[Federal Register Volume 67, Number 222 (Monday, November 18, 2002)]
[Proposed Rules]
[Pages 69496-69498]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29200]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-143321-02]
RIN 1545-BB60


Information Reporting Relating to Taxable Stock Transactions

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: In the rules and regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations relating to 
information reporting relating to taxable stock transactions. This 
document contains proposed regulations under section 6043(c) requiring 
information reporting by a corporation if control of the corporation is 
acquired or if the corporation has a recapitalization or other 
substantial change in capital structure. This document also contains 
proposed regulations under section 6045 concerning information 
reporting requirements for brokers with respect to transactions 
described in section 6043(c). The text of the temporary regulations 
serves as the text of these proposed regulations. This document also 
provides notice of a public hearing on these proposed regulations.

DATES: Written or electronic comments must be received by February 18, 
2003. Outlines of topics to be discussed at the public hearing 
scheduled for March 5, 2003, at 10 a.m., must be received by February 
12, 2003.

ADDRESSES: Send submissions to: CC:ITA:RU (REG-143321-02), 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.

[[Page 69497]]

to: CC:ITA:RU (REG-143321-02), 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 www.irs.gov/regs. The public hearing will be held in room 4718, 
Internal Revenue Building, 1111 Constitution Avenue, NW., Washington, 
DC.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Nancy L. Rose (202) 622-4910; concerning submissions of comments, the 
hearing, and/or to be placed on the building access list to attend the 
hearing, Treena Garrett at (202) 622-7190 (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, 
Washington, DC 20224. Comments on the collection of information should 
be received by January 17, 2003. 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 service to provide information.

The collection of information in this proposed regulation is in 26 CFR 
1.6043-4(a) and (b) and in 26 CFR 1.6045-3. The information is required 
be reported to ensure that shareholders properly recognize gain from 
corporate acquisitions and changes in capital structure. The collection 
of information is mandatory. The likely respondents are large 
corporations.

The estimated total annual reporting and recordkeeping burden in 
proposed Sec.  1.6043-4(a), requiring the filing of form 8806, is 2 
hours. The estimated total annual reporting and recordkeeping burden in 
proposed Sec. Sec.  1.6043-4(b) and 1.6045-3 is 15 minutes for each 
form 1099-CAP and 10 minutes for form 1096.

The estimated annual burden per respondent and/or recordkeeper will 
vary dependent on the number of forms 1099-CAP required to be filed.

The estimated number of respondents under the proposed regulations is 
350. The estimated number of respondents under the temporary 
regulations, for transactions occurring after December 31, 2001, is 5.

The estimated annual frequency of reporting on form 8806 and form 1096 
is 1. The estimated annual frequency of reporting on form 1099-CAP is 1 
for each shareholder.

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 and Explanation of Provisions

    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 6043 and 6045. The temporary regulations 
set forth information reporting requirements relating to acquisitions 
of control and substantial changes in capital structure. The text of 
those regulations also serves as the text of these proposed 
regulations. The preamble to the temporary regulations explains the 
amendments and these proposed regulations.
    As set forth in the preamble to the temporary regulations, public 
comments are specifically invited with regard to the potential for 
duplicate reporting under these proposed regulations and with regard to 
the burden of compliance with the reporting requirements under the 
proposed regulations.

Proposed Effective Date

    The provisions of these regulations under section 6043 are proposed 
to be applicable for any acquisition of control and change in capital 
structure occurring after the date on which these regulations are 
published in the Federal Register as final regulations. The provisions 
of these regulations under section 6045 are proposed to be applicable 
for any form 1099-CAP received by a broker after the date on which 
these regulations are published in the Federal Register as final 
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, and because 
the regulations do not impose a collection of information on small 
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not 
apply. 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 businesses.

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 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 March 5, 2003, beginning at 10 a.m. in 
room 4718, Internal Revenue Building, 1111 Constitution Avenue, NW., 
Washington, DC. 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 portion of this preamble.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who 
wish

[[Page 69498]]

to present oral comments must submit electronic or written comments by 
February 18, 2003, and an outline of the topics to be discussed and the 
time to be devoted to each topic (a signed original and eight copies) 
by February 12, 2003. 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 reviewing outlines has 
passed. Copies of the agenda will be available free of charge at the 
hearing.

Drafting Information

    The principal author of this notice of proposed rulemaking is Nancy 
L. Rose, Office of Associate Chief Counsel (Procedure and 
Administration).

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 continues to read in 
part as follows:

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

    Par. 2. Section 1.6043-4 is added to read as follows:


Sec.  1.6043-4  Information returns relating to certain acquisitions of 
control and changes in capital structure.

    (The text of proposed Sec.  1.6043-4 is the same as the text of 
Sec.  1.6043-4T published elsewhere in this issue of the Federal 
Register.)
    Par. 3. Section 1.6045-3 is added to read as follows:


Sec.  1.6045-3  Information reporting for acquisitions of control or 
substantial changes in capital structure.

    (The text of proposed Sec.  1.6045-3 is the same as the text of 
Sec.  1.6045-3T published elsewhere in this issue of the Federal 
Register.)

Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 02-29200 Filed 11-13-02; 4:24pm]
BILLING CODE 4830-01-P