Bulletin No. 1998–49
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Bulletin No. 1998–49
December 7, 1998
Internal Revenue
bulletin
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
Ct.D. 2063, page 6.
The publication of the Supreme Court’s decision in United
States v. Estate of Francis J. Romani, et al., in 1998–36
I.R.B. 13, is corrected.
Rev. Rul. 98–57, page 4.
Federal rates; adjusted federal rates; adjusted federal long-term rate; and long-term exempt rate. For purposes of sections 1274, 1288, 382, and other sections of
the Code, tables set forth the rates for December 1998.
their debt obligations is not excludable from gross income
under section 103 of the Code. Beginning December 7,
1998, issuers may use the procedures set forth in the proposed revenue procedure until it is finalized. Comments are
welcome.
EMPLOYMENT TAX
Notice 98–60, page 16.
This notice provides tables which show the amount of an individual’s income that is exempt from a notice of levy used
to collect delinquent tax in 1999.
EMPLOYEE PLANS
ADMINISTRATIVE
Announcement 98–105, page 21.
Notice 98–59, page 16.
The Service intends to delay the effective date of the cafeteria plan temporary regulation 1.125–4T and proposed regulation 1.125–4. Until further guidance is issued, taxpayers
may continue to rely on the change in election provisions in
temporary regulation 1.125–4T as well as the change in
election provisions in section 1.125–2 of the pre-1990 proposed regulations.
EXEMPT ORGANIZATIONS
Notice 98–58, page 13.
Administrative appeal of adverse determination of
tax-exempt status of bond issue. This notice provides a
proposed revenue procedure that, when finalized, will provide the procedures for issuers to request an administrative
appeal of an adverse determination by the Employee
Plans/Exempt Organizations Key District that interest on
Finding Lists begin on page 23.
Department of the Treasury
Internal Revenue Service
Information reporting; Hope Credit; lifetime learning
credit. Educational institutions are informed that the Service will not require information returns to be filed under section 6050S of the Code for 1998 or 1999 to report tuition
received with respect to students taking only noncredit
courses. Also, no reporting is required for 1998 or 1999
with respect to tuition paid by nonresident alien students, unless requested by the student.
Rev. Proc. 98–58, page 19.
Alternative minimum tax; change in accounting
method. A procedure is provided to allow taxpayers to automatically change their method of accounting under section
446 of the Code for certain deferred payment sales contracts (relating to property used or produced in the trade or
business of farming) to the installment method for alternative minimum tax purposes.
The IRS Mission
and by applying the tax law with integrity and fairness to
all.
Provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities
Statement of Principles
of Internal Revenue
Tax Administration
The Service also has the responsibility of applying and
administering the law in a reasonable, practical manner.
Issues should only be raised by examining officers when
they have merit, never arbitrarily or for trading purposes.
At the same time, the examining officer should never hesitate to raise a meritorious issue. It is also important that
care be exercised not to raise an issue or to ask a court to
adopt a position inconsistent with an established Service
position.
The function of the Internal Revenue Service is to administer the Internal Revenue Code. Tax policy for raising revenue
is determined by Congress.
With this in mind, it is the duty of the Service to carry out that
policy by correctly applying the laws enacted by Congress;
to determine the reasonable meaning of various Code provisions in light of the Congressional purpose in enacting them;
and to perform this work in a fair and impartial manner, with
neither a government nor a taxpayer point of view.
Administration should be both reasonable and vigorous. It
should be conducted with as little delay as possible and
with great courtesy and considerateness. It should never
try to overreach, and should be reasonable within the
bounds of law and sound administration. It should, however, be vigorous in requiring compliance with law and it
should be relentless in its attack on unreal tax devices and
fraud.
At the heart of administration is interpretation of the Code. It
is the responsibility of each person in the Service, charged
with the duty of interpreting the law, to try to find the true
meaning of the statutory provision and not to adopt a
strained construction in the belief that he or she is “protecting the revenue.” The revenue is properly protected only
when we ascertain and apply the true meaning of the statute.
2
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
Conventions, 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 of a permanent nature are consolidated semiannually into Cumulative Bulletins, which are sold
on a single-copy basis.
dures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances
are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements
of internal practices and procedures that affect the rights
and duties of taxpayers are published.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions, and Subpart B, Legislation 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 Rulings. Bank Secrecy Act Administrative Rulings
are issued by the Department of the Treasury’s Office of the
Assistant Secretary (Enforcement).
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.
Part IV.—Items of General Interest.
With the exception of the Notice of Proposed Rulemaking
and the disbarment and suspension list included in this part,
none of these announcements are consolidated in the Cumulative Bulletins.
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 proce-
The first 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 first Bulletin of the succeeding semiannual period, respectively.
The contents 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.
3
Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Section 42.—Low-Income
Housing Credit
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of December 1998. See Rev. Rul. 98–57, page 4.
term, and long-term rates are set forth for the month
of December 1998. See Rev. Rul. 98–57, page 4.
Section 468.—Special Rules for
Mining and Solid Waste
Reclamation and Closing Costs
Section 56.—Adjustments in
Computing Alternative Minimum
Taxable Income
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of December 1998. See Rev. Rul. 98–57, page 4.
What procedures should taxpayers follow to obtain automatic consent to change their method of accounting for certain deferred payment sales contracts (relating to property used or produced in the
trade or business of farming) to the installment
method for alternative minimum tax purposes. See
Rev. Proc. 98–58, page 19.
Section 482.—Allocation of
Income and Deductions Among
Taxpayers
Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term
rates are set forth for the month of December 1998.
See Rev. Rul. 98–57, page 4.
Section 382.—Limitation on Net
Operating Loss Carryforwards
and Certain Built-In Losses
Following Ownership Change
The adjusted federal long-term rates is set forth
for the month of December 1998. See Rev. Rul.
98–57, page 4.
Section 412.—Minimum Funding
Standards
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of December 1998. See Rev. Rul. 98–57, page 4.
Section 467.—Certain Payments
for the Use of Property or
Services
The adjusted applicable federal short-term, mid-
December 7, 1998
Federal short-term, mid-term, and long-term
rates are set forth for the month of December 1998.
See Rev. Rul. 98–57, page 4.
term, and long-term rates are set forth for the month
of December 1998. See Rev. Rul. 98–57, page 4.
Section 1274.—Determination
of Issue Price in the Case of
Certain Debt Instruments Issued
for Property
(Also sections 42, 280G, 382, 412, 467, 468, 482,
483, 642, 807, 846, 1288, 7520, 7872.)
Federal rates; adjusted federal rates;
adjusted federal long-term rate; and
long-term exempt rate. For purposes of
sections 1274, 1288, 382, and other sections of the Code, tables set forth the rates
for December 1998.
Rev. Rul. 98–57
Section 483.—Interest on
Certain Deferred Payments
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of December 1998. See Rev. Rul. 98–57, page 4.
Section 642.—Special Rules for
Credits and Deductions
Federal short-term, mid-term, and long-term
rates are set forth for the month of December 1998.
See Rev. Rul. 98–57, page 4.
Section 807.—Rules for Certain
Reserves
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of December 1998. See Rev. Rul. 98–57, page 4.
Section 846.—Discounted
Unpaid Losses Defined
The adjusted applicable federal short-term, mid-
4
This revenue ruling provides various
prescribed rates for federal income tax
purposes for December 1998 (the current
month.) Table 1 contains the short-term,
mid-term, and long-term applicable federal rates (AFR) for the current month for
purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the
short-term, mid-term, and long-term adjusted applicable federal rates (adjusted
AFR) for the current month for purposes
of section 1288(b). Table 3 sets forth the
adjusted federal long-term rate and the
long-term tax-exempt rate described in
section 382(f). Table 4 contains the appropriate percentages for determining the
low-income housing credit described in
section 42(b)(2) for buildings placed in
service during the current month. Table 5
contains the federal 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. Finally, Table 6 contains
the 1999 interest rate for purposes of sections 846 and 807.
1998–49 I.R.B.
REV. RUL. 98–57 TABLE 1
Applicable Federal Rates (AFR) for December 1998
Period for Compounding
Annual
Semiannual
Quarterly
Monthly
Short-Term
AFR
110% AFR
120% AFR
130% AFR
4.33%
4.77%
5.21%
5.64%
4.28%
4.71%
5.14%
5.56%
4.26%
4.68%
5.11%
5.52%
4.24%
4.66%
5.09%
5.50%
Mid-Term
AFR
110% AFR
120% AFR
130% AFR
150% AFR
175% AFR
4.52%
4.98%
5.43%
5.89%
6.82%
7.97%
4.47%
4.92%
5.36%
5.81%
6.71%
7.82%
4.45%
4.89%
5.32%
5.77%
6.65%
7.75%
4.43%
4.87%
5.30%
5.74%
6.62%
7.70%
Long-Term
AFR
110% AFR
120% AFR
130% AFR
5.25%
5.78%
6.32%
6.84%
5.18%
5.70%
6.22%
6.73%
5.15%
5.66%
6.17%
6.67%
5.12%
5.63%
6.14%
6.64%
REV. RUL. 98–57 TABLE 2
Adjusted AFR for December 1998
Period for Compounding
Annual
Semiannual
Quarterly
Monthly
Short-term
adjusted AFR
3.20%
3.17%
3.16%
3.15%
Mid-term
adjusted AFR
3.89%
3.85%
3.83%
3.82%
Long-term
adjusted AFR
4.67%
4.62%
4.59%
4.58%
REV. RUL. 98–57 TABLE 3
Rates Under Section 382 for December 1998
Adjusted federal long-term rate for the current month
4.67%
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).
4.80%
1998–49 I.R.B.
5
December 7, 1998
REV. RUL. 98–57 TABLE 4
Appropriate Percentages Under Section 42(b)(2) for December 1998
Appropriate percentage for the 70% present value low-income housing credit
8.14%
Appropriate percentage for the 30% present value low-income housing credit
3.49%
REV. RUL. 98–57 TABLE 5
Rate Under Section 7520 for December 1998
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 interest
5.4%
REV. RUL. 98-57 TABLE 6
Rate Under Sections 846 and 807
Applicable rate of interest for 1999 for purposes of sections 846 and 807
Section 1288.—Treatment of
Original Issue Discount on TaxExempt Obligations
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of December 1998. See Rev. Rul. 98–57, page 4.
Section 6321.—Lien for Taxes
Ct.D. 2063*
SUPREME COURT
OF THE UNITED STATES
No. 96–1613
UNITED STATES v. ESTATE OF
FRANCIS J. ROMANI ET AL.
523 U.S. __ (1998)
CERTIORARI TO THE SUPREME
COURT OF PENNSYLVANIA,
WESTERN DISTRICT
APRIL 19,1998
Syllabus
After a third party perfected a $400,000
judgment lien under Pennsylvania law on
*Corrected due to typographical errors in United
States v. Estate of Francis J. Romani, et al.,
1998–36 I.R.B. 13.
December 7, 1998
Francis Romani’s Cambria County real
property, the Internal Revenue Service
filed notices of tax liens on the property,
totaling some $490,000. When Mr.
Romani died, his entire estate consisted of
real estate worth only $53,001. Because
the property was encumbered by both the
judgment lien and the federal tax liens, the
estate’s administrator sought the county
court’s permission to transfer the property
to the judgment creditor in lien of execution. The court authorized the conveyance, overruling the Federal Government’s objection that the transfer violated
the federal priority statute, 31 U.S.C.
§3713(a), which provides that a Government claim “shall be paid first” when a
decedent’s estate cannot pay all of its
debts. The Superior Court of Pennsylvania affirmed, as did the Pennsylvania
Supreme Court. The latter court determined that there was a “plain inconsistency” between §3713 and the Federal
Tax Lien Act of 1966, which provides that
a federal tax lien “shall not be valid”
against judgment lien creditors until a prescribed notice has been given, 26 U.S.C.
§6323(a). The court concluded that the
1966 Act effectively limited §3713’s operation as to tax debts, relying on United
States v. Kimbell Foods, Inc., 440 U.S.
715, 738, which noted that the 1966 Act
6
6.3%
modified the Government’s preferred position in the tax area and recognized the
priority of many state claims over federal
tax liens.
Held: Section 3713(a) does not require
that a federal tax claim be given preference over a judgment creditor’s perfected
lien on real property. Pp. 4–17.
(a) There is no dispute about the meaning of either the Pennsylvania lien statute
or the Tax Lien Act. It is undisputed that,
under the state law, the judgment creditor
acquired a valid lien on Romani’s real
property before his death and before the
Government served notice of its tax liens.
That lien was therefore perfected in the
sense that there is nothing more to be
done to have a choate lien. E.g., United
States v. City of New Britain, 347 U.S. 81,
84. And a review of the Tax Lien Act’s
history reveals that each time Congress
has revisited the federal tax lien, it has
ameliorated pre-existing harsh consequences for the delinquent taxpayer’s
other secured creditors. Here, all agree
that by §6323(a)’s terms, the Government’s liens are not valid as against the
earlier recorded judgment lien. Pp. 4–7.
(b) Because this Court has never definitively resolved the basic question
whether the federal priority statute gives
the United States a preference only over
1998–49 I.R.B.
other unsecured creditors, or whether it
also applies to the antecedent perfected
liens of secured creditors, see, e.g., United
States v. Vermont, 377 U.S. 351, 358, n. 8,
it does not seem appropriate to view the
issue here as whether the Tax Lien Act has
implicitly amended or repealed §3713(a).
Instead, the proper inquiry is how best to
harmonize the two statutes’ impact on the
Government’s power to collect delinquent
taxes. Pp. 7–12.
(c) Nothing in the federal priority
statute’s text or its long history justifies
the conclusion that it authorizes the
equivalent of a secret lien as a substitute
for the expressly authorized tax lien that
the Tax Lien Act declares “shall not be
valid” in a case of this kind. On several
occasions, this Court has concluded that a
specific policy embodied in a later federal
statute should control interpretation of the
older federal priority statute, despite that
law’s literal, unconditional text and the
fact that it had not been expressly
amended by the later Act. See, e.g., Cook
County Nat. Bank v. United States, 107
U.S. 445, 448–451. United States v.
Emory, 314 U.S. 423, 429–433, and
United States v. Key, 397 U.S. 322,
324–333, distinguished. So too here,
there are sound reasons for treating the
Tax Lien Act as the governing statute.
That Act is the later statute, the more specific statute, and its provisions are comprehensive, reflecting an obvious attempt
to accommodate the strong policy objections to the enforcement of secret liens. It
represents Congress’ detailed judgment as
to when the Government’s claims for unpaid taxes should yield to many different
sorts of interests (including, e.g., judgment liens, mechanic’s liens, and attorneys’ liens) in many different types of
property (including, e.g., real property,
securities, and motor vehicles). See
§6323. Indeed, given this Court’s unambiguous determination that the federal interest in the collection of taxes is paramount to its interest in enforcing other
claims, see Kimbell Foods, Inc., 440 U.S.,
at 733–735, it would be anomalous to
conclude that Congress intended the priority statute to impose greater burdens on
the citizen than those specifically crafted
for tax collection purposes. Pp. 12–17.
___ Pa. ___, 688 A. 2d 703, affirmed.
STEVENS, J., delivered the opinion of
the Court, in which REHNQUIST C.J., and
1998–49 I.R.B.
O’CONNOR, KENNEDY, SOUTER, THOMAS,
G INSBURG , and B REYER JJ., joined.
SCALIA, J., filed an opinion concurring in
part and concurring in the judgment.
