Alternative Simplified Credit Election, 10587-10590 [2015-04111]
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Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations
control number 0910–0437. The
collections of information in the UDI
rule have been approved under OMB
control number 0910–0720.
The information collection provisions
in the eMDR rule have been submitted
to OMB for review as required by
section 3507(d) of the PRA (44 U.S.C.
3507(d)). Before the effective date of the
final rule, FDA will publish a notice in
the Federal Register announcing OMB’s
decision to approve, modify, or
disapprove the information collection
provisions in the final rule. An Agency
may not conduct or sponsor, and a
person is not required to respond to, a
collection of information unless it
displays a currently valid OMB control
number.
(i) The lot or batch within which a
device was manufactured;
(ii) The serial number of a specific
device;
(iii) The expiration date of a specific
device;
(iv) The date a specific device was
manufactured.
(v) For an HCT/P regulated as a
device, the distinct identification code
required by § 1271.290(c) of this
chapter.
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■ 3. Amend § 803.11 by revising
paragraph (d) to read as follows:
List of Subjects in 21 CFR Part 803
Imports, Medical devices, Reporting
and recordkeeping requirements.
Therefore under the Federal Food,
Drug, and Cosmetic Act and under
authority delegated to the Commissioner
of Food and Drugs, 21 CFR part 803 as
amended by the Medical Device
Reporting: Electronic Submission
Requirements final rule of February 14,
2014, 79 FR 8832, is further amended as
follows:
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PART 803—MEDICAL DEVICE
REPORTING
1. The authority citation for 21 CFR
part 803 continues to read as follows:
Authority: 21 U.S.C. 352, 360, 360i, 360j,
371, 374.
2. Amend § 803.3 by adding
paragraphs (aa) and (bb) to read as
follows:
■
§ 803.3 How does FDA define the terms
used in this part?
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(aa) Human cell, tissue, or cellular or
tissue-based product (HCT/P) regulated
as a device means an HCT/P as defined
in § 1271.3(d) of this chapter that does
not meet the criteria in § 1271.10(a) and
that is also regulated as a device.
(bb) Unique device identifier (UDI)
means an identifier that adequately
identifies a device through its
distribution and use by meeting the
requirements of § 830.20 of this chapter.
A unique device identifier is composed
of:
(1) A device identifier—a mandatory,
fixed portion of a UDI that identifies the
specific version or model of a device
and the labeler of that device; and
(2) A production identifier—a
conditional, variable portion of a UDI
that identifies one or more of the
following when included on the label of
the device:
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(d) Form FDA 3500A is available on
the Internet at https://www.fda.gov/
medwatch/getforms.htm or from
Division of International and Consumer
Education, Center for Devices and
Radiological Health, Food and Drug
Administration, 10903 New Hampshire
Ave., Bldg. 66, Rm. 4621, Silver Spring,
MD 20993–0002, by email: DICE@
fda.hhs.gov, FAX: 301–847–8149, or
telephone: 800–638–2041.
■ 4. Amend § 803.32 by revising
paragraph (c)(4) to read as follows:
§ 803.32 If I am a user facility, what
information must I submit in my individual
adverse event reports?
■
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§ 803.11 What form should I use to submit
reports of individual adverse events and
where do I obtain these forms?
10587
identifier (UDI) that appears on the
device label or on the device package;
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■ 6. Amend § 803.42 by revising
paragraph (c)(4) to read as follows:
§ 803.42 If I am an importer, what
information must I submit in my individual
adverse event reports?
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(c) * * *
(4) Model number, catalog number,
serial number, lot number, or other
identifying number; expiration date; and
unique device identifier (UDI) that
appears on the device label or on the
device package;
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■ 7. Amend § 803.52 by revising
paragraph (c)(4) to read as follows:
§ 803.52 If I am a manufacturer, what
information must I submit in my individual
adverse event reports?
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(c) * * *
(4) Model number, catalog number,
serial number, lot number, or other
identifying number; expiration date; and
unique device identifier (UDI) that
appears on the device label or on the
device package;
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Dated: February 20, 2015.
Leslie Kux,
Associate Commissioner for Policy.
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(c) * * *
(4) Model number, catalog number,
serial number, lot number, or other
identifying number; expiration date; and
unique device identifier (UDI) that
appears on the device label or on the
device package;
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■ 5. Amend § 803.33 by revising
paragraphs (a)(2) and (b)(7)(iv) to read as
follows:
[FR Doc. 2015–03943 Filed 2–26–15; 8:45 am]
§ 803.33 If I am a user facility, what must
I include when I submit an annual report?
