[Federal Register Volume 64, Number 218 (Friday, November 12, 1999)]
[Rules and Regulations]
[Pages 61498-61502]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29084]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1, 301, and 602

[TD 8841]
RIN 1545-AU99


Return of Partnership Income

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations revising the 
partnership filing requirement. These regulations reflect changes to 
the law made by the Taxpayer Relief Act of 1997 (TRA). All partnerships 
required to file partnership returns, including certain foreign 
partnerships, are affected by these regulations.
DATES: Effective Dates: These regulations are effective January 1, 
2000, except that Sec. 1.6031(a)-1(b)(3) is effective January 1, 2001.
    Applicability Dates: For dates of applicability, see 
Secs. 1.6031(a)-1(f) and 1.6063-1(c)(2).

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Martin 
Schaffer, 202-622-3070; concerning foreign partnerships, Guy A. 
Bracuti, 202-622-3860 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in these final regulations 
has been reviewed and approved by the Office of Management and Budget 
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)) under control number 1545-1583. The collection of information 
in these final regulations is in Sec. 1.6031(a)-1. This information is 
required to enable the IRS to verify that a taxpayer is reporting the 
correct amount of income or gain or claiming the correct amount of 
losses, deductions, or credits from that taxpayer's interest in the 
partnership.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number.
    The burden is reflected in the burden estimate of Form 1065.
    Comments concerning the accuracy of this burden estimate and 
suggestions for reducing this burden should be sent to the

Internal Revenue Service, Attn: IRS Reports Clearance Officer, T:FS:FP, 
Washington, DC 20224, and
Office of Management and Budget, Attn: Desk Officer for the Department 
of the Treasury, Office of Information and Regulatory Affairs, 
Washington, DC 20503.

    Books or records relating to a collection of information must be 
retained as long as their contents might 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

    On January 26, 1998, the IRS and Treasury published in the Federal 
Register (63 FR 3677) proposed amendments to the regulations (REG-
209322-82) under sections 6031 and 6063 of the Internal Revenue Code 
(Code). These amendments were designed, in part, to reflect changes 
made to section 6031 of the Code by section 1141 of TRA, Public Law 
105-34 (111 Stat. 788). Written comments responding to these proposed 
regulations were received. No public hearing was requested or held. 
After consideration of all the comments, the proposed regulations under 
sections 6031 and 6063 of the Code are adopted as revised by this 
Treasury decision, and the current final regulations under section 6031 
of the Code are removed.

Explanation of Revisions and Summary of Comments

A. General Filing Requirements for Foreign Partnerships

    Section 6031(a) of the Code requires every partnership to file a 
partnership return. However, section 6031(e) of the Code provides that 
a foreign partnership is not required to file a return for a taxable 
year unless during that year it derives gross income from sources 
within the United States (U.S.-source income) or has gross income that 
is effectively connected with the conduct of a trade or business within 
the United States (ECI).
    Consistent with section 6031(e) of the Code, the proposed 
regulations generally required a foreign partnership to file a return 
under section 6031 of the Code if it had either U.S.-source income or 
ECI. This general rule is adopted without change in the final 
regulations.

