Disregarded Entities; Religious and Family Member FICA and FUTA Exceptions; Indoor Tanning Services Excise Tax, 36204-36207 [2014-14967]
Download as PDF
<![CDATA[
36204
Federal Register / Vol. 79, No. 123 / Thursday, June 26, 2014 / Rules and Regulations
based tool for Form SSA–538. If
adjudicators do not use the Web-based
tool, we still require them to complete
Form SSA–538 to explain our findings
in childhood disability determinations.
Public Comments
On July 15, 2011, we published a final
rule with request for comments in the
Federal Register at 76 FR 41685 and
provided a 60-day public comment
period. We received one comment. We
carefully considered the concerns
expressed in this comment, but did not
make any changes to the final rule.
We have summarized the
commenter’s view and have responded
to the significant issue raised by the
commenter.
Comment: The commenter was
concerned with the consistency between
claims that are filed on paper and those
filed electronically, and suggested that
Form SSA–538 be available for
electronic claims to ensure that all
children’s claims receive the same
considerations.
Response: We did not adopt this
comment. While we believe that
consistency in adjudication is
important, we do not agree that Form
SSA–538 should be available on the
Web-based tool that adjudicators
currently use in evaluating childhood
disability claims. As we noted in the
preamble to our July 2011 final rule
with request for comments (76 FR
41686), although the Web-based tool
does not include an exact copy of Form
SSA–538, the tool does include all of
the major elements of the form for
explaining our findings in these claims.
That is, the consultant with overall
responsibility must affirm that he or she
considered the factors and evidence, as
we require, in determining whether a
child’s impairment(s) is severe, meets or
medically equals a listing, or
functionally equals the listings.
Regulatory Procedures
pmangrum on DSK3VPTVN1PROD with RULES
Executive Order 12866, as
Supplemented by Executive Order
13563
Regulatory Flexibility Act
We certify that these rules would not
have a significant economic impact on
a substantial number of small entities
because they affect individuals only.
14:44 Jun 25, 2014
Jkt 232001
Paperwork Reduction Act
These rules do not create any new or
affect any existing collections and,
therefore, do not require OMB approval
under the Paperwork Reduction Act.
(Catalog of Federal Domestic Program No.
96.006, Supplemental Security Income)
List of Subjects in 20 CFR Part 416
Administrative practice and
procedure; Aged, Blind, Disability
benefits; Public assistance programs;
Reporting and recordkeeping
requirements; Supplemental Security
Income (SSI).
Dated: June 19, 2014.
Carolyn W. Colvin,
Acting Commissioner of Social Security.
Accordingly, the final rule with
request for comments amending 20 CFR
chapter III, part 416, subpart I that was
published at 76 FR 41685 on July 15,
2011, is adopted as a final rule without
change.
[FR Doc. 2014–14914 Filed 6–25–14; 8:45 am]
BILLING CODE 4191–02–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 31, and 301
[TD 9670]
RINs 1545–BJ06; 1545–BK38
Disregarded Entities; Religious and
Family Member FICA and FUTA
Exceptions; Indoor Tanning Services
Excise Tax
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
temporary regulations.
AGENCY:
This document contains final
regulations relating to disregarded
entities (including qualified subchapter
S subsidiaries) and the indoor tanning
services excise tax. These final
regulations affect disregarded entities
responsible for collecting the indoor
tanning services excise tax and owners
of those disregarded entities. The final
regulations also relate to disregarded
entities and certain exceptions from
taxes under the Federal Insurance
Contributions Act and the Federal
Unemployment Tax Act, as well as
backup withholding rules and related
information reporting requirements.
These final regulations affect individual
SUMMARY:
We consulted with the Office of
Management and Budget (OMB) and
determined that this final rule does not
meet the criteria for a significant
regulatory action under Executive Order
12866, as supplemented by Executive
Order 13563. Therefore, OMB did not
reviewed it.
VerDate Mar<15>2010
Therefore, a regulatory flexibility
analysis is not required under the
Regulatory Flexibility Act, as amended.
PO 00000
Frm 00022
Fmt 4700
Sfmt 4700
owners of disregarded entities. These
regulations also affect the owners of
disregarded entities subject to backup
withholding rules.
DATES: Effective Date: These regulations
are effective on June 26, 2014.
Applicability Dates: For dates of
applicability, see §§ 1.1361–4(a)(8)(ii),
31.3121(b)(3)–1(e), 31.3127–1(c),
31.3306(c)(5)–1(e), 301.7701–2(e)(5),
and 301.7701–2(e)(6)(iv).
FOR FURTHER INFORMATION CONTACT:
Regarding excise tax-related provisions,
Michael H. Beker (202) 317–6855;
regarding employment tax-related
provisions, Andrew Holubeck (202)
317–4770 (not toll free calls).
SUPPLEMENTARY INFORMATION:
Background
This document contains final
regulations amending the Income Tax
Regulations (26 CFR part 1) under
section 1361 of the Internal Revenue
Code (Code), the Employment Tax
Regulations (26 CFR part 31) under
sections 3121, 3127, and 3306 of the
Code, and the Procedure and
Administration Regulations (26 CFR
part 301) under section 7701 of the
Code.
Indoor Tanning Services Excise TaxRelated Regulations
On June 25, 2012, final and temporary
regulations (TD 9596) were published in
the Federal Register (77 FR 37806). The
regulations treat disregarded entities
(including qualified subchapter S
subsidiaries) as separate entities for
purposes of the indoor tanning services
excise tax imposed by section 5000B.
