[Federal Register Volume 68, Number 126 (Tuesday, July 1, 2003)]
[Rules and Regulations]
[Pages 39012-39013]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-16600]



[[Page 39012]]

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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 9065]
RIN 1545-BA77


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

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulation and removal of temporary regulation.

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SUMMARY: This document contains a final regulation relating to 
controlled foreign partnerships. This document requires that the United 
States partner must follow the filing requirements that are specified 
in the instructions for Form 8865.

DATES: Effective Date: This regulation is effective July 1, 2003.
    Applicability Date: For dates of applicability, see Sec.  1.6038-
3(l).

FOR FURTHER INFORMATION CONTACT: Tasheaya L. Warren Ellison, (202) 622-
3860 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in this final regulation 
has been previously reviewed and approved by the Office of Management 
and Budget in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)) under control number 1545-1617.
    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.
    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.
    Comments concerning the accuracy of this burden estimate and 
suggestions for reducing this burden should be sent to the Internal 
Revenue Service, Attn: IRS Reports Clearance Officer, W:CAR:MP:T:T:SP 
Washington, DC 20224, and 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.
    Books or records relating to a collection of information must be 
retained as long as their contents might 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

    On December 23, 2002, final and temporary regulations (T.D. 9033) 
relating to the information reporting requirements for U.S. persons 
with interests in controlled foreign partnerships were published in the 
Federal Register (67 FR 78174). The temporary regulation addressed the 
filing requirements that must be followed for Form 8865 (Return of U.S. 
Persons With Respect To Certain Foreign Partnerships) if a U.S. person 
is required to file Form 8865 with respect to a foreign partnership 
that files Form 1065, U.S. Return of Partnership Income or Form 1065-B, 
U.S. Return for Electing Large Partnerships. On December 23, 2002, a 
notice of proposed rulemaking and public hearing (REG-124069-02) was 
also published in the Federal Register (67 FR 78202) with respect to 
the provisions of the temporary regulation. No written or electronic 
comments were received in response to the notice of proposed 
rulemaking. No requests to speak at the public hearing were received, 
and, accordingly, the hearing was canceled.

Explanation of Provisions

    This Treasury decision adopts the language of the proposed 
regulation without change other than to clarify that Treas. Reg. Sec.  
1.6038-3(j) as in effect prior to T.D. 9033 (see 26 CFR part 1 revised 
April 1, 2002) is applicable to tax years of a foreign partnership 
ending before December 23, 2002. The temporary regulation is removed.

Special Analyses

    It has been determined that this Treasury decision 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 this regulation. It is hereby 
certified that the collection of information contained in this 
regulation will not have a significant economic impact on a substantial 
number of small entities. This certification is based on the fact that 
the number of small entities that will be required to file the form is 
not substantial. The number of small entities with interests in foreign 
partnerships is not substantial; therefore, this regulation will not 
have a significant economic impact on a substantial number of small 
entities. Additionally, this regulation does not increase the reporting 
burden for U.S. persons with interests in controlled foreign 
partnerships. Accordingly, 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, the notice of 
proposed rulemaking preceding this regulation was submitted to the 
Chief Counsel for Advocacy of the Small Business Administration for 
comment on its impact on small business. Comments are requested 
regarding the impact on small businesses.

Drafting Information

    The principal author of this regulation is Tasheaya Warren Ellison, 
Office of the Associate Chief Counsel (International). However, other 
personnel from the IRS and Treasury Department participated in its 
development.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 602

    Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

0
Accordingly, 26 CFR parts 1 and 602 are amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

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

0
Par. 2. Section 1.6038-3, paragraphs (j) and (l) are revised to read as 
follows:


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

* * * * *
    (j) Overlap with section 6031. A partner may be required to file 
Form 8865 under this section and the foreign partnership in which it is 
a partner may also be required to file a Form 1065 or Form 1065-B under 
section 6031(e) for the same partnership tax year. For cases where a 
United States person is a controlling fifty-percent partner or a 
controlling ten-percent partner with respect to a foreign partnership, 
and that foreign partnership completes and files Form 1065 or Form 
1065-B, the instructions for Form 8865 will specify

[[Page 39013]]

the filing requirements that address this overlap in reporting 
obligations.
* * * * *
    (1) Effective date. Except as otherwise provided, this section 
shall apply for tax years of a foreign partnership ending on or after 
December 31, 2000. For tax years of a foreign partnership ending before 
December 23, 2002, see Sec.  1.6038-3(j) in effect prior to the 
amendments made by T.D. 9033 (see 26 CFR part 1 revised April 1, 2002).


Sec.  1.6038-3T  [Removed]

0
Par. 3. Section 1.6038-3T is removed.

PART 602--OMB CONTROL NUMBERS UNDER PAPERWORK REDUCTION ACT

0
Par. 4. The authority citation for part 602 continues to read as 
follows:

    Authority: 26 U.S.C. 7805.

Sec.  602.101  [Amended]

0
Par. 5. In Sec.  602.101, paragraph (b) is amended by removing the 
entry ``Sec.  1.6038-3T''. * * * 1545-1617'' from the table.

David A. Mader,
Assistant Deputy Commissioner of Internal Revenue.
    Approved: June 23, 2003.
Pamela F. Olson,
Assistant Secretary of the Treasury.
[FR Doc. 03-16600 Filed 6-30-03; 8:45 am]
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