Part III. Administrative, Procedural, and Miscellaneous

1997 Pension Plan Limitations ¹

Notice 96–55

Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified plans. Section 415 also requires that the Commissioner annually adjust these limits for cost-of-living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments.

Effective January 1, 1997, the limitation for the annual benefit under § 415(b)(1)(A) for defined benefit plans is increased from $120,000 to $125,000. For participants who separated from service before January 1, 1997, the limitation for defined benefit plans under § 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 1996 by 1.0294. The limitation for defined contribution plans under § 415(c)(1)(A) remains unchanged at $30,000.

The Code provides that various other dollar amounts are to be adjusted at the

1Based on News Release IR-96-43, dated October 24, 1996.

same time and in the same manner as the dollar limitation of § 415(b)(1)(A) is adjusted. These dollar amounts and the adjusted amounts are as follows:

The special limitation for qualified police or firefighters under § 415(b)(2)(G) is increased from $66,000 to $70,000.

The limitation on the exclusion for elective deferrals under § 402(g)(1) remains unchanged at $9,500.

The dollar amount under § 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution period is increased from $690,000 to $710,000, while the dollar amount used to determine the lengthening of the 5-year distribution period is increased from $135,000 to $140,000.

The threshold amount under § 4980A(c)(1)(B) regarding excess distributions is increased from $155,000 to $160,000.

The limitation used in the definition of highly compensated employee under § 414(q)(1)(B), as amended by the Small Business Job Protection Act of 1996, is $80,000.

The annual compensation limit under §§ 401(a)(17) and 404(l) is increased from $150,000 to $160,000.

The compensation amount under § 408(k)(2)(C) regarding simplified employee pension plans (SEPs) remains unchanged at $400. The compensation amount under § 408(k)(3)(C) for SEPs is increased from $150,000 to $160,000.

The compensation amount under § 408(p)(2)(A) regarding simple retirement accounts, as added by § 1421 of the Small Business Job Protection Act of 1996, is $6,000.

The limitation on deferrals under § 457(b)(2) and (c)(1) concerning eligible deferred compensation plans of state and local governments and of tax-exempt organizations remains unchanged at $7,500.

Administrators of defined benefit or defined contribution plans that have received favorable determination letters should not request new determination letters solely because of yearly amendments to adjust maximum limitations in the plans.

Tables for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income

Notice 96–56

1. Table for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income (Forms 668–W, 668–W(c), & 668–W(c)(DO)) 1997 Publication 1494, shown below, provides tables which show the amount of an individual’s income that is exempt from a notice of levy used to collect delinquent tax in 1997.

(Amounts are for each pay period.)

Filing Status: Single

Pay Period

Number of Exemptions Claimed on Statement

1 2 3 4 5 6 More Than 6

Daily 26.15 36.35 46.54 56.73 66.92 77.12 15.96 plus 10.19 for each exemption

Weekly 130.77 181.73 232.69 283.65 334.62 385.58 79.81 plus 50.96 for each exemption

Biweekly 261.54 363.46 465.38 567.31 669.23 771.15 159.62 plus 101.92 for each exemption

Semimonthly

283.33 393.75 504.17 614.58 725.00 835.42 172.92 plus 110.42 for each exemption

Monthly 566.67 787.50 1008.33 1229.17 1450.00 1670.83 345.83 plus 220.83 for each exemption

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Pay Period

Filing Status: Unmarried Head of Household

Number of Exemptions Claimed on Statement

1 2 3 4 5 6 More Than 6

Daily 33.46 43.65 53.85 64.04 74.23 84.42 23.27 plus 10.19 for each exemption

Weekly 167.31 218.27 269.23 320.19 371.15 422.12 116.35 plus 50.96 for each exemption

Biweekly 334.62 436.54 538.46 640.38 742.31 844.23 232.69 plus 101.92 for each exemption

Semimonthly

362.50 472.92 583.33 693.75 804.17 914.58 252.08 plus 110.42 for each exemption

Monthly 725.00 945.83 1166.67 1387.50 1608.33 1829.17 504.17 plus 220.83 for each exemption

Filing Status: Married Filing Joint (and Qualifying Widow(er)s)

Pay Period

Number of Exemptions Claimed on Statement

1 2 3 4 5 6 More Than 6

Daily 36.73 46.92 57.12 67.31 77.50 87.69 26.54 plus 10.19 for each exemption

Weekly 183.65 234.62 285.58 336.54 387.50 438.46 132.69 plus 50.96 for each exemption

Biweekly 367.31 469.23 571.15 673.08 775.00 876.92 265.38 plus 101.92 for each exemption

Semimonthly

397.92 508.33 618.75 729.17 839.58 950.00 287.50 plus 110.42 for each exemption

Monthly 795.83 1016.67 1237.50 1458.33 1679.17 1900.00 575.00 plus 220.83 for each exemption

Filing Status: Married Filing Separate

Pay Period

Number of Exemptions Claimed on Statement

1 2 3 4 5 6 More Than 6

Daily 23.46 33.65 43.85 54.04 64.23 74.42 13.27 plus 10.19 for each exemption

Weekly 117.31 168.27 219.23 270.19 321.15 372.12 66.35 plus 50.96 for each exemption

Biweekly 234.62 336.54 438.46 540.38 642.31 744.23 132.69 plus 101.92 for each exemption

