Agent for a Consolidated Group With Foreign Common Parent, 40066-40069 [E7-14197]
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Federal Register / Vol. 72, No. 140 / Monday, July 23, 2007 / Rules and Regulations
calfhood vaccinate as defined in § 78.1
of this chapter.
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3. Section 91.5 is amended as follows:
a. In paragraph (a)(1), by removing the
word ‘‘or’’ at the end of paragraph
(a)(1)(i); by removing the citation ‘‘9
CFR 77.1’’ in paragraph (a)(1)(ii) and
adding the citation ‘‘§ 77.7 of this
chapter’’ in its place; by removing the
period at the end of paragraph (a)(1)(ii)
and adding a semicolon in its place; and
by adding new paragraphs (a)(1)(iii) and
(a)(1)(iv) to read as set forth below.
I b. In paragraph (b)(1), by removing the
word ‘‘or’’ at the end of paragraph
(b)(1)(iv), by removing the period at the
end of paragraph (b)(1)(v) and adding a
semicolon in its place, and by adding
new paragraphs (b)(1)(vi) and (b)(1)(vii)
to read as set forth below.
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
with commercial firms-science and
technology.
14 CFR Parts 1260 and 1274
Sheryl Goddard,
Acting Assistant Administrator for
Procurement.
I
I
§ 91.5
Cattle.
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(a) * * *
(1) * * *
(iii) Cattle exported to a country that
does not require cattle from the United
States to be tested for tuberculosis as
described in this part; or
(iv) Cattle exported from a State
designated as an Accredited-free State
in § 77.7 of this chapter to a country that
does not require cattle from Accreditedfree States to be tested for tuberculosis
as described in this part.
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(b) * * *
(1) * * *
(vi) Cattle exported to a country that
does not require cattle from the United
States to be tested for brucellosis as
described in this part; or
(vii) Cattle exported from a State
designated as a Class Free State in
§ 78.41 of this chapter to a country that
does not require cattle from Class Free
States to be tested for brucellosis as
described in this part.
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pwalker on PROD1PC71 with RULES
Done in Washington, DC, this 18th day of
July 2007.
Kevin Shea,
Acting Administrator, Animal and Plant
Health Inspection Service.
[FR Doc. E7–14177 Filed 7–20–07; 8:45 am]
RIN 2700–AD34
NASA Grant and Cooperative
Agreement Handbook—Individual
Procurement Action Reports (NF 507)
National Aeronautics and
Space Administration.
ACTION: Final rule.
AGENCY:
SUMMARY: This final rule amends NASA
regulations by removing from NASA
grant officers responsibility for
submitting Individual Procurement
Action Reports (NF 507) for all grant
and cooperative agreement actions. This
rule also removes the ‘‘Individual
Procurement Action Report (NASA
Form 507)’’.
EFFECTIVE DATE: July 23, 2007.
FOR FURTHER INFORMATION CONTACT: Paul
Brundage, NASA Headquarters,
Contract Management Division,
Washington, DC, (202) 358–0481, email: paul.d.brundage@nasa.gov.
SUPPLEMENTARY INFORMATION:
A. Background
The NF 507 was rendered obsolete in
2003 and has been eliminated as a
NASA form. Thus, the requirement for
its submission by NASA grant officers
on all grant and cooperative agreement
actions is eliminated.
B. Regulatory Flexibility Act
Accordingly, 14 CFR Parts 1260 and
1274 are amended as follows:
I 1. The authority citation for 14 CFR
Parts 1260 and 1274 continues to read
as follows:
I
Authority: 42 U.S.C. 2473(c)(1), Pub. L. 97–
258, 96 Stat. 1003 (31 U.S.C. 6301, et seq.),
and OMB Circular A–110.
PART 1260—GRANTS AND
COOPERATIVE AGREEMENTS
2. Revise paragraph (a) of § 1260.75 to
read as follows:
I
§ 1260.75 Summary of report
requirements.
(a) The Committee on Academic
Science and Engineering (CASE) Report
(NF 1356), for grants and cooperative
agreements awarded to educational
institutions, is submitted by the
program office with the basic award
procurement request and completed by
the grant officer. The grant officer
should initiate an amendment to the NF
1356 whenever the principal
investigator or the technical officer
changes.
