department of the treasury internal_revenue_service p o box irs cincinnati oh release number tea eg ode o2- date date employer id number contact person id number contact telephone number form you must file tax years dear this letter is our final_determination that you don’t qualify for tax-exempt status under sec_501 of the internal_revenue_code the code recently we sent you a proposed adverse determination in response to your application the proposed adverse determination explained the facts law and basis for our conclusion and it gave you days to file a protest because we didn’t receive a protest within the required days the proposed determination is now final because you don’t qualify as a tax-exempt_organization under sec_501 of the code donors can’t deduct contributions to you under sec_170 of the code you must file federal_income_tax returns for the tax years listed at the top of this letter using the required form also listed at the top of this letter within days of this letter unless you request an extension of time to file we'll also notify the appropriate state officials of our determination by sending them a copy of this final letter and the proposed determination_letter under sec_6104 of the code you should contact your state officials if you have questions about how this determination will affect your state responsibilities and requirements we'll make this final adverse determination_letter and the proposed adverse determination_letter available for public inspection as required under sec_6110 of the code 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 the notice on how to notify us if you agree with our deletions you don’t need to take any further action letter rev catalog number 47632s if you have questions about this letter you can contact the person listed at the top of this letter if you have questions about your federal_income_tax status and responsibilities call our customer service number pincite-829-1040 tty for deaf or hard of hearing or customer service for businesses pincite-829-4933 sincerely jeffrey i cooper director exempt_organizations rulings and agreements enclosures notice redacted letter proposed adverse determination under sec_501 redacted letter final adverse determination under sec_501 - no protest letter rev catalog number 47632s van irs department of the treasury internal_revenue_service p o box cincinnati oh legend b state c date x number y number dear date date employer id number contact person id number contact telephone number contact fax number uil facts you were incorporated in b on c your articles of incorporation specifically state issues do you qualify for exemption under sec_501 of the code no for the reasons described below we considered your application_for recognition of exemption from federal_income_tax under sec_501 a of the internal_revenue_code the code based on the information provided we determined that you don’t qualify for exemption under sec_501 of the code this letter explains the basis for our conclusion please keep it for your records said organization is exclusively organized for charitable religious educational and scientific purposes including for such purposes the making of distributions to organizations that qualify as exempt_organizations under sec_501 of the internal_revenue_code or the corresponding section of any future federal tax code the business activity for said organization is as follows fundraising for the purpose of children’s education to set up a social network for children in order to further their future educational funding developing and maintaining a website and other networks and systems for the furthering of children’s education with the intent of helping children develop and manufacture creative projects for licensing and sale funds from this activity go directly into the running the organization and the website and into trusts or accounts for the children involved said monies to be used for the development of the system and tuition and expenses of the children’s future education needs the raising of funds for children’s various charitable organizations as well as the development of said organizations and or the partnering of the organization with other charitable organizations which focus on children letter rev catalog number 47630w their creative process and the development of their mental and inventive skills with a focus on helping them become entrepreneurs you are dedicated to the following three principals children’s brilliant ideas created with love entrepreneurship at an early age helping to fund children’s continuing education your main activity will be to develop and maintain a website and a system of production and licensing dedicated to the support guidance education and entrepreneurship of children the website will be a secure social networking site for children which will be dedicated to teaching children how to deal with bullying of all types at the same time protecting them from on-line bullying in addition the website will act as a protected social network for children who will be engaged in displaying their ideas art designs and other creative endeavors to one another and the on-line computer community the ideas and projects will be voted upon by members of website children only and then the projects with the majority of votes will be turned into real- world products products may include but not be limited to clothing art literature music practical inventions handbags mouse pads mugs and backpacks for example a tee shirt design voted as best among the constituents of the social network will then be printed on tee shirts and sold you will then act as a licensing agency for these child designed products offering them to the manufacturing and retail community for sale to the general_public you will hold the licenses for the products created by children for a period of two years the intellectual_property associated with these products films music or inventions will always be held in perpetuity by the creator and not by you unless the creator wants to sell or donate said copyright patent etc after the two year period the copyright will revert to the creator most of the profits x from such designs will be put into a conservatorship type account and held for that child’s further college education which they will receive when they enroll in college or come of age the remainder y will be retained by you for your operations including web site maintenance you have a four member board who will also act as business mentors to the children guiding them through the process of self-expression invention innovation production and sales of their ideas your startup costs and website design will be funded by charitable fundraising grants and donations your operating funds will mainly come from producing marketing and selling the winning projects you will also accept gifts grants and contributions as well as link up with other children’s charities and put on sponsored events attractions and fundraisers law sec_501 of the code provides for exemption from federal_income_tax of organizations organized and operated exclusively for religious charitable scientific literary 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 b i of the regulations provides that an organization is organized exclusively for one or more exempt purposes only if its articles of organization limit its purposes to one or more exempt purposes and do not expressly empower the organization to engage otherwise than as an insubstantial part of its activities in activities which in themselves are not in furtherance of one or more exempt purposes letter rev catalog number 47630w sec_1'501 c -1 c of the regulations states that an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more 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 states that an organization is not operated exclusively for one or more exempt purposes unless it serves a public rather than a private interest it must not be operated for the benefit of designated individuals or the persons who created it revrul_66_104 1966_1_cb_135 holds that an organization which makes funds available to authors and editors for preparing teaching materials and writing textbooks and under the terms of the contract with the publisher receives royalties from sales of the published materials and then shares them with the editors and authors does not qualify for exemption under sec_501 in better business bureau of washington d c inc v united_states 326_us_179 the supreme court held that the presence of a single non-exempt purpose if substantial in nature will destroy a claim for exemption regardless of the number of importance of truly exempt purposes in binger v johnson 394_us_741 the supreme court stated that to be excluded from gross_income under sec_117 scholarships must be relatively disinterested no strings educational grants with no requirements of any substantial quid pro quo from the recipients application of law you are not as described in sec_501 of the code because you are not exclusively organized and operated for charitable purposes in easter house v united_states cl_ct citing sec_1_501_c_3_-1 ii of the regulations aff'd without opinion 846_f2d_78 fed cir that an organization is not operated exclusively for exempt purposes if it serves a private rather than a public interest in 72_tc_267 the tax_court held that a separate fund created by the miss georgia