Requirement of Return and Time for Filing, 36871-36873 [E7-12901]
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Federal Register / Vol. 72, No. 129 / Friday, July 6, 2007 / Rules and Regulations
derived directly or indirectly from tax
consequences or tax strategy described
in the published guidance that lists the
transaction.
(4) Disclosure is not required with
respect to any prohibited tax shelter
transaction entered into by a tax-exempt
entity on or before May 17, 2006.
(f) Penalty for failure to provide
disclosure statement. See section
6652(c)(3) for penalties applicable to
failure to disclose a prohibited tax
shelter transaction in accordance with
this section.
(g) Effective date—(1) Applicability
date. This section applies with respect
to transactions entered into by a taxexempt entity after May 17, 2006.
(2) Expiration date. This section will
expire on July 6, 2010.
PART 301—PROCEDURE AND
ADMINISTRATION
I Par. 3. The authority citation for part
301 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
I Par. 4. Section 301.6033–5T is added
to read as follows:
§ 301.6033–5T Disclosure by tax-exempt
entities that are parties to certain reportable
transactions (temporary).
(a) In general. For provisions relating
to the requirement of the disclosure by
a tax-exempt entity that it is a party to
certain reportable transactions, see
§ 1.6033–5T of this chapter (Income Tax
Regulations).
(b) Effective date—(1) Applicability
date. This section applies with respect
to transactions entered into by a taxexempt entity after May 17, 2006.
(2) Expiration date. This section will
expire on July 5, 2010.
Kevin M. Brown,
Deputy Commissioner for Services and
Enforcement.
Approved: June 21, 2007.
Eric Solomon,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. E7–12903 Filed 7–5–07; 8:45 am]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 53 and 54
[TD 9334]
RIN 1545–BG20
Requirement of Return and Time for
Filing
Internal Revenue Service (IRS),
Treasury.
ACTION: Final and temporary
regulations.
AGENCY:
SUMMARY: This document contains final
and temporary regulations providing
guidance relating to the requirement of
a return to accompany payment of
excise taxes under section 4965 of the
Internal Revenue Code (Code) and the
time for filing that return. These
regulations affect a broad array of taxexempt entities, including charities,
state and local government entities,
Indian tribal governments and employee
benefit plans, as well as entity managers
of these entities. This action is
necessary to implement section 516 of
the Tax Increase Prevention and
Reconciliation Act of 2005. The text of
the temporary regulations also serves as
the text of the proposed regulations set
forth in the Proposed Rules section in
this issue of the Federal Register.
DATES: Effective date. These regulations
are effective on July 6, 2007.
Applicability date. For dates of
applicability, see §§ 53.6071–1T(g) and
54.6011–1T(c) of these regulations.
FOR FURTHER INFORMATION CONTACT:
Galina Kolomietz, (202) 622–6070,
Michael Blumenfeld, (202) 622–1124, or
Dana Barry, (202) 622–6060 (not tollfree numbers).
SUPPLEMENTARY INFORMATION:
Background
The Tax Increase Prevention and
Reconciliation Act of 2005, Public Law
109–222 (120 Stat. 345) (TIPRA),
enacted on May 17, 2006, added section
4965 to the Code. Section 4965 affects
a broad array of tax-exempt entities as
defined in section 4965(c). Tax-exempt
entities described in section 4965(c)(1),
(2), or (3) (referred to herein as ‘‘nonplan entities’’) include entities
described in section 501(c), religious or
apostolic associations or corporations
described in section 501(d), entities
described in section 170(c), including
states, possessions of the United States,
the District of Columbia, political
subdivisions of states and political
subdivisions of possessions of the
United States (but not including the
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36871
United States), and Indian tribal
governments within the meaning of
section 7701(a)(40). Tax-exempt entities
described in section 4965(c)(4), (c)(5),
(c)(6), or (c)(7) (referred to herein as
‘‘plan entities’’) include tax-favored
retirement plans, individual retirement
arrangements, and savings arrangements
described in section 401(a), 403(a),
403(b), 529, 457(b), 408(a), 220(d),
408(b), 530 or 223(d).
