Agent for a Consolidated Group With Foreign Common Parent, 13001-13003 [06-2438]
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Federal Register / Vol. 71, No. 49 / Tuesday, March 14, 2006 / Rules and Regulations
Dated: February 23, 2006.
David E. Wardrop, Jr.,
Acting Director, Center for Veterinary
Medicine.
[FR Doc. 06–2396 Filed 3–13–06; 8:45 am]
PART 520—ORAL DOSAGE FORM
NEW ANIMAL DRUGS
1. The authority citation for 21 CFR
part 520 continues to read as follows:
I
Authority: 21 U.S.C. 360b.
I
BILLING CODE 4160–01–S
2. Add § 520.2218 to read as follows:
sroberts on PROD1PC70 with RULES
§ 520.2218 Sulfamerazine, sulfamethazine,
and sulfaquinoxaline powder.
DEPARTMENT OF THE TREASURY
(a) Specifications. Each 195-gram (g)
packet of powder contains 78 g
sulfamerazine, 78 g sulfamethazine, and
39 g sulfaquinoxaline.
(b) Sponsor. See No. 046573 in
§ 510.600(c) of this chapter.
(c) Related tolerances. See §§ 556.670
and 556.685 of this chapter.
(d) Conditions of use—(1) Chickens—
(i) Amounts and indications for use—
(A) As an aid in the control of
coccidiosis caused by Eimeria tenella
and E. necatrix susceptible to
sulfamerazine, sulfamethazine, and
sulfaquinoxaline: provide medicated
water (0.4 percent solution) for 2 to 3
days, then plain water for 3 days, then
medicated water (0.25 percent solution)
for 2 days. If bloody droppings appear,
repeat at 0.25 percent level for 2 more
days. Do not change litter.
(B) As an aid in the control of acute
fowl cholera caused by Pasteurella
multocida susceptible to sulfamerazine,
sulfamethazine, and sulfaquinoxaline:
provide medicated water (0.4 percent
solution) for 2 to 3 days. If disease
recurs, repeat treatment.
(ii) Limitations. Make fresh solution
daily. Do not treat chickens within 14
days of slaughter for food. Do not
medicate chickens producing eggs for
human consumption.
(2) Turkeys—(i) Amounts and
indications for use—(A) As an aid in the
control of coccidiosis caused by Eimeria
meleagrimitis and E. adenoeides
susceptible to sulfamerazine,
sulfamethazine, and sulfaquinoxaline:
provide medicated water (0.25 percent
solution) for 2 days, then plain water for
3 days, then medicated water (0.25
percent solution) for 2 days, then plain
water for 3 days, then medicated water
(0.25 percent solution) for 2 days.
Repeat if necessary. Do not change litter.
(B) As an aid in the control of acute
fowl cholera caused by Pasteurella
multocida susceptible to sulfamerazine,
sulfamethazine, and sulfaquinoxaline:
provide medicated water (0.4 percent
solution) for 2 to 3 days. If disease
recurs, repeat treatment.
(ii) Limitations. Make fresh solution
daily. Do not treat turkeys within 14
days of slaughter for food. Do not
medicate turkeys producing eggs for
human consumption.
Internal Revenue Service
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26 CFR Part 1
[TD 9255]
RIN 1545–BF31
Agent for a Consolidated Group With
Foreign Common Parent
Internal Revenue Service (IRS),
Treasury.
ACTION: Final and temporary
regulations.
AGENCY:
SUMMARY: This document contains
temporary regulations under section
1502 that provide the IRS with the
authority to designate a domestic
member of the consolidated group as a
substitute agent to act as the sole agent
for the group where a foreign entity is
the common parent. The regulations
affect corporations that join in the filing
of a consolidated Federal income tax
return where the common parent of the
consolidated group is a foreign entity
that is treated as a domestic corporation
pursuant to section 7874(b) of the
Internal Revenue Code (Code) or as the
result of a section 953(d) election. The
text of these 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 in this issue
of the Federal Register.
DATES: Effective Date: These regulations
are effective March 14, 2006.
Applicability Dates: These regulations
apply to taxable years for which the due
date (without extensions) for filing
returns is after March 14, 2006. The
applicability of these regulations will
expire on or before March 9, 2009.
FOR FURTHER INFORMATION CONTACT:
Stephen R. Cleary, (202) 622–7750, (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background and Explanation of
Provisions
Section 1504(b)(3) of the Internal
Revenue Code of 1986 (Code) excludes
foreign corporations from the definition
of ‘‘includible corporation.’’ As a result,
a foreign entity generally cannot be a
member of a consolidated group. In
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13001
certain cases, section 7874 treats a
foreign entity as a domestic corporation
and section 953(d) allows a foreign
insurance company to make an election
to be treated as a domestic corporation.
As a result, a foreign entity could be the
common parent or a subsidiary of a
consolidated group if it is treated as a
domestic corporation under either
section 7874(b) or section 953(d).
Under § 1.1502–77(a)(1)(i) of the
regulations, the common parent for a
consolidated return year is generally the
sole agent (agent for the group) that is
authorized to act in its own name with
respect to all matters relating to the tax
liability for that consolidated return
year for each member of the group, and
any successor of a member (as defined
in § 1.1502–77(a)(1)(iii)). The common
parent’s agency for a consolidated
return year generally continues until the
common parent ceases to exist,
regardless of whether any subsidiaries
in that year cease to be members of the
group, whether the group files a
consolidated return in any later year, or
whether the common parent ceases to be
the common parent or a member of the
group in a later year. Section 1.1502–
77(d) provides rules for designating a
substitute agent if the common parent’s
existence terminates.
The IRS and Treasury Department
believe that it may not always be
practical or efficient for tax
administration to have a foreign entity
act as the agent for the group.
Accordingly, where a foreign entity is
the common parent because it is treated
as a domestic corporation by reason of
section 7874 or a section 953(d) election
(a Foreign Common Parent), the
temporary regulations provide the IRS
with the authority to designate a
domestic member of the group to be the
sole agent (a Domestic Substitute Agent)
even though the group’s common parent
continues in existence.
These temporary regulations provide
flexibility in the method of
communication the IRS may use to
designate a Domestic Substitute Agent,
allowing notification by mail or by
faxed transmission. In addition, these
regulations provide specificity for the
determination of the effective date of the
designation of a Domestic Substitute
Agent: the designation is effective on
the earliest of the 14th day following the
date of a mailing, the 4th day following
a faxed transmission, or the date the
Commissioner receives written
confirmation of the designation by a
duly authorized officer of the designated
agent, within the meaning of section
6062.
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13002
Federal Register / Vol. 71, No. 49 / Tuesday, March 14, 2006 / Rules and Regulations
Special Analyses
It has been determined that these
temporary regulations are not a
significant regulatory action as defined
in Executive Order 12866. Therefore, a
regulatory assessment is not required. It
has been determined, pursuant to 5
U.S.C. 553(b)(B), that good cause exists
for dispensing with the notice and
public comment procedures and that,
pursuant to 5 U.S.C. 553(d)(3), good
cause exists to dispense with a delayed
effective date. The regulations are
necessary to allow the IRS to avoid
potentially serious tax administration
problems that may arise when a foreign
entity is the agent for a consolidated
group, and to provide immediate
guidance to taxpayers regarding the IRS’
authority to designate a substitute agent
for the group in such a case. For
applicability of the Regulatory
Flexibility Act (5 U.S.C. chapter 6), refer
to the Special Analysis section of the
Notice of Proposed Rulemaking
published in the Proposed Rules section
in this issue of the Federal Register.
Pursuant to section 7805(f) of the Code,
these temporary regulations will be
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 Stephen R. Cleary of the
Office of Associate Chief Counsel
(Corporate). Other personnel from the
Treasury Department and the IRS
participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is
amended as follows:
I
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by adding entries
in numerical order to read as follows:
I
Authority: 26 U.S.C. 7805 * * *
Section 1.1502–77T also issued under 26
U.S.C. 1502 * * *
sroberts on PROD1PC70 with RULES
I Par. 2. Section 1.1502–77 is amended
by adding and reserving paragraph (i)
and adding paragraph (j) to read as
follows:
§ 1.1502–77
Agent for the group.
