SECTION 7. REQUEST FOR

COMMENTS AND CONTACT INFORMATION

The Treasury Department and the IRS solicit comments on the rules described in this notice. The Treasury Department and the IRS specifically solicit comments on whether, and to what extent, netting of a refund should be permitted if the foreign

tax adjustment exceeds the foreign taxes paid in the refund year, and whether excess refunds should be allowed to carry over to a subsequent year or years and netted against foreign taxes paid in those years.

The Treasury Department and the IRS also solicit comments on the principles to be applied to interest adjustments for periods prior to and after the date on which the refund of foreign tax is received by the RIC. In order to approximate the U.S. tax consequences that would arise had the foreign tax refunds been paid directly to the shareholders who originally claimed the foreign tax credits, the interest adjustment would need to account for the fact that interest generally would run on a redetermination under section 905(c) from the due date of the taxpayer’s return on which the credit was claimed until the date on which the redetermined amount is actually paid. This period is divided into two separate periods under section 905(c) - the “pre-refund” period (which is subject to the limitation under section 905(c)(5)) and the “post-refund” period. This Notice only addresses interest during the pre-refund period. Accordingly, the Treasury Department and the IRS are considering whether an approach should be developed to take post-refund interest into account and how to make any such approach administrable for both the IRS and for RICs and their shareholders. In that respect, the Treasury Department and the IRS request comments regarding the date on which the underpayment should be deemed to be satisfied under the netting method (such as April 15 of the following calendar year) and how interest could be calculated for the period between the date on which the refund is received by the RIC and the date on which the underpayment is deemed to be satisfied under the netting method.

The Treasury Department and the IRS also solicit comments on whether and in what respects closing agreements relating to these issues could be standardized and what information, if any, can be reasonably and uniformly relied upon for calculating the aggregate adjustment relating to such refunds at the RIC level, as opposed to at the shareholder level, when such a calculation is appropriate.

In addition, the Treasury Department and the IRS solicit comments as to

whether guidance is needed to clarify how the generally applicable rules of section 905(c) operate with respect to both a RIC that makes an election under section 853(a) and its shareholders. Written comments may be submitted to the Office of Associate Chief Counsel (International), Attention: Larry R. Pounders, Internal Revenue Service, IR-4549, 1111 Constitution Avenue, NW, Washington, DC 20224. Alternatively, taxpayers may submit comments electronically to Notice.comments@irscounsel.treas.gov . Comments will be available for public inspection and copying. For further information regarding this notice, contact Mr. Pounders of the Office of Associate Chief Counsel (International) at (202) 317-5465 (not a toll-free number).