[Federal Register Volume 71, Number 119 (Wednesday, June 21, 2006)]
[Proposed Rules]
[Pages 35592-35593]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-9611]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-109512-05]
RIN 1545--BE47


Information Returns Required With Respect to Certain Foreign 
Corporations and Certain Foreign-Owned Domestic Corporations

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations.

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations to clarify 
existing guidance under sections 6038 and 6038A of the Internal Revenue 
Code (Code) with respect to the information required to be furnished 
regarding certain related party transactions of certain foreign 
corporations and certain foreign-owned U.S. corporations. The temporary 
regulations also increase the amount of certain penalties, and make 
certain other changes, to reflect the statutory changes made by the 
Taxpayer Relief Act of 1997. The text of the temporary regulations also 
serves as the text of these proposed regulations.

DATES: Written or electronic comments and requests for a public hearing 
must be received by September 19, 2006.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-109512-05), Room 
5203, Internal Revenue Service, PO Box 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-
109512-05), 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-109512-05).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Kate Y. Hwa, (202) 622-3840; concerning submissions of comments, Kelly 
Banks, (202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in these proposed 
regulations has been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)).
    Comments concerning the collection of information should be sent 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, with copies to the Internal Revenue 
Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, 
Washington, DC 20224. Any such comments should be submitted not later 
than August 21, 2006. Comments are specifically requested concerning:
    Whether the proposed collection of information is necessary for the 
proper performance of the functions of the IRS, including whether the 
information will have practical utility;
    The accuracy of the estimated burden associated with the proposed 
collection of information (see below);
    How the quality, utility, and clarity of the information to be 
collected may be enhanced;
    How the burden of complying with the proposed collections of 
information may be minimized, including through the application of 
automated collection techniques or other forms of information 
technology; and
    Estimates of capital or start-up costs and costs of operations, 
maintenance, and purchase of service to provide information.
    The collection of information is in Sec.  1.6038-2(f)(11). This 
information is required by the IRS pursuant to section 6038 of the 
Code. The likely recordkeepers are business or other for-profit 
institutions. The estimated burden is as follows:
    Estimated total annual reporting and/or recordkeeping burden: 1250 
hours.
    Estimated average annual burden per respondent: 15 minutes.
    Estimated number of respondents: 5,000.
    Estimated annual frequency of responses: Once.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid control number assigned by the Office of 
Management and Budget.
    Books or records relating to a collection of information must be 
retained as long as their contents may 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

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend the Income Tax Regulations (26 CFR 
part 1) to clarify the existing rules under sections 6038 and 6038A of 
the Code with respect to the information required to be furnished 
regarding certain related party transactions of certain foreign 
corporations and certain foreign-owned domestic corporations. The text 
of the temporary regulations also serves as the text of these proposed 
regulations. The preamble to the temporary regulations explains the 
temporary regulations and these proposed regulations.

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 has also 
been determined that section 553(b) of the Administrative Procedure Act 
(5 U.S.C. chapter 5) does not apply to these regulations. Because these 
regulations impose no new collection of information on small entities, 
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 Code, this notice of proposed rulemaking will be submitted to the 
Chief Counsel for Advocacy of the Small Business Administration for 
comment on their impact on small business.

Comments and Request for 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. All comments will be available for public inspection and copying. 
A public hearing may be scheduled if requested by any person who timely 
submits comments. If a public hearing is scheduled, notice of the date, 
time, and place for the hearing will be published in the Federal 
Register.

[[Page 35593]]

Drafting Information

    The principal author of these regulations is Kate Y. Hwa, Office of 
the Associate Chief Counsel (International). 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

    Paragraph 1. The authority citation for part 1 is amended by adding 
entries in numerical order to read in part as follows:

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

    Par. 2. Section 1.6038-2 is amended to read as follows:
    1. Paragraphs (f)(11), (k)(1), (k)(5) and (m) are revised.
    2. Paragraph (f)(12) is added.
    The additions and revisions read as follows:


Sec.  1.6038-2  Information returns required of United States persons 
with respect to annual accounting periods of certain foreign 
corporations beginning after December 31, 1962.

* * * * *
    (f)(11) [The text of this proposed amendment is the same as the 
text of Sec.  1.6038-2T(f)(11) published elsewhere in this issue of the 
Federal Register].
    (f)(12) [The text of this proposed amendment is the same as the 
text of Sec.  1.6038-2T(f)(12) published elsewhere in this issue of the 
Federal Register].
* * * * *
    (k)(1) [The text of this proposed amendment is the same as the text 
of Sec.  1.6038-2T(k)(1) published elsewhere in this issue of the 
Federal Register].
* * * * *
    (5) * * *

    Example 3. [The text of this proposed amendment is the same as 
the text of Sec.  1.6038-2T(k)(5) Example 3 published elsewhere in 
this issue of the Federal Register].
    Example 4. [The text of this proposed amendment is the same as 
the text of Sec.  1.6038-2T(k)(5) Example 4 published elsewhere in 
this issue of the Federal Register].
* * * * *
    (m) [The text of this proposed amendment is the same as the text of 
Sec.  1.6038-2T(m) published elsewhere in this issue of the Federal 
Register.]
    Par. 3. Section 1.6038A-2 is amended by revising paragraphs (b)(8) 
and (h) to read as follows:


Sec.  1.6038A-2  Requirement of return.

* * * * *
    (b) * * *
    (8) [The text of this proposed amendment is the same as the text of 
Sec.  1.6038A-2T(b)(8) published elsewhere in this issue of the Federal 
Register].
* * * * *
    (h) [The text of this proposed amendment is the same as the text of 
Sec.  1.6038A-2T(h) published elsewhere in this issue of the Federal 
Register].

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
 [FR Doc. E6-9611 Filed 6-20-06; 8:45 am]
BILLING CODE 4830-01-P