SECTION 4. DRAFTING

INFORMATION

The principal authors of this notice are Timothy L. Jones and Vicky Tsilas of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this notice, contact Vicky Tsilas at (202) 622–3980 (not a toll-free call).

Certain Filing Changes for Tax-Exempt Organizations

Notice 2012–4

This notice notifies tax-exempt organizations (organizations) that the IRS Modernized eFile (MeF) system will not be available from January 1, 2012 through February 29, 2012 for electronic filing of Form 990, Return of Organization Exempt From Income Tax, Form 990–EZ, Short Form Return of Organization Exempt From Income Tax, Form 990–PF, Return of Pri- vate Foundation, or Form 1120–POL, U.S. Income Tax Return for Certain Political Organizations (affected returns). In addition, this notice describes options available to organizations affected by this two

month suspension period and provides relief under sections 6081, 6651, and 6652 of the Internal Revenue Code with respect to certain filing requirements. This notice also notifies tax-exempt hospital organizations that, beginning with the 2011 tax year, Form 990, Schedule H, Part V, Section B (Part V.B) is no longer optional, with the exception of lines 1 through 7.

Two-Month Suspension of IRS MeF System for 990 and 1120–POL Filers

In order to facilitate systems and programming changes, the IRS is suspending the availability of its MeF system for filing Forms 990, 990–EZ, 990–PF, and 1120–POL from January 1, 2012 through February 29, 2012 (the suspension period). Although no organizations will be able to file these forms electronically during the suspension period, only organizations with filing due dates (or extended due dates) for such returns in the suspension period are considered “affected organizations” for purposes of this notice. Paper forms may continue to be filed during the suspension period and affected organizations may take advantage of the relief provided in this notice including the ability to file electronically by March 30, 2012. Organizations that file Form 990–N (e-Postcard) may continue to file electronically during this period.

Extended Filing Date for Eligible Affected Organizations

In order to minimize the impact on affected organizations, the IRS is granting an extension of time to file affected returns to March 30, 2012 to organizations whose original due date (or first three-month extended due date) for the affected return occurs during the suspension period. The extension of time to file applies to all such organizations with affected return filings due during this period, whether or not they are required to file electronically. Affected organizations required to file electronically may file electronically prior to January 1, 2012 or between March 1, 2012 and March 30, 2012. Affected organizations that are not required to file electronically may do the same or may file on paper by March 30, 2012. This extension of time to file is automatic; therefore, affected

2012–3 I.R.B. 290 January 17, 2012

for future years and welcomes further public input. To be considered for the tax year 2012 form revisions, input must be received by January 15, 2012. Input submitted after such date will be considered for future years. Input can be submitted to Form990Revision@irs.gov or the following address:

Internal Revenue Service Attn: Stephen Clarke (Notice 2012–4) SE:T:EO 1111 Constitution Avenue, N.W. Washington, D.C. 20224

The principal author of this notice is Stephen Clarke of the Tax Exempt and Government Entities Division. For further information regarding this notice, please contact Mr. Clarke at (202) 283–9474 (not a toll-free number).

APPENDIX A

Reasonable Cause Statement

This return is being filed between March 1, 2012, and March 30, 2012, as directed by the IRS in Notice 2012–4, because electronic filing was not available January 1, 2012 through February 29, 2012. We request that penalties be waived because it would be inequitable to impose a penalty on us due to the unusual circumstances requiring us to delay the filing of this return.

Safe Harbor Reporting Method for Eligible REMICS Required to Report on Schedule Q Information with Respect to REMIC Assets

Notice 2012–5

PURPOSE

This notice provides a safe harbor reporting method that an eligible real estate mortgage investment conduit (REMIC) may use to satisfy its reporting obligations under § 1.860F–4(e)(1)(ii) of the Income Tax Regulations with respect to information regarding REMIC assets that the REMIC must report to residual interest holders on a Schedule Q (Form 1066), Quarterly Notice to Residual Interest

organization files its return by March 30, 2012).

