Part IV. Items — Internal Revenue Bulletin 2013-39

Notice of Proposed Rulemaking and Notice of Public Hearing

User Fees for Processing Installment Agreements and Offers in Compromise

REG–144990–12

AGENCY: Internal Revenue Service (IRS), Treasury.

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

SUMMARY: This document contains proposed amendments to the regulations that provide user fees for installment agreements and offers in compromise. The proposed amendments affect taxpayers who wish to pay their liabilities through installment agreements and offers in compromise. This document also provides a notice of public hearing on these proposed amendments to the regulations.

DATES: Written or electronic comments must be received by September 30, 2013. Outlines of topics to be discussed at the public hearing scheduled for October 1, 2013, at 10 a.m. must be received by September 30, 2013.

ADDRESSES: Send submissions to: Internal Revenue Service, CC:PA:LPD:PR (REG–144990–12), Room 5203, Post Office 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–144990–12), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington, DC 20044, or sent electronically via the Federal eRulemaking Portal at http://www.regulations.gov (indicate IRS and REG–144990–12). The public hearing will be held in the IRS Auditorium beginning at 10 a.m. at the Internal Revenue Service Building, 1111 Constitution Avenue, N.W., Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT: Concerning submissions

and/or to be placed on the building access list to attend the hearing, Oluwafunmilayo (Funmi) Taylor, at (202) 622–7180; concerning cost methodology, Eva Williams, at (202) 435–5514; concerning the proposed regulations, Girish Prasad, at (202) 622–3620 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

The Independent Offices Appropriations Act (IOAA), which is codified at 31 U.S.C. 9701, authorizes agencies to prescribe regulations that establish charges for services provided by the agencies (user fees). The charges must be fair and must be based on the costs to the government, the value of the service to the recipient, the public policy or interest served, and other relevant facts. The IOAA provides that regulations implementing user fees are subject to policies prescribed by the President. Those policies are currently set forth in the Office of Management and Budget (OMB) Circular A–25, 58 FR 38142 (July 15, 1993) (the OMB Circular). The OMB Circular encourages agencies to charge user fees for government-provided services that confer benefits on identifiable recipients over and above those benefits received by the general public. Under the OMB Circular, an agency that seeks to impose a user fee for government-provided services must calculate its full cost of providing those services. In general, the amount of a user fee should recover the cost of providing the service, unless OMB grants an exception.

Installment Agreements

Section 6159 of the Internal Revenue Code (Code) authorizes the IRS to enter into an agreement with any taxpayer for the payment of tax in installments. 26 CFR 301.6159–1. Before entering into an installment agreement, the IRS may examine the taxpayer’s financial position to determine whether such an agreement is appropriate. Once the agreement is in effect, the IRS must process the payments and monitor compliance. Section 6331(k)(2)

of the Code generally prohibits the IRS from levying to collect taxes while a request to enter into an installment agreement is pending, and if rejected for 30 days thereafter, and, if a timely appeal of rejection is filed, for the duration of the appeal. Section 6331(k)(2) of the Code also generally prohibits the IRS from levying to collect taxes while an installment agreement is in effect. A taxpayer that enters into an installment agreement therefore receives a special benefit of being allowed to pay an outstanding tax obligation over time.

Under sections 300.1 and 300.2 of the Treasury Regulations, the IRS currently charges $105 for entering into an installment agreement, except that the fee is $52 for a direct debit installment agreement, which is an agreement whereby the taxpayer authorizes the IRS to request the monthly electronic transfer of funds from the taxpayer’s bank account to the IRS, and the fee is $43 if the taxpayer is a low-income taxpayer (notwithstanding the method of payment). Also, the IRS currently charges $45 for restructuring or reinstating an installment agreement that is in default. The amount of the fees has not changed since 2007. As required by the OMB Circular, the IRS recently completed a routine review of the installment agreement program and determined that the full cost of an installment agreement is $282, except that the cost is only $122 for a direct debit installment agreement. The IRS also determined that the full cost of restructuring or reinstating an installment agreement is $85.

In accordance with the OMB Circular, these proposed amendments to the regulations increase the installment agreement fees to recover more of the costs associated with such agreements. The proposed regulations propose to charge less than full cost. While agencies are generally required to charge full cost, the OMB Circular permits exceptions to this requirement when the cost of collecting the fees would represent an unduly large part of the fee for the activity or any other condition exists that, in the opinion of the agency head or his designee, justifies an exception. OMB has granted an exception to the full cost requirement of the OMB Circular. After discussions with OMB, the proposed fee

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tified that these regulations will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required. This certification is based on the information that follows. The economic impact of these regulations on any small entity would result from the entity being required to pay a fee prescribed by these regulations in order to obtain a particular service. The dollar amount of the fee is not, however, substantial enough to have a significant economic impact on any entity subject to the fee. Pursuant to section 7805(f) of the 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 Public Hearing

Before these proposed amendments to the regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the “Addresses” heading. The IRS and Treasury Department request comments on all aspects of the proposed regulations. All comments will be available at www.regulations.gov or upon request.

