Part IV. Applicable — Internal Revenue Bulletin 2003-10

TABLE OF APPLICABLE FEDERAL INTEREST RATES

FOR PURPOSES OF § 807

Year Interest Rate

2002 5.71 2003 5.27

Sources: Rev. Rul. 2001–58, 2001–2 C.B. 570 for the 2002 rate and Rev. Rul. 2002–81, 2002–49 I.R.B. 928 for the 2003 rate.

EFFECT ON OTHER REVENUE RULINGS

Rev. Rul. 92–19 is supplemented by the addition to Part III of that ruling of prevailing state assumed interest rates under § 807 for certain insurance products issued in 2002 and 2003 and is further supplemented by an addition to the table in Part IV of Rev. Rul. 92–19 listing applicable federal interest rates. Parts I and II of Rev. Rul. 92–19 are not affected by this ruling.

DRAFTING INFORMATION

The principal author of this revenue ruling is Ann H. Logan of the Office of Associate Chief Counsel (Financial Institutions and Products). For further information regarding this revenue ruling, contact her at (202) 622–3970 (not a toll-free call).

Section 846.—Discounted Unpaid Losses Defined

The adjusted applicable federal short-term, mid term, and long-term rates are set forth for the month

of March 2003. See Rev. Rul. 2003–26, page 563.

March 10, 2003 560 2003–10 I.R.B.

PART 1—INCOME TAXES

Section 954.—Foreign Base Company Income

26 CFR 1.954–2: Foreign personal holding company income.

T.D. 9039

DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1

Guidance Regarding the Definition of Foreign Personal Holding Company Income

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final regulations that provide that gain or loss arising from certain commodities hedging transactions and currency gain or loss arising from certain interest-bearing liabilities do not constitute (or are not netted against) foreign personal holding company income. This treatment is implemented because the applicable commodities hedging transactions and interest-bearing liabilities typically offset transactions that do not generate foreign personal holding company income.

DATES: Effective Date: These regulations are effective on January 31, 2003.

Applicability Date: For dates of applicability, see §1.954–2(f)(2)(iv)(C), (v)(D), and (g)(2)(ii)(C)( 2 )( iii ).

FOR FURTHER INFORMATION CONTACT: Kenneth Christman or Gregory Spring at (202) 622–3870 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

On May 13, 2002, proposed regulations (REG–154920–01, 2002–22 I.R.B. 1060 [67 FR 31995]) were published in the Federal Register under section 954 governing the definition of foreign base com- pany income and foreign personal holding company income of a controlled foreign cor- poration (a CFC). These regulations ad dressed, among other matters, the circum

stances in which income from transactions in commodities will be treated as foreign personal holding company income.

Following the publication of the proposed regulations, the IRS scheduled a public hearing and requested written comments on the regulations. The public hearing was canceled because no one requested to speak at the hearing. The IRS received one written comment, which recommended the proposed regulations be finalized as written.

Explanation of Revisions

The language of the proposed regulations is unchanged except for nonsubstantive changes to §§1.954–2(g)(2)(ii)(C)( 2 )( i ) and ( ii ) that more explicitly set out the relationship between those paragraphs and §1.954–2(g)(2)(ii)(C)( 1 ).

Special Analyses

It has been determined that this Treasury decision 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, and because these regulations do not impose a collection of information on small entities, 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 authors of these regulations are Kenneth Christman and Ted Setzer of the Office of the Associate Chief Counsel (International). However, other presonnel from the IRS and Treasury Department participated in their development.

* * * * *

Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 1 is amended as follows:

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

Authority: 26 U.S.C. 7805 * * * Par. 2. In §1.954–0, paragraph (b) is amended by:

Removing the entry for §1.954– 2(f)(2)(iii)(E).
Revising the entry for §1.954– 2(f)(2)(iv).
Adding entries for §1.954– 2(f)(2)(iv)(C), and (f)(2)(v) through (f)(2)(vi).
Adding entries for §1.954– 2(g)(2)(ii)(C)( 1 ) through (g)(2)(ii)(C)( 2 )( iii ). The additions and revisions read as follows:

§1.954–0 Introduction.

* * * * * (b) * * *

§1.954–2 Foreign personal holding company income.

* * * * * (f) * * * (2) * * * (iv) Qualified hedging transaction entered into prior to January 31, 2003.

* * * * * (C) Effective date. (v) Qualified hedging transaction entered into on or after January 31, 2003.

(A) In general. (B) Exception. (C) Examples. (D) Effective date. (vi) Financial institutions not a producer, etc.

(g) * * * (2) * * * (ii) * * * (C) Regular dealers. ( 1 ) General rule. ( 2 ) Certain interest-bearing liabilities treated as dealer property.

( i ) In general. ( ii ) Failure to identify certain liabilities.

( iii ) Effective date.

* * * * * Par. 3. Section 1.954–2 is amended by:

Removing paragraph (f)(2)(iii)(E).
Revising the heading of paragraph (f)(2)(iv).

2003–10 I.R.B. 561 March 10, 2003

Adding paragraphs (f)(2)(iv)(C) and (f)(2)(v) through (f)(2)(vi).
Adding paragraphs (g)(2)(ii)(C)( 1 ) through (g)(2)(ii)(C)( 2 )( iii ).
Revising paragraph (g)(2)(iii). The revisions and additions read as follows:

§1.954–2 Foreign personal holding company income.

* * * * * (f) * * * (2) * * * (iv) Qualified hedging transaction en- tered into prior to January 31, 2003.

* * * * * (C) Effective date. This paragraph (f)(2)(iv) applies to gain or loss realized by a controlled foreign corporation with respect to a qualified hedging transaction entered into prior to January 31, 2003.

(v) Qualified hedging transaction en- tered into on or after January 31, 2003 (A) In general. The term qualified hedging transaction means a bona fide hedging transaction, as defined in paragraph (a)(4)(ii) of this section, with respect to one or more commodities transactions reasonably necessary to the conduct of any business by a producer, processor, merchant or handler of commodities in a manner in which such business is customarily and usually conducted by others. For purposes of this paragraph (f)(2)(v), a producer, processor, merchant or handler of commodities includes a controlled foreign corporation that regularly uses commodities in a manufacturing, construction, utilities, or transportation business.

(B) Exception. The term qualified hedg- ing transaction does not include a transaction described in section 988(c)(1) (without regard to section 988(c)(1)(D)(i)).

Example 1. CFC1 is a controlled foreign corporation located in country A. CFC1 manufactures and sells machinery in country B using aluminum and component parts purchased from third parties that contain significant amounts of aluminum. CFC1 conducts its manufacturing business in a manner in which such business is customarily and usually conducted by others. To protect itself against increases in the price of aluminum used in the machinery it manufactures, CFC1 enters into futures purchase contracts for the delivery of aluminum. These futures purchase contracts are bona fide hedging transactions. As CFC1 purchases aluminum and component parts containing significant amounts of aluminum in the spot market

for use in its business, it closes out an equivalent amount of aluminum futures purchase contracts by entering into offsetting aluminum futures sales contracts. The aluminum futures purchase contracts are qualified hedging transactions as defined in paragraph (f)(2)(v)(A) of this section. Accordingly, any gain or loss on such aluminum futures purchase contracts is excluded from the computation of foreign personal holding company income.

