2010-19097. Excise Taxes on Prohibited Tax Shelter Transactions and Related Disclosure Requirements; Disclosure Requirements With Respect to Prohibited Tax Shelter Transactions; Requirement of Return and Time for Filing; Correction

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Correcting amendment.

SUMMARY:

This document contains correcting amendments to IRS regulations providing guidance under 4965 of the Internal Revenue Code, relating to entity-level and manager-level excise taxes with respect to prohibited tax shelter transactions to which tax-exempt entities are parties; sections 6033(a)(2) and 6011(g), relating to certain disclosure obligations with respect to such transactions; and sections 6011 and 6071, relating to the requirement of a return and time for filing with respect to section 4965 taxes. These errors were made when the agency published final regulations (TD 9492) in the Federal Register on Tuesday, July 6, 2010 (75 FR 38700).

DATES:

This correction is effective on August 4, 2010, and is applicable on July 6, 2010.

FOR FURTHER INFORMATION CONTACT:

For questions concerning these regulations, contact Benjamin Akins at [phone] or Michael Blumenfeld at [phone]. For questions specifically relating to qualified pension plans, individual retirement accounts, and similar tax-favored savings arrangements, contact Cathy Pastor at [phone] (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

The final regulations (TD 9492) that are the subject of this document are under sections 4965, 6011 and 6071 of the Internal Revenue Code.

Need for Correction

As published, the final regulations (TD 9492) contain errors that may prove to be misleading and are in need of clarification.

List of Subjects

26 CFR Part 53

• Excise taxes
• Foundations
• Investments
• Lobbying
• Reporting and recordkeeping requirements

26 CFR Part 54

• Excise taxes
• Pensions
• Reporting and recordkeeping requirements

Correction of Publication

Accordingly, 26 CFR parts 53 and 54 are corrected by making the following correcting amendments:

PART 53—FOUNDATION AND SIMILAR EXCISE TAXES

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

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

Par. 2. Section 53.4965-2 is amended by revising paragraphs (c)(6)(i) and (c)(6)(i)(C) to read as follows:

§ 53.4965-2

Covered tax-exempt entities.

* * * * *

(c) * * *

(6) * * *

(i) Individual retirement plans defined in section 408(a) and (b), including—

(A) * * *

(B) * * *

(C) Deemed individual retirement accounts or annuities (IRAs) qualified under a qualified plan (deemed IRAs) under section 408(q); and

* * * * *

Par. 3. Section 53.4965-5 is amended by revising the first sentence of paragraph (c)(4) Example to read as follows:

§ 53.4965-5

Entity managers and related definitions.

* * * * *

(c) * * *

(4) * * *

Example.

In a sale-in, lease-out (SILO) transaction described in Notice 2005-13 (2005-1 CB 630), X, which is a non-plan entity, has purported to sell property to Y, a taxable entity and lease it back for a term of years. * * *

* * * * *

Par. 4. Section 53.4965-8 is amended by revising the first sentence of paragraph (e) and the second sentence of paragraph (f) Example 1. (iii) to read as follows:

§ 53.4965-8

Definition of net income and proceeds and standard for allocating net income or proceeds to various periods.

* * * * *

(e) Allocation to pre-and post-listing periods. If a transaction other than a prohibited reportable transaction (as defined in section 4965(e)(1)(C) and § 53.4965-3(a)(2)) to which the tax-exempt entity is a party is subsequently identified in published guidance as a listed transaction during a taxable year of the entity (the listing year) in which it has net income or proceeds attributable to the transaction, the net income or proceeds are allocated between the pre- and post-listing periods. The IRS will treat the period beginning on the first day of the listing year and ending on the day immediately preceding the date of the listing, and the period beginning on the date of the listing and ending on the last day of the listing year as short taxable years. * * *

(f) * * * Example 1. * * *

(iii) * * * The $14M fee received in 1999, which constitutes proceeds of the transaction, is likewise allocated to that tax year. * * *

* * * * *

Par. 5. Section 53.6071-1 is amended by revising paragraph (g)(3) to read as follows:

§ 53.6071-1

Time for filing returns.

* * * * *

(g) * * *

(3) Transition rule. A Form 4720, for a section 4965 tax that was due on or before October 4, 2007, will be deemed to have been filed on the due date if it was filed by October 4, 2007, and if all section 4965 taxes required to be reported on that Form 4720 were paid by October 4, 2007.

* * * * *

PART 54—PENSION EXCISE TAXES

Par. 6. The authority citation for part 54 continues to read in part as follows:

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

Par. 7. Section 54.6011-1 is amended by revising paragraph (c)(2) to read as follows:

§ 54.6011-1

General requirement of return, statement or list.

* * * * *

(c) * * *

(2) Transition rule. A Form 5330, “Return of Excise Taxes Related to Employee Benefit Plans,” for an excise tax under section 4965 that was due on or before October 4, 2007, will be deemed to have been filed on the due date if it was filed by October 4, 2007, and if the section 4965 tax that was required to be reported on that Form 5330 was paid by October 4, 2007.

LaNita Van Dyke,

Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration).