[Federal Register Volume 60, Number 167 (Tuesday, August 29, 1995)]
[Rules and Regulations]
[Pages 44758-44760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21438]



=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 40

[TD 8616]
RIN 1545-AT26


Deposits of Excise Taxes

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary regulations.

-----------------------------------------------------------------------

SUMMARY: This document contains temporary regulations relating to 
deposits of excise taxes. These temporary regulations reflect changes 
to the law made by the Uruguay Round Agreements Act and affect persons 
required to make deposits of excise taxes. The text of these temporary 
regulations also serves as the text of the proposed regulations set 
forth in the notice of proposed rulemaking on this subject in the 
Proposed Rules section of this issue of the Federal Register.

EFFECTIVE DATE: These regulations are effective August 1, 1995.

FOR FURTHER INFORMATION CONTACT: Ruth Hoffman, (202) 622-3130 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    This document contains amendments to the Excise Tax Procedural 
Regulations (26 CFR part 40) relating to deposits of excise taxes. 
Effective January 1, 1995, the Uruguay Round Agreements Act of 1994 
(the Act) amended sections 6302(e) and (f) (relating to deposits of 
excise taxes). As amended, these provisions require an additional 
deposit of all excise taxes except air transportation taxes in 
September of each year. Beginning in 1997, the amendments also apply to 
air transportation taxes. These temporary regulations provide safe 
harbor rules for that additional deposit of tax.
    Under existing rules, deposits of excise taxes for a semimonthly 
period generally must equal the amount of tax liability incurred (or in 
the case of collected taxes, the amount of tax collected) during that 
semimonthly period unless a safe harbor applies. Sections 40.6302(c)-
1(c) and 40.6302(c)-2(b) (2) and (3) provide two safe harbor rules for 
computing the amount of tax required to be deposited; the look-back 
quarter safe harbor rule and the current liability safe harbor rule.
    These temporary regulations modify the safe harbor rules to reflect 
the amendments made by the Act.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in EO 12866. Therefore, a 
regulatory assessment is not required. It also has been determined that 
section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) 
and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to 
these regulations, and, therefore, a Regulatory Flexibility Analysis is 
not required. Pursuant to section 7805(f) of the Internal Revenue Code, 
these temporary regulations will be submitted to the Chief Counsel for 
Advocacy of the Small Business Administration for comment on their 
impact on small business.

    Drafting Information: The principal author of these regulations 
is Ruth Hoffman, Office of Assistant Chief Counsel (Passthroughs and 
Special Industries). However, other personnel from the IRS and 
Treasury Department participated in their development.

List of Subjects in 26 CFR Part 40

    Excise taxes, Reporting and recordkeeping requirements. 

[[Page 44759]]


Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 40 is amended as follows:

PART 40--EXCISE TAX PROCEDURAL REGULATIONS

    Paragraph 1. The authority citation for part 40 continues to read 
in part as follows:

    Authority: 26 U.S.C. 780 * * *

    Par. 2. Section 40.6302(c)-5T is added to read as follows:


Sec. 40.6302(c)-5T  Use of Government depositaries; rules under 
sections 6302(e) and (f) (temporary).