pageant solely to award scholarships to the pageant’s contestants did not qualify under sec_501 of the code because the scholarships were awarded in consideration of contractual obligations the contract required contestants to participate in the miss georgia pageant and appear in public as directed by pageant officials a winning contestant who failed to honor the contract forfeited all rights to her scholarship the tax_court concluded that the scholarships were compensation_for signing the pageant contract and for performing services under it therefore these awards were not sec_117 scholarships and the fund was not operated exclusively for sec_501 purposes you do not meet the requirements in sec_1_501_c_3_-1 of the income_tax regulations your articles of incorporation state in part the business activity for said organization is as follows fundraising for the purpose of children’s education to set up a social network for children in order to further their future educational funding developing and maintaining a website and other networks and systems for the furthering of children’s education with the intent of helping children develop and manufacture creative projects for you are not as described in sec_1_501_c_3_-1 of the income_tax regulations because you fail both the organizational and operational tests letter rev catalog number 47630w licensing and sale because you are organized to conduct the business activities listed above your purposes are outside the parameters of c purposes and you fail the organizational_test you are not described in sec_1_501_c_3_-1 of the regulations because more than an insubstantial part of your activities is not in furtherance of an exempt_purpose for example you are operating for the private purposes of your contest winners because you are providing them a means to market and sell their products in which they keep x of the proceeds to be put into an account for education you are also operating for substantial commercial purposes such as the marketing and sale of products because you are keeping y of the proceeds of product sales to fund the commercial like services you provide to the winners you are not as defined in sec_1_501_c_3_-1 of the income_tax regulations because you are operating for the private interests of the contest winners for example you will hold the licenses of the products created by the winners for a period of two years but the intellectual_property associated with these products will always be held in perpetuity by the creator unless the creator wants to sell or donate the intellectual_property rights you also plan to pay the winner to license the product and utilize the copyright or patent this shows you are a vehicle for promoting the sale of the winners’ work which serves the private purposes of the winners you are similar to the organization in revrul_66_104 because you pay royalties on a percentage basis for the products you sell on behalf of the winners the winners will retain x and you keep y for the services you provide like the organization in the revenue_ruling you are operating in a commercial manner you are similar to the organization described in binger v johnson because you are providing compensation to your participants and not scholarships for example contest winners will receive payments to an educational trust in their name based on subsequent sales of the winning products you are similar to the organization described in miss georgia scholarship fund inc v commissioner because the funds placed in the winners’ individual trust accounts for future education needs serves as compensation_for the products you sell on their behalf therefore these awards are not sec_117 scholarships and you are not operating exclusively for sec_501 purposes you are like 326_us_279 in that you are not operated exclusively for exempt purposes purposes include substantially furthering the private interests of the contest winners by providing them commercial like services as well as paying them royalties to fund their future education like the organization in this court case and in easter house this single nonexempt purpose destroys your claim for exemption under sec_501 of the code although you may have some charitable purposes your your position you state that you operate exclusively for educational and charitable purposes for qualifying for exemption sec_501 you believe setting up educational trust funds for contest winners by producing and selling winning entries qualifies for exemption as educational our response to your 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 further the details as analyzed previously show you are serving substantial commercial and private purposes letter rev catalog number 47630w conclusion based on the information you provided your operations result in substantial private benefit to the creators of products and you are providing services in a commercial manner as a result we are not able to conclude that you are operated exclusively for public rather than nonexempt purposes despite any charitable and educational_purposes your activities may achieve you cannot qualify for tax exemption because more than an insubstantial part of your activities is not in furtherance of exempt purposes accordingly you do not qualify for exemption under sec_501 of the code if you don’t agree you have a right to file a protest if you don’t agree with our proposed adverse determination to do so you must send a statement to us within days of the date of this letter the statement must include e e e e e your name address employer_identification_number ein and a daytime phone number acopy of this letter highlighting the findings you disagree with anexplanation of why you disagree including any supporting documents the law or authority if any you are relying on the signature of an officer director trustee or other official who is authorized to sign for the organization or your authorized representative for an officer director trustee or other official who is authorized to sign for the organization under penalties of perjury i declare that i examined this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete for authorized representatives under penalties of perjury i declare that i prepared this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete e one of the following declarations your representative attorney certified_public_accountant or other individual enrolled to practice_before_the_irs must file a form_2848 power_of_attorney and declaration of representative with us if he or she hasn’t already done so you can find more information about representation in publication practice_before_the_irs and power_of_attorney we'll review your protest statement and decide if you provided a basis for us to reconsider our determination if so we’ll continue to process your case considering the information you provided if you haven’t provided a basis for reconsideration we’ll forward your case to the office of appeals and notify you you can find more information about the role of the appeals_office in publication how to appeal an irs decision on tax- exempt status letter rev catalog number 47630w ' x if you don’t file a protest within days you can’t seek a declaratory_judgment in court at a later date because the law requires that you use the irs administrative process first sec_7428 of the code where to send your protest please send your protest statement form_2848 if needed and any supporting documents to the applicable address u s mail street address for delivery service 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 you can also fax your statement and supporting documents to the fax number listed at the top of this letter if you fax your statement please contact the person listed at the top of this letter to confirm that he or she received it if you agree if you agree with our proposed adverse determination you don’t need to do anything if we don’t hear from you within days we’ll issue a final adverse determination_letter that letter will provide information on your income_tax filing_requirements you can find all forms and publications mentioned in this letter on our website at www irs gov formspubs if you have questions you can contact the person listed at the top of this letter sincerely director exempt_organizations enclosure publication letter rev catalog number 47630w


