Part IV. Items — Internal Revenue Bulletin 1998-29

Notice of Proposed Rulemaking and Notice of Public Hearing

Equity Options Without Standard Terms; Special Rules and Definitions

REG–104641–97

AGENCY: Internal Revenue Service (IRS), Treasury

ACTION: Notice of proposed rulemaking and notice of public hearing.

SUMMARY: This document contains proposed regulations providing guidance on the application of the rules governing qualified covered calls. The new rules address concerns that were created by the introduction of new financial instruments after the enactment of the qualified covered call rules. The proposed regulations will provide guidance to taxpayers holding qualified covered calls. This document also provides notice of public hearing on these proposed regulations.

DATES: Written comments must be received by September 23, 1998. Requests to speak (with outlines of oral comments) at the public hearing scheduled for November 4, 1998, must be submitted by October 14, 1998.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG–104641–97), room 5228, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG–104641–97), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC. Alternatively, taxpayers may submit comments electronically via the Internet by selecting the “Tax Regs” option on the IRS Home Page, or by submitting comments directly to the IRS Internet site at http://www.irs. ustreas.gov/prod/tax_regs/comments.html . The public hearing will be held in room 2615, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations,

Pamela Lew, (202) 622-3950; concerning submissions and the hearing, Michael L. Slaughter, Jr., (202) 622-7190, (not tollfree numbers).

SUPPLEMENTARY INFORMATION:

Background

Section 1092(c) defines a straddle as offsetting positions with respect to personal property. Under section 1092(d)(3), stock is personal property if the stock is part of a straddle that involves an option on that stock or substantially identical stock or securities. Under section 1092(c)(4), however, writing a qualified covered call option and owning the optioned stock is not treated as a straddle for purposes of section 1092.

The special treatment for qualified covered calls was created because Congress believed that, in certain limited circumstances, a taxpayer who grants a call option does not substantially reduce his or her risk of loss with respect to the optioned stock. Congress established a mechanical test to determine whether a written call option could substantially reduce a taxpayer’s risk of loss and, therefore, should be subject to treatment as one leg of a straddle. In order to be classified as a qualified covered call under this test, a call option must, among other things, be exchange-traded and not be deep in the money.

Section 1092(c)(4)(C) defines a deepin-the-money option as an option whose strike price is lower than an allowed bench mark. Under section 1092(c)(4)(D), this bench mark is generally the highest available strike price for an option that is less than the applicable stock price, as defined in section 1092(c)(4)(G). The Internal Revenue Code provides other bench marks under specified circumstances.

At the time the qualified covered call definition was written, listed options were available only at standardized maturity dates and strike price intervals. This fixed-interval system was a basic assumption of the Congressional plan for qualified covered calls and, more specifically, was the foundation for the definition of a deep-in-the-money option.

Certain options exchanges have begun to trade put and call equity options with flexible terms. The terms that are flexible

include strike price, expiration date, and exercise style (that is, American, European, or capped). Except as noted below, the strike price is denominated in the smallest interval available on the options exchanges, which is currently 1/8 of one dollar. To minimize the market impact of options contract expirations, equity options with flexible terms may not expire within 2 business days of equity options with standardized terms. Equity options with flexible terms are generally intended for institutional and other large investors.

Questions have been raised as to whether the strike prices established by equity options with flexible terms might establish the lowest qualified benchmark under section 1092(c)(4)(D) for all equity options, including those with standardized terms. The following example illustrates this concern. If a stock is currently selling for $62, equity options with flexible terms and option periods of not more than 90 days could have a strike price of $61 7/8. If the strike prices from equity options with flexible terms were taken into account in determining if a 90-day equity option with standardized terms is deep in the money, any option being sold for less than $61 7/8 would be deep in the money. Because the strike prices for an equity option with standardized terms are set in $5 intervals, the highest strike price less than the current selling price for an equity option with standardized terms would be $60. Thus, any in-the-money equity option on the stock that had standardized terms would be deep in the money (for purposes of section 1092(c)(4)).

Explanation of Provisions

The proposed regulations provide that the strike prices established by equity options with flexible terms are not taken into account in determining whether equity options that are not equity options with flexible terms are deep in the money. Thus, the existence of strike prices established for equity options with flexible terms does not affect the lowest qualified bench mark, as determined under section 1092(c)(4)(D), for an equity option with standardized terms. The proposed regulations define equity options with flexible

1998–29 I.R.B. 9 July 20, 1998

terms as those equity options described in certain specified SEC releases, including any changes approved by the SEC to these releases.

