10650 Federal Register / Vol. 66, No. 33 / Friday, February 16, 2001 / Proposed Rules

(3) The amount of total contract price

reported by year;

(4) The numerator and the

denominator of the completion factor by

year;

(5) The due date (not including

extensions) of the old taxpayer’s income

tax returns for each taxable year in

which income was required to be

reported;

(6) Whether the old taxpayer was a

corporate or a noncorporate taxpayer by

year; and

(7) Any other information required by

the Commissioner by administrative

pronouncement.

(iii) Application of look-back method

to post-transaction years. With respect

to post-transaction taxable years, the

new taxpayer must use the same lookback method it uses for other contracts

(i.e., the simplified marginal impact

method or the actual method) to

determine the amount of any

hypothetical overpayment or

underpayment of tax and the time

period for computing interest on these

amounts.

* * * * *

David A. Mader,

Acting Deputy Commissioner of Internal

Revenue.

[FR Doc. 01–1992 Filed 2–15–01; 8:45 am]

BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 40

[REG–106892–00]

RIN 1545–AX11

Deposits of Excise Taxes

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains

proposed regulations relating to the

requirements for excise tax returns,

payments, and deposits. These

regulations affect persons required to

report liability for excise taxes on Form

720, ‘‘Quarterly Federal Excise Tax

Return.’’

DATES: Written and electronic comments

and requests for a public hearing must

be received by May 17, 2001.

ADDRESSES: Send submissions to:

CC:M&SP:RU (REG–106892–00), room

5226, Internal Revenue Service, POB

7604, Ben Franklin Station, Washington,

DC 20044. 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–106892–00),

Courier’s Desk, Internal Revenue

Service, 1111 Constitution Avenue NW.,

Washington, DC. Alternatively,

taxpayers may send submissions

electronically via the Internet by

selecting the ‘‘Tax Regs’’ option on the

IRS Home Page, or directly to the IRS

Internet site at http://www.irs.gov/

taxlregs/regslist.html.

FOR FURTHER INFORMATION CONTACT:

Concerning submissions, Guy Traynor,

(202) 622–7180; concerning the

regulations, Susan Athy (202) 622–3130

(not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed

amendments to the Excise Tax

Procedural Regulations (26 CFR part 40)

relating to the requirements for excise

tax returns, payments, and deposits. On

January 7, 2000, an advance notice of

proposed rulemaking was published in

the Federal Register (65 FR 1076) that

invited comments from the public on

issues relating to the requirements for

excise tax returns and deposits. Several

written comments were received that

were considered in drafting these

proposed regulations.

The advance notice requested

comments on: whether there should be

a single deposit date for all excise taxes

(other than those deposited under the

alternative method), such as 14 days

after the end of the semimonthly period;

whether a taxpayer should be required

to deposit only 95 percent of tax

liability incurred for the semimonthly

period (in lieu of the current

requirement of 100 percent with safe

harbor rules); and whether the amount

required to be deposited for a quarter

should be computed without reduction

for the amounts of any claims made on

Schedule C of the Form 720 for that

quarter.

In general, commentators from the air

transportation industry requested that

the one-month filing extension provided

to those reporting communications, air

transportation, and ozone-depleting

chemical taxes be retained because

airlines need additional time to

determine the proper amount of tax

liability. The IRS and Treasury believe

the need for additional time is

adequately addressed by the retention of

the alternative method for making

deposits of communications and air

transportation taxes. Filers choosing to

use the alternative method for making

deposits of these taxes also are allowed

additional time to determine the amount

of tax liability. For example, under the

alternative method, the activity for

December, January, and February is

reported as tax liability for January,

February, and March on the Form 720

due April 30th. Thus, even without the

one-month filing extension, filers

reporting under the alternative method

have two months after the last activity

to determine the amount of tax liability

to be reported. In addition, retention of

an extended filing date for certain

industries would be inconsistent with

the simplification and overall fairness

sought to be achieved by these changes.

Accordingly, the proposed amendments

eliminate the one-month filing

extension that is now allowed for

returns related to taxes imposed by

chapter 33 (relating to communications

and air transportation) and section 4681

(relating to ozone-depleting chemicals)

and require that all Forms 720 be filed

by the last day of the month following

the quarter for which the return is made.

