Part IV. Items of General Interest

Notice of Proposed Rulemaking by Cross- Reference to Temporary Regulations

Taxpayer Identification Number Rule Where Taxpayer Claims Treaty Rate and Is Entitled to an Immediate Payment

REG–159079–01

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary regulations.

SUMMARY: This document contains proposed regulations that provide additional guidance needed to comply with the withholding rules under section 1441 and conforming changes to the regulations under section 6109. Specifically, these proposed regulations provide rules that facilitate compliance by withholding agents where foreign individuals who are claiming reduced rates of withholding under an income tax treaty receive an unexpected payment from the withholding agent, yet do not possess the required individual taxpayer identification number. The text of the temporary regulations on this subject (T.D. 8977) in this issue of the Bulletin, also serves as the text of these proposed regulations set forth in this cross-referenced notice of proposed rulemaking.

DATES: Written or electronic comments and requests for a public hearing must be received by April 17, 2002.

ADDRESSES: Send submissions to: CC:ITA:RU (REG–159079–01), room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered between the hours of 8 a.m. and 5 p.m. to: CC:ITA:RU (REG–159079– 01), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC. Alternatively, taxpayers may submit comments electronically via

the Internet by selecting the “Tax Regs” option of the IRS Home Page or by submitting comments directly to the IRS internet site at http://irs.gov/tax_regs/ reglist.html .

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Jonathan A. Sambur at (202) 622– 3840; concerning submissions, Donna Poindexter, (202) 622–7180 (not a tollfree number).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

Temporary regulations in this issue of the Bulletin amend 26 CFR parts 1 and 301. The temporary regulations provide rules that facilitate compliance by withholding agents where foreign individuals who are claiming reduced rates of withholding under an income tax treaty receive an unexpected payment from the withholding agent, yet do not possess the required individual taxpayer identification number. The text of the temporary regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains the temporary regulations and these proposed regulations.

Special Analyses

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. 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. Because these regulations impose no new collection of information on small entities, 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, this notice of proposed rulemaking will be 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 (preferably a signed original and eight (8) copies) or electronically generated comments that are submitted timely to the IRS. The IRS and Treasury Department request comments on the clarity of the proposed rules and how they can be made easier to understand. All comments will be available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Reg- ister .

Drafting Information

The principal author of these regulations is Jonathan A. Sambur, Office of the Associate Chief Counsel (International). However, other personnel from the IRS and Treasury Department participated in their development.

- - - -

Proposed Amendments to the Regulations

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. Section 1.1441–1 is amended as follows:

§ 1.1441–1 Requirement for the deduc- tion and withholding of tax on payments to foreign persons .

[The text of the proposed amendments to this section is the same as the text of § 1.1441–1T published elsewhere in this issue of the Federal Register ].

February 11, 2002 493 2002–6 I.R.B.

Par. 3. Section 1.1441–6 is amended as follows:

§ 1.1441–6 Claim of reduced withholding under an income tax treaty .

[The text of the proposed amendments to this section is the same as the text of § 1.1441–6T published elsewhere in this issue of the Federal Register ].

PART 301—ADMINISTRATIVE PRACTICES AND PROCEDURE, Income Taxes, Reporting and Recordkeeping requirements

Par. 4. The authority citation for part 301 continues to read in part as follows: Authority: 26 U.S.C. 7805 *** Par. 5. Section 301.6109–1 is amended as follows:

§ 301.6109–1 Identifying numbers .

[The text of the proposed amendments to this section is the same as the text of § 301.6109–1T published elsewhere in this issue of the Federal Register ].

Robert E. Wenzel, Deputy Commissioner of

Internal Revenue .

(Filed by the Office of the Federal Register on January 16, 2002, 8:45 a.m., and published in the issue of the Federal Register for January 17, 2002, 67 F.R. 2387)

Extension of Deadline for Comments to Notice 2001–72 and Notice 2001–73

Announcement 2002–8

The purpose of this announcement is to extend the deadline for comments to the proposed administrative rules set forth in Notice 2001–72 (2001–49 I.R.B. 548) and Notice 2001–73 (2001–49 I.R.B. 549) until April 23, 2002.

Background

On November 14, 2001, the Service issued proposed regulations entitled Application of the Federal Insurance Contributions Act, Federal Unemployment Tax Act and Collection of Income Tax at Source to Statutory Stock Options (66 Fed. Reg. 57023). The proposed regu

lations provided rules regarding the application of employment taxes to statutory stock options, i.e. incentive stock options under section 422 of the Internal Revenue Code (Code) and options granted pursuant to an employee stock purchase plan under section 423 of the Code. As provided in the proposed regulations, written comments were required to be received by February 14, 2002. In addition, outlines of topics to be discussed at the public hearing were also required to be received by February 14, 2002, with the hearing to be held March 7, 2002.

The Service has extended the deadline for written comments on the proposed regulations so that comments must be received by April 23, 2002. Outlines of topics to be discussed at the public hearing must also be received by April 23, 2002, with the hearing rescheduled for May 14, 2002.

In conjunction with the issuance of the proposed regulations, the Service issued two Notices. Notice 2001–72 proposed rules regarding an employer’s federal income tax withholding and reporting obligations upon the disposition of stock acquired pursuant to the exercise of a statutory stock option. Notice 2001–73 proposed rules of administrative convenience regarding the application of the Federal Insurance Contributions Act and Federal Unemployment Tax Act upon the exercise of a statutory stock option. Consistent with the proposed regulations, comments to Notice 2001–72 and Notice 2001–73 were due on February 14, 2002.

Extension of Deadline for Comments to Notice 2001–72 and Notice 2001–73

Consistent with the deadline for written comments to the proposed regulations, comments to Notice 2001–72 and Notice 2001–73 must be received by April 23, 2002. All comments will be available for copying and public inspection. Comments should reference Notice 2001–72 and/or Notice 2001–73 and be addressed to:

Associate Chief Counsel (Tax Exempt and Government Enti ties) CC:TEGE ATTN: Employment Taxes and Statu tory Stock Options Room 5214

Internal Revenue Service 1111 Constitution Ave., N.W. Washington, D.C. 20224

Drafting Information

The principal author of this announcement is Stephen Tackney of the Office of Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this announcement, contact Stephen Tackney at (202) 622– 6040 (not a toll-free call).

Application of the Federal Insurance Contributions Act, Federal Unemployment Tax Act, and Collection of Income Tax at Source to Statutory Stock Options; Hearing

Announcement 2002–11

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Change of date of public hearing; extension of time to submit written comments and outlines of oral comments.

SUMMARY: This document changes the date of the public hearing on the proposed regulations (REG–142686–01, 2001–49 I.R.B. 561) that relate to incentive stock options and options granted under employee stock purchase plans and supercedes the notice of public hearing published in the Federal Register on January 28, 2002. It also extends the time to submit written comments and outlines of oral comments for the hearing.

DATES: The public hearing will be held May 14, 2002, beginning at 10 a.m. Written comments and outlines of oral comments must be received by April 23, 2002.

ADDRESSES: The public hearing will be held in the Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC. Send submissions to: CC:ITA:RU (REG–142686–01), Room 5226, Internal Revenue Service POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 5 p.m. to

2002–6 I.R.B. 494 February 11, 2002

CC:ITA:RU (REG–142686–01), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, 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/tax_regs/ regslist.html .

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Stephen Tackney of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities), (202) 622–6040; concerning submissions of comments, the hearing,

and/or to be placed on the building access list to attend the hearing, Treena Garrett of the Regulations Unit, Associate Chief Counsel (Income Tax and Accounting), (202) 622–7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

A notice of proposed rulemaking and notice of public hearing that appeared in the Federal Register on November 14, 2001, (REG–142686–01, 2001–49 I.R.B. 561 [66 FR 57023]), announced that a public hearing on the proposed regulations relating to incentive stock options and options granted under employee

stock purchase plans would be held on March 7, 2002, in the IRS Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC. Subsequently, the date of the public hearing has changed to May 14, 2002, at 10 a.m. in the IRS Auditorium. Written comments and outlines of oral comments must be received by April 23, 2002.

Guy Traynor, Acting Chief, Regulations Unit,

Associate Chief Counsel (Income Tax and Accounting) .

(Filed by the Office of the Federal Register on January 25, 2002, 8:45 a.m., and published in the issue of the Federal Register for January 28, 2002, 67 F.R. 3846)

February 11, 2002 495 2002–6 I.R.B.