Part IV. Items — Internal Revenue Bulletin 2011-7

Notice of Proposed Rulemaking by Cross-Reference to Temporary Regulations

Source of Income From Qualified Fails Charges

REG–132724–10

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary regulations.

SUMMARY: In this issue of the Bulletin, the IRS and the Treasury Department are issuing temporary regulations (T.D. 9508) under section 863(a) of the Internal Revenue Code. These regulations set forth the source of income attributable to qualified fails charges. This action is necessary to provide guidance about the treatment of fails charges for purposes of sections 871 and 881, which generally require gross-basis taxation of foreign persons not otherwise subject to U.S. net-basis taxation and the withholding of such tax under sections 1441 and 1442. The text of the temporary regulations also serves as the text of these proposed regulations.

DATES: Written or electronic comments and requests for a public hearing must be received by March 8, 2011.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG–132724–10), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG–132724–10), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC, or sent electronically, via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG–132724–10).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed

regulations, Sheila Ramaswamy or Anthony J. Marra, Office of Associate Chief Counsel (International) (202) 622–3870; concerning submissions of comments or a request for a public hearing, Richard Hurst at (202) 622–7180.

Background and Explanation of Provisions

The temporary regulations published in this issue of the Bulletin provide guidance for the treatment of fails charges for purposes of sections 871, 881, 1441 and 1442 by establishing source rules for qualified fails charges that arise in the delivery-versus-payment market for Treasury securities. The text of those temporary regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains the temporary regulations and these proposed regulations.

Special Analyses

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also 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 these regulations do not impose a collection of information on small entities, the provisions of the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Comments and Requests for a Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. In addition to the specific requests for comments made elsewhere in this preamble or the preamble to the temporary

regulations, the IRS and the Treasury Department request comments on the clarity of the proposed regulations and how they can be made easier to understand. A public hearing may be scheduled if requested in writing by any person who timely submitted written comments. If a public hearing is scheduled, notice of the date, time, and place of the hearing will be published in the Federal Register .

Drafting Information

The principal authors of these regulations are Sheila Ramaswamy and Anthony J. Marra, Office of the Associate Chief Counsel (International). However, other persons from the Office of Associate Chief Counsel (International) and the Treasury Department have participated in their development.

- - - -

Proposed Amendment to the Regulations

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1— INCOME TAXES

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

Authority: 26 U.S.C. 863(a) and 7805

- Par. 2. Section 1.863–10 is added to read as follows:

§1.863–10 Source of income from a qualified fails charge.

[The text of proposed §1.863–10 is the same as the text of §1.863–10T published elsewhere in this issue of the Bulletin].

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

(Filed by the Office of the Federal Register on December 7, 2010, 8:45 a.m., and published in the issue of the Federal Register for December 8, 2010, 75 F.R. 76321)

February 14, 2011 498 2011–7 I.R.B.

Correction to Revenue Procedure 2011–11; Maximum Vehicle Values

Announcement 2011–9

Revenue Procedure 2011–11 as published on January 24, 2011 (2011–4 I.R.B. 329) contains an error in Section 1. Purpose. Revenue Procedure 2011–11 provides guidance for the maximum values of employer-provided vehicles first made available for personal use in calendar year 2011. This announcement corrects section 1.01 of Rev. Proc. 2011–11. This correction clarifies that the maximum vehicle values set forth in Rev. Proc. 2011–11 are for the calendar year 2011. Section 1.01 of Rev. Proc. 2011–11 now reads as follows:

This revenue procedure provides (1) the maximum value of employer-provided vehicles first made available to employees for personal use in calendar year 2011 for which the vehicle cents-per-mile valuation rule provided under section 1.61–21(e) of the Income Tax Regulations may be applicable is $15,300 for a passenger automobile and $16,200 for a truck or van; (2) the maximum value of employer-provided vehicles first made available to employees for personal use in calendar year 2011 for which the fleet-average valuation rule provided under section 1.61–21(d) of the regulations may be applicable is $20,300 for a passenger automobile and $21,200 for a truck or van.

Drafting Information

The principal author of this announcement is Don M. Parkinson of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this announcement, please contact Don M. Parkinson at (202) 622–6040 (not a toll-free call).

Hybrid Retirement Plans; Correction

Announcement 2011–10

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendment.

SUMMARY: This document contains corrections to final regulations (T.D. 9505, 2010–48 I.R.B. 755) that were published in the Federal Register on Tuesday, October 19, 2010 (75 FR 64123) providing guidance relating to certain provisions of the Internal Revenue Code that apply to hybrid defined benefit pension plans.

DATES: This correction is effective on December 28, 2010, and is applicable on October 19, 2010.

FOR FURTHER INFORMATION CONTACT: Neil S. Sandhu, Lauson C. Green, or Linda S. F. Marshall at (202) 622–6090 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The final regulations (T.D. 9505) that are the subject of this document are under section 411 of the Internal Revenue Code.

Need for Correction

As published, the final regulations (T.D. 9505) contain errors that may prove to be misleading and are in need of clarification.

- - - -

Correction of Publication

Accordingly, 26 CFR part 1 is corrected by making the following correcting amendments:

PART 1—INCOME TAXES

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

Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.411(b)(5)–1 is amended by:

Revising the paragraph (b)(1)(ii)(A).
Revising the first sentence of paragraph (b)(1)(iv) Example 4 .(iii).
Revising the first sentence of paragraph (c)(5) Example 2 .(iv).
Revising the third sentence of paragraph (c)(5) Example 3 .(i).
Revising the paragraph (d)(1)(iii).
Revising the first sentence of paragraph (f)(2)(iii).