Section 4965 imposes two new excise
taxes, one on the tax-exempt entity (the
entity-level tax) and the other on certain
of the tax-exempt entity’s managers (the
manager-level tax). The entity-level tax
is imposed on non-plan entities that are
parties to prohibited tax shelter
transactions. The entity-level tax does
not apply to plan entities. Prohibited tax
shelter transactions are transactions that
are identified by the IRS as ‘‘listed
transactions’’ (within the meaning of
section 6707A(c)(2)) and reportable
transactions that are confidential
transactions or transactions with
contractual protection (as defined in
section 6707A(c)(1) and § 1.6011–4(b) of
this chapter).
The entity-level tax applies to each
taxable year during which the non-plan
entity is a party to a prohibited tax
shelter transaction and has net income
or proceeds attributable to the
transaction which are properly allocable
to that taxable year. The amount of the
entity-level tax depends on whether the
non-plan entity knew or had reason to
know that the transaction was a
prohibited tax shelter transaction at the
time the entity became a party to the
transaction. If the non-plan entity did
not know (and did not have reason to
know) that the transaction was a
prohibited tax shelter transaction at the
time the entity became a party to the
transaction, the tax is the highest rate of
tax under section 11 (currently 35
percent) multiplied by the greater of: (i)
The entity’s net income with respect to
the prohibited tax shelter transaction
(after taking into account any tax
imposed by Subtitle D, other than by
this section, with respect to such
transaction) for the taxable year or (ii)
75 percent of the proceeds received by
the entity for the taxable year that are
attributable to such transaction. If the
non-plan entity knew or had reason to
know that the transaction was a
prohibited tax shelter transaction at the
time the entity became a party to the
transaction, the tax is the greater of (i)
100 percent of the entity’s net income
with respect to the transaction (after
taking into account any tax imposed by
Subtitle D, other than by this section,
with respect to such transaction) for the
taxable year or (ii) 75 percent of the
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Federal Register / Vol. 72, No. 129 / Friday, July 6, 2007 / Rules and Regulations
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proceeds received by the entity for the
taxable year that are attributable to such
transaction. In the case of a transaction
that becomes a prohibited tax shelter
transaction by reason of becoming a
listed transaction after the non-plan
entity has become a party to such
transaction (subsequently listed
transactions), the amount of tax is based
on the net income or proceeds
attributable to such transaction that are
properly allocable to the period
beginning on the date the transaction
became listed or the first day of the
entity’s taxable year, whichever is later.
No entity-level tax applies to any
income or proceeds that are properly
allocable to a period ending on or before
August 15, 2006.
The manager-level tax is imposed on
entity managers (as defined in section
4965(d)) of all tax-exempt entities
described in section 4965(c) who
approve the entity as a party (or
otherwise cause the entity to be a party)
to a prohibited tax shelter transaction
and know or have reason to know that
the transaction is a prohibited tax
shelter transaction. In the case of nonplan entities, the term entity manager
means the person with authority or
responsibility similar to that exercised
by an officer, director or trustee, and,
with respect to any act, the person
having authority or responsibility with
respect to such act. In the case of plan
entities, the term entity manager means
the person who approves or otherwise
causes the entity to be a party to the
prohibited tax shelter transaction. An
individual beneficiary (including a plan
participant) or owner of the tax-favored
retirement plans, individual retirement
arrangements, and savings arrangements
described in section 401(a), 403(a),
403(b), 529, 457(b), 408(a), 220(d),
408(b), 530 or 223(d), may be liable as
an entity manager if the individual
beneficiary or owner has broad
investment authority under the
arrangement. The amount of the
manager-level tax is $20,000 for each
approval or other act causing the entity
to be a party to a prohibited tax shelter
transaction. The manager-level tax
applies separately to each entity
manager.
These final and temporary regulations
are being issued concurrently with
proposed regulations under sections
4965, 6033(a)(2) and 6011(g) published
elsewhere in the Federal Register.
