This document contains final regulations that remove from the Code of Federal Regulations 296 regulations that are no longer necessary because they do not have any current or fu...
This document contains final regulations that remove from the Code of Federal Regulations 296 regulations that are no longer necessary because they do not have any current or future applicability under the Internal Revenue Code and amend 79 regulations to reflect the removal of the 296 regulations. The removal and amendment of these regulations may affect various categories of taxpayers by simplifying the Code of Federal Regulations.
DATES:
These regulations are effective on March 14, 2019.
FOR FURTHER INFORMATION CONTACT:
Emily Lesniak of the Office of the Associate Chief Counsel (Procedure and Administration), (202) 317-3400 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains final regulations removing from the Code of Federal Regulations (CFR) 296 regulations that are no longer necessary because they do not have any current or future applicability under the Internal Revenue Code and amending 79 regulations to reflect the removal of the 296 regulations.
On February 24, 2017, the President issued Executive Order 13777, Enforcing the Regulatory Reform Agenda (82 FR 12285). Executive Order 13777 directed each agency to establish a Regulatory Reform Task Force. Each Regulatory Reform Task Force was directed to review existing regulations for regulations that: (i) Eliminate jobs, or inhibit job creation; (ii) are outdated, unnecessary, or ineffective; (iii) impose costs that exceed benefits; (iv) create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies; (v) are inconsistent with the requirements of the Information Quality Act (section 515 of the Treasury and General Government Appropriations Act of 2001) or OMB Information Quality Guidance issued pursuant to that provision; or (vi) derive from or implement Executive Orders or other Presidential directives that have been subsequently rescinded or substantially modified.
On April 21, 2017, the President issued Executive Order 13789, Presidential Executive Order on Identifying and Reducing Tax Regulatory Burdens (82 FR 19317). This executive order stated a policy that the “Federal tax system should be simple, fair, efficient, and pro-growth” and that “[t]he purposes of tax regulations should be to bring clarity to the already complex Internal Revenue Code . . . and to provide useful guidance to taxpayers.” Executive Order 13789 also directed that immediate action be taken to “reduce the burden existing tax regulations impose on American taxpayers and thereby to provide tax relief and useful, simplified tax guidance.” To further this goal, the executive order directed the Secretary of the Treasury to review all significant tax regulations issued on or after January 1, 2016.
As required by Executive Order 13789, on June 22, 2017, the Treasury Department issued an interim report (June report) identifying eight regulations to be revised or withdrawn. On October 2, 2017, the Treasury Department issued a second report (October report) recommending specific actions with respect to the regulations identified in the June report. In addition, in the October report the Treasury Department explained that “in furtherance of the policies stated in Executive Order 13789, Executive Order 13771, and Executive Order 13777, Treasury and the IRS have initiated a comprehensive review, coordinated by the Treasury Regulatory Reform Task Force, of all tax regulations, regardless of when they were issued. . . . This review will identify tax regulations that are unnecessary, create undue complexity, impose excessive burdens, or fail to provide clarity and useful guidance. . . .” In the October report, the Treasury Department noted that the IRS Office of Chief Counsel had already identified over 200 regulations for potential revocation. These regulations are in the CFR “but are, to varying degrees, unnecessary, duplicative, or obsolete, and force taxpayers to navigate unnecessarily complex or confusing rules.”
Pursuant to the policies stated in Executive Orders 13777 and 13789, on February 15, 2018, the Treasury Department and the IRS published in the
Federal Register
(83 FR 6806) a notice of proposed rulemaking proposing to remove from the CFR 298 regulations as having no current or future applicability and, therefore, no longer providing useful guidance, and to amend 79 regulations to reflect the proposed removal of the 298 regulations (the notice of proposed rulemaking). The Treasury Department and the IRS received comments on the notice of proposed rulemaking, but no public hearing was requested or held. After consideration of the comments, the Treasury Department and the IRS are in this Treasury decision finalizing the rules proposed in the notice of proposed rulemaking, with the revisions described below.
Summary of Comments and Explanation of Revisions
Five comments were submitted under the regulation number for the notice of proposed rulemaking. Of the five comments submitted, four are responsive to the notice of proposed rulemaking and are addressed below. All of the comments are available for public inspection at
http://www.regulations.gov
or upon request.
