internal_revenue_service significant index no department of the treasury washington dc person tn contaet- telephone number refer reply to t ep ra t a1 date jul in re ein this letter constitutes notice that with respect to the above-named defined benefit pension_plan we have granted a conditional waiver of the minimum_funding_standard for the pian year ending date this conditional waiver for the plan_year ended date has been granted in accordance with sec_412 of the internal_revenue_code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa the waived amount is the contribution which would otherwise be required to reduce the balance in the funding_standard_account to zero as of the end of the plan_year for which this conditional waiver has been granted the sponsor has an october 1-september fiscal_year for its fiscal_year ended date the employer had a net_operating_loss and negative cash_flow compared to the prior fiscal_year the employer's net_worth decreased by and working_capital decreased by for the six-month period ended date revenues increased at a higher rate than expenses did this led to a smailer pro-rata loss than in the prior fiscal_year to effect a turnaround the employer has reduced staff reduced contracted services and lowered its rental costs the empioyer anticipates that the full impact of these measures will be realized in the second half of the current fiscal_year accordingly the employer expects to break even this year and to have a net operating gain for the fiscal_year ending date as of date the plan assets were equal to of the plan's current_liability because of the recovery prospects of the employer are uncertain and the pian is underfunded the waiver is granted subject_to the following condition the contributions required to satisfy the minimum_funding_standard for the plan years ended date and are to be timely made as defined in code sec_412 without an additional funding waiver for those years - if this condition is not satisfied the waiver is retroactively null and void you agreed to this condition in your letter dated date your attention is called to code sec_412 and erisa sec_304 which describe the consequences that would result in the event the plan is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived_funding_deficiency remains unamortized please note that any amendment to other retirement plans maintained by the employer to increase the liabilities of those plans would be considered an amendment for purposes of code sec_412 and erisa sec_304 this ruling is directed only to the taxpayer that requested it code sec_6110 provides that it may not be used or cited by others as precedent when filing form_5500 for the plan_year ended date the date of this letter should be entered on schedule b actuarial information a copy of this letter should also be sent to the enrolled_actuary for the plan we have sent a copy of this letter to the employee_plans classification manager in sincerely t vhong james e holland jr manager employee_plans actuarial group tax_exempt_and_government_entities_division 3b


office_of_chief_counsel internal_revenue_service memorandum number release date cc pa lpounders posts-120674-14 uilc date date to associate area_counsel richmond small_business self-employed from pamela wilson fuller senior technician reviewer branch procedure administration subject proper method for calculating the amount available for refund under sec_6511 this chief_counsel_advice responds to your request for assistance dated date this advice may not be used or cited as precedent issues whether the amount available for refund under sec_6511 the portion of the tax paid within the period includes payments allocated to interest and penalties conclusions yes sec_6665 and sec_6601 provide that for purposes of the internal_revenue_code title_26 of the u s code references to tax are also deemed to include additions to tax including penalty and interest charges therefore the phrase tax paid as used in sec_6511 includes not only payments of the tax but also payments of interest and penalty charges associated with that tax any payment made with respect to the tax for the period at issue will be an amount_paid for purposes of the limitation on refunds under sec_6511 even if the payment was specifically allocated to a non-contested item of the liability ie tax penalty or interest on the module which is not specifically at issue law and analysis sec_6511 of the code provides that any refund_or_credit of tax is limited to the amount of the tax which was paid in the preceding two or three years depending on posts-120674-14 whether the two or three year period in sec_6511 applies if the taxpayer files a claim within three years of the filing of an original return the taxpayer may obtain a refund_or_credit of any overpayment up to the amount of the tax paid in the three years immediately preceding the date of the filing of the claim_for_refund similarly if a taxpayer files a claim outside of the three-year period but within two years of a payment then the taxpayer can recover the amount of any overpayment_of_tax up to the amount of the tax paid in the two years immediately preceding the filing of the claim_for_refund in order to determine the amount of an overpayment subject_to refund the irs must first determine the amount of the tax paid within the applicable look-back period the word tax as used throughout the code is typically deemed to include to the extent relevant interest and penalty charges relating to the tax see sec_6665 and sec_6601 the distinction between payments for tax additions to tax penalties and interest is irrelevant this is true even if the claim_for_refund asserts an overpayment based only on one aspect of the liability such as a specific item of tax or the calculation of interest or the amount of penalties see 339_f3d_61 2nd cir holding in part that t here is nothing in the language of sec_6511 that limits ‘the tax paid’ to the particular penalties disputed in the claim and that t he ‘tax paid’ therefore refers to the sum of taxes penalties and interest_paid for the tax_year in question similarly the irs is not generally permitted to use the ordering or application of specific payments and claims with respect to the specific tax and period in order to limit a refund see 550_f2d_629 ct_cl in allstate the court treated all payments as payments of tax for purposes of sec_6511 lumping together payments made specifically for tax interest and penalties the court effectively held that it did not matter if the payments falling within the look-back period were specifically paid for the disputed liability ie the item of tax or penalty or interest at issue as long as it was a payment made with respect to the taxable_period at issue the courts in carroll and allstate seem to treat overpayments as fungible and disregard any connection between specific payments and specific calculations and instead look to see if the account for the taxable_period is overpaid and if so how much of the overpayment came about as a result of payments made during the look-back period therefore in calculating the limitation on credit or refund established in sec_6511 the irs must take into account all payments of whatever kind which are applied to the liability for the tax for the specific taxable_period at issue including payments applied to tax interest and penalties this is true regardless of whether the specific overpayment claimed relates exclusively to a specific item of tax interest or penalty this writing may contain privileged information any unauthorized disclosure of this writing may undermine our ability to protect the privileged information if disclosure is determined to be necessary please contact this office for our views posts-120674-14 please call if you have any further questions


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division release number release date date date uil code contact person identification_number contact number employer_identification_number form required to be filed tax years dear this is our final_determination that you do not qualify for exemption from federal_income_tax as an organization described in internal_revenue_code sec_501 recently we sent you a letter in response to your application that proposed an adverse determination the letter explained the facts law and rationale and gave you days to file a protest since we did not receive a protest within the requisite days the proposed adverse determination is now final because you do not qualify for exemption as an organization described in code sec_501 donors may not deduct contributions to you under code sec_170 you must file federal_income_tax returns on the form and for the years listed above within days of this letter unless you request an extension of time to file instructions and do not send them to this office failure_to_file the returns timely may result in a penalty file the returns in accordance with their we will make this letter and our proposed adverse determination_letter available for public inspection under code sec_6110 after deleting certain identifying information please read the enclosed notice notice of intention to disclose and review the two attached letters that show our proposed deletions if you disagree with our proposed deletions follow the instructions in notice action if you agree with our deletions you do not need to take any further in accordance with code sec_6104 we will notify the appropriate state officials of our determination by sending them a copy of this final letter and the proposed adverse letter you should contact your state officials if you have any questions about how this determination may affect your state responsibilities and requirements if you have any questions about this letter please contact the person whose name and telephone number are shown in the heading of this letter federal_income_tax status and responsibilities please contact irs customer service pincite-829-1040 or the irs customer service number for businesses the irs customer service number for people with hearing impairments is if you have any questions about your sincerely lois g lerner director exempt_organizations enclosure notice redacted proposed adverse determination_letter redacted final adverse determination_letter department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division date date legend n name o state p date q name r name s dollars amount t dollars amount u dollars amount dear contact person identification_number contact number fax number employer_identification_number vil we have considered your application_for recognition of exemption from federal_income_tax under internal_revenue_code sec_501 based on the information provided we have concluded that you do not qualify for exemption under code sec_501 the basis for our conclusion is set forth below issue do you qualify for exemption under sec_501 of the internal_revenue_code no for the reasons stated below facts you are a nonprofit corporation formed on p state the corporation is organized exclusively for charitable purposes under sec_501 of letter cg catalog number 47630w in the state of o your articles of incorporation the internal_revenue_code the organization trains to serve in public and private_schools and clubs organizations your activities consist of recruiting and training in order to provide to public and private_schools local area parks and recreation programs the leagues work through you at a specific rate for each game the fees are s dollars per game per umpire plus travel_expenses you indicated that you have no profit_motive and work with other non-profits to become a member individuals apply in writing to join and must pass a background check sanctioning body sign the membership agreement agreeing to hold membership in a independent_contractor status and undergo training to verify members are required to attend meetings and attend your ongoing training program members are also evaluated annually to ensure they are performing up to your standards and those of your customers you currently have over abilities in addition members your members receive the full umpire fee including travel_expenses and are paid twice a year members then pay you tax reporting purposes of their earnings as membership dues and receive a form_1099 for forty percent of your revenue comes from fees that schools pay the remainder is from fees that the parks department and various incur fees resulted in revenues of t dollars expenses totaled u dollars you in indicate that nass through money minimal expenses are incurred for office supplies and the training materials of revenues are paid out to the members for their services and revenue is you previously operated as the for-profit entity n manager incorporator and r your president each owned were transferred to you q your secretary business of n no assets nor liabilities your board members are not compensated for their duties on the board but may receive compensation as independent contractors for providing umpire services law sec_501 of the code provides in part for the exemption from federal_income_tax of organizations organized and operated exclusively for charitable religious or educational_purposes no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 of the regulations states that in order to qualify under sec_501 of the code an organization must be both organized and operated exclusively for one or more exempt purposes if an organization fails to meet either the organizational or operational_test it is not exempt letter cg catalog number 47630w sec_1_501_c_3_-1 of the regulations provides that an organization will be regarded as it engages primarily in activities operated exclusively for one or more exempt purposes only if that accomplish one or more of such exempt purposes specified in sec_501 of the code an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose sec_1_501_c_3_-1 of the regulations provides that an organization is not organized or operated exclusively for exempt purposes unless it serves a public rather than a private interest to meet this requirement it is necessary for an organization to establish that it is not organized or operated for the benefit of private interests revrul_61_170 1961_1_cb_112 holds that an association composed of professional private duty nurses and practical nurses which supported and operated a nurses’ registry primarily to afford greater employment opportunities for its members was not entitled to exemption under sec_501 of the code although the public received some benefit from the organization's activities the primary benefit of these activities was to the organization's members revrul_72_369 1972_2_cb_245 held that an organization formed to provide managerial and consulting services at cost to unrelated exempt_organizations lacked any donative or charitable element and did not qualify for exemption under sec_501 in addition the provision of such services constituted commercial services furthermore the fact that the services are provided at cost and solely for exempt_organizations is not sufficient to characterize this activity as charitable within the meaning of sec_501 of the code finally the ruling states that an organization is not exempt merely because its operations are not conducted for producing a profit in 326_us_279 the supreme court stated that the presence of a single nonexempt purpose if substantial in nature will preclude exemption under sec_501 of the code regardless of the number or importance of statutorily exempt purposes in 70_tc_352 the court found that a corporation formed to provide consulting services did not satisfy the operational_test under sec_501 of the code because its activities constituted the conduct_of_a_trade_or_business that is ordinarily its primary purpose was not charitable carried on by commercial ventures organized for profit educational or scientific but rather commercial in addition the court found that the organization's financing did not resemble that of the typical sec_501 organizations it had not solicited nor had it received voluntary contributions from the public its only source_of_income was from fees from services and those fees were set high enough to recoup all projected costs and to produce a profit moreover it did not appear that the corporation ever planned to charge a fee less than cost organizations that were sec_501 exempt_organizations finally the corporation did not limit its clientele to in easter house v u s cl_ct affd 846_f2d_78 fed cir cert_denied 488_us_907 109_sct_257 102_led_246 the court found an organization that operated an adoption agency was not exempt under sec_501 of the code because a letter cg catalog number 47630w substantial purpose of the agency was a nonexempt commercial purpose the court concluded that the organization did not qualify for exemption under sec_501 because its primary activity was placing children for adoption in a manner indistinguishable from that of a commercial adoption agency the court rejected the organization's argument that the adoption services merely complemented the health related_services to unwed mothers and their children rather the court found that the health-related services were merely incidental to the organization's operation of an adoption service which in and of itself did not serve an exempt_purpose the organization's sole source of support was the fees it charged adoptive parents rather than contributions from the public the court also found that the organization competed with for-profit adoption agencies engaged in substantial advertising and accumulated substantial profits accordingly the court found that the business_purpose and not the advancement of educational and charitable activities purpose of plaintiffs adoption service is its primary goal and held that the organization was not operated exclusively for purposes described in sec_501 easter house cl_ct pincite application of law you are not described in sec_501 of the code because you are not organized and operated exclusively for charitable or educational_purposes you do not meet the provisions of sec_1_501_c_3_-1 of the regulations because your articles of incorporation stated purpose is to train amateur baseball umpires to serve baseball leagues this purpose is not limited to one or more of the purposes specified in the code and regulations you are not as described in sec_1_501_c_3_-1 of the regulations because your purpose is to provide employment opportunities for your member umpires to officiate games and earn revenue this is not an exempt_purpose specified under sec_501 of the code you are not as defined in sec_1_501_c_3_-1 of the regulations because you are operating for the private interests of your member umpires the scheduling of games for your members and the distribution of your income as payments to them minus a small percentage to meet your expenses indicate that your activities primarily benefit your members you are like the organization described in revrul_61_170 because you are an organization of professional umpires that provide umpire services to various baseball leagues furthermore your activities are primarily directed to arrange employment for members in addition like the organization in the revenue_ruling your membership is open only to specific professionals who meet particular requirements and continued membership in your organization depends on members maintaining specific certifications finally like the organization in the revenue_ruling public support is negligible because membership assessments fund your activities you are similar to the organization described in revrul_72_369 because the provision of umpiring services to non-profit organizations such as schools parks and youth baseball is a commercial activity moreover you are not exempt merely because your operations are not conducted for the purpose of producing a profit letter cg catalog number 47630w you are similar to the organization in better business bureau v united_states because you operate for a substantial non-exempt commercial purpose you are similar to the organization in b s w group inc v commissioner for example your primary purpose is to schedule and assign member umpires to various games and collect the fees from the games to pay your member umpires your only income is from these fees and of their earnings to these fees are high enough to pay your members who then pay you cover your operational expenses manner like the court case you are operating in a commercial you are like the organization in easter house v u s because you are primarily providing member umpires paid employment your only source_of_income is the fees you charge the various organizations for each game therefore you also operate for a commercial purpose of providing a service for a fee applicant’s position you believe you meet the requirements of sec_501 because you provide umpire services at the lowest possible price to non profit organizations such as schools parks and baseball leagues moreover your goal is not to make a profit on fees charged doing this allows you to bring your services to the non-profits you serve and the general_public of baseball teams at a reasonable rate you also educate umpires by providing training to them so they can serve the baseball public properly service response to applicant’s position you failed to provide any additional information from which it can be concluded that your activities exclusively further or advance a purpose described in sec_501 your goal of not earning a profit on fees charged lacks any donative element and constitutes the conduct of furthermore even though some of your activities may be educational you a trade_or_business are primarily operating in a commercial manner that benefits your member umpires by providing them paid umpire assignments therefore you are not described in sec_501 of the code conclusion based on the above we find that you are not organized and operated exclusively for exempt purposes within the meaning of sec_501 of the code specifically you do not meet the organizational_test for exemption because your organizing document does not limit your purposes to those defined in sec_501 you also do not meet the operational_test for exemption because you provide your member umpires