81_FR_26779 81 FR 26693 - Self-Employment Tax Treatment of Partners in a Partnership That Owns a Disregarded Entity

81 FR 26693 - Self-Employment Tax Treatment of Partners in a Partnership That Owns a Disregarded Entity

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 81, Issue 86 (May 4, 2016)

Page Range26693-26695
FR Document2016-10383

This document contains final and temporary regulations that clarify the employment tax treatment of partners in a partnership that owns a disregarded entity. These regulations affect partners in a partnership that owns a disregarded entity. The text of these temporary regulations serves as the text of proposed regulations (REG-114307-15) published in the Proposed Rules section in this issue of the Federal Register.

Federal Register, Volume 81 Issue 86 (Wednesday, May 4, 2016) 
[Federal Register Volume 81, Number 86 (Wednesday, May 4, 2016)]
[Rules and Regulations]
[Pages 26693-26695]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-10383]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[TD 9766]
RIN 1545-BM87


Self-Employment Tax Treatment of Partners in a Partnership That 
Owns a Disregarded Entity

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and temporary regulations.

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SUMMARY: This document contains final and temporary regulations that 
clarify the employment tax treatment of partners in a partnership that 
owns a disregarded entity. These regulations affect partners in a 
partnership that owns a disregarded entity. The text of these temporary 
regulations serves as the text of proposed regulations (REG-114307-15) 
published in the Proposed Rules section in this issue of the Federal 
Register.

DATES: Effective date: These regulations are effective on May 4, 2016.
    Applicability date: For date of applicability, see Sec.  301-7701-
2T(e)(8).

FOR FURTHER INFORMATION CONTACT: Andrew K. Holubeck at (202) 317-4774 
(not a toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    Section 301.7701-2(c)(2)(i) states that, except as otherwise 
provided, a business entity that has a single owner and is not a 
corporation under Sec.  301.7701-2(b) is disregarded as an entity 
separate from its owner (a disregarded entity). However, Sec.  
301.7701-2(c)(2)(iv)(B) provides that an entity that is a disregarded 
entity is treated as a corporation for purposes of employment taxes 
imposed under subtitle C of the Internal Revenue Code (Code). 
Therefore, the disregarded entity, rather than the owner, is considered 
to be the employer of the entity's employees for purposes of employment 
taxes imposed by subtitle C.
    While Sec.  301.7701-2(c)(2)(iv)(B) treats a disregarded entity as 
a corporation for employment tax purposes, this rule does not apply for 
self-employment tax purposes. Specifically, Sec.  301.7701-
2(c)(2)(iv)(C)(2) provides that the general rule of Sec.  301.7701-
2(c)(2)(i) applies for self-employment tax purposes. After setting 
forth this general rule, the regulation applies this rule in the 
context of a single individual owner by stating that the owner of an 
entity that is treated in the same manner as a sole proprietorship is 
subject to tax on self-employment income. The regulation, at Sec.  
301.7701-2(c)(2)(iv)(D), also includes an example that specifically 
illustrates the mechanics of the rule. In the example, the disregarded 
entity is subject to employment tax with respect to employees of the 
disregarded entity. The individual owner, however, is subject to self-
employment tax on the net earnings from self-employment resulting from 
the disregarded entity's activities. The regulations do not include a 
separate example in which the disregarded entity is owned by a 
partnership.
    It has come to the attention of the Treasury Department and the IRS 
that even though the regulations set forth a general rule that an 
entity is disregarded as a separate entity from the owner for self-
employment tax purposes, some taxpayers may have read the current 
regulations to permit the treatment of individual partners in a 
partnership that owns a disregarded entity as employees of the 
disregarded entity because the regulations did not include a specific 
example applying the general rule in the partnership context. Under 
this reading, which was not intended, some taxpayers have permitted 
partners to participate in certain tax-favored employee benefit plans. 
The Treasury Department and the IRS note that the regulations did not 
create a distinction between a disregarded entity owned by an 
individual (that is, a sole proprietorship) and a disregarded entity 
owned by a partnership in the application of the self-employment tax 
rule. Rather, Sec.  301.7701-2(c)(2)(iv)(C)(2) provides that the 
general rule of Sec.  301.7701-2(c)(2)(i) applies for self-employment 
tax purposes for any owner of a disregarded entity without carving out 
an exception regarding a partnership that owns such a disregarded 
entity. In addition, the Treasury Department and the IRS do not believe 
that the regulations alter the holding of Rev. Rul. 69-184, 1969-1 CB 
256, which provides that: (1) Bona fide members of a partnership are 
not employees of the partnership within the meaning of the Federal 
Insurance Contributions Act, the Federal Unemployment Tax Act, and the 
Collection of Income Tax at Source on Wages (chapters 21, 23, and 24, 
respectively, subtitle C, Internal Revenue Code of 1954), and (2) such 
a partner who devotes time and energy in the conduct of the trade or 
business of the partnership, or in providing services to the 
partnership as an independent contractor, is, in either event, a self-
employed individual rather than an individual who, under the usual 
common law rules applicable in determining the employer-employee 
relationship, has the status of an employee.
    To address this issue, the Treasury Department and the IRS clarify 
in these temporary regulations that the rule that a disregarded entity 
is treated as a corporation for employment tax purposes does not apply 
to the self-employment tax treatment of any individuals who are 
partners in a partnership that owns a disregarded entity. The rule that 
the entity is disregarded for self-employment tax purposes applies to 
partners in the same way that it applies to a sole proprietor owner. 
Accordingly, the partners are subject to the same self-employment tax 
rules as partners in a partnership that does not own a disregarded 
entity.