The regulations will allow some taxpayers, primarily institutional and other large investors, to engage in certain exchange-based transactions that are currently unavailable to them and will permit other investors to continue doing business under section 1092 without regard to the existence of the institutional product.

The proposed regulations do not address whether an equity option with flexible terms is eligible for qualified covered call treatment under section 1092(c)(4). Comments are requested on the following issues: (1) whether equity options with flexible terms should be eligible for qualified covered call treatment under section 1092(c)(4); (2) whether there should be uniform rules governing the bench marks for equity options with flexible terms and standardized options; and (3) if uniform rules are not appropriate, what bench marks should apply to equity options with flexible terms.

Proposed Effective Date

These regulations apply to equity options with flexible terms entered into on or after the date that the Treasury Decision adopting these rules as final regulations is published in the Federal Register.

Special Analyses

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in EO 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Comments and Public Hearing

Before these proposed regulations are adopted as final regulations, considera

tion will be given to any written comments (preferably a signed original and eight (8) copies) that are submitted timely to the IRS. All comments will be available for public inspection and copying.

A public hearing has been scheduled for Wednesday, November 4, 1998, beginning at 10:00 a.m. The hearing will be held in Room 2615, Internal Revenue Building, 1111 Constitution Avenue NW, Washington DC. Because of access restrictions, visitors will not be admitted beyond the Internal Revenue Building lobby more than 15 minutes before the hearing starts.

The rules of 26 CFR 601.601(a)(3) apply to the hearing.

Persons who wish to present oral comments at the hearing must submit written comments by September 23, 1998, and submit an outline of topics to be discussed and the time to be devoted to each topic (signed original and eight (8) copies) by October 14, 1998.

A period of 10 minutes will be allotted to each person for making comments.

An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing.

Drafting Information

The principal author of these regulations is Pamela Lew, Office of Assistant Chief Counsel (Financial Institutions and Products). However, other personnel from the IRS and Treasury Department participated in their development.

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Proposed Amendments to the Regulations

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 is amended by adding an entry in numerical order to read as follows:

Authority: 26 U.S.C. 7805 * * * Section 1.1092(c)–1 also issued under 26 U.S.C. 1092(c)(4)(H). * * *

Par. 2. Section 1.1092(c)–1 is added to read as follows:

§1.1092(c)–1 Equity options with flexible terms.

(a) Effect on lowest qualified bench mark for other options. The existence of

strike prices established by equity options with flexible terms does not affect the determination of the lowest qualified bench mark, as defined in section 1092(c)(4)(D), for any option that is not an equity option with flexible terms.

(b) Definitions. For purposes of this section–

(1) Equity option with flexible terms means an equity option—

(i) That is described in the following Securities Exchange Act Releases—

(A) Self-Regulatory Organizations; Order Approving Proposed Rule Changes and Notice of Filing and Order Granting Accelerated Approval of Amendments by the Chicago Board Options Exchange, Inc. and the Pacific Stock Exchange, Inc., Relating to the Listing of Flexible Equity Options on Specified Equity Securities, Securities Exchange Act Release No. 34–36841 (Feb. 21, 1996); or (B) Self-Regulatory Organizations; Order Approving Proposed Rule Changes and Notice of Filing and Order Granting Accelerated Approval of Amendment Nos. 2 and 3 to the Proposed Rule Change by the American Stock Exchange, Inc., Relating to the Listing of Flexible Equity Options on Specified Equity Securities, Securities Exchange Act Release No. 34–37336 (June 27, 1996); or (C) Self-Regulatory Organizations; Order Approving Proposed Rule Change and Notice of Filing and Order Granting Accelerated Approval of Amendment Nos. 2, 4 and 5 to the Proposed Rule Change by the Philadelphia Stock Exchange, Inc., Relating to the Listing of Flexible Exchange Traded Equity and Index Options, Securities Exchange Act Release No. 34–39549 (Jan. 23, 1998); or

(D) Any changes to the SEC releases described in paragraphs (b)(1)(i)(A) through (C) of this section that are approved by the Securities and Exchange Commission; or

(ii) That is traded on any national securities exchange which is registered with the Securities and Exchange Commission (other than those described in the SEC Releases set forth in paragraph (b)(1)(i) of this section) or other market which the Secretary determines has rules adequate to carry out the purposes of section 1092 and is—

(A) Substantially identical to the equity options described in paragraph (b)(1)(i) of this section; and

July 20, 1998 10 1998–29 I.R.B.

