Reporting of Original Issue Discount on Tax-Exempt Obligations; Basis and Transfer Reporting by Securities Brokers for Debt Instruments and Options, 13292-13295 [2015-05654]
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Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Proposed Rules
Current regulations
Proposed revisions to regulations
If before the expiration of the 30-month period, or 7 ⁄ years where applicable:
• (ii) the court issues a final order that the patent is invalid, unenforceable, or not infringed, approval may be made effective on:
— the date the court enters judgment;
• (iii) the court issues a final order or judgment that the patent has
been infringed, approval may be made effective on:
— the date the court determines that the patent will expire or
otherwise orders
• (iv) the court grants a preliminary injunction prohibiting the applicant from engaging in the commercial manufacture or sale of the
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effective on:
— the date the court enters a final order or judgment that the
patent is invalid, unenforceable, or not infringed.
12
[FR Doc. C1–2015–01666 Filed 3–12–15; 8:45 am]
BILLING CODE 1505–01–D
If before the expiration of the 30-month period, or 71⁄2 years where applicable:
• (ii) the district court decides that the patent is invalid, unenforceable, or not infringed (including any substantive determination
that there is no cause of action for patent infringement or invalidity), the 505(b)(2) application or ANDA may be approved on:
—(A) the date on which the court enters judgment reflecting
the decision; or
—(B) the date of a settlement order or consent decree signed
and entered by the court stating that the patent that is the
subject of the certification is invalid or not infringed.
• (iii) the district court decides that the patent has been infringed
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ANDA may be approved on:
—(A) the date on which the mandate is issued by the court of
appeals entering judgment that the patent is invalid or not
infringed; or
—(B) the date of a settlement order or consent decree signed
and entered by the court of appeals stating that the patent
is invalid or not infringed.
• (iv) the district court decides that the patent has been infringed
and the judgment is not appealed or is affirmed, the 505(b)(2)
application or ANDA may be approved no earlier than the date
specified by the district court in an order under 35 U.S.C.
271(e)(4)(A).
• (v) the district court grants a preliminary injunction prohibiting
the applicant from engaging in the commercial manufacture or
sale of the drug product until the court decides the issues of patent validity and infringement:
— if the court later decides the patent is invalid, unenforceable, or not infringed, the 505(b)(2) application or ANDA
may be approved per § 314.107(b)(3)(ii).
—if the court decides that the patent has been infringed, the
505(b)(2) application or ANDA may be approved per
§ 314.107(b)(3)(iii) or (b)(3)(iv), as applicable.
• (vi) the patent owner or the exclusive patent licensee (or their
representatives) agrees in writing that the 505(b)(2) application
or ANDA may be approved any time on or after the date of the
consent, approval may be granted on or after that date.
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period to be terminated, the 505(b)(2) application or ANDA may
be approved in accordance with the court’s order.
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or ANDA may be approved on or after the date of the order.
Notice of proposed rulemaking
by cross-reference to temporary
regulations.
ACTION:
In the Rules and Regulations
section of this issue of the Federal
Register, the IRS is issuing temporary
regulations relating to information
reporting by brokers for transactions
involving debt instruments and options,
including the reporting of original issue
discount (OID) and acquisition premium
on tax-exempt obligations, the treatment
of certain holder elections for reporting
a taxpayer’s adjusted basis in a debt
instrument, and transfer reporting for
section 1256 options and debt
instruments. The text of those
regulations also serves as the text of
these proposed regulations.
SUMMARY:
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–143040–14]
tkelley on DSK3SPTVN1PROD with PROPOSALS
RIN 1545–BM59
Reporting of Original Issue Discount
on Tax-Exempt Obligations; Basis and
Transfer Reporting by Securities
Brokers for Debt Instruments and
Options
Internal Revenue Service (IRS),
Treasury.
AGENCY:
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Written or electronic comments
must be received by June 11, 2015.
DATES:
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Send submissions to:
CC:PA:LPD:PR (REG–143040–14), Room
5203, 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–143040–
14), Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue NW.,
Washington, DC, or sent electronically
via the Federal eRulemaking Portal at
www.regulations.gov (IRS REG–143040–
14).
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
Concerning the proposed regulations,
Pamela Lew, (202) 317–7053;
concerning submissions of comments,
Regina Johnson, (202) 317–6901 (not
toll-free numbers).
