Section 1. PURPOSE

This notice provides guidance on certain excise tax provisions in the Internal Revenue Code that were added or affected by the American Jobs Creation Act of 2004 (Pub. L. 108–357) (Act). These provisions relate to: alcohol and biodiesel fuels; the definition of off-highway vehicles; aviation-grade kerosene; claims related to diesel fuel used in certain buses; the display of registration on certain vessels; claims related to sales of gasoline to state and local governments and nonprofit educational organizations; two party exchanges of taxable fuel; and the classification of transmix and certain diesel fuel blendstocks as diesel fuel. Also, this notice requests comments from the public on these provisions as well as other excise tax provisions that were added or affected by the Act.

The provisions in this notice will be the subject of a notice of proposed rulemaking (NPRM) that Treasury and the Internal Revenue Service plan to issue in 2005. Also, excise tax provisions of the Act on which guidance is not provided by this no

der § 3401(a). However, § 6041(g)(2) does not require the reporting of amounts includible in gross income under § 409A that are treated as having been paid to a person with respect to whom a Form 1099–MISC is not required to be filed.

Q–35 How should a payer report to a nonemployee amounts includible in gross income under § 409A and not treated as wages under § 3401(a) as re- quired by § 6041(g)(2)?

A–35 A payer should report the amounts includible in gross income under § 409A and not treated as wages under § 3401(a) in box 7 (nonemployee compensation) of Form 1099–MISC. Additionally, a payer should report such amounts in box 15b of Form 1099–MISC. The amount reported in box 15b should include only the amounts includible in gross income under § 409A and not included in wages under § 3401(a). The instructions for Form 1099–MISC provide additional information relating to this reporting requirement.

Q–36 What are the SECA tax con- sequences of a failure to satisfy the re- quirements of § 409A?

A–36 Gross income of a self-employed individual (for example, a nonemployee director, partner, or independent contractor) derived by the individual from any trade or business is generally subject to tax in accordance with the Self-Employment Contributions Act (SECA) when includible in gross income. See §§ 1401, 1402(a). Accordingly, an amount derived from an individual’s trade or business that is includible in the self-employed individual’s gross income under § 409A is generally subject to the application of SECA taxes at the time such amount is includible in gross income.

Q–37 Does § 885 of the Act affect the imposition of the employee tax and the employer tax under the Federal Insur- ance Contributions Act (FICA) with re- spect to wages paid and received for em- ployment under a nonqualified deferred compensation plan within the meaning of § 409A(d)?

A–37 No. Section 885 of the Act does not affect the imposition of the employee tax and the employer tax under FICA with respect to wages paid and received for employment under a nonqualified deferred

compensation plan within the meaning of § 409A(d). Thus, remuneration for employment constituting wages within the meaning of § 3121(a) is taken into account for FICA tax purposes in accordance with the rules for wage inclusion under §§ 3121(a) and 3121(v)(2).

H. Interim Reporting for Expedited Form W–2

Q–38 What are an employer’s with- holding and reporting obligations where an employee is terminated or a busi- ness files a final Form 941 prior to the issuance of further guidance providing methods for calculating the amount of deferrals for the year and the amounts includible in gross income under § 409A and in wages under § 3401(a)?

A–38 An employer is generally required to issue a Form W–2 reporting compensation paid during a calendar year no later than January 31 of the succeeding calendar year. However, if an employee’s employment is terminated before the close of the calendar year, an employer must furnish an expedited Form W–2 if requested to do so by the employee. Additionally, an employer may, at its option, furnish a Form W–2 to such an employee at any time after the termination but no later than January 31 of the succeeding calendar year. See § 31.6051–1(d)(i). In addition, if an employer makes a final return on Form 941, the employer must furnish expedited Form W–2s to employees and file expedited Form W–2s with the Social Security Administration. See §§ 31.6051–1(d)(ii), 31.6071(a)–1. If an employer furnishes an expedited Form W–2 before the issuance of additional guidance providing methods for determining the amount of deferrals for the year or the amounts includible in gross income under § 409A and in wages under § 3401(a), the employer need not report an amount described in Q&A–25 (deferrals for the year) or in Q&A–31 (amounts includible in gross income and wages) on the Form W–2. However, if an employer furnishes an expedited Form W–2 prior to the issuance of additional guidance that requires the employer to report a deferral for the year or an amount includible in gross income and wages, then the employer must subsequently furnish a corrected Form W–2. See § 31.6051(c).

January 10, 2005 289 2005–2 I.R.B.

son selling the biodiesel in a qualifying retail sale or, if the biodiesel has not been sold in a qualifying retail sale, to the person using the biodiesel as a fuel in a trade or business. A sale is a qualifying retail sale for this purpose if it is at retail and the biodiesel is placed in the fuel tank of the purchaser’s vehicle at the time of the sale. In the case of biodiesel in a mixture, the credit is allowable to the producer of a mixture that is sold or used in the producer’s trade or business. This credit is claimed on Form 8864, Biodiesel Fuels Credit, in accordance with the instructions for that form. For the requirement that the claimant obtain a certificate from a producer of biodiesel, see section 2(h) of this notice.

(f) Registration —(1) Producers of al- cohol and biodiesel; § 4101(a)(1) —(i) In general . Under § 4101(a)(1) and this notice, every person producing or importing alcohol (other than alcohol with a proof of less than 190) or biodiesel must be registered by the Service by July 1, 2005. Application for registration is made on Form 637, Application for Registration (For Cer- tain Excise Tax Activities), in accordance with the instructions for that form. For penalties for failure to register as required, see § 6719 and § 48.4101–1(c)(3).

(ii) Requirements . The Service will register an applicant as an alcohol producer or biodiesel producer only if the Service—

(A) Determines that the applicant is engaged as a producer or importer of alcohol or biodiesel, or is likely to become so engaged within a reasonable time after being registered under § 4101; and

(B) Is satisfied with the filing, deposit, payment, reporting, and claim history for all federal taxes of the applicant and any related person (as defined in § 48.4101–1(b)(5)).

(2) Blender registration . Section 48.4101–1(c) requires any person that produces blended taxable fuel to be registered by the Service under § 4101. Application for this registration is made on Form 637, Application for Registration (For Certain Excise Tax Activities), under Activity Letter “M” (Blender of taxable fuel outside the bulk transfer/terminal system) in accordance with the instructions for that form. A person that is registered under Activity Letter “T” (Buyer of gasoline for blending into gasohol outside the bulk transfer/terminal system) will be treated

tice may be the subject of future guidance or addressed in the NPRM.

Unless otherwise specified, references to Code provisions in this notice are to the Code as in effect on January 1, 2005. Unless otherwise specified, references to regulations are to the Manufacturers and Retailers Excise Tax Regulations.