Also on June 25, 2012, a notice of
proposed rulemaking (REG–125570–11)
was published by cross-reference to the
temporary regulations in the Federal
Register (77 FR 37838). The preamble to
TD 9596 includes background
information and an explanation of
provisions regarding the regulations.
Employment Tax-Related Regulations
On November 1, 2011, final and
temporary regulations (TD 9554) were
published in the Federal Register (76
FR 67363). The regulations extend the
exceptions or exemptions from taxes
under the Federal Insurance
Contributions Act and the Federal
Unemployment Tax Act under sections
3121(b)(3) (concerning individuals who
work for certain family members), 3127
(concerning members of religious
faiths), and 3306(c)(5) (concerning
persons employed by children and
spouses and children under 21
employed by their parents) to services
performed in the employ of certain
E:\FR\FM\26JNR1.SGM
26JNR1
Federal Register / Vol. 79, No. 123 / Thursday, June 26, 2014 / Rules and Regulations
entities that are generally disregarded as
separate from their owners for federal
tax purposes under § 301.7701–2(c). The
regulations also clarify the existing rule
that, in the case of an entity that is
disregarded as an entity separate from
its owner for any purpose under
§ 301.7701–2(c), the owner is subject to
the withholding requirements imposed
under section 3406 (backup
withholding).
Also on November 1, 2011, a notice of
proposed rulemaking (REG–136565–09)
was published by cross-reference to the
temporary regulations in the Federal
Register (76 FR 67384). The preamble to
TD 9554 includes background
information and an explanation of
provisions regarding the regulations.
pmangrum on DSK3VPTVN1PROD with RULES
Combining the Employment Tax and
Excise Tax Provisions Into This Final
Regulation
The IRS did not receive any written
or electronic comments responding to
either notice of proposed rulemaking
and a public hearing was neither
requested nor held. Accordingly, both
sets of proposed regulations are adopted
as amended by this Treasury decision
without substantive change and both
sets of corresponding temporary
regulations are removed. The
nonsubstantive revisions are discussed
in the next section.
Explanation of Revisions
These final regulations reorganize and
revise § 31.3121(b)(3)–1, § 31.3127–1,
§ 31.3306(c)(5)–1, and § 301.7701–
2(c)(2)(iv) for clarity, and no substantive
changes are intended to these
provisions. In § 31.3121(b)(3)–1,
concerning family employment, the
general rule that applies to corporations
was moved from § 31.3121(b)(3)–1(c) to
§ 31.3121(b)(3)–1(d), so that the rules for
disregarded entities (which are treated
as corporations for purposes of Subtitle
C under § 301.7701–2(c)(2)(iv)(B))
would follow after the general corporate
rule. Similarly, in § 31.3306(c)(5)–1,
with respect to the provisions
concerning family employment, the
general rule that applies to corporations
was moved from § 31.3306(c)(5)–1(c) to
§ 31.3306(c)(5)–1(d), so that the rules for
disregarded entities would follow after
the general corporate rule. For clarity,
§ 31.3127–1(a) was reorganized into a
list format and headings were added. In
addition, §§ 31.3121(b)(3)–1(d),
31.3127–1(b), and 31.3306(c)(5)–1(d)
were revised to provide that an entity
that is treated as a corporation for
purposes of Subtitle C under
§ 301.7701–2(c)(2)(iv)(B) is not treated
as the employer for purposes of
applying sections 3121(b)(3), 3127, and
VerDate Mar<15>2010
14:44 Jun 25, 2014
Jkt 232001
3306(c)(5) and the regulations
thereunder.
Section 301.7701–2(c)(2)(iv)(A)
continues to provide that § 301.7701–
2(c)(2)(i) (relating to certain wholly
owned entities) does not apply to taxes
imposed under Subtitle C. Section
301.7701–2(c)(2)(iv)(B) also continues to
provide that an entity that is
disregarded as an entity separate from
its owner for any purpose under
§ 301.7701–2 is treated as a corporation
for purposes of taxes imposed under
Subtitle C. The cross references that
were formerly in § 301.7701–
2(c)(2)(iv)(C) and were described as
exceptions to § 301.7701–2(c)(2)(iv)(B)
are now described as special rules and
are added to § 301.7701–2(c)(2)(iv)(B).
In addition, the language formerly of
§ 301.7701–2(c)(2)(iv)(A) regarding
backup withholding has been moved to
new § 301.7701–2(c)(2)(iv)(C)(1) to
clarify that it is an exception to the
general provisions of § 301.7701–
2(c)(2)(iv)(A) and (B). Finally, the last
two sentences that were formerly in
§ 301.7701–2(c)(2)(iv)(A) regarding taxes
imposed under Subtitle A, including
Chapter 2, Tax on Self Employment
Income, have been moved to new
§ 301.7701–2(c)(2)(iv)(C)(2) to put all the
special clarifying rules and exceptions
in one paragraph.
Special Analyses
It has been determined that this
Treasury decision is not a significant
regulatory action as defined in
Executive Order 12866, as
supplemented by Executive Order
13563. 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
regulations, and because the regulations
do 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 Code, the
proposed regulations that preceded
these regulations were submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment
on their impact on small business and
no comments were received.
