Declaratory Judgments-Gift Tax Determinations, 46347-46350 [E9-21458]
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Federal Register / Vol. 74, No. 173 / Wednesday, September 9, 2009 / Rules and Regulations
dealing regulations.’’ is corrected to read
‘‘of new global dealing regulations.’’.
7. On page 38837, column 1, in the
first paragraph heading, the language
‘‘D. Stewardship Expenses—§ 1.861–8’’
is corrected to read ‘‘D. Apportionment
of Stewardship Expenses—§ 1.861–8’’.
LaNita Van Dyke,
Chief, Publications and Regulations Branch,
Legal Processing Division, Associate Chief
Counsel (Procedure and Administration).
[FR Doc. E9–21227 Filed 9–8–09; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[TD 9460]
RIN 1545–BD67
Declaratory Judgments—Gift Tax
Determinations
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
AGENCY:
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SUMMARY: This document contains final
regulations under section 7477 of the
Internal Revenue Code (Code) regarding
petitions filed with the United States
Tax Court for declaratory judgments
with respect to the valuation of gifts.
Changes to the applicable law were
made by section 506(c)(1) of the
Taxpayer Relief Act of 1997. These final
regulations primarily affect individuals
who are donors of gifts. The final
regulations provide rules for
determining whether a donor may
petition the Tax Court for a
determination regarding the value of a
gift, including guidance regarding the
definition of ‘‘exhaustion of
administrative remedies.’’
DATES: Effective date: These regulations
are effective September 9, 2009.
Applicability date: For the date of
applicability, see § 301.7477–1(f).
FOR FURTHER INFORMATION CONTACT:
Deborah S. Ryan or George Masnik (202)
622–3090 (not a toll free number).
Background
Section 7477, enacted in conjunction
with other provisions as part of the
Taxpayer Relief Act of 1997 (TRA) (Pub.
L. 105–34, 111 Stat. 855), provides a
declaratory judgment procedure
pursuant to which taxpayers may
contest in the United States Tax Court
an IRS determination regarding the
value of a gift. Prior law did not provide
a judicial remedy in situations where
the proposed IRS adjustment would not
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result in a gift tax deficiency or a tax
overpayment. The new procedure
applies, for example, where an increase
in gift tax determined under section
2502 is offset by the taxpayer’s
applicable credit amount under section
2505(a), so that no additional tax is
assessed as a result of a valuation
increase. Because there is no tax
deficiency, in the absence of section
7477, the taxpayer would be unable to
challenge the IRS determination, even
though, upon the expiration of the
statute of limitations, that determination
would become binding for purposes of
calculating the cumulative gift tax on all
future gifts of that taxpayer, as well as
the taxpayer’s estate tax liability. See
H.R. Conf. Rep. No. 105–220, at 407–408
(1997).
On June 9, 2008, proposed regulations
under section 7477 were published in
the Federal Register (REG–143716–04,
73 FR 32503, 2008–25 IRB 1170). The
IRS received no written or oral
comments responding to the notice of
proposed rulemaking. No public hearing
was requested or held.
The final regulations include a few
clarifications. In particular, under
section 7477, in order to be eligible for
the declaratory judgment procedure, the
Tax Court must determine that the
donor exhausted all administrative
remedies. In general, the proposed
regulations provide that the IRS will
consider a donor to have exhausted all
administrative remedies if an Appeals
conference is requested timely and the
donor (or an authorized representative)
‘‘participates fully’’ in the Appeals
process. The final regulations contain a
separate subsection specifying that full
participation requires timely submission
of requested information and disclosure
of all relevant information regarding the
controversy. In addition, a provision has
been added specifying that, if Appeals
does not grant the donor’s request for a
conference, the donor will be treated as
having exhausted all administrative
remedies if, after filing a Tax Court
petition for a declaratory judgment, the
donor (or authorized representative)
participates fully in the Appeals office
consideration when offered by the IRS
while the case is in docketed status.
Special Analyses
It has been determined that this
Treasury decision is not a significant
regulatory action as defined in
Executive Order 12866. Therefore, a
regulatory assessment is not required. It
also has been determined that section
553(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply
to these regulations and, because these
regulations do not impose on small
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46347
entities a collection of information
requirement, the Regulatory Flexibility
Act (5 U.S.C. chapter 6) does not apply.
Pursuant to section 7805(f) of the Code,
the notice of proposed rulemaking
preceding this regulation 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 authors of these final
regulations are Deborah Ryan and Juli
Ro Kim, Office of the Associate Chief
Counsel (Passthroughs and Special
Industries), IRS. Other personnel from
the IRS and the Treasury Department
participated in their development.
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes,
Excise taxes, Gift taxes, Income taxes,
Penalties, Reporting and recordkeeping
requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 301 is
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. Section 301.7477–1 is revised
to read as follows:
■
§ 301.7477–1 Declaratory judgments
relating to the value of certain gifts for gift
tax purposes.
(a) In general. If the adjustment(s)
proposed by the Internal Revenue
Service (IRS) will not result in any
deficiency in or refund of the donor’s
gift tax liability for the calendar year,
and if the requirements contained in
paragraph (d) of this section are
satisfied, then the declaratory judgment
procedure under section 7477 is
available to the donor for determining
the amount of one or more of the
donor’s gifts during that calendar year
for Federal gift tax purposes.
(b) Declaratory judgment procedure—
(1) In general. If a donor does not
resolve a dispute with the IRS
concerning the value of a transfer for gift
tax purposes at the Examination level,
the donor will be sent a notice of
preliminary determination of value
(Letter 950–G or such other document as
may be utilized by the IRS for this
purpose from time to time, but referred
to in this section as Letter 950–G),
inviting the donor to file a formal
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Federal Register / Vol. 74, No. 173 / Wednesday, September 9, 2009 / Rules and Regulations
protest and to request consideration by
the appropriate IRS Appeals office. See
§§ 601.105 and 601.106 of this chapter.
