Part III. Administrative, Procedural, and Miscellaneous

effective before the first day of that plan year. (A later remedial amendment period applies for governmental plans.)

III. EXTENSION OF EFFECTIVE DATE OF NONDISCRIMINATION REGULATIONS FOR NONELECTING CHURCH PLANS

Under the extension provided by this notice, the regulations under §§ 401(a)(4), 401(a)(5), 401(l), and 414(s) apply to nonelecting church plans only for plan years beginning on or after January 1, 2001. For plan years beginning before this extended effective date, nonelecting church plans must be operated in accordance with a reasonable, good faith interpretation of these sections.

IV. EXTENSION OF REMEDIAL AMENDMENT PERIOD AND ADMINISTRATIVE RELIEF FOR NONELECTING CHURCH PLANS FOR AMENDMENTS RELATING TO NONDISCRIMINATION REQUIREMENTS

Under this notice, the TRA ’86 remedial amendment period for nonelecting church plans is extended to the last day of the first plan year beginning on or after January 1, 2001, but only for amendments required to comply with the nondiscrimination requirements of §§ 401(a)(4), 401(a)(5), 401(l), and 414(s). The additional administrative relief provided under Notice 92–36 also applies to these plans through this extended remedial amendment period with respect to these nondiscrimination requirements. This notice does not extend the remedial amendment periods for any provisions applicable to nonelecting church plans other than these nondiscrimination requirements.

V. SCOPE AND COMMENTS

The extensions described in this notice are provided in anticipation of the development of nondiscrimination and coverage safe harbors for nonelecting church plans to comply with §§ 401(a)(4), 401(a)(5), 401(l), and 414(s), as described in § 1462(b) of SBJPA. The Treasury and the Service recognize that certain issues may arise for nonelecting church plans that are attributable to unique features of churches as sponsoring employers. Such

Effective Date of Nondiscrimination Regulations for Church Plans

Notice 98–39

I. PURPOSE

This notice extends, until the first day of the first plan year beginning on or after January 1, 2001, the effective date of certain nondiscrimination regulations for nonelecting church plans. Specifically, this notice extends the effective date of the regulations under §§ 401(a)(4), 401(a)(5), 401(l), and 414(s) of the Internal Revenue Code. This notice also extends the TRA ’86 remedial amendment period for such provisions, and other related administrative relief for nonelecting church plans, until the last day of the first plan year beginning on or after January 1, 2001.

II. BACKGROUND

A. Church Plans

Section 414(e)(1) of the Code provides in general that the term “church plan” means a plan established and maintained for its employees (and their beneficiaries) by a church or by a convention or association of churches which is exempt from tax under § 501. Pursuant to § 410(d), a church or convention or association of churches which maintains any church plan may make an election under § 410(d) to have certain Code provisions relating to participation, vesting, and funding, etc., apply to such church plan (an “electing church plan”) as if such provisions did not contain an exclusion for church plans. A church plan for which such an election has not been made (a “nonelecting church plan”) is not subject to these provisions.

Section 1462(b) of the Small Business Job Protection Act of 1996 (“SBJPA”) provides that the Secretary of the Treasury may design nondiscrimination and coverage safe harbors for church plans.

B. Announcement 95–48 and Notice 96–64

The nondiscrimination requirements under the Code were substantially changed by the Tax Reform Act of 1986 (“TRA ’86”). Announcement 95–48, 1995–23 I.R.B. 13, and Notice 96–64,

1996–2 C.B. 229, provided that the regulations under §§ 401(a)(4), 401(a)(5), 401(l) and 414(s) apply for nonelecting church plans in plan years beginning on or after January 1, 1999. For plan years beginning before that effective date, nonelecting church plans must be operated in accordance with a reasonable, good faith interpretation of these statutory provisions.

