(i) Payment made on or before April 1, 1967.

Exemption may be secured by filing Form 1001A-UK, or by filing a letter of notification (as explained in (ii) of this subparagraph). (ii) Payments made after April 1, 1967.

Exemption from withholding on such interest or royalties may be secured only by filing a letter of notification with the withholding agent containing the information required by sections 507.24 and 507.25 of the new withholding regulations. A new letter of notification must be filed for each successive 3-calendar-year period during which the income is paid.

(b) Exemption from U.S. tax of private pensions or life annuities. This paragraph pertains to payment of pensions (other than pensions to which article X of the convention applies) or life annuities received by a resident of the United Kingdom in a taxable year of the recipient beginning after December 31, 1965.

(1) Payments on or before April 1, 1967.

A letter of notification is required to secure exemption. Such letter may conform to the requirements of section 507.6 or section 507.26 of the withholding regulations.

(2) Payments after April 1, 1967.

To secure exemption, a letter of notification must be filed which contains the information required by section 507.26 (b) (1) of the new regulations.

(c) Applicability of section.

(1) United Kingdom residents.

The forms, letters of notification, and rulings described in this section are applicable only to items of income paid to residents of the United Kingdom who are not citizens of the United States or U.S. corporations and who are not subject to tax in the United Kingdom on a remittance basis. See article II (1) (g) and (4) of the convention. (2) Residents of territories and former territories.

Sections 507.501-507.511 of the withholding regulations under the convention as extended to the United Kingdom territories (T.D. 6437, C.B. 1960-1, 76) continue to be applicable to such territories and former territories. Modified Form 1001-UK and letters of notification shall continue to be used to secure exemption from withholding on payments of coupon bond interest and noncoupon bond interest, respectively, to residents of the former United Kingdom territories of the Federation of Rhodesia and Nyasaland, now known as Zambia, Rhodesia, and Malawi. Interest payments (coupon and noncoupon) from U.S. sources to residents of other present and former United Kingdom territories and colonies to which the convention has been extended remain subject to the U.S. statutory withholding rate of 30 percent.

26 CFR 601.315: Claims.

(Also Part III-B, Section 5705; 270.283, 270.311.)

Rev. Proc. 67-18

Procedure to be followed in executing Form 3069, Schedule of Cigars, Cigarettes, or Cigarette Papers or Tubes Withdrawn From the Market, to evidence cigars and cigarettes withdrawn from the market by the manufacturer.

Revenue Procedure 66–24, C.B. 1966–1, 652, superseded.

SECTION 1. PURPOSE.

Revenue Procedure 66-24, C.B. 1966-1, 652, established procedures to be followed by a manufacturer of tobacco products (or by his authorized representative) in executing Form 3069, Schedule of Cigars, Cigarettes, or Cigarette Papers or Tubes Withdrawn from the Market. In order to make such procedures applicable to Form 3069 without regard to revision date, they are restated herein to omit reference, in sections 3 and 4, to specific item numbers appearing on the form. SEC. 2. BACKGROUND.

.01 Damaged cigars and cigarettes were destroyed at the premises of a wholesale tobacco dealer under the supervision of an alcohol and tobacco tax inspector. The dealer prepared Form 3069 with the intention of transmitting the schedule to the manufacturer who would file claim for credit or refund of tax under section 5705 of the Internal Revenue Code of 1954. However, the manufacturer was not aware of the destruction of such products. The matter did not come to his attention until after the destruction of the cigars and cigarettes. Therefore, the manufacturer could not properly claim that he had withdrawn them from the market. Accordingly, a claim for credit or refund of tax on such products is not allowable.

.02 One condition to the credit or refund of tax on domestic cigars and cigarettes under section 5705 of the Code is the withdrawal of the products from the market by the manufacturer who paid the tax. However, the law and regulations do not preclude the allowance of a claim where the cigars and cigarettes are destroyed or reduced to tobacco at a location other than the factory premises if the manufacturer takes possession or acquires ownership of the cigars and cigarettes prior to destruction or reduction to tobacco.

SEC. 3. SIGNATURE REQUIRED ON FORM 3069.

The action of the manufacturer in withdrawing cigars and cigarettes from the market must be evidenced by the signature of the manufacturer (or by the signature of the manufacturer's authorized representative) on the schedule, Form 3069.