department of the treasury internal_revenue_service washington d c date number release date cc intl br1 tl-n-1955-01 uilc internal_revenue_service national_office chief_counsel_advice memorandum for from ricardo a cadenas senior technical reviewer associate chief_counsel intl cc intl br1 subject service of administrative_summons on us citizen residing in the united kingdom this chief_counsel_advice responds to your memorandum dated date in accordance with sec_6110 this advice should not be cited as precedent issues does the hague service convention permit service of an irs administrative_summons in the united kingdom that would be enforceable through the courts of the united_states if so a how does the hague service convention permit an irs administrative_summons to be served in the united kingdom b what are the procedures that examination teams should follow to submit administrative summonses for service in the united kingdom pursuant to the hague service convention c where should the summons require a us citizen who resides in the united kingdom to appear to be interviewed conclusion the hague convention on the service abroad of judicial and extrajudicial documents in civil or commercial matters u s t u n t s t i a s no u s c a i l m the service convention provides for service of an irs administrative_summons on a us citizen residing in the united kingdom because such summons is considered an extrajudicial document under the convention a properly served summons may be enforceable in the us district_court for the district of columbia pursuant to sec_7604 and sec_7701 the summons may be personally served by the revenue service a representative the rsr or the assistant revenue service representative the arsr stationed at london after being authorized by the central authority of the united kingdom under the service convention the requesting office would forward the request in the form prescribed by the b service convention and annexed to article sec_3 and along with the summons form_2039 and a brief description of the nature of investigation and the proposed line of inquiry to this office the service of the summons in the united kingdom will be processed by the london rsr of the office of director international lmsb and coordinated by this office and the office of assistant chief_counsel collection bankruptcy and summonses the office of the revenue service representative in london is an c appropriate place for requiring the witness to appear for the summons interview facts we have been requested to determine if a us citizen or resident residing in the united kingdom who is believed to have information relevant to irs audits may be served with an irs administrative_summons in the united kingdom law and analysis scope of application of the hague service convention background the most efficient means for gathering information from any country is through the exchange of information article in the tax_treaty the united_states has signed with that country the us-uk income_tax treaty as currently in force is interpreted not to require either party to provide formal assistance to the other in exchange of information if that party does not have a tax interest in the matter in cases where the united kingdom does not have a tax interest it will not use compulsive measures to require testimony or the production of documents in such situations the irs may have to look to other means for obtaining information such as the internal_revenue_code other statutes and the service convention1 authority for administrative_summons and district_court jurisdiction sec_7602 authorizes the service to summon any person the secretary may deem proper for ascertaining the correctness of any return and for determining the tax_liability of any person such summons can be issued to examine any records and to take testimony of any person this power to summon any person to pursue a legitimate inquiry is subject only to the criteria established by 379_us_48 and specific statutory provisions such as sec_7602 which forbids issuance of the summons where a justice_department referral is in effect the code does not restrict the application of this section to the geographic boundaries of the united_states your questions raise the issue of serving in the united kingdom a summons under sec_7603 by delivery in hand to a summoned party as discussed below the service convention provides procedures for personal service of documents abroad jurisdiction for enforcement of administrative_summons is generally vested in the united_states district_court for the district in which the summoned person resides or is found sec_7604 for purposes of enforcing an administrative_summons us citizens and residents residing abroad are deemed to be residing in the district of columbia under sec_7701 although the legislative_history of sec_7701 is scanty congress was concerned that there was no provision to enforce an administrative_summons when a us citizen or resident was not found in any us judicial district the senate amendment extended the jurisdiction and the summons power of the united_states district_court of the district of columbia to reach us citizens and residents not present in the united_states the conference agreement generally followed the senate amendment but added other provisions such as the formal_document_request procedure found in sec_982 which was also enacted under tefra in see conf_rep no reproduced pincite_2_cb_600 pincite thus the us district_court for the district of columbia is vested with jurisdiction to enforce administrative summonses issued to us citizens and residents abroad article of the new us-uk income_tax treaty which is pending ratification eliminates tax interest as a condition for providing assistance in exchange of information we are not aware of any case that has construed sec_7701 if an irs summons could be served upon a us citizen or resident overseas under a treaty or as otherwise recognized by international law then the us district_court for the district of columbia would be properly vested with jurisdiction over summons enforcement proceedings by virtue of sec_7701 the hague service convention we are not aware of any federal statute that prohibits or otherwise explicitly addresses the subject of personal service of an irs summons on individuals who reside abroad but certain legal doctrines that have evolved over time in the practice of international law proscribe such actions because they sometimes impinge on the sovereignty of other nations under international law a state may determine the conditions for service of process in its territory in aid of litigation in another state restatement of law third foreign relations law of the united_states the american law institute restatement sec_471 service of process in foreign state extraterritorial service of investigative summonses by any country without proper authority may be viewed as an exercise of its sovereign power in the other country the need to recognize foreign sensibilities while serving summonses is best explained in ftc v compagnie de saint-gobain-pont- a-mousson 636_f2d_1300 d c cir generally this extraordinary step may be taken by a us agency only when explicitly authorized by statute2 the service convention complements the federal rules of civil procedure for service of documents abroad this convention is a multilateral treaty that has been ratified by approximately twenty-three countries the united_states and the united kingdom became signatories to this agreement in date u s c a appendix following rule fed r civ p i l m as a ratified self- executing treaty the service convention is a supreme law of the land 788_f2d_830 2d cir the service convention governs the service of judicial and extrajudicial documents the term extrajudicial documents in the title and in article of the service convention refers to documents not directly connected with a lawsuit but which require formal service under the law of the state of origin restatement sec_471 service of process in foreign state reporters note sec_3 congress acknowledged that article of the service convention which renders the provisions of the convention applicable to extrajudicial documents was intended to include documents emanating from administrative agencies and commissions or other quasi-judicial tribunals in our own system report of the senate committee u s c known as the walsh act of is an example of a statute by which congress expressly approved service of documents abroad on foreign relations on the convention on the service abroad of judicial and extrajudicial documents s exec rep no 90th cong 1st sess p also see p date based on these authorities it is our view that the irs administrative_summons is covered by the definition of the term extrajudicial documents in the service convention the service convention applies only to civil or commercial matters but these terms are not defined in the convention the uk central authority like its us counterpart has taken an expansive view of the term civil or commercial matters in serving documents issued by us agencies restatement sec_471 service of process in foreign state comments illustrations f the uk courts have also adopted a cooperative approach in the matter in the recent past in in re state of norway all er i l m where norway was seeking the assistance of the english court to compel testimony from witnesses in england in connection with certain tax collection proceedings the highest court of the united kingdom affirmed the order to compel testimony and instructed that the words civil or commercial matter should be given their ordinary meaning and would include all matters not criminal3 thus tax and other fiscal matters are within the scope of both the hague service and evidence conventions this is consistent with the us practice to apply both conventions broadly to all non-criminal matters see statement of us representative at the meetings of the special commission on the operation of the hague convention date reprinted in i l m enforcement provisions a summons served in the united kingdom in accordance with the service convention would be backed by statutory enforcement provisions as stated above sec_7701 confers jurisdiction in the us district_court for the district of columbia in summons enforcement proceedings it is worth noting that the court in ftc v compagnie de saint-gobain-pont-a- mousson which disapproved of the service by mail of the subpoena by the federal