Thursday, March 31, 2011

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Chairman Dave Camp (R-MI) Markup of H.R. 1232 – The Elimination of Certain Tax Benefits Relating to Abortion March 31, 2011 ....................................................................................... (Remarks as Prepared) We meet today to consider H.R. 1232, a bill that restricts the use of taxpayer funds for abortion. It is, we all know, not an issue that this Committee considers often, and it is certainly one that many of us have strong feelings about. While I expect there will be differences of opinion today, I do hope that we will stand together in protecting the jurisdiction of this Committee. When Mr. Rangel and Mr. Levin were in the chair, I backed them every time – without hesitation – when it came to our jurisdiction. It is not an issue I take lightly and with good reason – we are the only Committee whose authority is directly derived from the Constitution. Tax measures must originate in the House and those matters are our sole jurisdiction. I do not intend for the Committee to abdicate its constitutional responsibilities. So, before a tax bill goes to the floor, you can expect us to ensure it is done correctly. ........................................................................................... I firmly believe that this Committee has some of the most talented members of Congress serving on it – and that goes for both sides of the dais. I have every confidence that we can walk and chew gum at the same time. We can deal with job-creating trade policy, as the Trade Subcommittee did yesterday; and job-creating fiscal and tax policy, as the full committee discussed yesterday; and continue to push the Senate to pass the pro-jobs 1099 bill; and advance a long-term FAA reauthorization bill that many in the Senate have called a jobs bill, which is on the Floor today, and still deal with other legislation, such as the bill before us today. H.R. 1232, in general, codifies the longstanding, bipartisan Hyde Amendment, which prevents taxpayers’ funds being used for abortion-related costs. According to the Joint Committee on Taxation, it will have a “negligible” effect on revenues. It is not a tax increase, despite what some have wrongly suggested. ............................................................................................. The legislation is necessary because the Democrats’ health care law included a massive expansion of the IRS’ authority and concocted a host of ways to funnel taxpayer funds for various costs and procedures, including abortions. In response, our colleague, Chris Smith, introduced H.R. 3, which is designed to prevent the use of taxpayer funding for abortions. However, as a hearing in the Select Revenue Measures Subcommittee two weeks ago revealed, the tax implications of that measure were unclear. Simply put, it is our responsibility as a Committee to address the valid concerns raised in that hearing. ............................................................................................. In a moment we will hear from Tom Barthold of the Joint Committee on Taxation for a technical walk through of the legislation, but before we do so I want to be clear about what the legislation would not do. ........................................................................................ • It would not affect either the ability of an individual to pay for an abortion (or for abortion coverage) through private funds, or the ability of an entity to provide separate abortion coverage. .......................................................................................... • It would not apply to abortions in cases of rape, incest, or life-threatening physical condition of the mother. • It would not apply to treatment of injury, infection, or other health problems resulting from an abortion. .......................................................................................... This is about making sure taxpayer funds are not used to pay for abortions but does not affect the use of private funds. Thus, we are basically codifying the Hyde Amendment in the tax code. ### www.irstaxattorney.com 888-712-7690
Notice 2011-31, 2011-17 IRB, 03/30/2011, IRC Sec(s). ________________________________________ Headnote: Reference(s): Full Text:................................................................................... This Notice provides guidance to taxpayers regarding how to answer questions related to foreign financial accounts (FFA) found on 2010 federal income tax and information returns, e.g., Schedule B of Form 1040, the “ Other Information” section of Form 1041, Schedule B of Form 1065, and Schedule N of Form 1120, among others. ............................................................................................ On February 26, 2010, the Financial Crimes Enforcement Network (FinCEN), a bureau within the Treasury Department, published a notice of proposed rulemaking (75 FR 8844) proposing amendments to the Bank Secrecy Act implementing regulations relating to the Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), found at 31 CFR 1010.350 (formerly 31 CFR 103.24). Proposed revisions to the instructions for the FBAR were included as an attachment to the notice of proposed rulemaking. On February 24, 2011, FinCEN published final FBAR regulations (76 FR 10234). The final FBAR regulations are effective on March 28, 2011, and apply to FBARs required to be filed by June 30, 2011, with respect to foreign financial accounts maintained in calendar year 2010, as well as to FBARs for future calendar years. On March 21, 2011, the IRS posted revised FBAR instructions (titled DRAFT Final Instructions) on irs.gov at www.irs.gov/businesses/small/article/0,,id=148849,00.html. On March 26, 2011, the IRS published a revised FBAR form with accompanying instructions that reflect the amendments made by the final FBAR regulations. 1 There is no substantive difference between the text of the posted instructions (titled DRAFT Final Instructions) and the instructions that accompany the revised FBAR form, although the format of the instructions has changed. In light of the recent publication of the final FBAR regulations, the posting of revised FBAR instructions, and the publication of a revised FBAR form with accompanying instructions, the Treasury Department and the IRS provide the following guidance concerning the FFA-related questions on 2010 federal income tax and information returns: For Returns Filed Before March 28, 2011 Before March 28, 2011, which is the first date on which the final FBAR regulations become effective, the existing FBAR regulations (last amended April 1987) remain effective and may be referenced, along with other then-existing FBAR guidance, when answering FFA-related questions on 2010 tax and information returns. Alternatively, persons filing a return before March 28, 2011, may reference the recently published final FBAR regulations and revised FBAR instructions (including the instructions, titled DRAFT Final Instructions, which were posted on irs.gov on March 21, 2011) when answering the FFA-related questions on 2010 returns. The IRS will take into account the recently published final FBAR regulations and the revised FBAR instructions when evaluating the reasonableness of a person's response to the FFA-related questions on 2010 tax and information returns. ......................................................................................... For Returns Filed On or After March 28, 2011 Beginning March 28, 2011, the recently published final FBAR regulations will be effective and should be referenced, along with the revised FBAR form and instructions, when answering FFA-related questions on 2010 tax and information returns. ........................................................................................... The principal author of this Notice is Matthew P. Howard of the Office of Associate Chief Counsel (Procedure and Administration). For further information regarding this Notice, contact Matthew P. Howard at (202) 622-4570 (not a toll-free call). ________________________________________ 1 Filers are advised that although the instructions to the FBAR form are being revised in light of the final FBAR regulations, the data items appearing in the body of the FBAR form remain unchanged. www.irstaxattorney.com 888-712-7690
It is genuinely stupid to appeal a case when the standard applied by the tax court is that it will support the IRS unless "arbitrary or capricious." That standard is far too high. What follows is a bad decision creating some very bad law and bad judgment by this court. When an attorney takes this kind of a case, it is a "rip off" of the client. Larry E. Tucker v. Commissioner, TC Memo 2011-67 , Code Sec(s) 6320; 6330; 7122. ________________________________________ LARRY E. TUCKER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent . Case Information: Code Sec(s): 6320; 6330; 7122 Docket: Docket No. 3165-06L. Date Issued: 03/22/2011 Judge: Opinion by GUSTAFSON HEADNOTE XX. Reference(s): Code Sec. 6320 ; Code Sec. 6330 ; Code Sec. 7122 Syllabus Official Tax Court Syllabus P filed income tax returns for 2000, 2001, and 2002 that reported tax due; but he did not pay the tax. In early 2003, when P's tax liabilities totaled at least $14,945, P used $44,700 for day trading and lost $22,645. The Internal Revenue Service assessed the tax and issued to P a notice of the filing of a “Notice of Federal Tax Lien” (NFTL). After an initial hearing and an adverse determination, P filed a timely appeal of that determination with the Tax Court pursuant to I.R.C. sec. 6330(d)(1), contending that the Office of Appeals improperly rejected an offer-in-compromise (OIC) that P proposed. This Court ordered a remand to the Office of Appeals for further consideration of P's OIC. At a supplemental collection due process hearing, the Office of Appeals preferred a partial payment installment agreement but P proposed only his OIC. In calculating P's reasonable collection potential for purposes of evaluating his OIC, the Office of Appeals considered P's day trading to constitute asset dissipation. The Office of Appeals issued a supplemental notice of determination denying P's proposed OIC and upholding the filing of the NFTL. The parties have filed cross-motions for summary judgment. Held: Where P engaged in day trading in disregard of his outstanding Federal income taxes, the resulting losses constitute dissipation of assets. R's Office of Appeals did not abuse its discretion in denying P's proposed OIC and upholding the filing of the NFTL. Carlton M. Smith and Zachary Grendi (student), for petitioner. Counsel Lydia A. Branche, for respondent. Opinion by GUSTAFSON MEMORANDUM OPINION This case is an appeal, pursuant to section 6330(d)(1), 1 by which petitioner Larry E. Tucker seeks this Court's review of a determination by the Office of Appeals of the Internal Revenue Service (IRS) to reject Mr. Tucker's proposed offer-in-compromise (OIC) and to sustain the filing of a notice of Federal tax lien (NFTL) in order to collect Mr. Tucker's unpaid income taxes for tax years 2000, 2001, and 2002. That determination was made after the Office of Appeals conducted a collection due process (CDP) hearing pursuant to section 6330(c) and a supplemental CDP hearing pursuant to a remand of this Court. The IRS's determination at issue in this case is reflected in an initial “Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330” and in a “Supplemental Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330”. This matter is currently before this Court on the parties' cross- motions for summary judgment filed under Rule 121. The specific issue to be decided is whether the Office of Appeals abused its discretion in September 2006—at a time when Mr. Tucker owed more than $39,000—by rejecting an OIC pursuant to which Mr. Tucker would have paid $317 over 116 months, totaling $36,772. We will grant respondent's motion and deny Mr. Tucker's motion. We hold that the Office of Appeals did not abuse its discretion in rejecting Mr. Tucker's OIC and sustaining the filing of the NFTL. Background The parties' motion papers and the supporting exhibits attached thereto show that there is no dispute as to the following facts. At the time he filed his petition, Mr. Tucker resided in New Mexico. Mr. Tucker's tax returns Mr. Tucker earned income in the five years 1999 through 2003. For the first three of those years Mr. Tucker failed to For the years at issue 2 --2000, 2001, timely file tax returns. and 2002—he simultaneously filed Forms 1040, “U.S. Individual Income Tax Return”, on April 15, 2003. 3 In March 2004 he filed an untimely Form 1040 for tax year 1999. And in April 2004 he timely filed a Form 1040 for tax year 2003. For 2000 through 2003, some but not all of his tax liabilities were either prepaid or withheld from his wages. The IRS assessed the income tax liabilities that Mr. Tucker had self-reported. After the application of prepayment and withholding credits, Mr. Tucker had *** including *** offers of collection alternatives”. , Sec. 6330(c)(2)(A), (d). Therefore, we evaluate the settlement officer's exercise of discretion in rejecting the OIC, taking into account all the liabilities that were proposed to be compromised, even though we do not have jurisdiction to review the collection of all those liabilities. See, e.g., Orum v. Commissioner, 123 T.C. 1 (2004) (reviewing an OIC that covers income tax liabilities for tax years that are both within and outside of this Court's jurisdiction), affd. 412 F.3d 819 [95 AFTR 2d 2005-2931] (7th Cir. 2005). an outstanding reported tax due (not including any interest or penalties) for each year as follows: Income Tax Withholding Reported Tax Tax Year Reported Credits Liability Due 1999 $3,356 -0- $3,356 <1> 8,106 2000 14,808 ($6,702) 2001 3,629 (146) 3,483 2002 13,404 (10,353) 3,051 2003 6,947 (633) 6,314 Total 24,310 1 After filing his return for tax year 2000, Mr. Tucker made three voluntary payments of $349 towards the amount due. As a result, by July 2004, when the collection action at issue started, the tax due for 2000 (without any accruals) was reduced to $7,059, and the tax due for all five years (without any accruals) was reduced to $23,263. On May 8, 2004, nearly a year after Mr. Tucker filed his delinquent returns for 2000, 2001, and 2002, the IRS sent to him a “Final Notice—Notice of Intent to Levy and Notice of Your Right to a Hearing” (hereinafter, “levy notice”) for those three years, pursuant to sections 6330(a)(1) and 6331(d)(1), advising him of the IRS's intent to levy upon his property. Mr. Tucker did not timely request a hearing under section 6330 with respect to that notice. For the same three years, the IRS sent to Mr. Tucker on July 22, 2004, a “Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320” (”lien notice”), pursuant to section 6320(a)(1), advising him that the IRS had filed an NFTL against him. Mr. Tucker's July 2004 OIC On July 29, 2004, after the IRS had issued the lien notice, but before Mr. Tucker received it, he submitted a Form 656, “Offer in Compromise”, proposing to settle his income tax liabilities for the five years 1999 through 2003. At that time, his unpaid tax liabilities for those five years totaled $24,310, and with interest and additions to tax (”accruals”), his total five-year liability was approximately $35,000. 