SECTION 3. GUIDANCE FOR 2005

AND FUTURE YEARS

.01 Generally.

While the Treasury Department and the IRS continue to acknowledge that more detailed information reporting guidance may be necessary, and such procedures continue to be under study, Treasury and the IRS have concluded that it is appropriate to extend the simplified procedures that were provided in Notice 2003–79 and Notice 2004–71 with respect to tax years 2003 and 2004, to 2005 and future years with appropriate modifications to take into account the changes enacted by the AJCA.

Section 3.02 of this notice summarizes guidance for 2005 and future years information reporting of a distribution with respect to a security issued by a foreign corporation. Section 3.03 provides guidance for 2005 and future years for recipients of Form 1099-DIV.

.02 Persons Required to File Form 1099-DIV.

The rules for 2003 information reporting of a distribution with respect to a security issued by a foreign corporation that are described in detail in sections 3.01 through 3.07 of Notice 2003–79 will continue to apply for 2005. Those rules are outlined in the following summary. However, in order to account for the amendments enacted by the AJCA, for 2006 and future years the foreign investment company exclusion test shall be applied without regard to whether the foreign corporation is or was a foreign personal holding company or a foreign investment company.

A person required to make a return under section 6042 shall report a distribution with respect to such a security in Box 1b of Form 1099-DIV as a qualified dividend if:

1. either the security with respect to which the distribution is made is a common or an ordinary share, or a public SEC filing contains a statement that the security will be, should be, or more likely than not will be

2006–3 I.R.B. 306 January 17, 2006

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