[Federal Register Volume 78, Number 87 (Monday, May 6, 2013)]
[Rules and Regulations]
[Pages 26244-26246]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-10515]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 301 and 602
[TD 9617]
RIN 1545-BK02
Updating of Employer Identification Numbers
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
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SUMMARY: This document contains final regulations that require any
person assigned an employer identification number (EIN) to provide
updated information to the IRS in the manner and frequency prescribed
by forms, instructions, or other appropriate guidance. These
regulations affect persons with EINs and will enhance the IRS's ability
to maintain accurate information as to persons assigned EINs.
DATES: Effective date: These regulations are effective on May 6, 2013.
Applicability date: For date of applicability, see Sec. 301.6109-
1(d)(2)(ii)(B).
FOR FURTHER INFORMATION CONTACT: David Skinner, (202) 622-4940 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained in the final regulations
has been reviewed and approved by the Office of Management and Budget
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)) under control number 1545-2242.
The collection of information in the final regulations is in Sec.
301.6109-1(d)(2)(ii)(A). The collection of this information is
necessary to allow the IRS to gather correct application information
with respect to persons that have EINs. The respondents are persons
that have EINs.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a valid
control number assigned by the Office of Management and Budget.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by section 6103 of
the Internal Revenue Code.
Background
This document contains final amendments to the Procedure and
Administration Regulations (26 CFR part 301) under section 6109 of the
Internal Revenue Code relating to identifying numbers. The Department
of Treasury and the IRS published a notice of proposed rulemaking (REG-
135491-10) in the Federal Register, 77 FR 15004, on March 14, 2012,
requiring persons issued EINs to provide updated application
information to the IRS. The IRS did not receive any requests for a
public hearing. Written comments responding to the proposed regulations
were received and are available for public inspection at http://www.regulations.gov or upon request. After consideration of all the
comments, the proposed regulations are adopted without amendment by
this Treasury decision.
Summary of Comments
The IRS received four written comments in response to the proposed
regulations. One comment supported the rule in the proposed regulations
requiring any person issued an EIN to provide updated information to
the IRS in the manner and frequency required by forms, instructions, or
other appropriate guidance (including updated application information
regarding the name and taxpayer identifying number of the responsible
party). This commentator also recommended changes to either the Form
SS-4, Application for Employer Identification Number, or the Form 5500,
Annual Returns/Reports of Employee Benefit Plan, to require additional
information confirming the active status of a trust's EIN.
Alternatively, the commentator suggested that the IRS could use a
postcard to confirm the active status of trusts for EIN purposes.
Although these suggestions are outside the scope of the regulations,
the IRS will take them into consideration during future updates of
those items.
Three of the comments did not support the rule in the proposed
regulations. Two commentators objected to the increased burden on
entities resulting from the updating requirement and questioned the
necessity of this requirement. Additionally, two
[[Page 26245]]
commentators suggested that the estimated annual average burden of 15
minutes provided in the Paperwork Reduction Act section of the proposed
regulations underestimated the actual burden to entities and their
agents. One commentator also argued that this rule is ``material''
because the related costs could reach over $100,000,000. Treasury and
the IRS have considered these comments and, for the following reasons,
these final regulations adopt the proposed regulations without change.
Treasury and the IRS continue to conclude that updating this
application information is necessary for effective tax administration.
Some EIN applicants continue to list individuals temporarily authorized
to act on behalf of EIN applicants (sometimes referred to as
``nominees'') as principal officers, general partners, grantors,
owners, and trustors on EIN applications. The listing of nominees or
other individuals who are no longer associated with the entity prevents
the IRS from gathering and maintaining correct and current information
with respect to the responsible party for the EIN applicant. The
requirement in the final regulations to provide updated application
information will allow the IRS to ascertain the true responsible party
for persons who have an EIN. This knowledge will prevent unnecessary
delays by allowing the IRS to contact the correct persons when
resolving a tax matter related to a business with an EIN. In addition,
this information will help the IRS combat schemes that abuse the tax
system through the use of nominees, which results in the concealing of
the true responsible party for entities that hide assets and income.