Commentators generally supported a

single deposit date for all taxes other

than those deposited under the

alternative method (regular method

taxes). The proposed amendments

provide that deposits for regular method

taxes for a semimonthly period are due

by the 14th day of the following

semimonthly period. The proposed

amendments change the requirement to

deposit by class of tax. The 9-day rule,

14-day rule, and 30-day rule taxes are

eliminated. Instead there are two

classes: regular method and alternative

method.

Commentators generally supported a

reduction in the amount of the required

deposit for a semimonthly period from

100 percent of net tax liability to 95

percent of net tax liability. However,

they requested that the look-back

quarter safe harbor rule be retained. One

commentator noted that the look-back

quarter safe harbor rule is easy for

taxpayers to use and provides a way for

taxpayers to meet the deposit

requirements when taxpayers have not

determined their liability for the current

semimonthly period. Finally, some

commentators requested that the

provisions allowing deposits to be

reduced by Schedule C claims be

retained to avoid economic hardship.

The proposed amendments adopt the

suggestions of these commentators.

The proposed amendments require

the deposit of at least 95 percent of net

tax liability incurred during the

semimonthly period. This rule replaces

both the requirement to deposit 100

percent of net tax liability and the safe

harbor rule for taxpayers depositing 95

percent of their current liability. The

new requirement is, in fact, more

generous than the current safe harbor,

Federal Register / Vol. 66, No. 33 / Friday, February 16, 2001 / Proposed Rules 10651

which applies only if the 95-percent

deposit requirement is met for each

semimonthly period in the quarter.

Under the proposed amendments, a

taxpayer that deposits 95 percent of net

tax liability for a semimonthly period

will satisfy the deposit requirement for

that period even if less than 95 percent

of net tax liability is deposited for one

or more of the other semimonthly

periods in the quarter.

The proposed amendments retain the

look-back quarter liability safe harbor

rule for taxpayers depositing taxes that

were in effect during the look-back

quarter. The proposed amendments to

the deposit requirements and the safe

harbor rule apply to all excise tax

deposits, including deposits made

under the alternative method. Finally,

the proposed amendments continue to

allow deposits to be reduced by

Schedule C claims.

Proposed Effective Date

The regulations are proposed to be

applicable with respect to returns and

deposits that relate to calendar quarters

beginning on or after the date of

publication of the final regulations in

the Federal Register.

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

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 and, because these

regulations do not impose on small

entities a collection of information

requirement, the Regulatory Flexibility

Act (5 U.S.C. chapter 6) does not apply.

Therefore, a Regulatory Flexibility

Analysis is not required. 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.

Comments and Requests for a Public

Hearing

Before these proposed regulations are

adopted as final regulations,

consideration will be given to any

electronic and written comments that

are submitted timely to the IRS. The IRS

and Treasury Department specifically

request comments on the clarity of the

proposed regulations and how they may

be made easier to understand. All

comments will be available for public

inspection and copying. A public

hearing may be scheduled if requested

in writing by any person that timely

submits written comments. If a public

hearing is scheduled, notice of the date,

time, and place for the hearing will be

published in the Federal Register.

Drafting Information

The principal author of these

regulations is Susan Athy, Office of

Associate Chief Counsel (Passthroughs

and Special Industries). However, other

personnel from the IRS and Treasury

Department participated in their

development.

List of Subjects in 26 CFR Part 40

Excise taxes, Reporting and

recordkeeping requirements.

Proposed Amendments to the

Regulations

Accordingly, 26 CFR part 40 is

proposed to be amended as follows:

PART 40—EXCISE TAX PROCEDURAL

REGULATIONS

Paragraph 1. The authority citation

for part 40 is amended by removing the

entries for Sections 40.6071(a)–1 and

40.6071(a)–2 and Sections 40.6302(c)–2,

40.6302(c)–3, and 40.6302(c)–4; and

adding entries in numerical order to

read in part as follows:

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

Section 40.6071(a)–1 also issued under 26

U.S.C. 6071(a). * * *

Section 40.6302(c)–2 also issued under 26

U.S.C. 6302(a).

