Rev Proc

Bulletin No. 2003–20
May 19, 2003

HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.

INCOME TAX

EXEMPT ORGANIZATIONS

T.D. 9053, page 914.
REG–141659–02, page 927.
Temporary and proposed regulations under section 6695 of the
Code clarify and amend existing regulations to facilitate electronic filing by return preparers. The regulations eliminate the references to manually signed returns. In addition, they provide that
the Commissioner may prescribe, in forms, instructions, or other
appropriate guidance, the manner in which preparers may satisfy their obligations under section 6107 to furnish returns to taxpayers and to retain copies of returns.

Rev. Rul. 2003–49, page 903.
Reporting requirements for section 527 organizations. This
ruling provides questions and answers regarding the reporting
and disclosure requirements for political organizations described
in section 527 of the Code. Rev. Rul. 2000–49 modified and superseded.

Notice 2003–29, page 917.
Electricity produced from certain renewable resources; calendar year 2003 inflation adjustment factor and reference prices. This notice announces the calendar year 2003
inflation adjustment factor and reference prices for the renewable electricity production credit under section 45 of the Code.

EMPLOYEE PLANS
Announcement 2003–32, page 933.
The Service invites the public to participate in the ongoing dialog on the long-term future of the EP determination letter
program. This announcement requests comments on the future of the program as modified by responses received in response to Announcement 2001–83, 2001–35 I.R.B. 205. The
second white letter may be downloaded from the Internet at:
www.irs.gov/ep.

Finding Lists begin on page ii.

Announcement 2003–29, page 928.
The Service requests public comment on how it might clarify existing requirements that section 501(c)(3) organizations must meet
with respect to international grant-making and other international activities. The IRS seeks comments on how new guidance might reduce the possibility of diversion of assets for
noncharitable purposes.
Announcement 2003–30, page 929.
The Service withdraws Announcement 99–45 relating to the deletion of an organization to which contributions are deductible under section 170 of the Code. The Abraham Lincoln Opportunity
Foundation will be treated as having been on the Cumulative List
retroactively for all periods that it was in existence.
Announcement 2003–31, page 930.
A list is provided of organizations now classified as private
foundations.
(Continued on the next page)

EMPLOYMENT TAX
Rev. Proc. 2003–35, page 919.
This document provides guidance relating to the Gaming Industry Tipping Agreement Program. Under this program, a gaming industry employer and the Service may work together to reach
a Gaming Industry Tip Compliance Agreement that objectively establishes minimum tip rates for tipped employees in specified occupational categories, prescribes a threshold level of participation
by the employer’s employees, and reduces compliance burdens for the employer and enforcement burdens for the Service.

ADMINISTRATIVE
T.D. 9053, page 914.
REG–141659–02, page 927.
Temporary and proposed regulations under section 6695 of the
Code clarify and amend existing regulations to facilitate electronic filing by return preparers. The regulations eliminate the references to manually signed returns. In addition, they provide that

May 19, 2003

the Commissioner may prescribe, in forms, instructions, or other
appropriate guidance, the manner in which preparers may satisfy their obligations under section 6107 to furnish returns to taxpayers and to retain copies of returns.
T.D. 9054, page 909.
Final regulations under section 6103 of the Code relate to disclosure by IRS employees of returns and return information to
a designee of the taxpayer. The regulations also provide guidance to taxpayers who wish to designate a person or persons
to whom return and return information may be disclosed.
Rev. Proc. 2003–29, page 917.
Qualified mortgage bonds; mortgage credit certificates;
national median gross income. Guidance is provided concerning the use of the national and area median gross income
figures by issuers of qualified mortgage bonds and mortgage
credit certificates in determining the housing cost/income ratio described in section 143(f) of the Code. Rev. Proc. 2002–24
obsoleted, except as provided in section 5.02 of this procedure.

2003–20 I.R.B.

The IRS Mission
Provide America’s taxpayers top quality service by helping them
understand and meet their tax responsibilities and by applying
the tax law with integrity and fairness to all.

Introduction
The Internal Revenue Bulletin is the authoritative instrument of the
Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions,
legislation, court decisions, and other items of general interest. It is published weekly and may be obtained from the Superintendent of Documents on a subscription basis. Bulletin contents
are consolidated semiannually into Cumulative Bulletins, which
are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, modify,
or amend any of those previously published in the Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are
not published; however, statements of internal practices and procedures that affect the rights and duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices, identifying details and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the
disposition of other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations, court

decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and
circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions of
the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A, Tax
Conventions and Other Related Items, and Subpart B, Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rulings.
Bank Secrecy Act Administrative Rulings are issued by the Department of the Treasury’s Office of the Assistant Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.
The first Bulletin for each month includes a cumulative index for
the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the first Bulletin of the succeeding semiannual period, respectively.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

2003–20 I.R.B.

May 19, 2003

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Section 25.—Interest on Certain Home Mortgages

Rev. Rul. 2003–49
ISSUES

26 CFR 1.25–4T: Qualified mortgage credit certificate program (temporary).
Guidance is provided with respect to the national
and area median gross income figures for use by issuers of qualified mortgage bonds and mortgage credit
certificates in determining the housing cost/income ratio described in section 143(f)(5) of the Code. See Rev.
Proc. 2003–29, page 917.

Section 103.—Interest on
State and Local Bonds
26 CFR 1.103–1: Interest upon obligations of a
State, Territory, etc.
Guidance is provided with respect to the national
and area median gross income figures for use by issuers of qualified mortgage bonds and mortgage credit
certificates in determing the housing cost/income ratio described in section 143(f)(5) of the Code. See Rev.
Proc. 2003–29, page 917.

Section 143.—Mortgage Revenue Bonds: Qualified Mortgage Bond and Qualified
Veterans’ Mortgage Bond
26 CFR 6a.103A–2: Qualified mortgage bond.
Guidance is provided with respect to the national
and area median gross income figures for use by issuers of qualified mortgage bonds and mortgage credit
certificates in determining the housing cost/income ratio described in section 143(f)(5) of the Code. See Rev.
Proc. 2003–29, page 917.

Section 527.—Political
Organizations
26 CFR 1.527–2: Definitions.
(Also §§ 6012, 6033, 6104, 6651, and 6652.)

Reporting requirements for section
527 organizations. This ruling provides
questions and answers regarding the reporting and disclosure requirements for section 527 of the Code. Rev. Rul. 2000–49
modified and superseded.

2003–20 I.R.B.

On November 2, 2002, Pub. L. 107–
276 was enacted, amending § 527 of the
Code. The new law amends the reporting
and disclosure requirements for tax-exempt
political organizations described in § 527
with respect to the following: (1) notice of
status, (2) periodic reports of contributions and expenditures, and (3) annual returns. This revenue ruling provides questions
and answers relating to the reporting and
disclosure requirements for political organizations described in § 527, as amended
by Pub. L. 107–276.
QUESTIONS AND ANSWERS
I. Notice of Status
Q–1. What is the notice of status requirement for an organization described in
§ 527?
A–1. Under § 527(i)(1)(A), to be taxexempt, a political organization is required
to give notice electronically to the Service that it is a political organization described in § 527, unless excepted (see
Q&A–3).
Q–2. What is the required notice form?
A–2. The required notice form is Form
8871, Political Organization Notice of Section 527 Status.
Q–3. Are all political organizations required to file the Form 8871 notice to be
tax-exempt?
A–3. No. Under § 527(i)(5) and
§ 527(i)(6), five types of organizations are
not required to file the Form 8871 notice:
(a) Any person required to report under the Federal Election Campaign Act
of 1971 (FECA) as a political committee (see 2 U.S.C. § 431(4));
(b) Any political committee of a state
or local candidate;
(c) Any state or local committee of a
political party;
(d) Any organization that reasonably
anticipates that its annual gross receipts
will always be less than $25,000; and
(e) Any organization described in
§ 501(c) that is subject to § 527(f)(1) because it has made an “exempt function” expenditure.

903

Q–4. Must a political committee of a
state or local candidate be incorporated or
otherwise have formal organizational documents to be excepted from the Form 8871
filing requirements?
A–4. No. As discussed in Q&A–13,
§ 527 does not require political organizations to be incorporated or otherwise have
formal organizational documents to qualify
as a tax-exempt political organization.
Therefore, a political organization need not
be incorporated or otherwise have formal
organizational documents to qualify for the
exception under § 527(i)(5) for political
committees of a state or local candidate.
Q–5. Is a political organization required
to file Form 8871 if it does not know
whether it will have annual gross receipts
of $25,000 or more for any taxable year?
A–5. A newly established political organization is not required to file Form 8871
if it reasonably anticipates that its annual
gross receipts will be less than $25,000 for
its first six taxable years. However, if an organization, in fact, does have annual gross
receipts of $25,000 or more for any taxable year, it is required to file Form 8871
within 30 days of receiving $25,000 in a
single taxable year to continue to be taxexempt.
Q–6. Is the separate segregated fund established under § 527(f)(3) by a § 501(c) organization required to file Form 8871?
A–6. A § 501(c) organization that is not
prohibited from participating in political
campaign activity has the option of conducting the activity itself or setting up a
separate segregated fund. If the § 501(c) organization conducts the activity itself, it is
subject to tax under § 527(f)(1) on the lesser
of its investment income or the amount of
its political expenditures, but it is not required to file Form 8871 pursuant to
§ 527(i)(5)(A). If the § 501(c) organization establishes a separate segregated fund,
the fund is treated as a separate political organization under § 527(f)(3) and does not
qualify for the exception under § 527(i)(5)
(A). Therefore, unless it meets one of the
other exceptions, the separate segregated
fund is required to file Form 8871 to be taxexempt.
Q–7. Is an organization that finances
both federal and non-federal election activity required to file the Form 8871 notice to be tax-exempt?

May 19, 2003

A–7. As a general rule, any political organization (whether or not separately incorporated) that is organized and operated
primarily for an exempt function under
§ 527(e)(2) (see Q&A–22) must file Form
8871 to be tax-exempt unless it meets one
of the exceptions discussed above (see
Q&A–3), one of which is being required to
report under FECA as a political committee. An organization that finances election activity (within the meaning of FECA)
for both federal and non-federal elections
may establish a political committee to receive contributions and make expenditures for both federal and non-federal
election activity. In that case, the organization must register as a political committee and comply with the FECA contribution
limitations and reporting requirements. 11
C.F.R. 102.5(a)(1)(ii). Such an organization is, therefore, not required to file Form
8871.
If, however, the organization sets up
separate accounts to conduct its federal election activity and its non-federal election activity, the federal account is treated as a
separate political committee that is required to register and report under FECA.
11 C.F.R. 102.5(a)(1)(i). The treatment of
the federal account as a separate committee is consistent with the organizational requirements for political organizations under
§ 527, as discussed below in Q&A–13. Accordingly, the separate federal account is not
required to file Form 8871. However, a
separate non-federal account is not required to register and report under FECA
as a political committee. Therefore, a separate non-federal account that is described
in § 527(e)(1) is required to file Form 8871
to be tax-exempt.
Q–8. Is a political organization that is required to report to state or local election
agencies excepted from the notice requirement?
A–8. Section 527(i) does not except political organizations that file reports with
state or local election agencies from the notice of status requirement. Therefore, unless the political organization meets one of
the exceptions discussed above in Q&A–3,
it must file Form 8871 to be tax-exempt.
Q–9. When must the organization file
Form 8871?
A–9. If the political organization seeks
tax-exempt status, Form 8871 must be filed
within 24 hours after the date on which the
organization was established. If the orga-

May 19, 2003

nization has a material change in any of the
information reported on Form 8871, it must
file an amended Form 8871 within 30 days
of the material change to maintain its taxexempt status. When the organization terminates its existence, it must file a final
Form 8871 within 30 days of termination.
Q–10. What are the methods of filing
Form 8871?
A–10. Section 527(i)(1)(A) requires that
the Form 8871 be filed electronically. Form
8871 may be filed electronically via the Internal Revenue Service Internet web site
(IRS web site) at www.irs.gov/polorgs (IRS
Keyword: political orgs).
Q–11. Must an organization take any additional steps before filing Form 8871?
A–11. To file Form 8871, the political
organization must have its own employer
identification number (EIN) even if it has
no employees. To obtain an EIN, an organization must file Form SS–4, Application for Employer Identification Number,
with the Service. See the Form SS–4 Instructions for information on how to get an
EIN by telephone.
Q–12. What information must be provided in the Form 8871 notice?
A–12. Under § 527(i)(3), an organization must provide in its Form 8871 notice its name and address (including any
business address, if different) and electronic mailing address; its purpose; the
names and addresses of its officers, highly
compensated employees, contact person,
custodian of records, and members of its
Board of Directors; the name and address
of, and relationship to, any related entities (within the meaning of § 168(h)(4)); and
whether it is claiming an exemption from
filing Form 8872 as a qualified state or local political organization (within the meaning of § 527(e)(5)) or an exemption from
filing Form 990 as a caucus or association of state or local officials.
Q–13. Does § 527(i) change the organizational requirements for § 527 organizations?
A–13. No. Section 527 does not require
an organization to have formal organizational documents, such as articles of incorporation. Under § 1.527–2(a)(2) of the
Income Tax Regulations, a political organization meets the organizational test if it
is organized for the primary purpose of carrying on exempt function activities as defined in § 527. The regulation specifically
states that the organization need not be for-

904

mally chartered or established as a corporation, trust, or association. For example,
a separate bank account can qualify as a political organization. See Rev. Rul. 79–11,
1979–1 C.B. 207.
The requirement that a § 527 organization include the names and addresses of its
officers, highly compensated employees, and
members of its Board of Directors does not
change the organizational test for § 527.
Section 527(i) does not require political organizations to be organized with Boards of
Directors, officers and highly compensated employees. It merely requires the organization to provide their names and
addresses if it is so organized.
Q–14. What is a “related entity” for this
purpose?
A–14. An entity is a “related entity”
within the meaning of § 168(h)(4), which
provides that an organization is related to
another entity as follows:
(a) The two entities have (i) significant common purposes and substantial
common membership or (ii) directly or
indirectly substantial common direction or control; or
(b) Either entity owns (directly or
through one or more entities) a 50 percent or greater interest in the capital or
profits of the other. For this purpose, entities treated as related entities under (a)
above shall be treated as one entity.
Q–15. What are “highly compensated
employees” for this purpose?
A–15. Highly compensated employees
for this purpose are the five employees
(other than officers and directors) who are
reasonably expected to have the highest annual compensation over $50,000. Annual
compensation includes both cash and noncash amounts, whether paid currently or deferred.
Q–16. What is a qualified state or local political organization?
A–16. A qualified state or local political organization is a political organization that meets the following requirements:
a. The organization limits its exempt
function (see Q&A–22) to the “selection
process” (see Q&A–22) relating solely to
any state or local public office or office in
a state or local political organization;
b. The organization is required under a
state law to report to a state agency (and
the organization does so) the information
that otherwise would be required to be reported on Form 8872. The organization will

2003–20 I.R.B.

meet this requirement even if the state law
does not require reporting of the identical
information required on the Form 8872, so
long as at least the following information
is required to be reported under the state law
and is reported by the organization:
(a) The name and address of every
person who contributes $500 or more in
the aggregate to the organization during the calendar year and the amount of
each contribution, and
(b) The name and address of every
person to whom the organization makes
expenditures aggregating $800 or more
during the calendar year, and the amount
of each expenditure.
However, if the state law requires the reporting of any additional information specified in § 527(j)(3) (see Q&A–40), the
organization will meet this requirement only
if it reports that additional information to
the state agency;
(c) The state agency makes the reports filed by the organization publicly
available;
(d) The organization makes the reports filed with the state agency publicly available in the manner described
in § 6104(d) (see Q&A–44); and
(e) No federal candidate or office
holder controls or materially participates in the direction of the organization, solicits contributions to the
organization, or directs any of the organization’s disbursements.
Q–17. May a political organization that
is required under a state law to report to a
state agency some, but not all, of its contributions and expenditures that otherwise
would be required to be reported on Form
8872 meet the requirements for a qualified state or local political organization?
A–17. Except for contributions or expenditures that are not required to be reported because the state law has a higher
threshold for reporting (see Q&A–16), all
contributions and expenditures that otherwise would be required to be reported on
Form 8872 must be required to be reported
under the state law to a state agency (and
the organization must so report) for the political organization to meet the requirements of a qualified state or local political
organization.
Q–18. May a political organization that
conducts activities in more than one state
meet the requirements for a qualified state
or local political organization?

2003–20 I.R.B.

A–18. A political organization that conducts activities in more than one state that
otherwise meets the requirements (see
Q&A–16) for a qualified state or local political organization, including the requirement that it limit its exempt function
activities to the “selection process” relating solely to any state or local office and
not influence or attempt to influence the
“selection process” of any individual to federal public office, may be a qualified state
or local political organization. To be a qualified state or local political organization, a
political organization that conducts activities in more than one state must be required under the laws of one state to report
to that state’s agency (and the organization must so report) information regarding all of its contributions and expenditures
that otherwise would be required to be reported on Form 8872, without regard to
whether those contributions or expenditures were received or made within that
state. The organization must identify this
state on its Form 8871 when claiming an
exception from filing Form 8872 as a qualified state or local political organization (see
Q&A–12).
Q–19. May a caucus or association of
state or local officials be a qualified state
or local political organization?
A–19. Yes, a caucus or association of
state or local political officials may be a
qualified state or local political organization if it meets the requirements (see Q&A–
16).
Q–20. What if an organization described
in § 527(e)(1) does not file the Form 8871
notice?
A–20. An organization described in
§ 527(e)(1) must file Form 8871 to be taxexempt, unless it is an organization described in § 527(i)(5) or § 527(i)(6) (see
Q&A–3). If the organization fails to file
Form 8871 on a timely basis, § 527(i)(4)
provides that, from the date of establishment (or from the date of material change
if the organization fails to file an amended
Form 8871 (see Q&A–9)) until the date the
organization satisfies the notice requirement, the taxable income of the organization includes its exempt function income
(including contributions received, membership dues, and political fundraising receipts), minus any deductions directly
connected with the production of that income. For purposes of computing its taxable income, the organization may not

905

deduct its exempt function expenditures because § 162(e) denies a deduction for political campaign expenditures.
Under § 527(b), the tax is computed by
multiplying the organization’s taxable income (including its net investment income)
by the highest corporate tax rate, currently
35 percent. The organization must file a
Form 1120–POL to report the income and
pay the tax.
Q–21. When is an organization described
in § 527(e)(1)?
A–21. An organization is described in
§ 527(e)(1) if it meets both the organizational and operational tests, that is, it must
be organized and operated primarily for the
purpose of accepting contributions or making expenditures for an exempt function under § 527(e)(2). See § 1.527–2(a).
Q–22. What is an “exempt function” under § 527(e)(2)?
A–22. “Exempt function” means, under § 527(e)(2), influencing or attempting
to influence the selection, nomination, election, or appointment of any individual to
any federal, state, or local public office or
office in a political organization, or the election of Presidential or Vice-Presidential electors, whether or not such individual or
electors are selected, nominated, elected, or
appointed (referred to as the “selection process”).
Q–23. Are transfers to political organizations that fail to file Form 8871 subject
to the gift tax?
A–23. Section 2501(a)(5) provides that
the gift tax does not apply to transfers of
money or other property to political organizations within the meaning of § 527(e)(1).
Therefore, transfers to an organization described in § 527(e)(1) (see Q&A–21) are
not subject to the gift tax, regardless of
whether the organization has filed Form
8871.
Q–24. Is the Form 8871 notice publicly available?
A–24. Yes. Under § 6104(a), Form 8871
(including any supporting papers), and any
letter or other document the Service issues with regard to Form 8871, will be open
to public inspection. Copies of Form 8871
that have been filed are currently available at the IRS web site at www.irs.gov/
polorgs (IRS Keyword: political orgs) and
are considered widely available under
§ 301.6104(d)–2 of the Procedure and Administration Regulations, as long as the organization provides the IRS web site

