[Federal Register Volume 65, Number 5 (Friday, January 7, 2000)]
[Proposed Rules]
[Pages 1076-1077]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-15]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 40
[REG-103827-99]
RIN 1545-AX11
Deposits of Excise Taxes
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Advance notice of proposed rulemaking.
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SUMMARY: This document invites comments from the public on issues that
the IRS may address in proposed regulations relating to the
requirements for excise tax returns and deposits. All materials
submitted will be available for public inspection and copying.
DATES: Written and electronic comments must be submitted by April 6,
2000.
ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-103827-99), room
5226, Internal Revenue Service, POB 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand delivered Monday through
Friday between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-
103827-99), Courier's Desk, Internal Revenue Service, 1111 Constitution
Avenue NW., Washington, DC. Alternatively, taxpayers may send
submissions electronically via the Internet by selecting the ``Tax
Regs'' option on the IRS Home Page, or directly to the IRS Internet
site at http://www.irs.ustreas.gov/tax__regs/regslist.html.
FOR FURTHER INFORMATION CONTACT: Concerning submissions, the
Regulations Unit, (202) 622-7180; concerning the proposals, Susan Athy,
(202) 622-3130 (not toll-free numbers).
SUPPLEMENTARY INFORMATION: The Excise Tax Procedural Regulations (26
CFR part 40) set forth the requirements related to filing the Quarterly
Federal Excise Tax Return, Form 720, and making deposits of excise
taxes. Certain provisions of the current regulations are complicated.
The IRS is interested in simplifying the filing and deposit rules both
as to the timing and the calculation of the correct amount to deposit.
Simplification would reduce recordkeeping burdens and costs for
taxpayers, improve compliance, and facilitate proper administration of
the excise taxes and trust funds. The IRS requests comments on how the
regulations can be simplified; comments are requested in particular on
the following issues.
Time for Filing Returns
The regulations currently provide that the Form 720 generally must
be filed by the last day of the first calendar month following the
quarter for which it is made. However, in the case of returns related
to taxes imposed by chapter 33 (communications and air transportation)
and section 4681 (ozone-depleting chemicals), the due date is the last
day of the second calendar month following the quarter for which it is
made.
The IRS requests comments on whether there should be one filing
date for all Form 720 filers, such as 30 days after the end of the
quarter. This would be a simple rule that would apply equally to all
taxpayers.
Use of Government Depositaries
Background
The regulations currently provide that excise taxes must be
deposited on a semimonthly basis. Generally, taxes must be deposited by
the 9th day of the semimonthly period following the semimonthly period
for which the deposit is made (the 9-day rule). There are, however,
exceptions to this rule. Taxes on ozone-depleting chemicals must be
deposited by the end of the second semimonthly period following the
semimonthly period for which the deposit is made (the 30-day rule). In
addition, for taxes imposed by section 4081 (gasoline, diesel fuel, and
kerosene), communications taxes, and air transportation taxes,
taxpayers may choose a deposit rule other than the 9-day rule. For
section 4081 taxes, section 518 of the Highway Revenue Act of 1982
provides that a qualified person may deposit by the 14th day of the
semimonthly period following the semimonthly period for which it is
made if the deposit is made by electronic funds transfer (the 14-day
rule). For communications and air transportation taxes, if a person
computes the amount of tax to be reported and deposited on the basis of
amounts considered as collected, the person may deposit the taxes
considered as collected during a semimonthly period by the third
banking day after the seventh day of the semimonthly period (the
alternative method).
[[Page 1077]]
The regulations also provide that the amount of the deposit for a
semimonthly period must equal the amount of net tax liability incurred
during that period unless either the look-back quarter safe harbor rule
or the current liability safe harbor rule applies. In general, the
look-back quarter safe harbor rule is met if the deposits for each
semimonthly period in the quarter are at least \1/6\ of the net
liability reported for that tax in the second calendar quarter
preceding the current quarter, and the current liability safe harbor
rule is met if the deposit for each semimonthly period is at least 95
percent of the net tax liability for the semimonthly period. Safe
harbor rules apply separately to each class of tax. Each semimonthly
deposit must be timely made at an authorized Government depository.
Also, the amount of any underpayment must be paid by the due date of
the return, without extension. A failure to meet all the deposit
requirements of a safe harbor rule for any semimonthly period
eliminates the availability of that safe harbor for the entire quarter.
As the above description of current regulations illustrates, the
deposit rules are quite complicated, and taxpayers have experienced
difficulty in complying with them. In addition, under existing safe
harbor rules, penalties for failure to deposit may be imposed for all
semimonthly periods in a quarter if a taxpayer fails to deposit timely
and in the correct amount during any semimonthly period in that
quarter.
Request for Comments
With respect to the deposit rules, the IRS specifically requests
comments on the following issues:
1. Whether there should be a single deposit date for all excise
taxes, such as 14 days after the end of the semimonthly period. (The
IRS believes it would be appropriate to retain the alternative method
allowing communications and air transportation tax collectors to file
returns and make deposits based on amounts billed or tickets sold.)
2. Whether a taxpayer should have to deposit at least 95 percent of
tax liability incurred for the corresponding semimonthly period (in
lieu of the current requirement of 100 percent with safe harbor rules).
3. Whether the amount required to be deposited for a quarter should
be computed without reduction for the amounts of any claims made on
Schedule C of Form 720 for that quarter.
Judith C. Dunn,
Associate Chief Counsel (Domestic).
[FR Doc. 00-15 Filed 1-6-00; 8:45 am]
BILLING CODE 4830-01-U
