81 FR 24482 - Determination of Adjusted Applicable Federal Rates Under Section 1288 and the Adjusted Federal Long-Term Rate Under Section 382
DEPARTMENT OF THE TREASURY
Internal Revenue Service Federal Register Volume 81, Issue 80 (April 26, 2016)
Internal Revenue Service
Federal Register Volume 81, Issue 80 (April 26, 2016)
| Page Range | 24482-24484 | |
| FR Document | 2016-09614 |
[Federal Register Volume 81, Number 80 (Tuesday, April 26, 2016)] [Rules and Regulations] [Pages 24482-24484] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-09614] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9763] RIN 1545-BM20 Determination of Adjusted Applicable Federal Rates Under Section 1288 and the Adjusted Federal Long-Term Rate Under Section 382 AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final regulations. ----------------------------------------------------------------------- SUMMARY: This document contains final regulations that provide the method to be used to adjust the applicable Federal rates (AFRs) to determine the corresponding rates under section 1288 of the Internal Revenue Code (Code) for tax-exempt obligations (adjusted AFRs) and the method to be used to determine the long-term tax-exempt rate and the adjusted Federal long-term rate under section 382. For tax-exempt obligations, the regulations affect the determination of original issue discount under section 1273 and of total unstated interest under section 483. In addition, the regulations affect the determination of the limitations under sections 382 and 383 on the use of certain operating loss carryforwards, tax credits, and other attributes of corporations following ownership changes. DATES: Effective Date: These regulations are effective on April 26, 2016. Applicability Dates: For the dates of applicability, see Sec. Sec. 1.382-12(d) and 1.1288-1(c). FOR FURTHER INFORMATION CONTACT: Concerning the regulations under section 1288, Jason G. Kurth at (202) 317-6842; concerning the regulations under section 382, William W. Burhop at (202) 317-6847. SUPPLEMENTARY INFORMATION: Background On March 2, 2015, the IRS and the Treasury Department published a notice of proposed rulemaking (REG-136018-13) in the Federal Register (80 FR 11141) proposing the method to be used to determine the adjusted AFRs for tax-exempt obligations under section 1288 and the method to be used to determine the long-term tax-exempt rate and the adjusted Federal long-term rate under section 382. No comments were received on the notice of proposed rulemaking. No public hearing was requested or held. Accordingly, this Treasury decision adopts the proposed regulations without substantive change. Explanation of Provisions The regulations in this Treasury decision provide the new method by which the Treasury Department and the IRS will determine the adjusted AFRs under section 1288 to take into account the tax exemption for interest on tax-exempt obligations (as defined in section 1275(a)(3) and Sec. 1.1275-1(e)). The regulations also provide that the Treasury Department and the IRS will use the new method to determine the long- term tax-exempt rate and the adjusted Federal long-term rate under section 382(f) to take into account differences between rates on long- term taxable and tax-exempt obligations. Since November 1986, the adjusted Federal long-term rate published under section 382(f)(2) has been equal to the long-term adjusted AFR with annual compounding published under section 1288(b) in the same month. See Rev. Rul. 86-133 (1986-2 CB 59). For calendar months from November 1986 to February 2013, the Treasury Department determined the adjusted Federal long-term rate and each adjusted AFR described in section 1288(b)(1) by multiplying the corresponding AFR by a fraction (the adjustment factor). The numerator of the adjustment factor was a composite yield of the highest-grade tax-exempt obligations available, which are prime, general obligation tax-exempt obligations. The denominator was a composite yield of U.S. Treasury obligations with maturities similar to those of the tax-exempt obligations. Each of the composite yields was measured over a one-month period. The IRS published Notice 2013-4 (2013-9 IRB 527) on February 25, 2013, requesting comments on possible modifications to the method by which adjusted AFRs and the adjusted Federal long-term rate are determined. The IRS requested comments on these possible modifications because, since the beginning of 2008, market yields of prime, general obligation tax-exempt obligations had sometimes exceeded market yields of comparable U.S. [[Page 24483]] Treasury obligations, causing the adjusted Federal long-term rate and each adjusted AFR to exceed the corresponding AFRs. Adjusted rates that are higher than the corresponding AFRs indicate that the adjustment factor no longer served the purposes of sections 1288(b)(1) and 382(f)(2), which were intended to adjust only for the tax exemption. These rates were also inconsistent with the express intention of Congress that the adjusted Federal long-term rate and the long-term tax-exempt rate be lower