SUPPLEMENTARY INFORMATION:
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tkelley on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Proposed Rules
Paperwork Reduction Act
Section 1.6049–10T, which is
published elsewhere in this issue of the
Federal Register, requires a payor to
report OID and acquisition premium on
tax-exempt obligations acquired on or
after January 1, 2017. This information
is required to enable the IRS to verify
that a taxpayer is reporting the correct
amount of tax-exempt interest each year
for alternative minimum tax and other
purposes. In addition, because this
information is used to report a
taxpayer’s adjusted basis in a debt
instrument under section 6045(g), this
information is required to enable the
IRS to verify that a taxpayer is reporting
the correct amount of gain or loss upon
the sale of a tax-exempt obligation. The
burden for the collection of information
contained in § 1.6049–10T and the
corresponding proposed regulations in
this document will be reflected in the
burden on Form 1099–OID (OMB
control number 1545–0117) when
revised to request the additional
information in the regulations.
Upon the transfer of a covered
security, section 6045A and § 1.6045A–
1 require the transferring broker to
provide to the transferee broker a
transfer statement containing certain
information relating to the security. This
transfer statement generally provides
the transferee broker the information
needed to determine a customer’s
adjusted basis and whether any gain or
loss with respect to the security is longterm, short-term, or ordinary as required
by section 6045(g). Prior to the
publication of § 1.6045A–1T in this
issue of the Federal Register, a broker
did not have to provide a transfer
statement for a section 1256 option. In
addition, a broker did not have to
provide the last date on or before the
transfer date that the broker made an
adjustment for a particular item relating
to a debt instrument. Section 1.6045A–
1T, however, now requires a broker to
transfer this information for a section
1256 option transferred on or after
January 1, 2016, and for a debt
instrument transferred on or after June
30, 2015.
The collection of information
contained in section 1.6045A–1 relating
to the furnishing of information in
connection with the transfer of
securities has been reviewed and
approved by the Office of Management
and Budget in accordance with the
Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)) under control number
1545–2186. The collection of
information in § 1.6045A–1T and the
corresponding proposed regulations in
this document is necessary to allow
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brokers that effect sales of transferred
section 1256 options and debt
instruments that are covered securities
to determine and report the adjusted
basis of these securities in compliance
with section 6045(g). This collection of
information is required to comply with
the provisions of section 403 of the
Energy Improvement and Extension Act
of 2008, Division B of Public Law 110–
343 (122 Stat. 3765, 3854 (2008)) (the
Act). The collection of information
contained in § 1.6045A–1T is an
increase in the total annual burden
under control number 1545–2186. The
likely respondents are brokers
transferring section 1256 options and
debt instruments that are covered
securities.
Estimated total annual reporting
burden is 3,333 hours.
Estimated average annual burden per
respondent is 2 hours.
Estimated average burden per
response is 4 minutes.
Estimated number of respondents is
7,500.
Estimated total frequency of responses
is 200,000.
The collection of information is
required to comply with the provisions
of section 403 of the Act.
The holder of a debt instrument is
permitted to make a number of elections
that affect how basis is computed. To
minimize the need for reconciliation
between information reported by a
broker to both a customer and the IRS
and the amounts reported on the
customer’s tax return, a broker is
required to take into account certain
specified elections in reporting
information to the customer. A
customer, therefore, must provide
certain information concerning an
election to the broker in a written
notification. A written notification
includes a writing in electronic format.
See § 1.6045–1(n)(5).
The collection of information
contained in § 1.6045–1(n)(5) relating to
the furnishing of information by a
customer to a broker in connection with
the sale or transfer of a debt instrument
that is a covered security has been
reviewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)) under control
number 1545–2186. Under § 1.6045–
1T(n)(11)(i)(A), which is published
elsewhere in this issue of the Federal
Register, unlike the rule in current
§ 1.6045–1(n)(5) adopted in 2013, a
broker must not take into account the
election under § 1.1272–3 in reporting a
customer’s adjusted basis in a debt
instrument. Therefore, a customer is no
longer required to notify the broker that
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the customer has made or revoked an
election under § 1.1272–3. This change
represents a decrease in the total annual
burden under OMB control number
1545–2186. In addition, under § 1.6045–
1T(n)(11)(i)(B), a broker must take into
account the election under section
1276(b)(2) unless the customer timely
notifies the broker that the customer has
not make the election. The temporary
regulations reverse the assumption in
current § 1.6045–1(n)(5) adopted in
2013. Because the section 1276(b)(2)
election results in a more taxpayerfavorable result than the default ratable
method for accruing market discount in
most cases, it is anticipated that more
customers will want to use this method
and these customers will no longer need
to notify their brokers that they have
made the election. As a result, this
change represents a decrease in the total
annual burden under OMB control
number 1545–2186.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a valid control
number assigned by the Office of
Management and Budget.
