SECTION 5. DRAFTING

INFORMATION

For further information regarding this notice, contact Mr. David Kessler of the Office of Associate Chief Counsel (Corporate) at (202) 622–7770 (not a toll-free call).

Qualified Amended Returns

Notice 2004–38

PURPOSE

The purpose of this notice is to announce that the Internal Revenue Service and the Treasury Department will issue temporary and proposed regulations that will modify the definition of “qualified amended return” in Treasury Regulations § 1.6664–2(c)(3). The temporary regulations will provide that the period for filing a qualified amended return is terminated when the Service serves a John Doe summons under section 7609(f) of the Internal Revenue Code with respect to the taxpayer’s tax liability. The temporary regulations also will provide that the period for filing a qualified amended return is terminated when the Service contacts a promoter, organizer or material advisor concerning a listed transaction for which the taxpayer has claimed a tax benefit.

The temporary regulations will be effective for amended returns or requests for administrative adjustment filed on or after April 30, 2004.

BACKGROUND

Section 1.6664–2(c)(3) of the Treasury Regulations requires a taxpayer to file a qualified amended return before the earliest of: (1) the date on which the taxpayer is first contacted by the Service concerning an examination of the return; (2) the date on which a person described in section 6700(a) is first contacted by the Service concerning the examination of an activity described in section 6700(a) with respect to which the taxpayer claimed any tax benefit on the return directly or indirectly through the entity, plan or arrangement described in section 6700(a)(1)(A); or (3) for certain pass-through items, the date on which the pass-through entity is first contacted by the Service in connection with an examination to which the passthrough item relates.

The Service may serve a John Doe summons pursuant to section 7609(f) after a court proceeding in which the Service establishes that: (1) the summons relates to the investigation of a particular person or ascertainable group or class of persons; (2) there is a reasonable basis for believing that the person, group, or class may fail or may have failed to comply with any internal revenue provision; and (3) the information sought from the examination of records and testimony (and the identity of the person or persons with respect to whose liability the summons is issued) is not readily available from other sources.

In February 2000, the Treasury Department and the Service issued temporary and proposed regulations requiring certain corporations to disclose “reportable transactions” that were reflected on their federal income tax returns. A reportable transaction included a transaction that is the same as or substantially similar to one of the types of transactions that the Service determined to be a tax avoidance transaction and identified by published guidance as a “listed transaction,” if the transaction also gave rise to federal income tax savings above a certain dollar threshold. In June 2002, the Treasury Department and the Service extended the disclosure requirement for listed transactions to individuals, partnerships, S corporations, and other noncorporate persons. This change was effective for transactions entered into on or after January 1, 2001, that had not been reported on a return filed on or before

2004-21 I.R.B. 949 May 24, 2004

Chief Counsel (Procedure and Administration), Administrative Provisions and Judicial Practice Division. For further information regarding this notice, contact Ms. Galib at (202) 622–4940 (not a tollfree call).

26 CFR 1.446–6: REMIC inducement fees. (Also §§ 446, 481, 860C; 1.446–1, 1.860C–1.)

Rev. Proc. 2004–30