Part IV. Items of General Interest

Notice of Proposed Rulemaking and Notice of Public Hearing

Magnetic Media Filing Requirements for Information Returns

REG–209803–95

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

SUMMARY: In ***T.D. 8683, page 9, the IRS is issuing temporary regulations relating to the requirements for filing information returns on magnetic media or in other machine-readable form under section 6011(e) of the Internal Revenue Code. The text of those temporary regulations also serves as the text of the proposed regulations. This document also contains a proposed amendment to § 301.6011–2(g)(2). This document also provides notice of a public hearing on these proposed regulations.

DATES: Written comments must be received by January 8, 1997. Outlines of topics to be discussed at the public hearing scheduled for February 5, 1997, must be received by January 15, 1997.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG–209803–95), room 5228, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. In the alternative, submissions may be hand delivered between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG–209803–95), Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave., NW., Washington, DC. Alternatively, taxpayers may submit comments electronically via the internet by selecting the ‘‘Tax Regs’’ option on the IRS Home Page, or by submitting comments directly to the IRS internet site at http:// www.irs.ustreas.gov/prod/tax_regs/ comments.html. The public hearing will be held in Room 3313 of the Internal Revenue Building, 1111 Constitution Ave., NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Donna Welch, (202) 622–4910; concerning submissions and the hearing, Mike Slaughter, (202) 622–7190 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

Temporary regulations in T.D. 8683 amend the Income Tax Regulations (26 CFR part 1) relating to section 6045 and the Procedure and Administration Regulations (26 CFR part 301) relating to section 6011(e). The temporary regulations contain rules relating to the filing requirements of information returns on magnetic media or in other machinereadable form under section 6011(e).

The text of those temporary regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains the temporary regulations.

Special Analyses

It has been determined that these proposed regulations are not a significant regulatory action as defined in EO 12866. Therefore, a regulatory assessment is not required.

It is hereby certified that the regulations in this document will not have a significant economic impact on a substantial number of small entities. This certification is based on a determination that these regulations impose no additional reporting or recordkeeping requirement and only prescribe the method of filing information returns that are already required to be filed. Further, these regulations are consistent with the requirements imposed by statute. Section 6011(e)(2)(A) provides that, in prescribing regulations providing standards for determining which returns must be filed on magnetic media or in other machinereadable form, the Secretary shall not require any person to file returns on magnetic media unless the person is required to file at least 250 returns during the calendar year. Consistent with the statutory provision, these regulations do not require information returns to be filed on magnetic media unless 250 or more returns are required to be filed. Further, the economic impact caused by requiring filing on magnetic media should be minimal. If a taxpayer’s operations are computerized, reporting in accordance with the regulations should be less costly than filing on paper. If the taxpayer’s operations are not computerized, the incremental cost of magnetic media reporting should be minimal in most cases because of the availability of

computer service bureaus. In addition, the existing regulations provide that the IRS may waive the magnetic media filing requirements upon a showing of hardship. It is anticipated that the waiver authority will be exercised so as not to unduly burden taxpayers lacking both the necessary data processing facilities and access at a reasonable cost to computer service bureaus. Accordingly, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.

Pursuant to section 7805(f) of the Internal Revenue Code, these proposed regulations will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.

Comments and Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight (8) copies) that are submitted timely to the IRS. All comments will be available for public inspection and copying.

A public hearing has been scheduled for February 5, 1997, at 10 am. The hearing will be held in room 3313 of the Internal Revenue Building, 1111 Constitution Ave., NW., Washington, DC. Because of access restrictions, visitors will not be admitted beyond the Internal Revenue Building lobby more than 15 minutes before the hearing starts.

The rules of 26 CFR 601.601(a)(3) apply to the hearing.

Persons who wish to present oral comments at the hearing must submit written comments by January 8, 1997, and submit an outline of the topics to be discussed and the time to be devoted to each topic (signed original and eight (8) copies) by January 15, 1997.

A period of 10 minutes will be allotted to each person for making comments.

An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing.

Drafting Information

The principal author of the regulations is Donna Welch, Office of Assis new statute is not intended to limit the mailing options that taxpayers currently use, but rather to expand the ‘‘timely mailing as timely filing/paying’’ rule to more delivery services.

