Internal Revenue Bulletin 2011-36 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 201
1-36
September 6, 201
1
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. 2011–19, page 199.
Remittance basis charge.TheRemittanceBasisCharge
(RBC) is a tax imposed by the government of the United King-
dom on long-term non-domiciliaries who elect to be taxed under
the remittance basis of taxation. This ruling holds that the RBC,
in combination with the remittance basis of taxation, is an in-
come tax for which a credit is allowable under section 901 of
the Code.
Rev. Rul. 2011–20, page 202.
Federal rates; adjusted federal rates; adjusted federal
long-termrateandthelong-termexemptrate.For pur-
poses of sections 382, 642, 1274, 1288, and other sections
of the Code, tables set forth the rates for September 2011.
REG–131491–10, page 208.
Proposed regulations under section 36B of the Code provide
rules relating to the premium tax credit, enacted by section
1401 of the Affordable Care Act. A public hearing is scheduled
for November 17, 2011.
Notice 2011–68, page 205.
The Pension Protection Act amended sections 72, 1035, and
7702B of the Code. This notice provides interim guidance on
these amendments and requests comments on issues to be
addressed in future guidance concerning the taxation of annuity
and life insurance contracts with a long-term care insurance
feature.
EMPLOYMENT TAX
Announcement 2011–48, page 227.
This announcement provides notice of a public hearing on
proposed regulations (REG–151687–10, 2011–23 I.R.B. 867)
that provide guidance relating to withholding by government
entities on payments to persons providing property or ser-
vices. A public hearing is scheduled for September 12, 2011.
ADMINISTRATIVE
Announcement 2011–48, page 227.
This announcement provides notice of a public hearing on
proposed regulations (REG–151687–10, 2011–23 I.R.B. 867)
that provide guidance relating to withholding by government
entities on payments to persons providing property or ser-
vices. A public hearing is scheduled for September 12, 2011.
Announcement 2011–49, page 228.
This document contains correcting amendments to final regula-
tions (T.D. 9527, 2011–27 I.R.B. 1) that affect individuals who
practice before the IRS and providers of continuing education
programs. The regulations modify the rules governing practice
before the IRS and the standards with respect to tax returns.
Finding Lists begin on page ii.

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.
September 6, 20112011–36 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 42.—L
ow-Income
Housing Credi
t
The adjusted a
pplicable federal short-term, mid-
term, and long
-term rates are set forth for the month
of September 2
011. See Rev. Rul. 2011-20, page
202.
Section 72.—Annuities;
Certain Proceeds of
Endowment and Life
Insurance Contract
The Pension Protection Act amended sections 72,
1035, and 7702B of the Code. Notice 2011-68 pro-
vides interim guidance on these amendments and re-
quests comments on issues to be addressed in future
guidance concerning the taxation of annuity and life
insurance contracts with a long-term care insurance
feature. See Notice 2011-68, page 205.
Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term rates
are set forth for the month of September 2011. See
Rev. Rul. 2011-20, page 202.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and Certain
Built-In Losses Following
Ownership Change
The adjusted applicable federal long-term rate is
set forth for the month of September 2011. See Rev.
Rul. 2011-20, page 202.
Section 412.—Minimum
Funding Standards
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2011. See Rev. Rul. 2011-20, page
202.
Section 467.—Certain
Payments for the Use of
Property or Services
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2011. See Rev. Rul. 2011-20, page
202.
Section 468.—
Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2011. See Rev. Rul. 2011-20, page
202.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
Federal short-term, mid-term, and long-term rates
are set forth for the month of September 2011. See
Rev. Rul. 2011-20, page 202.
Section 483.—Interest on
Certain Deferred Payments
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2011. See Rev. Rul. 2011-20, page
202.
Section 642.—Special
Rules for Credits and
Deductions
Federal short-term, mid-term, and long-term rates
are set forth for the month of September 2011. See
Rev. Rul. 2011-20, page 202.
Section 807.—Rules for
Certain Reserves
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2011. See Rev. Rul. 2011-20, page
202.
Section 846.—Discounted
Unpaid Losses Defined
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2011. See Rev. Rul. 2011-20, page
202.
Section 901.—
Taxes of
Foreign Count
ries and
of Possessions of the
United States
26 CFR 1.901–2: Income, war profits, or excess prof-
its tax paid or accrued.
Remittance basis charge.The Remit-
tance Basis Charge (RBC) is a tax imposed
by the government of the United Kingdom
on long-term non-domiciliaries who elect
to be taxed under the remittance basis of
taxation. This ruling holds that the RBC,
in combination with the remittance basis
of taxation, is an income tax for which a
credit is allowable under section 901 of the
Code.
Rev. Rul. 2011–19
ISSUE
Whether a credit is allowable under sec-
tion 901 of the Internal Revenue Code
for the Remittance Basis Charge (RBC) of
£30,000.
FACTS
Effective as of April 6, 2008, the United
Kingdom enacted legislation under Part 14
of the Income Tax Act 2007, as amended
by the Finance Acts 2008, 2009, and 2010,
that generally allows individuals who are
U.K. residents but who are not domiciled
in the United Kingdom (i.e.,donotin-
tend to live in the United Kingdom perma-
nently) (non-domiciliaries) to elect each
year to be taxed on an alternative basis.
The default basis of taxation for non-domi-
ciliaries — as it is for any U.K. resident
individual — is to pay U.K. income and
capital gains taxes on their worldwide in-
come and capital gains (gains), which is
known as the arising basis of taxation. The
alternative method of taxation is the remit-
tance basis, under which non-domiciliaries
with non-U.K.-source income or gains can
elect to be taxed on their non-U.K.-source
income and gains only when they are re-
mitted to the United Kingdom. Remittance
basis taxpayers also are subject to tax on
their U.K.-source income and gains, which
are taxed in the year in which they arose,
2011–36 I.R.B.199September 6, 2011

under separate statutory provisions appli-
cable to all U.K. resident individuals.
Both the arising basis and the remit-
tance basis of taxation are computed on
the basis of realized gross receipts and per-
mit recovery of significant costs and ex-
penses. Losses and deductions allocated
to one type of taxable U.K.-source or non-
U.K.-source income or gains may be avail-
able to offset other categories of taxable in-
come and gains, depending on the type of
income or gains involved and the nature of
the losses and deductions.
A special rule applies to U.K. residents
who are non-domiciliaries age 18 years or
older and who were U.K. residents in at
least seven of the prior nine taxable years
(long-term non-domiciliaries). Under this
rule, a long-term non-domiciliary who
elects the remittance basis of taxation is re-
quired to pay the RBC of £30,000 in addi-
tion to the remittance basis tax. The RBC
constitutes tax imposed on the arising basis
onpart(orall)ofalong-termnon-domicil-
iary’s unremitted non-U.K.-source income
or gains that arose or accrued in that year
and were nominated (i.e., identified) by
the long-term non-domiciliary, where the
nominated income or gains taxed on the
arising basis would give rise to an increase
in tax of £30,000, after taking into account
any credit due for foreign tax paid. A min-
imum of £1 of non-U.K.-source income
or gains must be nominated in order for a
long-term non-domiciliary’s election to be
taxedontheremittancebasistobevalid.
A long-term non-domiciliary’s re-
quired nomination schedule must show
specifics concerningthe nominated in-
come or gains and the expenses or capital
losses that are deducted in arriving at the
taxable income or gains giving rise to the
£30,000 tax charge. U.K.-source, remitted
non-U.K.-source, and nominated income
or gains, although separately computed,
are combined into a single base and taxed
at the graduated rates of U.K. income
or capital gains tax that are generally
applicable in the relevant tax year, with
the rate that applies to nominated income
or gains being determined after the tax
is calculated on U.K.-source income and
gains and on remitted non-U.K.-source
income and gains.
The U.K. statute provides ordering
rules that treat nominated amounts re-
mitted to the United Kingdom as paid
first out of income or gains that have not
previously been subject to U.K. tax. If
and when nominated income or gains are
treated as remitted to the United Kingdom,
they will be regarded as previously taxed
on the arising basis and the long-term
non-domiciliary will not again be subject
to U.K. tax with respect to such amounts.
If the long-term non-domiciliary real-
izes or accrues, but does not nominate,
sufficient realized non-U.K.-source in-
comeorgainstoresultinataxchargeof
£30,000, the long-term non-domiciliary
will be taxed as if sufficient additional
realized income or gains had been nomi-
nated to result in a tax charge of £30,000.
The U.K. statute also provides a rule for
when a long-term non-domiciliary elects
the remittance basis but does not have suf-
ficient realized income or gains to result
in a tax charge of £30,000. In that case,
the long-term non-domiciliary is deemed
to have sufficient realized income or gains
and to have nominated an amount neces-
sary to make the tax charge equal £30,000.
Income or gains, whether realized but
not nominated, or imputed, which were
deemed to have been nominated in order
to generate a tax charge of £30,000 are not
treated as previously-taxed income and
therefore will be subject to tax if and when
such income or gains are actually remitted.
LAW AND ANALYSIS
Section 901 generally allows a credit
for the amount of any income, war profits
and excess profits tax (collectively, an “in-
come tax”) paid or accrued during the tax-
able year to any foreign country or to any
possession of the United States. A foreign
levy is an income tax if and only if (i) it is
a tax and (ii) the predominant character of
that tax is that of an income tax in the U.S.
sense. §1.901–2(a)(1).
A. Single Levy or Separate Levies
Each levy must be analyzed separately
to determine if it is an income tax under
section 901. §1.901–2(d)(1). For purposes
of section 901, whether a single levy or
separate levies are imposed by a foreign
country depends on U.S. principles and not
on whether foreign law imposes the levy
or levies in a single or separate statutes.
Where the base of a levy is different in
kind, and not merely in degree, for differ-
ent classes of persons subject to the levy,
the levy is considered for purposes of sec-
tion 901 to impose separate levies for such
classes of persons. For example, regard-
less of whether they are contained in a sin-
gle or separate foreignstatutes, a foreign
levy identical to the tax imposed under sec-
tion 871(b) on a U.S. nonresident alien in-
dividual’s income that is effectively con-
nected with the conduct of a U.S. trade or
business is a separate levy from a foreign
levy identical to the tax imposed by sec-
tion 1 on the income of a U.S. citizen or
resident, as the tax on nonresidents has a
more limited scope and therefore is differ-
ent in kind from the tax on the worldwide
income of U.S. citizens and residents.
Where foreign law imposes a levy that
is the sum of two or more separately com-
puted amounts, and each such amount
is computed by reference to a separate
base, separate levies are considered, for
purposes of section 901, to be imposed.
Amounts are not separately computed if
they are computed separately merely for
purposes of a preliminary computation
and are then combined as a single base.
§1.901–2(d)(1). For example, where ex-
cess deductible expenses allocated to one
type of income are applied to reduce other
types of income, a single levy exists, since
despite a separate preliminary computa-
tion the bases are combined before com-
puting the tax due. See §1.901–2(d)(3),
Examples (3), (4), and (5).
1. The Remittance Basis and the Arising
Basis of Taxation Are Separate Levies
Under both the arising basis and the re-
mittance basis of taxation, a non-domicil-
iary is subject to tax on U.K.-source and
non-U.K.-source income and gains. How-
ever, under the arising basis, a non-domi-
ciliary is subject to tax on worldwide in-
come and gains that arise or accrue in a
particular taxable year; while under the re-
mittance basis, a non-domiciliary is sub-
ject to tax only on U.K.-source income and
gains and on non-U.K.-source income or
gains that are remitted in a particular tax-
able year, whether the non-U.K.-source in-
come or gains arise or accrue in the year re-
mitted or in an earlier year. Thus, the bases
of these levies are different in kind, and
not merely in degree; therefore, the aris-
ing basis and remittance basis of taxation
are considered for purposes of section 901
to impose separate levies.
September 6, 20112002011–36 I.R.B.

2. The RBC, in Combination with the
Remittance Basis of Taxation, is a Single
Levy that is a Separate Levy
All non-domiciliaries who elect the
remittance basis of taxation are subject
to tax on their U.K.-source and remitted
non-U.K.-source income and gains. In ad-
dition, long-term non-domiciliaries must
pay the RBC on nominated but unremit-
ted non-U.K.-source income and gains
(and, if the amount nominated generates
a tax charge of less than £30,000, on in-
come or gains realized but not nominated
and on imputed income such that the
tax charge equals £30,000). Losses and
deductions allocated to U.K.-source in-
come or gains, remitted non-U.K.-source
income or gains, or nominated but un-
remitted non-U.K.-source income or gains
may offset income or gains in another
category in determining the amount of
the long-term non-domiciliary’s taxable
income. Therefore, under §1.901–2(d)(1),
despite a separate preliminary compu-
tation, the long-term non-domiciliary’s
U.K.-source income or gains, remitted
non-U.K.-source income or gains, and un-
remitted non-U.K.-source income or gains
giving rise to the RBC are combined in de-
termining the long-term non-domiciliary’s
taxable income; therefore, the tax imposed
on the sum of the long-term non-domicil-
iary’s three separately computed amounts
of income constitute a single levy (the
Long-Term Non-Domiciliary (LTND)
Levy).
B. The LTND Levy Is a Tax in the U.S.
Sense
A foreign levy is an income tax if and
only if it is a tax and the predominant
character of that tax is that of an income
tax in the U.S. sense. §1.901–2(a)(1).
A foreign levy is a tax if it requires a
compulsory payment pursuant to the au-
thority of a foreign country to levy taxes.
§1.901–2(a)(2)(i). The LTND Levy is a
tax because it is required to be paid pur-
suant to the authority of the government
of the United Kingdom to levy taxes.
C. The Predominant Character of the
LTND Levy Is that of an Income Tax in
the U.S. Sense
The predominant character of a foreign
taxisthatofanincometaxintheU.S.
sense if the tax is likely to reach net gain
in the normal circumstances in which it
applies, and liability for the tax is not de-
pendent, by its terms or otherwise, on the
availability of a credit for the tax against
income tax liability to another country.
§1.901–2(a)(3). Liability for the LTND
Levy is not dependent on the availability
of a credit for the LTND Levy against
income tax liability to another country.
Thus, whether the LTND Levy has the
predominant character of an income tax
depends on whether it is likely to reach
net gain in the normal circumstances in
which it applies. A foreign tax is likely
to reach net gain in the normal circum-
stances in which it applies if and only if
the tax, judged on the basis of its predom-
inant character, satisfies each of the re-
alization, gross receipts, and net income
requirements set forth in §1.901–2(b)(2),
(b)(3), and (b)(4), respectively.
1. Realization
A foreign tax satisfies the realization
requirement if, judged on the basis of its
predominant character, it is imposed upon
or subsequent to the occurrence of events
that would result in the realization of in-
come under the income tax provisions of
the Code. §1.901–2(b)(2)(i)(A). A foreign
tax that, judged on the basis of its predom-
inant character, is imposed upon the oc-
currence of realization or pre-realization
events described in §1.901–2(b)(2)(i) sat-
isfies the realization requirement even if
it is also imposed in some situations upon
the occurrence of events not described in
that paragraph. For example, a foreign tax
that, judged on the basis of its predomi-
nant character, is imposed upon the occur-
rence of realization events satisfies the re-
alization requirement even though the base
of that tax also includes imputed rental in-
come from a personal residence used by
the owner. §1.901–2(b)(2)(i).
The U.K.-source and remitted
non-U.K.-source income and gains of a
long-term non-domiciliary electing the
remittance basis of taxation generally are
computed on the basis of amounts that
satisfy the realization requirement. In
addition, the income or gains nominated
for purposes of the RBC must be part (or
all) of the non-U.K.-source income and
gains arising or accruing in that taxable
year. Income tax is charged on nominated
income, and capital gains tax is charged
on nominated gains, as if the arising basis
applied for the relevant taxable year. In
other words, the nominated income and
gains are subject to tax, even though they
have not been remitted in the taxable year.
Thus, the RBC is imposed on nominated
income or nominated gains that have been
realized or accrued in the taxable year.
If the long-term non-domiciliary real-
izes or accrues, but fails to nominate, suf-
ficient income or gains, with the result that
the tax charge on nominated income would
be less than £30,000, an amount of income
or gains is deemed to be nominated so as to
make the tax charge equal £30,000. Thus,
income or gains that have been realized or
accrued but not nominated will be subject
to the RBC. If a long-term non-domicil-
iary elects the remittance basis but does
not have sufficient realized or accrued in-
come or gains to make the tax charge equal
£30,000, the long-term non-domiciliary is
deemed to have sufficient realized or ac-
crued income or gains and to have nom-
inated such imputed income or gains to
make the tax charge equal £30,000.
Section 1.901–2(b)(2)(i) states that, as
provided in §1.901–2(a)(1), a tax either is
or is not an income tax, in its entirety, for
all persons subject to the tax; therefore,
a foreign tax on a base that includes im-
puted rental income will satisfy the real-
ization requirement even though some per-
sons subject to the tax will on some occa-
sions not be subject to the tax except with
respect to such imputed income. However,
a foreign tax based only or predominantly
on such imputed income would not sat-
isfy the realization requirement. Although
it is possible for a long-term non-domi-
ciliary to elect the remittance basis with-
out having sufficient non-U.K.-source in-
come or gains to support a £30,000 tax
charge, in which case the base of the tax
would include imputed income or gains, it
is highly unlikely that substantial numbers
of long-term non-domiciliaries in this situ-
ation would elect to be taxed on the remit-
tance basis. Accordingly, it is reasonable
to conclude that the RBC is not based only
or predominantly on such imputed income
or gains. The RBC in general is imposed
on realized income or gains, whether nom-
inated by the long-term non-domiciliary or
considered by the U.K. statute to have been
nominated. Thus, judged on its predomi-
2011–36 I.R.B.201September 6, 2011

nant character, the LTND Levy meets the
realization test.
2. Gross Receipts
A foreign tax satisfies the gross receipts
requirement if, judged on the basis of its
predominant character, it is imposed on
the basis of gross receipts or gross receipts
computed under a method that is likely
to produce an amount that is not greater
than fair market value. §1.901–2(b)(3)(i).
A foreign tax that, judged on the basis
of its predominant character, is imposed
on the basis of amounts described in
§1.901–2(b)(3)(i) satisfies the gross re-
ceipts requirement even if it is also im-
posed on the basis of some amounts not
described in that paragraph. As is the case
with income and gains that are taxed under
either the arising basis or the remittance
basis, nominated income and gains subject
to the RBC generally are based on gross
receipts. Therefore,the LTND Levy meets
the gross receipts test.
3. Net Income
A foreign tax satisfies the net income
requirement if, judged on the basis of its
predominant character, the base of the tax
is computed by reducing gross receipts to
permit recovery of the significant costs
and expenses (including significant capital
expenditures) attributable, under reason-
able principles, to such gross receipts;
or recovery of such significant costs and
expenses computed under a method that
is likely to produce an amount that ap-
proximates, or is greater than, recovery
of such significant costs and expenses.
§1.901–2(b)(4)(i). Since the LTND Levy
is imposed on U.K.-source income and
gains, remitted non-U.K.-source income
and gains, and nominated but unremitted
non-U.K.-source income and gains, all of
which consist of gross receipts less costs
and expenses, the LTND Levy satisfies the
net income requirement.
4. Conclusion
Becaus
e the LTND Levy is likely to
reach n
et gain in the normal circumstances
in whic
h it applies, it has the predomi-
nant c
haracter of an income tax in the U.S.
sense
.
HOLDING
Because the LTND Levy is a tax (within
the meaning of §1.901–2(a)(2)), and its
predominant character is that of an income
tax in the U.S. sense, the LTND Levy,
including the Remittance Basis Charge
(RBC) of £30,000, is an income tax for
which a credit is allowable under section
901. However, a credit for the LTND
Levy will be available only if the other
legal requirements for obtaining a for-
eign tax credit are satisfied. For example,
an amount paid is treated as a compul-
sory payment of income tax only to the
extent the taxpayer applies the substan-
tive and procedural provisions of foreign
law, including elective provisions such as
those available under U.K. law relating to
the LTND Levy, in such a way as to re-
duce, over time, the taxpayer’s reasonably
expected liability under foreign law for
income tax. §1.901–2(e)(5).
Taxpayers generally may rely upon
revenue rulings to determine the tax treat-
ment of their own transactions and need
not request a ruling that would apply the
principles of a published revenue ruling
to the facts of their own particular cases.
However, because each revenue ruling
represents the conclusion of the Internal
Revenue Service (IRS) as to the appli-
cation of the law to the specific facts
involved, taxpayers, IRS personnel, and
others concerned are cautioned against
reaching the same conclusion in other
cases unless those cases present facts
and circumstances that are substantially
thesameasthoseintherevenueruling.
§601.601(d)(2)(v)(e). Accordingly, be-
cause the provisions of U.K. law described
in this revenue ruling are facts on which
this revenue ruling bases its holding, a
taxpayer may not rely on the revenue rul-
ing if the relevant provisions have been
amended in any material respect, and the
taxpayer is responsible for determining
whether any such modification has oc-
curred.
DRAFTING INFORMATION
The pr
incipal author of this revenue rul-
ing is
Teresa Burridge Hughes of the Of-
fice o
f Associate Chief Counsel (Interna-
tion
al). For further information regarding
this revenue ruling, contact Ms. Hughes at
(202) 622–3850 (not a toll-free call).
Section 1035.—Certain
Exchanges of Insurance
Policies
The Pension Protection Act amended sections 72,
1035, and 7702B of the Code. Notice 2011-68 pro-
vides interim guidance on these amendments and re-
quests comments on issues to be addressed in future
guidance concerning the taxation of annuity and life
insurance contracts with a long-term care insurance
feature. See Notice 2011-68, page 205.
Section 1274
.—Determi-
nation of Iss
ue Price in the
Case of Cert
ain Debt Instru-
ments Issue
d for Property
(Also Secti
ons 42, 280G, 382, 412, 467, 468, 482,
483, 642, 80
7, 846, 1288, 7520, 7872.)
Federal rat
es; adjusted federal rates;
adjusted fe
deral long-term rate and the
long-term e
xempt rate.For purposes of
sections 38
2, 642, 1274, 1288, and other
sections of
the Code, tables set forth the
rates for S
eptember 2011.
Rev. Rul. 2
011–20
This reven
ue ruling provides various
prescribe
d rates for federal income tax
purposes f
or September 2011 (the current
month). Ta
ble 1 contains the short-term,
mid-term
, and long-term applicable fed-
eral rate
s (AFR) for the current month
for purpo
ses of section 1274(d) of the
Internal
Revenue Code. Table 2 contains
the shor
t-term, mid-term, and long-term
adjuste
d applicable federal rates (ad-
justed A
FR) for the current month for
purpose
s of section 1288(b). Table 3 sets
forth th
e adjusted federal long-term rate
and the
long-term tax-exempt rate de-
scribe
d in section 382(f). Table 4 contains
the app
ropriate percentages for deter-
mining
the low-income housing credit
descri
bed in section 42(b)(1) for build-
ings p
laced in service during the current
month
. However, under section 42(b)(2),
the ap
plicable percentage for non-feder-
ally s
ubsidized new buildings placed in
servi
ce after July 30, 2008, and before
Decem
ber 31, 2013, shall not be less than
9%. F
inally, Table 5 contains the federal
September 6, 20112022011–36 I.R.B.

rate for determining the present value of
an annuity, an interest for life or for a term
of years, or a remainder or a reversionary
interest for purposes of section 7520.
REV. RUL. 2011–20 TABLE 1
Applicable Federal Rates (AFR) for September 2011
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR.26%.26%.26%.26%
110% AFR.29%.29%.29%.29%
120% AFR.31%.31%.31%.31%
130% AFR.34%.34%.34%.34%
Mid-term
AFR1.63%1.62%1.62%1.61%
110% AFR1.79%1.78%1.78%1.77%
120% AFR
1.95%
1.94%1.94%1.93%
130% AFR2.12%2.11%2.10%2.10%
150% AFR
2.44%2.43%2.42%2.42%
175% AFR
2.86%2.84%2.83%2.82%
Long-term
AFR
3.57%3.54%3.52%3.51%
110% AFR3.93%3.89%3.87%3.86%
120% AFR4.30%
4.25%
4.23%4.21%
130% AFR
4.65%
4.60%
4.57%4.56%
REV. RUL. 2011–20 TABLE 2
Adjusted AFR for September 2011
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-te
rm adjusted
AFR
.35%.35%.35%.35%
Mid-term adjusted AFR1.47%1.46%1.46%1.46%
Long-term adjusted
AFR
3.77%3.74%3.72%3.71%
REV. RUL
. 2011–20 TABLE 3
Rates Under Section 382 for September 2011
Adjusted federal long-term rate for the current month3.77%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted
federal long-term rates for the current month and the prior two months.)3.86%
2011–36 I.R.B.203September 6, 2011

REV. RUL. 2011–20 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for September 2011
Note: Under Section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after
July 30, 2008, and before December 31, 2013, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit7.60%
Appropriate percentage for the 30% present value low-income housing credit3.26%
REV. RUL. 2011–20 TABLE 5
Rate Under Sec
tion 7520 for September 2011
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,
or a remainder or reversionary interest2.0%
Section 1288.
—Treatment
of Original Is
sue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2011. See Rev. Rul. 2011-20, page
202.
Section 7520.—Valuation
Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2011. See Rev. Rul. 2011-20, page
202.
Section 7872.—Treatment
of Loans With Below-Market
Interest Rates
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of September 2011. See Rev. Rul. 2011-20, page
202.
September 6, 20112042011–36 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Annuity and Life Insurance
Contracts with a Long-Term
Care Insurance Feature
Notice 2011–68
SECTION 1. PURPOSE
This notice relates to amendments
made to §§ 72, 1035, and 7702B of the
Internal Revenue Code by the Pension
Protection Act of 2006, P.L. 109–280
(the “PPA”). These amendments af-
fect qualified long-term care insur-
ance, annuity, and life insurance con-
tracts issued after December 31, 1996,
but only with respect to taxable years
beginning after December 31, 2009,
and tax-free exchanges occurring after
December 31, 2009.This notice
provides interim guidance on the
application of theseamendments in certain
circumstances, and requests comments
on certain other issues to be addressed in
future guidance concerning the taxation of
annuity and life insurance contracts with a
long-term care insurance feature.
SECTION 2. BACKGROUND
.01 Section 72 sets forth rules for the in-
come taxation of amounts received under
an annuity, endowment, or life insurance
contract.
.02 Section 72(a) provides that gross
income includes any amount received as
an annuity under an annuity, endowment,
or life insurance contract. Section 72(b),
however, excludes from gross income that
part of an amount received as an annuity
that bears the same ratio to that amount
as the investment in the contract bears to
the expected return under the contract (de-
termined as of the annuity starting date).
For this purpose, investment in the contract
is defined in § 72(c)(1) to equal the ag-
gregate amount of premiums or other con-
sideration paid for the contract as of the
annuity starting date,minus the aggregate
amount received under the contract before
that date, to the extent that amount was ex-
cludable from gross income.
.03 Section 72(e) governs the treatment
of amounts received under an annuity con-
tract that are not received as an annuity.
Section 72(e)(2) provides in general that
such amounts received on or after the an-
nuity starting date are included in gross in-
come, and that amounts received before
the annuity starting date are included in
gross income to the extent allocable to in-
come on the contract,i.e.on an income-
first basis. For purposes of determining
the amount taxable under this subsection,
§ 72(e)(6) defines investment in the con-
tract as the aggregate amount of premiums
or other consideration paid for the contract,
minus the aggregate amount previously re-
ceived under the contract, to the extent
that amount was excludable from gross in-
come.
.04 Section 1035(a) provides that no
gain or loss shall be recognized on cer-
tain exchanges of insurance policies. The
legislative history of § 1035 states that
tax-free exchange treatment is appropri-
ate for “individuals who have merely ex-
changed one insurance policy for another
better suited to their needs.” H.R. Rep. No.
1337, 83d Cong., 2d Sess. 81 (1954). Sec-
tion 1.1035–1 of the Income Tax Regula-
tions provides that “the exchange, without
recognition of gain or loss, of an annuity
contract for another annuity contract under
§ 1035(a)(3) is limited to cases where the
same person or persons are the obligee or
obligees under the contract received in the
exchange as under theoriginal contract.”
.05 InConway v. Commissioner,111
T.C. 350 (1998),acq., 1999–2 C.B. xvi,
the Tax Court held that the direct exchange
by an insurance company of a portion of
an existing annuity contract to an unre-
lated insurance company for a new annu-
ity contract was a tax-free exchange un-
der § 1035. Such a transaction is some-
times referred to as a “partial exchange.”
See alsoRev. Rul. 2003–76, 2003–2
C.B. 355 (direct transfer of a portion of
an annuity contract for a new annuity con-
tract treated as a tax-free exchange under
§ 1035); Rev. Rul. 2002–75, 2002–2 C.B.
812 (assignment of an entire annuity con-
tract for deposit into a preexisting annuity
contract treated as a tax-free exchange un-
der § 1035).
.06 Section 7702B(b) defines a quali-
fied long-term care insurance contract as
an insurance contract that (a) provides pro-
tection only for coverage of qualified long-
term care services; (b) does not pay or re-
imburse expenses incurred for certain ser-
vices or items reimbursable under Title
XVIII of the Social Security Act; (c) is
guaranteed renewable; (d) does not pro-
vide for a cash surrender value; (e) per-
mits premium refunds or policyholder div-
idends to be applied only as a reduction in
future premiums or an increase in future
benefits; and (f) meets the consumer pro-
tection requirements of § 7702B(g).
.07 Under § 7702B(a), a qualified
long-term care insurance contract is
treated as an accident and health insurance
contract. Premiums paid under a qualified
long-term care insurance contract are gen-
erally treated as payments for insurance
for purposes of the deduction under § 213
for expenses paid for medical care, and
amounts received as benefits under such a
contract generally are treated as amounts
received for personal injuries and sick-
ness and as reimbursement for expenses
actually incurred for medical care. An
employer plan providing coverage under
such a contract treats the contract as an
accident and health plan with respect to
that coverage. The issuer of a qualified
long-term care insurance contract treats
the contract as a guaranteed renewable
contract subject to the rules of § 816(e).
SECTION 3. AMENDMENTS MADE
BY THE PPA: DISCUSSION AND
APPLICATION
.01 The PPA was enacted on
August 17, 2006. Section 844 of the PPA
made changes to §§ 72, 1035, and 7702B,
and added new reporting requirements
for charges or payments for qualified
long-term care insurance contracts under
combined arrangements.
Section 72
.02 Section 844(a) of the PPA amended
§ 72(e) by adding a new paragraph,
§ 72(e)(11). Section 72(e)(11) provides
that a charge against the cash value of
an annuity contract or the cash surrender
value of a life insurance contract made as
payment for coverage under a qualified
long-term care insurance contract that is
part of or a rider on the annuity or life
insurance contract is not includible in
2011–36 I.R.B.205September 6, 2011

income. The investment in the contract
is reduced (but not below zero) by the
charge.
.03 The PPA did not otherwise amend
the definition of “investment in the con-
tract” in § 72(c)(1) and 72(e)(6). Ac-
cordingly, the Treasury Department and
the IRS believe that all premiums paid for
a combination contract that is an annuity
and also provides long-term care insurance
are generally included in investment in the
contract under § 72 if (i) the premiums are
credited to the contract’s cash value (rather
than directly to the long-term care insur-
ance contract that is part of or a rider to
the contract), and (ii) coverage under the
long-term care insurance contract is paid
for by charges against the cash value of
the contract. Consistently, a waiver of pre-
miums under such a contract, such as on
account of disability or because the an-
nuitant has become chronically ill, should
be accounted for in the same manner as
awaiverofpremiumsunderothercon-
tracts for which “investment in the con-
tract” is determined under § 72(c)(1) or
72(e)(6).See, e.g.,Estate of Wong Wing
Non v. Commissioner, 18 T.C. 205 (1952)
(waived premiums not treated as construc-
tively received as disability benefits, and
therefore not included as part of premium
paid for endowment life insurance policy).
Section 1035
.04 Section 844(b) of the PPA ex-
panded the categories of exchanges that
are treated as tax-free under § 1035 to
include certain exchanges that involve a
qualified long-termcare insurance con-
tract. Accordingly, § 1035 now applies to
the exchange of a life insurance contract
for another life insurance, endowment,
annuity, or qualified long-term care in-
surance contract; an endowment contract
for another endowment, annuity, or qual-
ified long-term care insurance contract;
an annuity contract for another annu-
ity or qualified long-term care insurance
contract; or a qualified long-term care
insurance contract for another qualified
long-term care insurance contract. The
PPA also amended § 1035(b)(2) and (3)
to provide that, for purposes of § 1035, a
contract does not fail to be treated as a life
insurance contract or an annuity contract
solely because a qualified long-term care
insurance contract is a part of or a rider on
the contract.
.05 Just as the direct transfer of a por-
tion of the cash surrender value of an ex-
isting deferred annuity contract for a sec-
ond annuity contract may be treated as a
tax-free exchange under § 1035, the di-
rect transfer of a portion of the cash sur-
render value of an existing deferred an-
nuity contract for a qualified long-term
care insurance contract may be treated as
a tax-free exchange, provided the require-
ments of § 1035 are otherwise met.See,
e.g., Rev. Proc. 2011–38, 2011–30 I.R.B.
66 (setting forth conditions under which
such a transfer will be treated as a tax-free
exchange under § 1035);but see,Rev.
Rul. 2007–24, 2007–1C.B. 1282 (receipt
of a check under a nonqualified annuity
contract and endorsement of the check to
a second company as consideration for a
second annuity contract treated as a dis-
tribution under § 72(e), rather than as a
tax-free exchange under § 1035).
.06 Although § 7702B(b)(1)(D) and
(E) limit the extent to which a qualified
long-term care insurance contract may
have a cash value or premium refund fea-
ture, § 7702B(b)(2)(C) permits the refund
of premiums in the event of a complete
surrender or cancellation of the contract,
provided the amount does not exceed the
aggregate premiums paid under the con-
tract. Such a refund is includible in gross
income to the extent that any deduction
or exclusion was allowable with respect
to the premiums. Moreover, § 1031(d)
provides that if property is acquired in an
exchange described in § 1035(a), then the
acquired property’s adjusted basis shall
be the same as that of the property ex-
changed, decreased in the amount of any
money received by the taxpayer and in-
creased in the amount of gain or decreased
in the amount of loss to the taxpayer that
was recognized on such exchange. Ac-
cordingly, Treasury and the IRS believe
that, under § 1031(d), the adjusted basis
of a qualified long-term care insurance
contract received in a tax-free exchange
under § 1035(a) generally carries over
from the life insurance, endowment, annu-
ity, or qualified long-term care insurance
contract exchanged.
Section 7702B, Information Reporting,
and DAC
.07 Section 844(c) of the PPA amended
§ 7702B(e) of the Code to provide that,
in the case of any long-term care insur-
ance coverage (whether or not qualified)
provided by a rider on or as part of a life
insurance contract or an annuity contract,
the portion of the contract providing such
coverage is treated as a separate contract.
For this purpose, the term “portion” means
only the terms and benefits under the life
insurance or annuity contract that are in ad-
dition to the terms and benefits under the
contract without regard to long-term care
insurance coverage. Prior to this amend-
ment, § 7702B(e) provided a similar rule,
but only for coverage provided as part of a
life insurance contract.
.08 Section 844(d) of the PPA added
§ 6050U of the Code, which requires any
person who makes a charge against the
cash value of an annuity contract (or the
cash surrender value of a life insurance
contract) that is excluded from gross in-
come under § 72(e)(11) to file an infor-
mation return setting forth the aggregate
amount of such charges for the year, the
amount of the reduction in investment in
the contract by reason of such charges, and
the name, address, and TIN of the holder of
the contract. Statements are required to be
furnished to persons with respect to whom
information is required.
.09 Section 844(e) of the PPA added
§ 848(e) of the Code, which treats an annu-
ity or life insurance contract that includes
a qualified long-term care insurance con-
tract as a part of or a rider on such a con-
tract as a contract that is subject to a capi-
talization rate for specified policy acquisi-
tion expenses (DAC) equal to 7.7 percent
of net premiums.
Effective Date
.10 The amendments made by the PPA
are effective generally for contracts issued
after December 31, 1996, but only with re-
spect to taxable years beginning after De-
cember 31, 2009. The amendments relat-
ing to tax-free exchanges apply with re-
spect to exchanges occurring after Decem-
ber 31, 2009. The amendment relating
to information reporting applies to charges
made after December 31, 2009.
September 6, 20112062011–36 I.R.B.

SECTION 4. REQUEST FOR
COMMENTS
.01 The Treasury Department and Inter-
nal Revenue Service request comments to
assist in the development of further guid-
ance concerning the taxation of annuity
and life insurance contracts with a long-
term care insurance feature. For example:
(a) What issues arise when the owner
of an annuity contract with a long-term
care insurance feature decides to annuitize
the contract? Are the policyholder’s rights
under the long-term care insurance fea-
ture typically the same or different before
and after the annuity starting date? How
should long-term care insurance charges
be accounted for after the annuity starting
date? How should the exclusion ratio be
determined?
(b) For the purpose of determining
whether the long-term care features of an
annuity contract qualifyasaninsurance
contract and thus as a qualified long-term
care insurance contract, what is the ap-
propriate characterization of long-term
care payments that cause a reduction in a
contract’s cash value? Are there common
features or contract designs that would
lend themselves to guidance on deter-
mining whether enough insurance risk is
present for the long-term care features to
qualify as an insurance contract?
(c) Is guidance needed on the partial
exchange of the right to some or all of
the payments under an immediate annuity
contract for a qualified long-term care in-
surance contract? If so, how is such an
exchange effected? Under what circum-
stances should such an exchange be treated
as tax-free under § 1035? How should the
basis and investment in the contract be ap-
portioned between the qualified long-term
care insurance contract received in the ex-
change and the rights still held in the ex-
changed annuity?
(d) What changes, if any, are needed to
existing guidance (including publications,
forms, and instructions) on information re-
porting and record keeping to assist is-
suers of life insurance, annuity, or quali-
fied long-term care insurance contracts in
meeting their obligations with regard to the
amendments made by section 844 of the
PPA?
.02 Comments should be submitted in
writing on or before November 9, 2011 and
should contain a reference to this Notice
2011–68. Comments may be submitted to
CC:PA:LPD:PR (Notice 2011–68), Room
5203, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washing-
ton, DC 20044. Alternatively, taxpayers
may submit comments electronically to
Notice.Comments@irscounsel.treas.gov.
Please include “Notice 2011–68” in the
subject line of any electronic communica-
tions.
.03 Submissions may be hand-delivered
Monday through Friday between the hours
of 8 a.m. and 4 p.m. to CC:PA:LPD:PR
(Notice 2011–68), Courier’s Desk, Inter-
nal Revenue Service, 1111 Constitution
Ave., NW, Washington, DC 20224. All
comments will be available for public in-
spection and copying.
SECTION 5. PROCEDURAL
INFORMATION
This notice serves as an “administra-
tive pronouncement” as that term is used
in § 1.6662–4(d)(3)(iii) of the regulations
and may be relied upon to the same extent
as a revenue ruling or revenue procedure.
DRAFTING INFORMATION
The principal author of this notice is
Rebecca L. Baxter of the Office of Asso-
ciate Chief Counsel (Financial Institutions
& Products). For further information re-
garding this notice, contact Ms. Baxter at
(202) 622–7117 (not a toll-free call).
2011–36 I.R.B.207September 6, 2011

