Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

Section 125.—Cafeteria Plans

(Also Section 402(a).)

Taxability of distributions of employ- ee’s trust. This ruling provides that amounts distributed from a qualified retirement plan that the distributee elects to have applied to pay health insurance premiums under a cafeteria plan are includible in the distributee’s gross income. The holding also extends to situations where amounts distributed from the qualified retirement plan are applied directly to reimburse medical care expenses incurred by a participant in the qualified retirement plan.

Rev. Rul. 2003–62

ISSUE

Whether amounts distributed from a qualified retirement plan that the distributee elects to have applied to pay health insurance premiums under a cafeteria plan are includible in the distributee’s gross income under § 402(a) of the Internal Revenue Code, and whether the same conclusion applies if amounts distributed from the qualified retirement plan are applied directly to reimburse medical care expenses incurred by a participant in the qualified retirement plan.

FACTS

Employer M maintains a plan qualified under § 401(a) that provides retirement benefits for employees. M also maintains a health plan for employees, former employees, their spouses, and dependents that is partially paid through a cafeteria plan under §125 for employees. Under M’s health plan, former employees may elect to have distributions from the qualified retirement plan applied to pay for the health insurance premiums under the cafeteria plan.

LAW AND ANALYSIS

Section 106 provides that gross income of an employee does not include employerprovided coverage under an accident or health plan. Section 1.106–1 of the Income Tax Regulations provides that the gross income of an employee does not include contributions which the employee’s employer makes to an accident or health

plan for compensation (through insurance or otherwise) for personal injuries or sickness to the employee or the employee’s spouse or dependents (as defined in § 152).

Under § 125, an employer may establish a cafeteria plan that permits an employee to choose among two or more benefits, consisting of cash (generally, salary) and qualified benefits, including accident and health coverage. Pursuant to § 125, the amount of an employee’s salary reduction applied to purchase such coverage is not included in gross income, even though it is available to the employee and the employee could have chosen to receive cash instead. If an employee elects to apply the salary reduction amount to purchase accident or health coverage pursuant to § 125, the accident or health coverage is excludable from gross income under § 106 as employer-provided accident or health coverage.

Section 402(a) applies to distributions from a retirement plan that is qualified under § 401(a). Under § 402(a), except as otherwise provided in § 402, any amount actually distributed to any distributee by a qualified retirement plan is taxable to the distributee, in the taxable year of the distributee in which distributed, under § 72 (relating to annuities). There are two exceptions from the general rule of includability of distributions in gross income (at § 402(c) relating to rollovers and at § 402(e)(4) relating to net unrealized appreciation in employer securities), neither of which relates to cafeteria plans.

Rev. Rul. 61–164, 1961–2 C.B. 99, considers the effect upon the qualification under section 401(a) of an employer’s profitsharing plan of a provision in the plan for the purchase of major hospitalization insurance for the employees. The ruling concludes that although the purchase of the major hospitalization insurance does not prevent the qualification of the plan if the insurance is deemed to be “incidental,” the use of the funds to pay for the employees’ medical insurance is a “distribution” within the meaning of § 402.

Rev. Rul. 69–141, 1969–1 C.B. 48, considers whether distributions made from a qualified profit-sharing plan to pay an employee-participant for medical care expenses are excludable from the employeeparticipant’s gross income. An option in the

plan provides that in the event an employeeparticipant incurs medical expenses for the employee, the employee’s spouse, or the employee’s dependents, the employee may apply for an advance distribution from his account in the plan, provided that the aggregate distributions made pursuant to this option do not exceed 49 percent of the amount of funds in the account and the funds to be distributed have been credited to the account for a period of at least two years. The ruling states that distributions from the qualified profit-sharing plan for medical care expenses incurred by an employee-participant are taxable to the participant under § 402(a).

Neither of the exceptions in § 402 to the general rule of § 402(a) allows a participant to exclude from gross income amounts distributed from a qualified retirement plan and applied to the purchase of benefits under the cafeteria plan. Accordingly, the general rule of § 402(a) applies and the distribution is includible in the distributee’s gross income. The same conclusion applies if distributions from the qualified retirement plan were applied directly to reimburse medical care expenses incurred by a plan participant.

HOLDING

Amounts distributed from a qualified retirement plan that the distributee elects to have applied to pay health insurance premiums under a cafeteria plan are includible in the distributee’s gross income. The same conclusion applies if amounts distributed from the qualified retirement plan are applied directly to reimburse medical care expenses incurred by a participant in the qualified retirement plan.