officiating assignments and receive fees for these placements you then pay these fees to your members thereby operating for the private interests of your members you also letter cg catalog number 47630w operate in a commercial manner because you provide a service for a fee and the fee charged is not substantially below cost you have the right to file a protest if you believe this determination is incorrect to protest you must submit a statement of your views and fully explain your reasoning you must submit the statement signed by one of your officers within days from the date of this letter we will consider your statement and decide if the information affects our determination if your statement does not provide a basis to reconsider our determination we will forward your case to our appeals_office you can find more information about the role of the appeals_office in publication exempt_organization appeal procedures for unagreed issues types of information that should be included in your appeal can be found on page of publication under the heading regional_office appeal must be accompanied by the following declaration the statement of facts item under penalties of perjury declare that have examined the statement of facts presented in this appeal and in any accompanying schedules and statements and to the best of my knowledge and belief they are true correct and complete the declaration must be signed by an officer or trustee of the organization who has personal knowledge of the facts your appeal will be considered incomplete without this statement if an organization’s representative submits the appeal a substitute declaration must be included stating that the representative prepared the appeal and accompanying documents and whether the representative knows personally that the statements of facts contained in the appeal and accompanying documents are true and correct an attorney certified_public_accountant or an individual enrolled to practice before the internal_revenue_service may represent you during the appeal process if you want representation during the appeal process you must file a proper power_of_attorney form_2848 power_of_attorney and declaration of representative if you have not already done so you can find more information about representation in publication practice_before_the_irs and power_of_attorney all forms and publications mentioned in this letter can be found at www irs gov forms and publications if you do not file a protest within days you will not be able to file a suit for declaratory_judgment in court because the internal_revenue_service irs will consider the failure to appeal as a failure to exhaust available administrative remedies code sec_7428 provides in part that a declaratory_judgment or decree shall not be issued in any proceeding unless the tax_court the united_states court of federal claims or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted all of the administrative remedies available to it within the irs letter cg catalog number 47630w if if you do not intend to protest this determination you do not need to take any further action we do not hear from you within days we will issue a final adverse determination_letter that letter will provide information about filing tax returns and other matters please send your protest statement form_2848 and any supporting documents to the applicable address mail to deliver to internal_revenue_service eo determinations quality assurance room p o box cincinnati oh internal_revenue_service eo determinations quality assurance main street room cincinnati oh if you fax you may fax your statement using the fax number shown in the heading of this letter your statement please call the person identified in the heading of this letter to confirm that he or she received your fax if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely lois g lerner director exempt_organizations enclosure publication letter cg catalog number 47630w


t c memo united_states tax_court estate of edward j kunze deceased carol ann hause executor petitioner v commissioner of internal revenue respondent docket no filed date robert j tootelian jr for petitioner john walsh for respondent memorandum opinion gale judge this matter is before the court on respondent’s motion to dismiss for lack of jurisdiction on the ground that the petition was not filed by a taxpayer meeting the - - reguirements of sec_7430 a ii the issue for decision is whether sec_7430 d applies in determining the net_worth requirements for an estate seeking review under sec_6404 of a failure to abate interest after respondent issued a final_determination denying petitioner’s request to abate interest a timely petition for review under sec_6404 was filed with this court respondent thereafter filed a motion to dismiss for lack of jurisdiction with exhibits to which petitioner filed an objection with exhibits the court held a hearing on the motion received an additional exhibit and granted leave for the parties to file briefs supporting their positions we decide the motion based on the hearing record respondent’s motion petitioner’s objection the exhibits and the briefs background edward j kunze decedent died on date carol ann hause is the independent executor for the estate of decedent estate the executor resided in bast lansing michigan at the time the petition was filed decedent was domiciled in cook county illinois on the date of death and his estate was probated in cook county illinois the value of the gross_estate as of date decedent’s date of death as agreed to unless otherwise indicated all section references are to the internal_revenue_code - - by the parties was dollar_figure the taxable_estate equaled sbig_number the allowable credit_for_state_death_taxes was dollar_figure and the net estate_tax payable was dollar_figure by subtracting the credit_for_state_death_taxes and the net estate_tax payable from the taxable_estate respondent estimated a net_worth for the estate as of decedent’s date of death of at least dollar_figure discussion this court is a court of limited jurisdiction and may exercise jurisdiction only to the extent expressly provided by statute see 66_tc_61 see also sec_7442 sec_6404 grants the tax_court jurisdiction to review the treasury secretary’s failure to abate interest in any timely action brought by a taxpayer who meets the requirements referred to in sec_7430 a i11 in his motion to dismiss for lack of jurisdiction respondent argues that petitioner has not shown that it meets the net_worth requirements referred to in sec_7430 a we agree the requirements referred to in sec_7430 a include the requirements of section d b of title as in effect on date section d b of respondent notes in connection with this estimate that certain items deductible in computing the taxable_estate would not be equivalent to liabilities for purposes of calculating net_worth with the result that actual net_worth would be higher than the figure estimated using the taxable_estate - - title of the united_states_code provides that a party for purposes of the award of fees and other expenses means i an individual whose net_worth did not exceed dollar_figure at the time the civil_action was filed or any owner of an unincorporated business or any partnership corporation association unit of local_government or organization the net_worth of which did not exceed dollar_figure at the time the civil_action was filed and which had not more than employees at the time the civil_action was filed the foregoing section does not refer to an estate however sec_7430 d states as follows d special rules for applying net_worth requirement --- in applying the regquirements of section d b of title united_states_code for purposes of subparagraph a of this paragraph-- the net_worth limitation in clause i of such section shall apply to-- i an estate but shall be determined as of the date of the decedent’s death thus in the case of an estate the applicable net_worth requirement referred to in sec_7430 a is a limitation of dollar_figure determined as of the decedent’s date of death petitioner has not alleged or otherwise sought to prove that its net_worth as of the decedent’s date of death did not exceed dollar_figure instead as discussed more fully below petitioner contends that its net_worth should be measured as of some other date apparently either the date of filing of the petition or the date on which its right to seek review began to accrue in line with this reasoning petitioner merely alleges - - in the petition that the only asset of the estate of edward j kunze is the cause of action in this case therefore the estate has net_worth that does not exceed two million dollars notwithstanding respondent’s contention that petitioner has a net_worth of at least dollar_figure on the decedent’s date of death and the fact that the parties entered an agreement specifying that the decedent’s gross and taxable_estate exceeded dollar_figure petitioner has offered no proof of its net_worth as of the decedent’s date of death accordingly we conclude that petitioner did not meet the requirements referred to in sec_7430 c a and we do not have jurisdiction petitioner’s arguments to the contrary are unavailing petitioner first argues that sec_7430 d does not apply in the case of actions for review of denials of requests for abatement of interest according to petitioner the statutory scheme for abatement does not incorporate sec_7430 d and cannot be logically connected to it petitioner’s position appears to be that since sec_7430 d appears in a section entitled awarding of costs and certain fees which itself incorporates provisions of another section u s c sec as in effect on date entitled costs and fees sec_7430 d has no connection with and is not incorporated by the provisions governing our review of abatements - - the statute clearly provides otherwise sec_6404 grants tax_court jurisdiction over abatement review actions brought by taxpayers meeting the regquirements referred to in sec_7430 a one such requirement referred to in sec_7430 a 1s section d b of title of the united_states_code sec_7430 d provides special rules for applying the requirements of section d b of title for purposes of sec_7430 a emphasis added nothing in the language of sec_7430 d limits its application to awards of costs and fees indeed without incorporation of sec_7430 d by sec_6404 there would be no express statutory basis for tax_court jurisdiction over an action for review of abatement brought by an estate ’ 2a since u s c sec d b as in effect on date by its terms applies only to an individual or any owner of an unincorporated business or any partnership corporation association unit of local_government or organization or a cooperative association that section standing alone does not provide a clear basis to discern whether or how an estate might meet its requirements cf 99_tc_335 however prior to enactment of sec_7430 d this court and others held that u s c sec d b as used in sec_7430 c a should be construed to entitle estates to seek an award of litigation costs see eg 44_f3d_464 7th cir estate of hubberd v commissioner supra recognizing the