Part IV. Items o
fGeneralInterest
Notice of Prop
osed
Rulemaking an
dNoticeof
Public Hearin
g
Health Insura
nce Premium
Tax Credit
REG–131491–
10
AGENCY: Inte
rnal Revenue Service
(IRS), Treas
ury.
ACTION: Noti
ce of proposed rulemaking
and notice o
f public hearing.
SUMMARY: Th
is document contains pro-
posed regul
ations relating to the health
insurance p
remium tax credit enacted by
the Patient
Protection and Affordable Care
Act and the H
ealth Care and Education
Reconcili
ation Act of 2010, as amended
by the Medi
care and Medicaid Extenders
Act of 2010
, the Comprehensive 1099
Taxpayer P
rotection and Repayment of
Exchange
Subsidy Overpayments Act of
2011, and
the Department of Defense and
Full-Yea
r Continuing Appropriations Act,
2011. The
se proposed regulations pro-
vide guid
ance to individuals who enroll
in quali
fied health plans through Afford-
able Ins
urance Exchanges and claim the
premium
tax credit, and to Exchanges that
make qua
lified health plans available to
individ
uals and employers. This document
also pr
ovides notice of a public hearing on
these p
roposed regulations.
DATES:
Written (including elec-
tronic
) comments must be received by
Octobe
r 31, 2011. Outlines of topics to be
discus
sed at the public hearing scheduled
for No
vember 17, 2011, at 10 a.m. must
be rec
eived by November 10, 2011.
ADDRE
SSES: Send submissions to:
CC:PA
:LPD:PR(REG–131491–10),
Room 5
203, Internal Revenue Service,
PO Box
7604, Ben Franklin Station,
Wash
ington, DC 20044. Submissions may
be ha
nd-delivered Monday through Friday
betw
een the hours of 8 a.m. and 4 p.m.
to CC
:PA:LPD:PR (REG–131491–10),
Cour
ier’s Desk, Internal Revenue
Serv
ice, 1111 Constitution Avenue, NW,
Was
hington, DC, or sent electronically
via
theFederaleRulemaking
Portal atwww.
regulations.gov(IRS
REG–131491–1
0). The public hearing
will be held in
the IRS Auditorium,
Internal Reve
nue Building, 1111
Constitution
Avenue, NW, Washington,
DC.
FOR FURTHER I
NFORMATION
CONTACT: Con
cerning the proposed
regulations
, Shareen S. Pflanz, (202)
622–4920, or
Frank W. Dunham III, (202)
622–4960; c
oncerning the submission of
comments, t
he public hearing, and to be
placed on th
e building access list to attend
thepublich
earing, Funmi Taylor, (202)
622–7180 (
not toll-free calls).
SUPPLEMEN
TARY INFORMATION:
Paperwork
Reduction Act
The collec
tion of information con-
tained in t
his notice of proposed rulemak-
ing has bee
nsubmittedtotheOfficeof
Managemen
t and Budget in accordance
with the P
aperwork Reduction Act of
1995 (44 U
.S.C. 3507(d)). Comments
on the col
lection of information should
be sent to
theOffice of Management
and Budge
t, Attn: Desk Officer for
the Depa
rtment of the Treasury, Office
of Infor
mation and Regulatory Affairs,
Washing
ton, DC 20503, with copies
to theIn
ternal Revenue Service,
Attn: IR
S Reports Clearance Officer,
SE:W:C
AR:MP:T:T:SP, Washington, DC
20224.
Comments on the collection
of info
rmation should be received by
Octobe
r 17, 2011.Comments are
specif
ically requested concerning:
Whethe
r the proposed collection of in-
format
ion is necessary for the proper per-
forma
nce of the functions of the IRS, in-
cludi
ng whether the information will have
pract
ical utility;
How th
e quality, utility, and clarity of
the in
formation to be collected may be en-
hance
d;
How th
e burden of complying with the
propo
sed collection of information may be
minim
ized, including through the appli-
cati
on of automated collection techniques
or ot
her forms of information technology;
and
Esti
mates of capital or start-up costs
and c
osts of operation, maintenance, and
purchase of se
rvices to provide informa-
tion.
The collectio
n of information in these
proposed regu
lations is in §1.36B–5. The
collection of
information is necessary to
properly reco
ncile the amount of the pre-
mium tax credi
t with advance credit pay-
ments made un
der section 1412 of the Pa-
tient Protec
tion and Affordable Care Act
(42 U.S.C. 18
082). The collection of infor-
mation is req
uired to comply with the pro-
visions of s
ection 36B(f)(3) of the Internal
Revenue Cod
e (Code). The likely respon-
dents are Af
fordable Insurance Exchanges
establishe
d under section 1311 or 1321 of
the Patien
t Protection and Affordable Care
Act (42 U.S
.C. 13031 or 42 U.S.C. 18041).
The burden
for the collection of infor-
mation con
tained in proposed regulation
§1.36B–5 w
ill be reflected in the burden
on a form th
at the IRS will create to request
the infor
mation in the proposed regulation.
An agency m
ay not conduct or sponsor,
and a pers
on is not required to respond to, a
collecti
on of information unless it displays
a valid co
ntrol number assigned by the Of-
fice of Ma
nagement and Budget.
Backgrou
nd
Beginning
in 2014, under the Patient
Protecti
on and Affordable Care Act, Pub-
lic Law 11
1–148 (124 Stat. 119 (2010)),
and the He
alth Care and Education Recon-
ciliatio
n Act of 2010, Public Law 111–152
(124 Sta
t. 1029 (2010)) (collectively,
the Affo
rdable Care Act), individuals
and smal
l businesses will be able to pur-
chase pr
ivate health insurance through
State-b
ased competitive marketplaces
called
Affordable Insurance Exchanges
(Excha
nges). Exchanges will offer Amer-
icans c
ompetition and choice. Insurance
compan
ies will compete for business on
a level
playing field, driving down costs.
Consum
ers will have a choice of health
plans
to fit their needs and Exchanges will
give i
ndividuals and small businesses the
same p
urchasing power as big businesses.
The De
partments of Health and Human
Servi
ces and Treasury are working in close
coor
dination to release guidance related
to Ex
changes, in several phases. The first
in th
is series was a Request for Com-
ment
relating to Exchanges, published in
theF
ederal Registeron August 3, 2010
September 6, 20112082011–36 I.R.B.

(75 FR 45584). Second, Initial Guid-
ance to States on Exchanges was issued
on November 18, 2010. Third, proposed
regulations on the application, review, and
reporting process for waivers for State
innovation was published in theFederal
Registeron March 14, 2011 (76 FR
13553). Fourth, two proposed regulations
were published in theFederal Register
on July 15, 2011 (76 FR 41866 and 76
FR 41930) to implement components
of the Exchange and health insurance
premium stabilization policies in the
Affordable Care Act. Fifth, three proposed
regulations, including this one, are being
published in theFederal Registeron
August 17, 2011, to provide guidance
on the eligibility determination process
related to enrollment in a qualified health
plan or insurance affordability program;
on Medicaid, the Children’s Health
Insurance Program (CHIP), and other
State health coverage programs; and these
proposed regulations on the premium tax
credit.
Section 1401 of the Affordable Care
Act amended the Code to add section
36B, allowing a refundable premium tax
credit to help individuals and families af-
ford health insurance coverage. Section
36B was subsequently amended by the
Medicare and Medicaid Extenders Act
of 2010, Public Law 111–309 (124 Stat.
3285 (2010)); the Comprehensive 1099
Taxpayer Protection and Repayment of
Exchange Subsidy Overpayments Act of
2011, Public Law 112–9 (125 Stat. 36
(2011)); and the Department of Defense
and Full-Year Continuing Appropria-
tions Act, 2011, Public Law 112–10 (125
Stat. 38 (2011)). The section 36B credit
is designed to make a qualified health
plan affordable by reducing a taxpayer’s
out-of-pocket premium cost.
Under section 1411 of the Affordable
Care Act (42 U.S.C. 18081), an Exchange
makes an advance determination of credit
eligibility for individuals enrolling in cov-
erage through the Exchange and seeking
financial assistance. Using information
available at the time of enrollment, the Ex-
change determines (1) whether the individ-
ual meets the income and other require-
ments for advance credit payments, and (2)
the amount of the advance payments. Ad-
vance payments are made monthly under
section 1412 of the Affordable Care Act
(42 U.S.C. 18082) to the issuer of the qual-
ified health plan in which the individual
enrolls.
Eligibility
To be eligible for a premium tax credit,
an individual must be an applicable tax-
payer. Under section 36B(c)(1), an ap-
plicable taxpayer is a taxpayer (1) with
household income for the taxable year
between 100 percent and 400 percent of
the federal poverty line (FPL) for the tax-
payer’s family size, (2) who may not be
claimed as a dependent by another tax-
payer, and (3) who files a joint return if
married.
Section 36B(c)(1)(B) provides that a
taxpayer who is an alien lawfully present
in the United States, whose household in-
come is 100 percent of the FPL or less, and
who is not eligible for Medicaid, nonethe-
less is treated as an applicable taxpayer.
Under section 36B(e)(2), an individual is
lawfully present if the individual is, and
is reasonably expected to be for the entire
period of enrollment for which the credit
is claimed, a U.S. citizen or national or an
alien lawfully present in the United States.
Under section 36B(d)(1), a taxpayer’s
family consists of the individuals for
whom the taxpayer claims a personal
exemption deduction under section 151
for the taxable year. Taxpayers may
claim a personal exemption deduction for
themselves, a spouse, and each of their
dependents. Section 152 provides that a
taxpayer’s dependent may be a qualifying
child or qualifying relative, including an
unrelated individual who lives with the
taxpayer. Family size is equal to the num-
ber of individuals in the taxpayer’s family.
Section 36B(d)(2) defines household
income as the modified adjusted gross in-
come of all individuals included in family
size who are required to file an income tax
return. Modified adjusted gross income
means adjusted gross income (within
the meaning of section 62) increased by
amounts excluded from gross income un-
der section 911 and tax-exempt interest
a taxpayer receives or accrues during the
taxable year.
Under section 36B(b)(1), a taxpayer’s
premium assistance credit amount is the
sum of the premium assistance amounts
for all coverage months in the taxable year
for individuals in the taxpayer’s family.
Section 36B(c)(2)(A) provides that a cov-
erage month is any month for which the
taxpayer or any family member is cov-
ered by a qualified health plan enrolled in
through an Exchange and the premium is
paid by the taxpayer or through an advance
credit payment.
Under section 36B(c)(2)(B), a cover-
age month for an individual does not in-
clude a month in which the individual is
eligible for minimum essential coverage,
as defined in section 5000A(f), other than
coverage offered in the individual mar-
ket. Minimum essential coverage may
be government-sponsored coverage such
as Medicare, Medicaid, CHIP, TRICARE,
and veterans’ health care under Title 38
U.S.C. Certain employer-sponsored plans
also may be minimum essential coverage.
In general, under section 36B(c)(2)(C), an
individual is eligible for employer-spon-
sored minimum essential coverage only
if the employee’s share of the premiums
is affordable and the coverage provides
minimum value. However, under section
36B(c)(2)(C)(iii), anindividual is treated
as eligible for employer-sponsored mini-
mum essential coverage if the individual
actually enrolls in an eligible employer-
sponsored plan, even if the coverage does
not meet the affordability and minimum
value requirements.
Under section 5000A(f)(1)(E), the De-
partment of Health and Human Services,
in coordination withthe Treasury Depart-
ment, may designate other health benefits
coverage as minimum essential coverage.
Regulations under section 5000A are ex-
pected to provide additional guidance on
minimum essential coverage.
Credit Computation
Section 36B(b)(1) provides that the pre-
mium assistance credit amount is the sum
of the premium assistance amounts for all
coverage months in the taxable year for
individuals in the taxpayer’s family. The
premium assistance amount for a coverage
month is the lesser of (1) the premiums
for the month for one or more qualified
health plans that cover a taxpayer or family
member, or (2) the excess of the adjusted
monthly premium for the second lowest
cost silver plan (as described in section
1302(d)(1)(B) of the Affordable Care Act
(42 U.S.C. 18022(d)(1)(B))) (the bench-
mark plan) that applies to the taxpayer over
1
/12of the product of the taxpayer’s house-
2011–36 I.R.B.209September 6, 2011

hold income and the applicable percentage
for the taxable year. The adjusted monthly
premium, in general, is the premium an in-
surer would charge for the plan adjusted
only for the ages of the covered individ-
uals.
Therefore, the monthly premium assis-
tance amount is the lesser of the premium
for the qualified health plan in which a
taxpayer or family member enrolls, or the
excess of the premium for the benchmark
plan over the applicable percentage of the
taxpayer’s household income. In general,
this percentage of the taxpayer’s house-
hold income represents the amount of the
taxpayer’s required out-of-pocket contri-
bution to the premium cost if the taxpayer
purchases the benchmark plan. The re-
mainder of the premium for the benchmark
plan is the premium assistance amount.
A taxpayer’s applicable percentage
increases as the taxpayer’s household in-
come as a percentage of the FPL (FPL
percentage) for the taxpayer’s family size
increases. For 2014, the applicable per-
centage is 2 percent for taxpayers with
household income up to 133 percent of
the FPL and increases from 3 percent to
9.5 percent for taxpayers with household
incomes between 133 percent and 400
percent of the FPL. The applicable per-
centages may be adjusted after 2014.
Taxpayers must pay the difference be-
tween the premium assistance amount and
the premium for the plan they choose. The
amount of a taxpayer’s credit is limited to
the amount of actual premiums for the tax-
able year.
Individuals not lawfully present are
not eligible to enroll in a qualified health
plan through an Exchange. Accordingly,
section 36B(e)(1)(A) provides that, for
a household with at least one individual
not lawfully present, the portion (if any)
of the premium attributable to that indi-
vidual is not included in determining the
taxpayer’s credit. Section 36B(e)(1)(B)
provides that the family size for comput-
ing the FPL percentage for a family with
at least one unlawfully present individual
is determined by excluding the unlawfully
present individual. Household income
for computing the FPL percentage and
determining the applicable percentage is
the product of the taxpayer’s household
income (determined without regard to sec-
tion 36B(e)) and a fraction, the numerator
of which is the FPL for the taxpayer’s
family size excluding individuals who are
not lawfully present, and the denominator
of which is the FPL for the taxpayer’s
family size including individuals who are
not lawfully present.
Reconciliation
A taxpayer must reconcile the actual
credit for the taxable year computed on the
taxpayer’s tax return with the amount of
advance payments. If a taxpayer’s credit
amount exceeds the amount of the tax-
payer’s advance payments for the taxable
year, the taxpayer may receive the excess
as an income tax refund. If a taxpayer’s
advance payments exceed the taxpayer’s
credit amount, the taxpayer owes the ex-
cess as an additional income tax liabil-
ity. However, section 36B(f)(2)(B) places
a graduated set of caps on the additional
tax liability for taxpayers with household
income under 400 percent of the FPL. The
repayment limitation amounts range from
$600 to $2,500 (one-half that amount for
single taxpayers) depending on FPL, and
are adjusted to reflect changes in the cost
of living beginning in 2015.
Section 36B(g) directs the Secretary
of the Treasury to issue regulations that
provide for coordinating the premium tax
credit with the program for advance pay-
ments and for reconciling the credit and
advance payments when the taxpayer’s
filing status changes during the taxable
year.
Information Reporting
Section 36B(f)(3) directs an Exchange
to report to the IRS and taxpayers certain
information relating to health plans pro-
vided through the Exchange, including the
amount of any advance credit payments.
Explanation of Provisions
1.Eligibility for the Premium Tax Credit
The proposed regulations provide that
a taxpayer is eligible for the credit for
a taxable year if the taxpayer is an ap-
plicable taxpayer and the taxpayer or a
member of the taxpayer’s family (1) is
enrolled in one or more qualified health
plans through an Exchange established
under section 1311 or 1321 of the Af-
fordable Care Act (42 U.S.C. 13031 or
42 U.S.C. 18041) and (2) is not eligible for
minimum essential coverage other than
coverage in the individual market.
a.Applicable taxpayer
i. Lawfully Present Aliens
In general, to be an applicable taxpayer,
a taxpayer must have household income
that is at least 100 percent but not more
than 400 percent of the FPL. Under sec-
tion 36B(c)(1)(B), a lawfully present alien
with household income under 100 percent
of the FPL and not eligible for Medicaid is
treated as having household income of 100
percent of the FPL for purposes of quali-
fying as an applicable taxpayer. The pro-
posed regulations provide that premium
assistance amounts for these taxpayers are
computed based on actual household in-
come. The proposed regulations define
lawfully present by reference to 45 CFR
§152.2, which determines lawful presence
for purposes of the Pre-Existing Condition
Insurance Plan Program.
ii. Taxpayers with Household Income
under 100 Percent of the FPL
The proposed regulations clarify the
treatment of a taxpayer who receives ad-
vance credit payments but has household
income below 100 percent of the FPL for
the taxable year.
Taxpayers with household incomes be-
low 100 percent of the FPL (other than
lawfully present aliens) are not eligible for
the premium tax credit because they are el-
igible to receive assistance through Medic-
aid. However, an Exchange may approve
a taxpayer for advance credit payments
based on projecting a level of household
income for the taxable year that makes the
taxpayer ineligible for Medicaid. If, con-
trary to that projection, the taxpayer’s ac-
tual household income for the taxable year
is under 100 percent of the FPL (for ex-
ample, because the taxpayer experiences
a change in circumstances, such as a job
loss, during the year), the taxpayer would
not be an applicable taxpayer, and would
not be eligible for the credit under the gen-
eral rule. Accordingly, the proposed regu-
lations provide a special rule treating a tax-
payer with household income below 100
percent of the FPL as an applicable tax-
payer if, when a taxpayer enrolls in a quali-
fied health plan, an Exchange projects that
household income for the taxpayer will
September 6, 20112102011–36 I.R.B.

be between 100 and 400 percent of the
FPL for the taxable year and approves ad-
vance credit payments. Premium assis-
tance amounts for these taxpayers also are
computed based on actual household in-
come and not a deemed household income
that equals 100 percent of the FPL.
iii. Individuals WhoAre Incarcerated or
Not Lawfully Present
Under section 1312(f) of the Affordable
Care Act, individuals who are incarcerated
(other than pending disposition of charges)
or not lawfully present in the United States
may not enroll in a qualified health plan
through an Exchange. However, these in-
dividuals may have family members who
are eligible for Exchange coverage. Ac-
cordingly, the proposed regulations pro-
vide that an individual who is not lawfully
present in the United States or is incarcer-
ated, although not eligible to enroll in a
qualified health plan, may be an applicable
taxpayer if a family member is eligible to
and does enroll in a qualified health plan.
b.Minimum essential coverage
i. Government-Sponsored Coverage
Under the proposed regulations, an in-
dividual generally is eligible for govern-
ment-sponsored minimum essential cover-
age for any month thatthe individual meets
the requirements for coverage under a gov-
ernment-sponsored program described in
section 5000A(f)(1)(A). However, for pur-
poses of the premium tax credit, an indi-
vidual is eligible for minimum essential
coverage under a veterans’ health care pro-
gram only if the individual is enrolled in
a veteran’s health care program identified
as minimum essential coverage in regu-
lations issued under section 5000A. The
Commissioner may define eligibility for
specific government-sponsored programs
further in published guidance of general
applicability, see §601.601(d)(2) of this
chapter. For example, it is expected that
future guidance will provide that a person
is eligible for Medicaid on the basis of be-
ing blind or disabled or needing long-term
care services only when a State Medicaid
agency or the Social Security Administra-
tion, as appropriate, determines that the
individual is blind or disabled or requires
long-term care services.
In general, an individual is treated
as eligible for a government-sponsored
program on the first day of the first full
month in which the individual may receive
benefits. Thus, taxpayers would not lose
eligibility for the credit for a month in
which the taxpayer or a family member is
technically eligible for a government pro-
gram but cannot yet receive benefits due
to, for example, the need for administra-
tive processing. However, an individual
who fails to complete the requirements
to obtain coverage available under a gov-
ernment-sponsored program (other than
coverage under the veteran’s health care
program) reasonably promptly is treated
as eligible for the coverage on the first day
of the second calendar month following
the event that establishes eligibility (such
as reaching age 65 for Medicare).
An individual receiving advance credit
payments may apply and be approved for
government-sponsored minimum essen-
tial coverage such as Medicaid that, after
approval, is effective retroactively (over-
lapping some advance payment coverage
months). The proposed regulations pro-
vide that an individual in this situation is
treated as eligible for minimum essential
coverage no sooner than the first day of
the first calendar month after the approval.
Comments are requested on whether
rules should provide additional flexibility
if operational challenges prevent timely
transition from coverage under a qualified
health plan to coverage under a govern-
ment-sponsored program.
A taxpayer whom an Exchange has
determined to be ineligible for Medicaid,
CHIP, or a similar program at the time
of enrollment may end up with house-
hold income for the taxable year within
the eligibility criteria for these programs.
Therefore, the proposed regulations pro-
vide that an individual is treated as not
eligible for Medicaid, CHIP, or a similar
program for the months of coverage under
a qualified health plan if an Exchange de-
termines that the individual is not eligible
when the individual enrolls. If the indi-
vidual subsequently enrolls in Medicaid,
CHIP, or a similar program, however, the
full months of enrollment in the govern-
ment-sponsored coverage are not coverage
months.
ii. Employer-Sponsored Coverage
A. In general
Section 5000A(f)(1)(B) provides that
minimum essential coverage includes cov-
erage under an eligible employer-spon-
sored plan. Under section 5000A(f)(2),
an eligible employer-sponsored plan is
a group health plan or group health in-
surance coverage offered by an employer
to an employee that is a governmen-
tal plan (within the meaning of section
2791(d)(8) of the Public Health Ser-
vice Act (42 U.S.C. 300gg–91(d)(8))),
any other plan or coverage offered in
the small or large group market, or a
grandfathered plan offered in the group
market.Regulations under section
5000A are expected to provide that an
employer-sponsored plan will not fail to
be minimum essential coverage solely
because it is a plan to reimburse employees
for medical care for which reimbursement
is not provided under a policy of accident
and health insurance (a self-insured plan).
Continuation coverage required under
federal law or required under a state law
that provides comparable continuation
coverage is eligible employer-sponsored
coverage. The proposed regulations pro-
vide a special rulethat an individual
eligible to enroll in continuation coverage
is eligible for minimum essential coverage
only if the individual enrolls in the cover-
age.
The proposed regulations provide that
an individual generally is eligible for min-
imum essential coverage through an eligi-
ble employer-sponsored plan for a month
during a plan year if the individual had the
opportunity to enroll in the plan, even if the
enrollment period has since closed. Thus,
once an individual fails to enroll in eligi-
ble employer-sponsored coverage during
an employer-sponsored plan’s enrollment
period after having had the opportunity to
do so (assuming the coverage is afford-
able and provides minimum value), the
months during the plan year are not cov-
erage months for the individual, notwith-
standing that the individual is precluded
from later enrolling in the employer-spon-
sored coverage for those months because
the enrollment period has expired.
Under section 36B(c)(2)(C), an in-
dividual generally is eligible for em-
ployer-sponsored minimum essential cov-
2011–36 I.R.B.211September 6, 2011

