Part III. Administrative, Procedural, and Miscellaneous

Small Business Taxpayer Advance Pricing Agreements

Notice 98–10

PURPOSE

The Internal Revenue Service (“Service”) instituted the Advance Pricing Agreement (“APA”) Program to assist all taxpayers in their efforts to comply with I.R.C. §482. Under an APA, the Service and a taxpayer agree on a transfer pricing methodology (“TPM”) to be prospectively applied to an apportionment or allocation of income, deductions, credits, or allowances between or among two or more organizations, trades, or businesses owned or controlled, directly or indirectly, by the same interests. Provided the taxpayer complies with the terms and conditions of the APA, the Service will regard the results of applying the TPM as satisfying the arm’s length standard under §482. Rev. Proc. 96–53, 1996–2 C.B. 375, explains how a taxpayer may secure an APA from the Service.

To date, the Service has concluded over 100 APAs with U.S. taxpayers, the majority of which have been large business taxpayers with substantial income and/or assets. In an effort to reduce the §482 compliance burden of, and to make the APA Program more accessible to, small business taxpayers (“SBTs”), the Service is proposing special APA procedures for SBTs. For purposes of this Notice, a “small business taxpayer” is any U.S. taxpayer with total gross income (determined pursuant to §5.14(7) of Rev. Proc. 96–53 or its successor) of the amount set forth in §5.14(3) of Rev. Proc. 96–53 (or its successor), currently less than $100 million.

The special procedures seek to address the SBT’s need to achieve the compliance certainty an APA provides at a cost that is reasonable relative to the size and complexity of the transactions involved. This Notice describes the circumstances under which an SBT may request special procedures in seeking an APA, the nature of the special procedures, and other provisions designed to assist SBTs in the APA process. (The Service will consider implementing similar procedures, on a case

by case basis, for the small transactions described in §5.14(4) of Rev. Proc. 96–53.)

The Service wishes to receive comments from interested members of the public prior to publishing the final procedures for SBT APAs. Comments (eight copies) should be sent to Associate Chief Counsel (International) CC:INTL:FO, Internal Revenue Service, 1111 Constitution Avenue, NW, Room 3501, Washington, DC 20224, making reference in the comments to Control Number INTL–OGI– 117383–97. To ensure comments are given full consideration, they should be submitted by April 10, 1998.

BACKGROUND

The Service has indicated a desire to alleviate the §482 compliance burden for SBTs. For example, under the 1993 temporary regulations, §1.482–1T set forth a safe harbor for small taxpayers. That provision, however, was not retained in the final regulations due to deficiencies with the safe harbor. See “Explanation of Revisions and Summary of Comments” of the §482 final regulations, T.D. 8552, 1994–2 C.B. 93, 104. At that time, the Service solicited suggestions from the public for alternative approaches to assist small taxpayers with their §482 compliance burden. Id. No comments were received as a result of this solicitation.

The Service also attempted to assist all taxpayers, including SBTs, with their §482 compliance efforts by implementing the APA Program under Rev. Proc. 91–22, 1991–1 C.B. 526. The Program’s experience, however, indicates that SBTs are not participating in the Program to the same extent as larger taxpayers, due at least in part to cost concerns (in terms of internal staff time, external legal, accounting, and consulting fees, and Service user fees).

As a consequence, the Service established additional incentives for SBTs to seek APAs. Section 3.09 of Rev. Proc. 96–53 provides that the Service and a small business taxpayer may agree to special procedures for obtaining an APA, including simplified procedures that depart from standard procedures, to meet the needs of the particular SBT. In addition, §5.14 of Rev. Proc. 96–53 establishes a reduced user fee for an SBT seeking an

APA. The APA Program has successfully applied the approach referenced in §3.09 in several cases to assist SBTs in receiving APAs.