Drafting Information
The principal authors of these
regulations are Michael H. Beker, Office
of the Associate Chief Counsel
(Passthroughs and Special Industries),
and Andrew Holubeck, Office of the
Associate Chief Counsel (Tax Exempt &
Government Entities). However, other
personnel from the IRS and the Treasury
PO 00000
Frm 00023
Fmt 4700
Sfmt 4700
36205
Department participated in their
development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
26 CFR Part 31
Employment taxes, Income Taxes,
Penalties, Pensions, Railroad retirement,
Reporting and recordkeeping
requirements, Social security,
Unemployment compensation.
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 parts 1, 31, and
301 are amended as follows:
PART 1—INCOME TAX
Paragraph 1. The authority citation
for part 1 continues to read in part as
follows:
■
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.1361–4 is amended
as follows:
■ 1. In paragraph (a)(8)(i)(A) the
language ‘‘and 38’’ is removed and ‘‘38,
and 49’’ is added in its place.
■ 2. In paragraph (a)(8)(i)(B) the
language ‘‘Chapter 33’’ is removed and
‘‘Chapters 33 and 49’’ is added in its
place.
■ 3. Paragraph (a)(8)(ii) is revised.
■ 4. Paragraph (a)(8)(iii) is removed.
The revision reads as follows:
■
§ 1.1361–4
Effect of QSub election.
(a) * * *
(8) * * *
(ii) Effective/applicability date. (A)
Except as provided in this paragraph
(a)(8)(ii), paragraph (a)(8) of this section
applies to liabilities imposed and
actions first required or permitted in
periods beginning on or after January 1,
2008.
(B) References to Chapter 49 in
paragraph (a)(8) of this section apply to
taxes imposed on amounts paid on or
after July 1, 2012.
(C) Paragraph (a)(8)(i)(E) of this
section applies for periods after
December 31, 2014.
*
*
*
*
*
§ 1.1361–4T
■
[Removed]
Par. 3. Section 1.1361–4T is removed.
E:\FR\FM\26JNR1.SGM
26JNR1
36206
Federal Register / Vol. 79, No. 123 / Thursday, June 26, 2014 / Rules and Regulations
PART 31—EMPLOYMENT TAXES AND
COLLECTION OF INCOME TAX AT
SOURCE
Par. 4. The authority citation for part
31 continues to read in part as follows:
■
Authority: 26 U.S.C. 7805 * * *
Par. 5. Section 31.3121(b)(3)–1 is
amended by revising paragraphs (c), (d),
and (e) to read as follows:
■
§ 31.3121(b)(3)–1
Family employment.
*
*
*
*
*
(c) Services performed in the employ
of a partnership are within the
exception described in paragraph (a) of
this section only if the requisite family
relationship exists between the
employee and each of the partners
comprising the partnership.
(d) Services performed in the employ
of a corporation are not within the
exception described in paragraph (a) of
this section, except that services
performed in the employ of an entity
that is treated as a corporation under
§ 301.7701–2(c)(2)(iv)(B) of this chapter
may qualify for the exception if the
requirements of the exception are
otherwise met. An entity that is treated
as a corporation under § 301.7701–
2(c)(2)(iv)(B) of this chapter is not
treated as the employer for purposes of
applying section 3121(b)(3) and this
section. For purposes of applying
section 3121(b)(3) and this section, the
owner of an entity that is treated as a
corporation under § 301.7701–
2(c)(2)(iv)(B) of this chapter is treated as
the employer.
(e) Paragraphs (c) and (d) of this
section apply to wages paid on or after
November 1, 2011. However, taxpayers
may apply paragraphs (c) and (d) of this
section to wages paid on or after January
1, 2009.
§ 31.3121(b)(3)–1T
[Removed]
Par. 6. Section 31.3121(b)(3)–1T is
removed.
■ Par. 7. Section 31.3127–1 is added to
read as follows:
■
pmangrum on DSK3VPTVN1PROD with RULES
§ 31.3127–1 Exemption for employers and
their employees if both are members of
religious faiths opposed to participation in
Social Security Act programs.
(a) Exemption—(1) Employer. Except
as provided in paragraph (b) of this
section, an employer is exempt from the
taxes imposed by section 3111 on wages
paid to an employee if—
(i) The employer (or if the employer
is a partnership, each partner therein)
and its employee are members of a
recognized religious sect or division
described in section 1402(g)(1);
VerDate Mar<15>2010
14:44 Jun 25, 2014
Jkt 232001
(ii) Both the employer (or if the
employer is a partnership, each partner
therein) and the employee adhere to the
tenets and teachings of that sect; and
(iii) Both the employer and the
employee have filed and had approved
applications under section 3127(b) for
exemption from the taxes imposed by
sections 3111 and 3101.
(2) Employee. If an employer is
exempt from the taxes imposed by
section 3111 under paragraph (a)(1) of
this section, then each employee
described in paragraph (a)(1) of this
section is exempt from the taxes
imposed by section 3101 on the wages
received with respect to employment
with that employer.
(b) Corporation. Services performed
in the employ of a corporation are not
within the exemption described in
paragraph (a) of this section, except that
services performed in the employ of an
entity that is treated as a corporation
under § 301.7701–2(c)(2)(iv)(B) of this
chapter may qualify for the exemption
if the requirements of the exemption are
otherwise met. An entity that is treated
as a corporation under § 301.7701–
2(c)(2)(iv)(B) of this chapter is not
treated as the employer for purposes of
applying section 3127 and this section.
For purposes of applying section 3127
and paragraph (a) of this section, the
owner of an entity that is treated as a
corporation under § 301.7701–
2(c)(2)(iv)(B) of this chapter is treated as
the employer.
