81 FR 8870 - Definition of Political Subdivision

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 81, Issue 35 (February 23, 2016)

Page Range8870-8874
FR Document2016-03790

This document contains proposed regulations that provide guidance regarding the definition of political subdivision for purposes of tax-exempt bonds. The proposed regulations are necessary to specify the elements of a political subdivision. The proposed regulations will affect State and local governments that issue tax-exempt bonds and users of property financed with tax-exempt bonds. Under certain transition rules, however, the proposed definition of political subdivision will not apply for determining whether outstanding bonds are obligations of a political subdivision and will not apply to existing entities for a transition period. This document also provides a notice of a public hearing for these proposed regulations.

Federal Register, Volume 81 Issue 35 (Tuesday, February 23, 2016)
[Federal Register Volume 81, Number 35 (Tuesday, February 23, 2016)]
[Proposed Rules]
[Pages 8870-8874]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-03790]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-129067-15]
RIN 1545-BM99


Definition of Political Subdivision

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

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SUMMARY: This document contains proposed regulations that provide 
guidance regarding the definition of political subdivision for purposes 
of tax-exempt bonds. The proposed regulations are necessary to specify 
the elements of a political subdivision. The proposed regulations will 
affect State and local governments that issue tax-exempt bonds and 
users of property financed with tax-exempt bonds. Under certain 
transition rules, however, the proposed definition of political 
subdivision will not apply for determining whether outstanding bonds 
are obligations of a political subdivision and will not apply to 
existing entities for a transition period. This document also provides 
a notice of a public hearing for these proposed regulations.

DATES: Written or electronic comments must be received by May 23, 2016. 
Request to speak and outlines of topics to be discussed at the public 
hearing scheduled for June 6, 2016, at 10:00 a.m., must be received by 
May 23, 2016.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-129067-15), Internal 
Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 
20044. Submissions may be hand delivered to: CC:PA:LPD:PR Monday 
through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR 
(REG-129067-15), Courier's Desk, Internal Revenue Service, 1111 
Constitution Avenue NW., Washington, DC, or sent electronically via the 
Federal eRulemaking Portal at www.regulations.gov (REG-129067-15). The 
public hearing will be held at the Internal Revenue Building, 1111 
Constitution Avenue NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Spence Hanemann at (202) 317-6980; concerning submissions of comments 
and the hearing, Oluwafunmilayo (Funmi) Taylor at (202) 317-6901 (not 
toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    This document contains proposed amendments to 26 CFR part 1 under 
section 103 of the Internal Revenue Code (Code). Section 103 generally 
provides that, with certain exceptions, gross income does not include 
interest on any obligation of a State or political subdivision thereof. 
Section 1.103-1 of the Income Tax Regulations (the Existing 
Regulations) defines political subdivision as ``any division of any 
State or local governmental unit which is a municipal corporation or 
which has been delegated the right to exercise part of the sovereign 
power of the unit.''
    On a few occasions, Federal courts have ruled on whether an entity 
qualifies as a political subdivision. E.g., Philadelphia Nat'l Bank v. 
United States, 666 F.2d 834 (3d Cir. 1981); Comm'r of Internal Revenue 
v. White's Estate, 144 F.2d 1019 (2d Cir. 1944). The IRS has also 
addressed this issue in revenue rulings, most recently in 1983. E.g., 
Rev. Rul. 83-131 (1983-2 CB 184); Rev. Rul. 78-138 (1978-1 CB 314). 
Because the results in these revenue rulings generally turn on the 
unique facts and circumstances of the individual cases, numerous 
entities have sought and received letter rulings on whether they are 
political subdivisions. Letter rulings, however, are limited to their 
particular facts, may not be relied upon by taxpayers other than the 
taxpayer that received the ruling, and are not a substitute for 
published guidance. See 26 U.S.C. 6110(k)(3) (2015) (providing 
generally that a ruling, determination letter, or technical advice 
memorandum may not be used or cited as precedent).
    Commenters have requested additional published guidance, to be 
applied prospectively, on which facts and circumstances are germane to 
an entity's status as a political subdivision. The Treasury Department 
and IRS recognize the need to clarify the definition of political 
subdivision to provide greater certainty to prospective issuers and to 
promote greater consistency in how the definition is applied across a 
wide range of factual situations. These proposed regulations (the 
Proposed Regulations) would provide a new definition of political 
subdivision for purposes of tax-exempt bonds and would update and 
streamline other portions of the Existing Regulations. The definition 
of political subdivision in the Proposed Regulations does not apply in 
determining whether an entity is treated as a political subdivision of 
a State for purposes of section 414(d) of the Code.

Explanation of Provisions

1. Definition of Political Subdivision

    The Proposed Regulations clarify and further develop the 
eligibility requirements for a political subdivision. To qualify as a 
political subdivision under the Proposed Regulations, an entity must 
meet three requirements, taking into account all of the facts and 
circumstances: sovereign powers, governmental purpose, and governmental 
control. The Proposed Regulations also authorize the Commissioner to 
set forth in future guidance to be published in the Internal Revenue 
Bulletin additional circumstances in which an entity qualifies as a 
political subdivision.
A. Sovereign Powers
    The Proposed Regulations continue, without substantive change, the 
longstanding requirement that a political subdivision be empowered to 
exercise at least one of the generally recognized sovereign powers. The 
three sovereign powers recognized for this purpose are eminent domain, 
police power, and taxing power. See Comm'r of Internal Revenue v. 
Shamberg's Estate, 144 F.2d 998 (2d Cir. 1944). The entity must be able 
to exercise a substantial amount of at least one of these powers. See, 
e.g., Rev. Rul. 77-164 (1977-1 CB 20); Rev. Rul. 77-165 (1977-1 CB 21).
B. Governmental Purpose
    In determining whether an entity is a political subdivision, the 
case law and administrative guidance interpreting the definition of 
political subdivision in the Existing Regulations commonly consider 
whether the entity serves a public purpose. Historically, the 
determination of whether an entity serves a public purpose has focused 
on the purpose for which the entity was

[[Page 8871]]

created, usually as set forth in the legislation authorizing creation 
of the entity, rather than on the entity's conduct after its creation. 
See, e.g., Shamberg's Estate, 144 F.2d at 1004. The Proposed 
Regulations require that a political subdivision serve a governmental 
purpose. A governmental purpose requires, among other things, that the 
purpose for which the entity was created, as set out in its enabling 
legislation, be a public purpose and that the entity actually serve 
that purpose. It also requires that the entity operate in a manner that 
provides a significant public benefit with no more than incidental 
benefit to private persons. Cf., Rev. Rul. 90-74 (1990-2 CB 34) 
(applying an ``incidental private benefit'' standard for purposes of 
determining whether income is included in gross income under section 
115(1)).
C. Governmental Control
    The Proposed Regulations provide that a political subdivision must 
be governmentally controlled. The Proposed Regulations provide rules 
for determining both what constitutes control and which parties must 
possess that control.
i. Definition of Control
    The Proposed Regulations define control to mean ongoing rights or 
powers to direct significant actions of the entity. Rights or powers to 
direct the entity's actions only at a particular point in time are not 
ongoing and, therefore, do not constitute control. For example, the 
right to approve an entity's plan of operation as a condition of the 
entity's formation is not an ongoing right. To constitute control, a 
collection of rights and powers must enable its holder to direct the 
significant actions of the entity.
    The Proposed Regulations provide three non-exclusive benchmarks of 
rights or powers that constitute control: (1) The right or power both 
to approve and to remove a majority of an entity's governing body; (2) 
the right or power to elect a majority of the governing body of the 
entity in periodic elections of reasonable frequency; or (3) the right 
or power to approve or direct the significant uses of funds or assets 
of the entity in advance of that use. Aside from these three 
arrangements, the determination of whether a collection of rights and 
powers constitutes control will depend on the facts and circumstances. 
Neither the right to dissolve an entity nor procedures designed to 
ensure the integrity of the entity but not to direct significant 
actions of the entity are control. Cf., Rev. Rul. 69-453 (1969-2 CB 
182) (addressing procedures that do not constitute control in the 
context of instrumentalities).
ii. Control Vested in a State or Local Governmental Unit or an 
Electorate
    Control by a small faction of private individuals, business 
corporations, trusts, partnerships, or other persons is fundamentally 
not governmental control. Therefore, the Proposed Regulations generally 
require that control be vested in either a general purpose State or 
local governmental unit or in an electorate established under an 
applicable State or local law of general application. If, however, a 
small faction of private persons controls an electorate, that 
electorate's control of the entity does not constitute governmental 
control of the entity. Accordingly, the Proposed Regulations provide 
that an entity controlled by an electorate is not governmentally 
controlled when the outcome of the exercise of control is determined 
solely by the votes of an unreasonably small number of private persons.
    The determination of whether the number of private persons 
controlling an electorate is unreasonably small generally depends on 
all of the facts and circumstances. To provide certainty, the Proposed 
Regulations limit application of this facts and circumstances test to 
situations that fall between two quantitative measures of concentration 
in voting power. The number of private persons controlling an 
electorate is always unreasonably small if the combined votes of the 
three voters with the largest shares of votes in the electorate will 
determine the outcome of the relevant election, regardless of how the 
other voters vote. The number of private persons controlling an 
electorate is never unreasonably small if determining the outcome of 
the relevant election requires the combined votes of more voters than 
the 10 voters with the largest shares of votes in the electorate. For 
example, control can always be vested in any electorate comprised of 20 
or more voters that each have the right to cast one vote in the 
relevant election without giving rise to a private faction. For 
purposes of applying these measures of concentration in voting power, 
related parties are treated as a single voter and the votes of the 
related parties are aggregated.
iii. Possible Relief for Development Districts
    Some observers have suggested that, despite private control, 
development districts should be political subdivisions during an 
initial development period in which one or two private developers elect 
the district's governing body and no other governmental control exists. 
The Treasury Department and IRS recognize that the governmental control 
requirement may present challenges for such development districts. In 
these circumstances, the Treasury Department and IRS are concerned 
about the potential for excessive private control by individual 
developers, the attendant impact of excessive issuance of tax-exempt 
bonds, and inappropriate private benefits from this Federal subsidy. 
The Treasury Department and IRS seek public comment on whether it is 
necessary or appropriate to permit such districts to be political 
subdivisions during an initial development period; how such relief 
might be structured; what specific safeguards might be included in the 
recommended relief to protect against potential abuse; and whether the 
proposed prospective effective dates and transition periods in Sec.  
1.103-1(d) of the Proposed Regulations provide sufficient relief.

2. Streamlining Amendments

    In addition to amending the definition of political subdivision, 
paragraphs (a) and (b) of the Proposed Regulations update the 
references in the general provisions of the Existing Regulations to 
reflect changes to the Code made in the Tax Reform Act of 1986, Public 
Law 99-514, 100 Stat. 2085, and other laws and regulations since the 
promulgation of the longstanding Existing Regulations. The Proposed 
Regulations also streamline these provisions. In general, the Treasury 
Department and the IRS intend that these proposed amendments not change 
the meaning of the Existing Regulations. The last sentence of Sec.  
1.103-1(a) of the Proposed Regulations, however, clarifies that the 
continued tax-exemption of an issue of bonds depends on its issuer's 
continued status as a qualifying issuer of tax-exempt bonds. The 
Treasury Department and IRS seek comments on the need for remedial 
action provisions in the event the entity ceases to qualify as a 
political subdivision and on the substance of any such provisions.

3. Applicability Dates and Reliance on Proposed Regulations

    Subject to certain transition rules, the Proposed Regulations 
generally would apply to all entities for all purposes of the tax-
exempt bond provisions of sections 103 and 141 to 150 beginning 90 days 
after the Proposed Regulations are finalized. In order to ease hardship 
that may arise from the new definition