*
*
*
*
*
(i)[Reserved]
(j) Designation by Commissioner if
common parent is treated as a domestic
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Jkt 208001
corporation under section 7874 or
section 953(d) [Reserved]. For further
guidance, see § 1.1502–77T(j).
I Par. 3. Section 1.1502–77T is added to
read as follows:
§ 1.1502–77T
(temporary).
Agent for the group
(a) through (i) [Reserved]. For further
guidance see § 1.1502–77(a) through (i).
(j) Designation by Commissioner if
common parent is treated as a domestic
corporation under section 7874 or
section 953(d)—(1) In general. If the
common parent is an entity created or
organized under the law of a foreign
country and is treated as a domestic
corporation by reason of section 7874
(or regulations thereunder) or a section
953(d) election (a Foreign Common
Parent), the Commissioner may at any
time, with or without a request from any
member of the group, designate another
member of the group to act as the agent
for the group (a Domestic Substitute
Agent) for any taxable year for which
the due date (without extensions) for
filing returns is after March 14, 2006
and the Foreign Common Parent would
otherwise be the agent for the group. For
each such year, the Domestic Substitute
Agent will be the sole agent for the
group even though the Foreign Common
Parent remains in existence. The
Foreign Common Parent ceases to be the
agent for the group when the
Commissioner’s designation of a
Domestic Substitute Agent becomes
effective. The Commissioner may
designate a Domestic Substitute Agent
for the term of a single taxable year,
multiple years, or on a continuing basis.
(2) Domestic Substitute Agent. The
Domestic Substitute Agent, by
designation or by succession, shall be a
domestic corporation described in
§ 1.1502–77(d)(1)(i)(A) (determined
without regard to section 7874, a section
953(d) election, section 269B, or section
1504(d)).
(3) Designation by the Commissioner.
The Commissioner will notify the
Domestic Substitute Agent in writing by
mail or faxed transmission of the
designation. The Domestic Substitute
Agent’s designation is effective on the
earliest of the 14th day following the
date of a mailing, the 4th day following
a faxed transmission, or the date the
Commissioner receives written
confirmation of the designation by a
duly authorized officer of the Domestic
Substitute Agent (within the meaning of
section 6062). The Domestic Substitute
Agent must give notice of its
designation to the Foreign Common
Parent and each corporation that was a
member of the group during any part of
any consolidated return year for which
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Fmt 4700
Sfmt 4700
the Domestic Substitute Agent will be
the agent. A failure of the Domestic
Substitute Agent to notify the Foreign
Common Parent or any member of the
group does not invalidate the
designation. The Commissioner will
send a copy of the notification to the
Foreign Common Parent, and if
applicable, to any Domestic Substitute
Agent the designation replaces; a failure
to send a copy of the notification does
not invalidate the designation.
(4) Term of agency—(i) In general. If
the Commissioner designates a
Domestic Substitute Agent for a taxable
year, the Domestic Substitute Agent will
remain the agent for such year until the
group ceases to exist or the Domestic
Substitute Agent ceases to exist, ceases
to be a member of the group, is replaced
by a successor, or is replaced by the
Commissioner. This designee remains
the agent for such year regardless of
whether one or more corporations that
were members of the group during any
part of such year cease to be members
of the group, whether the group files a
consolidated return for any subsequent
year, or, except as provided by
paragraphs (j)(4)(iv)(B) and (j)(4)(v) of
this section, whether the group remains
in existence with a new common parent
in any subsequent year.
(ii) Agency of Domestic Substitute
Agent upon termination of the group. If
the Domestic Substitute Agent is the
agent for the group for a year in which
the group terminates, the Domestic
Substitute Agent shall be the agent for
that taxable year (and any prior taxable
year for which it is the agent for the
group) so long as the Domestic
Substitute Agent continues its corporate
existence unless it is replaced by a
successor or a new designee by the
Commissioner.