Subsequently, the donor will be sent a
notice of determination of value (Letter
3569, or such other document as may be
utilized from time to time by the IRS for
this purpose in cases where no
deficiency or refund would result, but
referred to in this section as Letter 3569)
if—
(i) The donor requests Appeals
consideration in writing within 30
calendar days after the mailing date of
the Letter 950–G, or by such later date
as determined pursuant to IRS
procedures, and the matter is not
resolved by Appeals;
(ii) The donor does not request
Appeals consideration within the time
provided in paragraph (b)(1)(i) of this
section; or
(iii) The IRS does not issue a Letter
950–G in circumstances described in
paragraph (d)(4)(iv) of this section.
(2) Notice of determination of value.
The Letter 3569 will notify the donor of
the adjustment(s) proposed by the IRS,
and will advise the donor that the donor
may contest the determination made by
the IRS by filing a petition with the Tax
Court before the 91st day after the date
on which the Letter 3569 was mailed to
the donor by the IRS.
(3) Tax Court petition. If the donor
does not file a timely petition with the
Tax Court, the IRS determination as set
forth in the Letter 3569 will be
considered the final determination of
value, as defined in sections 2504(c) and
2001(f). If the donor files a timely
petition with the Tax Court, the Tax
Court will determine whether the donor
has exhausted available administrative
remedies. Under section 7477, the Tax
Court is not authorized to issue a
declaratory judgment unless the Tax
Court finds that the donor has
exhausted all administrative remedies
within the IRS. See paragraph (d)(4) of
this section regarding the exhaustion of
administrative remedies.
(c) Adjustments subject to declaratory
judgment procedure. The declaratory
judgment procedures set forth in this
section apply to adjustments involving
all issues relating to the transfer,
including without limitation valuation
issues and legal issues involving the
interpretation and application of the gift
tax law.
(d) Requirements for declaratory
judgment procedure—(1) In general.
The declaratory judgment procedure
provided in this section is available to
a donor with respect to a transfer only
if all the requirements of paragraphs
(d)(2) through (5) of this section with
regard to that transfer are satisfied.
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(2) Reporting. The transfer is shown
or disclosed on the return of tax
imposed by chapter 12 for the calendar
year during which the transfer was
made or on a statement attached to such
return. For purposes of this paragraph
(d)(2), the term return of tax imposed by
chapter 12 means the last gift tax return
(Form 709, ‘‘United States Gift (and
Generation-skipping Transfer) Tax
Return’’ or such other form as may be
utilized for this purpose from time to
time by the IRS) for the calendar year
filed on or before the due date of the
return, including extensions granted if
any, or, if a timely return is not filed,
the first gift tax return for that calendar
year filed after the due date. For
purposes of satisfying this requirement,
the transfer need not be reported in a
manner that constitutes adequate
disclosure within the meaning of
§ 301.6501(c)–1(e) or (f) (and thus for
which, under §§ 20.2001–1(b) and
25.2504–2(b) of this chapter, the period
during which the IRS may adjust the
value of the gift will not expire). The
issuance of a Letter 3569 with regard to
a transfer disclosed on a return does not
constitute a determination by the IRS
that the transfer was adequately
disclosed, or otherwise cause the period
of limitations on assessment to
commence to run with respect to that
transfer. In addition, in the case of a
transfer that is shown on the return, the
IRS may in its discretion defer until a
later time making a determination with
regard to such transfer. If the IRS
exercises its discretion to defer such
determination in that case, the transfer
will not be addressed in the Letter 3569
(if any) sent to the donor currently, and
the donor is not yet eligible for a
declaratory judgment with regard to that
transfer under section 7477.
(3) IRS determination and actual
controversy. The IRS makes a
determination regarding the gift tax
treatment of the transfer that results in
an actual controversy. The IRS makes a
determination that results in an actual
controversy with respect to a transfer by
mailing a Letter 3569 to the donor,
thereby notifying the donor of the
adjustment(s) proposed by the IRS with
regard to that transfer and of the donor’s
rights under section 7477.
(4) Exhaustion of administrative
remedies—(i) In general. The Tax Court
determines whether the donor has
exhausted all administrative remedies
available within the IRS for resolving
the controversy.
(ii) Appeals office consideration. For
purposes of this section, the IRS will
consider a donor to have exhausted all
administrative remedies if, prior to
filing a petition in Tax Court (except as
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provided in paragraphs (d)(4)(iii) and
(iv) of this section), the donor, or a
qualified representative of the donor
described in § 601.502 of this chapter,
timely requests consideration by
Appeals and participates fully (within
the meaning of paragraph (d)(4)(vi) of
this section) in the Appeals
consideration process. A timely request
for consideration by Appeals is a
written request from the donor for
Appeals consideration made within 30
days after the mailing date of the Letter
950–G, or by such later date for
responding to the Letter 950–G as is
agreed to between the donor and the
IRS.
(iii) Request for Appeals office
consideration not granted. If the donor,
or a qualified representative of the
donor described in § 601.502 of this
chapter, timely requests consideration
by Appeals and Appeals does not grant
that request, the IRS nevertheless will
consider the donor to have exhausted all
administrative remedies within the IRS
for purposes of section 7477 upon the
issuance of the Letter 3569, provided
that the donor, or a qualified
representative of the donor described in
§ 601.502 of this chapter, after the filing
of a petition in Tax Court for a
declaratory judgment pursuant to
section 7477, participates fully (within
the meaning of paragraph (d)(4)(vi) of
this section) in the Appeals office
consideration if offered by the IRS while
the case is in docketed status.
