SECTION 6. THE SAT LIST

(1) As of March 8, 2016, the following airports include an approved SAT and the terminal operator does not need to request SAT approval for that terminal. The airports are listed by the airport name and the TCN of the approved SAT.

Baltimore/Washington International Airport, T–52–MD–1569; Bradley International Airport, T–06–CT– 1271; Charlotte/Douglas International Airport, T–56–NC–2032; Cincinnati/Northern Kentucky International Airport, T–61–KY–3277; Cleveland Hopkins International Airport, T–31–OH–3109; Colorado Springs Airport, T–84–CO– 4108; Dallas Fort Worth International Airport, T–75–TX–2673; Dallas Love Field Airport, T–75–TX– 2663; Denver International Airport, T–84–CO– 4111; Dulles International Airport, T–54–VA– 1676; Federal Express Corporation Memphis Airport, T–62–TN–2220; Fort Lauderdale/Hollywood International Airport, T–65–FL–2158; General Mitchell International Airport, T–39–WI–3092; George Bush Intercontinental Airport, T–76–TX–2818; Honolulu International Airport, T–91– HI–4570;

John F. Kennedy International Airport, T–11–NY–1334; Kansas City International Airport, T–43– MO–3723; Lambert International Airport, T–43– MO–3722; Logan International Airport, T–04–MA– 1171; Los Angeles International Airport, T–95– CA–4812; Louis Armstrong New Orleans International Airport, T–72–LA–2356; McCarren International Airport, T–86– NV–4355; Memphis International Airport, T–62– TN–2212; Mid Continent Airport, T–43–KS–3653; Midway Airport, T–36–IL–3376; Minneapolis–St. Paul International Airport, T–41–MN–3419; Minneapolis–St. Paul International Airport, T–41–MN–3420; Minneapolis–St. Paul International Airport, T–41–MN–3421; Nashville Metropolitan Airport, T–62– TN–2222; Newark Liberty International Airport, T–22–NJ–1532; Oakland International Airport, T–94– CA–4702; O’Hare International Airport, T–36–IL– 3325; Ontario International Airport, T–33–CA– 4792; Orlando International Airport, T–59–FL– 2111; Philadelphia International Airport, T–23– PA–1770; Piedmont Triad International Airport, T–56–NC–2038; Pittsburgh International Airport, T–23– PA–1766; Portland International Airport, T–91–OR– 4450; Raleigh/Durham International, T–56– NC–2045; Reno Cannon International Airport, T–86–NV–4352; Ronald Reagan National Airport, T–54– VA–1686; Salt Lake City International Airport, T–84–UT–4207; San Diego International Airport, T–33– CA–4788; San Francisco International Airport, T–94–CA–4701;

March 28, 2016 488 Bulletin No. 2016–13

amended § 51(c) of the Code to extend the WOTC through December 31, 2019. Section 142(b) of the PATH Act amended § 51(d) of the Code to expand the “targeted groups” of individuals, the employment of whom may qualify the employer for a credit listed in the statute, to include qualified long-term unemployment recipients (as defined in § 51(d)(15) of the Code). This notice provides guidance and transition relief beyond the 28-day deadline in § 51(d)(13)(A)(ii) of the Code for employers that hire members of targeted groups (other than qualified long-term unemployment recipients) on or after January 1, 2015, and on or before May 31, 2016. This notice also provides guidance and transition relief beyond the 28-day deadline in § 51(d)(13)(A)(ii) of the Code for employers that hire members of the new targeted group of qualified long-term unemployment recipients on or after January 1, 2016, and on or before May 31, 2016.

II. BACKGROUND

Section 51(a) of the Code provides the WOTC to employers based on a percentage of qualified wages paid during the taxable year. Section 51(b) of the Code defines qualified wages as wages paid or incurred by an employer during the taxable year to an individual who is a member of a targeted group. Section 51(d)(1) of the Code lists the targeted groups. Pursuant to § 51(d)(13)(A) of the Code, an individual is not treated as a member of a targeted group unless (1) on or before the day the individual begins work, the employer obtains certification from the designated local agency (DLA) that the individual is a member of a targeted group; or (2) the employer completes a prescreening notice on or before the day the individual is offered employment and submits such notice to the DLA to request certification not later than 28 days after the individual begins work. To request certification from a DLA, an employer submits IRS Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, to the DLA no later than the 28th day after the day an individual who is a member of a targeted group begins work for the employer. An employer also must submit a Department of Labor Employment and Training Administration (ETA) Form 9061 (Individ

ual Characteristics Form) or 9062 (Conditional Certification) to the DLA. Section 51(d)(12) of the Code provides that a DLA means a State employment security agency established in accordance with 29 U.S.C. §§ 49–49n.

