Amended Notice 2005-4

Part III. Administrative, Procedural, and Miscellaneous
Information About Additional
Criteria That Will be Applied
in Selecting Proposals for the
Internal Revenue Service’s
Industry Issue Resolution (IIR)
Program
Notice 2005–59
This notice provides information about
additional criteria that will be applied in
considering proposals regarding accountable plans for the Internal Revenue Service’s Industry Issue Resolution (IIR) program. The objective of the IIR Program
is to identify frequently disputed or burdensome tax issues that are common to a
significant number of business taxpayers
that may be resolved through published or
other administrative guidance. See Rev.
Proc. 2003–36, 2003–1 C.B. 859.
During the IIR Pilot Program, the Service initiated a project involving the tax
treatment of employer reimbursements of
various equipment-related expenses to employees in a segment of the pipeline construction industry. Whether or not such expenses are included in the employee’s income and wages is governed generally by
whether or not the employer makes payments to the employee under an accountable plan in accordance with the requirements of § 62(c) of the Internal Revenue
Code.1 The industry representatives maintained that their industry practice made
compliance with the accountable plan requirements unworkable. As a result of the
project, the Service published two pieces
of guidance: Rev. Rul. 2002–35, 2002–1
C.B. 1067, making clear that expense reimbursement in the industry is excluded
from income and wages only if made in
accordance with the accountable plan requirements, and Rev. Proc. 2002–41,
2002–1 C.B. 1098, providing for deemed
substantiation of expenses at a specified
rate to make it possible for employers in
the industry to comply with the accountable plan requirements.
Since the completion of the IIR pilot
program, several submissions to the IIR

program have asserted that compliance
with various aspects of the accountable
plan rules set forth under § 62(c) are unduly burdensome for businesses in certain
other industries and have asked for published guidance providing administrative
relief similar to that provided in Rev. Proc.
2002–41.
The Service provided guidance as part
of the IIR pilot project for a segment of the
pipeline construction industry because the
industry had successfully demonstrated
that employers could not comply with
the existing accountable plan rules given
certain fundamental aspects of their industry practice that could not readily be
changed, if changed at all. For purposes of
evaluating future IIR submissions raising
similar concerns about application of the
accountable plan rules in specific industries, the Service will make a comparable
assessment as to whether the accountable
plan rules are unworkable given aspects of
industry practice that cannot be changed at
all or cannot be changed without great difficulty. In addition to the requirements of
Rev. Proc. 2003–36, factors to be considered in determining whether there is need
for relief as to this issue would include,
but not be limited to the following:
(a) an established industry history
showing that high turnover in the labor
force or short-term employment with multiple employers is typical;
(b) large expenses for maintenance, although infrequent, are predictable relative
to the compensation paid to the employees
for their services;
(c) individual employers are unwilling
to reimburse in full for sporadic expenses
for equipment maintenance because a
significant portion of the reimbursement
will accrue to the benefit of a later employer/competitor;
(d) there is a uniformity of expenses
across the workforce or the existence of
a uniform objective predictive proxy for
measuring the expense, and
(e) existing methods of substantiating
expenses, such as Rev. Proc. 2004–64,
2004–49 I.R.B. 898 (mileage allowances),
do not accurately reflect the expenses in-

curred by the employees on behalf of the
employer.
The mere cost of collecting records,
substantiating expenses and reconciling
the amount of expenses with the amount
of reimbursements paid does not support
a claim of burden meriting relief from
the requirements of the accountable plan
rules.
DRAFTING INFORMATION
The principal author of this notice
is Joe Spires of the Office of Associate Chief Counsel (Tax Exempt &
Government Entities).
For further information regarding this notice, contact Jeanne Royal Singley at (202)
622–0047 (not a toll-free call).

Modification of Notice
2005–4; Biodiesel and
Aviation-Grade Kerosene
Notice 2005–62
Section 1. PURPOSE
This notice modifies Notice 2005–4,
2005–2 I.R.B. 289, as modified by Notice 2005–24, 2005–12 I.R.B. 757, by revising the guidance relating to the Certificate for Biodiesel, which is required as
a condition for claiming a credit or payment under §§ 6426(c), 6427(e), and 40A
of the Internal Revenue Code. This notice also provides guidance on issues related to the biodiesel credit or payment that
are not addressed in Notice 2005–4. This
notice further modifies Notice 2005–4 relating to the Certificate of Person Buying
Aviation-Grade Kerosene for Commercial
Aviation or Nontaxable Use, which is required to notify a position holder of certain
transactions under §§ 4081 and 4082.
Notice 2005–4 provides guidance on
certain excise tax provisions in the Code
that were added or affected by the American Jobs Creation Act of 2004 (Pub. L.
108–357) (the Act).