(iv) No Letter 950–G issued. If the IRS
does not issue a Letter 950–G to the
donor prior to the issuance of Letter
3569, the IRS nevertheless will consider
the donor to have exhausted all
administrative remedies within the IRS
for purposes of section 7477 upon the
issuance of the Letter 3569, provided
that—
(A) The IRS decision not to issue the
Letter 950–G was not due to actions or
inactions of the donor (such as a failure
to supply requested information or a
current mailing address to the Area
Director having jurisdiction over the tax
matter); and
(B) The donor, or a qualified
representative of the donor described in
§ 601.502 of this chapter, after the filing
of a petition in Tax Court for a
declaratory judgment pursuant to
section 7477, participates fully (within
the meaning of paragraph (d)(4)(vi) of
this section) in the Appeals office
consideration if offered by the IRS while
the case is in docketed status.
(v) Failure to agree to extension of
time for assessment. For purposes of
section 7477, the donor’s refusal to
agree to an extension of the time under
section 6501 within which gift tax with
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respect to the transfer at issue (if any)
may be assessed will not be considered
by the IRS to constitute a failure by the
donor to exhaust all administrative
remedies available to the donor within
the IRS.
(vi) Participation in Appeals
consideration process. For purposes of
this section, the donor or a qualified
representative of the donor described in
§ 601.502 of this chapter participates
fully in the Appeals consideration
process if the donor or the qualified
representative timely submits all
information related to the transfer that
is requested by the IRS in connection
with the Appeals consideration and
discloses to the Appeals office all
relevant information regarding the
controversy to the extent such
information and its relevance is known
or should be known by the donor or the
qualified representative during the time
the issue is under consideration by
Appeals.
(5) Timely petition in Tax Court. The
donor files a pleading with the Tax
Court requesting a declaratory judgment
under section 7477. This pleading must
be filed with the Tax Court before the
91st day after the date of mailing of the
Letter 3569 by the IRS to the donor. The
pleading must be in the form of a
petition subject to Tax Court Rule
211(d).
(e) Examples. The following examples
illustrate the provisions of this section,
and assume that in each case the Tax
Court petition is filed on or after
September 9, 2009.
These examples, however, do not
address any other situations that might
affect the Tax Court’s jurisdiction over
the proceeding:
Example 1. Exhaustion of administrative
remedies. The donor (D) timely files a Form
709, ‘‘United States Gift (and GenerationSkipping Transfer) Tax Return,’’ on which D
reports D’s completed gift of closely held
stock. After conducting an examination, the
IRS concludes that the value of the stock on
the date of the gift is greater than the value
reported on the return. Because the amount
of D’s available applicable credit amount
under section 2505 is sufficient to cover any
resulting tax liability, no gift tax deficiency
will result from the adjustment. D is unable
to resolve the matter with the IRS examiner.
The IRS sends a Letter 950–G to D informing
D of the proposed adjustment. D, within 30
calendar days after the mailing date of the
letter, submits a written request for Appeals
consideration. During the Appeals process, D
provides to the Appeals office all additional
information (if any) requested by Appeals
relevant to the determination of the value of
the stock in a timely fashion. The Appeals
office and D are unable to reach an agreement
regarding the value of the stock as of the date
of the gift. The Appeals office sends D a
notice of determination of value (Letter
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3569). For purposes of section 7477, the IRS
will consider D to have exhausted all
available administrative remedies within the
IRS, and thus will not contest the allegation
in D’s petition that D has exhausted all such
administrative remedies.
Example 2. Exhaustion of administrative
remedies. Assume the same facts as in
Example 1, except that D does not timely
request consideration by Appeals after
receiving the Letter 950–G. A Letter 3569 is
mailed to D more than 30 days after the
mailing of the Letter 950–G and prior to the
expiration of the period of limitations for
assessment of gift tax. D timely files a
petition in Tax Court pursuant to section
7477. After the case is docketed, D requests
Appeals consideration. In this situation,
because D did not respond timely to the
Letter 950–G with a written request for
Appeals consideration, the IRS will not
consider D to have exhausted all
administrative remedies available within the
IRS for purposes of section 7477 prior to
filing the petition in Tax Court, and thus may
contest any allegation in D’s petition that D
has exhausted all such administrative
remedies.
Example 3. Exhaustion of administrative
remedies. D timely files a Form 709 on which
D reports D’s completed gifts of interests in
a family limited partnership. After
conducting an examination, the IRS proposes
to adjust the value of the gifts as reported on
the return. No gift tax deficiency will result
from the adjustments, however, because D
has a sufficient amount of available
applicable credit amount under section 2505.
D declines to consent to extend the time for
the assessment of gift tax with respect to the
gifts at issue. Because of the pending
expiration of the period of limitation on
assessment within which a gift tax, if any,
could be assessed, the IRS determines that
there is not adequate time for Appeals
consideration. Accordingly, the IRS mails to
D a Letter 3569, even though a Letter 950–
G had not first been issued to D. D timely
files a petition in Tax Court pursuant to
section 7477. After the case is docketed in
Tax Court, D is offered the opportunity for
Appeals to consider any dispute regarding
the determination and participates fully in
the Appeals consideration process. However,
the Appeals office and D are unable to
resolve the issue. The IRS will consider D to
have exhausted all administrative remedies
available within the IRS, and thus will not
assert that D has not exhausted all such
administrative remedies.
