SEC. 9. PAPERWORK REDUCTION

ACT

The collections of information contained in this revenue procedure will be submitted to the Office of Management and Budget for review in accordance with the Paperwork Reduction Act (44 U.S.C. 3507(c)). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

The collection of information in this revenue procedure is in section 5. This information is required to determine whether a taxpayer that has made a primary adjustment under section 482 of the Code will be permitted to make certain adjustments to conform their accounts to reflect the section 482 allocation. The collections of information are required for a taxpayer to obtain the Commissioner’s permission to repatriate the cash attributable to a primary adjustment via an account without the Federal income tax consequences of the secondary adjustments that would otherwise be entailed as the result of the primary adjustment. The likely respondents are businesses or other forprofit institutions.

The estimated total annual reporting and/or recordkeeping burden is 1620.

The estimated annual burden per respondent/recordkeeper varies from 8 hours to 10 hours depending on individual circumstances, with an estimated average of 9 hours. The estimated number of respondents and/or recordkeepers is 180.

The estimated annual frequency of responses is on occasion.

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.

Payroll Deduction IRAs

Announcement 99–2

This announcement relates to direct deposit to individual retirement accounts or annuities (“IRAs”) by means of payroll deduction. As discussed in this announcement, employers may permit employees to contribute to traditional or Roth IRAs by direct deposit though payroll deduction. In addition, employees making direct deposits of deductible contributions to traditional IRAs may be able to adjust their Federal income tax withholding to receive a more immediate tax benefit from their contributions.

Many employers permit their employees to directly deposit all or a portion of their paychecks into checking or savings accounts maintained by financial institutions. Employers may also assist their employees in saving for retirement by means of direct deposit through payroll deduction to IRAs.

In the Conference Report to the Taxpayer Relief Act of 1997, Pub. L. 105-34, Congress indicated that “employers that choose not to sponsor a retirement plan should be encouraged to set up a payroll deduction system to help employees save for retirement by making payroll deduction contributions to their IRAs.” Congress encouraged the Secretary of the Treasury to “continue his efforts to publicize the availability of these payroll deduction IRAs.” H.R. Rep. No. 220, 105th Cong., 1st Sess. 775 (1997).

As part of this continuing effort, employers that feel they are not currently in a position to sponsor a retirement plan are reminded that the introduction of Roth IRAs in 1998 presents an additional opportunity to facilitate employee retirement savings. As with traditional IRAs, amounts accumulated under Roth IRAs are exempt from Federal income tax, and contributions to Roth IRAs are subject to specific limitations. Unlike traditional IRAs, Roth IRA contributions cannot be deducted from gross income, but “qualified distributions” from Roth IRAs are excludable from gross income. For further information on Roth IRAs, see § 408A of the Internal Revenue Code and the proposed Income Tax Regulations thereunder.

In addition, employees and employers are reminded that some employees who

January 11, 1999 44 1999–2 I.R.B.

(1) The first sentence of Section 1 of Rev. Proc. 98–63 is modified to read:

This revenue procedure updates Rev. Proc. 97–58, 1997–2 C.B. 587, by providing optional standard mileage rates for employees, self-employed individuals, or other taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes. (2) Section 11 of Rev. Proc. 98–63 is modified to read:

Except as otherwise provided in this section, Rev. Proc. 97–58, 1997–2 C.B. 587, is hereby superseded for mileage allowances paid to an employee on or after January 1, 1999, with respect to transportation expenses paid or incurred on or after January 1, 1999, and, for purposes of computing the amount allowable as a deduction, for transportation expenses paid or incurred on or after January 1, 1999. Sections 2.01(1) and 5.01 of this revenue procedure are effective for mileage allowances paid to an employee on or after April 1, 1999, with respect to transportation expenses paid or incurred on or after April 1, 1999, and, for purposes of computing the amount allowable as a deduction, for businessrelated transportation expenses paid or incurred on or after April 1, 1999.

DRAFTING INFORMATION

The principal author of this announcement is Edwin B. Cleverdon of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this announcement contact Mr. Cleverdon at (202) 622-4920 (not a tollfree call).

make deductible contributions to traditional IRAs (whether through payroll deduction or otherwise) may be able to adjust their Federal income tax withholding on account of these contributions. By adjusting their withholding, employees may not have to wait until they file their tax return to get the benefit of the tax deduction for their contributions. Employees can review the instructions on IRS Form W-4 (Employee’s Withholding Allowance Certificate) and the worksheet on the back of that form to see if they are eligible for this withholding adjustment. Further information may be found in Publication 919 (Is My Withholding Correct for 1999?).

