Deadline to Adopt Certain Retirement Plan Amendments Extended (Notice 2009-97)

The IRS has extended the deadline for amending qualified retirement plans to meet certain requirements of the Internal Revenue Code that were added by the Pension Protection Act of 2006 (P.L. 109-280), and subsequently modified by the Worker, Retiree, and Employer Recovery Act of 2008 (P.L. 110-458). The deadline is extended to the last day of the first plan year that begins on or after January 1, 2010.

This extension applies to: (1) the deadline for amending single-employer defined benefit plans to meet the requirements of Code Secs. 401(a)(29) and 436, relating to funding-based limits on benefits and benefit accruals under single-employer plans; (2) the deadline for amending cash balance and other applicable defined benefit plans, within the meaning of Code Sec. 411(a)(13)(C), to meet the requirements of Code Sec. 411(a)(13) (other than Code Sec. 411(a)(13)(A)) and Code Sec. 411(b)(5), relating to vesting and other special rules applicable to these plans; and (3) the deadline for amending applicable defined contribution plans, within the meaning of Code Sec. 401(a)(35)(E), to meet the requirements of Code Sec. 401(a)(35), relating to diversification requirements for certain defined contribution plans.

The IRS has also provided for the anti-cutback requirements of Code Sec. 411(d)(6) for amendments that are adopted by the extended deadline for amending a plan to meet the requirements of Code Secs. 401(a)(29) and 436. The IRS expects that limited Code Sec. 411(d)(6) relief will be granted for amendments that are adopted by the extended deadline for amending a plan to meet the requirements of Code Sec. 411(b)(5) once final regulations under Code Secs. 411(a)(13) and 411(b)(5) are issued.

The IRS's review of an application for a determination letter that is submitted before February 1, 2011, will not take into account the requirements of Code Secs. 401(a)(29) and 436. After January 31, 2009, and before February 1, 2011, the IRS will take into account the requirements of Code Secs. 401(a)(35), 411(a)(13) (including Code Sec. 411(a)(13)(A)), or 411(b)(5), only if the plan has been amended to meet those requirements.

Section 5.07(2) of Rev. Proc. 2007-44, I.R.B. 2007-28, 54, is modified. Notice 2008-108, 2008-2 CB 1275, is modified to provide that the Service's review of an application for a determination letter submitted during the submission period beginning on February 1, 2009, will take into account the requirements of Code Secs. 401(a)(35), 411(a)(13) (including Code Sec. 411(a)(13)(A)), or 411(b)(5), only if the plan has been amended to meet those requirements.

Notice 2009-97, 2009FED ¶46,559

Other References:

Code Sec. 401

CCH Reference - 2009FED ¶17,507.041

CCH Reference - 2009FED ¶17,507.2531

Code Sec. 411

CCH Reference - 2009FED ¶19,076.23

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2009 Cumulative List of Changes in Plan Requirements Issued (Notice 2009-98)

The IRS has published the 2009 Cumulative List of Changes in Plan Qualification Requirements (2009 Cumulative List). The 2009 Cumulative List informs plan sponsors and practitioners of issues the IRS has specifically identified for review when determining whether individually designed single-employer plans filing in Cycle E have been properly updated. The 2009 Cumulative List reflects changes made by a number of recent laws, including the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), (P.L. 107-16) (with technical corrections made by the Job Creation and Worker Assistance Act of 2002 (JCWAA) (P.L. 104-147), the Pension Funding Equity Act of 2004 (PFEA), (P.L. 108-218), the American Jobs Creation Act of 2004 (AJCA), (P.L. 108-357), the Katrina Emergency Tax Relief Act of 2005 (KETRA), (P.L. 109-73), the Gulf Opportunity Zone Act of 2005 (GOZA), (P.L. 109-135), the Pension Protection Act of 2006 (PPA '06), (P.L. 109-280), the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, (P.L. 110-28), the Heroes Earnings Assistance and Relief Act of 2008 (HEART Act), (P.L. 110-245), the Emergency Economic Stabilization Act of 2008 (EESA), (P.L. 110-343), and the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA), (P.L. 110-458).

In order to be qualified, a plan must comply with all relevant qualification requirements, not just those on the 2009 Cumulative List. The IRS will not review plan language for guidance issued after October 1, 2009, statutes enacted after October 1, 2009, qualification requirements first effective in 2011 or later, or statutory provisions first effective in 2010, for which no guidance is identified in the 2009 Cumulative List. Thus, sponsors of pre-approved plans may not rely on opinion or advisory letters with respect to any guidance issued after October 1, 2009, unless that guidance is on the 2009 Cumulative List. The 2009 Cumulative List does not extend the deadline by which a plan must be amended to comply with any statutory, regulatory or guidance changes.

