[Federal Register Volume 77, Number 122 (Monday, June 25, 2012)]
[Rules and Regulations]
[Pages 37806-37807]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-15422]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 301
[TD 9596]
RIN 1545-BK39
Disregarded Entities and the Indoor Tanning Services Excise Tax
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final and temporary regulations.
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SUMMARY: This document contains final and temporary regulations
relating to disregarded entities (including qualified subchapter S
subsidiaries) and the indoor tanning services excise tax. These
regulations affect disregarded entities responsible for collecting the
indoor tanning services excise tax and owners of those disregarded
entities. The text of these temporary regulations serves as the text of
proposed regulations (REG-125570-11) published in the Proposed Rules
section in this issue of the Federal Register.
DATES: Effective Date: These regulations are effective on June 25,
2012.
Applicability Date: For dates of applicability, see Sec. Sec.
1.1361-4T(a)(8)(iii)(B) and 301.7701-2T(e)(9)(i).
FOR FURTHER INFORMATION CONTACT: Michael H. Beker, (202) 622-3130 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background and Explanation of Provisions
This document contains amendments to the Income Tax Regulations (26
CFR part 1) under section 1361 of the Internal Revenue Code (Code) and
the Procedure and Administration Regulations (26 CFR part 301) under
section 7701 of the Code.
Since January 1, 2008, Sec. Sec. 1.1361-4(a)(8) and 301.7701-
2(c)(2)(v) have treated a qualified subchapter S subsidiary (QSub) and
a single-owner eligible entity that is disregarded as an entity
separate from its owner for any purpose under Sec. 301.7701-2
(collectively, a disregarded entity) as a separate entity for purposes
of excise taxes imposed by Chapters 31, 32 (other than section 4181),
33, 34, 35, 36 (other than section 4461), and 38 of the Code, and any
floor stocks tax imposed on articles subject to any of these taxes.
Effective July 1, 2010, section 10907 of the Patient Protection and
Affordable Care Act, Public Law 111-148 (124 Stat. 119 (2010)), added
new Chapter 49 to the Code, which imposes an excise tax on amounts paid
for indoor tanning services under section 5000B.
Consistent with existing Sec. Sec. 1.1361-4(a)(8) and 301.7701-
2(c)(2)(v), these temporary regulations add Chapter 49 to the list of
excise taxes for which disregarded entities are treated as separate
entities. Accordingly, effective for taxes imposed on amounts paid on
or after July 1, 2012, these temporary regulations treat a disregarded
entity as a separate entity for purposes of the indoor tanning services
excise tax under section 5000B. These temporary regulations also treat
a single-owner eligible entity that is disregarded as an entity
separate from its owner for any purpose under Sec. 301.7701-2 as a
corporation with respect to the indoor tanning services excise tax.
The indoor tanning services excise tax is reported on Form 720
``Quarterly Federal Excise Tax Return''. As a result of these temporary
regulations, a Form 720 reporting indoor tanning services excise taxes
imposed on amounts paid on or after July 1, 2012, must be filed under
the name and employer identification number (EIN) of the entity rather
than under the name and EIN of the disregarded entity's owner. Thus,
this rule affects returns of this tax that are due on or after October
31, 2012.
For taxes imposed under section 5000B on amounts paid before July
1, 2012, the IRS will treat payments made by a disregarded entity, or
other actions taken by a disregarded entity, with respect to the indoor
tanning services excise tax as having been made or taken by the owner
of that entity. Thus, for such periods, the owner of a disregarded
entity will be treated as satisfying its obligations with respect to
the indoor tanning services excise tax if those obligations are
satisfied either: (i) By the owner itself or (ii) by the disregarded
entity on behalf of the owner.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866, as
supplemented by Executive Order 13563. 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. For applicability of the Regulatory
Flexibility Act (5 U.S.C. chapter 6), please refer to the Special
Analyses section of the preamble to the cross-reference notice of
proposed rulemaking published elsewhere in this issue of the Federal
Register. Pursuant to section 7805(f) of the Code, this regulation has
been 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 Michael H. Beker,
Office of the Associate Chief Counsel (Passthroughs and Special
Industries). However, other personnel from the IRS and the Treasury
Department participated in their development.
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.