    (a) Applicability; meaning of terms. This section sets forth rules 
relating to the excise tax deposits required under sections 6302(e)(2) 
and (f). Terms used both in this section and in any other provision of 
Sec. 40.6302(c)-1, 40.6302(c)-2, 40.6302(c)-3, or 40.6302(c)-4 have the 
same meaning for purposes of this section as when used in such other 
provision.
    (b) Nine-day rule and 14-day rule taxes--(1) Deposits required. In 
the case of deposits of 9-day rule taxes and 14-day rule taxes for the 
second semimonthly period in September, separate deposits are required 
for the period September 16th-26th and the period September 27th-30th.
    (2) Amount of deposit; in general. Each deposit of a class of tax 
(that is, 9-day rule taxes or 14-day rule taxes) required under this 
paragraph (b) for the periods September 16th-26th and September 27th-
30th must be not less than the amount of net tax liability incurred for 
the class of tax during the period. The net tax liability incurred for 
a class of tax during these periods may be computed by--
    (i) Determining the amount of net tax liability reasonably expected 
to be incurred for the class of tax during the second semimonthly 
period in September;
    (ii) Treating 11/15 (73.34 percent) of such amount as the net tax 
liability incurred during the period September 16th-26th; and
    (iii) Treating the remainder of the amount determined under 
paragraph (b)(2)(i) of this section (adjusted to reflect net tax 
liability actually incurred through the end of September) as the net 
tax liability incurred during the period September 27th-30th.
    (3) Amount of deposit; safe harbor rules. In the case of a class of 
tax for which an additional September deposit is required under this 
paragraph (b), the safe harbor rules of Sec. 40.6302(c)-1(c) are 
modified as follows:
    (i) Safe harbor rule based on look-back quarter liability. The safe 
harbor rule of Sec. 40.6302(c)-1(c)(2)(i) does not apply for the third 
calendar quarter unless--
    (A) The deposit of taxes in that class for the period September 
16th-26th is not less than \11/90\ (12.23 percent) of the net tax 
liability reported for the class of tax for the look-back quarter; and
    (B) The total deposit of taxes in that class for the second 
semimonthly period in September is not less than \1/6\ (16.67 percent) 
of the net tax liability reported for the class of tax for the look-
back quarter.
    (ii) Safe harbor rule based on current liability. The safe harbor 
rule of Sec. 40.6302(c)-1(c)(3)(i) does not apply for the third 
calendar quarter unless--
    (A) The deposit of taxes in that class for the period September 
16th-26th is not less than 69.67 percent of the net tax liability for 
the class of tax for the second semimonthly period in September; and
    (B) The total deposit of taxes in that class for the second 
semimonthly period in September is not less than 95 percent of the net 
tax liability for the class of tax for that semimonthly period.
    (4) Time to deposit. The deposit required under this paragraph (b) 
for the period beginning September 16th must be made on or before 
September 29. The deposit required under this paragraph (b) for the 
period ending September 30th must be made at the time prescribed in 
Sec. 40.6302(c)-1(b)(6)(i) (or, to the extent applicable, at the time 
prescribed in Sec. 40.6302(c)-4(b)) for making deposits for the second 
semimonthly period in September.
    (c) 30-day rule taxes--(1) Deposits required. In the case of 
deposits of 30-day rule taxes for the first semimonthly period in 
September, separate deposits are required for the period September 1st-
11th and the period September 12th-15th.
    (2) Amount of deposit; in general. Each deposit of 30-day rule 
taxes required under this paragraph (c) for the periods September 1st-
11th and September 12th-15th must be not less than the amount of net 
tax liability incurred for 30-day rule taxes during the period. The net 
tax liability incurred during these periods may be computed by--
    (i) Determining the amount of net tax liability incurred during the 
first semimonthly period in September (or, if semimonthly liability is 
computed by dividing monthly liability by two, the amount reasonably 
expected to be incurred);
    (ii) Treating \11/15\ (73.34 percent) of such amount as the net tax 
liability incurred during the period September 1st-11th; and
    (iii) Treating the remainder of the amount determined under 
paragraph (c)(2)(i) of this section (adjusted, if such amount is based 
on reasonable expectations, to reflect net tax liability actually 
incurred through the end of September) as the net tax liability 
incurred during the period September 12th-15th.
    (3) Amount of deposit; safe harbor rules. In the case of 30-day 
rule taxes for which an additional September deposit is required under 
this paragraph (c), the safe harbor rules of Sec. 40.6302(c)-2(b) are 
modified as follows:
    (i) Safe harbor rule based on look-back quarter liability. The safe 
harbor rule of Sec. 40.6302(c)-2(b)(2) does not apply for the third 
calendar quarter unless--
    (A) The deposit of 30-day rule taxes for the period September 1st-
11th is not less than \11/90\ (12.23 percent) of the net tax liability 
reported for 30-day rule taxes for the look-back quarter; and
    (B) The total deposit of 30-day rule taxes for the first 
semimonthly period in September is not less than \1/6\ (16.67 percent) 
of the net tax liability reported for 30-day rule taxes for the look-
back quarter.
    (ii) Safe harbor rule based on current liability. The safe harbor 
rule of Sec. 40.6302(c)-2(b)(3) does not apply for the third calendar 
quarter unless--
    (A) The deposit of 30-day rule taxes for the period September 1st-
11th is not less than 69.67 percent of the net tax liability for 30-day 
rule taxes for the first semimonthly period in September; and
    (B) The total deposit of 30-day rule taxes for the first 
semimonthly period in September is not less than 95 percent of the net 
tax liability for 30-day rule taxes for that semimonthly period.
    (4) Time to deposit. The deposit required under this paragraph (c) 
for the period beginning September 1st and the deposit of 30-day rule 
taxes for the second semimonthly period in August must be made on or 
before September 29. The deposit required under this paragraph (c) for 
the period ending September 15th must be made at the time prescribed in 
Sec. 40.6302(c)-2(b)(1) for making deposits for the first semimonthly 
period in September.
    (d) Alternative method taxes--(1) Deposits required. In the case of 
alternative method taxes charged (that is, included in amounts billed 
or tickets sold) during the first semimonthly period in September, 
separate deposits are required for the taxes charged during the period 
September 1st-11th and the period September 12th-15th. 