statutory ambiguities addressed in those and similar cases congress added sec_7430 d with the specific intent of clarifying the net_worth limitations applicable to estates trusts and individuals filing jointly thereby rendering those cases moot see h rept pincite although the net_worth requirements are explicit for individuals corporations and partnerships it petitioner also argues that its interpretation of the statute is consistent with an interpretation expressed by respondent ina final_determination letter sent to petitioner in which its claim_for_abatement of interest was disallowed the letter states the eligibility requirements for tax_court review are for individual and estate taxpayers - your net_worth must not exceed dollar_figure million as of the filing_date of your petition for review while respondent’s letter is in error regarding the jurisdictional requirements for an estate any such error does not operate to confer jurisdiction on this court see 112_tc_123 111_tc_273 the subject matter jurisdiction of this court is prescribed by statute and cannot be enlarged by the actions of the parties see freedman v commissioner t c is not clear which net_worth requirement is to apply to other potential litigants clarifying these rules will provide certainty for potential claimants and will decrease needless litigation over procedural issues moreover if petitioner were correct that there is no logical connection between the u s c sec d b net_worth requirements as used in connection with the award of costs and fees and as used with respect to review of interest abatements then it would follow that estate of hubberd v commissioner supra which construed the net_worth reguirements applicable to estates in cases involving awards of litigation costs could have no application in the interest abatement area nevertheless petitioner cites estate of hubberd in support of its position herein petitioner next argues that at the time its cause of action for review of respondent’s denial of interest abatement began to accrue which in petitioner’s view was date the date of the final_determination letter sec_7430 c d contained an erroneous cross-reference to a nonexistent subparagraph of sub sec_7430 a because of this erroneous cross-reference petitioner contends sec_7430 d did not apply to sec_6404 the predecessor of sec_6404 or could not have been read by a taxpayer to apply on the date petitioner’s cause of action began to accrue petitioner is correct that sec_7430 as originally enacted contained an erroneous cross-reference as originally enacted on date sec_7430 d read as follows d special rules for applying net_worth requirement in applying the regquirements of section d b of title united_states_code for purposes of subparagraph a iii of this paragraph taxpayer_relief_act_of_1997 publaw_105_34 sec 111_stat_788 emphasis added on date paragraph c of sec_7430 contained no such subparagraph a iii1 an earlier version of paragraph c of sec_7430 prior to its amendment on date did contain such a reference reading as follows c definitions for purposes of this section-- prevailing_party a in general the term prevailing_party means any party in any proceeding to which subsection a applies other than the united_states or any creditor of the taxpayer involved --- which establishes that the position_of_the_united_states in the proceeding was not substantially justified which-- i has substantially prevailed with respect to the amount in controversy or ii has substantially prevailed with respect to the most significant issue or set of issues presented and which meets the regquirements of the lst sentence of section d b of title united_states_code as in effect on date except to the extent differing procedures are established by rule_of court and meets the requirements of section d b of such title as so in effect on date the version of paragraph c of sec_7430 quoted above was amended by striking subparagraph a and renumbering subparagraphs a ii and as a i and respectively see taxpayer bill of right sec_2 publaw_104_168 sec 70o1 a 110_stat_1452 notwithstanding the elimination of subparagraph a i111 and renumbering of its contents as subparagraph a i1 when sec_7430 d was enacted on date it erroneously referred to subparagraph a iii see taxpayer_relief_act_of_1997 pub l the same legislation enacted sec_6404 now sec_6404 and that section correctly cross-referenced subparagraph a of paragraph c of sec_7430 when referring to the eligibility requirements for a taxpayer seeking tax_court review of a failure to abate interest see taxpayer bill of right sec_2 publaw_104_168 sec_701 110_stat_1452 sec 111_stat_788 the erroneous reference was corrected by congress in the irs restructuring and reform act of publaw_105_206 112_stat_685 enacted on date which amended the reference to subparagraph a iii to read subparagraph a i1 in sec_7430 d with respect to the consequences that petitioner would ascribe to this drafting error the short answer is that congress made the corrective amendment retroactive ie effective for proceedings commenced after date the date of original enactment of sec_7430 d see irs restructuring and reform act of publaw_105_206 112_stat_685 the corrected version takes effect as if included in the provision of the taxpayer_relief_act_of_1997 to which it relate s id thus the corrected version of sec_7430 d applies to this proceeding moreover the corrective amendment was enacted on date well before petitioner commenced this proceeding on date in addition we think the nature of the error and the actual intent of the uncorrected version of sec_7430 d were at all times reasonably clear the legislative_history reveals that sec_7430 d was always intended to modify sec_7430 a ii also the incorporation of the latter provision by sec_6404 and its successor sec_6404 has always been explicit a careful examination of the statute would have alerted petitioner to the foregoing in our view petitioner further argues that the amendment to sec_7430 d correcting the erroneous reference to subparagraph a gave insufficient notice that sec_6404 was being changed thereby denying petitioner due process petitioner first asserts that the retroactive application of the corrective amendment would deny petitioner’s due process rights because retroactive tax statutes have long been upheld this argument lacks merit see 512_us_26 39_f2d_540 2d cir the retroactive application of a statute does not deny due process so long as it is supported by a legitimate legislative purpose furthered by rational means united_states v carlton supra pincite clearly the retroactive correction of sec_7430 d is justified by a rational legislative purpose in that congress merely acted to correct the obviously mistaken reference to subparagraph a 11i1 in the original version of see h rept pincite in its explanation of sec_7430 d the house committee on the budget report states that the bill provides that the net_worth limitations currently applicable to individuals also apply to estates and trusts id sec_7430 d moreover the retroactive application of a tax statute is not suspect where it involves a mere change in rate or a technical amendment 77_tc_916 finally the fact that congress acted promptly to correct the error and established only a modest period of retroactivity supports the conclusion that petitioner’s due process rights have not been violated see united_states v carlton supra pincite for these reasons the retroactive application of the technical correction to sec_7430 c d does not violate due process petitioner appears to fashion a second due process claim based on the contention that the statutory scheme for jurisdiction in interest abatement cases involving three statutes contained in two different titles of the u s code provides inadequate notice of the requirements for tax_court review and thereby offends due process more specifically petitioner contends that given their subject matter differences an amendment to sec_7430 d gives no indication of a change in sec_6404 in support of this argument petitioner cites 339_us_306 and quotes from 131_f3d_1289 9th cir however both of these cases address the although petitioner attributes the quotation to 131_f3d_1325 9th cir its source is 131_f3d_1289 9th cir sufficiency of statutorily prescribed notice provided in connection with pending judicial proceedings and not constructive notice of new legislation where due process considerations are different cf 664_fsupp_663 n d n y 454_us_516 ndollar_figure they accordingly have no relevance here in any event the central premise of petitioner’s argument--that the numerous cross-references delineating the statutory basis for tax_court jurisdiction in interest abatement cases are unduly opaque--is not well founded sec_6404 expressly incorporates sec_7430 a which in turn is specifically referenced in current sec_7430 d such cross-referencing and incorporation are not unusual in the internal_revenue_code and hardly raise due process notice concerns for the foregoing reasons we find that the jurisdictional requirements for abatement of interest cases do not offend due process finally petitioner argues that imposing a net_worth limitation on a party’s right to tax_court review of denials of interest abatement is a violation of the equal protection clause of the u s constitution because there is no rational basis for establishing a net_worth threshold in a suit challenging the respondent’s failure to abate interest however in areas of social and economic policy a statutory classification that neither proceeds along suspect lines nor infringes fundamental constitutional rights must be upheld against equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the classification fcc v beach communications inc 508_us_307 one reasonably conceivable explanation for the classification embodied in the net_worth limitation is that congress believed taxpayers with net worths exceeding the limitation were less vulnerable to unjustified interest charges because such taxpayers were better able to make an advance_payment of tax or to post a cash bond thereby limiting the accrual of interest during a dispute with the commissioner cf revproc_84_58 1984_2_cb_501 establishing procedures for making an advance_payment or posting a cash bond we believe a rational basis exists for the net_worth limitations of sec_6404 consequently the provision does not violate the equal protection clause because petitioner’s net_worth determined as required by sec_7430 d i does not meet the requirements of sec_7430 a this court does not have jurisdiction in light of this conclusion we find it unnecessary to address respondent’s alternative argument that even if petitioner’s net_worth is to be determined as of the date of filing the petition such net_worth must include all assets in the estate including assets already distributed see estate of for the foregoing reasons an order granting respondent’s motion to dismiss for lack of jurisdiction will be entered woll v united_states 44_f3d_464 7th cir