(B) Approved by the Securities and Exchange Commission in a Securities Exchange Act Release.

(2) Securities Exchange Act Release means a release issued by the Securities and Exchange Commission. To determine identifying information for releases referenced in paragraph (b)(1) of this section, including release titles, identification numbers, and issue dates, contact the Office of the Secretary, Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 20549. To obtain a copy of a Securities Exchange Act Release, submit a written request, including the specific release identification number, title, and issue date, to Securities and Exchange Commission, Attention Public Reference, 450 5th Street, NW., Washington, DC 20549.

(c) Effective date. These regulations apply to equity options with flexible terms entered into on or after the date that the Treasury Decision adopting these regulations is published in the Federal Register.

Michael P. Dolan, Deputy Commissioner of

Internal Revenue.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG–110403–98), room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered between the hours of 8:00 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG–110403–98), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC. Alternatively, taxpayers may submit comments electronically via the Internet by selecting the “Tax Regs” option on the IRS Home Page, or by submitting comments directly to the IRS Internet site at http://www.irs. ustreas.gov/prod/tax_regs/comments.html.

FOR FURTHER INFORMATION CONTACT: Concerning the submissions, Michael Slaughter, (202) 622-7180; concerning the regulations, Vincent Surabian, (202) 622-4940 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

Temporary regulations in T.D. 8771 amend the Employment Tax and Collection of Income Tax at Source Regulations (26 CFR part 31) relating to section 6302. The termporary regulations change the de minimis rule for the deposit of Federal employment taxes. The text of those regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explain the amendments.

Special Analysis

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in EO 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because these regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its

impact on small business.

Comments and Requests for a Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS. All comments will be available for public inspection and copying. A public hearing may be scheduled if requested by any person that timely submits comments. If a public hearing is scheduled, notice of the date, time, and place for the hearing will be published in the Federal Register.

Drafting Information

The principal author of these regulations is Vincent Surabian, Office of Assistant Chief Counsel (Income Tax & Accounting). However, other personnel from the IRS and the Treasury Department participated in their development.

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Proposed Amendments to the Regulations

Accordingly, 26 CFR part 31 is proposed to be amended as follows:

PART 31—EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE

Paragraph 1. The authority citation for part 31 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * * Par. 2. In §31.6302–1, paragraph (f)(4) is revised to read as follows:

§31.6302–1 Federal tax deposit rules for withheld income taxes and taxes under the Federal Insurance Contributions Act (FICA) attributable to payments made after December 31, 1992.

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(f) * * * (4) [The text of proposed §31.6302– 1(f)(4) is the same as the text of §31.6302–1T(f)(4)].

Michael P. Dolan, Deputy Commissioner of

Internal Revenue.

(Filed by the Office of the Federal Register on June 24, 1998, 8:45 a.m., and published in the issue of the Federal Register for June 25, 1998, 63 F.R. 34616)

Notice of Proposed Rulemaking

Federal Employment Tax Deposits—De Minimis Rule

REG–110403–98

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary regulations.

SUMMARY: In T.D. 8771, page 6 of this Bulletin, the IRS is issuing temporary regulations relating to the deposits of Federal employment taxes. The text of those regulations also serves as the text of these proposed regulations.

DATES: Written comments and requests for a public hearing must be received by September 14, 1998.

1998–29 I.R.B. 11 July 20, 1998

a collection of information unless it displays a valid control number assigned by the Office of Management and Budget.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

Background

The temporary regulations published in T.D. 8773 add §1.32–3T to the Income Tax Regulations.

The text of those temporary regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains the temporary regulations.

Special Analyses

It is hereby certified that these regulations will not have a significant economic impact on a substantial number of small entities. This certification is based upon the fact that the underlying statute applies only to individuals. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.

Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Comments and public hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight copies) that are submitted timely (in the manner described in the ADDRESSES portion of this preamble) to the IRS. All comments will be available for public inspection and copying.

