INCOME TAXRev. Rul. 2000–7, page 712.Removal costs, capital expenditures. This ruling holdsthat if the retirement and removal of a depreciable asset oc-curs in connection with the installation or production of a re-placement asset, the costs incurred in removing the retiredasset are not required to be capitalized under section 263or 263A of the Code as part of the cost of the replacementasset. Rev. Proc. 99–49 modified and amplified.

EMPLOYEE PLANS

T.D. 8873, page 713.Final regulations under sections 402(f), 411(a)(11), and3405(e) of the Code provide applicable standards for trans-mitting certain notices and consents through electronicmedia and modify the timing requirements for providing cer-tain distribution-related notices.

Notice 2000–2, page 727.Weighted average interest rate update. Guidelines are setforth for determining the weighted average interest rate forFebruary 2000 and the resulting permissible range of interestrates used to calculate current liability for purposes of the fullfunding limitation under section 412(c)(7) of the Code.

EMPLOYMENT TAX

Page 721.Railroad retirement; rate determination; quarterly. TheRailroad Retirement Board has determined that the rate oftax imposed by section 3221 of the Code shall be 26 1/2cents for the quarter beginning January 1, 2000.

ADMINISTRATIVE

Rev. Proc. 2000–18, page 722.Automobile owners and lessees. This procedure providesowners and lessees of passenger automobiles (includingelectric automobiles) with tables detailing the limitations ondepreciation deductions for automobiles first placed in ser-vice during calendar year 2000 and the amounts to be in-cluded in income for automobiles first leased during calen-dar year 2000. In addition, this revenue procedure providesthe maximum allowable value of employer-provided automo-biles first made available to employees for personal use incalendar year 2000 for which the vehicle cents-per-mile valu-ation rule provided under section 1.61–21(e) of the IncomeTax Regulations may be applicable.

Internal Revenue

bbuulllleettiinnBulletin No. 2000–9February 28, 2000

HIGHLIGHTSOF THIS ISSUEThese synopses are intended only as aids to the reader inidentifying the subject matter covered. They may not berelied upon as authoritative interpretations.

Department of the TreasuryInternal Revenue Service

Actions Relating to Court Decisions is on the page following the Introduction.Finding Lists begin on page ii.

(Continued on next page)

February 28, 2000 2000–9 I.R.B.

ADMINISTRATIVE—Continued

Notice 2000–12, page 727.Pilot pre-filing agreement program. This notice announcesa pilot program for Pre-Filing Agreements (PFAs) under whichlarge business taxpayers may request examination and resolu-tion of specific issues relating to tax returns they expect to filebetween September and December 2000.

Notice 2000–13, page 732.Low-income housing tax credit. Resident population fig-ures for the states, Puerto Rico, and the insular areas (Amer-ican Samoa, Guam, Northern Mariana Islands, and the U.S.Virgin Islands) for determining the 2000 calendar year (1)

state housing credit ceiling under section 42(h) of the Code,and (2) private activity bond volume cap under section 146,are reproduced.

Announcement 2000–9, page 733.This document contains a correction to Notice 2000–4(2000–3 I.R.B. 313) in which an erroneous address wasgiven for comments to be submitted electronically.

Announcement 2000–10, page 733.This announcement contains a change to the date and timeof a public hearing relating to proposed regulations(REG–116733–98, 1999–36 I.R.B. 392) under section355(e) of the Code. The original public hearing on January26, 2000, has been rescheduled for March 2, 2000.

2000–9 I.R.B. February 28, 2000

The Internal Revenue Bulletin is the authoritative instrumentof the Commissioner of Internal Revenue for announcing offi-cial rulings and procedures of the Internal Revenue Serviceand for publishing Treasury Decisions, Executive Orders, TaxConventions, legislation, court decisions, and other items ofgeneral interest. It is published weekly and may be obtainedfrom the Superintendent of Documents on a subscriptionbasis. Bulletin contents are consolidated semiannually intoCumulative Bulletins, which are sold on a single-copy basis.

It is the policy of the Service to publish in the Bulletin all sub-stantive rulings necessary to promote a uniform applicationof the tax laws, including all rulings that supersede, revoke,modify, or amend any of those previously published in theBulletin. All published rulings apply retroactively unless other-wise indicated. Procedures relating solely to matters of in-ternal management are not published; however, statementsof internal practices and procedures that affect the rightsand duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service onthe application of the law to the pivotal facts stated in therevenue ruling. In those based on positions taken in rulingsto taxpayers or technical advice to Service field offices,identifying details and information of a confidential natureare deleted to prevent unwarranted invasions of privacy andto comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not havethe force and effect of Treasury Department Regulations,but they may be used as precedents. Unpublished rulingswill not be relied on, used, or cited as precedents by Servicepersonnel in the disposition of other cases. In applying pub-lished rulings and procedures, the effect of subsequent leg-islation, regulations, court decisions, rulings, and proce-

dures must be considered, and Service personnel and oth-ers concerned are cautioned against reaching the same con-clusions in other cases unless the facts and circumstancesare substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.This part includes rulings and decisions based on provisionsof the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.This part is divided into two subparts as follows: Subpart A,Tax Conventions, and Subpart B, Legislation and RelatedCommittee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.To the extent practicable, pertinent cross references tothese subjects are contained in the other Parts and Sub-parts. Also included in this part are Bank Secrecy Act Admin-istrative Rulings. Bank Secrecy Act Administrative Rulingsare issued by the Department of the Treasury’s Office of theAssistant Secretary (Enforcement).

Part IV.—Items of General Interest.This part includes notices of proposed rulemakings, disbar-ment and suspension lists, and announcements.

The first Bulletin for each month includes a cumulative indexfor 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 semi-annual period, respectively.

The IRS Mission

Provide America’s taxpayers top quality service by help-ing them understand and meet their tax responsibilities

and by applying the tax law with integrity and fairness toall.

Introduction

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.

February 28, 2000 2000–9 I.R.B.

It is the policy of the Internal RevenueService to announce at an early datewhether it will follow the holdings in cer-tain cases. An Action on Decision is thedocument making such an announcement.An Action on Decision will be issued atthe discretion of the Service only on un-appealed issues decided adverse to thegovernment. Generally, an Action on De-cision is issued where its guidance wouldbe helpful to Service personnel workingwith the same or similar issues. Unlike aTreasury Regulation or a Revenue Ruling,an Action on Decision is not an affirma-tive statement of Service position. It is notintended to serve as public guidance andmay not be cited as precedent.

Actions on Decisions shall be reliedupon within the Service only as conclu-sions applying the law to the facts in theparticular case at the time the Action onDecision was issued. Caution should beexercised in extending the recommenda-tion of the Action on Decision to similarcases where the facts are different. More-over, the recommendation in the Actionon Decision may be superseded by newlegislation, regulations, rulings, cases, orActions on Decisions.

Prior to 1991, the Service published ac-

quiescence or nonacquiescence only incertain regular Tax Court opinions. TheService has expanded its acquiescenceprogram to include other civil tax caseswhere guidance is determined to be help-ful. Accordingly, the Service now may ac-quiesce or nonacquiesce in the holdingsof memorandum Tax Court opinions, aswell as those of the United States DistrictCourts, Claims Court, and Circuit Courtsof Appeal. Regardless of the court decid-ing the case, the recommendation of anyAction on Decision will be published inthe Internal Revenue Bulletin.

The recommendation in every Actionon Decision will be summarized as ac-quiescence, acquiescence in result only,or nonacquiescence. Both “acquies-cence” and “acquiescence in result only”mean that the Service accepts the holdingof the court in a case and that the Servicewill follow it in disposing of cases withthe same controlling facts. However, “ac-quiescence” indicates neither approvalnor disapproval of the reasons assignedby the court for its conclusions; whereas,“acquiescence in result only” indicatesdisagreement or concern with some or allof those reasons. “Nonacquiescence” sig-nifies that, although no further review

was sought, the Service does not agreewith the holding of the court and, gener-ally, will not follow the decision in dis-posing of cases involving other taxpay-ers. In reference to an opinion of a circuitcourt of appeals, a “nonacquiescence” in-dicates that the Service will not followthe holding on a nationwide basis. How-ever, the Service will recognize theprecedential impact of the opinion oncases arising within the venue of the de-ciding circuit.

The Actions on Decisions published inthe weekly Internal Revenue Bulletin areconsolidated semiannually and appear inthe first Bulletin for July and the Cumu-lative Bulletin for the first half of theyear. A semiannual consolidation also ap-pears in the first Bulletin for the follow-ing January and in the Cumulative Bul-letin for the last half of the year.

The Commissioner NONACQUI-ESCES in the following decision:

Simpson v. United States,1

183 F.3d 812 (8th Cir. 1999), rev’g17 F. Supp. 2d 972 (W.D. Mo. 1998)

Actions Relating to Court Decisions

1 Nonacquiescence relating to whether a transfer of property to decedent’s grandchildren, pursuant to decedent’s exercise of a general testamentary power of appoint-ment, was exempt from the generation-skipping transfer (GST) tax under the effective date provisions in the Tax Reform Act of 1986 (TRA 86).

February 28, 2000 712 2000–9 I.R.B.

Section 61.—Gross IncomeDefined

26 CFR 1.61–21: Taxation of fringe benefits.

This procedure provides the maximum value of em-ployer-provided automobiles first made available toemployees for personal use in calendar year 2000 forwhich the vehicle cents-per-mile valuation rule pro-vided under §1.61–21(e) of the Income Tax Regulationsmay be applicable. See Rev. Proc. 2000–18, page 722.

Section 162.—Trade or BusinessExpenses

26 CFR 1.162–1: Business expenses.

If the retirement and removal of a depreciable assetoccurs in connection with the installation or productionof a replacement asset, are the costs incurred in remov-ing the retired asset required to be capitalized under §263(a) or 263A as part of the cost of the replacementasset? See Rev. Rul. 2000–7, page 712.

Section 165.—Losses

26 CFR 1.165–3: Demolition of buildings.

If the retirement and removal of a depreciableasset occurs in connection with the installation orproduction of a replacement asset, are the costs in-curred in removing the retired asset required to becapitalized under § 263(a) or 263A as part of thecost of the replacement asset? See Rev. Rul. 2000–7,page 712.

Section 167.—Depreciation

26 CFR 1.167(a)–8: Retirements.

If the retirement and removal of a depreciableasset occurs in connection with the installation orproduction of a replacement asset, are the costs in-curred in removing the retired asset required to becapitalized under § 263(a) or 263A as part of thecost of the replacement asset? See Rev. Rul. 2000–7,page 712.

Section 263.—CapitalExpenditures

26 CFR 1.263(a)–1: Capital expenditures; ingeneral. (Also §§ 162, 165, 167, 263A; 1.165–3,1.167(a)–8, 1.167(a)–11, 1.263A–1)

Removal costs, capital expenditures.This ruling holds that if the retirement andremoval of a depreciable asset occurs inconnection with the installation or pro-

duction of a replacement asset, the costsincurred in removing the retired asset arenot required to be capitalized under sec-tion 263 or 263A of the Code as part ofthe cost of the replacement asset.

Rev. Rul. 2000–7

ISSUE

If the retirement and removal of a de-preciable asset occurs in connection withthe installation or production of a replace-ment asset, are the costs incurred in re-moving the retired asset required to becapitalized under section 263(a) or 263Aas part of the cost of the replacementasset?

FACTS

The assets of X, a telephone company,include telephone poles A and B. Xplaced Pole A in service in 1979 on land itowned. X placed Pole B in service in1982 on land owned by Y under the termsof an easement permitting X to have onepole on Y’s land. In 2000, X undertakes aproject to replace telephone poles in theservice area in which Pole A is situated.As part of that project, X incurs costs in2000 in removing and discarding Pole Aand installing a new telephone pole, PoleC, in the same location. X also undertakesa second project to replace telephonepoles in the service area in which Pole Bis situated. X installs a new telephonepole, Pole D, on Y’s land, but not in thesame location as Pole B. As part of thissecond project and to comply with theeasement, X incurs costs in 2000 in re-moving and discarding Pole B.

LAW AND ANALYSIS

Section 162 of the Internal RevenueCode and § 1.162–1 of the Income TaxRegulations generally allow a deductionfor all the ordinary and necessary ex-penses paid or incurred during the taxableyear in carrying on any trade or business.

Section 165 allows as a deduction anyloss sustained during the taxable year andnot compensated for by insurance or oth-erwise. For the allowance under § 165(a)of losses arising from the permanent with-drawal of depreciable property from use

in a trade or business or in the productionof income, § 1.165–2(c) cross references§ 1.167(a)–8(a), which permits, in part, aloss from physical abandonment of retiredproperty.

Under §§ 263(a) and 1.263(a)–1(a), nodeduction is allowed for capital expendi-tures, such as amounts paid for new build-ings or for permanent improvements orbetterments made to increase the value ofany property. Section 1.263(a)–2(a) pro-vides that capital expenditures include thecosts of acquisition, construction, or erec-tion of buildings, machinery and equip-ment, furniture and fixtures, and similarproperty having a useful life substantiallybeyond the taxable year.

Section 263A generally requires tax-payers that are producing real or tangiblepersonal property to capitalize direct ma-terial costs, direct labor costs, and indirectcosts that are properly allocable to theproduced property. Section 263A(g)(1)provides that, for purposes of § 263A, theterm “produce” includes construct, build,install, manufacture, develop, or improve.Under § 1.263A–1(e)(3)(i), indirect costsare allocable to produced property under§ 263A when the costs directly benefit orare incurred by reason of the performanceof production activities.

The costs of removing an asset havebeen historically allocable to the removedasset and, thus, generally deductible whenthe asset is retired and the costs are in-curred. A deduction generally is allowedwhether a taxpayer accounts for the re-tired asset in a single asset account or in amultiple asset account (e.g., a generalasset account or a mass asset account).See§ 1.165–3(b); § 1.167(a)–1(c); §1.167(a)– 11(d)(3)(x); Rev. Rul. 74–455,1974–2 C.B. 63; Rev. Rul. 75–150,1975–1 C.B. 73. But see§ 280B, requir-ing that the costs of demolishing build-ings be added to the basis of the land, and§ 1.165–3(a), requiring capitalization ofdemolition costs when the taxpayer ac-quires an asset with the intent to demolishit. See, e.g., Wood County Telephone Co.v. Commissioner, 51 T.C. 72 (1968); Rev.Rul. 69–62, 1969–1 C.B. 58.

The removal costs of Poles A and B arenot required to be capitalized under § 263(a). In both situations the removalcosts are properly allocable to the retired

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

2000–9 I.R.B. 713 February 28, 2000

poles, and thus do not relate to assets hav-ing a useful life in the taxpayer’s businessextending substantially beyond the taxableyear in which the removal costs are in-curred. The fact that Poles A and B are re-tired as part of a replacement project doesnot mean that the removal costs are re-quired to be capitalized under § 263(a).Furthermore, the removal costs are not re-quired to be capitalized under § 263A be-cause the costs are incurred for the purposeof retiring Poles A and B and not by reasonof the installation of Poles C and D. Theanalysis in this ruling does not apply to theremoval of a component of a depreciableasset, the costs of which are either de-ductible or capitalizable based on whetherreplacement of the component constitutes arepair or an improvement. See§1.162–4and § 1.263(a)–1(b).

HOLDING

If the retirement and removal of a de-preciable asset occurs in connection withthe installation or production of a replace-ment asset, the costs incurred in removingthe retired asset are not required to becapitalized under § 263(a) or 263A as partof the cost of the replacement asset.

APPLICATION

Any change in a taxpayer’s method of ac-counting to conform with this revenue rulingis a change in method of accounting towhich the provisions of §§ 446 and 481 andthe regulations thereunder apply. Except forassets for which depreciation is determinedin accordance with § 1.167(a)–11 (ADR),the taxpayer’s new method of treating re-moval costs for assets accounted for in amultiple asset account must be consistentwith the taxpayer’s method of treating sal-vage proceeds. SeeRev. Rul. 74– 455. (Seesections 2.01 and 2.02 of the Appendix ofRev. Proc. 99–49, 1999–52 I.R.B. 725, forchanging a taxpayer’s present method oftreating salvage proceeds.) A taxpayer want-ing to change its method of accounting toconform with the holding in this revenue rul-ing must follow the automatic change in ac-counting method provisions of Rev. Proc.99–49, except that the scope limitations insection 4.02 of Rev. Proc. 99–49 do notapply. However, if the taxpayer is under ex-amination, before an appeals office, or be-fore a federal court with respect to any in-come tax issue, the taxpayer must provide acopy of the Form 3115, Application for

Change in Accounting Method, to the exam-ining agent(s), appeals officer, or counsel forthe government, as appropriate, at the sametime that it files the copy of the Form 3115with the national office. The Form 3115must contain the name(s) and telephonenumber(s) of the examining agent(s), ap-peals officer, or counsel for the government,as appropriate. In addition, if the asset ispublic utility property within the meaning of§ 168(i)(10) or former § 167(l)(3)(A), thetaxpayer must comply with the terms andconditions in section 2.01(3)(b)(vi) of theAppendix of Rev. Proc. 99–49.