Example 4. Legal issue. D transfers
nonvested stock options to a trust for the
benefit of D’s child. D timely files a Form 709
reporting the transfer as a completed gift for
Federal gift tax purposes and complies with
the adequate disclosure requirements for
purposes of triggering the commencement of
the applicable statute of limitations. Pursuant
to § 301.6501(c)–1(f)(5), adequate disclosure
of a transfer that is reported as a completed
gift on the Form 709 will commence the
running of the period of limitations for
assessment of gift tax on D, even if the
transfer is ultimately determined to be an
incomplete gift for purposes of § 25.2511–2 of
this chapter. After conducting an
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46349
examination, the IRS concurs with the
reported valuation of the stock options, but
concludes that the reported transfer is not a
completed gift for Federal gift tax purposes.
D is unable to resolve the matter with the IRS
examiner. The IRS sends a Letter 950–G to
D, who timely mails a written request for
Appeals consideration. Assuming that the
IRS mails to D a Letter 3569 with regard to
this transfer, and that D complies with the
administrative procedures set forth in this
section, including the exhaustion of all
administrative remedies available within the
IRS, then D may file a petition for declaratory
judgment with the Tax Court pursuant to
section 7477.
Example 5. Transfers in controversy. On
April 16, 2007, D timely files a Form 709 on
which D reports gifts made in 2006 of
fractional interests in certain real property
and of interests in a family limited
partnership (FLP). However, although the
gifts are disclosed on the return, the return
does not contain information sufficient to
constitute adequate disclosure under
§ 301.6501(c)–1(e) or (f) for purposes of the
application of the statute of limitations on
assessment of gift tax with respect to the
reported gifts. The IRS conducts an
examination and concludes that the value of
both the interests in the real property and the
FLP interests on the date(s) of the transfers
are greater than the values reported on the
return. No gift tax deficiency will result from
the adjustments because D has a sufficient
amount of remaining applicable credit
amount under section 2505. However, D does
not agree with the adjustments. The IRS
sends a Letter 950–G to D informing D of the
proposed adjustments in the value of the
reported gifts. D, within 30 calendar days
after the mailing date of the letter, submits
a written request for Appeals consideration.
The Appeals office and D are unable to reach
an agreement regarding the value of any of
the gifts. In the exercise of its discretion, the
IRS decides to resolve currently only the
value of the real property interests, and to
defer the resolution of the value of the FLP
interests. On May 28, 2009, the Appeals
office sends D a Letter 3569 addressing only
the value of the gifts of interests in the real
property. Because none of the gifts reported
on the return filed on April 16, 2007 were
adequately disclosed for purposes of
§ 301.6501(c)–1(e) or (f), the period of
limitations during which the IRS may adjust
the value of those gifts has not begun to run.
Accordingly, the Letter 3569 is timely
mailed. If D timely files a petition in Tax
Court pursuant to section 7477 with regard
to the value of the interests in the real
property, then, assuming the other
requirements of section 7477 are satisfied
with regard to those interests, the Tax Court’s
declaratory judgment, once it becomes final,
will determine the value of the gifts of the
interests in the real property. Because the IRS
has not yet put the gift tax value of the
interests in the FLP into controversy, the
procedure under section 7477 is not yet
available with regard to those gifts.
(f) Effective/applicability date. This
section applies to civil proceedings
described in section 7477 filed in the
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rule is approved by the Director of the
Federal Register as of October 9, 2009.
FOR FURTHER INFORMATION CONTACT:
General information and press inquiries:
Contact Jennifer Ashley, Director, OSHA
Office of Communications, Room N–
3647, U.S. Department of Labor, 200
Constitution Avenue, NW., Washington,
DC 20210; telephone: (202) 693–1999.
Technical inquiries: Contact Ted
Twardowski, Directorate of Standards
and Guidance, Room N–3609, OSHA,
U.S. Department of Labor, 200
Constitution Avenue, NW., Washington,
DC 20210; telephone: (202) 693–2070;
fax: (202) 693–1663.
Copies of this Federal Register notice.
Electronic copies of this Federal
Register notice are available at https://
www.regulations.gov. This Federal
Register notice, as well as news releases
and other relevant information, are also
available at OSHA’s Web page at https://
www.osha.gov.
SUPPLEMENTARY INFORMATION:
United States Tax Court on or after
September 9, 2009.
Linda E. Stiff,
Deputy Commissioner for Services and
Enforcement.
Approved: August 26, 2009.
Michael Mundaca,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. E9–21458 Filed 9–8–09; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF LABOR
Occupational Safety and Health
Administration
29 CFR Parts 1910, 1915, 1917, and
1918
[Docket No. OSHA–2007–0044]
RIN 1218–AC08
Updating OSHA Standards Based on
National Consensus Standards;
Personal Protective Equipment
Table of Contents
Occupational Safety and Health
Administration (OSHA), Department of
Labor.
ACTION: Final rule.
jlentini on DSKJ8SOYB1PROD with RULES
AGENCY:
SUMMARY: OSHA is issuing this final
rule to revise the personal protective
equipment (PPE) sections of its general
industry, shipyard employment,
longshoring, and marine terminals
standards regarding requirements for
eye- and face-protective devices, head
protection, and foot protection. OSHA is
updating the references in its
regulations to recognize more recent
editions of the applicable national
consensus standards, and is deleting
editions of the national consensus
standards that PPE must meet if
purchased before a specified date. In
addition, OSHA is amending its
provision that requires safety shoes to
comply with a specific American
National Standards Institute (ANSI)
standard, and a provision that requires
filter lenses and plates in eye-protective
equipment to meet a test for
transmission of radiant energy specified
by another ANSI standard. In amending
these paragraphs, OSHA will require
this safety equipment to comply with
the applicable PPE design provisions.
These revisions are a continuation of
OSHA’s effort to update or remove
references to specific consensus and
industry standards located throughout
its standards.
