Internal Revenue Bulletin 2009-52 (PDF rendition): IRS Revenue Procedures

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. 200
9-52
December 28, 200
9
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. 2009–37, page 957.
Interest rates; underpayment and overpayments.The
rate for interest determined under section 6621 of the Code
for the calendar quarter beginning January 1, 2010, will be 4
percent for overpayments (3 percent in the case of a corpo-
ration), 4 percent for underpayments, and 6 percent for large
corporate underpayments. The rate of interest paid on the
portion of a corporate overpayment exceeding $10,000 will
be 1.5 percent.
T.D. 9473, page 945.
Final regulations under section 6159 of the Code relate to the
payment of tax liabilities in installments and reflects changes
to the law made by the Taxpayer Bill of Rights II, the Internal
Revenue Service Restructuring and Reform Act of 1998, and
the American Jobs Creation Act of 2004.
REG–111833–99, page 1000.
Proposed regulations under section 7430 of the Code relate to
awards of administrative costs and attorneys fees to conform
the regulations to the amendments made in the Taxpayer Relief
Act of 1997 and the IRS Restructuring and Reform Act of 1998.
A public hearing is scheduled for March 10, 2010.
Rev. Proc. 2009–55, page 982.
Insurance companies; loss reserves; discounting unpaid
losses.This procedure sets forth the loss payment patterns
and discount factors for accident year 2009. Under section
846 of the Code, discount factors are determined by the Sec-
retary based on the interest rate determined annually under
section 846(c) and on loss payment patterns determined ev-
ery five years under section 846(d). Section 846(d) directs
the Secretary to use the most recent aggregate loss payment
data of property and casualty insurance companies to deter-
mine and publish a loss payment pattern for each line of busi-
ness every five years
Rev. Proc. 2009–56, page 993.
Insurance companies; discounting estimated salvage re-
coverable.This procedure sets forth the salvage discount fac-
tors for accident year 2009 for purposes of section 832 of the
Code. Under section 832, discount factors are determined by
the Secretary based on the interest rate determined annually
by the Secretary under section 846(c) and on salvage recovery
patterns determined every five years by the Secretary.
EMPLOYEE PLANS
Rev. Rul. 2009–40, page 942.
2010 covered compensation tables; permitted disparity.
The covered compensation tables under section 401 of the
Code for the year 2010 are provided for use in determining
contributions to defined benefit plans and permitted disparity.
Notice 2009–92, page 964.
This notice provides that a delay or acceleration of the payment
of nonqualified deferred compensation in order to comply with
an advisory opinion issued by the Office of the Special Master
for Troubled Asset Relief Program (TARP) Executive Compensa-
tion, pursuant to the Emergency Economic Stabilization Act of
2008 and regulations thereunder, including conditioning pay-
ment on satisfaction of a requirement related to TARP, such as
repayment of the financial assistance granted under TARP, will
not cause the plan to fail to meet the requirements of section
409A of the Code.
(Continued on the next page)
Fi
nding Lists begin on page ii.
Index for July through December begins on page v.

Notice 2009–96, page 968.
Weighted average interest rate update; corporate bond
indices; 30-year Treasury securities; segment rates.
This notice contains updates for the corporate bond weighted
average interest rate for plan years beginning in December
2009; the 24-month average segment rates; the funding tran-
sitional segment rates applicable for December 2009; and the
minimum present value transitional rates for November 2009.
Notice 2009–97, page 972.
This notice extends the deadline for amending qualifed retire-
ment plans to meet certain requirements of the Code that were
added by the Pension Protection Act of 2006 (PPA ’06), P.L.
109–280, and subsequently modified by the Worker, Retiree,
and Employer Recovery Act of 2008 (WRERA), P.L. 110–458.
The deadline is extended to the last day of the first plan year
that begins on or after January 1, 2010. Rev. Proc. 2007–44
modified. Notice 2008–18 modified.
Notice 2009–98, page 974.
Retirement plans; qualification, list of changes.This no-
tice sets forth a list of changes referred to in Rev. Proc.
2007–44, 2007–2 C.B. 54, pertaining to the statutory, reg-
ulatory, and guidance changes needed for certain requests to
the Service for opinion, advisory, and determination letters for
the 12-month period beginning February 1, 2010.
Announcement 2009–89, page 1009.
Remedial amendment period and reliance for section
403(b) plans.This announcement provides for a remedial
amendment period and reliance for employers that, pursuant
to the upcoming revenue procedures, either adopt a pre-ap-
proved plan with a favorable opinion letter or apply for an in-
dividual determination letter when available. Employers should
not request ruling or determination letters on the form of their
§ 403(b) plans at this time, pending publication of the rev-
enue procedure for pre-approved § 403(b) plans and additional
procedures on applying for individual determination letters for
§ 403(b) plans.
EXEMPT ORGANIZATIONS
Announcement 2009–88, page 1008.
A list is provided of organizations now classified as private foun-
dations.
Announcement 2009–90, page 1010.
The IRS has revoked its determination that Twenty First Century
World — TEMENOS of San Rafael, CA, qualifies as an organiza-
tion described in sections 501(c)(3) and 170(c)(2) of the Code.
ESTATE TAX
T.D. 9473, page 945.
Final regulations under section 6159 of the Code relate to the
payment of tax liabilities in installments and reflects changes
to the law made by the Taxpayer Bill of Rights II, the Internal
Revenue Service Restructuring and Reform Act of 1998, and
the American Jobs Creation Act of 2004.
GIFT TAX
T.D. 9473, page 945.
Final regulations under section 6159 of the Code relate to the
payment of tax liabilities in installments and reflects changes
to the law made by the Taxpayer Bill of Rights II, the Internal
Revenue Service Restructuring and Reform Act of 1998, and
the American Jobs Creation Act of 2004.
EMPLOYMENT TAX
Rev. Rul. 2009–39, page 951.
94X examples revenue ruling.This revenue ruling illus-
trates the application of the interest-free adjustment and claim
for refund processes under the final regulations promulgated
by Treasury Decision 9405 (T.D. 9405), 2008–32 I.R.B. 293.
T.D 9405 amends the process for making interest-free adjust-
ments of employment taxes under sections 6205 and 6413 of
the Code, and claiming refunds of employment taxes under sec-
tions 6402 and 6414. T.D. 9405 was initiated in connection
with the Service’s development of new “X” forms (e.g.,Form
941–X,Adjusted Employer’s QUARTERLY Federal Tax Return or
Claim for Refund) as part of the Form 94X Project initiated by
the Office of Taxpayer Burden Reduction and now led by SB/SE
Employment Tax Policy. The proposed revenue ruling applies
the final regulations under T.D. 9405 to 10 different situations
to show how the new processes operate. Rev. Rul. 75–464
obsoleted.
T.D. 9473, page 945.
Final regulations under section 6159 of the Code relate to the
payment of tax liabilities in installments and reflects changes
to the law made by the Taxpayer Bill of Rights II, the Internal
Revenue Service Restructuring and Reform Act of 1998, and
the American Jobs Creation Act of 2004.
(Continued on the next page)
December 28, 20092009–52 I.R.B.

SELF-EMPLOYMENT TAX
T.D. 9473, page 945.
Final regulations under section 6159 of the Code relate to the
payment of tax liabilities in installments and reflects changes
to the law made by the Taxpayer Bill of Rights II, the Internal
Revenue Service Restructuring and Reform Act of 1998, and
the American Jobs Creation Act of 2004.
EXCISE TAX
T.D. 9473, page 945.
Final regulations under section 6159 of the Code relate to the
payment of tax liabilities in installments and reflects changes
to the law made by the Taxpayer Bill of Rights II, the Internal
Revenue Service Restructuring and Reform Act of 1998, and
the American Jobs Creation Act of 2004.
ADMINISTRATIVE
T.D. 9473, page 945.
Final regulations under section 6159 of the Code relate to the
payment of tax liabilities in installments and reflects changes
to the law made by the Taxpayer Bill of Rights II, the Internal
Revenue Service Restructuring and Reform Act of 1998, and
the American Jobs Creation Act of 2004.
REG–111833–99, page 1000.
Proposed regulations under section 7430 of the Code relate to
awards of administrative costs and attorneys fees to conform
the regulations to the amendments made in the Taxpayer Relief
Act of 1997 and the IRS Restructuring and Reform Act of 1998.
A public hearing is scheduled for March 10, 2010.
Notice 2009–95, page 968.
This notice delays the effective date of compliance with Rev.
Rul. 2006–57, 2006–2 C.B. 911, which provides guidance on
the use of smartcards, debit or credit cards, or other electronic
media to provide qualified transportation fringes under section
132(f) of the Code, until January 1, 2011. Rev. Rul. 2006–57
modified.
Announcement 2009–91, page 1010.
This document contains corrections to final regulations (T.D.
2009–33 I.R.B. 188) providing guidance regarding the treat-
ment of controlled services transactions under section 482 of
theCodeandtheallocationofincomefromintangibleproperty,
in particular with respect to contributions by a controlled party
to the value of intangible property owned by another controlled
party. These final regulations modify regulations under section
861 concerning stewardship expenses to be consistent with
the changes made to the guidance under section 482.
Announcement 2009–92, page 1012.
This document contains a correction to Notice 2009–80,
2009–51 I.R.B. 859, which contained an incorrect taxable
year at the end of the first paragraph.
2009–52 I.R.B.December 28, 2009

The IRS Mission
Provide Americ
a’s taxpayers top quality service by helping them
understand an
d meet their tax responsibilities and by applying
the tax law with
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 and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of 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.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al 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 par
t includes notices of proposed rulemakings, disbar-
ment an
d 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 c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
December 28, 20092009–52 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 401.—Qualified
Pension, Profit-Sharing,
and Stock Bonus Plans
26 CFR 1.401(l)–1: Permitted disparity in employer-
provided contributions or benefits.
2010 covered compensation tables;
permitted disparity.The covered com-
pensation tables under section 401 of the
Code for the year 2010 are provided for
use in determining contributions to de-
fined benefit plans and permitted disparity.
Rev. Rul. 2009–40
This revenue ruling provides ta-
bles of covered compensation under
§ 401(l)(5)(E) of the Internal Revenue
Code (the “Code”) and the Income Tax
Regulations, thereunder, for the 2010 plan
year.
Section 401(l)(5)(E)(i) defines covered
compensation with respect to an employee,
as the average of the contribution and ben-
efit bases in effect under section 230 of the
Social Security Act (the “Act”) for each
year in the 35-year period ending with the
year in which the employee attains social
security retirement age.
Section 401(l)(5)(E)(ii) of the Code
states that the determination for any year
preceding the year in which the employee
attains social security retirement age shall
be made by assuming that there is no in-
crease in covered compensation after the
determination year and before the em-
ployee attains social security retirement
age.
Section 1.401(l)–1(c)(34) defines the
taxable wage base as the contribution and
benefit base under section 230 of the Act.
Section 1.401(l)–1(c)(7)(i) defines cov-
ered compensation for an employee as the
average (without indexing) of the taxable
wage bases in effect for each calendar year
during the 35-year period ending with the
last day of the calendar year in which the
employee attains (or will attain) social
security retirement age. A 35-year pe-
riod is used for all individuals regardless
of the year of birth of the individual. In
determining an employee’s covered com-
pensation for a plan year, the taxable wage
base for all calendar years beginning after
the first day of the plan year is assumed
tobethesameasthetaxablewagebasein
effect as of the beginning of the plan year.
An employee’s covered compensation for
a plan year beginning after the 35-year pe-
riod applicable under §1.401(l)–1(c)(7)(i)
is the employee’s covered compensation
for a plan year during which the 35-year
period ends. An employee’s covered
compensation for a plan year beginning
before the 35-year period applicable under
§1.401(l)–1(c)(7)(i) is the taxable wage
base in effect as of the beginning of the
plan year.
Section 1.401(l)–1(c)(7)(ii) provides
that, for purposes of determining the
amount of an employee’s covered com-
pensation under §1.401(l)–1(c)(7)(i), a
plan may use tables, provided by the Com-
missioner, that are developed by rounding
the actual amounts of covered compensa-
tion for different years of birth.
For purposes of determining covered
compensation for the 2010 year, the tax-
able wage base is $106,800.
The following tables provide covered
compensation for 2010.
ATTACHMENT I
2010 COVERED COMPENSATION TABLE
CALENDAR
YEAR OF
BIRTH
CALENDAR YEAR OF
SOCIAL SECURITY
RETIREMENT AGE
2010 COVERED
COMPENSATION
TABLE II
19071972
$4,488
190819734,704
19091974
5,004
1910
19755,316
19111976
5,664
191219776,060
191319786,480
191419797,044
1915
19807,692
19
16
19
81
8,
460
191719829,300
1918198310,236
1919198411,232
1920
1
985
12,276
1921198613,368
19221987
14,520
19231988
15,708
1924198916,968
1925
199018,312
2009–52 I.R.B.942December 28, 2009

ATTACHMENT I
2010 COVERED COMPENSATION TABLE
CALENDAR
YEAR OF
BIRTH
CALENDAR YEAR OF
SOCIAL SECURITY
RETIREMENT AGE
2010 COVERED
COMPENSATION
TABLE II
1926199119,728
1927199221,192
1928199322,716
1929199424,312
1930
199525,920
19311996
27,576
1932199729,304
1933199831,128
1934199933,060
1935
2000
35,100
1936200137,212
1937200239,444
1938200443,992
1939
2005
46,344
1940200648,816
19412007
51,348
19422008
53,952
19432009
56,628
19442010
59,268
1945
201161,884
1946201264,464
1947201367,008
1948201469,408
1949
2015
71,72
4
1950
201673,920
1951
201776,044
1952
201878,084
1953
2019
80,0
52
1954
202081,972
1955
202
2
85,620
1956
202387,384
1957
202489,064
19582025
90,660
1
959
202692,184
1960202793,648
1
961
2
028
95,052
1962202996,372
1963203097,680
1964203198,940
1965
2032100,116
19662033101,220
19672034102,192
1968
2035
103,068
19692036103,824
19702037104,448
19712038
105,012
19722039
105,552
19732040106,032
19742041106,392
December 28, 20099432009–52 I.R.B.

ATTACHMENT I
2010 COVERED COMPENSATION TABLE
CALENDAR
YEAR OF
BIRTH
CALENDAR YEAR OF
SOCIAL SECURITY
RETIREMENT AGE
2010 COVERED
COMPENSATION
TABLE II
1975
2042
106,656
1976 and Later2043 and Later106,800
ATTACHMENT II
2010 ROUNDED COVERED COMPENSATION TABLE
CALENDAR
YEAR OF
BIRTH
2010 COVERED
COMPENSATION
ROUNDED
1937
$39,000
1938 – 1939
45,000
194048,000
1941
51,000
1942
54,000
1943
57,000
194460,000
1945 – 1946
63,000
194766,000
194869,000
194972,000
1950 – 195175,000
1952
78,000
1953 – 1954
81,000
1955 – 1956
87,000
1957 – 1958
90,000
1959 – 1960
93,000
1961 – 196296,000
1963 – 1965
99,000
1966 – 1968102,000
1969 – 1972
105,000
1973 an
d Later
106,80
0
DRAFTING INFORMATION
The principal author of this revenue
ruling is Michael Spaid of the Employee
Plans, Tax Exempt and Government
Entities Division. For further infor-
mation regarding this revenue ruling,
please contact the Employee Plans tax-
payer assistance telephone service at
1–877–829–5500, between the hours of
8:30 a.m. and 4:30 p.m. Eastern time,
Monday through Friday (a toll-free num-
ber). Mr. Spaid may be reached via e-mail
atRetirementPlanQuestions@irs.gov.
Section 832.—Insurance
Company Taxable Income
26 CFR 1.832–4: Gross income.
The salvage discount factors are set forth for 2009.
These factors must be used to compute discounted
estimated salvage recoverable for purposes of section
832 of the Code. See Rev. Proc. 2009-56, page 993.
Section 846.—Discounted
Unpaid Losses Defined
26 CFR 1.846–1: Application of discount factors.
The loss payment patterns and discount factors are
set forth for the 2009 accident year. These factors
will be used for computing discounted unpaid losses
under section 846 of the Code. See Rev. Proc. 2009-
55, page 982.
The salvage discount factors are set forth for 2009.
These factors must be used to compute discounted
estimated salvage recoverable for purposes of section
832 of the Code. See Rev. Proc. 2009-56, page 993.
2009–52 I.R.B.944December 28, 2009

Section 6159.—Agree-
ments for Payment of Tax
Liability in
Installments
26 CFR 1.301.6159–0: Table of contents.
T.D. 9473
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 301
Agreements for Payment of
Tax Liability in Installments
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final Regulations.
SUMMARY: This document contains fi-
nal regulations relating to the payment of
tax liabilities in installments. The regu-
lations reflect changes to the law made
by the Taxpayer Bill of Rights II, the In-
ternal Revenue Service Restructuring and
Reform Act of 1998, and the American
Jobs Creation Act of 2004. The regula-
tions will affect taxpayers submitting in-
stallment agreements to the IRS.
DATES:Effective Date:These regulations
are effective on November 25, 2009.
Applicability Date:For the date of ap-
plicability, see §301.6159(k).
FOR FURTHER INFORMATION
CONTACT: Walter Ryan, (202) 622–3620
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments
to the Procedure and Administration Reg-
ulations (26 CFR part 301) under section
6159 of the Internal Revenue Code (Code).
Section 6159 allows the IRS to enter into
agreements for the payment of any unpaid
tax in installments. Taxpayers may request
administrative review of IRS decisions to
terminate installment agreements pursuant
to section 6159(e), added to the Code by
section 202 of the Taxpayer Bill of Rights
II, Public Law 104–168 (110 Stat. 1452,
1457 (1996)). Taxpayers may appeal
rejections of proposed installment agree-
ments under section 7122(e), added to the
Code by section 3462 of Internal Revenue
Service Restructuring and Reform Act of
1998 (RRA 98), Public Law 105–206 (112
Stat. 685, 764 (1998)). Section 6159(c),
added to the Code by section 3467 of RRA
1998, requires the IRS to accept a pro-
posed installment agreement for income
taxes under certain circumstances. Sec-
tion 3506 of RRA 1998 requires the IRS
to send each taxpayer with an installment
agreement an annual statement showing
the balance due at the beginning of the
year, the payments made during the year,
and the remaining balance due at the end
of the year.
Section 843 of the American Jobs Cre-
ation Act of 2004 (AJCA), Public Law
108–357 (118 Stat. 1418, 1600 (2004)),
amended section 6159(a) to allow the IRS
to enter into installment agreements that
provide for partial (as well as full) pay-
ment of a tax liability, but excludes partial
payment installment agreements from the
scope of installment agreements that must
be accepted by the IRS. Section 843 of the
AJCA also added new section 6159(d), re-
quiring the IRS to review partial payment
installment agreements every two years.
The primary purpose of the review is to
determine whether the financial condition
of the taxpayer has significantly changed
so as to warrant an increase in the value
of the payments being made. See H. Rep.
No. 108–755, 108th Cong., 2d Sess., 2005
U.S.C.C.A.N. 1341 (October 7, 2004).
On March 5, 2007, a notice of proposed
rulemaking (REG–100841–97, 2007–1
C.B. 763 [72 FR 9712]) was published
in theFederal Register.The proposed
regulations reflected the changes made
to section 6159 by the Taxpayer Bill of
Rights II, the RRA 98, and the AJCA. The
proposed regulations reflected current IRS
administrative practice. The IRS received
one set of written comments with numer-
ous recommendations. No public hearing
was requested or held. After consideration
of the comments, the proposed regulations
are adopted as revised by this Treasury
decision.
Summary of Comments and
Explanation of Revisions
The final regulations adopt certain
recommendations contained in the com-
ments by clarifying two provisions of
the proposed regulations. As explained
in this preamble, §301.6159–1(e)(3) was
amended to clarify that the taxpayer may
submit a request to modify or termi-
nate the installment agreement. Section
301.6159–1(e)(3) further clarifies that
such a request will not suspend the statute
of limitations on collection and the tax-
payer must comply with the existing
installment agreement while the request
is being considered. As also explained
in this preamble, §301.6159–1(e)(1)(i)
clarifies that the IRS may terminate an
installment agreement if the taxpayer pro-
vides materially incomplete or inaccurate
informationinresponsetoanIRSrequest
for a financial update.
The following is a section-by-section
analysis of the comments.
Section 301.6159–1(b): Procedures for
submission and consideration of proposed
installment agreements.
Section 301.6159–1(b) of the proposed
regulations provided that an installment
agreement request must be submitted ac-
cording to procedures prescribed by the
IRS. It did not require the IRS to accept
or reject the request within a specific time
frame. The commenter proposed to limit
the IRS’s time to consider an installment
agreement to 90 days; if the IRS fails to
act in that time, the agreement would be
granted automatically. The commenter
reasoned that the limited time frame would
benefit the IRS because more installments
agreements would be automatically al-
lowed, thereby increasing revenues, and
would benefit the taxpayer by allowing
payments to begin quickly and efficiently.
The recommendation was not adopted
for two reasons. First, the IRS already
grants installment agreements quickly
and automatically in the vast majority
of cases. If the taxpayer owes less than
$25,000 and offers to pay the liabilities
in full within 5 years, the agreement can
be granted automatically under the IRS’s
“streamlined” installment agreement pro-
cedures. See Internal Revenue Manual
5.14.5.2 athttp://www.irs.gov/irm/part5/
December 28, 20099452009–52 I.R.B.

irm_05–014–005.html. The IRS granted
over 2.62 million installment agreements
in fiscal year 2008, of which over 2.51
million were granted through the IRS’s
streamlined procedures. In cases that
do not meet the streamlined criteria, the
IRS has determined that a more detailed
review of the taxpayer’s financial situation
is warranted. Second, the IRS generally
responds to non-streamlined installment
agreement requests in a timely manner.
During the filing season, however,
inventory fluctuations may cause delays.
The automatic allowance of installment
agreements in such cases would not be
appropriate.
Proposed § 301.6159–1(b)(2) provided
that an installment agreement request be-
comes pending when it is accepted for pro-
cessing. The commenter recommended
that the IRS send an automatically-gener-
ated response acknowledging the date of
acceptance for processing to the taxpayer
and the taxpayer’s representative. This
recommendation was not adopted. The
vast majority of installment agreements
are streamlined agreements, which the IRS
accepts very quickly. The IRS will, how-
ever, consider adopting an administrative
procedure for the minority of cases where
it anticipates a time lag between accep-
tance for processing and the acceptance or
rejection of the installment agreement.
Proposed §301.6159–1(b)(2) also pro-
vided that if an installment agreement re-
quest does not contain sufficient informa-
tion to permit the IRS to evaluate whether
the request should be accepted, the IRS
will request the needed information. The
commenter recommended that all requests
for additional information should be rea-
sonably necessary. The proposed regula-
tions already address this recommendation
by directing that requests be for “needed”
information.
Proposed §301.6159–1(b)(3) allowed
a taxpayer to submit a good faith revi-
sion of a rejected installment agreement
request within 30 days of rejection. The
commenter recommended that the time for
taxpayers to submit a good faith revision
should be extended to 60 days because
taxpayers often have difficulty obtaining
the necessary documents within 30 days.
This recommendation was not adopted.
The recommendation would apply to a
small number of installment agreement
requests that are not accepted under the
IRS’s streamlined procedures. In these
cases, the IRS requests the information
necessary for a financial analysis be-
fore rejecting the installment agreement
request. See Internal Revenue Manual
5.15.1.6 athttp://www.irs.gov/irm/part5/
irm_05–015–001.html.Allowing 60
days following the rejection would
encourage untimely responses and delay
case resolution.
Section 301.6159–1(c): Acceptance, form,
and terms of installment agreements.
Section 301.6159–1(c)(1) of the pro-
posed regulations provided that an install-
ment agreement request has not been ac-
cepted until the IRS notifies the taxpayer
or the taxpayer’s representative of the ac-
ceptance. Section 6159(a) requires that an
installment agreement be in writing, and
proposed §301.6159–1(c)(2) provided that
the writing may take the form of a docu-
ment signed by the taxpayer and the IRS
or the written confirmation of an agree-
ment entered into by the taxpayer and the
IRS that is mailed or personally delivered
to the taxpayer. The commenter recom-
mended that the IRS’s notification of the
acceptance or rejection of a proposed in-
stallment agreement also be directed to the
taxpayer’s representative and include the
terms of the agreement and payment sub-
mission information. These recommenda-
tions were not adopted in the regulations
because they are more appropriately ad-
dressed in the IRS’s procedures. The IRS
currently does, however, provide written
notification to the taxpayer and the tax-
payer’s representative of the acceptance or
rejection of an installment agreement and
the suggested information.
The commenter was concerned that
the IRS intended to change its stream-
lined procedures and recommended that
the procedures be retained. The com-
menter was also concerned that proposed
§301.6159–1(c)(3)(iii)(A) may represent
a departure from the IRS’s current policy
that limits the acceptance of extensions
of the collection statute of limitations in
connection with installment agreements to
the narrow subset of partial payment in-
stallment agreements in which the liability
will not be paid in full under the agree-
ment before the collection statute expires.
As stated in the preamble to the notice
of proposed rulemaking, the regulations
were intended to reflect existing practices.
The regulations will have no effect on the
IRS’s streamlined procedures or its policy
with regard to waivers of the collection
statute.
The commenter stated that the proposed
regulations did not explain the inclusion
of §301.6159–1(c)(3)(ii), which provided
that an installment agreement may, by its
terms, end upon the expiration of the pe-
riod of limitations on collection, or at some
prior date. As explained in the preamble
to the proposed regulations, this provision
clarifies that the IRS may enter into partial
payment installment agreements that end
upon the running of the collection statute,
or that end prior to that time so that the
IRS may collect the balance of the tax li-
ability against any property belonging to
the taxpayer before the collection period
expires. The IRS does not currently en-
ter into partial payment installment agree-
ments that expire before the end of the col-
lection statute and has no plans to do so
routinely in the future.
Proposed §301.6159–1(c)(3)(v) pro-
vided that while an installment agreement
is in effect, the IRS may request a financial
condition update from the taxpayer at any
time. The commenter recommended that
the IRS be permitted to request only one
financial condition update per year. This
recommendation was not adopted. The
IRS very rarely requests updates more than
once a year. In certain rare circumstances,
more frequent updates may be appropriate,
such as when the IRS has reason to believe
that the taxpayer’s financial condition has
improved.
Section 301.6159–1(d): Rejection of a
proposed installment agreement.
Section 301.6159–1(d)(2) of the pro-
posed regulations provided that the IRS
may not notify a taxpayer or the taxpayer’s
representative of the rejection of an install-
ment agreement until an independent re-
view of proposed rejection is completed.
The commenter was concerned that the
proposed regulations did not provide any
guidance as to how the independent ad-
ministrative review will be assured. The
commenter recommended that the review
be undertaken by an IRS office located
in a different territory. The recommen-
dation was not adopted. Managers in the
IRS offices in San Jose, California, and
2009–52 I.R.B.946December 28, 2009

Jacksonville, Florida, supervise employ-
ees throughout the United States who re-
view rejected installment agreements. An
independent review is assured by assign-
ing these cases to an employee who has no
prior involvement in the case and who re-
ports to a supervisor in either of these two
offices.
The commenter recommended that the
determination that the taxpayer did not
submit a good faith revision be subject to
independent administrative review. This
recommendation was not adopted be-
cause it would delay case resolution and
would, in effect, treat requests that were
not made in good faith as valid requests.
The commenter also recommended that
the rejection of revisions that were made
in good faith receive independent review.
The proposed regulation already provided
for this review. Proposed §301.6159–1(b)
stated that if the IRS determines that the
taxpayer made a good faith revision within
30 days of the rejection, the provisions
of §301.6159–1 apply to the revised pro-
posal.
Proposed §301.6159–1(d)(3) provided
that a taxpayer may appeal the rejection
of an installment agreement request within
30 days of the rejection. The commenter
recommended that the 30-day period be
tolled while a revised proposal of a re-
jected request is being evaluated so that
the taxpayer would not have to file an ap-
peal while the revision is under consid-
eration. This recommendation was not
adopted. The IRS’s procedures are de-
signed to allow a quick resolution of the
taxpayer’s request; tolling the appeal pe-
riod would add an unneeded layer of com-
plexity to the process and delay case reso-
lution. The commenter also recommended
that the IRS provide more definitive guid-
ance as to what qualifies as a good faith
revision. This recommendation was not
adopted because this guidance is more ap-
propriately left to the IRS procedures.
Section 301.6159–1(e): Modification or
termination of installment agreements by
the Internal Revenue Service.
Proposed §301.6159–1(e)(2)(i) pro-
vided that the IRS may modify or ter-
minate an installment agreement if the
IRS determines that the financial con-
dition of the taxpayer has significantly
changed. Proposed §301.6159–1(c)(3)(vi)
provided that the IRS and the taxpayer
may agree to modify or terminate an in-
stallment agreement or may agree to a new
installment agreement that supersedes the
existing agreement. The commenter rec-
ommended that the regulations explicitly
allow taxpayers to request a modifica-
tion or termination of an existing install-
ment agreement, as was stated in existing
§301.6159–1(c)(3). This clarification was
adopted in §301.6159–1(e)(3).
The commenter recommended that the
regulations require the taxpayer to com-
plywiththetermsofaninstallmentagree-
ment while a request for modification is
being considered and that a proposed mod-
ification will not result in a suspension
of the statute of limitations on collection.
These clarifications were also adopted in
§301.6159–1(e)(3).
The commenter recommended that a
taxpayer’s request to modify an existing
installment agreement should be exempt
from user fees under regulations §§300.1
and 300.2. This recommendation was not
adopted because user fees are outside the
scope of this regulation project.
Proposed §301.6159–1(e)(2)(ii)(C)
provided that the IRS may modify or ter-
minate an installment agreement if the
taxpayer fails to provide a financial con-
dition update requested by the IRS. The
commenter recommended that the regula-
tions provide explicitly whether the IRS
may terminate an installment agreement
if the taxpayer provided materially inac-
curate or incomplete information. This
recommendation was adopted. Section
301.6159–1(e)(1)(i) was revised to clarify
that the IRS may terminate an installment
agreement if the taxpayer provided materi-
ally inaccurate or incomplete information
in connection with a requested financial
update.
Proposed §301.6159–1(e)(3) provided
that the IRS will generally notify the tax-
payer in writing at least 30 days prior to
terminating an installment agreement and
describe the reason for the termination, af-
ter which the taxpayer may provide infor-
mation showing that the IRS’s reason is in-
correct. Proposed §301.6159–1(e)(4) pro-
vided for the administrative appeal of the
modification or termination of an install-
ment agreement to the Office of Appeals
if the request is properly made within 30
days after the termination or modification
is to take effect. The commenter recom-
mended that the regulations clarify that an
appeal should be made to the Office of Ap-
peals within 30 days after the modification
or termination will take effect, regardless
of whether the taxpayer submits additional
information under §301.6159–1(e)(3), has
filled out Form 9423, “Collection Appeal
Request,” or has requested a meeting with
a Collection Manager. This recommenda-
tion was not adopted in the regulations be-
cause it is more appropriately addressed in
IRS forms and procedures.
Proposed §301.6159–1(e)(4) provided,
in part, that the taxpayer may admin-
istratively appeal the modification or
termination of an installment agreement
to the Office of Appeals. The commenter
recommended that the taxpayer be al-
lowed to appeal the IRS’s determination
not to modify an installment agreement.
This recommendation was not adopted.
The IRS routinely grants taxpayer modi-
fication requests that result in agreements
within the streamlined criteria. See
Internal Revenue Manual 5.19.1.5.4.24
athttp://www.irs.gov/irm/part5/
irm_05–019–001.html. Taxpayers do not
have a statutory right to appeal rejected
modification requests, and the IRS has not
determined there is a need for additional
administrative review of the denial of a
modification request.
Section 301.6159–1(f): Effect of
installment agreement or pending
installment agreement on collection
activity.
Section 301.6159–1(f)(1) of the pro-
posed regulations stated that the IRS
may not levy during the time an install-
ment agreement is pending. Proposed
§301.6159–1(f)(2) stated that levy is not
prohibited if an installment agreement
request was made solely to delay collec-
tion. The commenter recommended that
the solely to delay collection standard in
the proposed regulations be replaced with
language that references the “frivolous
submission” standard in section 6702(b) of
the Code. This recommendation was not
adopted. Under existing IRS procedures,
an installment agreement is returned as
made solely to delay collection when there
is no economic reality to the request, the
request fails to address changes previously
requested by the IRS in response to a prior
request, the request ignores direction pro-
December 28, 20099472009–52 I.R.B.

vided by revenue officers, the request is
made by a taxpayer that has defaulted prior
installment agreements, or the request is
made at a time that causes it to be classified
as a request made to delay enforcement
action. See Internal Revenue Manual
5.14.3.2 athttp://www.irs.gov/irm/part5/
irm_05–014–003.html. Section 6702(b)
imposes a $5,000 penalty for installment
agreement requests that reflect a desire to
delay or impede the administration of the
Federal tax laws, and the IRS has not yet
developed procedures defining the kinds
of installment agreements that constitute
frivolous submissions. The standard in
section 6702(b) therefore may not be an
appropriate standard for identifying those
installment agreementsthat fail to qualify
for the prohibition against levy.
In the alternative, the commenter rec-
ommended that the regulations state that a
taxpayer may appeal the IRS’s levy action
when the IRS determines that an install-
ment agreement request was made solely
to delay collection, and that damages may
be appropriate under section 7433 of the
Code. These recommendations were not
adopted. Taxpayers’ rights to appeal pro-
posed levies and seek damages are pro-
vided for in the regulations under sections
6330 and 7433 of the Code, respectively.
Section 301.6159–1(g): Suspension of the
statute of limitations on collection.
Section 301.6159–1(g) of the proposed
regulations provided that the statute of lim-
itations on collection under section 6502 of
the Code is suspended for the period that
a proposed installment agreement is pend-
ing, plus 30 days following a rejection, and
during any appeal. The commenter recom-
mended that the regulations clearly define
when an installment agreement is pend-
ing. This recommendation is already ad-
dressed by proposed §301.6159–1(b)(2),
which provides a detailed explanation of
when an installment agreement is pending.
Section 301.6159–1(h): Annual statement.
Section 301.6159–1(h) of the proposed
regulations requires the IRS to provide tax-
payers with an annual statement setting
forth the balance owed at the beginning
of the year, the payments made during the
year, and the remaining balance at the end
of the year. The commenter recommends
that the annual statement be as clear as pos-
sible and that the IRS provide the taxpayer
with a single annual statement describing
all tax liabilities covered by the agreement.
Currently, the IRS sends an annual state-
ment for each separate liability covered by
an installment agreement. No change was
made to the final regulations because this
recommendation is more appropriately ad-
dressed when the IRS updates the forms
used for the annual statements.
Section 301.6159–1(i): Biennial review of
partial payment installment agreements.
Section 301.6159–1(i) of the proposed
regulations required the IRS to perform a
review of the taxpayer’s financial condi-
tion at least once every two years in cases
of partial payment installment agreements.
The proposed regulations also stated that
the purpose of the review was to determine
whether an increase in payments is war-
ranted. The commenter recommended that
§301.6159–1(i) be rephrased to provide
that the biennial review of a taxpayer’s fi-
nancial condition may result in a decrease,
as well as an increase, in the amount of
payments being made. This recommen-
dation was not adopted. While taxpayers
may request a decrease in the amount of
payments due under aninstallment agree-
ment, the IRS does not have the informa-
tion to unilaterally make that determina-
tion. The automatic biennial review done
by the IRS does not, in every case, result
in a request for updated financial informa-
tion. As explained above, taxpayers may
request that their payments be lowered if
their financial condition has worsened.
Section 301.6159–1(k):
Effective/applicability date.
Section 301.6159–1(k) of the proposed
regulations provided that the effective
date of the final regulations would be the
date the final regulations are published
in theFederal Register. The commenter
was concerned about how previously pro-
posed or accepted installment agreements
will be affected by the regulations and
recommended that the effective date of
paragraphs (b), (c), and (d) apply prospec-
tively. This recommendation was not
adopted. As explained earlier and in the
preamble to the proposed regulations, the
regulations substantially reflect existing
practices. The regulations will therefore
have no effect on previously proposed or
accepted installment agreements.
Special Analyses
It has been determined that this Trea-
sury decision is not asignificant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It also has been deter-
mined that section 553(b) of the Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply to these regulations, and
because the regulations do not impose a
collection of information on small entities,
the Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply. Pursuant to sec-
tion 7805(f) of the Code, the proposed reg-
ulations preceding these regulations were
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administration
for comment on its impact on small busi-
ness.
Drafting Information
The principal author of these regula-
tions is Walter Ryan, Office of Associate
Chief Counsel (Procedure and Administra-
tion).
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 301 is
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 301.6159–0 is added to
read as follows:
§301.6159–0 Table of contents.
This section lists the major captions
that appear in the regulations under
§301.6159–1.
§301.6159–1 Agreements for the payment
of tax liabilities in installments.
(a) Authority.
2009–52 I.R.B.948December 28, 2009

(b) Procedures for submission and con-
sideration of proposed installment agree-
ments.
(c) Acceptance, form, and terms of in-
stallment agreements.
(d) Rejection of a proposed installment
agreement.
(e) Modification or termination of in-
stallment agreements by the Internal Rev-
enue Service.
(f) Effect of installment agreement or
pending installment agreement on collec-
tion activity.
(g) Suspension of the statute of limita-
tions on collection.
(h) Annual statement.
(i) Biennial review of partial payment
installment agreements.
(j) Cross reference.
(k) Effective/applicability date.
Par. 3. Section 301.6159–1 is revised
to read as follows:
§301.6159–1 Agreements for payment of
tax liabilities in installments.
(a)Authority. The Commissioner may
enter into a written agreement with a tax-
payer that allows the taxpayer to make
scheduled periodic payments of any tax
liability if the Commissioner determines
that such agreement will facilitate full or
partial collection of the tax liability.
(b)Procedures for submission and con-
sideration of proposed installment agree-
ments—(1)In general. A proposed install-
ment agreement must be submitted accord-
ing to the procedures, and in the form and
manner, prescribed by the Commissioner.
(2)When a proposed installment agree-
ment becomes pending. A proposed in-
stallment agreement becomes pending
when it is accepted for processing. The
Internal Revenue Service (IRS) may not
accept a proposed installment agreement
for processing following reference of a
case involving the liability that is the sub-
ject of the proposed installment agreement
to the Department of Justice for prosecu-
tion or defense. The proposed installment
agreement remains pending until the IRS
accepts the proposal, the IRS notifies the
taxpayer that the proposal has been re-
jected, or the proposal is withdrawn by the
taxpayer. If a proposed installment agree-
ment that has been accepted for processing
does not contain sufficient information to
permit the IRS to evaluate whether the
proposal should be accepted, the IRS will
request the taxpayer to provide the needed
additional information. If the taxpayer
does not submit the additional information
that the IRS has requested within a reason-
able time period after such a request, the
IRS may reject the proposed installment
agreement.
(3)Revised proposals of installment
agreements submitted following rejection.
If, following the rejection of a proposed
installment agreement, the IRS determines
that the taxpayer made a good faith re-
vision of the proposal and submitted the
revision within 30 days of the date of re-
jection, the provisions of this section shall
apply to that revised proposal. If, how-
ever, the IRS determines that a revision
was not made in good faith, the provisions
ofthissectiondonotapplytotherevision
and the appeal period in paragraph (d)(3)
of this section continues to run from the
date of the original rejection.
(c)Acceptance, form, and terms of in-
stallment agreements—(1)Acceptance of
an installment agreement—(i)In general.
A proposed installment agreement has not
been accepted until the IRS notifies the
taxpayer or the taxpayer’s representative
of the acceptance. Except as provided
in paragraph (c)(1)(iii) of this section, the
Commissioner has the discretion to accept
or reject any proposed installment agree-
ment.
(ii)Acceptance does not reduce liabil-
ities. The acceptance of an installment
agreement by the IRS does not reduce
the amount of taxes, interest, or penalties
owed. (However, penalties may continue
to accrue at a reduced rate pursuant to
section 6651(h).)
(iii)Guaranteed installment agree-
ments. In the case of a liability of an
individual for income tax, the Commis-
sioner shall accept a proposed installment
agreement if, as of the date the individual
proposes the installment agreement—
(A) The aggregate amount of the liabil-
ity (not including interest, penalties, addi-
tions to tax, and additional amounts) does
not exceed $10,000;
(B) The taxpayer (and, if the liabil-
ity relates to a joint return, the taxpayer’s
spouse) has not, during any of the preced-
ing five taxable years—
(1) Failed to file any income tax return;
(2) Failed to pay any required income
tax; or
(3) Entered into an installment agree-
ment for the payment of any income tax;
(C) The Commissioner determines that
the taxpayer is financially unable to pay
the liability in full when due (and the tax-
payer submits any information the Com-
missioner requires to make that determina-
tion);
(D) The installment agreement requires
full payment of the liability within three
years; and
(E) The taxpayer agrees to comply with
the provisions of the Internal Revenue
Code for the period the agreement is in
effect.
(2)Form of installment agreements.An
installment agreement must be in writing.
A written installment agreement may take
the form of a document signed by the tax-
payer and the Commissioner or a written
confirmation of an agreement entered into
by the taxpayer and the Commissioner that
is mailed or personally delivered to the tax-
payer.
(3)Terms of installment agreements.(i)
Except as otherwise provided in this sec-
tion, an installment agreement is effective
from the date the IRS notifies the taxpayer
or the taxpayer’s representative of its ac-
ceptance until the date the agreement ends
by its terms or until it is superseded by a
new installment agreement.
(ii) By its terms, an installment agree-
ment may end upon the expiration of the
period of limitations on collection in sec-
tion 6502 and §301.6502–1, or at some
prior date.
(iii) As a condition to entering into an
installment agreement with a taxpayer, the
Commissioner may require that—
(A) The taxpayer agree to a reasonable
extension of the period of limitations on
collection; and
(B) The agreement contain terms that
protect the interests of the Government.
(iv) Except as otherwise provided in an
installment agreement, all payments made
under the installment agreement will be
applied in the best interests of the Govern-
ment.
(v) While an installment agreement is
in effect, the Commissioner may request,
and the taxpayer must provide, a financial
condition update at any time.
(vi) At any time after entering into an
installment agreement, the Commissioner
and the taxpayer may agree to modify or
terminate an installment agreement or may
December 28, 20099492009–52 I.R.B.

