Part I. Rulings — Internal Revenue Bulletin 2009-52

Section 401.—Qualified Pension, Profit-Sharing, and Stock Bonus Plans

26 CFR 1.401(l)–1: Permitted disparity in employer- provided contributions or benefits.

2010 covered compensation tables; permitted disparity. The covered compensation tables under section 401 of the Code for the year 2010 are provided for use in determining contributions to defined benefit plans and permitted disparity.

Rev. Rul. 2009–40

This revenue ruling provides tables of covered compensation under § 401(l)(5)(E) of the Internal Revenue Code (the “Code”) and the Income Tax Regulations, thereunder, for the 2010 plan year.

Section 401(l)(5)(E)(i) defines covered compensation with respect to an employee, as the average of the contribution and benefit bases in effect under section 230 of the Social Security Act (the “Act”) for each year in the 35-year period ending with the

CALENDAR

YEAR OF

BIRTH

year in which the employee attains social security retirement age.

Section 401(l)(5)(E)(ii) of the Code states that the determination for any year preceding the year in which the employee attains social security retirement age shall be made by assuming that there is no increase in covered compensation after the determination year and before the employee attains social security retirement age.

Section 1.401(l)–1(c)(34) defines the taxable wage base as the contribution and benefit base under section 230 of the Act.

Section 1.401(l)–1(c)(7)(i) defines covered compensation for an employee as the average (without indexing) of the taxable wage bases in effect for each calendar year during the 35-year period ending with the last day of the calendar year in which the employee attains (or will attain) social security retirement age. A 35-year period is used for all individuals regardless of the year of birth of the individual. In determining an employee’s covered compensation for a plan year, the taxable wage base for all calendar years beginning after

ATTACHMENT I

2010 COVERED COMPENSATION TABLE

CALENDAR YEAR OF

SOCIAL SECURITY

RETIREMENT AGE

the first day of the plan year is assumed to be the same as the taxable wage base in effect as of the beginning of the plan year. An employee’s covered compensation for a plan year beginning after the 35-year period applicable under §1.401(l)–1(c)(7)(i) is the employee’s covered compensation for a plan year during which the 35-year period ends. An employee’s covered compensation for a plan year beginning before the 35-year period applicable under §1.401(l)–1(c)(7)(i) is the taxable wage base in effect as of the beginning of the plan year.

Section 1.401(l)–1(c)(7)(ii) provides that, for purposes of determining the amount of an employee’s covered compensation under §1.401(l)–1(c)(7)(i), a plan may use tables, provided by the Commissioner, that are developed by rounding the actual amounts of covered compensation for different years of birth.

For purposes of determining covered compensation for the 2010 year, the taxable wage base is $106,800.

The following tables provide covered compensation for 2010.

2010 COVERED COMPENSATION

TABLE II

1907 1972 $4,488 1908 1973 4,704 1909 1974 5,004 1910 1975 5,316 1911 1976 5,664 1912 1977 6,060 1913 1978 6,480 1914 1979 7,044 1915 1980 7,692 1916 1981 8,460 1917 1982 9,300 1918 1983 10,236 1919 1984 11,232 1920 1985 12,276 1921 1986 13,368 1922 1987 14,520 1923 1988 15,708 1924 1989 16,968 1925 1990 18,312

2009–52 I.R.B. 942 December 28, 2009

2010 COVERED COMPENSATION

TABLE II

CALENDAR

YEAR OF

BIRTH

ATTACHMENT I

2010 COVERED COMPENSATION TABLE

CALENDAR YEAR OF

SOCIAL SECURITY

RETIREMENT AGE

1926 1991 19,728 1927 1992 21,192 1928 1993 22,716 1929 1994 24,312 1930 1995 25,920 1931 1996 27,576 1932 1997 29,304 1933 1998 31,128 1934 1999 33,060 1935 2000 35,100 1936 2001 37,212 1937 2002 39,444 1938 2004 43,992 1939 2005 46,344 1940 2006 48,816 1941 2007 51,348 1942 2008 53,952 1943 2009 56,628 1944 2010 59,268 1945 2011 61,884 1946 2012 64,464 1947 2013 67,008 1948 2014 69,408 1949 2015 71,724 1950 2016 73,920 1951 2017 76,044 1952 2018 78,084 1953 2019 80,052 1954 2020 81,972 1955 2022 85,620 1956 2023 87,384 1957 2024 89,064 1958 2025 90,660 1959 2026 92,184 1960 2027 93,648 1961 2028 95,052 1962 2029 96,372 1963 2030 97,680 1964 2031 98,940 1965 2032 100,116 1966 2033 101,220 1967 2034 102,192 1968 2035 103,068 1969 2036 103,824 1970 2037 104,448 1971 2038 105,012 1972 2039 105,552 1973 2040 106,032 1974 2041 106,392

December 28, 2009 943 2009–52 I.R.B.

2010 COVERED COMPENSATION

TABLE II

CALENDAR

YEAR OF

BIRTH

ATTACHMENT I

2010 COVERED COMPENSATION TABLE

CALENDAR YEAR OF

SOCIAL SECURITY

RETIREMENT AGE

1975 2042 106,656 1976 and Later 2043 and Later 106,800

ATTACHMENT II

2010 ROUNDED COVERED COMPENSATION TABLE

CALENDAR

YEAR OF

BIRTH

2010 COVERED COMPENSATION

ROUNDED

1937 $39,000 1938 – 1939 45,000 1940 48,000 1941 51,000 1942 54,000 1943 57,000 1944 60,000 1945 – 1946 63,000 1947 66,000 1948 69,000 1949 72,000 1950 – 1951 75,000 1952 78,000 1953 – 1954 81,000 1955 – 1956 87,000 1957 – 1958 90,000 1959 – 1960 93,000 1961 – 1962 96,000 1963 – 1965 99,000 1966 – 1968 102,000 1969 – 1972 105,000 1973 and Later 106,800

Section 846.—Discounted Unpaid Losses Defined

26 CFR 1.846–1: Application of discount factors.

The loss payment patterns and discount factors are set forth for the 2009 accident year. These factors will be used for computing discounted unpaid losses under section 846 of the Code. See Rev. Proc. 200955, page 982.

The salvage discount factors are set forth for 2009. These factors must be used to compute discounted estimated salvage recoverable for purposes of section 832 of the Code. See Rev. Proc. 2009-56, page 993.

DRAFTING INFORMATION

The principal author of this revenue ruling is Michael Spaid of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding this revenue ruling, please contact the Employee Plans taxpayer assistance telephone service at 1–877–829–5500, between the hours of 8:30 a.m. and 4:30 p.m. Eastern time, Monday through Friday (a toll-free number). Mr. Spaid may be reached via e-mail at RetirementPlanQuestions@irs.gov.

Section 832.—Insurance Company Taxable Income

26 CFR 1.832–4: Gross income.

2009–52 I.R.B. 944 December 28, 2009

Section 6159.—Agree- ments for Payment of Tax Liability in Installments

26 CFR 1.301.6159–0: Table of contents.

T.D. 9473

DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 301

Agreements for Payment of Tax Liability in Installments

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final Regulations.

SUMMARY: This document contains final regulations relating to the payment of tax liabilities in installments. The regulations reflect changes to the law made by the Taxpayer Bill of Rights II, the Internal Revenue Service Restructuring and Reform Act of 1998, and the American Jobs Creation Act of 2004. The regulations will affect taxpayers submitting installment agreements to the IRS.

DATES: Effective Date: These regulations are effective on November 25, 2009.

Applicability Date: For the date of applicability, see §301.6159(k).

FOR FURTHER INFORMATION CONTACT: Walter Ryan, (202) 622–3620 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This document contains amendments to the Procedure and Administration Regulations (26 CFR part 301) under section 6159 of the Internal Revenue Code (Code). Section 6159 allows the IRS to enter into agreements for the payment of any unpaid tax in installments. Taxpayers may request administrative review of IRS decisions to terminate installment agreements pursuant to section 6159(e), added to the Code by section 202 of the Taxpayer Bill of Rights II, Public Law 104–168 (110 Stat. 1452,

1457 (1996)). Taxpayers may appeal rejections of proposed installment agreements under section 7122(e), added to the Code by section 3462 of Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98), Public Law 105–206 (112 Stat. 685, 764 (1998)). Section 6159(c), added to the Code by section 3467 of RRA 1998, requires the IRS to accept a proposed installment agreement for income taxes under certain circumstances. Section 3506 of RRA 1998 requires the IRS to send each taxpayer with an installment agreement an annual statement showing the balance due at the beginning of the year, the payments made during the year, and the remaining balance due at the end of the year.

Section 843 of the American Jobs Creation Act of 2004 (AJCA), Public Law 108–357 (118 Stat. 1418, 1600 (2004)), amended section 6159(a) to allow the IRS to enter into installment agreements that provide for partial (as well as full) payment of a tax liability, but excludes partial payment installment agreements from the scope of installment agreements that must be accepted by the IRS. Section 843 of the AJCA also added new section 6159(d), requiring the IRS to review partial payment installment agreements every two years. The primary purpose of the review is to determine whether the financial condition of the taxpayer has significantly changed so as to warrant an increase in the value of the payments being made. See H. Rep. No. 108–755, 108th Cong., 2d Sess., 2005 U.S.C.C.A.N. 1341 (October 7, 2004).

On March 5, 2007, a notice of proposed rulemaking (REG–100841–97, 2007–1 C.B. 763 [72 FR 9712]) was published in the Federal Register. The proposed regulations reflected the changes made to section 6159 by the Taxpayer Bill of Rights II, the RRA 98, and the AJCA. The proposed regulations reflected current IRS administrative practice. The IRS received one set of written comments with numerous recommendations. No public hearing was requested or held. After consideration of the comments, the proposed regulations are adopted as revised by this Treasury decision.

