Withholding on Payments by Government Entities to Persons Providing Property or Services, 26678-26679 [2011-10758]

Download as PDF 26678 Federal Register / Vol. 76, No. 89 / Monday, May 9, 2011 / Proposed Rules within the meaning of § 9.2 of this part, may also file a petition on behalf of its insured or plan beneficiaries for any claims they may have based on copayments made to the perpetrator of the offense underlying the forfeiture or the perpetrator of a ‘‘related offense’’ within the meaning of § 9.2 of this part, if the authority to file claims or lawsuits is contained in the document or documents establishing the plan. Where such a petition is filed, any amounts granted as a remission must be transferred to the other petitioners, not the party filing the petition; although, in his or her discretion, the ruling official may use the actual petitioner as an intermediary for transferring the amounts authorized as a remission to the other petitioners. Dated: April 18, 2011. Eric H. Holder, Jr., Attorney General. [FR Doc. 2011–9826 Filed 5–6–11; 8:45 am] BILLING CODE 4410–02–P; 4410–FY–P; 4410–09–P; 4410–14–P Written or electronic comments and requests for a public hearing must be received by August 8, 2011. ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG–151687–10), 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–151687– 10), 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– 151687–10). FOR FURTHER INFORMATION CONTACT: Concerning these proposed regulations, A.G. Kelley, (202) 622–6040; concerning submissions of comments or to request a public hearing, Oluwafunmilayo Taylor at (202) 622–7180 (not toll-free numbers). DATES: SUPPLEMENTARY INFORMATION: Background DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 31 [REG–151687–10] RIN 1545–BJ98 Withholding on Payments by Government Entities to Persons Providing Property or Services Internal Revenue Service (IRS), Treasury. ACTION: Notice of proposed rulemaking. AGENCY: This document contains proposed regulations relating to withholding by government entities on payments to persons providing property or services. The proposed regulations reflect changes in the law made by the Tax Increase Prevention and Reconciliation Act of 2005 that require Federal, State, and local government entities to withhold income tax when making payments to persons providing property or services. These proposed regulations would change the provisions related to the effective date of the final regulations concerning these withholding requirements that are being issued concurrently with these proposed regulations. The guidance affects government entities that are required to withhold from payments to persons providing property or services and persons receiving the payments. WReier-Aviles on DSKGBLS3C1PROD with PROPOSALS SUMMARY: VerDate Mar<15>2010 15:09 May 06, 2011 Jkt 223001 This document contains proposed amendments to 26 CFR Part 31 under section 3402(t) of the Internal Revenue Code (Code). Section 3402(t) of the Code was added by section 511 of the Tax Increase Prevention and Reconciliation Act of 2005, Public Law 109–222 (TIPRA), 120 Stat. 345, which was enacted into law on May 17, 2006. Section 3402(t)(1) provides that the Government of the United States, every State, every political subdivision thereof, and every instrumentality of the foregoing (including multi-State agencies) making any payment to any person providing any property or services (including any payment made in connection with a government voucher or certificate program which functions as a payment for property or services) shall deduct and withhold from such payment a tax in an amount equal to 3 percent of such payment. Section 3402(t)(2) provides exceptions to withholding under section 3402(t). Section 1511 of the American Recovery and Reinvestment Act of 2009 (Pub. L. 111–5), 123 Stat. 115, 355, amended the effective date of section 3402(t) withholding. As amended, the statute provides that section 3402(t) applies to payments made after December 31, 2011. Notice 2010–91, 2010–52 IRB 915, provided interim guidance on the application of section 3402(t) to payments by debit cards, credit cards, stored value cards, and other payment cards. PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 Proposed regulations under sections 3402(t), 3406, 6011, 6051, 6071, and 6302 of the Code were published in the Federal Register on December 5, 2008 (REG–158747–06, 73 FR 74082, 2009–4 IRB 362) (the ‘‘2008 proposed regulations’’). The 2008 proposed regulations proposed applying the withholding obligations to payments beginning on January 1, 2011, but proposed excluding payments made under contracts existing on January 1, 2011, unless those contracts were materially modified. The final regulations provide an additional oneyear extension beyond the amended effective date of the statute. Thus, under the final regulations, the withholding obligation applies to payments made after December 31, 2012, and the exclusion applies to contracts existing on December 31, 2012, that are not materially modified on or after December 31, 2012. These final regulations under sections 3402(t), 3406, 6011, 6051, 6071, and 6302 of the Code (REG–158747–06, Treasury decision) are being published in the Federal Register concurrently with these proposed regulations. Several commenters on the 2008 proposed regulations expressed concern that the requirement to differentiate between payments subject to withholding and payments not subject to withholding based on whether the payment was made under a contract existing on December 31, 2011, and whether that contract had been materially modified, would be burdensome to apply. In response to these concerns, these proposed regulations would