agree to a new installment agreement that
supersedes the existing agreement.
(d)Rejection of a proposed installment
agreement—(1)Whenaproposedinstall-
ment agreement becomes rejected.Apro-
posed installment agreement has not been
rejected until the IRS notifies the taxpayer
or the taxpayer’s representative of the re-
jection, the reason(s)for rejection, and the
righttoanappeal.
(2)Independent administrative review.
The IRS may not notify a taxpayer or tax-
payer’s representative of the rejection of
an installment agreement until an indepen-
dent administrative review of the proposed
rejection is completed.
(3)Appeal of rejection of a proposed
installment agreement. The taxpayer may
administratively appeal a rejection of a
proposed installment agreement to the IRS
Office of Appeals (Appeals) if, within the
30-day period commencing the day after
the taxpayer is notified of the rejection, the
taxpayer requests an appeal in the manner
provided by the Commissioner.
(e)Modification or termination of
installment agreements by the Internal
Revenue Service—(1)Inadequate infor-
mation or jeopardy. The Commissioner
may terminate an installment agreement if
the Commissioner determines that—
(i) Information which was provided to
the IRS by the taxpayer or the taxpayer’s
representative in connection with either
the granting of the installment agreement
or a request for a financial update was
inaccurate or incomplete in any material
respect; or
(ii) Collection of any liability to which
the installment agreement applies is in
jeopardy.
(2)Change in financial condition, fail-
ure to timely pay an installment or an-
other Federal tax liability, or failure to
provide requested financial information.
The Commissioner may modify or termi-
nate an installment agreement if—
(i) The Commissioner determines that
the financial condition of a taxpayer that
is party to the agreement has significantly
changed; or
(ii) A taxpayer that is party to the in-
stallment agreement fails to—
(A) Timely pay an installment in ac-
cordance with the terms of the installment
agreement;
(B) Pay any other Federal tax liability
when the liability becomes due; or
(C) Provide a financial condition update
requested by the Commissioner.
(3)Request by taxpayer.Uponrequest
by a taxpayer that is a party to the install-
ment agreement, the Commissioner may
terminate or modify the terms of an in-
stallment agreement if the Commissioner
determines that the financial condition of
the taxpayer has significantly changed.
The taxpayer’s request will not suspend
the statute of limitations under section
6502 for collection of any liability. While
the Commissioner is considering the re-
quest, the taxpayer shall comply with the
terms of the existing installment agree-
ment.
(4)Notice. Unless the Commissioner
determines that collection of the tax is in
jeopardy, the Commissioner will notify the
taxpayer in writing at least 30 days prior
to modifying or terminating an installment
agreement pursuant to paragraph (e)(1) or
(2) of this section. The notice provided
pursuant to this section must briefly de-
scribe the reason for the intended modifi-
cation or termination. Upon receiving no-
tice, the taxpayer may provide information
showing that the reason for the proposed
modification or termination is incorrect.
(5)Appeal of modification or termina-
tion of an installment agreement.The
taxpayer may administratively appeal the
modification or termination of an install-
ment agreement to Appeals if, following
issuance of the notice required by para-
graph (e)(4) of this section and prior to the
expiration of the 30-day period commenc-
ingthedayafterthemodificationorter-
mination is to take effect, the taxpayer re-
quests an appeal in the manner provided by
the Commissioner.
(f)Effect of installment agreement or
pending installment agreement on collec-
tion activity—(1)In general.Nolevymay
be made to collect a tax liability that is the
subject of an installment agreement dur-
ing the period that a proposed installment
agreement is pending with the IRS, for 30
days immediately following the rejection
of a proposed installment agreement, dur-
ing the period that an installment agree-
ment is in effect, and for 30 days imme-
diately following the termination of an in-
stallment agreement. If, prior to the expi-
ration of the 30-day period following the
rejection or termination of an installment
agreement, the taxpayer appeals the rejec-
tion or termination decision, no levy may
be made while the rejection or termination
is being considered by Appeals. This sec-
tion will not prohibit levy to collect the li-
ability of any person other than the person
or persons named in the installment agree-
ment.
(2)Exceptions. Paragraph (f)(1) of this
section shall not prohibit levy if the tax-
payer files a written notice with the IRS
that waives the restriction on levy imposed
by this section, the IRS determines that the
proposed installment agreement was sub-
mitted solely to delay collection, or the
IRS determines that collection of the tax
to which the installment agreement or pro-
posed installment agreement relates is in
jeopardy.
(3)Other actions by the IRS while levy
is prohibited—(i)In general.TheIRSmay
take actions other than levy to protect the
interests of the Government with regard
to the liability identified in an installment
agreement or proposed installment agree-
ment. Those actions include, for exam-
ple—
(A) Crediting an overpayment against
the liability pursuant to section 6402;
(B) Filing or refiling notices of Federal
tax lien; and
(C) Taking action to collect from any
person who is not named in the installment
agreement or proposed installment agree-
ment but who is liable for the tax to which
the installment agreement relates.
(ii)Proceedings in court
. Except as
otherwise provided in this paragraph
(f)(3)(ii), the IRS will not refer a case to the
Department of Justice for the commence-
ment of a proceeding in court, against a
person named in an installment agreement
or proposed installment agreement, if levy
to collect the liability is prohibited by
paragraph (f)(1) of this section. Without
regard to whether a person is named in an
installment agreement or proposed install-
ment agreement, however, the IRS may
authorize the Department of Justice to file
a counterclaim or third-party complaint
in a refund action or to join that person
in any other proceeding in which liability
for the tax that is the subject of the install-
ment agreement or proposed installment
agreement may be established or disputed,
including a suit against the United States
under 28 U.S.C. 2410. In addition, the
United States may file a claim in any bank-
ruptcy proceeding or insolvency action
brought by or against such person. If a
2009–52 I.R.B.950December 28, 2009

person named in an installment agreement
is joined in a proceeding, the United States
obtains a judgment against that person,
and the case is referred back to the IRS
for collection, collection will continue
to occur pursuant to the terms of the in-
stallment agreement. Notwithstanding the
installment agreement, any claim or suit
permitted will be for the full amount of the
liabilities owed.
(g)Suspension of the statute of limita-
tions on collection. The statute of limita-
tions under section 6502 for collection of
any liability shall be suspended during the
period that a proposed installment agree-
ment relating to that liability is pending
with the IRS, for 30 days immediately fol-
lowing the rejection of a proposed install-
ment agreement, and for 30 days immedi-
ately following the termination of an in-
stallment agreement. If, within the 30 days
following the rejection or termination of an
installment agreement, the taxpayer files
an appeal with Appeals, the statute of lim-
itations for collection shall be suspended
while the rejection or termination is being
considered by Appeals. The statute of lim-
itations for collection shall continue to run
if an exception under paragraph (f)(2) of
this section applies and levy is not prohib-
ited with respect to the taxpayer.
(h)Annual statement. The Commis-
sioner shall provide each taxpayer who is
party to an installment agreement under
this section with an annual statement set-
ting forth the initial balance owed at the
beginning of the year, the payments made
during the year, and the remaining balance
as of the end of the year.
(i)Biennial review of partial payment
installment agreements. The Commis-
sioner shall perform a review of the tax-
payer’s financial condition in the case of a
partial payment installment agreement at
least once every two years. The purpose
of this review is to determine whether the
taxpayer’s financialcondition has signifi-
cantly changed so as to warrant an increase
in the value of the payments being made
or termination of the agreement.
(j)Cross reference. Pursuant to sec-
tion 6601(b)(1), the last day prescribed
for payment is determined without regard
to any installment agreement, including
for purposes of computing penalties and
interest provided by the Internal Rev-
enue Code. For special rules regarding
the computation of the failure to pay
penalty while certain installment agree-
ments are in effect, see section 6651(h)
and §301.6651–1(a)(4).
(k)Effective/applicability date.This
section is applicable on November 25,
2009.
Par. 4. Section 301.6331–4, paragraph
(d) is revised and paragraph (e) is added to
read as follows:
§301.6331–4 Restrictions on levy while
installment agreements are pending or in
effect.
*****
(d)Cross-ref
erence. For provisions re-
latingtothe
making of levies while an in-
stallment ag
reement is pending or in effect,
see §301.615
9–1.
(e)Effectiv
e/applicability date. Para-
graphs (a), (
b) and (c) are applicable begin-
ning Decembe
r 18, 2002. Paragraph (d) is
applicable
on November 25, 2009.
Steven T. Miller,
Deputy Commissioner of
Services and Enforcement.
Approved November 11, 2009.
Michael F. Mundaca,
Acting Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on November 24,
2009, 8:45
a.m., and published in the issue of the Federal
Register for November 25, 2009, 74 F.R. 61525)
Section 6205.—Special
Rules Applicable to Certain
Employment Taxes
26 CFR 31.6205–1: Adjustments of underpayments.
(Also:6402, 6413, 6414, 31.6402(a)–1,
31.6402(a)–2,31.6413(a)–1,31.6413(a)–2,
31.6414–1.)
94X examples revenue ruling.This
revenue ruling illustrates the application
of the interest-free adjustment and claim
for refund processes under the final regu-
lations promulgated by Treasury Decision
9405 (T.D. 9405), 2008–32 I.R.B. 293.
T.D 9405 amends the process for mak-
ing interest-free adjustments of employ-
ment taxes under sections 6205 and 6413
of the Code, and claiming refunds of em-
ployment taxes under sections 6402 and
6414. T.D. 9405 was initiated in con-
nection with the Service’s development of
new “X” forms (e.g., Form 941–X,Ad-
justed Employer’s QUARTERLY Federal
Tax Return or Claim for Refund)aspart
of the Form 94X Project initiated by the
Office of Taxpayer Burden Reduction and
now led by SB/SE Employment Tax Pol-
icy. The proposed revenue ruling applies
the final regulations under T.D. 9405 to 10
different situations to show how the new
processes operate. Rev. Rul. 75–464 ob-
soleted.
Rev. Rul. 2009–39
ISSUE
How does an employer correct employ-
ment tax reporting errors using the inter-
est-free adjustment and refund claim pro-
cesses under sections 6205, 6402, 6413,
and 6414 of the Internal Revenue Code and
the accompanying regulations in the fol-
lowing situations:
(1) an underpayment of Federal Insur-
ance Contributions Act (FICA) tax and in-
come tax withholding (ITW) when the er-
ror is not ascertained in the year the wages
were paid; (2) an overpayment of ITW
when the error is ascertained in the same
year the wages were paid; (3) both an over-
payment and an underpayment of FICA
tax for the same tax period; (4) an under-
payment of FICA tax when the employer’s
filing requirement has changed; (5) an un-
derpayment of FICA tax and ITW result-
ing from a failure to file an employment
tax return because the employer failed to
treat any workers as employees; (6) an
overpayment of FICA tax on wages paid
to a household employee; (7) an overpay-
ment of FICA tax when the error is as-
certained close to the expiration of the pe-
riod of limitations on credit or refund; (8)
an underpayment of FICA tax and ITW
ascertained in the course of an employ-
ment tax examination; (9) an underpay-
ment of FICA tax and ITW ascertained in
the course of the appeals process; (10) an
underpayment of FICA tax and ITW re-
sulting from the misclassification of em-
ployees ascertained in the course of the ap-
peals process.
LAW, ANALYSIS, AND HOLDINGS
For purposes of this revenue ruling,
employment taxmeans FICA tax (both
the social security and Medicare portions)
imposed by section 3101 (employee FICA
December 28, 20099512009–52 I.R.B.

tax) and section 3111 (employer FICA
tax), and ITW imposed by section 3402.
To the extent other types of withholding
are treated as ITW under section 3402(a)
(that is, gambling withholding, pension
withholding, and backup withholding as
set forth in sections 3402(q)(7), 3405(f),
and 3406(h)(10), respectively), these other
types of withholding are included in the
term employment tax.
Sections 6205, 6402, 6413, and 6414
permit interest-free adjustments and
claims for refund to correct employ-
ment tax reporting errors. Sections
31.6205–1, 31.6402(a)–1, 31.6402(a)–2,
31.6413(a)–1,31.6413(a)–2,and
31.6414–1, as amended by Treasury Deci-
sion 9405 (T.D. 9405, 2008–32 I.R.B. 293
[73 FR 37371]), provide rules for mak-
ing interest-free adjustments and claim-
ing refunds of employment tax. Section
31.6302–1, as amended by T.D. 9405, pro-
vides rules relating to deposit obligations
with respect to interest-free adjustments
of employment tax. T.D. 9405 is effective
on January 1, 2009 and applies to errors
ascertained on or after January 1, 2009.
T.D. 9405 was issued in coordination
with “X” forms developed by the Internal
Revenue Service (IRS) that employers
use to correct employment tax reporting
errors ascertained on or after January 1,
2009. The “X” forms correspond with
Form 941, “Employer’s QUARTERLY
Federal Tax Return”; Form 943, “Em-
ployer’s Annual Federal Tax Return for
Agricultural Employees”; Form 944, “Em-
ployer’s ANNUAL Federal Tax Return”;
and Form 945, “Annual Return of With-
held Federal Income Tax.” The new “X”
forms (e.g., Form 941–X, “Adjusted Em-
ployer’s QUARTERLY Federal Tax Return
or Claim for Refund”) are used to claim
refunds, make adjustments, and request
abatements of employment tax.
This revenue ruling refers to correc-
tions made pursuant to sections 6205 and
6413 of underpayments or overpayments,
respectively, resulting from employment
tax reporting errors as having been made
using the adjustment process. This rev-
enue ruling refers to corrections made pur-
suant to sections 6402 and 6414 of over-
payments resulting from employment tax
reporting errors as having been made us-
ing the refund claim process.
Underpayments
Pursuant to § 31.6205–1(b), an em-
ployer that has underreported and un-
derpaid FICA tax with respect to any
payment of wages can correct the error as
an interest-free adjustment if the error is
ascertained after the return reporting such
tax has been filed. An error is ascertained
when the employer has sufficient knowl-
edge of the error to be able to correct
it. An interest-freeunderpayment adjust-
ment is made by reporting the additional
amount due on an adjusted return filed by
the due date for filing the employment tax
return for the return period in which the
error was ascertained. The due date for
filing the adjusted return is determined by
reference to the type of return (e.g., Form
941 or Form 944) being corrected, with-
out regard to the employer’s current filing
requirements. The amount of the under-
payment must be paid to the IRS by the
date the adjusted return is filed. Section
31.6205–1(a)(7) provides that agreement
forms, such as Form 2504, “Agreement to
Assessment and Collection of Additional
Tax and Acceptance of Overassessment
(Excise or Employment Tax),”which are
used in the context of an examination or
appeals process, constitute adjusted re-
turns. If an adjustment is reported but the
amount of the adjustment is not paid when
due, interest will accrue thereafter.
Section 31.6205–1(c) provides simi-
lar rules for correcting underpayments of
ITW. However, an interest-free adjust-
ment of ITW may only be made if the
error is ascertained within the same calen-
dar year that the wages to the employee
were paid, unless: (1) the underpayment
is attributable to an administrative error,
(2) section 3509 (a relief provision to
reduce employment tax liability in cer-
tain worker misclassification situations)
applies to determine the amount of the
underpayment, or (3) the adjustment is re-
ported on a Form 2504, Form 2504–WC,
“Agreement to Assessment and Collec-
tion of Additional Tax and Acceptance of
Overassessment in Worker Classification
Cases (Employment Tax),” or other agree-
ment forms prescribed by the IRS (such as,
Form 2504–AD, “Excise or Employment
Tax-Offer of Agreement to Assessment and
Collection of Additional Tax and Offer
of Acceptance of Overassessment,” and
Form 2504–S, “Agreement to Assessment
and Collection of Additional Tax and Ac-
ceptance of Overassessment (Including
Section 530 Statement)”).
Section 31.6205–1(a)(2) provides that
an interest-free adjustment may not be
made to correct an underpayment of any
employment tax if the failure to report
relates to an issue that was raised in an
examination of a prior return period or
if the employer knowingly underreported
its employment tax liability. In addition,
§ 31.6205–1(a)(6) provides that an in-
terest-free adjustment generally may not
be made after receipt of notice and de-
mand for payment or receipt of a Notice
of Determination of Worker Classification
(Notice of Determination).
Section7436grantstheU.S.TaxCourt
jurisdiction to review determinations by
the IRS regarding worker classification,
relief under section 530 of the Revenue
Act of 1978, and the proper amount of em-
ployment tax under those determinations.
The Notice of Determination serves as the
IRS’s determination for purposes of sec-
tion 7436, and therefore is a jurisdictional
prerequisite for seeking U.S. Tax Court
review in worker classification cases. In
order to provide a mechanism for taxpay-
ers to make an interest-free adjustment
yet receive a Notice of Determination
enabling them to petition the U.S. Tax
Court, § 31.6205–1(a)(6)(ii) permits an
employer, prior to receipt of a Notice of
Determination, to make a cash bond de-
posit in lieu of making a payment to stop
the accrual of any interest. The IRS treats
a cash bond deposit made prior to receipt
of a Notice of Determination as an inter-
est-free adjustment. Without this rule, an
employer would not be able to both make
an interest-free adjustment and receive
a Notice of Determination enabling it to
seek U.S. Tax Court review under section
7436. Moreover, this cash bond deposit
is the only way an employer can make an
interest-free adjustment other than filing
an adjusted return.
Section 31.6205–1(b)(2)(i) provides
that an adjusted return reporting an under-
payment must be filed within the period of
limitations for assessment under section
6501, which is generally 3 years after the
duedateofthereturnorthedatethereturn
was filed, whichever is later. In computing
the period of limitations for assessment,
section 6501(b)(2) provides that employ-
ment tax returns reporting FICA tax or
2009–52 I.R.B.952December 28, 2009

ITWforanyperiodendingwithorwithin
a calendar year filed before April 15 of the
succeeding calendar year are deemed filed
on April 15 of such succeeding calendar
year.
Section 31.6205–1(b)(3) provides that,
if an employer fails to file a return for a
return period solelybecause the employer
failed to treat any individuals properly
as employees for the return period (and,
therefore, failed towithhold and pay any
employer or employee FICA tax with re-
spect to wages paid to the employees) and
if the employer ascertains the error after
the due date of the return, the employer
shall correct the error as an interest-free
adjustment. The regulations also provide
the process for correcting this type of error.
Section 31.6205–1(c)(3) provides a simi-
lar rule for ITW; however, an adjustment
ofITWmayonlybemadeif(1)theerror
is ascertained within the same calendar
year that the wages to the employee were
paid, (2) section 3509 applies to deter-
mine the amount of the underpayment, or
(3) the adjustment is reported on a Form
2504, Form 2504–WC, or other prescribed
agreement form.
Section 31.6302–1(c)(7) provides that
an employer filing an adjusted return un-
der § 31.6205–1 in order to report taxes
that were accumulated in a prior return pe-
riod shall pay the amount of the adjust-
ment by the time it files the adjusted return;
the amount paid by the time the employer
files the adjusted return will be deemed
to have been timely deposited by the em-
ployer. Amounts not timely deposited may
be subject to the failure to deposit penalty
under section 6656.
Overpayments
In general, employers may choose to
correct employment tax overpayment er-
rors by either making an interest-free ad-
justment or filing a claim for refund after
an error has been ascertained. An error is
ascertained when the employer has suffi-
cient knowledge of the error to be able to
correct it.
Under § 31.6413(a)–1(a), an em-
ployer has a duty to assure that its em-
ployee’s rights to recover overcollected
taxes are protected by repaying or reim-
bursing overcollected amounts. Section
31.6413(a)–1(a) provides that before mak-
ing an adjustment of an overpayment of
FICA tax, an employer must repay or re-
imburse its employee in the amount of
the overcollection prior to the expiration
of the period of limitations on credit or
refund and, for FICA tax overcollected
in a prior year, must also secure the em-
ployee’s written statement confirming that
the employee has not made any previous
claims (or the claims were rejected) and
will not make any future claims for refund
or credit of the amount of the overcol-
lected FICA tax. Section 31.6413(a)–1(b)
provides a similar rule for overcollected
ITW; however, the employer is required to
repay or reimburse the employee prior to
the end of the calendar year in which the
wages were paid or an adjustment may not
be made to correct the error.
Section 31.6413(a)–2 provides the rules
for making interest-free adjustments for
overpayments of FICA tax or ITW, after
the employer has repaid or reimbursed the
employee the amount of any overcollec-
tion. An interest-free adjustment is made
by filing an adjusted return. The employer
is required to certify that it has repaid or
reimbursed the employee in the amount
of the overcollection. For adjustments of
employee FICA tax overcollected in prior
years, the employer must also certify that
it has secured the required written state-
ment from the employee. However, these
requirements do not apply to the extent that
the taxes were not withheld from the em-
ployee, nor do they apply if after having
made reasonable efforts the employer can-
not locate the employee or, for prior year
FICA tax, the employee did not provide
the required written statement. If, after the
employer’s reasonable efforts to secure the
required written statement, the employee
does not furnish it, the employer may make
an adjustment of the overpaid employer
FICA tax.
The employer must file an adjusted re-
turn before the expiration of the period of
limitations on credit or refund under sec-
tion 6511. However, § 31.6413(a)–2(d)(2)
provides that no overpayment adjustment
may be made if the overpayment relates
to a return period for which the period of
limitations on credit or refund under sec-
tion 6511 will expire within 90 days of fil-
ing the adjusted return. This is referred
to as the 90-day rule. The purpose of the
90-day rule is to give the IRS sufficient
time to process the request for an overpay-
ment adjustment. To satisfy the rule, an ad-
justed return must be filed 90 days before
the expiration of the period of limitations
on credit or refund under section 6511.
Section 6511(a) provides that a claim
for credit or refund must be made within
3 years from the time the return was filed
or 2 years from the time the tax was paid,
whichever is later, or, if no return was filed,
within 2 years from the time the tax was
paid. In computing the period of limita-
tions, section 6513(c) provides that em-
ployment tax returns reporting FICA tax or
ITW for any period ending with or within
a calendar year filed before April 15 of the
succeeding calendar year are deemed filed
on April 15 of such succeeding calendar
year. Likewise, section 6513(c) provides
that FICA tax or ITW paid during any pe-
riod ending with or within a calendar year
before April 15 of the succeeding calendar
year is deemed paid on April 15 of the suc-
ceeding calendar year.
Section 31.6402(a)–2 provides rules
under which a refund claim for an overpay-
ment of FICA tax may be made. Pursuant
to § 31.6402(a)–2(a), an employer has a
duty to assure that its employee’s rights to
recover overcollected taxes are protected
by repaying or reimbursing overcollected
amounts. Alternatively, an employer may
obtain the employee’s consent to the filing
of the refund claim, an option not avail-
able under the adjustment process. Under
Chicago Milwaukee Corp. v. U.S.,40
F.3d 373 (C.A. Fed. 1994), an employer
need not repay or reimburse its employ-
ees or obtain the employees’ consents for
the filing of a refund claim prior to filing
the claim, in order for the claim to be
valid. However, the employer must repay
or reimburse its employees or obtain the
employees’ consents before the IRS can
grant the claim.
The regulations require that an em-
ployer certify that it has repaid or re-
imbursed its employee or obtained the
employee’s consent to the filing of the
refund claim. For refund claims for em-
ployee FICA tax overcollected in prior
years, the employer must also certify that
it has obtained the employee’s written
statement confirming that the employee
has not made any previous claims (or the
claims were rejected) and will not make
any future claims for refund or credit of
the amount of the overcollection. How-
ever, these requirements do not apply to
the extent that the taxes were not withheld
December 28, 20099532009–52 I.R.B.

from the employee, nor do they apply if
after having made reasonable efforts the
employer cannot locate the employee or
the employee will not provide consent, or
the employee did not provide the required
written statement. If, after the employer’s
reasonable efforts to obtain the employee’s
consent or secure the required written
statement, the employee does not furnish
oneortheotherofthem,theemployermay
claim a refund of the overpaid employer
FICA tax. A claim must be filed before
the expiration of the period of limitations
on credit or refund under section 6511.
Section 31.6414–1 provides rules under
which a claim for credit or refund of an
overpayment of ITW can be made. An
employer that has overpaid ITW may file a
claim for refund of the overpayment only if
the amount was not actually withheld from
the employee’s wages.
As a result of T.D. 9405 and this rev-
enue ruling, Revenue Ruling 75–464,
1975–2 C.B. 474, is no longer determi-
native of when interest-free adjustments
are made in the context of an employment
tax examination. Accordingly, Rev. Rul.
75–464 is obsolete.
Situations
In each of these situations, except as
otherwise noted, (a) the amounts underre-
ported do not relate to an issue that was
raised in an examination of a prior period,
(b) the employer did not knowingly under-
report its employment tax liability, (c) the
employer did not receive notice and de-
mand for payment, and (d) the employer
did not receive a Notice of Determination.
Situation 1: Employer R timely filed its
2009 fourth quarter Form 941 on January
10, 2010 and timely paid all employment
taxreportedonthereturn.OnFebruary9,
2010, Employer R ascertains that it under-
withheld and underpaid FICA tax and ITW
with respect to its employees’ wages in the
fourth quarter of 2009.
Employer R must correct the underpay-
ment of FICA tax on a Form 941–X using
the adjustment process. Employer R must
file Form 941–X by the due date of the re-
turn for the return period in which it ascer-
tained the error (i.e.,April 30, 2010) and
pay the amount owed by the time it files
Form 941–X. If Employer R files Form
941–X by April 30, 2010 but does not pay
by the time it files, interest will accrue
from the date Form 941–X is filed until
payment is made. If payment is not made
until after receipt of a notice and demand
for payment, Employer R is entitled to an
interest-free adjustment for the period up
to the date the Form 941–X is filed, but
interest accrues from the date the Form
941–X is filed until payment is made.
Employer R may not use the interest-
free adjustment process outside an em-
ployment tax examination to correct the
underpayment of ITW, because the error
was not ascertained in the same year that
the wages were paid to the employees.
Situation 2: Employer S timely
filed its 2011 third quarter Form 941
on October 10, 2011 and timely paid
all employment tax reported on the
return. On December 2, 2011, Employer
S ascertains that it overwithheld and
overpaid ITW in the third quarter of
2011 and reported the overpayment on its
2011 third quarter Form 941. Employer
S repays the overcollected amounts to
its affected employees on December 29,
2011. Employer S files Form 941–X on
January 6, 2012 to correct the overpayment
using the adjustment process.
Because Employer S repaid its em-
ployees the amount of the overcollection
of ITW in the same year that the wages
were paid, Employer S may correct the
overpayment of ITW using the adjustment
process even though the adjusted return is
filed in a year after the wages were paid.
Employer S may not use the refund claim
process to correct the error because the
ITW was actually withheld from the em-
ployees’ wages. Since Employer S filed
Form 941–X on or before January 15,
2015, it is a timely adjustment under the
90-day rule.
Situation 3: Employer T timely filed
its 2006 fourth quarter Form 941 on
January 19, 2007, and timely paid all
employment tax reported on the return. On
December 1, 2009, Employer T ascertains
that it underpaid FICA tax with respect
to wages of Employees A, B, and C
and overwithheld and overpaid FICA
tax with respect to wages of Employee
D on its 2006 fourth quarter Form 941.
Employer T reimbursed Employee D in
the amount of the overcollection promptly
after ascertaining the overpayment.
The underpaid FICA tax with respect
to wages of Employees A, B, and C must
be corrected on Form 941–X using the
adjustment process. To correct the over-
paid FICA tax with respect to wages of
Employee D, Employer T may choose
between the adjustment and refund claim
processes because the error was ascer-
tained on December 1, 2009 (more than
90 days before the expiration of the period
of limitations on credit or refund) and be-
cause Employer T reimbursed Employee
D in the amount of the overcollection. If
Employer T obtained Employee D’s con-
sent to the filing of a refund claim instead
of reimbursing the overcollected FICA
tax, Employer T would have to use the
refund claim process to correct the over-
payment since the consent option is not
available for the adjustment process.
In order for Employer T to correct
the overpayment using the adjustment
process, the adjusted return must be filed
on or before January 15, 2010 (i.e.,90
days before the expiration of the period of
limitations on credit orrefund); otherwise,
after January 15, 2010, only the refund
claim process will be available to correct
theoverpayment. Tobetimely,arefund
claim must be filed on or before April 15,
2010 (i.e., the last day of the period of
limitations on credit or refund).
If Employer T chooses to correct
the overpayment using the adjustment
process, it can file one Form 941–X cor-
recting both the underpayment and the
overpayment. However, because an over-
payment adjustment may be made only
if the adjusted return is filed within 90
days of the expiration of the period of
limitations on credit or refund, Employer
T may correct both the overpayment and
underpayment on one Form 941–X only if
it files by January 15, 2010. When both
an overpayment and underpayment are
corrected on the same Form 941–X, the
amounts will be combined and may result
in either a credit or a balance due.
If Employer T chooses to correct
the overpayment using the refund claim
process, or it is unable to file Form 941–X
by January 15, 2010 (so that it must correct
the overpayment using the refund claim
process), it must file two separate Forms
941–X; one to correct the overpayment
using the refund claim process, and one
to correct the underpayment using the ad-
justment process. A refund claim and an
adjustment may not be made on the same
Form 941–X. Employer T must file the
Form 941–X reporting the underpayment
2009–52 I.R.B.954December 28, 2009

by January 31, 2010 and pay any amount
due by the date the Form 941–X is filed. If
Employer T files the Form 941–X report-
ing the underpayment by January 31, 2010
and pays the amount due with that Form
941–X the amount will be deemed to have
been timely deposited. If Employer T does
not pay the amount due with that Form
941–X, interest will accrue from the date
the Form 941–X is filed until the time of
payment. The overpayment corrected on
the separate Form 941–X using the refund
claim process will be refunded, plus any
interest that applies, unless Employer T
owes other taxes, penalties, or interest.
An employer may not designate an over-
payment from one Form 941–X to pay an
amount due on a separate Form 941–X.
Situation 4: Employer U timely filed
its 2007 Form 944 and timely paid all em-
ployment tax reported on the return. In
February 2010, the IRS notifies Employer
U that its filing requirement has changed
and it is required to file Form 941, rather
than Form 944, for calendar year 2010 and
thereafter. On May 23, 2010, Employer U
ascertains that it underpaid FICA tax on its
2007 Form 944.
Employer U must correct the underpay-
ment of FICA tax using the adjustment
process. Because Employer U is correct-
inganerroronapreviouslyfiledForm
944, it must file a Form 944–X, “Adjusted
Employer’s ANNUAL Federal Tax Return
or Claim for Refund,” to make the correc-
tion since the “X” form filed must corre-
spond to the return being corrected. Em-
ployer U does not consider its current fil-
ing requirement (i.e., Form 941) at the time
the “X” form is filed to determine the ap-
propriate “X” form to file and the date the
“X” form is due. Employer U must file
Form 944–X by January 31, 2011, the due
date of the return for the return period in
which it ascertained the error, and pay the
amount owed by the time it files Form
944–X. If Employer U timely files Form
944–X but does not pay by the time it files,
interest will accrue from the date Form
944–X is filed until payment is made. If
payment is not made until after receipt of
notice and demand for payment, Employer
U is still entitled to an interest-free adjust-
ment for the period up to the date the Form
944–X is filed, but interest accrues from
the date the Form 944–X is filed until pay-
ment is made.
Situation 5: On February 6, 2012, Em-
ployer V, a sole proprietor, ascertains that
he should have treated his bookkeeper as
an employee, rather than as an indepen-
dent contractor, for employment tax pur-
poses. The bookkeeper worked each week
for Employer V since March 2011. Be-
cause Employer V did not have any other
employees, he never filed any Forms 941
and never withheld or paid any employ-
ment tax.
Employer V may correct the underpay-
ment of FICA tax for each quarter in 2011
using the adjustment process because he
failed to file the returns for 2011 due to
his failure to treat any individuals as em-
ployees. However, because the error was
not ascertained in the same year the wages
were paid, Employer V may correct the
underpayment of ITW using the adjust-
ment process for each quarter in 2011 only
if section 3509 applies to determine the
FICA tax and ITW liability.
To make the adjustment for each quar-
ter in 2011, Employer V must file a Form
941 and a Form 941–X for each quarter
in 2011, as provided in the Instructions
for Form 941–X. Employer V must file
these returns by April 30, 2012 and pay
the amount owed by the time he files the
returns. If Employer V files by April 30,
2012 but does not pay by the time he files,
interest will accrue from the date Form
941–X is filed until payment is made. Be-
cause Employer V ascertained the error
prior to filing the return for the first quar-
ter of 2012 there is no adjustment to be
made for that quarter; however, Employer
V must file his 2012 first quarter Form 941
and report and pay the correct amounts of
FICA tax and ITW for that quarter and
must file Forms 941 for any future quarters
in which he pays wages to the bookkeeper
or other employees.
Situation 6: Household Employer W
timely filed his 2007 Form 1040, “U.S. In-
dividual Income Tax Return,” with an at-
tached Schedule H (Form 1040), “House-
hold Employment Taxes,” on April 8, 2008,
and timely paid all income and employ-
ment taxes reported on the return. On
April 18, 2009, Household Employer W
ascertains that he overwithheld and over-
paid FICA tax on wages paid to a house-
hold employee on his 2007 return.
Household Employer W can choose
between the adjustment and refund claim
processes to correct the overpayment on
his 2007 return because the error was as-
certained more than 90 days before the
expiration of the period of limitations on
credit or refund. Regardless of the process
chosen, Household Employer W must
make the correction by filing Form 1040X,
“Amended U.S. Individual Income Tax Re-
turn,” and attaching a corrected Schedule
H (Form 1040), as provided in Publication
926,Household Employer’s Tax Guide.If
Household Employer W chooses the re-
fund claim process, the Form 1040X with
the corrected Schedule H (Form 1040)
must be filed by April 15, 2011. However,
if Household Employer W chooses the
adjustment process, the Form 1040X with
the corrected Schedule H must be filed by
January 15, 2011 under the 90 day rule.
If Household Employer W chooses the
adjustment process, he must repay or re-
imburse his employee in the amount of
the overcollection before filing the Form
1040X with the attached corrected Sched-
ule H (Form 1040). Household Employer
W can then adjust his return by indicating
on the appropriate line of the Form 1040X
that he wants the overpayment applied as a
payment of estimated taxes on Form 1040,
for the year in which the corrected Sched-
ule H (Form 1040) is filed.
If Household Employer W chooses the
refund claim process, he must either repay
or reimburse his employee in the amount
of the overcollection or obtain the em-
ployee’s consent to file the claim for re-
fund for the employee tax. Household
Employer W can then claim a refund by
indicating on the appropriate line of the
Form 1040X that he wants the overpay-
ment refunded. The overpayment will be
refunded, plus any interest that applies, un-
less Household Employer W owes other
taxes, penalties, or interest.
Situation 7: Employer X timely filed its
2006 Form 943 on January 26, 2007 and
timely paid all employment tax reported
on the return. On April 5, 2010, Employer
X ascertains that it overpaid FICA tax on
wages paid to its employees on its 2006
Form 943. Employer X does not have suf-
ficient time to repay or reimburse its em-
ployees or obtain their consents and also
timely file a claim for refund.
In order to correct the overpayment,
Employer X must file Form 943–X, “Ad-
justed Employer’s Annual Federal Tax
Return for Agricultural Employees or
Claim for Refund.” Employer X may not
December 28, 20099552009–52 I.R.B.

correct the error using the adjustment
process because the error was ascertained
toolatefortheadjustedreturntobefiled
by January 15, 2010, as required under
the 90-day rule. To correct the error
using the refund claim process, Employer
X must file Form 943–X by April 15,
2010 in order for the claim to be timely.
Notwithstanding the fact that Employer X
has not repaid or reimbursed its employees
or obtained its employees’ consents, if
Employer X files Form 943–X by April
15, 2010, the claim will be considered
timely filed. However, before the IRS
can grant the claim, Employer X must
certify that it has repaid or reimbursed its
employees, or obtained their consents, and
secured the employees’ written statements
confirming that the employees have not
made any previous claims (or the claims
were rejected) and will not make any
future claims for refund or credit of the
amount of the overcollected FICA tax.
Situation 8: In 2010, in the course of
an employment tax examination, IRS de-
termines that Employer Y underpaid FICA
tax and ITW with respect to wages of its
employees on its 2008 fourth quarter Form
941. Employer Y signs Form 2504 to
agree to the assessment and submits it to
the examiner, during the employment tax
examination.
The determination by the IRS that Em-
ployer Y underpaid FICA tax and ITW on
its 2008 fourth quarter Form 941 is treated
as an error ascertained at the time Em-
ployer Y submits the signed Form 2504.
Submitting a signed Form 2504 satisfies
the requirement that an adjusted return be
filed; therefore, Employer Y is entitled to
an interest-free adjustment.
While the error was not ascertained in
the same year that the wages were paid
to the employees, the interest-free adjust-
ment applies to both the FICA tax and ITW
because the adjustment is reported on a
signed Form 2504. In order for the adjust-
ment to be entirely interest-free, Employer
Y must pay the amount due when it sub-
mits the signed Form 2504. Otherwise, in-
terest will accrue from the date Employer
Y submits the signedForm 2504. Because
an adjusted return (i.e., Form 2504) was
filed, even if payment is not made until af-
ter receipt of notice and demand, Employer
Y is nevertheless entitled to interest-free
treatment up to the date Employer Y sub-
mits the signed Form 2504; however, in-
terest will accrue from the date the signed
Form 2504 is submitted until the date of
payment.
Situation 9: The same facts exist as
in situation (8), except that Employer Y
does not agree with the examiner’s deter-
mination and exercises its appeal rights.
No agreement is reached in Appeals. An
Appeals closing letter, dated November 3,
2010, is sent to Employer Y informing
Employer Y that it will receive notice and
demand for payment of tax and interest
owed and that it has the right to contest
the Appeals’ determination in the U.S.
District Court or theU.S. Court of Federal
Claims if it files a refund claim and later
sues for a refund. The determination by
Appeals that Employer Y underpaid FICA
taxandITWonits2008fourthquarter
Form 941 is treated as an error ascertained
on November 3, 2010, the date of the
Appeals closing letter. Because Employer
Y does not submit a signed Form 2504, an
adjusted return has not been filed. As a
result, no interest-free adjustment has been
made, and Employer Y owes the amount
due plus interest accrued from the due date
of the return for which the underpayment
was made (i.e.,January 31, 2009, the
due date of the return for the 2008 fourth
quarter Form 941). However, if Employer
Y submits a signed Form 2504 by the due
date of the return for the return period
in which the error was ascertained (i.e.,
January 31, 2011) and before receipt of
notice and demand for payment, Employer
Y is entitled to an interest-free adjustment.
Submitting a signed Form 2504 will not
prevent Employer Y from filing a refund
claim to make it possible to contest its
liability in the U.S. District Court or the
U.S. Court of Federal Claims.
If Employer Y does not submit a signed
Form 2504 by January 31, 2011, but pays
the amount due prior to receiving notice
and demand, Employer Y has not made an
interest-free adjustment, and Employer Y
will owe interest accrued from the due date
of the return for which the underpayment
was made (i.e.,from January 31, 2009).
Situation 10: In 2011, in the course
of an employment tax examination, IRS
determines that Employer Z misclassified
some of its employees as independent
contractors for the first quarter of 2009.
Employer Z does not agree with the ex-
aminer’s determination and exercises its
appeal rights. No agreement is reached in
Appeals, and Employer Z does not sign
Form 2504–WC; however, Employer Z
makes a cash bond deposit to stop the
accrual of interest. A Notice of Determi-
nation is issued, and Employer Z subse-
quently files a petition with the U.S. Tax
Court.
The error is treated as having been as-
certained at the time Employer Z makes
the cash bond deposit. Because Employer
Z made a cash bond deposit prior to receiv-
ing the Notice of Determination, it is enti-
tled to an interest-free adjustment.
EFFECT ON OTHER REVENUE
RULING(S)
Rev. Rul. 75–464 is obsoleted.
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is Ligeia M. Donis of the Office of
Division Counsel/Associate Chief Coun-
sel (Tax Exempt & Government Entities).
For further information regarding this rev-
enue ruling, contact Ligeia M. Donis at
(202) 622–0047 (not a toll-free call).
Section 6402.—Authority to
Make Credits or Refunds
Final regulations modify the process for making
claims for refund of overpayments of Federal Insur-
ance Contribution Act (FICA) and Railroad Retire-
ment Tax Act (RRTA) taxes under section 6402 of the
Code. See Rev. Rul. 2009-39, page 951.
Section 6413.—Special
Rules Applicable to Certain
Employm
ent Taxes
Final re
gulations modify the process for making
intere
st-free adjustments for overpayments of Federal
Insura
nce Contribution Act (FICA) and Railroad Re-
tireme
nt Tax Act (RRTA) taxes and Federal income
tax wit
hholding (ITW) under section 6413(a) of the
Code. S
ee Rev. Rul. 2009-39, page 951.
Section 6414.—Income
Tax Withheld
Final regulations modify the process for making
claims for refund of overpayments of Federal income
tax withholding (ITW) under section 6414 of the
Code. See Rev. Rul. 2009-39, page 951.
2009–52 I.R.B.956December 28, 2009

Section 6621.—Determina-
tion of Rate of Interest
26 CFR 301.6621–1: Interest rate.
Interest rates; underpayment and
overpayments.The rate for interest deter-
mined under section 6621 of the Code for
the calendar quarter beginning January 1,
2010, will be 4 percent for overpayments
(3 percent in the case of a corporation),
4 percent for underpayments, and 6 percent
for large corporate underpayments. The
rate of interest paid on the portion of a
corporate overpayment exceeding $10,000
will be 1.5 percent.
Rev. Rul. 2009–37
Section 6621 of the Internal Revenue
Code establishes the rates for interest
on tax overpayments and tax underpay-
ments. Under section 6621(a)(1), the
overpayment rate is the sum of the federal
short-term rate plus 3 percentage points
(2 percentage points in the case of a cor-
poration), except the rate for the portion
of a corporate overpayment of tax exceed-
ing $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 underpayment 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 calen-
dar quarter beginning after that month.
Section 6621(b)(2)(B) provides that in de-
termining the addition to tax under section
6654 for failure to pay estimated tax for
any taxable year, the federal short-term
rate that applies during the third month
following the taxable year also applies
during the first 15 days of the fourth
month following the taxable year. 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) dur-
ing October 2009 is the rate published
in Revenue Ruling 2009–35, 2009–44
I.R.B. 568, to take effect beginning
November 1, 2009. The federal short-term
rate, rounded to the nearest full percent,
based on daily compounding determined
during the month of October 2009 is
1 percent. Accordingly, an overpayment
rate of 4 percent (3 percent in the case
of a corporation) and an underpayment
rate of 4 percent are established for the
calendar quarter beginning January 1,
2010. The overpayment rate for the
portion of a corporate overpayment
exceeding $10,000 for the calendar quarter
beginning January 1, 2010, is 1.5 percent.
The underpayment rate for large corporate
underpayments for the calendar quarter
beginning January 1, 2010, is 6 percent.
These rates apply to amounts bearing
interest during that calendar quarter.
Under section 6621(b)(2)(B), the 4 per-
cent rate also applies to estimated tax un-
derpayments for the first calendar quarter
in 2010 and for the first 15 days in April
2010.
Interest factors for daily compound in-
terest for annual rates of 1.5 percent, 3 per-
cent, 4 percent, and 6 percent are published
in Tables 8, 11, 13, and 17 of Rev. Proc.
95–17, 1995–1 C.B. 556, 562, 565, 567,
and 571.
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 Of-
fice of Associate Chief Counsel (Proce-
dure & Administration). For further infor-
mation regarding this revenue ruling, con-
tact Ms. Colbert-James at (202) 622–8143
(not a toll-free call).
TABLE O
F 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, 1982
12%
Table 5, pg. 560
Feb. 1, 1982—Dec. 31, 198220%
Table 6, pg. 560
December 28, 20099572009–52 I.R.B.

TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975 — PERIODS ENDING DEC. 31, 1986
OVERPAYMENTS AND UNDERPAYMENTS – Continued
PERIODRATE
In 1995–1 C.B.
DAILY RATE TABLE
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
Jan. 1, 1989—Mar. 31, 198910%
25579
11%27
581
Apr. 1, 1989—Jun. 30, 198911%27
581
12%29
583
Jul. 1, 1989—Sep. 30, 198911%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—Jun. 30, 199010%
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, 199110%
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, 19919%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, 19927%676218%69623
Oct. 1, 1992—Dec. 31, 19926%
65
6197%67621
Jan. 1, 1993—Mar. 31, 19936%17
571
7%19
573
Apr. 1, 1993—Jun. 30, 19936%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, 1994—Mar. 31, 19946%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, 1994—Dec. 31, 19948%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, 19967%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, 19978%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
2009–52 I.R.B.958December 28, 2009

TABLE OF INTEREST RATES
FROM JAN. 1, 1987 — Dec. 31, 1998 – Continued
OVERPAYMENTSUNDERPAYMENTS
1995–1 C.B.1995–1 C.B.
RATE TABLEPGRATE TABLEPG
Oct. 1, 1997—Dec. 31, 19978%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, 19987%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.
RATETABLEPG
Jan. 1, 1999—Mar. 31, 19997%19
573
Apr. 1, 1999—Jun. 30, 19998%21
575
Jul. 1, 1999—Sep. 30, 19998%21
575
Oct. 1, 1999—Dec. 31, 19998%21
575
Jan. 1, 2000—Mar. 31, 20008%69623
Apr. 1, 2000—Jun. 30, 20009%71
625
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
December 28, 20099592009–52 I.R.B.

TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 — PRESENT
NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS – Continued
1995–1 C.B.
RATETABLEPG
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
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, 19997%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—Mar. 31, 20007%676218%69623
Apr. 1, 2000—Jun. 30, 20008%696239%71
625
Jul. 1, 2000—Sep. 30, 20008%696239%71
625
Oct. 1, 2000—Dec. 31, 20008%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, 20016%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, 2003—Mar. 31, 20034%13
5675%15569
Apr. 1, 2003—Jun. 30, 20034%13
5675%15569
Jul. 1, 2003—Sep. 30, 20034%13
5675%15569
Oct. 1, 2003—Dec. 31, 20033%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, 2004—Sep. 30, 20043%
59
6134%61
615
Oct. 1, 2004—Dec. 31, 20044%61
6155%
63617
Jan. 1, 2005—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, 20066%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, 20067%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, 20077%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
2009–52 I.R.B.960December 28, 2009

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
Oct. 1, 2008—Dec. 31, 2008
5%
636176%
65
619
Jan. 1, 2009—Mar. 31, 20094%13
5675%15569
Apr. 1, 2009—Jun. 30, 20093%11
565
4%13
567
Jul. 1, 2009—Sep. 30, 20093%11
565
4%13
567
Oct. 1, 2009—Dec. 31, 20093%11
565
4%13
567
Jan. 1, 2010—Mar. 31, 20103%11
565
4%13
567
TABLE OF INTEREST RATES FOR
LARGE CORPORATE 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—Sep. 30, 199112%29
583
Oct. 1, 1991—Dec. 31, 199112%29
583
Jan. 1, 1992—Mar. 31, 199211%
75
629
Apr. 1, 1992—Jun. 30, 199210%73627
Jul. 1, 1992—Sep. 30, 199210%73627
Oct. 1, 1992—Dec. 31, 19929%71
625
Jan. 1, 1993—Mar. 31, 19939%23
577
Apr. 1, 1993—Jun. 30, 19939%23
577
Jul. 1, 1993—Sep. 30, 19939%23
577
Oct. 1, 1993—Dec. 31, 19939%23
577
Jan. 1, 1994—Mar. 31, 19949%23
577
Apr. 1, 1994—Jun. 30, 19949%23
577
Jul. 1, 1994—Sep. 30, 199410%
25579
Oct. 1, 1994—Dec. 31, 199411%27
581
Jan. 1, 1995—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, 199611%
75
629
Apr. 1, 1996—Jun. 30, 199610%73627
Jul. 1, 1996—Sep. 30, 199611%
75
629
Oct. 1, 1996—Dec. 31, 199611%
75
629
Jan. 1, 1997—Mar. 31, 199711%27
581
Apr. 1, 1997—Jun. 30, 199711%27
581
Jul. 1, 1997—Sep. 30, 199711%27
581
Oct. 1, 1997—Dec. 31, 199711%27
581
Jan. 1, 1998—Mar. 31, 199811%27
581
Apr. 1, 1998—Jun. 30, 199810%
25579
Jul. 1, 1998—Sep. 30, 199810%
25579
Oct. 1, 1998—Dec. 31, 199810%
25579
Jan. 1, 1999—Mar. 31, 19999%23
577
Apr. 1, 1999—Jun. 30, 199910%
25579
Jul. 1, 1999—Sep. 30, 199910%
25579
Oct. 1, 1999—Dec. 31, 199910%
25579
Jan. 1, 2000—Mar. 31, 200010%73627
Apr. 1, 2000—Jun. 30, 200011%
75
629
Jul. 1, 2000—Sep. 30, 200011%
75
629
December 28, 20099612009–52 I.R.B.

TABLE OF INTEREST RATES FOR
LARGE CORPORATE UNDERPAYMENTS
FROM JANUARY 1, 1991 — PRESENT – Continued
1995–1 C.B.
RATETABLEPG
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
TABLE OF INTEREST RATES FOR CORPORATE
OV
ERPAYMENTS EXCEEDING $10,000
FROM JANUARY 1, 1995 — PRESENT
1995–1 C.B.
RATETABLEPG
Ja
n. 1, 1995—Mar. 31, 1995
6.
5%
18
57
2
Apr. 1, 1995—Jun. 30, 19957.5%
20
574
Jul. 1, 1995—Sep. 30, 19956.5%
18
572
O
ct. 1, 1995—Dec. 31, 1995
6
.5%
18
5
72
J
an. 1, 1996—Mar. 31, 1996
6.5%
6
6
6
20
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
2009–52 I.R.B.962December 28, 2009

TABLE OF INTEREST RATES FOR CORPORATE
OVERPAYMENTS E
XCEEDING $10,000
FROM JANUARY 1, 1995 — PRESENT – Continued
1995–1 C.B.
RATETABLEPG
Apr. 1, 1997—Jun. 30, 1997
6.5%
18
572
Jul. 1, 1997—Se
p. 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, 200
0—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, 20
01—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, 2
002—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, 2005
3.5
%
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
56
8
Ju
l. 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
5
70
A
pr. 1, 2007—Jun. 30, 2007
5.5%
1
6
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
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
December 28, 20099632009–52 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Guidance on the Application
of § 409A(a) to Changes
to Nonqualified Deferred
Compensation Plans to
Comply with an Advisory
Opinion of the Office of the
Special Master for TARP
Executive Compensation
Notice 2009–92
I. Introduction
This notice provides that, subject to cer-
tain conditions, the compliance by a fi-
nancial institution (TARP recipient) that
has received financial assistance under the
Troubled Asset Relief Program (TARP)
with an advisory opinion of the Office
of the Special Master for TARP Execu-
tive Compensation (the Special Master)
determining that changing the time or form
of payment of compensation to a service
provider of the TARP recipient, or condi-
tioning payment upon a TARP-related con-
dition such as the prior repayment of some
or all of the financial assistance, or both,
is necessary for the payment or arrange-
ment to be consistent with the standards set
forth in Treasury’s Interim Final Rule for
TARP Compensation and Corporate Gov-
ernance (74 FR 28394), will not result in
a failure to comply with the requirements
of § 409A(a) of the Internal Revenue Code
(Code). This notice applies only to TARP
recipients and the service providers of such
TARP recipients and only to the extent that
the compensation paid by the TARP recip-
ient to a service provider of that TARP re-
cipient is addressed by an advisory opinion
of the Special Master issued after Septem-
ber 30, 2009. The Treasury Department
and the IRS intend to amend the regula-
tions under § 409A to incorporate guid-
ance set forth in this notice as necessary.
II. Background
A.Section 409A of the Code
Section 409A prescribes certain re-
quirements applicable to nonqualified
deferred compensation plans. If a plan
does not meet those requirements, partic-
ipants in the plan are required to include
in income immediately compensation
otherwise deferred under the plan and
pay taxes on such income, including an
additional 20% taxand a tax generally
based upon the underpayment interest
that would have accrued had the amount
been includible in income when first de-
ferred or, if later, vested. As provided
by § 409A(a)(1)(A)(i), a nonqualified de-
ferred compensation plan must comply
with the requirements of § 409A(a) both
in form and in operation. Section 409A(e)
provides that the Secretary of the Treasury
(Secretary) shall prescribe such regula-
tions as may be necessary or appropriate
to carry out the purposes of § 409A. On
April 17, 2007, the Treasury Department
and the IRS issued final regulations under
§ 409A that apply to taxable years begin-
ning on or after January 1, 2009 (72 Fed.
Reg. 19234).
Section 409A(a)(4) provides certain
rules with respect to making an election
to defer compensation under a nonquali-
fied deferred compensation plan. Section
409A(a)(4)(B)(i) provides generally that
a plan may permit compensation for ser-
vices performed during a taxable year to
be deferred at the participant’s election
only if the election to defer such com-
pensation is made not later than the close
of the preceding taxable year or at such
other time as is provided in regulations.
Section 409A(a)(4)(C) provides that a
nonqualified deferred compensation plan
that permits, under a subsequent election
(a subsequent deferral election), a delay
in a payment or a change in the form of
payment must require that (i) such elec-
tion will not take effect until at least 12
months after the date on which the elec-
tion is made, (ii) in the case of an election
related to a payment not made on account
of disability, death or the occurrence of
an unforeseeable emergency, the payment
governed by the election will be deferred
for a period of not less than five years from
the date the payment would otherwise
have been made, and (iii) any election
related to a payment to be made at a spec-
ified time or pursuant to a fixed schedule
will be made not less than 12 months prior
to the date of the first scheduled payment.
Section 1.409A–2(b)(7) of the Income
Tax Regulations provides that a payment
may be delayed to a date after a designated
payment date under certain circumstances,
and that in these circumstances the appli-
cable plan provision will not fail to meet
the requirements of establishing a permis-
sible payment event and the delay in the
payment will not constitute a subsequent
deferral election, as long as the service re-
cipient treats all payments to similarly sit-
uated service providers on a reasonably
consistent basis. Such circumstances in-
clude (i) the delay of payments subject to
§ 162(m) to the extent the service recip-
ient reasonably anticipates that if the pay-
ments were made as scheduled, the service
recipient’s deduction with respect to such
payments would not be permitted due to
the application of § 162(m), (ii) the de-
lay of payments to the extent the service
recipient reasonably anticipates that mak-
ing the payments will violate Federal se-
curities laws or other applicable law, and
(iii) such other events and conditions as the
Commissioner may prescribe in generally
applicable guidance published in the Inter-
nal Revenue Bulletin.
Section 409A(a)(3) provides that, ex-
cept as provided in regulations issued
by the Secretary, a nonqualified deferred
compensation plan may not permit the
acceleration of the time or schedule of pay-
ment of compensation deferred under the
plan. Section 1.409A–3(j) further provides
that a nonqualified deferred compensa-
tion plan may not permit the acceleration
ofthetimeorscheduleofanypayment,
and no such accelerated payment may be
made whether or not provided for under
the terms of the plan, except pursuant to
one of the exceptions set forth under such
section.
Under § 1.409A–1(b)(4), an amount
that constitutes a short-term deferral is not
a deferral of compensation for purposes
of § 409A. Generally, an amount must
be paid not later than the end of the ap-
plicable 2
1
/2month period (as defined in
§ 1.409A–1(b)(4)) in order to qualify as
a short-term deferral. The applicable 2
1
/2
month period is the period ending on the
15
th
day of the third month following the
later of the end of the service provider’s
first taxable year in which the right to pay-
ment is no longer subject to a substantial
risk of forfeiture or the end of the service
2009–52 I.R.B.964December 28, 2009

recipient’s first taxable year in which such
right is no longer subject to such risk. Un-
der § 1.409A–1(b)(4)(ii), a payment that
otherwise qualifies as a short-term deferral
but is made after the applicable 2
1
/2month
period may continue to so qualify if (i)
it was administratively impracticable to
make the payment by the end of such pe-
riod and, as of the date the legally binding
right to the compensation arose, such im-
practicability was unforeseeable, provided
that the payment is made as soon as admin-
istratively practicable or (ii) making such
paymentbytheendofsuchperiodwould
have jeopardized the ability of the service
recipient to continue as a going concern,
provided that the payment is made as soon
as it would no longer have such effect. In
addition, such a payment may continue
to so qualify if the service recipient rea-
sonably anticipates that § 162(m) would
disallow its deduction for such payment
and, at the time the legally binding right
to the payment arose, a reasonable person
would not have anticipated such disal-
lowance, so long as the payment is made
as soon as reasonably practicable follow-
ing the first date on which the service
recipient anticipatesor reasonably should
anticipate that, if it made the payment on
such date, § 162(m) would not limit its
ability to deduct the payment.
B.TheTroubledAssetReliefProgram
(TARP)
In October, 2008, the Department of the
Treasury (Treasury) established the TARP
under the Emergency Economic Stabiliza-
tion Act of 2008, as amended (12 U.S.C.
5021et seq.) (EESA). EESA provided
immediate authority and facilities that
the Secretary of the Treasury (Secretary)
could use to restore liquidity and stability
to the financial system. Section 101(a) of
EESA authorizes the Secretary to establish
the TARP to “purchase, and to make and
fund commitments to purchase, troubled
assets from any financial institution,
on such terms and conditions as are
determined by the Secretary, and in
accordance with this Act and policies and
procedures developed and published by
the Secretary.” Section 101(c) of EESA
authorizes the Secretary to take such
actions as the Secretary deems necessary
to carry out the authorities in EESA,
including without limitation issuing such
regulations and other guidance as may be
necessary or appropriate to define terms
or carry out the authorities or purposes of
EESA.
The American Recovery and Reinvest-
ment Act of 2009 (ARRA) was signed into
law on February 17, 2009. Title VII of
Division B of ARRA amended in its en-
tirety section 111 of EESA. Section 111 of
EESA, both as originally promulgated and
as amended, provides that certain entities
that receive financial assistance from Trea-
sury under the TARP (TARP recipients)
will be subject to specified executive com-
pensation and corporate governance stan-
dards to be established by the Secretary.
C.The Interim Final Rule and the Office
of the Special Master for TARP Executive
Compensation
On June 15, 2009, Treasury issued an
Interim Final Rule setting forth the rules
on executive compensation and corporate
governance applicable to TARP recipients
(74 FR 28394). The rules apply solely
to TARP recipients, as defined in §30.1
(Q–1) of the Interim Final Rule. Sec-
tion 30.16 (Q–16) of the Interim Final
Rule establishes an Office of the Special
Master for TARP Executive Compensa-
tion (the Special Master). Sections 30.11
and 30.16(a) (Q–11 and Q–16(a)) pro-
vide that the Special Master must approve
any compensation payments to, and the
compensation structure of, certain em-
ployees of a TARP recipient receiving
exceptional assistance (Exceptional Assis-
tance Recipient). The employees affected
generally are the employees subject to the
bonus payment limitations under section
111(b)(3)(D) of EESA, who generally
are the TARP recipient’s senior execu-
tive officers (SEOs) whose compensation
is subject to disclosure under Securities
and Exchange Commission rules, and
a number (determined by the level of
TARP assistance received) of the next
most highly compensated employees. In
addition, the SpecialMaster must approve
the compensation structures of any other
executive officers of the Exceptional As-
sistance Recipient, and certain other most
highly compensated employees. Section
30.16(a)(3) (Q–16(a)(3)) provides that this
determination is based upon whether the
compensation structure for the affected
employee, including in certain instances
the amount payable or potentially payable
under such compensation structure, will
or may result in payments that are incon-
sistent with the purposes of section 111 of
EESA or TARP, or are otherwise contrary
to the public interest. For TARP recipients
that are not Exceptional Assistance Recip-
ients and their employees, and for other
employees or payments to employees of
Exceptional Assistance Recipients (such
as payments not subject to section 111 of
EESA), section 30.16(a)(4) (Q–16(a)(4))
provides that a TARP recipient or TARP
recipient employee may request an advi-
sory opinion from the Special Master as
to whether a compensation structure is, or
willormayresultinpaymentsthatare,
inconsistent with the purposes of EESA or
TARP, or otherwise contrary to the public
interest. Section 30.16(a)(4) (Q–16(a)(4))
further provides that the Special Master
may render such an advisory opinion at
his own initiative. An advisory opinion is
not binding upon a TARP recipient receiv-
ing the opinion, but, under § 30.16(c)(3)
(Q–16(c)(3)), may be relied upon by that
TARP recipient and its employees, if that
TARP recipient and its employees comply
with the advisory opinion in all respects.
1
D.Interaction Between Advisory Opinions
and § 409A
To render a favorable advisory opin-
ion, the Special Master may determine that
changes to a compensation arrangement,
including the time and form of payment,
are necessary for the arrangement, or pay-
ments under the arrangement, to be consis-
tent with the purposes of EESA or TARP,
and otherwise consistent with the public
interest. The Special Master may also de-
termine that to be consistent with the pur-
poses of EESA or TARP, and otherwise
consistent with the public interest, a pay-
ment must be subject to certain TARP-re-
1
For purposes of this notice, an advisory opinion includes any portion of a determination with respect to certain employees of Exceptional AssistanceRecipients (see §30.16 Q–16(a)(3)(i) and
(ii)), to the extent such portion of the determination addresses compensation arrangements or rights to payments that are not required to be approvedby the Special Master under §30.16(a)(3)(i)
or (ii) (Q–16(a)(3)(i) or (ii)) of the Interim Final Rule, for example because the determination addresses amounts payable pursuant to valid writtenemployment contracts not subject to section
111 of EESA by virtue of the grandfathering rule of section 111(b)(3)(D)(iii) of EESA.
December 28, 20099652009–52 I.R.B.

lated conditions, such as the prior repay-
ment of some or all of the financial as-
sistance received by the TARP recipient.
The Special Master and TARP recipients
have raised the issue of the application of
§ 409A(a) to such changes in the time and
form of payment of a compensation ar-
rangement and of the tax consequences un-
der that section of adherence to conditions
that may apply. Specifically, TARP re-
cipients have noted that compliance with
changes as part of the overall restructuring
of a compensation arrangement would of-
ten result in delays in payments and pos-
sibly acceleration of certain payments that
would not comply with § 409A(a). Thus,
in the absence of the guidance provided for
in this notice, the TARP recipient would
be forced to choose between (i) making
a payment under the original terms of an
agreement that the Special Master deter-
mined to be inconsistent with the purposes
of EESA or TARP, or otherwise contrary to
the public interest, or (ii) instead making a
payment that the Special Master has deter-
mined to be consistent with the purposes of
EESA or TARP, and otherwise to be con-
sistent with the public interest, but that also
would result in severe adverse tax con-
sequences to the individual receiving the
payment. The application of § 409A(a) in
these circumstances would produce a dis-
incentive for TARP recipients to comply
with the Special Master’s advisory opin-
ions and act in accordance with the pub-
lic interest, severely diminishing the Spe-
cial Master’s ability to fulfill his intended
role and damaging the entire TARP pro-
gram. Furthermore, in these circumstances
the changes in the time and form of pay-
ment result from a determination by the
Special Master that the original time and
form of payment terms were inconsistent
with the purposes of EESA or TARP or
otherwise contrary to the public interest.
Finally, the final regulations under § 409A
were promulgated before the enactment of
EESA and ARRA and did not consider or
address the need for an exception for a de-
lay or acceleration of a payment under a
nonqualified deferred compensation plan
as a condition of receiving a favorable ad-
visory opinion.
Section 1.409A–2(b)(7)(iii) provides
that the Commissioner, in guidance of
general applicability, may prescribe events
that constitute exceptions to the prohi-
bition on the delay of payment set forth
under § 409A. Sections 1.409A–2(b)(7)(i)
and (ii) provide specific exceptions al-
lowing for the delay of payment to the
extent making the payment would result
in the payment not being deductible under
§ 162(m), or would result in violations of
laws, including Federal securities laws and
other applicable laws. These provision of
the regulations resolve conflicts between
§ 409A and other laws by providing excep-
tions to the limitations under § 409A on
further deferral of nonqualified deferred
compensation, where compliance with
those requirements would subject the em-
ployer to unfavorable tax treatment under
§ 162(m) or would violate other applicable
law. The Treasury Department and IRS
have determined that a delay in payment
to comply with an advisory opinion of
the Special Master in accordance with the
guidance set forth in section III of this
notice is another such event and the disclo-
sure by the TARP recipient to the Special
Master of all similarly situated service
providers and, if requested by the Special
Master, such information as may be neces-
sary to make those service providers also
subject to an advisoryopinion, will satisfy
the condition that the TARP recipient treat
all payments to similarly situated service
providers on a reasonably consistent ba-
sis. Section 409A(a)(3) authorizes the
Secretary, by regulation, to permit a non-
qualifieddeferredcompensationplanto
accelerate the time or schedule of payment
of compensation deferred under the plan.
For the reasons discussed above, the
Treasury and the IRS find that guidance
permitting a TARP recipient to comply
with an advisory opinion of the Special
Master under the circumstances set out in
this notice without triggering adverse tax
consequences under § 409A(a) is neces-
sary and appropriate. Pursuant to the au-
thority in § 409A(a)(3), the Treasury De-
partmentandtheIRSintendtoissuereg-
ulations to allow for changes in the time
and form of payment of nonqualified de-
ferred compensation, including the accel-
eration of payments under a nonqualified
deferred compensation plan by a TARP re-
cipient, to the extent necessary to comply
with an advisory opinion or other determi-
nation issued by the Special Master and to
specify when a delay in making a payment
as a result of conditions imposed pursuant
to such an advisory opinion or other deter-
mination will not cause an amount to fail
to qualify as a short-term deferral, consis-
tent with this notice.
III. Guidance
A. Eligibility
TheguidancesetforthinsectionIII.B
of this Notice applies to a service provider
of a TARP recipient only if:
(1) the advisory opinion is addressed to
that TARP recipient, and specifically ad-
dresses the compensation arrangement be-
tween the TARP recipient and the service
provider;
(2) the TARP recipient has fully dis-
closed to the Special Master the identities
of any similarly situated service providers
of the TARP recipient and, to the extent
requested by the Special Master, included
those service providers in a request for
an advisory opinion (for this purpose,
an employee subject to §30.16(a)(3)(i)
(Q–16(a)(3)(i)) of the Interim Final Rule,
which addresses certain employees of Ex-
ceptional Assistance Recipients (generally
the SEOs and the next 20 most highly com-
pensated employees), will not be treated
as similarly situated to an employee sub-
ject to §30.16(a)(3)(ii) (Q–16(a)(3)(ii)) of
the Interim Final Rule, which addresses
certain other employees of Exceptional
Assistance Recipients (generally the 26
th
through 100
th
most highly compensated
employees and any remaining executive
officers), and an employee not in either
of those groups of employees will not
be treated as similarly situated to an em-
ployee in one of those groups);
(3) the advisory opinion explicitly sets
forth (a) a revised time and form of pay-
ment for the compensation that would have
complied with the otherwise applicable re-
quirements of § 409A(a) had such revised
time and form of payment been the original
time and form of payment, (b) a condition
on payment that is directly related to the
financial assistance received by the TARP
recipient under the TARP program or the
ability of the TARP recipient to repay the
TARP assistance (for example, a condition
that the amount cannot be paid prior to the
repayment of all or a specified percentage
or amount of the TARP assistance), or (c)
a combination of (a) and (b);
(4) the advisory opinion does not autho-
rize the TARP recipient or service provider
to elect another time and form of pay-
2009–52 I.R.B.966December 28, 2009

ment other than in a manner compliant
with § 409A(a) and the regulations there-
under without regard to the special rules
set forth in this notice regarding compli-
ance with advisory opinions (for this pur-
pose a decision to repay some or all of the
TARP assistance will not be treated as an
election as to the time and form of pay-
ment, even if such repayment may affect
the timing of some or all of the amount
payable);
(5) the TARP recipient and the service
provider enter into a written agreement
containing the revised time and form of
payment and any applicable conditions on
payment not later than the end of the ser-
vice provider’s taxable year in which the
advisory opinion is issued or the 15
th
day
of the third month following the date the
advisory opinion is issued, if later; and
(6) the TARP recipient and the service
provider of the TARP recipient comply
with the terms of the advisory opinion in
all material respects.
B.Application of § 409A(a)
With respect to an arrangement be-
tween a TARP recipient and a service
provider of the TARP recipient, if the
conditions of section III.A. of this notice
are met, changes in the time and form of
payment pursuant to an advisory opinion
will be treated in the following manner for
purposes of § 409A(a) and the regulations
thereunder:
(1) A failure to pay an amount upon
the originally designated payment date
will not be treated as an impermissible
initial deferral election or subsequent de-
ferral election, provided that the amount
is paid pursuant to the advisory opinion.
For this purpose, if the advisory opinion
sets forth new payment dates pursuant to
section III.A.3.a. of this notice, whether
the amount is paid pursuant to the advisory
opinion and in accordance with § 409A
will be determined after application of the
payment provisions under § 1.409A–3(d).
For example, with respect to a payment
date that is specified in the advisory opin-
ion, the amount generally will be treated
as paid pursuant to the advisory opinion if
it is paid no earlier than 30 days before the
specified payment date and no later than
the last day of the service provider’s tax-
able year in which the specified payment
date occurs or, if later, the 15
th
day of the
third calendar month after the specified
payment date (in each case so long as the
service provider is not permitted, directly
or indirectly, to designate the taxable year
in which the amount is paid). If the ad-
visory opinion sets forth TARP-related
conditions pursuant to section III.A.3.b.
of this notice that must be met before a
service recipient can pay an amount (for
example, a prohibition on a payment being
made until the service recipient repays all
or a specified amount or percentage of
TARP financial assistance), the amount
will be treated as paid pursuant to the
advisory opinion and in accordance with
§ 409A if it is paid at the earliest date
at which the service recipient reasonably
anticipates that the making of the payment
will be permissible under such advisory
opinion. For example, with respect to sat-
isfaction of TARP-related conditions, the
amount generally will be treated as paid
pursuant to the advisory opinion if it is
paid upon satisfaction of the TARP-related
conditions.
(2) To the extent compliance with an
advisory opinion requires payment of an
amount that otherwise qualified as a short-
term deferral under § 1.409A–1(b)(4) at a
time or in a form that would cause such
amount to be treated as deferred compen-
sation subject to § 409A, except as oth-
erwise provided in the next sentence, the
amount will be treated as deferred com-
pensation under § 409A once the time and
form of payment have been changed. To
the extent that an advisory opinion requires
only that the payment of such an amount be
delayed until specified TARP-related con-
ditions are met, and does not otherwise
prescribe changes in the time or form of
payment, such condition will not cause the
amount to fail to qualify as a short-term de-
ferral provided that the amount is paid at
the earliest date at which the service recip-
ient anticipates or reasonably should antic-
ipate that the payment will be permissible
pursuant to the advisory opinion.
(3) Payment of a deferred amount be-
fore the original payment date pursuant to
an advisory opinion, EESA or the regula-
tions thereunder (including §§30.11(a) and
30.16(a)(3) (Q–11(a) and Q–16(a)(3)) of
the Interim Final Rule (Special Master ap-
proval of certain payments to employees of
TARP recipients receiving exceptional fi-
nancial assistance)
2
will be treated as a per-
missible acceleration. For this purpose, ar-
rangements that provide for payment upon,
or an earlier payment date resulting from,
the satisfaction of a TARP-related condi-
tion, such as a repayment of some or all
of the TARP assistance, will be treated as
providing for a permissible acceleration of
a payment under §409A.
(4) Once the TARP recipient and ser-
vice provider have agreed to a revised time
and form of payment pursuant to an ad-
visory opinion and have set forth the re-
vised time and form of payment in writ-
ing, the revised time and form of payment
is treated as the time and form of payment
for purposes of determining future com-
pliance with § 409A and the regulations
thereunder.
(5) Nothing in this notice is intended
to permit corrections of failures to com-
ply with § 409A, or to otherwise affect the
application of § 409A to a compensation
arrangement, including the application of
§ 409A to any change to a compensation
arrangement that does not meet the condi-
tions of section III.A of this notice.
C.Effective date
The guidance in this notice is effec-
tive for arrangements addressed in advi-
sory opinions issued by the Special Master
pursuant to EESA and the guidance there-
under after September 30, 2009.
IV. Drafting Information
The principal author of this notice is
Keith Ranta of the Office of Division
Counsel/Associate Chief Counsel (Tax
2
The treatment under § 409A of required deferrals ofpayments under EESA and the regulations thereunderwasdiscussedinthepreambletotheInterimFinal Rule (IFR). Taxpayers may rely
on the guidance provided in that discussion. In addition, because the determinations by the Special Master with respect to certain employees of Exceptional Assistance Recipients (generally
the executive officers and any other employees that are among the top 100 most highly compensated employees) are required under the IFR (see §30.16(a)(i) and (ii) (Q–16(a)(3)(i) and (ii)),
taxpayers may also apply that guidance to any changes to existing rights required by those determinations, so that any resulting delay in a payment will not constitute a failure to comply with
§ 409A and will not cause a payment that otherwise would have been a short-term deferral to be treated as a payment of deferred compensation. Because that discussion did not address the
potential for the required acceleration of a payment as part of an opinion requiring modifications of a compensation structure, that guidance has been provided in this notice. The guidance
referred to in the preamble to the IFR and provided in this footnote is not applicable to advisory opinions provided under §30.16(a)(4) (Q–16(a)(4)) of the IFR, including the portion of a
Special Master determination under §30.16(a)(i) and (ii) (Q–16(a)(3)(i) and (ii)) of the IFR that is an advisory opinion. (See note 1 of this notice).
December 28, 20099672009–52 I.R.B.

Exempt and Government Entities), al-
though other Treasury and IRS officials
participated in its development. For fur-
ther information on the provisions of
this notice, contact Keith Ranta at (202)
927–9639 (not a toll-free call). For further
information about the Office of the Special
Master for TARP Executive Compensa-
tion, contact that office at (202) 622–0667.
Qualified Transportation
Fringes
Notice 2009–95
This notice delays the effective date of
Revenue Ruling 2006–57. Revenue Rul-
ing 2006–57 provides guidance to employ-
ers on the use of smartcards, debit or credit
cards, or other electronic media to provide
qualified transportation fringes under sec-
tions 132(a)(5) and (f) of the Code. This
guidance is intended to provide relief to
mass transit providers that have been un-
able to update their present systems in or-
der to comply with the Revenue Ruling
guidelines prior to the current effective
date of January 1, 2010. The effective date
of Revenue Ruling 2006–57 is further de-
layed until January 1, 2011. Revenue Rul-
ing 2006–57 is modified.
Revenue Ruling 2006–57, 2006–2
C.B. 911, provides guidance to employers
on the use of smartcards, debit or credit
cards, or other electronic media to pro-
vide qualified transportation fringes under
Internal Revenue Code §§ 132(a)(5) and
132(f). The ruling’s effective date was
set for January 1, 2008. In 2007, how-
ever, Treasury and the IRS became aware
that certain transit systems needed addi-
tional time to modify their technology and
make it compatible with the requirements
for vouchers set forth in Revenue Ruling
2006–57. Consequently, Treasury and the
IRS delayed the effective date of Revenue
Ruling 2006–57 until January 1, 2009.
See Notice 2007–76, 2007–2 C.B. 735.
In 2008, Treasury and the IRS further de-
layed the effective date of Revenue Ruling
2006–57 until January 1, 2010. See Notice
2008–74, 2008–38 I.R.B. 718. Certain
transit systems need additional time to
complete the process of adapting their
technology to achieve compatibility with
the requirements for vouchers. There-
fore, the ruling’s effective date is further
delayed until January 1, 2011. Never-
theless, employers and employees may
rely on Revenue Ruling 2006–57 with
respect to transactions occurring prior to
January 1, 2011.
The principal author of this notice is
Syd Gernstein of the Office of Associate
Chief Counsel (Tax Exempt & Govern-
ment Entities). For further information re-
garding this notice, contact Syd Gernstein
at (202) 622–6040 (not a toll-free call).
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2009–96
This notice provides guidance as to the
corporate bond weighted average interest
rate and the permissible range of interest
rates specified under § 412(b)(5)(B)(ii)(II)
of the Internal Revenue Code as in ef-
fect for plan years beginning before 2008.
It also provides guidance on the corpo-
rate bond monthly yield curve (and the
corresponding spot segment rates), the
24-month average segment rates, and
the funding transitional segment rates
under § 430(h)(2). In addition, this no-
tice provides guidance as to the interest
rate on 30-year Treasury securities un-
der § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008, the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I), and the min-
imum present value segment rates under
§ 417(e)(3)(D) as in effect for plan years
beginning after 2007.
CORPORATE BOND WEIGHTED
AVERAGE INTEREST RATE
Sections412(b)(5)(B)(ii)and
412(l)(7)(C)(i), as amended by the Pen-
sion Funding Equity Act of 2004 and by
the Pension Protection Act of 2006 (PPA),
provide that the interest rates used to cal-
culate current liability and to determine
the required contribution under § 412(l)
for plan years beginning in 2004 through
2007 must be within a permissible range
based on the weighted average of the rates
of interest on amounts invested conser-
vatively in long term investment grade
corporate bonds during the 4-year period
ending on the last day before the beginning
of the plan year.
Notice 2004–34, 2004–1 C.B. 848, pro-
vides guidelines for determining the cor-
porate bond weighted average interest rate
and the resulting permissible range of in-
terest rates used to calculate current liabil-
ity. That notice establishes that the corpo-
rate bond weighted average is based on the
monthly composite corporate bond rate de-
rived from designated corporate bond in-
dices. The methodology for determining
the monthly composite corporate bond rate
as set forth in Notice 2004–34 continues to
apply in determining that rate. See Notice
2006–75, 2006–2 C.B. 366.
The composite corporate bond rate for
November 2009 is 5.79 percent. Pursuant
to Notice 2004–34, the Service has de-
termined this rate as the average of the
monthly yields for the included corporate
bond indices for that month.
The following corporate bond weighted
average interest rate was determined for
plan years beginning in the month shown
below.
For Plan Years
Beginning inPermissible Range
MonthYear
Corporate
Bond Weighted
Average90%to100%
December20096.42
5.78
6.42
2009–52 I.R.B.968December 28, 2009

YIELD CURVE AND SEGMENT
RATES
Generally for plan years beginning
after 2007 (except for delayed effective
dates for certain plans under sections 104,
105, and 106 of PPA), § 430 of the Code
specifies the minimum funding require-
ments that apply to single employer plans
pursuant to § 412. Section 430(h)(2) spec-
ifies 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 us-
ing three 24-month average interest rates
(“segment rates”), each of which applies
to cash flows during specified periods.
However, an election may be made under
§ 430(h)(2)(D)(ii) to use the monthly yield
curve in place of the segment rates. For
plan years beginning in 2008 and 2009, a
transitional rule under § 430(h)(2)(G) pro-
vides that the segment rates are blended
with the corporate bond weighted average
as specified above. An election may be
made under § 430(h)(2)(G)(iv) to use the
segment rates without applying the transi-
tional rule.
Notice 2007–81, 2007–2 C.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, the
24-month average corporate bond segment
rates, and the funding transitional segment
rates used to compute the target normal
cost and the funding target. Pursuant to
Notice 2007–81, the monthly corporate
bond yield curve derived from November
2009 data is in Table I at the end of this
notice. The spot first, second, and third
segment rates for the month of Novem-
ber 2009 are, respectively, 2.35, 5.57,
and 6.29. The three 24-month average
corporate bond segment rates applicable
for December 2009 under the election of
§ 430(h)(2)(G)(iv) are as follows:
First
Segment
Second
Segment
Third
Segment
4.716.676.77
The transitional segment rates under
§ 430(h)(2)(G) applicable for December
2009, taking into account the corporate
bond weighted average of 6.42 stated
above, are as follows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
2008
5.856.506.54
2009
5.286.596.65
The transitional rule of § 430(h)(2)(G)
does not apply to plan years starting in
2010. Therefore, for a plan year start-
ingin2010withalookbackmonthtoDe-
cember 2009, the funding segment rates
are the three 24-month average corporate
bond segment rates applicable for Decem-
ber 2009, listed above without blending for
the transitional period.
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 417(e)(3)(A)(ii)(II) (prior to
amendment by PPA) defines the appli-
cable interest rate, which must be used
for purposes of determining the minimum
present value of a participant’s benefit
under § 417(e)(1) and (2), as the annual
rate of interest on 30-year Treasury se-
curities for the month before the date
of distribution or such other time as the
Secretary may by regulations prescribe.
Section 1.417(e)–1(d)(3) of the Income
Tax Regulations provides that the applica-
bleinterestrateforamonthistheannual
rate of interest on 30-year Treasury secu-
rities as specified by the Commissioner
for that month in revenue rulings, notices
or other guidance published in the Internal
Revenue Bulletin.
The rate of interest on 30-year Trea-
sury securities for November 2009 is 4.31
percent. The Service has determined this
rate as the average of the yield on the
30-year Treasury bond maturing in Au-
gust 2039 determined each day through
November 10, 2009, and the yield on
the 30-year Treasury bond maturing in
November 2039 determined each day for
the balance of the month.
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 dur-
ing 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 following rates
were determined for plan years beginning
in the month shown below.
December 28, 20099692009–52 I.R.B.

