83_FR_55869 83 FR 55653 - Regulations To Prescribe Return and Time for Filing for Payment of Section 4960, 4966, 4967, and 4968 Taxes and To Update the Abatement Rules for Section 4966 and 4967 Taxes

83 FR 55653 - Regulations To Prescribe Return and Time for Filing for Payment of Section 4960, 4966, 4967, and 4968 Taxes and To Update the Abatement Rules for Section 4966 and 4967 Taxes

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 83, Issue 216 (November 7, 2018)

Page Range55653-55656
FR Document2018-24285

This document contains proposed regulations specifying which return to use to pay certain excise taxes and the time for filing the return. The regulations also implement the statutory addition of two excise taxes to the first-tier taxes subject to abatement. These regulations affect applicable tax-exempt organizations and their related organizations, applicable educational institutions, sponsoring organizations that maintain certain donor advised funds, fund managers of such sponsoring organizations, and certain donors, donor advisors and persons related to a donor or donor advisor of a donor advised fund.

Federal Register, Volume 83 Issue 216 (Wednesday, November 7, 2018)
[Federal Register Volume 83, Number 216 (Wednesday, November 7, 2018)]
[Proposed Rules]
[Pages 55653-55656]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-24285]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 53

[REG-107163-18]
RIN 1545-BO80


Regulations To Prescribe Return and Time for Filing for Payment 
of Section 4960, 4966, 4967, and 4968 Taxes and To Update the Abatement 
Rules for Section 4966 and 4967 Taxes

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: This document contains proposed regulations specifying which 
return to use to pay certain excise taxes and the time for filing the 
return. The regulations also implement the statutory addition of two 
excise taxes to the first-tier taxes subject to abatement. These 
regulations affect applicable tax-exempt

[[Page 55654]]

organizations and their related organizations, applicable educational 
institutions, sponsoring organizations that maintain certain donor 
advised funds, fund managers of such sponsoring organizations, and 
certain donors, donor advisors and persons related to a donor or donor 
advisor of a donor advised fund.

DATES: Written or electronic comments and requests for a public hearing 
must be received by December 7, 2018.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-107163-18), Room 
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
107163-18), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW, Washington, DC 20224 or sent electronically via the Federal 
eRulemaking Portal at http://www.regulations.gov (indicate IRS REG-
107163-18).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Amber L. MacKenzie at (202) 317-4086 or Ward L. Thomas at (202) 317-
6173; concerning submission of comments and request for hearing, Regina 
Johnson at (202) 317-6901 (not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background

    This document contains proposed regulations amending regulations 
under section 6011 of the Internal Revenue Code (Code) to specify the 
return to accompany payment of excise taxes under sections 4960, 4966, 
4967, and 4968; amending regulations under section 6071 to specify the 
time for filing that return; and amending regulations under section 
4963 that define the first-tier taxes subject to abatement under 
section 4962.
    These regulations affect applicable tax-exempt organizations 
described in section 4960(c)(1) and their related organizations 
described in section 4960(c)(4)(B); applicable educational institutions 
described in section 4968(b)(1); sponsoring organizations described in 
section 4966(d)(1) that maintain donor advised funds described in 
section 4966(d)(2); fund managers of such sponsoring organizations 
described in sections 4966(d)(3); and donors, donor advisors and 
persons related to a donor or donor advisor of a donor advised fund 
described in section 4967(d).
    These regulations implement section 1231 of the Pension Protection 
Act of 2006, Public Law 109-280, 120 Stat. 780, 1094 (``PPA''), as 
amended by section 3(h) of the Tax Technical Corrections Act of 2007, 
Public Law 110-172, 121 Stat. 2473, 2475, and sections 13602 and 13701 
of the Tax Cuts and Jobs Act, Public Law 115-97, 131 Stat. 2054, 2157, 
2167 (2017) (``TCJA'').
    The PPA added sections 4966 and 4967 to the Code. These sections 
impose excise taxes related to certain distributions from donor advised 
funds (defined in section 4966(d)(2)) maintained by organizations that 
are defined as sponsoring organizations in section 4966(d)(1).
    Section 4966(a)(1) imposes a 20 percent excise tax on each 
``taxable distribution'' from a donor advised fund, payable by the 
sponsoring organization of the donor advised fund. Section 4966(a)(2) 
imposes a separate 5 percent excise tax on the agreement of any fund 
manager (as defined in section 4966(d)(3)) to the making of the 
distribution, knowing that it is a taxable distribution. Section 
4966(b)(1) states that if more than one fund manager is liable for the 
tax, all such managers are jointly and severally liable with respect to 
the taxable distribution. Section 4966(b)(2) provides that the maximum 
amount of tax that may be imposed on all fund managers for any one 
taxable distribution is $10,000.
    Section 4966(c)(1) defines the term ``taxable distribution'' as any 
distribution from a donor advised fund: (A) To any natural person; or 
(B) to any other person if (i) the distribution is for any purpose 
other than one specified in section 170(c)(2)(B), or (ii) the 
sponsoring organization does not exercise expenditure responsibility in 
accordance with section 4945(h) with respect to such distribution. 
Section 4966(c)(2) excepts from the definition of taxable distribution: 
(A) Distributions to any organization described in section 
170(b)(1)(A), other than a disqualified supporting organization (as 
defined in section 4966(d)(4)); (B) distributions to the sponsoring 
organization of such donor advised fund; and (C) distributions to any 
other donor advised fund.
    Section 4967(a)(1) imposes a tax on the advice of a donor, donor 
advisor, or related person, described in subsection (d), if a 
distribution from a donor advised fund results in such person (or any 
other person described in subsection (d)) receiving, directly or 
indirectly, a more than incidental benefit (a ``prohibited benefit''). 
The tax, which is equal to 125 percent of the amount of the prohibited 
benefit, is paid by any person described in subsection (d) who advises 
as to a distribution or who receives a prohibited benefit as a result 
of the distribution. Section 4967(c)(1) provides that if more than one 
person is liable for the tax under section 4967(a)(1), then all such 
persons are jointly and severally liable for the tax.
    Section 4967(a)(2) imposes a tax on a fund manager (defined in 
section 4966(d)(3)) who agrees to the making of a distribution 
described in section 4967(a)(1), knowing that it would confer a more 
than incidental benefit on a donor, donor advisor, or related person. 
Section 4967(a)(2) states that the tax is equal to 10 percent of the 
amount of the prohibited benefit. Section 4967(c)(1) provides that if 
more than one fund manager is liable for the tax, all such fund 
managers are jointly and severally liable. Section 4967(c)(2) provides 
that the maximum amount of tax under section 4967(a)(2) on all fund 
managers for any one prohibited benefit transaction is $10,000. Section 
4967(b) provides that no tax is imposed under section 4967 if a tax has 
been imposed with respect to the distribution under section 4958 
(taxing excess benefit transactions).
    In 2006, the PPA added section 4966 and section 4967 taxes to the 
definitions of ``first tier tax'' in section 4963(a) and ``taxable 
event'' in section 4963(c). In 2007, section 4962(b) was amended by the 
Tax Technical Corrections Act of 2007, Public Law 110-172, sec. 3(h), 
121 Stat. 2473, 2475, to add subchapter G of chapter 42 (i.e., section 
4966 and section 4967 taxes) to the definition of ``qualified first 
tier tax'' for purposes of tax abatement. Thus under the Code, section 
4966 and section 4967 taxes are subject to abatement under the 
generally applicable rules. Treas. Reg. Sec.  53.4963-1 sets forth 
definitions with respect to abatement of taxes.
    The TCJA added sections 4960 and 4968 to the Code. Section 4960 
imposes an excise tax equal to the product of the rate of tax under 
section 11 and the sum of (1) so much of the remuneration paid (other 
than any excess parachute payment) by an applicable tax-exempt 
organization for the taxable year with respect to employment of any 
covered employee in excess of $1,000,000, plus (2) any excess parachute 
payment paid by such an organization to any covered employee. Section 
4960(c)(4)(A) provides that remuneration of a covered employee by an 
applicable tax-exempt organization includes any remuneration paid with 
respect to employment of such employee by any related person or 
governmental entity. Section 4960(c)(4)(C) provides that when 
remuneration from more than one