4 Mr. Tucker proposed to compromise that five-year liability for a total of $6,000 payable in monthly payments of $100 over 60 months. Mr. Tucker also submitted a Form 433-A, “Collection Information Statement for Wage Earners and Self-Employed Individuals”, detailing his assets, monthly income, and monthly expenses. The IRS received Mr. Tucker's July 2004 OIC on August 4, 2004. By letter dated August 25, 2004, the IRS examiner who evaluated the July 2004 OIC informed Mr. Tucker that the IRS had “determined that you have the ability to pay your liability in (i.e., unpaid taxes plus accruals) as of July 29, 2004 (i.e., less than one month earlier), to be approximately $35,000. full within the time provided by law.” 5 Mr. Tucker was given 14 days to dispute this determination. At the same time the IRS was evaluating Mr. Tucker's July 2004 OIC, Mr. Tucker timely submitted to the IRS on August 11, 2004, a Form 12153, “Request for a Collection Due Process Hearing”, in response to the lien notice. In the attachment to Form 12153, Mr. Tucker expressed his desire for an OIC in the CDP context by stating that “on July 29, 2004, the taxpayer mailed to the IRS an offer in compromise covering these taxes and taxes for the years 1999 and 2003. An offer in compromise would be the sensible collection alternative to this lien.” Because of the close timing of Mr. Tucker's submission of the July 2004 OIC and his August 2004 request for a CDP hearing, there was some confusion as to who (i.e., the original OIC examiner or the CDP settlement officer) should continue to consider Mr. Tucker's July 2004 OIC. As a result, there is some dispute as to whether Mr. Tucker ever disputed the financial determination outlined in the letter dated August 25, 2004, and whether his July 2004 OIC was rejected by the IRS before his case was assigned to a settlement officer. In any event, by letter dated May 19, 2005, from Mr. Tucker's counsel to the settlement officer assigned to Mr. Tucker's case, Mr. Tucker's counsel effectively withdrew Mr. Tucker's July 2004 OIC and indicated his desire for an installment agreement instead: Per your request, enclosed is the offer in compromise filed by Larry Tucker on July 29, 2004—i.e., prior to the IRS' issuance of collection due process notices. [6] I am also enclosing the Form 433-A filed at that time, together with its enclosures. Please note that we have since realized that the offer to pay $6,000 in the form of 60 monthly payments of $100 was a mistake in that the IRS requires that offers being paid in over two-year periods be payable over the entire collection period—which in this case is closer to ten years, since the offer was filed only a few months “Final Notice—Notice of Intent to Levy and Notice of Your Right to a Hearing” relating to tax years 1999 and 2003 was, in fact, issued after Mr. Tucker's submission of the July 2004 OIC. Section 6331(k)(1) provides for a restraint on levy while an OIC is pending, and the issuance of the notice of levy violated that restriction. As a result, the IRS withdrew this levy notice against Mr. Tucker. The issuance of that first levy notice (and its subsequent withdrawal) was not part of the CDP hearing or determination and is not part of the CDP appeal at issue here. after the 2003 return was filed. Mr. Tucker is willing to make payments over the entire collection period remaining. *** *** [Mr. Tucker's] income can be more variable than the usual taxpayer. This may make an offer in compromise unfeasible, since a brief period of unemployment could result in the offer going into default and having to be completely redone. Perhaps a more sensible situation would be for us together to determine a full or partial payment installment payment arrangement for Mr. Tucker, which might be modified in the future as his circumstances change. Using the collection financial standards, we together could come to an amount. *** In this same letter, Mr. Tucker's counsel also addressed the issue that the original OIC examiner raised regarding dissipation of assets. In doing so, Mr. Tucker's counsel referred the settlement officer to his letter dated April 26, 2005, which had been submitted to the Office of Appeals before the settlement officer was assigned to Mr. Tucker's case. In that April 26, 2005, letter, Mr. Tucker's counsel had summarized Mr. Tucker's stock transactions as follows: In January 2003, Mr. Tucker received payment in advance for some independent contractor web design project to be performed by him later in the year. He knew he would need this money to live on during the year, but he also knew he owed taxes and other creditors. In retrospect unwisely, he decided to try to leverage currently-unneeded funds [7] into profits by which he could pay off his back tax debts and other creditors. So, he wire transferred some of the funds from his checking account to a newly-opened E-Trade account between January 10, 2003 and April 3, 2003. During January, he put $23,700 into the E-Trade account. Then, he began day trading. By the end of January, he showed a small profit, since the account was valued at $25,873.16 on January 31, 2003. From there, however, everything went south. The E-Trade account lost $7,123.12 in value in February 2003. It continued losing money in March. So, starting on March 13, 2003, Mr. Tucker received “margin calls”. Mr. Tucker was trading on margin - i.e, borrowing part of the money to trade from the brokerage firm. As the account declined in value, the brokerage firm insisted that Mr. Tucker put additional funds into the [E-Trade] account so that the margin borrowing did not exceed a certain percentage of the value of the account. If Mr. Tucker did not comply with these “margin calls”, the brokerage firm would sell all the stocks in the account. So, from March 13, 2003 to April 3, 2003, Mr. Tucker put, in aggregate, $21,000 into the E-Trade account. By mid-April, 2003, Mr. Tucker gave up on trading. He had lost $22,645 through his trading between January 10 and April 21. His last account position was liquidated on April 21, 2003. At that point, the E-Trade account had about $22,000 in cash in it and no securities. Between May 2, 2003 and October 27, 2003, Mr. Tucker gradually transferred money from the E-Trade account back to his checking account to pay his rent and other bills. In all, he transferred $18,503 between accounts in that period. At the same time, since the E-Trade account came with a debit card, he charged various personal expenses to thee-Trade [sic] account, approximating $3,500 in all. By October 27, 2003, the account was left with only 79 cents in it. So, Mr. Tucker did not dissipate anywhere near the $697,721 determined by *** [the original OIC examiner] - merely $22,645. And he did this in a good faith attempt to repay his taxes. [Emphasis added.] In her case activity records for May 27, 2005, the settlement officer observed: “POA [i.e., Mr. Tucker's “power of attorney”] admits that at least $22,645.00 in assets was dissipated. This amount must be added to RCP [reasonable collection potential]. I/A [installment agreement] might be more appropriate unless FP [full payment] is possible.” CDP hearing The CDP hearing was held as a telephone conference on May 31, 2005, between the IRS settlement officer and Mr. Tucker and his counsel. During the conference Mr. Tucker's counsel reiterated that Mr. Tucker was no longer pursuing the July 2004 OIC proposing payments totaling $6,000 since circumstances had changed. Furthermore, Mr. Tucker's counsel advised that Mr. Tucker was not asserting that the lien filed against him had to be removed, but rather Mr. Tucker was hoping to find an installment payment arrangement that he could live with. Following the May 31 telephone CDP hearing, numerous letters were exchanged between the settlement officer and Mr. Tucker's counsel: On June 8, 2005, Mr. Tucker submitted a revised page 6 of the Form 433-A to reflect new financial figures for his monthly income and expenses. This revised form demonstrated that Mr. Tucker had excess income over allowable living expenses of $326 per month. In the June 8, 2005, cover letter accompanying the updated financial information, Mr. Tucker's counsel advised the settlement officer that “Mr. Tucker would be prepared to enter into an installment payment arrangement to pay the IRS $326 a month.” In response, by letter dated June 20, 2005, the settlement officer concluded that her “calculations indicate that the most *** [Mr. Tucker] would be able to pay is $316.00” per month. Enclosed with the settlement officer's letter was a Form 433-D, “Installment Agreement”, filled out by the settlement officer reflecting a proposed partial payment installment agreement (PPIA) to pay $316 per month. The settlement officer invited Mr. Tucker to review the terms of the PPIA and, if acceptable, sign and return the agreement by July 6, 2005. On June 23, 2005, Mr. Tucker's counsel faxed the settlement officer a letter indicating that Mr. Tucker would prefer an OIC in lieu of the proposed PPIA, because an OIC would (assuming he adhered to all of the conditions) fix his liability to the IRS, whereas the PPIA could be reexamined every two years for possible increases. 8 [i.e., a PPIA], the Secretary shall review the agreement at least once every 2 years.”); sec. 7122 (authorizing agreement between a taxpayer and the Government that fully settles a tax liability for payment of less than the full amount owed.) But see Internal Revenue Manual (IRM) pt. 5.8. 6 (Sept. 1, 2005) (when accepting an OIC, the Government may obtain a collateral agreement that enables the Government to collect funds in addition to the amount actually secured by the offer). Certain provisions of the IRM have been revised since the time of Mr. Tucker's CDP hearing. We quote the IRM provisions as in effect when the Office of Appeals made the determination that is under review in this case. Mr. Tucker's July 2005 OIC Consistent with the suggestion he had made in his June 23 fax, Mr. Tucker's counsel sent to the settlement officer a revised OIC dated July 20, 2005. At that time Mr. Tucker's liabilities for the five years 1999 through 2003 totaled approximately $37,000 (with accruals). 9 Mr. Tucker proposed to settle his income tax liabilities for those five years by making a total of $36,772 in monthly payments of $317 over 116 months (July 2005 OIC). The offer of $317 per month was intended by Mr. Tucker to be $1 more than the settlement officer had previously determined he could pay per month (and was thus intended to exceed his RCP and thereby warrant acceptance). In a letter dated November 18, 2005, the settlement officer rejected Mr. Tucker's proposed July 2005 OIC. In doing so, the settlement officer stated, “It is usually not in the Government's best interest to accept an offer when there is more than five years remaining on the collection statute.” The notice of determination and the commencement of this case On January 9, 2006, the Office of Appeals issued to Mr. Tucker a “Notice of Determination Concerning CollectionAction(s) under Section 6320 and/or 6330”, in which Appeals determined to uphold the filing of the NFTL as to Mr. Tucker's income tax liabilities for 2000, 2001, and 2002. In response, Mr. Tucker timely filed a petition with this Court on February 13, 2006. Previous Tax Court proceedings, remand to the Office of Appeals, and supplemental notice of determination After filing his petition, Mr. Tucker filed a motion for summary judgment on June 9, 2006. Respondent opposed that motion and filed a motion for remand on July 17, 2006, stating that "[t]he settlement officer erred as a matter of law in rejecting petitioner's offer for the stated reason that amendment of I.R.C. § 6159 to permit partial payment installment agreements renders obsolete deferred payment offers in compromise.” By our order of July 27, 2006, we denied Mr. Tucker's motion for summary judgment and granted respondent's motion to remand the case to the IRS's Office of Appeals “for an officer to exercise discretion in consideration of *** [Mr. Tucker's] offer” and for issuance of a supplemental notice of determination no later than October 16, 2006. The Office of Appeals then assigned a settlement officer (i.e., a different settlement officer from the one who had conducted Mr. Tucker's initial CDP hearing) to conduct a supplemental CDP hearing and to reconsider Mr. Tucker's July 2005 OIC. The supplemental CDP hearing was held as a telephone conference on September 11, 2006, between the settlement officer and Mr. Tucker's counsel. On September 12, 2006, the Office of Appeals issued a “Supplemental Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330”, which determined to reject Mr. Tucker's July 2005 OIC and to uphold the filing of the NFTL as to Mr. Tucker's income tax liabilities for 2000, 2001, and 2002. The attachment to the supplemental notice of determination stated, inter alia: Issues Raised by the Taxpayer In an attachment to Form 12153, *** [counsel] stated that you were unable to full pay the balances due based on sporadic employment and medical concerns and believe that an offer in compromise would be a sensible alternative to the lien. You submitted a long term deferred offer in the amount of $6,000.00 to compromise 1999, 2000, 2001, 2002, and 2003 1040 return balances. You subsequently amended your offer to $36,772.00. You owe $39,790.19 with accruals to 10/16/2006. In response: 1. An offer is not an alternative to the filing of a NFTL. It is an alternative to the issuance of a levy or garnishment. Internal Revenue Manual (IRM) Section 5.8.4.9 requires that a NFTL be considered when reviewing an offer in compromise. This section does not require the filing of a NFTL but they are routinely filed on offers that have been accepted but will not be paid within 24 months in order to protect the government's interest in any assets an individual may own. Your proposal includes payments over the course of 116 months. 2. NFTL may not be released until full payment is received. A taxpayer may qualify for a withdrawal under circumstances laid out in IRC Section 6323(j) if the filing of the lien was premature or otherwise not in accordance with legal and administrative procedures, at the time a taxpayer entered into an installment agreement, he or she was not notified that a lien would be filed, withdrawal of the lien would facilitate collection, and hardship situations (this determination is normally made by the Taxpayer Advocate rather than Appeals). As stated above, all legal or procedural requirements have been met. You have no installment agreement precluding the filing of the NFTL. The documents in the administrative file indicate that you want to pay the debts over 116 months based on your income. You site [sic] no other sources for funding the offer. Therefore, withdrawal of the lien would not facilitate collection by, for example, enabling you to get a loan to full pay the balance or gain business to speed up collection. Furthermore, in the response to the motion for summary judgment, you indicated that you did not request the NFTL be “removed”. 