Substitute for Return, 41144-41146 [05-14086]

Agencies

• DEPARTMENT OF THE TREASURY
• Internal Revenue Service

[Federal Register Volume 70, Number 136 (Monday, July 18, 2005)]
[Rules and Regulations]
[Pages 41144-41146]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-14086]


-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

26 CFR Part 301

[TD 9215]
RIN 1545-BC46


Substitute for Return

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary regulations and removal of final regulations.

-----------------------------------------------------------------------

SUMMARY: This document contains temporary regulations relating to 
returns prepared or signed by the Commissioner or other internal 
revenue officers or employees under section 6020 of the Internal 
Revenue Code. The text of the temporary regulations also serves as the 
text of the proposed regulations set forth in the notice of proposed 
rulemaking on this subject in the Proposed Rules section of this issue 
of the Federal Register.

DATES: Effective Date: These regulations are effective July 18, 2005.
    Applicability Date: For dates of applicability, see Sec.  301.6020-
1(d).

FOR FURTHER INFORMATION CONTACT: Tracey B. Leibowitz, (202) 622-4940 
(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    This document contains amendments to 26 CFR part 301 under section 
6020 of the Internal Revenue Code (Code), 26 U.S.C. sec. 6020. Section 
301.6020-1 of the Procedure and Administration Regulations provides for 
the preparation or execution of returns by authorized internal revenue 
officers or employees. Section 1301(a) of the Taxpayer Bill of Rights 
Act of 1996, Pub. L. 104-168 (110 Stat. 1452), amended section 6651 to 
add subsection (g)(2), which provides that, for returns due after July 
30, 1996 (determined without regard to extensions), a return made under 
section 6020(b) shall be treated as a return filed by the taxpayer for 
purposes of determining the amount of the additions to tax under 
section 6651(a)(2) and (a)(3). Absent the existence of a return under 
section 6020(b), the addition to tax under section 6651(a)(2) does not 
apply to a nonfiler.
    In Cabirac v. Commissioner, 120 T.C. 163 (2003), aff'd in an 
unpublished opinion, No. 03-3157 (3rd Cir. Feb. 10, 2004), and Spurlock 
v. Commissioner, T.C. Memo. 2003-124, the Tax Court found that the 
Service did not establish that it had prepared and signed a return in 
accordance with section 6020(b). In Spurlock, the Tax Court held that a 
return for section 6020(b) purposes must be subscribed, contain 
sufficient information from which to compute the taxpayer's tax 
liability, and the return and any attachments must ``purport to be a 
return.'' Spurlock, slip op. at 27.
    These temporary regulations provide that a document (or set of 
documents) signed by an authorized internal revenue officer or employee 
is a return under section 6020(b) if the document (or set of documents) 
identifies the taxpayer by name and taxpayer identification number, 
contains sufficient information from which to compute the taxpayer's 
tax liability, and the document (or set of documents) purports to be a 
return under section 6020(b). A Form 13496, ``IRC Section 6020(b) 
Certification,'' or any other form that an authorized internal revenue 
officer or employee signs and uses to identify a document (or set of 
documents) containing the information set forth above as a section 
6020(b) return, and the documents identified, constitute a valid 
section 6020(b) return.
    Further, because the Service prepares and signs section 6020(b) 
returns both by hand and through automated means, these regulations 
provide that a name or title of an internal revenue officer or employee 
appearing upon a return made in accordance with section 6020(b) is 
sufficient as a subscription by that officer or employee to adopt the 
document as a return for the taxpayer without regard to whether the 
name or title is handwritten, stamped, typed, printed, or otherwise 
mechanically affixed to the document. The document or set of documents 
and subscription may be in written or electronic form.
    These temporary regulations do not alter the method for the 
preparation of returns under section 6020(a) as provided in TD 6498. 
Under section 6020(a), if the taxpayer consents to disclose necessary 
information, the Service may prepare a return on behalf of a taxpayer, 
and if the taxpayer signs the return, the Service will receive it as 
the taxpayer's return.

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 
applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6) 
please refer to the cross-reference notice of proposed rulemaking 
published elsewhere in this issue of the Federal Register. Pursuant to 
section 7805(f) of the Code, this notice of proposed rulemaking was 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small businesses.

Drafting Information

    The principal author of these regulations is Tracey B. Leibowitz, 
of the Office of the Associate Chief Counsel (Procedure and 
Administration), Administrative Provisions and Judicial Practice 
Division.