Since originally enacted by § 1201 of the Small Business Job Protection Act of 1996, Pub. L. No. 104–188, the WOTC has been subject to a series of legislative extensions and modifications.

III. AMENDMENTS MADE BY THE PATH ACT

The PATH Act extends the WOTC through December 31, 2019 for taxable employers that hire members of a targeted group and for qualified tax-exempt organizations described in § 501(c) of the Code that hire qualified veterans.

The PATH Act also amends § 51(d)(1) of the Code to add qualified long-term unemployment recipients to the list of targeted groups, effective as of January 1, 2016. Section 51(d)(15) of the Code defines a qualified long-term unemployment recipient as any individual who is certified by a DLA as being in a period of unemployment which is not less than 27 consecutive weeks and includes a period in which the individual was receiving unemployment compensation under State or Federal law. This additional targeted group does not apply for purposes of qualified taxexempt organizations taking the credit provided by § 3111(e) against an employer social security tax.

IV. GUIDANCE AND TRANSITION RELIEF

An employer must obtain certification that an individual is a member of a targeted group before the employer may claim the WOTC. As stated in Section II of this notice, § 51(d)(13)(A) of the Code provides that an individual is not treated as a member of a targeted group unless (i) on or before the day the individual begins work for the employer, the employer obtains certification from a DLA that the individual is a member of a targeted group; or (ii) on or before the day the individual is offered employment with the employer, a prescreening notice (IRS Form 8850) is completed and no later than 28 days after the individual begins work

the employer submits the prescreening notice to the DLA for certification. An employer obtains certification of an individual’s targeted group status from a DLA by submitting both the IRS Form 8850 and an ETA Form 9061 or 9062 to the DLA. Employers are encouraged to submit both the IRS Forms 8850 and the ETA Forms 9061 or 9062 together in the same submission.

A. QUALIFIED LONG-TERM UNEMPLOYMENT RECIPIENTS

The PATH Act’s amendment and expansion of the targeted groups described in § 51(d)(1) of the Code to include longterm unemployment recipients will require changes to forms used by employers to request certification for qualified longterm unemployment recipients hired on or after January 1, 2016. For purposes of this notice, a qualified long-term unemployment recipient is any individual who on the day before the individual begins work for the employer, or, if earlier, the day the individual completes the IRS Form 8850 as a prescreening notice in accordance with the certification described in§ 51(d)(13)(A)(ii), is in a period of unemployment that is (i) not less than 27 consecutive weeks, and (ii) includes a period (which may be less than 27 weeks) in which the individual received unemployment compensation under State or Federal law.

The IRS Form 8850 and ETA Forms 9061 and 9062 are being modified consistent with the guidance in this notice so that they can be used to request certification by the DLAs for qualified long-term unemployment recipients. Those modified forms and instructions will indicate the information that must be provided on the forms for the employer to receive certification from the DLA that the individual is a qualified long-term unemployment recipient. The Treasury Department and the IRS anticipate that the modified forms will include a requirement that the individual signing the form attest that he or she meets the requirements to be a qualified long-term unemployment recipient and a requirement that the individual attest to the period(s) during which the individual was unemployed and the period the individual received unemployment compensation.

Bulletin No. 2016–13 489 March 28, 2016

B. TRANSITION RELIEF

Because the PATH Act extended the WOTC retroactively for 2015 for members of targeted groups described in § 51(d)(1)(A) through (d)(1)(I) of the Code, and because the PATH Act created a new targeted group described in § 51(d)(1)(J) of the Code (qualified long-term unemployment recipients), employers need additional time to comply with the requirements of § 51(d)(13)(A)(ii) of the Code for those targeted groups. For these reasons, the Treasury Department and the IRS have determined that it is appropriate to provide employers with additional time to file IRS Form 8850 with the DLAs.

