office_of_chief_counsel internal_revenue_service memorandum number release date uil files-152773-03 cc pa dpl b01 spowers date date to bill n timm associate area_counsel cc sb atl subject from charles b christopher chief branch disclosure and privacy law cc pa dpl b01 mou review you inquired about the legality of proposed changes and additions by an addendum to the date implementing agreement on the coordination of tax_administration between internal_revenue_service and georgia department of revenue the proposed changes and addition sec_1 are to part ii section a information to be exchanged or provided on a continuing basis types of returns and return_information as follows the changes and additions are underscored form_1120s including returns and k-1 partnership data for tefra and non-tefra returns a returns and revenue_agent reports form_1065 including returns and k-1 partnership data for tefra and non-tefra return sec_2 irs will provide the irs will provide w-4’s that are a in excess of exemptions xxx xxx page b adjusted by the irs c exempt whether allowable or unallowable d identified as abusive_tax_shelter schemes files-152773-03 sec_6103 provides that tax information with respect to specified taxes shall be open to inspection by state agencies bodies or commissions or their legal representatives charged under the laws of the state with tax_administration responsibilities such inspection is permitted only for state tax_administration_purposes sec_6103 requires a written request from state tax officials as a precondition to disclosure because most state agencies request continuing disclosure this statutory request requirement may be satisfied by means of a basic agreement between the irs and the state tax agency and an implementing agreement between the irs area and state officials see 964_f2d_630 7th cir the federal tax data that may be furnished to state tax agencies pursuant to sec_6103 is limited to taxes imposed by the specific internal_revenue_code chapters described in sec_6103 the proposed changes and additions by an addendum to the date implementing agreement are modifications relating to disclosures of return and return_information with respect to taxes imposed by chapter these changes fall within the purview of sec_6103 and therefore are permissible one concern we would like to bring to your attention however is that some of the original agreement’s language and information needs updating for example in section ii a e of the original agreement irm dollar_figure is not the current citation the new citation i sec_11 the atlanta service_center is now known as the atlanta campus district offices of the service are now referred to as areas and some of the signatories of the original agreement may not be the same individuals in consideration of some of these inconsistencies creating a new agreement rather than amending the original may be an option to consider some of these changes are a result of the internal_revenue_service restructuring and reform act of


department of the treasury internal_revenue_service washington d c contact person identification_number telephone number employer_identification_number tax_exempt_and_government_entities_division release number release date date date xkkkkxxxkxkk xxkxkxkkkkk xxkxxxxxkkx xxkxkkkkkkk uniform issue list legend w n u o w u o i dear this is in response to your ruling requests as to the federal tax consequences of the proposed transactions under the internal_revenue_code and federal tax regulations facts you are an organization recognized as exempt under sec_501 of the internal_revenue_code code and an organization described in sec_501 as a voluntary employees' beneficiary association veba you represent that you received a favorable tax-exempt status under sec_501 of the code on date you provide medical life dental and sickness benefits to employees of your participating members employers individually as the employer and collectively as the employers the employers are in the a industry located in the northern part of state z your participating employers are members of the sponsoring trade_association known as b you represent that in the summer of b sent you notice that it plans to end its sponsorship b also required the employers to seek alternate insurance arrangements and as of date all of the employers had arranged alternative healthcare coverage for their employees as a result there are no remaining employers in the veba you now plan to wind up and terminate the veba pursuant to article ix sec_2 of your trust document trust upon the veba’s termination the trustee shall apply any remaining assets toward keeping in force xxxxkxxxkxxxkxxxkkxxkkxkkakkk the plan policy or policies held at termination for such a period as the contributions shall serve or toward such other purposes as in the opinion of the trustees shall be consistent with the purpose of this trust you represent that the trust assets the fund balance that you will transfer to the employers upon your termination were derived from exempt_function_income you represent that you do not plan to distribute to the employers any of the fund balance remaining after payment of administrative expenses rather you will require each employer to enter into a written_agreement agreement under the agreement you will determine how much of the fund balance is allocable to each employer the agreement will stipulate that employers shall use any portion of the fund balance allocable to them to provide veba benefits as provided under sec_501 of the code you submitted a copy of the agreement pursuant to the agreement a b c d e each employer understands