Summary of Comments and Explanation of Revisions

The final regulations adopt certain recommendations contained in the comments by clarifying two provisions of the proposed regulations. As explained in this preamble, §301.6159–1(e)(3) was amended to clarify that the taxpayer may submit a request to modify or terminate the installment agreement. Section 301.6159–1(e)(3) further clarifies that such a request will not suspend the statute of limitations on collection and the taxpayer must comply with the existing installment agreement while the request is being considered. As also explained in this preamble, §301.6159–1(e)(1)(i) clarifies that the IRS may terminate an installment agreement if the taxpayer provides materially incomplete or inaccurate information in response to an IRS request for a financial update.

The following is a section-by-section analysis of the comments.

Section 301.6159–1(b): Procedures for submission and consideration of proposed installment agreements.

Section 301.6159–1(b) of the proposed regulations provided that an installment agreement request must be submitted according to procedures prescribed by the IRS. It did not require the IRS to accept or reject the request within a specific time frame. The commenter proposed to limit the IRS’s time to consider an installment agreement to 90 days; if the IRS fails to act in that time, the agreement would be granted automatically. The commenter reasoned that the limited time frame would benefit the IRS because more installments agreements would be automatically allowed, thereby increasing revenues, and would benefit the taxpayer by allowing payments to begin quickly and efficiently. The recommendation was not adopted for two reasons. First, the IRS already grants installment agreements quickly and automatically in the vast majority of cases. If the taxpayer owes less than $25,000 and offers to pay the liabilities in full within 5 years, the agreement can be granted automatically under the IRS’s “streamlined” installment agreement procedures. See Internal Revenue Manual 5.14.5.2 at http://www.irs.gov/irm/part5/

December 28, 2009 945 2009–52 I.R.B.

were intended to reflect existing practices. The regulations will have no effect on the IRS’s streamlined procedures or its policy with regard to waivers of the collection statute.

The commenter stated that the proposed regulations did not explain the inclusion of §301.6159–1(c)(3)(ii), which provided that an installment agreement may, by its terms, end upon the expiration of the period of limitations on collection, or at some prior date. As explained in the preamble to the proposed regulations, this provision clarifies that the IRS may enter into partial payment installment agreements that end upon the running of the collection statute, or that end prior to that time so that the IRS may collect the balance of the tax liability against any property belonging to the taxpayer before the collection period expires. The IRS does not currently enter into partial payment installment agreements that expire before the end of the collection statute and has no plans to do so routinely in the future.

Proposed §301.6159–1(c)(3)(v) provided that while an installment agreement is in effect, the IRS may request a financial condition update from the taxpayer at any time. The commenter recommended that the IRS be permitted to request only one financial condition update per year. This recommendation was not adopted. The IRS very rarely requests updates more than once a year. In certain rare circumstances, more frequent updates may be appropriate, such as when the IRS has reason to believe that the taxpayer’s financial condition has improved.

Section 301.6159–1(d): Rejection of a proposed installment agreement.

Section 301.6159–1(d)(2) of the proposed regulations provided that the IRS may not notify a taxpayer or the taxpayer’s representative of the rejection of an installment agreement until an independent review of proposed rejection is completed. The commenter was concerned that the proposed regulations did not provide any guidance as to how the independent administrative review will be assured. The commenter recommended that the review be undertaken by an IRS office located in a different territory. The recommendation was not adopted. Managers in the IRS offices in San Jose, California, and

irm_05–014–005.html . The IRS granted over 2.62 million installment agreements in fiscal year 2008, of which over 2.51 million were granted through the IRS’s streamlined procedures. In cases that do not meet the streamlined criteria, the IRS has determined that a more detailed review of the taxpayer’s financial situation is warranted. Second, the IRS generally responds to non-streamlined installment agreement requests in a timely manner. During the filing season, however, inventory fluctuations may cause delays. The automatic allowance of installment agreements in such cases would not be appropriate.

Proposed § 301.6159–1(b)(2) provided that an installment agreement request becomes pending when it is accepted for processing. The commenter recommended that the IRS send an automatically-generated response acknowledging the date of acceptance for processing to the taxpayer and the taxpayer’s representative. This recommendation was not adopted. The vast majority of installment agreements are streamlined agreements, which the IRS accepts very quickly. The IRS will, however, consider adopting an administrative procedure for the minority of cases where it anticipates a time lag between acceptance for processing and the acceptance or rejection of the installment agreement.

Proposed §301.6159–1(b)(2) also provided that if an installment agreement request does not contain sufficient information to permit the IRS to evaluate whether the request should be accepted, the IRS will request the needed information. The commenter recommended that all requests for additional information should be reasonably necessary. The proposed regulations already address this recommendation by directing that requests be for “needed” information.

Proposed §301.6159–1(b)(3) allowed a taxpayer to submit a good faith revision of a rejected installment agreement request within 30 days of rejection. The commenter recommended that the time for taxpayers to submit a good faith revision should be extended to 60 days because taxpayers often have difficulty obtaining the necessary documents within 30 days. This recommendation was not adopted. The recommendation would apply to a small number of installment agreement requests that are not accepted under the

IRS’s streamlined procedures. In these cases, the IRS requests the information necessary for a financial analysis before rejecting the installment agreement request. See Internal Revenue Manual 5.15.1.6 at http://www.irs.gov/irm/part5/ irm_05–015–001.html . Allowing 60 days following the rejection would encourage untimely responses and delay case resolution.

Section 301.6159–1(c): Acceptance, form, and terms of installment agreements.

Section 301.6159–1(c)(1) of the proposed regulations provided that an installment agreement request has not been accepted until the IRS notifies the taxpayer or the taxpayer’s representative of the acceptance. Section 6159(a) requires that an installment agreement be in writing, and proposed §301.6159–1(c)(2) provided that the writing may take the form of a document signed by the taxpayer and the IRS or the written confirmation of an agreement entered into by the taxpayer and the IRS that is mailed or personally delivered to the taxpayer. The commenter recommended that the IRS’s notification of the acceptance or rejection of a proposed installment agreement also be directed to the taxpayer’s representative and include the terms of the agreement and payment submission information. These recommendations were not adopted in the regulations because they are more appropriately addressed in the IRS’s procedures. The IRS currently does, however, provide written notification to the taxpayer and the taxpayer’s representative of the acceptance or rejection of an installment agreement and the suggested information.

The commenter was concerned that the IRS intended to change its streamlined procedures and recommended that the procedures be retained. The commenter was also concerned that proposed §301.6159–1(c)(3)(iii)(A) may represent a departure from the IRS’s current policy that limits the acceptance of extensions of the collection statute of limitations in connection with installment agreements to the narrow subset of partial payment installment agreements in which the liability will not be paid in full under the agreement before the collection statute expires. As stated in the preamble to the notice of proposed rulemaking, the regulations

2009–52 I.R.B. 946 December 28, 2009

mended that the regulations clarify that an appeal should be made to the Office of Appeals within 30 days after the modification or termination will take effect, regardless of whether the taxpayer submits additional information under §301.6159–1(e)(3), has filled out Form 9423, “ Collection Appeal Request,” or has requested a meeting with a Collection Manager. This recommendation was not adopted in the regulations because it is more appropriately addressed in IRS forms and procedures.

Proposed §301.6159–1(e)(4) provided, in part, that the taxpayer may administratively appeal the modification or termination of an installment agreement to the Office of Appeals. The commenter recommended that the taxpayer be allowed to appeal the IRS’s determination not to modify an installment agreement. This recommendation was not adopted. The IRS routinely grants taxpayer modification requests that result in agreements within the streamlined criteria. See Internal Revenue Manual 5.19.1.5.4.24 at http://www.irs.gov/irm/part5/ irm_05–019–001.html . Taxpayers do not have a statutory right to appeal rejected modification requests, and the IRS has not determined there is a need for additional administrative review of the denial of a modification request.

Section 301.6159–1(f): Effect of installment agreement or pending installment agreement on collection activity.

Section 301.6159–1(f)(1) of the proposed regulations stated that the IRS may not levy during the time an installment agreement is pending. Proposed §301.6159–1(f)(2) stated that levy is not prohibited if an installment agreement request was made solely to delay collection. The commenter recommended that the solely to delay collection standard in the proposed regulations be replaced with language that references the “frivolous submission” standard in section 6702(b) of the Code. This recommendation was not adopted. Under existing IRS procedures, an installment agreement is returned as made solely to delay collection when there is no economic reality to the request, the request fails to address changes previously requested by the IRS in response to a prior request, the request ignores direction pro

Jacksonville, Florida, supervise employees throughout the United States who review rejected installment agreements. An independent review is assured by assigning these cases to an employee who has no prior involvement in the case and who reports to a supervisor in either of these two offices.

The commenter recommended that the determination that the taxpayer did not submit a good faith revision be subject to independent administrative review. This recommendation was not adopted because it would delay case resolution and would, in effect, treat requests that were not made in good faith as valid requests. The commenter also recommended that the rejection of revisions that were made in good faith receive independent review. The proposed regulation already provided for this review. Proposed §301.6159–1(b) stated that if the IRS determines that the taxpayer made a good faith revision within 30 days of the rejection, the provisions of §301.6159–1 apply to the revised proposal.

Proposed §301.6159–1(d)(3) provided that a taxpayer may appeal the rejection of an installment agreement request within 30 days of the rejection. The commenter recommended that the 30-day period be tolled while a revised proposal of a rejected request is being evaluated so that the taxpayer would not have to file an appeal while the revision is under consideration. This recommendation was not adopted. The IRS’s procedures are designed to allow a quick resolution of the taxpayer’s request; tolling the appeal period would add an unneeded layer of complexity to the process and delay case resolution. The commenter also recommended that the IRS provide more definitive guidance as to what qualifies as a good faith revision. This recommendation was not adopted because this guidance is more appropriately left to the IRS procedures.

Section 301.6159–1(e): Modification or termination of installment agreements by the Internal Revenue Service.

Proposed §301.6159–1(e)(2)(i) provided that the IRS may modify or terminate an installment agreement if the IRS determines that the financial condition of the taxpayer has significantly changed. Proposed §301.6159–1(c)(3)(vi)

provided that the IRS and the taxpayer may agree to modify or terminate an installment agreement or may agree to a new installment agreement that supersedes the existing agreement. The commenter recommended that the regulations explicitly allow taxpayers to request a modification or termination of an existing installment agreement, as was stated in existing §301.6159–1(c)(3). This clarification was adopted in §301.6159–1(e)(3).

The commenter recommended that the regulations require the taxpayer to comply with the terms of an installment agreement while a request for modification is being considered and that a proposed modification will not result in a suspension of the statute of limitations on collection. These clarifications were also adopted in §301.6159–1(e)(3).

The commenter recommended that a taxpayer’s request to modify an existing installment agreement should be exempt from user fees under regulations §§300.1 and 300.2. This recommendation was not adopted because user fees are outside the scope of this regulation project.

Proposed §301.6159–1(e)(2)(ii)(C) provided that the IRS may modify or terminate an installment agreement if the taxpayer fails to provide a financial condition update requested by the IRS. The commenter recommended that the regulations provide explicitly whether the IRS may terminate an installment agreement if the taxpayer provided materially inaccurate or incomplete information. This recommendation was adopted. Section 301.6159–1(e)(1)(i) was revised to clarify that the IRS may terminate an installment agreement if the taxpayer provided materially inaccurate or incomplete information in connection with a requested financial update.

Proposed §301.6159–1(e)(3) provided that the IRS will generally notify the taxpayer in writing at least 30 days prior to terminating an installment agreement and describe the reason for the termination, after which the taxpayer may provide information showing that the IRS’s reason is incorrect. Proposed §301.6159–1(e)(4) provided for the administrative appeal of the modification or termination of an installment agreement to the Office of Appeals if the request is properly made within 30 days after the termination or modification is to take effect. The commenter recom

December 28, 2009 947 2009–52 I.R.B.

practices. The regulations will therefore have no effect on previously proposed or accepted installment agreements.

Special Analyses

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, the proposed regulations preceding these regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Drafting Information

The principal author of these regulations is Walter Ryan, Office of Associate Chief Counsel (Procedure and Administration).

- - - -

Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 301 is amended as follows:

PART 301—PROCEDURE AND ADMINISTRATION

Paragraph 1. The authority citation for part 301 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * * Par. 2. Section 301.6159–0 is added to read as follows:

§301.6159–0 Table of contents .

This section lists the major captions that appear in the regulations under §301.6159–1.

§301.6159–1 Agreements for the payment of tax liabilities in installments .

(a) Authority.

vided by revenue officers, the request is made by a taxpayer that has defaulted prior installment agreements, or the request is made at a time that causes it to be classified as a request made to delay enforcement action. See Internal Revenue Manual 5.14.3.2 at http://www.irs.gov/irm/part5/ irm_05–014–003.html . Section 6702(b) imposes a $5,000 penalty for installment agreement requests that reflect a desire to delay or impede the administration of the Federal tax laws, and the IRS has not yet developed procedures defining the kinds of installment agreements that constitute frivolous submissions. The standard in section 6702(b) therefore may not be an appropriate standard for identifying those installment agreements that fail to qualify for the prohibition against levy.

In the alternative, the commenter recommended that the regulations state that a taxpayer may appeal the IRS’s levy action when the IRS determines that an installment agreement request was made solely to delay collection, and that damages may be appropriate under section 7433 of the Code. These recommendations were not adopted. Taxpayers’ rights to appeal proposed levies and seek damages are provided for in the regulations under sections 6330 and 7433 of the Code, respectively.

Section 301.6159–1(g): Suspension of the statute of limitations on collection.

Section 301.6159–1(g) of the proposed regulations provided that the statute of limitations on collection under section 6502 of the Code is suspended for the period that a proposed installment agreement is pending, plus 30 days following a rejection, and during any appeal. The commenter recommended that the regulations clearly define when an installment agreement is pending. This recommendation is already addressed by proposed §301.6159–1(b)(2), which provides a detailed explanation of when an installment agreement is pending.

Section 301.6159–1(h): Annual statement.

Section 301.6159–1(h) of the proposed regulations requires the IRS to provide taxpayers with an annual statement setting forth the balance owed at the beginning of the year, the payments made during the year, and the remaining balance at the end of the year. The commenter recommends

that the annual statement be as clear as possible and that the IRS provide the taxpayer with a single annual statement describing all tax liabilities covered by the agreement. Currently, the IRS sends an annual statement for each separate liability covered by an installment agreement. No change was made to the final regulations because this recommendation is more appropriately addressed when the IRS updates the forms used for the annual statements.

Section 301.6159–1(i): Biennial review of partial payment installment agreements.

Section 301.6159–1(i) of the proposed regulations required the IRS to perform a review of the taxpayer’s financial condition at least once every two years in cases of partial payment installment agreements. The proposed regulations also stated that the purpose of the review was to determine whether an increase in payments is warranted. The commenter recommended that §301.6159–1(i) be rephrased to provide that the biennial review of a taxpayer’s financial condition may result in a decrease, as well as an increase, in the amount of payments being made. This recommendation was not adopted. While taxpayers may request a decrease in the amount of payments due under an installment agreement, the IRS does not have the information to unilaterally make that determination. The automatic biennial review done by the IRS does not, in every case, result in a request for updated financial information. As explained above, taxpayers may request that their payments be lowered if their financial condition has worsened.

Section 301.6159–1(k): Effective/applicability date.

Section 301.6159–1(k) of the proposed regulations provided that the effective date of the final regulations would be the date the final regulations are published in the Federal Register . The commenter was concerned about how previously proposed or accepted installment agreements will be affected by the regulations and recommended that the effective date of paragraphs (b), (c), and (d) apply prospectively. This recommendation was not adopted. As explained earlier and in the preamble to the proposed regulations, the regulations substantially reflect existing

2009–52 I.R.B. 948 December 28, 2009

( 3 ) Entered into an installment agreement for the payment of any income tax;

(C) The Commissioner determines that the taxpayer is financially unable to pay the liability in full when due (and the taxpayer submits any information the Commissioner requires to make that determination);

(D) The installment agreement requires full payment of the liability within three years; and

(E) The taxpayer agrees to comply with the provisions of the Internal Revenue Code for the period the agreement is in effect.

(2) Form of installment agreements . An installment agreement must be in writing. A written installment agreement may take the form of a document signed by the taxpayer and the Commissioner or a written confirmation of an agreement entered into by the taxpayer and the Commissioner that is mailed or personally delivered to the taxpayer.

(3) Terms of installment agreements . (i) Except as otherwise provided in this section, an installment agreement is effective from the date the IRS notifies the taxpayer or the taxpayer’s representative of its acceptance until the date the agreement ends by its terms or until it is superseded by a new installment agreement.

(ii) By its terms, an installment agreement may end upon the expiration of the period of limitations on collection in section 6502 and §301.6502–1, or at some prior date.

(iii) As a condition to entering into an installment agreement with a taxpayer, the Commissioner may require that—

(A) The taxpayer agree to a reasonable extension of the period of limitations on collection; and

(B) The agreement contain terms that protect the interests of the Government.

(iv) Except as otherwise provided in an installment agreement, all payments made under the installment agreement will be applied in the best interests of the Government.

(v) While an installment agreement is in effect, the Commissioner may request, and the taxpayer must provide, a financial condition update at any time.

(vi) At any time after entering into an installment agreement, the Commissioner and the taxpayer may agree to modify or terminate an installment agreement or may

(b) Procedures for submission and consideration of proposed installment agreements.

(d) Rejection of a proposed installment agreement.

(e) Modification or termination of installment agreements by the Internal Revenue Service.

(f) Effect of installment agreement or pending installment agreement on collection activity.

(g) Suspension of the statute of limitations on collection.

(h) Annual statement. (i) Biennial review of partial payment installment agreements.

(j) Cross reference. (k) Effective/applicability date. Par. 3. Section 301.6159–1 is revised to read as follows:

§301.6159–1 Agreements for payment of tax liabilities in installments .

(a) Authority . The Commissioner may enter into a written agreement with a taxpayer that allows the taxpayer to make scheduled periodic payments of any tax liability if the Commissioner determines that such agreement will facilitate full or partial collection of the tax liability.

(b) Procedures for submission and con- sideration of proposed installment agree- ments —(1) In general . A proposed installment agreement must be submitted according to the procedures, and in the form and manner, prescribed by the Commissioner.

(2) When a proposed installment agree- ment becomes pending . A proposed installment agreement becomes pending when it is accepted for processing. The Internal Revenue Service (IRS) may not accept a proposed installment agreement for processing following reference of a case involving the liability that is the subject of the proposed installment agreement to the Department of Justice for prosecution or defense. The proposed installment agreement remains pending until the IRS accepts the proposal, the IRS notifies the taxpayer that the proposal has been rejected, or the proposal is withdrawn by the taxpayer. If a proposed installment agreement that has been accepted for processing does not contain sufficient information to permit the IRS to evaluate whether the

proposal should be accepted, the IRS will request the taxpayer to provide the needed additional information. If the taxpayer does not submit the additional information that the IRS has requested within a reasonable time period after such a request, the IRS may reject the proposed installment agreement.

