Part III. Administrative, Procedural, and Miscellaneous

2011 Section 43 Inflation Adjustment

Notice 2011–57

Section 43(b)(3)(B) of the Internal Revenue Code requires the Secretary to publish an inflation adjustment factor. The enhanced oil recovery credit under § 43 for any taxable year is reduced if the “reference price,” determined under § 45K(d)(2)(C), for the calendar year preceding the calendar year in which the

taxable year begins is greater than $28 multiplied by the inflation adjustment factor for that year. The credit is phased out in any taxable year in which the reference price for the preceding calendar year exceeds $28 (as adjusted) by at least $6.

The term “inflation adjustment factor” means, with respect to any calendar year, a fraction the numerator of which is the GNP implicit price deflator for the preceding calendar year and the denominator of which is the GNP implicit price deflator for 1990.

Because the reference price for the 2010 calendar year ($74.71) exceeds $28 multiplied by the inflation adjustment factor for the 2010 calendar year ($42.91) by $31.80, the enhanced oil recovery credit for qualified costs paid or incurred in 2011 is phased out completely.

Table 1 contains the GNP implicit price deflator used for the 2011 calendar year, as well as the previously published GNP implicit price deflators used for the 1991 through 2010 calendar years.

• Beginning in 1995, the GNP implicit price deflator was rebased relative to 1992. The 1990 GNP implicit price deflator used to compute the 1996 § 43 inflation adjustment factor is 93.6.

** Beginning in 1997, two digits follow the decimal point in the GNP implicit price deflator. The 1990 GNP price deflator used to compute the 1998 § 43 inflation adjustment factor is 93.63.

*** Beginning in 1999, the GNP implicit price deflator was rebased relative to 1996. The 1990 GNP implicit price deflator used to compute the 2000 § 43 inflation adjustment factor is 86.53.

**** Beginning in 2003, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute the 2004 § 43 inflation adjustment factor is 81.589.

***** Beginning in 2009, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute the 2010 § 43 inflation adjustment factor is 72.199.

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Table 2 contains the inflation adjustment factor and the phase-out amount for taxable years beginning in the 2011

calendar year as well as the previously published inflation adjustment factors and phase-out amounts for taxable years be

ginning in the 1991 through 2010 calendar years.

DRAFTING INFORMATION

The principal author of this notice is Martha S. McRee of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice, contact Ms. McRee at (202) 622-3110 (not a toll-free call).

2011 Marginal Production Rates

Notice 2011–58

This notice announces the applicable percentage under § 613A of the Internal Revenue Code to be used in determining percentage depletion for marginal properties for the 2011 calendar year.

Section 613A(c)(6)(C) defines the term “applicable percentage” for purposes of determining percentage depletion for oil and gas produced from marginal properties. The applicable percentage is the per

centage (not greater than 25 percent) equal to the sum of 15 percent, plus one percentage point for each whole dollar by which $20 exceeds the reference price (determined under § 45K(d)(2)(C)) for crude oil for the calendar year preceding the calendar year in which the taxable year begins. The reference price determined under § 45K(d)(2)(C) for the 2010 calendar year is $74.71.

Table 1 contains the applicable percentages for marginal production for taxable years beginning in calendar years 1991 through 2011.

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ending on the last day before the beginning of the plan year.

Notice 2004–34, 2004–1 C.B. 848, provides guidelines for determining the corporate bond weighted average interest rate and the resulting permissible range of interest rates used to calculate current liability. That notice establishes that the corporate bond weighted average is based on the monthly composite corporate bond rate derived from designated corporate bond indices. The methodology for determining the monthly composite corporate bond rate as set forth in Notice 2004–34 continues to apply in determining that rate. See Notice 2006–75, 2006–2 C.B. 366. The composite corporate bond rate for June 2011 is 5.38 percent. Pursuant to Notice 2004–34, the Service has determined this rate as the average of the monthly yields for the included corporate bond indices for that month.

The following corporate bond weighted average interest rate was determined for plan years beginning in the month shown below.

The principal author of this notice is Martha S. McRee of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice, contact Ms. McRee at (202) 622–3110 (not a toll-free call).

Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

Notice 2011–59

This notice provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code as in effect for plan years beginning before 2008. It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), and the 24-month average segment rates under § 430(h)(2). In addition, this no

For Plan Years

tice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I), and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007.