For Plan Years
Beginning inPermissible Ran
ge
MonthYear
30-Year
Treasury
Weighted
Average
90%to
105%
December20094.363.92
4.57
MINIMUM PRESENT VALUE
SEGMENT RATES
Generally for plan years beginning af-
ter December 31, 2007, the applicable in-
terest rates under § 417(e)(3)(D) are seg-
ment rates computed without regard to a
24-month average. For plan years be-
ginning in 2008 through 2011, the appli-
cable interest rates are the monthly spot
segment rates blended with the applicable
rate under § 417(e)(3)(A)(ii)(II) as in ef-
fect for plan years beginning in 2007. No-
tice 2007–81 provides guidelines for de-
termining the minimum present value seg-
ment rates. Pursuant to that notice, the
minimum present value transitional seg-
ment rates determined for November 2009,
taking into account the November 2009
30-year Treasury rate of 4.31 stated above,
are as follows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
20083.92
4.56
4.71
2009
3.53
4.81
5.10
20103.13
5.075.50
DRAFTING INFORMATION
The principal author of this notice is
Tony Montanaro of the Employee Plans,
Tax Exempt and Government Entities Di-
vision. Mr. Montanaro may be e-mailed at
RetirementPlanQuestions@irs.gov.
2009–52 I.R.B.970December 28, 2009

Table I
Monthly Yield Curve for November 2009
Derived from November 2009 Data
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.5
0.89
20.56.1540.5
6.31
60.5
6.38
80.5
6.41
1.01.2021.06.1541.06.3161.06.3881.06.41
1.51.5121.5
6.16
41.5
6.32
61.5
6.38
81.5
6.41
2.0
1.85
22.06.1742.06.3262.06.3882.06.41
2.5
2.19
22.5
6.17
42.5
6.32
62.5
6.38
82.5
6.41
3.0
2.54
23.06.1843.06.3263.06.3883.06.41
3.5
2.87
23.5
6.18
43.5
6.33
63.5
6.38
83.5
6.41
4.0
3.19
24.0
6.19
44.06.3364.06.3884.06.41
4.5
3.49
24.5
6.19
44.5
6.33
64.5
6.38
84.5
6.41
5.0
3.77
25.0
6.20
45.0
6.33
65.0
6.38
85.0
6.41
5.5
4.02
25.5
6.20
45.5
6.33
65.5
6.38
85.5
6.41
6.04.2426.06.2146.06.3366.0
6.39
86.06.41
6.54.4526.5
6.21
46.5
6.34
66.5
6.39
86.5
6.41
7.04.6427.06.2247.06.3467.0
6.39
87.06.41
7.5
4.80
27.5
6.22
47.5
6.34
67.5
6.39
87.5
6.41
8.0
4.96
28.06.2348.06.3468.0
6.39
88.06.41
8.5
5.09
28.5
6.23
48.5
6.34
68.5
6.39
88.5
6.42
9.0
5.22
29.0
6.24
49.0
6.35
69.06.3989.0
6.42
9.5
5.33
29.56.2449.5
6.35
69.5
6.39
89.56.42
10.05.4330.06.2550.06.3570.0
6.3990.0
6.42
10.55.5230.56.2550.56.3570.5
6.3990.56.42
11.0
5.60
31.0
6.2551.06.35
71.0
6.3991.0
6.42
11.55.6731.5
6.26
51.56.3571.5
6.39
91.56.42
12.0
5.74
32.06.26
52.06.35
72.06.40
92.0
6.42
12.5
5.79
32.5
6.27
52.5
6.36
72.5
6.4092.56.42
13.05.8433.06.2753.06.3673.06.40
93.0
6.42
13.5
5.89
33.5
6.27
53.5
6.36
73.5
6.4093.56.42
14.05.9334.06.28
54.0
6.3674.06.40
94.0
6.42
14.5
5.96
34.5
6.28
54.5
6.36
74.5
6.4094.56.42
15.0
5.99
35.0
6.28
55.0
6.36
75.0
6.4095.06.42
15.5
6.01
35.5
6.29
55.5
6.36
75.5
6.4095.56.42
16.06.0436.0
6.29
56.06.36 76.06.40
96.0
6.42
16.56.0536.5
6.29
56.5
6.37
76.5
6.4096.56.42
17.06.0737.0
6.29
57.0
6.3777.06.40
97.0
6.42
17.5
6.09
37.5
6.30
57.5
6.37
77.5
6.4097.56.42
18.06.1038.06.30
58.0
6.3778.06.40
98.0
6.42
18.5
6.11
38.5
6.30
58.5
6.37
78.5
6.4098.56.42
19.0
6.12
39.0
6.3059.06.37
79.0
6.40
99.0
6.42
19.56.1339.56.3159.56.3779.56.4199.56.43
20.06.1440.06.3160.06.3780.06.41100.06.43
December 28, 20099712009–52 I.R.B.

Extension of Deadline to
Adopt Certain Retirement
Plan Amendments
Notice 2009–97
I. Purpose
This notice extends the deadline for
amending qualified retirement plans to
meet certain requirements of the Internal
Revenue Code that were added by the
Pension Protection Act of 2006 (PPA ’06),
Pub. L. 109–280, and subsequently modi-
fied by the Worker, Retiree, and Employer
Recovery Act of 2008 (WRERA), Pub. L.
110–458. The deadline is extended to the
last day of the first plan year that begins on
or after January 1, 2010. This extension
applies to:
1. The deadline for amending single-
employer defined benefit plans to meet the
requirements of §§ 401(a)(29) and 436,
relating to funding-based limits on bene-
fits and benefit accruals under single-em-
ployer plans;
2. The deadline for amending cash
balance and other applicable defined
benefit plans, within the meaning of
§ 411(a)(13)(C), to meet the require-
ments of § 411(a)(13) (other than
§ 411(a)(13)(A)) and § 411(b)(5), relating
to vesting and other special rules applica-
ble to these plans; and
3. The deadline for amending applica-
ble defined contribution plans, within the
meaning of § 401(a)(35)(E), to meet the re-
quirements of § 401(a)(35), relating to di-
versification requirements for certain de-
fined contribution plans.
This notice also provides limited re-
lief from the anti-cutback requirements
of § 411(d)(6) for amendments that are
adopted by the extended deadline for
amending a plan to meet the requirements
of §§ 401(a)(29) and 436. In addition, this
notice provides that limited § 411(d)(6)
relief is expected to be granted for amend-
ments that are adopted by the extended
deadline for amending a plan to meet the
requirements of § 411(b)(5) once final reg-
ulations under §§ 411(a)(13) and 411(b)(5)
are issued.
II. Background
Section 401(a)(29) requires single-em-
ployer defined benefit plans that are sub-
ject to the minimum funding requirements
of § 412 to meet the requirements of § 436.
Section 436, which was added by section
113(a)(1) of PPA ’06, imposes funding-
based limits on benefits and benefit ac-
cruals under single-employer plans. The
requirements of § 436 generally apply to
plan years that begin after December 31,
2007. Final regulations under § 436 were
published in the Federal Register on Octo-
ber 15, 2009, 74 F.R. 53004.
Section 411(a)(13), which was added
by section 701(b)(2) of PPA ’06, contains
special rules for cash balance and other
applicable defined benefit plans. Sec-
tion 411(a)(13)(A) provides, in general,
that an applicable defined benefit plan
will not fail to satisfy the requirements of
§ 411(a)(2), 411(c), or 417(e) solely be-
cause the present value of the participant’s
accrued benefit under the plan equals the
balance in the participant’s hypothetical
account or the accumulated percentage of
the participant’s final average compensa-
tion. Section 411(a)(13)(B) requires an
applicable defined benefit plan to provide
100 percent vesting for employer-derived
benefits on completion of three years of
service. Section 411(a)(13) is generally
effective for years that begin after Decem-
ber 31, 2007, and for distributions made
after August 17, 2006.
Section 411(b)(5), which was added
by section 701(b)(1) of PPA’06 and is
generally effective for years that begin
after December 31, 2007, contains spe-
cial rules for applicable defined benefit
plans with regard to the requirements of
§ 411(b)(1)(H), which prohibits a defined
benefit plan from ceasing an employee’s
benefit accruals or reducing an employee’s
rate of benefit accrual because of the at-
tainment of any age.
Notice 2007–6, 2007–1 C.B. 273,
provides transitionalguidance regarding
the requirements of §§ 411(a)(13) and
411(b)(5). Proposed regulations under
§§ 411(a)(13) and 411(b)(5) were pub-
lished in the Federal Register on December
28, 2007, 72 F.R. 73690. Announcement
2009–82, 2009–48 I.R.B. 720, announced
certain relief with respect to the require-
ments of § 411(b)(5)(B)(i), relating to the
interest crediting rate in applicable defined
benefit plans. Final and additional pro-
posed regulations under §§ 411(a)(13) and
411(b)(5) are expected to be published in
the near future.
Section 401(a)(35), which was added
by section 901(a)(1) of PPA ’06, requires
certain defined contribution plans to meet
certain diversification requirements with
respect to investments in employer secu-
rities. The requirements of § 401(a)(35)
generally apply to planyears that begin af-
ter December 31, 2007. Notice 2006–107,
2006–2 C.B. 1114, provides transitional
guidance regarding § 401(a)(35). Pro-
posed regulations under § 401(a)(35)
were published in the Federal Register on
January 3, 2008, 73 F.R. 421. Final regu-
lations under § 401(a)(35) are expected to
be published in the near future.
Section 401(b) provides a period during
which a plan may be amended retroac-
tively to comply with the Code’s qualifi-
cation requirements. Section 1.401(b)–1
of the Treasury regulations and Rev.
Proc. 2007–44, 2007–2 C.B. 54, describe
the disqualifying provisions that may be
amended retroactively and the remedial
amendment period during which retroac-
tive amendments may be adopted. The
regulations also grant the Commissioner
the discretion to extend the remedial
amendment period.
Section 5.05 of Rev. Proc. 2007–44
provides that when there are statutory or
regulatory changes to the plan qualifica-
tion requirements that will impact provi-
sions of the written plan document, the
adoption of an interim amendment will
generally be required by the later of the end
of the plan year in which the change is first
effective or the due date of the employer’s
tax return for the tax year that includes the
date the change is first effective.
Section 411(d)(6) provides generally
that a plan will not satisfy § 401(a) if an
amendment to the plan decreases a partic-
ipant’s accrued benefit. For this purpose,
a plan amendment which has the effect
of eliminating or reducing an early retire-
ment benefit or a retirement-type subsidy
or eliminating an optional form of bene-
fit with respect to benefits attributable to
service before the amendment is treated as
reducing accrued benefits. Section 401(b)
does not relieve a plan of the requirement
to satisfy § 411(d)(6) with respect to any
amendment.
Section 1.411(d)–4, A–2(b)(2)(i), pro-
vides that a plan may be amended to elimi-
nate or reduce a § 411(d)(6) protected ben-
efit, within the meaning of § 1.411(d)–4,
A–1, if the following three requirements
2009–52 I.R.B.972December 28, 2009

are met: the amendment constitutes timely
compliance with a change in law affecting
plan qualification; there is an exercise of
§ 7805(b) relief by the Commissioner; and
the elimination or reduction is made only
to the extent necessary to enable the plan
to continue to satisfy the requirements for
qualified plans.
Section 1107 of PPA ’06 provides, in
general, that, except as provided by the
Secretary of the Treasury, a plan will not
fail to satisfy the anti-cutback require-
ments of § 411(d)(6) as a result of a plan
amendment made pursuant to a provision
of PPA ’06 or regulations thereunder, pro-
vided that:
(1) the plan amendment is adopted no
later than the section 1107 date, which is
the last day of the first plan year that begins
on or after January 1, 2009 (or 2011, in the
case of a governmental plan as defined in
§ 414(d));
(2) if the plan amendment is required
to enable the plan to continue to satisfy
§ 401(a), the amendment applies retroac-
tively to the effective date of the provision
of PPA ’06 or regulation; and
(3) the plan is operated as if the plan
amendment were in effect during the pe-
riod beginning on the effective date of the
amendment and ending on the section 1107
date or, if earlier, the date the amendment
is adopted.
Section1107ofPPA’06alsoprovides
that a plan will not be treated as failing to
be operated in accordance with its terms
during the period described in (3), pro-
vided that the conditions in (1) through (3)
are met.
Section 5.07(2) of Rev. Proc. 2007–44
provides an exception from the general
deadline for adopting interim amend-
ments. This section provides that the
deadline for adopting an interim amend-
ment pursuant to a provision of PPA ’06 or
regulations thereunder is the section 1107
date. This is also the deadline for adopt-
ing a discretionary amendment (within
the meaning of section 5.05(2) of Rev.
Proc. 2007–44) pursuant to a provision of
PPA ’06 or regulations thereunder.
The extension of time to adopt plan
amendments that is provided by sec-
tion 1107 of PPA ’06 applies to any
plan amendment that is adopted pursuant
to a provision of PPA ’06 or regula-
tions thereunder. For example, section
1107 of PPA ’06 extends the otherwise
applicable deadline for adopting plan
amendments to meet the requirements,
if applicable, of §§ 401(a)(29) and 436,
401(a)(35), 401(a)(36), 401(k)(13) and
414(w), 411(a)(2), 411(a)(13), 411(b)(5),
417(a), 417(e), and 432 to the section 1107
date. In addition to extending the time
by which an amendment pursuant to a
provision of PPA ’06 or regulations there-
under would otherwise have to be adopted,
section 1107 of PPA ’06 also generally
provides relief from the requirements of
§ 411(d)(6) that would otherwise apply to
the amendment.
Under the Commissioner’s authority
to extend remedial amendment periods
under § 401(b), Part III of this notice
grants a further extension of time, beyond
the section 1107 date, to adopt certain
plan amendments. However, except as
described in Part IV of this notice re-
garding amendments for §§ 401(a)(29)
and 436 and § 411(b)(5), this notice does
not grant relief from the requirements of
§ 411(d)(6) for amendments adopted af-
ter the section 1107 date. For example,
an amendment of an applicable defined
benefitplantoeliminate,withrespect
to a post-August 17, 2006 distribution,
the excess of a single-sum distribution
over a participant’shypothetical account
balance must comply with the generally
applicable requirements of § 411(d)(6) if
the amendment is adopted after the section
1107 date.
III. Extension of Deadline for Adopting
Amendments Under §§ 401(a)(29) and
436, 401(a)(35), 411(a)(13) (other than
§ 411(a)(13)(A)), and 411(b)(5)
In order to give plan sponsors time to
adopt plan amendments that take into ac-
count recently issued final regulations and
those that are expected to be issued in the
near future, the deadline for adopting an
interim or discretionary plan amendment
under §§ 401(a)(29) and 436, 401(a)(35),
411(a)(13) (other than § 411(a)(13)(A)),
and 411(b)(5) is extended to the last day
of the first plan year that begins on or af-
ter January 1, 2010. A plan must continue
to satisfy the operational compliance re-
quirements of section 1107 of PPA ’06 as a
condition of the extension of the deadline
for adopting plan amendments provided by
this notice.
This extension does not restrict rights
with respect to the timing of plan amend-
ments set out in Rev. Proc. 2007–44.
For example, under section 5.03(2) of Rev.
Proc 2007–44, the extension of the reme-
dial amendment period to the end of the
applicable remedial amendment cycle for
a disqualifying provision continues to ap-
ply to a disqualifying provision where the
employer reasonably and in good faith de-
termines during the period when an in-
terim amendment to reflect a qualifica-
tion change would otherwise be required
that no amendment is required because the
qualification change does not impact pro-
visions of the written plan document.
IV. Section 411(d)(6)Relief for Certain
Amendments
A. Relief for Amendments Under
§§ 401(a)(29) and 436
Pursuant to § 7805(b) and § 1.411(d)–4,
A–2(b)((2)(i), an interim plan amendment
that eliminates or reduces a § 411(d)(6)
protected benefit will not cause a plan to
fail to meet the requirements of § 411(d)(6)
if the amendment is adopted by the last day
of the first plan year that begins on or af-
ter January 1, 2010, and the elimination or
reduction is made only to the extent neces-
sary to enable the plan to meet the require-
ments of §§ 401(a)(29) and 436.
B. Relief for Amendments Under
§ 411(b)(5)
As provided in Announcement
2009–82, it is expected that once final
regulations under § 411(b)(5)(B)(i) are
issued, relief from the requirements of
§411(d)(6)willbegrantedtopermitplan
amendments that are adopted prior to the
effective date of those final regulations to
reduce the interest crediting rate on partic-
ipants’ accounts to the extent necessary to
constitute a permissible rate under those
final regulations. More broadly, pursuant
to this notice, once final regulations under
§§ 411(a)(13) and 411(b)(5) are issued, it
is expected that relief from the require-
ments of § 411(d)(6) will be granted for a
plan amendment that eliminates or reduces
a § 411(d)(6) protected benefit, provided
that the amendment is adopted by the last
day of the first plan year that begins on or
after January 1, 2010, and the elimination
or reduction is made only to the extent
necessary to enable the plan to meet the
requirements of § 411(b)(5).
December 28, 20099732009–52 I.R.B.

V. Determination Letters
The Service’s review of an application
for a determination letter that is submitted
before February 1, 2011, will not take into
account the requirements of §§ 401(a)(29)
and 436. The Service’s review of an ap-
plication for a determination letter submit-
ted after January 31, 2009, and before Feb-
ruary 1, 2011, will take into account the
requirements of §§ 401(a)(35), 411(a)(13)
(including § 411(a)(13)(A)), or 411(b)(5),
only if the plan has been amended to meet
those requirements.
VI. Effect on Other Documents
Section 5.07(2) of Rev. Proc. 2007–44
is modified.
Notice 2008–108, 2008–50 I.R.B.
1275, which contains the 2008 Cumula-
tive List of Changes in Plan Qualification
Requirements, is modified to provide that
the Service’s review of an application for
a determination letter submitted during
the submission period beginning on Feb-
ruary 1, 2009, will take into account the
requirements of §§ 401(a)(35), 411(a)(13)
(including § 411(a)(13)(A)), or 411(b)(5),
only if the plan has been amended to meet
those requirements.
Drafting Information
The principal author of this notice
is James P. Flannery of the Employee
Plans, Tax Exempt and Government
Entities Division. Questions regarding
this notice may be sent via e-mail to
retirementplanquestions@irs.gov.
2009 Cumulative List of
Changes in Plan Qualification
Requirements
Notice 2009–98
I. PURPOSE
This notice contains the 2009 Cumu-
lative List of Changes in Plan Qualifi-
cation Requirements (2009 Cumulative
List) described in section 4 of Rev. Proc.
2007–44, 2007–2 C.B. 54. The 2009 Cu-
mulative List is to be used primarily by
plan sponsors of individually designed
plans that are in Cycle E. An individually
designed plan is in Cycle E if it is a sin-
gle employer plan where the last digit of
the employer identification number of the
plan sponsor is 5 or 0, or it is a § 414(d)
governmental plan for which an election
has been made by the plan sponsor to treat
Cycle E as the initial EGTRRA remedial
amendment cycle for the plan.
ThelistofchangesinsectionVIof
this notice does not extend the deadline by
which a plan must be amended to com-
ply with any statutory, regulatory, or guid-
ance changes. The general deadline for
timely adoption of an interim or discre-
tionary amendment can be found in section
5.05 of Rev. Proc. 2007–44.
II. BACKGROUND
Rev. Proc. 2007–44 sets forth pro-
cedures for issuing opinion, advisory,
and determination letters and describes
the five-year remedial amendment cycle
for individually designed plans and the
six-year remedial amendment cycle for
pre-approved plans. In addition, section
5.05 of Rev. Proc. 2007–44 provides the
deadline for timely adoption of an interim
amendment or discretionary amendment.
Under section 4 of Rev. Proc. 2007–44,
the Internal Revenue Service intends to
annually publish a Cumulative List to
identify statutory, regulatory, and guidance
changes that must be taken into account
in submissions by plan sponsors to the
Service for opinion, advisory, and deter-
mination letters whose submission period
begins on February 1st following issuance
of the Cumulative List.
In Notice 2008–108, 2008–50 I.R.B.
1275, the Service published the 2008 Cu-
mulative List of Changes in Plan Quali-
fication Requirements (2008 Cumulative
List).
1
Under section 1107 of the Pension
Protection Act of 2006 (PPA ’06), a plan
amendment made pursuant to any amend-
ment made by PPA ’06 generally may be
retroactively effective, if, in addition to
meeting the other applicable requirements,
the amendment is made on or before the
last day of the first plan year beginning on
or after January 1, 2009 (January 1, 2011
in the case of a governmental plan).
Pursuant to Notice 2008–108, as an al-
ternative to submitting a plan in Cycle D
(February 1, 2009 – January 31, 2010),
a plan sponsor of a Cycle D plan whose
first plan year beginning after January 1,
2009 ends on or after February 1, 2010,
may defer submission of its plan until Cy-
cle E (February 1, 2010 –. January 31,
2011). In order to defer submission of such
a plan until Cycle E, an application for a
determination letter must be timely filed
in Cycle E. In such a case, the plan will
be treated as having been filed within the
plan’s EGTRRA remedial amendment pe-
riodandwillbereviewedonthebasisof
the 2009 Cumulative List. However, such
a plan will be treated as a Cycle E plan
solely for this initial cycle, and all subse-
quent submissions will be made in Cycle
D.
Rev. Proc. 2009–36, 2009–35 I.R.B.
304, provides, in part, that the sponsor
of an individually designed governmental
plan may make a one-time election to be
in Cycle E (instead of Cycle C), as the ini-
tial EGTRRA remedial amendment cycle
for the plan.
III. APPLICATION OF 2009
CUMULATIVE LIST
This notice is being issued for purposes
of the determination letter program for
plans submitted for determination letters
during the Cycle E submission period. In
Rev. Proc. 2005–66, 2005–2 C.B. 509,
the Service announced the opening of
the initial five-year remedial amendment
cycle. In accordance with Rev. Proc.
2007–44, the Servicewill start accepting
determination letter applications for Cycle
E plans beginning on February 1, 2010.
The 12-month submission period for Cy-
cle E plans will end January 31, 2011.
The 2009 Cumulative List, set forth
in section VI of this notice, informs
plan sponsors of issues the Service has
specifically identified for review in de-
termining whether a plan filing in Cycle
E has been properly updated. Specifi-
cally, the 2009 Cumulative List reflects
law changes under the Economic Growth
and Tax Relief Reconciliation Act of
2001 (EGTRRA), Pub. L. 107–16 (with
technical corrections made by the Job Cre-
ation and Worker Assistance Act of 2002
1
See Notice 2007–94, 2007–2 C.B. 1179; Notice 2007–3, 2007–1 C.B. 255; Notice 2005–101, 2005–2 C.B. 1219; and Notice 2004–84, 2004–2 C.B. 1030, for the2007, 2006, 2005, and
2004 Cumulative Lists, respectively.
2009–52 I.R.B.974December 28, 2009

(JCWAA)), Pub. L. 104–147, the Pension
Funding Equity Act of 2004 (PFEA), Pub.
L. 108–218, the American Jobs Creation
Act of 2004 (AJCA), Pub. L. 108–357,
the Katrina Emergency Tax Relief Act of
2005 (KETRA), Pub. L. 109–73, the Gulf
Opportunity Zone Act of 2005 (GOZA),
Pub. L. 109–135, the Pension Protection
Act of 2006 (PPA ’06), Pub. L. 109–280,
the U.S. Troop Readiness, Veterans’ Care,
Katrina Recovery, and Iraq Accountability
Appropriations Act, 2007, Pub. L.
110–28, the Heroes Earnings Assistance
and Relief Tax Act of 2008 (HEART
Act), Pub. L. 110–245, the Emergency
Economic Stabilization Act of 2008
(EESA), Pub. L. 110–343, and the Worker,
Retiree, and Employer Recovery Act of
2008 (WRERA), P.L. 110–458.
The Service will not consider in its re-
view of any determination letter applica-
tion, for the submission period that begins
February 1, 2010, any:
(1) guidance issued after October 1,
2009;
(2) statutes enacted after October 1,
2009;
(3) qualification requirements first ef-
fective in 2011 or later; or
(4) statutory provisions that are first ef-
fective in 2010, for which there is no guid-
ance identified in this notice.
2
The 2009 Cumulative List does not in-
clude any items described in (1) through
(4) above. However, in order to be quali-
fied, a plan must comply with all relevant
qualification requirements, not just those
on the 2009 Cumulative List.
The Service will notconsider the pro-
posed regulations identified in the foot-
notes of section VI of this notice in issu-
ing determination letters, and such letters
cannot be relied on with respect to the pro-
posed regulations.
Terminating plans must include all law
changes in effect at the time of termination.
See section 8 of Rev. Proc. 2007–44 re-
garding plan termination.
IV. SPECIAL RULES FOR THE
HEROES EARNINGS ASSISTANCE
AND RELIEF TAX ACT OF 2008
Under sections 104(d)(2) and 105(c)
of the Heroes Earnings Assistance and
Relief Tax Act of 2008 (HEART Act),
Pub. L. 110–245, a plan amendment made
pursuant to sections 104(a) or 105(b)(1)
of the HEART Act generally may be
retroactively effective, if, in addition to
meeting the other applicable requirements,
the amendment is made on or before the
last day of the first plan year beginning on
or after January 1, 2010 (January 1, 2012
in the case of a governmental plan).
Plans submitted in Cycle E must meet
the amendment deadline for the HEART
Act, if applicable. However, the Service
will not consider the HEART Act in issu-
ing determination letters because no guid-
ance has been issued with respect to the
HEART Act, and such letters cannot be re-
lied on with respect to the HEART Act.
The HEART Act provisions are listed in
section VII of this notice.
Section 107(a) of the HEART Act ex-
tends the applicability of the qualified
reservist distribution to individuals or-
dered or called to duty after December 31,
2007. The Service is treating an amend-
ment made pursuant to section 107 of the
HEART Act as if it was included in the
amendments described in section 1107 of
PPA ’06. See section VI of this notice, #
11, with respect to § 401(k)(2)(B)(i)(V)
qualified reservist distributions.
V. SPECIAL RULES FOR THE
WORKER, RETIREE, AND
EMPLOYER RECOVERY ACT
OF 2008
Section 201 of WRERA added section
401(a)(9)(H) to the Code. This provision
provides, in part, a suspension of the mini-
mum distribution requirement for 2009 ap-
plicable to defined contribution plans.
Under section 201(c)(2) of WRERA,
a plan amendment made pursuant to
WRERA section 201 generally may be
retroactively effective, if, in addition to
meeting the other applicable requirements,
the amendment is made on or before the
last day of the first plan year beginning on
or after January 1, 2011 (January 1, 2012
in the case of a governmental plan).
Plans submitted in Cycle E can be
amended, at the option of plan sponsors to
include WRERA section 201. However,
the Service will not consider WRERA sec-
tion 201 in issuing determination letters
for Cycle E plans, and such letters cannot
be relied on with respect to the require-
ments of WRERA section 201.
A plan restatement submitted in Cy-
cle E must include theapplicable WRERA
provisions identified in section VI of this
notice.
VI. 2009 CUMULATIVE LIST OF
CHANGES IN PLAN QUALIFICATION
REQUIREMENTS
The following list consists of statutory
provisions and associated guidance which
reflect changes to plan qualification re-
quirements. Miscellaneous guidance is
also provided. The Service has identi-
fied below plan qualification requirements
which were not on the 2008 or earlier Cu-
mulative Lists as “(New)”. Thus, the 2009
Cumulative List contains those plan qual-
ification requirements listed in the 2004,
2005, 2006, 2007, and 2008 Cumulative
Lists as well as additional 2009 plan qual-
ification requirements.
1.72(p): Section 1.72(p)–1 of the In-
come Tax Regulations relating to plan
loans was published on December 3,
2002 (67 Fed. Reg. 71821). (2004
C. L.).
2.401(a):
•Final Regulations under § 401(a)
of the Code regarding permissible
normal retirement ages were pub-
lished on May 22, 2007 (72 Fed.
Reg. 28604). (2006 C. L.).
•Notice 2007–69, 2007–2 C.B.
468, provides temporary re-
lief, for certain pension plans
under which the definition of
normal retirement age may be
required to be changed to com-
ply with the regulations, but
only until the first day of the
first plan year that begins after
June 30, 2008. (2007 C. L.).
•Notice 2008–98, 2008–44
I.R.B. 1080, provides that the
Service and Treasury intend to
amend the normal retirement
age regulations to change the
effective date for governmen-
tal plans to plan years begin-
2
The Service will also not consider the requirements of § 436 in its review of any Cycle E determination letter application. The Service will consider the requirements of §§ 401(a)(35),
411(a)(13), and 411(b)(5) in its review of a Cycle E determination letterapplication only if the plan has been amended to meet those requirements.
December 28, 20099752009–52 I.R.B.

ning on or after January 1,
2011.
3
(New).
•Rev. Rul. 2008–40, 2008–30
I.R.B. 166, provides that the trans-
fer of amounts from a trust un-
der a plan qualified under § 401(a)
to a nonqualified foreign trust is
treated as a distribution from the
transferor plan and that transfer of
assets and liabilities from a qual-
ified plan to a plan that satisfies
§ 1165 of the Puerto Rico Code is
also treated as a distribution from
the transferor plan. (2008 C. L.).
•Rev. Rul. 2008–45, 2008–34
I.R.B. 403, provides that the ex-
clusive benefit rule of § 401(a)
is violated if the sponsorship of a
qualified retirement plan is trans-
ferred from an employer to an un-
related taxpayer and the transfer is
not in connection with a transfer of
business assets or operations from
the employer to the unrelated tax-
payer. (2008 C. L.).
3.401(a)(4):
•Amendments to § 1.401(a)(4)–8
of the Regulations relating to new
comparability plans were pub-
lished on June 29, 2001 (66 Fed.
Reg. 34535). (2004 C. L.).
•Rev. Rul. 2001–30, 2001–2 C.B.
46. (2004 C. L.).
•Amendments to § 1.401(a)(4)–9
of the Regulations relating to new
comparability plans were pub-
lished on June 29, 2001 (66 Fed.
Reg. 34535). (2005 C. L.).
•Rev. Rul. 2004–21, 2004–1 C.B.
544. (2005 C. L.).
4.401(a)(5): Section 401(a)(5)(G) of
the Code was amended by PPA ’06
§ 861(a)(1) with respect to govern-
mental plans. (2008 C. L.).
5.401(a)(9):
•Sections 1.401(a)(9)–1 through –9
of the Regulations were published
on April 17, 2002 and June 15,
2004 (67 Fed. Reg. 18988 and 69
Fed. Reg. 33288). (2004 C. L.).
•Finalregulationsunder
§ 401(a)(9) were published on
September 8, 2009 (74 Fed. Reg.
45993), which permit a govern-
mental plan to comply with the
required minimum distribution
rules of § 401(a)(9) by using a
reasonable and good faith inter-
pretation of the statute. (New).
6.401(a)(17): Section 401(a)(17) of the
Code was amended by § 611(c) of
EGTRRA to increase the compensa-
tion limit to $200,000. (2004 C. L.).
•Notice 2001–56, 2001–2 C.B.
277. (2004 C. L.).
7.401(a)(26): Section 401(a)(26)(G) of
the Code was amended by PPA ’06
§ 861(a)(1) with respect to govern-
mental plans. (2008 C. L.).
8.401(a)(31):
•Section 401(a)(31) was amended
by§643(b)ofEGTRRAtoallow
employees’ after-tax contribu-
tions to be rolled over under cer-
tain circumstances. (2004 C. L.).
•Section 401(a)(31)(B) was
amended by § 657(a) of EGTRRA
(asamendedby§411(t)of
JCWAA) to provide for the auto-
matic rollover of certain manda-
tory distributions. The effective
date is March 28, 2005. (2004
C. L.).
•Notice 2005–5, 2005–1 C.B.
337. (2004 C. L.).
•Sections 641, 642 and 643
of EGTRRA (as amended by
§411(q)ofJCWAA)amended
the definition of eligible retire-
ment plan in § 402 of the Code to
include a § 403(b) annuity con-
tract and eligible governmental
§ 457(b) plan. (2004 C. L.).
•Section 636(b) of EGTRRA mod-
ified the definition of eligible
rollover distribution to exclude
hardship distributions. (2004
C. L.).
9.401(a)(35): PPA ’06 § 901(a)(1)
added § 401(a)(35) requiring that
defined contribution plans provide
employees with the freedom to di-
vest publicly traded securities.
4
(2008
C. L.).
•Notice 2006–107, 2006–2 C.B.
1114. (2008 C. L.).
•Notice 2008–7, 2008–1 C.B. 276,
extends certain transitional guid-
ance and transitional relief pro-
vided to certain defined contribu-
tion plans holding publicly traded
employer securities under Notice
2006–107. (2008 C. L.).
•WRERA § 109(a) amended
the definition of one-partic-
ipant retirement plan under
§ 401(a)(35)(E)(iv). (New).
10.401(a)(36): PPA’06§905(b)added
§ 401(a)(36) regarding distributions to
a participant who has attained age 62
and who has not separated from em-
ployment at the time of the distribu-
tion. (2008 C. L.).
11.401(k) & 401(m):
•Section401(k)(2)and
§ 401(k)(10) of the Code were
amended by § 646(a)(1) of
EGTRRA to permit distribu-
tions of elective deferrals from
a § 401(k) plan upon severance
from employment. (2004 C. L.).
•Notice 2002–4, 2002–1 C.B.
298. (2004 C. L.).
•Section 636(a) of EGTRRA di-
rected the Secretary of the Trea-
sury to revise the regulations relat-
ing to safe harbor hardship distri-
butions of elective deferrals from
§ 401(k) plans so that the time the
employee is prohibited from mak-
ing elective and employee contri-
butions is reduced from one year
to six months after a hardship dis-
tribution. (2004 C. L.).
•Notice 2001–56. (2004 C. L.).
•Notice 2002–4. (2004 C. L.).
•Section 401(k)(11) of the Code
wasamendedby§611(f)of
EGTRRA to increase the maxi-
mum amount of qualified salary
reduction contributions that can
3
Notice 2009–86, 2009–46 I.R.B. 629, provides that the Service and Treasury intend to amend the normal retirement age regulations to change the effective date for governmental plans to
plan years beginning on or after January 1, 2013.
4
Proposed regulations under § 401(a)(35) were published on January 3, 2008 (73 Fed. Reg. 421) and may be relied upon until final regulations are issued.The Service will consider the
requirements of § 401(a)(35) in its review of a Cycle E determination letter application only if the plan has been amended to meet those requirements.
2009–52 I.R.B.976December 28, 2009

be made to SIMPLE 401(k) plans.
(2004 C. L.).
•Section 402(g) of the Code was
amendedby§611(d)ofEGTRRA
to increase the applicable dollar
amount. (2004 C. L.).
•Section 401(m)(9) of the Code
was amended by § 666 of
EGTRRA to eliminate the multi-
ple use test. (2004 C. L.).
•Final Regulations under § 401(k)
and § 401(m) of the Code were
published on December 29, 2004
(69 Fed. Reg. 78144).
5
(2004
C. L.).
•Announcement 2007–59, 2007–1
C.B. 1448, provides that a plan
will not fail to satisfy the require-
ments of a § 401(k) safe har-
bor plan because of a mid-year
change to implement a designated
Roth contribution program. (2007
C. L.).
•PPA ’06 § 826 modified the rules
relating to distributions from a
§ 401(k) plan on account of a par-
ticipant’s hardship to permit the
plan to treat a participant’s bene-
ficiary under the plan the same as
the participant’s spouse or depen-
dent. (2008 C. L.).
•Notice 2007–7, 2007–1 C.B.
395, provides guidance re-
garding PPA ’06 § 826. (2008
C. L.).
•Announcement2007–59,
2007–1 C.B. 1448, provides
that a plan will not fail to
satisfy the requirements of a
§ 401(k) safe harbor plan be-
cause of a mid-year change to
implement the PPA ’06 § 826
hardship withdrawals. (2008
C. L.).
•PPA ’06 § 827 added
§ 401(k)(2)(B)(i)(V) which per-
mits reservists called to active
duty after September 11, 2001
and before 2008 to take in-service
distributions from a § 401(k) plan.
(2008 C. L.).
•Section107(a)oftheHEART
Act extends the applicability
of the qualified reservist distri-
bution to individuals ordered
or called to active duty after
December 31, 2007. (New).
•PPA ’06 § 861(a)(2) amended
§ 401(k)(3)(G) with respect to
governmental plans. (2008 C. L.).
•PPA ’06 § 902(e)(3) eliminates the
gap period income rule for excess
contributions in § 401(k)(8)(A)(i).
(2008 C. L.).
•PPA’06§902added§401(k)(13)
with respect to qualified automatic
contribution arrangements. (2008
C. L.).
•Final regulations under
§ 401(k) with respect to qual-
ified automatic contribution
arrangements were published
on February 24, 2009 (74 Fed.
Reg. 8200). (New).
•Rev. Rul. 2009–30, 2009–39
I.R.B. 391, provides infor-
mation with respect to auto-
matic contribution increases
under automatic contribution
arrangements. (New).
•Notice 2009–65, 2009–39
I.R.B. 413, provides sample
amendments that plan spon-
sors can use to add automatic
contribution features to their
plans. (New).
•PPA ’06 § 902(e)(3) eliminates
the gap period income rule for
excess aggregate contributions in
§ 401(m)(6)(A). (2008 C. L.).
•PPA ’06 § 902 added § 401(m)(12)
with respect to qualified automatic
contribution arrangements. (2008
C. L.).
•Final regulations under
§ 401(m) with respect to qual-
ified automatic contribution
arrangements were published
on February 24, 2009 (74 Fed.
Reg. 8200). (New).
12.402(c)(2)(A): PPA ’06 § 822(a)
amended § 402(c)(2)(A) to permit
nontaxable distributions from a qual-
ified plan to be directly rolled over
tax-free to either another qualified
plan or a § 403(b) plan if the sepa-
rate accounting requirements are met.
(2008 C. L.).
13.402(c)(11): PPA ’06 § 829(a)(1)
added § 402(c)(11) to allow non-
spouse beneficiaries to directly roll
over distributions from a qualified
plan to an individual retirement plan.
(2008 C. L.).
•Notice 2007–7, 2007–1 C.B.
395, provides guidance regarding
§ 402(c)(11). (2008 C. L.).
•WRERA § 108(f) requires
that plans provide for non-
spouse beneficiary rollovers
under § 402(c)(11), effective
for plan years beginning after
December 31, 2009. (New).
14.402(f): PPA ’06 § 1102(a) provides
that notice required to be provided un-
der § 402(f) may be provided as much
as 180 days before the annuity starting
date.
6
(2008 C. L.).
•Notice 2007–7, 2007–1 C.B.
395, provides guidance regarding
PPA ’06 § 1102. (2008 C. L.).
•Notice 2009–68, 2009–39 I.R.B.
423, provides two safe harbor ex-
planations that may be provided to
recipients of eligible rollover dis-
tributions from an employer to sat-
isfy § 402(f). (New).
•WRERA § 108(f)(2) amended
§ 402(f)(2)(A) with respect to the
definition of eligible rollover dis-
tribution. (New).
15.402(g)(2): WRERA § 109(b)(3)
amended § 402(g)(2)(A)(ii) to elim-
inate the distribution of gap pe-
riod earnings with excess deferrals.
(New).
16.402A: Section 402A of the Code was
addedby§617ofEGTRRAtooffer
optional treatment of elective defer-
rals as designated Roth contributions
to defined contribution plans, effec-
tive for taxable years beginning after
December 31, 2005. (2004 C. L.).
•Final Regulations under § 401(k)
and § 401(m) of the Code relating
to designated Roth contributions
were published on January 3, 2006
(71 Fed. Reg. 6). (2005 C. L.).
5
Proposed amendments to the regulations under § 401(k) and § 401(m) were published on May 18, 2009 (74 Fed. Reg. 23134) and may be relied upon until final regulations are issued.
6
Proposed regulations under § 402(f) were published on October 9, 2008 (73Fed. Reg. 59575) and may be relied upon until final regulations are issued.
December 28, 20099772009–52 I.R.B.

•Notice 2006–44, 2006–1
C.B. 889, provides a sample
amendment for Roth § 401(k)
plans. (2006 C. L.).
•Final Regulations under § 402A
of the Code were published on
April 30, 2007 (72 Fed. Reg.
21103). (2006 C. L.).
17.404:
•Section 404(k)(2)(A) of the
Code was amended by § 662(a)
of EGTRRA (as amended by
§ 411(w) of JCWAA) to allow
ESOP dividends to be reinvested
without the loss of dividend de-
ductions. (2005 C. L.).
•Notice 2002–2, 2002–1 C.B.
285, provides guidance with
respect to the changes made to
§ 404(k) of the Code and on
theeffectivedateof§409(p)
of the Code. (2005 C. L.).
18. 408(q): Section 408(q) of the Code
was added by § 602 of EGTRRA (as
amended by § 411(i) of JCWAA) to al-
low for deemed individual retirement
accounts (IRAs) in an eligible retire-
ment plan. (2004 C. L.).
•Section 1.408(q)–1 of the Regu-
lations was published on July 22,
2004 (69 Fed. Reg. 43735).
(2004 C. L.).
19.408A(e): PPA ’06 § 824 added
§ 408A(e) which permits rollovers to
Roth IRAs from accounts that are not
designated Roth accounts that are part
of qualified plans, § 403(b) plans, and
§ 457 plans. (2008 C. L.).
•Notice 2008–30, 2008–1 C.B.
638, provides guidance regarding
PPA ’06 § 824. (2008 C. L.).
20.409: Section 409(p) of the Code was
added by § 656 of EGTRRA relating
to restrictions on the allocation of em-
ployer securities in an ESOP main-
tained by an S corporation. (2005
C. L.).
•Section 1.409(p)–1T of the Regu-
lations was published on July 21,
2003 (68 Fed. Reg. 42970).
(2005 C. L.).
•Section 1.409(p)–1T of the Reg-
ulations was published on De-
cember 17, 2004 (69 Fed. Reg.
75455). (2005 C. L.).
•Rev. Proc. 2003–23, 2003–1 C.B.
599, as modified and superseded
by Rev. Proc. 2004–14, 2004–1
C.B. 489, allows a direct rollover
from an ESOP maintained by an S
corporation to an individual retire-
ment plan (IRA). (2005 C. L.).
•Rev. Rul. 2003–6, 2003–1 C.B.
286, provides guidance with re-
spect to whether an ESOP main-
tained by an S corporation is eligi-
ble for the delayed effective date
of § 409(p) under § 656(d)(2) of
EGTRRA. (2005 C. L.).
•Rev. Rul. 2004–4, 2004–1 C.B.
414, provides guidance relating to
synthetic equity owned by a dis-
qualified person in a nonallocation
year of an ESOP maintained by an
S corporation. (2005 C. L.).
•Final Regulations were published
on December 20, 2006 (71 Fed.
Reg. 76134) that provide guid-
ance concerning requirements un-
der § 409(p) for ESOPs holding
stock of S corporations. (2006
C. L.).
21.410(b): Final Regulations were pub-
lished on July 21, 2006 (71 Fed. Reg.
41357) permitting some employees
of tax-exempt organizations to be ex-
cluded when determining whether a
§ 401(k) plan meets the § 410(b) min-
imum coverage requirements. (2006
C. L.).
22.411(a):
•Section411(a)oftheCodewas
amended by § 633 of EGTRRA
(as amended by § 411(o) of
JCWAA) to provide for faster
vesting of matching contributions.
(2004 C. L.).
•Rev. Rul. 2003–65, 2003–1 C.B.
1035. (2005 C. L.).
•Amendments to § 1.411(d)–3 of
the Final Regulations were pub-
lished on August 9, 2006 (71 Fed.
Reg. 45379) with respect to the
interaction between the anti-cut-
back rules of § 411(d)(6) and the
nonforfeitability requirements of
§ 411(a). (2006 C. L.).
•Section411(a)oftheCodewas
amended by § 904 of PPA ’06 to
provide for faster vesting of em-
ployer nonelective contributions.
(2008 C. L.).
•Notice 2007–7, 2007–1 C.B.
395, provides guidance re-
garding § 411(a), as amended
by § 904 of PPA ’06. (2008
C. L.).
23.411(a)(11): Section 411(a)(11)(D) of
the Code was added by § 648(a) of
EGTRRA (as amended by § 411(r)
of JCWAA) to allow amounts attrib-
utable to rollover contributions to be
disregarded in determining the value
of an account balance for involuntary
distributions. (2004 C. L.).
•PPA ’06 § 1102(a) provides that
notice required to be provided
under § 411(a)(11) may be pro-
vided as much as 180 days before
the annuity starting date. Section
1102(b) of PPA ’06 requires that
the notice under § 411(a)(11) also
include a description of the conse-
quences of failing to defer receipt
of a distribution.
7
(2008 C. L.).
•Notice 2007–7, 2007–1 C.B.
395, provides guidance re-
gardingPPA’06§1102.
(2008 C. L.).
24.411(a)(13): PPA ’06 § 701(b)(2)
added § 411(a)(13) with respect to
special vesting rules for applicable
defined benefit plans, such as cash
balance plans.
8
(2008 C. L.).
•Notice 2007–6, 2007–1 C.B. 272,
provides guidanceregarding cash
balance plans and other hybrid de-
fined benefit plans. (2008 C. L.).
•WRERA § 107(b)(2) amended
§ 411(a)(13)(A). (New).
7
Proposed regulations under § 411(a)(11) were published on October 9, 2008 (73 Fed. Reg. 59575). Until final regulations are issued, a plan will be treated as complying with § 411(a)(11) if
(1) the plan complies with either the proposed regulations or Q&A–32 and Q&A–33 in Notice 2007–7; or (2) if the plan administrator makes a reasonable attempt to comply with § 411(a)(11).
8
Proposed regulations under § 411(a)(13) were published on December 28, 2007 (72 Fed. Reg. 73680) and may be relied upon until final regulations are issued. The Service will consider
the requirements of § 411(a)(13) in its review of aCycle E determination letter application only ifthe plan has been amended to meet those requirements.
2009–52 I.R.B.978December 28, 2009

25.411(b)(1):
•Rev. Rul. 2008–7, 2008–1 C.B.
419, addresses (1) the application
of the backloading provisions of
§ 411(b)(1)(A), (B), and (C) to de-
fined benefit cash balance plans
and (2) the use of a “greater of”
formula in the instance of a con-
version of a defined benefit pen-
sion plan to a cash balance plan,
including limited § 7805(b) relief.
(2008 C. L.).
26.411(b)(5): PPA ’06 § 701(b)(1) added
§ 411(b)(5) with respect to applica-
ble defined benefit plans, such as cash
balance plans, and special rules relat-
ing to age.
9
(2008 C. L.).
•Notice 2007–6, 2007–1 C.B. 272,
provides guidance regarding cash
balance plans and other hybrid de-
fined benefit plans. (2008 C. L.).
•WRERA § 107(b)(1) amended
§ 411(b)(5). (New).
27.411(d)(3):
•Rev. Rul. 2007–43, 2007–2 C.B.
45, provides guidance regarding
the partial termination of a defined
contribution plan. (2007 C. L.).
28.411(d)(6):
•Central Laborers’ Pension Fund
v. Heinz, 124 S.Ct. 2230 (2004).
(2005 C. L.).
•Rev. Proc. 2005–23, 2005–1
C.B. 991, as modified by Rev.
Proc. 2005–76, 2005–2 C.B.
1139. (2005 C. L.).
•Amendments to § 1.411(d)–3
of the Final Regulations were
published on August 9, 2006
(71 Fed. Reg. 45379) with
respect to the interaction be-
tween the anti-cutback rules
of § 411(d)(6) and the non-
forfeitability requirements of
§ 411(a). (2006 C. L.).
•Section 645(b)(3) of EGTRRA
directed the Secretary of the Trea-
sury to issue regulations under
§ 411(d)(6)(B). (2005 C. L.).
•Section 1.411(d)–3 of the Reg-
ulations was published on Au-
gust 12, 2005 (70 Fed. Reg.
47109). (2005 C. L.).
•Amendments to § 1.411(d)–3
of the Final Regulations were
published on August 9, 2006
(71 Fed. Reg. 45379) with
respect to a utilization test.
(2006 C. L.).
•Section 411(d)(6)(D) and
§ 411(d)(6)(E) of the Code were
added by § 645 of EGTRRA to
permit the elimination of certain
optional forms of benefit under
certain conditions. (2005 C. L.).
•Section1.411(d)–4,
Q&A–2(e) of the Regulations
was published on January 25,
2005 (70 Fed. Reg. 3475)
to implement § 411(d)(6)(E).
(2005 C. L.).
29.412
•Rev. Rul. 2004–20, 2004–1 C.B.
546, provides guidance with re-
spect to whether a qualified pen-
sion plan can be a § 412(i) plan
if the plan holds life insurance
contracts and annuity contracts for
benefits at normal retirement age
in excess of a participant’s bene-
fits at normal retirement age under
the plan. (2005 C. L.).
•Notice 2004–59, 2004–2 C.B.
447, provides guidance with re-
spect to restrictions placed on
plan amendments following an
employer’s election of an alterna-
tive deficit reduction contribution.
(2005 C. L.).
30.414(d): PPA ’06 § 906(a)(1) added
language to the definition of govern-
mental plan in § 414(d) with respect
to Indian tribal governments. (2008
C. L.).
•Notice 2006–89, 2006–2 C.B.
772, provides transition relief for
plans subject to PPA ’06 § 906.
(2008 C. L.).
•Notice 2007–67, 2007–2 C.B.
467, extends the transition re-
lief provided in Notice 2006–89.
(2008 C. L.).
31.414(f)(6): PPA ’06 § 1106(b) added
§ 414(f)(6) with respect to a mul-
tiemployer status election. Sec-
tion 6611(a)(2) and (b)(2) of the
U.S. Troop Readiness, Veterans’
Care, Katrina Recovery, and Iraq
Accountability Appropriations Act,
2007 amends § 414(f)(6). (2008 C.
L.).
32.414(v): Section414(v)oftheCode
was added by § 631 of EGTRRA (as
amended by § 411(o) of JCWAA) to
allow for catch-up contributions for
individuals age 50 or older. (2004
C. L.).
•Regulations under § 414(v) were
published on July 8, 2003 (68 Fed.
Reg. 40510). (2004 C. L.).
•Notice 2002–4. (2004 C. L.).
33.414(w): PPA ’06 § 902(d)(1) added
§ 414(w) with respect to eligible au-
tomatic contribution arrangements.
(2008 C. L.).
•WRERA § 109(b)(4), (5), and (6)
amended § 414(w)(3), (5), and (6)
respectively. (New).
•Final regulations under § 414(w)
with respect to eligible automatic
contribution arrangements were
published on February 24, 2009
(74 Fed. Reg. 8200). (New).
•Rev. Rul. 2009–30, 2009–39
I.R.B. 391, provides information
with respect to automatic con-
tribution increases under auto-
matic contribution arrangements.
(New).
•Notice 2009–65, 2009–39 I.R.B.
413, provides sample amend-
ments that plan sponsors can use
to add automatic contribution fea-
tures to their plans. (New).
34.415:
•Section 415(c) of the Code was
amended by §§ 611(b) and 632
9
Proposed regulations under § 411(b)(5) were published on December 28, 2007 (72 Fed. Reg. 73680) and may be relied upon until final regulations are issued. Announcement 2009–82,
2009–48 I.R.B. 720 , November 30, 2009, announces relief for sponsors of statutory hybrid plans that must amend the interest crediting rate in those plans. Plan sponsors may rely on Ann.
2009–82 pending publication of the anticipated additional guidance described in the announcement. The Service will consider the requirements of § 411(b)(5) in its review of a Cycle E
determination letter application only if the plan has been amended to meet those requirements.
December 28, 20099792009–52 I.R.B.

of EGTRRA (as amended by
§411(p)ofJCWAA)toincrease
the maximum annual additions
permitted to the lesser of $40,000
or 100% of compensation. (2004
C. L.).
•Rev. Rul. 2001–51, 2001–2
C.B. 427. (2004 C. L.).
•Rev. Rul. 2002–27, 2002–1
C.B. 925, provided that “com-
pensation” within the meaning
of § 415(c) could in certain sit-
uations include “deemed § 125
compensation”. (2004 C. L.).
•Section 415(b) of the Code
was amended by § 611 of
EGTRRA to increase the dol-
lar limit and change the age
when the limit is reduced or
increased. (2005 C. L.).
•Rev. Rul. 2001–51,
2001–2 C.B. 427. (2004
C. L.).
•Section 415(b)(2)(E)(ii) of
the Code was amended by
§ 101(b)(4) of PFEA to fix
the percentage at 5.5%. (2005
C. L.).
•Notice 2004–78, 2004–2
C.B. 879, provides the ac-
tuarial assumptions that
must be used for distribu-
tions with annuity start-
ing dates occurring during
the plan years beginning
in 2004 and 2005. (2005
C. L.).
•WRERA § 103(a) changed
the deadline to adopt
PFEA amendments from
theendofthe2008plan
year to the end of the 2009
plan year. (New).
•Section 415(b)(2)(E)(ii) of the
Code was amended by § 303
of PPA ’06 regarding the in-
terest rate assumption for ap-
plying benefit limitations to
lump sum distributions. (2008
C. L.).
•PPA ’06 § 832(a) amended
§ 415(b)(3) to eliminate the
active participant restriction
from the “average compensa-
tion for high 3 years” defini-
tion. (2008 C. L.).
•PPA ’06 § 906(b)(1)(A) &
(B)modified§§415(b)(2)(H)
and 415(b)(10), respectively,
regarding Indian tribal gov-
ernments. (2008 C. L.).
•PPA ’06 § 867(a) amended
§ 415(b)(11) to remove the
100% of compensation limi-
tation for a church plan par-
ticipant if the participant has
never been a highly compen-
sated employee of the church.
(2008 C. L.).
•Final Regulations under § 415
were published on April 5,
2007 (72 Fed. Reg. 16878).
(2006 C. L.).
•WRERA § 103(b)(2)(B)(i)
amended § 415(b)(2)(E)(v).
(New).
35.416:
•Section 416 of the Code was
amended by § 613 of EGTRRA
(as amended by § 411(k) of
JCWAA) to make several changes
to the top-heavy rules. (2004
C. L.).
•Section 416(g)(4)(H) of the
Code was added by § 613(d)
of EGTRRA to provide certain
safe harbor § 401(k) plans and
§ 401(m) plans an exemption from
the top-heavy rules. (2004 C. L.).
•Rev. Rul. 2004–13, 2004–1
C.B. 485. (2004 C. L.).
•Section 416(c)(1)(C) of the
Code was amended by § 613(e)
of EGTRRA (as amended by
§ 411(k)(1) of JCWAA) to provide
when a frozen defined benefit plan
is exempt from the minimum ben-
efit requirements. (2005 C. L.).
•PPA ’06 § 902(c)(1) amended
§ 416(g)(4)(H)(i) by inserting
§ 401(k)(13) of the Code. (2008
C. L.).
•PPA ’06 § 902(c)(2) amended
§ 416(g)(4)(H)(ii) by inserting
§ 401(m)(12) of the Code. (2008
C. L.).
36.417:
•Section 1.417(e)–1 of the Regu-
lations was published on July 16,
2003 (68 Fed. Reg. 41906) relat-
ing to retroactive annuity starting
dates. (2005 C. L.).
•FinalRegulationsunder
§ 417(a)(3) were published on
March 24, 2006 (71 Fed. Reg.
14798) regarding the disclosure
of the relative value of optional
forms of benefit. (2006 C. L.).
•PPA ’06 § 1102(a) provides that
notice required to be provided un-
der § 417 may be provided as
much as 180 days before the an-
nuity starting date.
10
(2008 C. L.).
•Notice 2007–7, 2007–1 C.B.
395, provides guidance re-
gardingPPA’06§1102.
(2008 C. L.).
•PPA ’06 § 302(b) amended the ap-
plicable interest rate and mortal-
ity table to be used for determin-
ing the present value of lump sum
distributions in § 417(e)(3). (2008
C. L.).
•Rev. Rul. 2007–67, 2007–2
C.B. 1047, addresses the
mortality tables required by
§ 417(e)(3). (2008 C. L.).
•Notice 2008–30, 2008–1 C.B.
638, provides guidance re-
garding PPA ’06 § 302. (2008
C. L.).
•WRERA § 103(b)(2)(A)
amended § 417(e)(3)(D)(i).
(New).
•PPA ’06 § 1004(a) added the qual-
ified optional survivor annuity
benefit to § 417. (2008 C. L.).
•Notice 2008–30, 2008–1 C.B.
638, provides guidance re-
garding PPA ’06 § 1004.
(2008 C. L.).
37.420:
•Section6613oftheU.S.Troop
Readiness, Veterans’ Care,
Katrina Recovery, and Iraq
Accountability Appropriations
Act, 2007, amends § 420(c)(3)(A)
regardingminimumcost
requirements for transfers of
10
Proposed regulations under § 417 were published on October 9, 2008 (73 Fed. Reg. 59575) and may be relied upon until final regulations are issued.
2009–52 I.R.B.980December 28, 2009

excess pension assets to retiree
health accounts. (2007 C. L.).
•PPA ’06 § 114(d)(1) modified
the definition of the term “excess
pension assets” in § 420(e)(2).
Section 6612(b) of the U.S.
Troop Readiness, Veterans’ Care,
Katrina Recovery, and Iraq
Accountability Appropriations
Act, 2007, amends § 420(e)(2)(B).
(2007 C. L.).
38.432: PPA ’06 § 212(a) added § 432
which requires that a funding im-
provement plan or a rehabilitation
plan be adopted for multiemployer
plans in endangered or critical status
and provides for certain benefit re-
ductions.
11
(2008 C. L.).
•WRERA § 204 provides a tempo-
rary delay of designation of mul-
tiemployer plans in endangered or
critical status. (New).
•Notice 2009–31, 2009–16
I.R.B. 856, as modified by
Notice 2009–42, 2009–20
I.R.B. 1011, provides elec-
tion and notice procedures for
multiemployer plans under
WRERA § 204. (New).
•Rev. Proc. 2009–43, 2009–40
I.R.B. 460, provides proce-
dures with respect to the re-
vocation of elections by mul-
tiemployer plans to freeze
funded status under WRERA
§204.(New).
•WRERA § 205 provides a tempo-
rary extension of the funding im-
provement or rehabilitation peri-
ods for multiemployer plans in en-
dangered or critical status for 2008
or 2009. (New).
•Notice 2009–31, 2009–16
I.R.B. 856, as modified by
Notice 2009–42, 2009–20
I.R.B. 1011, provides elec-
tion and notice procedures for
multiemployer plans under
WRERA § 205. (New).
39.4975:
•Section 4975 of the Code was
amendedby§612ofEGTRRAto
allow plan loans for Subchapter
S shareholder-employees. (2004
C. L.).
•Section 4975(f) of the Code was
amendedby§240ofAJCAto
allow an S corporation distribu-
tion on allocated shares to pay off
an exempt loan as long as equal
amounts are allocated to partici-
pant accounts. (2005 C. L.).
40.Hurricane Relief:
•Katrina Emergency Tax Relief Act
of 2005, Pub. L. 109–73. (2005
C. L.).
•Notice 2005–92, 2005–2 C.B.
1165. (2005 C. L.).
•Announcement 2005–70, 2005–2
C.B. 682. (2005 C. L.).
•Gulf Opportunity Zone Act of
2005, Pub. L. 109–135, added
§ 1400M and § 1400Q to the Code
to provide certain tax benefits to
those areas affected by Hurricanes
Katrina, Wilma, and Rita. (2006
C. L.).
•Notice 2008–87, 2008–42 I.R.B.
930, provides relief in connec-
tion with certain employee benefit
plans because of damage caused
by Hurricane Ike. (New).
•Emergency Economic Stabi-
lization Act of 2008, Pub. L.
110–343, provides temporary tax
relief for areas damaged by 2008
Midwestern severe storms, tor-
nados, and flooding by applying
§ 1400Q and KETRA to any Mid-
western disaster area. (New).
41.Miscellaneous:
•Rev. Rul. 2002–42, 2002–1 C.B.
76, provides guidance with re-
spect to a situation where a money
purchase pension plan is merged
or converted into a profit sharing
plan. (2004 C. L.).
•Rev. Proc. 2002–21, 2002–1 C.B.
911, provides guidance with re-
spect to defined contribution re-
tirement plans maintained by pro-
fessional employer organizations.
(2004 C. L.).
•Rev. Proc. 2003–86, 2003–2
C.B. 1211, amplifies Rev. Proc.
2002–21 relating to relief pro-
vided for certain defined contri-
bution plans maintained by pro-
fessional employer organizations.
(2004 C. L.).
•Rev. Rul. 2004–10, 2004–1 C.B.
484, provides guidance with re-
spect to charging administrative
expenses to former and current
employees. (2004 C. L.).
•Rev. Rul. 2004–12, 2004–1 C.B.
478, provides guidance with re-
spect to the distribution restric-
tions applicable to rollover contri-
butions. (2004 C. L.).
•Rev. Rul. 2001–62, 2001–2 C.B.
632, provides guidance with re-
spect to the mortality table un-
der § 415(b)(2)(E)(v) of the Code
and the applicable mortality table
under § 417(e)(3)(A)(ii)(I) of the
Code. (2005 C. L.).
•Rev. Rul. 2003–11, 2003–1 C.B.
285, provides guidance with re-
spect to satisfying the nondiscrim-
ination rules under § 401(a)(4) of
the Code and the minimum cover-
age requirements under § 410(b)
of the Code when applying the in-
creased compensation limit to for-
mer employees. (2005 C. L.).
•Rev. Rul. 2005–55, 2005–2 C.B.
284, provides guidance with re-
spect to medical reimbursement
accounts under a profit sharing
plan. (2005 C. L.).
•Section 1.401(a)–21 of the Fi-
nal Regulations was published on
October 20, 2006 (71 Fed. Reg.
61877) setting forth standards for
the use of an electronic medium
to provide applicable notices to
recipients or to make participant
elections. (2006 C. L.).
•Notice 2008–21, 2008–1 C.B.
431, provides transitional guid-
ance for 2008 under § 436 for
small plans with end-of-year val-
uation dates. (2008 C. L.).
•Notice 2008–73, 2008–38 I.R.B.
717, expands transition relief of
Notice 2008–21. (2008 C. L.).
•Rev. Rul. 2009–31, 2009–39
I.R.B. 395, provides guidance
with respect to annual paid time
off contributions. (New).
11
Proposed regulations under § 432 were published on March 18, 2008 (73 Fed. Reg. 14417) and may be relied upon until final regulations are issued.
December 28, 20099812009–52 I.R.B.

•Rev. Rul. 2009–32, 2009–39
I.R.B. 398, provides guidance
with respect to paid time off con-
tributions at termination of em-
ployment. (New).
The following guidance contains
sample or model amendments: Notice
2001–57, 2001–1 C.B. 279 (miscella-
neous EGTRRA amendments); Rev. Rul.
2001–62, 2001–2 C.B. 632 (applicable
mortality table); Rev. Proc. 2002–29,
2002–2 C.B. 1176 (required minimum
distribution amendments); Rev. Proc.
2003–13, 2003–1 C.B. 317 (required lan-
guage for deemed IRAs); Notice 2005–5
(automatic rollover); Notice 2006–44,
2006–1 C.B. 889 (Roth § 401(k) plans);
and Notice 2009–65, 2009–39 I.R.B. 413
(automatic contribution features).
VII. HEROES EARNINGS
ASSISTANCE AND RELIEF TAX
ACT OF 2008 PROVISIONS
As provided in section IV of this notice,
a plan amendment made pursuant to sec-
tion 104(a) or 105(b)(1) of the HEART Act
generally may be retroactively effective,
if,inadditiontomeetingtheotherapplica-
ble requirements, the amendment is made
on or before the last day of the first plan
year beginning on or after January 1, 2010
(January 1, 2012 in the case of a govern-
mental plan). While plans submitting in
Cycle E must meet the amendment dead-
line for the HEART Act, if applicable, the
Service will not consider the HEART Act
in issuing determination letters because no
guidance has been issued with respect to
the HEART Act. The HEART Act provi-
sions are listed below.
1.401(a)(37): Section104(a)ofthe
HEART Act added Code § 401(a)(37)
with respect to benefits payable on
the death of a plan participant while
performing qualified military service.
(2008 C. L.).
2.414(u)(9): Section 104(b) of the
HEART Act amended § 414(u) of the
Code by adding a paragraph regarding
how a plan may provide benefit accru-
als for a person who dies or becomes
disabled while performing qualified
military service. (2008 C. L.).
3.414(u)(12): Section 105(b)(1) of the
HEART Act added § 414(u)(12) with
respect to the treatment of differen-
tial wage payments during the period
a person, while on active duty, is per-
forming service in the uniformed ser-
vices. (2008 C. L.).
VIII. WORKER, RETIREE, AND
EMPLOYER RECOVERY ACT OF 2009
PROVISION
As provided in section V of this no-
tice, a plan amendment made pursuant to
WRERA section 201 generally may be
retroactively effective, if, in addition to
meeting the other applicable requirements,
the amendment is made on or before the
last day of the first plan year beginning on
or after January 1, 2011 (January 1, 2012
in the case of a governmental plan). The
WRERA provision is listed below.
1.401(a)(9)(H): Section 201(a) of
WRERA added § 401(a)(9)(H) which
provides a suspension of the mini
mum
distribution requirement for 20
09
applicable to defined contribut
ion
plans. (New).
•Notice 2009–82, 2009–41 I.R.B.
491, provides guidance relating to
the suspension of the minimum
distribution requirement for 2009
applicable to defined contribution
plans. (New).
DRAFTING INFORMATION
The principal author of this notice is
Angelique Carrington of the Employee
Plans, Tax Exempt and Government En-
tities Division. For further information
regarding this notice, please contact the
Employee Plans taxpayer assistance an-
swering service at 1–877–829–5500 (a toll
free number) or e-mail Ms. Carrington at
RetirementPlanQuestions@irs.gov.
26 CFR 601.201: Rulings and determination letters.
(Also Part I, Sections 846; 1.846–1.)
Rev. Proc. 2009–55
SECTION 1. PURPOSE
This revenue procedure prescribes the
loss payment patterns and discount factors
for the 2009 accident year. These factors
will be used for computing discounted un-
paid losses under § 846 of the Internal Rev-
enue Code.SeeRev. Proc. 2008–10,
2008–3 I.R.B. 290, for background con-
cerning the loss payment patterns and ap-
plication of the discount factors.
SECTION 2. SCOPE
This revenue procedure applies to any
taxpayer that is required to discount its un-
paid losses under § 846 for a line of busi-
ness using discount factors published by
the Secretary.
SECTION 3. TABLES OF DISCOUNT
FACTORS
.01 The following tables present sepa-
rately for each line of business the discount
factors under § 846 for accident year 2009.
All the discount factors presented in this
section were determined using the appli-
cable interest rate under § 846(c) for 2009,
which is 4.06 percent, and by assuming all
loss payments occur in the middle of the
calendar year.
.02 If the groupings of individual
lines of business on the annual state-
ment change, taxpayers must discount the
unpaid losses on the affected lines of busi-
ness in accordance with the discounting
patterns that would have applied to those
unpaid losses based on their classification
on the 2005 annual statement.SeeRev.
Proc. 2008–10, section 2, for additional
background on discounting under § 846
and the use of the Secretary’s tables.
.03 Section V of Notice 88–100,
1988–2 C.B. 439, sets forth a composite
method for computing discounted unpaid
losses for accident years that are not sep-
arately reported on the annual statement.
The tables separately provide discount
factors for taxpayers who elect to use the
composite method of section V of Notice
88–100.SeeRev. Proc. 2002–74, 2002–2
C.B. 980.
.04 Tables.
2009–52 I.R.B.982December 28, 2009

Tables of Factors to be Used to Discount
Unpaid Losses Incurred in
Accident Year 2009
(Interest rate: 4.06 percent)
Accident and Health (Other Than Disability Income or Credit Disability Insurance)
Taxpayers that do not use the composite method of Notice 88–100 should use 98.0298 percent to discount unpaid losses incurred
in this line of business in the 2009 accident year and that are outstanding at theend of the 2009 and later taxable years.
Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount all unpaid losses in this line of
business that are outstanding at the end of the 2009 taxable year.
Auto Physical Damage
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
200989.409689.4096
10.5904
10.363997.8613
201099.6848
10.27520.3152
0.303096.1174
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
2011 and later years
0.15760.15760.1545
98.0298
Taxpayers that use the composite method of Notice 88–100 shoulduse 98.0298 percent to discount unpaid losses incurred in this
line of business in 2009 and prior years and that areoutstanding at the end of the 2011 taxable year.
Commercial Auto
/Truck Liability/Medical
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
200923.671823.671876.328270.194291.9637
2010
47.5425
23.8708
52.4575
48.693692.8249
201166.684719.1421
33.3153
31.143793.4816
2012
81.510514.825818.4895
17.284393.4819
2013
90.05488.54439.9452
9.2701
93.2115
201494.73114.6763
5.2689
4.8762
92.5459
2015
97.06022.32922.93982.698291.7820
201698.1174
1.0572
1.88261.7293
91.8572
201798.8692
0.7518
1.13081.032691.3161
201899.11600.24670.88400.822893.0737
December 28, 20099832009–52 I.R.B.

Commercial Auto/Truck Liability/Medical
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
20190.24670.6373
0.604594.8560
20200.24670.39060.377496.6210
2021 and later years0.24670.14390.141098.0298
Taxpayers that use the composite method of Notice 88–100 shoulduse 95.8392 percent to discount unpaid losses incurred in this
line of business in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
Composite
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
200934.700434.7004
65.299659.2808
90.7829
2010
58.6076
23.907241.392437.299990.1131
201171.7608
13.1532
28.2392
25.3968
89.9346
201281.49879.7379
18.5013
16.4943
89.1521
201387.8488
6.350112.1512
10.686387.9440
201491.4226
3.57398.5774
7.4744
87.1415
201593.4057
1.9831
6.59435.7549
87.2720
201694.22800.8222
5.77205.1498
89.2206
2017
95.48751.25954.5125
4.074190.2843
2018
96.35600.8685
3.6440
3.3535
92.0287
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
2019
0.86852.7754
2.603693.8109
2020
0.8685
1.90691.8233
95.6199
2021
0.8685
1.03831.011497.4044
2022 and later years
0.8685
0.16980.166498.0298
Taxpayers that use the composite method of Notice 88–100 shoulduse 95.6075 percent to discount unpaid losses incurred in this
line of business in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
Fidelity/Surety
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2009
25.232825.2328
74.767271.0916
95.0839
2010
61.102535.869838.8975
37.387296.1174
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
2011 and later years19.448719.4487
19.0655
98.0298
Taxpayers that use the composite method of Notice 88–100 shoulduse 98.0298 percent to discount unpaid losses incurred in this
line of business in 2009 and prior years and that areoutstanding at the end of the 2011 taxable year.
2009–52 I.R.B.984December 28, 2009

Financial Guaranty/Mortgage Guaranty
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
20097.78247.782492.2176
88.256895.7050
201062.1390
54.3565
37.861036.391196.1174
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
2011 and later years
18.930518.930518.5575
98.0298
Taxpayers that use the composite method of Notice 88–100 shoulduse 98.0298 percent to discount unpaid losses incurred in this
line of business in 2009 and prior years and that areoutstanding at the end of the 2011 taxable year.
International (
Composite)
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
200934.700434.7004
65.299659.2808
90.7829
2010
58.6076
23.907241.392437.299990.1131
201171.7608
13.1532
28.2392
25.3968
89.9346
201281.49879.7379
18.5013
16.4943
89.1521
201387.8488
6.350112.1512
10.686387.9440
201491.4226
3.57398.5774
7.4744
87.1415
201593.4057
1.9831
6.59435.7549
87.2720
201694.22800.8222
5.77205.1498
89.2206
2017
95.48751.25954.5125
4.074190.2843
2018
96.35600.8685
3.6440
3.3535
92.0287
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
2019
0.86852.7754
2.603693.8109
2020
0.8685
1.90691.8233
95.6199
2021
0.8685
1.03831.011497.4044
2022 and later years
0.8685
0.16980.166498.0298
Taxpayers t
hat use the composite method of Notice 88–100 should use 95.6075 percent to discount unpaid losses incurred in this
line of bus
iness in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
December 28, 20099852009–52 I.R.B.

Medical Malpractice — Claims-Made
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2009
4.94254.942595.057585.027689.4485
201019.936914.994480.063173.183991.4078
201144.348924.4120
55.651151.2525
92.0962
201264.8374
20.488535.1626
32.4331
92.2375
2013
80.253015.4156
19.7470
18.0245
91.2770
2014
85.79075.5377
14.209313.107292.2442
2015
91.2722
5.4815
8.72788.047892.2082
201693.3314
2.0593
6.66866.273994.0812
2017
96.1257
2.79423.87433.678294.9374
2018
97.65381.5281
2.34622.268796.6961
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
2019 and later years
1.5281
0.81820.802198.0298
Taxpayers th
at use the composite method of Notice 88–100 should use 98.0298 percent to discount unpaid losses incurred in this
line of busi
ness in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
Medical Malpractice — Occurrence
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2009
1.58781.5878
98.412282.1817
83.5076
20104.47202.8842
95.528082.5760
86.4417
201117.773813.301882.2262
72.359588.0005
2012
35.8814
18.107664.1186
56.8257
88.6260
2013
52.9447
17.0633
47.0553
41.7266
88.6757
201468.4348
15.490131.5652
27.619387.4993
201579.5616
11.126820.438417.3902
85.0861
2016
85.81986.2582
14.180211.7123
82.5961
201790.12674.30699.87337.794378.9437
201890.37010.24349.6299
7.8625
81.6469
Taxpayer
s that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred
in this line of business inthe 2009 accident year and that are outstanding at the end of the tax year shown.
20190.2434
9.38657.933584.5197
20200.24349.14318.0073
87.5770
20210.24348.89988.0841
90.8352
20220.2434
8.6564
8.164194.3126
2023 and later years0.24348.41308.247398.0298
Taxpay
ers that use the composite method of Notice 88–100 should use 87.6495 percent to discount unpaid losses incurred in this
line of
business in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
2009–52 I.R.B.986December 28, 2009

Miscellaneous Casualty
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
200972.906472.906427.093626.196496.6888
2010
93.5836
20.67716.41646.167396.1174
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
2011 and later years3.20823.2082
3.1450
98.0298
Taxpayers that use the composite method of Notice 88–100 shoulduse 98.0298 percent to discount unpaid losses incurred in this
line of business in 2009 and prior years and that areoutstanding at the end of the 2011 taxable year.
Multiple Peril L
ines
(Homeowners/Fa
rmowners, Commercial Multiple Peril, and Special Liability
(Ocean Marine, A
ircraft (All Perils), Boiler and Machinery))
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2009
52.588052.5880
47.4120
44.253793.3385
201080.0449
27.457019.9551
18.041690.4110
2011
86.16256.117513.837512.533690.5767
2012
90.74524.58279.2548
8.367690.4137
201393.9006
3.1555
6.0994
5.4885
89.9844
2014
95.7613
1.86074.23873.813289.9627
201596.8755
1.1141
3.12452.8315
90.6219
2016
97.6715
0.7960
2.32852.134591.6659
201798.0329
0.3615
1.9671
1.8524
94.1706
201898.68100.64811.3190
1.2665
96.0207
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
20190.64810.6709
0.6568
97.8997
2020 and late
r years
0.64810.02280.022498.0298
Taxpayers th
at use the composite method of Notice 88–100 should use 97.9040 percent to discount unpaid losses incurred in this
line of busin
ess in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
December 28, 20099872009–52 I.R.B.

Other (Including Credit)
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2009
67.952867.9528
32.047230.819096.1676
201089.4609
21.508110.5391
10.129996.1174
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
2011 and later years
5.26955.26955.1657
98.0298
Taxpayers that use the composite method of Notice 88–100 shoulduse 98.0298 percent to discount unpaid losses incurred in this
line of business in 2009 and prior years and that areoutstanding at the end of the 2011 taxable year.
Other Liability
—Claims-Made
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2009
5.87965.8796
94.120483.236988.4367
2010
18.8735
12.9938
81.1265
73.361390.4283
201141.6840
22.810558.316053.070991.0056
2012
62.5322
20.848337.4678
33.9583
90.6333
2013
73.520710.9885
26.479324.127791.1189
201482.00368.482917.9964
16.4539
91.4286
2015
88.62796.624411.372110.364491.1391
201690.71072.08289.2893
8.6605
93.2317
201794.84394.1332
5.15614.795993.0145
201896.26891.42493.7311
3.5370
94.7977
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
20191.42492.30622.2270
96.5683
2020 and late
r years
1.42490.88120.863998.0298
Taxpayers th
at use the composite method of Notice 88–100 should use 97.1192 percent to discount unpaid losses incurred in this
line of busin
ess in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
2009–52 I.R.B.988December 28, 2009

Other Liability — Occurrence
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2009
13.659413.6594
86.3406
74.557886.3531
201024.8389
11.179575.1611
66.1806
88.0517
201141.779216.9403
58.220851.586888.6055
2012
58.4995
16.7203
41.5005
36.6249
88.2518
2013
69.5197
11.020330.480326.8702
88.1560
2014
77.7513
8.231622.2487
19.5641
87.9336
2015
84.22436.4730
15.775713.7553
87.1929
2016
83.2275
-0.9968
16.772515.3306
91.4032
2017
88.85245.6249
11.1476
10.2151
91.6347
2018
91.38522.5328
8.61488.046193.3986
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
2019
2.5328
6.0820
5.789195.1836
2020
2.53283.5492
3.4404
96.9345
2021 and lat
er years
2.5328
1.01640.996498.0298
Taxpayers that use the composite method of Notice 88–100 should use 96.1213 percent to discount unpaid losses incurred in this
line of business in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
Private Passenger Auto Liability/Medical
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
200942.610842.6108
57.389254.051194.1835
2010
71.5827
28.971928.4173
26.6915
93.9269
201184.694713.1120
15.3053
14.399794.0826
2012
92.3556
7.66107.64447.169393.7860
201396.23693.88123.7631
3.5012
93.0391
2014
97.9275
1.6907
2.0725
1.9187
92.5799
2015
98.77190.84441.2281
1.1352
92.4394
201699.26920.49730.73080.674092.2334
2017
99.5053
0.23610.49470.460693.0998
201899.64400.1387
0.3560
0.337894.8818
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
20190.13870.21740.210196.6446
2020 and later years0.13870.07870.077298.0298
Taxpayers that use the composite method of Notice 88–100 shoulduse 97.0129 percent to discount unpaid losses incurred in this
line of business in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
December 28, 20099892009–52 I.R.B.

Products Liability — Claims-Made
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2009
1.02591.0259
98.974184.7900
84.6586
201011.792710.766788.207376.208886.3973
201129.3642
17.571670.6358
61.378186.8939
2012
55.165525.801244.834537.550383.7531
201383.4171
28.251616.582910.2554
61.8434
201464.8933
-18.523835.106729.5679
84.2229
2015
82.334617.4414
17.665412.976573.4571
201686.39864.064013.6014
9.3576
68.7991
201776.3310-10.067623.6690
20.007584.5305
201878.79102.460021.209018.310486.3331
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
20192.460018.7490
16.5444
88.2412
20202.460016.289014.7066
90.2855
20212.460013.829012.7943
92.5176
20222.460011.369110.8043
95.0326
2023 and la
ter years
2.46008.90918.733698.0298
Taxpayers t
hat use the composite method of Notice 88–100 should use 90.1769 percent to discount unpaid losses incurred in this
line of bus
iness in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
Products Liability — Occurrence
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2009
5.04665.046694.953480.1653
84.4260
2010
13.6935
8.6469
86.306574.599486.4354
2011
28.254114.560671.7459
62.774887.4961
201241.3083
13.054258.691752.0070
88.6104
2013
59.3693
18.061040.6307
35.694487.8509
201473.071713.702426.9283
23.1659
86.0279
2015
74.6612
1.589525.3388
22.484988.7371
201678.98334.322121.016718.9889
90.3513
201786.12317.139813.8769
12.476589.9085
201888.6931
2.5700
11.306910.361491.6379
2009–52 I.R.B.990December 28, 2009

Products Liability — Occurrence
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
2019
2.5700
8.73698.160493.4018
2020
2.5700
6.1669
5.870195.1869
2021
2.57003.5969
3.486896.9378
2022 and later y
ears
2.5700
1.02691.006798.0298
Taxpayers that use the composite method of Notice 88–100 shoulduse 95.5262 percent to discount unpaid losses incurred in this
line of business in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
Reinsurance —
Nonproportional Assumed Property
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2009
12.945812.945887.0542
80.840392.8620
201060.179647.233839.8204
35.939390.2535
2011
80.8225
20.6429
19.1775
16.3406
85.2075
201284.9430
4.120515.0570
12.8008
85.0155
2013
85.66800.7250
14.3320
12.5809
87.7821
2014
80.0452-5.622919.9548
18.8276
94.3509
2015
86.7013
6.6561
13.298712.8020
96.2654
2016
97.253310.5520
2.7467
2.557893.1205
201797.67210.41882.32792.2344
95.9820
201898.8078
1.1357
1.1922
1.1665
97.8487
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
2019 and later years
1.13570.05640.0553
98.0298
Taxpayers that use the composite method of Notice 88–100 shoulduse 94.3133 percent to discount unpaid losses incurred in this
line of business in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
Reinsurance — Nonproportional Assumed Liability
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2009
32.591732.5917
67.4083
54.5146
80.8723
2010
33.3995
0.8078
66.600555.9039
83.9392
2011
35.49482.095364.505256.0362
86.8708
201244.0321
8.537355.9679
49.6024
88.6265
201364.829920.7979
35.1701
30.400486.4383
2014
66.43581.605933.564229.9965
89.3706
2015
77.809711.373822.190319.6119
88.3805
201682.44384.6341
17.556215.6809
89.3183
201784.1944
1.750715.805614.5317
91.9406
201887.92233.727912.077711.318993.7176
December 28, 20099912009–52 I.R.B.