Explanation of Provisions
The regulations provide that non-plan
entities (including exempt organizations
and governments) that are liable for
section 4965 excise taxes and entity
managers of non-plan entities who are
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liable for section 4965 excise taxes as
entity managers are required to file a
return on Form 4720, ‘‘Return of Certain
Excise Taxes Under Chapters 41 and 42
of the Internal Revenue Code.’’ The
entity return is due on or before the date
the non-plan entity’s annual return
under section 6033(a)(1) (for example,
Form 990, ‘‘Return of Organization
Exempt From Income Tax’’) is due, if
the non-plan entity is required to file
such a return. In all other cases, the
entity return is due on or before the 15th
day of the fifth month after the end of
the non-plan entity’s accounting period
for which the liability under section
4965 was incurred. In the case of a nonplan entity manager, the entity manager
return is due on or before the 15th day
of the fifth month following the close of
the manager’s taxable year during which
the entity entered into a prohibited tax
shelter transaction.
The regulations also provide that
entity managers of plan entities who are
liable for section 4965 taxes as entity
managers are required to file a return on
Form 5330, ‘‘Return of Excise Taxes
Related to Employee Benefit Plans.’’ For
section 4965 taxes, the Form 5330 is due
on or before the 15th day of the fifth
month following the close of the
manager’s taxable year during which the
entity entered into a prohibited tax
shelter transaction.
The regulations provide a transition
rule that returns of section 4965 taxes
that are or were due on or before
October 4, 2007 will be deemed timely
if the return is filed and the tax is paid
before that date.
Associate Chief Counsel (Tax Exempt
and Government Entities). However,
other personnel from the IRS and the
Treasury Department participated in
their development.
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 the
applicability of the Regulatory
Flexibility Act (5 U.S.C. chapter 6), refer
to the Special Analyses section of the
preamble to the cross-referencing 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
regulations have been submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment
on their impact on business.
§ 53.6071–1
Drafting Information
The principal authors of these
regulations are Galina Kolomietz and
Dana Barry, Office of Division Counsel/
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List of Subjects
26 CFR Part 53
Excise taxes, Foundations,
Investments, Lobbying, Reporting and
recordkeeping requirements.
26 CFR Part 54
Excise Taxes, Pensions, Reporting and
recordkeeping requirements.
Amendments to the Regulations
Accordingly, 26 CFR parts 53 and 54
are amended as follows:
I
PART 53—FOUNDATION AND SIMILAR
EXCISE TAXES
Paragraph 1. The authority citation
for part 53 continues to read in part as
follows:
I
Authority: 26 U.S.C. 7805 * * *
§ 53.6011–1
[Amended]
Par. 2. In § 53.6011–1, paragraph (b) is
amended by:
I 1. Removing from the first sentence,
the language ‘‘or 4958(a),’’ and adding
‘‘4958(a), or 4965(a),’’ in its place.
I 2. Removing from the last sentence,
the language ‘‘or 4958(a),’’ and adding
‘‘4958(a), or 4965(a),’’ in its place.
I Par. 3. Section 53.6071–1 is amended
by adding and reserving paragraph (g)
and adding paragraph (h) to read as
follows:
I
Time for filing returns.
*
*
*
*
*
(g) [Reserved]. For further guidance,
see § 53.6071–1T(g).
(h) Effective/applicability date. For
the applicability date of paragraph (g) of
this section, see § 53.6071–1T(h).
I Par. 4. Section 53.6071–1T is added to
read as follows:
§ 53.6071–1T
(temporary).
Time for filing returns
(a) through (f) [Reserved]. For further
guidance, see § 53.6071–1(a) through (f).
(g) Taxes imposed with respect to
prohibited tax shelter transactions to
which tax-exempt entities are parties—
(1) Returns by certain tax-exempt
entities. A Form 4720, ‘‘Return of
Certain Excise Taxes Under Chapters 41
and 42 of the Internal Revenue Code,’’
required by § 53.6011–1(b) for a taxexempt entity described in section
4965(c)(1), (c)(2) or (c)(3) that is a party
to a prohibited tax shelter transaction
and is liable for tax imposed by section
4965(a)(1) shall be filed on or before the
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due date (not including extensions) for
filing the tax-exempt entity’s annual
information return under section
6033(a)(1). If the tax-exempt entity is
not required to file an annual
information return under section
6033(a)(1), the Form 4720 shall be filed
on or before the 15th day of the fifth
month after the end of the tax-exempt
entity’s taxable year or, if the entity has
not established a taxable year for
Federal income tax purposes, the
entity’s annual accounting period.