Extension of Time to File Does Not Extend Time to Pay Any Tax Liability

Organizations are reminded that an extension of time to file, including the automatic extension of time to file to March 30, 2012 provided in this notice, is not an extension of time to pay any tax liabilities that may be due for the year. Therefore, an organization that has a tax liability for a return that has a due date that falls within the suspension period must make a timely payment of the amount due either by making an estimated tax payment or by filing its return on paper, if permitted normally or under this notice as described below, and remitting payment with its return or by electronic funds transfer if required.

Relief from Late Filing Penalty

An affected organization with a second extended filing due date that falls during the suspension period is not eligible for an additional extension of time to file. However, if such an organization files its return by March 30, 2012, it will have reasonable cause for its late filing and, therefore, will not be subject to a late filing penalty. Such an organization that files by March 30, 2012 is not required to file a Reasonable Cause Statement in order to take advantage of this late filing penalty relief. However, in order to avoid receiving a system-generated penalty notice for late filing, each affected organization should attach a Reasonable Cause Statement to its return. Appendix A of this notice contains an example of a Reasonable Cause Statement that organizations can use. If an affected organization erroneously receives a system-generated penalty notice for late filing from the IRS, the organization should call the telephone number on the penalty notice to request that the IRS abate the penalty in accordance with Notice 2012–4.

Limited Option to File on Paper during the Suspension Period

The automatic extension and automatic penalty relief provisions of this notice are

designed to ensure that any affected organization whose filing is delayed by reason of the suspension of the MeF system will not suffer adverse consequences and will be accorded the same results as if it filed a return by the normal filing deadline. The IRS recognizes, however, that some affected organizations generally required to file electronically that have already obtained two three-month filing extensions may be uncomfortable relying on the late filing penalty relief provided in this notice. In that circumstance, the affected organization may file its return on paper. Organizations that are normally required to file electronically and choose to file on paper pursuant to this notice may receive a system-generated form asking for an explanation of why they did not file electronically. It will be sufficient to respond “Paper Filing Pursuant to Notice 2012–4.”

Schedule H for Hospitals

Section 9007 of the Patient Protection and Affordable Care Act (Affordable Care Act), Pub. L. No. 111–148, 124 Stat. 119 (March 23, 2010), included new requirements for tax-exempt hospital organizations and their hospital facilities, including information return reporting requirements. To gather information on hospital organizations’ compliance with these requirements and on related policies and practices, the IRS revised the Form 990, Schedule H for tax year 2010 to add a new Part V.B. To give the hospital community more time to familiarize itself with the types of information the IRS is requesting, the IRS made Part V.B optional for tax year 2010. See Announcement 2011–37, 2011–27 I.R.B. 37. Beginning in tax year 2011, Part V.B is no longer optional, with the exception of lines 1 through 7, regarding community health needs assessments (CHNAs), as the CHNA requirements of the Affordable Care Act are only effective for tax years beginning after March 23, 2012. Accordingly, hospital organizations that are reqiired to file the 2011 Form 990 are required to complete all parts and sections of the 2011 Schedule H, including Part V.B, except lines 1 through 7 of Part V.B.

The IRS has considered public input on Part V.B, and has made revisions to Part V.B for tax year 2011. The IRS anticipates making further revisions to Part V.B

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assets during the calendar quarter. ² If the percentage of REMIC assets represented by either Category 1 or Category 2 is at least 95 percent, then the REMIC need only specify on Schedule Q that the percentage for that category was at least 95 percent (the 95-percent asset-reporting test).

Under § 1.860F–4(e)(1)(ii)(B), if, for any calendar quarter after 1988, the 95-percent asset-reporting test is not met with respect to assets in Category 2 (that is, real estate assets as defined in section 856(c)(5)(B)), then for that calendar quarter, the REMIC must provide the following additional information to any REIT that holds a residual interest:

(1) The percentage of REMIC assets described in section 856(c)(4)(A), computed by reference to the average adjusted basis of the REMIC assets during the calendar quarter (as described in § 1.860F–4(e)(1)(iii)),

(2) The percentage of REMIC gross income (other than gross income from prohibited transactions defined in section 860F(a)(2)) described in section 856(c)(3)(A) through (E), computed as of the close of the calendar quarter, and

(3) The percentage of REMIC gross income (other than gross income from prohibited transactions defined in section 860F(a)(2)) that is described in section 856(c)(3)(F) (which refers to income or gain from foreclosure property), computed as of the close of the calendar quarter. For this purpose, the term “foreclosure property” has the meaning specified in section 860G(a)(8) (which governs REMICs), rather than the closely related definition of “foreclosure property” in section 856(e) (which otherwise would determine the income or gain that is described in section 856(c)(3)(F)). Section 1.860G–2(a)(1) generally treats a mortgage loan as an obligation “principally secured by an interest in real property” for purposes of section 860G(a)(3) if the loan is secured by an interest in real property that is worth at least 80 percent of the outstanding stated principal of the loan (in other words, the loan-to-value ratio of the loan—commonly referred to

Holder of REMIC Taxable Income or Net Loss Allocation (Schedule Q) .

THE HOME AFFORDABLE REFINANCE PROGRAM (HARP)

In April 2009, the Federal Housing Finance Agency (FHFA) and the United States Department of the Treasury introduced the Home Affordable Refinance Program (HARP) as part of the United States Government’s Making Home Affordable Program. On October 24, 2011, FHFA, with Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), announced an expansion of HARP in an effort to serve additional eligible borrowers who can benefit from refinancing their home mortgages. Details of the expansion were announced on November 15, 2011.

HARP serves borrowers who may not otherwise qualify for refinancing, either because the value of their homes has declined or because they cannot obtain mortgage insurance. The program is available to borrowers who owe more on their mortgages than the value of their homes. HARP provides these homeowners with the ability to refinance their mortgages into more affordable and sustainable mortgages.

LAW

REMICs are widely used securitization vehicles for mortgages. REMICs are governed by sections 860A through 860G of the Internal Revenue Code. For an entity to qualify as a REMIC, all of the interests in the entity must consist of one or more classes of regular interests and a single class of residual interests, see section 860D(a), and those interests must be issued on the startup day, within the meaning of § 1.860G–2(k).

Under section 860D(a)(4), an entity qualifies as a REMIC only if, among other things, as of the close of the third month beginning after the startup day and at all times thereafter, substantially all of its assets consist of qualified mortgages and permitted investments. In general,

the term “qualified mortgage” means an obligation that is principally secured by an interest in real property. See section 860G(a)(3)(A). That is, an obligation secured by an “interest in real property” is not a qualified mortgage unless the obligation is “principally secured” by such an interest.

An obligation is “principally secured” if the fair market value of the interest in real property securing the obligation equals at least 80 percent of the adjusted issue price of the obligation (the 80-percent test). See § 1.860G–2(a)(1). The regulations require the 80-percent test to be satisfied either at the time the obligation was originated or at the time the sponsor contributes the obligation to the REMIC. After the startup day, the regulations generally do not require retesting of the value of the interest in real property that secures the obligation.

The REMIC regulations cross-reference the real estate investment trust (REIT) regulations to define the term “interest in real property.” Specifically, § 1.860G–2(a)(4) provides that the definition of “interests in real property” in § 1.856–3(c) and the definition of “real property” in § 1.856–3(d) apply for purposes of section 860G(a)(3) and § 1.860G–2(a). In addition, a mortgage pass-thru certificate that is guaranteed by Fannie Mae or Freddie Mac is included as an obligation secured by an interest in real property for purposes of section 860G(a)(3)(A). See § 1.860G–2(a)(5). Section 1.860F–4(e) provides that, at the close of each calendar quarter, a REMIC must provide to each person who held a residual interest in the REMIC during that quarter notice on Schedule Q of certain information, including information with respect to REMIC assets. Under § 1.860F–4(e)(1)(ii)(A), a REMIC must provide to each of its residual interest holders the following information: (1) the percentage of REMIC assets that are described in section 7701(a)(19) (Category 1); and (2) the percentage of REMIC assets that are real estate assets defined in section 856(c)(5)(B) (Category 2), ¹ computed by reference to the average adjusted basis (as defined in section 1011) of the REMIC

1 The regulation refers to former section 856(c)(6)(B). Section 1255 of the Taxpayer Relief Act of 1997 (P.L. 105–34) redesignated former section 856(c)(6)(B) as current section 856(c)(5)(B).