(c) Effective/applicability date. This
section applies to wages paid on or after
November 1, 2011. However, taxpayers
may apply this section to wages paid on
or after January 1, 2009.
§ 31.3127–1T
[Removed]
Par. 8. Section 31.3127–1T is
removed.
■ Par. 9. Section 31.3306(c)(5)–1 is
amended by revising paragraphs (c), (d),
and (e) to read as follows:
■
§ 31.3306(c)(5)–1
Family employment.
*
*
*
*
*
(c) Services performed in the employ
of a partnership are within the
exception described in paragraph (a) of
this section only if the requisite family
relationship exists between the
employee and each of the partners
comprising the partnership.
(d) Services performed in the employ
of a corporation are not within the
exception described in paragraph (a) of
this section, except that services
performed in the employ of an entity
that is treated as a corporation under
§ 301.7701–2(c)(2)(iv)(B) of this chapter
PO 00000
Frm 00024
Fmt 4700
Sfmt 4700
may qualify for the exception if the
requirements of the exception are
otherwise met. An entity that is treated
as a corporation under § 301.7701–
2(c)(2)(iv)(B) of this chapter is not
treated as the employer for purposes of
applying section 3306(c)(5) and this
section. For purposes of applying
section 3306(c)(5) and this section, the
owner of an entity that is treated as a
corporation under § 301.7701–
2(c)(2)(iv)(B) of this chapter is treated as
the employer.
(e) Paragraphs (c) and (d) of this
section apply to wages paid on or after
November 1, 2011. However, taxpayers
may apply paragraphs (c) and (d) of this
section to wages paid on or after January
1, 2009.
§ 31.3306(c)(5)–1T
[Removed]
Par. 10. Section 3306(c)(5)–1T is
removed.
■
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 11. The authority citation for part
301 continues to read in part as follows:
■
Authority: 26 U.S.C. 7805 * * *
Par. 12. Section 301.7701–2 is
amended as follows:
■ 1. Paragraphs (c)(2)(iv)(A), (B), and (C)
are revised.
■ 2. Paragraph (c)(2)(v)(A)(1) is
amended by removing the language
‘‘and 38’’ and adding ‘‘38, and 49’’ in its
place.
■ 3. Paragraph (c)(2)(v)(A)(2) is
amended by removing the language
‘‘Chapter 33’’ and adding ‘‘Chapters 33
and 49’’ in its place.
■ 4. Paragraph (c)(2)(vi) is removed.
■ 5. Paragraph (e)(5) is revised.
■ 6. Paragraph (e)(6)(iv) is added.
■ 7. Paragraphs (e)(8) and (e)(9) are
removed.
The revisions and addition read as
follows:
■
§ 301.7701–2
definitions.
*
Business entities;
*
*
*
*
(c) * * *
(2) * * *
(iv) * * *
(A) In general. Except as provided in
paragraph (c)(2)(iv)(C) of this section,
paragraph (c)(2)(i) of this section
(relating to certain wholly owned
entities) does not apply to taxes
imposed under Subtitle C—Employment
Taxes and Collection of Income Tax
(Chapters 21, 22, 23, 23A, 24, and 25 of
the Internal Revenue Code).
E:\FR\FM\26JNR1.SGM
26JNR1
pmangrum on DSK3VPTVN1PROD with RULES
Federal Register / Vol. 79, No. 123 / Thursday, June 26, 2014 / Rules and Regulations
(B) Treatment of entity. Except as
provided in paragraph (c)(2)(iv)(C) of
this section, an entity that is disregarded
as an entity separate from its owner for
any purpose under this section is
treated as a corporation with respect to
taxes imposed under Subtitle C—
Employment Taxes and Collection of
Income Tax (Chapters 21, 22, 23, 23A,
24, and 25 of the Internal Revenue
Code). For special rules regarding the
application of certain employment tax
exceptions, see §§ 31.3121(b)(3)–1(d),
31.3127–1(b), and 31.3306(c)(5)–1(d) of
this chapter.
(C) Special rules. (1) Paragraphs
(c)(2)(iv)(A) and (B) of this section do
not apply to withholding requirements
imposed by section 3406 (backup
withholding). Thus, in the case of an
entity that is disregarded as an entity
separate from its owner for any purpose
under this section, the owner is subject
to the withholding requirements
imposed by section 3406 (backup
withholding).
(2) Paragraph (c)(2)(i) of this section
applies to taxes imposed under Subtitle
A, including Chapter 2—Tax on Self
Employment Income. Thus, the owner
of an entity that is treated in the same
manner as a sole proprietorship under
paragraph (a) of this section is subject to
tax on self-employment income.
*
*
*
*
*
(e) * * *
(5)(i) Except as provided in this
paragraph (e)(5), paragraph (c)(2)(iv) of
this section applies with respect to
wages paid on or after January 1, 2009.
(ii) Paragraph (c)(2)(iv)(B) applies
with respect to wages paid on or after
September 14, 2009. For rules that apply
before September 14, 2009, see 26 CFR
part 301 revised as of April 1, 2009.
(iii) Paragraph (c)(2)(iv)(C)(1) of this
section applies with respect to wages
paid on or after November 1, 2011. For
rules that apply before November 1,
2011, see 26 CFR part 301, revised as of
April 1, 2011. However, taxpayers may
apply paragraph (c)(2)(iv)(C)(1) of this
section with respect to wages paid on or
after January 1, 2009.