The revisions read as follows:

§1.411(b)(5)–1 Reduction in rate of benefit accrual under a defined benefit plan .

- - - (b) - * (1) - * (ii) - - - (A) In general . Except as provided in paragraphs (b)(1)(ii)(B), (C), and (D) of this section, the safe harbor provided by section 411(b)(5)(A) and paragraph (b)(1)(i) of this section is available with respect to an individual only if the individual’s accumulated benefit under the plan is expressed in terms of only one safe-harbor formula measure and no similarly situated, younger individual who is or could be a participant has an accumulated benefit that is expressed in terms of any measure other than that same safe-harbor formula measure. Thus, for example, if a plan provides that the accumulated benefit of participants who are age 55 or over is expressed under the terms of the plan as a life annuity payable at normal retirement age (or current age, if later) as described in paragraph (b)(1)(i)(A) of this section and the plan provides that the accumulated benefit of participants who are younger than age 55 is expressed as the current balance of a hypothetical account as described in paragraph (b)(1)(i)(B) of this section, then the safe harbor described in section 411(b)(5)(A) and paragraph (b)(1)(i) of this section does not apply to individuals who are or could be participants who are age 55 or over.
- - - (iv) - - Example 4 . - * * (iii) * * * If, instead of the facts in paragraph (i) of this Example 4, the plan had been amended to provide only participants who have not yet attained age 55 by January 1, 2012, with a benefit that is the greater of the benefit under the average annual compensation formula and a benefit that is based on the balance of a hypothetical account, then the safe harbor would not be satisfied with respect to individuals who have attained age 55 by January 1, 2012. - * *

2011–7 I.R.B. 499 February 14, 2011

(c) - - (5) - - Example 2 . - * * (iv) - - - The plan provides that, as of a participant’s annuity starting date, the plan will determine whether the benefit attributable to the opening hypothetical account balance payable in the particular optional form of benefit selected is equal to or greater than the benefit accrued under the plan through the date of conversion and payable in the same generalized optional form of benefit with the same annuity starting date. - * *

- - Example 3 . - * * (i) * * * Under the terms of Plan E, the benefit attributable to A’s opening hypothetical account balance is increased so that A’s straight life annuity commencing on January 1, 2015, is $1,000 per month. - - *
- - (d) - - (1) - - (iii) Market rate of return for single rates . Except as otherwise provided in this paragraph (d)(1), an interest crediting rate is not in excess of a market rate of return only if the plan terms provide that the interest credit for each plan year is determined using one of the following specified interest crediting rates:
- - (f) - - (2) - - (iii) * * * For the periods after the statutory effective date set forth in paragraph (f)(1) of this section and before the regulatory effective date set forth in paragraph (f)(2)(i) of this section, the safe harbor and other relief of section 411(b)(5) apply and the market rate of return and other requirements of section 411(b)(5) must be satisfied. - * *

Guy R. Traynor,

Acting Chief, Publications and Regulations Branch,

Legal Processing Division,

Associate Chief Counsel (Procedure and Administration).

(Filed by the Office of the Federal Register on December 27, 2010, 8:45 a.m., and published in the issue of the Federal Register for December 28, 2010, 75 F.R. 81456)

Additional Rules Regarding Hybrid Retirement Plans; Correction

Announcement 2011–11

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to a notice of proposed rulemaking.

SUMMARY: This document contains a correction to a notice of proposed rulemaking (REG–132554–08, 2010–48 I.R.B. 783) that was published in the Federal Register on Tuesday, October 19, 2010 (75 FR 64197) providing guidance relating to certain provisions of the Internal Revenue Code that apply to hybrid defined benefit pension plans.

FOR FURTHER INFORMATION CONTACT: Neil S. Sandhu, Lauson C. Green, or Linda S. F. Marshall at (202) 622–6090 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The correction notice that is the subject of this document is under section 411 of the Internal Revenue Code.

Need for Correction

As published, the notice of proposed rulemaking (REG–132554–08) contains an error that may prove to be misleading and is in need of clarification.

Correction of Publication

Accordingly, the publication of the notice of proposed rulemaking (REG–132554–08), which was the subject of FR Doc. 2010–25942, is corrected as follows:

§1.411(b)(5)–1 [Corrected]

On page 64214, column 3, §1.411(b)(5)–1(e)(2)(iii)(A), line 19, the language “change the rate of interest crediting” is corrected to read “change the interest crediting rate”.

Guy R. Traynor,

Acting Chief, Publications and Regulations Branch,

Legal Processing Division,

Associate Chief Counsel (Procedure and Administration).

(Filed by the Office of the Federal Register on December 27, 2010, 8:45 a.m., and published in the issue of the Federal Register for December 28, 2010, 75 F.R. 81543)

Correction to Revenue Ruling 2011–3 — 2011 Covered Compensation Tables; Permitted Disparity

Announcement 2011–16

Revenue Ruling 2011–3 as it appears in the Internal Revenue Bulletin (IRB) that was published on January 24, 2011 (2011–4 I.R.B. 326) contains a typographical error in Attachment I. The error appears in the third column of Attachment I that provides the 2011 Covered Compensation Table II. The dollar amount in column three for the 1966 Calendar Year of Birth is $100,220; the correct dollar amount for 1966 is $101,220. Revenue Ruling 2011–3 as it appears in the IRB has been corrected and can be accessed at www.irs.gov .

Drafting Information

The principal author of this announcement is Kathleen Herrmann of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding this announcement, please contact the Employee Plans taxpayer assistance answering service at 1–877–829–5500 (a toll-free number) or e-mail Ms. Herrmann at RetirementPlanQuestions@irs.gov .

February 14, 2011 500 2011–7 I.R.B.