internal_revenue_service number release date index number 468a ----------------------------- --------------------------------------- -------------------------------- ---------------------------- ---------------------------- legend parent department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ------------- telephone number --------------------- refer reply to cc psi b6 plr-129967-06 plr-129969-06 plr-129943-06 plr-129971-06 plr-129959-06 plr-129952-06 date date -------------------------------- --------------------------------- -------------------------------------------------------- taxpayer a ------------------------------------------------------------ taxpayer b ------------------------------ --------------------------------- ----------------------------------------- taxpayer c ------------------------------------------------------------ company state a state b plant director --------------------------------------------- ------ ------------------ --------------------------------------------------- --------------------------------------------------------------------------------- ---------------------------------------------------------------------------------- ---------------------------------------------------------------------------------- ------------------------------------ -------------------------------------------- ----------------------------------------------------- ---------------------------------------------------- ------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------------------- location commission a commission b commission c commission d taxpayer d plr-129967-06 taxpayer e -------------------------------------------------------------------------------- ------------------------------------------------------------------------------------- -------------------------------------------------------------------- taxpayer f -------------------------------------------------------------------------------- ------------------------------------------------------------------------------ -------------------------- -------------------------- ------------------- -------------------------------------------------------------------------------------------------------- x y z dear ---------------- the tax consequences of the transaction described below under sec_468a of the internal_revenue_code this letter responds to your request dated date for various rulings on taxpayers represent the following facts and information relating to the ruling_request taxpayer b is wholly owned by parent taxpayer b owns all of the common_stock of taxpayer c taxpayer b is an electric public_utility company engaged in the generation transmission distribution and sale of electric energy in state a taxpayer b is subject_to the jurisdiction of commission a and commission b with respect to the nuclear decommissioning costs included in its cost of service for regulatory purposes taxpayer c is an electric public_utility company engaged in the generation transmission distribution and sale of electric energy in state b taxpayer c is subject_to the jurisdiction of commission c and commission b with respect to the nuclear decommissioning costs included in its cost of service for regulatory purposes taxpayer a is a newly-formed generation company and is a wholly-owned subsidiary of company which is wholly-owned by parent taxpayer b has an ownership_interest of-----percent in the plant taxpayer c has a --- percent ownership_interest in the plant plant is situated at location companies a and b are severally obligated to pay all expenditures_for the construction operation and maintenance of plant and are entitled to the proportionate share of the electric power produced thereby both taxpayer b and taxpayer c have obligations to decommission the plant and have established several funds for that purpose taxpayer b has established taxpayer d as a fund qualified under sec_468a as well as one or more nonqualified funds taxpayer c has established taxpayer e as a fund qualified under sec_468a as well as one or more nonqualified funds both taxpayer b and taxpayer c have received revised schedules of ruling amounts through on x taxpayer b contributed the entire 12-month ruling plr-129967-06 amount specified in its most recent schedule of ruling amounts to taxpayer d on x taxpayer c contributed the entire 12-month ruling_amount specified in its most recent schedule of ruling amounts to taxpayer e on y taxpayer b and taxpayer c transferred their interests in plant to taxpayer a taxpayer a assumed certain obligations with respect to plant including the obligation to decommission plant also on y taxpayer b transferred taxpayer d as well as all nonqualified decommissioning funds relating to the plant to taxpayer a and taxpayer c transferred taxpayer e as well as all nonqualified decommissioning funds relating to the plant to taxpayer a the assets in taxpayer d and taxpayer e were transferred to taxpayer f a fund established by taxpayer a and qualified under sec_468a the transfers of the interests in plant were approved by commission c and commission d in addition commission b approved the transfer of the interest of taxpayer c in the plant as a result of the contributions of the entire ruling amounts on x by taxpayer b to taxpayer d and by taxpayer c to taxpayer e excess_contributions were made to those funds on z taxpayer a withdrew from taxpayer f the excess_contributions made by taxpayer b and taxpayer c along with earnings on those excess_contributions from the day after x until z taxpayer has requested the following rulings requested ruling taxpayer a taxpayer b taxpayer c taxpayer d taxpayer e and taxpayer f will not recognize any gain_or_loss or otherwise take any income_or_deduction into account by reason of the transfer of assets of taxpayer d and taxpayer e into taxpayer f and taxpayer f will have a basis in the assets received from taxpayer d and taxpayer e equal to the basis of those assets immediately prior to the transfer requested ruling no portion of taxpayer d or taxpayer e is disqualified by receipt of the excess_contributions from taxpayer b and taxpayer c respectively and that no portion of taxpayer f is disqualified by the withdrawal of such excess_contributions and the earnings thereon law and analysis requested ruling sec_1_468a-5 sets out the qualification requirements for nuclear decommissioning funds it provides in part that a qualified nuclear decommissioning plr-129967-06 fund must be established and maintained pursuant to an arrangement that qualifies as a_trust under state law sec_1_468a-5 provides that an electing taxpayer can establish and maintain only one qualified nuclear decommissioning fund for each nuclear power plant if a nuclear power plant is subject_to the ratemaking jurisdiction of two or more public_utility commissions and any such public_utility commission requires a separate fund to be maintained for the benefit of ratepayers whose rates are established or approved by the public_utility commission the separate funds maintained for such plant whether or not established and maintained pursuant to a single trust agreement shall be considered a single nuclear decommissioning fund sec_1_468a-6 provides rules applicable to the transfer of an interest in a nuclear power plant and transfer of the qualified nuclear decommissioning fund where certain requirements are met specifically sec_1_468a-6 provides that sec_1_468a-6 applies if-- immediately before the disposition the transferor maintained a qualified nuclear decommissioning fund with respect to the interest disposed of and immediately after the disposition-- i the transferee maintains a qualified nuclear decommissioning fund with respect to the interest acquired ii the interest acquired is a qualifying interest of the transferee in the nuclear power plant iii either a proportionate amount which could include all of the assets of the transferor’s qualified nuclear decommissioning fund is transferred to a qualified nuclear decommissioning fund of the transferee or the transferor’s entire qualified nuclear decommissioning fund is transferred to the transferee provided in the latter case or if the transferee receives all of the assets in the transferor’s qualified nuclear decommissioning fund but not the transferor’s qualified nuclear decommissioning fund that the transferee acquires the transferor’s entire qualifying interest in the plant and iv the transferee continues to satisfy the requirements of sec_1_468a-5 which permits an electing taxpayer to maintain only one qualified nuclear decommissioning fund for each plant plr-129967-06 sec_1_468a-6 provides that a disposition that satisfies the requirements of sec_1_468a-6 will have the following tax consequences at the time it occurs neither the transferor nor the transferor’s qualified nuclear decommissioning fund will recognize gain_or_loss or otherwise take any income into account by reason of the transfer of a proportionate amount of the assets of the transferor’s qualified nuclear decommissioning fund to the transferee’s qualified nuclear decommissioning fund or by reason of the transfer of the transferor’s entire qualified nuclear decommissioning fund to the transferee for purposes of the regulations under sec_468a this transfer or the transfer of the transferor’s qualified nuclear decommissioning fund will not be considered a distribution of assets by the transferor’s qualified nuclear decommissioning fund neither the transferee nor the transferee’s qualified nuclear decommissioning fund will recognize gain_or_loss or otherwise take any income into account by reason of the transfer of a proportionate amount of the assets of the transferor’s qualified nuclear decommissioning fund to the transferee’s qualified nuclear decommissioning fund or by reason of the transfer of the transferor’s entire qualified nuclear decommissioning fund to the transferee for purposes of the regulations under sec_468a this transfer or the transfer of the transferor’s qualified nuclear decommissioning fund will not constitute a payment or a contribution of assets by the transferee to its qualified nuclear decommissioning fund transfers of assets of a qualified nuclear decommissioning fund to which this section applies do not affect basis thus the transferee’s qualified nuclear decommissioning fund will have a basis in the assets received from the transferor’s qualified nuclear decommissioning fund that is the same as the basis of those assets in the transferor’s qualified nuclear decommissioning fund immediately before the distribution under sec_1_468a-6 the service may treat any disposition of an interest in a nuclear power plant occurring after date as satisfying the requirements of the regulations if the service determines that such treatment is necessary or appropriate to carry out the purposes of sec_468a sec_468a and sec_1_468a-2 provide that a taxpayer that elects the requested ruling application of sec_468a may deduct in the taxable_year the election is made any payments made by the taxpayer to a qualified nuclear decommissioning fund in that year former sec_468a and sec_1 468a- b provide that for purposes plr-129967-06 of sec_1_468a-2 the amount that a taxpayer may pay into a qualified nuclear decommissioning