CORPORATE BOND WEIGHTED AVERAGE INTEREST RATE

Sections 412(b)(5)(B)(ii) and 412(l)(7)(C)(i), as amended by the Pension Funding Equity Act of 2004 and by the Pension Protection Act of 2006 (PPA), provide that the interest rates used to calculate current liability and to determine the required contribution under § 412(l) for plan years beginning in 2004 through 2007 must be within a permissible range based on the weighted average of the rates of interest on amounts invested conservatively in long term investment grade corporate bonds during the 4-year period

Corporate Bond Weighted

Beginning in Permissible Range

Month Year

Average 90% to 100%

July 2011 5.97 5.37 5.97

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monthly corporate bond yield curve, and the 24-month average corporate bond segment rates used to compute the target normal cost and the funding target. Pursuant to Notice 2007–81, the monthly corporate bond yield curve derived from June 2011 data is in Table I at the end of this notice. The spot first, second, and third segment rates for the month of June 2011 are, respectively, 1.70, 4.99, and 6.33. The three 24-month average corporate bond segment rates applicable for July 2011 are as follows:

Third Segment

YIELD CURVE AND SEGMENT RATES

Generally for plan years beginning after 2007 (except for delayed effective dates for certain plans under sections 104, 105, and 106 of PPA), § 430 of the Code specifies the minimum funding requirements that apply to single employer plans pursuant to § 412. Section 430(h)(2) specifies the interest rates that must be used to determine a plan’s target normal cost and funding target. Under this provision, present value is generally determined using three 24-month average interest rates

First Segment

(“segment rates”), each of which applies to cash flows during specified periods. However, an election may be made under § 430(h)(2)(D)(ii) to use the monthly yield curve in place of the segment rates. Section 430(h)(2)G) set forth a transitional rule applicable to plan years beginning in 2008 and 2009 under which the segment rates were blended with the corporate bond weighted average described above, including an election under § 430(h)(2)(G)(iv) for an employer to use the segment rates without the transitional rule.

Notice 2007–81, 2007–44 I.R.B. 899, provides guidelines for determining the

Second Segment

2.18 5.36 6.33

mum funding requirements that apply to multiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum amount for the full-funding limitation described in section 431(c)(6)(A), based on the plan’s current liability. Section 431(c)(6)(E)(ii)(I) provides that the interest rate used to calculate current liability for this purpose must be no more than 5 percent above and no more than 10 percent below the weighted average of the rates of interest on 30-year Treasury securities during the four-year period ending on the last day before the beginning of the plan year. Notice 88–73, 1988–2 C.B. 383, provides guidelines for determining the weighted average interest rate. The following rates were determined for plan years beginning in the month shown below.

The transitional rule of § 430(h)(2)(G) does not apply to plan years beginning after December 31, 2009. Therefore, for a plan year beginning after 2009 with a lookback month to July 2011, the funding segment rates are the three 24-month average corporate bond segment rates applicable for July 2011, listed above without blending for any transitional period.

30-YEAR TREASURY SECURITIES INTEREST RATES

Section 417(e)(3)(A)(ii)(II) (prior to amendment by PPA) defines the applicable interest rate, which must be used for purposes of determining the minimum present value of a participant’s benefit under § 417(e)(1) and (2), as the annual rate of interest on 30-year Treasury se

For Plan Years

curities for the month before the date of distribution or such other time as the Secretary may by regulations prescribe. Section 1.417(e)–1(d)(3) of the Income Tax Regulations provides that the applicable interest rate for a month is the annual rate of interest on 30-year Treasury securities as specified by the Commissioner for that month in revenue rulings, notices or other guidance published in the Internal Revenue Bulletin.

The rate of interest on 30-year Treasury securities for June 2011 is 4.23 percent. The Service has determined this rate as the average of the daily determinations of yield on the 30-year Treasury bond maturing in May 2041.

Generally for plan years beginning after 2007, § 431 specifies the mini

30-Year Treasury Weighted

Beginning in Permissible Range

Month Year

Average 90% to 105%

July 2011 4.27 3.84 4.48

effect for plan years beginning in 2007. Notice 2007–81 provides guidelines for determining the minimum present value segment rates.

