[Federal Register Volume 67, Number 204 (Tuesday, October 22, 2002)]
[Proposed Rules]
[Pages 64840-64842]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-26725]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1, 20, 25, 31, 53, 54, 56, and 301

[REG-103735-00; REG-154117-02; REG-154116-02; REG-154115-02; REG-
154429-02; REG-154423-02; REG-154426-02; REG-110311-98]
RIN 1545-AX81; RIN 1545-BB49; RIN 1545-BB50; RIN 1545-BB48; RIN 1545-
BB53; RIN 1545-BB51; RIN 1545-BB52; RIN 1545-AW26


Tax Shelter Disclosure Statements

AGENCY: Internal Revenue Service (IRS), Treasury.

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

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SUMMARY: These proposed rules provide the public with additional 
guidance needed to comply with the disclosure rules under section 
6011(a). The rules also make conforming changes to the registration 
requirements under section 6111(d). The proposed rules affect taxpayers 
participating in certain reportable transactions. In the rules and 
regulations portion of this issue of the Federal Register, the IRS is 
issuing temporary regulations that modify the rules relating to the 
requirement that certain taxpayers file a statement with their Federal 
tax returns under section 6011(a) for certain transactions, including 
transactions involving Federal income, estate, gift, employment, and 
pension or exempt organizations excise taxes. The temporary regulations 
also make conforming changes to the rules relating to the registration 
of tax shelters under section 6111(d). The text of the temporary 
regulations also serves as the text of these proposed regulations.

DATES: Written or electronic comments and requests to speak and 
outlines of topics to be discussed at the public hearing scheduled for 
December 11, 2002, at 10 a.m., must be received by December 2, 2002.

ADDRESSES: Send submissions to: CC:ITA:RU (REG-103735-00; REG-154117-
02; REG-154116-02; REG-154115-02; REG-154429-02; REG-154423-02; REG-
154426-02; REG-110311-98), 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:ITA:RU (REG-103735-00; REG-154117-02; REG-154116-02; REG-
154115-02; REG-154429-02; REG-154423-02; REG-154426-02; REG-110311-98), 
Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, 
NW., Washington, DC. Alternatively, taxpayers may submit electronic 
comments directly to the IRS Internet site at http://www.irs.gov/regs. 
The public hearing will be held in room 6718, Internal Revenue 
Building, 1111 Constitution Ave., NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Tara P. Volungis, Danielle M. Grimm, 
or Charlotte Chyr, 202-622-3080 (not a toll-free number); concerning 
submissions, Sonya Cruse, 202-622-7180 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collections of information contained in this notice of proposed 
rulemaking have 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 collections 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, 
Washington, DC 20224. Comments on the collection of information should 
be received by December 23, 2002. Comments are specifically requested 
concerning:
    Whether the proposed collections of information are necessary for 
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 
collections 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 collections 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 service to provide information.
    The collections of information in this proposed regulation are in 
Sec.  1.6011-4T(a), (d), (e), (f), and (g), and in Sec.  301.6111-
2T(b), (e), and (f). This information is required to provide the IRS 
with notice of transactions that are potentially abusive. This 
information will be used to ensure compliance with the Federal tax 
laws. The collections of information are mandatory. The likely 
respondents and recordkeepers are individuals, business or other for-
profit institutions, and small businesses or organizations.
    The burden for the collection of information in Sec.  1.6011-4T 
will be reflected on Form 8886, ``Reportable Transaction Disclosure 
Statement''. The burden for the collection of information in Sec.  
301.6111-2T is reflected on Form 8264, ``Application for Registration 
of a Tax Shelter'.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information

[[Page 64841]]

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 rules in 26 CFR parts 1, 20, 
25, 31, 53, 54, and 56 regarding the filing and records requirements of 
certain taxpayers under section 6011. The temporary regulations also 
amend the rules in 26 CFR part 301 regarding the registration of 
confidential corporate tax shelters under section 6111. 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 these notices of proposed rulemaking 
are not significant regulatory actions 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 in these regulations will 
not have a significant economic impact on a substantial number of small 
entities. This certification is based upon the fact that the time 
required to prepare or retain the disclosure or registration is not 
lengthy and will not have a significant impact on those small entities 
that are required to provide disclosure or to register. Therefore, 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, these notices of proposed rulemaking will be 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on their impact on small business.

Comments and 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 has been scheduled for December 11, 2002, 
beginning at 10 a.m. in room 6718 of the Internal Revenue Building, 
1111 Constitution Avenue, NW., Washington, DC. Due to building security 
procedures, visitors must enter at the Constitution Avenue entrance. 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 30 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 606.601(a)(3) apply to the 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 December 2, 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.