(3) Revised proposals of installment agreements submitted following rejection . If, following the rejection of a proposed installment agreement, the IRS determines that the taxpayer made a good faith revision of the proposal and submitted the revision within 30 days of the date of rejection, the provisions of this section shall apply to that revised proposal. If, however, the IRS determines that a revision was not made in good faith, the provisions of this section do not apply to the revision and the appeal period in paragraph (d)(3) of this section continues to run from the date of the original rejection.

(c) Acceptance, form, and terms of in- stallment agreements —(1) Acceptance of an installment agreement —(i) In general . A proposed installment agreement has not been accepted until the IRS notifies the taxpayer or the taxpayer’s representative of the acceptance. Except as provided in paragraph (c)(1)(iii) of this section, the Commissioner has the discretion to accept or reject any proposed installment agreement.

(ii) Acceptance does not reduce liabil- ities . The acceptance of an installment agreement by the IRS does not reduce the amount of taxes, interest, or penalties owed. (However, penalties may continue to accrue at a reduced rate pursuant to section 6651(h).)

(iii) Guaranteed installment agree- ments . In the case of a liability of an individual for income tax, the Commissioner shall accept a proposed installment agreement if, as of the date the individual proposes the installment agreement—

(A) The aggregate amount of the liability (not including interest, penalties, additions to tax, and additional amounts) does not exceed $10,000;

(B) The taxpayer (and, if the liability relates to a joint return, the taxpayer’s spouse) has not, during any of the preceding five taxable years—

( 1 ) Failed to file any income tax return; ( 2 ) Failed to pay any required income tax; or

December 28, 2009 949 2009–52 I.R.B.

be made while the rejection or termination is being considered by Appeals. This section will not prohibit levy to collect the liability of any person other than the person or persons named in the installment agreement.

(2) Exceptions . Paragraph (f)(1) of this section shall not prohibit levy if the taxpayer files a written notice with the IRS that waives the restriction on levy imposed by this section, the IRS determines that the proposed installment agreement was submitted solely to delay collection, or the IRS determines that collection of the tax to which the installment agreement or proposed installment agreement relates is in jeopardy.

(3) Other actions by the IRS while levy is prohibited —(i) In general . The IRS may take actions other than levy to protect the interests of the Government with regard to the liability identified in an installment agreement or proposed installment agreement. Those actions include, for example—

(A) Crediting an overpayment against the liability pursuant to section 6402;

(B) Filing or refiling notices of Federal tax lien; and

(C) Taking action to collect from any person who is not named in the installment agreement or proposed installment agreement but who is liable for the tax to which the installment agreement relates.

(ii) Proceedings in court . Except as otherwise provided in this paragraph (f)(3)(ii), the IRS will not refer a case to the Department of Justice for the commencement of a proceeding in court, against a person named in an installment agreement or proposed installment agreement, if levy to collect the liability is prohibited by paragraph (f)(1) of this section. Without regard to whether a person is named in an installment agreement or proposed installment agreement, however, the IRS may authorize the Department of Justice to file a counterclaim or third-party complaint in a refund action or to join that person in any other proceeding in which liability for the tax that is the subject of the installment agreement or proposed installment agreement may be established or disputed, including a suit against the United States under 28 U.S.C. 2410. In addition, the United States may file a claim in any bankruptcy proceeding or insolvency action brought by or against such person. If a

agree to a new installment agreement that supersedes the existing agreement.

(d) Rejection of a proposed installment agreement —(1) When a proposed install- ment agreement becomes rejected . A proposed installment agreement has not been rejected until the IRS notifies the taxpayer or the taxpayer’s representative of the rejection, the reason(s) for rejection, and the right to an appeal.

(2) Independent administrative review . The IRS may not notify a taxpayer or taxpayer’s representative of the rejection of an installment agreement until an independent administrative review of the proposed rejection is completed.

(3) Appeal of rejection of a proposed installment agreement . The taxpayer may administratively appeal a rejection of a proposed installment agreement to the IRS Office of Appeals (Appeals) if, within the 30-day period commencing the day after the taxpayer is notified of the rejection, the taxpayer requests an appeal in the manner provided by the Commissioner.

(e) Modification or termination of installment agreements by the Internal Revenue Service —(1) Inadequate infor- mation or jeopardy . The Commissioner may terminate an installment agreement if the Commissioner determines that—

(i) Information which was provided to the IRS by the taxpayer or the taxpayer’s representative in connection with either the granting of the installment agreement or a request for a financial update was inaccurate or incomplete in any material respect; or

(ii) Collection of any liability to which the installment agreement applies is in jeopardy.

(2) Change in financial condition, fail- ure to timely pay an installment or an- other Federal tax liability, or failure to provide requested financial information . The Commissioner may modify or terminate an installment agreement if—

(i) The Commissioner determines that the financial condition of a taxpayer that is party to the agreement has significantly changed; or

(ii) A taxpayer that is party to the installment agreement fails to—

(A) Timely pay an installment in accordance with the terms of the installment agreement;

(B) Pay any other Federal tax liability when the liability becomes due; or

(3) Request by taxpayer . Upon request by a taxpayer that is a party to the installment agreement, the Commissioner may terminate or modify the terms of an installment agreement if the Commissioner determines that the financial condition of the taxpayer has significantly changed. The taxpayer’s request will not suspend the statute of limitations under section 6502 for collection of any liability. While the Commissioner is considering the request, the taxpayer shall comply with the terms of the existing installment agreement.

(4) Notice . Unless the Commissioner determines that collection of the tax is in jeopardy, the Commissioner will notify the taxpayer in writing at least 30 days prior to modifying or terminating an installment agreement pursuant to paragraph (e)(1) or (2) of this section. The notice provided pursuant to this section must briefly describe the reason for the intended modification or termination. Upon receiving notice, the taxpayer may provide information showing that the reason for the proposed modification or termination is incorrect.

(5) Appeal of modification or termina- tion of an installment agreement . The taxpayer may administratively appeal the modification or termination of an installment agreement to Appeals if, following issuance of the notice required by paragraph (e)(4) of this section and prior to the expiration of the 30-day period commencing the day after the modification or termination is to take effect, the taxpayer requests an appeal in the manner provided by the Commissioner.

(f) Effect of installment agreement or pending installment agreement on collec- tion activity —(1) In general . No levy may be made to collect a tax liability that is the subject of an installment agreement during the period that a proposed installment agreement is pending with the IRS, for 30 days immediately following the rejection of a proposed installment agreement, during the period that an installment agreement is in effect, and for 30 days immediately following the termination of an installment agreement. If, prior to the expiration of the 30-day period following the rejection or termination of an installment agreement, the taxpayer appeals the rejection or termination decision, no levy may

2009–52 I.R.B. 950 December 28, 2009

person named in an installment agreement is joined in a proceeding, the United States obtains a judgment against that person, and the case is referred back to the IRS for collection, collection will continue to occur pursuant to the terms of the installment agreement. Notwithstanding the installment agreement, any claim or suit permitted will be for the full amount of the liabilities owed.

(g) Suspension of the statute of limita- tions on collection . The statute of limitations under section 6502 for collection of any liability shall be suspended during the period that a proposed installment agreement relating to that liability is pending with the IRS, for 30 days immediately following the rejection of a proposed installment agreement, and for 30 days immediately following the termination of an installment agreement. If, within the 30 days following the rejection or termination of an installment agreement, the taxpayer files an appeal with Appeals, the statute of limitations for collection shall be suspended while the rejection or termination is being considered by Appeals. The statute of limitations for collection shall continue to run if an exception under paragraph (f)(2) of this section applies and levy is not prohibited with respect to the taxpayer.

(h) Annual statement . The Commissioner shall provide each taxpayer who is party to an installment agreement under this section with an annual statement setting forth the initial balance owed at the beginning of the year, the payments made during the year, and the remaining balance as of the end of the year.

(i) Biennial review of partial payment installment agreements . The Commissioner shall perform a review of the taxpayer’s financial condition in the case of a partial payment installment agreement at least once every two years. The purpose of this review is to determine whether the taxpayer’s financial condition has significantly changed so as to warrant an increase in the value of the payments being made or termination of the agreement.

(j) Cross reference . Pursuant to section 6601(b)(1), the last day prescribed for payment is determined without regard to any installment agreement, including for purposes of computing penalties and interest provided by the Internal Revenue Code. For special rules regarding the computation of the failure to pay

penalty while certain installment agreements are in effect, see section 6651(h) and §301.6651–1(a)(4).

(k) Effective/applicability date . This section is applicable on November 25, 2009. Par. 4. Section 301.6331–4, paragraph (d) is revised and paragraph (e) is added to read as follows:

§301.6331–4 Restrictions on levy while installment agreements are pending or in effect .

- - - (d) Cross-reference . For provisions relating to the making of levies while an installment agreement is pending or in effect, see §301.6159–1.

(e) Effective/applicability date . Paragraphs (a), (b) and (c) are applicable beginning December 18, 2002. Paragraph (d) is applicable on November 25, 2009.

Steven T. Miller, Deputy Commissioner of Services and Enforcement.

Approved November 11, 2009.

Michael F. Mundaca, Acting Assistant Secretary of the Treasury (Tax Policy).

(Filed by the Office of the Federal Register on November 24, 2009, 8:45 a.m., and published in the issue of the Federal Register for November 25, 2009, 74 F.R. 61525)

Section 6205.—Special Rules Applicable to Certain Employment Taxes

26 CFR 31.6205–1: Adjustments of underpayments. (Also: 6402, 6413, 6414, 31.6402(a)–1, 31.6402(a)–2, 31.6413(a)–1, 31.6413(a)–2, 31.6414–1.)

