[Federal Register Volume 68, Number 225 (Friday, November 21, 2003)]
[Proposed Rules]
[Pages 65645-65646]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-29043]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-136890-02]
RIN 1545-BA90


Transfers To Provide for Satisfaction of Contested Liabilities

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 
the transfer of indebtedness or stock of a taxpayer or related persons 
or of a promise to provide services or property in the future to 
provide for the satisfaction of an asserted liability that the taxpayer 
is contesting. The temporary regulations also relate to transfers of 
money or other property to a trust, an escrow account, or a court to 
provide for the satisfaction of a liability for which payment is 
economic performance. The text of those temporary regulations also 
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 19, 
2004. Requests to speak and outlines of topics to be discussed at the 
public hearing scheduled for March 23, 2004, must be received by March 
2, 2004.

ADDRESSES: Send submissions to: CC:LPD:PR (REG-136890-02), 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:LPD:PR (REG-136890-02), 
Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, 
NW., Washington, DC, or sent electronically via the IRS Internet site 
at www.irs.gov/regs. The public hearing will be held in the 7th floor 
auditorium, Internal Revenue Building, 1111 Constitution Avenue NW., 
Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the hearing, submission of 
comments, and/or to be placed on the building access list to attend the 
hearing, Guy Traynor, (202) 622-7180; concerning the proposed 
regulations, Norma Rotunno, (202) 622-7900 (not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

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 section 461(f) of the Internal Revenue Code (Code). 
The temporary regulations provide the express rule that transfers of 
the indebtedness of a taxpayer or of any promise to provide services or 
property in the future, or transfers (other than to the person 
asserting the liability) of a taxpayer's stock, or the indebtedness or 
stock of a person related to the taxpayer (as defined in section 
267(b)), are not transfers to provide for the satisfaction of an 
asserted liability. The temporary regulations also provide rules 
relating to the application of the economic performance rules to 
transfers of money or other property under section 461(f) to provide 
for the satisfaction of a contested workers compensation or tort 
liability, or other liability for which payment is economic performance 
under Sec.  1.461-4(g). The text of the temporary regulations also 
serves as the text of these proposed regulations. The preamble to the 
temporary regulations explains the amendments.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a

[[Page 65646]]

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 the 
regulation does 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 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 Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written comments (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 23, 2004, in the 7th 
floor auditorium 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 601.601(a)(3) apply to the hearing. Persons who 
wish to present oral comments at the hearing must submit 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 
March 2, 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 these regulations is Norma Rotunno, Office 
of the Associate Chief Counsel (Income Tax & Accounting). 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

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

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

    2. Section 1.461-2 is amended by revising paragraphs (c)(1), 
(e)(2), (e)(3), and (g) to read as follows:


Sec.  1.461-2  Contested liabilities.

    [The text of proposed paragraphs (c)(1), (e)(2), (e)(3), and (g) is 
the same as the text of Sec.  1.461-2T(c)(1), (e)(2), (e)(3), and (g) 
published elsewhere in this issue of the Federal Register.]

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 03-29043 Filed 11-19-03; 8:45 am]
BILLING CODE 4830-01-P