Explanation of Provisions

    This document contains amendments to the Procedure and 
Administration Regulations (26 CFR part 301) under section 7701 of the 
Code to clarify that a disregarded entity that is treated as a 
corporation for purposes of employment taxes imposed under subtitle C 
of the

[[Page 26694]]

Code is not treated as a corporation for purposes of employing its 
individual owner, who is treated as a sole proprietor, or employing an 
individual that is a partner in a partnership that owns the disregarded 
entity. Rather, the entity is disregarded as an entity separate from 
its owner for this purpose. Existing regulations already provide that 
the entity is disregarded for self-employment tax purposes and 
specifically note that the owner of an entity treated in the same 
manner as a sole proprietorship under Sec.  301.7701-2(a) is subject to 
tax on self-employment income. These temporary regulations apply this 
existing general rule to illustrate that, if a partnership is the owner 
of a disregarded entity, the partners in the partnership are subject to 
the same self-employment tax rules as partners in a partnership that 
does not own a disregarded entity.
    While these temporary regulations provide that a disregarded entity 
owned by a partnership is not treated as a corporation for purposes of 
employing any partner of the partnership, these regulations do not 
address the application of Rev. Rul. 69-184 in tiered partnership 
situations. Several commenters have requested that the IRS provide 
additional guidance on the application of Rev. Rul. 69-184 to tiered 
partnership situations, and have also suggested modifying the holding 
of Rev. Rul. 69-184 to allow partnerships to treat partners as 
employees in certain circumstances, such as, for example, employees in 
a partnership who obtain a small ownership interest in the partnership 
as an employee compensatory award or incentive. However, these 
commenters have not provided detailed analyses and suggestions as to 
how the employee benefit and employment tax rules would apply in such 
situations. The Treasury Department and the IRS request comments on the 
appropriate application of the principles of Rev. Rul. 69-184 to tiered 
partnership situations, the circumstances in which it may be 
appropriate to permit partners to also be employees of the partnership, 
and the impact on employee benefit plans (including, but not limited 
to, qualified retirement plans, health and welfare plans, and fringe 
benefit plans) and on employment taxes if Rev. Rul. 69-184 were to be 
modified to permit partners to also be employees in certain 
circumstances.
    In order to allow adequate time for partnerships to make necessary 
payroll and benefit plan adjustments, these temporary regulations will 
apply on the later of: (1) August 1, 2016, or (2) the first day of the 
latest-starting plan year following May 4, 2016, of an affected plan 
(based on the plans adopted before, and the plan years in effect as of, 
May 4, 2016) sponsored by an entity that is disregarded as an entity 
separate from its owner for any purpose under Sec.  301.7701-2. For 
these purposes, an affected plan includes any qualified plan, health 
plan, or section 125 cafeteria plan if the plan benefits participants 
whose employment status is affected by these regulations. For rules 
that apply before the applicability date of these regulations, see 26 
CFR part 301 revised as of April 1, 2016.

