[Federal Register Volume 62, Number 248 (Monday, December 29, 1997)]
[Rules and Regulations]
[Pages 67568-67570]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33248]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 40
[TD 8740]
RIN 1545-AV03
Deposits of Excise Taxes
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Temporary regulations.
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SUMMARY: This document contains temporary regulations relating to the
availability of the safe harbor deposit rule based on look-back quarter
liability and affects persons required to make deposits of excise
taxes. This document also contains temporary regulations relating to
floor stocks taxes and affects persons liable for those taxes. The
regulations implement certain changes made by the Small Business Job
Protection Act of 1996 (the 1996 Act) and the Airport and Airway Trust
Fund Tax Reinstatement Act of 1997 (the 1997 Act). The text of these
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.
DATES: These regulations are effective December 29, 1997. For dates of
applicability, see Secs. 40.6302(c)-1T and 40.6302(c)-2T.
FOR FURTHER INFORMATION CONTACT: Ruth Hoffman (202) 622-3130 (not a
toll-free call).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to the Excise Tax Procedural
Regulations (26 CFR part 40) that implement certain changes made by the
1996 Act and the 1997 Act.
The aviation excise taxes that expired on December 31, 1995, were
reinstated by the 1996 Act for the period from August 27 through
December 31, 1996, by the 1997 Act for the period from March 7 through
September 30, 1997, and were extended, with modifications, for the
period from October 1, 1997, through September 30, 2007.
Deposit Safe Harbor Rules
Sections 40.6302(c)-1(c)(2) and 40.6302(c)-2(b)(2) (relating to
deposit safe harbors) currently provide, generally, that a person can
satisfy excise tax deposit obligations for a calendar quarter by
depositing an amount equal to the person's excise tax liability
reported on the return for the second preceding quarter (the look-back
quarter). For this purpose, the tax liability for the look-back quarter
must be modified to take into account any increase in rates in the
current quarter, but the safe harbor does not specifically address the
effect of the enactment of a new tax or the reinstatement of an expired
tax. Notice 97-15, 1997-8 I.R.B. 23, and section 2(f) of the 1997 Act
provide that the look-back safe harbor shall not apply with respect to
any tax unless the tax was imposed throughout the look-back period.
The temporary regulations modify the look-back safe harbor rules to
reflect this
[[Page 67569]]
change. Under the temporary regulations, the general look-back safe
harbor of Sec. 40.6302(c)-1(c)(2) is modified for a class of tax that
includes a tax that was not in effect at all times during the look-back
quarter (or, in the case of an alternative method tax, that was not in
effect at all times during the look-back quarter and the month
preceding the look-back quarter). The safe harbor does not apply to
that class of tax unless, for each semimonthly period, the deposit is
not less than the greater of (1) \1/6\ of the net tax liability
reported for the class of tax for the look-back quarter, or (2) the sum
of (i) 95 percent of the net tax liability incurred with respect to new
or reinstated taxes during the semimonthly period, and (ii) \1/6\ of
the net tax liability reported for all other taxes in the class for the
look-back quarter. Also, the section 4681 tax (ozone-depleting
chemicals) look-back safe harbor provided under Sec. 40.6302(c)-2(b)(2)
is modified in a similar manner if the tax liability for the quarter
includes liability for any chemical that was not subject to tax at all
times during the look-back quarter.
The new rules apply to liabilities for new or reinstated taxes
incurred after February 28, 1997.
Fuel Floor Stocks Taxes
Section 1609(h) of the 1996 Act imposes a floor stocks tax on
aviation fuel (other than gasoline) on which tax was imposed by section
4091 before August 27, 1996, and that is held on the first moment of
that date by any person. Section 2(d) of the 1997 Act imposes a floor
stocks tax on aviation gasoline and aviation fuel (other than gasoline)
on which tax was imposed by section 4081 or 4091 before March 7, 1997,
and that is held on the first moment of that date by any person.
The temporary regulations provide that the rules set forth in 26
CFR part 40 (relating to administrative provisions for certain excise
taxes, including the excise taxes on aviation fuels) also apply to
related floor stocks taxes. Thus, persons liable for floor stocks taxes
on aviation fuels must file returns reporting those taxes in accordance
with the provisions of 26 CFR part 40.