EFFECT ON OTHER DOCUMENTS

Rev. Proc. 99–49 is modified and am-plified to include this change in account-ing method in the APPENDIX.

DRAFTING INFORMATION

The principal author of this revenueruling is Beverly Katz of the Office of As-sistant Chief Counsel (Income Tax andAccounting). For further information re-garding this revenue ruling contact Ms.Katz on (202) 622-4950 (not a toll-freecall).

Section 263A.—Capitalizationand Inclusion in Inventory Costsof Certain Expenses

26 CFR 1.263A–1: Uniform capitalization of costs.

If the retirement and removal of a depreciable assetoccurs in connection with the installation or produc-tion of a replacement asset, are the costs incurred in re-moving the retired asset required to be capitalizedunder § 263(a) or 263A as part of the cost of the re-placement asset? See Rev. Rul. 2000–7, page 712.

Section 280F.—Limitation onDepreciation for LuxuryAutomobiles; Limitation whereCertain Property Used forPersonal Purposes

26 CFR 1.280F–7: Property leased after December31, 1986.

This procedure provides owners and lessees of pas-senger automobiles (including electric automobiles)with tables detailing the limitations on depreciationdeductions for automobiles first placed in service dur-ing calendar year 2000 and the amounts to be includedin income for automobiles first leased during calendaryear 2000. See Rev. Proc. 2000–18, page 722.

Section 411.—Minimum VestingStandards

26 CFR 1.411(a)–11: Restriction and valuation of

distributions.

T.D. 8873

DEPARTMENT OF THE TREASURYInternal Revenue Service26 CFR Parts 1, 35, and 602

New Technologies in RetirementPlans

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document containsamendments to the regulations governingcertain notices and consents required inconnection with distributions from retire-ment plans. Specifically, these regula-tions set forth applicable standards for thetransmission of those notices and con-sents through electronic media and mod-ify the timing requirements for providingcertain distribution-related notices. Theregulations provide guidance to plansponsors and administrators by interpret-ing the notice and consent requirements inthe context of the electronic administra-tion of retirement plans. The regulationsaffect retirement plan sponsors, adminis-trators, and participants.

DATES: Effective Date: These regula-tions are effective January 1, 2001.

Applicability Date: These regulationsapply to plan years beginning on or afterJanuary 1, 2001.

FOR FURTHER INFORMATION CON-TACT: Catherine Livingston Fernandez,(202) 622-6030 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information con-tained in these final regulations has beenreviewed and approved by the Office ofManagement and Budget in accordancewith the Paperwork Reduction Act (44U.S.C. 3507) under control number 1545-1632. Responses to this collection of in-formation are mandatory.

An agency may not conduct or sponsor,and a person is not required to respond to,

February 28, 2000 714 2000–9 I.R.B.

a collection of information unless the col-lection of information displays a validcontrol number.

The estimated annual burden per respon-dent and/or recordkeeper is 76 minutes.

Comments concerning the accuracy ofthis burden estimate and suggestions forreducing this burden should be sent to theInternal Revenue Service, Attn: IRS Re-ports Clearance Officer, OP:FS:FP, Wash-ington, DC 20224, and to the Office ofManagement and Budget, Attn: Desk Of-ficer for the Department of the Treasury,Office of Information and Regulatory Af-fairs, Washington, DC 20503.

Books or records relating to this collec-tion of information must be retained aslong as their contents may become mater-ial in the administration of any internalrevenue law. Generally, tax returns andtax return information are confidential, asrequired by 26 U.S.C. 6103.

Background

This document contains amendments tothe Income Tax Regulations (26 CFR parts1 and 35) under sections 402(f), 411(a)(11)and 3405(e)(10)(B). The regulations undersection 3405(e)(10)(B) (new Q/A d–35 andd–36 of section 35.3405–1), like the regula-tions under sections 402(f) and 411(a)(11)are final regulations. These regulations fi-nalize proposed regulations that were pub-lished as a notice of proposed rulemaking(REG–118662–98, 1999–13 I.R.B. 13) inthe Federal Register(63 FR 70071) onDecember 18, 1998. A public hearing washeld on the proposed regulations on April15, 1999.

In addition to the proposed regulations,the IRS and Treasury issued Notice 99–1(1999–2 I.R.B. 8), and Announcement99–6 (1999–4 I.R.B. 24), concerning theuse of electronic media under retirementplans. Notice 99–1 confirms that the “pa-perless” administration of participant en-rollments, contribution elections, invest-ment elections, beneficiary designations(other than designations requiring spousalconsent), direct rollover elections, andcertain other transactions do not cause aqualified plan to fail to satisfy the require-ments of section 401(a) (or the require-ments for a qualified cash or deferredarrangement under section 401(k)). An-nouncement 99–6 authorizes the elec-tronic transmission of Form W-4P.

The proposed regulations, Notice 99–1,

and Announcement 99–6 were issued pur-suant to section 1510 of the Taxpayer ReliefAct of 1997. That section provides for theSecretary of the Treasury to issue guidancedesigned to interpret the notice, election,consent, disclosure, time, and relatedrecordkeeping requirements under the Codeand the Employee Retirement Income Secu-rity Act of 1974 (ERISA) regarding the useof new technologies by sponsors and ad-ministrators of retirement plans and to clar-ify the extent to which writing requirementsunder the Code relating to retirement planspermit paperless transactions. Section 1510provides that the guidance must protect par-ticipant and beneficiary rights. Any finalregulations applicable to this guidance maynot be effective until the first plan year be-ginning at least six months after issuance asfinal regulations.

Explanation of Provisions

General

Commentators generally praised the ap-proach taken in the proposed regulations ofproviding broad, flexible standards for thetransmission of certain notices and consentrequired for distributions through electronicmedia. Commentators stated that theguidelines set forth in the proposed regula-tions facilitate the expanded use of newtechnologies and recognize the likelihoodof future technological advances in plan ad-ministration. Accordingly, the final regula-tions retain this approach and:• Permit electronic delivery of the notice

of distribution options and the right todefer distribution under section411(a)(11), the rollover notice undersection 402(f), and the withholding no-tice under section 3405(e)(10)(B);

• Permit electronic transmission of par-ticipant consent to a distribution undersection 411(a)(11); and

• Permit a plan to provide the section411(a)(11) and section 402(f) noticesmore than 90 days before a distribution,if the plan provides a summary of thenotices within 90 days before the distri-bution.

Notices Under Sections 402(f),411(a)(11), and 3405(e)(10)(B)

1. Use of electronic media for delivery ofnotices

The proposed regulations provide that,in general, a plan may furnish a notice re-

quired under section 402(f), 411(a)(11),or 3405(e)(10)(B) either on a writtenpaper document or through an electronicmedium reasonably accessible to the par-ticipant to whom the notice is given. Theproposed regulations require that anyelectronic notice be provided under a sys-tem reasonably designed to give the no-tice in a manner no less understandable tothe participant than a written paper docu-ment and that the participant be advisedof the right to request and to receive acopy of the notice on a written paper doc-ument without charge. The final regula-tions adopt these rules without change.

One commentator noted that the pro-posed regulations do not define the termreasonably accessibleand suggested thatthe final regulations require that partici-pants have effective access at their placeof work to any electronic medium used todeliver the notices under sections 402(f),411(a)(11), and 3405(e)(10)(B). The IRSand Treasury, after further consideration,believe that the reasonably accessiblestandard protects the interests of plan par-ticipants and, therefore, have retained theproposed terminology.

The same commentator raised moregeneral concerns with the use of elec-tronic media to transmit notices. Thiscommentator argued that an electronicnotice should be “actually received (notjust sent or available) and read by the par-ticipant, be permanently accessible, andeasily converted to a printed document,by using an available printer and/orthrough a request for a paper writing.” Inresponse to these concerns, the IRS andTreasury reiterate the view, expressed inthe preamble to the proposed regulations,that the legal standards for the delivery ofdistribution-related notices under sections402(f), 411(a)(11), and 3405(e)(10)(B)should be the same regardless of themedium of delivery. Additionally, theIRS and Treasury note that many of theconcerns raised by this commentatorabout electronic media are adequately ad-dressed by the requirement in the regula-tions that participants always have theright to request and to receive a writtenpaper notice without charge.

Several commentators objected to the re-quirement that participants be able to re-ceive the notice on a written paper docu-ment upon request. These commentatorsargued that simply making written paper

2000–9 I.R.B. 715 February 28, 2000

notices available through an electronicmedium (such as a printing option on an e-mail system or a plan web site) protects theinterests of participants in having access towritten paper notices without placing theburden of providing written paper noticeson plan sponsors and administrators. How-ever, the IRS and Treasury believe that theright to request and to receive a writtenpaper notice is an important fail-safe for pa-perless plan administration. The require-ment ensures that no participant is deniedready access to a usable copy of a requireddistribution notice, and it limits the need forthe IRS and Treasury to regulate the man-ner in which written paper notices are madeavailable through electronic media. TheIRS and Treasury believe that the burdenfor plan sponsors and administrators tomaintain a process that will generate writ-ten paper notices upon request is out-weighed by the important safeguards pro-vided by the requirement. In addition, asindicated in the preamble to the proposedregulations, the written paper notice pro-vided on request need not be identical tothe electronic notice. Therefore, the writtenpaper notice can be either a printed versionof the electronic notice or a separate noticeprepared for distribution on paper. In lightof these considerations, the requirement isretained in the final regulations.

One commentator requested clarifica-tion that the proposed regulations undersection 3405 would permit the electronicdelivery of the annual notice described insection 3405(e)(10)(B)(i)(III) (which isprovided to recipients of periodic pay-ments). The proposed regulations, aswritten, apply to that annual notice; how-ever, the final regulations make this pointexpressly. One commentator asked thatthe proposed regulations be amended toprovide for electronic withholding elec-tions under section 3405 in addition toelectronic transmission of notices undersection 3405. It is unclear what, if any,utility such a change in the regulationswould have in light of the ability to useelectronic media for transmission of FormW-4P, as set out in Announcement 99–6.Therefore, no change has been made tothe regulations on this point.

2. Flexibility for timing requirement inproviding notices

Commentators favored the provision inthe proposed regulations that providedflexibility with respect to the 90-day pe-

riod under sections 402(f) and 411(a)(11)by providing an alternative timing rule.Under this alternative timing rule, a planmay give the full section 402(f) and sec-tion 411(a)(11) notices more than 90 daysbefore the distribution and provide theparticipant a summary of the notice dur-ing the 90/30-day period under those sec-tions. The full notice is not required to beprovided on a regular periodic basis andmay be provided in connection with othermaterials (for example, in the summaryplan description or in a brochure describ-ing plan distribution features), but it mustbe updated (and provided to the partici-pant) as necessary to ensure accuracy asof the time the summary is given. Theproposed regulations provide that thesummary notice must set out the principalprovisions of the full notice, must referthe participant to the most recent occasionon which the full notice was provided,and must advise the participant of theright to request and to receive a copy ofthe full notice without charge.

Several commentators interpreted therequirement in the proposed regulationsthat the summary refer the participant tothe most recent occasion on which the fullnotice was provided as requiring an indi-cation of the precise date on which theparticipant was given the full notice andthe precise location of the full notice if itwas provided in a document containingother information (such as the summaryplan description). These commentatorsargued that this information may vary ona participant-by-participant basis and soimposes a considerable administrativeburden on plan sponsors and administra-tors.1

The IRS and Treasury did not intendfor the proposed regulations to be con-strued as requiring individualized infor-mation about the full notice. Therefore,the final regulations clarify, first, that thesummary must refer participants to themost recent versionof the full notice.The purpose of this rule is to minimizeconfusion among participants if morethan one version of a full notice has beenprovided in the past. In many of those

cases, this reference could reasonably bemade by calendar year (for example, byreferring to the 1999 version of the sec-tion 402(f) notice). If more than one ver-sion of a distribution notice was providedin a single calendar year, more precisereference should be made (for example,by referring to the May 1999 version ofthe section 402(f) notice). Reference tothe notice by month or year would not benecessary if only one version of the noticehad been provided in the past. If the fullnotice were constantly available (for ex-ample, a notice that is available on a planweb site and is kept up-to-date), it wouldbe adequate to state that fact.

Additionally, the regulations have beenmodified to provide that, in the case of afull notice provided in a document con-taining other information, the summarymust identify that document and mustprovide a reasonable indication of wherethe notice may be found in the document.This requirement could be satisfiedthrough a number of means, includingidentification of page number, sectionheading, an index reference, the title ofthe notice, or any other reference thatwould reasonably direct the participant tothe notice.

One commentator objected to the alter-native timing rule set out in the proposedregulations. This commentator arguedthat distribution-related notices should betied to a specific event (such as a partici-pant request for a distribution) and that “itis inappropriate to provide a notice of thenotice when using electronic or other newtechnologies when it is just as easy to pro-vide the actual notice itself.” The IRSand Treasury agree that the informationcontained in the section 402(f) and sec-tion 411(a)(11) notices should be pro-vided to a participant in connection withthe participant’s contemplation of a distri-bution, but the IRS and Treasury believethat providing a summary of a previouslyprovided notice and informing the partici-pant of the right to request and to receivethe full notice adequately protect the in-terests of participants in this regard.

The preamble to the proposed regula-tions includes an example of a summarysection 402(f) notice provided through anautomated telephone system. Many com-mentators raised questions about this ex-ample. Several commentators argued thatthe sample summary is too long and com-

1 For example, many plan sponsors provide a copyof the summary plan description to each employeewhen the employee is first hired. If the full notice isprovided through the summary plan description, theprecise date on which the full notice was last pro-vided could differ for each participant.

February 28, 2000 716 2000–9 I.R.B.

plex to be of use in plan administration;others argued that it does not include ref-erence to every potentially applicable ruleconcerning the taxation of plan distribu-tions (for example, it does not refer to thetaxation of net unrealized appreciation onthe distribution of employer securities).Commentators also inquired about thelegal status of the example because of itsplacement in the preamble. The examplewas intended merely to illustrate a sum-mary notice that, in the view of the IRSand Treasury, satisfies the requirements ofthe proposed regulations. It was not in-tended as a model summary or as the ex-clusive form for such a summary. Al-though the example is not restated inthese final regulations, the IRS and Trea-sury are considering whether to issue ad-ditional guidance providing additional ex-amples of summary notices. In thisregard, the IRS and Treasury will solicitcomments from interested parties regard-ing the development of those examplesand will invite interested parties to submitdraft summary notices to assist in the de-velopment of that guidance.

Consent Under Section 411(a)(11)

Consistent with the proposed regula-tions, the final regulations provide that, ingeneral, a plan may receive a participant’sconsent either on a written paper docu-ment or through an electronic mediumreasonably accessible to the participant.As in the case of participant notices, theregulations generally do not categorizeparticular electronic media as either per-missible or impermissible for this purposeand do not prescribe detailed, media-spe-cific rules. The standards are intended toparallel the key attributes of participantconsent provided on written paper docu-ments without imposing more stringentrequirements on electronic consents. Theproposed regulations provide that partici-pant consent transmitted through an elec-tronic medium must be given under a sys-tem that is reasonably designed topreclude an individual other than the par-ticipant from giving the consent and thatprovides the participant a reasonable op-portunity to review and to confirm, mod-ify, or rescind the terms of the distributionbefore the consent to the distribution be-comes effective. Comments on this por-tion of the proposed regulations were gen-erally favorable, and no change has been

made in the final regulations.One commentator, however, objected

outright to the use of electronic media forthe transmission of participant consent andargued that, at a minimum, such consent“should not be effective until after a writtenconfirmation is received and the participanthas a specified amount of time to revokeit.” This commentator also argued that thefinal regulations should prohibit the use ofautomated telephone systems to providedistribution-related notices and to receiveparticipant consent unless an automatic,mandatory written confirmation of the par-ticipant’s election of a distribution option isrequired along with a seven-day right of re-vocation. The IRS and Treasury concludedthat it is not advisable to impose new revo-cation rules based on the medium throughwhich a participant consents to a distribu-tion. Both the proposed regulations and thefinal regulations require that the terms ofany consent made through an electronicmedium be confirmed to the participant.Additionally, the IRS and Treasury do notbelieve that a right of revocation for a de-fined period after consent is given is morenecessary or appropriate in the case of con-sent made through an electronic mediumthan it is in the case of consent madethrough a written paper document. Moregenerally, the IRS and Treasury do not be-lieve that the use of electronic media is im-proper or inappropriate for the transmissionof a participant’s consent under section411(a)(11). If the requirements of the regu-lations are satisfied, consent provided inthat manner should reflect the consideredwishes of the participant as reliably as aconsent provided through a written paperdocument.