SUPREME COURT OF THE
UNITED STATES
No. 96–1613
UNITED STATES, PETITIONER v.
ESTATE OF FRANCIS J. ROMANI
ET AL.
ON WRIT OF CERTIORARI TO
THE SUPREME COURT OF
PENNSYLVANIA, WESTERN
DISTRICT
[April, 29, 1998]
JUSTICE STEVENS delivered the opinion
of the Court.
The federal priority statute, 31 U.S.C.
§3713(a), provides that a claim of the
United States Government “shall be paid
first” when a decedent’s estate cannot pay
all of its debts.1 The question presented is
whether that statute requires that a federal
tax claim be given preference over a judgment creditor’s perfected lien on real
property even though such a preference is
not authorized by the Federal Tax Lien
Act of 1966, 26 U. S. C. §6321 et seq.
I
On January 25, 1985, the Court of
Common Pleas of Cambria County, Pennsylvania, entered a judgment for $400,000
in favor of Romani Industries, Inc., and
against Francis J. Romani. The judgment
was recorded in the clerk’s office and
therefore, as a matter of Pennsylvania
law, it became a lien on all of the defendant’s real property in Cambria County.
Thereafter, the Internal Revenue Service
filed a series of notices of tax liens on Mr.
Romani’s property. The claims for unpaid
taxes, interest and penalties described in
those notices amounted to approximately
$490,000.
When Mr. Romani died on January 13,
1992, his entire estate consisted of real estate worth only $53,001. Because the
property was encumbered by both the
judgment lien and the federal tax liens,
the estate’s administrator sought permission from the Court of Common Pleas to
transfer the property to the judgment
creditor, Romani Industries, in lieu of execution. The Federal Government acknowledged that its tax liens were not
valid as against the earlier judgment lien;
but, giving new meaning to Franklin’s
aphorism that “in this world nothing can
be said to be certain, except death and
taxes,” 2 it opposed the transfer on the
ground that the priority statute (§3713)
gave it the right to “be paid first.”
The Court of Common Pleas overruled
the Government’s objection and authorized the conveyance. The Superior Court
of Pennsylvania affirmed, and the
Supreme Court of the State also affirmed.
547 Pa. 41, 688 A. 2d 703 (1997). That
court first determined that there was a
“Plain inconsistency” between §3713,
which appears to give the United States
“absolute priority” over all competing
claims, and the Tax Lien Act of 1966,
which provides that the federal tax lien
“shall not be valid” against judgment lien
creditors until a prescribed notice has
been given. Id., at 45, 688 A. 2d, at 705.3
Then, relying on the reasoning in United
1Ҥ3713. Priority of Government claims
“(a)(1) A claim of the United States Government
shall be paid first when—
“(A) a person indebted to the Government is insolvent and—
“(i) the debtor without enough property to pay all
debts makes a voluntary assignment of property;
“(ii) property of the debtor, if absent, is attached;
or
“(iii) an act of bankruptcy is committed; or
“(B) the estate of a deceased debtor, in the custody of the executor or administrator, is not enough
to pay all debts of the debtor.
“(2) This subsection does not apply to a case
under title ll.” 31 U.S.C. §3713.
The present statute is the direct descendent of
§3466 of the Revised Statutes, which had been codified in 31 U. S. C. §191.
7
2Letter of November 13, 1789 to Jean Baptiste
Le Roy, in 10 The Writings of Benjamin Franklin 69
(A. Smyth ed. 1907). As is often the case, the original meaning of the aphorism is clarified somewhat
by its context: “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be
certain, except death and taxes.” Ibid.
3The Federal Tax Lien Act of 1966, 26 U.S.C.
§6321 et seq., provides in pertinent part:
Ҥ6321. Lien for taxes
“If any person liable to pay any tax neglects or
refuses to pay the same after demand, the amount
(including any interest, additional amount, addition
to tax, or assessable penalty, together with any costs
that may accrue in addition thereto) shall be a lien in
favor of the United States upon all property and
December 7, 1998
States v. Kimbell Foods, Inc., 440 U. S.
715 (1979), which had noted that the Tax
Lien Act of 1966 modified the Federal
Government’s preferred position in the
tax area and recognized the priority of
many state claims over federal tax liens,
id., at 738, the court concluded that the
1966 Act had the effect of limiting the operation of §3713 as to tax debts.
The decision of the Pennsylvania
Supreme Court conflicts with two federal
court of appeals decisions, Kentucky ex
rel. Luckett v. United States, 383 F. 2d 13
(CA6 1967), and Nesbitt v. United States,
622 F. 2d 433 (CA9 1980). Moreover, in
its petition for certiorari, the Government
submitted that the decision is inconsistent
with our holding in Thelusson v. Smith, 2
Wheat. 396 (1817), and with the admonition that “ ‘[o]nly the plainest inconsistency would warrant our finding an implied exception to the operation of so
clear a command as that of [31 U.S.C.
§3713],’” United States v. Key, 397 U.S.
322, 324–325 (1970) (quoting United
States v. Emory, 314 U.S. 423, 433
(1941)). We granted certiorari, 521 U.S.
__ (1997), to resolve the conflict and to
consider whether Thelusson, Key, or any
of our other cases construing the priority
statute requires a different result.
II
There is no dispute about the meaning
of two of the three statutes that control the
disposition of this case. It is therefore appropriate to comment on the Pennsylvania
lien statute and the Federal Tax Lien Act
before considering the applicability of the
rights to property, whether real or personal, belonging to such person.”
Ҥ6323. Validity and priority against certain persons
“(a) Purchasers, holders of security interests, mechanic’s lienors, and judgment lien creditors
“The lien imposed by section 6321 shall not be
valid as against any purchaser, holder of a security
interest, mechanic’s lienors, or judgment lien creditor
until notice thereof which meets the requirements of
subsection (f) has been filed by the Secretary.”
Section 6323(f)(1)(A)(i) provides that the required notice ‘shall be filed . . . [i]n the case of real
property, in one office within the State (or the
county, or other governmental subdivision), as designated by the laws of such State, in which the property subject to the lien is situated.” If the State has
not designated such an office, notice is to be filed
with the clerk of the federal district court “for the judicial district in which the property subject to the
lien is situated.” §6323(f)(1)(B).
December 7, 1998
priority statute to property encumbered by
an antecedent judgment creditor’s lien.
The Pennsylvania statute expressly
provides that a judgment shall create a
lien against real property when it is
recorded in the county where the property
is located. 42 Pa. Cons. Stat. §4303(a)
(1995). After the judgment has been
recorded, the judgment creditor has the
same right to notice of a tax sale as a
mortgagee.4 The recording in one county
does not, of course, create a lien on property located elsewhere. In this case, however, it is undisputed that the judgment
creditor acquired a valid lien on the real
property in Cambria County before the
judgment debtor’s death and before the
Government served notice of its tax liens.
Romani Industries’ lien was “perfected in
the sense that there is nothing more to be
done to have a choate lien—when the
identity of the lienor, the property subject
to the lien, and the amount of the lien are
established.” United States v. City of New
Britain, 347 U.S. 81, 84 (1954); see also
Illinois ex rel. Gordon v. Campbell, 329
U.S. 362, 375 (1946).
The Federal Government’s right to a
lien on a delinquent taxpayer’s property
has been a part of our law at least since
1865.5 Originally the lien applied, without exception, to all property of the tax-
4 The Pennsylvania Supreme Court has elabo-
rated:
“We must now decide whether judgment creditors are also entitled to personal or general notice by
the [County Tax Claim] Bureau as a matter of due
process of law.
“Judgment liens are a product of centuries of
statutes which authorize a judgment creditor to seize
and sell the land of debtors at a judicial sale to satisfy their debts out of the proceeds of the sale. The
judgment represents a binding judicial determination of the rights and duties between the parties, and
establishes their debtor-creditor relationship for all
the world to notice when the judgment is recorded in
a Prothonotary’s Office. When entered of record,
the judgment also operates as a lien upon all real
property of the debtor in that county.” In re Upset
Sale, Tax Claim Bureau of Berks County, 505 Pa.
327, 334, 479 A. 2d 940, 943 (1984).
5 The post-Civil War Reconstruction Congress
imposed a tax of three cents per pound on “the producer, owner, or holder” of cotton and a lien on the
cotton until the tax was paid. Act of July 13, 1866,
§l, 14 Stat. 98. The same statute also imposed a general lien on all of a delinquent taxpayer’s property,
see §9, 14 Stat. 107, which was nearly identical to a
provision in the revenue act of Mar. 3, 1865, 13 Stat.
470–471, quoted in n. 6, infra.
8
payer immediately upon the neglect or
failure to pay the tax upon demand.6 An
unrecorded tax lien against a delinquent
taxpayer ’s property was valid even
against a bona fide purchaser who had no
notice of the lien. United States v. Snyder,
149 U.S. 210, 213–215 (1893). In 1913,
Congress amended the statute to provide
that the federal tax lien “shall not be valid
as against any mortgagee, purchaser, or
judgment creditor” until notice has been
filed with the clerk of the federal district
court or with the appropriate local authorities in the district or county in which the
property subject to the lien is located. Act
of Mar. 4, 1913, 37 Stat. 1016. In 1939,
Congress broadened the protection
against unfiled tax liens to include
pledgees and the holders of certain securities. Act of June 29, 1939, §401, 53 Stat.
882–883. The Federal Tax Lien Act of
1966 again broadened that protection to
encompass a variety of additional secured
transactions, and also included detailed
provisions protecting certain secured interests even when a notice of the federal
lien previously has been filed. 80 Stat.
1125–1132, as amended, 26 U.S.C.
§6323.
In sum, each time Congress revisited
the federal tax lien, it ameliorated its original harsh impact on other secured creditors of the delinquent taxpayer.7 In this
case, it is agreed that by the terms of
§6323(a), the Federal Government’s liens
are not valid as against the lien created by
6The 1865 revenue act contained the following
sentence: “And if any person, bank, association,
company, or corporation, liable to pay any duty,
shall neglect or refuse to pay the same after demand,
the amount shall be a lien in favor of the United
States from the time it was due until paid, with the
interests, penalties, and costs that may accrue in addition thereto, upon all property and rights to property; and the collector, after demand, may levy or by
warrant may authorize a deputy collector to levy
upon all property and rights to property belonging to
such person, bank, association, company, or corporation, or on which the said lien exists, for the payment of the sum due as aforesaid, with interest and
penalty for non-payment, and also of such further
sum as shall be sufficient for the fees, costs, and expenses of such levy.” 13 Stat. 470–471. This provision, as amended, became §3186 of the Revised
Statutes.
7For a more thorough description of the early history and of Congress’ reactions to this Court’s tax
lien decisions, see Kennedy, The Relative Priority of
the Federal Government: The Pernicious Career of
the Inchoate and General Lien, 63 Yale L.J. 905,
919–922 (1954) (hereinafter Kennedy).
1998–49 I.R.B.
the earlier recording of Romani Industries’ judgment.
III
The text of the priority statute on which
the Government places its entire reliance
is virtually unchanged since its enactment
in 1797.8 As we pointed out in United
States v. Moore, 423 U.S. 77 (1975), not
only were there earlier versions of the
statute,9 but “its roots reach back even
further into the English common law,” id.,
at 80. The sovereign prerogative that was
exercised by the English Crown and by
many of the States as “an inherent incident of sovereignty,” ibid., applied only to
unsecured claims. As Justice Brandeis
noted in Marshall v. New York, 254 U.S.
380, 384 (1920), the common law priority
“[did] not obtain over a specific lien created by the debtor before the sovereign
undertakes to enforce its right.” Moreover, the statute itself does not create a
8The Act of Mar. 3, 1797, §5, 1 Stat. 515, pro-
vided:
“And be it further enacted, That where any revenue officer, or other person hereafter becoming indebted to the United States, by bond or otherwise,
shall become insolvent, or where the estate of any
deceased debtor, in the hands of executors or administrators, shall be insufficient to pay all the debts due
from the deceased, the debt due to the United States
shall be first satisfied; and the priority hereby established shall be deemed to extend, as well to cases in
which a debtor, not having sufficient property to pay
all his debts, shall make a voluntary assignment
thereof, or in which the estate and effects of an absconding, concealed, or absent debtor, shall be attached by process of law, as to cases in which an act
of legal bankruptcy shall be committed.” Compare
§3466 of the Revised Statutes, and the present
statute quoted in n. 1, supra.
It has long been settled that the federal priority
covers the Government’s claims for unpaid taxes.
Price v. United States, 269 U.S. 492, 499–502
(1926); Massachusetts v. United States, 333 U.S.
611, 625–626, and n. 24 (1948).
9“The earliest priority statute was enacted in the
Act of July 31, 1789, 1 Stat. 29, which dealt with
bonds posted by importers in lieu of payment of duties for release of imported goods. It provided that
the ‘debt due to the United States’ for such duties
shall be discharged first ‘in all cases of insolvency,
or where any estate in the hands of executors or administrators shall be insufficient to pay all the debts
due from the deceased . . . .’ §21, 1 Stat. 42. A 1792
enactment broadened the Act’s coverage by providing that the language ‘cases of insolvency, should be
taken to include cases in which a debtor makes a
voluntary assignment for the benefit of creditors,
and the other situations that §3466, 31 U.S.C.§191,
now covers. l Stat. 263.” United States v. Moore,
423 U.S., at 81.
1998–49 I.R.B.
lien in favor of the United States.10 Given
this background, respondent argues that
the statute should be read as giving the
United States a preference over other unsecured creditors but not over secured
creditors.11
There are dicta in our earlier cases that
support this contention as well as dicta
that tend to refute it. Perhaps the
strongest support is found in Justice
Story’s statement:
“What then is the nature of the priority, thus limited and established in
favour of the United States? Is it a
right, which supersedes and overrules the assignment of the debtor, as
to any property which the United
States may afterwards elect to take in
execution, so as to prevent such
property from passing by virtue of
such assignment to the assignees?
Or, is it a mere right of prior payment, out of the general funds of the
debtor, in the hands of the assignees?
We are of opinion that it clearly falls,
within the latter description. The
language employed is that which
naturally would be employed to express such an intent; and it must be
strained from its ordinary import, to
speak any other.” Conard v. Atlantic
Ins. Co. of N.Y., 1 Pet. 386,439
(1828).
Justice Story’s opinion that the language
employed in the statute “must be strained”
to give it any other meaning is entitled to
special respect because he was more
familiar with 18th-century usage than
judges who view the statute from a 20thcentury perspective.
We cannot, however, ignore the Court’s
earlier judgment in Thelusson v. Smith, 2
Wheat. 396, 426 (1817), or the more recent dicta in United States v. Key, 397
U.S. 322, 324–325 (1970). In Thelusson,
10“In construing the statutes on this subject, it has
been stated by the court, on great deliberation, that
the priority to which the United States are entitled,
does not partake of the character of a lien on the
property of public debtors. This distinction is always to be recollected.” United States v. Hooe, 3
Cranch 73, 90 (1805).
11Although this argument was not presented to
the state courts, respondent may defend the judgment on a ground not previously raised. Heckler v.
Campbell, 461 U.S. 458, 468–469, n. 12 (1983). We
will rarely consider such an argument, however.
Ibid.; see also Matsushita Elec. Industrial Co. v.
Epstein, 516 U.S. 367, 379, n. 5 (1996).
9
the Court held that the priority statute
gave the United States a preference over
the claim of a judgment creditor who had
a general lien on the debtor’s real property. The Court’s brief opinion12 is subject to the interpretation that the statutory
priority always accords the Government a
preference over judgment creditors. For
two reasons, we do not accept that reading of the opinion.