May 19, 2003

address to any person making a request for
a copy (see also Q&A–54). In addition, the
organization is required to make a copy of
these materials available for public inspection during regular business hours at the organization’s principal office (and at each of
its regional or district offices having at least
three paid employees) in the same manner as applications for exemption of
§ 501(c) organizations are made available.
§ 6104(d).
Q–25. What is the penalty on the organization for failure to comply with the public inspection requirement?
A–25. Under § 6652(c)(1)(D), a penalty of $20 per day may be imposed on any
person with a duty to comply with the public inspection requirement for each day a
failure to comply continues.
II. Periodic Reporting Requirements
Q–26. What are the periodic reporting
requirements imposed upon tax-exempt political organizations?
A–26. Under § 527(j), a tax-exempt political organization is required to report periodically certain contributions it receives
and expenditures it makes.
Q–27. What is the required periodic reporting form?
A–27. The required periodic reporting
form is Form 8872, Political Organization Report of Contributions and Expenditures.
Q–28. When are tax-exempt political organizations required to file periodic reports on Form 8872?
A–28. Under § 527(j)(2), tax-exempt political organizations that accept contributions or make expenditures for an exempt
function under § 527 (see Q&A–22) during a calendar year are required to file periodic reports on Form 8872, beginning with
the first month or quarter during the calendar year in which they accept contributions or make expenditures, unless excepted
(see Q&A–29). For example, a tax-exempt
political organization that does not accept
contributions or make expenditures for an
exempt function under § 527 until April of
a particular calendar year is not required to
file Form 8872 for the first quarter or first
three months of that year (see Q&A–31
through Q&A–36 for filing due dates), but
must file all quarterly or monthly reports
due for the rest of the calendar year. In addition, tax-exempt political organizations
that make contributions or expenditures with

May 19, 2003

respect to an election for federal office (as
defined in § 527(j)(6)) may be required to
file pre-election reports for that election.
Q–29. Are all tax-exempt political organizations required to file periodic reports on Form 8872?
A–29. No, § 527(j)(5) provides that certain organizations are not subject to this requirement. The following tax-exempt
political organizations are excepted from the
filing requirements:
(a) Any organization excepted from
the requirement to file a Form 8871 (see
Q&A–3); and
(b) Any qualified state or local political organization (see Q&A–16).
All other tax-exempt political organizations are subject to the reporting requirements of § 527(j).
Q–30. Is an organization that reasonably anticipated it would not have annual
gross receipts of $25,000 or more required
to file Form 8872 if it, in fact, receives
$25,000 or more in any taxable year?
A–30. An organization that receives
$25,000 in any taxable year no longer qualifies for the exception in § 527(j)(5)(D) and,
therefore, must begin filing Form 8872 unless it meets one of the other exceptions discussed in Q&A–29. (See Q&A–5 with
respect to Form 8871.) A tax-exempt political organization must file, within 30 days
of receiving $25,000, any Form 8872 that
would otherwise have been due during the
calendar year prior to that date.
Q–31. How often must the Form 8872
be filed?
A–31. A tax-exempt political organization subject to the periodic reporting requirement may choose to file Form 8872
on a monthly basis or on a quarterly/semiannual basis, but it must file on the same
basis for the entire calendar year.
Q–32. What is an election year and nonelection year for purposes of determining
the due dates for filing Form 8872?
A–32. An election year is any year in
which a regularly scheduled general election for federal office is held, i.e., any evennumbered year. A non-election year is
therefore any odd-numbered year.
Q–33. If an organization chooses to file
on a monthly basis, when is Form 8872 due
in a non-election year?
A–33. Pursuant to § 527(j)(2)(B), a taxexempt political organization that chooses
to file monthly must file Form 8872 reports not later than the 20th day after the

906

end of the month, which must be complete as of the last day of the month. December activity is included in the yearend report that is due not later than January
31 of the following year.
Q–34. If an organization chooses to file
on a monthly basis, when is Form 8872 due
during an election year?
A–34. Pursuant to § 527(j)(2)(B), in any
election year (i.e., even-numbered years),
monthly reports are due not later than the
20th day after the end of the month (see
Q&A–33), except the organization shall not
file the reports regularly due in November and December (i.e., the monthly reports for activity in October and November).
Instead, the organization must file a Form
8872 report not later than 12 days before
the general election (or 15 days before the
general election if posted by registered or
certified mail) that contains information
through the 20th day before the general
election. The organization must also file a
report no more than 30 days after the general election containing information through
the 20th day after the election. The December activity is included in the yearend report due not later than January 31 of
the following year.
Q–35. If an organization chooses not to
file on a monthly basis, when is Form 8872
due in a non-election year?
A–35. Pursuant to § 527(j)(2)(A), a taxexempt political organization that chooses
not to file monthly must file semi-annual
reports in non-election years (i.e., oddnumbered years). These reports are due not
later than July 31 for the first half of the
year and, for the second half of the year,
not later than January 31 of the following
year.
Q–36. If an organization chooses not to
file on a monthly basis, when is Form 8872
due during an election year?
A–36. Pursuant to § 527(j)(2)(A), in an
election year (even-numbered years), an
organization that chooses not to file monthly
reports must file quarterly reports not later
than the 15th day after the last day of the
quarter, except that the return for the final quarter shall be due not later than January 31 of the following year. The organization must also file a post-general election report not later than 30 days after the
general election that contains information
through the 20th day after the election. In
addition, the organization must file a preelection report for any election for

2003–20 I.R.B.

federal office with respect to which the organization makes a contribution or expenditure. These reports shall be filed not later
than 12 days before the election (15 days
before if posted by registered or certified
mail) and must contain information through
the 20th day before the election.
Q–37. What is an election for purposes
of the reporting deadlines under § 527(j)?
A–37. For purposes of determining what
is an election year and what elections trigger the pre-election and post-general election reports, § 527(j)(6) provides that an
“election” is a general, special, primary, or
runoff election for a federal office; a convention or caucus of a political party with
authority to nominate a candidate for federal office; a primary election to select delegates to a national nominating convention
of a political party; or a primary election
to express a preference for the nomination of individuals for election to the office of President. Thus, an election for
purpose of these reporting deadlines does
not include a purely state or local election. When an election involves both candidates for federal office and candidates for
state or local offices, it is an election for
purposes of the reporting deadlines, but only
those organizations that make contributions or expenditures with respect to the
candidates for federal office are required to
file the pre-election reports for those elections under § 527(j)(2)(A)(i)(II). However, all reports filed under § 527(j) must
contain information about the contributions and expenditures within the reporting period, regardless of whether they were
accepted or made with respect to candidates for federal, state, or local office.
Q–38. What is a general election?
A–38. A general election is either one
of the following:
(a) An election for federal office held
in even numbered years on the Tuesday following the first Monday in November or
(b) An election held to fill a vacancy
in a federal office (i.e., a special election) that is intended to result in the final selection of a single individual to the
office at stake. See 11 C.F.R. 100.2(b).
Q–39. How will “election” under
§ 527(j)(6) be interpreted?
A–39. The definition of “election” under § 527(j)(6) is virtually identical to the
definition of “election” under FECA (2
U.S.C. § 431(1)). Organizations may rely

2003–20 I.R.B.

on FEC interpretations of the FECA definition in the absence of further guidance
from the Service. The FEC publishes information concerning the filing requirements under FECA and the dates for filing
those reports, including information on the
dates of elections, on its web site at
www.fec.gov. The Service also publishes this
information on the IRS web site at
www.irs.gov/polorgs (IRS Keyword: political orgs).
Q–40. What must a Form 8872 report
contain?
A–40. The report must include the name,
address, and (if an individual) the occupation and employer, of any person to whom
expenditures are made that aggregate $500
or more in a calendar year and the amount,
date and purpose of each expenditure. The
report must also include the name, address, and (if an individual) the occupation and employer, of any person that
contributes in the aggregate $200 or more
in a calendar year and the amount and date
of each contribution. However, an organization is not required to report independent expenditures, as defined in § 301 of
FECA. Only expenditures made or contributions received after July 1, 2000, that are
not made or received pursuant to binding
contracts entered into before July 2, 2000,
must be reported.
Q–41. What is an independent expenditure under § 301 of FECA?
A–41. An independent expenditure is an
expenditure by a person expressly advocating the election or defeat of a clearly
identified candidate for federal office that
is made without cooperation or consultation with any candidate for federal office,
or any authorized committee or agent of
such candidate, and that is not made in concert with, or at the request or suggestion of,
any candidate for federal office, or authorized committee or agent of such candidate. See 2 U.S.C. § 431(17).
Q–42. Where is the Form 8872 filed?
A–42. Except as provided below, the
Form 8872 may be filed either electronically or by sending a signed copy of Form
8872 to the Internal Revenue Service Center, Ogden, UT 84201. The form must be
signed by an official authorized by the organization to sign the report. The form may
be filed electronically at the IRS web site
at www.irs.gov/polorgs (IRS Keyword: political orgs). For forms due after June 30,
2003, the Form 8872 must be filed elec-

907

tronically by organizations that have, or expect to have, contributions or expenditures
exceeding $50,000 for the calendar year. Organizations that complete the electronic filing of Form 8871 receive a user ID and
password that must be used when filing
Form 8872 electronically.
Q–43. What if a tax-exempt political organization that has filed Form 8871 does
not file the required Form 8872?
A–43. Under § 527(j)(1), a tax-exempt
political organization that does not timely
file the required Form 8872, or that fails to
include the information required on the
Form 8872, must pay an amount calculated by multiplying the amount of contributions and expenditures that are not
disclosed by the highest corporate tax rate,
currently 35 percent.
Q–44. Is the Form 8872 filed by taxexempt political organizations publicly
available?
A–44. Yes. Under § 6104(b) and
§ 6104(d)(6), Form 8872 will be made
available for public inspection by the Service. Copies of Form 8872 that have been
filed are currently available at the IRS web
site at www.irs.gov/polorgs (IRS Keyword:
political orgs) and are considered widely
available under § 301.6104(d)–2, as long
as the organization provides the IRS web
site address to any person making a request for a copy (see also Q&A–54). In addition, under § 6104(d)(1)(A), the organization is required to make a copy of these
reports available for public inspection during regular business hours at the organization’s principal office (and at each of its
regional or district offices having at least
three paid employees) in the same manner as applications for exemption of
§ 501(c) organizations are made available.
Pursuant to § 6104(b) and § 6104(d)(3)(A),
contributor information must be disclosed
to the public.
Q–45. What if the political organization does not make its Form 8872 publicly available?
A–45. Under § 6652(c)(1)(C), a penalty of $20 per day may be imposed on any
person with a duty to comply with the public inspection requirement for each day a
failure to comply continues. The maximum penalty that may be incurred for any
failure to disclose any one report is $10,000.
III. Annual Return Requirements
Q–46. Which political organizations are
required to file annual income tax returns?

May 19, 2003

A–46. A political organization, whether
or not tax-exempt, that has taxable income
in excess of the $100 specific deduction allowed under § 527 is required to file an annual income tax return on Form 1120–
POL, U.S. Income Tax Return for Certain
Political Organizations. § 6012(a)(6).
Q–47. When is the Form 1120–POL
due?
A–47. The Form 1120–POL is due on
or before the 15th day of the third month
after the close of the organization’s taxable year. § 6072(b). Thus, for a calendaryear taxpayer, Form 1120–POL is due on
March 15 of the following year. Political
organizations may request a six-month extension of the filing deadline by filing Form
7004, Application for Automatic Extension of Time to File Corporate Income Tax
Return. This form must be filed by the due
date of Form 1120–POL.
Q–48. What if the political organization fails to file Form 1120–POL?
A–48. A political organization that fails
to timely file a required Form 1120–POL
must pay an additional amount equal to 5
percent of the tax due for each month (or
partial month) the return is late up to a
maximum of 25 percent of the tax due, unless the organization shows that the failure was due to reasonable cause. A political
organization that fails to timely pay the tax
shown or required to be shown on Form
1120–POL, must pay an additional amount
equal to 0.5 percent of the unpaid tax for
each month (or partial month) the tax is not
paid up to a maximum of 25 percent of the
unpaid tax, unless the organization shows
that the failure was due to reasonable cause.
§ 6651(a). (A technical correction may be
needed to clarify that penalties under § 6652
that apply to failure to file Form 990 (see
Q&A–53) do not apply to a failure to file
Form 1120–POL.)
Q–49. Are the Forms 1120–POL filed by
political organizations publicly available?
A–49. No, the Forms 1120–POL filed by
political organizations are not required to
be available for public inspection by the
Service or the organization.
Q–50. Which political organizations are
required to file an annual information return?
A–50. Only tax-exempt political organizations may be required to file annual information returns. A tax-exempt political
organization (other than a qualified state or
local political organization) with $25,000

May 19, 2003

or more of annual gross receipts is required to file Form 990, Return of Organization Exempt From Income Tax, for
taxable years beginning after June 30, 2000,
unless excepted (see Q&A–51). Qualified
state or local political organizations (see
Q&A–16) are required to file Form 990 if
they have annual gross receipts of $100,000
or more. § 6033(g)(1). Tax-exempt organizations with gross receipts of less than
$100,000 and assets less than $250,000 may
file Form 990–EZ, Short Form Return of
Organization Exempt From Income Tax.
Tax-exempt organizations with gross receipts of less than $25,000 are not required
to file Form 990 or Form 990–EZ.
Q–51. Are all tax-exempt political organizations required to file the Form 990?
A–51. No, § 6033(g)(3) provides that
certain organizations are not subject to this
requirement. The tax-exempt political organizations excepted from the Form 990 filing requirements are as follows:
(a) Any organization excepted from
the requirement to file a Form 8871 (see
Q&A–3); and
(b) Any caucus or association of state
or local officials.
Q–52. When is the Form 990 due?
A–52. The Form 990 (or Form 990–
EZ) is due on or before the 15th day of the
fifth month after the close of the organization’s taxable year. Thus, for a calendaryear taxpayer, Form 990 is due on May 15
of the following year. Tax-exempt political organizations may request a three-month
extension, without showing cause, by filing Form 8868, Application for Extension of Time to File an Exempt Organization Return, by the due date of the Form
990. A second three-month extension, with
cause, may also be requested by filing Form
8868.
Q–53. What if the political organization fails to file Form 990?
A–53. A political organization that fails
to file a required Form 990 or fails to include required information on those returns is subject to a penalty of $20 per day
for every day such failure continues. The
maximum penalty imposed regarding any
one return is the lesser of $10,000 or 5 percent of the gross receipts of the organization for the year. In the case of an
organization having gross receipts exceeding $1,000,000 for any year, the penalty is
increased to $100 per day with a maximum penalty of $50,000. § 6652(c)(1)(A).

908

Q–54. Are the Forms 990 filed by taxexempt political organizations publicly
available?
A–54. Yes, the Forms 990 filed for taxable years beginning after June 30, 2000,
including contributor information reported
on Schedule B, will be made available for
public inspection by the Service. § 6104(b)
and § 6104(d)(3)(A). In addition, each political organization must make a copy of
these returns, including contributor information reported on Schedule B, available
for public inspection during regular business hours at its principal office (and any
regional or district offices having at least
three paid employees) in the same manner as annual information returns of § 501(c)
organizations are made available. It must
also provide a copy of these returns to any
person requesting a copy in person or in
writing without charge other than a reasonable charge for reproduction and postage in the same manner that § 501(c)
organizations provide copies of their annual returns. § 6104(d)(1) and § 6104(d)(3)
(A). If an organization’s returns are widely
available under § 301.6104(d)–2 (such as
on the Internet), the organization need not
respond to requests for copies so long as
it provides the web site address where the
returns are available to any person making a request. Returns only need to be made
available for three years after filing.
§ 6104(d)(2).
Q–55. What if the tax-exempt political
organization does not make its Forms 990
publicly available?
A–55. A penalty of $20 per day may be
imposed on any person with a duty to comply with the public inspection requirement for each day a failure to comply
continues. The maximum penalty that may
be incurred for any failure to disclose any
one return is $10,000. § 6652(c)(1)(C).
IV. General
Q–56. What if the filing date for any of
these forms falls on Saturday, Sunday or a
holiday?
A–56. If any due date falls on a Saturday, Sunday, or legal holiday, the organization may file the report on the next
business day.
Q–57. Where can organizations access
the various forms?
A–57. The various forms and their instructions are available by calling 1–800–
TAX–FORM (1–800–829–3676) or via the

2003–20 I.R.B.

Internet at the IRS web site at
www.irs.gov in the “Forms and Publications” section.
Q–58. What if an organization has questions regarding the notice and reporting requirements?
A–58. For more information, organizations may call the TE/GE Customer Service Center at 1–877–829–5500.
EFFECT ON OTHER REVENUE
RULINGS
Rev. Rul. 2000–49 is modified and superseded.
DRAFTING INFORMATION
The principal author of this revenue ruling is Judith E. Kindell of Exempt Organizations. For further information regarding
this revenue ruling, contact Judith E.
Kindell at (202) 283–8964 (not a toll-free
call).

Section 6012.—Persons
Required to Make Returns of
Income
Questions and answers relating to the reporting and
disclosure requirements for political organizations described in section 527. See Rev. Rul. 2003–49, page
903.

T.D. 9054
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Parts 301 and 602
Disclosure of Returns and
Return Information to
Designee of Taxpayer
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulation and removal of
temporary regulation.
SUMMARY: This final regulation relates
to the disclosure of returns and return information to a designee of the taxpayer. The
regulation provides guidance to IRS employees responsible for disclosing returns
and return information and to taxpayers who
wish to designate a person or persons to
whom returns and return information may
be disclosed.
DATES: Effective Date: This regulation is
effective April 29, 2003.
Applicability Date: For dates of applicability, see §301.6103(c)–1(f).
FOR FURTHER INFORMATION CONTACT: Joseph Conley, (202) 622–4580 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:

Section 6033.—Returns by
Exempt Organizations
Questions and answers relating to the reporting and
disclosure requirements for political organizations described in section 527. See Rev. Rul. 2003–49, page
903.

Section 6103. —Confidentiality and Disclosure of
Returns and Return
Information
26 CFR 301.6103(c)–1: Disclosure of returns and
return information to designee of taxpayer.

2003–20 I.R.B.

