Deposits of Excise Taxes (IRS final rule, 2001-08-09, FR

Official source: Federal Register (GovInfo) (https://www.govinfo.gov/content/pkg/FR-2001-08-09/pdf/01-19927.pdf), retrieved 2026-10-03. U.S. Government work (17 U.S.C. § 105).

Federal Register / Vol. 66, No. 154 / Thursday, August 9, 2001 / Rules and Regulations 41775

part 97) is amended by establishing, amending, suspending, or revoking Standard Instrument Approach Procedures, effective at 0901 UTC on the dates specified, as follows:

PART 97—STANDARD INSTRUMENT APPROACH PROCEDURES

The authority citation for part 97 is revised to read as follows:

Authority: 49 U.S.C. 106(g), 40103, 40113, 40120, 44701; and 14 CFR 11.49(b)(2).

Part 97 is amended to read as follows:

§§ 97.23, 97.25, 97.27, 97.29, 97.31, 97.33, 97.35 [Amended] By amending: § 97.23 VOR, VOR/ DME, VOR or TACAN, and VOR/DME or TACAN; § 97.25 LOC, LOC/DME, LDA, LADA/DME, SDF, SDF/DMF; § 97.27 NDB, NDB/DME; § 97.29 ILS, ILS/DME, ISMLS, MLS, MLS/DME, MLS/RNAV; § 97.31 RADAR SIAPs; § 97.33 RNAV SIAPs; and § 97.35 COPTER SIAPs, identified as follows:

* * * Effective September 6, 2001 Lewistown, MT, Lewistown Muni, VOR RWY

7, Amdt 15 Lewistown, MT, Lewistown Muni, RNAV

(GPS) RWY 7, Orig New York, NY, John F. Kennedy Intl, VOR

OR GPS–D, Amdt 8, (CANCELLED) New York, NY, John F. Kennedy Intl, VOR

OR GPS RWY 4L/R, Amdt 15A, CANCELLED New York, NY, John F. Kennedy Intl, VOR

RWY 4L, Orig New York, NY, John F. Kennedy Intl, VOR

RWY 4R, Orig New York, NY, John F. Kennedy Intl, VOR

RWY 31L, Orig New York, NY, John F. Kennedy Intl, VOR

OR GPS RWY 13L/13R, Amdt 18A New York, NY, John F. Kennedy Intl, VOR/

DME RWY 22L, Amdt 4D New York, NY, John F. Kennedy Intl, VOR/

DME RWY 31L, Amdt 13 New York, NY, John F. Kennedy Intl, ILS

RWY 4L, Amdt 10 New York, NY, John F. Kennedy Intl, ILS

RWY 4R, Amdt 29 New York, NY, John F. Kennedy Intl, ILS

RWY 13L, Amdt 16 New York, NY, John F. Kennedy Intl, ILS

RWY 22L, Amdt 23 New York, NY, John F. Kennedy Intl, ILS

RWY 22R, Amdt 2 New York, NY, John F. Kennedy Intl, ILS

RWY 31L, Amdt 10 New York, NY, John F. Kennedy Intl, ILS

RWY 31R, Amdt 14 New York, NY, John F. Kennedy Intl, RNAV

(GPS) RWY 4L, Orig New York, NY, John F. Kennedy Intl, RNAV

(GPS) RWY 4R, Orig New York, NY, John F. Kennedy Intl, RNAV

(GPS) RWY 22L, Orig New York, NY, John F. Kennedy Intl, RNAV

(GPS) RWY 22R, Orig New York, NY, John F. Kennedy Intl, RNAV

(GPS) RWY 31R, Orig

Memphis, TN, Memphis Intl, RNAV (GPS)

RWY 9, Orig Memphis, TN, Memphis Intl, RNAV (GPS)

RWY 18C, Orig Memphis, TN, Memphis Intl, RNAV (GPS)

RWY 18L, Orig Memphis, TN, Memphis Intl, RNAV (GPS)

RWY 18R, Orig Memphis, TN, Memphis Intl, RNAV (GPS)

RWY 27, Orig Memphis, TN, Memphis Intl, RNAV (GPS)

RWY 36C, Orig Memphis, TN, Memphis Intl, RNAV (GPS)

RWY 36L, Orig Memphis, TN, Memphis Intl, RNAV (GPS)