Changes to the Examples in theRegulations

Several commentators expressed con-cern about details in the examples illustrat-ing the proposed regulations for distribu-tion notices and consent. One of theconcerns involved the statement in the ex-amples that a participant who wished tochange a PIN electronically would be un-able to proceed with a distribution transac-tion until the plan sent a confirmation of thechange to the participant. Commentatorsstated that the electronic systems main-tained by plan sponsors and administratorsuse an array of security features to ensureparticipant identity, some of which might

permit an electronic transaction to proceedafter a PIN change. Although the prohibi-tion on proceeding with an electronic trans-action after a PIN change was intendedonly to illustrate a commonly used systemand not as a substantive requirement, thefinal regulations omit the statement fromthe examples for the sake of clarity. Ofcourse, the examples in the final regula-tions presuppose that plan sponsors and ad-ministrators maintain adequate measures toensure participant identity when a PIN ischanged.

Notice 99–1 and Announcement 99–6

Commentators expressed support forNotice 99–1, which indicates that a quali-fied plan will not fail to meet the require-ments of section 401(a) (and that a quali-fied cash-or-deferred arrangement willnot fail to meet the requirements of sec-tion 401(k)) merely because it permits aparticipant or beneficiary to use electronicmedia to effect a transaction for which nospecific provision of the Code, the regula-tions, or other guidance of general applic-ability sets forth rules or standards regard-ing the media through which it may beconducted. Announcement 99–6 permitsthe electronic transmission of Form W-4P.

Commentators asked for clarificationwhether Form W-4P may be transmittedthrough a telephone system. The underly-ing standards for the electronic transmis-sion of Form W-4P are intended to be thesame as those for the electronic transmis-sion of Form W-4, as set out in§31.3402(f)(5)–1(c). The preamble to theproposed regulations for the electronictransmission of Form W-4 indicates that“[i]f an employer chooses to establish anelectronic system, the employer will befree to determine the type of system (suchas telephone or computer) or systemsavailable to its employees.” (59 FR18508 (Apr. 15, 1994)). Therefore, theuse of a telephone system for electronictransmission of Form W-4P, if otherwiseconsistent with Announcement 99–6 and§31.3402(f)(5)–1(c), is permissible.

Commentators also asked the IRS andTreasury to reconsider the requirement,stated in Announcement 99–6, that theelectronic signature on Form W-4P be thefinal entry in the submission of the form.These commentators argue that this effec-tively requires the participant in mostcases to enter a PIN at both the beginning

2000–9 I.R.B. 717 February 28, 2000

and the end of a transaction that involvesthe use of an electronic Form W-4P. TheIRS and Treasury are considering thisissue and anticipate issuing additionalguidance on this question.

Scope of These Regulations

These regulations do not address the ap-plication of Title I of ERISA (except forsection 203(e)) to the use of electronicmedia for any plan communication ortransaction. Several commentators re-quested that the regulations be expanded toinclude matters not covered by the pro-posed regulations. Most notably, commen-tators asked that the IRS and Treasury pro-vide guidance on the use of electronicmedia for plan loans under section 72(p),nondiscrimination safe-harbor noticesunder sections 401(k)(12) and 401(m)(11),notices under section 204(h) of ERISA, anddistribution notices, elections, and spousalconsents governed by sections 401(a)(11)and section 417.

The IRS and Treasury are actively con-sidering comments submitted on regula-tions proposed under section 72(p) andexpect to issue additional guidance underthat section. It is anticipated that anyguidance on the use of electronic media inconnection with plan loans would be is-sued in connection with that additionalguidance. As the IRS and Treasury havenoted in the past, notices under sections401(k)(12) and 401(m)(11) and ERISAsection 204(h) present legal issues distinctfrom those presented by notices undersections 402(f), 411(a)(11), and3405(e)(10)(B). Notice 2000–3 (2000–4I.R.B. 413) provides that, pending furtherguidance, notices under sections401(k)(12) and 401(m)(11) may be issuedthrough electronic media if standards setforth in Notice 2000–3 which are similarto those applicable to notices under theseregulations, are satisfied. Because of theunique considerations applicable to no-tices under ERISA section 204(h), guid-ance with respect to the use of electronicmedia in connection with section 204(h)notices is not being issued at this time.

Finally, regarding notices, elections,and spousal consents governed by sec-tions 401(a)(11) and section 417, the IRSand Treasury note that the statutory re-quirement that spousal consent be wit-nessed either by a notary public or a planrepresentative appears to presuppose that

a spouse be in the physical presence of thenotary public or the plan representative atthe time consent is given. This appears toplace significant limitations on the utilityof electronic media in effecting spousalconsent.2 Thus, it is unclear what guid-ance the IRS and Treasury could issuethat would meaningfully facilitate paper-less distributions in the case of plans sub-ject to sections 401(a)(11) and 417.

Reliance

Plan sponsors and administrators mayrely on these final regulations for guid-ance for distributions made prior to the ef-fective date.

Special Analyses

It has been determined that this Treasurydecision is not a significant regulatory ac-tion as defined in Executive Order 12866.Therefore, a regulatory impact analysis isnot required. It is hereby certified thatthese regulations will not have a significanteconomic impact on a substantial numberof small entities. This certification is basedon the fact that the regulations provide pa-perless alternatives to notices that other-wise must be sent as written paper docu-ments. It is anticipated that most smallbusinesses affected by these regulationswill be sponsors of retirement plans. Sincethese notices are provided only upon distri-butions and since, in the case of a smallplan, there will be relatively few distribu-tions per year, small plans that implement apaperless system for delivering these no-tices will likely contract for them as part ofa paperless system for distributions offeredby outside vendors. The paperless deliveryof the notices will not add more than aminor increment to the cost of these distri-bution systems or the plan sponsor willcontinue to use a paper-based system. Ac-cordingly, a Regulatory Flexibility Analy-sis is not required. Pursuant to section7805(f) of the Code, the notice of proposedrulemaking preceding these regulationswas submitted to the Chief Counsel forAdvocacy of the Small Business Adminis-tration for comment on its impact on smallbusiness.

Drafting Information

The principal author of these regulationsis Catherine Livingston Fernandez, Officeof the Associate Chief Counsel (EmployeeBenefits and Exempt Organizations), IRS.However, personnel from other offices ofthe IRS and Treasury Department partici-pated in their development.

* * * * *

Amendments to the Regulations

Accordingly, 26 CFR parts 1, 35, and 602are amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation forpart 1 continues to read, in part, as fol-lows:

Authority: 26 U.S.C. 7805 * * *Par. 2. Section 1.402(f)–1 is amended

by: 1. Revising Q&A–2.2. Adding Q&A–5 and Q&A–6.The revision and additions read as fol-

lows:§1.402(f)–1 Required explanation of eli-gible rollover distributions; questions andanswers.* * * * *

Q-2: When must the plan administratorprovide the section 402(f) notice to a dis-tributee?

A-2: The plan administrator must pro-vide the section 402(f) notice to a distrib-utee at a time that satisfies either para-graph (a) or (b) of this Q&A-2.

(a) This paragraph (a) is satisfied if theplan administrator provides a distributeewith the section 402(f) notice no less than30 days and no more than 90 days beforethe date of a distribution. However, if thedistributee, after having received the sec-tion 402(f) notice, affirmatively elects adistribution, a plan will not fail to satisfysection 402(f) merely because the distrib-ution is made less than 30 days after thesection 402(f) notice was provided to thedistributee, provided the plan administra-tor clearly indicates to the distributee thatthe distributee has a right to consider thedecision of whether or not to elect a directrollover for at least 30 days after the no-tice is provided. The plan administratormay use any method to inform the distrib-utee of the relevant time period, providedthat the method is reasonably designed to

2 One commentator suggested that electronic trans-mission of spousal consent be permitted if the planhas Areasonable certainty that the spouse has con-sented.@ That suggested standard appears to fall farshort of the witnessing requirement specifically setforth in the statute.

February 28, 2000 718 2000–9 I.R.B.

attract the attention of the distributee. Forexample, this information could be eitherprovided in the section 402(f) notice orstated in a separate document (e.g., at-tached to the election form) that is pro-vided at the same time as the notice. Forpurposes of satisfying the requirement inthe first sentence of paragraph (a) of thisQ&A-2, the plan administrator may sub-stitute the annuity starting date, within themeaning of §1.401(a)–20, Q&A-10, forthe date of the distribution.

(b) This paragraph (b) is satisfied if theplan administrator—

(1) Provides a distributee with the sec-tion 402(f) notice;

(2) Provides the distributee with a sum-mary of the section 402(f) notice withinthe time period described in paragraph (a)of this Q&A-2; and

(3) If the distributee so requests afterreceiving the summary described in para-graph (b)(2) of this Q&A-2, provides thesection 402(f) notice to the distributeewithout charge and no less than 30 daysbefore the date of a distribution (or the an-nuity starting date), subject to the rulesfor the distributee’s waiver of that 30-dayperiod. The summary described in para-graph (b)(2) of this Q&A-2 must set fortha summary of the principal provisions ofthe section 402(f) notice, must refer thedistributee to the most recent version ofthe section 402(f) notice (and, in the caseof a notice provided in any document con-taining information in addition to the no-tice, must identify that document andmust provide a reasonable indication ofwhere the notice may be found in thatdocument, such as by index reference orby section heading), and must advise thedistributee that, upon request, a copy ofthe section 402(f) notice will be providedwithout charge.* * * * *

Q-5: Will the requirements of section402(f) be satisfied if a plan administratorprovides a distributee with the section402(f) notice or the summary of the noticedescribed in paragraph (b)(2) of Q&A-2of this section other than through a writ-ten paper document?

A-5: A plan administrator may providea distributee with the section 402(f) noticeor the summary of that notice described inparagraph (b)(2) of Q&A-2 of this sectioneither on a written paper document orthrough an electronic medium reasonably

accessible to the distributee. A notice orsummary provided through an electronicmedium must be provided under a systemthat satisfies the following requirements:

(a) The system must be reasonably de-signed to provide the notice or summaryin a manner no less understandable to thedistributee than a written paper document.

(b) At the time the notice or summary isprovided, the distributee must be advisedthat the distributee may request and re-ceive the notice on a written paper docu-ment at no charge, and, upon request, thatdocument must be provided to the distrib-utee at no charge.

Q-6: Are there examples that illustratethe provisions of Q&A-2 and Q&A-5 ofthis section?

A-6: The following examples illustratethe provisions of Q&A-2 and Q&A-5 ofthis section:

Example 1. (i) A qualified plan (Plan A) permitsparticipants to request distributions by e-mail.Under Plan A’s system for such transactions, a par-ticipant must enter his or her account number andpersonal identification number (PIN); this informa-tion must match that in Plan A’s records in order forthe transaction to proceed. If a participant requests adistribution from Plan A by e-mail and the distribu-tion is an eligible rollover distribution, the plan ad-ministrator provides the participant with a section402(f) notice by e-mail. The plan administrator alsoadvises the participant that he or she may request thesection 402(f) notice on a written paper documentand that, if the participant requests the notice on awritten paper document, it will be provided at nocharge. To proceed with the distribution by e-mail,the participant must acknowledge receipt, review,and comprehension of the section 402(f) notice.

(ii) In Example 1, Plan A does not fail to satisfythe notice requirement of section 402(f) merely be-cause the notice is provided to the participant otherthan through a written paper document.

Example 2. (i) A qualified plan (Plan B) permitsparticipants to request distributions through the PlanB web site (Internet or intranet). Under Plan B’ssystem for such transactions, a participant mustenter his or her account number and personal identi-fication number (PIN); this information must matchthat in Plan B’s records in order for the transactionto proceed. A participant may request a distributionfrom Plan B by following the applicable instructionson the Plan B web site. After the participant has re-quested a distribution that is an eligible rollover dis-tribution, the participant is automatically shown apage on the web site containing a section 402(f) no-tice. Although this page of the web site may beprinted, the page also advises the participant that heor she may request the section 402(f) notice on awritten paper document by calling a telephone num-ber indicated on the web page and that, if the partici-pant requests the notice on a written paper docu-ment, it will be provided at no charge. To proceedwith the distribution by e-mail, the participant mustacknowledge receipt, review, and comprehension ofthe section 402(f) notice.

(ii) In this Example 2, Plan B does not fail to sat-isfy the notice requirement of section 402(f) merelybecause the notice is provided to the participantother than through a written paper document.

Example 3. (i) A qualified plan (Plan C) permitsparticipants to request distributions through Plan C’sautomated telephone system. Under Plan C’s systemfor such transactions, a participant must enter his orher account number and personal identification num-ber (PIN); this information must match that in PlanC’s records in order for the transaction to proceed.Plan C provides the section 402(f) notice in the sum-mary plan description, the most recent version ofwhich was distributed to participants in 1997. A par-ticipant may request a distribution from Plan C byfollowing the applicable instructions on the auto-mated telephone system. In 1999, a participant,using Plan C’s automated telephone system, requestsa distribution that is an eligible rollover distribution.The automated telephone system refers the partici-pant to the most recent version of the section 402(f)notice which was provided in the summary plan de-scription, informs the participant where the section402(f) notice may be located in the summary plan de-scription, and provides an oral summary of the mate-rial provisions of the section 402(f) notice. The sys-tem also advises the participant that the participantmay request the section 402(f) notice on a writtenpaper document and that, if the participant requeststhe notice on a written paper document, it will beprovided at no charge. Before proceeding with thedistribution, the participant must acknowledge re-ceipt, review, and comprehension of the summary.Under Plan C’s system for processing such transac-tions, the participant’s distribution will be made nomore than 90 days and no fewer than 30 days afterthe participant requests the distribution and receivesthe summary of the section 402(f) notice (unless theparticipant waives the 30-day period).

(ii) In this Example 3, Plan C does not fail to sat-isfy the notice requirement of section 402(f) merelybecause Plan C provides a summary of the section402(f) notice or merely because the summary is pro-vided to the participant other than through a writtenpaper document.

Example 4. (i) Same facts as Example 3, exceptthat, pursuant to Plan C’s system for processing suchtransactions, a participant who so requests is trans-ferred to a customer service representative whoseconversation with the participant is recorded. Thecustomer service representative provides the sum-mary of the section 402(f) notice by reading from aprepared text.

(ii) In this Example 4, Plan C does not fail to sat-isfy the notice requirement of section 402(f) merelybecause Plan C provides a summary of the section402(f) notice or merely because the summary of thesection 402(f) notice is provided to the participantother than through a written paper document.

Example 5. (i) Same facts as Example 3, exceptthat Plan C does not provide the section 402(f) no-tice in the summary plan description. Instead, theautomated telephone system reads the section 402(f)notice to the participant.

(ii) In this Example 5, Plan C does not satisfy thenotice requirement of section 402(f) because oraldelivery alone of the section 402(f) notice throughthe automated telephone system is not sufficient.

Example 6. (i) The facts are the same as in Ex-ample 1, except that Participant D requested a distri-

2000–9 I.R.B. 719 February 28, 2000

bution by e-mail, then terminated employment, and,following the termination, no longer has reasonableaccess to Plan A e-mail.

(ii) In this Example 6, Plan A does not satisfy thenotice requirement of section 402(f) because theelectronic medium through which the notice is pro-vided is not reasonably accessible to Participant D.Plan A must provide the section 402(f) notice to Par-ticipant D in a written paper document or by an elec-tronic means that is reasonably accessible to Partici-pant D.