Example 2. CFC2 is a controlled foreign corporation located in country B. CFC2 operates an airline business within country B in a manner in which such business is customarily and usually conducted by others. To protect itself against increases in the price of aviation fuel, CFC2 enters into forward contracts for the purchase of aviation fuel. These forward purchase contracts are bona fide hedging transactions. As CFC2 purchases aviation fuel in the spot market for use in its business, it closes out an equivalent amount of its forward purchase contracts for cash pursuant to a contractual provision that permits CFC2 to terminate the contract and make or receive a one-time payment representing the contract’s fair market value. The aviation fuel forward purchase contracts are qualified hedging transactions as defined in paragraph (f)(2)(v)(A) of this section. Accordingly, any gain or loss on such aviation fuel forward purchase contracts is excluded from the computation of foreign personal holding company income.

(D) Effective date. This paragraph (f)(2)(v) applies to gain or loss realized by a controlled foreign corporation with respect to a qualified hedging transaction entered into on or after January 31, 2003.

(vi) Financial institutions not a pro- ducer, etc. For purposes of this paragraph (f), a corporation is not a producer, processor, merchant, or handler of commodities if its business is primarily financial. For example, the business of a controlled foreign corporation is primarily financial if its principal business is making a market in notional principal contracts based on a commodities index.

* * * * * (g) * * * (2) * * * (ii) * * * (C) Regular dealers —(1) General rule. Transactions in dealer property (as defined in paragraph (a)(4)(v) of this section) described in section 988(c)(1)(B) or (C) that are entered into by a controlled foreign corporation that is a regular dealer (as defined in paragraph (a)(4)(iv) of this section) in such property in its capacity as a dealer will be treated as directly related to the business needs of the controlled foreign corporation under paragraph (g)(2)(ii)(A) of this section.

( 2 ) Certain interest-bearing liabilities treated as dealer property —( i ) In gen- eral. For purposes of this paragraph

(g)(2)(ii)(C), an interest-bearing liability incurred by a controlled foreign corporation that is denominated in (or determined by reference to) a non-functional currency shall be treated as dealer property of the type described in paragraph (g)(2)(ii)(C)( 1 ) of this section if the liability, by being denominated in such currency, reduces the controlled foreign corporation’s currency risk with respect to dealer property, and the liability is identified on the controlled foreign corporation’s records as a liability treated as dealer property before the close of the day on which the liability is incurred.

( ii ) Failure to identify certain liabili- ties. If a controlled foreign corporation identifies certain interest-bearing liabilities as liabilities treated as dealer property under paragraph (g)(2)(ii)(C)( 2 )( i ) of this section but fails to so identify other interestbearing liabilities that manage its currency risk with respect to assets held that constitute dealer property, the Commissioner may treat such other liabilities as properly identified as dealer property under paragraph (g)(2)(ii)(C)( 2 )( i ) of this section if the Commissioner determines that the failure to identify such other liabilities had as one of its principal purposes the avoidance of federal income tax.

( iii ) Effective date. This paragraph (g)(2)(ii)(C)( 2 ) applies only to gain or loss from an interest-bearing liability entered into by a controlled foreign corporation on or after January 31, 2003.

* * * * * (iii) Special rule for foreign currency gain or loss from an interest-bearing li- ability. Except as provided in paragraph (g)(2)(ii)(C)( 2 ) or (g)(5)(iv) of this section, foreign currency gain or loss arising from an interest-bearing liability is characterized as subpart F income and nonsubpart F income in the same manner that interest expense associated with the liability would be allocated and apportioned between subpart F income and non-subpart F income under §§1.861–9T and 1.861–12T.

* * * * *

David A. Mader, Assistant Deputy Commissioner

of Internal Revenue.

Approved January 17, 2003.

March 10, 2003 562 2003–10 I.R.B.

Pamela F. Olson, Assistant Secretary of the Treasury.

(Filed by the Office of the Federal Register January 30, 2003, 8:45 a.m., and published in the issue of the Federal Register for January 31, 2003, 68 F.R. 4916)

Section 1274.—Determina- tion of Issue Price in the Case of Certain Debt Instruments Issued for Property

(Also Sections 42, 280G, 382, 412, 467, 468, 482, 483, 642, 807, 846, 1288, 7520, 7872.)

Federal rates; adjusted federal rates; adjusted federal long-term rate and the

long-term exempt rate. For purposes of sections 382, 1274, 1288, and other sections of the Code, tables set forth the rates for March 2003.

Rev. Rul. 2003–26

This revenue ruling provides various prescribed rates for federal income tax purposes for March 2003 (the current month). Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the shortterm, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term taxexempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in section 42(b)(2) for buildings placed in service during the current month. Finally, Table 5 contains the federal rate for determining the present value of annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520.

Applicable Federal Rates (AFR) for March 2003

Period for Compounding

Annual Semiannual Quarterly Monthly Short-Term

AFR 1.58% 1.57% 1.57% 1.56% 110% AFR 1.74% 1.73% 1.73% 1.72% 120% AFR 1.89% 1.88% 1.88% 1.87% 130% AFR 2.05% 2.04% 2.03% 2.03%

Mid-Term

AFR 3.24% 3.21% 3.20% 3.19% 110% AFR 3.56% 3.53% 3.51% 3.50% 120% AFR 3.89% 3.85% 3.83% 3.82% 130% AFR 4.21% 4.17% 4.15% 4.13% 150% AFR 4.88% 4.82% 4.79% 4.77% 175% AFR 5.70% 5.62% 5.58% 5.56%

Long-Term

AFR 4.80% 4.74% 4.71% 4.69% 110% AFR 5.28% 5.21% 5.18% 5.15% 120% AFR 5.77% 5.69% 5.65% 5.62% 130% AFR 6.25% 6.16% 6.11% 6.08%

REV. RUL. 2003–26 TABLE 2

Adjusted AFR for March 2003

Period for Compounding

Annual Semiannual Quarterly Monthly Short-term adjusted AFR 1.34% 1.34% 1.34% 1.34%

Mid-term adjusted AFR 2.76% 2.74% 2.73% 2.72%

Long-term adjusted AFR 4.58% 4.53% 4.50% 4.49%

2003–10 I.R.B. 563 March 10, 2003

REV. RUL. 2003–26 TABLE 3

Rates Under Section 382 for March 2003

Adjusted federal long-term rate for the current month 4.58%

Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal long-term rates for the current month and the prior two months.) 4.61%

REV. RUL. 2003–26 TABLE 4

Appropriate Percentages Under Section 42(b)(2) for March 2003

Appropriate percentage for the 70% present value low-income housing credit 7.93%

Appropriate percentage for the 30% present value low-income housing credit 3.40%

REV. RUL. 2003–26 TABLE 5

Rate Under Section 7520 for March 2003

Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a remainder or reversionary interest 3.8%

Section 1288.—Treatment of Original Issue Discounts on Tax-Exempt Obligations

The adjusted applicable federal short-term, mid term, and long-term rates are set forth for the month

of March 2003. See Rev. Rul. 2003–26, page 563.

