83446 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Rules and Regulations 

§ 266.650 Items deducted from total loss. 

* * * * * 

(a) All amounts received by the HFA 

on account of the mortgage after the date 

of default, including any partial 

payment of claim paid by HUD in the 

event a full claim follows a partial 

payment of claim; 

* * * * * 

§ 266.654 [Amended] 

■ 41. Amend § 266.654 in paragraph (b) 

by adding the word ‘‘calendar’’ before 

the word ‘‘days’’ in the first sentence. 

Dana T. Wade, 

Assistant Secretary for Housing—Federal 

Housing Commissioner. 

[FR Doc. 2020–27914 Filed 12–21–20; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 301 

[TD 9940] 

RIN 1545–BP41 

Misdirected Direct Deposit Refunds 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: These final regulations 

provide the procedures under section 

6402(n) of the Internal Revenue Code 

(Code) for identification and recovery of 

a misdirected direct deposit refund. The 

final regulations reflect changes to the 

law made by the Taxpayer First Act. 

The final regulations affect taxpayers 

who have made a claim for refund, 

requested the refund be issued as a 

direct deposit, but did not receive a 

refund in the account designated on the 

claim for refund. 

DATES: 

Effective date: These regulations are 

effective on December 22, 2020. 

Applicability date: These regulations 

apply to reports to the IRS made after 

[date of publication] that a taxpayer 

never received a direct deposit refund. 

FOR FURTHER INFORMATION CONTACT: 

Mary C. King at (202) 317–5433 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains amendments 

to 26 CFR part 301 under section 

6402(n) of the Code and provides 

guidance on the procedures used to 

identify and recover tax refunds issued 

by electronic funds transfer (direct 

deposit) that were not delivered to the 

account designated to receive the direct 

deposit refund on the federal tax return 

or other claim for refund. Section 

6402(n) was added to the Code by 

section 1407 of the Taxpayer First Act, 

Public Law 116–25, 133 Stat. 981 (2019) 

(TFA) on July 1, 2019. On December 23, 

2019, the Department of the Treasury 

(Treasury Department) and the IRS 

published in the Federal Register (84 

FR 70462) a notice of proposed 

rulemaking (REG–116163–19) providing 

the procedures under section 6402(n) 

for reporting, identification, and 

recovery of a misdirected direct deposit 

refund. The Treasury Department and 

the IRS received one comment 

responding to the proposed regulations. 

The comment is available at 

www.regulations.gov or upon request. 

No public hearing was requested or held 

on the proposed regulations. 

After consideration of the written 

comment, this Treasury Decision adopts 

the proposed regulations as final 

regulations with minor modifications, as 

described in the Summary of Comments 

and Explanation of Provisions. A 

detailed explanation of these regulations 

can be found in the preamble to the 

proposed regulations. 

Summary of Comments and 

Explanation of Provisions 

The Treasury Department and the IRS 

received one comment regarding the 

proposed regulations. After 

consideration of the comment, the 

proposed regulations are adopted as 

final regulations without any 

substantive changes. 

I. Applicability Date 

A commenter expressed a concern 

that the procedures in these regulations 

would not apply to claims for refund 

from taxable years before the 

applicability date of the final 

regulations. The commenter requested 

that the procedures should be applied to 

refund claims for prior years. Consistent 

with the comment, the final regulations 

clarify that these procedures apply to 

any report of a misdirected direct 

deposit refund for a current or prior year 

submitted after the publication of the 

final regulations in the Federal Register. 

II. Coordination With Financial 

Institutions 

Section 301.6402–2(g)(1) of the 

proposed regulations defines 

‘‘misdirected direct deposit refund’’ as 

any refund of an overpayment of tax 

that is disbursed as a direct deposit but 

is not deposited into the account 

designated on the claim for refund to 

receive the direct deposit refund. The 

proposed regulations include in the 

definition of a misdirected direct 

deposit refund only those refunds 

which are actually issued as a direct 

deposit. A misdirected direct deposit 

refund does not include an overpayment 

that is credited against another 

outstanding tax liability of the taxpayer 

pursuant to section 6402(a) or that is 

offset pursuant to the law. An 

overpayment that is offset or applied as 

mandated by law is not a misdirected 

direct deposit refund because these 

actions are mandated by law. Section 

301.6402–2(g)(1) of the final regulations 

clarifies this by striking the last 

sentence from the proposed regulations, 

as it is not needed to define a 

‘‘misdirected direct deposit refund.’’ 

Instead, the final regulations clarify in 

section 301.6402–2(g)(3)(i) that the 

offset or setoff of an overpayment occurs 

prior to the issuance of a direct deposit. 