(iii) Replacement of § 1.1502–77(d)(1)
agent. If, pursuant to § 1.1502–77(d)(1),
the common parent of the group
designates a Foreign Common Parent as
the agent for the group for any taxable
year, the Commissioner may, at any
time, designate a Domestic Substitute
Agent to replace the Foreign Common
Parent, even if the Commissioner
approved the terminating common
parent’s designation.
(iv) Group continues with a new
common parent—(A) Year the new
common parent becomes the common
parent. If subsequent to a transaction to
which section 7874 applies or a section
953(d) election, the group remains in
existence with a new common parent
and such new common parent is a
domestic corporation (determined
without regard to section 7874, a section
953(d) election, or section 269B), such
new common parent will become the
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14MRR1
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Federal Register / Vol. 71, No. 49 / Tuesday, March 14, 2006 / Rules and Regulations
agent for the group with respect to the
entire consolidated return year
(including the portion of the year
preceding the date on which the new
common parent became the common
parent)) and the former Domestic
Substitute Agent will no longer be the
agent for the group for any part of that
year.
(B) Years preceding the year the new
common parent becomes the common
parent. If after the Commissioner’s
designation of a Domestic Substitute
Agent the group remains in existence
with a new common parent, and such
new common parent is a domestic
corporation (determined without regard
to section 7874, a section 953(d)
election, or section 269B), the
Commissioner may designate the new
common parent as the agent for the
group for any of the group’s prior
taxable years (for which the due date
(without extensions) for filing returns is
after March 14, 2006) in which the new
common parent was a member of the
group. For this purpose, the new
common parent is treated as having
been a member of the group for any
taxable year it is primarily liable for the
group’s income tax liability.
(v) Replacement of Domestic
Substitute Agent by the Commissioner.
The Commissioner may at any time,
with or without a request from any
member of the group, designate a
replacement for a Domestic Substitute
Agent (or a successor to such agent).
(5) Deemed § 1.1502–77(d)
designation—(i) Section 1.1502–78
adjustments. If the Commissioner
designates a Domestic Substitute Agent
under this paragraph (j), it will be
treated as a designation of a substitute
agent under § 1.1502–77(d) for the
purposes of § 1.1502–78.
(ii) Default Substitute Agent. If the
Domestic Substitute Agent goes out of
existence and has a single successor that
is eligible to be a Domestic Substitute
Agent, such successor becomes the
Domestic Substitute Agent and is
treated as a default substitute agent
under § 1.1502–77(d)(2). See § 1.1502–
77(d)(4) regarding the consequences of
the successor’s failure to notify the
Commissioner of its status as a default
substitute agent. The default substitute
agent shall use procedures in section 9
of Rev. Proc. 2002–43 (2002–2 C.B. 99)
or a corresponding provision of a
successor revenue procedure for
notification. (See § 601.601(d)(2)(ii) of
this chapter.)
(6) Request that IRS designate a
Domestic Substitute Agent—(i) Original
designation. If the common parent of the
group is a Foreign Common Parent, and
the IRS has not designated a Domestic
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16:18 Mar 13, 2006
Jkt 208001
Substitute Agent, one or more members
of the group may request the IRS to
make a designation for taxable years for
which the due date (without extensions)
for filing returns is after March 14, 2006.
Such request is deemed to be a request
under § 1.1502–77(d)(3)(i). Members of
the group shall use the procedures in
section 10 of Rev. Proc. 2002–43 (2002–
2 C.B. 99) or a corresponding provision
of a successor revenue procedure for
this purpose. (See § 601.601(d)(2)(ii) of
this chapter.)
(ii) Request that IRS replace a
previously designated substitute agent.
If the IRS designates a Domestic
Substitute Agent pursuant to this
paragraph (j), one or more members of
the group may request that the IRS
replace the designated Domestic
Substitute Agent with another member
(or successor to another member). Such
a request is deemed to be a request
pursuant to § 1.1502–77(d)(3)(ii).
Members of the group shall use the
procedures in section 11 of Rev. Proc.
2002–43 (2002–2 C.B. 99) or a
corresponding provision of a successor
revenue procedure for this purpose. (See
§ 601.601(d)(2)(ii) of this chapter.)
(7) Effective Date. This paragraph (j)
applies to taxable years for which the
due date (without extensions) for filing
returns is after March 14, 2006. The
applicability of this paragraph (j)
expires on or before March 9, 2009.
Mark E. Matthews,
Deputy Commissioner for Services and
Enforcement.
Approved: March 9, 2006.
Eric Solomon,
Acting Deputy Assistant Secretary of the
Treasury (Tax Policy).
[FR Doc. 06–2438 Filed 3–9–06; 4:15 pm]
BILLING CODE 4830–01–P
13003
of tax under sections 1441 and 1442 on
certain U.S. source income paid to
foreign persons and related
requirements governing collection,
deposit, refunds, and credits of
withheld amounts under sections 1461
through 1463. Additionally, this
document contains final regulations
under sections 6049 and 6114. These
regulations affect persons making
payments of U.S. source income to
foreign persons and foreign persons
claiming benefits under a U.S. income
tax treaty.
DATES: Effective date: These regulations
are effective March 14, 2006. The
removal of § 1.1441–1(e)(4)(vii)(G) is
effective as of January 1, 2001.
FOR FURTHER INFORMATION CONTACT:
Ethan Atticks, (202) 622–3840 (not a toll
free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collections of information
contained in this final rule have been
previously reviewed and approved by
the Office of Management and Budget in
accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
3507(d)) under control number 1545–
1484.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information
displays a valid control number
assigned by the Office of Management
and Budget.
Books or records relating to a
collection of information must be
retained as long as their contents may
become material in the administration
of any internal revenue law. Generally,
tax returns and tax return information
are confidential, as required by 26
U.S.C. 6103.
DEPARTMENT OF THE TREASURY
Background
Internal Revenue Service
In Treasury Decision 8734 (1997–2
C.B. 109 [62 FR 53387]), the Treasury
Department and the IRS issued
comprehensive regulations under
chapter 3 (sections 1441–1464) and
subpart B of Part III of Subchapter A of
chapter 61 (sections 6041 through
6050T) of the Internal Revenue Code
(Code). Those regulations were
amended by TD 8804 (1999–1 C.B. 793
[63 FR 72183]), TD 8856 (2000–1 C.B.
298 [64 FR 73408]), TD 8881 (2000–1
C.B. 1158 [65 FR 32152]), and TD 9023
(2002–2 C.B. 955 [67 FR 70310])
(collectively the current regulations).
The current regulations are generally
effective as of January 1, 2001.
In Notice 2001–4 (2001–1 C.B. 267),
Notice 2001–11 (2001–1 C.B. 464), and
26 CFR Parts 1 and 301
[TD 9253]
RIN 1545–AY92
Revisions to Regulations Relating to
Withholding of Tax on Certain U.S.
Source Income Paid to Foreign
Persons and Revisions of Information
Reporting Regulations
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
temporary regulations.
AGENCY:
SUMMARY: This document contains final
regulations relating to the withholding
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]]>Agencies
[Federal Register Volume 71, Number 49 (Tuesday, March 14, 2006)]
[Rules and Regulations]
[Pages 13001-13003]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-2438]
=======================================================================
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9255]
RIN 1545-BF31
Agent for a Consolidated Group With Foreign Common Parent
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final and temporary regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains temporary regulations under section
1502 that provide the IRS with the authority to designate a domestic
member of the consolidated group as a substitute agent to act as the
sole agent for the group where a foreign entity is the common parent.
The regulations affect corporations that join in the filing of a
consolidated Federal income tax return where the common parent of the
consolidated group is a foreign entity that is treated as a domestic
corporation pursuant to section 7874(b) of the Internal Revenue Code
(Code) or as the result of a section 953(d) election. The text of these
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 in this issue of the Federal
Register.
DATES: Effective Date: These regulations are effective March 14, 2006.
Applicability Dates: These regulations apply to taxable years for
which the due date (without extensions) for filing returns is after
March 14, 2006. The applicability of these regulations will expire on
or before March 9, 2009.
FOR FURTHER INFORMATION CONTACT: Stephen R. Cleary, (202) 622-7750,
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background and Explanation of Provisions
Section 1504(b)(3) of the Internal Revenue Code of 1986 (Code)
excludes foreign corporations from the definition of ``includible
corporation.'' As a result, a foreign entity generally cannot be a
member of a consolidated group. In certain cases, section 7874 treats a
foreign entity as a domestic corporation and section 953(d) allows a
foreign insurance company to make an election to be treated as a
domestic corporation. As a result, a foreign entity could be the common
parent or a subsidiary of a consolidated group if it is treated as a
domestic corporation under either section 7874(b) or section 953(d).
Under Sec. 1.1502-77(a)(1)(i) of the regulations, the common
parent for a consolidated return year is generally the sole agent
(agent for the group) that is authorized to act in its own name with
respect to all matters relating to the tax liability for that
consolidated return year for each member of the group, and any
successor of a member (as defined in Sec. 1.1502-77(a)(1)(iii)). The
common parent's agency for a consolidated return year generally
continues until the common parent ceases to exist, regardless of
whether any subsidiaries in that year cease to be members of the group,
whether the group files a consolidated return in any later year, or
whether the common parent ceases to be the common parent or a member of
the group in a later year. Section 1.1502-77(d) provides rules for
designating a substitute agent if the common parent's existence
terminates.
The IRS and Treasury Department believe that it may not always be
practical or efficient for tax administration to have a foreign entity
act as the agent for the group. Accordingly, where a foreign entity is
the common parent because it is treated as a domestic corporation by
reason of section 7874 or a section 953(d) election (a Foreign Common
Parent), the temporary regulations provide the IRS with the authority
to designate a domestic member of the group to be the sole agent (a
Domestic Substitute Agent) even though the group's common parent
continues in existence.
These temporary regulations provide flexibility in the method of
communication the IRS may use to designate a Domestic Substitute Agent,
allowing notification by mail or by faxed transmission. In addition,
these regulations provide specificity for the determination of the
effective date of the designation of a Domestic Substitute Agent: the
designation is effective on the earliest of the 14th day following the
date of a mailing, the 4th day following a faxed transmission, or the
date the Commissioner receives written confirmation of the designation
by a duly authorized officer of the designated agent, within the
meaning of section 6062.
[[Page 13002]]
Special Analyses
It has been determined that these temporary regulations are not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It has been
determined, pursuant to 5 U.S.C. 553(b)(B), that good cause exists for
dispensing with the notice and public comment procedures and that,
pursuant to 5 U.S.C. 553(d)(3), good cause exists to dispense with a
delayed effective date. The regulations are necessary to allow the IRS
to avoid potentially serious tax administration problems that may arise
when a foreign entity is the agent for a consolidated group, and to
provide immediate guidance to taxpayers regarding the IRS' authority to
designate a substitute agent for the group in such a case. For
applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6),
refer to the Special Analysis section of the Notice of Proposed
Rulemaking published in the Proposed Rules section in this issue of the
Federal Register. Pursuant to section 7805(f) of the Code, these
temporary regulations will be 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 Stephen R. Cleary of
the Office of Associate Chief Counsel (Corporate). Other personnel from
the Treasury Department and the IRS participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
0
Accordingly, 26 CFR part 1 is amended as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 is amended by adding
entries in numerical order to read as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.1502-77T also issued under 26 U.S.C. 1502 * * *
0
Par. 2. Section 1.1502-77 is amended by adding and reserving paragraph
(i) and adding paragraph (j) to read as follows:
Sec. 1.1502-77 Agent for the group.