One comment agreed with the principles expressed in Executive Orders 13777 and 13789 and stated that the progress in response to the executive orders is greatly welcomed. The comment also asserted that the Background section of the notice of proposed rulemaking stated that the regulations in the notice result from examination of a small sample of all regulations composed only of those “significant” regulations issued on or after January 1, 2016. The Treasury Department and the IRS, however, note that while the Background section to the notice of proposed rulemaking references significant tax regulations issued on or after January 1, 2016, when describing Executive Order 13789, nothing in the Background section or elsewhere in the notice of proposed rulemaking states that the 298 regulations proposed to be removed or the 79 regulations proposed to be amended are comprised only of such regulations. In the October report (as quoted in the Background section of the notice of proposed rulemaking), the Treasury Department described review “of all tax regulations, regardless of when they were issued. . . .”
The remaining responsive comments recommend the removal of various Treasury Regulations, including Treasury Regulation § 1.809-3. Treasury Regulation § 1.809-3 was proposed to be removed by the notice of proposed rulemaking, and these final regulations remove it from the CFR. However,
( printed page 9232)
because none of the other regulations discussed in the comments were proposed to be removed by the notice of proposed rulemaking, these comments are beyond the scope of these final regulations to the extent they discuss regulations other than Treasury Regulation § 1.809-3. The Treasury Department and the IRS continue to consider which, if any, additional regulations ought to be removed or amended pursuant to the executive orders.
These final regulations do not remove Treasury Regulations §§ 1.921-1T and 1.921-2, which were proposed to be removed from the CFR in the notice of proposed rulemaking. The Treasury Department and the IRS have determined that these regulations should not be removed from the CFR because the regulations are cross-referenced in other regulations with continuing effect, and the cross references are important to the content of the other regulations.
Special Analyses
These regulations are not subject to review under section 6(b) of Executive Order 12866 pursuant to the Memorandum of Agreement (April 11, 2018) between the Treasury Department and the Office of Management and Budget regarding review of tax regulations. Because the final regulations would not impose a collection of information on small entities, an analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.
Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking that preceded these final regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small businesses. No comments were received on the proposed regulations.
Drafting Information
The principal author of these regulations is Mark A. Bond of the Office of the Associate Chief Counsel (Procedure and Administration).
2. In paragraph (f), removing “§ 1.902-1, § 1.904-5, § 1.960-3, § 1.960-4, and § 1.963-4” and adding in its place “§§ 1.902-1, 1.904-5, 1.960-3, and 1.960-4”.
1. Designating Examples 1
and
2
as paragraphs (c)(1) and (2), respectively.
2. Removing the language “1.61-2T” and adding “1.61-21(d)” in its place in the fourth sentence in newly designated paragraph (c)(1).
3. Removing the language “example (1)” and adding in its place “ Example 1
of paragraph (c)(1) of this section” in the first sentence of newly designated paragraph (c)(2).
1. Removing the reference “§ 1.61-2T(f) (5) and (6)” and adding in its place “§ 1.61-21(f)(5) and (6)” in paragraphs (a)(3)(i)(E) and (a)(3)(ii)(E).
2. Removing the reference “§ 1.61-2T(f)(3)” and adding in its place “§ 1.61-21(f)(3)” in paragraphs (a)(3)(i)(F), (a)(3)(ii) introductory text, and (a)(3)(ii)(F).
3. Removing the reference “§ 1.61-2T(d)(1)(ii)” and adding in its place “§ 1.61-21(d)(1)(ii)” in paragraphs (a)(3)(i)(E), (a)(3)(ii)(E), and (e)(3).
4. Removing the reference “§ 1.61-2T(e)(2)” and adding in its place “§ 1.61-21(e)(2)” in paragraph (e)(4).
5. Removing the reference “§ 1.132-5T(g)” and adding in its place “§ 1.132-5(g)” in the last sentence in paragraph (b)(1).
6. Removing the reference “§ 1.132-5T(g)(3)” and adding in its place “§ 1.132-5(g)(3)” in the last sentence in paragraph (b)(3).
1. Removing “and § 1.404(a)-9” in the second sentence in paragraph (b)(1).
2. Removing “and § 1.401-5” in the last sentence in paragraph (b)(2).
3. Removing “§ 1.404(a)-7, paragraph (e) of § 1.404(a)-9, and” in the parenthetical of the second sentence of paragraph (d)(2).
