Amendments to the Regulations Regarding Questions and Answers Relating to Church Tax Inquiries and Examinations, 39003-39007 [E9-18659]

Download as PDF Federal Register / Vol. 74, No. 149 / Wednesday, August 5, 2009 / Proposed Rules regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this proposed regulation: (1) Is not a ‘‘significant regulatory action’’ under Executive Order 12866; (2) is not a ‘‘significant rule’’ under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. The FAAs authority to issue rules regarding aviation safety is found in Title 49 of the U.S. Code. Subtitle 1, Section 106, describes the authority for the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency’s authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes additional controlled airspace at Pueblo Memorial Airport, CO. Paragraph 6005. Class E airspace areas extending upward from 700 feet or more above the surface of the earth. List of Subjects in 14 CFR Part 71 DEPARTMENT OF THE TREASURY Airspace, Incorporation by reference, Navigation (air). Internal Revenue Service The Proposed Amendment 26 CFR Part 301 Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows: [REG–112756–09] srobinson on DSKHWCL6B1PROD with PROPOSALS 1. The authority citation for 14 CFR part 71 continues to read as follows: Authority: 49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959– 1963 Comp., p. 389. [Amended] 2. The incorporation by reference in 14 CFR 71.1 of the FAA Order 7400.9S, Airspace Designations and Reporting Points, signed October 3, 2008, and effective October 31, 2008 is amended as follows: VerDate Nov<24>2008 18:25 Aug 04, 2009 Jkt 217001 * * * * ANM CO E5 Pueblo, CO [Modified] Pueblo Memorial Airport, CO (Lat. 38°17′21″ N., long. 104°29′48″ W.) That airspace extending upward from 700 feet above the surface within 21.8-mile radius of the Pueblo Memorial Airport, and within the 28.8-mile radius of Pueblo Memorial Airport clockwise between the 070° and 133° bearing from the airport; that airspace extending upward from 1,200 feet above the surface bounded on the north by lat. 38°30′00″ N., on the east by V–169, on the south by V–210, on the west by a line from lat. 37°38′00″ N., long. 105°00′02″ W.; to lat. 38°09′25″ N., long. 105°08′06″ W.; to lat. 38°05′51″ N., long. 105°30′49″ W.; to lat. 38°10′00″ N., long. 105°33′02″ W.; to lat. 38°30′00″ N., long. 105°33′02″ W.; that airspace extending upward from 13,700 feet MSL bounded by a line beginning at lat. 38°09′25″ N., long. 105°08′06″ W.; to lat. 37°38′00″ N., long. 105°00′02″ W.; to lat. 37°34′00″ N., long. 105°12′02″ W.; to lat. 38°05′51″ N., long. 105°30′49″ W.; thence to point of beginning, excluding that airspace within Federal airways and the Colorado Springs, CO, Class E airspace area. * * * * * Issued in Seattle, Washington, on July 27, 2009. H. Steve Karnes, Acting Manager, Operations Support Group, Western Service Center. [FR Doc. E9–18736 Filed 8–4–09; 8:45 am] BILLING CODE 4910–13–P RIN 1545–BI60 PART 71—DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR TRAFFIC SERVICE ROUTES; AND REPORTING POINTS § 71.1 * Amendments to the Regulations Regarding Questions and Answers Relating to Church Tax Inquiries and Examinations AGENCY: Internal Revenue Service (‘‘IRS’’), Treasury. ACTION: Notice of proposed rulemaking. SUMMARY: This document contains proposed regulations amending the questions and answers relating to church tax inquiries and examinations. These proposed regulations replace references to positions that were abolished by the Internal Revenue Service Restructuring and Reform Act of 1998 with references that are consistent both with the statute and the IRS’s current organizational structure. PO 00000 Frm 00017 Fmt 4702 Sfmt 4702 39003 DATES: Written or electronic comments and requests for a public hearing must be received by November 3, 2009. ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG–112756–09), Room 5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG–112756– 09), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC, or sent electronically, via the Federal eRulemaking Portal at http:// www.regulations.gov (IRS–REG– 112756–09). FOR FURTHER INFORMATION CONTACT: Concerning these proposed regulations, Benjamin Akins at (202) 622–1124 or Monice Rosenbaum at (202) 622–6070; concerning submission of comments and requests for a public hearing, Richard Hurst, Richard.A.Hurst@irscounsel.treas.gov, (202) 622–7180 (not a toll-free numbers). SUPPLEMENTARY INFORMATION: Background Restrictions on Church Tax Inquiries and Examinations This document contains amendments to the regulations on Procedure and Administration (26 CFR part 301) under section 7611 of the Internal Revenue Code. Section 7611 was enacted by section 1033 of the Deficit Reduction Act of 1984 (Pub. L. 98–369, 98 Stat. 1034–1039) (‘‘DRA 1984’’). Prior to the enactment of section 7611, section 7605(c) imposed special requirements that the IRS had to meet before it could examine church books of account, but there were no special requirements imposed before the IRS could commence an investigation or inquiry into a church’s tax liabilities. As explained in the Conference Report accompanying DRA 1984, H.R. Rep. No. 98–861, 98th Cong., 2d Sess. 1101 (1984), 1984–3 CB Vol. 2 355, Congress sought to address certain problems that arise when the IRS examines the records of a church. Thus, Congress expanded the requirements relating to IRS interactions with churches. Although prior law imposed limitations on the examination of church records, those limitations were somewhat vague and relied on internal IRS procedures to protect the rights of a church in the examination process. Additionally, there was some uncertainty regarding the scope of the investigations to which prior law applied and the nature of the E:\FR\FM\05AUP1.SGM 05AUP1 srobinson on DSKHWCL6B1PROD with PROPOSALS 39004 Federal Register / Vol. 74, No. 149 / Wednesday, August 5, 2009 / Proposed Rules records protected by the law. The enactment of section 7611 attempted to resolve these competing considerations by providing detailed rules for the IRS to follow in making tax inquiries to churches, both as to tax-exempt status and as to the existence of unrelated business income. Section 7611(a)(2) permits the IRS to begin an inquiry into whether a church qualifies for exemption from income tax as an organization described in section 501(c)(3) or whether a church has a liability for unrelated business income tax only if an appropriate high-level Treasury official first reasonably believes on the basis of facts and circumstances, recorded in writing, that the church may not be exempt under section 501(a), or that the church may be carrying on an unrelated trade or business, or may be otherwise engaged in activities subject to tax. Section 7611(h)(7) provides that the term ‘‘appropriate high-level Treasury official’’ means the Secretary of the Treasury or any delegate of the Secretary whose rank is no lower than that of a principal Internal Revenue officer for an internal revenue region. The legislative history of section 7611 interprets the term ‘‘appropriate highlevel Treasury official’’ to mean an IRS Regional Commissioner (or higher official). H.R. Rep. No. 98–861, 98th Cong. 2d Sess. 1101 (1984), 1984–3 CB Vol. 2 355. Final regulations under section 7611, which were published on February 21, 1986, 50 FR 6219, also interpret the term to mean an IRS Regional Commissioner. See Treas. Reg. § 301.7611 Q1–A1. Section 7611(b)(2)(A) provides that at least 15 days before the beginning of a church tax examination, the IRS must provide notice of the examination to both the church and the appropriate regional counsel. Section 7611(b)(3)(C) provides that any regional counsel who receives notice under section 7611(b)(2)(A) may submit to a regional commissioner an advisory objection to the examination within 15 days after the notice of examination is provided. Section 7611(c)(1)(A) provides that the IRS must make a final determination as to any church tax inquiry or examination within two years of the date the notice of examination is provided to the church under