[Federal Register Volume 64, Number 16 (Tuesday, January 26, 1999)]
[Proposed Rules]
[Pages 3886-3888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-886]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[REG-106564-98]
RIN 1545-AW86


Modifications and Additions to the Unified Partnership Audit 
Procedures

AGENCY: Internal Revenue Service, Treasury.

ACTION: Notice of proposed rulemaking, notice of proposed rulemaking by 
cross-reference to temporary regulations, and notice of public hearing.

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SUMMARY: In the Rules and Regulations of this issue of the Federal 
Register, the Internal Revenue Service (Service) is issuing temporary 
regulations relating to the unified partnership audit procedures added 
to the Internal Revenue Code by the Tax Equity and Fiscal 
Responsibility Act of 1982 (TEFRA). The text of those temporary 
regulations also generally serves as the text of these proposed 
regulations. This document also provides a notice of public hearing on 
these proposed regulations.

DATES: Written and electronic comments must be received by April 26, 
1999. Outlines of topics to be discussed at the public hearing 
scheduled for April 14, 1999, at 10 a.m. must be received by March 24, 
1999.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-106564-98), room 
5226, Internal Revenue Service, POB 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand delivered Monday through 
Friday between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-
106564-98), Courier's desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW, Washington, DC. Alternatively, taxpayers may submit 
comments 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. The public hearing will be held in Room 2615, Internal 
Revenue Building, 1111 Constitution Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed and temporary 
regulations, Robert G. Honigman, (202) 622-3050; concerning submissions 
of comments, the hearing, and/or to be placed on the building access 
list to attend the hearing Michael L. Slaughter,

[[Page 3887]]

Jr., (202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    Temporary and final regulations in the Rules and Regulations 
section of this issue of the Federal Register amend the Procedure and 
Administration Regulations (26 CFR part 301) relating to the unified 
partnership audit procedures found in sections 6221 through 6233 of the 
Internal Revenue Code (Code).
    The text of those temporary regulations also generally serves as 
the text of these proposed regulations. The preamble to the temporary 
regulations explains the temporary and proposed regulations.
    Temporary regulations previously were published on December 13, 
1984 (49 FR 48536), and March 5, 1987 (52 FR 6779) (the existing 
regulations). The Service intends to finalize such regulations 
simultaneously with finalizing these regulations. Comments previously 
received in connection with the existing regulations will be considered 
as well as new or additional comments with respect to such regulations.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in EO 12866. It also has 
been determined that section 533(b) of the Administrative Procedures 
Act (5 U.S.C. chapter 5) does not apply to these regulations, and 
because these regulations do not impose a collection of information on 
small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) 
does not apply. 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 Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any electronic and written comments (a 
signed original and eight (8) copies) that are submitted timely to the 
Service. All comments will be available for public inspection and 
copying. The Service and Treasury Department specifically request 
comments on the clarity of the proposed regulations and how they may be 
made easier to understand.
    A public hearing has been scheduled for April 14, 1999, at 10 a.m. 
in Room 2615, Internal Revenue Building, 1111 Constitution Avenue, NW., 
Washington, DC. Due to building security procedures, visitors must 
enter at the 10th Street entrance, located between Constitution and 
Pennsylvania Avenues, NW. In addition, all visitors must present photo 
identification to enter the building. Because of access restrictions, 
visitors will not be admitted beyond the immediate entrance area more 
than 15 minutes before the hearing starts. For information about having 
your name placed on the building access list to attend the hearing, see 
the FOR FURTHER INFORMATION CONTACT section of this preamble.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing.
    Persons who wish to present oral comments at the hearing must 
submit electronic or written comments by April 26, 1999 and an outline 
of the topics to be discussed and the time devoted to each topic (a 
signed original and eight (8) copies) by March 24, 1999.
    A period of 10 minutes will be allotted to each person for making 
comments.
    An agenda showing the scheduling of the speakers will be prepared 
after the deadline for receiving outlines has passed. Copies of the 
agenda will be available free of charge at the hearing.
    Drafting Information. The principal authors of these proposed 
regulations are Robert G. Honigman, Office of the Assistant Chief 
Counsel (Passthroughs & Special Industries), and William A. Heard, 
Office of the Assistant Chief Counsel (Field Service). However, other 
personnel from the Service and Treasury Department participated in 
their development.

List of Subjects in 26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 301 is proposed to be amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

    Paragraph 1. The authority citation for part 301 continues to read 
in part as follows:

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

    Par. 2. Section 301.6221-1 as proposed to be added at 51 FR 13235, 
April 18, 1986, is amended by:
    1. Redesignating paragraph (c) as paragraph (e);
    2. Adding paragraphs (c) and (d).
    The additions read as follows:


Sec. 301.6221-1  Tax treatment determined at partnership level.