Section 5891.—Structured Settlement Factoring Transactions

26 CFR 157.5891–1T: Imposition of excise tax on structured settlement factoring transactions.

T.D. 9042

DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 157 and 602

Excise Tax Relating to Structured Settlement Factoring Transactions

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary regulations.

SUMMARY: This document contains temporary regulations relating to the manner and method of reporting and paying the nondeductible 40-percent excise tax imposed on any person who acquires structured settlement payment rights in a structured settlement factoring transaction. The Victims of Terrorism Tax Relief Act of 2001 added this excise tax to the Internal Revenue Code of 1986. The text of the temporary regulations also serves as the text of the proposed regulations set forth in the notice of proposed rulemaking (REG– 139768–02) on this subject in this issue of the Bulletin.

DATES: Effective Date: These regulations are effective on February 19, 2003.

Applicability Date: For dates of applicability, see §157.5891–1T(e).

FOR FURTHER INFORMATION CONTACT: Shareen S. Pflanz at 202–622–8488 (not a toll-free call).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

These regulations are being issued without prior notice and public procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). For this reason, the collection of information contained in these regulations has been reviewed and, pending receipt and evaluation of public comments, approved by the Office of Management and Budget under control number 1545–1824. Responses to this collection of information are mandatory.

March 10, 2003 564 2003–10 I.R.B.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget.

For further information concerning this collection of information, and where to submit comments on the collection of information and the accuracy of the estimated burden, and suggestions for reducing this burden, please refer to the preamble to the cross-referencing notice of proposed rulemaking (REG–139768–02) on page 583 of this Bulletin.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

Background

This document adds a new part 157, Excise Tax on Structured Settlement Factoring Transactions, to title 26 of the Code of Federal Regulations. The temporary regulations under part 157 provide guidance on the proper manner and method of reporting and paying the 40-percent excise tax imposed on any person who acquires, directly or indirectly, structured settlement payment rights in a structured settlement factoring transaction. The temporary regulations reflect the addition to the Internal Revenue Code (Code) of chapter 55 and section 5891 by section 115 of the Victims of Terrorism Tax Relief Act of 2001, Public Law 107–134 (115 Stat. 2427, 2436–2439).

Explanation of Provisions

Section 5891of the Internal Revenue Code imposes an excise tax on any person who acquires, directly or indirectly, structured settlement payment rights in a structured settlement factoring transaction. The tax is equal to 40 percent of the factoring discount with respect to the factoring transaction.

The temporary regulations set forth the manner and method of paying the excise tax imposed under section 5891 of the Code. Generally, the term structured settlement factoring transaction is defined as a transfer of structured settlement payment rights made for consideration by means of sale, assignment, pledge, or other form of en

cumbrance or alienation for consideration. If a taxpayer is liable for the tax imposed by section 5891, the excise tax must be reported on Form 8876, Excise Tax on Struc- tured Settlement Factoring Transactions. Generally, the temporary regulations require that the excise tax return be filed and the tax paid on or before the later of the ninetieth day following the day the taxpayer receives any structured settlement payment rights (including portions of structured settlement payments) or May 20, 2003. The temporary regulations provide rules relating to the Service’s authority to extend the time for payment of any amount shown or required to be shown on the return.

The temporary regulations do not address the method of determining the proper amount of the excise tax imposed by section 5891 of the Code. Issues related to the determination of the amount of the excise tax may be addressed by future regulations.

The temporary regulations will be effective generally for structured settlement factoring transactions entered into on or after February 22, 2002.

Special Analyses

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a 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. For the applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), refer to the Special Analyses section of the preamble to the cross-reference notice of proposed rulemaking (REG–139768–02) on page 583 of this issue of the Bulletin. Pursuant to section 7805(f) of the Internal Revenue Code, these temporary regulations will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact.

Drafting Information

The principal author of these regulations is Shareen Soltanzadeh Pflanz, Attorney, Office of Associate Chief Counsel (Income Tax and Accounting). However, other personnel from the IRS and Treasury Department participated in their development.

* * * * *

Amendments to the Regulations

Accordingly, title 26 of the Code of Federal Regulations is amended as follows:

SUBCHAPTER D - MISCELLANEOUS EXCISE TAXES

Paragraph 1. Part 157 is added to read as follows:

PART 157 - EXCISE TAX ON STRUCTURED SETTLEMENT FACTORING TRANSACTIONS

Subpart A — Tax on Structured Settlement Factoring Transactions

Sec. 157.5891–1T Imposition of excise tax on structured settlement factoring transactions.

Subpart B — Procedure and Administration

Sec. 157.6001–1T Records, statements, and special returns.

157.6011–1T General requirement of return, statement, or list.

157.6061–1T Signing of returns and other documents.

157.6065–1T Verification of returns. 157.6071–1T Time for filing returns. 157.6081–1T Extension of time for filing the return.

157.6091–1T Place for filing returns. 157.6151–1T Time and place for paying of tax shown on returns.

157.6161–1T Extension of time for paying tax.

157.6165–1T Bonds where time to pay tax has been extended.

Authority: 26 U.S.C. 7805 Section 157.6001–1T also issued under 26 U.S.C. 6001.

Section 157.6011–1T also issued under 26 U.S.C. 6011.

Section 157.6061–1T also issued under 26 U.S.C. 6061

Section 157.6091–1T also issued under 26 U.S.C. 6091.

Section 157.6161–1T also issued under 26 U.S.C. 6161.

Subpart A — Tax on Structured Settlement Factoring Transactions

2003–10 I.R.B. 565 March 10, 2003

pository institution in the absence of any action to redirect the structured settlement payments to such institution (or agent or successor thereof) or otherwise to enforce such blanket security interest as against the structured settlement payment rights; or

(ii) A subsequent transfer of structured settlement payment rights acquired in a structured settlement factoring transaction.

(9) Structured settlement payment rights means rights to receive payments under a structured settlement.

(d) Coordination with other provisions of the Internal Revenue Code —(1) In gen- eral. If the applicable requirements of sections 72, 104(a)(1), 104(a)(2), 130, and 461(h) were satisfied at the time the structured settlement involving structured settlement payment rights was entered into, the subsequent occurrence of a structured settlement factoring transaction shall not affect the application of the provisions of such sections to the parties to the structured settlement (including an assignee under a qualified assignment under section 130) in any taxable year.

(2) No withholding of tax. The provisions of section 3405 regarding withholding of tax shall not apply to the person making the payments in the event of a structured settlement factoring transaction.

(e) Effective dates - (1) In general. Section 5891 applies to structured settlement factoring transactions entered into on or after February 22, 2002. Section 5891(d) also applies to structured settlement factoring transactions entered into before February 22, 2002. (2) Transition rule. In the case of a structured settlement factoring transaction entered into during the period beginning on February 22, 2002, and ending on July 1, 2002, no tax shall be imposed under section 5891(a) if (i) The structured settlement payee is domiciled in a state (or possession of the United States) that has not enacted an applicable state statute (as defined in section 5891(b)(3)); and

(ii) The person acquiring the structured settlement payment rights discloses to the structured settlement payee in advance of the structured settlement factoring transaction

§157.5891–1T Imposition of excise tax on structured settlement factoring transactions.

(a) In general. Section 5891 imposes on any person who acquires, directly or indirectly, structured settlement payment rights in a structured settlement factoring transaction a tax equal to 40 percent of the factoring discount with respect to such factoring transactions.

(b) Exceptions for certain approved transactions - (1) In general. The excise tax shall not apply to a structured settlement factoring transaction if the transfer of structured settlement payment rights is approved in advance in a qualified order.

(2) Qualified order dispositive. A qualified order shall be treated as dispositive for purposes of this exception.

(c) Definitions - (1) Applicable state statute means (i) A statute that is enacted by the state in which the payee of the structured settlement is domiciled and that provides for the entry of an order, judgment, or decree described in paragraph (c)(4)(i) of this section; or

(ii) If there is no such statute, a statute that is enacted by the state in which either the party to the structured settlement (including an assignee under a qualified assignment under section 130) or the person issuing the funding asset for the structured settlement is domiciled or has its principal place of business and that provides for the entry of such an order, judgment, or decree.

(2) Applicable state court means, with respect to any applicable state statute, a court of the state that enacted such statute. If the payee of the structured settlement is not domiciled in the state that enacted the statute, the term also includes a court of the state in which the payee is domiciled.

(3) Factoring discount means an amount equal to the excess of (i) The aggregate undiscounted amount of structured settlement payments being acquired in the structured settlement factoring transaction; over

(ii) The total amount actually paid by the acquirer to the person from whom such structured settlement payments are acquired.

(4) Qualified order means a final order, judgment, or decree that

(i) Finds that the transfer of structured settlement payment rights does not contravene any federal or state statute, or the order of any court or responsible administrative authority, and is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents; and

(ii) Is issued under the authority of an applicable state statute by an applicable state court, or is issued by the responsible administrative authority (if any) which has exclusive jurisdiction over the underlying action or proceeding which was resolved by means of the structured settlement.

(5) Responsible administrative author- ity means the administrative authority that had jurisdiction over the underlying action or proceeding that was resolved by means of the structured settlement.

(6) State includes the Commonwealth of Puerto Rico and any possession of the United States.

(7) Structured settlement means an arrangement (i) That is established by (A) Suit or agreement for the periodic payment of damages excludable from the gross income of the recipient under section 104(a)(2); or

(B) Agreement for the periodic payment of compensation under any workers’ compensation law excludable from the gross income of the recipient under section 104(a)(1); and

(ii) Under which the periodic payments are (A) Of the character described in section 130(c)(2)(A) and (B); and

(B) Payable by a person who is a party to the suit or agreement or to the workers’ compensation claim or by a person who has assumed the liability for such periodic payments under a qualified assignment in accordance with section 130.

(8) Structured settlement factoring trans- action means a transfer of structured settlement payment rights (including portions of structured settlement payments) made for consideration by means of sale, assignment, pledge, or other form of encumbrance or alienation for consideration other than (i) The creation or perfection of a security interest in structured settlement payment rights under a blanket security agreement entered into with an insured de

March 10, 2003 566 2003–10 I.R.B.

return required by §157.6011–1T (relating to returns of tax with respect to structured settlement factoring transactions) must be completed in accordance with the forms and instructions provided by the Internal Revenue Service. It should be made before the expiration of the time within which the return otherwise must be filed, and failure to do so may indicate negligence and constitute sufficient cause for denial. It should, where possible, be made sufficiently early to permit consideration of the matter and reply before what otherwise would be the due date of the return. An extension of time for filing a return shall not extend the time for the payment of the tax or any part thereof unless specified to the contrary in the grant of the extension.

(b) Filing of return. If an extension of time for filing the return is granted, a return must be filed before the period of extension expires.

§157.6091–1T Place for filing returns.

The return required by §157.6011–1T (relating to returns of tax with respect to structured settlement factoring transactions) must be filed at the place specified in the forms and instructions provided by the Internal Revenue Service.

§157.6151–1T Time and place for paying of tax shown on returns.

The tax under chapter 55 (Structured Settlement Factoring Transactions) of the Internal Revenue Code shown on any return must, without assessment or notice and demand, be paid at the time and place specified in the forms and instructions provided by the IRS. For provisions relating to the time and place for filing such return, see §157.6071–1T and §157.6091– 1T. For provisions relating to the extension of time for paying the tax, see §157.6161– 1T.

§157.6161–1T Extension of time for paying tax.

(a) In general - (1) Tax shown or re- quired to be shown on return. The Internal Revenue Service may, at the request of the taxpayer, grant a reasonable extension of time for payment of the amount of any tax imposed by chapter 55 (Structured Settlement Factoring Transactions) of the Internal Revenue Code (chapter 55) and shown or required to be shown on any return. The period of such extension shall not

(A) The amounts and due dates of the payments to be transferred;

(B) The aggregate amount to be transferred;

(D) The discounted present value of the transferred payments (including the present value as determined in the manner described in section 7520); and

(E) The expenses required under the terms of the structured settlement factoring transaction to be paid by the structured settlement payee or deducted from the proceeds of such transaction.

Subpart B — Procedure and Administration

§157.6001–1T Records, statements, and special returns.

(a) In general. Any person subject to tax under chapter 55 (Structured Settlement Factoring Transactions) of the Internal Revenue Code (chapter 55) must keep such complete and detailed records as are sufficient to enable the Internal Revenue Service (IRS) to determine accurately the amount of liability under chapter 55.

(b) Notice by the IRS requiring returns, statements, or the keeping of records. The IRS may require any person, by notice served upon him, to make such returns, render such statements, or keep such specific records as will enable the IRS to determine whether or not the person is liable for tax under chapter 55.

(c) Retention of records. The records required by this section must be kept at all times available for inspection by the IRS, and shall be retained so long as the contents thereof may become material in the administration of any internal revenue law.

§157.6011–1T General requirement of return, statement, or list.

Every person liable for tax under section 5891 must file a return with respect to the tax in accordance with the forms and instructions provided by the Internal Revenue Service.

§157.6061–1T Signing of returns and other documents.

Any return, statement, or other document required to be made with respect to a tax imposed by chapter 55 (Structured

Settlement Factoring Transactions) of the Internal Revenue Code or the regulations thereunder must be signed by the person required to file the return, statement, or other document, or by the persons required or duly authorized to sign in accordance with the regulations, forms, or instructions prescribed with respect to such return, statement, or document. An individual’s signature on such return, statement, or other document shall be prima facie evidence that the individual is authorized to sign the return, statement, or other document.

§157.6065–1T Verification of returns.

If a return, statement, or other document made under the provisions of chapter 55 of the Internal Revenue Code (chapter 55) or of subtitle F of the Code (subtitle F), or the regulations thereunder with respect to any tax imposed by chapter 55, or the form and instructions issued with respect to such return, statement, or other document, requires that it shall contain or be verified by a written declaration that it is made under the penalties of perjury, it must be so verified by the person or persons required to sign such return, statement, or other document. In addition, any other statement or document submitted under any provision of chapter 55 or subtitle F, or the regulations thereunder, with respect to any tax imposed by chapter 55 may be required to contain or be verified by written declaration that is made under the penalties of perjury.

§157.6071–1T Time for filing returns.

(a) In general. Except as provided in paragraph (b) of this section, returns required by §157.6011–1T (relating to returns of tax with respect to structured settlement factoring transactions) must be filed on or before the ninetieth day following the receipt of structured settlement payment rights in a structured settlement factoring transaction.

(b) Returns relating to structured settle- ment payment rights received before Feb- ruary 19, 2003. Returns required by §157.6011–1T that relate to structured settlement payment rights received on or before February 19, 2003, must be filed on or before May 20, 2003.

§157.6081–1T Extension of time for filing the return.

(a) Application for extension. An application for an extension of time for filing the

2003–10 I.R.B. 567 March 10, 2003

tained in part 301 (Regulations on Procedure and Administration) of this chapter.

PART 602—OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

Par. 2. The authority citation for part 602 continues to read as follows:

Authority: 26 U.S.C. 7805. Par. 3. In §602.101, paragraph (b) is amended by adding entries in numerical order to the table as follows:

§602.101 OMB control numbers.

* * * * * (b) * * *

Current OMB control No.

exceed 6 months from the date fixed for payment of such tax, except that in the case of a taxpayer that is abroad, such extension may exceed 6 months.

(2) Extension of time for filing distin- guished. The granting of an extension of time for filing a return does not extend the time for the payment of the tax or any part thereof unless so specified in the extension.

(b) Certain rules relating to extension of time for paying income tax to apply. The provisions of §1.6161–1(b), (c), and (d) of this chapter (relating to a requirement for undue hardship, to the application for extension, and to payment pursuant to an extension) shall apply to extensions of time

CFR part or section where identified and described

for payment of the tax imposed by chapter 55 of the Internal Revenue Code.

§157.6165–1T Bonds where time to pay tax has been extended.

If an extension of time for payment is granted under section 6161, the Internal Revenue Service may, if it deems necessary, require a bond for the payment, in accordance with the terms of the extension, of the amount with respect to which the extension is granted. However, the bond shall not exceed double the amount with respect to which the extension is granted. For provisions relating to the form of bonds, see the regulations under section 7101 con

* * * * * 157.6001–1T ............................................................................................................................................................... 1545–1824 157.6011–1T ............................................................................................................................................................... 1545–1824 157.6081–1T ............................................................................................................................................................... 1545–1824 157.6161–1T ............................................................................................................................................................... 1545–1824

* * * * *

David A. Mader, Assistant Deputy Commissioner

of Internal Revenue.

Approved December 17, 2002.

Pamela F. Olson, Assistant Secretary of the Treasury.

(Filed by the Office of the Federal Register on February 18, 2003, 8:45 a.m., and published in the issue of the Federal Register for February 19, 2003, 68 F.R. 7922)

Section 6001.—Notice or Regulations Requiring Records, Statements, and Special Returns

26 CFR 157.6001–1T: Records, statements, and special returns.

Rules are provided regarding the recordkeeping requirements imposed on any person subject to tax under chapter 55 (regarding structured settlement

factoring transactions) of the Code. See T.D. 9042,

page 564.

26 CFR 1.6001: Records.

Family day care providers may use optional stan dard meal and snack rates to compute the deduct ible cost of food provided to eligible children in the

day care in lieu of maintaining records to substanti ate actual cost. Family day care providers who use the

standard meal and snack rates should maintain records

that include the name of each eligible child, dates and

hours of attendance in the family day care, and the

type and quantity of meals and snacks served, and may

use the meal and snack log provided. See Rev. Proc.

2003–22, page 577.

Section 6011.—General Re- quirement of Return, State- ment, or List

26 CFR 157.6011–1T: General requirement of re- turn, statement, or list.

Rules are provided under which every person li able for the 40-percent excise tax under section 5891

of the Code (regarding structured settlement factor ing transactions) must file a return with respect to such

tax. See T.D. 9042, page 564.

26 CFR 301.6011–1: General requirement of re- turn, statement or list.

T.D. 9040

DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1, 301 and 602

Guidance Necessary to Facilitate Electronic Tax Administration

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and removal of temporary regulations.

SUMMARY: This document contains final regulations that eliminate regulatory impediments to the electronic filing of Form 1040, U.S. Individual Income Tax Return. These regulations affect taxpayers who file Form 1040 and who are required to file any of the following forms: Form 56, Notice Concerning Fiduciary Relationship ; Form

March 10, 2003 568 2003–10 I.R.B.

a return, statement, or other document required to be made under any provision of the internal revenue laws or regulations. The regulations give the IRS maximum flexibility in prescribing (1) what needs to be filed in support of a return or claim, and (2) the form of the filing, e.g., electronic versus paper. The regulations permit the IRS to prescribe required return information in forms, instructions, or other appropriate guidance.

In addition, the IRS identified five regulatory provisions that impede electronic filing by requiring the taxpayer to either include a third-party signature, or attach a document generated by a third party. The temporary regulations amended those provisions to eliminate the impediments.

No written comments were received in response to the cross-reference notice of proposed rulemaking and no public hearing was requested or held.

Explanation of Provisions

This Treasury decision removes the temporary regulations and adopts the proposed regulations with minor clarifications explained below.

These final regulations clarify how to “file” a written declaration waiving the dependency deduction under section 152(c)(4). Section 1.152–3(a)(4) of the existing regulations provides that each person waiving the deduction should “file” a written declaration stating that the person waiving the deduction will not claim the individual as a dependent. However, the term “file” is confusing because it usually refers to a submission to the IRS. These final regulations amend section 1.152–3(a)(4) to provide that each person waiving the deduction should “furnish” a written waiver declaration to the taxpayer claiming the deduction.

Section 1.152–3(b) of the existing regulations provides two examples explaining the requirements in section 1.152–3(a). The examples require that the written declarations furnished by each person waiving the deduction be attached to the income tax return of the taxpayer. These final regulations update the examples by removing the requirement that the waivers be attached to the taxpayer’s return. The amended regulations require the taxpayer to retain the waivers consistent with section 1.152– 3(c).

2120, Multiple Support Declaration ; Form 2439, Notice to Shareholder of Undistrib- uted Long-Term Capital Gains ; Form 3468, Investment Credit ; and Form T (Timber), Forest Activities Schedules.

DATES: EFFECTIVE DATE: These regulations are effective January 31, 2003.

FOR FURTHER INFORMATION CONTACT: Joseph P. Dewald, (202) 622–4910 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information contained in these final regulations has been reviewed and approved by the Office of Manage- ment and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1545–1783. The collection of information in these final regulations is in §§1.48– 12(d)(7)(iv), 1.152–3(c), 1.611–3(h), 1.852– 9(c)(1), and 301.6903–1(b). Responses to this collection of information are mandatory.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number assigned by the Office of Management and Budget .

The estimated additional burden in final regulations §§1.611–3(h), 1.852–9(c)(1), and 301.6903–1(b) is 0 hours because the records that are required to be maintained were previously required to be maintained to document the reporting requirements. This reporting burden will be reflected in the burden estimate for Form T (Timber), Form 2439, and Form 56, respectively.

Estimated additional total annual reporting burden for 2002 for Form 3468: 376 hours.

Estimated number of responses for 2002 for Form 3468: 22,575.

Estimated additional average annual burden hours per response for 2002 for Form 3468: 1 minute. Estimated additional total annual reporting burden for 2002 for Form 2120: 550 hours.

Estimated number of responses for 2002 for Form 2120: 11,000.

Estimated additional average annual burden hours per response for 2002 for Form 2120: 3 minutes.

The estimated additional reporting burden for the reporting in final regulations §§1.48–12(d)(7)(iv) and 1.152–3(c) will be reflected in the burden estimate for Form 3468 and Form 2120, respectively. Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be sent to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, W:CAR:MP:FP:S, Washington, DC 20224, and to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503.

Background

This document contains amendments to the Income Tax Regulations (26 CFR part

and the Procedure and Administration Regulations (26 CFR part 301) designed to eliminate regulatory impediments to the electronic filing of Form 1040.

In 1998, Congress enacted the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 1998), Public Law 105–206 (112 Stat. 685) (1998). Section 2001(a) of RRA 1998 states that the policy of Congress is that paperless filing should be the preferred and most convenient means of filing Federal tax returns. Section 2001(a) of RRA 1998 also sets a long-range goal for the IRS to have at least 80 percent of all federal tax returns filed electronically by 2007. Section 2001(b) of RRA 1998 requires the IRS to establish a 10-year strategic plan to eliminate barriers to electronic filing. On April 24, 2002, the IRS published temporary regulations (T.D. 8989, 2002–20 I.R.B. 920 [67 FR 20028]) and a cross-reference notice of proposed rulemaking (REG–107184–00, 2002–20 I.R.B. 967 [67 FR 20072]) to facilitate the implementation of this plan by eliminating regulatory impediments to the electronic filing of Form 1040.

The temporary regulations amended the Procedure and Administration Regulations to provide a regulatory statement of IRS authority to prescribe what return information or documentation must be filed with

2003–10 I.R.B. 569 March 10, 2003

Under section 1.152–3(c)(3) of the proposed regulations, the taxpayer claiming the individual as a dependent must retain the declarations furnished by the persons waiving the deduction. Section 1.152–3(c)(3) of the proposed regulations also provides that the IRS may request other information from the taxpayer to substantiate the dependency claim. The proposed regulation then states that the other information that will substantiate the claim may include a statement showing the names of all contributors and the amount contributed by each. These final regulations clarify that the statement is just one of many pieces of information that the IRS may request to substantiate the dependency claim. No one statement or piece of information is necessarily determinative.

Special Analyses

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a 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. It is hereby certified that the collection of information in these regulations will not have a significant economic impact on a substantial number of small entities. This certification is based upon the fact that the persons responsible for recordkeeping are principally individuals, and the burden is not significant as described earlier in the preamble. Therefore, 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, the notice of proposed rulemaking preceding these regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.

Drafting Information

The principal author of these regulations is Joseph P. Dewald, Office of Associate Chief Counsel (Procedure and Administration), Administrative Provisions and Judicial Practice Division. However, other personnel from the IRS and the Treasury Department participated in the development of the regulations.

* * * * *

Adoption of Amendments to the Regulations

Accordingly, 26 CFR parts 1, 301, and 602 are amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 is amended as follows:

Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.48–12 is amended as follows:

Revising paragraph (d)(7)(iii).
Adding a new paragraph (d)(7)(iv).

§1.48–12 Qualified rehabilitated building; expenditures incurred after December 31, 1981.

* * * * * (d) * * * (7) * * * (iii) Effective dates. Paragraph (d)(7)(i) of this section applies to returns for taxable years beginning before January 1, 2002. The requirement in the fourth sentence of paragraph (d)(7)(ii) of this section applies only if the first income tax return filed after receipt by the taxpayer of the certification is for a taxable year beginning before January 1, 2002. For rules applicable to returns for taxable years beginning after December 31, 2001, see paragraph (d)(7)(iv) of this section.

(iv) Returns for taxable years begin- ning after December 31, 2001 —(A) In gen- eral. Except as otherwise provided in paragraph (d)(7)(ii) of this section and this paragraph (d)(7)(iv), a taxpayer claiming the credit for rehabilitation of a certified historic structure (within the meaning of section 47(c)(3) and paragraph (d)(1) of this section) for a taxable year beginning after December 31, 2001, must provide with the return for the taxable year in which the credit is claimed, the NPS project num

ber assigned by, and the date of the final certification of completed work received from, the Secretary of the Interior. If a credit (including a credit for a taxable year beginning before January 1, 2002) is claimed under the late certification procedures of paragraph (d)(7)(ii) of this section and the first income tax return filed by the taxpayer after receipt of the certification is for a taxable year beginning after December 31, 2001, the taxpayer must provide the NPS project number assigned by, and the date of the final certification of completed work received from, the Secretary of the Interior with that return.

(B) Reporting and recordkeeping re- quirements. The information required under paragraph (d)(7)(iv)(A) of this section must be provided on Form 3468 (or its successor) filed with the taxpayer’s return. In addition, the taxpayer must retain a copy of the final certification of completed work for as long as its contents may become material in the administration of any internal revenue law.

(C) Passthrough entities. In the case of a credit for qualified rehabilitation expenditures of a partnership, S corporation, estate, or trust, the requirements of this paragraph (d)(7)(iv) apply only to the entity. Each partner, shareholder or beneficiary claiming a credit for such qualified rehabilitation expenditures from a passthrough entity must, however, provide the employer identification number of the entity on Form 3468 (or its successor).

§1.48–12T [Removed]

Par. 3. Section 1.48–12T is removed. Par. 4. In §1.152–3, paragraphs (a)(4) and (b) are revised and paragraph (c) is added to read as follows:

§1.152–3 Multiple support agreements.

(a) * * * (4) Each other person in the group who contributed more than 10 percent of such support furnishes to the taxpayer claiming the dependent a written declaration that such other person will not claim the individual as a dependent for any taxable year beginning in such calendar year.

(b) Examples. Application of the rule contained in paragraph (a) of this section may be illustrated by the following examples:

March 10, 2003 570 2003–10 I.R.B.

Example (1). During the taxable year, brothers A, B, C, and D contributed the entire support of their mother in the following percentages: A, 30 percent; B, 20 percent; C, 29 percent; and D, 21 percent. Any one of the brothers, except for the fact that he did not contribute more than half of her support, would have been entitled to claim his mother as a dependent. Consequently, any one of the brothers could claim a de

duction for the exemption of the mother if he obtained a written declaration (as provided in paragraph (a)(4) of this section) from each of the other brothers. Even though A and D together contributed more than onehalf the support of the mother, A, if he wished to claim his mother as a dependent, would be required to obtain written declarations from B, C, and D, since each of those three contributed more than 10 percent of the

support and, but for the failure to contribute more than half of the mother’s support, would have been entitled to claim his mother as a dependent.