DRAFTING INFORMATION

The principal authors of this revenue ruling are Shoshanna Tanner of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities) and Steven Linder of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding this revenue ruling as it pertains to § 125 (cafeteria plan) matters, please contact Ms. Tanner at (202) 622–6080 (not a toll-free number). For further information

2003–25 I.R.B. 1034 June 23, 2003

purposes of § 1.411(a)–5, a plan is terminated at the date there is a termination of the plan within the meaning of § 411(d)(3)(A) and the regulations thereunder.

Section 411(d)(3)(A) requires that a defined benefit plan provide that, upon its termination or partial termination, the rights of all affected employees to benefits accrued to the date of such termination or partial termination, to the extent funded as of such date, are nonforfeitable. Section 1.411(d)–2(c) provides rules for determining when a plan has undergone a termination. Section 1.411(d)–2(b) provides rules for determining when a plan has undergone a partial termination. A partial termination of a plan is not a termination.

Under the facts presented, Plan A has not been terminated but has undergone a partial termination. Employer M has continued to maintain Plan A after benefit accruals were frozen. For vesting purposes, § 1.411(a)–5(b)(3)(iii) excludes service after a plan has been terminated but does not exclude service after a partial termination. Accordingly, service with Employer M after the establishment of Plan A and prior to January 1, 2003, during which accruals under Plan A were frozen may not be disregarded for vesting purposes with respect to the future accruals under Plan A.

HOLDING

The freezing of accruals under a qualified retirement plan, so that a partial termination of the plan occurs, does not constitute a plan termination for purposes of determining whether service for the plan sponsor after the plan was established may be disregarded toward vesting if accruals resume under the plan. Accordingly, all years of service for the plan sponsor following the establishment of the previously frozen plan must be taken into account for purposes of vesting. If, instead, the accruals are earned under a new plan maintained by the same employer and the new plan is merged with the frozen plan, then this holding also applies, so that, after the merger, service after the frozen plan was established must be taken into account for purposes of vesting in any benefit accruals under the new plan.

DRAFTING INFORMATION

The principal author of this revenue ruling is Diane S. Bloom of Employee Plans, Tax Exempt and Government Entities Di

regarding this revenue ruling as it pertains to § 402 (rollover) matters, please contact the Employee Plans’ taxpayer assistance telephone service at 1–877–829– 5500 (a toll-free number), between 8:00 a.m. and 6:30 p.m. Eastern time, Monday through Friday or Mr. Linder at (202) 283– 9888 (not a toll-free number).

Section 402(a).—Taxability of Beneficiary of Employees’ Trust

Guidance is provided with respect to whether amounts distributed from a qualified retirement plan that the distributee elects to have applied to pay health insurance premiums under a cafeteria plan are includible in the distributee’s gross income under § 402(a), and whether the same conclusion applies if amounts distributed from the qualified retirement plan are applied directly to reimburse medical care expenses incurred by a participant in the qualified retirement plan. See Rev. Rul. 2003–62, page 1034.

Section 411.—Minimum Vesting Standards

Frozen plan; additional accruals; vest- ing service. This ruling states that the freezing of accruals under a plan is not a plan termination for purposes of determining whether vesting service may be disregarded if accruals resume under the plan. Accordingly, all years of service for the plan sponsor since the plan was established must be counted toward vesting. The result is the same if, instead, the frozen plan is merged into a new plan of the employer with accruals resuming under the merged plan.

Rev. Rul. 2003–65

ISSUE

If accruals under a qualified retirement plan are frozen, so that a partial termination of the plan occurs, and accruals under the plan subsequently resume, must all years of service for the plan sponsor following the establishment of the plan be taken into account for purposes of vesting? Is the result different if, instead, a new plan is established that is then merged into the frozen plan after the partial termination?

FACTS

Employer M maintains Plan A, a defined benefit plan qualified under § 401(a) of the Internal Revenue Code, under which benefit accruals were frozen as of December 31, 1996. Under Plan A’s benefit formula prior to January 1, 1997, a participant received a specified percentage of his or her highest average pay multiplied by the participant’s total years of service. Plan A provides that each participant becomes fully vested in his or her accrued benefit after five years of service. The freezing of accruals under Plan A caused a partial termination in 1997, so that all participants in Plan A became fully vested in their accrued benefits following the freeze. Employer M subsequently amends Plan A to provide that, as of January 1, 2003, participants in Plan A will begin accruing benefits under a different formula. A participant’s accrued benefit under Plan A, as amended, will be the sum of the accrued benefit under the old formula and the accrued benefit under the new formula.