than the Federal long-term rate. See 2 H.R. Rep. No. 99-841 (Conf. Rep.), 99th Cong., 2d Sess. II-188 (1986) (1986- 3 CB (Vol. 4) 1, 188). Notice 2013-4 also provided that, until the Treasury Department and the IRS issue further guidance, the adjusted AFRs and the long-term tax-exempt rate would continue to be calculated using the adjustment factor, except that the adjustment factor would equal one (1) for any month in which the adjustment factor would otherwise be greater than one or in which the denominator of the adjustment factor would otherwise be less than or equal to zero. After reviewing comments received in response to Notice 2013-4, the Treasury Department and the IRS issued a notice of proposed rulemaking (REG-136018-13) proposing the regulations that are adopted in this Treasury decision. The regulations use historical market data to create an appropriate adjustment factor based on individual tax rates. The regulations provide that the adjusted AFRs and the adjusted Federal long-term rate for each month will be determined from the appropriate AFRs for that month using the adjustment factor that results from the following calculation: 100 percent--[(a combined tax rate) x (a fixed percentage)]. The tax rate in the adjustment factor is the sum of the maximum individual rate under section 1 and the maximum individual rate under section 1411 for the month to which the rate applies. The fixed percentage is the amount by which that combined tax rate must be multiplied to reflect the historical relationship between the maximum tax rate and the spread between yields of taxable and tax-exempt obligations. The fixed percentage in the adjustment factor is 59 percent, because the yield on tax-exempt obligations from February 1986 to July 2007 was lower than that of comparable taxable obligations by, on average, 59 percent of the maximum individual rate in effect under section 1. Therefore, the adjustment factor under current tax rates would be 74.39 percent, the result of subtracting 25.61 percent (the product of 43.4 percent (the sum of the current maximum individual rate under section 1 (39.6 percent) and the current maximum individual rate under section 1411 (3.8 percent)) and 59 percent) from 100 percent. If an AFR for a given month were 5 percent, under current tax rates, the corresponding adjusted AFR would be 3.72 percent: The product of 74.39 percent and 5 percent. If that 5 percent AFR were the Federal long-term rate for debt instruments with annual compounding, the adjusted Federal long-term rate under section 382 would likewise be 3.72 percent. As noted previously, because no comments were received on the proposed regulations, the final regulations adopt the proposed regulations without substantive change. Effective/Applicability Date These regulations apply to determine the adjusted AFRs, adjusted Federal long-term rate, and long-term tax-exempt rate beginning with the rates determined during August 2016 that apply during September 2016. Special Analyses Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, the proposed regulations preceding these final regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small businesses. No comments were received. Drafting Information The principal authors of these regulations are Jason G. Kurth, IRS Office of the Associate Chief Counsel (Financial Institutions and Products) and William W. Burhop, IRS Office of the Associate Chief Counsel (Corporate). However, other personnel from the Treasury Department and the IRS participated in their development. Availability of IRS Documents The IRS revenue ruling and notice cited in this Treasury decision are made available by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. 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 is amended by adding entries in numerical order to read in part as follows: Authority: 26 U.S.C. 7805 * * * Section 1.382-12 also issued under 26 U.S.C. 382(f) and 26 U.S.C. 382(m). * * * Section 1.1288-1 also issued under 26 U.S.C. 1288(b). * * * 0 Par. 2. Section 1.382-1 is amended by revising the introductory text and adding an entry for Sec. 1.382-12 to read as follows: Sec. 1.382-1 Table of contents. This section lists the captions that appear in the regulations for Sec. Sec. 1.382-2 through 1.382-12. * * * * * Sec. 1.382-12 Determination of adjusted Federal long-term rate. (a) In general. (b) Adjusted Federal long-term rate. (c) Adjustment factor. (d) Effective/applicability date. 0 Par. 3. Section 1.382-12 is added to read as follows: Sec. 1.382-12 Determination of adjusted Federal long-term rate. (a) In general. The long-term tax-exempt rate for an ownership change is the highest of the adjusted Federal long-term rates in effect for any month in the 3-calendar-month period ending with the calendar month in which the change date occurs. For purposes of the previous sentence, the adjusted Federal long-term rate is the Federal long-term rate determined under section 1274(d) (without regard to paragraphs (2) and (3) thereof), adjusted for differences between rates on long-term taxable and tax-exempt