[Federal Register: June 6, 2006 (Volume 71, Number 108)]
[Proposed Rules]
[Page 32495-32496]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06jn06-16]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-112994-06]
RIN 1545-BF47
Guidance Under Section 7874 Regarding Expatriated Entities and
Their Foreign Parents
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking by cross-reference to temporary
regulation and notice of public hearing.
-----------------------------------------------------------------------
SUMMARY: In the Rules and Regulations section of this issue of the
Federal Register, the IRS is issuing temporary regulations relating to
the determination of whether a foreign entity shall be treated as a
surrogate foreign corporation under section 7874(a)(2)(B) of the Code.
The text of those regulations also serves as the text of these proposed
regulations. This document also provides notice of a public hearing on
these proposed regulations.
DATES: Written or electronic comments must be received by September 5,
2006. Outlines of topics to be discussed at the public hearing
scheduled for October 24, 2006, at 10 a.m., must be received by October
3, 2006.
ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-112994-06), 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-
112994-06), Courier's Desk, Internal Revenue Service, 1111 Constitution
Avenue, NW., Washington, DC, or sent electronically, via the IRS
Internet site at: http://www.irs.gov/regs or via the Federal eRulemaking Portal at http://www.regulations.gov (IRS-REG-112994-06).
The public hearing will be held in the auditorium, Internal Revenue
Building, 1111 Constitution Avenue, NW., Washington, DC.
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
Milton Cahn at (202) 622-3860; concerning submission and delivery of
comments and the public hearing, Treena Garrett, (202) 622-7180 (not
toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background and Explanation of Provisions
Temporary regulations in the Rules and Regulations section of this
issue of the Federal Register amend the Income Tax Regulations (26 CFR
part 1) relating to section 7874. The temporary regulations set forth
rules relating to the determination of whether a foreign entity shall
be treated as a surrogate foreign corporation under section
7874(a)(2)(B) of the Code. The text of those regulations also serves as
the text of these proposed regulations. The preamble to the temporary
regulations explains the amendments.
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. Pursuant to
the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby
certified that this regulation will not have a significant economic
impact on a substantial number of small entities. Accordingly, a
regulatory flexibility analysis is not required. The nature of the
businesses that are most likely to consider corporate expatriation
transactions, as well as the complexity and the costs of structuring
and implementing those transactions, makes it unlikely that a
substantial number of small entities will engage in such transactions.
In addition, any economic impact to entities affected by section 7874,
large or small, is derived from the operation of the statute or its
intended application, not the proposed regulations in this notice of
proposed rulemaking. 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 regulations are adopted as final regulations,
consideration will be given to any written comments (a signed original
and eight (8) copies) or electronic comments that are submitted timely
to the IRS. The IRS and Treasury Department specifically request
comments on the clarity of the proposed regulations and how they can be
made easier to understand. All comments will be available for public
inspection and copying.
[[Page 32496]]
A public hearing has been scheduled for October 24, 2006, at 10
a.m., in the 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 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 electronic or
written comments and an outline of the topics to be discussed and the
time to be devoted to each topic (a signed original and eight (8)
copies) by October 3, 2006. 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 Jefferson VanderWolk
of the Office of the Associate Chief Counsel (International). However,
other personnel from the IRS and Treasury Department participated in
their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
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 part 1 is amended by adding
an entry in numerical order to read, in part, as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.7874-2 also issued under 26 U.S.C. 7874(c)(6) and (g).
* * *
Par. 2. Section 1.7874-2 is added to read as follows:
Sec. 1.7874-2 Surrogate foreign corporation.
[The text of proposed Sec. 1.7874-2 is the same as the text of
Sec. 1.7874-2T published elsewhere in this issue of the Federal
Register].
Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. E6-8698 Filed 6-5-06; 8:45 am]
BILLING CODE 4830-01-P