[Federal Register Volume 65, Number 159 (Wednesday, August 16, 2000)]
[Proposed Rules]
[Pages 49955-49957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-20541]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 301

[REG-103735-00; REG-110311-98; REG-103736-00]
RIN 1545-AX81; 1545-AW26; 1545-AX79


Modification of Tax Shelter Rules

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Cross-reference notice of proposed rulemaking.

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SUMMARY: These proposed rules relate to the modification of tax 
shelters under sections 6011, 6111, and 6112. The proposed rules 
provide the public with additional guidance needed to comply with the 
disclosure rules, the registration requirement, and the list 
maintenance requirement applicable to tax shelters. The proposed rules 
affect corporations participating in certain reportable transactions, 
persons responsible for registering confidential corporate tax 
shelters, and organizers of potentially abusive tax shelters. In the 
rules and regulations portion of this issue of the Federal Register, 
the IRS is issuing temporary regulations modifying the rules relating 
to the requirement that certain corporate taxpayers file a statement 
with their Federal corporate income tax returns under section 6011(a), 
the registration of confidential corporate tax shelters under section 
6111(d), and the maintenance of lists of investors in potentially 
abusive tax shelters under section 6112. The text of those temporary 
regulations also serves as the text of these proposed regulations.

DATES: Written or electronic comments and requests for a public hearing 
must be received by November 14, 2000.

ADDRESSES: Send submissions to: CC:M&SP:RU (REG-103735-00; REG-110311-
98; REG-103736-00), room 5226, Internal Revenue Service, POB 7604, Ben 
Franklin Station, Washington, DC 20044. Submissions may be hand 
delivered between the hours of 8 a.m. and 5 p.m. to: CC:M&SP:RU (REG-
103735-00; REG-110311-98; REG-103736-00), 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 of the IRS Home Page or 
by submitting comments directly to the IRS Internet site at http://www.irs.gov/tax_regs/regslist.html.

[[Page 49956]]


FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Catherine 
Moore, (202) 622-3070; concerning submissions, Guy Traynor, (202) 622-
7180.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collections of information contained in this notice of proposed 
rulemaking previously have 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)). No material changes to these collections of 
information are proposed in these regulations.
    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 assigned by the Office of Management and Budget.
    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

    The temporary regulations amend the Income Tax Regulations (26 CFR 
part 1) regarding rules relating to the filing and records requirements 
for certain corporate taxpayers under section 6011. The temporary 
regulations also amend the temporary procedure and administration 
regulations (26 CFR part 301) regarding the registration of 
confidential corporate tax shelters under section 6111 and the 
maintenance of lists of investors in potentially abusive tax shelters 
under section 6112.
    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 Executive Order 
12866. Therefore, a regulatory assessment is not required. It has also 
been determined that section 553(b) of the Administrative Procedure Act 
(5 U.S.C. chapter 5) does not apply to these regulations. Because these 
regulations impose no new collection of information on small entities, 
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 written comments (preferably a 
signed original and eight (8) copies) or electronically generated 
comments that are submitted timely to the IRS. The IRS and Treasury 
request comments on the clarity of the proposed rules and how they can 
be made easier to understand. All comments will be available for public 
inspection and copying. A public hearing will be scheduled if requested 
in writing by any person that timely submits written comments. If a 
public hearing is scheduled, notice of the date, time, and place for 
the public hearing will be published in the Federal Register.
    Drafting Information: The principal author of these regulations is 
Catherine Moore, Office of the Associate Chief Counsel (Passthroughs 
and Special Industries). 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.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR parts 1 and 301, which were proposed to be 
amended on August 29, 1984, and March 2, 2000, are proposed to be 
further 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 1.6011-4 as proposed to be added at 65 FR 11271 
(March 2, 2000) is amended as follows:
    1. The first sentence of paragraph (a) is revised.
    2. Paragraph (d)(1), second sentence, is amended by removing the 
language ``LM:PF'' and adding ``LM:PFTG:OTSA'' in its place.
    3. Paragraphs (e) and (g) are revised.
    The revisions read as follows:


Sec. 1.6011-4  Requirement of statement disclosing participation in 
certain transactions by corporate taxpayers.

(The text of the amendments to this proposed section is the same as the 
text of the amendments to Sec. 1.6011-4T published elsewhere in this 
issue of the Federal Register.)

PART 301-- PROCEDURE AND ADMINISTRATION

    Par. 3. The authority citation for part 301 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *
    Par. 4. Section 301.6111-2 as proposed to be added at 65 FR 11274 
(March 2, 2000) is amended as follows:
    1. Paragraph (b)(3)(ii) is amended by removing the word 
``corporate''.
    2. Paragraph (c) is amended as follows:
    a. The last two sentences of paragraph (c)(1) are revised.
    b. Paragraph (c)(2) is revised.
    c. Paragraph (c)(3) is added.
    3. Paragraphs (f) and (g)(1) are revised.
    4. Paragraph (h) is amended by adding three sentences at the end of 
the paragraph.
    The revisions and additions read as follows:


Sec. 301.6111-2  Confidential corporate tax shelters.

(The text of the amendments to this proposed section is the same as the 
text of the amendments to Sec. 301.6111-2T published elsewhere in this 
issue of the Federal Register.)

    Par. 5. Section 301.6112-1 as proposed to be added at 49 FR 34246 
(August 29, 1984) and 65 FR 11272 (March 2, 2000) is amended as 
follows:
    0. The section heading is added.
    1. A-4(a) is revised.
    2. The last two sentences of A-5 are removed and a new sentence is 
added in their place.
    3. A-6 is amended as follows:
    a. Paragraph (b) is amended by removing the language ``and'' at the 
end of the paragraph.
    b. Paragraph (c) is amended by removing the period at the end of 
the paragraph and adding ``; and'' in its place.
    c. Paragraph (d) is added immediately after paragraph (c).
    4. The last sentence of A-7 is revised.
    5. A-8 is amended as follows:
    a. In A-8, introductory text and paragraphs (a) through (e) are 
redesignated as paragraph (a)

[[Page 49957]]

introductory text and paragraphs (a)(1) through (a)(5), respectively.
    b. New paragraph (b) is added immediately after Example (2) in 
newly designated paragraph (a)(5).
    6. The last two sentences of A-9 are amended by removing the 
language ``paragraph (e)'' and adding ``paragraph (a)(5)'' in its 
place.
    7. One sentence is added at the end of A-10.
    8. A-11 is amended as follows:
    a. In A-11, introductory text and paragraphs (a) and (b) are 
redesignated as paragraph (a) introductory text and paragraphs (a)(1) 
and (a)(2), respectively.
    b. New paragraph (b) is added.
    9. A-17 is amended as follows:
    a. Paragraph (a)(3) is revised.
    b. Paragraph (c) is added.
    10. The first and second sentences of A-19 are amended by removing 
the language ``paragraph (d) or paragraph (e)'' and adding ``paragraph 
(a)(4) or (5)'' in its place.
    11. A-22 is amended by adding three sentences before the last 
sentence.
    The additions and revisions read as follows:


Sec. 301.6112-1  Questions and answers relating to the requirement to 
maintain a list of investors in potentially abusive tax shelters.

(The text of the amendments to this proposed section is the same as the 
text of the amendments to Sec. 301.6112-1T published elsewhere in this 
issue of the Federal Register.)

Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 00-20541 Filed 8-11-00; 8:45 am]
BILLING CODE 4830-01-U