Section 40.6302(c)–3 also issued under 26

U.S.C. 6302(a).

§ 40.0–1 [Amended]

Par. 2. Section 40.0–1 is amended as

follows:

1. Paragraphs (d) and (e) are removed.

2. Paragraph (f) is redesignated as new

paragraph (d).

§ 40.6011(a)–1 [Amended]

Par. 3. Section 40.6011(a)–1 is

amended by removing paragraph (c).

§ 40.6011(a)–2 [Amended]

Par. 4. Section 40.6011(a)–2 is

amended as follows:

1. In paragraph (b)(2), the language

‘‘§ 40.6302(c)–1(f)(2)’’ is removed and

‘‘§ 40.6302(c)–1(e)(2)’’ is added in its

place.

2. Paragraph (d) is removed.

Par. 5. Section 40.6071(a)–1 is

amended by revising paragraphs (a),

(b)(2), and (c) to read as follows:

§ 40.6071(a)–1 Time for filing returns.

(a) Quarterly returns. Each quarterly

return required under § 40.6011(a)–

1(a)(2) must be filed by the last day of

the first calendar month following the

quarter for which it is made.

(b) * * *

(2) Semimonthly returns. Each

semimonthly return required under

§ 40.6011(a)–1(b) must be filed by the

last day of the semimonthly period (as

defined in § 40.0–1(c)) following the

semimonthly period for which it is

made.

(c) Effective date. This section is

applicable with respect to returns that

relate to calendar quarters beginning on

or after the date of publication of the

final regulations in the Federal Register.

§ 40.6071(a)–2 [Removed]

Par. 6. Section 40.6071(a)–2 is

removed.

§ 40.6091–1 [Amended]

Par. 7. Section 40.6091–1 is amended

by removing paragraph (d).

Par. 8. Section 40.6101–1 is revised to

read as follows:

§ 40.6101–1 Period covered by returns.

See § 40.6011(a)–1(a)(2) for the rules

relating to the period covered by the

return.

Par. 9. Sections 40.6109(a)–1 and

40.6151(a)–1 are revised to read as

follows:

§ 40.6109(a)–1 Identifying numbers.

Every person required under

§ 40.6011(a)–1 to make a return must

provide the identifying number required

by the instructions applicable to the

form on which the return is made.

§ 40.6151(a)–1 Time and place for paying

tax shown on return.

Except as provided by statute, the tax

must be paid at the time prescribed in

§ 40.6071(a)–1 for filing the return, and

at the place prescribed in § 40.6091–1

for filing the return.

Par. 10. Section 40.6302(c)–1 is

revised to read as follows:

§ 40.6302(c)–1 Use of Government

depositaries.

(a) In general—(1) Semimonthly

deposits required. Except as provided by

statute or by paragraph (e) of this

section, each person required under

§ 40.6011(a)–1(a)(2) to file a quarterly

return must make a deposit of tax for

each semimonthly period (as defined in

§ 40.0–1(c)) in which tax liability is

incurred.

(2) Treatment of taxes imposed by

chapter 33. For purposes of this part 40,

tax imposed by chapter 33 (relating to

communications and air transportation)

is treated as a tax liability incurred

during the semimonthly period—

(i) In which that tax is collected; or

(ii) In the case of the alternative

method, in which that tax is considered

as collected.

10652 Federal Register / Vol. 66, No. 33 / Friday, February 16, 2001 / Proposed Rules

(3) Definition of net tax liability. Net

tax liability means the tax liability for

the specified period plus or minus any

adjustments allowable in accordance

with the instructions applicable to the

form on which the return is made.

(4) Computation of net tax liability for

a semimonthly period. The net tax

liability for a semimonthly period may

be computed by—

(i) Determining the net tax liability

incurred during the semimonthly

period; or

(ii) Dividing by two the net tax

liability incurred during the calendar

month that includes that semimonthly

period, provided that this method of

computation is used for all semimonthly

periods in the calendar quarter.

(b) Amount of deposit—(1) In general.

