[Federal Register Volume 77, Number 50 (Wednesday, March 14, 2012)]
[Proposed Rules]
[Pages 15004-15006]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-6072]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[REG-135491-10]
RIN 1545-BK02


Updating of Employer Identification Numbers

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations that provide rules 
requiring any person assigned an employer identification number (EIN) 
to provide updated information to the IRS in the manner and frequency 
prescribed by forms, instructions, or other appropriate guidance. These 
proposed regulations affect persons with EINs and will enhance the 
IRS's ability to maintain accurate information as to persons assigned 
EINs.

DATES: Written or electronic comments and request for a public hearing 
must be received by June 12, 2012.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-135491-10), room 
5205, 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-
135491-10), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC 20224 or sent electronically via the Federal 
eRulemaking Portal at http://www.regulations.gov (IRS REG-135491-10).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Gregory T. Armstrong, (202) 622-4940; concerning submissions of 
comments and requests for a public hearing, Oluwafunmilayo (Funmi) 
Taylor of the Publications and Regulation Branch at (202) 622-7180 (not 
toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)). Comments on the collection of information should be sent 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, with copies to the Internal Revenue 
Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, 
Washington, DC 20224. Comments on the collection of information should 
be received by May 14, 2012. Comments are specifically requested 
concerning:
    Whether the proposed collection of information is necessary for the 
proper performance of the functions of the IRS, including whether the 
information will have practical utility;
    The accuracy of the estimated burden associated with the proposed 
collection of information;
    How the quality, utility, and clarity of the information to be 
collected may be enhanced;
    How the burden of complying with the proposed collection of 
information may be minimized, including through the application of 
automated collection techniques or other forms of information 
technology; and
    Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.
    The collection of information in this proposed regulation is in 
proposed Sec.  301.6109-1(d)(2)(ii)(A). This information is necessary 
to allow the IRS to gather correct ownership information with respect 
to persons that have an EIN. The respondents are persons that have an 
EIN.
    Estimated total annual reporting burden: 403,177 hours.
    Estimated average annual burden per respondent: varies from 10 to 
20 minutes with an estimated average of 15 minutes.

[[Page 15005]]

    Estimated number of respondents: 1,612,708.
    Estimated frequency of responses: On occasion.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget. Books 
or records relating to a collection 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 tax return information 
are confidential, as required by section 6103 of the Internal Revenue 
Code.

Background and Explanation of Provisions

    This document contains proposed amendments to the Procedure and 
Administration Regulations (26 CFR Part 301) under section 6109 
relating to identifying numbers. In general, section 6109(a)(1) 
provides that persons shall include taxpayer identifying numbers on 
returns, statements, or other documents filed with the IRS. 
Additionally, section 6109(c) authorizes the Secretary to require such 
information as may be necessary to assign an identifying number to any 
person.
    One of the principal types of taxpayer identifying numbers used to 
identify taxpayers is an employer identification number (EIN), which 
takes the form 00-0000000. See Treas. Reg. Sec.  301.6109-1(a)(1); 
Treas. Reg. Sec.  301.7701-12. In general, the IRS assigns an EIN for 
use by employers, sole proprietors, corporations, partnerships, non-
profit associations, trusts, estates, government agencies, certain 
individuals, and other business entities for tax filing and reporting 
purposes.
    Section 301.6109-1(d)(2)(i) provides that any person required to 
furnish an EIN must apply for one with the IRS on a Form SS-4, 
Application for Employer Identification Number. The IRS accepts 
applications for EINs electronically and by telephone, facsimile, or 
mail.
    With increasing frequency, EIN applicants authorize certain 
individuals (sometimes referred to as ``nominees'') to act on the EIN 
applicants' behalf. These nominees are listed on the EIN application as 
principal officers, general partners, grantors, owners, and trustors. 
The authority of these nominees to act on behalf of the EIN applicant 
is often temporary and expires after the application is processed. The 
listing of a nominee prevents the IRS from gathering correct ownership 
information with respect to the EIN applicant once the nominee is no 
longer authorized to act on behalf of the EIN applicant. In response to 
concern with this practice and the need for accurate records, effective 
January 2010, the IRS revised line 7a on the Form SS-4 requiring 
disclosure of the name of the EIN applicant's ``responsible party'' and 
the responsible party's Social Security Number, Individual Taxpayer 
Identification Number, or EIN.
    The Instructions for Form SS-4 provide a definition for 
``responsible party.'' For entities with shares or interests traded on 
a public exchange, or which are registered with the Securities and 
Exchange Commission, the instructions currently provide that a 
``responsible party'' is (a) a principal officer, if the business is a 
corporation, (b) a general partner, if a partnership, (c) the owner of 
an entity that is disregarded as separate from its owner (disregarded 
entities owned by a corporation enter the corporation's name and EIN), 
or (d) a grantor, owner, or trustor, if a trust.
    For all other entities, the ``responsible party'' is the person who 
has a level of control over, or entitlement to, the funds or assets in 
the entity that, as a practical matter, enables the individual, 
directly or indirectly, to control, manage, or direct the entity and 
the disposition of its funds and assets. The ability to fund the entity 
or the entitlement to the property of the entity alone, however, 
without any corresponding authority to control, manage, or direct the 
entity (such as in the case of a minor child beneficiary), does not 
cause the individual to be a responsible party.
    These proposed regulations require any person issued an EIN to 
provide updated information to the IRS in the manner and frequency 
required by forms, instructions, or other appropriate guidance, which 
the IRS will issue in the near future. This requirement includes 
updated application information regarding the name and taxpayer 
identifying number of the responsible party. This requirement covers 
those persons who previously applied for an EIN by listing a person 
other than the applicant's responsible party. This updated information 
will allow the IRS to ascertain correct ownership details for persons 
who have an EIN. In turn, the IRS can use that knowledge to contact the 
correct persons when resolving a tax matter related to a business with 
an EIN and to help combat schemes that abuse the tax system through the 
use of nominees.