trade commission endorsed the use of the service convention under certain circumstances see 636_f2d_1313 the situation where the irs seeks to serve a summons abroad can also be distinguished from the one in ftc the court in ftc observed that the provision pursuant to which the commission served the impugned subpoena section of the federal trade commission act usc sec_49 empowered the commission to require the attendance of witnesses and the production of evidence only from any place in the united_states in contrast sec_3 the hague service convention parallels the hague evidence convention and it is the latter convention that was applied in in re state of norway sec_7602 under which service would be attempted to summon an individual in the united kingdom authorizes the summoning of any person for ascertaining the correctness of any return without geographic limitations the court found the commission’s action in ftc objectionable also because it served the subpoena on a foreign_citizen on foreign soil the discussion in this memorandum however addresses the question of serving a summons on a us citizen or resident in the united kingdom in summary the service convention provides for service of documents by an agent and through the central authority of the united kingdom the service convention applies to all civil matters which require service of judicial and extrajudicial documents article we believe that an irs administrative_summons constitutes an extrajudicial document for this purpose therefore the service of an irs administrative_summons under the service convention does not impinge on the sovereignty of the united kingdom the us district_court for the district of columbia has the jurisdiction to enforce a summons properly served upon a us citizen or resident who resides abroad a how the summons should be served abroad using the hague service convention the code and the case law generally require that an administrative_summons be served in person the persons authorized to personally serve an irs summons are specific irs employees including revenue agents rsrs and arsrs sec_301_7603-1 sec_301_7602-1 and delegation_order no rev paragraphs and under article of the service convention each contracting state designates a central authority to process transnational service of documents under article the central authority of the state of destination arranges to have the document served in accordance with its own law or by any particular method requested by the applicant unless such a method is incompatible with its own laws under this provision the irs can request that the summons be served by delivery in hand to the person summoned personal service of documents is not incompatible with the uk laws rules and of civil procedure rules part uk under article the central authority or the delegate after service completes a certificate in the form annexed to the service convention the certificate states that the document has been served and includes the method the place and the date of service and the person to whom the document was delivered under article each contracting state is free to use consular and diplomatic channels to forward the documents to the authorities designated by the other state for service in order to serve a summons on a us citizen or resident in the united kingdom the irs should seek the assistance of the uk central authority under the service convention and should request that it be served in person as required by sec_7603 but under the treasury regulations the only persons authorized to serve an irs summons are specific irs employees including revenue agents rsrs and arsrs sec_301_7603-1 and delegation_order no rev paras and in order to comply with this requirement we recommend that the rsr or the arsr in london be designated by the uk central authority to serve the summons b recommended procedures for the service of summons under article of the service convention the request for service of a document should be forwarded to the central authority of the receiving state in the form prescribed in the convention and annexed to it without any requirement of legalization or equivalent formality see recommendation adopted by the fourteenth session date of the convention and annexed to article sec_3 and of the convention the uk central authority for the service convention is her majesty’s principal secretary of state for foreign and commonwealth affairs london sw1a 2al the document to be served or a copy of it should be attached to the request and both the request and the document should be furnished in duplicate sec_7603 describes how a summons may be served by an attested copy delivered in hand to the person to whom it is directed as with any irs courtesy investigation request the requesting office is expected to provide the receiving office with all of the essential information on the summons form_2039 at a minimum the following should be included in the summons or in the attachments i the name s and address es of the taxpayer s under examination information that is also necessary to provide the taxpayer proper notice of the summons under sec_7609 and an opportunity to file a petition to quash ii the tax period s involved iii the irs office examining the us taxpayer s iv the name and address of the third party witness to be served with the summons and v the list of specific books records papers and other data the witness is expected to bring with him to the summons interview the rsr’s office may fill in the other required information on the summons form i the name the business address and telephone number of the irs officer before whom the witness is to appear the rsr or assistant rsr in this case ii the place and time for appearance of the witness generally at least days after the summons is served on the witness and the taxpayer s has been given notice and the required opportunity to quash see sec_7609and b and irm a iii details regarding the required manner of service upon the witness ie hand delivery in person and iv details regarding how notice of the summons was given to the taxpayer we expect that the revenue_agent s investigating the case would take part in the interview in the event it is not practicable along with the basic information described above the requesting office will also need to devise some means of outlining the matters to be covered during the witness interview including the follow-up type questions that the rsr arsr may have to ask in addition as provided in the recommendation adopted by the fourteenth session date and annexed to article sec_3 and of the service convention additional information has to be provided in the prescribed form entitled request for service abroad of judicial or extrajudicial documents copy attached a request that the documents be served in person in accordance with the provisions of subparagraph b of the first paragraph of article of the service convention should be clearly stated in the form to ensure proper procedures and coordination any summons that is to be served under the service convention should be sent to this office for review before it is sent to the rsr if necessary we will also coordinate matters with the us department of justice office of foreign litigation which is the central authority for the united_states under the service convention under restatement sec_442 request for disclosure law of the united_states the authority issuing the summons is required to take into account the following factors while preparing it the importance to the investigation of information sought the degree of specificity of the request the availability of alternative means of securing the information the extent to which noncompliance with the request would undermine important interests of the united_states and how compliance would affect the important interests of the country whence the information is sought c place to be designated for appearance we agree with you that a witness residing in the united kingdom should be requested to appear for the interview at the office of the rsr in london pursuant to irm c and d the irs generally makes a summons returnable at a place that suits the witness’s convenience if he is cooperative and at the irs officer’s or employee’s office if he is not since the interview of a witness residing in the united kingdom is likely to be conducted by the rsr or_his_delegate their office is the natural choice for this purpose in summoning a witness who resides abroad the convenience of the witness should also be taken into account case development hazards and other considerations in the last paragraph of your analysis of issue a on page of your memorandum you have concluded that an irs administrative_summons may be served in the united kingdom pursuant to the service convention by any of the following means forwarding the summons to the uk central authority for service by the central authority or a private agency arranged by the central authority or serving the summons directly through us diplomatic or consular agents such as the service’s revenue service representative in the united kingdom pursuant to sec_301_7603-1 and sec_301_7602-1 only designated officer s or employee s of the internal_revenue_service are authorized to serve an irs administrative_summons to be persons before whom the summoned person must appear or to take testimony under oath from the summoned persons under delegation_order