Federal Register / Vol. 83, No. 138 / Wednesday, July 18, 2018 / Proposed Rules 33875 

acceptable safety margins, and out of the 

context of RNP–AR operations could lead to 

an unusually high pilot workload. 

(f) Compliance 

Comply with this AD within the 

compliance times specified, unless already 

done. 

(g) Definitions 

For the purposes of this AD, the definitions 

in paragraphs (g)(1) through (g)(3) of this AD 

apply. 

(1) Group 1 airplanes are those that have 

Flight Management Guidance Envelope 

Computer (FMGEC) standard P5H3 (Airbus 

Modification 204758 Part Number (P/N) 

FMGEC C13226HA07 with P/N FMS 

operational SW PS4087700–906) embodied 

in production, or embodied in service as 

specified in Airbus Service Bulletin A330– 

22–3209; or Airbus Service Bulletin A330– 

22–3225; or Airbus Service Bulletin A330– 

22–3244; or Airbus Service Bulletin A330– 

22–3247; or Airbus Service Bulletin A330– 

22–3262, except those that have RNP–AR. 

(2) Group 2 airplanes have the same 

configuration as those in Group 1, but in 

addition have RNP–AR (Airbus Modification 

203441, or Airbus Modification 203442, or 

Airbus Modification 200624) embodied in 

production or Airbus Service Bulletin A330– 

34–3262; or Airbus Service Bulletin A330– 

34–3308; or Airbus Service Bulletin A330– 

34–3345, embodied in service. 

(3) Group 3 airplanes are those in any 

configuration other than that identified in 

paragraph (g)(1) or (g)(2) of this AD. 

(h) Airplane Flight Manual (AFM) Revision 

For Group 2 airplanes: Within 30 days after 

the effective date of this AD, revise the 

Limitations section of the Airbus A330/A340 

Airplane Flight Manual (AFM) to include the 

information in Temporary Revision TR774, 

RNP–AR Operations Forbidden with FMGEC 

Standard P5H3, Issue 1, approved October 

13, 2017 (‘‘TR774’’), and inform all flight 

crews, and, thereafter, operate the airplane 

accordingly, as specified in the TR. TR774 

prohibits the RNP–AR operation on Airbus 

A330 airplanes equipped with FMGEC 

standard P5H3. Revising the AFM to include 

TR774 may be done by inserting a copy of 

TR774 in the AFM. When this TR has been 

included in general revisions of the AFM, the 

general revisions may be inserted in the 

AFM, provided the relevant information in 

the general revision is identical to that in 

TR774, and the TR may be removed. 

(i) FMS Software Modification 

(1) For Group 1 and Group 2 airplanes: 

Within 60 days after the effective date of this 

AD, modify the airplane by installing FMS 

software P4A (P/N FMS operational SW 

PS4087700–905) on FMGEC standard P5H3 

(P/N FMGEC C13226HA07 with P/N FMS 

operational SW PS4087700–906) in 

accordance with the instructions of Airbus 

Service Bulletin A330–22–3264, dated March 

14, 2018. 

(2) For Group 2 airplanes: After 

modification of an airplane as required by 

paragraph (i)(1) of this AD, the AFM revision 

required by paragraph (h) of this AD may be 

removed from the AFM of that airplane. 

(j) Optional Modification 

For Group 3 airplanes: From the effective 

date of this AD, it is allowed to modify any 

airplane into a Group 1 or Group 2 

configuration, provided that, concurrently, 

that airplane is modified in accordance with 

the Accomplishment Instructions of Airbus 

Service Bulletin A330–22–3264, dated March 

14, 2018. 

(k) Credit for Previous Actions 

This paragraph provides credit for the 

actions required by paragraph (i) of this AD 

and optional actions specified in paragraph 

(j) of this AD, if those actions were performed 

before the effective date of this AD using 

Airbus Alert Operators Transmission—AOT 

A22L002–17, dated October 20, 2017. 

(l) Other FAA AD Provisions 

The following provisions also apply to this 

AD: 

(1) Alternative Methods of Compliance 

(AMOCs): The Manager, International 

Section, Transport Standards Branch, FAA, 

has the authority to approve AMOCs for this 

AD, if requested using the procedures found 

in 14 CFR 39.19. In accordance with 14 CFR 

39.19, send your request to your principal 

inspector or local Flight Standards District 

Office, as appropriate. If sending information 

directly to the International Section, send it 

to the attention of the person identified in 

paragraph (m)(2) of this AD. Information may 

be emailed to: 9-ANM-116-AMOCREQUESTS@faa.gov. Before using any 

approved AMOC, notify your appropriate 

principal inspector, or lacking a principal 

inspector, the manager of the local flight 

standards district office/certificate holding 

district office. 