RWY 36R, Orig

* * * Effective October 4, 2001

Leesburg, FL, Leesburg Regional, NDB RWY

31, Amdt 1

* * * Effective November 1, 2001

Florala, AL, Florala Muni, RNAV (GPS) RWY

22, Orig Panama City, FL, Panama City-Bay County

Intl, VOR OR TACAN–A, Amdt 14 Panama City, FL, Panama City-Bay County

Intl, VOR OR TACAN RWY 14, Amdt 16 Panama City, FL, Panama City-Bay County

Intl, VOR OR TACAN RWY 32, Amdt 11 Panama City, FL, Panama City-Bay County

Intl, NDB RWY 14, Amdt 5 Panama City, FL, Panama City-Bay County

Intl, ILS RWY 14, Amdt 16 Benton, KS, Benton, VOR OR GPS–E, Orig,

(CANCELLED) St. Louis, MO, Creve Coeur, VOR–A, Amdt

5 St. Louis, MO, Creve Coeur, RNAV (GPS)

RWY 16, Orig St. Louis, MO, Creve Coeur, RNAV (GPS)

RWY 34, Orig Farmington, NM, Four Corners Regional,

VOR RWY 25, Amdt 9 Farmington, NM, Four Corners Regional,

VOR/DME RWY 7, Amdt 4 Farmington, NM, Four Corners Regional,

RNAV (GPS) RWY 7, Orig Farmington, NM, Four Corners Regional,

RNAV (GPS) RWY 25, Orig Farmington, NM, Four Corners Regional, ILS

RWY 25, Amdt 7

[FR Doc. 01–20035 Filed 8–8–01; 8:45 am]

BILLING CODE 4910–13–M

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 40

[TD 8963]

RIN 1545–AX11

Deposits of Excise Taxes

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains the final regulations relating to the requirements for excise tax returns,

payments, and deposits. These regulations affect persons required to report liability for excise taxes on Form 720, ‘‘Quarterly Federal Excise Tax Return.’’

DATES: Effective Date: These regulations are effective August 9, 2001.

Applicability Date: These regulations are applicable with respect to returns and deposits that relate to calendar quarters beginning on or after October 1, 2001.

Background

This document contains final amendments to the Excise Tax Procedural Regulations (26 CFR part 40) relating to the requirements for excise tax returns, payments, and deposits. On January 7, 2000, an advance notice of proposed rulemaking that invited comments from the public on issues relating to the requirements for excise tax returns and deposits was published in the Federal Register (65 FR 1076). Several written comments were received and considered in drafting the proposed regulations. On February 16, 2001, a notice of proposed rulemaking (REG106892–00) was published in the Federal Register (66 FR 10650). Written comments and requests for a public hearing were solicited.

Written comments responding to the notice were received from one commentator. The comments requested that the safe harbor rule based on lookback quarter liability be modified to be applicable: To each semimonthly period in a quarter if one-sixth of look-back quarter liability is deposited during that semimonthly period; when a taxpayer’s liability includes new or reinstated taxes; and when a new legal entity includes a party that filed a Form 720 for the second preceding quarter. The final regulations do not adopt the requested modifications to the look-back safe harbor rule because doing so could significantly reduce the percentage of excise tax liability deposited without any corresponding reduction in the complexity of the deposit rules.

No public hearing was requested or held. After consideration of all of the comments, the proposed regulations are adopted without change by this Treasury decision.

Special Analyses

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a

FOR FURTHER INFORMATION CONTACT: Susan Athy (202) 622–3130 (not a tollfree number).

SUPPLEMENTARY INFORMATION:

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41776 Federal Register / Vol. 66, No. 154 / Thursday, August 9, 2001 / Rules and Regulations

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 and, because these regulations do not impose on small entities a collection of information requirement, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Therefore, a Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceding these regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Drafting Information

The principal author of these regulations is Susan Athy, Office of Associate Chief Counsel (Passthroughs and Special Industries). However, other personnel from the IRS and Treasury Department participated in their development.