1

Whether a payment of this type is a rental payment rather than the reimbursement of an employee expense may involve the question whether the worker is serving as an independent
contractor or employee. Although these payments in almost every case would not qualify as actual rental payments, it is a highly factual question. See, e.g., Eliseo v. Commissioner, T.C.
Memo. 2000–176. Further, in this context, the Service is restricted from addressing classification of workers by section 530(b) of the Revenue Act of 1978.

2005–35 I.R.B.

443

August 29, 2005

Section 2. BIODIESEL CERTIFICATE
(a) Section 2 of Notice 2005–4 provides
guidance on credits and payments allowed
for biodiesel fuel. Section 2(h) of that notice describes the Certificate for Biodiesel
that, under the Code, the claimant must obtain “from” the producer of the biodiesel.
This notice revises the certificate to clarify that the claimant may obtain the certificate either directly from the producer of
the biodiesel or indirectly from a biodiesel
reseller.
(b) Section 2(h) of Notice 2005–4 also
requires that each claim contain a statement that the claimant has in its possession
an unexpired biodiesel certificate. This
notice revises that rule so that the claimant
generally must submit a copy of the certificate with its claim.
(c) This notice also provides guidance
on accounting for commingled biodiesel.
(d) Finally, this notice provides a transitional rule for claims that were made before August 29, 2005.
(e) Accordingly, section 2(h) of Notice
2005–4 is revised to read as follows:
Section 2. ALCOHOL AND BIODIESEL
CLAIMS
*****
(h) Content of claim; commingled
biodiesel—(1) In general.
Section
6426(c)(4) of the Code provides that
the biodiesel mixture credit of § 6426
is not allowed unless the producer of

the mixture obtains a certificate, in such
form and manner as may be prescribed
by the Secretary, from the producer of
the biodiesel that identifies the product
produced and the percentage of biodiesel
and agri-biodiesel in the product. Section 40A(b)(4) provides a similar rule for
the biodiesel mixture credit and biodiesel
credit allowed by § 40A. Under this notice,
these rules will also apply to the credit or
payment allowed for biodiesel mixtures
by § 6427(e). Accordingly, each claim for
a credit or payment under § 6426, 6427(e),
or 40A must contain the following information with respect to biodiesel or a
biodiesel mixture covered by the claim:
(i) The amount of agri-biodiesel and
the amount of biodiesel other than agribiodiesel in the biodiesel or biodiesel mixture.
(ii) A copy of the Certificate for
Biodiesel described in paragraph (h)(2)
of this section and, if applicable, the Statement(s) of Biodiesel Reseller described in
paragraph (h)(3) of this section. However,
in the case of a certificate and statement
that supports a claim made on more than
one claim form, the certificate and statement are to be included with the first claim
and the claimant is to provide information
related to the certificate on any subsequent
claim in accordance with the instructions
applicable to the claim form.
(iii) A statement by the claimant that the
claimant has no reason to believe that any
information in the certificate (described in

paragraph (h)(2) of this section) or statement (described in paragraph (h)(3) of this
section) is false.
(2) Certificate for Biodiesel—(i) In
general. The certificate to be obtained by
the claimant claiming a credit or payment
under § 6426, 6427(e), or 40A consists of a
statement that is signed under penalties of
perjury by a person with authority to bind
the biodiesel producer, is substantially in
the same form as the model certificate in
paragraph (h)(2)(ii) of this section, and
contains all the information necessary to
complete such model certificate. In the
case of a claimant that is the producer of
the biodiesel, the information required on
lines 2–7 of the model certificate is not
applicable and those lines do not need to
be completed. The certificate identification number is determined by the producer
and must be unique to each certificate. A
biodiesel producer may, with respect to a
particular sale of biodiesel, provide multiple separate certificates, each applicable to
a portion of the total volume of biodiesel
sold. Thus, for example, a biodiesel producer that sells 5,000 gallons of biodiesel
may provide its buyer with five certificates for 1,000 gallons each. The multiple
certificates may be provided either to the
buyer at or after the time of sale or to a
reseller in the circumstances described in
paragraph (h)(3)(i) of this section.
(ii) Model certificate.

