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Internal Revenue Bulletin: 2019-52
HIGHLIGHTS OF THIS ISSUE
The IRS Mission
Rev. Rul. 2019-28
T.D. 9885
Notice 2019-64
Foreign Currency Guidance under Section 987
Reporting of Positive Tax Basis Capital Accounts not Required Until 2020 Partnership Taxable Years; Net Unrecognized Section 704(c) Gain or Loss Defined; Publicly Traded Partnerships not Required to Report Net Unrecognized Section 704(c) Gain or Loss; Certain Reporting of Section 465 At-Risk Activities not Required Until 2020 Partnership Taxable Years; Penalty Relief
Updated Mortality Improvement Rates and Static Mortality Tables for Defined Benefit Pension Plans for 2021
Additional Rules Regarding Base Erosion and Anti-Abuse Tax
Numerical Finding List
Finding List of Current Actions on Previously Published Items1
How to get the Internal Revenue Bulletin
INTERNAL REVENUE BULLETIN
We Welcome Comments About the Internal Revenue Bulletin
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.
REV. RUL. 2019-28, page 1401.
Interest rates: underpayments and overpayments. The rates for interest determined under Section 6621 of the code for the calendar quarter beginning January 1, 2020, will be 5 percent for overpayments (4 percent in the case of a corporation), 5 percent for underpayments, and 7 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 2.5 percent.
26 CFR 301.6621-1: Interest rate.
NOTICE 2019-64, page 1505.
This notice contains the 2019 Required Amendments List for qualified individually designed plans and § 403(b) individually designed plans.
This notice specifies updated mortality improvement rates and static mortality tables to be used for defined benefit pension plans under § 430(h)(3)(A) of the Internal Revenue Code and section 303(h)(3)(A) of the Employee Retirement Income Security Act of 1974, Pub. L. No. 93-406, as amended (ERISA), for valuation dates occurring during the 2021 calendar year. This notice also includes a modified unisex version of the mortality tables for use in determining minimum present value under § 417(e)(3) of the Code and section 205(g)(3) of ERISA for distributions with annuity starting dates that occur during stability periods beginning in the 2021 calendar year.
REG-112607-19, page 1516.
These proposed regulations that provide guidance regarding the base erosion and anti-abuse tax imposed on certain large corporate taxpayers with respect to certain payments made to foreign related parties. The proposed regulations would affect corporations with substantial gross receipts that make payments to foreign related parties.
T.D. 9885, page 1418.
These final regulations implement the base erosion and anti-abuse tax, designed to prevent the reduction of tax liability by certain large corporate taxpayers through certain payments made to foreign related parties and certain tax credits. This tax was added to the Internal Revenue Code (the "Code") as part of the Tax Cuts and Jobs Act. The final regulations affect corporations with substantial gross receipts that make payments to foreign related parties.
26 CFR 1.59A-1 through 1.59A-10
This Notice announces that the Department of the Treasury and the Internal Revenue Service intend to amend the regulations under section 987 to defer the applicability date of the final regulations under section 987, as well as certain related final and temporary regulations, by one additional year. Notice 2017-57, published on October 16, 2017, and Notice 2018-57, published on June 25, 2018, each delayed the applicability date of the final regulations, along with the related final and temporary regulations, by 1 year. The Treasury Department and the IRS intend to amend §§1.861-9T, 1.985-5, 1.987-11, 1.988-1, 1.988-4, and 1.989(a)-1 of the 2016 final regulations and §§1.987-2 and 1.987-4 of the 2019 final regulations to apply to taxable years beginning on or after the first day of the first taxable year following December 7, 2020.
This notice provides that the requirement to report partners' shares of partnership capital on the tax basis method will not be effective for 2019 (for partnership taxable years beginning in calendar 2019) but will be effective beginning in 2020 (for partnership taxable years that begin on or after January 1, 2020). For 2019, partnerships and other persons must report partner capital accounts consistent with the reporting requirements in the 2018 forms and instructions, including the requirement to report negative tax basis capital accounts on a partner-by-partner basis. This notice also clarifies the 2019 requirement for partnerships and other persons to report a partner's share of "net unrecognized Section 704(c) gain or loss" by defining this term for purposes of the reporting requirement. Additionally, this notice exempts publicly traded partnerships from the requirement to report their partners' shares of net unrecognized Section 704(c) gain or loss until further notice. This notice also provides that the requirement added by the draft instructions for 2019 for partnerships to report to partners information about separate "Section 465 at-risk activities" will not be effective until 2020. Finally, this notice provides relief from certain reporting penalties imposed by the Internal Revenue Code (Code).