B. Exceptions to General Filing Requirements

    Under the proposed regulations, a foreign partnership that had no 
ECI, and that otherwise was required to file a partnership return only 
because it had U.S.-source income, was exempt from the requirement to 
file a partnership return if: (i) No United States person had a direct 
or indirect interest in the partnership; (ii) the U.S.-source income 
was either fixed or determinable annual or periodical income described 
in Sec. 1.1441-2(b) or other amounts subject to withholding described 
in Sec. 1.1441-2(c); (iii) Forms 1042 and 1042-S were filed with 
respect to all such gross income by the partnership, or by another 
withholding agent (or agents) if the partnership was not required to 
file such forms; and (iv) the tax liability of the partners with 
respect to such gross income was fully satisfied by the withholding of 
tax at source. Most of the written comments received with respect to 
the proposed regulations requested that the IRS and Treasury modify 
this proposed exception to the foreign partnership filing requirement.
    In response to these comments, the final regulations liberalize the 
exceptions in certain instances for foreign partnerships that have 
U.S.-source income but no ECI. The changes are designed to reduce 
duplicative filing requirements where other information reporting and 
withholding requirements provide adequate protection for the tax system 
and to recognize that where there is de minimis ownership in a foreign 
partnership by U.S. partners, the return filing requirements should not 
be invoked merely because the partnership earns any amount of U.S.-
source income.
    The final regulations contain three rules that modify the reporting 
obligations of certain foreign partnerships that have no ECI. These 
modified reporting rules, with the exception of the de minimis 
exception, are applicable for partnership taxable years beginning after 
December 31, 2000, because they are dependent on rules contained in 
Secs. 1.1441-5(c) and 1.1461-1, which will be applicable only after 
December 31, 2000. See Notice 99-27 (1999-20 I.R.B. 75). The de minimis

[[Page 61499]]

exception, however, will be effective for partnership taxable years 
beginning after December 31, 1999, the general effective date of these 
regulations.
    The modified reporting rules contain some common requirements. None 
of these rules will apply to a withholding foreign partnership (as 
defined in Sec. 1.1441-5(c)(2)(i)). Also, with the exception of the de 
minimis rule, the modified reporting rules will apply only when one or 
more withholding agents file the required Forms 1042 and 1042-S and pay 
the associated withholding tax.
    The first modified reporting rule is the de minimis exception. This 
rule provides that a foreign partnership (other than a withholding 
foreign partnership, as defined in Sec. 1.1441-5(c)(2)(i)) with $20,000 
or less of U.S.-source income and no ECI is required to file a 
partnership return only if one percent or more of any item of 
partnership gain, loss, deduction, or credit is allocable in the 
aggregate to direct U.S. partners.
    The second modified reporting rule, which also was contained in the 
proposed regulations, provides that a foreign partnership with U.S.-
source income but no ECI and no U.S. partners is not required to file a 
partnership return. Under the third rule, a foreign partnership with 
U.S.-source income and one or more U.S. partners but no ECI must file a 
partnership return. However, such a partnership need file Schedules K-1 
only for its direct U.S. partners and for its passthrough partners 
through which U.S. partners hold an interest in the foreign 
partnership.
    The final regulations do not require a foreign partnership to 
provide Schedules K-1 for foreign partners deriving U.S.-source income 
that is not ECI, because the foreign partners are subject to 
information reporting on Forms 1042-S under the rules contained in 
Secs. 1.1441-5(c) and 1.1461-1 of the regulations. These rules 
generally subject the foreign partners, and not the partnership, to an 
information reporting regime with respect to U.S.-source income (that 
is not ECI) paid to a foreign partnership. To the extent that 
information returns are not required for foreign partners under section 
1461 of the Code, the IRS and Treasury have determined that reporting 
under section 6031 of the Code is unnecessary as long as the foreign 
partnership has no ECI. Accordingly, a foreign partnership with no ECI 
need not report on a Schedule K-1 a foreign partner's allocable share 
of items of income, including U.S.-source gains that are not subject to 
Form 1042-S reporting, deposit interest under section 871(i) of the 
Code, and interest or OID on short-term obligations under section 
871(g) of the Code.
    In contrast to the rule for U.S.-source income, the exception to 
Schedule K-1 reporting does not apply to a foreign partner's allocable 
share of ECI. Under the information reporting rules in Secs. 1.1441-
5(c)(1)(ii)(B) and 1.1461-1(c) of the regulations, ECI must be reported 
to a foreign partnership rather than to the foreign partners directly. 
In addition, because ECI is subject to tax on a net basis, a foreign 
partnership must provide a foreign partner's allocable share of other 
items of partnership income, gain, loss, or deduction to properly 
calculate the net taxable income. Therefore, if a foreign partnership 
has ECI, it must file a complete partnership return (with Schedules K-1 
for all partners) reflecting all items of partnership income, gain, 
loss, deduction, and credit.

