Bulletin No. 2013-23June 3, 2013

HIGHLIGHTSOF THIS ISSUEThese synopses are intended only as aids to the reader inidentifying the subject matter covered. They may not berelied upon as authoritative interpretations.

INCOME TAX

T.D. 9618, page 1194.This final regulation extends the period for submission to theIRS of taxpayer authorizations permitting disclosure of returnsand return information to third-party designees. Notice 2010–8is obsolete as of May 7, 2013.

REG–125398–12, page 1199.Proposed regulations provide rules under section 36B of theCode relating to the health insurance premium tax credit, en-acted by section 1401 of the Affordable Care Act, includingrules for determining whether an eligible employer-sponsoredplan provides minimum value.

Notice 2013–34, page 1198.Credit for Carbon Dioxide Sequestration; 2013 Section 45QInflation Adjustment Factor. This notice publishes the inflationadjustment factor for the carbon dioxide (CO2) sequestrationcredit under § 45Q for calendar year 2013.

ADMINISTRATIVE

T.D. 9617, page 1195.These final regulations provide rules requiring any person as-signed an employer identification number (EIN) to provide up-dated information to the IRS in the manner and frequency pre-scribed by forms, instructions, or other appropriate guidance.

Announcements of Disbarments and Suspensions begin on page 1207.Finding Lists begin on page ii.

The IRS MissionProvide America’s taxpayers top-quality service by helpingthem understand and meet their tax responsibilities and en-

force the law with integrity and fairness to all.

IntroductionThe Internal Revenue Bulletin is the authoritative instrument ofthe Commissioner of Internal Revenue for announcing officialrulings and procedures of the Internal Revenue Service and forpublishing Treasury Decisions, Executive Orders, Tax Conven-tions, legislation, court decisions, and other items of generalinterest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all sub-stantive rulings necessary to promote a uniform application ofthe tax laws, including all rulings that supersede, revoke, mod-ify, or amend any of those previously published in the Bulletin.All published rulings apply retroactively unless otherwise indi-cated. Procedures relating solely to matters of internal man-agement are not published; however, statements of internalpractices and procedures that affect the rights and duties oftaxpayers are published.

Revenue rulings represent the conclusions of the Service on theapplication of the law to the pivotal facts stated in the revenueruling. In those based on positions taken in rulings to taxpayersor technical advice to Service field offices, identifying detailsand information of a confidential nature are deleted to preventunwarranted invasions of privacy and to comply with statutoryrequirements.

Rulings and procedures reported in the Bulletin do not have theforce and effect of Treasury Department Regulations, but theymay be used as precedents. Unpublished rulings will not berelied on, used, or cited as precedents by Service personnel inthe disposition of other cases. In applying published rulings andprocedures, the effect of subsequent legislation, regulations,court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautionedagainst reaching the same conclusions in other cases unlessthe 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 ofthe 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, Leg-islation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.To the extent practicable, pertinent cross references to thesesubjects are contained in the other Parts and Subparts. Alsoincluded in this part are Bank Secrecy Act Administrative Rul-ings. Bank Secrecy Act Administrative Rulings are issued bythe Department of the Treasury’s Office of the Assistant Secre-tary (Enforcement).

Part IV.—Items of General Interest.This part includes notices of proposed rulemakings, disbar-ment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative indexfor the matters published during the preceding months. Thesemonthly indexes are cumulated on a semiannual basis, and arepublished in the last Bulletin of each semiannual period.

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.

June 3, 2013 2013–23 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Codeof 1986Section 6011.—GeneralRequirement of Return,Statement, or List

Proposed regulations provide that a taxpayer whoreceives advance payments of the premium tax creditunder section 36B must file an income tax return forthat taxable year on or before the due date for thereturn (including extensions of time for filing). SeeREG-125398-12, page 1199.

Section 6103(c).—Confi-dentiality and Disclosureof Returns and ReturnInformation

T.D. 9618

DEPARTMENT OF THETREASURYInternal Revenue Service26 CFR Part 301

Disclosure of Returns andReturn Information toDesignee of Taxpayer

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains fi-nal regulations extending the period forsubmission to the IRS of taxpayer autho-rizations permitting disclosure of returnsand return information to third-party de-signees. Specifically, the final regulationsextend from 60 days to 120 days the pe-riod within which a signed and dated au-thorization must be received by the IRS (oran agent or contractor of the IRS) for it tobe effective. The final regulations will af-fect taxpayers who submit authorizationspermitting disclosure of returns and returninformation to third-party designees.

DATES: Effective Date: The final regula-tions are effective on May 7, 2013.

Applicability Date: For date of applica-bility, see §301.6103(c)–1(f).

FOR FURTHER INFORMATIONCONTACT: Amy Mielke, (202) 622–4570(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information containedin the final regulations has been reviewedand approved by the Office of Manage-ment and Budget in accordance with thePaperwork Reduction Act of 1995 (44U.S.C. 3507(d)) under control number1545–1816.

The collection of informationin these final regulations is in§301.6103(c)–1(b)(2). This informationis required by the IRS to identify thereturn or return information describedin the request or consent; to search forand, where found, compile such returnor return information; and to identify theperson to whom any such return or returninformation is to be provided.

An agency may not conduct or sponsor,and a person is not required to respond to, acollection of information unless it displaysa valid control number assigned by the Of-fice of Management and Budget.

Books and records relating to the col-lection of information must be retained aslong as their contents may become mate-rial in the administration of any internalrevenue law. Generally, tax returns andreturn information are confidential, as re-quired by section 6103.

Background

This document contains amendments tothe Procedure and Administration Regu-lations (26 CFR part 301), and amends§301.6103(c)–1 by extending the periodfor submission to the IRS of taxpayer au-thorizations permitting disclosure of re-turns and return information to designeesof a taxpayer.

On December 18, 2009, the IRS pub-lished Notice 2010–8, 2010–3 I.R.B. 297(available at IRS.gov), which announcedthe Treasury Department and the IRS’sintent to amend the regulations under§301.6103(c)–1 to expand the time framefor submission of section 6103(c) au-thorizations. The notice also announcedinterim rules extending from 60 days to120 days the period within which section6103(c) authorizations must be received

to be effective. The time period was ex-tended because some institutions chargedwith assisting taxpayers in their financialdealings encountered difficulty in obtain-ing written authorizations and submittingthe authorizations within the 60-day pe-riod allowed by the existing regulations.The interim rules apply to authorizationssigned and dated on or after October 19,2009.

The Treasury Department and the IRSpublished a notice of proposed rulemaking(REG–153338–09) in the Federal Reg-ister, 76 FR 14827, on March 18, 2011,which adopted the interim rule in Notice2010–8. A public hearing was scheduledfor June 9, 2011. The IRS did not receiveany requests to testify at the public hearing,and the public hearing was cancelled. Onewritten comment responding to the NPRMwas received and is available for publicinspection at http://www.regulations.govor upon request. After consideration ofthe comment, the proposed regulations areadopted by this Treasury decision withoutchange.

Explanation and Summary ofComments

The IRS received one comment in re-sponse to the NPRM. The commentatoragreed that the period for submission ofauthorizations to allow for the disclosureof taxpayer information to third-party de-signees should be expanded. The com-mentator specifically suggested that anyreasonable time period beyond 120 daysalso be considered. The Treasury Depart-ment and the IRS have concluded that the120-day period is a sufficient extension oftime to assist taxpayers whose designeeshave encountered difficulty in obtainingand submitting the written authorizations.The 120-day period is a reasonable limita-tion on the effective period of written au-thorizations that helps ensure the currencyof the authorization while protecting tax-payer privacy. After carefully consideringthe comment, the proposed regulations areadopted without modification.

2013–23 I.R.B. 1194 June 3, 2013

Effect on Other Documents

The following publication is obsolete asof May 7, 2013: Notice 2010–8, 2010–3I.R.B. 297.

Special Analyses

It has been determined that this finalrule is not a significant regulatory actionas defined in Executive Order 12866, assupplemented by Executive Order 13563.Therefore, a regulatory assessment is notrequired. It also has been determined thatsection 553(b) of the Administrative Pro-cedure Act (5 U.S.C. chapter 5) does notapply to this regulation. Pursuant to sec-tion 7805(f) of the Internal Revenue Code,the notice of proposed rulemaking preced-ing the final regulations was submitted tothe Chief Counsel for Advocacy of theSmall Business Administration for com-ment on its impact on small businesses,and no comments were received from thatoffice.

When an agency issues a final rule, theRegulatory Flexibility Act (5 U.S.C. chap-ter 6) (RFA), requires the agency to “pre-pare a final regulatory flexibility analysis.”(5 U.S.C. 604(a)). Section 605 of the RFAprovides an exception to this requirementif the agency certifies that the rulemakingwill not have a significant economic im-pact on a substantial number of small en-tities. It is hereby certified that the col-lection of information in this regulationwill not have a significant economic im-pact on a substantial number of small en-tities. This certification is based upon thefact that any burden on taxpayers is min-imal, since the regulation applies only totaxpayers who request or consent to thedisclosure of their own returns or return in-formation, and since the information col-lected is only that necessary to carry outthe disclosure of returns or return informa-tion requested or consented to by the tax-payer (such as the name and taxpayer iden-tification number of the taxpayer, the re-turn or return information to be disclosed,and the identity of the designee). More-over, the certification is based upon thefact that the regulation reduces the burdenimposed upon taxpayers by the prior reg-ulation by extending the period in whichconsents may be received by the IRS. Ac-cordingly, a Regulatory Flexibility Analy-sis is not required.

Drafting Information

The principal author of the final reg-ulations is Amy Mielke, Office of theAssociate Chief Counsel (Procedure andAdministration).

* * * * *

Adoption of Amendments to theRegulations

Accordingly, 26 CFR part 301 isamended as follows:

PART 301—PROCEDURE ANDADMINISTRATION

Paragraph 1. The authority citation forpart 301 continues to read in part as fol-lows:

Authority: 26 U.S.C. 7805 * * *Par. 2. Section 301.6103(c)–1 is

amended by revising paragraphs (b)(2)and (f), and adding paragraph (g) to readas follows:

§301.6103(c)–1 Disclosure of returnsand return information to designee oftaxpayer.

* * * * *(b) * * *(2) Requirement that request or con-

sent be received within one hundred twentydays of when signed and dated. The dis-closure of a return or return informationauthorized by a written request for or writ-ten consent to the disclosure shall not bemade unless the request or consent is re-ceived by the Internal Revenue Service (oran agent or contractor of the Internal Rev-enue Service) within 120 days followingthe date upon which the request or consentwas signed and dated by the taxpayer.

* * * * *(f) Applicability date. This section is

applicable on April 29, 2003, except thatparagraph (b)(2) is applicable to section6103(c) authorizations signed on or afterOctober 19, 2009.

(g) Effective date. This section is effec-tive on April 29, 2003, except that para-graphs (b)(2) and (f) are effective May 7,2013.

Steven T. Miller,Deputy Commissioner forServices and Enforcement.

Approved April 25, 2013.

Mark J. Mazur,Assistant Secretary

of the Treasury (Tax Policy).

(Filed by the Office of the Federal Register on May 6, 2013,8:45 a.m., and published in the issue of the Federal Registerfor May 7, 2013, 78 F.R. 26506)

Section 6109.—IdentifyingNumbers

T.D. 9617

DEPARTMENT OF THETREASURYInternal Revenue Service26 CFR Parts 301 and 602

Updating of EmployerIdentification Numbers

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Final Regulations.

SUMMARY: This document contains fi-nal regulations that require any person as-signed an employer identification number(EIN) to provide updated information tothe IRS in the manner and frequency pre-scribed by forms, instructions, or other ap-propriate guidance. These regulations af-fect persons with EINs and will enhancethe IRS’s ability to maintain accurate in-formation as to persons assigned EINs.

DATES: Effective Date: These regulationsare effective on May 6, 2013.

Applicability Date: For date of applica-bility, see §301.6109–1(d)(2)(ii)(B).

FOR FURTHER INFORMATIONCONTACT: David Skinner, (202)622–4940 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information containedin the final regulations has been reviewedand approved by the Office of Manage-ment and Budget in accordance with thePaperwork Reduction Act of 1995 (44U.S.C. 3507(d)) under control number1545–2242.

June 3, 2013 1195 2013–23 I.R.B.

The collection of informa-tion in the final regulations is in§301.6109–1(d)(2)(ii)(A). The collectionof this information is necessary to allowthe IRS to gather correct applicationinformation with respect to persons thathave EINs. The respondents are personsthat have EINs.

An agency may not conduct or sponsor,and a person is not required to respond to, acollection of information unless it displaysa valid control number assigned by the Of-fice of Management and Budget.

Books or records relating to a collectionof information must be retained as longas their contents may become material inthe administration of any internal revenuelaw. Generally, tax returns and tax returninformation are confidential, as requiredby section 6103 of the Internal RevenueCode.

Background

This document contains final amend-ments to the Procedure and Administra-tion Regulations (26 CFR part 301) un-der section 6109 of the Internal RevenueCode relating to identifying numbers. TheDepartment of Treasury and the IRS pub-lished a notice of proposed rulemaking(REG–135491–10) in the Federal Regis-ter, 77 FR 15004, on March 14, 2012, re-quiring persons issued EINs to provide up-dated application information to the IRS.The IRS did not receive any requests fora public hearing. Written comments re-sponding to the proposed regulations werereceived and are available for public in-spection at http://www.regulations.gov orupon request. After consideration of allthe comments, the proposed regulationsare adopted without amendment by thisTreasury decision.

Summary of Comments

The IRS received four written com-ments in response to the proposed regu-lations. One comment supported the rulein the proposed regulations requiring anyperson issued an EIN to provide updatedinformation to the IRS in the manner andfrequency required by forms, instructions,or other appropriate guidance (includingupdated application information regardingthe name and taxpayer identifying numberof the responsible party). This commen-tator also recommended changes to either

the Form SS–4, Application for EmployerIdentification Number, or the Form 5500,Annual Returns/Reports of Employee Ben-efit Plan, to require additional informationconfirming the active status of a trust’sEIN. Alternatively, the commentator sug-gested that the IRS could use a postcardto confirm the active status of trusts forEIN purposes. Although these suggestionsare outside the scope of the regulations,the IRS will take them into considerationduring future updates of those items.

Three of the comments did not supportthe rule in the proposed regulations. Twocommentators objected to the increasedburden on entities resulting from the up-dating requirement and questioned thenecessity of this requirement. Addition-ally, two commentators suggested thatthe estimated annual average burden of15 minutes provided in the PaperworkReduction Act section of the proposed reg-ulations underestimated the actual burdento entities and their agents. One commen-tator also argued that this rule is “material”because the related costs could reach over$100,000,000. Treasury and the IRS haveconsidered these comments and, for thefollowing reasons, these final regulationsadopt the proposed regulations withoutchange.

Treasury and the IRS continue to con-clude that updating this application in-formation is necessary for effective taxadministration. Some EIN applicantscontinue to list individuals temporarily au-thorized to act on behalf of EIN applicants(sometimes referred to as “nominees”)as principal officers, general partners,grantors, owners, and trustors on EINapplications. The listing of nominees orother individuals who are no longer as-sociated with the entity prevents the IRSfrom gathering and maintaining correctand current information with respect to theresponsible party for the EIN applicant.The requirement in the final regulations toprovide updated application informationwill allow the IRS to ascertain the trueresponsible party for persons who havean EIN. This knowledge will prevent un-necessary delays by allowing the IRS tocontact the correct persons when resolv-ing a tax matter related to a business withan EIN. In addition, this information willhelp the IRS combat schemes that abusethe tax system through the use of nomi-nees, which results in the concealing of

the true responsible party for entities thathide assets and income.

Treasury and the IRS also conclude thatthe costs related to this rule are not “ma-terial,” any associated burden on entitiesresulting from this requirement is mini-mal, and the costs and burden are out-weighed by the benefits to tax administra-tion described in the previous paragraph.An entity with an EIN will always knowthe identity of its appropriate responsibleparty, which is generally defined as the in-dividual with the authority to control, man-age, or direct the entity and the disposi-tion of its funds and assets. The updatingrequirement in these final regulations re-quires entities to keep the IRS informed ofthe identity of the responsible party.

The 15 minute burden estimate pro-vided in the Paperwork Reduction Actsection of the proposed regulations is anestimate of the burden in reporting anddisclosing the correct application informa-tion to the IRS, not the burden an entity orits agent may incur in determining this in-formation (which, as noted, is minimal be-cause an entity will always know the iden-tity of its responsible party). Followingthe publication of these final regulations,the IRS will publish the relevant form forpersons issued an EIN to use to disclosethe correct application information to theIRS. The relevant form will require thesepersons to update application informationregarding the name and taxpayer identify-ing number of the responsible party withinthe applicable timeframe. Treasury andthe IRS have determined that the amountof time necessary to fill out the relevantform and submit it to the IRS is minimal.

These final regulations are applicable asof January 1, 2014, so that the IRS canpublish the relevant form and instructionsin advance of the applicability date.

Special Analyses

It has been determined that these finalrules are not a significant regulatory actionas defined in Executive Order 12866, assupplemented by Executive Order 13563.Therefore, a regulatory assessment is notrequired. It also has been determined thatsection 553(b) of the Administrative Pro-cedure Act (5 U.S.C. chapter 5) does notapply to these final regulations.

When an agency issues a rulemaking,the Regulatory Flexibility Act (RFA) (5

2013–23 I.R.B. 1196 June 3, 2013

U.S.C. chapter 6) requires the agency to“prepare and make available for publiccomment an initial regulatory flexibilityanalysis” that will “describe the impact ofthe proposed rule on small entities.” (5U.S.C. 603(a)). Section 605 of the RFAprovides an exception to this requirementif the agency certifies that the proposedrulemaking will not have a significant eco-nomic impact on a substantial number ofsmall entities.

The rules affect entities that have anEIN and the IRS has determined that theserules will have an impact on a substantialnumber of small entities. The IRS has de-termined, however, that the impact on en-tities affected by the rules will not be sig-nificant. The current Form SS–4, Appli-cation for Employer Identification Num-ber, requires entities to disclose the nameof the EIN applicant’s “responsible party”and the responsible party’s Social Secu-rity Number, Individual Taxpayer Identifi-cation Number, or EIN. Employers are re-quired to know the identity of their respon-sible party. The amount of time necessaryto submit the updated information requiredin these regulations, therefore, should beminimal for these entities.

Based on these facts, the IRS herebycertifies that the collection of informationcontained in the final regulations will nothave a significant economic impact on asubstantial number of small entities. Ac-cordingly, a Regulatory Flexibility Analy-sis is not required.

Pursuant to section 7805(f) of the Code,the notice of proposed rulemaking preced-ing the final regulations was submitted tothe Chief Counsel for Advocacy of theSmall Business Administration for com-ment on its impact on small business andno comments were received.

Drafting Information

The principal author of these regula-tions is Elizabeth Cowan of the Office ofthe Associate Chief Counsel (Procedureand Administration).

* * * * *

Adoption of Amendments to theRegulations

Accordingly, 26 CFR part 301 isamended as follows:

PART 301—PROCEDURE ANDADMINISTRATION

Paragraph 1. The authority citation forpart 301 continues to read as follows:

Authority: 26 U.S.C. 7805 * * *Par. 2. Section 301.6109–1 is amended

by adding paragraph (d)(2)(ii) to read asfollows:

§301.6109–1 Identifying numbers.

* * * * *(d) * * *(2) * * *

(ii) Updating of application informa-tion—(A) Requirements. Persons issuedemployer identification numbers in ac-cordance with the application process setforth in paragraph (d)(2)(i) of this sectionmust provide to the Internal Revenue Ser-vice any updated application informationin the manner and frequency required byforms, instructions, or other appropriateguidance.

(B) Effective/applicability date. Para-graph (d)(2)(ii)(A) of this section appliesto all persons possessing an employeridentification number on or after January1, 2014.

* * * * *

PART 602—OMB CONTROLNUMBERS UNDER THEPAPERWORK REDUCTIONACT

Par. 3. The authority citation for part602 continues to read as follows:

Authority: 26 U.S.C. 7805.Par. 4. In §602.101, paragraph (b) is

amended by adding the following entry innumerical order to the table:

§602.101 OMB Control Numbers.

* * * * *(b) * * *

CFR part or section whereIdentified and described

Current OMBControl No.

* * * * *301.6109–1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1545–2242* * * * *

Steven T. Miller,Deputy Commissioner forServices and Enforcement.

Approved April 25, 2013.

Mark J. Mazur,Assistant Secretary

of the Treasury (Tax Policy).

(Filed by the Office of the Federal Register on May 3, 2013,8:45 a.m., and published in the issue of the Federal Registerfor May 6, 2013, 78 F.R. 26244)

June 3, 2013 1197 2013–23 I.R.B.

Part III. Administrative, Procedural, and MiscellaneousCredit for Carbon DioxideSequestration 2013 Section45Q Inflation AdjustmentFactor

Notice 2013–34

SECTION 1. PURPOSE

This notice publishes the inflation ad-justment factor for the credit for carbondioxide (CO2) sequestration under § 45Qof the Internal Revenue Code (§ 45Qcredit) for calendar year 2013. The infla-tion adjustment factor is used to determinethe amount of the credit allowable under§ 45Q. This notice also publishes the ag-gregate amount of qualified CO2 takeninto account for purposes of § 45Q.

SECTION 2. BACKGROUND

Section 45Q(a)(1) allows a credit of $20per metric ton of qualified CO2 that is cap-tured by the taxpayer at a qualified facil-ity, disposed of by the taxpayer in securegeological storage, and not used by thetaxpayer as a tertiary injectant. Section45Q(a)(2) allows a credit of $10 per metricton of qualified CO2 that is captured by thetaxpayer at a qualified facility, used by thetaxpayer as a tertiary injectant in a quali-fied enhanced oil or natural gas recoveryproject, and disposed of by the taxpayer insecure geological storage.

Section 45Q(b)(1) defines the term“qualified carbon dioxide” as CO2 cap-tured from an industrial source that wouldotherwise be released into the atmosphereas industrial emission of greenhouse gas,and that is measured at the source of cap-ture and verified at the point of disposalor injection. Qualified CO2 includes theinitial deposit of captured CO2 used as atertiary injectant but does not include CO2that is re-captured, recycled, or otherwisere-injected as part of the enhanced oil andnatural gas recovery process.

Section 45Q(c) defines the term “qual-ified facility” as an industrial facility thatis owned by the taxpayer, where carboncapture equipment is placed in service, andwhere at least 500,000 metric tons of CO2is captured during the taxable year.

Section 45Q(d)(2) provides that theSecretary, in consultation with the Admin-istrator of the Environmental ProtectionAgency (EPA), the Secretary of Energy,and the Secretary of the Interior, shallestablish regulations for determining ade-quate security measures for the geologicalstorage of CO2 under § 45Q(a)(1)(B) or(a)(2)(C) such that the CO2 does not es-cape into the atmosphere. See section 5 ofNotice 2009–83, 2009–44 I.R.B. 588, forprocedures regarding secure geologicalstorage.

Section 45Q(d)(5) allows the § 45Qcredit to the person that captures and phys-ically or contractually ensures the disposalof or the use as a tertiary injectant of thequalified CO2.

Under § 45Q(d)(7), for taxable yearsbeginning in a calendar year after 2009,the dollar amount contained in § 45Q(a)must be adjusted for inflation by multiply-ing such dollar amount by the inflation ad-justment factor for such calendar year de-termined under § 43(b)(3)(B), determinedby substituting “2008” for “1990.”