The remedial amendment period described in § 401(b) is generally the period during which a plan may be amended retroactively to comply with certain plan qualification requirements. Announcement 95–48 and Notice 96–64 extended the remedial amendment period under § 401(b) for nonelecting church plans for certain amendments (“TRA ’86 remedial amendment period”) to the last day of the first plan year beginning on or after January 1, 1999. The amendments to which the TRA ’86 remedial amendment period applies are those required to comply with TRA ’86 and subsequent legislation through the Omnibus Budget Reconciliation Act of 1993. Announcement 95–48 and Notice 96–64 also provided that, for a nonelecting church plan during the TRA ’86 remedial amendment period, the additional administrative relief provided under Notice 92–36, 1992–2 C.B. 364, would continue to be available.

C. Revenue Procedure 97–41 and Revenue Procedure 98–14

The Uruguay Round Agreements Act of 1994 (“GATT”), SBJPA (including § 414(u) of the Code and the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”)), and the Taxpayer Relief Act of 1997 (“TRA ’97”) changed certain provisions of the Code affecting qualified plans. Rev. Proc. 97–41, 1997–33 I.R.B. 51, and Rev. Proc. 98–14, 1998–4 I.R.B. 22, set forth the remedial amendment period for plans for amendments relating to these statutes. The remedial amendment period for these statutes generally permits plan amendments to be made retroactively effective if they are adopted on or before the last day of the first plan year beginning on or after January 1, 1999, and they relate to GATT, SBJPA (including § 414(u) and USERRA), and TRA ’97 changes that are

1998–33 I.R.B. 11 August 17, 1998

endar year as well as the previously published inflation adjustment factors and phase-out amounts for the 1991 through 1997 calendar years.

Notice 98–41 TABLE 2

INFLATION ADJUSTMENT FACTORS AND PHASE-OUT

AMOUNTS

Inflation Calendar Adjustment Phase-out Year Factor Amount

1991 1.0000 0 1992 1.0363 0 1993 1.0708 0 1994 1.0992 0 1995 1.1160 0 1996 1.1485 0 1997 1.1720 0 1998 1.1999 0

DRAFTING INFORMATION The principal author of this notice is Brenda M. Stewart of the Office of Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice contact Ms. Stewart on (202) 622-3120 (not a toll-free call).

1998 Marginal Production Rates

Notice 98–42

Section 613A(c)(6)(C) of the Internal Revenue Code defines the term “applicable percentage” for purposes of determining percentage depletion for oil and gas produced from marginal properties. The applicable percentage is the percentage (not greater than 25 percent) equal to the sum of 15 percent, plus one percentage point for each whole dollar by which $20 exceeds the reference price (determined under § 29(d)(2)(C)) for crude oil for the calendar year preceding the calendar year in which the taxable year begins. The reference price determined under § 29(d)(2)(C) for the 1997 calendar year is $17.24.

issues may arise, for instance, in the interaction of §§ 401(a)(4) and 410(c). The Treasury and the Service invite specific comments and suggestions regarding the design of safe harbors for nonelecting church plans.

The extensions provided by this notice do not apply to electing church plans. The Treasury and the Service do not presently anticipate the development of safe harbors for electing church plans under § 1462(b) of SBJPA, but comments are welcome regarding whether these plans need safe harbors. Furthermore, this notice does not apply to annuity contracts or other arrangements maintained by churches pursuant to § 403(b), which continue to be eligible for the relief described in § VI of Notice 96–64.

Comments or suggestions in response to this notice should be addressed to CC:DOM:CORP:R (Notice 98–39), Room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Alternatively, taxpayers may hand-deliver comments between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (Notice 98–39), Courier’s desk, Internal Revenue Service, 1111 Constitution Ave., NW, Washington, DC, or may submit comments electronically via the IRS internet site at http://www.irs.ustreas.gov./prod/tax_regs/ comments.html

VI. EFFECT ON OTHER DOCUMENTS

Notices 96–64 and 92–36 are modified.

