SECTION 4. ELECTION TO APPLY

2011 ADJUSTED LIMITATIONS TO 2010 TAXABLE YEAR

For some locations, the limitation on housing expenses provided in section 3 of this notice may be higher than the limitation on housing expenses provided in the “Table of Adjusted Limitations for 2010” in Notice 2010–27. A qualified individual incurring housing expenses in such a location during 2010 may apply the adjusted limitation on housing expenses provided in section 3 of this notice in lieu of the amounts provided in the “Table of Adjusted Limitations for 2010” in Notice 2010–27 (and as set forth in the Instructions to Form 2555 (2010)).

Treasury and the IRS anticipate that future annual notices providing adjustments to housing expense limitations will make a similar election available to qualified individuals that incur housing expenses in the immediately preceding year. For example, when adjusted housing expense limitations

for 2012 are issued, it is expected that taxpayers will be permitted to apply those adjusted limitations to the 2011 taxable year.

EFFECT ON OTHER DOCUMENTS

This notice supersedes Notice 2006–87, 2006–2 C.B. 766, Notice 2007–25, 2007–1 C.B. 760, Notice 2007–77, 2007–2 C.B. 735, Notice 2008–107, 2008–2 C.B. 1265, and Notice 2010–27, 2010–15 I.R.B. 531.

EFFECTIVE DATE

This notice is effective for taxable years beginning on or after January 1, 2011. However, as provided in section 4, a taxpayer may elect to apply the 2011 adjusted housing limitations contained in section 3 of this notice to his or her taxable year beginning in 2010.

DRAFTING INFORMATION

The principal author of this notice is Susan E. Massey of the Office of Associate

February 22, 2011 514 2011–8 I.R.B.

IV. EFFECT ON OTHER DOCUMENTS

Notice 2009–91 has no effect for wages paid on or after January 1, 2011. Therefore, the modification to Notice 2005–76 made by Notice 2009–91 does not apply for wages paid on or after January 1, 2011. Notice 2005–76 continues in effect for wages paid on or after January 1, 2011.

V. DRAFTING INFORMATION

The principal author of this notice is A. G. Kelley of the Office of Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this notice, contact A. G. Kelley at (202) 622–6040 (not a toll-free call).

II. BACKGROUND

Notice 2009–91 was published to provide procedures to take account of changes made in the withholding tables to reflect the Making Work Pay Credit (section 36A of the Code). The Making Work Pay Credit does not apply to taxable years beginning after December 31, 2010. Therefore, the withholding tables for wages paid on or after January 1, 2011, will not reflect the Making Work Pay Credit, and Notice 2009–91 will not apply in determining the withholding on nonresident aliens.

Notice 1036, Early Release Copies of the 2011 Percentage Method Tables for Income Tax Withholding, explains that employers should implement the 2011 withholding tables as soon as possible, but not later than January 31, 2011.

III. WITHHOLDING RULES THAT WILL BE IN EFFECT FOR WAGES PAID TO NONRESIDENT ALIEN EMPLOYEES ON OR AFTER JANUARY 1, 2011

For wages paid on or after January 1, 2011, employers must determine the amount of income tax to withhold from wages paid to nonresident alien employees for services performed within the United States, using the procedure explained in Notice 2005–76, 2005–2 C.B. 947, together with the tables in the revisions of Publication 15 (Circular E), Employer’s Tax Guide, and Notice 1036 that are in effect when the wages are paid. This procedure is explained in Publication 15 and Notice 1036.

2011–8 I.R.B. 515 February 22, 2011