IRS will no longer publish an index to the IRB starting with IRB 2015–01, due to the availability of electronic search tools, In addition, the following section will be eliminated from the IRB; “INTERNAL REVENUE BULLETINS ON CD-ROM” and “CUMULATIVE BULLETINS.” Effective date: January 5, 2015.

Section 1274A–inflation adjusted numbers for 2015. This ruling provides the dollar amounts, increased by the 2012 inflation adjustment, for section 1274A of the Code. Revenue Ruling 2013–23 supplemented and superseded.

Eligibility for Minimum Essential Coverage Under Pregnancy-Based Medicaid and CHIP Programs. This notice provides guidance on eligibility for minimum essential coverage for purposes of the premium tax credit under § 36B of the Code for pregnancy-related Medicaid and Children’s Health Insurance Program (CHIP) programs.

Final Regulations providing guidance on the recovery of overpayments of arbitrage rebate on tax-exempt bonds and other tax-advantaged bonds. These Final Regulations provide the deadline for filing a claim for an arbitrage rebate overpayment and certain other rules.

This notice sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for October 2014 used under § 417(e)(3)(D), the 24-month average segment rates applicable for November 2014, 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).

Internal Revenue Service (IRS), Treasury.

Final regulations.

This document contains final regulations that provide guidance on the recovery of overpayments of arbitrage rebate on tax-exempt bonds and other tax-advantaged bonds. These final regulations provide the deadline for filing a claim for an arbitrage rebate overpayment and certain other rules. These final regulations affect issuers of tax-exempt and tax-advantaged bonds.

Effective date: These regulations are effective on November 13, 2014.

Applicability date: For dates of applicability, see § 1.148–11(l)(4).

Timothy Jones at (202) 317-6980 (not a toll-free number).

The principal author of these regulations is Timothy Jones, Office of Associate Chief Counsel (Financial Institutions and Products), IRS. However, other personnel from the IRS and the Treasury Department participated in their development.

* * * * *

Accordingly, 26 CFR part 1 is amended as follows:

This revenue ruling provides the dollar amounts, increased by the 2015 inflation adjustment, for § 1274A of the Internal Revenue Code.

In general, §§ 483 and 1274 determine the principal amount of a debt instrument given in consideration for the sale or exchange of nonpublicly traded property. In addition, any interest on a debt instrument subject to § 1274 is taken into account under the original issue discount provisions of the Code. Section 1274A, however, modifies the rules under §§ 483 and 1274 for certain types of debt instruments.

In the case of a “qualified debt instrument,” the discount rate used for purposes of §§ 483 and 1274 may not exceed nine percent, compounded semiannually. Section 1274A(b) defines a qualified debt instrument as any debt instrument given in consideration for the sale or exchange of property (other than new § 38 property within the meaning of § 48(b), as in effect on the day before the date of enactment of the Revenue Reconciliation Act of 1990) if the stated principal amount of the instrument does not exceed the amount specified in § 1274A(b). For debt instruments arising out of sales or exchanges before January 1, 1990, this amount is $2,800,000.

In the case of a “cash method debt instrument,” as defined in § 1274A(c), the borrower and lender may elect to use the cash receipts and disbursements method of accounting. In particular, for any cash method debt instrument, § 1274 does not apply, and interest on the instrument is accounted for by both the borrower and the lender under the cash method of accounting. A cash method debt instrument is a qualified debt instrument that meets the following additional requirements: (A) In the case of instruments arising out of sales or exchanges before January 1, 1990, the stated principal amount does not exceed $2,000,000; (B) the lender does not use an accrual method of accounting and is not a dealer with respect to the property sold or exchanged; (C) § 1274 would have applied to the debt instrument but for an election under § 1274A(c); and (D) an election under § 1274A(c) is jointly made with respect to the debt instrument by the borrower and the lender. Section 1.1274A–1(c)(1) of the Income Tax Regulations provides rules concerning the time for, and manner of, making this election.

