Recapture of Excess Employment Tax Credits Under the Families First Act and the CARES Act, 45551-45553 [2020-16300]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 85, Number 146 (Wednesday, July 29, 2020)]
[Proposed Rules]
[Pages 45551-45553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16300]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 31

[REG-111879-20]
RIN 1545-BP88


Recapture of Excess Employment Tax Credits Under the Families 
First Act and the CARES Act

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of Proposed Rulemaking by cross-reference to temporary 
regulations.

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations pursuant to 
the regulatory authority granted under the Families First Coronavirus 
Response Act and the Coronavirus Aid, Relief, and Economic Security Act 
to prescribe such regulations as may be necessary for

[[Page 45552]]

reconciling advance payments of refundable employment tax credits 
provided under these acts and recapturing the benefit of the credits 
when necessary. These proposed regulations affect businesses and tax-
exempt organizations that claim certain credits under the Families 
First Coronavirus Response Act for qualifying sick and family leave 
wages and that claim certain employee retention credits under the 
Coronavirus Aid, Relief, and Economic Security Act. The text of those 
temporary regulations serves as the text of these proposed regulations.

DATES: Written or electronic comments and requests for a public hearing 
must be received by September 28, 2020. Requests for a public hearing 
must be submitted as prescribed in the ``Comments and Requests for a 
Public Hearing'' section.

ADDRESSES: Commenters are strongly encouraged to submit public comments 
electronically. Submit electronic submissions via the Federal 
eRulemaking Portal at www.regulations.gov (indicate IRS and REG-111879-
20) by following the online instructions for submitting comments. Once 
submitted to the Federal eRulemaking Portal, comments cannot be edited 
or withdrawn. The IRS expects to have limited personnel available to 
process public comments that are submitted on paper through the mail. 
Until further notice, any comments submitted on paper will be 
considered to the extent practicable. The Department of the Treasury 
(Treasury Department) and the IRS will publish for public availability 
any comment submitted electronically, and to the extent practicable on 
paper, to its public docket. Send paper submissions to: CC:PA:LPD:PR 
(REG-111879-20), room 5203, Internal Revenue Service, P.O. Box 7604, 
Ben Franklin Station, Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
NaLee Park at (202) 317-6879; concerning submissions of comments and/or 
requests for a public hearing, Regina Johnson, (202) 317-5177 (not 
toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend the Employment Taxes and Collection 
of Income at the Source Regulations (26 CFR part 31) relating to 
sections 3111 and 3221 of the Internal Revenue Code (Code) pursuant to 
the regulatory authority granted under the Families First Coronavirus 
Response Act (Families First Act) and the Coronavirus Aid, Relief, and 
Economic Security Act (CARES Act) to prescribe such regulations as may 
be necessary for reconciling advance payments of refundable employment 
tax credits provided under these acts and recapturing the benefit of 
the credits when necessary. Consistent with this authority, these 
proposed regulations authorize the assessment of erroneous refunds of 
the credits paid under sections 7001 and 7003 of the Families First Act 
and section 2301 of the CARES Act. The text of those temporary 
regulations also serves as the text of these proposed regulations. The 
preamble to the temporary regulations explains the amendments.

