[4830-01-u]
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 40
[TD 8616]
RIN  1545-AT26
Deposits of Excise Taxes
AGENCY:  Internal Revenue Service (IRS), Treasury.
ACTION:  Temporary regulations.
SUMMARY:  This document contains temporary regulations relating to deposits of
excise taxes.  These temporary regulations reflect changes to the law made by
the Uruguay Round Agreements Act and affect persons required to make deposits
of excise taxes.  The text of these temporary regulations also serves as the
text of the proposed regulations set forth in the notice of proposed
rulemaking on this subject in the Proposed Rules section of this issue of the
Federal Register.
EFFECTIVE DATE:  These regulations are effective August 1, 1995.
FOR FURTHER INFORMATION CONTACT:  Ruth Hoffman, (202) 622-3130 (not a toll-
free number).
SUPPLEMENTARY INFORMATION:
Background
    This document contains amendments to the Excise Tax Procedural
Regulations (26 CFR part 40) relating to deposits of excise taxes.  Effective
January 1, 1995, the Uruguay Round Agreements Act of 1994 (the Act) amended
sections 6302(e) and (f) (relating to deposits of excise taxes).  As amended,
these provisions require an additional deposit of all excise taxes except air
transportation taxes in September of each year.  Beginning in 1997, the
amendments also apply to air transportation taxes.  These temporary
regulations provide safe harbor rules for that additional deposit of tax.
    Under existing rules, deposits of excise taxes for a semimonthly period
generally must equal the amount of tax liability incurred (or in the case of
collected taxes, the amount of tax collected) during that semimonthly period
unless a safe harbor applies.  Sections 40.6302(c)-1(c) and 40.6302(c)-2(b)(2)
and (3) provide two safe harbor rules for computing the amount of tax required
to be deposited; the look-back quarter safe harbor rule and the current
liability safe harbor rule.
    These temporary regulations modify the safe harbor rules to reflect the
amendments made by the Act.
Special Analyses
    It has been determined that this Treasury decision is not a significant
regulatory action as defined in EO 12866.  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) and the Regulatory
Flexibility Act (5 U.S.C. chapter 6) do not apply to these regulations, and,
therefore, a Regulatory Flexibility Analysis is not required.  Pursuant to
section 7805(f) of the Internal Revenue Code, these temporary regulations will
be submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on their impact on small business.
Drafting Information
    The principal author of these regulations is Ruth Hoffman, 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 40
    Excise taxes, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
    Accordingly, 26 CFR part 40 is amended as follows:
PART 40--EXCISE TAX PROCEDURAL REGULATIONS
    Paragraph 1.  The authority citation for part 40 continues to read in
part as follows:
    Authority:  26 U.S.C. 7805 * * *
    Par. 2.  Section 40.6302(c)-5T is added to read as follows:
40.6302(c)-5T  Use of Government depositaries; rules under sections 6302(e)
and (f) (temporary).
    (a) Applicability; meaning of terms.  This section sets forth rules
relating to the excise tax deposits required under sections 6302(e)(2) and
(f).  Terms used both in this section and in any other provision of
40.6302(c)-1, 40.6302(c)-2, 40.6302(c)-3, or 40.6302(c)-4 have the same
meaning for purposes of this section as when used in such other provision.
    (b) Nine-day rule and 14-day rule taxes--(1) Deposits required.  In the
case of deposits of 9-day rule taxes and 14-day rule taxes for the second
semimonthly period in September, separate deposits are required for the period
September 16th-26th and the period September 27th-30th.
    (2) Amount of deposit; in general.  Each deposit of a class of tax (that
is, 9-day rule taxes or 14-day rule taxes) required under this paragraph (b)
for the periods September 16th-26th and September 27th-30th must be not less
than the amount of net tax liability incurred for the class of tax during the
period.  The net tax liability incurred for a class of tax during these
periods may be computed by--
    (i) Determining the amount of net tax liability reasonably expected to
be incurred for the class of tax during the second semimonthly period in
September;
    (ii) Treating 11/15 (73.34 percent) of such amount as the net tax
liability incurred during the period September 16th-26th; and
    (iii) Treating the remainder of the amount determined under paragraph
(b)(2)(i) of this section (adjusted to reflect net tax liability actually
incurred through the end of September) as the net tax liability incurred
during the period September 27th-30th.
    (3) Amount of deposit; safe harbor rules.  In the case of a class of tax
for which an additional September deposit is required under this paragraph
(b), the safe harbor rules of 40.6302(c)-1(c) are modified as follows:
    (i) Safe harbor rule based on look-back quarter liability.  The safe
harbor rule of 40.6302(c)-1(c)(2)(i) does not apply for the third calendar
quarter unless--
    (A) The deposit of taxes in that class for the period September
16th-26th is not less than 11/90 (12.23 percent) of the net tax liability
reported for the class of tax for the look-back quarter; and
    (B) The total deposit of taxes in that class for the second semimonthly
period in September is not less than 1/6 (16.67 percent) of the net tax
liability reported for the class of tax for the look-back quarter.
    (ii) Safe harbor rule based on current liability.  The safe harbor rule
of 40.6302(c)-1(c)(3)(i) does not apply for the third calendar quarter
unless--
    (A) The deposit of taxes in that class for the period September
16th-26th is not less than 69.67 percent of the net tax liability for the
class of tax for the second semimonthly period in September; and
    (B) The total deposit of taxes in that class for the second semimonthly
period in September is not less than 95 percent of the net tax liability for
the class of tax for that semimonthly period.
    (4) Time to deposit.  The deposit required under this paragraph (b) for
the period beginning September 16th must be made on or before September 29.
The deposit required under this paragraph (b) for the period ending September
30th must be made at the time prescribed in 40.6302(c)-1(b)(6)(i) (or, to the
extent applicable, at the time prescribed in 40.6302(c)-4(b)) for making
deposits for the second semimonthly period in September.
    (c) 30-day rule taxes--(1) Deposits required.  In the case of deposits
of 30-day rule taxes for the first semimonthly period in September, separate
deposits are required for the period September 1st-11th and the period
September 12th-15th.
    (2) Amount of deposit; in general.  Each deposit of 30-day rule taxes
required under this paragraph (c) for the periods September 1st-11th and
September 12th-15th must be not less than the amount of net tax liability
incurred for 30-day rule taxes during the period.  The net tax liability
incurred during these periods may be computed by--
    (i) Determining the amount of net tax liability incurred during the
first semimonthly period in September (or, if semimonthly liability is
computed by dividing monthly liability by two, the amount reasonably expected
to be incurred);
    (ii) Treating 11/15 (73.34 percent) of such amount as the net tax
liability incurred during the period September 1st-11th; and
    (iii) Treating the remainder of the amount determined under paragraph
(c)(2)(i) of this section (adjusted, if such amount is based on reasonable
expectations, to reflect net tax liability actually incurred through the end
of September) as the net tax liability incurred during the period September
12th-15th.
    (3) Amount of deposit; safe harbor rules.  In the case of 30-day rule
taxes for which an additional September deposit is required under this
paragraph (c), the safe harbor rules of 40.6302(c)-2(b) are modified as
follows:
    (i) Safe harbor rule based on look-back quarter liability.  The safe
harbor rule of 40.6302(c)-2(b)(2) does not apply for the third calendar
quarter unless--
    (A) The deposit of 30-day rule taxes for the period September 1st-11th
is not less than 11/90 (12.23 percent) of the net tax liability reported for
30-day rule taxes for the look-back quarter; and
    (B) The total deposit of 30-day rule taxes for the first semimonthly
period in September is not less than 1/6 (16.67 percent) of the net tax
liability reported for 30-day rule taxes for the look-back quarter.
    (ii) Safe harbor rule based on current liability.  The safe harbor rule
of 40.6302(c)-2(b)(3) does not apply for the third calendar quarter unless--
    (A) The deposit of 30-day rule taxes for the period September 1st-11th
is not less than 69.67 percent of the net tax liability for 30-day rule taxes
for the first semimonthly period in September; and
    (B) The total deposit of 30-day rule taxes for the first semimonthly
period in September is not less than 95 percent of the net tax liability for
30-day rule taxes for that semimonthly period.
    (4) Time to deposit.  The deposit required under this paragraph (c) for
the period beginning September 1st and the deposit of 30-day rule taxes for
the second semimonthly period in August must be made on or before September
29.  The deposit required under this paragraph (c) for the period ending
September 15th must be made at the time prescribed in 40.6302(c)-2(b)(1) for
making deposits for the first semimonthly period in September.
    (d) Alternative method taxes--(1) Deposits required.  In the case of
alternative method taxes charged (that is, included in amounts billed or
tickets sold) during the first semimonthly period in September, separate
deposits are required for the taxes charged during the period September
1st-11th and the period September 12th-15th.