Example (2). During the taxable year, E, an individual who resides with his son, S, received his entire support for that year as follows:

Source Percentage of

Total Social Security...................................................................................................................................................... 25 N, an unrelated neighbor...................................................................................................................................... 11 B, a brother........................................................................................................................................................... 14 D, a daughter ........................................................................................................................................................ 10 S, a son ................................................................................................................................................................. 40

Total received by E .......................................................................................................................... 100

out Form T (Timber) for the taxable year covered by the income tax return, including the following information—

(i) A map where necessary to show clearly timber and land acquired, timber cut, and timber and land sold;

(ii) Description of, cost of, and terms of purchase of timberland or timber, or cutting rights, including timber or timber rights acquired under any type of contract;

(iii) Profit or loss from sale of land, or timber, or both;

(iv) Description of timber with respect to which claim for loss, if any, is made;

(v) Record of timber cut; (vi) Changes in each timber account as a result of purchase, sale, cutting, reestimate, or loss;

(vii) Changes in improvements accounts as the result of additions to or deductions from capital and depreciation, and computation of profit or loss on sale or other disposition of such improvements;

(viii) Operation data with respect to raw and finished material handled and inventoried;

(ix) Statement as to application of the election under section 631(a) and pertinent information in support of the fair market value claimed thereunder;

(x) Information with respect to land ownership and capital investment in timberland; and

(xi) Any other data which will be helpful in determining the reasonableness of the depletion or depreciation deductions claimed in the return.

(2) Taxable years beginning after De- cember 31, 2001. A taxpayer claiming a de

B, D, and S are persons each of whom, but for the fact that none contributed more than half of E’s support, could claim E as a dependent for the taxable year. The three together contributed 64 percent of E’s support, and, thus, each is a member of the group to be considered for the purpose of section 152(c). B and S are the only members of such group who can meet all the requirements of section 152(c), and either one could claim E as a dependent for his taxable year if he obtained a written declaration (as provided in paragraph (a)(4) of this section) signed by the other, and furnished the other information required by the return with respect to all the contributions to E. Inasmuch as D did not contribute more than 10 percent of E’s support, she is not entitled to claim E as a dependent for the taxable year nor is she required to furnish a written declaration with respect to her contributions to E. N contributed over 10 percent of the support of E, but, since he is an unrelated neighbor, he does not qualify as a member of the group for the purpose of the multiple support agreement under section 152(c).

(c)(1) The member of a group of contributors who claims an individual as a dependent for a taxable year beginning before January 1, 2002, under the multiple support agreement provisions of section 152(c) must attach to the member’s income tax return for the year of the deduction a written declaration from each of the other persons who contributed more than 10 percent of the support of such individual and who, but for the failure to contribute more than half of the support of the individual, would have been entitled to claim the individual as a dependent.

(2) The taxpayer claiming an individual as a dependent for a taxable year beginning after December 31, 2001, under the multiple support agreement provisions of section 152(c) must provide with the income tax return for the year of the deduction—

(i) A statement identifying each of the other persons who contributed more than 10 percent of the support of the individual and who, but for the failure to contribute more than half of the support of the individual, would have been entitled to claim the individual as a dependent; and

(ii) A statement indicating that the taxpayer obtained a written declaration from each of the persons described in section 152(c)(2) waiving the right to claim the individual as a dependent.

(3) The taxpayer claiming the individual as a dependent for a taxable year beginning after December 31, 2001, must retain the waiver declarations and should be prepared to furnish the waiver declarations and any other information necessary to substantiate the claim, which may include a statement showing the names of all contributors (whether or not members of the group described in section 152(c)(2)) and the amount contributed by each to the support of the claimed dependent.

§1.152–3T [Removed]

Par. 5. Section 1.152–3T is removed. Par. 6. In §1.611–3, paragraph (h) is added to read as follows:

§1.611–3 Rules applicable to timber.

* * * * * (h) Reporting and recordkeeping requirements —(1) Taxable years begin- ning before January 1, 2002. A taxpayer claiming a deduction for depletion of timber for a taxable year beginning before January 1, 2002, shall attach to the income tax return of the taxpayer a filled

2003–10 I.R.B. 571 March 10, 2003

duction for depletion of timber on a return filed for a taxable year beginning after December 31, 2001, shall attach to the income tax return of the taxpayer a filledout Form T (Timber) for the taxable year covered by the income tax return. In addition, the taxpayer must retain records sufficient to substantiate the right of the taxpayer to claim the deduction, including a map, where necessary, to show clearly timber and land acquired, timber cut, and timber and land sold for as long as their contents may become material in the administration of any internal revenue law.

§1.611–3T [Removed]

Par. 7. Section 1.611–3T is removed. Par. 8. In §1.852–9, paragraph (c)(1) is added to read as follows:

§1.852–9 Special procedural requirements applicable to designation under section 852(b)(3)(D).

* * * * * (c) Shareholders —(1) Return and Recordkeeping Requirements —(i) Return re- quirements for taxable years beginning be- fore January 1, 2002. For taxable years beginning before January 1, 2002, the copy B of Form 2439 furnished to a shareholder by the regulated investment company or by a nominee, as provided in §1.852–9(a) or (b) shall be attached to the income tax return of the shareholder for the taxable year in which the amount of undistributed capital gains is includible in gross income as provided in §1.852–4(b)(2).

(ii) Recordkeeping requirements for tax- able years beginning after December 31, 2001. For taxable years beginning after December 31, 2001, the shareholder shall retain a copy of Form 2439 for as long as its contents may become material in the administration of any internal revenue law.

* * * * *

§1.852–9T [Removed]

Par. 9. Section 1.852–9T is removed.

PART 301—PROCEDURE AND ADMINISTRATION

Par. 10. The authority citation for part 301 continues to read as follows: Authority: 26 U.S.C. 7805 * * * Par. 11. Section 301.6011–1 is added to read as follows:

§301.6011–1 General requirement of return, statement or list.

(a) For provisions requiring returns, statements, or lists, see the regulations relating to the particular tax.

(b) The Internal Revenue Service may prescribe in forms, instructions, or other appropriate guidance the information or documentation required to be included with any return or any statement required to be made or other document required to be furnished under any provision of the internal revenue laws or regulations.

§301.6011–1T [Removed]

Par. 12. Section 301.6011–1T is removed.

Par. 13. In §301.6903–1, paragraph (b) is added to read as follows:

§301.6903–1 Notice of fiduciary relationship.

