Part IV. Items of General Interest

Medical Savings Accounts

Announcement 97–96

PURPOSE

Sections 220(i) and (j) of the Internal Revenue Code provide that if the number of medical savings accounts (MSAs) established as of June 30, 1997, exceeds 525,000, then October 1, 1997, is a “cutoff” date for the MSA pilot project. The Internal Revenue Service has determined that the applicable number of MSAs established as of June 30, 1997, is 17,145. Consequently, October 1, 1997 is not a “cut-off” date and 1997 is not a “cut-off” year for the MSA pilot project.

BACKGROUND

The Health Insurance Portability and Accountability Act of 1996 added section 220 to the Code to permit eligible individuals to establish MSAs under a pilot project effective January 1, 1997. The pilot project has a scheduled “cut-off” year of 2000, but may have an earlier “cut-off” year if the number of individuals who have established MSAs exceeds certain numerical limitations. See sections 220(i) and (j).

If a year is a “cut-off” year, section 220(i)(1) generally provides that no individual will be eligible for a deduction or exclusion for MSA contributions for any taxable year beginning after the “cut-off” year unless the individual (A) was an active MSA participant for any taxable year ending on or before the close of the “cutoff” year, or (B) first became an active MSA participant for a taxable year ending after the “cut-off” year by reason of coverage under a high deductible health plan of an MSA-participating employer.

Section 220(j)(1) provides that the numerical limitation for 1997 is exceeded if the number of MSAs established as of June 30, 1997, is more than 525,000. Under section 220(j)(3), in determining whether any calendar year is a “cut-off” year, the MSA of any previously uninsured individual is not taken into account. In addition, section 220(j)(4)(D) specifies that, to the extent practical, all MSAs established by an individual are aggregated and two married individuals opening sep

arate MSAs are to be treated as having a single MSA for purposes of determining the number of MSAs.

Based on Forms 8851 filed by MSA trustees and custodians, it has been determined that 22,051 taxpayers have established MSAs as of June 30, 1997. Of this total, 3,670 taxpayers were reported as previously uninsured, and are therefore not taken into account in determining whether 1997 is a “cut-off” year. In addition, 1,236 taxpayers were reported as excludable from the count because their spouse also established an MSA. Accordingly, because the applicable number of MSAs established as of June 30, 1997, 17,145 (22,051 minus (3,670 plus 1,236)) is less than 525,000, 1997 is not a “cutoff” year for the MSA pilot project.

Questions regarding this announcement may be directed to Felix Zech in the Office of Associate Chief Counsel (Employee Benefits and Exempt Organizations) at (202) 622-4606 (not a toll free number).

Foundations Status of Certain Organizations

Announcement 97–98

New York, NY

Association to Promote Intercultural

Relations, Inc., Climax, MI Athena Telematics Foundation, Inc.,

White Plains, NY Avrohom Z. Shfronsky Torah Fund, Inc.,

Staten Island, NY Bangladesh Cultural Exchange, Jamaica

Estates, NY Basic Housing Needs, Inc., New Canaan,

CT Believers of San Jose De Oasis, Inc.,

Bronx, NY Big Green Apple Corp., New York, NY Bill Weete Memorial Fund, Inc.,

Cambridge, MA Bon Accord Theatre Company of New

York, Inc., New York, NY Boston Rugby Football Foundation, Inc.,

Newton, MA Branch Brook Parent Teacher

Association, Smithtown, NY Brooklyn Community Correction Center

Advisory Board, Inc., Brooklyn, NY Brooklyn Shipbuilding Foundation, Inc.,

Brooklyn, NY Burrus Residential Group Home,

Washington, CT Business Enterprise Assistance of

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: Asian-Amerasian Youth, Inc., Albany, NY Association for Rescue at Sea Inc.,

Connecticut, Inc., Bolton, CT Causa–Peru, Inc., East Hartford, CT Cambiata Chamber Players, Inc.,