Books or records relating to a
collection of information must be
retained as long as their contents may
become material in the administration
of any internal revenue law. Generally,
tax returns and tax return information
are confidential, as required by section
6103.
Background and Explanation of
Provisions
Section 6045 generally requires a
broker to report gross proceeds upon the
sale of a security. Section 6045 was
amended by section 403 of the Act to
require the reporting of adjusted basis
for a covered security and whether any
gain or loss upon the sale of the security
is long-term or short-term. In addition,
the Act added section 6045A, which
requires certain information to be
reported in connection with a transfer of
a covered security to another broker.
Section 6049 requires the reporting of
interest payments (including accruals of
OID treated as payments).
On April 18, 2013, the Treasury
Department and the IRS published in
the Federal Register (TD 9616 at 78 FR
23116) final regulations under sections
6045 and 6045A (the 2013 final basis
reporting regulations). After the
publication of the 2013 final basis
reporting regulations in the Federal
Register, the Treasury Department and
the IRS received written comments on
certain provisions of the 2013 final basis
reporting regulations. In response to
these written comments, temporary
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Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Proposed Rules
regulations in the Rules and Regulations
section of this issue of the Federal
Register amend the Income Tax
Regulations (26 CFR part 1) relating to
sections 6045, 6045A, and 6049. The
temporary regulations (1) amend
§ 1.6045–1(n) of the 2013 final basis
reporting regulations to change a
broker’s treatment of the election to treat
all interest as OID under § 1.1272–3 and
the election to accrue market discount
based on a constant yield under section
1276(b)(2), (2) amend § 1.6045A–1 of the
2013 final basis reporting regulations to
require transfer statement reporting
under section 6045A for section 1256
options, (3) amend § 1.6045A–1 of the
2013 final basis reporting regulations to
require an additional item of
information to be provided on transfer
statements for debt instruments, and (4)
require information reporting under
section 6049 for OID and acquisition
premium on tax-exempt obligations.
The text of the temporary regulations
also serves as the text of these proposed
regulations.
tkelley on DSK3SPTVN1PROD with PROPOSALS
Consideration of Administrative
Burdens Related to Basis Reporting
A number of commenters have
indicated that compliance with basis
reporting requirements and the use of
basis and other information reported by
brokers will require considerable
resources and effort on the part of return
preparers and information recipients.
The Treasury Department and the IRS
are continuing to review all aspects of
the information reporting process and
are exploring ways to reduce the
compliance burden for both brokers and
for information recipients.
Special Analyses
It has been determined that this notice
of proposed rulemaking 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. Therefore, a
Regulatory Flexibility Analysis under
the Regulatory Flexibility Act (5 U.S.C.
chapter 6) is not required. Any effect on
small entities by the rules in the
regulations generally flows directly from
section 403 of the Act. In addition, it is
anticipated that the requirements in the
regulations in this document will fall
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only on financial services firms with
annual receipts greater than the $38.5
million threshold and, therefore, on no
small entities.
Section 403(a) of the Act requires a
broker to report the adjusted basis of a
debt instrument that is a covered
security. Although a holder of a debt
instrument (customer) is permitted to
make a number of elections that affect
how basis is computed, a broker only is
required to take into account specified
elections in reporting a debt
instrument’s adjusted basis, including
the election under section 1276(b)(2) to
determine accruals of market discount
on a constant yield method. Under the
2013 final basis reporting regulations, a
customer had to notify the broker that
the customer had made the section
1276(b)(2) election. However, § 1.6045–
1T(n)(11)(i)(B) requires a broker to take
into account the election under section
1276(b)(2) in reporting a debt
instrument’s adjusted basis unless the
customer timely notifies the broker that
the customer has not made the election.
The notification must be in writing,
which includes a writing in electronic
format. In most cases, this election
results in a more taxpayer-favorable
result than the default ratable method.
It is anticipated that this collection of
information in the regulations will not
fall on a substantial number of small
entities, especially because fewer
customers will need to notify brokers
about the election. Further, the
regulations generally implement the
statutory requirements for reporting
adjusted basis under section 403 of the
Act. Moreover, any economic impact is
expected to be minimal because it
should take a customer no more than
seven minutes to satisfy the
information-sharing requirement in
these regulations.