94X examples revenue ruling. This revenue ruling illustrates the application of the interest-free adjustment and claim for refund processes under the final regulations promulgated by Treasury Decision 9405 (T.D. 9405), 2008–32 I.R.B. 293. T.D 9405 amends the process for making interest-free adjustments of employment taxes under sections 6205 and 6413 of the Code, and claiming refunds of employment taxes under sections 6402 and 6414. T.D. 9405 was initiated in connection with the Service’s development of

new “X” forms ( e.g., Form 941–X, Ad- justed Employer’s QUARTERLY Federal Tax Return or Claim for Refund ) as part of the Form 94X Project initiated by the Office of Taxpayer Burden Reduction and now led by SB/SE Employment Tax Policy. The proposed revenue ruling applies the final regulations under T.D. 9405 to 10 different situations to show how the new processes operate. Rev. Rul. 75–464 obsoleted.

Rev. Rul. 2009–39

ISSUE

How does an employer correct employment tax reporting errors using the interest-free adjustment and refund claim processes under sections 6205, 6402, 6413, and 6414 of the Internal Revenue Code and the accompanying regulations in the following situations:

(1) an underpayment of Federal Insurance Contributions Act (FICA) tax and income tax withholding (ITW) when the error is not ascertained in the year the wages were paid; (2) an overpayment of ITW when the error is ascertained in the same year the wages were paid; (3) both an overpayment and an underpayment of FICA tax for the same tax period; (4) an underpayment of FICA tax when the employer’s filing requirement has changed; (5) an underpayment of FICA tax and ITW resulting from a failure to file an employment tax return because the employer failed to treat any workers as employees; (6) an overpayment of FICA tax on wages paid to a household employee; (7) an overpayment of FICA tax when the error is ascertained close to the expiration of the period of limitations on credit or refund; (8) an underpayment of FICA tax and ITW ascertained in the course of an employment tax examination; (9) an underpayment of FICA tax and ITW ascertained in the course of the appeals process; (10) an underpayment of FICA tax and ITW resulting from the misclassification of employees ascertained in the course of the appeals process.

LAW, ANALYSIS, AND HOLDINGS

For purposes of this revenue ruling, employment tax means FICA tax (both the social security and Medicare portions) imposed by section 3101 (employee FICA

December 28, 2009 951 2009–52 I.R.B.

and Collection of Additional Tax and Ac- ceptance of Overassessment (Including Section 530 Statement )”).

Section 31.6205–1(a)(2) provides that an interest-free adjustment may not be made to correct an underpayment of any employment tax if the failure to report relates to an issue that was raised in an examination of a prior return period or if the employer knowingly underreported its employment tax liability. In addition, § 31.6205–1(a)(6) provides that an interest-free adjustment generally may not be made after receipt of notice and demand for payment or receipt of a Notice of Determination of Worker Classification (Notice of Determination).

Section 7436 grants the U.S. Tax Court jurisdiction to review determinations by the IRS regarding worker classification, relief under section 530 of the Revenue Act of 1978, and the proper amount of employment tax under those determinations. The Notice of Determination serves as the IRS’s determination for purposes of section 7436, and therefore is a jurisdictional prerequisite for seeking U.S. Tax Court review in worker classification cases. In order to provide a mechanism for taxpayers to make an interest-free adjustment yet receive a Notice of Determination enabling them to petition the U.S. Tax Court, § 31.6205–1(a)(6)(ii) permits an employer, prior to receipt of a Notice of Determination, to make a cash bond deposit in lieu of making a payment to stop the accrual of any interest. The IRS treats a cash bond deposit made prior to receipt of a Notice of Determination as an interest-free adjustment. Without this rule, an employer would not be able to both make an interest-free adjustment and receive a Notice of Determination enabling it to seek U.S. Tax Court review under section 7436. Moreover, this cash bond deposit is the only way an employer can make an interest-free adjustment other than filing an adjusted return.

Section 31.6205–1(b)(2)(i) provides that an adjusted return reporting an underpayment must be filed within the period of limitations for assessment under section 6501, which is generally 3 years after the due date of the return or the date the return was filed, whichever is later. In computing the period of limitations for assessment, section 6501(b)(2) provides that employment tax returns reporting FICA tax or

tax) and section 3111 (employer FICA tax), and ITW imposed by section 3402. To the extent other types of withholding are treated as ITW under section 3402(a) (that is, gambling withholding, pension withholding, and backup withholding as set forth in sections 3402(q)(7), 3405(f), and 3406(h)(10), respectively), these other types of withholding are included in the term employment tax.

Sections 6205, 6402, 6413, and 6414 permit interest-free adjustments and claims for refund to correct employment tax reporting errors. Sections 31.6205–1, 31.6402(a)–1, 31.6402(a)–2, 31.6413(a)–1, 31.6413(a)–2, and 31.6414–1, as amended by Treasury Decision 9405 (T.D. 9405, 2008–32 I.R.B. 293

[73 FR 37371]), provide rules for making interest-free adjustments and claiming refunds of employment tax. Section 31.6302–1, as amended by T.D. 9405, provides rules relating to deposit obligations with respect to interest-free adjustments of employment tax. T.D. 9405 is effective on January 1, 2009 and applies to errors ascertained on or after January 1, 2009.

T.D. 9405 was issued in coordination with “X” forms developed by the Internal Revenue Service (IRS) that employers use to correct employment tax reporting errors ascertained on or after January 1, 2009. The “X” forms correspond with Form 941, “ Employer’s QUARTERLY Federal Tax Return ”; Form 943, “ Em- ployer’s Annual Federal Tax Return for Agricultural Employees ”; Form 944, “ Em- ployer’s ANNUAL Federal Tax Return ”; and Form 945, “ Annual Return of With- held Federal Income Tax .” The new “X” forms ( e.g ., Form 941–X, “ Adjusted Em- ployer’s QUARTERLY Federal Tax Return or Claim for Refund ”) are used to claim refunds, make adjustments, and request abatements of employment tax.

This revenue ruling refers to corrections made pursuant to sections 6205 and 6413 of underpayments or overpayments, respectively, resulting from employment tax reporting errors as having been made using the adjustment process. This revenue ruling refers to corrections made pursuant to sections 6402 and 6414 of overpayments resulting from employment tax reporting errors as having been made using the refund claim process.

Underpayments

Pursuant to § 31.6205–1(b), an employer that has underreported and underpaid FICA tax with respect to any payment of wages can correct the error as an interest-free adjustment if the error is ascertained after the return reporting such tax has been filed. An error is ascertained when the employer has sufficient knowledge of the error to be able to correct it. An interest-free underpayment adjustment is made by reporting the additional amount due on an adjusted return filed by the due date for filing the employment tax return for the return period in which the error was ascertained. The due date for filing the adjusted return is determined by reference to the type of return ( e.g ., Form 941 or Form 944) being corrected, without regard to the employer’s current filing requirements. The amount of the underpayment must be paid to the IRS by the date the adjusted return is filed. Section 31.6205–1(a)(7) provides that agreement forms, such as Form 2504, “ Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment (Excise or Employment Tax),” which are used in the context of an examination or appeals process, constitute adjusted returns. If an adjustment is reported but the amount of the adjustment is not paid when due, interest will accrue thereafter.

Section 31.6205–1(c) provides similar rules for correcting underpayments of ITW. However, an interest-free adjustment of ITW may only be made if the error is ascertained within the same calendar year that the wages to the employee were paid, unless: (1) the underpayment is attributable to an administrative error, (2) section 3509 (a relief provision to reduce employment tax liability in certain worker misclassification situations) applies to determine the amount of the underpayment, or (3) the adjustment is reported on a Form 2504, Form 2504–WC, “ Agreement to Assessment and Collec- tion of Additional Tax and Acceptance of Overassessment in Worker Classification Cases (Employment Tax),” or other agreement forms prescribed by the IRS (such as, Form 2504–AD, “ Excise or Employment Tax-Offer of Agreement to Assessment and Collection of Additional Tax and Offer of Acceptance of Overassessment,” and Form 2504–S, “ Agreement to Assessment

2009–52 I.R.B. 952 December 28, 2009

justed return must be filed 90 days before the expiration of the period of limitations on credit or refund under section 6511.

Section 6511(a) provides that a claim for credit or refund must be made within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later, or, if no return was filed, within 2 years from the time the tax was paid. In computing the period of limitations, section 6513(c) provides that employment tax returns reporting FICA tax or ITW for any period ending with or within a calendar year filed before April 15 of the succeeding calendar year are deemed filed on April 15 of such succeeding calendar year. Likewise, section 6513(c) provides that FICA tax or ITW paid during any period ending with or within a calendar year before April 15 of the succeeding calendar year is deemed paid on April 15 of the succeeding calendar year.

Section 31.6402(a)–2 provides rules under which a refund claim for an overpayment of FICA tax may be made. Pursuant to § 31.6402(a)–2(a), an employer has a duty to assure that its employee’s rights to recover overcollected taxes are protected by repaying or reimbursing overcollected amounts. Alternatively, an employer may obtain the employee’s consent to the filing of the refund claim, an option not available under the adjustment process. Under Chicago Milwaukee Corp. v. U.S., 40 F.3d 373 (C.A. Fed. 1994), an employer need not repay or reimburse its employees or obtain the employees’ consents for the filing of a refund claim prior to filing the claim, in order for the claim to be valid. However, the employer must repay or reimburse its employees or obtain the employees’ consents before the IRS can grant the claim.

The regulations require that an employer certify that it has repaid or reimbursed its employee or obtained the employee’s consent to the filing of the refund claim. For refund claims for employee FICA tax overcollected in prior years, the employer must also certify that it has obtained the employee’s written statement confirming that the employee has not made any previous claims (or the claims were rejected) and will not make any future claims for refund or credit of the amount of the overcollection. However, these requirements do not apply to the extent that the taxes were not withheld

ITW for any period ending with or within a calendar year filed before April 15 of the succeeding calendar year are deemed filed on April 15 of such succeeding calendar year.