The Service believes that maintaining the ability to adapt procedures to the facts and circumstances of a particular SBT is better than establishing formal procedures that may not be applicable to all SBTs. However, it is important for the Service to furnish guidance regarding the types of procedures it deems appropriate for SBT APAs. Accordingly, the provisions in this Notice expand upon §3.09 of Rev. Proc. 96–53 by providing examples of simplified procedures the Service believes may be appropriate. It is hoped that the flexibility underlying this approach will encourage more small business taxpayers to participate in the APA Program.

PRINCIPLES FOR SMALL BUSINESS TAXPAYER APA REQUESTS

The Service intends to maintain flexibility in the APA process to address the particular needs of SBTs. Accordingly, the special procedures set forth below are the types of procedures the Service will entertain for SBT APA requests; they are not exclusive, and the Service will consider other procedures that harmonize with the objectives of the APA Program and the SBT. In addition, different procedures may apply to different SBTs, depending upon the facts and circumstances of each APA case.

To address the concern that the perceived costs to secure an APA are high in proportion to the size of the transactions involved, the special procedures focus on simplifying the APA process for the SBT transactions. This simplification is intended to reduce costs in terms of the amount of time required to evaluate the request, while permitting the Service to satisfy its due diligence requirements.

This objective can be accomplished when the SBT proposes to cover less complicated transactions with which the APA Program has had experience (such as those involving the manufacture or distribution of tangible property under §1.482– 3 and the performance of administrative and technical services under §1.482–2(b)) and proposes a “best method” that is spec

1998–6 I.R.B 9 February 9, 1998

ified under the regulations. Transactions involving non-routine intangibles, including research and development cost sharing arrangements under §1.482–7, would not ordinarily be amenable to such special procedures due to the complexity of valuing such intangibles.

In addition, to the extent practical, the Service will coordinate the special procedures with the SBT’s other tax compliance efforts so as to minimize the costs to the SBT. For example, the documentation that SBTs are required to maintain under I.R.C. §6662(e) may be accepted as the APA submission materials, and such documentation could form the primary foundation for the Service’s evaluation of the SBT’s APA request.

SPECIAL PROVISIONS FOR SBT APAs

At the request of an SBT, the Service will apply any or all of the following provisions under the principles of this Notice, if deemed appropriate by the APA Director:

1. Under ordinary conditions, a taxpayer contemplating an APA may (but is not required to) request a prefiling conference with the Service. If a prefiling conference is requested, the Service provides informal advice to the taxpayer regarding the taxpayer’s proposal, but ordinarily does not begin its due diligence evaluation in earnest until the taxpayer formally files an APA request along with the appropriate user fee. Once the formal APA request is received, the APA Program targets finalizing the negotiating position for bilateral APAs in nine months and concluding unilateral APAs in 12 months. In contrast, for SBT transactions the Service intends, if requested, to commence its due diligence analysis at the front-end of the process to accelerate the conclusion of the APA negotiations.

(a) The Service and SBT may hold a prefiling conference (before a user fee is paid) to determine as early as possible the best method for the SBT’s proposed covered transactions. To accomplish this, the Service will need a detailed description of the underlying facts of, and the proposed TPM for, the SBT’s requested covered transactions at least 60 days prior to the scheduled conference. For purposes of this Notice, the SBT may provide the information it is required to maintain under I.R.C. §6662(e) to satisfy this requirement. Prior to its prefiling submission, the SBT must consult with APA Program personnel to determine the information the Service deems necessary to evaluate the SBT’s particular covered transactions.

(b) An APA Team will evaluate the SBT APA prefiling submittal to determine items of concern and the additional documentation, if any, needed to evaluate the request. The SBT will be advised of the APA Team’s initial conclusions before the prefiling conference so that it can address these items before or at the conference.

(c) At the prefiling conference, the SBT and Service will negotiate the case management plan with the objective of concluding a unilateral APA, or finalizing the recommended negotiating position for a bilateral APA, within six months of the date the SBT files its APA request. The Service’s efforts to perform more of its analysis earlier in the process should result in a reduced number of post-filing meetings and supplemental information requests.

