34594 Federal Register / Vol. 63, No. 122 /Thursday, June 25, 1998 /Rules and Regulations

contract that is specified in the

proposed settlement.

Recently, the Commission has been

shortening the time period in which

divestiture is to take place and has more

frequently included specific approved

acquirers and reference specific

divestiture agreements in proposed

orders when the Commission accepts

proposed orders for public comment.

This trend has increased the likelihood

that the divestiture transaction will

occur before there is a final order

requiring divestiture. In these

circumstances, Rule 802.70 as written,

because it applies only to final orders,

does not provide an exemption.

Nevertheless, the same reasons to

exclude from the HSR filing

requirements divestitures after the order

is entered also apply in cases where the

proposed order identifies the acquirer

and the divestiture contract. The

agencies have already had an

opportunity comparable to that which

HSR provides to weigh the competitive

impact of proposed transaction and to

approve or disapprove the transaction.

There is therefore no need for a separate

HSR filing.

The Federal Trade Commission

believes that an acquisition of assets or

voting securities pursuant to the terms

of a proposed order of divestiture is

unlikely to violate the antitrust laws and

that exempting such acquisitions is

necessary and appropriate to carry out

the purposes of the act. Accordingly, the

Commission has amended § 802.70 of its

premerger notification rules to exempt

such acquisitions from premerger

reporting requirements.

The following section outlines briefly

the rationale for this rulemaking.

Subsequent sections discuss certain key

issues concerning the Commission’s

authority to promulgate § 802.70, and

the nature of the new rule.

Statement of the Underlying Problem

The purpose of section 7A of the

Clayton Act is clear: to give the antitrust

agencies an opportunity to determine

whether a proposed acquisition might

violate the antitrust laws and an

opportunity to challenge any such

transaction prior to consummation. At

the same time, the program is not

without cost, including the cost of

filling out the form, filing fees, delaying

transactions and otherwise. For

transactions that do not rise significant

issues under the antitrust laws these

costs can be particularly burdensome.

The Commission has continually

reviewed the premerger notification

program in an effort to increase its

efficiency and decrease the burden on

filing parties. This rulemaking

proceeding is part of this effort.

Analysis of Proposed Revised Rule

802.70

Revised rule 802.70 exempts

completely from HSR premerger

notification requirements acquisitions

pursuant to a divestiture order once the

order is accepted by the Commission for

public comment or is filed with the

Federal court for public comment. It

does so because the Commission

believes that such transactions, having

received a full review and been

accepted by the Commission or the

Antitrust Division, are not likely to

violate the antitrust laws and because

exempting such acquisitions is

necessary and appropriate to carry out

the purposes of the act.

In deciding to revise rule 802.70, the

Commission relied upon its own

extensive merger enforcement

experience, as well as that of the

Antitrust Division of the Department of

Justice.

Congress expressly has authorized the

Commission, with the concurrence of

the Assistant Attorney General, to

‘‘exempt from requirements of [the act],

classes of * * * transactions which are

not likely to violate the antitrust laws.’’

Section 7A(d)(2)(B) of the Act. The

finding required by the statute can be

demonstrated in different ways. The

Commission can exempt a class of

transactions because that class of

transactions is inherently unlikely to be

anticompetitive. Acquisitions pursuant

to divestiture orders are inherently

unlikely to be anticompetitive. Such

transactions are already subject to the

approval of the agencies and such

approval would not be granted if the

transaction would be anticompetitive.

This is true whether or not the

divestiture order is final. Accordingly,

there is no need for a separate HSR

filing.

List of Subjects in 16 CFR Part 802

Antitrust.

Final Rule

The Commission amends Title 16b

Chapter I, Subpart H, The Code of

Federal Regulations as follows:

PART 802—EXEMPTION RULES

1. Authority. The authority citation

for Part 802 continues to read as

follows:

Authority: Sec. 7A(d) of the Clayton Act,

15 U.S.C. 18a(d), as added by sec. 201 of the

Hart-Scott-Rodino Antitrust Improvements

Act of 1976, Pub. L. No. 94–435, 90 Stat.

1390.

2. Section 802.70 is revised to read as

follows:

§ 802.70 Acquisitions subject to order.