Amendments to the Regulations
Accordingly, 26 CFR parts 1 and 301 are amended as follows:
PART 1--INCOME TAX
0
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 1.1361-4 is amended by adding paragraph (a)(8)(iii) to
read as follows:
Sec. 1.1361-4 Effect of QSub election.
(a) * * *
(8) * * *
(iii) [Reserved]. For further guidance, see Sec. 1.1361-
4T(a)(8)(iii).
* * * * *
0
Par. 3. Section 1.1361-4T is added to read as follows:
Sec. 1.1361-4T Effect of QSub election (temporary).
(a)(1) through (a)(8)(ii) [Reserved]. For further guidance, see
Sec. 1.1361-4(a)(1) through (a)(8)(ii).
[[Page 37807]]
(iii) Rule for Chapter 49 tax liabilities--(A) In general. A
qualified subchapter S subsidiary (QSub) is treated as a separate
corporation for purposes of--
(1) Federal tax liabilities imposed by Chapter 49 of the Internal
Revenue Code;
(2) Collection of tax imposed by Chapter 49 of the Internal Revenue
Code; and
(3) Claims of a credit or refund related to the tax imposed by
Chapter 49 of the Internal Revenue Code.
(B) Effective/applicability date for Chapter 49 liabilities.
Paragraph (a)(8)(iii)(A) of this section applies to taxes imposed on
amounts paid on or after July 1, 2012.
(C) Expiration date. The applicability of paragraph (a)(8)(iii) of
this section expires on June 22, 2015 or such earlier date as may be
determined under amendments to the regulations issued after June 22,
2012.
(a)(9) through (d) [Reserved]. For further guidance, see Sec.
1.1361-4(a)(9) through (d).
PART 301--PROCEDURE AND ADMINISTRATION
0
Par. 4. The authority citation for part 301 continues to read in part
as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 5. Section 301.7701-2 is amended by adding new paragraphs
(c)(2)(vi) and (e)(9), and adding and reserving paragraph (e)(8), to
read as follows:
Sec. 301.7701-2 Business entities; definitions.
* * * * *
(c) * * *
(2) * * *
(vi) [Reserved]. For further guidance, see Sec. 301.7701-
2T(c)(2)(vi).
* * * * *
(e) * * *
(8) [Reserved]
(9) [Reserved]. For further guidance, see Sec. 301.7701-2T(e)(9).
0
Par. 6. Section 301.7701-2T is amended as follows:
1. Paragraphs (a) through (e)(4) are revised.
2. Paragraph (e)(9) is added.
The revisions and addition read as follows:
Sec. 301.7701-2T Business entities; definitions (temporary).
(a) through (c)(2)(v) [Reserved]. For further guidance, see Sec.
301.7701-2(a) through (c)(2)(v).
(vi) Tax liabilities with respect to the indoor tanning services
excise tax--(A) In general. Notwithstanding any other provision of
Sec. 301.7701-2, Sec. 301.7701-2(c)(2)(i) (relating to certain wholly
owned entities) does not apply for purposes of--
(1) Federal tax liabilities imposed by Chapter 49 of the Internal
Revenue Code;
(2) Collection of tax imposed by Chapter 49 of the Internal Revenue
Code; and
(3) Claims of a credit or refund related to the tax imposed by
Chapter 49 of the Internal Revenue Code.
(B) Treatment of entity. An entity that is disregarded as an entity
separate from its owner for any purpose under Sec. 301.7701-2 is
treated as a corporation with respect to items described in paragraph
(c)(2)(vi)(A) of this section.
(d) through (e)(4) [Reserved]. For further guidance, see Sec.
301.7701-2(d) through (e)(4).
* * * * *
(9) Indoor tanning services excise tax--(i) Effective/applicability
date. Paragraph (c)(2)(vi) of this section applies to taxes imposed on
amounts paid on or after July 1, 2012.
(ii) Expiration date. The applicability of paragraph (c)(2)(vi) of
this section expires on or before June 22, 2015 or such earlier date as
may be determined under amendments to the regulations issued after June
22, 2012.
Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
Approved: June 11, 2012.
Emily S. McMahon,
Acting Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2012-15422 Filed 6-22-12; 8:45 am]
BILLING CODE 4830-01-P