Section 1274A(d)(2) provides that, for any debt instrument arising out of a sale or exchange during any calendar year after 1989, the dollar amounts stated in § 1274A(b) and § 1274A(c)(2)(A) are increased by the inflation adjustment for the calendar year. Any increase due to the inflation adjustment is rounded to the nearest multiple of $100 (or, if the increase is a multiple of $50 and not of $100, the increase is increased to the nearest multiple of $100). The inflation adjustment for any calendar year is the percentage (if any) by which the CPI for the preceding calendar year exceeds the CPI for calendar year 1988. Section 1274A(d)(2)(B) defines the CPI for any calendar year as the average of the Consumer Price Index as of the close of the 12-month period ending on September 30 of that calendar year.

For debt instruments arising out of sales or exchanges after December 31, 1989, the inflation-adjusted amounts under § 1274A are shown in Table 1.

Rev. Rul. 2013–23, 2013–48 I.R.B. 590, is supplemented and superseded.

The author of this revenue ruling is Pradip Chandrasoma of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue ruling, contact Andrea Hoffenson at (202) 317-7053 (not a toll-free number).

This notice provides guidance on eligibility for minimum essential coverage for purposes of the premium tax credit under § 36B of the Internal Revenue Code for pregnancy-related Medicaid and Children’s Health Insurance Program (CHIP) programs.

Beginning in 2014, eligible individuals covered under a qualified health plan through a Health Insurance Marketplace, also called an Exchange, are allowed a premium tax credit under § 36B. Under § 36B and § 1.36B–2 of the Income Tax Regulations, in general, coverage of an individual (who may be the taxpayer claiming the premium tax credit or a member of the taxpayer’s family) may be subsidized by the premium tax credit only for months the individual is enrolled in a qualified health plan through an Exchange and is not eligible for other minimum essential coverage.

In general, an individual is treated as eligible for minimum essential coverage under a government sponsored-program if the individual meets the eligibility criteria for coverage under the program. However, the Commissioner may define eligibility for minimum essential coverage under specific government-sponsored programs in additional published guidance. Section 1.36B–2(c)(2)(i).

Section 5000A(f)(1)(A) provides that minimum essential coverage includes coverage under the Medicaid program under title XIX of the Social Security Act and CHIP under title XXI of the Social Security Act. An individual who becomes pregnant may become eligible for Medicaid or CHIP coverage solely because of that condition. Because Medicaid coverage based on pregnancy under § 1902(a)(10)(A)(i)(IV) and (a)(10)(A)(ii)(IX) of the Social Security Act (42 U.S.C. 1396a(a)(10)(A)(i)(IV), (a)(10)(A)(ii)(IX)) may provide limited benefits, § 1.5000A–2(b)(1)(ii)(C) provides that it is not minimum essential coverage within the meaning of § 5000A(f)(1)(A). Under § 5000A(f)(1)(E), the Secretary of Health and Human Services (HHS), in coordination with the Secretary of the Treasury, may designate health benefits coverage not specified in § 5000A(f) as minimum essential coverage. HHS has designated pregnancy-based Medicaid coverage as minimum essential coverage in states that provide full Medicaid benefits under that program. See Center for Medicaid and CHIP Services letter to state health officials (SHO #14–002), November 7, 2014.

Under § 2112 of the Social Security Act (42 U.S.C. 1397ll), states may expand coverage under their CHIP programs to targeted low-income pregnant women. Pregnancy-related CHIP coverage provides full CHIP benefits and is minimum essential coverage.

Medicaid or CHIP coverage as a result of pregnancy applies only for the duration of the pregnancy plus a period of up to 90 days afterwards. Without a special rule, an individual enrolled in a qualified health plan before the pregnancy would lose eligibility for the premium tax credit subsidy for the coverage as a result of the pregnancy. If, after the birth, the individual is not eligible for Medicaid or CHIP coverage on another basis, she would be required to re-enroll in a qualified health plan to maintain coverage. (The loss of Medicaid or CHIP coverage generally makes an individual eligible for a special enrollment period for a qualified health plan.) The special rule announced in this notice provides continuity of care to these individuals.