C. Partners That Are Controlled Foreign Corporations

    One commentator suggested that a foreign partnership should not 
have to file under section 6031 of the Code if it has no direct U.S. 
partners and its only U.S.-source income is bank deposit interest under 
section 871(i) of the Code. The exception to the filing requirement in 
Sec. 1.6031(a)-1(b)(2) of the proposed regulations did not apply to 
foreign partnerships with direct or indirect U.S. partners. Thus, 
according to the commentator, this exception did not apply to a common, 
nonabusive situation in which a controlled foreign corporation (CFC) is 
a partner in a foreign partnership whose only U.S.-source income is 
interest earned on a U.S. bank account. (Foreign partners do not owe 
U.S. tax on this interest income; see section 871(i) of the Code and 
Sec. 1.1441-2(a) of the regulations (final sentence). In addition, a 
U.S. person who controls a CFC must report such income on Form 5471; 
see Sec. 1.6038-2.)
    The term indirect interest was not defined in the proposed 
regulations. Thus, whether a U.S. shareholder of a CFC partner held an 
indirect interest in the foreign partnership was not clear. These final 
regulations define the term United States partner as any U.S. person 
owning a direct or indirect interest in the foreign partnership. An 
indirect interest is defined as any interest held through one or more 
passthrough partners (as defined in section 6231(a)(9) of the Code). A 
passthrough partner is a partnership, estate, trust, S corporation, 
nominee, or other similar person. Because a CFC is not a passthrough 
partner, the U.S. shareholder of a CFC has no indirect interest in the 
foreign partnership under these final regulations. Accordingly, a 
partnership with no ECI need not file a return solely as a result of 
having a CFC partner.

D. Responsibility To Ensure Filing of Forms 1042 and 1042-S and Payment 
of Associated Tax

    As stated above, a foreign partnership may avail itself of the 
modified filing requirements in Sec. 1.6031(a)-1(b)(3) of these 
regulations, for partnership taxable years beginning after December 31, 
2000, only if it or another withholding agent actually files the Forms 
1042 and 1042-S and pays the associated tax. A commentator suggested 
that a foreign partnership with no withholding responsibility should 
not have the burden of ensuring that another withholding agent has 
properly filed Forms 1042-S in order to invoke the modified filing 
requirements.
    Where a withholding agent fails to withhold (and to file the 
requisite forms) with respect to a partner in a foreign partnership, 
the Service might be unable to assess and collect the proper tax 
without information from a partnership return. A partnership return 
provides the Service with the name of the foreign partner and the 
amount subject to withholding. Accordingly, these final regulations do 
not adopt the comment.
    While this comment is not adopted, certain relief still may be 
available. Each person who has control, receipt, custody, or payment of 
an amount subject to withholding is a withholding agent and is 
responsible for withholding tax and filing Forms 1042 and 1042-S. 
Generally, a foreign partnership is a withholding agent and must 
withhold tax and file the requisite forms. Under Sec. 1.1461-1(b) and 
(c), one withholding agent among several may be relieved of its 
responsibility to withhold if another withholding agent withholds tax 
and files the proper returns. However, Sec. 1.1441-5(c)(3)(v) augments 
this rule by deeming a foreign partnership (other than a withholding 
foreign partnership as defined in Sec. 1.1441-5(c)(2)(i)) to have 
satisfied its withholding responsibilities for an amount with respect 
to a partner to the extent that the partner's distributive share of the 
payment can be reliably associated with a withholding certificate 
described in Sec. 1.1441-5(c)(3)(iii) pertaining to the partner that 
the partnership has furnished to a withholding agent, and the 
partnership does not know or has no reason to know that the correct 
amount has not been withheld. These final regulations do not alter the 
result under Sec. 1.1441-5(c)(3)(v). In addition, if a foreign

