This procedure provides the inflation-adjusted items for 2016 pursuant to the enactment of Protecting Americans from Tax Hikes Act of 2015.

These proposed regulations would provide guidance on the application of a limitation under § 432(e)(9)(D)(vii) on a suspension of benefits under § 432(e)(9) under a multiemployer defined benefit pension plan that includes benefits directly attributable to a participant’s service with any employer that has withdrawn from the plan, paid its full withdrawal liability, and, pursuant to a collective bargaining agreement, assumed liability for providing benefits to participants and beneficiaries equal to benefits for such participants and beneficiaries reduced as a result of the financial status of the plan.

This notice sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for February 2016 used under § 417(e)(3)(D), the 24-month average segment rates applicable for February 2016, and the 30-year Treasury rates. These rates reflect the application of § 430(h)(2)(C)(iv), which was added by the Moving Ahead for Progress in the 21st Century Act, Public Law 112–141 (MAP–21) and amended by section 2003 of the Highway and Transportation Funding Act of 2014 (HATFA).

Serves notice to potential donors of organizations that have recently filed a timely declaratory judgment suit under section 7428 of the Code, challenging revocation of its status as an eligible donee under section 170(c)(2).

Serves notice to potential donors of a stipulated decision by the United States Tax Court in declaratory judgment proceedings under Section 7428.

Revocation of IRC 501(c)(3) Organizations for failure to meet the code section requirements. Contributions made to the organizations by individual donors are no longer deductible under IRC 170(b)(1)(A).

This notice provides that statements required under section 6035, regarding the basis of property distributed from the estate of a decedent, need not be filed or furnished until March 31, 2016, rather than the current February 29, 2016 deadline. The notice further recommends that executors and other persons who are required to file an estate tax return wait to prepare the statements required under section 6035 until the Treasury Department and IRS issue further guidance.

Notice 2016–17 provides schools (colleges and universities) with temporary transition relief to address compliance with certain group market reform provisions of the ACA. The guidance in this notice is being issued in substantially identical form by DOL and HHS in separate guidance. The Treasury Department and IRS, and DOL and HHS will not assert that a premium reduction arrangement fails to satisfy certain group market reform provisions of the ACA if the arrangement is offered in connection with other student health coverage (insured or self-insured) for a plan year or policy year beginning before January 1, 2017.

This notice sets forth the maximum face amount of Qualified Zone Academy Bonds that may be issued for each State for the calendar years 2015 and 2016. For this purpose, "State" includes the District of Columbia and the possessions of the United States.

This notice provides guidance on the application of certain provisions of the Affordable Care Act^[1] to premium reduction arrangements offered in connection with student health plans and provides temporary transition relief from enforcement by the Departments of the Treasury, Labor, and Health and Human Services (collectively, the Departments) in certain circumstances.

On September 13, 2013, the Treasury Department (Treasury) and the Internal Revenue Service (IRS) published Notice 2013–54,^[2] 2013–40 IRB 287, addressing the application of the market reforms to health reimbursement arrangements and employer payment plans under the Affordable Care Act. The Department of Labor (DOL) contemporaneously published parallel guidance in Technical Release 2013–03^[3] and the Department of Health and Human Services (HHS) issued guidance stating that it concurs in the application of the laws under its jurisdiction as set forth in the guidance issued by DOL and Treasury and IRS.^[4] Subsequent guidance reiterated and clarified the application of the market reforms to employer payment plans.^[5] The guidance set out below provides a transition period for the application of certain market reforms to certain arrangements offered by an institution of higher education to its students that are designed to reduce the cost of student health coverage (whether insured or self-insured) through a credit, offset, reimbursement, stipend, or similar arrangement (a premium reduction arrangement).

The Departments continue to work together to develop coordinated regulations and other administrative guidance to assist stakeholders with implementation of the Affordable Care Act. The guidance in this notice is being issued in substantially identical form by DOL and HHS in separate guidance.

Under Notice 2013–54 (the 2013 guidance), an employer payment plan (EPP) is a group health plan under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual market health insurance policy or directly pays a premium for an individual market health insurance policy covering the employee. EPPs and health reimbursement arrangements (HRAs) typically consist of a promise by an employer to reimburse medical expenses up to a certain amount. The 2013 guidance clarifies that such arrangements are subject to the group market reform provisions of the Affordable Care Act, including the prohibition on annual dollar limits under PHS Act section 2711 and the requirement to provide certain preventive services without cost sharing under PHS Act section 2713. That guidance generally provides that EPPs and HRAs will fail to comply with these group market reform requirements because these arrangements, by their very definition, include dollar limits on the amount of reimbursements or payments, and therefore violate the Affordable Care Act prohibition on annual dollar limits and the requirement to provide coverage of certain recommended preventive services without imposing any cost-sharing requirements.

The 2013 guidance further clarified that such employer health care arrangements will not violate the market reform provisions when integrated with a group health plan that otherwise complies with those provisions. Importantly, however, the 2013 guidance provided that these employer health care arrangements cannot be integrated with individual market policies to satisfy the market reforms. Consequently, such an arrangement may be subject to penalties, including excise taxes under section 4980D of the Code.

On March 21, 2012, HHS published a final rule (the student health insurance plan or SHIP rule) establishing requirements for student health insurance coverage under the PHS Act and the Affordable Care Act.^[6] The SHIP rule defines “student health insurance coverage” as a type of individual market health insurance coverage that is offered to students and their dependents under a written agreement between an institution of higher education (as that term is defined for purposes of the Higher Education Act of 1965) and an issuer.^[7]

Many colleges and universities provide students (typically graduate students) with student health coverage at greatly reduced or no cost as part of their student package, which often includes tuition assistance and a stipend for living expenses. The student health coverage can be provided either through individual health insurance or through coverage that is self-insured by the college or university. For these students, the bill they receive from the school for the health coverage premium may take into account a premium reduction arrangement. Because some of these students also perform services for the school (such as teaching or research), the question has been raised whether such premium reduction arrangements might be employer-sponsored group health plans, and, as a result, might be viewed as EPPs that violate market reform provisions of the Affordable Care Act. Whether a particular arrangement constitutes a group health plan will depend on all of the facts and circumstances.

In many cases in which a college or university offers a premium reduction arrangement to its students, the payment arrangement will not constitute an EPP under the 2013 guidance. In other cases, however, such arrangements might meet the definition of an EPP. The Departments understand that some schools that have been offering such premium reduction arrangements might not have recognized at the time of the 2013 guidance that, in certain circumstances, the arrangements might constitute EPPs within the meaning of the 2013 guidance and, therefore, violate PHS Act sections 2711 and 2713 because they are not integrated with group health plan coverage and (as provided in the 2013 guidance and other guidance) cannot integrate with individual insurance coverage. As a result, the Departments recognize that schools may need additional time to adopt a suitable alternative or make other arrangements to come into compliance. Accordingly, the Departments will not assert that a premium reduction arrangement fails to satisfy PHS Act section 2711 or 2713 if the arrangement is offered in connection with other student health coverage (insured or self-insured) for a plan year or policy year beginning before January 1, 2017 (therefore including, for example, plan years or policy years that are roughly coterminous with academic years beginning in the summer or fall of 2016 and ending in 2017).

This notice applies for plan years beginning before January 1, 2017. This notice supplements the guidance provided in Notice 2013–54 and Notice 2015–87, 2015–52 IRB 889.

This notice was prepared by personnel at the Health and Welfare Branch, Office of Associate Chief Counsel (Tax Exempt and Governmental Entities), Internal Revenue Service, with the development of the guidance including personnel at the Treasury Department, Department of Labor and Department of Health and Human Services. For further information regarding this guidance, contact the Department of Labor at (202) 693-8335 or the Internal Revenue Service at (202) 317-5500 (not a toll-free number).

This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the Internal Revenue Code. In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I).

Generally, except for certain plans under sections 104 and 105 of the Pension Protection Act of 2006 and CSEC plans under § 414(y), § 430 of the Code specifies the minimum funding requirements that apply to single-employer plans pursuant to § 412. Section 430(h)(2) specifies the interest rates that must be used to determine a plan’s target normal cost and funding target. Under this provision, present value is generally determined using three 24-month average interest rates (“segment rates”), each of which applies to cash flows during specified periods. To the extent provided under § 430(h)(2)(C)(iv), these segment rates are adjusted by the applicable percentage of the 25-year average segment rates for the period ending September 30 of the year preceding the calendar year in which the plan year begins.^[8] However, an election may be made under § 430(h)(2)(D)(ii) to use the monthly yield curve in place of the segment rates.

Notice 2007–81, 2007–44 I.R.B. 899, provides guidelines for determining the monthly corporate bond yield curve, and the 24-month average corporate bond segment rates used to compute the target normal cost and the funding target. Consistent with the methodology specified in Notice 2007–81, the monthly corporate bond yield curve derived from January 2016 data is in Table I at the end of this notice. The spot first, second, and third segment rates for the month of January 2016 are, respectively, 1.78, 4.08, and 5.02.

The 24-month average segment rates determined under § 430(h)(2)(C)(i) through (iii) must be adjusted pursuant to § 430(h)(2)(C)(iv) to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates. For plan years beginning before 2018, the applicable minimum percentage is 90% and the applicable maximum percentage is 110%. The 25-year average segment rates for plan years beginning in 2014, 2015, and 2016 were published in Notice 2013–58, 2013–40 I.R.B. 294, Notice 2014–50, 2014–40 I.R.B. 590, and Notice 2015–61, 2015–39 I.R.B. 408, respectively.

The three 24-month average corporate bond segment rates applicable for February 2016 without adjustment for the 25-year average segment rate limits are as follows:

Based on § 430(h)(2)(C)(iv), the 24-month averages applicable for February 2016 adjusted to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates, are as follows:

Generally for plan years beginning after 2007, § 431 specifies the minimum funding requirements that apply to multiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum amount for the full-funding limitation described in § 431(c)(6)(A), based on the plan’s current liability. Section 431(c)(6)(E)(ii)(I) provides that the interest rate used to calculate current liability for this purpose must be no more than 5 percent above and no more than 10 percent below the weighted average of the rates of interest on 30-year Treasury securities during the four-year period ending on the last day before the beginning of the plan year. Notice 88–73, 1988–2 C.B. 383, provides guidelines for determining the weighted average interest rate. The rate of interest on 30-year Treasury securities for January 2016 is 2.86 percent. The Service determined this rate as the average of the daily determinations of yield on the 30-year Treasury bond maturing in November 2045. For plan years beginning in the month shown below, the weighted average of the rates of interest on 30-year Treasury securities and the permissible range of rate used to calculate current liability are as follows:

In general, the applicable interest rates under § 417(e)(3)(D) are segment rates computed without regard to a 24-month average. Notice 2007–81 provides guidelines for determining the minimum present value segment rates. Pursuant to that notice, the minimum present value segment rates determined for January 2016 are as follows:

The principal author of this notice is Tom Morgan of the Office of the Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS participated in the development of this guidance. For further information regarding this notice, contact Mr. Morgan at 202-317-6700 or Tony Montanaro at 202-317-8698 (not toll-free numbers).

On July 31, 2015, the President of the United States signed into law the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, Public Law 114–41, 129 Stat. 443 (Act). Section 2004 of the Act added new sections 1014(f) and 6035. On August 21, 2015, the Treasury Department and the IRS issued Notice 2015–57, 2015–36 IRB 294. That notice delayed until February 29, 2016, the due date for any statements required under section 6035(a)(3)(A) to be provided before February 29, 2016. This notice provides that executors and other persons required to file or furnish a statement under section 6035(a)(1) or (a)(2) before March 31, 2016, need not do so until March 31, 2016. This notice is being issued in order to provide executors and such other persons the opportunity to review the proposed regulations to be issued under sections 1014(f) and 6035 before preparing a Form 8971 and any Schedule A.

Section 1014(f) provides rules requiring that the basis of certain property acquired from a decedent, as determined under section 1014, may not exceed the value of that property as finally determined for federal estate tax purposes, or if not finally determined, the value of that property as reported on a statement made under section 6035.

Section 6035 imposes new reporting requirements with regard to the value of property included in a decedent’s gross estate for federal estate tax purposes.

Section 6035(a)(1) provides that the executor of any estate required to file a return under section 6018(a) must furnish, both to the Secretary and to the person acquiring any interest in property included in the decedent’s gross estate for federal estate tax purposes, a statement identifying the value of each interest in such property as reported on such return and such other information with respect to such interest as the Secretary may prescribe.

Section 6035(a)(2) provides that each person required to file a return under section 6018(b) must furnish, both to the Secretary and to each other person who holds a legal or beneficial interest in the property to which such return relates, a statement identifying the information described in section 6035(a)(1).

Section 6035(a)(3)(A) provides that each statement required to be furnished under section 6035(a)(1) or (a)(2) is to be furnished at such time as the Secretary may prescribe, but in no case at a time later than the earlier of (i) the date which is 30 days after the date on which the return under section 6018 was required to be filed (including extensions, if any) or (ii) the date which is 30 days after the date such return is filed.

Section 6035(b) authorizes the Secretary to prescribe such regulations as necessary to carry out section 6035. Section 7805(a) provides generally that the Secretary shall prescribe all needful rules and regulations for the enforcement of this title, including all rules and regulations as may be necessary by reason of any alteration of law in relation to internal revenue. Section 7805(b)(2) provides that regulations may apply retroactively if they are issued within 18 months of the date of the enactment of the statutory provision to which they relate.

Statements required under sections 6035(a)(1) and (a)(2) to be filed with the IRS or furnished to a beneficiary before March 31, 2016, need not be filed with the IRS and furnished to a beneficiary until March 31, 2016. The Treasury Department and IRS recommend that executors and other persons required to file a return under section 6018 wait to prepare the statements required by section 6035(a)(1) and (a)(2) until the issuance of proposed regulations by the Treasury Department and the IRS addressing the requirements of section 6035. The Treasury Department and the IRS expect to issue proposed regulations under sections 1014(f) and 6035 very shortly.

This notice is effective on February 11, 2016. This notice applies to executors of the estates of decedents and to other persons who are required under section 6018(a) or (b) to file a return if that return is filed after July 31, 2015.

The principal author of this notice is Eliezer Mishory of the Office of the Associate Chief Counsel (Procedure & Administration). For further information regarding this notice, please contact Theresa Melchiorre at (202) 317-6859 (not a toll-free number).

This notice sets forth the maximum face amount of Qualified Zone Academy Bonds (“QZABs”) that may be issued for each State for the calendar years 2015 and 2016 under § 54E(c)(2) of the Internal Revenue Code. Under § 54A(e)(3), the term State includes the District of Columbia and any possession of the United States.

The national limitation for QZABs issued under § 54E for calendar years 2015 and 2016 is $400 million. These amounts are allocated among the States as follows:

The national limitation allocated in section 3 for calendar years 2015 and 2016 is effective for QZABs issued after December 31, 2014.

The principal authors of this notice are James A. Polfer and David E. White of the Office of Associate Chief Counsel (Financial Institutions and Products). For further information regarding this notice contact David White or James Polfer at (202) 317-6980 (not a toll-free number).

Rev. Proc. 2015–53, 2015–44 I.R.B. 615, provides inflation adjustments for certain items for 2016. This revenue procedure provides the inflation adjustments for additional items that are adjusted for inflation due to the enactment of the Protecting Americans from Tax Hikes Act (PATH Act) of 2015, enacted as part of the Consolidated Appropriations Act, 2016, Public Law 114–113, div. Q (the “Act”). This revenue procedure also modifies part of section 3.17 of Rev. Proc. 2015–53, concerning the inflation adjustment for excludable transit benefits.

.01 Section 104 of the Act provides that under § 62(a)(2)(D) of the Internal Revenue Code the amount of the deduction allowed under § 162 which consists of expenses paid or incurred by an eligible educator in connection with books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment (including related software and services) and other equipment, and supplementary materials used by the eligible educator in the classroom is adjusted for inflation for taxable years beginning after December 31, 2015. (See section 3.01 of this revenue procedure.)

.02 Section 105 of the Act amends § 132(f)(2) of the Code to create parity, for periods after December 31, 2014, between the transit benefit exclusion for the aggregate of transportation in a commuter highway vehicle and any transit pass, and the exclusion for qualified parking. (See section 3.02 of this revenue procedure.)

.03 Section 124 of the Act amends § 179(b)(1) and (2) of the Code to provide that the dollar limitation for the aggregate cost of § 179 property that a taxpayer may elect to expense is $500,000, and that dollar amount is reduced by the amount by which the cost of all § 179 property placed in service during the taxable year exceeds $2,000,000. For taxable years beginning in 2016, these amounts are adjusted for inflation. (See section 3.03 of this revenue procedure.)

.01 Certain Expenses of Elementary and Secondary School Teachers. For taxable years beginning in 2016, under § 62(a)(2)(D) the amount of the deduction allowed under § 162 which consists of expenses paid or incurred by an eligible educator in connection with books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment (including related software and services) and other equipment, and supplementary materials used by the eligible educator in the classroom is not in excess of $250.

.02 Qualified Transportation Fringe Benefit. For taxable years beginning in 2016, the monthly limitation under § 132(f)(2)(A) regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $255. This section modifies section 3.17 of Rev. Proc. 2015–53. (For taxable years beginning in 2015, see Notice 2016–6, 2016–4 I.R.B 287, Application of Retroactive Increase in Excludable Transit Benefits.)

.03 Election to Expense Certain Depreciable Assets. For taxable years beginning in 2016, under § 179(b)(1) the aggregate cost of any § 179 property that a taxpayer elects to treat as an expense cannot exceed $500,000. Under § 179(b)(2)(C), the $500,000 limitation is reduced (but not below zero) by the amount the cost of § 179 property placed in service during the 2016 taxable year exceeds $2,010,000.

Rev. Proc. 2015–53 is modified.

Section 3 of this revenue procedure applies to taxable years beginning in 2016.

The principal author of this revenue procedure is William Ruane of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this revenue procedure, contact Mr. Ruane at (202) 317-4718 (not a toll-free number).

This announcement serves notice to potential donors that the organization listed below has recently filed a timely declaratory judgment suit under section 7428 of the Code, challenging revocation of its status as an eligible donee under section 170(c)(2).

Protection under section 7428(c) of the Code begins on the date that the notice of revocation is published in the Internal Revenue Bulletin and ends on the date on which a court first determines that an organization is not described in section 170(c)(2), as more particularly set forth in section 7428(c)(1).

In the case of individual contributors, the maximum amount of contributions protected during this period is limited to $1,000.00, with a husband and wife being treated as one contributor. This protection is not extended to any individual who was responsible, in whole or in part, for the acts or omissions of the organization that were the basis for the revocation. This protection also applies (but without limitation as to amount) to organizations described in section 170(c)(2) which are exempt from tax under section 501(a). If the organization ultimately prevails in its declaratory judgment suit, deductibility of contributions would be subject to the normal limitations set forth under section 170.

This announcement serves notice to donors that on November 4, 2015, the United States Tax Court entered an order dismissing the case involving the below-referenced organization. The organization listed below is not recognized as an organization described in section 501(c)(3), is not exempt from tax under section 501(a), and is not an organization described in section 170(c)(2).

Dr. R.C. Samantha Roy Institute of Science and Technology Inc

Green Bay WI

The Internal Revenue Service has revoked its determination that the organizations listed below qualify as organizations described in sections 501(c)(3) and 170(c)(2) of the Internal Revenue Code of 1986.

Generally, the IRS will not disallow deductions for contributions made to a listed organization on or before the date of announcement in the Internal Revenue Bulletin that an organization no longer qualifies. However, the IRS is not precluded from disallowing a deduction for any contributions made after an organization ceases to qualify under section 170(c)(2) if the organization has not timely filed a suit for declaratory judgment under section 7428 and if the contributor (1) had knowledge of the revocation of the ruling or determination letter, (2) was aware that such revocation was imminent, or (3) was in part responsible for or was aware of the activities or omissions of the organization that brought about this revocation.

If on the other hand a suit for declaratory judgment has been timely filed, contributions from individuals and organizations described in section 170(c)(2) that are otherwise allowable will continue to be deductible. Protection under section 7428(c) would begin on February 29, 2016 and would end on the date the court first determines the organization is not described in section 170(c)(2) as more particularly set for in section 7428(c)(1). For individual contributors, the maximum deduction protected is $1,000, with a husband and wife treated as one contributor. This benefit is not extended to any individual, in whole or in part, for the acts or omissions of the organization that were the basis for revocation.

Under the Multiemployer Pension Reform Act of 2014

Internal Revenue Service (IRS), Treasury.

Notice of proposed rulemaking and notice of public hearing.

The Multiemployer Pension Reform Act of 2014 (“MPRA”), which was enacted by Congress as part of the Consolidated and Further Continuing Appropriations Act of 2015, relates to multiemployer defined benefit pension plans that are projected to have insufficient funds, within a specified timeframe, to pay the full plan benefits to which individuals will be entitled (referred to as plans in “critical and declining status”). Under MPRA, the sponsor of such a plan is permitted to reduce the pension benefits payable to plan participants and beneficiaries if certain conditions and limitations are satisfied (referred to in MPRA as a “suspension of benefits”). One specific limitation governs the application of a suspension of benefits under any plan that includes benefits directly attributable to a participant’s service with any employer that has withdrawn from the plan in a complete withdrawal, paid its full withdrawal liability, and, pursuant to a collective bargaining agreement, assumed liability for providing benefits to participants and beneficiaries equal to any benefits for such participants and beneficiaries reduced as a result of the financial status of the plan. This document contains proposed regulations that would provide guidance relating to this specific limitation. These regulations affect active, retired, and deferred vested participants and beneficiaries under any such multiemployer plan in critical and declining status as well as employers contributing to, and sponsors and administrators of, those plans.

Comments must be received by March 15, 2016. Outlines of topics to be discussed at the public hearing scheduled for March 22, 2016 must be received by March 15, 2016.

Send submissions to: CC:PA:LPD:PR (REG–101701–16), room 5205, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington D.C. 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG–101701–16), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, D.C., or sent electronically via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG–101701–16). The public hearing will be held in the IRS Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC.

Concerning the regulations, the Department of the Treasury MPRA guidance information line at (202) 622-1559; concerning submissions of comments, the hearing, and/or being placed on the building access list to attend the hearing, Regina Johnson at (202) 317-6901 (not toll-free numbers).