DRAFTING INFORMATION

The principal author of this notice is Diane S. Bloom of the Employee Plans Division. For further information regarding this notice, please contact the Employee Plans Division’s taxpayer assistance telephone service at (202) 622-6074 or (202) 622-6075, between the hours of 1:30 p.m. and 3:30 p.m. Eastern Time, Monday through Thursday. Ms. Bloom may be reached at (202) 622-6214. These telephone numbers are not toll-free.

1998 Section 43 Inflation Adjustment

The enhanced oil recovery credit under § 43 for any taxable year is reduced if the “reference price,” determined under § 29(d)(2)(C), for the calendar year preceding the calendar year in which the taxable year begins is greater than $28 multiplied by the inflation adjustment factor for that year.

The term “inflation adjustment factor” means, with respect to any calendar year, a fraction the numerator of which is the GNP implicit price deflator for the preceding calendar year and the denominator of which is the GNP implicit price deflator for 1990.

Because the reference price for the 1997 calendar year ($17.24) does not exceed $28 multiplied by the inflation adjustment factor for the 1998 calendar year, the enhanced oil recovery credit for qualified costs paid or incurred in 1998 is determined without regard to the phaseout for crude oil price increases.

Table 1 contains the GNP implicit price deflator used for the 1998 calendar year, as well the previously published GNP implicit price deflators used for the 1991 through 1997 calendar years.

Notice 98–41 TABLE 1

GNP IMPLICIT PRICE DEFLATORS

GNP Implicit Calendar Year Price Deflator

1990 112.9 (used for 1991) 1991 117.0 (used for 1992) 1992 120.9 (used for 1993) 1993 124.1 (used for 1994) 1994 126.0 (used for 1995) 1995 107.5 (used for 1996)* 1996 109.7 (used for 1997) 1997 112.35 (used for 1998)**

• Beginning in 1995, the GNP implict price deflator was rebased relative to

1992. The 1990 GNP implicit price deflator used to compute the 1996 § 43 inflation adjustment factor is 93.6.

** Beginning in 1997, two digits follow the decimal point in the GNP implicit price deflator. The 1990 GNP price deflator used to compute the 1998 § 43 inflation adjustment factor is 93.63.

Notice 98–41

Table 1 contains the applicable percent Section 43(b)(3)(B) of the Internal Table 2 contains the inflation adjust- ages for marginal production for taxable Revenue Code requires the Secretary to ment factor and the phase-out amount for years beginning in calendar years 1991 publish an inflation adjustment factor. taxable years beginning in the 1998 cal- through 1998.

August 17, 1998 12 1998–33 I.R.B.

Section 43(b)(3)(B) of the Internal Revenue Code requires the Secretary to publish an inflation adjustment factor.

Table 2 contains the inflation adjustment factor and the phase-out amount for taxable years beginning in the 1998 cal

Notice 98–42 TABLE 1

APPLICABLE PERCENTAGE FOR

MARGINAL PRODUCTION

Applicable Calendar Year Percentage

1991 15 percent 1992 18 percent 1993 19 percent 1994 20 percent 1995 21 percent 1996 20 percent 1997 16 percent 1998 17 percent

DRAFTING INFORMATION

The principal author of this notice is Brenda M. Stewart of the Office of Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice contact Ms. Stewart on (202) 622-3120 (not a toll-free call).

New Procedures for Processing Employment Tax Cases Involving Worker Classification and Section 530 of the Revenue Act of 1978 Under Section 7436 of the Code

Notice 98–43

PURPOSE

The Taxpayer Relief Act of 1997 (TRA ’97), Pub. L. No. 105–34, 111 Stat. 788, created new § 7436 of the Internal Revenue Code (the “Code”), which provides Tax Court review rights concerning certain employment tax determinations. This notice provides information about how taxpayers may petition for Tax Court review of employment tax determinations under § 7436. Attached to this notice as Exhibit 1 is a “Notice of Determination Concerning Worker Classification Under Section 7436” (a “Notice of Determination”). With respect to taxpayers whose workers are the subject of an employment tax determination, the attached Notice of Determination addressed to a taxpayer will constitute the “determination” that is a prerequisite to invoking the Tax Court’s jurisdiction under § 7436.