fund for any taxable_year shall not exceed the lesser_of the amount of nuclear decommissioning costs allocable to the fund which is included in the taxpayer's cost of service for ratemaking purposes for the taxable_year or the ruling_amount applicable to fund for that the taxable_year sec_1_468a-2 provides further that if the amount of cash payments made or deemed made to a qualified nuclear decommissioning fund during any taxable_year exceeds the limitation of sec_1 468a- b the excess is not deductible by the electing taxpayer sec_1_468a-5 prohibits a nuclear decommissioning fund from accepting sec_1_468a-5 defines an excess_contribution for purposes of section any contribution for which a deduction is not permitted under sec_468a and sec_1_468a-2 sec_1_468a-5 provides that if at any time during a taxable_year of a nuclear decommissioning fund the fund does not satisfy the requirements of sec_1_468a-5 the service may in its discretion disqualify all or any portion of the fund as of the date that the fund does not satisfy the requirements of sec_1_468a-5 sec_1_468a-2 provides that the amount of any cash payment made by an electing taxpayer to a qualified nuclear decommissioning fund on or before the 15th day of the third calendar month after the close any taxable_year shall be deemed made during that taxable_year if the electing taxpayer irrevocably designates the amount as relating to that taxable_year on its timely filed federal_income_tax return for that taxable_year 468a-5 c as the amount by which cash payments made or deemed made to a qualified nuclear decommissioning fund during any taxable_year exceed the payment limitation in former sec_468a and sec_1_468a-2 sec_1_468a-5 provides that a qualified nuclear decommissioning fund will not be disqualified under sec_1_468a-5 by reason of an excess_contribution or the withdrawal of that excess_contribution by an electing taxpayer if the amount of the excess_contribution is withdrawn by the electing taxpayer on or before the date prescribed by law including extensions for filing the return of the fund for the taxable_year for which the excess_contribution relates contribution as defined in sec_1_468a-5 by an electing taxpayer pursuant to the rules of sec_1_468a-5 shall not be included in the gross_income of the electing taxpayer conclusions sec_1_468a-2 provides that the amount of a withdrawal of an excess taxpayer a taxpayer b taxpayer c taxpayer d taxpayer e and taxpayer f plr-129967-06 will not recognize any gain_or_loss or otherwise take any income_or_deduction into account by reason of the transfer of assets of taxpayer d and taxpayer e into taxpayer f and taxpayer f will have a basis in the assets received from taxpayer d and taxpayer e equal to the basis of those assets immediately prior to the transfer with respect to the excess_contributions and the subsequent withdrawal of those excess_contributions the service will not disqualify any part of taxpayer d taxpayer e or taxpayer f as a result of these transactions the rulings contained in this letter are based upon information and representations submitted by the taxpayers and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as specifically determined above no opinion is expressed or implied concerning the federal_income_tax consequences of the transaction described above effective date amendments were made to sec_468a by the energy tax incentives act of publaw_109_58 119_stat_594 regulations based on these amendments are being developed but have not yet been proposed the discussion above is based on the law in effect prior to date however this ruling will be modified or revoked by the adoption of temporary or final regulations to the extent the regulations are inconsistent with any conclusion in the letter_ruling see section dollar_figure of revproc_2007_1 2007_1_irb_1 however when the criteria in section dollar_figure of revproc_2007_1 2007_1_irb_50 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances this ruling is directed only to the taxpayers who requested it sec_6110 of the code provides it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer we are also sending a copy of this letter_ruling to the director pursuant to ' 468a-7 a a copy of this letter must be attached with the required election statement to the taxpayers' federal_income_tax return for each tax_year if any in which the taxpayer claims a deduction for payments made to the fund sincerely peter c friedman senior technician reviewer branch passthroughs special industries


significant index nos department of the treasury internal_revenue_service washington d c aug sy tax_exempt_and_government_entities_division t ee ra a2 taxpayer db plan dc pian state dear - this letter is in response to your request of date as modified by your letters of date and date for rulings concerning the federal tax consequences of certain proposed transactions between the db plan and the dc plan in particular you have requested rulings that amounts transferred upon disability retirement from the dc plan to the db plan under the disability provisions of the plans are not subject_to sec_414 of the internal_revenue_code code the transfer of assets from the dc plan to the db plan upon disability retirement or from the db plan to the dc plan upon recovery from disability are permissible plan transfers that will not result in taxation under sec_72 sec_401 sec_402 or sec_404 of the code the transfer of assets from the dc plan to the db plan upon disability retirement or from the db plan to the dc plan upon recovery from disability will not result in constructive receipt to an affected participant or otherwise subject the participant to taxes under sec_72 or sec_401 of the code the transfer of assets from the dc plan to the db plan upon disability retirement or from the db plan to the dc plan upon recovery from disability with respect to any affected participant will not affect the determination of either the participant's annual_benefit under sec_415 of the code or the determination of the annual_addition to the participant's account under sec_415 of the code facts the taxpayer administers qualified government retirement plans for the state the state maintains a defined_benefit_plan and trust the db plan and a defined_contribution_plan and trust the dc plan the db plan and the dc plan were previously the subject of plr state employees may actively participate in either the db plan or dc plan state employees eligible to participate in the db plan are enrolled by default in the db plan but may at any time before the end of the fifth month following the employee’s in addition all employees have an month of hire elect to participate in the dc plan additional one-time opportunity at the employee’s discretion to switch from the db plan to the dc plan similarly all employees have an additional one-time opportunity at the employee’s discretion to switch from the dc plan to the db plan subsequent to the issuance of plr state law was amended and statutes were created to allow participants in the dc plan who become totally and permanently disabled’ to receive a disability benefit disability retirement’ in order to receive disability benefits a disabled dc plan participant must transfer all monies accumulated in his or her individual accounts to a ministerial account within the db trust fund the disability account’ the amount of the disability retirement benefit of a dc plan participant is generally determined in the same manner as the disability retirement benefit of a participant who was a participant in the db plan at the time of his or her disability ‘ the applicable laws of the state provide that a participant shall be considered totally and permanently disabled if in the opinion of the division he or she is prevented by reason of a medically determinable physical or mental impairment from rendering useful or efficient service as an officer_or_employee in both cases the amount of each monthly payment is computed in the same manner as for a normal_retirement_benefit under the db pian except that disability option actuarial equivalency tables are used average monthly compensation and creditable service are determined as of the date of disability as opposed to the date of retirement and the otherwise determined monthly payment may not be less than certain specified percentages of average monthly compensation depending on for example for participants injured in the line whether the participant was injured in the line of duty_of duty the disability retirement benefit generally may not be less than forty-two percent of average monthly compensation as of the date of disability retirement benefits under the db plan are generally determined based on final_average_compensation and years_of_service if a disabled dc plan participant recovers from his disability the net difference between the amount transferred to the disability account including earnings and the total disability benefits paid to the participant is redeposited in individual accounts within the dc plan as directed by the participant if the now recovered participant does not return to covered employment nonvested amounts are held in a suspense_account and forfeited if the participant does not return to covered employment within five years in determining the net difference between the amount of a recovered participant's account balance transferred to the disability account and the total disability benefits paid to the participant paid disability benefits are first subtracted from the vested portion of the transferred amounts and second from the nonvested portion of such amounts a disabled dc plan participant may elect in lieu of receiving benefits under the disability provisions of the dc plan to receive benefits under the normal benefit provisions of the dc plan ie the benefit provisions available to a nondisabled employee who terminates employment law sec_72 of the code provides that if any taxpayer receives any amount from a qualified_retirement_plan as defined in sec_4974 the taxpayer’s tax under this chapter for the taxable_year in which such amount is received shall be increased by an amount equal to percent of the portion of such amount which is includible in gross_income sec_401 of the code generally provides that a profit-sharing or stock_bonus_plan a pre-erisa_money_purchase_plan or a rural_cooperative_plan shall not be considered as not satisfying the requirements of subsection a merely because the plan includes a qualified_cash_or_deferred_arrangement sec_402 of the code provides that except as otherwise provided in that section any amount actually distributed to any distributee by any employees’ trust described in sec_401 which is exempt from tax under a shall be taxable to the distributee in the taxable_year of the distributee in which distributed under sec_72 relating to annuities sec_414 of the code provides that a defined_benefit_plan which provides a benefit derived from employer contributions which is based partly on the balance of the separate_account of a participant shall - for example if dollar_figure consisting of dollar_figure of vested amounts and