Part I. Rulings — Internal Revenue Bulletin 2014-28

Section 42.—Low–Income Housing Credit

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of July 2014. See Rev. Rul. 2014–20, page 101.

Section 280G.—Golden Parachute Payments

Federal short-term, mid-term, and long-term rates are set forth for the month of July 2014. See Rev. Rul. 2014–20, page 101.

Section 382.—Limitation on Net Operating Loss Carryforwards and Certain Built-In Losses Following Ownership Change

The adjusted applicable federal long-term rate is set forth for the month of July 2014. See Rev. Rul. 2014–20, page 101.

Section 412.—Minimum Funding Standards

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of July 2014. See Rev. Rul. 2014–20, page 101.

Section 467.—Certain Payments for the Use of Property or Services

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of July 2014. See Rev. Rul. 2014–20, page 101.

Section 468.—Special Rules for Mining and Solid Waste Reclamation and Closing Costs

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of July 2014. See Rev. Rul. 2014–20, page 101.

Section 482.—Allocation of Income and Deductions Among Taxpayers

Federal short-term, mid-term, and long-term rates are set forth for the month of July 2014. Rev. Rul. 2014–20, page 101.

Section 483.—Interest on Certain Deferred Payments

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of July 2014. See Rev. Rul. 2014–20, page 101.

Section 642.—Special Rules for Credits and Deductions

Federal short-term, mid-term, and long-term rates are set forth for the month of July 2014. See Rev. Rul. 2014–20, page 101.

Section 807.—Rules for Certain Reserves

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of July 2014. See Rev. Rul. 2014–20, page 101.

Section 846.—Discounted Unpaid Losses Defined

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of July 2014. See Rev. Rul. 2014–20, page 101.

Section 1274.— Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property

(Also Sections 42, 280G, 382, 412, 467, 468, 482, 483, 642, 807, 846, 1288, 7520, 7872.

Rev. Rul. 2014–20

This revenue ruling provides various prescribed rates for federal income tax purposes for July 2014 (the current month). Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the shortterm, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-term rate and the longterm tax-exempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the loW–income housing credit described in section 42(b)(1) for buildings placed in service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, with respect to housing credit dollar amount allocations made before January 1, 2014, shall not be less than 9%. Table 5 contains the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520. Finally, Table 6 contains the blended annual rate for 2014 for purposes of section 7872.

Bulletin No. 2014–28 101 July 07, 2014

REV. RUL. 2014–20 TABLE 1

Applicable Federal Rates (AFR) for July 2014

Period for Compounding Annual Semiannual Quarterly Monthly

Short-term

AFR .31% .31% .31% .31%

110% AFR .34% .34% .34% .34%

120% AFR .37% .37% .37% .37%

130% AFR .40% .40% .40% .40%

Mid-term

AFR 1.82% 1.81% 1.81% 1.80%

110% AFR 2.00% 1.99% 1.99% 1.98%

120% AFR 2.18% 2.17% 2.16% 2.16%

130% AFR 2.36% 2.35% 2.34% 2.34%

150% AFR 2.74% 2.72% 2.71% 2.70%

175% AFR 3.20% 3.17% 3.16% 3.15%

Long-term

AFR 3.06% 3.04% 3.03% 3.02%

110% AFR 3.37% 3.34% 3.33% 3.32%

120% AFR 3.68% 3.65% 3.63% 3.62%

130% AFR 3.99% 3.95% 3.93% 3.92%

REV. RUL. 2014–20 TABLE 2

Adjusted AFR for July 2014

Period for Compounding Annual Semiannual Quarterly Monthly

Short-term adjusted AFR .31% .31% .31% .31%

Mid-term adjusted AFR 1.40% 1.40% 1.40% 1.40%

Long-term adjusted AFR 3.06% 3.04% 3.03% 3.02%

REV. RUL. 2014–20 TABLE 3

Rates Under Section 382 for July 2014

Adjusted federal long-term rate for the current month 3.06%

Long-term tax-exempt rate for ownership changes during the current month (the highest 3.27% of the adjusted federal long-term rates for the current month and the prior two months.)

REV. RUL. 2014–20 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for July 2014

Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, with respect to housing credit dollar amount allocations made before January 1, 2014, shall not be less than 9%.

Appropriate percentage for the 70% present value loW–income housing credit 7.56%

Appropriate percentage for the 30% present value loW–income housing credit 3.24%

July 07, 2014 102 Bulletin No. 2014–28

REV. RUL. 2014–20 TABLE 5

Rate Under Section 7520 for July 2014

Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a remainder or reversionary interest

REV. RUL. 2014–20 TABLE 6

2.2%

Blended Annual Rate for 2014

Section 7872(e)(2) blended annual rate for 2014 .28%

Section 1288.—Treatment of Original Issue Discount on Tax-Exempt Obligations

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of July 2014. See Rev. Rul. 2014–20, page 101.

Section 7520.—Valuation Tables

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of July 2014. See Rev. Rul. 2014–20, page 101.

Section 7872.—Treatment of Loans With Below–Market Interest Rates

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of July 2014. See Rev. Rul. 2014–20, page 101.

Section 7602.—Examination of Books and Witnesses

26 CFR 301.7602–1 Participation of a Person De- scribed in Section 6103(n) in a Summons Interview Under Section 7602(a)(2) of the Internal Revenue Code

TD 9669

DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 301

Summons Interview Regulations Under 7602

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary regulations.