Alternative Simplified Credit Election
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(a) * * *
(2) Division of International and
Consumer Education, Center for Devices
and Radiological Health, Food and Drug
Administration, 10903 New Hampshire
Ave., Bldg. 66, Rm. 4621, Silver Spring,
MD 20993–0002, by email: DICE@
fda.hhs.gov, FAX: 301–847–8149, or
telephone: 800–638–2041.
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(b) * * *
(7) * * *
(iv) Product model, catalog, serial,
and lot number and unique device
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BILLING CODE 4164–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9712]
RIN 1545–BL78
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
temporary regulations.
AGENCY:
This document contains final
regulations relating to the election of the
alternative simplified credit under
section 41(c)(5) of the Internal Revenue
Code (Code). The final regulations affect
certain taxpayers claiming the credit
under section 41.
DATES: Effective Date: These regulations
are effective on February 27, 2015.
Applicability Date: For dates of
applicability, see § 1.41–9(d).
SUMMARY:
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Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations
FOR FURTHER INFORMATION CONTACT:
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David Selig (202) 317–4137 (not a tollfree number).
SUPPLEMENTARY INFORMATION:
Background
This document amends 26 CFR part 1
to provide rules relating to the time and
manner of electing the alternative
simplified credit (ASC) under section
41(c)(5) of the Internal Revenue Code
(Code).
Section 41(a) provides an incremental
tax credit for increasing research
activities (research credit) based on a
percentage of a taxpayer’s qualified
research expenses above a base amount.
A taxpayer can apply the rules and
credit rate percentages under section
41(a)(1) to calculate the credit
(commonly referred to as the regular
credit) or a taxpayer can make an
election to apply the ASC rules and
credit rate percentages under section
41(c)(5) to calculate the credit. Section
41(c)(5)(C) provides that an ASC
election under section 41(c)(5) applies
to the taxable year for which it is made
and all succeeding taxable years unless
revoked with the consent of the
Secretary.
On June 10, 2011, the Treasury
Department and the IRS published final
regulations (TD 9528) (2011 Final
Regulations) in the Federal Register (76
FR 33994) relating to the election and
calculation of the ASC. Section 1.41–
9(b)(2) provides that a taxpayer makes
an election under section 41(c)(5) by
completing the portion of Form 6765,
‘‘Credit for Increasing Research
Activities,’’ (or successor form) relating
to the ASC election, and attaching the
completed form to the taxpayer’s timely
filed (including extensions) original
return for the taxable year to which the
election applies. Section 1.41–9(b)(2)
also provides that a taxpayer may not
make an election under section 41(c)(5)
on an amended return and that an
extension of time to make an election
under section 41(c)(5) will not be
granted under § 301.9100–3.
Following the publication of the 2011
Final Regulations, the Treasury
Department and the IRS received
requests to amend the regulations to
allow taxpayers to make an ASC
election on an amended return. The
requests explained that the burden of
substantiating expenditures and costs
for the base period under the regular
credit can be costly, time-consuming,
and difficult, and suggested that
taxpayers often need additional time to
determine whether to claim the regular
credit or the ASC.
On June 3, 2014, the Treasury
Department and the IRS published a
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notice of proposed rulemaking by crossreference to temporary regulations
(REG–133495–13) in the Federal
Register (79 FR 31892), and final and
temporary regulations (TD 9666) (the
Temporary Regulations) in the Federal
Register (79 FR 31863). The final
regulations removed the rule in § 1.41–
9(b)(2) that prohibited a taxpayer from
making an ASC election for a tax year
on an amended return. In its place, the
Temporary Regulations provided a rule
allowing a taxpayer to make an ASC
election for a tax year on an amended
return if the taxpayer had not previously
claimed a section 41 credit for that tax
year on an original or amended return.
In addition, the Temporary Regulations
provided that a taxpayer that is a
member of a controlled group in a tax
year may not make an election under
section 41(c)(5) for that tax year on an
amended return if any member of the
controlled group for that year claimed
the research credit using a method other
than the ASC on an original or amended
return.
Written and electronic comments
responding to the proposed regulations
were received. No requests for a public
hearing were made and no public
hearing was held. After consideration of
all the comments, the proposed
regulations are adopted as revised by
this Treasury decision.
Summary of Comments and
Explanation of Provisions
Interaction With Section 280C Elections
A commenter requested clarification
regarding whether a section 280C(c)(3)
election made for a taxable year on line
17 of Form 6765, Credit For Increasing
Research Activities, where no amount of
regular credit is claimed, will be viewed
by the IRS as a claim of the section
41(a)(1) credit and preclude an ASC
election from being made on an
amended return for that taxable year.