Section 403(c) of the Act added
section 6045A, which requires
applicable persons to provide a transfer
statement in connection with the
transfer of custody of a covered security.
Section 1.6045A–1T and the
corresponding proposed regulations in
this document effectuate the Act by
giving the broker who receives the
transfer statement the information
necessary to determine and report
adjusted basis and whether any gain or
loss with respect to a debt instrument or
section 1256 option is long-term or
short-term as required by section 6045
when the security is subsequently sold.
Consequently, § 1.6045A–1T and the
corresponding proposed regulations in
this document do not add to the impact
on small entities imposed by the
statutory provisions. Instead, the
regulations limit the information to be
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reported to only those items necessary
to effectuate the statutory scheme.
The information required under
§ 1.6049–10T and the corresponding
proposed regulations in this document
will enable the IRS to verify that a
taxpayer is reporting the correct amount
of tax-exempt interest each year for
alternative minimum tax and other
purposes. In addition, because this
information is used to report a
taxpayer’s adjusted basis in a debt
instrument under section 6045(g), this
information is required to enable the
IRS to verify that a taxpayer is reporting
the correct amount of gain or loss upon
the sale of a tax-exempt obligation. Any
economic impact on small entities is
expected to be minimal because a broker
already is required to determine the
accruals of OID and acquisition
premium for purposes of determining
and reporting a customer’s adjusted
basis on Form 1099–B under section
6045. Moreover, any effect on small
entities by the rules in the final
regulations flows from section 6049 and
section 403 of the Act.
Pursuant to section 7805(f) of the
Internal Revenue Code, this notice of
proposed rulemaking has been
submitted to the Chief Counsel for
Advocacy of the Small Business
Administration for comment on its
impact on small businesses.
Comments and Request 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
submitted timely to the IRS as
prescribed in the preamble under the
ADDRESSES heading. The Treasury
Department and the IRS welcome
comments on the clarity of the proposed
rules and how they can be made easier
to understand. All comments will be
available at www.regulations.gov for
public inspection and copying. A public
hearing may be scheduled if requested
in writing by any person that timely
submits written comments. If a public
hearing is scheduled, notice of the date,
time, and place for a public hearing will
be published in the Federal Register.
Drafting Information
The principal author of these
regulations is Pamela Lew, Office of
Associate Chief Counsel (Financial
Institutions and Products). However,
other personnel from the IRS and the
Treasury Department participated in
their development.
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Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Proposed Rules
List of Subjects in 26 CFR Part 1
DEPARTMENT OF LABOR
Income Taxes, Reporting and
recordkeeping requirements.
Occupational Safety and Health
Administration
Proposed Amendments to the
Regulations
29 CFR Parts 1910, 1915, 1917, 1918,
and 1926
Accordingly, 26 CFR part 1 is
proposed to be amended as follows:
[Docket No. OSHA–2014–0024]
RIN 1218–AC87
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by adding entries
in numerical order to read in part as
follows:
■
Authority: 26 U.S.C. 7805 * * *
Section 1.6045–1(n)(11) also issued under
26 U.S.C. 6045(g). * * *
Section 1.6045A–1(e) and (f) also issued
under 26 U.S.C. 6045A(a). * * *
Section 1.6049–10 also issued under 26
U.S.C. 6049(a). * * *
Par. 2. Section 1.6045–1(n)(11) is
added to read as follows:
■
§ 1.6045–1 Returns of information of
brokers and barter exchanges.
[The text of proposed § 1.6045–
1(n)(11) is the same as the text of
§ 1.6045–1T(n)(11) published elsewhere
in this issue of the Federal Register].
■ Par. 3. Sections 1.6045A–1(e) and (f)
are added to read as follows:
§ 1.6045A–1 Statements of information
required in connection with transfers of
securities.
[The text of proposed § 1.6045A–1(e)
and (f) is the same as the text of
§ 1.6045A–1T(e) and (f) published
elsewhere in this issue of the Federal
Register].
■ Par. 4. Section 1.6049–10 is added to
read as follows:
§ 1.6049–10 Reporting of original issue
discount on a tax-exempt obligation.
[The text of proposed § 1.6049–10 is the same
as the text of § 1.6049–10T published
elsewhere in this issue of the Federal
Register].
John Dalrymple,
Deputy Commissioner for Services and
Enforcement.
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[FR Doc. 2015–05654 Filed 3–12–15; 8:45 am]
BILLING CODE P
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Updating OSHA Standards Based on
National Consensus Standards; Eye
and Face Protection
Occupational Safety and Health
Administration (OSHA), Department of
Labor.
ACTION: Notice of proposed rulemaking.
AGENCY:
The Occupational Safety and
Health Administration (‘‘OSHA’’ or
‘‘Agency’’) is issuing this notice of
proposed rulemaking to update its
general industry, shipyard employment,
marine terminals, longshoring, and
construction eye and face protection
standards by incorporating by reference
the three most recent versions of the
American National Standards Institute
(‘‘ANSI’’ or ‘‘national consensus
standard’’) Occupational and
Educational Eye and Face Protection
standard. In addition, OSHA proposes
to change language in the construction
eye and face protection standard to
make it consistent with both the general
industry and maritime standards.
DATES: Submit comments on this notice
of proposed rule (including comments
on the information-collection
(paperwork) determination described
under the section titled Procedural
Determinations, hearing requests, and
other information) by April 13, 2015.
All submissions must bear a postmark
or provide other evidence of the
submission date (the following section
titled ADDRESSES describes the available
methods of making submissions).
ADDRESSES: Submit comments, hearing
requests, and other information as
follows:
• Electronic. Submit comments
electronically to https://
www.regulations.gov, which is the
Federal eRulemaking Portal. Follow the
instructions online for submitting
comments.
• Facsimile. OSHA allows facsimile
transmission of comments and hearing
requests that are 10 pages or fewer in
length (including attachments). Send
these documents to the OSHA Docket
Office at (202) 693–1648; OSHA does
not require hard copies of these
documents. Instead of transmitting
facsimile copies of attachments that
supplement these documents (e.g.,
SUMMARY:
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13295
studies, journal articles), commenters
must submit these attachments to the
OSHA Docket Office, Technical Data
Center (TDC), Room N–2625, OSHA,
U.S. Department of Labor, 200
Constitution Ave. NW., Washington, DC
20210. These attachments must clearly
identify the sender’s name, date,
subject, and docket number (i.e.,
OSHA–2014–0024 so that the Agency
can attach them to the appropriate
document.
• Regular mail, express delivery,
hand delivery, and messenger (courier)
service. Submit comments and any
additional material (e.g., studies, journal
articles) to the OSHA Docket Office,
Docket No. OSHA–2013–0024 or RIN
1218–AC8708 Technical Data Center,
Room N–2625, OSHA, U.S. Department
of Labor, 200 Constitution Ave. NW.,
Washington, DC 20210; telephone: (202)
693–2350. (OSHA’s TTY number is
(877) 889–5627)). Note that security
procedures may result in significant
delays in receiving comments and other
written materials by regular mail.
Contact the OSHA Docket Office for
information about security procedures
for delivery of materials by express
delivery, hand delivery, and messenger
service. The hours of operation for the
OSHA Docket Office are 8:15 a.m. to
4:45 p.m., e.t.
• Instructions. All submissions must
include the Agency name and the OSHA
docket number (i.e., OSHA Docket No.
OSHA–2014–0024). OSHA will place
comments and other material, including
any personal information, in the public
docket without revision, and these
materials will be available online at:
https://www.regulations.gov. Therefore,
the Agency cautions commenters about
submitting statements they do not want
made public, or submitting comments
that contain personal information
(either about themselves or others), such
as social security numbers, birth dates,
and medical data.
OSHA invites comments on all issues
related to this notice of proposed
rulemaking. The Agency also welcomes
comments on its findings that this
notice of proposed rulemaking will have
no impact on the regulated community.
• Docket. To read or download
comments or other material in the
docket, go to https://
www.regulations.gov. The electronic
docket for this notice of proposed rule
established at https://
www.regulations.gov contains most of
the documents in the docket. Some
information (e.g., copyrighted material),
however, cannot be read or downloaded
through this Web site. All submissions,
including copyrighted material, are
accessible at the OSHA Docket Office.
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]]>Agencies
[Federal Register Volume 80, Number 49 (Friday, March 13, 2015)]
[Proposed Rules]
[Pages 13292-13295]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-05654]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-143040-14]
RIN 1545-BM59
Reporting of Original Issue Discount on Tax-Exempt Obligations;
Basis and Transfer Reporting by Securities Brokers for Debt Instruments
and Options
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking by cross-reference to temporary
regulations.