List of Subjects in 26 CFR Part 40

Excise taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 40 is amended as follows:

PART 40—EXCISE TAX PROCEDURAL REGULATIONS

Paragraph 1. The authority citation for part 40 is amended by removing the entries for § 40.6071(a)–1 and 40.6071(a)–2, and § 40.6302(c)–2, 40.6302(c)–3, and 40.6302(c)–4; and adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805 * -
Section 40.6071(a)–1 also issued under 26 U.S.C. 6071(a). * - Section 40.6302(c)–2 also issued under 26 U.S.C. 6302(a).

Section 40.6302(c)–3 also issued under 26 U.S.C. 6302(a). * - § 40.0–1 [Amended] Par. 2. Section 40.0–1 is amended as follows:

Paragraphs (d) and (e) are removed.
Paragraph (f) is redesignated as new paragraph (d).

§ 40.6011(a)–1 [Amended] Par. 3. Section 40.6011(a)–1 is amended by removing paragraph (c).

§ 40.6011(a)–2 [Amended] Par. 4. Section 40.6011(a)–2 is amended as follows:

In paragraph (b)(2), the language ‘‘§ 40.6302(c)–1(f)(2)’’ is removed and ‘‘§ 40.6302(c)–1(e)(2)’’ is added in its place.
Paragraph (d) is removed. Par. 5. Section 40.6071(a)–1 is amended by revising paragraphs (a), (b)(2), and (c) to read as follows:

§ 40.6071(a)–1 Time for filing returns. (a) Quarterly returns. Each quarterly return required under § 40.6011(a)– 1(a)(2) must be filed by the last day of the first calendar month following the quarter for which it is made.

(b) * - (2) Semimonthly returns. Each semimonthly return required under § 40.6011(a)–1(b) must be filed by the last day of the semimonthly period (as defined in § 40.0–1(c)) following the semimonthly period for which it is made.

(c) Effective date. This section is applicable with respect to returns that relate to calendar quarters beginning on or after October 1, 2001.

§ 40.6071(a)–2 [Removed] Par. 6. Section 40.6071(a)–2 is removed.

§ 40.6091–1 [Amended] Par. 7. Section 40.6091–1 is amended by removing paragraph (d).

Par. 8. Section 40.6101–1 is revised to read as follows:

§ 40.6101–1 Period covered by returns. See § 40.6011(a)–1(a)(2) for the rules relating to the period covered by the return.

Par. 9. Sections 40.6109(a)–1 and 40.6151(a)–1 are revised to read as follows:

§ 40.6109(a)–1 Identifying numbers. Every person required under § 40.6011(a)–1 to make a return must provide the identifying number required by the instructions applicable to the form on which the return is made.

§ 40.6151(a)–1 Time and place for paying tax shown on return.

Except as provided by statute, the tax must be paid at the time prescribed in § 40.6071(a)–1 for filing the return, and at the place prescribed in § 40.6091–1 for filing the return.

Par. 10. Section 40.6302(c)–1 is revised to read as follows:

§ 40.6302(c)–1 Use of Government depositaries.

(a) In general —(1) Semimonthly deposits required. Except as provided by statute or by paragraph (e) of this section, each person required under § 40.6011(a)–1(a)(2) to file a quarterly

return must make a deposit of tax for each semimonthly period (as defined in § 40.0–1(c)) in which tax liability is incurred.

(2) Treatment of taxes imposed by chapter 33. For purposes of this part 40, tax imposed by chapter 33 (relating to communications and air transportation) is treated as a tax liability incurred during the semimonthly period—

(i) In which that tax is collected; or (ii) In the case of the alternative method, in which that tax is considered as collected.

(3) Definition of net tax liability. Net tax liability means the tax liability for the specified period plus or minus any adjustments allowable in accordance with the instructions applicable to the form on which the return is made.

(4) Computation of net tax liability for a semimonthly period. The net tax liability for a semimonthly period may be computed by—

(i) Determining the net tax liability incurred during the semimonthly period; or

(ii) Dividing by two the net tax liability incurred during the calendar month that includes that semimonthly period, provided that this method of computation is used for all semimonthly periods in the calendar quarter.

(b) Amount of deposit —(1) In general. The deposit of tax for each semimonthly period must be not less than 95 percent of the amount of net tax liability incurred during the semimonthly period.

(2) Safe harbor rules —(i) Applicability. The safe harbor rules of this paragraph (b)(2) are applied separately to taxes deposited under the alternative method provided in § 40.6302(c)–3 (alternative method taxes) and to the other taxes for which deposits are required under this section (regular method taxes).