* * * * * (b) Manner of notice —(1) Notices filed before April 24, 2002. This paragraph (b)(1) applies to notices filed before April 24, 2002. The notice shall be signed by the fiduciary, and shall be filed with the Internal Revenue Service office where the return of the person for whom the fiduciary is acting is required to be filed. The notice must state the name and address of the person for whom the fiduciary is acting, and the nature of the liability of such person; that is, whether it is a liability for tax, and, if so, the type of tax, the year or years involved, or a liability at law or in equity of a transferee of property of a taxpayer, or a liability of a fiduciary under section 3467 of the Revised Statutes, as amended (31 U.S.C. 192) in respect of the payment of any tax from the estate of the taxpayer. Satisfactory evidence of the authority of the fiduciary to act for any other person in a fiduciary capacity must be filed with and made a part of the notice. If the fiduciary capacity exists by order of court, a certified copy of the order may be regarded as satisfactory evidence. When the fiduciary capacity has terminated, the fiduciary, in order to be relieved of any further duty or liability as such, must file with the Internal Revenue Service office with whom the notice of fiduciary relationship was filed written notice that the fiduciary capacity has terminated as to him, accompanied by satisfactory evidence of the termination of the

fiduciary capacity. The notice of termination should state the name and address of the person, if any, who has been substituted as fiduciary. Any written notice disclosing a fiduciary relationship which has been filed with the Commissioner under the Internal Revenue Code of 1939 or any prior revenue law shall be considered as sufficient notice within the meaning of section 6903. Any satisfactory evidence of the authority of the fiduciary to act for another person already filed with the Commissioner or district director need not be resubmitted.

(2) Notices filed on or after April 24, 2002. This paragraph (b)(2) applies to notices filed on or after April 24, 2002. The notice shall be signed by the fiduciary, and shall be filed with the Internal Revenue Service Center where the return of the person for whom the fiduciary is acting is required to be filed. The notice must state the name and address of the person for whom the fiduciary is acting, and the nature of the liability of such person; that is, whether it is a liability for tax, and if so, the type of tax, the year or years involved, or a liability at law or in equity of a transferee of property of a taxpayer, or a liability of a fiduciary under 31 U.S.C. 3713(b), in respect of the payment of any tax from the estate of the taxpayer. The fiduciary must retain satisfactory evidence of his or her authority to act for any other person in a fiduciary capacity as long as the evidence may become material in the administration of any internal revenue law.

* * * * *

§301.6903–1T [Removed]

Par. 14. Section 301.6903–1T is removed.

PART 602—OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

Par. 15. The authority citation for part 602 continues to read as follows: Authority: 26 U.S.C. 7805. Par. 16. In §602.101, paragraph (b), the table is amended as follows:

The following entries are removed:

§602.101 OMB Control numbers.

* * * * * (b) * * *

March 10, 2003 572 2003–10 I.R.B.

CFR part or section where Current OMB identified and described control No.

* * * * * 1.48–12T ..................................................................................................................................................................... 1545–0155 1545–1783

* * * * * 1.152–3T ..................................................................................................................................................................... 1545–0071 1545–1783

* * * * * 1.611–3T ..................................................................................................................................................................... 1545–0007 1545–0099 1545–1784

* * * * * 1.852–9T ..................................................................................................................................................................... 1545–0074 1545–0123 1545–0144 1545–0145 1545–1783

* * * * * 301.6903–1T ............................................................................................................................................................... 1545–0013 1545–1783

* * * * *

The following entries are revised: §602.101 OMB Control numbers.

* * * * *

(b) * * *

CFR part or section where Current OMB identified and described control No.

* * * * * 1.48–12........................................................................................................................................................................ 1545–0155 1545–1783

* * * * * 1.152–3........................................................................................................................................................................ 1545–0071 1545–1783

* * * * * 1.611–3........................................................................................................................................................................ 1545–0007 1545–0099 1545–1784

* * * * * 1.852–9........................................................................................................................................................................ 1545–0074 1545–0123 1545–0144 1545–0145 1545–1783

* * * * * 301.6903–1.................................................................................................................................................................. 1545–0013 1545–1783

* * * * *

2003–10 I.R.B. 573 March 10, 2003

David A. Mader, Assistant Deputy Commissioner

of Internal Revenue.

Approved January 14, 2003.

Pamela F. Olson, Assistant Secretary of the Treasury.

(Filed by the Office of the Federal Register on January 30, 2003, 8:45 a.m., and published in the issue of the Federal Register for January 31, 2003, 68 F.R. 4918)

Section 6061.—Signing of Returns and Other Documents

26 CFR 157.6061–1T: Signing of returns and other documents.

Rules are provided for the manner and method of

paying and reporting the non-deductible 40-percent ex cise tax imposed on any person who acquires struc tured settlement payment rights in a structured

settlement factoring transaction. See T.D. 9042, page

Section 6065.—Verification of Returns

26 CFR 157.6065–1T: Verification of returns.

Rules are provided for the manner and method of

paying and reporting the non-deductible 40-percent ex cise tax imposed on any person who acquires struc tured settlement payment rights in a structured

settlement factoring transaction. See T.D. 9042, page

Section 6071.—Time for Fil- ing Returns and Other Docu- ments

26 CFR 157.6071–1T: Time for filing returns relat- ing to structured settlement factoring transactions.

Rules are provided regarding the time for filing returns relating to the 40-percent excise tax under sec tion 5891 of the Code (regarding structured settlement factoring transactions). See T.D. 9042, page 564.

Section 6081.—Extension of Time for Filing Returns

26 CFR 157.6081–1T: Extension of time for filing the return.

Rules are provided regarding extensions of time

for filing returns relating to the 40-percent excise tax

under section 5891 of the Code (regarding struc tured settlement factoring transactions). See T.D. 9042,

page 564.

Section 6091.—Place for Fil- ing Returns or Other Docu- ments

26 CFR 157.6091–1T: Place for filing returns.

Rules are provided regarding the place for filing

returns relating to the 40-percent excise tax under sec tion 5891 of the Code (regarding structured settle ment factoring transactions). See T.D. 9042, page 564.

Section 6151.—Time and Place for Paying Tax Shown on Returns

26 CFR 157.6151–1T: Time and place for paying tax shown on returns.

Rules are provided regarding the time and man ner for paying the 40-percent excise tax imposed un der section 5891 of the Code (regarding structured

settlement factoring transactions). See T.D. 9042, page

Section 6161.—Extension of Time for Paying Tax

26 CFR 157.6161–1T: Extension of time for paying tax.

Rules are provided regarding extensions of time for paying the 40-percent excise tax under section 5891

of the Code (regarding structured settlement factor ing transactions). See T.D. 9042, page 564.

Section 6165.—Bonds Where Time to Pay Tax or Deficiency Has Been Extended

26 CFR 157.6165–1T: Bonds where time to pay tax has been extended.

Rules are provided for the manner and method of

paying and reporting the non-deductible 40-percent ex cise tax imposed on any person who acquires struc tured settlement payment rights in a structured

settlement factoring transaction. See T.D. 9042, page

Section 7520.—Valuation Tables

The adjusted applicable federal short-term, mid term, and long-term rates are set forth for the month

of March 2003. See Rev. Rul. 2003–26, page 563.

Section 7872.—Treatment of Loans With Below-Market In- terest Rates

The adjusted applicable federal short-term, mid term, and long-term rates are set forth for the month

of March 2003. See Rev. Rul. 2003–26, page 563.

March 10, 2003 574 2003–10 I.R.B.