(Filed by the Office of the Federal Register on June 15, 1998, 8:45 a.m., and published in the issue of the Federal Register for June 16, 1998, 63 F.R. 32774)

Notice of Proposed Rulemaking and Notice of Public Hearing

EIC Eligibility Requirements

REG–116608–97

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary regulations and notice of public hearing.

SUMMARY: In T.D. 8773, page 4 of this Bulletin, the IRS is issuing temporary regulations pertaining to the eligibility requirements for certain taxpayers denied the earned income credit (EIC) as a result of the deficiency procedures. The text of those temporary regulations also serves as the text of these proposed regulations. This document also provides notice of a public hearing on these proposed regulations.

DATES: Written comments must be received by September 23, 1998. Requests to speak (with outlines of oral comments) at a public hearing scheduled for Wednesday, October 21, 1998, must be received by September 30, 1998.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG–116608–97), room 5228, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG–116608–97), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC. Alternatively, taxpayers may submit comments electronically via the Internet by selecting the “Tax Regs” option on the IRS Home Page, or by submitting comments directly to the IRS Internet site at http://www.irs. ustreas.gov/prod/tax_regs/comments.html. The public hearing will be held in room 2615, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC 20224.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Karin

Loverud, 202-622-6060; concerning submissions or the hearing, LaNita VanDyke, 202-622-7190 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information contained in this notice of proposed rulemaking has been submitted to the Office of Management and Budget for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). Comments on the collection of information should be sent to the Office of Manage- ment and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, T:FP, Washington, DC 20224. Comments on the collection of information should be received by August 24, 1998. Comments are specifically requested concerning:

Whether the proposed collection of information is necessary for the proper performance of the functions of the Internal Revenue Service, including whether the information will have practical utility;

The accuracy of the estimated burden associated with the proposed collection of information (see below);

How the quality, utility, and clarity of the information to be collected may be enhanced;

How the burden of complying with the proposed collection of information may be minimized, including through the application of automated collection techniques or other forms of information technology; and

Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

The collection of information in this proposed regulation is in §1.32–3. This information is required to conform with the statute and to permit the taxpayer to claim the EIC. This information will be used by the IRS to determine whether the taxpayer is entitled to claim the EIC. The collection of information is mandatory. The likely respondents are individuals.

The burden is reflected in the burden of Form 8862.

An agency may not conduct or sponsor, and a person is not required to respond to,

July 20, 1998 12 1998–29 I.R.B.

A public hearing has been scheduled for Wednesday, October 21, 1998, at 10 a.m., in room 2615, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC. Because of access restrictions, visitors will not be admitted beyond the building lobby more than 15 minutes before the hearing starts.

The rules of §601.601(a)(3) apply to the hearing.

Persons that have submitted written comments by September 23, 1998, and want to present oral comments at the hearing must submit, not later than September 30, 1998, an outline of the topics to be discussed and the time to be devoted to each topic. A period of 10 minutes will be allotted to each person for making comments.

An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing.

Drafting Information

The principal author of these proposed regulations is Karin Loverud, Office of the Associate Chief Counsel (Employee Benefits and Exempt Organizations), IRS. However, other personnel from the IRS and the Treasury Department participated in their development.

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Proposed Amendments to the Regulations

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.32–3 is added to read as follows:

§1.32–3 Eligibility Requirements.

[The text of this proposed section is the same as the text of §1.32–3T published in T.D. 8773.]

ministrators, participants or beneficiaries. Specifically, interested members of the public are invited to describe new technologies that are commonly used in plan administration, and to indicate the extent to which these technologies, and the manner in which they are used, adequately protect the rights of participants and beneficiaries. Commentators also are invited to contrast characteristics and applications of technologies that adequately protect the rights of participants and beneficiaries with characteristics and applications that may not provide such protection. The Service is particularly interested in receiving specific comments regarding the paperless administration of participant elections and consents, plan notices, plan loans, and distributions.

In addition to the information requested above, comments are specifically invited on the following questions:

Would it be preferable for guidance to focus on specific uses of existing technologies or to take the form of generally applicable principles or standards? If commentators recommend that guidance take the form of generally applicable principles or standards, it is requested that the comments identify suggested principles or standards as specifically as possible (including any variations appropriate for different technologies).

• To what extent, if any, do the terms “election” and “consent” imply a writing or signature requirement?

• To what extent should paperless identification mechanisms (for example, a Personal Identification Number (“PIN”) or password) be treated as satisfying a legal requirement of a “writing” or a signature?