2. The Service and SBT may negotiate the reduction or elimination of specific elements otherwise required under §5 of Rev. Proc. 96–53. Examples of the types of information the Service may determine the SBT could exclude from its APA request include those described in the following subsections of Rev. Proc. 96–53:

(a) §5.04(3); (b) §5.04(5); (c) §5.04(6); (d) §5.08; and (e) §5.09.

3. The Service will hold all meetings with the SBT at a location convenient to the SBT. To minimize the number of meetings, teleconferences will be employed whenever feasible.

4. The Service will reasonably assist the SBT in the selection and evaluation of comparables or the computation of adjustments to comparables under §1.482–1(e), as well as, if appropriate, assist the SBT in determining other adjustments.

5. The initial term of an SBT APA will be three years, with the potential to renew the APA for a longer term.

6. For unilateral APA requests, an SBT may submit a proposed draft APA in a form substantially identical to the current APA model agreement attached to this Notice (the APA model is subject to change; SBTs should check with the APA Program for updated versions). To expedite review of the proposed draft APA, the SBT should also include a “redline” version showing the differences between the APA model and the SBT’s proposed draft. In addition, SBTs should also submit the draft on a computer disk in a word processing format acceptable to the Service.

7. The Service will consider other procedures suggested by the SBT to reduce the SBT’s administrative and financial burden, consistent with the objectives of the APA Program and the requirements of §482.

DRAFTING INFORMATION

The principal author of this Notice is David J. Canale of the Advance Pricing Agreement Program, Office of Associate Chief Counsel (International). For further information regarding this Notice, contact Mr. Canale or Mr. Karl Kellar at (202) 874-4360 (not a toll-free call).

February 9, 1998 10 1998–6 I.R.B.

1998–6 I.R.B 11 February 9, 1998

ADVANCE PRICING AGREEMENT

between

TAXPAYER

and

THE INTERNAL REVENUE SERVICE

THIS ADVANCE PRICING AGREEMENT (“APA”) is made by and between Taxpayer and the Internal Revenue Service (“Service”), acting through the Associate Chief Counsel (International).

WHEREAS, Taxpayer and the Service (the “Parties”) wish to establish a method for determining whether certain prices used in international transactions involving Taxpayer are in accordance with the principles of section 482 of the Internal Revenue Code of 1986 as amended (the “Code”) and attendant Regulations and, to the extent applicable, income tax conventions to which the United States is a party;

NOW, THEREFORE, in consideration of the mutual promises contained herein, the Parties agree as follows:

1. Identifying Information. Taxpayer’s EIN is __________. [Taxpayer is included in the consolidated federal income tax return filed by ________________, EIN ________. All references to Taxpayer’s United States income tax return in this APA refer to that consolidated return, and all references in this APA to “Taxpayer” shall refer to the ______________ consolidated return group.]

2. Covered Transactions. This APA governs the pricing of the transactions specified in Appendix A (the “Covered Transactions”).

3. Legal Effect.

3.1. Taxpayer agrees to comply with the terms and conditions of this APA, including the transfer pricing methodology (“TPM”) that is described in Appendix A. If Taxpayer complies with the terms and conditions of this APA, then the Service will not contest the application of the TPM to the Covered Transactions and will not make or propose any reallocation or adjustment under section 482 of the Code with respect to Taxpayer concerning the Transfer Prices in Covered Transactions for the years covered by this APA (the “APA Years”).

3.2. Regardless of the date on which Taxpayer filed its request for this APA, Taxpayer and the Service agree, unless otherwise specified to the contrary in this APA, that Rev. Proc. 96–53, 1996–2 C.B. 375, and not any predecessor to Rev. Proc. 96–53, governs the interpretation and administration of this APA.

3.3. If, for any APA Year, Taxpayer does not comply with the terms and conditions of this APA, then the Service may:

i. enforce the terms of this APA and propose adjustments to the income, expenses, deductions, credits, or allowances reported on Taxpayer’s U.S. federal income tax return in keeping with the terms of this APA;

ii. cancel or revoke this APA pursuant to section 11.05 or 11.06 of Rev. Proc. 96–53; or

iii. revise this APA, upon agreement on revision with Taxpayer.