Special Analysis

    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. For applicability of the Regulatory Flexibility Act 
(5 U.S.C. chapter 6), please refer to the Special Analysis section in 
the preamble to the cross-referenced notice of proposed rulemaking in 
the Proposed Rules section of this issue of the Federal Register. 
Pursuant to section 7805(f) of the Code, these regulations were 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business.

Drafting Information

    The principal author of these regulations is Andrew Holubeck of the 
Office of the Division Counsel/Associate Chief Counsel (Tax Exempt and 
Government Entities). However, other personnel from the IRS and the 
Treasury Department participated in their development.

List of Subjects in 26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Amendments to the Regulations

    Accordingly, 26 CFR part 301 is amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

0
Paragraph 1. The authority citation for part 301 continues to read in 
part as follows:

    Authority:  26 U.S.C. 7805 * * *


0
Par. 2. Section 301.7701-2 is amended by:
0
1. Revising paragraph (c)(2)(iv)(C)(2).
0
2. Adding paragraph (e)(8).
    The revision and addition reads as follows:


Sec.  301.7701-2  Business entities; definitions.

* * * * *
    (c) * * *
    (2) * * *
    (iv) * * *
    (C) * * *
    (2) [Reserved]. For further guidance, see Sec.  301.7701-
2T(c)(2)(iv)(C)(2).
* * * * *
    (e)(8) [Reserved]. For further guidance, see Sec.  301.7701-
2T(e)(8).


0
Par. 3. Section 301.7701-2T is added to read as follows:


Sec.  301.7701-2T  Business entities; definitions (temporary).

    (a) through (c)(2)(iv)(C)(1) [Reserved]. For further guidance, see 
Sec.  301.7701-2(a) through (c)(2)(iv)(C)(1).
    (2) Section 301.7701-2(c)(2)(i) applies to taxes imposed under 
subtitle A, including Chapter 2--Tax on Self-Employment Income. Thus, 
an entity that is treated in the same manner as a sole proprietorship 
under Sec.  301.7701-2(a) is not treated as a corporation for purposes 
of employing its owner; instead, the entity is disregarded as an entity 
separate from its owner for this purpose and is not the employer of its 
owner. The owner will be subject to self-employment tax on self-
employment income with respect to the entity's activities. Also, if a 
partnership is the owner of an entity that is disregarded as an entity 
separate from its owner for any purpose under Sec.  301.7701-2, the 
entity is not treated as a corporation for purposes of employing a 
partner of the partnership that owns the entity; instead, the entity is 
disregarded as an entity separate from the partnership for this purpose 
and is not the employer of any partner of the partnership that owns the 
entity. A partner of a partnership that owns an entity that is 
disregarded as an entity separate from its owner for any purpose under 
Sec.  301.7701-2 is subject to the same self-employment tax rules as a 
partner of a partnership that does not own an entity that is 
disregarded as an entity separate from its owner for any purpose under 
Sec.  301.7701-2.
    (c)(2)(iv)(D) through (e)(7) [Reserved]. For further guidance, see 
Sec.  301.7701-2(c)(2)(iv)(D) through (e)(7).
    (8)(i) Effective/applicability date. Paragraph (c)(2)(iv)(C)(2) of 
this section applies on the later of--
    (A) August 1, 2016, or

[[Page 26695]]

