Amendment to Sunset Date of Section 1441 Voluntary Compliance Program under Rev. Proc. 2004-59

under § 4261(b) on the amount paid for
each domestic segment of taxable transportation by air is $3.30. For calendar
year 2006, the tax under § 4261(c) on any
amount paid (whether within or without
the United States) for any transportation
of any person by air, if such transportation
begins or ends in the United States, generally is $14.50. However, for a domestic segment beginning or ending in Alaska
or Hawaii as described in § 4261(c)(3), the
tax only applies to departures and is at the
rate of $7.30.
.31 Reporting Exception for Certain
Exempt Organizations with Nondeductible
Lobbying Expenditures. For taxable years
beginning in 2006, the annual per person, family, or entity dues limitation to
qualify for the reporting exception under
§ 6033(e)(3) (and section 5.05 of Rev.
Proc. 98–19, 1998–1 C.B. 547), regarding
certain exempt organizations with nondeductible lobbying expenditures, is $91 or
less.
.32 Notice of Large Gifts Received from
Foreign Persons. For taxable years beginning in 2006, recipients of gifts from certain foreign persons may be required to report these gifts under § 6039F if the aggregate value of gifts received in a taxable
year exceeds $12,760.
.33 Persons Against Which a Federal
Tax Lien Is Not Valid. For calendar year
2006, a federal tax lien is not valid against
(i) certain purchasers under § 6323(b)(4)
who purchased personal property in a
casual sale for less than $1,240, or (ii)
a mechanic’s lienor under § 6323(b)(7)
that repaired or improved certain residential property if the contract price with the
owner is not more than $6,210.
.34 Property Exempt from Levy. For
calendar year 2006, the value of property
exempt from levy under § 6334(a)(2) (fuel,
provisions, furniture, and other household
personal effects, as well as arms for personal use, livestock, and poultry) may not
exceed $7,430. The value of property exempt from levy under § 6334(a)(3) (books
and tools necessary for the trade, business,
or profession of the taxpayer) may not exceed $3,710.
.35 Interest on a Certain Portion of the
Estate Tax Payable in Installments. For an
estate of a decedent dying in calendar year
2006, the dollar amount used to determine
the “2-percent portion” (for purposes of
calculating interest under § 6601(j)) of the

November 21, 2005

estate tax extended as provided in § 6166
is $1,200,000.
.36 Attorney Fee Awards. For fees
incurred in calendar year 2006, the
attorney fee award limitation under
§ 7430(c)(1)(B)(iii) is $160 per hour.
.37 Periodic Payments Received under Qualified Long-Term Care Insurance
Contracts or under Certain Life Insurance Contracts. For calendar year 2006,
the stated dollar amount of the per diem
limitation under § 7702B(d)(4) (regarding
periodic payments received under a qualified long-term care insurance contract or
periodic payments received under a life
insurance contract that are treated as paid
by reason of the death of a chronically ill
individual) is $250.

mation regarding this revenue procedure,
contact Ms. Myers at (202) 622–4920 (not
a toll-free call).

SECTION 4. EFFECTIVE DATE

This revenue procedure modifies Rev.
Proc. 2004–59, 2004–2 C.B. 678, to extend the sunset date of the Section 1441
Voluntary Compliance Program (“Section
1441 VCP”) to March 31, 2006.