After consideration of public comments received in response to this announcement, the Service intends to issue interim guidance that will establish the criteria to be used to designate private delivery services for a limited period of time, starting in the first quarter of 1997. Once that interim guidance is issued, private delivery services will be able to apply to the Service to become ‘‘designated delivery services’’ under § 7502(f). After consideration of those applications, the Service will publish a list of the designated delivery services for the interim period. That list will indicate whether the designation is solely for purposes of § 7502(f)(2) (timely mailing as timely filing/paying) or whether it is also for purposes of § 7502(f)(3) (services that are equivalent to United States registered or certified mail).

Following its designation of private delivery services for the interim period, the Service intends to publish permanent guidance.

INTERIM REQUIREMENTS: Section 7502(f)(2) provides that the Service may designate a private delivery service only if it meets the following requirements:

(A) it must be available to the general public,

(B) it must be at least as timely and reliable on a regular basis as United States mail,

(C) it must record electronically to its data base (kept in the regular course of its business) the date on which the item was given to the private delivery service for delivery, or mark such date on the cover of the item to be delivered, and

(D) it must meet such other criteria as the Service may prescribe. Congress intended to allow the designation of private delivery services which meet the USPS’s ability to deliver documents quickly and securely. See H.R. Rep. No. 506, 104th Cong., 2d Sess. 51 (1996).

The Service is developing guidance that will implement the statutory criteria during the interim period in accordance with Congress’s intent. For example, the USPS postmarks First-Class Mail on the date an item is received for delivery by indelibly marking such date on the

tant Chief Counsel (Income Tax and Accounting). However, other personnel from the IRS and the Treasury Department participated in the development of the regulations.

- - - -

Proposed Amendments to the Regula- tions

Accordingly, 26 CFR parts 1 and 301 are proposed to be amended as follows:

PART 1—INCOME TAXES

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

Authority: 26 U.S.C. 7805 - - Par. 2. In § 1.6045–1, paragraph (l) is revised to read as follows:

§ 1.6045–1 Returns of information of brokers and barter exchanges.

[The text of paragraph (l) as proposed is the same as the first sentence of § 1.6045–1T(l) published in T.D. 8683, page 9.

Par. 3. In § 1.6045–2, paragraph (g)(2) is revised to read as follows:

§ 1.6045–2 Furnishing statement re- quired with respect to certain substitute payments.

[The text of paragraph (g)(2) as proposed is the same as the text of the first sentence of § 1.6045–2T(g)(2) published in T.D. 8683, page 9.

PART 301—PROCEDURE AND ADMINISTRATION

Par. 4. The authority citation for part 301 continues to read in part as follows: Authority: 26 U.S.C. 7805 - - Par. 5. Section 301.6011–2 is amended by revising paragraphs (a)(1), (b)(1) and (2), (c)(1)(i) and (iii), (c)(2), (f) and (g)(2), and by adding (c)(1)(iv), and by removing paragraphs (c)(3) and (4) and the last sentence of paragraph (e). The revisions and additions read as follows:

§ 301.6011–2 Required use of magnetic media.

[The text of paragraphs (a)(1), (b)(1) and (2), (c)(1)(i), (iii), and (iv), (c)(2), (f), and (g)(2) as proposed is the same as the text in § 301.6011–2T(a)(1), (b)(1) and (2), (c)(1)(i), (iii), and (iv),

(c)(2), (f), and the first sentence of (g)(2) published in T.D. 8683, page 9.

Margaret Milner Richardson, Commissioner of Internal Revenue.

(Filed by the Office of the Federal Register on October 9, 1996, 8:45 a.m., and published in the issue of the Federal Register for October 10, 1996, 61 F.R. 53161)

Developing Interim Requirements for Designated Delivery Services Under Section 7502(f) of the Internal Revenue Code

Announcement 96–108

SUMMARY: This announcement invites comments, and provides notice of a public hearing, with respect to interim criteria for designating private delivery services for purposes of the ‘‘timely mailing as timely filing/paying’’ rule of § 7502 of the Internal Revenue Code.

BACKGROUND: The Internal Revenue Service currently accepts mail from both the United States Postal Service (‘‘USPS’’) and private delivery services. However, the ‘‘timely mailing as timely filing/paying’’ rule of § 7502(a) has applied only to documents and payments delivered by the USPS. Thus, taxpayers who assumed that using a private delivery service was adequate to show timely filing of their documents or timely making of their payments could inadvertently fail to qualify under the ‘‘timely mailing as timely filing/paying’’ rule. Similarly, the rule of section 7502(c) that proof of proper registration of a document, or that a postmarked certified mail sender’s receipt was properly issued for a document, is prima facie evidence of delivery applies only to documents sent by United States registered or certified mail.