erage only if the employee’s share of the
premiums is affordable and the coverage
provides minimum value. An individ-
ual is treated as eligible for minimum
essential coverage through an eligible em-
ployer-sponsored plan, however, if the
individual actually enrolls in the coverage,
including coverage that does not meet the
requirements for affordability and mini-
mum value.
B. Affordability of employer-sponsored
coverage
Section 36B(c)(2)(C)(i) prescribes
the standards for determining whether
employer-sponsored coverage is afford-
able for an employee as well as for
other individuals. In the case of an em-
ployee, under section 36B(c)(2)(C)(i), an
employer-sponsored plan is not afford-
able if “the employee’s required contri-
bution (within the meaning of section
5000A(e)(1)(B)) with respect to the plan
exceeds 9.5 percent of the applicable tax-
payer’s household income” for the taxable
year. This percentage may be adjusted
after 2014.
1
In the case of an individual other than
an employee, section 36B(c)(2)(C)(i) pro-
vides that “this clause shall also apply to an
individual who is eligible to enroll in the
plan by reason of a relationship the indi-
vidual bears to the employee.” The cross-
referenced section 5000A(e)(1)(B) defines
the term “required contribution” for this
purpose as “the portion of the annual pre-
miumwhichwouldbepaidbytheindivid-
ual... for self-only coverage.”
Thus, the statutory language specifies
that for both employees and others (such
as spouses or dependents) who are eligible
to enroll in employer-sponsored coverage
by reason of their relationship to an em-
ployee (related individuals), the coverage
is unaffordable if the required contribu-
tion for “self-only” coverage (as opposed
to family coverage or other coverage appli-
cable to multiple individuals) exceeds 9.5
percent of household income. See Joint
Committee on Taxation, General Explana-
tion of Tax Legislation Enacted in the 111
th
Congress, JCS–2–11 (March 2011) at 265
(stating that, for purposes of the premium
tax credit provisions of the Act, “[u]naf-
fordable is defined as coverage with a pre-
mium required to be paid by the employee
that is more than 9.5 percent of the em-
ployee’s household income, based on the
self-only coverage”).
Consistent with these statutory provi-
sions, the proposed regulations provide
that an employer-sponsored plan also is
affordable for a related individual for pur-
poses of section 36B if the employee’s
required contribution for self-only cov-
erage under the plan does not exceed
9.5 percent of the applicable taxpayer’s
household income for the taxable year,
even if the employee’s required contribu-
tion for the family coverage does exceed
9.5 percent of the applicable taxpayer’s
household income for the year.
Although the affordability test for re-
lated individuals for purposes of the pre-
mium tax credit is based on the cost of self-
only coverage, future proposed regulations
under section 5000A are expected to pro-
vide that the affordability test for purposes
of applying the individual responsibility
requirement to related individuals is based
on the employee’s required contribution
for employer-sponsored family coverage.
Section 5000A addresses affordability for
employees in section 5000A(e)(1)(B) and,
separately, for related individuals in sec-
tion 5000A(e)(1)(C).
C. Employee affordability safe harbor
The proposed regulations provide an
employee safe harbor for individuals who
were offered eligible employer-sponsored
coverage that ultimately proves to be af-
fordable based on household income for
the taxable year but who declined the
offer because, at the time of enrollment
in a qualified health plan, the Exchange
determined that the employer coverage
would be unaffordable. Under the safe
harbor, an eligible employer-sponsored
plan is treated as unaffordable for an entire
plan year. Thus, for the months during the
plan year (which may coincide or overlap
with the taxable year) a taxpayer will not
lose credit eligibility because, as a result
of changes during the taxable year, the
employer coverage would have been af-
fordable based on the household income
for that taxable year. The taxpayer may,
however, lose credit eligibility for other
reasons, for example if the taxpayer’s
household income for the taxable year
exceeds 400 percent of the FPL. Regula-
tions under section 4980H are expected
to provide that an employer is not subject
to a penalty merely because an employee
receives a premium tax credit under this
employee safe harbor if the employer of-
fered to its employees affordable coverage
that otherwise meets the requirements of
section 4980H.
D. Affordability safe harbor for employers
In general, an applicable large em-
ployer (as defined in section 4980H(c)(2))
that offers health coverage to its full-time
employees and their dependents is subject
to the assessable payment under section
4980H(b) if at least one full-time em-
ployee is certified to receive a premium
tax credit or cost-sharing reduction be-
cause the employer-sponsored coverage
either does not provide minimum value or
is unaffordable to the employee.
Employers have commented that they
will not know their employees’ actual
household income. As a result, even if
an employer intends to offer affordable
coverage to all full-time employees, one
or more full-time employees may be cer-
tified to receive the premium tax credit,
and the employer may be subject to the
assessable payment under 4980H(b). Fu-
ture proposed regulations under section
4980H are expected to provide an afford-
ability safe harbor for employers. Under
this anticipated safe harbor, an employer
that meets certain requirements, including
offering its full-time employees (and their
dependents) the opportunity to enroll in
eligible employer-sponsored coverage,
will not be subject to an assessable pay-
ment under section 4980H(b) with respect
to an employee who receives a premium
tax credit or cost-sharing reduction for a
taxable year if the employee portion of
the self-only premium for the employer’s
lowest cost plan that provides minimum
value does not exceed 9.5 percent of the
1
In addition, the statute provides for the Comptroller General, within 5 years of enactment, to conduct a study, including legislative recommendations, on the affordability of coverage,
including whether the percentage of household income specified in section 36B(c)(2)(C) “is the appropriate level for determining whether employer-provided coverage is affordable for an
employee and whether such level may be lowered without significantly increasing the costs to the Federal Government and reducing employer-providedcoverage.” See section 1401(c)(1) of
the Affordable Care Act.
September 6, 20112122011–36 I.R.B.

employee’s current W–2 wages from the
employer.
Giving employers the ability to base
their affordability calculations on their em-
ployees’ wages (which employers know)
instead of employees’ household income
(which employers generally do not know)
is intended to provide a more workable and
predictable method of facilitating afford-
able employer-sponsored coverage for the
benefit of both employers and employees.
Notwithstanding this safe harbor, employ-
ees’ eligibility for a premium tax credit
would continue to be based on afford-
ability of employer-sponsored coverage
relative to employees’ household income.
Accordingly, some employees — among
the small percentage of employees whose
household income is less than their wages
from the employer — would receive a
premium tax credit without resulting in
an assessable payment by their employer.
The Treasury Department and the IRS
intend to issue a request for comments on
this affordability safe harbor for employ-
ers.
E. Minimum value
Section 36B(c)(2)(C)(ii) provides that
an eligible employer-sponsored plan gen-
erally provides minimum value if the
plan’s share of the total allowed costs of
benefits provided under the plan is at least
60 percent of those costs. Under section
1302(d)(2) of the Affordable Care Act
(42 U.S.C. 18022(d)(2)), regulations to
be issued by the Secretary of Health and
Human Services will apply in determining
the percentage of “the total allowed costs
of benefits” provided under a group health
plan or health insurance coverage that are
covered by that plan or coverage. The
regulations under section 1302(d)(2) are
expected to be proposed later this year and
to reflect the fact that employer-sponsored
group health plans and health insurance
coverage in the large group market are not
required to provide each of the essential
health benefits or each of the 10 categories
of benefits described in section 1302(b)(1)
of the Affordable Care Act. It is also
anticipated that the regulations will seek
to further the objective of preserving the
existing system of employer-sponsored
coverage, but without permitting the statu-
tory employer responsibility standards to
be avoided. We also are contemplating
whether to provide appropriate transition
relief with respect to the minimum value
requirement for employers currently offer-
ing health care coverage.
2.Computing the Premium Tax Credit
A taxpayer’s credit is the sum of the
premium assistanceamounts for each cov-
erage month in the taxable year. A pre-
mium assistance amount is computed for
each coverage month during the taxable
year based on several factors: household
income, family size, applicable percent-
age, benchmark plan premium, and actual
plan premium. A month during which no
one in the taxpayer’s family is enrolled in a
qualified health plan through an Exchange
is not a coverage month. A month is a
coverage month only if the taxpayer pays
the premium for coverage or receives the
benefit of an advance payment. The pre-
mium assistance amount for a month that
is not a coverage month is zero. House-
hold income is determined on an annual
basis and is prorated for each month to de-
termine the monthly premium assistance
amount. The applicable percentage is the
same for each month because it is derived
from annual household income and fam-
ily size. A taxpayer’s benchmark plan pre-
mium may change during the year if, for
example, there are changes in the mem-
bers of the household covered through the
Exchange or the taxpayer moves to a new
State with different plan rates.
a.Premiums paid on behalf of the
taxpayer
The proposed regulations provide that,
in determining whether a month is a cover-
age month, premiums that another person
pays for the coverage of the taxpayer or a
family member are treated as paid by the
taxpayer.
b.Applicable benchmark plan
Under section 36B(b)(2), the monthly
premium for the applicable second low-
est cost silver plan offered through an Ex-
change is the benchmark for computing
a taxpayer’s monthly premium assistance
amount. To determine the amount of pre-
mium tax credit, a taxpayer must compute
the difference between the premium for
this plan and the applicable percentage of
the taxpayer’s household income, regard-
less of the qualified health plan the tax-
payer purchases.
i. Multiple Categories of Coverage
OfferedonanExchange
Section 36B(b)(3)(B)(ii) identifies only
self-only and family as the categories of
coverage for the benchmark plan. How-
ever, qualified health plans may offer other
categories of coverage based on family
composition, such as children only, two
adults, or one adult plus children. See pro-
posed 45 CFR 156.255(b). Thus, the pro-
posed regulations define family coverage
as any health insurance that covers more
than one individual.
Under the proposed regulations, the
“applicable” benchmark plan for a tax-
payer is determined by finding the second
lowest cost plan at the silver level that
would cover those family members actu-
ally enrolled in a qualified health plan, not
eligible for minimum essential coverage
other than coverage in the individual mar-
ket, not incarcerated, and lawfully present
in the United States (the coverage family).
Thus, the applicable benchmark plan is
the self-only category of coverage for a
taxpayer who files as single with no depen-
dents, a taxpayer who purchases self-only
coverage, and a taxpayer whose family
includes only one individual who is not
eligible for minimum essential coverage
or one lawfully present individual (thus
excluding from the credit computation the
portion of the premium attributable to an
individual not lawfully present, as required
by section 36B(e)(1)(A)). If an Exchange
offers more categories of coverage than
self-only and family, the applicable bench-
mark plan is the coverage category that
applies to the members of the taxpayer’s
coverage family.
ii. Families Who Purchase More Than
One Qualified Health Plan
Section 36B determines family size
by reference to individuals for whom the
taxpayer claims a personal exemption,
and family coverage under some qualified
health plans may not extend to certain tax
dependents (for example, a niece). We
note that the Department of Health and
Human Services has requested comments
in its proposed regulations on Exchanges
2011–36 I.R.B.213September 6, 2011

on whether qualified health plans offered
on an Exchange should be required to
cover all members of the family if they
live in the same Exchange service area.
Pending the issuance of additional guid-
ance on this issue by Health and Human
Services, the proposed regulations pro-
vide that, if the applicable benchmark plan
does not cover a taxpayer’s full family,
the applicable benchmark plan premium
for these families is the sum of the premi-
ums for the benchmark plans that cover
the taxpayer’s family (for example, for an
uncle and two adult dependent nieces, a
self-only benchmark plan for the uncle and
a two-adult or family plan for the nieces).
The applicable benchmark plan is simi-
larly modified for taxpayers with family
members residing in different rating areas
(also known as Exchange service areas,
see proposed 45 CFR §155.20). However,
the IRS and Treasury Department are con-
sidering other approaches for determining
the applicable benchmark plan in these
cases. For example, the applicable bench-
mark plan for these families could be the
benchmark plan that would apply to the
family composition (such as one adult plus
children) if one plan covered all members
of the taxpayer’s family. Alternatively,
the applicable benchmark plan premium
could be the lesser of (1) the premium for
a combination of plans that cover the tax-
payer’s entire family, or (2) the premium
for a single plan that covers the taxpayer’s
entire family and is more expensive than
the second lowest cost silver plan. Com-
ments are requested on these and other
possible approaches.
iii. One Qualified Health Plan Covering
More Than One Family
If a single qualified health plan covers
more than one taxpayer’s family (for ex-
ample a plan that covers adult children un-
der age 26 who are not tax dependents),
the allowable section 36B credit is com-
puted for each applicable taxpayer cov-
ered by the plan. An individual applica-
ble percentage is determined for each tax-
payer based on the taxpayer’s household
income and family size, and the separate
applicable benchmark plan. The premi-
ums for the qualified health plan the tax-
payers purchase are allocated to each tax-
payer in proportion to the premiums for
each taxpayer’s benchmark plan to deter-
mine whether the premiums paid are less
than the benchmark premium minus the
taxpayer’s applicable percentage of house-
hold income.
iv. Applicable Benchmark Plan That
Terminates or Closes to Enrollment
A qualified health plan that is the sec-
ond lowest cost silver plan for a particu-
lar category of coverage, or the lowest cost
silver plan in that category, may close to
enrollment or terminate during the taxable
year. The proposed regulations clarify that
an applicable benchmark plan is a plan of-
fered through the Exchange when a tax-
payer or family member enrolls in a qual-
ified health plan. Unless the taxpayer or a
family member is enrolled in the applica-
ble benchmark plan, a plan does not cease
to be the applicable benchmark plan solely
because the plan or thelowest cost silver
plan terminates or closes to further enroll-
ment during the taxable year.
c.Pediatric dental coverage
Section 36B(b)(3)(E) provides that, for
purposes of determining the amount of any
monthly premium, if an individual enrolls
in both a qualified health plan and a plan
providing dental coverage as described in
section 1311(d)(2)(B)(ii) of the Affordable
Care Act (42 U.S.C. 13031(d)(2)(B)(ii)),
the portion of the premium for the dental
plan that is properly allocable to pediatric
dental benefits that are essential health
benefits is treated as a premium payable
for the individual’s qualified health plan.
Thus, the portion of the premium for the
separate pediatric dental coverage is added
to the premium for the benchmark plan
in computing the credit. Comments are
requested on methods of determining the
amount of the premium properly allocable
to pediatric dental benefits.
3.Reconciling the Credit and Advance
Credit Payments
The proposed regulations describe the
requirements for reconciling advance pay-
ments of the credit with the actual credit
amount and determining the amount of any
resulting additional credit or additional in-
come tax liability. The proposed regula-
tions explain that the credit is computed
by using the household income and fam-
ily size for the taxable year, but premium
assistance amounts fordifferent coverage
months may be based on different appli-
cable benchmark plans if, for example,
the taxpayer’s family composition changes
during the taxable year.
a.Changes in filing status
Section 36B(g)(2) directs the Secretary
to provide regulations specifying how to
reconcile advance payments with the ac-
tual credit when the taxpayer’s filing sta-
tus on the return claiming the credit differs
from the filing status used to determine ad-
vance payments of the credit. Filing sta-
tus may be any of the following: single,
married filing jointly, married filing sep-
arately, head of household, or surviving
spouse.
i. Computing the Credit When Taxpayer’s
Marital Status Changes
The proposed regulations provide that,
for a taxpayer who has a change in marital
status during the taxable year, the credit
generally is computed according to the
same rules that apply to other taxpayers,
using the applicable benchmark plan or
plans that apply to the taxpayer’s marital
status as of the first day of each month.
However, the proposed regulations include
special rules for computing the credit for
taxpayers who divorce during the taxable
year. Comments are requested on special
rules for taxpayers who marry during the
taxable year and for married taxpayers
who face challenges in being able to file a
joint return.
ii. Taxpayers Who Divorce during the
Taxable Year
The proposed regulations provide that,
for purposes of reconciliation, taxpayers
who for some months during a taxable year
were married (within the meaning of sec-
tion 7703) and were covered by the same
qualified health plan but are no longer mar-
ried on the last day of the taxable year,
may agree to allocate between themselves,
in the same proportion, the premiums for
the benchmark plan, premiums paid and
advance credit payments made during the
marriage. If the taxpayers do not agree on
an allocation, the taxpayers must allocate
50 percent of these amounts to each tax-
payer. If only one of the formerly mar-
ried taxpayers was enrolled in the plan,
September 6, 20112142011–36 I.R.B.

100 percent of the benchmark premiums,
premiums for the plan that taxpayer pur-
chases, and advance payments are allo-
cated to that taxpayer.
iii. Taxpayers Who Marry during the
Taxable Year
For individuals who marry during a tax-
able year and receive advance credit pay-
ments during the time before they are mar-
ried, the general rules for credit computa-
tion and reconciliation could lead to the in-
dividuals facing additional tax upon recon-
ciliation, even if the Exchange accurately
determines each individual’s separate in-
come for the year at the time of enroll-
ment. This may occur, for example, in sit-
uations in which the combination of two
individuals’ household incomes and fami-
lies results in the combined family having
a higher FPL percentage than either of the
component families would have had if the
individuals had not married, and therefore
having a higher applicable percentage or
being ineligible for a credit. Comments are
requested on rules providing relief to cer-
tain individuals who would owe additional
tax because they marry during a taxable
year when one or both individuals receive
advance credit payments prior to marriage.
Comments are requested on how the pre-
mium assistance credit amount should be
computed in this circumstance, including
how household income (which is required
to be determined on an annual basis) and
dependents for the taxable year would be
taken into account in the credit computa-
tion.
iv. Married Taxpayers Filing Separately
Married taxpayers who file their returns
as married filing separately are not appli-
cable taxpayers and generally are ineli-
gible for the premium tax credit for any
month during the taxable year. The pro-
posed regulations provide that taxpayers
who receive advance credit payments and
file their tax returns as married filing sep-
arately must allocate 50 percent of any
advance credit payments to each spouse
for purposes of determining their excess
advance payment amounts as part of the
reconciliation process. Although the tax-
payers owe additional tax for the entire
amount of the advance credit payments,
the section 36B(f)(2)(B) repayment limita-
tion applies to each taxpayer whose house-
hold income is below 400 percent of the
federal poverty line based on the house-
hold income and family size reported on
the return.
Some taxpayers who are married at the
time they enroll in a qualified health plan
and begin to receive advance credit pay-
ments may not be able to file a joint re-
turn for the coverage year. For example, in
situations involving domestic abuse, when
a divorce is pending but not yet final, or
when one spouse is incarcerated, filing a
joint return may not be possible or pru-
dent. Comments are requested on rules
to provide relief for those married taxpay-
ers who have received advance credit pay-
ments but face challenges in being able to
file a joint return. Comments are requested
in particular on whether rules should take
into account whether (1) the spouses have
filed jointly for the preceding taxable year,
(2) the spouses attested to an expectation
to file jointly for purposes of receiving
the advance credit payments, and (3) the
spouses should be allowed relief of this
type for more than one year.
Comments are requested on other rules
for reconciling the credit with advance
payments for taxpayers whose filing status
changes during the taxable year.
b.Requirement to file a return
The proposed regulations require ev-
ery taxpayer receiving advance credit pay-
ments to file an income tax return on or be-
fore the fifteenth day of the fourth month
following the close of the taxable year.
The requirement to file a return applies
whether or not a taxpayer is otherwise re-
quired to file a return under section 6012 or
claims a premium tax credit for the taxable
year. Under section 6081, the Commis-
sioner may grant a reasonable extension of
time for filing any income tax return.
Effective/Applicability Date
These regulations are proposed to
apply for taxable years ending after
December 31, 2013.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866, as supplemented by Exec-
utive Order 13563. Therefore, a regula-
tory assessment is not required. It has also
been determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these regu-
lations, and, because the regulations do
not impose a collection of information re-
quirement on small entities, the Regula-
tory Flexibility Act (5 U.S.C. chapter 6)
does not apply. Pursuant to section 7805(f)
of the Code, this notice of proposed rule-
making has been submitted to the Chief
Counsel for Advocacy of the Small Busi-
ness Administration for comment on its
impact on small business.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written comments (ei-
ther electronic or a signed paper original
and eight (8) copies) that are submitted
timely to the IRS. The IRS and Treasury
Department request comments on the clar-
ity of the proposed rules and how they can
be made easier to understand. All com-
ments will be available for public inspec-
tion and copying.
A public hearing has been scheduled
for November 17, 2011, at 10 a.m., in
the auditorium, Internal Revenue Build-
ing, 1111 Constitution Avenue NW, Wash-
ington, DC. Due to building security pro-
cedures, visitors must enter at the Consti-
tution Avenue entrance. All visitors must
present photo identification to enter the
building. Because of access restrictions,
visitors will not be admitted beyond the
immediate entrance more than 30 minutes
before the hearing starts. For informa-
tion about having your name placed on the
building access list to attend the hearing,
see the “FOR FURTHER INFORMA-
TION CONTACT”section of this pream-
ble.
The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing. Persons who wish to
present oral comments at the hearing must
submit written comments (electronic or a
signed paper original and eight (8) copies)
and an outline of topics to be discussed and
the time devoted toeach topic by Novem-
ber 10, 2011. A period of 10 minutes will
be allotted to each person for making com-
ments.
2011–36 I.R.B.215September 6, 2011