Treasury and the IRS also conclude that the costs related to this
rule are not ``material,'' any associated burden on entities resulting
from this requirement is minimal, and the costs and burden are
outweighed by the benefits to tax administration described in the
previous paragraph. An entity with an EIN will always know the identity
of its appropriate responsible party, which is generally defined as the
individual with the authority to control, manage, or direct the entity
and the disposition of its funds and assets. The updating requirement
in these final regulations requires entities to keep the IRS informed
of the identity of the responsible party.
The 15 minute burden estimate provided in the Paperwork Reduction
Act section of the proposed regulations is an estimate of the burden in
reporting and disclosing the correct application information to the
IRS, not the burden an entity or its agent may incur in determining
this information (which, as noted, is minimal because an entity will
always know the identity of its responsible party). Following the
publication of these final regulations, the IRS will publish the
relevant form for persons issued an EIN to use to disclose the correct
application information to the IRS. The relevant form will require
these persons to update application information regarding the name and
taxpayer identifying number of the responsible party within the
applicable timeframe. Treasury and the IRS have determined that the
amount of time necessary to fill out the relevant form and submit it to
the IRS is minimal.
These final regulations are applicable as of January 1, 2014, so
that the IRS can publish the relevant form and instructions in advance
of the applicability date.
Special Analyses
It has been determined that these final rules are 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 also has been determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to
these final regulations.
When an agency issues a rulemaking, the Regulatory Flexibility Act
(RFA) (5 U.S.C. chapter 6) requires the agency to ``prepare and make
available for public comment an initial regulatory flexibility
analysis'' that will ``describe the impact of the proposed rule on
small entities.'' (5 U.S.C. 603(a)). Section 605 of the RFA provides an
exception to this requirement if the agency certifies that the proposed
rulemaking will not have a significant economic impact on a substantial
number of small entities.
The rules affect entities that have an EIN and the IRS has
determined that these rules will have an impact on a substantial number
of small entities. The IRS has determined, however, that the impact on
entities affected by the rules will not be significant. The current
Form SS-4, Application for Employer Identification Number, requires
entities to disclose the name of the EIN applicant's ``responsible
party'' and the responsible party's Social Security Number, Individual
Taxpayer Identification Number, or EIN. Employers are required to know
the identity of their responsible party. The amount of time necessary
to submit the updated information required in these regulations,
therefore, should be minimal for these entities.
Based on these facts, the IRS hereby certifies that the collection
of information contained in the final regulations will not have a
significant economic impact on a substantial number of small entities.
Accordingly, a Regulatory Flexibility Analysis is not required.
Pursuant to section 7805(f) of the Code, the notice of proposed
rulemaking preceding the final regulations was submitted to the Chief
Counsel for Advocacy of the Small Business Administration for comment
on its impact on small business and no comments were received.
Drafting Information
The principal author of these regulations is Elizabeth Cowan of the
Office of the Associate Chief Counsel (Procedure and Administration).
List of Subjects
26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
26 CFR Part 602
Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR part 301 is amended as follows:
PART 301--PROCEDURE AND ADMINISTRATION
0
Paragraph 1. The authority citation for part 301 continues to read as
follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 301.6109-1 is amended by adding paragraph (d)(2)(ii) to
read as follows:
Sec. 301.6109-1 Identifying numbers.
* * * * *
(d) * * *
(2) * * *
(ii) Updating of application information--(A) Requirements. Persons
issued employer identification numbers in accordance with the
application process set forth in paragraph (d)(2)(i) of this section
must provide to the Internal Revenue Service any updated application
information in the manner and frequency required by forms,
instructions, or other appropriate guidance.
(B) Effective/applicability date. Paragraph (d)(2)(ii)(A) of this
section applies to all persons possessing an
[[Page 26246]]
employer identification number on or after January 1, 2014.
* * * * *
PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
0
Par. 3. The authority citation for part 602 continues to read as
follows:
Authority: 26 U.S.C. 7805.
0
Par. 4. In Sec. 602.101, paragraph (b) is amended by adding the
following entry in numerical order to the table:
Sec. 602.101 OMB Control Numbers.
* * * * *
(b) * * *
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Current OMB
CFR part or section where identified and described Control No.
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* * * * *
301.6109-1.............................................. 1545-2242
* * * * *
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Steven T. Miller
Deputy Commissioner for Services and Enforcement.
Approved: April 25, 2013.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2013-10515 Filed 5-3-13; 8:45 am]
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