[Federal Register Volume 76, Number 122 (Friday, June 24, 2011)]
[Rules and Regulations]
[Pages 36996-37000]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-15902]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 54

[TD 9531]
RIN 1545-BH88


Extension of Time for Filing Returns

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and removal temporary regulations

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SUMMARY: This document contains final regulations relating to the 
automatic extensions of time to file returns for partnership, trust, 
and estate taxpayers, and automatic extensions of time for filing 
returns for pension excise taxes. The objective of these final 
regulations is to reduce overall taxpayer burden by providing an 
extension period that strikes the most reasonable balance for these 
pass-through entities and the large number of taxpayers who require 
information from these entities for completion of their income tax 
returns.

DATES: Effective Date: These regulations are effective on June 24, 
2011.
    Applicability Date: For dates of applicability of these 
regulations, see Sec. Sec.  1.6081-2(h), 1.6081-6(g), and 54.6081-1(f).

FOR FURTHER INFORMATION CONTACT: Jason Bremer, (202) 622-4910 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    This document contains amendments to 26 CFR parts 1 and 54 under 
section 6081 of the Internal Revenue Code (Code). On November 8, 2005, 
the Treasury Department and the IRS published a notice of proposed 
rulemaking (REG-144898-04) by cross-reference to temporary regulations 
(TD 9229) in the Federal Register (70 FR 67356, 70 FR 67397) relating 
to the simplification of procedures for obtaining automatic extensions 
of time

[[Page 36997]]

to file certain returns. On July 1, 2008, the Treasury Department and 
the IRS published final and temporary regulations (TD 9407) in the 
Federal Register (73 FR 37362) finalizing the rules simplifying the 
procedures for obtaining automatic extensions of time to file certain 
returns. A notice of proposed rulemaking (REG-115457-08) cross-
referencing the temporary regulations also was published in the Federal 
Register (73 FR 37389) on July 1, 2008. The temporary and proposed 
regulations reduced the automatic six-month extension of time to file 
contained in the 2005 proposed regulations to five months for certain 
pass-through entities (most partnerships, estates, and certain trusts).
    As these pass-through entities were previously allowed to obtain an 
automatic six-month extension of time to file certain returns, the 
Treasury Department and the IRS requested comments on whether, and how, 
a five-month extension of time to file for these pass-through entities 
might increase or reduce overall taxpayer burden. Approximately 70 
comments were received in response to the notice of proposed 
rulemaking. A public hearing was held on January 13, 2009. Three 
speakers appeared at the public hearing and commented on the notice of 
proposed rulemaking.
    All comments were considered and are available for public 
inspection at http://www.regulations.gov or upon request. After 
consideration of the written comments and the comments provided at the 
public hearing, the proposed regulations under section 6081 are adopted 
as revised by this Treasury decision. The public comments, public 
hearing, and the revisions are discussed in this preamble.

Explanation and Summary of Comments

    Prior to issuance of the 2005 temporary regulations, TD 9229, pass-
through entities were entitled to an automatic three-month extension of 
time to file certain returns by filing one form, and could also request 
a discretionary additional three-month extension of time to file by 
filing a second form. TD 9229 provided temporary regulations that 
simplified the extension process by allowing most taxpayers, including 
pass-through entities, to obtain a six-month automatic extension of 
time to file by filing one single form. In the 2008 final and temporary 
regulations, TD 9407, the Treasury Department and the IRS finalized 
rules granting an automatic six-month extension of time to file for non 
pass-through entities and granting certain pass-through entities a 
five-month automatic extension of time to file certain returns. The 
five-month extension included in the 2008 final and temporary 
regulations for certain pass-through entities responded to comments 
received on the 2005 temporary regulations. Commentators expressed 
concern that an automatic six-month extension for pass-through entities 
would unduly burden individual and corporate taxpayers with ownership 
interests in pass-through entities because individual and corporate 
taxpayers might not receive information returns from pass-through 
entities in sufficient time to complete their income tax returns in an 
accurate and timely manner.

