[Federal Register Volume 76, Number 112 (Friday, June 10, 2011)]
[Rules and Regulations]
[Pages 33997-33999]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-14468]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9529]
RIN 1545-BK01


Requirements for Taxpayers Filing Form 5472

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary regulations.

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SUMMARY: This document contains temporary regulations that remove the 
duplicate filing requirement for Form 5472, ``Information Return of a 
25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in 
a U.S. Trade or Business.'' The temporary regulations affect certain 
25-percent foreign-owned domestic corporations and certain foreign 
corporations that are engaged in a trade or business in the United 
States that are required to file Form 5472. The text of the temporary

[[Page 33998]]

regulations also serves as the text of the proposed regulations set 
forth in the Proposed Rules section in this issue of the Federal 
Register.

DATES: Effective Date: These regulations are effective June 10, 2011.
    Applicability Dates: For dates of applicability, see Sec. Sec.  
1.6038A-1T(n) and 1.6038A-2(h).

FOR FURTHER INFORMATION CONTACT: Gregory A. Spring, (202) 435-5265 (not 
a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    Section 6038A of the Internal Revenue Code (Code) generally 
requires information reporting by a 25-percent foreign-owned domestic 
corporation with respect to certain transactions between such 
corporation and certain related parties. Similarly, section 6038C 
generally requires a foreign corporation engaged in a trade or business 
within the United States at any time during the taxable year to report 
the information described in section 6038A with respect to certain 
transactions between such corporation and certain related parties.
    On June 19, 1991, the Treasury Department and the IRS published in 
the Federal Register (56 FR 28056) final regulations (TD 8353, 1991-2 
CB 402) under section 6038A (1991 final regulations). A correction to 
TD 8353 was published in the Federal Register (56 FR 41792) on August 
23, 1991. The 1991 final regulations contained guidance under a number 
of provisions including Sec. Sec.  1.6038A-1 and 1.6038A-2 regarding 
information reporting requirements under sections 6038A and 6038C. 
Section 1.6038A-1(c)(1) defines a reporting corporation as: (i) A 
domestic corporation that is 25-percent foreign-owned; (ii) a foreign 
corporation that is 25-percent foreign-owned and engaged in trade or 
business within the United States; or (iii) (after November 4, 1990) a 
foreign corporation engaged in a trade or business within the United 
States at any time during a taxable year. Section 1.6038A-2(a)(1) 
generally requires a reporting corporation to file a separate annual 
information return on Form 5472, ``Information Return of a 25% Foreign-
Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade 
or Business,'' with respect to each related party with which the 
reporting corporation has had any reportable transaction during the 
taxable year. Section 1.6038A-2(d) requires a reporting corporation to 
file Form 5472 with its income tax return for the taxable year by the 
due date of that return. Section 1.6038A-2(d) also requires a reporting 
corporation to file a duplicate Form 5472 with the Internal Revenue 
Service Center in Philadelphia, PA (duplicate filing requirement). 
Section 1.6038A-2(e) provides that if a reporting corporation's income 
tax return is not timely filed, Form 5472 nonetheless is required to be 
filed (with a duplicate to the Internal Revenue Service Center in 
Philadelphia, PA) at the service center where the return is due 
(untimely filed return provision). When the income tax return is 
ultimately filed, a copy of Form 5472 must be attached to the return.
    On February 9, 2004, the Treasury Department and the IRS published 
in the Federal Register (69 FR 5931) final regulations and temporary 
regulations (2004 temporary regulations) (TD 9113, 2004-1 CB 524) under 
section 6038A regarding the duplicate filing requirement. The text of 
the 2004 temporary regulations also served as the text of proposed 
regulations (REG-167217-03, 2004-1 CB 540) set forth in the proposed 
rules section of the same issue of the Federal Register (69 FR 5940-01) 
(2004 proposed regulations). The 2004 temporary regulations provided 
that the duplicate filing requirement of Sec.  1.6038A-2(d) is 
satisfied if Form 5472 is timely filed electronically (electronic 
filing provision). The 2004 temporary regulations did not add a 
conforming electronic filing provision to Sec.  1.6038A-2(e) 
(containing the untimely filed return provision) because the electronic 
filing of Form 5472 other than as an attachment to an electronically 
filed income tax return was not technically possible at the time the 
2004 temporary regulations were published. However, the preamble to the 
2004 temporary regulations states that the Treasury Department and the 
IRS intend that a Form 5472 that is timely and separately filed 
electronically, once technically possible, would be treated as 
satisfying the duplicate filing requirement of Sec.  1.6038A-2(e).
    On September 15, 2004, the Treasury Department and the IRS 
published in the Federal Register (69 FR 55499-02) final regulations 
(TD 9161, 2004-2 CB 704) that adopted the 2004 proposed regulations 
without change (2004 final regulations). As part of the 2004 final 
regulations, Sec.  1.6038A-1(n)(2) (providing effective dates) was also 
amended to indicate that the electronic filing provision applies for 
taxable years ending on or after January 1, 2003. TD 9161 also removed 
the text of the 2004 temporary regulations.

Explanation of Provisions

    As a result of advances in electronic processing and data 
collection in the IRS, the duplicate filing requirement contained in 
Sec.  1.6038A-2(d) is no longer necessary. Upon the effective date of 
these temporary regulations, the duplicate filing of Form 5472 will no 
longer be required regardless of whether the reporting corporation 
files a paper or an electronic income tax return. The temporary 
regulations implement this change by removing from Sec.  1.6038A-2(d), 
the duplicate filing requirement and the electronic filing provision.
    As a conforming amendment, the temporary regulations also remove 
the duplicate filing requirement from the untimely filed return 
provision of Sec.  1.6038A-2(e). In addition, the temporary regulations 
remove the reference in Sec.  1.6038A-2(e) to ``at the service center 
where the return is due'' in order to avoid any implication that the 
untimely filed return provision can only be satisfied by filing a paper 
Form 5472. However, while the Treasury Department and the IRS intend 
that a timely filed electronic Form 5472 would be treated as satisfying 
the untimely filed return provision, there are currently no procedures 
for electronically filing Form 5472 independent of an electronically 
filed income tax return. Thus, a reporting corporation that does not 
timely file an income tax return must still timely file a paper Form 
5472 in order to satisfy the untimely filed return provision. If the 
IRS institutes procedures for the separate electronic filing of Form 
5472, reporting corporations will no longer be required to file a paper 
Form 5472 when filing the Form 5472 separate from an income tax return.
    Lastly, the temporary regulations amend the effective date 
provisions of Sec.  1.6038A-1(n) to provide that the amendments to 
Sec.  1.6038A-2(d) and (e) apply for taxable years ending on or after 
June 10, 2011.
    The text of the temporary regulations also serves as the text of 
the proposed regulations set forth in the Proposed Rules section in 
this issue of the Federal Register.

Special Analyses

    It has been determined that this temporary regulation 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. For the 
applicability of the Regulatory Flexibility Act (5 U.S.C chapter 6) 
refer to the Special Analyses section of the preamble of the cross-
referenced notice of proposed rulemaking published in

[[Page 33999]]

the Proposed Rules section in this issue of the Federal Register. 
Pursuant to section 7805(f) of the Code, this regulation has been 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business.

Drafting Information

    The principal author of these regulations is Gregory A. Spring, 
Office of Associate Chief Counsel (International). However, other 
personnel from the IRS and the Treasury Department participated in its 
development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Amendments to the Regulations

    Accordingly, 26 CFR part 1 is amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

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


0
Par. 2. Section 1.6038A-1 is amended by revising paragraph (n)(2) to 
read as follows:


Sec.  1.6038A-1  General requirements and definitions.

* * * * *
    (n) * * *
    (2) [Reserved]. For further guidance, see Sec.  1.6038A-1T(n)(2).
* * * * *


0
Par. 3. Section 1.6038A-1T is added to read as follows:


Sec.  1.6038A-1T  General requirements and definitions (temporary).

    (a) through (n)(1) [Reserved]. For further guidance see Sec.  
1.6038A-1(a) through (n)(1).
    (2) Section 1.6038A-2. Section 1.6038A-2 (relating to the 
requirement to file Form 5472) generally applies for taxable years 
beginning after July 10, 1989. However, Sec.  1.6038A-2 as it applies 
to reporting corporations whose sole trade or business in the United 
States is a banking, financing, or similar business as defined in Sec.  
1.864-4(c)(5)(i) applies for taxable years beginning after December 10, 
1990. Section 1.6038A-2(d) and (e) apply for taxable years ending on or 
after June 10, 2011. For taxable years ending prior to June 10, 2011, 
see Sec.  1.6038A-2(d) and (e) as contained in 26 CFR part 1 revised as 
of September 15, 2004.
    (n)(3) through (n)(6) [Reserved]. For further guidance see Sec.  
1.6038A-1(n)(3) through (6).

0
Par. 4. Section 1.6038A-2 is amended by revising paragraphs (d) and (e) 
to read as follows:


Sec.  1.6038A-2  Requirement of return.

* * * * *
    (d) [Reserved]. For further guidance, see Sec.  1.6038A-2T(d).
    (e) [Reserved]. For further guidance, see Sec.  1.6038A-2T(e).
* * * * *

0
Par. 5. Section 1.6038A-2T is added to read as follows:


Sec.  1.6038A-2T  Requirement of return (temporary).

    (a) through (c) [Reserved]. For further guidance, see Sec.  
1.6038A-2(a) through (c).
    (d) Time for filing returns. A Form 5472 required under this 
section must be filed with the reporting corporation's income tax 
return for the taxable year by the due date (including extensions) of 
that return.
    (e) Untimely filed return. If the reporting corporation's income 
tax return is untimely filed, Form 5472 nonetheless must be timely 
filed. When the reporting corporation's income tax return is ultimately 
filed, a copy of Form 5472 must be attached.
    (f) through (h) [Reserved]. For further guidance, see Sec.  
1.6038A-2(f) through (h).

    Approved: May 2, 2011.
Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
 Emily S. McMahon,
 Acting Assistant Secretary for the Treasury (Tax Policy).
[FR Doc. 2011-14468 Filed 6-9-11; 8:45 am]
BILLING CODE 4830-01-P