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PART 1274–COOPERATIVE
AGREEMENTS WITH COMMERCIAL
FIRMS
Appendix to Part 1274 [Amended]
The Regulatory Flexibility Act does
not apply to this final rule. This final
rule does not constitute a significant
revision within the meaning of Public
Law 98–577, and publication for public
comment is not required. However,
NASA will consider comments from
small entities concerning the affected
coverage in accordance with 5 U.S.C.
610. Interested parties should cite 5
U.S.C. 601, et seq., in correspondence.
C. Paperwork Reduction Act
3. In the appendix to part 1274, under
the section ‘‘Exhibit B to Part 1274—
Reports,’’ remove paragraph 1 and
redesignate paragraphs 2 and 3 as 1 and
2, respectively.
I
[FR Doc. E7–14135 Filed 7–20–07; 8:45 am]
BILLING CODE 7510–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
The Paperwork Reduction Act (Pub.
L. 104–13) does not apply because this
rule does not impose any new
recordkeeping or information collection
requirements, or collection of
information from offerors, contractors,
or members of the public that require
the approval of the Office of
Management (OMB) and Budget under
44 U.S.C. 3501, et seq.
26 CFR Part 1
[TD 9343]
RIN 1545–BF30
Agent for a Consolidated Group With
Foreign Common Parent
List of Subjects in 14 CFR Parts 1260
and 1274
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Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
temporary regulations.
Grant programs-science and
technology, Cooperative agreements
BILLING CODE 3410–34–P
SUMMARY: This document contains final
regulations under section 1502 that
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AGENCY:
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Federal Register / Vol. 72, No. 140 / Monday, July 23, 2007 / Rules and Regulations
provide the Internal Revenue Service
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 group’s common parent.
The final regulations are necessary to
clarify and explain the rules governing
the designation of an agent for the
members of a consolidated group. 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.
DATES: Effective Date: These regulations
are effective July 23, 2007.
Applicability Date: For dates of
applicability, see § 1.1502–77(h)(3).
FOR FURTHER INFORMATION CONTACT:
Stephen R. Cleary, (202) 622–7750, (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On March 14, 2006, the IRS and
Treasury Department published
temporary regulations (TD 9255) in the
Federal Register (71 FR 13001)
providing the IRS the authority to
designate a domestic member of a
consolidated group to be the sole agent
for the group where the common parent
of the group is a foreign entity. A notice
of proposed rule making (REG–164247–
05) cross-referencing the temporary
regulations was published in the
Federal Register for the same day (71
FR 13062). The temporary regulations
provide procedures for the IRS’s
designation of a ‘‘domestic substitute
agent’’ and define the term of that
substitute agent’s agency.
pwalker on PROD1PC71 with RULES
Explanation of Provisions and
Summary of Comments
No comments were received
responding to the notice of proposed
rulemaking, and no public hearing was
requested or held. The proposed
regulations are adopted as amended by
this Treasury decision and the
corresponding temporary regulations are
removed. The temporary regulations, as
contained in the 26 CFR part 1 edition
revised as of April 1, 2007, remain in
effect for certain taxable years as
provided by § 1.1502–77(h)(3)(ii) of
these final regulations.
These final regulations clarify the
term of the domestic substitute agent’s
agency by specifying that once
appointed for one or more taxable years
of the group, unless the designation is
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expressly limited to such term, the
domestic substitute agent will continue
to be the agent for subsequent taxable
years of the group until certain specified
events occur. These final regulations
also specify that, if the domestic
substitute agent is the group’s agent for
a taxable year, it will generally continue
to serve as the agent for that year until
the domestic substitute agent’s existence
terminates. Finally, these final
regulations clarify that if a group with
a domestic substitute agent continues in
existence with a new common parent
that is a domestic corporation (without
regard to section 7874 or a section
953(d) election) during a consolidated
return year, the domestic substitute
agent is the agent of the group for the
year through the date of the transaction
in which the new common parent
becomes the common parent, and
thereafter the new common parent
becomes the agent of the group for the
entire taxable year.
