Part IV. Items of General Interest

Medical Savings Accounts

Announcement 99–95

PURPOSE

Sections 220(i) and (j) of the Internal Revenue Code provide that if the number of Medical Savings Account (MSA) returns filed for 1998 or a statutorily specified projection of the number of MSA returns that will be filed for 1999 exceeds 750,000, then October 1, 1999, is a “cutoff” date for the MSA pilot project. The Internal Revenue Service (IRS) has determined that the applicable number of MSA returns filed for 1998 is 32,371 and that the applicable number of MSA returns projected to be filed for 1999 is 44,784 (after reduction in each case for statutorily specified exclusions, such as the exclusion for previously uninsured taxpayers). Consequently, October 1, 1999, is not a “cut-off’ date and 1999 is not a “cutoff’ year for the MSA pilot project.

BACKGROUND

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

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

Section 220(j)(2)(A) provides that the numerical limitation for 1999 is exceeded if the number of MSA returns filed on or before April 15, 1999, for taxable years ending with or within the 1998 calendar

year, plus the Secretary’s estimate of the number of MSA returns for those taxable years which will be filed after April 15, 1999, exceeds 750,000. For this purpose, section 220(j)(2)(A) provides that a tax return is an MSA return for a taxable year if any exclusion is claimed under section 106(b) or any deduction is claimed under section 220 for that taxable year. Section 220(j)(2)(B) provides, as an alternative test, that the numerical limitation for 1999 is also exceeded if the sum of 90 percent of the MSA returns for 1998 plus the product of 2.5 and the number of MSAs for taxable years beginning in 1999 that are established during the portion of 1999 preceding July 1 (based on reports by MSA trustees and custodians), exceeds 750,000. Under section 220(j)(3), in determining whether any calendar year is a “cut-off” year, the MSA of any previously uninsured individual is not taken into account. In addition, section 220(j)(4)(D) specifies that, to the extent practical, all MSAs established by an individual are aggregated and two married individuals opening separate MSAs are to be treated as having a single MSA for purposes of determining the number of MSAs.

A total of 36,638 tax returns reporting an excludable or deductible contribution to an MSA for the 1998 taxable year were filed by April 15, 1999. Of this total, 8,749 taxpayers were reported as being previously uninsured. It has been estimated that an additional 5,839 tax returns reporting MSA contributions for the 1998 taxable year have been or will be filed after April 15, 1999, including 1,357 taxpayers who were previously uninsured. Accordingly, it has been determined that there were 42,477 (36,638 plus 5,839) MSA returns for 1998. Of this total, 10,106 (8,749 plus 1,357) were for taxpayers reported as being previously uninsured. As a result, 32,371 (42,477 minus 10,106) MSA returns count toward the applicable statutory limitation for 1998 MSA returns of 750,000.

Based on the Forms 8851 filed on or before August 1, 1999 by MSA trustees and custodians, it has been determined that 11,727 taxpayers who did not have MSA contributions for 1998 established MSAs for 1999 during the portion of

1999 preceding July 1. Of this total, 4,468 taxpayers were reported by trustees and custodians as previously uninsured, and therefore are not taken into account in determining whether 1999 is a “cut-off” year. In addition, 963 taxpayers were reported by trustees and custodians as excludable from the count because their spouse also established an MSA, and 36 taxpayers had more than one account. Accordingly, the applicable number of MSAs established from January 1, 1999 through June 30, 1999, is 6,260 (11,727 minus (4,468 plus 963 plus 36)). The alternative limitation for 1999 (90 percent of the applicable number of MSA returns for 1998 plus the product of 2.5 and the number of applicable MSAs established from January 1, 1999 through June 30, 1999) is 44,784 (90 percent of 32,371 plus 2.5 times 6,260), which is less than the statutory limit of 750,000. Thus, 1999 is not a “cut- off” year for the MSA pilot project by reason of either the 1998 MSA returns test of section 220(j)(2)(A) or the alternative test of section 220(j)(2)(B) of the Code.

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

Appeals Customer Service Program

Announcement 99–98

To emphasize Appeal’s commitment to advancing its customer service program under the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No. 105–206, 112 Stat. 685, Appeals Policy Statement P-8-1, and Treasury Directive 63–01, this announcement informs taxpayers about Appeals Customer Service Representatives. Appeals presently has a Customer Service Representative in each of the thirty-three Appeals Offices nationwide.

The duties of the Appeals Customer Service Representatives include:

1. Serving as proponents of the Appeals process;

October 18, 1999 520 1999–42 I.R.B.

2. Providing assistance to taxpayers during their administrative appeal;

3. Handling taxpayers complaints regarding Appeals;

4. Participating in National Problem Solving Days;

5. Coordinating with Taxpayer Advocate representative on Appeals matters;

6. Performing Appeals education and outreach with the public, as well as other IRS functions;

7. Ensuring that taxpayer rights are not abridged; and

8. Identifying problems and trends, including analyzing customer survey and balanced measures results.

A list of the office locations and telephone numbers of the Appeals Customer Service Representatives, and the National and Regional Coordinators, as of October 1999, appears at the end of this announcement.