[[Page 8872]]

of political subdivision, under proposed transition rules, that 
definition would not apply for purposes of determining whether 
outstanding bonds and refunding bonds in which the weighted average 
maturity is not extended continue to be obligations of a political 
subdivision. While these transition rules for outstanding bonds and 
refunding bonds would apply for the purpose of determining whether 
these bonds continue to be obligations of a political subdivision, the 
new proposed definition of political subdivision would apply for other 
purposes under sections 103 and 141 to 150, such as whether a new 
entity that subsequently became a user of a project financed with such 
bonds qualified as a State or local governmental unit for purposes of 
section 141. Furthermore, under another proposed transition rule that 
would apply to entities in existence prior to 30 days after the 
Proposed Regulations are published, the proposed definition of 
political subdivision would not apply for any purpose until three years 
and ninety days after the Proposed Regulations are finalized. This 
three-year transition period provides existing entities an opportunity 
to restructure as necessary to satisfy the new definition of political 
subdivision and allows existing entities to continue to issue new bonds 
during the transition period. To enhance certainty, an issuer also may 
choose to apply the definition of political subdivision in Sec.  1.103-
1(c) in the final regulations in circumstances in which that definition 
otherwise would not apply under the transition rules.
    In addition, prior to the applicability date of the final 
regulations, issuers may elect to apply the definition of political 
subdivision in Sec.  1.103-1(c) of the Proposed Regulations in whole, 
but not in part, for any purpose of sections 103 and 141 through 150, 
provided such use is applied consistently for all purposes of sections 
103 and 141 through 150 to any given entity.

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 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, and because these 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, 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 entities.

Comments and Public Hearing

    Before these Proposed Regulations are adopted as final regulations, 
consideration will be given to any comments that are submitted timely 
to the IRS as prescribed in this preamble under the ``Addresses'' 
heading. The Treasury Department and the IRS request comments on all 
aspects of the proposed rules. All comments will be available at 
www.regulations.gov or upon request.
    A public hearing has been scheduled for June 6, 2016, at 10:00 
a.m., in the Auditorium of the Internal Revenue Building, 1111 
Constitution Avenue NW., Washington, DC. Due to building security 
procedures, visitors must enter at the Constitution Avenue entrance. In 
addition, all visitors must present photo identification to enter the 
building. Because of access restrictions, visitors will not be admitted 
beyond the immediate entrance area more than 30 minutes before the 
hearing starts. For more information about having your name placed on 
the building access list to attend the hearing, see the FOR FURTHER 
INFORMATION CONTACT section of this preamble.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who 
wish to present oral comments at the hearing must submit an outline of 
the topics to be discussed and the time to be devoted to each topic by 
May 23, 2016. Submit a signed paper or electronic copy of the outline 
as prescribed in this preamble under the ``Addresses'' heading. A 
period of 10 minutes will be allotted to each person for making 
comments. An agenda showing the scheduling of the speakers will be 
prepared after the deadline for receiving outlines has passed. Copies 
of the agenda will be available free of charge at the hearing.

Drafting Information

    The principal authors of these regulations are Spence Hanemann and 
Timothy Jones, Office of Associate Chief Counsel (Financial 
Institutions and Products), IRS. However, other personnel from the IRS 
and the Treasury Department participated in their development.

Availability of IRS Documents

    IRS revenue rulings cited in this notice of proposed rulemaking 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.

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 continues to read in 
part as follows:

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

0
Par. 2. Section 1.103-1 is revised to read as follows:


Sec.  1.103-1  Interest on State or local bonds.

    (a) Interest on State or local bonds. Under section 103(a), except 
as otherwise provided in section 103(b), gross income does not include 
interest on any State or local bond. Under section 103(c), the term 
State or local bond means any obligation (as defined in Sec.  1.150-
1(b)) of a State (including for this purpose the District of Columbia 
or any possession of the United States) or a political subdivision 
thereof (a State or local governmental unit). Obligations issued by or 
on behalf of any State or local governmental unit by a constituted 
authority empowered to issue such obligations are the obligations of 
such a unit. An obligation qualifies as a State or local bond so long 
as the issuer of that obligation remains a State or local governmental 
unit or a constituted authority.
    (b) Certain limitations on interest exclusion. Under section 
103(b), the interest exclusion in section 103(a) is inapplicable to a 
private activity bond under section 141(a) (unless the bond is a 
qualified bond under section 141(e)), an arbitrage bond under section 
148, or a bond which does not meet the applicable requirements of 
section 149.
    (c) Definition of political subdivision--(1) In general. The term 
political subdivision means an entity that meets each of the 
requirements of paragraphs (c)(2) (sovereign powers), (c)(3) 
(governmental purpose), and (c)(4) (governmental control) of this 
section, taking into account all of the facts and circumstances, or 
that is described in published guidance issued pursuant to paragraph 
(c)(5) of this section. Entities that may qualify as political 
subdivisions include, among others, general purpose governmental 
entities, such as cities and counties (whether or not incorporated as 
municipal corporations), and special purpose governmental entities, 
such as special assessment districts that provide for