LAW AND ANALYSIS

Section 411(a) describes minimum vesting standards that a retirement plan must satisfy in order for the plan to be qualified under § 401(a). These standards include § 411(a)(2), which requires that qualified retirement plans provide that employees who have completed a certain number of years of service have a nonforfeitable right to their accrued benefit derived from employer contributions. Employees must become fully vested in these benefits after no more than five years of service under a cliff vesting schedule or seven years of service under a graded vesting schedule.

Section 411(a)(4) and § 1.411(a)–5(a) of the Income Tax Regulations provide that, in computing the period of service under the plan for purposes of determining the nonforfeitable percentage under § 411(a)(2), all of an employee’s years of service with the employer or employers maintaining the plan are taken into account subject to certain exceptions. These include an exception for years of service with an employer during any period for which the employer did not maintain the plan or a predecessor plan. In particular, § 1.411(a)–5(b)(3)(iii) provides that the period for which a plan is not maintained by an employer includes the period after the plan is terminated. For

June 23, 2003 1035 2003–25 I.R.B.

Section 45B(b)(1) defines the term “excess employer social security tax” as any tax paid by an employer under § 3111 with respect to tips received by an employee during any month, to the extent such tips (A) are deemed to have been paid by the employer to the employee pursuant to § 3121(q) (without regard to whether such tips are reported under § 6053), and (B) exceed the amount by which wages (excluding tips) paid by the employer to the employee during such month are less than the total amount that would be payable (with respect to such employment) at the minimum wage rate applicable to such individual under § 6(a)(1) of the Fair Labor Standards Act of 1938 (determined without regard to § 3(m) of such Act).

Section 45B(b)(2) provides that in applying § 45B(b)(1), there shall be taken into account only tips received from customers in connection with the providing, delivering, or serving of food or beverages for consumption if the tipping of employees delivering or serving food or beverages by customers is customary.

ANALYSIS

To compute its unrelated business taxable income under § 512(a)(3), a social club described in § 501(c)(7) must first ascertain its gross income. Exempt function income is excluded. Gross income is then reduced by allowable deductions that are directly connected with the production of the social club’s gross income (with the exclusion of exempt function income) to arrive at unrelated business taxable income. In calculating the amount of tax due, a social club may claim allowable credits, such as the general business credit under § 38. The general business credit is the sum of several other credits, including the employer social security credit under section 45B, which provides for a credit for employer social security taxes paid with respect to employee tips.

The § 45B credit has the effect of limiting the employer’s social security tax liability to the amount that would be due if an employee were to receive only the minimum wage, no matter how much the employee actually earns. The employee’s earnings record and individual income tax liability are not affected by the credit.

Here, A has paid social security taxes on all tips earned by its employees, including tips paid by both members and non

vision. For further information regarding this revenue ruling, contact the Employee Plans taxpayer assistance telephone service between the hours of 8:00 a.m. and 6:30 p.m. Eastern Time, Monday through Friday, by calling (877) 829–5500 (a toll-free number). Ms. Bloom may be reached at (202) 283–9888 (not a toll-free number).

Section 512.—Unrelated Business Taxable Income

26 CFR 1.512(a)–1: Definition.

Unrelated business taxable income. In computing the unrelated business income tax it owes under section 511(a)(2)(A) of the Code, it is proper for a social club described in section 501(c)(7) to claim the credit under section 45B for the portion of employer social security taxes paid with respect to employee tips received from both members and nonmembers.

Rev. Rul. 2003–64

ISSUE

In computing the unrelated business income tax it owes under § 511(a)(2)(A) of the Internal Revenue Code, is it proper for a social club described in § 501(c)(7) to claim the credit under § 45B for a portion of employer social security taxes paid with respect to employee tips received from both members and nonmembers?

FACTS

A is a social club that is exempt from federal income tax under § 501(a) as an organization described in § 501(c)(7). A was formed to operate a country club with a private golf course and related amenities. A has a clubhouse where food and beverages are served to members and their nonmember guests. In addition to dues, fees, and payments from members, A receives an insubstantial amount of income from nonmembers, who use A ’s golf course and purchase food and beverages at A ’s dining facility. Such nonmember income is treated as gross income from an unrelated trade or business under § 512(a)(3).

Employees who serve food and beverages in A ’s clubhouse are paid by the hour and also customarily receive tips from both members and nonmembers. The tips are re

ported to A as the employer by the employees and are reported on A ’s employment tax returns. A also pays social security tax on the reported tips.

A files Form 990–T, Exempt Organiza- tion Business Income Tax Return, reporting nonmember income as gross income from an unrelated trade or business. In computing liability for unrelated business income tax, A claims the credit under § 45B for employer social security taxes paid with respect to tips paid to its employees who serve food and beverages. A calculates the credit based on all tips received by its employees.