Should the requirement to provide a notice during a specified period (such as the requirement to provide a § 402(f) notice no less than 30 and no more than 90 days before the date of an eligible rollover distribution) be deemed to be satisfied by providing a written copy of a full notice on a less frequent basis (for example, once a year) if participants or beneficiaries, when initiating a transaction to which the notice relates (such as requesting a distribution), are given an oral or recorded summary of the notice and told how to obtain a copy of the full notice?

Michael P. Dolan, Deputy Commissioner of

Internal Revenue.

25, 1998, 8:45 a.m., and published in the issue of the Federal Register for June 25, 1998, 63 F.R. 34615)

Request for Information—New Technologies in Retirement Plans

Announcement 98–62

The Internal Revenue Service and the Department of the Treasury request comments from the public relating to the use of new technologies (sometimes referred to as “paperless” technologies) in the administration of retirement plans. The Service and Treasury are in the process of developing guidance relating to the use of new technologies in communications between retirement plans and their participants. This announcement solicits comments on a number of specific issues. However, comments and suggestions from interested parties concerning other issues pertinent to these technologies are also requested.

BACKGROUND

Section 1510 of the Taxpayer Relief Act of 1997 (“TRA ’97”), Pub. L. 105– 34, provides that the Secretary of the Treasury and the Secretary of Labor each shall issue guidance designed to interpret the notice, election, consent, disclosure, and time requirements (and related recordkeeping requirements) under the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 relating to retirement plans as applied to the use of new technologies by plan sponsors and administrators. Section 1510 requires the guidance to maintain the protection of the rights of participants and beneficiaries. Section 1510 further provides that the guidance shall clarify the extent to which writing requirements under the Internal Revenue Code of 1986 relating to retirement plans shall be interpreted to permit paperless transactions.

SPECIFIC ISSUES FOR COMMENT

The Service invites interested parties to submit information concerning the application of new or paperless technologies in the administration of retirement plans and concerning any issues that such technologies have presented for plan sponsors, ad

(Filed by the Office of the Federal Register on June

1998–29 I.R.B. 13 July 20, 1998

organizations that are not private foundations described in section 509(a) of the Code) are now classified as private foundations: Golden Generations Inc., Philadelphia,

Foundation, St. Louis, MO

What are the appropriate standards for authentication, substantiation, and security in paperless plan administration and record-keeping? For example, how can it be established with a reasonable level of confidence that a plan notice has actually been received by a plan participant or beneficiary to whom the notice has been transmitted in a paperless form? Similarly, how can it be established that a particular paperless transaction was entered into by a particular participant? Also, how should records of paperless transactions be maintained by plan sponsors or administrators?

• What are the appropriate standards for ensuring that participants and beneficiaries have sufficient time and opportunity to consider (and, if desired, obtain advice on) all relevant options when making significant decisions about retirement savings? For example, should participants and beneficiaries have the right to review and change the content of any communication or instructions transmitted in a paperless form before completion of the transaction, and should they always have the right to receive communications on paper as an alternative to paperless communications?

What types of new or paperless technologies do plan sponsors and administrators foresee using in the future? What practical and legal issues might arise from the use of those technologies, and how might systems using those technologies be designed to protect the rights of participants and beneficiaries?

PA Good Shepherd of Colorado I, Littleton,

CO Gower Foundation for Excellence in

Education, Burr Ridge, IL Granada East Parent Teacher

Organization, Phoenix, AZ Grand Rapids Emergency Assistance

Team G R E A T, Grant Rapids, MI Grass Roots Initiative for Planning &

Progress Inc., Conway, SC Grayson County Community Housing

Resource Board Inc., Sherman, TX Great Independence Housing Coalition,

Independence, MO Greater Albuquerque Housing

Partnership, Albuquerque, NM Greater Cleveland Soccer Association,

Cleveland, TN Greater Birmingham Alabama Nawic

Scholarship Fund, Birmingham, AL Greater First Social Ministries

Incorporated GFSMI, Beaumont, TX Greater Kankakee Development

Foundation, Kankakee, IL Greater Orleans Club of the National

Association of Negro, New Orleans, LA Greater Works Outreach Ministries Inc.,

Philadelphia, PA Grey Wolves Rugby Club Inc., Thornton,

Which issues raised by the use of new technologies in retirement plans are most in need of administrative guidance?

with a signed original and eight (8) copies. All comments will be available for public inspection and copying in their entirety. Comments should be sent to CC:DOM:CORP:R (OGI–106555–98), Room 5226, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Alternatively, comments may be hand delivered between the hours of 8 a.m. and 5 p.m. to CC:DOM:CORP:R, Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC, or may be submitted electronically via the IRS Internet site at http://www.irs.ustreas.gov/ prod/tax_regs/comments.html. To ensure that comments are given full consideration, they should be submitted by October 5, 1998.