* * * * *
(i)[Reserved]
(j) Designation by Commissioner if common parent is treated as a
domestic corporation under section 7874 or section 953(d) [Reserved].
For further guidance, see Sec. 1.1502-77T(j).
0
Par. 3. Section 1.1502-77T is added to read as follows:
Sec. 1.1502-77T Agent for the group (temporary).
(a) through (i) [Reserved]. For further guidance see Sec. 1.1502-
77(a) through (i).
(j) Designation by Commissioner if common parent is treated as a
domestic corporation under section 7874 or section 953(d)--(1) In
general. If the common parent is an entity created or organized under
the law of a foreign country and is treated as a domestic corporation
by reason of section 7874 (or regulations thereunder) or a section
953(d) election (a Foreign Common Parent), the Commissioner may at any
time, with or without a request from any member of the group, designate
another member of the group to act as the agent for the group (a
Domestic Substitute Agent) for any taxable year for which the due date
(without extensions) for filing returns is after March 14, 2006 and the
Foreign Common Parent would otherwise be the agent for the group. For
each such year, the Domestic Substitute Agent will be the sole agent
for the group even though the Foreign Common Parent remains in
existence. The Foreign Common Parent ceases to be the agent for the
group when the Commissioner's designation of a Domestic Substitute
Agent becomes effective. The Commissioner may designate a Domestic
Substitute Agent for the term of a single taxable year, multiple years,
or on a continuing basis.
(2) Domestic Substitute Agent. The Domestic Substitute Agent, by
designation or by succession, shall be a domestic corporation described
in Sec. 1.1502-77(d)(1)(i)(A) (determined without regard to section
7874, a section 953(d) election, section 269B, or section 1504(d)).
(3) Designation by the Commissioner. The Commissioner will notify
the Domestic Substitute Agent in writing by mail or faxed transmission
of the designation. The Domestic Substitute Agent's designation is
effective on the earliest of the 14th day following the date of a
mailing, the 4th day following a faxed transmission, or the date the
Commissioner receives written confirmation of the designation by a duly
authorized officer of the Domestic Substitute Agent (within the meaning
of section 6062). The Domestic Substitute Agent must give notice of its
designation to the Foreign Common Parent and each corporation that was
a member of the group during any part of any consolidated return year
for which the Domestic Substitute Agent will be the agent. A failure of
the Domestic Substitute Agent to notify the Foreign Common Parent or
any member of the group does not invalidate the designation. The
Commissioner will send a copy of the notification to the Foreign Common
Parent, and if applicable, to any Domestic Substitute Agent the
designation replaces; a failure to send a copy of the notification does
not invalidate the designation.
(4) Term of agency--(i) In general. If the Commissioner designates
a Domestic Substitute Agent for a taxable year, the Domestic Substitute
Agent will remain the agent for such year until the group ceases to
exist or the Domestic Substitute Agent ceases to exist, ceases to be a
member of the group, is replaced by a successor, or is replaced by the
Commissioner. This designee remains the agent for such year regardless
of whether one or more corporations that were members of the group
during any part of such year cease to be members of the group, whether
the group files a consolidated return for any subsequent year, or,
except as provided by paragraphs (j)(4)(iv)(B) and (j)(4)(v) of this
section, whether the group remains in existence with a new common
parent in any subsequent year.
(ii) Agency of Domestic Substitute Agent upon termination of the
group. If the Domestic Substitute Agent is the agent for the group for
a year in which the group terminates, the Domestic Substitute Agent
shall be the agent for that taxable year (and any prior taxable year
for which it is the agent for the group) so long as the Domestic
Substitute Agent continues its corporate existence unless it is
replaced by a successor or a new designee by the Commissioner.
(iii) Replacement of Sec. 1.1502-77(d)(1) agent. If, pursuant to
Sec. 1.1502-77(d)(1), the common parent of the group designates a
Foreign Common Parent as the agent for the group for any taxable year,
the Commissioner may, at any time, designate a Domestic Substitute
Agent to replace the Foreign Common Parent, even if the Commissioner
approved the terminating common parent's designation.
