Part IV. Items — Internal Revenue Bulletin 2009-5

Notice of Proposed Rulemaking by Cross-Reference to Temporary Regulations

Employer’s Annual Federal Tax Return and Modifications to the Deposit Rules

REG–148568–04

AGENCY: Internal Revenue Service (IRS), Treasury.

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

SUMMARY: This document revises the notice of proposed rulemaking published in the Federal Register on January 3, 2006. In this issue of the Bulletin, the IRS is issuing temporary regulations (T.D. 9440) relating to the annual filing of Federal employment tax returns and requirements for employment tax deposits under sections 6011 and 6302 of the Internal Revenue Code (Code). Those temporary regulations generally allow certain employers to file a Form 944, “ Employer’s ANNUAL Federal Tax Return,” rather than Form 941, “ Employer’s QUARTERLY Federal Tax Return .” In addition to rules related to Form 944, those temporary regulations provide an additional method for employers who file Form 941 to determine whether the amount of accumulated employment taxes is considered de minimis . The temporary and proposed regulations affect taxpayers that file Form 941, “ Em- ployer’s QUARTERLY Federal Tax Re- turn,” Form 944, “ Employer’s ANNUAL Federal Tax Return,” and any related Spanish-language returns or returns for U.S. possessions. The text of those regulations also serves as the text of these proposed regulations.

DATES: Written or electronic comments and requests for a public hearing must be received by March 30, 2009.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG–148568–04), room

5203, 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 4 p.m. to: CC:PA:LPD:PR (REG–148568–04), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC, or sent electronically via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG–148568–04).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Audra M. Dineen at (202) 622–4910; concerning submissions of comments and requests for a public hearing, Oluwafunmilayo Taylor of the Publications and Regulations Branch at (202) 622–7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

Temporary regulations in this issue of the Bulletin amend the Regulations on Employment Taxes and Collection of Income Tax at Source (26 CFR part 31) under section 6011 relating to the federal employment tax return filing requirements and section 6302 relating to the employment tax deposit requirements. The regulations concern the reporting and paying of income taxes withheld from wages and taxes under the Federal Insurance Contributions Act (FICA). 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 and these proposed regulations. The temporary and proposed regulations are part of the IRS’s effort to reduce taxpayer burden by permitting certain employers to file one return annually to report their employment tax liabilities instead of four quarterly returns.

Proposed Effective/Applicability Date

The regulations, as proposed, will apply to taxable years ending on or after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register .

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 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 these regulations will not have a significant economic impact on a substantial number of small entities pursuant to the Regulatory Flexibility Act (5 U.S.C. Chapter 6). The regulations under sections 6011 and 6302 affect only a small number of taxpayers that file employment tax returns. Therefore, the Treasury Department and the IRS have determined that these regulations will not affect a substantial number of small entities. In addition, the Treasury Department and the IRS have determined that any impact on entities affected by the regulations will not be significant. The regulations merely allow certain employers to file their employment tax return annually rather than quarterly. Therefore, these regulations will reduce the burden on these employers, by reducing the number of returns they must file each year. Based on these facts, the IRS has determined that these regulations will not have a significant economic impact on a substantial number of small entities. Pursuant to section 7805(f) of the Internal Revenue Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their 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 (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. The IRS and Treasury Department request comments on the substance of the proposed regulations, as well as 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 sched

February 2, 2009 421 2009–5 I.R.B.

Example 6, (e)(2), (f)(4), (f)(5) Example 3, (g)(1) and (n) to read as follows:

§31.6302–1 Federal tax deposit rules for withheld income taxes and taxes under the Federal Insurance Contributions Act (FICA) attributable to payments made after December 31, 1992 .

- - - (b)* -
- - - (4) [The text of proposed §31.6302–1(b)(4) is the same as the text of §31.6302–1T(b)(4) published elsewhere in this issue of the Bulletin].

(c) * - (5) [The text of proposed §31.6302–1(c)(5) is the same as the text of §31.6302–1T(c)(5) published elsewhere in this issue of the Bulletin].

(6) [The text of proposed §31.6302–1(c)(6) is the same as the text of §31.6302–1T(c)(6) published elsewhere in this issue of the Bulletin].

(d)* - Example 6 . [The text of proposed §31.6302–1(d) Example 6 is the same as the text of §31.6302–1T(d) Example 6 published elsewhere in this issue of the Bulletin].

(e) * - (2) [The text of proposed §31.6302–1(e)(2) is the same as the text of §31.6302–1T(e)(2) published elsewhere in this issue of the Bulletin].

(f) - - (4) [The text of proposed §31.6302–1(f)(4) is the same as the text of §31.6302–1T(f)(4) published elsewhere in this issue of the Bulletin].

(5) - * Example 3 . [The text of proposed §31.6302–1(f)(5) Example 3 is the same as the text of §31.6302–1T(f)(5) Example 3 published elsewhere in this issue of the Bulletin].

(g) - - - (1) [The text of proposed §31.6302–1(g)(1) is the same as the text of §31.6302–1T(g)(1) published elsewhere in this issue of the Bulletin].