(ii) Regular method taxes. Any person that made a return of tax reporting regular method taxes for the second preceding calendar quarter (the lookback quarter) is considered to have complied with the requirement of this part 40 for deposit of regular method taxes for the current calendar quarter if—

(A) The deposit of regular method taxes for each semimonthly period in the current calendar quarter is not less than 1/6 of the net tax liability for regular method taxes reported for the look-back quarter;

(B) Each deposit is made on time; (C) The amount of any underpayment of regular method taxes is paid by the due date of the return; and

(D) The person’s liability does not include any regular method tax that was

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Federal Register / Vol. 66, No. 154 / Thursday, August 9, 2001 / Rules and Regulations 41777

for regular method taxes incurred during these periods may be computed by—

(A) Determining the amount of net tax liability for regular method taxes reasonably expected to be incurred during the second semimonthly period in September;

(B) Treating ¹¹ ⁄15 of the amount determined under paragraph (a)(2)(i)(A) of this section as the net tax liability for regular method taxes incurred during the period September 16th through 26th; and (C) Treating the remainder of the amount determined under paragraph (a)(2)(i)(A) of this section (adjusted to reflect the amount of net tax liability for regular method taxes actually incurred through the end of September) as the net tax liability for regular method taxes incurred during the period September 27th through 30th. (ii) Safe harbor rules. The safe harbor rules in § 40.6302(c)–1(b)(2) do not apply for the third calendar quarter unless—

(A) The deposit of taxes for the period September 16th through 26th is not less than ¹¹ ⁄90 of the net tax liability for regular method taxes reported for the look-back quarter; and

(B) The total deposit of taxes for the second semimonthly period in September is not less than ¹ ⁄6 of the net tax liability for regular method taxes reported for the look-back quarter.

(3) Time to deposit. (i) The deposit required for the period beginning September 16th must be made by September 29th unless—

(A) September 29th is a Saturday, in which case the deposit must be made by September 28th; or

(B) September 29th is a Sunday, in which case the deposit must be made by September 30th.

(ii) The deposit required for the period ending September 30th must be made at the time prescribed in § 40.6302(c)–1(c).

(b) Persons not required to use electronic funds transfer. The rules of this section are applied with the following modifications in the case of a person not required to deposit taxes by electronic funds transfer.

(1) Periods. The deposit periods for the separate deposits required under paragraph (a) of this section are September 16th through 25th and September 26th through 30th.

(2) Amount of deposit. In computing the amount of deposit required under paragraph (a)(2)(i)(B) of this section, the applicable fraction is ¹⁰ ⁄15. In computing the amount of deposit required under paragraph (a)(2)(ii)(A) of this section, the applicable fraction is ¹⁰ ⁄90.

not imposed at all times during the look-back quarter or a tax on a chemical not subject to tax at all times during the look-back quarter.

(iii) Alternative method taxes. Any person that made a return of tax reporting alternative method taxes for the look-back quarter is considered to have complied with the requirement of this part 40 for deposit of alternative method taxes for the current calendar quarter if—

(A) The deposit of alternative method taxes for each semimonthly period in the current calendar quarter is not less than 1/6 of the net tax liability for alternative method taxes reported for the look-back quarter;

(B) Each deposit is made on time; (C) The amount of any underpayment of alternative method taxes is paid by the due date of the return; and

(D) The person’s liability does not include any alternative method tax that was not imposed at all times during the look-back quarter and the month preceding the look-back quarter.

(iv) Modification for tax rate increase. The safe harbor rules of this paragraph (b)(2) do not apply to regular method taxes or alternative method taxes for the first and second calendar quarters beginning on or after the effective date of an increase in the rate of any tax to which this part 40 applies unless the deposit of those taxes for each semimonthly period in the calendar quarter is not less than 1/6 of the tax liability the person would have had with respect to those taxes for the lookback quarter if the increased rate of tax had been in effect for the look-back quarter.

(v) Failure to comply with deposit requirements. If a person fails to make deposits as required under this part 40, that failure may be reported to the appropriate IRS office and the IRS may withdraw the person’s right to use the safe harbor rules of this paragraph (b)(2).