The deposit of tax for each semimonthly

period must be not less than 95 percent

of the amount of net tax liability

incurred during the semimonthly

period.

(2) Safe harbor rules—(i)

Applicability. The safe harbor rules of

this paragraph (b)(2) are applied

separately to taxes deposited under the

alternative method provided in

§ 40.6302(c)–3 (alternative method

taxes) and to the other taxes for which

deposits are required under this section

(regular method taxes).

(ii) Regular method taxes. Any person

that made a return of tax reporting

regular method taxes for the second

preceding calendar quarter (the lookback quarter) is considered to have

complied with the requirement of this

part 40 for deposit of regular method

taxes for the current calendar quarter

if—

(A) The deposit of regular method

taxes for each semimonthly period in

the current calendar quarter is not less

than 1⁄6 of the net tax liability for regular

method taxes reported for the look-back

quarter;

(B) Each deposit is made on time;

(C) The amount of any underpayment

of regular method taxes is paid by the

due date of the return; and

(D) The person’s liability does not

include any regular method tax that was

not imposed at all times during the

look-back quarter or a tax on a chemical

not subject to tax at all times during the

look-back quarter.

(iii) Alternative method taxes. Any

person that made a return of tax

reporting alternative method taxes for

the look-back quarter is considered to

have complied with the requirement of

this part 40 for deposit of alternative

method taxes for the current calendar

quarter if—

(A) The deposit of alternative method

taxes for each semimonthly period in

the current calendar quarter is not less

than 1⁄6 of the net tax liability for

alternative method taxes reported for

the look-back quarter;

(B) Each deposit is made on time;

(C) The amount of any underpayment

of alternative method taxes is paid by

the due date of the return; and

(D) The person’s liability does not

include any alternative method tax that

was not imposed at all times during the

look-back quarter and the month

preceding the look-back quarter.

(iv) Modification for tax rate increase.

The safe harbor rules of this paragraph

(b)(2) do not apply to regular method

taxes or alternative method taxes for the

first and second calendar quarters

beginning on or after the effective date

of an increase in the rate of any tax to

which this part 40 applies unless the

deposit of those taxes for each

semimonthly period in the calendar

quarter is not less than 1⁄6 of the tax

liability the person would have had

with respect to those taxes for the lookback quarter if the increased rate of tax

had been in effect for the look-back

quarter.

(v) Failure to comply with deposit

requirements. If a person fails to make

deposits as required under this part 40,

that failure may be reported to the

appropriate IRS office and the IRS may

withdraw the person’s right to use the

safe harbor rules of this paragraph (b)(2).

(c) Time to deposit—(1) In general.

The deposit of tax for any semimonthly

period must be made by the 14th day of

the following semimonthly period

unless such day is a Saturday, Sunday,

or legal holiday in the District of

Columbia in which case the

immediately preceding day which is not

a Saturday, Sunday, or legal holiday in

the District of Columbia is treated as the

14th day. Thus, generally, the deposit of

tax for the first semimonthly period in

a month is due by the 29th day of that

month and the deposit of tax for the

second semimonthly period in a month

is due by the 14th day of the following

month.

(2) Exceptions. See § 40.6302(c)–2 for

the special rules for September. See

§ 40.6302(c)–3 for the special rules for

deposits under the alternative method.

(d) Remittance of deposits—(1)

Deposits by federal tax deposit coupon.

A completed Form 8109, ‘‘Federal Tax

Deposit Coupon,’’ must accompany each

deposit. The deposit must be remitted,

in accordance with the instructions

applicable to the form, to a financial

institution authorized as a depositary

for federal taxes (as provided in 31 CFR

part 203).

(2) Deposits by electronic funds

transfer. For the requirement to deposit

excise taxes by electronic funds transfer,

see § 31.6302–1(h) of this chapter. A

taxpayer not required to deposit by

electronic funds transfer pursuant to

§ 31.6302–1(h) of this chapter remains

subject to the rules of this paragraph (d).

(e) Exceptions—(1) Taxes excluded.