First, as a factual matter, in 1817 when
the case was decided, there was no procedure for recording a judgment and thereby
creating a choate lien on a specific parcel
of real estate. See generally 2 L. Dembitz, A Treatise on Land Titles in the
United States §127, pp. 948–952 (1895).
Notwithstanding the judgment, a bona
fide purchaser could have acquired the
debtor’s property free from any claims of
the judgment creditor. See Semple v.
Burd, 7 Serg. & Rawle 286, 291 (Pa.
1821) (“The prevailing object of the Legislature, has uniformly been, to support
the security of a judgment creditor, by
confirming his lien, except when it interferes with the circulation of property by
embarrassing a fair purchaser”). That is
not the case with respect to Romani Industries’ choate lien on the property in
Cambria County.
Second, and of greater importance, in
his opinion for the Court in the Conard
.12The relevant portion of the opinion reads, in
full, as follows:
“These [statutory] expressions are as general as
any which could have been used, and exclude all
debts due to individuals, whatever may be their dignity. . . . The law makes no exception in favour of
prior judgment creditors; and no reason has been, or
we think can be, shown to warrant this court in
making one. . . .
“The United States are to be first satisfied; but
then it must be out of the debtor’s estate. If, therefore, before the right of preference has accrued to
the United States, the debtor has made a bona fide
conveyance of his estate to a third person, or has
mortgaged the same to secure a debt; or if his property has been seized under a fi. fa., the property is
devested out of the debtor, and cannot be made liable to the United States. A judgment gives to the
judgment creditor a lien on the debtor’s lands, and a
preference over all subsequent judgment creditors.
But the act of congress defeats this preference in
favour of the United States, in the cases specified in
the 65th section of the act of 1799.” Thelusson v.
Smith, 2 Wheat. 396, 425–426 (1817).
In the later Conard case, Justice Story apologized
for Thelusson: “The reasons for that opinion are not,
owing to accidental circumstances, as fully given as
they are usually given in this Court.” Conard v. Atlantic Ins. Co. of N.Y., 1 Pet. 386, 442 (1828).
December 7, 1998
case, which was joined by Justice Washington, the author of Thelusson,13 Justice
Story explained why that holding was
fully consistent with his interpretation of
the text of the priority statute:
“The real ground of the decision,
was, that the judgment creditor had
never perfected his title, by any execution and levy on the Sedgely estate; that he had acquired no title to
the proceeds as his property, and that
if the proceeds were to be deemed
general funds of the debtor, the priority of the United States to payment
had attached against all other creditors; and that a mere potential lien on
land, did not carry a legal title to the
proceeds of a sale, made under an
adverse execution. This is the manner in which this case has been understood, by the Judges who concurred in the decision; and it is
obvious, that it established no such
proposition, as that a specific and
perfected lien, can be displaced by
the mere priority of the United
States; since that priority is not of itself equivalent to a lien.” Conard, 1
Pet., at 444.14
The Government also relies upon dicta
from our opinion in United States v. Key,
397 U.S., at 324–325, which quoted from
our earlier opinion in United States v.
Emory, 314 U.S., at 433: “Only the
plainest inconsistency would warrant our
finding an implied exception to the operation of so clear a command as that of
[§3713].” Because both Key and Emory
were cases in which the competing claims
were unsecured, the statutory command
was perfectly clear even under Justice
Story’s construction of the statute. The
statements made in that context, of
course, shed no light on the clarity of the
command when the United States relies
on the statute as a basis for claiming a
13Justice Washington’s opinion for this Court in
Thelusson affirmed, and was essentially the same as,
his own opinion delivered in the Circuit Court as a
Circuit Justice. 2 Wheat., at 426, n. h.
14Relying on this and several other cases, in 1857
the Attomey General of the United States issued an
opinion concluding that Thelusson “has been distinctly overruled” and that the priority of the United
States under this statute “will not reach back over
any lien, whether it be general or specific.” 9 Op.
Att. Gen. 28, 29. See also Kennedy 908–911 (advancing this same interpretation of the early priority
act decisions).
December 7, 1998
preference over a secured creditor. Indeed, the Key opinion itself made this
specific point: “This case does not raise
the question, never decided by this Court,
whether §3466 grants the Government
priority over the prior specific liens of secured creditors. See United States v.
Gilbert Associates, Inc., 345 U.S. 361,
365–366 (1953).” 397 U.S., at 332, n. 11.
The Key opinion is only one of many in
which the Court has noted that despite the
age of the statute, and despite the fact that
it has been the subject of a great deal of
litigation, the question whether it has any
application to antecedent perfected liens
has never been answered definitively.
See United States v. Vermont, 377 U.S.
351, 358, n. 8 (1964) (citing cases). In his
dissent in the Gilbert Associates case, Justice Frankfurter referred to the Court’s reluctance to decide the issue “not only
today but for almost a century and a half.”
345 U.S., at 367.
The Government’s priority as against
specific, perfected security interests is, if
possible, even less settled with regard to
real property. The Court has sometimes
concluded that a competing creditor who
has not “divested” the debtor of “either
title or possession” has only a “general,
unperfected lien” that is defeated by the
Government’s priority. E.g., id., at 366.
Assuming the validity of this “title or possession” test for deciding whether a lien
on personal property is sufficiently choate
for purposes of the priority statute (a
question of federal law, see Illinois ex rel.
Gordon v. Campbell, 329 U.S., at 371),
we are not aware of any decisions since
Thelusson applying that theory to claims
for real property, or of any reason to require a lienor or mortgagee to acquire
possession in order to perfect an interest
in real estate.
Given the fact that this basic question
of interpretation remains unresolved, it
does not seem appropriate to view the
issue in this case as whether the Tax Lien
Act of 1966 has implicitly amended or repealed the priority statute. Instead, we
think the proper inquiry is how best to
harmonize the impact of the two statutes
on the Government’s power to collect
delinquent taxes.
IV
In his dissent from a particularly harsh
application of the priority statute, Justice
10
Jackson emphasized the importance of
considering other relevant federal policies. Joined by three other Justices, he
wrote:
“This decision announces an unnecessarily ruthless interpretation of a
statute that at its best is an arbitrary
one. The statute by which the Federal Government gives its own
claims against an insolvent priority
over claims in favor of a state government must be applied by courts,
not because federal claims are more
meritorious or equitable, but only
because that Government has more
power. But the priority statute is an
assertion of federal supremacy as
against any contrary state policy. It
is not a limitation on the Federal
Government itself, not an assertion
that the priority policy shall prevail
over all other federal policies. Its
generalities should not lightly be
construed to frustrate a specific policy embodied in a later federal
statute.” Massachusetts v. United
States, 333 U.S. 611, 635 (1948)
(Jackson, J., dissenting).
On several prior occasions the Court
had followed this approach and concluded
that a specific policy embodied in a later
federal statute should control our construction of the priority statute, even
though it had not been expressly amended.
Thus, in Cook County Nat. Bank v. United
States, 107 U. S. 445, 448–451 (1883), the
Court concluded that the priority statute
did not apply to federal claims against national banks because the National Bank
Act comprehensively regulated banks’
obligations and the distribution of insolvent banks’ assets. And in United States v.
Guaranty Trust Co. of N.Y., 280 U.S. 478,
485 (1930), we determined that the Transportation Act of 1920 had effectively superseded the priority statute with respect
to federal claims against the railroads arising under that Act.
The bankruptcy law provides an additional context in which another federal
statute was given effect despite the priority statute’s literal, unconditional text.
The early federal bankruptcy statutes had
accorded to “‘all debts due to the United
States, and all taxes and assessments
under the laws thereof’” a preference that
was “coextensive” with that established
by the priority statute. Guarantee Title &
1998–49 I.R.B.
Trust Co. v. Title Guaranty & Surety Co.,
224 U.S. 152, 158 (1992) (quoting the
Bankruptcy Act of 1867, Rev. Stat.
§5101). As such, the priority act and the
bankruptcy laws "were to be regarded as
in pari materia and both were unqualified; . . . as neither contained any qualification, none could be interpolated.” Ibid.
The Bankruptcy Act of 1898, however,
subordinated the priority of the Federal
Government’s claims (except for taxes
due) to certain other kinds of debts. This
Court resolved the tension between the
new bankruptcy provisions and the priority statute by applying the former and thus
treating the Government like any other
general creditor. Id., at 158–160; Davis v.
Pringle, 268 U.S. 315, 317–319 (1925).15
There are sound reasons for treating the
Tax Lien Act of 1966 as the governing
statute when the Government is claiming
a preference in the insolvent estate of a
delinquent taxpayer. As was the case with
the National Bank Act, the Transportation
Act of 1920, and the Bankruptcy Act of
1898, the Tax Lien Act is the later statute,
the more specific statute, and its provisions are comprehensive, reflecting an
obvious attempt to accommodate the
strong policy objections to the enforcement of secret liens. It represents Congress’ detailed judgment as to when the
Government’s claims for unpaid taxes
should yield to many different sorts of interests (including, for instance, judgment
liens, mechanic’s liens, and attorneys’
liens) in many different types of property
(including, for example, real property, securities, and motor vehicles). See 26
U.S.C. §6323. Indeed, given our unambiguous determination that the federal interest in the collection of taxes is paramount to its interest in enforcing other
claims, see United States v. Kimbell
15Congress amended the priority statute in 1978
to make it expressly inapplicable to Title 11 bankruptcy cases. Pub. L. 95–598, §322(b), 92 Stat.
2679, codified in 31 U.S.C. §3713(a)(2). The differences between the bankruptcy laws and the priority
statute have been the subject of criticism: “as a result of the continuing discrepancies between the
bankruptcy and insolvency rules, some creditors
have had a distinct incentive to throw into bankruptcy a debtor whose case might have been handled, with less expense and less burden on the federal courts, in another form of proceeding.” Plumb,
The Federal Priority in Insolvency: Proposals for
Reform, 70 Mich. L. Rev. 3, 8–9 (1971) (hereinafter
Plumb).
1998–49 I.R.B.
Foods’ Inc., 440 U.S., at 733–735, it
would be anomalous to conclude that
Congress intended the priority statute to
impose greater burdens on the citizen than
those specifically crafted for tax collection purposes.
Even before the 1966 amendments to
the Tax Lien Act, this Court assumed that
the more recent and specific provisions of
that Act would apply were they to conflict
with the older priority statute. In the
Gilbert Associates case, which concerned
the relative priority of the Federal Government and a New Hampshire town to
funds of an insolvent taxpayer, the Court
first considered whether the town could
qualify as a “judgment creditor” entitled
to preference under the Tax Lien Act. 345
U.S., at 363–364. Only after deciding
that question in the negative did the Court
conclude that the United States obtained
preference by operation of the priority
statute. Id., at 365–366. The Government
would now portray Gilbert Associates as
a deviation from two other relatively recent opinions in which the Court held that
the priority statute was not trumped by
provisions of other statutes: United States
v. Emory, 314 U.S., at 429–433 (the National Housing Act), and United States v.
Key, 397 U.S., at 324–333 (Chapter X of
the Bankruptcy Act). In each of those
cases, however, there was no “plain inconsistency” between the commands of
the priority statute and the other federal
act, nor was there reason to believe that
application of the priority statute would
frustrate Congress’ intent. Id., at 329.
The same cannot be said in the present
suit.
The Government emphasizes that when
Congress amended the Tax Lien Act in
1966, it declined to enact the American
Bar Association’s proposal to modify the
federal priority statute, and Congress
again failed to enact a similar proposal in
1970. Both proposals would have expressly provided that the Government’s
priority in insolvency does not displace
valid liens and security interests, and
therefore would have harmonized the priority statute with the Tax Lien Act. See
Hearings on H.R. 11256 and 11290 before
the House Committee on Ways and
Means, 89th Cong., 2d Sess., 197 (1966)
(hereinafter Hearings); S. 2197, 92d
Cong., lst Sess. (1971). But both proposals also would have significantly changed
11
the priority statute in many other respects
to follow the priority scheme created by
the bankruptcy laws. See Hearings, at 85,
198; Plumb 10, n. 53, 33–37. The earlier
proposal may have failed because its
wide-ranging subject matter was beyond
the House Ways and Means Committee’s
jurisdiction. Plumb 8. The failure of the
1970 proposal in the Senate Judiciary
Committee—explained by no reports or
hearings—might merely reflect disagreement with the broad changes to the priority statute, or an assumption that the proposal was not needed because, as Justice
Story had believed, the priority statute
does not apply to prior perfected security
interests, or any number of other views.
Thus, the Committees’ failures to report
the proposals to the entire Congress do
not necessarily indicate that any legislator
thought that the priority statute should supersede the Tax Lien Act in the adjudication of federal tax claims. They provide
no support for the hypothesis that both
Houses of Congress silently endorsed that
position.
The actual measures taken by Congress
provide a superior insight regarding its intent. As we have noted, the 1966 amendments to the Tax Lien Act bespeak a
strong condemnation of secret liens,
which unfairly defeat the expectations of
innocent creditors and frustrate “the needs
of our citizens for certainty and convenience in the legal rules governing their
commercial dealings.” 112 Cong. Rec.
22227 (1966) (remarks of Rep. Byrnes);
cf. United States v. Speers, 382 U.S. 266,
275 (1965) (referring to the general policy
against secret liens”). These policy concerns shed light on how Congress would
want the conflicting statutory provisions
to be harmonized:
“Liens may be a dry-as-dust part of
the law, but they are not without significance in an industrial and commercial community where construction and credit are thought to have
importance. One does not readily
impute to Congress the intention that
many common commercial liens
should be congenitally unstable.” E.
Brown, The Supreme Court, 1957
Term—Foreword: Process of Law,
72 Harv. L. Rev. 77, 87 (1958) (footnote omitted).
In sum, nothing in the text or the long
history of interpreting the federal priority
December 7, 1998
statute justifies the conclusion that it authorizes the equivalent of a secret lien as a
substitute for the expressly authorized tax
lien that Congress has said “shall not be
valid” in a case of this kind.
The judgment of the Pennsylvania
Supreme Court is affirmed.
It is so ordered.
JUSTICE SCALIA, concurring in part and
concurring in the judgment.
I join the opinion of the Court except
that portion which takes seriously, and
thus encourages in the future, an argument that should be laughed out of court.
The Government contended that 31
U.S.C. §3713(a) must have priority over
the Federal Tax Lien Act of 1966, because
in 1966 and again in 1970 Congress
“failed to enact” a proposal put forward
by the American Bar Association that
would have subordinated §3713(a) to the
Tax Lien Act, citing hearings before the
House Committee on Ways and Means,
and a bill proposed in, but not passed by,
the Senate. See Brief for United States
25–27, and n. 10 (citing American Bar
Association, Final Report of the Committee on Federal Liens 7, 122–124 (1959),
contained in Hearings on H.R. 11256 and
11290 before the House Committee an
Ways and Means, 89th Cong., 2d Sess.,
85, 199 (1966); S. 2197, 92d Cong., lst
Sess. (1971)). The Court responds that
these rejected proposals “provide no support for the hypothesis that both Houses
of Congress silently endorsed” the supremacy of §3713, ante, at 16, because
those proposals contained other provisions as well, and might have been rejected because of those other provisions,
or because Congress thought the existing
law already made §3713 supreme. This
implies that, if the proposals had not con-
December 7, 1998
tained those additional features, or if
Members of Congress (or some part of
them) had somehow made clear in the
course of rejecting them that they wanted
the existing supremacy of the Tax Lien
Act to subsist, the rejection would “provide support” for the Government’s case.