2 Section 1.860F–4(e)(1)(ii)(A) also requires a REMIC to provide information with respect to the percentage of REMIC assets that are qualifying real property loans under section 593. Section 1616(a) of the Small Business Job Protection Act of 1996 (P. L. 104–188), however, repealed the section 593 reserve method of accounting for bad debts of thrift institutions for tax years beginning after December 31, 1995. Accordingly, whether assets are “qualifying real property loans under section 593” is no longer relevant, and the reporting of this information to residual interest holders is unnecessary.

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as “LTV”—is not greater than 125 percent). ³ If, however, a REMIC holds one or more qualified mortgages that are less than 95-percent secured by an interest in real property, the REMIC may fail the 95-percent asset-reporting test and may be required to report additional information to residual interest holders with respect to the REMIC assets.

SAFE HARBOR REPORTING METHOD

As a safe harbor for purposes of a REMIC’s reporting obligation to residual interest holders under § 1.860F–4(e)(1)(ii), if a REMIC is an “eligible REMIC” as defined below and if the percentage of its assets represented by either Category 1 or Category 2 is less than 95 percent but at least 80 percent, then the REMIC need only specify on Schedule Q that the percentage for that category was at least 80 percent.

To qualify as an “eligible REMIC” under this notice—

1. The REMIC must have a guarantee from Fannie Mae or Freddie Mac that will supplement amounts received by the REMIC as required to permit the payment of principal and interest, as applicable, on both the regular interests and residual interests issued by the REMIC; and
2. All of the qualified mortgages (including mortgage pass-thru certificates) that are held by the REMIC must be secured by interests in single-family (one-to-four unit) dwellings.

See also Rev. Proc. 2012–14, this bulletin, for guidance to REITs that hold a regular or residual interest in an eligible REMIC.

EFFECTIVE DATE

The safe harbor reporting method described in this notice applies to reporting for calendar quarters ending on or after December 31, 2011.

DRAFTING INFORMATION

The principal author of this notice is Diana Imholtz of the Office of Associate

Chief Counsel (Financial Institutions and Products). For further information regarding this notice, contact Ms. Imholtz at 202–622–3920 (not a toll-free call).

(Also 26 CFR 1.414(l)–1, 1.933–1, 1.501(a)–1, and 301.7805–1.)

Qualified Pension, Profit-Sharing, and Stock Bonus Plans; Exemption from Tax on Corporations, Certain Trusts, Etc.

Notice 2012–6

I. PURPOSE

This notice extends and expands the transition relief provided under Rev. Rul. 2011–1, 2011–2 I.R.B. 251, and Rev. Rul. 2008–40, 2008–2 C.B. 166, for certain group trusts, certain retirement trusts that qualify under the Puerto Rico Internal Revenue Code (Puerto Rico Code) and that participate in group trusts, and certain qualified retirement plans that benefit Puerto Rico residents. This notice also provides additional time for governmental retiree benefit plans described in § 401(a)(24) of the Internal Revenue Code (Code) (§ 401(a)(24) plans) to be amended to satisfy the applicable requirements of Rev. Rul. 2011–1.

II. BACKGROUND

Rev. Rul. 81–100, 1981–1 C.B. 326, provides that qualified retirement plans and individual retirement accounts are permitted to pool their assets for investment purposes in a group trust (“81–100 group trusts”) if certain specified requirements are satisfied. Rev. Rul. 81–100 was clarified and modified by Rev. Rul. 2004–67, 2004–2 C.B. 28. Rev. Rul. 2011–1 revises and restates the generally applicable rules for group trusts described in Rev. Rul. 81–100, 1981–1 C.B. 326, as clarified and modified by Rev. Rul. 2004–67. Rev. Rul. 2011–1 permits the participation in 81–100 group trusts of certain retiree benefit plans, such as governmental retiree

benefit plans under § 401(a)(24), in addition to § 401(a) qualified retirement plans, if certain requirements are met.