[[Page 55655]]

employer is taken into account in determining the tax imposed by 
subsection (a), each such employer is liable for a pro rata share of 
the tax imposed by subsection (a) based on the ratio of the amount of 
remuneration paid by such employer with respect to such employee to the 
amount of remuneration paid by all such employers to such employee. 
Separately, section 4968 imposes an excise tax on each applicable 
educational institution based on the net investment income of such 
institution (including certain income of related organizations) for the 
taxable year.
    Section 6011(a) generally provides that when required by 
regulations prescribed by the Secretary, any person liable for any tax 
imposed by the Code shall make a return or statement according to the 
forms and regulations prescribed by the Secretary. Section 6071 
generally provides that when not otherwise provided for under the Code, 
return filing dates are prescribed by regulation. Treas. Reg. 
Sec. Sec.  53.6011-1 and 53.6071-1 require persons subject to certain 
enumerated excise taxes under Chapter 42 of the Code to file a Form 
4720 to accompany payment of those excise taxes and provide the time 
for filing the return. (Form 4720 is denominated ``Return of Certain 
Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code.'') 
Sections 4960, 4966, 4967, and 4968 were added to Chapter 42 of the 
Code, but are not enumerated in Treas. Reg. Sec. Sec.  53.6011-1 and 
53.6071-1.

Explanation of Provisions

1. Section 4962 Abatement

    These proposed regulations add section 4966 and section 4967 taxes 
to the definitions of ``first tier tax'' and ``taxable event'' in 
Treas. Reg. Sec.  53.4963-1. Qualified first tier taxes are subject to 
abatement under section 4962.

2. Requirement To File a Form 4720

    These proposed regulations amend Treas. Reg. Sec.  53.6011-1(b) to 
provide that persons (including governmental entities) that are liable 
for section 4960, 4966, 4967, or 4968 excise taxes are required to file 
a return on Form 4720.

3. Deadline for Filing a Form 4720

    Under Sec.  53.6071-1(i) of these proposed regulations, a person 
required to file a Form 4720 to report an excise tax under section 
4960, 4966, 4967, or 4968 must file a Form 4720 by the 15th day of the 
fifth month after the end of the person's taxable year during which the 
excise tax liability was incurred. Thus, for example, an organization 
reporting on a calendar-year basis that incurred excise tax during the 
calendar year ending December 31, 2018, would be required to file a 
Form 4720 and pay the tax due by May 15, 2019.

4. Effective/Applicability Date

    These regulations are proposed to apply as of the date of 
publication of the final rule in the Federal Register.

Special Analyses

    This regulation is not subject to review under section 6(b) of 
Executive Order 12866 pursuant to the Memorandum of Agreement (April 
11, 2018) between the Department of the Treasury and the Office of 
Management and Budget regarding review of tax regulations. It is hereby 
certified that the collection of information in these regulations will 
not have a significant economic impact on a substantial number of small 
entities. This rule merely provides guidance as to the timing and 
filing of Form 4720 for persons liable for the specified excise taxes 
and who have a statutory filing obligation. Completing the applicable 
portion of the Form 4720 imposes little incremental burden in time or 
expense as compared to any other filing method. In addition, a person 
may already be required to file the Form 4720 under the existing final 
regulations in Sec. Sec.  53.6011-1 and 53.6071-1 if it is liable for 
another excise tax for which filing of the Form is required. Therefore, 
a regulatory flexibility analysis under the Regulatory Flexibility Act 
(5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of 
the Code, this regulation will be submitted to the Chief Counsel for 
Advocacy of the Small Business Administration for comment on its impact 
on small entities.