An individual enrolled in a qualified health plan who becomes eligible for Medicaid coverage for pregnancy-related services that is minimum essential coverage, or for CHIP coverage based on pregnancy, is treated as eligible for minimum essential coverage under the Medicaid or CHIP coverage for purposes of the premium tax credit only if the individual enrolls in the coverage.

This notice is effective on November 7, 2014.

The principal author of this notice is Arvind Ravichandran of the Office of the Associate Chief Counsel (Income Tax and Accounting). For further information regarding this notice, contact Mr. Ravichandran at (202) 317-4718 (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). The rates in this notice 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, Public Law 113–159 (HATFA).

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. 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. In accordance with the methodology specified in Notice 2007–81, the monthly corporate bond yield curve derived from October 2014 data is in Table I at the end of this notice. The spot first, second, and third segment rates for the month of October 2014 are, respectively, 1.29, 3.81, and 4.88.

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) by the applicable percentage of the corresponding 25-year average segment rates. Section 2003(a) of HATFA amended the applicable percentages under § 430(h)(2)(C)(iv). This change generally applies to plan years beginning on or after January 1, 2013. However, pursuant to section 2003(e)(2) of HATFA, a plan sponsor can elect not to have the amendments made to the applicable percentages by section 2003 of HATFA apply to any plan year beginning in 2013. These elections can be made either for all purposes or, alternatively, for purposes of determining the adjusted funding target attainment percentage under § 436. The 25-year average segment rates for plan years beginning in 2012, 2013, 2014 and 2015 were published in Notice 2012–55, 2012–36 I.R.B. 332, Notice 2013–11, 2013–11 I.R.B. 610, Notice 2013–58, 2013–40 I.R.B. 294, and Notice 2014–50, 2014–40 I.R.B. 590, respectively.

For plan years beginning in years 2012 through 2017, pursuant to the changes made by HATFA, the applicable minimum percentage is 90% and the applicable maximum percentage is 110%. These applicable percentages are referred to as HATFA applicable percentages. As described in the preceding paragraph, a special election is available for any plan year beginning in 2013 under which this change made by HATFA can be disregarded for all purposes or for limited purposes. To the extent such an election is made, the applicable minimum percentage for a plan year beginning in 2013 is 85% and the applicable maximum percentage for that plan year is 115%. These applicable percentages are referred to as MAP–21 applicable percentages.

The three 24-month average corporate bond segment rates applicable for November 2014 without adjustment for the 25-year average segment rate limits are as follows:

Based on § 430(h)(2)(C)(iv) as amended by section 2003 of HATFA, the 24-month averages applicable for November 2014 adjusted for the HATFA applicable percentages of the corresponding 25-year average segment rates, are as follows:

Based on § 430(h)(2)(C)(iv) as in effect prior to amendment by section 2003 of HATFA, the three 24-month averages applicable for November 2014 adjusted for the MAP–21 applicable percentages of the corresponding 25-year average segment rates, for plan years beginning in 2013, 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 section 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 October 2014 is 3.04 percent. The Service has determined this rate as the average of the daily determinations of yield on the 30-year Treasury bond maturing in August 2044. The following rates were determined for plan years beginning in the month shown below.

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 October 2014 are as follows:

The principal author of this notice is Paul Stern of the Employee Plans, Tax Exempt and Government Entities Division. Mr. Stern may be e-mailed at RetirementPlanQuestions@irs.gov.

Internal Revenue Service (IRS), Treasury.

Changes to the Internal Revenue Bulletin (IRB).

IRS will no longer publish an index to the IRB starting with IRB 2015–01, due to the availability of electronic search tools, In addition, the following section will be eliminated from the IRB; “INTERNAL REVENUE BULLETINS ON CD-ROM” and “CUMULATIVE BULLETINS.”

January 5, 2015

Announcement 2013–12, 2013–11 I.R.B. 651, is supplemented. Announcements 2008–87, 2008–02 I.R.B 843, is supplemented.