That is not so, for several reasons. First
and most obviously, Congress can not express its will by a failure to legislate. The
act of refusing to enact a law (if that can be
called an act) has utterly no legal effect,
and thus has utterly no place in a serious
discussion of the law. The Constitution
sets forth the only manner in which the
Members of Congress have the power to
impose their will upon the country: by a
bill that passes both Houses and is either
signed by the President or repassed by a
supermajority after his veto. Art. I, §7.
Everything else the Members of Congress
do is either prelude or internal organization. Congress can no more express its
will by not legislating than an individual
Member can express his will by not voting.
Second, even if Congress could express
its will by not legislating, the will of a
later Congress that a law enacted by an
earlier Congress should bear a particular
meaning is of no effect whatever. The
Constitution puts Congress in the business of writing new laws, not interpreting
old ones. “[L]ater-enacted laws . . . do
not declare the meaning of earlier law.”
Almendarez-Torres v. United States, 523
U.S. __ (1998) (slip op., at 12); id., at __
(S CALIA , J., dissenting) (“This later
amendment can of course not cause [the
statute] to have meant, at the time of petitioner’s conviction, something different
from what it then said”) (slip op., at 23).
If the enacted intent of a later Congress
cannot change the meaning of an earlier
statute, then it should go without saying
that the later unenacted intent cannot pos-
12
sibly do so. It should go without saying,
and it should go without arguing as well.
I have in the past been critical of the
Court’s using the so-called legislative history of an enactment (hearings, committee reports, and floor debates) to determine its meaning. See, e.g., Conroy v.
Aniskoff, 507 U.S. 511, 518–529 (1993)
(S CALIA , J., concurring in judgment);
United States v. Thompson/Center Arms
Co., 504 U.S. 505, 521 (1992) (SCALIA, J.,
concurring in judgment); Blanchard v.
Bergeron, 489 U.S. 87, 98–100 (1989)
(SCALIA, J., concurring in part and concurring in judgment). Today, however,
the Court’s fascination with the files of
Congress (we must consult them, because
they are there) is carried to a new silly extreme. Today’s opinion ever-so-carefully
analyzes, not legislative history, but the
history of legislation-that-never-was. If
we take this sort of material seriously, we
require conscientious counsel to investigate (at clients’ expense) not only the
hearings, committee reports, and floor debates pertaining to the history of the law
at issue (which is bad enough), but to
find, and then investigate the hearings,
committee reports, and floor debates pertaining to, later bills on the same subject
that were never enacted. This is beyond
all reason, and we should say so.
Section 7520.—Valuation Tables
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of December 1998. See Rev. Rul. 98–57, page 4.
Section 7872.—Treatment of
Loans With Below-Market
Interest Rates
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of December 1998. See Rev. Rul. 98–57, page 4.
1998–49 I.R.B.
Part III. Administrative, Procedural, and Miscellaneous
Administrative Appeal of
Adverse Determination of
Tax-Exempt Status of Bond
Issue
Notice 98–58
This notice provides a proposed revenue procedure that, when finalized, will
provide the procedures for issuers to request an administrative appeal of an adverse determination by the Employee
Plans/Exempt Organizations Key District
(District) that interest on their debt obligations (Bond Issue) is not excludable
from gross income under § 103 of the Internal Revenue Code. Beginning December 7, 1998, issuers may use the procedures set forth in the proposed revenue
procedure until it is finalized. The revenue procedure also modifies the Internal
Revenue Service’s existing procedures
that the District must receive a technical
advice memorandum from Assistant
Chief Counsel (Financial Institutions &
Products) that is unfavorable to the issuer
prior to declaring that the interest on the
Bond Issue is not excludable from gross
income under § 103 of the Code, and
makes other modifications to the examination process made appropriate by the
Internal Revenue Service Restructuring
and Reform Act of 1998, P.L. 105–206
(the Act).
Section 3105 of the Act directs the Service to modify its administrative procedures to allow issuers to appeal an adverse determination. The Act requires
that the appeals be heard by senior officers of the Office of Appeals (Appeals)
having experience in resolving complex
cases. An issuer, having received an adverse determination following an examination of its Bond Issue, may protest the
determination to Appeals before the interest on the Bond Issue is declared not excludable from gross income under § 103
of the Code. The appeal is optional and is
initiated by the issuer.
Section 3465 of the Act provides that
the Service shall prescribe procedures by
which a taxpayer may request early referral of one or more unresolved issues to
Appeals. Certain issues arising during an
examination of a Bond Issue may be appropriate for early referral. For an exam-
1998–49 I.R.B.
ple of how early referral operates, see
Rev. Proc. 96–9, 1996–1 C.B. 575, which
describes the method by which a Coordinated Examination Program taxpayer requests early referral of one or more unagreed issues from Examination to
Appeals. The Service is developing new
procedures for early referral and seeks
comments regarding the applicability of
early referral procedures to examinations
of Bond Issues.
The Service welcomes comments on
the proposed revenue procedure provided
in this notice and on the application of the
early referral program to Bond Issues.
Comments should be submitted by March
7, 1999, either to:
National Director of Appeals
901 D Street, S.W.
Box 68
Washington, D.C. 20024
Attn: C:AP:ADR&CS, Room 236
or electronically via: http:/www.irs.ustreas.gov/prod/tax_regs/comments.html
(the Service Internet site).
Part IV - Items of General
Interest
ADMINISTRATIVE APPEAL OF
ADVERSE DETERMINATION OF
TAX-EXEMPT STATUS OF BOND
ISSUE
PROPOSED REVENUE
PROCEDURE
TABLE OF CONTENTS
SECTION 1. PURPOSE
SECTION 2. BACKGROUND
SECTION 3. SCOPE
.01 In general
.02 Issuers may request technical advice referral
.03 Early referral
SECTION 4. ADMINISTRATIVE
APPEAL PROCESS
.01 In general
.02 Consultations with District Counsel
.03 The District requests technical advice
.04 The issuer requests technical advice
referral
13
.05 Technical advice not requested
.06 Closing agreement with the District
SECTION 5. HOW TO REQUEST AN
APPEAL
.01 In general
.02 The issuer’s request to appeal and
response to the District’s notice
SECTION 6. PROCESSING AN
APPEAL REQUEST
SECTION 7. THE DISTRICT
FORWARDS CASE FILE TO
APPEALS
SECTION 8. RESOLVING AN
APPEAL ISSUE(S)
.01 In general
.02 New information provided
.03 If agreement is reached
.04 If agreement is not reached
SECTION 9. NO USER FEE
SECTION 10. EFFECTIVE DATE
SECTION 1. PURPOSE
As required by § 3105 of the Internal
Revenue Service Restructuring and Reform Act of 1998, P.L. 105–206 (the Act),
this revenue procedure provides procedures for issuers to request an administrative appeal to the Office of Appeals (Appeals) of an adverse determination by an
Employee Plans/Exempt Organizations
Key District (the District) that the interest
on their debt obligations (the Bond Issue)
is not excludable from gross income
under § 103 of the Internal Revenue
Code. This revenue procedure also modifies the Internal Revenue Service’s existing procedures that the District must receive a technical advice memorandum
from Assistant Chief Counsel (Financial
Institutions & Products) that is unfavorable to the issuer prior to declaring that
the interest on the Bond Issue is not excludable from gross income under § 103
of the Code, and makes other modifications to the examination process made appropriate by the Act.
SECTION 2. BACKGROUND
Examination procedures set forth in
Announcement 95-61, 1995-33 I.R.B. 25,
December 7, 1998
provide that an agent may, in consultation
with District Counsel, arrive at a preliminary adverse determination that interest
on a Bond Issue is not excludable from
gross income under § 103 of the Code. If
the District determines that a closing
agreement is appropriate, the agent generally will inform the issuer, orally or in
writing, of the agent’s preliminary adverse determination and give the issuer an
opportunity to enter into a closing agreement. If the issuer and the District fail to
reach an agreement, Internal Revenue
Manual section 7(10)7(11) and the examination procedures require that prior to declaring that the interest on a Bond Issue is
not excludable from gross income under
§ 103 of the Code, the District must receive a technical advice memorandum
from Assistant Chief Counsel (Financial
Institutions & Products) that is unfavorable to the issuer. If the technical advice
memorandum concludes that interest on
the Bond Issue is not excludable from
gross income under § 103 of the Code, the
District may proceed with its determination that interest on the Bond Issue is not
excludable from gross income when received or accrued by bondholders. Under
existing procedures, the issuer may not
request an appeal of the District’s adverse
determination.
Section 3105 of the Act directs the Service to modify its administrative procedures to allow issuers to appeal an adverse determination. An issuer, having
received an adverse determination following an examination of its Bond Issue, may
protest the determination to Appeals before the interest on the Bond Issue is declared not excludable from gross income
under § 103 of the Code.
SECTION 3. SCOPE
.01 In general. All issues raised by the
District during an examination of a Bond
Issue that would cause the interest on the
Bond Issue not to be excludable from
gross income under § 103 of the Code are
appropriate for consideration by Appeals.
The appeal is optional and is initiated by
the issuer as described below.
.02 Issuers may request technical advice referral. For purposes of examining
Bond Issues, issuers are treated as taxpayers. Thus, the procedures for requesting
technical advice referral that apply to all
taxpayers apply to issuers of Bond Issues
December 7, 1998
under examination. See § 601.105 et seq.
of the Statement of Procedural Rules and
Rev. Proc. 98–2, 1998–1 I.R.B. 74,
or subsequent procedure.
.03 Early referral. Section 3465 of
the Act provides that the Service shall
prescribe procedures by which a taxpayer
may request early referral of one or more
unresolved issues to Appeals. Prior to the
adoption of generally applicable early referral procedures, an issuer may make a
separate request to the District for the
early referral to Appeals of one or more
issues regarding a Bond Issue set forth in
section 3.01.
SECTION 4. ADMINISTRATIVE
APPEAL PROCESS
.01 In general. Sections 4.03, 4.04,
and 4.05 describe the circumstances in
which an issuer may appeal an adverse
determination by the District that interest
on a Bond Issue is not excludable from
gross income under § 103 of the Code.
Following the receipt of a written notice
from the District described in sections
4.03(b), 4.04(b), or 4.05(b), the issuer
may request an appeal in accordance with
section 5.
.02 Consultations with District
Counsel. Prior to issuing a preliminary
adverse determination to the issuer regarding the excludability of interest on
the Bond Issue from gross income under
§ 103 of the Code, the District will consult with District Counsel regarding
whether technical advice should be requested by the District. Technical advice
should be requested, for example, when
there is a lack of uniformity regarding the
disposition of an issue or when an issue is
unusual or complex enough to warrant
consideration by the National Office.
.03 The District requests technical
advice. (a) If the District, in consultation
with District Counsel, determines that
technical advice is warranted, the District
will follow the procedures for requesting
technical advice set forth in § 601.105 et
seq. of the Statement of Procedural Rules
and Rev. Proc. 98–2, 1998–1 I.R.B. 74. If
the National Office issues a technical advice memorandum to the District, the District will notify the issuer, in writing, of
its determination.
(b) The written notice will identify the
Bond Issue under examination, include a
copy of the technical advice memoran-
14
dum and, if the District’s determination is
adverse to the issuer, inform the issuer of
the availability of an administrative appeal of the adverse determination.
.04 The issuer requests technical advice referral. (a) If the District, after
consultation with District Counsel, determines that technical advice is not necessary, the District will notify the issuer, in
writing, of its preliminary adverse determination that the interest on the Bond
Issue is not excludable from gross income
under § 103 of the Code, and provide the
issuer with an opportunity to have closing
agreement discussions. The notice will
also inform the issuer that it may request
technical advice referral in accordance
with § 601.105 et seq. of the Statement of
Procedural Rules. If the issuer requests
technical advice referral, such request
will be made, and considered, in accordance with the procedures set forth in
§ 601.105 et seq. of the Statement of Procedural Rules and Rev. Proc. 98–2, 1998–
1 I.R.B. 74, or subsequent procedure. If
the National Office issues a technical advice memorandum to the District, the District will notify the issuer, in writing, of
its determination.
(b) The written notice will identify the
Bond Issue under examination, include a
copy of the technical advice memorandum and, if the District’s determination is
adverse to the issuer, inform the issuer of
the availability of an administrative appeal of the adverse determination.
.05 Technical advice not requested.
(a) If, after receiving notice of the District’s preliminary adverse determination
described in section 4.04(a), the issuer
does not request technical advice referral
or if the issuer’s request is denied, the
District will provide the issuer with an opportunity to have closing agreement discussions. If closing agreement discussions between the issuer and the District
are unsuccessful, the District will send the
issuer a written notice to the effect that
the District has made an adverse determination that the interest on the Bond Issue
under examination is not excludable from
gross income under § 103 of the Code.
(b) The written notice will identify the
Bond Issue under examination, state the
District’s reasons for its adverse determination and inform the issuer of the availability of an administrative appeal of the
District’s adverse determination.
1998–49 I.R.B.
.06 Closing agreement with the District. The District will retain jurisdiction
over the Bond Issue until the issuer has
made a request to appeal the District’s adverse determination that interest on the
Bond Issue is not excludable from gross
income under § 103 of the Code and the
agent’s file has been sent to Appeals in accordance with section 6. Prior to requesting an appeal, the issuer may enter into
closing agreement discussions with the
District and execute a closing agreement
with respect to the Bond Issue. The District will generally prepare a closing
agreement using the model closing agreement provided in Announcement 95–61,
1995–33 I.R.B. 25.
SECTION 5. HOW TO REQUEST
AN APPEAL
.01 In general. Established Appeals
procedures, including those governing
submissions and taxpayer conferences,
apply to requesting an appeal of an adverse determination that interest on a
Bond Issue is not excludable from gross
income under § 103 of the Code. See
§ 601.106 et seq. of the Statement of Procedural Rules.
.02 The issuer’s request for appeal
and response to the District’s notice.
The issuer’s appeal request must be in
writing. In addition, the issuer must provide a detailed written response to the
District’s notice of the District’s adverse
determination, and include any further explanation of the issuer’s position regarding the issue(s) in dispute. The issuer’s
written appeal request and detailed written response must be submitted to the
District within 30 days of the date of the
notice from the District regarding its adverse determination. This 30-day requirement may be extended by the District.
For both the request and response, the issuer must satisfy the declaration and signature requirements below:
(1) Declaration:
Under penalties of perjury, I declare that I have examined this request [or submission], including
accompanying documents, and to
the best of my knowledge and belief, the facts presented are true,
correct, and complete.
This declaration must be signed and dated
by the issuer, not the issuer’s representative. A stamped signature is not permitted.
1998–49 I.R.B.
(2) Signatures: An appeal request and
response must be signed by the issuer or
the issuer’s authorized representative. It
is preferred that Form 2848, Power of Attorney and Declaration of Representative,
be used to designate an authorized representative when making an appeal request
under this revenue procedure.
SECTION 6. THE DISTRICT
FORWARDS CASE FILE TO
APPEALS
After the issuer has requested an appeal
and has responded in writing to the notice
of an adverse determination, the District
will forward the agent’s file to Appeals.
The file should include copies of the following:
1. the technical advice memorandum,
if any;
2. all information received by the
agent from the issuer regarding the Bond
Issue;
3. all work papers of the agent examining the Bond Issue;
4. the District’s notice;
5. the issuer’s written appeal request;
6. the issuer’s written response to the
notice; and
7. the District’s response to the issuer’s
position, if any.