    (B) The first day of the latest-starting plan year following May 4, 
2016, of an affected plan (based on the plans adopted before, and the 
plan years in effect as of, May 4, 2016) sponsored by an entity that is 
disregarded as an entity separate from its owner for any purpose under 
Sec.  301.7701-2. For rules that apply before the applicability date of 
these regulations, see 26 CFR part 301 revised as of April 1, 2016. For 
these purposes--
    (1) An affected plan includes any qualified plan, health plan, or 
section 125 cafeteria plan if the plan benefits participants whose 
employment status is affected by paragraph (c)(2)(iv)(C)(2),
    (2) A qualified plan means a plan, contract, pension, or trust 
described in paragraph (A) or (B) of section 219(g)(5) (other than 
paragraph (A)(iii)), and
    (3) A health plan means an arrangement described under Sec.  1.105-
5 of this chapter.
    (ii) Expiration date. The applicability of paragraph 
(c)(2)(iv)(C)(2) of this section expires on or before May 3, 2016, or 
such earlier date as may be determined under amendments to the 
regulations issued after May 3, 2016.

John M. Dalrymple,
Deputy Commissioner for Services and Enforcement.
    Approved: April 20, 2016.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2016-10383 Filed 5-3-16; 8:45 am]
 BILLING CODE 4830-01-P

Federal Register / Vol. 81, No. 86 / Wednesday, May 4, 2016 / Rules and Regulations 26693 therefore confirms the rule without Applicability date: For date of partnership context. Under this reading, change. applicability, see § 301–7701–2T(e)(8). which was not intended, some DATES: Effective May 4, 2016. FOR FURTHER INFORMATION CONTACT: taxpayers have permitted partners to Andrew K. Holubeck at (202) 317–4774 participate in certain tax-favored FOR FURTHER INFORMATION CONTACT: (not a toll-free number). employee benefit plans. The Treasury Elizabeth Appel, Director, Office of SUPPLEMENTARY INFORMATION: Department and the IRS note that the Regulatory Affairs and Collaborative regulations did not create a distinction Action, Office of the Assistant Background between a disregarded entity owned by Secretary—Indian Affairs; telephone Section 301.7701–2(c)(2)(i) states that, an individual (that is, a sole (202) 273–4680, elizabeth.appel@ except as otherwise provided, a proprietorship) and a disregarded entity bia.gov. business entity that has a single owner owned by a partnership in the SUPPLEMENTARY INFORMATION: On March application of the self-employment tax and is not a corporation under 1, 2016, the Department published an rule. Rather, § 301.7701–2(c)(2)(iv)(C)(2) § 301.7701–2(b) is disregarded as an interim final rule (81 FR 10475) to provides that the general rule of entity separate from its owner (a extend the deadline by which a relative § 301.7701–2(c)(2)(i) applies for self- disregarded entity). However, of a deceased Indian can apply for employment tax purposes for any owner § 301.7701–2(c)(2)(iv)(B) provides that burial assistance for the deceased Indian of a disregarded entity without carving an entity that is a disregarded entity is from 30 days following death to 180 out an exception regarding a partnership treated as a corporation for purposes of days following death. that owns such a disregarded entity. In The Department received three employment taxes imposed under subtitle C of the Internal Revenue Code addition, the Treasury Department and comments on the rule, all of which were the IRS do not believe that the supportive of the rule. None of the (Code). Therefore, the disregarded regulations alter the holding of Rev. Rul. comments requested changes to the rule. entity, rather than the owner, is 69–184, 1969–1 CB 256, which provides Consequently, the Department did not considered to be the employer of the that: (1) Bona fide members of a make any change to the interim final entity’s employees for purposes of partnership are not employees of the rule as a result of this comment. For employment taxes imposed by subtitle partnership within the meaning of the these reasons, the Department confirms C. Federal Insurance Contributions Act, While § 301.7701–2(c)(2)(iv)(B) treats the interim rule published March 1, the Federal Unemployment Tax Act, a disregarded entity as a corporation for 2016 (81 FR 10475), as final without and the Collection of Income Tax at employment tax purposes, this rule does change. Source on Wages (chapters 21, 23, and not apply for self-employment tax Dated: April 26, 2016. 