Part III. — Internal Revenue Bulletin 2001-4

Section 533(a) of the Ticket to Work and Work Incentives Improvement Act of 1999, Pub. L. No. 106–170, 113 Stat. 1860, 1931 (1999) (“the Act”), amended § 6050P of the Code by expanding the types of entities that are required to report discharges of indebtedness to include any organization “a significant trade or business of which is the lending of money.” The Act was signed into law on December 17, 1999. Section 533(a) was made effective for discharges of indebtedness occurring after December 31, 1999. Notice 2000–22 suspended penalties for failures to file information returns or to furnish payee statements for discharges of indebtedness by these newly included organizations occurring prior to January 1, 2001.

PENALTY SUSPENSION

The Service recognizes that, in the absence of published guidance regarding the new statutory provision, many organizations potentially included within the reporting provisions of § 6050P by the Act are unable to determine whether they are in fact subject to the new reporting provisions. Furthermore, sufficient time is necessary after guidance is issued for these affected organizations to establish recordkeeping systems needed to capture the information required to be reported under § 6050P. Therefore, the Service will not impose penalties on these organizations for failure to comply with the requirements of § 6050P for discharges of indebtedness occurring prior to the first calendar year beginning at least two months after the date that appropriate guidance is issued.

This notice does not suspend penalties for any organization that was already subject to § 6050P prior to its amendment by the Act.

EFFECT ON OTHER DOCUMENTS

Notice 2000–22 is modified, and, as modified, is superseded.

DRAFTING INFORMATION

The principal author of this notice is Sharon L. Hall of the Office of Assistant Chief Counsel, Income Tax and Accounting. For further information regarding this notice, contact Ms. Hall at (202) 6224930 (not a toll-free call).

Reporting of Gross Proceeds Payments to Attorneys

Notice 2001–7

This notice informs taxpayers that the Internal Revenue Service intends to further delay the effective date of the regulations proposed under § 6045(f) of the Internal Revenue Code (relating to the reporting of payments of gross proceeds to attorneys). Under this extension, the rules in § 1.6045–5 will apply to payments made during the first calendar year that begins at least two months after the date of publication of the final regulations in the Federal Register.

Section 1021 of the Taxpayer Relief Act of 1997, 1997–4 (Vol. 1) C.B. 1, 136, added § 6045(f) of the Code, which requires information reporting for payments made in the course of a trade or business to attorneys in connection with legal services (whether or not such services are performed for the payor). Section 6045(f) applies to payments made after December 31, 1997. The notice of proposed rulemaking (NPRM) under § 6045(f) was published in the Federal Register on May 21, 1999 (64 F.R. 27730), 1999–1 C.B. 1193. Section 1.6045–5(h) of the proposed Income Tax Regulations provides that the rules in § 1.6045–5 apply to payments made after December 31, 1999. However, Notice 99–53, 1999–2 C.B. 565, extended the effective date of § 1.6045–5 to payments made after December 31, 2000.

Because the Service is continuing to study the many comments regarding the NPRM under § 6045(f), the Service intends to further delay the effective date of § 1.6045–5. Accordingly, when finalized, the rules in § 1.6045–5 will apply to payments made during the first calendar year that begins at least two months after the date of publication of the final regulations in the Federal Register. Nevertheless, payments of gross proceeds to attorneys made after December 31, 1997, are and continue to be reportable on Form 1099–MISC pursuant to § 6045(f); only the effective date of the regulations that interpret § 6045(f) will be delayed. Taxpayers may continue to rely on the NPRM as a safe harbor providing a rea

sonable interpretation of the statute.

EFFECT OTHER DOCUMENTS

Notice 99–53 is modified, and as modified, is superseded.

DRAFTING INFORMATION

The principal author of this notice is Sara Paige Shepherd of the Office of the Associate Chief Counsel, Procedure and Administration (Administrative Provisions and Judicial Practice). For further information regarding this notice contact Ms. Shepherd at (202) 622-4910 (not a toll-free number).

Information Reporting for Discharges of Indebtedness

Notice 2001–8

PURPOSE

This notice extends the suspension of penalties under §§ 6721 and 6722 of the Internal Revenue Code provided by Notice 2000–22, 2000–16 I.R.B. 902 (April 17, 2000), for certain organizations newly subject to § 6050P (that is, those organizations a significant trade or business of which is the lending of money and that are not otherwise described in § 6050P(c)(1) or (2)). Under this notice, penalties will not be imposed on such an organization for failure to file information returns under § 6050P for any discharge of indebtedness that occurs prior to the first calendar year beginning at least two months after the date that appropriate guidance is issued.