After the agent’s file is sent to Appeals,
Appeals will have jurisdiction over the
Bond Issue.
SECTION 7. PROCESSING AN
APPEAL REQUEST
An appeal by an issuer of an adverse
determination will be assigned to a senior
Appeals officer, who will make every effort to resolve the case as expeditiously as
possible.
SECTION 8. RESOLVING AN
APPEAL ISSUE(S)
.01 In general. Established Appeals
procedures, including those governing
submissions and taxpayer conferences,
apply to resolving appeals regarding
Bond Issues. See § 601.106 et seq. of the
Statement of Procedural Rules. The procedures in sections 8.03 and 8.04, specifically apply to bond issues.
.02 New information provided. If the
issuer provides additional information not
previously given to the District, Appeals
will forward the information to the District for its comments.
15
.03 If agreement is reached. If Appeals and the issuer agree that no action is
necessary with respect to the Bond Issue,
Appeals will notify the District and close
the case. If Appeals and the issuer reach
an agreement with respect to the Bond
Issue, Appeals will generally prepare a
closing agreement using the model closing agreement provided in Announcement
95–61, 1995–33 I.R.B. 25.
.04 If agreement is not reached. (a)
If Appeals and the issuer fail to reach an
agreement with respect to an appeal, Appeals will close the appeal file, return jurisdiction over the Bond Issue to the District for appropriate action, and send a
copy of the Appeals Case Memorandum
with respect to the Bond Issue to the District.
(b) Appeals will not reconsider an unagreed appeal unless there has been a substantial change in the circumstances regarding the appeal issue.
SECTION 9. NO USER FEE
There is no user fee for an appeal request.
SECTION 10. EFFECTIVE DATE
These procedures are generally effective with respect to adverse determinations made by the District on or after July
22, 1998, and in the case of a technical
advice memorandum the public release of
which occurred within one year prior to
July 22, 1998, an appeal may be requested
not later than 90 days after the publication
of this revenue procedure in the Internal
Revenue Bulletin.
DRAFTING INFORMATION
The principal authors of this revenue
procedure are Thomas Carter Louthan,
Director, Office of Alternative Dispute
Resolution & Customer Service Programs, National Office Appeals; Sunita B.
Lough, Senior Trial Attorney, Office of
Assistant Chief Counsel (Field Service
Division); and Joseph Grabowski, Analyst, Exempt Organizations Division. For
further information regarding this revenue
procedure, please contact Mr. Louthan at
(202) 401-4098, Ms. Lough at (202) 6227870, or Mr. Grabowski at (202) 6227761 (not toll-free numbers).
December 7, 1998
Returns Relating to Higher
Education Tuition and Related
Expenses
Notice 98–59
PURPOSE
This notice modifies Notice 97–73,
1997–2 C.B. 335, and Notice 98–46,
1998–36 I.R.B. 21, by providing that the
Internal Revenue Service will not require
an eligible educational institution to file
information returns under § 6050S of the
Internal Revenue Code for 1998 or 1999
with respect to students who are enrolled
during the year only in courses for which
the student receives no academic credit
from the institution. In addition, this notice modifies Notice 97–73 and Notice
98–46 by providing that eligible educational institutions are not required to file
information returns for 1998 or 1999 with
respect to nonresident alien students, unless requested to do so by the student.
BACKGROUND
Section 6050S, enacted by the Taxpayer Relief Act of 1997, Pub. L. No.
105-–34, § 201(c), 111 Stat. 804, requires
the filing of information returns to assist
taxpayers and the Service in determining
the Hope Scholarship credit and the Lifetime Learning credit that taxpayers may
claim pursuant to § 25A of the Code.
Section 6050S requires that eligible educational institutions file the specified information returns with the Service and
December 7, 1998
provide a corresponding statement to the
individuals named on the information return showing the information that has
been reported.
The requirements of § 6050S are generally described in Notice 97–73, along
with the specific information reporting requirements for 1998. The Service announced in Notice 98–46 that it is extending the application of Notice 97–73 to
information returns required under
§ 6050S for 1999.
Notice 97–73 provides that an eligible
educational institution that receives payments of qualified tuition and related expenses must file a Form 1098–T, Tuition
Payments Statement, with the Service
with respect to the student on whose behalf the payments were received. Consequently, information reporting is required
even if the student is enrolled during the
year only in courses for which the student
receives no academic credit from the institution, because the payments may be
for qualified tuition and related expenses
that are eligible for the Lifetime Learning
credit (although not for the Hope Scholarship credit). Further, information reporting is required even if the student is a
nonresident alien for any portion of the
year.
the exemptions do not undermine the
overall compliance objectives of § 6050S.
See H.R. Conf. Rep. No. 599, 105th
Cong., 2d Sess. at 322 (June 24, 1998).
Pending the issuance of regulations under
§ 6050S, and consistent with the limited
information reporting required by Notice
97–73 and Notice 98–46, the Service will
not require eligible educational institutions to file Forms 1098–T for 1998 or
1999 with respect to students who are enrolled during the year only in courses for
which the students receive no academic
credit from the institution. In addition,
such institutions are not required to file
Forms 1098–T for 1998 or 1999 with respect to nonresident alien students, unless
requested to do so by the student.
The Treasury Department intends to
issue regulations on the information reporting requirements of § 6050S. The
Service will not impose penalties on an
institution if it complies with Notice 97–
73, as modified by this notice, for 1998
and 1999.
DISCUSSION
The principal author of this notice is
John J. McGreevy of the Office of the Assistant Chief Counsel (Income Tax and
Accounting). For further information regarding this notice contact him on (202)
622-4910 (not a toll-free call).
Treasury may exempt educational institutions from the reporting requirements of
§ 6050S with respect to certain categories
of students, such as non-degree students
enrolled in a course for which the institution grants no academic credit, provided
16
EFFECT ON OTHER DOCUMENTS
Notice 97–73 and Notice 98–46 are
modified.
DRAFTING INFORMATION
1998–49 I.R.B.
Tables for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income
Notice 98–60
1. Table for Figuring Amount Exempt From Levy on Wages, Salary, and Other Income (Forms 668–W, 668–W(c), &
668–W(c)(DO)) 1999
Publication 1494, shown below, provides tables which show the amount of an individual’s income that is exempt from a notice of
levy used to collect delinquent tax in 1999.
(Amounts are for each pay period.)
Filing Status: Single
Number of Exemptions Claimed on Statement
Pay Period
1
2
3
4
5
6
More Than 6
Daily
27.12
37.69
48.27
58.85
69.42
80.00
16.54 plus 10.58 for each exemption
Weekly
135.58
188.46
241.35
294.23
347.12
400.00
82.69 plus 52.88 for each exemption
Biweekly
271.15
376.92
482.69
588.46
694.23
800.00
165.38 plus 105.77 for each exemption
Semi-monthly
293.75
408.33
522.92
637.50
752.08
866.67
179.17 plus 114.58 for each exemption
Monthly
587.50
816.67
1045.83
1275.00
1504.17
1733.33
358.33 plus 229.17 for each exemption
Filing Status: Unmarried Head of Household
Number of Exemptions Claimed on Statement
Pay Period
1
2
3
4
5
6
More Than 6
Daily
35.00
45.58
56.15
66.73
77.31
87.88
24.42 plus 10.58 for each exemption
Weekly
175.00
227.88
280.77
333.65
386.54
439.42
122.12 plus 52.88 for each exemption
Biweekly
350.00
455.77
561.54
667.31
773.08
878.85
244.23 plus 105.77 for each exemption
Semi-monthly
379.17
493.75
608.33
722.92
837.50
952.08
264.58 plus 114.58 for each exemption
Monthly
758.33
987.50
1216.67
1445.83
1675.00
1904.17
529.17 plus 229.17 for each exemption
1998–49 I.R.B.
17
December 7, 1998
Filing Status: Married Filing Joint (and Qualifying Widow(er)s)
Number of Exemptions Claimed on Statement
Pay Period
1
2
3
4
5
6
More Than 6
Daily
38.27
48.85
59.42
70.00
80.58
91.15
27.69 plus 10.58 for each exemption
Weekly
191.35
244.23
297.12
350.00
402.88
455.77
138.46 plus 52.88 for each exemption
Biweekly
382.69
488.46
594.23
700.00
805.77
911.54
276.92 plus 105.77 for each exemption
Semi-monthly
414.58
529.17
643.75
758.33
872.92
987.50
300.00 plus 114.58 for each exemption
Monthly
829.17
1058.33
1287.50
1516.67
1745.83
1975.00
600.00 plus 229.17 for each exemption
Filing Status: Married Filing Separate
Number of Exemptions Claimed on Statement
Pay Period
1
2
3
4
5
6
More Than 6
Daily
24.42
35.00
45.58
56.15
66.73
77.31
13.85 plus 10.58 for each exemption
Weekly
122.12
175.00
227.88
280.77
333.65
386.54
69.23 plus 52.88 for each exemption
Biweekly
244.23
350.00
455.77
561.54
667.31
773.08
138.46 plus 105.77 for each exemption
Semi-monthly
264.58
379.17
493.75
608.33
722.92
837.50
150.00 plus 114.58 for each exemption
Monthly
529.17
758.33
987.50
1216.67
1445.83
1675.00
300.00 plus 229.17 for each exemption
December 7, 1998
18
1998–49 I.R.B.
2. Table for Figuring Additional Exempt Amount for Taxpayers at Least 65 Years Old and/or Blind
Additional Exempt Amount
Filing Status
*
Daily
Wkly
Bi-Wkly
Semi-Mo
Monthly
Single or Head
of Household
1
2
4.04
8.08
20.19
40.38
40.38
80.77
43.75
87.50
87.50
175.00
Any Other
Filing Status
1
2
3
4
3.27
6.54
9.81
13.08
16.35
32.69
49.04
65.38
32.69
65.38
98.08
130.77
35.42
70.83
106.25
141.67
70.83
141.67
212.50
283.33
* ADDITIONAL STANDARD DEDUCTION claimed on Parts 3, 4, & 5 of levy.
Examples
These tables show the amount exempt from a levy on wages, salary, and other income.
For example:
1. A single taxpayer who is paid weekly and claims three exemptions (including one for the taxpayer) has $241.35 exempt from levy.
2. If the taxpayer in number 1 is over 65 and writes 1 in the ADDITIONAL STANDARD DEDUCTION space on Parts 3, 4, & 5 of
the levy, $261.54 is exempt from this levy ($241.35 plus $20.19).
3. A taxpayer who is married, files jointly, is paid bi-weekly, and claims two exemptions (including one for the taxpayer) has
$488.46 exempt from levy.
4. If the taxpayer in number 3 is over 65 and has a spouse who is blind, this taxpayer should write 2 in the ADDITIONAL STANDARD DEDUCTION space on Parts 3, 4, & 5 of the levy. Then, $553.84 is exempt from this levy ($488.46 plus $65.38).
26 CFR 601.204: Changes in accounting periods
and in methods of accounting.
(Also Part I, § 56; 446; 1.446–1.)
sitions in taxable years beginning after
December 31, 1986.
Rev. Proc. 98–58
SECTION 2. BACKGROUND
SECTION 1. PURPOSE
This revenue procedure provides procedures to allow a taxpayer to automatically change its method of accounting
under § 446 of the Internal Revenue Code
for certain deferred payment sales
(“DPS”) contracts (relating to property
used or produced in the trade or business
of farming) to the installment method for
alternative minimum tax (AMT) purposes. This change will allow a taxpayer
to comply with § 403 of the Taxpayer Relief Act of 1997 (TRA 1997), Pub. L. No.
105–34, 111 Stat. 788 (Aug. 5, 1997),
which repealed § 56(a)(6) of the Code, relating to the AMT adjustment for installment sales, effective generally for dispo-
1998–49 I.R.B.
.01 Section 446 (e) and § 1.446–1(e)
state that, except as otherwise provided, a
taxpayer must secure the consent of the
Commissioner before changing a method
of accounting for federal income tax purposes. Section 1.446–1(e)(2)(i) of the Income Tax regulations provides that the
taxpayer must secure such consent
whether or not the method is proper or
permitted under the Code or regulations.
While such consent is ordinarily obtained
by filing Form 3115, Application for
Change in Accounting Method, § 1.446–
1(e)(3)(ii) authorizes the Commissioner
to prescribe administrative procedures
setting forth the limitations, terms, and
conditions necessary to obtain the Commissioner’s consent to change the taxpayer’s method of accounting.
19
.02 Prior to the enactment of TRA
1997, § 56(a)(6) provided that, in computing alternative minimum taxable income
(AMTI), income from the disposition of
property described in § 1221(1) (including farm products) was determined without regard to the installment method
under § 453. Thus, a farmer using the
cash method who sold farm products
under a DPS contract was required under
§ 56(a)(6) to include the fair market value
(or the issue price) of the DPS obligation
in AMTI in the taxable year of sale. For
regular tax purposes, such a farmer generally was allowed to report the income
from the DPS contract as payments were
received by the farmer, pursuant to the installment method under § 453.
.03 Section 403 of the TRA 1997 repealed § 56(a)(6) retroactively to 1987.
As a result, a taxpayer who reports income from a DPS contract using the installment method for regular tax purposes
December 7, 1998
should also use the installment method to
report income from the contract for AMT
purposes. A change from applying former
§ 56(a)(6) to using the installment method
for AMT purposes for DPS contracts is a
change in method of accounting within
the meaning of § 446(e) and the regulations thereunder.
SECTION 3. SCOPE
This revenue procedure applies to taxpayers who properly report income from
DPS contracts using the installment
method under § 453 for regular tax purposes, but apply former § 56(a)(6) to report income from such contract for AMT
purposes. However, this revenue procedure does not apply to any taxpayer described in the preceding sentence for any
taxable year that is subject to a closing
agreement concerning the treatment of
DPS contracts. See § 7121(b).
SECTION 4. PROCEDURE
.01 In General.
A change to the installment method of
accounting under § 453 for DPS contracts
for AMT purposes is made on a cut-off
basis either prospectively, beginning with
the current taxable year (generally, the
1998 taxable year), or retroactively, beginning with an earlier taxable year by filing amended returns. No Form 3115 is
required to be filed. For further information in preparing 1998 returns, and
amended returns, see Publication 225,
Farmer’s Tax Guide.
.02 Prospective Change.
To make the change in method of accounting prospectively, the installment
method is used to report income from
December 7, 1998
DPS contracts entered into in the current
taxable year and all subsequent taxable
years for AMT purposes if such method is
used for the contract for regular tax purposes. No AMT adjustment should be
made for these contracts related to the use
of the installment method. Any amount
of income from a DPS contract entered
into prior to the year of change (i.e. prior
to the current taxable year) that was reported in a prior taxable year for AMT
purposes, must be reflected as a negative
AMT adjustment in the taxable year that
amount of income is reported for regular
tax purposes. Taxpayers who made a
prospective change in method of accounting for DPS contracts in 1997 are deemed
to have complied with the requirements of
this section 4.02.
.03 Retroactive Change.
To make the change in method of accounting retroactively, amended returns
must be filed for any earlier open taxable
year that the taxpayer selects after which
there is no closed taxable year and all affected subsequent taxable years for which
a return has been filed. An entity (including a limited liability company) treated as
a partnership or an S corporation for federal income tax purposes (“passthrough
entity”) may not file an amended return
for any taxable year ending prior to the
beginning of the earliest open taxable
year of its partners, members, or shareholders after which there is no closed taxable year. The installment method must
be used to report income from DPS contracts entered into in the year of change
(i.e. the earliest taxable year for which an
amended return is filed), and for all subsequent taxable years for AMT purposes
if such method is used for the contract for
20
regular tax purposes. The installment
method may not be used to report income
from DPS contracts entered into prior to
the year of change for AMT purposes.