Section 1210 of the Taxpayer Bill of Rights 2 authorized the Service to expand the ‘‘timely mailing as timely filing/paying’’ rule to documents and payments delivered by certain private delivery services that meet the USPS’s ability to deliver items timely, reliably, and securely. A private delivery service must be designated by the Service before it will qualify for the ‘‘timely mailing as timely filing/paying’’ rule. The new statute also authorized an additional designation under § 7502(f)(3) for those private delivery services that provide a service equivalent to United States registered or certified mail. The

15 1996–44 I.R.B.

cover of the item so that it is readable by the human eye without mechanical assistance. The Service anticipates that a similar marking or labeling requirement may be appropriate under clause (C) above, even for a private delivery service that records the date of receipt electronically to its data base. Further, there are special rules under § 7502 for United States mail that has a postmark made other than by the USPS. See Treas. Reg. § 301.7502–1(c)(1)(iii)( b ). For example, if privately metered mail is incorrectly dated, an envelope may have a postmark made by the USPS in addition to the postmark from a private postage meter. In that situation, the postmark made by the private postage meter is disregarded and the USPS postmark is used for purposes of § 7502. Similarly, if a private delivery service permits the sender (or the sender’s agent or intermediary) to identify the date under (C), the private delivery service may be required to have established procedures to verify the date and to correct the date if the item is incorrectly dated.

The Service invites written comments concerning the additional criteria that should be prescribed, under clause (D) above, in order to guarantee the same levels of timeliness, reliability, security, and scope of delivery as are available from the USPS. Comments are also requested on what, if any, different or additional criteria should be applied to determine the equivalence of a private delivery service to United States registered or certified mail within the scope of § 7502(f)(3).

Taxpayers should note that no private delivery service has yet been designated pursuant to § 7502(f), nor will the Service accept applications for designation until the interim guidance is issued. Until such designation is announced, the ‘‘timely mailing as timely filing/paying’’ rule of § 7502 is available only with respect to items sent by United States mail.

COMMENTS AND PUBLIC HEARING: In order to meet the Service’s objective of publishing a list of the designated delivery services for the interim period in the first quarter of 1997, it is necessary to receive comments and hold the public hearing (discussed below) as soon as possible. Accordingly, a signed original and eight copies of all comments should be submitted by November 22, 1996, by either mailing them to:

Internal Revenue Service P.O. Box 7604 Ben Franklin Station

Attn: CC:DOM:CORP:T:R:IT&A

Foundations Status of Certain Organizations

Announcement 96–111

The following organizations have failed to establish or have been unable to maintain their status as public charities or as operating foundations. Accordingly, grantors and contributors may not, after this date, rely on previous rulings or designations in the Cumulative List of Organizations (Publication 78), or on the presumption arising from the filing of notices under section 508(b) of the Code. This listing does not indicate that the organizations have lost their status as organizations described in section 501(c)(3), eligible to receive deductible contributions.

Former Public Charities . The following organizations (which have been treated as organizations that are not private foundations described in section 509(a) of the Code) are now classified as private foundations: Assembly of Aethiopian Hebrews, Inc.,

(Branch 4) Room 5228 Washington, D.C. 20044,

or hand delivering them between the hours of 8:00 a.m. and 5:00 p.m. to:

Courier’s Desk Internal Revenue Service 1111 Constitution Avenue, N.W. Attn: CC:DOM:CORP:T:R:IT&A

(Branch 4) Room 5228 Washington, D.C.

Alternatively, comments may be submitted electronically via the Service’s Internet site at ‘‘http://www.irs.ustreas. gov/prod/tax_regs/comments.html’’. All comments will be available for public inspection and copying.

A public hearing has been scheduled for Friday, December 6, 1996, at 10:00 a.m. in Room 3313; Internal Revenue Building; 1111 Constitution Avenue, N.W.; Washington, D.C. Because of access restrictions, visitors will not be admitted beyond the building lobby more than 15 minutes before the hearing starts. Persons who wish to present oral comments at the hearing must submit written comments as well as an outline of the topics to be discussed and the time to be devoted to each topic (a signed original and eight copies) by November 22, 1996. Each speaker (or group of speakers representing a single entity) will be limited to 10 minutes for an oral presentation, exclusive of the time consumed by the questions from the panel and the answers thereto. An agenda showing the scheduling of the speakers will be made after the outlines are received from the persons testifying. Copies of the agenda will be available free of charge at the hearing.