Semimonthly

254.17 364.58 475.00 585.42 695.83 806.25 143.75 plus 110.42 for each exemption

Monthly 508.33 729.17 950.00 1170.83 1391.67 1612.50 287.50 plus 220.83 for each exemption

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2. Table for Figuring Additional Exempt Amount for Taxpayers at Least 65 Years Old and/or Blind

Additional Exempt Amount

Filing Status * Daily Wkly Bi-Wkly Semi-Mthly Monthly

Single or Head 1 3.85 19.23 38.46 41.67 83.33 of Household 2 7.69 38.46 76.92 83.33 166.67

Any Other 1 3.08 15.38 30.77 33.33 66.67 Filing Status 2 6.15 30.77 61.54 66.67 133.33 3 9.23 46.15 92.31 100.00 200.00 4 12.31 61.54 123.08 133.33 266.67

• ADDITIONAL STANDARD DEDUCTION claimed on Parts 3, 4, & 5 of levy.

Examples

These tables show the amount exempt from a levy on wages, salary, and other income. For example:

1. A single taxpayer who is paid weekly and claims three exemptions (including one for the taxpayer) has $232.69 exempt from levy.

2. If the taxpayer in number 1 is over 65 and writes 1 in the ADDITIONAL STANDARD DEDUCTION space on Parts 3, 4, & 5 of the levy, $251.92 is exempt from this levy ($232.69 plus $19.23).

3. A taxpayer who is married, files jointly, is paid bi-weekly, and claims two exemptions (including one for the taxpayer) has $469.23 exempt from levy.

4. If the taxpayer in number 3 is over 65 and has a spouse who is blind, this taxpayer should write 2 in the ADDITIONAL STANDARD DEDUCTION space on Parts 3, 4, & 5 of the levy. Then, $530.77 is exempt from this levy ($469.23 plus $61.54).

Indian Tribal Casinos and Reporting Under Title 31

Notice 96–57

This notice clarifies the reporting requirements under the Internal Revenue Code for cash transactions of more than $10,000 from gaming activities for Indian tribal casinos with gross annual gaming revenues in excess of $1 million and with operations on Indian tribal lands. Effective August 1, 1996, these tribal casinos must comply with the currency transaction reporting, recordkeeping, and compliance-program requirements of the Bank Secrecy Act (BSA), 31 U.S.C. §§ 5311–5330 (1994). As a result, these tribal casinos are not required to report certain transactions under § 6050I of the Internal Revenue Code.

Section 6050I(a) generally requires any person who is engaged in a trade or business and who, in the course of that trade or business, receives cash in excess of $10,000 in one transaction (or two or more related transactions) to file an IRS Form 8300 (Report of Cash Payments Over $10,000 Received in a Trade or Business) with the Internal Revenue Service. However, § 6050I(c) (1) provides an exception from the reporting requirements of § 6050I(a) for

cash received in a transaction reported under Title 31, if the Secretary determines that reporting under § 6050I would be duplicative.

The BSA and the regulations under Title 31 require certain financial institutions to report the receipt (or disbursement) of cash of more than $10,000 from certain transactions. See 31 U.S.C. § 5313 (1994) and 31 C.F.R. § 103.22(a)(2) (1996). Under § 5312(a) (2)(x) of the BSA and 31 C.F.R. § 103.11(n)(7)(i) the term ‘‘financial institution’’ includes a casino that has gross annual gaming revenues (as described in 31 C.F.R. § 103.11(n)(7)(ii)) in excess of $1 million.

Effective August 1, 1996, 31 C.F.R. § 103.11(n)(7)(i) was amended to provide that the term ‘‘casino’’ means a casino or gambling casino that is duly licensed or authorized to do business as such in the United States, whether under the laws of a State or of a Territory or Insular Possession of the United States, or under the Indian Gaming Regulatory Act or other federal, state, or tribal law or arrangement affecting Indian lands (including, without limitation, a casino operating on the assumption or under the view that no such authorization is required for casino operation on Indian lands), and that has gross annual gaming

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revenue in excess of $1 million. 61 Fed. Reg. 7055 (1996). This amendment is intended to apply only to Class III casinos.

Accordingly, effective August 1, 1996, any Class III Indian tribal casino having gross annual gaming revenue in excess of $1 million that engages in a cash transaction of more than $10,000 (as defined in 31 C.F.R. § 103.22(a)(2)) with respect to gaming activities must report that transaction under 31 U.S.C. § 5313 and the regulations thereunder and satisfy applicable recordkeeping and compliance-program requirements of 31 C.F.R. § 103. Such a casino is not also required to report that transaction under § 6050I of the Code.

Section 6050I continues to apply, however, to a transaction in which cash of more than $10,000 is received by such a casino from a nongaming business activity (such as a shop, restaurant, entertainment, or hotel). See 26 C.F.R. § 1.6050I–1(d)(2)(iii).

This notice does not affect the current reporting requirements applicable to a Class II gaming establishment.

DRAFTING INFORMATION

The principal author of this notice is Renay France of the Office of Assistant

26 CFR 601.105: Examination of returns and claims for refund, credit, or abatement; determina- tion of correct tax liability. (Also Part I, § 42; 1.42–14.)

Rev. Proc. 96–51