(2) Returns by entity managers of taxexempt entities described in section
4965(c)(1), (c)(2) or (c)(3). A Form 4720,
required by § 53.6011–1(b) for an entity
manager of a tax-exempt entity
described in section 4965(c)(1), (c)(2) or
(c)(3) who is liable for tax imposed by
section 4965(a)(2) shall be filed on or
before the 15th day of the fifth month
following the close of the entity
manager’s taxable year during which the
entity entered into the prohibited tax
shelter transaction.
(3) Transition rule. A Form 4720, for
a section 4965 tax that is or was due on
or before October 4, 2007 will be
deemed to have been filed on the due
date if it is filed by October 4, 2007 and
if all section 4965 taxes required to be
reported on that Form 4720 are paid by
October 4, 2007.
(h) Effective/applicability date—(1) In
general. Paragraph (g) of this section is
applicable on July 6, 2007.
(2) Expiration date. Paragraph (g) of
this section will cease to apply on July
6, 2010.
PART 54—PENSION EXCISE TAXES
Par. 5. The authority citation for part
54 continues to read in part as follows:
I
§ 54.6011–1T General requirement of
return, statement or list (temporary).
(a) Tax on reversions of qualified plan
assets to employer. * * *
(b) [Reserved].
(c) Entity manager tax on prohibited
tax shelter transactions—(1) In general.
Any entity manager of a tax-exempt
entity described in section 4965(c)(4),
(c)(5), (c)(6), or (c)(7) who is liable for
tax under section 4965(a)(2) shall file a
return on Form 5330, ‘‘Return of Excise
Taxes Related to Employee Benefit
Plans,’’ on or before the 15th day of the
fifth month following the close of such
entity manager’s taxable year during
which the entity entered into the
prohibited tax shelter transaction, and
shall include therein the information
required by such form and the
instructions issued with respect thereto.
(2) Transition rule. A Form 5330,
‘‘Return of Excise Taxes Related to
Employee Benefit Plans,’’ for an excise
tax under section 4965 that is or was
due on or before October 4, 2007 will be
deemed to have been filed on the due
date if it is filed by October 4, 2007 and
if the section 4965 tax that was required
to be reported on that Form 5330 is paid
by October 4, 2007.
(d) Effective/applicability date—(1) In
general. Paragraph (c) of this section is
applicable on July 6, 2007.
(2) Expiration date. Paragraph (c) of
this section will expire on July 5, 2010.
Kevin M. Brown,
Deputy Commissioner for Services and
Enforcement.
Approved: June 21, 2007.
Eric Solomon,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. E7–12901 Filed 7–5–07; 8:45 am]
BILLING CODE 4830–01–P
Authority: 26 U.S.C. 7805 * * *
Par. 6. Section 54.6011–1 is amended
by adding and reserving paragraph (c)
and adding paragraph (d) to read as
follows:
EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION
§ 54.6011–1 General requirement of return,
statement, or list.
RIN 3046–AA78
*
Coverage Under the Age
Discrimination in Employment Act
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I
*
*
*
*
(c) [Reserved]. For further guidance,
see § 54.6011–1T(c).
(d) Effective/applicability date. For
the applicability date of paragraph (c) of
this section, see § 54.6011–1T(d).
I Par. 7. Section 54.6011–1T is
amended as follows:
I 1. The undesignated text is designated
as paragraph (a) and a paragraph
heading is added.
I 2. Paragraph (b) is added and
reserved.
I 3. Paragraphs (c) and (d) are added.
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29 CFR Part 1625
Equal Employment
Opportunity Commission.
ACTION: Final rule.