.01 General Rule. Except as provided
in section 4.02, this revenue procedure applies to taxable years beginning in 2006.
.02 Calendar Year Rule. This revenue
procedure applies to transactions or events
occurring in calendar year 2006 for purposes of sections 3.07 (low-income housing credit), 3.09 (pipeline construction
industry optional expense substantiation
rules), 3.15 (private activity bond volume
cap), 3.16 (safe harbor rules for broker
commissions on guaranteed investment
contracts or investments purchased for a
yield restricted defeasance escrow), 3.22
(health savings accounts), 3.25 (funeral
trusts), 3.26 (expatriation to avoid tax),
3.27 (valuation of qualified real property
in decedent’s gross estate), 3.28 (annual
exclusion for gifts), 3.29 (tax on arrow
shafts), 3.30 (passenger air transportation
excise tax), 3.33 (persons against which a
federal tax lien is not valid), 3.34 (property exempt from levy), 3.35 (interest on a
certain portion of the estate tax payable in
installments), 3.36 (attorney fee awards),
and 3.37 (periodic payments received under qualified long-term care insurance
contracts or under certain life insurance
contracts).
SECTION 5. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Marnette M. Myers of the Office of Associate Chief Counsel (Income
Tax & Accounting). For further infor-

985

26 CFR 1.1441–7: Extension of offer to resolve issues
arising from certain tax, withholding, and reporting
obligations of U.S. withholding agents with respect to
payments to foreign persons.

Amendment to Sunset Date
of Section 1441 Voluntary
Compliance Program Under
Rev. Proc. 2004–59
Rev. Proc. 2005–71
SECTION 1. PURPOSE

SECTION 2. BACKGROUND
Rev. Proc. 2004–59 set forth the provisions of the Section 1441 VCP, a program that is available to certain withholding agents with respect to the withholding,
payment, and reporting of certain taxes due
on payments to foreign persons.
The IRS initiated the Section 1441 VCP
as a temporary program. Section 6 of Rev.
Proc. 2004–59 provided that the Section
1441 VCP became effective September 29,
2004, and would be available for submissions made on or before December 31,
2005.
The volume of Section 1441 VCP submissions has increased steadily since the
inception of the program. Many withholding agents that wish to participate in the
program will not be able to complete the
submission process before December 31,
2005, and will be excluded from participation in the VCP without an extension. To
enable such withholding agents to participate in the VCP, this revenue procedure
amends Section 6 of Rev. Proc. 2004–59
to extend the sunset date of the program
for three months, to March 31, 2006. In
addition, this revenue procedure amends
Section 5.01, which allows taxpayers to request extensions to complete VCP submissions under certain circumstances. This
revenue procedure provides that, for sec-

2005–47 I.R.B.

tion 1441 VCP submissions made after
December 31, 2005, no extensions will be
granted beyond June 30, 2006.
SECTION 3. EXTENSION OF SUNSET
DATE
Sections 5 and 6 of Rev. Proc. 2004–59
are amended as follows.
In Section 5.01, the following sentence
is added after the existing text. “For section 1441 VCP submissions made after
December 31, 2005, no extensions will be
granted beyond June 30, 2006.”
In Section 6, the second sentence
is amended by deleting “December 31,
2005” and inserting in its place, “March
31, 2006.” A third, fourth, and fifth sentence are added as follows: “A Section
1441 VCP submission may not be made
for calendar year 2005 Forms 1042 and

2005–47 I.R.B.

1042-S. A Section 1441 VCP submission
made after December 31, 2005, must include an executed Form 872, Consent to
Extend the Time to Assess Tax, consenting
to extend for one additional year the time
to assess tax with respect to amounts reportable on Form 1042 for the 2002 year.
If the withholding agent has filed a Form
945 for the 2002 year, it should further
include an executed Form SS–10, Consent
to Extend the Time to Assess Employment
Taxes, to extend the assessment period for
income tax withholding for an additional
year.”
SECTION 4. INQUIRIES
For further information regarding the
Section 1441 VCP contact the Section
1441 VCP Coordinator at (212) 298–2698
(not a toll-free number).

986

SECTION 5. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2004–59 is modified.
SECTION 6. EFFECTIVE DATE
This revenue procedure is effective
September 29, 2004, the effective date of
Rev. Proc. 2004–59.
SECTION 7. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Kathryn Holman of the
Office of Associate Chief Counsel (International). For further information regarding this revenue procedure, contact
Kathryn Holman at (202) 622–3840 (not a
toll-free call).

November 21, 2005