(2) Contacting the Manufacturer: For any 

requirement in this AD to obtain corrective 

actions from a manufacturer, the action must 

be accomplished using a method approved 

by the Manager, International Section, 

Transport Standards Branch, FAA; or the 

European Aviation Safety Agency (EASA); or 

Airbus’s EASA Design Organization 

Approval (DOA). If approved by the DOA, 

the approval must include the DOAauthorized signature. 

(3) Required for Compliance (RC): If any 

service information contains procedures or 

tests that are identified as RC, those 

procedures and tests must be done to comply 

with this AD; any procedures or tests that are 

not identified as RC are recommended. Those 

procedures and tests that are not identified 

as RC may be deviated from using accepted 

methods in accordance with the operator’s 

maintenance or inspection program without 

obtaining approval of an AMOC, provided 

the procedures and tests identified as RC can 

be done and the airplane can be put back in 

an airworthy condition. Any substitutions or 

changes to procedures or tests identified as 

RC require approval of an AMOC. 

(m) Related Information 

(1) Refer to Mandatory Continuing 

Airworthiness Information (MCAI) EASA AD 

2017–0233, dated November 23, 2017, for 

related information. This MCAI may be 

found in the AD docket on the internet at 

http://www.regulations.gov by searching for 

and locating Docket No. FAA–2018–0584. 

(2) For more information about this AD, 

contact Vladimir Ulyanov, Aerospace 

Engineer, International Section, Transport 

Standards Branch, FAA, 2200 South 216th 

St., Des Moines, WA 98198; telephone and 

fax 206–231–3229. 

(3) For service information identified in 

this AD, contact Airbus SAS, Airworthiness 

Office—EAL, 2 Rond-Point Emile Dewoitine, 

31700 Blagnac, France; telephone +33 5 61 

93 36 96; fax +33 5 61 93 45 80; email 

airworthiness.A330-A340@airbus.com; 

internet http://www.airbus.com. You may 

view this service information at the FAA, 

Transport Standards Branch, 2200 South 

216th St., Des Moines, WA. For information 

on the availability of this material at the 

FAA, call 206–231–3195. 

Issued in Des Moines, Washington, on June 

22, 2018. 

Michael Kaszycki, 

Acting Director, System Oversight Division, 

Aircraft Certification Service. 

[FR Doc. 2018–14408 Filed 7–17–18; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–103474–18] 

RIN 1545–BO63 

Tax Return Preparer Due Diligence 

Penalty Under Section 6695(g) 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking, 

partial withdrawal of notice of proposed 

rulemaking. 

SUMMARY: This document contains 

proposed regulations that amend 

portions of previously proposed 

regulations related to the tax return 

preparer penalty under section 6695(g) 

of the Internal Revenue Code (Code). 

These amendments to the previously 

proposed regulations are necessary to 

implement a recent law change that 

expands the scope of the tax return 

preparer due diligence penalty under 

section 6695(g) so that it applies with 

respect to eligibility to file a return or 

claim for refund as head of household. 

The proposed regulations affect tax 

return preparers. 

DATES: Written or electronic comments 

and requests for a public hearing must 

be received by August 17, 2018. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–103474–18), Room 

5207, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. Submissions 

may be hand delivered Monday through 


amozie on DSK3GDR082PROD with PROPOSALS1
33876 Federal Register / Vol. 83, No. 138 / Wednesday, July 18, 2018 / Proposed Rules 

Friday between the hours of 8 a.m. and 

4 p.m. to: CC:PA:LPD:PR (REG–103474– 

18), Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue NW, 

Washington, DC 20224, or sent 

electronically, via the Federal 

eRulemaking Portal at 

www.regulations.gov (IRS REG–103474– 

18). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

Marshall French, 202–317–6845; 

concerning submissions of comments 

and requests for a public hearing, 

Regina Johnson, 202–317–6901 (not tollfree numbers). 

Paperwork Reduction Act 

The collection of information in 

current § 1.6695–2 was previously 

reviewed and approved under control 

number 1545–1570. Control number 

1545–1570 was discontinued in 2014, as 

the burden for the collection of 

information contained in § 1.6695–2 is 

reflected in the burden for Form 8867, 

‘‘Paid Preparer’s Due Diligence 

Checklist,’’ under control number 1545– 

1629. 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains proposed 

amendments to the Income Tax 

Regulations (26 CFR part 1) under 

section 6695(g) of the Code regarding 

the tax return preparer due diligence 

requirements. 