-----------------------------------------------------------------------
SUMMARY: In the Rules and Regulations section of this issue of the
Federal Register, the IRS is issuing temporary regulations relating to
information reporting by brokers for transactions involving debt
instruments and options, including the reporting of original issue
discount (OID) and acquisition premium on tax-exempt obligations, the
treatment of certain holder elections for reporting a taxpayer's
adjusted basis in a debt instrument, and transfer reporting for section
1256 options and debt instruments. The text of those regulations also
serves as the text of these proposed regulations.
DATES: Written or electronic comments must be received by June 11,
2015.
ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-143040-14), Room
5203, 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-
143040-14), Courier's Desk, Internal Revenue Service, 1111 Constitution
Avenue NW., Washington, DC, or sent electronically via the Federal
eRulemaking Portal at www.regulations.gov (IRS REG-143040-14).
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
Pamela Lew, (202) 317-7053; concerning submissions of comments, Regina
Johnson, (202) 317-6901 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
[[Page 13293]]
Paperwork Reduction Act
Section 1.6049-10T, which is published elsewhere in this issue of
the Federal Register, requires a payor to report OID and acquisition
premium on tax-exempt obligations acquired on or after January 1, 2017.
This information is required to enable the IRS to verify that a
taxpayer is reporting the correct amount of tax-exempt interest each
year for alternative minimum tax and other purposes. In addition,
because this information is used to report a taxpayer's adjusted basis
in a debt instrument under section 6045(g), this information is
required to enable the IRS to verify that a taxpayer is reporting the
correct amount of gain or loss upon the sale of a tax-exempt
obligation. The burden for the collection of information contained in
Sec. 1.6049-10T and the corresponding proposed regulations in this
document will be reflected in the burden on Form 1099-OID (OMB control
number 1545-0117) when revised to request the additional information in
the regulations.
Upon the transfer of a covered security, section 6045A and Sec.
1.6045A-1 require the transferring broker to provide to the transferee
broker a transfer statement containing certain information relating to
the security. This transfer statement generally provides the transferee
broker the information needed to determine a customer's adjusted basis
and whether any gain or loss with respect to the security is long-term,
short-term, or ordinary as required by section 6045(g). Prior to the
publication of Sec. 1.6045A-1T in this issue of the Federal Register,
a broker did not have to provide a transfer statement for a section
1256 option. In addition, a broker did not have to provide the last
date on or before the transfer date that the broker made an adjustment
for a particular item relating to a debt instrument. Section 1.6045A-
1T, however, now requires a broker to transfer this information for a
section 1256 option transferred on or after January 1, 2016, and for a
debt instrument transferred on or after June 30, 2015.
The collection of information contained in section 1.6045A-1
relating to the furnishing of information in connection with the
transfer of securities has been reviewed and approved by the Office of
Management and Budget in accordance with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)) under control number 1545-2186. The collection
of information in Sec. 1.6045A-1T and the corresponding proposed
regulations in this document is necessary to allow brokers that effect
sales of transferred section 1256 options and debt instruments that are
covered securities to determine and report the adjusted basis of these
securities in compliance with section 6045(g). This collection of
information is required to comply with the provisions of section 403 of
the Energy Improvement and Extension Act of 2008, Division B of Public
Law 110-343 (122 Stat. 3765, 3854 (2008)) (the Act). The collection of
information contained in Sec. 1.6045A-1T is an increase in the total
annual burden under control number 1545-2186. The likely respondents
are brokers transferring section 1256 options and debt instruments that
are covered securities.
Estimated total annual reporting burden is 3,333 hours.
Estimated average annual burden per respondent is 2 hours.
Estimated average burden per response is 4 minutes.
Estimated number of respondents is 7,500.
Estimated total frequency of responses is 200,000.
The collection of information is required to comply with the
provisions of section 403 of the Act.
The holder of a debt instrument is permitted to make a number of
elections that affect how basis is computed. To minimize the need for
reconciliation between information reported by a broker to both a
customer and the IRS and the amounts reported on the customer's tax
return, a broker is required to take into account certain specified
elections in reporting information to the customer. A customer,
therefore, must provide certain information concerning an election to
the broker in a written notification. A written notification includes a
writing in electronic format. See Sec. 1.6045-1(n)(5).
The collection of information contained in Sec. 1.6045-1(n)(5)
relating to the furnishing of information by a customer to a broker in
connection with the sale or transfer of a debt instrument that is a
covered security has been reviewed and approved by the Office of
Management and Budget in accordance with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)) under control number 1545-2186. Under Sec.