Section 280(c)(3) allows a taxpayer to
make an annual irrevocable election to
claim a reduced research credit rather
than reducing the section 174
deduction, as required by section
280(c)(1). A section 280C(c)(3) election
must be made on an original return. If
a taxpayer is undecided whether to
claim the regular credit for a taxable
year but wants to preserve the operative
effect of the section 280C(c)(3) election
for that taxable year, then the taxpayer
will make the section 280C(c)(3)
election on line 17 of Form 6765, but
leave the remaining section of the form
blank. A section 280C(c)(3) election on
line 17 of Form 6765 made in a taxable
year does not, in and of itself, constitute
a credit claim under section 41(a)(1),
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and accordingly does not preclude a
taxpayer from making an ASC election
on an amended return for that taxable
year.
Section 9100 Relief
One commenter requested that the
final regulations allow an extension of
time to make an election under section
41(c)(5) under § 301.9100–3. Under
§ 301.9100–3(c), the Commissioner will
grant a reasonable extension of time to
make a regulatory election only when
the interests of the Government will not
be prejudiced by the granting of relief.
Under § 301.9100–3(c)(1)(ii), the
interests of the Government are
ordinarily prejudiced if the taxable year
in which the regulatory election should
have been made or any taxable years
that would have been affected by the
election had it been timely made are
closed by the period of limitations on
assessment under section 6501(a) before
the taxpayer’s receipt of a ruling
granting relief under this section.
Because the final regulations allow a
taxpayer to amend its return to make the
ASC election in a taxable year that is not
closed by the period of limitations for
assessment under section 6501(a) if no
credit under section 41(a)(1) was
claimed in the prior taxable year on an
original or amended return, an
extension of time under § 301.9100–3 to
make the ASC election is not necessary
during this period. An extension of time
to make an ASC election in a taxable
year closed by the period of limitations
on assessment under section 6501(a)
ordinarily prejudices the interests of the
government. See section 301.9100–
3(c)(1)(ii). Accordingly, the final
regulations retain the rule that an
extension of time to make an election
under section 41(c)(5) will not be
granted under § 301.9100–3.
Period for Making an ASC Election
One commenter requested that the
final regulations provide that a taxpayer
may make an ASC election for an
earlier, closed tax year on a later year’s
return in which a research credit from
that closed year is reported on a
carryforward schedule, or actually used
as a credit against tax, so long as no
intervening amended return claiming a
research credit for that tax year using a
different method has been claimed. The
Temporary Regulations only permitted a
taxpayer to elect the ASC on an
amended return for taxable years ending
before June 3, 2014, (the effective/
applicability date of those regulations) if
the taxpayer makes the election before
the period of limitations for assessment
of tax has expired for that year. The rule
in the Temporary Regulations provided
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a reasonable time period for taxpayers to
determine whether or not to make an
ASC election with respect to a prior,
open tax year. To permit a taxpayer to
make an ASC election for a tax year in
which the period of limitations for
assessment of tax has expired has the
practical effect of permitting the
taxpayer to make an ASC election on a
return that cannot be amended.
Therefore, these final regulations do not
adopt this suggested modification.
One commenter requested that these
final regulations provide that an ASC
election can be made on an amended
return for a tax year so long as the
period for making a refund claim under
section 6511 has not expired for that tax
year, even in cases where the statute of
limitations on assessment under section
6501 is closed. These final regulations
retain the rule of the Temporary
Regulations that a taxpayer must make
an ASC election on an amended return
before the statute of limitations on
assessment under section 6501(a) is
closed. The general period under the
statute of limitations on assessment
under section 6501(a), which is three
years after the tax return is filed,
provides a reasonable time for taxpayers
to file an ASC election on an amended
return, and a reasonable time for the IRS
to examine the amended return. This
rule also preserves the integrity the of
the rule in the final regulations
providing that an extension of time to
make an election under section 41(c)(5)
will not be granted under § 301.9100–3.
Under § 301.9100–3, the interests of the
government are ordinarily prejudiced if
the taxable year in which a regulatory
election should have been made or any
taxable years that would have been
affected by the election had it been
timely made are closed by the period of
limitations on assessment under section
6501(a) before the taxpayer’s receipt of
a ruling granting relief under
§ 301.9100. This requirement is
mitigated by the fact that the period of
limitations on assessment may be
extended by agreement of the IRS and
the taxpayer. For clarity, the language
found in the effective date of the
Temporary Regulations referencing the
period of limitations for assessment of
tax is added to the text of the final
regulations under § 1.41–9(b)(2) relating
to the time and manner of making the
ASC election.
Controlled Group ASC Elections
One commenter requested that the
final regulations modify the rules for
controlled group ASC elections under
§ 1.41–9(b)(4), under which only the
designated member of a controlled
group may make or revoke an ASC
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election. Revising those rules is beyond
the scope of these regulations.
Therefore, the final regulations do not
amend § 1.41–9(b)(4).
Modification of the Election Rule
One commenter requested that these
final regulations amend the rule in the
Temporary Regulations that allows a
taxpayer to make an ASC election for a
tax year on an amended return only if
the taxpayer has not previously claimed
the section 41 credit on its original
return or an amended return for that tax
year to clarify that the previously
claimed section 41 credit is determined
under section 41(a)(1), and not under
sections 41(a)(2) or (3). The commenter
stated that the ASC is an alternative
method to the regular credit under
section 41(a)(1), and whether a taxpayer
elects the ASC or claims the regular
credit does not impact the
determination of the credits allowable
under sections 41(a)(2) and 41(a)(3).
This approach is consistent with the
language of section 41(c)(5)(A) and
§ 1.41–9(a), which specifically reference
section 41(a)(1). Accordingly, the final
regulations provide that a taxpayer may
make an ASC election for a tax year on
an amended return only if the taxpayer
has not previously claimed the section
41(a)(1) credit on its original return or
an amended return for that tax year.
Effect on Other Documents
The Temporary Regulations are
obsolete for taxable years beginning on
or after February 27, 2015.
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 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. It is hereby certified that the
collection of information in these
regulations will not have a significant
economic impact on a substantial
number of small entities. Although a
substantial number of small entities may
make an ASC election on an amended
return pursuant to these regulations, the
economic impact of any collection
burden on these entities relating to this
election is minimal because the
regulations will result in a benefit to
taxpayers by providing additional time
for taxpayer to calculate and elect the
ASC. Accordingly, a regulatory
flexibility analysis under the Regulatory
Flexibility Act (5 U.S.C. chapter 6) is
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10589
not required. Pursuant to section 7805(f)
of the Code, these regulations have been
submitted to the Chief Counsel for
Advocacy of the Small Business
Administration for comment on their
impact on small business.
Drafting Information
The principal author of these
regulations is David Selig, Office of the
Associate Chief Counsel (Passthroughs
and Special Industries). However, other
personnel from the IRS and the Treasury
Department participated in their
development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is
amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 continues to read in part as
follows:
■
Authority: 26 U.S.C. 7805 * * *
Section 1.41–9 also issued under 26
U.S.C. 41(c)(5)(C). * * *
■ Par. 2. Section 1.41–9 is amended by:
■ 1. Revising paragraph (b)(2).
■ 2. Adding a third and fourth sentence
to paragraph (d).
The revision and addition read as
follows:
§ 1.41–9
Alternative simplified credit.
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(b) * * *
(2) Time and manner of election. A
taxpayer makes an election under
section 41(c)(5) by completing the
portion of Form 6765, ‘‘Credit for
Increasing Research Activities,’’ (or
successor form) relating to the election
of the ASC, and attaching the completed
form to the taxpayer’s timely filed
(including extensions) original return
for the taxable year to which the
election applies. A taxpayer may make
an election under section 41(c)(5) for a
tax year on an amended return, but only
if the taxpayer has not previously
claimed a section 41(a)(1) credit on its
original return or an amended return for
that tax year, and only if that tax year
is not closed by the period of limitations
on assessment under section 6501(a).
An extension of time to make an
election under section 41(c)(5) will not
be granted under § 301.9100–3 of this
chapter. A taxpayer that is a member of
a controlled group in a tax year may not
make an election under section 41(c)(5)
for that tax year on an amended return
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if any member of the controlled group
for that tax year previously claimed the
research credit under section 41(a)(1)
using a method other than the ASC on
an original or amended return for that
tax year. See paragraph (b)(4) of this
section for additional rules concerning
controlled groups. See also § 1.41–
6(b)(1) requiring that all members of the
controlled group use the same method
of computation.
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(d) Effective/applicability date. * * *
Paragraph (b)(2) of this section applies
to elections with respect to taxable years
ending on or after February 27, 2015.
For taxable years ending before
February 27, 2015, see § 1.41–9T as
contained in 26 CFR part 1, revised
April 1, 2015.
§ 1.41–9T
■
[Removed]
Par. 3. Section 1.41–9T is removed.
John Dalrymple,
Deputy Commissioner for Services and
Enforcement.
Approved: February 3, 2015.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. 2015–04111 Filed 2–26–15; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 117
[Docket No. USCG–2014–1070]
RIN 1625–AA09
Drawbridge Operation Regulation;
Passaic River, Rutherford, NJ
Coast Guard, DHS.
Final rule.
AGENCY:
ACTION:
The Coast Guard is removing
the existing drawbridge operation
regulation for the drawbridge across the
Passaic River, mile 11.8, at Rutherford,
New Jersey. The drawbridge was
converted to a fixed bridge in October
2010, and the operating regulation is no
longer applicable or necessary.
DATES: This rule is effective February
27, 2015.
ADDRESSES: The docket for this final
rule, [USCG–2014–1070] is available at
https://www.regulations.gov. Type the
docket number in the ‘‘SEARCH’’ box
and click ‘‘SEARCH.’’ Click on Open
Docket Folder on the line associated
with this final rule. You may also visit
the Docket Management Facility in
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SUMMARY:
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Jkt 235001
Room W12–140 on the ground floor of
the Department of Transportation West
Building, 1200 New Jersey Avenue SE.,
Washington, DC 20590, 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 Mr. Joe Arca, Project Officer, First
Coast Guard District Bridge Program,
telephone 212–514–4336, email
joe.m.arca@uscg.mil. If you have
questions on viewing the docket, call
Cheryl Collins, Program Manager,
Docket Operations, telephone 202–366–
9826.
SUPPLEMENTARY INFORMATION:
A. Regulatory History and Information
The Coast Guard is issuing this final
rule without prior notice and
opportunity to comment pursuant to
authority under section 4(a) of the
Administrative Procedure Act (APA) (5
U.S.C. 553(b)). This provision
authorizes an agency to issue a rule
without prior notice and opportunity to
comment when the agency for good
cause finds that those procedures are
‘‘impracticable, unnecessary, or contrary
to the public interest.’’ Under 5 U.S.C.
553(b), the Coast Guard finds that good
cause exists for not publishing a notice
of proposed rulemaking (NPRM) with
respect to this rule because the Route 3
Bridge, that once required draw
operations in 33 CFR 117.739(n), was
converted to a fixed bridge in October
2010. Therefore, the regulation is no
longer applicable and shall be removed
from publication. It is unnecessary to
publish an NPRM because this
regulatory action does not purport to
place any restrictions on mariners but
rather removes a restriction that has no
further use or value.
Under 5 U.S.C. 553(d)(3), the Coast
Guard finds that good cause exists for
making this rule effective in less than 30
days after publication in the Federal
Register. The bridge has been a fixed
bridge for 4 years and this rule merely
requires an administrative change to the
Federal Register, in order to omit a
regulatory requirement that is no longer
applicable or necessary.
CFR 117.739(n), pertaining to the former
drawbridge.
The purpose of this rule is to remove
paragraph 33 CFR 117.739(n), that refers
to the Route 3 Bridge at mile 11.8, from
the Code of Federal Regulations since it
governs a bridge that is no longer able
to be opened.
C. Discussion of Rule
The Coast Guard is changing the
regulation in 33 CFR 117.739 by
removing restrictions and the regulatory
burden related to the draw operations
for this bridge that is no longer a
drawbridge. The change removes
paragraph 117.739(n) of the regulation
which governs the Route 3 Bridge and
redesignates (o) through (t) as (n)
through (s). This Final Rule seeks to
update the Code of Federal Regulations
by removing language that governs the
operation of the Route 3 Bridge, which
in fact no longer is a drawbridge. This
change does not affect waterway or land
traffic. This change does not affect nor
does it alter the operating schedules in
33 CFR 117.739 that govern the
remaining active drawbridges on the
Passaic River except to redesignate these
bridges.
D. Regulatory Analyses
We developed this rule after
considering numerous statutes and
executive orders related to rulemaking.
Below we summarize our analyses
based on these statutes or executive
orders.
B. Basis and Purpose
1. Regulatory Planning and Review
This rule is not a significant
regulatory action under section 3(f) of
Executive Order 12866, Regulatory
Planning and Review, as supplemented
by Executive Order 13563, Improving
Regulation and Regulatory Review, and
does not require an assessment of
potential costs and benefits under
section 6(a)(3) of Order 12866 or under
section 1 of Executive Order 13563. The
Office of Management and Budget has
not reviewed it under those Orders.
The Coast Guard does not consider
this rule to be ‘‘significant’’ under that
Order because it is an administrative
change and does not affect the way
vessels operate on the waterway.
