Professional Documents
Culture Documents
2001–44
October 29, 2001
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HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
Provide America’s taxpayers top quality service by help- and by applying the tax law with integrity and fairness to
ing them understand and meet their tax responsibilities all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument dures must be considered, and Service personnel and oth-
of the Commissioner of Internal Revenue for announcing offi- ers concerned are cautioned against reaching the same con-
cial rulings and procedures of the Internal Revenue Service clusions in other cases unless the facts and circumstances
and for publishing Treasury Decisions, Executive Orders, Tax are substantially the same.
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly and may be obtained The Bulletin is divided into four parts as follows:
from the Superintendent of Documents on a subscription
basis. Bulletin contents are consolidated semiannually into
Cumulative Bulletins, which are sold on a single-copy basis. Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
Part II.—Treaties and Tax Legislation.
of the tax laws, including all rulings that supersede, revoke,
This part is divided into two subparts as follows: Subpart A,
modify, or amend any of those previously published in the
Tax Conventions and Other Related Items, and Subpart B,
Bulletin. All published rulings apply retroactively unless other-
Legislation and Related Committee Reports.
wise indicated. Procedures relating solely to matters of in-
ternal management are not published; however, statements
of internal practices and procedures that affect the rights Part III.—Administrative, Procedural, and Miscellaneous.
and duties of taxpayers are published. To the extent practicable, pertinent cross references to
these subjects are contained in the other Parts and Sub-
parts. Also included in this part are Bank Secrecy Act Admin-
Revenue rulings represent the conclusions of the Service on
istrative Rulings. Bank Secrecy Act Administrative Rulings
the application of the law to the pivotal facts stated in the
are issued by the Department of the Treasury’s Office of the
revenue ruling. In those based on positions taken in rulings
Assistant Secretary (Enforcement).
to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature
are deleted to prevent unwarranted invasions of privacy and Part IV.—Items of General Interest.
to comply with statutory requirements. This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
Rulings and procedures reported in the Bulletin do not have
the force and effect of Treasury Department Regulations, The first Bulletin for each month includes a cumulative index
but they may be used as precedents. Unpublished rulings for the matters published during the preceding months.
will not be relied on, used, or cited as precedents by Service These monthly indexes are cumulated on a semiannual basis,
personnel in the disposition of other cases. In applying pub- and are published in the first Bulletin of the succeeding semi-
lished rulings and procedures, the effect of subsequent leg- annual period, respectively.
islation, regulations, court decisions, rulings, and proce-
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.
to the Internal Revenue Code of 1954, 26 U.S.C. Sec. ences are to the regulations in effect between 1983 Consolidated Returns, and 10-Year Carrybacks, 90
1 et seq. (1982 ed. and Supp. V), as in effect between and 1986, 26 CFR Sec. 1.1502-11 et seq. (1982- Tax Notes, No. 10, p. 1383 (Mar. 5, 2001) (here-
1983 and 1986, the tax years here in question. 1986). inafter Axelrod & Blank).
For example, a taxpayer whose filing sta- reduction contributions (the ADP test) Plans, Tax Exempt and Government Enti-
tus is single with adjusted gross income of for plans subject to that test. Also, vol- ties Division. For further information re-
$15,000 may be entitled to a credit equal untary after-tax employee contributions garding this announcement, please con-
to 50% of his or her contributions (up to to a qualified plan, whether or not those tact the Employee Plans’ taxpayer
$2,000 of contributions) to a plan contributions give rise to the saver’s assistance telephone service at 1-877-
described in A-5 above. credit, are taken into account in the 829-5500 (a toll-free number), between
nondiscrimination test for employee the hours of 8:00 a.m. and 9:30 p.m. East-
Q-7: Does the saver’s credit affect an eli-
after-tax contributions (the ACP test) for ern Time, Monday through Friday. Mr.
gible individual’s entitlement to any
plans subject to that test. Kuehnle may be reached at (202) 283-
deduction or exclusion that would other-
9888 (not a toll-free number).
wise apply to the contribution? Q-11: Can an individual claim the saver’s
credit for an amount contributed to a plan
A-7: No. Eligible individuals entitled to
pursuant to automatic enrollment?
deduct IRA contributions or to exclude Notice to Employees Regarding
plan contributions from gross income will A-11: Yes. Any amount that is treated as Saver’s Credit:
be able to deduct or exclude those an elective contribution on behalf of an This notice explains how you may be able
amounts and also claim the saver’s credit. eligible individual to an employer plan to pay less tax by contributing to [insert
described in A-5 above can give rise to name of employer’s plan] (the “Plan”) or
Q-8: Can a taxpayer use the saver’s cred-
the saver’s credit. to an individual retirement arrangement
it to offset both an alternative minimum
tax liability and a regular income tax lia- Q-12: Can an individual take a projected (“IRA”).
bility? saver’s credit into account in figuring the Beginning in 2002, if you make contri-
A-8: Yes. allowable number of withholding al- butions to the Plan or to an IRA, you
lowances on Form W-4? may be eligible for a tax credit, called
Q-9: For married taxpayers filing jointly, the “saver’s credit.” This credit could
do contributions by or for either or both A-12: Yes. For information on convert-
ing credits into withholding allowances, reduce the federal income tax you pay
spouses give rise to the saver’s credit? dollar-for-dollar. The amount of the
see IRS Publication 919, “How Do I Ad-
A-9: Yes, contributions by or for either or just My Withholding?” credit you can get is based on the contri-
both spouses, up to $2,000 per year for each butions you make and your credit rate.
spouse, can give rise to the saver’s credit. Q-13: Is there a sample notice that em- The credit rate can be as low as 10% or
ployers can use to help explain the saver’s as high as 50%, depending on your ad-
Q-10: Are salary reduction and after-tax credit to employees? justed gross income — the lower your
employee contributions that are eligible income, the higher the credit rate. The
for the saver’s credit taken into account in A-13: Yes. Employers are encouraged to
credit rate also depends on your filing
the ADP and ACP nondiscrimination tests tell their employees about the credit. Em-
status. See the tables at the end of this
of §§ 401(k) and (m) of the Internal ployers can inform employees in any way
notice to determine your credit rate.
Revenue Code? they choose, including use of the notice
set out below. The maximum contribution taken into ac-
A-10: Yes. Salary reduction contribu- count for the credit for an individual is
tions to a 401(k) plan, whether or not Drafting Information $2,000. If you are married filing jointly,
those contributions give rise to the the maximum contribution taken into ac-
saver’s credit, are taken into account in The principal author of this announce- count for the credit is $2,000 each for you
the nondiscrimination test for salary ment is Roger Kuehnle of the Employee and your spouse.
CREDIT RATES
CUMULATIVE BULLETINS
The contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are sold
on a single copy basis and are not included as part of the subscription to the Internal Revenue Bulletin. Subscribers to the weekly
Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of print
and are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from the
Superintendent of Documents.
HOW TO ORDER
Check the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,
detach entire page, and mail to the Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250–7954. Please allow two
to six weeks, plus mailing time, for delivery.