61292 Federal Register / Vol. 65, No. 201 / Tuesday, October 17, 2000 / Proposed Rules

Aircraft Certification Office (ACO), FAA.

Operators shall submit their requests through

an appropriate FAA Principal Maintenance

Inspector, who may add comments and then

send it to the Manager, Atlanta ACO.

Note 2: Information concerning the

existence of approved alternative methods of

compliance with this AD, if any, may be

obtained from the Atlanta ACO.

(2) Alternative methods of compliance,

approved previously in accordance with AD

2000–17–51, amendment 39–11877, are

approved as alternative methods of

compliance with the initial HFEC inspection

required by paragraph (a)(1) of this AD.

Special Flight Permits

(d) Special flight permits may be issued in

accordance with sections 21.197 and 21.199

of the Federal Aviation Regulations (14 CFR

21.197 and 21.199) to operate the airplane to

a location where the requirements of this AD

can be accomplished.

Issued in Renton, Washington, on October

11, 2000.

Donald L. Riggin,

Acting Manager, Transport Airplane

Directorate, Aircraft Certification Service.

[FR Doc. 00–26595 Filed 10–16–00; 8:45 am]

BILLING CODE 4910–13–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1, 5f, and 31

[REG–246249–96]

RIN 1545–AW48

Information Reporting Requirements

for Certain Payments Made on Behalf

of Another Person, Payments to Joint

Payees, and Payments of Gross

Proceeds From Sales Involving

Investment Advisers

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Withdrawal of previous notice

of proposed rulemaking; notice of

proposed rulemaking; and notice of

public hearing.

SUMMARY: This document withdraws a

previous notice of proposed rulemaking

(LR–62–84) published May 29, 1984 (49

FR 22343). This document contains

proposed regulations under section

6041 that clarify who is the payee for

information reporting purposes if a

check or other instrument is made

payable to joint payees, provide

information reporting requirements for

escrow agents and other persons making

payments on behalf of another person,

and clarify that the amount to be

reported paid is the gross amount of the

payment. This document also contains

proposed regulations under section

6045 that remove investment advisers

from the list of exempt recipients. In

addition, this document provides notice

of a public hearing on these proposed

regulations.

DATES: Written or electronic comments

must be received by January 17, 2001.

Requests to speak (with outlines of oral

comments) at a public hearing

scheduled for February 7, 2001, at 10

a.m. must be submitted by January 24,

2001.

ADDRESSES: Send submissions to:

CC:M&SP:RU (REG–246249–96), room

5226, Internal Revenue Service, POB

7604, Ben Franklin Station, Washington,

DC 20044. In the alternative,

submissions may be hand delivered

Monday through Friday between the

hours of 8 a.m. and 5 p.m. to:

CC:M&SP:RU (REG–246249–96),

Courier’s Desk, Internal Revenue

Service, 1111 Constitution Avenue,

NW., Washington, DC, or sent

electronically via the IRS Internet site at

http://www.irs.gov/taxlregs/

regslist.html. The public hearing will be

held in the IRS Auditorium, Seventh

Floor, Internal Revenue Service

Building, 1111 Constitution Avenue,

NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the regulations, Nancy L.

Rose, (202) 622–4910; concerning

submission of comments, the hearing,

and/or to be placed on the building

access list to attend the hearing, Guy R.

Traynor, (202) 622–7190 (not toll-free

numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information

contained in this notice of proposed

rulemaking has been submitted to the

Office of Management and Budget for

review in accordance with the

Paperwork Reduction Act of 1995 (44

U.S.C. 3507(d)). Comments on the

collection of information should be sent

to the Office of Management and

Budget, Attn: Desk Officer for the

Department of Treasury, Office of

Information and Regulatory Affairs,

Washington, DC 20503, with copies to

the Internal Revenue Service, Attn: IRS

Reports Clearance Officer,

W:CAR:MP:FP:S:O, Washington, DC

20224. Comments on the collection of

information should be received by

December 19, 2000. Comments are

specifically requested concerning:

Whether the proposed collection of

information is necessary for the proper

operation of the functions of the Internal

Revenue Service, including whether the

information will have practical utility;

The accuracy of the estimated burden

associated with the proposed collection

of information (see below);

How the quality, utility, and clarity of

the information to be collected may be

enhanced;

How the burden of complying with

the proposed collection of information

may be minimized, including through

the application of automated collection

techniques or other forms of information

technology; and

Estimates of capital or start-up costs

and costs of operation, maintenance,

and purchase of service to provide

information.

The collection of information in these

proposed regulations is in §§ 1.6041–

1(e) and 1.6045–1(c)(3). This

information is required to determine if

taxpayers have properly reported

amounts received as income. The

collection of information is mandatory.

The likely respondents are businesses

and other for-profit institutions.

The estimate of the reporting burden

in proposed § 1.6041–1 is reflected in

the burden of Form 1099-MISC,

Miscellaneous Income, which is

currently 14 minutes per form. The

estimate of the reporting burden in

proposed § 1.6045–1 is reflected in the

burden of Form 1099-B, Proceeds of

Broker and Barter Exchange

Transactions, which is currently 15

minutes per form.

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.

Books or records relating to the

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 and Explanation of

Provisions

1. Proposed Regulations Under Section

6041

Section 6041 provides that all persons

engaged in a trade or business that make

certain payments in the course of that

trade or business to another person of

$600 or more in a taxable year must

report the amount of the payments and

the name and address of the recipient.

Section 3406(a) provides that a payor

must withhold tax from reportable

Federal Register / Vol. 65, No. 201 / Tuesday, October 17, 2000 / Proposed Rules 61293

payments under certain circumstances,

for example, if the payee has failed to

furnish a valid taxpayer identification

number to the payor in the manner

required. ‘‘Reportable payments’’

include payments that are required to be

reported under sections 6041 and 6045.

Section 3406(b)(3)(A) and (C). The party

that is responsible for reporting the

payments under sections 6041 and 6045

is also responsible for any backup

withholding required under section

3406.

These proposed regulations address

certain issues identified by the

Commissioner’s Information Reporting

Program Advisory Committee (IRPAC)

and take into account comments and

information provided by IRPAC

members representing the banking, real

estate, insurance, and securities

industries.

a. Payments to Joint Payees

The proposed regulations clarify the

definition of fixed and determinable

income in § 1.6041–1(c) when a

payment is made payable to joint

payees. This issue was discussed in

papers presented at IRPAC meetings in

May 1994 and May 1995. The

regulations provide that a payment

made jointly to two or more payees may

be fixed and determinable income to

one payee even though the payment is

not fixed and determinable income to

another payee. For example, when a

payment in consideration for services is

made payable to joint payees, one of

whom is the service provider, an

information return must be made

showing the service provider as the

payee if the payment is fixed and

determinable income to the service

provider, even if the payment is not

fixed and determinable income to the

other payee. See, e.g., Situation 2 of Rev.

Rul. 70–608 (1970–2 C.B. 286).

b. Identification of Payor

A payment reportable under section

6041 may be made by a person on behalf

of another person that is the actual

source of the funds. Under certain

circumstances this so-called

middleman, and not the person that

provided the funds, is the payor

obligated to report the payment under

section 6041. See, e.g., Rev. Rul. 93–70

(1993–2 C.B. 294).

Consistent with Rev. Rul. 93–70, the

proposed regulations add a new

paragraph (e)(1) to § 1.6041–1 that

provides that a person that makes a

payment on behalf of another person

and performs a management or

oversight function in connection with,

or has a significant economic interest in,

the payment must report under section

6041. A management or oversight

function is an activity that is more than

merely administrative or ministerial.

For example, a person that merely

writes checks at the direction of others

in connection with a transaction,

sometimes referred to as a paying agent,

is performing only an administrative or

ministerial function and is not a payor.

In contrast, a person that exercises

discretion or supervision in connection

with a payment is performing a

management or oversight function and

is a payor. A significant economic

interest in a payment is an economic

interest that would be compromised if

the payment were not made. For

example a bank has a significant

economic interest in a payment to a

contractor when damage occurs to

property securing a mortgage held by

the bank. With this standard, which was

also discussed in the IRPAC papers of

May 1994 and May 1995, the proposed

regulations attempt to replace disparate

revenue rulings with a consistent and

easily administrable rule that can be

applied to a variety of factual situations

involving middlemen.

Section 1.6041–1(e)(2) of the

proposed regulations provides an

exception to the general rule of

§ 1.6041–1(e)(1) by referencing the

procedures in Rev. Proc. 84–33 (1984–

1 C.B. 502) for an optional method for

payors to designate a paying agent to file

information returns and backup

withhold.

The proposed regulations include

examples, derived primarily from

revenue rulings and private letter

rulings, which are intended to be allinclusive. Rulings that are factually

encompassed by the proposed

regulations will be obsoleted. Comments

are requested identifying other factually

relevant rulings or suggesting

appropriate additional examples.

The proposed regulations make two

changes to § 1.6041–3 (to be effective

January 1, 2001). They revise § 1.6041–

3(d) to conform the cross-reference to

§ 1.6041–1 to the language effective

January 1, 2001, and to clarify the

current rule that real estate agents who

manage rental property and make

payments of rent to landlords are payors

and continue to be subject to the general

requirements of § 1.6041–1. The

proposed regulations also remove

§ 1.6041–3(n), which provides an

exception to the information reporting

requirements of section 6041 for

amounts that a bank or similar

institution collects on behalf of, and

pays over or credits to the account of,

the actual owner of the funds, but only

if it does not collect the items on a

regular and continuing basis. Rev. Rul.

77–53 (1977–1 C.B. 368) further

restricted this limitation to banks that

collect items on a regular and

continuing basis and also assume a

management function or perform more

than the mere collection and payment or

crediting of funds to a customer’s

account. This holding is consistent with

the ‘‘management and oversight’’

standard of the proposed regulations.

Accordingly, Example 11 of the

proposed regulations preserves the

holding of Rev. Rul. 77–53. Section

1.6041–3(n) is removed to avoid

confusion and redundancy. However, its

removal will change current

requirements by imposing a reporting

requirement on a bank that collects and

pays or credits funds on behalf of a

customer on an infrequent or isolated

basis if it performs a management or

oversight function in connection with

the payment, a transaction that is

currently within the § 1.6041–3(n)

exception.

The proposed regulations also remove

paragraphs (b) and (c) of § 31.3406(a)–2.

These paragraphs provide a standard for

information reporting by a so-called

middleman that is inconsistent with the

standard in the proposed regulations. As

amended, § 31.3406(a)–2 reiterates the

general rule of section 3406(h) (also

stated in § 35a.9999–3, Q & A 1) that the

definition of payor for information

reporting purposes determines who is

the payor for backup withholding

purposes as well.

c. Amount To Be Reported When Fees,

Expenses or Commissions are Deducted

From a Payment

The proposed regulations add a new

paragraph (f) to § 1.6041–1 that clarifies

that the amount to be reported as paid

to a payee is the gross amount of the

payment or payments before fees,

commissions, expenses, or other

amounts owed by the payee to another

person have been deducted. See, e.g.,

Rev. Rul. 67–197 (1967–1 C.B. 319);

Rev. Rul. 54–571 (1954–2 C.B. 235). The

rule, which applies whether the

payment is made jointly or separately to

the payee and another person, is also

cross-referenced in Example 6 and

Example 8 of § 1.6041–1(e)(3).

The rule of § 1.6041–1(f) is illustrated

by two examples involving payment of

taxable damages by a defendant to a

plaintiff. These examples, read with

Example 8 of § 1.6041–1(e)(3), are, in

part, inconsistent with Example 2 of the

proposed regulations at § 1.6045–5(f),

published on May 21, 1999 (64 FR

27730). Example 2 states that a

defendant that pays a settlement to a

plaintiff and knows the amount of the

plaintiff’s attorney fees included in the

61294 Federal Register / Vol. 65, No. 201 / Tuesday, October 17, 2000 / Proposed Rules

payment is required to report the

payment of the attorney fees under

section 6041 and not the gross proceeds

under section 6045(f). However, under

§ 1.6041–1(e) of these regulations, the

defendant is not exercising management

or oversight in connection with, and

therefore is not required to make an

information return under section 6041

for, the payment to the attorney. The

plaintiff, not the defendant, is required

to report the payment of attorney fees to

plaintiff’s attorney under section 6041

(assuming that the payment is made in

the course of the plaintiff’s trade or

business and that the other

requirements of section 6041 apply).

Accordingly, Example 2 in the final

regulations under section 6045(f) will be

revised to provide that the defendant is

not required to make an information

return under section 6041 but is

required to make an information return

under section 6045(f), even if the

defendant knows the amount of

plaintiff’s attorney fees.

d. Revenue Rulings To Become Obsolete

As discussed above, the proposed

regulations apply to the factual

situations addressed in the following

revenue rulings, which will become

obsolete:

Rev. Rul. 93–70 (1993–2 C.B. 294)

Rev. Rul. 85–50 (1985–1 C.B. 345)

Rev. Rul. 77–53 (1977–1 C.B. 368)

Rev. Rul. 73–232 (1973–1 C.B. 541)

Rev. Rul. 70–608, Situations 1, 2, and 5

(1970–2 C.B. 286)

Rev. Rul. 69–595 (1969–2 C.B. 242)

Rev. Rul. 67–197 (1967–1 C.B. 319)

Rev. Rul. 65–129 (1965–1 C.B. 519)

Rev. Rul. 64–36 (1964–1 C.B. 446)

Rev. Rul. 59–328 (1959–2 C.B. 379)

Rev. Rul. 55–606 (1955–2 C.B. 489)

Rev. Rul. 54–571 (1954–2 C.B. 235)

2. Proposed Regulations Under Section

6045

Section 6045 provides that a broker

must file an information return showing

the name and address of the broker’s

customer and other details, such as the

amount of the gross proceeds of the

transaction, as the Secretary may

require. Section 6045(c) defines a broker

as a dealer, a barter exchange, or any

other person who, for a consideration,

regularly acts as a middleman with

respect to property or services.

Section 1.6045–1(a)(2) provides that a

customer is the person who makes a sale

effected by a broker, if the broker acts

as (i) an agent for the customer in the

sale, (ii) a principal in the sale, or (iii)

the party in the sale responsible for

paying or crediting the proceeds to the

customer. Under § 1.6045–1(h), a broker

must treat the person whose name

appears on the broker’s books and

records as the principal.

Section 5f.6045–1(c)(3), also

published as proposed regulations (49

FR 22343), provides that no return of

information is required with respect to

a sale effected for a customer that is an

exempt recipient. Among the categories

of exempt recipients is a person

registered under the Investment

Advisers Act of 1940 who regularly acts

as a broker (an investment adviser).

Section 5f.6045–1(c)(3)(iii) provides

that, in a cash on delivery or similar

transaction, only the broker that

receives the gross proceeds against

delivery of the securities sold is

required to report a sale, unless the

broker’s customer is another broker (a

second-party broker) that is an exempt

recipient. In that case, only the secondparty broker is required to report.

One effect of these provisions is to

shift the reporting requirement in a cash

on delivery transaction from the broker

that receives the gross proceeds against

delivery of the securities to an

investment adviser. For example, in

§ 5f.6045–1(c)(4) Example (4), an

investment adviser instructs a broker/

dealer to sell securities owned by the

investment adviser’s customer and to

pay the proceeds of the sale to a

custodian bank. The custodian bank is

instructed to deliver the securities to the

broker/dealer against delivery of the

proceeds of the sale. The investment

adviser, and not the broker/dealer or the

custodian bank, is required to report the

payment of the proceeds of the sale to

the investment adviser’s customer,

because (1) the broker/dealer paid the

gross proceeds of the sale to the

custodian bank against delivery of the

securities sold, and (2) the custodian

bank’s customer was the investment

adviser, an exempt recipient.

Commentators on the proposed

regulations objected to the imposition of

the reporting obligation under section

6045(a) on investment advisers because

(1) investment advisers generally do not

have first-hand knowledge that a sale

has been completed, and (2) investment

advisers generally do not handle the

proceeds of a sale and, consequently,

cannot comply with the backup

withholding requirements of section

3406. Investment adviser reporting

issues were also the subject of IRPAC

papers presented at meetings in

November 1995 and October 1997.

These proposed regulations withdraw

the 1984 proposed regulations. In

general, they propose to incorporate the

provisions of § 5f.6045–1 into § 1.6045–

1(c)(3) and (4). The proposed

regulations also remove investment

advisers from the list of exempt

recipients and revise current § 5f.6045–

1(c)(4) Examples 4 and 5 to clarify that,

under the revised rules, an investment

adviser that initiates a sale on behalf of

a customer is required to make a return

of information only if the sale relates to

an investment account in the

investment adviser’s name (i.e., the

identity of the customer is not disclosed

to the account custodian).

Proposed Effective Date

The provisions of these regulations

under sections 6041 and 3406 are

proposed to be applicable for payments

made on or after the beginning of the

first calendar year that begins after these

regulations are published in the Federal

Register as final regulations. The

provisions of these regulations under

section 6045 are proposed to be

applicable for sales effected on or after

the beginning of the first calendar year

that begins after the date these

regulations are published in the Federal

Register as final regulations.

Special Analyses

It has been determined that this notice

of proposed rulemaking is not a

significant regulatory action as defined

in Executive Order 12866. Therefore, a

regulatory assessment is not required. It

has also been determined that section

553(b) of the Administrative Procedure

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

to these regulations. An initial

regulatory flexibility analysis has been

prepared for the collection of

information in this notice of proposed

rulemaking under 5 U.S.C. section 603.

The analysis is set forth in this preamble

under the heading ‘‘Initial Regulatory

Flexibility Analysis.’’ Pursuant to

section 7805(f) of the Internal Revenue

Code, this notice of proposed

rulemaking will be submitted to the

Chief Counsel for Advocacy of the Small

Business Administration for comment

on its impact on small business.

Initial Regulatory Flexibility Analysis

The collection of information

proposed in § 1.6041–1(e) is needed to

clarify the requirements for filing an

information return under section 6041

when a person makes a payment on

behalf of another person or to joint

payees. The objectives of the proposed

regulations are to provide uniform,

practicable, and administrable rules

under section 6041 for persons making

payments on behalf of another person or

to joint payees. The types of small

entities to which the proposed

regulations may apply are small

businesses. An estimate of the number

of small entities affected is not feasible

because of the large variety of entities

Federal Register / Vol. 65, No. 201 / Tuesday, October 17, 2000 / Proposed Rules 61295

and transactions to which the proposed

regulations may apply. However, in

1997 a total of 73,273,621 Forms 1099–

MISC were filed with the IRS. The

number of 1997 Forms 1099–MISC that

related to transactions that involved

payments made on behalf of another

person or to joint payees cannot be

determined. The current estimated

reporting burden relating to Form 1099–

MISC is 14 minutes per form. No special

professional skills are necessary for

preparation of the reports or records.

There are no known Federal rules that

duplicate, overlap, or conflict with these

proposed regulations. The regulations

proposed are considered to have the

least economic impact on small entities

of all alternatives considered.

The collection of information in

proposed § 1.6045–1(c)(3) will not have

a significant economic impact on a

substantial number of small entities.

