Part III. Administrative, Procedural, and Miscellaneous

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

Notice 2013–23

This notice 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) of the Internal Revenue Code. In addition, this notice 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. These rates reflect certain changes implemented by the Moving Ahead for Progress in the 21st Century Act, Public Law 112–141 (MAP–21). MAP–21 provides that for purposes of § 430(h)(2), the segment rates are limited by the applicable maximum percentage or the applicable minimum percentage based on the average of segment rates over a 25 year period.

YIELD CURVE AND SEGMENT RATES

Generally, except for certain plans under sections 104 and 105 of the Pension Protection Act of 2006, § 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 (“segment rates”), each of which applies to cash flows during specified periods. To the extent provided under § 430(h)(2)(C)(iv), these segment rates are adjusted by the applicable percentage of the 25-year average segment rates for the period ending September 30 of the year preceding the calendar year in which the plan year begins. However, an election may be made under § 430(h)(2)(D)(ii) to use the monthly yield curve in place of the segment rates.

Notice 2007–81, 2007–44 I.R.B. 899, provides guidelines for determining the 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 February 2013 data is in Table I at the end of this notice. The spot first, second, and third segment rates for the month of February 2013 are, respectively, 0.99, 3.82, and 5.02. For plan years beginning on or after January 1, 2012, the 24-month average segment rates determined under § 430(h)(2)(C)(iv) must be adjusted by the applicable percentage of the corresponding 25-year average segment rates. The 25-year average segment rates for plan years beginning in 2012 and for plan years beginning in 2013 were published in Notices 2012–55 and 2013–11, respectively. The 24-month average corporate bond segment rates applicable for March 2013 without adjustment, and the adjusted 24-month average segment rates taking into account the applicable percentages of corresponding the 25-year average segment rates, are as follows:

determined each day for the balance of the month.

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

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 securities 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 applica

ble 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 February 2013 is 3.17 percent. The Service has determined this rate as the average of the yield on the 30-year Treasury bond maturing in November 2042 determined each day through February 13, 2013, and the yield on the 30-year Treasury bond maturing in February 2043

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interest on 30-year Treasury securities during the four-year period ending on the last day before the beginning of the plan year.

For Plan Years

30-Year Treasury Weighted

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.

Beginning in Permissible Range

Month Year

Average 90% to 105%

March 2013 3.55 3.19 3.72

tional segment rates determined for February 2013 are as follows:

Third Segment

MINIMUM PRESENT VALUE SEGMENT RATES

In general, the applicable interest rates under § 417(e)(3)(D) are segment rates

First Segment

computed without regard to a 24-month average. Notice 2007–81 provides guidelines for determining the minimum present value segment rates. Pursuant to that notice, the minimum present value transi

Second Segment

0.99 3.82 5.02

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 .

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Table I

Monthly Yield Curve for February 2013

Derived from February 2013 Data

Maturity Yield Maturity Yield Maturity Yield Maturity Yield Maturity Yield

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Penalty Relief for Delayed 2012 Forms

Notice 2013–24

This notice provides transitional relief for additions to tax under section 6651(a)(2) of the Internal Revenue Code due to the delayed publication of some IRS forms relating to the 2012 tax year.

BACKGROUND

Generally, individuals, estates, and trusts are required to file income tax returns and pay any tax due by April 15; corporations and certain other entities must file returns and pay tax by March 15.

Section 6081 provides that the Secretary may grant a reasonable extension of time for filing any return, but, except in the case of taxpayers who are abroad, no such extension shall be for more than 6 months. To qualify for an extension, taxpayers must properly estimate their tax liability using any available information and report that tax liability on the extension application. An extension of time to file a return, however, does not extend the time to pay the tax and taxpayers generally must pay the tax by the original due date of the return.

Section 6651(a)(2) imposes an addition to tax for payments made after the due date

(determined with regard to any extension of time for payment) with respect to tax shown on a return. The section 6651(a)(2) addition to tax will not be imposed if the taxpayer shows that the failure was due to reasonable cause and not willful neglect.

On January 2, 2013, Congress enacted the American Taxpayer Relief Act of 2012 (ATRA), Pub. L. No. 112–240, 126 Stat. 2313. The ATRA affected a number of tax forms. Revising those forms required extensive programming and testing of IRS systems, which delayed the IRS’s ability to release, accept, and process those forms. These delays may affect the ability of some taxpayers to timely estimate and pay their 2012 tax liability when requesting an extension to file.

TRANSITIONAL RELIEF

Generally, the IRS automatically assesses the section 6651(a)(2) addition to tax against taxpayers who pay late, and then it sends notice and demand for payment of the addition to tax. For each taxpayer who requests or has requested an extension to file a 2012 income tax return that includes one of the forms listed in Exhibit 1 of this notice, the IRS will deem the taxpayer to have demonstrated reasonable cause and lack of willful neglect, provided a good faith effort was

made to properly estimate the tax liability on the extension application, the estimated amount is paid by the original due date of the return, and any tax owed on the return is fully paid no later than the extended due date of the return. The IRS will abate any section 6651(a)(2) additions to tax assessed with respect to these 2012 income tax returns. When responding to the assessment notice, a taxpayer should submit a letter describing the taxpayer’s eligibility for this relief, identifying which of the form(s) listed in Exhibit 1 of this notice was included with the taxpayer’s return as filed, and referencing this notice by number [Notice 2013–24] to the address listed in the assessment notice.

Forms, instructions, and other tax assistance are available on IRS.gov . The IRS toll-free number for general tax questions is 1–800–829–1040.

CONTACT INFORMATION

The principal author of this notice is David W. Skinner of the Office of the Associate Chief Counsel (Procedure and Administration). For further information regarding this notice, contact Mr. Skinner at 202–622–4940 (not a toll-free call).

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EXHIBIT 1 – Delayed 2012 forms (available in February 2013 or the first week of March 2013)

• Form 3800, General Business Credit • Form 4136, Credit for Federal Tax Paid on Fuels • Form 4562, Depreciation and Amortization (Including Information on Listed Property) • Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands (CNMI) • Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations • Form 5695, Residential Energy Credits • Form 5735, American Samoa Economic Development Credit • Form 5884, Work Opportunity Credit • Form 6478, Alcohol and Cellulosic Biofuel Fuels Credit (Including Second Generation Biofuel) • Form 6765, Credit for Increasing Research Activities • Form 8396, Mortgage Interest Credit • Form 8582, Passive Activity Loss Limitations • Form 8820, Orphan Drug Credit • Form 8834, Qualified Plug-in Electric and Electric Vehicle Credit • Form 8839, Qualified Adoption Expenses • Form 8844, Empowerment Zone Employment Credit • Form 8845, Indian Employment Credit • Form 8859, District of Columbia First-Time Homebuyer Credit • Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits) • Form 8864, Biodiesel and Renewable Diesel Fuels Credit • Form 8874, New Markets Credit • Form 8900, Qualified Railroad Track Maintenance Credit • Form 8903, Domestic Production Activities Deduction • Form 8908, Energy Efficient Home Credit • Form 8909, Energy Efficient Appliance Credit • Form 8910, Alternative Motor Vehicle Credit • Form 8911, Alternative Fuel Vehicle Refueling Property Credit • Form 8912, Credit to Holders of Tax Credit Bonds • Form 8923, Mine Rescue Team Training Credit • Form 8932, Credit for Employer Differential Wage Payments • Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit

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