3. Internal Revenue Manual (IRM) Section 5.8.1.4(1) lists four objectives of the offer in compromise program including to effect collection of what can reasonably be collected at the earliest possible time and at the least cost to the government, achieve a resolution that is in the best interest of both the individual taxpayer and the government, provide a taxpayer a fresh start toward future voluntary compliance with all filing and paying requirements, and secure collection of revenue that may not be collected through any other means. *** [The previous settlement officer] offered to negotiate a shorter term offer that would accomplish all these objectives. A long term deferred offer may also accomplish these objectives but it also raises the possibility of a part payment installment agreement (PPIA). Appeals is required to consider all collection alternatives raised but is not required to accept an alternative that it believes will not be in the best interest of the taxpayer AND the government (emphasis added). 4. Appeals still does not believe a long term deferred offer is a better alternative to a PPIA because the Service still has to collect and monitor payments for the next 116 months and unlike a long term deferred offer, the payments on a PPIA are negotiable. IRS Section 6159 requires that PPIAs be reviewed every two years. If there are increases to a taxpayer's income or equity in assets, then the taxpayer is required to increase the amount of the payments, liquidate the equity, and if the income and equity is sufficient enough, full pay the debts. If the taxpayer does not comply, the Service can terminate the PPIA. The bottom line, in the amount of time it takes to monitor your long term deferred offer, the Service can review a PPIA no less than four times, which may in fact result in an amount greater than what is offered and even full payment. 5. There is reason to believe the Service would collect more from a PPIA over the next 116 months based on the documentation in the administrative file and information available from internal sources. You are 45-years old, your diabetes is being controlled by medication and you are not receiving disability for this or any other ailments, and you are gainfully employed. Your employment history also indicates you have the ability to earn great sums of money. For instance, in 2003, you purchased and sold almost $7 million in stocks (you purchased more than $3.4 million in stocks and sold just about the same amount for which you ultimately claimed a loss on your 2003 1040 return). 6. Upon review, *** [this settlement officer] believes that the stock sales are dissipated assets and believes the amounts dissipated should be included in a minimum offer calculation. As such, the minimum offer is actually full payment. These stock transactions in 2003 occurred *** [after] the due dates of the 1999, 2000, and 2001 1040 returns. If you simply sold a little less than you bought, which was your option, you could have already paid the taxes in full. Mr. Tucker's motion to remand and the parties' cross-motions for summary judgment On November 21, 2006, in response to the supplemental notice of determination, Mr. Tucker filed an amendment to petition with this Court in order to challenge the determination in the supplemental notice of determination. In his amendment to petition, Mr. Tucker asserted that the Office of Appeals erred by: (1) determining that Mr. Tucker's offer was not in respondent's best interest; (2) determining that a PPIA was a better alternative to the OIC that Mr. Tucker proposed; (3) determining that there was reason to believe that Mr. Tucker's income or assets would increase in the future, such that the IRS would collect more from a PPIA than from the OIC; (4) determining that Mr. Tucker's stock sales in 2003 constituted “dissipated assets”; (5) raising the dissipated assets issue in the supplemental notice of determination because it went beyond the scope of the remand order, as the issue was not raised in the original notice of determination; (6) determining that “there is no law or policy that requires the Service to accept an offer”; and (7) determining that “the cost it takes to monitor your long term deferred offer for 116 months would be similar to the cost it would take to monitor a part payment installment agreement”. 10 On November 29, 2007, respondent filed a motion for summary judgment asking the Court to sustain the supplemental notice of determination. Mr. Tucker filed a cross-motion for summary judgment on February 27, 2008, and filed a motion for remand on September 2, 2008. Mr. Tucker's motion to remand was previously denied in Tucker v. Commissioner, 135 T.C. 114 (2010), and we now address the parties' cross-motions for summary judgment. Discussion I. Applicable legal principles A. Summary judgment standards Where the pertinent facts are not in dispute, a party may move for summary judgment to expedite the litigation and avoid an unnecessary trial. Summary judgment may be granted where there is no genuine issue as to any material fact and a decision may be rendered as a matter of law. Rule 121(a) and (b). Since we will grant respondent's motion for summary judgment, we will focus on respondent as the movant. The party moving for summary judgment (i.e., respondent) bears the burden of showing that there is no genuine issue as to any material fact, and factual inferences will be drawn in the manner most favorable to the party opposing summary judgment (i.e., Mr. Tucker). Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985). B. Collection review procedure When a taxpayer fails to pay any Federal income tax liability after demand section 6321 imposes a lien in favor of the United States on all the property of the deliquent taxpayer, and section 6323 authorizes the IRS to file notice of that lien. However, the IRS must provide written notice of a tax lien filing to the taxpayer within five business days. After receiving such a notice, the taxpayer may request an administrative hearing before the Office of Appeals. Sec. 6320(a)(3)(B), (b)(1). Administrative review is carried out by way of a hearing before the Office of Appeals pursuant to section 6330(b) and (c); and, if the taxpayer is dissatisfied with the outcome there, he can appeal that determination to the Tax Court under section 6330(d), as Mr. Tucker has done. For the agency-level CDP hearing before the Office of Appeals, the pertinent procedures are set forth in section 6330(c): First, the IRS appeals officer must obtain verification from the Secretary that the requirements of any applicable law or Sec. 6330(c)(1). 11 administrative procedure have been met. The supplemental notice of determination and respondent's motion set forth the IRS's compliance with these requirements; however, in his petition at paragraph 4(m) and (n), Mr. Tucker called into question the accuracy of the filing date of the NFTL reflected on the lien notice: m. On July 13, 2004, respondent prepared a notice of federal tax lien against petitioner for his 2000, 2001, and 2002 taxes. Respondent filed the notice of federal tax lien in Manhattan on August 4, 2004. n. On July 22, 2004, respondent issued to petitioner a “Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320” for the years 2000, 2001, and 2002, erroneously stating that the Notice of Federal Tax Lien had been filed on July 15, 2004. While Mr. Tucker concedes that the IRS issued to him a lien notice for tax years 2000, 2001, and 2002 on July 22, 2004, he disputes whether the NFTL was filed on July 15, 2004 (as reflected in the lien notice), or August 4, 2004 (as reflected on the website of the New York City Department of Finance). We find it unnecessary to resolve this issue, for the following reasons. Under section 6320(a), the Secretary is required to send written notice to the taxpayer liable for the tax “not more than 5 business days after the day of the filing of the notice of lien.” Whether the NFTL was filed on July 15, 2004, or August 4, 2004, the IRS sent notice of the filing to Mr. Tucker on July 22, 2004, which was “not more than 5 business days after” July 15, 2004, or August 4, 2004. There is no rule that the requisite notice cannot be sent before the filing of the NFTL. Therefore, even if the NFTL was filed on August 4, 2004, the lien notice that Mr. Tucker received on July 22, 2004, was still timely under section 6320(a). Mr. Tucker has raised no other verification issues under section 6330(c)(1), and we find no failure of verification. Second, the taxpayer may “raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy,” including challenges to the appropriateness of the collection action and offers of collection alternatives. Sec. 6330(c)(2)(A). Mr. Tucker's principal contention—that the IRS Office of Appeals abused its discretion in not accepting his OIC—pertains to that second set of issues, which we will discuss below. Additionally, the taxpayer may contest the existence and amount of the underlying tax liability if he did not receive a notice of deficiency or otherwise have a prior opportunity to dispute the tax liability. Sec. 6330(c)(2)(B). While Mr. Tucker did not have any prior opportunity to challenge his underlying self-reported liabilities, he did not make such a challenge during his CDP hearing or before this Court. Therefore, we find Mr. Tucker's underlying tax liabilities for 2000, 2001, and 2002 are not at issue. When the Office of Appeals issues its determination, the taxpayer may “appeal such determination to the Tax Court”, pursuant to section 6330(d)(1), as Mr. Tucker has done. In such an appeal (where the underlying liability is not at issue), we review the determination of the Office of Appeals for abuse of discretion. That is, we decide whether the determination was arbitrary, capricious, or without sound basis in fact or law. See Murphy v. Commissioner, 125 T.C. 301, 320 (2005), affd. 469 F.3d 27 [98 AFTR 2d 2006-7853] (1st Cir. 2006); Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176 (2000). Because Mr. Tucker does not dispute the filing of the NFTL as improper, our review of the supplemental notice of determination focuses on whether the Office of Appeals abused its discretion in rejecting Mr. Tucker's OIC. II. Respondent's entitlement to summary judgment A. Scope of remand Mr. Tucker argues that the settlement officer assigned to his supplemental CDP hearing erred in raising the dissipated assets issue in the supplemental notice of determination because it went beyond the scope of the remand order, as the issue was not raised in the original notice of determination. As a result, we must decide whether it was proper for the settlement officer to include dissipated assets in her calculation of Mr. Tucker's reasonable collection potential. We hold that it was proper for her to do so. Section 6330(c)(2)(A)(iii) permits a taxpayer to propose collection alternatives to the filing of a Federal tax lien. Section 4.02(2) of Rev. Proc. 2003-71, 2003-2 C.B. 517, 517, provides that an OIC based on doubt as to collectibility will be treated as an acceptable collection alternative only where the OIC reflects the taxpayer's reasonable collection potential. Where a taxpayer has dissipated assets in disregard of the taxpayer's outstanding Federal income taxes, the dissipated assets may be included in the calculation of the minimum amount that is to be paid under an acceptable OIC. Internal Revenue Manual (IRM) pt. 5.8.5.4(5) (Sept. 1, 2005). Mr. Tucker is not correct in asserting that the dissipation issue was not considered by the original settlement officer and not raised in the original notice of determination. While the original settlement officer did not articulate her reasons for denying Mr. Tucker's OIC (thereby necessitating the remand), her case activity notes clearly reflect that she considered the issue of dissipation: “POA admits that at least $22,645.00 in assets was dissipated. This amount must be added to RCP. I/A might be more appropriate unless FP is possible.” In any event, we do not believe the second settlement officer's review was limited to issues raised in the original notice of determination. By its order of July 27, 2006, this Court granted respondent's motion to remand this case to the IRS's Office of Appeals “for an officer to exercise discretion in consideration of *** [Mr. Tucker's] offer”. We thus ordered the Office of Appeals to consider Mr. Tucker's OIC de novo. To do so, the settlement officer was required pursuant to IRM pt. 5.8.5.4 to consider any dissipated assets in calculating Mr. Tucker's reasonable collection potential. Since the viability of an OIC is contingent on a taxpayer's reasonable collection potential, we find that inherent in the consideration of Mr. Tucker's OIC was the consideration of dissipated assets. As a result, we hold that the issue of dissipated assets was properly considered by the settlement officer during the supplemental CDP hearing, and that consideration of that issue did not go beyond the scope of our remand order. B. Dissipation of assets Mr. Tucker also argues that the Office of Appeals erred in determining that his day trading in 2003 constituted a dissipation of assets. We disagree in part. A dissipated asset is defined as any asset (liquid or not liquid) that has been sold, transferred, or spent on nonpriority items or debts and that is no longer available to pay the tax liability. Samuel v. Commissioner, T.C. Memo. 2007-312 [TC Memo 2007-312]; IRM pt. 5.8.5.4(1). If the OIC examiner determines that assets have been dissipated with a disregard of an outstanding tax liability, then the examiner may include the value of the dissipated asset in the taxpayer's reasonable collection potential calculation. IRM pt. 5.8.5.4 states: (1) During an offer investigation it may be discovered that assets (liquid or non-liquid) have been sold, gifted, transferred, or spent on non-priority items and/or debts and are no longer available to pay the tax liability. This section discusses treatment of the value of these assets when considering an offer in compromise. *** (2) Once it is determined that a specific asset has been dissipated, the investigation should address whether the value of the asset, or a portion of the value, should be included in an acceptable offer amount. *** (5) If the investigation clearly reveals that assets have been dissipated with a disregard of the outstanding tax liability, consider including the value in the reasonable collection potential (RCP) calculation. Where a taxpayer's once-held assets have simply vanished, it makes obvious sense for the tax collector to include the assets in computing the taxpayer's reasonable collection potential, unless the taxpayer can account for them. See Schropp v. Commissioner, T.C. Memo. 2010-71 [TC Memo 2010-71], slip op. at 24-26, affd. without published opinion 106 AFTR 2d 2010-7424, 2011-1 [106 AFTR 2d 2010-7424] USTC par. 50,122 (4th Cir. 2010). However, where a taxpayer can prove that he really did dissipate the assets (say, by lavish living or gambling that he substantiates), the long-gone assets cannot be said to increase his literal collection potential. However, in that circumstance the IRM nonetheless instructs the Office of Appeals to “consider” including the assets in RCP. The evident reason for this rule is to deter delinquent taxpayers from wasting money that they owe and should pay as taxes. Conscientious taxpayers would object—and the system would suffer—if a noncompliant taxpayer with overdue taxes and with money in hand could spend his money on “non-priority items” and nonetheless effectively obtain forgiveness of his liability simply by proving in the collection context that he really did reduce his collection potential by wasting the assets. Removing dissipated assets from “reasonable collection potential” could create perverse incentives, and the tax collector must have discretion to avoid that problem. Mr. Tucker admittedly deposited $23,700 into an E-Trade account in January 2003 and made additional deposits totaling $21,000 between March 13 and April 3, 2003. At the time Mr. Tucker admittedly deposited funds into his E-Trade account (i.e., from January to April 3, 2003), he had not yet filed his income tax returns for tax years 1999 through 2001, which were then due. Nonetheless, because the due date for those returns had passed, his tax liabilities had accrued and he had outstanding tax liabilities (not including any interest or additions to tax) for tax years 1999, 2000, and 2001 totaling $14,945 at the time of his deposits. 