3954 Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / Proposed Rules

determined for purposes of section 4974

is determined under section 457(d).

Q–7. With respect to which calendar

year is the excise tax under section 4974

imposed in the case in which the

amount not distributed is an amount

required to be distributed by April 1 of

a calendar year (by the employee’s or

individual’s required beginning date)?

A–7. In the case in which the amount

not paid is an amount required to be

paid by April 1 of a calendar year, such

amount is a required minimum

distribution for the previous calendar

year, i.e., for the employee’s or the

individual’s first distribution calendar

year. However, the excise tax under

section 4974 is imposed for the calendar

year containing the last day by which

the amount is required to be distributed,

i.e., the calendar year containing the

employee’s or individual’s required

beginning date, even though the

preceding calendar year is the calendar

year for which the amount is required

to be distributed. Pursuant to A–2 of

§ 1.401(a)(9)–5, amounts distributed in

the employee’s or individual’s first

distribution calendar year will reduce

the amount required to be distributed in

the next calendar year by the

employee’s or individual’s required

beginning date. There is also a required

minimum distribution for the calendar

year which contains the employee’s

required beginning date. Such

distribution is also required to be made

during the calendar year which contains

the employee’s required beginning date.

Q–8. Are there any circumstances

when the excise tax under section 4974

for a taxable year may be waived?

A–8. (a) Reasonable cause. The tax

under section 4974(a) may be waived if

the payee described in section 4974(a)

establishes to the satisfaction of the

Commissioner the following—

(1) The shortfall described in section

4974(a) in the amount distributed in any

taxable year was due to reasonable error;

and

(2) Reasonable steps are being taken to

remedy the shortfall.

(b) Automatic Waiver. The tax under

section 4974 will be automatically

waived, unless the Commissioner

determines otherwise, if—

(1) The payee described in section

4974(a) is an individual who is the sole

beneficiary and whose required

minimum distribution amount for a

calendar year is determined under the

life expectancy rule described in

§ 1.401(a)(9)–3 A–3 in the case of an

employee’s death before the employee’s

required beginning date; and

(2) The employee’s or individual’s

entire benefit to which that beneficiary

is entitled is distributed by the end of

the fifth calendar year following the

calendar year that contains the

employee’s date of death.

Robert E. Wenzel,

Deputy Commissioner of Internal Revenue.

[FR Doc. 01–304 Filed 1–12–01; 8:45 am]

BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 601

[REG–129608–00]

RIN 1545–AY68

Notice to Interested Parties

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains

proposed regulations relating to the

notice to interested parties. Before the

IRS can issue an advance determination

regarding the qualification of a

retirement plan, a plan sponsor must

provide evidence that it has notified all

persons who qualify as interested

parties that an application for an

advance determination will be filed.

These proposed regulations set forth

standards by which a plan sponsor may

satisfy the notice to interested parties

requirement. The proposed regulations

affect retirement plan sponsors, plan

participants and other interested parties

with respect to an application for a

determination letter, and certain

representatives of interested parties.

DATES: Written or electronic comments

and requests for a public hearing must

be received by April 17, 2001.

ADDRESSES: Send submissions to:

CC:M&SP:RU (REG–129608–00), 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–129608–00),

Courier’s Desk, Internal Revenue

Service, 1111 Constitution Avenue,

NW., Washington, DC. Alternatively,

taxpayers may submit comments

electronically via the Internet by

selecting the ‘‘Tax Regs’’ option on the

IRS Home Page, or by submitting

comments directly to the IRS Internet

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

reglist.html.

FOR FURTHER INFORMATION CONTACT:

Concerning the proposed regulations,

contact Pamela R. Kinard, (202) 622–

6060; concerning the submission of

comments, contact LaNita VanDyke,

(202) 622–7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed

amendments to the Income Tax

Regulations (26 CFR parts 1 and 601)

under section 7476 of the Internal

Revenue Code of 1986 (Code).

Section 7476(b)(2) provides that, with

respect to a pleading filed by a

petitioner for a request for a

determination on the qualified status of

a retirement plan under section 7476(a),

the Tax Court may find the pleading to

be premature unless the petitioner

establishes to the satisfaction of the

court that he has complied with the

requirements prescribed by the

regulations of the Secretary regarding

the notice to interested parties.

On May 21, 1976, Final Income Tax

Regulations (TD 7421) under section

7476 were published in the Federal

Register (41 FR 20874). The final

regulations provide guidance on the

nature and method of giving notice to

interested parties. Existing § 1.7476–

1(a)(1) provides that in order to receive

a determination on the qualified status

of a retirement plan, the applicant must

provide evidence that individuals who

qualified as interested parties received

notification of the determination letter

application. In general, interested

parties are defined in § 1.7476–1(b)(1) as

all present employees of the employer

eligible to participate in the plan, and

all other present employees whose

principal place of employment is the

same as the principal place of

employment of the employees eligible to

participate. For plan terminations,

§ 1.7476–1(b)(5) defines interested

parties as all present employees with

accrued benefits, all former employees

with vested benefits, and all

beneficiaries of deceased former

employees currently receiving benefits

under the plan.

Existing § 1.7476–2(b) provides that

the notice must be given in writing,

must contain the information in

§ 601.201(o)(3) (Statement of Procedural

Rules) and must be given in the manner

prescribed in § 1.7476–2(c). For present

employees, § 1.7476–2(c)(1) provides

that the notice must be given in person,

by mailing, by posting, or by printing it

in a publication of the employer or an

employee organization that is

reasonably available to employees. For

interested parties who are in a unit of

employees covered by a collectivebargaining agreement, the notice must

also be given in person or by mail to the

collective-bargaining representative of

the interested parties. For former

Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / Proposed Rules 3955

employees and beneficiaries who

qualify as interested parties, § 1.7476–

2(c)(2)(i) provides that notice shall be

given in person or by mail to the last

known address of the interested party.

On February 8, 2000, the IRS and

Treasury published Final Income Tax

Regulations (TD 8873) in the Federal

Register (65 FR 6001) that provide safe

harbor methods for plan sponsors and

administrators using electronic media to

transmit notices and consents required

under sections 402(f), 411(a)(11), or

3405(e)(10)(B). Notice 99–1 (1999–2

I.R.B. 8) and Announcement 99–6

(1999–4 I.R.B. 24) also provide guidance

on the use of electronic media by

retirement plans.

In order to continue to advance the

goal of permitting plan sponsors to use

electronic media in administering their

retirement plans, this amendment to the

regulations eliminates the writing

requirement for the notice to interested

parties. Instead, the proposed

regulations set forth new standards for

satisfying the notice requirement that

would ensure that interested parties will

receive timely and adequate notice.

Explanation of Provisions

This notice of proposed rulemaking

would amend §§ 1.7476–2 and 601.201

regarding the nature and method of

giving notices to interested parties. The

proposed regulations do not change the

information that the notice must contain

or the time period in which the notice

must be given. These regulations

continue to provide that the notice to

interested parties must contain the

information and be given within the

time period prescribed in

§ 601.201(o)(3) (Statement of Procedural

Rules). The proposed regulations would

set forth new standards for providing

the notice to interested parties. These

new standards permit greater flexibility

in the manner in which the notice may

be provided.

The proposed regulations provide

that, in the case of a present employee,

former employee, or beneficiary who is

an interested party, the notice may be

provided by any method that reasonably

ensures that all interested parties will

receive the notice. The method used

must be reasonably calculated to

provide timely and adequate notice to

all interested parties. In addition, the

proposed regulations provide that if an

interested party who is a present

employee is in a unit of employees

covered by a collective-bargaining

agreement between employee

representatives and one or more

employers, notice shall also be given to

the collective-bargaining representative

of such interested party by any method

that reasonably ensures that the

collective-bargaining representative will

receive the notice. The proposed

regulations also provide if the notice to

interested parties is delivered using an

electronic medium under a system that

satisfies the requirements of Q&A–5 of

§ 1.402(f)–1, the notice will be deemed

to be provided in a manner that satisfies

the notice to interested parties

requirement.

