[Federal Register Volume 79, Number 56 (Monday, March 24, 2014)]
[Proposed Rules]
[Pages 15926-15928]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-06209]


========================================================================
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.

========================================================================


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.

-----------------------------------------------------------------------

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