Section 43(b)(3)(B) defines the term“inflation adjustment factor” as, with re-spect to any calendar year, a fraction thenumerator of which is the GNP implicitprice deflator for the preceding calendaryear and the denominator of which is theGNP implicit price deflator for 1990. Forpurposes of § 45Q(d)(7), with respect to2013 calendar year, the inflation adjust-ment factor is a fraction the numerator ofwhich is the GNP implicit price deflatorfor 2012 (115.387) and the denominator ofwhich is the GNP implicit price deflatorfor 2008 (108.589).

Section 45Q(e) provides that the § 45Qcredit will apply with respect to qualified

CO2 before the end of the calendar year inwhich the Secretary, in consultation withthe EPA, certifies that 75,000,000 metrictons of qualified CO2 have been taken intoaccount in accordance with § 45Q(a).

SECTION 3. INFLATIONADJUSTMENT FACTOR

The inflation adjustment factor for cal-endar year 2013 is 1.0626. The § 45Qcredit for calendar year 2013 is $21.25per metric ton of qualified CO2 under§ 45Q(a)(1) and $10.63 per metric ton ofqualified CO2 under § 45Q(a)(2).

SECTION 4. TAX CREDITUTILIZATION

Section 6 of Notice 2009–83 requirestaxpayers to file annual reports thatprovide (among other information) theamounts (in metric tons) of qualified CO2for the taxable year that has been takeninto account for purposes of claiming the§ 45Q credit. The annual reports must befiled with the Service not later than the lastday of the second calendar month follow-ing the month during which the tax returnon which the § 45Q credit is claimed wasdue (including extensions).

Based on the annual reports filed withthe Service as of May 14, 2013, the ag-gregate amount of qualified CO2 takeninto account for purposes of § 45Q is20,858,926 metric tons.

SECTION 5. DRAFTINGINFORMATION

The principal author of this noticeis Jennifer Bernardini of the Office ofAssociate Chief Counsel (Passthroughs& Special Industries). For furtherinformation regarding this notice contactMs. Bernardini on (202) 622–3110 (not atoll-free call).

2013–23 I.R.B. 1198 June 3, 2013

Part IV. Items of General InterestNotice of ProposedRulemaking

Minimum Value of EligibleEmployer-Sponsored Plansand Other Rules Regardingthe Health Insurance PremiumTax Credit

REG–125398–12

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains pro-posed regulations relating to the healthinsurance premium tax credit enacted bythe Patient Protection and Affordable CareAct and the Health Care and EducationReconciliation Act of 2010, as amendedby the Medicare and Medicaid ExtendersAct of 2010, the Comprehensive 1099Taxpayer Protection and Repayment ofExchange Subsidy Overpayments Act of2011, and the Department of Defenseand Full-Year Continuing AppropriationsAct, 2011. These proposed regulationsaffect individuals who enroll in qualifiedhealth plans through Affordable InsuranceExchanges (Exchanges) and claim thepremium tax credit, and Exchanges thatmake qualified health plans available toindividuals and employers. These pro-posed regulations also provide guidanceon determining whether health coverageunder an eligible employer-sponsoredplan provides minimum value and affectemployers that offer health coverage andtheir employees.

DATES: Written (including electronic)comments and requests for a public hear-ing must be received by July 2, 2013.

ADDRESSES: Send submissions to:CC:PA:LPD:PR (REG–125398–12),Room 5203, Internal Revenue Service,PO Box 7604, Ben Franklin Station,Washington, DC 20044. Submissions maybe hand-delivered Monday through Fridaybetween the hours of 8 a.m. and 4 p.m.to CC:PA:LPD:PR (REG–125398–12),Courier’s Desk, Internal RevenueService, 1111 Constitution Avenue, NW.,

Washington, DC, or sent electronicallyvia the Federal eRulemakingPortal at www.regulations.gov (IRSREG–125398–12).

FOR FURTHER INFORMATIONCONTACT: Concerning the proposedregulations, Andrew S. Braden, (202)622–4960; concerning the submission ofcomments and/or requests for a publichearing, Oluwafunmilayo Taylor, (202)622–7180 (not toll-free calls).

SUPPLEMENTARY INFORMATION:

Background

Beginning in 2014, under the PatientProtection and Affordable Care Act, Pub-lic Law 111–148 (124 Stat. 119 (2010)),and the Health Care and Education Recon-ciliation Act of 2010, Public Law 111–152(124 Stat. 1029 (2010)) (collectively, theAffordable Care Act), eligible individualswho purchase coverage under a quali-fied health plan through an AffordableInsurance Exchange may receive a pre-mium tax credit under section 36B of theInternal Revenue Code (Code). Section36B was subsequently amended by theMedicare and Medicaid Extenders Actof 2010, Public Law 111–309 (124 Stat.3285 (2010)); the Comprehensive 1099Taxpayer Protection and Repayment ofExchange Subsidy Overpayments Act of2011, Public Law 112–9 (125 Stat. 36(2011)); and the Department of Defenseand Full-Year Continuing AppropriationsAct, 2011, Public Law 112–10 (125 Stat.38 (2011)).

Notice 2012–31, 2012–20 I.R.B. 906,requested comments on methods for de-termining whether health coverage underan eligible employer-sponsored plan pro-vides minimum value (MV). Final regula-tions under section 36B (TD 9590) werepublished on May 23, 2012 (77 FR 30377).The final regulations requested commentson issues to be addressed in further guid-ance. The comments have been consideredin developing these proposed regulations.

Minimum Value

Individuals generally may not receive apremium tax credit if they are eligible for

affordable coverage under an eligible em-ployer-sponsored plan that provides MV.An applicable large employer (as definedin section 4980H(c)(2)) may be liablefor an assessable payment under section4980H if a full-time employee receives apremium tax credit.

Under section 36B(c)(2)(C)(ii), a planfails to provide MV if the plan’s share ofthe total allowed costs of benefits providedunder the plan is less than 60 percent ofthe costs. Section 1302(d)(2)(C) of the Af-fordable Care Act provides that, in deter-mining the percentage of the total allowedcosts of benefits provided under a grouphealth plan, the regulations promulgatedby the Secretary of Health and Human Ser-vices (HHS) under section 1302(d)(2) ap-ply.

HHS published final regulations undersection 1302(d)(2) on February 25, 2013(78 FR 12834). The HHS regulations at45 CFR 156.20 define the percentage ofthe total allowed costs of benefits providedunder a group health plan as (1) the an-ticipated covered medical spending for es-sential health benefits (EHB) coverage (asdefined in 45 CFR 156.110(a)) paid by ahealth plan for a standard population, (2)computed in accordance with the plan’scost-sharing, and (3) divided by the totalanticipated allowed charges for EHB cov-erage provided to a standard population. Inaddition, 45 CFR 156.145(c) provides thatthe standard population used to computethis percentage for MV (as developed byHHS for this purpose) reflects the popula-tion covered by typical self-insured grouphealth plans.

The HHS regulations describe sev-eral options for determining MV. Un-der 45 CFR 156.145(a)(1), plans mayuse the MV Calculator (available athttp://cciio.cms.gov/resources/regulations/index.html). Alternatively, 45 CFR156.145(a)(2) provides that a plan maydetermine MV through a safe harborestablished by HHS and IRS. For planswith nonstandard features that areincompatible with the MV Calculatoror a safe harbor, 45 CFR 156.145(a)(3)provides that the plan may determine MVthrough an actuarial certification from amember of the American Academy ofActuaries after performing an analysis

June 3, 2013 1199 2013–23 I.R.B.

in accordance with generally acceptedactuarial principles and methodologies.Finally, 45 CFR 156.145(a)(4) providesthat a plan in the small group marketsatisfies MV if it meets the requirementsfor any of the levels of metal coveragedefined at 45 CFR 156.140(b) (bronze,silver, gold, or platinum).

Miscellaneous Provisions Under Section36B

To be eligible for a premium tax credit,an individual must be an applicable tax-payer. Under section 36B(c)(1), an ap-plicable taxpayer is a taxpayer whosehousehold income for the taxable yearis between 100 percent and 400 percentof the federal poverty line (FPL) for thetaxpayer’s family size.

Section 36B(b)(1) provides that the pre-mium assistance credit amount is the sumof the premium assistance amounts for allcoverage months in the taxable year forindividuals in the taxpayer’s family. Thepremium assistance amount for a cover-age month is the lesser of (1) the premi-ums for the month for one or more qual-ified health plans that cover a taxpayeror family member, or (2) the excess ofthe adjusted monthly premium for the sec-ond lowest cost silver plan (as describedin section 1302(d)(1)(B) of the AffordableCare Act (42 U.S.C. 18022(d)(1)(B)) (thebenchmark plan) that applies to the tax-payer over 1/12 of the product of the tax-payer’s household income and the applica-ble percentage for the taxable year. Theadjusted monthly premium, in general, isthe premium an insurer would charge forthe plan adjusted only for the ages of thecovered individuals.

Under section 36B(c)(2)(A), a cover-age month is any month for which the tax-payer or a family member is covered bya qualified health plan enrolled in throughan Exchange and the premium is paid bythe taxpayer or through an advance creditpayment. Section 36B(c)(2) provides thata month is not a coverage month for anindividual who is eligible for other mini-mum essential coverage. If the other cov-erage is eligible employer-sponsored cov-erage, however, it is treated as minimumessential coverage only if it is affordableand provides MV. Eligible employer-spon-sored coverage is affordable for an em-ployee and related individuals if the por-

tion of the annual premium the employeemust pay for self-only coverage does notexceed the required contribution percent-age (9.5 percent for taxable years begin-ning before January 1, 2015) of the tax-payer’s household income. The MV re-quirement is discussed in the Explanationof Provisions.

Any arrangement under which em-ployees are required, as a condition ofemployment or otherwise, to be enrolledin an employer-sponsored plan that doesnot provide minimum value or is unafford-able, and that does not give the employeesan effective opportunity to terminate ordecline the coverage, raises a variety ofissues. Proposed regulations under sec-tion 4980H indicate that if an employermaintains such an arrangement it wouldnot be treated as having made an offer ofcoverage. As a result, an applicable largeemployer could be subject to an assessablepayment under that section. See Proposed§54.4980H–4(b), 78 FR 250 (January 2,2013). Such an arrangement would alsoraise additional concerns. For example, itis questionable whether the law permitsinterference with an individual’s ability toapply for a section 36B premium tax creditby seeking to involuntarily impose cover-age that does not provide minimum value.(See, for example, the Fair Labor Stan-dards Act, as amended by section 1558of the Affordable Care Act, 29 U.S.C.218c(a).) If an employer sought to invol-untarily impose on its employees coveragethat did not provide minimum value orwas unaffordable, the IRS and Treasury,as well as other relevant departments, maytreat such arrangements as impermissibleinterference with an employee’s ability toaccess premium tax credits, as contem-plated by the Affordable Care Act.

Explanation of Provisions andSummary of Comments

1. Minimum Value

a. In general

The proposed regulations refer to theproportion of the total allowed costs ofbenefits provided to an employee that arepaid by the plan as the plan’s MV percent-age. The MV percentage is determinedby dividing the cost of certain benefits(described in paragraph b.) the plan wouldpay for a standard population by the total

cost of certain benefits for the standardpopulation, including amounts the planpays and amounts the employee paysthrough cost-sharing, and then convertingthe result to a percentage.

b. Health benefits measured indetermining MV

Commentators sought clarification ofthe health benefits considered in determin-ing the share of benefit costs paid by a plan.Some commentators maintained that MVshould be based on the plan’s share of thecost of coverage for all EHBs, includingthose a plan does not offer. Other com-mentators suggested that the MV percent-age should be based on the plan’s share ofthe costs of only those categories of EHBsthe plan covers.

The proposed regulations do not requireemployer-sponsored self-insured and in-sured large group plans to cover everyEHB category or conform their plans to anEHB benchmark that applies to qualifiedhealth plans. The preamble to the HHSregulations (see 78 FR 12833) notes thatemployer-sponsored group health plansare not required to offer EHBs unless theyare health plans offered in the small groupmarket subject to section 2707(a) of thePublic Health Service Act. The preamblealso states that, under section 1302(d)(2)of the Affordable Care Act, MV is mea-sured based on the provision of EHBsto a standard population and plans mayaccount for any benefits covered by theemployer that also are covered in any oneof the EHB-benchmark plans. See 45 CFR156.145(b)(2).