* * * * *
    (c) and (d) [The text of proposed paragraphs (c) and (d) are the 
same as the text of Sec. 301.6221-1T(c) and (d) published elsewhere in 
this issue of the Federal Register].
* * * * *
    Par. 3. Section 301.6223(c)-1 as proposed to be added at 51 FR 
13238, April 18, 1986, is amended by adding a sentence at the end of 
paragraph (c) to read as follows:


Sec. 301.6223(c)-1  Additional information regarding partners furnished 
to the Service.

* * * * *
    (c) * * * [The text of the proposed last sentence in paragraph (c) 
is the same as the text of the last sentence in Sec. 301.6223(c)-1T(c) 
published elsewhere in this issue of the Federal Register].
* * * * *
    Par. 4. Section 301.6224(c)-3 as proposed to be added at 51 FR 
13241, April 18, 1986, is amended by revising the section heading and 
paragraphs (b), (c)(3)(ii) and (d), Example (1) to read as follows:


Sec. 301.6224(c)-3  Consistent settlement terms.

* * * * *
    (b) [The text of proposed paragraph (b) is the same as the text of 
Sec. 301.6224(c)-3T(b) published elsewhere in this issue of the Federal 
Register].
    (c) * * *
    (3) * * *
    (ii) [The text of proposed paragraph (c)(3)(ii) is the same as the 
text of Sec. 301.6224(c)-3T(c)(3)(ii) published elsewhere in this issue 
of the Federal Register].
    (d) * * *
    Example (1). [The text of proposed paragraph (d) Example (1). is 
the same as the text of Sec. 301.6224(c)-3T(d) Example (1). published 
elsewhere in this issue of the Federal Register].
* * * * *
    Par. 5. Section 301-6229(b)-2 is added to read as follow:


Sec. 301.6229(b)-2  Special rule with respect to debtors in Title 11 
cases.

    [The text of this proposed section is the same as the text of 
Sec. 301.6229(b)-2T published elsewhere in this issue of the Federal 
Register].
    Par. 6. Section 301.6229(f)-1 is added to read as follows:
    [The text of this proposed section is the same as the text of 
Sec. 301.6229(f)-1T

[[Page 3888]]

published elsewhere in this issue of the Federal Register].
    Par. 7. Section 301.6231(a)(1)-1 as proposed to be added at 51 FR 
13243, April 18, 1986, is amended by:
    1. Revising the first two sentences of paragraph (a)(1);
    2. Removing paragraph (a)(3);
    3. Redesignating paragraph (a)(4) as paragraph (a)(3).
    The revision reads as follows:


Sec. 301.6231(a)(1)-1  Exception for small partnerships.

    (a) * * *
    (1) [The text of the proposed first two sentences of paragraph 
(a)(1) is the same as the text of the first two sentences of 
Sec. 301.6231(a)(1)-1T(a)(1) published elsewhere in this issue of the 
Federal Register].* * *
* * * * *
    Par. 8. Section 301.6231(a)(6)-1 as proposed to be added at 51 FR 
13245, April 18, 1986, is amended by:
    1. Revising paragraph (a);
    2. Removing paragraph (c).
    The revision reads as follows:


Sec. 301.6231(a)(6)-1  Computational adjustments.

    (a) [The text of proposed paragraph (a) is the same as the text of 
Sec. 301.6231(a)(6)-1T(a) published elsewhere in this issue of the 
Federal Register].
* * * * *
    Par. 9. Section 301.6231(a)(7)-1 is amended by revising paragraphs 
(p)(2), (r)(1) and (s) to read as follows:


Sec. 301.6231(a)(7)-1  Designation or selection of tax matters partner.

* * * * *
    (p) * * *
    (2) When each general partner is deemed to have no profits interest 
in the partnership. If it is impracticable under paragraph (o)(2) of 
this section to apply the largest-profits-interest rule of paragraph 
(m)(2) of this section, the Commissioner will select a partner 
(including a general or limited partner) as the tax matters partner in 
accordance with the criteria set forth in paragraph (q) of this 
section. The Commissioner will notify, within 30 days of the selection, 
the partner selected, the partnership, and all partners required to 
receive notice under section 6223(a), effective as of the date 
specified in the notice.
* * * * *
    (r) * * * (1) In general. If the Commissioner selects a tax matters 
partner under the provisions of paragraph (p)(1) or (3)(i) of this 
section, the Commissioner will notify, within 30 days of the selection, 
the partner selected, the partnership, and all partners required to 
receive notice under section 6223(a), effective as of the date 
specified in the notice.
* * * * *
    (s) Effective date. This section applies to all designations, 
selections, and terminations of a tax matters partner occurring on or 
after December 23, 1996, except for paragraphs (p)(2) and (r)(1), that 
are applicable on the date they are published as final regulations in 
the Federal Register.
Robert E. Wenzel,
Deputy Commissioner of Internal Revenue Service.
[FR Doc. 99-886 Filed 1-25-99; 8:45 am]
BILLING CODE 4830-01-P