SEC. 4. EXECUTION OF SCHEDULE FOR THE MANUFACTURER BY HIS REPRESENTATIVE.

Whenever a manufacturer withdraws cigars and cigarettes from the market and the schedule, Form 3069, is to be executed in his behalf by an employee such as a district manager, distribution manager, etc., not otherwise authorized to sign documents filed with the Assistant Regional Commissioner, Alcohol and Tobacco Tax, the manufacturer is responsible for timely filing Form 1534, Power of Attorney, as provided for in 26 CFR 270.68 authorizing such person to so act. It is the responsibility of the manufacturer to have on file with the Assistant Regional Commissioner, Alcohol and Tobacco Tax, for the region where the claim will be filed a Form 1534 prior to the execution of any schedule for the manufacturer by the person named in the power of attorney. Execution of Form 3069 by a person not authorized to do so may result in the disallowance of the claim. After cigars and cigarettes have been disposed of and a claim for credit or refund filed, the

determination will be made in alcohol and tobacco tax offices as to whether the person who executed Form 3069 was duly authorized to act in behalf of the manufacturer. Manufacturers should fully instruct their representatives in the proper preparation of Form 3069. SEC. 5. INQUIRIES.

Inquiries in regard to this Revenue Procedure should refer to its number and be addressed to the office of the appropriate Assistant Regional Commissioner, Alcohol and Tobacco Tax.

SEC. 6. EFFECT ON OTHER DOCUMENTS.

Revenue Procedure 66-24, C.B. 1966-1, 652, is hereby superseded.

26 CFR 1.6041-1: Return of information as Rev. Proc. 67-191 to payments of $600 or more.

(Also Part I, Sections 6047, 6052; 1.6047-1, 1.6052-1.)

The Internal Revenue Service sets forth clarifying instructions as to the proper Form (1099 or W-2) to be used for various types of payments.

The Internal Revenue Service has been asked to clarify when "other compensation" should be reported on Form 1099, U.S. Information Return, and when it should be reported on Form W-2, Wage and Tax Statement.

Reporting of certain "other compensation" must be made on Form W-2 for the calendar year 1966 when the recipient of the compensation was an employee of the payer.

Payments to independent contractors of fees, commissions, and other compensation related to nonemployee services should be reported on Form 1099 in column 7.

Where certain employee pension, profit-sharing, or stock bonus plans are administered by a trust, which is not the employer making payment to an employee, the trustees should report applicable amounts distributed to participants in column 6 of Form 1099. For example, the amount of premium paid by a trust for current life insurance protection under a life insurance contract purchased pursuant to a qualified pension or profit-sharing plan must be reported in column 6 on Form 1099, together with any other amount distributed under the plan to an employee (to the extent it is includible in his gross income) if the aggregate amount is $600 or more during the calendar year. This reporting requirement is also applicable to distributions made by insurance companies pursuant to qualified annuity plans. However, the premiums applied by the employer for current life insurance protection under such non-trusteed qualified annuity plans must be reported by the employer as "other compensation" on Form W-2. Distributions on behalf of an "owner-employee" under a selfemployed retirement plan aggregating $10 or more during the calendar year must be reported on Form 1099 in column 7.

The cost of group-term life insurance on the life of an employee carried directly or indirectly by his employer is reported as "other

1 Based on Technical Information Release 882, dated Jan. 30, 1967.
In TIR 882 the word "contributions" should have been "distributions."

compensation" on Form W-2 to the extent that it is includible in the employee's gross income under section 79 (a) of the Internal Revenue Code of 1954. See section 6052 of the Code.

Forms 1099 which have been prepared will be accepted by the Service if the amounts reportable in columns 6 and 7 are entered in either column for the calendar year 1966.

Where Forms W-2 have been prepared for amounts reportable in column 6 or 7 of Form 1099, the Service has no objection to the use of Form W-2 for the calendar year 1966, provided the amounts are reported as "other compensation" and the aggregation rules are applied.

26 CFR 601.301: Imposition of taxes, qualification requirements, and regulations.

(Also Part III-A, Section 5552; 245.30.)

Rev. Proc. 67-20

The Potter beer monitoring system, Model SY-81-600 has been approved for use in breweries.

Revenue Procedure 66-14, C.B. 1966-1, 628, superseded.

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to announce the approval of beer monitoring system, Model SY-81-600, manufactured by the Potter Aeronautical Corp., Union, N.J., for use in breweries in conjunction with approved Potter Flow Meters.