obligations. The Secretary calculates the adjusted Federal long-term rate as provided in paragraph (b) of this section. The Internal Revenue Service publishes the long-term tax- exempt rate and the adjusted Federal long-term rate for each month in the Internal Revenue Bulletin (see Sec. 601.601(d)(2)(ii) of this chapter). (b) Adjusted Federal long-term rate. The adjusted Federal long-term rate for [[Page 24484]] a calendar month is the product of the Federal long-term rate determined under section 1274(d) for that month, based on annual compounding, multiplied by the adjustment factor described in paragraph (c) of this section. (c) Adjustment factor. The adjustment factor is a percentage equal to-- (1) The excess of 100 percent, over (2) The product of-- (i) 59 percent, and (ii) The sum of the maximum rate in effect under section 1 applicable to individuals and the maximum rate in effect under section 1411 applicable to individuals for the month to which the adjusted applicable Federal rate applies. (d) Effective/applicability date. The rules of this section apply to the determination of the long-term tax-exempt rate and the adjusted Federal long-term rate beginning with the rates determined during August 2016 that apply during September 2016. 0 Par. 4. Section 1.1288-1 is added to read as follows: Sec. 1.1288-1 Adjustment of applicable Federal rate for tax-exempt obligations. (a) In general. In applying section 483 or section 1274 to a tax- exempt obligation, the applicable Federal rate is adjusted to take into account the tax exemption for interest on the obligation. For each applicable Federal rate determined under section 1274(d), the Secretary computes a corresponding adjusted applicable Federal rate by multiplying the applicable Federal rate by the adjustment factor described in paragraph (b) of this section. The Internal Revenue Service publishes the applicable Federal rates and the adjusted applicable Federal rates for each month in the Internal Revenue Bulletin (see Sec. 601.601(d)(2)(ii) of this chapter). (b) Adjustment factor. The adjustment factor is a percentage equal to-- (1) The excess of 100 percent, over (2) The product of-- (i) 59 percent, and (ii) The sum of the maximum rate in effect under section 1 applicable to individuals and the maximum rate in effect under section 1411 applicable to individuals for the month to which the adjusted applicable Federal rate applies. (c) Effective/applicability date. The rules of this section apply to the determination of adjusted applicable Federal rates beginning with the rates determined during August 2016 that apply during September 2016. John Dalrymple, Deputy Commissioner for Services and Enforcement. Approved: April 8, 2016. Mark J. Mazur, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. 2016-09614 Filed 4-25-16; 8:45 am] BILLING CODE 4830-01-P
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pay benefits with respect to a claim for fund on behalf of such operator or other of proposed rulemaking (REG–136018–
which the operator has been adjudicated employer. 13) in the Federal Register (80 FR
liable, the Director may invoke and (c) The fund may not be held liable 11141) proposing the method to be used
execute the lien on the property of the for payments of additional to determine the adjusted AFRs for tax-
operator as described in § 725.603. compensation under any circumstances. exempt obligations under section 1288
Enforcement of this lien must be Signed at Washington, DC, this 19th day of and the method to be used to determine
pursued in an appropriate U.S. district April, 2016. the long-term tax-exempt rate and the
court. If the Director determines that the Leonard J. Howie, III, adjusted Federal long-term rate under
remedy provided by § 725.603 may not Director, Office of Workers’ Compensation section 382. No comments were
be sufficient to guarantee the continued Programs. received on the notice of proposed
compliance with the terms of an award [FR Doc. 2016–09525 Filed 4–25–16; 8:45 am] rulemaking. No public hearing was
or awards against the operator, the BILLING CODE 4510–CR–P
requested or held. Accordingly, this
Director may in addition seek an Treasury decision adopts the proposed
injunction in the U.S. district court to regulations without substantive change.
prohibit future noncompliance by the
DEPARTMENT OF THE TREASURY Explanation of Provisions
operator and such other relief as the
court considers appropriate (see The regulations in this Treasury
Internal Revenue Service
§ 725.604). If an operator unlawfully decision provide the new method by
suspends or terminates the payment of which the Treasury Department and the
26 CFR Part 1
benefits to a claimant, the district IRS will determine the adjusted AFRs
director may declare the award in [TD 9763] under section 1288 to take into account
default and proceed in accordance with RIN 1545–BM20
the tax exemption for interest on tax-
§ 725.605. In all cases payments of exempt obligations (as defined in
additional compensation (see § 725.607) Determination of Adjusted Applicable section 1275(a)(3) and § 1.1275–1(e)).