Paperwork Reduction Act
The collections of information contained
in this final regulation have been reviewed
and, pending receipt and evaluation of public comments, approved by the Office of
Management and Budget in accordance with
the Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)) under control number
1545–1816.
The collections of information relating
to requests for or consents to disclosure of
returns and return information are in
§301.6103(c)–1(b), (c), and (d). Information provided in a request or consent under paragraph (b) is required by the IRS to
identify the return or return information described in the request or consent; to search
for and, where found, compile such return or return information; and to identify
the person to whom any such return or re-

909

turn information is to be provided. Information provided in a request under
paragraph (c) is required by the IRS to determine the nature and extent of the information or assistance requested by the
taxpayer; to determine any return or return information to be disclosed to a third
party in order to comply with the taxpayer’s request; and to search for and, where
found, to compile any such return or return information. Information provided in
a request under paragraph (c)(2) is also required by the IRS to confirm the identity
of the taxpayer and the designee. Information provided in a consent under paragraph
(d)(1) is required by the IRS to make certain disclosures to an electronic return transmitter or other third party in connection with
the taxpayer’s electronic filing of returns or
other documents or information, such as disclosures to a transmitter of the IRS’s receipt of a taxpayer’s return and its
acceptance or rejection by the IRS. The collections of information in this regulation are
not mandatory, but are required if the IRS
is to make disclosures to designees under
the regulation. The likely respondents are
individuals and households; farms, businesses, and other for-profit institutions; nonprofit institutions; and small businesses and
organizations.
Comments on the collections of information should be sent to the Office of
Management and Budget, Attn: Desk
Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with
copies to the Internal Revenue Service,
Attn: IRS Reports Clearance Officer,
W:CAR:MP:T:T:SP, Washington, DC
20224. Comments on the collections of information should be received by June 30,
2003.
Comments on the collections of information are specifically requested concerning the following:
(a) Whether the collections of information are necessary for the proper performance of the functions of the IRS, including
whether the information will have practical utility;
(b) The accuracy of the estimated burden associated with the collections of information (see below);
(c) How the quality, utility, and clarity of the information to be collected may
be enhanced;

May 19, 2003

(d) How the burden of complying with
the collections of information may be minimized, including through the application of
automated collection techniques or other
forms of information technology; and
(e) Estimates of capital or start-up costs
and costs of operation, maintenance, and
purchase of service to provide information.
Portions of the burden for the reporting requirements contained in paragraph (b)
will be reflected in IRS Forms 4506, 6847,
and 8821, and in the United States
Department of Education form entitled
“William D. Ford Federal Direct Loan Program Income Contingent Repayment Plan
Consent to Disclosure of Tax Information.” A portion of the burden for the reporting requirement contained in paragraph
(c)(1) will be reflected in the return of the
taxpayer. The burden for the reporting requirement contained in paragraph (d)(1) will
be reflected in IRS Forms 8453 and 8879
and the income tax return of the taxpayer.
Estimated total annual reporting burden under §301.6103(c)–1(b) for consents
not using forms disclosed above: 800 hours.
Estimated annual burden per respondent:
0.2 hours (12 minutes).
Estimated number of respondents: 4,000.
Estimated annual frequency of responses:
On occasion.
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
control number assigned by the Office of
Management and Budget.
Books or records relating to a collection of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and return information are confidential, as required by
26 U.S.C. 6103.
Background
On January 11, 2001, a temporary regulation (T.D. 8935, 2001–1 C.B. 702 [66 FR
2261]) and a cross-referenced notice of proposed rulemaking (REG–103320–00,
2001–1 C.B. 714 [66 FR 2373]) under section 6103(c) of the Internal Revenue Code
(Code) were published in the Federal Register.
No written comments were received on
the proposed regulation. In this Treasury de-

May 19, 2003

cision, the regulation proposed by REG–
103320–00 is adopted as revised in six
minor respects.
Explanation of Provisions
Under section 6103(a), returns and return information are confidential unless disclosure is otherwise authorized by the Code.
Section 6103(c), as amended in 1996 by
section 1207 of the Taxpayer Bill of Rights
II, Public Law 104–168 (110 Stat. 1452),
authorizes the IRS to disclose returns and
return information to such person or persons as the taxpayer may designate in a request for or consent to disclosure, or to any
other person at the taxpayer’s request to the
extent necessary to comply with a request
for information or assistance made by the
taxpayer to such other person. Disclosure
is permitted subject to such requirements
and conditions as may be prescribed by
regulations. With the amendment in 1996,
Congress eliminated the longstanding requirement that disclosures to designees of
the taxpayer must be pursuant to the written request or consent of the taxpayer.
The temporary regulation contained in
T.D. 8935 authorized the disclosure of tax
returns and return information to a designee of the taxpayer pursuant to a nonwritten request or consent when the taxpayer
seeks the assistance of a third party in resolving a tax matter. T.D. 8935 also
amended the existing regulation to clarify
the rules applicable to written requests or
consents to disclosure. The temporary regulation is scheduled to expire on January 10,
2004.
This final regulation adopts the proposed regulation as revised in six minor respects.
Paragraphs (b) and (c) of the proposed
regulation permit disclosures of returns or
return information to the designee of a taxpayer when the requirements of such paragraphs are met. In the final regulation,
paragraphs (b) and (c) have been amended
to state that returns or return information
may be disclosed in written or nonwritten
form. This amendment is intended as a
clarification rather than a change in the effect of the regulation.
Paragraph (b) of the proposed regulation concerns disclosures of returns and return information to a designee of the
taxpayer pursuant to a written request or
consent. Paragraph (b)(1)(i) – (iv) lists four
pieces of information that must be included

910

in the written request or consent (taxpayer
identify information, the identity of the person to whom disclosure is to be made, the
type of return or return information to be
disclosed, and the taxable years covered by
the return or return information). The final regulation adds language to paragraph
(b) to make clear that, in order to constitute a valid written request or consent, a
writing must contain the four pieces of information when it is signed and dated by
the taxpayer. A written request or consent
is not valid if the taxpayer signs it in blank,
i.e., signs the written request or consent with
any of the four pieces of information or the
date missing, even if another party later
adds such information or the date. This addition is intended as a clarification rather
than a change in the effect of the regulation.
Paragraph (c)(2) of the proposed regulation concerns disclosures of returns and
return information to a designee of the taxpayer pursuant to a nonwritten request or
consent. Paragraph (c)(2)(i) sets forth the
requirements to be met in order for such
disclosures to be authorized. Paragraph
(c)(2)(ii) provides two examples of circumstances under which such disclosures may
be useful or convenient: a meeting or interview with the IRS to which a taxpayer
brings a friend, relative, or other person, and
a telephone conversation with the IRS when
the taxpayer wishes to involve another person. In the final regulation, a new paragraph (c)(2)(iii) has been added, which
states that the taxpayer does not need to be
present, either in person or as part of a telephone conversation, for disclosures of returns and return information to be made to
the other person under paragraph (c)(2).
This addition is intended as a clarification rather than a change in the effect of the
regulation.
Paragraphs (d)(1) and (d)(2) of the proposed regulation provide parameters for the
development of consents for, respectively,
the IRS’s electronic filing program and
combined Federal-State (FedState) return filing programs. Each of these paragraphs permits the creation of limited purpose
disclosure consents that would not otherwise be effective under paragraph (b) (relating to general purpose consents in the
form of separate written documents pertaining solely to an authorized disclosure)
or paragraph (c) (relating to disclosures to
designees to comply with a taxpayer’s re-

2003–20 I.R.B.

quest for information or assistance). Accordingly, the last sentence in paragraph
(d)(1) of the proposed regulation states that
the requirements of paragraphs (b) and (c)
do not apply to a consent under paragraph
(d)(1). The final regulation deletes such sentence and adds a similar sentence at the beginning of paragraph (d), stating that the
requirements of paragraphs (b) and (c) do
not apply under paragraph (d). This modification is intended as a clarification rather
than a change in the effect of the regulation.
Paragraph (e)(1) of the proposed regulation defines the phrase “separate written document.” (To be valid under
paragraph (b), a request for or consent to
disclosure must be in the form of a separate written document pertaining solely to
the authorized disclosure.) Under paragraph (e)(1)(A), one meaning of the phrase
“separate written document” is the text appearing on a sheet of 81⁄2-inch by 11-inch
or larger paper. Similarly, under paragraph
(e)(1)(B), another meaning of the phrase
“separate written document” is the text appearing on a single computer screen containing all the elements described in
paragraph (b)(1), which can be signed and
dated by the taxpayer, and which can be reproduced if necessary. In the final regulation, paragraphs (e)(1)(A) and (e)(1)(B) have
been amended to provide that the text at issue in such paragraphs may appear, respectively, on one or more sheets of 81⁄2-inch
by 11-inch or larger paper or on one or
more computer screens. This amendment
will provide taxpayers and their representatives with additional flexibility in drafting written and electronic consents while
continuing to require that language authorizing disclosures of tax information be kept
separate and distinct from language regarding other matters.
Paragraph (e)(3) of the proposed regulation provides rules regarding permissible designees. Paragraph (e)(3) has been
amended to include an additional sentence
stating that when a designee is an individual, this regulation does not authorize
disclosures to other individuals associated with such individual, such as employees of such individual or members of such
individual’s staff. This modification is intended as a clarification rather than a change
in the effect of the regulation.

2003–20 I.R.B.

Special Analyses
It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. This final regulation provides taxpayers with enhanced procedures
to resolve problems with the IRS, and it
clarifies the requirements for a valid request for or consent to the disclosure of returns or return information. Therefore, notice
and public procedure are not required pursuant to 5 U.S.C. 553(b)(B). Moreover, a
delayed effective date would be contrary to
the public interest and is not required under 5 U.S.C. 553(d). Pursuant to section
7805(f) of the Code, the temporary regulation was submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on its impact on small business.
It is hereby certified that the collection of information in this regulation will
not have a significant economic impact on
a substantial number of small entities. This
certification is based upon the fact that any
burden on taxpayers is minimal, since the
regulation only applies to taxpayers which
request or consent to the disclosure of returns or return information, and since the
information collected is only that necessary to carry out the disclosure of returns
or return information requested or consented to by the taxpayer (such as the name
and taxpayer identification number of the
taxpayer, the return or return information
to be disclosed, and the identity of the designee). Moreover, it is based upon the fact
that the regulation reduces the burden imposed upon taxpayers by the prior regulation by clarifying the requirements for and
conditions of a request for or consent to disclosure and by permitting certain disclosures pursuant to nonwritten requests or
consents. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.
Drafting Information
The principal author of this regulation
is Joseph Conley, Office of the Associate
Chief Counsel (Procedure and Administration), Disclosure and Privacy Law Division.
*****

911

Adoption of
Regulations

Amendments

to

the

Accordingly, 26 CFR part 301 and 26
CFR part 602 are 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 301.6103(c)–1 is added
to read as follows:
§301.6103(c)–1 Disclosure of returns
and return information to designee of
taxpayer.
(a) Overview. Subject to such requirements and conditions as the Secretary may
prescribe by regulation, section 6103(c) of
the Internal Revenue Code authorizes the
Internal Revenue Service to disclose a taxpayer’s return or return information to such
person or persons as the taxpayer may designate in a request for or consent to such
disclosure, or to any other person at the taxpayer’s request to the extent necessary to
comply with the taxpayer’s request to such
other person for information or assistance.
This regulation contains the requirements
that must be met before, and the conditions under which, the Internal Revenue Service may make such disclosures. Paragraph
(b) of this section provides the requirements that are generally applicable to designate a third party to receive the taxpayer’s
returns and return information. Paragraph
(c) of this section provides requirements under which the Internal Revenue Service may
disclose information in connection with a
taxpayer’s written or nonwritten request for
a third party to provide information or assistance with regard to a tax matter, for example, a Congressional inquiry. Paragraph
(d) of this section provides the parameters for disclosure consents connected with
electronic return filing programs and combined Federal-State filing. Finally, paragraph (e) of this section provides definitions
and general rules related to requests for or
consents to disclosure.
(b) Disclosure of returns and return information to person or persons designated
in a written request or consent—(1) General requirements. Pursuant to section
6103(c) of the Internal Revenue Code, the
Internal Revenue Service (or an agent or

May 19, 2003

contractor of the Internal Revenue Service) may disclose a taxpayer’s return or
return information (in written or nonwritten form) to such person or persons as the
taxpayer may designate in a request for or
consent to such disclosure. A request for or
consent to disclosure under this paragraph
(b) must be in the form of a separate written document pertaining solely to the authorized disclosure. (For the meaning of
separate written document, see paragraph
(e)(1) of this section.) The separate written document must be signed (see paragraph (e)(2) of this section) and dated by
the taxpayer who filed the return or to
whom the return information relates. At the
time it is signed and dated by the taxpayer,
the written document must also indicate—
(i) The taxpayer’s taxpayer identity information described in section 6103(b)(6);
(ii) The identity of the person or persons to whom the disclosure is to be made;
(iii) The type of return (or specified portion of the return) or return information (and
the particular data) that is to be disclosed;
and
(iv) The taxable year or years covered
by the return or return information.
(2) Requirement that request or consent be received within sixty days of when
signed and dated. The disclosure of a return or return information authorized by a
written request for or written consent to the
disclosure shall not be made unless the request or consent is received by the Internal Revenue Service (or an agent or
contractor of the Internal Revenue Service) within 60 days following the date
upon which the request or consent was
signed and dated by the taxpayer.
(c) Disclosure of returns and return information to designee of taxpayer to comply with a taxpayer’s request for information
or assistance. If a taxpayer makes a written or nonwritten request, directly to another person or to the Internal Revenue
Service, that such other person (for example, a member of Congress, friend, or
relative of the taxpayer) provide information or assistance relating to the taxpayer’s return or to a transaction or other
contact between the taxpayer and the Internal Revenue Service, the Internal Revenue Service (or an agent or contractor of
the Internal Revenue Service or a federal
government agency performing a federal
tax administration function) may disclose
returns or return information (in written or

May 19, 2003

nonwritten form) to such other person under the circumstances set forth in paragraphs (c)(1) through (3) of this section.
(1) Written request for information or assistance. (i) The taxpayer’s request for information or assistance may be in the form
of a letter or other written document, which
must be signed (see paragraph (e)(2) of this
section) and dated by the taxpayer. The taxpayer must also indicate in the written
request—
(A) The taxpayer’s taxpayer identity information described in section 6103(b)(6);
(B) The identity of the person or persons to whom disclosure is to be made; and
(C) Sufficient facts underlying the request for information or assistance to enable the Internal Revenue Service to
determine the nature and extent of the information or assistance requested and the
returns or return information to be disclosed in order to comply with the taxpayer’s request.
(ii) A person who receives a copy of a
taxpayer’s written request for information or assistance but who is not the addressee of the request, such as a member
of Congress who is provided with a courtesy copy of a taxpayer’s letter to another
member of Congress or to the Internal Revenue Service, cannot receive returns or return information under paragraph (c)(1) of
this section.
(2) Nonwritten request or consent. (i) A
request for information or assistance may
also be nonwritten. Disclosure of returns and
return information to a designee pursuant
to a taxpayer’s nonwritten request will be
made only after the Internal Revenue Service has—
(A) Obtained from the taxpayer sufficient facts underlying the request for information or assistance to enable the Internal
Revenue Service to determine the nature
and extent of the information or assistance requested and the return or return information to be disclosed in order to comply
with the taxpayer’s request;
(B) Confirmed the identity of the taxpayer and the designee; and
(C) Confirmed the date, the nature, and
the extent of the information or assistance
requested.
(ii) Examples of disclosures pursuant to
nonwritten requests for information or assistance under this paragraph (c)(2) include, but are not limited to, disclosures to
a friend, relative, or other person whom the

912

taxpayer brings to an interview or meeting with Internal Revenue Service officials, and disclosures to a person whom the
taxpayer wishes to involve in a telephone
conversation with Internal Revenue Service officials.
(iii) As long as the requirements of this
paragraph (c)(2) are met, the taxpayer does
not need to be present, either in person or
as part of a telephone conversation, for disclosures of returns and return information
to be made to the other person.
(3) Rules applicable to written and nonwritten requests for information or assistance. A return or return information will
be disclosed to the taxpayer’s designee as
provided by this paragraph only to the extent considered necessary by the Internal
Revenue Service to comply with the taxpayer’s request or consent. Such disclosures shall not be made unless the request
or consent is received by the Internal Revenue Service, its agent or contractor, or a
federal government agency performing a
federal tax administration function in connection with a request for advice or assistance relating to such function. This
paragraph (c) does not apply to disclosures to a taxpayer’s representative in connection with practice before the Internal
Revenue Service (as defined in Treasury
Department Circular No. 230, 31 CFR Part
10). For disclosures in these cases, see section 6103(e)(6) and §§601.501 through
601.508 of this chapter.
(d) Acknowledgments of electronically
filed returns and other documents; combined filing programs with state tax agencies. The requirements of paragraphs (b) and
(c) of this section do not apply to this paragraph (d).
(1) Acknowledgment of, and notices regarding, electronically filed returns and
other documents. When a taxpayer files returns or other documents or information
with the Internal Revenue Service electronically, the taxpayer may consent to the
disclosure of return information to the transmitter or other third party, such as the taxpayer’s financial institution, necessary to
acknowledge that the electronic transmission was received and either accepted or rejected by the Internal Revenue Service, the
reason for any rejection, and such other information as the Internal Revenue Service determines is necessary to the operation
of the electronic filing program. The consent must inform the taxpayer of the re-

2003–20 I.R.B.

turn information that will be transmitted and
to whom disclosure will be made.
(2) Combined return filing programs with
state tax agencies. (i) A taxpayer’s participation in a combined return filing program between the Internal Revenue Service
and a State agency, body, or commission
(State agency) described in section
6103(d)(1) constitutes a consent to the disclosure by the Internal Revenue Service, to
the State agency, of taxpayer identity information, signature, and items of common data contained on the return. For
purposes of this paragraph, common data
means information reflected on the federal return required by state law to be attached to or included on the state return.
Instructions accompanying the forms or
published procedures involved in such program must indicate that by participating in
the program, the taxpayer is consenting to
the Internal Revenue Service’s disclosure
to the State agency of the taxpayer identity information, signature, and items of
common data, and that such information
will be treated by the State agency as if it
had been directly filed with the State
agency. Such instructions or procedures
must also describe any verification that takes
place before the taxpayer identity information, signature and common data is transmitted by the Internal Revenue Service to
the State agency.
(ii) No disclosures may be made under this paragraph (d)(2) unless there are
provisions of state law protecting the confidentiality of such items of common data.
(e) Definitions and rules applicable to
this section—(1) Separate written document. (i) For the purposes of paragraph (b)
of this section, separate written document
means—
(A) Text appearing on one or more
sheets of 81⁄2-inch by 11-inch or larger paper, each of which pertains solely to the authorized disclosure, so long as such sheet
or sheets, taken together, contain all the elements described in paragraph (b)(1) of this
section;
(B) Text appearing on one or more computer screens, each of which pertains solely
to the authorized disclosure, so long as such
screen or, taken together, such screens—

2003–20 I.R.B.

(1) contain all the elements described in
paragraph (b)(1) of this section,
(2) can be signed (see paragraph (e)(2)
of this section) and dated by the taxpayer,
and
(3) can be reproduced, if necessary; or
(C) A consent on the record in an administrative or judicial proceeding, or a transcript of such proceeding recording such
consent, containing the information required under paragraph (b)(1) of this section.
(ii) A provision included in a taxpayer’s application for a loan or other benefit authorizing the grantor of the loan or
other benefit to obtain any financial information, including returns or return information, from any source as the grantor may
request for purposes of verifying information supplied on the application, does not
meet the requirements of paragraph (b)(1)
of this section because the provision is not
a separate written document relating solely
to the disclosure of returns and return information. In addition, the provision does
not contain the other information specified in paragraph (b)(1) of this section.
(2) Method of signing. A request for or
consent to disclosure may be signed by any
method of signing the Secretary has prescribed pursuant to §301.6061–1(b) in
forms, instructions, or other appropriate
guidance.
(3) Permissible designees and public forums. Permissible designees under this section include individuals; trusts; estates;
corporations; partnerships; federal, state, local and foreign government agencies or subunits of such agencies; or the general public.
When disclosures are to be made in a public forum, such as in a courtroom or congressional hearing, the request for or consent
to disclosure must describe the circumstances surrounding the public disclosure,
e.g., congressional hearing, judicial proceeding, media, and the date or dates of the
disclosure. When a designee is an individual, this section does not authorize disclosures to other individuals associated with
such individual, such as employees of such
individual or members of such individual’s staff.
(4) Authority to execute a request for or
consent to disclosure. Any person who may

913

obtain returns under section 6103(e)(1)
through (5), except section 6103(e)(1)(D)
(iii), may execute a request for or consent to disclose a return or return information to third parties. For taxpayers that are
legal entities, such as corporations and municipal bond issuers, any officer of the entity with authority under applicable state law
to legally bind the entity may execute a request for or consent to disclosure. A person described in section 6103(e)(6) (a
taxpayer’s representative or individual holding a power of attorney) may not execute
a request for or consent to disclosure unless the designation of representation or
power of attorney specifically delegates such
authority. A designee pursuant to this section does not have authority to execute a
request for or consent to disclosure permitting the Internal Revenue Service to disclose returns or return information to
another person.
(5) No disclosure of return information if impairment. A disclosure of return
information shall not be made under this
section if the Internal Revenue Service determines that the disclosure would seriously impair federal tax administration (as
defined in section 6103(b)(4) of the Internal Revenue Code).
(f) Effective date. This section is applicable on April 29, 2003.
§301.6103(c)–1T [Removed]
Par. 3. Section 301.6103(c)–1T is removed.
PART 602—OMB CONTROL
NUMBERS UNDER THE
PAPERWORK REDUCTION ACT
Par. 4. The authority citation for part 602
continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 5. In §602.101, paragraph (b) is revised as follows:
1. The following entry to the table is
removed:
§602.101 OMB Control numbers.
*****
(b) * * *

May 19, 2003

CFR part or section where
Current OMB
identified and described
control No.
*****
301.6103(c)–1 ........................................................................................................................................................... 1545–0280
*****
2. The following entry is added in numerical order to the table:

§602.101 OMB Control numbers.

(b) * * *

*****

CFR part or section where
Current OMB
identified and described
control No.
*****
301.6103(c)–1 ........................................................................................................................................................... 1545–1816
*****

Section 6695.—Other
Assessable Penalties With
Respect to the Preparation of
Approved April 9, 2003.
Income Tax Returns for Other
Pamela F. Olson, Persons
David A. Mader,
Assistant Deputy Commissioner
of Internal Revenue.