24, respectively, subtitle C, Internal purposes. Specifically, § 301.7701– Lawrence S. Roberts, Revenue Code of 1954), and (2) such a 2(c)(2)(iv)(C)(2) provides that the Acting Assistant Secretary—Indian Affairs. partner who devotes time and energy in general rule of § 301.7701–2(c)(2)(i) the conduct of the trade or business of [FR Doc. 2016–10409 Filed 5–3–16; 8:45 am] applies for self-employment tax the partnership, or in providing services BILLING CODE 4337–15–P purposes. After setting forth this general to the partnership as an independent rule, the regulation applies this rule in contractor, is, in either event, a self- the context of a single individual owner employed individual rather than an DEPARTMENT OF THE TREASURY by stating that the owner of an entity individual who, under the usual that is treated in the same manner as a common law rules applicable in Internal Revenue Service sole proprietorship is subject to tax on determining the employer-employee self-employment income. The relationship, has the status of an 26 CFR Part 301 regulation, at § 301.7701–2(c)(2)(iv)(D), employee. [TD 9766] also includes an example that To address this issue, the Treasury specifically illustrates the mechanics of Department and the IRS clarify in these RIN 1545–BM87 the rule. In the example, the disregarded temporary regulations that the rule that entity is subject to employment tax with a disregarded entity is treated as a Self-Employment Tax Treatment of respect to employees of the disregarded Partners in a Partnership That Owns a corporation for employment tax entity. The individual owner, however, purposes does not apply to the self- Disregarded Entity is subject to self-employment tax on the employment tax treatment of any AGENCY: Internal Revenue Service (IRS), net earnings from self-employment individuals who are partners in a Treasury. resulting from the disregarded entity’s partnership that owns a disregarded ACTION: Final and temporary activities. The regulations do not entity. The rule that the entity is regulations. include a separate example in which the disregarded for self-employment tax disregarded entity is owned by a purposes applies to partners in the same SUMMARY: This document contains final partnership. way that it applies to a sole proprietor and temporary regulations that clarify It has come to the attention of the owner. Accordingly, the partners are the employment tax treatment of Treasury Department and the IRS that subject to the same self-employment tax partners in a partnership that owns a even though the regulations set forth a rules as partners in a partnership that disregarded entity. These regulations general rule that an entity is disregarded does not own a disregarded entity. affect partners in a partnership that as a separate entity from the owner for asabaliauskas on DSK3SPTVN1PROD with RULES owns a disregarded entity. The text of self-employment tax purposes, some Explanation of Provisions these temporary regulations serves as taxpayers may have read the current This document contains amendments the text of proposed regulations (REG– regulations to permit the treatment of to the Procedure and Administration 114307–15) published in the Proposed individual partners in a partnership that Regulations (26 CFR part 301) under Rules section in this issue of the Federal owns a disregarded entity as employees section 7701 of the Code to clarify that Register. of the disregarded entity because the a disregarded entity that is treated as a DATES: Effective date: These regulations regulations did not include a specific corporation for purposes of employment are effective on May 4, 2016. example applying the general rule in the taxes imposed under subtitle C of the VerDate Sep<11>2014 17:12 May 03, 2016 Jkt 238001 PO 00000 Frm 00027 Fmt 4700 Sfmt 4700 E:\FR\FM\04MYR1.SGM 04MYR1

26694 Federal Register / Vol. 81, No. 86 / Wednesday, May 4, 2016 / Rules and Regulations Code is not treated as a corporation for following May 4, 2016, of an affected ■ Par. 2. Section 301.7701–2 is purposes of employing its individual plan (based on the plans adopted before, amended by: owner, who is treated as a sole and the plan years in effect as of, May ■ 1. Revising paragraph (c)(2)(iv)(C)(2). proprietor, or employing an individual 4, 2016) sponsored by an entity that is ■ 2. Adding paragraph (e)(8). that is a partner in a partnership that disregarded as an entity separate from The revision and addition reads as owns the disregarded entity. Rather, the its owner for any purpose under follows: entity is disregarded as an entity § 301.7701–2. For these purposes, an § 301.7701–2 Business entities; separate from its owner for this purpose. affected plan includes any qualified definitions. Existing regulations already provide that plan, health plan, or section 125 the entity is disregarded for self- * * * * * cafeteria plan if the plan benefits employment tax purposes and (c) * * * participants whose employment status (2) * * * specifically note that the owner of an is affected by these regulations. For (iv) * * * entity treated in the same manner as a rules that apply before the applicability (C) * * * sole proprietorship under § 301.7701– date of these regulations, see 26 CFR (2) [Reserved]. For further guidance, 2(a) is subject to tax on self-employment part 301 revised as of April 1, 2016. see § 301.7701–2T(c)(2)(iv)(C)(2). income. These temporary regulations apply this existing general rule to Special Analysis * * * * * illustrate that, if a partnership is the (e)(8) [Reserved]. For further Certain IRS regulations, including this guidance, see § 301.7701–2T(e)(8). owner of a disregarded entity, the one, are exempt from the requirements partners in the partnership are subject to of Executive Order 12866, as ■ Par. 3. Section 301.7701–2T is added the same self-employment tax rules as supplemented and reaffirmed by to read as follows: partners in a partnership that does not Executive Order 13563. Therefore, a § 301.7701–2T Business entities; own a disregarded entity. regulatory impact assessment is not definitions (temporary). While these temporary regulations required. It has also been determined provide that a disregarded entity owned (a) through (c)(2)(iv)(C)(1) [Reserved]. that section 553(b) of the Administrative For further guidance, see § 301.7701– by a partnership is not treated as a Procedure Act (5 U.S.C. chapter 5) does corporation for purposes of employing 2(a) through (c)(2)(iv)(C)(1). not apply to these regulations. For (2) Section 301.7701–2(c)(2)(i) applies any partner of the partnership, these applicability of the Regulatory regulations do not address the to taxes imposed under subtitle A, Flexibility Act (5 U.S.C. chapter 6), including Chapter 2—Tax on Self- application of Rev. Rul. 69–184 in tiered please refer to the Special Analysis partnership situations. Several Employment Income. Thus, an entity section in the preamble to the cross- that is treated in the same manner as a commenters have requested that the IRS referenced notice of proposed provide additional guidance on the sole proprietorship under § 301.7701– rulemaking in the Proposed Rules 2(a) is not treated as a corporation for application of Rev. Rul. 69–184 to tiered section of this issue of the Federal partnership situations, and have also purposes of employing its owner; Register. Pursuant to section 7805(f) of instead, the entity is disregarded as an suggested modifying the holding of Rev. the Code, these regulations were entity separate from its owner for this Rul. 69–184 to allow partnerships to submitted to the Chief Counsel for purpose and is not the employer of its treat partners as employees in certain Advocacy of the Small Business owner. The owner will be subject to circumstances, such as, for example, Administration for comment on its self-employment tax on self- employees in a partnership who obtain impact on small business. employment income with respect to the a small ownership interest in the partnership as an employee Drafting Information entity’s activities. Also, if a partnership compensatory award or incentive. is the owner of an entity that is However, these commenters have not The principal author of these disregarded as an entity separate from provided detailed analyses and regulations is Andrew Holubeck of the its owner for any purpose under suggestions as to how the employee Office of the Division Counsel/Associate § 301.7701–2, the entity is not treated as benefit and employment tax rules would Chief Counsel (Tax Exempt and a corporation for purposes of employing apply in such situations. The Treasury Government Entities). However, other a partner of the partnership that owns Department and the IRS request personnel from the IRS and the Treasury the entity; instead, the entity is comments on the appropriate Department participated in their disregarded as an entity separate from application of the principles of Rev. Rul. development. the partnership for this purpose and is 69–184 to tiered partnership situations, List of Subjects in 26 CFR Part 301 not the employer of any partner of the the circumstances in which it may be partnership that owns the entity. A appropriate to permit partners to also be Employment taxes, Estate taxes, partner of a partnership that owns an employees of the partnership, and the Excise taxes, Gift taxes, Income taxes, entity that is disregarded as an entity impact on employee benefit plans Penalties, Reporting and recordkeeping separate from its owner for any purpose (including, but not limited to, qualified requirements. under § 301.7701–2 is subject to the retirement plans, health and welfare Amendments to the Regulations same self-employment tax rules as a plans, and fringe benefit plans) and on partner of a partnership that does not employment taxes if Rev. Rul. 69–184 Accordingly, 26 CFR part 301 is own an entity that is disregarded as an were to be modified to permit partners amended as follows: entity separate from its owner for any asabaliauskas on DSK3SPTVN1PROD with RULES to also be employees in certain purpose under § 301.7701–2. circumstances. PART 301—PROCEDURE AND (c)(2)(iv)(D) through (e)(7) [Reserved]. In order to allow adequate time for ADMINISTRATION For further guidance, see § 301.7701– partnerships to make necessary payroll 2(c)(2)(iv)(D) through (e)(7). and benefit plan adjustments, these ■ Paragraph 1. The authority citation (8)(i) Effective/applicability date. temporary regulations will apply on the for part 301 continues to read in part as Paragraph (c)(2)(iv)(C)(2) of this section later of: (1) August 1, 2016, or (2) the follows: applies on the later of— first day of the latest-starting plan year Authority: 26 U.S.C. 7805 * * * (A) August 1, 2016, or VerDate Sep<11>2014 17:12 May 03, 2016 Jkt 238001 PO 00000 Frm 00028 Fmt 4700 Sfmt 4700 E:\FR\FM\04MYR1.SGM 04MYR1