and interest (see § 725.608) will be Federal Rates Under Section 1288 and The regulations also provide that the
sought by the Director or awarded by the Adjusted Federal Long-Term Rate Treasury Department and the IRS will
the district director. Under Section 382 use the new method to determine the
(c) In certain instances the remedies long-term tax-exempt rate and the
provided by the Act are concurrent; that AGENCY: Internal Revenue Service (IRS), adjusted Federal long-term rate under
is, more than one remedy might be Treasury. section 382(f) to take into account
appropriate in any given case. In such ACTION: Final regulations. differences between rates on long-term
a case, the Director may select the taxable and tax-exempt obligations.
SUMMARY: This document contains final Since November 1986, the adjusted
remedy or remedies appropriate for the
regulations that provide the method to Federal long-term rate published under
enforcement action. In making this
be used to adjust the applicable Federal section 382(f)(2) has been equal to the
selection, the Director shall consider the
rates (AFRs) to determine the long-term adjusted AFR with annual
best interests of the claimant as well as
corresponding rates under section 1288 compounding published under section
those of the fund.
of the Internal Revenue Code (Code) for 1288(b) in the same month. See Rev.
■ 6. Revise § 725.607 to read as follows:
tax-exempt obligations (adjusted AFRs) Rul. 86–133 (1986–2 CB 59). For
§ 725.607 Payments of additional and the method to be used to determine calendar months from November 1986
compensation. the long-term tax-exempt rate and the to February 2013, the Treasury
(a) If any benefits payable under the adjusted Federal long-term rate under Department determined the adjusted
terms of an award by a district director section 382. For tax-exempt obligations, Federal long-term rate and each
(§ 725.419(d)), a decision and order filed the regulations affect the determination adjusted AFR described in section
and served by an administrative law of original issue discount under section 1288(b)(1) by multiplying the
judge (§ 725.478), or a decision filed by 1273 and of total unstated interest under corresponding AFR by a fraction (the
the Board or a U.S. court of appeals, are section 483. In addition, the regulations adjustment factor). The numerator of the
not paid by an operator or other affect the determination of the adjustment factor was a composite yield
employer ordered to make such limitations under sections 382 and 383 of the highest-grade tax-exempt
payments within 10 days after such on the use of certain operating loss obligations available, which are prime,
payments become due, there will be carryforwards, tax credits, and other general obligation tax-exempt
added to such unpaid benefits an attributes of corporations following obligations. The denominator was a
amount equal to 20 percent thereof, ownership changes. composite yield of U.S. Treasury
which must be paid to the claimant at DATES: Effective Date: These regulations obligations with maturities similar to
the same time as, but in addition to, are effective on April 26, 2016. those of the tax-exempt obligations.
such benefits, unless review of the order Applicability Dates: For the dates of Each of the composite yields was
making such award is sought as applicability, see §§ 1.382–12(d) and measured over a one-month period.
provided in section 21 of the LHWCA 1.1288–1(c). The IRS published Notice 2013–4
and an order staying payments has been FOR FURTHER INFORMATION CONTACT: (2013–9 IRB 527) on February 25, 2013,
issued. Concerning the regulations under requesting comments on possible
(b) If, on account of an operator’s or section 1288, Jason G. Kurth at (202) modifications to the method by which
asabaliauskas on DSK3SPTVN1PROD with RULES
other employer’s failure to pay benefits 317–6842; concerning the regulations adjusted AFRs and the adjusted Federal
as provided in paragraph (a) of this under section 382, William W. Burhop long-term rate are determined. The IRS
section, benefit payments are made by at (202) 317–6847. requested comments on these possible
the fund, the eligible claimant will SUPPLEMENTARY INFORMATION: modifications because, since the
nevertheless be entitled to receive such beginning of 2008, market yields of
additional compensation to which he or Background prime, general obligation tax-exempt
she may be eligible under paragraph (a), On March 2, 2015, the IRS and the obligations had sometimes exceeded
with respect to all amounts paid by the Treasury Department published a notice market yields of comparable U.S.