LAW

Section 501(c)(7), in part, provides for the exemption from federal income tax of clubs organized for pleasure, recreation, and other nonprofitable purposes, substantially all the activities of which are for such purposes and no part of the net earnings of which inures to the benefit of any private shareholder.

Section 511(a), in part, provides for the imposition of tax on the unrelated business taxable income (as defined in § 512) of social clubs described in § 501(c)(7).

Section 512(a)(3)(A) provides, in part, that in the case of social clubs described in § 501(c)(7), the term “unrelated business taxable income” means the gross income (excluding any exempt function income), less the deductions allowed by Chapter 1 that are directly connected with the production of the gross income (excluding exempt function income), both computed with certain modifications provided in § 512(b).

Section 512(a)(3)(B) defines the term “exempt function income” as the gross income from dues, fees, charges, or similar amounts paid by members of the organization as consideration for providing such members or their dependents or guests goods, facilities, or services in furtherance of the purposes constituting the basis for the exemption of the organization to which such income is paid.

Section 45B provides for a credit for a portion of employer social security taxes paid with respect to employee tips.

Section 45B(a) provides that for purposes of the general business credit under § 38, the employer social security credit is an amount equal to the excess employer social security tax paid or incurred by the taxpayer.

2003–25 I.R.B. 1036 June 23, 2003

members. These tips meet the requirements under § 45B(b)(2) because the tips were received in connection with food and beverage service at A, and tipping of employees is customary at A . Section 45B does not prohibit social clubs described in § 501(c)(7) from claiming the credit, nor does it limit the credit to social security taxes paid in connection with a social club’s unrelated trade or business. Therefore, A may calculate the § 45B credit on the basis of all tips received by its employees, not only the tips received by employees from nonmembers.

HOLDING

In computing the unrelated business income tax it owes under § 511(a)(2)(A), it is proper for a social club described in § 501(c)(7) to claim the credit under § 45B for the portion of employer social security taxes paid with respect to employee tips received from both members and nonmembers.

DRAFTING INFORMATION

The principal author of this revenue ruling is Charles Barrett of the Tax Exempt and Government Entities Division, Exempt Organizations. For further information regarding this revenue ruling, contact Mr. Barrett at (202) 283–8944 (not a toll-free number).

Section 6621.—Determin- ation of Interest Rate

26 CFR 301.6621–1: Interest rate.

Interest rates; underpayments and overpayments. The rate of interest determined under section 6621 of the Code for the calendar quarter beginning July 1, 2003, will be 5 percent for overpayments (4 percent in the case of a corporation), 5 percent for underpayments, and 7 percent for large corporate underpayments. The rate of

interest paid on the portion of a corporate overpayment exceeding $10,000 will be 2.5 percent.

Rev. Rul. 2003–63

Section 6621 of the Internal Revenue Code establishes the rates for interest on tax overpayments and tax underpayments. Under section 6621(a)(1), the overpayment rate beginning July 1, 2003, is the sum of the federal short-term rate plus 3 percentage points (2 percentage points in the case of a corporation), except the rate for the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the sum of the federal short-term rate plus 0.5 of a percentage point for interest computations made after December 31, 1994. Under section 6621(a)(2), the underpayment rate is the sum of the federal short-term rate plus 3 percentage points.

Section 6621(c) provides that for purposes of interest payable under section 6601 on any large corporate underpayment, the underpayment rate under section 6621(a)(2) is determined by substituting “5 percentage points” for “3 percentage points.” See section 6621(c) and section 301.6621–3 of the Regulations on Procedure and Administration for the definition of a large corporate underpayment and for the rules for determining the applicable date. Section 6621(c) and section 301.6621–3 are generally effective for periods after December 31, 1990.

Section 6621(b)(1) provides that the Secretary will determine the federal shortterm rate for the first month in each calendar quarter.

Section 6621(b)(2)(A) provides that the federal short-term rate determined under section 6621(b)(1) for any month applies during the first calendar quarter beginning after such month.

Section 6621(b)(3) provides that the federal short-term rate for any month is the federal short-term rate determined during such month by the Secretary in accordance with § 1274(d), rounded to the nearest full

percent (or, if a multiple of 1/2 of 1 percent, the rate is increased to the next highest full percent).

Notice 88–59, 1988–1 C.B. 546, announced that, in determining the quarterly interest rates to be used for overpayments and underpayments of tax under section 6621, the Internal Revenue Service will use the federal short-term rate based on daily compounding because that rate is most consistent with section 6621 which, pursuant to section 6622, is subject to daily compounding.