Additionally, these regulations
indicate that § 1.1502–77(e)(1) is also
applicable for purposes of determining
whether a domestic substitute agent’s
existence has terminated.
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.
Pursuant to 5 U.S.C. 553(d)(3) it has
been determined that that a delayed
effective date is unnecessary because
this rule finalizes currently effective
temporary rules regarding the
designation of a domestic substitute
agent without substantive change. It is
hereby certified that these regulations
will not have a significant economic
impact on a substantial number of small
entities. This certification is based on
the fact that these regulations will
primarily affect affiliated groups of
corporations that have elected to file
consolidated returns, which tend to be
larger businesses. Therefore, a
regulatory flexibility analysis is not
required. Pursuant to section 7805(f) of
the Internal Revenue Code, the notice of
proposed rulemaking preceding these
final regulations was submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment
on its 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.
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40067
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 removing the
entry for § 1.1502–77T to read as
follows:
I
Authority: 26 U.S.C. 7805 * * *
I Par. 2. Section 1.1502–77 is amended
by:
I 1. Revising paragraph (e)(1).
I 2. Adding paragraph (h)(3).
I 3. Revising paragraph (j).
The additions and revisions read as
follows:
§ 1.1502–77
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Agent for the group.
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(e) Termination of a corporation’s
existence—(1) In general. For purposes
of paragraphs (a)(1)(v), (a)(4)(i), (d), and
(j) of this section, the existence of a
corporation is deemed to terminate if—
(i) Its existence terminates under
applicable law; or
(ii) Except as provided in paragraph
(e)(3) of this section, it becomes, for
Federal tax purposes, either—
(A) An entity that is disregarded as an
entity separate from its owner; or
(B) An entity that is reclassified as a
partnership. * * *
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(h) * * *
(3) Designation of a domestic
substitute agent—(i) In general. The
provisions of paragraphs (e)(1) and (j) of
this section apply to taxable years for
which the consolidated Federal income
tax return is due (without extensions)
after July 23, 2007.
(ii) Prior law. For taxable years for
which the consolidated Federal income
tax return is due (without extensions)
on or before July 23, 2007, see § 1.1502–
77(e)(1) as contained in the 26 CFR part
1 edition revised as of April 1, 2007. For
taxable years for which the consolidated
Federal income tax return is due
(without extensions) after March 14,
2006, and on or before July 23, 2007, see
§ 1.1502–77T as contained in the 26
CFR part 1 edition revised as of April 1,
2007.
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(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
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Federal Register / Vol. 72, No. 140 / Monday, July 23, 2007 / Rules and Regulations
organized under the law of a foreign
country and is treated as a domestic
corporation by reason of section 7874
(or regulations under that section) 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 consolidated
Federal income tax return is due
(without extensions) after July 23, 2007,
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
paragraph (d)(1)(i)(A) of this section
(determined without regard to section
7874, a section 953(d) election 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) Taxable years
for which domestic substitute agent is
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the agent. If the Commissioner
designates a domestic substitute agent
for one or more taxable years, unless the
designation is expressly limited to such
term, such domestic substitute agent
will continue as the group’s sole agent
for subsequent taxable years until the
domestic substitute agent ceases to be a
member of the continuing group, is
replaced by a new domestic common
parent (as provided in paragraph
(j)(4)(iv)(A) of this section), is replaced
by the Commissioner, or is replaced by
a default substitute agent (as provided
in paragraph (j)(5)(ii) of this section). If
during the course of a consolidated
return year the domestic substitute
agent ceases to be a member of the
continuing group or is replaced, it shall
no longer act as agent for such taxable
year or subsequent taxable years in any
matter.
(ii) Continuing agency for prior
taxable years. Unless replaced by a
default substitute agent (as provided in
paragraph (j)(5)(ii) of this section) or by
the Commissioner, the domestic
substitute agent at the end of a taxable
year of the group will remain the agent
for such year until its existence
terminates, even if the group
subsequently ceases to exist or the
domestic substitute agent subsequently
ceases to be a member of the group.