Assistant Secretary of the Treasury.
(Filed by the Office of the Federal Register on April 28, 2003,
8:45 a.m., and published in the issue of the Federal Register for April 29, 2003, 68 F.R. 22596)

26 CFR 1.6996–1: Other assessable penalties with
respect to the preparation of income tax returns for
other persons.

T.D. 9053
Section 6104.—Publicity of
Information Required From
Certain Exempt Organizations
and Certain Trusts
Questions and answers relating to the reporting and
disclosure requirements for political organizations described in section 527. See Rev. Rul. 2003–49, page
903.

Section 6651.—Failure to File
Tax Return or to Pay Tax
Questions and answers relating to the reporting and
disclosure requirements for political organizations described in section 527. See Rev. Rul. 2003–49, page
903.

Section 6652.—Failure to File
Certain Information Returns,
Registration Statements, etc.
Questions and answers relating to the reporting and
disclosure requirements for political organizations described in section 527. See Rev. Rul. 2003–49, page
903.

May 19, 2003

DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR part 1
Tax Return Preparers —
Electronic Filing
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Temporary regulations.
SUMMARY: This document contains temporary regulations to facilitate electronic filing by tax return preparers. The existing
regulations, which contain references to
manually signed returns, have resulted in
uncertainty over whether preparers must
produce manually signed, paper copies of
returns for taxpayers and for the preparers’ records. The temporary regulations
clarify that preparers may avoid paper copies by retaining and furnishing to taxpayers copies of returns in electronic or digital
format prescribed by the Commissioner.
DATES: Effective Date: These regulations
are effective by April 24, 2003.
Applicability Date: For dates of applicability, see §1.6107–2T(b) and §1.6695–
1T(b)(5).

914

FOR FURTHER INFORMATION CONTACT: Richard Charles Grosenick, (202)
622–7940 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains temporary regulations that amend the Income Tax Regulations (26 CFR part 1) under sections 6107
and 6695 of the Internal Revenue Code
(Code) to facilitate electronic filing and
recordkeeping by tax return preparers. Section 6695 of the Code imposes various penalties on tax return preparers, including a
penalty for failure to sign the returns that
they prepare. Originally, the regulations under section 6695 contemplated only manually signed (i.e., paper) returns. Although
the regulations under section 6695 were
amended in 1996 to permit tax return preparers to sign and file returns electronically in the manner prescribed by the
Secretary (see T.D. 8689, 1997–1 C.B. 214
[61 FR 65319]) (Dec. 12, 1996), §1.6695–
1(b) of the regulations continues to refer to
manually signed returns and copies. Those
references have resulted in uncertainty over
whether preparers must produce manually signed, paper copies of returns to satisfy their obligations under section 6107 to
provide copies of returns to taxpayers and
keep copies of returns in their records.
These temporary regulations eliminate
the references to manually signed returns
in §1.6695–1(b). In addition, they provide that the Commissioner may prescribe,
in forms, instructions, or other appropriate guidance, the manner in which preparers may satisfy their obligations under
section 6107 to furnish returns to taxpay-

2003–20 I.R.B.

ers and to retain copies of returns. These
changes and the applicable forms, instructions, and guidance clarify that preparers
may maintain electronic (paperless) filing
systems.
Special Analyses
It has been determined that this temporary regulation is not a significant regulatory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It has also been determined
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does not
apply to this regulation and, because the
regulation does not impose a collection of
information on small entities, that the Regulatory Flexibility Act (5 U.S.C. chapter 6)
does not apply. Pursuant to section 7805(f)
of the Code, this temporary regulation will
be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small
business.
Drafting Information
The principal author of this regulation
is Richard Charles Grosenick, Office of Assistant Chief Counsel (Administrative Provisions & Judicial Practice). However, other
personnel from the IRS and the Treasury
Department participated in its development.
* * * * *.
Adoption of Amendment to the
Regulations
Accordingly, 26 CFR part 1 is amended
as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding an entry in numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.6695–1T also issued under 26
U.S.C. 6695(b). * * *
Par. 2. Section 1.6107–2T is added to
read as follows:
§1.6107–2T Form and manner of
furnishing copy of return and retaining
copy or record.
(a) In general. The Commissioner may
prescribe the form and manner of satisfying the requirements imposed by section

2003–20 I.R.B.

6107(a) and (b) and §1.6107–1(a) and (b)
in forms, instructions, or other appropriate guidance.
(b) Effective date. To the extent this section relates to section 6107(a) and §1.6107–
1(a), it applies to income tax returns and
claims for refund presented to a taxpayer
for signature after December 31, 2002. To
the extent this section relates to section
6107(b) and §1.6107–1(b), it applies after December 31, 2002, to returns and
claims for refund for which the 3-year period described in section 6107(b) expires after December 31, 2002.
Par. 3. Section 1.6695–1 is amended by
revising paragraph (b) to read as follows:
§1.6695–1 Other assessable penalties
with respect to the preparation of
income tax returns for other persons.
*****
(b) [Reserved]. For further guidance, see
§1.6695–1T(b).
*****
Par. 4. Section 1.6695–1T is added to
read as follows:
§1.6695–1T Other assessable penalties
with respect to the preparation of
income tax returns for other persons.
(a) [Reserved]. For further guidance, see
§1.6695–1(a).
(b) Failure to sign return. (1) An individual who is an income tax return preparer with respect to a return of tax under
subtitle A of the Internal Revenue Code or
claim for refund of tax under subtitle A of
the Internal Revenue Code shall sign the return or claim for refund after it is completed and before it is presented to the
taxpayer (or nontaxable entity) for signature. If the preparer is unavailable for signature, another preparer shall review the
entire preparation of the return or claim for
refund, and then shall sign the return or
claim for refund. The preparer shall sign the
return in the manner prescribed by the
Commissioner in forms, instructions, or
other appropriate guidance.
(2) If more than one income tax return
preparer is involved in the preparation of
the return or claim for refund, the individual preparer who has the primary responsibility as between or among the
preparers for the overall substantive accuracy of the preparation of such return or
claim for refund shall be considered to be

915

the income tax return preparer for purposes of this paragraph.
(3) The application of this paragraph is
illustrated by the following examples:
Example 1. X law firm employs Y, a lawyer, to
prepare for compensation returns and claims for refund of taxes. X is employed by T, a taxpayer, to prepare his federal tax return. X assigns Y to prepare T’s
return. Y obtains the information necessary for completing the return from T and makes determinations
with respect to the proper application of the tax laws
to such information in order to determine T’s tax liability. Y then forwards such information to C, a computer tax service which performs the mathematical
computations and prints the return by means of computers. C then sends the completed return to Y who
reviews the accuracy of the return. Y is the individual preparer who is primarily responsible for the
overall accuracy of T’s return. Y must sign the return as preparer.
Example 2. X partnership is a national accounting firm which prepares for compensation returns and
claims for refund of taxes. A and B, employees of X,
are involved in preparing the tax return of T Corporation. After they complete the return, including the
gathering of the necessary information, the proper application of the tax laws to such information, and the
performance of the necessary mathematical computations, C, a supervisory employee of X, reviews the
return. As part of this review, C reviews the information provided and the application of the tax laws
to this information. The mathematical computations
and carried-forward amounts are proved by D, an employee of X’s comparing and proving department. The
policies and practices of X require that P, a partner,
finally review the return. The scope of P’s review includes reviewing the information provided by applying to this information his knowledge of T’s affairs,
observing that X’s policies and practices have been
followed, and making the final determination with respect to the proper application of the tax laws to determine T’s tax liability. P may or may not exercise
these responsibilities, or may exercise them to a greater
or lesser extent, depending on the degree of complexity of the return, his confidence in C (or A and
B), and other factors. P is the individual preparer who
is primarily responsible for the overall accuracy of T’s
return. P must sign the return as preparer.
Example 3. C corporation maintains an office in
Seattle, Washington, for the purpose of preparing for
compensation returns and claims for refund of taxes.
C makes compensatory arrangements with individuals (but provides no working facilities) in several states
to collect information from taxpayers and to make determinations with respect to the proper application of
the tax laws to the information in order to determine the tax liabilities of such taxpayers. E, an individual, who has such an arrangement in Los Angeles
with C, collects information from T, a taxpayer, and
completes a worksheet kit supplied by C which is
stamped with E’s name and an identification number assigned to E by C. In this process, E classifies
this information in appropriate income and deduction categories for the tax determination. The completed worksheet kit signed by E is then mailed to C.
D, an employee in C’s office, reviews the worksheet kit to make sure it was properly completed. D
does not review the information obtained from T for
its validity or accuracy. D may, but did not, make the

May 19, 2003

final determination with respect to the proper application of tax laws to the information. The data from
the worksheet is entered into a computer and the return form is completed. The return is prepared for submission to T with filing instructions. E is the individual
preparer primarily responsible for the overall accuracy of T’s return. E must sign the return as preparer.
Example 4. X employs A, B, and C to prepare income tax returns for taxpayers. After A and B have
collected the information from the taxpayer and applied the tax laws to the information, the return form
is completed by computer service. On the day the returns prepared by A and B are ready for their signatures, A is away from the city for 1 week on another
assignment and B is on detail to another office for the
day. C may sign the returns prepared by A, provided that (i) C reviews the information obtained by
A relative to the taxpayer, and (ii) C reviews the preparation of each return prepared by A. C may not sign
the returns prepared by B because B is available.

(4) An individual required by this paragraph (b) to sign a return or claim for refund shall be subject to a penalty of $50 for
each failure to sign, with a maximum of

May 19, 2003

$25,000 per person imposed with respect
to each calendar year, unless it is shown that
the failure is due to reasonable cause and
not due to willful neglect. If the preparer
asserts reasonable cause for failure to sign,
the Internal Revenue Service will require
a written statement in substantiation of the
preparer’s claim of reasonable cause. For
purposes of this paragraph (b), reasonable cause is a cause which arises despite
ordinary care and prudence exercised by the
individual preparer. Thus, no penalty may
be imposed under section 6695(b) and this
paragraph (b) upon a person who is an income tax return preparer solely by reason
of—
(i) Section 301.7701–15(a)(2) and (b) of
this chapter on account of having given advice on specific issues of law; or
(ii) Section 301.7701–15(b)(3) of this
chapter on account of having prepared the

916

return solely because of having prepared another return which affects amounts reported
on the return.
(5) Effective date. This paragraph (b) applies to income tax returns and claims for
refund presented to a taxpayer for signature after December 31, 2002.
(c) through (f) [Reserved]. For further
guidance, see §1.6695–1(c) through (f).
David A. Mader,
Assistant Deputy Commissioner
of Internal Revenue.
Approved April 7, 2003.
Pamela F. Olson,
Assistant Secretary of the Treasury.
(Filed by the Office of the Federal Register on April 23, 2003,
8:45 a.m., and published in the issue of the Federal Register for April 24, 2003, 68 F.R. 20069)

2003–20 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Renewable Electricity
Production Credit, Publication
of Inflation Adjustment Factor
and Reference Prices for
Calendar Year 2003
Notice 2003–29
This notice publishes the inflation adjustment factor and reference prices for calendar year 2003 for the renewable electricity
production credit under § 45(a) of the Internal Revenue Code. The 2003 inflation adjustment factor and reference prices are used
in determining the availability of the credit.
The 2003 inflation adjustment factor and
reference prices apply to calendar year 2003
sales of kilowatt-hours of electricity produced in the United States or a possession thereof from qualified energy resources.
BACKGROUND
Section 45(a) provides that the renewable electricity production credit for any tax
year is an amount equal to the product of
1.5 cents multiplied by the kilowatt-hours
of specified electricity produced by the taxpayer and sold to an unrelated person during the tax year. This electricity must be
produced from qualified energy resources
and at a qualified facility during the 10year period beginning on the date the facility was originally placed in service.
Section 45(b)(1) provides that the
amount of the credit determined under
§ 45(a) is reduced by an amount that bears
the same ratio to the amount of the credit
as (A) the amount by which the reference
price for the calendar year in which the sale
occurs exceeds 8 cents bears to (B) 3 cents.
Under § 45(b)(2), the 1.5 cents in § 45(a)
and the 8 cents in § 45(b)(1) are each adjusted by multiplying the amount by the inflation adjustment factor for the calendar
year in which the sale occurs.
Section 45(c)(1) defines qualified energy resources as wind, closed-loop biomass, and poultry waste. Section 45(c)(3)
defines a qualified facility as any facility
owned by the taxpayer that originally is
placed in service after December 31, 1993
(in the case of a facility using wind to produce electricity), December 31, 1992 (in the
case of a facility using closed-loop biomass to produce electricity), or Decem-

2003–20 I.R.B.

ber 31, 1999 (in the case of a facility using poultry waste to produce electricity), and
before January 1, 2004. See § 45(d)(7) for
rules relating to the inapplicability of the
credit to electricity sold to utilities under
certain contracts.
Section 45(d)(2)(A) requires the Secretary to determine and publish in the Federal Register each calendar year the inflation
adjustment factor and the reference prices
for the calendar year. The inflation adjustment factor and the reference prices for the
2003 calendar year were published in the
Federal Register on April 17, 2003, (68 Fed.
Reg. 19073).
Section 45(d)(2)(B) defines the inflation adjustment factor for a calendar year
as the fraction the numerator of which is
the GDP implicit price deflator for the preceding calendar year and the denominator of which is the GDP implicit price
deflator for the calendar year 1992. The
term “GDP implicit price deflator” means
the most recent revision of the implicit price
deflator for the gross domestic product as
computed and published by the Department of Commerce before March 15 of the
calendar year.
Section 45(d)(2)(C) provides that the reference price is the Secretary’s determination of the annual average contract price per
kilowatt hour of electricity generated from
the same qualified energy resource and sold
in the previous year in the United States.
Only contracts entered into after December 31, 1989, are taken into account.
INFLATION ADJUSTMENT FACTOR
AND REFERENCE PRICES

vided in § 45(b)(1) does not apply to
electricity produced from wind, closedloop biomass, or poultry waste energy resources sold during calendar year 2003.
CREDIT AMOUNT
As required by § 45(b)(2), the 1.5¢
amount in § 45(a)(1) is adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in
which the sale occurs. If any amount as increased under the preceding sentence is not
a multiple of 0.1¢, such amount is rounded
to the nearest multiple of 0.1¢. Under the
calculation required by § 45(b)(2), the renewable electricity production credit for calendar year 2003 is 1.8¢ per kilowatt hour
on the sale of electricity produced from
wind energy, closed-loop biomass, and poultry waste resources.
DRAFTING INFORMATION
The principal author of this notice is
David A. Selig of the Office of Associate
Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice, contact Mr. Selig at (202)
622–3040 (not a toll-free call).

26 CFR 601.601: Rules and Regulations.
(Also Part I, §§ 25, 103, 143; 1.25–4T, 1.103–1,
6a.103A–2.)

Rev. Proc. 2003–29
SECTION 1. PURPOSE

The inflation adjustment factor for calendar year 2003 is 1.2048. The reference
prices for calendar year 2003 are 4.85 cents
per kilowatt-hour for facilities producing
electricity from wind energy resources and
0 cents per kilowatt-hour for facilities producing electricity from closed-loop biomass and poultry waste energy resources.

This revenue procedure provides guidance with respect to the United States and
area median gross income figures that are
to be used by issuers of qualified mortgage bonds, as defined in § 143(a) of the
Internal Revenue Code, and issuers of mortgage credit certificates, as defined in § 25(c),
in computing the housing cost/income ratio described in § 143(f)(5).

PHASE-OUT CALCULATION

SECTION 2. BACKGROUND

Because the 2003 reference prices for
electricity produced from wind, closedloop biomass, and poultry waste energy resources do not exceed 8 cents per kilowatt
hour multiplied by the inflation adjustment factor, the phaseout of the credit pro-

.01 Section 103(a) provides that, except as provided in § 103(b), gross income does not include interest on any state
or local bond. Section 103(b)(1) provides
that § 103(a) shall not apply to any private activity bond that is not a qualified

917

May 19, 2003

bond (within the meaning of § 141). Section 141(e) provides that the term “qualified bond” includes any private activity
bond that (1) is a qualified mortgage bond,
(2) meets the volume cap requirements under § 146, and (3) meets the applicable requirements under § 147.
.02 Section 143(a)(1) provides that the
term “qualified mortgage bond” means a
bond that is issued as part of a “qualified
mortgage issue”. Section 143(a)(2)(A) provides that the term “qualified mortgage issue” means an issue of one or more bonds
by a state or political subdivision thereof,
but only if (i) all proceeds of the issue (exclusive of issuance costs and a reasonably required reserve) are to be used to
finance owner-occupied residences; (ii) the
issue meets the requirements of subsections (c), (d), (e), (f), (g), (h), (i), and (m)(7)
of § 143; (iii) the issue does not meet the
private business tests of paragraphs (1) and
(2) of § 141(b); and (iv) with respect to
amounts received more than 10 years after the date of issuance, repayments of
$250,000 or more of principal on financing provided by the issue are used not later
than the close of the first semi-annual period beginning after the date the prepayment (or complete repayment) is received
to redeem bonds that are part of the issue.
.03 Section 143(f) imposes eligibility requirements concerning the maximum income of mortgagors for whom financing
may be provided by qualified mortgage
bonds. Section 25(c)(2)(A)(iii)(IV) provides that recipients of mortgage credit certificates must meet the income requirements
of § 143(f). Generally, under §§ 143(f)(1)
and 25(c)(2)(A)(iii)(IV), these income requirements are met only if all ownerfinancing under a qualified mortgage bond
and all certified indebtedness amounts under a mortgage credit certificate program
are provided to mortgagors whose family
income is 115 percent or less of the applicable median family income. Under
§ 143(f)(6), the income limitation is reduced to 100 percent of the applicable median family income if there are fewer than
three individuals in the family of the mortgagor.
.04 Section 143(f)(4) provides that the
term “applicable median family income”
means the greater of (A) the area median
gross income for the area in which the resi-

May 19, 2003

dence is located, or (B) the statewide median gross income for the state in which the
residence is located.
.05 Section 143(f)(5) provides for an upward adjustment of the income limitations
in certain high housing cost areas. Under
§ 143(f)(5)(C), a high housing cost area is
a statistical area for which the housing cost/
income ratio is greater than 1.2. The housing cost/income ratio is determined under
§ 143(f)(5)(D) by dividing (a) the applicable housing price ratio by (b) the ratio that
the area median gross income bears to the
median gross income for the United States.
The applicable housing price ratio is the
new housing price ratio (new housing average purchase price for the area divided
by the new housing average purchase price
for the United States) or the existing housing price ratio (existing housing average
area purchase price divided by the existing housing average purchase price for the
United States), whichever results in the
housing cost/income ratio being closer to
1. This income adjustment applies only to
bonds issued, and nonissued bond amounts
elected, after December 31, 1988. See Technical and Miscellaneous Revenue Act of
1988, § 4005(h), 1988–3 C.B. 1, 311 (1988).
.06 The Department of Housing and Urban Development (HUD) has computed the
median gross income for the United States,
the states, and statistical areas within the
states. The income information was released to the HUD regional offices on February 20, 2003, and may be obtained by
calling the HUD reference service at 1–800–
245–2691. The income information is also
available at HUD’s World Wide Web site,
http:huduser.org\datasets\il.html, which provides a menu from which you may select
the year and type of data of interest. The
Internal Revenue Service annually publishes only the median gross income for the
United States.
.07 The most recent nationwide average purchase prices and average area purchase price safe harbor limitations were
published on September 6, 1994, in Rev.
Proc. 94–55, 1994–2 C.B. 716.
SECTION 3. APPLICATION
.01 When computing the housing cost/
income ratio under § 143(f)(5), issuers of
qualified mortgage bonds and mortgage
credit certificates must use $56,500 as the
median gross income for the United States.
See § 2.06 of this revenue procedure.

