[Federal Register Volume 87, Number 143 (Wednesday, July 27, 2022)]
[Rules and Regulations]
[Pages 45021-45022]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-15868]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9959]
RIN 1545-BP70


Guidance Related to the Foreign Tax Credit; Clarification of 
Foreign-Derived Intangible Income; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations; correction.

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SUMMARY: This document contains corrections to Treasury Decision 9959, 
which was published in the Federal Register on Tuesday, January 4, 
2022. Treasury Decision 9959 contained final regulations relating to 
the foreign tax credit, including the disallowance of a credit or 
deduction for foreign income taxes with respect to dividends eligible 
for a dividends-received deduction, the allocation and apportionment of 
interest expense, foreign income tax expense, and certain deductions of 
life insurance companies; the definition of a foreign income tax and a 
tax in lieu of an income tax; the definition of foreign branch category 
income; and the time at which foreign taxes accrue and can be claimed 
as a credit.

DATES: These corrections are effective on July 27, 2022 and applicable 
on or after January 4, 2022.

FOR FURTHER INFORMATION CONTACT: Concerning Sec. Sec.  1.861-20, 1.960-
1, and 1.960-2, Suzanne M. Walsh, (202) 317-4908, and Teisha Ruggiero, 
(202) 317-5282; concerning Sec.  1.901-2, Tianlin (Laura) Shi, (202) 
317-6987 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    The final regulations (TD 9959) that are the subject of this 
correction are issued under sections 861, 901, and 903 of the Internal 
Revenue Code.

Correction

    As published on January 4, 2022 (87 FR 276), the final regulations 
(TD 9959) contain errors that need to be corrected.

Correction of Publication

    Accordingly, the final regulations (TD 9959) that are the subject 
of FR Doc. 2021-27887, starting on page 276 in the Federal Register of 
January 4, 2022, are corrected as follows:
    1. On page 278, in the first column, in the second line from the 
top of the second full paragraph, the language ``Sec.  1.861-20,'' is 
corrected to read ``the rules of Sec.  1.861-20,''.
    2. On page 281, in the second column, in the fourth and fifth lines 
of the second full paragraph, the language, ``that, together, they'' is 
corrected to read ``that the rules''.
    3. On page 281, in the second column, the fifth sentence of the 
second full paragraph is corrected to read: ``To fill this gap, Sec.  
1.861-20(d)(3)(v)(E) of the final regulations defines a `contribution' 
as the excess amount of a disregarded payment, other than a payment 
described in Sec.  1.861-20(d)(3)(v)(D), made by a taxable unit to 
another taxable unit that the first taxable unit owns over the portion 
of the disregarded payment, if any, that is a reattribution payment.''
    4. On page 281, in the third column, in the third and fourth lines 
from the top of the first partial paragraph, the language ``that is 
neither a contribution nor'' is corrected to read ``other than a 
contribution, a payment described in Sec.  1.861-20(d)(3)(v)(D), or''.
    5. On page 287, in the third column, in the fifth sentence of the 
first full paragraph, the language, ```income, war profits, and profits 
taxes'.'' is corrected to read `` 'income, war profits, and profits 
taxes.' ''.
    6. On page 291, in the first column, in the third line from the 
bottom of the first partial paragraph, the language, ``section 903'' is 
corrected to read ``sections 901 and 903.''
    7. On page 291, in the first column, the first and second sentences 
of the first full paragraph are corrected to read: ``Another comment 
recommended that the example in proposed Sec.  1.901-2(c)(3) (Sec.  
1.901-2(b)(5)(iii) of the final regulations) be expanded to illustrate 
the application of the attribution requirement in the case where a 
nonresident taxpayer is earning income from electronically supplied 
services in a country that imposes tax on such services (ESS tax) and 
the taxpayer either (1) maintains its own branch in the foreign country 
imposing the tax, with employees of the branch conducting routine 
sales, marketing, and customer support functions or (2) uses a related 
party disregarded entity resident in that country to perform local 
marketing, customer support, and other routine functions that is 
subject to that country's resident corporate income tax. With respect 
to the second scenario, the comment noted that where the ESS tax is 
imposed on the nonresident but the resident disregarded entity is 
subject to a resident corporate income tax and the base of such 
corporate income tax is determined under arm's length principles, 
without taking into account as a significant factor the location of 
customers, users, or any other similar destination-based criterion, 
then such resident corporate income tax would meet the residence-based 
nexus requirement and would be creditable but that the ESS tax imposed 
on the nonresident taxpayer would not meet the nexus requirements.''.
    8. On page 292, in the second column, in the seventh line from the 
bottom of the last partial paragraph, the language ``Sec.  1.901-
2(a)(3).'' is corrected to read ``Sec.  1.901-2(b)(1).''.
    9. On page 294, in the second column, under the paragraph heading 
``2. Alternative Gross Receipts Test'', in the third line, the language 
``Sec.  1.901-2(b)(3),'' is corrected to read ``Sec.  1.901-
2(b)(3)(i)(B),''.
    10. On page 298, in the first column, in the second and third lines 
from the bottom of the last partial paragraph, delete the language 
``Sec.  1.901-2(b)(4)(i)(C)(1) provides that''.
    11. On page 310, in the third column, the fourth line from the 
bottom of the first partial paragraph, the language, ``there is,'' is 
corrected to read ``there is''.
    12. On page 311, in the first column, in the first and second lines 
from the bottom of the first partial paragraph, the language, ``a 
activity'' is corrected to read ``an activity''.
    13. On page 317, in the second column, before the caption 
``Drafting Information,'' add section VII. to read as follows:

VII. Congressional Review Act

[[Page 45022]]

    The Administrator of the Office of Information and Regulatory 
Affairs of the OMB has determined that this Treasury decision is a 
major rule for purposes of the Congressional Review Act (5 U.S.C. 801 
et seq.) (``CRA''). Under section 801(3) of the CRA, a major rule takes 
effect 60 days after the rule is published in the Federal Register. 
Accordingly, the Treasury Department and IRS are adopting these final 
regulations with the delayed effective date generally prescribed under 
the Congressional Review Act.

Oluwafunmilayo A. Taylor,
Branch Chief, Publications and Regulations Branch, Legal Processing 
Division, Associate Chief Counsel, (Procedure and Administration).
[FR Doc. 2022-15868 Filed 7-26-22; 8:45 am]
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