[Federal Register Volume 65, Number 248 (Tuesday, December 26, 2000)]
[Proposed Rules]
[Pages 81453-81455]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 00-32568]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 31, 35, 36, 40, 301, 601
[REG-107176-00]
RIN 1545-AY10
Removal of Federal Reserve Banks as Federal Depositaries
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document contains proposed regulations which remove the
Federal Reserve banks as authorized depositaries for Federal tax
deposits. The regulations affect taxpayers who make Federal tax
deposits using paper Federal Tax Deposit (FTD) coupons (Form 8109) at
Federal Reserve banks.
DATES: Written or electronically generated comments and requests for a
public hearing must be received by March 26, 2001.
ADDRESSES: Send submissions to: CC (REG-107176-00), 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 (REG-107176-00), Courier's Desk,
Internal Revenue Service, 1111 Constitution Avenue, NW., Washington,
DC. Alternatively, taxpayers may submit comments electronically via the
Internet by selecting the ``Tax Regs'' option on the IRS Home Page, or
by submitting comments directly to the IRS Internet site at http://
www.irs.gov/tax__regs/regslist.html.
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
Brinton T. Warren, (202) 622-4940; concerning submissions of comments
and requests for a public hearing, Treena Garrett of the Regulations
Unit at (202) 622-7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background and Explanation of Provisions
This document contains proposed amendments to 26 CFR parts 1, 31,
35, 36, 40, 301, and 601 relating to Federal tax deposits under section
6302(c) of the Internal Revenue Code (Code). Section 6302(c) provides
that the Secretary may authorize Federal Reserve banks, and
incorporated banks, trust companies, domestic building and loan
associations, or credit unions that are depositaries or financial
agents of the United States, to receive any tax imposed under the
internal revenue laws, in such manner, at such times, and under such
conditions as the Secretary may prescribe. Pursuant to this authority,
various regulations provide that Federal Reserve banks, as well as
other authorized financial institutions, may receive certain Federal
tax deposits.
In cooperation with the Treasury Department's Financial Management
Service (FMS), the Federal Reserve System has been streamlining its
Treasury Tax and Loan (TT&L) Operation to respond to the fact that the
overwhelming majority of Federal Tax Deposits (FTDs) are now received
electronically. The widespread adoption of electronic deposits by
taxpayers is an important aspect of improving the efficiency,
reliability, and cost-effectiveness of the Treasury Department's
financial management. In general, compared to the universe of all tax
deposits, the percentage of FTDs made with paper coupons has
significantly declined. FTDs made with paper coupons at Federal Reserve
banks now constitute only a tiny percentage of all tax deposits. For
example, in Fiscal Year 1999, of the approximately 100 million Federal
tax deposits, made by paper coupon and electronically, only about
270,000, or less than one half of one percent, were paper coupons
presented at Federal Reserve banks. Additionally, the number of paper
coupons presented at Federal Reserve banks has declined over twenty-
five percent since 1997.
The Treasury Department has developed an array of other deposit
options that are more convenient for taxpayers to use, and more
economical to process, than deposits with Federal Reserve banks. For
example, taxpayers may use their touch tone telephone or personal
computer to make deposits 24 hours a day through the Electronic Federal
Tax Payment System (EFTPS). For those taxpayers who still prefer paper
coupons over electronic deposits, there are now more than 10,000
financial institutions nationwide that are designated as TT&L
depositaries where taxpayers may make FTD deposits using paper coupons.
In response to the declining number of deposits being made with
paper coupons at Federal Reserve banks, the Federal Reserve Bank of St.
Louis was selected, effective May 1, 2000, to serve as the only Federal
Reserve bank accepting FTDs. Even after this consolidation, however, it
is no longer cost-effective for the Federal Reserve bank in St. Louis
to process the small number of paper coupons it receives annually.
Accordingly, these proposed regulations remove all Federal Reserve
banks as depositaries for Federal taxes. To mitigate any difficulties
for those taxpayers who still do not wish to use the deposit
alternatives discussed above, the Treasury Department has authorized a
financial agent to receive and process FTD payments through the mail,
thereby maintaining a mail-in alternative for taxpayers who do not have
an account with an authorized financial institution and who do not wish
to use EFTPS. The address for this mail-in alternative is Financial
Agent, Federal Tax Deposit Processing, P.O. Box 970030, St. Louis,
Missouri, 63197.
[[Page 81454]]
Proposed Effective Date
The regulations, as proposed, apply to any deposits of Federal
taxes made after the date of publication of a Treasury decision
adopting these rules as final regulations in the Federal Register.
Special Analyses
It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in Executive Order
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 regulations do 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.
Comments and Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any written (a signed original and 8
copies) and electronic comments that are submitted timely to the IRS.
The IRS and Treasury Department request comments on the clarity of the
proposed rules and how they can be made easier to understand. All
comments will be available for public inspection and copying. A public
hearing will be scheduled if requested in writing by any person that
timely submits comments. If a public hearing is scheduled, notice of
the date, time, and place for the public hearing will be published in
the Federal Register.
Drafting Information
The principal author of these regulations is Brinton T. Warren of
the Office of Associate Chief Counsel, Procedure and Administration
(Administrative Provisions and Judicial Practice Division). However,
other personnel from the IRS and Treasury Department participated in
their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
26 CFR Part 31
Employment taxes, Income taxes, Penalties, Pensions, Railroad
retirement, Reporting and recordkeeping requirements, Social security,
Unemployment compensation.