The proposed regulations will relieve

investment advisers of the requirement

to make information returns under

section 6045(a), and few, if any,

financial custodians that may be

affected by the regulations are small

entities.

Comments and Public Hearing

Before these proposed regulations are

adopted as final regulations,

consideration will be given to any

electronic or written comments (a

signed original and eight (8) copies) that

are submitted timely (in the manner

described in the ADDRESSES caption) to

the IRS. The IRS and Treasury

Department request comments on the

clarity of the proposed rules and how

they may be made easier to understand.

All comments will be available for

public inspection and copying.

A public hearing has been scheduled

for February 7, 2001, beginning at 10

a.m. in the IRS Auditorium, Seventh

Floor, Internal Revenue Building, 1111

Constitution Avenue, NW., Washington,

DC. Due to building security

procedures, visitors must enter at the

10th Street entrance, located between

Constitution and Pennsylvania

Avenues, NW. In addition, all visitors

must present photo identification to

enter the building.

Because of access restrictions, visitors

will not be admitted beyond the

immediate entrance area more than 15

minutes before the hearing starts. For

information about having your name

placed on the building access list to

attend the hearing, see the FOR FURTHER

INFORMATION CONTACT section of the

preamble.

The rules of 26 CFR 601.601(a)(3)

apply to the hearing. Persons who wish

to present oral comments at the hearing

must submit written comments and an

outline of the topics to be discussed and

the time to be devoted to each topic

(signed original and eight (8) copies) by

January 24, 2001. A period of 10

minutes will be allotted to each person

for making comments. An agenda

showing the scheduling of the speakers

will be prepared after the deadline for

receiving outlines has passed. Copies of

the agenda will be available free of

charge at the hearing.

Drafting Information

The principal author of these

regulations is Donna M. Crisalli, Office

of the Associate Chief Counsel (Income

Tax & Accounting). However, other

personnel from the IRS and Treasury

Department participated in their

development.

List of Subjects

26 CFR Parts 1 and 5f

Income taxes, Reporting and

recordkeeping requirements.

26 CFR Part 31

Employment taxes, Income taxes,

Penalties, Railroad retirement,

Reporting and recordkeeping

requirements, Social security,

Unemployment compensation.

Proposed Amendments to the

Regulations

Accordingly, under the authority of

26 U.S.C. 7805, the notice of proposed

rulemaking (LR–62–84) amending 26

CFR part 1 that was published in the

Federal Register on May 29, 1984 (49

FR 22343) is withdrawn. In addition, 26

CFR parts 1, 5f, and 31 are proposed to

be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 is amended by adding an entry

in numerical order to read in part as

follows:

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

Section 1.6041–1 also issued under 26

U.S.C. 6041(a). * * *

Par. 2. Section 1.6041–1 is amended

by:

1. Removing the language ‘‘paragraph

(g)’’ in the second sentence of paragraph

(b)(1) and adding the language

‘‘paragraph (i)’’ in its place.

2. Adding two sentences after the

fourth sentence of paragraph (c).

3. Redesignating paragraphs (e)

through (g) as paragraphs (g) through (i).

4. Adding new paragraphs (e) and (f),

and (j).

The additions and revisions read as

follows:

§ 1.6041–1 Return of information as to

payments of $600 or more.

* * * * *

(c) * * * A payment made jointly to

two or more payees may be fixed and

determinable income to one payee even

though the payment is not fixed and

determinable income to another payee.

For example, property insurance

proceeds paid jointly to the owner of

damaged property and to a contractor

that repairs the property may be fixed

and determinable income to the

contractor but not fixed and

determinable income to the owner.

***

* * * * *

(e) Payment made on behalf of

another person—(1) In general. A

person that makes a payment in the

course of its trade or business on behalf

of another person is the payor that must

make a return of information under this

section with respect to that payment if

the payment is described in paragraph

(a) of this section and, under all the

facts and circumstances, that person—

(i) Performs management or oversight

functions (i.e., performs more than mere

administrative or ministerial functions)

in connection with the payment; or

(ii) Has a significant economic interest

in the payment.

(2) Optional method to report. A

person that makes a payment on behalf

of another person but is not required to

make an information return under

paragraph (e)(1) of this section may elect

to do so pursuant to the procedures

established in Rev. Proc. 84–33 (1984–

1 C.B. 502) (optional method for a

paying agent to report and deposit

amounts withheld for payors under the

statutory provisions of backup

withholding) (see § 601–601(d)(2) of this

chapter).

(3) Examples. The provisions of this

paragraph (e) are illustrated by the

following examples:

Example 1. Bank B provides financing to

C, a real estate developer, for a construction

project. B puts the funds in an escrow

account and makes disbursements from the

account for labor, materials, services, and

other expenses related to the construction

project. In connection with the payments, B

performs the following functions on behalf of

C: approves payments to the general

contractor or subcontractors; ensures that

loan proceeds are properly applied and that

all approved bills are properly paid to avoid

mechanics or materialmen’s liens; conducts

site inspections to determine whether work

has been completed (but does not check the

quality of the work); evaluates and assesses

the cost of the project, including costs of

changes; and communicates resulting

concerns to C or to the general contractor so

that modifications can be made or additional

funding obtained. B is performing

61296 Federal Register / Vol. 65, No. 201 / Tuesday, October 17, 2000 / Proposed Rules

management or oversight functions in

connection with the payment and is subject

to the information reporting requirements of

section 6041 with respect to payments from

the escrow fund.

Example 2. Mortgage company D holds a

mortgage on business property owned by E.

When the property is damaged by a storm E’s

insurance company issues a check payable to

both D and E in settlement of E’s claim.

Pursuant to the contract between D and E, D

holds the insurance proceeds in an escrow

account and makes disbursements according

to E’s instructions to contractors and

subcontractors performing repairs on the

property. D is not performing management or

oversight functions, but D has a significant

economic interest in the payments because

the purpose of the arrangement is to ensure

that property on which D holds a mortgage

is repaired or replaced. D is subject to the

information reporting requirements of section

6041 with respect to the payments to

contractors.

Example 3. Settlement agent F provides

real estate closing services to real estate

brokers and agents. F deposits money

received from the buyer or lender in an

escrow account and makes payments from

the account to real estate agents or brokers,

appraisers, land surveyors, building

inspectors, or similar service providers

according to the provisions of the real estate

contract and written instructions from the

lender. F may also make disbursements

pursuant to verbal instructions of the seller

or purchaser at closing. F is not performing

management or oversight functions and does

not have a significant economic interest in

the payments, and is not subject to the

information reporting requirements of section

6041. For the rules relating to F’s obligation

to report the gross proceeds of the sale, see

section 6045(e) and § 1.6045–4.