No deposit is required in the case of the

taxes imposed by—

(i) Section 4042 (relating to fuel used

on inland waterways);

(ii) Section 4161 (relating to sport

fishing equipment and bows and arrow

components);

(iii) Section 4682(h) (relating to floor

stocks tax on ozone-depleting

chemicals); and

(iv) Section 48.4081–3(b)(1)(iii) of this

chapter (relating to certain removals of

gasohol from refineries).

(2) One-time filings. No deposit is

required in the case of any taxes

reportable on a one-time filing (as

defined in § 40.6011(a)–2(b)).

(3) De minimis exception. For any

calendar quarter, no deposit is required

if the net tax liability for the quarter

does not exceed $2,500.

(f) Effective date. This section is

applicable with respect to deposits that

relate to calendar quarters beginning on

or after the date of publication of the

final regulations in the Federal Register.

Par. 11. Section 40.6302(c)–2 is

revised to read as follows:

§ 40.6302(c)–2 Special rules for

September.

(a) In general—(1) Separate deposits

required for the second semimonthly

period. In the case of deposits of taxes

not deposited under the alternative

method (regular method taxes) for the

second semimonthly period in

September, separate deposits are

required for the period September 16th

through 26th and for the period

September 27th through 30th.

(2) Amount of deposit—(i) In general.

The deposits of regular method taxes for

the period September 16th through 26th

and the period September 27th through

30th must be not less than 95 percent

of the net tax liability for regular

method taxes incurred during the

respective periods. The net tax liability

for regular method taxes incurred

during these periods may be computed

by—

(A) Determining the amount of net tax

liability for regular method taxes

reasonably expected to be incurred

during the second semimonthly period

in September;

(B) Treating 11⁄15 of the amount

determined under paragraph (a)(2)(i)(A)

of this section as the net tax liability for

regular method taxes incurred during

the period September 16th through

26th; and

Federal Register / Vol. 66, No. 33 / Friday, February 16, 2001 / Proposed Rules 10653

(C) Treating the remainder of the

amount determined under paragraph

(a)(2)(i)(A) of this section (adjusted to

reflect the amount of net tax liability for

regular method taxes actually incurred

through the end of September) as the net

tax liability for regular method taxes

incurred during the period September

27th through 30th.

(ii) Safe harbor rules. The safe harbor

rules in § 40.6302(c)–1(b)(2) do not

apply for the third calendar quarter

unless—

(A) The deposit of taxes for the period

September 16th through 26th is not less

than 11⁄90 of the net tax liability for

regular method taxes reported for the

look-back quarter; and

(B) The total deposit of taxes for the

second semimonthly period in

September is not less than 1⁄6 of the net

tax liability for regular method taxes

reported for the look-back quarter.

(3) Time to deposit. (i) The deposit

required for the period beginning

September 16th must be made by

September 29th unless—

(A) September 29th is a Saturday, in

which case the deposit must be made by

September 28th; or

(B) September 29th is a Sunday, in

which case the deposit must be made by

September 30th.

(ii) The deposit required for the

period ending September 30th must be

made at the time prescribed in

§ 40.6302(c)–1(c).

(b) Persons not required to use

electronic funds transfer. The rules of

this section are applied with the

following modifications in the case of a

person not required to deposit taxes by

electronic funds transfer.

(1) Periods. The deposit periods for

the separate deposits required under

paragraph (a) of this section are

September 16th through 25th and

September 26th through 30th.

(2) Amount of deposit. In computing

the amount of deposit required under

paragraph (a)(2)(i)(B) of this section, the

applicable fraction is 10⁄15. In computing

the amount of deposit required under

paragraph (a)(2)(ii)(A) of this section,

the applicable fraction is 10⁄90.

(3) Time to deposit. In the case of the

deposit required under paragraph (a) of

this section for the period beginning

September 16th, the deposit must be

made by September 28th unless—

(i) September 28th is a Saturday, in

which case the deposit must be made by

September 27th; or

(ii) September 28th is a Sunday, in

which case the deposit must be made by

September 29th.

(c) Effective date. This section is

applicable with respect to deposits that

relate to calendar quarters beginning on

or after the date of publication of the

final regulations in the Federal Register.