3.4. [This APA addresses the arm’s length nature of prices charged or received in the aggregate between Taxpayer and [name of foreign group], and except as explicitly provided in this APA does not address, and does not bind the Service with respect to, prices charged or received, or the relative amounts of income or loss realized, by particular legal entities that are members of Taxpayer or that are members of [foreign group]. The true taxable income of a member of an affiliated group filing a U.S. consolidated return shall be determined under the regulations governing consolidated returns. See, e.g., Treas. Reg. section 1.1502–12. Similarly, to the extent relevant for United States tax purposes, and except as explicitly provided in this APA, the relative amounts of income of different entities that are members of [foreign group] shall be determined under the arm’s length standard of section 482 without reference to this APA.]

3.5. The Parties agree that nonfactual oral and written representations, within the meaning of sections 10.4 and 10.5 of Rev. Proc. 96–53 (including any proposals to use particular TPMs), made in conjunction with this request constitute statements made in compromise negotiations within the meaning of Rule 408 of the Federal Rules of Evidence.

February 9, 1998 12 1998–6 I.R.B.

4. Term. This APA shall apply only to the APA Years, which shall include only ________________.

5. Financial Statements and APA Records. The determination whether Taxpayer has complied with this APA will be based on its United States income tax return; its financial statements as prepared in accordance with generally accepted accounting principles (“GAAP”) on a consistent basis (the “Financial Statements”); the additional records (“APA Records”) specified in Appendix B; and all information referenced in section 8 of this APA. Taxpayer will be in compliance with the TPM only if a certified public accountant renders an opinion that the Financial Statements present fairly, in all material respects, the financial position of Taxpayer and the results of its operations, in accordance with GAAP. Taxpayer agrees to maintain the Financial Statements and APA Records and to make them available within thirty days of a request by the Service in connection with an examination described in section 11.03 of Rev. Proc. 96–53. Compliance with this section 5 will constitute compliance with the provisions of sections 6038A and 6038C of the Code, with respect to the Covered Transactions during the APA Years.

6. Critical Assumptions. The Critical Assumptions of this APA, within the meaning of section 11.07 of Rev. Proc. 96–53, are listed in Appendix C.

7. Compensating Adjustments. To the extent necessary to bring Taxpayer into compliance with this APA, Taxpayer may make Compensating Adjustments as described in and subject to the rules of section 11.02 of Rev. Proc. 96–53, and subject to any restrictions stated elsewhere in this APA.

8. Annual Report. Taxpayer shall file a timely Annual Report for each APAYear pursuant to the rules of section 11.01 of Rev. Proc. 96–53. The Annual Report shall contain the information described in Appendix D. In connection with an examination described in section 11.03 of Rev. Proc. 96–53, the District Director may request and Taxpayer shall provide additional facts, computations, data or information reasonably necessary to clarify or verify the Annual Report.

9. Disputes. Should a dispute arise concerning the interpretation, application or enforcement of this APA, the Parties agree to seek resolution of the dispute by the Associate Chief Counsel (International), to the extent reasonably practicable, prior to seeking alternative remedies.

10. Section Captions. The section captions contained in this APA are for convenience and reference only and shall not affect in any way the interpretation or application of this APA.

11. Notice. Any notices required by this APA or Rev. Proc. 96–53 shall be in writing. Taxpayer shall send notices to the Service at the address and in the manner prescribed in section 5.13(2) of Rev. Proc. 96–53. The Service shall send notices to Taxpayer at:

12. Effective Date. This APA shall become binding when both Parties have executed the APA.

13. Counterparts. This APA may be executed in counterparts, with each counterpart deemed an original.

IN WITNESS WHEREOF, the Parties have executed this APA on the dates indicated below.