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![Federal Register / Vol. 81, No. 80 / Tuesday, April 26, 2016 / Rules and Regulations 24483
Treasury obligations, causing the sum of the current maximum individual Documents, U.S. Government Printing
adjusted Federal long-term rate and rate under section 1 (39.6 percent) and Office, Washington, DC 20402.
each adjusted AFR to exceed the the current maximum individual rate
List of Subjects in 26 CFR Part 1
corresponding AFRs. Adjusted rates that under section 1411 (3.8 percent)) and 59
are higher than the corresponding AFRs percent) from 100 percent. If an AFR for Income taxes, Reporting and
indicate that the adjustment factor no a given month were 5 percent, under recordkeeping requirements.
longer served the purposes of sections current tax rates, the corresponding Adoption of Amendments to the
1288(b)(1) and 382(f)(2), which were adjusted AFR would be 3.72 percent: Regulations
intended to adjust only for the tax The product of 74.39 percent and 5
exemption. These rates were also percent. If that 5 percent AFR were the Accordingly, 26 CFR part 1 is
inconsistent with the express intention Federal long-term rate for debt amended as follows:
of Congress that the adjusted Federal instruments with annual compounding,
long-term rate and the long-term tax- the adjusted Federal long-term rate PART 1—INCOME TAXES
exempt rate be lower than the Federal under section 382 would likewise be ■ Paragraph 1. The authority citation
long-term rate. See 2 H.R. Rep. No. 99– 3.72 percent. for part 1 is amended by adding entries
841 (Conf. Rep.), 99th Cong., 2d Sess. II– As noted previously, because no in numerical order to read in part as
188 (1986) (1986–3 CB (Vol. 4) 1, 188). comments were received on the
Notice 2013–4 also provided that, follows:
proposed regulations, the final
until the Treasury Department and the Authority: 26 U.S.C. 7805 * * *
regulations adopt the proposed
IRS issue further guidance, the adjusted Section 1.382–12 also issued under 26
regulations without substantive change. U.S.C. 382(f) and 26 U.S.C. 382(m). * * *
AFRs and the long-term tax-exempt rate
would continue to be calculated using Effective/Applicability Date Section 1.1288–1 also issued under 26
U.S.C. 1288(b). * * *
the adjustment factor, except that the These regulations apply to determine
adjustment factor would equal one (1) ■ Par. 2. Section 1.382–1 is amended by
the adjusted AFRs, adjusted Federal
for any month in which the adjustment revising the introductory text and
long-term rate, and long-term tax-
factor would otherwise be greater than adding an entry for § 1.382–12 to read
exempt rate beginning with the rates
one or in which the denominator of the as follows:
determined during August 2016 that
adjustment factor would otherwise be
apply during September 2016. § 1.382–1 Table of contents.
less than or equal to zero.
After reviewing comments received in Special Analyses This section lists the captions that
response to Notice 2013–4, the Treasury appear in the regulations for §§ 1.382–
Department and the IRS issued a notice Certain IRS regulations, including this 2 through 1.382–12.
of proposed rulemaking (REG–136018– one, are exempt from the requirements
* * * * *
13) proposing the regulations that are of Executive Order 12866, as
adopted in this Treasury decision. The supplemented and reaffirmed by § 1.382–12 Determination of adjusted
regulations use historical market data to Executive Order 13563. Therefore, a Federal long-term rate.
create an appropriate adjustment factor regulatory impact assessment is not (a) In general.
based on individual tax rates. The required. It has also been determined (b) Adjusted Federal long-term rate.
regulations provide that the adjusted that section 553(b) of the Administrative (c) Adjustment factor.