- - - (n) [The text of proposed §31.6302–1(n) is the same as the text of §31.6302–1T(n)(1) published elsewhere in this issue of the Bulletin].

uled 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 Register .

Drafting Information

The principal authors of these final regulations are Raymond Bailey and Audra M. Dineen of the Office of the Associate Chief Counsel (Procedure and Administration).

- - - -

Proposed Amendments to the Regulations

Accordingly, 26 CFR part 31 is proposed to be amended as follows:

PART 31—EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE

Paragraph. 1. The authority citation for part 31 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * * Par. 2. Section 31.6011(a)–1, which was proposed to be amended at 71 FR 46 on January 3, 2006, is further amended by revising paragraph (a)(1) and paragraph (a)(5) and adding paragraph (g) to read as follows:

§31.6011(a)–1 Returns under Federal Insurance Contributions Act .

(a) - - *(1) [The text of proposed §31.6011(a)–1(a)(1) is the same as the text of §31.6011(a)–1T(a)(1) published elsewhere in this issue of the Bulletin].

- - - (5) [The text of proposed §31.6011(a)–1(a)(5) is the same as the text of §31.6011(a)–1T(a)(5) published elsewhere in this issue of the Bulletin].
- - - (g) [The text of proposed §31.6011(a)–1(g) is the same as the text of §31.6011(a)–1T(g) published elsewhere in this issue of the Bulletin].

Par. 3. Section 31.6011(a)–4, which was proposed to be amended at 71 FR 46 (January 3, 2006), is further amended by revising paragraphs (a)(1) and (a)(4) and adding paragraph (d) to read as follows:

§31.6011(a)–4 Returns of income tax withheld .

(a)* - *(1) [The text of proposed §31.6011(a)–4(a)(1) is the same as the text of §31.6011(a)–4T(a)(1) published elsewhere in this issue of the Bulletin].

- - - (4) [The text of proposed §31.6011(a)–4(a)(4) is the same as the text of §31.6011(a)–4T(a)(4) published elsewhere in this issue of the Bulletin].
- - - (d) [The text of proposed §31.6011(a)–4(d) is the same as the text of §31.6011(a)–4T(d) published elsewhere in this issue of the Bulletin].

Par. 4. Section 31.6302–0 is amended by revising the entries for §31.6302–1(f)(4)(i), (g)(1) and (n) to read as follows:

§31.6302–0 Table of contents .

§31.6302–1 Federal tax deposit rules for withheld income taxes and taxes under the Federal Insurance Contributions Act (FICA) attributable to payments made after December 31, 1992 .

- - - (f) - - (4) - - (i) [The text of the proposed entry for §31.6302–1(f)(4)(i) is the same as the text of the entry for §31.6302–1T(f)(4)(i) published elsewhere in this issue of the Bulletin].
- - - (g) - - (1) [The text of the proposed entry for §31.6302–1(g)(1) is the same as the text of the entry for §31.6302–1T(g)(1) published elsewhere in this issue of the Bulletin].
- - - (n) [The text of the proposed entry for §31.6302–1(n) is the same as the text of the entry for §31.6302–1T(n) published elsewhere in this issue of the Bulletin].

Par. 5. Section 31.6302–1, which was proposed to be amended at 71 FR 46 on January 3, 2006, is further amended by revising paragraphs (b)(4), (c)(5), (c)(6), (d)

2009–5 I.R.B. 422 February 2, 2009

of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, these regulations have been 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 the proposed regulations are adopted as final regulations, consideration will be give to any written comments (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. The IRS and the Treasury Department specifically request comments on the clarity of the proposed rules and how they may be made easier to understand. All comments will be available for public inspection and copying.

A public hearing has been scheduled for April 20, 2009, beginning at 10 a.m. in the IRS Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the Constitution Avenue entrance area more than 30 minutes before the hearing starts. For information about having your name placed on the building access list to attend the hearing, see the “FOR FURTHER INFORMATION CONTACT” section of this preamble.

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 or electronic comments by March 30, 2009, and an outline of the topics to be discussed and the time to be devoted to each topic (signed original and eight (8) copies) by April 2, 2009. 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 these regulations is Ethan Atticks of the Office of

Linda E. Stiff, Deputy Commissioner for Services and Enforcement.

(Filed by the Office of the Federal Register on December 24, 2008, 8:45 a.m., and published in the issue of the Federal Register for December 29, 2008, 73 F.R. 79423)

Notice of Proposed Rulemaking by Cross-Reference to Temporary Regulations and Notice of Public Hearing

Guidance Regarding Foreign Base Company Sales Income

REG–150066–08

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary regulations and notice of public hearing.

SUMMARY: In this issue of the Bulletin, the IRS and Treasury Department are issuing temporary regulations (T.D. 9438) relating to foreign base company sales income, in cases in which personal property sold by a controlled foreign corporation (CFC) is manufactured, produced, or constructed pursuant to a contract manufacturing arrangement or by one or more branches of the CFC. The temporary regulations modify the foreign base company sales income regulations to adequately address current business structures and practices, particularly the growing importance of contract manufacturing and other manufacturing arrangements. The temporary regulations, in general, will affect CFCs and their United States shareholders. The text of the temporary regulations also serves as the text of the proposed regulations. This document also provides notice of a public hearing.

DATES: Written or electronic comments must be received by March 30, 2009. Outlines of the topics to be discussed at the public hearing scheduled for April 20, 2009, at 10 a.m. must be received by April 2, 2009.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG–150066–08), room 5203 Internal Revenue Service, PO Box 7604 Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG–150066–08), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC 20224. Alternatively, taxpayers may submit electronic comments via the Federal eRulemaking Portal at www.regulations.gov (IRS-REG–150066–08).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Ethan Atticks, (202) 622–3840; concerning submissions of comments, hearing, and/or to be placed on the building access list to attend the hearing, Richard A. Hurst at Richard.A.Hurst@irscounsel.treas.gov or (202) 622–7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provision

The temporary regulations in this issue of the Bulletin amend the Income Tax Regulations (26 CFR part 1) relating to foreign base company sales income, in cases in which personal property sold by a controlled foreign corporation (CFC) is manufactured, produced, or constructed pursuant to a contract manufacturing arrangement or by one or more branches of the CFC. These regulations, in general, will affect CFCs and their United States shareholders. The text of those temporary regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains these proposed regulations.

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 the regulations do not impose a collection

February 2, 2009 423 2009–5 I.R.B.

Associate Chief Counsel (International). However, other personnel from the IRS and the Treasury Department participated in their development.

- - - -

Proposed Amendments to the Regulations

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for 26 CFR part 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.954–3 is amended by revising paragraphs (b)(1)(i)( c ), (b)(1)(ii)( a ), (b)(1)(ii)( c ), (b)(2)(i)( b ), (b)(2)(i)( d ), (b)(2)(ii)( a ), (b)(2)(ii)( b ), (b)(2)(ii)( e ), (b)(4) Example 3, (c) and (d), and adding Examples 8 and 9 to paragraph (b)(4), and adding paragraphs (e), (f) and (g) to read as follows:

§1.954–3 Foreign base company sales income .

- - - (b) * * * (1) * * * (i) * * * (c) [The text of the proposed amendments to §1.954–3(b)(1)(i)( c ) is the same as the text of §1.954–3T(b)(1)(i)( c ) published elsewhere in this issue of the Bulletin].

(ii)* - - ( a ) [The text of the proposed amendments to §1.954–3(b)(1)(ii)( a ) is the same as the text of §1.954–3T(b)(1)(ii)( a )

published elsewhere in this issue of the Bulletin].

- - - ( c ) [The text of the proposed amendments to §1.954–3(b)(1)(ii)( c ) is the same as the text of §1.954–3T(b)(1)(ii)( c ) published elsewhere in this issue of the Bulletin].

(2) * * * (i) * * * ( b ) [The text of the proposed amendments to §1.954–3(b)(2)(i)( b ) is the same as the text of §1.954–3T(b)(2)(i)( b ) published elsewhere in this issue of the Bulletin].

- - - ( d ) [The text of the proposed amendments to §1.954–3(b)(2)(i)( d ) is the same as the text of §1.954–3T(b)(2)(i)( d ) published elsewhere in this issue of the Bulletin].
- - - (ii) - - * ( a ) [The text of the proposed amendments to §1.954–3(b)(2)(ii)( a ) is the same as the text of §1.954–3T(b)(2)(ii)( a ) published elsewhere in this issue of the Bulletin].

( b ) [The text of the proposed amendments to §1.954–3(b)(2)(ii)( b ) is the same as the text of §1.954–3T(b)(2)(ii)( b ) published elsewhere in this issue of the Bulletin].

- - - ( e ) [The text of the proposed amendments to §1.954–3(b)(2)(ii)( e ) is the same as the text of §1.954–3T(b)(2)(ii)( e ) published elsewhere in this issue of the Bulletin].
- - - (4) - * Example 3 . [The text of the proposed amendments to §1.954–3(b)(4) Example 3 is the same as the text of §1.954–3T(b)(4) Example 3 published elsewhere in this issue of the Bulletin].
- - - Example 8 . [The text of the proposed amendments to §1.954–3(b)(4) Example 8 is the same as the text of §1.954–3T Ex- ample 8 published elsewhere in this issue of the Bulletin].

Example 9 . [The text of the proposed amendments to §1.954–3(b)(4) Example 9 is the same as the text of §1.954–3T Ex- ample 9 published elsewhere in this issue of the Bulletin].

(e) [The text of the proposed amendments to §1.954–3(e) is the same as the text of §1.954–3T(e) published elsewhere in this issue of the Bulletin].

(f) [The text of the proposed amendments to §1.954–3(f) is the same as the text of §1.954–3T(f) published elsewhere in this issue of the Bulletin].

(g) [The text of the proposed amendments to §1.954–3(g) is the same as the text of §1.954–3T(g) published elsewhere in this issue of the Bulletin].

Linda E. Stiff, Deputy Commissioner for Services and Enforcement.

(Filed by the Office of the Federal Register on December 24, 2008, 8:45 a.m., and published in the issue of the Federal Register for December 29, 2008, 73 F.R. 79421)