Section 31.6205–1(b)(3) provides that, if an employer fails to file a return for a return period solely because the employer failed to treat any individuals properly as employees for the return period (and, therefore, failed to withhold and pay any employer or employee FICA tax with respect to wages paid to the employees) and if the employer ascertains the error after the due date of the return, the employer shall correct the error as an interest-free adjustment. The regulations also provide the process for correcting this type of error. Section 31.6205–1(c)(3) provides a similar rule for ITW; however, an adjustment of ITW may only be made if (1) the error is ascertained within the same calendar year that the wages to the employee were paid, (2) section 3509 applies to determine the amount of the underpayment, or (3) the adjustment is reported on a Form 2504, Form 2504–WC, or other prescribed agreement form.

Section 31.6302–1(c)(7) provides that an employer filing an adjusted return under § 31.6205–1 in order to report taxes that were accumulated in a prior return period shall pay the amount of the adjustment by the time it files the adjusted return; the amount paid by the time the employer files the adjusted return will be deemed to have been timely deposited by the employer. Amounts not timely deposited may be subject to the failure to deposit penalty under section 6656.

Overpayments

In general, employers may choose to correct employment tax overpayment errors by either making an interest-free adjustment or filing a claim for refund after an error has been ascertained. An error is ascertained when the employer has sufficient knowledge of the error to be able to correct it.

Under § 31.6413(a)–1(a), an employer has a duty to assure that its employee’s rights to recover overcollected taxes are protected by repaying or reimbursing overcollected amounts. Section 31.6413(a)–1(a) provides that before making an adjustment of an overpayment of

FICA tax, an employer must repay or reimburse its employee in the amount of the overcollection prior to the expiration of the period of limitations on credit or refund and, for FICA tax overcollected in a prior year, must also secure the employee’s written statement confirming that the employee has not made any previous claims (or the claims were rejected) and will not make any future claims for refund or credit of the amount of the overcollected FICA tax. Section 31.6413(a)–1(b) provides a similar rule for overcollected ITW; however, the employer is required to repay or reimburse the employee prior to the end of the calendar year in which the wages were paid or an adjustment may not be made to correct the error.

Section 31.6413(a)–2 provides the rules for making interest-free adjustments for overpayments of FICA tax or ITW, after the employer has repaid or reimbursed the employee the amount of any overcollection. An interest-free adjustment is made by filing an adjusted return. The employer is required to certify that it has repaid or reimbursed the employee in the amount of the overcollection. For adjustments of employee FICA tax overcollected in prior years, the employer must also certify that it has secured the required written statement from the employee. However, these requirements do not apply to the extent that the taxes were not withheld from the employee, nor do they apply if after having made reasonable efforts the employer cannot locate the employee or, for prior year FICA tax, the employee did not provide the required written statement. If, after the employer’s reasonable efforts to secure the required written statement, the employee does not furnish it, the employer may make an adjustment of the overpaid employer FICA tax.

The employer must file an adjusted return before the expiration of the period of limitations on credit or refund under section 6511. However, § 31.6413(a)–2(d)(2) provides that no overpayment adjustment may be made if the overpayment relates to a return period for which the period of limitations on credit or refund under section 6511 will expire within 90 days of filing the adjusted return. This is referred to as the 90-day rule. The purpose of the 90-day rule is to give the IRS sufficient time to process the request for an overpayment adjustment. To satisfy the rule, an ad

December 28, 2009 953 2009–52 I.R.B.

adjustment process. To correct the overpaid FICA tax with respect to wages of Employee D, Employer T may choose between the adjustment and refund claim processes because the error was ascertained on December 1, 2009 (more than 90 days before the expiration of the period of limitations on credit or refund) and because Employer T reimbursed Employee D in the amount of the overcollection. If Employer T obtained Employee D’s consent to the filing of a refund claim instead of reimbursing the overcollected FICA tax, Employer T would have to use the refund claim process to correct the overpayment since the consent option is not available for the adjustment process.

In order for Employer T to correct the overpayment using the adjustment process, the adjusted return must be filed on or before January 15, 2010 ( i.e., 90 days before the expiration of the period of limitations on credit or refund); otherwise, after January 15, 2010, only the refund claim process will be available to correct the overpayment. To be timely, a refund claim must be filed on or before April 15, 2010 ( i.e ., the last day of the period of limitations on credit or refund).

If Employer T chooses to correct the overpayment using the adjustment process, it can file one Form 941–X correcting both the underpayment and the overpayment. However, because an overpayment adjustment may be made only if the adjusted return is filed within 90 days of the expiration of the period of limitations on credit or refund, Employer T may correct both the overpayment and underpayment on one Form 941–X only if it files by January 15, 2010. When both an overpayment and underpayment are corrected on the same Form 941–X, the amounts will be combined and may result in either a credit or a balance due.

If Employer T chooses to correct the overpayment using the refund claim process, or it is unable to file Form 941–X by January 15, 2010 (so that it must correct the overpayment using the refund claim process), it must file two separate Forms 941–X; one to correct the overpayment using the refund claim process, and one to correct the underpayment using the adjustment process. A refund claim and an adjustment may not be made on the same Form 941–X. Employer T must file the Form 941–X reporting the underpayment

from the employee, nor do they apply if after having made reasonable efforts the employer cannot locate the employee or the employee will not provide consent, or the employee did not provide the required written statement. If, after the employer’s reasonable efforts to obtain the employee’s consent or secure the required written statement, the employee does not furnish one or the other of them, the employer may claim a refund of the overpaid employer FICA tax. A claim must be filed before the expiration of the period of limitations on credit or refund under section 6511.

Section 31.6414–1 provides rules under which a claim for credit or refund of an overpayment of ITW can be made. An employer that has overpaid ITW may file a claim for refund of the overpayment only if the amount was not actually withheld from the employee’s wages.

As a result of T.D. 9405 and this revenue ruling, Revenue Ruling 75–464, 1975–2 C.B. 474, is no longer determinative of when interest-free adjustments are made in the context of an employment tax examination. Accordingly, Rev. Rul. 75–464 is obsolete.

Situations

In each of these situations, except as otherwise noted, (a) the amounts underreported do not relate to an issue that was raised in an examination of a prior period, (b) the employer did not knowingly underreport its employment tax liability, (c) the employer did not receive notice and demand for payment, and (d) the employer did not receive a Notice of Determination.

Situation 1 : Employer R timely filed its 2009 fourth quarter Form 941 on January 10, 2010 and timely paid all employment tax reported on the return. On February 9, 2010, Employer R ascertains that it underwithheld and underpaid FICA tax and ITW with respect to its employees’ wages in the fourth quarter of 2009.

Employer R must correct the underpayment of FICA tax on a Form 941–X using the adjustment process. Employer R must file Form 941–X by the due date of the return for the return period in which it ascertained the error ( i.e., April 30, 2010) and pay the amount owed by the time it files Form 941–X. If Employer R files Form 941–X by April 30, 2010 but does not pay by the time it files, interest will accrue

from the date Form 941–X is filed until payment is made. If payment is not made until after receipt of a notice and demand for payment, Employer R is entitled to an interest-free adjustment for the period up to the date the Form 941–X is filed, but interest accrues from the date the Form 941–X is filed until payment is made. Employer R may not use the interestfree adjustment process outside an employment tax examination to correct the underpayment of ITW, because the error was not ascertained in the same year that the wages were paid to the employees.

Situation 2 : Employer S timely filed its 2011 third quarter Form 941 on October 10, 2011 and timely paid all employment tax reported on the return. On December 2, 2011, Employer S ascertains that it overwithheld and overpaid ITW in the third quarter of 2011 and reported the overpayment on its 2011 third quarter Form 941. Employer S repays the overcollected amounts to its affected employees on December 29, 2011. Employer S files Form 941–X on January 6, 2012 to correct the overpayment using the adjustment process.

Because Employer S repaid its employees the amount of the overcollection of ITW in the same year that the wages were paid, Employer S may correct the overpayment of ITW using the adjustment process even though the adjusted return is filed in a year after the wages were paid. Employer S may not use the refund claim process to correct the error because the ITW was actually withheld from the employees’ wages. Since Employer S filed Form 941–X on or before January 15, 2015, it is a timely adjustment under the 90-day rule. Situation 3 : Employer T timely filed its 2006 fourth quarter Form 941 on January 19, 2007, and timely paid all employment tax reported on the return. On December 1, 2009, Employer T ascertains that it underpaid FICA tax with respect to wages of Employees A, B, and C and overwithheld and overpaid FICA tax with respect to wages of Employee D on its 2006 fourth quarter Form 941. Employer T reimbursed Employee D in the amount of the overcollection promptly after ascertaining the overpayment.

The underpaid FICA tax with respect to wages of Employees A, B, and C must be corrected on Form 941–X using the

2009–52 I.R.B. 954 December 28, 2009

his 2007 return because the error was ascertained more than 90 days before the expiration of the period of limitations on credit or refund. Regardless of the process chosen, Household Employer W must make the correction by filing Form 1040X, “ Amended U.S. Individual Income Tax Re- turn,” and attaching a corrected Schedule H (Form 1040), as provided in Publication 926, Household Employer’s Tax Guide . If Household Employer W chooses the refund claim process, the Form 1040X with the corrected Schedule H (Form 1040) must be filed by April 15, 2011. However, if Household Employer W chooses the adjustment process, the Form 1040X with the corrected Schedule H must be filed by January 15, 2011 under the 90 day rule.

If Household Employer W chooses the adjustment process, he must repay or reimburse his employee in the amount of the overcollection before filing the Form 1040X with the attached corrected Schedule H (Form 1040). Household Employer W can then adjust his return by indicating on the appropriate line of the Form 1040X that he wants the overpayment applied as a payment of estimated taxes on Form 1040, for the year in which the corrected Schedule H (Form 1040) is filed.

