[Federal Register Volume 74, Number 175 (Friday, September 11, 2009)]
[Proposed Rules]
[Pages 46705-46707]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-21665]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 74, No. 175 / Friday, September 11, 2009 / 
Proposed Rules  

[[Page 46705]]



DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 26 and 301

[REG-136563-07]
RIN 1545-BG89


Generation-Skipping Transfers (GST) Section 6011 Regulations and 
Amendments to the Section 6112 Regulations

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations that provide rules 
relating to the disclosure of listed transactions and transactions of 
interest with respect to the generation-skipping transfer tax under 
section 6011 of the Internal Revenue Code (Code), conforming amendments 
under sections 6111 and 6112, and rules relating to the preparation and 
maintenance of lists with respect to reportable transactions under 
section 6112. The regulations affect taxpayers participating in listed 
transactions and transactions of interest and material advisors to such 
transactions. The proposed regulations also contain rules under section 
6112 that affect material advisors to reportable transactions. These 
regulations provide guidance regarding the length of time a material 
advisor has to prepare the list that must be maintained after the list 
maintenance requirement first arises with respect to a reportable 
transaction. These regulations also clarify guidance regarding 
designation agreements.

DATES: Written or electronic comments and requests for a public hearing 
must be received by December 10, 2009.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-136563-07), room 
5203, Internal Revenue Service, P.O. 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-
136563-07), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC, or sent electronically, via the Federal 
eRulemaking Portal at http://www.regulations.gov (IRS-REG-136563-07).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Charles D. Wien, (202) 622-3070; concerning the submissions of comments 
and requests for hearing, Oluwafunmilayo (Funmi) Taylor, (202) 622-7180 
(not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collections of information contained in this notice of proposed 
rulemaking have been reviewed and approved by the Office of Management 
and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 
3507) under control number 1545-1686. Responses to these collections of 
information are mandatory. 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 OMB control 
number assigned by the Office of Management and Budget.
    On August 3, 2007, the IRS published final regulations under Sec.  
301.6112-1 (TD 9352; 72 FR 43154). These regulations propose to modify 
those regulations.
    The estimated annual burden per recordkeeper for the collection of 
information in Sec.  301.6112-1T is 100 hours and the estimated number 
of recordkeepers is 500.
    Comments concerning the accuracy of these burden estimates and 
suggestions for reducing these burdens should be sent to Internal 
Revenue Service, Attn: IRS Reports Clearance Officer, 
SE:W:CAR:MP:T:T:SP, Washington, DC 20224, and 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.
    Books and records relating to these collections 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 
return information are confidential, as required by 26 U.S.C. 6103.

Background

    This document proposes to amend 26 CFR part 26 to provide rules for 
purposes of the generation-skipping transfer tax that require the 
disclosure of listed transactions and transactions of interest by 
certain taxpayers on their Federal tax returns under section 6011. This 
document also proposes to modify and clarify some of the rules under 26 
CFR part 301 relating to the disclosure obligations of material 
advisors under section 6111 and the list maintenance requirements of 
material advisors with respect to reportable transactions under section 
6112.
    On July 31, 2007, the IRS and Treasury Department issued final 
regulations under section 6011 (TD 9350; 72 FR 43146), 6111 (TD 9351; 
72 FR 43157) and 6112 (TD 9352; 72 FR 43154) (the July 2007 
regulations) that were published in the Federal Register on August 3, 
2007. In the July 2007 regulations, the IRS and Treasury Department 
amended 26 CFR parts 20, 25, 31, 53, 54, and 56 to provide that certain 
taxpayers would be required to disclose transactions of interest, in 
addition to listed transactions, on their Federal tax returns under 
section 6011. These regulations propose to amend 26 CFR part 26 to add 
similar rules under section 6011 for the tax on generation-skipping 
transfers. The July 2007 regulations also amended 26 CFR part 301 to 
provide rules relating to the obligation of material advisors to 
prepare and maintain lists with respect to reportable transactions 
under section 6112. These proposed regulations make minor 
clarifications and modifications to the rules under section 6112.

