Internal Revenue Bulletin 2012-26 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 201
2-26
June 25, 2012
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. 2012–16, page 1035.
Interest rates; underpayments and overpayments.The
rates for interest determined under section 6621 of the Code
for the calendar quarter beginning July 1, 2012, will be 3 per-
cent for overpayments (2 percent in the case of a corporation),
3 percent for the underpayments, and 5 percent for large cor-
porate underpayments. The rate of interest paid on the portion
of a corporate overpayment exceeding $10,000 will be 0.5
percent.
Notice 2012–40, page 1046.
This notice provides guidance on the limits in section 125(i)
of the Code on salary reduction contributions to health flexi-
ble spending arrangements, effective for cafeteria plan years
beginning after December 31, 2012, and also requests com-
ments on possible modification to the “use-or-lose” rule in the
proposed section 125 regulations.
Notice 2012–42, page 1049.
Credit for carbon dioxide sequestration; 2012 section
45Q inflation adjustment factor.This notice publishes the
inflation adjustment factor for the carbon dioxide (CO2) seques-
tration credit under section 45Q of the Code for calendar year
2012.
EMPLOYEE PLANS
Notice 2012–43, page 1050.
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 June 2012;
the 24-month average segment rates; the funding transitional
segment rates applicable for June 2012; and the minimum
present value transitional rates for May 2012.
EMPLOYMENT TAX
Rev. Rul. 2012–18, page 1032.
Tips included for both employee and employer taxes.
This ruling provides guidance for employers and employees
in a question and answer format regarding taxes imposed on
tips under the Federal Insurance Contributions Act (FICA), in-
cluding information on the difference between tips and service
charges, the reporting of the employer share of FICA under
section 3121(q) of the Code, and the section 45B credit. See
related Announcement 2012–25, published elsewhere in this
Bulletin. Rev. Rul. 95–7 modified and superseded.
Announcement 2012–25, page 1054.
This announcement is seeking comments from the public re-
garding an interim guidance memo (IGM) issued to its examin-
ers relating to Rev. Rul. 2012–18, published elsewhere in this
Bulletin. The IGM provides audit issue direction to examiners in
dealing with issues concerning the proper treatment of tips and
service charges. This announcement also announces plans to
solicit comments in the future regarding possible changes to
voluntary tip compliance agreements.
(Continued on the next page)
Fi
nding Lists begin on page ii.
Index for January through June begins on page vi.

ADMINISTRATIVE
Rev. Rul. 2012–18, page 1032.
Tips included for both employee and employer taxes.
This ruling provides guidance for employers and employees
in a question and answer format regarding taxes imposed on
tips under the Federal Insurance Contributions Act (FICA), in-
cluding information on the difference between tips and service
charges, the reporting of the employer share of FICA under
section 3121(q) of the Code, and the section 45B credit. See
related Announcement 2012–25, published elsewhere in this
Bulletin. Rev. Rul. 95–7 modified and superseded.
Notice 2012–41, page 1048.
This notice provides an extension of time to pay under section
6651 of the Code to eligible civilian spouses of military service-
members who work in American Samoa, Guam, the Northern
Mariana Islands, Puerto Rico, or the U.S. Virgin Islands (each
a “U.S. territory”) and claim residence or domicile for tax pur-
poses in a State or the District of Columbia pursuant to the
Military Spouses Residency Relief Act (“MSRRA”), for tax year
2011 and subsequent tax years. In addition, this notice pro-
vides that civilian spouses of military servicemembers working
in a State or the District of Columbia but claiming residence
or domicile for tax purposes in a U.S. territory under MSRRA
should follow the procedures described in Notice 2010–30 with
respect to their individual income tax returns for tax year 2011
and subsequent tax years.
June 25, 20122012–26 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
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th integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly 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.
2012–26 I.R.B.June 25, 2012

June 25, 20122012–26 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 3121.—Tips
Included for Both Employee
and Employer Taxes
Tips included for both employee and
employer taxes.This ruling provides
guidance for employers and employees in
a question and answer format regarding
taxes imposed on tips under the Federal
Insurance Contributions Act (FICA), in-
cluding information on the difference
between tips and service charges, the re-
porting of the employer share of FICA
under section 3121(q) of the Code, and the
section 45B credit. See related Announce-
ment 2012–25, published elsewhere in this
Bulletin. Rev. Rul. 95–7 modified and
superseded.
Rev. Rul. 2012–18
The purpose of this revenue ruling is
to clarify and update guidelines first pre-
sented in Rev. Rul. 95–7, 1995–1 C.B.
185, concerning the taxes imposed on tips
under the Federal Insurance Contributions
Act (FICA) and the notice and demand un-
der section 3121(q) of the Internal Rev-
enue Code (Code).
Sections 3101 and 3111 of the Code im-
pose FICA taxes on employees and em-
ployers, respectively, equal to a percent-
age of the wages received by an individual
with respect to employment. FICA taxes
consist of two separate taxes, the Old Age,
Survivors, and Disability Insurance (social
security) tax and the Hospital Insurance
(Medicare) tax. The amount of wages sub-
ject to social security tax is limited by an
annual contribution and benefit base; how-
ever, all wages are subject to Medicare tax.
Section 3121(a) of the Code defines
“wages” for FICA tax purposes as all
remuneration for employment, with cer-
tain exceptions. Section 3121(a)(12)(A)
excludes from the definition of wages
tips paid in any medium other than cash;
section 3121(a)(12)(B) excludes cash tips
received by an employee in any calendar
month in the course of the employee’s
employment by an employer unless the
amount of the cash tips is $20 or more.
Employer FICA Obligations.Under
section 3121(q) of the Code, tips received
by an employee in the course of the em-
ployee’s employment are considered re-
muneration for that employment and are
deemed to have been paid by the employer
for purposes of the employer share of
FICA taxes imposed by sections 3111(a)
and (b), that is, social security tax and
Medicare tax, respectively. The remuner-
ation is deemed to be paid when a written
statement including the tips is furnished to
the employer by the employee pursuant to
section 6053(a), discussed below.
Section 3111 of the Code requires the
employer to pay social security tax on the
amount of cash tips received by the em-
ployee up to and including the contribu-
tion and benefit baseas determined un-
der section 3121(a)(1) and to pay Medi-
care tax on the total amount of cash tips
received by the employee. However, if the
employee either did not furnish the state-
ment pursuant to section 6053(a) or if the
statement furnishedwas inaccurate or in-
complete, in determining the employer’s
liability in connection with the taxes im-
posedbysection3111withrespecttothe
tips, section 3121(q) provides that the re-
muneration is deemed, for purposes of sub-
title F (Procedure and Administration), to
be paid on the date on which notice and de-
mand for the taxes is made to the employer
by the Internal Revenue Service (Service).
Employee FICA Obligations.Under
section 3121(q) of the Code, for purposes
of the employee share of FICA taxes im-
posed by sections 3101(a) and (b), tips that
are properly reported to the employer pur-
suant to section 6053(a) are deemed to be
paid at the time a written statement is fur-
nished to the employer pursuant to section
6053(a). Unreportedtips received by the
employee are deemed to be paid to the em-
ployee when actually received by the em-
ployee.
Section 6053(a) of the Code requires
every employee who, in the course of the
employee’s employment by an employer,
receives in any calendar month tips that
are wages (as defined in section 3121(a)
for FICA tax purposes or section 3401(a)
for income tax withholding purposes) to
report all those tips in one or more writ-
ten statements furnished to the employer
on or before the 10th day of the follow-
ing month. The employee is to furnish
the statements in the form and manner pre-
scribed by the Service.See§ 31.6053–1(b)
of the Employment Tax Regulations.
Credit for Employer Share of FICA
Taxes Paid.Section45B(a)oftheCode
provides that, for purposes of the general
business credit under section 38, the credit
for employer social security and Medicare
taxes paid on certain employee tips is an
amount equal to the “excess employer
social security tax” paid or incurred by
the employer. The term “excess employer
social security tax” means any tax paid
by an employer under section 3111 (both
social security tax and Medicare tax) on its
employees’ tip income without regard to
whether the employees reported the tips to
the employer pursuant to section 6053(a).
Consequently, the section 45B credit is
available with respectto unreported tips in
an amount equal to the “excess employer
social security tax” paid or incurred by the
employer. No credit, however, is allowed
to the extent tips are used to meet the
federal minimum wage rate. For purposes
of this limitation, the federal minimum
wage rate is the rate that was in effect on
January 1, 2007. The credit is available
with respect to FICA taxes paid on tips
received from customers in connection
with the providing, delivering, or serving
of food or beverages for consumption, if
it is customary for customers to tip the
employees.
QUESTIONS AND ANSWERS
IN GENERAL
Q1. Is the characterization of a payment
as a “tip” by the employer determinative
for FICA tax purposes under section 3121
of the Code?
A1. No. The employer’s characteriza-
tion of a payment as a “tip” is not deter-
minative. For example, an employer may
characterize a payment as a tip, when in
fact the payment is a service charge. The
criteria of Rev. Rul. 59–252, 1959–2
C.B. 215, should be applied to determine
whether a payment made in the course of
employment is a tip or non-tip wages un-
der section 3121 of the Code. The rev-
enue ruling provides that the absence of
2012–26 I.R.B.1032June 25, 2012

any of the following factors creates a doubt
as to whether a payment is a tip and indi-
cates that the payment may be a service
charge: (1) the payment must be made
free from compulsion; (2) the customer
must have the unrestricted right to deter-
mine the amount; (3) the payment should
not be the subject of negotiation or dic-
tated by employer policy; and (4) gener-
ally, the customer has the right to deter-
mine who receives the payment. All of
the surrounding facts and circumstances
must be considered. For example, Rev.
Rul. 59–252 holds that the payment of a
fixed charge imposed by a banquet hall that
is distributed to the employees who ren-
der services (e.g., waiter, busser, and bar-
tender) is a service charge and not a tip.
Thus, to the extent any portion of a service
charge paid by a customer is distributed to
an employee it is wages for FICA tax pur-
poses.
The application of the factors is illus-
trated by the following two common ex-
amples:
Example A: Restaurant W’s menu specifies that
an 18% charge will be added to all bills for parties of
6 or more customers. Customer D’s bill for food and
beverages for her party of 8 includes an amount on the
“tip line” equal to 18% of the price for food and bever-
ages and the total includes this amount. Restaurant W
distributes this amount to the waitresses and bussers.
Under these circumstances, Customer D did not have
the unrestricted right to determine the amount of the
payment because it was dictated by employer policy.
Customer D did not make the payment free from com-
pulsion. The 18% charge is not a tip within the mean-
ing of section 3121 of the Code. The amount included
on the tip line is a service charge dictated by Restau-
rant W.
Example B: Restaurant X includes sample calcu-
lations of tip amounts beneath the signature line on
its charge receipts for food and beverages provided to
customers. The actual tip line is left blank. Customer
G’s charge receipt shows sample tip calculations of
15%, 18% and 20% of the price of food and bever-
ages. Customer G inserts the amount calculated at
15% on the tip line and adds this amount to the price
of food and beverages to compute the total. Under
these circumstances, Customer G was free to enter
any amount on the tip line or leave it blank; thus, Cus-
tomer G entered the 15% amount free from compul-
sion. Customer G and Restaurant X did not negotiate
the amount nor did Restaurant X dictate the amount.
Customer G generally determined who would get the
amount. The amount Customer G entered on the tip
line is a tip within the meaning of section 3121 of the
Code.
Q2. Whattipsmustbereportedtothe
employer?
A2. All cash tips received by an em-
ployee are wages for FICA tax purposes
and, therefore, must be reported to the em-
ployer unless the cash tips received by the
employee during a single calendar month
while working for the employer total less
than $20. If an employee works for more
than one employer during a month and re-
ceives less than $20 in tips while working
for each employer, no tips are required to
be reported to any of the employers. Cash
tips include tips received from customers,
charged tips (e.g., credit and debit card
charges) distributed to the employee by his
or her employer, and tips received from
other employees under any tip-sharing ar-
rangement. Thus, both directly and indi-
rectly tipped employees must report tips
received to their employer. Non-cash tips
(i.e., tips received by an employee in any
other medium than cash, such as passes,
tickets, or other goods or commodities)
from customers are not wages for FICA tax
purposes and are not reported to the em-
ployer. All cash tips and non-cash tips are
includable in an employee’s gross income
and subject to federal income taxes.
Q3. How are tips reported by the em-
ployee to the employer?
A3. The employee must give the em-
ployer a written statement (or statements)
of cash tips by the 10th day of the month
after the month in which the tips are re-
ceived. Form 4070,Employee’s Report
of Tips to Employer, is available for this
purpose and may be found in Publication
1244,Employee’s Daily Record of Tips
and Report to Employer. The statement
may be furnished on paper or transmitted
electronically.See§ 31.6053–1(b) of the
regulations.
Q4. How are FICA taxes paid on tips
which are reported to the employer by the
employee?
A4. The employer withholds the em-
ployee share of FICA taxes on the reported
tips from the wages of the employee
(other than tips) or from other funds made
available by the employee for this pur-
pose.Seesection 3102(c) of the Code and
§§ 31.3102–3 and 31.3402(k)–1(c) of the
regulations. The employer pays both em-
ployer and employee shares of FICA taxes
in the same manner as the taxes on the
employee’s non-tip wages and includes
the reported tips on the employee’s Form
W–2,Wage and Tax Statement.The em-
ployer makes a current period adjustment
on Form 941,Employer’s QUARTERLY
Federal Tax Return, to reflect any uncol-
lected employee FICA taxes on reported
tips. The employer reports any uncollected
employee FICA taxes on the employee’s
Form W–2,Wage and Tax Statement.The
employee must report these amounts as
additional tax on the employee’s Form
1040,U.S. Individual Income Tax Return
(or other applicable return in the Form
1040 series).
EMPLOYEE
Q5. If an employee fails to report tips to
his or her employer, is the employee liable
for the employee share of FICA taxes on
those unreported tips?
A5. Yes. The employee is liable for
the employee share of FICA taxes on the
unreported tips. The employee pays his
or her share of FICA taxes by completing
Form 4137,Social Security and Medicare
TaxonUnreportedTipIncome, and filing it
with Form 1040 (or other applicable return
in the Form 1040 series) for the year in
which the tips are actually received by the
employee.
Q6. Which year’s social security and
Medicare rates and social security contri-
bution and benefit base apply to compute
the employee’s FICA tax liability on unre-
ported tips?
A6. The social security and Medicare
rates and the social security contribution
and benefit base applicable to the calen-
dar year in which the tips were actually
received apply to compute the employee’s
FICA tax liability. Form 4137 includes
the applicable social security and Medi-
care rates and social security contribution
and benefit base. The employer is not
liable to withhold and pay the employee
share of FICA taxes on the unreported tips.
Q7. Are employees who fail to report
tips to their employers subject to a penalty?
A7. Yes. Under section 6652(b) of the
Code, an employee who fails to report tips
requiredtobereportedtoanemployeris
subject to a penalty equal to 50 percent
of the employee share of FICA taxes on
those tips, unless the employee can provide
a satisfactory explanation showing that the
failure was due to reasonable cause and
not due to willful neglect. The explana-
tion must be made in the form of a written
statement setting forth all the facts alleged
as a reasonable cause. This statement can
be attached to the employee’s Form 1040
(SeeForm 4137). If the statement is sub-
mitted in response to a notice regarding
June 25, 201210332012–26 I.R.B.