Provide America's taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.
The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions, legislation, court decisions, and other items of general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application of the tax laws, including all rulings that supersede, revoke, modify, or amend any of those previously published in the Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of internal practices and procedures that affect the rights and duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service on the application of the law to the pivotal facts stated in the revenue ruling. In those based on positions taken in rulings 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 to comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they may be used as precedents. Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the disposition of other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the 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 of the 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, Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rulings. Bank Secrecy Act Administrative Rulings are issued by the Department of the Treasury's Office of the Assistant Secretary (Enforcement).
Part IV.—Items of General Interest. This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index for the matters published during the preceding months. These monthly indexes are cumulated on a semiannual basis, and are published in the last Bulletin of each semiannual period.
Section 6621.—Determination of Rate of Interest
Section 6621 of the Internal Revenue Code establishes the interest rates on overpayments and underpayments of tax. Under section 6621(a)(1), the overpayment rate is the sum of the federal short-term rate plus 3 percentage points (2 percentage points in the case of a corporation), except the rate for the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the sum of the federal short-term rate plus 0.5 of a percentage point. Under section 6621(a)(2), the underpayment rate is the sum of the federal short-term rate plus 3 percentage points.
Section 6621(c) provides that for purposes of interest payable under section 6601 on any large corporate underpayment, the underpayment rate under section 6621(a)(2) is determined by substituting "5 percentage points" for "3 percentage points." See section 6621(c) and section 301.6621-3 of the Regulations on Procedure and Administration for the definition of a large corporate underpayment and for the rules for determining the applicable date. Section 6621(c) and section 301.6621-3 are generally effective for periods after December 31, 1990.
Section 6621(b)(1) provides that the Secretary will determine the federal short- term rate for the first month in each calendar quarter. Section 6621(b)(2)(A) provides that the federal short-term rate determined under section 6621(b)(1) for any month applies during the first calendar quarter beginning after that month. Section 6621(b)(3) provides that the federal short-term rate for any month is the federal short-term rate determined during that month by the Secretary in accordance with section 1274(d), rounded to the nearest full percent (or, if a multiple of 1/2 of 1 percent, the rate is increased to the next highest full percent).
Notice 88-59, 1988-1 C.B. 546, announced that in determining the quarterly interest rates to be used for overpayments and underpayments of tax under section 6621, the Internal Revenue Service will use the federal short-term rate based on daily compounding because that rate is most consistent with section 6621 which, pursuant to section 6622, is subject to daily compounding.
The federal short-term rate determined in accordance with section 1274(d) during October 2019 is the rate published in Revenue Ruling 2019-25, 2019-45 IRB 1042, to take effect beginning November 1, 2019. The federal short-term rate, rounded to the nearest full percent, based on daily compounding determined during the month of October 2019 is 2 percent. Accordingly, an overpayment rate of 5 percent (4 percent in the case of a corporation) and an underpayment rate of 5 percent are established for the calendar quarter beginning January 1, 2020. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 for the calendar quarter beginning January 1, 2020 is 2.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning January 1, 2020, is 7 percent. These rates apply to amounts bearing interest during that calendar quarter.
Sections 6654(a)(1) and 6655(a)(1) provide that the underpayment rate established under section 6621 applies in determining the addition to tax under sections 6654 and 6655 for failure to pay estimated tax for any taxable year. Thus, the 5 percent rate also applies to estimated tax underpayments for the first calendar quarter beginning January 1, 2020. Pursuant to section 6621(b)(2)(B), in determining the addition to tax under section 6654 for any taxable year for an individual, the federal short-term rate that applies during the third month following the taxable year also applies during the first 15 days of the fourth month following the taxable year. In addition, pursuant to section 6603(d)(4), the rate of interest on section 6603 deposits is 2 percent for the first calendar quarter in 2020.
