[Federal Register Volume 77, Number 25 (Tuesday, February 7, 2012)]
[Proposed Rules]
[Pages 6027-6028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-2339]



Internal Revenue Service

26 CFR Part 1

RIN 1545-BK63

Application for Recognition as a 501(c)(29) Organization

AGENCY: Internal Revenue Service (IRS), Treasury.

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


SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register are temporary regulations authorizing the IRS to 
prescribe the procedures by which a qualified nonprofit health 
insurance issuer participating in the Consumer Operated and Oriented 
Plan program, established by the Centers for Medicare and Medicaid 
Services, may apply for recognition as a tax-exempt organization under 
the Internal Revenue Code. The text of those 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 April 9, 2012.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-135071-11), 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-
135071-11), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC, or sent electronically via the Federal 
eRulemaking Portal at www.regulations.gov (IRS REG-135071-11).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Amy Franklin or Martin Sch[auml]ffer at (202) 622-6070; concerning 
submission of comments and request for hearing, Oluwafunmilayo Taylor 
at (202) 622-7180 (not toll-free numbers).


Background and Explanation of Provisions

    The temporary regulations in the Rules and Regulations section of 
this issue of the Federal Register make additions to the Income Tax 
Regulations (26 CFR part 1) relating to section 501(c)(29) of the 
Internal Revenue Code (Code). The temporary regulations provide that 
the Commissioner has the authority to prescribe the procedures under 
which a qualified nonprofit health insurance issuer (within the meaning 
of section 1322(c) of the Patient Protection and Affordable Care Act, 
Public Law 111-148 (March 23, 2010)) which has received a loan or grant 
from the Centers for Medicare and Medicaid Services under the Consumer 
Operated and Oriented Plan program may request to be recognized as tax-
exempt under section 501(a) as an organization described in section 
501(c)(29). The temporary regulations expressly authorize the 
Commissioner to recognize a qualified nonprofit health insurance issuer 
as exempt effective as of a date prior to the date of its application, 
provided that the application is submitted in the manner and within the 
time prescribed by the Commissioner and the organization's prior 
purposes and activities were consistent with the requirements for 
exempt status under section 501(c)(29). The text of the temporary 
regulations also serves as the text of these proposed regulations. The 
preamble to the temporary regulations explains the additions.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866, as supplemented by Executive Order 13563. Therefore, a 
regulatory assessment is not required. It also has

[[Page 6028]]

been determined that section 553(b) of the Administrative Procedure Act 
(5 U.S.C. chapter 5) does not apply, and because no collection of 
information is imposed on small entities, the provisions of the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply. Pursuant 
to section 7805(f) of the Code, the proposed regulation has been 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comments on its impact on small businesses.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any comments that are submitted timely 
to the IRS as prescribed in this preamble under the ADDRESSES heading. 
The IRS and the Treasury Department request comments on the proposed 
regulations, including how they might be made easier to understand. All 
comments will be available at www.regulations.gov or upon request. A 
public hearing will be scheduled if requested in writing by any person 
that timely submits written 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 authors of these regulations are Amy Franklin and 
Martin Sch[auml]ffer of the Office of Division Counsel/Associate Chief 
Counsel (Tax Exempt and Government Entities), although other persons in 
the IRS and the Treasury Department participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendment to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:


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

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

    Section 1.501(c)(29)-1 also issued under 26 U.S.C. 
501(c)(29)(B)(i). * * *

    Par. 2. Section 1.501(c)(29)-1 is added to read as follows:

Sec.  1.501(c)(29)-1  CO-OP Health Insurance Issuers.

    [The text of proposed amendment to Sec.  1.501(c)(29)-1 is the same 
as the text for Sec.  1.501(c)(29)-1T(a) through (c) published 
elsewhere in this issue of the Federal Register].

 Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2012-2339 Filed 2-6-12; 8:45 am]