[Federal Register Volume 79, Number 56 (Monday, March 24, 2014)]
[Proposed Rules]
[Pages 15926-15928]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-06209]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 79, No. 56 / Monday, March 24, 2014 /
Proposed Rules
[[Page 15926]]
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 31 and 301
[REG-163195-05]
RIN 1545-BG53
Removal of the Qualified Payment Card Agent Program
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Withdrawal of notice of proposed rulemaking and notice of
proposed rulemaking.
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SUMMARY: This document contains proposed regulations that will remove
regulations relating to information reporting and backup withholding
for the Qualified Payment Card Agent (QPCA) Program. This document also
amends regulations to remove references to the QPCA Program and
withdraws proposed regulations relating to the QPCA Program. Enactment
of the payment card and third party network reporting requirements in
the Housing Assistance Tax Act of 2008 made the QPCA Program obsolete.
Because no payors have applied to be designated as a QPCA (and no
payors have been designated as a QPCA), no taxpayers will be affected
by these proposed regulations.
DATES: Comments and requests for a public hearing must be received by
June 23, 2014.
ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-163195-05), Room
5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand-delivered Monday through
Friday between the hours of 8:00 a.m. and 4:00 p.m. to CC:PA:LPD:PR
(REG-163195-05), Courier's Desk, Internal Revenue Service, 1111
Constitution Avenue NW., Washington, DC 20224. Alternatively, taxpayers
may submit comments electronically via the Federal eRulemaking Portal
at www.regulations.gov (IRS REG-163195-05).
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
Michael Hara, (202) 317-5413; concerning the submission of comments and
requests for a public hearing, Oluwafunmilayo Taylor, (202) 317-6901
(not toll-free calls).
SUPPLEMENTARY INFORMATION:
Background and Explanation of Provisions
This document contains proposed regulations to remove deadwood
provisions implementing the now obsolete QPCA Program. When finalized,
the proposed regulations would remove Sec. 31.3406(g)-1(f), Sec.
301.6724-1(e)(1)(vi)(H), and Sec. 301.6724-1(f)(5)(vii). In addition,
the proposed regulations would amend Sec. 301.6724-1(c)(6) to remove
references to QPCAs. This document also withdraws proposed regulations
(REG-163195-05) relating to the QPCA Program.
The QPCA Program was developed by the IRS to enhance the accuracy
of section 6041 information reporting in transactions where a payment
card, such as a credit card, is accepted as payment. Under the QPCA
Program, a payment card organization may apply to be designated as a
QPCA. For this purpose, a payment card organization is an entity that
sets the standards and provides the mechanism, either directly or
indirectly through members and affiliates, for effectuating payment
between a purchaser and a merchant in a payment card transaction. See
Sec. 5.06 of Notice 2007-59, 2007-30 IRB 135 (July 23, 2007). Once
designated, the QPCA may act on behalf of a payor/cardholder to
solicit, collect, and validate the name and taxpayer identification
number (TIN) of a payee/merchant, and provide that information to the
payor/cardholder so that the payor/cardholder can meet its section 6041
reporting obligation, if any.
Enactment of section 6050W and changes to the regulations under
section 6041 obsolete the QPCA Program by requiring payment card
organizations, rather than payor/cardholders, to report payments made
in payment card transactions to payees/merchants. See Sec. 1.6041-
1(a)(1)(iv) (eliminating duplicate reporting under section 6041 if the
payment is subject to reporting under section 6050W).
Section 6041(a) requires persons engaged in a trade or business and
making payment in the course of such trade or business to another
person of rent, salaries, wages, premiums, annuities, compensations,
remunerations, emoluments, or other fixed or determinable gains,
profits, and income of $600 or more in any one taxable year to file
information returns with the IRS and to furnish information statements
to payees. Among other items, the payor must include the payee's name
and TIN on the information return and the information statement.
Section 3406(a)(1) requires a payor to withhold on any reportable
payment (as defined in section 3406(b)(1)) if: (1) The payee fails to
furnish the payee's TIN to the payor as required; or (2) the Secretary
notifies the payor that the TIN furnished by the payee is incorrect.
On January 31, 2003, temporary regulations relating to the IRS TIN
Matching Program were published in the Federal Register (TD 9041) (68
FR 4922). Under the IRS TIN Matching Program, a participating payor may
reduce name/TIN errors on information returns by contacting the IRS
before filing to verify whether the name and TIN combination furnished
by a payee matches IRS records. The 2003 temporary regulations permit a
payor's authorized agent to participate in the IRS TIN Matching Program
on behalf of the payor. Under the authority of these temporary
regulations, the IRS issued Rev. Proc. 2003-9 (2003-1 CB 516 (February
24, 2003)) (see Sec. 601.601(d)(2)(ii)(b) of this chapter) to allow
all payors, as well as a payor's authorized agent, to participate in
the IRS TIN Matching Program.
A notice of proposed rulemaking (REG-116641-01) cross-referencing
the 2003 temporary regulations was also published in the Federal
Register (68 FR 4970) for January 31, 2003. The notice of proposed
rulemaking contained additional proposed rules relating to the
information reporting and backup withholding requirements for payment
card transactions effectuated through a QPCA.
On February 24, 2003, Notice 2003-13 (2003-1 CB 513 (February 24,
2003)) (see Sec. 601.601(d)(2)(ii)(b) of this chapter) was published
in the Internal Revenue
[[Page 15927]]
Bulletin, announcing a proposed revenue procedure that would establish
a procedure for a payment card organization to request a determination
that it is a QPCA.
