Classification of Certain Foreign Entities, 74658 [05-24107]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 70, Number 241 (Friday, December 16, 2005)]
[Rules and Regulations]
[Page 74658]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-24107]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[TD 9235]
RIN 1545-BD77


Classification of Certain Foreign Entities

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations and temporary regulations.

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SUMMARY: This document contains final and temporary regulations 
relating to certain business entities included on the list of foreign 
business entities that are always classified as corporations for 
Federal tax purposes.

DATES: Effective Date: These regulations are effective on December 16, 
2005.
    Applicability Date: For the dates of applicability of these 
regulations, see Sec.  301.7701-2(e)(4).

FOR FURTHER INFORMATION CONTACT: Ronald M. Gootzeit, (202) 622-3860 
(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    On April 14, 2005, the IRS and Treasury Department published in the 
Federal Register temporary regulations (TD 9197, 2005-18 I.R.B. 985 [70 
FR 19697]) and a notice of proposed rulemaking (REG-148521-04, 2005-18 
I.R.B. 995 [70 FR 19722]) under section 7701 of the Internal Revenue 
Code (Code). The regulations added certain foreign business entities to 
the list of entities in Sec.  301.7701-2(b)(8) (the per se corporation 
list) in response to the adoption by the Council of the European Union 
of a Council Regulation (2157/2001 2001 O.J. (L 294)) permitting a new 
business entity, the European public limited liability company 
(Societas Europaea or SE). Specifically, the temporary and proposed 
regulations added the SE, Estonian Aktsiaselts, Latvian Akciju 
Sabiedriba, Lithuanian Akcine Bendroves, Slovenian Delniska Druzba, and 
Liechtenstein Aktiengesellschaft to the per se list of corporations. 
For further background see TD 9197 (2005-18 I.R.B. 985; 70 FR 19697) 
and Notice 2004-68 (2004-2 CB 706).

Explanation of Provisions

    No substantive comments were received regarding the temporary and 
proposed regulations. Accordingly, these regulations finalize the 
proposed regulations without modification and revise the temporary 
regulations to cross reference to the new provisions.

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 and 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. Pursuant to section 7805(f) of the Code, the Notice of Proposed 
Rulemaking preceding the final 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 Ronald M. Gootzeit of 
the Office of Associate Chief Counsel (International). However, other 
personnel from the IRS and Treasury Department participated in their 
development.

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 for part 301 continues to read, in 
part, as follows:

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

0
Par. 2. Section 301.7701-2 is amended by:
0
1. Adding six entries in alphabetical order to paragraph (b)(8)(i).
0
2. Removing paragraph (b)(8)(vi).
0
3. Adding paragraphs (e)(3) and (4).
    The additions read as follows:


Sec.  301.7701-2  Business entities; definitions.

* * * * *
    (b) * * *
    (8) * * *
    (i) * * *
Estonia, Aktsiaselts
European Economic Area/European Union, Societas Europaea
* * * * *
Latvia, Akciju Sabiedriba
* * * * *
Liechtenstein, Aktiengesellschaft
Lithuania, Akcine Bendroves
* * * * *
Slovenia, Delniska Druzba.
* * * * *
    (e) * * *
    (3) [Reserved]. For further guidance, see Sec.  301.7701-2T(f).
    (4) The reference to the Estonian, Latvian, Liechtenstein, 
Lithuanian, and Slovenian entities in paragraph (b)(8)(i) of this 
section applies to such entities formed on or after October 7, 2004, 
and to any such entity formed before such date from the date any person 
or persons, who were not owners of the entity as of October 7, 2004, 
own in the aggregate a 50 percent or greater interest in the entity. 
The reference to the European Economic Area/European Union entity in 
paragraph (b)(8)(i) of this section applies to such entities formed on 
or after October 8, 2004.

0
Par. 3. Section 301.7701-2T is amended by:
0
1. Removing paragraph (b)(8)(vi).
0
2. Revising paragraph (e)(3).
    The revision reads as follows:


Sec.  301.7701-2T  Business entities; definitions (temporary).

* * * * *
    (e) * * *
    (3) [Reserved]. For further guidance, see Sec.  301.7701-2(e)(4).
* * * * *

    Approved: December 8, 2005.
Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
Erin Solomon,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 05-24107 Filed 12-15-05; 8:45 am]
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