FOR FURTHER INFORMATION: For further information regarding the substance of this announcement, contact Robert J. Basso of the Office of Assistant Chief Counsel (Income Tax and Accounting) at (202) 622–6232 (not a toll-free call). For further information regarding the submission of comments and the public hearing, contact Evangelista Lee of the Regulations Unit, Office of Assistant Chief Counsel (Corporate) at (202) 622–7190 (not a tollfree call).

Island, IL Grand Gardens Inc., Grand Rapids, MN Greater Brown County Committee, Inc.,

Atlanta, GA Canids Wildlife Management

Association, Greenbrier, AR Community Health Foundation of

Central Florida Inc., Aopoka, FL Festival of Trees Sheboygan County,

Sheboygan, WI Firethorn Institution, Chicago, IL Fitzhugh Interventions Inc., Chicago, IL Fort Ripley-St. Mathias First Response

Inc., Fort Ripley, MN Fox Valley AIDS Project Inc., Appleton,

WI Freeport Area Housing Ministry,

Freeport, IL French Canadian-Acadian Genealogists

of Wisc Inc., New Berlin, WI Friends for St. Coletta Illinois, Park

Ridge, IL Friends for the Popular Movement of

Ukraine, Chicago, IL Friends of Central, Lake Geneva, WI Friends of Dade County Elderly Inc.,

Miami, FL Friends of the Chicago Cultural Center,

Chicago, IL Fulton County Crime Stoppers Inc.,

Canton, IL Fund for Jewish Education Inc., Skokie,

IL Genesius Theater Foundation, Rock

Green Bay, WI

1996–44 I.R.B. 16

Greater Minneapolis Interfaith Network,

Minneapolis, MN Greater Minnesota Christian Counseling

Ringgold Historical Foundation,

Danville, VA Roanoke Valley Museum of Theatre

History Inc., Roanoke, VA Roanoke Valley Therapeutic Riding

Program Inc., Roanoke, VA Roaring Spring Ambulance Service,

Talent Outreach for Underpriviledged

Services, Minneapolis, MN Gold Coast Communities Foundation,

Metaieie, LA Hamlin Park Development Corporation,

Roaring Spring, PA Robert Burns Club of Milwaukee WI,

Career Hunters Inc., Cleveland, OH Team Center, Chicago, IL Token Study Group, Round Lake, IL Tomah Youth Hockey Club Inc., Tomah,

WI Trevor E. Ewing Memorial Foundation,

Inc., Old Greenwich, CT Washington Irish RFC Inc., Arlington,

Buffalo, NY Harvey Video & Productions, Harvey,

IL Hemlock of Wisconsin, Inc., Madison,

New Berlin, WI Rockbridge Regional Fairs Inc.,

VA Washington Square Village Creative

WI Hmong International Organization Inc.,

Lexington, VA Rowland Theatre Inc., Philipsburg, PA Salacoa Valley Day Care Inc.,

Fairmount, GA Say Nope to Dope, Ventnor, NJ Second Helpings, Hilton Head Island,

Steps Play Group, New York, NY Washington Village Academy, Antioch,

St. Paul, MN Hmong U.S.A. Foundation Inc., St.

Paul, MN Home-Free-Inc., Stevens Point, WI Hopkins Wrestling Booster Club,

IL Waterworks Foundation Inc., Annapolis,

Minnetonka, MN Human Rights Foundation of Illinois

SC Sherwood Park Civic Association,

MD Welcome Home, Inc., Brockton, MA West Bluff Resident Management

Organization Inc., New Castle, PA West Newton Rutland East Springfield

Inc., Chicago, IL Marine Life Preservation Society, Coral

Corporation, Kansas City, MO West Chester Baseball Association Inc.,

West Chester, PA Western Pennsylvania Head Start

Gables, FL Mexican Folkloric Dance Company of

Chicago Inc., Chicago, IL Michal Foundation, Chicago, IL Military Veterans Museum Inc., Neenah,

Philadelphia, PA Silica Research Foundation Inc., Silver

Spring, MD Silver Spoons Inc., King of Prussia, PA Simple Sacrifice for the Homeless Inc.,