Consistent with 45 CFR 156.145(a)–(c)and the assumptions described in Notice2012–31, these proposed regulations pro-vide that MV is based on the anticipatedspending for a standard population. Theplan’s anticipated spending for benefitsprovided under any particular EHB-bench-mark plan for any State counts towardsMV.

c. Health reimbursement arrangements,health savings accounts, and wellnessprogram incentives

i. Arrangements that Reduce Cost-Sharing

Some commentators suggested thatcurrent year health savings account (HSA)contributions and amounts newly made

2013–23 I.R.B. 1200 June 3, 2013

available under a health reimbursement ar-rangement (HRA) should be fully countedtoward the plan’s share of costs includedin calculating MV. Some commentatorssuggested that only HRA contributionsthat may be used to pay for cost sharingand not HRAs restricted to other usesshould be counted in the MV calculation.

Consistent with 45 CFR 156.135(c),the proposed regulations provide that allamounts contributed by an employer forthe current plan year to an HSA are takeninto account in determining the plan’sshare of costs for purposes of MV and aretreated as amounts available for first dollarcoverage. Amounts newly made availableunder an HRA that is integrated with aneligible employer-sponsored plan for thecurrent plan year count for purposes ofMV in the same manner if the amountsmay be used only for cost-sharing and maynot be used to pay insurance premiums. Itis anticipated that regulations will providethat whether an HRA is integrated withan eligible employer-sponsored plan isdetermined under rules that apply for pur-poses of section 2711 of the Public HealthService Act (42 U.S.C. 300gg–11). Com-mentators offered differing opinions abouthow nondiscriminatory wellness programincentives that may affect an employee’scost sharing should be taken into accountfor purposes of the MV calculation. Somecommentators noted that the rules govern-ing wellness incentives require that theybe available to all similarly situated indi-viduals. These commentators suggestedthat because eligible individuals have theopportunity to reduce their cost-sharing ifthey choose, a plan’s share of costs shouldbe based on the costs paid by individu-als who satisfy the terms of the wellnessprogram. Other commentators expressedconcern that, despite the safeguards of theregulations governing wellness incentives,certain individuals inevitably will facebarriers to participation and fail to qualifyfor rewards. These commentators sug-gested that a plan’s share of costs shouldbe determined without assuming that in-dividuals would qualify for the reducedcost-sharing available under a wellnessprogram.

The proposed regulations provide thata plan’s share of costs for MV purposesis determined without regard to reducedcost-sharing available under a nondiscrim-inatory wellness program. However, for

nondiscriminatory wellness programs de-signed to prevent or reduce tobacco use,MV may be calculated assuming that everyeligible individual satisfies the terms of theprogram relating to prevention or reduc-tion of tobacco use. This exception is con-sistent with other Affordable Care Act pro-visions (such as the ability to charge higherpremiums based on tobacco use) reflectinga policy about individual responsibility re-garding tobacco use.

ii. Arrangements that Reduce Premiums

Section 36B(c)(2)(C)(i)(II) and thefinal regulations provide that eligible em-ployer-sponsored coverage is affordableonly if an employee’s required contribu-tion for self-only coverage does not exceed9.5 percent of household income. Thepreamble to the final regulations indicatedthat rules for determining how HRAs andwellness program incentives are countedin determining the affordability of eligibleemployer-sponsored coverage would beprovided in later guidance.

Some commentators asserted that anemployer’s entire annual contribution toan HRA plus prior year contributionsshould be taken into account in determin-ing affordability. The proposed regula-tions provide that amounts newly madeavailable under an HRA that is integratedwith an eligible employer-sponsored planfor the current plan year are taken intoaccount only in determining affordabil-ity if the employee may use the amountsonly for premiums or may choose touse the amounts for either premiums orcost-sharing. Treating amounts that maybe used either for premiums or cost-shar-ing only towards affordability preventsdouble counting the HRA amounts whenassessing MV and affordability of eligibleemployer-sponsored coverage.

It is anticipated that regulations undersection 5000A will provide that amountsnewly made available under an HRA thatis integrated with an eligible employer-sponsored plan for the current plan yearare also taken into account for purposes ofthe affordability exemption under section5000A(e)(1) if the employee may use theamounts only for premiums or for eitherpremiums or cost-sharing.

The final regulations requested specificcomments on the nature of wellness incen-tives and how they should be treated for

determining affordability. Commentatorsexpressed similar views about the treat-ment of wellness incentives that affect thecost of premiums as about the treatmentof wellness incentives that affect cost-shar-ing.

Like the rule for determining MV, theproposed regulations provide that the af-fordability of an employer-sponsored planis determined by assuming that each em-ployee fails to satisfy the requirements of awellness program, except the requirementsof a nondiscriminatory wellness programrelated to tobacco use. Thus, the afford-ability of a plan that charges a higher ini-tial premium for tobacco users will be de-termined based on the premium that ischarged to non-tobacco users, or tobaccousers who complete the related wellnessprogram, such as attending smoking ces-sation classes.

In many circumstances these rules re-lating to the effect of premium-relatedwellness program rewards on affordabil-ity will have no practical consequences.They matter only when the employersets the level of the employee’s requiredcontribution to self-only premium, and es-tablishes a wellness program that providesfor a level of premium discount, in sucha manner that the employee’s requiredcontribution to premium would exceed 9.5percent of household income (or wages,under an affordability safe harbor underthe section 4980H proposed regulations)but for the potential premium discount un-der the wellness program. If, for example,the employee’s household income was atleast $25,000, and the employee’s requiredcontribution for self-only coverage did notexceed $2,375 (9.5 percent of $25,000),the coverage would be affordable whetheror not a wellness premium discount wastaken into account to reduce the $2,375required contribution.

It is anticipated that regulations undersection 5000A will provide that nondis-criminatory wellness programs that affectpremiums will be treated for purposes ofthe affordability exemption under section5000A(e)(1) in the same manner as theyare treated for purposes of determining af-fordability under section 36B.

Solely for purposes of applying section4980H and solely for plan years of anemployer’s group health plan beginningbefore January 1, 2015, with respect to anemployee described in the next sentence,

June 3, 2013 1201 2013–23 I.R.B.

an employer will not be subject to an as-sessable payment under section 4980H(b)with respect to an employee who receiveda premium tax credit because the offer ofcoverage was not affordable or did notsatisfy MV, if the offer of coverage tothe employee under the employer’s grouphealth plan would have been affordableor would have satisfied MV based onthe total required employee premium andcost-sharing for that group health plan thatwould have applied to the employee if theemployee satisfied the requirements of anywellness program described in the nextsentence, including a wellness programwith requirements unrelated to tobaccouse. The rule in the preceding sentenceapplies only (1) to the extent of the rewardas of May 3, 2013, expressed as eithera dollar amount or a fraction of the to-tal required employee contribution to thepremium (or the employee cost-sharing,as applicable), (2) under the terms of awellness program as in effect on May 3,2013, and (3) with respect to an employeewho is in a category of employees eligibleunder the terms of the wellness programas in effect on May 3, 2013 (regardless ofwhether the employee was hired before orafter that date). Any required employeecontribution to premium determined basedupon assumed satisfaction of the require-ments of a wellness program availableunder this transition relief may be appliedto the use of an affordability safe harborprovided in the proposed regulations un-der section 4980H.

d. Standard population and utilization

Consistent with 45 CFR 156.145(c),the proposed regulations provide that thestandard population used to determineMV reflects the population covered byself-insured group health plans. HHS hasdeveloped the MV standard populationand described it through summary sta-tistics (for example, continuance tables).MV continuance tables and an explanationof the MV Calculator methodology andthe health claims data HHS has used to de-velop the continuance tables are availableat http://cciio.cms.gov/resources/regula-tions/index.html.

e. Methods for determining minimumvalue

Notice 2012–31 and 45 CFR156.145(a) describe several methods fordetermining MV: the MV Calculator, asafe harbor, actuarial certification, and,for small group market plans, a metallevel. Some commentators requested thatplans be allowed to choose one of the fourmethods in determining MV. Other com-mentators favored requiring employers touse the most precise method for plans thatmay be close to the 60 percent threshold.

The proposed regulations provide thattaxpayers may determine whether a planprovides MV by using the MV Calculatormade available by HHS and the IRS. Tax-payers must use the MV Calculator to mea-sure standard plan features (unless a safeharbor applies), but the percentage may beadjusted based on an actuarial analysis ofplan features that are outside the parame-ters of the calculator.

Certain safe harbor plan designs thatsatisfy MV will be specified in additionalguidance under section 36B or 4980H,see §601.601(d). It is anticipated that theguidance will provide that the safe harborsare examples of plan designs that clearlywould satisfy the 60 percent thresholdif measured using the MV Calculator.The safe harbors are intended to providean easy way for sponsors of typical em-ployer-sponsored group health plans todetermine whether a plan meets the MVthreshold without having to use the MVCalculator.

Plan designs meeting the followingspecifications are proposed as safe harborsfor determining MV if the plans cover allof the benefits included in the MV Calcu-lator: (1) a plan with a $3,500 integratedmedical and drug deductible, 80 percentplan cost-sharing, and a $6,000 maxi-mum out-of-pocket limit for employeecost-sharing; (2) a plan with a $4,500integrated medical and drug deductible,70 percent plan cost-sharing, a $6,400maximum out-of-pocket limit, and a $500employer contribution to an HSA; and (3)a plan with a $3,500 medical deductible,$0 drug deductible, 60 percent plan med-ical expense cost-sharing, 75 percent plandrug cost-sharing, a $6,400 maximumout-of-pocket limit, and drug co-pays of$10/$20/$50 for the first, second and thirdprescription drug tiers, with 75 percent

coinsurance for specialty drugs. Com-ments are requested on these and othercommon plan designs that would satisfyMV and should be designated as safe har-bors.

Consistent with 45 CFR 156.145(a),the proposed regulations require planswith nonstandard features that cannot de-termine MV using the MV Calculator ora safe harbor to use the actuarial certi-fication method. The actuary must bea member of the American Academy ofActuaries and must perform the analysisin accordance with generally accepted ac-tuarial principles and methodologies andany additional standards that subsequentguidance requires.

f. Other issues

Commentators suggested a de minimisexception to the MV 60 percent level ofcoverage, noting that similar de minimisvariations are permitted in determiningactuarial value for qualified health plans.However, as other commentators noted,permitting a de minimis exception wouldhave the effect of lowering the minimumlevel of coverage to a percentage below 60percent. Under section 36B(c)(2)(C)(ii),coverage below 60 percent does not pro-vide MV. Accordingly, the proposed reg-ulations do not provide for a de minimisexception.

2. Miscellaneous Issues Under Section36B

a. Definition of modified adjusted grossincome

Section 36B(d)(2) provides that theterm household income means the modi-fied adjusted gross income of the taxpayerplus the modified adjusted gross incomeof all members of the taxpayer’s familyrequired to file a tax return under section 1for the taxable year. The final regulationsprovide that the determination of whethera family member is required to file a re-turn is made without regard to section1(g)(7). Under section 1(g)(7), a parentmay, if certain requirements are met, electto include in the parent’s gross income,the gross income of his or her child. Ifthe parent makes the election, the child istreated as having no gross income for thetaxable year.