Any amount of income from a DPS contract entered into prior to the year of
change that was reported in a prior taxable year for AMT purposes, must be reflected as a negative AMT adjustment in
the taxable year that amount of income is
reported for regular tax purposes. Additionally, the minimum tax credit, if any,
reported on Form 8801, for the amended
return years must be recalculated.
Passthrough entities must reflect all adjustments on the Schedule K-1 issued to
partners, members, or shareholders.
SECTION 5. CONSENT TO CHANGE
METHOD OF ACCOUNTING
Taxpayers within the scope of this revenue procedure that comply with the procedures set forth in Section 4 of this revenue procedure have the consent of the
Commissioner to change to the installment method of accounting under § 453
for DPS contracts for AMT purposes.
SECTION 6. EFFECTIVE DATE
This revenue procedure is effective for
taxable years beginning after December
31, 1986.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Jonathan Strum of the Office
of Assistant Chief Counsel (Income Tax
and Accounting). For further information
regarding this revenue procedure, contact
Mr. Strum at (202) 622-4960 (not a tollfree call).
1998–49 I.R.B.
Part IV. Items of General Interest
Cafeteria Plans Election
Changes
Announcement 98–105
PURPOSE
The purpose of this document is to announce that the Internal Revenue Service
will delay the effective date of the cafeteria plan temporary regulations (1.125–4T)
and proposed regulations (1.125–4) published on November 7, 1997 at 62 F.R.
60165 and 62 F.R. 60196, respectively.
BACKGROUND
In 1984, the Service issued proposed
regulations that address certain issues
under section 125 of the Internal Revenue
Code. See 49 F.R. 19321. The proposed
regulations were amended in 1989. See
49 F.R. 50733. The proposed regulations
1998–49 I.R.B.
include rules relating to the circumstances
under which an employer can permit a
cafeteria plan participant to revoke an existing election with respect to accident or
health coverage or group term life insurance coverage and make a new election
during a cafeteria plan year. In 1997, the
Service issued proposed and temporary
regulations that modify and clarify the
change in election provisions of the pre1990 proposed regulations. The 1997
temporary regulations provide that they
will become effective for plan years beginning after December 31, 1998. The
preamble to the 1997 temporary regulations states that, pending this effective
date, taxpayers can rely on the 1997 temporary regulations as well as the pre-1990
proposed regulations.
The Service will amend the effective
date of the 1997 temporary regulations
and the 1997 proposed regulations so that
21
they will not be effective before plan
years beginning at least 120 days after
further guidance is issued. Thus, for example, in the case of a calendar year plan,
the 1997 temporary and proposed regulations will not be effective for 1999. Until
further guidance is issued, taxpayers can
rely on the change in election provisions
of the 1997 temporary regulations as well
as the change in election provisions of
section 1.125–2 of the pre-1990 proposed
regulations, and both alternatives are
available regardless of whether the plan
document has been amended to conform
with the 1997 temporary regulations.
Questions regarding this announcement
may be directed to Felix Zech in the Office of Associate Chief Counsel (Employee Benefits and Exempt Organizations) at (202) 622-4606 (not a toll-free
number).
December 7, 1998
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
effect:
Amplified describes a situation where
no change is being made in a prior published position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds
that the same principle also applies to B,
the earlier ruling is amplified. (Compare
with modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being 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.
Distinguished describes a situation
where a ruling mentions a previously
published ruling and points out an essential difference between them.
Modified is 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 ap-
plies to both A and B, the prior ruling is
modified because it corrects a published
position. (Compare with amplified and
clarified, above).
Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions. This term is most commonly used
in a ruling that lists previously published
rulings that are obsoleted because of
changes in law or regulations. A ruling
may also be obsoleted because the substance has been included in regulations
subsequently adopted.
Revoked describes situations where the
position in the previously published ruling is not correct and the correct position
is being stated in the new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a period of time in separate rulings. If the
new ruling does more than restate the
substance of a prior ruling, a combination
of terms is used. For example, modified
and superseded describes 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 published ruling is first
modified and then, as modified, is superseded.
Supplemented is 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 ruling has been supplemented
several times, a new ruling may be published that includes the list in the original
ruling and the additions, and supersedes
all prior rulings in the series.
Suspended is 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
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contribution Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign Corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedral Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
The following abbreviations in current use and formerly used will appear in material published in the
Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C.—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
December 7, 1998
22
1998–49 I.R.B.
Numerical Finding List1
Notices—Continued
Revenue Rulings—Continued
Bulletins 1998–29 through 48
98–51, 1998–44 I.R.B. 11
98–52, 1998–46 I.R.B. 16
98–53, 1998–46 I.R.B. 24
98–54, 1998–46 I.R.B. 25
98–55, 1998–46 I.R.B. 26
98–56, 1998–47 I.R.B. 9
98–57, 1998–47 I.R.B. 9
98–44, 1998–37 I.R.B. 4
98–45, 1998–38 I.R.B. 4
98–46, 1998–39 I.R.B. 10
98–47, 1998–39 I.R.B. 4
98–48, 1998–39 I.R.B. 6
98–49, 1998–40 I.R.B. 4
98–50, 1998–40 I.R.B. 7
98–51, 1998–43 I.R.B. 4
98–52, 1998–45 I.R.B. 4
98–53, 1998–46 I.R.B. 12
98–54, 1998–46 I.R.B. 14
98–55, 1998–47 I.R.B. 5
98–56, 1998–47 I.R.B. 5
Announcements:
98–62, 1998–29 I.R.B. 13
98–68, 1998–29 I.R.B. 14
98–69, 1998–30 I.R.B. 16
98–70, 1998–30 I.R.B. 17
98–71, 1998–30 I.R.B. 17
98–72, 1998–31 I.R.B. 14
98–73, 1998–31 I.R.B. 14
98–74, 1998–31 I.R.B. 15
98–75, 1998–31 I.R.B. 15
98–76, 1998–32 I.R.B. 64
98–77, 1998–34 I.R.B. 30
98–78, 1998–34 I.R.B. 30
98–79, 1998–34 I.R.B. 31
98–80, 1998–34 I.R.B. 32
98–81, 1998–36 I.R.B. 35
98–82, 1998–35 I.R.B. 17
98–83, 1998–36 I.R.B. 36
98–84, 1998–38 I.R.B. 30
98–85, 1998–38 I.R.B. 30
98–86, 1998–38 I.R.B. 31
98–87, 1998–40 I.R.B. 11
98–88, 1998–41 I.R.B. 14
98–89, 1998–40 I.R.B. 11
98–90, 1998–42 I.R.B. 22
98–91, 1998–40 I.R.B. 12
98–92, 1998–41 I.R.B. 15
98–93, 1998–43 I.R.B. 10
98–94, 1998–43 I.R.B. 32
98–95, 1998–44 I.R.B. 13
98–96, 1998–44 I.R.B. 18
98–97, 1998–44 I.R.B. 18
98–98, 1998–44 I.R.B. 18
98–99, 1998–46 I.R.B. 34
98–100, 1998–46 I.R.B. 42
98–101, 1998–45 I.R.B. 27
98–102, 1998–45 I.R.B. 28
98–103, 1998–47 I.R.B. 12
98–104, 1998–47 I.R.B. 13
98–106, 1998–48 I.R.B. 10
98–107, 1998–48 I.R.B. 10
98–108, 1998–48 I.R.B. 12
Court Decisions:
2063, 1998–36 I.R.B. 13
2064, 1998–37 I.R.B. 4
2065, 1998–39 I.R.B. 7
Notices:
98–36, 1998–29 I.R.B. 8
98–37, 1998–30 I.R.B. 13
98–38, 1998–34 I.R.B. 7
98–39, 1998–33 I.R.B. 11
98–40, 1998–35 I.R.B. 7
98–41, 1998–33 I.R.B. 12
98–42, 1998–33 I.R.B. 12
98–43, 1998–33 I.R.B. 13
98–44, 1998–34 I.R.B. 7
98–45, 1998–35 I.R.B. 7
98–46, 1998–36 I.R.B. 21
98–47, 1998–37 I.R.B. 8
98–48, 1998–39 I.R.B. 17
98–49, 1998–38 I.R.B. 5
98–50, 1998–44 I.R.B. 10
Railroad Retirement Quarterly Rate:
1998–31 I.R.B. 7
Proposed Regulations:
REG–209446–82, 1998–36 I.R.B. 24
REG–209060–86, 1998–39 I.R.B. 18
REG–209769–95, 1998–41 I.R.B. 8
REG–209813–96, 1998–35 I.R.B. 9
REG–246256–96, 1998–34 I.R.B. 9
REG–104641–97, 1998–29 I.R.B. 9
REG–104565–97, 1998–39 I.R.B. 21
REG–106177–97, 1998–37 I.R.B. 33
REG–109708–97, 1998–45 I.R.B. 29
REG–115446–97, 1998–36 I.R.B. 23
REG–116608–97, 1998–29 I.R.B. 12
REG–118926–97, 1998–39 I.R.B. 23
REG–118966–97, 1998–39 I.R.B. 29
REG–119227–97, 1998–30 I.R.B. 13
REG–122488–97, 1998–42 I.R.B. 19
REG–101363–98, 1998–40 I.R.B. 10
REG–102023–98, 1998–48 I.R.B. 6
REG–106221–98, 1998–41 I.R.B. 10
REG–110332–98, 1998–33 I.R.B. 18
REG–110403–98, 1998–29 I.R.B. 11
REG–115393–98, 1998–39 I.R.B. 34
Revenue Procedures:
Tax Conventions:
1998–43 I.R.B. 6
Treasury Decisions:
8771, 1998–29 I.R.B. 6
8772, 1998–31 I.R.B. 8
8773, 1998–29 I.R.B. 4
8774, 1998–30 I.R.B. 5
8775, 1998–31 I.R.B. 4
8776, 1998–33 I.R.B. 6
8777, 1998–34 I.R.B. 4
8778, 1998–36 I.R.B. 4
8779, 1998–36 I.R.B. 11
8780, 1998–39 I.R.B. 14
8781, 1998–40 I.R.B. 4
8782, 1998–41 I.R.B. 5
8783, 1998–41 I.R.B. 4
8784, 1998–42 I.R.B. 4
8785, 1998–42 I.R.B. 5
8786, 1998–44 I.R.B. 4
8787, 1998–46 I.R.B. 5
8788, 1998–45 I.R.B. 6
98–40, 1998–32 I.R.B. 6
98–41, 1998–32 I.R.B. 7
98–42, 1998–28 I.R.B. 9
98–43, 1998–29 I.R.B. 8
98–44, 1998–32 I.R.B. 11
98–45, 1998–34 I.R.B. 8
98–46, 1998–36 I.R.B. 21
98–47, 1998–37 I.R.B. 8
98–48, 1998–38 I.R.B. 7
98–49, 1998–37 I.R.B. 9
98–50, 1998–38 I.R.B. 8
98–51, 1998–38 I.R.B. 20
98–52, 1998–37 I.R.B. 12
98–53, 1998–40 I.R.B. 9
98–54, 1998–43 I.R.B. 7
98–55, 1998–46 I.R.B. 27
98–56, 1998–46 I.R.B. 33
98–57, 1998–48 I.R.B. 5
Revenue Rulings:
98–34, 1998–31 I.R.B. 12
98–35, 1998–30 I.R.B. 4
98–36, 1998–31 I.R.B. 6
98–37, 1998–32 I.R.B. 5
98–38, 1998–32 I.R.B. 4
98–39, 1998–33 I.R.B. 4
98–40, 1998–33 I.R.B. 4
98–41, 1998–35 I.R.B. 6
98–42, 1998–35 I.R.B. 5
98–43, 1998–36 I.R.B. 9
1 A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 1998–1 through 1998–28
will be found in Internal Revenue Bulletin 1998–29,
dated July 20, 1998.
1998–49 I.R.B.
23
December 7, 1998
Finding List of Current Action on
Previously Published Items1
Bulletins 1998–29 through 48
*Denotes entry since last publication
Notices:
87–13
Modified by
98–49, 1998–38 I.R.B. 5
87–16
Modified by
98–49, 1998–38 I.R.B. 5
Revenue Procedures:
83–58
Obsoleted by
98–37, 1998–32 I.R.B. 5
88–17
Clarified, modified, and superseded by
98–54, 1998–43 I.R.B. 7
94–23
Amplified and superseded by
98–55, 1998–46 I.R.B. 27
97–40
Amplified and superseded by
98–55, 1998–46 I.R.B. 27
97–60
Superseded by
98–50, 1998–38 I.R.B. 8
97–61
Superseded by
98–51, 1998–38 I.R.B. 20
98–14
Modified by
98–53, 1998–40 I.R.B. 9
Revenue Rulings:
57–271
Obsoleted by
98–37, 1998–32 I.R.B. 5
67–301
Modified by
98–41, 1998–35 I.R.B. 6
Revenue Rulings—Continued
Revenue Rulings—Continued
72–121
Obsoleted by
98–37, 1998–32 I.R.B. 5
72–122
Obsoleted by
98–37, 1998–32 I.R.B. 5
74–77
Obsoleted by
98–37, 1998–32 I.R.B. 5
75–19
Obsoleted by
98–37, 1998–32 I.R.B. 5
76–562
Obsoleted by
98–37, 1998–32 I.R.B. 5
77–214
Obsoleted by
98–37, 1998–32 I.R.B. 5
79–106
Obsoleted by
98–37, 1998–32 I.R.B. 5
83–113
Obsoleted by
98–37, 1998–32 I.R.B. 5
85–143
Obsoleted by
98–37, 1998–32 I.R.B. 5
88–8
Obsoleted by
98–37, 1998–32 I.R.B. 5
88–76
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–81
Obsoleted by
98–37, 1998–32 I.R.B. 5
88–79
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–4
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–5
Obsoleted by
98–37, 1998–32 I.R.B. 5
70–225
Obsoleted by
98–44, 1998–37 I.R.B. 4
93–6
Obsoleted by
98–37, 1998–32 I.R.B. 5
71–277
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–30
Obsoleted by
98–37, 1998–32 I.R.B. 5
71–434
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–38
Obsoleted by
98–37, 1998–32 I.R.B. 5
71–574
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–49
Obsoleted by
98–37, 1998–32 I.R.B. 5
72–75
Obsoleted by
98–37, 1998–32 I.R.B. 5
72–120
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–50
Obsoleted by
98–37, 1998–32 I.R.B. 5
3–91
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–92
Obsoleted by
98–37, 1998–32 I.R.B. 5
93–93
Obsoleted by
98–37, 1998–32 I.R.B. 5
94–5
Obsoleted by
98–37, 1998–32 I.R.B. 5
94–6
Obsoleted by
98–37, 1998–32 I.R.B. 5
94–30
Obsoleted by
98–37, 1998–32 I.R.B. 5
94–51
Obsoleted by
98–37, 1998–32 I.R.B. 5
94–79
Obsoleted by
98–37, 1998–32 I.R.B. 5
95–2
Obsoleted by
98–37, 1998–32 I.R.B. 5
95–9
Obsoleted by
98–37, 1998–32 I.R.B. 5
97–37
Obsoleted by
98–39, 1998–33 I.R.B. 4
93–53
Obsoleted by
98–37, 1998–32 I.R.B. 5
1 A cumulative finding list for previously published
items mentioned in Internal Revenue Bulletins
1998–1 through 1998–28 will be found in Internal
Revenue Bulletin 1998–29, dated July 20, 1998.