(iv) Group continues with a new common parent--(A) Year the new
common parent becomes the common parent. If subsequent to a transaction
to which section 7874 applies or a section 953(d) election, the group
remains in existence with a new common parent and such new common
parent is a domestic corporation (determined without regard to section
7874, a section 953(d) election, or section 269B), such new common
parent will become the
[[Page 13003]]
agent for the group with respect to the entire consolidated return year
(including the portion of the year preceding the date on which the new
common parent became the common parent)) and the former Domestic
Substitute Agent will no longer be the agent for the group for any part
of that year.
(B) Years preceding the year the new common parent becomes the
common parent. If after the Commissioner's designation of a Domestic
Substitute Agent the group remains in existence with a new common
parent, and such new common parent is a domestic corporation
(determined without regard to section 7874, a section 953(d) election,
or section 269B), the Commissioner may designate the new common parent
as the agent for the group for any of the group's prior taxable years
(for which the due date (without extensions) for filing returns is
after March 14, 2006) in which the new common parent was a member of
the group. For this purpose, the new common parent is treated as having
been a member of the group for any taxable year it is primarily liable
for the group's income tax liability.
(v) Replacement of Domestic Substitute Agent by the Commissioner.
The Commissioner may at any time, with or without a request from any
member of the group, designate a replacement for a Domestic Substitute
Agent (or a successor to such agent).
(5) Deemed Sec. 1.1502-77(d) designation--(i) Section 1.1502-78
adjustments. If the Commissioner designates a Domestic Substitute Agent
under this paragraph (j), it will be treated as a designation of a
substitute agent under Sec. 1.1502-77(d) for the purposes of Sec.
1.1502-78.
(ii) Default Substitute Agent. If the Domestic Substitute Agent
goes out of existence and has a single successor that is eligible to be
a Domestic Substitute Agent, such successor becomes the Domestic
Substitute Agent and is treated as a default substitute agent under
Sec. 1.1502-77(d)(2). See Sec. 1.1502-77(d)(4) regarding the
consequences of the successor's failure to notify the Commissioner of
its status as a default substitute agent. The default substitute agent
shall use procedures in section 9 of Rev. Proc. 2002-43 (2002-2 C.B.
99) or a corresponding provision of a successor revenue procedure for
notification. (See Sec. 601.601(d)(2)(ii) of this chapter.)
(6) Request that IRS designate a Domestic Substitute Agent--(i)
Original designation. If the common parent of the group is a Foreign
Common Parent, and the IRS has not designated a Domestic Substitute
Agent, one or more members of the group may request the IRS to make a
designation for taxable years for which the due date (without
extensions) for filing returns is after March 14, 2006. Such request is
deemed to be a request under Sec. 1.1502-77(d)(3)(i). Members of the
group shall use the procedures in section 10 of Rev. Proc. 2002-43
(2002-2 C.B. 99) or a corresponding provision of a successor revenue
procedure for this purpose. (See Sec. 601.601(d)(2)(ii) of this
chapter.)
(ii) Request that IRS replace a previously designated substitute
agent. If the IRS designates a Domestic Substitute Agent pursuant to
this paragraph (j), one or more members of the group may request that
the IRS replace the designated Domestic Substitute Agent with another
member (or successor to another member). Such a request is deemed to be
a request pursuant to Sec. 1.1502-77(d)(3)(ii). Members of the group
shall use the procedures in section 11 of Rev. Proc. 2002-43 (2002-2
C.B. 99) or a corresponding provision of a successor revenue procedure
for this purpose. (See Sec. 601.601(d)(2)(ii) of this chapter.)
(7) Effective Date. This paragraph (j) applies to taxable years for
which the due date (without extensions) for filing returns is after
March 14, 2006. The applicability of this paragraph (j) expires on or
before March 9, 2009.
Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
Approved: March 9, 2006.
Eric Solomon,
Acting Deputy Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 06-2438 Filed 3-9-06; 4:15 pm]
BILLING CODE 4830-01-P