(iii) Replacement of a § 1.1502–
77(d)(1) agent. If, pursuant to paragraph
(d)(1) of this section, 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 the group has a domestic
substitute agent and the group continues
in existence with a new common parent
during a consolidated return year, and
such new common parent is a domestic
corporation (determined without regard
to section 7874 or a section 953(d)
election), the domestic substitute agent
at the beginning of the year is the agent
for the group through the date of the
transaction in which the new common
parent becomes the common parent, and
the new common parent becomes the
agent for the group beginning the day
after the transaction, at which time it
becomes the agent for the group with
respect to the entire consolidated return
year (including the period through the
date of the transaction) and the former
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domestic substitute agent will no longer
be the agent for the group for 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 or a section 953(d)
election), the Commissioner may
designate the new common parent as
the sole agent for the group for any of
the group’s prior taxable years (for
which the consolidated Federal income
tax return is due (without extensions)
after July 23, 2007) 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) In general. If the
Commissioner designates a domestic
substitute agent under this paragraph (j),
it will be treated as a designation of a
substitute agent under paragraph (d) of
this section.
(ii) Default substitute agent. If the
domestic substitute agent’s existence
terminates and it has a single successor
that is a domestic corporation (without
regard to section 269B) 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 paragraph
(d)(2) of this section. See paragraph
(d)(4) of this section 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 CB 99) or a corresponding provision
of a successor revenue procedure for
notification. (See § 601.601(d)(2)(ii)(b) 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 consolidated Federal income
tax return is due (without extensions)
after July 23, 2007. Such request is
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Federal Register / Vol. 72, No. 140 / Monday, July 23, 2007 / Rules and Regulations
deemed to be a request under paragraph
(d)(3)(i) of this section. Members of the
group shall use the procedures in
section 10 of Rev. Proc. 2002–43 (2002–
2 CB 99) or a corresponding provision
of a successor revenue procedure for
this purpose. (See § 601.601(d)(2)(ii)(b)
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 paragraph (d)(3)(ii) of this
section. Members of the group shall use
the procedures in section 11 of Rev.
Proc. 2002–43 (2002–2 CB 99) or a
corresponding provision of a successor
revenue procedure for this purpose. (See
§ 601.601(d)(2)(ii)(b) of this chapter.)
§ 1.1502–77T
[Removed]
I Par. 3. Section 1.1502–77T is
removed.
Kevin M. Brown,
Deputy Commissioner for Services and
Enforcement.
Approved: July 16, 2007.
Eric Solomon,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. E7–14197 Filed 7–20–07; 8:45 am]
BILLING CODE 4830–01–P
NATIONAL LABOR RELATIONS
BOARD
29 CFR Part 100
Debt Collection Procedures
National Labor Relations Board
(NLRB).
ACTION: Final rule.
pwalker on PROD1PC71 with RULES
AGENCY:
SUMMARY: The National Labor Relations
Board (NLRB) is issuing final
regulations concerning the procedures
used to collect debts that are owed to
the NLRB. These final regulations
conform to the legislative changes
enacted in the Debt Collection
Improvement Act of 1996 (DCIA) and
the amended procedures presented in
the Federal Claims Collection Standards
(FCCS) issued by the Department of the
Treasury (Treasury) and the Department
of Justice (DOJ). This final action is
intended to improve the NLRB’s
collection of debts owed to the United
States.
EFFECTIVE DATE: July 23, 2007.
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Karl
Rohrbaugh, Chief, Finance Branch,
National Labor Relations Board, Room
7828, 1099 14th Street, NW.,
Washington, DC 20570–0001,
Telephone (202) 273–4226, e-mail
address Karl.Rohrbaugh@nlrb.gov.
SUPPLEMENTARY INFORMATION:
FOR FURTHER INFORMATION CONTACT:
I. Background
On April 26, 1996, the Debt Collection
Improvement Act (DCIA) of 1996 (Pub.