Comments and Requests for Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any comments that are timely submitted 
to the IRS as prescribed in the preamble under the ADDRESSES section. 
All comments submitted will be made available at www.regulations.gov or 
upon request.
    A public hearing will be scheduled if requested in writing by any 
person that timely submits written comments. If a public hearing is 
scheduled, notice of the date, time, and place for the hearing will be 
published in the Federal Register.

Drafting Information

    The principal authors of these regulations are Amber L. MacKenzie 
and Ward L. Thomas, Office of Associate Chief Counsel (Tax Exempt and 
Government Entities). However, other personnel from the IRS and 
Treasury Department participated in their development.

List of Subjects in 26 CFR Part 53

    Excise taxes, Foundations, Investments, Lobbying, Reporting and 
recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 53 is proposed to be amended as follows:

PART 53--FOUNDATION AND SIMILAR EXCISE TAXES

0
Paragraph 1. The authority citation for part 53 continues to read, in 
part, as follows:

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


Sec.  53.4963-1   [Amended]

0
Par. 2. Section 53.4963-1 is amended as follows:
0
1. Paragraph (a) is amended by removing the language ``4958, 4971'' and 
adding ``4958, 4966, 4967, 4971'' in its place.
0
2. Paragraph (c) is amended by removing the language ``4958, 4971'' and 
adding ``4958, 4966, 4967, 4971'' in its place.
0
Par. 3. Section 53.6011-1 is amended by:
0
1. Revising the first sentence of paragraph (b).
0
2. Removing from the third sentence of paragraph (b) the language 
``4958(a), or 4965(a),'' and adding ``4958(a), 4960(a), 4965(a), 
4966(a), or 4967(a),'' in its place.
    The revision reads as follows:


Sec.  53.6011-1  General requirement of return, statement or list.

* * * * *
    (b) Every person (including a governmental entity) liable for tax 
imposed by sections 4941(a), 4942(a), 4943(a), 4944(a), 4945(a), 
4955(a), 4958(a), 4959, 4960(a), 4965(a), 4966(a), 4967(a), or 4968(a), 
and every private foundation and every trust described in section 
4947(a)(2) which has engaged in an act of self-dealing (as defined in 
section 4941(d)) (other than an act giving rise to no tax under section 
4941(a)) shall file an annual return on Form 4720 and shall include 
therein the information required by such form and

[[Page 55656]]

the instructions issued with respect thereto. * * *
* * * * *


Sec.  53.6071-1   [Amended]

0
Par. 4. Section 53.6071-1 is amended by:
0
1. Redesignating paragraph (i) as paragraph (j).
0
2. Adding new paragraphs (i) and (j)(3).
    The additions read as follows:


Sec.  53.6071-1   Time for filing returns.

* * * * *
    (i) Taxes under section 4960, 4966, 4967, or 4968. A person 
(including a governmental entity) required by Sec.  53.6011-1(b) to 
file a return for a tax imposed by section 4960(a), 4966(a), 4967(a), 
or 4968(a) in a taxable year must file the Form 4720 on or before the 
15th day of the fifth month after the end of the person's taxable year 
(or, if the person has not established a taxable year for Federal 
income tax purposes, the person's annual accounting period).
    (j) * * *
    (3) Paragraph (i) of this section applies on and after the date of 
publication of the Treasury decision adopting these rules as final 
regulations in the Federal Register.

Kirsten Wielobob,
 Deputy Commissioner for Services and Enforcement.
[FR Doc. 2018-24285 Filed 11-5-18; 4:15 pm]
 BILLING CODE 4830-01-P



                                                                   Federal Register / Vol. 83, No. 216 / Wednesday, November 7, 2018 / Proposed Rules                                                55653