    (2) Amount of deposit; in general.  Each deposit of alternative method
taxes required under this paragraph (d) for the periods September 1st-11th and
September 12th-15th must be not less than the amount of alternative method
taxes charged during the period.  The amount of alternative method taxes
charged during these periods may be computed by--
    (i) Determining the net amount of alternative method taxes reflected in
the separate account for the first semimonthly period in September (or one-
half of the net amount of alternative method taxes reasonably expected to be
reflected in the separate account for the month of September);
    (ii) Treating 11/15 (73.34 percent) of such amount as the amount charged
during the period September 1st-11th; and
    (iii) Treating the remainder of the amount determined under paragraph
(d)(2)(i) of this section (adjusted, if such amount is based on reasonable
expectations, to reflect actual charges through the end of September) as the
amount charged during the period September 12th-15th.
    (3) Amount of deposit; safe harbor rules.  In the case of alternative
method taxes for which an additional September deposit is required under this
paragraph (d), the safe harbor rules of 40.6302(c)-1(c) are modified as
follows:
    (i) Safe harbor rule based on look-back quarter liability.  The safe
harbor rule of 40.6302(c)-1(c)(2)(i) does not apply for the fourth calendar
quarter unless--
    (A) The deposit for alternative method taxes charged during the period
September 1st-11th is not less than 11/90 (12.23 percent) of the net tax
liability reported for alternative method taxes for the look-back quarter; and
    (B) The total deposit for alternative method taxes charged during the
first semimonthly period in September is not less than 1/6 (16.67 percent) of
the net tax liability reported for alternative method taxes for the look-back
quarter.
    (ii) Safe harbor rule based on current liability.  The safe harbor rule
of 40.6302(c)-1(c)(3)(i) does not apply for the fourth calendar quarter
unless--
    (A) The deposit for alternative method taxes charged during the period
September 1st-11th is not less than 69.67 percent of the alternative method
taxes charged during the first semimonthly period in September; and
    (B) The total deposit for alternative method taxes charged during the
first semimonthly period in September is not less than 95 percent of the
alternative method taxes charged during that semimonthly period.
    (4) Time to deposit.  The deposit required under this paragraph (d) for
taxes charged during the period beginning September 1st must be made on or
before September 29.  The deposit of alternative method taxes required under
this paragraph (d) for taxes charged during the period ending September 15th
must be made at the time prescribed in 40.6302(c)-3(c) for making deposits
for the first semimonthly period in October.
    (e) Modifications for persons not required to use electronic funds
transfer.  In the case of a person that is not required to deposit excise
taxes by electronic funds transfer (a non-EFT depositor), the rules of
paragraphs (b), (c), and (d) apply with the following modifications:
    (1) The periods for which separate deposits must be made under paragraph
(b) of this section are September 16th-25th and September 26th-30th.  In
addition, the deposit required for the period beginning September 16th must be
made on or before September 28.
    (2) The periods for which separate deposits must be made under paragraph
(c) of this section are September 1st-10th and September 11th-15th.  In
addition, the deposit required for the period beginning September 1st and the
deposit of 30-day rule taxes for the second semimonthly period in August must
be made on or before September 28.
    (3) The taxes for which separate deposits must be made under paragraph
(d) of this section are those charged during the periods September 1st-10th
and September 11th-15th.  In addition, the deposit required for taxes charged
during the period beginning September 1st must be made on or before September
28.
    (4) The generally applicable fractions and percentages are modified to
reflect the different deposit periods in accordance with the following table:
      Generally applicable              Modification for
    fractions and percentages
    non-EFT depositors
    11/15 (73.34 percent)              10/15 (66.67 percent)
    11/90 (12.23 percent)              10/90 (11.12 percent)
    69.67 percent                      63.34 percent
    (f) Due date on Saturday or Sunday--(1) EFT depositors.  A deposit that,
under the rules of this section, would otherwise be due on September 29 must
be made on or before September 28 if September 29 is a Saturday and on or
before September 30 if September 29 is a Sunday.
    (2) Non-EFT depositors.  A deposit that, under the rules of this
section, would otherwise be due on September 28 must be made on or before
September 27 if September 28 is a Saturday and on or before September 29 if
September 28 is a Sunday.
    (g) Special rules for section 4081 taxes superseded.  Deposits for the
second semimonthly period in September of taxes imposed by section 4081 must
be made under the rules of this section and without regard to the special
rules for such deposits under 40.6302(c)-1.
    (h) Effective date--(1) In general.  Except as provided in paragraph
(h)(2) of this section, this section is effective August 1, 1995.
    (2) Air transportation taxes.  For air transportation taxes, this
section is effective January 1, 1997.
                                  Margaret Milner Richardson
                                           Commissioner of Internal Revenue
Approved:  August 3, 1995
                 Leslie Samuels
          Assistant Secretary of the Treasury