Example 4. Assume the same facts as in

Example 3, except that the seller instructs F

to hire a contractor to perform repairs on the

property. F selects the contractor, negotiates

the cost, monitors the progress of the project,

and inspects the work to ensure it complies

with the contract. With respect to the

payments to the contractor, F is performing

management or oversight functions and is

subject to the information reporting

requirements of section 6041.

Example 5. Real estate agent G manages

certain rental property on behalf of property

owner H. In addition to collecting the rent G

arranges for various services that are needed

to maintain the property (e.g., painting,

repairs, lawn mowing, etc.), determines that

the services have been satisfactorily

performed, and pays the service providers. G

is performing management or oversight

functions and is subject to the information

reporting requirements of section 6041 with

respect to the payments to the service

providers. With respect to the payments of

rent to H, see § 1.6041–3(d).

Example 6. Literary agent J receives a

payment from publisher L of fees earned by

J’s client, author K. J deposits the payment

into a bank account in J’s name and pays K

the net amount after subtracting J’s

commission. From time to time and as

directed by K, J also makes payments to

attorneys, managers, and other third parties

from these funds for services rendered to K.

J does not order or direct the provision of

services by the third parties to K, and J

exercises no discretion in making the

payments to them. J is not performing

management or oversight functions and does

not have a significant economic interest in

the payments, and is not subject to the

information reporting requirements of section

6041 in connection with the payments to K

or to the third parties. For the rules relating

to L’s obligation to report the payment of the

fees to K, see paragraphs (a)(1)(i) and (f) of

this section. For the rules relating to K’s

obligation to report the payment of the

commission to J and the payments to the

third parties for services, see paragraphs

(a)(1)(i) and (d)(2) of this section.

Example 7. Attorney P deposits into a

client trust fund a settlement payment from

R, the defendant in a breach of contract

action for lost profits in which P represented

plaintiff Q. P makes payments from the client

trust fund to service providers such as expert

witnesses and private investigators for

expenses incurred in the litigation. P decides

whom to hire, negotiates the amount of

payment, and determines that the services

have been satisfactorily performed. In the

event of a dispute with a service provider, P

withholds payment until the dispute is

settled. With respect to payments to the

service providers P is performing

management or oversight functions and is

subject to the information reporting

requirements of section 6041.

Example 8. Assume the same facts as in

Example 7, except that after paying the

service providers and deducting his legal fee,

P pays Q the remaining funds that P had

received from the settlement with R. With

respect to the payment to Q, P is not

performing management or oversight

functions and does not have a significant

economic interest in the payment, and is not

subject to the information reporting

requirements of section 6041. For the rules

relating to R’s obligation to report the

payment of the settlement proceeds to P, see

section 6045(f) and § 1.6045–5. For the rules

relating to R’s obligation to report the

payment of the settlement proceeds to Q, see

paragraphs (a)(1)(i) and (f) of this section. For

the rules relating to Q’s obligation to report

the payment of attorney fees to P, see

paragraphs (a)(1)(i) and (d)(2) of this section.

Example 9. Medical insurer S operates as

the administrator of a health care program

under a contract with a state. S makes

payments of government funds to health care

providers who provide care to eligible

patients. S receives and reviews claims

submitted by patients or health care

providers, determines if the claims meet all

the requirements of the program (e.g., that the

care is authorized and that the patients are

eligible beneficiaries), and determines the

amount of payment. S is performing

management or oversight functions and is

subject to the information reporting

requirements of section 6041 with respect to

the payments.

Example 10. Race track employee T holds

deposits made by horse owner U in a special

escrow account in U’s name. U enters into a

contract with jockey V to ride U’s horse in

a race at the track. As directed by U, T pays

V the fee for riding U’s horse from U’s escrow

account. T is not performing management or

oversight functions and does not have a

significant economic interest in the payment,

and is not subject to the information

reporting requirements of section 6041. For

the rules relating to U’s obligation to report

the payment of the fee to V, see paragraph

(a)(1)(i) of this section.

Example 11. Bank W collects payments

from mortgagors and remits the amounts to

the mortgagees or credits their accounts. W

performs no other task with respect to the

mortgage payments and has no other interest

in the accounts. Although W collects

payments on a regular and continuing basis,

W is not performing management or

oversight functions and does not have a

significant economic interest in the

payments, and is not subject to the

information reporting requirements of section

6041 with respect to the payments.

(f) Amount to be reported when fees,

expenses or commissions are

deducted—(1) In general. The amount to

be reported as paid to a payee is the

gross amount of the payment or

payments before fees, commissions,

expenses, or other amounts owed by the

payee to another person have been

deducted, whether the payment is made

jointly or separately to the payee and

the other person.

(2) Examples. The provisions of this

paragraph (f) are illustrated by the

following examples:

Example 1. Attorney P represents client Q

in a breach of contract action for lost profits

against defendant R. R settles the case for

$100,000 damages and $40,000 for attorney

fees. R issues a check payable to P and Q in

the amount of $140,000. R is required to

make an information return reporting a

payment to Q in the amount of $140,000.

Example 2. Assume the same facts as in

Example 1, except that R issues a check to

Q for $100,000 and a separate check to P for

$40,000. R is required to make an

information return reporting a payment to Q

in the amount of $140,000.

* * * * *

(j) Effective date. The provisions of

paragraphs (b), (c), (e), and (f) of this

section apply to payments made on or

after the beginning of the first calendar

year that begins after these regulations

are published in the Federal Register as

final regulations.

§ 1.6041–3 [Amended]

Par. 3. Section 1.6041–3, as in effect

on January 1, 2001, is amended as

follows:

1. In paragraph (d), removing the

language ‘‘(but the agent is subject to the

requirements of paragraph (a)(1)(ii) and

(2)(ii) of § 1.6041–1)’’ and adding the

language ‘‘(but the agent is required to

report payments of rent to the landlord

Federal Register / Vol. 65, No. 201 / Tuesday, October 17, 2000 / Proposed Rules 61297

in accordance with § 1.6041–

1)(a)(1)(i)(B) and (2)’’ in its place.

2. Removing paragraph (n) and

redesignating paragraphs (o) through (q)

as paragraphs (n) through (p).

Par. 4. Section 1.6045–1, as in effect

on January 1, 2001, is amended as

follows:

1. Revising paragraph (a) introductory

text.

2. Revising paragraphs (c)(3) and

(c)(4).

3. Removing the language ‘‘5f.6045–

1(c)(3)(ii) of this chapter’’ and adding

the language ‘‘paragraph (c)(3)(iii) of

this section’’ in its place in each place

it appears in paragraph (g)(4) Examples

1, 4, 5, 6, and 7(i).

The revisions read as follows:

§ 1.6045–1 Returns of information of

brokers and barter exchanges.

(a) Definitions. The following

definitions apply for purposes of this

section and § 1.6045–2:

* * * * *

(c) * * *

(3) Exceptions—(i) Sales effected for

exempt recipients—

(A) In general. No return of

information is required with respect to

a sale effected for a customer that is an

exempt recipient under paragraph

(c)(3)(i)(B) of this section.

(B) Exempt recipient defined. The

term exempt recipient means—

(1) A corporation as defined in section

7701(a)(3), whether domestic or foreign;

(2) An organization exempt from

taxation under section 501(a) or an

individual retirement plan;

(3) The United States or a State, the

District of Columbia, a possession of the

United States, a political subdivision of

any of the foregoing, a wholly-owned

agency or instrumentality of any one or

more of the foregoing, or a pool or

partnership composed exclusively of

any of the foregoing;

(4) A foreign government, a political

subdivision thereof, an international

organization, or any wholly-owned

agency or instrumentality of the

foregoing;

(5) A foreign central bank of issue as

defined in § 1.895–1(b)(1) (i.e., a bank

that is by law or government sanction

the principal authority, other than the

government itself, issuing instruments

intended to circulate as currency);

(6) A dealer in securities or

commodities registered as such under

the laws of the United States or a State;

(7) A futures commission merchant

registered as such with the Commodity

Futures Trading Commission;

(8) A real estate investment trust (as

defined in section 856);

(9) An entity registered at all times

during the taxable year under the

Investment Company Act of 1940 (15

U.S.C. 80a–1, et seq.);

(10) A common trust fund (as defined

in section 584(a)); or

(11) A financial institution such as a

bank, mutual savings bank, savings and

loan association, building and loan

association, cooperative bank,

homestead association, credit union,

industrial loan association or bank, or

other similar organization.

(C) Exemption certificate. A broker

may treat a person described in

paragraph (c)(3)(i)(B) of this section as

an exempt recipient based on a properly

completed exemption certificate (as

provided in § 31.3406(h)–3) of this

chapter or on the broker’s actual

knowledge that the payee is a person

described in paragraph (c)(3)(i)(B) of

this section. A broker may require an

exempt recipient to file a properly

completed exemption certificate and

may treat an exempt recipient that fails

to do so as a recipient that is not

exempt.

(ii) Excepted sales. No return of

information is required with respect to

a sale effected by a broker for a customer

if the sale is an excepted sale. For this

purpose, a sale is an excepted sale if it

is so designated by the Internal Revenue

Service in a revenue ruling or revenue

procedure (see § 601.601(d)(2) of this

chapter).

(iii) Multiple brokers. If a broker is

instructed to initiate a sale by a person

that is an exempt recipient described in

paragraph (c)(3)(i)(B)(6), (7), or (11) of

this section, no return of information is

required with respect to the sale by that

broker. In a redemption of stock or

retirement of securities, only the broker

responsible for paying the holder

redeemed or retired, or crediting the

gross proceeds on the sale to that

holder’s account, is required to report

the sale.

(iv) Cash on delivery transactions. In

the case of a sale of securities through

a cash on delivery account, a delivery

versus payment account, or other

similar account or transaction, only the

broker that receives the gross proceeds

from the sale against delivery of the

securities sold is required to report the

sale. If, however, the broker’s customer

is another broker (second-party broker)

that is an exempt recipient, then only

the second-party broker is required to

report the sale.

(v) Fiduciaries and partnerships. No

return of information is required with

respect to a sale effected by a custodian

or trustee in its capacity as such or a

redemption of a partnership interest by

a partnership provided the sale is

otherwise reported by the custodian or

trustee on a properly filed Form 1041,

or the redemption is otherwise reported

by the partnership on a properly filed

Form 1065, and all Schedule K–1

reporting requirements are satisfied.

(vi) Sales at issue price. No return of

information is required with respect to

a sale of an interest in a regulated

investment company (within the

meaning of section 851) that computes

its current price per share for purposes

of distributions, redemptions, and

purchases so as to stabilize the price per

share at a constant amount that

approximates its issue price or the price

at which it was originally sold to the

public.

(vii) Obligor payments on certain

obligations. No return of information is

required with respect to payments

representing obligor payments on—

(A) Nontransferable obligations

(including savings bonds, savings

accounts, checking accounts, and NOW

accounts);

(B) Obligations as to which the entire

gross proceeds are reported by the

broker on Form 1099 under provisions

of the Internal Revenue Code other than

section 6045 (including stripped

coupons issued prior to July 1, 1982); or

(C) Retirement of short-term

obligations (i.e., obligations with a fixed

maturity date not exceeding 1 year from

the date of issue) that have original

issue discount, as defined in section

1273(a)(1).

(viii) Callable obligations. No return

of information is required with respect

to payments representing obligor

payments on demand obligations that

also are callable by the obligor and that

have no premium or discount.

(ix) Foreign currency. No return of

information is required with respect to

a sale of foreign currency other than a

sale pursuant to a forward contract or

regulated futures contract that requires

delivery of foreign currency.

(x) Fractional share. No return of

information is required with respect to

a sale of a fractional share of stock if the

gross proceeds on the sale of the

fractional share are less than $20.

(xi) Certain retirements. No return of

information is required from an issuer

or its agent with respect to the

retirement of book entry or registered

form obligations as to which the

relevant books and records indicate that

no interim transfers have occurred.

(xii) Cross reference. For an exception

for certain sales of agricultural

commodities and certificates issued by

the Commodity Credit Corporation after

January 1, 1993, see paragraph (c)(7) of

this section.

(xiii) Effective date. The provisions of

this paragraph (c)(3) apply for sales

effected on or after the beginning of the

61298 Federal Register / Vol. 65, No. 201 / Tuesday, October 17, 2000 / Proposed Rules

first calendar year that begins after the

date these regulations are published in

the Federal Register as final regulations.

(4) Examples. The following examples

illustrate the application of the rules in

paragraph (c)(3) of this section:

Example 1. P, an individual who is not an

exempt recipient, places an order with B, a

person generally known in the investment

community to be a federally registered

broker/dealer, to sell P’s stock in a publicly

traded corporation. B, in turn, places an

order to sell the stock with C, a second

broker, which will execute the sale. B

discloses to C the identity of the customer

placing the order. C is not required to make

a return of information with respect to the

sale because C was instructed by B, an

exempt recipient as defined in paragraph

(c)(3)(i)(B)(6) of this section, to initiate the

sale. B is required to make a return of

information with respect to the sale because

P is B’s customer and is not an exempt

recipient.

Example 2. Assume the same facts as in

Example 1 except that B has an omnibus

account with C so that B does not disclose

to C whether the transaction is for a customer

of B or for B’s own account. C is not required

to make a return of information with respect

to the sale because C was instructed by B, an

exempt recipient as defined in paragraph

(c)(3)(i)(B)(6) of this section, to initiate the

sale. B is required to make a return of

information with respect to the sale because

P is B’s customer and is not an exempt

recipient.

Example 3. D, an individual who is not an

exempt recipient, enters into a cash on

delivery stock transaction by instructing K, a

federally registered broker/dealer, to sell

stock owned by D, and to deliver the

proceeds to L, a custodian bank.

Concurrently with the above instructions, D

instructs L to deliver D’s stock to K (or K’s

designee) against delivery of the proceeds

from K. The records of both K and L with

respect to this transaction show an account

in the name of D. Pursuant to paragraph

(h)(1) of this section, D is considered the

customer of K and L. Under paragraph

(c)(3)(iv) of this section, K is not required to

make a return of information with respect to

the sale because K will pay the gross

proceeds to L against delivery of the

securities sold. L is required to make a return

of information with respect to the sale

because D is L’s customer and is not an

exempt recipient.

Example 4. Assume the same facts as in

Example 3 except that E, a federally

registered investment adviser, instructs K to

sell stock owned by D and to deliver the

proceeds to L. Concurrently with the above

instructions, E instructs L to deliver D’s stock

to K (or K’s designee) against delivery of the

proceeds from K. The records of both K and

L with respect to the transaction show an

account in the name of D. Pursuant to

paragraph (h)(1) of this section, D is

considered the customer of K and L. Under

paragraph (c)(3)(iv) of this section, K is not

required to make a return of information with

respect to the sale because K will pay the

gross proceeds to L against delivery of the

securities sold. L is required to make a return

of information with respect to the sale

because D is L’s customer and is not an

exempt recipient.

Example 5. Assume the same facts as in

Example 4 except that the records of both K

and L with respect to the transaction show

an account in the name of E. Pursuant to

paragraph (h)(1) of this section, E is

considered the customer of K and L. Under

paragraph (c)(3)(iv) of this section, K is not

required to make a return of information with

respect to the sale because K will pay the

gross proceeds to L against delivery of the

securities sold. L is required to make a return

of information with respect to the sale

because E is L’s customer and is not an

exempt recipient. E is required to make a

return of information with respect to the sale

because D is E’s customer and is not an

exempt recipient.

Example 6. F, an individual who is not an

exempt recipient, owns bonds that are held

by G, a federally registered broker/dealer, in

an account for F with G designated as

nominee for F. Upon the retirement of the

bonds, the gross proceeds are automatically

credited to the account of F. G is required to

make a return of information with respect to

the retirement because G is the broker

responsible for making payments of the gross

proceeds to F.

* * * * *

§ 1.6045–2 [Amended]

Par. 5. In § 1.6045–2, paragraph

(b)(2)(ii), is amended by removing the

language ‘‘§ 5f.6045–1(c)(3)(i)(B) of the

Temporary Income Tax Regulations

under the Tax Equity and Fiscal

Responsibility Act of 1982’’ and adding

the language ‘‘§ 1.6045–1(c)(3)(i)(B)’’ in

its place.

Par. 6. In § 1.6049–4, as in effect on

January 1, 2001, paragraph (a)(2) is

revised to read as follows:

§ 1.6049–4 Return of information as to

interest paid and original issue discount

includible in gross income after December

31, 1982.

(a) * * *

(2) Payor. For payments made on or

after the beginning of the first calendar

year that begins after the date these

regulations are published in the Federal

Register as final regulations, a payor is

a person described in paragraph (a)(2)(i)

or (ii) of this section.

(i) Every person who makes a

payment of the type and of the amount

subject to reporting under this section

(or under an applicable section under

this chapter) to any other person during

a calendar year.

(ii) Every person who collects on

behalf of another person payments of

the type and of the amount subject to

reporting under this section (or under

an applicable section under this

chapter), or who otherwise acts as a

middleman (as defined in paragraph

(f)(4) of this section) with respect to

such payment.

* * * * *

PART 5f—TEMPORARY INCOME TAX

REGULATIONS UNDER THE TAX

EQUITY AND FISCAL RESPONSIBILITY

ACT OF 1982

Par. 7. The authority citation for part

5f is amended by removing the authority

citation for Sec. 5f.6045–1 to read in

part as follows:

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

§ 5f.6045–1 [Removed]

Par. 8. Section 5f.6045–1 is removed.

PART 31—EMPLOYMENT TAXES AND

COLLECTION OF INCOME TAX AT

SOURCE

Par. 9. The authority citation for part

31 continues to read in part as follows:

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

Par. 10. Section 31.3406–0 is

amended by:

1. Revising the entry for § 31.3406(a)–

2, paragraph (b).

2. Adding an entry for § 31.3406(a)–2,

paragraph (d).

The revision and addition read as

follows:

§ 31.3406–0 Outline of the backup

withholding regulations.

* * * * *

§ 31.3406(a)–2 Definition of payors

obligated to backup withhold.

* * * * *

(b) Persons treated as payors.

* * * * *

(d) Effective date.

* * * * *

Par. 11. Section 31.3406(a)–2 is

revised to read as follows:

§ 31.3406(a)–2 Definition of payors

obligated to backup withhold.

(a) In general. Payor means the person

that is required to make an information

return under section 6041, 6041A(a),

6042, 6044, 6045, 6049, 6050A, or

6050N, with respect to any reportable

payment (as described in section

3406(b)), or that is described in

paragraph (b) of this section.

(b) Persons treated as payors. The

following persons are treated as payors

for purposes of section 3406—

(1) A grantor trust established after

December 31, 1995, all of which is

owned by two or more grantors, and for

this purpose spouses filing a joint return

are considered to be one grantor;

(2) A grantor trust with ten or more

grantors established on or after January

1, 1984 but before January 1, 1996;

Federal Register / Vol. 65, No. 201 / Tuesday, October 17, 2000 / Proposed Rules 61299

(3) A common trust fund; and

(4) A partnership or an S corporation

that makes a reportable payment.