Federal Register / Vol. 81, No. 86 / Wednesday, May 4, 2016 / Rules and Regulations 26695 (B) The first day of the latest-starting into or movement within the safety zone Captain of the Port North Carolina plan year following May 4, 2016, of an during the enforcement period is (COTP) has determined that potential affected plan (based on the plans prohibited without approval of the hazards associated with the Barrier adopted before, and the plan years in Captain of the Port. Island Challenge Paddle Board Race on effect as of, May 4, 2016) sponsored by DATES: This rule is effective on May 7, May 07, 2016 will be a safety concern an entity that is disregarded as an entity 2016, from 9:30 a.m. through 11:30 a.m. when race participants cross the Lower separate from its owner for any purpose ADDRESSES: To view documents Swash Channel on the Cape Fear River, under § 301.7701–2. For rules that apply mentioned in this preamble as being Southport, North Carolina, a major before the applicability date of these available in the docket, go to http:// shipping channel. This rule is needed to regulations, see 26 CFR part 301 revised www.regulations.gov, type USCG–2016– protect personnel, vessels, and the as of April 1, 2016. For these purposes— 0306 in the ‘‘SEARCH’’ box and click marine environment in the navigable (1) An affected plan includes any ‘‘SEARCH.’’ Click on Open Docket waters within the safety zone. qualified plan, health plan, or section Folder on the line associated with this IV. Discussion of the Rule 125 cafeteria plan if the plan benefits rule. participants whose employment status The Coast Guard is establishing a FOR FURTHER INFORMATION CONTACT: If temporary safety zone on the navigable is affected by paragraph (c)(2)(iv)(C)(2), you have questions on this rule, call or (2) A qualified plan means a plan, waters of the Lower Swash Channel on email LCDR Derek J. Burrill, Waterways the Cape Fear River. The safety zone contract, pension, or trust described in Management Division Chief, Sector paragraph (A) or (B) of section 219(g)(5) will encompass all waters within a North Carolina, Coast Guard; telephone shape bounded by the following (other than paragraph (A)(iii)), and (910) 772–2230, email Derek.J.Burrill@ (3) A health plan means an coordinates: 33°55′05″ N., 078°00′04″ uscg.mil. W.; 33°54′57″ N., 078°00′04″ W.; arrangement described under § 1.105–5 of this chapter. SUPPLEMENTARY INFORMATION: 33°54′56″ N., 078°00′54″ W.; 33°55′04″ (ii) Expiration date. The applicability N., 078°00′54″ W.; thence back to the I. Table of Abbreviations of paragraph (c)(2)(iv)(C)(2) of this point of origin (NAD 83) in Southport, CFR Code of Federal Regulations North Carolina. This safety zone will be section expires on or before May 3, DHS Department of Homeland Security 2016, or such earlier date as may be established in the interest of public E.O. Executive Order safety due to the participants crossing determined under amendments to the FR Federal Register regulations issued after May 3, 2016. NPRM Notice of proposed rulemaking the Cape Fear River. This rule will be Pub. L. Public Law enforced on May 07, 2016 during the John M. Dalrymple, § Section times of 9:30 a.m. through 11:30 a.m., Deputy Commissioner for Services and U.S.C. United States Code unless otherwise cancelled earlier by Enforcement. the COTP. Approved: April 20, 2016. II. Background Information and Except for vessels authorized by the Regulatory History Captain of the Port or her Mark J. Mazur, Assistant Secretary of the Treasury (Tax The Coast Guard is issuing this Representative, no person or vessel may