918

.02 When computing the housing cost/
income ratio under § 143(f)(5), issuers of
qualified mortgage bonds and mortgage
credit certificates must use the area median gross income figures released by HUD
on February 20, 2003. See § 2.06 of this
revenue procedure.
SECTION 4. EFFECT ON OTHER
REVENUE PROCEDURES
.01 Rev. Proc. 2002–24, 2002–1 C.B.
798, is obsolete except as provided in § 5.02
of this revenue procedure.
.02 This revenue procedure does not affect the effective date provisions of Rev.
Rul. 86–124, 1986–2 C.B. 27. Those effective date provisions will remain operative at least until the Service publishes a
new revenue ruling that conforms the approach to effective dates set forth in Rev.
Rul. 86–124 to the general approach taken
in this revenue procedure.
SECTION 5. EFFECTIVE DATES
.01 Issuers must use the United States
and area median gross income figures specified in section 3 of this revenue procedure for commitments to provide financing
that are made, or (if the purchase precedes
the financing commitment) for residences
that are purchased, in the period that begins on February 20, 2003, and ends on the
date when these United States and area median gross income figures are rendered obsolete by a new revenue procedure.
.02 Notwithstanding section 5.01 of this
revenue procedure, issuers may continue to
rely on the United States and area median gross income figures specified in Rev.
Proc. 2002–24 with respect to bonds originally sold and nonissued bond amounts
elected not later than June 18, 2003, if the
commitments or purchases described in
§ 5.01 are made not later than August 17,
2003.
DRAFTING INFORMATION
The principal author of this revenue procedure is Zoran Stojanovic of the Office of
Assistant Chief Counsel (Exempt Organizations/Employment Tax/Government
Entities). For further information regarding this revenue procedure, contact
Mr. Stojanovic at (202) 622–3980 (not a
toll-free call).

2003–20 I.R.B.

Gaming Industry Tip
Compliance Agreement
Program
Rev. Proc. 2003–35
SECTION 1. PURPOSE
The Gaming Industry Tip Compliance
Agreement Program is designed to promote compliance by the gaming industry
employers and employees with the provisions of the Internal Revenue Code relating to tip income and to reduce disputes
under section 3121(q).
SECTION 2. OVERVIEW
Under the Gaming Industry Tipping
Agreement Program, a gaming industry employer and the Internal Revenue Service
may work together to reach a Gaming Industry Tip Compliance Agreement that objectively establishes minimum tip rates for
tipped employees in specified occupational
categories, prescribes a threshold level of
participation by the employer’s employees, and reduces compliance burdens for the
employer and enforcement burdens for the
Service.
SECTION 3. EMPLOYER
PARTICIPATION
.01 All employers operating a gaming establishment may participate in the Gaming Industry Tip Compliance Agreement
Program. Either the Service or an employer
may suggest the employer’s potential participation in the program.
.02 The Service’s decision to refuse participation by any employer in this program is not subject to review and will not
deprive the employer of any rights under
Internal Revenue Service procedures.
SECTION 4. GAMING INDUSTRY TIP
COMPLIANCE AGREEMENTS
.01 To participate in this program, an
employer must execute a Gaming Industry Tip Compliance Agreement. The Gaming Industry Tip Compliance Agreement
shall conform with all requirements of this
revenue procedure and will use the form appended to this revenue procedure as Exhibit 1.

2003–20 I.R.B.

.02 An executed Gaming Industry Tip
Compliance Agreement shall supersede all
existing tip compliance agreements between an employer and the Service. An employer under any gaming industry tip
compliance agreement, including a Tip Rate
Determination Agreement, may request to
change to a Gaming Industry Tip Compliance Agreement.
.03 In general, Gaming Industry Tip
Compliance Agreements shall be for a term
of three years. For new properties and for
properties that do not have a prior agreement with the Service, however, the initial term of the Agreement may be for a
shorter period.
.04 All Gaming Industry Tip Compliance Agreements may be renewed for additional terms of up to three years, in
accordance with Section IX. of the form
Gaming Industry Tip Compliance Agreement. Beginning not later than six months
prior to the termination date of a Gaming
Industry Tip Compliance Agreement, the
Service and the employer shall commence
discussions as to any appropriate revisions to the agreement, including any appropriate revisions to the tip rates described
in Section VIII. of the form Gaming Industry Tip Compliance Agreement. In the
event that the Service and the employer
have not reached final agreement on the
terms and conditions of a renewal agreement, the parties may, by mutual agreement, extend the existing agreement for an
appropriate time to finalize and execute a
renewal agreement.
.05 Decisions regarding renewal of a
Gaming Industry Tip Compliance Agreement are not subject to review.
SECTION 5. DEEMED COMPLIANCE
WITH SECTION 6053.
An employer who complies with the reporting requirements of Section V. of its
Gaming Industry Tip Compliance Agreement, and participating employees of the
employer who report in accordance with the
agreement, will be deemed to be in compliance with the reporting requirements of
section 6053 of the Internal Revenue Code
for the taxable periods during which the
agreement remains in effect.
SECTION 6. EFFECTIVE DATE
This revenue procedure is effective May
1, 2003.

919

SECTION 7. PAPERWORK
REDUCTION ACT
The collection of information contained
in this revenue procedure has been reviewed
and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. § 3507)
under control number 1545–1530. 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 collection of information in this revenue procedure is in the section titled
GAMING INDUSTRY TIP COMPLIANCE AGREEMENTS. This information
is required to evaluate the suitability of the
Gaming Industry Tip Compliance Agreement Program for the particular taxpayer
and to assess the validity of the proposed
tip rates. The collection of information is
required to obtain the benefits described in
this revenue procedure. The likely respondents are businesses or other for-profit institutions.
The estimated total annual reporting burden is 6100 hours.
The estimated annual burden per respondent is an average of 10 hours, depending on individual circumstances. The
estimated number of respondents is 610.
The estimated frequency of responses is
1 time per year per respondent.
Books or records relating to a collection of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally tax returns and tax return information are confidential, as required by
26 U.S.C. § 6103.
SECTION 8. CONTACT
INFORMATION
A taxpayer that wants to participate in
the Gaming Industry Tip Compliance
Agreement Program, or that has questions
about the program, may contact Thomas
Burger at (202) 622–3704 (not a toll-free
number) or by email at thomas.r.burger
@irs.gov or Jason Spitzer at (202) 622–
7940 (not a toll-free number) or by email
at [email protected].

May 19, 2003

Rev. Proc. 2003–35
Exhibit 1
Gaming Industry Tip Compliance Agreement
I. PARTIES
The parties to this Agreement are _______________________ (hereinafter “Employer”) and the Commissioner of the Internal
Revenue Service (hereinafter “Service”; collectively “the parties”). This Agreement will establish tip rates for all Participating Employees of the Employer. This Agreement is pursuant to Rev. Proc. 2003–35.
II. APPENDICES
The parties have agreed to:
A. The Occupational Categories, available shifts, and tip rates for all participating employees of the Employer, set forth in Appendix A,
B. A Narrative Summary of Tip Rate Calculation Methodology (specific to the Employer), set forth in Appendix B,
C. The Model Gaming Employee Tip Reporting Agreement, set forth in Appendix C, and
D. The Model Extension Agreement, set forth in Appendix D.
III. INTENDED BENEFICIARIES
The Participating Employees of the Employer are intended beneficiaries of this Agreement.
IV. EMPLOYEE PARTICIPATION
A. For purposes of this Agreement, an “Eligible Employee” means an individual who:
(1) performs a job function in an Occupational Category described in Appendix A of this Agreement, and;
(2) regularly and routinely receives tips, directly or indirectly, of at least $20 per month during the course of his or her employment.
B. A “Participating Employee” is an Eligible Employee who:
(1) filed, if required to do so by law, federal income tax returns for the three taxable years that precede the Effective Date
of this Agreement or, if he or she has not filed, files these returns prior to signing the Model Gaming Employee Tip Reporting Agreement provided in Appendix C of this Agreement;
(2) gives to the Employer a signed Model Gaming Employee Tip Reporting Agreement;
(3) reports and continues to report his or her tips to the Employer at or above the “tip rates” set forth in Section VIII. of this
Agreement, except as provided by paragraph E of this section; and
(4) timely files federal income tax returns that report those tips.
C. An Eligible Employee who has filed federal income tax returns for the three taxable years that precede the Effective Date of
this Agreement but has not fully paid the tax liability reported on such returns, or has additional tax liability due to, for example, a
completed examination of such returns or the filing of amended returns, may participate in this program. To participate, however,
he or she must contact the local office of the Service within the later of 60 days of electing to become a Participating Employee
under this Agreement or 60 days of commencing employment to resolve his or her tax liability.
D. For purposes of this Agreement, a “Nonparticipating Employee” is any Eligible Employee who is not a Participating Employee.
E. A Participating Employee may report tips on his or her federal tax return below the tip rates if the employee can substantiate, with adequate books and records, that he or she earned less tip income than would be reflected by applying the tip rates.
V. EMPLOYER PROGRAM
A. The Employer agrees to encourage all of its Eligible Employees to become Participating Employees and to sign the Model
Gaming Employee Tip Reporting Agreement, attached as Appendix C. The Employer will keep these agreements for at least the period of limitation on assessment of employment tax for the years in which this Agreement is in effect and the Employer will make
the agreements available to the Service upon request.
B. The Employer shall make tax withholding based upon tips reported, as required by law.
C. The Employer shall include all reported tips in I.R.S. Forms W–2.
D. The Employer acknowledges that the Service has authority, including the issuance and enforcement of summonses pursuant
to sections 7602, 7604, and 7609 of the Code, to secure the information necessary to the Service to develop the tip rates of Nonparticipating Employees.

May 19, 2003

920

2003–20 I.R.B.

E. The Employer shall maintain the following records, to be made available to the Service upon request:
(1) Employee records. For each Eligible Employee, the Employer will maintain a record of the employee’s name and social
security number; the date on which the employee was hired by the Employer; the employee’s Occupational Category or Categories, as set forth in Appendix A; the employee’s reported tips; the employee’s shift(s) and/or hours; and the employee’s wages.
(2) Gaming establishment records. For each instance of toke and chip-cashing, where such information is in the possession
or control of the Employer, the Employer will maintain a record of the dollar amount of tokes and chips presented to the Employer for cashing by the toke committee (or other representatives of eligible employees); a list of the tip splits furnished to the Employer by its Eligible Employees or the toke committee (or other representatives of eligible employees); and other separate records
of the amounts presented to the Employer for cashing by toke committee. The Service acknowledges that the records of the toke
committee reflecting the actual division of tips may not be in the Employer’s possession or control.
(3) Food and beverage operations records. If the Occupational Categories set forth in Appendix A include food or beverage
servers, the Employer will maintain gross receipts subject to food or beverage tipping, and aggregate receipts showing charged tips.
(4) Tip rates records. The Employer will maintain any other records relevant to determining tip rates, as may be required by
other governmental agencies.
The Employer must retain the records listed in this section for at least 4 years after the April 15 following the calendar year to which
the records relate.
F. The Employer shall furnish to the Service the following documents:
(1) An annual report showing each Eligible Employee’s name and social security number; the Employee’s Occupational Category or Categories; the employee’s shift(s) and hours; the employee’s wages and reported tips; and whether the employee is a Participating Employee. The report is due on or before March 31 for the preceding calendar year or any portion thereof during which
the Gaming Industry Tip Compliance Agreement was in effect.
(2) If the Occupational Categories listed in Appendix A include employees of large food and beverage establishments as defined in section 6053(c)(4) of the Code, the Employer shall provide annually to the Service the following information: (1) the gross
receipts subject to food and beverage tipping; (2) the aggregate amount of charge receipts attributable to such gross receipts; (3)
the aggregate amount of charged tips shown on such charge receipts; (4) the sum of (i) the aggregate amount of tips reported by
Nonparticipating Employees to the Employer and (ii) the amount the Employer is required to report under section 6051 of the Code
with respect to service charges of less than 10 percent; and (5) the amount allocated to each Nonparticipating Employee under section 6053(c)(3) of the Code. In addition, the Employer shall include on the Forms W–2 issued to Nonparticipating Employees tips
allocated pursuant to section 6053 of the Code. No such tip allocation shall be required on Forms W–2 issued to Participating Employees. Accordingly, no preparation and filing of I.R.S. Forms 8027 by the Employer shall be required with respect to Participating Employees. The information is due on or before the Form 8027 filing date.
G. If the Employer complies with the terms of this Agreement with respect to its Participating Employees and provides the information described in paragraph F of this section to the Service with respect to its Nonparticipating Employees on I.R.S. Forms
8027 (or the equivalent information in an alternate form deemed acceptable by the Service) and I.R.S. Forms W–2, the Employer
shall be deemed to satisfy the requirement that the Employer prepare and file I.R.S. Forms 8027 with respect to its Employees.
H. If the Employer fails to maintain or provide any material information in the manner described in paragraphs E and F of this
section, following notice and demand to the Employer for such information the Service may employ any lawful means, including
the issuance and enforcement of summonses pursuant to sections 7602, 7604, and 7609 of the Code, in order to secure that information.
I. In the event of a material breach by the Employer of its obligation to maintain or provide the information described in paragraphs E and F of this section that continues following notice and demand for such information by the Service, the restrictions in
Section VII.A on methods of determination of additional liabilities under section 3121(q) of the Code shall be deemed to be waived
by the Employer and shall be inapplicable for all taxable periods occurring after the date of such material breach, and the Service
shall be permitted to determine employer liability by any lawful means.
VI. TIP EXAMINATIONS OF EMPLOYEES
A. Except as provided in paragraph B. of this section, the Service may not examine a Participating Employee’s tip income for
any taxable year that ends after the Effective Date of this Agreement to which this Agreement applies, provided that each of the
following conditions is met:
(1) The employee is a Participating Employee for the entire taxable year (or such portion thereof during which he or she earns
tip income). In the case of a new employee, he or she must become a Participating Employee within 60 days after commencement
of employment with the Employer as an Eligible Employee.
(2) The Participating Employee reports the tips he or she earns during the taxable year to the Employer at or above the tip
rates set forth in Section VIII. of this Agreement.
(3) The Participating Employee timely files a federal income tax return for the taxable year that reports earned tips and wages
reported on IRS Form W–2.

2003–20 I.R.B.

921

May 19, 2003

B. If an employee becomes a Participating Employee more than 60 days after becoming employed as an Eligible Employee, the
Service may examine the Participating Employee’s tip income received before the employee becomes a Participating Employee, unless the employee was a participating employee of the Employer or another employer under a tip compliance agreement for any taxable year. Once the employee becomes a Participating Employee, the Service may not examine the employee’s tip income received
after the employee becomes a Participating Employee.
C. The Service may not examine tip income of a Participating Employee for any taxable year that ends on or before the Effective Date of this Agreement, provided that during that prior period he or she was:
(1) a participating employee of the Employer under a predecessor agreement between the Employer and the Service and satisfied the terms and conditions of that agreement in that prior taxable year;
(2) a participating employee of another employer who had a Gaming Industry Tip Compliance Agreement (or a predecessor
agreement) with the Service and satisfied the terms and conditions of that agreement in that prior taxable year; or
(3) an employee of (i) an employer that did not have a Gaming Industry Tip Compliance Agreement (or predecessor agreement) with the Service or (ii) the Employer but held a position in which he or she was not an Eligible Employee, and he or she
filed, if required to do so by law, federal income tax returns for the three taxable years that preceded the Effective Date of this Agreement year.
D. A Nonparticipating Employee is subject to the full range of compliance and enforcement procedures of the Service, at any
time, including during the term of this Agreement. (The treatment of the Employer in the case of Nonparticipating Employees is
set forth in Section VII.A.(2)).
E. At the Service’s discretion, the Service may continue any ongoing examination of any employees of the Employer begun by
the Service before the Effective Date of this Agreement.
VII. TIP EXAMINATIONS OF EMPLOYER
A. With respect to any taxable year during which this Agreement is in effect:
(1) the Service may not assert liability against the Employer pursuant to section 3121(q) of the Code with respect to the tip
income of Participating Employees (except in the limited case provided in subparagraph (2)(ii) immediately below);
(2) the Service may assert liability against the Employer pursuant to section 3121(q) of the Code based on (i) tips received
by a Nonparticipating Employee if the asserted liability is based upon the final results of an audit or agreement of the Nonparticipating Employee or (ii) the reporting of additional tip income by an employee.
B. At the Service’s discretion, the Service may continue any ongoing examination of the Employer begun by the Service before
the Effective Date of this Agreement.
VIII. TIP RATES
A. This Section sets forth the applicable tip rates under this Agreement. The parties established the applicable tip rates as follows:
(1) Employees Who Pool Tips. In satisfaction of their tip reporting obligations under section 6053(a) of the Code with respect to Employees who pool tips, these Employees or their employee group representatives (e.g., the toke committee) shall present
to the Employer a listing of the actual share of pooled tips received by or given to each Employee. This listing must reconcile to
the tips presented to the Employer’s cage for cashing. The tip rate in the case of these Employees is the amount of tips so reported
to the Employer with respect to each such Employee.
(2) Other Tipped Employees — Specified Occupational Categories. By agreement between the Employer and the Service, based
on information available from the Employer, historical information available to the Service, and generally accepted accounting principles, tip rates have been established for the occupational categories or subcategories of Eligible Employees (“Occupational Category”) and, where applicable, shifts listed on Appendix A. These rates specify tips received, by hour, by shift, by drink, by percentage
of sales, or other mutually agreed and verifiable bases of measurement depending on the nature of the work performed.
B. (1) In general. The applicable Tip Rates and Occupational Categories established by this Agreement shall remain in effect for
the term of this Agreement, unless otherwise modified pursuant to paragraphs B.(2) or (3) of this section.
(2) Mutual agreement process. The Service or the Employer may propose revisions to Tip Rates or Occupational Categories
during the term of the Agreement. The non-proposing party will notify the proposing party in writing of approval or disapproval
within 60 calendar days of receipt of the proposed revision. The non-proposing party will not unreasonably withhold approval. If
accepted, the revisions will become effective upon the date agreed to by the parties.
(3) Specific events. Upon the occurrence of one of the following specific events—
(a) a significant change in the nature of the business (or segment thereof) in which the Participating Employee earns tips
(e.g., Employer converts upscale restaurant into coffee shop),
(b) a decrease of 20 percent or more in the Employer’s gross monthly revenue as compared to the same month of the
previous year, or
(c) a drop below 50 percent in the participation rate of any Occupational Category as of the participation measurement
date,

May 19, 2003

922

2003–20 I.R.B.

the Employer may request that the Service agree to a modification in the relevant Tip Rate of an affected Participating Employee
within an Occupational Category (e.g., an outlet or shift) that is appropriate in amount and duration, which consent shall not be unreasonably withheld. The process established in this paragraph B.(3) for the revision of a Tip Rate upon the occurrence of specific
events in no way limits the circumstances that may give rise to a request for revision of a Tip Rate under the mutual agreement
process described in paragraph B.(2) of this section.
IX. TERM OF AGREEMENT
A. This Agreement shall commence on the Effective Date and shall terminate on __________. The “Effective Date” of this Agreement shall be ___________.
B. The Service and the Employer agree that, beginning not later than six months prior to the termination date described in paragraph A., they shall commence discussions as to any appropriate revisions to this Agreement, including any appropriate revisions
to the tip rates described in Section VIII. In the event that the Service and the Employer have not reached final agreement on the
terms and conditions of a renewal Agreement to become effective beginning on _________, the parties may, by mutual agreement,
extend this agreement for an appropriate time to finalize and execute a renewal Agreement.
C. Neither the Employer’s nor the Service’s decisions regarding renewal of agreements are subject to review.
X. TERMINATION OF AGREEMENT; SURVIVAL OF TERMS
A. If Employee participation is below 75 percent of the Eligible Employees, the Service and Employer shall meet to discuss the
cause of the decline in the participation rate and appropriate measures to increase the participation rate. At the meetings, the Employer shall provide information with respect to the records necessary for assessing the tip rate and for assessing the procedures employed to encourage all of the Employer’s Eligible Employees to be Participating Employees.
(1) If the Employer undertakes good faith consultations with the Service to discuss these matters and the Employer is not in
breach of its obligations under Section V.A., the Service may not terminate the Agreement.
(2) If the Employer fails to undertake good faith consultations with the Service to discuss these matters or the Employer is
in breach of its obligations under Section V.A., the Service may terminate the Agreement.
B. The Service may terminate this Agreement if participation falls below 50 percent of the Eligible Employees. Termination shall
be effective beginning with the first calendar quarter that commences after the 60-day period for notice to the Employer.
C. This Agreement may be terminated upon the joint agreement of the Employer and the Service, without the consent of any Participating Employee. The effective date of termination shall be as agreed to by the Employer and the Service.
D. If either party fails to comply with any material provision of this Agreement, the non-defaulting party, at its option, may terminate this Agreement by giving written notice of termination to the other party. Termination of the Agreement shall be effective
upon receipt of the notice by the other party.
E. If this Agreement is terminated pursuant to the terms of this agreement, the mutual obligations of the parties shall remain in
effect through the effective date of termination. The agreements set forth in Sections VI. and VII. shall survive termination with respect to taxable periods (or portion thereof) that occur prior to the effective date of termination.
XI. PRECEDENTIAL VALUE
The contents of this agreement may not be used or cited as precedent by any other Employer or other taxpayer and will not bind,
or otherwise control, the parties for taxable years or issues not covered by this Agreement.
XII. FAILURE TO COMPLY
If the Employer fails or refuses to provide any of the information required by this Agreement, the Service may employ any lawful means, including the issuance and enforcement of summonses pursuant to sections 7602, 7604, and 7609 of the Code, in order
to secure the information.
XIII. COMPLIANCE REVIEW
The Employer agrees that a compliance review or other inspection of books and records, as required for compliance with the terms
of this Agreement, will not be considered an inspection of books and records for purposes of section 7605(b) of the Code, or an
audit for purposes of section 530 of the Revenue Act of 1978.
XIV. EXCLUSION OF CERTAIN EMPLOYEES
This Agreement does not cover those employees of Employer working in housekeeping and such employees shall not be considered Eligible Employees for purposes of this Agreement.