An agenda showing the scheduling of
the speakers will be prepared after the
deadline for receiving outlines has passed.
Copies of the agenda will be available free
of charge at the hearing.
Drafting Information
The principal authors of these pro-
posed regulations are Shareen S. Pflanz,
Frank W. Dunham III, and
Stephen J. Toomey of the Office of
Associate Chief Counsel (Income Tax and
Accounting). However, other personnel
from the IRS and the Treasury Department
participated in the development of the
regulations.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding entries in nu-
merical order to read in part as follows:
Authority: 26 U.S.C. 7805***
Section 1.36B–4 also issued under
26 U.S.C. 36B(g).
Par. 2. Sections 1.36B–0, 1.36B–1,
1.36B–2, 1.36B–3, 1.36B–4, and 1.36B–5
are added to read as follows:
§1.36B–0 Table of contents.
This section lists the captions contained
in §§1.36B–1 through 1.36B–5.
§1.36B–1 Premium tax credit definitions.
(a) In general.
(b) Affordable Care Act.
(c) Qualified health plan.
(d) Family and family size.
(e) Household income.
(1) In general.
(2) Modified adjusted gross income.
(f) Dependent.
(g) Lawfully present.
(h) Federal poverty line.
(i) Reserved.
(j) Advance credit payment.
(k) Exchange.
(l) Self-only coverage.
(m) Family coverage.
(n) Rating area.
(o) Effective/applicability date.
§1.36B–2 Eligibility for premium tax
credit.
(a) In general.
(b) Applicable taxpayer.
(1) In general.
(2) Married taxpayers must file joint re-
turn.
(3) Dependents.
(4) Individuals not lawfully present or
incarcerated.
(5) Individuals lawfully present.
(6) Special rule for taxpayers with
household income below 100 percent of
the federal poverty line for the taxable
year.
(7) Computation of premium assistance
amounts for taxpayers with household in-
come below 100 percent of the federal
poverty line.
(c) Minimum essential coverage.
(1) In general.
(2) Government-sponsored minimum
essential coverage.
(i) In general.
(ii) Special rule for coverage under the
veteran’s health care program under chap-
ter17or18ofTitle38,U.S.C.
(iii) Time of eligibility.
(A) In general.
(B) Retroactive effect of eligibility de-
termination.
(iv) Determination of Medicaid or Chil-
dren’s Health Insurance Program (CHIP)
ineligibility.
(v) Examples.
(3) Employer-sponsored minimum es-
sential coverage.
(i) In general.
(ii) Plan year.
(iii) Eligibility for coverage months
during a plan year.
(A) In general.
(B) Example.
(iv) Special rule for continuation cover-
age.
(v) Affordable coverage.
(A) In general.
(1) Affordability.
(2)Employeesafeharbor.
(B) Required contribution percentage.
(C) Examples.
(vi) Minimum value.
(vii) Enrollment in eligible employer-
sponsored plan.
(A) In general.
(B) Example.
§1.36B–3 Computing the premium
assistance credit amount.
(a) In general.
(b) Definitions.
(c) Coverage month.
(1) In general.
(2) Premiums paid for the taxpayer.
(3) Examples.
(d) Premium assistance amount.
(e) Adjusted monthly premium.
(f) Applicable benchmark plan.
(1) In general.
(2) Family coverage.
(3) Second lowest cost silver plan not
covering the taxpayer’s family.
(4) Benchmark plan terminates or
closes to enrollment.
(5) Examples.
(g) Applicable percentage.
(1) In general.
(2) Applicable percentage table.
(3) Examples.
(h)Plancoveringmorethanonefamily.
(1) In general.
(2) Example.
(i) Reserved.
(j) Additional benefits.
(1) In general.
(2) Method of allocation.
(k) Pediatric dental coverage.
(1) In general.
(2) Method of allocation.
(l) Families including individuals not
lawfully present.
(1) In general.
(2) Revised household income compu-
tation.
(i) Statutory method.
(ii) Comparable method.
§1.36B–4 Reconciling the premium tax
credit with advance credit payments.
(a) Reconciliation.
(1) In general.
(2) Credit computation.
(3) Limitation on additional tax.
(i) In general.
(ii) Additional tax limitation table.
(4) Examples.
(b) Changes in filing status.
(1) In general.
(2) Taxpayers not married to each other
at the end of the taxable year.
(3) Married taxpayers filing separate re-
turns.
September 6, 20112162011–36 I.R.B.

(4) Examples.
§1.36B–5 Information reporting by
Exchanges.
(a) Information required to be reported.
(b) Time and manner of reporting.
§1.36B–1 Premium tax credit definitions.
(a)In general. Section 36B allows a
refundable premium tax credit for taxable
years ending after December 31, 2013.
The definitions in this section apply to this
section and §§1.36B–2 through 1.36B–5.
(b)Affordable Care Act.Theterm
Affordable Care Actrefers to the Patient
Protection and Affordable Care Act, Pub-
lic Law 111–148 (124 Stat. 119 (2010)),
and the Health Care and Education Recon-
ciliation Act of 2010, Public Law 111–152
(124 Stat. 1029 (2010)), as amended by
the Medicare and Medicaid Extenders Act
of 2010, Public Law 111–309 (124 Stat.
3285 (2010)), the Comprehensive 1099
Taxpayer Protection and Repayment of
Exchange Subsidy Overpayments Act of
2011, Public Law 112–9 (125 Stat. 36
(2011)), and the Department of Defense
and Full-Year Continuing Appropriations
Act, 2011, Public Law 112–10 (125 Stat.
38 (2011)).
(c)Qualified health plan.Theterm
qualified health planhas the same mean-
ing as in section 1301(a) of the Affordable
Care Act (42 U.S.C. 18021(a)) but does
not include a catastrophic plan described
in section 1302(e) of the Affordable Care
Act (42 U.S.C. 18022(e)).
(d)Family and family size.Atax-
payer’s family means the individuals for
whom a taxpayer properly claims a de-
duction for a personal exemption under
section 151 for the taxable year. Family
size means the number of individuals in
the family. Family and family size include
an individual who is exempt from the re-
quirement to maintain minimum essential
coverage under section 5000A.
(e)Household income—(1)In general.
Household income means the sum of—
(i) A taxpayer’s modified adjusted
gross income; plus
(ii) The aggregate modified adjusted
gross income of all other individuals
who—
(A) Are included in the taxpayer’s fam-
ily under paragraph (d) of this section; and
(B) Are required to file an income tax
return for the taxable year (determined
without regard to the exception under sec-
tion (1)(g)(7) to the requirement to file a
return).
(2)Modified adjusted gross income.
Modified adjusted gross income means
adjusted gross income (within the mean-
ing of section 62) increased by amounts
excluded from gross income under section
911 and tax-exempt interest the taxpayer
receives or accrues during the taxable year.
(f)Dependent. Dependent has the same
meaning as in section 152.
(g)Lawfully present. Lawfully present
has the same meaning as in 45 CFR 152.2.
(h)Federal poverty line. The federal
poverty line means the most recently pub-
lished poverty guidelines (updated period-
ically in theFederal Registerby the Sec-
retary of Health and Human Services un-
der the authority of 42 U.S.C. 9902(2)) as
of the first day of the regular enrollment
period for coverage by a qualified health
plan offered through an Exchange for a cal-
endar year. Thus, the federal poverty line
for computing the premium tax credit for
a taxable year is the federal poverty line in
effect on the first day of the initial or an-
nual open enrollment period preceding that
taxable year. See 45 CFR 155.410.
(i) [Reserved]
(j)Advance credit payment. Advance
credit payment means an advance payment
of the premium tax credit as provided in
section 1412 of the Affordable Care Act
(42 U.S.C. 18082).
(k)Exchange. Exchange has the same
meaning as in 45 CFR 155.20.
(l)Self-only coverage. Self-only cover-
age means health insurance that covers one
individual.
(m)Family coverage. Family coverage
means health insurance that covers more
than one individual.
(n)Rating area. Rating area means an
Exchange service area, as described in 45
CFR 155.20.
(o)Effective/applicability date.This
section and §§1.36B–2 through 1.36B–5
apply for taxable years ending after De-
cember 31, 2013.
§1.36B–2 Eligibility for premium tax
credit.
(a)In general. An applicable taxpayer
(within the meaning of paragraph (b) of
this section) is allowed a premium assis-
tance amount only for any month that the
applicable taxpayer, or the applicable tax-
payer’s spouse or dependent—
(1) Is enrolled in one or more qualified
health plans through an Exchange; and
(2) Is not eligible for minimum essential
coverage (within the meaning of paragraph
(c) of this section) other than coverage de-
scribed in section 5000A(f)(1)(C) (relating
to coverage in the individual market).
(b)Applicable taxpayer—(1)
In gen-
eral. Except as otherwise provided in this
paragraph (b), an applicable taxpayer is
a taxpayer whose household income is at
least 100 percent but not more than 400
percent of the federal poverty line for the
taxpayer’s family size for the taxable year.
(2)Married taxpayers must file joint re-
turn. A taxpayer who is married (within
the meaning of section 7703) at the close
of the taxable year isan applicable tax-
payer only if the taxpayer and the tax-
payer’s spouse file a joint return for the
taxable year.
(3)Dependents. An individual is not
an applicable taxpayer if another taxpayer
may claim a deduction under section 151
for the individual for a taxable year begin-
ning in the calendar year in which the in-
dividual’s taxable year begins.
(4)Individuals not lawfully present or
incarcerated. An individual who is not
lawfully present in the United States or
is incarcerated (otherthan incarceration
pending disposition of charges) may not be
covered by a qualified health plan through
an Exchange. However, the individual
may be an applicable taxpayer if a family
member is eligible to enroll in a qualified
health plan. See sections 1312(f)(1)(B)
and 1312(f)(3) of the Affordable Care Act
(42 U.S.C. 18032(f)(1)(B) and (f)(3)) and
§1.36B–3(b)(2).
(5)Individuals lawfully present.Ifa
taxpayer’s household income is less than
100 percent of the federal poverty line for
the taxpayer’s family size and the taxpayer
or a member of the taxpayer’s family is an
alien lawfully present in the United States,
the taxpayer is treated as an applicable tax-
payer if—
(i) The taxpayer or family member is
not eligible for the Medicaid program; and
(ii) The taxpayer would be an applica-
ble taxpayer if the taxpayer’s household in-
come for the taxable year was between 100
2011–36 I.R.B.217September 6, 2011

and 400 percent of the federal poverty line
for the taxpayer’s family size.
(6)Special rule for taxpayers with
household income below 100 percent of
the federal poverty line for the taxable
year. A taxpayer (other than a taxpayer de-
scribed in paragraph (b)(5) of this section)
whose household income for a taxable
year is less than 100 percent of the federal
poverty line for the taxpayer’s family size
is treated as an applicable taxpayer if—
(i) The taxpayer or a family member
enrolls in a qualified health plan through
an Exchange;
(ii) An Exchange estimates at the time
of enrollment that the taxpayer’s house-
hold income will be between 100 and 400
percent of the federal poverty line for the
taxable year;
(iii) Advance credit payments are au-
thorized and paid for one or more months
during the taxable year; and
(iv) The taxpayer would be an applica-
ble taxpayer if the taxpayer’s household in-
come for the taxable year was between 100
and 400 percent of the federal poverty line
for the taxpayer’s family size.
(7)Computation of premium assistance
amounts for taxpayers with household
income below 100 percent of the federal
poverty line. If a taxpayer is treated as an
applicable taxpayer under paragraph (b)(5)
or (b)(6) of this section, the taxpayer’s ac-
tual household income for the taxable year
is used to compute the premium assistance
amounts under §1.36B–3(d).
(c)Minimum essential coverage—(1)
In general. Minimum essential cover-
age is defined in section 5000A(f) and
regulations issued under that section.
As described in section 5000A(f), gov-
ernment-sponsored programs, eligible
employer-sponsored plans, grandfathered
health plans, and certain other health
benefits coverage are minimum essential
coverage.
(2)Government-sponsored minimum
essential coverage—(i)In general. Except
as provided in paragraph (c)(2)(ii) of this
section, for purposes of section 36B, an in-
dividual is eligible for government-spon-
sored minimum essential coverage if the
individual meets the criteria for coverage
under a government-sponsored program
describedinsection5000A(f)(1)(A).The
Commissioner may define eligibility for
specific government-sponsored programs
further in published guidance of general
applicability, see §601.601(d)(2) of this
chapter.
(ii)Special rule for coverage under the
veteran’s health care program under chap-
ter17or18ofTitle38,U.S.C. An individ-
ual is eligible for minimum essential cov-
erage under the veteran’s health care pro-
gram authorized under chapter 17 or 18 of
Title 38, U.S.C., only if the individual is
enrolled in a veteran’s health care program
identified as minimum essential coverage
in regulations issued under section 5000A.
(iii)Time of eligibility—(A)In general.
An individual generally is treated as eligi-
ble for a government-sponsored program
on the first day of the first full month in
which the individual may receive bene-
fits under the program. However, an in-
dividual who fails to complete the require-
ments necessary to receive benefits avail-
able under a government-sponsored pro-
gram (other than a veteran’s health care
program) reasonably promptly is treated
as eligible for government-sponsored min-
imum essential coverage as of the first day
of the second calendar month following
the event that establishes eligibility under
paragraph (c)(2)(i) of this section.
(B)Retroactive effect of eligibility de-
termination. If an individual receiving ad-
vance credit payments is determined to be
eligible for government-sponsored mini-
mum essential coverage that is effective
retroactively (such asMedicaid), the indi-
vidual is treated as eligible for minimum
essential coverage under that program no
earlier than the first day of the first calen-
dar month beginning after the approval.
(iv)Determination of Medicaid or Chil-
dren’s Health Insurance Program (CHIP)
ineligibility. An individual is treated as not
eligible for Medicaid, CHIP, or a similar
program for a period of coverage under a
qualified health plan if an Exchange deter-
mines that the individual is not eligible for
the program when the individual enrolls in
the qualified health plan.
(v)Examples. The following examples
illustrate the provisions of this paragraph
(c)(2).
Example 1.Delay in coverage effectiveness.On
April 10, Taxpayer D applies for coverage under a
government-sponsored health care program. D’s ap-
plication is approved on July 12 but her coverage is
not effective until September 1. Under paragraph
(c)(2)(iii)(A) of this section, D is eligible for gov-
ernment-sponsored minimum essential coverage on
September 1.
Example 2.Time of eligibility. Taxpayer E turns
65 on June 3 and becomes eligible for Medicare. Un-
der section 5000A(f)(1)(A), Medicare is minimum
essential coverage. However, E must enroll in Medi-
care to receive benefits. E enrolls in Medicare on
June 11 and may receive benefits immediately. Under
paragraph (c)(2)(iii)(A) of this section, E is eligible
for government-sponsored minimum essential cover-
age on July 1, the first day of the first full month that
E may receive benefits under the program.
Example 3.Time of eligibility, individual fails to
complete necessary requirements. The facts are the
same as inExample 2, except that E fails to enroll
in the Medicare coverage. E is treated as eligible
for government-sponsored minimum essential cover-
age under paragraph (c)(2)(iii)(A) of this section as of
August 1, the first day of the second month following
the event that establishes eligibility (E turning 65).
Example 4.Retroactive effect of eligibility.On
April 10, 2015, Taxpayer G applies for coverage un-
der the Medicaid program. G’s application is ap-
proved on May 15, 2015, and her Medicaid cover-
age is effective as of April 1, 2015. Under paragraph
(c)(2)(iii)(B) of this section, G is eligible for gov-
ernment-sponsored minimum essential coverage on
June 1, 2015, the first day of the first calendar month
after approval.
Example 5.Determination of Medicaid ineligibil-
ity. In November 2014, Taxpayer H applies to the Ex-
change to enroll in a qualified health plan and for ad-
vance credit payments for 2015. The Exchange esti-
mates that H’s household income will be 140 percent
of the federal poverty line for H’s family size and de-
termines that H is not eligible for Medicaid. The Ex-
change authorizes advance credit payments for H for
2015. H experiences a loss of household income in
June 2015 but does not return to the Exchange in 2015
to apply for Medicaid benefits or report his change in
income. H’s household income for 2015 is 130 per-
cent of the federal poverty line (within the Medicaid
income threshold). Under paragraph (c)(2)(iv) of this
section, H is treated as not eligible for Medicaid for
2015.
Example 6.Mid-year Medicaid eligibility rede-
termination. The facts are the same as inExample 5,
except that H returns to the Exchange in July 2015
and the Exchange determines H is eligible for Med-
icaid. The Exchange discontinues H’s advance credit
payments effective August 1. Under paragraphs
(c)(2)(iii)(B) and (c)(2)(iv) of this section, H is
treated as not eligible for Medicaid for the coverage
months when H is covered by a qualified health plan.
H is eligible for government-sponsored minimum
essential coverage for the coverage months after H
is approved for Medicaid, August through December
2015.
(3)Employer-sponsored minimum es-
sential coverage—(i)In general.For
purposes of section 36B, an employee
who may enroll in an eligible em-
ployer-sponsored plan (as defined in
section 5000A(f)(2)) and an individual
who may enroll in the plan because of
a relationship to the employee (a related
individual) are eligible for minimum
essential coverage under the plan for
any month only if the plan is affordable
September 6, 20112182011–36 I.R.B.

and provides minimum value. Govern-
ment-sponsored programs described in
section 5000A(f)(1)(A) are not eligible
employer-sponsored plans.
(ii)Plan year. For purposes of this
paragraph (c)(3), a plan year is an eli-
gible employer-sponsored plan’s regular
12-month coverage period (or the remain-
der of a 12-month coverage period for a
new employee or an individual who enrolls
during a special enrollment period).
(iii)Eligibility for coverage months
during a plan year—(A)In general.An
employee or related individual may be
eligible for minimum essential coverage
under an eligible employer-sponsored plan
for a coverage month during a plan year if
the employee or related individual could
have enrolled in the plan for that month
during an open or special enrollment pe-
riod.
(B)Example. The following example
illustrates the provisions of this paragraph
(c)(3)(iii).
Example. (i) Taxpayer B is an employee of Em-
ployer X. X offers its employees a health insurance
plan that has a plan year (within the meaning of
paragraph (c)(3)(ii) of this section) from October 1
through September 30. Employees may enroll during
an open season from August 1 to September 15. B
does not enroll in X’s plan for the plan year Octo-
ber 1, 2014, to September 30, 2015. In November
2014 B enrolls in a qualified health plan through an
Exchange for calendar year 2015.
(ii) B could have enrolled in X’s plan during the
August 1 to September 15 enrollment period. There-
fore, unless X’s plan is not affordable for B or does
not provide minimum value, B is eligible for mini-
mum essential coverage for the months that B is en-
rolled in the qualified health plan during X’s plan year
(January through September 2015).
(iv)Special rule for continuation cov-
erage. An individual who may enroll in
continuation coverage required under fed-
eral law or a state law that provides compa-
rable continuation coverage is eligible for
minimum essential coverage only if the in-
dividual enrolls in the coverage.
(v)Affordable coverage—(A)In gen-
eral—(1)Affordability. Except as pro-
vided in paragraph (c)(3)(v)(A)(2)ofthis
section, an eligible employer-sponsored
plan is affordable for an employee or a re-
lated individual if the portion of the annual
premium the employee must pay, whether
by salary reduction or otherwise (required
contribution), for self-only coverage for
the taxable year does not exceed the re-
quired contribution percentage (as defined
in paragraph (c)(3)(v)(B) of this section)
of the applicable taxpayer’s household
income for the taxable year.
(2)Employee safe harbor.Anem-
ployer-sponsored plan is treated as not af-
fordable for an employee or a related in-
dividual for a plan year if, when the em-
ployee or a related individual enrolls in a
qualified health plan for a period coincid-
ing with the plan year (in whole or in part),
an Exchange determines that the eligible
employer-sponsored plan is not affordable.
(B)Required contribution percentage.
The required contribution percentage is 9.5
percent. The percentage may be adjusted
in published guidance of general applica-
bility, see §601.601(d)(2) of this chapter,
for taxable years beginning after Decem-
ber 31, 2014, to reflect rates of premium
growth relative to growth in income and,
for taxable years beginning after Decem-
ber 31, 2018, to reflect rates of premium
growth relative to growth in the consumer
price index.
(C)Examples. The following examples
illustrate the provisions of this paragraph
(c)(3)(v). Unless stated otherwise, in each
example the taxpayer is single and has no
dependents, the employer’s plan is an el-
igible employer-sponsored plan and pro-
vides minimum value, the employee is not
eligible for other minimum essential cov-
erage, and the taxpayer, related individual,
and employer-sponsored plan have a cal-
endar taxable year.
Example 1.Basic determination of affordabil-
ity. In 2014 Taxpayer C has household income of
$47,000. C is an employee of Employer X, which
offers its employees a health insurance plan that re-
quires C to contribute $3,450 for self-only coverage
for 2014 (7.3 percent of C’s household income). Be-
cause C’s required contribution for self-only cover-
age does not exceed 9.5 percent of household income,
under paragraph (c)(3)(v)(A)(1) of this section, X’s
plan is affordable for C, and C is eligible for mini-
mum essential coverage for all months in 2014.
Example 2.Basic determination of affordability
for a related individual. The facts are the same as in
Example 1,exceptthatCismarriedtoJandX’splan
requires C to contribute $5,300 for coverage for C and
J for 2014 (11.3 percent of C’s household income).
Because C’s required contribution for self-only cov-
erage ($3,450) does not exceed 9.5 percent of house-
hold income, under paragraph (c)(3)(v)(A)(1)ofthis
section, X’s plan is affordable for C and J, and C and
J are eligible for minimum essential coverage for all
months in 2014.
Example 3.Determination of unaffordability at
enrollment. (i) Taxpayer D is an employee of Em-
ployer X. In November 2013 the Exchange in D’s rat-
ing area projects that D’s 2014 household income will
be $37,000. It also verifies that D’s required contribu-
tion for self-only coverage under X’s health insurance
plan will be $3,700 (10 percent of household income).
Consequently, the Exchange determines that X’s plan
is unaffordable. D enrolls in a qualified health plan
and not in X’s plan. In December 2014, X pays D
a $2,500 bonus. Thus, D’s actual 2014 household
income is $39,500 and D’s required contribution for
coverage under X’s plan is 9.4 percent of household
income.
(ii) Based on D’s actual 2014 household income,
D’s required contribution does not exceed 9.5 percent
of household income and X’s health plan is affordable
for D. However, when D enrolled in a qualified health
plan for 2014, the Exchange determined that X’s plan
was not affordable for D for 2014. Consequently,
under paragraph (c)(3)(v)(A)(2)ofthissection,X’s
plan is treated as not affordable for D and D is treated
as not eligible for minimum essential coverage for
2014.
Example 4.Determination of unaffordability for
plan year. The facts are the same as inExample
3, except that X’s employee health insurance plan
year is September 1 to August 31. The Exchange in
D’s rating area determines in August 2014 that X’s
plan is unaffordable for D based on D’s projected
household income for 2014. D enrolls in a qualified
health plan as of September 1, 2014. Under paragraph
(c)(3)(v)(A)(2) of this section, X’s plan is treated as
not affordable for D and D is treated as not eligible
for minimum essential coverage under X’s plan for
the coverage months September to December 2014
and January through August 2015.
Example 5.Determination of unaffordability for
part of plan year. (i) Taxpayer E is an employee of
Employer X beginning in May 2015. X’s employee
health insurance plan year is September 1 to August
31. E’s required contribution for self-only coverage
for May through August is $150 per month ($1,800
for the full plan year). The Exchange in E’s rating
area determines E’s household income for purposes
of eligibility for advance credit payments as $18,000.
E’s actual household income for the 2015 taxable year
is $20,000.
(ii) Whether coverage under X’s plan is afford-
able for E is determined for the remainder of X’s
plan year (May through August). E’s required con-
tribution for a full plan year ($1,800) exceeds 9.5
percent of E’s household income (1,800/18,000 =
10 percent). Therefore, the Exchange determines
that X’s coverage is unaffordable for May through
August. Although E’s actual household income for
2015 is $20,000 (and E’s required contribution of
$1,800 does not exceed 9.5 percent of E’s household
income), under paragraph (c)(3)(v)(A)(2)ofthis
section, X’s plan is treated as unaffordable for E
for the part of the plan year May through August
2015. Consequently, E is not eligible for minimum
essential coverage underX’s plan for the period May
through August 2015.
Example 6.Affordability determined for part of
a taxable year (part-year period)
.(i)TaxpayerFis
an employee of Employer X. X’s employee health in-
surance plan year is September 1 to August 31. F’s
required contribution for self-only coverage for the
period September 2014 through August 2015 is $150
per month or $1,800 for the plan year. F does not ask
the Exchange in his rating area to determine whether
X’s coverage is affordable for F. F does not enroll
in X’s plan during X’s open season but enrolls in a
2011–36 I.R.B.219September 6, 2011

