[Federal Register Volume 71, Number 202 (Thursday, October 19, 2006)]
[Proposed Rules]
[Pages 61692-61693]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-17409]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-127819-06]
RIN 1545-BF79


TIPRA Amendments to Section 199

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 concerning 
the application of section 199 of the Internal Revenue Code, which 
provides a deduction for income attributable to domestic production 
activities. The text of those 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 January 17, 
2007. Outlines of topics to be discussed at the public hearing 
scheduled for February 5, 2007, must be received by January 16, 2007.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-127819-06), 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-
127819-06), Internal Revenue Service, Crystal Mall 4 Building, 1901 S. 
Bell St., Arlington, VA, 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-127819-06). The public hearing 
will be held in the auditorium of the New Carrollton Federal Building, 
5000 Ellin Rd., Lanham, Maryland 20706.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Paul 
Handleman or Lauren Ross Taylor, (202) 622-3040; concerning submission 
of comments, the hearing, and/or to be placed on the building access 
list to attend the hearing, Kelly D. Banks, (202) 622-7180 (not toll-
free numbers).

SUPPLEMENTARY INFORMATION:

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) relating to section 199. The temporary regulations provide 
guidance concerning the amendments made by the Tax Increase Prevention 
and Reconciliation Act of 2005 to section 199 of the Internal Revenue 
Code. The text of those 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 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 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 their 
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.

[[Page 61693]]

Comments are requested on all aspects of the proposed regulations. In 
addition, the IRS and Treasury Department specifically 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 February 5, 2007 at 10 
a.m., in the auditorium of the New Carrollton Federal Building, 5000 
Ellin Rd., Lanham, Maryland 20706. Due to building security procedures, 
visitors must enter at the main 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 electronic or 
written comments and an outline of the topics to be discussed and the 
time to be devoted to each topic (a signed original and eight (8) 
copies) by January 16, 2007. 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 authors of these regulations are Paul Handleman and 
Lauren Ross Taylor, Office of Associate Chief Counsel (Passthroughs and 
Special Industries), IRS. 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 continues to read, 
in part, as follows:

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

    Par. 2. Section 1.199-2 is amended to read as follows:


Sec.  1.199-2  Wage limitation.

    [The text of proposed Sec.  1.199-2 is the same as the text of 
Sec.  1.199-2T published elsewhere in this issue of the Federal 
Register.]
    Par. 3. Section 1.199-3 is amended to read as follows:


Sec.  1.199-3  Domestic production gross receipts.

    [The text of proposed Sec.  1.199-3 is the same as the text of 
Sec.  1.199-3T published elsewhere in this issue of the Federal 
Register.]
    Par. 4. Section 1.199-5 is amended to read as follows:


Sec.  1.199-5  Application of section 199 to pass-thru entities for 
taxable years beginning after May 17, 2006, the enactment date of the 
Tax Increase Prevention and Reconciliation Act of 2005.

    [The text of proposed Sec.  1.199-5 is the same as the text of 
Sec.  1.199-5T published elsewhere in this issue of the Federal 
Register.]
    Par. 5. Section 1.199-7 is amended to read as follows:


Sec.  1.199-7  Expanded affiliated groups.

    [The text of proposed Sec.  1.199-7 is the same as the text of 
Sec.  1.199-7T published elsewhere in this issue of the Federal 
Register.]
    Par. 6. Section 1.199-8 is amended to read as follows:


Sec.  1.199-8  Other rules.

    [The text of proposed Sec.  1.199-8 is the same as the text of 
Sec.  1.199-8T published elsewhere in this issue of the Federal 
Register.]

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
 [FR Doc. E6-17409 Filed 10-18-06; 8:45 am]
BILLING CODE 4830-01-P