Part III. — Internal Revenue Bulletin 2002-15

ADMINISTRATIVE RELIEF FROM CERTAIN INTERNAL REVENUE CODE PENALTIES FOR DFVC PROGRAM PARTICIPANTS

The Service will not impose the penalties under §§ 6652(c)(1), (d), (e), and 6692 (as these sections relate to the filing of a Form 5500) on a person who is eligible for and satisfies the requirements of the DFVC Program with respect to the filing of a Form 5500. Once the late filer satisfies the requirements of the DFVC Program, including paying the reduced civil penalty under section 502(c)(2) of ERISA, the relief under this notice will apply. The late filer need not file a separate application for relief with the Service. The Service will coordinate with DOL in determining which late filers are eligible for the relief under this notice.

INAPPLICABILITY OF THE ABOVE RELIEF FOR CERTAIN FILERS

The relief under this notice is available only to the extent that a Form 5500 is required under Title I of ERISA. Therefore, for example, Form 5500–EZ filers and Form 5500 filers for plans without employees (as described in 29 CFR 2510.3–3(b) and (c)) are not eligible for the relief in this notice. Because such plans are not subject to Title I of ERISA, they are ineligible to participate in the DFVC Program.

DRAFTING INFORMATION

The principal drafters of this notice are Steven J. Linder of the Employee Plans, Tax Exempt and Government Entities Division and Pamela Kinard of the Office of the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this notice, please contact Employee Plans’ taxpayer assistance telephone service at 1–877–829–5500 (a toll-free number) between the hours of 8:00 a.m. and 6:30 p.m. Eastern Time, Monday through Friday. Mr. Linder may be reached at (202) 283–9888; Ms. Kinard may be reached at (202) 622–6060. The telephone numbers in the preceding sentence are not toll-free.

Relief From Internal Revenue Code Late Filer Penalties

Notice 2002–23

PURPOSE

This notice provides administrative relief from the penalties under §§ 6652 (c)(1), (d), (e), and 6692 of the Internal Revenue Code (the “Code”) for failure to timely comply with the annual reporting requirements under §§ 6033(a), 6057, 6058, 6047, and 6059 of the Code. This administrative relief applies to late filers who both are eligible for and satisfy the requirements of the Delinquent Filer Voluntary Compliance Program (“DFVC Program”), which is administered by the Department of Labor’s (“DOL”) Pension and Welfare Benefits Administration (“PWBA”). The DFVC Program was published on April 27, 1995, in the Federal Register (60 FR 20874). A modification of the DFVC Program was published on March 28, 2002 (67 FR 15051).

BACKGROUND

Plan administrators who fail to file Form 5500 annual returns/reports on a timely basis can be subject to civil penalties under both Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Code. The Secretary of Labor has the authority under section 502(c)(2) of ERISA and 29 CFR 2575.502c–2 to assess civil penalties of up to $1,100 per day against plan administrators who fail or refuse to file complete and timely annual reports.

Pursuant to 29 CFR 2560.502c–2 and 29 CFR 2570.60 et seq., PWBA maintains an administrative program for the assessment of civil penalties for noncompliance with the annual reporting requirements. Under this program, plan administrators filing late annual reports may be assessed a penalty of $50 per day for each day of noncompliance. Plan administrators who fail to file an annual report may be assessed a penalty of $300 per day, up to $30,000 per year, until a complete annual report is filed.

In addition to the civil penalties that may be assessed by DOL under section

502(c)(2) of ERISA, the Internal Revenue Service (the “Service”) may assess penalties under §§ 6652(c)(1), (d), (e) and 6692 of the Code for the failure to satisfy the annual reporting requirements. Section 6652(c)(1) generally provides that in the case of any failure to file a return under § 6033(a), the exempt organization shall pay an amount equal to $20 for each day during which the failure continues, not to exceed the maximum amount specified under the Code. Section 6652(d)(1) generally provides that in the case of any failure to file an annual registration statement under § 6057(a), the late filer shall pay, upon notice and demand, a penalty of $1 for each participant with respect to whom there is a failure to file for each day the failure continues, up to $5,000 for any plan year. Section 6652(d)(2) generally provides that in the case of any failure to file a notification of change of status, the late filer shall pay, upon notice and demand, a penalty of $1 for each day the failure continues, up to $1,000. Section 6652(e) generally provides, in part, that in the case of any failure to file a return or statement required under §§ 6058 or 6047(e), the late filer shall pay, upon notice and demand, a penalty of $25 for each day the failure continues, up to $15,000 per return or statement. Section 6692 generally provides that in the case of any failure to file a report required by § 6059, the late filer shall pay a penalty of $1,000 for each failure.

DOL ADMINISTRATIVE RELIEF FROM PENALTY

In order to encourage voluntary compliance with the annual reporting requirements by late filers, DOL implemented the DFVC Program. Plan administrators who are subject to the assessment of civil penalties for failing to file a timely annual report and who are eligible for the DFVC program may pay reduced civil penalties by voluntarily complying with the terms of the DFVC Program.

2002–15 I.R.B. 742 April 15, 2002

Weighted Average Interest Rate Update

Notice 2002–26

Sections 412(b)(5)(B) and 412(l)(7) (C)(i) of the Internal Revenue Code provide that the interest rates used to calculate current liability for purposes of determining the full funding limitation under § 412(c)(7) and the required contribution under § 412(l) must be within a permissible range around the weighted average of the rates of interest on 30-year Treasury securities during the four-year period ending on the last day before the beginning of the plan year.