qualified health plan for September through Decem-
ber 2014. F’s household income in 2014 is $18,000.
(ii) Because F is a calendar year taxpayer and Em-
ployer X’s plan is not a calendar year plan, F must de-
termine the affordability of X’s coverage for the part-
year period in 2014 (September-December). F deter-
mines the affordability of X’s plan for the Septem-
ber through December 2014 period by comparing the
annual premiums ($1,800) to F’s 2014 household in-
come. F’s required contribution of $1,800 is 10 per-
cent of F’s 2014 household income. Because F’s re-
quired contribution exceeds 9.5 percent of F’s 2014
household income, X’s plan is not affordable for F
for the part-year period September through Decem-
ber 2014 and F is not eligible for minimum essential
coverage under X’s plan for that period.
(iii) F enrolls in Exchange coverage for 2015 and
does not ask the Exchange to determine whether X’s
coverage is affordable. F’s 2015 household income is
$20,000.
(iv) F must determine if X’s plan is affordable
for the part-year period January 2015 through Au-
gust 2015. F’s annual required contribution ($1,800)
is 9 percent of F’s 2015 household income. Because
F’s required contribution does not exceed 9.5 percent
of F’s 2015 household income, X’s plan is affordable
for F for the part-year period January through August
2015 and F is eligible for minimum essential cover-
age for that period.
Example 7.Coverage unaffordable at year end.
TaxpayerGisemployedbyEmployerX.InNovem-
ber 2014 the Exchange in G’s rating area determines
that G is eligible for affordable employer-sponsored
coverage for 2015. G nonetheless enrolls in a quali-
fied health plan for 2015 but does not receive advance
credit payments. G’s 2015 household income is less
than expected and G’s required contribution for em-
ployer-sponsored coverage for 2015 exceeds 9.5 per-
cent of G’s actual 2015 household income. Under
paragraph (c)(3)(v)(A)(1) of this section, G is not eli-
gible for minimum essential coverage for 2015 and, if
otherwise eligible, G may claim a premium tax credit.
(vi)Minimum value. An eligible em-
ployer-sponsored plan provides minimum
value only if the plan’s share of the total
allowed costs of benefits provided under
the plan (as determined under regulations
issued by the Secretary of Health and Hu-
man Services under section 1302(d)(2)
of the Affordable Care Act (42 U.S.C.
18022(d)(2))) is at least 60 percent.
(vii)Enrollment in eligible employer-
sponsored plan—(A)In general.There-
quirements of affordability and minimum
value do not apply if an individual enrolls
in an eligible employer-sponsored plan.
(B)Example. The following example
illustrates the provisions of this paragraph
(c)(3)(vii).
Example. Taxpayer H is employed by Employer
X in 2014. H’s required contribution for employer
coverage exceeds 9.5 percent of H’s 2014 household
income. H enrolls in X’s plan for 2014. Under
paragraph (c)(3)(vii) of this section, H is eligible for
minimum essential coverage for 2014 because H is
enrolled in an eligible employer-sponsored plan for
2014.
§1.36B–3 Computing the premium
assistance credit amount.
(a)In general. A taxpayer’s premium
assistance credit amount for a taxable
year is the sum of the premium assistance
amounts determined under paragraph (d)
of this section for all coverage months for
individuals in the taxpayer’s family.
(b)Definitions. For purposes of this
section—
(1) The cost of a qualified health plan is
the premium the plan charges; and
(2) The termcoverage familyrefers to
members of the taxpayer’s family who are
not eligible for minimum essential cover-
age (other than coverage in the individ-
ual market), are lawfully present in the
United States, and are not incarcerated (ex-
cept pending disposition of charges).
(c)Coverage month—(1)In general.A
month is a coverage month for an individ-
ual if, as of the first day of the month—
(i) The individual is covered by a quali-
fied health plan enrolled in through an Ex-
change;
(ii) The individual’s premiums for cov-
erage under the plan are paid by the tax-
payer or by an advance credit payment;
and
(iii) The individual is not eligible for
minimum essential coverage (within the
meaning of §1.36B–2(c)) other than cov-
erage described in section 5000A(f)(1)(C)
(relating to coverage in the individual mar-
ket).
(2)Premiums paid for the taxpayer.
Premiums another person pays for cov-
erage of the taxpayer, taxpayer’s spouse,
or dependent are treated as paid by the
taxpayer.
(3)Examples. The following exam-
ples illustrate the provisions of this para-
graph (c). In each example, unless stated
otherwise, the individuals are not eligible
for minimum essential coverage other than
coverage in the individual market and the
taxpayer is an applicable taxpayer.
Example 1. (i) Taxpayer M is single with no de-
pendents. In December 2013 M enrolls in a qualified
health plan for 2014 and the Exchange approves ad-
vance credit payments. On May 15, 2014, M enlists
in the U.S. Army and is eligible immediately for gov-
ernment-sponsored minimum essential coverage.
(ii) Under paragraph (c)(1) of this section, Jan-
uary through May 2014 are coverage months for
M. June through December 2014 are not coverage
months because M is eligible for minimum essential
coverage for those months. Thus, under paragraph
(a) of this section, M’s premium assistance credit
amount for 2014 is the sum of the premium assistance
amounts for the months January through May.
Example 2. (i) Taxpayer N has one dependent,
S. S is eligible for government-sponsored minimum
essential coverage. N is not eligible for minimum es-
sential coverage. N enrolls in a qualified health plan
for 2014 and the Exchange approves advance credit
payments. On August 1, 2014, S loses eligibility for
minimum essential coverage. N cancels the quali-
fied health plan that covers only N and enrolls in a
qualified health plan that covers N and S for August
through December 2014.
(ii) Under paragraph (c)(1) of this section, Jan-
uary through December of 2014 are coverage months
for N and August through December are coverage
months for N and S. N’s premium assistance credit
amount for 2014 is the sum of the premium assistance
amounts for these coverage months.
Example 3. (i) O and P are the divorced parents
of T. Under the divorce agreement between O and
P, T resides with P and P claims T as a dependent.
However, O must pay premiums for health insurance
for T. P enrolls T in a qualified health plan for 2014.
O pays the premiums to the insurance company.
(ii) Because P claims T as a dependent, P (and
not O) may claim a premium tax credit for coverage
for T. See §1.36B–2(a). Under paragraph (c)(2) of
this section, the premiums that O pays for coverage
for T are treated as paid by P. Thus, the months when
T is covered by a qualified health plan are coverage
months under paragraph (c)(1) of this section in com-
puting P’s premium tax credit under paragraph (a) of
this section.
(d)Premium assistance amount.The
premium assistance amount for a coverage
month is the lesser of—
(1) The premiums for the month for one
or more qualified health plans in which
a taxpayer or a member of the taxpayer’s
family enrolls; or
(2) The excess of the adjusted monthly
premium for the applicable benchmark
plan over
1
/12of the product of a taxpayer’s
household income and the applicable per-
centage for the taxable year.
(e)Adjusted monthly premium.The
adjusted monthly premium is the premium
an insurer would charge for the applicable
benchmark plan to cover all members of
the taxpayer’s coverage family, adjusted
only for the age of each member of the
coverage family as allowed under section
2701 of the Public Health Service Act
(42 U.S.C. 300gg).
(f)Applicable benchmark plan—(1)In
general. Except as otherwise provided in
this paragraph (f), the applicable bench-
mark plan for a coverage month is the sec-
ond lowest cost silver plan (as described
in section 1302(d)(1)(B) of the Afford-
September 6, 20112202011–36 I.R.B.

able Care Act (42 U.S.C. 18022(d)(1)(B)))
offered at the time a taxpayer or family
member enrolls in a qualified health plan
through the Exchange in the rating area
where the taxpayer resides for—
(i) Self-only coverage for a taxpayer—
(A) Who computes tax under section
1(c) (unmarried individuals other than sur-
viving spouses and heads of household)
and is not allowed a deduction under sec-
tion 151 for a dependent for the taxable
year;
(B) Who purchases only self-only cov-
erage for one individual; or
(C) Whose coverage family includes
only one individual; and
(ii) Family coverage for all other tax-
payers.
(2)Family coverage. If an Exchange
offers categories of family coverage (for
example, two adults, one adult with chil-
dren, two or more adults with children, or
children only), the applicable benchmark
plan for family coverage is the coverage
category that applies to the members of the
taxpayer’s coverage family who enroll in a
qualified health plan (such as a plan cover-
ing two adults if the members of taxpayer’s
coverage family are two adults).
(3)Second lowest cost silver plan not
covering the taxpayer’s family.Iftheap-
plicable benchmark plan determined under
paragraphs (f)(1) and (f)(2) of this section
does not cover all members of a taxpayer’s
coverage family (for example, because
family members reside in different rating
areas), the premium for the applicable
benchmark plan is the sum of the premi-
ums for the applicable benchmark plans
determined under paragraphs (f)(1) and
(f)(2) of this section that cover the compo-
nents of the taxpayer’s coverage family.
(4)Benchmark plan terminates or
closes to enrollment. A qualified health
plan that is the applicable benchmark plan
under this paragraph (f) for a taxpayer
does not cease to be the applicable bench-
mark plan solely because the plan or a
lower cost plan terminates or closes to
enrollment during the taxable year.
(5)Examples. The following examples
illustrate the rules of this paragraph (f). In
each example, unless otherwise stated, the
taxpayer is eligible to receive a premium
tax credit.
Example 1.Single taxpayer with no dependents.
Taxpayer V is single and resides with his 24-year old
daughter but may not claim her as a dependent. Tax-
payer V purchases family coverage for himself and
his daughter. The exchange in V’s rating area offers
only self-only and family coverage categories. Un-
der paragraph (f)(1)(i)(A) of this section, V’s appli-
cable benchmark plan is the second lowest cost silver
self-only plan. But see paragraph (h) of this section
for computing the credit when multiple taxpayers are
covered by one qualified health plan.
Example 2.Single taxpayer with one dependent,
two coverage categories. The facts are the same as in
Example 1, except that V also resides with his teenage
son and claims him as a dependent. V purchases fam-
ily coverage for himself, his son, and his daughter.
Under paragraph (f)(1)(ii) of this section, V’s appli-
cable benchmark plan is the second lowest cost silver
family plan.
Example 3.Single taxpayer with one dependent,
multiple coverage categories. The facts are the same
as inExample 2, except that the Exchange where V
resides offers a category of coverage for one adult and
children. Under paragraphs (f)(1)(ii) and (f)(2) of this
section, V’s applicable benchmark plan is the second
lowest cost silver plan for one adult plus children.
Example 4.Single taxpayer with one dependent,
multiple coverage categories. The facts are the same
as inExample 2, except that the Exchange where V
resides offers a category of coverage for one adult and
one child in addition to coverage for one adult and
children. Under paragraphs (f)(1)(ii) and (f)(2) of this
section, V’s applicable benchmark plan is the second
lowest cost silver plan for one adult and one child.
Example 5.Applicable benchmark plan unre-
lated to coverage purchased. Taxpayers W and X,
who are married, reside with X’s two teenage daugh-
ters, whom they claim as dependents. The Exchange
where W and X reside offers a category of cover-
age for one adult plus children. W and X purchase
self-only coverage for W and one adult plus chil-
dren coverage for X and X’s daughters. Under para-
graph (f)(1)(ii) of this section, W’s and X’s applicable
benchmark plan is the second lowest cost silver fam-
ily plan.
Example 6.Minimum essential coverage for some
coverage months. Taxpayer Y claims his daughter as
a dependent. Y and his daughter enroll in a quali-
fied health plan for 2014. The exchange in Y’s rating
area offers only self-only and family coverage cate-
gories. Y, but not his daughter, is eligible for gov-
ernment-sponsored minimum essential coverage for
September to December 2014. Thus, under paragraph
(c)(1)(iii) of this section, January through December
are coverage months for Y’s daughter and January
through August are coverage months for Y. Because,
under paragraphs (d) and (f)(1) of this section, the
premium assistance amount for a coverage month is
computed based on the applicable benchmark plan
for that coverage month, Y’s applicable benchmark
plan for January through August is the second low-
est cost silver family plan under paragraph (f)(1)(ii)
of this section. Under paragraph (f)(1)(i)(C) of this
section, Y’s applicable benchmark plan for Septem-
ber through December is the second lowest cost silver
self-only plan.
Example 7.Family member eligible for minimum
essential coverage for the taxable year. The facts are
thesameasinExample 6, except that Y is not eli-
gible for government-sponsored minimum essential
coverage for any months and Y’s daughter is eligible
for government-sponsored minimum essential cover-
age for the entire year. Under paragraph (f)(1)(i)(C)
of this section, Y’s applicable benchmark plan is the
second lowest cost silver self-only plan.
Example 8.Family required to buy multiple plans
to obtain coverage. (i) Taxpayers X and Z are mar-
ried and live in different Exchange rating areas. X
and Z have one child, M, whom they claim as a de-
pendent and who resides with X. X and M enroll in
a qualified health plan covering one adult plus chil-
dren through the ExchangeinX’sratingarea,andZ
enrolls in a qualified health plan providing self-only
coverage through the Exchange in Z’s rating area.
(ii) Under paragraph (f)(3) of this section, the pre-
mium for the applicable benchmark plan for comput-
ing X’s and Z’s premium assistance credit amount is
the sum of the premium for the second lowest cost
silver one adult plus children plan offered through
the Exchange in X’s rating area and the premium for
the second lowest cost silver self-only plan offered
through the Exchange in Z’s rating area.
Example 9.Benchmark plan closes to new en-
rollees during the year. Taxpayers X, Y, and Z each
have coverage families consisting of two adults. In
the rating area where X, Y, and Z reside, Plan 2 is
the second lowest cost silver plan and Plan 3 is the
third lowest cost silver plan covering two adults of-
fered through the Exchange. The X and Y families
each enroll in a qualified health plan that is not the
applicable benchmark plan in November during the
regular open enrollment period. Plan 2 closes to new
enrollees the following June. Thus, on July 1, Plan 3
is the second lowest cost silver plan available to new
enrollees through the Exchange. The Z family enrolls
in a qualified health plan in July. Under paragraphs
(f)(1), (f)(2), and (f)(4) of this section, the applicable
benchmark plan is Plan 2 for X and Y for all coverage
months during the year. The applicable benchmark
plan for Z is Plan 3, because Plan 2 is not offered
through the Exchange when the Z family enrolls.
Example 10.Benchmark plan terminates for all
enrollees during the year. The facts are the same
as inExample 9, except that Plan 2 terminates for
all enrollees on June 30. Under paragraphs (f)(1),
(f)(2), and (f)(4) of this section, Plan 2 is the appli-
cable benchmark plan for X and Y for all coverage
months during the year and Plan 3 is the applicable
benchmark plan for Z.
(g)Applicable percentage—(1)In gen-
eral. The applicable percentage multiplied
by a taxpayer’s household income de-
termines the taxpayer’s required share
of premiums for the benchmark plan.
This amount is subtracted from the ad-
justed monthly premium for the applicable
benchmark plan when computing the pre-
mium assistance amount. The applicable
percentage is computed by first deter-
mining the percentage that the taxpayer’s
household income bears to the federal
poverty line for the taxpayer’s family size.
The resulting federal poverty line per-
centage is then compared to the income
categories describedin the table in para-
graph (g)(2) of this section (or successor
tables). An applicable percentage within
2011–36 I.R.B.221September 6, 2011