(c) Persons not treated as payors. The

following persons are not treated as

payors for purposes of section 3406 if

the person does not have a reporting

obligation under the section on

information reporting to which the

payment relates—

(1) A trust (other than a grantor trust

as described in paragraph (b)(1) or (2) of

this section) that files a Form 1041

containing information required to be

shown on an information return,

including amounts withheld under

section 3406; or

(2) A partnership making a payment

of a distributive share or an S

corporation making a similar

distribution.

(d) Effective date. The provisions of

this section apply to payments made on

or after the beginning of the first

calendar year that begins after these

regulations are published in the Federal

Register as final regulations.

§ 31.3406(a)–4 [Amended]

Par. 12. Section 31.3406(a)–4 is

amended as follows:

1. In paragraph (c)(1), first sentence,

removing the language ‘‘Any

middleman (as defined in § 31.3406(a)–

2(b))’’ and adding the language ‘‘A

middleman payor (as defined in

§ 31.3406(a)–2(b) or in the section on

information reporting to which the

payment relates)’’ in its place.

2. In paragraph (c)(3), first sentence,

removing the language ‘‘§ 31.3406(a)–

2(b)(4)’’ and adding the language

‘‘§ 31.3406(a)–2(b)(1) or (2)’’ in its place.

§ 31.3406(b)(3)–2 [Amended]

Par. 13. In § 31.3406(b)(3)–2,

paragraph (b)(5) is amended by

removing the language ‘‘§ 5f.6045–

1(c)(3)(ix)’’ and adding the language

‘‘§ 1.6045–1(c)(3)(x)’’ in its place.

§ 31.3406(d)–4 [Amended]

Par. 14. In § 31.3406(d)–4, paragraph

(a)(1) introductory text is amended by

removing the language ‘‘the payor of the

instrument (as defined in § 31.3406(a)–

2(b)(3)),’’ and adding the language ‘‘a

broker holding a security (including

stock) for a customer in street name,’’ in

its place.

§ 31.3406(h)–1 [Amended]

Par. 15. In § 31.3406(h)–1, paragraph

(c), second sentence, is amended by

removing the language ‘‘§ 5f.6045–

1(c)(3)(ii) and (iii)’’ and adding the

language ‘‘§ 1.6045–1(c)(3)(iii) and (iv)’’

in its place.

§ 31.3406(h)–2 [Amended]

Par. 16. Section 31.3406(h)–2 is

amended as follows:

1. In paragraph (c), third sentence,

removing the language ‘‘with two or

more grantors described in § 31.3406(a)–

2(b)(4), which is treated as a middleman

payor’’ and adding the language

‘‘described in § 31.3406(a)–2(b)(1) or (2),

which is treated as a payor’’ in its place.

2. In paragraph (d), first sentence,

removing the language ‘‘A middleman

payor (as defined in § 31.3406(a)–2(b)’’

and adding the language ‘‘A middleman

payor (as defined in § 31.3406(a)–2(b) or

in the section on information reporting

to which the payment relates)’’ in its

place.

3. In paragraph (f)(6), removing the

language ‘‘§ 31.3406(a)–2(a)’’ and adding

the language ‘‘§ 31.3406(a)–2’’ in its

place.

Robert E. Wenzel,

Deputy Commissioner of Internal Revenue.

[FR Doc. 00–26204 Filed 10–16–00; 8:45 am]

BILLING CODE 4830–01–U

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 73

[DA 00–2303, MM Docket No. 00–198, RM–

9980]

Digital Television Broadcast Service;

Corpus Christi, TX

AGENCY: Federal Communications

Commission.

ACTION: Proposed rule.

SUMMARY: The Commission requests

comments on a petition filed by KVOA

Communications, Inc., licensee of

station KRIS–TV, NTSC Channel 6,

Corpus Christi, Texas, requesting the

substitution of DTV 13 for station KRIS–

TV’s assigned DTV Channel 50. DTV

Channel 13 can be allotted to Corpus

Christi, Texas, in compliance with the

principle community coverage

requirements of section 73.625(a) at

reference coordinates 27–44–28 N and

97–36–08 W with a power of 160 (kW)

and a height above average terrain

(HAAT) of 291 meters. However, since

the community of Corpus Christi is

located within 275 kilometers of the

U.S.-Mexican border, concurrence by

the Mexican government must be

obtained for this allotment.

DATES: Comments must be filed on or

before December 4, 2000, and reply

comments on or before December 19,

2000.

ADDRESSES: Federal Communications

Commission, 445 12th Street, SW.,

Room TW–A325, Washington, DC

20554. In addition to filing comments

with the FCC, interested parties should

serve the petitioner, or its counsel or

consultant, as follows: Scott S. Patrick,

Dow, Lohnes & Albertson, 1200 New

Hampshire Avenue, NW., Suite 800,

Washington, DC 20036–6802 (Counsel

for KVOA Communications, Inc.).

FOR FURTHER INFORMATION CONTACT: Pam

Blumenthal, Mass Media Bureau, (202)

418–1600.

SUPPLEMENTARY INFORMATION: This is a

synopsis of the Commission’s Notice of

Proposed Rule Making, MM Docket No.

00–198, adopted October 12, 2000, and

released October 13, 1999. The full text

of this Commission decision is available

for inspection and copying during

normal business hours in the FCC

Reference Center, 445 12th Street, SW.,

Washington, DC. The complete text of

this decision may also be purchased

from the Commission’s copy contractor,

International Transcription Services,

Inc., (202) 857–3800, 1231 20th Street,

NW., Washington, DC 20036.

Provisions of the Regulatory

Flexibility Act of 1980 do not apply to

this proceeding.

Members of the public should note

that from the time a Notice of Proposed

Rule Making is issued until the matter

is no longer subject to Commission

consideration or court review, all ex

parte contacts are prohibited in

Commission proceedings, such as this

one, which involve channel allotments.

See 47 CFR 1.1204(b) for rules

governing permissible ex parte contacts.

For information regarding proper

filing procedures for comments, see 47

CFR 1.415 and 1.420.

Federal Communications Commission.

Barbara A. Kreisman,

Chief, Video Services Division, Mass Media

Bureau.

[FR Doc. 00–26666 Filed 10–16–00; 8:45 am]

BILLING CODE 6712–01–P