4. Removing “computed in accordance with the rules in paragraph (e)(2) of § 1.404(a)-9 for computing limitations when a profit-sharing plan has terminated” in the third sentence of paragraph (d)(4).
5. Removing “and § 1.404(a)-9” in the second sentence in paragraph (i).
Par. 36.
Section 1.401-1 is amended by:
1. Removing “(see paragraph (e) of § 1.401-11)” in paragraph (a)(3)(iii).
2. Removing “and, in addition, see § 1.401-12 for special rules as to plans covering owner-employees” in the parenthetical in paragraph (a)(3)(v).
3. Removing “§ 1.401-4” and adding “§§ 1.401(a)(4)-0 through 1.401(a)(4)-13” in its place in paragraph (a)(3)(vi).
4. Revising the last sentence in paragraph (a)(4).
5. Removing “1.401-4” and adding “1.401(a)(4)-0 through 1.401(a)(4)-13” in its place in the fifth sentence of paragraph (b)(1)(ii).
6. Removing “, 1.404(a)-2A,” from the last sentence in paragraph (e)(2).
Par. 49.
Section 1.404(a)-2 is amended by removing “see § 1.404(a)-2A” and adding “and before December 31, 1975, see § 1.404(a)-2A of the Treasury Regulations in effect on April 1, 2017” in its place in the second sentence in paragraph (i).
Par. 72.
Section 1.416-1 is amended by removing “§ 1.410(b)-1(d)(3)” and adding “§ 1.410(b)-7(d)” in its place in the last sentence of Example 1 of Q&A T-6.
Par. 81.
Section 1.501(c)(17)-1 is amended by removing “1.401-4” and adding “1.401(a)(4)-0 through 1.401(a)(4)-13” in its place in the second sentence in paragraph (a)(5).
Par. 82.
Section 1.501(c)(18)-1 is amended by removing “1.401-4” and adding “1.401(a)(4)-0 through 1.401(a)(4)-13” in its place in the second sentence in paragraph (b)(6).
Definition of “foreign trust created by a United States person”.
(a) * * * For provisions relating to the information returns which are required to be filed with respect to the creation of or transfers to foreign trusts, see section 6048.
Par. 115.
Section 1.809-2 is amended by removing the words “and paragraphs (a) and (b) of § 1.809-3, respectively” from the second sentence in paragraph (a).
Par. 127.
Section 1.822-4 is amended by removing “Sections 1.822-1 through 1.822-3 are applicable” and adding in its place “Section 1.822-3 is applicable” in the first sentence.
Par. 169.
Section 1.1402(e)(4)-1 is amended by removing “§§ 31.3121(b)(8)-1 and 31.3121(k)-1” and adding “§ 31.3121(b)(8)-1” in its place in the last sentence.
(k)
Other provisions.
For returns by fiduciaries or corporations, see § 1.6012-3. For information returns by corporations regarding payments of dividends, see §§ 1.6042-1 through 1.6042-3, inclusive; regarding corporate dissolutions or liquidations, see § 1.6043-1; regarding distributions in liquidation, see § 1.6043-2; regarding payments of patronage dividends, see §§ 1.6044-1 through 1.6044-4, inclusive; and regarding certain payments of interest, see §§ 1.6049-1 and 1.6049-1. For returns as to formation or reorganization of foreign corporations, see §§ 1.6046-1 through 1.6046-3, inclusive.
Par. 213.
Section 31.0-3 is amended by removing “(1)” and “, and (2) to the extent provided in § 31.3121(k)-3, to services performed before 1955 the remuneration for which was paid before 1955” from the fourth sentence in paragraph (a).
Par. 216.
Section 31.3121(b)(10)-1 is amended by removing “§ 31.3121(b)(8)-2, relating to services performed in the employ of religious, charitable, educational, and certain other organizations exempt from income tax;” from paragraph (b).
Par. 250.
Section 601.201 is amended by removing “§ 1.401-4(c) of the Income Tax Regulations” and adding “§ 1.401(a)(4)-5 of this chapter” in its place in paragraph (q)(2)(ii).
PART 602—OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
Par. 251.
The authority citation for part 602 continues to read as follows: