Part IV. Items of General Interest

PLANS THAT BEGIN AFTER JANUARY 1, 1997

This announcement does not address the treatment of SIMPLE plans established for 1997 that are first effective after January 1, 1997. Further guidance will be provided regarding those plans.

Foundations Status of Certain Organizations

Announcement 96–114

The following organizations have failed to establish or have been unable to maintain their status as public charities or as operating foundations. Accordingly, grantors and contributors may not, after this date, rely on previous rulings or designations in the Cumulative List of Organizations (Publication 78), or on the presumption arising from the filing of notices under section 508(b) of the Code. This listing does not indicate that the organizations have lost their status as organizations described in section 501(c)(3), eligible to receive deductible contributions.

Former Public Charities . The following organizations (which have been treated as organizations that are not private foundations described in section 509(a) of the Code) are now classified as private foundations: Action Foundation Inc., Washington, DC Adopt Hunger of Utah, Inc., Salt Lake

TX

Transition Relief for SIMPLES

Announcement 96–112

PURPOSE

Section 1421 of the Small Business Job Protection Act of 1996 (P.L. 104– 188), signed into law on August 20, 1996, established a simplified taxfavored retirement plan for small employers (the ‘‘SIMPLE plan’’) under section 408(p) of the Internal Revenue Code. The purpose of this announcement is to provide transition relief from the 60-day election period and related notice requirements in the case of SIMPLE plans that begin January 1, 1997. Under this transition relief, for a SIMPLE plan that allows employees to begin salary reduction contributions on January 1, 1997, the employees’ salary reduction election period may begin as late as January 1, 1997. During this 60day election period, employees must be permitted to prospectively make or modify any salary reduction election.

BACKGROUND

SIMPLE plans can be established for calendar years beginning after 1996. Generally, SIMPLE plans can be established by any employer that, for the prior year, had no more than 100 employees who received at least $5,000 in compensation from the employer.

Under section 408(p), contributions to a SIMPLE plan are made to individual retirement accounts or annuities (SIMPLE IRAs) that are established under the SIMPLE plan adopted by the employer. The Code provides that, if an employer adopts a SIMPLE plan, all of the employer’s eligible employees must be given the opportunity to make salary reduction contributions to their SIMPLE IRAs (up to a maximum of $6,000 for 1997). The adopting employer is required to match 100 percent of employees’ salary reduction contributions up to three percent of compensation. Alternatively, an employer may contribute two percent of compensation for all eligible employees or, for up to two out of five years, match a lower percentage (but not less than one percent of compensation.)

Section 408(p)(5)(C) provides that, for each calendar year, each eligible employee may elect, during the 60-day period before the beginning of the calendar year (and the 60-day period be

fore the first day the employee is eligible to participate), to participate in the qualified salary reduction arrangement under the SIMPLE plan maintained by the employer, or to modify the amounts subject to the arrangement. The statute requires that the employer notify each eligible employee immediately before the election period of the employee’s opportunity to make salary reduction contributions and provide certain other information.

TRANSITION RELIEF FOR PLANS THAT BEGIN JANUARY 1, 1997

The 60-day period during which eligible employees may elect to make salary reduction contributions under a SIMPLE plan, or to modify prior elections, will not be required (but will be permitted) to begin before January 1, 1997. For plans that begin January 1, 1997, the 60-day election period requirement can be satisfied by providing an election period, of at least 60 days, that includes either the date the employee becomes eligible to make salary reduction contributions or the day immediately before that date. Thus, in the case of a SIMPLE plan under which eligible employees may begin making salary reduction contributions on January 1, 1997, employees who are eligible employees as of that date must have an election period of at least 60 continuous days that begins between November 2, 1996, and January 1, 1997. This minimum 60-day election period could be November 2 through December 31, 1996; January 1 through March 2, 1997; or any continuous period of at least 60 days beginning between November 2, 1996, and January 1, 1997. The election period cannot begin until notice is provided to all eligible employees of their opportunity to make salary reduction contributions, including the summary description required by the statute. An employer may permit an eligible employee to begin making salary reduction contributions less than 60 days after receiving notice of the opportunity to make these contributions, but in no event before January 1, 1997. The employee must be given the opportunity to prospectively modify the election during the remainder of the 60-day election period.