1.6045-1T(n)(11)(i)(A), which is published elsewhere in this issue of
the Federal Register, unlike the rule in current Sec. 1.6045-1(n)(5)
adopted in 2013, a broker must not take into account the election under
Sec. 1.1272-3 in reporting a customer's adjusted basis in a debt
instrument. Therefore, a customer is no longer required to notify the
broker that the customer has made or revoked an election under Sec.
1.1272-3. This change represents a decrease in the total annual burden
under OMB control number 1545-2186. In addition, under Sec. 1.6045-
1T(n)(11)(i)(B), a broker must take into account the election under
section 1276(b)(2) unless the customer timely notifies the broker that
the customer has not make the election. The temporary regulations
reverse the assumption in current Sec. 1.6045-1(n)(5) adopted in 2013.
Because the section 1276(b)(2) election results in a more taxpayer-
favorable result than the default ratable method for accruing market
discount in most cases, it is anticipated that more customers will want
to use this method and these customers will no longer need to notify
their brokers that they have made the election. As a result, this
change represents a decrease in the total annual burden under OMB
control number 1545-2186.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a valid
control number assigned by the Office of Management and Budget.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by section 6103.
Background and Explanation of Provisions
Section 6045 generally requires a broker to report gross proceeds
upon the sale of a security. Section 6045 was amended by section 403 of
the Act to require the reporting of adjusted basis for a covered
security and whether any gain or loss upon the sale of the security is
long-term or short-term. In addition, the Act added section 6045A,
which requires certain information to be reported in connection with a
transfer of a covered security to another broker. Section 6049 requires
the reporting of interest payments (including accruals of OID treated
as payments).
On April 18, 2013, the Treasury Department and the IRS published in
the Federal Register (TD 9616 at 78 FR 23116) final regulations under
sections 6045 and 6045A (the 2013 final basis reporting regulations).
After the publication of the 2013 final basis reporting regulations in
the Federal Register, the Treasury Department and the IRS received
written comments on certain provisions of the 2013 final basis
reporting regulations. In response to these written comments, temporary
[[Page 13294]]
regulations in the Rules and Regulations section of this issue of the
Federal Register amend the Income Tax Regulations (26 CFR part 1)
relating to sections 6045, 6045A, and 6049. The temporary regulations
(1) amend Sec. 1.6045-1(n) of the 2013 final basis reporting
regulations to change a broker's treatment of the election to treat all
interest as OID under Sec. 1.1272-3 and the election to accrue market
discount based on a constant yield under section 1276(b)(2), (2) amend
Sec. 1.6045A-1 of the 2013 final basis reporting regulations to
require transfer statement reporting under section 6045A for section
1256 options, (3) amend Sec. 1.6045A-1 of the 2013 final basis
reporting regulations to require an additional item of information to
be provided on transfer statements for debt instruments, and (4)
require information reporting under section 6049 for OID and
acquisition premium on tax-exempt obligations. The text of the
temporary regulations also serves as the text of these proposed
regulations.
Consideration of Administrative Burdens Related to Basis Reporting
A number of commenters have indicated that compliance with basis
reporting requirements and the use of basis and other information
reported by brokers will require considerable resources and effort on
the part of return preparers and information recipients. The Treasury
Department and the IRS are continuing to review all aspects of the
information reporting process and are exploring ways to reduce the
compliance burden for both brokers and for information recipients.
Special Analyses
It has been determined that this notice of proposed rulemaking 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. Therefore, a Regulatory
Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C.
chapter 6) is not required. Any effect on small entities by the rules
in the regulations generally flows directly from section 403 of the
Act. In addition, it is anticipated that the requirements in the
regulations in this document will fall only on financial services firms
with annual receipts greater than the $38.5 million threshold and,
therefore, on no small entities.