Drafting Information

    The principal authors of these regulations are Tara P. Volungis, 
Danielle M. Grimm, and Charlotte Chyr, 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 20

    Estate tax, Reporting and recordkeeping requirements.

26 CFR Part 25

    Gift 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 53

    Excise taxes, Foundations, Investments, Lobbying, Reporting and 
recordkeeping requirements.

26 CFR Part 54

    Excise taxes, Pensions, Reporting and recordkeeping requirements.

26 CFR Part 56

    Excise taxes, Lobbying, Nonprofit organizations, Reporting and 
recordkeeping requirements.

26 CFR Part 301

    Administrative practice and procedure, 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 at 67 FR 41362 (June 18, 2002), are proposed to be further 
amended and 26 CFR parts 20, 25, 31, 53, 54, and 56 are proposed to be 
amended as follows:

PART 1--INCOME TAXES

    1. The authority citation for part 1 continues to read in part as 
follows:

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

    2. Section 1.6011-4, as proposed to be added at 66 FR 41169 (August 
7, 2001) and amended at 67 FR 41362 (June 18, 2002), is revised to read 
as follows:


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

    [The text of the revision of this proposed section is the same as 
the text of the revision of Sec.  1.6011-4T published elsewhere in this 
issue of the Federal Register.]

PART 20--ESTATE TAX; ESTATES OF DECEDENTS DYING AFTER AUGUST 16, 
1954

    3. The authority citation for part 20 continues to read in part as 
follows:

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

    4. Section 20.6011-4 is added to read as follows:


Sec.  20.6011-4  Requirement of statement disclosing participation in 
certain transactions by taxpayers.

    [The text of this proposed section is the same as the text of Sec.  
20.6011-4T published elsewhere in this issue of the Federal Register.]

[[Page 64842]]

PART 25--GIFT TAX; GIFTS MADE AFTER DECEMBER 31, 1954

    5. The authority citation for part 25 continues to read in part as 
follows:

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

    6. Section 25.6011-4 is added to read as follows:


Sec.  25.6011-4  Requirement of statement disclosing participation in 
certain transactions by taxpayers.

    [The text of this proposed section is the same as the text of Sec.  
25.6011-4T published elsewhere in this issue of the Federal Register.]

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

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

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

    8. Section 31.6011-4 is added to read as follows:


Sec.  31.6011-4  Requirement of statement disclosing participation in 
certain transactions by taxpayers.

    [The text of this proposed section is the same as the text of Sec.  
31.6011-4T published elsewhere in this issue of the Federal Register.]

PART 53--FOUNDATION AND SIMILAR EXCISE TAXES

    9. The authority citation for part 53 continues to read as follows:

    Authority: 26 U.S.C. 7805.

    10. Section 53.6011-4 is added to read as follows:


Sec.  53.6011-4  Requirement of statement disclosing participation in 
certain transactions by taxpayers.

    [The text of this proposed section is the same as the text of Sec.  
53.6011-4T published elsewhere in this issue of the Federal Register.]

PART 54--PENSION EXCISE TAXES

    11. The authority citation for part 54 continues to read in part as 
follows:

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

    12. Section 54.6011-4 is added to read as follows:


Sec.  54.6011-4  Requirement of statement disclosing participation in 
certain transactions by taxpayers.

    [The text of this proposed section is the same as the text of Sec.  
54.6011-4T published elsewhere in this issue of the Federal Register.]

PART 56--PUBLIC CHARITY EXCISE TAXES

    13. The authority citation for part 56 continues to read in part as 
follows:

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

    14. Section 56.6011-4 is added to read as follows:


Sec.  56.6011-4  Requirement of statement disclosing participation in 
certain transactions by taxpayers.

    [The text of this proposed section is the same as the text of Sec.  
56.6011-4T published elsewhere in this issue of the Federal Register.]

PART 301--PROCEDURE AND ADMINISTRATION

    15. The authority citation for part 301 is amended by adding an 
entry in numerical order to read in part as follows:

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

    Section 301.6111-2 also issued under 26 U.S.C. 6111. * * *
    16. Section 301.6111-2, as proposed to be added at 66 FR 41169 
(August 7, 2001) and amended at 67 FR 41363 (June 18, 2002), is amended 
as follows:
    1. Paragraphs (a)(3) and (b)(3)(i) are revised.
    2. Paragraph (c)(3) is amended by adding a sentence at the end of 
the paragraph.
    3. Paragraph (h) is amended by revising the paragraph heading and 
removing the third sentence through the last sentence and adding two 
new sentences in their place.
    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.]

Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 02-26725 Filed 10-17-02; 3:10 pm]
BILLING CODE 4830-01-P