that after you terminate the veba and pay expenses resulting thereof you are permitted solely to use fund balance to continue to provide their employees with sec_501 of the code benefits until the fund balance is exhausted the employers have no legal right to a reversion of assets under the code or the agreement you will use the fund balance to pre-pay employee_benefits permitted under sec_501 each employer must represent that it has in place a plan that will provide its employees with the benefits permitted within the perimeters of sec_501 of the code and sec_1_501_c_9_-3 of the income_tax regulations regulations each employer must submit proof of such plan each employer must also consent that either you or the internal_revenue_service service may require such employer to produce copies of such plan toenable you to pre-pay the group plans the employers will set up each employer must submit information about the group plan and the cost of the group plan upon your receipt and verification of the group plan’s information you will draw a check in the name of the group plan and mail the check to the employer who will then forward the check to the group plan each employer shall not administer benefit s payment arrangements that will bestow disproportionate benefit s to officers shareholders or other highly paid employees of the employer if an employer's contribution to the veba included contributions by an employer's employees the employer agrees that during the successor coverage period represented by your distribution no further contribution shall be required of the employees the employer may also reimburse the employees any amount s attributable to employee premium payments as far as the employer still has records reasonably accounting for such employee contributions and the employee expenditures_for medical benefits described in sec_213 of the code if possible f each employer understands that the service can audit any employer to make certain that the employer applied its share of the fund balance to pay benefit s consistent xxxxxxxxxkxxxxkxxxkkxkx xk kk with the terms and provisions of the agreement the internal_revenue_code and this private_letter_ruling g each employer understands that you plan to terminate and wind up by date and if any employer fails to comply with the agreement such an employer will forfeit any claim to the fund balance you represent that you plan to use an objective method to determine the amount of the fund balance allocable to each employer pursuant to this objective method you shall a b c determine the fund balance after payment of administrative expenses allocate the fund balance by line of coverage ie medical life dental sickness and accident using the total contributions to veba as the denominator and the contributions by line of coverage as the numerator and determine the employers’ share of the fund balance per line of coverage using total contributions as the denominator and the employers’ respective contributions as the numerator finally in a draft letter that you plan to send to the employers you stated to the employers the trust cannot make payment to your company directly however the letter_ruling obtained by the trust allows the trust to pre-pay your insurance plan obligations for up to the amount of the identified rebate amount you represent that if you are unable to locate an employer or an employer fails to respond or timely agree to the agreement you reserve the right to allocate the share of the fund balance allocable to a nonresponsive employer to the other employers rulings requested the proposed transactions will not adversely affect your tax-exempt status as an organization described under sec_501 of the code the proposed transactions will not result in the imposition of tax on the employers under sec_4976 of the code transfers will not result in your incurring unrelated_business_taxable_income under sec_511 of the code law sec_501 of the code provides for the exemption from federal_income_tax of voluntary employees’ beneficiary associations providing for the payment of life sick accident or other_benefits to the members of such association or their dependents or designated beneficiaries if no part of the net_earnings of such association inures other than through such payments to the benefit of any private_shareholder_or_individual xxxxxkxkxkxxkxxkxkxkxxkxkxaxkx kkk sec_1_501_c_9_-1 of the regulations provides that for an organization to be described in sec_501 of the code it must be an employees' association membership in the association must be voluntary the organization must provide for the payment of life sick accident or other_benefits to its members and there can be no inurement other than by payment of permitted benefits to the benefit of any private_shareholder_or_individual sec_1_501_c_9_-4 of the regulations provides generally that no part of the net_earnings of an employees' association may inure to the benefit of any private_shareholder_or_individual other than through the payment of benefits permitted by sec_1_501_c_9_-3 sec_1_501_c_9_-4 of the regulations provides that it will not constitute prohibited inurement if on termination of a plan established by an employer and funded through an association described in sec_501 any assets remaining in the association after satisfaction of all liabilities to existing beneficiaries of the plan are applied to provide either directly or through the purchase of insurance life sick accident or other_benefits within the meaning of sec_1_501_c_9_-3 pursuant to criteria that do not provide for disproportionate benefits to officers shareholders or highly