The announcement of these Appeals Customer Service Representatives reaffirms the Commissioner’s concept for modernizing the Internal Revenue Service to focus on:

1. Service to Each Taxpayer,
2. Service to All Taxpayers, and
3. Productivity Through a Quality Work Environment. Please call your local Appeals Cus

tomer Service Representative whenever you need assistance with an Appeals tax matter. For further information, visit Appeals Internet Web Site at http://www.irs. gov/prod/ind–info/appeals/index.html

DRAFTING INFORMATION

The principal author of this announcement is Thomas C. Louthan, Director, Office of Alternative Dispute Resolution and Customer Service Programs. For further information regarding this announcement, contact Mr. Louthan at (202) 694-1842, Frederick L. Gavin at (616) 235-1280, or Darlene M. Marshall at (202) 694-1875 (not a toll-free call).

TELEPHONE DIRECTORY

Customer Service Representatives Office (Location) (Not A Toll-Free Number)

NORTHEAST REGION Brooklyn (Hempstead) (516) 539-6259 Connecticut-Rhode Island (East Hartford) (860) 290-4055 Manhattan (New York City) (212) 298-2430 Michigan (Detroit) (313) 226-2314 ext. 62344 New England (Boston) (617) 565-7962 New Jersey (Newark) (973) 645-6288 Ohio (Cleveland) (216) 623-2047 Pennsylvania (Philadelphia) (215) 597-2177 ext. 160 Upstate New York (Buffalo) (716) 551-5330 ext. 21

SOUTHEAST REGION Delaware-Maryland (Baltimore) (410) 962-9354 Georgia (Atlanta) (404) 338-7197 Gulf Coast (New Orleans) (504) 558-3177 Indiana (Indianapolis) (317) 226-6778 Kentucky-Tennessee (Nashville) (615) 250-5613 North Florida (Jacksonville) (904) 665-0962 North-South Carolina (Greensboro) (336) 378-2309 South Florida (Ft. Lauderdale) (305) 982-5377 Virginia-West Virginia (Richmond) (804) 771-2772

MIDSTATES REGION Oklahoma-Arkansas (Oklahoma) (405) 297-4956 Houston (Houston) (281) 721-7215 Illinois (Chicago) (312) 886-5736 ext. 652 Kansas-Missouri ( St. Louis) (314) 612-4672 Midwest (Milwaukee) (414) 297-4120 North Central (St. Paul) (651) 290-3868 North Texas (Dallas) (972) 308-7271 South Texas (Austin) (512) 499-5650

1999–42 I.R.B. 521 October 18, 1999

Twelfth Annual Institute on Current Issues in International Taxation

Announcement 99–99

Assistant Commissioner (International) John Lyons has announced the Twelfth Annual Institute on Current Issues in International Taxation, co-sponsored with The George Washington University, to be held December 9 and 10, 1999, at the J.W. Marriott Hotel in Washington, D.C.

Designed for professionals in international tax law, the Institute will open with an overview of issues facing world tax administrations for the new millennium. The first day will also include sessions on taxation of multinational enterprises, global asymmetries, alleviating double taxation, and ethics. A panel of the Competent Authorities from Canada, Germany, the United Kingdom, and the United States will discuss availability of treaty benefits, confidentiality, and cooperation. Larry Langdon, Commissioner of the IRS Large and Mid-Size Business Division, will be the featured luncheon

speaker. The second day will include sessions on international mergers and acquisitions, inbound taxation, electronic commerce and communication, information reporting and exchange for the 21st century, and an “Ask the IRS” panel. Jonathan Talisman, Acting Assistant Secretary for Tax Policy for the U.S. Treasury Department, will be the featured luncheon speaker.

Those interested in attending may obtain more information from The George Washington University, Conference Management Services, by calling (202) 9731110 or visiting their Internet site at http://www.gwu.edu/~cms/iti12 .

Application of Section 382 in Short Taxable Years and With Respect to Controlled Groups; Correction

Announcement 99–100

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to final regulations.

SUMMARY: This document contains corrections to T.D. 8825, 1999–28 I.R.B. 19, which was published in the Federal Register on Friday, July 2, 1999 (64 F.R. 36175). These regulations relate to limitations on net operating loss carryovers and certain built-in losses following an ownership change of a corporation.

FOR FURTHER INFORMATION CONTACT: Lee A. Kelley at (202) 622-7550 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The final regulations that are the subject of these corrections are under section 382 of the Internal Revenue Code.

Need for Correction

As published, T.D .8825 contains errors which may prove to be misleading and are in need of clarification.

October 18, 1999 522 1999–42 I.R.B.

Correction of Publication

Accordingly, the publication of the final regulations (T.D. 8825), which are the subject of F.R. Doc. 99–16163, is corrected as follows:

1. On page 36177, column 2, instruc

tional paragraph 2, the language “ Par 2. Section 382–1 is amended by” is corrected to read “ Par. 2. Section 1.382–1 is amended by:”.

2. On page 36177, column 3, the section heading “ §1.1382–2 [Amended] ” is corrected to read “ §1.382–2 [Amended] ”.

Cynthia E. Grigsby, Chief, Regulations Unit, Assistant Chief Counsel (Corporate).

(Filed by the Office of the Federal Register on September 29, 1999, 8:45 a.m., and published in the issue of the Federal Register for September 30, 1999, 64 F.R. 52650)

1999–42 I.R.B. 523 October 18, 1999