MINIMUM PRESENT VALUE SEGMENT RATES

Generally for plan years beginning after December 31, 2007, the applicable interest rates under § 417(e)(3)(D) are

segment rates computed without regard to a 24-month average. For plan years beginning in 2008 through 2011, the applicable interest rates are the monthly spot segment rates blended with the applicable rate under § 417(e)(3)(A)(ii)(II) as in

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Pursuant to that notice, the minimum present value transitional segment rates

For Plan Years

Beginning in

determined for June 2011, taking into ac- count the June 2011 30-year Treasury rate of 4.23 stated above, are as follows:

First Segment

Second Segment

Third Segment

2010 2.71 4.69 5.49 2011 2.21 4.84 5.91

DRAFTING INFORMATION

The principal author of this notice is Tony Montanaro of the Employee Plans,

Tax Exempt and Government Entities Division. Mr. Montanaro may be e-mailed at RetirementPlanQuestions@irs.gov.

August 1, 2011 88 2011–31 I.R.B.

Table I

Monthly Yield Curve for June 2011

Derived from June 2011 Data

Maturity Yield Maturity Yield Maturity Yield Maturity Yield Maturity Yield

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North Dakota Low-Income Housing Credit Disaster Relief

Notice 2011–60

The Internal Revenue Service is suspending certain requirements under § 42 of the Internal Revenue Code for low-income housing credit projects in the United States to provide emergency housing relief needed as a result of the devastation caused by flooding in North Dakota beginning on February 14, 2011. This relief is being granted pursuant to the Service’s authority under § 42(n) and § 1.42–13(a) of the Income Tax Regulations.

BACKGROUND

On May 10, 2011, the President declared a major disaster for the State of North Dakota. This declaration was made under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121 et seq . Subsequently, the Federal Emergency Management Agency (FEMA) designated jurisdictions for Individual Assistance. The State of North Dakota has requested that the Service allow owners of low-income housing credit projects to provide temporary housing in vacant units to individuals who resided in jurisdictions designated for Individual Assistance in North Dakota and who have been displaced because their residences were destroyed or damaged as a result of the devastation caused by the flooding. Based upon this request and because of the widespread damage to housing caused by the flooding, the Service has determined that the North Dakota Housing Finance Agency (Agency) may provide approval to project owners to provide temporary emergency housing for displaced individuals in accordance with this notice.

I. SUSPENSION OF INCOME LIMITATIONS

The Service has determined that it is appropriate to temporarily suspend certain income limitation requirements under § 42 for certain qualified low-income projects. The suspension will apply to low-income housing projects approved by the Agency, in which vacant units are rented to displaced individuals. The Agency will de

termine the appropriate period of temporary housing for each project, not to extend beyond July 31, 2012 (temporary housing period).

II. STATUS OF UNITS

A. Units in the first year of the credit period

A displaced individual temporarily occupying a unit during the first year of the credit period under § 42(f)(1) will be deemed a qualified low-income tenant for purposes of determining the project’s qualified basis under § 42(c)(1), and for meeting the project’s 20–50 test or 40–60 test as elected by the project owner under § 42(g)(1). After the end of the temporary housing period established by the Agency (not to extend beyond July 31, 2012), a displaced individual will no longer be deemed a qualified low-income tenant.

B. Vacant units after the first year of the credit period

During the temporary housing period established by the Agency, the status of a vacant unit (that is, market-rate or low-income for purposes of § 42 or never previously occupied) after the first year of the credit period that becomes temporarily occupied by a displaced individual remains the same as the unit’s status before the displaced individual moves in. Displaced individuals temporarily occupying vacant units will not be treated as low-income tenants under § 42(i)(3)(A)(ii). However, even if it houses a displaced individual, a low-income or market rate unit that was vacant before the effective date of this notice will continue to be treated as a vacant low-income or market rate unit. Similarly, a unit that was never previously occupied before the effective date of this notice will continue to be treated as a unit that has never been previously occupied even if it houses a displaced individual. Thus, the fact that a vacant unit becomes occupied by a displaced individual will not affect the building’s applicable fraction under § 42(c)(1)(B) for purposes of determining the building’s qualified basis, nor will it affect the 20–50 test or 40–60 test of § 42(g)(1). If the income of occupants in low-income units exceeds 140 percent of the applicable income limitation, the temporary occupancy of a unit by

a displaced individual will not cause application of the available unit rule under § 42(g)(2)(D)(ii). In addition, the project owner is not required during the temporary housing period to make attempts to rent to low-income individuals the low-income units that house displaced individuals.