an income category increases on a sliding
scale in a linear manner and is rounded to
the nearest one-hundredth of one percent.
The applicable percentages in the table
may be adjusted in published guidance of
general applicability, see §601.601(d)(2)
of this chapter, for taxable years beginning
after December 31, 2014, to reflect rates
of premium growth relative to growth in
income and, for taxable years beginning
after December 31, 2018, to reflect rates
of premium growth relative to growth in
the consumer price index.
(2)Applicable percentage table.
Household income percentage of federal
poverty line
Initial percentageFinal percentage
Less than 133%2.0%2.0%
At least 133% but less than 150%
3.0%4.0%
At least 150% but less than 200%
4.0%6.3%
At least 200% but less than 250%
6.3%
8.05%
At least 250% but less than 300%8.05%9.5%
At least 300% but less than 400%
9.5%9.5%
(3)Examples. The following examples
illustrate the rules of this paragraph (g).
Exam
ple 1. A’s household income is 275 per-
cent of the federal poverty line for A’s family size for
that taxable year. In the table in paragraph (g)(2) of
this
section, the initial percentage for a taxpayer with
household income of 250 to 300 percent of the federal
poverty line is 8.05 and the final percentage is 9.5.
A’s
federal poverty line percentage of 275 percent is
halfway between 250 percent and 300 percent. Thus,
rounded to the nearest one-hundredth of one percent,
A’s
applicable percentage is 8.78, which is halfway
between the initial percentage of 8.05 and the final
percentage of 9.5.
Ex
ample 2. (i) B’s household income is 210 per-
cent of the federal poverty line for B’s family size. In
the table in paragraph (g)(2) of this section, the initial
pe
rcentage for a taxpayer with household income of
200 to 250 percent of the federal poverty line is 6.3
and the final percentage is 8.05. B’s applicable per-
c
entage is 6.65, computed as follows.
(ii) Determine the excess of B’s FPL percentage
(210) over the initial household income percentage
i
n B’s range (200), which is 10. Determine the dif-
ference between the initial household income per-
centage in the taxpayer’s range (200) and the ending
h
ousehold income percentage in the taxpayer’s range
(250), which is 50. Divide the first amount by the
second amount:
210-200=10
250 - 200 = 50
10/50 = .20.
(iii) Compute the difference between the initial
premium percentage (6.3) and the second premium
percentage (8.05) in the taxpayer’s range; 8.05 - 6.3
= 1.75.
(iv) Multiply the amount in the first calculation
(.20) by the amount in the second calculation (1.75)
and add the product (.35) to the initial premium per-
centage in B’s range (6.3), resulting in B’s applicable
percentage of 6.65:
.20 X 1.75 = .35
6.3 + .35 = 6.65.
(h)Plan covering more than one fam-
ily—(1)In general. If a single qualified
health plan covers more than one fam-
ily, each applicable taxpayer covered by
the plan may claim a premium tax credit,
if otherwise allowable. Each taxpayer
computes the credit using that taxpayer’s
applicable percentage, household income,
and the benchmark plan that applies to the
taxpayer under paragraph (f) of this sec-
tion. In determining whether the amount
computed under paragraph (d)(1) of this
section (the premiums for the qualified
health plan in which the taxpayer enrolls)
is less than the amount computed under
paragraph (d)(2) of this section (the bench-
mark plan premium minus the product
of household income and the applicable
percentage), the premiums paid are allo-
cated to each taxpayer in proportion to the
premiums for each taxpayer’s benchmark
plan.
(2)Example. The following example
illustrates the rules of this paragraph (h).
E
xample. (i) Taxpayers A and B enroll in a sin-
gle qualified health plan. B is A’s 25-year old child
who is not A’s dependent. B has no dependents. The
p
lancoversA,B,andA’stwochildrenwhoareA’s
dependents. The premium for the plan in which A
and B enroll is $15,000. The premium for the second
lowest cost silver family plan is $12,000 and the pre-
mium for the second lowest cost silver self-only plan
is $6,000. A and B are applicable taxpayers and oth-
erwise eligible to claim the premium tax credit.
(ii) Under paragraph (h)(1) of this section, both A
and B may claim premium tax credits. A computes
her credit using her household income, a family size
of three, and a benchmark plan premium of $12,000.
B computes his credit using his household income, a
family size of one, and a benchmark plan premium of
$6,000.
(iii) In determining whether the amount in para-
graph (d)(1) of this section (the premiums for the
qualified health plan A and B purchase) is less
than the amount in paragraph (d)(2) of this section
(the benchmark plan premium minus the product
of household income and the applicable percent-
age), the $15,000 premiums paid are allocated to
A and B in proportion to the premiums for their
applicable benchmark plans. Thus, the portion of
the premium allocated to A is $10,000 ($15,000 x
$12,000/$18,000) and the portion allocated to B is
$5,000 ($15,000 x $6,000/$18,000).
(i) [Reserved]
(j)Additional benefits—(1)In general.
If a qualified health plan offers benefits in
addition to the essential health benefits a
qualified health plan must provide under
section 1302 of the Affordable Care Act
(42 U.S.C. 18022), or a State requires a
qualified health plan to cover benefits in
addition to these essential health benefits,
the portion of the premium for the plan
properly allocable tothe additional bene-
fits is excluded from the monthly premi-
ums under paragraph (d)(1) or (d)(2) of
this section.
(2)Method of allocation.Thepor-
tion of the premium properly allocable
to additional benefits is determined un-
der regulations issued by the Secretary of
Health and Human Services. See section
36B(b)(3)(D).
(k)Pediatric dental coverage—(1)In
general. For purposes of determining the
amount of the monthly premium a tax-
payer pays for coverage under paragraph
(d)(1) of this section, if an individual en-
rolls in both a qualified health plan and a
plan described in section 1311(d)(2)(B)(ii)
of the Affordable Care Act (42 U.S.C.
13031(d)(2)(B)(ii)) (Affordable Care Act
dental plan), the portion of the premium
for the Affordable Care Act dental plan
that is properly allocable to pediatric den-
tal benefits that are essential benefits re-
quired to be provided by a qualified health
plan is treated as a premium payable for
the individual’s qualified health plan.
(2)Method of allocation.[Reserved]
(l)Families including individuals not
lawfully present—(1)In general. If one or
more individuals for whom a taxpayer is
allowed a deduction under section 151 are
not lawfully present (within the meaning
September 6, 20112222011–36 I.R.B.

of §1.36B–1(g)), the percentage a tax-
payer’s household income bears to the
federal poverty line for the taxpayer’s
family size for purposes of determining
the applicable percentage under paragraph
(g) of this section is determined by ex-
cluding individuals who are not lawfully
present from family size and by determin-
ing household income in accordance with
paragraph (l)(2) of this section.
(2)Revised household income com-
putation—(i)Statutory method. For pur-
poses of paragraph (l)(1) of this section,
household income is equal to the product
of the taxpayer’s household income (de-
termined without regard to this paragraph
(l)(2)) and a fraction—
(A)Thenumeratorofwhichisthefed-
eral poverty line for the taxpayer’s family
size determined by excluding individuals
who are not lawfully present; and
(B) The denominator of which is the
federal poverty line for the taxpayer’s fam-
ily size determined by including individu-
als who are not lawfully present.
(ii)Comparable method.[Reserved]
§1.36B–4 Reconciling the premium tax
credit with advance credit payments.
(a)Reconciliation—(1)In general.The
amount of credit allowed under section
36B and this section is reconciled with ad-
vance credit payments on a taxpayer’s in-
come tax return for a taxable year. A tax-
payer whose premium tax credit for the
taxable year exceeds the taxpayer’s ad-
vance credit payments may receive the ex-
cess as an income tax refund. A tax-
payer whose advance credit payments for
the taxable year exceed the taxpayer’s pre-
mium tax credit owes the excess as an ad-
ditional income tax liability.
(2)Credit computation.Thepremium
assistance credit amount is computed on
the taxpayer’s return using the taxpayer’s
household income and family size for the
taxable year. Thus, the taxpayer’s contri-
bution amount (household income for the
taxable year times the applicable percent-
age) is determined using the taxpayer’s
household income and family size at the
end of the taxable year. If the applicable
benchmark plan changes during the tax-
able year, the taxpayer may be required
to use a different applicable benchmark
plan to determine the premium assistance
amounts for the coverage months.
(3)Limitation on additional tax—(i)In
general. The additional tax imposed un-
der paragraph (a)(1) of this section on a
taxpayer whose household income is less
than 400 percent of the federal poverty line
islimitedtotheamountsprovidedinthe
table in paragraph (a)(3)(ii) of this section
(or successor tables). For taxable years be-
ginning after December 31, 2014, the lim-
itation amounts may be adjusted in pub-
lished guidance of general applicability,
see §601.601(d)(2) of this chapter, to re-
flect changes in the consumer price index.
(ii)Additional tax limitation table.
Household income percentage of federal
poverty line
Limitation amount for taxpayers whose
tax is determined under section 1(c)
Limitation amount for all other
taxpayers
Less than 200%
$ 300$ 600
At least 200% but less than 300%
$ 750$1,500
At least 300% but less than 400%
$1,250$2,500
(4
)Examples. Therulesofthispara-
gr
aph (a) are illustrated by the following
ex
amples. Unless otherwise stated, in each
ex
ample the taxpayer is allowed a pre-
mi
um tax credit, has a calendar taxable
y
ear, and files an income tax return for the
t
axable year.
Example 1.Household income increases.(i)Tax-
payer A is single and has no dependents. The Ex-
c
hange in A’s rating area projects A’s 2014 house-
hold income to be $27,225 (250 percent of the federal
poverty line for a family of one, applicable percent-
a
ge 8.05). A enrolls in a qualified health plan. The
annual premium for the applicable benchmark plan
is $5,200. A’s advance credit payments are $3,008
(benchmark plan premium of $5,200 less contribu-
tion amount of $2,192 (projected household income
of $27,225 x .0805) = $3,008).
(ii) A’s household income for 2014 is $32,800,
which is 301 percent of the federal poverty line for
a family of one (applicable percentage 9.5). Conse-
quently, A’s premium tax credit for 2014 is $2,084
(benchmark plan premium of $5,200 less contribu-
tion amount of $3,116 (household income of $32,800
x .095)). Because A’s advance credit payments for
2014 are $3,008 and A’s 2014 credit is $2,084, A has
excess advance payments of $924. Under paragraph
(a)(1) of this section, A’s tax liability for 2014 is in-
creased by $924.
Ex
ample 2.Household income decreases.The
factsarethesameasinExample 1, except that
A’s actual household income for 2014 is $21,780
(2
00 percent of the federal poverty line for a family
of one, applicable percentage 6.3). Consequently,
A’s premium tax credit for 2014 is $3,828 ($5,200
b
enchmark plan premium less contribution amount
of $1,372 (household income of $21,780 x .063)).
Because A’s advance credit payments for 2014 are
$
3,008, A is allowed an additional credit of $820
($3,828 less $3,008).
Example 3.Family size decreases. (i) Taxpay-
e
rs B and C are married and have two children (ages
17 and 20) whom they claim as their dependents in
2013. The Exchange in their rating area projects their
2014 household income to be $61,460 (275 percent
of the federal poverty line for a family of four, appli-
cable percentage 8.78). B and C enroll in a qualified
health plan for 2014 that covers the four family mem-
bers. The annual premium for the applicable bench-
mark plan is $14,100. B and C’s advance credit pay-
ments for 2014 are $8,704 (benchmark plan premium
of $14,100 less contribution amount of $5,396 (pro-
jected household income of $61,460 x .0878)).
(ii) In 2014 B and C do not claim their 20-year
old child as their dependent. Consequently, B and
C’s family size for 2014 is three and their house-
hold income is 332 percent of the federal poverty
line for a family of three (applicable percentage 9.5).
Their premium tax credit for 2014 is $8,261 ($14,100
be
nchmark plan premium less $5,839 contribution
amount (household income of $61,460 x .095)). Be-
cause B and C’s advance credit payments for 2014
ar
e $8,704 and their 2014 credit is $8,261, B and C
have excess advance payments of $443. Under para-
graph (a)(1) of this section, B and C’s tax liability
f
or 2014 is increased by $443. Because B and C’s
household income is below 400 percent of the federal
poverty line, if B and C’s excess advance payments
e
xceeded $2,500, under the limitation of paragraph
(a)(3) of this section, B and C’s additional tax liabil-
ity would be limited to that amount.
E
xample 4.Repayment limitation does not apply.
(i) Taxpayer D is single and has no dependents. The
Exchange in D’s rating area approves advance credit
payments for D based on 2014 household income
of $38,115 (350 percent of the federal poverty line
for a family of one, applicable percentage 9.5). D
enrolls in a qualified health plan. The annual pre-
mium for the applicable benchmark plan is $5,200.
D’s advance credit payments are $1,579 (benchmark
plan premium of $5,200 less contribution amount of
$3,621 (projected household income of $38,115 x
.095) = $3,621).
(ii) D’s actual household income for 2014 is
$43,778, which is 402 percent of the federal poverty
line for a family of one. D is not an applicable
taxpayer and may not claim a premium tax credit.
Additionally, the repayment limitation of paragraph
(a)(3) of this section does not apply. Consequently,
2011–36 I.R.B.223September 6, 2011

D has excess advance payments of $1,579 (the total
amount of the advance credit payments in 2014). Un-
der paragraph (a)(1) of this section, D’s tax liability
for 2014 is increased by $1,579.
Example 5.Coverage for less than a full taxable
year. (i) Taxpayer F is single and has no dependents.
In November 2013 the Exchange in F’s rating area
projects F’s 2014 household income to be $27,225
(250 percent of the federal poverty line for a family
of one, applicable percentage 8.05). F enrolls in a
qualified health plan. The annual premium for the ap-
plicable benchmark plan is $5,200. F’s monthly ad-
vance credit payment is $251 (benchmark plan pre-
mium of $5,200 less contribution amount of $2,192
(projected household income of $27,225 x .0805) =
$3,008; $3,008/12 = $251).
(ii) F begins a new job in August 2014 and is
eligible for employer-sponsored minimum essential
coverage for the period September through Decem-
ber 2014. F discontinues her Exchange coverage ef-
fective November 1, 2014. F’s household income for
2014 is $28,000 (257 percent of the federal poverty
line for a family size of one, applicable percentage
8.25).
(iii) Under §1.36B–3(a), F’s premium assistance
credit amount is the sum of the premium assis-
tance amounts for the coverage months. Under
§1.36B–3(c)(1)(iii), a month in which an individual
is eligible for minimum essential coverage other than
coverage in the individual market is not a coverage
month. Because F is eligible for employer-sponsored
minimum essential coverage as of September 1, only
the months January through August of 2014 are
coverage months.
(iv) If F had 12 coverage months in 2014, F’s
premium tax credit would be $2,890 (benchmark
plan premium of $5,200 less contribution amount
of $2,310 (household income of $28,000 x .0825)).
Because F has only eight coverage months in 2014,
F’s credit is $1,927 ($2,890/12 x 8). Because F does
not discontinue her Exchange coverage until Novem-
ber 1, 2014, F’s advance credit payments for 2014
are $2,510 ($251 x 10). Consequently, F has excess
advance payments of $583 ($2,510 less $1,927) and
F’s tax liability for 2014 is increased by $583 under
paragraph (a)(1) of this section.
Example 6.Changes in coverage months and ap-
plicable benchmark plan. (i) Taxpayer E claims one
dependent, F. E is eligible for government-sponsored
minimum essential coverage. E enrolls F in a quali-
fied health plan for 2014. The Exchange in E’s rat-
ing area projects E’s 2014 household income to be
$29,420 (200 percent of the federal poverty line for
a family of two, applicable percentage 6.3). The an-
nual premium for E’s applicable benchmark plan is
$5,200. E’s monthly advance credit payment is $279
(benchmark plan premium of $5,200 less contribu-
tion amount of $1,853 (projected household income
of $29,420 x .063) = $3,347; $3,347/12 = $279).
(ii) On August 1, 2014, E loses her eligibility for
government-sponsored minimum essential coverage.
E cancels the qualified health plan that covers F and
enrolls in a qualified health plan that covers E and F
for August through December 2014. The annual pre-
mium for the applicable benchmark plan is $10,000.
The Exchange computes E’s monthly advance credit
payments for the period August through December
as $679 (benchmark plan premium of $10,000 less
contribution amount of $1,853 (projected household
income of $29,420 x .063) = $8,147; $8,147/12 =
$679). E’s household income for 2014 is $28,000
(190 percent of the federal poverty line, applicable
percentage 5.84).
(iii) Under §1.36B–3(c)(1), January through
July of 2014 are coverage months for F and August
through December are coverage months for E and
F. Under paragraph (a)(2) of this section, E must
compute her premium tax credit using the premium
for the applicable benchmark plan for each coverage
month. E’s premium assistance credit amount for
2014 is the sum of the premium assistance amounts
for all coverage months. E reconciles her premium
tax credit with advance credit payments as follows:
Advance credit payments (Jan. to July)
$ 1,953
Advance credit payments (Aug. to Dec.)
3
,395
Total advance credit payments5,348
Benchmarkplanpremium(Jan. toJuly)3,033
Benchmark plan premium (Aug. to Dec.)4
,167
Total benchmark plan premium7,200
Contribution amount (taxable year household income X applicable percentage)1,635
Credit (total benchmark plan premium less required contribution, assuming not more than premium paid)
5,565
(iv) E’s advance credit payments for 2014 are
$5,348. E’s premium tax credit is $5,565. Thus, E
is allowed an additional credit of $217.
Example 7.Part-year coverage and changes in
coverage months and applicable benchmark plan.
(i) The facts are the same as inExample 7, except that
both E and F are eligible for government-sponsored
minimum essential coverage for January and
February 2014, and E enrolls F in a qualified health
plan beginning in March 2014.
(ii) E reconciles her premium tax credit with ad-
vance credit payments as follows:
Advance credit payments (March to July)
$ 1,395
Advance credit payments (Aug. to Dec.)
3
,395
Total advance credit payments4,790
Benchmark plan premium (March to July)2,167
Benchmark plan premium (Aug. to Dec.)4
,166
Total benchmark plan premium6,333
Contribution amount for 10 coverage months (taxable year household income X applicable percentage X 10/12)1,363
Credit (total benchmark plan premium less required contribution, assuming not more than premium paid)4,970
(iii) E’s advance credit payments for 2014 are
$4,790. E’s premium tax credit is $4,970. Thus, E
is allowed an additional credit of $180.
(b)Changes in filing status—(1)In
general. A taxpayer whose marital status
changes during the taxable year computes
the premium tax credit by using the ap-
plicable benchmark plan or plans for the
taxpayer’smaritalstatusasofthefirstday
of each coverage month. The taxpayer’s
contribution amount (household income
for the taxable year times the applicable
percentage) is determined using the tax-
payer’s household income and family size
at the end of the taxable year.
September 6, 20112242011–36 I.R.B.

(2)Taxpayers not married to each other
at the end of the taxable year.Taxpayers
who are married (within the meaning of
section 7703) to each other during a tax-
able year but are not married to each other
on the last day of the taxable year, and who
are enrolled in the same qualified health
plan at any time during the taxable year,
must allocate the premium for the applica-
ble benchmark plan, the premium for the
plan in which the taxpayers enroll, and the
advance credit payments for the period the
taxpayers are married during the taxable
year. The taxpayers may allocate these
items to each former spouse in any propor-
tion but must allocate all items in the same
proportion. If the taxpayers cannot agree
on an allocation, 50 percent of the pre-
mium for the applicable benchmark plan,
the premiums for the plan in which the tax-
payers enroll, and the advance credit pay-
ments for the period are allocated to each
taxpayer. If a plan covers only one of these
taxpayers for any period during a taxable
year, the amounts for that period are allo-
cated entirely to that taxpayer.
(3)Married taxpayers filing separate
tax returns. The premium tax credit is al-
lowed to married taxpayers only if they file
joint returns. See §1.36B–2(b)(2). Mar-
ried taxpayers who receive advance credit
payments and file their income tax returns
as married filing separately have received
excess advance payments. The taxpayers
must allocate the advance credit payments
to each taxpayer equally for purposes of
determining their excess advance payment
amounts under paragraph (a)(1) of this sec-
tion. The repayment limitation described
in paragraph (a)(3) of this section applies
to each taxpayer based on the household
income and family size reported on that
taxpayer’s return.
(4)Examples. The following examples
illustrate the provisions of this paragraph
(b). In each example, unless otherwise
indicated, each taxpayer uses a calendar
taxable year and no individuals are eligible
for minimum essential coverage other than
coverage in the individual market.
Example 1.Taxpayers marry during the taxable
year. (i) P is a single taxpayer with no dependents.
In 2013 the Exchange in the rating area where P
resides determines that P’s 2014 household income
will be $40,000 (367 percent of the federal poverty
line, applicable percentage 9.5). P enrolls in a qual-
ified health plan. The premium for the applicable
benchmark plan is $5,200. The Exchange approves
advance credit payments of $117 per month, com-
puted as follows: $5,200 benchmark plan premium
minus contribution amount of $3,800 ($40,000 x
.095) equals $1,400 (total advance credit); $1,400/12
= $117.
(ii) Q is a single taxpayer with two dependents.
In 2013 the Exchange in the rating area where Q
resides determines that Q’s 2014 household income
will be $35,000 (189 percent of the federal poverty
line, applicable percentage 5.79). Q enrolls in a
qualified health plan. The premium for the appli-
cable benchmark plan is $14,100. The Exchange
approves advance credit payments of $1,006 per
month, computed as follows: $14,100 benchmark
plan premium minus contribution amount of $2,027
($35,000 x .0579) equals $12,073 (total advance
credit); $12,073/12 = $1,006.
(iii) P and Q marry on June 17, 2014, and en-
roll in one qualified health plan covering four fam-
ily members, beginning July 1, 2014. The premium
for the applicable benchmark plan is $14,100. Based
on household income of $75,000 and a family size of
four (336 percent of the federal poverty line, applica-
ble percentage 9.5), the Exchange approves advance
credit payments of $581 per month, computed as fol-
lows: $14,100 benchmark plan premium minus con-
tribution amount of $7,125 ($75,000 x .095) equals
$6,975 (total advance credit); $6,975/12 = $581.
(iv) P and Q file a joint return for 2014 and re-
port $75,000 in household income and a family size
of four. Under paragraph (b)(1) of this section, P and
Q compute their credit at reconciliation using the pre-
miums for the applicable benchmark plans that apply
for the months married and the months not married,
and their contribution amount based on their federal
poverty line percentage at the end of the taxable year.
P and Q reconcile their premium tax credit with ad-
vance credit payments as follows:
Advance payments for P (Jan. to June)
$700
Advance payments for Q (Jan. to June)6,036
Advance payments for P and Q (July to Dec.)3
,486
Total advance payments10,222
Benchmark plan premium for P (Jan. to June)2,600
Benchmark plan premium for Q (Jan. to June)7,050
Benchmark plan premium for P and Q (July to Dec.)
7
,050
Total benchmark plan premium16,700
Contribution amount (taxable year household income X applicable percentage)
7,125
Credit (total benchmark plan premium less required contribution, assuming not more than premium paid)9,575
Additional tax647
(v) P’s and Q’s tax liability for 2014 is increased
by $647 under paragraph (a)(1) of this section.
Example 2.Taxpayers divorce during the taxable
year, 50 percent allocation. (i) Taxpayers R and S
are married and have two dependents. In 2013 the
Exchange in the rating area where the family resides
determines that their 2014 household income will be
$76,000 (340 percent of the federal poverty line for a
family of 4, applicable percentage 9.5). R and S en-
roll in a qualified health plan for 2014. The premium
for the applicable benchmark plan is $14,100. The
Exchange approves advance credit payments of $573
per month, computed as follows: $14,100 benchmark
plan premium minus R and S’s contribution amount
of $7,220 ($76,000 x .095) equals $6,880 (total ad-
vance credit); $6,880/12 = $573.
(ii) R and S divorce on June 17, 2014, and
obtain separate qualified health plans beginning
July 1, 2014. R enrolls based on household income
of $60,000 and a family size of three (324 percent
of the federal poverty line, applicable percentage
9.5). The premium for the applicable benchmark
plan is $14,100. The Exchange approves advance
credit payments of $700 per month, computed as
follows: $14,100 benchmark plan premium minus
R’s contribution amount of $5,700 ($60,000 x .095)
equals $8,400 (total advance credit); $8,400/12 =
$700.
(iii) S enrolls based on household income of
$16,000 and a family size of one (147 percent of
the federal poverty line, applicable percentage 3.82).
The premium for the applicable benchmark plan
is $5,200. The Exchange approves advance credit
payments of $382 per month, computed as follows:
$5,200 benchmark plan premium minus S’s con-
tribution amount of $611 ($16,000 x .0382) equals
$4,589 (total advance credit); $4,589/12 = $382. R
and S do not agree on an allocation of the premium
for the applicable benchmark plan, the premiums for
the plan in which they enroll, and the advance credit
payments for the period they were married in the
taxable year.
2011–36 I.R.B.225September 6, 2011