DATES: This final rule will become
effective on October 9, 2009.
The incorporation by reference of
specific publications listed in this final
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I. Summary and Explanation of the Final
Rule
A. General Background
B. Revisions to the PPE Provisions of the
OSHA Standards
C. Discussion of Comments and Hearing
Testimony
D. Summary of the Final Rule
II. Procedural Determinations
A. Legal Considerations
B. Final Economic Analysis and Regulatory
Flexibility Act Certification
C. OMB Review Under the Paperwork
Reduction Act of 1995
D. Federalism
E. State-Plan States
F. Unfunded Mandates Reform Act
III. Authority and Signature
I. Summary and Explanation of the
Final Rule
A. General Background
As discussed in a previous Federal
Register document (69 FR 68283),
OSHA is undertaking a series of projects
to update its standards to incorporate
the latest versions of national consensus
and industry standards. These projects
include updating or revoking national
consensus and industry standards
referenced in existing OSHA standards,
updating regulatory text of standards
adopted directly by OSHA from the
language of outdated consensus
standards, and, when appropriate,
replacing specific references to outdated
national consensus and industry
standards with performance-oriented
requirements.
On May 17, 2007, OSHA published a
Notice of Proposed Rulemaking (NPRM)
(72 FR 27771) entitled ‘‘Updating OSHA
Standards Based on National Consensus
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Standards; Personal Protective
Equipment.’’ The NPRM set July 16,
2007, as a deadline for submitting
comments and for requesting an
informal public hearing on the proposed
rule. The Agency received
approximately 25 comments and 4
requests for an informal public hearing.
OSHA then published a Federal
Register notice scheduling an informal
public hearing for December 4, 2007 (72
FR 50302). The informal public hearing
took place as scheduled, and OSHA
received testimony from nine witnesses.
Thomas M. Burke, Administrative Law
Judge, presided at the hearing. At the
end of the hearing, Judge Burke set
deadlines of January 3, 2008, for
submission of post-hearing comments,
and February 4, 2008, for the
submission of final summations and
briefs. Judge Burke closed and certified
the record for this rulemaking on June
23, 2008.
B. Revisions to the PPE Provisions of the
OSHA Standards
1. Background of OSHA’s PPE
Standards
Subpart I of OSHA’s general industry
standards contains design requirements
for eye- and face-protective devices,
head protection, and foot protection.
(See 29 CFR 1910.133, 1910.135,
1910.136.) OSHA has similar
requirements in subpart I of part 1915
(Shipyard Employment), subpart E of
part 1917 (Marine Terminals), and
subpart J of part 1918 (Longshoring).
These rules require that the specified
PPE comply with national consensus
standards incorporated by reference into
the OSHA standards, unless the
employer demonstrates that a piece of
equipment is as effective as equipment
that complies with the incorporated
national consensus standard. (See, e.g.,
29 CFR 1910.133(b)(1).) 1 These design
provisions are part of comprehensive
requirements to ensure that employees
use PPE that will protect them from
hazards in the workplace.
The incorporated ANSI standards are
over a decade old and, in some
instances, are two decades old. Over
this period, ANSI updated all of the
standards, and, in one instance (i.e., the
1 The general industry and shipyard employment
standards expressly allow employers to use PPE
that is as protective as PPE constructed in
accordance with the incorporated standards. OSHA
uses its de minimis policy to allow employers
covered by the longshoring and marine terminals
standards to use PPE that is as protective as PPE
constructed in accordance with the incorporated
standards. (See OSHA Instruction CPL 2.103, ‘‘Field
Inspection Reference Manual,’’ Chapter III.C.2.g;
and memorandum from Richard Fairfax, Director,
Directorate of Enforcement Programs to Regional
Administrators (June 19, 2006).)
E:\FR\FM\09SER1.SGM
09SER1
Agencies
[Federal Register Volume 74, Number 173 (Wednesday, September 9, 2009)]
[Rules and Regulations]
[Pages 46347-46350]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-21458]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[TD 9460]
RIN 1545-BD67
Declaratory Judgments--Gift Tax Determinations
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations under section 7477 of
the Internal Revenue Code (Code) regarding petitions filed with the
United States Tax Court for declaratory judgments with respect to the
valuation of gifts. Changes to the applicable law were made by section
506(c)(1) of the Taxpayer Relief Act of 1997. These final regulations
primarily affect individuals who are donors of gifts. The final
regulations provide rules for determining whether a donor may petition
the Tax Court for a determination regarding the value of a gift,
including guidance regarding the definition of ``exhaustion of
administrative remedies.''
DATES: Effective date: These regulations are effective September 9,
2009.
Applicability date: For the date of applicability, see Sec.
301.7477-1(f).
FOR FURTHER INFORMATION CONTACT: Deborah S. Ryan or George Masnik (202)
622-3090 (not a toll free number).
Background
Section 7477, enacted in conjunction with other provisions as part
of the Taxpayer Relief Act of 1997 (TRA) (Pub. L. 105-34, 111 Stat.
855), provides a declaratory judgment procedure pursuant to which
taxpayers may contest in the United States Tax Court an IRS
determination regarding the value of a gift. Prior law did not provide
a judicial remedy in situations where the proposed IRS adjustment would
not result in a gift tax deficiency or a tax overpayment. The new
procedure applies, for example, where an increase in gift tax
determined under section 2502 is offset by the taxpayer's applicable
credit amount under section 2505(a), so that no additional tax is
assessed as a result of a valuation increase. Because there is no tax
deficiency, in the absence of section 7477, the taxpayer would be
unable to challenge the IRS determination, even though, upon the
expiration of the statute of limitations, that determination would
become binding for purposes of calculating the cumulative gift tax on
all future gifts of that taxpayer, as well as the taxpayer's estate tax
liability. See H.R. Conf. Rep. No. 105-220, at 407-408 (1997).
On June 9, 2008, proposed regulations under section 7477 were
published in the Federal Register (REG-143716-04, 73 FR 32503, 2008-25
IRB 1170). The IRS received no written or oral comments responding to
the notice of proposed rulemaking. No public hearing was requested or
held.
The final regulations include a few clarifications. In particular,
under section 7477, in order to be eligible for the declaratory
judgment procedure, the Tax Court must determine that the donor
exhausted all administrative remedies. In general, the proposed
regulations provide that the IRS will consider a donor to have
exhausted all administrative remedies if an Appeals conference is
requested timely and the donor (or an authorized representative)
``participates fully'' in the Appeals process. The final regulations
contain a separate subsection specifying that full participation
requires timely submission of requested information and disclosure of
all relevant information regarding the controversy. In addition, a
provision has been added specifying that, if Appeals does not grant the
donor's request for a conference, the donor will be treated as having
exhausted all administrative remedies if, after filing a Tax Court
petition for a declaratory judgment, the donor (or authorized
representative) participates fully in the Appeals office consideration
when offered by the IRS while the case is in docketed status.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It also has been
determined that section 553(b) of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these regulations and, because
these regulations do not impose on small entities a collection of
information requirement, the Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply. Pursuant to section 7805(f) of the Code, the
notice of proposed rulemaking preceding this regulation 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 authors of these final regulations are Deborah Ryan
and Juli Ro Kim, Office of the Associate Chief Counsel (Passthroughs
and Special Industries), IRS. Other personnel from the IRS and the
Treasury Department participated in their development.
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
0
Accordingly, 26 CFR part 301 is amended as follows:
PART 301--PROCEDURE AND ADMINISTRATION
0
Paragraph 1. The authority citation for part 301 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 301.7477-1 is revised to read as follows:
Sec. 301.7477-1 Declaratory judgments relating to the value of
certain gifts for gift tax purposes.
(a) In general. If the adjustment(s) proposed by the Internal
Revenue Service (IRS) will not result in any deficiency in or refund of
the donor's gift tax liability for the calendar year, and if the
requirements contained in paragraph (d) of this section are satisfied,
then the declaratory judgment procedure under section 7477 is available
to the donor for determining the amount of one or more of the donor's
gifts during that calendar year for Federal gift tax purposes.
(b) Declaratory judgment procedure--(1) In general. If a donor does
not resolve a dispute with the IRS concerning the value of a transfer
for gift tax purposes at the Examination level, the donor will be sent
a notice of preliminary determination of value (Letter 950-G or such
other document as may be utilized by the IRS for this purpose from time
to time, but referred to in this section as Letter 950-G), inviting the
donor to file a formal
[[Page 46348]]
protest and to request consideration by the appropriate IRS Appeals
office. See Sec. Sec. 601.105 and 601.106 of this chapter.
Subsequently, the donor will be sent a notice of determination of value
(Letter 3569, or such other document as may be utilized from time to
time by the IRS for this purpose in cases where no deficiency or refund
would result, but referred to in this section as Letter 3569) if--
(i) The donor requests Appeals consideration in writing within 30
calendar days after the mailing date of the Letter 950-G, or by such
later date as determined pursuant to IRS procedures, and the matter is
not resolved by Appeals;
(ii) The donor does not request Appeals consideration within the
time provided in paragraph (b)(1)(i) of this section; or
(iii) The IRS does not issue a Letter 950-G in circumstances
described in paragraph (d)(4)(iv) of this section.
(2) Notice of determination of value. The Letter 3569 will notify
the donor of the adjustment(s) proposed by the IRS, and will advise the
donor that the donor may contest the determination made by the IRS by
filing a petition with the Tax Court before the 91st day after the date
on which the Letter 3569 was mailed to the donor by the IRS.
(3) Tax Court petition. If the donor does not file a timely
petition with the Tax Court, the IRS determination as set forth in the
Letter 3569 will be considered the final determination of value, as
defined in sections 2504(c) and 2001(f). If the donor files a timely
petition with the Tax Court, the Tax Court will determine whether the
donor has exhausted available administrative remedies. Under section
7477, the Tax Court is not authorized to issue a declaratory judgment
unless the Tax Court finds that the donor has exhausted all
administrative remedies within the IRS. See paragraph (d)(4) of this
section regarding the exhaustion of administrative remedies.
(c) Adjustments subject to declaratory judgment procedure. The
declaratory judgment procedures set forth in this section apply to
adjustments involving all issues relating to the transfer, including
without limitation valuation issues and legal issues involving the
interpretation and application of the gift tax law.
(d) Requirements for declaratory judgment procedure--(1) In
general. The declaratory judgment procedure provided in this section is
available to a donor with respect to a transfer only if all the
requirements of paragraphs (d)(2) through (5) of this section with
regard to that transfer are satisfied.
