[Federal Register Volume 84, Number 68 (Tuesday, April 9, 2019)]
[Rules and Regulations]
[Pages 14009-14011]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07043]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[TD 9856]
RIN 1545-BN63
Disclosures of Return Information Reflected on Returns to
Officers and Employees of the Department of Commerce for Certain
Statistical Purposes and Related Activities
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulation and removal of temporary regulation.
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SUMMARY: This document contains a final regulation that authorizes the
disclosure of specified items of return information to the Bureau of
the Census (Census Bureau). This regulation finalizes a proposed
regulation cross-referencing a temporary regulation that was made
pursuant to a request from the Secretary of Commerce. This final
regulation requires no action by taxpayers and has no effect on their
tax liabilities. No taxpayers are likely to be affected by the
disclosures authorized by this guidance.
DATES:
Effective date: This regulation is effective on April 9, 2019.
Applicability date: For dates of applicability, see Sec.
301.6103(j)(1)-1(e).
FOR FURTHER INFORMATION CONTACT: William Rowe, (202) 317-6834 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to 26 CFR part 301 (Procedure and
Administration Regulations). Section 6103(j)(1)(A) of the Internal
Revenue Code authorizes the Secretary of the Treasury (Secretary) to
furnish, upon written request by the Secretary of Commerce, such
returns or return information as the Secretary may prescribe by
regulation to officers and employees of the Census Bureau for the
purpose of, but only to the extent necessary in, the structuring of
censuses and national economic accounts and conducting related
statistical activities authorized by law. Section 301.6103(j)(1)-1 of
the existing regulations further defines such purposes by reference to
13 U.S.C. chapter 5 and provides an itemized description of the return
information authorized to be disclosed for such purposes.
By letter dated August 2, 2016, the Secretary of Commerce requested
amendments to Sec. 301.6103(j)(1)-1 to allow disclosure of several
additional items of return information to the Census Bureau for
purposes of its economic statistics program, structuring the censuses,
and related program evaluations. The Secretary of Commerce's letter
lists the additional items of return information requested based on the
Census Bureau's specific need for each item of information. The
Secretary of Commerce asserted that good cause exists to amend Sec.
301.6103(j)(1)-1 to add these additional items to the list of items of
return information that may be disclosed to the Census Bureau. The
Department of the Treasury (Treasury Department) and the IRS agree that
amending existing regulations to permit disclosure of these items to
the Census Bureau is appropriate to meet the needs of the Census
Bureau.
On December 9, 2016, a temporary regulation (TD 9802) was published
in the Federal Register (81 FR 89004). The text of the temporary
regulation also serves as the text of the proposed regulation set forth
in a notice of proposed rulemaking (REG-133353-16) published in the
Federal Register on the same day (81 FR 89022). The preamble to the
temporary regulation describes the categories of information requested
by the Secretary of Commerce. No public hearing was requested or held.
No comments were received in response to the notice of proposed
rulemaking.
Accordingly, the proposed regulation, the contents of which are
described in the following Explanation of Provisions, is adopted by
this Treasury decision without change, and the corresponding temporary
regulation is removed, applicable to disclosures on or after December
9, 2016.
Explanation of Provisions
The proposed regulation authorized disclosure of additional expense
items
[[Page 14010]]
from business tax returns in order to improve the expense data that is
collected by the Census Bureau. Specifically, the proposed regulation
authorized disclosure of the following enumerated components of total
expenses or total deductions from business tax returns (Forms 1065,
Forms in the 1120 series, and Form 1040, Schedule C, E or C/EZ): (1)
Repairs (and maintenance) expense; (2) rents (or lease) expense; (3)
taxes and licenses expense; (4) interest expense, including mortgage or
other interest; (5) depreciation expense; (6) depletion expense; (7)
advertising expense; (8) pension and profit-sharing plans (retirement
plans) expense; (9) employee benefit programs expense; (10) utilities
expense; (11) supplies expense; (12) contract labor expense; and (13)
management (and investment advisory) fees. The proposed regulation also
authorized disclosure of purchases from Form 1125-A and the following
additional items from Form 1040, Schedule C: (1) Materials and
supplies; and (2) purchases less cost of items withdrawn for personal
use.
