[Federal Register Volume 64, Number 139 (Wednesday, July 21, 1999)]
[Proposed Rules]
[Pages 39106-39107]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-18457]


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

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[REG-116991-98]
RIN 1545-AW88


Compromises

AGENCY: Internal Revenue Service (IRS), Treasury.


[[Page 39107]]


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

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

SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations relating to 
the compromise of tax liabilities. These regulations provide additional 
guidance regarding the compromise of internal revenue taxes. The 
temporary regulations reflect changes to the law made by the Internal 
Revenue Service Restructuring and Reform Act of 1998 and the Taxpayer 
bill of Rights II. The text of the temporary regulations also serves as 
the text of these proposed regulations.

DATES: Written or electronically generated comments and requests for a 
public hearing must be received by October 19, 1999.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-116991-98), 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-116991-98), 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.gov/prod/tax__regs/comments.html.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Carol A. 
Campbell, (202) 622-3620 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend the Procedure and Administration 
Regulations (26 CFR part 301) under section 7122 of the Internal 
Revenue Code. The temporary regulations reflect the amendment of 
section 7122 by section 3462 of the Internal Revenue Service 
Restructuring and Reform Act of 1998 (``RRA 1998'') Public Law, 105-
206, (112 Stat. 685, 764) and by section 503(a) of Taxpayer Bill of 
Rights II Public Law 104-168, (110 Stat. 1452, 1461).
    The text of the 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 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 the 
regulation does 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 Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written comments (a signed original 
and eight (8) copies) or electronically generated comments that are 
submitted timely to the IRS. The IRS generally requests any comments on 
the clarity of the proposed rule and how it may be made easier to 
understand.
    Section 3462 of RRA 1998 and its legislative history provide for 
the consideration of factors such as equity, hardship, and public 
policy in the compromise of tax cases, if such consideration would 
promote effective tax administration. The legislative history also 
states that the IRS should use this new compromise authority ``to 
resolve longstanding cases by forgoing penalties and interest which 
have accumulated as a result of delay in determining the taxpayer's 
liability.'' H. Conf. Rep. 599, 105th Cong., 2d Sess. 289 (1998). The 
text of the temporary regulation provides the authority to compromise 
cases involving issues of equity, hardship, and public policy, if such 
a compromise would promote effective tax administration. The temporary 
regulation provides factors to be considered and examples of cases that 
could be compromised under this authority when collection of the full 
amount of the tax liability would create economic hardship. The 
temporary regulation also provides limited examples of cases that could 
be compromised when the facts and circumstances presented indicate that 
collection of the full tax liability would be detrimental to voluntary 
compliance. The temporary regulation does not contain examples of 
longstanding cases that could be compromised to promote effective tax 
administration when penalties and interest have accumulated as the 
result of delay by the Service in determining the tax liability.
    The public is specifically encouraged to make comments or provide 
examples regarding the particular types of cases or situations in which 
the Secretary's authority to compromise should be used because: (1) 
collection of the full amount of tax liability would be detrimental to 
voluntary compliance or (2) IRS delay in determining the tax liability 
has resulted in the accumulation of significant interest and penalties. 
In formulating comments regarding delay in interest and penalty cases, 
consideration should be given to the possible interplay between cases 
compromised under this provision and the relief accorded taxpayers 
under I.R.C. section 6404(e).
    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, time, and place for the hearing will be 
published in the Federal Register.
    Drafting Information: The principal author of these regulations is 
Carol A. Campbell, Office of the Assistant Chief Counsel (General 
Litigation) CC:EL:GL, IRS. However, other personnel from the IRS 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 * * *

    Paragraph 2. Section 301.7122-1 is added to read as follows:


Sec. 301.7122-1  Compromises.

    [The text of this proposed section is the same as the text of 
Sec. 301.7122-IT published elsewhere in this issue of the Federal 
Register.]
Charles O. Rossotti,
Commissioner of Internal Revenue.
[FR Doc. 99-18457 Filed 7-19-99; 8:45 am]
BILLING CODE 4830-01-U