Severn, MD Skaters Education and Training Fund

Inc., Baltimore, MD Ski for Light Montana Inc., Bozeman,

WI Minority Family Progress Center Inc

St. Neighborhood Fund, Inc., Boston, MA West Philadelphia Housing Development

Corporation, Philadelphia, PA Williamsburg Growing Projects, Inc.,

Center Without Walls, Fayetteville, NC Mission of Hope, Lockport, IL New Haven Festivals, Inc., Hamden, CT Old Abe Booster Club, Eau Claire, WI Opening Doors of Denver, Aurora, CO Park Pals, Inc., Clermont, FL Patrick Randall Sawyer Memorial Fund

MT Small Important People Inc., Richmond,

Association Inc., Minneapolis, MN South Side Childrens Advisory Council,

VA Society of Primitive Technology Inc.,

Dover, DE Software National Resource Inc., Silver

Brooklyn, NY Wolf Lodge Cultural Foundation, Orcas,

WA Women Inc., East Orange, NJ Wood Hollow Childrens Center Inc.,

Spring, MD Somerset Project, Philadelphia, PA Southeast Como Improvement

Madison, WI Worcester Fights Back, Inc., Worcester,

MA Work Force Development Agency - A,

Inc., Hartsville, SC Paxton Area Health Care Foundation,

Paxton, IL Pickett Steam & Gas Engine Club Inc.,

Pittsburgh, PA South Suburban Development, South

Holland, IL Springfield Parks Foundation Inc.,

Oshkosh, WI Polish Childrens Welfare Fund Inc.,

Chicago, IL Prayas Inc., Chicago, IL Prince Georges County Foster Parents

Springfield, IL Square Wheelers of Pittsburgh Inc.,

Everett, WA WJPZ Radio, Inc., Syracuse, NY Yale 50-50 Fund, Inc., Woodrbridge, CT Yellow Ribbon Celebrity Golf Classic at

Forsgate Inc., Montclair, NJ Yeshiva Zichron Dovid, Inc., Brooklyn,

NY Youth World Institute, Rockford, IL ZAS-Wings of Hope Inc., Washington,

Association Inc., Oxon Hill, MD Prism Projects Inc., Washington, DC Proclamation Ministries Inc., Salem, VA Redirect Inc., Alexandria, VA Regional Center for Child Protection,

Scranton, PA Regis Gable Trust Fund, Johnstown, PA Residents for a Safe Georgetown,

Pittsburgh, PA St. Theresa School Development Fund

Association Incorporated, Washington, DC Sunset Christian Academy Inc., Newark,

NJ Support American Troops Fund,

Inc., Rolling Meadows, IL Student Outreach of Richmond Inc.,

Richmond, VA Sube Inc., Washington, DC Sudan Relief and Rehabilitation

DC If an organization listed above submits information that warrants the renewal of its classification as a public charity or as a private operating foundation, the Internal Revenue Service will issue a ruling or determination letter with the revised classification as to foundation status. Grantors and contributors may thereafter rely upon such ruling or determination letter as provided

Washington, DC Results Educational Fund of Maryland

Inc., Baltimore, MD Richardson Dilworth Memorial Fund,

Lancaster, PA

Philadelphia, PA

McHenry, IL Survivors and Victims Empowered,

17 1996–44 I.R.B.

in section 1.509(a)–7 of the Income Tax Regulations. It is not the practice of the Service to announce such revised classification of foundation status in the Internal Revenue Bulletin.

New Form 8837, Notice of Adoption of Revenue Procedure Model Amendments

Announcement 96–113

New Form 8837, Notice of Adoption of Revenue Procedure Model Amend

ments, has been developed for use by sponsors of ‘‘master or prototype’’ plans, regional prototype plans, masssubmitter plans, and volume submitter plans, to transmit documents relating to the adoption of model plan amendments.

The form is now available by modem or on the Internet. The IRS distribution centers will have the form by early November 1996. Plan sponsors may order Form 8837 by telephone or they may use IRS electronic information services to get copies.

Request by— Number or Address

Telephone 800–TAX–FORM (800–829–3676)

Computer and modem

Internet:

World

Wide Web FTP Telnet

703–321–8020 (modem settings are N, 8, 1)

http:// www.irs.ustreas.gov ftp.irs.ustreas.gov iris.irs.ustreas.gov

1996–44 I.R.B. 18