                                                  The rules of 26 CFR 601.601(a)(3)                     ■ 1. Removing ‘‘section 846(f)(3)’’ from              section 846(d)(2)(A) and (B). However,
                                                apply to the hearing. Persons who wish                  the first sentence of paragraph (a)(1) and            the Secretary may adjust the loss
                                                to present oral comments at the hearing                 adding ‘‘section 846(e)(3)’’ in its place.            payment pattern for any line of business
                                                must submit written or electronic                       ■ 2. Removing ‘‘and § 1.846–3(b)                      as provided in paragraph (d)(2) of this
                                                comments and an outline of the topics                   contains guidance relating to discount                section.
                                                to be discussed and the time to be                      factors applicable to accident years prior               (2) Smoothing adjustments. The
                                                devoted to each topic by December 7,                    to the 1987 accident year’’ from the                  Secretary may adjust the loss payment
                                                2018. Such persons should submit a                      third sentence of paragraph (a)(1).                   pattern for any line of business using a
                                                signed paper original and eight (8)                     ■ 3. Removing the last sentence of                    methodology described by the Secretary
                                                copies or an electronic copy. A period                  paragraph (a)(1).                                     in other published guidance if necessary
                                                of ten (10) minutes will be allotted to                 ■ 4. Removing paragraph (a)(2) and                    to avoid negative payment amounts and
                                                each person for making comments. An                     redesignating paragraphs (a)(3) and (4)               otherwise produce a stable pattern of
                                                agenda showing the scheduling of the                    as paragraphs (a)(2) and (3),                         positive discount factors less than one.
                                                speakers will be prepared after the                     respectively.                                            (e) Applicability date. (1) Except as
                                                deadline for receiving outlines has                     ■ 5. In the first sentence of paragraph               provided in paragraph (e)(2) of this
                                                passed. Copies of the agenda will be                    (b)(1), removing ‘‘section 846(f)(6)’’ and            section, this section applies to taxable
                                                available free of charge at the hearing.                adding ‘‘section 846(e)(6)’’ in its place;            years beginning after December 31,
                                                                                                        and removing ‘‘, in § 1.846–2 (relating to            1986.
                                                Drafting Information                                    a taxpayer’s election to use its own                     (2) Paragraphs (c) and (d) of this
                                                  The principal author of these                         historical loss payment pattern)’’.                   section apply to taxable years beginning
                                                                                                        ■ 6. Removing ‘‘for accident years after              after December 31, 2017.
                                                regulations is Kathryn M. Sneade, Office
                                                of Associate Chief Counsel (Financial                   1987’’ from the heading for paragraph
                                                                                                        (b)(3)(i).                                            § 1.846–2    [Removed]
                                                Institutions and Products), IRS.
                                                                                                        ■ 7. Removing the designation ‘‘(A)’’                 ■   Par. 4. Section 1.846–2 is removed.
                                                However, other personnel from the
                                                Treasury Department and the IRS                         and the accompanying heading
                                                                                                                                                              § 1.846–2T    [Removed]
                                                participated in their development.                      ‘‘Accident years after 1991’’ after the
                                                                                                        heading of paragraph (b)(3)(ii).                      ■   Par. 5. Section 1.846–2T is removed.
                                                Statement of Availability of IRS                        ■ 8. Removing paragraphs (b)(3)(ii)(B),
                                                                                                                                                              § 1.846–3    [Removed]
                                                Documents                                               and (b)(3)(iii) and (iv).
                                                                                                        ■ 9. Removing paragraph (b)(4) and
                                                                                                                                                              ■   Par. 6. Section 1.846–3 is removed.
                                                  The IRS notices and revenue                           redesignating paragraph (b)(5) as                     § 1.846–4    [Removed]
                                                procedures cited in this preamble are                   paragraph (b)(4).
                                                published in the Internal Revenue                                                                             ■   Par. 7. Section 1.846–4 is removed.
                                                                                                        ■ 10. Adding paragraphs (c), (d), and (e).
                                                Bulletin (or Cumulative Bulletin) and                      The additions read as follows:                     § 1.846–4T    [Removed]
                                                are available from the Superintendent of
                                                                                                        § 1.846–1    Application of discount factors.         ■   Par. 8. Section 1.846–4T is removed.
                                                Documents, U.S. Government
                                                Publishing Office, Washington, DC                       *      *    *     *     *                             Kirsten Wielobob,
                                                20402, or by visiting the IRS website at                   (c) Determination of annual rate. The              Deputy Commissioner for Services and
                                                http://www.irs.gov.                                     applicable interest rate is the annual                Enforcement.
                                                                                                        rate determined by the Secretary for any              [FR Doc. 2018–24367 Filed 11–5–18; 4:15 pm]
                                                List of Subjects in 26 CFR Part 1
                                                                                                        calendar year on the basis of the                     BILLING CODE 4830–01–P
                                                  Income taxes, Reporting and                           corporate bond yield curve (as defined
                                                recordkeeping requirements.                             in section 430(h)(2)(D)(i), determined by
                                                                                                        substituting ‘‘60-month period’’ for ‘‘24-            DEPARTMENT OF THE TREASURY
                                                Proposed Amendments to the                              month period’’ therein). The annual rate
                                                Regulations                                             for any calendar year is determined on                Internal Revenue Service
                                                  Accordingly, 26 CFR part 1 is                         the basis of a yield curve that reflects
                                                                                                        the average, for the most recent 60-                  26 CFR Part 53
                                                proposed to be amended as follows:
                                                                                                        month period ending before the                        [REG–107163–18]
                                                PART 1—INCOME TAXES                                     beginning of the calendar year, of
                                                                                                        monthly yields on corporate bonds                     RIN 1545–BO80
                                                ■ Paragraph 1. The authority citation                   described in section 430(h)(2)(D)(i). The
                                                                                                                                                              Regulations To Prescribe Return and
                                                for part 1 is amended by removing the                   annual rate is the average of that yield
                                                                                                                                                              Time for Filing for Payment of Section
                                                entry for § 1.846–2(d), removing the                    curve’s monthly spot rates with times to
                                                                                                                                                              4960, 4966, 4967, and 4968 Taxes and
                                                entry for §§ 1.846–1 through 1.846–4,                   maturity of not more than seventeen and
                                                                                                                                                              To Update the Abatement Rules for
                                                and adding an entry in numerical order                  one-half years.
                                                                                                           (d) Determination of loss payment                  Section 4966 and 4967 Taxes
                                                for § 1.846–1. The addition reads in part
                                                as follows:                                             pattern—(1) In general. Under section                 AGENCY: Internal Revenue Service (IRS),
                                                                                                        846(d)(1), the loss payment pattern                   Treasury.
                                                    Authority: 26 U.S.C. 7805 * * *
                                                                                                        determined by the Secretary for each                  ACTION: Notice of proposed rulemaking.
                                                *      *     *       *      *                           line of business is determined by
amozie on DSK3GDR082PROD with PROPOSALS1




                                                  Section 1.846–1 also issued under 26                  reference to the historical loss payment              SUMMARY:    This document contains
                                                U.S.C. 846.
                                                                                                        pattern applicable to such line of                    proposed regulations specifying which
                                                *      *     *       *      *                           business determined in accordance with                return to use to pay certain excise taxes
                                                § 1.846–0   [Removed]                                   the method of determination set forth in              and the time for filing the return. The
                                                                                                        section 846(d)(2) and the computational               regulations also implement the statutory
                                                ■ Par. 2. Section 1.846–0 is removed.                   rules prescribed in section 846(d)(3) on              addition of two excise taxes to the first-
                                                ■ Par. 3. Section 1.846–1 is amended                    the basis of the annual statement data                tier taxes subject to abatement. These
                                                by:                                                     from annual statements described in                   regulations affect applicable tax-exempt


                                           VerDate Sep<11>2014   17:02 Nov 06, 2018   Jkt 247001   PO 00000   Frm 00011   Fmt 4702   Sfmt 4702   E:\FR\FM\07NOP1.SGM   07NOP1