[[Page 8873]]

roads, water, sewer, gas, light, reclamation, drainage, irrigation, 
levee, school, harbor, port improvements, and other governmental 
purposes for a State or local governmental unit.
    (2) Sovereign powers. Pursuant to a State or local law of general 
application, the entity has a delegated right to exercise a substantial 
amount of at least one of the following recognized sovereign powers of 
a State or local governmental unit: The power of taxation, the power of 
eminent domain, and police power.
    (3) Governmental purpose. The entity serves a governmental purpose. 
The determination of whether an entity serves a governmental purpose is 
based on, among other things, whether the entity carries out the public 
purposes that are set forth in the entity's enabling legislation and 
whether the entity operates in a manner that provides a significant 
public benefit with no more than incidental private benefit.
    (4) Governmental control. A State or local governmental unit 
exercises control over the entity. For this purpose, control is defined 
in paragraph (c)(4)(i) of this section and a State or local 
governmental unit exercises such control only if the control is vested 
in persons described in paragraph (c)(4)(ii) of this section.
    (i) Definition of control. Control means an ongoing right or power 
to direct significant actions of the entity. Rights or powers may 
establish control either individually or in the aggregate. Among rights 
or powers that may establish control, an ongoing ability to exercise 
one or more of the following significant rights or powers, on a 
discretionary and non-ministerial basis, constitutes control: the right 
or power both to approve and to remove a majority of the governing body 
of the entity; the right or power to elect a majority of the governing 
body of the entity in periodic elections of reasonable frequency; or 
the right or power to approve or direct the significant uses of funds 
or assets of the entity in advance of that use. Procedures designed to 
ensure the integrity of the entity but not to direct significant 
actions of the entity are insufficient to constitute control of an 
entity. Examples of such procedures include requirements for submission 
of audited financial statements of the entity to a higher level State 
or local governmental unit, open meeting requirements, and conflicts of 
interest limitations.
    (ii) Control vested in a State or local governmental unit or an 
electorate. Control is vested in persons described in paragraphs 
(c)(4)(ii)(A) or (c)(4)(ii)(B) of this section or a combination 
thereof:
    (A) A State or local governmental unit possessing a substantial 
amount of each of the sovereign powers and acting through its governing 
body or through its duly authorized elected or appointed officials in 
their official capacities; or
    (B) An electorate established under applicable State or local law 
of general application, provided the electorate is not a private 
faction (as defined in paragraph (c)(4)(iii) of this section).
    (iii) Definition of private faction--(A) In general. A private 
faction is any electorate if the outcome of the exercise of control 
described in paragraph (c)(4)(i) of this section is determined solely 
by the votes of an unreasonably small number of private persons. The 
determination of whether a number of such private persons is 
unreasonably small depends on all of the facts and circumstances, 
including, without limitation, the entity's governmental purpose, the 
number of members in the electorate, the relationships of the members 
of the electorate to one another, the manner of apportionment of votes 
within the electorate, and the extent to which the members of the 
electorate adequately represent the interests of persons reasonably 
affected by the entity's actions. For purposes of this definition, the 
special rules in paragraphs (c)(4)(iii)(B) through (D) of this section 
apply.
    (B) Treatment of certain limited electorates as private factions. 
An electorate is a private faction if any three private persons that 
are members of the electorate possess, in the aggregate, a majority of 
the votes necessary to determine the outcome of the relevant exercise 
of control.
    (C) Safe harbor--voting power dispersed among more than 10 persons. 
An electorate is not a private faction if the smallest number of 
private persons who can combine votes to establish a majority of the 
votes necessary to determine the outcome of the relevant exercise of 
control is greater than 10 persons. For example, if an electorate 
consists of 20 private persons with equal, five-percent shares of the 
total votes, that electorate is not a private faction because a minimum 
of 11 members of that electorate is necessary to have a majority of the 
votes. By contrast, for example, if an electorate consists of 20 
private persons with unequal voting shares in which some combination of 
10 or fewer members has a majority of the votes, then that electorate 
does not qualify for the safe harbor from treatment as a private 
faction under this paragraph (c)(4)(iii)(C).
    (D) Operating rules. The following rules apply for purposes of 
determining numbers of voters and voting control in paragraphs 
(c)(4)(iii)(B) and (C) of this section:
    (1) Related parties (as defined in Sec.  1.150-1(b)) are treated as 
a single person; and
    (2) In computing the number of votes necessary to determine the 
outcome of the relevant exercise of control, all voters entitled to 
vote in an election are assumed to cast all votes to which they are 
entitled.
    (5) Authority of the Commissioner. In guidance published in the 
Internal Revenue Bulletin, the Commissioner may set forth additional 
circumstances in which an entity qualifies as a political subdivision 
of a State or local governmental unit. See Sec.  601.601(d)(2)(ii) of 
this chapter.
    (d) Applicability dates--(1) In general. Except as otherwise 
provided in paragraphs (d)(2) through (4) of this section, this section 
applies to all entities for all purposes of sections 103 and 141 
through 150 beginning on the date 90 days after the publication of the 
Treasury decision adopting these rules as final regulations in the 
Federal Register.
    (2) Applicability date of the definition of political subdivision 
for outstanding bonds. For purposes of determining whether outstanding 
bonds of an entity are obligations of a political subdivision under 
section 103, the definition of political subdivision in paragraph (c) 
of this section does not apply to that entity with respect to its 
outstanding bonds that are issued before the general applicability date 
under paragraph (d)(1) of this section.
    (3) Applicability date of the definition of political subdivision 
for refunding bonds. For purposes of determining whether refunding 
bonds of an entity are obligations of a political subdivision under 
section 103, the definition of political subdivision in paragraph (c) 
of this section does not apply to that entity with respect to its 
refunding bonds that are issued on or after the general applicability 
date under paragraph (d)(1) of this section to refund bonds with 
respect to which paragraph (c) of this section otherwise does not 
apply, provided that the weighted average maturity of the refunding 
bonds is no longer than the remaining weighted average maturity of the 
refunded bonds.
    (4) Applicability date of the definition of political subdivision 
for existing entities. For existing entities that are created or 
organized before March 24, 2016, the definition of political 
subdivision in paragraph (c) of this section does not apply for any 
purpose of sections 103 and 141 to 150 during the three-year period 
beginning on the

