Final regulations under section 6049 of the Code provide guidance regarding the reporting requirements for interest paid to the U.S. accounts of certain nonresident alien individuals. The reporting required by these final regulations will support the U.S. government’s efforts to combat offshore tax evasion.

This notice describes and requests comments on several approaches for determining whether health coverage under an eligible employer-sponsored plan provides minimum value for purposes of sections 36B and 4980H of the Code.

This notice requests comments on information reporting under section 6055 of the Code by health insurance issuers, government agencies, employers that sponsor self-insured plans, and other persons that provide minimum essential coverage to an individual.

This notice invites comments on reporting under section 6056 of the Code by applicable large employers (as defined in section 4980H(c)(2)) that are subject to section 4980H. Section 6056 requires reporting of certain information on employer-provided health care coverage provided on or after January 1, 2014. The notice also advises the public that the Treasury and IRS intend to propose regulations implementing section 6056 and invites comments on issues arising under section 6056, including on possible approaches for coordinating and minimizing duplication between the information required to be reported and furnished by employers under section 6056 and information required to be reported and/or furnished by employers or other persons under other applicable Code provisions.

This procedure provides guidance for implementing final regulations under section 6049 of the Code. The procedure contains two lists of countries with which the IRS has an income tax or other convention or bilateral agreement relating to the exchange of information for tax administration purposes.

This procedure provides the 2013 inflation adjusted amounts for Health Savings Accounts (HSAs) under section 223 of the Code.

This notice describes and requests comments on several approaches for determining whether health coverage under an eligible employer-sponsored plan provides minimum value for purposes of sections 36B and 4980H of the Code.

This announcement makes it optional for Form 990 filers for Tax Year 2011 to report their interests in the income, expenses, and assets of partnerships using information from Schedule K-1 of Form 1065, as opposed to using their books and records.

Final regulations under section 6049 of the Code provide guidance regarding the reporting requirements for interest paid to the U.S. accounts of certain nonresident alien individuals. The reporting required by these final regulations will support the U.S. government’s efforts to combat offshore tax evasion.

This notice requests comments on information reporting under section 6055 of the Code by health insurance issuers, government agencies, employers that sponsor self-insured plans, and other persons that provide minimum essential coverage to an individual.

This notice invites comments on reporting under section 6056 of the Code by applicable large employers (as defined in section 4980H(c)(2)) that are subject to section 4980H. Section 6056 requires reporting of certain information on employer-provided health care coverage provided on or after January 1, 2014. The notice also advises the public that the Treasury and IRS intend to propose regulations implementing section 6056 and invites comments on issues arising under section 6056, including on possible approaches for coordinating and minimizing duplication between the information required to be reported and furnished by employers under section 6056 and information required to be reported and/or furnished by employers or other persons under other applicable Code provisions.

This procedure provides guidance for implementing final regulations under section 6049 of the Code. The procedure contains two lists of countries with which the IRS has an income tax or other convention or bilateral agreement relating to the exchange of information for tax administration purposes.

This procedure provides issuers of qualified mortgage bonds (QMBs) and qualified mortgage credit certificates (MCCs) with average area purchase price safe harbors for statistical areas in the United States and with a nationwide average purchase price for residences in the United States for purposes of the QMB rules under section 143 of the Code and the MCC rules under section 25. Rev. Proc. 2011-23 obsoleted in part.

Internal Revenue Service (IRS), Treasury.

Final Regulations.

This document contains final regulations regarding the reporting requirements for interest that relates to deposits maintained at U.S. offices of certain financial institutions and is paid to certain nonresident alien individuals. These regulations will affect commercial banks, savings institutions, credit unions, securities brokerages, and insurance companies that pay interest on deposits.

Effective Date: These regulations are effective April 19, 2012.

Applicability Date: These regulations apply to payments of interest made on or after January 1, 2013.

Kathryn Holman, (202) 622-3840 (not a toll-free number).

Accordingly, 26 CFR parts 1 and 31 are amended as follows:

The principal author of the regulations is Kathryn Holman, Office of Associate Chief Counsel (International). However, other personnel from the Treasury Department and the IRS participated in their development.

* * * * *

This notice describes and requests comments on several possible approaches to determining whether health coverage under an eligible employer-sponsored plan, as defined in § 5000A of the Internal Revenue Code (“employer-sponsored plan”), provides minimum value within the meaning of § 36B(c)(2)(C)(ii). Beginning in 2014, eligible individuals who purchase coverage under a qualified health plan through an Affordable Insurance Exchange may receive a premium tax credit under § 36B unless they are eligible for other minimum essential coverage, including coverage under an employer-sponsored plan that is affordable to the employee and provides minimum value. Under § 36B(c)(2)(C)(ii), a plan fails to provide minimum value if “the plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs.” If the coverage offered by the employer fails to provide minimum value, an employee may be eligible to receive a premium tax credit. An applicable large employer (as defined in § 4980H(c)(2)) may be liable for an assessable payment under § 4980H if any full-time employee receives a premium tax credit.

The Treasury Department and the Internal Revenue Service intend to issue proposed regulations on determining minimum value and are considering incorporating the approach described in this notice. As described below, under anticipated future guidance, an employer-sponsored plan would be able to use one of several alternative approaches to ascertain that the plan provides minimum value. Specifically, this notice seeks comment on the following three potential approaches that could be used to determine whether an employer-sponsored plan provides minimum value:

Section VI of this notice describes these potential approaches in greater detail.