2009FED ¶46,560

Other References:

Code Sec. 401

CCH Reference - 2009FED ¶17,507.041

CCH Reference - 2009FED ¶17,507.15

CCH Reference - 2009FED ¶17,507.2531

CCH Reference - 2009FED ¶17,929.024

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Final Regulations Address Reduction of Taxable Income for Taxpayers Housing Individuals Displaced by Hurricane Katrina and Midwestern Disasters (T.D. 9474)

The IRS has adopted final regulations relating to the reduction in taxable income under section 302 of the Katrina Emergency Tax Relief Act of 2005 (KETRA) (P.L. 109-73) and section 702 of the Heartland Disaster Tax Relief Act of 2008 (HDTRA) (Title VII of Division C of P.L. 110-343). The regulations finalize 2006 temporary regulations that affected taxpayers who provide housing in their principal residences to individuals displaced by Hurricane Katrina. The reach of the final regulations has been expanded to also cover taxpayers who provide housing in their principal residences to individuals displaced due to a 2008 Midwestern disaster.

Section 702 of HDTRA, enacted on October 3, 2008, applied section 302 of KETRA to the Midwestern disaster. The Midwestern disaster area is an area with respect to which a major disaster was declared by the president under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (P.L. 100-707) by reason of severe storms, tornadoes or flooding on or after May 20, 2008, and before August 1, 2008, in the following states: Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska and Wisconsin. The applicable disaster date for each state in the Midwestern disaster area is the date of the severe storm, tornado, or flooding giving rise to the presidential declaration for that state. The reduction in taxable income for providing housing to a displaced individual in a Midwestern disaster area applies to tax years beginning in 2008 or 2009.

The final regulations, in addition to expanding the scope of the temporary regulations to include taxpayers who provide housing in their principal residences to Midwestern disaster displaced individuals, clarify that the limitations on the reduction in taxable income apply separately to the Hurricane Katrina disaster area and the Midwestern disaster area. As a result, a taxpayer who, for example, provides housing to both Hurricane Katrina and Midwestern disaster displaced individuals may reduce taxable income by up to $2,000 for providing housing to Midwestern disaster displaced individuals, even though the taxpayer reduced taxable income for providing housing to Hurricane Katrina displaced individuals.

The temporary regulations provided that the maximum dollar limitation for a married individual who files separately is $1,000. The final regulations provide that the maximum dollar limitation is $2,000 for married taxpayers filing jointly or separately. Married taxpayers filing separately may allocate the $2,000 between both returns.

The final regulations authorize the IRS to apply these rules in additional guidance of general applicability if Congress extends relief under section 302 of KETRA to other future disaster areas.

The final regulations apply to tax years ending after December 11, 2006. Taxpayers who, after filing their tax returns for 2006 or 2008 as married filing separately, want to apply the rule allowing them to allocate the $2,000 maximum limitation between them may do so by filing amended returns, so long as the period of limitations on credit or refund under Code Sec. 6511 has not expired.

T.D. 9474, 2009FED ¶47,042

Other References:

Code Sec. 151

CCH Reference - 2009FED ¶8004M

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Nevada --Sales and Use Tax: SST Rules Adopted

The Nevada Tax Commission has adopted regulations that reflect statutory changes that conformed Nevada sales and use tax laws to the Streamlined Sales and Use Tax (SST) Agreement. The regulatory changes include the following:

-- amendments to the definitions of "drug", "prosthetic device", and "prepared food intended for immediate consumption;"

-- revisions to the rules regarding what type of delivery charges are subject to sales and use taxes;

-- amendments to the florist delivery charge provisions;

-- the addition of an exception for the taxability of custom computer software;

-- expansion to the taxability of prewritten computer software to include maintenance contracts;

-- the addition of new sections governing the application of taxes to the lease or rental of tangible personal property and to the sale of such property for lease or rental; and

-- the revision of rules regarding the administration of exemptions from taxes on retail sales.

Additionally, sections with the following headings have been repealed:

-- "Prepared food" defined;

-- Resolution of conflicting provisions;

-- Containers: Requirements for sale of baling wire or twine;

-- Interpretation of terms used in NRS 374.286 (regarding agricultural equipment);

-- Affidavit from purchaser required when tax not collected on farm machinery and equipment; availability to Department of affidavits retained by retailer;

-- "Fine art for public display" defined;

-- Interpretation of terms used in NRS 374.2911 (regarding fine art);

-- Calculation of interest payments on art indebtedness;

-- Apportionment of direct costs when works of art consist of more than fine art;

-- Requirements to receive credit for donations to certain museums;

-- Determination of value (regarding fine art for public display); and

-- Provisions of poster to school or parent of child who receives in-home instruction.

CCH NOTE: According to a recertification letter issued by the Nevada Department of Taxation and sent to the Streamlined Sales Tax Governing Board, the Department has been following the provisions of these new regulations since prior to July 31, 2009.

Subscribers may view the text of the regulations at:

Reg. Secs. 104-09, 105-09, and 106-09; Nevada Department of Taxation, effective November 25, 2009