A public hearing has been scheduled for October 1, 2013, beginning at 10 a.m. in the IRS Auditorium of the Internal Revenue Service Building, 1111 Constitution Avenue N.W., Washington, D.C. 20044. 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 immediate 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 or electronic comments and submit an outline of the topics to be discussed and the amount of time to be devoted to each topic (a signed original and eight (8) copies) by September

for entering into an installment agreement is $120, and the proposed fee for restructuring or reinstating an installment agreement is $50. The fee for a direct debit installment agreement remains $52, and low income taxpayers, as defined in 26 CFR 300.1(b)(2), would continue to pay $43 for any new installment agreement, including a direct debit installment agreement. The proposed regulations do not increase the fee for direct debit installment agreements because these agreements have a significantly higher completion rate. The proposed fees balance the need to recover costs with the goals of encouraging the use of installment agreements in general and direct debit installment agreements in particular.

Offers in Compromise

Section 7122 of the Internal Revenue Code gives the Secretary the authority to compromise any civil or criminal case arising under the internal revenue laws, prior to the referral of that case to the Department of Justice. An offer to compromise may be accepted if there is doubt as to liability, if there is doubt as to collectibility, or if acceptance will promote effective tax administration. 26 CFR 301.7122–1(b). Before accepting an offer to compromise, the IRS must examine the taxpayer’s financial position to determine whether such a compromise is appropriate unless it is an offer under section 7122(d)(3)(B) (regarding offers relating only to issues of liability). Once the IRS accepts an offer to compromise, the IRS must process the payments and monitor compliance. When the IRS accepts an offer to compromise, the taxpayer receives the benefit of resolving its tax liabilities for a compromised amount, provided the taxpayer complies with the terms of the compromise agreement. Further, section 6331(k)(1) of the Code generally prohibits the IRS from levying to collect taxes while a request to enter into an offer to compromise is pending, and if rejected for 30 days thereafter, and, if a timely appeal of a rejection is filed, for the duration of the appeal.

Under section 300.3 of the Treasury Regulations, the IRS currently charges $150 for processing an offer to compromise, except that no fee is charged if an offer is based solely on doubt as to liability, or made by a low income taxpayer, as

defined in 26 CFR 300.3(b)(1)(ii). Also, the fee is generally applied to the unpaid taxes if the offer is accepted to promote effective tax administration or accepted based on doubt as to collectibility (in this latter case, a determination must be made that collection of an amount greater than the amount offered would create economic hardship). The amount of the fee has not changed since 2003. As required by the OMB Circular, the IRS recently completed a routine review of the offer to compromise program and determined that the full cost of an offer to compromise is $2,718.

In accordance with the OMB Circular, this proposed amendment to the regulations increases the offer to compromise fee to recover more of the costs associated with such offers. These proposed regulations propose to charge less than full cost. While agencies are generally required to charge full cost, the OMB Circular permits exceptions to this requirement when the cost of collecting the fees would represent an unduly large part of the fee for the activity or any other condition exists that, in the opinion of the agency head or his designee, justifies an exception. As with the installment agreement fees, OMB has granted an exception to the full cost requirement of the OMB Circular. After discussions with OMB, the proposed fee for processing an offer to compromise is $186. Low-income taxpayers and taxpayers making offers based solely on doubt as to liability will continue to pay no fee. Also, as now, the fee is generally applied to the unpaid taxes if the offer is accepted to promote effective tax administration or accepted based on doubt as to collectibility (in this latter case, a determination must be made that collection of an amount greater than the amount offered would create economic hardship). The proposed fee balances the need to recover costs with the goal of encouraging offers in compromise.

The new fee rate for both installment agreements and offers in compromise will be effective January 1, 2014.

Special Analyses

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. It is hereby cer

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30, 2013. 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 Kimberly Barsa of the Office of Associate Chief Counsel (Procedure and Administration).

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Proposed Amendments to the Regulations

Accordingly, 26 CFR part 300 is proposed to be amended as follows:

PART 300—USER FEES

Paragraph 1. The authority citation for part 300 continues to read as follows:

Authority: 31 U.S.C. 9701. Par. 2. In §300.1, paragraphs (b) introductory text and (d) are revised to read as follows:

§300.1 Installment agreement fee .