section 7611(b). In instances where no examination follows a church tax inquiry, section 7611(c)(1)(B) requires the IRS to make a final determination as to the inquiry no later than 90 days after the date the notice of inquiry is provided to the church under section 7611(a). Section 7611(c)(2) suspends the periods described in section 7611(c)(1) VerDate Nov<24>2008 18:25 Aug 04, 2009 Jkt 217001 (that is, 2 year period and 90 day period) while certain judicial proceedings are pending or being appealed, including proceedings brought by the IRS against a church seeking to compel compliance with a reasonable request to examine church records or religious activities. Section 7611(d)(1) prohibits the IRS from making certain final determinations (that is, revocation of tax-exempt status, notice of deficiency, or assessment) regarding a church until after the appropriate regional counsel determines in writing that there has been substantial compliance with the requirements of section 7611. Section 7611(d)(1) further requires the appropriate regional counsel’s written approval of such final determination before the IRS can make the determination. Section 7611(e)(1) provides that if the IRS has not substantially complied with the requirements of section 7611, any proceeding to compel compliance with a summons shall be stayed until the court finds that the IRS has taken all practicable steps to correct the noncompliance. Section 7611(e)(2) states that the remedy provided in subsection (e)(1) shall be the exclusive remedy for a church in regard to any noncompliance by the IRS with the requirements of section 7611. Under section 7611(f), the IRS may not commence an inquiry or examination of a church if, within the previous five years, the IRS completed an inquiry or examination regarding the church that did not result in a revocation, notice of deficiency, assessment, or a request for a significant change in the church’s operating practices. An exception exists where the Secretary or his delegate approves the second inquiry or examination in writing. There is also an exception where the issues involved in the subsequent inquiry or examination are not the same or similar to issues involved in the preceding inquiry or examination. Prior to the Internal Revenue Service Restructuring and Reform Act of 1998, Public Law 105– 206 (‘‘RRA 1998’’), discussed below, section 7611(f) required the Assistant Commissioner (Employee Plans and Exempt Organizations), instead of the Secretary or his delegate, to approve subsequent inquiries and examinations for the exception to apply. Reorganization of the IRS Section 1001 of RRA 1998 requires the Commissioner of Internal Revenue to develop and implement a plan to reorganize the IRS. The congressional mandate provides that the plan shall PO 00000 Frm 00018 Fmt 4702 Sfmt 4702 ‘‘eliminate or substantially modify the existing organization of the IRS which is based on a national, regional, and district structure; [and] establish organizational units serving particular groups of taxpayers with similar needs * * *.’’ Under the reorganized IRS, four nationwide operating divisions were established to serve different types of taxpayers. One of these operating divisions serves tax exempt and government entities, including churches. Section 1102(e)(3) of RRA 1998 amended section 7611(f)(1), relating to second inquiries and examinations within five years of a previous inquiry or examination, by replacing Assistant Commissioner (Employee Plans and Exempt Organizations) with Secretary. Under section 7701(a)(11)(B), Secretary is defined to refer to the Secretary of the Treasury or his delegate. RRA 1998 did not amend other portions of section 7611, such as references to ‘‘appropriate high-level Treasury official’’ and ‘‘appropriate regional counsel.’’ In mandating the restructuring of the IRS under RRA 1998, Congress realized that certain positions within the IRS would be eliminated as a result of transitioning from a geographic structure to a structure based on nationwide jurisdiction of similar types of taxpayers. Accordingly, Congress included a savings provision in RRA 1998. Section 1001(b) provides, ‘‘All orders, determinations, rules, regulations * * * and other administrative actions * * * which are in effect at the time this section takes effect * * * shall continue in effect according to their terms until modified, terminated, superseded, set aside or revoked in accordance with law by * * * the Secretary of the Treasury [or] the Commissioner of Internal Revenue * * *.’’ This provision keeps in effect regulations that make reference to officers whose positions no longer exist. The legislative history of RRA 1998 at H.R. Conf. Rep. No. 105–599, 105th Cong., 2d Sess. 195 (1998) explains that ‘‘[t]he legality of IRS actions will not be affected pending further appropriate statutory changes relating to such a reorganization (e.g., eliminating statutory references to obsolete positions).’’ Accordingly, the Treasury Regulations under section 7611 have remained in effect notwithstanding their references to the positions of Regional Commissioner, Regional Counsel, and Assistant Commissioner (Employee Plans and Exempt Organizations), positions that were eliminated by the reorganization. Delegation Order 193 (Rev. 6) (11/08/2000) provides in part that actions previously delegated to E:\FR\FM\05AUP1.SGM 05AUP1 Federal Register / Vol. 74, No. 149 / Wednesday, August 5, 2009 / Proposed Rules srobinson on DSKHWCL6B1PROD with PROPOSALS Regional Commissioners by Treasury Regulations (par. 7) are now delegated to ‘‘Assistant Deputy Commissioners, Division Commissioners; Chiefs; and Directors, Submission Processing Field, Compliance Services Field, and Accounts Management Field.’’ In the Internal Revenue Manual (‘‘IRM’’), the IRS designated the Director, Exempt Organizations Examinations as the appropriate high-level Treasury official for purposes of section 7611. See IRM § 4.76.7. Recent litigation has challenged the IRS’s interpretation of the term ‘‘appropriate high-level Treasury official’’ following the reorganization. See United States v. Living Word Christian Center, Civil No. 08–mc–37, D.C. Minn. (Jan. 30, 2009) (‘‘LWCC’’). In particular, concern has been expressed about the need for an update to the regulations in light of the statutorily mandated reorganization and the elimination of internal revenue regions. In LWCC, the District Court for the District of Minnesota ruled that the Director, Exempt Organizations Examinations is not an appropriate high-level Treasury official to make the ‘‘reasonable belief’’ determination required before the IRS may commence a church tax inquiry under section 7611. LWCC at 2. The district court concluded that the Director, Exempt Organizations Examinations is not an appropriate high-level Treasury official within the meaning of section 7611(h) because that official does not have a comparable breadth of responsibility to a regional commissioner nor as high a position within the IRS. Although the IRS disagrees with the district court’s reasoning and conclusion in LWCC, the IRS acknowledges that it would be beneficial to revise the regulations in light of the changes in IRS organization made in the wake of RRA 1998 to clarify who is an appropriate high-level Treasury official for purposes of section 7611. Further, the IRS recognizes the significance of the special procedural requirements for church tax inquiries and examinations. These proposed regulations assign responsibility for making the determinations required under section 7611(a) to the Director, Exempt Organizations. Explanation of Provisions These proposed regulations eliminate references to the positions of Regional Commissioner and Regional Counsel under the existing regulations and give responsibilities formerly assigned to these now defunct positions to the Director, Exempt Organizations and the Division Counsel/Associate Chief Counsel, Tax Exempt and Government VerDate Nov<24>2008 18:25 Aug 04, 2009 Jkt 217001 Entities, respectively. In addition, these proposed regulations eliminate references to the position of Assistant Commissioner (Employee Plans and Exempt Organizations) under the existing regulations and give responsibilities formerly assigned to that position to the Commissioner, Tax Exempt and Government Entities or the Deputy Commissioner, Tax Exempt and Government Entities. Reasonable Belief and Inquiry Notice Requirement With respect to the initiation of the church tax inquiry process, Treas. Reg. § 301.7611–1 Q1–A1 provides that a ‘‘Regional Commissioner (or higher Treasury official)’’ is the appropriate high-level Treasury official for purposes of this reasonable belief requirement. Similarly, Treas. Reg. § 301.7611–1 Q7– A7 states, ‘‘Repeated (two or more) failures by a church or its agents to reply to routine requests * * * will be considered by the appropriate Internal Revenue Service Regional Commissioner to be a reasonable basis for commencement of a church tax inquiry under the church tax inquiry and examination procedures of section 7611.’’ In addition, Treas. Reg. § 301.7611 Q9–A9 requires a Regional Commissioner to provide written notice to the church of the beginning of an inquiry. These proposed regulations eliminate references to the Regional Commissioner and instead provide that the Director, Exempt Organizations is the ‘‘appropriate high-level Treasury official’’ for purposes of the reasonable belief and inquiry notice requirements of Treas. Reg. § 301.7611–1 Q1–A1, Q7– A7, and Q9–A9. The Director, Exempt Organizations is a senior executive who reports to the Commissioner/Deputy Commissioner, Tax Exempt and Government Entities Division, and who is responsible for planning, managing, directing and executing nationwide activities for Exempt Organizations. See IRM § 1.1.23.5 for a comprehensive description of these activities. Examination Notice Requirement Under section 7611(b)(2) and Treas. Reg. § 301.7611–1 Q10–A10, a church tax examination cannot be commenced without first providing written notice of such examination to the church and to the ‘‘appropriate Regional Counsel’’ at least 15 days before the IRS begins the church tax examination. The regulation allows the Regional Counsel to file an advisory objection to the examination within this same 15-day period. These proposed regulations amend Treas. Reg. § 301.7611–1 Q10–A10 by PO 00000 Frm 00019 Fmt 4702 Sfmt 4702 39005 substituting Division Counsel/Associate Chief Counsel, Tax Exempt and Government Entities, for each occurrence of Regional Counsel. These proposed regulations further specify that before the notice of examination is provided to the church, a copy of the notice must be provided to the Division Counsel/Associate Chief Counsel, Tax Exempt and Government Entities. Revocation of Exemption or of Church Status Section 7611(d)(1) and Treas. Reg. § 301.7611–1 Q11–A11 require the Regional Counsel to approve, in writing, certain final determinations that are within the scope of section 7611 and adversely affect the tax-exempt status or increase any tax liability of a church. Further, prior to such adverse action, section 7611(d) requires Regional Counsel to determine, in writing, that there has been substantial compliance with the requirements of section 7611, when applicable. These proposed regulations amend Treas. Reg. § 301.7611–1 Q11–A11 by providing that the Division Counsel/ Associate Chief Counsel, Tax Exempt and Government Entities, is the official responsible for complying with the written determination and approval requirements of section 7611(d)(1). Limitations on Period of Assessment Section 7611(d)(2) and Treas. Reg. § 301.7611–1 Q15–A15 provide special limitation periods for church tax liabilities. These special rules are not to be construed to increase an otherwise applicable limitation period. Treas. Reg. § 301.7611–1 Q15–A15 states that, for purposes of section 7611(d)(2)(A), that is, the statute of limitations applicable to liabilities arising from church tax examinations, a church is determined not to be a church exempt from tax when the appropriate Regional Commissioner approves, in writing, the completed findings of the examining agent that the organization is not a church exempt from tax for one or more of the three most recently completed taxable years ending before the examination notice date. The regulation also states that the Regional Commissioner cannot delegate this approval to a subordinate official. Further, the completed findings of the examining agent, which are approved by the appropriate Regional Commissioner, are not considered a final revenue agent’s report (defined in section 7611(g)). These proposed regulations substitute the Director, Exempt Organizations for the appropriate Regional Commissioner E:\FR\FM\05AUP1.SGM 05AUP1 39006 Federal Register / Vol. 74, No. 149 / Wednesday, August 5, 2009 / Proposed Rules for purposes of Treas. Reg. § 301.7611– 1 Q15–A15. Administration for comment on its impact on small business. Multiple Examinations Comments and Requests for a Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. Comments are requested on all aspects of the proposed regulations. All comments will be available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person that timely submits written or electronic comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Register. Consistent with the language of section 7611(f)(1) prior to enactment of RRA 1998, Treas. Reg. § 301–7611–1 Q16–A16 provides that the Assistant Commissioner (Employee Plans and Exempt Organizations) is responsible for providing the written approval necessary to begin a second inquiry or examination of a church. These proposed regulations provide that the Commissioner, Tax Exempt and Government Entities or the Deputy Commissioner, Tax Exempt and Government Entities is responsible for approving second inquiries and examinations under section 7611(f). Remedies for Violation of Section 7611 Drafting Information The principal authors of these proposed regulations are Benjamin Akins and Monice Rosenbaum of the 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. Special Analyses srobinson on DSKHWCL6B1PROD with PROPOSALS Section 7611(e) and Treas. Reg. § 301.7611–1 Q17–A17 provide that, if there has not been substantial compliance with certain requirements in section 7611, including the notice requirements of section 7611(a) and (b), the exclusive remedy for such noncompliance is a stay in an enforcement proceeding to compel compliance with a summons with respect to the inquiry or examination. The stay continues until the court finds that all practicable steps to correct the noncompliance have been taken. Treas. Reg. § 301.7611–1 Q17–A17 further states that failure of the Regional Commissioner to approve an inquiry may not be raised as a defense or as an affirmative ground for relief in a summons proceeding or any other judicial proceeding other than as specifically set forth in the regulation. These proposed regulations amend Treas. Reg. § 301.7611–1 Q17–A17 to replace each reference to Regional Commissioner with Director, Exempt Organizations. Paragraph 1. The authority citation for part 301 continues to read in part as follows: It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these proposed regulations and because the regulation does not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. 