[Federal Register Volume 63, Number 8 (Tuesday, January 13, 1998)]
[Proposed Rules]
[Pages 1932-1933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-600]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-120200-97]
RIN 1545-AV79


Election Not to Apply Look-Back Method in De Minimis Cases

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations.

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations under 
section 460 relating to the look-back method. The temporary regulations 
provide rules for electing not to apply the look-back method to long-
term contracts in de minimis cases. The temporary regulations reflect 
changes to the law made by the Taxpayer Relief Act of 1997 and affect 
electing manufacturers and construction contractors whose long-term 
contracts otherwise are subject to the look-back method. The text of 
those temporary regulations also serves as the text of these proposed 
regulations.

DATES: Written comments and requests for a public hearing must be 
received by April 13, 1998.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-120200-97), room 
5228, Internal Revenue Service, POB 7604, Ben Franklin Station, 
Washington, DC 20044. In the alternative, submissions may be hand 
delivered between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R 
(REG-120200-97), Courier's Desk, Internal Revenue Service, 1111 
Constitution Avenue, NW., Washington, DC, or sent electronically via 
the Internet by selecting the ``Tax Regs'' option on the IRS Home Page, 
or by submitting comments directly to the IRS Internet site at http://
www.irs.ustreas.gov/prod/tax__regs/comments.html.

FOR FURTHER INFORMATION CONTACT: John M. Aramburu or Leo F. Nolan II at 
(202) 622-4960 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)). Comments on the collection of information should be 
sent to the Office of Management and Budget, Attn: Desk Officer for the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503, with copies to the Internal Revenue 
Service, Attn: IRS Reports Clearance Officer, T:FP, Washington, DC 
20224. Comments on the collection of information should be received by 
March 16, 1998. Comments are specifically requested concerning:
    Whether the proposed collection of information is necessary for the 
proper performance of the functions of the Internal Revenue Service, 
including whether the information will have practical utility;
    The accuracy of the estimated burden associated with the proposed 
collection of information (see below);
    How the quality, utility, and clarity of the information to be 
collected may be enhanced;
    How the burden of complying with the proposed collection of 
information may be minimized, including through the application of 
automated collection techniques or other forms of information 
technology; and
    Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.
    The collection of information in this proposed regulation is in 
Sec. 1.460-6(j). This information is required to notify the 
Commissioner of taxpayers' elections under section 460(b)(6). This 
information will be used to determine whether taxpayers have properly 
elected under section 460(b)(6). This collection of information is 
required for a taxpayer to elect not to apply the look-back method to 
long-term contracts in de minimis cases. The likely respondents are 
for-profit entities.
    Estimated total annual reporting burden: 4,000 hours.
    Estimated average annual burden hours per respondent: 0.2 hours.
    Estimated number of respondents: 20,000.
    Estimated frequency of responses: Once.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid OMB control number.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax return information are confidential, as required by 26 U.S.C. 6103.

Background

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend the Regulations on Income Taxes (26 
CFR part 1) relating to section 460. The text of those temporary 
regulations also serves as the text of these proposed regulations. The 
preamble to the temporary regulations explains the regulations.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in EO 12866. Therefore, 
a regulatory assessment is not required. It is hereby certified that 
the collection of information in these regulations will not have a 
significant economic impact on a substantial number of small entities. 
This certification is based on the fact that the time required to 
prepare and file an election statement is minimal and will not have a 
significant impact on those small entities that choose to make the 
election. In addition, the election need only be made once by a 
taxpayer. Therefore, a Regulatory Flexibility Analysis under the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. 
Pursuant to section 7805(f) of the Internal Revenue Code, this notice 
of proposed rulemaking will be submitted to the Chief Counsel for 
Advocacy of the Small Business Administration for comment on its impact 
on small business.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any electronic or written comments (a 
signed original and eight (8) copies) that are submitted timely to the 
IRS. All comments will be available for public inspection and copying. 
A public hearing may be scheduled if requested in writing by a person 
that timely submits written comments. If a public hearing is scheduled, 
notice of the date,

[[Page 1933]]

time, and place of the hearing will be published in the Federal 
Register.

Drafting Information

    The principal author of these proposed regulations is Leo F. Nolan 
II, Office of Assistant Chief Counsel (Income Tax and Accounting). 
However, other personnel from the IRS and Treasury Department 
participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1--INCOME TAXES

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

    Authority: 26 U.S.C. 7805 * * *

    Par. 2. Section 1.460-6 is amended by adding paragraph (j) to read 
as follows:


Sec. 1.460-6  Look-back method.

* * * * *
    (j) [The text of proposed paragraph (j) is the same as the text of 
Sec. 1.460-6T(j) published elsewhere in this issue of the Federal 
Register].
Michael P. Dolan,
Deputy Commissioner of Internal Revenue.
[FR Doc. 98-600 Filed 1-12-98; 8:45 am]
BILLING CODE 4830-01-U