This announcement does not address the application of Title I of the Employee Retirement Income Security Act of 1974 to a system for direct deposit to IRAs by means of payroll deduction.

Optional Standard Mileage Rates for Employees, Self- Employed Individuals, and Other Taxpayers Used in Computing Deductible Costs

Announcement 99–7

This announcement informs taxpayers that the Internal Revenue Service is postponing until April 1, 1999, the effective date of the 31 cents-per-mile rate established in Rev. Proc. 98–63, 1998–52 I.R.B. 25 (Dec. 28, 1998). The Service has decided to make this change because it understands that many employers and employees will require additional time to implement the new rate. Accordingly, the business standard mileage rate of 32.5 cents per mile set forth in Rev. Proc. 97–58, 1997–2 C.B. 587, continues to apply with respect to mileage allowances paid to an employee before April 1, 1999,

for transportation expenses paid or incurred before that date. The 32.5 centsper-mile rate also continues to apply for purposes of computing the amount allowable as a deduction for business- related transportation expenses paid or incurred before April 1, 1999. All other provisions of Rev. Proc. 98–63 will be effective January 1, 1999.

BACKGROUND

Rev. Proc 98–63 supersedes Rev. Proc. 97–58 and, as published, lowers the rate to 31 cents per mile (from 32.5 cents per mile) for mileage allowances paid to an employee on or after January 1, 1999, with respect to transportation expenses paid or incurred on or after January 1, 1999, and, for purposes of computing the amount allowable as a deduction, for transportation expenses paid or incurred on or after January 1, 1999. The reduction in the rate was based on an annual study of the fixed and variable costs of operating an automobile conducted on behalf of the Service by an independent contractor. It has come to the attention of the Service that many employers and employees will require additional time to implement this new, lower rate. Without additional time, employers who normally reimburse business transportation expenses of employees at the standard rate, and who are unable to implement the lower rate by January 1, 1999, will need to treat the excess over 31 cents per mile as wages to the employee for federal employment tax purposes. Further, employees would be required to include such excess in gross income.

MODIFICATION OF REV. PROC. 98–63

Rev. Proc. 98–63 is modified as follows:

1999–2 I.R.B 45 January 11, 1999

Revenue rulings and revenue procedures (hereinafter referred to as “rulings”) that have an effect on previous rulings use the following defined terms to de- scribe the effect:

Amplified describes a situation where no change is being made in a prior published position, but the prior position is being extended to apply to a variation of the fact situation set forth therein. Thus, if an earlier ruling held that a principle applied to A, and the new ruling holds that the same principle also applies to B, the earlier ruling is amplified. (Compare with modified, below).

Clarified is used in those instances where the language in a prior ruling is being made clear because the language has caused, or may cause, some confusion. It is not used where a position in a prior ruling is being changed.

Distinguished describes a situation where a ruling mentions a previously published ruling and points out an essential difference between them.

Modified is used where the substance of a previously published position is being changed. Thus, if a prior ruling held that a principle applied to A but not to B, and the new ruling holds that it ap

The following abbreviations in current use and for- merly used will appear in material published in the Bulletin.

A —Individual. Acq. —Acquiescence. B —Individual. BE —Beneficiary. BK —Bank. B.T.A. —Board of Tax Appeals. C. —Individual. C.B. —Cumulative Bulletin. CFR —Code of Federal Regulations. CI —City. COOP —Cooperative. Ct.D. —Court Decision. CY —County. D —Decedent. DC —Dummy Corporation. DE —Donee. Del. Order —Delegation Order. DISC —Domestic International Sales Corporation. DR —Donor. E —Estate. EE —Employee.

plies to both A and B, the prior ruling is modified because it corrects a published position. (Compare with amplified and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions. This term is most commonly used in a ruling that lists previously published rulings that are obsoleted because of changes in law or regulations. A ruling may also be obsoleted because the substance has been included in regulations subsequently adopted.

Revoked describes situations where the position in the previously published ruling is not correct and the correct position is being stated in the new ruling.