Rounded to the nearest full percent, the federal short-term rate based on daily compounding determined during the month of April 2003 is 2 percent. Accordingly, an overpayment rate of 5 percent (4 percent in the case of a corporation) and an underpayment rate of 5 percent are established for the calendar quarter beginning July 1, 2003. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 for the calendar quarter beginning July 1, 2003, is 2.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning July 1, 2003, is 7 percent. These rates apply to amounts bearing interest during that calendar quarter.

Interest factors for daily compound interest for annual rates of 2.5 percent, 4 percent, 5 percent, and 7 percent are published in Tables 10, 13, 15, and 19 of Rev. Proc. 95–17, 1995–1 C.B. 556, 564, 567, 569, and 573. Annual interest rates to be compounded daily pursuant to section 6622 that apply for prior periods are set forth in the tables accompanying this revenue ruling.

DRAFTING INFORMATION

The principal author of this revenue ruling is Crystal Foster of the Office of Associate Chief Counsel (Procedure & Administration). For further information regarding this revenue ruling, contact Ms. Foster at (202) 622–4652 (not a tollfree call).

June 23, 2003 1037 2003–25 I.R.B.

TABLE OF INTEREST RATES

PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986

OVERPAYMENTS AND UNDERPAYMENTS

In 1995–1 C.B.

PERIOD RATE DAILY RATE TABLE

Before Jul. 1, 1975 6% Table 2, pg. 557

Jul. 1, 1975—Jan. 31, 1976 9% Table 4, pg. 559

Feb. 1, 1976—Jan. 31, 1978 7% Table 3, pg. 558

Feb. 1, 1978—Jan. 31, 1980 6% Table 2, pg. 557

Feb. 1, 1980—Jan. 31, 1982 12% Table 5, pg. 560

Feb. 1, 1982—Dec. 31, 1982 20% Table 6, pg. 560

Jan. 1, 1983—Jun. 30, 1983 16% Table 37, pg. 591

Jul. 1, 1983—Dec. 31, 1983 11% Table 27, pg. 581

Jan. 1, 1984—Jun. 30, 1984 11% Table 75, pg. 629

Jul. 1, 1984—Dec. 31, 1984 11% Table 75, pg. 629

Jan. 1, 1985—Jun. 30, 1985 13% Table 31, pg. 585

Jul. 1, 1985—Dec. 31, 1985 11% Table 27, pg. 581

Jan. 1, 1986—Jun. 30, 1986 10% Table 25, pg. 579

Jul. 1, 1986—Dec. 31, 1986 9% Table 23, pg. 577

TABLE OF INTEREST RATES

FROM JAN. 1, 1987 - DEC. 31, 1998

OVERPAYMENTS UNDERPAYMENTS

1995–1 C.B. 1995–1 C.B.

RATE TABLE PG RATE TABLE PG

Jan. 1, 1987—Mar. 31, 1987 8% 21 575 9% 23 577

Apr. 1, 1987—Jun. 30, 1987 8% 21 575 9% 23 577

Jul. 1, 1987—Sep. 30, 1987 8% 21 575 9% 23 577

Oct. 1, 1987—Dec. 31, 1987 9% 23 577 10% 25 579

Jan. 1, 1988—Mar. 31, 1988 10% 73 627 11% 75 629

Apr. 1, 1988—Jun. 30, 1988 9% 71 625 10% 73 627

Jul. 1, 1988—Sep. 30, 1988 9% 71 625 10% 73 627

Oct. 1, 1988—Dec. 31, 1988 10% 73 627 11% 75 629

Jan. 1, 1989—Mar. 31, 1989 10% 25 579 11% 27 581

Apr. 1, 1989—Jun. 30, 1989 11% 27 581 12% 29 583

Jul. 1, 1989—Sep. 30, 1989 11% 27 581 12% 29 583

Oct. 1, 1989—Dec. 31, 1989 10% 25 579 11% 27 581

Jan. 1, 1990—Mar. 31, 1990 10% 25 579 11% 27 581

Apr. 1, 1990—Jun. 30, 1990 10% 25 579 11% 27 581

Jul. 1, 1990—Sep. 30, 1990 10% 25 579 11% 27 581

Oct. 1, 1990—Dec. 31, 1990 10% 25 579 11% 27 581

Jan. 1, 1991—Mar. 31, 1991 10% 25 579 11% 27 581

Apr. 1, 1991—Jun. 30, 1991 9% 23 577 10% 25 579

Jul. 1, 1991—Sep. 30, 1991 9% 23 577 10% 25 579

2003–25 I.R.B. 1038 June 23, 2003

TABLE OF INTEREST RATES

FROM JAN. 1, 1987 - DEC. 31, 1998—Continued

OVERPAYMENTS UNDERPAYMENTS

1995–1 C.B. 1995–1 C.B.