L. 104–134) was enacted. This Act
enhances the Federal Government’s debt
collection activities. The purposes of the
Act are—
(1) To maximize collections of
delinquent debts owed to the
Government by ensuring quick action to
enforce recovery of debts and the use of
all appropriate collection tools,
(2) To minimize the costs of debt
collection by consolidating related
functions and activities and using
interagency teams,
(3) To reduce losses arising from debt
management activity by requiring
proper screening of potential borrowers,
aggressive monitoring of all accounts,
and sharing of information within and
among Federal agencies,
(4) To ensure that the public is fully
informed of the Federal Government’s
debt collection policies and that debtors
are aware of their obligations to repay
amounts owed to the Federal
Government,
(5) To ensure that debtors have all
appropriate due process rights,
including the ability to verify,
challenge, and compromise claims, and
access to administrative appeals
procedures which are both reasonable
and protect the interests of the United
States,
(6) To encourage agencies, when
appropriate, to sell delinquent debt,
particularly debts with underlying
collateral, and
(7) To rely on the experience and
expertise of private sector professionals
to provide debt collection services to
Federal agencies.
This act provides that any nontax debt
or claim owed to the United States that
has been delinquent for a period of 180
days shall be referred to the Department
of the Treasury or a Treasury-designated
collection center for appropriate action
to collect or terminate collection of the
claim or debt. The DCIA provides the
Treasury with new collection tools,
including the authority to offset any
Federal agency’s payment to a vendor to
satisfy that vendor’s debt.
The Federal Claims Collection
Standards (FCCS) (31 CFR Chapter IX
Parts 900, 901, 902, 903, and 904) were
revised November 22, 2000 (65 FR
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40069
70390). The revised FCCS clarify and
simplify Federal debt collection
procedures and reflect changes under
the DCIA of 1996 and the General
Accounting Office Act of 1996. The
revised FCCS reflect legislative changes
to Federal debt collection procedures
enacted under the Debt Collection
Improvement Act of 1996 (DCIA), Public
Law 104–134, 110 Stat. 1321–358, as
part of the Omnibus Consolidated
Recissions and Appropriations Act of
1996. The revised FCCS provide
agencies with greater latitude to adopt
agency-specific regulations, tailored to
the legal and policy requirements
applicable to various types of Federal
debt, to maximize the effectiveness of
Federal debt collection procedures.
The Department of the Treasury and
the Department of Justice published the
revised FCCS as a joint final rule under
Chapter IX, Title 31, Code of Federal
Regulations. These regulations
superseded the FCCS regulations
codified at 4 CFR Chapter II Parts 101–
105.
The revised FCCS prescribe standards
for Federal agency use in the
administrative collection, offset,
compromise, and the suspension or
termination of collection activity for
civil claims for money, funds, or
property as defined by 31 U.S.C.
3701(b), unless specific Federal agency
statutes or regulations apply to such
activities, or as provided for by Title 11
of the United States Code when the
claims involve bankruptcy. The revised
FCCS also prescribe standards for
referring debts to the Department of
Justice for litigation.
These regulations cover the collection
of debts such as court costs, vendor
overpayments, travel-related expenses,
etc. However, currently, the majority of
the debts owed to the NLRB are payroll
debts owed by current or former
employees, the collection of which are
covered under 5 U.S.C. 5514.
II. Comments on Interim Rule
On August 18, 2006 (71 FR 47732),
the NLRB published an interim rule
with a request for comments concerning
its procedures used to collect debts
owed to the NLRB. The comment period
expired on October 17, 2006. No
comments were received with respect to
the interim rule.
III. Administrative Procedures Act
Because this rule involves rules of
agency organization, procedure, or
practice, no notice of proposed
rulemaking is required under Section
553 of the Administrative Procedures
Act (5 U.S.C. 553).
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]]>Agencies
[Federal Register Volume 72, Number 140 (Monday, July 23, 2007)]
[Rules and Regulations]
[Pages 40066-40069]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-14197]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9343]
RIN 1545-BF30
Agent for a Consolidated Group With Foreign Common Parent
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations and removal of temporary regulations.
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SUMMARY: This document contains final regulations under section 1502
that
[[Page 40067]]
provide the Internal Revenue Service 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 group's
common parent. The final regulations are necessary to clarify and
explain the rules governing the designation of an agent for the members
of a consolidated group. 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.
DATES: Effective Date: These regulations are effective July 23, 2007.
Applicability Date: For dates of applicability, see Sec. 1.1502-
77(h)(3).