Interest factors for daily compound interest for annual rates of 2.5 percent, 4 percent, 5 percent and 7 percent are published in Tables 58, 61, 63, and 67 of Rev. Proc. 95-17, 1995-1 C.B. 612, 615, 617, and 621.
Annual interest rates to be compounded daily pursuant to section 6622 that apply for prior periods are set forth in the tables accompanying this revenue ruling.
DRAFTING INFORMATION
The principal author of this revenue ruling is Casey R. Conrad of the Office of the Associate Chief Counsel (Procedure and Administration). For further information regarding this revenue ruling, contact Mr. Conrad at (202) 317-6844 (not a toll-free number).
365 Day Year
0.5% Compound Rate 184 Days
1 0.000013699 63 0.000863380 125 0.001713784
10 0.000136995 72 0.000986781 134 0.001837290
38 0.000520680 100 0.001370792 162 0.002221627
61 0.000835960 123 0.001686340
TABLE OF INTEREST RATES PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986 OVERPAYMENTS AND UNDERPAYMENTS
In 1995-1 C.B. DAILY RATE TABLE
Before Jul. 1, 1975 6% Table 2, pg. 557
Jul. 1, 1975–Jan. 31, 1976 9% Table 4, pg. 559
Feb. 1, 1976–Jan. 31, 1978 7% Table 3, pg. 558
Feb. 1, 1980–Jan. 31, 1982 12% Table 5, pg. 560
Feb. 1, 1982–Dec. 31, 1982 20% Table 6, pg. 560
Jan. 1, 1983–Jun. 30, 1983 16% Table 37, pg. 591
Jul. 1, 1983–Dec. 31, 1983 11% Table 27, pg. 581
Jul. 1, 1986–Dec. 31, 1986 9% Table 23, pg. 577
TABLE OF INTEREST RATES FROM JAN. 1, 1987 - Dec. 31, 1998
UNDERPAYMENTS
1995-1 C.B.
Jan. 1, 1987–Mar. 31, 1987 8% 21 575 9% 23 577
Apr. 1, 1987–Jun. 30, 1987 8% 21 575 9% 23 577
Jul. 1, 1987–Sep. 30, 1987 8% 21 575 9% 23 577
Oct. 1, 1987–Dec. 31, 1987 9% 23 577 10% 25 579
Jan. 1, 1988–Mar. 31, 1988 10% 73 627 11% 75 629
Apr. 1, 1988–Jun. 30, 1988 9% 71 625 10% 73 627
Jul. 1, 1988–Sep. 30, 1988 9% 71 625 10% 73 627
Oct. 1, 1988–Dec. 31, 1988 10% 73 627 11% 75 629
Apr. 1, 1989–Jun. 30, 1989 11% 27 581 12% 29 583
Jul. 1, 1989–Sep. 30, 1989 11% 27 581 12% 29 583
Oct. 1, 1992–Dec. 31, 1992 6% 65 619 7% 67 621
TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS
Jan. 1, 1999–Mar. 31, 1999 7% 19 573
Apr. 1, 1999–Jun. 30, 1999 8% 21 575
Jul. 1, 1999–Sep. 30, 1999 8% 21 575
Oct. 1, 1999–Dec. 31, 1999 8% 21 575
Oct. 1. 2015–Dec. 31, 2015 3% 11 565
TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT CORPORATE OVERPAYMENTS AND UNDERPAYMENTS
Jan. 1, 2011–Mar. 31, 2011 2% 9 563 3% 11 565
Oct. 1, 2011–Dec. 31, 2011 2% 9 563 3% 11 565
Apr. 1, 2013–Jun. 30, 2013 2% 9 563 3% 11 565
Jul. 1, 2013–Sep. 30, 2013 2% 9 563 3% 11 565
Oct. 1, 2017–Dec. 31,, 2017 3% 11 565 4% 13 567
TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS FROM JANUARY 1, 1991 - PRESENT
Jan. 1, 1991–Mar. 31, 1991 13% 31 585
Apr. 1, 1991–Jun. 30, 1991 12% 29 583
Jul. 1, 1991–Sep. 30, 1991 12% 29 583
Oct. 1, 1991–Dec. 31, 1991 12% 29 583