December 7, 1998
24
1998–49 I.R.B.
Index
Internal Revenue Bulletins
1998–1 Through 1998–48
The abbreviation and number in parenthesis following the index entry refer to
the specific item; numbers in roman and
italic type following the parenthesis refer
to the Internal Revenue Bulletin in which
the item may be found and the page
number on which it appears.
Key to Abbreviations:
RR
Revenue Ruling
RP
Revenue Procedure
TD
Treasury Decision
CD
Court Decision
PL
Public Law
EO
Executive Order
DO
Delegation Order
TDO
Treasury Department Order
TC
Tax Convention
SPR
Statement of Procedural
Rules
PTE
Prohibited Transaction
Exemption
EMPLOYMENT TAX
Magnetic media; electronic filing:
1998 Form W–4 specifications (RP 26)
13, 26
1998 Form 8027 (RP 52) 37, 12
Proposed regulations:
26 CFR 31.3121(v)(2)–1, revised;
FICA and FUTA taxation of amounts
under employee benefit plans (REG–
209484–87; REG–209807–95) 8, 40
26 CFR 31.3221–4, added; exception
from supplemental annuity tax on
railroad employers (REG–209769–
95) 41, 8
26 CFR 31.6053–1, –4; electronic tip
reports (REG–104691–97) 11, 13
26 CFR 31.6302–1(f)(4), revised; federal employment tax deposits de
minimis rule (REG–110403–98) 29,
11
Railroad retirement; rate determination;
quarterly beginning April 1, 1998 and
July 1, 1998 31, 7
Regulations:
26 CFR 1.6045–1T, –2T, removed;
1.6045–1, –2, amended; 301.6011–2,
amended; 301.6011–2T, removed;
magnetic filing requirements for information returns (TD 8772) 31, 8
1998–49 I.R.B.
EMPLOYMENT TAX—
Continued
EXCISE TAX—
Continued
26 CFR 31.6302–1(f)(4), 31.6302–1T,
added; federal employment tax deposits de minimis rule (TD 8771) 29,
6
Student FICA exception (RP 16) 5, 19
Worker classification; section 530; Tax
Court review (Notice 43) 33, 13
3, added; 48.4101–2, amended;
48.4101–3, 48.6427–10, –11, added;
kerosene tax, aviation fuel tax, tax
on heavy trucks and trailers (REG–
119227–97) 30, 13
26 CFR 53.4958; 301.6213–1,
301.6501(e)–1, 301.6501(n)–1,
301.7422–1, amended; 53.4958–0
through –7 and intermediary sections,
added; failure by certain charitable organizations to meet certain qualification requirements, taxes on excess
benefit transactions (REG–246256–
96) 34, 9
26 CFR 54.4980B–1, added; group
health plans continuation coverage
requirements (REG–209485–86) 11,
21
Regulations:
26 CFR 40.0–1(a), amended; 40.6011(a)
–1(a)(2)(iii), 40.5302(c)– 1, amended,
40.6302(c)–2(b)(2)(iii), added; deposits of excise taxes (TD 8740) 3, 4
26 CFR 40.6011(a)–1(b)(2)(vi),
amended; 48.4082–5T, removed;
48.4082–5, added; 48.4081–1,
amended; 48.4082–5T, redesignated;
48.6416(b)(4)–1, removed; 48.6421–
3(d)(2), amended; 48.6427–3(d)(2),
amended; 48.6715–1(a)(3), revised;
48.6715–2T, removed; gasoline and
diesel fuel excise tax; special rules for
Alaska, definitions (TD 8748) 8, 24
Regulations:
26 CFR 48.4081–1T, 48.4082–6T
through –10T and intermediary sections, 48.4091–3T, 48.4101–2T, –3T,
48.6427–10T, –11T, added; 145.4052–
1, amended; kerosene, aviation fuel,
heavy trucks and trailers tax (TD
8774) 30, 5
ESTATE TAX
Regulations:
26 CFR 20.2041–3, 20.2056(d)–2,
amended; 20.2046–1, revised; property interests and disclaimer (TD
8744) 7, 20
26 CFR 20.2044–1(e), added; 20.2044–
1T, removed; 20.2056(b)–7, revised;
20.2056(b)–7T, removed; 20.2056(b)–
10, revised; 20.2056(b)–10T, removed; certain property for which
marital deduction was previously allowed (TD 8779) 36, 11
26 CFR 25.2702–5, –7, amended; qualified prsonal residence trust, sale of
residence (TD 8743) 7, 26
26 CFR 25.2511–1, 25.2514–3,
25.2518–1, –2, amended; property
interests and disclaimers (TD 8744)
7, 20
Revocable trust; election (RP 13) 4, 21
Special use value; farms; interest rates
(RR 22) 19, 5
Underpayment interest, interest expense
deduction, estates (RP 15) 4, 25
Valuation of compensatory stock options
(RP 34) 18, 15
EXCISE TAX
Ad valorem tax, export clause (Ct.D.
2064) 37, 4
Bows and arrows; taxable and nontaxable
articles (RR 5) 2, 20
Deposit of excise taxes, amendment (Notice 36) 29, 8
Federal excise taxes for consular officers
and employees, exemption (RR 24) 19, 6
Proposed regulations:
26 CFR 40.0–1T, added; 40.6011(a)–
1T, added; 40.6302(c)–2T, added;
deposits of excise taxes (REG–
102894–97) 3, 59
26 CFR 48.4052–1, added; 48.4081–1,
amended; 48.4082–6 through –10
and intermediary sections, 48.4091–
25
GIFT TAX
Nonstatutory stock option, transfer (RR
21) 18, 7
Qualifying income interest, disposition
(RR 8) 7, 24
Valuation of compensatory stock options
(RP 34) 18, 15
INCOME TAX
Advance pricing agreements, small business taxpayers (Notice 10) 6, 9
December 7, 1998
INCOME TAX—Continued INCOME TAX—Continued INCOME TAX—Continued
Article XIII (8) Rev. Proc. (RP 21) 8, 27
Automobile owners and lessees (RP 24)
10, 31; (RP 30) 17, 6
Base period T-bill rate for 1998 (RR 55)
47, 5
Below-market loans; exempted loans;
second mortgage loans under the
MAHRA Act (RR 34) 31, 12
Books and records; automatic data processing system (RP 25) 11, 7
Business expenses:
Environmental remediation expenditures (RP 47) 37, 8
Underground waste storage tank (RR
25) 19, 4
Capital gains and charitable remainder
trusts (Notice 20) 13, 25
Classification settlement program:
Extended until further notice (Notice
21) 15, 14
Common Trust Funds, unrelated business
taxable income (RR 41) 35, 6
Credits against tax:
Earned income credit; disqualified income (RR 56) 47, 5
Deductions:
When taken:
All events test; accrued cooperative
advertising expenses (RR 39) 33,
4
Definition of former Indian reservations
in Oklahoma (Notice 45) 35, 7
Disclosure authorization list (RP 43) 29, 8
Distribution of stock and securities of a
newly formed controlled corporation;
limitations (RR 44) 37, 4
Domestic assets/liability and investment
yield percentages (RP 31) 23, 9
Education loans (Notice 7) 3, 54
Effective date of consolidated overall foreign loss provisions (Notice 40) 35, 7
Elections under section 7704(g) (Notice
3) 3, 48
Electronic Federal Tax Payment System:
Batch filers and bulk filers (RP 32) 17,
11
Electronic funds transfer; failure to deposit penalty (Notice 30) 22, 9
Employee plans:
Administrative programs; closing
agreements (RP 22) 12, 11
Determination letters (RP 6) 1, 183;
(RP 14) 4, 22
Determination letter requests, remedial
amendments (RP 53) 40, 9
December 7, 1998
Discrimination:
CODAs (Notice 1) 3, 42
Safe harbors (Notice 52) 46, 16
Eligible deferred compensation plans
(Notice 8) 4, 6
Funding:
Full funding limitations, weighted
average interest rate for January 1998 (Notice 9) 4, 8; February 1998 (Notice 15) 9, 8;
March 1998 (Notice 18) 12, 11;
April 1998 (Notice 26) 18, 14;
May 1998 (Notice 32) 22, 23;
June 1998 (Notice 33) 25, 10;
July 1998 (Notice 37) 30, 13;
August 1998 (Notice 44) 34, 7;
September 1998 (Notice 48)
39, 17; October 1998 (Notice
51) 44, 11; November 1998
(Notice 56) 47, 9
Group health plans; COBRA continuation coverage; HIPAA portability
(Notice 12) 5, 12
Individual retirement arrangements,
Roth IRAs (Notice 49) 38, 5; (Notice 50) 44, 10
Letter rulings, etc. (RP 4) 1, 113
Limit on contributions and benefits;
cost-of-living adjustments (Notice
53) 46, 24
Limitations on benefits and contributions (RR 1) 2, 5
Minimum Funding Standards (RP 10)
2, 35
Minimum:
Remedial amendments (RP 42) 28, 9
Net unrealized appreciation; capital
gains (Notice 24) 17, 5
Qualification (Notice 29) 22, 8;
CODAs (RR 30) 25, 8
Qualification:
Church plans (Notice 39) 33, 11
Covered compensation (RR 53) 46,
12
Recovery of basis; retirees (Notice 2)
2, 22
Section 457 model amendments (RP
41) 32, 7
Section 457 ruling program (RP 40)
32, 6
SIMPLE-IRAs (Notice 4) 2, 25
Technical advice (RP 5) 1, 155
User fees (RP 8) 1, 225
Enhanced oil recovery credit (Notice 41)
33, 12
Environmental cleanup costs; letter
rulings (RP 17) 5, 21
26
Exempt Organizations:
Letter rulings, etc. (RP 4) 1, 113
Organizations excepted from reporting
lobbying expenditures (RP 19) 7,
30
Tax consequences of physicians recruitment incentives provided by
hospitals (RR 15) 12, 6
Technical advice (RP 5) 1, 155
User fees (RP 8) 1, 225
Failure to deposit federal tax; penalty
abatement (Notice 14) 8, 27
Foreign partnerships, reporting transfer of
property by U.S. persons (Notice 17)
11, 6
Foreign tax credit abuse (Notice 5) 3, 49
Form 1040:
e-file program (RP 50) 38, 8
On-line filing program (RP 51) 38, 20
Fringe benefits aircraft valuation formula,
first half of 1998 (RR 14) 11, 4;
second half of 1998 (RR 40) 33, 4
Fuel from a nonconventional source,
credit; section 29 inflation adjustment;
reference price for 1997 (Notice 28)
19, 7
Hybrid arrangements, treatment under
subpart F (Notice 35) 27, 35
Identification of census tracts in District
of Columbia Enterprise Zone (Notice
57) 47, 9
Information reporting:
Hope Scholarship and Lifetime Learning credits (Notice 46) 36, 21
Qualified student loan interest (Notice
54) 46, 25
Insurance companies:
Differential earnings rate and recomputed differential earnings rate for
mutual life insurance companies (RR
38) 32, 4
Discounting estimated salvage recoverable (RP 12) 4, 18
Interest rate tables (RR 2) 2, 15
Loss reserves; discounting unpaid
losses (RP 11) 4, 9
“Reserve strengthening,” reasonable
interpretation (Ct.D. 2065) 39, 7
International operation of ships and/or
aircraft, United Arab Emirates, 43, 6
Interest:
Investment:
Federal short-term, mid-term, and
long-term rates for January 1998
(RR4) 2, 18; February 1998 (RR
7) 6, 6; March 1998 (RR 11) 10,
1998–49 I.R.B.
INCOME TAX—Continued INCOME TAX—Continued INCOME TAX—Continued
13; April 1998 (RR 18) 14, 22;
May (RR 23) 18, 5; June 1998
(RR 28) 22, 5; July 1998 (RR 33)
27, 26; August 1998 (RR 36) 31,
6; September 1998 (RR 43) 36, 9;
October 1998 (RR 50) 40, 7; November 1998 (RR 52) 45, 4
Rates, underpayments and overpayments (RR 17) 13, 21; calendar
quarter beginning July 1, 1998
(RR 32) 25, 4; calendar quarter
beginning October 1, 1998 (RR
46) 39, 10
Inventory:
LIFO:
Automobile and truck dealers (RP
46) 36, 21
Price indexes; department stores for
November 1997 (RR 6) 4, 4; December 1997 (RR 9) 6, 5; January
1998 (RR 16) 13, 18; February
1998 (RR 20) 15, 8; March 1998
(RR 26) 21, 4; April 1998 (RR
29) 24, 4; May 1998 (RR 35) 30,
4; June 1998 (RR 42) 35, 5; July
1998 (RR 48) 39, 6; August 1998
(RR 51) 43, 4; September 1998
(RR 54) 46, 14
Price indexes; inventory price computation method (RP 49) 37, 9
Shrinkage estimates:
Changing method of accounting for
estimating inventory shrinkage
(RP 29) 15, 22
Late election relief for S corporations (RP
55) 46, 27
Letter rulings, determination letters, and
information letters issued by Associate
Chief Counsel (Domestic), Associate
Chief Counsel (EBEO), Associate
Chief Counsel (Enforcement Litigation), and Associate Chief Counsel
(International) (RP 1) 1, 7
Lien for taxes; validity and priority against
third parties; judgment creditor (Ct.D.
2063) 36, 13
Losses attributable to a disaster during
1997 (RR 12) 10, 5
Low-income housing tax credit (Notice
13) 6, 19; (RP 45) 34, 8
Low-income housing credit:
HUD programs (RR 49) 40, 4
Satisfactory bond; “bond factor”
amounts for the period October
through December 1997 (RR 3) 2, 4;
January–March 1998 (RR 13) 11, 4;
April-June 1998 (RR 31) 25, 4; JulySeptember 1998 (RR 45) 38, 4
1998–49 I.R.B.
Magnetic media/electronic filing:
1998 Forms 1098, 1099, 5498, and
W–2G specifications (RP 35) 19,
6
Form 1040NR (RP 36) 23, 10
Marginal production rates (Notice 42) 33,
12
Methods of accounting; involuntary
changes (Notice 31) 22, 10
Package design; amortization; capitalization; amortizable section 197 intangible
(RP 39) 26, 36
Passive foreign investment companies:
Shareholders may use rules of sec.