The proposed regulations provide that

whether the notice to interested parties

is given in a manner that satisfies the

requirements under these regulations

will be determined on the basis of all

the facts and circumstances. These

regulations further provide that since

the facts and circumstances will differ

depending on the interested party, it is

possible that more than one method of

delivery (including nonelectronic

writing) must be used in order to ensure

timely and adequate notice to all

interested parties.

The proposed regulations also revise

§ 601.201 (Statement of Procedural

Rules) to conform to the changes in

§ 1.7476–2.

Proposed Effective Date

These regulations are proposed to be

effective with respect to applications

made on or after the date they are

published in the Federal Register as

final regulations. Plan sponsors may

rely on these proposed regulations for

guidance pending the issuance of final

regulations. If, and to the extent, future

guidance is more restrictive than the

guidance in these proposed regulations,

the future guidance will be applied

without retroactive effect.

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 a collection

of information on small entities, the

Regulatory Flexibility Act (5 U.S.C.

chapter 6) does not apply. Pursuant to

section 7805(f) of the Code, these

proposed regulations 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

written comments (a signed original and

eight (8) copies) or electronic comments

that are submitted timely to the IRS. The

IRS and Treasury specifically request

comments on the clarity of the proposed

rule and how it 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 a 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 Pamela R. Kinard of the

Office of the Division Counsel/Associate

Chief Counsel (Tax Exempt and

Government Entities), IRS. However,

other personnel from the IRS and

Treasury Department participated in

their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and

recordkeeping requirements.

Proposed Amendments to the

Regulations

Accordingly, 26 CFR part 1 is

proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 continues to read, in part, as

follows:

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

Par. 2. Section 1.7476–2 is amended

as follows:

1. Paragraphs (b) and (c) are revised.

2. Paragraph (d) is redesignated as

paragraph (e) and a new paragraph (d)

is added.

3. Paragraph (e)(1) is revised.

The revisions and additions read as

follows:

§ 1.7476–2 Notice to interested parties.

* * * * *

(b) Nature of notice. The notice

required by this section shall —

(1) Contain the information and be

given within the time period prescribed

in § 601.201(o)(3) of this chapter

(Statement of Procedural Rules); and,

(2) Be given in a manner prescribed in

paragraph (c) of this section.

(c) Method of giving notice. (1) In the

case of a present employee, former

employee, or beneficiary who is an

interested party, the notice may be

provided by any method that reasonably

ensures that all interested parties will

3956 Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / Proposed Rules

receive timely and adequate notice. If an

interested party who is a present

employee is in a unit of employees

covered by a collective-bargaining

agreement between employee

representatives and one or more

employers, notice shall also be given to

the collective-bargaining representative

of such interested party by any method

that satisfies this paragraph. Whether

the notice is provided in a manner that

satisfies the requirements of this

paragraph will be determined on the

basis of all the facts and circumstances.

Because the facts and circumstances

will differ depending on the interested

party, it is possible that more than one

method of delivery must be used in

order to ensure timely and adequate

notice to all interested parties.

(2) If the notice to interested parties

is delivered using an electronic medium

under a system that satisfies the

requirements of Q&A–5 of § 1.402(f)–1,

the notice will be deemed to be

provided in a manner that satisfies the

requirements of paragraph (c)(1) of this

section.

(d) Examples. The principles of this

section are illustrated by the following

examples:

Example 1. (i) Employer A is amending

Plan C and applying for a determination

letter. Plan C is not maintained pursuant to

one or more collective-bargaining agreements

and is not being terminated. As part of the

determination letter application process,

Employer A provides the notice required

under this section to interested parties. For

present employees, Employer A provides the

notice by posting the notice at those locations

within the principal places of employment of

the interested parties which are customarily

used for employer notices to employees with

regard to labor-management relations

matters.

(ii) In this Example 1, Employer A satisfies

the notice to interested parties requirement

described in this section.

Example 2. (i) Employer B is amending

Plan D and applying for a determination

letter. As part of the determination letter

application process, Employer B provides the

notice required under this section to

interested parties.

(ii) Employer B has multiple worksites.

Employer B’s employees located at worksites

1 through 4 have access to computers at their

workplace. However, Employer B’s

employees located at worksite 5 do not have

access to computers.