DRAFTING INFORMATION

The principal authors of this announcement are Catherine Livingston Fernandez of the Office of the Associate Chief Counsel (Employee Benefits and Exempt Organizations) and Daniel S. Evans of the Employee Plans Division. For further information regarding this announcement, contact the Employee Plans Division’s telephone assistance service between 1:30 and 4:00 p.m., Eastern Time, Monday through Thursday at (202) 622-6074/75, or Ms. Fernandez at (202) 622-6030. (These telephone numbers are not tollfree).

Foundations Status of Certain Organizations

Announcement 98–68

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

CO Grief of the Washington Metropolitan

Area Inc., Alexandria, VA Griffin Group International Inc., Mesa, AZ Group Inc., Stuart, FL Gunn Junior High School Band Booster

Comments received to date indicate that the possible use of electronic technologies in the administration of the spousal consent requirements of §§ 401(a)(11) and 417 of the Code raises a number of significant legal and practical issues relating to adequate protection of persons who are not plan participants or current or former employees. Consequently, initial guidance on new technologies is unlikely to address issues involving spousal consent. The public is nevertheless invited to submit comments on this topic.

Fund, Arlington, TX Harvest Time Crusades Inc., Waco, TX Haven Enterprises Inc., Wonsocket, RI Health Education and Scholarship

Club, Arlington, TX Gurnee Rotary Club Charitable

Foundation, Gurnee, IL Haddington Townhouses Resident

Association Inc., Philadelphia, PA Halifax-Northampton Opportunity

Industrialization Center Inc., Roanoke Rapids, NC Hannibal Area Rapid Express Inc.,

Hannibal, MO Harold Key Scholarship Endowment

ADDRESS

Written comments should be submitted

July 20, 1998 14 1998–29 I.R.B.

Health Fair of Greater Kansas City Inc.,

Koo-Koo News Foundation, Strasburg,

Fund, Montvale, NJ Kyrene de la Colina School P T O,

Phoenix, AZ La Palomas, Inc., Loveland, CO Laikos Ministries Inc., Hague, VA Lamar County Activity Center Inc.,

Independence, MO Health Opportunity Protection and

Encouragement Center Inc., Athens, TN Heart Body & Soul Inc., Baltimore, MD Hearth, Chapel Hill, NC Hellenic American National Council Inc.,

Iowans Against the Death Penalty Fund,

West Des Moines, IA Iowans for Safer Cities, Des Moines, IA Irish Alliances Foundation, St. Paul, MN Isshin Ryu Club Inc., Albuquerque, NM J R Tucker High School Athletic Booster

Club Inc., Richmond, VA Jane Addams Delta Development

VA KPMG Peat Marwick Disaster Relief

Washington, DC Henry County Council on Child Abuse,

Stockbridge, GA Heritage Arts Inc., Raleigh, NC Heritage Festival, Brooklyn Center, MN Hiram G. Andrews Parents Association

Memorial Scholarship Trust, Stoutland, MO Japan-America Jamboree Adventure,

Rapid City, SD Jefferson Housing Opportunities Inc.,

PA Landmark Court Inc., Pittsburgh, PA Leavenworth County Youth Soccer

Corporation, Chicago, IL James D Evans & Pauline Palmer Evans

Barnesville, GA Lancaster Heart Foundation, Lancaster,

Incorporated, Johnstown, PA Hispanic Society of Central Ohio Inc.,

Association, Levenworth, KS Leora Brown School Inc., Corydon, IN Liberty High School Alumni Scholarship

Fund Inc., Williamson, WV Life Directions USA, Chicago, IL Lifeskills Education to Empower People

Columbus, OH Hospital Art Project Network, Inc.,

Dallas, TX Hooves for Happiness Inc., Frostburg,

Metairie, LA Jenkins Apartments Inc., Baltimore, MD Jennings Rotary Scholastic Fund Inc.,