(c) Time to deposit —(1) In general. The deposit of tax for any semimonthly period must be made by the 14th day of the following semimonthly period unless such day is a Saturday, Sunday, or legal holiday in the District of Columbia in which case the immediately preceding day which is not a Saturday, Sunday, or legal holiday in the District of Columbia is treated as the 14th day. Thus, generally, the deposit of tax for the first semimonthly period in a month is due by the 29th day of that month and the deposit of tax for the second semimonthly period in a month is due by the 14th day of the following month.

(2) Exceptions. See § 40.6302(c)–2 for the special rules for September. See

§ 40.6302(c)–3 for the special rules for deposits under the alternative method.

(d) Remittance of deposits —(1) Deposits by federal tax deposit coupon. A completed Form 8109, ‘‘Federal Tax Deposit Coupon,’’ must accompany each deposit. The deposit must be remitted, in accordance with the instructions applicable to the form, to a financial institution authorized as a depositary for federal taxes (as provided in 31 CFR part 203).

(2) Deposits by electronic funds transfer. For the requirement to deposit excise taxes by electronic funds transfer, see § 31.6302–1(h) of this chapter. A taxpayer not required to deposit by electronic funds transfer pursuant to § 31.6302–1(h) of this chapter remains subject to the rules of this paragraph (d).

(e) Exceptions —(1) Taxes excluded. No deposit is required in the case of the taxes imposed by—

(i) Section 4042 (relating to fuel used on inland waterways);

(ii) Section 4161 (relating to sport fishing equipment and bows and arrow components);

(iii) Section 4682(h) (relating to floor stocks tax on ozone-depleting chemicals); and

(iv) Section 48.4081–3(b)(1)(iii) of this chapter (relating to certain removals of gasohol from refineries).

(2) One-time filings. No deposit is required in the case of any taxes reportable on a one-time filing (as defined in § 40.6011(a)–2(b)).

(3) De minimis exception. For any calendar quarter, no deposit is required if the net tax liability for the quarter does not exceed $2,500.

(f) Effective date. This section is applicable with respect to deposits that relate to calendar quarters beginning on or after October 1, 2001.

Par. 11. Section 40.6302(c)–2 is revised to read as follows:

§ 40.6302(c)–2 Special rules for September.

(a) In general —(1) Separate deposits required for the second semimonthly period. In the case of deposits of taxes not deposited under the alternative method (regular method taxes) for the second semimonthly period in September, separate deposits are required for the period September 16th through 26th and for the period September 27th through 30th.

(2) Amount of deposit —(i) In general. The deposits of regular method taxes for the period September 16th through 26th and the period September 27th through 30th must be not less than 95 percent of the net tax liability for regular method taxes incurred during the respective periods. The net tax liability

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41778 Federal Register / Vol. 66, No. 154 / Thursday, August 9, 2001 / Rules and Regulations

(3) Time to deposit. In the case of the deposit required under paragraph (a) of this section for the period beginning September 16th, the deposit must be made by September 28th unless—

(i) September 28th is a Saturday, in which case the deposit must be made by September 27th; or

(ii) September 28th is a Sunday, in which case the deposit must be made by September 29th.

(c) Effective date. This section is applicable with respect to deposits that relate to calendar quarters beginning on or after October 1, 2001.

Par. 12. Section 40.6302(c)–3 is amended as follows:

In paragraph (b)(1)(ii), the language ‘‘9-day rule of § 40.6302(c)–1(b)(6)’’ is removed and ‘‘rule of § 40.6302(c)– 1(c)(1)’’ is added in its place.
In paragraph (b)(3), last sentence, the language ‘‘6th’’ is removed and ‘‘16th’’ is added in its place.
In paragraph (d), first sentence, the language ‘‘not less than’’ is removed and ‘‘not less than 95 percent of’’ is added in its place.
In paragraph (f)(4) introductory text, the language ‘‘§ 40.6302(c)– 1(c)(2)(i)’’ is removed and ‘‘§ 40.6302(c)–1(b)(2)’’ is added in its place.
Paragraphs (f)(5) and (f)(7) are removed.
Paragraph (f)(6) is redesignated as paragraph (f)(5).
Paragraph (g) is revised.
Paragraph (h) is removed. The revision reads as follows:

§ 40.6302(c)–3 Special rules for use of Government depositaries under chapter 33.