(iii) For present employees with access to

computers (worksites 1 through 4), Employer

B provides the notice by posting the notice

on Employer B’s web site (Internet or

intranet). Employer B customarily posts

employer notices to employees at worksites

1 through 4 with regard to labor-management

relations matters on its web site. For present

employees without access to computers

(worksite 5), Employer B provides the notice

by posting the notice at worksite 5 in a

location that is customarily used for

employer notices to employees with regard to

labor-management relations matters.

(iv) Employer B also sends the notice by email to each collective-bargaining

representative of interested parties who are

present employees of Employer B covered by

a collective-bargaining agreement between

employee representatives and Employer B,

using the e-mail address previously provided

to Employer B by such collective-bargaining

representative.

(v) In this Example 2, Employer B satisfies

the notice to interested parties requirement

described in this section.

Example 3. (i) Employer C is terminating

Plan E and applying for a determination

letter as to whether the plan termination

affects the continuing qualification of Plan E.

As part of the determination letter

application process, Employer C provides the

notice required under this section to

interested parties.

(ii) All of Employer C’s employees have

access to computers. Each employee has an

e-mail address where he or she can receive

messages from Employer C. Employer C has

set up kiosks for employees’ use. The kiosks

are located within the principal places of

employment of the employees and are

customarily used for employer notices to

employees with regard to labor-management

relations matters.

(iii) For present employees, Employer C

provides the notice by sending the notice by

e-mail.

(iv) Employer C also sends the notice by email to each collective-bargaining

representative of interested parties who are

present employees of Employer C covered by

a collective-bargaining agreement between

employee representatives and Employer C,

using the e-mail address previously provided

to Employer C by such collective-bargaining

representative.

(v) In addition, Employer C sends the

notice by e-mail to each interested party who

is a former employee or beneficiary, using the

e-mail address previously provided to

Employer C by such interested party. For any

former employee or beneficiary who did not

provide an e-mail address, Employer C sends

the notice by regular mail to the last known

address of such former employee or

beneficiary.

(vi) In this Example 3, Employer C satisfies

the notice to interested parties requirement

described in this section.

(e) Effective date. (1) The provisions

of this section shall apply to

applications referred to in paragraph (a)

of § 1.7476–1 made on or after the date

the regulations are published in the

Federal Register as final regulations.

PART 601—STATEMENT OF

PROCEDURAL RULES

Paragraph 1. The authority citation

for part 601 continues to read, in part,

as follows:

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

Par. 2. Section 601.201 is amended as

follows:

1. In paragraph (o)(3)(xv), the first

sentence is replaced by two new

sentences.

2. In paragraph (o)(3)(xvi),

introductory text is revised.

The revisions read as follows:

§ 601.201 Rulings and determination

letters.

* * * * *

(o) * * * (3) * * *

(xv) When the notice referred to in

paragraph (o)(3)(xiv) of this section is

given in the manner set forth in

§ 1.7476–2(c), the following time

limitations for providing the notice

apply. When the notice is given other

than by mailing, it should be given not

less than 7 days nor more than 21 days

prior to the date that the application for

a determination is made. * * *

(xvi) The notice referred to in

paragraph (o)(3)(xiv) of this section shall

be given in the manner prescribed in

§ 1.7476–2 and shall contain the

following information:

* * * * *

Robert E. Wenzel,

Deputy Commissioner of Internal Revenue.

[FR Doc. 01–131 Filed 1–16–01; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 31

[REG–110374–00]

RIN 1545–AY21

Interest-free adjustments with respect

to underpayments of employment

taxes

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains a

proposed amendment to the regulations

relating to interest-free adjustments with

respect to underpayments of

employment taxes. The proposed

amendment reflects changes to the law

made by the Taxpayer Relief Act of

1997. The proposed amendment affects

employers that are the subject of IRS

examinations involving determinations

by the IRS that workers are employees

for purposes of subtitle C or that the

employers are not entitled to relief from

employment taxes under section 530 of

the Revenue Act of 1978 (section 530).

DATES: Written and electronic comments

and requests for a public hearing must

be received by April 17, 2001.