On July 13, 2004, final regulations relating to the information
reporting requirements, information reporting penalties, and backup
withholding requirements for payment card transactions effectuated
through a QPCA were published in the Federal Register (TD 9136) (69 FR
41938). The amendments implementing the QPCA Program were generally
effective for payments made on or after January 1, 2005. The final
regulations also made the temporary regulations implementing the TIN
Matching Program permanent.
On August 2, 2004, Revenue Procedure 2004-42 (2004-2 CB 121 (August
2, 2004)) (see Sec. 601.601(d)(2)(ii)(b) of this chapter) was
published in the Internal Revenue Bulletin, setting forth procedures
for a payment card organization to request a determination that it is a
QPCA. Also on August 2, 2004, Revenue Procedure 2004-43 (2004-2 CB 124
(August 2, 2004)) (see Sec. 601.601(d)(2)(ii)(b) of this chapter) was
published in the Internal Revenue Bulletin, setting forth an optional
procedure for payors who make payments in the course of their trade or
business through payment cards to use Merchant Category Codes, or other
similar codes to determine whether the payments are reportable under
sections 6041 and 6041A.
On July 13, 2007, a notice of proposed rulemaking (REG-163195-05)
proposing revisions to the QPCA Program allowing merchants to opt-out
of the QPCA Program and permitting QPCA's to furnish certain payee
notifications electronically was published in the Federal Register (72
FR 38534).
On July 23, 2007, Notice 2007-59 (2007-30 IRB 135 (July 23, 2007))
(see Sec. 601.601(d)(2)(ii)(b) of this chapter) was published in the
Internal Revenue Bulletin, which provided a proposed revenue procedure
that would supersede Rev. Proc. 2004-42 to revise procedures for a
payment card organization to request a determination that it is a QPCA.
On July 30, 2008, Congress enacted the Housing Assistance Tax Act
of 2008, Public Law 110-289, which added section 6050W to the Internal
Revenue Code. Section 6050W requires payment settlement entities,
including payment card organizations, to report payments made in
settlement of payment card and third party network transactions.
Regulations published under section 6050W and section 6041 provide,
among other things, that payments required to be reported under section
6050W are not also required to be reported under section 6041. See
Sec. 1.6041-1(a)(1)(iv). Because payment card organizations now have a
reporting obligation with respect to payment card transactions, there
is no longer a need for payment card organizations to solicit, collect,
and verify payee/merchant names/TINs for the payor/cardholder. Thus,
enactment of section 6050W made the QPCA Program obsolete. Accordingly,
the regulations under Sec. 31.3406(g)-1(f), Sec. 301.6724-
1(e)(1)(vi)(H), and Sec. 301.6724-1(f)(5)(vii) are proposed to be
removed, Sec. 301.6724-1(c)(6) of the regulations is proposed to be
amended, and the proposed regulations published in the Federal Register
on July 13, 2007, are being withdrawn. In addition, Revenue Procedure
2004-42, Revenue Procedure 2004-43, Notice 2003-13, Notice 2003-37, and
Notice 2007-59 are obsoleted. See Sec. 601.601(d)(2)(ii)(b).
Effective Date
Sections 31.3406(g)-1(f), Sec. 301.6724-1(e)(1)(vi)(H), and Sec.
301.6724-1(f)(5)(vii) would be removed on the date these regulations
are published as final regulations in the Federal Register. Amendments
to Sec. 301.6724-1(c)(6) would be effective on the date these
regulations are published as final 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, 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 regulations. 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 Code, this notice of proposed rulemaking has
been submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on its impact on small business.
Comments and Requests for a Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any comments that are submitted timely
to the IRS as prescribed in this preamble under the ``Addresses''
heading. The Treasury Department and the IRS requested comments on all
aspects of the proposed rules. All comments will be available at
www.regulations.gov or upon request.
A public hearing will be scheduled if requested by any person who
timely submits comments. If a public hearing is scheduled, notice of
the date, time, and place for the hearing will be published in the
Federal Register.
Effect on Other Documents
The following publications are obsolete as of the date these
regulations are published as final regulations in the Federal Register:
Notice 2003-13, (2003-1 CB 513); Notice 2003-37 (2003-1 CB 1121); Rev.
Proc. 2004-42 (2004-2 CB 121); Rev. Proc. 2004-43 (2004-2 CB 124); and
Notice 2007-59 (2007-30 IRB 135) (see Sec. 601.601(d)(2)(ii)(b) of
this chapter).
Withdrawal of Notice of Proposed Rulemaking
Accordingly, under the authority of 26 U.S.C. 7805, the notice of
proposed rulemaking (REG-163195-05) that was published in the Federal
Register on July 13, 2007 (72 FR 38534) is withdrawn.
Drafting Information
The principal author of these proposed regulations is Michael Hara
of the Office of Associate Chief Counsel (Procedure and
Administration).
List of Subjects
26 CFR Part 31
Employment taxes, Income taxes, Penalties, Pensions, Railroad
retirement, Reporting and recordkeeping requirements, Social security,
Unemployment compensation.
26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Income taxes, Gift
taxes, Penalties, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR parts 31 and 301 are proposed to be amended as
follows:
PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE
0
Paragraph 1. The authority citation for part 31 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Sec. 31.3406(g)-1 [Amended]
0
Par. 2. Section 31.3406(g)-1 is amended by removing paragraph (f).
[[Page 15928]]
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. * * *
Sec. 301.6724-1 [Amended]
0
Par. 4. Section 301.6724-1 is amended by:
0
a. Removing the language ``or a qualified Payment Card Agent (QPCA) as
defined in Sec. 31.3406(g)-1(f)(2)(v) of this chapter,'' from the
introductory text of paragraph (c)(6).
0
b. Removing paragraphs (e)(1)(vi)(H) and (f)(5)(vii).
John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2014-06209 Filed 3-21-14; 8:45 am]
BILLING CODE 4830-01-P