Par. 3. Section 1.411(a)–11 is amendedby:

1. Revising paragraphs (c)(2)(i) and(iii).

2. Removing the language “Writtenconsent” in paragraph (c)(2)(ii) and (c)(3)and adding “Consent” in its place.

3. Adding paragraphs (f) and (g).The revisions and additions read as fol-

lows:§1.411(a)–11 Restriction and valuation ofdistributions.* * * * *

(c) * * *(2) Consent. (i) No consent is valid

unless the participant has received a gen-eral description of the material features ofthe optional forms of benefit availableunder the plan. In addition, so long as abenefit is immediately distributable, aparticipant must be informed of the right,if any, to defer receipt of the distribution.Furthermore, consent is not valid if a sig-nificant detriment is imposed under theplan on any participant who does not con-sent to a distribution. Whether or not asignificant detriment is imposed shall bedetermined by the Commissioner by ex-amining the particular facts and circum-stances. * * * * *

(iii) A plan must provide a participantwith notice of the rights specified in thisparagraph (c)(2) at a time that satisfies ei-ther paragraph (c)(2)(iii)(A) or (B) of thissection:

(A) This paragraph (c)(2)(iii)(A) is sat-isfied if the plan provides a participantwith notice of the rights specified in thisparagraph (c)(2) no less than 30 days andno more than 90 days before the date thedistribution commences. However, if theparticipant, after having received this no-tice, affirmatively elects a distribution, aplan will not fail to satisfy the consent re-quirement of section 411(a)(11) merelybecause the distribution commences lessthan 30 days after the notice was providedto the participant, provided the plan ad-

ministrator clearly indicates to the partici-pant that the participant has a right to atleast 30 days to consider whether to con-sent to the distribution.

(B) This paragraph (c)(2)(iii)(B) is sat-isfied if the plan—

(1) Provides the participant with noticeof the rights specified in this paragraph(c)(2);

(2) Provides the participant with a sum-mary of the notice within the time perioddescribed in paragraph (c)(2)(iii)(A) ofthis section; and

(3) If the participant so requests afterreceiving the summary described in para-graph (c)(2)(iii)(B)(2) of this section, pro-vides the notice to the participant withoutcharge and no less than 30 days before thedate the distribution commences, subjectto the rules for the participant’s waiver ofthat 30-day period. The summary de-scribed in paragraph (c)(2)(iii)(B)(2) ofthis section must advise the participant ofthe right, if any, to defer receipt of the dis-tribution, must set forth a summary of thedistribution options under the plan, mustrefer the participant to the most recentversion of the notice (and, in the case of anotice provided in any document contain-ing information in addition to the notice,must identify that document and mustprovide a reasonable indication of wherethe notice may be found in that document,such as by index reference or by sectionheading), and must advise the participantthat, upon request, a copy of the noticewill be provided without charge.* * * * *

(f) Medium for notice and consent—(1) Notice. The notice of a participant’srights described in paragraph (c)(2) of thissection or the summary of that notice de-scribed in paragraph (c)(2)(iii)(B)(2) ofthis section may be provided either on awritten paper document or through anelectronic medium reasonably accessibleto the participant. A notice or summaryprovided through an electronic mediummust be provided under a system that sat-isfies the following requirements:

(i) The system must be reasonably de-signed to provide the notice or summaryin a manner no less understandable to theparticipant than a written paper docu-ment.

(ii) At the time the notice or summaryis provided, the participant must be ad-vised that he or she may request and re-

ceive the notice on a written paper docu-ment at no charge, and, upon request, thatdocument must be provided to the partici-pant at no charge.

(2) Consent. The consent described inparagraphs (c)(2) and (3) of this sectionmay be given either on a written paperdocument or through an electronicmedium reasonably accessible to the par-ticipant. A consent given through an elec-tronic medium must be given under a sys-tem that satisfies the followingrequirements:

(i) The system must be reasonably de-signed to preclude any individual otherthan the participant from giving the con-sent.

(ii) The system must provide the partic-ipant with a reasonable opportunity to re-view and to confirm, modify, or rescindthe terms of the distribution before theconsent to the distribution becomes effec-tive.

(iii) The system must provide the par-ticipant, within a reasonable time after theconsent is given, a confirmation of theterms (including the form) of the distribu-tion either on a written paper document orthrough an electronic medium under asystem that satisfies the requirements ofparagraph (f)(1) of this section.

(g) Examples. The provisions of para-graph (f) of this section are illustrated bythe following examples:

Example 1. (i) A qualified plan (Plan A) permitsparticipants to request distributions by e-mail. UnderPlan A’s system for such transactions, a participantmust enter his or her account number and personalidentification number (PIN); this information mustmatch that in Plan A’s records in order for the transac-tion to proceed. If a participant requests a distributionfrom Plan A by e-mail, the plan administrator providesthe participant with a section 411(a)(11) notice by e-mail. The plan administrator also advises the partici-pant by e-mail that he or she may request the section411(a)(11) notice on a written paper document andthat, if the participant requests the notice on a writtenpaper document, it will be provided at no charge. Toproceed with the distribution by e-mail, the participantmust acknowledge receipt, review, and comprehen-sion of the section 411(a)(11) notice and must consentto the distribution within the time required under sec-tion 411(a)(11). Within a reasonable time after theparticipant’s consent by e-mail, the plan administrator,by e-mail, sends confirmation of the terms (includingthe form) of the distribution to the participant and ad-vises the participant that he or she may request theconfirmation on a written paper document that will beprovided at no charge.

(ii) In this Example 1, Plan A does not fail to satisfythe notice or consent requirement of section411(a)(11) merely because the notice and consent areprovided other than through written paper documents.

February 28, 2000 720 2000–9 I.R.B.

Example 2. (i) Same facts as Example 1, exceptthat, instead of sending a confirmation of the distribu-tion by e-mail, the plan administrator, within a reason-able time after the participant’s consent, sends the par-ticipant an account statement for the period thatincludes information reflecting the terms of the distri-bution.

(ii) In this Example 2, Plan A does not fail to satisfythe consent requirement of section 411(a)(11) merelybecause the consent is provided other than through awritten paper document.

Example 3. (i) A qualified plan (Plan B) permitsparticipants to request distributions through the Plan Bweb site (Internet or intranet). Under Plan B’s systemfor such transactions, a participant must enter his orher account number and personal identification num-ber (PIN); this information must match that in Plan B’srecords in order for the transaction to proceed. A par-ticipant may request a distribution from Plan B by fol-lowing the applicable instructions on the Plan B website. After the participant has requested a distribution,the participant is automatically shown a page on theweb site containing a section 411(a)(11) notice. Al-though this page of the web site may be printed, thepage also advises the participant that he or she may re-quest the section 411(a)(11) notice on a written paperdocument by calling a telephone number indicated onthe web page and that, if the participant requests thenotice on a written paper document, it will be providedat no charge. To proceed with the distribution by e-mail, the participant must acknowledge receipt, re-view, and comprehension of the section 411(a)(11) no-tice and must consent to the distribution within thetime required under section 411(a)(11). The web siterequires the participant to review and confirm theterms (including the form) of the distribution beforethe transaction is completed. After the participant hasgiven consent via e-mail, the Plan B web site confirmsthe distribution to the participant and advises the par-ticipant that he or she may request the confirmation ona written paper document that will be provided at nocharge.

(ii) In this Example 3, Plan B does not fail to satisfythe notice or consent requirement of section411(a)(11) merely because the notice and consent areprovided other than through written paper documents.

Example 4. (i) A qualified plan (Plan C) permitsparticipants to request distributions through Plan C’sautomated telephone system. Under Plan C’s systemfor such transactions, a participant must enter his orher account number and personal identification num-ber (PIN); this information must match that in Plan C’srecords in order for the transaction to proceed. Plan Cprovides only the following distribution options: alump sum and annual installments over 5, 10, or 20years. A participant may request a distribution fromPlan C by following the applicable instructions on theautomated telephone system. After the participant hasrequested a distribution, the automated telephone sys-tem reads the section 411(a)(11) notice to the partici-pant. The automated telephone system also advisesthe participant that he or she may request the notice ona written paper document and that, if the participantrequests the notice on a written paper document, it willbe provided at no charge. Before proceeding with thedistribution transaction, the participant must acknowl-edge receipt, review, and comprehension of the section411(a)(11) notice and must consent to the distributionwithin the time required under section 411(a)(11). Theautomated telephone system requires the participant to

review and confirm the terms (including the form) ofthe distribution before the transaction is completed.After the participant has given consent, the automatedtelephone system confirms the distribution to the par-ticipant and advises the participant that he or she mayrequest the confirmation on a written paper documentthat will be provided at no charge. Because Plan C hasrelatively few and simple distribution options, the pro-vision of the section 411(a)(11) notice over the auto-mated telephone system is no less understandable tothe participant than a written paper notice.

(ii) In this Example 4, Plan C does not fail to satisfythe notice or consent requirement of section411(a)(11) merely because the notice and consent areprovided other than through written paper documents.

Example 5. (i) Same facts as Example 4, exceptthat, pursuant to Plan C’s system for processing suchtransactions, a participant who so requests is trans-ferred to a customer service representative whose con-versation with the participant is recorded. The cus-tomer service representative provides the section411(a)(11) notice from a prepared text and processesthe participant’s distribution in accordance with prede-termined instructions of the plan administrator.

(ii) In this Example 5, Plan C does not fail to satisfythe notice or consent requirement of section411(a)(11) merely because the notice and consent areprovided other than through written paper documents.

Example 6. (i) Same facts as Example 1, exceptthat Participant D requested a distribution by e-mail,then terminated employment and, following the termi-nation, no longer has access to e-mail.

(ii) In this Example 6, Plan A does not satisfy thenotice or consent requirement of section 411(a)(11)because the electronic medium through which the no-tice is provided is not reasonably accessible to Partici-pant D. Plan A must provide Participant D the section411(a)(11) notice in a written paper document or by anelectronic means that is reasonably accessible to Par-ticipant D.

Par. 4. The heading for part 35 is re-vised to read as follows:

PART 35—EMPLOYMENT TAX ANDCOLLECTION OF INCOME TAX ATSOURCE REGULATIONS UNDERTHE TAX EQUITY AND FISCALRESPONSIBILITY ACT OF 1982

Par. 5. The authority citation for part35 is revised to read as follows:

Authority: 26 U.S.C. 6047(e), 7805;68A Stat. 917; 96 Stat. 625; Public Law97–248 (96 Stat. 623).

Section 35.3405–1 also issued under 26U.S.C. 3405(e)(10)(B)(iii).

Section 35.3405–1T also issued under26 U.S.C. 3405(e)(10)(B)(iii).

Par. 6. Redesignate §35.3405–1 as§35.3405–1T and revise the heading toread as follows:§35.3405–1T Questions and answers re-lating to withholding on pensions, annu-ities, and certain other deferred income(temporary regulations).* * * * *

Par. 7. A new §35.3405–1 is added toread as follows:§35.3405–1 Questions and answers re-lating to withholding on pensions, annu-ities, and certain other deferred income.

The following questions and answersrelate to withholding on pensions, annu-ities, and other deferred income undersection 3405 of the Internal RevenueCode of 1986, as added by section 334 ofthe Tax Equity and Fiscal ResponsibilityTax Act of 1982 (Pub. L. 97–248)(TEFRA).

a-1 through d-34 [Reserved] For fur-ther guidance, see §35.3405–1T.* * * * *

d-35. Q. Through what medium maya payor provide the notice required undersection 3405 to a payee?

A. A payor may provide the notice re-quired under section 3405 (including theabbreviated notice described in d-27 of§35.3405–1T and the annual notice de-scribed in d-31 of §35.3405–1T) to apayee either on a written paper documentor through an electronic medium reason-ably accessible to the payee. A noticeprovided through an electronic mediummust be provided under a system that sat-isfies the following requirements:

(a) The system must be reasonably de-signed to provide the notice in a mannerno less understandable to the payee than awritten paper document.

(b) At the time the notice is provided,the payee must be advised that the payeemay request and receive the notice on awritten paper document at no charge, and,upon request, that document must be pro-vided to the payee at no charge.

d-36. Q. Are there examples that il-lustrate the provisions of d-35 of this sec-tion?

A. The provisions of d-35 of this sectionare illustrated by the following examples:

Example 1. (i) An employer deferred compensa-tion plan (Plan A) permits participants to request dis-tributions by e-mail. Under Plan A’s system for suchtransactions, a participant must enter his or her ac-count number and personal identification number(PIN); this information must match that in Plan A’srecords in order for the transaction to proceed. Theplan administrator is the payor. If a participant re-quests a distribution from Plan A by e-mail, the planadministrator provides the participant with the noticerequired under section 3405 by e-mail. The plan ad-ministrator also advises the participant by e-mail thathe or she may request the notice on a written paperdocument and that, if the participant requests the no-tice on a written paper document, it will be provided atno charge. To proceed with the distribution by e-mail,

the participant must acknowledge receipt, review, andcomprehension of the notice.

(ii) In this Example 1, the plan administrator doesnot fail to satisfy the notice requirement of section3405 merely because the notice is provided to the par-ticipant other than through a written paper document.

Example 2. (i) An employer deferred compensa-tion plan (Plan B) permits participants to request dis-tributions through the Plan B web site (Internet or in-tranet). Under Plan B’s system for such transactions, aparticipant must enter his or her account number andpersonal identification number (PIN); this informationmust match that in Plan B’s records in order for thetransaction to proceed. The plan administrator is thepayor. A participant may request a distribution fromPlan B by following the applicable instructions on thePlan B web site. After the participant has requested adistribution, the participant is automatically shown apage on the web site containing the notice required bysection 3405. Although this page of the web site maybe printed, the page also advises the participant that heor she may request the notice on a written paper docu-ment and that, if the participant requests the notice ona written paper document, it will be provided at nocharge. To proceed with the distribution through theweb site, the participant must acknowledge receipt, re-view, and comprehension of the notice.

(ii) In this Example 2, the plan administrator doesnot fail to satisfy the notice requirement of section3405 merely because the notice is provided to the par-ticipant other than through a written paper document.

Example 3. (i) An employer deferred compensa-tion plan (Plan C) permits participants to request dis-tributions through Plan C’s automated telephone sys-tem. Under Plan C’s system for such transactions, aparticipant must enter his or her account number andpersonal identification number (PIN); this informationmust match that in Plan C’s records in order for the

transaction to proceed. The plan administrator is thepayor. A participant may request a distribution fromPlan C by following the applicable instructions on theautomated telephone system. After the participant hasrequested a distribution, the automated telephone sys-tem reads the notice required by section 3405 to theparticipant. The automated telephone system also ad-vises the participant that he or she may request the no-tice on a written paper document and that, if the partic-ipant requests the notice on a written paper document,it will be provided at no charge. Before proceedingwith the distribution transaction, the participant mustacknowledge receipt, review, and comprehension ofthe notice.

(ii) In this Example 3, the plan administrator doesnot fail to satisfy the notice requirement of section3405 merely because the notice is provided to the par-ticipant other than through a written paper document.

Example 4. (i) Same facts as Example 3, exceptthat, pursuant to the system for processing such trans-actions, a participant who so requests is transferred toa customer service representative whose conversationwith the participant is recorded. The customer servicerepresentative provides the notice required by section3405 by reading from a prepared text.

(ii) Conclusion. In this Example 4, the plan admin-istrator does not fail to satisfy the notice requirementof section 3405 merely because the notice is providedto the participant other than through a written paperdocument.

Example 5. (I) Same facts as Example 1, exceptthat Participant D requested a distribution by e-mailand then terminated employment. Participant D nolonger has access to e-mail.

(ii) In this Example 5, Plan A does not satisfy thenotice requirement of section 3405 because the elec-tronic medium through which the notice is provided isnot reasonably accessible to Participant D. Plan A

must provide the notice required by section 3405 toParticipant D in a written paper document or by anelectronic medium that is reasonably accessible to Par-ticipant D.

PART 602—OMB CONTROLNUMBERS UNDER THEPAPERWORK REDUCTION ACT

Par. 6. The authority citation for part602 continues to read as follows:

Authority: 26 U.S.C. 7805.Par. 7. In §602.101, paragraph (b) is

amended by adding the following entry inthe table in numerical order to read as fol-lows:§602.101 OMB Control numbers.* * * * *

(b) * * *

Robert E. Wenzel,Deputy Commissioner

of Internal Revenue.