12 Personal income taxes are due on the date the return is required to be filed. Sec. 6151(a); Holywell Corp. v. Smith, 503 U.S. 47, 58 [69 AFTR 2d 92-682] (1992); Pan Am. Van Lines v. United States, 607 F.2d 1299, 1301 [45 AFTR 2d 80-346] (9th Cir. 1979). Mr. Tucker's tax liabilities for tax years 2002 and 2003 had not yet accrued. Mr. Tucker was aware of his unpaid tax obligations for 1999 through 2001 when he transferred the $44,700 into his E- Trade account. Despite having known tax obligations, Mr. Tucker still transferred the money and for nearly four months engaged in the highly speculative and volatile activity of day trading. Mr. Tucker maintains that he did so in an effort to make enough money to pay off his delinquent taxes and other creditors, as well as pay his tax liability for 2002 that would be coming due. Even if this is true, Mr. Tucker's motives do not change the character of his day trading activity. Black's Law Dictionary (8th ed. 2004) defines “day trading” as “The act or practice of buying and selling stock shares or other securities on the same day, esp. over the Internet, usu. for the purpose of making a quick profit on the difference between the buying price and the selling price.” Mr. Tucker had never owned stocks before and had no experience in day trading. To further complicate matters, Mr. Tucker was trading on margin— i.e., was borrowing part of the money to trade from a brokerage firm—and was making high-volume trades (e.g., trading as much as $697,721 in one day). On April 21, 2003, Mr. Tucker stopped trading. By that time he had lost $22,645 of his initial deposits, leaving approximately $22,000 in the E-Trade account. Mr. Tucker maintains that he used this remaining $22,000 to provide for basic living expenses from May 2 through October 27, 2003. Under Rule 121 we view the facts in the light most favorable to Mr. Tucker, and we assume that the $22,000 was, in fact, used for necessary living expenses. 13 Pursuant to IRS administrative guidelines, if this $22,000 was used for necessary living expenses, it will not be considered a dissipation. IRM pt. 5.8.5.4(4) (”When the taxpayer can show that assets have been dissipated to provide for necessary living expenses, these amounts should not be included in the reasonable collection potential (RCP) calculation”). We therefore consider as potential dissipation only the other $22,645, which Mr. Tucker lost. The losses that Mr. Tucker sustained were not due to an unforeseeable event but rather were commonplace (especially for a neophyte) in such a highly volatile activity. Mr. Tucker knew he owed outstanding taxes; and he had the cash in hand that would have paid in full the taxes and accruals he owed as of early 2003 (i.e., for tax years 1999, 2000 and 2001); and yet he chose instead to devote that money to a risky investment. Mr. Tucker's foray into day trading was purely speculative, and his already slim chances of success were undermined by his inexperience. In short, Mr. Tucker's circumstances were of his own making. Therefore, we cannot criticize the Office of Appeals' conclusion that Mr. Tucker's losses associated with his day trading were a dissipation of assets that should be considered for inclusion in RCP as contemplated by IRM pt. 5.8.5.4. In the supplemental notice of determination, the settlement officer concluded that Mr. Tucker had dissipated $44,700 in assets, measured by his deposits into the E-Trade account. For purposes of summary judgment, we find that that conclusion was excessive. The mere act of depositing the money into the E-Trade account did not rise to the level of dissipation, but the day trading and the losing of the money in the account did. Because at the time in April 2003 that Mr. Tucker lost a total of $22,645 from his day trading activities, he had outstanding Federal tax liabilities of at least $14,975, 14 we hold for purposes of summary judgment that Mr. Tucker dissipated assets of $14,975. The settlement officer determined that not just $14,975 but rather all $44,700 of the deposits had been dissipated. For purposes of summary judgment, we assume that conclusion was erroneous as to amount, but we find that error to be harmless for reasons explained below. See infra note 16. As a result, we conclude that the settlement officer did not abuse her discretion in determining that Mr. Tucker had dissipated assets as the result of his day trading in 2003. C. Rejection of Mr. Tucker's OIC The Office of Appeals rejected Mr. Tucker's OIC because, inter alia, it determined that he could fully pay his tax liabilities. At the time of the supplemental notice of determination, Mr. Tucker owed $39,790.19 (with accruals through October 16, 2006) in unpaid Federal income taxes for the years 1999 through 2003. The settlement officer assigned to Mr. Tucker's supplemental CDP hearing was tasked with considering Mr. Tucker's proposed OIC of $36,772 (to be paid at a rate of $317 per month over 116 months) based on doubt as to collectibility. 1. Mr. Tucker's dissipation of assets justified the rejection of his OIC. Rev. Proc. 2003-71, sec. 4.02(2), 2003-2 C.B. 517, 517, provides that an OIC based on doubt as to collectibility will be treated as an acceptable collection alternative only where the OIC reflects the taxpayer's reasonable collection potential. A taxpayer's reasonable collection potential is determined, in part, using published guidelines that establish national and local allowances for necessary living expenses. Income and assets (possibly including dissipated assets in accordance with IRM pt. 5.8.5.4) in excess of those needed for necessary living expenses are treated as available to satisfy Federal income tax liabilities. See IRM pt. 5.15.1.2(1) and (2) (May 1, 2004); IRM exs. 5.15.1-3, 5.15.1-8, 5.15.1-9 (Jan. 1, 2005). The parties agree that Mr. Tucker's disposable income (i.e., monthly income over allowable monthly expenses) was $316 per month, and that there were 116 months remaining before his collection period expiration date. See sec. 6502. “Generally, the amount to be collected from future income is calculated by taking the projected gross monthly income less allowable expenses and multiplying the difference times the number of months remaining on the statutory period for collection.” IRM pt. 5.8.5.5.5(1) (Sept. 1, 2005). As a result, Mr. Tucker's future income subject to collection would be $316 x 116 months, or $36,656 15 —an amount slightly less than the total of the payments he proposed in his OIC. However, as we determined above, the value of assets that Mr. Tucker dissipated through his day trading activities was $14,945. Under IRS guidelines, Mr. Tucker's reasonable collection potential would therefore be $51,601—i.e., the sum of his future income stream ($36,656) plus the value of any dissipated assets (at least $14,945). Given that Mr. Tucker's reasonable collection potential thus exceeded his outstanding tax liabilities, the settlement officer did not err in determining Mr. Tucker could fully pay his Federal income tax liabilities. 16 When an Appeals officer has followed IRS administrative guidelines to ascertain a taxpayer's reasonable collection potential and has rejected the taxpayer's OIC on that ground, we generally have found no abuse of discretion. See McClanahan v. Commissioner, T.C. Memo. 2008-161 [TC Memo 2008-161]. 2. Even apart from Mr. Tucker's dissipation of assets, the Office of Appeals did not abuse its discretion in rejecting his OIC. Assuming arguendo that we should ignore dissipated assets altogether and should conclude that Mr. Tucker's reasonable collection potential was less than full payment, we still hold that the Office of Appeals did not abuse its discretion in rejecting Mr. Tucker's OIC and insisting instead on a PPIA, for the following reasons. Section 7122(a) authorizes compromise of a taxpayer's Federal income tax liability. “The decision to entertain, accept or reject an offer in compromise is squarely within the discretion of the appeals officer and the IRS in general.” Gregg v. Commissioner, T.C. Memo. 2009-19 [TC Memo 2009-19] (quoting Kindred v. Commissioner, 454 F.3d 688, 696 [98 AFTR 2d 2006-5472] (7th Cir. 2006)). In reviewing this determination, we do not decide whether in our opinion Mr. Tucker's OIC should have been accepted. See Woodral v. Commissioner, 112 T.C. 19, 23 (1999); Keller v. Commissioner, T.C. Memo. 2006-166 [TC Memo 2006-166], affd. in part 568 F.3d 710 [103 AFTR 2d 2009-2470] (9th Cir. 2009). Instead, we review the determination for abuse of discretion. As Mr. Tucker's representative acknowledged, an OIC permanently limits the Government to collecting only according to its terms, whereas a PPIA permits the Government to review the taxpayer's situation every two years and increase its collections if circumstances warrant. See supra note 8. In the supplemental notice of determination, the settlement officer articulated several reasons for her determination, largely on the basis of this distinction: (1) Mr. Tucker's offer was not in the best interest of the Government; (2) a PPIA was a better alternative to the OIC that Mr. Tucker proposed; (3) there is reason to believe that Mr. Tucker's income or assets would increase in the future, such that the IRS would collect more from a PPIA than from the OIC; (4) “there is no law or policy that requires the Service to accept an offer”; and (5) “the cost it takes to monitor *** [Mr. Tucker's] long term deferred offer for 116 months would be similar to the cost it would take to monitor a part payment installment agreement”. The decision whether to accept Mr. Tucker's OIC rested squarely within the discretion of the settlement officer, and we find there was a reasonable basis for the settlement officer's decision; it was not arbitrary, capricious, or without sound basis in fact or law. As a result, we cannot conclude that the Office of Appeals abused its discretion in rejecting Mr. Tucker's OIC and sustaining the filing of the NFTL, whether or not dissipated assets were considered by the settlement officer or included in his RCP. Conclusion On the basis of the foregoing, we conclude that the Office of Appeals did not abuse its discretion, and we hold that respondent is entitled to the entry of a decision sustaining the determination as a matter of law. To reflect the foregoing, An appropriate order and decision will be entered. ________________________________________ 1 Unless otherwise indicated, all section references are to the Internal Revenue Code (”Code”, 26 U.S.C.) and all Rule references are to the Tax Court Rules of Practice and Procedure. ________________________________________ 2 The IRS's notice of determination at issue referred to liabilities for only three years—2000, 2001, and 2002—and this Court lacks jurisdiction to review collection of the liabilities for the years not included in the notices of determination. See Sullivan v. Commissioner, T.C. Memo. 2009-4 [TC Memo 2009-4]. However, as is explained below, the OIC that Mr. Tucker submitted in his CDP hearing addressed five years—1999 through 2003. In determining whether the rejection of the OIC and the collection of liabilities for the years included in the notices of determination is appropriate, this Court is authorized (as the settlement officer was required) to consider “any relevant issue ________________________________________ 3 In our previous Opinion in this case, Tucker v. Commissioner, 135 T.C. 114, 117 (2010), we mistakenly stated that Mr. Tucker untimely filed all of these returns in June 2003. The transcripts of Mr. Tucker's accounts show that, while these returns were not processed by the IRS until June 2003, they were received by the IRS on April 15, 2003. These filings were therefore timely as to 2002 but untimely as to 2000 and 2001. ________________________________________ 4 The record reflects that Mr. Tucker's outstanding liabilities with accruals through August 16, 2004, were $35,591.26, so we estimate his total outstanding liabilities ________________________________________ 5 This August 2004 determination that Mr. Tucker could fully pay his income tax liabilities—a determination not important to the outcome of this case—was made by comparing Mr. Tucker's then-current liabilities (i.e., $35,591.26 with accruals through August 16, 2004) to his total ability to pay (which was reckoned to be $609,680.73). Included in the IRS's calculation of Mr. Tucker's total ability to pay was $558,176.80 in dissipated assets from stock transactions, representing $697,721 discounted by 20 percent for quick sale purposes. The $697,721 represents the largest amount of stock sales Mr. Tucker had, in the aggregate, on any one day (i.e., February 3, 2003). We assume that the examiner concluded that if he had sales in that amount on that day, then he must have had cash in hand in that amount on that day; but if the examiner so concluded, she evidently failed to offset the proceeds by corresponding liabilities arising from margin purchases. It seems unlikely that Mr. Tucker had $697,721 of proceeds from his day trading in hand at any one time. In any event, before any determination was issued in this case, the OIC examiner abandoned the position that Mr. Tucker had dissipated $558,176.80 in stocks. As is set out below, the Appeals Office subsequently determined that Mr. Tucker had dissipated assets in a much smaller amount—$22,645. ________________________________________ 8 See sec. 6159(d) (”In the case of an agreement entered into by the Secretary *** for partial collection of a tax liability ________________________________________ 6 ________________________________________ 9 The record reflects that Mr. Tucker's total outstanding tax liability with accruals through August 16, 2004, was $35,591.26, and his total liability with accruals through October 16, 2006, was $39,790.19. We therefore estimate his total outstanding liability as of July 20, 2005 (between those two dates), to be approximately $37,000. ________________________________________ 10 Mr. Tucker also contended that the Office of Appeals failed to afford him his statutory right to a hearing, in that he was denied a hearing before an appeals officer appointed pursuant to the Appointments Clause in Article II of the Constitution. We rejected this contention in Tucker v. Commissioner, 135 T.C. 114 (2010). ________________________________________ 11 In the case of the lien filed against Mr. Tucker, the basic requirements, see sec. 6320, for which the appeals officer was to obtain verification are: a timely assessment of the liability, secs. 6201(a)(1), 6501(a); notice and demand for payment of the liability, sec. 6303; and notice of the filing of the lien and of the taxpayer's right to a CDP hearing, sec. 6320(a) and (b). ________________________________________ 12 The liabilities eventually reported on his returns but not prepaid by withholding or otherwise were $3,356 for 1999, $8,106 for 2000, and $3,483 for 2001, totaling $14,945. See supra p. 5. ________________________________________ 13 This assumption may be unduly generous, since Mr. Tucker admits that some portion of this $22,000 may not have been used for necessary living expenses—e.g., $824.64 on May 19, 2003, for an airline ticket for a personal trip to Phoenix, Arizona; $274.84 on June 2, 2003, for the hotel stay associated with this personal trip; $535 on October 24, 2003, for a bartending course; and $236 on August 12, 2003, for a personal cruise on the Hudson River. ________________________________________ 14 The record does not provide a basis for the Court to reasonably estimate Mr. Tucker's unpaid tax liabilities with accruals as of April 2003. As a result, for summary judgment purposes, we assume Mr. Tucker's unpaid tax liabilities to be the amounts reported as due when he filed his delinquent returns for tax years 1999, 2000, and 2001. Furthermore, although Mr. Tucker's tax liability for tax year 2002 accrued on April 15, 2003—the due date of the return—we cannot tell on the record before us whether the losses associated with the E-Trade account occurred before or after April 15, 2003. As a result, for summary judgment purposes we ignore the tax liability for 2002 in determining Mr. Tucker's outstanding tax liabilities at the time he dissipated assets. ________________________________________ 15 In calculating a taxpayer's future income stream for purposes of evaluating a offer, the IRM apparently does not direct settlement officers to discount the monthly income stream to a present value. ________________________________________ 16 We find the settlement officer's inclusion of $44,700 of dissipated assets in Mr. Tucker's reasonable collection potential (as opposed to the $14,945 determined above) to be a harmless error because—as is shown above—even with inclusion of only the lower amount, Mr. Tucker could still fully pay his liabilities. www.irstaxattorney.com 888-712-7690

Wednesday, March 30, 2011

IRS further delays health insurance coverage information reporting for small employers Notice 2011-28, 2011-16 IRB ; IR 2011-31 A new Notice provides interim guidance significantly relaxing the Patient Protection and Affordable Care Act's (PPACA's) information reporting requirement for employer-sponsored health coverage. Under the new guidance, reporting continues to be voluntary for all employers in 2011, and it will be voluntary for small employers until further guidance is issued, but at least through 2012. The Notice also provides guidance on the nuts and bolts of the information reporting rule for employers who will be subject to it, and those employers that choose to voluntarily comply with it. Background. For tax years beginning on or after Jan. 1, 2011, Code Sec. 6051(a)(14) , which was added by PPACA §9002, generally provides that the aggregate cost of the applicable employer-sponsored health insurance coverage (as defined in Code Sec. 4980I(d)(1) ) must be reported on Form W-2. For this purpose, the aggregate cost is to be determined under rules similar to the rules of Code Sec. 4980B(f)(4) , referring to the definition of the “applicable premium” under the rules providing for COBRA continuation coverage. Code Sec. 6041(a)(14) does not, however, apply to reporting the amount contributed to an Archer MSA or the health savings account of an employee or the employee's spouse, any salary reduction contributions to a flexible spending agreement, or certain “excepted benefits” described in Code Sec. 9832(c)(1) including worker's compensation and disability income insurance. In Notice 2010-69, 2010-44 IRB 576 , IRS made this new reporting requirement optional for all employers for the 2011 Forms W-2 (which would generally be given to employees in January 2012). (See Weekly Alert ¶ 19 10/14/2010 ) Interim guidance. Notice 2011-28 provides further relief for small employers (i.e., those filing fewer than 250 Forms W-2) by making Code Sec. 6051(a)(14)reporting optional for health coverage provided through at least 2012, or until further guidance is issued by IRS. In other words, small employers won't have to report the cost of health care coverage on any forms required to be furnished to employees before January 2014, at the earliest. Notice 2011-28 also provides additional guidance, in question and answer (Q&A) format, to employers who are subject to the information reporting requirement for the 2012 Forms W-2, and to employers that choose to voluntarily comply with it for either 2011 or 2012. The Q&As are generally categorized as follows: general requirements; methods for reporting the cost of coverage on Form W-2; definitions of terms relating to the cost of coverage required to be reported; the types of coverage for which the cost is required to included on Form W-2; calculation methods used to determine the cost of coverage; and issues that an employer may have to address in determining the cost of coverage. These subjects are briefly addressed below: ... In general. IRS emphasizes that Code Sec. 6051(a)(14) 's new reporting requirement is purely information and has no effect on whether any particular coverage is excludible under Code Sec. 106 or otherwise. Rather, the purpose of the reporting is to “provide useful and comparable consumer information to employees on the cost of their health care coverage.” (Q&A-2) ... Employers subject to the reporting requirement. Except as otherwise provided, all employers that provide applicable employer-sponsored coverage during a calendar year are subject to the reporting requirement, beginning with the 2012 Forms W-2. This includes governmental entities and religious organizations, but not Federally recognized Indian tribal governments. However, employers that file 250 or fewer Forms W-2 for the preceding year are exempted from the reporting requirement for 2012 Forms W-2 (and possibly later, depending on when IRS issues further guidance). (Q&A-3) ... Method of reporting on the Form W-2. The aggregate reportable cost is reported in box 12 of Form W-2, using code “DD.” (Q&A-5) An employer is not required to issue a Form W-2 with the aggregate reportable cost to an individual for whom the employer is not otherwise required to file a Form W-2 (Q&A-9), nor is the employer required to report the total aggregate reportable costs attributable to its employees on Form W-3. (Q&A-10) IRS also provided guidance relating to employees who have coverage provided by the employer for a period during the calendar year after the employee terminated employment (Q&A-6); individuals with multiple employers during the year, or with multiple employers who are related and have a common paymaster (Q&A-7); and individuals who transfer to a new employer that qualifies as a successor employer under Code Sec. 3121(a)(1) (Q&A-8). ... Aggregate cost of applicable employer-sponsored coverage. The “aggregate cost” of applicable employer-sponsored coverage is the total cost of coverage under all “applicable employer-sponsored coverage” provided to an employee (Q&A-11), which is defined as coverage under any “group health plan” made available to the employee that is excludable under Code Sec. 106 . (Q&A-12) A “group health plan” refers to a plan of, or contributed to by, an employer or employee organization to provide health care to current and former employees, others currently or formerly associated with the employer in a business relationship, or their families. (Q&A-13) The “aggregate reportable cost” includes both the portions paid by the employer and the employee, regardless of whether the employee's contributions were made on a pre-tax or after-tax basis (Q&A-14), and it also includes the cost of coverage includible in the employee's gross income. (Q&A-15) ... Cost of coverage required to be included in the aggregate reportable cost. Except as otherwise provided, the cost of coverage under all applicable employer-sponsored coverage is included in the aggregate reportable cost, except contributions to an Archer MSA or Health Savings Account, and any salary reduction election to a flexible spending arrangement. (Q&A-16) The aggregate reportable cost does not include: the amount that an employer contributes to a multiemployer plan (Q&A-17); the cost of coverage under a Health Reimbursement Arrangement (Q&A-18); the cost of coverage under a dental or vision plan that isn't integrated into a group health plan (Q&A-20); the cost of coverage provided under a self-insured group health plan that isn't subject to any federal contribution coverage requirements (Q&A-21); or the cost of coverage provided by the federal government, the government of any State or political subdivision thereof, or any agency or instrumentality of any such government, under a plan maintained primarily for members of the military and their families (Q&A-22). If an employer offers a health flexible spending arrangement (FSA) through a Code Sec. 125 cafeteria plan, the amount of the health FSA required to be included is reduced (not below zero) by the employee's salary reduction contribution. (Q&A-19) ... Methods of calculating the cost of coverage. An employer may calculate the reportable cost under a plan using: the COBRA applicable premium method (reportable cost for a period equals the COBRA applicable premium for that coverage during that period) (Q&A-25); the premium charged method (the premium charged by the insurer for an employee's coverage during the applicable period) (Q&A-26); or the modified COBRA premium method (an employer that subsidizes the cost of COBRA determines the reportable cost based on a good faith estimate of the COBRA applicable premium for that period) (Q&A-27). An employer doesn't have to use the same method for every plan, but must use the same method for every employee receiving coverage under a particular plan. (Q&A-24) ... Other issues relating to calculating the cost of coverage. IRS also provides guidance on: how an employer that charges a composite rate to an employee calculates its reportable cost (Q&A-28); how the reportable cost must account for increases or decreases to the cost during the year (Q&A-29); and how the reportable cost under a plan is calculated if an employee commences, changes or terminates coverage during the year (Q&A-30). IRS also clarified that the reportable cost under a plan must be determined on a calendar year basis. Notice 2011-28, 2011-16 IRB, 03/29/2011, IRC Sec(s). ________________________________________ Headnote: Reference(s): Full Text: I. Purpose This notice provides interim guidance on informational reporting to employees of the cost of their employer-sponsored group health plan coverage. This informational reporting is required under § 6051(a)(14) of the Code, enacted as part of the Affordable Care Act to provide useful and comparable consumer information to employees on the cost of their health care coverage. As more fully described below — • This reporting to employees is for their information only, to inform them of the cost of their health care coverage, and does not cause excludable employer-provided health care coverage to become taxable. Nothing in § 6051(a)(14), this notice, or the additional guidance that is contemplated under § 6051(a)(14), causes or will cause otherwise excludable employer-provided health care coverage to become taxable. • This notice provides interim guidance that generally applies beginning with 2012 Forms W-2 (that is, the forms required for the calendar year 2012 that employers generally are required to furnish to employees in January 2013 and then file with the Social Security Administration (SSA)). Employers are not required to report the cost of health coverage on any forms required to be furnished to employees prior to January 2013. See Notice 2010-69. However, any employers that choose to report earlier (on the 2011 Forms W-2 generally furnished to employees in January 2012) may look to this notice for guidance regarding that voluntary earlier reporting. • This notice also provides additional transition relief for certain employers and with respect to certain types of employer-sponsored coverage. This transition relief will continue at least through the 2012 Forms W-2 which are required to be furnished to employees in January 2013. In other words, those employers to which the additional transition relief applies (which includes smaller employers that are required to file fewer than 250 2011 Forms W-2) will not be required to report the cost of health coverage on any forms required to be furnished to employees prior to January 2014. This transition relief will continue until the issuance of further guidance. • Comments are invited on this interim guidance. Section 6051(a)(14) was added to the Code by § 9002 of the Patient Protection and Affordable Care Act of 2010 (the Affordable Care Act), Public Law 111-148, enacted March 23, 2010, and provides that the reporting be made on Form W-2, Wage and Tax Statement. Notice 2010-69, 2010-44 I.R.B. 567, provides that this reporting will not be mandatory for 2011 Forms W-2 (that is, the forms required for the calendar year 2011 that employers are generally required to give employees in January 2012 and then file with the Social Security Administration). As explained above, this notice provides interim guidance that generally is applicable beginning with 2012 Forms W-2. In addition, employers may rely on the guidance provided in this notice if they voluntarily choose to report the cost of coverage on 2011 Forms W-2, even though this reporting is not required for 2011. This interim guidance is applicable until further guidance is issued. To the extent that future guidance applies the reporting requirement to additional employers or categories of employers or additional types of coverage that guidance will apply prospectively only and will not apply to any calendar year beginning within six months of the date the guidance is issued. Also as explained above, this notice provides transition relief for certain employers and with respect to certain types of employer-sponsored coverage. See section IV of this notice. This transition relief will be extended at least through the 2012 Forms W-2 and the availability of this transition relief through the 2012 Forms W-2 will not be affected by the issuance of any further guidance. Thus, reporting by these employers and with respect to these types of coverage will not be required for calendar year 2012 (that is, on the Forms W-2 that employers generally are required to furnish to employees in January 2013 and then file with the SSA). For example, as provided in Q&A-3 of this notice, employers that are required to file fewer than 250 2011 Forms W-2 will not be subject to the reporting requirement for 2012 Forms W-2. The