FOR FURTHER INFORMATION CONTACT: Stephen R. Cleary, (202) 622-7750,
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On March 14, 2006, the IRS and Treasury Department published
temporary regulations (TD 9255) in the Federal Register (71 FR 13001)
providing the IRS the authority to designate a domestic member of a
consolidated group to be the sole agent for the group where the common
parent of the group is a foreign entity. A notice of proposed rule
making (REG-164247-05) cross-referencing the temporary regulations was
published in the Federal Register for the same day (71 FR 13062). The
temporary regulations provide procedures for the IRS's designation of a
``domestic substitute agent'' and define the term of that substitute
agent's agency.
Explanation of Provisions and Summary of Comments
No comments were received responding to the notice of proposed
rulemaking, and no public hearing was requested or held. The proposed
regulations are adopted as amended by this Treasury decision and the
corresponding temporary regulations are removed. The temporary
regulations, as contained in the 26 CFR part 1 edition revised as of
April 1, 2007, remain in effect for certain taxable years as provided
by Sec. 1.1502-77(h)(3)(ii) of these final regulations.
These final regulations clarify the term of the domestic substitute
agent's agency by specifying that once appointed for one or more
taxable years of the group, unless the designation is expressly limited
to such term, the domestic substitute agent will continue to be the
agent for subsequent taxable years of the group until certain specified
events occur. These final regulations also specify that, if the
domestic substitute agent is the group's agent for a taxable year, it
will generally continue to serve as the agent for that year until the
domestic substitute agent's existence terminates. Finally, these final
regulations clarify that if a group with a domestic substitute agent
continues in existence with a new common parent that is a domestic
corporation (without regard to section 7874 or a section 953(d)
election) during a consolidated return year, the domestic substitute
agent is the agent of the group for the year through the date of the
transaction in which the new common parent becomes the common parent,
and thereafter the new common parent becomes the agent of the group for
the entire taxable year.
Additionally, these regulations indicate that Sec. 1.1502-77(e)(1)
is also applicable for purposes of determining whether a domestic
substitute agent's existence has terminated.
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. Pursuant to 5
U.S.C. 553(d)(3) it has been determined that that a delayed effective
date is unnecessary because this rule finalizes currently effective
temporary rules regarding the designation of a domestic substitute
agent without substantive change. It is hereby certified that these
regulations will not have a significant economic impact on a
substantial number of small entities. This certification is based on
the fact that these regulations will primarily affect affiliated groups
of corporations that have elected to file consolidated returns, which
tend to be larger businesses. Therefore, a regulatory flexibility
analysis is not required. Pursuant to section 7805(f) of the Internal
Revenue Code, the notice of proposed rulemaking preceding these final
regulations was submitted to the Chief Counsel for Advocacy of the
Small Business Administration for comment on its 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
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Accordingly, 26 CFR part 1 is amended as follows:
PART 1--INCOME TAXES
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Paragraph 1. The authority citation for part 1 is amended by removing
the entry for Sec. 1.1502-77T to read as follows:
Authority: 26 U.S.C. 7805 * * *
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Par. 2. Section 1.1502-77 is amended by:
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1. Revising paragraph (e)(1).
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2. Adding paragraph (h)(3).
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3. Revising paragraph (j).
The additions and revisions read as follows:
Sec. 1.1502-77 Agent for the group.
* * * * *
(e) Termination of a corporation's existence--(1) In general. For
purposes of paragraphs (a)(1)(v), (a)(4)(i), (d), and (j) of this
section, the existence of a corporation is deemed to terminate if--
(i) Its existence terminates under applicable law; or
(ii) Except as provided in paragraph (e)(3) of this section, it
becomes, for Federal tax purposes, either--
(A) An entity that is disregarded as an entity separate from its
owner; or
(B) An entity that is reclassified as a partnership. * * *
* * * * *
(h) * * *
(3) Designation of a domestic substitute agent--(i) In general. The
provisions of paragraphs (e)(1) and (j) of this section apply to
taxable years for which the consolidated Federal income tax return is
due (without extensions) after July 23, 2007.