BACKGROUND

Section 7436(a) of the Code provides the Tax Court with jurisdiction to review determinations by the Service that workers are employees for purposes of subtitle C of the Code, or that the organization for which services are performed is not entitled to relief from employment taxes under § 530 of the Revenue Act of 1978. Section 7436(a) requires that the determination involve an actual controversy and that it be made as part of an examination. Section 7436 became effective on August 5, 1997. Proceedings under § 7436 may be conducted pursuant to the Tax Court’s simplified procedures for small tax cases set forth in § 7463 of the Code and Rule 295 of the Tax Court’s Rules of Practice and Procedure. Currently, taxpayers may elect, with the concurrence of the Tax Court, to use these simplified procedures if the amount of employment taxes placed in dispute is $50,000 or less for each calendar quarter involved.

ISSUES TO WHICH § 7436 APPLIES

Section 7436(a) provides the Tax Court with jurisdiction to review the Service’s determinations that one or more individuals performing services for the taxpayer are employees of the taxpayer for purposes of subtitle C of the Code, or that the taxpayer is not entitled to relief under § 530 with respect to such individuals. Thus, § 7436(a) does not provide the Tax Court with jurisdiction to determine any amount of employment tax or penalties. Nor does § 7436(a) provide the Tax Court with jurisdiction to review other employment tax issues. Moreover, the procedures set forth in § 7436 do not apply to employment-related issues not arising under subtitle C, such as the classification of individuals with respect to pension plan coverage or the proper treatment of individual income tax deductions. Additionally, insofar as § 7436(a) only confers jurisdiction upon the Tax Court to review determinations that are made by the Service as part of an examination, other Service determinations that are not made as part of an examination, including those that are made in the context of private letter rulings or Forms SS–8, Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding, are not subject to re

view by the Tax Court under § 7436(a).

The Service will issue a Notice of Determination only after the Service has determined both that one or more individuals performing services for the taxpayer are employees for purposes of subtitle C and that the taxpayer is not entitled to relief under § 530. This will provide taxpayers with the opportunity to resolve both issues in one judicial determination.

TAXPAYERS ELIGIBLE TO SEEK JUDICIAL REVIEW

Section 7436(b) provides that a pleading seeking Tax Court review of the Service’s determination may be filed only by “the person for whom the services are performed.” Thus, workers may not seek review of the Service’s determinations under § 7436. In addition, because there must be an actual controversy, review may not be sought by a third party that has not been determined by the Service to be the employer.

NOTICE OF DETERMINATION CONCERNING WORKER CLASSIFICATION UNDER § 7436

The Service will inform taxpayers of a determination described in § 7436(a) by sending the taxpayer a Notice of Determination by certified or registered mail. A copy of the current Notice of Determination, which may be revised from time to time, is attached hereto as Exhibit 1.

The Notice of Determination will advise taxpayers of the opportunity to seek Tax Court review and provides information on how to do so. Attached to the Notice of Determination will be a schedule showing each kind of tax with its proposed employment tax adjustment by calendar quarter. The schedule will be provided to enable the taxpayer to determine eligibility to elect use of the small tax case procedures under § 7436(c). Currently, the small tax case procedures may be available under § 7436(c) if the amount of employment taxes placed in dispute is $50,000 or less for each calendar quarter involved.