Prior to 2016, section 6695(g) imposed 

a penalty on tax return preparers who 

fail to comply with due diligence 

requirements set forth in regulations 

prescribed by the Secretary with respect 

to determining eligibility for, or the 

amount of, the earned income credit 

(EIC). For tax years beginning after 

December 31, 2015, the scope of section 

6695(g) was expanded to apply the 

penalty to tax return preparers who fail 

to comply with due diligence 

requirements with respect to 

determining eligibility for, or the 

amount of, the child tax credit (CTC)/ 

additional child tax credit (ACTC) and 

the American opportunity tax credit 

(AOTC). See section 207 of the 

Protecting Americans from Tax Hikes 

Act of 2015, Div. Q of Public Law 114– 

113 (129 Stat. 2242, 3082 (2015)) (PATH 

Act). On December 5, 2016, final and 

temporary regulations (TD 9799, 81 FR 

87444) with cross-referencing proposed 

regulations (REG–102952–16, 81 FR 

87502) (2016 proposed regulations) 

were published in the Federal Register 

to reflect these changes. 

Effective for tax years beginning after 

December 31, 2017, section 6695(g) was 

amended to further expand the scope of 

the penalty to tax return preparers who 

fail to comply with due diligence 

requirements with respect to 

determining eligibility to file as head of 

household (as defined in section 2(b)). 

See section 11001(b) of ‘‘An Act to 

provide for reconciliation pursuant to 

titles II and V of the concurrent 

resolution on the budget for fiscal year 

2018,’’ Public Law 115–97 (131 Stat. 

2054, 2058 (2017)) (Act). This document 

contains proposed regulations to reflect 

this change. 

Explanation of Provisions 

The proposed regulations contained 

in this document withdraw paragraphs 

(a), (b)(3), and (e) of § 1.6695–2 of the 

2016 proposed regulations and propose 

in their place new paragraphs (a), (b)(3), 

and (e) of § 1.6695–2 (amended 

paragraphs). The amended paragraphs 

update the 2016 proposed regulations to 

reflect the recent change in the law that 

expands the tax return preparer due 

diligence requirements under section 

6695(g) to apply to determining 

eligibility to file as head of household. 

Accordingly, the proposed regulations 

contained in this document amend 

paragraphs (a) and (b)(3) of § 1.6695–2 

of the 2016 proposed regulations by 

adding a reference to determining 

eligibility to file as head of household 

where reference is made to determining 

eligibility for, or the amount of, the EIC, 

the CTC/ACTC and/or the AOTC. In 

addition, Example 5 in paragraph 

(b)(3)(ii) of § 1.6695–2 of the 2016 

proposed regulations is revised to 

demonstrate how head of household 

due diligence requirements are 

intertwined with the rules for 

determining a taxpayer’s eligibility for 

the CTC. 

A new example is also added to 

§ 1.6695–2(a)(2) to illustrate how the 

penalty applies if there is a failure to 

satisfy the due diligence requirements 

with respect to determining eligibility to 

file as head of household in addition to 

a failure to satisfy the due diligence 

requirements with respect to one of the 

applicable credits. As explained in the 

preamble of the 2016 temporary 

regulations, the preparation of one 

return or claim for refund may result in 

the imposition of more than one penalty 

under section 6695(g). That is because 

under section 6695(g), each failure to 

comply with the due diligence 

requirements set forth in regulations 

prescribed by the Secretary results in a 

separate penalty. To illustrate this point, 

a new example, Example 3, is added to 

proposed § 1.6695–2(a)(2) contained in 

this document. 

The applicability date in § 1.6695–2(e) 

is also updated to reflect the effective 

date of the addition of determining 

eligibility to file as head of household 

to the due diligence requirements. 

Accordingly, proposed § 1.6695–2(e) 

contained in this document provides 

that § 1.6695–2 applies to tax returns 

and claims for refund for taxable years 

beginning after December 31, 2015, that 

are prepared on or after the date of 

publication of the Treasury decision 

adopting the proposed rules as final 

regulations in the Federal Register. 

However, the rules relating to the 

determination of a taxpayer’s eligibility 

to file as head of household under 

section 2(b) apply to tax returns and 

claims for refund for taxable years 

beginning after December 31, 2017, that 

are prepared on or after the date of 

publication of the Treasury decision 

adopting the proposed rules as final 

regulations in the Federal Register. 

As part of satisfying the due diligence 

requirements, the regulations under 

§ 1.6695–2 require tax return preparers 

to complete the Form 8867, ‘‘Paid 

Preparer’s Due Diligence Checklist,’’ 

and, in most cases, attach it to the 

relevant return or claim for refund as 

part of satisfying the section 6695(g) due 

diligence requirements. The Form 8867 

underwent significant revisions for the 

2016 tax year and is currently a single 

checklist to be used for all applicable 

credits (namely, the EIC, the CTC/ 

ACTC, and the AOTC) on the return or 

claim for refund subject to the section 

6695(g) due diligence requirements. It is 

anticipated that the IRS will revise the 

Form 8867 to include the head of 

household filing status in time for the 

2019 filing season. 

Proposed Applicability Dates 

Proposed § 1.6695–2(e) provides that 

the rules in this notice of proposed 

rulemaking with respect to determining 

eligibility to file as head of household 

under section 2(b) will apply to tax 

returns and claims for refund for taxable 

years beginning after December 31, 

2017, that are prepared on or after the 

date the final regulations are published 

in the Federal Register. 

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 Department of the 

Treasury and the Office of Management 

and Budget regarding review of tax 

regulations. Under the Regulatory 

Flexibility Act (RFA) (5 U.S.C. chapter 

6), it is hereby certified that these 

proposed rules, if adopted, would not 


amozie on DSK3GDR082PROD with PROPOSALS1
Federal Register / Vol. 83, No. 138 / Wednesday, July 18, 2018 / Proposed Rules 33877 

have a significant economic impact on 

a substantial number of small entities. 

When an agency issues a notice of 

proposed rulemaking, the RFA requires 

the agency to ‘‘prepare and make 

available for public comment an initial 

regulatory flexibility analysis’’ that will 

‘‘describe the impact of the proposed 

rule on small entities.’’ (5 U.S.C. 603(a)). 

Section 605 of the RFA provides an 

exception to this requirement if the 

agency certifies that the proposed 

rulemaking will not have a significant 

economic impact on a substantial 

number of small entities. 

The proposed rules affect paid tax 

return preparers who determine a 

taxpayer is eligible to file as head of 

household, in addition to those tax 

return preparers who determine 

eligibility for, or the amount of, the EIC, 

the CTC/ACTC, and/or the AOTC. The 

North American Industry Classification 

System (NAICS) code that relates to tax 

return preparation services (NAICS code 

541213) is the appropriate code for tax 

return preparers subject to this notice of 

proposed rulemaking. Entities identified 

as tax return preparation services are 

considered small under the Small 

Business Administration size standards 

(13 CFR 121.201) if their annual revenue 

is less than $20.5 million. The IRS 

estimates that approximately 75 to 85 

percent of the 505,000 persons who 

work at firms or are self-employed tax 

return preparers are operating as or 

employed by small entities. The IRS has 

therefore determined that these 

proposed rules will have an impact on 

a substantial number of small entities. 

The IRS has further determined, 

however, that the economic impact on 

entities affected by the proposed rules 

will not be significant. The current final 

and temporary regulations under section 

6695(g) already require tax return 

preparers to complete the Form 8867 

when a return or claim for refund 

includes a claim of the EIC, the CTC/ 

ACTC, and/or the AOTC. Tax return 

preparers also must currently maintain 

records of the checklists and 

computations, as well as a record of 

how and when the information used to 

compute the credits was obtained by the 

tax return preparer. The information 

needed to document a taxpayer’s 

eligibility to file as head of household 

is information the preparer must gather 

to file the return. Even if certain 

preparers are required to maintain the 

checklists and complete Form 8867 for 

the first time, the IRS estimates that the 

total time required should be minimal 

for these tax return preparers. Further, 

the IRS does not expect that the 

requirements in these proposed 

regulations would necessitate the 

purchase of additional software or 

equipment in order to meet the 

additional information retention 

requirements. 

Based on these facts, the IRS hereby 

certifies that the collection of 

information contained in this notice of 

proposed rulemaking will not have a 

significant economic impact on a 

substantial number of small entities. 

Accordingly, a Regulatory Flexibility 

Analysis is not required. 

Pursuant to section 7805(f) of the 

Internal Revenue Code, this notice of 

proposed rulemaking has been 

submitted to the Chief Counsel for 

Advocacy of the Small Business 

Administration for comment on the 

impact on small business. 

Comments and Requests for Public 

Hearing 

Before these proposed regulations are 

adopted as final regulations, 

consideration will be given to any 

written and electronic comments that 

are timely submitted to the IRS as 

prescribed in this preamble under the 

ADDRESSES heading. The Treasury 

Department and the IRS request 

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 in writing by any person that 

timely submits written comments. If a 

public hearing is scheduled, notice of 

the date, time, and place for the public 

hearing will be published in the Federal 

Register. 