number rev rsrs and arsrs have been designated to perform these duties see paras and the revenue agents however are prohibited from serving the summons outside of the united_states by international law and the manual see ccdm in these circumstances only the rsrs and arsrs may serve the summonses and take testimony from the summoned persons in preparing for the interview of a witness the service should bear in mind the various general privileges a witness may assert such as the privilege_against self- incrimination spousal communication privilege and the attorney-client_privilege if applicable we suggest that before proceeding with the issuance of the summons you explore all means of countering these and other privileges that a witness may assert the summons should not be served as suggested by you directly through the us diplomatic or consular services under article this article is applicable only for documents served without application of compulsion since administrative summonses compel witnesses to appear and produce documents and give testimony the procedure set forth in article is not applicable we recommend service of the summons with the authorization of the uk central authority in a case where the irs has sufficient information regarding the transactions involved so as to issue a valid statutory_notice_of_deficiency to the taxpayer without first summoning the us citizen or resident in the united kingdom we would recommend issuance of the statutory notice to minimize the litigation risks inherent in serving an irs summons overseas once a case is docketed in the us tax_court or the us district_court the irs could seek to compel testimony and the production of other needed information through judicial means in the united kingdom by invoking the hague evidence convention as opposed to service of a summons under the service convention this can be done even though the uk inland revenue does not have a tax interest under the us-uk income_tax treaty because we would not be invoking the tax_treaty in a case currently pending in tax_court area_counsel in philadelphia successfully used the hague evidence convention to obtain uk bank records after inland revenue declined a treaty request because of its not having a tax interest the hague evidence convention can only be used by the irs if there is a judicial proceeding pending or contemplated in the united_states where the specific information sought will be used in litigation this writing may contain privileged information any unauthorized disclosure of this writing may have an adverse effect on privileges such as the attorney client privilege if disclosure becomes necessary please contact this office for our views if you have any further questions please call vijay rajan at ricardo a cadenas senior technical reviewer branch office of associate chief_counsel international attachment to tl-n-1955-01 request certificate and summary of the documents to be served hague convention on the service abroad of judicial and extrajudicial documents in annexes provided for article sec_3 and of the civil and commercial matters on date the fourteenth session adopted a recommendation on information to accompany judicial and extrajudicial documents to be sent or served abroad in civil or commercial matters practical handbook on the operation of the hague convention of date on the service abroad of judicial and extrajudicial documents in civil or commercial matters annex to the convention forms request for service abroad of judicial or extrajudicial documents convention on the service abroad of judicial and extrajudicial documents in civil or commercial matters signed at the hague the 15th of date identity and address of the applicant address of receiving authority i e b of the first a of the first paragraph of article the undersigned applicant has the honour to transmit - in duplicate - the documents listed below and in conformity with article of the above-mentioned convention requests prompt service of one copy thereof on the addressee identity and address a in accordance with the provisions of sub-paragraph of the convention b in accordance with the following particular method sub-paragraph paragraph of article c by delivery to the addressee if he accepts it voluntarily second paragraph of article the authority is requested to return or to have returned to the applicant a copy of the documents - and of the annexes - with a certificate as provided on the reverse side list of documents done at the signature and or stamp delete if inappropriate reverse of the request certificate the undersigned authority has the honour to certify in conformity with article of the convention that the document has been served the date at place street number - in one of the following methods authorised by article a in accordance with the provisions of sub-paragraph of the convention b in accordance with the following particular method c by delivery to the addressee who accepted it voluntarily the documents referred to in the request have been delivered to a of the first paragraph of article identity and description of person relationship to the addressee family business or other that the document has not been served by reason of the following facts in conformity with the second paragraph of article of the convention the applicant is requested to pay or reimburse the expenses detailed in the attached statement annexes documents returned in appropriate cases documents establishing the service done at the signature and or stamp delete if inappropriate summary of the document to be served convention on the service abroad of judicial and extrajudicial documents in civil or commercial matters signed at the hague the 15th of date article fourth paragraph name and address of the requesting authority particulars of the parties judicial document nature and purpose of the document nature and purpose of the proceedings and where appropriate the amount in dispute date and place for entering appearance court which has given judgment date of judgment time-limits stated in the document extrajudicial document nature and purpose of the document time-limits stated in the document if appropriate identity and address of the person interested in the transmission of the document delete if inappropriate


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 psi b04 plr-133237-13 date date re legend decedent ------------------------------------------------------------------------ ------------------------ estate ------------------------------------------------------------------- --------------------------------- trust --------------------------------------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------- trustee niece nephew cousin nephew’s wife nephew’s daughter date date ------------------------ --------------------------- ----------------------- --------------------------- ------------------------- ------------------------- ------------------------ ----------------------- plr-133237-13 date date date date date dear ------------------ ------------------- -------------------- ------------------------ ------------------------ -------------------- this letter responds to the letter dated date submitted by your authorized representative requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file pursuant to sec_26_2601-1 of the generation-skipping_transfer_tax regulations a qualified physician’s certification and other evidence that decedent was mentally incompetent at all times on and after date until her death the facts submitted and representations made are summarized as follows decedent created a revocable_trust trust on date and subsequently amended it on date a date prior to date decedent died on date upon the death of decedent the remainder of trust was split into two equal shares and held in further trust the first share was for the benefit of decedent’s niece niece and the second share was for the benefit of decedent’s nephew nephew on the death of niece the remainder of the first share is to be paid to the grandchildren of decedent’s cousin cousin niece is still living on the death of nephew the income of second share was to be paid to his wife nephew’s wife for her lifetime then to his daughter nephew’s daughter for her lifetime nephew died on date nephew’s wife renounced her interest on date and nephew’s daughter died on date upon the death of the last to die of nephew nephew’s wife and nephew’s daughter the remainder of the second share is to continue on in perpetuity for the benefit of two tax exempt entities the executor of decedent’s estate timely filed decedent’s form_706 united_states estate and generation-skipping_transfer_tax return on date decedent’s estate failed to file a physician’s certificate or other evidence of decedent’s mental incompetency plr-133237-13 sec_2601 of the internal_revenue_code imposes a tax on every generation- skipping transfer a generation-skipping_transfer is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip under b c of the tax_reform_act_of_1986 and sec_26_2601-1 if an individual was under a mental_disability to change the disposition of the individual's property continuously from date until the date of death the provisions of chapter do not apply to any generation-skipping_transfer under a_trust as defined in sec_2652 to the extent such trust consists of property or the proceeds of property the value of which was included