AGENCY:
SUMMARY: The Equal Employment
Opportunity Commission (‘‘EEOC’’ or
‘‘Commission’’) is publishing this final
rule to amend its Age Discrimination in
Employment Act (the ‘‘Act’’ or ‘‘ADEA’’)
regulations to conform them to the
Supreme Court’s holding in General
Dynamics Land System, Inc. v. Cline,
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36873
540 U.S. 581 (2004), that the ADEA only
prohibits discrimination based on
relatively older age, not discrimination
based on age generally. Thus, the final
rule deletes language in EEOC’s ADEA
regulations that prohibited
discrimination against relatively
younger individuals. The new rule
explains that the ADEA only prohibits
employment discrimination based on
old age and, therefore, does not prohibit
employers from favoring relatively older
individuals.
DATES: Effective date July 6, 2007.
FOR FURTHER INFORMATION CONTACT:
Raymond Peeler, Senior Attorney
Advisor, Office of Legal Counsel, at
(202) 663–4537 (voice) or (202) 663–
7026 (TTY) (These are not toll free
numbers). This final rule also is
available in the following formats: large
print, braille, audio tape and electronic
file on computer disk. Requests for this
final rule in an alternative format
should be made to the Publications
Information Center at 1–800–669–3362.
SUPPLEMENTARY INFORMATION: On August
11, 2006, the EEOC published a Notice
of Proposed Rulemaking (‘‘NPRM’’) in
the Federal Register to amend
regulations that prohibited any agebased discrimination against
individuals forty years old or older,
regardless of whether the age-bias
favored older or younger individuals.1
Relying on the Supreme Court’s
decision in General Dynamics Land
System, Inc. v. Cline, 540 U.S. 581
(2004),2 the NPRM explained that the
ADEA protects only relatively older
individuals.
Overview of Public Comments
The Commission received nine public
comments during the public comment
period, which ended on October 10,
2006. Six commenters strongly
supported the proposed rule: AARP,
National Employment Lawyers
Association (NELA), Equal Employment
Advisory Counsel (EEAC), U.S.
Chamber of Commerce, TOC
Management Services, and the National
Federation of Independent Business
(NFIB). Two federal employee unions
opposed the rule. The Conference
1 EEOC Notice of Proposed Rulemaking, 71 FR
46177, Aug. 11, 2006.
2 In Cline, a group of employees between the ages
of forty and forty-nine sued their employer for age
discrimination when it eliminated its future
obligation to pay retiree health benefits for any
employee then under fifty years old. The Supreme
Court rejected their claim, finding that the ADEA’s
prohibition against discrimination ‘‘because of age’’
only prevents discrimination that favors younger
workers, not actions that place older workers in a
more favorable position. The Court’s rationale is
described in detail in the NPRM. See 71 FR at
46178.
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]]>Agencies
[Federal Register Volume 72, Number 129 (Friday, July 6, 2007)]
[Rules and Regulations]
[Pages 36871-36873]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-12901]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 53 and 54
[TD 9334]
RIN 1545-BG20
Requirement of Return and Time for Filing
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final and temporary regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final and temporary regulations
providing guidance relating to the requirement of a return to accompany
payment of excise taxes under section 4965 of the Internal Revenue Code
(Code) and the time for filing that return. These regulations affect a
broad array of tax-exempt entities, including charities, state and
local government entities, Indian tribal governments and employee
benefit plans, as well as entity managers of these entities. This
action is necessary to implement section 516 of the Tax Increase
Prevention and Reconciliation Act of 2005. The text of the temporary
regulations also serves as the text of the proposed regulations set
forth in the Proposed Rules section in this issue of the Federal
Register.
DATES: Effective date. These regulations are effective on July 6, 2007.
Applicability date. For dates of applicability, see Sec. Sec.
53.6071-1T(g) and 54.6011-1T(c) of these regulations.