RATE TABLE PG RATE TABLE PG

Oct. 1, 1991—Dec. 31, 1991 9% 23 577 10% 25 579

Jan. 1, 1992—Mar. 31, 1992 8% 69 623 9% 71 625

Apr. 1, 1992—Jun. 30, 1992 7% 67 621 8% 69 623

Jul. 1, 1992—Sep. 30, 1992 7% 67 621 8% 69 623

Oct. 1, 1992—Dec. 31, 1992 6% 65 619 7% 67 621

Jan. 1, 1993—Mar. 31, 1993 6% 17 571 7% 19 573

Apr. 1, 1993—Jun. 30, 1993 6% 17 571 7% 19 573

Jul. 1, 1993—Sep. 30, 1993 6% 17 571 7% 19 573

Oct. 1, 1993—Dec. 31, 1993 6% 17 571 7% 19 573

Jan. 1, 1994—Mar. 31, 1994 6% 17 571 7% 19 573

Apr. 1, 1994—Jun. 30, 1994 6% 17 571 7% 19 573

Jul. 1, 1994—Sep. 30, 1994 7% 19 573 8% 21 575

Oct. 1, 1994—Dec. 31, 1994 8% 21 575 9% 23 577

Jan. 1, 1995—Mar. 31, 1995 8% 21 575 9% 23 577

Apr. 1, 1995—Jun. 30, 1995 9% 23 577 10% 25 579

Jul. 1, 1995—Sep. 30, 1995 8% 21 575 9% 23 577

Oct. 1, 1995—Dec. 31, 1995 8% 21 575 9% 23 577

Jan. 1, 1996—Mar. 31, 1996 8% 69 623 9% 71 625

Apr. 1, 1996—Jun. 30, 1996 7% 67 621 8% 69 623

Jul. 1, 1996—Sep. 30, 1996 8% 69 623 9% 71 625

Oct. 1, 1996—Dec. 31, 1996 8% 69 623 9% 71 625

Jan. 1, 1997—Mar. 31, 1997 8% 21 575 9% 23 577

Apr. 1, 1997—Jun. 30, 1997 8% 21 575 9% 23 577

Jul. 1, 1997—Sep. 30, 1997 8% 21 575 9% 23 577

Oct. 1, 1997—Dec. 31, 1997 8% 21 575 9% 23 577

Jan. 1, 1998—Mar. 31, 1998 8% 21 575 9% 23 577

Apr. 1, 1998—Jun. 30, 1998 7% 19 573 8% 21 575

Jul. 1, 1998—Sep. 30, 1998 7% 19 573 8% 21 575

Oct. 1, 1998—Dec. 31, 1998 7% 19 573 8% 21 575

TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS

1995–1 C.B. RATE TABLE PAGE Jan. 1, 1999—Mar. 31, 1999 7% 19 573 Apr. 1, 1999—Jun. 30, 1999 8% 21 575 Jul. 1, 1999—Sep. 30, 1999 8% 21 575 Oct. 1, 1999—Dec. 31, 1999 8% 21 575 Jan. 1, 2000—Mar. 31, 2000 8% 69 623 Apr. 1, 2000—Jun. 30, 2000 9% 71 625

June 23, 2003 1039 2003–25 I.R.B.

TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS—Continued

1995–1 C.B. RATE TABLE PAGE Jul. 1, 2000—Sep. 30, 2000 9% 71 625 Oct. 1, 2000—Dec. 31, 2000 9% 71 625 Jan. 1, 2001—Mar. 31, 2001 9% 23 577 Apr. 1, 2001—Jun. 30, 2001 8% 21 575 Jul. 1, 2001—Sep. 30, 2001 7% 19 573 Oct. 1, 2001—Dec. 31, 2001 7% 19 573 Jan. 1, 2002—Mar. 31, 2002 6% 17 571 Apr. 1, 2002—Jun. 30, 2002 6% 17 571 Jul. 1, 2002—Sep. 30, 2002 6% 17 571 Oct. 1, 2002—Dec. 31, 2002 6% 17 571 Jan. 1, 2003—Mar. 31, 2003 5% 15 569 Apr. 1, 2003—Jun. 30, 2003 5% 15 569 Jul. 1, 2003—Sep. 30, 2003 5% 15 569

TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT CORPORATE OVERPAYMENTS AND UNDERPAYMENTS

OVERPAYMENTS UNDERPAYMENTS 1995–1 C.B. 1995–1 C.B. RATE TABLE PG RATE TABLE PG Jan. 1, 1999—Mar. 31, 1999 6% 17 571 7% 19 573 Apr. 1, 1999—Jun. 30, 1999 7% 19 573 8% 21 575 Jul. 1, 1999—Sep. 30, 1999 7% 19 573 8% 21 575 Oct. 1, 1999—Dec. 31, 1999 7% 19 573 8% 21 575 Jan. 1, 2000—Mar. 31, 2000 7% 67 621 8% 69 623 Apr. 1, 2000—Jun. 30, 2000 8% 69 623 9% 71 625 Jul. 1, 2000—Sep. 30, 2000 8% 69 623 9% 71 625 Oct. 1, 2000—Dec. 31, 2000 8% 69 623 9% 71 625 Jan. 1, 2001—Mar. 31, 2001 8% 21 575 9% 23 577 Apr. 1, 2001—Jun. 30, 2001 7% 19 573 8% 21 575 Jul. 1, 2001—Sep. 30, 2001 6% 17 571 7% 19 573 Oct. 1, 2001—Dec. 31, 2001 6% 17 571 7% 19 573 Jan. 1, 2002—Mar. 31, 2002 5% 15 569 6% 17 571 Apr. 1, 2002—Jun. 30, 2002 5% 15 569 6% 17 571 Jul. 1, 2002—Sep. 30, 2002 5% 15 569 6% 17 571 Oct. 1, 2002—Dec. 31, 2002 5% 15 569 6% 17 571 Jan. 1, 2003—Mar. 31, 2003 4% 13 567 5% 15 569 Apr. 1, 2003—Jun. 30, 2003 4% 13 567 5% 15 569 Jul. 1, 2003—Sep. 30, 2003 4% 13 567 5% 15 569

2003–25 I.R.B. 1040 June 23, 2003

TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS

FROM JANUARY 1, 1991 - PRESENT

1995–1 C.B. RATE TABLE PG Jan. 1, 1991—Mar. 31, 1991 13% 31 585 Apr. 1, 1991—Jun. 30, 1991 12% 29 583 Jul. 1, 1991—Sep. 30, 1991 12% 29 583 Oct. 1, 1991—Dec. 31, 1991 12% 29 583 Jan. 1, 1992—Mar. 31, 1992 11% 75 629 Apr. 1, 1992—Jun. 30, 1992 10% 73 627 Jul. 1, 1992—Sep. 30, 1992 10% 73 627 Oct. 1, 1992—Dec. 31, 1992 9% 71 625 Jan. 1, 1993—Mar. 31, 1993 9% 23 577 Apr. 1, 1993—Jun. 30, 1993 9% 23 577 Jul. 1, 1993—Sep. 30, 1993 9% 23 577 Oct. 1, 1993—Dec. 31, 1993 9% 23 577 Jan. 1, 1994—Mar. 31, 1994 9% 23 577 Apr. 1, 1994—Jun. 30, 1994 9% 23 577 Jul. 1, 1994—Sep. 30, 1994 10% 25 579 Oct. 1, 1994—Dec. 31, 1994 11% 27 581 Jan. 1, 1995—Mar. 31, 1995 11% 27 581 Apr. 1, 1995—Jun. 30, 1995 12% 29 583 Jul. 1, 1995—Sep. 30, 1995 11% 27 581 Oct. 1, 1995—Dec. 31, 1995 11% 27 581 Jan. 1, 1996—Mar. 31, 1996 11% 75 629 Apr. 1, 1996—Jun. 30, 1996 10% 73 627 Jul. 1, 1996—Sep. 30, 1996 11% 75 629 Oct. 1, 1996—Dec. 31, 1996 11% 75 629 Jan. 1, 1997—Mar. 31, 1997 11% 27 581 Apr. 1, 1997—Jun. 30, 1997 11% 27 581 Jul. 1, 1997—Sep. 30, 1997 11% 27 581 Oct. 1, 1997—Dec. 31, 1997 11% 27 581 Jan. 1, 1998—Mar. 31, 1998 11% 27 581 Apr. 1, 1998—Jun. 30, 1998 10% 25 579 Jul. 1, 1998—Sep. 30, 1998 10% 25 579 Oct. 1, 1998—Dec. 31, 1998 10% 25 579 Jan. 1, 1999—Mar. 31, 1999 9% 23 577 Apr. 1, 1999—Jun. 30, 1999 10% 25 579 Jul. 1, 1999—Sep. 30, 1999 10% 25 579 Oct. 1, 1999—Dec. 31, 1999 10% 25 579 Jan. 1, 2000—Mar. 31, 2000 10% 73 627 Apr. 1, 2000—Jun. 30, 2000 11% 75 629 Jul. 1, 2000—Sep. 30, 2000 11% 75 629 Oct. 1, 2000—Dec. 31, 2000 11% 75 629 Jan. 1, 2001—Mar. 31, 2001 11% 27 581 Apr. 1, 2001—Jun. 30, 2001 10% 25 579 Jul. 1, 2001—Sep. 30, 2001 9% 23 577 Oct. 1, 2001—Dec. 31, 2001 9% 23 577 Jan. 1, 2002—Mar. 31, 2002 8% 21 575 Apr. 1, 2002—Jun. 30, 2002 8% 21 575

