[Federal Register Volume 62, Number 194 (Tuesday, October 7, 1997)]
[Rules and Regulations]
[Pages 52256-52257]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26556]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 53
[TD 8736]
RIN 1545-AU66
Time for Filing Form 4720 Return
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final and temporary regulations.
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SUMMARY: This document contains a regulation that specifies the filing
date by which Form 4720 returns must be filed by disqualified persons
and organization managers liable for Internal Revenue Code section 4958
excise taxes. These excise taxes are imposed on excess benefit
transactions between disqualified persons and section 501(c)(3)
organizations (except for private foundations) or section 501(c)(4)
organizations.
DATES: This regulation is effective October 7, 1997.
For dates of applicability, see Sec. 53.6071-1(f).
FOR FURTHER INFORMATION CONTACT: Phyllis Haney, (202) 622-4290 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to the Foundation and Similar
Excise Taxes regulations (26 CFR part 53) under Internal Revenue Code
(Code) section 6071. Those amendments provide guidance on the time for
filing the return that is required to accompany payment of section 4958
excise taxes. This rule was first published in Notice 96-46 (1996-39
I.R.B. 7) (September 23, 1996). A notice of proposed rulemaking (NPRM)
of that rule was published at 62 FR 84, by cross reference to a
temporary regulation, (TD 8705, 62 FR 25), on January 2, 1997. The
deadline for comments on the NPRM was April 2, 1997; no comments were
received.
Taxpayer Bill of Rights 2, Public Law 104-168, 110 Stat. 1452
(TBOR2), enacted July 30, 1996, added section 4958 to the Code, which
imposes excise taxes on excess benefit transactions. Section 4958 taxes
apply retroactively to excess benefit transactions occurring on or
after September 14, 1995. The taxes do not, however, apply to any
benefit arising from a transaction pursuant to any written contract
which was binding on September 13, 1995, and at all times thereafter
before such transaction occurred.
An ``excess benefit transaction'' subject to tax under section 4958
is any transaction in which an economic benefit is provided by an
organization described in Code section 501(c)(3) (except for a private
foundation) or 501(c)(4) directly or indirectly to, or for the use of,
any disqualified person if the value of the economic benefit provided
exceeds the value of the consideration (including the performance of
services) received for providing the benefit. A ``disqualified person''
is any person who was, at any time during the 5-year period ending on
the date of the excess benefit transaction, in a position to exercise
substantial influence over the affairs of the organization.
Disqualified persons also include family members and certain entities
in which at least 35 percent of the control or beneficial interest are
held by persons described in the preceding sentence.
Code section 4958 imposes three taxes. The first tax is equal to 25
percent of the excess benefit amount, and is to be paid by any
disqualified person who engages in an excess benefit transaction. The
second tax is equal to 200 percent of the excess benefit amount, and is
to be paid by any disqualified person if the excess benefit transaction
is not corrected within the taxable period. The third tax is equal to
10 percent of the excess benefit amount, and is to be paid generally by
any organization manager who knowingly participates in an excess
benefit transaction. The maximum amount of this third tax with respect
to any one excess benefit transaction may not exceed $10,000. An
``organization manager'' is any officer, director, trustee, or any
individual having powers or responsibilities similar to those of any
officer, director, or trustee. Final regulations under Code section
6011 were published on January 2, 1997, at TD 8705 (62 FR 25),
prescribing Form 4720 for calculating and paying the first and third
taxes described above.
TBOR2 also amended Code section 6033(b) to require section
501(c)(3) organizations to report the amounts of the taxes paid under
section 4958 with respect to excess benefit transactions involving the
organization, as well as any other information the Secretary may
require concerning those transactions. Section 6033(f) also was amended
to impose the same reporting requirements on section 501(c)(4)
organizations. Those amendments to section 6033 only apply to
organizations' returns for taxable years beginning after July 30, 1996.
These and other TBOR2 amendments to the reporting requirements for
section 501(c)(3) and section 501(c)(4) organizations are
[[Page 52257]]
reflected on IRS Forms 990 and 990-EZ beginning with the 1996 versions.
Explanation of Provisions
This regulation provides the general rule that Form 4720 returns
will be due on or before the 15th day of the fifth month following the
close of the taxable year of any disqualified person or organization
manager who is liable for section 4958 excise taxes on excess benefit
transactions. The regulations also provide that returns on Form 4720
for taxable years ending after September 13, 1995, and on or before
July 30, 1996, will be due on or before December 15, 1996. See also
Notice 96-46 (1996-39 I.R.B. 7) (September 23, 1996), and 62 FR 25, 84
(January 2, 1997).
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in EO 12866. Therefore, a
regulatory assessment is not required. It also has been determined that
section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5)
does not apply to these regulations, and because the regulation does
not impose a collection of information on small entities, the
Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply.
Pursuant to section 7805(f) of the Internal Revenue Code, these
regulations will be submitted to the Chief Counsel for Advocacy of the
Small Business Administration for comment on their impact on small
business.
Drafting Information
The principal author of these regulations is Phyllis Haney, Office
of Associate Chief Counsel (Employee Benefits and Exempt
Organizations). 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.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR part 53 is amended as follows:
PART 53--FOUNDATION AND SIMILAR EXCISE TAXES
Paragraph 1. The authority citation for part 53 continues to read
as follows:
Authority: 26 U.S.C. 7805.
Sec. 53.6071-1T and Sec. 53.6071-1 [Amended]
Par 2. In Sec. 53.6071-1T, paragraph (f) is redesignated as
paragraph (f) of Sec. 53.6071-1.
Sec. 53.6071-1T [Removed]
Par 3. Sec. 53.6071-1T is removed.
Michael P. Dolan,
Acting Commissioner of Internal Revenue.
Approved: August 27, 1997.
Donald C. Lubick,
Acting Assistant Secretary of the Treasury.
[FR Doc. 97-26556 Filed 10-6-97; 8:45 am]
BILLING CODE 4830-01-U
