SECTION 7. AUDIT PROTECTION

.01 If a Utility uses the safe harbor method provided in section 5.01 of this revenue procedure for Up-front Payments and does not deduct its reimbursements of the Up-front Payments, the method of accounting for an Up-front Payment will not be raised as an issue by the IRS in a taxable year that ends on or before July 11, 2005, provided the Up-front Payment was made pursuant to an Interconnection Agreement that satisfies all of the conditions of either section 5.02 or 5.03 of this revenue procedure, whichever is applicable. Also, if a Utility uses the safe harbor method provided in section 5.01 of this revenue procedure for Up-front Payments and does not deduct its reimbursements of the Up-front Payments, and its use of that method is an issue under consideration (within the meaning of section 3.09 of Rev. Proc. 2002–9) in examination, before an appeals

office, or before the U.S. Tax Court for any taxable year that ends on or before July 11, 2005, that issue will not be further pursued by the IRS, provided that the conditions in either section 5.02 or 5.03 of this revenue procedure, whichever is applicable, are satisfied.