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)
does not apply to these regulations and, because these regulations do
not impose on small entities a collection of information requirement,
the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply.
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.
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. 7805 * * *
Par. 2. Section 40.0-1T is added to read as follows:
Sec. 40.0-1T Introduction (temporary).
(a) through (f). [Reserved]
(g) Applicability to floor stocks taxes. The regulations in this
part 40 also apply with respect to floor stocks taxes imposed on
articles subject to a tax described in Sec. 40.0-1(a), beginning April
1, 1991.
Par. 3. Section 40.6011(a)-1T is added to read as follows:
Sec. 40.6011(a)-1T Returns (temporary).
(a)(1) through (a)(2)(ii). [Reserved]
(a)(2)(iii) Floor stocks tax return. A return reporting liability
for a floor stocks tax described in Sec. 40.0-1T(g) is a return for the
calendar quarter in which the tax payment is due and not for the
calendar quarter in which the liability for tax is incurred, beginning
April 1, 1991.
Par. 4. Section 40.6302(c)-1T is added to read as follows:
Sec. 40.6302(c)-1T Use of Government depositaries (temporary).
(a) through (c)(2)(iii). [Reserved]
(c)(2)(iv) Modification for new or reinstated taxes--(A)
Applicability. The safe harbor rule of Sec. 40.6302(c)-1(c)(2)(i) is
modified for any calendar quarter in which a person's liability for a
class of tax includes liability for any new or reinstated tax. For this
purpose, a new or reinstated tax is--
(1) Any tax (including an alternative method tax) that was not in
effect at all times during the look-back quarter; and
(2) Any alternative method tax that was not in effect at all times
during the month preceding the look-back quarter.
(B) Modification. The safe harbor rule of Sec. 40.6302(c)-
1(c)(2)(i) does not apply to a class of tax unless the deposit of taxes
in that class for each semimonthly period in the calendar quarter is
not less than the greater of--
(1) \1/6\ of the net tax liability reported for the class of tax
for the look-back quarter; or
(2) The sum of--
(i) 95 percent of the net tax liability incurred with respect to
new or reinstated taxes during the semimonthly period; and
(ii) \1/6\ of the net tax liability reported for all other taxes in
the class for the look-back quarter.
(C) Effective date. This paragraph (c)(2)(iv) applies to tax
liabilities for new or reinstated taxes incurred after February 28,
1997, except that paragraph (c)(2)(iv)(A)(2) of this section applies
only for calendar quarters beginning after December 31, 1997.
(c)(3) through (f)(4). [Reserved]
(f)(5) Taxes excluded; floor stocks taxes. No deposit is required
in the case of any floor stocks tax described in Sec. 40.0-1T(g),
beginning April 1, 1991.
Par. 5. Section 40.6302(c)-2T is added to read as follows:
Sec. 40.6302(c)-2T Special rule for use of Government depositaries
under section 4681 (temporary).
(a) through (b)(2)(ii). [Reserved]
(b)(2)(iii) Modification for new chemicals--(A) Applicability. The
safe harbor rule of Sec. 40.6302(c)-2(b)(2)(i) is modified for any
calendar quarter in which a person's liability for section 4681 tax
includes liability with respect to any new chemical. For this purpose,
a new chemical is any chemical that was not subject to tax at all times
during the look-back quarter.
(B) Modification. The safe harbor rule of Sec. 40.6302(c)-
2(b)(2)(i) does not apply unless the deposit of section 4681 taxes for
each semimonthly period in the calendar quarter is not less than the
greater of--
(1) \1/6\ of the net tax liability reported under section 4681 for
the look-back quarter; or
(2) The sum of--
(i) 95 percent of the net tax liability incurred under section 4681
with
[[Page 67570]]
respect to the new chemical during the semimonthly period; and
(ii) \1/6\ of the net tax liability reported under section 4681
with respect to all other chemicals for the look-back quarter.
(C) Effective date. This paragraph (b)(2)(iii) applies to tax
liabilities for new chemicals incurred after February 28, 1997.
Michael P. Dolan,
Acting Commissioner of Internal Revenue.
Approved: November 6, 1997.
Donald C. Lubick,
Acting Assistant Secretary of the Treasury.
[FR Doc. 97-33248 Filed 12-24-97; 8:45 am]
BILLING CODE 4830-01-U