Explanation of Provisions

    The regulations should encompass transactions that purport to 
reduce or eliminate the generation-skipping transfer tax as listed 
transactions or transactions of interest and require the disclosure of 
these transactions under section 6011. Although these regulations are 
being proposed, the IRS and Treasury Department do not have plans to 
identify any such transaction at this time. Clarifying amendments are 
being made to the regulations under sections 6111 and 6112 as a result 
of the generation-skipping transfer tax rules proposed under section 
6011.
    The IRS and Treasury Department are proposing to amend the 
regulations

[[Page 46706]]

under section 6112 to provide that, before a material advisor must make 
available to the IRS the list as described in Sec.  301.6112-1(b), the 
material advisor will have a specified period of time to prepare the 
list after the list maintenance requirement first arises with respect 
to a reportable transaction. The specified period of time for a 
material advisor to prepare a list will be 30 calendar days or a period 
greater than 30 calendar days as may be specifically described in the 
published guidance designating a transaction as a reportable 
transaction. A request for a list under section 6112 made during the 
list preparation time period will be treated as having been made on the 
day after the list preparation time period ends.
    In addition, the regulations make clarifications to the rules 
regarding designation agreements. A group of material advisors to a 
reportable transaction may designate by written agreement one material 
advisor from the group to maintain the list required under section 
6112. The existence of a designation agreement, however, does not 
affect the ability of the IRS to request the list from any party to the 
designation agreement, or the obligation of any party receiving a 
request from the IRS to furnish the list as required under section 6112 
and the related 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. It is hereby 
certified that the collection of information in these regulations will 
not have a significant economic impact on a substantial number of small 
entities. This certification is based on the fact that most of the 
material advisors affected by these regulations are not small entities 
and for those material advisors that are small entities most of the 
information is already required under the current regulations. Also, 
the collection of information referenced in these regulations has been 
approved under OMB control number 1545-1686. The clarification and new 
information required by these proposed regulations add little or no new 
burden to those existing requirements. Therefore, 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 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 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, how they can be made easier to 
understand, and the administrability of the rules in the proposed 
regulations. All comments will be available for public inspection and 
copying. A public hearing will be scheduled if requested in writing by 
any person that submits timely written or electronic 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 Charles D. Wien, 
Office of the 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 26

    Estate taxes, Reporting and recordkeeping requirements.

26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR parts 26 and 301 are proposed to be amended as 
follows:

PART 26--GENERATION-SKIPPING TRANSFER TAX REGULATIONS UNDER THE TAX 
REFORM ACT OF 1986

    Paragraph 1. The authority citation for part 26 is amended to read 
in part as follows:

    Authority: 26 U.S.C. 7805 * * *.
    Section 26.6011-4 also issued under 26 U.S.C. 6011 * * *.

    Par. 2. Section 26.6011-4 is added to read as follows:


Sec.  26.6011-4  Requirement of statement disclosing participation in 
certain transactions by taxpayers.

    (a) In general. If a transaction is identified as a listed 
transaction or a transaction of interest as defined in Sec.  1.6011-4 
of this chapter by the Commissioner in published guidance, and the 
listed transaction or transaction of interest involves a tax on 
generation-skipping transfers under chapter 13 of subtitle B of the 
Internal Revenue Code, the transaction must be disclosed in the manner 
stated in such published guidance.
    (b) Effective/applicability date. This section applies to listed 
transactions and transactions of interest entered into on or after the 
date these regulations are published as final regulations in the 
Federal Register.

PART 301--PROCEDURE AND ADMINISTRATION

    Par. 3. The authority citation for part 301 continues to read in 
part as follows:

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

    Par. 4. Section 301.6111-3 is amended as follows:
    1. Paragraphs (b)(2)(i)(A) and (b)(3)(i)(B) are amended by adding 
the language ``26.6011-4,'' after each occurrence of ``25.6011-4,''.
    2. Paragraphs (c)(2) and (c)(13) are amended by adding the language 
``26.6011-4,'' after ``25.6011-4,''.
    3. Paragraph (i)(1) is revised.
    The revision reads as follows:


Sec.  301.6111-3   Disclosure of reportable transactions.