a proposed penalty assessment, the state-
ment must contain a declaration that it is
made under the penalties of perjury.
EMPLOYER
Q8. If an employee fails to report tips to
his or her employer, is the employer liable
for the employee and employer shares of
FICA taxes on those unreported tips?
A8. If an employee fails to report tips to
his or her employer, the employer is not li-
able for the employer share of FICA taxes
on the unreported tips until notice and de-
mand for the taxes is made to the employer
by the Service. The employer is not liable
to withhold and pay the employee share of
FICA taxes on the unreported tips.
Q9. How is notice and demand made
under section 3121(q) of the Code?
A9. There is no specific form or pro-
cedure prescribed for a Section 3121(q)
Notice and Demand. Notice and demand
is made by the Service when it advises
the employer in writing of the amount of
tips received by an employee (or employ-
ees) who failed to report or underreported
tips to the employer. Although no specific
form is prescribed, a document will con-
stitute a Section 3121(q) Notice and De-
mand if it (1) includes the words “notice
and demand” and “section 3121(q),” (2)
states the amount of tips received by the
employee (or employees), and (3) states
the period to which the tips relate. How-
ever, a document including such informa-
tion will not constitute a Section 3121(q)
Notice and Demand if it states that it is not
a notice and demand.
Q10. How does an employer that files
Form 941 report the section 3121(q) FICA
tax liability after notice and demand is
made?
A10. The employer reports the amount
of the section 3121(q) FICA tax liability
as a current period liability for FICA taxes
on the employer’s Form 941 for the calen-
dar quarter in which notice and demand is
made. Employers should consult the In-
structions for Form 941 to determine the
correct line entry on Form 941. The em-
ployer must also include the amount of the
section 3121(q) FICA tax liability on the
appropriate line of the record of federal tax
liability (Part 2 of Form 941 for a monthly
depositor or Schedule B (Form 941) for a
semi-weekly depositor) corresponding to
the date of the Section 3121(q) Notice and
Demand.
Q11. Which year’s social security and
Medicare rates and social security contri-
bution and benefit base apply to compute
the employer’s FICA tax liability on unre-
ported tips?
A11. The social security and Medicare
rates and the social security contribution
and benefit base applicable to the calen-
dar year in which the tips were actually
received apply to compute the employer’s
FICA tax liability. The Service will com-
pute the employer’s liability, and include
a calculation worksheet with the Section
3121(q) Notice and Demand.
Q12. If the Service determines that
an employer’s employees have unreported
tips and issues a Section 3121(q) Notice
and Demand to the employer, what is the
period of limitations for the Service to as-
sess the employer share of FICA taxes?
A12. Generally, the period of limita-
tions for assessment under section 6501
of the Code is 3 years after the due date
of the return or the date the return was
filed, whichever is later. However, section
6501(b)(2) provides that employment tax
returns reporting FICA taxes for any pe-
riod ending with or within a calendar year
filed before April 15 of the succeeding cal-
endar year are deemed filed on April 15 of
such succeeding calendar year.
As a general rule, the Service must as-
sess the employer FICA taxes on the un-
reported tips within 3 years after April 15
of the calendar year following the year in
which the Section 3121(q) Notice and De-
mand is made. For example, if the notice
and demand is dated December 31, 2012,
theliabilityisrequiredtobereportedon
Form 941 for the fourth quarter of 2012,
due on January 31, 2013. If the employer
timely files Form 941, the period of lim-
itations for assessment ends on April 15,
2016.
However, if the employer did not file
its Form 941 for the fourth quarter of 2012
before April 15 of the succeeding calendar
year (April 15, 2013) and instead filed on
May 10, 2013, the Service must assess the
employer FICA taxes by May 10, 2016, the
date 3 years after the date the return was
filed.
If the employer files a false or fraudu-
lent Form 941 for the quarter in which the
liabilityisrequiredtobereportedorfailsto
file Form 941 for thatquarter, the Service
can assess the additional employer FICA
taxes on the unreported tips at any time.
These assessment periods apply
whether or not the employer accurately re-
ports the liability on Form 941 as required
by Q&A 10 above.
Q13. Is the employer liable for interest
on the employer’s FICA tax liability for
unreported tips?
A13. Generally, no. If the employer
pays the tax on or before the due date of the
Form 941 for the quarter during which no-
tice and demand is made, the employer is
not liable for interest. If the employer does
not pay the tax by the due date of the re-
turn, interest will accrue on the underpay-
ment from the due date of the return.
Q14. Is the employer required to de-
posit FICA taxes due on the unreported
tips shown on the Section 3121(q) Notice
and Demand?
A14. Yes. The employer must make de-
posits pursuant to section 6302 of the Code
and § 31.6302–1 of the regulations. For
purposes of applying the deposit rules, the
amount of employer FICA taxes shown on
the Section 3121(q) Notice and Demand,
is treated as employment taxes accumu-
latedbytheemployeronthedatetheSec-
tion 3121(q) Notice and Demand is made,
which is the date printed on the notice and
demand document. The Service generally
intends to notify an employer at least 30
calendar days in advance of the issuance
of a Section 3121(q) Notice and Demand.
Q15. Is the section 45B credit, with re-
spect to the tips reported on the Section
3121(q) Notice and Demand, available to
the employer in the year the notice and
demand is made or the year in which the
unreported tips were received by the em-
ployee?
A15. The section 45Bcredit is applied
to the taxable year that the “excess social
security tax” amount is paid or incurred.
The section 45B(b)(1) definition of “ex-
cess social security tax” is limited to tips
that “are deemed to have been paid by the
employer to the employee pursuant to sec-
tion 3121(q).” Under this definition of “ex-
cess social security tax,” such tax cannot
be paid or incurred prior to the time that the
tip amounts are deemed to have been paid
under section 3121(q), which occurs on the
date on which notice and demand for the
employer share of FICA taxes is made to
the employer. Therefore, the section 45B
credit is available to the employer in the
2012–26 I.R.B.1034June 25, 2012

year the Section 3121(q) Notice and De-
mand is made and not the year in which
the unreported tips were received by the
employee. The credit is claimed on Form
8846,Credit for Employer Social Security
and Medicare Taxes Paid on Certain Em-
ployee Tips.
EFFECT ON OTHER REVENUE
RULING(S)
Rev. Rul. 95–7 is modified and super-
seded.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Linda L. Conway-Hataloski of
the Office of Division Counsel/Associate
Chief Counsel (Tax Exempt &
Government Entities).For further
information regarding this revenue ruling,
contact Linda L. Conway-Hataloski at
202–622–0047 (not a toll-free call).
Section 6621.—Determina-
tion of Rate of Interest
26 CFR 301.6621–1: Interest rate.
Interest rates; underpayments and
overpayments.The rates for interest de-
termined under section 6621 of the Code
for the calendar quarter beginning July 1,
2012, will be 3 percent for overpayments
(2 percent in the case of a corporation), 3
percent for the underpayments, and 5 per-
cent for large corporate underpayments.
The rate of interest paid on the portion of a
corporate overpayment exceeding $10,000
will be 0.5 percent.
Rev. Rul. 2012–16
Section 6621 of the Internal Revenue
Code establishes the interest rates on over-
payments and underpayments of tax. Un-
der section 6621(a)(1), the overpayment
rate is the sum of the federal short-term
rate plus 3 percentage points (2 percent-
age points in the case of a corporation), ex-
cept the rate for the portion of a corporate
overpayment of tax exceeding $10,000 for
a taxable period is the sum of the federal
short-term rate plus 0.5 of a percentage
point. Under section 6621(a)(2), the un-
derpayment rate is the sum of the federal
short-term rate plus 3 percentage points.
Section 6621(c) provides that for pur-
poses of interest payable under section
6601 on any large corporate underpay-
ment, the underpayment rate under section
6621(a)(2) is determined by substituting
“5 percentage points” for “3 percentage
points.” See section 6621(c) and section
301.6621–3 of the Regulations on Proce-
dure and Administration for the definition
of a large corporate underpayment and
for the rules for determining the appli-
cable date. Section 6621(c) and section
301.6621–3 are generally effective for
periods after December 31, 1990.
Section 6621(b)(1) provides that the
Secretary will determine the federal
short-term rate for the first month in each
calendar quarter. Section 6621(b)(2)(A)
provides that the federal short-term rate
determined under section 6621(b)(1) for
any month applies during the first calen-
dar quarter beginning after that month.
Section 6621(b)(3) provides that the fed-
eral short-term rate for any month is the
federal short-term rate determined during
that month by the Secretary in accordance
with section 1274(d), rounded to the near-
est full percent (or, if a multiple of
1
/2of
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 April 2012 is the rate published in
Revenue Ruling 2012–13, 2012–19 I.R.B.
878, to take effect beginning May 1, 2012.
The federal short-term rate, rounded to the
nearest full percent, based on daily com-
pounding determined during the month of
April 2012 is 0 percent. Accordingly, an
overpayment rate of 3 percent (2 percent
in the case of a corporation) and an under-
payment rate of 3 percent are established
for the calendar quarter beginning July 1,
2012. The overpayment rate for the por-
tion of a corporate overpayment exceeding
$10,000 for the calendar quarter beginning
July 1, 2012, is 0.5 percent. The under-
payment rate for large corporate underpay-
ments for the calendar quarter beginning
July 1, 2012, is 5 percent. These rates ap-
ply to amounts bearing interest during that
calendar quarter.
The 3 percent rate also applies to esti-
mated tax underpayments for the third cal-
endar quarter in 2012.
Interest factors for daily compound in-
terest for annual rates of 0.5 percent are
published in Appendix A of this Revenue
Ruling. Interest factors for daily com-
pound interest for annual rates of 2 percent,
3 percent and 5 percent are published in Ta-
bles 57, 59, and 63 of Rev. Proc. 95–17,
1995–1 C.B. 611, 613, and 617.
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 A.M. Gulas of the Office of Asso-
ciate Chief Counsel (Procedure & Admin-
istration). For further information regard-
ing this revenue ruling, contact Ms. Gulas
at (202) 622–4570 (not a toll-free call).
June 25, 201210352012–26 I.R.B.

APPENDIX A
365 Day Year
0.5% Compound Ra
te 184 Days
DaysFactorDaysFactorDaysFactor
10.000013699630.000863380
125
0.001713784
20.000027397640.000877091126
0.001727506
30.000041096
65
0.0008908011270.001741228
4
0.000054796
66
0.000904512
128
0.001754951
50.000068495
670.0009182231290.001768673
6
0.000082195
680.0009319341300.001782396
7
0.000095894
69
0.000945646
1310.001796119
8
0.000109594
70
0.000959357
1320.001809843
90.000123294710.000973069133
0.001823566
10
0.000136995
720.0009867811340.001837290
11
0.000150695
730.001000493
1350.001851013
120.000164396740.0010142061360.001864737
130.00017809
7
75
0.00102791
8
1370.00187846
2
140.000191798760.0010416311380.001892186
150.0002054
99
77
0.0010553
44
139
0.0019059
10
160.0002192
01
78
0.001069057
140
0.001919635
170.000232902790.0010827701410.001933360
180.000246604800.001096484142
0.001947
085
190.000260
306
810.001110
197
1430.001960
811
200.000274008820.001123911144
0.001974536
210.00028771183
0.001137
625
145
0.001988262
220.000301
413
84
0.001151339
1460.002001
988
23
0.000315116850.001165054
147
0.002015714
240.000328819860.0011787681480.002029440
250.000342522
870.00119
2483
1490.00204
3166
26
0.000356225
880.001206198
1500.002056893
270.000369929890.001219913
151
0.002070620
280.0003
83633
900.0012
33629
152
0.0020
84347
290.000397336910.001247344
153
0.002098074
300.000411041920.001261060
154
0.002111801
31
0.000424745
930.001
274776
1550.002125529
320.000438449940.001288492
1560.002139257
33
0.00
0452154
95
0.001302208
1570.00
2152985
34
0.000465859
96
0.001315925158
0.00
2166713
350.000479564
970.001329641
159
0.002180441
360.00049326998
0.0
01343358
1600.002194169
37
0.000506974
99
0.001357075
1610.0
02207898
38
0.000520680
1000.0013707921620.002221627
39
0.0
00534386
101
0.0
01384510
163
0.0
02235356
40
0.000548092
10
2
0.
001398227
16
4
0.002249085
41
0.000561798
103
0.0014119451650.002262815
42
0.
000575504
104
0.
001425663
166
0.
002276544
43
0.000589211105
0.
001439381
16
7
0.
002290274
440.000602917106
0.001453100
1680.002304004
4
5
0.0006166241070.0014668181690.002317734
4
6
0
.000630331
1
08
0.001480537
1
70
0.002331465
470.000644039109
0.001494256
171
0.002345195
48
0.000657746
110
0.001507975
172
0.002358926
49
0.000671454
111
0.001521694
173
0.002372657
500.000685161
112
0.001535414
1740.002386388
51
0.000698869113
0.001549133175
0.002400120
520.000712578
114
0.001562853
176
0.002413851
53
0.000726286
1150.001576573
177
0.002427583
540.000739995
116
0.001590293
178
0.002441315
550.000753703
1170.001604014179
0.002455047
56
0.0007674121180.0016177341800.002468779
2012–26 I.R.B.1036June 25, 2012

365 Day Year
0.5% Compound Rate 184 Days – Continued
DaysFactorDaysFactorDaysFactor
57
0.000781121119
0.001631455
181
0.002482511
58
0.000794831120
0.001645176
1820.002496244
590.000808540
121
0.001658897
183
0.002509977
60
0.000822250
1220.001672619184
0.002523710
61
0.000835960
1230.001686340
620.0008496701240.001700062
365 Day Year
0.5% Compound Rate 184 Days
DaysFactorDaysFactorDaysFactor
10.000013661630.000861020
125
0.001709097
20.000027323640.0008746931260.001722782
30.000040984
65
0.0008883661270.001736467
4
0.000054646
660.000902040128
0.001750152
5
0.00006830867
0.000915713
1290.001763837
60.000081970680.000929387130
0.001777522
7
0.000095632
690.0009430611310.001791208
8
0.000109295
70
0.000956735
1320.001804893
9
0.000122958
710.000970409133
0.001818579
100.000136620720.000984084134
0.001832265
11
0.000150283
73
0.0009977581350.001845951
120.000163947740.001011433136
0.001859638
130.000177610
750.001025108
1370.001873324
140.000191274760.0010387831380.001887011
15
0.00020493877
0.001052459
1390.001900698
160.000218602780.001066134140
0.001914385
170.000232266790.0010798101410.001928073
18
0.000245930
800.0010934861420.001941760
19
0.000259595
810.001107162143
0.001955448
200.000273260820.0011208391440.001969136
210.00028692483
0.001134515145
0.001982824
22
0.000300590
840.001148192146
0.001996512
23
0.00031425585
0.0011618691470.002010201
240.00032792086
0.001175546
1480.002023889
250.000341586
870.001189223149
0.002037578
26
0.000355252
880.001202900
1500.002051267
270.00036891889
0.0012165781510.002064957
28
0.000382584
90
0.001230256152
0.002078646
29
0.000396251
910.001243934
153
0.002092336
300.00040991792
0.0012576121540.002106025
31
0.000423584
930.001271291
1550.002119715
32
0.000437251
940.001284969
1560.002133405
33
0.00045091895
0.001298648
157
0.002147096
34
0.000464586
960.001312327
158
0.002160786
350.000478253
970.001326006
159
0.002174477
360.00049192198
0.001339685
1600.002188168
37
0.000505589
99
0.001353365
161
0.002201859
38
0.000519257
1000.001367044162
0.002215550
39
0.000532925
1010.0013807241630.002229242
40
0.000546594
1020.0013944041640.002242933
41
0.000560262
103
0.0014080851650.002256625
42
0.000573931
104
0.001421765
1660.002270317
43
0.0005876001050.001435446
1670.002284010
440.0006012691060.0014491271680.002297702
45
0.0006149391070.001462808169
0.002311395
June 25, 201210372012–26 I.R.B.

365 Day Year
0.5% Compound Rate 184 Days – Continued
DaysFactorDaysFactorDaysFactor
460.0006286081080.001476489170
0.002325087
470.0006422781090.0014901701710.002338780
48
0.000655948
110
0.001503852
172
0.002352473
490.000669618111
0.001517533
1730.002366167
50
0.000683289112
0.001531215
1740.002379860
510.000696959
113
0.0015448971750.002393554
52
0.000710630114
0.001558580
1760.002407248
53
0.000724301
1150.001572262
1770.002420942
54
0.000737972116
0.001585945
1780.002434636
550.000751643
117
0.001599628
1790.002448331
560.000765315
1180.001613311180
0.002462025
57
0.0007789861190.001626994181
0.002475720
580.000792658
1200.001640678182
0.002489415
59
0.000806330121
0.001654361
183
0.002503110
600.000820003122
0.001668045
184
0.002516806
61
0.000833675
1230.001681729
620.000847348124
0.001695413
TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975 — PERIODS ENDING DEC. 31, 1986
OVERPAYMENTS AND UNDERPAYMENTS
PERIODRATE
In 1995–1 C.B.
DAILY RATE TABLE
Before Jul. 1, 1975
6%
Table 2, pg. 557
Jul. 1, 1975—Jan. 31, 1976
9%
Table 4, pg. 559
Feb. 1, 1976—Jan. 31, 19787%
Table 3, pg. 558
Feb. 1, 1978—Jan. 31, 19806%
Table 2, pg. 557
Feb. 1, 1980—Jan. 31, 198212%
Table 5, pg. 560
Feb. 1, 1982—Dec. 31, 198220%
Table 6, pg. 560
Jan. 1, 1983—Jun. 30, 198316%
Table 37, pg. 591
Jul. 1, 1983—Dec. 31, 198311%
Table 27, pg. 581
Jan. 1, 1984—Jun. 30, 198411%
Table 75, pg. 629
Jul. 1, 1984—Dec. 31, 198411%
Table 75, pg. 629
Jan. 1, 1985—Jun. 30, 1985
13%
Table 31, pg. 585
Jul. 1, 1985—Dec. 31, 1985
11%
Table 27, pg. 581
Jan. 1, 1986—Jun. 30, 198610%
Table 25, pg. 579
Jul. 1, 1986—Dec. 31, 19869%
Table 23, pg. 577
TABLE OF INTEREST RATES
FROM JAN. 1, 1987 — DEC. 31, 1998
OVERPAYMENTSUNDERPAYMENTS
1995–1 C.B.1995–1 C.B.
RATE TABLEPGRATE TABLEPG
Jan. 1, 1987—Mar. 31, 19878%21
575
9%23
577
Apr. 1
, 1987—Jun. 30, 1987
8%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, 1988
10%7362711%
75
629
Apr. 1, 1988—Jun. 30, 19889%71
625
10%73627
Jul. 1, 1988—Sep. 30, 19889%71
625
10%73627
2012–26 I.R.B.1038June 25, 2012

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, 1988—Dec. 31, 198810%7362711%
75
629
Jan. 1, 1989—Mar. 31, 198910%
25579
11%27
581
Apr. 1, 1989—Ju
n. 30, 1989
11%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—M
ar. 31, 1990
10%
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, 1990
10%
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, 1991
9%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, 1992
7%676218%69623
Jul. 1, 1992—Sep. 30, 19927%676218%69623
Oct. 1, 1992—Dec. 31, 19926%
65
6197%67621
Jan. 1, 19
93—Mar. 31, 1993
6%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, 19
93—Dec. 31, 1993
6%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, 1
994—Sep. 30, 1994
7%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, 1996
8%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, 1996
8%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, 1997
8%21
575
9%23
577
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, 1998
7%19
573
8%21
575
Jul. 1, 1998—Sep. 30, 19987%19
573
8%21
575
Oct. 1, 1998—Dec. 31, 19987%19
57
3
8%21
57
5
TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 — PRESENT
NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS
19
95–1 C.B.
RA
TE
TA
BLE
PG
Jan
. 1, 1999—Mar. 31, 1999
7%19
573
Apr. 1, 1999—Jun. 30, 19998%21
575
Jul. 1, 1999—Sep. 30, 19998%21
57
5
Oc
t. 1, 1999—Dec. 31, 1999
8%21
575
Jan. 1, 2000—Mar. 31, 20008%69623
June 25, 201210392012–26 I.R.B.

TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 — PRESENT – Continued
NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS
1995–1 C.B.
RATETABLEPG
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
Jan. 1, 2009—Mar. 31, 2009
5%15569
Apr. 1, 2009—Jun. 30, 20094%13
567
Jul. 1, 2009—Sep. 30, 20094%13
567
Oct. 1, 2009—Dec. 31, 20094%13
567
Jan. 1, 2010—Mar. 31, 20104%13
567
Apr. 1, 2010—Jun. 30, 20104%13
567
Jul. 1, 2010—Sep. 30, 20104%13
567
Oct. 1, 2010—Dec. 31, 20104%13
567
Jan. 1, 2011—Mar. 31, 20113%11
565
Apr. 1, 2011—Jun. 30, 20114%13
567
Jul. 1, 2011—Sep. 30, 20114%13
567
Oct. 1, 2011—Dec. 31, 20113%11
565
Jan. 1, 2012—Mar. 31, 20123%
59
613
Apr. 1, 2012—Jun. 30, 20123%
59
613
Jul. 1, 2012—Sep. 30, 20123%
59
613
2012–26 I.R.B.1040June 25, 2012

TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 — PRESENT
CORPORATE OVERPAYMENTS AND UNDERPAYMENTS
OVERPAYMENTSUNDERPAYMENTS
1995–1 C.B.1995–1 C.B.
RATE TABLEPGRATE TABLEPG
Jan. 1, 1999—Mar. 31, 19996%17
571
7%19
573
Apr. 1, 1999—Jun
. 30, 1999
7%19
573
8%21
575
Jul. 1, 1999—Sep. 30, 19997%19
573
8%21
575
Oct. 1, 1999—Dec. 31, 19997%19
573
8%21
575
Jan. 1, 2000—Ma
r. 31, 2000
7%676218%69623
Apr. 1, 2000—Jun. 30, 20008%696239%71
625
Jul. 1, 2000—Sep. 30, 20008%696239%71
625
Oct. 1, 2000—D
ec. 31, 2000
8%696239%71
625
Jan. 1, 2001—Mar. 31, 20018%21
575
9%23
577
Apr. 1, 2001—Jun. 30, 20017%19
573
8%21
575
Jul. 1, 2001—
Sep. 30, 2001
6%17
571
7%19
573
Oct. 1, 2001—Dec. 31, 20016%17
571
7%19
573
Jan. 1, 2002—Mar. 31, 2002
5%15569
6%17
571
Apr. 1, 2002
—Jun. 30, 2002
5%15569
6%17
571
Jul. 1, 2002—Sep. 30, 2002
5%15569
6%17
571
Oct. 1, 2002—Dec. 31, 2002
5%15569
6%17
571
Jan. 1, 200
3—Mar. 31, 2003
4%13
5675%15569
Apr. 1, 2003—Jun. 30, 20034%13
5675%15569
Jul. 1, 2003—Sep. 30, 20034%13
5675%15569
Oct. 1, 20
03—Dec. 31, 2003
3%11
565
4%13
567
Jan. 1, 2004—Mar. 31, 20043%
59
6134%61
615
Apr. 1, 2004—Jun. 30, 20044%61
6155%
63617
Jul. 1, 2
004—Sep. 30, 2004
3%
59
6134%61
615
Oct. 1, 2004—Dec. 31, 20044%61
6155%
63617
Jan. 1, 2
005—Mar. 31, 2005
4%13
5675%15569
Apr. 1, 2005—Jun. 30, 20055%15569
6%17
571
Jul. 1, 2005—Sep. 30, 20055%15569
6%17
571
Oct. 1,
2005—Dec. 31, 2005
6%17
571
7%19
573
Jan. 1,
2006—Mar. 31, 2006
6%17
571
7%19
573
Apr. 1, 2006—Jun. 30, 20066%17
571
7%19
573
Jul. 1, 2006—Sep. 30, 20067%19
573
8%21
575
Oct. 1
, 2006—Dec. 31, 2006
7%19
573
8%21
575
Jan. 1, 2007—Mar. 31, 20077%19
573
8%21
575
Apr. 1, 2007—Jun. 30, 20077%19
573
8%21
575
Jul.
1, 2007—Sep. 30, 2007
7%19
573
8%21
575
Oct. 1, 2007—Dec. 31, 20077%19
573
8%21
575
Jan. 1, 2008—Mar. 31, 20086%
65
6197%67621
Apr
. 1, 2008—Jun. 30, 2008
5%
636176%
65
619
Jul. 1, 2008—Sep. 30, 20084%61
6155%
63617
Oct. 1, 2008—Dec. 31, 2008
5%
636176%
65
619
Jan
. 1, 2009—Mar. 31, 2009
4%13
5675%15569
Apr. 1, 2009—Jun. 30, 20093%11
565
4%13
567
Jul. 1, 2009—Sep. 30, 20093%11
56
5
4%13
56
7
Oc
t. 1, 2009—Dec. 31, 2009
3%11
565
4%13
567
Jan. 1, 2010—Mar. 31, 20103%11
565
4%13
567
Apr. 1, 2010—Jun. 30, 20103%11
5
65
4%13
5
67
J
ul. 1, 2010—Sep. 30, 2010
3
%
1
1
565
4
%
1
3
567
Oct. 1, 2010—Dec. 31, 20103%11
565
4%13
567
Jan. 1, 2011—Mar. 31, 20112%9
563
3%11
565
Apr. 1, 2011—Jun. 30, 20113%11
565
4%13
567
Jul. 1, 2011—Sep. 30, 20113%11
565
4%13
567
Oct. 1, 2011—Dec. 31, 20112%9
563
3%11
565
Jan. 1, 2012—Mar. 31, 20122%
57
6113%
59
613
June 25, 201210412012–26 I.R.B.

TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 — PRESENT – Continued
CORPORATE OVERPAYMENTS AND UNDERPAYMENTS
OVERPAYMENTSUNDERPAYMENTS
1995–1 C.B.1995–1 C.B.
RATE TABLEPGRATE TABLEPG
Apr. 1, 2012—Jun. 30, 20122%
57
6113%
59
613
Jul. 1, 2012—Sep. 30, 20122%
57
6113%
59
613
TABLE OF INTEREST RATES FOR
LARGE CORPORAT
E UNDERPAYMENTS
FROM JANUARY 1, 1
991 — 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—Se
p. 30, 1991
12%29
583
Oct. 1, 1991—Dec. 31, 199112%29
583
Jan. 1, 1992—Mar. 31, 199211%
75
629
Apr. 1, 1992—J
un. 30, 1992
10%73627
Jul. 1, 1992—Sep. 30, 199210%73627
Oct. 1, 1992—Dec. 31, 19929%71
625
Jan. 1, 1993—
Mar. 31, 1993
9%23
577
Apr. 1, 1993—Jun. 30, 19939%23
577
Jul. 1, 1993—Sep. 30, 19939%23
577
Oct. 1, 1993
—Dec. 31, 1993
9%23
577
Jan. 1, 1994—Mar. 31, 19949%23
577
Apr. 1, 1994—Jun. 30, 19949%23
577
Jul. 1, 199
4—Sep. 30, 1994
10%
25579
Oct. 1, 1994—Dec. 31, 199411%27
581
Jan. 1, 19
95—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, 1
995—Dec. 31, 1995
11%27
581
Jan. 1, 1
996—Mar. 31, 1996
11%
75
629
Apr. 1, 1996—Jun. 30, 199610%73627
Jul. 1, 1996—Sep. 30, 199611%
75
629
Oct. 1, 1
996—Dec. 31, 1996
11%
75
629
Jan. 1, 1997—Mar. 31, 199711%27
581
Apr. 1, 1997—Jun. 30, 199711%27
581
Jul. 1,
1997—Sep. 30, 1997
11%27
581
Oct. 1, 1997—Dec. 31, 199711%27
581
Jan. 1, 1998—Mar. 31, 199811%27
581
Apr. 1
, 1998—Jun. 30, 1998
10%
25579
Jul. 1, 1998—Sep. 30, 199810%
25579
Oct. 1, 1998—Dec. 31, 199810%
25579
Jan.
1, 1999—Mar. 31, 1999
9%23
577
Apr. 1, 1999—Jun. 30, 199910%
25579
Jul. 1, 1999—Sep. 30, 199910%
25579
Oct
. 1, 1999—Dec. 31, 1999
10%
25579
Jan. 1, 2000—Mar. 31, 200010%73627
Apr. 1, 2000—Jun. 30, 200011%
75
629
Jul
. 1, 2000—Sep. 30, 2000
11%
75
629
Oct. 1, 2000—Dec. 31, 200011%
75
629
Jan. 1, 2001—Mar. 31, 200111%27
58
1
Ap
r. 1, 2001—Jun. 30, 2001
10%
25579
Jul. 1, 2001—Sep. 30, 20019%23
577
2012–26 I.R.B.1042June 25, 2012

TABLE OF INTEREST RATES FOR
LARGE CORPORATE UNDERPAYMENTS
FROM JANUARY 1, 1991 — PRESENT – Continued
1995–1 C.B.
RATETABLEPG
Oct. 1, 2001—Dec. 31, 20019%23
577
Jan. 1, 2002—Mar. 31, 20028%21
575
Apr. 1, 2002—Jun. 30, 20028%21
575
Jul. 1, 2002—Sep. 30, 20028%21
575
Oct. 1, 2002—Dec. 30, 20028%21
575
Jan. 1, 2003—Mar. 31, 20037%19
573
Apr. 1, 2003—Jun. 30, 20037%19
573
Jul. 1, 2003—Sep. 30, 20037%19
573
Oct. 1, 2003—Dec. 31, 20036%17
571
Jan. 1, 2004—Mar. 31, 20046%
65
619
Apr. 1, 2004—Jun. 30, 20047%67621
Jul. 1, 2004—Sep. 30, 20046%
65
619
Oct. 1, 2004—Dec. 31, 20047%67621
Jan. 1, 2005—Mar. 31, 2005
7%19
573
Apr. 1, 2005—Jun. 30, 2005
8%21
575
Jul. 1, 2005—Sep. 30, 2005
8%21
575
Oct. 1, 2005—Dec. 31, 2005
9%23
577
Jan. 1, 2006—Mar. 31, 20069%23
577
Apr. 1, 2006—Jun. 30, 20069%23
577
Jul. 1, 2006—Sep. 30, 200610%
25579
Oct. 1, 2006—Dec. 31, 200610%
25579
Jan. 1, 2007—Mar. 31, 200710%
25579
Apr. 1, 2007—Jun. 30, 200710%
25579
Jul. 1, 2007—Sep. 30, 200710%
25579
Oct. 1, 2007—Dec. 31, 200710%
25579
Jan. 1, 2008—Mar. 31, 20089%71
625
Apr. 1, 2008—Jun. 30, 20088%69623
Jul. 1, 2008—Sep. 30, 20087%67621
Oct. 1, 2008—Dec. 31, 20088%69623
Jan. 1, 2009—Mar. 31, 20097%19
573
Apr. 1, 2009—Jun. 30, 20096%17
571
Jul. 1, 2009—Sep. 30, 20096%17
571
Oct. 1, 2009—Dec. 31, 20096%17
571
Jan. 1, 2010—Mar. 31, 20106%17
571
Apr. 1, 2010—Jun. 30, 20106%17
571
Jul. 1, 2010—Sep. 30, 20106%17
571
Oct. 1, 2010—Dec. 31, 20106%17
571
Jan. 1, 2011—Mar. 31, 2011
5%15569
Apr. 1, 2011—Jun. 30, 20116%17
571
Jul. 1, 2011—Sep. 30, 20116%17
571
Oct. 1, 2011—Dec. 31, 2011
5%15569
Jan. 1, 2012—Mar. 31, 2012
5%
63617
Apr. 1, 2012—Jun. 30, 2012
5%
63617
Jul. 1, 2012—Sep. 30, 2012
5%
63617
TABLE OF INTEREST RATES FOR CORPORATE
OVERPAYMENTS EXCEEDING $10,000
FROM JANUARY 1, 1995 — PRESENT
1995–1 C.B.
RATETABLEPG
Jan. 1, 1995—Mar. 31, 19956.5%
18
572
Apr. 1, 1995—Jun. 30, 19957.5%
20
574
June 25, 201210432012–26 I.R.B.

TABLE OF INTEREST RATES FOR CORPORATE
OVERPAYMENTS E
XCEEDING $10,000
FROM JANUARY 1, 1995 — PRESENT – Continued
1995–1 C.B.
RATETABLEPG
Jul. 1, 1995—Sep. 30, 19956.5%
18
572
Oct. 1, 1995—Dec. 31, 19956.5%
18
572
Jan. 1, 1996—Mar. 31, 1996
6.5%
66620
Apr. 1, 1996—Jun. 30, 1996
5.5%
64618
Jul. 1, 1996—Sep. 30, 1996
6.5%
66620
Oct. 1, 1996—Dec. 31, 1996
6.5%
66620
Jan. 1, 1997—Mar. 31, 1997
6.5%
18
572
Apr. 1, 1997—Jun. 30, 1997
6.5%
18
572
Jul. 1, 1997—Sep. 30, 1997
6.5%
18
572
Oct. 1, 1997—Dec. 31, 1997
6.5%
18
572
Jan. 1, 1998—Mar. 31, 1998
6.5%
18
572
Apr. 1, 1998—Jun. 30, 1998
5.5%
16
570
Jul. 1, 1998—Sep. 30, 1998
5.5%
16
570
Oct. 1, 1998—Dec. 31, 1998
5.5%
16
570
Jan. 1, 1999—Mar. 31, 1999
4.5%
14
568
Apr. 1, 1999—Jun. 30, 1999
5.5%
16
570
Jul. 1, 1999—Sep. 30, 1999
5.5%
16
570
Oct. 1, 1999—Dec. 31, 1999
5.5%
16
570
Jan. 1, 2000—Mar. 31, 2000
5.5%
64618
Apr. 1, 2000—Jun. 30, 2000
6.5%
66620
Jul. 1, 2000—Sep. 30, 2000
6.5%
66620
Oct. 1, 2000—Dec. 31, 2000
6.5%
66620
Jan. 1, 2001—Mar. 31, 2001
6.5%
18
572
Apr. 1, 2001—Jun. 30, 2001
5.5%
16
570
Jul. 1, 2001—Sep. 30, 2001
4.5%
14
568
Oct. 1, 2001—Dec. 31, 2001
4.5%
14
568
Jan. 1, 2002—Mar. 31, 2002
3.5%
12
566
Apr. 1, 2002—Jun. 30, 2002
3.5%
12
566
Jul. 1, 2002—Sep. 30, 2002
3.5%
12
566
Oct. 1, 2002—Dec. 31, 2002
3.5%
12
566
Jan. 1, 2003—Mar. 31, 2003
2.5%
10
564
Apr. 1, 2003—Jun. 30, 2003
2.5%
10
564
Jul. 1, 2003—Sep. 30, 2003
2.5%
10
564
Oct. 1, 2003—Dec. 31, 2003
1.5%
8
562
Jan. 1, 2004—Mar. 31, 2004
1.5%56
610
Apr. 1, 2004—Jun. 30, 2004
2.5%58
612
Jul. 1, 2004—Sep. 30, 2004
1.5%56
610
Oct. 1, 2004—Dec. 31, 2004
2.5%58
612
Jan. 1, 2005—Mar. 31, 20052.5%
10
564
Apr. 1, 2005—Jun. 30, 20053.5%
12
566
Jul. 1, 2005—Sep. 30, 20053.5%
12
566
Oct. 1, 2005—Dec. 31, 20054.5%
14
568
Jan. 1, 2006—Mar. 31, 2006
4.5%
14
568
Apr. 1, 2006—Jun. 30, 2006
4.5%
14
568
Jul. 1, 2006—Sep. 30, 2006
5.5%
16
570
Oct. 1, 2006—Dec. 31, 2006
5.5%
16
570
Jan. 1, 2007—Mar. 31, 2007
5.5%
16
570
Apr. 1, 2007—Jun. 30, 2007
5.5%
16
570
Jul. 1, 2007—Sep. 30, 2007
5.5%
16
570
Oct. 1, 2007—Dec. 31, 2007
5.5%
16
570
Jan. 1, 2008—Mar. 31, 2008
4.5%
62616
Apr. 1, 2008—Jun. 30, 2008
3.5%
60614
Jul. 1, 2008—Sep. 30, 2008
2.5%58
612
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
2012–26 I.R.B.1044June 25, 2012