York, NY Clyde E. Wheeler Group, Mastic, NY Coalition for Sustainable Agriculture,

Kingston, NY Center for Advancement of International

Relations through Broadcast, New City, NY Center for Art and Earth, Inc.,

New York, NY Chosen Children From Romania,

Barre, VT Christian Clothing Drive, Inc.,

Merrick, NY Circle of Children Charitable Foundation,

Inc., Lexington, MA Citizen Empowerment, Inc., Bennington,

NH Citizens Radiological Monitoring

Network Pilgrim, Inc., Duxbury, MA Citizens United for the Rehab of Errants

Life Long Care, Inc., Jamaica Plain, MA Clothe the Children Foundation, New

Webster Groves, MO Association of Friends of Passages, Inc.,

Castile, NY

1997–39 I.R.B. 15 September 29, 1997

Cobble Hill Foundation, Inc.,

Friends of Frederick E. Samuels

Foundations, Inc., New York, NY Friends of Greenfield Public Schools,

New York, NY Friends of Salem Woods, Inc.,

Brooklyn, NY Columbus Avenue Committee, Inc., New

York, NY Columbus Outdoor Club, Columbus, OH Communication for Development and

Essex Firefighters Association,

Essex, VT European Child Care Day Care Center,

Inc., Brooklyn, NY Everybuddy, Incorporated, Manchester

Center, VT Family and Child Therapies, Inc., New

Monroe, CT Friends of Ohel Moshe Institute, Inc.,

Greenfield, MA Friends of Kids Kreations, Inc.,

Change, Inc., New York, NY Connecticut Environment Roundtable,

York, NY Faran Club International, Inc.,

Inc., Hartford, CT Cooley Center for Indian Unity, Inc.,

Salem, MA Hamilton Senior Center Foundation,

Hamilton, TX National Black United Front Educational

Providence, RI Diversified Educational Resources, Inc.,

Jamaica, NY Father Peter G. Young, Jr. Foundation,

Northfield Falls, VT Don Costa Scholarship Fund, Lowell, MA Drop In Club of Danbury CT Inc.,

Inc., Albany, NY First Baptist Church Development

Corporation, Strafford, CT First Responders Emergency Medical

Fund, Kansas City, MO Pennsylvania Childrens Services, Inc.,

Danbury, CT Drum—The Heartbeat of the Native

Harrisburg, PA Public Lands Action Network, Silver

Development, Inc., Arlington, VA Saugus Business Education

American Community, Inc., Chicchester, NH Eastcor, Inc., Hampton Bays, NY East End Seaport and Marine Foundation,

Services Association, Saranac Lake, NY Flag Acres Zoo, Inc., Hoosick Falls, NY Flower City Down Syndrome Network,

Rochester, NY Footnotes Corp., New York, NY Force Athletic Club, Inc.,

City, NM Renewable Energy for African

Inc., Greenport, NY Eastern Cashmere Association,

Shoreham, VT Eaton Fire Reserve Association,

Swampscott, MA Foundation for International Environ

Eaton, NH Ebony Horsewomen, Inc., Hartford, CT E Call, Inc., Boston, MA Echo Evangelique De Boston, Inc.,

mental Law & Development, Inc., New York, NY Foundation for the Fiftieth Anniversary

Collaborative, Inc., Saugus, MA 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.

Mattapan, MA Ecletic Theatre Co., Inc., New York, NY Educational Partnership, New York, NY Education Law Project, Inc.,

of the United Nations, New York, NY Franklin County Mens Education Net

work, Inc., Greenfield, MA Free Gift, Hudson, ME French Cultural Heritage Society, Ltd.,

Brooklyn, NY Friends of Fort Knox, Bucksport, ME Friends of Frederick Douglass, Inc.,

Willimantic, CT Environment Technology Education

Rochester, NY

Center, Inc., Cambridge, MA

September 29, 1997 16 1997–39 I.R.B.