AFRs and the adjusted Federal long- Procedure Act (5 U.S.C. chapter 5) does (d) Effective/applicability date.
term rate for each month will be not apply to these regulations, and ■ Par. 3. Section 1.382–12 is added to
determined from the appropriate AFRs because the regulations do not impose a read as follows:
for that month using the adjustment collection of information on small
factor that results from the following entities, the Regulatory Flexibility Act § 1.382–12 Determination of adjusted
(5 U.S.C. chapter 6) does not apply. Federal long-term rate.
calculation: 100 percent—[(a combined
tax rate) x (a fixed percentage)]. Pursuant to section 7805(f) of the Code, (a) In general. The long-term tax-
The tax rate in the adjustment factor the proposed regulations preceding exempt rate for an ownership change is
is the sum of the maximum individual these final regulations were submitted the highest of the adjusted Federal long-
rate under section 1 and the maximum to the Chief Counsel for Advocacy of the term rates in effect for any month in the
individual rate under section 1411 for Small Business Administration for 3-calendar-month period ending with
the month to which the rate applies. comment on their impact on small the calendar month in which the change
The fixed percentage is the amount by businesses. No comments were date occurs. For purposes of the
which that combined tax rate must be received. previous sentence, the adjusted Federal
multiplied to reflect the historical long-term rate is the Federal long-term
Drafting Information
relationship between the maximum tax rate determined under section 1274(d)
rate and the spread between yields of The principal authors of these (without regard to paragraphs (2) and (3)
taxable and tax-exempt obligations. The regulations are Jason G. Kurth, IRS thereof), adjusted for differences
fixed percentage in the adjustment Office of the Associate Chief Counsel between rates on long-term taxable and
factor is 59 percent, because the yield (Financial Institutions and Products) tax-exempt obligations. The Secretary
on tax-exempt obligations from and William W. Burhop, IRS Office of calculates the adjusted Federal long-
February 1986 to July 2007 was lower the Associate Chief Counsel (Corporate). term rate as provided in paragraph (b)
asabaliauskas on DSK3SPTVN1PROD with RULES
than that of comparable taxable However, other personnel from the of this section. The Internal Revenue
obligations by, on average, 59 percent of Treasury Department and the IRS Service publishes the long-term tax-
the maximum individual rate in effect participated in their development. exempt rate and the adjusted Federal
under section 1. long-term rate for each month in the
Availability of IRS Documents
Therefore, the adjustment factor Internal Revenue Bulletin (see
under current tax rates would be 74.39 The IRS revenue ruling and notice § 601.601(d)(2)(ii) of this chapter).
percent, the result of subtracting 25.61 cited in this Treasury decision are made (b) Adjusted Federal long-term rate.
percent (the product of 43.4 percent (the available by the Superintendent of The adjusted Federal long-term rate for
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![24484 Federal Register / Vol. 81, No. 80 / Tuesday, April 26, 2016 / Rules and Regulations
a calendar month is the product of the determined during August 2016 that PART 1—INCOME TAXES
Federal long-term rate determined apply during September 2016.
under section 1274(d) for that month, ■ Paragraph 1. The authority citation
John Dalrymple, for part 1 continues to read in part as
based on annual compounding,
Deputy Commissioner for Services and follows:
multiplied by the adjustment factor Enforcement.
described in paragraph (c) of this Authority: 26 U.S.C. 7805 * * *
Approved: April 8, 2016.
section. ■ Par. 3. Section 1.1445–5 is amended
Mark J. Mazur,
(c) Adjustment factor. The adjustment Assistant Secretary of the Treasury (Tax by revising the last sentence of
factor is a percentage equal to— Policy). paragraph (b)(3)(ii)(A) to read as
(1) The excess of 100 percent, over [FR Doc. 2016–09614 Filed 4–25–16; 8:45 am] follows:
(2) The product of— BILLING CODE 4830–01–P § 1.1445–5 Special rules concerning
(i) 59 percent, and distributions and other transactions by
corporations, partnerships, trusts, and
(ii) The sum of the maximum rate in DEPARTMENT OF THE TREASURY estates.
effect under section 1 applicable to * * * * *
individuals and the maximum rate in Internal Revenue Service
(b) * * *
effect under section 1411 applicable to (3) * * *
individuals for the month to which the 26 CFR Part 1 (ii) * * *
adjusted applicable Federal rate applies. [TD 9751] (A) * * * In general, a foreign person
(d) Effective/applicability date. The is a nonresident alien individual,
RIN 1545–BN22
rules of this section apply to the foreign corporation, foreign partnership,
determination of the long-term tax- PATH Act Changes to Section 1445; foreign trust, or foreign estate, but not a
exempt rate and the adjusted Federal Correction qualified foreign pension fund (as
long-term rate beginning with the rates defined in section 897(l)) or an entity all
AGENCY: Internal Revenue Service (IRS), of the interests of which are held by a
determined during August 2016 that
Treasury. qualified foreign pension fund.
apply during September 2016.