- - - (b) Fee . The fee for entering into an installment agreement before January 1, 2014, is $105. The fee for entering into an installment agreement on or after January 1, 2014, is $120. A reduced fee applies in the following situations:
- - - (d) Effective/applicability date . This section is applicable beginning January 1,

Par. 3. In §300.2, paragraphs (b) and (d) are revised to read as follows:

§300.2 Restructuring or reinstatement of installment agreement fee .

- - - (b) Fee . The fee for restructuring or reinstating an installment agreement before January 1, 2014, is $45. The fee for restructuring or reinstating an installment agreement on or after January 1, 2014, is $50.

(d) Effective/applicability date . This section is applicable beginning January 1, 2014. Par. 4. In §300.3, paragraphs (b)(1) introductory text and (d) are revised to read as follows:

§300.3 Offer to compromise fee .

- - - (b) Fee . (1) The fee for processing an offer to compromise before January 1, 2014, is $150. The fee for processing an offer to compromise on or after January 1, 2014, is $186. No fee will be charged if an offer is—
- - - (d) Effective/applicability date . This section is applicable beginning January 1,

Beth Tucker, Deputy Commissioner for

Operations Support .

(Filed by the Office of the Federal Register on August 29, 2013, 8:45 a.m., and published in the issue of the Federal Register for August 30, 2013, 78 F.R. 53702)

Notice of Proposed Rulemaking

Employee Retirement Benefit Plan Returns Required on Magnetic Media

REG–111837–13

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains proposed regulations relating to the requirements for filing certain employee retirement benefit plan statements, returns, and reports on magnetic media. The term magnetic media includes electronic filing, as well as other magnetic media specifically permitted under applicable regulations, revenue procedures, publications, forms, instructions, or other guidance on the IRS.gov Internet website. These regulations would affect plan administrators and employers maintaining

retirement plans that are subject to various employee benefit reporting requirements under the Internal Revenue Code (Code).

DATES: Comments and requests for a public hearing must be received by October 29, 2013.

ADDRESSES: Send submissions relating to the proposed regulations to: CC:PA:LPD:PR (REG–111837–13), room 5205, 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–111837–13), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC.

Alternately, taxpayers may submit comments relating to the proposed regulations electronically via the Federal eRulemaking Portal at www.regulations.gov (IRS REG–111837–13).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, William Gibbs or Pamela Kinard at (202) 622–6060; concerning the submission of comments or to request a public hearing, Oluwafunmilayo Taylor at (202) 622–7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

Electronic filing of tax returns benefits taxpayers and the IRS by reducing errors that are more likely to occur during the manual preparation and processing of paper returns. Electronic filing results in faster settling of accounts and better customer service. Requiring that employee retirement benefit plan statements, returns, and reports be filed electronically improves the timeliness and accuracy of the information for both the public and the employee retirement benefit plan community.

Section 6011(e)(1) authorizes the Secretary to prescribe regulations providing the standards for determining which returns must be filed on magnetic media or in other machine-readable form. Section 6011(e)(2)(A) provides that the Secretary may not require any person to file returns

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On July 21, 2006, the Department of Labor (DOL) published a final rule in the Federal Register (71 FR 41359) requiring electronic filing of the Form 5500 and Form 5500–SF for plans covered by Title I of ERISA for plan years beginning on or after January 1, 2008. On November 16, 2007, the DOL published a final rule in the Federal Register (72 FR 64710) postponing the effective date of the electronic filing mandate so that the mandate applies to plan years beginning on or after January 1, 2009. See 29 CFR §2520.104a–2. The electronic filing system mandated by DOL is the computerized ERISA Filing Acceptance System (EFAST2).

Filers of the Form 5500 and Form 5500–SF are required to file electronically through EFAST2. Currently, electronic filing is not available for the Form 5500–EZ. However, certain filers that would otherwise file the Form 5500–EZ on paper may instead file the Form 5500–SF electronically through EFAST2. Under the current requirements, plans that are eligible to use the Form 5500–SF to file electronically include plans that cover fewer than 100 participants at the beginning of the plan year and satisfy certain other requirements. See the Instructions to the Form 5500–EZ for information about filing the Form 5500–EZ.

