82 FR 34611 - Branded Prescription Drug Fee

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 82, Issue 142 (July 26, 2017)

This document contains final regulations that define the term controlled group for purposes of the branded prescription drug fee. The final regulations supersede and adopt the text of temporary regulations that define the term controlled group. The final regulations affect persons engaged in the business of manufacturing or importing certain branded prescription drugs.

[Federal Register Volume 82, Number 142 (Wednesday, July 26, 2017)]
[Rules and Regulations]
[Pages 34611-34612]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-15643]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 51

[TD 9823]
RIN 1545-BM26


Branded Prescription Drug Fee

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations and removal of temporary regulations.

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SUMMARY: This document contains final regulations that define the term 
controlled group for purposes of the branded prescription drug fee. The 
final regulations supersede and adopt the text of temporary regulations 
that define the term controlled group. The final regulations affect 
persons engaged in the business of manufacturing or importing certain 
branded prescription drugs.

DATES: 
    Effective Date: The final regulations are effective July 24, 2017.
    Applicability Date: For dates of applicability, see Sec.  51.11(b) 
of the final regulations.

FOR FURTHER INFORMATION CONTACT: Rachel S. Smith at (202) 317-6855 (not 
a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The branded prescription drug fee was enacted by section 9008 of 
the Patient Protection and Affordable Care Act, Public Law 111-148, 124 
Stat. 119 (2010), as amended by section 1404 of the Health Care and 
Education Reconciliation Act of 2010, Public Law 111-152, 124 Stat. 
1029 (2010) (collectively the ACA). Section 9008 did not amend the 
Internal Revenue Code (Code) but cross-references specific Code 
sections.
    On July 28, 2014, temporary regulations (TD 9684) relating to the 
fee on branded prescription drugs were published in the Federal 
Register (79 FR 43631) (2014 temporary regulations). A notice of 
proposed rulemaking (REG-123286-14) cross-referencing the temporary 
regulations was published in the Federal Register on the same day (79 
FR 43699). The 2014 temporary regulations provided a definition of the 
term controlled group that was broader than the definition of the term 
controlled group in Sec.  51.2T(e)(3) of the temporary regulations (TD 
9544) published in the Federal Register (76 FR 51245) on August 18, 
2011 (2011 temporary regulations).
    Neither the Department of the Treasury (Treasury Department) nor 
the Internal Revenue Service (IRS) received any written comments with 
respect to the notice of proposed rulemaking and no public hearing was 
requested or held. The final regulations adopt the proposed regulations 
without change and the 2014 temporary regulations are removed.

Explanation of Provisions

    The 2011 temporary regulations defined the term controlled group to 
mean a group of at least two covered entities that are treated as a 
single employer under section 52(a), 52(b), 414(m), or 414(o) of the 
Code. The 2014 temporary regulations defined the term controlled group 
more broadly to mean a group of two or more persons, including at least 
one person that is a covered entity, that is treated as a single 
employer under section 52(a), 52(b), 414(m), or 414(o) of the Code. 
These final regulations adopt the definition of controlled group 
contained in the 2014 temporary regulations without change.
    The broader definition of the term controlled group in the 2014 
temporary regulations and these final regulations is supported by the 
statutory language and is consistent with the way in which controlled 
group rules based on similar statutory language are applied, including 
how the term controlled group is defined in Sec.  57.2(c)(1) for 
purposes of the health insurance providers fee under section 9010 of 
the ACA. Consistent with the preamble to the 2014 temporary 
regulations, the Treasury Department and the IRS continue to expect 
that the broader definition of the term controlled group in the final 
regulations will primarily affect the scope of joint and several 
liability for the fee and will not otherwise affect the administration 
of the fee.
    The 2014 temporary regulations applied beginning on January 1, 2015 
(i.e., starting with 2015 sales years), and are effective until July 
24, 2017. These final regulations apply on and after July 24, 2017. 
Because both the 2014 temporary regulations and these final regulations 
provide the same definition of controlled group for purposes of section 
9008 of the ACA, that definition applies continuously beginning with 
the 2015 sales year and 2017 fee year.

Special Analyses

    Certain IRS regulations, including these, 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. Because the final 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 notice of proposed rulemaking that preceded the final 
regulations was submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its impact on small 
business. No comments were received on the proposed regulations.

Drafting Information

    The principal author of these final regulations is Rachel S. Smith, 
Office of the Associate Chief Counsel (Passthroughs and Special 
Industries). However, other personnel from the IRS and the Treasury 
Department participated in their development.

List of Subjects in 26 CFR Part 51

    Drugs, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 51 is amended as follows:

PART 51--BRANDED PRESCRIPTION DRUG FEE

0
Paragraph 1. The authority citation for part 51 is revised to read as 
follows:

    Authority: 26 U.S.C. 7805; sec. 9008, Pub. L. 111-148, 124 Stat. 
119.
    Section 51.8 also issued under 26 U.S.C. 6302(a).

[[Page 34612]]

    Section 51.6302-1 also issued under 26 U.S.C. 6302(a).

0
Par. 2. Section 51.2 is amended by revising paragraph (e)(3) to read as 
follows:


Sec.  51.2  Explanation of terms.

* * * * *
    (e) * * *
    (3) Controlled group. The term controlled group means a group of 
two or more persons, including at least one person that is a covered 
entity, that is treated as a single employer under section 52(a), 
52(b), 414(m), or 414(o).
* * * * *


Sec.  51.2T   [Removed]

0
Par. 3. Section 51.2T is removed.

0
Par. 4. Section 51.11 is amended by revising the section heading and 
paragraph (b) and removing paragraph (c) to read as follows:


Sec.  51.11   Applicability date.

* * * * *
    (b) Section 51.2(e)(3) applies on and after July 24, 2017.


Sec.  51.11T   [Removed]

0
Par. 5. Section 51.11T is removed.

Kirsten Wielobob,
Deputy Commissioner for Services and Enforcement.
    Approved: July 17, 2017.
Tom West,
Tax Legislative Counsel.
[FR Doc. 2017-15643 Filed 7-24-17; 4:15 pm]
BILLING CODE 4830-01-P