Par. 12. Section 40.6302(c)–3 is

amended as follows:

1. In paragraph (b)(1)(ii), the language

‘‘9-day rule of § 40.6302(c)–1(b)(6)’’ is

removed and ‘‘rule of § 40.6302(c)–

1(c)(1)’’ is added in its place.

2. In paragraph (b)(3), second

sentence, the language ‘‘6th’’ is removed

and ‘‘16th’’ is added in its place.

3. In paragraph (d), first sentence, the

language ‘‘not less than’’ is removed and

‘‘not less than 95 percent of’’ is added

in its place.

4. In paragraph (f)(4), the language

‘‘§ 40.6302(c)–1(c)(2)(i)’’ is removed and

‘‘§ 40.6302(c)–1(b)(2)’’ is added in its

place.

5. Paragraph (f)(5) is removed.

6. Paragraphs (f)(6) and (f)(7) are

redesignated as paragraphs (f)(5) and

(f)(6), respectively.

7. Paragraph (g) is revised.

8. Paragraph (h) is removed.

The revision reads as follows:

§ 40.6302(c)-3 Special rules for use of

Government depositaries under chapter 33.

* * * * *

(g) Effective date. This section is

applicable with respect to deposits of

taxes that are considered as collected in

calendar quarters beginning on or after

the date of publication of the final

regulations in the Federal Register and

to returns of tax for calendar quarters

beginning on or after the date of

publication of the final regulations in

the Federal Register.

§ 40.6302(c)–4 [Removed]

Par. 13. Section 40.6302(c)–4 is

removed.

§ 40.9999–1 [Removed]

Par. 14. Section 40.9999–1 is

removed.

Robert E. Wenzel,

Deputy Commissioner of Internal Revenue.

[FR Doc. 01–1120 Filed 2–15–01; 8:45 am]

BILLING CODE 4830–01–P

FEDERAL EMERGENCY

MANAGEMENT AGENCY

44 CFR Part 67

[Docket No. FEMA–D–7506]

Proposed Flood Elevation

Determinations

AGENCY: Federal Emergency

Management Agency, FEMA.

ACTION: Proposed rule.

SUMMARY: Technical information or

comments are requested on the

proposed base (1% annual chance) flood

elevations and proposed base flood

elevation modifications for the

communities listed below. The base

flood elevations are the basis for the

floodplain management measures that

the community is required either to

adopt or to show evidence of being

already in effect in order to qualify or

remain qualified for participation in the

National Flood Insurance Program

(NFIP).

DATES: The comment period is ninety

(90) days following the second

publication of this proposed rule in a

newspaper of local circulation in each

community.

ADDRESSES: The proposed base flood

elevations for each community are

available for inspection at the office of

the Chief Executive Officer of each

community. The respective addresses

are listed in the following table.

FOR FURTHER INFORMATION CONTACT:

Matthew B. Miller, P.E., Chief, Hazards

Study Branch, Mitigation Directorate,

Federal Emergency Management

Agency, 500 C Street SW., Washington,

DC 20472, (202) 646–3461, or (email)

matt.miller@fema.gov.

SUPPLEMENTARY INFORMATION: The

Federal Emergency Management Agency

(FEMA or Agency) proposes to make

determinations of base flood elevations

and modified base flood elevations for

each community listed below, in

accordance with section 110 of the

Flood Disaster Protection Act of 1973,

42 U.S.C. 4104, and 44 CFR 67.4(a).

These proposed base flood and

modified base flood elevations, together

with the floodplain management criteria

required by 44 CFR 60.3, are the

minimum that are required. They

should not be construed to mean that

the community must change any

existing ordinances that are more

stringent in their floodplain

management requirements. The

community may at any time enact

stricter requirements of its own, or

pursuant to policies established by other

Federal, state or regional entities. These

proposed elevations are used to meet

the floodplain management

requirements of the NFIP and are also

used to calculate the appropriate flood

insurance premium rates for new

buildings built after these elevations are

made final, and for the contents in these

buildings.

National Environmental Policy Act.

This proposed rule is categorically

excluded from the requirements of 44

CFR part 10, Environmental

Consideration. No environmental

impact assessment has been prepared.