In most cases, a taxpayer who receives a Notice of Determination will have previously received a “thirty-day letter,” which the Service sends to taxpayers in unagreed examination cases. The thirtyday letter lists the proposed employment tax adjustments to be made and describes

1998–33 I.R.B. 13 August 17, 1998

the taxpayer’s right to either agree to the proposed employment tax adjustments or, alternatively, to protest the proposed adjustments to the Appeals Division of the Service within thirty days of the date of the letter. If the taxpayer does not respond to the thirty-day letter by agreeing to the proposed adjustments or, alternatively, by filing a protest with the Appeals Division, the taxpayer will receive, by certified or registered mail, a Notice of Determination. Under normal procedures, if the taxpayer does not respond to the thirty-day letter, the taxpayer should generally expect to receive a Notice of Determination within sixty days after expiration of the thirty-day period beginning with the date on the thirty-day letter. If no Notice of Determination is received during this period, the taxpayer may wish to contact the local Internal Revenue Service office to check on the status of the case.

If the taxpayer responds to the thirtyday letter by filing a protest with the Appeals Division (or if the case proceeds to Appeals by way of the employment tax early referral procedures, see Announcement 97–52, 1997–21 I.R.B. 22; Announcement 96–13, 1996–12 I.R.B. 33; and Rev. Proc. 96–9, 1996–1 C.B. 575), and the worker classification and § 530 issues are not settled on an agreed basis in the Appeals Division, the taxpayer will thereafter receive a Notice of Determination. Taxpayers are encouraged to resolve cases in nondocketed status by requesting use of the early referral procedures in appropriate cases.

PREREQUISITE FOR SEEKING TAX COURT REVIEW

after the Service mails its Notice of Determination to the taxpayer by certified or registered mail. If the taxpayer discusses the case with the Service during the period before the 91st day following the mailing of the Notice of Determination, the discussion will not extend the period in which the taxpayer may file a petition with the Tax Court.

A taxpayer who does not file a Tax Court petition within the allotted time retains the right to seek judicial review of the Service’s employment tax determinations by paying the tax and filing a claim for refund, as required by § 7422(a) of the Code. If the claim for refund is denied, the taxpayer may file a refund suit in district court or the Court of Federal Claims.

for assessment of taxes attributable to the worker classification and § 530 issues will be suspended under section 6503(a) during the Tax Court proceedings, and for 60 days after the Tax Court decision becomes final.

RESTRICTIONS ON ASSESSMENT

Section 7436(d)(1) provides that the restrictions on assessment in § 6213 of the Code apply in the same manner as if a notice of deficiency had been issued. Thus, pursuant to § 6213(a), the Service is precluded from assessing the taxes attributable to the worker classification and § 530 issues prior to expiration of the 90-day period during which the taxpayer may file a timely Tax Court petition. If the taxpayer does file a timely Tax Court petition, § 6213(a) generally precludes the Service from assessing taxes attributable to the worker classification and § 530 issues until the decision of the Tax Court has become final. If the taxpayer does not file a timely Tax Court petition before the 91st day after the Notice of Determination was mailed, the employment taxes attributable to the workers described in the Notice of Determination may thereafter be assessed.

AGREED SETTLEMENTS

If the taxpayer wishes to settle the worker classification and § 530 issues on an agreed basis before issuance of a Notice of Determination, the taxpayer must formally waive the restrictions on assessment contained in §§ 7436(d)(1) and 6213. This will generally be accomplished by execution of an agreed settlement that contains the following language:

Because a Notice of Determination constitutes the Service’s determination described in § 7436(a), the Notice of Determination is a jurisdictional prerequisite for seeking Tax Court review of the Service’s determinations regarding worker classification and § 530 issues. Tax Court proceedings seeking review of these determinations may not be commenced prior to the time the Service issues a Notice of Determination to the taxpayer.

constitutes the Service’s determination plies in the same manner as if a notice of I understand that, by signing this described in § 7436(a), the Notice of De- deficiency had been issued. Thus, pur- agreement, I am waiving the restrictermination is a jurisdictional prerequisite suant to § 6503(a), the mailing of the No- tions on assessment provided in for seeking Tax Court review of the Ser- tice of Determination by certified or reg- sections 7436(d) and 6213(a) of the vice’s determinations regarding worker istered mail will suspend the statute of Internal Revenue Code of 1986. classification and § 530 issues. Tax Court limitations for assessment of taxes attrib- The Service will not assess employproceedings seeking review of these de- utable to the worker classification and § ment taxes attributable to worker classifiterminations may not be commenced 530 issues. Generally, the statute of limi- cation or § 530 issues unless either the prior to the time the Service issues a No- tations for assessment of taxes attribut- Service has issued a Notice of Determinatice of Determination to the taxpayer. able to the worker classification and § tion to the taxpayer and the 90-day period