City, UT Affirmations III, Inc., Houston, TX AJO Ambulance, Inc., Ajo, AZ Altus Public School Foundation, Inc.,

Altus, OK American Men’s Studies Association

Inc., Northampton, MA Arizona Council for Sustainable

Development, Tempe, AZ Association for Community Theatre

Excellence, Inc., Bourne, MA Astronomical Institute for Research and

Education, Madill, OK ASU Cycling Devils, Tempe, AZ Austin Area Youth, Austin, TX Austin Sickle Cell Anemia Association,

Inc., Austin, TX Bay Area Veterans and Associates,

LaPorte, TX Big Bend, Inc., Riverton, WY Boulder Chorale, Boulder, CO British American Youth Festival Theatre,

New York, NY Brother Phi Brother, Inc., Fort Worth,

7 1996–45 I.R.B.

Buckingham Square Optimist Fund,

Harrington Elementary School PTO,

Salt Lake Mens Choir A Non-Profit

Inc., Aurora, CO Business and Professional Womens

Heritage Association, Merrimack, NH Cancer Treatment Research Foundation,

Plano, TX Hood-Erath County Foster Parents

Association, Stephenville, TX Houston Steel Light Orchestra, Houston,

TX Human Enrichment and Learning

Utah Corporation DTD, Salt Lake City, UT Say Yes San Antonio With Luis Palau,

Inc., San Antonio, TX Scotcrest, Inc., Houston, TX S.D.N.C., Cheyenne, WY Secaucus Lions Charities Inc., Cedar

Inc., Arlington Heights, IL Career Development Incorporated,

Holbrook, AZ Casa Grande Regional Retirement

Grove, NJ Sedona Repertory Theater An Arizona

Non-Profit Corporation, Sedona, AZ Serenty Center for Girls, Inc., Marlin,

Community, Casa Grande, AZ Celebration of Freedom, Inc., Boston,

Project, Houston, TX Hutchinson High School Booster Club,

Inc., Hutchinson, KS Indian Health Care Clinic, Inc., Salt

MA Center for Indigenous Studies in the

Salt Lake City, UT Join the Move, Austin, TX Jones Township Historical Society Inc.,

Americas, Phoenix, AZ Central Arizona Chapter of the A. Philip

Randolph Institute, Phoenix, AZ Childrens Connection, Inc., Chester, NH Christfest Productions, Inc., Austin, TX Cibola County Community Systems,

Lake City, UT International Leadership Group, Inc.,

TX Kerrville South Volunteer Fire Dept,

TX Shawnee Mission North Band Parents

Club, Shawnee Mission, KS Southeast Nutritious Food Program,

Houston, TX South Texas Counsel on Alcohol and

Wilcox, PA K.A.C.U., Inc. K.A.C.U.-FM, Abilene,

Albuquerque, NM Swedish-American Research Foundation

Grants, NM Cigarroa High-Crime Stoppers, Laredo,

Drug Abuse, Inc., Laredo, TX South Valley Fire & Rescue Auxiliary,

for Diet & Disease Inc., Morris Plains, NJ Take Pride in Arizona, Inc., Phoenix,

TX City Art, Salt Lake City, UT Clear Creek Project Graduation, Inc.,

League City, TX Clinton County Council on Alcoholism

Inc., Kerrville, TX Kids Place, Salt Lake City, UT Leadership Fort Worth, Forth Worth, TX Leadership Forum of North Carolina,

Wilmington, NC Learning Disabilities Association of

Norman, Norman, OK Manassa Maulers, Inc., Manassa, CO Mariposa Arts Foundation, Inc., Corpus

Inc., Plattsburgh, NY Colorado Animal Refuge, Inc., Simla,

AZ Task Force for Housing, Lock Haven,

PA Temple Bar Foundation, Washington,

DC Texas Bankers Foundation, Austin, TX T.F.O.C. Incorporated, Conroe, TX Third Eternal Baptist Community

CO Colorado Drug Education Services,

Christi, TX Millennium 2000 Foundation LTD,

Aurora, CO Colorado Springs Volleyball Club,

Littleton, CO Millner Elderly Housing, Inc., Atlanta,

Outreach, Philadelphia, PA Thomas McNaughton Foundation for

Colorado Springs, CO Cross Timbers Crisis Center,

Stephenville, TX Daily Planet Option Store, Inc.,

Colorado Springs, CO Dallas Womens Coalition, Dallas, TX Dear Valley High School Band and Flag

Boosters, Inc., Glendale, AZ Designated Driver Program, Inc., Austin,

TX Eagle Aquatic Team, Salt Lake City, UT Edisto Wildlife Sanctuary Fund Edisto

Natural History Museum Inc., Tyrone, GA Family Outreach Central, Inc., Houston,

GA Millner Ridge Inc., Atlanta, GA New Beginning Nutrition Food

Oklahoma City, OK Orange Pathways Incorporated, Goshen,

Program, Humble, TX New Mountain Volunteer Fire Dept.

