Internal Revenue Bulletin: 2009-20
May 18, 2009
Table of Contents
This revenue procedure sets forth the circumstances under which the filing of Form 8927, “Determination Under Section 860(e)(4) by a Qualified Investment Entity,” is treated as a “determination” for purposes of § 860(e) of the Internal Revenue Code (Code).
.01 Section 860 of the Code and the Income Tax Regulations (Regulations) thereunder (together, “the Deficiency Dividend Procedures”) allow a regulated investment company (RIC) or a real estate investment trust (REIT) to be relieved from the payment of a deficiency in (or to be allowed a credit or refund of) certain taxes.
.02 To effect this relief, the Deficiency Dividend Procedures allow an additional deduction for dividend distributions that meet the requirements of § 860 and § 1.860-2 of the Regulations (“deficiency dividends”). The deduction is allowed in computing the deduction for dividends paid for the taxable year for which the deficiency is determined.
.03 A RIC or REIT is allowed a deduction for a deficiency dividend only if, among other things, there is a determination (as defined in § 860(e) and § 1.860-2(b)(1) of the Regulations) that results in an adjustment (as defined in § 860(d)(1) or 860(d)(2)) for the taxable year for which the deficiency dividend is paid.
.04 Under the Deficiency Dividend Procedures, the date of the determination controls the timeliness of certain acts that the RIC or REIT must perform. (See italicized phrases in Section 2.04 through 2.06 of this revenue procedure.) For example, § 860(f)(1) provides generally that, for purposes of § 860, the term “deficiency dividends” means a distribution of property that—
Is made by a RIC or REIT;
Is made on or after the date of the determination and before the filing of a claim under § 860(g); and
Would have been includible in the computation of the deduction under § 561 for dividends paid for the taxable year with respect to which the liability for tax resulting from the determination exists, if that distribution had been made during that taxable year.
.05 Section 860(f)(1) provides further that no distribution of property shall be considered as deficiency dividends for purposes of § 860(a) unless the property is distributed within 90 days after the determination and unless a claim for a deficiency dividend deduction with respect to the distribution is filed pursuant to § 860(g).
.06 Section 860(g) provides that no deficiency dividend deduction shall be allowed under § 860(a) unless (under regulations prescribed by the Secretary) a claim therefor is filed within 120 days after the date of the determination. Under § 1.860-2(a)(2) of the Regulations, the claim that § 860(g) requires is filed on Form 976, “Claim for Deficiency Dividends Deductions by a Personal Holding Company, Regulated Investment Company, or Real Estate Investment Trust.”
.07 In addition, under § 860(h), certain rules regarding the suspension of the running of the statute of limitations and stay of collection are determined by reference to the date of the determination. Thus, the date of the determination is a critical date not only for RICs and REITs attempting to comply with the requirements of the Deficiency Dividend Procedures but also for representatives of the Internal Revenue Service (Service) attempting to enforce the provisions of the Deficiency Dividend Procedures.
.08 The American Jobs Creation Act of 2004, Pub. L. No. 108-357, 118 Stat. 1418 (AJCA), § 243(f)(5), added § 860(e)(4) to the Code. The addition expanded the meaning of the term “determination” for purposes of § 860. As amended, the term includes not only the determinations described in pre-existing §§ 860(e)(1), (e)(2), and (e)(3) but also RIC and REIT self-determinations (“a statement by the taxpayer attached to its amendment or supplement to a return of tax for the relevant tax year”). Section 243(g)(4)(E) of the AJCA provides that § 860(e)(4) applies to statements filed after October 22, 2004.
.09 The Deficiency Dividend Procedures provide no rules regarding the date of determination for a RIC or REIT self-determination under § 860(e)(4), the contents of the statement that § 860(e)(4) requires, or the manner in which the taxpayer may attach the statement to its amendment or supplement to a return of tax for the relevant tax year. Moreover, the legislative history to § 860(e)(4) provides no specific guidance on these issues.
.10 Section 7502(a) prescribes a timely-mailing/timely-filing rule for any return, claim, statement, or other document that is required to be filed within a prescribed period or on or before a prescribed date under authority of any provision of the internal revenue laws but that is received after the prescribed time.
.11 Congress appears to have expected that statements of self-determination under § 860(e)(4) would be filed within a reasonable time after the taxpayer discovers the existence of a deficiency. For purposes of § 7502, however, that expectation is not a requirement that the statement be filed “within a prescribed period or on or before a prescribed date.” Nevertheless, for purposes of establishing the date of determination under § 860(e)(4), Section 4 of this revenue procedure uses certain principles contained in § 7502 and the regulations thereunder.
.12 Section 7502(a) and § 301.7502-1 of the Procedure and Administration Regulations generally provide that if a document is delivered by the United States mail after the due date in a postage prepaid, properly addressed envelope, then the date of the United States postmark is deemed to be the date of delivery if the date of the postmark is on or before the due date.
.13 Section 7502(c) and § 301.7502-1(c)(2) and (e) of the Procedure and Administration Regulations provide the rules applicable to registered and certified mail. If a document or payment is sent by registered or certified mail, the date of registration, or the date of the postmark on the certified mail sender’s receipt, is treated as the postmark date. If a document (but not a payment) is sent by registered or certified mail, proof that the document was properly registered or that a postmarked certified mail sender’s receipt was properly issued and that the envelope was properly addressed to the agency, officer, or office constitutes prima facie evidence that the document was delivered to the agency, officer, or office.
.14 Section 7502(f) authorizes the Secretary to designate certain private delivery services (PDSs) for purposes of § 7502. If the Secretary so designates a PDS, references in § 7502 to the U.S. mail are treated as including the designated PDS, and references to a postmark are treated as including the analogous date that is recorded or marked by the designated PDS (see § 7502(f)(2)(C)). See also Rev. Proc. 97-19, 1997-1 C.B. 644, modified, Notice 2002-62, 2002-2 C.B. 574, modified, Notice 2004-83, 2004-2 C.B. 1030. Notice 2004-83, 2004-2 C.B. 1030, modifies Notice 2002-62, 2002-2 C.B. 574, and updates the list of PDSs that have been designated for purposes of § 7502. Notice 97-26, 1997-1 C.B. 413, modified, Notice 2002-62, 2002-2 C.B. 574, provides special rules to determine the date that is treated as the postmark date for purposes of § 7502 when a designated PDS is used.
This revenue procedure applies to RICs and REITs that seek to make a determination under § 860(e)(4).
(1) In general, if a RIC or REIT (the taxpayer) properly completes Form 8927, and files Form 8927 with the Service, in accordance with the applicable instructions, then that form will be treated for purposes of § 860(e)(4) as “a statement by the taxpayer attached to its amendment or supplement to a return of tax for the relevant tax year.” As such, it qualifies as a “determination” for purposes of § 860(e).
(2) The taxpayer’s Form 8927 is a “determination” for purposes of § 860(e) only if it is delivered to the Service. Taxpayers are advised, therefore, to request a return receipt or other comparable evidence of actual receipt by the Service to establish that the Form 8927 was delivered to the Service.
(3) If the taxpayer does not have proof of actual delivery to the Service, prima facie evidence that the Form 8927 was delivered to the Service is the same as evidence that would be prima facie evidence of delivery of a document under the principles of § 7502(c) and § 301.7502-1(e) of the Procedure and Administration Regulations.
.02 Date of the Determination.
(1) If Form 8927 is sent by U.S. mail or by proper use of a PDS that the Secretary has designated for purposes of § 7502, then the date of the determination is the postmark date determined using the principles of § 301.7502-1(c) of the Procedure and Administration Regulations and any applicable guidance regarding designated PDSs (without regard to any particular “prescribed time”). Thus, for example, if the taxpayer sends Form 8927 by U.S. registered mail, the date of the determination for purposes of § 860(e)(4) is the date of registration of the envelope containing Form 8927. If the taxpayer sends Form 8927 by U.S. certified mail and the sender’s receipt is postmarked by the postal employee to whom Form 8927 was presented, the date of the determination for purposes § 860(e)(4) is the date of the U.S. postmark on the sender’s receipt. If the taxpayer sends Form 8927 by proper use of a PDS that the secretary has designated for purposes of § 7502, then the date of the determination for purposes of § 860(e)(4) is the date that would be treated as the postmark date for purposes of § 7502.
(2) If the taxpayer files Form 8927 with the Service by means other than U.S. mail or a PDS that the Secretary has designated for purposes of § 7502, then the date of the determination is the date the Form 8927 is received by the Service.
.03 Deficiency dividend. Even though there may have been a determination within the meaning of § 860(e)(4), a distribution does not satisfy § 860(f)(1) unless it is made on or after the date of the determination (as established by Section 4.02 of this Revenue Procedure) and on or before the date that is 90 days after the date of the determination (as so established).
|More Internal Revenue Bulletins|