Approved January 20, 2000.

Jonathan Talisman,Acting Assistant Secretary

of the Treasury.

(Filed by the Office of the Federal Register on Feb-ruary 7, 2000, 8:45 a.m., and published in the issueof the Federal Register for February 8, 2000, 65 F.R.6001)

2000–9 I.R.B. 721 February 28, 2000

CFR Part or Section Where Current OMBIdentified and Described Control No.

* * * * *

1.402(f)–1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1545–1632* * * * *1.411(a)–11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1545–1632

* * * * *

Section 3221.—Rate of Tax

Determination of Quarterly Rateof Excise Tax for RailroadRetirement SupplementalAnnuity Program

In accordance with directions in Section3221(c) of the Railroad Retirement Tax Act(26 U.S.C., Section 3221(c)), the RailroadRetirement Board has determined that theexcise tax imposed by such Section 3221(c)on every employer, with respect to havingindividuals in his employ, for each work-

hour for which compensation is paid bysuch employer for services rendered to himduring the quarter beginning January 1,2000, shall be at the rate of 26 1/2 cents.

In accordance with directions in Section15(a) of the Railroad Retirement Act of1974, the Railroad Retirement Board has de-termined that for the quarter beginning Janu-ary 1, 2000, 38.7 percent of the taxes col-lected under Sections 3211(b) and 3221(c)of the Railroad Retirement Tax Act shall becredited to the Railroad Retirement Accountand 61.3 percent of the taxes collected undersuch Sections 3211(b) and 3221(c) plus 100

percent of the taxes collected under Section3221(d) of the Railroad Retirement Tax Actshall be credited to the Railroad RetirementSupplemental Account.

Dated December 2, 1999.

By Authority of the Board.

Beatrice Ezerski,Secretary of the Board.

(Filed by the Office of the Federal Register on De-cember 12, 1999, 8:45 a.m., and published in theissue of the Federal Register for December 13, 1999,64 F.R. 69575)

26 CFR 601.105: Examination of returns andclaims for refund, credit, or abatement;determination of correct tax liability.(Also Part I, sections 61, 280F; 1.61.21, 1.280F–7)

Rev. Proc. 2000-18

SECTION 1. PURPOSE

This revenue procedure provides: (1)limitations on depreciation deductions forowners of passenger automobiles firstplaced in service during calendar year2000, including separate limitations onpassenger automobiles designed to bepropelled primarily by electricity andbuilt by an original equipment manufac-turer (electric automobiles); (2) theamounts to be included in income bylessees of passenger automobiles firstleased during calendar year 2000, includ-ing separate inclusion amounts for elec-tric automobiles; and (3) the maximumallowable value of employer-provided au-tomobiles first made available to employ-ees for personal use in calendar year 2000for which the vehicle cents-per-mile valu-ation rule provided under § 1.61-21(e) ofthe Income Tax Regulations may be ap-plicable. The tables detailing these depre-ciation limitations and lessee inclusionamounts reflect the automobile price in-flation adjustments required by §280F(d)(7) of the Internal Revenue Code.The maximum allowable automobilevalue for applying the vehicle cents-per-mile valuation rule reflects the automo-bile price inflation adjustment of §280F(d)(7) as required by § 1.61-21(e)(1)(iii)(A).

SECTION 2. BACKGROUND

For owners of automobiles, § 280F(a)imposes dollar limitations on the depreci-ation deduction for the year that the auto-mobile is placed in service and each suc-ceeding year. In the case of electricautomobiles placed in service after Au-gust 5, 1997, and before January 1, 2005,§ 280F(a)(1)(C) requires tripling of theselimitation amounts. Section 280F(d)(7)requires the amounts allowable as depre-ciation deductions to be increased by aprice inflation adjustment amount for pas-senger automobiles placed in service after1988.

For leased automobiles, § 280F(c) re-quires a reduction in the deduction al-lowed to the lessee of the automobile.The reduction must be substantiallyequivalent to the limitations on the depre-ciation deductions imposed on owners ofautomobiles. Under § 1.280F-7(a), thisreduction requires the lessees to includein gross income an inclusion amount de-termined by applying a formula to theamount obtained from a table. There is atable for lessees of electric automobilesand a table for all other passenger auto-mobiles. Each table shows inclusionamounts for a range of fair market valuesfor each tax year after the automobile isfirst leased.

For automobiles first provided by em-ployers to employees that meet the re-quirements of § 1.61-21(e)(1), the valueto the employee of the use of the automo-bile may be determined under the vehiclecents-per-mile valuation rule of § 1.61-21(e). Section 1.61-21(e)(1)(iii)(A) pro-vides that for an automobile first madeavailable after 1988 to any employee ofthe employer for personal use, the valueof the use of the automobile may not bedetermined under the vehicle cents-per-mile valuation rule for a calendar year ifthe fair market value of the automobile(determined pursuant to § 1.61-21(d)(5)(i) through (iv)) on the first datethe automobile is made available to theemployee exceeds $12,800 as adjusted by§ 280F(d)(7).

SECTION 3. SCOPE AND OBJECTIVE

01. The limitations on depreciation de-ductions in section 4.02 of this revenueprocedure apply to automobiles (otherthan leased automobiles) that are placedin service in calendar year 2000 and con-tinue to apply for each tax year that theautomobile remains in service.

02. The tables in section 4.03 of thisrevenue procedure apply to leased auto-mobiles for which the lease term begins incalendar year 2000. Lessees of such auto-mobiles must use these tables to deter-mine the inclusion amount for each taxyear during which the automobile isleased.

03. SeeRev. Proc. 96-25, 1996-1 C.B.681, for information on determining in-

clusion amounts for automobiles firstleased before January 1, 1997; Rev. Proc.97-20, 1997-1 C.B. 647, for automobilesfirst leased during calendar year 1997, in-cluding electric automobiles first leasedon or after January 1, 1997, and beforeAugust 6, 1997; Rev. Proc. 98-24, 1998-1C.B. 663, for electric automobiles firstleased after August 5, 1997, and beforeJanuary 1, 1998; Rev. Proc. 98-30, 1998-1C.B. 930, for all automobiles first leasedin calendar year 1998; and Rev. Proc. 99-14, 1999-5 I.R.B. 56, for all automobilesfirst leased in calendar year 1999.

04. The maximum fair market valuefigure in section 4.04(2) of this revenueprocedure applies to employer-providedautomobiles first made available to anyemployee for personal use in calendaryear 2000. SeeRev. Proc. 97-20, for themaximum fair market value figure for au-tomobiles first made available in calendaryear 1997; Rev. Proc. 98-30, for the maxi-mum fair market value figure for automo-biles first made available in calendar year1998; and Rev. Proc. 99-14, for the maxi-mum fair market value figure for automo-biles first made available in calendar year1999.

SECTION 4. APPLICATION

01. A taxpayer placing an automobilein service for the first time during calen-dar year 2000 is limited to the deprecia-tion deduction shown in Table 1 of sec-tion 4.02(2) of this revenue procedure or,in the case of an electric automobile,Table 2 of this revenue procedure. A tax-payer first leasing an automobile in calen-dar year 2000 must determine the inclu-sion amount that is added to gross incomeusing Table 3 of section 4.03 of this rev-enue procedure or, in the case of an elec-tric automobile, Table 4 of this revenueprocedure. In addition, the procedures of§ 1.280F-7(a) must be followed. An em-ployer providing an automobile for thefirst time in calendar year 2000 for thepersonal use of any employee may deter-mine the value of the use of the automo-bile by using the cents-per-mile valuationrule in § 1.61-21(e) if the fair marketvalue of the automobile does not exceedthe amount specified in section 4.04(2) ofthis revenue procedure. If the fair market

February 28, 2000 722 2000–9 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous

value of the automobile exceeds theamount specified in section 4.04(2) of thisrevenue procedure, the employer may de-termine the value of the use of the auto-mobile under the general valuation rulesof § 1.61-21(b) or under the special valua-tion rules of § 1.61-21(d) (Automobilelease valuation) or § 1.61-21(f) (Commut-ing valuation) if the applicable require-ments are met.

02. Limitations on Depreciation De-ductions for Certain Automobiles.

(1) Amount of the Inflation Adjust-ment. Under § 280F(d)(7)(B)(i), the auto-mobile price inflation adjustment for anycalendar year is the percentage (if any) bywhich the CPI automobile component forOctober of the preceding calendar yearexceeds the CPI automobile componentfor October 1987. The term “CPI auto-mobile component” is defined in §

280F(d)(7)(B)(ii) as the “automobilecomponent” of the Consumer Price Indexfor all Urban Consumers published by theDepartment of Labor (the CPI). The newcar component of the CPI was 115.2 forOctober 1987 and 138.8 for October1999. The October 1999 index exceededthe October 1987 index by 23.6. The In-ternal Revenue Service has, therefore, de-termined that the automobile price infla-tion adjustment for 2000 is 20.49 percent(23.6/115.2 x 100%). This adjustment isapplicable to all automobiles that are firstplaced in service in calendar year 2000.The dollar limitations in § 280F(a) musttherefore be multiplied by a factor of0.2049, and the resulting increases, afterrounding to the nearest $100, are added tothe 1988 limitations to give the deprecia-tion limitations applicable to passengerautomobiles (other than electric automo-

biles) for calendar year 2000. To deter-mine the dollar limitations applicable toan electric automobile first placed in ser-vice during calendar year 2000, the dollarlimitations in § 280F(a) are tripled in ac-cordance with § 280F(a)(1)(C) and arethen multiplied by a factor of 0.2049; theresulting increases, after rounding to thenearest $100, are added to the tripled1988 limitations to give the depreciationlimitations for calendar year 2000.

(2) Amount of the Limitation. Forautomobiles (other than electric automo-biles) placed in service in calendar year2000, Table 1 of this revenue procedurecontains the dollar amount of the depreci-ation limitations for each tax year. Forelectric automobiles placed in service incalendar year 2000, Table 2 of this rev-enue procedure contains these amounts.

2000–9 I.R.B. 723 February 28, 2000

REV. PROC. 2000-18, TABLE 1

DEPRECIATION LIMITATIONS FOR AUTOMOBILES(OTHER THAN ELECTRIC AUTOMOBILES)

FIRST PLACED IN SERVICE IN CALENDAR YEAR 2000

Tax Year Amount

1st Tax Year $3,0602nd Tax Year $4,9003rd Tax Year $2,950Each Succeeding Year $1,775

REV. PROC. 2000-18, TABLE 2

DEPRECIATION LIMITATIONS FOR ELECTRIC AUTOMOBILESFIRST PLACED IN SERVICE IN CALENDAR YEAR 2000

Tax Year Amount

1st Tax Year $9,2802nd Tax Year $14,8003rd Tax Year $8,850Each Succeeding Year $5,325

03. Inclusions in Income of Lessees ofAutomobiles.

The inclusion amounts for automobilesfirst leased in calendar year 2000 are cal-

culated under the procedures described in§ 1.280F-7(a). Lessees of automobilesother than electric automobiles should useTable 3 of this revenue procedure in ap-

plying these procedures, while lessees ofelectric automobiles should use Table 4 ofthis revenue procedure.

REV. PROC. 2000-18, TABLE 3

DOLLAR AMOUNTS FOR AUTOMOBILES (OTHER THAN ELECTRIC AUTOMOBILES)WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2000

Fair Market Value Tax Year During Leaseof Automobile

1st 2nd 3rd 4th 5th andOver Not Over Later

February 28, 2000 724 2000–9 I.R.B.

$ 15,500 15,800 3 6 9 10 12 15,800 16,100 5 12 17 20 23 16,100 16,400 8 17 25 30 34 16,400 16,700 10 23 33 40 45 16,700 17,000 13 28 42 49 57 17,000 17,500 16 36 52 62 72 17,500 18,000 20 45 66 78 91 18,000 18,500 25 54 79 95 109 18,500 19,000 29 63 93 111 128 19,000 19,500 33 72 107 127 147 19,500 20,000 37 81 121 143 166 20,000 20,500 41 91 133 160 185 20,500 21,000 45 100 147 176 204 21,000 21,500 50 109 160 193 222 21,500 22,000 54 118 174 209 241 22,000 23,000 60 132 194 234 269 23,000 24,000 68 150 222 266 306 24,000 25,000 77 168 249 298 345 25,000 26,000 85 187 276 331 381 26,000 27,000 93 205 303 364 419 27,000 28,000 102 223 330 396 457 28,000 29,000 110 241 358 429 494 29,000 30,000 119 259 385 461 532 30,000 31,000 127 278 412 493 570 31,000 32,000 135 296 439 527 607 32,000 33,000 144 314 467 558 645 33,000 34,000 152 333 493 591 683 34,000 35,000 160 351 521 623 720 35,000 36,000 169 369 548 656 757 36,000 37,000 177 388 574 689 795 37,000 38,000 185 406 602 721 833 38,000 39,000 194 424 629 754 870 39,000 40,000 202 443 656 786 908 40,000 41,000 210 461 683 819 946 41,000 42,000 219 479 710 852 983 42,000 43,000 227 497 738 884 1,021 43,000 44,000 235 516 765 916 1,058 44,000 45,000 244 534 792 949 1,095 45,000 46,000 252 552 819 982 1,133 46,000 47,000 260 571 846 1,014 1,171 47,000 48,000 269 589 873 1,047 1,208 48,000 49,000 277 607 901 1,079 1,246 49,000 50,000 285 626 927 1,112 1,284 50,000 51,000 294 644 954 1,145 1,321 51,000 52,000 302 662 982 1,177 1,359 52,000 53,000 311 680 1,009 1,210 1,396 53,000 54,000 319 699 1,036 1,242 1,433

54,000 55,000 327 717 1,063 1,275 1,471 55,000 56,000 336 735 1,090 1,308 1,508 56,000 57,000 344 754 1,117 1,340 1,546 57,000 58,000 352 772 1,145 1,372 1,584 58,000 59,000 361 790 1,172 1,405 1,621 59,000 60,000 369 808 1,199 1,438 1,659 60,000 62,000 381 836 1,240 1,486 1,715 62,000 64,000 398 873 1,294 1,551 1,790 64,000 66,000 415 909 1,348 1,617 1,865 66,000 68,000 432 945 1,403 1,681 1,941 68,000 70,000 448 982 1,457 1,747 2,016 70,000 72,000 465 1,019 1,511 1,811 2,092 72,000 74,000 482 1,055 1,566 1,876 2,166 74,000 76,000 498 1,092 1,620 1,942 2,241 76,000 78,000 515 1,129 1,673 2,007 2,317 78,000 80,000 532 1,165 1,728 2,072 2,392 80,000 85,000 561 1,229 1,823 2,186 2,523 85,000 90,000 603 1,320 1,959 2,349 2,711 90,000 95,000 644 1,412 2,095 2,511 2,899 95,000 100,000 686 1,504 2,230 2,674 3,087

100,000 110,000 749 1,641 2,433 2,918 3,369 110,000 120,000 832 1,824 2,705 3,243 3,745 120,000 130,000 916 2,006 2,977 3,569 4,120 130,000 140,000 999 2,190 3,248 3,894 4,496 140,000 150,000 1,083 2,372 3,520 4,219 4,872 150,000 160,000 1,166 2,556 3,790 4,545 5,248 160,000 170,000 1,250 2,738 4,062 4,871 5,623 170,000 180,000 1,333 2,921 4,334 5,196 5,998 180,000 190,000 1,416 3,105 4,605 5,521 6,374 190,000 200,000 1,500 3,287 4,877 5,846 6,750 200,000 210,000 1,583 3,470 5,148 6,172 7,126 210,000 220,000 1,667 3,653 5,419 6,498 7,501 220,000 230,000 1,750 3,836 5,691 6,823 7,877 230,000 240,000 1,834 4,019 5,962 7,148 8,253 240,000 250,000 1,917 4,202 6,233 7,474 8,629

2000–9 I.R.B. 725 February 28, 2000

REV. PROC. 2000-18, TABLE 3 (Cont’d.)