[[Page 61500]]

partnership reasonably relies on a modified filing requirement under 
these regulations, but the modification is inapplicable because no 
party has satisfied withholding responsibilities, the partnership 
should be able to show that its failure to file a partnership return 
was due to reasonable cause for purposes of section 6698 of the Code if 
the foreign partnership is deemed to have satisfied its withholding 
responsibilities under Sec. 1.1441-5(c)(3)(v).

E. Partnership Level Elections Under Section 703 of the Code

    A commentator suggested that an abbreviated return should be 
permitted where a foreign partnership would be exempt from the filing 
requirement but for a partnership level election under section 703 of 
the Code. These final regulations clarify that a return filed solely to 
make an election under section 703 of the Code need contain only 
information identifying the partnership and the type of election. In 
general, such a return is not considered to be a return filed under 
section 6031(a) of the Code. Therefore, a return filed solely to make 
an election is not a partnership return for purposes of section 6501 
(regarding the statute of limitations) and sections 6231(a)(1)(A) and 
6233 (regarding the partnership audit rules) of the Code.
    Section 1.6031(a)-1(b)(3)(ii) of the proposed regulations provided 
that a return filed by or for a foreign partnership to make a section 
703 election must be signed by each partner who was a partner at the 
time of election or by any partner who was authorized (under local law 
or the partnership's organizational documents) to make the election and 
who represented having such authority under penalties of perjury. A 
commentator suggested that the signature requirement for returns filed 
solely to make a partnership level election should be restricted to 
partners who are U.S. persons or are owned directly or indirectly by 
U.S. persons. These final regulations do not adopt this comment but 
maintain the signature requirement as proposed. Cf. Sec. 301.7701-
3(c)(2) setting forth the same signature requirement for entity 
classification elections.

F. Electing Out of Subchapter K Under Section 761 of the Code

    A commentator suggested that the final regulations should provide a 
default rule under which a foreign partnership with no direct U.S. 
partners that is eligible to elect out of subchapter K of the Code 
would be deemed to have elected exclusion. Under Sec. 1.6031(a)-1(c)(2) 
of the proposed regulations, a partnership that was deemed to have 
elected exclusion from subchapter K, as specified in Sec. 1.761-
2(b)(2)(ii), would be exempt from the partnership filing requirement. 
According to the commentator, for joint ventures in which all the 
direct owners are foreign, it is often difficult to clearly demonstrate 
an intention to exclude the entity from U.S. partnership treatment, as 
required by the section 761 regulations. To avoid inconsistency with 
the requirements for deemed exclusion under section 761 of the Code, 
these final regulations maintain the rule as proposed.

Special Analyses

    It has been determined that these regulations are not a significant 
regulatory action as defined in Executive Order 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. It is hereby certified that the 
collection of information contained 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 regulations 
would reduce (rather than increase) the number of small entities that 
are required to file a partnership return. Specifically, the 
regulations eliminate the filing requirements for certain foreign 
partnerships that are fully subject to withholding in order to prevent 
duplicative filing requirements. In addition to eliminating the filing 
requirements in these circumstances, for ease of reference, the 
regulations update and restate the general requirements to file a 
partnership return as set forth in existing regulations. Because these 
regulations do not impose any new reporting requirements that are not 
imposed by the existing regulations, and the only significant 
modification of the existing regulations is to eliminate the filing 
requirement for certain foreign partnerships, the regulations will not 
have a significant economic impact on a substantial number of small 
entities. Accordingly, 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 Code, the proposed regulations 
preceding these regulations were submitted to the Chief Counsel for 
Advocacy of the Small Business Administration for comment on its impact 
on small business.
    Drafting Information: The principal authors of these regulations 
are Martin Schaffer, Office of Assistant Chief Counsel (Passthroughs 
and Special Industries), and Guy A. Bracuti, Office of Associate Chief 
Counsel (International). However, other personnel from the IRS and 
Treasury Department participated in their development.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 301

