SEC. 7. COMPUTATION OF EMPLOYEE REPRESENTATIVE TAX. The rates shown below are applicable to compensation paid during 1967 for services rendered after 1936 and before October 1, 1966, as an employee representative. Period in which compensation, paid during quarter, was earned Jan. 1, 1966, through Sept. 30, 1966_. Calendar years 1943, 1944, and 1945. Rate of employee representative tax Employee representative tax with respect to compensation paid for services rendered as an employee representative before 1947 should be reported on Form CT-2 for the calendar quarter in which the services were rendered, and not on the Form CT-2 for the quarter in which the compensation is paid. If a return on Form CT-2 was filed for the calendar quarter in which the services were rendered, any subsequent payment of compensation for services rendered in such quarter should be reported on a Form CT-2, which is marked "amended" and which is altered to show the applicable rate of tax. (Also Part I, Section 6041; 26 CFR 1.6041–1.) Rev. Proc. 67-8 Revenue Ruling 63-271, C.B. 1963-2, 597, holds that a bank acting as agent for the collection of interest on evidences of indebtedness is required to file an information return on Forms 1099, U.S. Information Return for Calendar Year, and 1096, U.S. Annual Information Return, when, in the course of its trade or business, it receives payments of interest of $600 or more and pays them over to the actual owner. Penalties apply for failure to file information returns required under the circumstances set forth in Revenue Ruling 63-271, and for failure to furnish identifying numbers on such returns, unless it is shown that such failures are due to reasonable cause. Representatives of banking institutions have requested relief from the requirement of Revenue Ruling 63-271 to file returns and from the application of such penalties because of the many unresolved problems encountered by their banks in perfecting procedures to furnish the required information. Therefore, relief will be granted for 1966 on a case-by-case basis when reasonable cause for failure to meet the requirements is established by banking institutions which submit statements in writing, on or before February 28, 1967, to the District Director of Internal Revenue showing that their failure to comply was due to problems or procedures which they could not solve. See Revenue Procedure 66-26, C.B. 1966-1, 654, for similar procedures with respect to information returns for 1965. 26 CFR 601.602: Forms and instructions. (Also Part I, Section 3302; 31.3302 (c)−1.) Rev. Proc. 67-91 Computation of reductions in credit against tax reportable on Form 940, Employer's Annual Federal Unemployment Tax Return, for 1961 and subsequent years, with respect to wages paid for services performed in a State which has not restored to the United States Treasury amounts which were made available under title XII of the Social Security Act or under the Temporary Unemployment Compensation Act of 1958. Revenue Procedure 65-33, C.B., 1965-2, 1038, superseded. SECTION 1. PURPOSE. The purpose of this Revenue Procedure is to restate Revenue Procedure 65-33, C.B., 1965-2, 1038, and bring up to date the procedure to be followed in computing reductions in the credit against tax reportable on Form 940, Employer's Annual Federal Unemployment Tax Return, for 1961 and subsequent years. SEC. 2. BACKGROUND. Section 3302 of the Internal Revenue Code of 1954 provides for credits against the Federal unemployment tax imposed by section 3301 of the Code on employers of four or more employees. Reductions in the amount of credit otherwise allowable are provided for in section 3302 (c) of the Code and in section 104 of the Temporary Unemployment Compensation Act of 1958. The reductions may occur if an employer pays wages for services performed in a State which has not restored to the U.S. Treasury amounts which were made available under title XII of the Social Security Act or under the Temporary Unemployment Compensation Act of 1958. Credit reductions for 1963 or any subsequent year may be forestalled if a State restores to the U.S. Treasury before November 10 of that year an amount approximately equal to the additional Federal tax which otherwise would be due for that year as a result of the credit reductions. SEC. 3. CREDIT REDUCTIONS FOR 1961 AND 1962. Regulations relating to reductions in credit under section 3302 (c) of the Code for the calendar years 1961 and 1962 are set forth in section 31.3302 (c)-1 of the Employment Tax Regulations, as amended by Treasury Decision 6658, C.B., 1963-2, 426. The credit reductions are computed by applying the following percentages to wages paid for services performed in the following States: 1 Based on Technical Information Release 874, dated Dec. 27, 1966. . 15 SEC. 4. CREDIT REDUCTIONS FOR 1963 AND SUBSEQUENT YEARS. Public Law 88-173, approved November 7, 1963, C. B. 1963-2, 699, amended section 3302(c) (2) of the Code and section 104 of the Temporary Unemployment Compensation Act of 1958, effective for 1963 and subsequent years. Under the amended law, credit reductions apply in the following percentages to wages paid for services performed in the following States: The computation of credit allowable is reported in schedule A of Form 940, Employer's Annual Federal Unemployment Tax Return. If a credit reduction applies, the amount of credit otherwise allowable is first computed in schedule A of Form 940, and the amount of the credit reduction is subtracted from the amount otherwise allowable. The remainder is then subtracted from the gross Federal tax shown on Form 940. If the employer is using a schedule A which was not designed for the particular year for which the computation is being made, the schedule A should be appropriately altered, or the computation should be shown on an attached sheet. SEC. 6. EFFECT ON OTHER DOCUMENTS. Revenue Procedure 65-33, C.B. 1965-2, 1038, is hereby superseded. 26 CFR 601.204: Changes in accounting periods and in methods of accounting. (Also Part I, Sections 446, 481; 1.446-1, 1.481-1.) Rev. Proc. 67-101 Administrative procedure for changing overall method of accounting from cash receipts and disbursements method to accrual method. SECTION 1. PURPOSE. This Revenue Procedure provides an administrative procedure whereby taxpayers may expeditiously obtain consent to change their overall method of accounting from the cash receipts and disbursements method to an accrual method for Federal income tax purposes. Taxpayers complying with the provisions hereof will be deemed to have obtained the consent of the Commissioner of Internal Revenue to change their method of accounting. SEC. 2. BACKGROUND. A taxpayer, before changing his method of accounting from the cash receipts and disbursements method to an accrual method, for Federal income tax purposes, is required to obtain the consent of the Commissioner under the provisions of section 1.446-1(e) (3) of the Income Tax Regulations and is required to file an application on Form 3115, Application for Change in Accounting Method, with the Commissioner within the first 90 days of the taxable year in which the change is to become effective. 1 Also released as Technical Information Release 883, dated Feb. 7, 1967. SEC. 3. APPLICATION. .01 Subject to the following conditions, a taxpayer desiring to change his overall method of accounting from the cash receipts and disbursements method to an accrual method may do so by filing an application on Form 3115 with the District Director of Internal Revenue for the district in which he files his return. Reference to this Revenue Procedure should be made a part of the application. The application shall be filed within the first 90 days of the taxable year in which the change is to become effective and include information showing all adjustments required under section 481 (a) of the Internal Revenue Code of 1954 and the regulations thereunder. Unless a letter is received by the taxpayer from the District Director denying permission because the Form 3115 is not timely filed, it may be assumed that the change has been granted provided the taxpayer has complied with all of the provisions of section 4 below. .02 Any adjustment resulting from the change is subject to verification by the District Director upon examination of the income tax return. SEC. 4. MANNER OF EFFECTING THE CHANGE. .01 Any taxpayer changing from the overall cash receipts and disbursements method to an accrual method under this Revenue Procedure shall effect the change as follows: (1) Adjust the books at the end of the taxable year of change to an accrual method and keep the books for subsequent taxable years on such method. (2) Take into account in computing taxable income for the taxable year of change and for each of the nine succeeding taxable years one-tenth of the net amount of the adjustments required under section 481 (a) of the Code. The adjustments required thereunder are (a) the inclusion in income of (i) income accrued as of the end of the taxable year preceding the taxable year of change, which has not previously been reported, (ii) the amount of inventory (for farm inventories, see .02 of this section) as of the end of the taxable year preceding the taxable year of change previously deducted as an expense, and (ii) prepaid expenses at the end of the taxable year preceding the taxable year of change which have been deducted and (b) the inclusion of deductions for (i) expenses accrued as of the end of the taxable year preceding the taxable year of change not previously allowed as a deduction and (2) amounts which were previously included in income and which, under an accrual method, would again be included as they accrue. Any other item or amount of income or deduction affected by the change shall be treated properly under subparagraph (a) or (b) of this paragraph in order to prevent such item or amount from being duplicated or omitted from the net amount of the adjustments. (3) Under an accrual method of accounting the amount of inventory to be reported as the inventory at the beginning of the taxable year of change for purposes of computing cost of goods sold for each taxable year will be the amount of inventory referred to in subsection .01 (2) (a) (i) of this section plus items of inventory, if any, at the beginning of the taxable year of change |