                                                55654              Federal Register / Vol. 83, No. 216 / Wednesday, November 7, 2018 / Proposed Rules

                                                organizations and their related                         2006, Public Law 109–280, 120 Stat.                   (d) who advises as to a distribution or
                                                organizations, applicable educational                   780, 1094 (‘‘PPA’’), as amended by                    who receives a prohibited benefit as a
                                                institutions, sponsoring organizations                  section 3(h) of the Tax Technical                     result of the distribution. Section
                                                that maintain certain donor advised                     Corrections Act of 2007, Public Law                   4967(c)(1) provides that if more than
                                                funds, fund managers of such                            110–172, 121 Stat. 2473, 2475, and                    one person is liable for the tax under
                                                sponsoring organizations, and certain                   sections 13602 and 13701 of the Tax                   section 4967(a)(1), then all such persons
                                                donors, donor advisors and persons                      Cuts and Jobs Act, Public Law 115–97,                 are jointly and severally liable for the
                                                related to a donor or donor advisor of                  131 Stat. 2054, 2157, 2167 (2017)                     tax.
                                                a donor advised fund.                                   (‘‘TCJA’’).                                              Section 4967(a)(2) imposes a tax on a
                                                DATES: Written or electronic comments                      The PPA added sections 4966 and                    fund manager (defined in section
                                                and requests for a public hearing must                  4967 to the Code. These sections impose               4966(d)(3)) who agrees to the making of
                                                be received by December 7, 2018.                        excise taxes related to certain                       a distribution described in section
                                                ADDRESSES: Send submissions to:                         distributions from donor advised funds                4967(a)(1), knowing that it would confer
                                                CC:PA:LPD:PR (REG–107163–18), Room                      (defined in section 4966(d)(2))                       a more than incidental benefit on a
                                                5203, Internal Revenue Service, P.O.                    maintained by organizations that are                  donor, donor advisor, or related person.
                                                Box 7604, Ben Franklin Station,                         defined as sponsoring organizations in                Section 4967(a)(2) states that the tax is
                                                Washington, DC 20044. Submissions                       section 4966(d)(1).                                   equal to 10 percent of the amount of the
                                                may be hand-delivered Monday through                       Section 4966(a)(1) imposes a 20                    prohibited benefit. Section 4967(c)(1)
                                                Friday between the hours of 8 a.m. and                  percent excise tax on each ‘‘taxable                  provides that if more than one fund
                                                                                                        distribution’’ from a donor advised                   manager is liable for the tax, all such
                                                4 p.m. to CC:PA:LPD:PR (REG–107163–
                                                                                                        fund, payable by the sponsoring                       fund managers are jointly and severally
                                                18), Courier’s Desk, Internal Revenue
                                                                                                        organization of the donor advised fund.               liable. Section 4967(c)(2) provides that
                                                Service, 1111 Constitution Avenue NW,
                                                                                                        Section 4966(a)(2) imposes a separate 5               the maximum amount of tax under
                                                Washington, DC 20224 or sent
                                                                                                        percent excise tax on the agreement of                section 4967(a)(2) on all fund managers
                                                electronically via the Federal
                                                                                                        any fund manager (as defined in section               for any one prohibited benefit
                                                eRulemaking Portal at http://
                                                                                                        4966(d)(3)) to the making of the                      transaction is $10,000. Section 4967(b)
                                                www.regulations.gov (indicate IRS REG–
                                                                                                        distribution, knowing that it is a taxable            provides that no tax is imposed under
                                                107163–18).
                                                                                                        distribution. Section 4966(b)(1) states               section 4967 if a tax has been imposed
                                                FOR FURTHER INFORMATION CONTACT:                        that if more than one fund manager is                 with respect to the distribution under
                                                Concerning the proposed regulations,                    liable for the tax, all such managers are             section 4958 (taxing excess benefit
                                                Amber L. MacKenzie at (202) 317–4086                    jointly and severally liable with respect             transactions).
                                                or Ward L. Thomas at (202) 317–6173;                    to the taxable distribution. Section                     In 2006, the PPA added section 4966
                                                concerning submission of comments                       4966(b)(2) provides that the maximum                  and section 4967 taxes to the definitions
                                                and request for hearing, Regina Johnson                 amount of tax that may be imposed on                  of ‘‘first tier tax’’ in section 4963(a) and
                                                at (202) 317–6901 (not toll-free                        all fund managers for any one taxable                 ‘‘taxable event’’ in section 4963(c). In
                                                numbers).                                               distribution is $10,000.                              2007, section 4962(b) was amended by
                                                SUPPLEMENTARY INFORMATION:                                 Section 4966(c)(1) defines the term                the Tax Technical Corrections Act of
                                                                                                        ‘‘taxable distribution’’ as any                       2007, Public Law 110–172, sec. 3(h),
                                                Background                                              distribution from a donor advised fund:               121 Stat. 2473, 2475, to add subchapter
                                                   This document contains proposed                      (A) To any natural person; or (B) to any              G of chapter 42 (i.e., section 4966 and
                                                regulations amending regulations under                  other person if (i) the distribution is for           section 4967 taxes) to the definition of
                                                section 6011 of the Internal Revenue                    any purpose other than one specified in               ‘‘qualified first tier tax’’ for purposes of
                                                Code (Code) to specify the return to                    section 170(c)(2)(B), or (ii) the                     tax abatement. Thus under the Code,
                                                accompany payment of excise taxes                       sponsoring organization does not                      section 4966 and section 4967 taxes are
                                                under sections 4960, 4966, 4967, and                    exercise expenditure responsibility in                subject to abatement under the generally
                                                4968; amending regulations under                        accordance with section 4945(h) with                  applicable rules. Treas. Reg. § 53.4963–
                                                section 6071 to specify the time for                    respect to such distribution. Section                 1 sets forth definitions with respect to
                                                filing that return; and amending                        4966(c)(2) excepts from the definition of             abatement of taxes.
                                                regulations under section 4963 that                     taxable distribution: (A) Distributions to               The TCJA added sections 4960 and
                                                define the first-tier taxes subject to                  any organization described in section                 4968 to the Code. Section 4960 imposes
                                                abatement under section 4962.                           170(b)(1)(A), other than a disqualified               an excise tax equal to the product of the
                                                   These regulations affect applicable                  supporting organization (as defined in                rate of tax under section 11 and the sum
                                                tax-exempt organizations described in                   section 4966(d)(4)); (B) distributions to             of (1) so much of the remuneration paid
                                                section 4960(c)(1) and their related                    the sponsoring organization of such                   (other than any excess parachute
                                                organizations described in section                      donor advised fund; and (C)                           payment) by an applicable tax-exempt
                                                4960(c)(4)(B); applicable educational                   distributions to any other donor advised              organization for the taxable year with
                                                institutions described in section                       fund.                                                 respect to employment of any covered
                                                4968(b)(1); sponsoring organizations                       Section 4967(a)(1) imposes a tax on                employee in excess of $1,000,000, plus
                                                described in section 4966(d)(1) that                    the advice of a donor, donor advisor, or              (2) any excess parachute payment paid
                                                maintain donor advised funds described                  related person, described in subsection               by such an organization to any covered
                                                in section 4966(d)(2); fund managers of                 (d), if a distribution from a donor                   employee. Section 4960(c)(4)(A)
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                                                such sponsoring organizations described                 advised fund results in such person (or               provides that remuneration of a covered
                                                in sections 4966(d)(3); and donors,                     any other person described in                         employee by an applicable tax-exempt
                                                donor advisors and persons related to a                 subsection (d)) receiving, directly or                organization includes any remuneration
                                                donor or donor advisor of a donor                       indirectly, a more than incidental                    paid with respect to employment of
                                                advised fund described in section                       benefit (a ‘‘prohibited benefit’’). The tax,          such employee by any related person or
                                                4967(d).                                                which is equal to 125 percent of the                  governmental entity. Section
                                                   These regulations implement section                  amount of the prohibited benefit, is paid             4960(c)(4)(C) provides that when
                                                1231 of the Pension Protection Act of                   by any person described in subsection                 remuneration from more than one