If Household Employer W chooses the refund claim process, he must either repay or reimburse his employee in the amount of the overcollection or obtain the employee’s consent to file the claim for refund for the employee tax. Household Employer W can then claim a refund by indicating on the appropriate line of the Form 1040X that he wants the overpayment refunded. The overpayment will be refunded, plus any interest that applies, unless Household Employer W owes other taxes, penalties, or interest.

Situation 7 : Employer X timely filed its 2006 Form 943 on January 26, 2007 and timely paid all employment tax reported on the return. On April 5, 2010, Employer X ascertains that it overpaid FICA tax on wages paid to its employees on its 2006 Form 943. Employer X does not have sufficient time to repay or reimburse its employees or obtain their consents and also timely file a claim for refund.

In order to correct the overpayment, Employer X must file Form 943–X, “ Ad- justed Employer’s Annual Federal Tax Return for Agricultural Employees or Claim for Refund .” Employer X may not

by January 31, 2010 and pay any amount due by the date the Form 941–X is filed. If Employer T files the Form 941–X reporting the underpayment by January 31, 2010 and pays the amount due with that Form 941–X the amount will be deemed to have been timely deposited. If Employer T does not pay the amount due with that Form 941–X, interest will accrue from the date the Form 941–X is filed until the time of payment. The overpayment corrected on the separate Form 941–X using the refund claim process will be refunded, plus any interest that applies, unless Employer T owes other taxes, penalties, or interest. An employer may not designate an overpayment from one Form 941–X to pay an amount due on a separate Form 941–X.

Situation 4 : Employer U timely filed its 2007 Form 944 and timely paid all employment tax reported on the return. In February 2010, the IRS notifies Employer U that its filing requirement has changed and it is required to file Form 941, rather than Form 944, for calendar year 2010 and thereafter. On May 23, 2010, Employer U ascertains that it underpaid FICA tax on its 2007 Form 944. Employer U must correct the underpayment of FICA tax using the adjustment process. Because Employer U is correcting an error on a previously filed Form 944, it must file a Form 944–X, “ Adjusted Employer’s ANNUAL Federal Tax Return or Claim for Refund,” to make the correction since the “X” form filed must correspond to the return being corrected. Employer U does not consider its current filing requirement ( i.e ., Form 941) at the time the “X” form is filed to determine the appropriate “X” form to file and the date the “X” form is due. Employer U must file Form 944–X by January 31, 2011, the due date of the return for the return period in which it ascertained the error, and pay the amount owed by the time it files Form 944–X. If Employer U timely files Form 944–X but does not pay by the time it files, interest will accrue from the date Form 944–X is filed until payment is made. If payment is not made until after receipt of notice and demand for payment, Employer U is still entitled to an interest-free adjustment for the period up to the date the Form 944–X is filed, but interest accrues from the date the Form 944–X is filed until payment is made.

Situation 5 : On February 6, 2012, Employer V, a sole proprietor, ascertains that he should have treated his bookkeeper as an employee, rather than as an independent contractor, for employment tax purposes. The bookkeeper worked each week for Employer V since March 2011. Because Employer V did not have any other employees, he never filed any Forms 941 and never withheld or paid any employment tax.

Employer V may correct the underpayment of FICA tax for each quarter in 2011 using the adjustment process because he failed to file the returns for 2011 due to his failure to treat any individuals as employees. However, because the error was not ascertained in the same year the wages were paid, Employer V may correct the underpayment of ITW using the adjustment process for each quarter in 2011 only if section 3509 applies to determine the FICA tax and ITW liability.

To make the adjustment for each quarter in 2011, Employer V must file a Form 941 and a Form 941–X for each quarter in 2011, as provided in the Instructions for Form 941–X. Employer V must file these returns by April 30, 2012 and pay the amount owed by the time he files the returns. If Employer V files by April 30, 2012 but does not pay by the time he files, interest will accrue from the date Form 941–X is filed until payment is made. Because Employer V ascertained the error prior to filing the return for the first quarter of 2012 there is no adjustment to be made for that quarter; however, Employer V must file his 2012 first quarter Form 941 and report and pay the correct amounts of FICA tax and ITW for that quarter and must file Forms 941 for any future quarters in which he pays wages to the bookkeeper or other employees.

Situation 6 : Household Employer W timely filed his 2007 Form 1040, “ U.S. In- dividual Income Tax Return,” with an attached Schedule H (Form 1040), “ House- hold Employment Taxes,” on April 8, 2008, and timely paid all income and employment taxes reported on the return. On April 18, 2009, Household Employer W ascertains that he overwithheld and overpaid FICA tax on wages paid to a household employee on his 2007 return.

Household Employer W can choose between the adjustment and refund claim processes to correct the overpayment on

December 28, 2009 955 2009–52 I.R.B.

Appeals, and Employer Z does not sign Form 2504–WC; however, Employer Z makes a cash bond deposit to stop the accrual of interest. A Notice of Determination is issued, and Employer Z subsequently files a petition with the U.S. Tax Court.

The error is treated as having been ascertained at the time Employer Z makes the cash bond deposit. Because Employer Z made a cash bond deposit prior to receiving the Notice of Determination, it is entitled to an interest-free adjustment.

EFFECT ON OTHER REVENUE RULING(S)

Rev. Rul. 75–464 is obsoleted.

DRAFTING INFORMATION

The principal author of this revenue ruling is Ligeia M. Donis of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt & Government Entities). For further information regarding this revenue ruling, contact Ligeia M. Donis at (202) 622–0047 (not a toll-free call).

Section 6402.—Authority to Make Credits or Refunds

Final regulations modify the process for making claims for refund of overpayments of Federal Insurance Contribution Act (FICA) and Railroad Retirement Tax Act (RRTA) taxes under section 6402 of the Code. See Rev. Rul. 2009-39, page 951.

Section 6413.—Special Rules Applicable to Certain Employment Taxes

Final regulations modify the process for making interest-free adjustments for overpayments of Federal Insurance Contribution Act (FICA) and Railroad Retirement Tax Act (RRTA) taxes and Federal income tax withholding (ITW) under section 6413(a) of the Code. See Rev. Rul. 2009-39, page 951.

Section 6414.—Income Tax Withheld

Final regulations modify the process for making claims for refund of overpayments of Federal income tax withholding (ITW) under section 6414 of the Code. See Rev. Rul. 2009-39, page 951.

correct the error using the adjustment process because the error was ascertained too late for the adjusted return to be filed by January 15, 2010, as required under the 90-day rule. To correct the error using the refund claim process, Employer X must file Form 943–X by April 15, 2010 in order for the claim to be timely. Notwithstanding the fact that Employer X has not repaid or reimbursed its employees or obtained its employees’ consents, if Employer X files Form 943–X by April 15, 2010, the claim will be considered timely filed. However, before the IRS can grant the claim, Employer X must certify that it has repaid or reimbursed its employees, or obtained their consents, and secured the employees’ written statements confirming that the employees have not made any previous claims (or the claims were rejected) and will not make any future claims for refund or credit of the amount of the overcollected FICA tax.

Situation 8 : In 2010, in the course of an employment tax examination, IRS determines that Employer Y underpaid FICA tax and ITW with respect to wages of its employees on its 2008 fourth quarter Form 941. Employer Y signs Form 2504 to agree to the assessment and submits it to the examiner, during the employment tax examination.

The determination by the IRS that Employer Y underpaid FICA tax and ITW on its 2008 fourth quarter Form 941 is treated as an error ascertained at the time Employer Y submits the signed Form 2504. Submitting a signed Form 2504 satisfies the requirement that an adjusted return be filed; therefore, Employer Y is entitled to an interest-free adjustment.

While the error was not ascertained in the same year that the wages were paid to the employees, the interest-free adjustment applies to both the FICA tax and ITW because the adjustment is reported on a signed Form 2504. In order for the adjustment to be entirely interest-free, Employer Y must pay the amount due when it submits the signed Form 2504. Otherwise, interest will accrue from the date Employer Y submits the signed Form 2504. Because an adjusted return ( i.e., Form 2504) was filed, even if payment is not made until after receipt of notice and demand, Employer Y is nevertheless entitled to interest-free treatment up to the date Employer Y submits the signed Form 2504; however, in

terest will accrue from the date the signed Form 2504 is submitted until the date of payment.

Situation 9 : The same facts exist as in situation (8), except that Employer Y does not agree with the examiner’s determination and exercises its appeal rights. No agreement is reached in Appeals. An Appeals closing letter, dated November 3, 2010, is sent to Employer Y informing Employer Y that it will receive notice and demand for payment of tax and interest owed and that it has the right to contest the Appeals’ determination in the U.S. District Court or the U.S. Court of Federal Claims if it files a refund claim and later sues for a refund. The determination by Appeals that Employer Y underpaid FICA tax and ITW on its 2008 fourth quarter Form 941 is treated as an error ascertained on November 3, 2010, the date of the Appeals closing letter. Because Employer Y does not submit a signed Form 2504, an adjusted return has not been filed. As a result, no interest-free adjustment has been made, and Employer Y owes the amount due plus interest accrued from the due date of the return for which the underpayment was made ( i.e., January 31, 2009, the due date of the return for the 2008 fourth quarter Form 941). However, if Employer Y submits a signed Form 2504 by the due date of the return for the return period in which the error was ascertained ( i.e., January 31, 2011) and before receipt of notice and demand for payment, Employer Y is entitled to an interest-free adjustment. Submitting a signed Form 2504 will not prevent Employer Y from filing a refund claim to make it possible to contest its liability in the U.S. District Court or the U.S. Court of Federal Claims.