601) does not apply. Pursuant to section 7805(f) of the Code, these proposed regulations have been submitted to the Chief Counsel for Advocacy of the Small Business VerDate Nov<24>2008 18:25 Aug 04, 2009 Jkt 217001 List of Subjects 26 CFR Part 301 Administrative practice and procedure, Bankruptcy, Courts, Crime, Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Investigations, Law enforcement, Penalties, Pensions, Statistics, Taxes, Disclosure of information, Filing requirements. Amendments to the Regulations Accordingly, 26 CFR part 301 is proposed to be amended as follows: PART 301—PROCEDURE AND ADMINISTRATION Authority: 26 U.S.C. 7805 * * * Par. 2. In § 301.7611–1, each entry in the table, undesignated paragraphs in the ‘‘Old Paragraph’’ column are designated as new paragraphs in the ‘‘New Paragraph’’ column to read as follows: Old paragraph § 301.7611–1 A–5 first undesignated paragraph. § 301.7611–1 A–5 second undesignated paragraph. PO 00000 Frm 00020 Fmt 4702 New paragraph § 301.7611–1 A–5 paragraph (a). § 301.7611–1 A–5 paragraph (b). Sfmt 4702 Old paragraph § 301.7611–1 A–6 first undesignated paragraph. § 301.7611–1 A–9 first undesignated paragraph. § 301.7611–1 A–9 second undesignated paragraph. § 301.7611–1 A–10 first undesignated paragraph. § 301.7611–1 A–10 second undesignated paragraph. § 301.7611–1 A–10 third undesignated paragraph. § 301.7611–1 A–10 fourth undesignated paragraph. § 301.7611–1 A–10 fifth undesignated paragraph. § 301.7611–1 A–11 first undesignated paragraph. § 301.7611–1 A–11 second undesignated paragraph. § 301.7611–1 A–11 third undesignated paragraph. § 301.7611–1 A–13 first undesignated paragraph. § 301.7611–1 A–13a first undesignated paragraph. § 301.7611–1 A–14 first undesignated paragraph. § 301.7611–1 A–14 second undesignated paragraph. § 301.7611–1 A–15 first undesignated paragraph. § 301.7611–1 A–15 second undesignated paragraph. § 301.7611–1 A–15 third undesignated paragraph. § 301.7611–1 A–15 fourth undesignated paragraph. § 301.7611–1 A–15 fifth undesignated paragraph. § 301.7611–1 A–15 sixth undesignated paragraph. § 301.7611–1 A–15 seventh undesignated paragraph. § 301.7611–1 A–16 first undesignated paragraph. § 301.7611–1 A–17 first undesignated paragraph. E:\FR\FM\05AUP1.SGM 05AUP1 New paragraph § 301.7611–1 A–6 paragraph (a). § 301.7611–1 A–9 paragraph (a). § 301.7611–1 A–9 paragraph (b). § 301.7611–1 A–10 paragraph (a). § 301.7611–1 A–10 paragraph (b). § 301.7611–1 A–10 paragraph (c). § 301.7611–1 A–10 paragraph (d). § 301.7611–1 A–10 paragraph (e). § 301.7611–1 A–11 paragraph (a). § 301.7611–1 A–11 paragraph (b). § 301.7611–1 A–11 paragraph (c). § 301.7611–1 A–13 paragraph (a). § 301.7611–1 A–13a paragraph (a). § 301.7611–1 A–14 paragraph (a). § 301.7611–1 A–14 paragraph (b). § 301.7611–1 A–15 paragraph (a). § 301.7611–1 A–15 paragraph (b). § 301.7611–1 A–15 paragraph (c). § 301.7611–1 A–15 paragraph (d). § 301.7611–1 A–15 paragraph (e). § 301.7611–1 A–15 paragraph (f). § 301.7611–1 A–15 paragraph (g). § 301.7611–1 A–16 paragraph (a). § 301.7611–1 A–17 paragraph (a). Federal Register / Vol. 74, No. 149 / Wednesday, August 5, 2009 / Proposed Rules § 301.7611–1 [Amended] ‘‘Remove’’ column and add in its place the language in the ‘‘Add’’ column as set forth below: Par. 3. For each section listed in the table, remove the language in the Section Remove § 301.7611–1 A–1 first sentence ........................ appropriate Regional Commissioner (or higher Treasury official). appropriate Internal Revenue Service Regional Commissioner. appropriate Regional Commissioner ............... appropriate Regional Counsel ......................... § 301.7611–1 A–7 first sentence ........................ § 301.7611–1 A–9 first sentence ........................ § 301.7611–1 A–10 first sentence ...................... Add Regional Commissioner ................................... Director, Exempt Organizations. Assistant Commissioner (Employee Plans and Exempt Organizations). Commissioner, Tax Exempt and Government Entities or the Deputy Commissioner, Tax Exempt and Government Entities. approval of the Commissioner, Tax Exempt and Government Entities or the Deputy Commissioner, Tax Exempt and Government Entities. Commissioner, Tax Exempt and Government Entities or the Deputy Commissioner, Tax Exempt and Government Entities. Director, Exempt Organizations. Director, Exempt Organizations. belief of the Director, Exempt Organizations. § 301.7611–1 A–10 paragraph (b) second sentence. § 301.7611–1 A–11 paragraph (c) first, second and third sentences. § 301.7611–1 A–15 paragraph (c) first and third sentences. § 301.7611–1 A–15 paragraph (c) second sentence. § 301.7611–1 A–16 first sentence ...................... Regional Counsel ............................................. § 301.7611–1 A–16 second sentence ................ Assistant Commissioner’s approval ................. § 301.7611–1 A–16 paragraph (a) second sentence. Assistant Commissioner (Employee Plans and Exempt Organizations). § 301.7611–1 A–17 first sentence ...................... § 301.7611–1 A–17 paragraph(a) third sentence § 301.7611–1 A–17 paragraph (a) fourth sentence. Regional Commissioner ................................... Regional Commissioner ................................... appropriate Regional Commissioner’s belief ... BILLING CODE 4830–01–P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA–R09–OAR–2008–0379; FRL–8940–3] srobinson on DSKHWCL6B1PROD with PROPOSALS Approval and Promulgation of Maintenance Plan for Carbon Monoxide; State of Arizona; Tucson Air Planning Area AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: Pursuant to the Clean Air Act, EPA is proposing to approve two State implementation plan revisions submitted by the State of Arizona. The State submitted the 2008 Revision to the Carbon Monoxide Limited Maintenance Plan for the Tucson Air Planning Area on July 10, 2008. EPA is proposing to 18:25 Aug 04, 2009 Jkt 217001 Director, Exempt Organizations. appropriate Regional Commissioner ............... At the time the notice of examination (second notice) is provided to the church, a copy of the same notice will be provided to the appropriate Regional Counsel. Linda E. Stiff, Deputy Commissioner for Services and Enforcement. [FR Doc. E9–18659 Filed 7–31–09; 4:15 pm] Director, Exempt Organizations. Director, Exempt Organizations. Division Counsel/Associate Chief Counsel, Tax Exempt and Government Entities. Before the notice of examination (second notice) is provided to the church, a copy of the same notice will be provided to the Division Counsel/Associate Chief Counsel, Tax Exempt and Government Entities. Division Counsel/Associate Chief Counsel, Tax Exempt and Government Entities. Division Counsel/Associate Chief Counsel, Tax Exempt and Government Entities. Director, Exempt Organizations. § 301.7611–1 A–10 paragraph (b) first sentence VerDate Nov<24>2008 39007 Regional Counsel ............................................. approve the 2008 Limited Maintenance Plan because it provides for the maintenance of the carbon monoxide national ambient air quality standard within the Tucson Air Planning Area through the second 10-year portion of the maintenance period. EPA is also proposing to approve a statutory provision that was submitted by the State on June 22, 2009 as a revision to the State implementation plan and that extends the life of the State’s vehicle emissions inspection program through the end of 2016. EPA is taking this action pursuant to those provisions of the Clean Air Act that obligate the Agency to take action on submittals of revisions to State implementation plans. The effect of this action would be to make certain commitments related to maintenance of the carbon monoxide standard in the Tucson Air Planning Area Federally enforceable as part of the Arizona State implementation plan. DATES: Written comments must be received at the address below on or before September 4, 2009. ADDRESSES: Submit comments, identified by docket number EPA–R09– PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 OAR–2008–0379, by one of the following methods: 1. Federal eRulemaking Portal: http://www.regulations.gov. Follow the on-line instructions. 2. E-mail: robin.marty@epa.gov. 3. Mail or deliver: Marty Robin (AIR– 2), U.S. Environmental Protection Agency Region IX, 75 Hawthorne Street, San Francisco, CA 94105–3901. Instructions: All comments will be included in the public docket without change and may be made available online at http://www.regulations.gov, including any personal information provided, unless the comment includes Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Information that you consider CBI or otherwise protected should be clearly identified as such and should not be submitted through http://www.regulations.gov or e-mail. The http://www.regulations.gov portal is an ‘‘anonymous access’’ system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send e-mail directly to EPA without going through http:// E:\FR\FM\05AUP1.SGM 05AUP1

Agencies

[Federal Register Volume 74, Number 149 (Wednesday, August 5, 2009)]
[Proposed Rules]
[Pages 39003-39007]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-18659]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[REG-112756-09]
RIN 1545-BI60


Amendments to the Regulations Regarding Questions and Answers 
Relating to Church Tax Inquiries and Examinations

AGENCY: Internal Revenue Service (``IRS''), Treasury.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: This document contains proposed regulations amending the 
questions and answers relating to church tax inquiries and 
examinations. These proposed regulations replace references to 
positions that were abolished by the Internal Revenue Service 
Restructuring and Reform Act of 1998 with references that are 
consistent both with the statute and the IRS's current organizational 
structure.

DATES: Written or electronic comments and requests for a public hearing 
must be received by November 3, 2009.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-112756-09), Room 
5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
112756-09), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC, or sent electronically, via the Federal 
eRulemaking Portal at http://www.regulations.gov (IRS-REG-112756-09).

FOR FURTHER INFORMATION CONTACT: Concerning these proposed regulations, 
Benjamin Akins at (202) 622-1124 or Monice Rosenbaum at (202) 622-6070; 
concerning submission of comments and requests for a public hearing, 
Richard Hurst, Richard.A.Hurst@irscounsel.treas.gov, (202) 622-7180 
(not a toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

Restrictions on Church Tax Inquiries and Examinations

    This document contains amendments to the regulations on Procedure 
and Administration (26 CFR part 301) under section 7611 of the Internal 
Revenue Code. Section 7611 was enacted by section 1033 of the Deficit 
Reduction Act of 1984 (Pub. L. 98-369, 98 Stat. 1034-1039) (``DRA 
1984'').
    Prior to the enactment of section 7611, section 7605(c) imposed 
special requirements that the IRS had to meet before it could examine 
church books of account, but there were no special requirements imposed 
before the IRS could commence an investigation or inquiry into a 
church's tax liabilities. As explained in the Conference Report 
accompanying DRA 1984, H.R. Rep. No. 98-861, 98th Cong., 2d Sess. 1101 
(1984), 1984-3 CB Vol. 2 355, Congress sought to address certain 
problems that arise when the IRS examines the records of a church. 
Thus, Congress expanded the requirements relating to IRS interactions 
with churches. Although prior law imposed limitations on the 
examination of church records, those limitations were somewhat vague 
and relied on internal IRS procedures to protect the rights of a church 
in the examination process. Additionally, there was some uncertainty 
regarding the scope of the investigations to which prior law applied 
and the nature of the

[[Page 39004]]

records protected by the law. The enactment of section 7611 attempted 
to resolve these competing considerations by providing detailed rules 
for the IRS to follow in making tax inquiries to churches, both as to 
tax-exempt status and as to the existence of unrelated business income.
    Section 7611(a)(2) permits the IRS to begin an inquiry into whether 
a church qualifies for exemption from income tax as an organization 
described in section 501(c)(3) or whether a church has a liability for 
unrelated business income tax only if an appropriate high-level 
Treasury official first reasonably believes on the basis of facts and 
circumstances, recorded in writing, that the church may not be exempt 
under section 501(a), or that the church may be carrying on an 
unrelated trade or business, or may be otherwise engaged in activities 
subject to tax. Section 7611(h)(7) provides that the term ``appropriate 
high-level Treasury official'' means the Secretary of the Treasury or 
any delegate of the Secretary whose rank is no lower than that of a 
principal Internal Revenue officer for an internal revenue region. The 
legislative history of section 7611 interprets the term ``appropriate 
high-level Treasury official'' to mean an IRS Regional Commissioner (or 
higher official). H.R. Rep. No. 98-861, 98th Cong. 2d Sess. 1101 
(1984), 1984-3 CB Vol. 2 355. Final regulations under section 7611, 
which were published on February 21, 1986, 50 FR 6219, also interpret 
the term to mean an IRS Regional Commissioner. See Treas. Reg. Sec.  
301.7611 Q1-A1.
    Section 7611(b)(2)(A) provides that at least 15 days before the 
beginning of a church tax examination, the IRS must provide notice of 
the examination to both the church and the appropriate regional 
counsel. Section 7611(b)(3)(C) provides that any regional counsel who 
receives notice under section 7611(b)(2)(A) may submit to a regional 
commissioner an advisory objection to the examination within 15 days 
after the notice of examination is provided.
    Section 7611(c)(1)(A) provides that the IRS must make a final 
determination as to any church tax inquiry or examination within two 
years of the date the notice of examination is provided to the church 
under section 7611(b). In instances where no examination follows a 
church tax inquiry, section 7611(c)(1)(B) requires the IRS to make a 
final determination as to the inquiry no later than 90 days after the 
date the notice of inquiry is provided to the church under section 
7611(a). Section 7611(c)(2) suspends the periods described in section 
7611(c)(1) (that is, 2 year period and 90 day period) while certain 
judicial proceedings are pending or being appealed, including 
proceedings brought by the IRS against a church seeking to compel 
compliance with a reasonable request to examine church records or 
religious activities.
    Section 7611(d)(1) prohibits the IRS from making certain final 
determinations (that is, revocation of tax-exempt status, notice of 
deficiency, or assessment) regarding a church until after the 
appropriate regional counsel determines in writing that there has been 
substantial compliance with the requirements of section 7611. Section 
7611(d)(1) further requires the appropriate regional counsel's written 
approval of such final determination before the IRS can make the 
determination.
    Section 7611(e)(1) provides that if the IRS has not substantially 
complied with the requirements of section 7611, any proceeding to 
compel compliance with a summons shall be stayed until the court finds 
that the IRS has taken all practicable steps to correct the 
noncompliance. Section 7611(e)(2) states that the remedy provided in 
subsection (e)(1) shall be the exclusive remedy for a church in regard 
to any noncompliance by the IRS with the requirements of section 7611.
    Under section 7611(f), the IRS may not commence an inquiry or 
examination of a church if, within the previous five years, the IRS 
completed an inquiry or examination regarding the church that did not 
result in a revocation, notice of deficiency, assessment, or a request 
for a significant change in the church's operating practices. An 
exception exists where the Secretary or his delegate approves the 
second inquiry or examination in writing. There is also an exception 
where the issues involved in the subsequent inquiry or examination are 
not the same or similar to issues involved in the preceding inquiry or 
examination. Prior to the Internal Revenue Service Restructuring and 
Reform Act of 1998, Public Law 105-206 (``RRA 1998''), discussed below, 
section 7611(f) required the Assistant Commissioner (Employee Plans and 
Exempt Organizations), instead of the Secretary or his delegate, to 
approve subsequent inquiries and examinations for the exception to 
apply.

Reorganization of the IRS

    Section 1001 of RRA 1998 requires the Commissioner of Internal 
Revenue to develop and implement a plan to reorganize the IRS. The 
congressional mandate provides that the plan shall ``eliminate or 
substantially modify the existing organization of the IRS which is 
based on a national, regional, and district structure; [and] establish 
organizational units serving particular groups of taxpayers with 
similar needs * * *.'' Under the reorganized IRS, four nationwide 
operating divisions were established to serve different types of 
taxpayers. One of these operating divisions serves tax exempt and 
government entities, including churches.
    Section 1102(e)(3) of RRA 1998 amended section 7611(f)(1), relating 
to second inquiries and examinations within five years of a previous 
inquiry or examination, by replacing Assistant Commissioner (Employee 
Plans and Exempt Organizations) with Secretary. Under section 
7701(a)(11)(B), Secretary is defined to refer to the Secretary of the 
Treasury or his delegate. RRA 1998 did not amend other portions of 
section 7611, such as references to ``appropriate high-level Treasury 
official'' and ``appropriate regional counsel.''
    In mandating the restructuring of the IRS under RRA 1998, Congress 
realized that certain positions within the IRS would be eliminated as a 
result of transitioning from a geographic structure to a structure 
based on nationwide jurisdiction of similar types of taxpayers. 
Accordingly, Congress included a savings provision in RRA 1998. Section 
1001(b) provides, ``All orders, determinations, rules, regulations * * 
* and other administrative actions * * * which are in effect at the 
time this section takes effect * * * shall continue in effect according 
to their terms until modified, terminated, superseded, set aside or 
revoked in accordance with law by * * * the Secretary of the Treasury 
[or] the Commissioner of Internal Revenue * * *.'' This provision keeps 
in effect regulations that make reference to officers whose positions 
no longer exist. The legislative history of RRA 1998 at H.R. Conf. Rep. 
No. 105-599, 105th Cong., 2d Sess. 195 (1998) explains that ``[t]he 
legality of IRS actions will not be affected pending further 
appropriate statutory changes relating to such a reorganization (e.g., 
eliminating statutory references to obsolete positions).'' Accordingly, 
the Treasury Regulations under section 7611 have remained in effect 
notwithstanding their references to the positions of Regional 
Commissioner, Regional Counsel, and Assistant Commissioner (Employee 
Plans and Exempt Organizations), positions that were eliminated by the 
reorganization. Delegation Order 193 (Rev. 6) (11/08/2000) provides in 
part that actions previously delegated to

[[Page 39005]]

Regional Commissioners by Treasury Regulations (par. 7) are now 
delegated to ``Assistant Deputy Commissioners, Division Commissioners; 
Chiefs; and Directors, Submission Processing Field, Compliance Services 
Field, and Accounts Management Field.'' In the Internal Revenue Manual 
(``IRM''), the IRS designated the Director, Exempt Organizations 
Examinations as the appropriate high-level Treasury official for 
purposes of section 7611. See IRM Sec.  4.76.7.
    Recent litigation has challenged the IRS's interpretation of the 
term ``appropriate high-level Treasury official'' following the 
reorganization. See United States v. Living Word Christian Center, 
Civil No. 08-mc-37, D.C. Minn. (Jan. 30, 2009) (``LWCC''). In 
particular, concern has been expressed about the need for an update to 
the regulations in light of the statutorily mandated reorganization and 
the elimination of internal revenue regions.
    In LWCC, the District Court for the District of Minnesota ruled 
that the Director, Exempt Organizations Examinations is not an 
appropriate high-level Treasury official to make the ``reasonable 
belief'' determination required before the IRS may commence a church 
tax inquiry under section 7611. LWCC at 2. The district court concluded 
that the Director, Exempt Organizations Examinations is not an 
appropriate high-level Treasury official within the meaning of section 
7611(h) because that official does not have a comparable breadth of 
responsibility to a regional commissioner nor as high a position within 
the IRS. Although the IRS disagrees with the district court's reasoning 
and conclusion in LWCC, the IRS acknowledges that it would be 
beneficial to revise the regulations in light of the changes in IRS 
organization made in the wake of RRA 1998 to clarify who is an 
appropriate high-level Treasury official for purposes of section 7611. 
Further, the IRS recognizes the significance of the special procedural 
requirements for church tax inquiries and examinations. These proposed 
regulations assign responsibility for making the determinations 
required under section 7611(a) to the Director, Exempt Organizations.

Explanation of Provisions

    These proposed regulations eliminate references to the positions of 
Regional Commissioner and Regional Counsel under the existing 
regulations and give responsibilities formerly assigned to these now 
defunct positions to the Director, Exempt Organizations and the 
Division Counsel/Associate Chief Counsel, Tax Exempt and Government 
Entities, respectively. In addition, these proposed regulations 
eliminate references to the position of Assistant Commissioner 
(Employee Plans and Exempt Organizations) under the existing 
regulations and give responsibilities formerly assigned to that 
position to the Commissioner, Tax Exempt and Government Entities or the 
Deputy Commissioner, Tax Exempt and Government Entities.

Reasonable Belief and Inquiry Notice Requirement

    With respect to the initiation of the church tax inquiry process, 
Treas. Reg. Sec.  301.7611-1 Q1-A1 provides that a ``Regional 
Commissioner (or higher Treasury official)'' is the appropriate high-
level Treasury official for purposes of this reasonable belief 
requirement. Similarly, Treas. Reg. Sec.  301.7611-1 Q7-A7 states, 
``Repeated (two or more) failures by a church or its agents to reply to 
routine requests * * * will be considered by the appropriate Internal 
Revenue Service Regional Commissioner to be a reasonable basis for 
commencement of a church tax inquiry under the church tax inquiry and 
examination procedures of section 7611.'' In addition, Treas. Reg. 
Sec.  301.7611 Q9-A9 requires a Regional Commissioner to provide 
written notice to the church of the beginning of an inquiry.
    These proposed regulations eliminate references to the Regional 
Commissioner and instead provide that the Director, Exempt 
Organizations is the ``appropriate high-level Treasury official'' for 
purposes of the reasonable belief and inquiry notice requirements of 
Treas. Reg. Sec.  301.7611-1 Q1-A1, Q7-A7, and Q9-A9. The Director, 
Exempt Organizations is a senior executive who reports to the 
Commissioner/Deputy Commissioner, Tax Exempt and Government Entities 
Division, and who is responsible for planning, managing, directing and 
executing nationwide activities for Exempt Organizations. See IRM Sec.  
1.1.23.5 for a comprehensive description of these activities.

Examination Notice Requirement

    Under section 7611(b)(2) and Treas. Reg. Sec.  301.7611-1 Q10-A10, 
a church tax examination cannot be commenced without first providing 
written notice of such examination to the church and to the 
``appropriate Regional Counsel'' at least 15 days before the IRS begins 
the church tax examination. The regulation allows the Regional Counsel 
to file an advisory objection to the examination within this same 15-
day period.
    These proposed regulations amend Treas. Reg. Sec.  301.7611-1 Q10-
A10 by substituting Division Counsel/Associate Chief Counsel, Tax 
Exempt and Government Entities, for each occurrence of Regional 
Counsel. These proposed regulations further specify that before the 
notice of examination is provided to the church, a copy of the notice 
must be provided to the Division Counsel/Associate Chief Counsel, Tax 
Exempt and Government Entities.

Revocation of Exemption or of Church Status

    Section 7611(d)(1) and Treas. Reg. Sec.  301.7611-1 Q11-A11 require 
the Regional Counsel to approve, in writing, certain final 
determinations that are within the scope of section 7611 and adversely 
affect the tax-exempt status or increase any tax liability of a church. 
Further, prior to such adverse action, section 7611(d) requires 
Regional Counsel to determine, in writing, that there has been 
substantial compliance with the requirements of section 7611, when 
applicable.
    These proposed regulations amend Treas. Reg. Sec.  301.7611-1 Q11-
A11 by providing that the Division Counsel/Associate Chief Counsel, Tax 
Exempt and Government Entities, is the official responsible for 
complying with the written determination and approval requirements of 
section 7611(d)(1).

Limitations on Period of Assessment

    Section 7611(d)(2) and Treas. Reg. Sec.  301.7611-1 Q15-A15 provide 
special limitation periods for church tax liabilities. These special 
rules are not to be construed to increase an otherwise applicable 
limitation period. Treas. Reg. Sec.  301.7611-1 Q15-A15 states that, 
for purposes of section 7611(d)(2)(A), that is, the statute of 
limitations applicable to liabilities arising from church tax 
examinations, a church is determined not to be a church exempt from tax 
when the appropriate Regional Commissioner approves, in writing, the 
completed findings of the examining agent that the organization is not 
a church exempt from tax for one or more of the three most recently 
completed taxable years ending before the examination notice date. The 
regulation also states that the Regional Commissioner cannot delegate 
this approval to a subordinate official. Further, the completed 
findings of the examining agent, which are approved by the appropriate 
Regional Commissioner, are not considered a final revenue agent's 
report (defined in section 7611(g)).
    These proposed regulations substitute the Director, Exempt 
Organizations for the appropriate Regional Commissioner

[[Page 39006]]

for purposes of Treas. Reg. Sec.  301.7611-1 Q15-A15.

Multiple Examinations

    Consistent with the language of section 7611(f)(1) prior to 
enactment of RRA 1998, Treas. Reg. Sec.  301-7611-1 Q16-A16 provides 
that the Assistant Commissioner (Employee Plans and Exempt 
Organizations) is responsible for providing the written approval 
necessary to begin a second inquiry or examination of a church. These 
proposed regulations provide that the Commissioner, Tax Exempt and 
Government Entities or the Deputy Commissioner, Tax Exempt and 
Government Entities is responsible for approving second inquiries and 
examinations under section 7611(f).

Remedies for Violation of Section 7611

    Section 7611(e) and Treas. Reg. Sec.  301.7611-1 Q17-A17 provide 
that, if there has not been substantial compliance with certain 
requirements in section 7611, including the notice requirements of 
section 7611(a) and (b), the exclusive remedy for such noncompliance is 
a stay in an enforcement proceeding to compel compliance with a summons 
with respect to the inquiry or examination. The stay continues until 
the court finds that all practicable steps to correct the noncompliance 
have been taken. Treas. Reg. Sec.  301.7611-1 Q17-A17 further states 
that failure of the Regional Commissioner to approve an inquiry may not 
be raised as a defense or as an affirmative ground for relief in a 
summons proceeding or any other judicial proceeding other than as 
specifically set forth in the regulation.
    These proposed regulations amend Treas. Reg. Sec.  301.7611-1 Q17-
A17 to replace each reference to Regional Commissioner with Director, 
Exempt Organizations.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866. Therefore, a regulatory assessment is not required. It has also 
been determined that section 553(b) of the Administrative Procedure Act 
(5 U.S.C. chapter 5) does not apply to these proposed regulations and 
because the regulation does not impose a collection of information on 
small entities, the Regulatory Flexibility Act (5 U.S.C. 601) does not 
apply.
    Pursuant to section 7805(f) of the Code, these proposed regulations 
have been submitted to the Chief Counsel for Advocacy of the Small 
Business Administration for comment on its impact on small business.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written comments (a signed original 
and eight (8) copies) or electronic comments that are submitted timely 
to the IRS. Comments are requested on all aspects of the proposed 
regulations. All comments will be available for public inspection and 
copying. A public hearing will be scheduled if requested in writing by 
any person that timely submits written or electronic comments. If a 
public hearing is scheduled, notice of the date, time, and place for 
the public hearing will be published in the Federal Register.

Drafting Information

    The principal authors of these proposed regulations are Benjamin 
Akins and Monice Rosenbaum of the 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 301

    Administrative practice and procedure, Bankruptcy, Courts, Crime, 
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, 
Investigations, Law enforcement, Penalties, Pensions, Statistics, 
Taxes, Disclosure of information, Filing requirements.

Amendments to the Regulations

    Accordingly, 26 CFR part 301 is proposed to be amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

    Paragraph 1. The authority citation for part 301 continues to read 
in part as follows:

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

    Par. 2. In Sec.  301.7611-1, each entry in the table, undesignated 
paragraphs in the ``Old Paragraph'' column are designated as new 
paragraphs in the ``New Paragraph'' column to read as follows:

------------------------------------------------------------------------
               Old paragraph                        New paragraph
------------------------------------------------------------------------
Sec.   301.7611-1 A-5 first undesignated    Sec.   301.7611-1 A-5
 paragraph.                                  paragraph (a).
Sec.   301.7611-1 A-5 second undesignated   Sec.   301.7611-1 A-5
 paragraph.                                  paragraph (b).
Sec.   301.7611-1 A-6 first undesignated    Sec.   301.7611-1 A-6
 paragraph.                                  paragraph (a).
Sec.   301.7611-1 A-9 first undesignated    Sec.   301.7611-1 A-9
 paragraph.                                  paragraph (a).
Sec.   301.7611-1 A-9 second undesignated   Sec.   301.7611-1 A-9
 paragraph.                                  paragraph (b).
Sec.   301.7611-1 A-10 first undesignated   Sec.   301.7611-1 A-10
 paragraph.                                  paragraph (a).
Sec.   301.7611-1 A-10 second undesignated  Sec.   301.7611-1 A-10
 paragraph.                                  paragraph (b).
Sec.   301.7611-1 A-10 third undesignated   Sec.   301.7611-1 A-10
 paragraph.                                  paragraph (c).
Sec.   301.7611-1 A-10 fourth undesignated  Sec.   301.7611-1 A-10
 paragraph.                                  paragraph (d).
Sec.   301.7611-1 A-10 fifth undesignated   Sec.   301.7611-1 A-10
 paragraph.                                  paragraph (e).
Sec.   301.7611-1 A-11 first undesignated   Sec.   301.7611-1 A-11
 paragraph.                                  paragraph (a).
Sec.   301.7611-1 A-11 second undesignated  Sec.   301.7611-1 A-11
 paragraph.                                  paragraph (b).
Sec.   301.7611-1 A-11 third undesignated   Sec.   301.7611-1 A-11
 paragraph.                                  paragraph (c).
Sec.   301.7611-1 A-13 first undesignated   Sec.   301.7611-1 A-13
 paragraph.                                  paragraph (a).
Sec.   301.7611-1 A-13a first undesignated  Sec.   301.7611-1 A-13a
 paragraph.                                  paragraph (a).
Sec.   301.7611-1 A-14 first undesignated   Sec.   301.7611-1 A-14
 paragraph.                                  paragraph (a).
Sec.   301.7611-1 A-14 second undesignated  Sec.   301.7611-1 A-14
 paragraph.                                  paragraph (b).
Sec.   301.7611-1 A-15 first undesignated   Sec.   301.7611-1 A-15
 paragraph.                                  paragraph (a).
Sec.   301.7611-1 A-15 second undesignated  Sec.   301.7611-1 A-15
 paragraph.                                  paragraph (b).
Sec.   301.7611-1 A-15 third undesignated   Sec.   301.7611-1 A-15
 paragraph.                                  paragraph (c).
Sec.   301.7611-1 A-15 fourth undesignated  Sec.   301.7611-1 A-15
 paragraph.                                  paragraph (d).
Sec.   301.7611-1 A-15 fifth undesignated   Sec.   301.7611-1 A-15
 paragraph.                                  paragraph (e).
Sec.   301.7611-1 A-15 sixth undesignated   Sec.   301.7611-1 A-15
 paragraph.                                  paragraph (f).
Sec.   301.7611-1 A-15 seventh              Sec.   301.7611-1 A-15
 undesignated paragraph.                     paragraph (g).
Sec.   301.7611-1 A-16 first undesignated   Sec.   301.7611-1 A-16
 paragraph.                                  paragraph (a).
Sec.   301.7611-1 A-17 first undesignated   Sec.   301.7611-1 A-17
 paragraph.                                  paragraph (a).
------------------------------------------------------------------------


[[Page 39007]]

Sec.  301.7611-1  [Amended]

    Par. 3. For each section listed in the table, remove the language 
in the ``Remove'' column and add in its place the language in the 
``Add'' column as set forth below:

------------------------------------------------------------------------
           Section                   Remove                  Add
------------------------------------------------------------------------
Sec.   301.7611-1 A-1 first   appropriate Regional  Director, Exempt
 sentence.                     Commissioner (or      Organizations.
                               higher Treasury
                               official).
Sec.   301.7611-1 A-7 first   appropriate Internal  Director, Exempt
 sentence.                     Revenue Service       Organizations.
                               Regional
                               Commissioner.
Sec.   301.7611-1 A-9 first   appropriate Regional  Director, Exempt
 sentence.                     Commissioner.         Organizations.
Sec.   301.7611-1 A-10 first  appropriate Regional  Division Counsel/
 sentence.                     Counsel.              Associate Chief
                                                     Counsel, Tax Exempt
                                                     and Government
                                                     Entities.
Sec.   301.7611-1 A-10        At the time the       Before the notice of
 paragraph (b) first           notice of             examination (second
 sentence.                     examination (second   notice) is provided
                               notice) is provided   to the church, a
                               to the church, a      copy of the same
                               copy of the same      notice will be
                               notice will be        provided to the
                               provided to the       Division Counsel/
                               appropriate           Associate Chief
                               Regional Counsel.     Counsel, Tax Exempt
                                                     and Government
                                                     Entities.
Sec.   301.7611-1 A-10        Regional Counsel....  Division Counsel/
 paragraph (b) second                                Associate Chief
 sentence.                                           Counsel, Tax Exempt
                                                     and Government
                                                     Entities.
Sec.   301.7611-1 A-11        Regional Counsel....  Division Counsel/
 paragraph (c) first, second                         Associate Chief
 and third sentences.                                Counsel, Tax Exempt
                                                     and Government
                                                     Entities.
Sec.   301.7611-1 A-15        appropriate Regional  Director, Exempt
 paragraph (c) first and       Commissioner.         Organizations.
 third sentences.
Sec.   301.7611-1 A-15        Regional              Director, Exempt
 paragraph (c) second          Commissioner.         Organizations.
 sentence.
Sec.   301.7611-1 A-16 first  Assistant             Commissioner, Tax
 sentence.                     Commissioner          Exempt and
                               (Employee Plans and   Government Entities
                               Exempt                or the Deputy
                               Organizations).       Commissioner, Tax
                                                     Exempt and
                                                     Government
                                                     Entities.
Sec.   301.7611-1 A-16        Assistant             approval of the
 second sentence.              Commissioner's        Commissioner, Tax
                               approval.             Exempt and
                                                     Government Entities
                                                     or the Deputy
                                                     Commissioner, Tax
                                                     Exempt and
                                                     Government
                                                     Entities.
Sec.   301.7611-1 A-16        Assistant             Commissioner, Tax
 paragraph (a) second          Commissioner          Exempt and
 sentence.                     (Employee Plans and   Government Entities
                               Exempt                or the Deputy
                               Organizations).       Commissioner, Tax
                                                     Exempt and
                                                     Government
                                                     Entities.
Sec.   301.7611-1 A-17 first  Regional              Director, Exempt
 sentence.                     Commissioner.         Organizations.
Sec.   301.7611-1 A-17        Regional              Director, Exempt
 paragraph(a) third sentence.  Commissioner.         Organizations.
Sec.   301.7611-1 A-17        appropriate Regional  belief of the
 paragraph (a) fourth          Commissioner's        Director, Exempt
 sentence.                     belief.               Organizations.
------------------------------------------------------------------------


Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
[FR Doc. E9-18659 Filed 7-31-09; 4:15 pm]
BILLING CODE 4830-01-P