TAXPAYER

By:_________________________________ Date:__________________________

INTERNAL REVENUE SERVICE

By:_________________________________ Date:__________________________

Associate Chief Counsel (International)

1998–6 I.R.B 13 February 9, 1998

APPENDIX A

TRANSFER PRICING METHODOLOGY

For each APA Year:

A. Covered Transactions.

The Covered Transactions for this APA consist of .

B. Transfer Pricing Methodology (“TPM”).

February 9, 1998 14 1998–6 I.R.B.

APPENDIX B

APA RECORDS

1. All documents listed in, and supporting the information provided in, Appendix D for inclusion in the Annual Report.

2. [Insert here other records].

1998–6 I.R.B 15 February 9, 1998

APPENDIX C

CRITICAL ASSUMPTIONS

1. The business activities, and financial and tax accounting methods and classifications, of Taxpayer shall remain materially the same as described in Taxpayer’s request for this APA.

2. [Insert here other Critical Assumptions.]

February 9, 1998 16 1998–6 I.R.B.

APPENDIX D

ANNUAL REPORT

Taxpayer shall include the following in its Annual Report for each APA Year:

1. A statement identifying all material differences between Taxpayer’s business operations during the APA Year and the description of Taxpayer’s business operations contained in Taxpayer’s request for this APA, or if there have been no such material differences a statement to that effect.

2. A statement identifying all material changes in the Taxpayer’s accounting methods and classifications, from those described in Taxpayer’s request for this APA, or if there have been no such material changes a statement to that effect.

3. The Financial Statements.

4. A financial analysis demonstrating Taxpayer’s compliance with the TPM.

5. A description of any failure to meet Critical Assumptions or, if there have been no such failures, a statement to that effect.

6. A description of the reason for, and financial analysis of, any Compensating Adjustments with respect to the APA Year, including the means by which any such Compensating Adjustment has been or will be satisfied.

7. A copy of the certified public accountant’s opinion, described in section 5 of this APA, for the APA Year.

8. [Insert here other items to be included in Annual Report.]

1998–6 I.R.B 17 February 9, 1998

Little or no tax is paid by BR1 to Country B on the receipt of interest.

If BR1 is disregarded, then for U.S. tax purposes the loan would be regarded as being made by CFC1 to CFC2 and the interest as being paid by CFC2 to CFC1. While interest received by a CFC is normally subpart F income under section 954(c) (foreign personal holding company income), in this case, if BR1 is disregarded, the “same country” exception of section 954(c)(3) would apply to exclude the interest from subpart F income. If BR1 instead were considered to be a CFC, however, this payment would be between two CFCs located in different countries. In that case, subpart F income would arise because the same-country exception would not apply. Thus, if BR1 is disregarded CFC1 will have lowered its foreign tax on deferred income and created a significant tax incentive to invest abroad rather than in the United States. As this arrangement creates income intended to be subpart F income which is not subject to subpart F in this case, the result of the arrangement is inconsistent with the policies and rules of subpart F.

Example 2. CFC3 is incorporated in Country A. CFC3 has a branch (BR2) in Country B. The tax laws of Country A and Country B classify CFC3 and BR2 as separate, non-fiscally transparent entities. BR2 makes a transfer to CFC3 that the tax laws of both Country A and Country B recognize as a loan from BR2 to CFC3. CFC3, which earns only non-subpart F income, pays interest to BR2 that Country A allows as a deduction against taxable income. Little or no tax is paid by BR2 on the receipt of interest.

If BR2 is disregarded, then U.S. tax law would not recognize the income flows (neither the loan nor the interest payment) between the CFC and its branch and, therefore, subpart F would not apply. If this transaction were between two CFCs, however, the interest would be subpart F income under section 954(c) and no exception would apply. Thus, if BR2 is disregarded, by use of this arrangement the CFC will have lowered its foreign tax on deferred income in a manner inconsistent with the policies and rules of subpart F.