FOR FURTHER INFORMATION CONTACT: Galina Kolomietz, (202) 622-6070,
Michael Blumenfeld, (202) 622-1124, or Dana Barry, (202) 622-6060 (not
toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
The Tax Increase Prevention and Reconciliation Act of 2005, Public
Law 109-222 (120 Stat. 345) (TIPRA), enacted on May 17, 2006, added
section 4965 to the Code. Section 4965 affects a broad array of tax-
exempt entities as defined in section 4965(c). Tax-exempt entities
described in section 4965(c)(1), (2), or (3) (referred to herein as
``non-plan entities'') include entities described in section 501(c),
religious or apostolic associations or corporations described in
section 501(d), entities described in section 170(c), including states,
possessions of the United States, the District of Columbia, political
subdivisions of states and political subdivisions of possessions of the
United States (but not including the United States), and Indian tribal
governments within the meaning of section 7701(a)(40). Tax-exempt
entities described in section 4965(c)(4), (c)(5), (c)(6), or (c)(7)
(referred to herein as ``plan entities'') include tax-favored
retirement plans, individual retirement arrangements, and savings
arrangements described in section 401(a), 403(a), 403(b), 529, 457(b),
408(a), 220(d), 408(b), 530 or 223(d).
Section 4965 imposes two new excise taxes, one on the tax-exempt
entity (the entity-level tax) and the other on certain of the tax-
exempt entity's managers (the manager-level tax). The entity-level tax
is imposed on non-plan entities that are parties to prohibited tax
shelter transactions. The entity-level tax does not apply to plan
entities. Prohibited tax shelter transactions are transactions that are
identified by the IRS as ``listed transactions'' (within the meaning of
section 6707A(c)(2)) and reportable transactions that are confidential
transactions or transactions with contractual protection (as defined in
section 6707A(c)(1) and Sec. 1.6011-4(b) of this chapter).
The entity-level tax applies to each taxable year during which the
non-plan entity is a party to a prohibited tax shelter transaction and
has net income or proceeds attributable to the transaction which are
properly allocable to that taxable year. The amount of the entity-level
tax depends on whether the non-plan entity knew or had reason to know
that the transaction was a prohibited tax shelter transaction at the
time the entity became a party to the transaction. If the non-plan
entity did not know (and did not have reason to know) that the
transaction was a prohibited tax shelter transaction at the time the
entity became a party to the transaction, the tax is the highest rate
of tax under section 11 (currently 35 percent) multiplied by the
greater of: (i) The entity's net income with respect to the prohibited
tax shelter transaction (after taking into account any tax imposed by
Subtitle D, other than by this section, with respect to such
transaction) for the taxable year or (ii) 75 percent of the proceeds
received by the entity for the taxable year that are attributable to
such transaction. If the non-plan entity knew or had reason to know
that the transaction was a prohibited tax shelter transaction at the
time the entity became a party to the transaction, the tax is the
greater of (i) 100 percent of the entity's net income with respect to
the transaction (after taking into account any tax imposed by Subtitle
D, other than by this section, with respect to such transaction) for
the taxable year or (ii) 75 percent of the
[[Page 36872]]
proceeds received by the entity for the taxable year that are
attributable to such transaction. In the case of a transaction that
becomes a prohibited tax shelter transaction by reason of becoming a
listed transaction after the non-plan entity has become a party to such
transaction (subsequently listed transactions), the amount of tax is
based on the net income or proceeds attributable to such transaction
that are properly allocable to the period beginning on the date the
transaction became listed or the first day of the entity's taxable
year, whichever is later. No entity-level tax applies to any income or
proceeds that are properly allocable to a period ending on or before
August 15, 2006.
The manager-level tax is imposed on entity managers (as defined in
section 4965(d)) of all tax-exempt entities described in section
4965(c) who approve the entity as a party (or otherwise cause the
entity to be a party) to a prohibited tax shelter transaction and know
or have reason to know that the transaction is a prohibited tax shelter
transaction. In the case of non-plan entities, the term entity manager
means the person with authority or responsibility similar to that
exercised by an officer, director or trustee, and, with respect to any
act, the person having authority or responsibility with respect to such
act. In the case of plan entities, the term entity manager means the
person who approves or otherwise causes the entity to be a party to the
prohibited tax shelter transaction. An individual beneficiary
(including a plan participant) or owner of the tax-favored retirement
plans, individual retirement arrangements, and savings arrangements
described in section 401(a), 403(a), 403(b), 529, 457(b), 408(a),
220(d), 408(b), 530 or 223(d), may be liable as an entity manager if
the individual beneficiary or owner has broad investment authority
under the arrangement. The amount of the manager-level tax is $20,000
for each approval or other act causing the entity to be a party to a
prohibited tax shelter transaction. The manager-level tax applies
separately to each entity manager.
