Notice 2007-19

Part III. Administrative, Procedural, and Miscellaneous
Statute of Limitations on
Assessment Concerning
Certain Individuals Filing
Income Tax Returns With the
U.S. Virgin Islands
Notice 2007–19
SECTION 1. PURPOSE
This notice provides interim rules under
sections 932(c) and 7654(e) concerning
the statute of limitations on assessment
of the U.S. income tax liability (if any)
of a U.S. citizen or resident alien who
takes the position that he or she is a bona
fide resident of the U.S. Virgin Islands
and the U.S. filing obligations of such an
individual. This notice also announces
that the Treasury Department and Internal
Revenue Service (IRS) intend to issue
regulations under sections 932(c) and
7654(e). Finally, this notice announces
that the Treasury Department and the IRS
are studying the feasibility of an automatic exchange of information program
with the U.S. Virgin Islands Bureau of
Internal Revenue concerning income tax
information of individual taxpayers. Such
a program for the timely exchange of
equivalent data in a form compatible with
IRS systems may eliminate the reporting requirements set forth in the interim
rules. Until the regulations are issued,
taxpayers may rely on this notice.
SECTION 2. INTERIM RULES
Under the authority of section 7654(e),
an income tax return filed with the U.S.
Virgin Islands by a U.S. citizen or resident
alien (USVI Form 1040) will be deemed
to be a U.S. income tax return of that individual for purposes of section 6501(a),
provided that the individual is a covered
person. The term “covered person” means
a U.S. citizen or resident alien who takes
the position that he or she is a bona fide
resident of the U.S. Virgin Islands, files
USVI Form 1040 with the U.S. Virgin Islands, and has less than $75,000 of gross
income for the taxable year. For purposes
of this notice, gross income means the total
amount of income from whatever source
derived, before any exclusions or deductions (for example, disregarding any appli-

March 12, 2007

cable U.S. Virgin Islands tax benefits authorized under section 934(b)). Gross income does not include income of the individual’s spouse.
For example, assume that C, a U.S.
citizen and calendar year taxpayer who
has less than $75,000 of gross income for
2006, takes the position that he is a bona
fide resident of the U.S. Virgin Islands and
files USVI Form 1040 for 2006 on March
12, 2007 with the U.S. Virgin Islands. C
does not file Form 1040, U.S. Individual
Income Tax Return (U.S. Form 1040), with
the IRS. C is a covered person. Under
these circumstances, the 3-year period of
limitations under section 6501(a) will expire on April 15, 2010, and the IRS will
make no further assessment of income tax
for A’s 2006 taxable year after that date
except as otherwise authorized by section
6501.
With respect to a U.S. citizen or resident alien who takes the position that he or
she is a bona fide resident of the U.S. Virgin Islands for a taxable year but who has
gross income of $75,000 or more (referred
to as a non-covered person), a U.S. Form
1040 filed by the non-covered person with
the IRS, on which the non-covered person
reports no gross income and no taxable income, will be treated as an income tax return described in section 6501(a).
This notice imposes a new annual information reporting requirement under section 7654 for non-covered persons. The
Treasury Department and the IRS intend
to issue a new form titled Bona Fide Residence-Based Return Position for purposes
of this new information reporting requirement. Until this form is issued, a non-covered person will meet the information reporting requirement by attaching a statement to U.S. Form 1040 reporting no gross
income and no taxable income. The statement should be titled “Bona Fide Residence-Based Return Position” and must
set forth the following information.
1. The non-covered person’s name, social security number, and address as reported on U.S. Form 1040.
2. A statement affirming the non-covered person’s bona fide residence in the
U.S. Virgin Islands as defined in Treas.
Reg. § 1.937–1(b) and a brief summary of
the facts on which it is based.

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3. An affirmation that the non-covered
person has properly filed a U.S. Virgin Islands individual income tax return, a statement of the total tax liability reported on
USVI Form 1040, and the amount of gross
income reported on such return (adding
back any applicable territorial tax benefits
authorized under section 934(b)).
4. The following declaration signed and
dated by the individual: “Under penalties
of perjury, I declare that I have examined
this statement and the accompanying attachments and to the best of my knowledge
and belief, they are true, correct, and complete.”
For example, assume that on March 12,
2007, N, a U.S. citizen and calendar year
taxpayer with at least $75,000 of gross
income for 2006, files U.S. Form 1040
(2006) with the IRS, taking the position
that he does not have any gross income or
taxable income for U.S. income tax purposes (as reported on lines 22 and 43, respectively) under section 932(c)(4). N attaches a Bona Fide Residence-Based Return Position statement. As a result of filing U.S. Form 1040, the 3-year period of
limitations under section 6501(a) will expire on April 15, 2010, and the IRS will
make no further assessment of income tax
for N’s 2006 taxable year after that date
except as otherwise authorized by section
6501.
U.S. Forms 1040 with attached Bona
Fide Residence-Based Return Position
statements must be filed with the Internal Revenue Service Center, P.O. Box
331 Drop Point S–607, Bensalem, PA
19020–8517. Failure to file the Bona Fide
Residence-Based Position statement is
subject to a penalty under section 6688.
If a non-covered person and his or her
spouse filed a joint USVI Form 1040,
then they may file a jointly executed U.S.
Form 1040 but must attach a separate
Bona Fide Residence-Based Return Position statement for each spouse who is a
non-covered person.
SECTION 3. EFFECTIVE DATE
This notice applies for taxable years
ending on or after December 31, 2006.
Taxpayers also may choose to apply this
notice to a taxable year ending before