An acquisition shall be exempt from

the requirements of the act if the voting

securities or assets are to be acquired

from an entity pursuant to and in

accordance with:

(a) An order of the Federal Trade

Commission or of any Federal court in

an action brought by the Federal Trade

Commission or the Department of

Justice;

(b) An Agreement Containing Consent

Order that has been accepted by the

Commission for public comment,

pursuant to the Commission’s Rules of

Practice; or

(c) A proposal for a consent judgment

that has been submitted to a Federal

court by the Federal Trade Commission

or the Department of Justice and that is

subject to public comment.

Donald S. Clark,

Secretary.

[FR Doc. 98–16954 Filed 6–24–98; 8:45 am]

BILLING CODE 6750–01–M

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 8773]

RIN 1545–AV62

EIC Eligibility Requirements

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Temporary regulations.

SUMMARY: This document contains

temporary regulations that provide

guidance to taxpayers who have been

denied the earned income credit (EIC) as

a result of the deficiency procedures

and wish to claim the EIC in a

subsequent year. The temporary

regulations apply to taxpayers claiming

the EIC for taxable years beginning after

December 31, 1997, where the

taxpayer’s EIC claim was denied for a

taxable year beginning after December

31, 1996. The text of these temporary

regulations also serves as the text of

proposed regulations set forth in the

notice of proposed rulemaking on this

subject in the Proposed Rules section of

this issue of the Federal Register.

DATES: Effective date: June 25, 1998.

Applicability dates: For dates of

applicability, see § 1.32–3T(f) of these

regulations.

FOR FURTHER INFORMATION CONTACT:

Karin Loverud at 202–622–6060 (not a

toll-free number).
Federal Register / Vol. 63, No. 122 /Thursday, June 25, 1998 /Rules and Regulations 34595

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

These regulations are being issued

without prior notice and public

procedure pursuant to the

Administrative Procedure Act (5 U.S.C.

553). For this reason, the collection of

information contained in these

regulations has been reviewed and,

pending receipt and evaluation of

public comments, approved by the

Office of Management and Budget under

control number 1545–1575. 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 it displays a valid

control number assigned by the Office of

Management and Budget.

For further information concerning

this collection of information, and

where to submit comments on the

collection of information and the

accuracy of the estimated burden, and

suggestions for reducing this burden,

please refer to the preamble to the crossreferencing notice of proposed

rulemaking published in the Proposed

Rules section of this issue of the Federal

Register.

Books or records relating to a

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

This document contains amendments

to the Income Tax Regulations (26 CFR

part 1) providing guidance relating to

the requirement that taxpayers who are

denied the EIC for a taxable year

demonstrate their eligibility to claim the

EIC in a subsequent taxable year. This

requirement is described in section

32(k)(2), which was added by section

1085(a)(1) of the Taxpayer Relief Act of

1997 (Public Law 105–34, 111 Stat.

788).

Section 32(k)(2) pertains to taxpayers

who are denied the EIC as a result of the

deficiency procedures under subchapter

B of chapter 63 (the deficiency

procedures). A taxpayer who has been

denied the EIC for any taxable year as

a result of the deficiency procedures is

ineligible to claim the EIC for a

subsequent taxable year unless the

taxpayer provides information required

by the Secretary demonstrating

eligibility for the EIC. If the taxpayer

demonstrates eligibility for the EIC, the

taxpayer is not required to provide this

information in the future unless the IRS

again denies the EIC as a result of the

deficiency procedures.

If the taxpayer fails to provide the

required information or the information

provided does not demonstrate

eligibility for the EIC, the requirements

of section 32(k)(2) are not satisfied. In

such circumstances, the IRS can treat

the failure to meet these requirements as

a mathematical or clerical error.

In the case of deficiencies attributable

to certain mathematical and clerical

errors, enumerated in section 6213(g),

the IRS is authorized to make a

summary assessment, without following

the normal deficiency procedures. In the

case of EIC claims, mathematical and

clerical errors can include both errors

that apply generally to all returns and

certain errors specific to the EIC. For

example, mathematical and clerical

errors include situations in which (1) a

taxpayer fails to provide a correct

taxpayer identification number required

under section 32, or (2) a taxpayer who

claims the EIC with respect to net

earnings from self-employment fails to

pay the proper amount of selfemployment tax on the net earnings. As

noted above, the IRS is now authorized

to treat failure to meet the requirements

of section 32(k)(2) as a mathematical or

clerical error.