The proposed regulation also authorized disclosure of additional
items of return information from business tax returns for the purpose
of directing a high proportion of research and development surveys
towards businesses with known research activities. Specifically, the
proposed regulation authorized disclosure of additional items of return
information from Forms 6765 (when filed with corporation income tax
returns): (1) Cycle posted; and (2) the research tax credit amount to
be carried over to a business return, schedule, or form.
The proposed regulation also authorized disclosure of additional
items of return information for purposes of maintaining a centralized,
continuous Business Register that comprehensively lists and
characterizes United States business establishments and their domestic
parent enterprises. Specifically, the proposed regulation authorized
disclosure of additional items of return information from employment
tax returns: (1) If a business has closed or stopped paying wages; (2)
final date a business paid wages; and (3) if a business is a seasonal
employer and does not have to file a return for every quarter of the
year. The proposed regulation also authorized disclosure of the
electronic system filing indicator from business tax returns and the
cycle from the IRS's Business Master Files.
The proposed regulation also authorized disclosure of additional
items of return information for purposes of modeling firm survival for
production of statistics on business dynamics. Specifically, the
proposed regulation authorized disclosure of additional items of return
information from business tax returns: (1) Dividends, including
ordinary and qualified; and (2) type of REIT (from Form 1120-REIT).
The proposed regulation also authorized disclosure of additional
items of return information for purposes of the Survey of Business
Owners. Specifically, the proposed regulation authorized disclosure of
the following additional items of return information from Form 1065,
Schedule K-1: (1) Publicly-traded partnership indicator; (2) partner's
share of nonrecourse, qualified nonrecourse, and recourse liabilities;
and (3) ordinary business income (loss). The proposed regulation also
authorized disclosure of ordinary business income (loss) from Forms
1120S, Schedule K-1.
Finally, the proposed regulation authorized disclosure of
additional items of return information for purposes of developing and
preparing the Quarterly Financial Report. Specifically, the proposed
regulation authorized disclosure of the following additional items of
return information from Forms 1120-REIT: (1) Type of Real Estate
Investment Trust (``REIT''); and (2) gross rents from real property.
The proposed regulation also authorized disclosure of the corporation's
method of accounting from Form 1120F and the total amount reported from
Form 1096.
The proposed regulation also amended language in the existing
regulations to clarify that the TD 9500, which was published in the
Federal Register (75 FR 52458), authorized disclosure only of
categorical information for total qualified research expenses from
Forms 6765. In accordance with the preamble to TD 9500, the existing
regulations do not authorize the disclosure of the exact amount of
total research expenses as reported on Form 6765. By letter dated
February 6, 2006, the Secretary of Commerce requested disclosure of
categorical information on total qualified research expenses in three
ranges: Greater than zero, but less than $1 million; greater than or
equal to $1 million, but less than $3 million; and, greater than or
equal to $3 million. The proposed regulation amended the existing
regulations to more clearly reflect the categorical nature of the
disclosure of total research expenses from Form 6765.
Lastly, the proposed regulation also removed duplicate paragraphs
contained in the existing regulations. Under the existing regulations,
each of the following items of return information from business-related
returns was authorized for disclosure by two identical paragraphs:
Social Security tip income; total Social Security taxable earnings; and
gross distributions from employer-sponsored and individual retirement
plans from Form 1099-R. Because there is no need for duplicate
paragraphs that authorize disclosure of the same items of return
information for the same purpose, the proposed regulation removed the
duplicate paragraphs.
Special Analyses
These regulations are not subject to review under section 6(b) of
Executive Order 12866 pursuant to the Memorandum of Agreement (April
11, 2018) between the Treasury Department and the Office of Management
and Budget regarding review of tax regulations. 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 these regulations will not have a significant economic
impact on a substantial number of small entities because the
regulations do not impose a collection of information on small
entities. Accordingly, a regulatory flexibility analysis is not
required under the Regulatory Flexibility Act (5 U.S.C. chapter 6).
Pursuant to section 7805(f) of the Internal Revenue Code, these
regulations have been 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 William Rowe, Office
of the Associate Chief Counsel (Procedure & Administration). However,
other personnel from the Treasury Department and the IRS participated
in their development.