compensated employees of the employer sec_4976 of the code imposes a excise_tax if an employer maintains a welfare_benefit_fund and there is a disqualified_benefit provided during any taxable_year sec_4976 of the code provides that for purposes of subsection a the term disqualified_benefit means any portion of a welfare_benefit_fund reverting to the benefit of the employer sec_511 of the code imposes a tax on the unrelated_business_taxable_income of organizations described in sec_501 sec_512 of the code provides that in the case of an organization described in sec_501 the term unrelated_business_taxable_income means the gross_income excluding any exempt_function_income less the deductions allowed by this chapter which are directly connected with the production of the gross_income excluding exempt_function_income both computed with modifications sec_512 of the code provides that in the case of an organization described in paragraph or of sec_501 exempt_function_income includes all income other than an amount equal to the gross_income derived from any unrelated_trade_or_business regularly carried on by such organization computed as if the organization were subject_to sec_512 which is set-aside to provide for the payment of life sick accident or other_benefits including reasonable costs of administration directly connected with its exempt_purpose sec_512 of the code provides that generally for organizations described in paragraph or of sec_501 a set-aside may be taken into account under subparagraph b only to the extent that such set-aside does not result in an amount of assets set_aside in excess of the account limit determined under sec_419a without regard to subsection f thereof for the taxable_year not taking into account any reserve described in sec_419a for post-retirement medical benefits xxxxxxxxxxxxxxxxxxxxxxx analysis you have requested a ruling on whether the proposed transactions will adversely affect your tax-exempt status as an organization described under sec_501 of the code pursuant to sec_1_501_c_9_-4 of the regulations it will not constitute prohibited inurement if on termination of a plan established by an employer and funded through an association described in sec_501 any assets remaining in the association after satisfaction of all liabilities to existing beneficiaries of the plan are applied to provide either directly or through the purchase of insurance life sick accident or other_benefits within the meaning of sec_1_501_c_9_-3 pursuant to criteria that do not provide for disproportionate benefits to officers shareholders or highly compensated employees of the employer you represent that after you terminate the veba and pay administrative expenses and liabilities the remaining fund balance of the veba will be used to pre-pay group plans that will benefit the employees each employer must provide to you information about the group plan it has secured for its employees and the group plan’s costs upon your receipt and verification of the information regarding an employer’s group plan and its cost you will draw a check in the group plan's name not that of the employer and mail the check to the employer the employer upon receipt of the check will forward the check to the group plan in order for an employer to receive an allocable share of the fund balance it must enter into the agreement with you the agreement provides that no assets of the veba will revert back to any employer and each employer must make certain that the group plan can only provide benefits permitted under sec_501 of the code and sec_1_501_c_9_-3 of the regulations each employer must also agree that there will be no disproportionate benefits to officers shareholders or other highly compensated employees of the employers thus because you will use the fund balance to pre-pay the group plans the employers secured to provide veba benefits permitted under sec_501 of the code with no disproportionate benefit inuring to any person and because none of the veba’s assets will revert back to any employer we conclude that this transaction will not adversely jeopardize your tax-exempt status under sec_501 second you have requested a ruling on whether the proposed transactions will result in the imposition of tax on the employers under sec_4976 of the code pursuant to sec_4976 of the code a excise_tax shall be imposed if an employer maintains a welfare_benefit_fund and there is a disqualified_benefit provided during any taxable_year sec_4976 of the code provides that for purposes of subsection a the term disqualified_benefit means any portion of a welfare_benefit_fund reverting to the benefit of the employer further you represent that each employer must obtain a group plan that will provide solely benefits permitted under sec_501 of the code the employers will submit information including costs of maintaining the group plans to you after your verification of the group plans’ information and costs you will draw checks in the name of the group plans not the employers to cover the costs of the group plans you will mail the checks to the employers and the employers will forward the checks to the group plans you will follow this procedure until the fund balance allocable to each employer is exhausted you represent that as a result of this procedure you will pay no money directly to the employers you further represent that no xxxxxxxxxxxxxkxxkxkxkxkxkxkxk assets will revert to any employer thus because no employer will receive a disqualified_benefit the proposed transactions will not result in the imposition of tax on the employers under sec_4976 finally you have requested a ruling on