(iv) Under paragraph (b)(1) of this section, R and
S each compute their credit at reconciliation using the
premiums for the applicablebenchmark plans that ap-
ply to them for the months married and the months
not married, and contribution amount based on their
federal poverty line percentages at the end of the tax-
able year. Under paragraph (b)(2) of this section, be-
cause R and S do not agree on an allocation, R and
S must equally allocate the benchmark plan premium
($7,050) and the advance credit payments ($3,440)
for the six-month period January through June 2014
when they are married and enrolled in the same qual-
ified health plan. Thus, R and S each are allocated
$3,525 of the benchmark plan premium ($7,050/2)
and $1,720 of the advance credit payments ($3,440/2)
for January through June.
(v) R reports on his 2014 tax return $60,000 in
household income and family size of three. S reports
on her 2014 tax return $16,000 in household income
and family size of one. R and S reconcile their pre-
mium tax credit with advance credit payments as fol-
lows:
R
S
Allocated advance payments (Jan. to June)
$ 1,720$ 1,720
Actual advance payments (July to Dec.)4
,2002,292
Total advance payments
5,920
4,012
Allocated benchmark plan premium (Jan. to June)
3,5253,525
Actual benchmark plan premium (July to Dec.)
7
,050
2,600
Total benchmark plan premium
10,5756,125
Contribution amount (taxable year household income X applicable percentage)
5,700
611
Credit (total benchmark plan premium less required contribution, assuming not more than
premium paid)
4,8755,514
Additional credit
1,502
Additional tax
1,045
(vi) Under paragraph (a)(1) of this section, on
their tax returns R’s tax liability is increased by
$1,045 and S is allowed $1,502 as additional credit.
Example 3.Taxpayers divorce during the taxable
year, allocation in proportion to household income.
(i)ThefactsarethesameasinExample 2, except
that R and S decide to allocate the benchmark plan
premium ($7,050) and the advance credit payments
($3,440) for January through June 2014 in propor-
tion to their household incomes (79 percent and 21
percent). Thus, R is allocated $5,570 of the bench-
mark plan premiums ($7,050 x .79) and $2,718 of
the advance credit payments($3,440x.79),andS
is allocated $1,480 of thebenchmark plan premiums
($7,050 x .21) and $722 of the advance credit pay-
ments ($3,440 x .21). R and S reconcile their pre-
mium tax credit with advance credit payments as fol-
lows:
R
S
Allocated advance payments (Jan. to June)
$ 2,718$ 722
Actual advance payments (July to Dec.)4
,2002,292
Total advance payments6,9183,014
Allocated benchmark plan premium (Jan. to June)
5,570
1,480
Actual benchmark plan premium (July to Dec.)
7
,050
2,600
Total benchmark plan premium12,6204,080
Contribution amount (taxable year household income X applicable percentage)
5,700
611
Credit (total benchmark plan premium less required contribution, assuming not more than
premium paid)
6,9203,469
Additional credit2
455
(ii) Under paragraph (a)(1) of this section, on their
tax returns R is allowed an additional credit of $2 and
S is allowed an additional credit of $455.
Example 4.Married taxpayers filing separate tax
returns. (i) Taxpayers T and U are married and have
two dependents. In 2013, the Exchange in the rat-
ing area where the family resides determines that their
2014 household income will be $76,000 (340 percent
of the federal poverty line for a family of 4, applicable
percentage 9.5). T and U enroll in a qualified health
plan for 2014. The premium for the applicable bench-
mark plan is $14,100. The Exchange approves ad-
vance credit payments of $573 per month, computed
as follows: $14,100 benchmark plan premium minus
T and U’s contribution amount of $7,220 ($76,000 x
.095) equals $6,880 (total advance credit); $6,880/12
= $573.
(
ii) T and U file income tax returns for 2014 using
a married filing separately filing status. T reports
household income of $60,000 and a family size of
three (324 percent of the federal poverty line). U
reports household income of $16,000 and a family
size of one (147 percent of the federal poverty line).
(iii) Because T and U are married but do not file a
joint return for 2014, T and U are not applicable tax-
payers and are not allowed a premium tax credit for
2014. See §1.36B–2(b)(2). Under paragraph (b)(3)
of this section, half of the advance credit payments
($6,880/2 = $3,440) is allocated to T and half is al-
located to U for purposes of determining their ex-
cess advance payments. The repayment limitation
described in paragraph (a)(3) of this section applies
to T and U based on the household income and fam-
ily size reported on each return. Consequently, T’s
tax liability for 2014 is increased by $2,500 and U’s
tax liability for 2014 is increased by $600.
§1.36B–5 Information reporting by
Exchanges.
(a)Information required to be reported.
An Exchange must report to the IRS and
a taxpayer the following information for a
qualified health plan the taxpayer enrolls
in through the Exchange—
September 6, 20112262011–36 I.R.B.

(1) The premium and category of cov-
erage (such as self-only) for the applicable
benchmark plans used to compute advance
credit payments and the period coverage
was in effect;
(2) The total premium for the coverage
without reduction for advance credit pay-
ments or cost sharing;
(3) The aggregate amounts of any ad-
vance credit payments or cost sharing re-
ductions;
(4) The name, address and taxpayer
identification number (TIN) of the primary
insured and the name and TIN of each
other individual covered under the policy;
(5) All information provided to the Ex-
change at enrollment or during the tax-
able year, including any change in circum-
stances, necessary to determine eligibility
for and the amount of the premium tax
credit;
(6) All information necessary to deter-
mine whether a taxpayer has received ex-
cess advance payments; and
(7) Any other information required in
published guidance of general applicabil-
ity, see §601.601(d)(2) of this chapter.
(b)Time and manner of reporting.The
Commissioner may provide rules in pub-
lished guidance of general applicability,
see §601.601(d)(2) of this chapter, for the
time and manner of reporting under this
section.
Par. 3. Section 1.6011–8 is added to
read as follows:
§1.6011–8 Requirement of income tax
return for taxpayers who claim the
premium tax credit under section 36B.
(a)Requirement of return. A taxpayer
who receives advance payments of the pre-
mium tax credit under section 36B must
file an income tax return for that taxable
year on or before the fifteenth day of the
fourth month following the close of the
taxable year.
(b)Effective/applicability date.This
section applies for taxable years ending af-
ter December 31, 2013.
Par. 4. In §1.6012–1, paragraph
(a)(2)(viii) is added to read as follows:
§1.6012–1 Individuals required to make
returns of income.
(a) * * *
(2) * * *
(viii) For rules relating to returns re-
quired of taxpayers who receive advance
payments of the premium tax credit under
section 36B, see §1.6011–8(a).
*****
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on August 12,
2011, 8:45 a.m., and published in the issue of the Federal
Register for August 17, 2011, 76 F.R. 50931)
Withholding on Payments
by Government Entities to
Persons Providing Property or
Services; Hearing
Announcement 2011–48
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of public hearing on pro-
posed rulemaking.
SUMMARY: This document provides no-
tice of public hearing on proposed regu-
lations relating to withholding by govern-
ment entities on payments to persons pro-
viding property or services.
DATES: The public hearing is being
held on Monday, September 12, 2011, at
10:00 a.m. The IRS must receive outlines
of the topics to be discussed at the public
hearing by Friday, September 2, 2011.
ADDRESSES: The public hearing is being
held in the IRS Auditorium, Internal Rev-
enue Service Building, 1111 Constitution
Avenue, NW, Washington, DC 20224.
Send Submissions to CC:PA:LPD:PR
(REG–151687–10), room 5205, Internal
Revenue Service, P.O. Box 7604, Ben
Franklin Station, Washington, DC 20044.
Submissions may be hand-delivered Mon-
day through Friday to CC:PA:LPD:PR
(REG–151687–10), Couriers Desk, In-
ternal Revenue Service, 1111 Constitu-
tion Avenue, NW, Washington, DC or
sent electronically via the Federal erule-
making Portal atwww.regulations.gov
(REG–151687–10).
FOR FURTHER INFORMATION
CONTACT: Concerning the regulations,
A.G. Kelley, (202) 622–6040; concerning
submissions of comments, the hearing
and/or to be placed on the building access
list to attend the hearing Funmi Taylor at
(202) 622–7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
The subject of the public hearing
is the notice of proposed rulemaking
(REG–151687–10, 2011–23 I.R.B. 867),
that was published in theFederal Register
on Monday, May 9, 2011 (76 FR 26678).
The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing. Persons who wish to
present oral comments at the hearing that
submitted written comments by August 8,
2011, must submit an outline of the topics
to be addressed and the amount of time to
be denoted to each topic (Signed original
and eight copies)
A period of 10 minutes is allotted to
each person for presenting oral comments.
After the deadline for receiving out-
lines has passed, the IRS will prepare an
agenda containing the schedule of speak-
ers. Copies of the agenda will be made
available, free of charge, at the hearing or
in the Freedom of Information Reading
Room (FOIA RR) (Room 1621) which
is located at the 11
th
and Pennsylvania
Avenue, NW, entrance, 1111 Constitution
Avenue, NW, Washington, DC.
Because of access restrictions, the IRS
will not admit visitors beyond the imme-
diateentranceareamorethan30minutes
before the hearing starts. For informa-
tion about having your name placed on
the building access list to attend the hear-
ing, see the “FOR FURTHER INFORMA-
TION CONTACT” section of this docu-
ment.
LaNita VanDyke,
Chief,
Publications and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on August 16,
2011, 8:45 a.m., and published in the issue of the Federal
Register for August 17, 2011, 76 F.R. 50949)
2011–36 I.R.B.227September 6, 2011

Regulations Governing
Practice Before the Internal
Revenue Service; Correction
Announcement 2011–49
AGENCY: Office of the Secretary, Trea-
sury.
ACTION: Correcting amendment.
SUMMARY: This document contains
amendments to the regulations governing
practice before the Internal Revenue Ser-
vice to correct errorsin final regulations
(T.D. 9527, 2011–27 I.R.B. 1) that were
published in the Federal Register on Fri-
day, June 3, 2011 (76 FR 32286). The
regulations affect individuals who practice
before the IRS and providers of continu-
ing education programs. The regulations
modify the rules governing of practice be-
fore the IRS and the standards with respect
to tax returns.
DATES: This correction is effective on
August 11, 2011 and is applicable on Au-
gust 2, 2011.
FOR FURTHER INFORMATION
CONTACT: Matthew D. Lucey, (202)
622–4940 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final regulation (T.D. 9527) that is
the subject of this correction is under sec-
tion 330 of Title 31of the United States
Code.
Need for Correction
As published, T.D. 9527 contains errors
that may prove to be misleading and is in
need of clarification.
*****
Correction of Publication
Accordingly, 31 CFR part 10 is cor-
rected by making the following correcting
amendments:
PART 10—PRACTICE BEFORE THE
INTERNAL REVENUE SERVICE
Paragraph 1. The authority citation for
part 31 continues to read in part as follows:
Authority: Sec. 3, 23 Stat. 258, secs.
2–12, 60 Stat. 237et. seq.; 5 U.S.C. 301,
500, 551–559; 31 U.S.C. 321; 31 U.S.C.
330; Reorg. Plan No. 26 of 1950, 15 FR
4935, 64 Stat. 1280, 3 CFR, 1949–1953
Comp., p. 1017.
Par. 2. Section 10.5 is amended by
revising paragraph (g) to read as follows:
§10.5 Application to become an enrolled
agent, enrolled retirement plan agent, or
registered tax return preparer.
*****
(g)Effective/applicability date.This
section is applicable to applications re-
ceived on or after August 2, 2011.
Par. 3. Section 10.60 is amended by
revising paragraphs (a) and (b) to read as
follows:
§10.60 Institution of proceeding.
(a) Whenever it is determined that a
practitioner (or employer, firm or other en-
tity, if applicable) violated any provision of
the laws governing practice before the In-
ternal Revenue Service or the regulations
in this part, the practitioner may be rep-
rimanded or, in accordance with §10.62,
subject to a proceeding for sanctions de-
scribed in §10.50.
(b) Whenever a penalty has been as-
sessed against an appraiser under the
Internal Revenue Code and an appropriate
officer or employee in an office estab-
lished to enforce this part determines that
the appraiser acted willfully, recklessly, or
through gross incompetence with respect
to the proscribed conduct, the appraiser
may be reprimanded or, in accordance
with §10.62, subject to a proceeding for
disqualification. A proceeding for dis-
qualification of an appraiser is instituted
by the filing of a complaint, the contents of
which are more fully described in §10.62.
*****
Par. 4. Section 10.69 is amended by
revising paragraph (a) to read as follows:
§10.69 Representation; ex parte
communication.
(a)Representation. (1) The Internal
Revenue Service may be represented in
proceedings under this part by an attorney
or other employee of the Internal Revenue
Service. An attorney or an employee of the
Internal Revenue Service representing the
Internal Revenue Service in a proceeding
under this part may sign the complaint or
any document required to be filed in the
proceeding on behalf of the Internal Rev-
enue Service.
(2) A respondent may appear in person,
be represented by a practitioner, or be rep-
resented by an attorney who has not filed a
declaration with the Internal Revenue Ser-
vice pursuant to §10.3. A practitioner or an
attorney representing a respondent or pro-
posed respondent may sign the answer or
any document required to be filed in the
proceeding on behalf of the respondent.
*****
Par. 5. Section 10.90 is amended by
revising paragraph (a)(6)(i) to read as fol-
lows:
§10.90 Records.
(a) * * *
(6) * * *
(i) Who have obtained a qualifying con-
tinuing education provider number; and
*****
Treena V. Garrett,
Federal Register Liaison,
Publications and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on August 10,
2011, 8:45 a.m., and published in the issue of the Federal
Register for August 11, 2011 76 F.R. 49650)
September 6, 20112282011–36 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.
2011–36 I.R.B.iSeptember 6, 2011

Numerical Finding List
1
Bulletins 2011–27 through 2011–36
Announcements:
2011-37, 2011-27 I.R.B.37
2011-38, 2011-28 I.R.B.45
2011-39, 2011-28 I.R.B.46
2011-40, 2011-29 I.R.B.56
2011-41, 2011-28 I.R.B.47
2011-42, 2011-32 I.R.B.138
2011-43, 2011-35 I.R.B.198
2011-44, 2011-33 I.R.B.164
2011-45, 2011-34 I.R.B.178
2011-46, 2011-34 I.R.B.178
2011-47, 2011-34 I.R.B.178
2011-48, 2011-36 I.R.B.227
2011-49, 2011-36 I.R.B.228
Notices:
2011-47, 2011-27 I.R.B.34
2011-50, 2011-27 I.R.B.35
2011-51, 2011-27 I.R.B.36
2011-52, 2011-30 I.R.B.60
2011-53, 2011-32 I.R.B.124
2011-54, 2011-29 I.R.B.53
2011-55, 2011-29 I.R.B.53
2011-56, 2011-29 I.R.B.54
2011-57, 2011-31 I.R.B.84
2011-58, 2011-31 I.R.B.85
2011-59, 2011-31 I.R.B.86
2011-60, 2011-31 I.R.B.90
2011-61, 2011-31 I.R.B.91
2011-62, 2011-32 I.R.B.126
2011-63, 2011-34 I.R.B.172
2011-65, 2011-34 I.R.B.173
2011-66, 2011-35 I.R.B.184
2011-67, 2011-34 I.R.B.174
2011-68, 2011-36 I.R.B.205
2011-70, 2011-32 I.R.B.135
Proposed Regulations:
REG-137128-08, 2011-28 I.R.B.43
REG-125592-10, 2011-32 I.R.B.137
REG-131491-10, 2011-36 I.R.B.208
REG-101352-11, 2011-30 I.R.B.75
REG-118809-11, 2011-33 I.R.B.162
REG-122813-11, 2011-35 I.R.B.197
Revenue Procedures:
2011-38, 2011-30 I.R.B.66
2011-39, 2011-30 I.R.B.68
2011-41, 2011-35 I.R.B.188
Revenue Rulings:
2011-14, 2011-27 I.R.B.31
Revenue Rulings— Continued:
2011-15, 2011-30 I.R.B.57
2011-16, 2011-32 I.R.B.93
2011-17, 2011-33 I.R.B.160
2011-19, 2011-36 I.R.B.199
2011-20, 2011-36 I.R.B.202
Treasury Decisions:
9527, 2011-27 I.R.B.1
9528, 2011-28 I.R.B.38
9529, 2011-30 I.R.B.57
9530, 2011-31 I.R.B.77
9531, 2011-31 I.R.B.79
9532, 2011-32 I.R.B.95
9533, 2011-33 I.R.B.139
9534, 2011-33 I.R.B.144
9537, 2011-35 I.R.B.181
9539, 2011-35 I.R.B.179
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2011–1 through 2011–26 is in Internal Revenue Bulletin
2011–26, dated June 27, 2011.
September 6, 2011ii2011–36 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2011–27 through 2011–36
Notices:
2010-23
Modified and supplemented by
Notice 2011-54, 2011-29 I.R.B.53
2010-81
Amended and supplemented by
Notice 2011-63, 2011-34 I.R.B.172
2010-88
Modified by
Ann. 2011-40, 2011-29 I.R.B.56
Proposed Regulations:
REG-118761-09
Hearing scheduled by
Ann. 2011-38, 2011-28 I.R.B.45
REG-151687-10
Hearing scheduled by
Ann. 2011-48, 2011-36 I.R.B.227
Revenue Procedures:
2008-24
Modified and superseded by
Rev. Proc. 2011-38, 2011-30 I.R.B.66
2008-32
Superseded by
Rev. Proc. 2011-39, 2011-30 I.R.B.68
Revenue Rulings:
58-225
Obsoleted by
Rev. Rul. 2011-15, 2011-30 I.R.B.57
Treasury Decisions:
9527
Corrected by
Ann. 2011-49, 2011-36 I.R.B.228
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2011–1 through 2011–26 is in Internal Revenue Bulletin 2011–26, dated June 27, 2011.
2011–36 I.R.B.iiiSeptember 6, 2011

September 6, 20112011–36 I.R.B.

2011–36 I.R.B.September 6, 2011

September 6, 20112011–36 I.R.B.

INTERNAL REVENUE BULLETIN
The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superin-
tendent of Documents when their subscriptions must be renewed.
CUMULATIVE BULLETINS
The contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are
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You may view the Internal Revenue Bulletin on the Internet at www.irs.gov. Select Businesses. Under Businesses Topics, select
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INTERNAL REVENUE BULLETINS ON CD-ROM
Internal Revenue Bulletins are available annually as part ofPublication 1796 (Tax Products CD-ROM). The CD-ROM can be
purchased from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders (discount for online orders)
or by calling 1-877-233-6767. The first release is available in mid-December and the final release is available in late January.
HOW TO ORDER
Check the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,
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WE WELCOME COMMENTS ABOUT THE INTERNAL
REVENUE BULLETIN
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would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page (www.irs.gov)
or write to the IRS Bulletin Unit, SE:W:CAR:MP:T:T:SP, Washington, DC 20224.
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