[Federal Register Volume 69, Number 153 (Tuesday, August 10, 2004)]
[Rules and Regulations]
[Pages 48393-48394]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18160]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 40 and 49

[TD 9149]
RIN 1545-BB76


Collected Excise Taxes; Duties of Collector

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and temporary regulations.

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SUMMARY: This document contains final and temporary regulations 
relating to the obligations of persons that receive payments for air 
transportation or communications services subject to excise tax when 
persons liable for tax refuse to pay the tax. These temporary 
regulations affect persons that receive payments subject to tax and 
persons liable for those taxes. The text of the temporary regulations 
also serves as the text of the proposed regulations (REG-163909-02) set 
forth in the notice of proposed rulemaking on this subject in the 
Proposed Rules section in this issue of the Federal Register.

DATES: Effective Date: These regulations are effective October 1, 2004.
    Applicability Dates: For dates of applicability, see Sec. Sec.  
40.6302(c)-3T(b)(2)(ii) and 49.4291-1T.

FOR FURTHER INFORMATION CONTACT: Taylor Cortright (202) 622-3130 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    This document contains amendments to the Excise Tax Procedural 
Regulations (26 CFR part 40) and the Facilities and Services Excise Tax 
Regulations (26 CFR part 49). Section 4251 of the Internal Revenue Code 
(Code) imposes an excise tax on amounts paid for certain communications 
services. Sections 4261(a) and (b) impose excise taxes on amounts paid 
for taxable transportation of persons by air. Section 4261(e)(3) 
provides that any amount paid to an air carrier or related party for 
the right to provide mileage awards for (or other reductions in the 
cost of) any transportation of persons by air is treated for purposes 
of section 4261(a) as an amount paid for taxable transportation and is 
therefore subject to tax. Section 4261(c) imposes an excise tax on any 
amount paid for the air transportation of persons that begins or ends 
in the United States. Section 4271 imposes an excise tax on amounts 
paid for taxable transportation of property by air. These taxes 
collectively are referred to as collected excise taxes.
    For each of the collected excise taxes, the person liable for the 
tax is the person making the payment on which tax is imposed (the 
taxpayer). Under section 4291, the person receiving the payment on 
which tax is imposed (the collector) generally must collect the tax 
from the person making the payment and pay it over to the government.
    If the taxpayer refuses to pay the tax the collector is required, 
under Sec.  49.4291-1, to report this refusal to the IRS. The IRS will 
then assert the tax against the taxpayer. Current regulations do not 
specify the time within which the collector must report this refusal to 
the IRS.
    Collectors are responsible for filing returns with respect to the 
collected excise taxes and for making deposits of tax as required by 
section 6302. Section 40.6302(c)-3 provides an alternative method for 
computing the amount of deposits of collected excise taxes. Under the 
alternative method, collectors may compute the amount of tax to be 
deposited on the basis of amounts considered as collected instead of on 
the basis of actual collections of tax. A person may use the 
alternative method with respect to a tax only if the person separately 
accounts for the tax. The separate account must reflect for each month 
all items of tax that are included in amounts billed or tickets sold to 
customers during the month and items of adjustment (including bad debts 
and errors) relating to the tax for prior months within the period of 
limitations for credits or refunds. When a collector using the 
alternative method determines that a taxpayer has refused to pay the 
tax, the collector adjusts the separate account to reflect that the tax 
was not collected. Current regulations do not specify the time for 
adjusting the separate account to reflect that refusal.
    The temporary regulations provide that the collector must report 
the refusal to pay the tax to the IRS by the due date of the return on 
which the tax would have been reported but for the refusal to pay. In 
addition, the temporary regulations provide that, for a person using 
the alternative method, the separate account cannot be adjusted to 
reflect a refusal to pay tax for the month unless such refusal has been 
reported.

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 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. For 
applicability of the Regulatory Flexibility Act, please refer to the 
cross-referenced notice of proposed rulemaking published elsewhere in 
this issue of the Federal Register. Pursuant to section 7805(f) of the 
Code, these temporary regulations will be submitted to the Chief 
Counsel for Advocacy of the Small Business Administration for comment 
on their impact on small business.

Drafting Information

    The principal author of these regulations is Patrick S. Kirwan, 
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

26 CFR Part 40

    Excise taxes, Reporting and recordkeeping requirements.

26 CFR Part 49

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

Adoption of Amendments to the Regulations

0
Accordingly, 26 CFR parts 40 and 49 are amended as follows:

PART 40--EXCISE TAX PROCEDURAL REGULATIONS

0
Paragraph 1. The authority citation for part 40 is amended by adding an 
entry in numerical order to read, in part, as follows:

    Authority: 26 U.S.C. 7805 * * *
    Section 40.6302(c)-3T also issued under 26 U.S.C. 6302 * * *


0
Par. 2. Section 40.6302(c)-3 is amended by:
0
a. Removing the language ``and'' at the end of paragraph (b)(2)(ii)(A).

[[Page 48394]]

0
b. Redesignating paragraph (b)(2)(ii)(B) as paragraph (b)(2)(ii)(C) and 
removing the language ``Items'' and adding ``Other items'' in its 
place.
0
c. Adding new paragraph (b)(2)(ii)(B) to read as follows:


Sec.  40.6302(c)-3  Special rules for use of Government depositaries 
under chapter 33.

* * * * *
    (b) * * *
    (2) * * *
    (ii) * * *
    (B) [Reserved]. For further guidance, see Sec.  40.6302(c)-
3T(b)(2)(ii)(B).
* * * * *
0
Par. 3. Section 40.6302(c)-3T is added to read as follows:


Sec.  40.6302(c)-3T  Special rules for use of Government depositaries 
under chapter 33 (temporary).

    (a) through (b)(2)(ii)(A) [Reserved]. For further guidance, see 
Sec.  40.6302(c)-3(a) through (b)(2)(ii)(A).
    (b)(2)(ii)(B) Applicable October 1, 2004, the account required 
under Sec.  40.6302(c)-3(b)(2)(i)(A) may not reflect an item of 
adjustment for any month during a quarter if the adjustment results 
from a refusal to pay or inability to collect the tax and the 
uncollected tax has not been reported under Sec.  49.4291-1 of this 
chapter on or before the due date of the return for that quarter; and
    (b)(2)(ii)(C) through (g) [Reserved]. For further guidance, see 
Sec.  40.6302(c)-3(b)(2)(ii)(C) through (g).

PART 49--FACILITIES AND SERVICES EXCISE TAXES

0
Par. 4. The authority citation for part 49 continues to read, in part, 
as follows:

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


0
Par. 5. Section 49.4291-1 is amended by adding a sentence after the 
third sentence to read as follows:


Sec.  49.4291-1  Persons receiving payment must collect tax.

    * * * For further guidance, see Sec.  49.4291-1T. * * *

0
Par. 6. Section 49.4291-1T is added to read as follows:


Sec.  49.4291-1T  Persons receiving payment must collect tax 
(temporary).

    Applicable October 1, 2004, a person required to report uncollected 
tax under Sec.  49.4291-1 must make the report on or before the due 
date of the return on which the refusal to pay or inability to collect 
such tax is reflected (or could be reflected but for the limitation in 
Sec.  40.6302(c)-3T).

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
    Approved: June 21, 2004.
Gregory Jenner,
Acting Assistant Secretary of the Treasury.
[FR Doc. 04-18160 Filed 8-9-04; 8:45 am]
BILLING CODE 4830-01-P