If Employer Y does not submit a signed Form 2504 by January 31, 2011, but pays the amount due prior to receiving notice and demand, Employer Y has not made an interest-free adjustment, and Employer Y will owe interest accrued from the due date of the return for which the underpayment was made ( i.e., from January 31, 2009).

Situation 10 : In 2011, in the course of an employment tax examination, IRS determines that Employer Z misclassified some of its employees as independent contractors for the first quarter of 2009. Employer Z does not agree with the examiner’s determination and exercises its appeal rights. No agreement is reached in

2009–52 I.R.B. 956 December 28, 2009

Section 6621.—Determina- tion of Rate of Interest

26 CFR 301.6621–1: Interest rate.

Interest rates; underpayment and overpayments. The rate for interest determined under section 6621 of the Code for the calendar quarter beginning January 1, 2010, will be 4 percent for overpayments (3 percent in the case of a corporation), 4 percent for underpayments, and 6 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 1.5 percent.

Rev. Rul. 2009–37

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 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. 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 short-term 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 that month. Section 6621(b)(2)(B) provides that in determining the addition to tax under section 6654 for failure to pay estimated tax for any taxable year, the federal short-term rate that applies during the third month following the taxable year also applies during the first 15 days of the fourth month following the taxable year. Section 6621(b)(3) provides that the federal short-term rate for any month is the federal short-term rate determined during that month by the Secretary in accordance with section 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.

The federal short-term rate determined in accordance with section 1274(d) during October 2009 is the rate published in Revenue Ruling 2009–35, 2009–44 I.R.B. 568, to take effect beginning

TABLE OF INTEREST RATES

November 1, 2009. The federal short-term rate, rounded to the nearest full percent, based on daily compounding determined during the month of October 2009 is 1 percent. Accordingly, an overpayment rate of 4 percent (3 percent in the case of a corporation) and an underpayment rate of 4 percent are established for the calendar quarter beginning January 1, 2010. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 for the calendar quarter beginning January 1, 2010, is 1.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning January 1, 2010, is 6 percent. These rates apply to amounts bearing interest during that calendar quarter.

Under section 6621(b)(2)(B), the 4 percent rate also applies to estimated tax underpayments for the first calendar quarter in 2010 and for the first 15 days in April 2010. Interest factors for daily compound interest for annual rates of 1.5 percent, 3 percent, 4 percent, and 6 percent are published in Tables 8, 11, 13, and 17 of Rev. Proc. 95–17, 1995–1 C.B. 556, 562, 565, 567, and 571.

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 Deborah Colbert-James of the Office of Associate Chief Counsel (Procedure & Administration). For further information regarding this revenue ruling, contact Ms. Colbert-James at (202) 622–8143 (not a toll-free call).

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

OVERPAYMENTS AND UNDERPAYMENTS

PERIOD RATE

In 1995–1 C.B. 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

December 28, 2009 957 2009–52 I.R.B.

TABLE OF INTEREST RATES

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

OVERPAYMENTS AND UNDERPAYMENTS - Continued

PERIOD RATE

In 1995–1 C.B. DAILY RATE TABLE

Jan. 1, 1986—Jun. 30, 1986 10% Table 25, pg. 579 Jul. 1, 1986—Dec. 31, 1986 9% Table 23, pg. 577

2009–52 I.R.B. 958 December 28, 2009

TABLE OF INTEREST RATES

FROM JANUARY 1, 1999 - PRESENT

NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS

1995–1 C.B. RATE TABLE PG

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 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 Oct. 1, 2003—Dec. 31, 2003 4% 13 567 Jan. 1, 2004—Mar. 31, 2004 4% 61 615 Apr. 1, 2004—Jun. 30, 2004 5% 63 617 Jul. 1, 2004—Sep. 30, 2004 4% 61 615 Oct. 1, 2004—Dec. 31, 2004 5% 63 617 Jan. 1, 2005—Mar. 31, 2005 5% 15 569 Apr. 1, 2005—Jun. 30, 2005 6% 17 571 Jul. 1, 2005—Sep. 30, 2005 6% 17 571 Oct. 1, 2005—Dec. 31, 2005 7% 19 573 Jan. 1, 2006—Mar. 31, 2006 7% 19 573 Apr. 1, 2006—Jun. 30, 2006 7% 19 573 Jul. 1, 2006—Sep. 30, 2006 8% 21 575 Oct. 1, 2006—Dec. 31, 2006 8% 21 575 Jan. 1, 2007—Mar. 31, 2007 8% 21 575 Apr. 1, 2007—Jun. 30, 2007 8% 21 575 Jul. 1, 2007—Sep. 30, 2007 8% 21 575 Oct. 1, 2007—Dec. 31, 2007 8% 21 575 Jan. 1, 2008—Mar. 31, 2008 7% 67 621 Apr. 1, 2008—Jun. 30, 2008 6% 65 619 Jul. 1, 2008—Sep. 30, 2008 5% 63 617 Oct. 1, 2008—Dec. 31, 2008 6% 65 619

December 28, 2009 959 2009–52 I.R.B.

TABLE OF INTEREST RATES

FROM JANUARY 1, 1999 - PRESENT

NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS - Continued

1995–1 C.B. RATE TABLE PG

Jan. 1, 2009—Mar. 31, 2009 5% 15 569 Apr. 1, 2009—Jun. 30, 2009 4% 13 567 Jul. 1, 2009—Sep. 30, 2009 4% 13 567 Oct. 1, 2009—Dec. 31, 2009 4% 13 567 Jan. 1, 2010—Mar. 31, 2010 4% 13 567

2009–52 I.R.B. 960 December 28, 2009

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

December 28, 2009 961 2009–52 I.R.B.

TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS

FROM JANUARY 1, 1991 - PRESENT - Continued

1995–1 C.B. RATE TABLE PG

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 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 Oct. 1, 2003—Dec. 31, 2003 6% 17 571 Jan. 1, 2004—Mar. 31, 2004 6% 65 619 Apr. 1, 2004—Jun. 30, 2004 7% 67 621 Jul. 1, 2004—Sep. 30, 2004 6% 65 619 Oct. 1, 2004—Dec. 31, 2004 7% 67 621 Jan. 1, 2005—Mar. 31, 2005 7% 19 573 Apr. 1, 2005—Jun. 30, 2005 8% 21 575 Jul. 1, 2005—Sep. 30, 2005 8% 21 575 Oct. 1, 2005—Dec. 31, 2005 9% 23 577 Jan. 1, 2006—Mar. 31, 2006 9% 23 577 Apr. 1, 2006—Jun. 30, 2006 9% 23 577 Jul. 1, 2006—Sep. 30, 2006 10% 25 579 Oct. 1, 2006—Dec. 31, 2006 10% 25 579 Jan. 1, 2007—Mar. 31, 2007 10% 25 579 Apr. 1, 2007—Jun. 30, 2007 10% 25 579 Jul. 1, 2007—Sep. 30, 2007 10% 25 579 Oct. 1, 2007—Dec. 31, 2007 10% 25 579 Jan. 1, 2008—Mar. 31, 2008 9% 71 625 Apr. 1, 2008—Jun. 30, 2008 8% 69 623 Jul. 1, 2008—Sep. 30, 2008 7% 67 621 Oct. 1, 2008—Dec. 31, 2008 8% 69 623 Jan. 1, 2009—Mar. 31, 2009 7% 19 573 Apr. 1, 2009—Jun. 30, 2009 6% 17 571 Jul. 1, 2009—Sep. 30, 2009 6% 17 571 Oct. 1, 2009—Dec. 31, 2009 6% 17 571 Jan. 1, 2010—Mar. 31, 2010 6% 17 571

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

2009–52 I.R.B. 962 December 28, 2009

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, 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 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 Oct. 1, 2003—Dec. 31, 2003 1.5% 8 562 Jan. 1, 2004—Mar. 31, 2004 1.5% 56 610 Apr. 1, 2004—Jun. 30, 2004 2.5% 58 612 Jul. 1, 2004—Sep. 30, 2004 1.5% 56 610 Oct. 1, 2004—Dec. 31, 2004 2.5% 58 612 Jan. 1, 2005—Mar. 31, 2005 2.5% 10 564 Apr. 1, 2005—Jun. 30, 2005 3.5% 12 566 Jul. 1, 2005—Sep. 30, 2005 3.5% 12 566 Oct. 1, 2005—Dec. 31, 2005 4.5% 14 568 Jan. 1, 2006—Mar. 31, 2006 4.5% 14 568 Apr. 1, 2006—Jun. 30, 2006 4.5% 14 568 Jul. 1, 2006—Sep. 30, 2006 5.5% 16 570 Oct. 1, 2006—Dec. 31, 2006 5.5% 16 570 Jan. 1, 2007—Mar. 31, 2007 5.5% 16 570 Apr. 1, 2007—Jun. 30, 2007 5.5% 16 570 Jul. 1, 2007—Sep. 30, 2007 5.5% 16 570 Oct. 1, 2007—Dec. 31, 2007 5.5% 16 570 Jan. 1, 2008—Mar. 31, 2008 4.5% 62 616 Apr. 1, 2008—Jun. 30, 2008 3.5% 60 614 Jul. 1, 2008—Sep. 30, 2008 2.5% 58 612 Oct. 1, 2008—Dec. 31, 2008 3.5% 60 614 Jan. 1, 2009—Mar. 31, 2009 2.5% 10 564 Apr. 1, 2009—Jun. 30, 2009 1.5% 8 562 Jul. 1, 2009—Sep. 30, 2009 1.5% 8 562 Oct. 1, 2009—Dec. 31, 2009 1.5% 8 562 Jan. 1, 2010—Mar. 31, 2010 1.5% 8 562

December 28, 2009 963 2009–52 I.R.B.