Section 1022(i)(1) of the Employee Retirement Income Security Act of 1974, Pub. L. 93–406 (ERISA) provides a tax exemption under § 501(a) of the Code for certain plans that satisfy the qualification requirements under the Puerto Rico Code (“section 1022(i)(1) plans”).

Rev. Rul. 2008–40 holds that a transfer of amounts from a trust under a plan qualified under § 401(a) to a nonqualified foreign trust is treated as a distribution from the transferor plan. Rev. Rul. 2008–40 holds further that a transfer of assets and liabilities from a qualified plan to a plan that satisfies the plan qualification requirements under section 1165 of the Puerto Rico Code is also treated as a distribution from the transferor plan, even if the plan is a section 1022(i)(1) plan. Rev. Rul. 2008–40 provided transition relief for a transfer from a qualified plan to a section 1022(i)(1) plan that occurred before January 1, 2011.

Rev. Rul. 2011–1 provides temporary relief relating to investments of the assets of certain section 1022(i)(1) plans in 81–100 group trusts, and modifies the transition relief provided in Rev. Rul. 2008–40 relating to transfers from qualified plans to section 1022(i)(1) plans. Specifically, under the heading “Plans Described in Section 1022(i)(1) of ERISA,” Rev. Rul. 2011–1 provides that:

The Service anticipates issuing guidance as to whether a plan described in section 1022(i)(1) of ERISA may participate in an 81–100 group trust. Until such guidance is issued, the Service will not treat a group trust as failing to satisfy the requirements of this revenue ruling merely because the group trust includes the assets of a section 1022(i)(1) plan as long as the section 1022(i)(1) plan (1) was participating in the group trust as of January 10, 2011, or (2) holds assets that had been held by a qualified plan immediately prior to the transfer of those assets to the section 1022(i)(1) plan pursuant to the transition relief in Rev. Rul. 2008–40, as modified by this revenue ruling. In addition, Rev. Rul. 2008–40 is hereby

3 In general, the adjusted issue price of a home mortgage loan is equal to or slightly less than the outstanding stated principal of the loan. Thus, although LTV is based on stated principal rather than on adjusted issue price, if LTV is not greater than 125 percent, then the criterion for “principally secured” will generally be satisfied (that is, the value of the real property collateral will be at least 80 percent of the adjusted issue price).

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governing document is modified to satisfy the applicable requirements of Rev. Rul. 2011–1 by the earlier of:

1. The close of the first regular legislative session of the legislative body with the authority to amend the plan that begins on or after January 1, 2012; or
2. January 1, 2015.

IV. COMMENTS REQUESTED

In general, if an entity that is not a group trust retiree benefit plan as defined in the holding of Rev. Rul. 2011–1 (an “ineligible entity”) participates in a group trust, the consequences described in the holdings of Rev. Rul. 2011–1, including the tax status of the group trust being derived from the tax status of the participating entities to the extent of their equitable interest in the group trust, would not apply to the group trust or to any of the entities that are invested in the trust. Comments are requested on whether the rule stating that the tax status of the group trust is derived from the tax status of the participating entities to the extent of their equitable interest in the group trust should be extended to cases where the equitable interest in the group trust is held by an ineligible entity that is an employee benefit plan if (a) the plan is tax exempt under § 501 or a similar rule and (b) in all other respects the requirements in paragraphs (1) through (8) of the holding of Rev. Rul. 2011–1 (including the exclusive benefit requirement in (5) and the separate account requirement in (6)) are satisfied. Comments should be submitted by April 16, 2012 (Notice 2012–6), Room 5203, Internal Revenue Service, POB 7604 Ben Franklin Station, Washington, D.C. 20044. Comments may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (Notice 2012–6), Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave., N.W., Washington D.C. Alternatively, comments may be submitted via the Internet at Notice.comments@irscounsel.treas.gov . Please include “Notice 2012–6” in the subject line of any electronic communication. All materials submitted will be available for public inspection and copying.