Treasury and the Service believe that it is appropriate to prevent taxpayers from using these types of hybrid branch

Treatment of Hybrid Arrangements under Subpart F

Notice 98–11

The Treasury Department and the Internal Revenue Service understand that certain taxpayers are using arrangements involving “hybrid branches” to circumvent the purposes of subpart F (sections 951– 964 of the Internal Revenue Code). These arrangements generally involve the use of deductible payments to reduce the taxable income of a controlled foreign corporation (CFC) under foreign law, thereby reducing the CFC’s foreign tax and, also under foreign law, the corresponding creation in another entity of low-taxed, passive income of the type to which subpart F was intended to apply. Because of the structure of these arrangements, however, this income is not taxed under subpart F.

The recent entity classification regulations, §§301.7701–1 through –3 of the Income Tax Regulations (the “check-thebox” regulations), have facilitated the creation of the hybrid branches used in these arrangements. The preamble to these regulations, in stating that Treasury and the Service would be monitoring the use of partnerships in the international context, indicated a concern that fiscallytransparent entities could be used in a manner inconsistent with the policies and rules of particular Code provisions.

Treasury and the Service have concluded that the use of certain hybrid branch arrangements, such as the ones illustrated below, is contrary to the policies and rules of subpart F. This notice announces that Treasury and the Service will issue regulations to address such arrangements, and requests public comments with respect to these subpart F issues.

I. BACKGROUND

Subpart F was enacted by Congress to limit the deferral of U.S. taxation of certain income earned outside the United States by CFCs, which are foreign corporations controlled by United States shareholders. Limited deferral was retained after the enactment of subpart F to protect the competitiveness of CFCs doing business overseas. This limited deferral allows a CFC engaged in an active business, and located in a foreign country for

appropriate economic reasons, to compete in a similar tax environment with nonU.S. owned corporations located in the same country.

Under subpart F, however, transactions of CFCs that involve related persons frequently give rise to subpart F income, unless an exception, for example the same country exception, applies. Related person transactions can be more easily manipulated to reduce both United States and foreign taxes. One of the purposes of Subpart F is to prevent CFCs (including those engaged in active businesses) from structuring transactions designed to manipulate the inconsistencies between foreign tax systems to inappropriately generate low- or non-taxed income on which United States tax might be permanently deferred.

U.S. international tax policy seeks to balance the objective of neutrality of taxation as between domestic and foreign business enterprises (seeking neither to encourage nor to discourage one over the other), with the need to keep U.S. business competitive. Subpart F strongly reflects and enforces that balance. These hybrid transactions upset that balance.

II. ARRANGEMENTS INVOLVING HYBRID BRANCHES

A hybrid branch is one that is viewed under United States tax principles to be part of the CFC (i.e., fiscally transparent), but under the law of the CFC’s country of incorporation as an entity separate from the CFC (i.e., non-fiscally transparent). The types of hybrid branch arrangements Treasury and the Service have identified as being inconsistent with the policies and rules of subpart F may be illustrated by the following examples.

Example 1. CFC1 owns all of the stock of CFC2. CFC1 and CFC2 are both incorporated in Country A. CFC1 also has a branch (BR1) in Country B. The tax laws of Country A and Country B classify CFC1, CFC2 and BR1 as separate, nonfiscally transparent entities. CFC2 earns only non-subpart F income and uses a substantial part of its assets in a trade or business in Country A. BR1 makes a transfer to CFC2 that the tax laws of both Country A and Country B recognize as a loan from BR1 to CFC2. CFC2 pays interest to BR1. Country A allows CFC2 to deduct the interest from taxable income.

February 9, 1998 18 1998–6 I.R.B.

arrangements to reduce foreign tax while avoiding the corresponding creation of subpart F income. Treasury and the Service will issue regulations to prevent the use of these types of hybrid branch arrangements. Regulations will provide that, when such arrangements are undertaken, the branch and the CFC will be treated as separate corporations for purposes of subpart F.