- - - (g) Effective date. This section is applicable with respect to deposits and returns that relate to taxes that are considered as collected in calendar quarters beginning on or after October 1,

§ 40.6302(c)–4 [Removed]

Par. 13. Section 40.6302(c)–4 is removed.

§ 40.9999–1 [Removed]

Par. 14. Section 40.9999–1 is removed.

Robert E. Wenzel, Deputy Commissioner of Internal Revenue.

Approved: July 31, 2001. Mark Weinberger, Assistant Secretary of the Treasury.

[FR Doc. 01–19927 Filed 8–8–01; 8:45 am]

BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[TD 8962]

RIN 1545–AY09

Classification of Certain Pension and Employee Benefit Trusts, and Other Trusts

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final regulations amending the regulations defining a domestic or foreign trust for federal tax purposes. The regulations will affect certain specified employee benefit trusts and investment trusts. The regulations provide that these employee benefit trusts and investment trusts are deemed to satisfy the control test for domestic trust treatment if United States trustees control all of the substantial decisions of the trust made by the trustees of the trust.

DATES: Effective Date: These regulations are effective August 9, 2001.

Background

On October 12, 2000, the Treasury Department and the IRS published a notice of proposed rulemaking (REG– 108553–00) under section 7701 of the Internal Revenue Code (Code) in the Federal Register (65 FR 60822). The proposed regulations add group trusts consisting of qualified plan trusts and IRA trusts, as described in Rev. Rul. 81– 100 (1981–1 C.B. 326), and certain investment trusts to the categories of trusts that may use the safe harbor in § 301.7701–7(d)(1)(iv) of the Procedure and Administration Regulations relating to the application of the control test of section 7701(a)(30)(E). The proposed regulations also modify the safe harbor in § 301.7701–7(d)(1)(iv) to clarify that employee benefit trusts and investment trusts identified in the regulations are deemed to satisfy the control test if United States trustees control all of the substantial decisions of the trust made by the trustees of the trust. No one requested to speak at the public hearing scheduled for January 31, 2001. Accordingly, the public hearing was

Applicability Dates: For dates of applicability of § 301.7701–7(d)(1)(iv) and (v) Examples 1 and 5, see § 301.7701–7(e)(3).

FOR FURTHER INFORMATION CONTACT: James A. Quinn at (202) 622–3060 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

canceled on January 26, 2001 (66 FR 7867). Comments in response to the notice of proposed rulemaking were received and are addressed in the following Explanation and Summary of Comments. This document finalizes the proposed regulations without change.

Explanation and Summary of Comments

Reporting Requirements for Foreign Widely Held Fixed Investment Trusts

Two commentators were concerned about United States investors in widely held fixed investment trusts that are outside the safe harbor provided by § 301.7701–7(d)(1)(iv)(I) and therefore are treated as foreign trusts. These commentators suggested that United States investors in such trusts should not be subject to reporting under section 6048 and to the corresponding penalties in section 6677 for failure to comply with the section 6048 reporting requirements. A guidance project under section 671 concerning reporting requirements for all widely held fixed investment trusts is currently under consideration. Accordingly, these regulations do not specifically address this issue.

Application to Certain Pension Trusts Created or Organized in Puerto Rico

Section 1022(i)(1) of the Employee Retirement Income Security Act of 1974, Public Law 93–406 (88 Stat. 829) (September 2, 1974), provides for tax exemption for certain trusts created or organized in Puerto Rico that form part of a pension, profit-sharing, or stock bonus plan. Section 1022(i)(2) and § 1.401(a)–50 of the Income Tax Regulations generally provide that the administrator of such a trust may elect to have the trust treated as a trust created or organized in the United States for purposes of section 401(a). In light of the changes made to section 7701(a)(30) in the Small Business Job Protection Act, Public Law 104–188 (110 Stat. 1755) (August 20, 1996), and the Taxpayer Relief Act of 1997, Public Law 105–34 (111 Stat. 788) (August 5, 1997), and the ensuing regulations, some taxpayers have expressed concerns regarding the continuing application of sections 1022(i)(1) and (2) and § 1.401–50 to a pension trust created or organized in Puerto Rico that is not a domestic trust within the meaning of section 7701(a)(30). Because the application of these provisions is not restricted to trusts that are domestic trusts within the meaning of section 7701(a)(30), the 1996 and 1997 amendments to section 7701(a)(30) and

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