whether the transfers will result in your incurring unrelated_business_taxable_income under sec_511 of the code you represent that the fund balance after payment of administrative expenses is exempt_function_income and does not constitute unrelated_trade_or_business income pursuant to sec_512 of the code in the case of an organization described in sec_501 unrelated_business_taxable_income does not include any exempt_function_income computed with modifications because the fund balance is exempt_function_income and not unrelated_business_taxable_income under sec_512 of the code it would not be subject_to unrelated_business_income taxation under sec_511 rulings based on the information submitted we rule as follows the proposed transactions will not adversely affect your tax-exempt status as an organization described under sec_501 of the code the proposed transactions will not result in the imposition of tax on the employers under sec_4976 of the code transfers will not result in your incurring unrelated_business_taxable_income under sec_511 of the code this ruling will be made available for public inspection under sec_6110 of the code after certain deletions of identifying information are made for details see enclosed notice notice of intention to disclose a copy of this ruling with deletions that we intend to make available for public inspection is attached to notice if you disagree with our proposed deletions you should follow the instructions in notice this ruling is directed only to the organization that requested it provides that it may not be used or cited by others as precedent sec_6110 of the code this ruling is based on the facts as they were presented and on the understanding that there will be no material changes in these facts this ruling does not address the applicability of any section of the code or regulations to the facts submitted other than with respect to the sections described because it could help resolved questions concerning your federal_income_tax status this ruling should be kept in your permanent records if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter mxxkaxkkk kkk kk kkk kkk kok in accordance with the power_of_attorney currently on file with the internal_revenue_service we are sending a copy of this letter to your authorized representative sincerely theodore r lieber manager exempt_organizations technical group enclosure notice


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 tege eb qp2 plr-108770-15 date date legend company ----------------- plan ---------------------------------------- plan_year a ------------------------------------------ plan_year b ------------------------------------------ dear ------------------- this letter constitutes notice that pursuant to the date request by company’s authorized representative waivers of the percent tax under sec_4971 of the internal_revenue_code code have been granted for plan_year a and plan_year b on the condition that company’s application to the pension_benefit_guaranty_corporation pbgc for a distress termination of the plan is approved in accordance with section dollar_figure of revproc_81_44 1981_2_cb_618 your authorized representative furnished evidence that imposition of the percent excise_tax would be a substantial business hardship and would be adverse to the interest of plan participants in the aggregate based on the documentation received the financial condition of company has deteriorated significantly and it cannot continue to afford to make any contributions to the plan also in the letter from your authorized representative the internal_revenue_service was informed that company is pursuing a distress termination of the plan with the pbgc company did not seek a waiver of the minimum_funding_standard under sec_412 with respect to plan years a or b because its substantial business hardship is not expected to be temporary plr-108770-15 the conditional waivers of the percent tax have been granted in accordance with section b of the employee_retirement_income_security_act_of_1974 erisa the amounts for which the conditional waivers have been granted are equal to percent of the plan’s unpaid minimum required contributions as of december of plan years a and b the end of the plan years for which the waivers have been granted to the extent such unpaid minimum required contributions have not been corrected 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 this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent the ruling contained in this letter is based upon information and representations submitted by taxpayer’s authorized representative 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_ruling it is subject_to verification on examination sincerely lauson c green branch chief qualified_plans branch employee_benefits tax exempt government entities