(6) * * *
(iv) References to Chapter 49 in
paragraph (c)(2)(v) of this section apply
to taxes imposed on amounts paid on or
after July 1, 2012.
*
*
*
*
*
VerDate Mar<15>2010
14:44 Jun 25, 2014
Jkt 232001
§ 301.7701–2T
[Removed]
36207
Editorial Note: This document was
received for publication by the Office of the
Federal Register on June 23, 2014.
between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this rule, call or
email CWO Christopher Ruleman,
Sector Charleston Office of Waterways
Management, Coast Guard; telephone
843–740–3184, email
christopher.l.ruleman@uscg.mil. If you
have questions on viewing the docket,
call Cheryl Collins, Program Manager,
Docket Operations, telephone 202–366–
9826.
SUPPLEMENTARY INFORMATION:
[FR Doc. 2014–14967 Filed 6–25–14; 8:45 am]
Table of Acronyms
Par. 13. Section 301.7701–2T is
removed.
■
John Dalrymple,
Deputy Commissioner for Services and
Enforcement.
Approved: February 7, 2014.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax
Policy).
BILLING CODE 4830–01–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 100
[Docket Number USCG–2014–0005]
RIN 1625–AA08
Special Local Regulations; Beaufort
Water Festival, Beaufort, SC
Coast Guard, DHS.
ACTION: Temporary final rule.
AGENCY:
The Coast Guard is
establishing a special local regulation
pertaining to the Beaufort Water Festival
from 11:30 a.m. through 4:30 p.m. on
July 19, 2014. This action is necessary
to ensure safety of life on navigable
waters of the United States during the
Beaufort Water Festival Air Show.
During the enforcement period, the
special local regulation establishes a
regulated area which all people and
vessels will be prohibited from entering,
transiting through, anchoring, or
remaining within. Vessels may enter,
transit through, anchor in, or remain
within the area if authorized by the
Captain of the Port Charleston or a
designated representative.
DATES: This rule is effective and will be
enforced from 11:00 a.m. until 5:00 p.m.
on July 19, 2014.
ADDRESSES: Documents indicated in this
preamble as being available in the
docket are part of docket USCG–2014–
0005 and are available online by going
to https://www.regulations.gov, inserting
USCG–2014–0005 in the ‘‘Keyword’’
box, and then clicking ‘‘Search.’’ They
are also available for inspection or
copying at the Docket Management
Facility (M–30), U.S. Department of
Transportation, West Building Ground
Floor, Room W12–140, 1200 New Jersey
Avenue SE., Washington, DC 20590,
SUMMARY:
PO 00000
Frm 00025
Fmt 4700
Sfmt 4700
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of Proposed Rulemaking
A. Regulatory History and Information
On April 19, 2014, we published a
notice of proposed rulemaking (NPRM)
entitled Special Local Regulations;
Beaufort Water Festival, Beaufort, SC in
the Federal Register (79 FR 21661). We
received no comments on the proposed
rule. No public meeting was requested,
and none was held.
B. Basis and Purpose
The legal basis for the rule is the
Coast Guard’s authority to establish
special local regulations: 33 U.S.C.
1233. The purpose of the rule is to
insure safety of life on navigable waters
of the United States during the Beaufort
Water Festival.
C. Discussion of Comments, Changes
and the Final Rule
This temporary rule creates a
regulated area that will encompass a
portion of the waterway that is 700 ft
wide by 2600 ft in length, whose
approximate corner coordinates are as
follows: 32°25′47″ N/080°40′44″ W,
32°25′41″ N/080°40′14″ W, 32°25′35″ N/
080°40′16″ W, 32°25′40″ N/080°40′46″
W, Spectator vessels may safely transit
outside the regulated area, but are
prohibited from entering, transiting
through, anchoring, or remaining within
the regulated area. The Coast Guard may
be assisted by other Federal, State, or
local law enforcement agencies in
enforcing this regulation. Persons and
vessels may not enter, transit through,
anchor in, or remain within the safety
zone unless authorized by the Captain
of the Port Charleston or a designated
representative.
Persons and vessels desiring to enter,
transit through, anchor in, or remain
within the regulated area may contact
the Captain of the Port Charleston by
telephone at (843) 740–7050, or a
designated representative via VHF radio
E:\FR\FM\26JNR1.SGM
26JNR1
]]>Agencies
[Federal Register Volume 79, Number 123 (Thursday, June 26, 2014)]
[Rules and Regulations]
[Pages 36204-36207]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-14967]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 31, and 301
[TD 9670]
RINs 1545-BJ06; 1545-BK38
Disregarded Entities; Religious and Family Member FICA and FUTA
Exceptions; Indoor Tanning Services Excise Tax
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations and removal of temporary regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations relating to
disregarded entities (including qualified subchapter S subsidiaries)
and the indoor tanning services excise tax. These final regulations
affect disregarded entities responsible for collecting the indoor
tanning services excise tax and owners of those disregarded entities.
The final regulations also relate to disregarded entities and certain
exceptions from taxes under the Federal Insurance Contributions Act and
the Federal Unemployment Tax Act, as well as backup withholding rules
and related information reporting requirements. These final regulations
affect individual owners of disregarded entities. These regulations
also affect the owners of disregarded entities subject to backup
withholding rules.
DATES: Effective Date: These regulations are effective on June 26,
2014.
Applicability Dates: For dates of applicability, see Sec. Sec.
1.1361-4(a)(8)(ii), 31.3121(b)(3)-1(e), 31.3127-1(c), 31.3306(c)(5)-
1(e), 301.7701-2(e)(5), and 301.7701-2(e)(6)(iv).