interim guidance is set forth in section III of this notice. Q&A-1 and Q&A-2 discuss the general requirements. Q&A-3 identifies the employers subject to the reporting requirements. Q&A-4 through Q&A-10 provide the methods for reporting the cost of the coverage on the Form W-2. Q&A-11 through Q&A-15 define certain terms related to the cost of coverage required to be reported on the Form W-2. Q&A-16 through Q&A-23 set forth the types of coverage the cost of which is required to be included in the amount reported on the Form W-2. Q&A-24 through Q&A-27 discuss several calculation methods that may be used to determine the cost of the coverage. Q&A-28 through Q&A-31 address a number of other issues employers may encounter in determining the cost of the coverage. Section IV of this notice contains transition relief for certain employers and with respect to certain types of employer-sponsored coverage. Section V of this notice contains a request for comments on all aspects of this guidance, including any areas to be addressed in further guidance or future regulations that will provide the final rules under § 6051(a)(14). II. Background Section 6051(a) provides generally that an employer must provide a written statement to each employee showing the remuneration paid by such person to such employee during the calendar year, on or before January 31 of the succeeding year (or, if the employee terminates employment during the year, within 30 days after the date of receipt of a written request from such employee submitted before January 2). Form W-2, Wage and Tax Statement, is the form used to provide an employee this information. Section 6051(a)(14) provides generally that the aggregate cost of applicable employer-sponsored coverage must be included in the information reported on Form W-2, effective for taxable years beginning on or after January 1, 2011. Section 6051(a)(14), provides that, for this purpose, the aggregate cost is to be determined under rules similar to the rules of § 4980B(f)(4), referring to the definition of the “ applicable premium” for purposes of COBRA continuation coverage. Section 6051(a)(14) does not apply to reporting the amount contributed to any Archer MSA (as defined in § 220(d)) or to any health savings account (as defined in § 223(d)) of an employee or an employee's spouse. See § 6051(a)(11) and (a)(12). Section 6051(a)(14) also does not apply to the amount of any salary reduction contributions to a flexible spending arrangement (within the meaning of § § 106(c)(2) and 125). Section 6051(a)(14) provides that the aggregate cost of applicable employer-sponsored coverage (the amount required to be reported on Form W-2) has the same meaning as in § 4980I(d)(1). Section 4980I(d)(1)(A) provides that the term “ applicable employer-sponsored coverage” means, with respect to any employee, coverage under any group health plan made available to the employee by an employer which is excludable from the employee's gross income under § 106, or would be so excludable if it were employer-provided coverage (within the meaning of § 106). Section 4980I(f)(4) provides that, for purposes of § 4980I(d)(1) the term “ group health plan” has the same meaning as under § 5000(b)(1). Under section 4980I(d)(1)(B), the term “ applicable employer-sponsored coverage” does not include (i) any coverage (whether through insurance or otherwise) described in § 9832(c)(1) (other than coverage for on-site medical clinics described in subparagraph (G) thereof) or for long-term care, or (ii) any coverage under a separate policy, certificate, or contract of insurance which provides benefits substantially all of which are for treatment of the mouth (including any organ or structure within the mouth) or for treatment of the eye, or (iii) any coverage described in § 9832(c)(3) the payment for which is not excludable from gross income and for which a deduction under § 162(l) is not allowable. The types of coverage described in § 9832(c)(1) (providing that certain “ excepted benefits” are not subject to the requirements of chapter 100 of the Code) that are not subject to this reporting requirement are as follows: • Coverage only for accident, or disability income insurance, or any combination thereof; • Coverage issued as a supplement to liability insurance; • Liability insurance, including general liability insurance and automobile liability insurance; • Workers' compensation or similar insurance; • Automobile medical payment insurance; • Credit-only insurance; • Other similar insurance coverage, specified in regulations, under which benefits for medical care are secondary or incidental to other insurance benefits. The types of coverage described in § 9832(c)(3) include the following, provided that such coverage is offered as independent, noncoordinated benefits: (A) coverage only for a specified disease or illness; and (B) hospital indemnity or other fixed indemnity insurance. Section 4980I(d)(1)(C) provides that coverage shall be treated as applicable employer-sponsored coverage without regard to whether the employer or employee pays for the coverage. Section 4980I(d)(1)(E) provides that applicable employer-sponsored coverage shall include coverage under any group health plan established and maintained primarily for its civilian employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any such government. Section 4980B(f)(4)(A) provides that the term “ applicable premium” means, with respect to any period of continuation coverage of qualified beneficiaries, the cost to the plan for such period of the coverage for similarly situated beneficiaries with respect to whom a qualifying event has not occurred (without regard to whether such cost is paid by the employer or employee). Section 4980B(f)(4)(B) provides a special rule for self-insured plans, generally requiring that such plans calculate the applicable premium through one of two methods – the actuarial method or the past cost method. Section 4980B(f)(4)(C) provides that the determination of any applicable premium shall be made for a period of 12 months and shall be made before the beginning of such period. Section 54.4980B-1, Q&A-2 of the Miscellaneous Excise Tax Regulations, provides that, for purposes of § 4980B, for topics relating to the COBRA continuation coverage requirements of § 4980B that are not addressed in § § 54.4980B-1 through 54.4980B-10 (such as methods for calculating the applicable premium), plans and employers must operate in good faith compliance with a reasonable interpretation of the statutory requirements in § 4980B. III. Interim Guidance This interim guidance generally is applicable beginning with 2012 Forms W-2 (that is, the forms required for the calendar year 2012 that employers generally are required to furnish to employees in January 2013 and then file with the SSA). In addition, employers may rely on the guidance provided in this notice if they voluntarily choose to report the cost of coverage on 2011 Forms W-2, even though such reporting is not required for 2011. This interim guidance is applicable until further guidance is issued. To the extent that future guidance applies the reporting requirement to additional employers or categories of employers, additional types of coverage, or otherwise applies the reporting requirement more expansively, that guidance will apply prospectively only and will not apply to any calendar year beginning within six months of the date the guidance is issued. See also Section IV of this notice for certain transition relief that will be extended at least through the 2012 Forms W-2. Except as otherwise specified, the interim guidance in this section applies solely for purposes of § 6051(a)(14) and no inference should be drawn concerning any other provision of the Code. In General (Q&A-1 and Q&A-2) Q-1: What does § 6051(a)(14) require? A-1: Section 6051(a)(14) generally requires the aggregate cost of applicable employer-sponsored coverage to be reported on Form W-2. Q-2: Does the new requirement under § 6051(a)(14) to report the aggregate cost of employer-sponsored coverage on Form W-2, or compliance with this requirement, have any impact on whether such coverage is taxable? A-2: No. The new requirement is informational only. The provisions of § 6051(a)(14) do not affect whether any particular coverage is excludable from gross income under § 106 or any other Code provision, and the reporting of any amount on Form W-2 in compliance with the requirements of § 6051(a)(14) will not affect the amount includable in income or the amount reported in any other box on Form W-2. The purpose of the reporting is to provide useful and comparable consumer information to employees on the cost of their health care coverage. Employers Subject to the Reporting Requirement (Q&A-3) Q-3: What employers are subject to the reporting requirement under § 6051(a)(14)? A-3: Except as provided in this Q&A-3, all employers that provide applicable employer-sponsored coverage (see Q&A-12) during a calendar year are subject to the reporting requirement under § 6051(a)(14). This includes federal, state and local government entities, churches and other religious organizations, and employers that are not subject to the COBRA continuation coverage requirements under § 4980B, to the extent such employers provide applicable employer-sponsored coverage under a group health plan, but does not include Federally recognized Indian tribal governments. ( Notice 2010-69 provides that reporting by these employers is not mandatory until the 2012 Forms W-2 (that is, the forms required for the calendar year 2012 that employers generally are required to furnish to employees in January 2013 and then file with the Social Security Administration (SSA))). However, in the case of the 2012 Forms W-2 and until the issuance of further guidance, an employer is not subject to the reporting requirement for any calendar year if the employer was required to file fewer than 250 Forms W-2 for the preceding calendar year. (This rule is based upon the rule in § 6011(e) that exempts employers from filing returns electronically if they file fewer than 250 returns.) Therefore, if an employer files fewer than 250 2011 Forms W-2 (meaning the Forms W-2 for the 2011 calendar year that employers generally furnish to employees In January 2012 and then file with SSA), the employer would not be subject to the reporting requirement for Forms W-2 for the 2012 calendar year (meaning the Forms W-2 for the 2012 calendar year that employers generally furnish to employees in January, 2013 and then file with SSA). See also Q&A-21 for an exception to the reporting requirement for coverage under a self-insured plan that is not subject to any federal continuation coverage requirements, and see also Q&A-22 for an exception from the reporting requirement for plans maintained primarily for members of the military, or primarily for members of the military and their families. Method of Reporting on the Form W-2 (Q&A-4 through Q&A-10) Q-4: Is the reporting of the aggregate cost of applicable employer-sponsored coverage required for Forms W-2 issued for the 2010 or 2011 calendar years? A-4: No. Section 6051(a)(14) does not apply to Forms W-2 for calendar years prior to 2011 and, accordingly, reporting of the aggregate cost of applicable employer-sponsored coverage is not required for Forms W-2 issued for the 2010 calendar year. Moreover, Notice 2010-69 provides that reporting will not be mandatory for the 2011 calendar year and, accordingly, an employer will not be treated as failing to meet the requirements of § 6051 for 2011, and will not be subject to any penalties for failure to meet such requirements, merely because it does not report the aggregate cost of applicable employer-sponsored coverage on Forms W-2 for 2011. Q-5: How is the aggregate reportable cost reported on Form W-2? A-5: The aggregate reportable cost is reported on Form W-2 in box 12, using code DD. Q-6: What rules apply in the case of coverage provided by the employer for a period during a calendar year after an employee has terminated employment? A-6: An employer may apply any reasonable method of reporting the cost of coverage provided under a group health plan for an employee who terminated employment during the calendar year, provided that the method is used consistently for all employees receiving coverage under that plan who terminate employment during the plan year. However, regardless of the method of reporting used by the employer for other terminated employees, an employer is not required to report any amount in box 12, Code DD for an employee who, pursuant to § 31.6051-1(d)(1)(i), has requested before the end of the calendar year during which the employee terminated employment to receive a Form W-2. Example 1. Employee is an employee of Employer on January 1, and continues in employment through April 25. During that entire period and through April 30, Employee had individual coverage for himself under a group health plan with a cost of coverage of $350 per month. Employee elects continuation coverage for the six months following termination of employment, covering the period May 1 through October 31, for which the Employee pays $350 per month. Employer reports $1,400 as the reportable cost under the plan for the calendar year, covering the four months during which Employee performed services and had coverage as an active employee. Employer applies this method consistently for all employees terminating during the calendar year who have coverage under that group health plan. Employer has applied a reasonable method of reporting Employee's reportable cost under the plan. Example 2. Same facts as Example 1, except that Employer reports $3,500 as the reportable cost under the plan for the calendar year, covering both the monthly periods during which Employee performed services and had coverage as an active employee, and the monthly periods during which Employee retained continuation coverage under the plan. Employer applies this method consistently for all employees terminating during the calendar year who retained coverage under that group health plan. Employer has applied a reasonable method of reporting Employee's reportable cost under the plan. Q-7: In the case of an individual who is an employee of multiple employers within a calendar year, must each employer provide a Form W-2 reporting the aggregate reportable cost? A-7: Each employer providing employer-sponsored coverage must report the aggregate reportable cost of coverage it provides. However, if the employers are related employers within the meaning of § 3121(s) and one such employer is a common paymaster within the meaning of § 3121(s) for wages paid to the employee, the common paymaster must include the aggregate reportable cost of the coverage provided to that employee by all the employers for whom it serves as the common paymaster on the Form W-2 issued by the common paymaster. In such case, the related employers that are not the common paymaster must not report the cost of coverage they provide. For employers participating in a multiemployer healthcare plan, see Q&A-17. Q-8: In the case of an individual who transfers to a new employer that qualifies as a successor employer under § 3121(a)(1), must both the predecessor and successor employers report the aggregate reportable cost of coverage each provided? A-8: Yes, unless the successor