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 cc psi b06 genin-100584-11 o f f i c e o f t h e c h i e f c o u n s e l number release date uil 25c ------------------------- ------------------------------- -------------------------------------- dear ------------- i am replying to your faxes dated date and date on the tax_credit under sec_25c of the internal_revenue_code the code this letter describes well-established interpretations and principles of tax law without applying them to a specific set of facts this letter is advisory only and has no binding effect with the internal_revenue_service this letter only provides general guidance for determining how to comply with applicable law qualifying property under sec_25c of the code sec_25c as originally enacted in the energy policy act of epact provided a tax_credit for qualified_energy_efficiency_improvements including qualifying exterior windows and exterior doors the credit was available with respect to qualifying property placed_in_service after date and before date the energy improvement extension act of eiea enacted on date revived the sec_25c credit that expired at the end of neither of these laws the epact nor the eiea provided any credit under sec_25c for property placed_in_service during but the eiea provided a credit for qualified_property placed_in_service after date and before date to qualify for this tax_credit the law required that the energy efficiency improvements meet certain energy efficiency standards the eiea required an exterior window or door to meet the requirements of the supplement of the iecc or the supplement of the iecc because of the difficulty taxpayers would have in determining whether they satisfied statutory efficiency standards for property that they purchase the irs allowed homeowners including a tenant stockholder in a cooperative_housing_corporation and the owner of a condominium to rely on certifications of the manufacturer that the property that the manufacturer produced satisfies these efficiency standards in the law the irs issued a notice on date that allowed manufacturers to issue a certification statement that the property that they manufactured met the energy efficiency requirements in the law the irs also allowed taxpayers who purchased exterior windows and skylights that bore the energy star genin-100584-11 label to rely on the energy star label to show that a window or skylight satisfied the statutorily required efficiency standards if the taxpayer installed the window or skylight in the region s identified on the label see notice_2006_26 the american recovery reinvestment tax act of arrta enacted on date extended the credit for qualified_property placed_in_service before date the arrta also made further changes to the credit by amending the efficiency standards required in the law therefore to qualify for this tax_credit for qualified_energy_efficiency_improvements including exterior windows skylights and doors that are installed after the day of enactment_date the improvements had to meet the energy efficiency standards in the arrta the arrta generally raised the efficiency standards for property placed_in_service after date thus the arrta requires that an exterior window skylight or door meet both the prescriptive criteria of the iecc and have a u factor and shgc that is equal to or less than dollar_figure to qualify for the tax_credit after the arrta a reference to the iecc may also refer to the iecc the irs provided a limited exception to this change in energy efficiency standards this limited exception specifically provides that for amounts actually paid_or_incurred before date taxpayers may rely on a manufacturer’s certification issued before date if the manufacturer based the certification on the efficiency standards in place before the arrta that is before date and on the energy star label for exterior windows or skylights if the taxpayer installed the windows or skylights in the region identified on the label note-the exception allowing a taxpayer to rely on an energy star label does not apply to doors the irs provided this limited exception because notice_2006_26 provided that taxpayers could rely on a manufacturer’s certification statement for sec_25c property or on an energy star label for exterior windows and skylights a taxpayer who claims this limited exception should retain in his or her records the manufacturer’s certification or the energy star label on which he or she relied we published this limited exception in section and of notice_2009_53 copy attached notice_2009_53 also includes an updated manufacturer’s certification procedure to allow manufacturers to certify property that meets the new energy efficiency standards enacted in the arrta taxpayers who made purchases before date and did not rely on a manufacturer’s certification issued before the arrta for sec_25c property or an energy star label for exterior windows and skylights cannot claim this exception to qualify for the credit for property placed_in_service after date these taxpayers must install property that meets the energy efficiency standards enacted as part of the arrta specifically for windows doors and skylights the arrta requires genin-100584-11 that these properties meet both the prescriptive criteria of the iecc and have a u factor and shgc that is equal to or less than dollar_figure to qualify for the tax_credit a taxpayer may qualify for the nonbusiness_energy_property_credit without a manufacturer’s certification statement for sec_25c property or the energy star label for exterior windows and skylights that the taxpayer installs between date and date if the taxpayer can show that the sec_25c property meets the requirements in the law as in effect prior to the arrta likewise a taxpayer may qualify for the credit without a manufacturer’s certification statement for sec_25c property that the taxpayer installs after date if the taxpayer can show that the sec_25c property meets the requirements in the law made effective by the arrta of course either a manufacturer’s certification for any sec_25c property or the energy star label for windows and skylights is necessary to rely on the exception for amounts actually paid_or_incurred before date based on either a manufacturer’s certification issued before date if the manufacturer based the certification on the efficiency standards in place before the arrta that is before date and the energy star label for