TABLE OF INTEREST RATES FOR CORPORATE
OVERPAYMENTS E
XCEEDING $10,000
FROM JANUARY 1, 1995 — PRESENT – Continued
1995–1 C.B.
RATETABLEPG
Jul. 1, 2009—Sep. 30, 2009
1.5%
8
562
Oct. 1, 2009—Dec. 31, 2009
1.5%
8
562
Jan. 1, 2010—Mar. 31, 2010
1.5%
8
562
Apr. 1, 2010—Jun. 30, 2010
1.5%
8
562
Jul. 1, 2010—Sep. 30, 2010
1.5%
8
562
Oct. 1, 2010—Dec. 31, 2010
1.5%
8
562
Jan. 1, 2011—Mar. 31, 2011
0.5%*
Apr. 1, 2011—Jun. 30, 2011
1.5%
8
562
Jul. 1, 2011—Sep. 30, 2011
1.5%
8
562
Oct. 1, 2011—Dec. 31, 2011
0.5%*
Jan. 1, 2012—Mar. 31, 2012
0.5%*
Apr. 1, 2012—Jun. 30, 2012
0.5%*
Jul. 1, 2012—Sep. 30, 2012
0.5%*
June 25, 201210452012–26 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Health Flexible Spending
Arrangements not Subject
to $2,500 Limit on Salary
Reduction Contributions
for Plan Years Beginning
before 2013 and Comments
Requested on Potential
Modification of Use-or-Lose
Rule
Notice 2012–40
I. PURPOSE AND OVERVIEW
This notice provides guidance on the ef-
fective date of the $2,500 limit (as indexed
for inflation) on salary reduction contribu-
tions to health flexible spending arrange-
ments (health FSAs) under § 125(i) of the
Internal Revenue Code (Code) (the $2,500
limit) and on the deadline for amending
plans to comply with that limit. This no-
tice also provides relief for certain contri-
butions that mistakenly exceed the $2,500
limit and that are corrected in a timely
manner. Finally, the notice requests com-
ments on whether to modify the use-or-
lose rule that is currently set forth in the
proposed regulations with respect to health
FSAs.
Specifically, this notice provides that —
•the $2,500 limit does not apply for plan
years that begin before 2013;
•the term “taxable year” in § 125(i)
refers to the plan year of the cafeteria
plan as this is the period for which
salary reduction elections are made;
•plans may adopt the required amend-
ments to reflect the $2,500 limit at any
time through the end of calendar year
2014;
•in the case of a plan providing a
grace period (which may be up to two
months and 15 days), unused salary
reduction contributions to the health
FSA for plan years beginning in 2012
or later that are carried over into the
grace period for that plan year will not
count against the $2,500 limit for the
subsequent plan year; and
•relief is provided for certain salary
reduction contributions exceeding the
$2,500 limit that are due to a reason-
able mistake and not willful neglect
and that are corrected by the employer.
The statutory $2,500 limit under
§ 125(i) applies only to salary reduction
contributions under a health FSA, and does
not apply to certain employer non-elec-
tive contributions (sometimes called flex
credits), to any types of contributions
or amounts available for reimbursement
under other types of FSAs, health sav-
ings accounts, or health reimbursement
arrangements, or to salary reduction con-
tributions to cafeteria plans that are used
to pay an employee’s share of health cov-
erage premiums (or the corresponding
employee share under a self-insured em-
ployer-sponsored health plan).
II. BACKGROUND
A § 125 cafeteria plan is a written plan
that allows employees to elect between
permitted taxable benefits (such as cash)
and certain qualified benefits. Section
125(a), (d)(1). If an employee makes the
election before the start of the plan year,
and other § 125 requirements are satisfied,
the employee’s election of one or more
qualified benefits does not result in gross
income to the employee.
In 2007, the Treasury Department and
the Internal Revenue Service (IRS) pub-
lished proposed regulations under § 125.
72 Fed. Reg. 43938 (Aug. 6, 2007). Tax-
payers may rely on the proposed regula-
tions. The proposed regulations require a
written cafeteria plan providing a health
FSA to specify the maximum salary re-
duction contribution as a maximum dollar
amount, a maximum percentage of com-
pensation, or other method of determining
the maximum salary reduction contribu-
tion. See Prop. Treas. Reg. § 1.125–1(c).
If a cafeteria plan fails to operate in com-
pliance with § 125 or fails to satisfy any
of the written plan requirements for health
FSAs, the plan is not a § 125 cafeteria plan
and an employee’s election of nontaxable
benefits results in gross income to the em-
ployee. For additional guidance, see Prop.
Treas. Reg. § 1.125–1(c)(1), (c)(6) and
(c)(7).
A cafeteria plan may include a grace pe-
riod of up to two months and 15 days im-
mediately following the end of a plan year.
If the plan provides for a grace period,
an employee may use amounts remain-
ing from the previous plan year (includ-
ing amounts remaining in a health FSA) to
pay for expenses incurred for certain qual-
ified benefits during the grace period. See
Notice 2005–42, 2005–1 C.B. 1204, and
Prop. Treas. Reg. § 1.125–1(e).
Section 125(i) was added by § 9005 of
the Patient Protection and Affordable Care
Act (the Act), Pub. L. No. 111–148 (as
amended by § 10902 of the Act, and fur-
ther amended by § 1403(b) of the Health
Care and Education Reconciliation Act of
2010, Pub. L. No. 111–152). Section
125(i) is effective for “taxable years” be-
ginning after December 31, 2012. Prior to
the effective date of § 125(i), plan sponsors
imposed limits on the amount of salary re-
duction contributions that employees may
elect to health FSAs, but there has been no
statutory limit.
III. COMPLIANCE WITH THE $2,500
LIMIT ON SALARY REDUCTION
CONTRIBUTIONS TO HEALTH FSAS
Section 125(i) provides that a health
FSA is not treated as a qualified benefit
unless the cafeteria plan “provides that an
employee may not elect for any taxable
year to have salary reduction contributions
in excess of $2,500 made to such arrange-
ment.” Because employees make salary re-
duction contribution elections for health
FSAs only on a plan year basis (see Prop.
Treas. Reg. § 1.125–2), the term “taxable
year” in § 125(i) (which does not spec-
ify that it refers, for example, to the em-
ployee’s taxable year or to the employer’s
taxable year) refers to the plan year of the
cafeteria plan. Similarly, the reference to
“taxable year” in the effective date provi-
sion of § 125(i) refers to the plan year of
the cafeteria plan. Accordingly, the $2,500
limit on health FSA salary reduction con-
tributions applies on a plan year basis and
is effective for plan years beginning af-
ter December 31, 2012. Also, the $2,500
limit will be indexed for cost-of-living ad-
justments for plan years beginning after
December 31, 2013. SeeGeneral Expla-
nation of Tax Legislation Enacted in the
111th Congress (2011), Joint Committee
on Taxation, at 317.
2012–26 I.R.B.1046June 25, 2012

A § 125 cafeteria plan may offer only
qualified benefits. A plan that offers a
nonqualified benefit is not a § 125 cafe-
teria plan. Section 125(d)(1)(B); see also
Prop. Treas. Reg. § 1.125–1(q). Accord-
ingly, a cafeteria plan that fails to comply
with § 125(i) for plan years beginning after
December 31, 2012 is not a § 125 cafete-
riaplanandthevalueofthetaxableben-
efits that an employee could have elected
to receive under the plan during the plan
year is includible inemployee’s gross in-
come, regardless of the benefit elected by
the employee. See Prop. Treas. Reg.
§ 1.125–1(b). As explained below, the
cafeteria plan must be amended to reflect
the $2,500 limit, and must also comply
with the $2,500 limit in operation.
Consistent with Prop. Treas. Reg.
§ 1.125–1(d)(2), a plan year is permitted to
be changed only for a valid business pur-
pose. If a principal purpose of changing
from a calendar year to a fiscal year is to
delay the application of the $2,500 limit,
the change is not for a valid business pur-
pose. If a change in the plan year does
not satisfy this valid business purpose re-
quirement, the plan year for the cafeteria
plan remains the plan year that was in ef-
fect prior to the attempted change.
If a cafeteria plan has a short plan year
(that is, fewer than 12 months) that begins
after 2012, the $2,500 limit must be pro-
rated based on the number of months in
that short plan year.
The $2,500 limit on salary reduction
contributions to a health FSA applies on
an employee-by-employee basis. Thus,
$2,500 (as indexed for inflation) is the
maximum salary reduction contribution
each employee may make for a plan year,
regardless of the number of other individ-
uals (for example, a spouse, dependents,
or adult children (see § 105(b)) whose
medical expenses are reimbursable under
the employee’s health FSA. Consistent
with this rule, if each of two spouses is
eligible to elect salary reduction contribu-
tions to an FSA, each spouse may elect to
make salary reduction contributions of up
to $2,500 (as indexed for inflation) to his
or her health FSA, even if both participate
in the same health FSA sponsored by the
same employer.
All employers that are treated as a sin-
gle employer under § 414(b), (c), or (m),
relating to controlled groups and affiliated
service groups, are treated as a single em-
ployer for purposes of the $2,500 limit.
If an employee participates in multiple
cafeteria plans offering health FSAs main-
tained by members of a controlled group
or affiliated service group, the employee’s
total health FSA salary reduction contri-
butions under all of the cafeteria plans
are limited to $2,500 (as indexed for in-
flation). Section 125(g)(4). However, an
employee employed by two or more em-
ployers that are not members of the same
controlled group may elect up to $2,500
(as indexed for inflation) under each em-
ployer’s health FSA.
As noted, the $2,500 limit applies only
to salary reduction contributions and not
to employer non-elective contributions,
sometimes called flex credits. Generally,
an employer may make flex credits avail-
able to an employee who is eligible to
participate in the cafeteria plan, to be used
(at the employee’s election) only for one
or more qualified benefits. For further in-
formation on flex credits, see Prop. Treas.
Reg. § 1.125–5(b). For example, if an
employer contributes a $500 flex credit to
each employee’s health FSA for the 2013
plan year, each employee may still elect
to make salary reduction contributions
of $2,500 (as indexed for inflation) to a
health FSA for that plan year. However,
if an employer provides flex credits that
employees may elect to receive as cash or
as a taxable benefit, those flex credits are
treated as salary reduction contributions
for purposes of § 125(i).
The statute imposes the $2,500 limit
only on salary reduction contributions to
a health FSA in a cafeteria plan and does
not limit the amount permitted for reim-
bursement under other employer-provided
coverage, such as employee salary reduc-
tion contributions to an FSA for dependent
care assistance or adoption care assistance.
The limit also does not apply to salary re-
duction contributions to a cafeteria plan
that are used to pay an employee’s share
of health coverage premiums (or the corre-
sponding employee share under a self-in-
sured employer-sponsored health plan) —
sometimes referred to as “premium con-
version” salary reduction contributions —
nor does it apply to salary reduction or any
other contributions to a health savings ac-
count (HSA) or to amounts made available
by an employer under a health reimburse-
ment arrangement (HRA).
If a plan provides for a grace period
(which, as noted above, can be no longer
than two months and 15 days) for a plan
year, unused salary reduction contribu-
tions to the health FSA for the plan year
that are carried over into the grace period
do not count against the $2,500 limit ap-
plicable for the subsequent plan year.
If a cafeteria plan timely complies
with the written plan requirement limiting
health FSA salary reduction contributions
as set forth in section IV, below, but one or
more employees are erroneously allowed
to elect a salary reduction of more than
$2,500 (as indexed for inflation) for a plan
year, the cafeteria plan will continue to be
a § 125 cafeteria plan for that plan year if
(1) the terms of the plan apply uniformly
to all participants (consistent with Prop.
Treas. Reg. § 1.125–1(c)(1)); (2) the error
results from a reasonable mistake by the
employer (or the employer’s agent) and
is not due to willful neglect by the em-
ployer (or the employer’s agent); and (3)
salary reduction contributions in excess of
$2,500 (as indexed for inflation) are paid
to the employee and reported as wages for
income tax withholding and employment
tax purposes on the employee’s Form
W–2,Wage and Tax Statement(or Form
W–2c,Corrected Wage and Tax State-
ment) for the employee’s taxable year in
which, or with which, ends the cafeteria
plan year in which the correction is made.
ThereliefprovidedinthissectionIII
with respect to erroneous excess contribu-
tions is not available for an employer if a
federal tax return of the employer is under
examination with respect to benefits pro-
vided under a cafeteria plan with respect
to any cafeteria planyear during which the
failure to comply with § 125(i) occurred.
For this purpose, an employer is treated
as under examination if the employer re-
ceives written notification (for example,
by plan examination, information docu-
ment request (IDR), or notification of pro-
posed adjustments to a federal tax return)
from the examining agent(s) specifically
citing § 125(i) as an issue under consider-
ation.
IV. WRITTEN CAFETERIA PLAN
AMENDMENT
A cafeteria plan offering a health FSA
must be amended to set forth the $2,500
limit (or, at the employer’s option, a
June 25, 201210472012–26 I.R.B.