BACKGROUND

Generally, § 6050P(a) requires applicable entities that are subject to that section to file returns with the Service, and to provide statements to persons whose names are required to be shown on the returns (“payees”), setting forth certain information regarding discharges of indebtedness of $600 or more. Sections 6721 and 6722 impose penalties for failure to file correct information returns or to provide correct payee statements, respectively, including those required under § 6050P.

January 22, 2001 374 2001–4 I.R.B.

plans must be operated in accordance with a reasonable, good faith interpretation of these statutory provisions.

III. EXTENSION OF RELIEF RELATING TO APPLICATION OF NONDISCRIMINATION RULES FOR CERTAIN GOVERNMENTAL PLANS

Under the relief provided by this notice, governmental plans within the meaning of § 414(d), other than those maintained by State or local governments or political subdivisions, agencies or instrumentalities thereof, shall be treated as satisfying the requirements of § 401(a)(4), 401(a)(26), 401(k)(3), and 401(m) until the first plan year beginning on or after January 1, 2002. In accordance with this relief, the regulations under §§ 401(a)(4), 401(a)(26), 401(m), 410(b) and 414(s), and the regulations implementing § 401(k)(3), apply to governmental plans described in this part only for plan years beginning on or after January 1, 2002.

IV. 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, 2002. 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 statutory provisions.

V. EFFECT ON OTHER DOCUMENTS

Notices 98–39 and 99–40 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) 283-9516 or (202) 283-9517, 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.

Extension of Relief Relating to Application of Nondiscrimination Rules for Certain Governmental Plans and Church Plans

Notice 2001–9

I. PURPOSE

This notice provides relief from the application of the nondiscrimination requirements of the Internal Revenue Code for certain governmental and church plans.

In particular, this notice provides that certain governmental plans shall be deemed to satisfy § 401(a)(4), 401(a)(26), 401(k)(3), and 401(m) of the Code until the first day of the first plan year beginning on or after January 1, 2002. In accordance with this relief, the regulations relating to these provisions do not apply until plan years beginning after that date. This relief is available with respect to governmental plans within the meaning of § 414(d) other than plans of State and local governments or political subdivisions, agencies or instrumentalities thereof.

In addition, this notice extends, until the first day of the first plan year beginning on or after January 1, 2002, 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.

II. BACKGROUND

A. Governmental Plans

Section 414(d) of the Code provides that the term “governmental plan” means a plan established and maintained for its employees by the government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing. The term “governmental plan” also includes any plan to which the Railroad Retirement Act of 1935 or 1937 (the “Act”) applies and which is financed by contributions under that Act and any plan of an international organization which is exempt from taxation by reason of the International Organizations Immunities Act (59 Stat. 669).

Section 1505 of the Taxpayer Relief Act of 1997 (“TRA ‘97”) generally provides

that the nondiscrimination rules do not apply to State and local governmental plans. In particular, § 1505 amended the Code to provide that § 401(a)(3), 401(a)(4), and 401(a)(26) shall not apply to such plans. Section 1505 of TRA ‘97 amended § 401(k) of the Code to provide that State and local governmental plans shall be treated as meeting the requirements of § 401(k)(3). In addition, § 1505(a)(3) of TRA ‘97 amended § 410(c) of the Code to provide that governmental plans shall be treated as meeting the requirements of § 410 for purposes of § 401(a). This amendment to § 410(c), by its terms, is not limited to State and local governmental plans but applies to all governmental plans within the meaning of § 414(d).

Notice 99–40, 1999–35 I.R.B. 324, provided that governmental plans, other than plans maintained by State or local governments or political subdivisions or instrumentalities thereof, would be deemed to satisfy § 401(a)(4), 401(a)(26), 401(k)(3), and 401(m) of the Internal Revenue Code until the first day of the first plan year beginning on or after January 1, 2001. The notice also provided that the regulations relating to these provisions would not apply until plan years beginning on or after that date.

B. 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.

Notice 98–39, 1998–2 C.B. 205, 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, 2001. For plan years beginning before that effective date, nonelecting church

2001–4 I.R.B. 375 January 22, 2001

26 CFR 601.602: Tax forms and instructions.

Publication 1245 (Rev.1–2001)

Specifications for Filing Form W-4, Employee’s Withholding Allowance Certificate, Magnetically or Electronically

Rev. Proc. 2001–16

Reprinted from IR Bulletin 2001–4 dated, January 22, 2001 (and containing copies of Forms 4419, 6466, 6467, and Notice 1027 for taxpayers’ use)

IRS/MCC will no longer return problem media in need of replacement beginning in Tax Year 2001 filed in calendar year 2002. See Part A, Sec. 2 .04 for details. In addition, beginning in calendar year 2003 for Tax Year 2002, IRS/MCC will no longer accept 9 track tapes for the fil- ing of Forms W-4. See Part B, Sec. 2.

TABLE OF CONTENTS

PART A. GENERAL