Rev. Rul. 68-521

Advice has been requested whether a credit union association, taxable as a corporation, established on a United States Air Force base located in a foreign country is a `domestic' corporation as defined by section 7701(a)(4) of the Internal Revenue Code of 1954, so as to be subject to the reporting requirements of section 6049(a)(1) of the Code.

The association has not been required to obtain a Federal or state charter in order to engage in its operations due to the fact that it is situated outside the territorial jurisdiction of these chartering authorities. It was not organized under, nor is it operating in compliance with, the laws of any foreign jurisdiction. Its operations are confined, under its by-laws, to the Air Force base. Its membership is restricted to military and civilian personnel of the Department of Defense, including their dependents, regularly assigned to the base.

Section 7701(a)(4) of the Code provides that, `The term `domestic' when applied to a corporation or partnership means created or organized in the United States or under the law of the United States or of any State or Territory.' The term `foreign' when applied to a corporation means, under section 7701(a)(5) of the Code, a corporation that is not domestic.

The association was established under the authority of paragraph 4(b) of Air Force regulation No. 176-1, dated February 7, 1964, providing that installation commanders must consent in writing before private associations, such as credit unions, may be established on Air Force installations, unless there is specific authorization for their establishment under another Air Force regulation or other requlations. There is no such other authorization in this case.

Paragraph 4(b) of regulation No. 176-1 is also the authority under which all operations of the association are carried on, and any amendment or amendments of its by-laws must be made with the approval of the installation commander. If the association is found to have engaged in any unauthorized activity or activities, or to have amended its by-laws without authorization, the installation commander may withdraw his consent to continued operations of the association at the installation.

Under these circumstances, the instant association was organized under laws of the United States, since it was organized under and is subject to regulations promulgated and authority exercised under such laws. Accordingly, the association is a domestic corporation within the meaning of section 7701(a)(4) of the Code.

Under section 6049(a)(1) of the Code every person who makes payments of interest aggregating $10 or more to any other person during any calendar year shall make an information return on Form 1096 and Form 1099 for such calendar year showing the aggregate amount of such payments, the name and address of the person to whom paid, the total of such payments for all persons and such other information as is required by the forms.

Accordingly, the association is subject to the reporting requirements of section 6049(a)(1) of the Code.