Reinsurance — Nonproportional Assumed Liability
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
20193.72798.3498
7.975795.5191
20203.72794.62194.496797.2900
2021 and later years3.72790.89400.876498.0298
Taxpayers that use the composite method of Notice 88–100 shoulduse 96.1991 percent to discount unpaid losses incurred in this
line of business in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
Reinsurance — Nonproportional Assumed Financial Lines
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
20098.47838.4783
91.5217
82.637790.2930
2010
28.047519.569371.9525
66.030291.7692
2011
60.435132.387539.564935.6726
90.1622
201282.444822.0097
17.5552
14.6688
83.5583
201390.27207.82719.72807.279974.8343
2014
85.3168-4.9551
14.683112.630186.0181
2015
88.37773.060811.622310.020686.2186
201689.9934
1.6157
10.00668.779387.7346
201781.6664-8.326918.333617.6300
96.1625
201891.04919.3827
8.95098.7745
98.0298
Taxpayers t
hat do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in
this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
2019 and lat
er years
———98.0298
Taxpayers th
at use the composite method of Notice 88–100 should use 96.2888 percent to discount unpaid losses incurred in this
line of busi
ness in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
Special Property
(Fire, Allied Lines, Inland Marine, Earthquake, Burglary and Theft)
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
2009
44.575644.575655.424453.5639
96.6430
201088.4263
41.850713.5737
13.046796.1174
Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
2011 and later years6.78696.7869
6.6531
98.0298
Taxpayers that use the composite method of Notice 88–100 shoulduse 98.0298 percent to discount unpaid losses incurred in this
line of business in 2009 and prior years and that areoutstanding at the end of the 2011 taxable year.
2009–52 I.R.B.992December 28, 2009

Workers’ Compensation
Tax Year
Estimated
Cumulative
Losses
Paid
(%)
Estimated
Losses Paid
Each Year
(%)
Unpaid
Losses at
Year End
(%)
Discounted
Unpaid
Losses at
Year End
(%)
Discount
Factors
(%)
200919.041019.0410
80.959069.6415
86.0207
201040.244221.2032
59.755850.839685.0789
2011
57.149716.905542.850335.6584
83.2162
201267.860110.710432.139926.1804
81.4579
2013
75.5399
7.679724.460119.4093
79.3507
2014
80.11574.5758
19.8843
15.5296
78.0994
2015
82.18282.067217.8172
14.0513
78.8640
2016
84.4045
2.2217
15.595512.3555
79.2248
2017
85.51951.115014.4805
11.719880.9346
2018
86.2855
0.7661
13.7145
11.414183.2269
Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount unpaid losses
incurred in this line of business in the 2009 accident year and that are outstanding at the end of the tax year shown.
20190.766112.948411.0961
85.6945
20200.766112.1823
10.7651
88.3666
20210.766111.416310.4207
91.2795
20220.7661
10.6502
10.062494.4802
2023 and later years0.76619.88429.689498.0298
Taxpayers that use the composite method of Notice 88–100 shoulduse 88.4259 percent to discount unpaid losses incurred in this
line of business in 2009 and prior years and that are outstanding at the end of the 2019 taxable year.
DRAFTING INFORMATION
The princi
pal author of this revenue
procedure
isSarahE.SwanoftheOffice
of Associ
ate Chief Counsel (Financial
Institut
ions & Products). For further infor-
mation re
garding this revenue procedure,
contact M
s. Swan at (202) 622–8443 (not
atoll-f
ree call).
26 CFR 601
.201: Rulings and determination letters.
(Also Par
t I, Sections 832, 846; 1.832–4, 1.846–1.)
Rev. Proc
. 2009–56
SECTION 1. PURPOSE
This revenue procedure prescribes the
salvage discount factors for the 2009 acci-
dent year. These factors must be used to
compute discounted estimated salvage re-
coverable under § 832 of the Internal Rev-
enue Code.
SECTION 2. BACKGROUND
Section 83
2(b)(5)(A) requires that all
estimated
salvage recoverable (including
that whic
h cannot be treated as an asset
for state
accounting purposes) be taken
into acco
unt in computing the deduction
for losse
s incurred. Under § 832(b)(5)(A),
paid los
ses are to be reduced by salvage
and rein
surance recovered during the tax-
able yea
r. This amount is adjusted to
reflect
changes in discounted unpaid losses
on nonli
fe insurance contracts and in un-
paid lo
sses on life insurance contracts.
An adju
stment is then made to reflect any
change
s in discounted estimated salvage
recove
rable and in reinsurance recover-
able.
Pursua
nt to § 832(b), the amount of es-
timate
d salvage is determined on a dis-
count
ed basis in accordance with proce-
dures
established by the Secretary.
SECTI
ON. 3. SCOPE
This revenue procedure applies to any
taxpayer that is required to discount esti-
mated salvage recoverable under § 832.
SECTION 4. APPLICATION
.01 The fol
lowing tables present sepa-
rately for
each line of business the discount
factors u
nder § 832 for the 2009 accident
year. All
the discount factors presented
in this se
ction were determined using the
applicab
le interest rate under § 846(c) for
2009, wh
ich is 4.06 percent, and by as-
suming a
ll estimated salvage is recovered
in the mi
ddle of each calendar year.See
Rev. Pro
c. 2008–11, 2008–3 I.R.B. 301,
for back
ground regarding the tables.
.02 Thes
etablesmustbeusedbytax-
payers i
rrespective of whether they elected
to disc
ount unpaid losses using their own
histor
ical experience under § 846.
.03 Sec
tion V of Notice 88–100,
1988–2
C.B. 439, provides a composite
discou
nt factor to be used in determining
the dis
counted unpaid losses for accident
years t
hat are not separately reported on
the NA
IC Annual Statement. The tables
separ
ately provide discount factors for
taxpa
yers who elect to use the composite
metho
d. Rev. Proc. 2002–74, 2002–2
C.B. 9
80, clarifies that for certain insur-
December 28, 20099932009–52 I.R.B.

ance companies subject to tax under § 831
the composite method for discounting un-
paid losses set forth in Notice 88–100,
section V, is permitted but not required.
This revenue procedure further provides
alternative methods for computing dis-
counted unpaid losses that are permitted
for insurance companies not using the
composite method, andsetsforthapro-
cedure for insurance companies to obtain
automatic consent of the Commissioner to
change to one of the methods described in
Rev. Proc. 2002–74.
.04 Tables.
Tables of Factors to
be Used to Discount
Salvage Recoverable With Re-
spect to Losses Incurred in
Accident Year 2009
(Interest rate: 4.06 percent)
Accident and Health (Other Than
Disability Income or Credit Disability
Insurance)
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
98.0298 percent to discount salvage re-
coverable with respect to losses incurred
in this line of business in the 2009 acci-
dent year as of the end of the 2009 and
later taxable years.
Taxpayers that use the composite
method of Notice 88–100 should use
98.0298 percent to discount all salvage
recoverableinthislineofbusinessasof
the end of the 2009 taxable year.
Auto Physical Damage
Tax Year
Discount
Factors
(%)
200997.2331
201096.1174
Taxpayer
s that do not use the compos-
ite metho
d of Notice 88–100 should use
the follo
wing factor to discount salvage
recovera
ble as of the end of the tax year
shown wi
th respect to losses incurred in
this lin
e of business in the 2009 accident
year.
Auto Physical Damage
2011 and later
years
98.0298
Taxpayers that use the composite
method of Notice 88–100 should use
98.0298 percent to discount salvage
recoverable as of the end of the 2011
taxable year with respect to losses in-
curred in this line of business in 2009
and prior years.
Commercial Auto/Truck
Liability/Medical
Tax Year
Discount
Factors
(%)
2009
92.3526
201092.2970
201192.6408
201292.9897
201393.7281
2014
93.5170
201591.9508
201692.8642
201796.2378
201898.0298
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2009 accident
year.
2019 and later
years
98.0298
Taxpayers that use the composite
method of Notice 88–100 should use
98.0298 percent to discount salvage
recoverable as of the end of the 2019
taxable year with respect to losses in-
curred in this line of business in 2009
and prior years.
Composite
Tax Year
Discount
Factors
(%)
200992.3690
201092.1172
201191.9402
2012
91.7659
201391.1438
201490.2174
2015
91.0647
2016
92.4105
201794.4361
2018
96.2605
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2009 accident
year.
2019 and later
years
98.0298
Taxpayers that use the composite
method of Notice 88–100 should use
97.8009 percent to discount salvage
recoverable as of the end of the 2019
taxable year with respect to losses
incurred in this line of business in 2009
and prior years.
Fidelity/Surety
Tax Year
Discount
Factors
(%)
2009
93.6954
201096.1174
Taxpaye
rs that do not use the compos-
ite meth
od of Notice 88–100 should use
the foll
owing factor to discount salvage
recover
able as of the end of the tax year
shown w
ith respect to losses incurred in
this li
ne of business in the 2009 accident
year.
2009–52 I.R.B.994December 28, 2009

Fidelity/Surety
2011 and later
years
98.0298
Taxpayers that use the composite
method of Notice 88–100 should use
98.0298 percent to discount salvage
recoverable as of the end of the 2011
taxable year with respect to losses in-
curred in this line of business in 2009
and prior years.
Financial Guaranty/Mortgage
Guaranty
Tax Year
Discount
Factors
(%)
200994.7421
201096.1174
Taxpayers tha
t do not use the compos-
ite method of N
otice 88–100 should use
the following
factor to discount salvage
recoverable a
s of the end of the tax year
shown with re
spect to losses incurred in
this line of b
usiness in the 2009 accident
year.
2011 and late
r
years
98.0298
Taxpayers t
hat use the composite
method of No
tice 88–100 should use
98.0298 per
cent to discount salvage
recoverabl
e as of the end of the 2011
taxable ye
ar with respect to losses in-
curred in t
his line of business in 2009
and prior y
ears.
International (Composite)
Tax Year
Discount
Factors
(%)
200992.3690
201092.1172
201191.9402
2012
91.7659
201391.1438
201490.2174
2015
91.0647
2016
92.4105
201794.4361
2018
96.2605
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2009 accident
year.
2019 and later
years
98.0298
Taxpayers that use the composite
method of Notice 88–100 should use
97.8009 percent to discount salvage
recoverable as of the end of the 2019
taxable year with respect to losses in-
curred in this line of business in 2009
and prior years.
Medical Malpractice —
Claims-Made
Tax Year
Discount
Factors
(%)
200992.6642
201093.7424
2011
92.1505
201292.7778
201392.0831
201487.6889
2015
84.3189
201690.2868
2017
96.4445
201898.0298
Medical Malpractice —
Claims-Made
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2009 accident
year.
2019 and later
years
98.0298
Taxpayers that use the composite
method of Notice 88–100 should use
98.0298 percent to discount salvage
recoverable as of the end of the 2019
taxable year with respect to losses in-
curred in this line of business in 2009
and prior years.
Medical Malpractice — Occurrence
Tax Year
Discount
Factors
(%)
2009
85.5177
201089.9300
201192.2898
201284.2693
2013
94.7905
201491.4234
201593.0145
2016
95.8751
201797.0989
201898.0298
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2009 accident
year.
2019 and later
years
98.0298
December 28, 20099952009–52 I.R.B.

Medical Malpractice — Occurrence
Taxpayers that use the composite
method of Notice 88–100 should use
98.0298 percent to discount salvage
recoverable as of the end of the 2019
taxable year with respect to losses in-
curred in this line of business in 2009
and prior years.
Miscellaneous Casualty
Tax Year
Discount
Factors
(%)
2009
96.5837
201096.1174
Taxpayers that
do not use the compos-
ite method of N
otice 88–100 should use
the following
factor to discount salvage
recoverable a
s of the end of the tax year
shown with res
pect to losses incurred in
this line of b
usiness in the 2009 accident
year.
2011 and late
r
years
98.0298
Taxpayers th
at use the composite
method of No
tice 88–100 should use
98.0298 per
cent to discount salvage
recoverabl
e as of the end of the 2011
taxable yea
r with respect to losses in-
curred in th
is line of business in 2009
and prior y
ears.
Multiple Peril Lines (Homeown-
ers/Farmowners, Commercial
Multiple Peril, and Special Liability
(Ocean Marine, Aircraft (All Perils),
Boiler and Machinery))
Tax Year
Discount
Factors
(%)
200993.0068
201092.3990
201192.3201
2012
92.2569
201391.4462
2014
89.8725
2015
91.0239
201693.4483
2017
94.8485
201896.6142
Taxpayers
that do not use the compos-
ite method
of Notice 88–100 should use
the follow
ing factor to discount salvage
recoverab
le as of the end of the tax year
shown with
respect to losses incurred in
this line o
f business in the 2009 accident
year.
2019 and l
ater
years
98.0298
Taxpayer
s that use the composite
method of
Notice 88–100 should use
98.0298
percent to discount salvage
recover
able as of the end of the 2019
taxable
year with respect to losses in-
curred i
n this line of business in 2009
and prio
r years.
Other (Including Credit)
Tax Year
Discount
Factors
(%)
2009
95.6448
201096.1174
Other (Including Credit)
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2009 accident
year.
2010 and later
years
98.0298
Taxpayers that use the composite
method of Notice 88–100 should use
98.0298 percent to discount salvage
recoverable as of the end of the 2011
taxable year with respect to losses in-
curred in this line of business in 2009
and prior years.
Other Liability — Claims-Made
Tax Year
Discount
Factors
(%)
200988.4208
2010
89.5374
2011
87.6521
201290.8781
2013
92.3590
201494.2379
2015
93.1673
201691.7716
201797.3613
201898.0298
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2009 accident
year.
2019 and later
years
98.0298
2009–52 I.R.B.996December 28, 2009

Other Liability — Claims-Made
Taxpayers that use the composite
method of Notice 88–100 should use
98.0298 percent to discount salvage
recoverable as of the end of the 2019
taxable year with respect to losses in-
curred in this line of business in 2009
and prior years.
Other Liability — Occurrence
Tax Year
Discount
Factors
(%)
200987.1236
201088.1600
201190.4878
201291.2470
2013
90.6851
201490.8000
2015
90.2668
201693.0020
2017
95.7619
2018
97.5722
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2009 accident
year.
2019 and later
years
98.0298
Taxpayers that use the composite
method of Notice 88–100 should use
98.0298 percent to discount salvage
recoverable as of the end of the 2019
taxable year with respect to losses in-
curred in this line of business in 2009
and prior years.
Private Passenger Auto
Liability/Medical
Tax Year
Discount
Factors
(%)
2009
94.5329
2010
94.5579
201194.3102
2012
93.4459
201392.8620
201492.0891
201592.9858
2016
94.5440
201794.6149
201896.4088
Taxpayers t
hat do not use the compos-
ite method o
f Notice 88–100 should use
the followi
ng factor to discount salvage
recoverab
le as of the end of the tax year
shown with
respect to losses incurred in
this line o
f business in the 2009 accident
year.
2019 and la
ter
years
98.0298
Taxpayer
s that use the composite
method of
Notice 88–100 should use
98.0298 p
ercent to discount salvage
recovera
ble as of the end of the 2019
taxable y
ear with respect to losses in-
curred i
n this line of business in 2009
and prio
r years.
Products Liability — Claims-Made
Tax Year
Discount
Factors
(%)
200988.9426
2010
51.3741
2011
53.7803
2012
90.7115
201380.1341
201491.4320
201559.5121
2016
90.5055
201791.6367
201892.7680
Products Liability — Claims-Made
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factors to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2009 accident
year.
2019
94.5598
202096.3623
2021 and later
years
98.0298
Taxpayers that use the composite
method of Notice 88–100 should use
95.6711 percent to discount salvage
recoverable as of the end of the 2019
taxable year with respect to losses in-
curred in this line of business in 2009
and prior years.
Products Liability — Occurrence
Tax Year
Discount
Factors
(%)
200987.6369
201089.7198
201191.6030
201292.4224
201392.8704
2014
90.4185
201591.0511
201694.0066
2017
94.2757
2018
96.1335
Taxpaye
rs that do not use the compos-
ite meth
od of Notice 88–100 should use
the fol
lowing factor to discount salvage
recove
rable as of the end of the tax year
shown w
ith respect to losses incurred in
this li
ne of business in the 2009 accident
year.
2019 an
d later
years
98.029
8
December 28, 20099972009–52 I.R.B.

Products Liability — Occurrence
Taxpayers that use the composite
method of Notice 88–100 should use
97.2089 percent to discount salvage
recoverable as of the end of the 2019
taxable year with respect to losses in-
curred in this line of business in 2009
and prior years.
Reinsurance — Nonproportional
Assumed Property
Tax Year
Discount
Factors
(%)
200991.0976
201092.7443
2011
95.6984
201280.1417
201389.8643
2014
81.5378
201551.4095
201692.8399
201773.3181
201888.1043
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factors to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2009 accident
year.
2019
89.8547
2020
91.6751
2021
93.5877
2022
95.6459
2023 an
d later
years
98.029
8
Taxpay
ers that use the composite
method
of Notice 88–100 should use
91.473
5 percent to discount salvage
recove
rable as of the end of the 2019
taxab
le year with respect to losses in-
curre
d in this line of business in 2009
and pr
ior years.
Reinsurance — Nonproportional
Assumed Liability
Tax Year
Discount
Factors
(%)
200986.7636
201090.0422
201191.4998
201288.6312
201390.7036
2014
91.5709
2015
91.4636
2016
93.2257
2017
95.1632
201896.9140
Taxpayers t
hat do not use the compos-
ite method o
f Notice 88–100 should use
the followi
ng factor to discount salvage
recoverab
le as of the end of the tax year
shown with
respect to losses incurred in
this line o
f business in the 2009 accident
year.
2019 and la
ter
years
98.0298
Taxpayer
s that use the composite
method of
Notice 88–100 should use
96.5025 p
ercent to discount salvage
recovera
ble as of the end of the 2019
taxable y
ear with respect to losses in-
curred i
n this line of business in 2009
and prio
r years.
Reinsurance — Nonproportional
Assumed Financial Lines
Tax Year
Discount
Factors
(%)
2009
87.1652
2010
85.9016
201189.9069
2012
78.5011
2013
90.2511
201480.2802
201590.4154
201690.8197
2017
97.5152
201898.0298
Taxpayers t
hat do not use the compos-
ite method o
f Notice 88–100 should use
the followi
ng factor to discount salvage
recoverab
le as of the end of the tax year
shown with
respect to losses incurred in
this line o
f business in the 2009 accident
year.
2019 and la
ter
years
98.0298
Taxpayer
s that use the composite
method of
Notice 88–100 should use
98.0298 p
ercent to discount salvage
recovera
ble as of the end of the 2019
taxable y
ear with respect to losses in-
curred i
n this line of business in 2009
and prio
r years.
Special Property (Fire, Allied
Lines, Inland Marine, Earthquake,
Burglary and Theft)
Tax Year
Discount
Factors
(%)
200994.8844
201096.1174
2009–52 I.R.B.998December 28, 2009

Special Property (Fire, Allied
Lines, Inland Marine, Earthquake,
Burglary and Theft)
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factor to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2009 accident
year.
2011 and later
years
98.0298
Taxpayers that use the composite
method of Notice 88–100 should use
98.0298 percent to discount salvage
recoverable as of the end of the 2011
taxable year with respect to losses in-
curred in this line of business in 2009
and prior years.
Workers’ Compensation
Tax Year
Discount
Factors
(%)
2009
88.3785
201090.4189
2011
91.2195
201291.1364
201389.6372
201488.2223
2015
88.8169
2016
88.5309
2017
90.7105
201892.4766
Taxpayers that do not use the compos-
ite method of Notice 88–100 should use
the following factors to discount salvage
recoverable as of the end of the tax year
shown with respect to losses incurred in
this line of business in the 2009 accident
year.
Workers’ Compensation
201994.2879
202096.1430
2021 and later
years
98.0298
Taxpayers tha
t use the composite
method of Noti
ce 88–100 should use
95.7330 perce
nt to discount salvage
recoverable a
s of the end of the 2019
taxable year w
ith respect to losses in-
curred in thi
s line of business in 2009
and prior yea
rs.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Sarah E. Swan of the Office
of the Associate Chief Counsel (Financial
Institutions & Products). For further infor-
mation regarding this revenue procedure,
contact Ms. Swan at (202)622–8443 (not
a toll-free call).
December 28, 20099992009–52 I.R.B.

Part IV. Items o
fGeneralInterest
Notice of Prop
osed
Rulemaking an
dNoticeof
Public Hearin
g
Amendments to
Regulations
Under I.R.C.
Section 7430
Relating to A
wards of
Administra
tive Costs and
Attorneys F
ees
REG–111833–99
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Not
ice of proposed rulemaking
and notice
of public hearing.
SUMMARY: This document contains pro-
posed regulations relating to awards of ad-
ministrative costs and attorneys fees un-
der section 7430 to conform to the amend-
ments made in the Taxpayer Relief Act of
1997 and the IRS Restructuring and Re-
form Act of 1998. The regulations affect
taxpayers seeking attorneys fees and costs.
This document also provides notice of a
public hearing on these proposed regula-
tions.
DATES: Written or electronic comments
must be received by February 8, 2010.
Outlines of topics to be discussed at the
public hearing scheduled for 10:00 a.m. on
March 10, 2010 must be received by Feb-
ruary 10, 2010.
ADDRES
SES: Send submissions to:
CC:PA:
LPD:PR (REG–111833–99), room
5203, I
nternal Revenue Service, P.O.
Box 760
4, Ben Franklin Station, Wash-
ington
, DC 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–111833–99),
Couri
er’s Desk, Internal Revenue
Servi
ce, 1111 Constitution Avenue, N.W.,
Wash
ington, DC. Alternatively, taxpayers
may s
ubmit comments electronically
viat
heFederaleRulemaking
Port
al atwww.regulations.gov(IRS
REG–
111833–99). The public hearing
will
be held in the Internal Revenue
Bui
lding, Room 2615, 1111 Constitution
Ave
nue, N.W., Washington, DC.
FOR FURTHER IN
FORMATION
CONTACT: Conc
erning the hearing, sub-
mission of wri
tten comments, and to be
placed on the b
uilding access list to at-
tend the heari
ng, contact Regina Johnson,
(202) 622–71
80; concerning the proposed
regulations
, contact Ronald J. Goldstein
(202) 622–49
10 (not toll-free numbers).
Background a
nd Explanation of
Provisions
The proposed
amendments to the Trea-
sury Regula
tions incorporate the 1997 and
1998 amendm
ents to section 7430 of the
Internal Re
venue Code relating to awards
of attorney
s fees. These amendments were
enacted as
part of the Taxpayer Relief
Act of 1997
, Public Law No. 105–34,
111 Stat. 7
88, and the IRS Restructuring
and Reform
Act of 1998, Public Law No.
105–206,
112 Stat. 685.
The Taxpay
er Relief Act of 1997 (TRA)
containe
d several amendments to section
7430 that
are addressed in the proposed
amendmen
ts to the regulations. First, the
TRA provi
ded that a taxpayer has ninety
days afte
r the date the IRS mails to the tax-
payer a f
inal decision determining tax, in-
terest o
r penalty, to file anapplication with
the IRS t
o recover administrative costs.
Second,
a taxpayer has ninety days after
the date
the IRS mails to the taxpayer, by
certif
ied or registered mail, a final adverse
decisi
on regarding an award of administra-
tive co
sts, to file a petition with the Tax
Court.
Third, the TRA clarified the ap-
plicat
ion of the net worth requirements by
provi
ding that individuals filing joint re-
turns
should be treated as separate taxpay-
ers fo
r purposes of determining net worth.
The TR
A added trusts to the list of taxpay-
ers su
bject to the net worth requirements
and a
lso specified the date on which the net
wort
h determination should be made.
The T
RA also added section 7436 to
the C
ode, which gives the Tax Court ju-
risd
iction in certain employment tax cases.
Unde
r section 7436, if the IRS determines
in co
nnection with an audit that (1) one
or mo
re individuals performing services
for
the taxpayer are employees of the tax-
pay
er or (2) the taxpayer is not entitled to
rel
ief from employment taxes under sec-
tio
n 530 of the Revenue Act of 1978 with
res
pect to the individual(s), and the IRS
sends a Notice
of Determination of Worker
Classificati
on (NDWC) to the taxpayer by
certified or r
egistered mail, the taxpayer
may petition t
he Tax Court to determine
(1) whether th
e IRS’s determination, as set
forthintheN
DWC, is correct and (2) the
proper amoun
t of employment tax under
the determin
ation. Various restrictions on
assessment a
nd collection in section 6213
applytoase
ction 7436 proceeding in the
same manner
as if the NDWC were a no-
tice of defi
ciency. Section 7436(d)(2) pro-
vides that s
ection 7430 applies to proceed-
ings broug
ht under section 7436.
The propose
d amendments reflect the
changes ou
tlined in this preamble. Addi-
tional cla
rifying changes address the cal-
culation o
f net worth. First, the regula-
tion speci
fies that net worth will be calcu-
lated usin
g the fair market value of assets
to provid
e a more accurate assessment of
ataxpaye
r’s actual and current net worth
as of the a
dministrative proceeding date.
Second, t
he regulation specifies which net
worth an
d size limitations apply when a
taxpaye
r is an owner of an unincorporated
busines
s. Third, the regulation has been
amended
to clarify the net worth require-
ment in c
ases involving partnerships sub-
ject to
the unified audit and litigation pro-
cedure
s of sections 6221 through 6234 of
the Cod
e(theTEFRApartnershipproce-
dures)
.
The IRS
Restructuring and Reform
Act of 1
998 (RRA) also contained sev-
eral am
endments affecting section 7430.
First
, the RRA increased the hourly rate
limit
ation from $110 per hour to $125 per
hour.
Second, two special factors were
added
that may be considered to increase
an att
orney’s hourly rate: difficulty of
the i
ssues presented and local availability
of ta
x experts. Third, the RRA added a
prov
ision that requires a court to consider
whet
her the IRS has lost cases with sub-
stan
tially similar issues in other circuit
cou
rts of appeal in deciding whether the
IRS
’s position was substantially justified.
Fou
rth, the RRA created an exception to
the
requirement that to recover attorneys
fee
s, the taxpayer must have paid or in-
cur
red the fees. The exception provides
th
at if an individual who is authorized to
pr
actice before the Tax Court or the IRS
is
representing the taxpayer on apro bono
2009–52 I.R.B.1000December 28, 2009

basis, then the taxpayer may petition for
an award of reasonable attorneys fees in
excess of the amounts that the taxpayer
paid or incurred, as long as the fee award
is ultimately paid to the individual or the
individual’s employer. Fifth, the period
for recovery of reasonable administrative
costs was extended to include costs in-
curred after the date on which the first
letter of proposed deficiency, commonly
known as a 30-day letter, is mailed to the
taxpayer. The regulations clarify, how-
ever, that a taxpayer may be eligible to
recover reasonable administrative costs
from the date of the 30-day letter only if
at least one issue (other than recovery of
administrative costs)remains in dispute as
of the date that the IRS takes a position in
the administrative proceeding.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory as-
sessment 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 these regulations do not im-
pose on small entities a collection of infor-
mation requirement, the Regulatory Flex-
ibility Act (5 U.S.C. chapter 6) does not
apply. Therefore, a Regulatory Flexibility
Analysis is not required. Pursuant to sec-
tion 7805(f) of the Internal Revenue Code,
this regulation has been submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment on
its impact on small business.
Comments and 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 submitted
timely to the IRS. The IRS and Treasury
Department specifically request comments
on the clarity of the proposed rules and
how it may be made easier to understand.
All public comments will be made avail-
able for public inspection and copying.
A public hearing has been scheduled
for 10:00 a.m. on March 10, 2010 in the
Internal Revenue Building, Room 2615,
1111 Constitution Avenue N.W., Washing-
ton, DC. Due to building security proce-
dures, visitors must enter at the Consti-
tution Avenue entrance. In addition, all
visitors must presentphoto identification
to enter the building. Because of access
restrictions, visitors will not be admitted
beyond the immediate entrance area more
than 30 minutes before the hearing starts.
For information about having a visitor’s
name placed on the building access list to
attend the hearing, see the FOR FURTHER
INFORMATION CONTACT caption.
An outline of the topics to be discussed
and the time to be devoted to each topic (a
signed original and eight (8) copies) must
be submitted by any person that wishes
to present oral comments at the hearing.
Outlines must be received by February 10,
2010.
The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing. A period of 10 minutes
will be allotted to each person for making
comments.
An agenda showing the scheduling of
the speakers will be prepared after the
deadline for receiving requests to speak
has passed. Copies of the agenda will be
available free of charge at the hearing.
Drafting Information
The principal author of these regula-
tions is Ronald J. Goldstein, Office of As-
sociate Chief Counsel (Procedure and Ad-
ministration).
*****
Proposed Amend
ments to the
Regulations
Accordingly, 26 CFR Part 301 is pro-
posed to be amended as follows:
PART 301–PROCEDU
RE 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 301.7430–0 is amended
by:
1.Adding a new entry for
§301.7430–3(c)(4).
2.Adding new entries for
§301.7430–4(b)(3)(iii)(A) through (F)
and (d).
3.Revising the entries for
§301.7430–5.
4. Revising the section heading for
§301.7430–6.
5.Adding new entries for
§§301.7430–7 and 301.7430–8.
The additions and revisions read as fol-
lows:
§301.7430–0 Table of contents.
*****
§301.7430–3 Administrative proceeding
and administrative proceeding date.
*****
(c) * * *
(4) First letter of proposed deficiency
that allows the taxpayer an opportunity for
administrative review in the Office of Ap-
peals.
*****
§301.7430–4 Reasonable administrative
costs.
*****
(b) * * *
(3) * * *
(iii) * * *
(A) In general.
(B) Special factor.
(C) Limited availability.
(D) Local availability of tax expertise.
(E) Difficulty of the issues.
(F) Example.
(c) * * *
(d)Pro bonoservices.
(1) In general.
(2) Requirements.
(3) Nominal fee.
(4) Payment when services provided for
a nominal fee.
(5) Requirements.
(6) Hourly rate.
(7) Examples.
§301.7430–5 Prevailing party.
(a) In general.
(b) Position of the Internal Revenue
Service.
(c) Examples.
(d) Substantially justified.
(1) In general.
(2) Position in courts of appeal.
(3) Examples.
(4) Included costs.
December 28, 200910012009–52 I.R.B.

(5) Examples.
(6) Exception.
(7) Presumption.
(e) Amount in controversy.
(f) Most significant issue or set of issues
presented.
(1) In general.
(2) Example.
(g) Net worth and size limitations.
(1) Individuals.
(2) Estates and trusts.
(3) Others.
(4) Special rule for charitable organiza-
tions and certain cooperatives.
(5) Special rule for TEFRA partner-
ships.
(h) Determination of prevailing party.
(i) Examples.
§301.7430–6 Effective/applicability dates.
§301.7430–7 Qualified offers.
(a) In general.
(b) Requirements for treatment as a pre-
vailing party based upon having made a
qualified offer.
(1) In general.
(2) Liability under the last qualified of-
fer.
(3) Liability pursuant to the judgment.
(c) Qualified offer.
(1) In general.
(2) To the United States.
(3) Specifies the offered amount.
(4) Designated at the time it is made as
a qualified offer.
(5) Remains open.
(6) Last qualified offer.
(7) Qualified offer period.
(8) Interest as a contested issue.
(d) [Reserved].
(e) Examples.
(f) Effective date.
§301.7430–8 Administrative costs
incurred in damage actions for violations
of section 362 or 524 of the Bankruptcy
Code.
(a) In general.
(b) Prevailing party.
(c) Administrative proceeding.
(d) Costs incurred after filing of bank-
ruptcy petition.
(e) Time for filing claim for administra-
tive costs.
(f) Effective date.
Par. 3. Section 301.7430–1 is amended
by:
1. Revising paragraphs (b)(1)(ii)(A),
(d)(1)(i), (d)(1)(ii) and (d)(2) introductory
text.
2. Removing the language “district di-
rector” in paragraphs (f)(2)(i), (f)(3)(ii),
(f)(3)(iii), (f)(4)(i) and (g)Examples 6, 7
and8and adding the language “Internal
Revenue Service office” in its place in all
locations.
3. Removing the language “such” in the
second sentence of paragraph (g)Example
9and adding the language “these” in its
place.
The revisions read as follows:
§301.7430–1 Exhaustion of administrative
remedies.
*****
(b)***(1)***
(ii) * * *
(A) Requests an Appeals office confer-
ence in accordance with §§601.105 and
601.106 of this chapter or any successor
published guidance; and
*****
(d)***(1)***
(i) The party follows all applicable
Internal Revenue Service procedures for
contesting the matter (including filing a
written protest or claim, requesting an
administrative appeal, and participating in
an administrative hearing or conference);
or
(ii) If there are no applicable Internal
Revenue Service procedures, the party
submits to the area director of the area
having jurisdiction over the dispute a
written claim for relief reciting facts and
circumstances sufficient to show the na-
ture of the relief requested and that the
party is entitled to the requested relief;
and the area director has denied the claim
for relief in writing or failed to act on the
claim within a reasonable period after the
claim is received by the area director.
(2) For purposes of paragraph (d)(1)(ii)
of this section, areasonable periodis—
*****
Par. 4. Section 301.7430–2 is amended
by:
1. Adding the language “from the Inter-
nal Revenue Service” at the end of the last
sentence of paragraph (a).
2. Removing the language “such” in
the fourth and fifth sentences of paragraph
(b)(2) and adding the language “these” in
its place in both locations.
3. Removing the “;” at the end of para-
graph (c)(3)(i)(B) and adding a “.” in its
place.
4. Adding a new sentence at the end
of paragraphs (c)(3)(i)(B), (c)(3)(i)(E) and
(c)(7).
5. Revising paragraphs (c)(3)(ii)(C),
(c)(5) and (e).
6. Adding new paragraph (c)(3)(iii)(C).
7. Removing the language “which” in
the first sentence of paragraph (c)(4) and
adding the language “that” in its place.
8. Removing the language “such” in the
second sentence of paragraph (c)(6) and
adding the language “the” in its place.
The additions and revisions read as fol-
lows:
§301.7430–2 Requirements and
procedures for recovery of reasonable
administrative costs.
*****
(c) * * *
(3) * * *(i) * * *
(B)***ForcostsincurredafterJan-
uary 18, 1999, if the taxpayer alleges that
the United States has lost in courts of ap-
peal for other circuits on substantially sim-
ilar issues, the taxpayer must provide the
full name of the case, volume and pages of
the reporter in which the opinion appears,
the circuit in which the case was decided,
and the year of the opinion;
*****
(E) * * * This statement must iden-
tify whether the representation is on apro
bonobasis as defined in §301.7430–4(d)
and, if so, to whom payment should be
made. Specifically, the statement must di-
rect whether payment should be made to
the taxpayer’s representative or to the rep-
resentative’s employer.
(ii) * * *
(C) For costs incurred after January 18,
1999, if more than $125 per hour as ad-
justed for increases in the cost of living
pursuant to §301.7430–4(b)(3) is claimed
for the fees of a representative in connec-
tion with the administrative proceeding, an
affidavit stating thata special factor de-
scribed in §301.7430–4(b)(3) is applica-
ble, such as the difficulty of the issues pre-
2009–52 I.R.B.1002December 28, 2009

sented in the case or the lack of local avail-
ability of tax expertise. If a special fac-
tor is claimed based on specialized skills
and distinctive knowledge as described in
§301.7430–4(b)(2)(ii), the affidavit must
state—
(1) Why the specialized skills and dis-
tinctive knowledge were necessary in the
representation;
(2) That there is a limited availability of
representatives possessing these special-
ized skills and distinctive knowledge; and
(3) How the education and experience
qualifies the representative as someone
with the necessary specialized skills and
distinctive knowledge.
(iii) * * *
(C) In cases ofpro bonorepresentation,
time records similar tobilling records, de-
tailing the time spent and work completed
must be submitted for the requested fees.
*****
(5)Period for requesting costs from the
Internal Revenue Service.To recover rea-
sonable administrative costs pursuant to
section 7430 and this section, the taxpayer
must file a written request for costs within
90 days after the date the final adverse de-
cision of the Internal Revenue Service with
respect to all tax, additions to tax, inter-
est, and penalties at issue in the adminis-
trative proceeding is mailed or otherwise
furnished to the taxpayer. For purposes of
this section,interestmeans the interest that
is specifically at issue in the administrative
proceeding independent of the taxpayer’s
objections to the underlying tax imposed.
The final decision of the Internal Revenue
Service for purposes of this section is the
document that resolves the tax liability of
the taxpayer with regard to all tax, addi-
tions to tax, interest, and penalties at issue
in the administrative proceeding (such as a
Form 870 or closing agreement), or a no-
tice of assessment for that liability (such
as the notice and demand under section
6303), whichever is earlier mailed or oth-
erwise furnished to the taxpayer. For pur-
poses of this section, if the 90th day falls
on a Saturday, Sunday, or a legal holiday,
the90-dayperiodshallendonthenextsuc-
ceeding day that is not a Saturday, Sun-
day, or a legal holiday as defined by sec-
tion 7503.
*****
(7) * * * If the notice of decision deny-
ing (in whole or in part) an award for rea-
sonable administrative costs was mailed
by the Internal Revenue Service via cer-
tified mail or registered mail, a taxpayer
may obtain judicial review of that decision
by filing a petition for review with the Tax
Court prior to the 91st day after the mail-
ing of the notice of decision.
*****
(e) * * *
Example 1. Taxpayer A receives a notice of pro-
posed deficiency (30-day letter). A requests and is
granted Appeals office consideration. Appeals re-
quests that A submit certain documents as substan-
tiation for the tax matters at issue. Appeals deter-
mines that the information submitted is insufficient.
Appeals then issues a notice of deficiency. After re-
ceiving the notice of deficiency but before the 90-day
period for filing a petition with the Tax Court has ex-
pired, A convinces Appeals that the information sub-
mitted during the review by Appeals is sufficient and,
therefore, the notice of deficiency is incorrect and A
owes no additional tax. Appeals then closes the case
showing a zero deficiency and mails A a notice to this
effect. Assuming that all of the other requirements
of section 7430 are satisfied, A may recover reason-
able administrative costs incurred after the date of the
30-day letter (the administrative proceeding date). To
recover these costs, A must file a request for admin-
istrative costs with the Appeals office personnel who
settled A’s tax matter, or if that person is unknown to
A, with the Area Director of the area that considered
the underlying matter, within 90 days after the date of
mailing of the Office of Appeals’ final decision that
A owes no additional tax.
Example 2. Taxpayer B files a request for an
abatement of interest pursuant to section 6404 and
the regulations thereunder. The Area Director issues
a notice of proposed disallowance of the abatement
request (akin to a 30-day letter). B requests and is
granted Appeals office consideration. No agreement
is reached with Appeals and the Office of Appeals
issues a notice of disallowance of the abatement re-
quest. B does not file suit in the Tax Court, but in-
stead contacts the Appeals office within 180 days af-
ter the mailing date of the notice of disallowance of
the abatement request to attempt to reverse the deci-
sion. B convinces the Appeals office that the notice of
disallowance is in error. The Appeals office agrees to
abate the interest and mails the taxpayer a notification
of this decision. The mailing date of the notification
from Appeals of the decision to abate interest com-
mences the 90-day period from which the taxpayer
may request administrative costs. Assuming that all
of the other requirements of section 7430 are satis-
fied, B may recover reasonable administrative costs
incurred after the date of the notice of proposed dis-
allowance of the abatement request (the administra-
tive proceeding date). To recover these costs, B must
file a request for costs with the Appeals office per-
sonnel who settled B’s tax matter, or if that person is
unknown to B, with the Area Director of the area that
considered the underlying matter within 90 days af-
ter the date of mailing of the Office of Appeals’ final
decision that B is entitled to abatement of interest.
Example 3. Taxpayer C receives a notice of pro-
posed adjustment and employment tax 30-day letter.
C requests and is granted Appeals office considera-
tion. Appeals requests that C submit certain docu-
ments to support C’s position in the tax matters at is-
sue. Appeals determines that the documents submit-
ted are insufficient. Appeals then issues a notice of
determination of worker classification. After receiv-
ing the notice of determination but before the 90-day
period for filing a petition with the Tax Court has ex-
pired, C convinces Appeals that the documents sub-
mitted during the review by Appeals adequately sup-
port its position and, therefore, C owes no additional
employment tax. Appeals then closes the case show-
ing a zero tax adjustment and mails C a no-change
letter. Assuming that all of the other requirements of
section 7430 are satisfied, C may recover reasonable
administrative costs incurred after the date of the no-
tice of proposed adjustment and 30-day letter (the ad-
ministrative proceeding date). To recover these costs,
C must file a request for administrative costs with the
Appeals office personnel who settled C’s tax matter,
or if that person is unknown to C, with the Area Direc-
tor of the area that considered the underlying matter,
within 90 days after the date of mailing of the Office
of Appeals’ final decision that C owes no additional
tax.
Par. 5. Section 301.7430–3 is amended
by:
1. Revising paragraphs (b), (c)(1),
(c)(3) and (d).
2. Adding paragraph (c)(4).
The addition and revisions read as fol-
lows:
§301.7430–3 Administrative proceeding
and administrative proceeding dates.
*****
(b)Collection action. A collection ac-
tion generally includes any action taken
by the Internal Revenue Service to collect
a tax (or any interest, additional amount,
addition to tax, or penalty, together with
any costs in addition to the tax) or any
action taken by a taxpayer in response to
the Internal Revenue Service’s act or fail-
ure to act in connection with the collec-
tion of a tax (including any interest, addi-
tional amount, addition to tax, or penalty,
together with any costs in addition to the
tax). A collection action for purposes of
section 7430 and this section includes any
action taken by the Internal Revenue Ser-
vice under Chapter 64 of Subtitle F to col-
lect a tax. Collectionactions also include
collection due process hearings under sec-
tions 6320 and 6330 (unless the underly-
ing tax liability is properly at issue), and
those actions taken by a taxpayer to rem-
edy the Internal Revenue Service’s fail-
ure to release a lien under section 6325
or to remedy any unauthorized collection
action as defined by section 7433, except
those collection actions described by sec-
December 28, 200910032009–52 I.R.B.