lower limit specified in the plan). Cafe-
teria plan amendments may be effective
only prospectively. See Prop. Treas.
Reg. § 1.125–1(c). Notwithstanding this
rule against retroactive amendments, an
amendment to conform a cafeteria plan to
the requirements of § 125(i) that is adopted
on or before December 31, 2014, may be
made effective retroactively, provided that
the cafeteria plan operates in accordance
with the requirements of § 125(i) (includ-
ing the guidance under this notice) for plan
years beginning after December 31, 2012.
This amendment to the written cafeteria
plan may be expressed as a maximum
dollar amount or by another method of de-
termining the maximum dollar amount of
salary reduction contributions to a health
FSA, but in no case may the plan permit a
participant to make salary reduction con-
tributions, for a plan year beginning after
December 31, 2012, exceeding the $2,500
limit.
V. EXAMPLES
The rules of this notice are illustrated
by the following examples. For all exam-
ples, it is assumed that the cafeteria plan
otherwise satisfies all of the requirements
of § 125 and the proposed regulations, and
thattheemployerisnotamemberofacon-
trolled group or affiliated service group.
Example 1. (i) Employer W offers a calendar
year cafeteria plan including a health FSA. Employer
W amends its written cafeteria plan by December 31,
2014, to provide that, effective for the plan year
beginning on January 1, 2013, employee salary
reduction contributions to a health FSA are limited
to $2,500 (as indexed for inflation).
(ii) Employer W’s written cafeteria plan satisfies
the requirements of § 125(i).
Example 2. (i) Employer X offers a calendar year
cafeteria plan including a health FSA with a grace pe-
riod of two months and 15 days that complies with
Notice 2005–42 and the proposed regulations. Effec-
tive for the 2012 plan year, the written plan provides
that employee salary reduction contributions for the
health FSA are limited to $5,000. Effective for the
2013 plan year, the written plan provides that em-
ployee salary reduction contributions to the health
FSA are limited to $2,500 (as indexed for inflation).
Some employees have unused amounts from their
2012 health FSA salary reduction contributions that
remain available during the grace period in the first
two months and 15 days of 2013.
(ii) The availability during the grace period of
amounts attributable to 2012 health FSA salary re-
duction contributions does not cause Employer X’s
cafeteria plan to fail to satisfy the $2,500 limit.
VI. EFFECTIVE DATES
Under the guidance provided in this no-
tice, section 125(i) applies to plan years be-
ginning after December 31, 2012. Index-
ing of the $2,500 limit applies to plan years
beginning after December 31, 2013.
VII. EFFECT ON OTHER
DOCUMENTS
The Treasury Department and the IRS
intend to amend the regulations under
§§ 1.125–1, 1.125–2, and 1.125–5 to pro-
vide for the $2,500 limit, and taxpayers
may rely on the foregoing guidance in this
notice pending issuance of the amended
regulations.
VIII. REQUEST FOR COMMENTS
ON POSSIBLE MODIFICATION OF
USE-OR-LOSE RULE FOR HEALTH
FSAS
In light of the $2,500 limit, the Trea-
sury Department and the IRS are consider-
ing whether, for health FSAs, the position
contained in proposed regulations that is
often referred to as the “use-or-lose” rule”
should be modified. That rule generally
prohibits any contribution or benefit under
an FSA from being used in a subsequent
plan year or period of coverage. See Prop.
Treas. Reg. § 1.125–1, Q&A–7(b) (1984);
Prop.Treas.Reg.§1.125–2,Q&A–5
& Q&A–7 (1989); Prop. Treas. Reg.
§ 1.125–5(c) (2007). Thus, under this rule,
unused amounts in the health FSA are “for-
feited” at the end of the plan year.
The $2,500 limit, while not address-
ing the “use-or-lose” rule, limits the poten-
tial for using health FSAs to defer com-
pensation and the extent to which salary
reduction amounts may accumulate over
time. Given the $2,500 limit, the Trea-
sury Department and the IRS are consider-
ing whether the use-or-lose rule for health
FSAs should be modified to provide a dif-
ferent form of administrative relief (in-
stead of, or in addition to, the current 2
1
/2
month grace period rule). Comments are
requested on whether the proposed regula-
tions should be modified to provide addi-
tional flexibility with respect to the opera-
tion of the use-or-lose rule for health FSAs
and, if so, how any such flexibility might
be formulated and constrained. Comments
are also requested on how any such mod-
ifications would interact with the $2,500
limit.
This section VIII of this notice does not
constitute guidance and may not be relied
upon by taxpayers.
Comments must be submitted by Au-
gust 17, 2012. Comments should in-
clude a reference to Notice 2012–40.
Send submissions to CC:PA:LPD:PR
(Notice 2012–40), Room 5203, Inter-
nal Revenue Service, P.O. Box 7604,
Ben Franklin Station, Washington, DC
20044. Submissions may be hand de-
liveredMonday through Fridaybe-
tween the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (Notice 2012–40),
Courier’s Desk, Internal Revenue Ser-
vice, 1111 Constitution Avenue, NW,
Washington, DC 20044, or sent electron-
ically, via the following e-mail address:
Notice.comments@irscounsel.treas.gov.
Please include “Notice 2012–40” in
the subject line of any electronic
communication. All material submitted
will be available for public inspection and
copying.
DRAFTING INFORMATION
The principal author of this notice is
Elizabeth Purcell of the Office of Division
Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities). For
further information regarding this notice,
contact Ms. Purcell at (202) 622–6080
(not a toll-free call).
Extension of Relief and
Procedures Under Notice
2010–30 and Notice
2011–16 for Spouses of
U.S. Servicemembers Who
are Working In or Claiming
Residence or Domicile In
a U.S. Territory Under the
Military Spouses Residency
Relief Act
Notice 2012–41
On April 15, 2010, the Department of
the Treasury (Treasury Department) and
the Internal Revenue Service (IRS) pub-
lished Notice 2010–30, 2010–18 I.R.B.
650, which provides relief and procedures
2012–26 I.R.B.1048June 25, 2012

for certain taxpayers who are spouses
(civilian spouses) of active duty members
of the uniformed services (servicemem-
bers). The relief and procedures were
made available to civilian spouses who (A)
accompany their servicemember spouses
to a military duty station in American
Samoa, Guam, the Northern Mariana Is-
lands (NMI), Puerto Rico, or the U.S.
Virgin Islands (USVI) (each a “U.S. terri-
tory”) and claim residence or domicile (tax
residence) in one of the 50 States or the
District of Columbia under the Military
Spouses Residency Relief Act (MSRRA)
or (B) accompany their servicemember
spouses to a military duty station in one
of the 50 States or the District of Co-
lumbia and claim tax residence in a U.S.
territory under MSRRA. The relief and
procedures set forth in Notice 2010–30
were initially available for the taxable year
including November 11, 2009 (generally,
this would be calendar year 2009, re-
ferred to hereinafter as 2009). On April 8,
2011, the Treasury Department and the
IRS published Notice 2011–16, 2011–17
I.R.B. 720, which extended the relief and
procedures announced in Notice 2010–30
to the first taxable year beginning after
November 11, 2009 (generally, this would
be calendar year 2010).
This notice further extends the relief
set forth in Notice 2010–30 for civilian
spouses described in the prior paragraph
to taxable years beginning after Novem-
ber 11, 2010 (generally, these will be cal-
endar year 2011 and subsequent calendar
years, referred to hereinafter as 2011 and
subsequent taxable years), and provides
that such civilian spouses should follow
the applicable procedures described in No-
tice 2010–30.
The extension of time to pay federal in-
come taxes described in Part III(A)(1)(b)
of Notice 2010–30 for 2009 is available
to eligible civilian spouses described in
Part III(A)(1)(b) of Notice 2010–30 claim-
ing MSRRA relief with respect to indi-
vidual federal income tax returns filed for
2011 and subsequent taxable years. To ob-
tain an extension of time through Octo-
ber 17, 2012, to pay federal income taxes
for 2011, such taxpayers should follow the
procedures in Part III(A)(1)(b) of Notice
2010–30. To obtain an extension to pay
federal income taxes for subsequent tax-
able years, such taxpayers should follow
those same proceduresadjusted for the ap-
propriate filing dates in each such subse-
quent taxable year.
As provided in Notice 2010–30, the
IRS has also determined pursuant to sec-
tion 6654(e)(3)(A) of the Internal Rev-
enue Code that, with respect to civilian
spouses eligible for the extension of time
to pay federal income taxes described in
this notice and Part III(A)(1)(b) of Notice
2010–30, the addition to tax under section
6654(a) will not apply in the case of an un-
derpayment of estimated tax by such civil-
ian spouses for 2011 and subsequent tax-
able years due to unusual circumstances.
Civilian spouses who obtain the exten-
sion to pay federal income taxes for 2011
and subsequent taxable years provided by
this notice are required to pay interest on
the amount of tax from the original pay-
mentduedateuntilthedatethetaxispaid.
Pursuant to section 6601, interest is cal-
culated from the prescribed payment due
date determined under section 6151 with-
out regard to any extension to pay federal
income tax, including the extension to pay
tax provided by this notice.
For the reasons discussed in Part
III(A)(2) of Notice 2010–30, the exten-
sion to pay federal income taxes described
in Part III(A)(1)(b) of Notice 2010–30 is
not available to civilian spouses claiming
tax residence in a State or the District
of Columbia under MSRRA and filing
individual federal income tax returns for
2011 and subsequent taxable years who
are (A) federal employees in American
Samoa, Guam, or the USVI, or (B) indi-
viduals working in Guam or the NMI to
whom section 935 applies. These civilian
spouses should file their individual federal
income tax returns for 2011 and subse-
quent taxable years, and pay any taxes
due, according to the procedures described
in Part III(A)(2) of Notice 2010–30.
Civilian spouses who accompany their
servicemember spouses to a military duty
stationinoneofthe50StatesortheDis-
trict of Columbia and who claim tax res-
idence in a U.S. territory under MSRRA
should follow the procedures in Part III(B)
of Notice 2010–30 with respect to their
individual federal income tax returns for
2011 and subsequent taxable years.
DRAFTING INFORMATION
The principal author of this notice
is Jackie B. Manasterli of the Office of
Associate Chief Counsel (International).
For further information regarding this
notice, contact Jackie B. Manasterli at
(202) 435–5262 (not a toll-free call).
Credit for Carbon Dioxide
Sequestration 2012 Section
45Q Inflation Adjustment
Factor
Notice 2012–42
SECTION 1. PURPOSE
This notice publishes the inflation ad-
justment factor for the credit for carbon
dioxide (CO
2
) sequestration under § 45Q
of the Internal Revenue Code (§ 45Q
credit) for calendar year 2012. The infla-
tion adjustment factor is used to determine
the amount of the credit allowable under
§ 45Q. The calendar year 2012 infla-
tion-adjusted creditapplies to the amount
of qualified CO
2
captured by a taxpayer
at a qualified facility and disposed of in
secure geological storage.
SECTION 2. BACKGROUND
Section 45Q(a)(1) allows a credit of $20
per metric ton of qualified CO
2
that is cap-
tured by the taxpayer at a qualified facil-
ity, disposed of by the taxpayer in secure
geological storage, and not used by the
taxpayer as a tertiary injectant. Section
45Q(a)(2) allows a credit of $10 per metric
ton of qualified CO
2
that is captured by the
taxpayer at a qualified facility, used by the
taxpayer as a tertiary injectant in a quali-
fied enhanced oil or natural gas recovery
project, and disposed of by the taxpayer in
secure geological storage.
Section 45Q(b)(1) defines the term
“qualified carbon dioxide” as CO
2
cap-
tured from an industrial source that would
otherwise be released into the atmosphere
as industrial emission of greenhouse gas,
and that is measured at the source of cap-
ture and verified at the point of disposal
or injection. Qualified CO
2
includes the
initial deposit of captured CO
2
used as a
tertiary injectant but does not include CO
2
that is re-captured, recycled, or otherwise
re-injected as part of the enhanced oil and
natural gas recovery process.
Section 45Q(c) defines the term “qual-
ified facility” as an industrial facility that
June 25, 201210492012–26 I.R.B.

is owned by the taxpayer, where carbon
capture equipment is placed in service, and
where at least 500,000 metric tons of CO
2
is captured during the taxable year.
Section 45Q(d)(2) provides that the
Secretary, in consultation with the Admin-
istrator of the Environmental Protection
Agency (EPA), the Secretary of Energy,
and the Secretary of the Interior, shall
establish regulationsfor determining ade-
quate security measures for the geological
storage of CO
2
under subsection (a)(1)(B)
or (a)(2)(C) such that the CO
2
does not
escape into the atmosphere. See section 5
of Notice 2009–83, 2009–44 I.R.B. 588,
for procedures regarding secure geological
storage.
Section 45Q(d)(5) allows the § 45Q
credit to the person that captures and
physically or contractually ensures the
disposal of or the use as a tertiary injectant
of the qualified CO
2,
except to the extent
provided in regulations prescribed by the
Secretary.
Under § 45Q(d)(7), for taxable years
beginning in a calendar year after 2009,
the dollar amount contained in § 45Q(a)
must be adjusted for inflation by multiply-
ing such dollar amount by the inflation ad-
justment factor for such calendar year de-
termined under § 43(b)(3)(B), determined
by substituting “2008” for “1990.”
Section 43(b)(3)(B) defines “inflation
adjustment factor” as, with respect to any
calendar year, a fraction the numerator of
which is the GNP implicit price deflator
for the preceding calendar year and the de-
nominator of which is the GNP implicit
price deflator for 1990. For purposes of
§ 45Q(d)(7), with respect to 2012 calen-
dar year, the inflation adjustment factor is a
fraction the numerator of which is the GNP
implicit price deflator for 2011 (113.347)
and the denominator of which is the GNP
implicit price deflator for 2008 (108.589).
Section 45Q(e) provides that the § 45Q
credit will apply with respect to qualified
CO
2
before the end of the calendar year in
which the Secretary, in consultation with
the EPA, certifies that 75,000,000 metric
tons of qualified CO
2
have been taken into
account in accordance with § 45Q(a).
SECTION 3. INFLATION
ADJUSTMENT FACTOR
The inflation adjustment factor for cal-
endar year 2012 is 1.0438. The 45Q credit
for calendar year 2012 is $20.88 per met-
ric ton of qualified CO
2
under § 45Q(a)(1)
and $10.44 per metric ton of qualified CO
2
under § 45Q(a)(2).
SECTION 4. DRAFTING
INFORMATION
The principal author of this notice is
Jennifer C. Bernardini of the Office of
Associate Chief Counsel (Passthroughs
& Special Industries).For further
information regarding this notice, contact
Ms. Bernardini at (202) 622–3110 (not a
toll-free call).
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2012–43
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 cor-
porate bond monthly yield curve (and
the corresponding spot segment rates),
and the 24-month average 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
May 2012 is 4.39 percent. Pursuant to No-
tice 2004–34, the Service has determined
this rate as the average of the monthly
yields for the included corporate bond in-
dices 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%
June2012
5.44
4.90
5.44
2012–26 I.R.B.1050June 25, 2012

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. Sec-
tion 430(h)(2)G) set forth a transitional
rule applicable to plan years beginning in
2008 and 2009 under which the segment
rates were blended with the corporate bond
weighted average described above, includ-
ing an election under § 430(h)(2)(G)(iv)
foranemployertousethesegmentrates
without the transitional rule.
Notice 2007–81, 2007–2 C.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, and
the 24-month average corporate bond
segment rates used to compute the tar-
get normal cost and the funding target.
Pursuant to Notice 2007–81, the monthly
corporate bond yield curve derived from
May 2012 data is in Table I at the end of
this notice. The spot first, second, and
third segment rates for the month of May
2012 are, respectively, 1.59, 4.12, and
5.04. The three 24-month average cor-
porate bond segment rates applicable for
June 2012 are as follows:
First
Segment
Second
Segment
Third
Segment
1.844.79
5.90
The tran
sitional rule of § 430(h)(2)(G)
does not
apply to plan years beginning af-
ter Dec
ember 31, 2009. Therefore, for a
plan ye
ar beginning after 2009 with a look-
back mo
nth to June 2012, the funding seg-
ment ra
tes are the three 24-month average
corpor
ate bond segment rates applicable
for Ju
ne 2012, listed above without blend-
ing fo
r any transitional period.
30-YE
AR TREASURY SECURITIES
INTER
EST RATES
Secti
on 417(e)(3)(A)(ii)(II) (prior to
amend
ment by PPA) defines the appli-
cable
interest rate, which must be used
for p
urposes of determining the minimum
pres
ent value of a participant’s benefit
unde
r § 417(e)(1) and (2), as the annual
rate
of interest on 30-year Treasury se-
curi
ties for the month before the date
of di
stribution or such other time as the
Secreta
ry may by regulations prescribe.
Section
1.417(e)–1(d)(3) of the Income
Tax Reg
ulations provides that the applica-
ble int
erest rate for a month is the annual
rate of
interest on 30-year Treasury secu-
rities
as specified by the Commissioner
for tha
t month in revenue rulings, notices
or oth
er guidance publishedintheInternal
Reven
ue Bulletin.
The ra
te of interest on 30-year Treasury
secur
ities for May 2012 is 2.93 percent.
The Se
rvice has determined this rate as the
avera
ge of the yield on the 30-year Trea-
sury b
ond maturing in February 2042 de-
term
ined each day through May 9, 2012,
and t
he yield on the 30-year Treasury bond
matu
ring in May 2042 determined each
day f
or the balance of the month.
Gene
rally for plan years beginning
afte
r 2007, § 431 specifies the mini-
mum f
unding requirements that apply to
multiem
ployer plans pursuant to § 412.
Section
431(c)(6)(B) specifies a minimum
amount
for the full-funding limitation
descri
bed in section 431(c)(6)(A), based
on the p
lan’s current liability. Section
431(c)
(6)(E)(ii)(I) provides that the inter-
est rat
e used to calculatecurrent liability
for th
is purpose must be no more than 5
perce
nt above and no more than 10 percent
below
the weighted average of the rates of
inter
est on 30-year Treasury securities dur-
ing th
e four-year period ending on the last
day b
efore the beginning of the plan year.
Noti
ce 88–73, 1988–2 C.B. 383, provides
guid
elines for determining the weighted
aver
age interest rate. The following rates
were
determined for plan years beginning
in t
he month shown below.
For Plan Years
Beginning inPermissible Range
MonthYear
30-Year
Treasury
Weighted
Average90%to105%
June20123.883.494.08
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 begin-
ning in 2008 through 2011, the applica-
ble interest rates are the monthly spot seg-
ment rates blended with the applicable rate
under § 417(e)(3)(A)(ii)(II) as in effect
for plan years beginning in 2007. Notice
2007–81 provides guidelines for determin-
ing the minimum present value segment
rates. Pursuant to that notice, the min-
imum present value transitional segment
rates determined for May 2012, taking into
account the May 2012 30-year Treasury
rate of 2.93 stated above, are as follows:
June 25, 201210512012–26 I.R.B.