(ii) Prior law. For taxable years for which the consolidated
Federal income tax return is due (without extensions) on or before July
23, 2007, see Sec. 1.1502-77(e)(1) as contained in the 26 CFR part 1
edition revised as of April 1, 2007. For taxable years for which the
consolidated Federal income tax return is due (without extensions)
after March 14, 2006, and on or before July 23, 2007, see Sec. 1.1502-
77T as contained in the 26 CFR part 1 edition revised as of April 1,
2007.
* * * * *
(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
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organized under the law of a foreign country and is treated as a
domestic corporation by reason of section 7874 (or regulations under
that section) 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 consolidated Federal income tax return is due
(without extensions) after July 23, 2007, 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 paragraph (d)(1)(i)(A) of this section (determined without regard to
section 7874, a section 953(d) election 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) Taxable years for which domestic substitute
agent is the agent. If the Commissioner designates a domestic
substitute agent for one or more taxable years, unless the designation
is expressly limited to such term, such domestic substitute agent will
continue as the group's sole agent for subsequent taxable years until
the domestic substitute agent ceases to be a member of the continuing
group, is replaced by a new domestic common parent (as provided in
paragraph (j)(4)(iv)(A) of this section), is replaced by the
Commissioner, or is replaced by a default substitute agent (as provided
in paragraph (j)(5)(ii) of this section). If during the course of a
consolidated return year the domestic substitute agent ceases to be a
member of the continuing group or is replaced, it shall no longer act
as agent for such taxable year or subsequent taxable years in any
matter.
(ii) Continuing agency for prior taxable years. Unless replaced by
a default substitute agent (as provided in paragraph (j)(5)(ii) of this
section) or by the Commissioner, the domestic substitute agent at the
end of a taxable year of the group will remain the agent for such year
until its existence terminates, even if the group subsequently ceases
to exist or the domestic substitute agent subsequently ceases to be a
member of the group.
(iii) Replacement of a Sec. 1.1502-77(d)(1) agent. If, pursuant to
paragraph (d)(1) of this section, 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 the group has a domestic
substitute agent and the group continues in existence with a new common
parent during a consolidated return year, and such new common parent is
a domestic corporation (determined without regard to section 7874 or a
section 953(d) election), the domestic substitute agent at the
beginning of the year is the agent for the group through the date of
the transaction in which the new common parent becomes the common
parent, and the new common parent becomes the agent for the group
beginning the day after the transaction, at which time it becomes the
agent for the group with respect to the entire consolidated return year
(including the period through the date of the transaction) and the
former domestic substitute agent will no longer be the agent for the
group for 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 or a section 953(d)
election), the Commissioner may designate the new common parent as the
sole agent for the group for any of the group's prior taxable years
(for which the consolidated Federal income tax return is due (without
extensions) after July 23, 2007) 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) In general. If the
Commissioner designates a domestic substitute agent under this
paragraph (j), it will be treated as a designation of a substitute
agent under paragraph (d) of this section.
(ii) Default substitute agent. If the domestic substitute agent's
existence terminates and it has a single successor that is a domestic
corporation (without regard to section 269B) 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
paragraph (d)(2) of this section. See paragraph (d)(4) of this section
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 CB 99) or a corresponding provision of a successor revenue
procedure for notification. (See Sec. 601.601(d)(2)(ii)(b) 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 consolidated Federal income
tax return is due (without extensions) after July 23, 2007. Such
request is
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deemed to be a request under paragraph (d)(3)(i) of this section.
Members of the group shall use the procedures in section 10 of Rev.
Proc. 2002-43 (2002-2 CB 99) or a corresponding provision of a
successor revenue procedure for this purpose. (See Sec.
601.601(d)(2)(ii)(b) 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 paragraph (d)(3)(ii) of this section. Members of
the group shall use the procedures in section 11 of Rev. Proc. 2002-43
(2002-2 CB 99) or a corresponding provision of a successor revenue
procedure for this purpose. (See Sec. 601.601(d)(2)(ii)(b) of this
chapter.)
Sec. 1.1502-77T [Removed]
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Par. 3. Section 1.1502-77T is removed.
Kevin M. Brown,
Deputy Commissioner for Services and Enforcement.
Approved: July 16, 2007.
Eric Solomon,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. E7-14197 Filed 7-20-07; 8:45 am]
BILLING CODE 4830-01-P
