[Federal Register Volume 66, Number 31 (Wednesday, February 14, 2001)]
[Proposed Rules]
[Pages 10247-10249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1293]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1, 31 and 301

[REG-107186-00]
RIN 1545-AY50


Electronic Payee Statements

AGENCY: Internal Revenue Service (IRS), Treasury.

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

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SUMMARY: The IRS is proposing regulations under sections 6041 and 6051 
relating to the voluntary electronic furnishing of payee statements on 
Forms W-2. The proposed regulations also provide rules under section 
6050S relating to the voluntary electronic furnishing of statements to 
individuals for whom Forms 1098-T, ``Tuition Payments Statement,'' and 
Forms 1098-E, ``Student Loan Interest Statement,'' are filed. The 
proposed regulations will affect persons required by the foregoing 
Internal Revenue Code sections to furnish these statements (furnishers) 
who wish to furnish these statements electronically. The proposed 
regulations will also affect individuals, principally employees, 
students, and borrowers (recipients), who consent to receive these 
statements electronically. The text of temporary regulations published 
in the Rules and Regulations section of this issue of the Federal 
Register serves as the text of these proposed regulations. These 
proposed regulations do not affect the requirement to file copy A of 
Forms W-2 with the Social Security Administration or the requirement to 
file Forms 1098-T or Forms 1098-E with the IRS.

DATES: Written or electronic comments and requests to speak (with 
outlines of oral comments) at a public hearing scheduled for June 4, 
2001, at 10 a.m. must be submitted by May 14, 2001.

ADDRESSES: Send submissions to: CC:M&SP:RU (REG-107186-00), 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:M&SP:RU (REG-107186-00), 
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 Regulations'' 
option on the IRS Home Page, or by submitting comments directly to the 
IRS Internet

[[Page 10248]]

site at http://www.irs.gov/tax_regs/regslist.html. The public hearing 
will be held in the IRS Auditorium, Seventh Floor, Internal Revenue 
Service Building, 1111 Constitution Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Laura C. 
Nash (202) 622-4910; concerning submission of comments, the hearing, 
and/or to be placed on the building access list to attend the hearing, 
Sonya Cruse (202) 622-7180 (not toll-free numbers).

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, W:CAR:MP:FP:S:O, 
Washington, DC 20224. Comments on the collection of information should 
be received by April 16, 2001. 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 collections of information in these proposed regulations are in 
Secs. 1.6041-2(a)(5), 1.6050S-1(a), 1.6050S-2(a), and 31.6051-1(i). 
These temporary regulations state that furnishers may provide the 
written statements required by sections 6041(d), 6050S(d), and 6051 in 
an electronic format in lieu of a paper format. In addition, the 
proposed regulations provide furnishers with a method to furnish a 
statement in connection with a Form 1098-T or Form 1098-E under section 
6050S(d), or a Form W-2 under section 6041(d) or 6051, electronically 
using website technology. In general, a furnisher may furnish the 
statement electronically using the method described in the proposed 
regulations if the recipient consents to receive the statement 
electronically, and if the furnisher makes certain disclosures to the 
recipient, annually notifies the recipient that the statement is 
available on a website, and provides access to the statement on that 
website for a prescribed period of time. This collection of information 
is required only for persons who wish to furnish the statements 
electronically using the method described in the proposed regulations. 
The likely respondents are businesses, other for-profit institutions, 
and eligible educational institutions.
    Estimated total annual reporting/recordkeeping burden: 2,844,950 
hours.
    Estimated average annual burden hours per response: 6 minutes.
    Estimated number of responses: 28,449,495.
    Estimated annual 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 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

    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 sections 6041 and 6050S(d), the Regulations on 
Employment Taxes and Collection of Income Tax at Source (26 CFR part 
31) relating to section 6051, and the Regulations on Procedure and 
Administration (26 CFR part 301) relating to section 6724. 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 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. An initial 
regulatory flexibility analysis has been prepared for this notice of 
proposed rulemaking under 5 U.S.C. 603 and is set forth under the 
heading ``Initial Regulatory Flexibility Act Analysis'' in this 
preamble. Pursuant to section 7805(f), 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.