SUMMARY: This document contains temporary regulations modifying regulations promulgated under section 7602(a) of the Internal Revenue Code relating to administrative summonses. Specifically, these temporary regulations clarify that persons with whom the IRS or the Office of Chief Counsel (Chief Counsel) contracts for services described in section 6103(n) and its implementing regulations may be included as persons designated to receive summoned books, papers, records, or other data and to take summoned testimony under oath. These temporary regulations may affect taxpayers, a taxpayer’s officers or employees, and any third party who is served with a summons, as well as any other person entitled to notice of a summons. The text of these temporary regulations serves as the text of the proposed regulations (REG–121542–14) set forth in the notice of proposed rulemaking on this subject in the Proposed Rules section in this issue of the Bulletin .

DATES: Effective Date : These regulations are effective on June 18, 2014.

Applicability Date : For date of applicability, see paragraph (d) of this temporary regulation.

FOR FURTHER INFORMATION CONTACT: A M Gulas at (202) 3176834 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

These temporary regulations amend Procedure and Administration Regulations (26 CFR part 301) promulgated un

der section 7602 of the Internal Revenue Code. These temporary regulations make clear that persons described in section 6103(n) and Treas. Reg. § 301.6103(n)– 1(a) with whom the IRS or Chief Counsel contracts for services may receive books, papers, records, or other data summoned by the IRS and take testimony of a person who the IRS has summoned as a witness to provide testimony under oath. While IRS officers and employees remain responsible for issuing summonses and developing and conducting examinations, the temporary regulations clarify that contractors are permitted to participate fully in a summons interview. Full participation includes, but is not limited to, receipt, review, and use of summoned books, papers, records, or other data, being present during summons interviews, questioning the person providing testimony under oath, and asking a summoned person’s representative to clarify an objection or an assertion of privilege.

The assistance of persons from outside the IRS or Chief Counsel promotes efficient administration and enforcement of laws administered by the IRS, by providing specialized knowledge, skills, or abilities that the IRS officers or employees assigned to the case may not possess. For example, outside persons often assist the IRS in matters involving transfer pricing. To clarify the role of these outside persons, these temporary regulations expressly provide that when an IRS officer or employee summons a taxpayer or other witness to produce books, papers, records, or other data and/or to give testimony, an outside person hired by the IRS or Chief Counsel authorized to receive returns or return information pursuant to section 6103(n) may receive the summoned

Bulletin No. 2014–28 103 July 07, 2014

books, papers, records, or other data and take the testimony of the witness under oath.

When the IRS hires an outside person to assist an IRS officer or employee to review books and papers, analyze data, or take testimony from a summoned witness, the IRS will ensure that the inherently governmental functions associated with section 7602, for example, deciding whether to issue a summons, deciding whom to summon, what information must be produced or who will be required to testify, and issuing the summons, will still be performed by an IRS officer or employee. The contractors’ role will be limited to functions that are not inherently governmental, such as taking testimony by asking questions, reviewing books or papers, or analyzing other data. As a further safeguard, the temporary regulations expressly provide that any contractor that the IRS authorizes to ask questions of a summoned witness testifying under oath must do so in the presence and under the guidance of an IRS officer or employee.

The conclusion that contractors may receive summoned books and papers, analyze data, and question summoned witnesses is consistent with Treas. Reg. § 301.7602–2(c)(1)(i)(B) and (c)(1)(ii) Example 2. Under those rules, which implement the provision requiring notice to the taxpayer of contacts by IRS officers or employees with third parties, contractors (in this case appraisers) are treated in the same manner as IRS officers or employees when they contact industry experts to discuss a taxpayer’s business.

The temporary regulations are effective for summons interviews conducted on or after June 18, 2014. The temporary regulations will expire on June 16, 2017.

Special Analyses

It has been determined that this Treasury Decision is not a significant regula

tory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. The IRS has determined that sections 553(b) and (d) of the Administrative Procedure Act (5 U.S.C. chapter 5) do not apply to these regulations and because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, the IRS will submit these temporary regulations to the Chief Counsel for Advocacy of the Small Business Administration for comments about the regulations’ impact on small business.

Drafting Information

The principal author of these regulations is A M Gulas of the Office of Associate Chief Counsel (Procedure and Administration).

Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 301 is amended as follows:

PART 301—PROCEDURE AND ADMINISTRATION

Paragraph 1. The authority citation for part 301 continues to read in part as follows:

Authority: 26 U.S.C. 7805 - - Par. 2. Section 301.7602–1T is added to read as follows:

§ 301.7602–1T Examination of books and witnesses (temporary) .

(a) [Reserved]. For further guidance, see § 301.7602–1(a).

(b) through (b)(2) [Reserved]. For further guidance, see § 301.7602–1(b) through (b)(2).

(b)(3) Participation of a person de- scribed in section 6103(n). For purposes of this paragraph (b), a person authorized to receive returns or return information under section 6103(n) and § 301.6103(n)– 1(a) of the regulations may receive and examine books, papers, records, or other data produced in compliance with the summons and, in the presence and under the guidance of an IRS officer or employee, participate fully in the interview of the witness summoned by the IRS to provide testimony under oath. Fully participating in an interview includes, but is not limited to, receipt, review, and use of summoned books, papers, records, or other data; being present during summons interviews; questioning the person providing testimony under oath; and asking a summoned person’s representative to clarify an objection or assertion of privilege.

(d) Effective/applicability date . This section applies to summons interviews conducted on or after June 18, 2014.

(e) Expiration date . The applicability of this section expires on or before June 16, 2017.

Heather C. Maloy, Acting Deputy Commissioner for Services and Enforcement.

Approved June 9, 2014,

Mark J. Mazur, Assistant Secretary of the Treasury

(Tax Policy).

(Filed by the Office of the Federal Register on June 17, 2014, 8:45 a.m., and published in the issue of the Federal Register for June 18, 2014, 79 F.R. 34625)

July 07, 2014 104 Bulletin No. 2014–28