Partnership, Trust, and Estate Taxpayers

    Recognizing the inherent conflict between providing sufficient time 
for pass-through entities to prepare returns and ensuring that the 
owners and beneficiaries of pass-through entities timely receive 
information returns needed to file their own returns, the 2008 proposed 
and temporary regulations specifically requested comments on whether a 
shorter filing extension period for pass-through entities might 
increase or reduce overall taxpayer burden. The IRS received 
approximately 70 comments, many of which are summarized in this 
preamble.
    Several commentators suggested that the Treasury Department and the 
IRS should consider changing the filing and extension due dates for 
individual and corporate tax returns rather than shortening the 
extension period for pass-through entities. For example, some 
commentators suggested moving the individual taxpayer return due date 
to April 30th, or allowing individuals and corporations a seven-month 
extension of time to file returns. Other commentators suggested moving 
up the filing date for partnership, trust, and estate taxpayers to 
March 15th, thereby allowing these entities a full six-month extension 
of time to file until September 15th so that individual taxpayers with 
ownership interests in the entities would receive information timely.
    These suggestions are not viable options for a regulation project 
because the due dates for filing tax returns are determined by statute. 
See, for example, sections 6012(a) and 6072. Further, section 6081 
provides that, except in the case of taxpayers who are abroad, the 
maximum extension of time to file a tax return cannot exceed six 
months. Accordingly, without legislative action, the Treasury 
Department and the IRS cannot change the due date for filing tax 
returns or increase the maximum extension of time to file a tax return 
for pass-through entities, individuals, or corporations.
    Although the comments with regard to shortening the automatic 
extension period for these pass-through entities varied as to time 
periods, the majority of commentators agreed that a less than six-month 
extension period for pass-through entities would generally reduce 
overall taxpayer burden by allowing taxpayers with ownership interests 
in pass-through entities to receive information in a more timely 
fashion vis-[agrave]-vis preparation of their own individual or 
corporate income tax returns. There was no clear consensus, however, 
regarding what the optimal period of extension would be for reducing 
taxpayer burden.
    The Treasury Department and the IRS considered several extension 
periods for pass-through entities, including a four-month and a five-
month extension period, when drafting the proposed and temporary 
regulations. The Treasury Department and the IRS ultimately decided 
upon a five-month automatic extension period for the proposed and 
temporary regulations. Many comments were received supporting the five-
month extension period. Some commentators noted, however, that the 
five-month extension period would not alleviate the burden on corporate 
taxpayers with ownership interests in pass-through entities. These 
commentators expressed a concern that even a five-month extension 
period for these entities would, in most cases, simply align the 
extended due date for pass-through entities with the extended due date 
for corporate returns, resulting in the same delay of information to 
corporate owners of these entities. That delay, the commentators 
contend, would greatly increase the need for filing amended returns. 
Commentators suggested shortening the automatic extension for these 
entities to less than five months.
    In opting for the five-month extension, the Treasury Department and 
the IRS recognize that some corporations with ownership interests in 
pass-through entities may continue to experience delayed receipt of 
information needed to complete their own corporate returns. The 
Treasury Department and the IRS, however, continue to believe that a 
five-month extension period reduces the overall burden on taxpayers and 
strikes the most reasonable balance for all affected taxpayers. The 
five-month extension period allows pass-through entities, including 
complex and tiered entities, an adequate time for preparation of the

[[Page 36998]]

required pass-through returns and also ensures the timely and accurate 
dissemination of information to a large number of taxpayers who require 
that information for completion of their own income tax returns.
    Electing large partnerships required to file Form 1065-B, ``U.S. 
Return of Income for Electing Large Partnerships,'' for any taxable 
year will be allowed an automatic six-month extension of time to file 
the return, however, because these pass-through entities are 
statutorily required to furnish Schedules K-1 by March 15, regardless 
of any extension of time to file the return. See section 6031(b).
    Comments varied in response to the five-month automatic filing 
extension period provided for trust taxpayers. Several commentators 
expressed support of the overall five-month extension to pass-through 
entities. Other commentators suggested that trusts resemble an end 
taxpayer more than a pass-through entity, and in that respect are more 
akin to individuals than to partnerships. These commentators argued 
that trusts did not belong in the same class of entities as 
partnerships and estates for purposes of automatic filing extensions.
    Some commentators further expressed concern that Schedules K-1 
would not be received by trusts in a sufficiently timely fashion. For 
example, commenters noted that trusts are often invested in 
partnerships, which are often invested in other partnerships in tiered 
structures, with each entity relying on the next for information before 
preparing their own statements. These commenters feared that, due to 
the compressed timeframe when Forms 1065, ``U.S. Return of Partnership 
Income,'' will typically be prepared, Schedules K-1 received by each 
succeeding entity in the chain ultimately will be received by trusts at 
the very last minute, resulting in inaccuracies and increased preparer 
burden.
    Commentators also pointed out that the five-month extended deadline 
for trusts would coincide with the extended due date for S Corporation 
tax returns. Due to the fact that many trusts are invested in S 
Corporations, these commentators viewed this as an increased burden on 
trusts and their return preparers.
    The Treasury Department and the IRS recognize that only allowing a 
five-month extension of time to file for trusts may cause a hardship, 
as some trusts may have less time to complete accurate income tax 
returns and to provide timely information to the trust's beneficiaries. 
Providing a longer extension of time to file, however, still presents 
the potential of shifting the burden to individuals who might not 
receive timely information. In addition, the Treasury Department and 
the IRS believe that the five-month automatic filing extension period 
has generally been successful and continues to strike the right balance 
in reducing overall taxpayer burden since the proposed and temporary 
regulations were adopted.
    Therefore, after thorough consideration of all the comments, the 
Treasury Department and the IRS determined that the five-month 
extension period best reduces overall tax burden. Accordingly, these 
final regulations provide that trusts will continue to receive an 
automatic five month extension of time to file as provided in the 
proposed and temporary regulations.
    Finally, a comment questioned whether the five-month automatic 
extension of time to file estate or trust income tax returns applies to 
individuals filing bankruptcy petitions under chapter 7 or 11 of title 
11 of the United States Code. The bankruptcy estate created when a 
petition is filed by an individual under either chapter 7 or 11 is a 
separate taxable entity for title 26 purposes. See 26 U.S.C. 1398. 
Although fiduciaries of these individual bankruptcy estates (trustees 
or debtors-in-possession) may be required to file Forms 1041, the 
bankruptcy estates are not pass-through entities as described in these 
regulations. Therefore, the five-month automatic extension provided by 
these regulations is inapplicable to bankruptcy estates of individuals 
under chapter 7 or 11 of title 11 of the Bankruptcy Code.
    Pass-through entities eligible to file bankruptcy petitions, such 
as partnerships, would be affected by these regulations. A separate 
taxable entity is not created when a partnership files a bankruptcy 
case. See generally 26 U.S.C. Sec.  1399. The trustee or debtor-in-
possession of the bankrupt partnership files a Form 1065, not a Form 
1041. Thus, the five-month automatic extension provided in these 
regulations would apply, as the filing of a bankruptcy petition does 
not change the information reporting requirements of pass-through 
entities, such as a partnership.
    Accordingly, after consideration of all comments and in order to 
best minimize overall taxpayer burden, these final regulations provide 
for a five-month automatic extension of time to file certain returns 
for partnerships, trusts, and estates other than certain bankruptcy 
estates.

Pension Excise Taxes

    These final regulations also adopt without modification the 
proposed amendments to 26 CFR part 54, which allow filers of Form 8928, 
``Return of Certain Excise Taxes Under Chapter 43 of the Internal 
Revenue Code,'' to obtain an automatic six-month extension of time to 
file the return after the date prescribed for filing the return.

Special Analyses

    It has been determined that this Treasury Decision 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. Although these 
final regulations reference forms that are approved under the Paperwork 
Reduction Act (44 U.S.C. chapter 35), the regulations themselves do not 
impose a collection of information on small entities. Therefore, the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. 
Pursuant to section 7805(f) of the Internal Revenue Code, the notice of 
proposed rulemaking preceding this regulation was submitted to the 
Chief Counsel for Advocacy of the Small Business Administration for 
comment on its impact on small businesses.

Drafting Information

    The principal author of these regulations is Jason Bremer of the 
Office of the Associate Chief Counsel (Procedure and Administration).

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 54

    Pension excise taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR parts 1 and 54 are amended as follows:

PART 1--INCOME TAXES

0
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 * * *
    Section 1.6081-2 also issued under 26 U.S.C. 6081. * * *
    Section 1.6081-6 also issued under 26 U.S.C. 6081. * * *

0
Par. 2. Section 1.6081-2 is added to read as follows:

[[Page 36999]]

Sec.  1.6081-2  Automatic extension of time to file certain returns 
filed by partnerships.