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

26 CFR Part 602

    Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR parts 1, 301, and 602 are amended as follows:

PART 1--INCOME TAXES

    Paragraph 1. The authority citation for part 1 is amended by adding 
an entry in numerical order to read in part as follows:

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

    Section 1.6031(a)-1 also issued under 26 U.S.C. 6031. * * *


Sec. 1.6031-1  [Removed]

    Par. 2. Section 1.6031-1 is removed.
    Par. 3. Section 1.6031(a)-1 is added to read as follows:


Sec. 1.6031(a)-1  Return of partnership income.

    (a) Domestic partnerships--(1) Return required. Except as provided 
in paragraphs (a)(3) and (c) of this section, every domestic 
partnership must file a return of partnership income under section 6031 
(partnership return) for each taxable year on the form prescribed for 
the partnership return. The partnership return must be filed for the 
taxable year of the partnership regardless of the taxable years of the 
partners. For taxable years of a partnership and of a partner, see 
section 706 and Sec. 1.706-1. For the rules governing partnership 
statements to partners and nominees, see Sec. 1.6031(b)-1T.
    (2) Content of return. The partnership return must contain the 
information required by the prescribed form and the accompanying 
instructions.
    (3) Special rule. A partnership that has no income, deductions, or 
credits

[[Page 61501]]