ACTION: Correcting amendment. * * * * *
■ Par. 4. Section 1.1288–1 is added to
read as follows: SUMMARY: This document contains Martin V. Franks,
corrections to final regulations (TD Chief, Publications and Regulations Branch,
§ 1.1288–1 Adjustment of applicable 9721) that were published in the Legal Processing Division, Associate Chief
Federal rate for tax-exempt obligations. Federal Register on Friday, February 19, Counsel, (Procedure and Administration).
(a) In general. In applying section 483 2016 (81 FR 8398). The final regulations [FR Doc. 2016–09666 Filed 4–25–16; 8:45 am]
are regarding the taxation of, and BILLING CODE 4830–01–P
or section 1274 to a tax-exempt
withholding on, foreign persons upon
obligation, the applicable Federal rate is
certain dispositions of, and distributions
adjusted to take into account the tax
with respect to, United States real DEPARTMENT OF JUSTICE
exemption for interest on the obligation.
property interests (USRPIs).
For each applicable Federal rate
DATES: This correction is effective April Bureau of Prisons
determined under section 1274(d), the
26, 2016 and is applicable on or after
Secretary computes a corresponding
February 19, 2016. 28 CFR Part 550
adjusted applicable Federal rate by
multiplying the applicable Federal rate FOR FURTHER INFORMATION CONTACT: [BOP–1168–F]
by the adjustment factor described in Milton M. Cahn or David A. Levine of
the Office of Associate Chief Counsel RIN 1120–AB68
paragraph (b) of this section. The
Internal Revenue Service publishes the (International) at (202) 317–6937 (not a
Drug Abuse Treatment Program
applicable Federal rates and the toll-free number).
adjusted applicable Federal rates for SUPPLEMENTARY INFORMATION: AGENCY: Bureau of Prisons, Justice.
each month in the Internal Revenue Background ACTION: Final rule.
Bulletin (see § 601.601(d)(2)(ii) of this
The final regulations (TD 9751) that SUMMARY: In this document, the Bureau
chapter).
are the subject of this correction are of Prisons (Bureau) revises the
(b) Adjustment factor. The adjustment under section 897 and1445 of the Residential Drug Abuse Treatment
factor is a percentage equal to— Internal Revenue Code. Program (RDAP) regulations to allow
(1) The excess of 100 percent, over greater inmate participation in the
Need for Correction
program and positively impact
(2) The product of— As published, the final regulations recidivism rates.
(i) 59 percent, and (TD 9751) contain errors that may prove DATES: This rule is effective on May 26,
(ii) The sum of the maximum rate in to be misleading and are in need of 2016.
effect under section 1 applicable to clarification.
FOR FURTHER INFORMATION CONTACT:
individuals and the maximum rate in
asabaliauskas on DSK3SPTVN1PROD with RULES
List of Subjects in 26 CFR Part 1 Sarah Qureshi, Office of General
effect under section 1411 applicable to Counsel, Bureau of Prisons, phone (202)
Income taxes, reporting and
individuals for the month to which the 353–8248.
recordkeeping requirements.
adjusted applicable Federal rate applies. SUPPLEMENTARY INFORMATION: In this
(c) Effective/applicability date. The Correction of Publication document, the Bureau revises the
rules of this section apply to the Accordingly, 26 CFR part 1 is Residential Drug Abuse Treatment
determination of adjusted applicable corrected by making the following Program (RDAP) regulations to allow
Federal rates beginning with the rates correcting amendments: greater inmate participation in the
VerDate Sep<11>2014 17:40 Apr 25, 2016 Jkt 238001 PO 00000 Frm 00030 Fmt 4700 Sfmt 4700 E:\FR\FM\26APR1.SGM 26APR1](https://thefederalregister.org/doc/81_FR_24562/page/3.svg)
Document Created: 2016-04-26 01:36:51
Document Modified: 2016-04-26 01:36:51
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final regulations. | |
| Contact | Concerning the regulations under section 1288, Jason G. Kurth at (202) 317-6842; concerning the regulations under section 382, William W. Burhop at (202) 317-6847. | |
| FR Citation | 81 FR 24482 | |
| RIN Number | 1545-BM20 | |
| CFR Associated | Income Taxes and Reporting and Recordkeeping Requirements |
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