For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
20111.863.884.62
2012
1.59
4.12
5.04
DRAFTING INFORMATION
The principal author of this notice is
Tony Montanaro of the Employee Plans,
Tax Exempt and Government Entities
Division. Mr. Montanaro may be e-mailed
atRetirementPlanQuestions@irs.gov.
2012–26 I.R.B.1052June 25, 2012

Table I
Monthly Yield Curve for May 2012
Derived from May 2012 Data
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.50.5220.5
4.83
40.55.0760.55.1680.55.20
1.0
0.85
21.04.8441.0
5.07
61.0
5.16
81.0
5.20
1.51.1421.54.8541.55.0861.55.1681.55.21
2.01.4022.04.8642.0
5.08
62.0
5.16
82.0
5.21
2.5
1.60
22.5
4.87
42.55.0862.55.1682.55.21
3.01.7823.04.8843.0
5.08
63.0
5.17
83.0
5.21
3.5
1.93
23.5
4.88
43.5
5.09
63.55.1783.55.21
4.02.0824.0
4.89
44.05.0964.0
5.17
84.0
5.21
4.52.2424.5
4.90
44.55.0964.55.1784.55.21
5.0
2.40
25.0
4.91
45.05.1065.05.1785.05.21
5.52.5625.5
4.91
45.55.1065.55.1785.55.21
6.02.7226.0
4.92
46.0
5.10
66.0
5.17
86.0
5.21
6.5
2.89
26.5
4.93
46.55.1066.55.1886.55.21
7.0
3.05
27.0
4.93
47.0
5.11
67.0
5.18
87.0
5.21
7.53.2127.5
4.94
47.55.1167.55.1887.55.21
8.03.3628.04.9548.0
5.11
68.0
5.18
88.0
5.22
8.53.5128.5
4.96
48.55.1168.55.1888.55.22
9.0
3.65
29.04.9649.0
5.12
69.0
5.18
89.0
5.22
9.53.7829.5
4.97
49.5
5.12
69.5
5.18
89.5
5.22
10.0
3.90
30.0
4.97
50.05.12
70.0
5.18
90.0
5.22
10.54.0130.5
4.98
50.55.1270.55.1890.55.22
11.04.1131.04.99
51.05.12
71.05.1991.0
5.22
11.5
4.20
31.5
4.99
51.55.1371.5
5.1991.5
5.22
12.04.2832.0
5.0052.05.13
72.05.19
92.0
5.22
12.54.3532.55.0052.55.1372.5
5.1992.5
5.22
13.04.4233.0
5.0153.05.13
73.05.19
93.0
5.22
13.54.4733.55.0153.55.1373.55.1993.55.22
14.0
4.52
34.0
5.0254.05.14
74.05.1994.0
5.22
14.54.5734.55.0254.55.1474.5
5.1994.5
5.22
15.0
4.61
35.05.0355.05.1475.0
5.1995.0
5.22
15.5
4.64
35.55.0355.55.1475.5
5.1995.5
5.23
16.04.6736.0
5.0456.05.14
76.0
5.20
96.0
5.23
16.54.7036.55.0456.55.1576.55.2096.55.23
17.04.7237.0
5.0457.05.15
77.0
5.20
97.0
5.23
17.5
4.74
37.55.0557.55.1577.55.20
97.5
5.23
18.04.7638.0
5.0558.05.15
78.0
5.20
98.0
5.23
18.5
4.78
38.55.0558.55.1578.55.20
98.5
5.23
19.04.7939.0
5.06
59.0
5.15
79.0
5.20
99.0
5.23
19.54.8139.55.0659.55.1679.55.2099.55.23
20.04.8240.0
5.07
60.0
5.16
80.0
5.20
100.0
5.23
June 25, 201210532012–26 I.R.B.

Part IV. Items o
fGeneralInterest
Interim Guida
nce on Rev. Rul.
2012–18
Announcement
2012–25
The Internal R
evenue Service (Service)
is providing a
dministrative guidelines to
examiners co
ncerning Rev. Rul. 2012–18,
published in
the 2012–26 Internal Revenue
Bulletin.
1
T
he Service is aware that some
businesses m
ay have to change automated
or manual re
porting systems in order to
comply with
the proper treatment of ser-
vice charge
s as specified in Q&A 1 of Rev.
Rul. 2012–1
8.
When perfor
ming a tip examination,
examiners m
ust ensure that distributed
service ch
arges are properly characterized
as wages an
dnottips. Q&A1ofRev.
Rul. 2012–
18 reaffirms the factors that
are used to
determine whether payments
constitu
te tips or service charges. Q&A 1
of Rev. Ru
l. 2012–18 provides that the
absence o
f any of the following factors
creates a
doubt as to whether a payment is
a tip and i
ndicates that the payment may
beaserv
ice charge:
(1) The payment must be made free
from compulsion;
(2) The customer must have the
unrestricted right to determine the
amount;
(3) The payment should not be the
subject of negotiation or dictated by
employer policy; and,
(4) Generally, the customer has the
right to determine who receives the
payment.
The Service is providing the interim
guidance memorandum below to its ex-
aminers. The memorandum provides
that, in limited circumstances, an exam-
iner should apply Q&A 1 of Rev. Rul.
2012–18 prospectively to amounts paid
on or after January 1, 2013, in order to
allow businesses not currently in com-
pliance additional time to amend their
business practices and make needed sys-
tem changes. The Service is seeking
public comments regarding this interim
guidance and whether additional time is
needed to ensure that systems are compli-
ant. Comments on the interim guidance
maybesubmittedonorbeforeSeptem-
ber 24, 2012, either electronically at
TIP.Program@irs.govor in writing to:
Internal Revenue Service
National Tip Reporting Compliance
3251 North Evergreen Dr. NE
Grand Rapids, MI 49525
In a future announcement, the Ser-
vice will also solicit public comments on
proposed changes to the Service’s exist-
ing voluntary
tip compliance agreements.
Specifically
, the Service is considering sig-
nificant chan
ges to the Tip Reporting Al-
ternative Com
mitment (TRAC) program
and other vari
ations of TRAC agreements.
Versions of t
he existing voluntary tip com-
pliance agre
ements are available on the
IRS website a
t Market Segment Under-
standings (M
SU)http://www.irs.gov/busi-
nesses/sma
ll/article/0,,id=98944,00.html.
They may als
o be obtained from the IRS
office list
ed above. The Service is inter-
estedinupd
ating its suite of voluntary tip
complianc
e agreements to place a greater
emphasis o
n computations derived from
Point of Sa
le systems and the use of elec-
tronic pay
ment settlement methods, such
as credit a
nd debit cards. While employee
educatio
n will remain a focus of the Ser-
vice’s ef
forts, these new voluntary tip
complian
ce agreements will increase the
particip
ants’ reliance on internal control
systems
to improve employee tip reporting
complia
nce.
Followi
ng is a copy of the interim guid-
ance mem
orandum that examiners will
use unti
l procedures are published in the
Interna
l Revenue Manual, after receiving
and cons
idering comments submitted in
respon
se to this announcement.
1
Among the topics covered in this revenue ruling are reporting and depositing of FICA taxes on tips, Section 3121(q) Notice and Demand issues, and the section 45B credit.
2012–26 I.R.B.1054June 25, 2012

June 25, 201210552012–26 I.R.B.

2012–26 I.R.B.1056June 25, 2012

June 25, 201210572012–26 I.R.B.

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.
2012–26 I.R.B.iJune 25, 2012

Numerical Finding List
1
Bulletins 2012–1 through 2012–26
Announcements:
2012-1, 2012-1 I.R.B.249
2012-2, 2012-2 I.R.B.285
2012-3, 2012-4 I.R.B.335
2012-4, 2012-4 I.R.B.335
2012-5, 2012-5 I.R.B.348
2012-6, 2012-6 I.R.B.366
2012-7, 2012-6 I.R.B.367
2012-8, 2012-7 I.R.B.373
2012-9, 2012-7 I.R.B.377
2012-11, 2012-13 I.R.B.611
2012-12, 2012-12 I.R.B.562
2012-13, 2012-16 I.R.B.805
2012-14, 2012-14 I.R.B.721
2012-15, 2012-15 I.R.B.794
2012-16, 2012-18 I.R.B.876
2012-17, 2012-18 I.R.B.876
2012-18, 2012-16 I.R.B.845
2012-19, 2012-20 I.R.B.934
2012-20, 2012-18 I.R.B.876
2012-21, 2012-19 I.R.B.898
2012-22, 2012-19 I.R.B.899
2012-23, 2012-22 I.R.B.967
2012-24, 2012-23 I.R.B.982
2012-25, 2012-26 I.R.B.1054
Notices:
2012-1, 2012-2 I.R.B.260
2012-3, 2012-3 I.R.B.289
2012-4, 2012-3 I.R.B.290
2012-5, 2012-3 I.R.B.291
2012-6, 2012-3 I.R.B.293
2012-7, 2012-4 I.R.B.308
2012-8, 2012-4 I.R.B.309
2012-9, 2012-4 I.R.B.315
2012-10, 2012-5 I.R.B.343
2012-11, 2012-5 I.R.B.346
2012-12, 2012-6 I.R.B.365
2012-13, 2012-9 I.R.B.421
2012-14, 2012-8 I.R.B.411
2012-15, 2012-9 I.R.B.424
2012-16, 2012-9 I.R.B.427
2012-17, 2012-9 I.R.B.430
2012-18, 2012-10 I.R.B.438
2012-19, 2012-10 I.R.B.440
2012-20, 2012-13 I.R.B.574
2012-21, 2012-10 I.R.B.450
2012-22, 2012-13 I.R.B.576
2012-23, 2012-11 I.R.B.483
2012-24, 2012-13 I.R.B.578
2012-25, 2012-15 I.R.B.789
2012-26, 2012-17 I.R.B.847
Notices— Continued:
2012-27, 2012-17 I.R.B.849
2012-28, 2012-17 I.R.B.850
2012-29, 2012-18 I.R.B.872
2012-30, 2012-18 I.R.B.874
2012-31, 2012-20 I.R.B.906
2012-32, 2012-20 I.R.B.910
2012-33, 2012-20 I.R.B.912
2012-34, 2012-21 I.R.B.937
2012-35, 2012-21 I.R.B.937
2012-36, 2012-22 I.R.B.962
2012-37, 2012-24 I.R.B.1014
2012-38, 2012-24 I.R.B.1014
2012-40, 2012-26 I.R.B.1046
2012-41, 2012-26 I.R.B.1048
2012-42, 2012-26 I.R.B.1049
2012-43, 2012-26 I.R.B.1050
Proposed Regulations:
REG-168745-03, 2012-14 I.R.B.718
REG-137589-07, 2012-21 I.R.B.942
REG-142561-07, 2012-25 I.R.B.1020
REG-139991-08, 2012-21 I.R.B.945
REG-141075-09, 2012-25 I.R.B.1028
REG-109369-10, 2012-9 I.R.B.434
REG-110980-10, 2012-13 I.R.B.581
REG-113770-10, 2012-13 I.R.B.587
REG-113903-10, 2012-11 I.R.B.486
REG-120282-10, 2012-11 I.R.B.487
REG-130302-10, 2012-8 I.R.B.412
REG-135491-10, 2012-16 I.R.B.803
REG-149625-10, 2012-2 I.R.B.279
REG-102988-11, 2012-4 I.R.B.326
REG-107548-11, 2012-23 I.R.B.977
REG-115809-11, 2012-13 I.R.B.598
REG-119632-11, 2012-23 I.R.B.978
REG-124627-11, 2012-8 I.R.B.417
REG-124791-11, 2012-15 I.R.B.791
REG-130777-11, 2012-5 I.R.B.347
REG-132736-11, 2012-15 I.R.B.793
REG-135071-11, 2012-12 I.R.B.561
REG-136008-11, 2012-19 I.R.B.881
REG-141268-11, 2012-19 I.R.B.896
REG-144267-11, 2012-21 I.R.B.949
REG-145474-11, 2012-11 I.R.B.495
REG-117645-12, 2012-22 I.R.B.965
Revenue Procedures:
2012-1, 2012-1 I.R.B.1
2012-2, 2012-1 I.R.B.92
2012-3, 2012-1 I.R.B.113
2012-4, 2012-1 I.R.B.125
2012-5, 2012-1 I.R.B.169
2012-6, 2012-1 I.R.B.197
2012-7, 2012-1 I.R.B.232
2012-8, 2012-1 I.R.B.235
Revenue Procedures— Continued:
2012-9, 2012-2 I.R.B.261
2012-10, 2012-2 I.R.B.273
2012-11, 2012-7 I.R.B.368
2012-12, 2012-2 I.R.B.275
2012-13, 2012-3 I.R.B.295
2012-14, 2012-3 I.R.B.296
2012-15, 2012-7 I.R.B.369
2012-16, 2012-10 I.R.B.452
2012-17, 2012-10 I.R.B.453
2012-18, 2012-10 I.R.B.455
2012-19, 2012-14 I.R.B.689
2012-20, 2012-14 I.R.B.700
2012-21, 2012-11 I.R.B.484
2012-22, 2012-17 I.R.B.853
2012-23, 2012-14 I.R.B.712
2012-24, 2012-20 I.R.B.913
2012-25, 2012-20 I.R.B.914
2012-26, 2012-20 I.R.B.933
2012-27, 2012-21 I.R.B.940
Revenue Rulings:
2012-1, 2012-2 I.R.B.255
2012-2, 2012-3 I.R.B.286
2012-3, 2012-8 I.R.B.383
2012-4, 2012-8 I.R.B.386
2012-5, 2012-5 I.R.B.337
2012-6, 2012-6 I.R.B.349
2012-7, 2012-6 I.R.B.362
2012-8, 2012-13 I.R.B.563
2012-9, 2012-11 I.R.B.475
2012-10, 2012-14 I.R.B.614
2012-11, 2012-14 I.R.B.686
2012-12, 2012-15 I.R.B.748
2012-13, 2012-19 I.R.B.878
2012-14, 2012-24 I.R.B.1012
2012-15, 2012-23 I.R.B.975
2012-16, 2012-24 I.R.B.1035
2012-17, 2012-25 I.R.B.1018
2012-18, 2012-26 I.R.B.1032
Treasury Decisions:
9559, 2012-2 I.R.B.252
9560, 2012-4 I.R.B.299
9561, 2012-5 I.R.B.341
9562, 2012-5 I.R.B.339
9563, 2012-6 I.R.B.354
9564, 2012-14 I.R.B.614
9565, 2012-8 I.R.B.378
9566, 2012-8 I.R.B.389
9567, 2012-8 I.R.B.395
9568, 2012-12 I.R.B.499
9569, 2012-11 I.R.B.465
9570, 2012-11 I.R.B.477
9571, 2012-11 I.R.B.468
9572, 2012-11 I.R.B.471
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2011–27 through 2011–52 is in Internal Revenue Bulletin
2011–52, dated December 27, 2011.
June 25, 2012ii2012–26 I.R.B.

Treasury Decisions— Continued:
9573, 2012-12 I.R.B.498
9574, 2012-12 I.R.B.559
9575, 2012-15 I.R.B.749
9576, 2012-15 I.R.B.723
9577, 2012-15 I.R.B.730
9579, 2012-16 I.R.B.796
9580, 2012-16 I.R.B.801
9581, 2012-16 I.R.B.798
9582, 2012-18 I.R.B.868
9583, 2012-18 I.R.B.866
9584, 2012-20 I.R.B.900
9585, 2012-21 I.R.B.935
9586, 2011-22 I.R.B.960
9587, 2012-22 I.R.B.953
9588, 2012-23 I.R.B.969
9589, 2012-23 I.R.B.971
9590, 2012-24 I.R.B.986
2012–26 I.R.B.iiiJune 25, 2012

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2012–1 through 2012–26
Announcements:
2002-44
Supplemented by
Notice 2012-13, 2012-9 I.R.B.421
2010-19
Obsoleted by
Ann. 2012-12, 2012-12 I.R.B.562
2011-63
Corrected by
Ann. 2012-9, 2012-7 I.R.B.377
Notices:
2006-52
As clarified and amplified by Notice 2008-40, is
modified by
Notice 2012-26, 2012-17 I.R.B.847
2006-87
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2006-99
Superseded in part by
Notice 2012-20, 2012-13 I.R.B.574
2007-25
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2007-47
Obsoleted by
REG-137589-07, 2012-21 I.R.B.942
2007-77
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2007-95
Obsoleted in part by
T.D. 9576, 2012-15 I.R.B.723
2008-98
Modified by
Notice 2012-29, 2012-18 I.R.B.872
2008-107
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2009-86
Modified by
Notice 2012-29, 2012-18 I.R.B.872
2010-27
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
Notices— Continued:
2010-88
As modified by Ann. 2011-40, is superseded by
Notice 2012-1, 2012-2 I.R.B.260
2010-92
Obsoleted by
T.D. 9577, 2012-15 I.R.B.730
2011-8
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2011-28
Superseded by
Notice 2012-9, 2012-4 I.R.B.315
2011-51
Modified and superseded by
Notice 2012-37, 2012-24 I.R.B.1014
Proposed Regulations:
REG-208274-86
Withdrawn by
Ann. 2012-11, 2012-13 I.R.B.611
REG-151687-10
Withdrawn by
Ann. 2012-23, 2012-22 I.R.B.967
Revenue Procedures:
2000-43
Amplified, modified and superseded by
Rev. Proc. 2012-18, 2012-10 I.R.B.455
2003-61
Superseded by
Notice 2012-8, 2012-4 I.R.B.309
2007-44
Modified by
Ann. 2012-3, 2012-4 I.R.B.335
2010-43
Superseded by
Rev. Proc. 2012-22, 2012-17 I.R.B.853
2011-1
Superseded by
Rev. Proc. 2012-1, 2012-1 I.R.B.1
2011-2
Superseded by
Rev. Proc. 2012-2, 2012-1 I.R.B.92
2011-3
Superseded by
Rev. Proc. 2012-3, 2012-1 I.R.B.113
2011-4
Superseded by
Rev. Proc. 2012-4, 2012-1 I.R.B.125
Revenue Procedures— Continued:
2011-5
Superseded by
Rev. Proc. 2012-5, 2012-1 I.R.B.169
2011-6
Superseded by
Rev. Proc. 2012-6, 2012-1 I.R.B.197
2011-7
Superseded by
Rev. Proc. 2012-7, 2012-1 I.R.B.232
2011-8
Superseded by
Rev. Proc. 2012-8, 2012-1 I.R.B.235
2011-9
Superseded by
Rev. Proc. 2012-9, 2012-2 I.R.B.261
2011-10
Superseded by
Rev. Proc. 2012-10, 2012-2 I.R.B.273
2011-14
Modified and clarified by
Rev. Proc. 2012-19, 2012-14 I.R.B.689
Rev. Proc. 2012-20, 2012-14 I.R.B.700
2011-23
Obsoleted in part by
Rev. Proc. 2012-25, 2012-20 I.R.B.914
2011-37
Obsoleted in part by
Rev. Proc. 2012-16, 2012-10 I.R.B.452
2011-40
Corrected by
Ann. 2012-6, 2012-6 I.R.B.366
2011-49
Modified by
Ann. 2012-3, 2012-4 I.R.B.335
2011-50
Corrected by
Ann. 2012-6, 2012-6 I.R.B.366
2011-51
Corrected by
Ann. 2012-6, 2012-6 I.R.B.366
2011-62
Corrected by
Ann. 2012-17, 2012-18 I.R.B.876
2012-8
Corrected by
Ann. 2012-7, 2012-6 I.R.B.367
Revenue Rulings:
92-19
Supplemented in part by
Rev. Rul. 2012-6, 2012-6 I.R.B.349
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2011–27 through 2011–52 is in Internal Revenue Bulletin 2011–52, dated December 27,
2011.
June 25, 2012iv2012–26 I.R.B.