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                                                                   Federal Register / Vol. 83, No. 216 / Wednesday, November 7, 2018 / Proposed Rules                                               55655

                                                employer is taken into account in                       Thus, for example, an organization                    Drafting Information
                                                determining the tax imposed by                          reporting on a calendar-year basis that
                                                                                                                                                                The principal authors of these
                                                subsection (a), each such employer is                   incurred excise tax during the calendar
                                                                                                                                                              regulations are Amber L. MacKenzie
                                                liable for a pro rata share of the tax                  year ending December 31, 2018, would
                                                                                                                                                              and Ward L. Thomas, Office of
                                                imposed by subsection (a) based on the                  be required to file a Form 4720 and pay
                                                                                                                                                              Associate Chief Counsel (Tax Exempt
                                                ratio of the amount of remuneration                     the tax due by May 15, 2019.                          and Government Entities). However,
                                                paid by such employer with respect to
                                                                                                        4. Effective/Applicability Date                       other personnel from the IRS and
                                                such employee to the amount of
                                                                                                                                                              Treasury Department participated in
                                                remuneration paid by all such                              These regulations are proposed to                  their development.
                                                employers to such employee.                             apply as of the date of publication of the
                                                Separately, section 4968 imposes an                     final rule in the Federal Register.                   List of Subjects in 26 CFR Part 53
                                                excise tax on each applicable
                                                educational institution based on the net                Special Analyses                                        Excise taxes, Foundations,
                                                investment income of such institution                                                                         Investments, Lobbying, Reporting and
                                                (including certain income of related                       This regulation is not subject to                  recordkeeping requirements.
                                                organizations) for the taxable year.                    review under section 6(b) of Executive                Proposed Amendments to the
                                                   Section 6011(a) generally provides                   Order 12866 pursuant to the                           Regulations
                                                that when required by regulations                       Memorandum of Agreement (April 11,
                                                prescribed by the Secretary, any person                 2018) between the Department of the                     Accordingly, 26 CFR part 53 is
                                                liable for any tax imposed by the Code                  Treasury and the Office of Management                 proposed to be amended as follows:
                                                shall make a return or statement                        and Budget regarding review of tax
                                                                                                                                                              PART 53—FOUNDATION AND SIMILAR
                                                according to the forms and regulations                  regulations. It is hereby certified that the
                                                                                                                                                              EXCISE TAXES
                                                prescribed by the Secretary. Section                    collection of information in these
                                                6071 generally provides that when not                   regulations will not have a significant               ■ Paragraph 1. The authority citation
                                                otherwise provided for under the Code,                  economic impact on a substantial                      for part 53 continues to read, in part, as
                                                return filing dates are prescribed by                   number of small entities. This rule                   follows:
                                                regulation. Treas. Reg. §§ 53.6011–1 and                merely provides guidance as to the
                                                53.6071–1 require persons subject to                    timing and filing of Form 4720 for                        Authority: 26 U.S.C. 7805 * * *
                                                certain enumerated excise taxes under                   persons liable for the specified excise               § 53.4963–1    [Amended]
                                                Chapter 42 of the Code to file a Form                   taxes and who have a statutory filing
                                                4720 to accompany payment of those                                                                            ■  Par. 2. Section 53.4963–1 is amended
                                                                                                        obligation. Completing the applicable
                                                excise taxes and provide the time for                                                                         as follows:
                                                                                                        portion of the Form 4720 imposes little
                                                filing the return. (Form 4720 is                                                                              ■ 1. Paragraph (a) is amended by
                                                                                                        incremental burden in time or expense
                                                denominated ‘‘Return of Certain Excise                  as compared to any other filing method.               removing the language ‘‘4958, 4971’’
                                                Taxes Under Chapters 41 and 42 of the                   In addition, a person may already be                  and adding ‘‘4958, 4966, 4967, 4971’’ in
                                                Internal Revenue Code.’’) Sections 4960,                required to file the Form 4720 under the              its place.
                                                4966, 4967, and 4968 were added to                      existing final regulations in §§ 53.6011–             ■ 2. Paragraph (c) is amended by
                                                Chapter 42 of the Code, but are not                     1 and 53.6071–1 if it is liable for another           removing the language ‘‘4958, 4971’’
                                                enumerated in Treas. Reg. §§ 53.6011–1                  excise tax for which filing of the Form               and adding ‘‘4958, 4966, 4967, 4971’’ in
                                                and 53.6071–1.                                          is required. Therefore, a regulatory                  its place.
                                                                                                        flexibility analysis under the Regulatory             ■ Par. 3. Section 53.6011–1 is amended
                                                Explanation of Provisions
                                                                                                        Flexibility Act (5 U.S.C. chapter 6) is               by:
                                                1. Section 4962 Abatement                               not required. Pursuant to section 7805(f)             ■ 1. Revising the first sentence of
                                                   These proposed regulations add                       of the Code, this regulation will be                  paragraph (b).
                                                section 4966 and section 4967 taxes to                  submitted to the Chief Counsel for                    ■ 2. Removing from the third sentence
                                                the definitions of ‘‘first tier tax’’ and               Advocacy of the Small Business                        of paragraph (b) the language ‘‘4958(a),
                                                ‘‘taxable event’’ in Treas. Reg.                        Administration for comment on its                     or 4965(a),’’ and adding ‘‘4958(a),
                                                § 53.4963–1. Qualified first tier taxes are             impact on small entities.                             4960(a), 4965(a), 4966(a), or 4967(a),’’ in
                                                subject to abatement under section                                                                            its place.
                                                4962.                                                   Comments and Requests for Public                         The revision reads as follows:
                                                                                                        Hearing
                                                2. Requirement To File a Form 4720                                                                            § 53.6011–1 General requirement of return,
                                                                                                          Before these proposed regulations are               statement or list.
                                                  These proposed regulations amend                      adopted as final regulations,
                                                Treas. Reg. § 53.6011–1(b) to provide                                                                         *     *     *     *     *
                                                                                                        consideration will be given to any
                                                that persons (including governmental                                                                            (b) Every person (including a
                                                                                                        comments that are timely submitted to                 governmental entity) liable for tax
                                                entities) that are liable for section 4960,
                                                                                                        the IRS as prescribed in the preamble                 imposed by sections 4941(a), 4942(a),
                                                4966, 4967, or 4968 excise taxes are
                                                                                                        under the ADDRESSES section. All                      4943(a), 4944(a), 4945(a), 4955(a),
                                                required to file a return on Form 4720.
                                                                                                        comments submitted will be made                       4958(a), 4959, 4960(a), 4965(a), 4966(a),
                                                3. Deadline for Filing a Form 4720                      available at www.regulations.gov or                   4967(a), or 4968(a), and every private
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                                                  Under § 53.6071–1(i) of these                         upon request.                                         foundation and every trust described in
                                                proposed regulations, a person required                   A public hearing will be scheduled if               section 4947(a)(2) which has engaged in
                                                to file a Form 4720 to report an excise                 requested in writing by any person that               an act of self-dealing (as defined in
                                                tax under section 4960, 4966, 4967, or                  timely submits written comments. If a                 section 4941(d)) (other than an act
                                                4968 must file a Form 4720 by the 15th                  public hearing is scheduled, notice of                giving rise to no tax under section
                                                day of the fifth month after the end of                 the date, time, and place for the hearing             4941(a)) shall file an annual return on
                                                the person’s taxable year during which                  will be published in the Federal                      Form 4720 and shall include therein the
                                                the excise tax liability was incurred.                  Register.                                             information required by such form and


