Employee relocation costs. This ruling addresses the tax treatment of costs an employer incurs in connection with three different home purchase programs the employer may offer to employees who are being relocated. Transactions under the three programs are analyzed to determine whether, based on the benefits and burdens of ownership of an employee's home, the transactions are treated for tax purposes as a sale of the home by the employee to the employer followed by a separate sale by the employer to a third party buyer, or as one sale by the employee to the third party buyer facilitated by the employer.

Interest rates; underpayments and overpayments. The rate of interest determined under section 6621 of the Code for the calendar quarter beginning January 1, 2006, will be 7 percent for overpayments (6 percent in the case of a corporation), 7 percent for underpayments, and 9 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 4.5 percent.

This notice announces that Treasury and the Service intend to exercise regulatory authority under section 901(1)(3) of the Code not to apply the credit disallowance rules of section 901(1) to foreign withholding taxes on royalties received in “ordinary course” back-to-back computer software licensing arrangements. The notice solicits comments on the exception as well as related issues under sections 901(1) and 901(k).

This notice informs taxpayers that guidance will be issued regarding the election to treat members of a family as a single S corporation shareholder provided in section 1361(c)(1) of the Code, which was created by the American Jobs Creation Act of 2004. Taxpayers may rely on guidance described in the notice until actual guidance is issued.

Proposed regulations under section 412 of the Code provide guidance regarding mortality tables to be used in determining the current liability of a qualified defined benefit plan under section 412(l)(7). A public hearing is scheduled for April 19, 2006.

Distributions; recontributions; loans; Katrina Emergency Tax Relief Act of 2005 (KETRA). This notice describes various aspects of sections 101 and 103 of KETRA. The notice addresses distributions, recontributions, 3-year ratable inclusions, 1-year inclusions and loans. The notice contains numerous examples of how these provisions work in the context of eligible retirement plans.

Plan amendments; retroactive annuity starting date; elective deferrals. This notice clarifies the interaction of the amendment timing deadlines for plans qualified under section 401(a) of the Code as set forth in Rev. Proc. 2005-66 with the deadlines set forth in various other published guidance. This notice also provides transitional relief from certain deadlines, thus giving sponsors, practitioners, and employers additional time to adopt those required amendments. Notices 2004-84 and 2005-5 modified.

This procedure amends the final withholding foreign partnership and withholding foreign trust agreements contained in Rev. Proc. 2003-64 by expanding the availability of simplified documentation, reporting and withholding procedures, which are currently available only if the withholding foreign partnership is a general partner of the partnership or the withholding foreign trust is a trustee of the trust. This procedure removes this relatedness requirement thus expanding the availability of the simplified procedures. This procedure also makes a conforming change to the portion of the Qualified Intermediary agreement contained in Rev. Proc. 2003-64. Rev. Proc. 2003-64 modified.

Optional standard mileage rates. This procedure announces 44.5 cents as the optional rate for deducting or accounting for expenses for business use of an automobile, 14 cents as the optional rate for use of an automobile as a charitable contribution, and 18 cents as the optional rate for use of an automobile as a medical or moving expense for 2006. Special rates apply to the charitable use of an automobile for the provision of relief related to Hurricane Katrina. The procedure also provides rules for substantiating the deductible expenses of using an automobile for business, moving, medical, or charitable purposes. Rev. Proc. 2004-64, as modified by Announcement 2005-71, superseded.