FOR FURTHER INFORMATION CONTACT: Regarding excise tax-related
provisions, Michael H. Beker (202) 317-6855; regarding employment tax-
related provisions, Andrew Holubeck (202) 317-4770 (not toll free
calls).
SUPPLEMENTARY INFORMATION:
Background
This document contains final regulations amending the Income Tax
Regulations (26 CFR part 1) under section 1361 of the Internal Revenue
Code (Code), the Employment Tax Regulations (26 CFR part 31) under
sections 3121, 3127, and 3306 of the Code, and the Procedure and
Administration Regulations (26 CFR part 301) under section 7701 of the
Code.
Indoor Tanning Services Excise Tax-Related Regulations
On June 25, 2012, final and temporary regulations (TD 9596) were
published in the Federal Register (77 FR 37806). The regulations treat
disregarded entities (including qualified subchapter S subsidiaries) as
separate entities for purposes of the indoor tanning services excise
tax imposed by section 5000B.
Also on June 25, 2012, a notice of proposed rulemaking (REG-125570-
11) was published by cross-reference to the temporary regulations in
the Federal Register (77 FR 37838). The preamble to TD 9596 includes
background information and an explanation of provisions regarding the
regulations.
Employment Tax-Related Regulations
On November 1, 2011, final and temporary regulations (TD 9554) were
published in the Federal Register (76 FR 67363). The regulations extend
the exceptions or exemptions from taxes under the Federal Insurance
Contributions Act and the Federal Unemployment Tax Act under sections
3121(b)(3) (concerning individuals who work for certain family
members), 3127 (concerning members of religious faiths), and 3306(c)(5)
(concerning persons employed by children and spouses and children under
21 employed by their parents) to services performed in the employ of
certain
[[Page 36205]]
entities that are generally disregarded as separate from their owners
for federal tax purposes under Sec. 301.7701-2(c). The regulations
also clarify the existing rule that, in the case of an entity that is
disregarded as an entity separate from its owner for any purpose under
Sec. 301.7701-2(c), the owner is subject to the withholding
requirements imposed under section 3406 (backup withholding).
Also on November 1, 2011, a notice of proposed rulemaking (REG-
136565-09) was published by cross-reference to the temporary
regulations in the Federal Register (76 FR 67384). The preamble to TD
9554 includes background information and an explanation of provisions
regarding the regulations.
Combining the Employment Tax and Excise Tax Provisions Into This Final
Regulation
The IRS did not receive any written or electronic comments
responding to either notice of proposed rulemaking and a public hearing
was neither requested nor held. Accordingly, both sets of proposed
regulations are adopted as amended by this Treasury decision without
substantive change and both sets of corresponding temporary regulations
are removed. The nonsubstantive revisions are discussed in the next
section.
Explanation of Revisions
These final regulations reorganize and revise Sec. 31.3121(b)(3)-
1, Sec. 31.3127-1, Sec. 31.3306(c)(5)-1, and Sec. 301.7701-
2(c)(2)(iv) for clarity, and no substantive changes are intended to
these provisions. In Sec. 31.3121(b)(3)-1, concerning family
employment, the general rule that applies to corporations was moved
from Sec. 31.3121(b)(3)-1(c) to Sec. 31.3121(b)(3)-1(d), so that the
rules for disregarded entities (which are treated as corporations for
purposes of Subtitle C under Sec. 301.7701-2(c)(2)(iv)(B)) would
follow after the general corporate rule. Similarly, in Sec.
31.3306(c)(5)-1, with respect to the provisions concerning family
employment, the general rule that applies to corporations was moved
from Sec. 31.3306(c)(5)-1(c) to Sec. 31.3306(c)(5)-1(d), so that the
rules for disregarded entities would follow after the general corporate
rule. For clarity, Sec. 31.3127-1(a) was reorganized into a list
format and headings were added. In addition, Sec. Sec. 31.3121(b)(3)-
1(d), 31.3127-1(b), and 31.3306(c)(5)-1(d) were revised to provide that
an entity that is treated as a corporation for purposes of Subtitle C
under Sec. 301.7701-2(c)(2)(iv)(B) is not treated as the employer for
purposes of applying sections 3121(b)(3), 3127, and 3306(c)(5) and the
regulations thereunder.
Section 301.7701-2(c)(2)(iv)(A) continues to provide that Sec.
301.7701-2(c)(2)(i) (relating to certain wholly owned entities) does
not apply to taxes imposed under Subtitle C. Section 301.7701-
2(c)(2)(iv)(B) also continues to provide that an entity that is
disregarded as an entity separate from its owner for any purpose under
Sec. 301.7701-2 is treated as a corporation for purposes of taxes
imposed under Subtitle C. The cross references that were formerly in
Sec. 301.7701-2(c)(2)(iv)(C) and were described as exceptions to Sec.
301.7701-2(c)(2)(iv)(B) are now described as special rules and are
added to Sec. 301.7701-2(c)(2)(iv)(B). In addition, the language
formerly of Sec. 301.7701-2(c)(2)(iv)(A) regarding backup withholding
has been moved to new Sec. 301.7701-2(c)(2)(iv)(C)(1) to clarify that
it is an exception to the general provisions of Sec. 301.7701-
2(c)(2)(iv)(A) and (B). Finally, the last two sentences that were
formerly in Sec. 301.7701-2(c)(2)(iv)(A) regarding taxes imposed under
Subtitle A, including Chapter 2, Tax on Self Employment Income, have
been moved to new Sec. 301.7701-2(c)(2)(iv)(C)(2) to put all the
special clarifying rules and exceptions in one paragraph.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866, as
supplemented by Executive Order 13563. 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 regulations, and because the regulations do 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 Code, the proposed regulations that preceded
these regulations were submitted to the Chief Counsel for Advocacy of
the Small Business Administration for comment on their impact on small
business and no comments were received.