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                                                55656               Federal Register / Vol. 83, No. 216 / Wednesday, November 7, 2018 / Proposed Rules

                                                the instructions issued with respect                     for the proposed rule until December 10,              ‘‘we,’’ ‘‘us,’’ or ‘‘our’’ is used, we mean
                                                thereto. * * *                                           2018.                                                 the EPA.
                                                *     *    *     *     *                                 DATES: Written comments must be                          On October 11, 2018 (83 FR 51403),
                                                                                                         received on or before December 10,                    we published in the Federal Register a
                                                § 53.6071–1      [Amended]                               2018.                                                 proposed rule pertaining to revisions to
                                                ■  Par. 4. Section 53.6071–1 is amended                                                                        the regional haze SIP and FIP for
                                                                                                         ADDRESSES: Submit your comments,
                                                by:                                                                                                            Wyoming and requested comment by
                                                                                                         identified by Docket ID No. EPA–R08–
                                                ■ 1. Redesignating paragraph (i) as                                                                            November 13, 2018. Specifically, the
                                                                                                         OAR–2018–0606, to the Federal
                                                paragraph (j).                                                                                                 SIP revisions modify the sulfur dioxide
                                                                                                         Rulemaking Portal: https://
                                                ■ 2. Adding new paragraphs (i) and                                                                             (SO2) emissions reporting requirements
                                                                                                         www.regulations.gov. Follow the online
                                                (j)(3).                                                                                                        for Laramie River Station Units 1 and 2.
                                                                                                         instructions for submitting comments.
                                                   The additions read as follows:                                                                              The revisions to the FIP revise the
                                                                                                         Once submitted, comments cannot be
                                                                                                                                                               nitrogen oxides (NOX) best available
                                                § 53.6071–1      Time for filing returns.                edited or removed from
                                                                                                                                                               retrofit technology (BART) emission
                                                                                                         www.regulations.gov. The EPA may
                                                *      *    *     *     *                                                                                      limits for Laramie River Units 1—3 and
                                                                                                         publish any comment received to its
                                                  (i) Taxes under section 4960, 4966,                                                                          establish a SO2 emission limit averaged
                                                                                                         public docket. Do not submit
                                                4967, or 4968. A person (including a                                                                           annually across both Laramie River
                                                                                                         electronically any information you
                                                governmental entity) required by                                                                               Station Units 1 and 2.
                                                                                                         consider to be Confidential Business
                                                § 53.6011–1(b) to file a return for a tax                                                                         We received a request from several
                                                                                                         Information (CBI) or other information
                                                imposed by section 4960(a), 4966(a),                                                                           organizations to extend the comment
                                                                                                         whose disclosure is restricted by statute.
                                                4967(a), or 4968(a) in a taxable year                                                                          period and, in response, we are
                                                                                                         Multimedia submissions (audio, video,
                                                must file the Form 4720 on or before the                                                                       extending the comment period to
                                                                                                         etc.) must be accompanied by a written
                                                15th day of the fifth month after the end                                                                      December 10, 2018.1
                                                                                                         comment. The written comment is
                                                of the person’s taxable year (or, if the                 considered the official comment and                   List of Subjects in 40 CFR Part 52
                                                person has not established a taxable                     should include discussion of all points
                                                year for Federal income tax purposes,                                                                            Environmental protection, Air
                                                                                                         you wish to make. The EPA will                        pollution control, Incorporation by
                                                the person’s annual accounting period).                  generally not consider comments or
                                                  (j) * * *                                                                                                    reference, Intergovernmental relations,
                                                                                                         comment contents located outside of the               Nitrogen dioxide, Particulate matter,
                                                  (3) Paragraph (i) of this section                      primary submission (i.e., on the web,
                                                applies on and after the date of                                                                               Sulfur oxides.
                                                                                                         cloud, or other file sharing system). For
