Final regulations under section 6045 of the Code provide guidance regarding the information reporting requirements on sales or exchanges of standing timber for lump-sum payments.

This notice provides guidance to employers that seek to claim the work opportunity credit for either of two new targeted groups of employees added to section 51 of the Code in the American Recovery and Reinvestment Tax Act of 2009.

This notice would propose a safe harbor for contracts with a maturity age of 100, which are intended to qualify as life insurance contracts under section 7702 of the Code and avoid characterization as an MEC under section 7702A, provided the contract complies with certain testing methodologies set out in the notice. The notice also asks for comments on several issues related to the use of an age 100 maturity.

This notice provides guidance under section 101(j) of the Code in the form of questions and answers concerning what entities are subject to the information reporting required for employer-owned life insurance contracts and how those entities can provide that information. Section 101(j) was added to the Code by the Pension Protection Act of 2006 to ensure that employees whose lives are insured by their employers are adequately informed of that coverage and its consequences. Section 6039I sets forth corresponding reporting obligations applicable to those employers who obtain life insurance coverage on their employees.

This procedure describes a new pilot program for single issue letter rulings in the context of section 355 distributions. Rev. Procs. 2009-1 and 2009-3 amplified.

This document provides a copy of the Competent Authority Agreement entered into on May 6, 2009, by the Competent Authorities of the United States and the Kingdom of Belgium regarding the arbitration process set forth in the United States-Belgium Income Tax Convention signed on November 27, 2006.

The Competent Authorities of the United States and Belgium have agreed to adopt guidelines regarding the arbitration process set forth in the United States-Belgium Income Tax Convention signed on November 27, 2006.

This document cancels a public hearing on proposed regulations (REG-138326-07, 2009-9 I.R.B. 638) under section 6231 of the Code that allow the IRS to convert partnership items to nonpartnership items when the application of the unified partnership audit and litigation procedures of sections 6221 thru 6234 (TEFRA partnership procedures) with respect to certain tax avoidance transactions interferes with the effective and efficient enforcement of the internal revenue laws.

Internal Revenue Service (IRS), Treasury.

Final Regulations.

This document contains final regulations that provide guidance regarding the information reporting requirements contained in section 6045(e) of the Internal Revenue Code (Code) on sales or exchanges of standing timber for lump-sum (outright) payments. The final regulations amend §1.6045-4 of the Income Tax Regulations to require real estate reporting persons, as defined in section 6045(e)(2) of the Code, to report lump-sum payments received by sellers (landowners) for sales or exchanges of standing timber. The final regulations do not change the information reporting requirements that currently apply to sales or exchanges of standing timber for pay-as-cut (contingent) payments under section 6050N of the Code.

Effective date: These regulations are effective on May 28, 2009.

Applicability date: The amendments to paragraphs (b)(2)(i)(E), (b)(2)(ii) and (c)(2)(i) of §1.6045-4 shall apply to sales or exchanges of standing timber for lump-sum payments completed after May 28, 2009.

Timothy S. Sheppard of the Office of Chief Counsel (Procedure and Administration), at (202) 622-4910.

Accordingly, 26 CFR part 1 is amended as follows:

The principal author of these regulations is Timothy S. Sheppard of the Office of Associate Chief Counsel (Procedure and Administration). However, other personnel from the IRS and the Treasury Department participated in their development.

* * * * *

The following is a copy of the Competent Authority Agreement entered into on May 6, 2009 by the Competent Authorities of the United States and the Kingdom of Belgium regarding the arbitration process set forth in the United States — Belgium Income Tax Convention signed on November 27, 2006.

The text of the Competent Authority Agreement is as follows:

The competent authorities of the Kingdom of Belgium and of the United States of America hereby enter into the following agreement (the “Agreement”) regarding the application of the arbitration procedure under paragraph 7 and 8 of Article 24 (Mutual Agreement Procedure) of the Convention Between the Kingdom of Belgium and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income signed on 27 November 2006. The Agreement is entered into under paragraph 6(q) of the Protocol to the Convention signed the same date (“the Protocol”). The purpose of this Agreement is to provide guidance under which the U.S.-Belgian arbitration procedure will operate.

The principal author of this announcement is Ana C. Guzman of the Office of Associate Chief Counsel (International). For further information regarding this announcement, contact Ms. Guzman at (202) 622-3880 (not a toll-free call).

The Competent Authorities of the United States and Belgium have agreed to adopt guidelines regarding the arbitration process set forth in the United States — Belgium Income Tax Convention signed on November 27, 2006. These guidelines relate to the Memorandum of Understanding Between the Competent Authorities of the Kingdom of Belgium and the United States of America signed on May 6, 2009 (See Ann. 2009-43, I.R.B. 2009-24). The guidelines apply to the arbitration process and, specifically, to the operations of the arbitration board. The text of the guidelines is as follows:

The competent authorities of the Kingdom of Belgium and of the United States of America adopt the following guidelines (the “Guidelines”) regarding the operation of an arbitration board established under paragraphs 7 and 8 of Article 24 (Mutual Agreement Procedure) of the Convention Between the Kingdom of Belgium and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, signed on 27 November 2006 (the “Convention”). These Guidelines are adopted in accordance with paragraph 6(q) of the Protocol to the Convention, signed on the same date (the “Protocol”).

The principal author of this announcement is Ana C. Guzman of the Office of Associate Chief Counsel (International). For further information regarding this announcement, contact Ana C. Guzman at (202) 622-3880 (not a toll-free call).

Section 51 of the Internal Revenue Code (the Code) provides for a Work Opportunity Tax Credit (WOTC) for employers who hire individuals who are members of targeted groups. Section 1221 of the American Recovery and Reinvestment Tax Act of 2009 (ARRTA), enacted February 17, 2009, Div. B, Tit. I of Pub. L. No. 111-5, amended § 51 to add two new targeted groups for purposes of the WOTC. New § 51(d)(14) provides that unemployed veterans and disconnected youth who begin work for an employer during 2009 or 2010 shall be treated as members of a targeted group for purposes of the WOTC.

This notice sets forth the statutory definitions of “unemployed veteran” and “disconnected youth,” and provides guidance on the definition of “disconnected youth.” It also provides transition relief for employers who hire unemployed veterans or disconnected youth after December 31, 2008, and before July 17, 2009.

For purposes of § 51(d)(14), the term “veteran” means any individual who is certified by the designated local agency (as defined in § 51(d)(12) as a State employment security agency established in accordance with the Act of June 6, 1933, as amended (29 U.S.C. § 49-49n)) as:

(1) having served on active duty (other than active duty for training) in the Armed Forces of the United States (Armed Forces) for a period of more than 180 days; or

(2) having been discharged or released from active duty in the Armed Forces for a service-connected disability.

Section 51(d)(14)(B)(i) provides that the term “unemployed veteran” means any veteran who is certified by the designated local agency as:

(1) having been discharged or released from active duty in the Armed Forces at any time during the 5-year period ending on the hiring date; and

(2) being in receipt of unemployment compensation under State or Federal law for not less than four weeks during the one-year period ending on the hiring date.

New § 51(d)(14) is effective for individuals who begin work for the employer after December 31, 2008, and before January 1, 2011.

Section 51(d)(13) provides that an individual shall not be treated as a member of a targeted group unless the employer obtains certification from a designated local agency on or before the day the individual begins work that the individual is a member of a targeted group or completes a pre-screening notice (IRS Form 8850) on or before the day the individual is offered employment and submits such notice to the designated local agency to request certification not later than 28 days after the individual begins work. However, under this notice, any employer who hires an unemployed veteran or a disconnected youth (as defined in § 51(d)(14)) after December 31, 2008, and before July 17, 2009, will be considered to satisfy the deadline in § 51(d)(13)(A)(ii)(II) if the employer submits the pre-screening notice to the designated local agency to request certification not later than August 17, 2009.

The principal author of this notice is Robin Ehrenberg of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other individuals participated in its development. For further information regarding this notice, contact Ms. Ehrenberg at (202) 622-6080 (not a toll-free call).

The purpose of this notice is to request comments on a proposed safe harbor addressing the application of §§ 7702 and 7702A of the Internal Revenue Code to life insurance contracts that mature after the insured individual (“the insured”) attains age 100. This notice also requests comments on the treatment of amounts received under a life insurance contract after it has matured.

.01 Section 7702 of the Code defines the term “life insurance contract” for purposes of the Code. Section 7702(a) provides that a “life insurance contract” is any contract that is a life insurance contract under the applicable law, but only if such contract either (1) meets the cash value accumulation test of § 7702(b), or (2) both meets the guideline premium requirements of § 7702(c) and falls within the cash value corridor of § 7702(d). Section 7702 was added to the Code by the Deficit Reduction Act of 1984, P.L. 98-369.

.02 A contract meets the cash value accumulation test of § 7702(b) if, by the terms of the contract, the cash surrender value of the contract may not at any time exceed the net single premium that would have to be paid at that time to fund future benefits under the contract.

.03 A contract meets the guideline premium requirements of § 7702(c) if the sum of the premiums paid under the contract does not at any time exceed the guideline premium limitation as of that time. The guideline premium limitation as of any date is the greater of the guideline single premium, or the sum of the guideline level premiums to that date. The guideline single premium is the premium that would be required on the date the contract is issued to fund the future benefits under the contract.

.04 A contract falls within the cash value corridor of § 7702(d) if the death benefit under the contract at any time is not less than the applicable percentage of the cash surrender value, as determined under the table set forth in § 7702(d)(2). Under that table, the applicable percentage for an insured with an attained age of 95 is 100 percent.

.05 Section 7702(e) provides computational rules that must be used for purposes of § 7702, other than for purposes of applying the cash value corridor. In particular, under § 7702(e)(1)(B) the maturity date (including the date on which any death benefit is payable) under a contract is deemed to be no earlier than the day on which the insured attains age 95, and no later than the day on which the insured attains age 100. Section 1.7702-2 of the Income Tax Regulations provides guidance on determining the attained age of the insured for this purpose.

.06 Section 7702A(a) provides that a life insurance contract is a modified endowment contract (MEC) if the contract is entered into on or after June 21, 1988, and fails to meet the 7-pay test, or is received in exchange for a contract which is a MEC. A contract fails to meet the 7-pay test if the accumulated amount paid under the contract at any time during the first 7 contract years exceeds the sum of the net level premiums that would have to be paid on or before such time if the contract were to provide for paid-up future benefits (including death benefits) after the payment of 7 level annual premiums. Under § 7702A(c)(1)(B), the determination of the 7 level annual premiums generally is made by applying the computational rules of § 7702(e), including the rule requiring a deemed maturity date no earlier than the day on which the insured attains age 95 and no later than the day on which the insured attains age 100.

.07 The 2001 Commissioners’ Standard Ordinary mortality and morbidity tables (2001 CSO tables) prescribed by the NAIC became the prevailing commissioners’ standard tables within the meaning of § 807(d)(5) during calendar year 2004, and have been adopted by all 50 states. For tax purposes, the 2001 CSO mortality tables generally must be used for purposes of applying the reasonable mortality charge requirements of § 7702(c)(3)(B)(i) with regard to contracts issued after December 31, 2008. See Notice 2006-95, 2006-2 C.B. 848, modifying and superseding Notice 2004-61, 2004-2 C.B. 596, supplementing Notice 88-128, 88-2 C.B. 540.

.08 Unlike the 1958 Commissioners Standard Ordinary Mortality Tables (1958 CSO Tables) and the 1980 Commissioners Standard Ordinary Mortality Tables (1980 CSO Tables), the 2001 CSO tables extend to age 121. As a result, an increasing number of issuers now develop contracts with maturity dates beyond age 100, even though the qualification of the contracts as life insurance contracts (and as MECs) is tested using computational rules that deem the contracts to mature between the date the insured attains age 95 and the date the insured attains age 100. The 2001 Maturity Age Task Force of the Taxation Section of the Society of Actuaries has proposed a series of recommendations to comply with the requirements of §§ 7702 and 7702A in a manner that is actuarially sound. See 2001 CSO Implementation Under IRC Sections 7702 and 7702A, 2 Taxing Times 23 (May 2006). The proposed safe harbor in section 3 of this notice is drawn from that proposal, with modifications. Section 4 of this notice requests comments on the proposed safe harbor.

.09 In addition to the application of the definitional rules of §§ 7702 and 7702A, other issues arise with regard to contracts that, by their terms, mature while the insured is still alive. For example, a contract that matures at age 100 may have a cash value equal to the contract’s death benefit. Pre-1984 federal tax case law, however, requires that a life insurance contract involve “risk shifting” in order to qualify as such for federal income tax purposes. See, e.g. , Helvering v. Le Gierse, 312 U.S. 531 (1941) (even though a contract is in the form of a life insurance contract, it is not treated as such for federal income tax purposes unless the requirements of risk shifting and risk distribution are met); Evans v. Commissioner, 56 T.C. 1142 (1971) (contracts that previously qualified as life insurance contracts were not so treated where the cash surrender value of the contracts exceeded their face amount). Moreover, even if such a contract were to satisfy the definition of a life insurance contract under the literal terms of § 7702, the fact that the contract has fully matured may affect the treatment of the holder of the contract under the doctrine of constructive receipt, or may affect the treatment of a beneficiary under the contract if amounts are received not by reason of the death of the insured, but by reason of the insured’s attainment of age 100. Section 4 requests comments on these issues as well.

.01 In general . Under the proposed safe harbor, the Service would not challenge the qualification of a contract as a life insurance contract under § 7702, or assert that a contract is a MEC under § 7702A, provided the contract satisfies the requirements of those provisions using all of the Age 100 Testing Methodologies of section 3.02 of this notice.

.02 Age 100 Testing Methodologies. The Age 100 Testing Methodologies of this section 3.02 are as follows:

(a) All determinations under §§ 7702 and 7702A (other than the cash value corridor) would assume that the contract will mature by the date the insured attains age 100, notwithstanding a later contractual maturity date (such as by reason of using the 2001 CSO mortality tables).

(b) The net single premium determined for purposes of the cash value accumulation test under § 7702(b), and the necessary premiums determined for purposes of § 7702A(c)(3)(B)(i), would assume an endowment on the date the insured attains age 100.

(c) The guideline level premium determined under § 7702(c)(4) would assume premium payments through the date the insured attains age 99.

(d) Under § 7702(c)(2)(B), the sum of the guideline level premiums would increase through a date no earlier than the date the insured attains age 95 and no later than the date the insured attains age 99. Thereafter, premium payments would be allowed and would be tested against this limit, but the sum of the guideline level premiums would not change.

(e) In the case of a contract issued or materially changed within fewer than 7 years of the insured’s attaining age 100, the net level premium under § 7702A(b) would be computed assuming level annual premium payments over the number of years between the date the contract is issued or materially changed and the date the insured attains age 100.

(f) If the net level premium under § 7702A(b) is computed over a period of less than 7 years by reason of an issuance or material change within fewer than 7 years of the insured’s attaining age 100, the sum of the net level premiums would increase through attained age 100. Thereafter, the sum of the net level premiums would not increase, but premium payments would be allowed and would be tested against this limit for the remainder of the 7-year period.

(g) The rules of § 7702A(c)(2) and (6) concerning reductions in benefits within the first 7 contract years would apply whether or not a contract is issued or materially changed fewer than 7 years before the date the insured attains age 100.

(h) A change in benefits under (or in other terms of) a life insurance contract that occurs on or after the date the insured attains age 100 would not be treated as a material change for purposes of § 7702A(c)(3) or as an adjustment event for purposes of § 7702(f)(7).

(i) Notwithstanding the methodologies of this section 3.02(a)-(h), a contract that remains in force would additionally be required to provide at all times a death benefit equal to or greater than 105 percent of the cash value.

.03 Effective date. The proposed safe harbor would be effective as of the date of publication in the Internal Revenue Bulletin.

.04 Status as administrative guidance. Until the proposed safe harbor is formally adopted by the Service, the proposed safe harbor is not an “administrative pronouncement” as that term is used in § 1.6662-4(d)(3)(iii) of the regulations; it may not be relied upon as an official interpretation of §§ 7702 or 7702A.

.01 In general. The Service requests comments on the proposed safe harbor described in Section 3 of this notice.

.02 Other matters. Comments are requested concerning additional issues that may arise in situations where a life insurance contract matures after the insured has attained age 100. For example—

(a) If an individual who already has attained age 100 purchases a contract that is a life insurance contract under the applicable state or foreign law, do the computational rules of § 7702(e) prevent the contract from qualifying as a life insurance contract for federal income tax purposes?

(b) If a preexisting contract actually matures at age 100, such that the cash surrender value and death benefit under the contract are the same, is the insured taxed at that time on the maturity value of the contract under the doctrine of constructive receipt?

(c) If a preexisting contract actually matures at age 100, such that the cash surrender value and the death benefit are the same, is an amount later received under the contract by a beneficiary upon the death of the insured ineligible for exclusion under § 101 because, in the absence of any amount at risk, the payment is not received “by reason of” the insured’s death?

(d) In addition to the maturity age issues discussed in this notice, do other issues arise as a result of implementation of the 2001 CSO tables that would appropriately be addressed by published guidance?

.03 Comments should be submitted in writing on or before October 13, 2009 and should contain a reference to this Notice 2009-47. Comments may be submitted to CC:PA:LPD:PR (Notice 2009-47), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Alternatively, taxpayers may submit comments electronically to Notice.Comments@irscounsel.treas.gov. Please include “Notice 2009-47” in the subject line of any electronic communications.

.04 Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (Notice 2009-47), Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave., NW, Washington, DC 20224. All comments will be available for public inspection and copying.

The principal author of this notice is Donald J. Drees of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this notice, contact Mr. Drees at (202) 622-3970 (not a toll-free call).

This notice provides guidance concerning the treatment of employer-owned life insurance contracts under §§ 101(j) and 6039I of the Code in a question and answer format. Sections 101(j) and 6039I were added to the Code by § 863 of the Pension Protection Act of 2006 (“PPA”), Pub. L. No. 109-280, 120 Stat. 780.

Section 101(j)(1) provides that, in the case of an employer-owned life insurance contract, the amount excluded from gross income of an applicable policyholder under § 101(a)(1) shall not exceed an amount equal to the sum of the premiums and other amounts paid by the policyholder for the contract. In general, an employer-owned life insurance contract is a life insurance contract that is owned by a person engaged in a trade or business and under which that person is a beneficiary under the contract, and that covers the life of an insured who is an employee on the date the contract is issued. An applicable policyholder is a person who owns an employer-owned life insurance contract, or a related person as described in § 101(j)(3).

Section 101(j)(2) provides exceptions to the general rule of § 101(j)(1) in the case of certain employer-owned life insurance contracts with respect to which certain notice and consent requirements are met. Those exceptions are based either on (i) the insured’s status as an employee at any time during the 12-month period before the insured’s death or as a director, a highly compensated employee or highly compensated individual at the time the contract is issued, or (ii) the extent to which death benefits are paid to (or used to purchase an equity interest in the applicable policyholder from) a family member, trust, or estate of the insured employee.

Section 6039I provides that every applicable policyholder that owns one or more employer-owned life insurance contracts issued after August 17, 2006, must file a return, at such time and in such manner as the Secretary prescribes, setting forth specific information for each year the contracts are owned. In order to satisfy this requirement, a taxpayer must file Form 8925. See § 1.6039I-1 of the regulations.

This Notice is effective June 15, 2009. The Service will not challenge a taxpayer who made a good faith effort to comply with § 101(j) based on a reasonable interpretation of that provision before that date.

The principal author of this Notice is Linda K. Boyd of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this Notice, contact Linda K. Boyd at (202) 622-3970 (not a toll-free call).

This revenue procedure describes a new pilot program for letter rulings for certain transactions under the jurisdiction of the Associate Chief Counsel (Corporate). The new program does not diminish the availability of letter rulings under existing programs.

This revenue procedure amplifies Rev. Proc. 2009-1, 2009-1 I.R.B. 1, which explains how the Internal Revenue Service (Service) provides advice to taxpayers on issues under the jurisdiction of the Associate Chief Counsel (Corporate). This revenue procedure also amplifies Rev. Proc. 2009-3, 2009-1 I.R.B. 107, which sets forth the areas of the Internal Revenue Code (Code) under the jurisdiction of the Associate Chief Counsel (Corporate) relating to issues on which the Service will not issue letter rulings.

.01 Current Procedures

Ordinarily, the Service will not issue a letter ruling on only part of an integrated transaction. Section 6.03 of Rev. Proc. 2009-1; Section 4.02(2) of Rev. Proc. 2009-3. If, however, a part of a transaction falls under a no-rule area, a letter ruling on other parts of the transaction may be issued. Where it is impossible for the Service to determine the tax consequences of a larger transaction without knowing the resolution of an issue on which the Service will not issue rulings under Rev. Proc. 2009-3, and the Service nevertheless rules on the larger transaction, then the taxpayer must state in the request to the best of the taxpayer’s knowledge and belief the tax consequences of the no-rule issue. Section 2.03 of Rev. Proc. 2009-3. The Service’s ruling letter will state that the Service did not consider, and no opinion is expressed upon, the no-rule issue. In appropriate cases, the Service may decline to issue rulings on such larger transactions due to the relevance of the no-rule issue, despite the taxpayer’s representation.

In addition, the Service generally does not issue letter rulings with respect to an issue that is clearly and adequately addressed by statute, regulations, decisions of a court, or authorities published in the Internal Revenue Bulletin. Section 6.11 of Rev. Proc. 2009-1 and section 4.02(9) of Rev. Proc. 2009-3. Similarly, unless the Service determines that there is a significant issue (as defined in section 3.01(38) of Rev. Proc. 2009-3), the Service will not issue a ruling on whether a transaction qualifies for nonrecognition treatment under § 332, § 351 (except for certain transfers undertaken before § 355 distributions) or § 1036. Likewise, absent a significant issue, the Service will not issue a ruling as to whether a transaction constitutes a corporate reorganization within the meaning of § 368(a)(1)(A) (including a transaction that qualifies under § 368(a)(1)(A) by reason of § 368(a)(2)(D) or § 368(a)(2)(E)), § 368(a)(1)(B), § 368(a)(1)(C), § 368(a)(1)(E) or § 368(a)(1)(F), or as to the various consequences (such as nonrecognition and basis adjustments) that arise as a result of a transaction constituting a corporate reorganization. If the Service determines that there is a significant issue, and to the extent the transaction is not described in another no-rule section, the Service will rule on the entire transaction, and not just the significant issue. Section 3.01(38) of Rev. Proc. 2009-3.

.02 New Procedures

In order to use Service resources more efficiently and to increase the availability of private letter rulings, this revenue procedure allows taxpayers to request rulings on one or more issues that: (1) are solely under the jurisdiction of the Associate Chief Counsel (Corporate), (2) are significant (as defined in section 3.01(38) of Rev. Proc. 2009-3), and (3) involve the tax consequences or characterization of a transaction (or part of a transaction) that occurs in the context of a § 355 distribution. Under this program, taxpayers may request and the Service may issue a ruling on part of a transaction rather than on the larger transaction. In addition, taxpayers may request and the Service may issue a ruling on a particular legal issue under a Code section or a section of the Income Tax Regulations (Regulations) rather than a ruling that addresses all aspects of that Code or Regulations section (or any other section). For example, the Service may rule on whether the acquisition of the assets of one corporation by another corporation meets the continuity of business enterprise requirement of § 1.368-1(d) or is described in § 355(b)(2)(C) even though the ruling does not address overall qualification of the transaction under § 368 or § 355, respectively, as long as the acquisition occurs in the context of a § 355 distribution. Accordingly, section 6.03 of Rev. Proc. 2009-1 and sections 3.01(38) and 4.02(2) of Rev. Proc. 2009-3 are amplified to provide that the Service will issue letter rulings regarding such significant issues under the conditions specified herein.

Ruling requests under this revenue procedure must comply with the relevant requirements of any other applicable revenue procedures. See, e.g., Appendix E of Rev. Proc. 2009-1. For example, a request for a § 351 ruling on a transaction that occurs in the context of a § 355 distribution must provide all of the information required by Rev. Proc. 83-59, 1983-2 C.B. 575. However, if the request is solely for a ruling on a significant issue under § 351, the request must provide the information and representations required by Rev. Proc. 83-59 that pertain only to that significant issue. Further, where a taxpayer is requesting a ruling regarding a significant issue under a Code or Regulations section (e.g., § 368(a)(2)(C)), the taxpayer must provide a representation regarding qualification or characterization of the transaction under such Code or Regulations section (e.g., § 368(a)(1)(A)) assuming that the Service rules as requested. The Service reserves the right to rule on any other issue in, or part of, the transaction (including ruling adversely) if the Service believes it is in the best interests of tax administration. Cf. section 2.01 of Rev. Proc 2009-3.

All pertinent no-rule policies governing the Service’s ruling practice will govern requests for rulings made pursuant to this revenue procedure. See, for example, Rev. Proc. 2003-48, 2003-2 C.B. 86 (no-rule policy regarding business purpose and device issues under § 355, and § 355(e) plan issues). In addition, the Service will not grant a ruling on a significant non-plan issue or issues under § 355(e) unless an adverse ruling on such non-plan issue or issues would result in there being a direct or indirect acquisition by one or more persons of stock representing a 50-percent or greater interest in the distributing corporation or the controlled corporation that is part of a plan under § 355(e). With respect to ruling requests regarding the effect of a redemption under section 355(e), the Service will entertain such requests under the conditions described in sections 5.09 and 5.10 of this revenue procedure. Rev. Proc. 2009-3 is amplified to reflect these policies.

The Service will, if requested, endeavor to issue letter rulings requested pursuant to this revenue procedure within ten weeks from receipt of the request, provided that the request meets the requirements of sections 7.02(4) and 8.05(1) of Rev. Proc. 2009-1 as amplified by this revenue procedure.

The ruling program under this revenue procedure is a pilot program that applies to ruling requests postmarked or, if not mailed, received after May 4, 2009. This pilot program will be evaluated by the Service periodically.

The Service requests comments regarding the pilot program. Comments should refer to Rev. Proc. 2009-25, and should be submitted to:

or electronically via the Service internet site at:

Notice.Comments@irscounsel.treas.gov (the Service comments e-mail address). All comments will be available for public inspection and copying.

.01 Rev. Proc. 2009-1 is amplified by adding the following paragraphs to section 6.03:

In addition, the Office of the Associate Chief Counsel (Corporate) may issue a letter ruling on part of an integrated transaction without ruling on the larger transaction if the requested ruling addresses one or more issues that: (1) are under the jurisdiction of the Associate Chief Counsel (Corporate), (2) are significant (as defined in section 3.01(38) of Rev. Proc. 2009-3, and (3) involve the tax consequences or characterization of a transaction (or part of a transaction) that occurs in the context of a § 355 distribution. The Service may also rule on a particular legal issue under a Code or Regulations section without ruling on all aspects of such Code or Regulations section if the issue meets the three conditions of the preceding sentence.

Before preparing the letter ruling request under this section 6.03, a taxpayer should call the Office of the Associate Chief Counsel (Corporate) at the telephone number provided in section 10.07(1)(a) of this revenue procedure for pre-submission conferences to discuss with one of the branches whether the Office of the Associate Chief Counsel (Corporate) will issue a letter ruling under this section 6.03. The Service reserves the right to rule on any other aspect of the transaction (including ruling adversely) if the Service believes it is in the best interests of tax administration. Cf. section 2.01 of Rev. Proc. 2009-3.

All requests for a ruling under this section 6.03 must contain the following:

(1) A narrative description of the transaction that puts the issue in context;

(2) An explanation concerning why the issue is significant within the meaning of section 3.01(38) of Rev. Proc. 2009-3;

(3) Applicable information from relevant revenue procedures with respect to the significant issue. See Appendix E of this revenue procedure (referring to, inter alia, Rev. Proc. 96-30, 1996-1 C.B. 696, as modified and amplified by Rev. Proc. 2003-48, 2003-2 C.B. 86);

(4) The precise ruling being requested;

(5) Where the taxpayer is requesting a ruling on the tax treatment of part of an integrated transaction, a representation regarding the relevant tax consequences of the larger transaction (to the best knowledge and belief of the taxpayer), assuming that the Service issues the requested ruling; additionally, where the taxpayer is requesting a ruling on a particular legal issue under a Code section or section of the Regulations (e.g., § 1.368-2(k)), a representation (to the best knowledge and belief of the taxpayer) regarding qualification or characterization of the transaction under such Code or Regulations section (e.g., § 368(a)(1)(A)), assuming that the Service issues the requested ruling; and

(6) A statement that no rulings outside the jurisdiction of the Associate Chief Counsel (Corporate) are requested.

If the Service issues a ruling on a significant issue under this procedure, then the letter ruling will state that no opinion is expressed as to the overall tax consequences of the transactions described in the letter ruling or as to any issue or step not specifically addressed by the letter. In addition, letter rulings under this procedure will contain the following (or similar) language at the beginning of the letter:

This Office expresses no opinion as to the overall tax consequences of the transaction(s) described in this letter. Rather, the ruling(s) contained in this letter only address one or more discrete legal issues involved in the transaction.

.02 Rev. Proc. 2009-1 is amplified by replacing the last sentence of the first paragraph of section 7.02(4) with the following:

Notwithstanding the previous sentence, expedited handling may be available for certain issues under the jurisdiction of the Associate Chief Counsel (Corporate), as provided below.

.03 Rev. Proc. 2009-1 is amplified by replacing the heading and the first sentence of the seventh paragraph of section 7.02(4) with the following:

EXPEDITED LETTER RULING PROCESS FOR CERTAIN REQUESTS UNDER THE JURISDICTION OF THE ASSOCIATE CHIEF COUNSEL (CORPORATE): If a taxpayer requests a letter ruling on whether a transaction constitutes a reorganization under § 368 or a distribution under § 355, or a letter ruling involving certain significant issues under the jurisdiction of the Associate Chief Counsel (Corporate) as described in section 6.03 of this revenue procedure, and the taxpayer asks for expedited handling pursuant to this provision, the Service will grant expedited handling.

.04 Rev. Proc. 2009-1 is amplified by replacing the last sentence of section 7.02(4) with the following:

For further information regarding this EXPEDITED LETTER RULING PROCESS FOR CERTAIN REQUESTS UNDER THE JURISDICTION OF THE ASSOCIATE CHIEF COUNSEL (CORPORATE), call the telephone number provided in section 10.07(1)(a) of this revenue procedure for pre-submission conferences with the Office of Associate Chief Counsel (Corporate).

.05 Rev. Proc. 2009-1 is amplified by replacing the first sentence of the last paragraph of section 8.05(1) with the following:

The Service will not endeavor to process on an expedited basis a ruling request regarding reorganizations under § 368, distributions under § 355, or certain significant issues under the jurisdiction of the Associate Chief Counsel (Corporate) as described in section 6.03 of this revenue procedure unless the branch representative in the Office of Associate Chief Counsel (Corporate) receives all requested additional information within 10 calendar days from the date of the request for such additional information, unless an extension of time is granted.

.06 Rev. Proc. 2009-1 is amplified by replacing the first sentence of the third paragraph of section 19 with the following:

The collections of information in this revenue procedure are in sections 5.06, 6.03, 7.01, 7.02, 7.03, 7.04, 7.05, 7.07, 8.02, 8.05, 10.01, 10.06, 10.07, 11.11, 13.02, 15.02, 15.07, 15.08, 15.09, 15.11, paragraph (B)(1) of Appendix A, Appendix C, and Appendix E (subject matter-rate orders; regulatory agency; normalization).

.07 Rev. Proc. 2009-1 is amplified by replacing the second sentence of Appendix C, Item 35 with the following sentence:

Note that certain requests under the jurisdiction of the Associate Chief Counsel (Corporate) may receive expedited treatment without stating a compelling need.

.08 Rev. Proc. 2009-3 is amplified by starting a new paragraph immediately before the last sentence of the first paragraph of section 3.01(38) and by adding the following sentences at the end of the revised first paragraph in section 3.01(38):

However, the Service may rule on a significant issue in a transaction that occurs in the context of a § 355 distribution without ruling on the entire transaction. See section 6.03 of Rev. Proc. 2009-1. Before preparing the letter ruling request, a taxpayer should call the Office of the Associate Chief Counsel (Corporate) at (202) 622-7700 to discuss with one of the branches whether the Office of the Associate Chief Counsel (Corporate) will issue a letter ruling only involving that significant issue. The Service reserves the right to rule on any other issue in the transaction (including ruling adversely) if the Service believes it is in the best interests of tax administration. Cf. section 2.01 of this revenue procedure.

.09 Rev. Proc. 2009-3 is amplified by adding the following paragraph to section 3.01:

Section 355.—Distribution of Stock and Securities of a Controlled Corporation.—Whether the distribution of the stock of a controlled corporation is being carried out for one or more corporate business purposes, whether the transaction is used principally as a device, and whether the distribution and an acquisition are part of a plan under § 355(e). See Rev. Proc. 2003-48, 2003-2 C.B. 86. Notwithstanding the preceding sentence, the Service may issue a ruling regarding the effect of redemptions under § 355(e) pending the issuance of temporary or final regulations regarding redemptions under § 355(e) if an adverse ruling on such question would result in there being a direct or indirect acquisition by one or more persons of stock representing a 50-percent or greater interest in the distributing corporation or the controlled corporation that is part of a plan under § 355(e).

.10 Rev. Proc. 2009-3 is amplified by adding the following paragraph to section 4.01:

Section 355.—Distribution of Stock and Securities of a Controlled Corporation.—Any issue under § 355(e) other than whether a distribution and an acquisition are part of a plan (i.e., any non-plan issue). Notwithstanding the preceding sentence, the Service generally will rule on a non-plan issue or issues (e.g., whether a corporation constitutes a predecessor of distributing) if an adverse ruling on such non-plan issue or issues would result in there being a direct or indirect acquisition by one or more persons of stock representing a 50-percent or greater interest in the distributing corporation or the controlled corporation that is part of a plan under § 355(e).

.11 Rev. Proc. 2009-3 is amplified by adding the following paragraph to section 4.02(2):

Notwithstanding the previous paragraph, the Office of the Associate Chief Counsel (Corporate) may issue a letter ruling on part of an integrated transaction without ruling on the larger transaction if such transaction occurs in the context of a § 355 distribution. See section 6.03 of Rev. Proc. 2009-1. Before preparing the letter ruling request, a taxpayer should call the Office of the Associate Chief Counsel (Corporate) at (202) 622-7700 to discuss with one of the branches whether the Office of the Associate Chief Counsel (Corporate) will issue a letter ruling only involving part of the transaction. The Service reserves the right to rule on any other part of the transaction (including ruling adversely) if the Service believes it is in the best interests of tax administration. Cf. section 2.01 of this revenue procedure.

Rev. Proc. 2009-1, 2009-1 I.R.B. 1, and Rev. Proc. 2009-3, 2009-1 I.R.B. 107, are amplified.

This revenue procedure is effective May 4, 2009.

The collections of information contained in this revenue procedure have been reviewed and approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-1522.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.

The collections of information in this revenue procedure are in section 5. This information is required and will be used to determine whether a taxpayer would qualify for a letter ruling on part of an integrated transaction without the Service ruling on the larger transaction. The collections of information are required to obtain a benefit. The likely respondents are business or other for-profit institutions.

The estimated total annual reporting burden under Rev. Proc. 2009-1 is 513,150 hours.

The estimated annual burden per respondent varies from 1 hour to 200 hours, depending on individual circumstances, with an estimated average of 90.1054 hours. The estimated number of respondents is 5,695.

The estimated annual frequency of responses is on occasion.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue tax law. Generally tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

The principal author of this revenue procedure is Russell P. Subin of the Office of Associate Chief Counsel (Corporate). For further information regarding this revenue procedure, contact Russell P. Subin at (202)-622-7790 (not a toll-free call).

Internal Revenue Service (IRS), Treasury.

Cancellation of notice of public hearing on proposed rulemaking.

This document cancels a public hearing on proposed rulemaking (REG-138326-07, 2009-9 I.R.B. 638) under section 6231 of the Internal Revenue Code that allow the IRS to convert partnership items to nonpartnership items when the application of the unified partnership audit and litigation procedures of sections 6221 through 6234 (TEFRA partnership procedures) with respect to certain tax avoidance transactions interferes with the effective and efficient enforcement of the internal revenue laws.

The public hearing, originally scheduled for June 4, 2009, at 10 a.m., is cancelled.

Richard A. Hurst of the Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration), at Richard.A.Hurst@irscounsel.treas.gov.

A notice of public hearing that appeared in the Federal Register on Friday, February 13, 2009 (74 FR 7205), announced that a public hearing was scheduled for June 4, 2009, at 10 a.m., in the auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC. The subject of the public hearing is under section 6231 of the Internal Revenue Code.

The public comment period for these regulations expired on May 14, 2009. Outlines of topics to be discussed at the hearing were due on May 15, 2009. The notice of proposed rulemaking and notice of public hearing instructed those interested in testifying at the public hearing to submit an outline of the topics to be addressed. As of Wednesday, May 20, 2009, no one has requested to speak. Therefore, the public hearing scheduled for June 4, 2009, is cancelled.