[[Page 8874]]

general applicability date under paragraph (d)(1) of this section.
    (5) Elective application of definition of political subdivision. An 
issuer may choose to apply the definition of political subdivision in 
paragraph (c) of this section to an issue of bonds in circumstances in 
which that section otherwise would not apply to that issue under 
paragraph (d)(2) or (3) of this section, provided that choice is 
applied consistently to the issue. An entity may choose to apply the 
definition of political subdivision in paragraph (c) of this section to 
an entity in circumstances in which that section otherwise would not 
apply to that entity under paragraph (d)(4) of this section, provided 
that choice is applied consistently to the entity.

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2016-03790 Filed 2-22-16; 8:45 am]
 BILLING CODE 4830-01-P


Current View
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionNotice of proposed rulemaking and notice of public hearing.
DatesWritten or electronic comments must be received by May 23, 2016. Request to speak and outlines of topics to be discussed at the public hearing scheduled for June 6, 2016, at 10:00 a.m., must be received by May 23, 2016.
ContactConcerning the proposed regulations, Spence Hanemann at (202) 317-6980; concerning submissions of comments and the hearing, Oluwafunmilayo (Funmi) Taylor at (202) 317-6901 (not toll-free numbers).
FR Citation81 FR 8870 
RIN Number1545-BM99
CFR AssociatedIncome Taxes and Reporting and Recordkeeping Requirements

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