[Federal Register Volume 67, Number 19 (Tuesday, January 29, 2002)]
[Proposed Rules]
[Pages 4217-4218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-2045]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-107100-00]
RIN 1545-AY26


Disallowance of Deductions and Credits for Failure To File Timely 
Return

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: This document contains proposed regulations relating to the 
disallowance of deductions and credits for nonresident alien 
individuals and foreign corporations that fail to file a timely U.S. 
income tax return. The current regulations permit nonresident aliens 
and foreign corporations the benefit of deductions and credits only if 
they timely file a U.S. income tax return in accordance with subtitle F 
of the Internal Revenue Code, unless the Commissioner waives the filing 
deadlines. The temporary regulations revise the waiver standard. The 
text of the temporary regulations on this subject in this issue of the 
Federal Register also serves as the text of these proposed regulations 
set forth in this cross-referenced notice of proposed rulemaking. This 
document also provides notice of a public hearing on these proposed 
regulations.

DATES: Written comments must be received by April 29, 2002. Requests to 
speak and outlines of topics to be discussed at the public hearing 
scheduled for June 3, 2002, at 10 a.m. must be received by May 13, 
2002.

ADDRESSES: Send submissions to: CC:ITA:RU (REG-107100-00), 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:ITA:RU (REG-107100-00), 
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 on 
the IRS Home Page, or by submitting comments directly to the IRS 
Internet site at http://www.irs.ustreas.gov/tax_regs/regslist.html. The 
public hearing will be held in the auditorium, Internal Revenue 
Building, 1111 Constitution Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Nina E. 
Chowdhry, (202) 622-3880; concerning submissions, the hearing, and/or 
to be placed on the building access list to attend the hearing, Donna 
Poindexter, (202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend the Income Tax Regulations (26 CFR 
part 1) relating to sections 874 and 882. These temporary regulations 
contain rules relating to the disallowance of deductions and credits 
for nonresident alien individuals and foreign corporations that fail to 
file a timely U.S. income tax return.

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 and, because 
these regulations do not impose on small entities a collection of 
information requirement, the Regulatory Flexibility Act (5 U.S.C. 
chapter 6) does not apply. Therefore, a Regulatory Flexibility Analysis 
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 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. Treasury and the IRS request comments on the clarity of the 
proposed rule and how it may be made easier to understand. All comments 
will be made available for public inspection and copying.
    A public hearing has been scheduled for June 3, at 10 a.m., in the 
auditorium, Internal Revenue Building, 1111 Constitution Ave., NW., 
Washington, DC. 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 this hearing. Persons 
who wish to present oral comments at the hearing must submit electronic 
or 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 April 29, 2002. 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.

[[Page 4218]]

Drafting Information

    The principal author of these regulations is Nina Chowdhry of the 
Office of Associate Chief Counsel (International). However, other 
personnel from the IRS and Treasury Department participated in their 
development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is 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 1.874-1 also issued under 26 U.S.C. 874. * * *
Section 1.882-4 also issued under 26 U.S.C. 882(c). * * *

    Par. 2. Section 1.874-1 is amended by:
    1. Revising paragraph (b)(2).
    2. Paragraphs (b)(3) and (b)(4) are redesignated as paragraphs 
(b)(5) and (b)(6), respectively.
    3. New paragraphs (b)(3) and (b)(4) are added.
    The revision and additions read as follows:


Sec. 1.874-1  Allowance of deductions and credits to nonresident alien 
individuals.

* * * * *
    (b)(2) through (4) [The text of proposed paragraphs (b)(2), (3), 
and (4) is the same as the text of Sec. 1.874-1T(b)(2), (3), and (4) 
published elsewhere in this issue of the Federal Register].
* * * * *
    Par. 3. Section 1.882-4 is amended by:
    1. Revising paragraph (a)(3)(ii).
    2. Paragraphs (a)(3)(iii) through (a)(3)(v) are redesignated as 
paragraphs (a)(3)(v) through (a)(3)(vii), respectively.
    3. New paragraphs (a)(3)(iii) and (iv) are added.
    The revision and additions read as follows:


Sec. 1.882-4  Allowance of deductions and credits to foreign 
corporations.

* * * * *
    (a)(3)(ii) through (iv) [The text of proposed paragraphs (a)(3)(ii) 
through (iv) is the same as the text of Sec. 1.882-4T(a)(3)(ii) through 
(iv) published elsewhere in this issue of the Federal Register].
* * * * *

Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 02-2045 Filed 1-28-02; 8:45 am]
BILLING CODE 4830-01-P