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Amendments to the Regulations
Accordingly, 26 CFR part 301 is amended as follows:
PART 301--PROCEDURE AND ADMINISTRATION
0
Paragraph 1. The authority citation for part 301 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
[[Page 14011]]
0
Par. 2. Section 301.6103(j)(1)-1 is amended by:
0
1. Revising paragraph (b)(2)(iii)(I) and adding paragraphs
(b)(2)(iii)(K) through (M);
0
2. Revising paragraphs (b)(3)(v) and (b)(3)(xxv) through (xxx);
0
3. Adding paragraphs (b)(3)(xxxi) through (xxxv) and (b)(6)(i)(C)
through (E); and
0
4. Revising paragraph (e).
The revisions and additions read as follows:
Sec. 301.6103(j)(1)-1 Disclosures of return information reflected on
returns to officers and employees of the Department of Commerce for
certain statistical purposes and related activities.
* * * * *
(b) * * *
(2) * * *
(iii) * * *
(I) Total taxable wages paid for purposes of chapter 21;
* * * * *
(K) If a business has closed or stopped paying wages;
(L) Final date a business paid wages; and
(M) If a business is a seasonal employer and does not have to file
a return for every quarter of the year;
* * * * *
(3) * * *
(v) Total expenses or deductions, including totals of the following
components thereof:
(A) Repairs (and maintenance) expense;
(B) Rents (or lease) expense;
(C) Taxes and licenses expense;
(D) Interest expense, including mortgage or other interest;
(E) Depreciation expense;
(F) Depletion expense;
(G) Advertising expense;
(H) Pension and profit-sharing plans (retirement plans) expense;
(I) Employee benefit programs expense;
(J) Utilities expense;
(K) Supplies expense;
(L) Contract labor expense; and
(M) Management (and investment advisory) fees.
* * * * *
(xxv) From Form 6765 (when filed with corporation income tax
returns)--
(A) Indicator that total qualified research expenses is greater
than zero, but less than $1 million; greater than or equal to $1
million, but less than $3 million; or, greater than or equal to $3
million;
(B) Cycle posted; and
(C) Research tax credit amount to be carried over to a business
return, schedule, or form.
(xxvi) Total number of documents reported on Form 1096 transmitting
Forms 1099-MISC.
(xxvii) Total amount reported on Form 1096 transmitting Forms 1099-
MISC.
(xxviii) Type of REIT.
(xxix) From Form 1125-A-- purchases.
(xxx) From Form 1040, Schedule C--
(A) Purchases less cost of items withdrawn for personal use; and
(B) Materials and supplies.
(xxxi) Electronic filing system indicator.
(xxxii) Posting cycle date relative to filing.
(xxxiii) Dividends, including ordinary or qualified.
(xxxiv) From Form 1120S, Schedule K-1--ordinary business income
(loss).
(xxxv) From Form 1065, Schedule K-1--
(A) Publicly-traded partnership indicator;
(B) Partner's share of nonrecourse, qualified nonrecourse, and
recourse liabilities; and
(C) Ordinary business income (loss).
* * * * *
(6) * * *
(i) * * *
(C) From Form 1120-REIT--
(1) Type of REIT; and
(2) Gross rents from real property;
(D) From Form 1120F--corporation's method of accounting.
(E) From Form 1096--total amount reported.
* * * * *
(e) Applicability date. Paragraphs (b)(2)(iii)(I), (b)(2)(iii)(K)
through (b)(2)(iii)(M), (b)(3)(v), (b)(3)(xxv) through (b)(3)(xxxv),
and (b)(6)(i)(C) through (b)(6)(i)(E) of this section apply to
disclosure to the Bureau of the Census made on or after December 9,
2016. For rules that apply to disclosure to the Bureau of the Census
before December 9, 2016, see 26 CFR 301.6103(j)(1)-1 (revised as of
April 1, 2016).
Sec. 301.6103(j)(1)-1T [Removed]
0
Par. 3. Section 301.6103(j)(1)-1T is removed.
Kirsten Wielobob,
Deputy Commissioner for Services and Enforcement.
Approved: March 19, 2019.
David J. Kautter,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2019-07043 Filed 4-5-19; 4:15 pm]
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