Liver Transplants Inc., Baltimore, MD Tri-State Conference Education Fund,

Inc., Ore City, TX New Southwest Orchestra, Albuquerque,

Pittsburgh, PA Troika Productions, Washington, DC Ulster Choral Society, Kingston, NY United Fire Fighters Task of Prince

NM Northern New Mexico Volleyball

Association, Los Alamos, NM Northwood Booster Club, Cedar Hill,

Georges County Maryland Inc., Capitol Heights, MD Urban Center for Change Housing

TX Oklahoma Homeless Network, Inc.,

Development Fund Corporation, Brooklyn, NY Utah Coalition of La Raza, Salt Lake

City, UT VDT Housing Development Fund

TX Forth Worth Foreign Film Festival,

Forth Worth, TX Foundation of Hope, Corpus Christi, TX Friends of Horn Foundation, Bellaire,

NY Parents and Educators Achieving

Community Excellence, Mission, TX Petroglyphs Por Los Ninos Coalition,

Santa Fe, NM Pharr Chamber of Commerce, Pharr, TX Piper Denver Outreach, Inc., Denver,

Portland, ME Wheat Ridge Coalition, Wheat Ridge,

Company, Inc., New York, NY Veterans Support Services, Inc.,

CO Whole Brain Connection, Dallas, TX Will Rogers PTO, Houston, TX Williams Technology Initiative

TX Friends of Martha’s Vineyard Scouting,

Inc., Oak Bluffs, MA Friends of the Utah Avalanche Forecast

Center, Inc., Holladay, UT Glendale Kachina Rotary Foundation,

Inc., Glendale, AZ Global Survival Inc., Riverdale, NY Greater Houston Nutritional & Support

CO Point of Light, Sinton, TX RHS, Inc., Albuquerque, NM Rock Springs Youth Boys Basketball,

Committee, Inc., Austin, TX Winters A.C.E.S. Inc., Winters, TX Word of Faith Outreach Food Program,

Channelview, TX Work Work Opportunities of a

Service, Houston, TX Hamshire-Fannett Education Foundation,

Rock Springs, WY Sail Connecticut Access Program Inc.,

Branford, CT Sal De Ahi, Santa Fe, NM

Rehabilitative Kind, Austin, TX

Hamshire, TX

1996–45 I.R.B. 8

Young Israel Soup Kitchen Incorporated,

New Haven, CT Youth Sports Systems, Inc.,

Albuquerque, NM If an organization listed above submits information that warrants the renewal of its classification as a public charity or as a private operating foundation, the Internal Revenue Service will issue a ruling or determination letter with the revised classification as to foundation status. Grantors and contributors may thereafter rely upon such ruling or determination letter as provided in section 1.509(a)–7 of the Income Tax Regulations. It is not the practice of the Service to announce such revised classification of foundation status in the Internal Revenue Bulletin.

Modifications of Bad Debts and Dealer Assignments of Notional Principal Contracts; Correction

Announcement 96–115

AGENCY: Internal Revenue Service, Treasury.

ACTION: Correction to the notice of proposed rulemaking by cross-reference to temporary regulations.

SUMMARY: This document contains a correction to the notice of proposed rulemaking by cross-reference to temporary regulations (FI–59–94 [1996–30 I.R.B. 23]) which was published in the Federal Register on Tuesday, June 25, 1996 (61 FR 32728). The notice of proposed rulemaking by cross-reference to temporary regulations relates to the allowance of a deduction for a partially worthless debt when the terms of a debt instrument have been modified.

FOR FURTHER INFORMATION CONTACT: Craig R. Wojay, (202) 622– 3920 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The notice of proposed rulemaking by cross-reference to temporary regulations that is subject to this correction is under sections 166 and 1001 of the Internal Revenue Code.

Need for Correction

As published, the notice of proposed rulemaking by cross-reference to temporary regulations (FI–59–94) contains an error which may prove to be misleading and is in need of clarification.

Correction of Publication

Accordingly, the publication of the notice of proposed rulemaking by crossreference to temporary regulations (FI– 59–94) which is the subject of FR Doc. 96–15831 is corrected as follows: On page 32728, column 2, in the heading, the RIN ‘‘RIN 1545–AT08’’ is corrected to read ‘‘RIN 1545–AU06’’.

Cynthia E. Grigsby, Chief, Regulations Unit, Assistant Chief Counsel (Corporate).

(Filed by the Office of the Federal Register on October 11, 1996, 8:45 a.m., and published in the issue of the Federal Register for October 15, 1996, 61 F.R. 53688)

9 1996–45 I.R.B.