tion 7433(e). An action or procedure di-
rectly relating to a claim for refund after
payment of an assessed tax is not a collec-
tion action.
(c)Administrativeproceeding
date—(1)General rule. For purposes of
section 7430 and the regulations thereun-
der, the termadministrative proceeding
datemeans the earlier of—
(i) The date of the receipt by the tax-
payer of the notice of the decision of the In-
ternal Revenue Service Office of Appeals;
(ii)Thedateofthenotice of deficiency;
or
(iii) The date on which the first letter
of proposed deficiencythat allows the tax-
payer an opportunity for administrative re-
view in the Internal Revenue Service Of-
fice of Appeals is sent.
(2) * * *
(3)Notice of deficiency. A notice of
deficiency is a notice described in section
6212(a), including a notice rescinded pur-
suant to section 6212(d). For purposes
of determining reasonable administrative
costs under section 7430 and the regu-
lations thereunder, the following will be
treated as a notice of deficiency:
(i) A notice of final partnership admin-
istrative adjustment described in section
6223(a)(2).
(ii) A notice of determination of worker
classification issued pursuant to section
7436.
(iii) A final notice of determination
denying innocent spouse relief issued pur-
suant to section 6015.
(4)First letter of proposed deficiency
that allows the taxpayer an opportunity for
administrative review in the Office of Ap-
peals. Generally, the first letter of pro-
posed deficiency that allows the taxpayer
an opportunity for administrative review
in the Office of Appeals is the first letter
issued to the taxpayer that describes the
proposed adjustments and advises the tax-
payer of the opportunity to contact the Of-
fice of Appeals. It also may be a claim
disallowance or the first letter of determi-
nation that allows the taxpayer an opportu-
nity for administrative review in the Office
of Appeals.
(d)Examples. The provisions of this
section are illustrated by the following ex-
amples:
Example 1. Taxpayer A receives a notice of pro-
posed deficiency (30-day letter). A files a request for
and is granted an Appeals office conference. At the
Appeals conference no agreement is reached on the
tax matters at issue. The Office of Appeals then is-
sues a notice of deficiency. Upon receiving the no-
tice of deficiency, A does not file a petition with the
Tax Court. Instead, A pays the deficiency and files a
claim for refund. The claim for refund is considered
by the Internal Revenue Service and the Area Direc-
tor issues a notice of proposed claim disallowance.
A requests and is granted Appeals office considera-
tion. A convinces Appeals that A’s claim is correct
and Appeals allows A’s claim. A may recover rea-
sonable administrative costs incurred on or after the
date of the notice of proposed deficiency (30-day let-
ter), but only if the other requirements of section 7430
and the regulations thereunder are satisfied. A cannot
recover costs incurred prior to the date of the 30-day
letter because these costs were incurred before the ad-
ministrative proceeding date.
Example 2. Taxpayer B files an individual in-
come tax return showing a balance due. No payment
is made with the return and the Internal Revenue Ser-
vice assesses the amount shown on the return. The
Internal Revenue Service issues a notice of levy pur-
suant to section 6330. B requests and is granted a Col-
lection Due Process (CDP) hearing. In connection
with the CDP hearing, B enters into an installment
agreement as a collection alternative. The costs that B
incurred in connection with the CDP hearing were not
incurred in an administrative proceeding, but rather in
a collection action. Accordingly, B may not recover
those costs as reasonable administrative costs under
section 7430 and the regulations thereunder.
Par. 6. Section 301.7430–4 is amended
by:
1. Removing the language “such” in
the second and fifth sentences of paragraph
(b)(2)(ii) and adding the language “that” in
its place in both locations.
2. Revising paragraphs (b)(3)(i),
(b)(3)(iii)(B), and (c)(4)Examples 1and
2.
3. Removing the language “$110” from
the first and second sentences in paragraph
(b)(3)(ii) and adding the language “$125”
in its place in both locations.
4. Revising the first sentence in para-
graph (b)(3)(iii)(C).
5.Redesignating paragraph
(b)(3)(iii)(D) as paragraph (b)(3)(iii)(F)
and revising newly-designated paragraph
(b)(3)(iii)(F).
6.Adding new paragraphs
(b)(3)(iii)(D), (b)(3)(iii)(E) and (d).
7. Removing the language “Such” in
the third sentence of paragraph (c)(2)(i)
and adding the language “These” in its
place.
8. Removing the language “$110” from
the second and third sentences in para-
graph (c)(2)(ii) and adding the language
“$125” in its place in both locations.
9. Removing the language “which” in
the fourth sentence of paragraph (c)(2)(i)
and adding the language “that” in its place.
The additions and revisions read as fol-
lows:
§301.7430–4 Reasonable administrative
costs.
*****
(b) * * *
(3)Limitation on fees for a representa-
tive—(i)In general. Except as otherwise
provided in this section, fees incurred after
January 18, 1999, and described in para-
graph (b)(1)(iv) of this section that are re-
coverable under section 7430 and the reg-
ulations thereunder asreasonable adminis-
trative costs may not exceed $125 per hour
increased by a cost of living adjustment
(and if appropriate, a special factor adjust-
ment).
*****
(iii) * * *
(B)Special factor.Aspecial factor
is a factor, other than an increase in the
cost of living, that justifies an increase
in the $125 per hour limitation of section
7430(c)(1)(B)(iii). The undesirability of
the case, the work and the ability of coun-
sel, the results obtained, and customary
fees and awards in other cases, are factors
applicable to a broad spectrum of litigation
and do not constitute special factors for the
purpose of increasing the $125 per hour
limitation. By contrast, the limited avail-
ability of a specially qualified representa-
tive for the proceeding, the difficulty of the
issues, and the limited local availability of
tax expertise are special factors justifying
an increase in the $125 per hour limitation.
(C)Limited availability. Limited avail-
ability of a specially qualified representa-
tive is established by demonstrating that
a specially qualified representative for the
proceeding is not available at the $125 per
hour rate (as adjusted for an increase in the
cost of living). * * *
(D)Limited local availability of tax ex-
pertise. Limited local availability of tax
expertise is established by demonstrating
that a representative possessing tax exper-
tise is not available in the taxpayer’s ge-
ographical area. Initially, this showing
may be made by submission of an affi-
davit signed by the taxpayer, or by the
taxpayer’s counsel, that no representative
possessing tax expertise practices within
2009–52 I.R.B.1004December 28, 2009

a reasonable distancefrom the taxpayer’s
principal residence or principal office. The
hourly rate charged by representatives in
the geographical area is not relevant in de-
termining whether tax expertise is locally
available. If the Internal Revenue Service
challenges this initial showing, the tax-
payer may submit additional evidence to
establish the limited local availability of a
representative possessing tax expertise.
(E)Difficulty of the issues. In determin-
ing whether the difficulty of the issues jus-
tifies an increase in the $125 per hour lim-
itation on the applicable hourly rate, the
Internal Revenue Service will consider the
following factors:
(1) The number of different provisions
of law involved in each issue.
(2) The complexity of the particular
provision or provisions of law involved in
each issue.
(3) The number of factual issues present
in the proceeding.
(4) The complexity of the factual issues
present in the proceeding.
(F)Example. The provisions of this
section are illustrated by the following ex-
ample:
Example. Taxpayer A is represented by B, a CPA
and attorney with a LL.M. Degree in Taxation with
Highest Honors and who regularly handles cases
dealing with TEFRA partnership issues. B represents
A in an administrative proceeding involving TEFRA
partnership issues that is subject to the provisions of
this section. Assuming the taxpayer qualifies for an
award of reasonable administrative costs by meeting
the requirements of section 7430, the amount of the
award attributable to the fees of B may not exceed
the $125 per hour limitation (as adjusted for the
cost of living), absent a special factor. B is not a
specially qualified representative because extraordi-
nary knowledge of the tax laws does not constitute
distinctive knowledge or a unique and specialized
skill constituting a special factor. A special factor
must be comprised of nontax expertise unless the
taxpayer establishes the limited local availability of
tax expertise.
*****
(c) * * *
(4)* * *
Example 1. After incurring fees for representa-
tion during the Internal Revenue Service’s examina-
tion of taxpayer A’s income tax return, A receives a
notice of proposed deficiency (30-day letter). A files
a request for and is granted an Appeals office confer-
ence. At the conference no agreement is reached on
the tax matters at issue. The Internal Revenue Service
then issues a notice of deficiency. Upon receiving the
notice of deficiency, A discontinues A’s administra-
tive efforts and files a petition with the Tax Court.
A’s costs incurred before the date of the mailing of the
30-day letter are not reasonable administrative costs
because they were incurred before the administrative
proceeding date. Similarly, A’s costs incurred in con-
nection with the preparation and filing of a petition
with the Tax Court are litigation costs and not rea-
sonable administrative costs.
Example 2. Assume the same facts as inExample
1except that after A receives the notice of deficiency,
A recontacts Appeals and Appeals agrees with A. If
A seeks administrative costs, A may recover costs in-
curred after the date of the mailing of the 30-day let-
ter, costs incurred in recontacting Appeals after the is-
suance of the notice of deficiency, and costs incurred
up to the time the Tax Court petition was filed, as rea-
sonable administrative costs, but only if the other re-
quirements of section 7430 and the regulations there-
under are satisfied. The costs incurred before the date
of the mailing of the 30-day letter are not reasonable
administrative costs because they were incurred be-
fore the administrative proceeding date, as set forth
in §301.7430–3(c)(1)(iii). A’s costs incurred in con-
nection with the filing of a petition with the Tax Court
are not reasonable administrative costs because those
costs are litigation costs. Similarly, A’s costs incurred
after the filing of the petition are not reasonable ad-
ministrative costs, as they are litigation costs.
(d)Pro bono services—(1)In general.
Fees recoverable under section 7430 and
the regulations thereunder as reasonable
administrative costs may exceed the attor-
neys’ fees paid or incurred by the prevail-
ing party if these fees are less than the rea-
sonable attorneys’ fees because an individ-
ual is representing the prevailing party on
a pro bono basis. In addition to attorneys’
fees, reasonable costs incurred or paid by
the individual providing thepro bonoser-
vices that are normally billed separately
also may be recoveredunder this section.
(2)Requirements.Pro bonorepresenta-
tion is established by demonstrating—
(i) Legal services were provided for no
fee or for a fee that (taking into account all
the facts and circumstances) constitutes a
nominal fee;
(ii) The legal services were provided to
or on behalf of either—
(A) Persons of limited financial means
who meet the eligibility requirements
for programs funded by the Legal Ser-
vices Corporation as set forth in 45 C.F.R.
§ 1611; or
(B) Organizations operating primarily
to address the needs of persons with lim-
ited means if payment of a standard le-
gal fee would significantly deplete the per-
son’s financial resources; and
(iii) The service provider intended to
perform services for no fee or for a nomi-
nal fee from the commencement of the rep-
resentation. Intent to perform services for
no fee or for a nominal fee may be demon-
strated through documentation such as a
retainer agreement. An individual will not
be considered to have represented a client
on apro bonobasis if the facts demonstrate
that the individual anticipated a fee or pro-
vided services on a contingency fee basis.
The fact that the service provider intended
to seek recovery of fees under section 7430
will not prevent the service provider from
satisfying this requirement.
(3)Nominal fee.Anominal feeis de-
fined as one that is slight, inconsiderable
or trifling (taking into account all the facts
and circumstances).
(4)Payment when services provided at
no charge or for a nominal fee. A prevail-
ing party who receives legal services at no
charge or for a nominal fee and who sat-
isfies the requirements under this section
is eligible to receive reasonable fees in ex-
cess of the fees actually paid or incurred
and those otherwise meeting the require-
ments of this paragraph. Payment will be
made to the representative or the represen-
tative’s employer.
(5)Record keeping. Contemporaneous
records must be maintained, demonstrat-
ing the work performed and the time
allocated to each task. These records
should contain similar information to
billing records.
(6)Hourly rate. For purposes of this
section, the hourly rate may not exceed the
lesser of—
(i) The rate prescribed under section
7430(c)(1)(B); or
(ii) The hourly rate customarily charged
by the representative in cases that are not
handled on apro bonobasis.
(7)Examples. The provisions of this
section are illustrated by the following ex-
amples:
Example 1.TaxpayerA,anattorney,filesapeti-
tion with the Tax Court and pays a $60 filing fee. A
appearspro sein the court proceeding. If A prevails,
he will not be entitled to an award of reasonable liti-
gation costs for his services. A is rendering services
on his own behalf, not providingpro bonorepresenta-
tion. His lost opportunity costs are not compensable
under section 7430. A may recover the filing fee as
a litigation cost, but only if the other requirements of
section 7430 and the regulations thereunder are satis-
fied.
Example 2. Taxpayer retains attorney B with re-
gard to the audit of taxpayer’s individual income tax
return. B agrees to represent taxpayer on apro bono
basis. Under this arrangement, taxpayer pays to at-
torney B a nominal fee. The customary hourly rate
charged by B in cases not handled on apro bono
basis is less than the rate prescribed under section
7430(c)(1)(B). Any award paid to attorney B, or at-
torney B’s employer, would be limited to attorney B’s
December 28, 200910052009–52 I.R.B.

customary hourly rate. Thus, attorney B, or attorney
B’s employer, would receive the customary hourly
rate charged in cases not handled by attorney B on
apro bonobasis rather than the nominal fee actually
paid or incurred by the taxpayer.
Example 3. Assume the same facts inExample
2except that attorney B’s customary hourly rate ex-
ceeds the rate prescribed under section 7430(c)(1)(B).
Any award paid to attorney B, or attorney B’s em-
ployer, would be made at the rate prescribed under
section 7430(c)(1)(B).
Example 4. Organization C, a low income tax-
payer clinic within the meaning of section 7526,
agrees to represent taxpayer on apro bonobasis.
Attorneys employed by C do not have a custom-
ary hourly rate and work exclusively for C. Any
award paid to C, for representation by its attorneys,
would be limited to the rate prescribed under section
7430(c)(1)(B).
§301.7430–5 [Amended]
Par. 7. For each entry in the table, re-
designate the paragraph designated in the
“Old Paragraph” column as the new para-
graph designation in the “New Paragraph”
column to read as follows:
Old ParagraphNew Paragraph
301.7430–5(a)(1)301.7430–5(a)(2)
301.7430–5(a)(2)301.7430–5(a)(3)
301.7430–5(a)(3)301.7430–5(a)(4)
301.7430–5(c)301.7430–5(d)(1)
301.7430–5(c)(2)301.7430–5(d)(6)
301.7430–5(c)(3)301.7430–5(d)(7)
301.7430–5(d)301.7430–5(e)
301.7430–5(e)301.7430–5(f)(1)
301.7430–5(f)(1)301.7430–5(g)(1)
301.7430–5(f)(2)301.7430–5(g)(3)
301.7430–5(f)(3)301.7430–5(g)(4)
301.7430–5(g)301.7430–5(h)
Par. 8. Section 301.7430–5 is amended
by:
1. Removing the language “only if–”
at the end of the introductory text in para-
graph (a) and adding the language “(other
than by reason of section 7430(c)(4)(E))
only if—” in its place.
2. Adding new paragraphs (a)(1), (c),
(d)(2), (d)(3), (d)(4), (d)(5), (g)(2) and
(g)(5).
3. Revising paragraph (b).
4. Revising the third sentence and re-
movingthelanguage“(c)(3)”fromthe
fourth sentence in newly-designated para-
graph (d)(7) and adding the language
“(d)(7)” in its place.
5. Revising the paragraph heading for
newly-designated paragraph (f)(1) and
adding new paragraph (f)(2).
6. Revising newly-designated para-
graphs (g)(1) and (g)(3).
7. Removing the language “Internal
Revenue Code” in the first sentence of
newly-designated paragraph (g)(4) in both
places.
8. Removing the language “such” in the
first sentence of newly-designated para-
graph (h) and adding the language “an” in
its place.
9. Removing paragraph (h).
The additions and revisions read as fol-
lows:
§3
01.7430–5 Prevailing party.
(a) * * *
(1) At least one issue (other than recov-
ery of administrative costs) remains in dis-
pute as of the date that the Internal Rev-
enue Service takes a position in the admin-
istrative proceeding, as described in para-
graph (b) of this section;
*****
(b)Position of the Internal Revenue Ser-
vice. The position of the Internal Revenue
Service in an administrative proceeding is
the position taken by the Internal Revenue
Service as of the earlier of—
(1) The date of the receipt by the tax-
payer of the notice of the decision of the In-
ternal Revenue Service Office of Appeals;
or
(2) The date of the notice of deficiency
or any date thereafter.
*****
(c)Examples. The provisions of this
section may be illustrated by the following
examples:
Ex
ample 1. Taxpayer A receives a notice of pro-
posed deficiency (30-day letter). A pays the amount
of the proposed deficiency and files a claim for re-
fu
nd. A’s claim is considered and a notice of pro-
posed claim disallowance is issued by the Area Direc-
tor. A does not request an Appeals office conference
a
nd the Area Director issues a notice of claim disal-
lowance. A then files suit in a United States District
Court. A cannot recover reasonable administrative
c
osts because the notice of claim disallowance is not
a notice of the decision of the Internal Revenue Ser-
vice Office of Appeals or a notice of deficiency. Ac-
cordingly, the Internal Revenue Service has not taken
a position in the administrative proceeding pursuant
to section 7430(c)(7)(B).
Example 2. Taxpayer B receives a notice of
proposed deficiency (30-day letter). B disputes the
proposed adjustments and requests an Appeals office
conference. The Appeals office determines that B has
no additional tax liability. B requests administrative
costs from the date of the 30-day letter. B is not the
prevailing party and may not recover administrative
costs because all of the proposed adjustments in the
case were resolved as of the date that the Internal
Revenue Service took a position in the administrative
proceeding.
(d) * * *
(2)Positionincourtsofappeal.
Whether the United States has won or lost
an issue substantially similar to the one in
2009–52 I.R.B.1006December 28, 2009

the taxpayer’s case in courts of appeal for
circuits other than the one to which the tax-
payer’s case would be appealable should
be taken into consideration in determining
whether the Internal Revenue Service’s
position was substantially justified.
(3)Example. The provisions of this sec-
tion are illustrated by the following exam-
ple:
Example. The Internal Revenue Service, in the
conduct of a correspondence examination of taxpayer
A’s individual income tax return, requests substanti-
ation from A of claimed medical expenses. A does
not respond to the request and the Service issues a
notice of deficiency. After receiving the notice of de-
ficiency, A presents sufficient information and argu-
ments to convince a revenue agent that the notice of
deficiency is incorrect and that A owes no tax. The
revenue agent then closes the case showing no defi-
ciency. Although A incurredcosts after the issuance
of the notice of deficiency, A is unable to recover
these costs because, as of the date these costs were
incurred, A had not presented relevant information
under A’s control and relevant legal arguments sup-
porting A’s position to the appropriate Internal Rev-
enue Service personnel. Accordingly, the position of
the Internal Revenue Service was substantially justi-
fied at the time the costs were incurred.
(4)Included costs. (i) An award of rea-
sonable administrative costs shall only in-
clude costs incurred on or after the earliest
of—
(A) The date of the receipt by the tax-
payer of the notice of decision from Ap-
peals;
(B) The date of the notice of deficiency;
or
(C) The date on which the first letter
of proposed deficiencythat allows the tax-
payer an opportunity for administrative re-
view in the Office of Appeals is sent.
(ii) If the Internal Revenue Service
takes a position in an administrative pro-
ceeding, as defined in paragraph (b) of
this section, and the position is not sub-
stantially justified, the taxpayer may be
permitted to recover costs incurred before
the position was taken, but not before the
dates set forth in this paragraph (d)(4).
(5)Examples. The provisions of this
section may be illustrated by the following
examples:
Example 1. Pursuant to section 6672, taxpayer
D receives from the Area Director Collection Opera-
tions (Collection) a proposed assessment of trust fund
taxes (Trust Fund Recovery Penalty). D requests and
is granted Appeals office consideration. Appeals con-
siders the issues and decides to uphold Collection’s
recommended assessment. Appeals notifies D of this
decision in writing. Collection then assesses the tax
and notice and demand is made. D timely pays the
minimum amount required to commence a court pro-
ceeding, files a claim for refund, and furnishes the
required bond. Collection disallows the claim, but
Appeals, on reconsideration, reverses its original po-
sition, thus upholding D’s position. If Appeals con-
cedes its initial determination was not substantially
justified, D may recover administrative costs incurred
on or after the mailing of the proposed assessment of
trust fund taxes, because the proposed assessment is
the first determination letter that allows the taxpayer
an opportunity for administrative review in the Inter-
nal Revenue Service Office of Appeals.
Example 2. Taxpayer E receives a notice of pro-
posed deficiency (30-day letter). E pays the amount
of the proposed deficiency and files a claim for re-
fund. E’s claim is considered and a notice of pro-
posed disallowance is issued by the Area Director. E
requests and is granted Appeals office consideration.
No agreement is reached withAppeals and the Office
of Appeals issues a notice of claim disallowance. E
does not file suit in a United States District Court but
instead contacts the Appeals office to attempt to re-
verse the decision. E convinces the Appeals officer
that the notice of claim disallowance is in error. The
Appeals officer then abates the assessment. E may re-
cover reasonable administrative costs if the position
taken in the notice of claim disallowance issued by
the Office of Appeals was not substantially justified
and the other requirements of section 7430 and the
regulations thereunder are satisfied. If so, E may re-
cover administrative costs incurred from the mailing
date of the 30-day letter because the requirements of
paragraph (c)(2) of this section are met. E cannot re-
cover the costs incurred prior to the mailing of the
30-day letter because they were incurred before the
administrative proceeding date.
*****
(7)Presumption. * * * For purposes of
this paragraph (d)(7), the termapplicable
published guidancemeans final or tempo-
rary regulations, revenue rulings, revenue
procedures, information releases, notices
and announcements published in the Inter-
nal Revenue Bulletin and, if issued to the
taxpayer, private letter rulings, technical
advice memoranda, and determination let-
ters (§601.601(d)(2) of this chapter). * * *
*****
(f)Most significant issue or set of issues
presented—(1)In general.***
(2)Example. The provisions of this
section may be illustrated by the following
example:
Example. In the purchase of an ongoing business,
Taxpayer F obtains from the previous owner of the
business a covenant not to compete for a period of
five years. On audit of F’s individual income tax re-
turn for the year in which the business is acquired,
the Internal Revenue Service challenges the basis as-
signed to the covenant not to compete and a deduction
taken as a business expense for a seminar attended by
F. Both parties agree that the covenant not to compete
is amortizable over a period of five years; however,
the Internal Revenue Service asserts that the proper
basis of the covenant is $2X while F asserts the basis
is $4X. The deduction for the seminar attended by F
was reported on the return in question in the amount
of $7X. The Internal Revenue Service determines that
the deduction for the seminar should be disallowed
entirely. In the notice of deficiency, the Internal Rev-
enue Service adjusts the amortization deduction to re-
flect the change to the basis of the covenant not to
compete, and disallows the seminar expense. Thus,
of the two adjustments determined for the year under
audit, the adjustment attributable to the disallowance
of the seminar is larger than that attributable to the
covenant not to compete. Due to the impact on the
next succeeding four years, however, the covenant
not to compete adjustment is objectively the most sig-
nificant issue to both F and the Internal Revenue Ser-
vice.
*****
(g)Net worth and size limitations—(1)
Individuals. A taxpayer who is a natural
person meets the net worth and size lim-
itations of this paragraph if the taxpayer’s
net worth does not exceed two million dol-
lars. The net worth limitation shall be de-
termined for individuals using the fair mar-
ket value of the individual’s assets as of the
administrative proceeding date. For pur-
poses of determining net worth, individu-
als filing a joint return shall be treated as
separate individuals. Thus, individuals fil-
ing a joint return will each be subject to a
separate net worth limitation of two mil-
lion dollars.
(2)Estates and trusts.Anestateora
trust meets the net worth and size limita-
tions of this paragraph if the taxpayer’s net
worth does not exceed two million dollars.
The net worth of an estate shall be deter-
mined using the fair market value of the
assetsoftheestateasofthedateofthe
decedent’s death provided the date of death
is prior to the date the court proceeding is
commenced. The net worth of a trust shall
be determined using the fair market value
of the assets of the trust as of the last day
of the last taxable year involved in the pro-
ceeding.
(3)Others. (i) A taxpayer that is
a partnership, corporation, association,
unit of local government, or organization
(other than an organization described in
paragraph (g)(4) of this section) meets
the net worth and size limitations of this
paragraph if, as of the administrative pro-
ceeding date:
(A) The taxpayer’s net worth does not
exceed seven million dollars.; and
(B) The taxpayer does not have more
than 500 employees.
(ii) A taxpayer who is a natural per-
son and owns an unincorporated business
December 28, 200910072009–52 I.R.B.

is subject to the net worth and size limi-
tations contained in paragraph (g)(3)(i) of
this section if the tax at issue (or any inter-
est, additional amount, addition to tax, or
penalty, together with any costs in addition
to the tax) relates directly to the business
activities of the unincorporated business.
(4) * * *
(5)Special rule for TEFRA partnership
proceedings. (i) In cases involving part-
nerships subject to the unified audit and
litigation procedures of subchapter C of
chapter 63 of the Internal Revenue Code
(TEFRA partnership cases), the TEFRA
partnership meets the net worth and size
limitationsrequirementsofthisparagraph
(g ) if, on the administrative proceeding
date—
(A) The partnership’s net worth does
not exceed seven million dollars; and
(B) The partnership does not have more
than 500 employees.
(ii) In addition, eachpartner requesting
fees pursuant to section 7430 must meet
the appropriate net worth and size limita-
tions set forth in paragraph (g)(1), (g)(2)
or (g)(3) of this section. For example, if
a partner is an individual, his or her net
worth must not exceed two million dollars
as of the administrative proceeding date. If
the partner is a corporation, its net worth
must not exceed seven million dollars and
it must not have more than 500 employees.
Par. 9. Section 301.7430–6 is amended
by revising the section heading and adding
a new sentence at the end of the paragraph
to read as follows:
§301.7430–6 Effective/applicability dates.
***Sections301.7430–2(c)(3)(i)(B),
(c)(3)(i)(E), (c)(3)(ii)(C), (c)(3)(iii)(C),
(c)(5), (c)(7), (e); 301.7430–3(c)(1),
(c)(4),(d);301.7430–4(b)(3)(i),
(b)(3)(iii)(B), (b)(3)(iii)(D), (b)(3)(iii)(E),
(c)(4), (d); and 301.7430–5(a), (b), (c),
(d)(2), (d)(3), (d)(4), (d)(5), (f)(2), (g)(1),
(g)(2) and (g)(5), as proposed, apply to
costs incurred and services performed as
of the date of publication of a Treasury
decision adopting these rules as final reg-
ulations in theFederal Register.
Par. 10. Section 301.7430–7 is
amended by adding new paragraph (c)(8)
and newExamples 16and17to paragraph
(e) to read as follows:
§301.7430–7 Qualified offers.
*****
(c) * * *
(8)Interest as a contested issue.To
constitute a qualified offer, an offer must
specify the offeredamount of the tax-
payer’s liability (determined without
regard to interest, unless interest is a
contested issue in the proceeding), as pro-
vided in paragraphs (c)(1)(ii) and (c)(3) of
this section. Therefore, a qualified offer
generally may only include an offer to
compromise tax, penalties, additions to
the tax and additional amounts. Interest
may only be included in a qualified offer if
interest is a contested issue in the proceed-
ing. For purposes of this section, interest
is a contested issue in the proceeding only
if the court in which the proceeding could
be brought would have jurisdiction to de-
termine the amount of interest due on the
underlying tax, penalties, additions to the
tax and additional amounts. Examples
of proceedings in which interest might
be a contested issue include proceedings
in which the increased interest rate for
large corporate underpayments under sec-
tion 6621(c) is imposed by the Internal
Revenue Service and interest abatement
proceedings brought under section 6404.
Interest is not a contested issue in the
proceeding if the court that would have
jurisdiction over the proceeding would not
have jurisdiction to determine the amount
or rate of interest, regardless of whether
the taxpayer attempts to raise interest as
an issue in the proceeding. Consequently,
interest will not be a contested issue in the
vast majority of tax cases because they
merely involve the straight forward appli-
cation of statutory interest under section
6601. Accordingly, in those cases, interest
may not be included in the offer.
*****
(e) * * *
Example 16.Qualified offer may not compro-
mise interest unless it is a contested issue. Taxpayer
J receives a notice of deficiency making an adjust-
ment resulting in a deficiency in tax of $6,500 plus a
penalty of $500. Interest is not a contested issue in
the proceeding. Within the qualified offer period, J
submits a written offer to settle the case for a defi-
ciency of $1,000, including all taxes, penalties, and
interest. The offer states that it is a qualified offer
for purposes of section 7430(g) and that it will re-
main open for acceptance by the IRS for a period of
90 days. Section 7430(g)(2)(B) and paragraph (c)(3)
of this section state that the amount of a qualified of-
fer must be without regard to interest unless interest
is at issue in the proceeding. Since J’s offer attempts
to compromise interest, which is not a contested issue
in the proceeding, it is not a qualified offer.
Example 17.Qualified offer based on new de-
fense or legal theory. Taxpayers K and L received a
statutory notice of deficiency for tax year 2005, a tax
year when they were married and filed a joint income
tax return. Taxpayer K files a sole petition claim-
ing innocent spouse relief and simultaneously sub-
mits an offer purporting to be a qualified offer. The
offer states that K is entitled to innocent spouse relief
and offers to settle the 2005 deficiency as to K in the
amount of $1,000. K’s innocent spouse claim was not
raised during K and L’s audit, nor was it raised dur-
ing their appeals conference. Additionally, at no time
prior to or contemporaneously with submitting the of-
fer did K file with the IRS a Form 8857,Request for
Innocent Spouse Relief, or otherwise provide the in-
formation specified in §1.6015–5(a) of this chapter.
K’s offer is not a qualified offer because K did not
file a Form 8857 or otherwise provide substantiation
or legal and factual arguments necessary to allow for
informed consideration of the merits of the innocent
spouse claim as required by paragraph (c)(4) of this
section, contemporaneously with the offer or prior to
making the offer.
LindaE.Stiff,
Deputy Commissioner
for Services and Enforcement.
(Filed by the Office of the Federal Register on November 24,
2009, 8:45 a.m., and published in the issue of the Federal
Register for November 25, 2009, 74 F.R. 61589)
Foundations Status of Certain
Organization
Announcement 2009–88
The following organizations have failed
to establish or have been unable to main-
tain their status as public charities or as op-
erating foundations. Accordingly, grantors
and contributors maynot, after this date,
rely on previous rulings or designations
in the Cumulative List of Organizations
(Publication 78), or on the presumption
arising from the filing of notices under sec-
tion 508(b) of the Code. This listing does
notindicate that the organizations have lost
their status as organizations described in
section 501(c)(3), eligible to receive de-
ductible contributions.
Former Public Charities. The follow-
ing organizations (which have been treated
as organizations that are not private foun-
dations described in section 509(a) of the
Code) are now classified as private foun-
dations:
ABBA Enterprises, Inc.,
Independence, MO
2009–52 I.R.B.1008December 28, 2009

Aspire Development Corporation,
Memphis, TN
Balleine Supporting Organization,
Salt Lake City, UT
B J & Friends India Ministry, Inc.,
Pasadena, CA
Boys and Girls Club of Bay City and
Matagorda County, Bay City, TX
Brant Center, Selma, AL
California Girls Ranch, Auburn, CA
Childrens Piano Institute, New York, NY
Christian Transdenominational
Spiritual Group & Enlightenment,
Tallahassee, FL
Community Crossroads, Inc.,
Murfeesboro, TN
Community Family Life Center,
St. Louis, MO
Community Service Television,
Las Vegas, NV
Computer Enhancement Center,
Jackson, MS
Cyberhood Foundation, Philadelphia, PA
Daddy Whites Unlimited, Fort Worth, TX
Dorsainvl Foundation, Delray Beach, FL
Dortch Outreach, Inc., Coy, AL
Empower, Inc., College Park, GA
Faces of New Mexico Concerned Citizens
Unified for the Restoration of Errants,
Alto, NM
Family Hope International, Inc.,
Stone Mountain, GA
Flint Hill Foundation, Inc., Trenton, SC
Gidewon Foundation, Atlanta, GA
Genesis RHF Housing, Inc.,
Long Beach, CA
Greater New Haven Partnership
for a Healthy Community, Inc.,
New Haven, CT
Grounding Relationships in People,
Playa Del Ray, CA
Help Me USA, Mineral Ridge, OH
Hopes and Dreams Foundation,
Carson, CA
Insight, Joplin, MO
International Academy of Information
Sciences Systems and Technologies,
Los Altos, CA
Isaac L Floyd Ministries, Lansing, IL
Jasmine Foundation, Baton Rouge, LA
Jefferson Community Services, Inc.,
Marrero, LA
Keys To College Education Network,
Inc., Boulder, CO
Lifeseed Foundation, Mt Prospect, IL
Marin County Mediation Service
Advisory Committee, San Rafael, CA
Medi-Bill Training Center, Inc.,
Yorktown Heights, NY
Monterey Bay Police Activities League,
Inc., Marina, CA
Mother Link, Fairfax, VA
Moving On Foundation, Las Vegas, NV
Mt. Pilgrim BC Outreach Ministries,
Smithville, TX
Na Koa Opio, Waianae, HI
Nehemiah Ministry, Bakersfield, CA
Off the Street Youth Community
Prepatory Academy, Memphis, TN
One Village NFP, Chicago, IL
Our Lord and Saviour Jesus Christ,
Ordway, CO
Panache Youth Outreach, Inc.,
Loxchachee, FL
Parque Santa Cruz, Inc., Bayamon, PR
Paws of Hope Foundation, New York, NY
Public Advocate Org., Seattle, WA
Project Life Foundation, Inc., Dallas, TX
Reading Clubs of America, Inc.,
Hempstead, NY
Releasing Life International,
Harrisburg, PA
Sage Enterprise, Waco, TX
Sarasota High School Basketball Booster
Club,Inc.,Sarasota,FL
Sawtooth Mountain Historical Society,
Queencreek, AZ
Somalian Women Organization, Inc.,
Atlanta, GA
Special Care Services, Inc., Jersey City, NJ
Supply Our Schools, Reston, VA
Unconditional Care Services,
Lawrenceville, GA
Unlimited Resources, Inc., Southfield, MI
USS United States Foundation,
North Las Vegas, NV
Where 2 Go of Central Florida, Inc.,
Pomeroy, FL
WNC Dual Diagnosis Region,
Black Mountain, NC
If an organization listed above submits
information that warrants the renewal of
its classification as a public charity or as
a private operating foundation, the Inter-
nal Revenue Service will issue a ruling or
determination letter with the revised clas-
sification as to foundation status. Grantors
and contributors may thereafter rely upon
such ruling or determination letter as pro-
vided in section 1.509(a)–7 of the Income
Tax Regulations. It is not the practice of
the Service to announce such revised clas-
sification of foundation status in the Inter-
nal Revenue Bulletin.
Remedial Amendment Period
and Reliance for Section
403(b) Plans
Announcement 2009–89
Within the next few months, the Service
expects to publish a revenue procedure for
obtaining an opinion letter that the form of
a prototype or other “pre-approved plan”
meets the requirements of § 403(b) of the
Internal Revenue Code and the regulations
thereunder. The revenue procedure will re-
flect the Service’s consideration of com-
ments it has received on the draft revenue
procedure that was included in Announce-
ment 2009–34, 2009–18 I.R.B. 916. Sub-
sequently, the Service intends to publish a
revenue procedure for obtaining an indi-
vidual determination letter for a § 403(b)
plan. This announcement provides for a
remedial amendment period and reliance
for employers that, pursuant to the up-
coming revenue procedures, either adopt a
pre-approved plan with a favorable opin-
ion letter or apply for an individual deter-
mination letter when available.
Notice 2009–3, 2009–2 I.R.B. 250, pro-
vides relief during 2009 with respect to the
requirement in the regulations to have a
written § 403(b) plan in place by January 1,
2009. The Service will not treat a § 403(b)
plan as failing to satisfy the requirements
of § 403(b) and the regulations during the
2009 calendar year, provided that the em-
ployer satisfies the conditions of Notice
2009–3.
As one of the conditions for relief un-
der Notice 2009–3, a written § 403(b) plan
that is intended to satisfy the requirements
of § 403(b) and the regulations must be
adopted on or before December 31, 2009.
If this condition is met and, pursuant to
the upcoming revenue procedures, the em-
ployer sponsoring the plan either adopts a
pre-approved plan that has received a fa-
vorable opinion letter from the Service or
applies for an individual determination let-
ter when available, the employer will have
a remedial amendment period in which to
amend the plan to correct any form de-
fects retroactive to January 1, 2010. Fur-
ther, such an employer will have reliance,
beginning January 1, 2010, that the form
December 28, 200910092009–52 I.R.B.

of its written plan satisfies the require-
ments of § 403(b) and the regulations, pro-
vided that, during the remedial amendment
period, the pre-approved plan is adopted
retroactive to January 1, 2010 or the plan is
amended to correct any defects in the form
of the plan retroactive to January 1, 2010.
An employer that first establishes a
§ 403(b) plan after December 31, 2009, by
adopting a written plan intended to satisfy
the requirements of § 403(b) and the reg-
ulations will also have reliance beginning
on the effective date of the plan, provided
the employer either adopts a pre-approved
plan with a favorable opinion letter or ap-
plies for an individual determination letter
and corrects any defects in the form of
the plan retroactive to the plan’s effective
date.
The upcoming revenue procedures will
include this remedial amendment provi-
sion and will address the time-frames for
adopting a pre-approved plan or applying
for a determination letter and other details
regarding the remedial amendment period.
Rev. Proc. 2007–71, 2007–2 C.B.
1184, provided model plan language for
use by public schools and other employ-
ers in complying with the requirements of
§ 403(b) and the regulations. Employers
may continue to rely on the model plan lan-
guage in Rev. Proc. 2007–71 as provided
in that revenue procedure.
Employers may rely on this announce-
ment prior to publication of the revenue
procedure for pre-approved § 403(b) plans.
Accordingly, employers should not request
ruling or determination letters on the form
of their § 403(b) plans at this time, pend-
ing publication of the revenue procedure
for pre-approved § 403(b) plans and ad-
ditional procedures on applying for indi-
vidual determination letters for § 403(b)
plans.
The principal author of this notice
is James P. Flannery of the Employee
Plans, Tax Exempt and Government
Entities Division. Questions regarding
this notice may be sent via e-mail to
retirementplanquestions@irs.gov.
Deletions From Cumulative
List of Organizations
Contributions to Which
are Deductible Under Section
170 of the Code
Announcement 2009–90
The Internal Revenue Service has re-
voked its determination that the organi-
zations listed below qualify as organiza-
tions described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.
Generally, the Service will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the Service is not
precluded from disallowing a deduction
for any contributions made after an or-
ganization ceases to qualify under section
170(c)(2) if the organization has not timely
filed a suit for declaratory judgment under
section 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declara-
tory judgment has been timely filed,
contributions from individuals and orga-
nizations described in section 170(c)(2)
that are otherwise allowable will continue
to be deductible. Protection under section
7428(c) would begin on December 28,
2009, and would end on the date the
court first determines that the organization
is not described in section 170(c)(2) as
more particularly set forth in section
7428(c)(1). For individual contributors,
the maximum deduction protected is
$1,000, with a husband and wife treated
as one contributor. This benefit is not
extended to any individual, in whole
or in part, for the acts or omissions of
the organization that were the basis for
revocation.
Twenty First Century World —
TEMENOS
San Rafael, CA
Treatment of Services Under
Section 482; Allocation of
Income and Deductions
From Intangible Property;
Apportionment of Stewardship
Expense; Correction
Announcement 2009–91
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correcting amendments.
SUMMARY: This document contains cor-
rections to final regulations (T.D. 9456,
2009–33 I.R.B. 188) that were published in
theFederal Registeron Tuesday, August
4, 2009 (74 FR 38830) providing guidance
regarding the treatment of controlled ser-
vices transactions under section 482 and
the allocation of income from intangible
property, in particular with respect to con-
tributions by a controlled party to the value
of intangible property owned by another
controlled party. These final regulations
modify regulations under section 861 con-
cerning stewardship expenses to be consis-
tent with the changes made to the guidance
under section 482.
DATES: This correction is effective on
September 9, 2009, and is applicable on
August 4, 2009.
FOR FURTHER INFORMATION
CONTACT: Carol B. Tan or
Gregory A. Spring, (202) 435–5265
for matters relating to section 482, or
Richard L. Chewning, (202) 622–3850 for
matters relating to stewardship expenses
(not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
The final regulations that are the subject
of this document are under sections 482,
861, 6038, and 6662 of the Internal Rev-
enue Code.
Need for Correction
As published, the final regulations
(T.D. 9456) contains errors that may prove
to be misleading and are in need of clarifi-
cation.
2009–52 I.R.B.1010December 28, 2009

*****
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 1.482–1 is amended
by revising the last sentence of paragraph
(d)(3)(v) to read as follows:
§1.482–1 Allocation of income and
deductions among taxpayers.
*****
(d) * * *
(3) * * *
(v) * * * For guidance concerning
the specific comparability considerations
applicable to transfers of tangible and
intangible property and performance of
services,see§§1.482–3 through 1.482–6
and §1.482–9;seealso §§1.482–3(f),
1.482–4(f)(4), and 1.482–9(m), dealing
with the coordination of intangible and
tangible property and performance of ser-
vices rules.
Par. 3. Section 1.482–6 is amended
by revising the third sentence of paragraph
(c)(3)(i)(B)(1) to read as follows:
§1.482–6 Profit split method.
*****
(c) * * *
(3) * * *
(i) * * *
(B)***
(1)***Thus,incaseswheresuch
nonroutine contributions are present, there
normally will be an unallocated residual
profit after the allocation of income de-
scribed in paragraph (c)(3)(i)(A) of this
section. * * *
Par. 4. Section 1.482–8 is amended by
revising the second sentence of paragraph
(b)Example 10. (iv) to read as follows:
§1.482–8 Examples of the best method
rule.
*****
(b) * * *
Example 10.***
(iv) * * * A functional analysis indi-
cates that USSub’s activities to promote
Product Y in year 4 are similar to activi-
ties performed by Agency A during years
1 through 3 under the contract with USSub.
***
*****
Par. 5. Section 1.482–9 is amended as
follows:
1. The last sentence of paragraph (b)(8)
Example 22.(i) is revised.
2. Paragraphs (b)(8)Example 23.(ii)
second occurrence, (b)(8)Example 23.
(iii), and (b)(8)Example 23.(iv) are re-
designated as paragraphs (b)(8)Example
23.(iii), (b)(8)Example 23.(iv), and (b)(8)
Example 23.(v).
3. The table of paragraph (e)(4)Exam-
ple 4.(ii) is revised.
4. The last sentence of paragraph (g)(2)
Example 2. (iii) is revised.
5. The table of paragraph (k)(3)Exam-
ple 2.(iii) is revised.
The revisions read as follows:
§1.482–9 Methods to determine taxable
income in connection with a controlled
services transaction.
*****
(b) * * *
(8) * * *
Example 22. (i) * * * Company P’s total services
cost for services A, B, C, and D charged within the
group is 100.
*****
(e) * * *
(4) * * *
Example 4.***
(ii) * * *
CategoryRate
Projectmanagers ........................................
$100 per hour.
Technicalstaff ...........................................
$75 per ho
ur.
*****
(g) * *
*
(2) * *
*
Examp
le 2. * * *
(iii)
***Inanefforttosubmitawin-
ning b
id to secure the contract, Company B
point
s to its Level 2 license and its record
of suc
cessful completion of projects, and
also
demonstrates to Country 2 govern-
ment
that it has access to substantial tech-
nica
l expertise pertaining to processing of
Leve
l1waste.
*****
(k) * *
*
(3) * *
*
Examp
le 2.***
(iii)
***
CompanyABTotal
Allocation ..................................
400/500100/500
.....................
Amount.....................................8020100
*****
Par. 6. Section 1.861–8 is amended by
revising the fourth sentence of paragraph
(g)Example 17. (ii)(A) to read as follows:
§1.861–8 Computation of taxable income
from sources within the United States and
from other sources and activities.
*****
(g) * * *
Example 17.***
(ii) * * *
(A)***Forpurposesofapplyingthe
foreign tax credit limitation, the statutory
December 28, 200910112009–52 I.R.B.

grouping is general category gross income
from sources without the United States and
the residual grouping is gross income from
sources with in the United States. * * *
*****
LaNita Van Dyke,
Chief, Publications and
Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on September
8, 2009, 8:45 a.m., and published in the issue of the Federal
Register for September 9, 2009, 74 F.R. 46345)
Announcement 2009–92
This document contains a correction
to Notice 2009–80, 2009–51 I.R.B. 859,
which contained an incorrect year.
The first paragraph incorrectly read:
“Under authority contained in the So-
cial Security Act (Act), the Commissioner,
Social Security Administration, has deter-
mined and announced (74 55614, dated
October 28, 2009) that the contribution
and benefit base for renumeration paid
in 2010, and self-employment income
earned in taxable years beginning in2009
is $106,800”.
The first paragraph should have read:
“Under authority contained in the So-
cial Security Act (Act), the Commissioner,
Social Security Administration, has deter-
mined and announced (74 55614, dated
October 28, 2009) that the contribution
and benefit base for renumeration paid
in 2010, and self-employment income
earned in taxable years beginning in2010
is $106,800”.
2009–52 I.R.B.1012December 28, 2009

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.
December 28, 2009i2009–52 I.R.B.