These final and temporary regulations are being issued concurrently
with proposed regulations under sections 4965, 6033(a)(2) and 6011(g)
published elsewhere in the Federal Register.
Explanation of Provisions
The regulations provide that non-plan entities (including exempt
organizations and governments) that are liable for section 4965 excise
taxes and entity managers of non-plan entities who are liable for
section 4965 excise taxes as entity managers are required to file a
return on Form 4720, ``Return of Certain Excise Taxes Under Chapters 41
and 42 of the Internal Revenue Code.'' The entity return is due on or
before the date the non-plan entity's annual return under section
6033(a)(1) (for example, Form 990, ``Return of Organization Exempt From
Income Tax'') is due, if the non-plan entity is required to file such a
return. In all other cases, the entity return is due on or before the
15th day of the fifth month after the end of the non-plan entity's
accounting period for which the liability under section 4965 was
incurred. In the case of a non-plan entity manager, the entity manager
return is due on or before the 15th day of the fifth month following
the close of the manager's taxable year during which the entity entered
into a prohibited tax shelter transaction.
The regulations also provide that entity managers of plan entities
who are liable for section 4965 taxes as entity managers are required
to file a return on Form 5330, ``Return of Excise Taxes Related to
Employee Benefit Plans.'' For section 4965 taxes, the Form 5330 is due
on or before the 15th day of the fifth month following the close of the
manager's taxable year during which the entity entered into a
prohibited tax shelter transaction.
The regulations provide a transition rule that returns of section
4965 taxes that are or were due on or before October 4, 2007 will be
deemed timely if the return is filed and the tax is paid before that
date.
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 the
applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6),
refer to the Special Analyses section of the preamble to the cross-
referencing 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 regulations have been submitted to
the Chief Counsel for Advocacy of the Small Business Administration for
comment on their impact on business.
Drafting Information
The principal authors of these regulations are Galina Kolomietz and
Dana Barry, Office of Division Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities). However, other personnel from the IRS
and the Treasury Department participated in their development.
List of Subjects
26 CFR Part 53
Excise taxes, Foundations, Investments, Lobbying, Reporting and
recordkeeping requirements.
26 CFR Part 54
Excise Taxes, Pensions, Reporting and recordkeeping requirements.
Amendments to the Regulations
0
Accordingly, 26 CFR parts 53 and 54 are amended as follows:
PART 53--FOUNDATION AND SIMILAR EXCISE TAXES
0
Paragraph 1. The authority citation for part 53 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Sec. 53.6011-1 [Amended]
0
Par. 2. In Sec. 53.6011-1, paragraph (b) is amended by:
0
1. Removing from the first sentence, the language ``or 4958(a),'' and
adding ``4958(a), or 4965(a),'' in its place.
0
2. Removing from the last sentence, the language ``or 4958(a),'' and
adding ``4958(a), or 4965(a),'' in its place.
0
Par. 3. Section 53.6071-1 is amended by adding and reserving paragraph
(g) and adding paragraph (h) to read as follows:
Sec. 53.6071-1 Time for filing returns.
* * * * *
(g) [Reserved]. For further guidance, see Sec. 53.6071-1T(g).
(h) Effective/applicability date. For the applicability date of
paragraph (g) of this section, see Sec. 53.6071-1T(h).
0
Par. 4. Section 53.6071-1T is added to read as follows:
Sec. 53.6071-1T Time for filing returns (temporary).
(a) through (f) [Reserved]. For further guidance, see Sec.
53.6071-1(a) through (f).