[[Page 44760]]

    (2) Amount of deposit; in general. Each deposit of alternative 
method taxes required under this paragraph (d) for the periods 
September 1st-11th and September 12th-15th must be not less than the 
amount of alternative method taxes charged during the period. The 
amount of alternative method taxes charged during these periods may be 
computed by--
    (i) Determining the net amount of alternative method taxes 
reflected in the separate account for the first semimonthly period in 
September (or one-half of the net amount of alternative method taxes 
reasonably expected to be reflected in the separate account for the 
month of September);
    (ii) Treating \11/15\ (73.34 percent) of such amount as the amount 
charged during the period September 1st-11th; and
    (iii) Treating the remainder of the amount determined under 
paragraph (d)(2)(i) of this section (adjusted, if such amount is based 
on reasonable expectations, to reflect actual charges through the end 
of September) as the amount charged during the period September 12th-
15th.
    (3) Amount of deposit; safe harbor rules. In the case of 
alternative method taxes for which an additional September deposit is 
required under this paragraph (d), the safe harbor rules of 
Sec. 40.6302(c)-1(c) are modified as follows:
    (i) Safe harbor rule based on look-back quarter liability. The safe 
harbor rule of Sec. 40.6302(c)-1(c)(2)(i) does not apply for the fourth 
calendar quarter unless--
    (A) The deposit for alternative method taxes charged during the 
period September 1st-11th is not less than \11/90\ (12.23 percent) of 
the net tax liability reported for alternative method taxes for the 
look-back quarter; and
    (B) The total deposit for alternative method taxes charged during 
the first semimonthly period in September is not less than \1/6\ (16.67 
percent) of the net tax liability reported for alternative method taxes 
for the look-back quarter.
    (ii) Safe harbor rule based on current liability. The safe harbor 
rule of Sec. 40.6302(c)-1(c)(3)(i) does not apply for the fourth 
calendar quarter unless--
    (A) The deposit for alternative method taxes charged during the 
period September 1st-11th is not less than 69.67 percent of the 
alternative method taxes charged during the first semimonthly period in 
September; and
    (B) The total deposit for alternative method taxes charged during 
the first semimonthly period in September is not less than 95 percent 
of the alternative method taxes charged during that semimonthly period.
    (4) Time to deposit. The deposit required under this paragraph (d) 
for taxes charged during the period beginning September 1st must be 
made on or before September 29. The deposit of alternative method taxes 
required under this paragraph (d) for taxes charged during the period 
ending September 15th must be made at the time prescribed in 
Sec. 40.6302(c)-3(c) for making deposits for the first semimonthly 
period in October.
    (e) Modifications for persons not required to use electronic funds 
transfer. In the case of a person that is not required to deposit 
excise taxes by electronic funds transfer (a non-EFT depositor), the 
rules of paragraphs (b), (c), and (d) apply with the following 
modifications:
    (1) The periods for which separate deposits must be made under 
paragraph (b) of this section are September 16th-25th and September 
26th-30th. In addition, the deposit required for the period beginning 
September 16th must be made on or before September 28.
    (2) The periods for which separate deposits must be made under 
paragraph (c) of this section are September 1st-10th and September 
11th-15th. In addition, the deposit required for the period beginning 
September 1st and the deposit of 30-day rule taxes for the second 
semimonthly period in August must be made on or before September 28.
    (3) The taxes for which separate deposits must be made under 
paragraph (d) of this section are those charged during the periods 
September 1st-10th and September 11th-15th. In addition, the deposit 
required for taxes charged during the period beginning September 1st 
must be made on or before September 28.
    (4) The generally applicable fractions and percentages are modified 
to reflect the different deposit periods in accordance with the 
following table:

------------------------------------------------------------------------
 Generally applicable fractions and                                     
            percentages              Modification for non-EFT depositors
------------------------------------------------------------------------
\11/15\ (73.34 percent)............  \10/15\ (66.67 percent).           
\11/90\ (12.23 percent)............  \10/90\ (11.12 percent).           
69.67 percent......................  63.34 percent.                     
------------------------------------------------------------------------

    (f) Due date on Saturday or Sunday--(1) EFT depositors. A deposit 
that, under the rules of this section, would otherwise be due on 
September 29 must be made on or before September 28 if September 29 is 
a Saturday and on or before September 30 if September 29 is a Sunday.
    (2) Non-EFT depositors. A deposit that, under the rules of this 
section, would otherwise be due on September 28 must be made on or 
before September 27 if September 28 is a Saturday and on or before 
September 29 if September 28 is a Sunday.
    (g) Special rules for section 4081 taxes superseded. Deposits for 
the second semimonthly period in September of taxes imposed by section 
4081 must be made under the rules of this section and without regard to 
the special rules for such deposits under Sec. 40.6302(c)-1.
    (h) Effective date--(1) In general. Except as provided in paragraph 
(h)(2) of this section, this section is effective August 1, 1995.
    (2) Air transportation taxes. For air transportation taxes, this 
section is effective January 1, 1997.
Margaret Milner Richardson,
Commissioner of Internal Revenue.

    Approved: August 3, 1995.
Leslie Samuels,
Assistant Secretary of the Treasury.
[FR Doc. 95-21438 Filed 8-28-95; 8:45 am]
BILLING CODE 4830-01-U