[Federal Register Volume 76, Number 219 (Monday, November 14, 2011)]
[Rules and Regulations]
[Pages 70340-70342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-29313]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 26 and 301
[TD 9556]
RIN 1545-BG89
Generation-Skipping Transfers (GST) Section 6011 Regulations and
Amendments to the Section 6112 Regulations
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations that provide rules
relating to the disclosure of listed transactions and transactions of
interest with respect to the generation-skipping transfer tax under
section 6011 of the Internal Revenue Code (Code), conforming amendments
under sections 6111 and 6112, and rules relating to the preparation and
maintenance of lists with respect to reportable transactions under
section 6112. The regulations affect taxpayers participating in listed
transactions and transactions of interest and material advisors to such
transactions. The final regulations also contain rules under section
6112 that affect material advisors to reportable transactions. These
regulations provide guidance regarding the length of time a material
advisor has to prepare the list that must be maintained after the list
maintenance requirement first arises with respect to a reportable
transaction. These regulations also clarify guidance regarding
designation agreements.
DATES: These regulations are effective November 14, 2011.
FOR FURTHER INFORMATION CONTACT: Charles D. Wien, (202) 622-3070 (not a
toll-free number).
Background
This document contains final regulations that amend 26 CFR part 26
to provide rules for purposes of the generation-skipping transfer tax
that require the disclosure of listed transactions and transactions of
interest by certain taxpayers on their Federal tax returns under
section 6011. This document also contains final regulations that modify
and clarify some of the rules under 26 CFR part 301 relating to the
disclosure obligations of material advisors under section 6111 and the
list maintenance requirements of material advisors with respect to
reportable transactions under section 6112.
On July 31, 2007, the IRS and Treasury Department issued final
regulations under section 6011 (TD 9350; 72 FR 43146), 6111 (TD 9351;
72 FR 43157) and 6112 (TD 9352; 72 FR 43154) (the July 2007
regulations) that were published in the Federal Register on August 3,
2007. In the July 2007 regulations, the IRS and Treasury Department
amended 26 CFR parts 20, 25, 31, 53, 54, and 56 to provide that certain
taxpayers would be required to disclose transactions of interest, in
addition to listed transactions, on their Federal tax returns under
section 6011. On September 10, 2009, the IRS and Treasury Department
issued a notice of proposed rulemaking under sections 6011, 6111, and
6112 (REG-136563-07) (the September 2009 proposed regulations). The
September 2009 proposed regulations were published in the Federal
Register (74 FR 46705) on September 11, 2009.
In response to the September 2009 proposed regulations, the IRS and
Treasury Department received two written public comments. A public
hearing was not requested. After consideration of the comments
received, the IRS and Treasury Department are adopting the proposed
regulations without change.
Explanation of Comments
Two commentators expressed concern that if the IRS and Treasury
Department designate a transaction involving gift, estate, or
generation-skipping transfer taxes as a listed transaction or
transaction of interest, that a corporate fiduciary, merely by acting
as an executor or trustee with respect to an estate or trust that is
incidental to the transaction, would be treated as a material advisor
under section 6112 and the regulations thereunder. One of the
commentators proposed that the September 2009 proposed regulations and
existing final regulations under sections 6011, 6111, and 6112 be
amended to require public comment before a transaction involving
Chapters 11, 12, and 13 of the Code can be designated as a listed
transaction or transaction of interest.
The IRS and Treasury Department believe that in the situation
described by the commentators the existing regulations under sections
6111 and 6112 properly address which parties are material advisors, and
transactions involving gift, estate, or generation-skipping transfer
taxes should not be treated differently than other transactions. A
fiduciary will not be treated as a material advisor merely by acting as
an executor or trustee with respect to an estate or trust that is
incidental to a transaction. A fiduciary will be treated as a material
advisor only if the fiduciary provides material aid, assistance or
advice as described in Sec. 301.6111-3(b)(2), the fiduciary directly
or indirectly derives gross income in excess of the threshold amount as
described in Sec. 301.6111-3(b)(3), and the transaction is entered
into by the taxpayer.
In addition, the regulations are not amended to require advance
notice before designating a transaction as a transaction of interest or
as a listed transaction as suggested by a commentator. In appropriate
circumstances, the IRS and Treasury Department may choose to publish
advance notice of a transaction of interest and request comments in
certain circumstances. The IRS and Treasury Department will determine
whether to provide advance notice and a request for comments on a
transaction by transaction basis. Accordingly, the proposed regulations
will be adopted without change.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It has also been
determined that section 553(b) of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these regulations. It is hereby
certified that the collection of information in these regulations will
not have a significant economic impact on a substantial number of small
entities. This certification is based on the fact that most of the
material advisors affected by these regulations are not small entities
and for those material advisors that are small entities most of the
information is already required under the current regulations. Any
additional recordkeeping burdens on material advisors that result from
this regulation are insubstantial. Also, the collection of information
referenced in these regulations has been approved under OMB control
number 1545-1686. The clarification and new information required by
these final regulations add little or no new burden to those existing
[[Page 70341]]
requirements. Therefore, a Regulatory Flexibility Analysis under the
Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.
Pursuant to section 7805(f) of the Code, the notice of proposed
rulemaking preceding these regulations was submitted to the Chief
Counsel for Advocacy of the Small Business Administration for comment
on its impact on small business.
Drafting Information
The principal author of these regulations is Charles D. Wien,
Office of the Associate Chief Counsel (Passthroughs and Special
Industries). However, other personnel from the IRS and Treasury
Department participated in their development.
List of Subjects
26 CFR Part 26
Estate taxes, Reporting and recordkeeping requirements.
26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR parts 26 and 301 are amended as follows:
PART 26--GENERATION-SKIPPING TRANSFER TAX REGULATIONS UNDER THE TAX
REFORM ACT OF 1986
0
Paragraph 1. The authority citation for part 26 is amended to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 26.6011-4 also issued under 26 U.S.C. 6011 * * *
0
Par. 2. Section 26.6011-4 is added to read as follows:
Sec. 26.6011-4 Requirement of statement disclosing participation in
certain transactions by taxpayers.
(a) In general. If a transaction is identified as a listed
transaction or a transaction of interest as defined in Sec. 1.6011-4
of this chapter by the Commissioner in published guidance, and the
listed transaction or transaction of interest involves a tax on
generation-skipping transfers under chapter 13 of subtitle B of the
Internal Revenue Code, the transaction must be disclosed in the manner
stated in such published guidance.
(b) Effective/applicability date. This section applies to listed
transactions and transactions of interest entered into on or after
November 14, 2011.
PART 301--PROCEDURE AND ADMINISTRATION
0
Par. 3. The authority citation for part 301 continues to read in part
as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 4. Section 301.6111-3 is amended as follows:
0
a. Paragraphs (b)(2)(i)(A) and (b)(3)(i)(B) are amended by adding the
language ``26.6011-4,'' after each occurrence of ``25.6011-4,''.
0
b. Paragraphs (c)(2) and (c)(13) are amended by adding the language
``26.6011-4,'' after ``25.6011-4,''.
0
c. Paragraph (i)(1) is revised.
The revision reads as follows:
Sec. 301.6111-3 Disclosure of reportable transactions.
* * * * *
(i) Effective/applicability date--(1) In general. This section
applies to transactions with respect to which a material advisor makes
a tax statement on or after August 3, 2007. However, this section
applies to transactions of interest entered into on or after November
2, 2006, with respect to which a material advisor makes a tax statement
under this section on or after November 2, 2006. Paragraphs
(b)(2)(i)(A), (b)(3)(i)(B), (c)(2), and (c)(13) of this section apply
to transactions with respect to which a material advisor makes a tax
statement under this section after November 14, 2011. Paragraph (h) of
this section applies to ruling requests received on or after November
2, 2006. Otherwise, the rules that apply on or before November 14, 2011
are contained in this section in effect prior to November 14, 2011 (see
26 CFR part 301 revised as of April 1, 2011).
* * * * *
0
Par. 5. Section 301.6112-1 is amended as follows:
0
1. Paragraph (b)(1) is revised.
0
2. Paragraphs (c)(3) and (c)(12) are amended by adding the language
``26.6011-4,'' after ``25.6011-4,''.
0
3. Paragraphs (f) and (g) are revised.
The revisions read as follows:
Sec. 301.6112-1 Material advisors of reportable transactions must
keep lists of advisees, etc.
* * * * *
(b) * * *
(1) In general. A separate list must be prepared and maintained for
each reportable transaction. However, one list must be maintained for
substantially similar transactions. A material advisor will have 30
calendar days from the date the list maintenance requirement first
arises (see Sec. 301.6111-3(b)(4) and paragraph (a) of this section)
with respect to a reportable transaction to prepare the list that must
be maintained under this section with respect to that transaction. The
Commissioner in his discretion also may provide in published guidance
designating a transaction as a reportable transaction a list
preparation time period greater than 30 calendar days. If a list is
requested under this section during the list preparation time period,
the request for the list will be treated as having been made on the day
after the list preparation time period ends. A list must be maintained
in a form that enables the IRS to determine without undue delay or
difficulty the information required in paragraph (b)(3) of this
section. The Commissioner in his discretion may provide in published
guidance a form or method for maintaining or furnishing the list.
* * * * *
(f) Designation agreements. If more than one material advisor is
required to maintain a list of persons for a reportable transaction, in
accordance with paragraph (b) of this section, the material advisors
may designate by written agreement a single material advisor (the
designated material advisor) to maintain the list or a portion of the
list. A designation agreement does not relieve material advisors from
their obligation to maintain a list in accordance with paragraph (b) of
this section or to furnish their list to the IRS in accordance with
paragraph (e)(1) of this section, but a designation agreement may allow
one material advisor to maintain a list on behalf of the other material
advisors who are a party to the designation agreement. A material
advisor is not relieved from the requirement of this section because a
material advisor is unable to obtain the list from any designated
material advisor, any designated material advisor did not maintain a
list, or the list maintained by any designated material advisor is not
complete. The existence of a designation agreement does not affect the
ability of the IRS to request a list from any party to the designation
agreement. The IRS may request a list from any party to the designation
agreement, and the party receiving the request must furnish their list
to the IRS in accordance with paragraph (e)(1) of this section,
regardless of whether their list was maintained by another party
pursuant to the terms of a designation agreement.
(g) Effective/applicability date. In general, this section applies
to transactions with respect to which a material advisor makes a tax
statement under Sec. 301.6111-3 on or after August 3,
[[Page 70342]]
2007. However, this section applies to transactions of interest entered
into on or after November 2, 2006, with respect to which a material
advisor makes a tax statement under Sec. 301.6111-3 on or after
November 2, 2006. Paragraphs (b)(1), (c)(3), (c)(12), and (f) of this
section apply to transactions with respect to which a material advisor
makes a tax statement under Sec. 301.6111-3 after November 14, 2011.
Otherwise, the rules that apply on or before November 14, 2011 are
contained in this section in effect prior to November 14, 2011 (see 26
CFR part 301 revised as of April 1, 2011).
Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
Approved: November 4, 2011.
Emily S. McMahon,
Assistant Secretary of the Treasury, Tax Policy.
[FR Doc. 2011-29313 Filed 11-10-11; 8:45 am]
BILLING CODE 4830-01-P