530 issues is suspended for the 90-day for filing a Tax Court petition has expired period during which the taxpayer can or, alternatively, the taxpayer has waived begin a suit in Tax Court, plus an addi- the restrictions on assessment. If the Ser Section 7436(b)(2) provides that a tax- tional 60 days thereafter. Moreover, if vice erroneously makes an assessment of payer’s petition for review must be filed the taxpayer does file a timely petition in taxes attributable to worker classification with the Tax Court before the 91st day the Tax Court, the statute of limitations and § 530 issues without first either issu August 17, 1998 14 1998–33 I.R.B.

TIME BY WHICH PETITION MUST BE FILED

Section 7436(b)(2) provides that a taxpayer’s petition for review must be filed with the Tax Court before the 91st day

APPEALS JURISDICTION

Cases docketed in the United States Tax Court will be referred by District Counsel to the Appeals Division for consideration of settlement unless the Notice of Determination was issued by Appeals. Cases in which Appeals issued such a Notice of Determination may be referred to Appeals unless District Counsel determines that there is little likelihood that a settlement of all or a part of the case can be achieved in a reasonable period of time. Appeals will have sole settlement authority over docketed cases referred to Appeals until the case is returned to District Counsel. See Rev. Proc. 87–24, 1987–1 C.B. 720.

SUSPENSION OF STATUTE OF LIMITATIONS

Section 7436(d)(1) provides that the suspension of the limitations period for assessment in § 6503(a) of the Code applies in the same manner as if a notice of deficiency had been issued. Thus, pursuant to § 6503(a), the mailing of the Notice of Determination by certified or registered mail will suspend the statute of limitations for assessment of taxes attributable to the worker classification and § 530 issues. Generally, the statute of limitations for assessment of taxes attributable to the worker classification and § 530 issues is suspended for the 90-day period during which the taxpayer can begin a suit in Tax Court, plus an additional 60 days thereafter. Moreover, if the taxpayer does file a timely petition in the Tax Court, the statute of limitations

ing a Notice of Determination or obtaining a waiver of restrictions on assessment from the taxpayer, the taxpayer is entitled to an automatic abatement of the assessment. However, once any such procedural defects are corrected, the Service may reassess the employment taxes to the same extent as if the abated assessment had not occurred.

EFFECTIVE DATE

Section 1454 of TRA ’97 is effective as of August 5, 1997. Thus, assessments that were made prior to the August 5,

1997, effective date of the Act are not subject to the new legislation or the procedures discussed above. All employment tax examinations involving worker classification and/or § 530 issues that were pending as of August 5, 1997, are subject to the new legislation.

DRAFTING INFORMATION

The principal author of this notice is Lynne A. Camillo of the Office of the Associate Chief Counsel (Employee Benefits and Exempt Organizations). The Service invites comments with respect to the

issues addressed in this notice, the form of the attached Notice of Determination, as well as with respect to any procedural issues which should be addressed in forthcoming guidance. Written comments should be submitted to Lynne A. Camillo of the Employee Benefits and Exempt Organizations Division, Office of Chief Counsel, Internal Revenue Service, 1111 Constitution Avenue, NW, Room 5329, Washington, DC 20224. For further information regarding this notice contact Lynne A. Camillo at (202) 622-6040 (not a toll-free call).