2013–23 I.R.B. 1202 June 3, 2013

The proposed regulations remove“without regard to section 1(g)(7)” fromthe final regulations because that languageimplies that the child’s gross income is in-cluded in both the parent’s adjusted grossincome and the child’s adjusted gross in-come in determining household income.Thus, the proposed regulations clarify thatif a parent makes an election under sec-tion 1(g)(7), household income includesthe child’s gross income included on theparent’s return and the child is treated ashaving no gross income.

b. Rating area

Section 36B(b)(3)(B) determines theapplicable benchmark plan by referenceto the rating area where a taxpayer re-sides. The final regulations reserved thedefinition of rating area. The proposedregulations provide that the term ratingarea has the same meaning as used insection 2701(a)(2) of the Public HealthService Act (42 U.S.C. 300gg) and 45CFR 156.255.

c. Retiree coverage

The section 36B final regulations pro-vide that an individual who may enroll incontinuation coverage required under Fed-eral law or a State law that provides com-parable continuation coverage is eligiblefor minimum essential coverage only formonths that the individual is enrolled inthe coverage. These proposed regulationsapply this rule to former employees only.Active employees eligible for continua-tion coverage as a result of reduced hoursshould be subject to the same rules for eli-gibility of affordable employer-sponsoredcoverage offering MV as other active em-ployees. The proposed regulations add acomparable rule for health coverage of-fered to retired employees (retiree cov-erage). Accordingly, an individual whomay enroll in retiree coverage is eligiblefor minimum essential coverage under thecoverage only for the months the individ-ual is enrolled in the coverage.

d. Coverage month for newborns and newadoptees

Under section 36B(c)(2)(A)(i) and thefinal regulations, a month is a coveragemonth for an individual only if, as of the

first day of the month, the individual is en-rolled in a qualified health plan throughan Exchange. A child born or adoptedduring the month is not enrolled in cov-erage on the first day and therefore wouldnot be eligible for the premium tax creditor cost-sharing reductions for that month.Accordingly, the proposed regulations pro-vide that a child enrolled in a qualifiedhealth plan in the month of the child’sbirth, adoption, or placement with the tax-payer for adoption or in foster care, istreated as enrolled as of the first day of themonth.

e. Adjusted monthly premium for familymembers enrolled for less than a fullmonth

Under section 36B(c), the premiumassistance amount for a coverage monthis computed by reference to the adjustedmonthly premium for an applicable bench-mark plan. The final regulations providethat the applicable benchmark plan is theplan that applies to a taxpayer’s cover-age family. The final regulations do notaddress whether changes to a coveragefamily, for example as the result of thebirth and enrollment of a child or the dis-enrollment of another family member, thatoccur during the month affect the premiumassistance amount. The proposed regu-lations provide that the adjusted monthlypremium is determined as if all membersof the coverage family for that month wereenrolled in a qualified health plan for theentire month.

f. Premium assistance amount for partialmonths of coverage

The final regulations do not addressthe computation of the premium assis-tance amount if coverage under a qualifiedhealth plan is terminated during the month.The proposed regulations provide thatwhen coverage under a qualified healthplan is terminated before the last day of amonth and, as a result, the issuer reducesor refunds a portion of the monthly pre-mium the premium assistance amount forthe month is prorated based on the numberof days of coverage in the month.

g. Family members residing at differentlocations.

The final regulations reserved rules ondetermining the premium for the applica-ble benchmark plan if family members aregeographically separated and enroll in sep-arate qualified health plans. The proposedregulations provide that the premium forthe applicable benchmark plan in this sit-uation is the sum of the premiums for theapplicable benchmark plans for each groupof family members residing in a differentState.

h. Correction to applicable percentagetable

The applicable percentage table in thefinal regulations erroneously states that the9.5 percentage applies only to taxpayerswhose household income is less than 400percent of the FPL. The proposed regula-tions clarify that the 9.5 percentage appliesto taxpayers whose household income isnot more than 400 percent of the FPL.

i. Additional benefits and applicablebenchmark plan

Under section 36B(b)(3)(D) and the fi-nal regulations, only the portion of the pre-mium for a qualified health plan properlyallocable to EHBs determines a taxpayer’spremium assistance amount. Premiumsallocable to benefits other than EHBs (ad-ditional benefits) are disregarded. Thefinal regulations do not address, however,whether a taxpayer’s benchmark planis determined before or after premiumshave been allocated to additional bene-fits. The proposed regulations providethat premiums are allocated to additionalbenefits before determining the applica-ble benchmark plan. Thus, only essentialhealth benefits are considered in deter-mining the applicable benchmark plan,consistent with the requirement in section36B(b)(3)(D) that only essential healthbenefits are considered in determining thepremium assistance amount. In addition,allocating premium to benefits that exceedEHBs before determining the applicablebenchmark plan results in a more accuratedetermination of the premium assistanceamount.

June 3, 2013 1203 2013–23 I.R.B.

j. Requirement to file a return to reconcileadvance credit payments

The final regulations provided that ataxpayer who receives advance credit pay-ments must file an income tax return forthat taxable year on or before the fifteenthday of the fourth month following the closeof the taxable year. Under the proposedregulations, a taxpayer who receives ad-vance credit payments must file an incometax return on or before the due date for thereturn (including extensions).

Effective/Applicability Date

These regulations are proposed to applyfor taxable years ending after December31, 2013. Taxpayers may apply the pro-posed regulations for taxable years endingbefore January 1, 2015.

Special Analyses

It has been determined that this noticeof proposed rulemaking is not a significantregulatory action as defined in ExecutiveOrder 12866, as supplemented by Execu-tive Order 13563. Therefore, a regulatoryassessment is not required. It has also beendetermined that section 553(b) of the Ad-ministrative Procedure Act (5 U.S.C. chap-ter 5) does not apply to these regulationsand, because the regulations do not im-pose a collection of information on smallentities, the Regulatory Flexibility Act (5U.S.C. chapter 6) does not apply. Pursuantto section 7805(f) of the Code, this no-tice of proposed rulemaking has been sub-mitted to the Chief Counsel for Advocacyof the Small Business Administration forcomment on its impact on small business.

Comments and Requests for PublicHearing

Before these proposed regulations areadopted as final regulations, considerationwill be given to any comments that aresubmitted timely to the IRS as prescribedin this preamble under the “Addresses”heading. Treasury and the IRS requestcomments on all aspects of the proposedrules. All comments will be availableat www.regulations.gov or upon request.A public hearing will be scheduled ifrequested in writing by any person whotimely submits written comments. If apublic hearing is scheduled, notice of the

date, time and place for the hearing willbe published in the Federal Register.

Drafting Information

The principal authors of these pro-posed regulations are Andrew S. Braden,Frank W. Dunham III, andStephen J. Toomey of the Office ofAssociate Chief Counsel (Income Tax andAccounting). However, other personnelfrom the IRS and the Treasury Departmentparticipated in the development of theregulations.

* * * * *

Proposed Amendments to theRegulations

Accordingly, 26 CFR part 1 is proposedto be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation forpart 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *Par. 2. Section 1.36B–0 is amended by:1. Revising the introductory text.2. Adding new entries for

§§1.36B–2(c)(3)(iv) and (c)(3)(v)(A)(5)and 1.36B–3(c)(2) and (3), and (d)(1), (2),and (3).

3. Revising the entries for§§1.36B–2(c)(3)(v)(A)(4) and1.36B–3(c)(4).

4. Adding new entries for §1.36B–6.The revisions and additions read as fol-

lows.

§1.36B–0 Table of contents.

This section lists the captions containedin §§1.36B–1 through 1.36B–6.

* * * * *

§1.36B–2 Eligibility for premium taxcredit.

* * * * *(c) * * *(3) * * *(iv) Post-employment coverage.(v) * * *(A) * * *(4) Wellness incentives.(5) Employer contributions to health re-

imbursement arrangements.

* * * * *

§1.36B–3 Computing the premiumassistance credit amount.

* * * * *(c) * * *(2) Child born or adopted during a

month.(3) Premiums paid for a taxpayer.(4) Examples.(d) * * *(1) In general.(2) Mid-month termination of cover-

age.(3) Example.

* * * * *

§1.36B–6 Minimum value.

(a) In general.(b) MV standard population.(c) MV percentage.(1) In general.(2) Wellness incentives.(i) In general.(ii) Example.(3) Health savings accounts.(4) Health reimbursement arrange-

ments.(5) Expected spending adjustments for

health savings accounts and health reim-bursement arrangements.

(d) Methods for determining MV.(e) Scope of essential health benefits

and adjustment for benefits not included inMV Calculator.

(f) Actuarial certification.(1) In general.(2) Membership in American Academy

of Actuaries.(3) Actuarial analysis.(4) Use of MV Calculator.(g) Effective/applicability date.Par. 3. Section 1.36B–1 is amended

by revising paragraph (e)(1)(ii)(B) andadding paragraph (n) to read as follows:

§1.36B–1 Premium tax credit definitions.

* * * * *(e) * * *(1) * * *(ii) * * *(B) Are required to file a return of tax

imposed by section 1 for the taxable year.

* * * * *(n) Rating area. The term rating area

has the same meaning as used in section2701(a)(2) of the Public Health Service

2013–23 I.R.B. 1204 June 3, 2013

Act (42 U.S.C. 300gg(a)(2)) and 45 CFR156.255.

* * * * *Par. 4. Section 1.36B–2 is amended by:1. Revising paragraphs (c)(3)(iv),

(c)(3)(v)(A)(4), and (c)(3)(vi).2. Adding paragraphs (c)(3)(v)(A)(5)

and (c)(3)(v)(D), Example 9.The revisions and additions read as fol-

lows:

§1.36B–2 Eligibility for premium taxcredit.

* * * * *(c) * * *(3) * * *(iv) Post-employment coverage. A for-

mer employee who may enroll in continu-ation coverage required under Federal lawor a State law that provides comparablecontinuation coverage, and an individualwho may enroll in retiree coverage underan eligible employer-sponsored plan, areeligible for minimum essential coverageunder this coverage only for months thatthe individual is enrolled in the coverage.

* * * * *(v) * * *(A) * * *(4) Wellness incentives. Nondiscrim-

inatory wellness program incentives of-fered by an eligible employer-sponsoredplan that affect premiums are treated asearned in determining an employee’s re-quired contribution for purposes of afford-ability of an eligible employer-sponsoredplan to the extent the incentives relate totobacco use. Wellness program incentivesthat do not relate to tobacco use are treatedas not earned for this purpose.

(5) Employer contributions to healthreimbursement arrangements. Amountsnewly made available for the currentplan year under a health reimbursementarrangement that is integrated with an el-igible employer-sponsored plan and thatan employee may use to pay premiums arecounted toward the employee’s requiredcontribution.

* * * * *(D) * * *Example 9. Wellness incentives. (i) Employer

X offers an eligible employer-sponsored plan witha nondiscriminatory wellness program that reducespremiums by $300 for employees who do not use

tobacco products or who complete a smoking ces-sation course. Premiums are reduced by $200 if anemployee completes cholesterol screening within thefirst six months of the plan year. Employee B does notuse tobacco and the cost of his premiums is $3,700.Employee C uses tobacco and the cost of her premi-ums is $4,000.

(ii) Under paragraph (c)(3)(v)(A)(4) of this sec-tion, only the incentives related to tobacco use arecounted toward the premium amount used to deter-mine the affordability of X’s plan. C is treated as hav-ing earned the $300 incentive for attending a smok-ing cessation course. Thus, the employee’s requiredcontribution to premium for determining affordabil-ity for both Employees B and C is $3,700. The $200incentive for completing cholesterol screening is dis-regarded.

(vi) Minimum value. See §1.36B–6 forrules for determining whether an eligibleemployer-sponsored plan provides mini-mum value.

* * * * *Par. 5. Section 1.36B–3 is amended by:1. Redesignating paragraphs (c)(2) and

(c)(3) as paragraphs (c)(3) and (c)(4) andadding a new paragraph (c)(2).

2. Revising paragraphs (d), (g)(2),(j)(1), and (j)(3).

3. Adding a sentence to the end of para-graph (e).

4. Adding paragraph (f)(4).The revisions and additions read as fol-

lows:

§1.36B–3 Computing the premiumassistance credit amount.

* * * * *(c) * * *(2) Child born or adopted during a

month. A child enrolled in a qualifiedhealth plan in the month of the child’sbirth, adoption, or placement with thetaxpayer for adoption or in foster care, istreated as enrolled as of the first day of themonth for purposes of this paragraph (c).