dollar_figure of nonvested amounts was transferred from the dc pian upon a participant’s disability and dollar_figure was paid from the disability account prior to the participant's recovery subsequent to the participant's recovery dollar_figure would be transferred to the participant's individual_account in the dc plan consisting of dollar_figure of vested amounts and dollar_figure of nonvested amounts 2u1349029 for purposes of sec_410 relating to minimum_participation_standards be treated as a defined_contribution_plan for purposes of sec_72 relating to treatment of employee contributions as separate contract a relating to minimum vesting standards relating to limitations on benefits_and_contributions under qualified_plans and m relating to nondiscrimination tests for matching requirements and employee contributions be treated as consisting of a defined_contribution_plan to the extent benefits are based on the separate_account of a participant and as a defined_benefit_plan with respect to the remaining portion of benefits under the plan and for purposes of sec_4975 relating to tax on prohibited_transactions be treated as defined_benefit_plan sec_404 of the code provides in part that if contributions are paid_by an employer to or under a stock bonus pension profit-sharing or annuity plan or if compensation is paid_or_accrued on account of any employee compensation such contributions or compensation shall not be deductible but if they would otherwise be deductible they shall be deductible under that section subject_to the limitations on the amounts deductible in any year described therein - sec_415 of the code provides that benefits with respect to a participant exceed the limitation of that subsection if when expressed as an annual_benefit within the meaning of paragraph such annual_benefit is greater than the lesser_of ----- a dollar_figure or b percent of the participant’s average compensation_for his high_three_years sec_415 of the code provides that for purposes of paragraph the term annual_benefit means a benefit payable annually in the form of a straight life_annuity with no ancillary_benefits under a plan to which employees do not contribute and under which no rollover_contributions as defined in sec_402 sec_403 sec_403 sec_408 and sec_457 are made sec_415 of the code provides that contributions and other additions with respect to a participant exceed the limitation of that subsection if when expressed as an annual_addition within the meaning of paragraph to the participant’s account such annual_addition is greater than the lesser_of ----- a dollar_figure or b percent of the participant's_compensation sec_415 of the code provides that for purposes of paragraph the term annual_addition means the sum for any year of ----- a employer contributions b the employee contributions and c forfeitures for purposes of that paragraph employee contributions under subparagraph b are determined without regard to any rollover_contributions as defined in sec_402 sec_403 sec_403 sec_408 and sec_457 without regard to employee contributions to a simplified_employee_pension which are excludable from gross_income under k subparagraph b of paragraph shall not apply to any contribution for medical benefits within the meaning of sec_419a after separation_from_service which is treated as an annual_addition sec_4974 of the code provides that for purposes of that section the term qualified_retirement_plans means --- a plan described in sec_401 which includes a_trust exempt from tax under sec_501 an annuity plan described in sec_403 an annuity_contract described in sec_403 an individual_retirement_account described in sec_408 a or an individual_retirement_annuity described in sec_408 such term includes any plan contract account or annuity which at any time has been determined by the secretary to be such a plan contract account or annuity sec_1_415_b_-1 of the regulations provides rules for adjusting a form of benefit other than a straight life_annuity to an actuarially equivalent straight life_annuity sec_1_415_c_-1 of the regulations provides that the term annual_addition means for purposes of that section the sum credited to a participant's account for any limitation_year of ---- a employer contributions b employee contributions and c forfeitures sec_1_415_c_-1 of the regulations provides that the direct transfer of a benefit or employee contribution from a qualified_plan to a defined_contribution_plan does not give rise to an annual_addition revrul_67_213 c b involves the transfer of funds directly from a_trust forming part of a pension_plan under sec_401 of the code to a_trust forming part of a stock_bonus_plan the revenue_ruling provides that if a participant's interest in a qualified_plan is transferred from the trust of a qualified_plan to the trust of another qualified_plan without being made available to the participant no taxable_income will be recognized by such transfer analysis ruling sec_414 of the code provides that a defined_benefit_plan which provides a benefit derived from employer contributions which is based partly on the balance of the separate_account is treated as a defined_benefit_plan for certain purposes and a defined_contribution_plan for certain other purposes in this case the disability benefit of a disabled participant who was formerly a participant in the dc plan is determined in a similar manner to a disabled participant who was a participant in the db pian at the time of his disability that is the disability benefit of disabled participant who was formerly a participant in the dc plan is determined without regard to the balance of the participant’s account in the dc plan at the time of his disability thus the db plan is not a defined_benefit_plan which provides a benefit derived from employer contributions which is based partly on the balance of the separate_account accordingly amounts transferred upon disability retirement from the dc plan to the db plan under the disability provisions of the plans are not subject_to sec_414 of the code ruling sec_2 and sec_72 of the code provides for an additional tax on any amount received from a qualified_retirement_plan as defined in sec_4974 which includes plans described in sec_401 the additional tax for the taxable_year in which such amount is received is equal to percent of the portion of such amount which is includible in gross_income except where such income is distributed on or after an employee attains the age of or on account of one or more exceptions provided for under sec_72 of the code sec_72 does not apply in this case to the transfers because the transfers do not result in any amounts being includible in the participant's gross_income accordingly the transfers will not result in the trigger of an additional tax under sec_72 and ll i siiss s sco c 20134902a9 will not result in constructive receipt to an affected participant or otherwise subject the participant to taxes under sec_72 of the code sec_401 of the code provides that a plan shall not be considered as not satisfying the requirements of sec_401 merely because the plan includes a qualified_cash_or_deferred_arrangement in plr it was ruled that transfers from the db plan to the dc pian or from the dc plan to the db plan did not constitute cash or deferred arrangements within the meaning of code sec_401 k in any event distributions from plans that include cash or deferred arrangements are generally taxed under sec_402 of the code not sec_401 accordingly any transfers from the db plan to the dc plan upon recovery from disability or from the dc plan to the db plan upon disability will not result in the trigger of an additional tax under sec_401 and will not result in constructive receipt to an affected participant or otherwise subject the participant to taxes under sec_401 of the code sec_402 of the code provides in effect that contributions made by an employer to a_trust described in sec_401 are not taxable to the employees on whose behalf they are made until the year or years in which such contributions are actually distributed to them revrul_67_21 1967_2_cb_149 involves the transfer of funds directly from a_trust forming part of a qualified_plan under code sec_401 to a_trust forming part of another qualified_plan the revenue_ruling provides that if a participant's interest in a qualified pian is transferred from the trust of a qualified_plan to the trust of another qualified_plan without being made available to the participant no taxable_income will be recognized to the participant by reason of such transfer in this case no benefits are made available or paid to the participant at the time of the transfers the transfers from the dc plan to the db plan upon disability and back to the dc plan upon recovery and reemployment occur automatically based on the type of retirement selected by the participant and the participants’ recovery if any from disability no participant or beneficiary of either of the plans will receive a distribution of any assets at the time of the transfer and the assets will remain in trusts that are qualified under code sec_401 and exempt from tax under sec_501 a accordingly as was the case with the transfers considered by revrul_67_213 the transfer of assets from the dc plan to the db plan upon disability retirement and back to the dc plan upon recovery from disability are plan transfers that will not be a taxable_event under sec_402 and will not result in actual or constructive receive of income sec_404 of the code provides rules for determining the deduction for contributions of an employer to an employee's trust or annuity plan distributions from employee’s trusts or annuity_plans are generally taxed under sec_402 of the code not sec_404 accordingly any transfers from the db plan to the dc plan yu13490ag upon recovery from disability or from the dc plan to the db plan upon disability will not result in the trigger of an additional tax under sec_404 of the code ruling sec_415 of the code and the regulations thereunder provide that a participant's annual_benefit generally means a benefit payable in the form of a straight life_annuity or the actuarial equivalent thereof in this case because neither the transfers of assets from the dc plan to the db plan or the transfer of assets from the db plan to the dc plan are benefits payable or made available to participants the transfers do not affect the determination participants’ annual benefits accordingly neither the transfers of assets from the dc plan to the db plan upon disability or the transfer of assets from the db plan to the dc plan upon recovery affect the determination of a participant’s annual_benefit under sec_41 b of the code sec_415 of the code and the regulations thereunder provide that an annual_addition to a participant's account is the sum of employer contributions employee contributions and forfeitures credited to a participant's account for any year sec_1_415_c_-1 of the regulations provides that transfers of a benefit or a employee contribution from a qualified_plan to a defined_contribution_plan does not give rise to an annual_addition thus because the transfer of assets from the db