[Federal Register Volume 67, Number 246 (Monday, December 23, 2002)]
[Proposed Rules]
[Pages 78202-78203]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-32151]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-124069-02]
RIN 1545-BA77


Section 6038--Returns Required With Respect to Controlled Foreign 
Partnerships

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulation 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 a temporary regulation relating to 
controlled foreign partnerships. That document requires that the United 
States partner must follow the filing requirements that are specified 
in the instructions for Form 8865. The text of that regulation also 
serves as the text of this proposed regulation. This document also 
provides notice of a public hearing on these proposed regulations.

DATES: Written or electronic comments must be received by March 24, 
2003. Outlines of topics to be discussed at the public hearing 
scheduled for March 12, 2003, at 10 a.m., must be received by February 
19, 2003.

ADDRESSES: Send submissions to: CC:ITA:RU (REG-124069-02), 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 4 p.m. to: CC:ITA:RU (REG-124069-02), 
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 http://www.irs.gov/regs. 
The public hearing will be held in the Auditorium, Internal Revenue 
Building, 1111 Constitution Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Tasheaya Warren, (202) 622-3860; concerning submissions and the hearing 
LaNita Van Dyke, (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, 
Washington, DC 20224. Comments on the collection of information should 
be received by February 21, 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

[[Page 78203]]

    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 regulation is in Sec.  
1.6038-3T. This information is required by the IRS to identify foreign 
partnerships which are controlled by United States persons and verify 
amounts reported by the partners. The collection of information is 
mandatory. The likely respondents will be individuals and business or 
other for-profit organizations.
    The burden of complying with the collection of information required 
to be reported on Form 8865 is reflected in the burden for Form 8865. 
The estimated number of respondents is 5000. The estimated burden for 
the 2001 Form 8865 per respondent is 89 hours.
    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

    The temporary regulation in the Rules and Regulations section of 
this issue of the Federal Register amends 26 CFR part 1. If a foreign 
partnership files Form 1065 or Form 1065-B and a United States partner 
is required to file Form 8865 with respect to that partnership, the 
temporary regulation amends Treas. Reg. Sec.  1.6038-3 to provide that 
the United States partner must follow the filing requirements that are 
specified in the instructions for Form 8865. The text of the temporary 
regulation also serves as the text of this proposed regulation. The 
preamble to the temporary regulation explains the temporary regulation 
and this proposed regulation.

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 
this regulation does not impose a collection of information on small 
entities, a Regulatory Flexibility Analysis under 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 this proposed regulation is adopted as a final regulation, 
consideration will be given to any written (a signed original and eight 
(8) copies) or electronic comments 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 12, 2003, at 10 a.m., 
in the Auditorium, 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 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 to present oral 
comments must submit written or electronic comments by March 24, 2003 
and an outline of the topics to be discussed and the time to be devoted 
to each topic (a signed original and eight (8) copies) by February 19, 
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 receiving outlines has passed. Copies 
of the agenda will be available free of charge at the hearing.

Drafting Information

    The principal author of this regulation is Tasheaya Warren, Office 
of the 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 continues to read in 
part as follows:

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

    Par. 2. Section 1.6038-3 is amended by revising paragraph (j) to 
read as follows:


Sec.  1.6038-3  Information returns required of certain United States 
persons with respect to controlled foreign partnerships (CFPs).

* * * * *
    (j) [The text of the proposed amendment to Sec.  1.6038-3(j) is the 
same as the text for Sec.  1.6038-3T(j) published elsewhere in this 
issue of the Federal Register.]
* * * * *

Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 02-32151 Filed 12-20-02; 8:45 am]
BILLING CODE 4830-01-P