in the gross_estate of the individual sec_26_2601-1 defines the term mental_disability as mental incompetence to execute an instrument governing the disposition of the individual’s property whether or not there was an adjudication of incompetence and regardless of whether there has been an appointment of a guardian fiduciary or other person charged with either the care of the individual or care of the individual's property sec_26_2601-1 provides that if there has not been a court adjudication that the decedent was mentally incompetent on or before date the executor must file with form_706 either - a certification from a qualified physician stating that the decedent was mentally incompetent at all times on and after date and did not regain competence to modify or revoke the terms of the trust or will prior to his or her death or sufficient other evidence demonstrating that the decedent was mentally incompetent at all times on and after date as well as a statement explaining why no certification is available from a physician and any judgment or decree relating to the decedent’s incompetency that was made after date sec_301_9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose date is prescribed by a regulation and not expressly provided by statute requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government based on the facts submitted and the representations made including a contemporaneous statement made regarding decedent’s mental incompetency during the applicable time period we conclude that the requirements of sec_301_9100-3 have been met therefore we grant an extension of time of days from the date of this letter to file the required physician’s certification or other evidence the physician’s certification or other evidence should be attached to a supplemental form_706 for decedent’s estate the form_706 should be filed with the cincinnati service_center at the following address internal_revenue_service cincinnati service_center - stop plr-133237-13 cincinnati oh a copy of this letter should also be attached to the supplemental form_706 a copy of this letter is enclosed for this purpose except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we express no opinion as to whether decedent was under a mental_disability within the meaning of sec_26_2601-1 on and after date resolution of this factual matter would be under the audit jurisdiction of the area director this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent the rulings contained in this letter are based upon information and representations submitted by the taxpayer 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 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely associate chief_counsel passthroughs special industries by _____________________________ lorraine e gardner senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service department of the treasury index number number release date washington dc person to contact telephone number refer reply to cc dom corp plr-122028-98 date date date date date property w contract a contract b e f dear this letter responds to your date request for a supplement to our prior letter_ruling dated date the prior letter_ruling the legend abbreviations factual summary and representations appearing in our prior letter_ruling are incorporated by reference unless otherwise indicated pursuant to your request the prior letter_ruling has been modified as follows a the descriptions of date date and property w in the legend have been plr-122028-98 amended and contract a contract b date e and f have been added b the description of the proposed transaction has been amended to read as follows before date i sub has sold its assets in the ordinary course of business c and will be liquidated into parent ii parent and its subsidiaries including several of its foreign subsidiaries will sell assets in the ordinary course of business the foreign subsidiaries that sell their assets will be liquidated into parent after such sales parent will also attempt to sell business b and the other businesses because none of group a group b or group c wishes to acquire them any proceeds from the above sales including the sale by sub in step i will be used to pay liabilities or purchase assets for use in business a or business c or will be allocated among sub controlled and controlled iii sub will sell all of its corp d and corp g stock and part of its corp a stock the proceeds of these sales will be used by sub to equate the value of each shareholder group’s stock in parent with the value of the corporation that group will own after the transactions are completed on or before date iv parent will transfer property w to controlled v sub will form two domestic holding_company subsidiaries dhc and dhc sub will transfer to dhc d percent of its stock in corp a corp b and corp e sub will transfer to dhc e percent of its stock in corp a corp b and corp e vi sub will merge into sub the first merger vii parent will merge into sub the second merger viii a plan_of_liquidation will be adopted for sub and the assets of sub will be distributed to sub the sub distribution ix unless sub is sold before date sub or parent before the merger described in step vi will contribute the stock of sub to a newly formed limited_liability_company new llc which will be treated for federal tax purposes as a division of sub on or before date a plan of complete_liquidation will be adopted for sub and the assets of sub will be distributed to new llc the sub distribution plr-122028-98 x sub will transfer to a wholly owned liability company llc a the assets and liabilities of business b and the other businesses not sold in step ii including stock of corporations engaged in the other businesses b stock of corp f and c property v as described below in steps xii and xiii sub will transfer to controlled and controlled partial_interests in llc which will be treated as a partnership for federal tax purposes the joint_ownership of llc will be terminated as expeditiously as possible see step xviii below xi sub will transfer to a second wholly owned limited_liability_company llc assets necessary to perform certain transitional support services for sub controlled controlled their respective subsidiaries and llc as described below in steps xii and xiii sub will transfer to controlled and controlled partial_interests in llc which will be treated as a partnership for federal tax purposes the joint_ownership of llc will be terminated as expeditiously as possible xii sub will contribute to controlled a property x and property y b c percent of its stock in corp a corp b corp e llc and llc c contract a d part of its pension assets and liabilities e part of its split dollar life_insurance assets and f cash and controlled will distribute property z to sub collectively contribution sub will also contribute to controlled its stock in sub sub sub sub and sub xiii sub will contribute to controlled a its corp c and dhc stock b d percent of its stock in llc and llc c contract b d part of its pension assets and liabilities and e cash collectively contribution the group a group b and group c shareholders have agreed to a tentative value for the corp c stock but have agreed to re-value the corp c stock after release of the corp c date earnings report if the date report and other relevant information alter the agreed upon tentative value of the corp c stock appropriate adjustments will be made amongst sub controlled and controlled to reflect the difference xiv controlled will form a domestic holding_company subsidiary dhc and will transfer to dhc stock of corp a and other investment_assets xv on date at_f sub will distribute its controlled stock to the group a shareholders in exchange for their sub stock_distribution and its controlled stock to the group b shareholders in exchange for their sub stock_distribution together the distributions after date xvi controlled will elect under sec_1361 to be treated as an s_corporation and will elect under sec_1361 to have sub sub sub sub sub and dhc treated as qualified subchapter_s subsidiaries qsubs controlled will elect plr-122028-98 under sec_1361 to be treated as an s_corporation and will elect under sec_1361 to have dhc treated as a qsub all elections will take effect on date xvii sub will elect under sec_1361 to be treated as an s_corporation the sub s election sub will elect under sec_1361 to have sub sub sub sub and dhc treated as qsubs all elections will take effect on date xviii llc will undertake to sell all the assets received from sub in step x above including the stock of corp f the proceeds of the sales will be distributed among sub controlled and controlled in proportion to their interests in llc sub controlled and controlled intend to have llc sell the assets as expeditiously as possible after which llc will be dissolved c representations k and cc have been modified to read as follows k other than any sec_303 redemptions that may be effected by controlled and other than possible inter_vivos gifts to lineal_descendants before or after distribution there is no plan or intention by the group a or group c shareholders to sell exchange transfer by gift or otherwise dispose_of any stock in sub or controlled after the transactions cc other than any sec_303 redemptions that may be effected by controlled and other than possible inter_vivos gifts to lineal_descendants before or after distribution