III. SUSPENSION OF NON-TRANSIENT REQUIREMENTS

The non-transient use requirement of § 42(i)(3)(B)(i) shall not apply to any unit providing temporary housing to a displaced individual during the temporary housing period determined by the Agency in accordance with section I of this notice.

IV. OTHER REQUIREMENTS

All other rules and requirements of § 42 will continue to apply during the temporary housing period established by the Agency. After the end of the temporary housing period, the applicable income limitations contained in § 42(g)(1), the available unit rule under § 42(g)(2)(D)(ii), the nontransient requirement of § 42(i)(3)(B)(i), and the requirement to make reasonable attempts to rent vacant units to low-income individuals shall resume. If a project owner offers to rent a unit to a displaced individual after the end of the temporary housing period, the displaced individual must be certified under the requirements of § 42(i)(3)(A)(ii) and § 1.42–5(b) and (c) to be a qualified low-income tenant. To qualify for the relief in this notice, the project owner must additionally meet all of the following requirements:

(1) Major Disaster Area

The displaced individual must have resided in a North Dakota jurisdiction designated for Individual Assistance by FEMA as a result of flooding in North Dakota beginning on February 14, 2011.

(2) Approval of the North Dakota Housing Finance Agency

The project owner must obtain approval from the Agency for the relief described in this notice. The Agency will determine the appropriate period of temporary housing for each project, not to extend beyond July 31, 2012.

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(3) Certifications and Recordkeeping

To comply with the requirements of § 1.42–5, project owners are required to maintain and certify certain information concerning each displaced individual temporarily housed in the project, specifically the following: name, address of damaged residence, social security number, and a statement signed under penalties of perjury by the displaced individual that, because of damage to the individual’s residence in a North Dakota jurisdiction designated for Individual Assistance by FEMA as a result of the flooding beginning on February 14, 2011, the individual requires temporary housing. The owner must notify the Agency that vacant units are available for rent to displaced individuals.

The owner must also certify the date the displaced individual began temporary occupancy and the date the project will discontinue providing temporary housing as established by the Agency. The certifications and recordkeeping for displaced individuals must be maintained as part of the annual compliance monitoring process with the Agency.

(4) Rent Restrictions

Rents for the low-income units that house displaced individuals must not exceed the existing rent-restricted rates for the low-income units established under § 42(g)(2).

(5) Protection of Existing Tenants

Existing tenants in occupied low-income units cannot be evicted or have their tenancy terminated as a result of efforts to provide temporary housing for displaced individuals.

EFFECTIVE DATE

This notice is effective May 10, 2011 (the date of the President’s major disaster declaration as a result of the flooding in North Dakota beginning on February 14, 2011).

PAPERWORK REDUCTION ACT

The collection of information contained in this notice has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork

Reduction Act (44 U.S.C. 3507) under control number 1545–2213.

An Agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.

The collection of information in this notice is in the section titled “OTHER REQUIREMENTS” under “(3) Certifications and Recordkeeping.” This information is required to enable the Service to verify whether individuals are displaced as a result of the devastation caused by flooding in North Dakota beginning on February 14, 2011, and thus warrant temporary housing in vacant low-income housing units. The collection of information is required to obtain a benefit. The likely respondents are individuals and businesses.

The estimated total annual recordkeeping burden is 125 hours.

The estimated annual burden per recordkeeper is approximately 15 minutes. The estimated number of recordkeepers is 500. Books or records relating to a collection of information must be retained as long as their contents may become material to the administration of the internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

DRAFTING INFORMATION

The principal author of this notice is David Selig of the Office of the Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice, contact Mr. Selig at (202) 622–3040 (not a toll free call).