SEC. 2. BACKGROUND AND APPROVAL OF MONITORING SYSTEM.

The Potter Flow Meter equipped with beer monitoring system, Model SY-81-4000, was approved on August 29, 1958. This system incorporated a solenoid valve to prevent slow flow which the counter would not register. The new system, Model SY-81-600, eliminates the necessity for a solenoid valve or other slow-flow device by utilizing a 30-hour auxiliary power supply and an independent power failure and flow rate recorder. This device is maintained behind a security door and provides on a strip tape a permanent 3-month record of operations. From such strip tape, a determination can be made of the date and extent of a power failure and, also, within an accuracy of 5 percent of a rate of flow which falls below the established system minimum.

SEC. 3. METERS AND MONITORING SYSTEMS PREVIOUSLY APPROVED.

The following beer meters and monitoring systems have been previously approved for metering beer in breweries under 26 CFR Part 245.

.01 Figure 486 Xacto Meter, and Figure 786 Xacto Meter, manufactured by Bowser, Inc., Fort Wayne, Ind.

.02 Pittsburgh Equitable Meter, manufactured by Rockwell Manufacturing Co., Pittsburgh, Pa.

.03 Potter Flow Meter, equipped with Maximum Security System SY-81-4000, manufactured by the Potter Aeronautical Corp., Union. N.J. (Rev. Proc. 58-22, C.B. 1958–2, 1140, as modified by Rev. Procs. 61-12, C.B. 1961-1, 899, and 65-7, C.B. 1965-1, 734.)

.04 2BL and 3BL Rotocycle Beer Meters, manufactured by Rockwell Manufacturing Co., Pittsburgh, Pa., equipped with either registers (approved for piston-type meters or the Brodie Register, Series 22265. (Rev. Proc. 60-30, C.B. 1960-2, 1008, as modified by Rev. Proc. 65-14, C.B. 1965-1, 825.)

.05 Tamper-Proof Turbine Meter and Totalizer System, manufactured by the Fischer & Porter Co., Warminster, Pa. (Rev. Proc. 64-2, C.B. 1964-1, (Part 1), 641.)

.06 A. O. Smith Model SY-81 meter, equipped with Model 1537 Security System. (Rev. Proc. 65-30, C.B. 1965-2, 1024.)

.07 Fischer & Porter Co. Magnetic Meter Monitoring System SE #5264, manufactured by the Fischer & Porter Co., Warminster, Pa. (Rev. Proc. 66-9, C.B. 1966-1, 621.)

.08 Fischer & Porter Co. Magnetic Meter Monitoring System SE #5281, manufactured by the Fischer & Porter Co., Warminster, Pa. (Rev. Proc. 66-14, C.B. 1966-1, 628.)

SEC. 4. CONTROLS AND POWER FAILURE AND FLOW RATE RECORDER.

On all electronic metering systems, the panels containing the totalizers, the means of setting adjustment factors, and the power failure and flow rate recorders are to be kept under separate lock or seal under Government control. The brewer will control all other operating controls.

SEC. 5. INSTALLATION AND TEST OF METERS.

For testing brewers' meters, the Alcohol and Tobacco Tax Division ordinarily has available only master meters having 2-inch flanged connections. Therefore, brewery meters must be so installed as to be readily tested by such 2-inch meters. Also, where brewery meters normally operate in excess of the maximum rate of flow for Government master meters-usually 90 to 100 gallons per minute-provisions must be made to test such brewery meters at a lesser rate of flow. SEC. 6. EFFECT ON OTHER DOCUMENTS.

Revenue Procedure 66-14, C.B. 1966-1, 628, is hereby superseded. SEC. 7. INQUIRIES.

Inquiries regarding this Revenue Procedure should refer to its number and be addressed to the office of the appropriate Assistant Regional Commissioner, Alcohol and Tobacco Tax.

26 CFR 601.602: Forms and instructions.

(Also Part I, Section 6041; 1.6041-1.)

Rev. Proc. 67-21

Substitutes for Form 1099, U.S. Information Return may be used in lieu of the official form, subject, however, to prescribed conditions. Revenue Procedure 66-16, C.B. 1966-1,630, superseded.

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to state the requirements of the Internal Revenue Service relating to substitutes for Form 1099, U.S. Information Return.