Initial Regulatory Flexibility Act Analysis

    This initial analysis is required under the Regulatory Flexibility 
Act. (5 U.S.C. chapter 6). The collection of information contained in 
Secs. 1.6041-2(a)(5), 1.6050S-1(a), 1.6050S-2(a), and 31.6051-1(i) is 
required if a furnisher implements the method described in the proposed 
regulations to furnish statements electronically.
    The types of small entities to which the proposed regulations may 
apply are small eligible educational institutions (such as colleges and 
universities), certain payees of interest on qualified education loans, 
and small employers. It is estimated that furnishers will seek consents 
from approximately 28,449,495 individuals to receive these statements 
electronically. There are no known Federal rules that duplicate, 
overlap, or conflict with these proposed regulations. The regulations 
proposed are considered to have the least economic effect on small 
entities of all alternatives considered.

Comments and 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. The IRS and Treasury Department 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 has been scheduled for June 4, 2001, beginning at 
10 a.m., in the IRS Auditorium of the Internal Revenue Building, 1111 
Constitution Avenue, NW., Washington, DC. Due to

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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 written 
comments and an outline of the topics to be discussed and the time to 
be devoted to each topic (signed original and eight (8) copies) by May 
14, 2001. A period of ten minutes will be allotted to each person for 
making comments. An agenda showing the scheduling of 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 author of these proposed regulations is Eric Lucas, 
formerly of the Office of Associate Chief Counsel (Procedure and 
Administration). 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 31

    Employment taxes, Income taxes, Penalties, Pensions, Railroad 
retirement, Reporting and recordkeeping requirements, Social security, 
Unemployment compensation.

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, 31, and 301 are proposed to be amended 
as follows:

PART 1--INCOME TAXES

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

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

    Section 1.6041-2 also issued under 26 U.S.C. 6041(d). * * *
    Section 1.6050S-1 also issued under 26 U.S.C. 6050S(g).
    Section 1.6050S-2 also issued under 26 U.S.C. 6050S(g). * * *

    Par. 2. Section 1.6041-2 is amended by adding a new paragraph 
(a)(5) to read as follows:


Sec. 1.6041-2  Return of information as to payments to employees.

    (a) * * *
    (5) [The text of proposed paragraph (a)(5) is the same as the text 
of Sec. 1.6041-2T(a)(5) published elsewhere in this issue of the 
Federal Register].
* * * * *
    Par. 3. Sections 1.6050S-1 and 1.6050S-2 are added to read as 
follows:


Sec. 1.6050S-1  Information reporting for payments and reimbursements 
or refunds of qualified tuition and related expenses.

    [The text of these proposed regulations is the same as the text of 
Sec. 1.6050S-1T published elsewhere in this issue of the Federal 
Register].


Sec. 1.6050S-2  Information reporting for payments of interest on 
qualified education loans.

    [The text of these proposed regulations is the same as the text of 
Sec. 1.6050S-2T published elsewhere in this issue of the Federal 
Register].

PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE

    Par. 4. The authority citation for part 31 continues to read in 
part as follows:

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

    Par. 5. Section 31.6051-1 is amended by:
    1. Redesignating paragraph (i) as paragraph (j).
    2. Adding a new paragraph (i).
    The addition reads as follows:


Sec. 31.6051-1  Statements for employees.

* * * * *
    (i) [The text of proposed paragraph (i) is the same as the text of 
Sec. 31.6051-1T(j) published elsewhere in this issue of the Federal 
Register].
* * * * *

PART 301--PROCEDURE AND ADMINISTRATION

    Par. 6. The authority citation for part 301 continues to read in 
part as follows:

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

    Par. 7. Section 301.6724-1 is amended by adding a new paragraph 
(d)(3) to read as follows:


Sec. 301.6724-1  Reasonable cause.

* * * * *
    (d) * * *
    (3) [The text of proposed paragraph (d)(3) is the same as the text 
of Sec. 301.6724-1T(d)(3) published elsewhere in this issue of the 
Federal Register].
* * * * *

Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 01-1293 Filed 2-13-01; 8:45 am]
BILLING CODE 4830-01-P