[Federal Register Volume 68, Number 62 (Tuesday, April 1, 2003)]
[Proposed Rules]
[Page 15690]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-7813]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 49

[REG-141097-02]
RIN 1545-BB18


Excise Taxes; Communications Services, Distance Sensitivity

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations relating to the 
definition of toll telephone service for purposes of the communications 
excise tax. These regulations affect providers and purchasers of 
communications services.

DATES: Written and electronic comments and requests for a public 
hearing must be received by June 30, 2003.

ADDRESSES: Send submissions to: CC:PA:RU (REG-141097-02), 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. to: CC:PA:RU (REG-141097-02), 
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.

FOR FURTHER INFORMATION CONTACT: Concerning submissions, LaNita Van 
Dyke, (202) 622-7180; concerning the regulations, Cynthia McGreevy 
(202) 622-3130 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    This document contains proposed amendments to the Facilities and 
Services Excise Tax Regulations (26 CFR part 49) relating to the 
definition of toll telephone service.
    Section 4251 imposes tax on amounts paid for certain communications 
services, including local and toll telephone service. Section 
4252(b)(1) provides that toll telephone service means a telephonic 
quality communication for which there is a toll charge that varies in 
amount with the distance and elapsed transmission time of each 
individual communication.
    Section 4252(b)(1), as enacted in 1965, describes the long distance 
telephone service sold to residential and most business subscribers 
under the 1965 Federal Communications Commission rules. At that time, 
the charge for a long distance telephone call increased as the duration 
of the call increased and generally increased as the distance between 
the originating telephone station and the terminating telephone station 
increased. By the late 1990's, most carriers had moved toward a fee 
structure that includes a flat per-minute rate for domestic calls.
    In 1979, the Treasury Department published Rev. Rul. 79-404 (1979-2 
C.B. 382), which stands for the principle that a long distance 
telephone call for which the charge varies with elapsed transmission 
time but not with distance is toll telephone service described in 
section 4252(b)(1).

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 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 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 Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written and electronic comments that 
are submitted timely to the IRS. The IRS and Treasury Department 
specifically request comments on the clarity of the proposed 
regulations and how they may be made easier to understand. All comments 
will be available for public inspection and copying. A public hearing 
may be scheduled if requested in writing by any person that timely 
submits written comments. If a public hearing is scheduled, notice of 
the date, time, and place for the hearing will be published in the 
Federal Register.

Drafting Information

    The principal author of these regulations is Cynthia McGreevy, 
Office of Associate Chief Counsel (Passthroughs and Special 
Industries). However, other personnel from the IRS and Treasury 
Department participated in their development.

List of Subjects in 26 CFR Part 49

    Excise taxes, Reporting and recordkeeping requirements, Telephone, 
Transportation.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 49 is proposed to be amended as follows:

PART 49--FACILITIES AND SERVICES EXCISE TAXES

    1. The authority citation for part 49 continues to read in part as 
follows:

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

    2. Section 49.4252-0 is added to read as follows:


Sec.  49.4252-0  Section 4252(b)(1); distance sensitivity.

    (a) In general. For a communications service to constitute toll 
telephone service described in section 4252(b)(1), the charge for the 
service need not vary with the distance of each individual 
communication.
    (b) Effective date. This section applies to amounts paid on and 
after the date of publication of these regulations in the Federal 
Register as final regulations.

David A. Mader,
Assistant Deputy Commissioner of Internal Revenue.
[FR Doc. 03-7813 Filed 3-31-03; 8:45 am]
BILLING CODE 4830-01-P