2003–20 I.R.B.

923

May 19, 2003

XV. OTHER AGREEMENTS SUPERSEDED
This Agreement shall supersede all existing tip compliance agreements between the Employer and the Service.
XVI. ENTIRE AGREEMENT
This Agreement contains the final and entire agreement between the Employer and the Service.

By signing this Gaming Industry Tip Compliance Agreement, the parties certify that they have read and agreed to the terms of this
document, including Appendices.
EMPLOYER:

INTERNAL REVENUE SERVICE:

By

By

TITLE

TITLE Territory Manager
[operating division]
Territory XX

Address

Address

Date:

Date:

May 19, 2003

924

2003–20 I.R.B.

APPENDIX A
Occupational Categories, Outlets, Shifts, and Tip Rates
Occupational Category
Food Server
Cocktail Server
Bartender
Room Service Food Server
Bell Person
Valet
Barback
Bingo
Cage
Captain
Change person
Doorman
Keno Writers/Runners
Race & Sportsbook writers/runners
Maitre D’
Parking (Valet)
Bus Person
Slot Floorperson
Other
Other
Other

Outlet

Shift

Tip Rate

APPENDIX B
Narrative Summary of Tip Rate Calculation Methodology

2003–20 I.R.B.

925

May 19, 2003

APPENDIX C
Model Gaming Employee Tip Reporting Agreement
I am an employee of _______________, and by signing this agreement I am choosing to participate in the tip reporting program
administered by my employer under the Gaming Industry Tip Compliance Agreement between my employer and the Internal Revenue Service (IRS).
I understand that I have responsibilities under this tip reporting program:
• In general, I agree to report to my employer tips at or above the tip rate that has been established for my job. However, I understand that I may report tips below the tip rate if I can substantiate, to the satisfaction of the IRS and subject to a possible
review by the IRS, that I earned less tip income than would be reflected by applying the tip rate.
• I agree to file my Federal tax return on a timely basis and report those tips and the rest of my earnings from my job as shown
on the IRS Form W–2 that my employer gives me and my other income.
• For each of the three years prior to the date of this agreement, if required to do so I have filed a Federal tax return on a timely
basis. If I have filed all of these tax returns but have not fully paid the tax I owe, I must contact the local office of the IRS
within 60 days from now to resolve my account.
If I fulfill my responsibilities and continue to participate under this tip reporting program, I will receive important benefits under
this agreement:
• If I report to my employer tips at or above the tip rate that has been established for my job, the IRS will not audit my tip income received after the date of this agreement during which the Gaming Industry Tip Compliance Agreement between my employer and the IRS is in effect. If I report tips below such tip rate, the IRS can review my substantiation of that tip income
and can make any adjustment necessary to accurately report such income.
• The IRS also will not audit my tip income for any prior tax year during which: (1) I was a participant in a prior tip compliance agreement of my current employer or a former employer, or (2) I had no opportunity to participate in a prior tip compliance agreement because I worked in a job that was not covered by an agreement or because my employer did not have a
tip compliance agreement with the IRS.
• If I was eligible to participate in an employer’s tip compliance agreement in prior tax years but did not do so, I will not be
protected from an IRS audit of my tip income for those prior years, but I will receive protection from audit of my tip income
received after the date of this agreement during which the Gaming Industry Tip Compliance Agreement between my employer and the IRS is in effect.
• If I sign this agreement more than 60 days after I first became employed with my current employer, I will be protected from
an IRS audit of my tip income received after the date of this agreement during which the Gaming Industry Tip Compliance
Agreement between my employer and the IRS is in effect.
By signing below, I agree to fulfill my responsibilities under this agreement and to participate in the Gaming Industry Tip Compliance Agreement between my employer and the IRS. This agreement shall remain in effect so long as there is a Gaming Industry
Tip Compliance Agreement between my employer and the IRS, and I have not notified my employer in writing that I wish to terminate this agreement.
Signature and Employee’s name printed, address
Social Security Number

APPENDIX D
Model Extension Agreement
The Gaming Industry Tip Compliance Agreement (“Agreement”) signed by _______________ and the Commissioner of Internal
Revenue (“the Parties”), effective on ________, shall expire on ________.
The Parties wish to renew the Agreement, but have not reached final agreement on the terms and conditions of the renewal. In order to allow more time to finalize and execute a renewal, the Parties agree to extend the original Agreement until __________.

May 19, 2003

926

2003–20 I.R.B.

Part IV. Items of General Interest
Notice of Proposed Rulemaking by Cross-Reference to
Temporary Regulation
Tax Return Preparers —
Electronic Filing
REG–141659–02
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking by cross-reference to temporary regulation
SUMMARY: In this issue of the Bulletin,
the IRS is issuing a temporary regulation
(T.D. 9053, on page 914) relating to a paid
income tax preparer’s obligation to retain
and furnish copies of income tax returns and
claims for refund. The text of that temporary regulation also serves as the text of this
proposed regulation.
DATES: Written and electronic comments
and requests for a public hearing must be
received by July 23, 2003.
ADDRESSES: Send submissions to:
CC:PA:RU (REG–141659–02), room 5226,
Internal Revenue Service, POB 7604, Ben
Franklin Station, Washington, DC 20044.
Submissions may be hand delivered Monday through Friday between the hours of
8 a.m. and 4 p.m. to: CC:PA:RU (REG–
141659–02), courier’s desk, Internal Revenue Service, 1111 Constitution Avenue,
NW, Washington, D.C. Alternatively, taxpayers may submit comments electronically directly to the IRS Internet site at
www.irs.gov/regs.
FOR
FURTHER
INFORMATION
CONTACT: Concerning the regulation,
Richard Charles Grosenick (202) 622–
7940; concerning submissions, LaNita
Van Dyke (202) 622–7190 (not toll-free
numbers).
SUPPLEMENTARY INFORMATION:
Background
Temporary regulations in this issue of the
Bulletin amend the Income Tax Regula-

2003–20 I.R.B.

tions (26 CFR part 1) under sections 6107
and 6695 of the Internal Revenue Code. The
temporary regulations eliminate the references to manually signed returns in the
regulations under section 6695. In addition, they provide that the Commissioner
may prescribe, in forms, instructions, or
other appropriate guidance, the manner in
which preparers may satisfy their obligations under section 6107 to furnish returns to taxpayers and to retain copies of
returns.
The text of those temporary regulations
also serves as the text of these proposed
regulations. The preamble to the temporary regulations explains the temporary
regulations.

mits written comments. If a public hearing is scheduled, notice of the date, time,
and place for the hearing will be published
in the Federal Register.
Drafting Information
The principal author of these regulations is Richard Charles Grosenick, Office of Assistant Chief Counsel (Administrative Provisions & Judicial Practice).
However, other personnel from the IRS and
the Treasury Department participated in its
development.
*****
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:

Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory
assessment is not required. It has also been
determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to this regulation and,
because the regulation does not impose a
collection of information on small entities, that the Regulatory Flexibility Act (5
U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed
rulemaking will be submitted to the Chief
Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
Comments and Requests for a Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written comments, either electronically or on paper (a signed
original and 8 copies), that are timely submitted to the IRS. The IRS and Treasury
Department specifically request comments
on the clarity of the proposed regulations
and how they can be made easier to understand. All comments will be available for
public inspection and copying. A public
hearing may be scheduled if requested in
writing by any person who timely sub-

927

PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.6107–2 is added to read
as follows:
§1.6107–2 Form and manner of
furnishing copy of return and retaining
copy or record.
[The text of this proposed section is the
same as the text of §1.6107–2T published
elsewhere in this issue of the Bulletin.
Par. 3. Section 1.6695–1 is amended by
revising paragraph (b) to read as follows:
§1.6695–1 Other assessable penalties
with respect to the preparation of
income tax returns for other persons.
*****
(b) [The text of this proposed paragraph
(b) is the same as the text of §1.6695–
1T(b) published elsewhere in this issue of
the Bulletin.
*****
David A. Mader,
Assistant Deputy Commissioner
of Internal Revenue.
(Filed by the Office of the Federal Register on April 23, 2003,
8:45 a.m., and published in the issue of the Federal Register for April 24, 2003, 68 F.R. 20089)

May 19, 2003

International Grant-making
and International Activities by
Domestic 501(c)(3)
Organizations: Request for
Comments Regarding
Possible Changes
Announcement 2003–29
The Internal Revenue Service requests
public comment on how it might clarify existing requirements that section 501(c)(3)
organizations must meet with respect to international grant-making and other international activities. The IRS is particularly
interested in comments on how new guidance might reduce the possibility of diversion of assets for non-charitable purposes
while preserving the important role of charitable organizations world-wide.
Background
The attacks of September 11, 2001, focused public attention on the need to take
comprehensive measures to prevent terrorism. Investigative and law enforcement initiatives have identified situations in which
charitable organizations have been a significant source of terrorist funding. The financing has come not only from United
States-based charitable organizations, but
also from foreign organizations that receive support directly or indirectly from
United States donors. Further, investigative efforts have also identified situations
in which diversion of charitable assets occurred without the knowledge of donors.
Statement of Purpose
The IRS is evaluating current guidance
with respect to international grant-making
and international activities of United Statesbased charities (both public charities and
private foundations) to determine whether
and to what extent additional guidance is
needed to help prevent the diversion of
charitable assets for non-charitable purposes and to assure donors that donations
are used for their intended charitable purpose.
Guidance addressing standards, controls, and reporting requirements for international giving by U.S. charities has focused
more on reducing the risk that charitable assets might be diverted for personal gain. The
IRS is concerned that this guidance does not
adequately cover the measures charities

May 19, 2003

should take to protect funds from being
used for other non-charitable purposes (including terrorist activities). As a result, the
IRS is considering new guidance applicable to public charities and private foundations that clarifies standards and
requirements for international grant-making
and international activities. The IRS is also
considering making revisions to Forms 990,
990–PF, and 1023 to provide for more specific reporting on international grant-making
and international activities.
The IRS is interested in learning how
domestic charitable organizations conduct
their international grant-making and international activities, and receiving suggestions on how existing guidance could be
expanded to better address compliance with
section 501(c)(3) and other federal tax standards. The IRS is particularly interested in
comments on how the existing rules might
be improved to help preclude the diversion of assets for non-charitable purposes
and assure donors that their contributions
are used solely for charitable purposes.
Within the past year, the IRS has issued three other requests for comments that
could bear on international grant-making
and international activities of charities. In
Announcement 2002–87, 2002–39 I.R.B.
624, the IRS asked for public comments on
how, among other matters, Form 990 might
be improved to better reflect international
grant-making activities of exempt organizations. In Announcement 2002–92,
2002–41 I.R.B. 709, the IRS asked for comments on changes to Form 1023. In Announcement 2002–47, 2002–18 I.R.B. 844,
the IRS asked for comments on changes to
private foundation regulations. The comment period has closed for all three requests. The IRS is aware that members of
the public submitted comments in response
to those requests that would also be responsive to this request and will take those
comments into consideration. However, you
may wish to modify or expand those comments to address the specific considerations raised here.
Existing Law
Section 501(a) of the Internal Revenue
Code provides for exemption from income
tax of organizations described in section
501(c)(3). Section 501(c)(3) describes organizations that are organized and oper-

928

ated exclusively for religious, charitable,
scientific, educational, or certain other specified purposes.
Section 170(c)(2) of the Code provides
that the term “charitable contribution” includes a contribution or gift to a domestic organization that is organized and
operated exclusively for religious, charitable, scientific, educational, or certain other
specified purposes.
Rev. Rul. 71–460, 1971–2 C.B. 231, provides that a domestic organization that conducts some or all of its activities outside the
United States is not precluded from qualifying for exempt status under section
501(c)(3). See also Rev. Rul. 68–117,
1968–1 C.B. 251, and Rev. Rul. 68–165,
1968–1 C.B. 253.
Rev. Rul. 68–489, 1968–2 C.B. 210, provides that an exempt organization under section 501(c)(3) does not jeopardize its
exempt status by distributing funds to organizations not themselves exempt under
section 501(c)(3), provided the exempt
organization:
1) retains control and discretion as to the
use of the funds;
2) maintains records establishing that the
funds were used for section 501(c)(3) purposes; and
3) limits distributions to specific projects
that are in furtherance of its own exempt
purposes.
Rev. Rul. 56–304, 1956–2 C.B. 306, provides that an organization is not precluded
from section 501(c)(3) exemption when it
makes grants to individuals, provided the
distributions are made on a true charitable basis and in furtherance of its exempt purposes. Such organizations should
keep adequate records and case histories to
show:
1) the name and address of the recipients;
2) the amount distributed to each;
3) the purpose for which the aid was
given;
4) the manner in which the recipient was
selected; and
5) the relationship, if any, between the
recipient and
(i) members, officers, or trustees of the
organization;
(ii) a grantor or substantial contributor to the organization or a member of the
family of either; and
(iii) a corporation controlled by a
grantor or substantial contributor.

2003–20 I.R.B.

For private foundations, section 4945 and
its underlying regulations impose an excise tax on certain distributions. If a grant
is made to another organization that is not
a public charity, the excise tax of section
4945 will apply unless the foundation exercises expenditure responsibility with
respect to that grant. Expenditure responsibility, as defined in section 4945(h) and
the regulations thereunder, means that the
foundation must exert all reasonable efforts and establish adequate procedures (1)
to see that the grant is spent solely for the
purpose for which made, (2) to obtain full
and complete reports from the grantee on
how the funds were spent, and (3) to make
full and detailed reports to the IRS with respect to these expenditures. Section 4945
imposes other specific requirements that private foundations must meet when making
grants to an individual in order to avoid
making a taxable expenditure.
Rev. Rul. 63–252, 1963–2 C.B. 101, and
Rev. Rul. 66–79, 1966–1 C.B. 48, provide guidance as to whether and under what
circumstances gifts to domestic charities that
subsequently transfer the gifts to foreign organizations are deductible by donors.
Issues for Comment
The IRS requests comments on how domestic charitable organizations conduct their
international grant-making and international activities, and whether the existing
guidance discussed above provides adequate federal tax standards for these activities. The IRS is particularly interested
in comments on how the existing rules discussed above might be improved to help
preclude the diversion of assets for noncharitable purposes. While the IRS welcomes all ideas, some possible areas to
address are:
1. What specific practices and safeguards are currently used by public charities and private foundations to ensure that
grants to foreign recipients are not diverted
for nonexempt purposes and overseas activities are in furtherance of exempt purposes? The IRS would find it particularly
helpful to have specific details about the
grant-making process, and examples of typical programs, including but not limited to:
a. What kind of due diligence investigation is done in advance of grant-making?
b. What provisions are used by grant
agreements to ensure grants are used for
their intended purpose?

2003–20 I.R.B.

c. What reports or other mechanisms are
used to track the use of grant funds?
d. If a public charity or a private foundation makes repeated grants to the same
foreign grantee, how often does it perform renewed due diligence on the grantee?
e. Are grant agreements, reports, and
other significant correspondence written or
accurately translated into English? Are grant
funds disbursed by check? By electronic
funds transfer? By cash?
2. In the aftermath of September 11,
2001, what review or changes in practice
have organizations made to ensure that
grants are not diverted to support terrorism or other non-charitable activities?
3. What difficulties have public charities and private foundations encountered in
monitoring how international grants are actually used, or how international activities are conducted? Are there particular
types of grants, recipients, or activities that
are easier to monitor than others?
4. a. Are there additional requirements
that should be added beyond those already
specified in Rev. Rul. 56–304, Rev. Rul.
63–252, Rev. Rul. 66–79, and Rev. Rul. 68–
489 to reduce the risk that charitable assets may be diverted to non-charitable
purposes? Please also comment on how any
burden associated with any new requirements might be mitigated.
b. What specific changes to Forms 990,
990–PF, and 1023 would you recommend
to allow for better monitoring of international grant-making and international activities by the IRS, and by other government
agencies and members of the public who
can review these forms as public documents?
5. In November 2002, the Treasury
Department released “Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities” (search at
www.treas.gov). These guidelines were developed to help a charity reduce the risk that
the charity’s funds would be frozen in connection with any ongoing anti-terrorism investigation. Recognizing that some of these
voluntary best practices impose additional
burdens on charities and may not be directly related to tax administration, the IRS
is nevertheless interested in learning which
of the best practices specified in the guidelines organizations currently use. The IRS
is also interested in learning whether these
currently used best practices are useful in
achieving compliance with federal income

929

tax requirements and appropriate for other
public charities and private foundations to
follow.
How to Comment
Public comments should be submitted in
writing on or before July 18, 2003, and
should include a reference to Announcement 2003–29.
Comments may be submitted to:
Internal Revenue Service
Attn: T:EO:RA:G
(Announcement 2003–29)
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
Comments may be hand delivered between the hours of 8 a.m. and 4 p.m., Monday through Friday, to:
T:EO:RA:G (Announcement 2003–29)
Courier’s Desk
Internal Revenue Service
1111 Constitution Ave, N.W.
Washington, DC 20224
Comments may also be sent via e-mail
to: [email protected]
All comments received will be subject
to public inspection.
Drafting Information
The principal author of this announcement is Robert Fontenrose of the Exempt
Organizations Technical Division. For further information regarding this announcement, contact Mr. Fontenrose at (202) 283–
9484 (not a toll-free call).

Withdrawal of Announcement
99–45; Restoration of
Organization on Cumulative
List of Organizations
Contributions to Which are
Deductible Under Section 170
of the Code
Announcement 2003–30
In Announcement 99–45, 1999–1 C.B.
927, the Internal Revenue Service announced that the Abraham Lincoln Opportunity Foundation, of Pine Mountain
Georgia, had been deleted from the Cumulative List of Organizations to Which

May 19, 2003

Contributions Are Deductible Under Section 170 of the Internal Revenue Code of
1986. Announcement 99–45 is hereby withdrawn. The Abraham Lincoln Opportunity Foundation will be treated as having
been on the Cumulative List retroactively
for all periods that it was in existence.