1. Additional time for employers that hired or hire members of targeted groups other than qualified long-term unemployment recipients between January 1, 2015 and May 31, 2016

An employer that hired or hires a member of a targeted group described in § 51(d)(1)(A) through (d)(1)(I) of the Code and who began or begins work for that employer on or after January 1, 2015, and on or before May 31, 2016, will be considered to have satisfied the requirements of § 51(d)(13)(A)(ii) of the Code if the employer submits the completed IRS Form 8850 to the DLA to request certification no later than June 29, 2016.

2. Additional time for employers that hired or hire long-term unemployment recipients between January 1, 2016 and May 31, 2016

An employer that hired or hires an individual who is a long-term unemployment recipient described in § 51(d)(1)(J) of the Code and who began or begins work for that employer on or after January 1, 2016, and on or before May 31, 2016, will be considered to have satisfied the requirements of § 51(d)(13)(A)(ii) if the employer submits the completed IRS Form 8850 to the DLA to request certification no later than June 29, 2016.

3. Application of 28-day requirement to individuals hired on or after June 1, 2016

An employer that hires a member of a targeted group described in § 51(d)(1)(A)

through (d)(1)(J) of the Code, including a long-term unemployment recipient, who begins work for that employer on or after June 1, 2016, is not eligible for the transition relief described in this notice with respect to any such new hire.

V. DRAFTING INFORMATION

The principal author of this notice is R. Lisa Mojiri-Azad of the Office of Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding the WOTC, contact Ms. MojiriAzad at (202) 317-5500 (not a toll-free number).

Request for Comments Regarding Implementation of the New Partnership Audit Regime Enacted as Part of the Bipartisan Budget Act of 2015

Notice 2016–23

I. PURPOSE

The purpose of this Notice is to solicit comments regarding implementation of section 1101 of the Bipartisan Budget Act of 2015, Pub. L. No. 114–74 (“the BBA”), which was enacted into law on November 2, 2015. Section 1101 of the BBA repeals the current rules governing partnership audits and replaces them with a new centralized partnership audit regime that, in general, assesses and collects tax at the partnership level.

The repeal of the current partnership audit rules and implementation of the new partnership audit regime are generally effective for partnership taxable years beginning after December 31, 2017. See section 1101(g)(1) of the BBA. However, section 1101(g)(4) generally provides that a partnership may elect (at such time and in such form and manner as the Secretary may prescribe) for parts of the new regime to apply to partnership taxable years beginning after November 2, 2015 and before January 1, 2018.

The Department of the Treasury (“Treasury Department”) and the Internal Revenue Service (“IRS”) intend to issue guidance implementing the new partner

ship audit regime. Specifically, guidance describing procedures for making the election to have parts of the new regime apply to taxable years beginning after November 2, 2015 and before January 1, 2018 is expected to be published in the near future. Partnerships that wish to make this election should wait until that guidance is published to ensure the election complies with the requirements for making a valid election. The guidance will be effective for taxable years beginning after November 2, 2015 and before January 1, 2018.

II. BACKGROUND

Section 1101(a) of the BBA removes subchapter C of chapter 63 of the Internal Revenue Code (“the Code”) effective for partnership taxable years beginning after December 31, 2017. Subchapter C of chapter 63 contains the unified partnership audit and litigation rules that were enacted as part of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97–248. These partnership audit and litigation rules are commonly referred to as the TEFRA partnership procedures.

Section 1101(b) of the BBA also removes subchapter D of chapter 63 and part IV of subchapter K of chapter 1 of the Code, rules applicable to electing large partnerships, effective for partnership taxable years beginning after December 31, 2017. Subchapter D contains the audit rules for electing large partnerships, and part IV of subchapter K prescribes the income tax treatment for such partnerships.

Section 1101(c) of the BBA replaces the rules to be removed by sections 1101(a) and (b) with a new partnership audit regime. Section 1101(c) adds a new subchapter C to chapter 63 of the Code, including amended Code sections 6221–6241. The BBA also makes related and conforming amendments to other provisions of the Code.

On December 18, 2015, President Obama signed into law the Protecting Americans from Tax Hikes Act of 2015, Pub. L. 114–113, div. Q (“PATH Act”). Section 411 of the PATH Act corrects and clarifies certain amendments made by the BBA. The amendments under the PATH Act are effective as if included in section 1101 of the BBA, and therefore, subject to

March 28, 2016 490 Bulletin No. 2016–13

the effective dates in section 1101(g) of the BBA.

Section 6221(a) as amended by the BBA provides that, in general, any adjustment to items of income, gain, loss, deduction, or credit of a partnership for a partnership taxable year (and any partner’s distributive share thereof) shall be determined, and any tax attributable thereto shall be assessed and collected, at the partnership level. The applicability of any penalty, addition to tax, or additional amount which relates to an adjustment to any such item or share shall also be determined at the partnership level. Section 6221(b) as amended by the BBA provides rules for partnerships that are required to furnish 100 or fewer Schedules K–1, Part- ner’s Share of Income, Deductions, Cred- its, etc. to elect out of this new regime. Generally, a partnership may elect out of the new regime only if each of its partners is an individual, corporation (including certain types of foreign entities), or estate. Special rules apply for purposes of determining the number of partners in the case of a partner that is an S corporation. Section 6221(b)(2)(C) provides that the Secretary by regulation or other guidance may prescribe rules for purposes of the 100-or-fewer-Schedule K-1 requirement similar to the rules for S corporations with respect to any partner that is not an individual, corporation, or estate.

Section 6222 as amended by the BBA provides rules generally requiring a partner’s return to be consistent with the partnership’s return.

Section 6223 as amended by the BBA sets forth the rules for designation of a partnership representative. Under this provision, a partnership representative must be a partner (or other person) with a substantial presence in the United States. If a designation is not in effect, the IRS may select any person as a partnership representative.

Section 6225 as amended by the BBA generally addresses partnership adjustments made by the IRS and the calculation of any resulting imputed underpayment. Section 6225(a) generally provides that the amount of any imputed underpayment resulting from an adjustment must be paid by the partnership. Section 6225(b) describes how an imputed underpayment is determined, and section

6225(c) describes modifications that, if approved by the IRS, may reduce the amount of an imputed underpayment. The PATH Act added to section 6225(c) a special rule addressing certain passive losses of publicly traded partnerships. Section 6233 provides rules for computation of interest and penalties on an imputed underpayment.

Section 6226 as amended by the BBA provides an exception to the general rule under section 6225(a)(1) that the partnership must pay the imputed underpayment. Under section 6226, the partnership may elect to have the reviewed year partners take into account the adjustments made by the IRS and pay any tax due as a result of those adjustments. In this case, the partnership is not required to pay the imputed underpayment. Section 6225(d)(1) defines the reviewed year to mean the partnership taxable year to which the item(s) being adjusted relates.

Under section 6227 as amended by the BBA, the partnership may request an administrative adjustment, which is taken into account in the year the administrative adjustment request is made. The partnership generally has three years from the date of filing the return to make an administrative adjustment request for that year, but may not make an administrative adjustment request for a partnership taxable year after the IRS has mailed the partnership a notice of an administrative proceeding with respect to the taxable year.

Section 6241(4) as amended by the BBA provides that no deduction is allowed under subtitle A for any payment required to be made by a partnership under the new partnership audit regime.

Section 6231 as amended by the BBA describes notices of proceedings and adjustments, including certain time frames for mailing the notices and the authority to rescind any notice of adjustment with the partnership’s consent. Section 6232(a) provides that any imputed underpayment is assessed and collected in the same manner as if it were a tax imposed for the adjustment year by subtitle A, except that in the case of an administrative adjustment request that reports an underpayment that the partnership elects to pay, the underpayment shall be paid when the request is filed.

Section 6234 as amended by the BBA generally provides that a partnership may seek judicial review of the adjustments within 90 days of the date the notice of final partnership adjustment is mailed. Section 6235 provides the period of limitations on making adjustments. Section 6241 provides definitions and special rules, including rules addressing bankruptcy and treatment when a partnership ceases to exist.

III. REQUEST FOR COMMENTS

.01 The Treasury Department and the IRS intend to issue guidance to implement the new partnership audit regime under sections 6221–6241 of the Code, as amended by section 1101 of the BBA and section 411 of the PATH Act. To assist in the development of this guidance, this Notice requests public comments on issues that the guidance should address. In particular, the Treasury Department and the IRS request comments on the following issues:

(1) The election out of the new centralized partnership audit regime under section 6221(b) for partnerships that are required to furnish 100 or fewer Schedules K–1, including whether any type of partner, other than those types of partners specifically identified in section 6221(b)(1)(C), should be treated under rules similar to the special rules applicable to S corporations.