The IRS will determine if a reported 

missing refund is setoff or offset as part 

of the procedure for the identification of 

the account that received the 

misdirected direct deposit refund. This 

reorganization simplifies the definition 

of a misdirected direct deposit refund 

and more accurately describes the 

process of identification of a 

misdirected direct deposit refund. 

The final regulations reflect this 

clarification to the definition of a 

misdirected direct deposit refund and 

the identification procedure, but the 

proposed regulations are otherwise 

adopted without change. 

Special Analyses 

This regulation is not subject to 

review under section 6(b) of Executive 

Order 12866 pursuant to the 

Memorandum of Agreement (April 11, 

2018) between the Treasury Department 

and the Office of Management and 

Budget regarding review of tax 

regulations. 

These regulations do not impose any 

additional information collection 

requirements in the form of reporting, 

recordkeeping requirements, or thirdparty disclosure requirements related to 

tax compliance. However, because a 

taxpayer or a taxpayer’s representative 

may elect to report a missing refund 

using the procedures described in 

§ 301.6402–2(g)(2)(ii)(B), some taxpayers 

may use a form to report a missing 

refund. The collection of information in 

§ 301.6402–2(g)(2)(ii)(B) is through use 

of a Form 3911, ‘‘Taxpayer Statement 

Regarding Refund,’’ and is the sole 

collection of information requirement 

established by the final regulations. 

For the purposes of the Paperwork 

Reduction Act, 44 U.S.C. 3501–3520, 

the reporting burden associated with the 


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Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Rules and Regulations 83447 

collection of information with respect to 

section 6402(n) will be reflected in 

Paperwork Reduction Act submissions 

for IRS Form 3911 (OMB Control 

Number 1545–1384). The estimated 

average time to complete Form 3911 is 

five minutes. However, use of a form is 

not required in every case. There are 

certain situations in which a taxpayer 

may instead elect to investigate a 

missing refund over the telephone or in 

person at the Office of the Taxpayer 

Advocate and, after the IRS identifies 

the tax refund and informs the taxpayer 

that the refund was issued as a direct 

deposit, orally report that the alreadyidentified refund is missing. 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. 

It is hereby certified that these 

regulations will not have a significant 

economic impact on a substantial 

number of small entities within the 

meaning of section 601(6) of the 

Regulatory Flexibility Act (5 U.S.C. 

chapter 6). The certification is based on 

the information that follows. There is no 

significant impact from these 

regulations on any small entity utilizing 

the procedures prescribed by these 

regulations to report a missing refund 

because there is no significant cost 

associated with reporting a missing 

refund. There is no fee charged in 

connection with reporting a missing 

refund, and the estimated time to 

complete a Form 3911, ‘‘Taxpayer 

Statement Regarding Refund,’’ is five 

minutes. There are no tax consequences 

associated with the final rule, as it 

merely sets forth the procedures for 

reporting a missing refund and 

describes the process the IRS uses in 

locating a missing refund and, in some 

instances, issuing a replacement refund. 

The process in these regulations mirrors 

the existing process and does not 

change the reporting burden. 

Accordingly, the Treasury Department 

and the IRS have determined that this 

Treasury Decision will not have a 

significant economic impact on a 

substantial number of small entities. 

Pursuant to section 7805(f) of the Code, 

the notice of proposed rulemaking 

preceding this regulation was submitted 

to the Chief Counsel for Advocacy of the 

Small Business Administration for 

comment on its impact on small 

business entities, and no comments 

were received. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 requires 

that agencies assess anticipated costs 

and benefits and take certain other 

actions before issuing a final rule that 

includes any Federal mandate that may 

result in expenditures in any one year 

by a state, local, or tribal government, in 

the aggregate, or by the private sector, of 

$100 million in 1995 dollars, updated 

annually for inflation. This regulation 

does not include any Federal mandate 

that may result in expenditures by state, 

local, or tribal governments, or by the 

private sector in excess of that 

threshold. 

Executive Order 13132 (titled 

Federalism) prohibits an agency from 

publishing any rule that has federalism 

implications if the rule either imposes 

substantial, direct compliance costs on 

state and local governments, and is not 

required by statute, or preempts state 

law, unless the agency meets the 

consultation and funding requirements 

of section 6 of the Executive Order. This 

rule does not have federalism 

implications and does not impose 

substantial direct compliance costs on 

state and local governments or preempt 

state law, within the meaning of the 

Executive Order. 

Drafting Information 

The principal author of these 

regulations is Mary C. King of the Office 

of the Associate Chief Counsel 

(Procedure and Administration). Other 

personnel from the Treasury 

Department and the IRS participated in 

the development of the regulations. 

List of Subjects in 26 CFR Part 301 

Employment taxes, Estate taxes, 

Excise taxes, Gift taxes, Income taxes, 

Penalties, Reporting and recordkeeping 

requirements. 

Adoption of Amendments to the 

Regulations 

Accordingly, 26 CFR part 301 is 

amended as follows: 

PART 301—PROCEDURE AND 

ADMINISTRATION 

■ Paragraph 1. The authority citation 

for part 301 is amended by adding an 

entry in numerical order for § 301.6402– 

2(g) to read in part as follows: 

Authority: 26 U.S.C. 7805 * * * 

* * * * * 

Section 301.6402–2(g) also issued under 26 

U.S.C. 6402(n). 

* * * * * 

■ Par. 2. Section 301.6402–2 is 

amended by: 

■ 1. Redesignating paragraph (g) as 

paragraph (h) and adding new 

paragraph (g). 

■ 2. Revising the subject heading of 

newly redesignated paragraph (h) and 

adding a sentence at the end of the 

paragraph. 

The additions and revision read as 

follows: 

§ 301.6402–2 Claims for credit or refund. 

* * * * * 

(g) Misdirected direct deposit 

refund—(1) Definition. The term 

misdirected direct deposit refund 

includes any refund of an overpayment 

of tax that is disbursed as a direct 

deposit but is not deposited into the 

account designated on the claim for 

refund to receive the direct deposit 

refund. 

(2) Procedures for reporting a 

misdirected direct deposit refund—(i) In 

general. A taxpayer or a taxpayer’s 

authorized representative may report to 

the IRS that the taxpayer never received 

a direct deposit refund and request a 

replacement refund. The report must 

include the name of the taxpayer who 

requested the refund, the taxpayer 

identification number of the taxpayer, 

the taxpayer’s mailing address, the type 

of return to which the refund is related, 

the account number and routing number 

that the taxpayer requested the refund 

be directly deposited into, and any other 

information necessary to locate the 

misdirected direct deposit refund. 

(ii) How to report a misdirected direct 

deposit refund. A reporting described in 

paragraph (g)(2)(i) of this section may be 

made in the following ways: 

(A) By calling the IRS; 

(B) On the form prescribed by the IRS 

and in accordance with the applicable 

publications, instructions, or other 

appropriate guidance; 

(C) By contacting the Office of the 

Taxpayer Advocate by telephone, by 

mail, facsimile, or in person; or 

(D) By submitting the appropriate 

form in person at a Taxpayer Assistance 

Center. 

(3) Procedures for coordination with 

financial institutions—(i) Identification 

of the account that received the 

misdirected direct deposit refund. If the 

IRS receives a report described in 

paragraph (g)(2)(ii) of this section, the 

IRS will confirm that the overpayment 

was issued as a direct deposit. The IRS 

will confirm that the overpayment was 

not credited or offset pursuant to the 

law in effect immediately prior to the 

direct deposit being disbursed. If the 

direct deposit described in the report 

was issued, the IRS will initiate a refund 

trace to request the assistance of the 

Department of the Treasury’s Bureau of 

the Fiscal Service. In accordance with 

its own procedures, the Bureau of the 

Fiscal Service coordinates with the 

financial institution that holds directly 

or indirectly the deposit account into 


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83448 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Rules and Regulations 

which the refund was made, requesting 

from the financial institution such 

information as is necessary to identify 

whether the financial institution 

received the refund; whether the 

financial institution returned, or will 

return, the refund to the IRS, or if no 

funds are available for return; whether 

a deposit was made into the account 

designated on the claim for refund; and 

the identity of the deposit account 

owner to whom the deposit was 

disbursed. 

(ii) Coordination to recover the 

amounts transferred. Recovery of the 

misdirected direct deposit refund from 

a financial institution shall follow the 

procedures established by the Bureau of 

the Fiscal Service. The Bureau of the 

Fiscal Service shall request the return of 

the misdirected direct deposit refund 

from the financial institution that 

received it. The IRS may contact the 

financial institution directly to recover 

the misdirected direct deposit refund. 

(4) Issuance of replacement refund. 

When the IRS has determined that a 

misdirected direct deposit refund has 

occurred, the IRS will issue a 

replacement refund in the full amount 

of the refund that was misdirected. The 

replacement refund may be issued as a 

direct deposit or as a paper check sent 

to the taxpayer’s last known address. 

(5) Applicability of this paragraph (g) 

to missing refunds. The provisions of 

paragraphs (g)(2) through (g)(3)(i) of this 

section should be used for any refund 

that was disbursed as a direct deposit 

and that the taxpayer reports as missing. 

For example, although a refund that was 

deposited into an incorrect bank 

account because the taxpayer 

transposed two digits in their bank 

account number is not considered to be 

a misdirected direct deposit refund, the 

provisions of paragraphs (g)(2) through 

(g)(3)(i) of this section should be used. 

If the application of these procedures 

results in an amount recovered by the 

IRS, the recovered amount will be 

refunded or credited as allowed by law. 

(h) Applicability dates. * * * 

Paragraph (g) of this section applies to 

reports described in paragraph (g)(2)(ii) 

of this section made after December 22, 

2020. 

Sunita Lough, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: December 8, 2020. 

David J. Kautter, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. 2020–28167 Filed 12–18–20; 4:15 pm] 

BILLING CODE 4830–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[Docket Number USCG–2020–0716] 

RIN 1625–AA00 

Safety Zone; Pipeline Testing; Tampa 

Bay, Gibsonton, FL 

AGENCY: Coast Guard, DHS. 

ACTION: Temporary final rule. 

SUMMARY: The Coast Guard is 

establishing a temporary safety zone for 

certain waters in the navigable waters of 

Tampa Bay, Gibsonton, FL. The safety 

zone is needed to protect personnel, 

vessels, and the marine environment 

from potential hazards created by 

pipeline pressure testing in the area. 

Entry of vessels or persons into this 

zone is prohibited unless specifically 

authorized by the Captain of the Port St. 

Petersburg. 

DATES: This rule is effective from 12:01 

a.m. on January 1, 2021, through 7:00 

a.m. on January 4, 2021. 

ADDRESSES: To view documents 

mentioned in this preamble as being 

available in the docket, go to https://

www.regulations.gov, type USCG–2020– 

0716 in the ‘‘SEARCH’’ box and click 

‘‘SEARCH.’’ Click on Open Docket 

Folder on the line associated with this 

rule. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this rule, call or 

email Marine Science Technician First 

Class Michael D. Shackleford, Sector St. 

Petersburg Prevention Department, 

Coast Guard; telephone (813) 228–2191, 

email Michael.D.Shackleford@uscg.mil. 

SUPPLEMENTARY INFORMATION: 

I. Table of Abbreviations 

CFR Code of Federal Regulations 

DHS Department of Homeland Security 

FR Federal Register 

NPRM Notice of proposed rulemaking 

§ Section 

U.S.C. United States Code 

II. Background Information and 

Regulatory History 

The Coast Guard is issuing this 

temporary rule without prior notice and 

opportunity to comment pursuant to 

authority under section 4(a) of the 

Administrative Procedure Act (APA) (5 

U.S.C. 553(b)). This provision 

authorizes an agency to issue a rule 

without prior notice and opportunity to 

comment when the agency for good 

cause finds that those procedures are 

‘‘impracticable, unnecessary, or contrary 

to the public interest.’’ Under 5 U.S.C. 

553(b)(B), the Coast Guard finds that 

good cause exists for not publishing a 

notice of proposed rulemaking (NPRM) 

with respect to this rule because it 

would be impracticable. The Coast 

Guard was unable to publish an NPRM 

and hold a comment period for this 

rulemaking due to the short time period 

the Captain of the Port St. Petersburg 

(COTP) was notified of the need for the 

safety zone. It is necessary for the Coast 

Guard to establish this safety zone by 

January 1, 2021, in order to ensure the 

appropriate level of protection exists in 

order to mitigate the potential safety 

hazards associated with pipeline 

pressure testing in the event of an 

explosion. 

Under 5 U.S.C. 553(d)(3), the Coast 

Guard finds that good cause exists for 

making this rule effective less than 30 

days after publication in the Federal 

Register. Delaying the effective date of 

this rule for the same reasons stated in 

the preceding paragraph. 

III. Legal Authority and Need for Rule 

The Coast Guard is issuing this rule 

under authority in 46 U.S.C. 70034. The 

COTP has determined that potential 

hazards associated with pipeline 

pressure testing starting January 1, 2021 

will be a safety concern for anyone 

within this safety zone in the event of 

an explosion. This rule is needed to 

protect personnel, vessels, and the 

marine environment in the navigable 

waters within the safety zone while the 

testing is occuring. 

IV. Discussion of the Rule 

This rule establishes a safety zone 

from 12:00 a.m. on January 1, 2021, 

until 7:00 a.m. on January 4, 2021. The 

safety zone will cover all navigable 

waters of Tampa Bay, east of a line 

formed by connecting the points of 

27°48′9′′ N, 082°24′56′′ W and 27°48′0′′ 

N, 082°24′56′′ W. The duration of the 

zone is intended to protect personnel, 

vessels, and the marine environment in 

these navigable waters while pipeline 

pressure testing is occuring. No vessel 

or person will be permitted to enter the 

safety zone without obtaining 

permission from the COTP or a 

designated representative. 

V. Regulatory Analyses 

We developed this rule after 

considering numerous statutes and 

Executive orders related to rulemaking. 

Below we summarize our analyses 

based on a number of these statutes and 

Executive orders, and we discuss First 

Amendment rights of protestors. 


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