Internal Revenue Service December 29, 2008 – Federal Register Recent Federal Regulation Documents

In the Rules and Regulations section of this issue of the Federal Register, the IRS and Treasury Department are issuing temporary regulations relating to foreign base company sales income, in cases in which personal property sold by a controlled foreign corporation (CFC) is manufactured, produced, or constructed pursuant to a contract manufacturing arrangement or by one or more branches of the CFC. The temporary regulations modify the foreign base company sales income regulations to address current business structures and practices, particularly the growing importance of contract manufacturing and other manufacturing arrangements. The temporary regulations, in general, will affect CFCs and their United States shareholders. The text of the temporary regulations also serves as the text of the proposed regulations. This document also provides notice of a public hearing.

This document contains final regulations under section 1502 of the Internal Revenue Code (Code). The regulations provide guidance regarding the treatment of transactions involving obligations between members of a consolidated group. These final regulations will affect affiliated groups of corporations filing consolidated returns.

This document revises the notice of proposed rulemaking published in the Federal Register on January 3, 2006. In the Rules and Regulations section of this issue of the Federal Register, the IRS is issuing temporary regulations relating to the annual filing of Federal employment tax returns and requirements for employment tax deposits under sections 6011 and 6302 of the Internal Revenue Code (Code). Those temporary regulations generally allow certain employers to file a Form 944, ``Employer's ANNUAL Federal Tax Return,'' rather than Form 941, ``Employer's QUARTERLY Federal Tax Return.'' In addition to rules related to Form 944, those temporary regulations provide an additional method for employers who file Form 941 to determine whether the amount of accumulated employment taxes is considered de minimis. The temporary and proposed regulations affect taxpayers that file Form 941, ``Employer's QUARTERLY Federal Tax Return,'' Form 944, ``Employer's ANNUAL Federal Tax Return,'' and any related Spanish-language returns or returns for U.S. possessions. The text of those regulations also serves as the text of these proposed regulations.