III. PARTNERSHIPS AND TRUSTS

Treasury and the Service are aware that the issues under subpart F raised by hybrid branch arrangements may also be raised by certain partnership or trust arrangements. Treasury and Service intend to address these issues in separate ongoing regulations projects addressing partnerships and trusts.

IV. EFFECTIVE DATE

The regulations on hybrid branch arrangements will apply to all such arrangements entered into (or substantially modified, including, for example, by acceleration of payments or increases in principal) on or after January 16, 1998, the date on which this Notice was issued to the public. In addition, for all hybrid branch arrangements entered into before January 16, 1998, these regulations will apply to all payments (or other transfers) made or accrued after June 30, 1998.

V. PUBLIC COMMENTS

Comments are requested regarding the treatment of hybrid branch arrangements under subpart F.

For further information regarding this notice, contact Valerie Mark of the Office of the Associate Chief Counsel (International) at (202) 622-3840 (not a toll-free call).

Low-Income Housing Tax Credit—1998 Calendar Year Resident Population Estimates

Notice 98–13

This notice informs (1) state and local housing credit agencies that allocate lowincome housing tax credits under § 42 of the Internal Revenue Code and (2) states

and other issuers of tax-exempt private activity bonds under § 141, of the proper population figures to be used for calculating the 1998 calendar year populationbased component of the state housing credit ceiling (Credit Ceiling) under § 42(h)(3)(C)(i) and the 1998 calendar year volume cap (Volume Cap) under § 146.

The population figures both for the population-based component of the Credit Ceiling and for the Volume Cap are determined by reference to § 146(j). That section provides generally that determinations of population for any calendar year are made on the basis of the most recent census estimate of the resident population of a state (or issuing authority) released by the Bureau of the Census before the beginning of such calendar year.

The proper population figures for calculating the Credit Ceiling and the Volume Cap for the 1998 calendar year are the estimates of the resident population of states for July 1, 1997, released by the Bureau of the Census on December 31, 1997, in press release CB97–213. For convenience, these estimates are reprinted below.

Resident Population Estimates for

July 1, 1997.

State Population

Alabama 4,319,000

Alaska 609,000

Arizona 4,555,000

Arkansas 2,523,000

California 32,268,000

Colorado 3,893,000

Connecticut 3,270,000

Delaware 732,000

D.C. 529,000

Florida 14,654,000

Georgia 7,486,000

Hawaii 1,187,000

Idaho 1,210,000

Illinois 11,896,000

Indiana 5,864,000

Iowa 2,852,000

Kansas 2,595,000

Kentucky 3,908,000

Louisiana 4,352,000

Maine 1,242,000

Maryland 5,094,000

Massachusetts 6,118,000

Michigan 9,774,000

Minnesota 4,686,000

Mississippi 2,731,000

Missouri 5,402,000

Montana 879,000

Nebraska 1,657,000

Nevada 1,677,000

New Hampshire 1,173,000

New Jersey 8,053,000

New Mexico 1,730,000

New York 18,137,000

North Carolina 7,425,000

North Dakota 641,000

Ohio 11,186,000

Oklahoma 3,317,000

Oregon 3,243,000

Pennsylvania 12,020,000

Rhode Island 987,000

South Carolina 3,760,000

South Dakota 738,000

Tennessee 5,368,000

Texas 19,439,000

Utah 2,059,000

Vermont 589,000

Virginia 6,734,000

Washington 5,610,000

West Virginia 1,816,000

Wisconsin 5,170,000

Wyoming 480,000

The principal authors of this notice are Christopher J. Wilson of the Office of Assistant Chief Counsel (Passthroughs and Special Industries) and Timothy L. Jones of the Office of Assistant Chief Counsel (Financial Institutions and Products). For further information regarding this notice

1998–6 I.R.B 19 February 9, 1998

contact Mr. Wilson on (202) 622-3040 (not a toll-free call).

26 CFR 601.102: Classification of taxes collected by the Internal Revenue Service. (Also Part I, §4261.)

Rev. Proc. 98–18