Section 403(a) of the Act requires a broker to report the adjusted
basis of a debt instrument that is a covered security. Although a
holder of a debt instrument (customer) is permitted to make a number of
elections that affect how basis is computed, a broker only is required
to take into account specified elections in reporting a debt
instrument's adjusted basis, including the election under section
1276(b)(2) to determine accruals of market discount on a constant yield
method. Under the 2013 final basis reporting regulations, a customer
had to notify the broker that the customer had made the section
1276(b)(2) election. However, Sec. 1.6045-1T(n)(11)(i)(B) requires a
broker to take into account the election under section 1276(b)(2) in
reporting a debt instrument's adjusted basis unless the customer timely
notifies the broker that the customer has not made the election. The
notification must be in writing, which includes a writing in electronic
format. In most cases, this election results in a more taxpayer-
favorable result than the default ratable method. It is anticipated
that this collection of information in the regulations will not fall on
a substantial number of small entities, especially because fewer
customers will need to notify brokers about the election. Further, the
regulations generally implement the statutory requirements for
reporting adjusted basis under section 403 of the Act. Moreover, any
economic impact is expected to be minimal because it should take a
customer no more than seven minutes to satisfy the information-sharing
requirement in these regulations.
Section 403(c) of the Act added section 6045A, which requires
applicable persons to provide a transfer statement in connection with
the transfer of custody of a covered security. Section 1.6045A-1T and
the corresponding proposed regulations in this document effectuate the
Act by giving the broker who receives the transfer statement the
information necessary to determine and report adjusted basis and
whether any gain or loss with respect to a debt instrument or section
1256 option is long-term or short-term as required by section 6045 when
the security is subsequently sold. Consequently, Sec. 1.6045A-1T and
the corresponding proposed regulations in this document do not add to
the impact on small entities imposed by the statutory provisions.
Instead, the regulations limit the information to be reported to only
those items necessary to effectuate the statutory scheme.
The information required under Sec. 1.6049-10T and the
corresponding proposed regulations in this document will enable the IRS
to verify that a taxpayer is reporting the correct amount of tax-exempt
interest each year for alternative minimum tax and other purposes. In
addition, because this information is used to report a taxpayer's
adjusted basis in a debt instrument under section 6045(g), this
information is required to enable the IRS to verify that a taxpayer is
reporting the correct amount of gain or loss upon the sale of a tax-
exempt obligation. Any economic impact on small entities is expected to
be minimal because a broker already is required to determine the
accruals of OID and acquisition premium for purposes of determining and
reporting a customer's adjusted basis on Form 1099-B under section
6045. Moreover, any effect on small entities by the rules in the final
regulations flows from section 6049 and section 403 of the Act.
Pursuant to section 7805(f) of the Internal Revenue Code, this
notice of proposed rulemaking has been submitted to the Chief Counsel
for Advocacy of the Small Business Administration for comment on its
impact on small businesses.
Comments and Request 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 submitted timely to the IRS
as prescribed in the preamble under the Addresses heading. The Treasury
Department and the IRS welcome comments on the clarity of the proposed
rules and how they can be made easier to understand. All comments will
be available at www.regulations.gov for public inspection and copying.
A public hearing may be scheduled if requested in writing by any person
that timely submits written comments. If a public hearing is scheduled,
notice of the date, time, and place for a public hearing will be
published in the Federal Register.
Drafting Information
The principal author of these regulations is Pamela Lew, Office of
Associate Chief Counsel (Financial Institutions and Products). However,
other personnel from the IRS and the Treasury Department participated
in their development.
[[Page 13295]]
List of Subjects in 26 CFR Part 1
Income Taxes, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 is amended by adding
entries in numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.6045-1(n)(11) also issued under 26 U.S.C. 6045(g). * *
*
Section 1.6045A-1(e) and (f) also issued under 26 U.S.C.
6045A(a). * * *
Section 1.6049-10 also issued under 26 U.S.C. 6049(a). * * *
0
Par. 2. Section 1.6045-1(n)(11) is added to read as follows:
Sec. 1.6045-1 Returns of information of brokers and barter exchanges.
[The text of proposed Sec. 1.6045-1(n)(11) is the same as the text
of Sec. 1.6045-1T(n)(11) published elsewhere in this issue of the
Federal Register].
0
Par. 3. Sections 1.6045A-1(e) and (f) are added to read as follows:
Sec. 1.6045A-1 Statements of information required in connection with
transfers of securities.
[The text of proposed Sec. 1.6045A-1(e) and (f) is the same as the
text of Sec. 1.6045A-1T(e) and (f) published elsewhere in this issue
of the Federal Register].
0
Par. 4. Section 1.6049-10 is added to read as follows:
Sec. 1.6049-10 Reporting of original issue discount on a tax-exempt
obligation.
[The text of proposed Sec. 1.6049-10 is the same as the text of
Sec. 1.6049-10T published elsewhere in this issue of the Federal
Register].
John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2015-05654 Filed 3-12-15; 8:45 am]
BILLING CODE P