Ineligibility for the EIC under these

new rules is subject to review by the

courts.

The new provision applies to

taxpayers who are denied the EIC on

their return for any taxable year

beginning after 1996.

Explanation of Provisions

A taxpayer who has been denied the

EIC, in whole or in part, as a result of

deficiency procedures is ineligible to

file a return claiming the EIC

subsequent to the denial until the

taxpayer provides evidence of eligibility

for the EIC. Deficiency procedures

include administrative procedures

(other than procedures related to

mathematical or clerical errors) that

result in an assessment of a deficiency

in tax, whether or not a notice of

deficiency is issued. To demonstrate

current eligibility, the regulations

require the taxpayer to complete Form

8862, Information To Claim Earned

Income Credit After Disallowance. Form

8862 contains a series of questions

designed to assist the IRS in

determining whether the taxpayer is

eligible to claim the EIC under section

32 for the subsequent taxable year. A

taxpayer fails to demonstrate eligibility

if, for example, the form is incomplete

or any item of information on the form

is incorrect or inconsistent with any

item on the return. If the taxpayer

properly demonstrates eligibility for the

EIC, the taxpayer is not required to

submit Form 8862 in the future unless

the IRS again denies the EIC as a result

of the deficiency procedures.

The regulations require the taxpayer

to attach Form 8862 to the first income

tax return on which the taxpayer claims

the EIC after the EIC has been denied as

a result of the deficiency procedures.

The EIC is denied as a result of the

deficiency procedures when an

assessment of a deficiency is made

(other than as a mathematical or clerical

error under section 6213(b)(1)).

The Treasury Department and the IRS

anticipate that the Commissioner of

Internal Revenue may require taxpayers

to provide documentary evidence in

addition to Form 8862. Whether or not

the Commissioner requires taxpayers to

provide documentary evidence in

addition to Form 8862, the

Commissioner may choose to examine

any return claiming the EIC for which

Form 8862 is required.

The regulations provide that if the

taxpayer fails to properly complete

Form 8862 or does not demonstrate

eligibility for the EIC, the provisions of

section 32(k)(2) are not satisfied. In such

circumstances, the IRS can deny the EIC

as a mathematical or clerical error under

section 6213(g)(2)(J) [(K)] (relating to the

omission of information required by

section 32(k)(2)). If a taxpayer’s claim

for the EIC is denied under section

6213(g)(2)(J) [(K)], the taxpayer must

attach Form 8862 to the next return for

which the EIC is claimed.

The regulations provide that if two

individuals marry after one has been

denied the EIC as a result of the

deficiency procedures, the eligibility

requirements apply when they file a

joint return and claim the EIC. For

example, two unmarried taxpayers have

qualifying children and claim the EIC.

The taxpayers subsequently marry. For

a taxable year preceding the marriage,

one of the taxpayers was denied the EIC

under the deficiency procedures and

has not established eligibility for a

subsequent year. In this situation, if

they claim the EIC for the taxable year

in which they marry, the demonstration

of eligibility rules will apply.

Special Analyses

It has been determined that these

regulations are 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

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

to these regulations.
34596 Federal Register / Vol. 63, No. 122 /Thursday, June 25, 1998 /Rules and Regulations

It is hereby certified that 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 underlying statute applies only to

individuals. Therefore, a Regulatory

Flexibility Analysis under the

Regulatory Flexibility Act (5 U.S.C.

chapter 6) is not required.

Pursuant to section 7805(f), these

temporary regulations will be submitted

to the Chief Counsel for Advocacy of the

Small Business Administration for

comment on their impact on small

business.

Drafting Information

The principal author of these

regulations is Karin Loverud of the

Office of the Associate Chief Counsel

(Employee Benefits and Exempt

Organizations), IRS. 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.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 1 is

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 1.32–3T is added to

read as follows:

§ 1.32–3T Eligibility requirements

(temporary).