CERTIFICATE FOR BIODIESEL
Certificate Identification Number:
(To support a claim related to biodiesel or a biodiesel mixture under the Internal Revenue Code)
The undersigned biodiesel producer (“Producer”) hereby certifies the following under penalties of perjury:
1.

Producer’s name, address, and employer identification number
2.

Name, address, and employer identification number of person buying the biodiesel from Producer
3.
Date and location of sale to buyer

August 29, 2005

444

2005–35 I.R.B.

4. This certificate applies to

gallons of biodiesel.

5. Producer certifies that the biodiesel to which this certificate relates is:
% Agri-biodiesel (derived solely from virgin oils)
% Biodiesel other than agri-biodiesel
This certificate applies to the following sale:
Invoice or delivery ticket number
Total number of gallons of biodiesel sold under that invoice or delivery ticket number (including biodiesel not
covered by this certificate)
Total number of certificates issued for that invoice or delivery ticket number
6.

Name, address, and employer identification number of reseller to whom certificate is issued (only in the case of certificates
reissued to a reseller after the return of the original certificate)
7.
Original Certificate Identification Number (only in the case of certificates reissued to a reseller after return of the
original certificate)
Producer is registered as a biodiesel producer with registration number
pended or revoked by the Internal Revenue Service.

. Producer’s registration has not been sus-

Producer certifies that the biodiesel to which this certificate relates is monoalkyl esters of long chain fatty acids derived
from plant or animal matter that meets the requirements of the American Society of Testing and Materials D6751 and the
registration requirements for fuels and fuel additives established by EPA under section 211 of the Clean Air Act (42 U.S.C.
7545).
Producer understands that the fraudulent use of this certificate may subject Producer and all parties making any fraudulent
use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.
Printed or typed name of person signing this certificate
Title of person signing
Signature and date signed
(3) Statement of Biodiesel Reseller—(i)
In general. A person that receives a Certificate for Biodiesel, and subsequently
sells the biodiesel without producing a
biodiesel mixture or claiming the biodiesel
credit, is to give the certificate and a statement that satisfies the requirements of
this paragraph (h)(3) to its buyer. The
statement must contain all of the information necessary to complete the model
certificate in paragraph (h)(3)(iii) of this
section and be attached to the Certificate
for Biodiesel. A reseller cannot make multiple copies of a Certificate for Biodiesel

2005–35 I.R.B.

to divide the certificate between multiple
buyers. If a single Certificate for Biodiesel
applies to biodiesel that a reseller expects
to sell to multiple buyers, the reseller
should return the certificate (together with
any statements provided by intervening
resellers) to the producer who may reissue to the reseller multiple Certificates
for Biodiesel in the appropriate volumes.
The reissued certificates must include the
Certificate Identification Number from the
certificate that has been returned.
(ii) Withdrawal of the right to provide
a certificate. The Internal Revenue Ser-

445

vice may withdraw the right of a buyer
of biodiesel to provide the certificate and
a statement under this section if the Internal Revenue Service cannot verify the
accuracy of the buyer’s statements. The
Internal Revenue Service may notify any
person to whom the buyer has provided a
statement that the buyer’s right to provide
the certificate and a statement has been
withdrawn.
(iii) Model statement of biodiesel reseller.

August 29, 2005

STATEMENT OF BIODIESEL RESELLER
(To support a claim related to biodiesel or a biodiesel mixture under the Internal Revenue Code)
The undersigned biodiesel producer (“Reseller”) hereby certifies the following under penalties of perjury:
1.

Resellers’s name, address, and employer identification number
2.

Name, address, and employer identification number of Reseller’s buyer
3.
Date and location of sale to buyer
4.
Volume of biodiesel sold
5.
Certificate Identification Number on the Certificate for Biodiesel
Reseller has bought the biodiesel described in the accompanying Certificate for Biodiesel and Reseller has no reason to
believe that any information in the certificate is false.
Reseller has not been notified by the Internal Revenue Service that its right to provide a certificate and a statement has been
withdrawn.
Reseller understands that the fraudulent use of this statement may subject Reseller and all parties making any fraudulent use
of this statement to a fine or imprisonment, or both, together with the costs of prosecution.
Printed or typed name of person signing this certificate
Title of person signing
Signature and date signed
(4) Commingled biodiesel—(i) In general. For purposes of this paragraph (h)(4),
commingled biodiesel means—
(A) Biodiesel held by its producer in a
storage tank that is used to store both agribiodiesel and biodiesel other than agribiodiesel; and
(B) Biodiesel held by a person other
than its producer in a storage tank unless
a single Certificate for Biodiesel applies to
the tank.
(ii) Reasonable methods may be used
to identify commingled biodiesel. A person that holds commingled biodiesel may
identify the biodiesel it sells or uses by
any reasonable method, including a firstin, first-out method applied either on a
tank-by-tank basis or on an aggregate ba-