In order to implement DOL’s mandate for electronic filing of the Form 5500 and Form 5500–SF, certain items on these forms that relate solely to Code requirements were eliminated. Information on the forms, schedules, and attachments that were eliminated was used by the IRS for compliance purposes. By mandating electronic filing of information, the IRS can obtain valuable plan information that is not currently required to be filed through EFAST2. ¹ In coordination with DOL, the IRS anticipates adding items on the Form 5500 and Form 5500–SF relating solely to Code requirements. For those filers that are not subject to IRS electronic filing requirements, the IRS plans to provide a paper-only form containing those Code-related items and an alternative method of filing with the IRS.

on magnetic media unless the person is required to file at least 250 returns during the calendar year. Section 6011(e)(2)(B) requires that the Secretary, prior to issuing regulations requiring these entities to file returns on magnetic media, take into account (among other relevant factors) the ability of the taxpayer to comply at reasonable cost with the requirements of such regulations.

A statement, return, or report filed electronically with an electronic return transmitter in the manner and time prescribed by the Commissioner is deemed to be filed on the date of the electronic postmark given by the return transmitter (that is, a record of the date and time that an authorized electronic return transmitter receives the transmission of a taxpayer’s electronically filed document on its host system). Accordingly, if the electronic postmark is timely, the document is considered filed timely although it is received by the IRS after the last date prescribed for filing. See §301.7502–1(d).

Section 414(g) defines a plan administrator as a person specifically so designated by the terms of the plan or, in the event no one is designated: (a) an employer for a single employer plan; (b) an association, committee, joint board of trustees, or other similar group of representatives for a plan maintained by two or more employers or jointly by one or more employers and one or more employee organizations; or (c) such other person as the Secretary of Treasury may prescribe in regulations.

Section 6057(a) requires the plan administrator (within the meaning of section 414(g)) of each plan to which the vesting standards of section 203 of part 2 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 (ERISA) applies for a plan year to file, within the time prescribed by regulations, a registration statement with the Secretary of the Treasury. The registration statement must set forth the following information relating to the plan: (1) the name of the plan; (2) the name and address of the plan administrator; (3) the name and identifying information of plan participants who separated from service covered by the plan and

are entitled to deferred vested retirement benefits; and (4) the nature, amount, and form of deferred vested retirement benefits to which the plan participants are entitled. The form used to file this registration statement is Form 8955–SSA, Annual Reg- istration Statement Identifying Separated Participants with Deferred Vested Benefits . Section 6057(b) requires that the plan administrator notify the Secretary of certain changes in the plan, including the name of the plan, the name and address of the plan administrator, the termination of the plan, or any merger or consolidation of the plan with another plan (or the plan’s division into two or more plans).

Section 6058(a) generally requires that every employer maintaining a pension, annuity, stock bonus, profit-sharing, or other funded plan of deferred compensation, or the plan administrator within the meaning of section 414(g) of the plan, file an annual return stating such information as the Secretary may by regulations prescribe with respect to the qualification, financial condition, and operations of the plan. The reporting requirement under section 6058(a) is satisfied by filing a return on the Form 5500 series. The Form 5500, Annual Return/Report of Employee Ben- efit Plan, the Form 5500–SF, Short Form Annual Return/Report of Small Employee Benefit Plan, and Form 5500–EZ, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan, make up the Form 5500 series.

Section 6059(a) generally requires that a plan administrator of each defined benefit plan to which section 412 applies file the actuarial report described in section 6059(b) for the first plan year for which section 412 applies to the plan and for each third plan year thereafter (or more frequently if the Secretary determines that more frequent reports are necessary). The schedules used to file these actuarial reports are the Schedule SB, Single-Employer Defined Benefit Plan Actuarial Information, and the Schedule MB, Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actu- arial Information, which are required to be filed as part of the Form 5500 or Form 5500–SF.

1 In its published report on September 20, 2011, the Treasury Inspector General for Tax Administration (TIGTA) recommended that the IRS explore regulatory options for mandating electronic filings of annual employee benefit returns for employee benefit retirement plans. TIGTA believed that this would assist the IRS in satisfying its tax administration responsibilities. See “The Employee Plans Function Should Continue Its Efforts to Obtain Needed Retirement Plan Information,” Reference Number 2011–10–108 (September 20, 2011).

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the Form 5500 series. For a failure to file the Form 5500 series, a penalty under section 6652(e) applies. The proposed regulations under section 6058 provide that rules under §301.6652–3(b) apply for purposes of determining whether there is reasonable cause for failure to file a return. In addition, rules similar to the rules in §301.6724–1(c)(3)(ii), regarding undue economic hardship relating to filing on magnetic media, will apply.