MD Horner Association of Men, Chicago, IL Hospice of the VNA of Greater

Jennings, LA Jesus Christ Prison Ministries Inc.,

Bethesda, MD Johnny Gray Jones Youth Shelter,

Saginaw, MI Jewish Repertory Theatre Company,

Inc., Paducah, KY Lillian Holliday Residence, Philadelphia,

PA Lincoln High School Band Boosters,

Philadelphia, Philadelphia, PA Housecalls-Hospice Volunteer

Association Inc., Parkersburg, WV Housing Applications to Social Training

Boosier City, LA Johnson City Historic Preservation

Des Moines, IA Literacy Alliance Memphis-Shelby

County, Memphis, TN Louisiana-Mississippi Infectious

Philadelphia, PA M Span, St. Paul, MN MacArthur Avenue Players, Dillon, SC Madison Basketball Association,

Evolutions Inc., Arlington, TX Housing Opportunity Center, Phoenix,

Diseases Society, New Orleans, LA Love and Care Center Inc., San Antonio,

AZ Howard County Hospital Foundation,

Cresco, IA Humanitarian Aid Relief Team, Provo, UT IGBO Foundation USA, Chicago, IL Illinois Ethnic Coalition, Chicago, IL Illinois Pirg Education Fund, Chicago, IL In the Best Interest Children of Divorce,

Salt Lake City, UT India Outreach, Elgin, IL Indian Cultural Center Inc., Marlton, NJ Inner-City Growth Corporation, Chicago,

Society Inc., Johnson City, TN Just In Time Builders, Inc., Pepper Pike,

OH Just Us for Youth, Chicago, IL Juvenile Justice Center Inc., Tallahassee,

FL Kansas Association of Directors of Plant

Facilities Scholarship, Leavenworth, KS Kansas Multi-Cultural Arts Alliance Inc.,

Raleigh, NC Kemper Hall Alumnae Association Inc.,

TX Luce County Non-Profit Housing

Commission, Newberry, MI Ludlow Youth Community Center,

Wichita, KS KDK Private Industry Council Inc.,

Batavia, IL Kelly Home of Iredell County Inc.,

Phoenix, AZ Mahlon and Millcreek Corporation,

Philadelphia, PA Mainstreet Springfield—Robertson

County, Springfield, TN Mapleview Inc., Carmel, IN Marianna High School Foundation Inc.,

IL Institute for Innovative Interventions II

Inc., Miami Beach, FL Interagency Council for Youth of Wake

County, Raleigh, NC Intercounty Teach a Trade Inc., King of

Simulate Competitive Research, Lexington, KY Keroglu Association Inc., Boonton, NJ Keshet of Michigan-Jewish Families of

Gurnee, IL Kensington Academy Foundation,

Birmingham, MI Kentucky Experimental Program to

Marianna, FL Marshall Junior Olympic Volleyball,

Mattawan, MI Matter of Life Consortium Inc.,

Prussia, PA International Falls Education Fund,

International Falls, MN International Learning Center Inc.,

Marshall, MN Mattawan Public Education Foundation,

County Dist Library, Canton, OH

Bellaire, TX International Trade Finance Society, Inc.,

Children With Special Needs, Oak Park, MI Kidsburgh Press, Pittsburgh, PA Kidslife Resources, Mount Laurel, NJ Kittrell School Scholarship Fund Inc.,

Readyville, TN Knox Co Task Force Against Violence

Pinehurst, NC Mature Resources Foundation, Clearfield,

Santa Rosa, CA International Trade & Management

Institute, Philadelphia, PA IO Association, Middletown, OH Iowa Young Farmers National Institute

Inc. Harbor House, Vincennes, IN

PA Maxwell Parent Teacher Organization,

Greensburg, PA Mayors Literacy Commission Stark

1992 Inc., Mt. Union, IA

1998–29 I.R.B. 15 July 20, 1998

McDowell County Citizens Conservation

Mri Mobile Services of West Michigan,

Grand Rapids, MI Multiple Sclerosis Fight Against

Ninth Judicial District Family and

Corps Inc., Welch, WV Medford Educational Institute Inc.,

Medford, OR Mediation Center for Central Virginia

Childrens Court Services Inc., Clovis, NM No Needles in the Trash Foundation Inc.,