The Route 3 Bridge across the Passaic
River, mile 11.8, was converted to a
fixed bridge in 2010. It has come to the
attention of the Coast Guard that the
governing regulation for this drawbridge
was never removed subsequent to the
conversion to a fixed bridge. The
conversion of this drawbridge
necessitates the removal of the
drawbridge operation regulation, 33
2. Impact on Small Entities
The Regulatory Flexibility Act of 1980
(RFA), 5 U.S.C. 601–612, as amended,
requires federal agencies to consider the
potential impact of regulations on small
entities during rulemaking. The term
‘‘small entities’’ comprises small
businesses, not-for-profit organizations
that are independently owned and
operated and are not dominant in their
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[Federal Register Volume 80, Number 39 (Friday, February 27, 2015)]
[Rules and Regulations]
[Pages 10587-10590]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-04111]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9712]
RIN 1545-BL78
Alternative Simplified Credit Election
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations and removal of temporary regulations.
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SUMMARY: This document contains final regulations relating to the
election of the alternative simplified credit under section 41(c)(5) of
the Internal Revenue Code (Code). The final regulations affect certain
taxpayers claiming the credit under section 41.
DATES: Effective Date: These regulations are effective on February 27,
2015.
Applicability Date: For dates of applicability, see Sec. 1.41-
9(d).
[[Page 10588]]
FOR FURTHER INFORMATION CONTACT: David Selig (202) 317-4137 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document amends 26 CFR part 1 to provide rules relating to the
time and manner of electing the alternative simplified credit (ASC)
under section 41(c)(5) of the Internal Revenue Code (Code).
Section 41(a) provides an incremental tax credit for increasing
research activities (research credit) based on a percentage of a
taxpayer's qualified research expenses above a base amount. A taxpayer
can apply the rules and credit rate percentages under section 41(a)(1)
to calculate the credit (commonly referred to as the regular credit) or
a taxpayer can make an election to apply the ASC rules and credit rate
percentages under section 41(c)(5) to calculate the credit. Section
41(c)(5)(C) provides that an ASC election under section 41(c)(5)
applies to the taxable year for which it is made and all succeeding
taxable years unless revoked with the consent of the Secretary.
On June 10, 2011, the Treasury Department and the IRS published
final regulations (TD 9528) (2011 Final Regulations) in the Federal
Register (76 FR 33994) relating to the election and calculation of the
ASC. Section 1.41-9(b)(2) provides that a taxpayer makes an election
under section 41(c)(5) by completing the portion of Form 6765, ``Credit
for Increasing Research Activities,'' (or successor form) relating to
the ASC election, and attaching the completed form to the taxpayer's
timely filed (including extensions) original return for the taxable
year to which the election applies. Section 1.41-9(b)(2) also provides
that a taxpayer may not make an election under section 41(c)(5) on an
amended return and that an extension of time to make an election under
section 41(c)(5) will not be granted under Sec. 301.9100-3.
Following the publication of the 2011 Final Regulations, the
Treasury Department and the IRS received requests to amend the
regulations to allow taxpayers to make an ASC election on an amended
return. The requests explained that the burden of substantiating
expenditures and costs for the base period under the regular credit can
be costly, time-consuming, and difficult, and suggested that taxpayers
often need additional time to determine whether to claim the regular
credit or the ASC.
On June 3, 2014, the Treasury Department and the IRS published a
notice of proposed rulemaking by cross-reference to temporary
regulations (REG-133495-13) in the Federal Register (79 FR 31892), and
final and temporary regulations (TD 9666) (the Temporary Regulations)
in the Federal Register (79 FR 31863). The final regulations removed
the rule in Sec. 1.41-9(b)(2) that prohibited a taxpayer from making
an ASC election for a tax year on an amended return. In its place, the
Temporary Regulations provided a rule allowing a taxpayer to make an
ASC election for a tax year on an amended return if the taxpayer had
not previously claimed a section 41 credit for that tax year on an
original or amended return. In addition, the Temporary Regulations
provided that a taxpayer that is a member of a controlled group in a
tax year may not make an election under section 41(c)(5) for that tax
year on an amended return if any member of the controlled group for
that year claimed the research credit using a method other than the ASC
on an original or amended return.
Written and electronic comments responding to the proposed
regulations were received. No requests for a public hearing were made
and no public hearing was held. After consideration of all the
comments, the proposed regulations are adopted as revised by this
Treasury decision.
Summary of Comments and Explanation of Provisions
Interaction With Section 280C Elections
A commenter requested clarification regarding whether a section
280C(c)(3) election made for a taxable year on line 17 of Form 6765,
Credit For Increasing Research Activities, where no amount of regular
credit is claimed, will be viewed by the IRS as a claim of the section
41(a)(1) credit and preclude an ASC election from being made on an
amended return for that taxable year. Section 280(c)(3) allows a
taxpayer to make an annual irrevocable election to claim a reduced
research credit rather than reducing the section 174 deduction, as
required by section 280(c)(1). A section 280C(c)(3) election must be
made on an original return. If a taxpayer is undecided whether to claim
the regular credit for a taxable year but wants to preserve the
operative effect of the section 280C(c)(3) election for that taxable
year, then the taxpayer will make the section 280C(c)(3) election on
line 17 of Form 6765, but leave the remaining section of the form
blank. A section 280C(c)(3) election on line 17 of Form 6765 made in a
taxable year does not, in and of itself, constitute a credit claim
under section 41(a)(1), and accordingly does not preclude a taxpayer
from making an ASC election on an amended return for that taxable year.
Section 9100 Relief
One commenter requested that the final regulations allow an
extension of time to make an election under section 41(c)(5) under
Sec. 301.9100-3. Under Sec. 301.9100-3(c), the Commissioner will
grant a reasonable extension of time to make a regulatory election only
when the interests of the Government will not be prejudiced by the
granting of relief. Under Sec. 301.9100-3(c)(1)(ii), the interests of
the Government are ordinarily prejudiced if the taxable year in which
the regulatory election should have been made or any taxable years that
would have been affected by the election had it been timely made are
closed by the period of limitations on assessment under section 6501(a)
before the taxpayer's receipt of a ruling granting relief under this
section. Because the final regulations allow a taxpayer to amend its
return to make the ASC election in a taxable year that is not closed by
the period of limitations for assessment under section 6501(a) if no
credit under section 41(a)(1) was claimed in the prior taxable year on
an original or amended return, an extension of time under Sec.
301.9100-3 to make the ASC election is not necessary during this
period. An extension of time to make an ASC election in a taxable year
closed by the period of limitations on assessment under section 6501(a)
ordinarily prejudices the interests of the government. See section
301.9100-3(c)(1)(ii). Accordingly, the final regulations retain the
rule that an extension of time to make an election under section
41(c)(5) will not be granted under Sec. 301.9100-3.
Period for Making an ASC Election
One commenter requested that the final regulations provide that a
taxpayer may make an ASC election for an earlier, closed tax year on a
later year's return in which a research credit from that closed year is
reported on a carryforward schedule, or actually used as a credit
against tax, so long as no intervening amended return claiming a
research credit for that tax year using a different method has been
claimed. The Temporary Regulations only permitted a taxpayer to elect
the ASC on an amended return for taxable years ending before June 3,
2014, (the effective/applicability date of those regulations) if the
taxpayer makes the election before the period of limitations for
assessment of tax has expired for that year. The rule in the Temporary
Regulations provided
[[Page 10589]]
a reasonable time period for taxpayers to determine whether or not to
make an ASC election with respect to a prior, open tax year. To permit
a taxpayer to make an ASC election for a tax year in which the period
of limitations for assessment of tax has expired has the practical
effect of permitting the taxpayer to make an ASC election on a return
that cannot be amended. Therefore, these final regulations do not adopt
this suggested modification.
One commenter requested that these final regulations provide that
an ASC election can be made on an amended return for a tax year so long
as the period for making a refund claim under section 6511 has not
expired for that tax year, even in cases where the statute of
limitations on assessment under section 6501 is closed. These final
regulations retain the rule of the Temporary Regulations that a
taxpayer must make an ASC election on an amended return before the
statute of limitations on assessment under section 6501(a) is closed.
The general period under the statute of limitations on assessment under
section 6501(a), which is three years after the tax return is filed,
provides a reasonable time for taxpayers to file an ASC election on an
amended return, and a reasonable time for the IRS to examine the
amended return. This rule also preserves the integrity the of the rule
in the final regulations providing that an extension of time to make an
election under section 41(c)(5) will not be granted under Sec.
301.9100-3. Under Sec. 301.9100-3, the interests of the government are
ordinarily prejudiced if the taxable year in which a regulatory
election should have been made or any taxable years that would have
been affected by the election had it been timely made are closed by the
period of limitations on assessment under section 6501(a) before the
taxpayer's receipt of a ruling granting relief under Sec. 301.9100.
This requirement is mitigated by the fact that the period of
limitations on assessment may be extended by agreement of the IRS and
the taxpayer. For clarity, the language found in the effective date of
the Temporary Regulations referencing the period of limitations for
assessment of tax is added to the text of the final regulations under
Sec. 1.41-9(b)(2) relating to the time and manner of making the ASC
election.
Controlled Group ASC Elections
One commenter requested that the final regulations modify the rules
for controlled group ASC elections under Sec. 1.41-9(b)(4), under
which only the designated member of a controlled group may make or
revoke an ASC election. Revising those rules is beyond the scope of
these regulations. Therefore, the final regulations do not amend Sec.
1.41-9(b)(4).
Modification of the Election Rule
One commenter requested that these final regulations amend the rule
in the Temporary Regulations that allows a taxpayer to make an ASC
election for a tax year on an amended return only if the taxpayer has
not previously claimed the section 41 credit on its original return or
an amended return for that tax year to clarify that the previously
claimed section 41 credit is determined under section 41(a)(1), and not
under sections 41(a)(2) or (3). The commenter stated that the ASC is an
alternative method to the regular credit under section 41(a)(1), and
whether a taxpayer elects the ASC or claims the regular credit does not
impact the determination of the credits allowable under sections
41(a)(2) and 41(a)(3). This approach is consistent with the language of
section 41(c)(5)(A) and Sec. 1.41-9(a), which specifically reference
section 41(a)(1). Accordingly, the final regulations provide that a
taxpayer may make an ASC election for a tax year on an amended return
only if the taxpayer has not previously claimed the section 41(a)(1)
credit on its original return or an amended return for that tax year.
Effect on Other Documents
The Temporary Regulations are obsolete for taxable years beginning
on or after February 27, 2015.
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 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. It is hereby certified that the
collection of information in these regulations will not have a
significant economic impact on a substantial number of small entities.
Although a substantial number of small entities may make an ASC
election on an amended return pursuant to these regulations, the
economic impact of any collection burden on these entities relating to
this election is minimal because the regulations will result in a
benefit to taxpayers by providing additional time for taxpayer to
calculate and elect the ASC. Accordingly, a regulatory flexibility
analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is
not required. Pursuant to section 7805(f) of the Code, these
regulations have been submitted to the Chief Counsel for Advocacy of
the Small Business Administration for comment on their impact on small
business.
Drafting Information
The principal author of these regulations is David Selig, Office of
the Associate Chief Counsel (Passthroughs and Special Industries).
However, other personnel from the IRS and the Treasury Department
participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR part 1 is amended as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.41-9 also issued under 26 U.S.C. 41(c)(5)(C). * * *
0
Par. 2. Section 1.41-9 is amended by:
0
1. Revising paragraph (b)(2).
0
2. Adding a third and fourth sentence to paragraph (d).
The revision and addition read as follows:
Sec. 1.41-9 Alternative simplified credit.
* * * * *
(b) * * *
(2) Time and manner of election. A taxpayer makes an election under
section 41(c)(5) by completing the portion of Form 6765, ``Credit for
Increasing Research Activities,'' (or successor form) relating to the
election of the ASC, and attaching the completed form to the taxpayer's
timely filed (including extensions) original return for the taxable
year to which the election applies. A taxpayer may make an election
under section 41(c)(5) for a tax year on an amended return, but only if
the taxpayer has not previously claimed a section 41(a)(1) credit on
its original return or an amended return for that tax year, and only if
that tax year is not closed by the period of limitations on assessment
under section 6501(a). An extension of time to make an election under
section 41(c)(5) will not be granted under Sec. 301.9100-3 of this
chapter. A taxpayer that is a member of a controlled group in a tax
year may not make an election under section 41(c)(5) for that tax year
on an amended return
[[Page 10590]]
if any member of the controlled group for that tax year previously
claimed the research credit under section 41(a)(1) using a method other
than the ASC on an original or amended return for that tax year. See
paragraph (b)(4) of this section for additional rules concerning
controlled groups. See also Sec. 1.41-6(b)(1) requiring that all
members of the controlled group use the same method of computation.
* * * * *
(d) Effective/applicability date. * * * Paragraph (b)(2) of this
section applies to elections with respect to taxable years ending on or
after February 27, 2015. For taxable years ending before February 27,
2015, see Sec. 1.41-9T as contained in 26 CFR part 1, revised April 1,
2015.
Sec. 1.41-9T [Removed]
0
Par. 3. Section 1.41-9T is removed.
John Dalrymple,
Deputy Commissioner for Services and Enforcement.
Approved: February 3, 2015.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2015-04111 Filed 2-26-15; 8:45 am]
BILLING CODE 4830-01-P