June 23, 2003 1041 2003–25 I.R.B.

TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS FROM JANUARY 1, 1991 - PRESENT—Continued

1995–1 C.B. RATE TABLE PG Jul. 1, 2002—Sep. 30, 2002 8% 21 575 Oct. 1, 2002—Dec. 30, 2002 8% 21 575 Jan. 1, 2003—Mar. 31, 2003 7% 19 573 Apr. 1, 2003—Jun. 30, 2003 7% 19 573 Jul. 1, 2003—Sep. 30, 2003 7% 19 573

TABLE OF INTEREST RATES FOR CORPORATE OVERPAYMENTS EXCEEDING $10,000

FROM JANUARY 1, 1995 - PRESENT

1995–1 C.B. RATE TABLE PG Jan. 1, 1995—Mar. 31, 1995 6.5% 18 572 Apr. 1, 1995—Jun. 30, 1995 7.5% 20 574 Jul. 1, 1995—Sep. 30, 1995 6.5% 18 572 Oct. 1, 1995—Dec. 31, 1995 6.5% 18 572 Jan. 1, 1996—Mar. 31, 1996 6.5% 66 620 Apr. 1, 1996—Jun. 30, 1996 5.5% 64 618 Jul. 1, 1996—Sep. 30, 1996 6.5% 66 620 Oct. 1, 1996—Dec. 31, 1996 6.5% 66 620 Jan. 1, 1997—Mar. 31, 1997 6.5% 18 572 Apr. 1, 1997—Jun. 30, 1997 6.5% 18 572 Jul. 1, 1997—Sep. 30, 1997 6.5% 18 572 Oct. 1, 1997—Dec. 31, 1997 6.5% 18 572 Jan. 1, 1998—Mar. 31, 1998 6.5% 18 572 Apr. 1, 1998—Jun. 30, 1998 5.5% 16 570 Jul. 1, 1998—Sep. 30, 1998 5.5% 16 570 Oct. 1, 1998—Dec. 31, 1998 5.5% 16 570 Jan. 1, 1999—Mar. 31, 1999 4.5% 14 568 Apr. 1, 1999—Jun. 30, 1999 5.5% 16 570 Jul. 1, 1999—Sep. 30, 1999 5.5% 16 570 Oct. 1, 1999—Dec. 31, 1999 5.5% 16 570 Jan. 1, 2000—Mar. 31, 2000 5.5% 64 618 Apr. 1, 2000—Jun. 30, 2000 6.5% 66 620 Jul. 1, 2000—Sep. 30, 2000 6.5% 66 620 Oct. 1, 2000—Dec. 31, 2000 6.5% 66 620 Jan. 1, 2001—Mar. 31, 2001 6.5% 18 572 Apr. 1, 2001—Jun. 30, 2001 5.5% 16 570 Jul. 1, 2001—Sep. 30, 2001 4.5% 14 568 Oct. 1, 2001—Dec. 31, 2001 4.5% 14 568 Jan. 1, 2002—Mar. 31, 2002 3.5% 12 566

2003–25 I.R.B. 1042 June 23, 2003

TABLE OF INTEREST RATES FOR CORPORATE OVERPAYMENTS EXCEEDING $10,000

FROM JANUARY 1, 1995 - PRESENT—Continued

1995–1 C.B. RATE TABLE PG Apr. 1, 2002—Jun. 30, 2002 3.5% 12 566 Jul. 1, 2002—Sep. 30, 2002 3.5% 12 566 Oct. 1, 2002—Dec. 31, 2002 3.5% 12 566 Jan. 1, 2003—Mar. 31, 2003 2.5% 10 564 Apr. 1, 2003—Jun. 30, 2003 2.5% 10 564 Jul. 1, 2003—Sep. 30, 2003 2.5% 10 564

June 23, 2003 1043 2003–25 I.R.B.