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December 31, 2006 as specified in this
section 3.
A non-covered person may choose to
apply this notice to a taxable year ending
before December 31, 2006 by filing U.S.
Form 1040 with the IRS at the address provided in section 2, reporting no gross income and no taxable income for that taxable year. Although a Bona Fide Residence-Based Position statement need not
be filed for a taxable year ending before
December 31, 2006, the non-covered person should clearly note on the first page
of U.S. Form 1040 the applicable taxable
year and that U.S. Form 1040 is being filed
in accordance with this notice.
For example, assume that on March 16,
2007, J, a U.S. citizen and calendar year
taxpayer with at least $75,000 of gross
income for taxable year 2003, files U.S.
Form 1040 with the IRS, taking the position that for taxable year 2003 she does
not have any gross income or taxable income for U.S. income tax purposes under
section 932(c)(4). J clearly marks U.S.
Form 1040 as applying to her taxable year
ending December 31, 2003 and as being
filed in accordance with Notice 2007–19.
Under these circumstances, the 3-year period of limitations under section 6501(a)
for taxable year 2003 will expire on March
16, 2010, and the IRS will make no further assessment of income tax for J’s 2003
taxable year after that date except as otherwise authorized by section 6501.
A covered person may choose to apply this notice to a taxable year ending before December 31, 2006 by providing documentation upon examination that establishes to the satisfaction of the Commissioner that the taxpayer is a covered person. Because the USVI Form 1040 filed
with the U.S. Virgin Islands is deemed to
be a covered person’s U.S. Form 1040, the
covered person’s statute of limitations under section 6501(a) will begin to run on the
date USVI Form 1040 is filed with the U.S.
Virgin Islands.
SECTION 4. PAPERWORK
REDUCTION ACT
The collection of information contained
in this notice 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 1545–2063.

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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 notice is in section 2. This information is
required to determine if a taxpayer satisfies the requirements of bona fide residence in the U.S. Virgin Islands under section 937(a). The information will be used
to determine if a taxpayer satisfies his or
her U.S. income tax filing requirements.
The collection of information is voluntary.
The likely respondents are individuals.
The estimated total annual reporting
burden is 42,500 hours.
The estimated annual burden per respondent varies from 4 to 6 hours, depending on individual circumstances, with an
estimated average of 5 hours. The estimated number of respondents is 8,500.
The estimated frequency of responses:
annually.
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 5. DRAFTING
INFORMATION
The principal author of this notice
is J. David Varley of the Office of Associate Chief Counsel (International). For
further information regarding this notice,
contact Mr. Varley at (202) 435–5262 (not
a toll-free call).

2007 Calendar Year Resident
Population Estimates
Notice 2007–23
This notice informs (1) state and local housing credit agencies that allocate
low-income housing tax credits under
§ 42 of the Internal Revenue Code and
(2) states and other issuers of tax-exempt
private activity bonds under § 141, of
the proper population figures to be used
for calculating the 2007 calendar year
population-based component of the state
housing credit ceiling (Credit Ceiling)

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under § 42(h)(3)(C)(ii), the 2007 calendar year volume cap (Volume Cap) under
§ 146, and the 2007 volume limit (Volume
Limit) under § 142(k)(5).
The population figures both for the
population-based component of the Credit
Ceiling and for the Volume Cap are determined by reference to § 146(j). That
section provides generally that determinations of population for any calendar year
are made on the basis of the most recent
census estimate of the resident population
of a state (or issuing authority) released
by the U.S. Census Bureau before the
beginning of such calendar year. Section
142(k)(5) provides that the Volume Limit
is based on the State population.
The population-based component of
the Credit Ceiling and the Volume Cap
are adjusted for inflation pursuant to
§§ 42(h)(3)(H) and 146(d)(2), respectively. The adjustments for the 2007 calendar year were published in Rev. Proc.
2006–53, 2006–48 I.R.B. 996. Section
3.08 of Rev. Proc. 2006–53 provides
that, for calendar year 2007, the amounts
used under § 42(h)(3)(C)(ii) to calculate
the Credit Ceiling is the greater of $1.95
multiplied by the State population (see
the resident population figures provided
below) or $2,275,000. Further, section
3.16 of Rev. Proc. 2006–53 provides
that the amounts used under § 146(d)(1)
to calculate the Volume Cap for calendar
year 2007 is the greater of $85 multiplied
by the State population (see the resident
population figures provided below) or
$256,235,000.
The proper population figures for calculating the Credit Ceiling, the Volume Cap,
and the Volume Limit for the 2007 calendar year are the estimates of the resident population of the 50 states, the District of Columbia, and Puerto Rico released
by the U.S. Census Bureau on December 22, 2006, in Press Release CB06–187.
The proper population figures for calculating the Credit Ceiling, the Volume Cap,
and the Volume Limit for the 2007 calendar year for the insular areas (American
Samoa, Guam, Northern Mariana Islands,
and U.S. Virgin Islands) are the figures released electronically by the U.S. Census
Bureau on July 17, 2003, and referenced in
Census Bureau Tip Sheet TP03–16, dated
August 8, 2003. For convenience, these
estimates are reprinted below.

March 12, 2007