Part IV. Items of General Interest

pricing penalty. The Committee consists of personnel from International, Examination, Appeals and Chief Counsel. The goal of the Committee is to ensure uniform application of the reasonableness standard and the documentation requirements on a nationwide basis. For that purpose, the Committee will review all cases in which a district director is considering the assertion of the penalty. The Committee also will collect data from district offices relating to cases in which the statutory thresholds for imposition of the penalty were met but the penalty was not recommended. This monitoring function will enable the Committee to evaluate the application of transfer pricing penalties by the districts and to share information within the Service regarding the administration of section 6662(e). The Committee will not provide an administrative forum for taxpayers to appeal a preliminary recommendation by the field that the transfer pricing penalty should be imposed. Rather, the review function performed by the Committee is an internal procedure related to the uniform administration of section 6662(e) by the Service. If transfer pricing penalties are asserted, the taxpayer may use regular administrative and judicial procedures for appeal.

The principal authors of this announcement are Joy DeGrosky of the International Field Assistance Specialization Program of the Office of the Assistant Commissioner (International) and Carolyn Fanaroff of the Office of Associate Chief Counsel (International). For further information regarding this announcement, contact Ms. DeGrosky at (202) 874-1894 (not a toll-free call) or Ms. Fanaroff at (202) 622-3880 (not a toll-free call).

Deletions from Cumulative List of Organizations, Contributions to Which Are Deductible Under Section 170 of the Code

Announcement 96–17

The names of organizations that no longer qualify as organizations described in section 170(c)(2) of the Internal Revenue Code of 1986 are listed below.

Nonenforcement Policy—Proposed Class Exemption

Announcement 96–15

The Department of Labor (‘‘DOL’’) today announced a Pension Payback Program (‘‘Program’’). As part of the Program, DOL also today published a notice of proposed class exemption (Application No. D–10218) for prohibited transactions that may have arisen under section 4975 of the Internal Revenue Code (the ‘‘Code’’) as a result of an employer’s failure to transfer certain employee benefit contributions to its employee benefit plan within the time frames mandated by section 2510.3–102 of DOL’s regulations.

The proposed class exemption will exempt from the Code section 4975 excise taxes corrective payments restored to the plan between the date of DOL’s announcement and September 7, 1996. Accordingly, the Internal Revenue Service will not seek to impose the Code section 4975(a) and (b) sanctions with respect to any prohibited transaction that is covered by the proposed class exemption, notwithstanding any subsequent changes to the proposed class exemption when it is finalized, provided that all requirements specified in the proposed class exemption with respect to the prohibited transaction have been met. For example, DOL must receive, in accordance with condition (6) of the Program, the required certification of compliance with all terms and conditions of the Program not later than September 7, 1996.

A corrective payment made to restore a delinquent contribution to which the Program applies will not be considered an annual addition with respect to the limitation year in which the corrective payment is made. To the extent the corrective payment restores a delinquent contribution, the payment will be considered an annual addition for the limitation year in which the contribution was required to have been transferred to the plan.

The principal author of this announcement is Cathy Vohs of the Employee Plans Division. For further information regarding this announcement, please contact the Employee Plans Division’s taxpayer assistance

telephone service between the hours of 1:30 and 4:00 p.m. Eastern time, Monday through Thursday, on (202) 622-6074/6075 or Cathy Vohs on (202) 622-6214 (These telephone numbers are not toll-free numbers).

Transfer Pricing Penalty Oversight Committee

Announcement 96–16

Following issuance on February 9, 1996 of final regulations under section 6662(e) of the Internal Revenue Code dealing with the imposition of penalties in the case of certain reallocations of income under section 482 of the Code (‘‘transfer pricing penalties’’), taxpayers have requested clarification of the purposes and functions of the Transfer Pricing Penalty Oversight Committee (the ‘‘Committee’’). This announcement clarifies the purposes and functions of the Committee.

Background

Congress enacted the transfer pricing penalties of section 6662(e) as part of the Omnibus Budget Reconciliation Act of 1990. The transfer pricing penalties are generally applicable to taxable years ending after November 5, 1990. Proposed regulations interpreting section 6662(e) were issued in January 1993, and temporary regulations were issued in February 1994. The temporary regulations were amended in July 1994 and are effective for taxable years ending after December 31, 1993. Revenue Procedure 94–33, issued on April 18, 1994, provided that contemporaneous documentation would be required for taxable years beginning after April 21, 1993 and before January 1, 1994. Final regulations issued on February 9, 1996 are effective as of that date. Taxpayers may elect to apply the final regulations to all open taxable years beginning after December 31, 1993.

Penalty Oversight Committee

Several months ago, the Internal Revenue Service established the Committee to monitor and gather information on the application of the transfer

1996–28 I.R.B. 22

Generally, the Service 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 Service 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 determina

tion 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 March 25, 1996, and would end on the date the court first determines that

the organization is not described in section 170(c)(2) as more particularly set forth 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 who was responsible, in whole or in part, for the acts or omissions of the organization that were the basis for revocation. America’s Missing Children, Inc.

Jacksonville, FL White Harvest Mission, Inc.

Chandler, AZ

23 1996–28 I.R.B.