Numerical Finding List
1
Bulletins 2009–27 through 2009–52
Announcements:
2009-56, 2009-28 I.R.B.145
2009-57, 2009-29 I.R.B.158
2009-58, 2009-29 I.R.B.158
2009-59, 2009-29 I.R.B.158
2009-60, 2009-30 I.R.B.166
2009-61, 2009-33 I.R.B.246
2009-62, 2009-33 I.R.B.247
2009-63, 2009-33 I.R.B.248
2009-64, 2009-36 I.R.B.319
2009-65, 2009-36 I.R.B.319
2009-66, 2009-37 I.R.B.364
2009-67, 2009-38 I.R.B.388
2009-68, 2009-38 I.R.B.388
2009-69, 2009-40 I.R.B.475
2009-70, 2009-41 I.R.B.499
2009-71, 2009-40 I.R.B.475
2009-72, 2009-41 I.R.B.500
2009-73, 2009-41 I.R.B.500
2009-74, 2009-42 I.R.B.537
2009-75, 2009-42 I.R.B.537
2009-76, 2009-45 I.R.B.627
2009-77, 2009-43 I.R.B.567
2009-78, 2009-44 I.R.B.594
2009-79, 2009-46 I.R.B.628
2009-80, 2009-46 I.R.B.646
2009-81, 2009-46 I.R.B.647
2009-82, 2009-48 I.R.B.720
2009-83, 2009-46 I.R.B.647
2009-84, 2009-47 I.R.B.683
2009-85, 2009-51 I.R.B.938
2009-86, 2009-49 I.R.B.759
2009-87, 2009-51 I.R.B.938
2009-88, 2009-52 I.R.B.1008
2009-89, 2009-52 I.R.B.1009
2009-90, 2009-52 I.R.B.1010
2009-91, 2009-52 I.R.B.1010
2009-92, 2009-52 I.R.B.1012
Notices:
2009-51, 2009-28 I.R.B.128
2009-55, 2009-31 I.R.B.170
2009-57, 2009-29 I.R.B.147
2009-58, 2009-30 I.R.B.163
2009-59, 2009-31 I.R.B.170
2009-60, 2009-32 I.R.B.181
2009-61, 2009-32 I.R.B.181
2009-62, 2009-35 I.R.B.260
2009-63, 2009-34 I.R.B.252
2009-64, 2009-36 I.R.B.307
2009-65, 2009-39 I.R.B.413
2009-66, 2009-39 I.R.B.418
2009-67, 2009-39 I.R.B.420
Notices— Continued:
2009-68, 2009-39 I.R.B.423
2009-69, 2009-35 I.R.B.261
2009-70, 2009-34 I.R.B.255
2009-71, 2009-35 I.R.B.262
2009-72, 2009-37 I.R.B.325
2009-73, 2009-38 I.R.B.369
2009-74, 2009-38 I.R.B.370
2009-75, 2009-39 I.R.B.436
2009-76, 2009-43 I.R.B.554
2009-77, 2009-40 I.R.B.449
2009-78, 2009-40 I.R.B.452
2009-79, 2009-40 I.R.B.454
2009-80, 2009-51 I.R.B.859
2009-81, 2009-40 I.R.B.455
2009-82, 2009-41 I.R.B.491
2009-83, 2009-44 I.R.B.588
2009-84, 2009-44 I.R.B.592
2009-85, 2009-45 I.R.B.598
2009-86, 2009-46 I.R.B.629
2009-87, 2009-46 I.R.B.630
2009-88, 2009-47 I.R.B.654
2009-89, 2009-48 I.R.B.714
2009-90, 2009-51 I.R.B.859
2009-91, 2009-48 I.R.B.717
2009-92, 2009-52 I.R.B.964
2009-93, 2009-51 I.R.B.863
2009-94, 2009-50 I.R.B.848
2009-95, 2009-52 I.R.B.968
2009-96, 2009-52 I.R.B.968
2009-97, 2009-52 I.R.B.972
2009-98, 2009-52 I.R.B.974
Proposed Regulations:
REG-111833-99, 2009-52 I.R.B.1000
REG-140492-02, 2009-43 I.R.B.559
REG-159704-03, 2009-46 I.R.B.632
REG-160871-04, 2009-47 I.R.B.657
REG-152166-05, 2009-32 I.R.B.183
REG-112994-06, 2009-28 I.R.B.144
REG-127270-06, 2009-42 I.R.B.534
REG-155929-06, 2009-47 I.R.B.665
REG-135005-07, 2009-47 I.R.B.681
REG-136563-07, 2009-41 I.R.B.497
REG-108045-08, 2009-43 I.R.B.557
REG-113289-08, 2009-33 I.R.B.244
REG-116614-08, 2009-42 I.R.B.536
REG-123829-08, 2009-48 I.R.B.719
REG-130200-08, 2009-31 I.R.B.174
REG-139068-08, 2009-43 I.R.B.558
REG-139255-08, 2009-49 I.R.B.747
Revenue Procedures:
2009-30, 2009-27 I.R.B.27
2009-31, 2009-27 I.R.B.107
2009-32, 2009-28 I.R.B.142
Revenue Procedures— Continued:
2009-33, 2009-29 I.R.B.150
2009-34, 2009-34 I.R.B.258
2009-35, 2009-35 I.R.B.265
2009-36, 2009-35 I.R.B.304
2009-37, 2009-36 I.R.B.309
2009-38, 2009-37 I.R.B.362
2009-39, 2009-38 I.R.B.371
2009-40, 2009-39 I.R.B.438
2009-41, 2009-39 I.R.B.439
2009-42, 2009-40 I.R.B.459
2009-43, 2009-40 I.R.B.460
2009-44, 2009-40 I.R.B.462
2009-45, 2009-40 I.R.B.471
2009-46, 2009-42 I.R.B.507
2009-47, 2009-42 I.R.B.524
2009-48, 2009-51 I.R.B.864
2009-49, 2009-51 I.R.B.879
2009-50, 2009-45 I.R.B.617
2009-51, 2009-45 I.R.B.625
2009-52, 2009-49 I.R.B.744
2009-53, 2009-49 I.R.B.746
2009-54, 2009-51 I.R.B.930
2009-55, 2009-52 I.R.B.982
2009-56, 2009-52 I.R.B.993
Revenue Rulings:
2009-18, 2009-27 I.R.B.1
2009-19, 2009-28 I.R.B.111
2009-20, 2009-28 I.R.B.112
2009-21, 2009-30 I.R.B.162
2009-22, 2009-31 I.R.B.167
2009-23, 2009-32 I.R.B.177
2009-24, 2009-36 I.R.B.306
2009-25, 2009-38 I.R.B.365
2009-26, 2009-38 I.R.B.366
2009-27, 2009-39 I.R.B.404
2009-28, 2009-39 I.R.B.391
2009-29, 2009-37 I.R.B.322
2009-30, 2009-39 I.R.B.391
2009-31, 2009-39 I.R.B.395
2009-32, 2009-39 I.R.B.398
2009-33, 2009-40 I.R.B.447
2009-34, 2009-42 I.R.B.502
2009-35, 2009-44 I.R.B.568
2009-36, 2009-47 I.R.B.650
2009-37, 2009-52 I.R.B.957
2009-38, 2009-49 I.R.B.736
2009-39, 2009-52 I.R.B.951
2009-40, 2009-52 I.R.B.942
Tax Conventions:
2009-79, 2009-46 I.R.B.628
Treasury Decisions:
9452, 2009-27 I.R.B.1
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2009–1 through 2009–26 is in Internal Revenue Bulletin
2009–26, dated June 29, 2009.
2009–52 I.R.B.iiDecember 28, 2009

Treasury Decisions— Continued:
9453, 2009-28 I.R.B.114
9454, 2009-32 I.R.B.178
9455, 2009-33 I.R.B.239
9456, 2009-33 I.R.B.188
9457, 2009-41 I.R.B.482
9458, 2009-43 I.R.B.547
9459, 2009-41 I.R.B.480
9460, 2009-44 I.R.B.584
9461, 2009-41 I.R.B.488
9462, 2009-42 I.R.B.504
9463, 2009-40 I.R.B.442
9464, 2009-48 I.R.B.692
9465, 2009-43 I.R.B.542
9466, 2009-43 I.R.B.551
9467, 2009-50 I.R.B.760
9468, 2009-44 I.R.B.570
9469, 2009-48 I.R.B.687
9470, 2009-49 I.R.B.738
9471, 2009-49 I.R.B.722
9472, 2009-51 I.R.B.850
9473, 2009-52 I.R.B.945
December 28, 2009iii2009–52 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2009–27 through 2009–52
Announcements:
2006-93
Superseded by
Ann. 2009-62, 2009-33 I.R.B.247
Notices:
2002-3
Modified and superseded by
Notice 2009-68, 2009-39 I.R.B.423
2004-67
Supplemented and superseded by
Notice 2009-59, 2009-31 I.R.B.170
2005-76
Modified by
Notice 2009-91, 2009-48 I.R.B.717
2006-70
Obsoleted by
T.D. 9453, 2009-28 I.R.B.114
2006-109
Superseded in part by
Rev. Proc. 2009-32, 2009-28 I.R.B.142
2007-7
Modified by
Notice 2009-82, 2009-41 I.R.B.491
2008-18
Modified by
Notice 2009-97, 2009-52 I.R.B.972
2008-30
Amplified and clarified by
Notice 2009-75, 2009-39 I.R.B.436
2008-43
Obsoleted by
REG-113289-08, 2009-33 I.R.B.244
2009-28
Clarified by
Notice 2009-69, 2009-35 I.R.B.261
2009-31
Amplified by
Rev. Proc. 2009-43, 2009-40 I.R.B.460
2009-42
Amplified by
Rev. Proc. 2009-43, 2009-40 I.R.B.460
2009-54
Amplified by
Notice 2009-89, 2009-48 I.R.B.714
2009-58
Amplified by
Notice 2009-89, 2009-48 I.R.B.714
Notices— Continued:
2009-80
Corrected by
Ann. 2009-92, 2009-52 I.R.B.1012
Proposed Regulations:
REG-130200-08
Hearing cancelled by
Ann. 2009-81, 2009-46 I.R.B.647
Revenue Procedures:
97-27
Clarified and modified by
Rev. Proc. 2009-39, 2009-38 I.R.B.371
97-49
Modified and superseded by
Rev. Proc. 2009-31, 2009-27 I.R.B.107
2002-44
Superseded by
Rev. Proc. 2009-44, 2009-40 I.R.B.462
2002-59
Superseded by
Rev. Proc. 2009-41, 2009-39 I.R.B.439
2005-63
Modified by
Rev. Proc. 2009-39, 2009-38 I.R.B.371
2006-19
Superseded by
Rev. Proc. 2009-48, 2009-51 I.R.B.864
2006-30
Modified by
Rev. Proc. 2009-53, 2009-49 I.R.B.746
2007-44
Modified by
Notice 2009-97, 2009-52 I.R.B.972
Rev. Proc. 2009-36, 2009-35 I.R.B.304
2007-65
Modified by
Ann. 2009-69, 2009-40 I.R.B.475
2008-34
Superseded by
Rev. Proc. 2009-46, 2009-42 I.R.B.507
2008-36
Superseded by
Rev. Proc. 2009-49, 2009-51 I.R.B.879
2008-38
Superseded by
Rev. Proc. 2009-30, 2009-27 I.R.B.27
2008-44
Superseded by
Rev. Proc. 2009-35, 2009-35 I.R.B.265
Revenue Procedures— Continued:
2008-52
Amplified, clarified, and modified by
Rev. Proc. 2009-39, 2009-38 I.R.B.371
2008-59
Superseded by
Rev. Proc. 2009-47, 2009-42 I.R.B.524
2008-65
Modified by
Rev. Proc. 2009-33, 2009-29 I.R.B.150
2008-72
Superseded by
Rev. Proc. 2009-54, 2009-51 I.R.B.930
2009-16
Modified by
Rev. Proc. 2009-33, 2009-29 I.R.B.150
2009-39
Modified by
Ann. 2009-67, 2009-38 I.R.B.388
Revenue Rulings:
74-346
Superseded by
Rev. Rul. 2009-34, 2009-42 I.R.B.502
75-190
Superseded by
Rev. Rul. 2009-34, 2009-42 I.R.B.502
75-398
Superseded by
Rev. Rul. 2009-34, 2009-42 I.R.B.502
75-464
Obsoleted by
Rev. Rul. 2009-39, 2009-52 I.R.B.951
75-526
Superseded by
Rev. Rul. 2009-34, 2009-42 I.R.B.502
2006-57
Modified by
Notice 2009-95, 2009-52 I.R.B.968
2009-22
Corrected by
Ann. 2009-74, 2009-42 I.R.B.537
2009-29
Corrected by
Ann. 2009-74, 2009-42 I.R.B.537
Treasury Decisions:
9456
Corrected by
Ann. 2009-73, 2009-41 I.R.B.500
Ann. 2009-91, 2009-52 I.R.B.1010
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2009–1 through 2009–26 is in Internal Revenue Bulletin 2009–26, dated June 29, 2009.
2009–52 I.R.B.ivDecember 28, 2009

INDEX
Internal Revenue Bulletin 2009–27 through
2009–52
The abbreviation and number in parenthesis following the index entry
refer to the specific item; numbers in roman and italic type following
the parenthesis refers 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
Application of section 409A to advisory opinions issued by the
Office of the Special Masterfor TARP Executive Compensa-
tion (Notice 92) 52,964
Defined benefit plans, prototype program (Ann 85) 51,935
Determination letters, staggered remedial amendment periods
(RP 36) 35,304
Full funding limitations, weighted average interest rates, seg-
ment rates for:
July 2009 (Notice 57) 29,147
August 2009 (Notice 63) 34,252
September 2009 (Notice 77) 40,449
October 2009 (Notice 76) 43,553
November 2009 (Notice 88) 47,654
December 2009 (Notice 96) 52,968
Information reporting requirements for statutory stock options
(TD 9470) 49,738
Limitations on benefits and contributions, cost–of–living adjust-
ments (Notice 94) 50,848
Measurement of assets and liabilities for pension funding pur-
poses, benefit restrictions for underfunded pension plans (TD
9467) 50,760
Multiemployer plans, funding, WRERA (RP 43) 40,460
Nondiscrimination requirements for group health plans based on
genetic information (TD 9464) 48,692; (REG–123829–09)
48,
Normal retirement age governmental plans (Notice 86) 46,629
Notice requirements for certain pension plan amendments signif-
icantly reducing the rate of future benefit accrual (TD 9472)
51,850
Performance of actuarial services under the employee retirement
income security act of 1974 (REG–159704–03) 46,632
EMPLOYEE PLANS—Cont.
Proposed Regulations:
20 CFR 901.0, .1, .10, .11, .12, .20, .31, .32, .47, amended;
901.12, removed; 901.13, redesignated as 901.12; 901.72,
added; performance of actuarial services under the
Employee Retirement Income Security Act of 1974
(REG–159704–03) 46,632
26 CFR 54.9802–3, added; interim final rules for section 101
through 103 of the Genetic Information Nondiscrimination
Act (REG-123829–08) 48,719
Qualifications:
Cumulative list of changes in plan qualification requirements,
2009 (Notice 98) 52,974
Extension of deadline to adopt certain retirement plan amend-
ments (Notice 97) 52,972
Qualified plans:
Accumulated and unused paid time off (RR 31) 39,395
Automatic increases (RR 30) 39,391
Covered compensation tables, permitted disparity (RR 40) 52,
942
Eligible combined plans (Notice 71) 35,262
Eligible rollover distributions, safe harbor explanations (No-
tice 68) 39,423
Post serverance contributions (RR 32) 39,398
Reasonable good faith interpretation of required minimum
distribution rules by governmental plans (TD 9459) 41,480
Remedial amendment period,section 403(b) plans (Ann 89)
52,1009
Required minimum distributions for 2009, waiver (Notice 82)
41,491
Sample amendments for section401(k)plan(Notice65)39,
418
Sample amendments for SIMPLE IRA plans (Notice 67) 39,
413
Under SIMPLE IRA plans (Notice 66) 39,420
Regulations:
26 CFR 1.401(a)(9)–1, –6, amended; 1.403(b)–6, amended;
reasonable good faith interpretation of required minimum
distribution rules by governmental plans (TD 9459) 41,480
26 CFR 1.411(d)–3, amended; 54.4980F–1, amended; notice
requirements for certain pension plan amendments signifi-
cantly reducing the rate of future benefit accrual (TD 9472)
51,850
26 CFR 1.421–1, revised; 1.422–2, –5, revised; 1.423–1, –2,
revised; 1.424–1, revised; employer stock purchase plans
(TD 9471) 49,722
26 CFR 1.430(d)–1, (f)–1, (g)–1, (h)(2)–1, (i)–1, added;
1.436–0, –1, added; 602.101, amended; measurement of
assets and liabilities for pension funding purposes, benefit
restrictions for underfunded pension plans (TD 9467) 50,
760
26 CFR 1.6039–1, revised; 1.6039–2, added; information re-
porting requirements for statutory stock options (TD 9470)
49,738
26 CFR 54.9801–1, –2, amended; 54.9802–1, amended;
54.9831–1, amended; 54.9802–3T, added; internal final
December 28, 2009v2009–52 I.R.B.

EMPLOYEE PLANS—Cont.
rules for section 101 through 103 of the Genetic Informa-
tion Nondiscrimination Act (TD 9464) 48,692
Roth IRA, eligible rollover distributions (Notice 75) 39,436
Rules regarding employee stock purchase plans (TD 9471) 49,
722
Statutory hybrid plans, interest crediting rates (Ann 82) 48,
Tax sheltered annuity contracts (RR 18) 27,1
EMPLOYMENT TAX
Agreements for payment of tax liabilities in installments (TD
9473) 52,945
Extension of Attributed Tip Income Program (ATIP) (RP 53) 49,
746
Form:
944 opt-in and out procedures (RP 51) 45,625
94X examples ruling (RR 39) 52,951
Income tax withholding on nonresident alien employees (Notice
91) 48,717
Intangible property, allocation of income and deductions (TD
9456) 33,188; corrections (Ann 73) 41, 500; additional cor-
rections (Ann 91) 52,1010
Proposed Regulations:
26 CFR 4.6041–1, amended; 1.6050W–1, added; 31.3406–0,
amended; 31.3406(a)–2, amended; 31.3406(b)(3)–5,
added; 31.3406(d)–1, amended; 31.6051–4, amended;
301.6271–1(g), amended; 301.6722 - amended; in-
formation reporting for payments made in settlement
of payment card and third party network transactions
(REG–139255–08) 49,747
Payments made in settlement of payment card and third party
network transactions (REG-139255–08) 49,747
Publications:
1223, General Rules and Specifications for Substitute Forms
W-2c and W-3c, revised (RP 48) 51,864
Regulations:
26 CFR 1.482–0, –0T, –1, –1T, –2, –2T, –4, –4T, –6, –8,
–8T, –9T, amended; 1.482–6T, removed; 1.482–9, added;
1.861–8, –8T, –9T, –10T, –11T, –12T, –14T, amended;
1.6038A–1, –3, amended; 1.6038A–3T, removed;
1.6662–6, amended; 1.6662–6T, removed; 31.3121(s)–1,
amended; 31.3121(s)–1T, removed; 602.101, amended;
treatment of services under section 482, allocation of
income and deductions from intangible property, appor-
tionment of stewardship expenses (REG–146893–02,
REG–115037–00, REG–138603–03) (TD 9456) 33,188;
corrections (Ann 73) 41, 500; additional corrections (Ann
91) 52,1010
26 CFR 301.6159–0, added; 301.6159–1, revised;
301.6331–4, revised; agreements for payment of tax liabil-
ities in installments (TD 9473) 52,945
Section 482, controlled services transactions (TD 9456) 33,188;
corrections (Ann 73) 41, 500; additional corrections (Ann 91)
52,1010
EMPLOYMENT TAX—Cont.
Social security contribution andbenefit base, domestic employee
coverage threshold, 2010 (Notice 80) 51,859
Substitute Forms W-2c and W-3c,general rules and specifica-
tions (RP 48) 51,864
Stewardship expenses, apportionment under section 861 (TD
9456) 33,188; corrections (Ann 73) 41, 500; additional
corrections (Ann 91) 52,1010
ESTATE TAX
Agreements for payment of tax liabilities in installments (TD
9473) 52,945
Cost-of-living adjustments for inflation for 2010 (RP 50) 45,617
Due date for filing return and paying tax under Chapter 15 (Gifts
and Bequests From Expatriates) (Ann 57) 29,158
Generation-skipping transfers (GST) section 6011 regula-
tions and amendments to the section 6112 regulations
(REG–136563–07) 41,497
Guidance under section 2053 regarding post-death events (TD
9468) 44,570
Interest rates for 2009, farm real property, special use value (RR
21) 30,162
Limited reexamination of the estate tax return applicable to cer-
tain section 2053 claims for refund (Notice 84) 44,592
Proposed Regulations:
26 CFR 26.6011–4, added; 301.6111–3, amended;
301.6112–1, amended; generation-skipping transfers
(GST) section 6011 regulations and amendments to the
section 6112 regulations (REG–136563–07) 41,497
Regulations:
26 CFR 20.2051–1, revised; 20.2053–1, –3, –5, –6, –9, –10,
amended; 20.2053–4, revised; guidance under section 2053
regarding post-death events (TD 9468) 44,570
26 CFR 301.6159–0, added; 301.6159–1, revised;
301.6331–4, revised; agreements for payment of tax liabil-
ities in installments (TD 9473) 52,945
EXCISE TAX
Agreements for payment of tax liabilities in installments (TD
9473) 52,945
Cost-of-living adjustments for inflation for 2010 (RP 50) 45,617
Disregarded entities and excise taxes (TD 9462) 42,504;
(REG–116614–08) 42,535
Employer comparable contributions to Health Savings Accounts
under section 4980G and requirement of return for filing of the
excise tax under section 4980B, 4980D, 4980E, or 4980G (TD
9457) 41,482
Exempt aircraft supplies, reciprocating countries (RR 34) 42,502
Nondiscrimination requirements for group health plans based on
genetic information (TD 9464) 48,692; (REG–123829–09)
48,
Notice requirements for certain pension plan amendments signif-
icantly reducing the rate of future benefit accrual (TD 9472)
51,850
2009–52 I.R.B.viDecember 28, 2009

EXCISE TAX—Cont.
Payout requirements for Type III supporting organizations that
are not functionally integrated (REG–155929–06) 47,665
Proposed Regulations:
26 CFR 1.509(a)–4, amended; 53.4943–11, amended; payout
requirements for Type III supporting organizations that are
not functionally integrated (REG–155929–06) 47,665
26 CFR 54.9802–3, added; interim final rules for section 101
through 103 of the genetic information nondiscrimination
act (REG-123829–08) 48,719
26 CFR 301.7701–2, amended; disregarded entities and ex-
cise taxes (REG–116614–08) 42,535
Regulations:
26 CFR 1.411(d)–(3), amended; 54.4980F–1, amended; no-
tice requirements for certain pension plan amendments sig-
nificantly reducing the rate of future benefit accrual (TD
9472), 51,850
26 CFR 54.4980B–0, –2, amended; 54.4980D–1, added;
54.4980E–1, added; 54.4980G–1, –3, –4, amended;
54.4980G–6, –7, added; 54.6011–2, added; 54.6061–1,
added; 54.6071–1, added; 54.6091–1, added; 54.6151–1,
added; employer comparablecontributions to Health Sav-
ings Accounts under section 4980G and requirement of
return for filing of the excise tax under section 4980B,
4980D, 4980E, or 4980G (TD 9457) 41,482
26 CFR 54.9801–1, –2, amended; 54.9802–1, amended;
54.9831–1, amended; 54.9802–3T, added; interim final
rules for section 101 through 103 of the Genetic Informa-
tion Nondiscrimination Act (TD 9464) 48,692
26 CFR 301.6159–0, added; 301.6159–1, revised;
301.6331–4, revised; agreements for payment of tax liabil-
ities in installments (TD 9473) 52,945
26 CFR 301.7701–2, amended; 301.7701–2T, added; disre-
garded entities and excise taxes (TD 9462) 42,504
EXEMPT ORGANIZATIONS
Annual electronic notification (e-Postcard) required by section
6033(i)(1) (TD 9454) 32,178
List of organizations classifiedas private foundations (Ann 58)
29,158; (Ann 76) 45,627; (Ann 88) 52,1008
Payout requirements for Type III supporting organizations that
are not functionally integrated (REG–155929–06) 47,665
Proposed Regulations:
26 CFR 1.509(a)–4, amended; 53.4943–11, amended; payout
requirements for Type III supporting Organizations that are
not functionally integrated (REG–155929–06) 47,665
Regulations:
26 CFR 1.6033–6, added; 1.6033–6T, removed; notification
requirement for tax-exempt entities not currently required
to file (TD 9454) 32,178
Reliance criteria for supporting organizations and donor advised
funds making grants (RP 32) 28,142
Revocations (Ann 60) 30,166; (Ann 61) 33,246;(Ann64)36,
319; (Ann 66) 37,362;(Ann72)41,500;(Ann78)44,594;
(Ann 80) 46,656; (Ann 86) 49,759;(Ann90)52,1010
EXEMPT ORGANIZATIONS—Cont.
Section 509(a)(3) supporting organizations, procedures to
change public charity classification (Ann 62) 33,247
GIFT TAX
Agreements for payment of tax liabilities in installments (TD
9473) 52,945
Cost-of-living adjustments for inflation for 2010 (RP 50) 45,617
Declaratory judgments for gift tax valuation (TD 9460) 44,584
Due date for filing return and paying tax under Chapter 15 (Gifts
and Bequests From Expatriates) (Ann 57) 29,158
Regulations:
26 CFR 301.6159–0, added; 301.6159–1, revised;
301.6331–4, revised; agreements for payment of tax liabil-
ities in installments (TD 9473) 52,945
26 CFR 301.7477–1, revised; declaratory judgments – gift tax
determinations (TD 9460) 44,584
INCOME TAX
Agreements for payment of tax liabilities in installments (TD
9473) 52,945
Amendments to regulations under Code section 7430 relat-
ing to awards of administrative costs and attorney fees
(REG–111833–99) 52,1000
Annual electronic notification (e-Postcard) required by section
6033(i)(1) (TD 9454) 32,178
Appeals mediation procedure (RP 44) 40,462
Base Period T-Bill rate, 2009 (RR 36) 47,650
Bonds, tribal economic development bonds (Notice 51) 28,128
Cancellation of indebtness income (RP 37) 36,309
Clarification of controlledgroup qualification rules
(REG–135005–07) 47,681
Contingent fees under Circular 230 (REG–113289–08) 33,244
Corporations:
Private placements and public offerings relating to expatria-
tions of domestic entities (Notice 78) 40,452
Transfers by domestic corporations or partnerships to a for-
eign corporation (TD 9453) 28,114; (REG–112994–06) 28,
144
Cost-of-living adjustments for inflation for 2010 (RP 50) 45,617
Cost-sharing payments received from the Forest Health Protec-
tion Program (FHPP) (RR 23) 32,177
Credits:
Carbon dioxide sequestration (Notice 83) 44,588
Election of reduced research credit under section 280C(c)(3)
(REG–130200–08) 31,174; hearing canceled (Ann 81) 46,
657
Enhanced oil recovery credit, 2009 inflation adjustment (No-
tice 73) 38,369
Low-income housing credit, carryovers to qualified states,
2009 National Pool (RP 40) 39,438
New qualified plug-in electric vehicle credit (Notice 89) 48,
714
December 28, 2009vii2009–52 I.R.B.

INCOME TAX—Cont.
Qualified plug-in electric vehicle under section 30 (Notice 58)
30,163
Section 45 production tax credit for refined coal (Notice 90)
51,859
Section 48C tax credit for qualifying advanced energy project
credit program (Notice 72) 37,325
Work opportunity credit, disconnected youth, targeted groups
(Notice 69) 35,261
Declaratory judgments for gift tax valuation (TD 9460) 44,584
Definition of omission from gross income (TD 9466) 43,550;
(REG–108045–08) 43,556
Delay of effective date of Rev. Rul. 2006–57 (Notice 95) 52,
968
Depreciation:
Asset class, ethanol plants (Notice 64) 36,307
Depreciation, election to forgoadditional first year deprecia-
tion deduction (RP 33) 29,150
Determination of interest expense deduction of foreign corpora-
tions (TD 9465) 43,541
Disciplinary actions involving attorneys, certified public accoun-
tants, enrolled agents, and enrolled actuaries (Ann 59) 29,158;
(Ann 63) 33,248; (Ann 65) 36,319; (Ann 68) 38,388;(Ann
71) 40,475; (Ann 75) 42,536; (Ann 83) 46,657; (Ann 84) 47,
683; (Ann 87) 51,935
Earnings and profits, insurancecontract payments (RR 25) 38,
365
Entities created in connection with the Public-Private Investment
Program (PPIP)/taxable mortgage pools (TMPs) (RP 38) 37,
360
Entity classification elections, extensions of time 39,413
Exclusion from income of damages for personal physical injury
or physical sickness (REG–127270–06) 42,534
Expenses, optional standard mileage rates for 2010 (RP 54) 51,
927
Extension of replacement period for livestock sold on account of
drought (Notice 81) 40,455
FBAR filing requirements, Form TD F 90–22.1, request for com-
ments (Notice 62) 35,260
Foreign tax credit, application of section 904 to dividends paid
by a foreign corporation that is a noncontrolled section 902
corporation, rules under section 964 for a foreign corporation
(TD 9452) 27,1
Forms:
1042-S, Foreign Person’s U.S. Source Income Subject to
Withholding, specifications for filing electronically (RP
35) 35,265
1096, 1098, 1099, 5498, W-2G, 1042-S, and 8935, substitute
form specifications (RP 49) 51,876
1098, 1099, 3921, 3922, 5498, 8935, and W-2G, requirements
for filing electronically,2009revision(RP30)27,27;cor-
rections (Ann 70) 41,499
8027, Employer’s Annual Information Return of Tip Income
and Allocated Tips, specifications for filling electronically
(RP 46) 42,506
INCOME TAX—Cont.
Generation-skipping transfers (GST) section 6011 regula-
tions and amendments to the section 6112 regulations
(REG–136563–07) 41,497
Gross income, general welfare exclusion (RR 19) 28,111
Information reporting for:
Discharges of indebtedness (TD 9461) 41,488
Payments made in settlement of payment card and third party
network transactions (REG–139255–08) 49,747
Statutory stock options (TD 9470) 49,738
Institute on Current Issues in International Taxation (Ann 77) 43,
566
Insurance companies:
Effectively connected income (RP 34) 34,258
Loss payment patterns and discount factors for the 2009 acci-
dent year (RP 55) 52,982
Salvage discount factors for the 2009 accident year (RP 56)
52,993
Intangible property, allocation of income and deductions (TD
9456) 33,188; corrections (Ann 73) 41,500; additional cor-
rections (Ann 91) 52,1010
Interest:
Investment:
Federal short-term, mid-term, and long-term rates for:
July 2009 (RR 20) 28,112
August 2009 (RR 22) 31,167;correction(Ann74)42,
536
September 2009 (RR 29) 37,322; correction (Ann 74)
42,536
October 2009 (RR 33) 40,447
November 2009 (RR 35) 44,568
December 2009 (RR 38) 49,736
Rates:
Underpayments and overpayments, quarter beginning:
October 1, 2009 (RR 27) 39,404
January 1, 2010 (RR 37) 52,957
Investment trust, commercial mortgage loan modifications (No-
tice 79) 40,454
Marginal production rates, 2009 (Notice 74) 38,370
Measurement of assets and liabilities for pension funding pur-
poses, benefit restrictions for underfunded pension plans (TD
9467) 50,760
Method of accounting:
Automatic and non-automatic changes in method of account-
ing (RP 39) 38,371
Corrections, automatic and non-automatic changes in method
of accounting (Ann 67) 38,388
Section 1.1502–13(e)(3) consent letter rulings (RP 31) 27,107
Modifications of commercial mortgage loans held by certain se-
curitization vehicles (RP 45) 40,471
Modification to consolidated return regulation permitting an
election to treat a liquidationof a target, followed by a recon-
tribution to a new target, as a cross-chain reorganization (TD
9458) 43,546; (REG–139068–08) 43,558
Mutual agreement on share attribution under Belgium treaty
(Ann 79) 46,628
Net operting losses (RP 52) 49,744
2009–52 I.R.B.viiiDecember 28, 2009

INCOME TAX—Cont.
Obligations of state and local governments solid waste disposal
facilities (Ann 76) 43,558
Partnerships:
Public-private investment partnerships (RP 42) 40,471
Section 704(c) layers relating to partnership mergers, divi-
sions, and tiered partnerships, request for comments (No-
tice 70) 34,255
Wind energy partnerships (Ann 69) 40,475
Payments made in settlement of payment card and third party
network transactions (REG–139255–08) 49,747
Per diem allowances, 2009-2010 (RP 47) 42,523
Performance of actuarial services under the employee retirement
income security act of 1974 (REG–159704–03) 46,632
Period of limitations on assessment for listed transactions not
disclosed under section 6011 (REG–160871–04) 47,657
Period of limitations on assessment when a case is brought with
respect to a designated or related summons (TD 9455) 33,239
Private foundations, organizations now classified as (Ann 58) 29,
158; (Ann 76) 45,627;(Ann88)52,1008
Proposed Regulation:
26 CFR 1.103–8, amended; 1.142(a)(6)–1, added; 17.1, re-
moved; obligations of state and local governments solid
waste disposal facilities (Ann 76) 43,558
26 CFR 1.104–1, revised; damages received on ac-
count of personal physical injuries or physical sickness
(REG–127270–06) 42,533
26 CFR 1.280C–4, revised; election of reduced research credit
(REG–130200–08) 31,174
26 CFR 1.1502–13, amended; modification to consolidated
return regulation permitting an election to treat a liquidation
of a target, followed by a recontribution to a new target, as
a cross-chain reorganization (REG–139068–08) 43,557
26 CFR 1.1563–1, amended; clarification of controlled group
qualification rules (REG–135005–07) 47,681
26 CFR 1.6041–1, amended; 1.6050W–1, added; 31.3406–0,
amended; 31.3406(a)–2, amended; 31.3406(b)(3)–5,
added; 31.3406(d)–1, amended; 31.6051–4, amended;
301.6721–1(g), amended; 301.6722–1, amended; in-
formation reporting for payments made in settlement
of payment card and third party network transactions
(REG–139255–08) 49,747
26 CFR 1.7874–1, amended; 1.7874–2, added; guidance un-
der section 7874 regarding surrogate foreign corporations
(REG–112994–06) 28,144
26 CFR 26.6011–4, added; 301.6111–3, amended;
301.6112–1, amended; generation-skipping transfers
(GST) section 6011 regulations and amendments to the
section 6112 regulations (REG–136563–07) 41,497
26 CFR 301.6229(c)(2)–1, added; 301.6501(e)–1, added; def-
inition of omission from gross income (REG–108045–08)
43,556
26 CFR 301.6501(c)–1, amended;period of limitations on as-
sessment for listed transactions not disclosed under section
6011 (REG–160871–04) 47,657
INCOME TAX—Cont.
26 CFR 301.7430–0 thru –7, amended; amendments to regu-
lations relating to awards of administrative costs and attor-
ney fees (REG–111833–99) 52,1000
26 CFR 301.7811–1, amended, Taxpayer Assistance Orders,
proposed regulations revised (REG–152166–05 ) 32,183
31 CFR 10.27, amended; contingent fees under circular 230
(REG–113289–08) 33,244
Proposed security, privacy, and business standards for authorized
IRS e-file providers participating in online filing of individual
income tax returns (Ann 56) 28,145
Publications:
1179, General Rules and Specifications for Substitute Forms
1096, 1098, 1099, 5498, W-2G, 1042-S, and 8935 (RP 49)
51,876
1187, Specifications for Filing Form 1042-S, Foreign Per-
son’s U.S. Source Income Subject to Withholding, Elec-
tronically, revised (RP 35) 35,265
1220, Specifications for Filing Forms 1098, 1099, 3921, 3922,
5498, 8935, and W-2G Electronically, 2009 revision (RP
30) 27,27; corrections (Ann 70) 41,499
1223, General Rules and Specifications for Substitute Forms
W-2c and W-3c, revised (RP 48) 51,864
1239, Specifications for Filing Form 8027, Employer’s An-
nual Information Return of TipIncome and Allocated Tips,
Electronically, revised (RP 46) 42,506
Real estate mortgage investment conduit (REMIC), commercial
mortgage loan modification (TD 9463) 40,442
Reasonable good faith interpretation of required minimum dis-
tribution rules by governmental plans (TD 9459) 41,480
Regulations:
26 CFR 1.401(a)(9)–1, –6, amended; 1.403(b)–6, amended;
reasonable good faith interpretation of required minimum
distribution rules by governmental plans (TD 9459) 41,480
26 CFR 1.421–1, revised; 1.422–2, –5, revised; 1.423–1, –2,
revised; 1.424–1, revised; employer stock purchase plans
(TD 9471) 49,722
26 CFR 1.430(d)–1, (f)–1, (g)–1, (h)(2)–1, (i)–1, added;
1.436–0, –1, added; 602.101, amended; measurement of
assets and liabilities for pension funding purposes, benefit
restrictions for underfunded pension plans (TD 9467) 50,
760
26 CFR 1.482–0, –0T, –1, –1T, –2, –2T, –4, –4T, –6, –8,
–8T, –9T, amended; 1.482–6T, removed; 1.482–9, added;
1.861–8, –8T, –9T, –10T, –11T, –12T, –14T, amended;
1.6038A–1, –3, amended; 1.6038A–3T, removed;
1.6662–6, amended; 1.6662–6T, removed; 31.3121(s)–1,
amended; 31.3121(s)–1T, removed; 602.101, amended;
treatment of services under section 482, allocation of
income and deductions from intangible property, appor-
tionment of stewardship expenses (REG–146893–02,
REG–115037–00, REG–138603–03) (TD 9456) 33,188;
corrections (Ann 73) 41,500; additional corrections (Ann
91) 52,1010
26 CFR 1.860A–0, –1, amended; 1.860G–2, amended;
602.101, revised; modifications of commercial mortgage
December 28, 2009ix2009–52 I.R.B.

INCOME TAX—Cont.
loans held by a real estate mortgage investment conduit
(REMIC) (TD 9463) 40,442
26 CFR 1.861–9, –9T, –12T, revised; 1.861–12, added;
1.902–1, revised;1.902–1T, removed; 1.904–0, –2, –2T,
–4, –4T, –5, –5T, –7, –7T, revised; 1.904(f)-0, –12, –12T,
revised; 1.964–1, revised; 1.964–1T, removed; 1.989(b)–1,
revised; 602.101, revised; application of section 904 to
dividends paid by a foreign corporation that is a noncon-
trolled section 902 corporation (TD 9452) 27,1
26 CFR 1.108–7, amended; section 108 reduction of tax at-
tributes for S corporation (TD 9469) 48,687
26 CFR 1.882–0, –5,amended; 1.882–5T, removed; 1.884–1,
amended; 1.884–1T, removed; 602.101, amended; determi-
nation of interest expense deduction of foreign corporations
(TD 9465) 43,541
26 CFR1.1502–13, –13T, amended; 602.101, amended;
modification to consolidated return regulation permitting
an election to treat a liquidation of a target, followed by a
recontribution to a new target, as a cross-chain reorganiza-
tion (TD 9458) 43,546
26 CFR 1.6033–6, added; 1.6033–6T, removed; notification
requirement for tax-exempt entities not currently required
to file (TD 9454) 32,178
26 CFR 1.6039–1, revised; 1.6039–2, added; information re-
porting requirements for statutory stock options (TD 9470)
49,738
26 CFR 1.6050P–0, –1, amended; 1.6050P–1T, removed;
information reporting for discharges of indebtedness (TD
9461) 41,488
26 CFR 1.7874–1(e), revised; 1.7874–1T, added; 1.7874–2T,
revised; quidance under section 7874 regarding surrogate
foreign corporations (TD 9453) 28,114
26 CFR 301.6159–0, added; 301.6159–1, revised;
301.6331–4, revised; agreements for payment of tax liabil-
ities in installments (TD 9473) 52,945
26 CFR 301.6229(c)(2)–1T, added; 301.6501(e)–1, removed;
301.6501(e)–1T, added; definition of omission from gross
income (TD 9466) 43,550
26 CFR 301.6503(j)–1, added; suspension of running of pe-
riod of limitations during a proceeding to enforce or quash
a designated or related summons (TD 9455) 33,239
26 CFR 301.7477–1, revised; declaratory judgments – gift tax
determinations (TD 9460) 44,584
Revocations, exempt organizations (Ann 60) 30,166;(Ann61)
33,246;(Ann64)36,319; (Ann 66) 37,362;(Ann72)41,
500; (Ann 78) 44,594;(Ann80)46,656;(Ann86)49,759;
(Ann 90) 52,1008
Rules regarding employee stock purchase plans (TD 9471) 49,
722
Section 108 reduction of tax attributes for S corporations (TD
9469) 48,687
Section 482, controlled services transactions (TD 9456) 33,188;
corrections (Ann 73) 41, 500; additional corrections (Ann 91)
52,1010
Single-insured – reinsurance (RR 26) 38,366
INCOME TAX—Cont.
Soliciting comments regardinga proposed amendment to Rev.
Proc. 80–59 (Notice 87) 46,630
Standards of conduct for the taxreturn preparer community, re-
quest for comments (Notice 60) 32,181
Standard Industry Fare Level (SIFL) fornula (RR 28) 39,391
Substitute forms:
W-2c and W-3c, general rules and specifications (RP 48) 51,
864
1096, 1098, 1099, 5498, W-2G, 1042-S, and 8935, rules and
specifications (RP 49) 51,876
Stewardship expenses, apportionment under section 861 (TD
9456) 33,188; corrections (Ann 73) 41, 500; additional
corrections (Ann 91) 52,1010
Tax shelters:
Listed transactions (Notice 59) 31,170
Transactions of interest (Notice 55) 31,170
Taxpayer Assistance Orders, proposed regulations revised
(REG–152166–05) 32,183
Treatment of Fails Charges for purposes of sections 871, 881,
1441, and 1442 (Notice 61) 32,181
Treatment of long-term residentsor citizens who relinquish thier
long-term resident status or citizenship after June 16, 2008
(Notice 85) 45,598
Truncating social security numbers on paper payee statements
(Notice 93) 51,863
SELF-EMPLOYMENT TAX
Agreements for payment of tax liabilities in installments (TD
9473) 52,945
Regulations:
26 CFR 301.6159–0, added; 301.6159–1, revised;
301.6331–4, revised; agreements for payment of tax liabil-
ities in installments (TD 9473) 52,945
2009–52 I.R.B.xDecember 28, 2009

December 28, 20092009–52 I.R.B.

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