August 29, 2005

sis to all commingled biodiesel the person holds. Thus, for example, a reseller
may treat the biodiesel it first purchases as
the first biodiesel it resells, and a biodiesel
mixture producer may treat the biodiesel it
first purchases as the first biodiesel it uses
to produce a biodiesel mixture.
(5) Effective date. This paragraph (h)
of this section applies with respect to
biodiesel sold or used by its producer after
August 29, 2005, but taxpayers may rely
on it as if it were applicable with respect
to biodiesel sold or used by its producer
on or before that date. In addition, the Internal Revenue Service may accept claims
relating to biodiesel sold or used by its
producer on or before August 29, 2005
if the claim evidences a good faith effort

446

to comply with the applicable Code provision or the rules of Notice 2005–4 as
in effect before August 29, 2005 and the
Service can reasonably verify the amount
of biodiesel and agri-biodiesel covered by
the claim.
*****
Section 3. DEFINITION OF A
BIODIESEL MIXTURE
(a) Definition in the Code. Section
6426(c)(3) provides that biodiesel mixture means a mixture of biodiesel and
diesel fuel (as defined in § 4083(a)(3)),
determined without regard to any use of
kerosene, that (1) is sold by the taxpayer
producing the mixture to any person for

2005–35 I.R.B.

use as a fuel, or (2) is used as a fuel by the
taxpayer producing the mixture.
(b) Explanation of terms—(1) The
diesel fuel in a biodiesel mixture may be
either dyed or undyed. However, taxpayers are reminded of the penalty in § 6715
for the willful alteration of the strength or
composition of any dye in dyed fuel. Also
see § 48.6715–1 of the Manufacturers and
Retailers Excise Tax Regulations.
(2) A biodiesel mixture generally is
used as a fuel when it is consumed to
produce energy. Thus, for example, a
biodiesel mixture that is consumed in a
furnace to produce heat is used as a fuel.
However, the destruction of a biodiesel
mixture in a fire or other casualty loss is
not treated as use as a fuel.
(3) A biodiesel mixture is a mixture
of biodiesel and diesel fuel containing at
least 0.1 percent (by volume) of diesel fuel.
Thus, for example, a mixture of 999 gallons of biodiesel and 1 gallon of diesel fuel
is a biodiesel mixture.
(4) Kerosene in a mixture of biodiesel
and diesel fuel is not included in the volume for purposes of determining whether
the biodiesel mixture satisfies the volume
requirements set forth in paragraph (b)(3)
of this section. Further, the gallons of
kerosene in the mixture of biodiesel and
diesel fuel are not included in the gallons
of biodiesel for which a credit or payment
is allowed.
(c) Effective date—(1) In general.
Paragraphs (b)(1), (2), and (4) of this section are applicable January 1, 2005, the
effective date of Notice 2005–4. Paragraph (b)(3) of this section applies with
respect to mixtures produced after August 29, 2005 and, except as provided
in paragraph (c)(2) of this section, is not
taken into account in determining the tax
treatment of any mixture produced on or
before that date.
(2) Reliance permitted in certain cases.
A taxpayer may rely on paragraph (b)(3)
of this section to claim a biodiesel mixture credit for a mixture produced on or
before August 29, 2005 if the taxpayer has
not taken any action inconsistent with the
claim requirements under this notice such
as providing a Certificate for Biodiesel or
a Statement of Biodiesel Reseller with respect to the biodiesel in the mixture.

2005–35 I.R.B.