Drafting Information
The principal authors of these regulations are Michael H. Beker,
Office of the Associate Chief Counsel (Passthroughs and Special
Industries), and Andrew Holubeck, Office of the Associate Chief Counsel
(Tax Exempt & Government Entities). However, other personnel from the
IRS and the Treasury Department participated in their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
26 CFR Part 31
Employment taxes, Income Taxes, Penalties, Pensions, Railroad
retirement, Reporting and recordkeeping requirements, Social security,
Unemployment compensation.
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 parts 1, 31, and 301 are amended as follows:
PART 1--INCOME TAX
0
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 1.1361-4 is amended as follows:
0
1. In paragraph (a)(8)(i)(A) the language ``and 38'' is removed and
``38, and 49'' is added in its place.
0
2. In paragraph (a)(8)(i)(B) the language ``Chapter 33'' is removed and
``Chapters 33 and 49'' is added in its place.
0
3. Paragraph (a)(8)(ii) is revised.
0
4. Paragraph (a)(8)(iii) is removed.
The revision reads as follows:
Sec. 1.1361-4 Effect of QSub election.
(a) * * *
(8) * * *
(ii) Effective/applicability date. (A) Except as provided in this
paragraph (a)(8)(ii), paragraph (a)(8) of this section applies to
liabilities imposed and actions first required or permitted in periods
beginning on or after January 1, 2008.
(B) References to Chapter 49 in paragraph (a)(8) of this section
apply to taxes imposed on amounts paid on or after July 1, 2012.
(C) Paragraph (a)(8)(i)(E) of this section applies for periods
after December 31, 2014.
* * * * *
Sec. 1.1361-4T [Removed]
0
Par. 3. Section 1.1361-4T is removed.
[[Page 36206]]
PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE
0
Par. 4. The authority citation for part 31 continues to read in part as
follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 5. Section 31.3121(b)(3)-1 is amended by revising paragraphs (c),
(d), and (e) to read as follows:
Sec. 31.3121(b)(3)-1 Family employment.
* * * * *
(c) Services performed in the employ of a partnership are within
the exception described in paragraph (a) of this section only if the
requisite family relationship exists between the employee and each of
the partners comprising the partnership.
(d) Services performed in the employ of a corporation are not
within the exception described in paragraph (a) of this section, except
that services performed in the employ of an entity that is treated as a
corporation under Sec. 301.7701-2(c)(2)(iv)(B) of this chapter may
qualify for the exception if the requirements of the exception are
otherwise met. An entity that is treated as a corporation under Sec.
301.7701-2(c)(2)(iv)(B) of this chapter is not treated as the employer
for purposes of applying section 3121(b)(3) and this section. For
purposes of applying section 3121(b)(3) and this section, the owner of
an entity that is treated as a corporation under Sec. 301.7701-
2(c)(2)(iv)(B) of this chapter is treated as the employer.
(e) Paragraphs (c) and (d) of this section apply to wages paid on
or after November 1, 2011. However, taxpayers may apply paragraphs (c)
and (d) of this section to wages paid on or after January 1, 2009.
Sec. 31.3121(b)(3)-1T [Removed]
0
Par. 6. Section 31.3121(b)(3)-1T is removed.
0
Par. 7. Section 31.3127-1 is added to read as follows:
Sec. 31.3127-1 Exemption for employers and their employees if both
are members of religious faiths opposed to participation in Social
Security Act programs.
(a) Exemption--(1) Employer. Except as provided in paragraph (b) of
this section, an employer is exempt from the taxes imposed by section
3111 on wages paid to an employee if--
(i) The employer (or if the employer is a partnership, each partner
therein) and its employee are members of a recognized religious sect or
division described in section 1402(g)(1);
(ii) Both the employer (or if the employer is a partnership, each
partner therein) and the employee adhere to the tenets and teachings of
that sect; and
(iii) Both the employer and the employee have filed and had
approved applications under section 3127(b) for exemption from the
taxes imposed by sections 3111 and 3101.
(2) Employee. If an employer is exempt from the taxes imposed by
section 3111 under paragraph (a)(1) of this section, then each employee
described in paragraph (a)(1) of this section is exempt from the taxes
imposed by section 3101 on the wages received with respect to
employment with that employer.
(b) Corporation. Services performed in the employ of a corporation
are not within the exemption described in paragraph (a) of this
section, except that services performed in the employ of an entity that
is treated as a corporation under Sec. 301.7701-2(c)(2)(iv)(B) of this
chapter may qualify for the exemption if the requirements of the
exemption are otherwise met. An entity that is treated as a corporation
under Sec. 301.7701-2(c)(2)(iv)(B) of this chapter is not treated as
the employer for purposes of applying section 3127 and this section.
For purposes of applying section 3127 and paragraph (a) of this
section, the owner of an entity that is treated as a corporation under
Sec. 301.7701-2(c)(2)(iv)(B) of this chapter is treated as the
employer.