plan to the dc plan is the transfer from a qualified_plan to a defined_contribution_plan no annual_addition arises similarly because there are no participants’ accounts in the db plan the transfer of assets from the dc plan to the db plan is also not an annual_addition accordingly neither the transfers of assets from the dc plan to the db plan upon disability or the transfer of assets from the db plan to the dc plan upon recovery affect the determination of the annual_addition to a participant’s account under sec_415 of the code conclusions amounts transferred upon disability retirement from the dc plan to the db plan under the disability provisions of the plans are not subject_to sec_414 of the code the transfer of assets from the dc plan to the db plan upon disability retirement or from the db plan to the dc plan upon recovery from disability will not result in taxation under sec_72 sec_401 sec_402 or sec_404 of the code the transfer of assets from the dc plan to the db plan upon disability retirement or from the db plan to the dc plan upon recovery from disability vu134902y will not result in constructive receipt to an affected participant or otherwise subject the participant to taxes under sec_72 or sec_401 of the code the transfer of assets from the dc plan to the db plan upon disability retirement or from the db plan to the dc plan upon recovery from disability with respect to any affected participant will not affect the determination of either the participant's annual_benefit under sec_415 of the code or the determination of the annual_addition to the participant’s account under sec_415 of the code this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited by others as precedent we are furnishing a copy of this letter to the enrolled_actuary for the plan in accordance with a power_of_attorney form on file if you have any questions on this ruling letter please contact l - sincerely david m ziegler manager employee_plans actuarial group


internal_revenue_service number release date index number ------------------------------- ---------------------------------- ----------------------- ----------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------- id no ----------------- telephone number --------------------- refer reply to cc corp b03 plr-129161-11 date date legend parent -------------------------------------------------------------------- ----------------------------------- date ------------------- --------------------- company official ------------------------------------------------------------------- ------------------------------------------------------------------------------ tax professional ------------------------------------------------------------------------------------------------ ------------------------------------------------------------ ---------------------- dear ---- --------- this is in response to a letter dated date submitted on behalf of parent requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election the extension is being requested for parent to file an election under sec_1_1502-21 to relinquish the entire carryback period for the parent consolidated group’s consolidated_net_operating_loss cnol for the tax_year ending date the election additional information was submitted in a letter dated date the material information submitted for consideration is summarized below plr-129161-11 parent is the common parent of a consolidated_group parent group parent group incurred a cnol for the taxable_year ending date parent has made the following representations parent group has not and will not carry back the cnol to a prior consolidated_return of parent group no corporation that was a member of the parent group at any time during the taxable_year ended date had a separate_return_year within the meaning of sec_1 e at any time during the carryback period parent is not seeking to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 at the time parent requested relief and the new return position requires or permits a regulatory election for which relief is requested parent intended to file the election the election was required to be filed by the due_date for parent group’s consolidated_return with extensions but for various reasons parent failed to file a valid election the period of limitations on assessment under sec_6501 has not expired for parent group’s tax_year ending date or any subsequent taxable_year sec_1_1502-21 provides that a consolidated_group may make an irrevocable election to relinquish the entire carryback period with respect to a cnol for any consolidated_return_year the election is made in a separate statement entitled this is an election under sec_1_1502-21 to waive the entire carryback period pursuant to sec_172 for the insert consolidated_return_year cnols of the consolidated_group of which insert name and employer_identification_number of common parent is the common parent sec_1_1502-21 also provides that the statement must be filed with the group's income_tax return for the consolidated_return_year in which the loss arises under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of plr-129161-11 the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 in this case the time for filing the election is fixed by the regulations ie sec_1_1502-21 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant an extension of time for parent to file the election provided parent shows it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by parent company official and tax professional explain the circumstances that resulted in the failure to timely file the election the information establishes that parent reasonably relied on a qualified_tax professional who failed to make or advise parent to make the election and that the request for relief was filed before the failure to timely make the election was discovered by the internal_revenue_service see sec_301_9100-3 and v based on the facts and information submitted including the representations made we conclude that parent has shown it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly an extension of time is granted under sec_301_9100-1 until days from the date on this letter for parent to file the election with respect to the relinquishment of the entire carryback period for the cnol for the tax_year ending date as described above the above extension of time is conditioned on the taxpayers’ parent’s and the members of its consolidated group’s tax_liability if any being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers’ tax_liability for the years involved a determination thereof will be made by the director’s office upon audit of the federal_income_tax returns involved parent group’s returns must be amended to attach the election statement required by sec_1_1502-21 a copy of this letter should be attached to the election statement alternatively if parent group files its returns electronically parent may satisfy this latter requirement by attaching a statement to its return that provides the date and control number of this letter_ruling we express no opinion as to the tax effects or consequences of filing the election late under the provisions of any other section of the code or regulations or as to the tax treatment of any conditions existing at the time of or effects resulting from filing the election late that are not specifically set forth in the above ruling plr-129161-11 for purposes of granting relief under sec_301_9100-1 we relied on certain statements and representations made by parent company official and tax professional however the director should verify all essential facts moreover notwithstanding that an extension is granted under sec_301_9100-1 to file the election penalties and interest that would otherwise be applicable if any still apply this ruling is directed only to the taxpayer s who requested it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely ken cohen senior technician reviewer branch office of associate chief_counsel corporate


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date conex-152287-10 uil number release date the honorable amy klobuchar united_states senate washington avenue south suite minneapolis mn attention -------------- dear senator klobuchar this letter is in response to your inquiry dated date on behalf of your constituent ----------------------- ---------------asked about the employment_tax treatment of compensation he received for services he performed while serving on an absentee ballot board as a general matter apart from the procedure for issuing a formal ruling as described in revproc_2011_1 internal_revenue_bulletin we cannot provide binding legal advice applicable to particular taxpayers however we have reviewed the facts ---------------provided and can provide general information which we hope will be helpful to you the law imposes old-age survivors and disability insurance taxes on wages paid to employees sec_3101 and sec_3111 of the internal_revenue_code the code the law also imposes hospital insurance taxes on wages paid to employees sec_3101 and sec_3111 of the code these two taxes comprise federal_insurance_contributions_act fica_taxes under fica apply to wages as defined in sec_3121 that employers pay for employment as defined in sec_3121 of the code services an election official or worker performed in the employ of a state or a political_subdivision are excepted from the definition of employment for fica purposes if the worker’s total pay is less than dollar_figure during the calendar_year sec_3121 and sec_3121 of the code we annually index and adjust this dollar_figure threshold for inflation for calendar_year sec_2010 and sec_2011 the applicable_amount is dollar_figure when wages paid to an individual for services performed as an election worker meet or exceed the applicable_dollar_threshold all amounts paid are subject_to fica tax including the first dollar_figure the fica exemptions for election workers will not apply if a sec_218 agreement covers the election worker’s services a sec_218 agreement is a voluntary agreement between a state and the social_security conex-152287-10 administration to provide coverage for employees of state and local governments within the state revrul_2000_6 internal_revenue_bulletin states that election workers are individuals who are generally employed to perform services for state and local governments at election booths in connection with national state or local elections we have not provided published guidance on whether the fica exemption applies to services election workers or officials performed at locations other than election booths such as services performed with absentee balloting we have not issued any formal rulings on whether the location at which individuals collect and count absentee ballots constitutes a polling place similar to an election booth for exemption purposes i hope this information is helpful if you have any questions please contact me or ------- --------------------of my staff at --------------------- sincerely lynne camillo branch chief employment_tax branch government entities tax exempt and government entities exempt_organizations employment_tax