provide that the exclusion for payments under existing contracts that had not been materially modified would terminate with payments after December 31, 2013. Thus, these proposed regulations would subject payments under all contracts to section 3402(t) withholding after December 31, 2013, unless another exception applied. This rule would avoid the administrative burden of distinguishing between payments made under existing contracts and all other payments while allowing time to address concerns about applying the withholding requirements to existing contracts. Proposed Effective Date These regulations are proposed to apply to payments made after December 31, 2011. Special Analyses It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined E:\FR\FM\09MYP1.SGM 09MYP1 Federal Register / Vol. 76, No. 89 / Monday, May 9, 2011 / Proposed Rules 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 this regulation, and because the regulation does not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, this regulation has 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 Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed original and eight (8) copies) or electronic comments that are timely submitted to the IRS. All comments will be available at http:// www.regulations.gov or for public inspection and copying upon request. 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 hearing will be published in the Federal Register. Drafting Information The principal author of these proposed regulations is A.G. Kelley, Office of the 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 in 26 CFR Part 31 Employment taxes, Fishing vessels, Gambling, Income taxes, Penalties, Pensions, Railroad retirement, Reporting and recordkeeping requirements, Social Security, Unemployment compensation. WReier-Aviles on DSKGBLS3C1PROD with PROPOSALS Proposed Amendments to the Regulations Accordingly, 26 CFR part 31 is proposed to be amended as follows: Paragraph 1. The authority citation for part 31 continues to read in part as follows: Authority: 26 U.S.C. 7805 * * * Par. 2. Section 31.3402(t)–1 is amended by revising paragraph (d)(2) to read as follows: 15:09 May 06, 2011 Jkt 223001 * * * * * (d) * * * (2) Payments made under a written binding contract that was in effect on December 31, 2012, are not subject to the withholding requirements of this section for payments made prior to January 1, 2014. The preceding sentence does not apply to payments made under any contract that is materially modified after December 31, 2012. For this purpose, a material modification includes only a modification that materially affects the property or services to be provided under the contract, the terms of payment for the property or services under the contract, or the amount payable for the property or services under the contract. Notwithstanding the foregoing, a material modification does not include a mere renewal of a contract. A material modification also does not include a modification to the contract required by applicable Federal, State or local law. The amendment to § 31.3402(t)–1(d)(2) applies with respect to payments made after December 31, 2012. Steven T. Miller, Deputy Commissioner for Services and Enforcement. [FR Doc. 2011–10758 Filed 5–6–11; 8:45 am] BILLING CODE 4830–01–P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA–R03–OAR–2010–0770; FRL–9303–1] Approval and Promulgation of Air Quality Implementation Plans; Delaware; Requirements for Preconstruction Review, Prevention of Significant Deterioration Environmental Protection Agency (EPA). ACTION: Proposed rule. AGENCY: EPA is proposing to approve a State Implementation Plan (SIP) revision submitted by the Delaware Department of Natural Resources and Environmental Control on April 1, 2010. This revision will establish nitrogen oxides (NOX) as a precursor to ozone within the Delaware SIP. This action is being taken under the Clean Air Act (CAA). DATES: Written comments must be received on or before June 8, 2011. ADDRESSES: Submit your comments, identified by Docket ID Number EPA– SUMMARY: PART 31—EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE VerDate Mar<15>2010 § 31.3402(t)–1 Withholding requirement on certain payments made by government entities. PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 26679 R03–OAR–2010–0770 by one of the following methods: A. http://www.regulations.gov. Follow the on-line instructions for submitting comments. B. E-mail: cox.kathleen@epa.gov. C. Mail: EPA–R03–OAR–2010–0770, Kathleen Cox, Associate Director, Office of Permits and Air Toxics, Mailcode 3AP10, U.S. Environmental Protection Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania 19103. D. Hand Delivery: At the previouslylisted EPA Region III address. Such deliveries are only accepted during the Docket’s normal hours of operation, and special arrangements should be made for deliveries of boxed information. Instructions: Direct your comments to Docket ID No. EPA–R03–OAR–2010– 0770. EPA’s policy is that all comments received 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 information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through http:// www.regulations.gov or e-mail. The www.regulations.gov Web site 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 an e-mail comment directly to EPA without going through http:// www.regulations.gov, your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD–ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. Docket: All documents in the electronic docket are listed in the http://www.regulations.gov index. Although listed in the index, some information is not publicly available, i.e., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly E:\FR\FM\09MYP1.SGM 09MYP1