for federal income tax purposes for a taxable year is not required to 
file a partnership return for that year.
    (4) Failure to file. For the consequences of a failure to comply 
with the requirements of section 6031(a) and this paragraph (a), see 
sections 6229(a), 6231(f), 6698, and 7203.
    (b) Foreign partnerships--(1) General rule. A foreign partnership 
is not required to file a partnership return, if the foreign 
partnership does not have gross income that is (or is treated as) 
effectively connected with the conduct of a trade or business within 
the United States (ECI) and does not have gross income (including 
gains) derived from sources within the United States (U.S.-source 
income). Except as provided in paragraphs (b)(2) and (3) of this 
section, a foreign partnership that has ECI or has U.S.-source income 
that is not ECI must file a partnership return for its taxable year in 
accordance with the rules for domestic partnerships in paragraph (a) of 
this section.
    (2) Foreign partnerships with de minimis U.S.-source income and de 
minimis U.S. partners. A foreign partnership (other than a withholding 
foreign partnership, as defined in Sec. 1.1441-5(c)(2)(i)) that has 
$20,000 or less of U.S.-source income and has no ECI during its taxable 
year is not required to file a partnership return if, at no time during 
the partnership taxable year, one percent or more of any item of 
partnership income, gain, loss, deduction, or credit is allocable in 
the aggregate to direct United States partners. The United States 
partners must directly report their shares of the allocable items of 
partnership income, gain, loss, deduction, and credit.
    (3) Filing obligations for certain other foreign partnerships with 
no ECI--(i) General requirements for modified filing obligations. A 
foreign partnership will be subject to the modified filing obligations 
in paragraphs (b)(3)(ii) and (iii) of this section if, in addition to 
satisfying the requirements contained in paragraphs (b)(3)(ii) and 
(iii) of this section--
    (A) The partnership is not a withholding foreign partnership as 
defined in Sec. 1.1441-5(c)(2)(i);
    (B) Forms 1042 and 1042-S are filed by the partnership with respect 
to the amounts subject to reporting under Sec. 1.1461-1(b) and (c), 
unless the partnership is not required to file such returns under 
Sec. 1.1461-1(b)(2) and (c)(4), in which case Forms 1042 and 1042-S 
must be filed by another withholding agent or agents; and
    (C) The tax liability of the partners withrespect to such amounts 
has been fully satisfied by the withholding of tax at the source, if 
applicable, under chapter 3 of the Internal Revenue Code.
    (ii) Foreign partnerships with U.S.-source income but no U.S. 
partners. A foreign partnership that has U.S.-source income is not 
required to file a partnership return if the partnership has no ECI and 
no United States partners at any time during the partnership's taxable 
year.
    (iii) Foreign partnerships with U.S.-source income and U.S. 
partners. Except as provided in paragraph (b)(2) of this section, a 
foreign partnership with one or more United States partners that has 
U.S.-source income but no ECI must file a partnership return. However, 
such a foreign partnership need not file Statements of Partner's Share 
of Income, Credit, Deduction, etc. (Schedules K-1) for any partners 
other than its direct United States partners and its passthrough 
partners (whether U.S. or foreign) through which United States partners 
hold an interest in the foreign partnership. Schedules K-1 that are not 
excepted from filing under this paragraph (b)(3)(iii) must contain the 
same information required of a domestic partnership filing under 
paragraph (a) of this section.
    (4) Information or returns required of partners who are United 
States persons--(i) In general. If a United States person is a partner 
in a partnership that is not required to file a partnership return, the 
district director or director of the relevant service center may 
require that person to render the statements or provide the information 
necessary to verify the accuracy of the reporting by that person of any 
items of partnership income, gain, loss, deduction, or credit.
    (ii) Controlled foreign partnerships. Certain United States persons 
who are partners in a foreign partnership controlled (within the 
meaning of section 6038(e)(1)) by United States persons may be required 
to provide information with respect to the partnership under section 
6038.
    (5) Certain partnership elections. For a partnership that is not 
otherwise required to file a partnership return, if an election that 
can only be made by the partnership under section 703 (affecting the 
computation of taxable income derived from a partnership) is to be made 
by or for the partnership, a return on the form prescribed for the 
partnership return must be filed for the partnership. Unless otherwise 
provided in the form or the accompanying instructions, a return filed 
solely to make an election need only contain a written statement citing 
paragraph (b)(5)(ii) of this section, listing the name and address of 
the partnership making the election, and clearly identifying the 
specific election being made. A return filed under paragraph (b)(5)(ii) 
of this section solely to make an election is not a partnership return. 
Thus, such a return is not a return filed under section 6031(a) for 
purposes of sections 6501 (except regarding the specific election 
issue), 6231(a)(1)(A), and 6233. The return must be signed by--
    (i) Each partner that is a partner in the partnership at the time 
the election is made; or
    (ii) Any partner of the partnership who is authorized (under local 
law or the partnership's organizational documents) to make the election 
and who represents to having such authorization under penalties of 
perjury.
    (6) Exclusion for certain organizations. The return requirement of 
section 6031 and this section does not apply to the International 
Telecommunications Satellite Organization, the International Maritime 
Satellite Organization, or any organization that is a successor of 
either.
    (c) Partnerships excluded from the application of subchapter K of 
the Internal Revenue Code--(1) Wholly excluded--(i) Year of election. 
An eligible partnership as described in Sec. 1.761-2(a) that elects to 
be excluded from all the provisions of subchapter K of chapter 1 of the 
Internal Revenue Code in the manner specified by Sec. 1.761-2(b)(2)(i) 
must timely file the form prescribed for the partnership return for the 
taxable year for which the election is made. In lieu of the information 
otherwise required, the return must contain or be accompanied by the 
information required by Sec. 1.761-2(b)(2)(i).
    (ii) Subsequent years. Except as otherwise provided in paragraph 
(c)(1)(i) of this section, an eligible partnership that elects to be 
wholly excluded from the application of subchapter K is not required to 
file a partnership return.
    (2) Deemed excluded. An eligible partnership that is deemed to have 
elected exclusion from the application of subchapter K beginning with 
its first taxable year, as specified in Sec. 1.761-2(b)(2)(ii), is not 
required to file a partnership return.
    (d) Definitions--(1) Partnership. For the meaning of the term 
partnership, see Sec. 1.761-1(a).
    (2) United States person. In applying this section, a United States 
person is a person described in section 7701(a)(30); the government of 
the United States, a State, or the District of Columbia (including an 
agency or instrumentality thereof); or a corporation created or 
organized in Guam, the Commonwealth