Superseded describes a situation where the new ruling does nothing more than restate the substance and situation of a previously published ruling (or rulings). Thus, the term is used to republish under the 1986 Code and regulations the same position published under the 1939 Code and regulations. The term is also used when it is desired to republish in a single ruling a series of situations, names, etc., that were previously published over a period of time in separate rulings. If the

E.O. —Executive Order. ER —Employer. ERISA —Employee Retirement Income Security Act. EX —Executor. F —Fiduciary. FC —Foreign Country. FICA —Federal Insurance Contribution Act. FISC —Foreign International Sales Company. FPH —Foreign Personal Holding Company. F.R. —Federal Register. FUTA —Federal Unemployment Tax Act. FX —Foreign Corporation. G.C.M. —Chief Counsel’s Memorandum. GE —Grantee. GP —General Partner. GR —Grantor. IC —Insurance Company. I.R.B. —Internal Revenue Bulletin. LE —Lessee. LP —Limited Partner. LR —Lessor. M —Minor. Nonacq. —Nonacquiescence. O —Organization. P —Parent Corporation.

new ruling does more than restate the substance of a prior ruling, a combination of terms is used. For example, modified and superseded describes a situation where the substance of a previously published ruling is being changed in part and is continued without change in part and it is desired to restate the valid portion of the previously published ruling in a new ruling that is self contained. In this case the previously published ruling is first modified and then, as modified, is superseded.

Supplemented is used in situations in which a list, such as a list of the names of countries, is published in a ruling and that list is expanded by adding further names in subsequent rulings. After the original ruling has been supplemented several times, a new ruling may be published that includes the list in the original ruling and the additions, and supersedes all prior rulings in the series.

Suspended is used in rare situations to show that the previous published rulings will not be applied pending some future action such as the issuance of new or amended regulations, the outcome of cases in litigation, or the outcome of a Service study.

PHC —Personal Holding Company. PO —Possession of the U.S. PR —Partner. PRS —Partnership. PTE —Prohibited Transaction Exemption. Pub. L. —Public Law. REIT —Real Estate Investment Trust. Rev. Proc. —Revenue Procedure. Rev. Proc.. —Revenue Ruling. S —Subsidiary. S.P.R. —Statements of Procedral Rules. Stat. —Statutes at Large. T —Target Corporation. T.C. —Tax Court. T.D. —Treasury Decision. TFE —Transferee. TFR —Transferor. T.I.R. —Technical Information Release. TP —Taxpayer. TR —Trust. TT —Trustee. U.S.C. —United States Code. X —Corporation. Y —Corporation. Z —Corporation.

January 11, 1999 46 1999–2 I.R.B.

Numerical Finding List ¹

Bulletin 1999–1

Revenue Procedures:

99–1, 1999–1 I.R.B. 6 99–2, 1999–1 I.R.B. 73 99–3, 1999–1 I.R.B. 103 99–4, 1999–1 I.R.B. 115 99–5, 1999–1 I.R.B. 158 99–6, 1999–1 I.R.B. 187 99–7, 1999–1 I.R.B. 226 99–8, 1999–1 I.R.B. 229

1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 1998–1 through 1998–52 will be found in Internal Revenue Bulletin 1999–1, dated January 4, 1999.

1999–2 I.R.B 47 January 11, 1999

Finding List of Current Action on Previously Published Items ¹

Bulletin 1999–1

Revenue Procedures:

97–23 Superseded by 99–3, 1999–1 I.R.B. 103

98–1 Superseded by 99–1, 1999–1 I.R.B. 6

98–2 Superseded by 99–2, 1999–1 I.R.B. 73

98–3 Superseded by 99–3, 1999–1 I.R.B. 103

98–4 Superseded by 99–4, 1999–1 I.R.B. 115

98–5 Superseded by 99–5, 1999–1 I.R.B. 158

98–6 Superseded by 99–6, 1999–1 I.R.B. 187

98–7 Superseded by 99–7, 1999–1 I.R.B. 226

98–8 Superseded by 99–8, 1999–1 I.R.B. 229

98–56 Superseded by 99–3, 1999–1 I.R.B. 103

1 A cumulative finding list for previously published items mentioned in Internal Revenue Bulletins 1998–1 through 1998–52 will be found in Internal Revenue Bulletin 1999–1, dated January 4, 1999.

January 11, 1999 48 1999–2 I.R.B.

1999–2 I.R.B 49 January 11, 1999

January 11, 1999 50 1999–2 I.R.B.