[Federal Register Volume 70, Number 8 (Wednesday, January 12, 2005)]
[Proposed Rules]
[Pages 2075-2076]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-648]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 301

[REG-130671-04]
RIN 1545-BD65


Returns Required on Magnetic Media

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations and notice of public hearing.

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations relating to 
the requirements for filing corporate income tax returns, S corporation 
returns, and returns of organizations required under section 6033 on 
magnetic media under section 6011(e) of the Internal Revenue Code 
(Code). The text of those regulations also serves as the text of these 
proposed regulations. This document also provides notice of a public 
hearing on these proposed regulations.

DATES: Written or electronic comments must be received by February 28, 
2005. Requests to speak (with outlines of topics to be discussed) at 
the public hearing scheduled for March 16, 2005, must be received by 
February 28, 2005.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-130671-04), Room 
5203, 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 4 p.m. to: CC:PA:LPD:PR (REG-
130671-04), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue, NW., Washington, DC. Alternatively, taxpayers may submit 
comments electronically via the IRS internet Web site at http://
www.irs.gov/regs, or via the Federal eRulemaking Portal, http://
www.regulations.gov (IRS-REG-130671-04). The public hearing will be 
held in the auditorium of the Internal Revenue Building, 1111 
Constitution Avenue, NW., Washington, DC 20224.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Michael E. Hara, (202) 622-4910 concerning submissions of comments, the 
hearing, and/or to be placed on the building access list to attend the 
hearing, Robin Jones at (202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend the Regulations on Procedure and 
Administration (26 CFR part 301) relating to the filing of corporate 
income tax returns, S corporation returns, and returns of organizations 
required under section 6033 on magnetic media under section 6011(e). 
The temporary regulations require corporations and certain 
organizations to file their Form 1120, ``U.S. Corporation Income Tax 
Return,'' Form 1120S, ``U.S. Income Tax Return for an S Corporation,'' 
Form 990, ``Return of Organization Exempt From Income Tax,'' and Form 
990-PF, ``Return of Private Foundation or Section 4947(a)(1) Trust 
Treated as a Private Foundation,'' electronically if they are required 
to file at least 250 returns during the calendar year ending with or 
within their taxable year. The text of those regulations also serves as 
the text of these proposed regulations. The preamble to the temporary 
regulations explains the amendments.

Special Analyses

    It has been determined that these proposed regulations are 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. Because these 
regulations do not impose a collection of information on small 
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not 
apply. The IRS and Treasury Department note that these regulations only 
prescribe the method of filing returns that are already required to be 
filed. Further, these regulations are consistent with the requirements 
imposed by statute.
    Section 6011(e)(2)(A) provides that, in prescribing regulations 
providing standards for determining which returns must be filed on 
magnetic media or in other machine-readable form, the Secretary shall 
not require any person to file returns on magnetic media unless the 
person is required to file at least 250 returns during the calendar 
year. Consistent with the statutory provision, these regulations do not 
require Forms 1120, Forms 1120S, Forms 990, or Forms 990-PF to be filed 
electronically unless 250 or more returns are required to be filed.
    Further, if a taxpayer's operations are computerized, reporting in 
accordance with the regulations should be less

[[Page 2076]]

costly than filing on paper. If the taxpayer's operations are not 
computerized, the incremental cost of filing Forms 1120, Forms 1120S, 
Forms 990, and Forms 990-PF electronically should be minimal in most 
cases because of the availability of computer service bureaus. In 
addition, the proposed regulations provide that the IRS may waive the 
electronic filing requirements upon a showing of hardship.
    Pursuant to section 7805(f) of the Code, these proposed 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 eight 
(8) copies) or electronic comments that are submitted timely to the 
IRS. The IRS and Treasury Department request comments on the clarity of 
the proposed regulations and how they can be made easier to understand. 
The IRS and Treasury Department also request comments on the procedures 
and criteria for hardship waivers from the electronic filing 
requirements. The IRS and Treasury Department also request comments on 
the accuracy of the certification that the regulations in this document 
will not have a significant economic impact on a substantial number of 
small entities. All comments will be available for public inspection 
and copying.
    A public hearing has been scheduled for March 16, 2005 at 10 a.m. 
in the auditorium of the Internal Revenue Building, 1111 Constitution 
Avenue, NW., Washington, DC. Due to building security procedures, 
visitors must enter at the Constitution Avenue entrance. In addition, 
all visitors must present photo identification to enter the building. 
Because of access restrictions, visitors will not be admitted beyond 
the immediate entrance area more than 30 minutes before the hearing 
starts. For information about having your name placed on the building 
access list to attend the hearing, see the FOR FURTHER INFORMATION 
CONTACT section of this preamble.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who 
wish to present oral comments at the hearing must submit comments and 
an outline of the topics to be discussed and the time to be devoted to 
each topic by February 28, 2005.
    A period of 10 minutes will be allotted to each person for making 
comments. An agenda showing the scheduling of the speakers will be 
prepared after the deadline for receiving outlines has passed. Copies 
of the agenda will be available free of charge at the hearing.

Drafting Information

    The principal author of these proposed regulations is Michael E. 
Hara, Office of the Assistant Chief Counsel (Procedure and 
Administration).

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR parts 1 and 301 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. * * *

    Par. 2. Section 1.6011-5 is added to read as follows:


Sec.  1.6011-5  Required use of magnetic media for corporate income tax 
returns.

    [The text of proposed Sec.  1.6011-5 is the same as the text of 
Sec.  1.6011-5T published elsewhere in this issue of the Federal 
Register].

    Par. 3. Section 1.6033-4 is added to read as follows:


Sec.  1.6033-4  Required use of magnetic media for returns by 
organizations required to file returns under section 6033.

    [The text of proposed Sec.  1.6033-4 is the same as the text of 
Sec.  1.6033-4T published elsewhere in this issue of the Federal 
Register].

    Par. 4. Section 1.6037-2 is added to read as follows:


Sec.  1.6037-2  Required use of magnetic media for income tax returns 
of electing small business corporations.

    [The text of proposed Sec.  1.6037-2 is the same as the text of 
Sec.  1.6037-2T published elsewhere in this issue of the Federal 
Register].

PART 301--PROCEDURE AND ADMINISTRATION

    Par. 5. The authority citation for part 301 is amended by adding 
entries, in numerical order, to read as follows:

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

    Section 301.6011-5 also issued under 26 U.S.C. 6011. * * *

    Section 301.6033-4 also issued under 26 U.S.C. 6033. * * *
    Section 301.5037-2 also issued under 26 U.S.C. 6037. * * *

    Par. 6. Section 301.6011-5 is added to read as follows:


Sec.  301.6011-5  Required use of magnetic media for corporate income 
tax returns.

    [The text of proposed Sec.  301.6011-5 is the same as the text of 
Sec.  301.6011-5T published elsewhere in this issue of the Federal 
Register].

    Par. 7. Section 301.6033-4 is added to read as follows:


Sec.  301.6033-4  Required use of magnetic media for returns by 
organizations required to file returns under section 6033.

    [The text of proposed Sec.  301.6033-4 is the same as the text of 
Sec.  3011.6033-4T published elsewhere in this issue of the Federal 
Register].

    Par. 8. Section 301.6037-2 is added to read as follows:


Sec.  301.6037-2  Required use of magnetic media for returns of 
electing small business corporation.

    [The text of proposed Sec.  301.6037-2 is the same as the text of 
Sec.  301.6037-2T published elsewhere in this issue of the Federal 
Register].

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 05-648 Filed 1-11-05; 8:45 am]
BILLING CODE 4830-01-P