* * * * *(d) Premium assistance amount—(1) In

general. Except as provided in paragraph(d)(2) of this section, the premium assis-tance amount for a coverage month is thelesser of—

(i) The premiums for the month for oneor more qualified health plans in whicha taxpayer or a member of the taxpayer’sfamily enrolls; or

(ii) The excess of the adjusted monthlypremium for the applicable benchmark

plan over 1/12 of the product of a tax-payer’s household income and the appli-cable percentage for the taxable year.

(2) Mid-month termination of coverage.If a qualified health plan is terminated be-fore the last day of a month and, as a result,the issuer reduces or refunds a portion ofthe monthly premium, the premium assis-tance amount for the coverage month is theamount that would apply under paragraph(d)(1) of this section for the entire monthmultiplied by a fraction, the numerator ofwhich is the number of days of enrollmentin the month and the denominator of whichis the number of days in the month.

(3) Example. The following exampleillustrates the provisions of this paragraph(d):

Example. (i) Taxpayer R is single and has nodependents. R enrolls in a qualified health plan for2014 with a monthly premium of $450. The adjustedmonthly premium for R’s applicable benchmark planis $490 and 1/12 of the product of R’s household in-come and applicable percentage for 2014 (R’s contri-bution amount) is $190. R takes a new job in Septem-ber of 2014, enrolls in the employer-sponsored plan,and terminates his enrollment in the qualified healthplan, effective on September 10, 2014. The issuer ofR’s qualified health plan refunds 2/3 of the Septem-ber premium for R’s coverage.

(ii) Under paragraph (d)(1) of this section, R’spremium assistance amount for the months January– August of 2014 is $300, the lesser of $450 (themonthly premium for the plan in which R enrolls) and$300 (the excess of the adjusted monthly premiumfor R’s applicable benchmark plan ($490) over R’scontribution amount ($190)). Under paragraph (d)(2)of this section, R’s premium assistance amount forSeptember is $100, the premium assistance amountfor September had R been enrolled for the full month($300), times 10/30 (the number of days R is enrolledin September, over the number of days in September).

(e) * * * The adjusted monthly premiumis determined as if all members of the cov-erage family for that month were enrolledin the qualified health plan for the entiremonth.

(f) * * *(4) Family members residing at differ-

ent locations. The premium for the ap-plicable benchmark plan determined un-der paragraphs (f)(1) and (f)(2) of this sec-tion for family members who live in dif-ferent States and enroll in separate qual-ified health plans is the sum of the pre-miums for the applicable benchmark plansfor each group of family members living inthe same State.

* * * * *(g) * * *

June 3, 2013 1205 2013–23 I.R.B.

(2) Applicable percentage table.

Household income percentageof Federal poverty line

Initial percentage Final percentage

Less than 133% 2.0% 2.0%At least 133% but less than 150% 3.0% 4.0%At least 150% but less than 200% 4.0% 6.3%At least 200% but less than 250% 6.3% 8.05%At least 250% but less than 300% 8.05% 9.5%At least 300% but not more than 400% 9.5% 9.5%

* * * * *(j) Additional benefits—(1) In general.

If a qualified health plan offers benefitsin addition to the essential health benefitsa qualified health plan must provide un-der section 1302 of the Affordable CareAct (42 U.S.C. 18022), or a State requiresa qualified health plan to cover benefitsin addition to these essential health ben-efits, the portion of the premium for theplan properly allocable to the additionalbenefits is excluded from the monthly pre-miums under paragraph (d)(1) or (d)(2)of this section. Premiums are allocatedto additional benefits before determiningthe applicable benchmark plan under para-graph (f) of this section.

* * * * *(3) Examples. The following examples

illustrate the rules of this paragraph (j):Example 1. (i) Taxpayer B enrolls in a qualified

health plan that provides benefits in addition to essen-tial health benefits (additional benefits). The monthlypremium for the plan in which B enrolls is $370, ofwhich $35 is allocable to additional benefits. The pre-mium for B’s applicable benchmark plan (determinedafter allocating premiums to additional benefits for allsilver level plans) is $440, of which $40 is allocable toadditional benefits. B’s contribution amount, whichis the product of B’s household income and the appli-cable percentage, is $60.

(ii) Under this paragraph (j), the premium for thequalified health plan in which B enrolls and the ap-plicable benchmark premium are reduced by the por-tion of the premium that is allocable to the additionalbenefits provided under that plan. Therefore, the pre-mium for the qualified health plan in which B en-rolls is reduced to $335 ($370 - $35) and the premiumfor B’s applicable benchmark plan is reduced to $400($440 - $40). B’s premium assistance amount for acoverage month is $335, the lesser of $335 (the pre-mium for the qualified health plan in which B enrolls,reduced by the portion of the premium allocable toadditional benefits) and $340 (the premium for B’sapplicable benchmark plan, reduced by the portion ofthe premium allocable to additional benefits ($400),minus B’s $60 contribution amount).

Example 2. The facts are the same as in Example1, except that the plan in which B enrolls provides nobenefits in addition to the essential health benefits re-

quired to be provided by the plan. Thus, under para-graph (j) of this section, the premium for B’s applica-ble benchmark plan ($440) is reduced by the portionof the premium allocable to additional benefits pro-vided under that plan ($40). The premium for the planin which B’s enrolls ($370) is not reduced under thisparagraph (j). B’s premium assistance amount for acoverage month is $340, the lesser of $370 (the pre-mium for the qualified health plan in which B enrolls)and $340 (the premium for B’s applicable benchmarkplan, reduced by the portion of the premium allocableto additional benefits ($400), minus B’s $60 contribu-tion amount).

* * * * *Par. 6. Section 1.36B–6 is added to

read as follows:

§1.36B–6 Minimum value.

(a) In general. An eligible employer-sponsored plan provides minimum value(MV) only if the plan’s share of the totalallowed costs of benefits provided to anemployee (the MV percentage) is at least60 percent.

(b) MV standard population. The MVstandard population is a standard popu-lation developed and described throughsummary statistics by the Department ofHealth and Human Services (HHS). TheMV standard population is based on thepopulation covered by typical self-insuredgroup health plans.

(c) MV percentage—(1) In general. Aneligible employer-sponsored plan’s MVpercentage is—

(i) The plan’s anticipated coveredmedical spending for benefits providedunder a particular essential health benefits(EHB) benchmark plan described in 45CFR 156.110 (EHB coverage) for the MVstandard population based on the plan’scost-sharing provisions;

(ii) Divided by the total anticipated al-lowed charges for EHB coverage providedto the MV standard population; and

(iii) Expressed as a percentage.

(2) Wellness incentives—(i) In general.Nondiscriminatory wellness program in-centives offered by an eligible employer-sponsored plan that affect deductibles, co-payments, or other cost-sharing are treatedas earned in determining the plan’s MVpercentage to the extent the incentives re-late to tobacco use. These wellness pro-gram incentives that do not relate to to-bacco use are treated as not earned.

(ii) Example. The following example il-lustrates the rules of this paragraph (c)(2):

Example. (i) Employer X offers an eligible em-ployer-sponsored plan that reduces the deductible by$300 for employees who do not use tobacco productsor who complete a smoking cessation course. The de-ductible is reduced by $200 if an employee completescholesterol screening within the first six months ofthe plan year. Employee B does not use tobacco andhis deductible is $3,700. Employee C uses tobaccoand her deductible is $4,000.

(ii) Under paragraph (c)(2)(i) of this section, onlythe incentives related to tobacco use are considered indetermining the plan’s MV percentage. C is treatedas having earned the $300 incentive for attending asmoking cessation course. Thus, the deductible fordetermining the MV percentage for both EmployeesB and C is $3,700. The $200 incentive for completingcholesterol screening is disregarded.

(3) Health savings accounts. Employercontributions for the current plan year tohealth savings accounts that are offeredwith an eligible employer-sponsored planare taken into account for that plan year to-wards the plan’s MV percentage.

(4) Health reimbursement arrange-ments. Amounts newly made availablefor the current plan year under a healthreimbursement arrangement that is inte-grated with an eligible employer-spon-sored plan are taken into account for thatplan year towards the plan’s MV percent-age if the amounts may be used only toreduce cost-sharing for covered medicalexpenses.

(5) Expected spending adjustments forhealth savings accounts and health re-imbursement arrangements. The amount

2013–23 I.R.B. 1206 June 3, 2013

taken into account under paragraph (c)(3)or (c)(4) of this section is the amount ofexpected spending for health care costs ina benefit year.

(d) Methods for determining MV. Aneligible employer-sponsored plan may useone of the following methods to determinewhether the plan provides MV—

(1) The MV Calculator made availableby HHS and IRS, with adjustments permit-ted by paragraph (e) of this section;

(2) One of the safe harbors establishedby HHS and IRS and described in pub-lished guidance, see §601.601(d) of thischapter;

(3) Actuarial certification, as describedin paragraph (f) of this section, if an eligi-ble employer-sponsored plan has nonstan-dard features that are not compatible withthe MV Calculator and may materially af-fect the MV percentage; or

(4) For plans in the small group market,conformance with the requirements for alevel of metal coverage defined at 45 CFR156.140(b) (bronze, silver, gold, or plat-inum).

(e) Scope of essential health benefitsand adjustment for benefits not includedin MV Calculator. An eligible employer-sponsored plan may include in calculat-ing its MV percentage all benefits included

in any EHB benchmark (as defined in 45CFR part 156). An MV percentage that iscalculated using the MV Calculator maybe adjusted based on an actuarial analy-sis that complies with the requirements ofparagraph (f) of this section to the extent ofthe value of these benefits that are outsidethe parameters of the MV Calculator.

(f) Actuarial certification—(1) In gen-eral. An actuarial certification under para-graph (d)(3) of this section must satisfy therequirements of this paragraph (f).

(2) Membership in American Academyof Actuaries. The actuary must be a mem-ber of the American Academy of Actuar-ies.

(3) Actuarial analysis. The actuary’sanalysis must be performed in accordancewith generally accepted actuarial princi-ples and methodologies and specific stan-dards that may be provided in publishedguidance, see §601.601(d) of this chapter.

(4) Use of MV Calculator. The actu-ary must use the MV Calculator to deter-mine the plan’s MV percentage for cov-erage the plan provides that is measurableby the MV Calculator. The actuary mayperform an actuarial analysis of the plan’sEHB coverage for the MV standard popu-lation for benefits not measured by the MVCalculator to determine the effect of non-

standard features that are not compatiblewith the MV Calculator. The actuary maycertify the plan’s MV percentage based onthe MV percentage that results from use ofthe MV Calculator and the actuarial anal-ysis of the plan’s coverage that is not mea-sured by the MV calculator.

(g) Effective/applicability date. Thissection applies for taxable years ending af-ter December 31, 2013.

Par. 7. Section 1.6011–8 is amended byrevising paragraph (a) to read as follows:

§1.6011–8 Requirement of income taxreturn for taxpayers who claim thepremium tax credit under section 36B.

(a) Requirement of return. A taxpayerwho receives advance payments of the pre-mium tax credit under section 36B mustfile an income tax return for that taxableyear on or before the due date for the return(including extensions of time for filing).

* * * * *

Steven T. Miller,Deputy Commissioner forServices and Enforcement.

(Filed by the Office of the Federal Register on April 30, 2013,4:15 p.m., and published in the issue of the Federal Registerfor May 3, 2013, 78 F.R. 25909)

Announcement of Disciplinary Sanctions From the Officeof Professional ResponsibilityAnnouncement 2013-34

The Office of Professional Responsi-bility (OPR) announces recent disciplinarysanctions involving attorneys, certifiedpublic accountants, enrolled agents, en-rolled actuaries, enrolled retirement planagents, and appraisers. These individualsare subject to the regulations governingpractice before the Internal Revenue Ser-vice (IRS), which are set out in Title 31,Code of Federal Regulations, Part 10, andwhich are published in pamphlet form asTreasury Department Circular No. 230.The regulations prescribe the duties andrestrictions relating to such practice andprescribe the disciplinary sanctions forviolating the regulations.

The disciplinary sanctions to be im-posed for violation of the regulations are:

Disbarred from practice before theIRS—An individual who is disbarred isnot eligible to represent taxpayers beforethe IRS.

Suspended from practice before theIRS—An individual who is suspended isnot eligible to represent taxpayers beforethe IRS during the term of the suspension.

Censured in practice before theIRS—Censure is a public reprimand. Un-like disbarment or suspension, censuredoes not affect an individual’s eligibilityto represent taxpayers before the IRS, butOPR may subject the individual’s futurerepresentations to conditions designed topromote high standards of conduct.

Monetary penalty—A monetarypenalty may be imposed on an individualwho engages in conduct subject to sanc-

tion or on an employer, firm, or entityif the individual was acting on its behalfand if it knew, or reasonably should haveknown, of the individual’s conduct.

Disqualification of appraiser—Anappraiser who is disqualified is barredfrom presenting evidence or testimony inany administrative proceeding before theDepartment of the Treasury or the IRS.

Under the regulations, attorneys, cer-tified public accountants, enrolled agents,enrolled actuaries, and enrolled retirementplan agents may not assist, or accept assis-tance from, individuals who are suspendedor disbarred with respect to matters consti-tuting practice (i.e., representation) beforethe IRS, and they may not aid or abet sus-pended or disbarred individuals to practicebefore the IRS.

June 3, 2013 1207 2013–23 I.R.B.

Disciplinary sanctions are described inthese terms:

Disbarred by decision after hearing,Suspended by decision after hearing,Censured by decision after hearing,Monetary penalty imposed after hear-ing, and Disqualified after hearing—Anadministrative law judge (ALJ) conductedan evidentiary hearing upon OPR’s com-plaint alleging violation of the regulationsand issued a decision imposing one ofthese sanctions. After 30 days from theissuance of the decision, in the absence ofan appeal, the ALJ’s decision became thefinal agency decision.

Disbarred by default decision, Sus-pended by default decision, Censured bydefault decision, Monetary penalty im-posed by default decision, and Disqual-ified by default decision—An ALJ, afterfinding that no answer to OPR’s complainthad been filed, granted OPR’s motion for adefault judgment and issued a decision im-posing one of these sanctions.

Disbarment by decision on appeal,Suspended by decision on appeal, Cen-sured by decision on appeal, Monetarypenalty imposed by decision on ap-peal, and Disqualified by decision onappeal—The decision of the ALJ wasappealed to the agency appeal authority,

acting as the delegate of the Secretaryof the Treasury, and the appeal authorityissued a decision imposing one of thesesanctions.

Disbarred by consent, Suspended byconsent, Censured by consent, Mone-tary penalty imposed by consent, andDisqualified by consent—In lieu of adisciplinary proceeding being institutedor continued, an individual offered a con-sent to one of these sanctions and OPRaccepted the offer. Typically, an offerof consent will provide for: suspensionfor an indefinite term; conditions that theindividual must observe during the sus-pension; and the individual’s opportunity,after a stated number of months, to filewith OPR a petition for reinstatement af-firming compliance with the terms of theconsent and affirming current eligibilityto practice (i.e., an active professionallicense or active enrollment status).

Suspended indefinitely by decision inexpedited proceeding, Suspended indef-initely by default decision in expeditedproceeding, Suspended by consent inexpedited proceeding—OPR institutedan expedited proceeding for suspension(based on certain limited grounds, includ-ing loss of a professional license for cause,and criminal convictions).

OPR has authority to disclose thegrounds for disciplinary sanctions in thesesituations: (1) an ALJ or the Secretary’sdelegate on appeal has issued a decisionon or after September 26, 2007, whichwas the effective date of amendments tothe regulations that permit making suchdecisions publicly available; (2) the indi-vidual has settled a disciplinary case bysigning OPR’s “consent to sanction” form,which requires consenting individuals toadmit to one or more violations of the reg-ulations and to consent to the disclosureof the individual’s own return informationrelated to the admitted violations (for ex-ample, failure to file Federal income taxreturns); or (3) OPR has issued a decisionin an expedited proceeding for indefinitesuspension.

Announcements of disciplinary sanc-tions appear in the Internal Revenue Bul-letin at the earliest practicable date. Thesanctions announced below are alphabet-ized first by the names of states and sec-ond by the last names of individuals. Un-less otherwise indicated, section numbers(e.g., § 10.51) refer to the regulations.

City & State Name Professional Disciplinary Sanction Effective Date(s)Designation

Arkansas

Camden Lindsey, Jr., Lloyd E. CPA Reinstated topractice beforethe IRS, effectiveApril 3, 2013

Winslow O’Dell, Kimberly CPA Suspended by decisionin expedited proceedingunder § 10.82 (convictionunder 18 U.S.C. § 1343,wire fraud, 18 U.S.C.§§ 1957 and 2, moneylaundering, and 31U.S.C. § 333, misuse ofDepartment of Treasurynames or symbols)

Indefinite fromJanuary 9, 2013

2013–23 I.R.B. 1208 June 3, 2013

City & State Name Professional Disciplinary Sanction Effective Date(s)Designation

California

Bakersfield Tedder, Garold J. CPA Disbarred by ALJ defaultdecision for violation of§ 10.51 (failure to filetimely Federal tax returnsfor 2006–2010)

Indefinite fromOctober 25, 2012

Cerritos Tiongson, Anthony A. CPA Disbarred by ALJ defaultdecision for violation of§ 10.51 (conviction under26 U.S.C. § 7207, filing afalse tax return)

Indefinite fromMarch 31, 2013

Vista Aguilera, Roberto R. Enrolled Agent Suspended by decisionin expedited proceedingunder § 10.82 (convictionunder 18 U.S.C. § 1349,conspiracy to commitmail and wire fraud)

Indefinite fromApril 24, 2013

Florida

Miami Rodriguez, Juan C. CPA Suspended by defaultdecision in expeditedproceeding under § 10.82(conviction under 18U.S.C. § 1343, wirefraud)

Indefinite fromJanuary 15, 2013

June 3, 2013 1209 2013–23 I.R.B.

City & State Name Professional Disciplinary Sanction Effective Date(s)Designation

Florida (Continued)

Key West Waage, Scott A. Attorney Suspended by defaultdecision in expeditedproceeding under § 10.82(permanently enjoinedby U.S. District Courtfrom preparing orfiling, or assisting in thepreparation or filing of taxreturns or other related taxforms or documents forany individual or entityother than preparingand filing his ownpersonal tax returns;organizing, promoting,selling, marketing oradvising with respectto (or helping othersto organize, promote,sell, market or advisewith respect to) plans,arrangements or servicesthat attempt to reduce aclient’s taxable income bycertain specified methods;engaging in conductsubject to penalty underI.R.C. §§ 6700 or 6701)

Indefinite fromApril 16, 2013

Kentucky

Hebron Land, Suzanne P. Attorney Suspended by decisionin expedited proceedingunder § 10.82 (convictionunder 26 U.S.C. § 7212,corruptly endeavoring toobstruct and impede thedue administration of theIRS; and suspension ofattorney license in Ohio)

Indefinite fromFebruary 7, 2013

2013–23 I.R.B. 1210 June 3, 2013

City & State Name Professional Disciplinary Sanction Effective Date(s)Designation

Nevada

Las Vegas Kidane, Yordanos Registered Tax ReturnPreparer (RTRP)

Censured by consent foradmitted violation of§ 10.51(a); permanentlyenjoined by U.S. DistrictCourt from preparingor assisting in thepreparation or filing oftax returns for others thatpreparer knows (or havereason to know) will resultin the understatement ofany tax liability under26 U.S.C. § 6662, or issubject to penalty under26 U.S.C. § 6694

Indefinite fromDecember 18, 2012

Texas

Houston Nguyen, Viet B. CPA Suspended by decisionin expedited proceedingunder § 10.82 (revocationof CPA license)

Indefinite fromApril 24, 2013

Washington

Ridgefield Firebaugh, Robert T. CPA Suspended by defaultdecision in expeditedproceeding under § 10.82(suspension of CPAlicense)

Indefinite fromMarch 1, 2013

Bellevue Walker, Lorna M. Enrolled Agent Disbarred by ALJ defaultdecision for violation of§ 10.51 (failure to remitfunds to the IRS, alteringmoney order, and failureto respond to IRS/OPRcorrespondence)

Indefinite fromFebruary 17, 2013

June 3, 2013 1211 2013–23 I.R.B.

Definition of TermsRevenue rulings and revenue procedures(hereinafter referred to as “rulings”) thathave an effect on previous rulings use thefollowing defined terms to describe the ef-fect:

Amplified describes a situation whereno change is being made in a prior pub-lished position, but the prior position is be-ing extended to apply to a variation of thefact situation set forth therein. Thus, ifan earlier ruling held that a principle ap-plied to A, and the new ruling holds that thesame principle also applies to B, the earlierruling is amplified. (Compare with modi-fied, below).

Clarified is used in those instanceswhere the language in a prior ruling is be-ing made clear because the language hascaused, or may cause, some confusion.It is not used where a position in a priorruling is being changed.

Distinguished describes a situationwhere a ruling mentions a previously pub-lished ruling and points out an essentialdifference between them.

Modified is used where the substanceof a previously published position is beingchanged. Thus, if a prior ruling held that aprinciple applied to A but not to B, and thenew ruling holds that it applies to both A

and B, the prior ruling is modified becauseit corrects a published position. (Comparewith amplified and clarified, above).

Obsoleted describes a previously pub-lished ruling that is not considered deter-minative with respect to future transac-tions. This term is most commonly used ina ruling that lists previously published rul-ings that are obsoleted because of changesin laws or regulations. A ruling may alsobe obsoleted because the substance hasbeen included in regulations subsequentlyadopted.

Revoked describes situations where theposition in the previously published rulingis not correct and the correct position isbeing stated in a new ruling.

Superseded describes a situation wherethe new ruling does nothing more than re-state the substance and situation of a previ-ously published ruling (or rulings). Thus,the term is used to republish under the1986 Code and regulations the same po-sition published under the 1939 Code andregulations. The term is also used whenit is desired to republish in a single rul-ing a series of situations, names, etc., thatwere previously published over a period oftime in separate rulings. If the new rul-ing does more than restate the substance

of a prior ruling, a combination of termsis used. For example, modified and su-perseded describes a situation where thesubstance of a previously published rulingis being changed in part and is continuedwithout change in part and it is desired torestate the valid portion of the previouslypublished ruling in a new ruling that is selfcontained. In this case, the previously pub-lished ruling is first modified and then, asmodified, is superseded.

Supplemented is used in situations inwhich a list, such as a list of the names ofcountries, is published in a ruling and thatlist is expanded by adding further names insubsequent rulings. After the original rul-ing has been supplemented several times, anew ruling may be published that includesthe list in the original ruling and the ad-ditions, and supersedes all prior rulings inthe series.

Suspended is used in rare situations toshow that the previous published rulingswill not be applied pending some futureaction such as the issuance of new oramended regulations, the outcome of casesin litigation, or the outcome of a Servicestudy.

AbbreviationsThe following abbreviations in current useand formerly used will appear in materialpublished 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.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.—Statement 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.

2013–23 I.R.B. i June 3, 2013

Numerical Finding List1

Bulletins 2013–1 through 2013–23

Announcements:

2013-1, 2013-1 I.R.B. 251

2013-2, 2013-2 I.R.B. 271

2013-3, 2013-2 I.R.B. 271

2013-4, 2013-4 I.R.B. 440

2013-5, 2013-3 I.R.B. 306

2013-6, 2013-3 I.R.B. 307

2013-7, 2013-3 I.R.B. 308

2013-8, 2013-4 I.R.B. 440

2013-9, 2013-4 I.R.B. 441

2013-10, 2013-3 I.R.B. 311

2013-11, 2013-6 I.R.B. 483

2013-12, 2013-11 I.R.B. 651

2013-13, 2013-9 I.R.B. 532

2013-14, 2013-11 I.R.B. 651

2013-15, 2013-11 I.R.B. 652

2013-16, 2013-14 I.R.B. 738

2013-17, 2013-16 I.R.B. 911

2013-19, 2013-14 I.R.B. 760

2013-20, 2013-14 I.R.B. 761

2013-21, 2013-17 I.R.B. 980

2013-22, 2013-17 I.R.B. 981

2013-23, 2013-16 I.R.B. 940

2013-26, 2013-16 I.R.B. 940

2013-27, 2013-17 I.R.B. 981

2013-28, 2013-17 I.R.B. 982

2013-29, 2013-18 I.R.B. 1024

2013-30, 2013-21 I.R.B. 1134

2013-31, 2013-21 I.R.B. 1135

2013-32, 2013-22 I.R.B. 1192

2013-33, 2013-20 I.R.B. 1098

2013-34, 2013-23 I.R.B. 1207

Notices:

2013-1, 2013-3 I.R.B. 281

2013-2, 2013-6 I.R.B. 473

2013-3, 2013-7 I.R.B. 484

2013-4, 2013-9 I.R.B. 527

2013-5, 2013-9 I.R.B. 529

2013-6, 2013-10 I.R.B. 540

2013-7, 2013-6 I.R.B. 477

2013-8, 2013-7 I.R.B. 486

2013-9, 2013-9 I.R.B. 529

2013-10, 2013-8 I.R.B. 503

2013-11, 2013-11 I.R.B. 610

2013-12, 2013-10 I.R.B. 543

2013-13, 2013-12 I.R.B. 659

2013-14, 2013-13 I.R.B. 712

2013-15, 2013-14 I.R.B. 739

2013-16, 2013-14 I.R.B. 740

2013-17, 2013-20 I.R.B. 1082

2013-18, 2013-14 I.R.B. 742

Notices— Continued:

2013-19, 2013-14 I.R.B. 743

2013-20, 2013-15 I.R.B. 902

2013-21, 2013-15 I.R.B. 903

2013-22, 2013-15 I.R.B. 904

2013-23, 2013-16 I.R.B. 906

2013-24, 2013-16 I.R.B. 909

2013-25, 2013-17 I.R.B. 978

2013-26, 2013-18 I.R.B. 984

2013-27, 2013-18 I.R.B. 985

2013-28, 2013-19 I.R.B. 1039

2013-29, 2013-20 I.R.B. 1085

2013-30, 2013-21 I.R.B. 1099

2013-31, 2013-21 I.R.B. 1099

2013-32, 2013-22 I.R.B. 1137

2013-33, 2013-22 I.R.B. 1140

2013-34, 2013-23 I.R.B. 1198

Proposed Regulations:

REG-160873-04, 2013-20 I.R.B. 1089

REG-155929-06, 2013-11 I.R.B. 650

REG-106918-08, 2013-13 I.R.B. 714

REG-141066-09, 2013-3 I.R.B. 289

REG-148873-09, 2013-7 I.R.B. 494

REG-102966-10, 2013-10 I.R.B. 579

REG-120391-10, 2013-18 I.R.B. 1005

REG-132702-10, 2013-19 I.R.B. 1042

REG-140649-11, 2013-12 I.R.B. 666

REG-106499-12, 2013-21 I.R.B. 1111

REG-106796-12, 2013-22 I.R.B. 1164

REG-118315-12, 2013-14 I.R.B. 746

REG-122706-12, 2013-19 I.R.B. 1043

REG-122707-12, 2013-5 I.R.B. 450

REG-148500-12, 2013-13 I.R.B. 716

REG-154563-12, 2013-20 I.R.B. 1097

REG-125398-12, 2013-23 I.R.B. 1199

Revenue Procedures:

2013-1, 2013-1 I.R.B. 1

2013-2, 2013-1 I.R.B. 92

2013-3, 2013-1 I.R.B. 113

2013-4, 2013-1 I.R.B. 126

2013-5, 2013-1 I.R.B. 170

2013-6, 2013-1 I.R.B. 198

2013-7, 2013-1 I.R.B. 233

2013-8, 2013-1 I.R.B. 237

2013-9, 2013-2 I.R.B. 255

2013-10, 2013-2 I.R.B. 267

2013-11, 2013-2 I.R.B. 269

2013-12, 2013-4 I.R.B. 313

2013-13, 2013-6 I.R.B. 478

2013-14, 2013-3 I.R.B. 283

2013-15, 2013-5 I.R.B. 444

2013-16, 2013-7 I.R.B. 488

2013-17, 2013-11 I.R.B. 612

2013-18, 2013-8 I.R.B. 503

Revenue Procedures— Continued:

2013-19, 2013-11 I.R.B. 648

2013-20, 2013-14 I.R.B. 744

2013-21, 2013-12 I.R.B. 660

2013-22, 2013-18 I.R.B. 985

2013-23, 2013-17 I.R.B. 978

2013-24, 2013-22 I.R.B. 1142

2013-25, 2013-21 I.R.B. 1110

2013-26, 2013-22 I.R.B. 1160

Revenue Rulings:

2013-1, 2013-2 I.R.B. 252

2013-2, 2013-10 I.R.B. 533

2013-3, 2013-8 I.R.B. 500

2013-4, 2013-9 I.R.B. 520

2013-5, 2013-9 I.R.B. 525

2013-6, 2013-13 I.R.B. 701

2013-7, 2013-11 I.R.B. 608

2013-8, 2013-15 I.R.B. 763

2013-9, 2013-15 I.R.B. 764

2013-11, 2013-20 I.R.B. 1059

Tax Conventions:

2013-16, 2013-14 I.R.B. 738

Treasury Decisions:

9601, 2013-10 I.R.B. 535

9603, 2013-3 I.R.B. 273

9605, 2013-11 I.R.B. 587

9606, 2013-11 I.R.B. 586

9607, 2013-6 I.R.B. 469

9608, 2013-3 I.R.B. 274

9609, 2013-12 I.R.B. 655

9610, 2013-15 I.R.B. 765

9611, 2013-13 I.R.B. 699

9612, 2013-13 I.R.B. 678

9613, 2013-15 I.R.B. 900

9614, 2013-17 I.R.B. 947

9615, 2013-19 I.R.B. 1026

9616, 2013-20 I.R.B. 1061

9617, 2013-23 I.R.B. 1195

9618, 2013-23 I.R.B. 1194

1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2012–27 through 2012–52 is in Internal Revenue Bulletin2012–52, dated December 27, 2012.

June 3, 2013 ii 2013–23 I.R.B.

Finding List of Current Actions onPreviously Published Items1

Bulletins 2013–1 through 2013–23

Announcements:

2012-42

Obsoleted by

T.D. 9610, 2013-15 I.R.B. 765

2013-12

Supplemented by

Ann. 2013-22, 2013-17 I.R.B. 981

Notices:

87-64

Obsoleted by

T.D. 9614, 2013-17 I.R.B. 947

2000-45

Modified and superseded by

Notice 2013-18, 2013-14 I.R.B. 742

2006-87

Superseded by

Notice 2013-31, 2013-21 I.R.B. 1099

2007-25

Superseded by

Notice 2013-31, 2013-21 I.R.B. 1099

2007-77

Superseded by

Notice 2013-31, 2013-21 I.R.B. 1099

2008-10

Obsoleted by

T.D. 9615, 2013-19 I.R.B. 1026

2008-107

Superseded by

Notice 2013-31, 2013-21 I.R.B. 1099

2010-8

Obsoleted by

T.D. 9618, 2013-23 I.R.B. 1194

2010-27

Superseded by

Notice 2013-31, 2013-21 I.R.B. 1099

2010-60

Obsoleted by

T.D. 9610, 2013-15 I.R.B. 765

2011-8

Superseded by

Notice 2013-31, 2013-21 I.R.B. 1099

2011-14

Amplified and supplemented by

Notice 2013-7, 2013-6 I.R.B. 477

Notices— Continued:

2011-34

Obsoleted by

T.D. 9610, 2013-15 I.R.B. 765

2011-38

Obsoleted by

REG-148873-09, 2013-7 I.R.B. 494

2011-53

Obsoleted by

T.D. 9610, 2013-15 I.R.B. 765

2012-19

Superseded by

Notice 2013-31, 2013-21 I.R.B. 1099

2012-60

Superseded by

Notice 2013-1, 2013-3 I.R.B. 281

2013-1

Modified and superseded by

Notice 2013-16, 2013-14 I.R.B. 740

Proposed Regulations:

REG-140668-07

Corrected by

Ann. 2013-6, 2013-3 I.R.B. 307

Revenue Procedures:

87-57

Modified by

Rev. Proc. 2013-13, 2013-6 I.R.B. 478

2004-66

Modified and superseded by

Rev. Proc. 2013-11, 2013-2 I.R.B. 269

2008-35

Modified and superseded by

Rev. Proc. 2013-14, 2013-3 I.R.B. 283

2008-50

Modified and superseded by

Rev. Proc. 2013-12, 2013-4 I.R.B. 313

2011-14

Modified by

Rev. Proc. 2013-26, 2013-22 I.R.B. 1160Rev. Proc. 2013-24, 2013-22 I.R.B. 1142Rev. Proc. 2013-20, 2013-14 I.R.B. 744

2011-49

Modified by

Rev. Proc. 2013-6, 2013-1 I.R.B. 198

2011-52

Modified and partly superseded by

Rev. Proc. 2013-15, 2013-5 I.R.B. 444

2011-55

Amplified and supplemented by

Notice 2013-7, 2013-6 I.R.B. 477

Revenue Procedures— Continued:

2011-61

Superseded by

Rev. Proc. 2013-17, 2013-11 I.R.B. 612

2011-62

Superseded by

Rev. Proc. 2013-18, 2013-8 I.R.B. 503

2012-1

Superseded by

Rev. Proc. 2013-1, 2013-1 I.R.B. 1

2012-2

Superseded by

Rev. Proc. 2013-2, 2013-1 I.R.B. 92

2012-3

Superseded by

Rev. Proc. 2013-3, 2013-1 I.R.B. 113

2012-4

Superseded by

Rev. Proc. 2013-4, 2013-1 I.R.B. 126

2012-5

Superseded by

Rev. Proc. 2013-5, 2013-1 I.R.B. 170

2012-6

Superseded by

Rev. Proc. 2013-6, 2013-1 I.R.B. 198

2012-7

Superseded by

Rev. Proc. 2013-7, 2013-1 I.R.B. 233

2012-8

Superseded by

Rev. Proc. 2013-8, 2013-1 I.R.B. 237

2012-9

Superseded by

Rev. Proc. 2013-9, 2013-2 I.R.B. 255

2012-10

Superseded by

Rev. Proc. 2013-10, 2013-2 I.R.B. 267

2012-30

Corrected and clarified by

Ann. 2013-3, 2013-2 I.R.B. 271

Updated by

Ann. 2013-10, 2013-3 I.R.B. 311

2012-46

Corrected by

Ann. 2013-11, 2013-6 I.R.B. 483

2013-1

Corrected by

Ann. 2013-9, 2013-4 I.R.B. 441

2013-4

Modified by

Rev. Proc. 2013-22, 2013-18 I.R.B. 985

1 A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2012–27 through 2012–52 is in Internal Revenue Bulletin 2012–52, dated December 27,2012.

2013–23 I.R.B. iii June 3, 2013

Revenue Procedures— Continued:

2013-6

Revised by

Ann. 2013-15, 2013-11 I.R.B. 652

Corrected by

Ann. 2013-13, 2013-9 I.R.B. 532

2013-8

Modified by

Rev. Proc. 2013-22, 2013-18 I.R.B. 985

2013-14

Modified by

Rev. Proc. 2013-19, 2013-11 I.R.B. 648

Revenue Rulings:

92-19

Supplemented in part by

Rev. Rul. 2013-4, 2013-9 I.R.B. 520

Treasury Decisions:

9564

Corrected by

Ann. 2013-4, 2013-4 I.R.B. 440

Amended by

Ann. 2013-7, 2013-3 I.R.B. 308

9604

Corrected by

Ann. 2013-19, 2013-14 I.R.B. 760

June 3, 2013 iv 2013–23 I.R.B.

Internal Revenue ServiceWashington, DC 20224Official BusinessPenalty for Private Use, $300

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