(g) Taxes imposed with respect to prohibited tax shelter
transactions to which tax-exempt entities are parties--(1) Returns by
certain tax-exempt entities. A Form 4720, ``Return of Certain Excise
Taxes Under Chapters 41 and 42 of the Internal Revenue Code,'' required
by Sec. 53.6011-1(b) for a tax-exempt entity described in section
4965(c)(1), (c)(2) or (c)(3) that is a party to a prohibited tax
shelter transaction and is liable for tax imposed by section 4965(a)(1)
shall be filed on or before the
[[Page 36873]]
due date (not including extensions) for filing the tax-exempt entity's
annual information return under section 6033(a)(1). If the tax-exempt
entity is not required to file an annual information return under
section 6033(a)(1), the Form 4720 shall be filed on or before the 15th
day of the fifth month after the end of the tax-exempt entity's taxable
year or, if the entity has not established a taxable year for Federal
income tax purposes, the entity's annual accounting period.
(2) Returns by entity managers of tax-exempt entities described in
section 4965(c)(1), (c)(2) or (c)(3). A Form 4720, required by Sec.
53.6011-1(b) for an entity manager of a tax-exempt entity described in
section 4965(c)(1), (c)(2) or (c)(3) who is liable for tax imposed by
section 4965(a)(2) shall be filed on or before the 15th day of the
fifth month following the close of the entity manager's taxable year
during which the entity entered into the prohibited tax shelter
transaction.
(3) Transition rule. A Form 4720, for a section 4965 tax that is or
was due on or before October 4, 2007 will be deemed to have been filed
on the due date if it is filed by October 4, 2007 and if all section
4965 taxes required to be reported on that Form 4720 are paid by
October 4, 2007.
(h) Effective/applicability date--(1) In general. Paragraph (g) of
this section is applicable on July 6, 2007.
(2) Expiration date. Paragraph (g) of this section will cease to
apply on July 6, 2010.
PART 54--PENSION EXCISE TAXES
0
Par. 5. The authority citation for part 54 continues to read in part as
follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 6. Section 54.6011-1 is amended by adding and reserving paragraph
(c) and adding paragraph (d) to read as follows:
Sec. 54.6011-1 General requirement of return, statement, or list.
* * * * *
(c) [Reserved]. For further guidance, see Sec. 54.6011-1T(c).
(d) Effective/applicability date. For the applicability date of
paragraph (c) of this section, see Sec. 54.6011-1T(d).
0
Par. 7. Section 54.6011-1T is amended as follows:
0
1. The undesignated text is designated as paragraph (a) and a paragraph
heading is added.
0
2. Paragraph (b) is added and reserved.
0
3. Paragraphs (c) and (d) are added.
Sec. 54.6011-1T General requirement of return, statement or list
(temporary).
(a) Tax on reversions of qualified plan assets to employer. * * *
(b) [Reserved].
(c) Entity manager tax on prohibited tax shelter transactions--(1)
In general. Any entity manager of a tax-exempt entity described in
section 4965(c)(4), (c)(5), (c)(6), or (c)(7) who is liable for tax
under section 4965(a)(2) shall file a return on Form 5330, ``Return of
Excise Taxes Related to Employee Benefit Plans,'' on or before the 15th
day of the fifth month following the close of such entity manager's
taxable year during which the entity entered into the prohibited tax
shelter transaction, and shall include therein the information required
by such form and the instructions issued with respect thereto.
(2) Transition rule. A Form 5330, ``Return of Excise Taxes Related
to Employee Benefit Plans,'' for an excise tax under section 4965 that
is or was due on or before October 4, 2007 will be deemed to have been
filed on the due date if it is filed by October 4, 2007 and if the
section 4965 tax that was required to be reported on that Form 5330 is
paid by October 4, 2007.
(d) Effective/applicability date--(1) In general. Paragraph (c) of
this section is applicable on July 6, 2007.
(2) Expiration date. Paragraph (c) of this section will expire on
July 5, 2010.
Kevin M. Brown,
Deputy Commissioner for Services and Enforcement.
Approved: June 21, 2007.
Eric Solomon,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. E7-12901 Filed 7-5-07; 8:45 am]
BILLING CODE 4830-01-P
