[Federal Register Volume 70, Number 145 (Friday, July 29, 2005)]
[Proposed Rules]
[Pages 43811-43812]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-15060]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-149436-04]
RIN 1545-BD92


Return Required by Subchapter T Cooperatives Under Section 6012

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations that prescribe the 
form that cooperatives must use to file their income tax returns. The 
regulations affect all cooperatives that are currently required to file 
an income tax return on either Form 1120, ``U.S. Corporation Income Tax 
Return,'' or Form 990-C, ``Farmers'' Cooperative Association Income Tax 
Return.''

DATES: Written or electronic comments and requests for a public hearing 
must be received by October 27, 2005.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-149436-04), room 
5203, 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:PA:LPD:PR (REG-
149436-04), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC, or sent electronically, via the IRS 
Internet site at http://www.irs.gov/regs, or via the Federal 
eRulemaking Portal at http://www.regulations.gov (IRS-REG-149436-04). A 
public hearing may be scheduled if requested by any person who timely 
submits comments.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,

[[Page 43812]]

Donnell M. Rini-Swyers, (202) 622-4910; concerning submissions of 
comments, or to request a hearing, Richard Hurst, (202) 622-7180 (not 
toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    Under existing regulations, all cooperatives to which subchapter T 
applies (Subchapter T cooperatives) are required to make income tax 
returns. Except in the case of farmers' cooperatives, the regulations 
require that the return be made on Form 1120. In the case of farmers' 
cooperatives, the regulations require that the return be made on Form 
990-C.
    Most taxpayers required to make an income tax return on Form 1120 
must file their return on or before the 15th day of the third month 
following the close of the taxpayer's taxable year (2\1/2\ month 
deadline). Some Subchapter T cooperatives that make their returns on 
Form 1120 are required to file by the 2\1/2\ month deadline, but others 
are not required to file their returns until the 15th day of the ninth 
month following the close of the taxpayer's taxable year (8\1/2\ month 
deadline). Because the Form 1120 does not distinguish between 
Subchapter T cooperatives that must file by the 2\1/2\ month deadline 
and those that must file by the 8\1/2\ month deadline, the IRS has 
difficulty determining which filing deadline applies and deciding 
whether to assert delinquency and failure to pay penalties in the case 
of returns filed after the 2\1/2\ month deadline.

Explanation of Provisions

    The proposed regulations provide that all Subchapter T cooperatives 
must make their income tax returns on Form 1120-C, ``U.S. Income Tax 
Return for Cooperative Associations,'' or such other form as may be 
designated by the Commissioner. The information that Subchapter T 
cooperatives will be required to provide on new Form 1120-C will assist 
taxpayers and the IRS in determining the appropriate filing deadline. 
Having that information will reduce the burden on taxpayers and will 
help the IRS avoid asserting penalties in inappropriate cases. Having 
all Subchapter T cooperatives make their income tax returns on Form 
1120-C will also eliminate confusion over which form to file and will 
promote efficiency in addressing income tax issues common to Subchapter 
T cooperatives.

Effect on Other Documents

    The following publication is obsolete as of [DATE THIS DOCUMENT IS 
PUBLISHED AS A FINAL RULE IN FEDERAL REGISTER].
    Announcement 84-26 (1984-11 I.R.B. 42).

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 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 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 (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 will 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 public hearing will be 
published in the Federal Register.

Drafting Information

    The principal author of these regulations is Donnell M. Rini-
Swyers, Office of Assistant Chief Counsel (Procedure & Administration).

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, REPORTING AND RECORDKEEPING REQUIREMENTS

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

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

    Par. 2. Section 1.6012-2 is amended by revising paragraph (f) to 
read as follows:


Sec.  1.6012-2  Corporations required to make returns of income.

* * * * *
    (f) Subchapter T cooperatives--(1) In general. For taxable years 
ending on or after December 31, 2006, a cooperative organization 
described in section 1381 (including a farmers' cooperative exempt from 
tax under section 521) is required to make a return, whether or not it 
has taxable income and regardless of the amount of its gross income, on 
Form 1120-C, ``U.S. Income Tax Return for Cooperative Associations,'' 
or such other form as may be designated by the Commissioner.
    (2) Farmers' cooperatives. For taxable years ending before December 
31, 2006, a farmers' cooperative organization described in section 
521(b)(1) (including a farmers' cooperative that is not exempt from tax 
under section 521) is required to make a return on Form 990-C, 
``Farmers'' Cooperative Association Income Tax Return.''
* * * * *

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 05-15060 Filed 7-28-05; 8:45 am]
BILLING CODE 4830-01-P