(2) Reporting. The transfer is shown or disclosed on the return of
tax imposed by chapter 12 for the calendar year during which the
transfer was made or on a statement attached to such return. For
purposes of this paragraph (d)(2), the term return of tax imposed by
chapter 12 means the last gift tax return (Form 709, ``United States
Gift (and Generation-skipping Transfer) Tax Return'' or such other form
as may be utilized for this purpose from time to time by the IRS) for
the calendar year filed on or before the due date of the return,
including extensions granted if any, or, if a timely return is not
filed, the first gift tax return for that calendar year filed after the
due date. For purposes of satisfying this requirement, the transfer
need not be reported in a manner that constitutes adequate disclosure
within the meaning of Sec. 301.6501(c)-1(e) or (f) (and thus for
which, under Sec. Sec. 20.2001-1(b) and 25.2504-2(b) of this chapter,
the period during which the IRS may adjust the value of the gift will
not expire). The issuance of a Letter 3569 with regard to a transfer
disclosed on a return does not constitute a determination by the IRS
that the transfer was adequately disclosed, or otherwise cause the
period of limitations on assessment to commence to run with respect to
that transfer. In addition, in the case of a transfer that is shown on
the return, the IRS may in its discretion defer until a later time
making a determination with regard to such transfer. If the IRS
exercises its discretion to defer such determination in that case, the
transfer will not be addressed in the Letter 3569 (if any) sent to the
donor currently, and the donor is not yet eligible for a declaratory
judgment with regard to that transfer under section 7477.
(3) IRS determination and actual controversy. The IRS makes a
determination regarding the gift tax treatment of the transfer that
results in an actual controversy. The IRS makes a determination that
results in an actual controversy with respect to a transfer by mailing
a Letter 3569 to the donor, thereby notifying the donor of the
adjustment(s) proposed by the IRS with regard to that transfer and of
the donor's rights under section 7477.
(4) Exhaustion of administrative remedies--(i) In general. The Tax
Court determines whether the donor has exhausted all administrative
remedies available within the IRS for resolving the controversy.
(ii) Appeals office consideration. For purposes of this section,
the IRS will consider a donor to have exhausted all administrative
remedies if, prior to filing a petition in Tax Court (except as
provided in paragraphs (d)(4)(iii) and (iv) of this section), the
donor, or a qualified representative of the donor described in Sec.
601.502 of this chapter, timely requests consideration by Appeals and
participates fully (within the meaning of paragraph (d)(4)(vi) of this
section) in the Appeals consideration process. A timely request for
consideration by Appeals is a written request from the donor for
Appeals consideration made within 30 days after the mailing date of the
Letter 950-G, or by such later date for responding to the Letter 950-G
as is agreed to between the donor and the IRS.
(iii) Request for Appeals office consideration not granted. If the
donor, or a qualified representative of the donor described in Sec.
601.502 of this chapter, timely requests consideration by Appeals and
Appeals does not grant that request, the IRS nevertheless will consider
the donor to have exhausted all administrative remedies within the IRS
for purposes of section 7477 upon the issuance of the Letter 3569,
provided that the donor, or a qualified representative of the donor
described in Sec. 601.502 of this chapter, after the filing of a
petition in Tax Court for a declaratory judgment pursuant to section
7477, participates fully (within the meaning of paragraph (d)(4)(vi) of
this section) in the Appeals office consideration if offered by the IRS
while the case is in docketed status.
(iv) No Letter 950-G issued. If the IRS does not issue a Letter
950-G to the donor prior to the issuance of Letter 3569, the IRS
nevertheless will consider the donor to have exhausted all
administrative remedies within the IRS for purposes of section 7477
upon the issuance of the Letter 3569, provided that--
(A) The IRS decision not to issue the Letter 950-G was not due to
actions or inactions of the donor (such as a failure to supply
requested information or a current mailing address to the Area Director
having jurisdiction over the tax matter); and
(B) The donor, or a qualified representative of the donor described
in Sec. 601.502 of this chapter, after the filing of a petition in Tax
Court for a declaratory judgment pursuant to section 7477, participates
fully (within the meaning of paragraph (d)(4)(vi) of this section) in
the Appeals office consideration if offered by the IRS while the case
is in docketed status.
(v) Failure to agree to extension of time for assessment. For
purposes of section 7477, the donor's refusal to agree to an extension
of the time under section 6501 within which gift tax with
[[Page 46349]]
respect to the transfer at issue (if any) may be assessed will not be
considered by the IRS to constitute a failure by the donor to exhaust
all administrative remedies available to the donor within the IRS.
(vi) Participation in Appeals consideration process. For purposes
of this section, the donor or a qualified representative of the donor
described in Sec. 601.502 of this chapter participates fully in the
Appeals consideration process if the donor or the qualified
representative timely submits all information related to the transfer
that is requested by the IRS in connection with the Appeals
consideration and discloses to the Appeals office all relevant
information regarding the controversy to the extent such information
and its relevance is known or should be known by the donor or the
qualified representative during the time the issue is under
consideration by Appeals.
(5) Timely petition in Tax Court. The donor files a pleading with
the Tax Court requesting a declaratory judgment under section 7477.
This pleading must be filed with the Tax Court before the 91st day
after the date of mailing of the Letter 3569 by the IRS to the donor.
The pleading must be in the form of a petition subject to Tax Court
Rule 211(d).
(e) Examples. The following examples illustrate the provisions of
this section, and assume that in each case the Tax Court petition is
filed on or after September 9, 2009.
These examples, however, do not address any other situations that
might affect the Tax Court's jurisdiction over the proceeding:
Example 1. Exhaustion of administrative remedies. The donor (D)
timely files a Form 709, ``United States Gift (and Generation-
Skipping Transfer) Tax Return,'' on which D reports D's completed
gift of closely held stock. After conducting an examination, the IRS
concludes that the value of the stock on the date of the gift is
greater than the value reported on the return. Because the amount of
D's available applicable credit amount under section 2505 is
sufficient to cover any resulting tax liability, no gift tax
deficiency will result from the adjustment. D is unable to resolve
the matter with the IRS examiner. The IRS sends a Letter 950-G to D
informing D of the proposed adjustment. D, within 30 calendar days
after the mailing date of the letter, submits a written request for
Appeals consideration. During the Appeals process, D provides to the
Appeals office all additional information (if any) requested by
Appeals relevant to the determination of the value of the stock in a
timely fashion. The Appeals office and D are unable to reach an
agreement regarding the value of the stock as of the date of the
gift. The Appeals office sends D a notice of determination of value
(Letter 3569). For purposes of section 7477, the IRS will consider D
to have exhausted all available administrative remedies within the
IRS, and thus will not contest the allegation in D's petition that D
has exhausted all such administrative remedies.