IV. Actuarial Reports

The proposed regulations under section 6059 provide that an actuarial report required under section 6059 must be filed on magnetic media if the filer is required by the Code or regulations to file at least 250 returns during the calendar year that includes the first day of the plan year. For purposes of the regulations under section 6059, the term filer means the plan administrator within the meaning of section 414(g). The proposed regulations under section 6059 provide that if a filer that is required to file electronically fails to do so, the filer is deemed to have failed to file the actuarial report required under section 6059. Section 6692 provides that a plan administrator that fails to file the report required under section 6059 shall pay a penalty for each such failure, unless it is shown that there is reasonable cause for the failure. The proposed regulations under section 6059 provide that rules under §301.6692–1(c) apply for purposes of determining whether there is reasonable cause for failure to file an actuarial report. In addition, rules similar to the rules in §301.6724–1(c)(3)(ii), regarding undue economic hardship relating to filing on magnetic media, will apply.

V. Economic Hardship Waiver

These proposed regulations also provide that the Commissioner may waive the requirement to file electronically in cases of undue economic hardship. Because the Treasury Department and the IRS believe that electronic filing will not impose significant burdens on the taxpayers covered by these regulations, the Commissioner anticipates granting waivers of the electronic filing requirement in only exceptional cases. Waivers are anticipated to be particularly rare for the filers of Form

Explanation of Provisions

I. In General

These regulations provide that a plan administrator (or, in certain situations, an employer maintaining a plan) required by the Code or regulations to file at least 250 returns during the calendar year that includes the first day of the plan year must use magnetic media to file certain statements, returns, and reports under sections 6057, 6058, and 6059. Magnetic media is defined as electronic filing or other media specifically permitted under applicable regulations, revenue procedures, publications, forms, instructions, or other guidance on the IRS.gov Internet website. (See §601.601(d)(2)(ii)( b ) of this chapter.)

Filers of the Form 5500 and Form 5500–SF are already required to file the returns electronically through EFAST2. In addition, many filers of the Form 8955–SSA already voluntarily file electronically with the IRS and also are required to file the Form 5500 and Form 5500–SF electronically through EFAST2. The IRS and the Treasury Department have determined that taxpayers should be able to comply at a reasonable cost with the requirement to file statements, returns, and reports on magnetic media.

The determination of whether a filer is required to file at least 250 returns is made by aggregating all returns, regardless of type, that the filer is required to file, including for example, income tax returns, returns required under section 6033, information returns, excise tax returns, and employment tax returns.

II. Registration Statements and Notifications Required Under Section 6057(a) and (b)

The proposed regulations under section 6057 provide that a registration statement under section 6057(a) or notification required under section 6057(b) must be filed on magnetic media if the filer is required by the Code or regulations to file at least 250 returns during the calendar year that includes the first day of the plan year. For purposes of the regulations under section 6057, the term filer means the plan administrator within the meaning of section 414(g). The proposed regulations under section 6057 provide that if a filer that is required

to file electronically fails to do so, the filer is deemed to have failed to file the registration statement or other notification required under section 6057. Section 6652(d)(1) imposes a penalty on the plan administrator for the failure to file a registration statement required under section 6057(a). Section 6652(d)(2) imposes a penalty on the plan administrator for the failure to file a notification required under section 6057(b). The proposed regulations under section 6057 provide that rules under §301.6652–3(b) apply for purposes of determining whether there is reasonable cause for failure to file a registration statement required under section 6057(a) or notification required under section 6057(b). In addition, rules similar to the rules in §301.6724–1(c)(3)(ii), regarding undue economic hardship relating to filing on magnetic media, will apply.

III. Form 5500 Series

The proposed regulations under section 6058 provide that a return required under section 6058 must be filed on magnetic media if the filer is required by the Code or regulations to file at least 250 returns during the calendar year that includes the first day of the plan year. The term filer means the employer or employers maintaining the plan and the plan administrator within the meaning of section 414(g). Thus, in applying the 250-return requirement, the returns of the employer or employers maintaining the plan and of the plan administrator are aggregated.

The proposed regulations under section 6058 also provide that, in determining the 250-return requirement, the aggregation rules of section 414(b), (c), (m), and (o) apply to a filer that is, or includes, an employer. Thus, for example, a filer that is a member of a controlled group of corporations within the meaning of section 414(b) must file the Form 5500 series on magnetic media if the aggregate number of returns required to be filed by the controlled group of corporations is at least 250. These aggregation rules also apply to the regulations under sections 6057 and 6059 if the plan administrator is the employer.

The proposed regulations under section 6058 provide that if the filer is required to file electronically but fails to do so, the filer is deemed to have failed to file

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Part 301—PROCEDURE AND ADMINISTRATION

Par. 1. The authority for part 301 continues to read in part as follows: Authority: 26 U.S.C. 7508*** Par. 2. Section 301.6057–3 is added to read as follows:

§301.6057–3 Required use of magnetic media for filing requirements relating to deferred vested retirement benefit .