Section 4. DEFINITION OF
AGRI-BIODIESEL
(a) In general. Section 40A(d)(2) defines agri-biodiesel as meaning biodiesel
derived solely from virgin oils, “including” esters derived from virgin vegetable
oils from corn, soybeans, sunflower seeds,
cottonseeds, canola, crambe, rapeseeds,
safflowers, flaxseeds, rice bran, and mustard seeds, and from animal fats. The
language “including” indicates that this
list is not exclusive. Thus, for example,
biodiesel derived solely from virgin oils
includes esters derived from palm oil and
fish oil.
(b) Commingled feedstock. If virgin
oils and recycled oils are commingled
for use as a feedstock in the production
of biodiesel, the biodiesel is not derived
solely from virgin oils as required by
§ 40A(d)(2).
(c) Effective date. Paragraph (a) of this
section is applicable January 1, 2005, the
effective date of Notice 2005–4. Paragraph (b) of this section applies with respect to biodiesel produced after August
29, 2005.
Section 5. CLAIMS FOR PAYMENTS
THAT EXCEED THE ALLOWABLE
CREDIT
(a) Background. Section 6426 generally allows a biodiesel mixture credit
against any tax imposed by § 4081, including those taxes unrelated to biodiesel
mixtures or alcohol mixtures. The § 6426
credit is claimed on a Form 720, Quarterly Federal Excise Tax Return, which is
filed at the end of each quarter. Section
6427(e)(1) generally allows a payment
relating to a person’s production of a
biodiesel mixture. The § 6427(e)(1) payment may be claimed before Form 720 is
due and as often as once a week if certain
conditions are met. However, § 6427(e)(2)
provides that no amount is payable under
§ 6427(e)(1) for any mixture with respect
to which an amount is allowed as a credit
under § 6426. If a claim is made under
§ 6427(e) for an amount that is allowable
as a credit under § 6426, section 2(d)(2)
of Notice 2005–4 provides that payment
under § 6427(e) is treated as an excessive
amount under § 6206. Unless this excessive amount is repaid with interest before
the due date of the Form 720 on which the

447

credit under § 6426 is allowable, it may
be assessed as if it were a tax imposed by
§ 4081 and a penalty under § 6675 may be
imposed.
(b) Computation of payment limitation.
A person producing biodiesel mixtures
outside the bulk transfer/terminal system
and liable for tax imposed by § 4081 solely
because of the removal or sale of the mixtures can avoid making excessive claims
for payment under § 6427(e) by limiting
claims filed on a form other than Form
720 to—
(1) 75.6 percent of the total credits
and payments allowable with respect to
agri-biodiesel used to produce the mixtures (24.4 percent of the allowable credits
and payments must be claimed on Form
720); and
(2) 51.2 percent of the total credits
and payments allowable with respect to
biodiesel other than agri-biodiesel used to
produce the mixtures (48.8 percent of the
allowable credits and payment must be
claimed on Form 720).
(c) Example. The following example
illustrates the application of this section:
(1) P is a biodiesel mixture producer. P produces
blended taxable fuel outside of the bulk transfer/terminal system by adding biodiesel to taxed diesel fuel.
See §§ 48.4081–1(c)(1) and 48.4081–3(g). P has no
§ 4081 liability other than its liability as a blender on
its sale of the biodiesel mixture. During the period
August 1 through August 10, 2005, P uses 5,000 gallons of agri-biodiesel to produce a biodiesel mixture.
The total of the credits and payments allowable with
respect to the biodiesel used to produce the mixture
is $5,000 (5,000 x $1.00).
(2) On August 11, P files Form 8849, Claim for
Refund of Excise Taxes, for the period August 1 –
August 10. To avoid an excessive claim, P limits
the claim on Form 8849 to $3,780 (75.6 percent of
$5,000) reporting 3,780 gallons of agri-biodiesel.
(3) On Form 720, Quarterly Federal Excise Tax
Return, P reports liability for IRS No. 60(c) of $1,220
(5,000 gallons x $.244) and claims a credit on Schedule C for $1,220 (24.4 percent of $5,000) for the period August 1 – August 10, reporting on Schedule C
1,220 gallons of agri-biodiesel.

(d) Effective date. This section is applicable January 1, 2005, the effective date of
Notice 2005–4.
Section 6. AVIATION-GRADE
KEROSENE
(a) In general—(1) Section 4 of Notice
2005–4 provides guidance on the taxation
of aviation-grade kerosene under the Act.
Under sections 4(d) and 4(e), a position
holder is not liable for tax if, among other
conditions, it obtains a certificate from the

