61268 Federal Register / Vol. 65, No. 201 / Tuesday, October 17, 2000 / Rules and Regulations

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 8905]

RIN 1545–AW74

Preparer Due Diligence Requirements

for Determining Earned Income Credit

Eligibility

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final regulations and removal of

temporary regulations.

SUMMARY: This document contains final

regulations relating to the due diligence

requirements under section 6695(g) of

the Internal Revenue Code for paid

preparers of Federal income tax returns

or claims for refund involving the

earned income credit (EIC). These

regulations reflect changes to the law

made by the Taxpayer Relief Act of

1997. The regulations provide guidance

to paid preparers who prepare Federal

income tax returns or claims for refund

claiming the earned income credit.

DATES: Effective Date. These regulations

are effective October 17, 2000.

Applicability Date. For dates of

applicability, see § 1.6695–2(d) of these

regulations.

FOR FURTHER INFORMATION CONTACT:

Andrea Tucker, (202) 622–4940 (not a

toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information in these

final regulations has been reviewed and

approved by the Office of Management

and Budget in accordance with the

Paperwork Reduction Act of 1995 (44

U.S.C. 3507) under control number

1545–1570. This information is required

by the IRS to determine preparer due

diligence compliance for purposes of

the penalty imposed under section

6695(g). Responses to this collection of

information are mandatory.

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

assigned by the Office of Management

and Budget.

The estimated annual burden per

recordkeeper varies depending on

individual circumstances. The

estimated total annual recordkeeping

burden: 507,136 hours with the

estimated average annual burden hours

per recordkeeper: 5 hours 4 minutes (40

minutes per return or claim for refund,

7.6 returns per preparer). The estimated

number of recordkeepers: 100,000.

Comments concerning the accuracy of

this burden estimate and suggestions for

reducing this burden should be sent to

the Internal Revenue Service, Attn: IRS

Reports Clearance Officer, OP:FS:FP,

Washington, DC 20224, and 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.

Books or records relating to this

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 tax return information

are confidential, as required by 26

U.S.C. 6103.

Background

Section 6695(g) was added by section

1085(a)(2) of the Taxpayer Relief Act of

1997, Public Law 105–34 (11 Stat. 788,

955 (1997)) (the Act), effective for

taxable years beginning after December

31, 1996. Section 6695(g) imposes a

$100 penalty for each failure by an

income tax return preparer to meet the

due diligence requirements set forth in

regulations prescribed by the Secretary.

On December 22, 1997, the IRS

published Notice 97–65 (1997–2 C.B.

326), in which the IRS set forth the

preparer due diligence requirements for

1997 returns and claims for refund

involving the EIC. To avoid the

imposition of the penalty under section

6695(g) for 1997 returns and claims for

refund, Notice 97–65 required preparers

to meet four requirements: (1) Complete

the Earned Income Credit Eligibility

Checklist attached to Notice 97–65

(Eligibility Checklist), or otherwise

record the information necessary to

complete the Eligibility Checklist; (2)

complete the Earned Income Credit

Worksheet (Computation Worksheet), as

contained in the 1997 Form 1040

instructions, or otherwise record the

computation and information necessary

to complete the Computation

Worksheet; (3) not know or have reason

to know that any information used by

the preparer in determining eligibility

for, and the amount of, the EIC is

incorrect; and (4) retain for three years

the Eligibility Checklist and

Computation Worksheet (or alternative

records), and a record of how and when

the information used to determine

eligibility for, and the amount of, the

EIC was obtained by the preparer. This

information may be retained as a paper

record, in magnetic media format, or in

an electronic storage media system,

consistent with applicable IRS revenue

procedures.

On December 21, 1998, temporary

regulations (TD 8798, 1999–1 C.B. 804)

under section 6695(g) were published in

the Federal Register (63 FR 70339). A

notice of proposed rulemaking (REG–

120168–97, 1999–1 C.B. 809) crossreferencing the temporary regulations

was published in the Federal Register

(63 FR 70357) on that same date. The

text of the temporary regulations served

as the text of the proposed regulations.

The requirements set forth in the

temporary regulations were

substantially similar to those in Notice

97–65.

The notice of proposed rulemaking

solicited comments from the public.

One comment was received, but no

public hearing was requested or held.

After consideration of the comment

received, the proposed regulations

under section 6695(g) are adopted by

this Treasury decision, and the

corresponding temporary regulations are

removed.

Summary of Comments

The commentator expressed concern

that requiring the completion of an

eligibility checklist and a computation

worksheet impose additional

recordkeeping burdens on tax return

preparers. The commentator did not

suggest alternative due diligence

requirements.