Under the statute, certain of the rules for determining whether an employer-sponsored plan provides minimum value are to be based on forthcoming regulations to be issued by HHS that will specify the methods for determining the actuarial value of a qualified health plan (QHP) offered through an Affordable Insurance Exchange and non-grandfathered plans in the individual and small group markets. On February 24, 2012, HHS issued the “Actuarial Value and Cost-Sharing Bulletin” (HHS actuarial value bulletin) describing the assumptions and methodology that HHS anticipates will govern the calculation of actuarial value.^[1] (See http://cciio.cms.gov/resources/files/Files2/02242012/Av-csr-bulletin.pdf.) This notice describes how guidance issued by HHS on the determination of actuarial value is expected to be applied in determining minimum value. This notice also outlines ways in which the determination of minimum value is expected to differ from the determination of the actuarial value of QHPs in order to reflect differences between QHPs and employer-sponsored plans, such as differences in their levels of standardization and the populations covered.

Employer-sponsored self-insured and insured large group plans are not required to conform their plans to any of the essential health benefit (EHB) benchmarks that HHS intends to propose to apply to QHPs.^[2] These employer-sponsored plans need not offer all of the EHBs or even cover each of the ten statutory EHB categories.

This notice provides information regarding the actuarial value of existing employer-sponsored plans (Section II) and the statutory background of the premium tax credit and the minimum value provision (Section III). The notice then describes, by way of background, the intended methodology laid out in the HHS actuarial value bulletin for determining the actuarial value of a QHP (Section IV) and explains the assumptions expected to be used to determine whether an employer-sponsored plan meets the minimum value threshold (Section V). The notice describes the options that are being considered for determining whether an employer-sponsored plan has an actuarial value of at least 60 percent and therefore provides minimum value (Section VI). Finally, the notice also invites public comments (Section VII).

The actuarial value of a health plan is a measure of the percentage of health care costs, on average, that the plan is expected to cover. A report issued last fall by HHS found that approximately 98 percent of individuals currently covered by employer-sponsored plans are enrolled in plans that have an actuarial value of at least 60 percent using methods and assumptions similar to those described in this notice for determining minimum value. (See Actuarial Value and Employer-Sponsored Insurance, ASPE Research Brief, U.S. Department of Health and Human Services (November 2011) http://aspe.hhs.gov/health/reports/2011/AV-ESI/rb.shtml.) The HHS report also concludes that four core categories of benefits and services are the greatest contributors to a health plan’s actuarial value: physician and mid-level practitioner care; hospital and emergency room services; pharmacy benefits; and laboratory and imaging services. Because they account for only a very small portion of overall medical expenditures, benefits and services beyond these four core categories of benefits that are covered by a plan generally have only a limited impact on the plan’s actuarial value. For example, a plan that does not include coverage for rehabilitative services, durable medical equipment, acupuncture and chiropractic services, and home health services may have an actuarial value that is only 5 percent less than a plan that includes coverage for these services. (See ASPE Research Brief.) We seek input on whether other analyses using different data or assumptions produce similar or different results.

Section 36B was added by § 1401 of the Patient Protection and Affordable Care Act, Public Law 111-148, and modified by the Health Care and Education Reconciliation Act of 2010, Public Law 111-152 (collectively, the Affordable Care Act). Beginning in 2014, certain taxpayers are allowed a refundable premium tax credit under § 36B to assist in purchasing QHP coverage through an Affordable Insurance Exchange. The premium tax credit is designed to make QHP coverage affordable by reducing an eligible taxpayer’s out-of-pocket premium cost. (Under § 1402 of the Affordable Care Act, eligible individuals are entitled to an advance payment of the premium tax credit, which is paid directly to the QHP issuer selected by the individual.)

An employee, or a member of the employee’s family, who is eligible to enroll in an employer-sponsored plan is not eligible for a premium tax credit unless the plan’s coverage for the employee either is unaffordable, as defined in § 36B(c)(2)(C)(i)(II), or does not provide minimum value, as defined in § 36B(2)(c)(2)(C)(ii). An employee (or member of the employee’s family) also is not eligible if he or she actually enrolls in the employer-sponsored plan, even if the plan is not affordable or fails to provide minimum value. Under § 4980H, an “applicable large employer” is generally liable for an assessable payment if any full-time employee receives a premium tax credit.

To satisfy the minimum value requirement under § 36B(c)(2)(C)(ii), a plan’s share of the “total allowed costs of benefits provided under the plan” must equal or exceed 60 percent of such costs. Section 1302(d)(2)(C) of the Affordable Care Act directs that the statutory phrase — “percentage of the total allowed costs of benefits provided under a group health plan” — is determined under rules contained in the regulations to be promulgated by HHS under § 1302(d)(2) (titled “Actuarial Value”). The requirements applicable to these HHS regulations are set forth in subparagraphs (A) and (B) of § 1302(d)(2).^[3] Consistent with these statutory requirements, the determination of whether an employer-sponsored plan provides minimum value will be based on the actuarial value rules with appropriate modifications.

Subparagraph (B) of § 1302(d)(2) requires HHS to issue regulations under which employer contributions to a health savings account (HSA) may be taken into account in determining the actuarial value of an employer-sponsored plan. In addition, § 1302(d)(3) of the Affordable Care Act authorizes the Secretary of HHS to determine a reasonable “de minimis” variation in the actuarial values used in determining the level of coverage of a plan to account for differences in actuarial estimates.

The HHS actuarial value bulletin explains that, in accordance with the requirements of subparagraph (A) of § 1302(d)(2) of the Affordable Care Act, the actuarial value of QHPs offered through an Affordable Insurance Exchange (and of non-grandfathered plans in the individual and small group insurance markets) is determined by computing the ratio of (1) the total expected payments by the plan, computed in accordance with the plan’s cost-sharing rules (deductibles, co-insurance, co-payments, out-of-pocket limits), toward the costs a standard population is expected to incur at standard pricing for EHBs; over (2) the total costs a standard population is expected to incur at standard pricing for the EHBs.^[4] This actuarial value is used to determine the “metal level” of a QHP (that is, platinum, gold, silver, or bronze). For example, bronze plans must have a 60 percent actuarial value.

HHS announced that it intends to make available to the public an AV calculator that could be used to determine the actuarial value of QHPs (and non-grandfathered plans in the individual and small group insurance markets). The AV calculator would be designed so that issuers would be able to input a limited set of information on the benefits provided under the plan, and the calculator would provide the actuarial value of the plan. The claims data underlying the AV calculator would represent the entire range of EHB benchmark benefits that states would be permitted to select.

Although HHS anticipates that the overwhelming majority of issuers of QHPs would be able to calculate the actuarial value of their health plans using the AV calculator, HHS requested comments on whether a QHP issuer whose plan design does not fit into the basic AV calculator logic should be able to obtain an actuarial certification in limited circumstances. HHS is considering options to permit such QHP issuers to obtain an actuarial certification that the plan design fits into the calculator logic or to obtain an actuarial certification that adjustments to the AV calculator-produced value are appropriate.

The HHS actuarial value bulletin also states that HHS intends to permit a de minimis variation of plus or minus 2 percent (so that, for example, a bronze plan could have an actuarial value between 58 and 62 percent). The bulletin also provides that amounts contributed by an employer to an HSA or first made available to an employee under a health reimbursement arrangement (HRA) would be taken into account by the AV calculator. The intended method for accounting for these contributions is discussed further below.

As discussed above, an employer-sponsored plan provides minimum value if its actuarial value is at least 60 percent. For employer-sponsored plans in the small group market, minimum value must be determined using a method that is consistent with the actuarial value rules under § 1302(d) of the Affordable Care Act and HHS guidance provided under that provision. It is expected that whether an employer-sponsored self-insured plan or insured large group plan provides minimum value would be determined in a manner generally consistent with the rules proposed by HHS for the calculation of actuarial value for plans subject to the actuarial value rules under § 1302(d), with appropriate modifications that reflect differences in the markets and also account for the fact that employer-sponsored self-insured and insured large group plans are not required to offer EHBs in each of the 10 categories. Accordingly, it is expected that the minimum value of an employer-sponsored self-insured plan and insured large group plan would be determined in the same manner as actuarial value under § 1302(b) of the Affordable Care Act, except that these plans might be valued using a comparison to claims data reflecting typical self-insured employer plans, which would be based on continuance tables^[5] published specifically for use by such plans.^[6] Moreover, employer-sponsored self-insured and insured large group plans, as noted above, are neither required to cover each of the categories of EHBs nor to conform their plans to any of the EHB benchmarks that HHS intends to apply to QHPs, but would be permitted to take into account all benefits provided by the plan that are included in any of the EHB benchmarks.

In addition, an employer-sponsored plan would be permitted to add to the plan’s value the employer contributions to an HSA and amounts made available under an HRA using a method similar to the method used by QHPs that are offered through a SHOP Exchange, as defined in § 1311(b)(1)(B) of the Affordable Care Act.

Under guidance to be issued by Treasury and the Service, and consistent with rules to be promulgated by HHS, employer-sponsored plans would be able to use any one of several tests to determine whether the plan meets minimum value. Comments are requested on three potential approaches described below.

Comments are requested on issues to be addressed in guidance on determining minimum value for an employer-sponsored plan. Comments are requested on issues plan sponsors, issuers, and employers may face in evaluating plan designs that will cover part or all of 2014, including suggestions for transitional relief for plan years that start before and end in 2014.

Comments are requested on the potential alternative methods for determining whether an employer-sponsored plan provides minimum value. Comments are specifically requested on the following points:

Comments may be submitted in writing on or before June 11, 2012. Comments should be submitted to Internal Revenue Service, CC:PA:LPD:PR (Notice 2012-31), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044, or electronically to Notice.Comments@irscounsel.treas.gov. Please include “Notice 2012-31” in the subject line of any electronic communications. Alternatively, comments may be hand delivered between the hours of 8:00 a.m. and 4:00 p.m. Monday to Friday to CC:PA:LPD:PR (Notice 2012-31), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, D.C. All comments will be available for public inspection and copying.

For further information on this notice, call the Office of the Division Counsel/Associate Chief Counsel (Tax Exempt & Government Entities) at (202) 927-9639 (not a toll-free call).

This notice invites comments concerning the reporting requirements under § 6055 of the Internal Revenue Code for health insurance issuers, government agencies, employers that sponsor self-insured plans, and other persons that provide minimum essential coverage to an individual. Section 6055 was added by § 1502(a) of the Patient Protection and Affordable Care Act, Public Law 111-148, which was amended by the Health Care and Education Reconciliation Act of 2010, Public Law 111-152 (collectively, the Affordable Care Act). The reporting requirements apply to coverage provided on or after January 1, 2014. The first information returns will be filed in 2015. The Department of the Treasury and the Internal Revenue Service plan to propose regulations implementing the reporting requirements under § 6055. The proposed regulations are expected to include guidance intended to minimize administrative burden and duplicative reporting. To assist in the development of the proposed regulations, this notice invites comments on issues arising under § 6055.

“Minimum essential coverage” is a term defined to include health insurance coverage offered in the individual market (such as a qualified health plan enrolled in through an Affordable Insurance Exchange (Exchange)), an eligible employer-sponsored plan, or government-sponsored coverage such as Medicare, Medicaid, the Children’s Health Insurance Program, TRICARE, or veterans’ health care under chapter 17 or 18 of Title 38 U.S.C. Section 5000A(f). Under § 5000A(f)(1)(E), the Department of Health and Human Services, in coordination with the Treasury Department, may designate other health benefits coverage as minimum essential coverage.

Section 6055(a) requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and other entity that provides minimum essential coverage to file annual returns reporting information for each individual for whom minimum essential coverage is provided. If health insurance coverage is provided by a health insurance issuer and consists of coverage provided through a group health plan of an employer, it is anticipated that the regulations would make the health insurance issuer responsible for the reporting.

Section 6055(b)(1) provides that all information returns reporting minimum essential coverage are to contain (1) the name, address, and taxpayer identification number of the primary insured and each other individual covered under the policy or plan, (2) the dates each individual was covered under minimum essential coverage during the calendar year, (3) in the case of health insurance coverage, whether the coverage is a qualified health plan offered through an Exchange, (4) if the coverage is a qualified health plan offered through an Exchange, the amount (if any) of any advance payment of the premium tax credit under § 1412 of the Affordable Care Act or of any cost-sharing reduction under § 1402 of the Affordable Care Act for each covered individual, and (5) other information that the Secretary requires.

Section 6055(b)(2) provides that information returns for minimum essential coverage provided by a health insurance issuer through an employer’s group health plan also include the name, address, and employer identification number of the employer maintaining the plan, the portion of the premium to be paid by the employer, and any other information that the Secretary may require for administering the tax credit under § 45R (credit for employee health insurance expenses of small employers).

Section 6055(c)(1) directs the entity filing an information return reporting minimum essential coverage to furnish a written statement to each individual listed on the return that shows the information that must be reported to the Service for that individual.

In addition, effective for years beginning after 2013, § 6056 directs every applicable large employer (within the meaning of § 4980H(c)(2)) that is required to meet the shared employer responsibility requirements of § 4980H during a calendar year to file a return with the Service that reports the terms and conditions of the health care coverage provided to the employer’s full-time employees for the year. The return also is required to include information on the employer’s full-time employees, including those who received the coverage and when they received it. Section 6056(d) permits the Secretary to provide, to the maximum extent feasible, that any return or statement required under § 6056 may be provided as part of a return or statement under § 6055 or § 6051 (relating to reporting by employers on the Form W-2, Wage and Tax Statement), and that an applicable large employer offering coverage of an issuer may agree with the issuer to include information under § 6056 with the return and statement provided by the issuer under § 6055. See Notice 2012-33, 2012-20 I.R.B. 912 (May 14, 2012).

The Treasury Department and the Service request comments on issues that should be addressed in regulations implementing reporting under § 6055, including but not limited to:

Comments may be submitted in writing on or before June 11, 2012. Comments should be submitted to Internal Revenue Service, CC:PA:LPD:PR (Notice 2012-32), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044, or electronically to Notice.Comments@irscounsel.treas.gov. Please include “Notice 2012-32” in the subject line of any electronic communications. Alternatively, comments may be hand delivered between the hours of 8:00 a.m. and 4:00 p.m. Monday to Friday to CC:PA:LPD:PR (Notice 2012-32), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, D.C. All comments will be available for public inspection and copying.

The principal authors of this notice are Andrew Braden and Frank W. Dunham III of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information, please contact Mr. Braden or Mr. Dunham at (202) 622-4960 (not a toll-free call).

This notice invites comments on reporting under § 6056 of the Internal Revenue Code for applicable large employers (as defined in § 4980H(c)(2)) that are subject to § 4980H. Section 6056 was enacted by § 1514(a) of the Patient Protection and Affordable Care Act, Pub. L. 111-148 (enacted on March 23, 2010), which was amended by the Health Care and Education Reconciliation Act, Pub. L. 111-152 (enacted on March 30, 2010) (collectively, the Affordable Care Act). Section 6056 requires reporting of certain information on employer-provided health care coverage provided on or after January 1, 2014 and the furnishing of related statements to employees. The first information returns will be filed in 2015. The Internal Revenue Service will use the information that employers report under § 6056 to verify employer-sponsored coverage and to administer the shared employer responsibility provisions under § 4980H(a) and (b). See generally Notice 2011-36, 2011-21 I.R.B. 792, and Notice 2011-73, 2011-40 I.R.B. 74.

The Department of the Treasury and the Service intend to propose regulations implementing the reporting requirements of § 6056. The proposed regulations are expected to include guidance intended to minimize administrative burden and duplicative reporting. To assist in the development of the proposed regulations, this notice invites comments on issues arising under § 6056, including on possible approaches for coordinating and minimizing duplication between the information required to be reported and furnished by employers under § 6056 and information required to be reported and/or furnished by employers or other persons under other applicable Code provisions. For example, § 6056(d) permits the Secretary of the Treasury to provide, to the maximum extent feasible, that any return or statement required under § 6056 may be provided as part of a return or statement under § 6055 (relating to reporting by entities that provide minimum essential coverage) or § 6051 (relating to reporting by employers on the Form W-2, Wage and Tax Statement), and that an applicable large employer offering coverage of an issuer may agree with the issuer to include information under § 6056 with the return and statement required to be provided by the issuer under § 6055.

Treasury and the Service anticipate proposing regulations under § 6056, and this notice requests comments on issues arising under § 6056 that would be helpful for the regulations to address, including how to coordinate and minimize duplication between the data employers must report under § 6056 and the data they must report under § 6055 (which provides for annual reporting by employers that sponsor self-insured plans) or other applicable Code or Affordable Care Act provisions. See Notice 2012-32, 2012-20 I.R.B. 910 (May 14, 2012).

Comments must be submitted by June 11, 2012. Comments should be submitted to Internal Revenue Service, CC:PA:LPD:RU (Notice 2012-33), Room 5203, PO Box 7604, Ben Franklin Station, Washington, DC 20224. Submissions may also be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to the Courier’s Desk, 1111 Constitution Avenue, NW, Washington, DC 20224, Attn: CC:PA:LPD:RU (Notice 2012-33), Room 5203. Submissions may also be sent electronically via the internet to the following e-mail address: Notice.Comments@irscounsel.treas.gov. Include the notice number (Notice 2012-33) in the subject line.

The principal author of this notice is R. Lisa Mojiri-Azad of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities), though other Treasury Department and Service officials participated in its development. For further information on all other provisions of this notice, contact R. Lisa Mojiri-Azad at (202) 622-6080 (not a toll-free number).

Sections 1.6049-4(b)(5) and 1.6049-8 of the Income Tax Regulations, as revised by T.D. 9584, require the reporting of certain deposit interest paid to nonresident alien individuals on or after January 1, 2013. The purpose of this revenue procedure is to list, in Section 3, the countries with which the United States has in effect an income tax or other convention or bilateral agreement relating to the exchange of information within the meaning of section 6103(k)(4) pursuant to which the United States agrees to provide, as well as receive, information and under which the competent authority is the Secretary of the Treasury or his delegate, as described in §1.6049-8(a). As discussed in the preamble to the regulations, even when such an agreement exists, the Internal Revenue Service (IRS) is not compelled to exchange information, including information collected pursuant to the regulations, if there is concern regarding the use of the information or other factors exist that would make exchange inappropriate. This revenue procedure also identifies in Section 4 the countries with which the Treasury Department and the IRS have determined that it is appropriate to have an automatic exchange relationship with respect to the information collected under the regulations. This revenue procedure will be updated as appropriate.

The regulations provide that in the case of reportable interest aggregating $10 or more paid to a nonresident alien individual (as defined in section 7701(b)(1)(B) of the Internal Revenue Code), the payor shall make an information return on Form 1042-S for the calendar year in which the interest is paid. Reportable interest is interest described in section 871(i)(2)(A) that relates to a deposit maintained at an office within the United States, and that is paid to a nonresident alien individual who is a resident of a country identified, in an applicable revenue procedure (see §601.601(d)(2) of this chapter) as of December 31 prior to the calendar year in which the interest is paid, as a country with which the United States has in effect an income tax or other convention or bilateral agreement relating to the exchange of information within the meaning of section 6103(k)(4) pursuant to which United States agrees to provide, as well as receive, information and under which the competent authority is the Secretary of the Treasury or his delegate. This revenue procedure constitutes the revenue procedure referenced in §1.6049-8(a) and will be updated by subsequent revenue procedures as appropriate.

The following are countries with which the United States has in effect an income tax or other convention or bilateral agreement relating to the exchange of tax information within the meaning of section 6103(k)(4) pursuant to which the United States agrees to provide, as well as receive, information and under which the competent authority is the Secretary of the Treasury or his delegate:

The following list identifies the countries with which the automatic exchange of the information collected under §§1.6049-4(b)(5) and 1.6049-8 has been determined by the Treasury Department and the IRS to be appropriate:

This revenue procedure is effective for interest paid on or after January 1, 2013.

The principal author of this revenue procedure is Kathryn T. Holman of the Office of Chief Counsel International (International). For further information regarding this revenue procedure, contact Kathryn T. Holman at (202) 622-3840 (not a toll-free call).

This revenue procedure provides issuers of qualified mortgage bonds, as defined in section 143(a) of the Internal Revenue Code, and issuers of mortgage credit certificates, as defined in section 25(c), with (1) the nationwide average purchase price for residences located in the United States, and (2) average area purchase price safe harbors for residences located in statistical areas in each state, the District of Columbia, Puerto Rico, the Northern Mariana Islands, American Samoa, the Virgin Islands, and Guam.

.01 Section 103(a) provides that, except as provided in section 103(b), gross income does not include interest on any state or local bond. Section 103(b)(1) provides that section 103(a) shall not apply to any private activity bond that is not a “qualified bond” within the meaning of section 141. Section 141(e) provides, in part, that the term “qualified bond” means any private activity bond if such bond (1) is a qualified mortgage bond under section 143, (2) meets the volume cap requirements under section 146, and (3) meets the applicable requirements under section 147.

.02 Section 143(a)(1) provides that the term “qualified mortgage bond” means a bond that is issued as part of a qualified mortgage issue. Section 143(a)(2)(A) provides that the term “qualified mortgage issue” means an issue of one or more bonds by a state or political subdivision thereof, but only if: (i) all proceeds of the issue (exclusive of issuance costs and a reasonably required reserve) are to be used to finance owner-occupied residences; (ii) the issue meets the requirements of subsections (c), (d), (e), (f), (g), (h), (i), and (m)(7) of section 143; (iii) the issue does not meet the private business tests of paragraphs (1) and (2) of section 141(b); and (iv) with respect to amounts received more than 10 years after the date of issuance, repayments of $250,000 or more of principal on mortgage financing provided by the issue are used by the close of the first semiannual period beginning after the date the prepayment (or complete repayment) is received to redeem bonds that are part of the issue.

.03 Section 143(e)(1) provides that an issue of bonds meets the purchase price requirements of section 143(e) if the acquisition cost of each residence financed by the issue does not exceed 90 percent of the average area purchase price applicable to such residence. Section 143(e)(5) provides that, in the case of a targeted area residence (as defined in section 143(j)), section 143(e)(1) shall be applied by substituting 110 percent for 90 percent.

.04 Section 143(e)(2) provides that the term “average area purchase price” means, with respect to any residence, the average purchase price of single-family residences (in the statistical area in which the residence is located) that were purchased during the most recent 12-month period for which sufficient statistical information is available. Under sections 143(e)(3) and (4), respectively, separate determinations are to be made for new and existing residences, and for two-, three-, and four-family residences.

.05 Section 143(e)(2) provides that the determination of the average area purchase price for a statistical area shall be made as of the date on which the commitment to provide the financing is made or, if earlier, the date of the purchase of the residence.

.06 Section 143(k)(2)(A) provides that the term “statistical area” means (i) a metropolitan statistical area (MSA), and (ii) any county (or the portion thereof) that is not within an MSA. Section 143(k)(2)(C) further provides that if sufficient recent statistical information with respect to a county (or portion thereof) is unavailable, the Secretary may substitute another area for which there is sufficient recent statistical information for such county (or portion thereof). In the case of any portion of a State which is not within a county, section 143(k)(2)(D) provides that the Secretary may designate as a county any area that is the equivalent of a county. Section 6a.103A-1(b)(4)(i) of the Temporary Income Tax Regulations (issued under section 103A of the Internal Revenue Code of 1954, the predecessor of section 143) provides that the term “State” includes a possession of the United States and the District of Columbia.

.07 Section 6a.103A-2(f)(5)(i) provides that an issuer may rely upon the average area purchase price safe harbors published by the Department of the Treasury for the statistical area in which a residence is located. Section 6a.103A-2(f)(5)(i) further provides that an issuer may use an average area purchase price limitation different from the published safe harbor if the issuer has more accurate and comprehensive data for the statistical area.

.08 Section 25(c) permits a state or political subdivision to establish a qualified mortgage credit certificate program. In general, a qualified mortgage credit certificate program is a program under which the issuing authority elects not to issue an amount of private activity bonds that it may otherwise issue during the calendar year under section 146, and in their place, issues mortgage credit certificates to taxpayers in connection with the acquisition of their principal residences. Section 25(a)(1) provides, in general, that the holder of a mortgage credit certificate may claim a federal income tax credit equal to the product of the credit rate specified in the certificate and the interest paid or accrued during the tax year on the remaining principal of the indebtedness incurred to acquire the residence. Section 25(c)(2)(A)(iii)(III) generally provides that residences acquired in connection with the issuance of mortgage credit certificates must meet the purchase price requirements of section 143(e).

.09 Section 143(f) imposes limitations on the income of mortgagors for whom financing may be provided by qualified mortgage bonds. In addition, section 25(c)(2)(A)(iii)(IV) provides that holders of mortgage credit certificates must meet the income requirement of section 143(f). Generally, under sections 143(f)(1) and 25(c)(2)(A)(iii)(IV), the income requirement is met only if all owner-financing under a qualified mortgage bond and all mortgage credit certificates issued under a qualified mortgage credit certificate program are provided to mortgagors whose family income is 115 percent or less of the applicable median family income. Section 143(f)(5), however, generally provides for an upward adjustment to the percentage limitation in high housing cost areas. High housing cost areas are defined in section 143(f)(5)(C) as any statistical area for which the housing cost/income ratio is greater than 1.2.

.10 Under section 143(f)(5)(D), the housing cost/income ratio with respect to any statistical area is determined by dividing (a) the applicable housing price ratio for such area by (b) the ratio that the area median gross income for such area bears to the median gross income for the United States. The applicable housing price ratio is the new housing price ratio (new housing average area purchase price divided by the new housing average purchase price for the United States) or the existing housing price ratio (existing housing average area purchase price divided by the existing housing average purchase price for the United States), whichever results in the housing cost/income ratio being closer to 1.

.11 Average area purchase price safe harbors for each state, the District of Columbia, Puerto Rico, the Northern Mariana Islands, American Samoa, the Virgin Islands, and Guam were last published in Rev. Proc. 2011-23, 2011-15 I.R.B. 626.

.12 The nationwide average purchase price limitation was last published in section 4.02 of Rev. Proc. 2011-23. Guidance with respect to the United States and area median gross income figures that are to be used in computing the housing cost/income ratio described in section 143(f)(5) was last published in Rev. Proc. 2012-16, 2012-10 I.R.B. 452.

.13 This revenue procedure uses FHA loan limits for a given statistical area to calculate the average area purchase price safe harbor for that area. FHA sets limits on the dollar value of loans it will insure based on median home prices and conforming loan limits established by the Federal Home Loan Mortgage Corporation. In particular, FHA sets an area’s loan limit at 95 percent of the median home sales price for the area, subject to certain floors and caps measured against conforming loan limits.

.14 To calculate the average area purchase price safe harbors in this revenue procedure, the FHA loan limits are adjusted to take into account the differences between average and median purchase prices. Because FHA loan limits do not differentiate between new and existing residences, this revenue procedure contains a single average area purchase price safe harbor for both new and existing residences in a statistical area. The Treasury Department and the Internal Revenue Service have determined that FHA loan limits provide a reasonable basis for determining average area purchase price safe harbors. If the Treasury Department and the Internal Revenue Service become aware of other sources of average purchase price data, including data that differentiate between new and existing residences, consideration will be given as to whether such data provide a more accurate method for calculating average area purchase price safe harbors.

.15 The average area purchase price safe harbors listed in section 4.01 of this revenue procedure are based on FHA loan limits released December 02, 2011. FHA loan limits are available for statistical areas in each state, the District of Columbia, Puerto Rico, the Northern Mariana Islands, American Samoa, the Virgin Islands, and Guam. See section 3.03 of this revenue procedure with respect to FHA loan limits revised after December 02, 2011.

.16 OMB Bulletin No. 03-04, dated and effective June 6, 2003, revised the definitions of the nation’s metropolitan areas and recognized 49 new metropolitan statistical areas. The OMB bulletin no longer includes primary metropolitan statistical areas.

.01 Average area purchase price safe harbors for statistical areas in each state, the District of Columbia, Puerto Rico, the Northern Mariana Islands, American Samoa, the Virgin Islands, and Guam are set forth in section 4.01 of this revenue procedure. Average area purchase price safe harbors are provided for single-family and two to four-family residences. For each type of residence, section 4.01 of this revenue procedure contains a single safe harbor that may be used for both new and existing residences. Issuers of qualified mortgage bonds and issuers of mortgage credit certificates may rely on these safe harbors to satisfy the requirements of sections 143(e) and (f). Section 4.01 of this revenue procedure provides safe harbors for MSAs and for certain counties and county equivalents. If no purchase price safe harbor is available for a statistical area, the safe harbor for “ALL OTHER AREAS” may be used for that statistical area.

.02 If a residence is in an MSA, the safe harbor applicable to it is the limitation of that MSA. If an MSA falls in more than one state, the MSA is listed in section 4.01 of this revenue procedure under each state.

.03 If the FHA revises the FHA loan limit for any statistical area after December 02, 2011, an issuer of qualified mortgage bonds or mortgage credit certificates may use the revised FHA loan limit for that statistical area to compute (as provided in the next sentence) a revised average area purchase price safe harbor for the statistical area provided that the issuer maintains records evidencing the revised FHA loan limit. The revised average area purchase price safe harbor for that statistical area is computed by dividing the revised FHA loan limit by .975.

.04 If, pursuant to section 6a.103A-2(f)(5)(i), an issuer uses more accurate and comprehensive data to determine the average area purchase price for a statistical area, the issuer must make separate average area purchase price determinations for new and existing residences. Moreover, when computing the average area purchase price for a statistical area that is an MSA, as defined in OMB Bulletin No. 03-04, the issuer must make the computation for the entire applicable MSA. When computing the average area purchase price for a statistical area that is not an MSA, the issuer must make the computation for the entire statistical area and may not combine statistical areas. Thus, for example, the issuer may not combine two or more counties.

.05 If an issuer receives a ruling permitting it to rely on an average area purchase price limitation that is higher than the applicable safe harbor in this revenue procedure, the issuer may rely on that higher limitation for the purpose of satisfying the requirements of section 143(e) and (f) for bonds sold, and mortgage credit certificates issued, not more than 30 months following the termination date of the 12-month period used by the issuer to compute the limitation.

.06 Section 4.02 of this revenue procedure sets forth a single nationwide average purchase price for purposes of computing the housing cost/income ratio under section 143(f)(5).

.07 Issuers must use the nationwide average purchase price set forth in section 4.02 of this revenue procedure when computing the housing cost/income ratio under section 143(f)(5) regardless of whether they are relying on the average area purchase price safe harbors contained in this revenue procedure or using more accurate and comprehensive data to determine average area purchase prices for new and existing residences for a statistical area that are different from the published safe harbors in this revenue procedure.

.08 If, pursuant to section 6.02 of this revenue procedure, an issuer relies on the average area purchase price safe harbors contained in Rev. Proc. 2011-23, the issuer must use the nationwide average purchase price set forth in section 4.02 of Rev. Proc. 2011-23 in computing the housing cost/income ratio under section 143(f)(5). Likewise, if, pursuant to section 6.05 of this revenue procedure, an issuer relies on the nationwide average purchase price published in Rev. Proc. 2011-23, the issuer may not rely on the average area purchase price safe harbors published in this revenue procedure.

.01 Average area purchase prices for single-family and two to four-family residences in MSAs, and for certain counties and county equivalents are set forth below. The safe harbor for “ALL OTHER AREAS” (found at the end of the table below) may be used for a statistical area that is not listed below.

.02 The nationwide average purchase price (for use in the housing cost/income ratio for new and existing residences) is $214,000.

Rev. Proc. 2011-23 is obsolete except as provided in section 6 of this revenue procedure.

.01 Issuers may rely on this revenue procedure to determine average area purchase price safe harbors for commitments to provide financing or issue mortgage credit certificates that are made, or (if the purchase precedes the commitment) for residences that are purchased, in the period that begins on April 25, 2012, and ends on the date as of which the safe harbors contained in section 4.01 of this revenue procedure are rendered obsolete by a new revenue procedure.

.02 Notwithstanding section 5 of this revenue procedure, issuers may continue to rely on the average area purchase price safe harbors contained in Rev. Proc. 2011-23, with respect to bonds sold, or for mortgage credit certificates issued with respect to bond authority exchanged, before May 25, 2012, if the commitments to provide financing or issue mortgage credit certificates are made on or before June 24, 2012.

.03 Except as provided in section 6.04, issuers must use the nationwide average purchase price limitation contained in this revenue procedure for commitments to provide financing or issue mortgage credit certificates that are made, or (if the purchase precedes the commitment) for residences that are purchased, in the period that begins on April 25, 2012, and ends on the date when the nationwide average purchase price limitation is rendered obsolete by a new revenue procedure.

.04 Notwithstanding sections 5 and 6.03 of this revenue procedure, issuers may continue to rely on the nationwide average purchase price set forth in Rev. Proc. 2011-23 with respect to bonds sold, or for mortgage credit certificates issued with respect to bond authority exchanged, before May 25, 2012, if the commitments to provide financing or issue mortgage credit certificates are made on or before June 24, 2012.

Code section 143 requires that the average area purchase prices be based on the most recent 12-month period for which sufficient statistical information is available. In order to ensure that the safe harbors reflect accurate and timely price information, the Treasury Department and the IRS are considering possible changes in the data source and method used for these safe harbors beginning in 2013. The alternative method under consideration would involve the use of certain currently available data from the Department of Housing and Urban Development (“HUD”) regarding county median housing purchase prices instead of the FHA loan limits. Certain aggregate HUD price data are available at http://www.hud.gov/pub/chums under CY2012 FHA Forward Limits, and certain HUD price data for individual counties is available at https://entp.hud.gov/idapp/html/hicostlook.cfm.

Absent modifications, the use of HUD data on county median housing purchase prices potentially would result in significant declines in purchase price limits compared to prior limits, particularly in rural areas. The Treasury Department and the IRS are considering certain appropriate modifications to the HUD price data in implementing this alternative method.

One potential modification would be to consider setting floors on purchase price safe harbors. Potential approaches to setting floors on purchase prices might include national average prices, county average prices, rural county average prices, or some percentile of county average prices. For illustrative purposes only, set forth below are the floors on mean purchase prices that would result from using one of these approaches with 2012 data: (1) national average price ($214,000); (2) county average price ($174,862); (3) rural county average price ($112,864); (4) 25^th percentile of county average price ($92,308); (5) 50^th percentile of county average price ($138,462); or (6) 75^th percentile of county average price ($214,103).

Another potential modification would be to consider transitional relief to phase in the effects of the changes over an extended period, as compared with a baseline of the 2012 purchase price safe harbors in section 4.01 of this revenue procedure. Potential phase-in periods might include a period of three years to five years. In addition, a technical modification will make adjustments for differences between HUD median prices and the required average prices.

The Treasury Department and the IRS solicit public comments on this alternative method using current HUD data on county median housing purchase prices, including particularly comments on potential floors on prices and phase-in periods for the method, and on whether other methods or data sources should be used to calculate these safe harbors. Comments should be submitted in writing and can be e-mailed to notice.comments@irscounsel.treas.gov (include “Rev. Proc. 2012-25” in the subject line) or mailed to Office of Associate Chief Counsel (Financial Institutions & Products), Re: Rev. Proc. 2012-25, CC:FIP:B5, Room 3547, 1111 Constitution Avenue, NW, Washington, DC 20224. The due date for the public comments is July 15, 2012. Comments that are submitted will be made available to the public.

The collection of information contained in this revenue procedure has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-1877.

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.

This revenue procedure contains a collection of information requirement in section 3.03. The purpose of the collection of information is to verify the applicable FHA loan limit that issuers of qualified mortgage bonds and qualified mortgage certificates have used to calculate the average area purchase price for a given metropolitan statistical area for purposes of section 143(e) and 25(c). The collection of information is required to obtain the benefit of using revisions to FHA loan limits to determine average area purchase prices. The likely respondents are state and local governments.

The estimated total annual reporting and/or recordkeeping burden is: 15 hours.

The estimated annual burden per respondent and/or recordkeeper: 15 minutes.

The estimated number of respondents and/or recordkeepers: 60.

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 law. Generally tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

The principal authors of this revenue procedure are David E. White and Timothy L. Jones of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure, contact David E. White at (202) 622-3980 (not a toll-free call).

This revenue procedure provides the 2013 inflation adjusted amounts for Health Savings Accounts (HSAs) as determined under § 223 of the Internal Revenue Code.

Annual contribution limitation. For calendar year 2013, the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,250. For calendar year 2013, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $6,450.

High deductible health plan. For calendar year 2013, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,250 for self-only coverage or $2,500 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,250 for self-only coverage or $12,500 for family coverage.

This revenue procedure is effective for calendar year 2013.

The principal author of this revenue procedure is Bill Ruane of Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding § 223 and HSAs, contact Leslie Paul at (202) 622-6080 (not a toll-free call). For further information regarding the calculation of the inflation adjustments in this revenue procedure, contact Mr. Ruane at (202) 622-4920 (not a toll-free call).

This announcement notifies filers of Form 990, Return of Organization Exempt from Income Tax and Form 990-EZ, Short Form Return of Organization Exempt from Income Tax, of a change in the 2011 Form 990-EZ and Form 990 Instructions. Except as noted below, it is now optional for tax year 2011 for filers to report their interests in the income, expenses, and assets of joint ventures and other partnerships in which they have an ownership interest using information from Form 1065, U.S. Return of Partnership Income, Schedule K-1.

The 2010 Form 990 Instructions state, in Appendix F, that the filing organization should report in Parts VIII, IX, and X its proportionate interests in a joint venture’s or other partnership’s revenue, expenses, and assets in accordance with the organization’s books and records. To promote greater consistency, accuracy, and transparency in reporting this information, including unrelated business income from partnerships, the IRS revised the 2011 Form 990 and Form 990-EZ Instructions to require the filing organization to report such interests using information from the Form 1065, Schedule K-1 provided by the partnership.

Since publishing the 2011 Form 990 and Form 990-EZ Instructions in January 2012, the IRS has received comments from the public arguing that reporting organizations’ interests in partnership assets using the organization’s books and records provides a more accurate value of those assets than does reporting using Schedule K-1 information. Other commenters noted that using Schedule K-1 information can be burdensome and that organizations cannot report information from all Forms 1065, Schedules K-1 they receive because some partnerships do not submit those Forms until after the Form 990 filing due date. To more fully consider these comments, and to determine how best to promote compliance and transparency while minimizing burden in reporting of partnership interests, the IRS has decided to make the new Schedule K-1 reporting instructions for Forms 990 and 990-EZ optional for tax year 2011.

In reporting on the 2011 Form 990 or Form 990-EZ its proportionate interests in the income, expenses, and assets of partnerships in which it has an ownership interest, an organization generally may continue to report these interests based on its books and records. However, as in prior years, organizations that complete Form 990, Schedule H and Form 990, Schedule R must continue to use information from Form 1065, Schedule K-1 in reporting certain partnership information on those schedules, as explained in the instructions for 2011 Form 990, Schedule H and 2011 Form 990, Schedule R.

The IRS welcomes further comments on whether and how the use of Form 1065, Schedule K-1 in reporting certain information on partnerships, as is currently required on Schedules H and R, should be extended to Parts VIII-X of the core Form 990, Form 990-EZ, and/or to other schedules. Comments may be submitted to Form990Revision@irs.gov or to:

The principal author of this announcement is Stephen Clarke of the Tax Exempt and Government Entities Division. For further information regarding this announcement, please contact Mr. Clarke at (202) 283-9474 (not a toll-free number).