Revenue Rulings— Continued:
92-53
Amplified by
Rev. Rul. 2012-14, 2012-24 I.R.B.1012
95-7
Modified and superseded by
Rev. Rul. 2012-18, 2012-26 I.R.B.1032
2008-40
Modified by
Notice 2012-6, 2012-3 I.R.B.293
2011-1
Modified by
Notice 2012-6, 2012-3 I.R.B.293
2012-9
Modified by
Rev. Rul. 2012-12, 2012-15 I.R.B.748
Treasury Decision:
9517
Corrected by
Ann. 2012-4, 2012-4 I.R.B.335
Ann. 2012-5, 2012-5 I.R.B.348
2012–26 I.R.B.vJune 25, 2012

INDEX
Internal Revenue Bulletins 2012–1 through
2012–26
The abbreviation and number in parenthesis following the index entry
refer to the specific item; numbers in roman and italic type following
the parentheses refer to the Internal Revenue Bulletin in which the item
may be found and the page number on which it appears.
Key to Abbreviations:
AnnAnnouncement
CDCourt Decision
DODelegation Order
EOExecutive Order
PLPublic Law
PTEProhibited Transaction Exemption
RPRevenue Procedure
RRRevenue Ruling
SPRStatement of Procedural Rules
TCTax Convention
TDTreasury Decision
TDOTreasury Department Order
EMPLOYEE PLANS
Determination letters, issuing procedures (RP 6) 1,197
Employer-sponsored health plan, minimum value (Notice 31) 20,
906
Fees on health insurance policies and self-insured health plans
for the Patient-Centered Outcomes Research Trust Fund
(REG–136008–11) 19,881
Full funding limitations, weighted average interest rates, seg-
ment rates for:
January 2012 (Notice 10) 5,343
February 2012 (Notice 16) 9,498
March 2012 (Notice 24) 13,578
April 2012 (Notice 28) 17,850
May2012(Notice36)22,962
June 2012 (Notice 43) 26,1050
Letter rulings:
And determination letters, areas which will not be issued
from:
Associates Chief Counsel and Division Counsel (TE/GE)
(RP 3) 1,113
Associate Chief Counsel (International) (RP 7) 1,232
And general information letters, procedures (RP 4) 1,125
User fees, request for letter rulings (RP 8) 1,235; correction
(Ann 7) 6,367
Longevity annuity contracts (REG–115809–11) 13,598
Modifications to minimum present value requirements for par-
tial annuity distribution options under defined benefit pension
plans (REG–110980–10) 13,581
Property transferred in connection with the performance of ser-
vices under section 83 (REG–141075–09) 25,1028
EMPLOYEE PLANS—Cont.
Proposed Regulations:
26 CFR 1.83–3, amended; property transferred in connec-
tion with the performance of services under section 83
(REG–141075–09) 25,1028
26 CFR 1.401(a)(9)–5, –6, amended; 1.403(b)–6, amended;
1.408–8, amended; 1.408A–6, amended; 1.6047–2, added;
longevity annuity contracts (REG–115809–11) 13,598
26 CFR 1.417(e)–1, amended; modifications to mini-
mum present value requirements for partial annuity
distribution options under defined benefit pension plans
(REG–110980–10) 13,581
26 CFR 40.0–1, amended; 40.6011(a)–1, amended;
40.607(a)–1, amended; 40.6091–1(a), amended;
40.6302(c)–1, amended; 46.0–1, amended; 46.0–2, re-
moved; 46.4375–1, added; 46.4376–1, added; 46.4377–1,
added; fees on health insurance policies and self-insured
health plans for the Patient-Centered Outcomes Research
Trust Fund (REG–136008–11) 19,881
Qualified plans:
Accrued benefits (RR 4) 8,386
Determination letters (Ann 3) 4,335
Group trusts (Notice 6) 3,293
Qualified joint and survivors annuities (RR 3) 8,383
Retirement plans, covered compensation, permitted disparity
(RR 5) 5,337
Regulations:
26 CFR 54.9815–2715, added; 602.101(b), amended; sum-
mary of benefits and coverage and uniform glossary (TD
9575) 15,749
Request for information regarding stop loss insurance
(REG–117645–12) 22,965
Summary of benefits and coverage and uniform glossary (TD
9575) 15,749
Technical advice to IRS employees (RP 5) 1,169
EMPLOYMENT TAX
Employer’s annual federal tax return and modifications to the
deposit rules (TD 9566) 8,389
Furnishing identifying number of tax return preparer
(REG–124791–11) 15,791
Interim guidance for cost of health care coverage reporting on
Form W-2 (Notice 9) 4,315
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Proposed Regulations:
26 CFR 1.6109–2, amended; furnishing identifying number
of tax return preparer (REG–124791–11) 15,791
26 CFR 301.6103(I)(21)–1, added; regulations pertaining to
the disclosure of return information to carry out eligibil-
ity requirements for health insurance affordability programs
(REG–119632–11) 23,978
June 25, 2012vi2012–26 I.R.B.

EMPLOYMENT TAX—Cont.
Regulations:
26 CFR 31.3402(t)–0 thru –7, removed; 31.6011(a)–4,
amended; 31.6051–5, removed; 31.6071(a)–1, amended;
31.6302–1, amended; 31.6302–4, amended; removal of
regulations requiring 3% withholding by government enti-
ties (TD 9586) 22,960
26 CFR 31.6011(a)–1, –4, amended; 31.6011(a)–1T, –4T, re-
moved; 31.6071(a)–1, amended; 31.6302–0, –1, amended;
31.6302–0T, –1T, removed; employer’s annual federal tax
return and modifications to the deposit rules (TD 9566) 8,
389
26 CFR 301.7623, amended; rewards and awards for infor-
mation relating to violations of internal revenue laws (TD
9580) 17,801
Regulations pertaining to the disclosure of return information to
carry out eligibility requirements for health insurance afford-
ability programs (REG–119632–11) 23,978
Removal of regulations requiring 3% withholding by govern-
ment entities (TD 9586) 22,960
Rewards and awards for information relating to violations of in-
ternal revenue laws (TD 9580) 17,801
Tips for both employee and employer (RR 18) 26,1032
Tips, interim guidance on Rev. Rul. 2012–18 (Ann 25) 26,1054
Technical Advice Memoranda (RP 2) 1,92
Withholding on payments by government entities to persons pro-
viding property or services, withdrawn (Ann 23) 22,967
Work opportunity tax credit (WOTC) (Notice 13) 9,492
ESTATE TAX
Extension of time to file estate tax return to elect portability of
a deceased spousal unused exclusion amount under section
2010(c) (Notice 21) 10,450
Furnishing identifying number of tax return preparer
(REG–124791–11) 15,791
Guidance under sections 642 and 643 (income ordering rules)
(TD 9582) 18,869
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Proposed Regulations:
26 CFR 1.6109–2, amended; furnishing identifying number
of tax return preparer (REG–124791–11) 15,791
26 CFR 301.6103(I)(21)–1, added; regulations pertaining to
the disclosure of return information to carry out eligibil-
ity requirements for health insurance affordability programs
(REG–119632–11) 23,978
Regulations:
26 CFR 1.642(c)–3, amended; 1.643(a)–5, amended; guid-
ance under sections 642 and 643 (income ordering rules)
(TD 9582) 18,869
26 CFR 301.7623, amended; rewards and awards for infor-
mation relating to violations of internal revenue laws (TD
9580) 17,801
ESTATE TAX—Cont.
Regulations pertaining to the disclosure of return information to
carry out eligibility requirements for health insurance afford-
ability programs (REG–119632–11) 23,978
Rewards and awards for information relating to violations of in-
ternal revenue laws (TD 9580) 17,801
Technical Advice Memoranda (RP 2) 1,92
EXCISE TAX
Aviation fuels, air transportation (Notice 27) 17,849
Fees on health insurance policies and self-insured health plans
for the Patient-Centered Outcomes Research Trust Fund
(REG–136008–11) 19,881
Frequently asked questions, Patient Protection and Affordable
Care Act (Notice 17) 9,501
Furnishing identifying number of tax return preparer
(REG–124791–11) 15,791
Guidance regarding the repeal of section 163(f)(2)(B) (Notice
20) 13,574
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Proposed Regulations:
26 CFR 1.6109–2, amended; furnishing identifying number
of tax return preparer (REG–124791–11) 15,791
26 CFR 48.4191–1, –2, added; 48.4221–1, –2, amended;
48.4221–2, amended; 48.6416(b)(2)–2, amended; taxable
medical devices (REG–113770–10) 13,587
26 CFR 40.0–1, amended; 40.6011(a)–1, amended;
40.607(a)–1, amended; 40.6091–1(a), amended;
40.6302(c)–1, amended; 46.0–1, amended; 46.0–2, re-
moved; 46.4375–1, added; 46.4376–1, added; 46.4377–1,
added; fees on health insurance policies and self-insured
health plans for the Patient-Centered Outcomes Research
Trust Fund (REG–136008–11) 19,881
26 CFR 301.6103(I)(21)–1, added; regulations pertaining to
the disclosure of return information to carry out eligibil-
ity requirements for health insurance affordability programs
(REG–119632–11) 23,978
Regulations:
26 CFR 54.9815–2715, added; 602.101(b), amended; sum-
mary of benefits and coverage and uniform glossary (TD
9575) 15,749
26 CFR 301.7623, amended; rewards and awards for infor-
mation relating to violations of internal revenue laws (TD
9580) 17,801
Regulations pertaining to the disclosure of return information to
carry out eligibility requirements for health insurance afford-
ability programs (REG–119632–11) 23,978
Rewards and awards for information relating to violations of in-
ternal revenue laws (TD 9580) 17,801
Summary of benefits and coverage and uniform glossary (TD
9575) 15,749
Taxable medical devices (REG–113770–10) 13,587
Technical Advice Memoranda (RP 2) 1,92
Telephone excise tax refund deadline (Ann 16) 18,873
2012–26 I.R.B.viiJune 25, 2012

EXEMPT ORGANIZATIONS
Annual notice to donors regarding pending and settled declara-
tory judgment suits (Ann 1) 1,249
Application for recognition as a 501(c)(29) organization (TD
9574) 12,559; (REG–135071–11) 12,561
Certain filing changes for tax-exempt organizations (Notice 4) 3,
290
Examples of program-related investments (REG–144267–11)
21,949
Letter rulings:
And determination letters:
Areas which will not be issued from Associates Chief
Counsel and Division Counsel (TE/GE) (RP 3) 1,113
Qualified nonprofit health insurance issuers, procedures
(RP 11) 7,368
And general information letters, procedures (RP 4) 1,125
Exemption application determination letter rulings under sec-
tions 501, 509, 4940, and 4942 (RP 10) 2,273
Exemption application determination letter rulings under sec-
tions 501 and 521 (RP 9) 2,261
User fees, request for letter rulings (RP 8) 1,235; correction
(Ann 7) 6,367
Method of reporting Form 990 information regarding interests in
partnership (Ann 19) 20,934
Public inspection of material relating to tax-exempt organiza-
tions (TD 9581) 17,798
Procedures for charitable trusts to obtain Type III supporting or-
ganization classification rulings (Ann 12) 12,562
Proposed Regulations:
26 CFR 1.501(c)(29)–1, added; application for recognition as
a 501(c)(29) organization (REG–135071–11) 12,561
26 CFR 53.4944–3, amended; examples of program-related
investments (REG–144267–11) 21,949
Regulations:
26 CFR 1.1501(c)(29)–1T, added;application for recognition
as a 501(c)(29) organization (TD 9574) 12,559
26 CFR 301.6104(a)–1, revised; 301.6110-1, amended; pub-
lic inspection of material relating to tax-exempt organiza-
tions (TD 9581) 17,798
Revocations (Ann 15) 15,794; (Ann 18) 16,845;(Ann20)18,
876; (Ann 22) 19,899
Technical advice to IRS employees (RP 5) 1,169
GIFT TAX
Furnishing identifying number of tax return preparer
(REG–124791–11) 15,791
Guidance under sections 642 and 643 (income ordering rules)
(TD 9582) 18,869
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Proposed Regulations:
26 CFR 1.6109–2, amended; furnishing identifying number
of tax return preparer (REG–124791–11) 15,791
GIFT TAX—Cont.
26 CFR 301.6103(I)(21)–1, added; regulations pertaining to
the disclosure of return information to carry out eligibil-
ity requirements for health insurance affordability programs
(REG–119632–11) 23,978
Regulations:
26 CFR 1.642(c)–3, amended; 1.643(a)–5, amended; guid-
ance under sections 642 and 643 (income ordering rules)
(TD 9582) 18,868
26 CFR 301.7623, amended; rewards and awards for infor-
mation relating to violations of internal revenue laws (TD
9580) 17,801
Regulations pertaining to the disclosure of return information to
carry out eligibility requirements for health insurance afford-
ability programs (REG–119632–11) 23,978
Rewards and awards for information relating to violations of in-
ternal revenue laws (TD 9580) 17,801
Technical Advice Memoranda (TAMs) (RP 2) 1,92
INCOME TAX
2012 inflation adjustment factors and reference prices for pur-
poses of computing the production tax credit under section 45
(Notice 35) 21,937
Adequate notice revenue procedure renewal (RP 15) 7,369
Advance Pricing Agreement Program (APA) 2011 (Ann 13) 16,
805
Agency for a consolidated group (REG–142561–07) 25,1020
Allocation and apportionment of interest expense (TD 9571) 11,
468; (REG–113903–11) 11,486
Allocation of earnings and profits in tax-free transfers from one
corporation to another (REG–141268–11) 19,896
Allocation of mortgage insurance premiums (TD 9588) 23,969
Application of the segregation rules to small shareholders
(REG–149625–10) 2,279
Asset tests, real estate investment trust (REIT) (RR 17) 25,1018
Average area purchase price safe-harbors guidance for 2012 (RP
25) 20,915
Basis reporting by securities brokers and basis determination for
debt instruments and options (REG–102988–11) 4,326;(No-
tice 34) 21,937
Bonds, national and area median gross income figures guidance
for 2012 (RP 16) 10,452
Cafeteria plans (Notice 40) 26,1046
Certain transfers of property to regulated investment com-
panies (RICs) and real estate investment trusts (REITs)
(REG–139991–08) 21,945
Changes affecting tax year 2011 filing of information returns
(Ann 6) 6,366
Conduit financing arrangements (TD 9562) 5,339
Continuing education provider and accrediting organization (RP
12) 2,275
Corporate reorganization, guidance on the measurement of con-
tinuity of interest (TD 9565) 8,378; (REG–124627–11) 8,417
Credits:
Carbon dioxide sequestration (Notice 42) 26,1049
June 25, 2012viii2012–26 I.R.B.

INCOME TAX—Cont.
Iowa credit disaster relief (Notice 7) 4,308
New markets tax credit (TD 9560) 4,299
Reimbursements under section 1603 of American Recovery
and Reinvestment Tax Act (ARRTA) of 2009 (Notice 23)
11,485
Low-income housing credit:
2012 population figures used for calculations (Notice 22)
13,576
Recapture under new section 42(j)(6) (RP 27) 21,940
Section 42 qualified contract provisions (TD 9587) 22,953
Work opportunity tax credit (WOTC) (Notice 13) 9,492
Current refundings of tax-exemptbonds in certain disaster relief
bond programs (Notice 3) 3,289
Damages received on account of personal physical injuries or
physical sickness (TD 9573) 12,498
Deduction for energy efficient commercial building property
(Notice 26) 17,847
Definition of a taxpayer (TD 9576) 15,723
Depreciation, 2012 limitation ondeductions for passenger auto-
mobiles (RP 23) 14,712
Determination of housing cost amounts eligible for exclusion or
deduction for 2012 (Notice 19) 10,440
Disciplinary actions involvingattorneys, certified public ac-
counts, enrolled agents, andenrolled actuaries (Ann 8) 7,373;
(Ann 24) 23,982
Dividend equivalents from sources within the United States (TD
9527) 11,474; (REG–120282–10) 11,487
Electronic filing of K–1s (RP 17) 10,453
Employer-sponsored health plan, minimum value (Notice 31) 20,
906
Equitable relief under section 66(c) or section 6015(f) (Notice 8)
4,309
Ex parte communications between appeals and other Internal
Revenue Employees (RP 18) 10,455
Extension of relief and procedures for eligible taxpayers claiming
benefits of the Military Spouses Residency Relief Act (Notice
41) 26,1048
Extension of time to file estate tax return to elect portability of
a deceased spousal unused exclusion amount under section
2010(c) (Notice 21) 10,450
Foreign earned income exclusion, 2011 update (RP 21) 11,484
Foreign tax credit splitting events (TD 9577) 15,730;
(REG–132736–11) 15,793
Forms:
W-2 and W-3, general rules and specifications, correction to
RP2011–62(Ann17)18,873
W-2c and W-2c, general rules and specifications (RP 22) 17,
853
1097, 1098, 3921, 3922, 5498, 8935, and W-2, requirements
for filing electronically; correction to Rev. Proc. 2011–40
(Ann 2) 2,285
Furnishing identifying number of tax return preparer
(REG–124791–11) 15,791
Gross income, exclusions, restitution payments under the Traf-
ficking Victims Protection Act of 2000 (Notice 12) 6,365
INCOME TAX—Cont.
Guidance on reporting of interest paid to nonresident aliens (TD
9584) 20,900
Guidance priority list (Notice 25) 15,789
Guidance regarding deduction and capitalization of expen-
ditures related to tangible property (TD 9564) 14,614;
(REG–168745–03) 14,718
Guidance regarding foreign base company sales income (TD
9563) 6,354
Guidance regarding the repeal of section 163(f)(2)(B) (Notice
20) 13,574
Guidance under section 267(f), deferral of loss on transactions
(TD 9583) 18,866
Guidance under sections 642 and643 (income ordering rules)
(TD 9582) 18,869
Health insurance coverage, information reporting (Notice 32) 20,
910
Health insurance premium tax credit (TD 9590) 24,986
Health savings accounts (HSAs):
Indian health service (Notice 14) 8,411
Inflation adjusted amounts (RP 26) 20,933
Information reporting by passport applicants (Ann 11) 13,611
Insurance companies, treatment of Blue Cross Blue Shield orga-
nizations and certain other health organizations (Notice 37) 24,
1014
Insurance tax, insurance companies, interest rate tables (RR 6) 6,
349
Interest:
Investment:
Federal short-term, mid-term, and long-term rates for:
January (RR 2) 3,286
February (RR 7) 6,362
March (RR 9) 11,478; correction (RR 12) 15,748
April (RR 11) 14,686
May (RR 13) 19,878
June (RR 15) 23,974
Rates:
Underpayment and overpayments, quarter beginning:
April 1, 2012 (RR 8) 13,563
July 1, 2012 (RR 16) 26,1035
Letters rulings:
And determination letters, areas which will not be issued
from:
Associate Chief Counsel and Division Counsel (TE/GE)
(RP 3) 1,113
Associate Chief Counsel (International) (RP 7) 1,232
And information letters issued byAssociate Offices, determi-
nation letters issued by Operating Divisions (RP 1) 1,1
Local lodging expenses (REG–137589–07) 21,942
Maximum vehicle values, special valuation rules, 2012 (RP 13)
3,295
Measuring partner insolvency upon cancellation of partnership
nonrecourse debt (RR 14) 24,1012
Modifications to definition of United States property (TD 9589)
23,971; (REG–1075448–11) 23,977
2012–26 I.R.B.ixJune 25, 2012

INCOME TAX—Cont.
Nonconventional source fuel credit, 2011 section 45K inflation
adjustment factor, section 45K reference price (Notice 30) 18,
874
Notice seeking public comments on implementation of Rev. Rul.
2006–57 (Notice 38) 24,1014
Physical inspection pilot program (Notice 18) 10,438
Procedure for obtaining automatic consent to change to
the method of accounting provided in sections 1.162–3T,
1.162–4T, 1.263(a)–1T, 1.263(a)–2T, and 1.263(a)–3T (TD
9564) for taxable years beginning on or after January 1, 2012
(RP 19) 14,689
Procedure for obtaining automatic consent to change to the
method of accounting providedin sections 1.167(a)–4T,
1.168(i)–1T, 1.168(k)–7T, and1.168(i)–8T (TD 9564) for
taxable years beginning on or after January 1, 2012 (RP 20)
14,700
Property transferred in connection with the performance of ser-
vices under section 83 (REG–141075–09) 25,1028
Proposed Regulations:
26 CFR 1.83–3, amended; property transferred in connec-
tion with the performance of services under section 83
(REG–141075–09) 25,1028
26 CFR 1.162–3T, –4T, –11T, added; 1.165–2T, added;
1.167(a)–4T, –7T, –8T, added; 1.263(a)–1T, –2T, –3T,
–6T, added; 1.263A–1T, added; 1.1016–3T, added;
1.162–11, amended; 1.165–2, amended; 1.167(a)–7, –8,
amended; 1.168(i)–0, –1, amended; 1.263(a)–0, amended,
1.1016–3, amended; 1.162–6, removed;1.162–3, –4, re-
vised; 1.167(a)–4, revised, 1.263(a)–1, –2, –3, revised,
guidance regarding deduction and capitalization of expen-
ditures relating to tangible property (REG–168745–03) 14,
614
26 CFR 1.162–31, added; 1.262–1, amended; local lodging
expenses (REG–137589–07) 21,942
26 CFR 1.275–7, revised; treasury inflation-protected securi-
ties issued at a premium (REG–130777–11) 5,347
26 CFR 1.312–11, amended; 1.381(c)(2)–1(d), removed; al-
location of earnings and profits in tax-free transfers from
one corporation to another (REG–141268–11) 19,896
26 CFR 1.337(d)–7, amended; certain transfers of property
to regulated investment companies (RICs) and real estate
investment trusts (REITs) (REG–139991–08) 21,945
26 CFR 1.338–1, amended; 1.1502–41A, revised; 1.1502–77,
amended; 1.1502–77B, added; agency for a consolidated
group (REG–142651–07) 25,1020
26 CFR 1.368–1, amended; corporate reorganizations,
guidance on the measurement of continuity of interest
(REG–124627–11) 8,417
26 CFR 1.382–3, amended; application of section 382 seg-
regation rules to small shareholders (REG–149625–10) 2,
279
26 CFR 1.469–0, amended; 1.469–5, –5T, –9, revised; mate-
rial participation of limited partners (REG–109369–10) 9,
434
26 CFR 1.482–7, amended; use of differential income stream
as an application of the income method and as a consider-
INCOME TAX—Cont.
ation in assessing the best method (REG–145474–11) 11,
497
26 CFR 1.704–1, amended; 1.909–0 thru 6, added; foreign tax
credit splitting events (REG–132736–11) 15,793
26 CFR 1.861–9, –11, revised; allocation and apportionment
of interest expense (REG–113903–11) 11,488
26 CFR 1.863–7, amended; 1.871–15, –16, added; 1.881–2,
added; 1.892–3, added; 1.894–1, added; 1.1441–2, –3, –4,
–6, –7, amended; 1.1461–1, amended; dividend equivalents
from sources within the United States (REG–120282–10)
11,489
26 CFR 1.965–2, amended; modifications to definition of
United States property (REG–107548–11) 23,977
26 CFR 1.6038D–0 thru –8, added; reporting of specified for-
eign financial assets (REG–130302–10) 8,412
26 CFR 1.6045–1, amended; 1.6045A–1, amended;
1.6045B–1, amended; basis reporting by securities brokers
and basis determination for debt instruments and options
(REG–102988–11) 4,326
26 CFR 1.6109–2, amended; furnishing identifying number
of tax return preparer (REG–124791–11) 15,791
26 CFR 301.6103(I)(21)–1, added; regulations pertaining to
the disclosure of return information to carry out eligibil-
ity requirements for health insurance affordability programs
(REG–119632–11) 23,978
Publications:
1141, general rules and specifcations for Forms W-2 and W-3,
correction to RP 2011–62 (Ann 17) 18,873
1187, specifications for filing Form 1040–S, foreign person’s
U.S. source income subject to withholding, electronically;
correction (Ann 6) 6,366
1220, specifications for filing Forms 1097, 1098, 3921, 3922,
5498, 8935, and W-2 electronically; correction to Rev.
Proc. 2011–40 (Ann 2) 2,285; correction (Ann 6) 6,366
1223, general rules and specifications for Forms W-2c and
W-3c (RP 22) 17,853
1239, specifications for filing Form 8027, employer’s annual
information return of tip income and allocated tips, elec-
tronically; correction (Ann 6) 6,366
Recurring item exception (RR 1) 2,255
Regulations:
26 CFR 1.36B–0, –5, added; 1.6011–8, added; 1.6012–1,
added; 602.101, amended; health insurance premium tax
credit (TD 9590) 24,986
26 CFR 1.42–18, added; 602.101, amended; section 42 qual-
ified contract provisions (TD 9587) 22,953
26 CFR 1.45D–1, added; 1.45D–1, amended; new markets
tax credit (TD 9560) 4,299
26 CFR 1.104–1, revised; damages received on account of
personal physical injuries or physical sickness (TD 9573)
12,498
26 CFR 1.163–11, added; 1.163–11T, removed; allocation of
mortgage insurance premiums (TD 9588) 23,969
26 CFR 1.267(f)–1, amended guidance under section 267(f),
deferral of loss on transactions (TD 9583) 18,866
June 25, 2012x2012–26 I.R.B.

INCOME TAX—Cont.
26 CFR 1.275–7T, added; treasury inflation-protected securi-
ties issued at a premium (TD 9561) 5,341
26 CFR 1.367(a)–1, –1T, amended; 1.482–0, –1, –2, –4, –5,
–8, –9, amended; 1.482–0T, –1T, –2T, –4T, —7T, –8T, –9T,
removed; 1.482–7, added; 1.861–17, amended; 1.6662–6,
amended; 301.7701–1, amended; 602.101, revised; section
482, methods to determine taxable income in connection
with a cost sharing arrangement (TD 9568) 12,499
26 CFR 1.368–1, amended; 1.368–1T, removed; corporate
reorganizations, guidance on the measurement of continuity
of interest (TD 9565) 8,378
26 CFR 1.482–7, amended; 1.482–7T, added; use of differen-
tial income stream as an application of the income method
and as a consideration in assessing the best method (TD
9569) 11,465
26 CFR 1.642(c)–3, amended; 1.643(a)–5, amended; guid-
ance under sections 642 and 643 (income ordering rules)
(TD 9582) 18,869
26 CFR 1.704–1, amended; 1.704–1T, added; 1.909–0T,
–2T. –3T, –4T, –5T, –6T, added; foreign tax credit splitting
events (TD 9577) 15,730
26 CFR 1.706–1, amended; 1.901–2, amended; definition of
a taxpayer (TD 9576) 15,723
26 CFR 1.861–9T, amended; 1.1.861–11T, amended; reduc-
tion of foreign tax credit limitation categories under section
904(d) (TD 9571) 11,471
26 CFR 1.863–7, amended; 1.863–7T, added; 1.871–15T,
added; 1.871–16T, added; 1.881–2, amended; 1.881–2T,
added; 1.1441–2, –3, –4, –7, amended; 1.144–2T, –3T, –4T,
–7T, added; 1.1461–1, amended; 1.1461–1T, added; divi-
dend equivalents from sources within the United States (TD
9572) 11,471
26 CFR 1.863–10, added; 1.863–10T, removed; source of in-
come from qualified fails charges (TD 9579) 16,796
26 CFR 1.881–3, amended; conduit financing arrangements
(TD 9562) 5,339
26 CFR 1.954–3, amended; 1.954–3T, removed; guidance re-
garding foreign base company sales income (TD 9563) 6,
354
26 CFR 1.965–2, –2T amended; modifications to definition
of United States property (TD 9589) 23,971
26 CFR 1.1248–1, amended; 1.1248–1T, removed; treatment
of gain recognized with respect to stock in certain foreign
corporations upon distributions (TD 9585) 21,935
26 CFR 1.6038D–0T thru –8T, added; reporting of specified
foreign financial assets (TD 9567) 8,395
26 CFR 1.6049–4, revised; 1.6049–5, –6, amended;
1.6049–8, revised; 31.3406(g)–1, revised; guidance on
reporting of interest paid to nonresident aliens (TD 9584)
20,900
26 CFR 1.6695–2, revised; tax return preparer penalties under
section 6695 (TD 9570) 11,479
26 CFR 300.0, amended; 300.12, revised; 300.13, added; user
fee to take the registered tax return preparer competency
examination (TD 9559) 2,252
INCOME TAX—Cont.
26 CFR 301.6109–1, amended; updating of employer identi-
fication numbers (REG–135491–10) 17,803
26 CFR 301.7623, amended; rewards and awards for infor-
mation relating to violations of internal revenue laws (TD
9580) 17,801
26 CFR 901.11, amended; regulations governing the perfor-
mance of actuarial services under the Employee Retirement
Income Security Act (ERISA)of 1974; correction (Ann 4)
4,335;correction(Ann5)5,348
Regulations governing the performance of actuarial services un-
der the Employee Retirement Income Security Act (ERISA) of
1974; correction (Ann 4) 4,335; correction (Ann 5) 5,348
Regulations pertaining to the disclosure of return information to
carry out eligibility requirements for health insurance afford-
ability programs (REG–119632–11) 23,978
Reporting deposit interest, exchange of information (RP 24) 20,
913
Reporting of specified foreign financial assets (TD 9567) 8,395;
(REG–130302–10) 8,412
Request for comments on reporting by applicable large employ-
ers on health insurance coverage under employer-sponsored
plans (Notice 33) 20,911
Rewards and awards for information relating to violations of in-
ternal revenue laws (TD 9580) 17,801
Revocations, exempt organizations (Ann 15) 15,794; (Ann 18)
16,845; (Ann 20) 18,876; (Ann 22) 19,899
Safe harbor reporting:
Eligible REMICs required to report on Schedule Q informa-
tion with respect to REMIC assets (Notice 5) 3,291
Guidance for REIT investing in certain REMIC regular and
residual interests (RP 14) 3,296
Section 304 transactions (Notice 15) 9,495
Section 482, methods to determine taxable income in connection
with a cost sharing arrangement (TD 9568) 12,499
Source of income from qualified fails charges (TD 9579) 16,796
Standard industry fare level (SIFL) (RR 10) 14,614
Standard mileage rates, 2012 (Notice 1) 2,260
Student loan bonds (Ann 14) 14,721
Substitute forms, W-2c and W-3c, general rules and specifica-
tions (RP 22) 17,853
Tax conventions:
U.S.–Germany agreement on pensions (Ann 21) 19,898
Tax return preparer penalties under section 6695 (TD 9570) 11,
479
Technical Advice Memoranda (TAMs) (RP 2) 1,92
Transitional relief for section 6045B issuer returns and state-
ments for 2011 organizational actions (Notice 11) 5,346
Treasury inflation-protected securities issued at a premium (TD
9561) 5,341; (REG–130777–11) 5,347
Treatment of gain recognized with respect to stock in certain for-
eign corporations upon distributions (TD 9585) 21,935
Updating of employer identification numbers (REG-135491-10)
17,803
Use of differential income streamas an application of the income
method and as a consideration in assessing the best method
(TD 9569) 11,465; (REG–145474–11) 11,497
2012–26 I.R.B.xiJune 25, 2012

INCOME TAX—Cont.
User fee to take the registered tax return preparer competency
examination (TD 9559) 2,252
SELF-EMPLOYMENT TAX
Furnishing identifying number of tax return preparer
(REG–124791–11) 15,791
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Proposed Regulations:
26 CFR 1.6109–2, amended; furnishing identifying number
of tax return preparer (REG–124791–11) 15,791
Technical Advice Memoranda (TAMs) (RP 2) 1,92
June 25, 2012xii2012–26 I.R.B.

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