(c) Effective/applicability date. This section applies to wages
paid on or after November 1, 2011. However, taxpayers may apply this
section to wages paid on or after January 1, 2009.
Sec. 31.3127-1T [Removed]
0
Par. 8. Section 31.3127-1T is removed.
0
Par. 9. Section 31.3306(c)(5)-1 is amended by revising paragraphs (c),
(d), and (e) to read as follows:
Sec. 31.3306(c)(5)-1 Family employment.
* * * * *
(c) Services performed in the employ of a partnership are within
the exception described in paragraph (a) of this section only if the
requisite family relationship exists between the employee and each of
the partners comprising the partnership.
(d) Services performed in the employ of a corporation are not
within the exception described in paragraph (a) of this section, except
that services performed in the employ of an entity that is treated as a
corporation under Sec. 301.7701-2(c)(2)(iv)(B) of this chapter may
qualify for the exception if the requirements of the exception are
otherwise met. An entity that is treated as a corporation under Sec.
301.7701-2(c)(2)(iv)(B) of this chapter is not treated as the employer
for purposes of applying section 3306(c)(5) and this section. For
purposes of applying section 3306(c)(5) and this section, the owner of
an entity that is treated as a corporation under Sec. 301.7701-
2(c)(2)(iv)(B) of this chapter is treated as the employer.
(e) Paragraphs (c) and (d) of this section apply to wages paid on
or after November 1, 2011. However, taxpayers may apply paragraphs (c)
and (d) of this section to wages paid on or after January 1, 2009.
Sec. 31.3306(c)(5)-1T [Removed]
0
Par. 10. Section 3306(c)(5)-1T is removed.
PART 301--PROCEDURE AND ADMINISTRATION
0
Par. 11. The authority citation for part 301 continues to read in part
as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 12. Section 301.7701-2 is amended as follows:
0
1. Paragraphs (c)(2)(iv)(A), (B), and (C) are revised.
0
2. Paragraph (c)(2)(v)(A)(1) is amended by removing the language ``and
38'' and adding ``38, and 49'' in its place.
0
3. Paragraph (c)(2)(v)(A)(2) is amended by removing the language
``Chapter 33'' and adding ``Chapters 33 and 49'' in its place.
0
4. Paragraph (c)(2)(vi) is removed.
0
5. Paragraph (e)(5) is revised.
0
6. Paragraph (e)(6)(iv) is added.
0
7. Paragraphs (e)(8) and (e)(9) are removed.
The revisions and addition read as follows:
Sec. 301.7701-2 Business entities; definitions.
* * * * *
(c) * * *
(2) * * *
(iv) * * *
(A) In general. Except as provided in paragraph (c)(2)(iv)(C) of
this section, paragraph (c)(2)(i) of this section (relating to certain
wholly owned entities) does not apply to taxes imposed under Subtitle
C--Employment Taxes and Collection of Income Tax (Chapters 21, 22, 23,
23A, 24, and 25 of the Internal Revenue Code).
[[Page 36207]]
(B) Treatment of entity. Except as provided in paragraph
(c)(2)(iv)(C) of this section, an entity that is disregarded as an
entity separate from its owner for any purpose under this section is
treated as a corporation with respect to taxes imposed under Subtitle
C--Employment Taxes and Collection of Income Tax (Chapters 21, 22, 23,
23A, 24, and 25 of the Internal Revenue Code). For special rules
regarding the application of certain employment tax exceptions, see
Sec. Sec. 31.3121(b)(3)-1(d), 31.3127-1(b), and 31.3306(c)(5)-1(d) of
this chapter.
(C) Special rules. (1) Paragraphs (c)(2)(iv)(A) and (B) of this
section do not apply to withholding requirements imposed by section
3406 (backup withholding). Thus, in the case of an entity that is
disregarded as an entity separate from its owner for any purpose under
this section, the owner is subject to the withholding requirements
imposed by section 3406 (backup withholding).
(2) Paragraph (c)(2)(i) of this section applies to taxes imposed
under Subtitle A, including Chapter 2--Tax on Self Employment Income.
Thus, the owner of an entity that is treated in the same manner as a
sole proprietorship under paragraph (a) of this section is subject to
tax on self-employment income.
* * * * *
(e) * * *
(5)(i) Except as provided in this paragraph (e)(5), paragraph
(c)(2)(iv) of this section applies with respect to wages paid on or
after January 1, 2009.
(ii) Paragraph (c)(2)(iv)(B) applies with respect to wages paid on
or after September 14, 2009. For rules that apply before September 14,
2009, see 26 CFR part 301 revised as of April 1, 2009.
(iii) Paragraph (c)(2)(iv)(C)(1) of this section applies with
respect to wages paid on or after November 1, 2011. For rules that
apply before November 1, 2011, see 26 CFR part 301, revised as of April
1, 2011. However, taxpayers may apply paragraph (c)(2)(iv)(C)(1) of
this section with respect to wages paid on or after January 1, 2009.
(6) * * *
(iv) References to Chapter 49 in paragraph (c)(2)(v) of this
section apply to taxes imposed on amounts paid on or after July 1,
2012.
* * * * *
Sec. 301.7701-2T [Removed]
0
Par. 13. Section 301.7701-2T is removed.
John Dalrymple,
Deputy Commissioner for Services and Enforcement.
Approved: February 7, 2014.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
Editorial Note: This document was received for publication by
the Office of the Federal Register on June 23, 2014.
[FR Doc. 2014-14967 Filed 6-25-14; 8:45 am]
BILLING CODE 4830-01-P