                                                publication of the Treasury decision                     additional submission methods, the full                 Authority: 42 U.S.C. 7401 et seq.
                                                adopting these rules as final regulations                EPA public comment policy,                              Dated: November 2, 2018.
                                                in the Federal Register.                                 information about CBI or multimedia                   Douglas Benevento,
                                                Kirsten Wielobob,                                        submissions, and general guidance on                  Regional Administrator, Region 8.
                                                Deputy Commissioner for Services and                     making effective comments, please visit               [FR Doc. 2018–24366 Filed 11–6–18; 8:45 am]
                                                Enforcement.                                             http://www.epa.gov/dockets/                           BILLING CODE 6560–50–P
                                                [FR Doc. 2018–24285 Filed 11–5–18; 4:15 pm]              commenting-epa-dockets.
                                                                                                            Docket: All documents in the docket
                                                BILLING CODE 4830–01–P
                                                                                                         are listed in the www.regulations.gov                 ENVIRONMENTAL PROTECTION
                                                                                                         index. Although listed in the index,                  AGENCY
                                                                                                         some information is not publicly
                                                ENVIRONMENTAL PROTECTION                                 available, e.g., CBI or other information             40 CFR Part 52
                                                AGENCY                                                   whose disclosure is restricted by statute.
                                                                                                                                                               [EPA–R08–OAR–2018–0607; FRL–9986–03–
                                                                                                         Certain other material, such as
                                                40 CFR Part 52                                                                                                 Region 8]
                                                                                                         copyrighted material, will be publicly
                                                [EPA–R08–OAR–2018–0606; FRL–9986–09–                     available only in hard copy. Publicly                 Approval and Promulgation of Air
                                                Region 8]                                                available docket materials are available              Quality Implementation Plans;
                                                                                                         either electronically in                              Wyoming; Revisions to Regional Haze
                                                Approval and Promulgation of Air                         www.regulations.gov or in hard copy at                State Implementation Plan
                                                Quality Implementation Plans;                            the Air Program, Environmental
                                                Wyoming; Revisions to Regional Haze                      Protection Agency (EPA), Region 8,                    AGENCY:  Environmental Protection
                                                State Implementation Plan; Revisions                     1595 Wynkoop Street, Denver, Colorado                 Agency (EPA).
                                                to Regional Haze Federal                                 80202–1129. The EPA requests that, if at              ACTION: Proposed rule.
                                                Implementation Plan                                      all possible, you contact the individual
                                                                                                                                                               SUMMARY:   The Environmental Protection
                                                AGENCY:  Environmental Protection                        listed in the FOR FURTHER INFORMATION
                                                                                                                                                               Agency (EPA) is proposing to approve a
                                                Agency (EPA).                                            CONTACT section to view the hard copy
                                                                                                                                                               source-specific revision to the Wyoming
                                                                                                         of the docket. You may view the hard
                                                ACTION: Proposed rule; extension of                                                                            State Implementation Plan (SIP) that
                                                                                                         copy of the docket Monday through
                                                comment period.                                                                                                provides an alternative to Best Available
                                                                                                         Friday, 8:00 a.m. to 4:00 p.m., excluding
                                                                                                                                                               Retrofit Technology (BART) for Unit 3 at
                                                SUMMARY:   On October 11, 2018, the                      federal holidays.
                                                                                                                                                               the Naughton Power Plant (‘‘the SIP
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                                                Environmental Protection Agency (EPA)                    FOR FURTHER INFORMATION CONTACT:                      revision’’) that is owned and operated
                                                published in the Federal Register a                      Jaslyn Dobrahner, Air Program, EPA,                   by PacifiCorp. The EPA proposes to find
                                                proposed rule pertaining to revisions to                 Region 8, Mailcode 8P–AR, 1595                        that the BART alternative for Naughton
                                                the regional haze State Implementation                   Wynkoop Street, Denver, Colorado,                     Unit 3 would provide greater reasonable
                                                Plan (SIP) and Federal Implementation                    80202–1129, (303) 312–6252,                           progress toward natural visibility
                                                Plan (FIP) for Wyoming and requested                     dobrahner.jaslyn@epa.gov.
                                                comments by November 13, 2018. The                       SUPPLEMENTARY INFORMATION:                              1 A copy of the letter requesting the extension

                                                EPA is extending the comment period                      Throughout this document wherever                     appears in the docket for this action.



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Document Created: 2018-11-07 00:04:43
Document Modified: 2018-11-07 00:04:43
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.
DatesWritten or electronic comments and requests for a public hearing must be received by December 7, 2018.
ContactConcerning the proposed regulations, Amber L. MacKenzie at (202) 317-4086 or Ward L. Thomas at (202) 317- 6173; concerning submission of comments and request for hearing, Regina Johnson at (202) 317-6901 (not toll-free numbers).
FR Citation83 FR 55653 
RIN Number1545-BO80
CFR AssociatedExcise Taxes; Foundations; Investments; Lobbying and Reporting and Recordkeeping Requirements

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