Policy). temporary rule without prior notice and enter or remain in the safety zone [FR Doc. 2016–10383 Filed 5–3–16; 8:45 am] opportunity to comment pursuant to during the time frame listed. The BILLING CODE 4830–01–P authority under section 4(a) of the Captain of the Port will give notice of Administrative Procedure Act (APA) (5 the enforcement of the safety zone by all U.S.C. 553(b)). This provision appropriate means to provide the widest authorizes an agency to issue a rule dissemination of notice among the DEPARTMENT OF HOMELAND without prior notice and opportunity to affected segments of the public. This SECURITY comment when the agency for good will include publication in the Local Coast Guard cause finds that those procedures are Notice to Mariners and Marine ‘‘impracticable, unnecessary, or contrary Information Broadcasts. 33 CFR Part 100 to the public interest.’’ Under 5 U.S.C. 553(b)(B), the Coast Guard finds that V. Regulatory Analyses [Docket Number USCG–2016–0306] good cause exists for not publishing a We developed this rule after notice of proposed rulemaking (NPRM) considering numerous statutes and RIN 1625–AA00 with respect to this rule because final Executive Orders (E.O.s) related to Safety Zone, Cape Fear River; details of this event were not provided rulemaking. Below we summarize our Southport, NC until April 12, 2016, making it analyses based on a number of these impracticable to publish an NPRM. statutes and E.O.s, and we discuss First AGENCY: Coast Guard, DHS. We are issuing this rule, and under 5 Amendment rights of protestors. ACTION: Temporary final rule. U.S.C. 553(d)(3), the Coast Guard finds A. Regulatory Planning and Review that good cause exists for making it SUMMARY: The Coast Guard is effective less than 30 days after E.O.s 12866 and 13563 direct agencies establishing a temporary safety zone on publication in the Federal Register. to assess the costs and benefits of the navigable waters of the Cape Fear Delaying the effective date of this rule available regulatory alternatives and, if River near Southport, North Carolina. would be contrary to public interest regulation is necessary, to select asabaliauskas on DSK3SPTVN1PROD with RULES This temporary safety zone is intended because immediate action is needed to regulatory approaches that maximize to restrict vessels from a portion of the protect race participants and spectators net benefits. E.O. 13563 emphasizes the Cape Fear River during the Barrier from the hazards associated with a importance of quantifying both costs Island Challenge Stand Up Paddle paddleboard race. and benefits, of reducing costs, of Board Race. This action is necessary to harmonizing rules, and of promoting protect the safety of race participants III. Legal Authority and Need for Rule flexibility. This rule has not been when they cross the Lower Swash The Coast Guard is issuing this rule designated a ‘‘significant regulatory Channel of the Cape Fear River. Entry under authority in 33 U.S.C. 1231. The action,’’ under E.O. 12866. Accordingly, VerDate Sep<11>2014 18:18 May 03, 2016 Jkt 238001 PO 00000 Frm 00029 Fmt 4700 Sfmt 4700 E:\FR\FM\04MYR1.SGM 04MYR1


Document Created: 2016-05-04 01:23:00
Document Modified: 2016-05-04 01:23:00
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal and temporary regulations.
ContactAndrew K. Holubeck at (202) 317-4774 (not a toll-free number).
FR Citation81 FR 26693 
RIN Number1545-BM87
CFR AssociatedEmployment Taxes; Estate Taxes; Excise Taxes; Gift Taxes; Income Taxes; Penalties and Reporting and Recordkeeping Requirements
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