(a) Magnetic media filing require- ments under section 6057 . A registration statement required under section 6057(a) or a notification required under section 6057(b) with respect to an employee benefit plan must be filed on magnetic media if the filer is required by the Internal Revenue Code or regulations to file at least 250 returns during the calendar year that includes the first day of the plan year. Returns filed on magnetic media must be made in accordance with applicable revenue procedures, publications, forms, instructions, or other guidance on the IRS.gov Internet website. In prescribing revenue procedures, publications, forms, instructions, or other guidance on the IRS.gov Internet website, the Commissioner may direct the type of magnetic media filing. (See §601.601(d)(2)(ii)( b ) of this chapter.)

(b) Economic hardship waiver . The Commissioner may waive the requirements of this section in cases of undue economic hardship. The principal factor in determining hardship will be the amount, if any, by which the cost of filing the registration statements or notifications on magnetic media in accordance with this section exceeds the cost of filing the registration statements or notifications on paper or other media. A request for a waiver must be made in accordance with applicable published guidance, publications, forms, instructions, or other guidance on the IRS.gov Internet website. (See §601.601(d)(2)(ii)( b ) of this chapter.) The waiver will specify the type of filing (that is, a registration statement or notification under section 6057), and the period to which it applies, and will be subject to such terms and conditions regarding the method of filing as may be prescribed by the Commissioner.

5500 and Form 5500–SF (as well as the schedules attached to those forms), because these filers are already required to file electronically under EFAST2.

Proposed Effective Date

These regulations are proposed to apply for employee retirement benefit plan statements, notifications, returns, and reports required to be filed under sections 6057, 6058, and 6059 for plan years that begin on or after January 1, 2014, but only for filings with a filing deadline (not taking into account extensions) after December 31, 2014.

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 5 U.S.C. 533(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. In addition, it is hereby certified that any collection of information contained in this regulation will not have a significant economic impact on a substantial number of small entities, and therefore no flexibility analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is required. Pursuant to section 7805(f) of the Internal Revenue Code, these regulations have been submitted to the Office of Chief Counsel for Advocacy of the Small Business Administration for comments on its impact on small businesses.

The certification is based on the fact that §§301.6057–1, 301.6058–1, and 301.6059–1 currently require filing with the IRS of information under sections 6057, 6058, and 6059 in accordance with applicable forms, schedules, and accompanying instructions. These proposed regulations merely require that this information be filed electronically by persons required to file at least 250 returns for the calendar year, consistent with section 6011(e)(2)(A), which provides that, in prescribing regulations providing standards for determining which returns must be filed on magnetic media or in other machine-readable form, the Secretary shall not require any person to file returns on magnetic media unless the person is required to file at least 250 returns during

the calendar year. Many small entities are unlikely to file 250 returns or more during the calendar year. Filers of the Form 5500 and Form 5500–SF are already required to file the returns electronically through EFAST2 pursuant to DOL regulations. In addition, many filers of the Form 8955–SSA already voluntarily file electronically with the IRS.

Further, if a taxpayer’s operations are computerized, reporting in accordance with the regulations should be less costly than filing on paper. The IRS and the Treasury Department have determined that taxpayers should be able to comply at a reasonable cost with the requirement in these regulations to file employee retirement statements, returns, and reports on magnetic media. In addition, the proposed regulations provide that the IRS may waive the electronic filing requirements upon a showing of hardship.

Comments and Requests for Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the “Addresses” heading. The IRS and the Treasury Department request comments on all aspects of the rules. All comments are available at www.regulations.gov or upon request. A public hearing will be scheduled if requested in writing by any person who timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place of the public hearing will be published in the Federal Register .

Drafting Information

The principal authors of these regulations are William Gibbs and Pamela R. Kinard, Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and the Treasury Department participated in the development of these regulations.

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Proposed Amendments to the Regulations

Accordingly, 26 CFR part 301 is proposed to be amended as follows:

2013–39 I.R.B. 269 September 23, 2013

for a waiver must be made in accordance with applicable published guidance, publications, forms, instructions, or other guidance on the IRS.gov Internet website. (See §601.601(d)(2)(ii)( b ) of this chapter.) The waiver will specify the type of filing (that is, a return required under section 6058) and the period to which it applies, and will be subject to such terms and conditions regarding the method of filing as may be prescribed by the Commissioner.

(c) Failure to file . If a filer required to file a return under section 6058 fails to file the return on magnetic media when required to do so by this section, the filer is deemed to have failed to file the return. See section 6652(e) for the addition to tax for failure to file a return. In determining whether there is reasonable cause for failure to file the return, §301.6652–3(b) and rules similar to the rules in §301.6724–1(c)(3)(ii) (regarding undue economic hardship related to filing information returns on magnetic media) will apply.