employer follows the optional procedure in Rev. Proc. 2004-53, 2004-2 C.B. 320, and issues one Form W-2 reflecting wages paid to the employee during the calendar year by both the predecessor employer and the successor employer. Consistent with the rules applicable to reporting of wages, the successor employer following the optional procedure must include the aggregate reportable cost of coverage provided by both employers on the Form W-2 that it issues, and the predecessor employer must not report the cost of coverage it provides. Q-9: Must an employer issue a Form W-2 including the aggregate reportable cost to an individual to whom the employer is not otherwise required to issue a Form W-2, such as a retiree or other former employee receiving no compensation required to be reported on a Form W-2? A-9: No. An employer is not required to issue a Form W-2 including the aggregate reportable cost to an individual to whom the employer is not otherwise required to issue a Form W-2. Q-10: Is the total of the aggregate reportable costs attributable to an employer's employees required to be reported on Form W-3, Transmittal of Wage and Tax Statements? A-10: No. The total of the aggregate reportable costs attributable to an employer's employees is not required to be reported on Form W-3, Transmittal of Wage and Tax Statements. Aggregate Cost of Applicable Employer-Sponsored Coverage (Q&A-11 through Q&A-15) Q-11: What is the aggregate cost of applicable employer-sponsored coverage and how is the aggregate cost of applicable employer-sponsored coverage referred to in this notice? A-11: The aggregate cost of applicable employer-sponsored coverage is the total cost of coverage under all applicable employer-sponsored coverage (as defined in Q&A-12 of this Notice) provided to the employee. In this notice, the cost of coverage under a group health plan is referred to as the reportable cost and the aggregate cost of applicable employer-sponsored coverage is referred to as the aggregate reportable cost. Q-12: What is applicable employer-sponsored coverage? A-12: Applicable employer-sponsored coverage means, with respect to any employee, coverage under any group health plan (see Q&A-13) made available to the employee by an employer that is excludable from the employee's gross income under § 106, or would be so excludable if it were employer-provided coverage (within the meaning of such § 106), except that applicable employer-sponsored coverage does not include: (1) any coverage for long-term care, (2) any coverage (whether through insurance or otherwise) described in § 9832(c)(1) (other than subparagraph (G) thereof (coverage for on-site medical clinics)), (3) any coverage under a separate policy, certificate, or contract of insurance which provides benefits substantially all of which are for treatment of the mouth (including any organ or structure within the mouth) or for treatment of the eye, and (4) any coverage described in § 9832(c)(3) the payment for which is not excludable from gross income and for which a deduction under § 162(l) is not allowable. See Q&A-16 through Q&A-23 for guidance on applicable employer-sponsored coverage that is not required to be included in the aggregate reportable cost. Q-13: What is a group health plan? A-13: A group health plan is a plan (including a self-insured plan) of, or contributed to by, an employer (including a self-employed person) or employee organization to provide health care (directly or otherwise) to the employees, former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families. For purposes of identifying whether a specific arrangement is a group health plan, taxpayers may rely upon a good faith application of a reasonable interpretation of the statutory provisions and applicable guidance, including § 54.4980B-2, Q&A-1. Q-14: Does the aggregate reportable cost include both the portion of the cost paid by the employer and the portion of the cost paid by the employee? A-14: Yes. The aggregate reportable cost generally includes both the portion of the cost paid by the employer and the portion of the cost paid by the employee, regardless of whether the employee paid for that cost through pre-tax or after-tax contributions. However, see Q&A-19 regarding contributions to a health FSA. Q-15: Does the aggregate reportable cost include any portion of the cost of coverage under an employer-sponsored group health plan that is includible in the employee's gross income, for example, the cost of coverage for a person other than an employee, the employee's spouse, the employee's dependent, or the employee's child who will not have attained age 27 by the end of the taxable year? A-15: Yes. The aggregate reportable cost includes the cost of coverage under the employer-sponsored group health plan of the employee and any person covered by the plan because of a relationship to the employee, including any portion of the cost that is includible in an employee's gross income. Thus, the aggregate reportable cost is not reduced by the amount of the cost of coverage included in the employee's gross income. Example. An employee has family health coverage under an employer-sponsored group health plan for himself, his spouse and dependents, and an adult child age 28, with a cost of coverage of $15,000. The fair market value of the health coverage for the adult child age 28 is included in the income and wages of the employee. The aggregate reportable cost with respect to the family health coverage is $15,000. Cost of Coverage Required to be Included in the Aggregate Reportable Cost (Q&A-16 through Q&A-23) Q-16: Is the cost of coverage under all applicable employer-sponsored coverage required to be included in the aggregate reportable cost? A-16: Except as provided in this Q&A and in Q&A-17 through Q&A-23, the cost of coverage under all applicable employer-sponsored coverage must be included in the aggregate reportable cost. However, the following amounts are not included in the aggregate reportable cost and are not permitted to be reported under § 6051(a)(14): (1) the amount contributed to any Archer MSA (as defined in § 220(d)), (2) the amount contributed to any Health Savings Account (as defined in § 223(d)), and (3) the amount of any salary reduction election to a flexible spending arrangement (within the meaning of § § 106(c)(2) and 125). Q-17: Is the cost of coverage under a multiemployer plan (as defined in § 54.4980B-2, Q&A-3) required to be included in the aggregate reportable cost reported on Form W-2? A-17: No. An employer that contributes to a multiemployer plan is not required to include the cost of coverage provided to an employee under that multiemployer plan in determining the aggregate reportable cost. If the only applicable employer-sponsored coverage provided to an employee is provided under a multiemployer plan, the employer is not required to report any amount under § 6051(a)(14) on the Form W-2 for that employee. Q-18: Is the cost of coverage under a Health Reimbursement Arrangement (HRA) required to be included in the aggregate reportable cost reported on Form W-2? A-18: No. An employer is not required to include the cost of coverage under an HRA in determining the aggregate reportable cost. If the only applicable employer-sponsored coverage provided to an employee is an HRA, the employer is not required to report any amount under § 6051(a)(14) on the Form W-2 for that employee. Q-19: If an employer offers a health flexible spending arrangement (health FSA) through a § 125 cafeteria plan, is the amount of the health FSA required to be included in the aggregate reportable cost reported on Form W-2? A-19: The amount of a health FSA for a cafeteria plan year equals the amount of salary reduction (as defined in Proposed Treas. Reg. § 1.125-1(r)) elected by the employee for the plan year, plus the amount of any optional employer flex credits (as defined under Proposed Treas. Reg. § 1.125-5(b), expressed as a fixed amount, or as a formula such as matching salary reduction), that the employee elects to apply to the health FSA. In determining the aggregate reportable cost, the amount of the health FSA is reduced (but not below zero) by the employee's salary reduction election (see Q&A-16). If the amount of salary reduction (for all qualified benefits) elected by an employee equals or exceeds the amount of the health FSA for the plan year, the employer does not include the amount of the health FSA for that employee in the aggregate reportable cost. However, if the amount of the health FSA for the plan year exceeds the salary reduction elected by the employee for the plan year, then the amount of that employee's health FSA minus the employee's salary reduction election for the health FSA must be included in the aggregate reportable cost and reported under § 6051(a)(14). For purposes of this Q&A-19, a health FSA means an FSA (as defined in Proposed Treas. Reg. § 1.125-5(a)) that is a medical reimbursement arrangement. Example 1: Employer maintains a § 125 cafeteria plan that offers permitted taxable benefits (including cash) and qualified nontaxable benefits (including a health FSA). The plan offers an employer flex credit of $1,000. Employee makes a $2,000 salary reduction election for several qualified benefits under the plan, including a health FSA for $1,500. The cost of the qualified benefits for Employee under the plan for the year is $3,000. The amount of Employee's salary reduction election ($2,000) for the plan year equals or exceeds the amount of the health FSA ($1,500) for the plan year. Thus, for purposes of reporting on Form W-2, none of the health FSA amount is taken into account for purposes of determining the aggregate reportable cost. Example 2: Employer maintains a § 125 cafeteria plan that offers permitted taxable benefits (including cash) and qualified nontaxable benefits (including a health FSA). The plan offers a flex credit in the form of a match of each employee's salary reduction contribution. Employee makes a $700 salary reduction election for a health FSA. Employer provides an additional $700 to the health FSA to match Employee's salary reduction election. The amount of the health FSA for Employee for the plan year is $1,400. The amount of Employee's health FSA ($1,400) for the plan year exceeds the salary reduction election ($700) for the plan year. The employer must include $700 ($1,400 health FSA amount minus $700 salary reduction) in determining the aggregate reportable cost. Q-20: Is the cost of coverage under a dental plan or a vision plan included in the aggregate reportable cost, if that plan is not integrated into a group health plan providing other types of health coverage subject to the reporting requirements of § 6051(a)(14)? A-20: No. An employer is not required to include the cost of coverage under a dental plan or a vision plan if such plan is not integrated into a group health plan providing additional health care coverage subject to the reporting requirements of § 6051(a)(14). An employer must include the cost of coverage under a dental plan or a vision plan if such plan is integrated into a group health plan providing such additional health care coverage. Q-21: Is the cost of coverage provided under a self-insured group health plan that is not subject to any federal continuation coverage requirements (for example, a church plan within the meaning of § 4980B(d)(3) that is a self-insured group health plan) required to be included in the aggregate reportable cost reported on Form W-2? A-21: No. An employer is not required to include in the aggregate reportable cost the cost of coverage provided under a self-insured group health plan that is not subject to any federal continuation coverage requirements. If the only group health plan coverage provided to an employee by the employer is provided under a self-insured group health plan that is not subject to any federal continuation coverage requirements, the employer is not required to report any amount under § 6051(a)(14) on the Form W-2 for that employee. Employers who provide coverage under a self-insured group health plan that is subject to Federal continuation coverage requirements must report the cost of coverage on Form W-2. For this purpose, federal continuation coverage requirements include the COBRA requirements under the Code, the Employee Retirement Income Security Act of 1974 or the Public Health Service Act and the temporary continuation coverage requirement under the Federal Employees Health Benefits Program. Q-22: Is the cost of coverage provided by the federal government, the government of any State or political subdivision thereof, or any agency or instrumentality of any such government, under a plan maintained primarily for members of the military or for members of the military and their families, required to be included in the aggregate reportable cost reported on Form W-2? A-22: No. Q-23: In determining the aggregate reportable cost, how should an employer treat an excess reimbursement of a highly compensated individual that is included in gross income under § 105(h)? A-23: The cost of applicable employer-sponsored coverage is not modified because of excess reimbursements of highly compensated individuals that are included in gross income under § 105(h); that is, an excess reimbursement that is included in income is neither added to the cost of coverage, nor subtracted from the cost of coverage, in determining the aggregate reportable cost. Example: Employer provides self-insured health coverage with a cost of coverage of $12,000 under which a highly compensated individual receives a $4,000 excess reimbursement. As a result, under § 105(h), that individual must include the $4,000 excess reimbursement in gross income. The excess reimbursement does not modify the determination of the aggregate reportable cost, so that Employer must include $12,000 as the cost of coverage under the plan in determining the aggregate reportable cost for that individual. Methods of Calculating the Cost of Coverage (Q&A-24 through Q&A-27) Q-24: How may an employer calculate the reportable cost under a plan? A-24: An employer may calculate the reportable cost under a plan using the COBRA applicable premium method (Q&A-25). Alternatively, (1) an employer that is determining the cost of coverage for an employee covered by the employer's insured plan may calculate the reportable cost using the premium charged method (Q&A-26); and (2) an employer that subsidizes the cost of coverage or that determines the cost of coverage for a year by applying the cost of coverage in a prior year may calculate the reportable cost using the modified COBRA premium method (Q&A-27). For employers that charge employees a composite rate (the same premium for different types of coverage under a plan, for example, a premium for self-only coverage versus family coverage), see Q&A-28. The reportable cost for an employee receiving coverage under the plan is the sum of the reportable costs for each period (such as a month) during the year as determined under the method used by the employer. An employer is not required to use the same method for every plan, but must use the same method with respect to a plan for every employee receiving coverage under that plan. Q-25: How does an employer calculate the reportable cost for a period under the COBRA applicable premium method? A-25: Under the COBRA applicable premium method, the reportable cost for a period equals the COBRA applicable premium for that coverage for that period. If the employer applies this method, the employer must calculate the COBRA applicable premium in a manner that satisfies the requirements under § 4980B(f)(4). Under current guidance, the COBRA applicable premium calculation would meet these requirements if the employer made such calculation in good faith compliance with a reasonable interpretation of the statutory requirements under § 4980B (see § 54.4980B-1, Q&A-2). Q-26: How does an employer calculate the reportable cost for a period under the premium charged method? A-26: The premium charged method may be used to determine the reportable cost only for an employee covered by an employer's insured group health plan. In such a case, if the employer applies this method, the employer must use the premium charged by the insurer for that employee's coverage (for example, for single-only coverage or for family coverage, as applicable to the employee) for each period as the reportable cost for that period. Q-27: How does an employer calculate the reportable cost for a period under the modified COBRA premium method? A-27: An employer may use the modified COBRA premium method with respect to a plan only where it subsidizes the cost of COBRA (so that the premium charged to COBRA qualified beneficiaries is less than the COBRA applicable premium) or where the actual premium charged by the employer to COBRA qualified beneficiaries for each period in the current year is equal to the COBRA applicable premium for each period in a prior year. If the employer subsidizes the cost of COBRA, the employer may determine the reportable cost for a period based upon a reasonable good faith estimate of the COBRA applicable premium for that period, if such reasonable good faith estimate is used as the basis for determining the subsidized COBRA premium. If the actual premium charged by the employer to COBRA qualified beneficiaries for each period in the current year is equal to the COBRA applicable premium for each period in a prior year, the employer may use the COBRA applicable premium for each period in the prior year as the reportable cost for each period in the current year. Example 1: For the calendar year 2012, Employer A subsidizes 50% of a reasonable good faith estimate of the COBRA applicable premium. Employer A's reasonable good faith estimate of the COBRA applicable premium for self-only coverage for each month in 2012 is $300. Accordingly, the actual COBRA premium Employer A charges individuals eligible for COBRA continuation coverage electing self-only coverage is $150 per month. Solely for purposes of § 6051(a)(14) reporting, if Employer A uses the modified COBRA premium method, it must treat $300 per month (the reasonable good faith estimate of the COBRA applicable premium) as the monthly reportable cost for self-only coverage for the calendar year 2012. Example 2: Employer B determined that the COBRA applicable premium for each month in calendar year 2011 for individuals eligible for COBRA continuation coverage electing self-only coverage would be $350 per month, and charged an actual COBRA premium for such coverage of $357 per month ($350 x 102%). Employer B knows that the cost of coverage for 2012 is not less than the COBRA applicable premium for 2011 and decides not to make a new determination of the COBRA applicable premium for the calendar year 2012 but rather to continue to charge an actual COBRA premium for self-only coverage of $357 per month ($350 x 102%). Solely for purposes of § 6051(a)(14) reporting, if Employer B uses the modified COBRA premium method, it must treat $350 per month ($357 charged - $7 increase permissible under COBRA) as the monthly reportable cost for self-only coverage for the calendar year 2012. Example 3: Employer C makes a good faith estimate of the COBRA applicable premium for the calendar year 2012 for individuals eligible for COBRA continuation coverage electing self-only coverage of $500 per month. To ensure compliance with the COBRA requirements despite not calculating a precise COBRA applicable premium, Employer C charges an actual COBRA premium of $350 per month for individuals eligible for COBRA coverage electing self-only coverage. Solely for purposes of § 6051(a)(14) reporting, if Employer C uses the modified COBRA premium method, it must treat $500 per month as the monthly reportable cost for self-only coverage for the calendar year 2012. Other Issues Relating to Calculating the Cost of Coverage (Q&A-28 through Q&A-31) Q-28: How may an employer charging an employee a composite rate calculate the reportable cost for a period? A-28: An employer is considered to charge employees a composite rate (1) if there is a single coverage class under the plan (that is, if an employee elects coverage, all individuals eligible for coverage under the plan because of their relationship to the employee are included in the elections and no greater amount is charged to the employee regardless of whether the coverage will include only the employee or the employee plus other such individuals), or (2) if there are different types of coverage under a plan (for example, self-only coverage and family coverage, or self-plus-one coverage and family coverage) employees are charged the same premium for each type of coverage. In such a case, the employer using a composite rate may calculate and use the same reportable cost for a period for (1) the single class of coverage under the plan, or (2) all the different types of coverage under the plan for which the same premium is charged to employees, provided this method is applied to all types of coverage provided under the plan. For example, if a plan charges one premium for either self-only coverage, or self-and-spouse coverage (the first coverage group), and also charges one premium for family coverage regardless of the number of family members covered (the second coverage group), an employer may calculate and report the same reportable cost for all of the coverage provided in the first coverage group, and the same reportable cost for all of the coverage provided in the second coverage group. In such a case, the reportable costs under the plan must be determined under one of the methods described in Q&A-25 through Q&A-27 for which the employer is eligible. Q-29: If the reportable cost for a period changes during the year, must the reportable cost under the plan for the year for an employee reflect the increase or decrease? A-29: If the cost for a period changes during the year (for example, under the COBRA applicable premium method because the 12-month period for determining the COBRA applicable premium is not the calendar year), the reportable cost under the plan for an employee for the year must reflect the increase or decrease for the periods to which the increase or decrease applies. For examples of the application of this rule, see Q&A-30 below. Q-30: How is the reportable cost under a plan calculated if an employee commences, changes or terminates coverage during the year? A-30: If an employee changes coverage during the year, the reportable cost under the plan for the employee for the year must take into account the change in coverage by reflecting the different reportable costs for the coverage elected by the employee for the periods for which such coverage is elected. If the change in coverage occurs during a period (for example, in the middle of a month where costs are determined on a monthly basis), an employer may use any reasonable method to determine the reportable cost for such period, such as using the reportable cost at the beginning of the period or at the end of the period, or averaging or prorating the reportable costs, provided that the same method is used for all employees with coverage under that plan. Similarly, if an employee commences coverage or terminates coverage during a period, an employer may use any reasonable method to calculate the reportable cost for that period, provided that the same method is used for all employees with coverage under the plan. The following examples illustrate the principles set forth in Q&A-29 and Q&A-30: Example 1: Employer determines that the monthly reportable cost under a group health plan for self-only coverage for the calendar year 2012 is $500. Employee is employed by employer for the entire calendar year 2012, and had self-only coverage under the group health plan for the entire year. For purposes of reporting for the 2012 calendar year, Employer must treat the 2012 reportable cost under the plan for Employee as $6,000 ($500 x 12). Example 2: Employer determines that the monthly reportable cost under a group health plan for self-only coverage for the period October 1, 2011 through September 31, 2012 is $500, and that the monthly reportable cost under a group health plan for self-only coverage for the period October 1, 2012 through September 31, 2013 is $520. Employee is employed by employer for the entire calendar year 2012 and had self-only coverage under the group health plan for the entire year. For purposes of reporting for the 2012 calendar year, Employer must treat the 2012 reportable cost under the plan for Employee as $6,060 (($500 x 9) + ($520 x 3)). Example 3: Employer determines that the monthly reportable cost under a group health plan for self-only coverage for the calendar year 2012 is $500, and that the monthly reportable cost under the same group health plan for self-plus-spouse coverage for the calendar year 2012 is $1,000. Employee is employed by Employer for the entire calendar year 2012. Employee had self-only coverage under the group health plan from January 1, 2012 through June 30, 2012, and then had self-plus-spouse coverage from July 1, 2012 through December 31, 2012. For purposes of reporting for the 2012 calendar year, Employer must treat the 2012 reportable cost under the plan for Employee as $9,000 (($500 x 6) + ($1,000 x 6)). Example 4: Employer determines that the monthly reportable cost under a group health plan for self-only coverage for the calendar year 2012 is $500. Employee commences employment and self-only coverage under the group health plan on March 14, 2012, and continues employment and self-only coverage through the remainder of the calendar year. For purposes of reporting for the 2012 calendar year, Employer treats the cost of coverage under the plan for Employee for March 2012 as $250 ($500 x 1/2 ). Because Employer's method of calculating the reportable cost of under the plan for March 2012 by prorating the reportable cost for March 2012 to reflect Employee's date of commencement of coverage is reasonable, Employer must treat the 2012 reportable cost under the plan for Employee as $4,750 (($500 x 1/2 ) + ($500 x 9)). Q-31: If an employer has used a 12-month determination period that is not the calendar year for purposes of applying the COBRA applicable premium under a plan, may the employer also use that 12-month determination period for purposes of calculating the reportable cost for the year under the plan? A-31: No. The reportable cost under a plan must be determined on a calendar year basis. For rules on translating the COBRA applicable premium to a calendar year amount, see Q&A-29 and Q&A-30. IV. Transition Relief Certain provisions of this interim guidance provide transition relief intended to facilitate compliance with the reporting requirement under § 6051(a)(14). See Q&A-3 (relief for employers filing fewer than 250 Forms W-2); Q&A-6 (relief with respect to certain Forms W-2 furnished to terminated employees before the end of the year); Q&A-17 (relief with respect to multiemployer plans); Q&A-18 (relief for HRAs); Q&A-20 (relief with respect to certain dental and vision plans); and Q&A-21 (relief with respect to self-insured plans of employers not subject to COBRA continuation coverage or similar requirements). Future guidance may limit the availability of some or all of this transition relief; however, such guidance will be prospective only and will not be applicable earlier than January 1 of the calendar year beginning at least six months after its date of issuance. In no case will such guidance limit the availability of this transition relief for the 2012 Forms W-2 (meaning Forms W-2 for the calendar year 2012 that employers generally are required to furnish to employees in January 2013 and then file with the SSA). For example, in no event will reporting be required for 2012 Forms W-2 for any employer required to file fewer than 250 2011 Forms W-2. V. Request For Comments The Treasury Department and the IRS request comments on all aspects of this interim guidance and the reporting requirements under § 6051(a)(14), including areas that should be addressed in proposed and final regulations or other future guidance. Comments are requested on how future guidance could further reduce the burden of compliance with the reporting requirements while still providing useful and comparable consumer information to employees on the cost of their health care coverage. In addition, the Treasury Department and the IRS request comments on any challenges employers may face in implementing the reporting requirements for the 2012 Forms W-2, and how further guidance could address those challenges, including through the provision of additional transition relief. In particular, Treasury and IRS request comments on issues that would arise in applying the reporting requirements to employers contributing to multiemployer plans (see Q&A-17), such as the potential methods by which the coverage provided to an employee could be allocated among the contributing employers and the potential methods by which contributing employers could obtain the requisite information to report the reportable cost. Comments are also particularly requested as to issues that would arise in applying the reporting requirements to employers that filed fewer than 250 Forms W-2 for the previous calendar year (see Q&A-3), and to employers that sponsor a self-insured plan that is not subject to any federal continuation coverage requirements (see Q&A-21). Comments must be submitted by [INSERT DATE 90 DAYS FROM PUBLICATION]. All materials submitted will be available for public inspection and copying. Comments should be submitted to Internal Revenue Service, CC:PA:LPD:RU ( Notice 2011-28), Room 5203, PO Box 7604, Ben Franklin Station, Washington, DC 20224. Submissions may also be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to the Courier's Desk, 1111 Constitution Avenue, NW, Washington, DC 20224, Attn: CC:PA:LPD:RU (Notice 2011-28), Room 5203. Submission may also be sent electronically via the internet to the following email address: Notice.comments@irscounsel.treas.gov . Include the notice number (Notice 2011-28) in the subject line. VI. Drafting Information The principal author of this notice is Leslie Paul of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities), though other Treasury Department and IRS officials participated in its development. For further information on the submission of comments or the comments submitted, contact Regina Johnson at (202) 622-7180 (not a toll-free number). For further information on all other provisions of this notice, contact Leslie Paul at (202) 622-6080 (not a toll-free number). www.irstaxattorney.com 888-712-7690