DOLLAR AMOUNTS FOR AUTOMOBILES (OTHER THAN ELECTRIC AUTOMOBILES)WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2000

Fair Market Value Tax Year During Leaseof Automobile

1st 2nd 3rd 4th 5th andOver Not Over Later

$ 47,000 48,000 7 17 26 32 36 48,000 49,000 14 31 47 57 66 49,000 50,000 20 45 69 82 95 50,000 51,000 27 59 90 107 124 51,000 52,000 33 74 110 133 153 52,000 53,000 39 88 132 157 183 53,000 54,000 46 102 153 183 211 54,000 55,000 52 116 174 209 240 55,000 56,000 59 130 195 234 270 56,000 57,000 65 145 216 259 299 57,000 58,000 72 159 237 284 328 58,000 59,000 78 173 258 310 357 59,000 60,000 85 187 279 335 387 60,000 62,000 95 208 311 373 430 62,000 64,000 107 237 353 423 489 64,000 66,000 120 266 394 474 547 66,000 68,000 133 294 437 524 606 68,000 70,000 146 322 480 574 664 70,000 72,000 159 351 521 625 723 72,000 74,000 172 379 564 675 781 74,000 76,000 185 407 606 727 838 76,000 78,000 198 436 648 777 897 78,000 80,000 211 464 690 828 955 80,000 85,000 234 514 763 916 1,058 85,000 90,000 266 585 869 1,042 1,204 90,000 95,000 298 656 975 1,168 1,350 95,000 100,000 331 727 1,080 1,295 1,495

100,000 110,000 379 834 1,237 1,485 1,714 110,000 120,000 444 975 1,449 1,737 2,006 120,000 130,000 509 1,117 1,660 1,990 2,297 130,000 140,000 574 1,259 1,870 2,243 2,589 140,000 150,000 638 1,402 2,080 2,496 2,881 150,000 160,000 703 1,543 2,292 2,748 3,173 160,000 170,000 768 1,685 2,503 3,000 3,465 170,000 180,000 833 1,827 2,713 3,254 3,756 180,000 190,000 897 1,970 2,923 3,506 4,049 190,000 200,000 962 2,112 3,134 3,759 4,340 200,000 210,000 1,027 2,253 3,346 4,011 4,632 210,000 220,000 1,092 2,395 3,556 4,264 4,924 220,000 230,000 1,156 2,538 3,766 4,517 5,215 230,000 240,000 1,221 2,680 3,977 4,769 5,507 240,000 250,000 1,286 2,821 4,189 5,022 5,798

February 28, 2000 726 2000–9 I.R.B.

REV. PROC. 2000-18, TABLE 4

DOLLAR AMOUNTS FOR ELECTRIC AUTOMOBILESWITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2000

Fair Market Value Tax Year During Leaseof Automobile

1st 2nd 3rd 4th 5th andOver Not Over Later

04. Maximum Automobile Value forUsing the Cents-per- mile Valuation Rule.

(1) Amount of Adjustment. Under §1.61-21(e)(1)(iii)(A), the limitation on thefair market value of an employer-providedautomobile first made available to any em-ployee for personal use after 1988 is to beadjusted in accordance with § 280F(d)(7).Accordingly, the adjustment for any calen-dar year is the percentage (if any) by whichthe CPI automobile component for Octoberof the preceding calendar year exceeds theCPI automobile component for October1987. See, section 4.02(1) of this revenueprocedure. The new car component of theCPI was 115.2 for October 1987 and 138.8for October 1999. The October 1999 indexexceeded the October 1987 index by 23.6.The Internal Revenue Service has, there-fore, determined that the adjustment for2000 is 20.49 percent (23.6/115.2 x 100%).This adjustment is applicable to all em-ployer-provided automobiles first madeavailable to any employee for personal usein calendar year 2000. The maximum fairmarket value specified in § 1.61-21(e)(1)(iii)(A) must therefore be multi-plied by a factor of 0.2049, and the result-ing increase, after rounding to the nearest$100, is added to $12,800 to give the maxi-mum value for calendar year 2000.

(2) The Maximum Automobile Value.For automobiles first made available incalendar year 2000 to any employee ofthe employer for personal use, the vehiclecents-per-mile valuation rule may be ap-plicable if the fair market value of the au-tomobile on the date it is first made avail-able does not exceed $15,400.

SECTION 5. EFFECTIVE DATE

This revenue procedure applies to auto-mobiles (other than leased automobiles)that are first placed in service during cal-endar year 2000, to leased automobilesthat are first leased during calendar year2000, and to employer-provided automo-biles first made available to employeesfor personal use in calendar year 2000.

DRAFTING INFORMATION

The principal author of this revenue pro-cedure is Bernard P. Harvey of the Officeof the Assistant Chief Counsel(Passthroughs and Special Industries). Forfurther information regarding the deprecia-tion limitations and lessee inclusionamounts in this revenue procedure, contactMr. Harvey at (202) 622-3110; for furtherinformation regarding the maximum auto-mobile value for applying the vehicle

cents-per-mile valuation rule, contact Ms.Lynne Camillo of the Office of the Associ-ate Chief Counsel (Employee Benefits andExempt Organizations) at (202) 622-6040(not toll-free calls).

Weighted Average Interest RateUpdate

Notice 2000-2

Notice 88-73 provides guidelines fordetermining the weighted average interestrate and the resulting permissible range ofinterest rates used to calculate current lia-bility for the purpose of the full fundinglimitation of § 412(c)(7) of the InternalRevenue Code as amended by the Om-nibus Budget Reconciliation Act of 1987and as further amended by the UruguayRound Agreements Act, Pub. L. 103-465(GATT).

The average yield on the 30-year Trea-sury Constant Maturities for January 2000is 6.63 percent.

The following rates were determinedfor the plan years beginning in the monthshown below.

2000–9 I.R.B. 727 February 28, 2000

90% to 105% 90% to 110%Weighted Permissible Permissible

Month Year Average Range Range

February 2000 6.03 5.43 to 6.34 5.43 to 6.64

Drafting Information

The principal author of this notice isTodd Newman of Employee Plans, Tax Ex-empt and Government Entities Division.For further information regarding this no-tice, call the Employee Plans Actuarial hot-line, (202) 622-6076 between 2:30 and3:30 p.m. Eastern time (not a toll-free num-ber). Mr. Newman’s number is (202) 622-8458 (also not a toll-free number).

Pre-Filing Agreements PilotProgram

Notice 2000-12

1. INTRODUCTION OF PILOTPROGRAM

This Notice announces a pilot programfor Pre-Filing Agreements (PFAs), underwhich large business taxpayers may re-quest examination and resolution of spe-cific issues relating to tax returns they ex-pect to fi le between September andDecember, 2000. The purpose of the pro-gram is to enable both taxpayers and theInternal Revenue Service (IRS) to resolvebefore filing the treatment of issues other-wise likely to be disputed in post-filingaudits. Through a cooperative effort, theprogram is intended to reduce the costs,burden and delays encountered in post-fil-ing examinations.The program is administered by the Largeand Mid-size Business Division (LMSB)of the IRS. In its pilot phase, the programis open to large businesses that currentlyhave a Coordinated Examination Team onsite. Taxpayers interested in participating

in the pilot program, or with questionsabout the program and its suitability totheir situation, should contact their on siteCase Manager as soon as possible, andare encouraged to apply on or beforeMarch 15, 2000, to ensure their applica-tion will be given full consideration.LMSB is willing to meet with taxpayersconsidering participation in the programto answer questions and explore the desir-ability of their participation.During the pilot phase of the program,LMSB plans to select approximately fiveto ten taxpayers from among those re-questing participation in the program.LMSB will select participants as soon aspossible after March 15, 2000, and pro-vide taxpayers and audit teams an orienta-tion about the program. The team willwork with the selected taxpayer with theexpectation of resolving the designated

issue by the taxpayer’s filing deadline.Taxpayers participating in the pilot pro-gram will be asked to assist in monitoringand evaluating the process. After com-pleting the pilot cases, the IRS will evalu-ate the program, and may then offer theprogram, after further modification, on apermanent basis.The IRS believes that the PFA programoffers significant potential benefits fortaxpayers as well as the IRS, and inviteslarge business taxpayers to participate inthis program.

2. DESCRIPTION OF A PRE-FILINGAGREEMENT

A PFA is a closing agreement under § 7121of the Internal Revenue Code between theIRS and taxpayer relating to one or morespecific issues arising from transactions en-tered into by the taxpayer during a taxableperiod ending prior to the date of the agree-ment. The agreement specifies the treat-ment of the transaction(s) on a tax return tobe filed by the taxpayer subsequent to thedate of the agreement. A PFA may also re-solve related specific items affecting othertaxable periods. See Rev. Proc. 68-16,1968-1 C.B. 770, which describes thepreparation of closing agreements under §7121.The PFA’s application of the law to thetaxpayer’s facts may result in treating anitem differently from earlier treatments ofsimilar items in prior taxable years (e.g.,deducting items that previously were cap-italized, such as certain ISO 9000 costs).If so, the differing treatment may consti-tute a change in the method of accountingfor that item. The PFA will resolve onlythe factual characterization of the items atissue, but will not constitute the Commis-sioner’s consent to make any accountingmethod change that may be required toconform the agreed upon treatment of theitem with identical items in earlier years.Permission to make any accountingmethod changes required by the PFA’sresolution of the factual and legal issuesmust be obtained using the applicable ad-ministrative procedures. SeeRev. Proc.99-49, 1999-52 I.R.B. 725 (automaticconsent to change certain accountingmethods); Rev. Proc. 97-27, 1997-1 C.B.680.

3. SUBJECT MATTER OF AN LMSBPRE-FILING AGREEMENT

In general. The PFA program is intendedto advance the resolution of issues that areotherwise likely to be disputed in post-fil-ing audits. The program is intended toreach agreement on factual issues andapply settled legal principles to those facts.In such cases, the presence of an LMSBaudit team on site shortly after the comple-tion of the transaction is most likely to en-hance the prospects for an agreed resolu-tion of the issue. Questions concerning thecorrect interpretation of legal rules the in-terpretation of which is not well settled aremore properly presented in requests for pri-vate letter rulings. SeeRev. Proc. 2000-1,2000-1 I.R.B. 4. Moreover, the program isnot available to settle disagreements be-tween a taxpayer and the IRS over the cor-rect interpretation of the tax laws (except asauthorized under Delegation Order No. 236or 247 regarding settlement guidelines).The IRS will consider entering into a PFAon any issue involving the application ofsettled legal principles requested by the tax-payer, except as noted below. Issuance of aPFA is discretionary with the LMSB Indus-try Director. A PFA cannot resolve issuesfor taxpayers or years outside the jurisdic-tion of LMSB. In evaluating whether toproceed with the PFA process and to enterinto a PFA, the IRS will determine that theissue presented is consistent with the over-all goals of the program stated above.Examples. The following are examplesof issues likely to be suitable for resolu-tion through the PFA program:(1) The valuation of assets (except in

the context of transfer pricing), andthe allocation of the purchase orsale price of a business among theassets acquired or sold;

(2) The identification and documenta-tion of hedging transactions;

(3) Issues relating to in-house researchexpenses under section 41;

(4) The allocation of costs among dif-ferent categories of deductible andcapitalizable items in contexts inwhich there is a published revenueruling, e.g., repairs (Rev. Rul. 94-12, 1994-1 C.B. 36), advertising(Rev. Rul. 92-80, 1992-2 C.B. 57),and Y2K costs (Rev. Proc. 97-50,1997-2 C.B. 525);

(5) The determination of which costsare investigatory costs incurred todetermine whether to enter a newbusiness and which business to

enter for purposes of qualifying asstart-up costs under § 195 (seeRev.Rul. 99-23, 1999-20 I.R.B. 3);

(6) The determination of ‘market’ fortaxpayers using the lower of cost ormarket method of inventory valua-tion in situations involving inactivemarkets. See§ 1.471-4(b);

(7) Whether a taxpayer ’s financialstatement preparation of its last-in,first-out (LIFO) inventory is consis-tent with the LIFO conformity re-quirement under § 1.472-2(e);

(8) Whether a taxpayer’s inventorycontains ‘sub-normal’ goods withinthe meaning of § 1.471-2(c) and thevaluation placed thereon;

(9) Whether a taxpayer is consideredthe tax owner of the property beingproduced under § 1.263A-2(a)(1)(ii)(A);

(10) Whether a manufacturing contractnewly entered into by a taxpayer isrequired to be accounted for as along-term contract under § 460; and

(11) The determination of appropriateasset classes for depreciable prop-erty placed in service during thetaxable period.

Excluded subjects. A PFA will not beentered into with respect to the followingissues:(1) Issues that can be included in an

Advance Pricing Agreement underRev. Proc. 96-53, 1996-2 C.B. 375,(e.g., transfer pricing);

(2) Issues that can be resolved by re-questing a change in accountingmethod on Form 3115;

(3) Issues under the jurisdiction of theCommissioner, Tax Exempt andGovernment Entities Division (e.g.,employee plans);

(4) Issues regarding transactions thatlack a bona fide business purpose orhave as their principal purpose thereduction of federal taxes;

(5) The satisfaction, for purposes ofSubtitle F (Procedure and Adminis-tration), of reasonable cause, duediligence, good faith, clear and con-vincing evidence, or any similarstandard; and

(6) The applicability of any penalty orcriminal sanction.

Excluded circumstances. In addition,the IRS will not entertain a request for aPFA in the following circumstances:

February 28, 2000 728 2000–9 I.R.B.

(1) The issue (for the taxpayer) in-volves a partnership item as definedin § 6231, or is subject to the proce-dures set forth in § 6221 through §6233.

(2) The issue is or will be the subject ofa pending or contemporaneous re-quest for a private letter ruling or achange in accounting method by thetaxpayer;

(3) The taxpayer’s proposed resolutionof the issue is contrary to a privateletter ruling, technical advice mem-orandum, or closing agreement pre-viously issued to or regarding thetaxpayer;

(4) The taxpayer’s proposed resolutionof the issue is contrary to a positionadverse to the taxpayer proposed bythe IRS in response to a private let-ter ruling (or accounting methodchange) request that was withdrawnby the taxpayer; or

(4) The issue is the subject of litigation(or has been designated for litiga-tion by the Office of Chief Counsel)between the IRS and the taxpayerwith respect to an earlier taxableperiod.

For the purposes of these excluded circum-stances, any reference to the taxpayer alsoincludes a related taxpayer and any prede-cessor of the taxpayer or a related taxpayer.A related taxpayer is one related within themeaning of § 267 or a member of an affili-ated group within the meaning of § 1504that includes the taxpayer. A predecessor isan entity the tax liability of which the tax-payer or a related taxpayer is or was pri-marily or secondarily liable.

4. PROCEDURES FORREQUESTING AN LMSB PRE-FILING AGREEMENT

Before initiating a formal request. Tax-payers interested in participating in thepilot program, or with questions about theprogram and its suitability to their situa-tion, should contact the LMSB Case Man-ager supervising the audit of the returncurrently under examination as soon aspossible. Taxpayers also may contactJohn Petrella, the PFA Program Manager,at (202) 283-8390 (not a toll-free num-ber), for further information about thePFA program.Initiating the request. After discussingthe proposed request with their Case

Manager, the taxpayer must submit a re-quest for a PFA in writing through theCase Manager to the LMSB Industry Di-rector. Taxpayers are encouraged to sub-mit the request on or before March 15,2000, to ensure their application will begiven full consideration. The PFA Pro-gram Manager and the Case Manager areavailable to assist in the preparation of thesubmission.Contents of the request. The writtenstatement requesting a PFA should con-cisely:(1) Provide the taxpayer’s name, EIN,

and address and the name, title, ad-dress and telephone number of aperson to contact;

(2) Provide the Case Manager’s nameand telephone number;

(3) Identify the taxable period forwhich the PFA is sought, the lastdate on which the taxpayer may file(with extensions) a timely return forthat period, and (if earlier) the dateon which the taxpayer intends tofile that return;

(4) Describe the issue(s) for which thePFA is sought. Summarize the ma-terial facts and state the legalissue(s) involved. For the purposeof ascertaining that the issue in-volves the application of settledlaw, discuss the taxpayer’s interpre-tation of these legal rules and theirproposed application to the facts inquestion;

(5) Discuss the suitability of the issuefor the PFA program in light of thepurposes and criteria set forth insection 3, above;

(6) Represent that the issue is not de-scribed in any of the “Excluded Cir-cumstances” listed in section 3,above;

(7) Discuss whether the resolution ofthis issue will have any effect intaxable periods either before orafter the taxable period for whichthe PFA is sought;

(8) State whether the taxpayer has everapplied, or intends to apply, forCompetent Authority assistancewith respect to the issue for the yearin question or any prior year;

(9) Discuss whether the issue identifiedcan be resolved through a PFA bythe date on which the taxpayer in-tends to file its return for the tax-

able period in question;(10) Describe the organization and loca-

tion of the records and other evi-dence that substantiate the tax-payer’s proposed position on theissue;

(11) State that the taxpayer agrees thatthe inspection of records and testi-mony under the PFA procedureswill not preclude or impede (under§ 7605(b) or any administrativeprovisions adopted by the IRS) alater examination of a return or in-spection of records with respect toany tax year needed to resolve theissue(s) in the request for a PFA,and that the IRS need not complywith any applicable procedural re-strictions (such as providing noticeunder § 7605(b)) before beginningsuch examination or inspection; and

(12) Indicate the taxpayer’s willingnessto participate in a pilot program andto assist in monitoring and evaluat-ing the process.