Foundations Status of Certain
Organizations
Announcement 2003–31
The following organizations have failed
to establish or have been unable to maintain their status as public charities or as operating foundations. Accordingly, grantors
and contributors may not, after this date,
rely on previous rulings or designations in
the Cumulative List of Organizations (Publication 78), or on the presumption arising from the filing of notices under section
508(b) of the Code. This listing does not
indicate that the organizations have lost their
status as organizations described in section 501(c)(3), eligible to receive deductible contributions.
Former Public Charities. The following organizations (which have been treated
as organizations that are not private foundations described in section 509(a) of the
Code) are now classified as private
foundations:
108th Street Tae Kwon Do Inst., Inc.,
New York, NY
Abondia Center for Public Dialogue
Education & Reflection,
Minneapolis, MN
Accelerated Music Program, Inc.,
Portland, OR
Acheinu, Inc., Los Angeles, CA
Action Council of the Blind of Missouri,
St. Louis, MO
Action for the Betterment of Our
Community, Sturgis, SD
Active 20–30 United States and Canada,
Tucson, AZ
Adam Clayton Powell Jr. Memorial
Committee, Inc., New York, NY
Afrika is Home Coalition, Inc.,
New York, NY
After School, Denver, CO
Aids Living Remembrance Project,
Chicago, IL
Akoma, Rochester, NY

May 19, 2003

Alice in Kids World Learning Center,
N. Chicago, IL
Aliza Brandwine Center for Parent
Infant Development, Inc.,
Baltimore, MD
All-Star Boys Competitive Gymnastics
Training Fund, Spring, TX
Alliance for Democracy, Waltham, MA
Alliance of Harari Volunteers, Inc.,
Silver Spring, MD
Alpha Education Fund, Seattle, WA
American Artists Relief Organization
Network, Inc., New York, NY
American Collectors Association of
Texas Educational Foundation,
Austin, TX
American Institute for Global Studies,
Inc., Byron, GA
American Institute of Advanced Drivers,
Malibu, CA
Amputee Assistance Association, Inc.,
San Diego, CA
Angels Door, Chicago, IL
Armstrong Cooper Basketball, Inc.,
Plymouth, MN
Art-Works Childrens Art Museum &
Resource Center, Fox Lake, IL
Artspace at Tri-Main, Inc., Buffalo, NY
Asian American Education & Heritage
Foundation, New York, NY
Athletic Training for Sports Excellence,
Foster City, CA
Axxis Performing Arts Association,
Pico Rivera, CA
Ballet Theatre Dallas, Richardson, TX
Band of Indians Council, Inc.,
Tioga, LA
Bear Creek High School Spirit Boosters
Club, Lakewood, CO
Believing Ground Ministries,
Cahokia, IL
Ben Davis High School Hockey Club,
Indianapolis, IN
Bethel Youth Basketball Association,
Bethel, OH
Bicicletta Co., Chicago, IL
Bilad as International Center,
Houston, TX
Blue River Riders, Mohave Valley, AZ
Blue Star Performance Company,
Chicago, IL
Booker T. Washington High School
Band Boosters, Inc., Pensacola, FL
Bosnia Educational Alliance,
Petersburg, VA
Boy Scouts of America Troop 574, Inc.,
St. Louis, MO

930

Boys & Girls Club of Assumption,
Napoleonville, LA
Brazos Valley Community Partners, Inc.,
Bryan, TX
Brooke High Cheering Booster Club,
Follansbee, WV
Brownfield Revival Ministries,
Dunbar, WI
Brunswick Area Responsible Canine
Owners, Inc., Ocean Isle, NC
Buchanan Basketball Foundation,
Grundy, VA
Buffalo Urban Arts, Buffalo, NY
California Association of Black Lawyers
Foundation, Los Angeles, CA
California Sports High School Hall of
Fame, Palm Desert, CA
Calumet Magic Girls Softball, Ltd.,
Hammond, IN
Camp Ravencliff Corporation,
El Sobrante, CA
Campus Renewal Ministries,
Cedar Park, TX
Candelighter North Texas Childhood
Cancer Foundation, Dallas, TX
Carbon County International Folkfest,
Helper, UT
Cardinal Booster Club, Akron, OH
Catalyst, Ann Arbor, MI
Cedar Grove High School Association of
Parents & Teachers, Inc.,
Cedar Grove, NJ
Centennial Elementary Parents in Action,
Evans, CO
Center for Integrated Infrastructure
Strategies, Inc., Parker, CO
Central Jersey Mustangs, Inc.,
N. Brunswick, NJ
Channel Zero, Incorporated,
St. Louis Park, MN
Child Safe Alliance, Inc.,
Lakewood, OH
Children of the Sun Guidance Center,
Inc., Columbus, OH
Childrens Literature Connection, Inc.,
Schenectady, NY
Christian Singles Fellowship, Inc.,
Altamonte Springs, FL
Chuck Reynolds Ministries, Inc.,
Oklahoma City, OK
Cincinnati Public Theater, Inc.,
Cincinnati, OH
Circus Historical Society, Inc.,
Columbus, OH
Clarice Community Service Programs,
Dallas, TX

2003–20 I.R.B.

Colors of Love, Inc.,
Yorktown Heights, NY
Community Incentives for Teaching
Excellence Foundation,
Costa Mesa, CA
Community Justice Assistance Services,
Phoenix, AZ
Companion Cat Adoption Agency,
Flint, MI
Compel Mens Resource and Referral
Center, Inc., Wyandanch, NY
Concerned Filipino Americans of
California, Carson, CA
Connecticut Firefighters for Christ, Inc.,
West Haven, CT
Cordell Jenkins Charitable Enterprises,
Inc., Los Angeles, CA
Cornerstone International Youth Camp
Foundation, Atlanta, GA
Cornerstone Masonic Historical Society,
Monroe, NY
Cosmopolitan Community Center of
Miami, Inc., Miami, FL
Cottage Ambulance, Inc.,
Carbondale, PA
Cottage City Civic Association,
Cottage City, MD
Crossroads Gospel Music & Ministries,
Lubbock, TX
Dean Park Historic District, Inc.,
Fort Myers, FL
Dearborn Athletic Association,
Dearborn, MO
Deep Ellum Center for the Arts,
Dallas, TX
Dickson Memorial Hospital Preservation
Society, Inc., Paragould, AR
Directions, Memphis, TN
Documentaries for the Betterment of
Educational Opportunity, Inc.,
Quincy, MA
Dog Savers Rescue, Inc.,
Muir Beach, CA
Dolphin Basketball Boosters,
Dana Point, CA
E Kuppa Kakou I Ka Uhane O Ka
Olelo, Puhi, HI
Earl Beaver Childrens Foundation,
Chicago, IL
Earth Right, San Diego, CA
East Fairmont Gold and Blue Club,
Fairmont, WV
East Islip Student Athletes Booster Club,
East Islip, NY
Eastern Shepherd Drug Rehabilitation
Center, Inc., Patrick Springs, VA
Edisto – Orangeburg Medical Alliance,
Orangeburg, SC

2003–20 I.R.B.

Entrepreneur Association at the
University of Utah,
Salt Lake City, UT
Epsilon XI Lambda Education
Foundation, Greenville, MS
Esteem Team, Inc., New York, NY
Faith Foundation, Champaign, IL
Faith in Action of Lafayette, Inc.,
Lafayette, LA
Family Holdings, Belleville, MI
First Night San Luis Obispo,
San Luis Obispo, CA
Floral Park Sports Association, Inc.,
Floral Park, NY
Florence Community Development
Corporation, Florence, SC
Florida Gold Coast Youth Hockey
League, Inc., Pompano Beach, FL
Foundation for Children of the Future,
Salinas, CA
Foundation of America, Peoria, AZ
Franklin Wrestling Club, Inc.,
Franklin, TN
French American Friendship Foundation,
Inc., New York, NY
Friends of Eastpark, Inc.,
Philadelphia, PA
Friends of Haddo, Inc., New York, NY
Friends of Hungarian Higher Education
Foundation, Washington, DC
Friends of Spruce Creek Preserve, Inc.,
New Smyrna Beach, FL
Friends of the Los Angeles Childrens
Ballet Theatre, Los Angeles, CA
Friends of the Park County Fair,
Powell, WY
Friends of Toras Simcha,
New York, NY
Frontier Medical Services,
Birmingham, AL
FSU Foundation, Concord, CA
Ft. Stockton Sports Booster Club,
Ft. Stockton, TX
Fullerton Childrens Repertory Theater,
Inc., Fullerton, CA
Gems Foundation, Glenburn, ME
Georgia Deaf Awareness, Ltd.,
Dunwoody, GA
Gibson County High School Band
Boosters, Dyer, TN
Glory Bethel, Inc., Baton Rouge, LA
Granite City Junior Olympic Volleyball
Association, St. Cloud, MN
Greater Baton Rouge Childrens Chorus,
Inc., Baton Rouge, LA
Greater Glens Falls Swim Club, Inc.,
Queensbury, NY

931

Greater Oneonta Swim Team, Inc.,
Oneonta, NY
Guidance & Orientation for Future
Achievement & Recognition, Inc.,
Staten Island, NY
Gulf Coast Interventional Radiology
Society, Inc., Pensacola, FL
Habersham Raider Tip-Off Club,
Cornelia, GA
Hampton Recital Foundation,
San Francisco, CA
Harlem Opera, Inc., New York, NY
Harvard Global Peace Project,
Boston, MA
Health Beat, Inc., White Plains, NY
Health Education Aids Liaison San
Francisco, Inc., San Francisco, CA
Heartland Community Foundation,
Overland Park, KS
Heels Down Riding Program, Inc.,
Big Horn, WY
Heide Educational Center, Inc.,
Los Angeles, CA
Hellenic Orthodox Christian Brotherhood
Mission of Jesus, Flushing, NY
Help the Children & Widows, Inc.,
Fairfax Station, VA
Helping Hands Ministry Foundation,
Inc., Mobile, AL
Henry McNeal Turner Cultural Center,
Staten Island, NY
Hiddenite Parent Teachers Organization,
Hiddenite, NC
Highland Park Cheerleading Booster
Club, Inc., Dallas, TX
Hispanic Cultural Center of Midland,
Midland, TX
Hockey Future Ohio, Inc.,
Westerville, OH
Horses for Therapeutic Riding, Inc.,
Boca Raton, FL
House Calls, Ltd., Fernley, NV
Houston Institute of Cultural Studies,
Houston, TX
Howland Playground Project, Inc.,
Warren, OH
Huntington Beach Art Center,
Santa Ana, CA
Imaginary Friends Puppet Troupe, Inc.,
Alpharetta, GA
Institute for Korean-American Culture,
Inc., Flushing, NY
Institute for Urban Gardening, Inc.,
Tempe, AZ
International Social Services Center,
Norwalk, CA
Iowa Digital Education Association,
Ltd., Anamosa, IA

May 19, 2003

Jacob Bookwalter Foundation,
Kankakee, IL
James Monroe Parent & Teacher
Organization, San Leandro, CA
Jamie Mastruserio Memorial Foundation,
Middletown, OH
Jelly Educational Theater, Inc.,
Buxton, NC
Jesus Saves Ministries, Inc.,
Lakeland, FL
Jobs for Teens, Inc., Medford, OR
Jonathan Robertozzi Memorial Fund,
E. Brunswick, NJ
Kali Search Center, Inc.,
East Rochester, NY
Kalispell Regional Medical Center
Foundation, Inc., Kalispell, MT
Keren Rachamim, Inc., Brooklyn, NY
Key Foundation Resource Services, Inc.,
Dallas, TX
Kids With a Cause, Inc.,
Los Angeles, CA
Kidzville Friends of the Playground,
Inc., Zanesville, OH
Konigswort, Incorporated,
St. Petersburg, FL
Kory Pope Foundation, Inc.,
Boynton Beach, FL
Lakeside Terrace Resident Council,
Urbana, IL
Lakewood Elementary PTO,
Buchanan, TN
Laughing Willows Productions, Inc.,
Culver City, CA
Leadership Granbury, Granbury, TX
Learning Center of Southeastern Ohio,
Inc., Zanesville, OH
Lenoir County Aids Task Force,
Grifton, NC
Liberty City Outreach Program, Inc.,
Miami, FL
Life Achievement, Inc., Portland, OR
Lighthouse Youth Center of Palacios,
Palacios, TX
Lincoln County Correctional Officers
Association, Lincolnton, NC
Little Peoples Place, New York, NY
Living Rosary of Saint Anne,
Caledonia, MI
Lords Ministry of Helps, Hilltop, MN
Los Angeles Childrens Ballet Theatre,
Culver, CA
Los Angeles Dynamo Youth Hockey,
Inc., Studio City, CA
Los Angeles First Preschool Education
Center, Inc., Los Angeles, CA
Los Angeles Hockey Officials
Association, Los Angeles, CA

May 19, 2003

Louisiana Missouri Scouts,
Louisiana, MO
Lowell Youth Soccer Association,
Lowell, MA
Lucas Samuel Freund Foundation,
New York, NY
Lyric West Theatre Company, Inc.,
Wellesely, MA
Main Street Morrilton, Inc.,
Morrilton, AR
Maine Dads, Inc., Harmony, ME
Making Life Choices, Inc.,
Mason City, IA
Marshall Main Street Program,
Marshall, IL
Maryland All-Star Twisters, Inc.,
Glen Burnie, MD
McAfee & Taft Community Foundation,
Inc., Oklahoma City, OK
Mellenium Organization, Inc.,
Langley Park, MD
Mesrobian Foundation, Montebello, CA
Miami All Stars Cultural Association,
Inc., Miami, FL
Mid City Home Owner Association,
St. Louis, MO
Middle School Parent Teacher
Organization, Shrewsbury, MA
Middle Tennessee Womens Club,
Nashville, TN
Milford Midget Football, Inc.,
Dallas, GA
Miracles of Love, Inc., Morehead, KY
Montomery County Handicapped
Association, Inc.,
Washington Grove, MD
Moscow State University Support
Foundation, Inc., San Franscisco, CA
Mothers Center of the South Shore, Inc.,
Sayville, NY
Mulling Career Foundation, Inc.,
Atlanta, GA
Municipal Forum Youth Education Fund,
New York, NY
Museum of Architecture,
Dana Point, CA
Museum of the Quest for Social Justice,
Inc., Pittsburgh, PA
Nashua Panthers Youth Hockey
Association, Nashua, NH
National College Days, Inc., Keller, TX
National Immigrant Center 1, Inc.,
Long Island City, NY
New Beginnings Career Development,
Dallas, TX
New Jersey Chinese Computer
Professionals Society, Inc.,
Denville, NJ

932

New Leaf Guild, Alice, TX
New Point, Ann Arbor, MI
New Schools Project, Inc., Austin, TX
New York State Prekindergarten
Administrators Assoc., Inc.,
Tarrytown, NY
Noahs Children Pediatric Hospice, Inc.,
Richmond, VA
North Shore Community Theatre,
Haleiwa, HI
Northern Nevada Roller Hockey League
Youth, Reno, NV
Omaha Public Theatre in Our
Neighborhoods Option, Ohama, NE
Omo Oduduwa of Miami Valley, Inc.,
Xenia, OH
Orland Township Scholarship Fund,
Orland Park, IL
Otero Elementary School PTO,
Colorado Springs, CO
Over the Rainbow Foundation, Inc.,
Orlando, FL
Pacific Surge Ministries, Le Mesa, CA
Palm Springs Animal Wellness Services,
Palm Springs, CA
Parent-to-Parent of the Capital Area,
Inc., Tallahassee, FL
Parksburg Childrens Charities,
Parkesburg, PA
Parkside Development Foundation,
Philadelphia, PA
Partners in Education of Tuckahoe, Inc.,
Tuckahoe, NY
Pasadena Parent Advocates for the
Gifted Talented, Pasadena, TX
Pathways to Eros Foundation,
Culver City, CA
Perry Link Memorial Humane Society,
Inc., Jasper, TN
Pharmacists Recovery Network, Inc.,
Kingston, NY
Pineywoods Bird and Bloom Club,
Livingston, TX
Pleasant Ridge Kids Place,
Knoxville, TN
Pleasant View Parent Boosters,
Lansing, MI
Pond Gap Elementary PTO,
Knoxville, TN
Portsmouth City Soccer Club, Rye, NH
Prairie Brass Band Association, Inc.,
Crystal Lake, IL
Program for Academic & Language
Services, Rancho Cucamonga, CA
Providence Community Development
Corp., Brooklyn, NY
Pyramid, Inc., New York, NY
Ray Chinese School, Naperville, IL

2003–20 I.R.B.

Razz Ma Tazz Musical Review
Company, Inc., Greensboro, NC
Recovery Management Service Co., Inc.,
Coral Springs, FL
Restoration Educational Media
Corporation Ministries,
Scottsdale, AZ
Rexburg Boxing Club, Rexburg, ID
Rhombus Theatre, Minneapolis, MN
Richmond Alumnae Delta House
Foundation, Inc., Richmond, VA
Richmond Youth Chamber Collegium,
Inc., Hanover, VA
Rim Youth Football, Inc.,
Lake Arrowhead, CA
Rockaway Township Education
Association Philanthropic Fund, Inc.,
Boonton, NJ
Rural Housing for the Elderly II, Inc.,
Manchester, NH
Santa Cruz Campus Bike Center,
Santa Cruz, CA
Satellite Arts, Incorporated,
Stony Brook, NY
Schoolhouse Resource Center, Inc.,
Durham, NC
Science Coalition of New Jersey,
North Brunswick, NJ
Sea Hawks Swim Team of Metro East,
Inc., Belleville, IL
Self Help Initiative, Silver Spring, MD
Shady Spring Elementary School PTO,
Shady Spring, WV
Showbiz, Scranton, PA
Sickle Cell Foundation of New Jersey,
Inc., Newark, NJ
Sierra Rosa Housing Corp.,
Los Angeles, CA
Sisters in the Name of Love,
Eastpointe, MI
Sisters of Color, Inc., Longview, TX
Sisu Productions, Beverly Hills, CA
Slammers Futbol Club,
Newport Beach, CA
Slavik Missionary Society, Wheaton, IL
Snoqualmie Pony League Association,
Snoqualmie, WA
So Kapi Ka Ya Yis Skat Tsii Yi Ta to
Run a Good Race, Browning, MT
Software Commercialization and
Innovation Center, Inc.,
College Sta, TX
Solon Stars Swim Club, Solon, OH
Soma Foundation,
South San Francisco, CA
Sonshine Haven, Inc., Hillsborough, NC
Soul Rep Theatre Company, Dallas, TX

2003–20 I.R.B.

Southern Maine Association for the
Education of Young Children,
S. Portland, ME
Soweto Academy, Newark, NJ
Spalding County Outreach for
Re-Establishment and Education,
Griffin, GA
Special Technical Aquatic Rescue,
Greenwich, CT
Spurwink Endowment Corporation,
Portland, ME
Stage First Cincinnati, Inc.,
Newport, KY
Stemley Volunteer Fire Department, Inc.,
Pell City, AL
Stings Softball Booster Club, Inc.,
Victoria, TX
Sultan Senior Parents Association,
Sultan, WA
Sunny Joe White Foundation, Inc.,
Boston, MA
Sunnyside Youth, Inc., Wichita, KS
Susitna Amateur Hockey Association,
Wasilla, AK
Synesthetic Winter Percussion,
Kokomo, IN
Team Go Foundation, Inc.,
Manchester Center, VT
Teen-Hope USA, Inc., Baytown, TX
Tender Loving Care Corporation,
Birmingham, AL
Tender Loving Care Homes, Inc.,
Richmond, VA
Theatre America, Inc., New York, NY
Thousand Island Park Tabernacle
Community Association,
Thousand Island Park, NY
Torah Learning Center, Monsey, NY
Touchdown, Inc., Detroit, IL
Valley Vikings Youth Football
Organization, San Antonio, TX
Village Garden Club of Sewickley, Inc.,
Pittsburgh, PA
Ville Platte Dixie Youth, Inc.,
Ville Platte, LA
Virgin Islands Library Association,
Christiansted, VI
Voices Against Violence,
Sacramento, CA
Washington Township Baseball
Association, Trenton, NJ
West Africa Womens Association USA,
Inc., Mineola, NY
Westchester Council on Crime and
Delinquency, Inc., White Plains, NY
White Plains Masonic Historical Society,
White Plains, NY
Woga Parents Club, Plano, TX

933

Womens Education & Research Institute,
Hazel Crest, IL
Womens Forum Foundation, Inc.,
Chesapeake, VA
World Christian Network, Flushing, NY
World Craft Alliance, Inc., Boise, ID
World Firefighters Assistance League,
Inc., Salt Lake City, UT
World Peace & Environmental Film
Festival, New York, NY
Worthington Rugby Club, Inc.,
Worthington, OH
Wyandotte Village Neighborhood
Association, Kansas City, KS
Young Musicians of Central New York,
Canastota, NY
Youth Alive, Inc., Kissimmee, FL
Youth Connection, Forest Lake, MN
Youth Recycling, Granada Hills, CA
Ziegler Memorial Foundation,
Canyon Lake, CA
If an organization listed above submits
information that warrants the renewal of its
classification as a public charity or as a private operating foundation, the Internal Revenue Service will issue a ruling or
determination letter with the revised classification as to foundation status. Grantors and contributors may thereafter rely
upon such ruling or determination letter as
provided in section 1.509(a)–7 of the Income Tax Regulations. It is not the practice of the Service to announce such revised
classification of foundation status in the Internal Revenue Bulletin.

Second White Paper on
Future of Employee Plans
Determination Letter Program
Announcement 2003–32
The Service has published on the Internet a second white paper on the Employee
Plans determination letter program.
The Service has maintained an Employee
Plans determination letter program for many
years, essentially in its present form. Under this program, the Employee Plans (EP)
component of Tax Exempt and Government Entities (TE/GE) issues letters of determination regarding the qualified status of
retirement plans under § 401(a) of the Internal Revenue Code and the status of related trusts under § 501(a). Determination
letters provide assurance to plan sponsors, participants and other interested par-

May 19, 2003

ties that the terms of employer-sponsored
retirement plans satisfy the qualification requirements of the Code. Qualified plans offer significant tax advantages to employers
and participants.
EP has undertaken a project to consider the long-term future of the determination letter program. The question the
Service is considering, and which it has
asked the public to consider, is whether
there might be better alternatives to the
present determination letter program.
As a preliminary step, in August 2001,
EP published on the Internet a white paper outlining several options it had identified as possible alternatives to the present
program. The second white paper, which
has just been released, evaluates the public comments on these options. While recognizing the importance of the Service
continuing to issue determination letters for
qualified plans, the second white paper explores further how this process might be improved. One of the options outlined in the
first white paper was a system of staggered remedial amendment periods. Such
a system would introduce regular determination letter cycles for plan sponsors and
would even-out determination letter workload from year to year for EP and practitioners. The second white paper explains in
greater detail how such a system could
work. The second white paper also discusses the possibility of requiring plans to

May 19, 2003

be updated annually. An annual plan update requirement could be established either without making other changes to the
current determination letter program or in
combination with a system of staggered remedial amendment periods. In the latter
case, as described in the second white paper, plan sponsors would not need to request determination letters more frequently
than every five years to have reliance even
though plan amendments could be required
every year.
The second white paper is entitled The
Future of the Employee Plans Determination Letter Program: Evaluation of Public Comments and Additional Explanation
of Staggered Remedial Amendment Period Option. It may be downloaded from
the Internet at: http://www.irs.gov/ep.
The Service invites interested parties to
comment on the ideas in the second white
paper. In particular, commentators are asked
to address several questions that are listed
at the end of the white paper. Written comments should reference Announcement
2003–32 and should be submitted, preferably in duplicate, to the following address:

Alternatively, comments may be hand delivered between the hours of 8:30 a.m. and
4:00 p.m. to:
CC:PA:RU (Announcement 2003–32)
Courier’s Desk
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, DC
Written comments should be submitted by
September 2, 2003. All written comments
will be open to public inspection.
DRAFTING INFORMATION
The principal author of this announcement is James Flannery of Employee Plans,
Tax Exempt and Government Entities Division. For further information regarding this
announcement, please contact the Employee
Plans’ taxpayer assistance telephone service at: 1–877–829–5500 (a toll-free number) between the hours of 8:00 a.m. and
6:30 p.m. Eastern Time, Monday through
Friday. Mr. Flannery may be reached at
1–202–283–9888 (not a toll-free number).

CC:PA:RU (Announcement 2003–32),
room 5226
Internal Revenue Service
POB 7604
Ben Franklin Station
Washington, DC 20044

934

2003–20 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as“rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior published position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle
applied to A, and the new ruling holds
that the same principle also applies to B,
the earlier ruling is amplified. (Compare
with modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confusion. It is not used where a position in a
prior ruling is being changed.
Distinguished describes a situation
where a ruling mentions a previously
published ruling and points out an essential difference between them.
Modified is used where the substance
of a previously published position is
being changed. Thus, if a prior ruling
held that a principle applied to A but not
to B, and the new ruling holds that it

applies to both A and B, the prior ruling
is modified because it corrects a published position. (Compare with amplified
and clarified, above).
Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions. This term is most commonly used
in a ruling that lists previously published
rulings that are obsoleted because of
changes in law or regulations. A ruling
may also be obsoleted because the substance has been included in regulations
subsequently adopted.
Revoked describes situations where the
position in the previously published ruling is not correct and the correct position
is being stated in the new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the

new ruling does more than restate the
substance of a prior ruling, a combination
of terms is used. For example, modified
and superseded describes a situation
where the substance of a previously published ruling is being changed in part and
is continued without change in part and it
is desired to restate the valid portion of
the previously published ruling in a new
ruling that is self contained. In this case,
the previously published ruling is first
modified and then, as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rulings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.

E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign Corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.

PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

Abbreviations
The following abbreviations in current
use and formerly used will appear in
material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.

2003–20 I.R.B.

i

May 19, 2003

Numerical Finding List1

Notices—Continued:

Revenue Rulings—Continued:

Bulletins 2003–1 through 2003–19

2003–27, 2003–19 I.R.B. 898

2003–9, 2003–4 I.R.B. 303
2003–10, 2003–3 I.R.B. 288
2003–11, 2003–3 I.R.B. 285
2003–12, 2003–3 I.R.B. 283
2003–13, 2003–4 I.R.B. 305
2003–14, 2003–4 I.R.B. 302
2003–15, 2003–4 I.R.B. 302
2003–16, 2003–6 I.R.B. 401
2003–17, 2003–6 I.R.B. 400
2003–18, 2003–7 I.R.B. 467
2003–19, 2003–7 I.R.B. 468
2003–20, 2003–7 I.R.B. 465
2003–21, 2003–8 I.R.B. 509
2003–22, 2003–8 I.R.B. 494
2003–23, 2003–8 I.R.B. 511
2003–24, 2003–10 I.R.B. 557
2003–25, 2003–13 I.R.B. 642
2003–26, 2003–10 I.R.B. 563
2003–27, 2003–11 I.R.B. 597
2003–28, 2003–11 I.R.B. 594
2003–29, 2003–11 I.R.B. 587
2003–30, 2003–13 I.R.B. 659
2003–31, 2003–13 I.R.B. 643
2003–32, 2003–14 I.R.B. 689
2003–33, 2003–13 I.R.B. 642
2003–34, 2003–17 I.R.B. 813
2003–35, 2003–14 I.R.B. 687
2003–36, 2003–18 I.R.B. 849
2003–37, 2003–15 I.R.B. 717
2003–38, 2003–17 I.R.B. 811
2003–39, 2003–17 I.R.B. 811
2003–40, 2003–17 I.R.B. 813
2003–41, 2003–17 I.R.B. 814
2003–42, 2003–16 I.R.B. 754
2003–44, 2003–18 I.R.B. 848
2003–45, 2003–19 I.R.B. 876
2003–46, 2003–19 I.R.B. 878
2003–47, 2003–19 I.R.B. 866
2003–48, 2003–19 I.R.B. 863

Announcements:
2003–1, 2003–2 I.R.B. 281
2003–2, 2003–3 I.R.B. 301
2003–3, 2003–4 I.R.B. 361
2003–4, 2003–5 I.R.B. 396
2003–5, 2003–5 I.R.B. 397
2003–6, 2003–6 I.R.B. 450
2003–7, 2003–6 I.R.B. 450
2003–8, 2003–6 I.R.B. 451
2003–9, 2003–7 I.R.B. 490
2003–10, 2003–7 I.R.B. 490
2003–11, 2003–10 I.R.B. 585
2003–12, 2003–10 I.R.B. 585
2003–13, 2003–11 I.R.B. 603
2003–14, 2003–11 I.R.B. 603
2003–15, 2003–11 I.R.B. 605
2003–16, 2003–12 I.R.B. 641
2003–17, 2003–15 I.R.B. 722
2003–18, 2003–13 I.R.B. 675
2003–19, 2003–15 I.R.B. 723
2003–20, 2003–15 I.R.B. 750
2003–21, 2003–17 I.R.B. 846
2003–22, 2003–17 I.R.B. 846
2003–23, 2003–16 I.R.B. 808
2003–24, 2003–16 I.R.B. 810
2003–25, 2003–17 I.R.B. 846
2003–26, 2003–18 I.R.B. 862
2003–27, 2003–18 I.R.B. 862
2003–28, 2003–19 I.R.B. 899

Court Decisions:
2077, 2003–19 I.R.B. 868

Notices:
2003–1, 2003–2 I.R.B. 257
2003–2, 2003–2 I.R.B. 257
2003–3, 2003–2 I.R.B. 258
2003–4, 2003–3 I.R.B. 294
2003–5, 2003–3 I.R.B. 294
2003–6, 2003–3 I.R.B. 298
2003–7, 2003–4 I.R.B. 310
2003–8, 2003–4 I.R.B. 310
2003–9, 2003–5 I.R.B. 369
2003–10, 2003–5 I.R.B. 369
2003–11, 2003–6 I.R.B. 422
2003–12, 2003–6 I.R.B. 422
2003–13, 2003–8 I.R.B. 513
2003–14, 2003–8 I.R.B. 515
2003–15, 2003–9 I.R.B. 540
2003–16, 2003–10 I.R.B. 575
2003–17, 2003–12 I.R.B. 633
2003–18, 2003–14 I.R.B. 699
2003–19, 2003–14 I.R.B. 703
2003–20, 2003–19 I.R.B. 894
2003–21, 2003–17 I.R.B. 817
2003–22, 2003–18 I.R.B. 851
2003–23, 2003–17 I.R.B. 821
2003–24, 2003–18 I.R.B. 853
2003–25, 2003–18 I.R.B. 855
2003–26, 2003–18 I.R.B. 855

Proposed Regulations:
REG–209500–86, 2003–2 I.R.B. 262
REG–104385–01, 2003–12 I.R.B. 634
REG–116641–01, 2003–8 I.R.B. 518
REG–125638–01, 2003–5 I.R.B. 373
REG–126016–01, 2003–7 I.R.B. 486
REG–126485–01, 2003–9 I.R.B. 542
REG–103580–02, 2003–9 I.R.B. 543
REG–124069–02, 2003–7 I.R.B. 488
REG–131478–02, 2003–13 I.R.B. 669
REG–138882–02, 2003–8 I.R.B. 522
REG–139768–02, 2003–10 I.R.B. 583
REG–141097–02, 2003–16 I.R.B. 807
REG–151043–02, 2003–3 I.R.B. 300
REG–164464–02, 2003–2 I.R.B. 262

Revenue Procedures:
2003–1, 2003–1 I.R.B. 1
2003–2, 2003–1 I.R.B. 76
2003–3, 2003–1 I.R.B. 113
2003–4, 2003–1 I.R.B. 123
2003–5, 2003–1 I.R.B. 163
2003–6, 2003–1 I.R.B. 191
2003–7, 2003–1 I.R.B. 233
2003–8, 2003–1 I.R.B. 236
2003–9, 2003–8 I.R.B. 516
2003–10, 2003–2 I.R.B. 259
2003–11, 2003–4 I.R.B. 311
2003–12, 2003–4 I.R.B. 316
2003–13, 2003–4 I.R.B. 317
2003–14, 2003–4 I.R.B. 319
2003–15, 2003–4 I.R.B. 321
2003–16, 2003–4 I.R.B. 359
2003–17, 2003–6 I.R.B. 427
2003–18, 2003–6 I.R.B. 439
2003–19, 2003–5 I.R.B. 371
2003–20, 2003–6 I.R.B. 445
2003–21, 2003–6 I.R.B. 448
2003–22, 2003–10 I.R.B. 577
2003–23, 2003–11 I.R.B. 599
2003–24, 2003–11 I.R.B. 599
2003–25, 2003–11 I.R.B. 601
2003–26, 2003–13 I.R.B. 666
2003–27, 2003–13 I.R.B. 667
2003–28, 2003–16 I.R.B. 759
2003–30, 2003–17 I.R.B. 822
2003–31, 2003–17 I.R.B. 838
2003–32, 2003–16 I.R.B. 803
2003–33, 2003–16 I.R.B. 803
2003–34, 2003–18 I.R.B. 856
2003–36, 2003–18 I.R.B. 859

Revenue Rulings:
2003–1,
2003–2,
2003–3,
2003–4,
2003–5,
2003–6,
2003–7,
2003–8,

2003–3
2003–2
2003–2
2003–2
2003–2
2003–3
2003–5
2003–3

I.R.B. 291
I.R.B. 251
I.R.B. 252
I.R.B. 253
I.R.B. 254
I.R.B. 286
I.R.B. 363
I.R.B. 290

Treasury Decisions:
9024,
9025,
9026,
9027,
9028,
9029,
9030,
9031,
9032,
9033,
9034,
9035,
9036,
9037,
9038,
9039,
9040,
9041,
9042,
9043,
9044,
9045,

2003–5 I.R.B. 365
2003–5 I.R.B. 362
2003–5 I.R.B. 366
2003–6 I.R.B. 413
2003–6 I.R.B. 415
2003–6 I.R.B. 403
2003–8 I.R.B. 495
2003–8 I.R.B. 504
2003–7 I.R.B. 471
2003–7 I.R.B. 483
2003–7 I.R.B. 453
2003–9 I.R.B. 528
2003–9 I.R.B. 533
2003–9 I.R.B. 535
2003–9 I.R.B. 524
2003–10 I.R.B. 561
2003–10 I.R.B. 568
2003–8 I.R.B. 510
2003–10 I.R.B. 564
2003–12 I.R.B. 611
2003–14 I.R.B. 690
2003–12 I.R.B. 610

1
A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 2002–26 through 2002–52 is
in Internal Revenue Bulletin 2003–1, dated January 6, 2003.

May 19, 2003

ii

2003–20 I.R.B.

Treasury Decisions—Continued:
9046,
9047,
9048,
9049,
9050,
9051,
9052,

2003–12
2003–14
2003–13
2003–14
2003–14
2003–16
2003–19

I.R.B. 614
I.R.B. 676
I.R.B. 644
I.R.B. 685
I.R.B. 693
I.R.B. 755
I.R.B. 879

2003–20 I.R.B.

iii

May 19, 2003

Finding List of Current Actions
on Previously Published Items2
Bulletins 2003–1 through 2003–19
Notices:
97–19
Modified by
Rev. Proc. 2003–1, 2003–1 I.R.B. 1
2000–38
Modified by
Notice 2003–20, 2003–19 I.R.B. 894
2001–26
Obsoleted by
T.D. 9032, 2003–7 I.R.B. 471
2001–46
Modified by
Notice 2003–6, 2003–3 I.R.B. 298
2001–69
Modified and superseded by
Notice 2003–1, 2003–2 I.R.B. 257
2002–20
Superseded by
Rev. Proc. 2003–36, 2003–18 I.R.B. 859
2002–27
Clarified by
Notice 2003–3, 2003–2 I.R.B. 258
2002–40
Modified by
Ann. 2003–18, 2003–13 I.R.B. 675
2002–46
Modified by
Notice 2003–10, 2003–5 I.R.B. 369

Proposed Regulations:
REG–209500–86
Corrected by
Ann. 2003–6, 2003–6 I.R.B. 450
REG–103829–99
Corrected by
Ann. 2003–12, 2003–10 I.R.B. 585
REG–126485–01
Withdrawn by
REG–126485–01, 2003–9 I.R.B. 542
Corrected by
Ann. 2003–25, 2003–17 I.R.B. 846
REG–131478–02
Corrected by
Ann. 2003–24, 2003–16 I.R.B. 810
REG–143321–02
Corrected by
Ann. 2003–12, 2003–10 I.R.B. 585
REG–164464–02
Corrected by
Ann. 2003–6, 2003–6 I.R.B. 450

Revenue Procedures:

Revenue Procedures—Continued:

83–23
Supplemented by
Rev. Proc. 2003–21, 2003–6 I.R.B. 448

2002–39
Modified by
Rev. Proc. 2002–34, 2002–18 I.R.B. 856

84–37
Modified by
Rev. Proc. 2003–1, 2003–1 I.R.B. 1

2002–51
Superseded by
Rev. Proc. 2003–31, 2003–17 I.R.B. 838

93–38
Obsoleted by
Rev. Proc. 2003–15, 2003–4 I.R.B. 321
97–31
Modified by
Rev. Proc. 2003–9, 2003–8 I.R.B. 516
98–13
Obsoleted by
T.D. 9032, 2003–7 I.R.B. 471
2002–1
Superseded by
Rev. Proc. 2003–1, 2003–1 I.R.B. 1
2002–2
Superseded by
Rev. Proc. 2003–2, 2003–1 I.R.B. 76
2002–3
Superseded by
Rev. Proc. 2003–3, 2003–1 I.R.B. 113
2002–4
Superseded by
Rev. Proc. 2003–4, 2003–1 I.R.B. 123

2002–52
Modified by
Rev. Proc. 2003–1, 2003–1 I.R.B. 1
2002–53
Superseded by
Rev. Proc. 2003–30, 2003–17 I.R.B. 822
2002–57
Superseded by
Rev. Proc. 2003–28, 2003–16 I.R.B. 759
2002–67
Supplemented by
Ann. 2003–3, 2003–4 I.R.B. 361
2002–75
Superseded by
Rev. Proc. 2003–3, 2003–1 I.R.B. 113
2003–3
Amplified by
Rev. Proc. 2003–14, 2003–4 I.R.B. 319
2003–7
Corrected by
Ann. 2003–4, 2003–5 I.R.B 396

2002–5
Superseded by
Rev. Proc. 2003–5, 2003–1 I.R.B. 163

Revenue Rulings:

2002–6
Superseded by
Rev. Proc. 2003–6, 2003–1 I.R.B. 191

53–131
Modified by
Rev. Rul. 2003–12, 2003–3 I.R.B. 283

2002–7
Superseded by
Rev. Proc. 2003–7, 2003–1 I.R.B. 233

57–190
Obsoleted by
Rev. Rul. 2003–18, 2003–7 I.R.B. 467

2002–8
Superseded by
Rev. Proc. 2003–8, 2003–1 I.R.B. 236

65–190
Revoked by
Rev. Rul. 2003–3, 2003–2 I.R.B. 252

2002–9
Modified and amplified by
Rev. Proc. 2003–20, 2003–6 I.R.B. 445
Rev. Rul. 2003–3, 2003–2 I.R.B. 252

66–118
Distinguished by
Rev. Rul. 2003–41, 2003–17 I.R.B. 814

2002–20
Supplemented by
Rev. Proc. 2003–26, 2003–13 I.R.B. 666
2002–22
Modified by
Rev. Proc. 2003–3, 2003–1 I.R.B. 113

69–372
Revoked by
Rev. Rul. 2003–3, 2003–2 I.R.B. 252
86–88
Supplemented by
Rev. Rul. 2003–46, 2003–19 I.R.B. 878

2002–29
Modified by
Rev. Proc. 2003–10, 2003–2 I.R.B. 259

88–36
Supplemented by
Rev. Rul. 2003–46, 2003–19 I.R.B. 878

2002–37
Modified by
Rev. Proc. 2002–34, 2002–18 I.R.B. 856

92–19
Supplemented in part by
Rev. Rul. 2003–24, 2003–10 I.R.B. 557

2

A cumulative list of current actions on previously
published items in Internal Revenue Bulletins
2002–26 through 2002–52 is in Internal Revenue
Bulletin 2003–1, dated January 6, 2003.

May 19, 2003

iv

2003–20 I.R.B.

Revenue Rulings—Continued:
2003–2
Revoked by
Rev. Rul. 2003–22, 2003–8 I.R.B. 494

Treasury Decisions:
9002
Corrected by
Ann. 2003–8, 2003–6 I.R.B. 451
9021
Corrected by
Ann. 2003–16, 2003–12 I.R.B. 641
9022
Supplemented by
Ann. 2003–7, 2003–6 I.R.B. 450
Corrected by
Ann. 2003–11, 2003–10 I.R.B. 585
9048
Corrected by
Ann. 2003–23, 2003–16 I.R.B. 808

2003–20 I.R.B.

v

*U.S. Government Printing Office: 2003—496–919/60083

May 19, 2003