Agencies

[Federal Register Volume 76, Number 89 (Monday, May 9, 2011)]
[Proposed Rules]
[Pages 26678-26679]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-10758]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 31

[REG-151687-10]
RIN 1545-BJ98


Withholding on Payments by Government Entities to Persons 
Providing Property or Services

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: This document contains proposed regulations relating to 
withholding by government entities on payments to persons providing 
property or services. The proposed regulations reflect changes in the 
law made by the Tax Increase Prevention and Reconciliation Act of 2005 
that require Federal, State, and local government entities to withhold 
income tax when making payments to persons providing property or 
services. These proposed regulations would change the provisions 
related to the effective date of the final regulations concerning these 
withholding requirements that are being issued concurrently with these 
proposed regulations. The guidance affects government entities that are 
required to withhold from payments to persons providing property or 
services and persons receiving the payments.

DATES: Written or electronic comments and requests for a public hearing 
must be received by August 8, 2011.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-151687-10), 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-
151687-10), 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-151687-10).

FOR FURTHER INFORMATION CONTACT: Concerning these proposed regulations, 
A.G. Kelley, (202) 622-6040; concerning submissions of comments or to 
request a public hearing, Oluwafunmilayo Taylor at (202) 622-7180 (not 
toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background

    This document contains proposed amendments to 26 CFR Part 31 under 
section 3402(t) of the Internal Revenue Code (Code). Section 3402(t) of 
the Code was added by section 511 of the Tax Increase Prevention and 
Reconciliation Act of 2005, Public Law 109-222 (TIPRA), 120 Stat. 345, 
which was enacted into law on May 17, 2006. Section 3402(t)(1) provides 
that the Government of the United States, every State, every political 
subdivision thereof, and every instrumentality of the foregoing 
(including multi-State agencies) making any payment to any person 
providing any property or services (including any payment made in 
connection with a government voucher or certificate program which 
functions as a payment for property or services) shall deduct and 
withhold from such payment a tax in an amount equal to 3 percent of 
such payment. Section 3402(t)(2) provides exceptions to withholding 
under section 3402(t).
    Section 1511 of the American Recovery and Reinvestment Act of 2009 
(Pub. L. 111-5), 123 Stat. 115, 355, amended the effective date of 
section 3402(t) withholding. As amended, the statute provides that 
section 3402(t) applies to payments made after December 31, 2011.
    Notice 2010-91, 2010-52 IRB 915, provided interim guidance on the 
application of section 3402(t) to payments by debit cards, credit 
cards, stored value cards, and other payment cards.
    Proposed regulations under sections 3402(t), 3406, 6011, 6051, 
6071, and 6302 of the Code were published in the Federal Register on 
December 5, 2008 (REG-158747-06, 73 FR 74082, 2009-4 IRB 362) (the 
``2008 proposed regulations''). The 2008 proposed regulations proposed 
applying the withholding obligations to payments beginning on January 
1, 2011, but proposed excluding payments made under contracts existing 
on January 1, 2011, unless those contracts were materially modified. 
The final regulations provide an additional one-year extension beyond 
the amended effective date of the statute. Thus, under the final 
regulations, the withholding obligation applies to payments made after 
December 31, 2012, and the exclusion applies to contracts existing on 
December 31, 2012, that are not materially modified on or after 
December 31, 2012. These final regulations under sections 3402(t), 