List of Subjects in 26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Amendments to the Regulations

0
Accordingly, 26 CFR part 301 is amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

0
Paragraph 1. The authority citation continues to read, in part, as 
follows:

    Authority: 26 U.S.C. 7805 * * *


Sec.  301.6020-1  [Removed]

0
Par. 2. Section 301.6020-1 is removed.

0
Par. 3. Section 301.6020-1T is added to read as follows:


Sec.  301.6020-1T  Returns prepared or executed by the Commissioner or 
other internal revenue officers (temporary).

    (a) Preparation of returns--(1) In general. If any person required 
by the Code or by the regulations prescribed thereunder to make a 
return fails to make such return, it may be prepared by the 
Commissioner or other authorized internal revenue officer or employee 
provided such person consents to disclose all information necessary for

[[Page 41145]]

the preparation of such return. The return upon being signed by the 
person required to make it shall be received by the Commissioner as the 
return of such person.
    (2) Responsibility of person for whom return is prepared. A person 
for whom a return is prepared in accordance with paragraph (a)(1) of 
this section shall for all legal purposes remain responsible for the 
correctness of the return to the same extent as if the return had been 
prepared by him.
    (b) Execution of returns--(1) In general. If any person required by 
the Code or by the regulations prescribed thereunder to make a return 
(other than a declaration of estimated tax required under section 6654 
or 6655) fails to make such return at the time prescribed therefor, or 
makes, willfully or otherwise, a false, fraudulent or frivolous return, 
the Commissioner or other authorized internal revenue officer or 
employee shall make such return from his own knowledge and from such 
information as he can obtain through testimony or otherwise. The 
Commissioner or other authorized internal revenue officer or employee 
may make the return by gathering information and making computations 
through electronic, automated or other means to make a determination of 
the taxpayer's tax liability.
    (2) Form of the return. A document (or set of documents) signed by 
the Commissioner or other authorized internal revenue officer or 
employee shall be a return for a person described in paragraph (b)(1) 
of this section if the document (or set of documents) identifies the 
taxpayer by name and taxpayer identification number, contains 
sufficient information from which to compute the taxpayer's tax 
liability, and the document (or set of documents) purports to be a 
return. A Form 13496, ``IRC Section 6020(b) Certification,'' or any 
other form that an authorized internal revenue officer or employee 
signs and uses to identify a set of documents containing the 
information set forth above as a section 6020(b) return, and the 
documents identified, constitute a return under section 6020(b). A 
return may be signed by the name or title of an internal revenue 
officer or employee being handwritten, stamped, typed, printed or 
otherwise mechanically affixed to the return, so long as that name or 
title was placed on the document to signify that the internal revenue 
officer or employee adopted the document as a return for the taxpayer. 
The document and signature may be in written or electronic form.
    (3) Status of returns. Any return made in accordance with paragraph 
(b)(1) of this section and signed by the Commissioner or other 
authorized internal revenue officer or employee shall be prima facie 
good and sufficient for all legal purposes. Furthermore, the return 
shall be treated as the return filed by the taxpayer for purposes of 
determining the amount of the addition to tax under section 6651(a)(2) 
and (3).
    (4) Deficiency procedures. For deficiency procedures in the case of 
income, estate, and gift taxes, see sections 6211 to 6216, inclusive, 
and Sec. Sec.  301.6211-1 to 301.6215-1, inclusive.
    (5) Employment status procedures. For pre-assessment procedures in 
employment taxes cases involving worker classification, see section 
7436 (proceedings for determination of employment status).
    (6) Examples. The application of this paragraph (b) is illustrated 
by the following examples:

    Example 1. Individual A, a calendar-year taxpayer, fails to file 
his 2003 return. Employee X, a Service employee, opens an 
examination related to A's 2003 taxable year. At the end of the 
examination, X completes a Form 13496 and attaches to it the 
documents listed on the form. Those documents explain examination 
changes and provide sufficient information to compute A's tax 
liability. The Form 13496 provides that the Service employee 
identified on the Form certifies that the attached pages constitute 
a return under section 6020(b). When X signs the certification 
package, the package constitutes a return under paragraph (b) of 
this section because the package identifies A by name, contains A's 
taxpayer identifying number (TIN), has sufficient information to 
compute A's tax liability, and contains a statement stating that it 
constitutes a return under section 6020(b). In addition, the Service 
shall determine the amount of the additions to tax under section 
6651(a)(2) by treating the section 6020(b) return as the return 
filed by the taxpayer. Likewise, the Service shall determine the 
amount of any addition to tax under section 6651(a)(3), which arises 
only after notice and demand for payment, by treating the section 
6020(b) return as the return filed by the taxpayer.
    Example 2. Same facts as in Example 1, except that, after 
performing the examination, X does not compile any examination 
documents together as a related set of documents. X also does not 
sign and complete the Form 13496 nor associate the forms explaining 
examination changes with any other document. Because X did not sign 
any document stating that it constitutes a return under section 
6020(b) and the documents otherwise do not purport to be a section 
6020(b) return, the documents do not constitute a return under 
section 6020(b). Therefore, the Service cannot determine the section 
6651(a)(2) addition to tax against nonfiler A for A's 2003 taxable 
year on the basis of those documents.
    Example 3. Individual C, a calendar-year taxpayer, fails to file 
his 2003 return. The Service determines through its automated 
internal matching programs that C received reportable income and 
failed to file a return. The Service, again through its automated 
systems, generates a Letter 2566, ``30 Day Proposed Assessment (SFR-
01) 910 SC/CG.'' This letter contains C's name, TIN, and has 
sufficient information to compute C's tax liability. Contemporaneous 
with the creation of the Letter 2566, the Service, through its 
automated system, electronically creates and stores a certification 
stating that the electronic data contained as part of C's account 
constitutes a valid return under section 6020(b) as of that date. 
Further, the electronic data includes the signature of the Service 
employee authorized to sign the section 6020(b) return upon its 
creation. Although the signature is stored electronically, it can 
appear as a printed name when the Service requests a paper copy of 
the certification. The electronically created information, 
signature, and certification is a return under section 6020(b). The 
Service will treat that return as the return filed by the taxpayer 
in determining the amount of the section 6651(a)(2) addition to tax 
with respect to C's 2003 taxable year. Likewise, the Service shall 
determine the amount of any addition to tax under section 
6651(a)(3), which arises only after notice and demand for payment, 
by treating the section 6020(b) return as the return filed by the 
taxpayer.
    Example 4. Corporation M, a quarterly taxpayer, fails to file a 
Form 941, ``Employer's Quarterly Federal Tax Return,'' for the 
second quarter of 2004. Q, a Service employee authorized to sign 
returns under section 6020(b), prepares a Form 941 by hand, stating 
Corporation M's name, address, and TIN. Q completes the Form 941 by 
entering line item amounts, including the tax due, and then signs 
the document. The Form 941 that Q prepared and signed constitutes a 
section 6020(b) return because the Form 941 purports to be a return 
under section 6020(b), the form contains M's name and TIN, and it 
includes sufficient information to compute M's tax liability for the 
second quarter of 2004.

    (c) Cross references--(1) For provisions that a return executed by 
the Commissioner or other authorized internal revenue officer or 
employee will not start the running of the period of limitations on 
assessment and collection, see section 6501(b)(3) and Sec.  
301.6501(b)-1(e).
    (2) For determining the period of limitations on collection after 
assessment of a liability on a return executed by the Commissioner or 
other authorized internal revenue officer or employee, see section 6502 
and Sec.  301.6502-1.
    (3) For additions to the tax and additional amounts for failure to 
file returns, see sections 6651 and Sec.  301.6651-1, and section 6652 
and Sec.  301.6652-1, respectively.
    (4) For additions to the tax for failure to pay tax, see section 
6651 and Sec.  301.6651-1.

[[Page 41146]]

    (5) For criminal penalties for willful failure to make returns, see 
sections 7201, 7202, and 7203.
    (6) For criminal penalties for willfully making false or fraudulent 
returns, see sections 7206 and 7207.
    (7) For civil penalties for filing frivolous income tax returns, 
see section 6702.
    (8) For authority to examine books and witnesses, see section 7602 
and Sec.  301.7602-1.
    (d) Effective date. This section applies to returns prepared under 
section 6020 after July 18, 2005. The applicability of this section 
expires on July 16, 2008.

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
    Approved: July 12, 2005.
Eric Solomon,
Acting Deputy Assistant Secretary (Tax Policy).
[FR Doc. 05-14086 Filed 7-15-05; 8:45 am]
BILLING CODE 4830-01-P