Proposed Effective/Applicability Date

    These regulations are proposed to apply to all persons possessing 
an EIN after the date the Treasury decision adopting these rules as 
final regulations is published in the Federal Register.

Special Analyses

    It has been determined that these proposed regulations are 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 been determined that section 
553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does 
not apply to these regulations.
    When an agency issues a rulemaking proposal, the Regulatory 
Flexibility Act (RFA) (5 U.S.C. chapter 6), requires the agency to 
``prepare and make available for public comment an initial regulatory 
flexibility analysis'' that will ``describe the impact of the proposed 
rule on small entities.'' (5 U.S.C. 603(a)). Section 605 of the RFA 
provides an exception to this requirement if the agency certifies that 
the proposed rulemaking will not have a significant economic impact on 
a substantial number of small entities.
    The proposed rules affect entities that have an EIN and the IRS has 
determined that these proposed rules will have an impact on a 
substantial number of small entities. The IRS has determined, however, 
that the impact on entities affected by the proposed rule will not be 
significant. The current Form SS-4 already requires entities to 
disclose the name of the EIN applicant's ``responsible party'' and the 
responsible party's Social Security Number, Individual Taxpayer 
Identification Number, or EIN. The amount of time necessary to submit 
the updated information required in these proposed regulations, 
therefore, should be minimal for these entities.
    Based on these facts, the IRS hereby certifies that the collection 
of information contained in this notice of proposed rulemaking will not 
have a significant economic impact on a substantial number of small 
entities. Accordingly, a Regulatory Flexibility Analysis is not 
required.
    Pursuant to section 7805(f) of the Code, these regulations have 
been 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 (a signed original and eight 
(8) copies) or electronic comments that are

[[Page 15006]]

submitted timely to the IRS. Treasury and the IRS request comments on 
all aspects of the proposed rules. All comments submitted by the public 
will be made available for public inspection and copying. A public 
hearing will be scheduled if requested in writing by any person that 
timely submits 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 Tammie A. Geier and 
Gregory T. Armstrong of the Office of the Associate Chief Counsel 
(Procedure and Administration).

List of Subjects in 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 part 301 is proposed to be amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

    Paragraph 1. The authority citation for part 301 continues to read 
as follows:

    Authority:  26 U.S.C. 7805 * * *
    Par. 2. Section 301.6109-1 is amended by adding paragraphs 
(d)(2)(ii)(A) and (d)(2)(ii)(B) to read as follows:


Sec.  301.6109-1.  Identifying numbers.

* * * * *
    (d) * * *
    (2) * * *
    (ii) * * *
    (A) Requirement to update. Persons issued employer identification 
numbers in accordance with the application process set forth in 
paragraph (d)(2)(i) of this section shall provide to the Internal 
Revenue Service any updated application information in the manner and 
frequency required by forms, instructions, or other appropriate 
guidance.
    (B) Effective/applicability date. Paragraph (d)(2)(ii)(A) of this 
section applies to all persons possessing an employer identification 
number after the date of publication of the Treasury decision adopting 
these rules as final regulations in the Federal Register.
* * * * *

Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2012-6072 Filed 3-13-12; 8:45 am]
BILLING CODE 4830-01-P