Continuing Education Providers

Notice 2011–61

Purpose

This notice invites public comments regarding the process for individuals and entities to be approved by the Internal Revenue Service as continuing education providers. On June 3, 2011, the Treasury Department and the IRS published final regulations (T.D. 9527,

2011–27 I.R.B. 1 [76 FR 32286]) under 31 CFR Part 10 (Circular 230) that require registered tax return preparers to complete continuing education offered by qualified continuing education providers. Enrolled agents and enrolled retirement plan agents also are required to complete continuing education under Circular 230. Section 10.9(a)(1) of Circular 230 provides that continuing education providers must be:

(i) An accredited educational institution;

(ii) Recognized for continuing education purposes by the licensing body of any State, territory, or possession of the United States, including a Commonwealth, or the District of Columbia;

(iii) Recognized and approved by a qualifying organization as a provider of continuing education on subject matters within section 10.6(f) of Circular 230; or

(iv) Recognized by the Internal Revenue Service as a professional organization, society, or business whose programs include offering continuing professional education opportunities in subject matters within section 10.6(f) of Circular 230.

Section 10.6(f) provides criteria that continuing education programs must meet to qualify as continuing education credit for enrolled agents, enrolled retirement plan agents, and registered tax return preparers, including that a qualifying continuing education course generally must enhance professional knowledge in Federal taxation or Federal tax related matters, must be consistent with the Code and effective tax administration, and must be conducted by a qualified instructor. See Circular 230 § 10.6(f)(1)-(2).

The IRS is developing procedures and standards to supplement sections 10.6 and 10.9 for individuals and entities seeking to be recognized and approved as continuing education providers under section 10.9(a)(1)(iv). The IRS is also developing the standards and procedures for organizations (accrediting organizations) to become qualified to accredit other individuals and entities as continuing education providers under section 10.9(a)(1)(iii) after those individuals or entities follow applicable procedures prescribed by the IRS. The IRS seeks the input of education providers, tax return preparers, the associated industry and consumer groups, and taxpayers on the procedures and standards that will govern the approval process for

2011–31 I.R.B. 91 August 1, 2011

continuing education providers. The information collected will assist the IRS in developing these standards and the process for those individuals and entities who seek IRS approval as a continuing education provider.

Request for public comments on procedures and standards applicable to the continuing education provider approval process

In addition to general comments regarding the procedures and standards to be implemented with respect to the approval process, the IRS is particularly interested in any comments regarding:

Continuing Education Providers

submit to be approved as a continuing education provider under section 10.9(a)(1)(iv) and assigned a continuing education provider number;

evaluate whether a continuing education provider applicant meets the requirements of Circular 230;

to evaluate whether a continuing education provider’s programs meet the standards for continuing education programs in Circular 230;

ucation provider must provide to renew its status as a continuing education provider;

that continuing education providers must renew their status with the IRS;

ucation providers must provide to the IRS regarding changes in continuing education programs offered and the mechanism for notifying the IRS about these changes;

publish so that tax return preparers may identify the individuals and entities approved as continuing education providers, and how often the publication should be updated for the information to be considered current;

tinuing education providers should receive approval from the IRS to be able to offer continuing education programs by January 1, 2012;

Accrediting Organizations

to determine which accrediting organizations have minimum education standards comparable to those set forth in Circular 230 in order to accredit an individual or entity as a continuing education provider under section 10.9(a)(1)(iii) for approval after the individual or entity follows applicable procedures prescribed by the IRS;

utilize to be designated as accrediting organizations and the requirements that organizations approved as accrediting organizations must follow to maintain their status;

organizations must provide to the IRS regarding continuing education providers approved by the accrediting organization;

organizations must maintain and how long these records must be maintained;

publish so that continuing education providers may identify accrediting organizations, and how often this information should be updated to be considered current;

IRS should consider when developing

procedures and standards applicable to the continuing education provider approval process.

Written comments should be sent to:

Internal Revenue Service Attn: CC:PA:LPD:PR

(Notice 2011–61) Room 5205 P.O. Box 7604 Ben Franklin Station Washington, D.C. 20044

or hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to:

Courier’s Desk Internal Revenue Service Attn: CC:PA:LPD:PR

(Notice 2011–61) 1111 Constitution Avenue, N.W. Washington, D.C. 20224

Alternatively, comments may be submitted electronically via e-mail to the following address: Notice.Comments@irscounsel.treas.gov . “Notice 2011–61” should be in the subject line of the e-mail. All comments will be available for public inspection and copying. Comments are requested by August 17, 2011.

Drafting Information

The principal author of this notice is Matthew D. Lucey of the Office of Associate Chief Counsel (Procedure & Administration). For further information regarding this notice, contact Matthew D. Lucey at (202) 622–4940 (not a toll-free call).

August 1, 2011 92 2011–31 I.R.B.