Example 2. Exhaustion of administrative remedies. Assume the
same facts as in Example 1, except that D does not timely request
consideration by Appeals after receiving the Letter 950-G. A Letter
3569 is mailed to D more than 30 days after the mailing of the
Letter 950-G and prior to the expiration of the period of
limitations for assessment of gift tax. D timely files a petition in
Tax Court pursuant to section 7477. After the case is docketed, D
requests Appeals consideration. In this situation, because D did not
respond timely to the Letter 950-G with a written request for
Appeals consideration, the IRS will not consider D to have exhausted
all administrative remedies available within the IRS for purposes of
section 7477 prior to filing the petition in Tax Court, and thus may
contest any allegation in D's petition that D has exhausted all such
administrative remedies.
Example 3. Exhaustion of administrative remedies. D timely files
a Form 709 on which D reports D's completed gifts of interests in a
family limited partnership. After conducting an examination, the IRS
proposes to adjust the value of the gifts as reported on the return.
No gift tax deficiency will result from the adjustments, however,
because D has a sufficient amount of available applicable credit
amount under section 2505. D declines to consent to extend the time
for the assessment of gift tax with respect to the gifts at issue.
Because of the pending expiration of the period of limitation on
assessment within which a gift tax, if any, could be assessed, the
IRS determines that there is not adequate time for Appeals
consideration. Accordingly, the IRS mails to D a Letter 3569, even
though a Letter 950-G had not first been issued to D. D timely files
a petition in Tax Court pursuant to section 7477. After the case is
docketed in Tax Court, D is offered the opportunity for Appeals to
consider any dispute regarding the determination and participates
fully in the Appeals consideration process. However, the Appeals
office and D are unable to resolve the issue. The IRS will consider
D to have exhausted all administrative remedies available within the
IRS, and thus will not assert that D has not exhausted all such
administrative remedies.
Example 4. Legal issue. D transfers nonvested stock options to a
trust for the benefit of D's child. D timely files a Form 709
reporting the transfer as a completed gift for Federal gift tax
purposes and complies with the adequate disclosure requirements for
purposes of triggering the commencement of the applicable statute of
limitations. Pursuant to Sec. 301.6501(c)-1(f)(5), adequate
disclosure of a transfer that is reported as a completed gift on the
Form 709 will commence the running of the period of limitations for
assessment of gift tax on D, even if the transfer is ultimately
determined to be an incomplete gift for purposes of Sec. 25.2511-2
of this chapter. After conducting an examination, the IRS concurs
with the reported valuation of the stock options, but concludes that
the reported transfer is not a completed gift for Federal gift tax
purposes. D is unable to resolve the matter with the IRS examiner.
The IRS sends a Letter 950-G to D, who timely mails a written
request for Appeals consideration. Assuming that the IRS mails to D
a Letter 3569 with regard to this transfer, and that D complies with
the administrative procedures set forth in this section, including
the exhaustion of all administrative remedies available within the
IRS, then D may file a petition for declaratory judgment with the
Tax Court pursuant to section 7477.
Example 5. Transfers in controversy. On April 16, 2007, D timely
files a Form 709 on which D reports gifts made in 2006 of fractional
interests in certain real property and of interests in a family
limited partnership (FLP). However, although the gifts are disclosed
on the return, the return does not contain information sufficient to
constitute adequate disclosure under Sec. 301.6501(c)-1(e) or (f)
for purposes of the application of the statute of limitations on
assessment of gift tax with respect to the reported gifts. The IRS
conducts an examination and concludes that the value of both the
interests in the real property and the FLP interests on the date(s)
of the transfers are greater than the values reported on the return.
No gift tax deficiency will result from the adjustments because D
has a sufficient amount of remaining applicable credit amount under
section 2505. However, D does not agree with the adjustments. The
IRS sends a Letter 950-G to D informing D of the proposed
adjustments in the value of the reported gifts. D, within 30
calendar days after the mailing date of the letter, submits a
written request for Appeals consideration. The Appeals office and D
are unable to reach an agreement regarding the value of any of the
gifts. In the exercise of its discretion, the IRS decides to resolve
currently only the value of the real property interests, and to
defer the resolution of the value of the FLP interests. On May 28,
2009, the Appeals office sends D a Letter 3569 addressing only the
value of the gifts of interests in the real property. Because none
of the gifts reported on the return filed on April 16, 2007 were
adequately disclosed for purposes of Sec. 301.6501(c)-1(e) or (f),
the period of limitations during which the IRS may adjust the value
of those gifts has not begun to run. Accordingly, the Letter 3569 is
timely mailed. If D timely files a petition in Tax Court pursuant to
section 7477 with regard to the value of the interests in the real
property, then, assuming the other requirements of section 7477 are
satisfied with regard to those interests, the Tax Court's
declaratory judgment, once it becomes final, will determine the
value of the gifts of the interests in the real property. Because
the IRS has not yet put the gift tax value of the interests in the
FLP into controversy, the procedure under section 7477 is not yet
available with regard to those gifts.
(f) Effective/applicability date. This section applies to civil
proceedings described in section 7477 filed in the
[[Page 46350]]
United States Tax Court on or after September 9, 2009.
Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
Approved: August 26, 2009.
Michael Mundaca,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. E9-21458 Filed 9-8-09; 8:45 am]
BILLING CODE 4830-01-P