(a) In general. A taxpayer who has

been denied the earned income credit

(EIC), in whole or in part, as a result of

the deficiency procedures under

subchapter B of chapter 63 (deficiency

procedures) is ineligible to file a return

claiming the EIC subsequent to the

denial until the taxpayer demonstrates

eligibility for the EIC in accordance with

paragraph (c) of this section. If a

taxpayer demonstrates eligibility for a

taxable year in accordance with

paragraph (c) of this section, the

taxpayer need not comply with those

requirements for any subsequent taxable

year unless the Service again denies the

EIC as a result of the deficiency

procedures.

(b) Denial of the EIC as a result of the

deficiency procedures. For purposes of

this section, denial of the EIC as a result

of the deficiency procedures occurs

when a tax on account of the EIC is

assessed as a deficiency (other than as

a mathematical or clerical error under

section 6213(b)(1)).

(c) Demonstration of eligibility. In the

case of a taxpayer to whom paragraph

(a) of this section applies, and except as

otherwise provided by the

Commissioner, no claim for the EIC

filed subsequent to the denial is allowed

unless the taxpayer properly completes

Form 8862, Information To Claim

Earned Income Credit After

Disallowance, demonstrating eligibility

for the EIC, and otherwise is eligible for

the EIC. If any item of information on

Form 8862 is incorrect or inconsistent

with any item on the return, the

taxpayer will be treated as not

demonstrating eligibility for the EIC.

The taxpayer must attach Form 8862 to

the taxpayer’s first income tax return on

which the taxpayer claims the EIC after

the EIC has been denied as a result of

the deficiency procedures.

(d) Failure to demonstrate eligibility.

If a taxpayer to whom paragraph (a) of

this section applies fails to satisfy the

requirements of paragraph (c) of this

section with respect to a particular

taxable year, the IRS can deny the EIC

as a mathematical or clerical error under

section 6213(g)(2)(J) [(K)].

(e) Special rule where one spouse

denied EIC. The eligibility requirements

set forth in this section apply to

taxpayers filing a joint return where one

spouse was denied the EIC for a taxable

year prior to marriage and has not

established eligibility as either an

unmarried or married taxpayer for a

subsequent taxable year.

(f) Effective date. This section applies

to returns claiming the EIC for taxable

years beginning after December 31,

1997, where the EIC was denied for a

taxable year beginning after December

31, 1996.

PART 602—OMB CONTROL NUMBERS

UNDER THE PAPERWORK

REDUCTION ACT

Par. 3. The authority citation for part

602 continues to read as follows:

Authority: 26 U.S.C. 7805.

Par. 4. In § 602.101, paragraph (c) is

amended by adding an entry to the table

in numerical order to read as follows:

§ 602.101 OMB Control numbers.

* * * * *

(c) * * *

CFR part or section where

identified and described

Current

OMB control No.

* * * * *

1.32–3T ..................................... 1545–1575

* * * * *

Michael P. Dolan,

Deputy Commissioner of Internal Revenue.

Approved: May 18, 1998.

Donald C. Lubick,

Assistant Secretary of the Treasury.

[FR Doc. 98–16840 Filed 6–24–98; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 250

RIN 1010–AC45

Redesignation of 30 CFR Part 250—Oil

And Gas And Sulphur Operations In

The Outer Continental Shelf;

Correction

AGENCY: Minerals Management Service

(MMS), Interior.

ACTION: Final rule; Corrections.

SUMMARY: MMS published in the

Federal Register of May 29, 1998 (63 FR

29478) a final rule commonly known as

the ‘‘Redesignation’’ rule which assigns

new section numbers to each section in

part 250 (Oil and Gas and Sulphur

Operations in the Outer Continental

Shelf). The purpose was so that MMS

can logically format the subparts in the

future without further renumbering. The

MMS needs to make several minor

corrections to the published document.

EFFECTIVE DATE: The rule is effective on

June 30, 1998.

FOR FURTHER INFORMATION CONTACT:

Kumkum Ray, Engineering and

Operations Division at (703) 787–1600.

SUPPLEMENTARY INFORMATION: The final

regulations contain several errors in the

redesignation table showing the

redesignated section containing

references to other regulation citations.

These may prove to be misleading and

are in need of correction. Only the lines

being corrected are included in the

following.

Correction of Publication

Accordingly, the publication on May

29, 1998 of the final regulations which

were the subject of FR Doc. 98–13249,

is corrected as follows:

1. On pages 29486 and 29487, in the

table of redesignation, the entries in the