3406, 6011, 6051, 6071, and 6302 of the Code (REG-158747-06, Treasury 
decision) are being published in the Federal Register concurrently with 
these proposed regulations.
    Several commenters on the 2008 proposed regulations expressed 
concern that the requirement to differentiate between payments subject 
to withholding and payments not subject to withholding based on whether 
the payment was made under a contract existing on December 31, 2011, 
and whether that contract had been materially modified, would be 
burdensome to apply. In response to these concerns, these proposed 
regulations would provide that the exclusion for payments under 
existing contracts that had not been materially modified would 
terminate with payments after December 31, 2013. Thus, these proposed 
regulations would subject payments under all contracts to section 
3402(t) withholding after December 31, 2013, unless another exception 
applied. This rule would avoid the administrative burden of 
distinguishing between payments made under existing contracts and all 
other payments while allowing time to address concerns about applying 
the withholding requirements to existing contracts.

Proposed Effective Date

    These regulations are proposed to apply to payments made after 
December 31, 2011.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined

[[Page 26679]]

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 
this regulation, and because the regulation does not impose a 
collection of information on small entities, the Regulatory Flexibility 
Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of 
the Internal Revenue Code, this regulation has 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 Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (a signed original and eight 
(8) copies) or electronic comments that are timely submitted to the 
IRS. All comments will be available at http://www.regulations.gov or 
for public inspection and copying upon request. 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 hearing will be published 
in the Federal Register.

Drafting Information

    The principal author of these proposed regulations is A.G. Kelley, 
Office of the 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 in 26 CFR Part 31

    Employment taxes, Fishing vessels, Gambling, Income taxes, 
Penalties, Pensions, Railroad retirement, Reporting and recordkeeping 
requirements, Social Security, Unemployment compensation.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 31 is proposed to be amended as follows:

PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE

    Paragraph 1. The authority citation for part 31 continues to read 
in part as follows:

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

    Par. 2. Section 31.3402(t)-1 is amended by revising paragraph 
(d)(2) to read as follows:


Sec.  31.3402(t)-1  Withholding requirement on certain payments made by 
government entities.

* * * * *
    (d) * * *
    (2) Payments made under a written binding contract that was in 
effect on December 31, 2012, are not subject to the withholding 
requirements of this section for payments made prior to January 1, 
2014. The preceding sentence does not apply to payments made under any 
contract that is materially modified after December 31, 2012. For this 
purpose, a material modification includes only a modification that 
materially affects the property or services to be provided under the 
contract, the terms of payment for the property or services under the 
contract, or the amount payable for the property or services under the 
contract. Notwithstanding the foregoing, a material modification does 
not include a mere renewal of a contract. A material modification also 
does not include a modification to the contract required by applicable 
Federal, State or local law. The amendment to Sec.  31.3402(t)-1(d)(2) 
applies with respect to payments made after December 31, 2012.

Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2011-10758 Filed 5-6-11; 8:45 am]
BILLING CODE 4830-01-P