[[Page 61502]]

of Northern Mariana Islands, the U.S. Virgin Islands, and American 
Samoa, if the requirements of section 881(b)(1)(A), (B), and (C) are 
met for such corporation. The term does not include an alien individual 
who is a resident of Puerto Rico, Guam, the Commonwealth of Northern 
Mariana Islands, the U.S. Virgin Islands, or American Samoa, as 
determined under Sec. 301.7701(b)-1(d) of this chapter.
    (3) United States partner. In applying this section, a United 
States partner is any United States person who holds a direct or 
indirect interest in the partnership.
    (4) Indirect interest. An indirect interest is any interest held 
through one or more passthrough partners, as defined in section 
6231(a)(9).
    (e) Procedural requirements--(1) Place for filing. The return of a 
partnership must be filed with the service center prescribed in the 
relevant IRS revenue procedure, publication, form, or instructions to 
the form (see Sec. 601.601(d)(2)).
    (2) Time for filing. The return of a partnership must be filed on 
or before the fifteenth day of the fourth month following the close of 
the taxable year of the partnership.
    (3) Magnetic media filing. For magnetic media filing requirements 
with respect to partnerships, see section 6011(e)(2) and the 
regulations thereunder.
    (f) Effective dates. This section applies to taxable years of a 
partnership beginning after December 31, 1999, except that paragraph 
(b)(3) of this section applies to taxable years of a foreign 
partnership beginning after December 31, 2000.
    Par. 4. Section 1.6063-1 is amended by adding paragraph (c) to read 
as follows:


Sec. 1.6063-1  Signing of returns, statements, and other documents made 
by partnerships.

* * * * *
    (c) Certain partnership elections--(1) In general. For rules 
regarding the authority of a partner to sign a partnership return filed 
solely for the purpose of making certain partnership level elections, 
see Sec. 1.6031(a)-1(b)(5)(ii).
    (2) Effective date. Paragraph (c) of this section applies to 
taxable years of a partnership beginning after December 31, 1999.

PART 301--PROCEDURE AND ADMINISTRATION

    Par. 5. The authority citation for part 301 continues to read in 
part as follows:

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


Sec. 301.6031-1  [Removed]

    Par. 6. Section 301.6031-1 is removed.
    Par. 7. Section 301.6031(a)-1 is added to read as follows:


Sec. 301.6031(a)-1  Return of partnership income.

    For provisions relating to the requirement of returns of 
partnership income, see Sec. 1.6031(a)-1 of this chapter.

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

    Par. 8. The authority citation for part 602 continues to read as 
follows:

    Authority: 26 U.S.C. 7805.

    Par. 9. In Sec. 602.101, paragraph (b) is amended by removing the 
entry ``1.6031-1'' from the table and adding a new entry in numerical 
order to the table to read as follows:


Sec. 602.101  OMB control numbers.

* * * * *
    (b) * * *

------------------------------------------------------------------------
                                                             Current OMB
     CFR part or section where identified and described      control No.
------------------------------------------------------------------------
 
                  *        *        *        *        *
1.6031(a)-1................................................    1545-1583
 
                  *        *        *        *        *
------------------------------------------------------------------------

Bob Wenzel,
Deputy Commissioner of Internal Revenue.
    Approved: October 29, 1999.
Jonathan Talisman,
Acting Assistant Secretary of the Treasury.
[FR Doc. 99-29084 Filed 11-10-99; 8:45 am]
BILLING CODE 4830-01-U