Perjury statement. A request for a PFA,and any supplemental submission (includ-ing additional documents), must include adeclaration, signed by a person currentlyauthorized to sign the taxpayer’s federalincome tax return, in the following form:

Under penalties of perjury, I declarethat I have examined this request, in-cluding accompanying documents,and, to the best of my knowledge andbelief, the facts presented in support ofthe request for the Pre-Filing Agree-ment are true, correct and complete.

Signature. The request for a PFA mustbe signed by the taxpayer or the tax-payer’s authorized representative. If therequest is signed by an authorized repre-sentative, a copy of Form 2848, Power ofAttorney and Declaration of Representa-tive, must accompany the request.No user fee. During the pilot phase ofthis program, no user fee is required to re-quest a PFA.

5. PROCEDURES FOR SELECTINGTAXPAYERS FOR THE PILOTPROGRAM

Case Manager’s role.Case Managers willinform the PFA Program Manager of all in-stances in which taxpayers express interestin participation in the program, and willforward a copy of any written request to theLMSB Industry Director and the PFA Pro-

2000–9 I.R.B. 729 February 28, 2000

gram Manager. The Case Manager willalso submit to the LMSB Industry Directora recommendation as to whether LMSBshould proceed with the PFA request. TheCase Manager should discuss, in particular,the IRS resources required (including anyspecialists or outside consultants), the abil-ity to coordinate the PFA process with theexamination of the taxpayer’s previouslyfiled returns, the availability of taxpayerrecords and personnel, and the probabilityof completing examination of the issue in atimely manner. If the Case Manager plansto recommend against proceeding withconsideration of the PFA request, the CaseManager will discuss the proposed recom-mendation with the taxpayer before submit-ting the recommendation. LMSB Industry Director’s decision. TheLMSB Industry Director with jurisdictionover the taxpayer will make the final deci-sion as to whether to proceed with the tax-payer’s request towards resolution throughthe PFA program. Criteria for selectingtaxpayers to participate in the pilot phase ofthe PFA program include:(1) The suitability of the issue pre-

sented for the program;(2) The direct or indirect impact of a

PFA upon other years, issues, tax-payers, or related cases;

(3) Providing a cross-section of issuesand industries for the pilot; and

(4) The probability of completing theexamination of the issue and enter-ing into a PFA by the target date.

Communication with taxpayer. TheLMSB Industry Director or Field Opera-tions Director will contact the taxpayerwithin 14 days of receipt of the request todiscuss the potential suitability of the re-quested issue for inclusion in the pilotprogram. Thereafter, LMSB will informthe taxpayer in writing of LMSB IndustryDirector’s decision to accept or reject theissue(s) for consideration in the PFA pilotprogram. A taxpayer is not entitled to aconference to appeal an LMSB IndustryDirector’s decision not to go forward withthe PFA process. A taxpayer not selectedfor the pilot program remains eligible forother procedures for early issue resolu-tion, including the Accelerated Issue Res-olution (AIR) program (seeRev. Proc. 94-67, 1994-2 C.B. 800).

6. PROCESSING A REQUEST FORAN LMSB PRE-FILINGAGREEMENT

Consultation with taxpayer. If the IRSaccepts the request for consideration, theLMSB Industry Director or Field Opera-tions Director, will contact the taxpayer todiscuss scheduling an orientation programabout the PFA process with the taxpayerand the audit team. This will initiate aplanning process for factual developmentand issue resolution with respect to theissue(s) accepted for consideration. Inthis planning process, the IRS and the tax-payer will seek to agree on a proposedtime-frame, the identification of relevantrecords and testimony, IRS access torecords and testimony, and, ultimately, thepotential scope and nature of the proposedagreement(s), Factual and issue development.Afteracceptance by the LMSB Industry Direc-tor, the Case Manager will contact thetaxpayer to discuss any questions that theIRS may have, to ask for any additionalinformation needed to process the re-quest, to verify data supplied, or to re-quest additional supporting data. Truecopies of all contracts, agreements, instru-ments and other documents, as well astestimony pertaining to a request for aPFA must be submitted by the taxpayerupon request. The issues will be devel-oped and facts confirmed consistent withauditing standards and all other applicablerules and regulations in effect regardingproper auditing techniques. The auditteam will work closely with the taxpayerto resolve the issue.Audit Team recommendation. After de-veloping the facts and issues, the CaseManager will prepare a recommendationfor the LMSB Industry Director about en-tering into a PFA with the taxpayer. Be-fore submitting the recommendation tothe LMSB Industry Director, the CaseManager will provide the proposed rec-ommendation to the taxpayer. If the tax-payer disagrees with the Case Manager’sproposed recommendation, the CaseManager will offer the taxpayer an oppor-tunity for a conference before submittingthe recommendation to the LMSB Indus-try Director.Coordination with other functions. Inconsidering the request for a PFA, theLMSB Industry Director will obtain ap-proval from, or coordinate with, all appro-priate IRS functions as necessary or, inhis judgment, desirable.Program Manager and Chief Counsel

review. The LMSB Industry Directorwill submit any proposed PFA to the PFAProgram Manager, and through the PFAProgram Manager to the Office of ChiefCounsel, for review before it is executed.Conference with LMSB Industry Di-rector. If the Case Manager recommendsentering into a PFA on terms agreed to bythe taxpayer, but the LMSB Industry Di-rector is tentatively unwilling to enter intosuch a agreement, the LMSB Industry Di-rector will offer the taxpayer an opportu-nity for a conference before rejecting allor part of a proposed PFA. In all othercases, the LMSB Industry Director is notobligated to offer the taxpayer such a con-ference, although the taxpayer may re-quest one.Executing the PFA. The LMSB IndustryDirector may execute a PFA if the LMSBIndustry Director determines:(1) That entering into the PFA is con-

sistent with the goals of the PFAprogram as stated in this Notice;

(2) That the tax results provided for inthe PFA reflect settled legal princi-ples and correctly apply those prin-ciples (or positions authorizedunder Delegation Order No. 236 or247) to the facts found by the AuditTeam; and

(3) That there appears to be an advan-tage in having the issue(s) perma-nently and conclusively closed forthe taxable period covered by thePFA, or that the taxpayer showsgood and sufficient reasons for de-siring a closing agreement and thatthe United States will sustain nodisadvantage through consumma-tion of such an agreement (see§301.7121-1(a) of the Regulationson Procedure and Administration).

Return filing requirements not af-fected. The IRS’ acceptance of a tax-payer’s request to attempt to reach a PFAon specified issue(s) does not suspend orwaive the normal filing requirements forany tax returns that are affected by theproposed PFA. In the event that a PFA isreached prior to the filing of the return,the taxpayer will report the transaction(s)addressed in the PFA in accordance withthe terms of the PFA.Continuation of process after filing, co-ordination with Accelerated Issue Res-olution procedure, and Appeals. If aPFA is not executed prior to the filing of

February 28, 2000 730 2000–9 I.R.B.

the return(s), the IRS and the taxpayermay continue to attempt to resolve theissue and enter into a PFA under theseprocedures until July 31, 2001. If, as ofJuly 31, 2001, the IRS and taxpayer havenot entered into a PFA and the IRS dis-agrees with the taxpayer’s claimed taxtreatment of the transaction(s), the tax-payer and the IRS can continue the effortto reach an agreement using AIR proce-dures under Rev. Proc. 94-67, 1994-2C.B. 800. This continuation of the issueresolution process does not require a newapplication. In addition to the AIR proce-dures, the taxpayer retains the right topursue administrative appeal either by re-questing an Early Referral to Appeals, orby protesting any proposed deficiency re-lated to the issue.

7. WITHDRAWAL FROM THE PFAPROCESS

Withdrawal by the taxpayer or theLMSB Industry Director. At any timeprior to the execution of the PFA by theLMSB Industry Director, either the tax-payer or the LMSB Industry Director maywithdraw all or part of the request for aPFA from consideration. The withdrawalmust be communicated in writing.Effect of withdrawal. Notwithstandingthe withdrawal by either the taxpayer orthe LMSB Industry Director of any or allof the issues in the request for a PFA, thetaxpayer’s agreement that the inspectionof records and testimony under the PFAprocedures will not preclude or impede(under § 7605(b) or any administrativeprovisions adopted by the IRS) a later ex-amination of a return or inspection ofrecords with respect to any tax yearneeded to resolve the issue(s) in the re-quest for a PFA, and that the IRS need notcomply with any applicable proceduralrestrictions (such as providing noticeunder § 7605(b)) before beginning suchexamination or inspection, will remain ef-fective.Availability of Early Referral to Ap-peals. If the taxpayer and the IRS are un-able to reach either a PFA or an AIRagreement, the possibility of forwardingthe disputed issues to Appeals may beavailable under the Early Referral to Ap-peals procedures set forth in Rev. Proc.99-28, 1999-29 I.R.B. 109.

8. FORM AND CONTENT OF A PRE-

FILING AGREEMENT

A PFA between the taxpayer and the IRSis a closing agreement under § 7121. SeeRev. Proc. 68-16, 1968-1 C.B. 770, forfurther information on the form and con-tent of a closing agreement. A PFA mustcomply with the requirements of Rev.Proc. 68-16. The PFA will be prepared bythe taxpayer and the examination teamwith assistance, as necessary, from thePFA Program Manager, the Office ofChief Counsel, or other IRS personnel.

9. DISCLOSURE

PFAs are closing agreements entered intopursuant to I.R.C. § 7121. As such, it isthe position of the IRS that both PFAs andthe information generated or received bythe IRS during the PFA process constituteconfidential return information as definedby I.R.C. § 6103(b)(2)(A), that PFAs arenot written determinations under I.R.C. §6110, and, accordingly, are exempt fromdisclosure to the public under the Free-dom of Information Act (FOIA). How-ever, the issue of whether certain closingagreements must be disclosed under theFOIA has been the subject of recent litiga-tion; thus far, courts addressing this issuehave agreed with the IRS position. SeeTax Analysts v. IRS, 53 F.Supp. 2d 449(D.D.C. 1999); Tax Analysts v. IRS, 1999U.S. Dist. LEXIS 16733 (D.D.C. Aug. 6,1999), appeal docketed, No. 5284 (D.C.Cir. Aug. 13, 1999).

10. MISCELLANEOUS

Record keeping requirements. No as-pect of the PFA process will affect therecord keeping requirements imposed byany section of the Internal Revenue Code.Record retention. The taxpayer mustmaintain a copy of the PFA and support-ing documents, and books of account andrecords sufficient to enable the IRS to ex-amine the taxpayer’s compliance with thePFA. These records may be specified inthe PFA itself or in separate agreements.

11. PAPERWORK REDUCTION ACT

The collection of information containedin this notice has been reviewed and ap-proved by the Office of Management andBudget in accordance with the PaperworkReduction Act of 1995 (44 U.S.C. 3507)under the control number 1545-1684.An agency may not conduct or sponsor,

and a person is not required to respond to,a collection of information unless it dis-plays a valid OMB control number. Thecollections of information in this noticeare in sections 4, 6, and 10. The informa-tion collected under section 4 (applica-tion) is required to provide the IRS withthe information necessary to determinewhich taxpayers should be included in thePFA pilot program. The information col-lected under section 6 will be used to re-solve the taxpayer’s issue and to supportany PFA entered into between the tax-payer and the IRS. The recordkeeping re-quirement under section 10 will be usedfor tax administration. The collections ofinformation under sections 4 and 6 arevoluntary. Once a PFA is entered into, therecordkeeping requirements under section10 are mandatory. The likely respondentsare businesses or other for-profit institu-tions.The estimated total annual reportingand/or recordkeeping burden is 967hours.The estimated annual burden per respon-dent/recordkeeper varies from 5 hours to126 hours, depending on whether a tax-payer applying to the PFA pilot programis accepted into the program. The esti-mated annual burden for taxpayers whoapply to the PFA pilot program and areaccepted is 126 hours. The estimated an-nual burden for taxpayers that apply to thePFA pilot program and are not accepted is5 hours. The estimated number of tax-payers who apply to the PFA pilot pro-gram and are accepted is 7. The esti-mated number of taxpayers who apply tothe PFA pilot program and are not ac-cepted is 17. The estimated total numberof respondents and/or recordkeepers is24.The estimated annual frequency of re-sponses is on occasion. Books or records relating to a collectionof information must be retained so long astheir contents may become material in theadministration of any internal revenuelaw. Generally, tax returns and tax returninformation are confidential, as requiredby 26 U.S.C. 6103.

12. COMMENTS

The IRS invites interested persons tocomment on this program. Send submis-sions to CC:DOM:CORP:R (Notice2000-12), room 5226, Internal Revenue

2000–9 I.R.B. 731 February 28, 2000

Service, POB 7604, Ben Franklin Station,Washington, DC 20044. Submissionsalso may be hand delivered Mondaythrough Friday between the hours of 8a.m. and 5 p.m. to CC:DOM:CORP:R(Notice 2000-12), Courier’s Desk, Inter-nal Revenue Service, 1111 ConstitutionAvenue, NW., Washington, DC. Alterna-tively, interested persons may submitcomments via e-mail to:

sharon.y.horn@m1.irscounsel.treas.gov

These addresses are for comments on thepilot program. Requests by eligible tax-payers to participate in the pilot programshould be submitted through their CaseManager.

13. FURTHER INFORMATION

For further information regarding this No-tice, contact John Petrella on (202) 283-8390 (not a toll-free number).

Low-Income Housing TaxCredit–2000 Calendar YearResident Population Estimates

Notice 2000-13

This notice informs (1) state and localhousing credit agencies that allocate low-income housing tax credits under § 42 ofthe Internal Revenue Code and (2) statesand other issuers of tax-exempt privateactivity bonds under § 141, of the properpopulation figures to be used for calculat-ing the 2000 calendar year population-based component of the state housingcredit ceiling (Credit Ceiling) under §42(h)(3)(C)(i) and the 2000 calendar yearvolume cap (Volume Cap) under § 146.

The population figures both for thepopulation-based component of the CreditCeiling and for the Volume Cap are deter-mined by reference to § 146(j). That sec-tion provides generally that determina-tions of population for any calendar yearare made on the basis of the most recentcensus estimate of the resident populationof a state (or issuing authority) releasedby the Bureau of the Census before thebeginning of such calendar year.

The proper population figures for cal-culating the Credit Ceiling and the Vol-ume Cap for the 2000 calendar year arethe estimates of the resident population of

the states, Puerto Rico, and the insularareas (American Samoa, Guam, NorthernMariana Islands, and U.S. Virgin Islands)of the United States for July 1, 1999, re-leased by the Bureau of the Census onDecember 29, 1999, in press releasesCB99-251, CB99-253, and CB99-254.For convenience, these estimates arereprinted below.

Resident Population Estimates for July 1, 1999.