(d) Meaning of terms . The following definitions apply for purposes of this section.

(1) Magnetic media . The term mag- netic media means electronic filing, as well as other media specifically permitted under applicable regulations, revenue procedures, or publications, forms, instructions, or other guidance on the IRS.gov Internet website. (See §601.601(d)(2)(ii)( b ) of this chapter.)

(2) Return required under section 6058 . The term return required under section 6058 means the Form 5500 series (or its successor).

(3) Determination of 250 returns —(i) In general . For purposes of this section, a filer is required to file at least 250 returns if, during the calendar year that includes the first day of the plan year, the filer is required to file at least 250 returns of any type, including information returns (for example, Forms W–2 and Forms 1099), income tax returns, employment tax returns, and excise tax returns.

(ii) Definition of filer . For purposes of this section, the term filer means the employer or employers maintaining the plan and the plan administrator within the meaning of section 414(g).

(iii) Special rules relating to determin- ing 250 returns . For purposes of applying paragraph (d)(3)(ii) of this section, the ag

(c) Failure to file . If a filer required to file a registration statement or other notification under section 6057 fails to file the statement or other notification on magnetic media when required to do so by this section, the filer is deemed to have failed to file the statement or other notification. See section 6652(d) for the amount imposed for the failure to file a registration statement or other notification under section 6057. In determining whether there is reasonable cause for the failure to file the registration statement or notification under section 6057, §301.6652–3(b) and rules similar to the rules in §301.6724–1(c)(3)(ii) (regarding undue economic hardship related to filing information returns on magnetic media) will apply.

(d) Meaning of terms . The following definitions apply for purposes of this section.

(2) Registration statement required un- der section 6057(a) . The term registration statement required under section 6057(a) means a Form 8955–SSA (or its successor).

(3) Notification required under section 6057(b) . The term notification required under section 6057(b) means either a Form 8955–SSA (or its successor) or a Form 5500 series (or its successor). (4) Determination of 250 returns —(i) In general . For purposes of this section, a filer is required to file at least 250 returns if, during the calendar year that includes the first day of the plan year, the filer is required to file at least 250 returns of any type, including information returns (for example, Forms W–2 and Forms 1099), income tax returns, employment tax returns, and excise tax returns.

(ii) Definition of filer . For purposes of this section, the term filer means the plan administrator within the meaning of section 414(g). If the plan administrator within the meaning of section 414(g) is the employer, the special rules in §1.6058–2(d)(3)(iii) will apply.

(e) Example . The following example illustrates the provisions of paragraph (d)(4) of this section:

Example . In 2014, P, the plan administrator of Plan B, is required to file 252 returns (including Forms 1099–R, Distributions From Pensions, An- nuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., Form 8955–SSA, Annual Registration Statement Identifying Separated Par- ticipants with Deferred Vested Benefits, Form 5500, Annual Return/Report of Employee Benefit Plan, and Form 945, Annual Return of Withheld Federal Income Tax ). Plan B’s plan year is the calendar year. Because P is required to file at least 250 returns during the 2014 calendar year, P must file the 2014 Form 8955–SSA for Plan B electronically.

(f) Effective/applicability date . This section is applicable for registration statements and other notifications required to be filed under section 6057 for plan years that begin on or after January 1, 2014, but only for filings with a filing deadline (not taking into account extensions) after December 31, 2014.

Par. 3. Section 301.6058–2 is added to read as follows:

§301.6058–2 Required use of magnetic media for filing requirements relating to information required in connection with certain plans of deferred compensation .

(a) Magnetic media filing requirements under section 6058 . A return required under section 6058 with respect to an employee benefit plan must be filed on magnetic media if the filer is required by the Internal Revenue Code or regulations to file at least 250 returns during the calendar year that includes the first day of the plan year. Returns filed on magnetic media must be made in accordance with applicable revenue procedures, publications, forms, instructions, or other guidance on the IRS.gov Internet website. In prescribing revenue procedures, publications, forms, and instructions, or other guidance on the IRS.gov Internet site, the Commissioner may direct the type of magnetic media filing. (See §601.601(d)(2)(ii)( b ) of this chapter.)

September 23, 2013 270 2013–39 I.R.B.

report required under section 6059 means the Schedule SB, Single-Employer De- fined Benefit Plan Actuarial Information, of the Form 5500 series (or its successor).

(ii) Multiemployer and certain money purchase plans . For multiemployer and certain money purchase plans, the term ac- tuarial report required under section 6059 means the Schedule MB, Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information, of the Form 5500 series (or its successor).