there is no plan or intention by the group b or group c shareholders to sell exchange transfer by gift or otherwise dispose_of any stock in sub or controlled after the transactions d the following representations regarding distribution and distribution have been added t2 distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of either sub or controlled or stock possessing percent or more of the total value of all classes of stock of either sub or controlled plr-122028-98 mm distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of either sub or controlled or stock possessing percent or more of the total value of all classes of stock of either sub or controlled the above changes do not adversely affect the rulings contained in the prior letter_ruling and those rulings retain full force and effect no opinion is expressed about the tax treatment of the above changes under other provisions of the code and federal_income_tax regulations or the tax treatment of any conditions existing at the time of or effects resulting from the above changes that are not specifically covered by the rulings contained in the prior letter_ruling the caveats contained in the prior letter_ruling remain unchanged except that all references to the steps of the transactions in these caveats are amended to conform to the revised steps set forth above this supplemental letter is directed only to the taxpayer who requested it sec_6110 provides that it cannot be used or cited as precedent copies of this supplemental letter and the prior letter_ruling must be attached to the federal_income_tax return of each taxpayer involved for the taxable_year in which the transactions are completed under a power_of_attorney on file in this office a copy of this letter has been sent to the taxpayer sincerely assistant chief_counsel corporate by wayne t murray senior technician reviewer branch prior written_determination


internal_revenue_service number info release date conex date uil the honorable arlen specter united_states senator regional enterprise tower 6th avenue suite pittsburgh pa attention adam pope dear senator specter this letter responds to your inquiry dated date on behalf of your constituent ---------------------------- he asked for the name of a bill that he says taxes up to eighty percent of a social_security recipient’s annuity based on the income of both spouses and the year the bill passed he says this law puts an unjust marriage_penalty tax on married senior citizens and wants to bring it to the attention of legislators -----------------may be referring to sec_86 of the internal_revenue_code the congress enacted this provision in as part of the social_security amendments of publaw_98_21 subject_to certain limitations this provision taxed social_security_benefits above a certain base_amount up to a maximum of one-half of the taxpayer’s total social_security_benefit in some cases the income of the other spouse can affect the taxation of the recipient spouse’s social_security_benefits this section reversed a longstanding practice of excluding social_security_benefits from income in committee reports the congress concluded that social_security_benefits are like the benefits received under other retirement systems and should be taxed it also concluded that taxing social_security_benefits can help strengthen the social_security system financially the omnibus_budget_reconciliation_act_of_1993 obra publaw_103_66 amended sec_86 for and later years by taxing up to percent of the taxpayer’s social_security_benefit after applying certain limitation amounts while -----------------is correct that in some cases a recipient of social_security_benefits may have to pay more tax because of his or her spouse’s income a married taxpayer does have a higher base limitation amount not subject_to tax than a single_person i hope this information is helpful as you requested i have enclosed a copy of --- -------------------letter to you if you have additional questions please call me at --------------------------------------------------------------------------------- nancy j marks division counsel associate chief_counsel tax exempt and governmental entities enclosure sincerely


office_of_chief_counsel internal_revenue_service memorandum number release date cc pa cbs bo1 wryan postn-139011-05 uilc date date to associate area_counsel jacksonville fl from alan c levine chief branch collection bankruptcy summonses subject redacting social_security numbers from a notice_of_federal_tax_lien this chief_counsel_advice responds to your request for assistance this advice may not be used or cited as precedent issue whether the state of florida through the office of the clerk of the circuit_court may redact the social_security_number from a notice_of_federal_tax_lien nftl conclusion the social_security_number may not be redacted from a nftl as the doctrine_of federal preemption bars the state from altering the content of a nftl facts the service uses form_668 as the nftl which contains an individual’s social_security_number law and analysis on date the office of the attorney_general for the state of florida issued an opinion addressing the responsibilities of a clerk of the circuit_court to redact social_security numbers from any document filed in the public record including a nftl fla ago wl fla a g the opinion was based on relatively recent florida statutory provisions intended to reduce the amount of identity theft see postn-139011-05 fl stat ' et seq florida law provides that on or after date the social_security numbers contained in public documents must be kept confidential and exempt from disclosure in summary the opinion at page concluded that the clerk when presented with a document that is required_by_law to contain a social_security_number for recording in the official records must record such document upon payment of the service charges prescribed by law however the social_security numbers contained in the recorded documents are confidential and the clerk is responsible for preventing the release of such information to the public the manner for redacting social_security numbers from copies of the original record is left to the discretion of the clerk the opinion ended with the conclusion that social_security numbers contained in nftls must be redacted from copies that are made available to the public sec_6323 states the form and content of the notice referred to in subsection a shall be prescribed by the secretary such notice shall be valid notwithstanding any other provision of law regarding the form or content of a notice of lien emphasis added regulations provide that the irs must file tax-lien notices using form which must identify the taxpayer the tax_liability giving rise to the lien and the date the assessment arose sec_301_6323_f_-1 the supremacy clause of article vi of the united_states constitution provides in part that federal laws shall be the supreme law of the land supreme court cases have established that state law is preempted under the supremacy clause in three circumstances first congress can define explicitly the extent to which its enactments preempt state law see 537_us_51 second state law is preempted where it regulates conduct in a field that congress intended the federal government to occupy exclusively such an intent may be inferred from a scheme of federal regulation so pervasive as to make reasonable the inference that congress left no room for the states to supplement it or where an act of congress touch es a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject 331_us_218 finally state law is preempted to the extent that it actually conflicts with federal_law thus the court has found preemption where it is impossible for a private party to comply with both state and federal requirements see eg 373_us_132 or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of congress see 368_us_291 i r c ' f preempted state law requiring that nftl contain a description of the taxpayer’s property see generally 312_us_52 if preemption exists state law cannot even complement federal_law in the present situation under the first prong of analysis federal_law explicitly preempts state law as noted above sec_6323 provides that the content of the nftl shall be determined by secretary_of_the_treasury notwithstanding any other provision of law regarding the form or content of a notice of lien by approving the redaction of a social_security_number from a nftl the state of florida is altering the content of postn-139011-05 the nftl that is available for public inspection because sec_6323 prohibits any other law including state law from determining the content of the nftl the opinion erred in concluding that the clerk is required to redact a taxpayer’s social_security_number from a nftl additionally the state of florida fails the second prong of preemption analysis because congress intended that the federal government exclusively occupy the field specifically in the revenue act of congress amended the predecessor to i r c ' f to provide in part that a tax_lien would not be valid until it was filed in accordance with the law of the state or territory in which the property subject_to the lien is situated 45_stat_876 subsequently in 36_fsupp_293 w d mich affirmed 116_f2d_935 6th cir the government argued in a suit to foreclose the federal_tax_lien that the nftl was validly filed even though it did not meet the state law requirement that the such notices contain a description of the property encumbered both the district_court and the sixth circuit rejected the government’s argument reasoning that the nftl was invalid because the government failed to file the lien in accordance with state law that required a description of the taxpayer’s property in the revenue act of congress overruled maniaci by deleting the phrase in accordance with the law of the state or territory in which the property subject_to the lien is situated from the predecessor to sec_6323 see h_r rep no 77th cong 2d sess see also s rep no 77th cong 2d sess accordingly congress has made it clear that the federal government exclusively occupies the field as to designating the content of the nftl finally the state of florida fails the third prong of preemption as redaction actually conflicts with federal_law as mentioned above a nftl provides the social_security_number of the taxpayer that is to be available for public inspection conversely the opinion instructs the clerks to redact the social_security_number from a nftl so that it will not be available for public inspection these two positions are irreconcilable either the social_security_number is available for public inspection or it is not case development hazards and other considerations --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- 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department of the treasury internal_revenue_service washington d c number release date uilc cc ebeo wta-n-104498-00 date memorandum for service_center from patricia m mcdermott senior technician reviewer employee_benefits and exempt_organizations subject state retirement contributions - fica adjustments this responds to your request for assistance in reviewing federal_insurance_contributions_act fica tax_refund claims and adjustments filed by school districts within the state that maintains the retirement_system that received a favorable ruling from the service in private_letter_ruling the ruling specifically you asked for assistance in determining what taxpayers are covered by the ruling and what criteria should be used in processing the refund claims the ruling involves the situation where members of a retirement_plan established for all public schools within the state the plan are required to contribute a percentage of their regular annual compensation to the plan the members’ contributions are made either by the school paying the contribution over and above the member’s gross salary or alternatively by the school deducting the member’s mandatory contribution from the member’s gross salary a statute was passed whereby the state is required to pick up a portion of each member’s mandatory employee contribution and make a direct payment to the plan on behalf of the member the member in turn receives from the school the amount of the contribution paid_by the state the amount of the state contribution per employee varies depending on the number of years_of_service credited to each member the statute required the plan to request a private_letter_ruling that the contributions picked up by the state are not subject_to fica and further required that until the plan received a favorable ruling from the service the school districts must withhold and pay fica_taxes on the contributions in the ruling the service concluded that in both situations ie where the school currently pays the member’s mandatory contribution over and above the member’s gross salary and where the school currently deducts the member’s mandatory contribution from the member’s gross salary the amount of employee the ruling was disclosed as plr date wta-n-104498-00 contributions picked up by the state and paid directly to the plan on behalf of the member pursuant to the state statute is not subject_to fica_taxes inasmuch as the school districts had been paying fica_taxes on the employee contributions picked up by the state since the enactment of the statute the school districts affected by the ruling had made an overpayment of fica_taxes which led to the refund claims or adjustments that are the subject of your request for assistance we note initially that only the school districts specifically involved in the ruling_request have reliance on the ruling however to the extent that the amounts at issue in the refund claims relate to contributions paid_by the state under the same statute the same legal analysis set forth in the ruling would apply to refund claims filed by school districts that were not specifically involved in the ruling thus all public schools within the state that withheld and paid fica_taxes on plan contributions paid_by the state under the same statute would be eligible for a refund of or adjustment for overpaid fica_taxes provided they followed proper procedures in claiming a refund or adjustment as described below sec_6413 of the code provides that if more than the correct amount of fica tax is paid with respect to any payment or remuneration proper adjustments with respect to both the tax and the amount to be deducted shall be made without interest in such manner and at such times as prescribed by the regulations an adjustment under sec_6413 is made on the current form_941 and must be accompanied by a form 941c showing the amount and period of the overpayment sec_6413 provides that if more than the correct amount of fica tax is paid or deducted with respect to any payment or remuneration and the overpayment cannot be adjusted under sec_6413 the amount of the overpayment shall be refunded in such manner and at such times as prescribed by the regulations the regulations contain various procedures by which employers and employees may recover overpayments of fica_taxes regulation sec_31 a - a provides that any person who pays to the district_director more than the correct amount of employer or employee tax under sec_3101 or sec_3111 may file a claim_for_refund an employee from whom excess fica tax has been withheld and paid may file a claim for a refund provided that he has not been reimbursed by the employer has not authorized the employer to file a claim on his behalf and has not claimed a credit against or refund of his income_tax based on the overpayment regulation sec_31_6402_a_-2 an employer who withholds and pays more than the correct amount of employee tax is required under regulation sec_31_6413_a_-1 to repay or reimburse wta-n-104498-00 the employee for the overpayment or to apply the overcollection against employee taxes which attach to specified wages or compensation in the future moreover every claim filed by an employer for a refund of excess employee tax must contain a statement that the employer has either repaid the employee or secured his written consent to the allowance of the employer’s refund_or_credit regs sec_31 a - a where an employer files for a refund_or_credit for an overpayment of employee tax in a prior year the employer must also state that it has received from the employee a written_statement that he has not successfully claimed a credit or refund and will not seek to do so thus based on the foregoing the school district must take the overpayment as an adjustment on the form_941 if possible otherwise the school district may file a refund claim in addition each claim_for_refund or adjustment filed by a school district within the state should include a statement that the school district has repaid the tax to the employees or has secured the written consent of the employees to the allowance of the refund_or_credit and if the claim relates to employee tax collected in a year prior to the year in which the claim_for_refund is filed a statement that the school district has obtained from the employee a written_statement that the employee has not successfully claimed a credit or refund and will not seek to do so see for example part i of the form 941c in order to verify the accuracy of the amount of refund claimed the school district should be able to provide a schedule of the amount of state contributions on an employee-by-employee basis the state statute pursuant to which the contributions were made applied to the plan_year beginning on date and ending on date in our view a schedule of the amount of state contributions on an employee-by-employee basis for the plan_year beginning on date and ending on date would be adequate documentation of the amount of the overpayment of fica_taxes and would support entitlement to a claim_for_refund or adjustment the state statute described in the ruling related only to the plan_year beginning on date and ending on date however we understand that the state was expected to pass similar legislation to provide state contributions under an identical structure for later years it is likely that the school districts did not withhold and pay fica on the state contributions made under similar legislation for later years based on the analysis set forth in the ruling however to the extent that fica was withheld and paid on such state contributions in later years and if the school district issued forms w-2 to the employees that showed incorrect amounts of fica wages and taxes the school district must issue corrected forms w-2 wta-n-104498-00 refund claims or adjustments are filed for those years it would be appropriate to apply the same result for later years the attorney assigned to this matter is lynne camillo she can be reached at patricia m mcdermott