modified to extend the transition relief for transfers from a qualified plan to a section 1022(i)(1) transferee plan for an additional year. Thus, “January 1, 2012” is substituted for “January 1, 2011” each place it appears in the Transition Relief section of Rev. Rul. 2008–40. When Rev Rul. 2011–1 and 2008–40 were issued, the qualification provisions for retirement plans were contained in section 1165 of the Puerto Rico Code. On January 31, 2011, the retirement plan qualification provisions of the Puerto Rico Code were extensively amended. ¹ These provisions, which now appear at section 1081.01 of the Puerto Rico Code, apply to plans qualified under both U.S. and Puerto Rico law (sometimes referred to as “dual-qualified plans”), as well as to section 1022(i)(1) plans.

III. EXTENSION AND EXPANSION OF RELIEF

The Service anticipates issuing guidance responding to comments received in connection with Rev. Rul. 2011–1. Accordingly, the following relief is provided.

A. ERISA Section 1022(i)(1) Plans

1. Expansion of relief under Rev. Rul. 2011–1 relating to 81–100 group trust status of certain trusts containing section 1022(i)(1) plan investments

The relief provided in Rev. Rul. 2011–1 under the heading “Plans Described in Section 1022(i)(1) of ERISA” continues to apply. In addition, that relief is expanded to cover an 81–100 group trust with respect to an investment by a section 1022(i)(1) plan that is the recipient of a transfer of assets from a qualified retirement plan pursuant to the transition relief under Rev. Rul. 2008–40, as modified by Rev. Rul. 2011–1 and this notice, if assets of the transferor plan were held in the 81–100 group trust on January 10, 2011.

2. Extension of transition relief under Rev. Rul. 2008–40 relating to tax consequences of certain transfers to section 1022(i)(1) plans

(i) Extension of transfer deadline until further guidance for certain qualified plans invested in group trusts

The relief provided in paragraphs 2, 3, and 4(b) under the Transition Relief heading in Rev. Rul. 2008–40 is extended for transfers to a section 1022(i)(1) transferee plan from a qualified retirement plan that participated in an 81–100 group trust on January 10, 2011, until a deadline to be set forth in future published guidance. It is expected that, when further guidance relating to participation of section 1022(i)(1) plans in group trusts is published, that guidance will set a future deadline for transfers covered by this extension.

(ii) One-year general extension of transfer deadline

The Service recognizes that a sponsor of a qualified retirement plan that benefits Puerto Rico residents may need additional time to evaluate whether to spin off the portion of the plan benefiting Puerto Rico residents to a section 1022(i)(1) plan in order to consider the effect of the changes to the Puerto Rico Code enacted earlier this year. Accordingly, Rev. Rul. 2008–40 is hereby further modified to extend the relief provided in paragraphs 2, 3, and 4(b) under the Transition Relief heading in Rev. Rul. 2008–40 for transfers to a section 1022(i)(1) transferee plan from any qualified retirement plan until December 31, 2012, regardless of whether the qualified retirement plan participates in a group trust.

B. Governmental Retiree Benefit Plans

In order to ensure that the governing documents of § 401(a)(24) plans may be timely amended to satisfy the requirements of Rev. Rul. 2011–1, the ruling is modified to provide that, in the case of a § 401(a)(24) plan for which the authority to amend the plan is held by a legislative body that meets in legislative session, the plan will not fail to satisfy the requirements of Rev. Rul. 2011–1 if the

1 See Código de Rentas Internas para un Nuevo Puerto Rico de la Ley Núm. 1 de 31 de enero de 2011.

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for trucks and vans, the “new trucks” component of the CPI is used. This results in somewhat higher maximum values for trucks and vans. This change reflects the higher rate of price inflation that trucks and vans have been subject to since 1988, and is consistent with the change announced in Rev. Proc. 2003–75, 2003–2 C.B. 1018, for purposes of calculating depreciation deductions. See also Rev. Proc. 2011–21, 2011–12 I.R.B. 560. For purposes of this revenue procedure, the term “trucks and vans” refers to passenger automobiles that are built on a truck chassis, including minivans and sport utility vehicles (SUVs) that are built on a truck chassis.