(2) Designation of the partnership representative under section 6223, including:

a. Any limitations on who may be des ignated as a partnership representative; b. The definition of substantial pres ence in the United States; and c. Designation of the partnership rep resentative by the IRS in cases where the partnership fails to designate a representative or the designation is not in effect. (3) The determination of the imputed underpayment under section 6225, including:

a. How the netting calculation under

section 6225(b)(1) should work; and b. How character changes, restrictions,

and limitations under the Code are taken into account. (4) Modification of the imputed underpayment under section 6225(c), including:

Bulletin No. 2016–13 491 March 28, 2016

a. The mechanics and timing for re questing modification and documentation to be provided to support the request for modification; b. Implementation of the modification,

with respect to publicly-traded partnerships, for certain specified passive losses under section 469; c. The effect of unrelated business tax able income of a tax-exempt entity on the modification procedure relating to tax-exempt partners; and d. Any other issues and factors that

should be considered when formulating the modification procedures. (5) How an adjustment made by the IRS under section 6225 that does not result in an imputed underpayment should be taken into account by the partnership.

(6) The election to use the alternative to payment of the imputed underpayment by the partnership under section 6226, including:

a. How to make the election, the time

for providing information to the IRS, the information that should be required to be included with the election, and the form and content of the statement of adjustments to be provided to the partners and the IRS; b. When the statements should be filed

with the IRS and furnished to partners; c. How the adjustments in the final

notice of partnership adjustment should be reflected if the adjustments are changed as a result of a court proceeding; d. Generally, how tax attributes should

be taken into account for intervening years between the reviewed year and the adjustment years; e. How adjustments are taken into ac count by partners under the alternative to payment of the imputed underpayment by the partnership under section 6226; and f. The consequences that result when a

partner fails to account for adjustments as required under section 6226(b), including how tax attributable to those adjustments is assessed and collected. (7) How a partnership makes an administrative adjustment request (“AAR”) under section 6227 and the effect of such a request, including:

a. The circumstances in which a part nership may want to file an AAR; b. The mechanics for how to file an

AAR and pay any imputed underpayment; c. How partnerships should account

for adjustments requested as part of an AAR; d. What steps the IRS should take

upon receipt of an AAR; and e. What opportunities the partnership

has for review of IRS actions taken with respect to an AAR. (8) The effect of adjustments on the basis of the partners in their partnership interests and the basis of the partnership in its assets.

(9) The rules for consistent filing of partner returns, including:

a. The rules for notifying the IRS of an

inconsistent position; b. The treatment of partners that prop erly file such notification; and c. Whether, and to what extent, the

existing framework for inconsistent partner returns and notification of inconsistent partner returns under TEFRA should apply. (10) The effect of bankruptcy and the treatment under the new partnership audit rules where a partnership ceases to exist.

(11) Procedural rules, including: a. Notices of proceedings and adjust ment; b. Rules regarding assessment, collec tion, and payment of the imputed underpayment; c. The computation of penalties and

interest; d. Judicial review of partnership ad justments; and e. The period of limitations on making

adjustments under section 6235. (12) Any other issues relevant to the implementation of the new partnership audit rules, including topics related to any of the above listed issues but not specifically identified in the list above, e.g., the interaction of these rules with international tax provisions.

.02 The new partnership audit rules are generally effective for tax years beginning after December 31, 2017. However, partnerships are permitted to elect to have parts of the new regime apply to tax years beginning after November 2, 2015 and before January 1, 2018. Given the scope of the guidance anticipated to be neces

sary to implement these rules, and the need to expedite the guidance process in light of the statutory effective dates, written comments in response to this Notice are requested by April 15, 2016.

IV. ADDRESS TO SEND COMMENTS

.01 Comments responding to this Notice should be sent to:

• Internal Revenue Service

• CC:PA:LPD:PR (Notice 2016–23)

• Room 5203

• P.O. Box 7604

• Ben Franklin Station

• Washington, DC 20044 Please include “Notice 2016–23” on the cover page.

.02 Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to:

• Internal Revenue Service

• Courier’s Desk

• 1111 Constitution Ave., N.W.

• Washington, DC 20224

• Attn: CC:PA:LPD:PR

• (Notice 2016–23) .03 Submissions may also be sent electronically to the following e-mail address: Notice.Comments@irscounsel.treas.gov. Please include “Notice 2016–23” in the subject line.

All comments will be available for public inspection and copying.

V. DRAFTING INFORMATION

The principal author of this notice is Joy E. Gerdy Zogby of the Office of Associate Chief Counsel (Procedure & Administration). For further information regarding this notice contact Joy E. Gerdy Zogby on (202) 317-6834 (not a toll-free number).

2016 Calendar Year Resident Population Figures

Notice 2016–24

This notice advises State and local housing credit agencies that allocate lowincome housing tax credits under § 42 of the Internal Revenue Code, and States and other issuers of tax-exempt private activ

March 28, 2016 492 Bulletin No. 2016–13

ity bonds under § 141, of the population figures to use in calculating: (1) the 2016 calendar year population-based component of the State housing credit ceiling (Credit Ceiling) under § 42(h)(3)(C)(ii); (2) the 2016 calendar year volume cap (Volume Cap) under § 146; and (3) the 2016 volume limit (Volume Limit) under § 142(k)(5).

Generally, § 146(j) requires determining the population figures for the population-based component of both the Credit Ceiling and the Volume Cap for any calendar year on the basis of the most recent census estimate of the resident population of a State (or issuing authority) released by the U.S. Census Bureau before the beginning of the calendar year. Similarly, § 142(k)(5) bases the Volume Limit on the State population.

Sections 42(h)(3)(H) and 146(d)(2) require adjusting for inflation the populationbased component of the Credit Ceiling and the Volume Cap. The adjustments for the 2016 calendar year are in Rev. Proc. 2015–53, 2015–44 I.R.B. 615. Section 3.09 of Rev. Proc. 2015–53 provides that, for calendar year 2016, the amount for calculating the Credit Ceiling under § 42(h)(3)(C)(ii) is the greater of $2.35 multiplied by the State population, or $2,690,000. Further, section 3.20 of Rev. Proc. 2015–53 provides that the amount for calculating the Volume Cap under § 146(d)(1) for calendar year 2016 is the greater of $100 multiplied by the State population, or $302,875,000.

For the 50 states, the District of Columbia, and Puerto Rico, the population figures for calculating the Credit Ceiling, the Volume Cap, and the Volume Limit for the 2016 calendar year are the resident population estimates released electronically by the U.S. Census Bureau on December 22, 2015 , and described in Press Release CB15–215. For American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands, the population figures for the 2016 calendar year are the 2015 midyear population figures in the U.S. Census Bureau’s International Data Base (IDB). The U.S. Census Bureau electronically announced an update of the IDB on July 9, 2015, in Press Release CB15–TPS.53.

For convenience, these figures are reprinted below.

Resident Population Figures

Alabama 4,858,979

Alaska 738,432

American Samoa 54,343

Arizona 6,828,065

Arkansas 2,978,204

California 39,144,818

Colorado 5,456,574

Connecticut 3,590,886

Delaware 945,934

District of 672,228

Columbia

Florida 20,271,272

Georgia 10,214,860

Guam 161,785

Hawaii 1,431,603

Idaho 1,654,930

Illinois 12,859,995

Indiana 6,619,680

Iowa 3,123,899

Kansas 2,911,641

Kentucky 4,425,092

Louisiana 4,670,724

Maine 1,329,328

Maryland 6,006,401

Massachusetts 6,794,422

Michigan 9,922,576

Minnesota 5,489,594

Mississippi 2,992,333

Missouri 6,083,672

Montana 1,032,949

Nebraska 1,896,190

Nevada 2,890,845

New Hampshire 1,330,608

New Jersey 8,958,013

New Mexico 2,085,109

New York 19,795,791

North Carolina 10,042,802

North Dakota 756,927

Northern Mariana 52,344

Islands

Ohio 11,613,423

Oklahoma 3,911,338

Oregon 4,028,977

Pennsylvania 12,802,503

Puerto Rico 3,474,182

Resident Population Figures

Rhode Island 1,056,298

South Carolina 4,896,146

South Dakota 858,469

Tennessee 6,600,299

Texas 27,469,114

Utah 2,995,919

Vermont 626,042

Virginia 8,382,993

Virgin Islands, 103,574

U.S.

Washington 7,170,351

West Virginia 1,844,128

Wisconsin 5,771,337

Wyoming 586,107

The principal authors of this notice are James A. Holmes, Office of the Associate Chief Counsel (Passthroughs and Special Industries), and Timothy L. Jones, Office of the Associate Chief Counsel (Financial Institutions and Products). For further information regarding this notice, please contact Mr. Holmes at (202) 317-4137 (not a toll-free number).

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

Notice 2016–25

This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under § 417(e)(3), 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 and the 30year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I).

YIELD CURVE AND SEGMENT RATES

Generally, except for certain plans under sections 104 and 105 of the Pension Protection Act of 2006 and CSEC plans

Bulletin No. 2016–13 493 March 28, 2016

under § 414(y), § 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. ¹ However, an election may be made under

Applicable

Month

First Segment

§ 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. Consistent with the methodology specified in Notice 2007–81, the monthly corporate bond yield curve derived from February 2016 data is in Table I at the end of this notice. The spot first, second, and third segment rates for the month of February 2016 are, respectively, 1.71, 3.98, and 5.03. The 24-month average segment rates determined under § 430(h)(2)(C)(i) through (iii) must be adjusted pursuant to § 430(h)(2)(C)(iv) to be within the appli

cable minimum and maximum percentages of the corresponding 25-year average segment rates. For plan years beginning before 2018, the applicable minimum percentage is 90% and the applicable maximum percentage is 110%. The 25-year average segment rates for plan years beginning in 2014, 2015, and 2016 were published in Notice 2013–58, 2013–40 I.R.B. 294, Notice 2014–50, 2014–40 I.R.B. 590, and Notice 2015–61, 2015–39 I.R.B. 408, respectively.

24-MONTH AVERAGE CORPORATE BOND SEGMENT RATES

The three 24-month average corporate bond segment rates applicable for March 2016 without adjustment for the 25-year average segment rate limits are as follows:

Third Segment

Second Segment

March 2016 1.46 3.93 4.94

Based on § 430(h)(2)(C)(iv), the 24month averages applicable for March

For Plan

2016 adjusted to be within the applicable minimum and maximum percentages of

Adjusted 24-Month Average

Segment Rates

the corresponding 25-year average segment rates, are as follows:

Years Beginning

First Second Third

In Applicable Month Segment Segment Segment

2015 March 2016 4.72 6.11 6.81

2016 March 2016 4.43 5.91 6.65

Second Segment

In

Applicable Month

First Segment

30-YEAR TREASURY SECURITIES INTEREST RATES

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 § 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 rate of interest on 30-year Treasury securities for February 2016 is 2.62 percent. The Service determined this rate as the average of the daily determinations of

yield on the 30-year Treasury bond maturing in November 2045 determined each day through February 10, 2016 and the yield on the 30-year Treasury bond maturing in February 2046 determined each day for the balance of the month. For plan years beginning in the month shown below, the weighted average of the rates of interest on 30-year Treasury securities and the permissible range of rate used to calculate current liability are as follows:

1Pursuant to § 433(h)(3)(A), the 3rd segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount of the full funding limitation under § 433(c)(7)(C)).

March 28, 2016 494 Bulletin No. 2016–13

For Plan Years

Beginning in

30-Year Treasury Weighted

Permissible Range

Month Year Average 90% to 105%

March 2016 3.10 2.79 3.25

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 seg

Second Segment

ment rates determined for February 2016 are as follows:

Third Segment

1.71 3.98 5.03

DRAFTING INFORMATION

The principal author of this notice is Tom Morgan of the Office of the Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS participated in the development of this guidance. For further information regarding this notice, contact Mr. Morgan at 202-317-6700 or Tony Montanaro at 202-317-8698 (not toll-free numbers).

Bulletin No. 2016–13 495 March 28, 2016

Table I Monthly Yield Curve for February 2016

Derived from February 2016 Data

Maturity Yield Maturity Yield Maturity Yield Maturity Yield Maturity Yield

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Rev. Proc. 2016–19