Special Analyses

    The Office of Management and Budget's Office of Information and 
Regulatory Analysis has determined that these regulations are not 
significant and not subject to review under section 6(b) of Executive 
Order 12866.
    Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), 
the Secretary certifies that these proposed regulations will not have a 
significant economic impact on a substantial number of small entities 
because these proposed regulations impose no compliance burden on any 
business entities, including small entities. Although these proposed 
regulations will apply to all employers eligible for the credits under 
the Families First Act and the CARES Act, including small businesses 
and tax-exempt organizations with fewer than 500 employees, and will 
therefore be likely to affect a substantial number of small entities, 
the economic impact will not be significant. These proposed regulations 
do not affect the employer's employment tax reporting or the necessary 
information to substantiate entitlement to the credits. Rather, these 
proposed regulations merely implement the statutory authority granted 
under sections 7001(f) and 7003(f) of the Families First Act and 
section 2301(l) of the CARES Act that authorize the Service to assess, 
reconcile, and recapture any portion of the credits erroneously paid or 
refunded in excess of the actual amount allowed as if such amounts were 
tax liabilities under sections 3111(a) and 3221(a) subject to 
assessment and administrative collection procedures. Notwithstanding 
this certification, the Treasury Department and the IRS invite comments 
on any impact these regulations would have on small entities.
    Pursuant to section 7805(f), this notice of proposed rulemaking has 
been submitted to the Chief Counsel of the Office of Advocacy of the 
Small Business Administration for comment on its impact on small 
business.

Comments and Requests for Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any comments that are timely submitted 
to the IRS as prescribed in the preamble under the ADDRESSES section. 
The Treasury Department and the IRS request comments on all aspects of 
these proposed regulations. Any electronic comments submitted, and to 
the extent practicable any paper comments submitted, will be made 
available at www.regulations.gov or upon request.
    A public hearing will be scheduled if requested in writing by any 
person who timely submits electronic or written comments. Requests for 
a hearing are strongly encouraged to be submitted electronically. If a 
public hearing is scheduled, notice of the date and time for the public 
hearing will be published in the Federal Register. Announcement 2020-4, 
2020-17 IRB 1, provides that until further notice, public hearings 
conducted by the IRS will be held telephonically. Any telephonic 
hearing will be made accessible to people with disabilities.

Statement of Availability of IRS Documents

    IRS notices and other guidance cited in this preamble are published 
in the Internal Revenue Bulletin (or Cumulative Bulletin) and are 
available from the Superintendent of Documents, U.S. Government 
Publishing Office, Washington, DC 20402, or by visiting the IRS website 
at https://www.irs.gov.

Drafting Information

    The principal author of these regulations is NaLee Park, Office of 
the Associate Chief Counsel (Employee Benefits, Exempt Organizations, 
and Employment Taxes). However, other personnel from the Treasury 
Department and the IRS participated in the development of these 
regulations.

List of Subjects in 26 CFR 31

    Employment taxes, Income taxes, Penalties, Pensions, Railroad 
retirement, Reporting and recordkeeping requirements, Social security, 
Unemployment compensation.

[[Page 45553]]

Proposed Amendments to the Regulations

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

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

0
Paragraph 1. The authority citation for part 31 is amended by adding 
entries for Sec. Sec.  31.3111-6T and 31.3221-5T in numerical order to 
read in part as follows:

    Authority:  26 U.S.C. 7805.
* * * * *
    Section 31.3111-6T also issued under sec. 7001 and sec. 7003 of 
the Families First Coronavirus Response Act of 2020 and sec. 2301 of 
the Coronavirus Aid, Relief, and Economic Security Act of 2020
* * * * *
    Section 31.3221-5T also issued under sec. 7001 and sec. 7003 of 
the Families First Coronavirus Response Act of 2020 and sec. 2301 of 
the Coronavirus Aid, Relief, and Economic Security Act of 2020
* * * * *

0
Par. 2. Section 31.3111-6 is added to read as follows:


Sec.  31.3111-6  Recapture of credits under the Families First 
Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic 
Security Act

    [The text of proposed Sec.  31.3111-6 is the same as the text of 
Sec.  31.3111-6T published elsewhere in this issue of the Federal 
Register].

0
Par. 3. Section 31.3221-5 is added to read as follows:


Sec.  31.3221-5  Recapture of credits under the Families First 
Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic 
Security Act

    [The text of proposed Sec.  31.3221-5 is the same as the text of 
Sec.  31.3221-5T published elsewhere in this issue of the Federal 
Register].

Sunita Lough,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2020-16300 Filed 7-24-20; 4:15 pm]
BILLING CODE 4830-01-P