Limitations on setoff under sections 6402 and 6411. This ruling holds that the Service may credit an overpayment against unassessed internal revenue tax liabilities that have been determined in a statutory notice of deficiency sent to the taxpayer. It further holds that under section 6411(b) of the Code, the Service may credit a decrease in tax resulting from a tentative carryback adjustment against unassessed liabilities determined in a statutory notice of deficiency. Rev. Rul. 54-378 clarified.

Definition of a liability under section 6402(a) and 6411(b). This ruling holds that the Service has the right under section 6402 of the Code to credit an overpayment against internal revenue liabilities for which no assessment has been made, or statutory notice of deficiency issued, when the liabilities are identified in a proof of claim filing in a bankruptcy case. Similarly, the ruling holds that the Service has the right under section 6411(b) to credit a decrease in tax resulting from a tentative carryback adjustment against internal revenue tax liabilities for which no assessment has been made, or statutory notice of deficiency issued, when the liabilities are identified in a proof of claim filed in a bankruptcy case.

Revocation of Rev. Rul.; tentative allowance. The IRS has determined that Rev. Rul. 78-369 is inconsistent with the regulations under section 6411 of the Code. Rev. Rul. 78-369 revoked.

Qualified pension or retirement plan. This ruling supplements Rev. Rul. 94-62, 1994-2 C.B. 164, by expanding the list of entities that are treated as “qualified pension or retirement plans” within the meaning of regulations section 1.817-5(f)(3)(iii). Rev. Rul 94-62 supplemented.

Bankruptcy effects of disaster and combat zone relief. This ruling provides that the postponement of the time to file a return under section 7508 or 7508A of the Code does not change the date that the return is last due, including extensions, and therefore does not change the priority and dischargeability of the tax for bankruptcy purposes.

Final, temporary, and proposed regulations under section 6411 of the Code clarify that, after being computed under the terms of regulations sections 1.6411-2 and 1.6411-2T, a tentative carryback adjustment may be reduced under sections 1.6411-3 and 1.6411-3T by unassessed amounts under certain circumstances. The regulations provide technical revisions that remove all references to IRS district director and service center director, as those positions no longer exist within the IRS.

Final, temporary, and proposed regulations under section 6411 of the Code clarify that, after being computed under the terms of regulations sections 1.6411-2 and 1.6411-2T, a tentative carryback adjustment may be reduced under sections 1.6411-3 and 1.6411-3T by unassessed amounts under certain circumstances. The regulations provide technical revisions that remove all references to IRS district director and service center director, as those positions no longer exist within the IRS.

Proposed regulations under section 817 of the Code concern the diversification requirements of section 817(h). The regulations would expand the list of holders whose beneficial interests in an investment company, partnership, or trust do not prevent a segregated asset account from looking through to the assets of the investment company, partnership, or trust, to satisfy the requirements of section 817(h). The regulations also would remove the sentence in regulations section 1.817-5(a)(2) that provides that the payment required to remedy an inadvertent diversification failure must be based on the tax that would have been owed by the policyholders if they were treated as receiving the income on the contract.

This procedure provides the domestic asset/liability percentages and domestic investment yields needed by foreign life insurance companies and foreign property and liability insurance companies to compute their minimum effectively connected net investment income under section 842(b) of the Code for taxable years beginning after December 31, 2005.

Final regulations under section 2642 of the Code provide guidance regarding the qualified severance of a trust for generation-skipping transfer (GST) tax purposes under section 2642(a)(3), which was added to the Code by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).

Proposed regulations under section 2642 of the Code provide guidance regarding the generation-skipping transfer (GST) tax consequences of the severance of trusts in a manner that is effective under state law, but that does not meet the requirements of a qualified severance under section 2642(a)(3). The regulations also provide guidance regarding the GST tax consequences of a qualified severance of a trust with an inclusion ratio between zero and one into more than two resulting trusts. The regulations also provide special funding rules applicable to the non pro rata division of certain assets between or among resulting trusts.

Final regulations under section 4081 of the Code relate to the entry of taxable fuel into the United States. The regulations affect enterers of taxable fuel, certain other importers of record, and certain sureties.

Bankruptcy effects of disaster and combat zone relief. This ruling provides that the postponement of the time to file a return under section 7508 or 7508A of the Code does not change the date that the return is last due, including extensions, and therefore does not change the priority and dischargeability of the tax for bankruptcy purposes.

Bankruptcy effects of disaster relief for Hurricane Katrina victims who file section 6081 extensions. This notice clarifies Notice 2006-56, 2006-28 I.R.B. 58, by explaining that even if an affected taxpayer requested an extension of time to file a return under section 6081 during the section 7508A postponement period, the due date of the return, including extensions, would be the original due date plus six months. The postponement under section 7508A does not change the priority and dischargeability of tax for bankruptcy purposes, regardless of when the extension of time under section 6081 is requested. Rev. Rul. 2007-59 amplified. Notice 2006-56 clarified.