exterior windows or skylights if the taxpayer installed the windows or skylights in the region identified on the label therefore to reiterate only taxpayers claiming a credit under the limited exception must have the certification statement property that meets the applicable statutory requirements at the time it is installed is qualified_property without a manufacturer’s certification the installation dates are critical however to determining the applicable statutory requirements the congress provided in the arrta that property installed after date must meet the arrta requirements the law specifically stated in the arrta that the change in the efficiency standards applies to property installed after date thus an exterior window skylight or door installed after date must meet both the iecc and the requirement that the shgc and u factor be equal to or less than windows skylights and doors that meet the prescriptive criteria of the supplement of the iecc or of the supplement of the iecc but not the requirement that the window skylight or door has a u factor and shgc that is equal to or less than will only qualify if installed prior to date unless this property also qualifies for the limited exception discussed above based on reliance on a manufacturer’s certification or the energy star label in your fax you asked about the information needed to verify that property qualifies for these tax_credits a taxpayer should have documentation sufficient to establish the entitlement to and amount of any credit a taxpayer claiming a credit for an eligible building_envelope_component or qualified_energy_property based on a manufacturer’s certification should retain the certification statement as part of the taxpayer's records a taxpayer claiming this credit based on satisfying the statutory requirements but not relying on a manufacturer’s certification should retain documentation to show that the genin-100584-11 property that the taxpayer installed met the statutory requirements that applied when the property was installed we do not have more specific guidance on the documentation that a taxpayer should retain eligibility of tenant-stockholders for a tax_credit for the purpose of this credit sec_25c treats an individual who is a tenant-stockholder in a cooperative_housing_corporation as making the tenant-stockholder's proportionate share of any expenditures of the corporation for exterior windows and doors similarly in the case of an individual who is a member of a condominium_management_association for a condominium unit that the individual owns sec_25c treats the individual as making the individual's proportionate share of any expenditures of the association for windows and doors for the purpose of determining that individual’s eligibility for the sec_25c credit a cooperative_housing_corporation is not eligible for these tax_credits for new fenestration or other products that benefit all of the individual tenant-stockholders this credit is a personal individual credit for individual taxpayers and the law specifically allows tenant-stockholders in their individual and personal capacity to claim these tax_credits the congress would have to amend the law to allow a cooperative to claim the credit the law deems a tenant-stockholder as making his or her proportionate share of the qualifying expenditures of the corporation generally the term tenant-stockholder’s_proportionate_share means the proportion that the stock of the cooperative_housing_corporation owned by the particular tenant-stockholder is of the total outstanding_stock of the corporation including any stock held by the corporation thus if property installed in a common area of the cooperative meets the efficiency standards in the law and qualifies for the tax_credit each tenant-stockholder is allocated a proportionate share of these eligible expenditures of the corporation however a taxpayer is eligible for the credit only for the proportionate share of the expenditures attributable to a unit that the taxpayer owns and uses as a principal_residence within the meaning of sec_121 of the code eligible tenant-stockholders should not adjust their proportionate share to take into account the share of the expenditures attributable to tenant-stockholders who cannot take the credit because they do not meet the principal_residence requirement therefore a tenant-stockholder that owns and uses his or her unit as a principal_residence within the meaning of sec_121 will be eligible for the credit based on his or her proportionate share of the qualifying expenses of the corporation for qualifying property that meets the requirements of sec_25c such a tenant-stockholder only receives a tax_credit based upon that tenant-stockholder’s_proportionate_share of the cooperative’s expenses regardless of whether the qualifying property was installed in that tenant-stockholder’s individual unit genin-100584-11 conclusion in conclusion the law allows a tenant-stockholder to qualify for these credits the law does not provide different rules for property installed in cooperatives for example the installation date requirements and references to efficiency requirements are the same for a tenant-stockholder as those that apply to any taxpayer claiming the credit furthermore the credit is available only for individual taxpayers and is not available for the cooperative for the law to provide different rules for a cooperative congress would have to amend the law i am sorry for the delay in our responding to you i hope this information is helpful if you have any further questions please contact ------------------------ identification_number ------------ or me at -------------------- for assistance sincerely charles b ramsey chief branch office of associate chief_counsel passthroughs special industries


t c memo united_states tax_court michael l goers petitioner v commissioner of internal revenue respondent docket no filed date michael l goers pro_se blizabeth owen for respondent memorandum findings_of_fact and opinion gerber judge respondent determined an dollar_figure deficiency in petitioner’s income_tax a dollar_figure addition for late filing and a dollar_figure addition for failure to pay estimated_tax the question presented in this case concerns whether the amounts petitioner received as bank interest and compensation from third parties constitute taxable_income to him findings_of_fact petitioner resided in el paso texas at the time his petition was filed petitioner did not file an income_tax return for for respondent received forms reflecting payment to petitioner from best mobile home service repair in the total amount of dollar_figure and a m construction in the total amount of dollar_figure he also received bank interest_income in the amounts of dollar_figure and dollar_figure during petitioner admitted that he received compensation_for labor but he denied that any amounts received constituted income from being employed because petitioner did not file a return respondent computed petitioner’s federal_income_tax liability using the standard_deduction and permitting one exemption opinion petitioner’s argument is generally familiar to this court he relies on a prepared packet of photocopied documents entitled reliance defense the first page of the packet of documents is entitled cut them off at the pocketbooks tax fighters show how to stop unjust taxes instructional seminar by william drexler at trial although petitioner resisted the admission of evidence it became clear that his arguments were essentially legal in nature and that he did not contest that he had received compensation from others petitioner at trial and on brief presented an array of legal positions all of which appear to be in support of his contention that he is not subject_to u s c or more particularly the income_tax to the extent necessary we consider petitioner’s following arguments a the income_tax is based on a voluntary self-assessment system essentially petitioner argues that he must agree to self- assess or respondent must make a proper assessment of any_tax which must include the signature of an authorized official in this regard respondent prepared a substitute for return under sec_6020 in order to establish a record for petitioner’s tax_year petitioner contends that the substitute for return is unsigned and accordingly no assessment can be made against petitioner initially we note that petitioner’s contentions about the proper assessment of tax are premature because this forum is designed for a prepayment prior to assessment controversy that is prerequisite to the commissioner’s authority to assess certain taxes see secs with respect to the voluntary nature of the income_tax that position has been unsuccessfully section references are to the internal_revenue_code as amended and in effect for the period under consideration rule references are to this court’s rules_of_practice and procedure advanced in the past see eg mckee v commissioner tcmemo_1996_143 b whether petitioner is a citizen subject_to the income_tax requirements and or whether the compensation he received for labor is taxable to him within the meaning of the internal_revenue_code here again these arguments are well worn and have been rejected on numerous occasions see eg 687_f2d_264 8th cir affg tcmemo_1981_506 619_f2d_716 8th cir 82_tc_403 80_tc_1111 77_tc_1169 70_tc_730 affd per curiam 614_f2d_159 8th cir c may respondent rely on the form_1099 information contained in his records to determine an income_tax deficiency the essence of petitioner’s argument is that the information relied on by respondent is hearsay and that respondent should not be allowed to prove that petitioner received dollar_figure from best mobile home service repair and dollar_figure from a m construction without testimony from third parties first we note that petitioner must show that respondent’s determination is in error see rule a respondent at trial petitioner referenced the taxpayer_bill_of_rights as applying to this case however the burden_of_proof provisions of sec_7491 do not apply here because the examination continued reasonably relied on the information received from third parties that payments had been made to petitioner petitioner did not file a return or any other document under oath that contradicted the information_return material from third parties petitioner also admits that he received compensation_for labor the determination that the amounts received were income to petitioner placed the burden on petitioner to show that the amounts reported to respondent were in error or were not income petitioner during trial did not agree that the amounts reported by the third parties were correct but he did not offer any evidence to show that the information relied upon by respondent was in error petitioner tacitly accepted that he received some amounts from others but he did not agree that any amounts received were taxable_income instead he argued that compensation_for his labor does not constitute taxable_income a position that is frivolous the remaining arguments and points made by petitioner are either incomprehensible or not worthy of comment therefore we hold that petitioner has not shown that respondent’s determination that petitioner failed to report