August 29, 2005

operator of the aircraft into which the aviation-grade kerosene is delivered. This certificate, described in section 4(g), is signed
by the aircraft operator and includes the
name of the position holder.
(2) In a so-called “flash title transaction,” the position holder sells (as defined in § 48.0–2(a)(5)) the aviation-grade
kerosene to a wholesale distributor (reseller) that in turn sells the kerosene to the
aircraft operator as the kerosene is being
removed from a terminal into the fuel tank
of an aircraft.
(3) For purposes of determining
whether the conditions of sections
4(d)(1)(ii) and 4(e)(2) of Notice 2005–4
are met in a case described in paragraph
(a)(2) of this section, the position holder
will be treated as having a certificate (in
the form described in section 4(g)) from
the operator of the aircraft if: (i) the aircraft operator puts the reseller’s name, address, and employer identification number
on the certificate in place of the position
holder’s name, address, and employer
identification number; and (ii) the reseller
provides the position holder with a statement of aviation-grade kerosene reseller.
The reseller statement is a statement that
is signed under penalties of perjury by a
person with authority to bind the reseller;
is provided at the bottom or on the back
of the certificate (or in an attached document); and contains the reseller’s name,
address, and employer identification number, the position holder’s name, address,
and employer identification number, and
a statement that the reseller has no reason
to believe that any information in the accompanying aircraft operator’s certificate
is false.
(b) Effective date. This section is applicable August 29, 2005.
Section 7. CORRECTION TO NOTICE
2005–4
The last sentence of section 2(a) of Notice 2005–4 is revised to read as follows:
Under the Code’s coordination rules, the
sum of all credits and payments per gallon
of alcohol or biodiesel may not exceed the
credit rate per gallon prescribed in § 40 or
40A, whichever is applicable.

Section 8. PAPERWORK REDUCTION
ACT
The collection of information contained
in this notice has been reviewed and approved by the office of Management and
Budget (OMB) in accordance with the Paperwork Reduction Act (44 U.S.C. § 3507)
under control number 1545–1915.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collections of information in this
notice are in the following sections.
Section 2 of the notice describes the
statement that the biodiesel reseller must
give to its buyer with respect to the
biodiesel mixture credit or biodiesel credit.
Section 6 of the notice describes the
statement that an aviation-grade kerosene
reseller must give to the position holder of
aviation grade kerosene.
The collections of information are required to obtain a tax benefit. This information will be used to substantiate claims
for the tax benefits. The likely respondents
are businesses, not-for-profit institutions,
and state, local, or tribal governments.
The estimated total annual reporting
and or recordkeeping burden is 5,100
hours.
The estimated average annual burden
per respondent and/or recordkeeper is approximately is .25 hours.
The estimated number of respondents
and recordkeepers is 240.
Books or records relating to a collection
of information must be retained as long
as their contents may become material to
the administration of the internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. § 6103.
Section 9. EFFECT ON OTHER
DOCUMENTS
Notice 2005–4 is modified as described
in sections 2, 6, and 7 of this notice.
Section 10. DRAFTING INFORMATION
The principal authors of this notice
are Susan Athy and Deborah Karet of
the Office of the Associate Chief Counsel (Passthroughs and Special Industries).

August 29, 2005

448

For further information regarding this notice, please contact Ms. Athy (regarding
biodiesel) or Ms. Karet (regarding aviation-grade kerosene) at (202) 622–3130
(not a toll-free call).

Weighted Average Interest
Rates Update
Notice 2005–63
This notice provides guidance as to the
corporate bond weighted average interest
rate and the permissible range of interest
rates specified under § 412(b)(5)(B)(ii)(II)
of the Internal Revenue Code. In addition, it provides guidance as to the
interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II), and the
weighted average interest rate and permissible ranges of interest rates based on the
30-year Treasury securities rate.
CORPORATE BOND WEIGHTED
AVERAGE INTEREST RATE
Sections
412(b)(5)(B)(ii)
and
412(l)(7)(C)(i), as amended by the Pension Funding Equity Act of 2004, provide
that the interest rates used to calculate current liability and to determine the required
contribution under § 412(l) for plan years
beginning in 2004 or 2005 must be within
a permissible range based on the weighted
average of the rates of interest on amounts
invested conservatively in long term investment grade corporate bonds during the
4-year period ending on the last day before
the beginning of the plan year.
Notice 2004–34, 2004–1 C.B. 848, provides guidelines for determining the corporate bond weighted average interest rate
and the resulting permissible range of interest rates used to calculate current liability. That notice establishes that the corporate bond weighted average is based on the
monthly composite corporate bond rate derived from designated corporate bond indices.
The composite corporate bond rate for
July 2005 is 5.37 percent. Pursuant to Notice 2004–34, the Service has determined
this rate as the average of the monthly
yields for the included corporate bond indices for that month.
The following corporate bond weighted
average interest rate was determined for

2005–35 I.R.B.