1998–33 I.R.B. 15 August 17, 1998

Internal Revenue Service Department of the Treasury

Date: Taxpayer Identification Number:

Person to Contact:

Telephone Number:

NOTICE OF DETERMINATION CONCERNING WORKER CLASSIFICATION UNDER SECTION 7436

As a result of an employment tax audit, we are sending you this NOTICE OF DETERMINATION CONCERNING WORKER CLASSIFICATION UNDER SECTION 7436. We have determined that the individual(s) listed or described on the attached schedule are to be classified as employees for purposes of federal employment taxes under subtitle C of the Internal Revenue Code and that you are not entitled to relief from this classification pursuant to section 530 of the Revenue Act of 1978 with respect to such individual(s). This determination could result in employment taxes being assessed against you.

If you want to contest this determination in court, you may file a petition with the United States Tax Court for a redetermination of the above-referenced issues. If you wish to contest this determination in the United States Tax Court, your petition must be filed before the 91st day after the date this letter was mailed by certified or registered mail. You can get a copy of the rules for filing a petition by writing to the address below.

United States Tax Court

400 Second Street, NW Washington, DC 20217

Send the completed petition, a copy of this letter, and copies of all statements and/or schedules you received with this letter to the Tax Court at the same address above. The Tax Court cannot consider your case if the petition is filed late. The petition is considered timely filed if the postmark date (either by the U.S. Postal Service or a designated private delivery service) falls within the period for filing a petition described above and the envelope containing the petition is properly addressed with the correct postage.

The time you have to file a petition with the Tax Court is set by law and cannot be extended. Thus, contacting the Internal Revenue Service (IRS) for more information, or receiving other correspondence from the IRS, will not change the period for filing a petition with the Tax Court.

EXHIBIT 1

If you are in bankruptcy, under Bankruptcy Code section 362(a)(8), the filing of a petition with the Tax Court is automatically stayed because of your bankruptcy case. When the automatic stay is in effect, you must ask the Bankruptcy Court (under Bankruptcy Code section 362(d)(1)) to lift the stay so you can file a petition with the Tax Court. Your petition must be filed before the 91st day after the date of this letter, plus any additional period provided by section 6213(f)(1) of the Internal Revenue Code (generally, the period that the automatic stay is in effect, plus 60 days) to file a petition with the Tax Court.

If this letter is addressed to both husband and wife, and both want to petition the Tax Court, both must sign and file the petition or each must file a separate, signed petition. If more than one tax period is shown on the attached schedule, you only need to file one petition showing all of the periods you are contesting.

The Tax Court has a simplified procedure for small tax cases that will apply when the amount of employment taxes in dispute is $50,000 or less for each calendar quarter involved. Attached is a preliminary calculation of the amounts that we think you might owe as a result of this determination. We have included this calculation for your use in determining whether you are entitled to request that your case be conducted under the Tax Court’s simplified procedures for small tax cases. You can get more information about this procedure by writing to the Tax Court at the address listed above. You should write promptly if you intend to file a petition with the Court.

If you decide not to file a petition with the Tax Court, we may assess the amount of employment taxes owed. If you do file a timely petition, we will not assess those taxes until the decision of the Tax Court is final.

If you do not file a Tax Court petition within the allotted time, you still may seek judicial review of the IRS’s employment tax determinations by paying the tax and filing a claim for refund with the IRS. If the claim for refund is denied, you may file a refund suit in district court or the Court of Federal Claims.

If you have any questions about this letter, you may write to the person whose name and IRS address are shown on the front of this letter. If you write, please include your telephone number, the best time for us to call you if we need more information, and

August 17, 1998 16 1998–33 I.R.B.

a copy of this letter to help us identify your account. Keep the original letter for your records.

If you prefer, you may call the IRS contact person at the telephone number on the front page of this letter. If this number is outside your local calling area, there will be a long distance charge to you. You may call the IRS telephone number listed in your local directory. An IRS employee there may be able to help you, but the contact person at our address shown on this letter is most familiar with your case.

Thank you for your cooperation.

Sincerely yours,

Commissioner by

Enclosure: Explanation of tax changes

1998–33 I.R.B. 17 August 17, 1998