    (a) In general. (1) A partnership required to file Form 1065, 
``U.S. Partnership Return of Income,'' or Form 8804, ``Annual Return 
for Partnership Withholding Tax,'' for any taxable year will be allowed 
an automatic 5-month extension of time to file the return after the 
date prescribed for filing the return if the partnership files an 
application under this section in accordance with paragraph (b) of this 
section. No additional extension will be allowed pursuant to Sec.  
1.6081-1(b) beyond the automatic 5-month extension provided by this 
section. In the case of a partnership described in Sec.  1.6081-
5(a)(1), the automatic extension of time to file allowed under this 
section runs concurrently with an extension of time to file granted 
pursuant to Sec.  1.6081-5.
    (2) An electing large partnership (ELP) required to file Form 1065-
B, ``U.S. Return of Income for Electing Large Partnerships,'' for any 
taxable year will be allowed an automatic 6-month extension of time to 
file the return after the date prescribed for filing the return if the 
partnership files an application under this section in accordance with 
paragraph (b) of this section.
    (b) Requirements. To satisfy this paragraph (b), the partnership 
must--
    (1) Submit a complete application on Form 7004, ``Application for 
Automatic Extension of Time to File Certain Business Income Tax, 
Information, and Other Returns,'' or in any other manner prescribed by 
the Commissioner;
    (2) File the application on or before the later of--
    (i) The date prescribed for filing the return of the partnership; 
or
    (ii) The expiration of any extension of time to file granted under 
Sec.  1.6081-5(a); and
    (3) File the application with the Internal Revenue Service office 
designated in the application's instructions.
    (c) Payment of section 7519 amount. An automatic extension of time 
for filing a partnership return of income granted under paragraph (a) 
of this section does not extend the time for payment of any amount due 
under section 7519, relating to required payments for entities electing 
not to have a required taxable year.
    (d) Section 444 election. An automatic extension of time for filing 
a partnership return of income will run concurrently with any extension 
of time for filing a return allowed because of section 444, relating to 
the election of a taxable year other than a required taxable year.
    (e) Effect of extension on partner. An automatic extension of time 
for filing a partnership return of income under this section does not 
extend the time for filing a partner's income tax return or the time 
for the payment of any tax due on a partner's income tax return.
    (f) Termination of automatic extension. The Commissioner may 
terminate an automatic extension at any time by mailing to the 
partnership a notice of termination at least 10 days prior to the 
termination date designated in such notice. The Commissioner must mail 
the notice of termination to the address shown on the Form 7004 or to 
the partnership's last known address. For further guidance regarding 
the definition of last known address, see Sec.  301.6212-2 of this 
chapter.
    (g) Penalties. See section 6698 for failure to file a partnership 
return.
    (h) Effective/applicability dates. This section applies to 
applications for an automatic extension of time to file the partnership 
returns listed in paragraph (a) of this section filed on or after June 
24, 2011.

Sec.  1.6081-2T  [Removed]

0
Par. 3. Section 1.6081-2T is removed.
0
Par. 4. Section 1.6081-6 is added to read as follows:


Sec.  1.6081-6  Automatic extension of time to file estate or trust 
income tax return.

    (a) In general. (1) Except as provided in paragraph (a)(2) of this 
section, any estate, including but not limited to an estate defined in 
section 2031, or trust required to file an income tax return on Form 
1041, ``U.S. Income Tax Return for Estates and Trusts,'' will be 
allowed an automatic 5-month extension of time to file the return after 
the date prescribed for filing the return if the estate or trust files 
an application under this section in accordance with paragraph (b) of 
this section. No additional extension will be allowed pursuant to Sec.  
1.6081-1(b) beyond the automatic 5-month extension provided by this 
section.
    (2) A bankruptcy estate that is created when an individual debtor 
files a petition under either chapter 7 or chapter 11 of Title 11 of 
the U.S. Code that is required to file an income tax return on Form 
1041, ``U.S. Income Tax Return for Estates and Trusts,'' and an estate 
or trust required to file an income tax return on Form 1041-N, ``U.S. 
Income Tax Return for Electing Alaska Native Settlement,'' or Form 
1041-QFT, ``U.S. Income Tax Return for Qualified Funeral Trusts'' for 
any taxable year will be allowed an automatic 6-month extension of time 
to file the return after the date prescribed for filing the return if 
the estate files an application under this section in accordance with 
paragraph (b) of this section.
    (b) Requirements. To satisfy this paragraph (b), an estate or trust 
must--
    (1) Submit a complete application on Form 7004, ``Application for 
Automatic Extension of Time to File Certain Business Income Tax, 
Information, and Other Returns,'' or in any other manner prescribed by 
the Commissioner;
    (2) File the application on or before the date prescribed for 
filing the return with the Internal Revenue Service office designated 
in the application's instructions; and
    (3) Show the amount properly estimated as tax for the estate or 
trust for the taxable year.
    (c) No extension of time for the payment of tax. An automatic 
extension of time for filing a return granted under paragraph (a) of 
this section will not extend the time for payment of any tax due on 
such return.
    (d) Effect of extension on beneficiary. An automatic extension of 
time to file an estate or trust income tax return under this section 
will not extend the time for filing the income tax return of a 
beneficiary of the estate or trust or the time for the payment of any 
tax due on the beneficiary's income tax return.
    (e) Termination of automatic extension. The Commissioner may 
terminate an automatic extension at any time by mailing to the estate 
or trust a notice of termination at least 10 days prior to the 
termination date designated in such notice. The Commissioner must mail 
the notice of termination to the address shown on the Form 7004 or to 
the estate or trust's last known address. For further guidance 
regarding the definition of last known address, see Sec.  301.6212-2 of 
this chapter.
    (f) Penalties. See section 6651 for failure to file an estate or 
trust income tax return or failure to pay the amount shown as tax on 
the return.
    (g) Effective/applicability dates. This section applies to 
applications for an automatic extension of time to file an estate or 
trust income tax return filed on or after June 24, 2011.

Sec.  1.6081-6T  [Removed]

0
 Par. 5. Section 1.6081-6T is removed.

PART 54--PENSION EXCISE TAXES

0
Par. 6. The authority citation for part 54 is amended by adding an 
entry in numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *
    Section 54.6081-1 also issued under 26 U.S.C. 6081(a).


0
Par. 7. Section 54.6081-1 is added to read as follows:

[[Page 37000]]

Sec.  54.6081-1  Automatic extension of time for filing returns for 
certain excise taxes under Chapter 43.

    (a) In general. An employer, other person or health plan that is 
required to file a return on Form 8928, ``Return of Certain Excise 
Taxes Under Chapter 43 of the Internal Revenue Code,'' will be allowed 
an automatic 6-month extension of time to file the return after the 
date prescribed for filing the return if the employer, other person or 
health plan files an application under this section in accordance with 
paragraph (b) of this section.
    (b) Requirements. To satisfy this paragraph (b), an employer, other 
person or health plan must--
    (1) Submit a complete application on Form 7004, ``Application for 
Automatic Extension of Time To File Certain Business Income Tax, 
Information, and Other Returns,'' or in any other manner prescribed by 
the Commissioner;
    (2) File the application on or before the date prescribed for 
filing the return with the Internal Revenue Service office designated 
in the application's instructions; and
    (3) Remit the amount of the properly estimated unpaid tax liability 
on or before the date prescribed for payment.
    (c) No extension of time for the payment of tax. An automatic 
extension of time for filing a return granted under paragraph (a) of 
this section will not extend the time for payment of any tax due on 
such return.
    (d) Termination of automatic extension. The Commissioner may 
terminate an automatic extension at any time by mailing to the 
employer, other person, or health plan a notice of termination at least 
10 days prior to the termination date designated in such notice. The 
Commissioner must mail the notice of termination to the address shown 
on the Form 7004 or to the estate or trust's last known address. For 
further guidance regarding the definition of last known address, see 
Sec.  301.6212-2 of this chapter.
    (e) Penalties. See section 6651 for failure to file a pension 
excise tax return or failure to pay the amount shown as tax on the 
return.
    (f) Effective/applicability date. This section is applicable for 
applications for an automatic extension of time to file a return due 
under chapter 43, filed on or after June 24, 2011.

Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
    Approved: June 17, 2011.
Emily S. McMahon,
Acting Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2011-15902 Filed 6-23-11; 8:45 am]
BILLING CODE 4830-01-P