The additional recordkeeping

required by the regulations is necessary

to implement congressional intent with

respect to section 6695(g). The

legislative history accompanying the

Act explains that Congress ‘‘believes

that more thorough efforts by return

preparers are important to improving

EIC compliance.’’ H.R. Rep. No. 148,

105th Cong., 1st Sess. 512 (1997) and S.

Rep. No. 29, 105th Cong., 1st Sess. 125

(1997). The additional information

gathering and recordkeeping required by

these regulations are intended to ensure

that preparers are thorough when

determining whether a taxpayer

qualifies to claim the EIC credit.

Further, the regulations allow preparers

the flexibility to use either the

prescribed forms or alternative records

containing the same information as the

prescribed forms to meet the due

diligence requirements.

Special Analyses

It has been determined that this

Treasury decision is not a significant

regulatory action as defined in

Executive Order 12866. Therefore, a

regulatory assessment is not required. It

also has been determined that section

553(b) of the Administrative Procedure

Federal Register / Vol. 65, No. 201 / Tuesday, October 17, 2000 / Rules and Regulations 61269

Act (5 U.S.C. chapter 5) does not apply

to these regulations. Further, it is hereby

certified, pursuant to sections 603(a)

and 605(b) of the Regulatory Flexibility

Act, that the collection of information in

these regulations will not have a

significant economic impact on a

substantial number of small entities.

This certification is based upon the fact

that the amount of time necessary to

record and retain the required

information will be nominal for those

income tax return preparers that choose

to use the Alternative Eligibility Record

and Alternative Computation Record.

Therefore, a Regulatory Flexibility

Analysis under the Regulatory

Flexibility Act (5 U.S.C. chapter 6) is

not required. Pursuant to section 7805(f)

of the Internal Revenue Code, the notice

of proposed rulemaking that preceded

these regulations was submitted to the

Chief Counsel for Advocacy of the Small

Business Administration for comment

on its impact on small business.

Drafting Information

The principal author of these

regulations is Andrea Tucker, Office of

Associate Chief Counsel, Procedure and

Administration (Administrative

Provisions and Judicial Practice

Division). However, other personnel

from the IRS and Treasury Department

participated in their development.

List of Subjects

26 CFR Part 1

Income taxes, Reporting and

recordkeeping requirements.

26 CFR Part 602

Reporting and recordkeeping

requirements.

Amendments to the Regulations

Accordingly, 26 CFR parts 1 and 602

are amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 is amended by removing the

entry for ‘‘Section 1.6695–2T’’ and

adding an entry in numerical order to

read in part as follows:

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

1.6695–2 also issued under 26 U.S.C. 6695(g).

* * *

Par. 2. Section 1.6695–2 is added to

read as follows:

§ 1.6695–2 Preparer due diligence

requirements for determining earned

income credit eligibility.

(a) Penalty for failure to meet due

diligence requirements. A person who is

an income tax return preparer (preparer)

of an income tax return or claim for

refund under subtitle A of the Internal

Revenue Code with respect to

determining the eligibility for, or the

amount of, 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 of $100 for each

such failure. However, no penalty will

be imposed under section 6695(g) on a

person who is an income tax return

preparer solely by reason of—

(1) Section 301.7701–15(a)(2) and (b)

of this chapter, on account of having

given advice on specific issues of law;

or

(2) Section 301.7701–15(b)(3) of this

chapter, on account of having prepared

the return solely because of having

prepared another return that affects

amounts reported on the return.

(b) Due diligence requirements. A

preparer must satisfy the following due

diligence requirements:

(1) Completion of eligibility checklist.

(i) The preparer must either—

(A) Complete Form 8867, ‘‘Paid

Preparer’s Earned Income Credit

Checklist,’’ or such other form and such

other information as may be prescribed

by the Internal Revenue Service (IRS)

(Eligibility Checklist); or

(B) Otherwise record in the preparer’s

paper or electronic files the information

necessary to complete the Eligibility

Checklist (Alternative Eligibility

Record). The Alternative Eligibility

Record may consist of one or more

documents containing the required

information.

(ii) The preparer’s completion of the

Eligibility Checklist or Alternative

Eligibility Record must be based on

information provided by the taxpayer to

the preparer or otherwise reasonably

obtained by the preparer.

(2) Computation of credit. (i) The

preparer must either—

(A) Complete the Earned Income

Credit Worksheet in the Form 1040

instructions or such other form and

such other information as may be

prescribed by the IRS (Computation

Worksheet); or

(B) Otherwise record in the preparer’s

paper or electronic files the preparer’s

EIC computation, including the method

and information used to make the

computation (Alternative Computation

Record). The Alternative Computation

Record may consist of one or more

documents containing the required

information.

(ii) The preparer’s completion of the

Computation Worksheet or Alternative

Computation Record must be based on

information provided by the taxpayer to

the preparer or otherwise reasonably

obtained by the preparer.

(3) Knowledge. The preparer must not

know, or have reason to know, that any

information used by the preparer in

determining the taxpayer’s eligibility

for, or the amount of, the EIC is

incorrect. The preparer may not ignore

the implications of information

furnished to, or known by, the preparer,

and must make reasonable inquiries if

the information furnished to, or known

by, the preparer appears to be incorrect,

inconsistent, or incomplete.

(4) Retention of records. (i) The

preparer must retain—

(A) A copy of the completed

Eligibility Checklist or Alternative

Eligibility Record;

(B) A copy of the Computation

Worksheet or Alternative Computation

Record; and

(C) A record of how and when the

information used to complete the

Eligibility Checklist or Alternative

Eligibility Record and the Computation

Worksheet or Alternative Computation

Record was obtained by the preparer,

including the identity of any person

furnishing the information.

(ii) The items in paragraph (b)(4)(i) of

this section must be retained for three

years after the June 30th following the

date the return or claim for refund was

presented to the taxpayer for signature,

and may be retained on paper or

electronically in the manner prescribed

in applicable regulations, revenue

rulings, revenue procedures, or other

appropriate guidance (see

§ 601.601(d)(2) of this chapter).

(c) Exception to penalty. The section

6695(g) penalty will not be applied with

respect to a particular income tax return

or claim for refund if the preparer can

demonstrate to the satisfaction of the

IRS that, considering all the facts and

circumstances, the preparer’s normal

office procedures are reasonably

designed and routinely followed to

ensure compliance with the due

diligence requirements of paragraph (b)

of this section, and the failure to meet

the due diligence requirements of

paragraph (b) of this section with

respect to the particular return or claim

for refund was isolated and inadvertent.

(d) Effective date. This section applies

to income tax returns and claims for

refund due on or after October 17, 2000.

§ 1.6695–2T [Removed]

Par. 3. Section 1.6695–2T is removed.

PART 602—OMB CONTROL NUMBERS

UNDER THE PAPERWORK

REDUCTION ACT

Par. 4. The authority citation for part

602 continues to read as follows:

Authority: 26 U.S.C. 7805.

61270 Federal Register / Vol. 65, No. 201 / Tuesday, October 17, 2000 / Rules and Regulations

Par. 5. In § 602.101, paragraph (b) is

amended by removing the entry for

‘‘1.6695–2T’’ and adding the following

entry in numerical order to the table to

read as follows:

§ 602.101 OMB Control numbers.

* * * * *

(b) * * *

CFR part or section where

identified and described

Current

OMB control

No.

*****

1.6695–2 ................................... 1545–1570

*****

Approved: October 6, 2000.

Robert E. Wenzel,

Deputy Commissioner of Internal Revenue.

Jonathan Talisman,

Acting Assistant Secretary of the Treasury.

[FR Doc. 00–26521 Filed 10–16–00; 8:45 am]

BILLING CODE 4830–01–P

DEPARTMENT OF LABOR

Mine Safety and Health Administration

30 CFR Parts 56, 57, 62, 70 and 71

RIN 1219–AA53

Health Standards for Occupational

Noise Exposure; Correction

AGENCY: Mine Safety and Health

Administration (MSHA), Labor.

ACTION: Final rule; corrections.

SUMMARY: This document contains

corrections to preamble to the final rule

which were published in the Federal

Register of Monday, September 13, 1999

(64 FR 49548). The rule related to the

health standards for occupational noise

exposure.

DATES: Effective October 17, 2000.

FOR FURTHER INFORMATION CONTACT:

Carol J. Jones, Director, Office of

Standards, Regulations, and Variances,

MSHA, (703) 235–1910 (not a toll-free

call).

SUPPLEMENTARY INFORMATION: As

published, the preamble contains errors

which may prove to be misleading and

which need to be corrected.

Accordingly, the preamble is

corrected as follows:

1. On page 49551, in ‘‘Chart 1:

General Requirements’’ under the

heading Noise level, the phrase ‘‘At or

above 105 dBA (dual hearing protection

level)’’ should read ‘‘Above 105 dBA

(dual hearing protection level).’’

2. On page 49551, in ‘‘Comparison

Chart 2: General Features’’ under the

heading Final rule, the third entry

should read ‘‘80 dBA for action level

and 90 dBA for PEL.’’

3. On page 49558, in the second

column, in the last sentence, the word

‘‘tone’’ should be deleted to make the

sentence read ‘‘Most definitions of

hearing impairment are based solely on

pure audiometry, in which an

audiometer is used to measure an

individual’s threshold hearing level—

the lowest level of discrete frequency

tones that he or she can hear.’’

4. On page 49590, in the second

column, in the first paragraph, in the

last sentence, the word ‘‘regulations’’

should be changed to ‘‘standards’’ to

make the sentence read ‘‘Accordingly,

MSHA has concluded that noise falls

within the scope of section 103(c) of the

Mine Act, and that MSHA has the

authority to establish standards that

provide miners and their representatives

access to noise exposure monitoring

conducted by mine operators.’’

5. On page 49607, in the third

column, in the first full paragraph, in

the first full sentence, the words ‘‘equals

or’’ should be inserted so that the

sentence reads ‘‘The final rule, like the

proposal, requires mine operators to

offer miners whose noise exposure

equals or exceeds the action level the

opportunity for audiometric . . .’’

6. On page 49608, in the second

column, in the first full paragraph, in

the first sentence, the words ‘‘equals or’’

should be inserted so that the sentence

reads ‘‘Under § 62.120 of the final rule,

mine operators must enroll miners

whose exposure to noise equals or

exceeds the action level in a hearing

conservation program . . .’’

7. On page 49627, in the first column,

in the first full paragraph, in the fourth

sentence, the term ‘‘Paragraph (c)’’

should be changed to ‘‘Paragraph (b).’’

In the second full paragraph, in the first

sentence, the term ‘‘Paragraph (a)(3)’’

should be changed to ‘‘Paragraph (b).’’

In the third full paragraph, in the first

sentence, the term ‘‘Paragraph (b)(1)’’

should be changed to ‘‘Paragraph

(c)(1).’’ In the last paragraph, in the last

sentence, the term ‘‘Paragraph (b)(1)’’

should be changed to ‘‘Paragraph

(c)(1).’’ In the second column, in the

first full paragraph, in the first sentence,

the term ‘‘Paragraph (b)(2)’’ should be

changed to ‘‘Paragraph (c)(2),’’ and in

the last sentence the term ‘‘Paragraph

(b)(2)’’ should be changed to ‘‘Paragraph

(c)(2).’’

Dated: September 28, 2000.

J. Davitt McAteer,

Assistant Secretary for Mine Safety and

Health.

[FR Doc. 00–26620 Filed 10–16–00; 8:45 am]

BILLING CODE 4510–43–U

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 180

[OPP–301049; FRL–6742–9]

RIN 2070–AB78

Azoxystrobin; Pesticide Tolerances for

Emergency Exemptions

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Final rule.

SUMMARY: This regulation establishes a

time-limited tolerance for residues of

azoxystrobin or methyl (E)-2-2-[6-(2-

cyanophenoxy)pyrimidin-4-

yloxy]phenyl-3-methoxyacrylate) and its

Z isomer in or on brassica leafy

vegetable. This action is in response to

EPA’s granting of an emergency

exemption under section 18 of the

Federal Insecticide, Fungicide, and

Rodenticide Act (FIFRA) authorizing

use of the pesticide on brassica leafy

vegetable. This regulation establishes a

maximum permissible level for residues

of azoxystrobin in this food commodity.

The tolerance will expire and is revoked

on December 31, 2001.

DATES: This regulation is effective

October 17, 2000. Objections and

requests for hearings, identified by

docket control number OPP–301049,

must be received by EPA on or before

December 18, 2000.

ADDRESSES: Written objections and

hearing requests may be submitted by

mail, in person, or by courier. Please

follow the detailed instructions for each

method as provided in Unit VII. of the

SUPPLEMENTARY INFORMATION. To ensure

proper receipt by EPA, your objections

and hearing requests must identify

docket control number OPP–301049 in

the subject line on the first page of your

response.

FOR FURTHER INFORMATION CONTACT: By

mail: Jacqueline E. Gwaltney,

Registration Division (7505C), Office of

Pesticide Programs, Environmental

Protection Agency, 1200 Pennsylvania

Ave., NW., Washington, DC 20460;

telephone number: 703 305–6792; and

e-mail address:

gwaltney.jackie@epa.gov.

SUPPLEMENTARY INFORMATION: