IRS MODIFIES EXTENSION STANDARDS.

Rev. Proc. 93-28

SECTION 1. PURPOSE

This revenue procedure modifies Rev. Proc. 92-85, 1992-42 I.R.B. 32, to bring the revenue procedure into conformity with new section 301.9100-1(b) of the Procedure and Administration Regulations. In addition, this revenue procedure clarifies the rule in section 5 of Rev. Proc. 92-85 regarding whether a taxpayer has acted reasonably and in good faith in the case of a taxpayer that avoids an accuracy- related penalty by filing a qualified amended return. Finally, this revenue procedure deletes from the list of elections eligible for automatic relief under section 4.01 of Rev. Proc. 92-85 the transitional elections under sections 1.337(d)-1(a)(2)(ii) and 1.337(d)-1(b)(2)(ii) of the Income Tax Regulations and the election to exclude foreign earned income under section 1.911-7(a).

SEC. 2. BACKGROUND

.01 Section 301.9100-1 of the regulations sets forth rules regarding extensions of time for making certain elections. Rev. Proc. 92-85 sets forth the standards the Internal Revenue Service will use to determine whether to grant relief under section 301.9100-1(a). The change to section 301.9100-1(b) removes the special transitional rule for elections required to be made prior to April 5, 1991 under subtitles B, C, D, and F, except for elections under section 4980A of the Internal Revenue Code. Accordingly, the effective date of Rev. Proc. 92-85 is amended to clarify that the standards announced in this revenue procedure now apply to all elections except those under section 4980A.

.02 Section 5.01(4)(a) of Rev. Proc. 92-85 provides that a taxpayer will not be considered to have acted reasonably and in good faith if a taxpayer seeks to alter a return position for which an accuracy-related penalty has been or could have been imposed. Section 5.01(4)(a) is amended to provide that if the taxpayer files a qualified amended return within the meaning of section 1.6664-2(c)(3) of the regulations, the qualified amended return will be taken into account in accordance with the regulations under sections 6662 and 6664 of the Code in determining whether the return position is one for which an accuracy-related penalty may be imposed.

.03 Transitional elections under sections 1.337(d)-1(a)(2)(ii) and 1.337(d)-1(b)(2)(ii) of the regulations are currently included in the list of elections in Appendix A of Rev. Proc. 92-85. Section 4 of Rev. Proc. 92-85 is effective for elections whose due dates (excluding extensions) fall on or after October 1, 1992. However, the original due date for the transitional elections under sections 1.337(d)-1(a)(2)(ii) and 1.337(d)-1(b)(2)(ii) occurs before October 1, 1992. Therefore, these transitional elections are deleted from Appendix A.

The election under section 1.911-7(a) of the regulations is likewise currently included in the list of elections in Appendix A of Rev. Proc. 92-85. New regulations under section 911 of the Code will revise the standards under which the Service may grant relief to taxpayers who fail to make the section 911 election in a timely fashion. Accordingly, the election to exclude foreign earned income under section 1.911-7(a) is deleted from Appendix A.

SEC. 3. ACTION

.01 Section 10 of Rev. Proc. 92-85 is amended to read as follows:

Section 4 of this revenue procedure, concerning automatic extensions, is effective for elections whose due dates (excluding extensions) fall on or after October 1, 1992. Section 5 of this revenue procedure is effective for all tax years.

.02 Section 5.01(4)(a) of Rev. Proc. 92-85 is amended to read as follows:

the taxpayer seeks to alter a return position for which an accuracy-related penalty has been or could be imposed under section 6662 of the Code at the time the taxpayer requests relief under this revenue procedure (taking into account any qualified amended return filed within the meaning of section 1.6664-2(c)(3) of the regulations) and the new position requires or permits an election for which relief is requested; or

.03 Appendix A of Rev. Proc. 92-85 is amended to delete the transitional elections under sections 1.337(d)-1(a)(2)(ii) and 1.337(d)-1(b)(2)(ii) of the regulations and the election under section 1.911-7(a).

DRAFTING INFORMATION

The principal author of this revenue procedure is Elissa J. Shendalman of the Office of the Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue procedure contact Elissa J. Shendalman at (202) 622-3040 (not a toll free-call).