[Federal Register Volume 61, Number 247 (Monday, December 23, 1996)]
[Proposed Rules]
[Pages 67510-67512]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32122]
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DEPARTMENT OF THE TREASURY
26 CFR Part 1
[REG-209828-96]
RIN 1545-AU28
Nuclear Decommissioning Funds; Revised Schedules of Ruling
Amounts
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking and notice of public hearing.
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SUMMARY: This document contains proposed regulations relating to
requests for revised schedules of ruling amounts for nuclear
decommissioning reserve funds. The proposed regulations would amend
existing regulations to ease the burden on affected taxpayers by
permitting them to adjust their ruling amounts under a formula or
method rather than by filing a request for a revised schedule of ruling
amounts. This document also provides notice of a public hearing on
these proposed regulations.
DATES: Comments must be received by March 24, 1997. Requests to speak
and outlines of oral comments to be discussed at the public hearing
scheduled for May 13, 1997, at 10 a.m., must be received by April 22,
1997.
ADDRESSES: Send submissions to CC:DOM:CORP:R [REG-209828-96], room
5226, Internal Revenue Service, POB 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand-delivered between the
hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R [REG-209828-96], Courier's
Desk, Internal Revenue Service, 1111 Constitution Avenue, N.W.,
Washington, DC. Alternatively, taxpayers may submit comments
electronically via the Internet by selecting the ``Tax Regs'' option on
the IRS Home Page, or by submitting comments directly to the IRS
Internet site at http://www.irs.ustreas.gov/prod/tax__regs/
comments.html. A public hearing will be held in the NYU Classroom,
Second Floor, Room 2615, Internal Revenue Building, 1111 Constitution
Avenue, N.W., Washington, DC.
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
Peter C. Friedman, (202) 622-3110 (not a toll-free number); concerning
submissions and the hearing, Evangelista Lee, (202) 622-7190 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained in this notice of proposed
rulemaking has been submitted to the Office of Management and Budget
for review in accordance with the Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)). Comments on the collection of information should be
sent to the Office of Management and Budget, Attn: Desk Officer for the
Department of the Treasury, Office of Information and Regulatory
Affairs, Washington, DC 20503, with copies to the Internal Revenue
Service, Attn: IRS Reports Clearance Officer, T:FP, Washington, DC
20224. Comments on the collection of information should be received by
February 21, 1997. Comments are specifically requested concerning:
Whether the proposed collection of information is necessary for the
proper performance of the functions of the Internal Revenue Service,
including whether the collection will have a practical utility;
The accuracy of the estimated burden associated with the proposed
collection of information (see below);
[[Page 67511]]
How the quality, utility, and clarity of the information to be
collected may be enhanced;
How the burden of complying with the proposed collection of
information may be minimized, including through the application of
automated collection techniques or other forms of information
technology; and
Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of service to provide information.
The collection of information is in Sec. 1.468A-3. This information
is required by the IRS to ensure compliance with the provisions of
section 468A relating to deductions for payments made to nuclear
decommissioning reserve funds. This information will be used by the IRS
to support the issuance to taxpayers of schedules of ruling amounts
under section 468A. The collection of information is voluntary to
obtain a benefit. The likely recordkeepers are businesses or other for-
profit institutions. Estimated total annual recordkeeping burden: 100
hours. Estimated average annual burden per recordkeeper: 5 hours.
Estimated number of recordkeepers: 20.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid control number.
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
return information are confidential, as required by 26 U.S.C. 6103.
Background
This document contains proposed regulations under section 468A of
the Internal Revenue Code. Section 468A was added to the Internal
Revenue Code by section 91(c) of the Tax Reform Act of 1984 (Pub. L.
98-369). Significant amendments were made to section 468A by section
1917 of the Energy Policy Act of 1992 (Public Law 102-486).
Section 468A(a) allows an electing taxpayer to deduct the amount of
payments made by the taxpayer to a nuclear decommissioning reserve
fund. Section 468A(b) limits the amount of these payments for any
taxable year to the lesser of the ruling amount or the amount of
decommissioning costs included in the taxpayer's cost of service for
ratemaking purposes for that taxable year.
Section 468A(d) provides that no deduction shall be allowed unless
the taxpayer requests, and receives, a schedule of ruling amounts from
the Secretary. A ruling amount is, with respect to any taxable year,
the amount determined by the Secretary as necessary to (1) fund that
portion of the nuclear decommissioning costs of the taxpayer with
respect to the nuclear power plant which bears the same ratio to the
total nuclear decommissioning costs with respect to such nuclear power
plant as the period for which the nuclear decommissioning fund is in
effect bears to the estimated useful life of such nuclear power plant;
and (2) prevent any excessive funding of such costs or the funding of
such costs at a rate more rapid than level funding, taking into account
such discount rates as the Secretary deems appropriate. Section
468A(d)(3) provides that the Secretary shall, at least once during the
useful life of the nuclear power plant (or more frequently, upon the
request of the taxpayer), review and, if necessary, revise the schedule
of ruling amounts.
Section 1.468A-3 sets forth the rules relating to the determination
of ruling amounts. Section 1.468A-3(a)(4) permits the use of a formula
or method for determining a schedule of ruling amounts (in lieu of a
schedule of ruling amounts specifying a dollar amount for each taxable
year), but only if the public utility commission establishing or
approving the amount of decommissioning costs to be included in cost of
service for ratemaking does not estimate the cost of decommissioning in
future dollars.
Section 1.468A-3(i) contains provisions for the review and revision
of schedules of ruling amounts. Section 1.468A-3(i)(1) sets forth
circumstances under which a taxpayer must request a revision to its
schedule of ruling amounts. In general, a schedule of ruling amounts
must be reviewed at ten-year intervals. If the schedule is determined
under a formula or method, however, the period between reviews may not
exceed five years.
Section 1.468A-3(i)(2) provides that a taxpayer may request an
elective review of its schedule of ruling amounts so long as such
request is made in accordance with the rules of Sec. 1.468A-3(h). A
taxpayer seeking to maximize its deductions under section 468A
generally needs to request an elective review of its schedule of ruling
amounts each time a public utility commission changes previously
established amounts of decommissioning costs. These proposed
regulations amend Sec. 1.468A-3(a)(4) by eliminating the restriction on
the use of a formula or method for determining a schedule of ruling
amounts. In addition, these proposed regulations revise the mandatory
review requirements of Sec. 1.468A-3(i)(1).
Explanation of Provisions
The proposed regulations provide that a taxpayer may request
approval of a formula or method for determining a schedule of ruling
amounts (rather than a schedule specifying a dollar amount for each
taxable year) that is consistent with the principles and provisions of
the rules relating to the determination of ruling amounts.
The proposed regulation would ease the filing burden on taxpayers
by permitting them to adjust their ruling amounts under a formula or
method (rather than by filing a request for a revised schedule of
ruling amounts). Thus, under the proposed regulations, a taxpayer may
maximize its deductions under section 468A without requesting a revised
schedule of ruling amounts each time a public utility commission
changes the amount of decommissioning costs included in the taxpayer's
cost of service if, under the taxpayer's formula or method, the
commission's action results in a corresponding change in ruling
amounts.
In addition, the proposed regulations modify the mandatory review
provisions applicable to schedules of ruling amounts determined under a
formula or method. One modification eliminates the rule requiring
review of those schedules after five years; the schedules will,
however, be subject to the general rule requiring review at ten-year
intervals. In addition, a taxpayer using a formula or method will be
required to request a revised schedule of ruling amounts if, beginning
with the second taxable year during which the most recently issued
formula or method is in effect, the ruling amount for a taxable year
(1) differs by more than 25 percent from the ruling amount for any
preceding taxable year during which such formula or method was in
effect; or (2) differs by more than 10 percent from the ruling amount
for the immediately preceding taxable year. Under these circumstances a
taxpayer must file a request for a revised schedule of ruling amounts
on or before the deemed payment deadline for the next taxable year.
Proposed Effective Date
The regulations are proposed to be effective for requests for
schedules of ruling amounts made on or after the date that the final
regulations are filed with the Federal Register.
[[Page 67512]]
Special Analyses
It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in EO 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, and because the
regulation does 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 Internal Revenue Code, this
notice of proposed rulemaking will be submitted to the Chief Counsel
for Advocacy of the Small Business Administration for comment on its
impact on small business.
Comments and Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any written comments (a signed original
and eight (8) copies) that are submitted timely to the IRS. All
comments will be available for public inspection and copying.
A public hearing has been scheduled for May 13, 1997, in room 2615.
Because of access restrictions, visitors will not be admitted beyond
the Internal Revenue Building lobby more than 15 minutes before the
hearing starts.
The rules of 26 CFR 601.601(a)(3) apply to the hearing.
Persons that wish to present oral comments at the hearing must
submit comments by March 24, 1997 and submit an outline of the topics
to be discussed and the time to be devoted to each topic by April 22,
1997.
A period of 10 minutes will be allotted to each person for making
comments.
An agenda showing the scheduling of the speakers will be prepared
after the deadline for receiving outlines has passed. Copies of the
agenda will be available free of charge at the hearing.
Drafting Information
The principal author of these regulations is Peter C. Friedman,
Office of Assistant Chief Counsel (Passthroughs and Special
Industries). However, other personnel from the IRS and Treasury
Department participated in their development.
List of Subjects in 26 CFR Part 1
Income Taxes, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.468A-2 is amended as follows:
1. The text of paragraph (f)(3) is redesignated as paragraph
(f)(3)(i).
2. Paragraph (f)(3)(ii) is added.
The addition reads as follows:
Sec. 1.468A-2 Treatment of electing taxpayer.
* * * * *
(f) * * *
(3) * * * (i) * * *
(ii) The requirement of this paragraph (f)(3) does not apply if the
taxpayer determines its schedule of ruling amounts under a formula or
method obtained under Sec. 1.468A-3(a)(4) and the cost of service
amount is a variable element of that formula or method.
* * * * *
Par. 3. Section 1.468A-3 is amended as follows:
1. Paragraph (a)(4) is revised.
2. Paragraph (e)(5) is added.
3. Paragraphs (i)(1)(ii)(A), (i)(1)(iii)(A)(3), and (i)(1)(iii)(B)
are revised.
4. Paragraph (i)(1)(iii)(C) is added.
The revisions and additions read as follows:
Sec. 1.468A-3 Ruling amount.
(a) * * *
(4) The Internal Revenue Service will approve, at the request of
the taxpayer, a formula or method for determining a schedule of ruling
amounts (rather than a schedule specifying a dollar amount for each
taxable year) that is consistent with the principles and provisions of
this section. See paragraph (i)(1)(ii) of this section for a special
rule relating to the mandatory review of ruling amounts that are
determined pursuant to a formula or method.
* * * * *
(e) * * *
(5) A formula or method obtained under paragraph (a)(4) of this
section may provide for changes in an estimated date described in
paragraph (e)(1) or (2) of this section to reflect changes in the
ratemaking assumptions used to determine rates (whether interim or
final) that are established or approved by the applicable public
utility commission after the filing of the request for approval of a
formula or method.
* * * * *
(i) * * *
(1) * * *
(ii)(A) Any taxpayer that has obtained a formula or method for
determining a schedule of ruling amounts for any taxable year under
paragraph (a)(4) of this section must file a request for a revised
schedule of ruling amounts on or before the deemed payment deadline for
a taxable year if the period for which the most recently issued formula
or method has been in effect (the ruling period) began at least two
taxable years before such year and--
(1) The ruling amount for the preceding taxable year and the ruling
amount for any earlier taxable year in the ruling period differ by more
than 25 percent of the smaller amount; or
(2) The ruling amounts for the two most recent taxable years differ
by more than 10 percent of the smaller amount.
* * * * *
(iii) * * *
(A) * * *
(3) Reduces the amount of decommissioning costs to be included in
cost of service for any taxable year;
(B) The taxpayer's most recent request for a schedule of ruling
amounts did not provide notice to the Internal Revenue Service of such
action by the public utility commission; and
(C) In the case of a taxpayer that determines its schedule of
ruling amounts under a formula or method obtained under paragraph
(a)(4) of this section, the item increased, adjusted, or reduced is a
fixed (rather than a variable) element of that formula or method.
* * * * *
Margaret Milner Richardson,
Commissioner of Internal Revenue.
[FR Doc. 96-32122 Filed 12-20-96; 8:45 am]
BILLING CODE 3410-01-U