* * * * *
    (i) Effective/applicability date--(1) In general. This section 
applies to transactions with respect to which a material advisor makes 
a tax statement on or after August 3, 2007. However, this section 
applies to transactions of interest entered into on or after November 
2, 2006, with respect to which a material advisor makes a tax statement 
under this section on or after November 2, 2006. Paragraphs 
(b)(2)(i)(A), (b)(3)(i)(B), (c)(2), and (c)(13) of this section apply 
to transactions with respect to which a material advisor makes a tax 
statement under this section after the date these regulations are 
published as final regulations in the Federal Register. Paragraph (h) 
of this section applies to ruling requests received on or after 
November 2, 2006. Otherwise, the rules that apply on or before the date 
these regulations are published as final regulations in the Federal 
Register are contained in this section in effect prior to the date 
these regulations are published as final

[[Page 46707]]

regulations in the Federal Register (see 26 CFR part 301 revised as of 
April 1, 2009).
* * * * *
    Par. 5. Section 301.6112-1 is amended as follows:
    1. Paragraph (b)(1) is revised.
    2. Paragraphs (c)(3) and (c)(12) are amended by adding the language 
``26.6011-4,'' after ``25.6011-4,''.
    3. Paragraphs (f) and (g) are revised.
    The revisions read as follows:


Sec.  301.6112-1  Material advisors of reportable transactions must 
keep lists of advisees, etc.

* * * * *
    (b) * * * (1) In general. A separate list must be prepared and 
maintained for each reportable transaction. However, one list must be 
maintained for substantially similar transactions. A material advisor 
will have 30 calendar days from the date the list maintenance 
requirement first arises (see Sec.  301.6111-3(b)(4) and paragraph (a) 
of this section) with respect to a reportable transaction to prepare 
the list that must be maintained under this section with respect to 
that transaction. The Commissioner in his discretion also may provide 
in published guidance designating a transaction as a reportable 
transaction a list preparation time period greater than 30 calendar 
days. If a list is requested under this section during the list 
preparation time period, the request for the list will be treated as 
having been made on the day after the list preparation time period 
ends. A list must be maintained in a form that enables the IRS to 
determine without undue delay or difficulty the information required in 
paragraph (b)(3) of this section. The Commissioner in his discretion 
may provide in published guidance a form or method for maintaining or 
furnishing the list.
* * * * *
    (f) Designation agreements. If more than one material advisor is 
required to maintain a list of persons for a reportable transaction, in 
accordance with paragraph (b) of this section, the material advisors 
may designate by written agreement a single material advisor (the 
designated material advisor) to maintain the list or a portion of the 
list. A designation agreement does not relieve material advisors from 
their obligation to maintain the list in accordance with paragraph (b) 
of this section or to furnish the list to the IRS in accordance with 
paragraph (e)(1) of this section, but a designation agreement may allow 
one material advisor to maintain the list on behalf of the other 
material advisors who are a party to the designation agreement. A 
material advisor is not relieved from the requirement of this section 
because a material advisor is unable to obtain the list from any 
designated material advisor, any designated material advisor did not 
maintain a list, or the list maintained by any designated material 
advisor is not complete. The existence of a designation agreement does 
not affect the ability of the IRS to request the list from any party to 
the designation agreement. The IRS may request the list from any party 
to the designation agreement, and the party receiving the request must 
furnish the list to the IRS in accordance with paragraph (e)(1) of this 
section, regardless of whether the list was maintained by another party 
pursuant to the terms of a designation agreement.
    (g) Effective/applicability date. In general, this section applies 
to transactions with respect to which a material advisor makes a tax 
statement under Sec.  301.6111-3 on or after August 3, 2007. However, 
this section applies to transactions of interest entered into on or 
after November 2, 2006, with respect to which a material advisor makes 
a tax statement under Sec.  301.6111-3 on or after November 2, 2006. 
Paragraphs (b)(1), (c)(3), (c)(12), and (f) of this section apply to 
transactions with respect to which a material advisor makes a tax 
statement under Sec.  301.6111-3 after the date these regulations are 
published as final regulations in the Federal Register. Otherwise, the 
rules that apply on or before the date these regulations are published 
as final regulations in the Federal Register are contained in this 
section in effect prior to the date these regulations are published as 
final regulations in the Federal Register (see 26 CFR part 301 revised 
as of April 1, 2009).

Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
[FR Doc. E9-21665 Filed 9-10-09; 8:45 am]
BILLING CODE 4830-01-P