1.1295–1T(b)(4), (f), and (g) to taxable years beginning before January
1, 1998 (Notice 22) 17, 5
Private letter rulings under sections 877,
2107, and 2501(a)(3)(Notice 34) 27, 30
Proposed regulations:
26 CFR 1.32–3, added; EIC eligibility
requirements (REG–116608–97) 29,
12
26 CFR 1.62–2(e)(2), revised; 1.62–2T,
removed; 1.274–5, added; –5T,
1.274(d)–1, amended; substantiation
of business expenses, use of mileage
rates to substantiate automobile expenses (REG–122488–97) 42, 19
26 CFR 1.72(p)–1, amended; loans to
plan participants (REG–209476–82)
8, 36
26 CFR 1.83–6, 1.1032–2, amended;
1.1032–3, added; treatment of a disposition by one corporation of the
stock of another corporation in a taxable transaction (REG–106221–98)
41, 10
26 CFR 1.141–7, 1.142(f)(4)–1, 1.150–
5, added; 1.141–8, –15, amended;
obligations of states and political
subdivisions (REG–110965–97) 13,
42
26 CFR 1.195–1, added; election to
amortize start-up expenditures
(REG–209373–81) 14, 26
26 CFR 1.356–6, added; reorganizations, nonqualified preferred stock
(REG–121755–97) 9, 13
26 CFR 1.368–1, amended; corporate
reorganizations, continuity of interest (REG–120882–97) 14, 25
26 CFR 1.401(a)(9)–1, amended; qualified plans and individual retirement
plans, required distributions (REG–
209463–82) 4, 27
27
26 CFR 1.408A–0 through –9 and intermediary sections, added; Roth
IRAs, questions and answers
(REG–115393–98) 39, 34
26 CFR 1.417(e)–1 and paragraph (d),
revised; 1.417(e)–1T and paragraph
(d), revised; valuation of plan distributrions (TD 8768) 20, 4
26 CFR 1.460–6, amended; election
not to apply look-back method in de
minimis cases (REG–120200–97)
12, 32
26 CFR 1.469–10, revised; 1.7704–1,
added; investment income, passive
activity income and loss rules for
publicly traded partnerships
(REG–105163–97) 8, 31
26 CFR 1.475(g)–2, new; 1.482–8,
added; 1.482–0, –1, –2, 1.863,
1.863–7(a)(1), 1.864–4, –6, 1.894–1,
amended; 1.482–9, redesignated;
global dealing operation allocation
and sourcing of income and deductions among taxpayers (REG–
208299–90) 16, 26
26 CFR 1.513–7, added; travel and tour
activities of tax exempt organizations (REG–121268–97) 20, 12
26 CFR 1.529–0 through –6 and intermediary sections, added; Qualified
State Tuition Programs (REG–
106177–97) 37, 33
26 CFR 1.671–4, 1.6049–7, 301.6109–
1, amended; reporting requirements
for widely held fixed investment
trusts (REG–209813–96) 35, 9
26 CFR 1.702–1, 1.954–1, 301.7701–3,
amended; 1.952–1(b), (c), redesignated 1.954–2(a)(5), (6), 1.954–
4(b)(2)(iii), 1.954–9, 1.956–2(a)(3),
added (REG–104537–97) 16, 21
26 CFR 1.732–1, amended; 1.732–2,
amended; 1.734–1(e), added; 1.743–
1, revised; 1.751–1, amended;
1.755–1, revised; 1.1017–1, revised;
adjustments to basis of partnership
property and partnership interest
(REG–209682–94) 17, 20
26 CFR 1.864(b)–1; trading safe harbors (REG–106031–98) 26, 38
26 CFR 1.925(a)–1, (b)–1, added;
1.927(e)–1, amended; foreign sales
corporation transfer pricing source
and grouping rules (REG–102144–
98) 15, 25
26 CFR 1.936–1T, added; termination
of Puerto Rico and possession tax
December 7, 1998
INCOME TAX—Continued INCOME TAX—Continued INCOME TAX—Continued
credit, new lines of business prohibited (REG–115446–97) 36, 23
26 CFR 1.985–8, 1.1001–5, added;
conversion to the euro (REG–
110332–98) 33, 18
26 CFR 1.1092(c)–1, added; equity options without standard terms, special
rules and definitions (REG–104641–
97) 29, xx
26 CFR 1.1291–1, 1.1293–1, 1.1295–1,
–3, 1.1297–3(c), added; 1.1296–4,
amended; passive foreign investment
company preferred shares, special
income exclusion (REG–115795–
97) 8, 33
26 CFR 1.1361–0, amended; 1.1361–1,
amended; 1.1361–1(d)(3), removed;
1.1361–2 through –6 and intermediary sections, added; 1.1362–0,
amended; 1.1362–2, amended;
1.1362–8, added; 1.1368–0,
amended; 1.1368–2(d)(2), amended;
1.1374–8(b), amended; S corporation subsidiaries (REG–251698–96)
20, 14
26 CFR 1.1366–1, –2, removed;
1.1366–0 through –5 and intermediary sections, added; 1.1367–0, –1,
amended; 1.1367–3, removed;
1.1368–0, –1, –2, –3, amended;
1.1368–4, revised; pass through of
items of an S corporation to its shareholders (REG–209446– 82) 36, 24
26 CFR 1.1397E–1, added; qualified
zone academy bonds (REG–
119449–97) 10, 35
26 CFR 1.1502–3(c), revised; 1.1502–
4(f)(3), (g)(3), added; 1.1502–9(b)(1)(v), added; 1.1502–21(c)(1)(iii),
amended; consolidated returns, limitations on the use of certain losses
and credits (REG–104062–97) 10, 34
26 CFR 1.6031–1, removed; 1.6031(a)–
1, added; 1.6063–1, amended; partnership returns (REG–209322–82)
15, 26
26 CFR 1.6031(a)–1(e)(1)(iv), added;
301.6011–3, added; 301.6031–1, revised; 301.6721–1, amended; partnership returns required on magnetic
media (REG–102023–98) 48, 6
26 CFR 1.6038B–1, amended; 1.6038B–
2, added; reporting of certain transfers
to foreign corporations and foreign
partnerships (REG– 118926–97) 39,
23
December 7, 1998
26 CFR 1.6038–3, added; information
returns for certain foreign partnerships (REG–118966–97) 39, 29
26 CFR 1.6046A–1, added; return requirement for U.S. persons owning
interests in foreign partnerships
(REG–209060–86) 39, 18
26 CFR 1.7702B–1, –2, added; qualified long-term care insurance contracts (REG–109333–97) 9, 9
26 CFR 54.9811–1, added; HIPAA
Newborns’ and Mothers’ Health Protection Act (REG–109708–97) 45,
29
26 CFR 54.9812–1, added; mental
health parity; HIPAA (REG–
109704–97) 3, 60
26 CFR 301.6159–1, amended; agreements for tax liability installment
payments (REG–100841–97) 8, 30
26 CFR 301.6402–5(h), added; –6(n),
revised; tax refund offset program
(REG–104565–97) 39, 21
26 CFR 301.6404–2, added; abatement
of interest (REG–209276–87) 11, 18
26 CFR 301.7433–1(a), (d), (e), and
(f), revised; civil cause of action for
certain unauthorized collection actions (REG–251502–96) 9, 14
Qualified Funeral Trust; guidance (Notice
6) 3, 52
Qualified intermediary agreements:
Guidance provided to foreign financial
institutions (RP 27) 15, 15
Qualified mortgage bonds, mortgage
credit certificates:
Guidance provided regarding use of national and area median gross income
figures by issuers (RP 28) 15, 14
Qualified offer rule; award of administrative and litigation costs (Notice 55) 46,
26
Qualified Subchapter S Trust (QSST)
conversion to Electing Small Business
Trust (ESBT) 10, 30
Qualified Zone Academy Bonds (RP) 3,
100; limitations for 1999 (RP 57) 48, 5
Real estate transactions (RP 20) 7, 32
Regulations:
26 CFR 1.32–3T, added; EIC eligibility
requirements (TD 8773) 29, 4
26 CFR 1.61–12, 1.249–1, 1.1016–5,
1.1275–1, amended; 1.163–13,
1.171–5, added; 1.171–1, –2, –3, –4,
revised; 1.1016–9, removed; amortizable bond premium (TD 8746) 7, 4
28
26 CFR 1.108–4, added; 1.108(c)–1,
redesignated; 1.108–6, added;
1.108(a)–1, –2, –(b)–1, 1.1016–7,
–8, removed; 1.1017–1, revised;
1.1017–2, removed; 301.9100–13T,
removed; basis reduction due to discharge of indebtedness (TD 8787)
46, 5
26 CFR 1.141–0, –2, amended;
1.141–7, –8, removed; 1.141–7T,
–8T, –15T, 1.142(f)(4)–1T, 1.150–
5T, added; 1.141–15, revised; obligations of states and political subdivisions (TD 8757) 13, 4
26 CFR 1.166–3(a)(3), 1.1001–4,
added; 1.166–3T, 1.1001–4T, removed; modifications of bad debts
and dealer assignments of notional
principal contracts (TD 8763) 15, 5
26 CFR 1.280B–1, added; building demolition, definition of structure (TD
8745) 7, 15
26 CFR 1.338–2, 1.368–1, –2,
amended; 1.368–1T, added; corporate reorganizations, continuity of interest, and continuity of business enterprise (TD 8760) 14, 4; (TD 8761)
14, 13
26 CFR 1.354–1, 1.355–1, 1.356–3,
amended; reorganizations, treatment
of warrants as securities (TD 8752)
9, 4
26 CFR 1.356–6T, added; reorganizations, nonqualified preferred stock
(TD 8753) 9, 6
26 CFR 1.367(a)–1T, –3, amended;
1.367(a)–3T, removed; 1.367(a)–8,
1.367(b)–1, –4, added; 1.367(d)–1T,
amended; 1.6038B–1, added;
1.6038B–1T; 7.367(b)–1, –4, –7,
amended; certain transfers of stock
or securities by U.S. persons to foreign corporations (TD 8770) 27, 4
26 CFR 1.368–1(e)(6), revised; continuity of interest requirement for corporate reorganizations (TD 8783) 41,
4
26 CFR 1.411(d)–4, amended; permitted elimination of preretirement optional forms of benefit (TD 8769)
28, 4
26 CFR 1.446–1, amended; 1.446–1T,
removed; 301.9100–0, added;
301.9100–1, revised; 301.9100–2,
–3, added; 301.9100–1T, –2T, –3T;
removed extensions of time to make
elections (TD 8742) 5, 4
1998–49 I.R.B.
INCOME TAX—Continued INCOME TAX—Continued INCOME TAX—Continued
26 CFR 1.453.11; installment obligations received from liquidating corporations (TD 8762) 14, 15
26 CFR 1.460–0, amended; 1.460–6T,
added; election not to apply lookback method in de minimis cases
(TD 8756) 12, 4
26 CFR 1.460–6T, removed;
1.460–6(i), (j), added; election not to
apply look-back method in de minimis cases (TD 8775) 31, 4
26 CFR 1.465–27, added; qualified
nonrecourse financing under section
465(b)(6) (TD 8777) 34, 4
26 CFR 1.468A–2, –3, –8, amended;
nuclear decommissioning funds; revised schedules of ruling amounts
(TD 8758) 13, 15
26 CFR 1.861–18, added; classification
of certain transactions involving
computer programs (TD 8785) 42, 5
26 CFR 1.863–3, revised; 1.936–4, –5,
–6, –7, removed; 1.863–3(f), (h),
amended; 1.936–6(a)(5) Q and A 7a,
added; source of income from sales
of inventory (TD 8786) 44, 4
26 CFR 1.904–5(o), 1.904–5T, 1.954–
0(b), 1.954–1, amended; 1.954–1T,
–2T, –9T, added; 301.7701–3(f)(1),
amended; controlled foreign corporation relating to partnerships and
branches (TD 8767) 16, 4
26 CFR 1.905–2, amended; foreign tax
credit filing requirements (TD 8759)
13, 19
26 CFR 1.925(a)–1T, 1.925(b)–
1T(b)(3)(i), amended; 1.927(e)–1T,
revised; foreign sales corporation
transfer pricing source and grouping
rules (TD 8764) 15, 9
26 CFR 1.927(e)–1T, removed;
1.927(e)(1), added; source rules for
foreign sales corporation transfer
pricing (TD 8782) 41, 5
26 CFR 1.936–11T, added; termination
of Puerto Rico and possession tax
credit; new lines of business prohibited (TD 8778) 36, 4
26 CFR 1.985–1, –5(a), amended;
1.985–7, added; dollar approximate
separate transactions method of accounting (DASTM) to profit and loss
method of accounting, change from
P&L method to DASTM (TD 8765)
16, 11
1998–49 I.R.B.
26 CFR 1.1271–1, 1.1275–1, amended;
debt instruments with original issue
discount, annuity contracts (TD
8754) 10, 15
26 CFR 1.1202–0, –2, added; qualified
small business stock (TD 8749) 7,
16
26 CFR 1.1290–0, amended; 1.1294–0,
added; a. 1291–0T, amended;
1.1291–1T, added; 1.1291–9,
amended; 1.1293–0, –1T, added;
1.1295–0, –1T, –3T, 1.1297–3T(c),
added; passive foreign investment
company preferred shares, special
income exclusion (TD 8750) 8, 4
26 CFR 1.1396–1; empowerment zone
employment credit, qualified zone
employees (TD 8747) 7, 18
26 CFR 1.1397E–1T, added; qualified
zone academy bonds (TD 8755) 10,
21
26 CFR 1.1502–3, –4, –9(a), –21T(c)(1)(iii), amended; 1.1502– 3T, –4T,
–9T, –55T, added; 1.1502– 23T(b),
(c), redesignated; consolidated returns, limitations on the use of certain losses and credits, overall foreign loss accounts (TD 8751) 10, 23
26 CFR 54.9801–1T, amended; –2, revised; 54.9811–1T, added; 54.9831–
1T(b)(1), revised; interim rules for
group health plans and health insurance issuers under the Newborns’
and Mothers’ Health Protection Act
(TD 8788) 45, 6
26 CFR 54.9801–2T, amended;
54.9801–4T, –5T, revised; 54.9804–
1T, redesignated; 54.9806–1T, redesignated; 54.9812–1T, added; mental
health parity, interim rules (TD
8741) 3, 6
26 CFR 301.7623–1, revised;
301.7623–1T, removed; rewards for
information relating to violations of
internal revenue laws (TD 8780) 39,
14
Relocation payments:
Authorized by sec. 105(a)(11) of Housing and Community Development
Act, not includible in gross income
(RR 19) 15, 5
Renewable electricity production credit;
calendar year 1998 inflation adjustment
factor and reference prices. (Notice 27)
18, 14
29
Reorganizations; exchange of securities
(RR 10) 10, 11
Reproduction of Forms 1096, 1098, 1099,
5498, and W–2G (RP 37) 26, 6
Rescission of notice deficiency (RP 54)
43, 7
Residential rental property, exempt facility bond (RR 47) 39, 4
Rulings:
Areas in which advance rulings will not
be issued:
Associate Chief Counsel (Domestic), Associate Chief Counsel
(EBEO) (RP 3) 1, 100
Associate Chief Counsel (International) (RP 7) 1, 222
Obsolete (RR 37) 32, 5
Rural airports (RP 18) 6, 20
Sales or exchanges:
Qualified small business stock (RP 48)
38, 7
Section 1374 no-rule (RP 56) 46, 33
Social security benefits under U.S.Canada treaty, recent changes (Notice
23) 18, 9
Specifications for filing Form 1042–S
(RP 44) 32, 11
Spin-off of subsidiary (RR 27) 22, 4
SRLY notice (Notice 38) 34, 7
Technical advice to district directors and
chiefs, appeals offices, Associate Chief
Counsel (Domestic), Associate Chief
Counsel (EBEO), Associate Chief
Counsel (Enforcement Litigation), and
Associate Chief Counsel (International)
(RP 2) 1, 74
Tentative differential earnings rate for
1997 (Notice 19) 13, 24
Timely filing or payment; private delivery
services (Notice 47) 37, 8
Treatment of hybrid arrangements under
subpart F (Notice 11) 6, 18
Trust, election to treat U.S. person;
domestic trust (Notice 25) 18, 11
Waiver of period of stay in foreign country (RP 38) 27, 29
Withholding regulations:
Effective date of sec. 1441 withholding
regulations amended (Notice 16) 15,
12
December 7, 1998
Notes
December 7, 1998
30
1998–49 I.R.B.
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