Alabama 4,369,862Alaska 619,500American Samoa 63,781Arizona 4,778,332Arkansas 2,551,373

California 33,145,121Colorado 4,056,133Connecticut 3,282,031

Delaware 753,538D.C. 519,000

Florida 15,111,244

Georgia 7,788,240Guam 151,968

Hawaii 1,185,497

Idaho 1,251,700Illinois 12,128,370Indiana 5,942,901Iowa 2,869,413

Kansas 2,654,052 Kentucky 3,960,825

Louisiana 4,372,035

Maine 1,253,040 Maryland 5,171,634 Massachusetts 6,175,169 Michigan 9,863,775 Minnesota 4,775,508 Mississippi 2,768,619 Missouri 5,468,338 Montana 882,779

Nebraska 1,666,028 Nevada 1,809,253 New Hampshire 1,201,134 New Jersey 8,143,412 New Mexico 1,739,844 New York 18,196,601 North Carolina 7,650,789 North Dakota 633,666 Northern Mariana Islands 69,216

Ohio 11,256,654 Oklahoma 3,358,044 Oregon 3,316,154

Pennsylvania 11,994,016

Puerto Rico 3,889,507

Rhode Island 990,819

South Carolina 3,885,736 South Dakota 733,133

Tennessee 5,483,535 Texas 20,044,141

U.S. Virgin Islands 119,615 Utah 2,129,836

Vermont 593,740 Virginia 6,872,912

Washington 5,756,361West Virginia 1,806,928 Wisconsin 5,250,446 Wyoming 479,602

The principal authors of this notice areChristopher J. Wilson of the Office of As-sistant Chief Counsel (Passthroughs andSpecial Industries) and Timothy L. Jonesof the Office of Assistant Chief Counsel(Financial Institutions and Products). Forfurther information regarding this noticecontact Mr. Wilson on (202) 622-3040(not a toll-free call).

February 28, 2000 732 2000–9 I.R.B.

2000–9 I.R.B. 733 February 28, 2000

Like-kind Exchange andInvoluntary Conversion ofMACRS Property; Correction

Announcement 2000-9

This document contains a correction toNotice 2000-4 (2000-3 I.R.B. 313), inwhich an erroneous address was given forcomments to be submitted electronically.Notice 2000-4 provides that the InternalRevenue Service and the Treasury De-partment intend to issue regulations under§ 168 of the Internal Revenue Code(MACRS property) to address the depre-ciation of MACRS property acquired in a§ 1031 like-kind exchange or § 1033 in-voluntary conversion.

The corrected provision reads as fol-lows:Alternatively, comments may be submit-ted electronically via:

sharon.y.horn@m1.irscounsel.treas.gov

Guidance Under Section 355(e);Recognition of Gain on CertainDistributions of Stock orSecurities in Connection With anAcquisition; Hearing

Announcement 2000-10

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Change of date and time ofpublic hearing.

SUMMARY: This document contains a no-tice of date and time change of a publichearing on proposed regulations relating torecognition of gain on certain distributionsof stock or securities of a controlled corpo-ration in connection with an acquisition.

DATES: The public hearing originallyscheduled for Wednesday, January 26,2000, is rescheduled for Thursday, March2, 2000, at 10 a.m. The due date for out-lines of topics to be discussed at the hear-ing was January 5, 2000.

ADDRESSES: The public hearing isbeing held in room 2615, Internal Rev-enue Building, 1111 Constitution Avenue,NW., Washington, DC. Due to buildingsecurity procedures, visitors must enter atthe 10th Street entrance, located betweenConstitution and Pennsylvania Avenues,NW. In addition, all visitors must presentphoto identification to enter the building.

FOR FURTHER INFORMATION CON-TACT: Concerning the hearing, and/or to

be placed on the building access list to at-tend the hearing LaNita VanDyke, (202)622-7190 (not a toll-free number).

SUPPLEMENTARY INFORMATION:The subject of the public hearing is

proposed regulations (REG-116733-98,1999-36 I.R.B. 392) that was published inthe Federal Registeron Thursday, Au-gust 24, 1999 (64 FR 46155).

The rules of 26 CFR 601.601(a)(3)apply to the hearing.

A period of 10 minutes is allotted toeach person for presenting oral com-ments.

After the deadline for receiving out-lines has passed, the IRS will prepare anagenda containing the schedule of speak-ers. Copies of the agenda will be madeavailable, free of charge, at the hearing.

Because of access restrictions, the IRSwill not admit visitors beyond the immedi-ate entrance area more than 15 minutes be-fore the hearing starts. For informationabout having your name placed on thebuilding access list to attend the hearing,see the “FOR FURTHER INFORMATIONCONTACT” section of this document.

Cynthia E. Grigsby,Chief, Regulations Unit

Assistant Chief Counsel (Corporate).

Part IV. Items of General Interest

February 28, 2000 i 2000–9 I.R.B.

Revenue rulings and revenue procedures(hereinafter referred to as “rulings”) thathave an effect on previous rulings use thefollowing defined terms to describe theeffect:

Amplified describes a situation whereno change is being made in a prior pub-lished position, but the prior position isbeing extended to apply to a variation ofthe fact situation set forth therein. Thus,if an earlier ruling held that a principleapplied to A, and the new ruling holdsthat the same principle also applies to B,the earlier ruling is amplified. (Comparewith modified, below).

Clarified is used in those instanceswhere the language in a prior ruling isbeing made clear because the languagehas caused, or may cause, some confu-sion. It is not used where a position in aprior ruling is being changed.

Distinguisheddescribes a situationwhere a ruling mentions a previouslypublished ruling and points out an essen-tial difference between them.

Modified is used where the substanceof a previously published position isbeing changed. Thus, if a prior rulingheld that a principle applied to A but notto B, and the new ruling holds that it ap-

plies to both A and B, the prior ruling ismodified because it corrects a publishedposition. (Compare with amplified andclarified, above).

Obsoleted describes a previously pub-lished ruling that is not considered deter-minative with respect to future transac-tions. This term is most commonly usedin a ruling that lists previously publishedrulings that are obsoleted because ofchanges in law or regulations. A rulingmay also be obsoleted because the sub-stance has been included in regulationssubsequently adopted.

Revoked describes situations where theposition in the previously published rul-ing is not correct and the correct positionis being stated in the new ruling.

Superseded describes a situation wherethe new ruling does nothing more thanrestate the substance and situation of apreviously published ruling (or rulings).Thus, the term is used to republish underthe 1986 Code and regulations the sameposition published under the 1939 Codeand regulations. The term is also usedwhen it is desired to republish in a singleruling a series of situations, names, etc.,that were previously published over a pe-riod of time in separate rulings. If the

new ruling does more than restate thesubstance of a prior ruling, a combinationof terms is used. For example, modifiedand superseded describes a situationwhere the substance of a previously pub-lished ruling is being changed in part andis continued without change in part and itis desired to restate the valid portion ofthe previously published ruling in a newruling that is self contained. In this casethe previously published ruling is firstmodified and then, as modified, is super-seded.

Supplemented is used in situations inwhich a list, such as a list of the names ofcountries, is published in a ruling andthat list is expanded by adding furthernames in subsequent rulings. After theoriginal ruling has been supplementedseveral times, a new ruling may be pub-lished that includes the list in the originalruling and the additions, and supersedesall prior rulings in the series.

Suspended is used in rare situations toshow that the previous published rulingswill not be applied pending some futureaction such as the issuance of new oramended regulations, the outcome ofcases in litigation, or the outcome of aService study.

AbbreviationsThe following abbreviations in current use and for-merly used will appear in material published in theBulletin.

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.

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.

Definition of Terms

2000–9 I.R.B. ii February 28, 2000

Numerical Finding List1

Bulletins 2000–1 through 2000–8

Announcements:

2000–1, 2000–2 I.R.B. 2942000–2, 2000–2 I.R.B. 2952000–3, 2000–2 I.R.B. 2962000–4, 2000–3 I.R.B. 3172000–5, 2000–4 I.R.B. 4272000–6, 2000–4 I.R.B. 4282000–7, 2000–6 I.R.B. 5862000–8, 2000–6 I.R.B. 586

Notices:

2000–1, 2000–2 I.R.B. 2882000–3, 2000–4 I.R.B. 4132000–4, 2000–3 I.R.B. 3132000–5, 2000–3 I.R.B. 3142000–6, 2000–3 I.R.B. 3152000–7, 2000–4 I.R.B. 4192000–8, 2000–4 I.R.B. 4202000–9, 2000–5 I.R.B. 4492000–10, 2000–5 I.R.B. 4512000–11, 2000–6 I.R.B. 572

Proposed Regulations:

REG–208280–86, 2000–8 I.R.B. 654REG–209135–88, 2000–8 I.R.B. 681REG–208254–90, 2000–6 I.R.B. 577REG–100276–97, 2000–8 I.R.B. 682REG–101492–98, 2000–3 I.R.B. 326REG–106012–98, 2000–2 I.R.B. 290REG–103831–99, 2000–5 I.R.B. 452REG–103882–99, 2000–8 I.R.B. 706REG–105089–99, 2000–6 I.R.B. 580REG–105279–99, 2000–8 I.R.B. 707REG–105606–99, 2000–4 I.R.B. 421REG–111119–99, 2000–5 I.R.B. 455REG–113572–99, 2000–7 I.R.B. 624REG–116048–99, 2000–6 I.R.B. 584REG–116567–99, 2000–5 I.R.B. 463REG–116704–99, 2000–3 I.R.B. 325REG–100163–00, 2000–7 I.R.B. 633

Revenue Procedures:

2000–1, 2000–1 I.R.B. 42000–2, 2000–1 I.R.B. 732000–3, 2000–1 I.R.B. 1032000–4, 2000–1 I.R.B. 1152000–5, 2000–1 I.R.B. 1582000–6, 2000–1 I.R.B. 1872000–7, 2000–1 I.R.B. 2272000–8, 2000–1 I.R.B. 2302000–9, 2000–2 I.R.B. 2802000–10, 2000–2 I.R.B. 2872000–11, 2000–3 I.R.B. 3092000–12, 2000–4 I.R.B. 3872000–13, 2000–6 I.R.B. 5152000–15, 2000–5 I.R.B. 4472000–16, 2000–6 I.R.B. 5182000–20, 2000–6 I.R.B. 553

Revenue Rulings:

2000–1, 2000–2 I.R.B. 2502000–2, 2000–3 I.R.B. 3052000–3, 2000–3 I.R.B. 297

Revenue Rulings continued:

2000–4, 2000–4 I.R.B. 3312000–5, 2000–5 I.R.B. 4362000–6, 2000–6 I.R.B. 5122000–8, 2000–7 I.R.B. 6172000–9, 2000–6 I.R.B. 4972000–10, 2000–8 I.R.B. 643

Treasury Decisions:

8849, 2000–2 I.R.B. 2458850, 2000–2 I.R.B. 2658851, 2000–2 I.R.B. 2758852, 2000–2 I.R.B.2538853, 2000–4 I.R.B.3778854, 2000–3 I.R.B.3068855, 2000–4 I.R.B.3748856, 2000–3 I.R.B.2988857, 2000–4 I.R.B.3658858, 2000–4 I.R.B.3328859, 2000–5 I.R.B.4298860, 2000–5 I.R.B.4378861, 2000–5 I.R.B.4418862, 2000–6 I.R.B.4668863, 2000–6 I.R.B.4888864, 2000–7 I.R.B.6148865, 2000–7 I.R.B.5898866, 2000–6 I.R.B.4958867, 2000–7 I.R.B.6208868, 2000–6 I.R.B.4918869, 2000–6 I.R.B.4988870, 2000–8 I.R.B.6478871, 2000–8 I.R.B.6418872, 2000–8 I.R.B.6398874, 2000–8 I.R.B.644

1 A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., published inInternal Revenue Bulletins 1999–27 through1999–52 is in Internal Revenue Bulletin 2000–1,dated January 3, 2000.

February 28, 2000 iii 2000–9 I.R.B.

Finding List of Current Actionson Previously Published Items1

Bulletins 2000–1 through 2000–8

Announcements:

99–50Modified by Rev. Proc. 2000–20, 2000–6 I.R.B. 553

Notices:

88–125Obsoleted by T.D. 8870, 2000–8 I.R.B. 647

92–48Obsoleted by Notice 2000–11, 2000–6 I.R.B. 572

97–19Modified by Rev. Proc. 2000–1, 2000–1 I.R.B. 4

98–22Obsoleted by T.D. 8870, 2000–8 I.R.B. 647

98–52Modified by Notice 2000–3, 2000–4 I.R.B. 413

98–61Modified and superseded by Rev. Proc. 2000–15, 2000–5 I.R.B. 447

99–8Obsoleted by Rev. Proc. 2000–12, 2000–4 I.R.B. 387

Revenue Procedures:

80–18Modified by Rev. Proc. 2000–13, 2000–6 I.R.B. 515

89–9Superseded by Rev. Proc. 2000–20, 2000–6 I.R.B. 553

89–13Superseded by Rev. Proc. 2000–20, 2000–6 I.R.B. 553

90–21Superseded by Rev. Proc. 2000–20, 2000–6 I.R.B. 553

91–66Superseded by Rev. Proc. 2000–20, 2000–6 I.R.B. 553

92–13Modified, amplified, and superseded by Rev. Proc. 2000–11, 2000–3 I.R.B. 309

92–13AModified, amplified, and superseded by Rev. Proc. 2000–11, 2000–3 I.R.B. 309

92–41Superseded by Rev. Proc. 2000–20, 2000–6 I.R.B. 553

93–9Superseded by Rev. Proc. 2000–20, 2000–6 I.R.B. 553

Revenue Procedures—Continued:

93–10Superseded by Rev. Proc. 2000–20, 2000–6 I.R.B. 553

94–12Modified, amplified, and superseded by Rev. Proc. 2000–11, 2000–3 I.R.B. 309

94–42Superseded by Rev. Proc. 2000–20, 2000–6 I.R.B. 553

96–13Modified by Rev. Proc. 2000–1, 2000–1 I.R.B. 4

98–22Modified and superseded by Rev. Proc. 2000–16, 2000–6 I.R.B. 518

98–27Superseded by Rev. Proc. 2000–12, 2000–4 I.R.B. 387

98–64Superseded by Rev. Proc. 2000–9, 2000–2 I.R.B. 280

99–1Superseded by Rev. Proc. 2000–1, 2000–1 I.R.B. 4

99–2Superseded byRev. Proc. 2000–2, 2000–1 I.R.B. 73

99–3Superseded by Rev. Proc. 2000–3, 2000–1 I.R.B. 103

99–4Superseded by Rev. Proc. 2000–4, 2000–1 I.R.B. 115

99–5Superseded by Rev. Proc. 2000–5, 2000–1 I.R.B. 158

99–6Superseded by Rev. Proc. 2000–6, 2000–1 I.R.B. 187

99–7Superseded by Rev. Proc. 2000–7, 2000–1 I.R.B. 227

99–8Superseded by Rev. Proc. 2000–8, 2000–1 I.R.B. 230

99–13Modified and superseded by Rev. Proc. 2000–16, 2000–6 I.R.B. 518

99–31Modified and superseded by Rev. Proc. 2000–16, 2000–6 I.R.B. 518

99–49Modified and amplified by bothRev. Rul. 2000–4, 2000–4 I.R.B. 331 andNotice 2000–4, 2000–3 I.R.B. 313

99–51Superseded by Rev. Proc. 2000–3, 2000–1 I.R.B. 103

Revenue Procedures—Continued:

2000–6Modified by Rev. Proc. 2000–20, 2000–6 I.R.B. 553

2000–8Modified by bothRev. Proc. 2000–16, 2000–6 I.R.B. 518 andRev. Proc. 2000–20, 2000–6 I.R.B. 553

Revenue Rulings:

88–36Modified by Rev. Proc. 2000–6, 2000–6 I.R.B. 512

98–30Amplified and superseded by Rev. Rul. 2000–8, 2000–7, I.R.B. 617

Treasury Decisions:

8734Modified by T.D. 8856, 2000–3, I.R.B. 298

8804Modified by T.D. 8856, 2000–3, I.R.B. 298

1 A cumulative list of current actions on previouslypublished items in Internal Revenue Bulletins1999–27 through 1999–52 is in Internal RevenueBulletin 2000–1, dated January 3, 2000.

INTERNAL REVENUE BULLETINThe Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue

Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by theSuperintendent of Documents when their subscriptions must be renewed.

CUMULATIVE BULLETINSThe contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are

sold on a single copy basis and are not included as part of the subscription to the Internal Revenue Bulletin. Subscribers to the week-ly Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of printand are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from theSuperintendent of Documents.

HOW TO ORDERCheck the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,

detach entire page, and mail to the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. Pleaseallow two to six weeks, plus mailing time, for delivery.

WE WELCOME COMMENTS ABOUT THEINTERNAL REVENUE BULLETIN

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, wewould be pleased to hear from you. You can e-mail us your suggestions or comments through the IRS Internet Home Page(www.irs.gov) or write to the IRS Bulletin Unit, OP:FS:FP:P:1, Room 5617, 1111 Constitution Avenue NW, Washington, DC 20224.

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