Parkersburg, WV North East Gifted and Talented Education

Incorporated, Lynchburg, VA Memorial Hospital Southeast Auxiliary,

Houston, TX Memorial Hospital Southwest Auxiliary,

Houston, TX Memphis and Shelby County Adolescent

Demyelinnating Diseases, Inc., San Antonio, TX Museo Chicano Inc., Phoenix, AZ Music in Common Inc., Columbia, MD Mustangs Athletic Booster Club Inc.,

Sclerosis, Aspen, CO Nannie Berry Elementary Parent Teacher

Parker, CO Nancy Davis Foundation for Multiple

Association, San Antonio, TX North Eastern Community Services Inc.,

Las Vegas, NM North Georgia Heritage Association Inc.,

Jasper, GA North Museum Corporation, Lancaster,

PA North Surburban Parochial School

Pregnancy Council, Memphis, TN Memphis State Swimming Inc.,

Council Inc., Wichita Falls, TX North Texas Free-Net Incorporated,

Memphis, TN Menasha Wisconsin Rotary Foundation

Org PTO Hendersonville TN, Hendersonville, TN Nashville Mens Chorus, Nashville, TN National African-American Club,

Philadelphia, PA National Assoc. of Secretaries of State,

League, Robbinsdale, MN North Texas Estate and Financial Planning

Inc., Menasha, WI Metanoia Mentor Group, Blue Springs,

MO Metro East Area Project Board,

E. St. Louis, IL Metroplex Association of Teachers of

Elementary Science, Arlington, TX Michigan Pharmacists Association,

Lansing, MI Mid-County Educational Foundation,

Lexington, KY National Association of Head Start

Memphis, TN Native American War Dead Memorial,

Alumni Chapters Inc., Indianapolis, IN National Association of State Personnel

Dallas, TX Northeastern Action Wildlife Club Inc.,

Roanoke Rapids, NC Northeastern Network Inc., Wilkes Barre,

PA Northern Ireland Human Rights

Executives Inc., Lexington, KY National Douglass Alumni Corporation,

Varna, IL Midnet Inc., Lincoln, NE Midpark High School Foundation,

Commission Inc., Washington, DC Northern Pocahontas Health Clinic Inc.,

Durbin, WV Northside Athletic Association, Huber

Heights, OH Northwest Delta Choral and Arts Council

Middleburg Heights, OH Midwest Safety and Health Association,

Lander, WY NDC Center for Affordable Solutions in

Housing of Tampa Inc., Bethesda, MD Nebraska Friends of Foster Children

St. Paul, MN Mike Begeny Memorial Scholarship

Fund, Westerville, OH Mindmenders Foundation Inc., Naples,

Foundation, Lincoln, NE Neighborhood Educational Training

Inc., Batesville, MS Northwest Louisiana Youth Services,

Shreveport, LA Novel Stages Theater Company Inc.,

FL Ministers Training Center, Richmond, VA Minnesota Project for Contemporary

Language Arts, St. Paul, MN Minnesota Safety and Health Foundation,

Services, Toledo, OH Neighbors Helping Neighbors, Canton,

NE New Beginnings Youth Center Inc.,

OH Net Illinois Inc., Ann Arbor, MI New Afrikan Writers Workshop, Omaha,

St. Paul, MN Minority Health Coalition of

Vanderburgh County, Evansville, IN Monte Carlo Outreach Facility Vaughn

Green, New Orleans, LA Morehouse College Alumni Chapter of

Des Moines, IA New Generations Youth Club Inc.,

Ann Arbor, MI New Haven Band Boosters Inc., New

Philadelphia, PA Nursing Center at Oak Summit, Winston Salem, NC Oakland Education Foundation, Oakland,

NJ 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.

Palm Beach County Florida Inc., West Palm Beach, FL Morgan County Academic Booster Club,

Madison, GA Morningstars Development Company,

Inc., Kansas City, MO Mountain College Library Network Inc.,

Haven, IN New Hope Ministries Inc., Falls Church,

VA New Jersey Dare Drug Abuse Resistance

Education Officers, Totowa, NJ Newton Community Center a New Jersey

Non-Profit Corporation, Camden, NJ NIH Recreation & Welfare Foundation

Inc., Bethesda, MD

Swannanoa, NC

July 20, 1998 16 1998–29 I.R.B.