Notice 88–73 (1988–2 C.B. 383) provides guidelines for determining the weighted average interest rate and the resulting permissible range of interest rates used to calculate current liability for the purpose of the full funding limitation of § 412(c)(7) of the Code.

Section 417(e)(3)(A)(ii)(II) of the Code defines the applicable interest rate, which must be used for purposes of determining the minimum present value of a participant’s benefit under §§ 417(e)(1) and (2), as the annual rate of interest on 30-year Treasury securities for the month before the date of distribution or such other time as the Secretary may by regulations prescribe. Section 1.417(e)– 1(d)(3) of the Income Tax Regulations provides that the applicable interest rate for a month is the annual interest rate on 30-year Treasury securities as specified by the Commissioner for that month in revenue rulings, notices or other guidance published in the Internal Revenue Bulletin.

The rate of interest on 30-year Treasury Securities for February 2002 is 5.40 percent. The Service has determined this rate as the average of the 30-year Treasury Constant Maturity interest rate determined each day through February 18, 2002 (as reported in § H.15 on the Federal Reserve website ( www.federal reserve.gov/releases )), and the yield on the 30-year Treasury bond maturing in February 2031, determined each day for the balance of the month.

Effective for March 2002, the Service will determine and publish the rate of

Partial Relief From the Substantiation Requirements of Section 170(f)(8) of the Internal Revenue Code for Charitable Contributions Made After September 10, 2001, and Before January 1, 2002

Notice 2002–25

PURPOSE

Due to the unique circumstances of the September 11 ^th tragedy, the Internal Revenue Service is providing taxpayers who made certain charitable contributions of $250 or more with partial relief from the “contemporaneous written acknowledgment” requirement of § 170(f)(8) of the Internal Revenue Code with respect to those contributions. Taxpayers will be treated as satisfying the contemporaneous written acknowledgment requirement with respect to contributions made after September 10, 2001, and before January 1, 2002, if, on or before October 15, 2002, they either obtain the required acknowledgment from the donee organization, or have evidence of a good faith effort to obtain it.

BACKGROUND

Section 170 generally allows a deduction for charitable contributions made during the taxable year. With respect to contributions of $250 or more, the deduction is allowable only if the donor obtains a written acknowledgment from the donee organization on or before the date the donor files the return reporting the contribution or on or before the due date (including extensions) of the return, whichever comes first. Section 170(f)(8).

A contemporaneous written acknowledgment is a timely written statement from the donee organization that contains the following information: (1) the amount of cash and a description (but not value) of any property other than cash contributed; (2) whether the donee organization provided any goods or services in consideration for the property contributed; and (3) a description and good faith estimate of the value of any goods or services provided by the donee organization in con

sideration for the property contributed. The donee organization may provide a paper copy of the acknowledgment to the donor, or the donee organization may provide the acknowledgment electronically, such as in an e-mail addressed to the donor. See Publication 1771, “Charitable Contributions—Substantiation and Disclosure Requirements.”

The Service has become aware that, due to the overwhelming number of charitable contributions made in the wake of September 11 ^th, many donee organizations are unable to supply donors with the required acknowledgments in a timely manner.

RELIEF

Under these unique circumstances, the following partial relief is provided: A donor that contributed $250 or more of cash or other property after September 10, 2001, and before January 1, 2002, and has not obtained a written acknowledgment by the date specified in § 170(f)(8), will be treated as having satisfied the requirements of that section if, on or before October 15, 2002, the donor either obtains the required acknowledgment, or has evidence of a good faith effort to obtain it. An example of a good faith effort is sending the donee organization a letter or e-mail requesting a written acknowledgment that meets the requirements of § 170(f)(8). A copy of that letter or e-mail is evidence of a good faith effort.

Donors are reminded that they must comply with all of the other requirements of § 170 in order to be allowed charitable contribution deductions. For example, donors must comply with the requirement that they maintain records to substantiate the fact and amount of a transfer to a qualified charity within the taxable year.

DRAFTING INFORMATION

The principal authors of this notice are Patricia Zweibel and Susan Kassell of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this notice, contact Ms. Zweibel or Ms. Kassell at (202) 622– 5020 (not a toll-free call).

April 15, 2002 743 2002–15 I.R.B.

beginning in 2002 and 2003 the permissible range is extended to 120 percent.

The following rates were determined for the plan years beginning in the month shown below.

interest on 30-year Treasury Securities solely on the basis of the monthly average of the daily determination of yield on the 30-year Treasury bond maturing in February 2031. The Service will determine and publish the average yield on such basis for an interim period, pending the enact

Month Year

ment of legislative changes to §§ 412 and 417 that address the discontinuance of the 30-year Treasury bond. Section 405 of the Job Creation and Worker Assistance Act of 2002 (“JCWAA”) amended § 412(l)(7)(C) of the Code to provide that for plan years

Weighted

Average

90% to 110% Permissible

Range

90% to 120% Permissible

Range

January 2002 5.71 5.14 to 6.85 5.14 to 6.28 February 2002 5.70 5.13 to 6.84 5.13 to 6.27 March 2002 5.69 5.12 to 6.83 5.12 to 6.26

Drafting Information

The principal author of this notice is Todd Newman of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding this notice, please contact the Employee Plans’ taxpayer assistance telephone service at 1–877–829–5500 (a tollfree number), between the hours of 8:00 a.m. and 6:30 p.m. Eastern time, Monday through Friday. Mr. Newman may be reached at 1–202–283–9888 (not a tollfree number).