(e) Example . The following example illustrates the provisions of paragraph (d)(3) of this section:

Example . In 2014, P, the plan administrator of Plan B (a single employer defined benefit plan), is required to file 266 returns (including Forms 1099–R, Distributions From Pensions, Annuities, Retirement, Profit-Sharing Plans, IRAs, Insurance Contracts, etc. and one Form 5500 series). Plan B’s plan year is the calendar year. Because P is required to file at least 250 returns during the calendar year, P must file the 2014 Schedule SB of the Form 5500 series for Plan B electronically.

(f) Effective/ applicability date . This section is applicable for actuarial reports required to be filed under section 6059 for plan years that begin on or after January 1, 2014, but only for filings with a filing deadline (not taking into account extensions) after December 31, 2014.

Beth Tucker, Deputy Commissioner for

Operations Support .

(Filed by the Office of the Federal Register on August 29, 2013, 8:45 a.m., and published in the issue of the Federal Register for August 30, 2013, 78 F.R. 53704)

gregation rules of section 414(b), (c), (m), and (o) will apply to a filer that is or includes an employer. Thus, for example, a filer that is a member of a controlled group of corporations within the meaning of section 414(b) must file the Form 5500 series on magnetic media if the aggregate number of returns required to be filed by all members of the controlled group of corporations is at least 250.

(e) Example . The following example illustrates the provisions of paragraph (d)(3) of this section:

Example . In 2014, Employer X (the plan sponsor of Plan A) and P (the plan administrator of Plan A) are required to file 267 returns. Employer X is required to file the following: one Form 1120, U.S. Corporation Income Tax Return, 195 Forms W–2, Wage and Tax Statement, 25 Forms 1099–DIV, Dividends and Dis- tributions, one Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, and four Forms 941, Employer’s Quarterly Federal Tax Return . P is required to file 40 Forms 1099–R, Distributions From Pensions, Annuities, Retirement, Profit-Sharing Plans, IRAs, Insurance Contracts, etc . P and Employer X are jointly required to file one Form 5500 series. Plan A’s plan year is the calendar year. Because P and Employer X, in the aggregate, are required to file at least 250 returns during the calendar year, the 2014 Form 5500 for Plan A must be filed electronically.

(f) Effective/applicability date . This section is applicable for returns required to be filed under section 6058 for plan years that begin on or after January 1, 2014, but only for filings with a filing deadline (not taking into account extensions) after December 31, 2014.

Par. 4. Section 301.6059–2 is added to read as follows:

§301.6059–2 Required use of magnetic media for filing requirements relating to periodic report of actuary.

(a) Magnetic media filing requirements under section 6059 . An actuarial report required under section 6059 with respect to an employee benefit plan must be filed on magnetic media if the filer is required by the Internal Revenue Code or regulations to file at least 250 returns during the calendar year that includes the first day of the plan year. Actuarial reports filed on magnetic media must be made in accordance with applicable revenue procedures, publications, forms, instructions, or other guidance on the IRS.gov Inter

net website. In prescribing revenue procedures, publications, forms, instructions, or other guidance on the IRS.gov Internet website, the Commissioner may direct the type of magnetic media filing. (See §601.601(d)(2)(ii)( b ) of this chapter.)

(b) Economic hardship waiver . The Commissioner may waive the requirements of this section in cases of undue economic hardship. The principal factor in determining hardship will be the amount, if any, by which the cost of filing the reports on magnetic media in accordance with this section exceeds the cost of filing the reports on paper or other media. A request for a waiver must be made in accordance with applicable published guidance, publications, forms, instructions, or other guidance on the IRS.gov Internet website. (See §601.601(d)(2)(ii)( b ) of this chapter.) The waiver will specify the type of filing (that is, an actuarial report required under section 6059) and the period to which it applies, and will be subject to such terms and conditions regarding the method of filing as may be prescribed by the Commissioner.

(c) Failure to File . If a filer required to file an actuarial report under section 6059 fails to file the report on magnetic media when required to do so by this section, the filer is deemed to have failed to file the report. See section 6692 for the penalty for the failure to file an actuarial report. In determining whether there is reasonable cause for failure to file the report, §301.6692–1(c) and rules similar to the rules in §301.6724–1(c)(3)(ii) (regarding undue economic hardship related to filing information returns on magnetic media) will apply.

(d) Meaning of terms . The following definitions apply for purposes of this section.

(2) Actuarial report required under sec- tion 6059 —(i) Single employer plans . For a single employer plan, the term actuarial

2013–39 I.R.B. 271 September 23, 2013