income is in error continued in this case began prior to date irs restructuring and reform act of publaw_105_206 112_stat_726 respondent also determined additions to tax for late filing sec_665l a and for failure to pay estimated_tax sec_6654 the sec_6651 addition applies unless the taxpayer shows that the failure_to_file was due to reasonable_cause and not willful neglect petitioner admits that he did not file a return and we have rejected his reasons for not doing so accordingly we hold that petitioner is liable for the sec_6651 a addition_to_tax as determined by respondent the sec_6654 addition applies in a mathematical fashion unless it is shown that any of certain statutory exceptions apply see 75_tc_1 petitioner has not shown that any such exceptions apply and accordingly we hold that respondent’s sec_6654 determination is sustained to reflect the foregoing decision will be entered for respondent


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi - plr-129236-01 date date x a d1 year dear this letter responds to your letter dated date and subsequent correspondence submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 in year a as the president of x represents that x was intended to be an s_corporation beginning year its first taxable_year x’s form ss-4 application_for employer_identification_number evidences this intent however a form_2553 election by a small_business_corporation was not timely filed with the internal_revenue_service for year x filed a form_1120s u s income_tax return for an s_corporation sec_1362 of the code provides that if -- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x's year taxable_year accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective for its year taxable_year within days following the date of this plr-129236-01 letter then such election will be treated as timely made for x’s year taxable_year a copy of this letter should be attached to the form_2553 the form_2553 submitted with the ruling_request is returned herewith except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 this ruling is directed only to the taxpayer requesting 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 x’s authorized representative sincerely yours shannon cohen assistant to the branch chief branch associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes form_2553


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 b1 plr-130085-08 date date legend x -------------------------------------------------- ------------------------------------------------ country date ---------------- ------------------------- dear -------------- this is in response to a letter dated date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to file an election to treat x as an entity disregarded as separate from its owner for federal tax purposes under sec_301_7701-3 facts x represents that as of date x was eligible to make an election under sec_301_7701-3 to be taxed as a disregarded_entity for federal tax purposes however the form_8832 entity classification election was not timely filed law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with a single owner can elect either to be classified as an association and thus a corporation under sec_301_7701-2 or to be disregarded as an entity separate from its owner plr-130085-08 sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally unless the entity makes an election to be treated otherwise a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability if a foreign eligible_entity has only one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 if a foreign eligible_entity has more than one owner it may elect to be treated as a partnership pursuant to the rules in sec_301_7701-3 sec_301_7701-3 further provides that an entity classification election must be filed on form_8832 entity classification election and can be effective up to days prior to the date the form is filed or up to months after the date on which the form is filed under sec_301_9100-1 the commissioner may 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 code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election with a deadline prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish 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 conclusion based solely upon the information submitted we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result an extension of days from the date of this letter is granted to elect to treat x as a disregarded_entity for federal tax purposes effective date the entity classification election should be made by filing form_8832 with the appropriate service_center a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose plr-130085-08 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 this ruling is directed only to the taxpayer s requesting it sec_6110 of the internal_revenue_code 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 representatives sincerely curtis g wilson curtis g wilson associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


id office uilc cca_2009032715224237 -------------- number release date from ------------------- sent friday date pm to -------------- cc --------------------------------------------------------- subject re penalty question sec_6221 requires that penalties that relate to an adjustment to partnership items must be determined at the partnership level the penalty you refer is based on the failure to report a transaction and is not based on an adjustment to a partnership_item thus it does not appear to be subject_to the tefra provisions ------------------ ---------------------- can answer your substantive questions