26 CFR Part 35
Employment taxes, Income taxes, Reporting and recordkeeping
requirements.
26 CFR Part 36
Employment taxes, Foreign relations, Reporting and recordkeeping
requirements, Social security.
26 CFR Part 40
Excise taxes, Reporting and recordkeeping requirements.
26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
26 CFR Part 601
Administrative practice and procedure, Freedom of information,
Reporting and recordkeeping requirements, Taxes.
Proposed Amendments to the Regulations
Accordingly, and under the authority of 26 U.S.C. 7805 and 5 U.S.C.
301, 26 CFR parts 1, 31, 35, 36, 40, 301 and 601 are proposed to be
amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Sec. 1.6302-1 [Amended]
Par. 2. Section 1.6302-1 is amended by removing the fifth sentence
in paragraph (b)(1).
Sec. 1.6302-2 [Amended]
Par. 3. Section 1.6302-2 is amended by removing the third sentence
in paragraph (b)(1).
PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE
Par. 4. The authority citation for part 31 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Sec. 31.6302-1 [Amended]
Par. 5. Section 31.6302-1 is amended by removing the fourth
sentence in paragraph (i)(3).
Sec. 31.6302 [Amended]
Par. 6. Section 31.6302(c)-3 is amended by removing the third
sentence in paragraph (b)(2).
PARTS 1, 31, 35, 36, 40, 301, 601--[AMENDED]
Par. 7. In the list below, for each section indicated in the left
column, remove the language in the middle column and add, if any, the
language in the right column:
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Section Remove Add
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1.1461-1(a), effective a Federal reserve an
January 1, 2001. bank or.
1.1502-5(a)(1).............. commercial financial
dispositary or institution
Federal Reserve
Bank.
1.6151-1(d)(1).............. Federal Reserve ....................
Banks or.
1.6302-1(b)(1) fourth 214 or, at the 203
sentence. election of the
corporation, to a
Federal Reserve
bank.
1.6302-1(b)(1) (as amended the Federal Reserve ....................
by paragraph 2) fifth bank or.
sentence.
1.6302-2(a)(1)(i)........... a Federal Reserve an
bank or.
1.6302-2(a)(1)(ii).......... a Federal Reserve an
bank or.
1.6302-2(a)(1)(iv).......... a Federal Reserve an
bank or.
1.6302-2(b)(1) second 214 or, at the 203
sentence. election of the
withholding agent,
to a Federal
Reserve bank.
1.6302-2(b)(1) (as amended the Federal Reserve 203
by paragraph 3) third bank or.
sentence.
1.6302-3(a)................. or with a Federal ....................
Reserve Bank.
31.6071(a)-1(a)(1).......... or by a Federal ....................
Reserve bank.
[[Page 81455]]
31.6071(a)-1(c)............. a Federal Reserve ....................
bank or by.
31.6151-1(b)................ Federal Reserve ....................
banks and.
31.6302-1(c)(1)............. a Federal Reserve an
bank or.
31.6302-1(c)(2)(i).......... a Federal Reserve an
bank or.
31.6302-1(c)(3)............. a Federal Reserve an
bank or.
31.6302-1(i)(3)............. 214 or, at the 203
election of the
employer, to a
Federal Reserve
bank.
31.6302-1(i)(5)............. the Federal Reserve ....................
bank or.
31.6302(c)-2A(b)(1)(i)...... with a Federal ....................
Reserve bank or.
31.6302(c)-2A(b)(3)......... with a Federal ....................
Reserve bank or.
31.6302(c)-3(a)(1)(i)....... with a Federal ....................
Reserve bank or.
31.6302(c)-3(a)(1)(ii)...... with a Federal ....................
Reserve bank or.
31.6302(c)-3(a)(3).......... with a Federal ....................
Reserve bank or.
31.6302(c)-3(b)(2) second 214 or, at the 203
sentence. election of the
employer, to a
Federal Reserve
bank.
31.6302(c)-3(b)(2) (as the Federal Reserve ....................
amended by paragraph 6) bank or.
third sentence.
35.3405-1T(e-10)............ a Federal Reserve ....................
Bank or.
36.3121(l)(10)-4............ a Federal Reserve an
bank or.
40.6302(c)-1(d)(1).......... (214) or to a (203)
Federal Reserve
bank.
301.6302-1(a)............... Federal Reserve authorized financial
banks and institutions
authorized
commercial banks.
301.6302-1(b)(1)............ Federal Reserve authorized financial
banks or authorized institutions
commercial banks.
301.6302-1(b)(2)............ Federal Reserve authorized financial
banks or authorized institutions
commercial banks.
301.9100-5T(c)(3)........... Federal Reserve ....................
banks and.
601.401(a)(5) heading....... Federal Reserve ....................
banks and.
601.401(a)(5)(iii) first a Federal Reserve an
sentence. bank or.
601.401(a)(5)(iii) second a Federal Reserve an
sentence. bank or.
601.401(a)(5)(iv)........... a Federal Reserve an authorized
bank or a financial financial
institution institution
authorized in
accordance with
Treasury Department
Circular No. 1079,
revised, to accept
remittances of
these taxes for
transmission to a
Federal Reserve
bank.
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Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 00-32568 Filed 12-22-00; 8:45 am]
BILLING CODE 4830-01-P