Drafting Information 

The principal author of these 

regulations is Rachel Gregory of the 

Office of the Associate Chief Counsel 

(Procedure and Administration). 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Partial Withdrawal of a Notice of 

Proposed Rulemaking 

Accordingly, under the authority of 

26 U.S.C. 7805, § 1.6695–2(a), (b)(3), and 

(e) of the notice of proposed rulemaking 

(REG–102952–16) published in the 

Federal Register on December 5, 2016 

(81 FR 87502) are withdrawn. 

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 1.6695–2 is amended 

by revising the section heading and 

paragraphs (a), (b)(3), and (e) to read as 

follows: 

§ 1.6695–2 Tax return preparer due 

diligence requirements for certain returns 

and claims. 

(a) Penalty for failure to meet due 

diligence requirements—(1) In general. 

A person who is a tax return preparer 

(as defined in section 7701(a)(36)) of a 

tax return or claim for refund under the 

Internal Revenue Code who determines 

the taxpayer’s eligibility to file as head 

of household under section 2(b), or who 

determines the taxpayer’s eligibility for, 

or the amount of, the child tax credit 

(CTC)/additional child tax credit 

(ACTC) under section 24, the American 

opportunity tax credit (AOTC) under 

section 25A(i), or the earned income 

credit (EIC) under section 32, and who 

fails to satisfy the due diligence 

requirements of paragraph (b) of this 

section will be subject to a penalty as 

prescribed in section 6695(g) (indexed 

for inflation under section 6695(h)) for 

each failure. A separate penalty applies 

to a tax return preparer with respect to 

the head of household filing status 

determination and to each applicable 

credit claimed on a return or claim for 

refund for which the due diligence 

requirements of this section are not 

satisfied and for which the exception to 

penalty provided by paragraph (d) of 

this section does not apply. 

(2) Examples. The provisions of 

paragraph (a)(1) of this section are 

illustrated by the following examples: 

Example 1. Preparer A prepares a federal 

income tax return for a taxpayer claiming the 

CTC and the AOTC. Preparer A did not meet 

the due diligence requirements under this 

section with respect to the CTC or the AOTC 

claimed on the taxpayer’s return. Unless the 

exception to penalty provided by paragraph 

(d) of this section applies, Preparer A is 

subject to two penalties under section 

6695(g): One for failure to meet the due 

diligence requirements for the CTC and a 

second penalty for failure to meet the due 

diligence requirements for the AOTC. 

Example 2. Preparer B prepares a federal 

income tax return for a taxpayer claiming the 

CTC and the AOTC. Preparer B did not meet 

the due diligence requirements under this 

section with respect to the CTC claimed on 

the taxpayer’s return, but Preparer B did 

meet the due diligence requirements under 

this section with respect to the AOTC 

claimed on the taxpayer’s return. Unless the 

exception to penalty provided by paragraph 

(d) of this section applies, Preparer B is 

subject to one penalty under section 6695(g) 

for the failure to meet the due diligence 

requirements for the CTC. Preparer B is not 


amozie on DSK3GDR082PROD with PROPOSALS1
33878 Federal Register / Vol. 83, No. 138 / Wednesday, July 18, 2018 / Proposed Rules 

subject to a penalty under section 6695(g) for 

failure to meet the due diligence 

requirements for the AOTC. 

Example 3. Preparer C prepares a federal 

income tax return for a taxpayer using the 

head of household filing status and claiming 

the CTC and the AOTC. Preparer C did not 

meet the due diligence requirements under 

this section with respect to the head of 

household filing status and the CTC claimed 

on the taxpayer’s return. Preparer C did meet 

the due diligence requirements under this 

section with respect to the AOTC claimed on 

the taxpayer’s return. Unless the exception to 

penalty provided by paragraph (d) of this 

section applies, Preparer C is subject to two 

penalties under section 6695(g) for the failure 

to meet the due diligence requirements: One 

for the head of household filing status and 

one for the CTC. Preparer C is not subject to 

a penalty under section 6695(g) for failure to 

meet the due diligence requirements for the 

AOTC. 

(b) * * * 

(3) Knowledge—(i) In general. The tax 

return preparer must not know, or have 

reason to know, that any information 

used by the tax return preparer in 

determining the taxpayer’s eligibility to 

file as head of household or in 

determining the taxpayer’s eligibility 

for, or the amount of, any credit 

described in paragraph (a) of this 

section and claimed on the return or 

claim for refund is incorrect. The tax 

return preparer may not ignore the 

implications of information furnished 

to, or known by, the tax return preparer, 

and must make reasonable inquiries if a 

reasonable and well-informed tax return 

preparer knowledgeable in the law 

would conclude that the information 

furnished to the tax return preparer 

appears to be incorrect, inconsistent, or 

incomplete. The tax return preparer 

must also contemporaneously document 

in the preparer’s paper or electronic 

files any inquiries made and the 

responses to those inquiries. 

(ii) Examples. The provisions of 

paragraph (b)(3)(i) of this section are 

illustrated by the following examples: 

Example 1. In 2018, Q, a 22 year-old 

taxpayer, engages Preparer C to prepare Q’s 

2017 federal income tax return. Q completes 

Preparer C’s standard intake questionnaire 

and states that she has never been married 

and has two sons, ages 10 and 11. Based on 

the intake sheet and other information that 

Q provides, including information that shows 

that the boys lived with Q throughout 2017, 

Preparer C believes that Q may be eligible to 

claim each boy as a qualifying child for 

purposes of the EIC and the CTC. However, 

Q provides no information to Preparer C, and 

Preparer C does not have any information 

from other sources, to verify the relationship 

between Q and the boys. To meet the 

knowledge requirement in paragraph (b)(3) of 

this section, Preparer C must make 

reasonable inquiries to determine whether 

each boy is a qualifying child of Q for 

purposes of the EIC and the CTC, including 

reasonable inquiries to verify Q’s relationship 

to the boys, and Preparer C must 

contemporaneously document these inquiries 

and the responses. 

Example 2. Assume the same facts as in 

Example 1 of this paragraph (b)(3)(ii). In 

addition, as part of preparing Q’s 2017 

federal income tax return, Preparer C made 

sufficient reasonable inquiries to verify that 

the boys were Q’s legally adopted children. 

In 2019, Q engages Preparer C to prepare her 

2018 federal income tax return. When 

preparing Q’s 2018 federal income tax return, 

Preparer C is not required to make additional 

inquiries to determine the boys relationship 

to Q for purposes of the knowledge 

requirement in paragraph (b)(3) of this 

section. 

Example 3. In 2018, R, an 18 year-old 

taxpayer, engages Preparer D to prepare R’s 

2017 federal income tax return. R completes 

Preparer D’s standard intake questionnaire 

and states that she has never been married, 

has one child, an infant, and that she and 

her infant lived with R’s parents during part 

of the 2017 tax year. R also provides Preparer 

D with a Form W–2 showing that she earned 

$10,000 during 2017. R provides no other 

documents or information showing that R 

earned any other income during the tax year. 

Based on the intake sheet and other 

information that R provides, Preparer D 

believes that R may be eligible to claim the 

infant as a qualifying child for the EIC and 

the CTC. To meet the knowledge requirement 

in paragraph (b)(3) of this section, Preparer 

D must make reasonable inquiries to 

determine whether R is eligible to claim these 

credits, including reasonable inquiries to 

verify that R is not a qualifying child of her 

parents (which would make R ineligible to 

claim the EIC) or a dependent of her parents 

(which would make R ineligible to claim the 

CTC), and Preparer D must 

contemporaneously document these inquiries 

and the responses. 

Example 4. The facts are the same as the 

facts in Example 3 of this paragraph (b)(3)(ii). 

In addition, Preparer D previously prepared 

the 2017 joint federal income tax return for 

R’s parents. Based on information provided 

by R’s parents, Preparer D has determined 

that R is not eligible to be claimed as a 

dependent or as a qualifying child for 

purposes of the EIC or CTC on R’s parents’ 

return. Therefore, for purposes of the 

knowledge requirement in paragraph (b)(3) of 

this section, Preparer D is not required to 

make additional inquiries to determine that 

R is not her parents’ qualifying child or 

dependent. 

Example 5. In 2019, S engages Preparer E 

to prepare his 2018 federal income tax 

return. During Preparer E’s standard intake 

interview, S states that he has never been 

married and that his niece and nephew lived 

with him for part of the 2018 taxable year. 

Preparer E believes S may be eligible to file 

as head of household and claim each of these 

children as a qualifying child for purposes of 

the EIC and the CTC. To meet the knowledge 

requirement in paragraph (b)(3) of this 

section, Preparer E must make reasonable 

inquiries to determine whether S is eligible to 

file as head of household and whether each 

child is a qualifying child for purposes of the 

EIC and the CTC, including reasonable 

inquiries about the children’s residency, S’s 

relationship to the children, the children’s 

income, the sources of support for the 

children, and S’s contribution to the payment 

of costs related to operating the household, 

and preparer E must contemporaneously 

document these inquiries and the responses. 

Example 6. W engages Preparer F to 

prepare her federal income tax return. During 

Preparer F’s standard intake interview, W 

states that she is 50 years old, has never been 

married, and has no children. W further 

states to Preparer F that during the tax year 

she was self-employed, earned $10,000 from 

her business, and had no business expenses 

or other income. Preparer F believes W may 

be eligible for the EIC. To meet the knowledge 

requirement in paragraph (b)(3) of this 

section, Preparer F must make reasonable 

inquiries to determine whether W is eligible 

for the EIC, including reasonable inquiries to 

determine whether W’s business income and 

expenses are correct, and Preparer F must 

contemporaneously document these inquiries 

and the responses. 

Example 7. Y, who is 32 years old, engages 

Preparer G to prepare his federal income tax 

return. Y completes Preparer G’s standard 

intake questionnaire and states that he has 

never been married. As part of Preparer G’s 

client intake process, Y provides Preparer G 

with a copy of the Form 1098–T Y received 

showing that University M billed $4,000 of 

qualified tuition and related expenses for Y’s 

enrollment or attendance at the university 

and that Y was at least a half-time 

undergraduate student. Preparer G believes 

that Y may be eligible for the AOTC. To meet 

the knowledge requirements in paragraph 

(b)(3) of this section, Preparer G must make 

reasonable inquiries to determine whether Y 

is eligible for the AOTC, as Form 1098–T 

does not contain all the information needed 

to determine eligibility for the AOTC or to 

calculate the amount of the credit if Y is 

eligible, and contemporaneously document 

these inquiries and the responses. 

* * * * * 

(e) Applicability date. The rules of 

this section apply to tax returns and 

claims for refund for taxable years 

beginning after December 31, 2015, that 

are prepared on or after the date of 

publication of the Treasury decision 

adopting these rules as final regulations 

in the Federal Register. However, the 

rules relating to the determination of a 

taxpayer’s eligibility to file as head of 

household under section 2(b) apply to 

tax returns and claims for refund for 

taxable years beginning after December 

31, 2017, that are prepared on or after 

the date of publication of the Treasury 


amozie on DSK3GDR082PROD with PROPOSALS1
Federal Register / Vol. 83, No. 138 / Wednesday, July 18, 2018 / Proposed Rules 33879 

1United States Postal Service Petition for 

Rulemaking on Periodic Reporting, December 27, 

2017 (Petition). 

2Advance Notice of Proposed Rulemaking to 

Revise Periodic Reporting Requirements, January 5, 

2018 (Order No. 4347). 

3 Docket No. RM2008–4, Notice of Final Rule 

Prescribing Form and Content of Periodic Reports, 

April 16, 2009 (Order No. 203). 

4 Id. at 4. The Postal Service also requests that the 

Quarter 4 Billing Determinants report be 

incorporated into the annual Billing Determinants 

report rather than submitted as a standalone filing. 

Id. The Postal Service states that eliminating the 

standalone filing would help the Postal Service 

more effectively allocate scarce time and resources. 

Id. 

5 Id. The Postal Service also requests updating 

Table 2 to reflect the name change of Standard Mail 

to USPS Marketing Mail. Id. at 8. 

6Public Representative Comments on Advance 

Notice of Proposed Rulemaking to Revise Periodic 

Reporting Requirements, March 7, 2018 (PR 

Comments); Comments of United Parcel Service, 

Inc. on Advance Notice of Proposed Rulemaking to 

Revise Periodic Reporting Requirements, March 7, 

2018 (UPS Comments). 

7Reply Comments of the United States Postal 

Service, April 6, 2018 (Postal Service Reply 

Comments); Reply Comments of the Parcel Shippers 

Association (PSA), April 6, 2018 (PSA Reply 

Comments). 

decision adopting these rules as final 

regulations in the Federal Register. 

Kirsten Wielobob, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2018–15351 Filed 7–13–18; 4:15 pm] 

BILLING CODE 4830–01–P 

POSTAL REGULATORY COMMISSION 

39 CFR Part 3050 

[Docket No. RM2018–2; Order No. 4706] 

Periodic Reporting Requirements 

AGENCY: Postal Regulatory Commission. 

ACTION: Proposed rule. 

SUMMARY: The Commission is proposing 

revisions to the periodic reporting 

requirements codified in our 

regulations. This document informs the 

public of the proposed rules, invites 

public comment, and takes other 

administrative steps. 

DATES: Comments are due: August 17, 

2018. 

ADDRESSES: Submit comments 

electronically via the Commission’s 

Filing Online system at http://

www.prc.gov. Those who cannot submit 

comments electronically should contact 

the person identified in the FOR FURTHER

INFORMATION CONTACT section by 

telephone for advice on filing 

alternatives. 

FOR FURTHER INFORMATION CONTACT: 

David A. Trissell, General Counsel, at 

202–789–6820. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

II. Background 

III. Comments 

IV. Analysis of Proposed Changes 

V. Solicitation of Comments 

VI. Conclusion 

I. Introduction 

On December 27, 2017, the Postal 

Service filed a request for the 

Commission to consider revisions to the 

periodic reporting requirements 

codified in 39 CFR part 3050.1 On 

January 5, 2018, the Commission 

established this docket and invited 

comments regarding the Postal Service’s 

proposed revisions.2 Based on 

comments received in response to the 

Commission’s advance notice of 

proposed rulemaking, the Commission 

proposes the following revisions to the 

periodic reporting requirements found 

in 39 CFR part 3050. 

II. Background 

The Postal Accountability and 

Enhancement Act (PAEA) granted the 

Commission enhanced information 

gathering and reporting responsibilities. 

See 39 U.S.C. 3652(e)(1). The PAEA 

provides that the Commission shall 

prescribe the content and form of the 

public reports the Postal Service files 

with the Commission under section 

3652. In Docket No. RM2008–4, the 

Commission approved its current 

periodic reporting requirements.3

On December 27, 2017, the Postal 

Service filed a request for the 

Commission to consider revisions to the 

periodic reporting requirements. First, 

the Postal Service requests that the 

Commission adjust the deadlines for the 

quarterly Revenue, Pieces, and Weight 

(RPW) report; the Quarterly Statistics 

Report (QSR); the quarterly Billing 

Determinants report; and the monthly 

National Consolidated Trial Balance and 

Revenue and Expense Summary (Trial 

Balance) report to align the deadlines 

with other financial reporting deadlines. 

Petition at 1. The Postal Service states 

that aligning these deadlines with other 

financial reporting deadlines will avoid 

potential restatements of the earlier filed 

reports once the data for the later filed 

reports are finalized. Id. at 3. 

Specifically, the Postal Service seeks 

to move the quarterly and year-end 

deadlines for the RPW and QSR reports 

so that they are the same as the Form 

10–Q and Form 10–K due dates. Id. at 

2–3. In addition, the Postal Service 

requests that the Commission extend 

deadlines for quarterly Billing 

Determinants reports to 60 days after the 

end of Quarters 1, 2, and 3, and 90 days 

after the end of Quarter 4.4 The Postal 

Service also requests that the 

Commission revise the periodic 

reporting rules so that the Trial Balance 

reports and the Monthly Summary 

Financial reports have the same 

deadline. Id. at 5–6. 

Second, the Postal Service requests 

that the Commission modify the format 

of the Monthly Summary Financial 

Report to make the report more 

consistent with the Postal Service’s 

quarterly and annual financial reports. 

Id. at 1. The Postal Service states that 

the term ‘‘Operating Revenue’’ as used 

in Tables 1 and 2 of the Monthly 

Summary Financial Report does not 

correspond with its usage in its Form 

10–K reports. Id. at 7. The Postal Service 

requests revisions to Tables 1 and 2 of 

the Monthly Summary Financial Report 

so that the items and amounts reported 

for total operating revenue reconcile on 

both tables and the breakdown for 

revenue more closely aligns with the 

format in its other financial reports.5

Third, the Postal Service requests that 

the Commission consider eliminating or 

modifying any reporting requirements 

that have become unnecessary or 

irrelevant since implementation of the 

current periodic reporting rules in 2009. 

Id. at 1. The Postal Service requests that 

the Commission consider eliminating or 

modifying these requirements to avoid 

imposing ‘‘unnecessary or unwarranted 

administrative effort and expense’’ on 

the Postal Service. Id. at 9 (citing 39 

U.S.C. 3652(e)(1)). 

III. Comments 

On March 7, 2018, the Public 

Representative and United Parcel 

Service, Inc. (UPS) filed comments.6 On 

April 6, 2018, the Postal Service and the 

Parcel Shippers Association (PSA) filed 

reply comments.7

Public Representative. The Public 

Representative divides her discussion 

into two sections. First, she discusses 

the guiding principles the Commission 

should consider when revising its 

periodic reporting requirements. PR 

Comments at 2–4. Specifically, she 

observes that the PAEA outlines three 

guiding principles for the Commission 

to consider when determining the 

content and form of the Postal Service’s 

public reports submitted under 39 

U.S.C. 3652. Id. at 2. The three guiding 

principles are whether the requirement 

‘‘(A) provid[es] the public with timely, 

adequate information to assess the 

lawfulness of rates charged; (B) avoid[s] 

unnecessary or unwarranted 

administrative effort and expense on the 


amozie on DSK3GDR082PROD with PROPOSALS1