67350 Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Rules and Regulations 

Correction 

In final rule FR Doc 2014–24114 

published on October 10, 2014 at 79 FR 

61221, in the regulatory language 

section, make the following correction: 

Appendix 1 to Subpart P of Part 404— 

[Corrected] 

■ 1. On page 61225 in the 2nd column, 

in paragraph A of Listing 106.00 of Part 

B of Appendix 1 to Subpart P of Part 

404, correct ‘‘exotrophic’’ to read 

‘‘exstrophic’’. 

Paul Kryglik, 

Director, Office of Regulations and Reports 

Clearance, Office of Legislative and 

Congressional Affairs, Social Security 

Administration. 

[FR Doc. 2014–26745 Filed 11–12–14; 8:45 am] 

BILLING CODE 4191–02–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9701] 

RIN 1545–BK80 

Arbitrage Rebate Overpayments on 

Tax-Exempt Bonds 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains final 

regulations that provide guidance on the 

recovery of overpayments of arbitrage 

rebate on tax-exempt bonds and other 

tax-advantaged bonds. These final 

regulations provide the deadline for 

filing a claim for an arbitrage rebate 

overpayment and certain other rules. 

These final regulations affect issuers of 

tax-exempt and tax-advantaged bonds. 

DATES: Effective date: These regulations 

are effective on November 13, 2014. 

Applicability date: For dates of 

applicability, see § 1.148–11(l)(4). 

FOR FURTHER INFORMATION CONTACT: 

Timothy Jones at (202) 317–6980 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

On September 16, 2013, the IRS 

published a Notice of Proposed 

Rulemaking (REG–148812–11) in the 

Federal Register (78 FR 56841) (the 

‘‘Proposed Regulations’’). A public 

hearing was scheduled for February 5, 

2014, but later was cancelled because no 

one requested to speak. However, two 

comments responding to the Proposed 

Regulations were received. After 

consideration of these comments, the 

Proposed Regulations are adopted as 

revised by this Treasury decision. 

Explanation of Provisions and 

Summary of Comments 

The final regulations amend the 

Income Tax Regulations (26 CFR part 1) 

on the arbitrage investment restrictions 

on tax-exempt bonds and other taxadvantaged bonds under section 148 of 

the Internal Revenue Code (Code). 

Section 1.148–3(i) of the existing 

Income Tax Regulations provides that 

an issuer may recover an overpayment 

of arbitrage rebate and similar payments 

on an issue of tax-exempt bonds if the 

issuer establishes to the satisfaction of 

the Commissioner that the overpayment 

occurred. 

Rev. Proc. 2008–37 (2008–2 CB 137) 

provides procedures for filing claims for 

the refund of arbitrage rebate and 

similar payments and imposes a 

deadline for filing such claims. In 

particular, a claim for a refund must be 

filed no later than two years after the 

final arbitrage computation date for the 

issue from which the claim arose. A 

transition rule applies to issues with a 

final computation date on or before June 

24, 2008. Like the Proposed Regulations, 

the final regulations include this twoyear limitation on filing claims as well 

as the transition rule. 

The final regulations also adopt the 

rule in the Proposed Regulations that 

the Commissioner may request 

additional information to support a 

claim, specify a date for a return of that 

information, and deny the claim if the 

information is not returned by the date 

specified in the Commissioner’s request 

or, if the Commissioner grants the issuer 

an extension to provide the information, 

by the extension date. Under both the 

Proposed Regulations and final 

regulations, if the Commissioner denies 

a claim because the Commissioner 

asserts that it was filed after the twoyear deadline or that the information 

requested by the Commissioner was not 

received by the date specified in the 

request for such additional information, 

the issuer may appeal the denial to the 

Office of Appeals. If the Office of 

Appeals concludes that the claim was 

timely filed or the requested 

information was timely submitted, as 

applicable, the case will be returned to 

the Commissioner for further 

consideration of the merits of the claim. 

The final regulations amend the 

Proposed Regulations to take into 

account a comment received suggesting 

that the Proposed Regulations be revised 

to provide a minimum time period for 

issuers to respond to any request by the 

Commissioner for additional 

information. In response to this request, 

the final regulations revise the Proposed 

Regulations to provide that issuers will 

be given at least 21 calendar days to 

respond to a request for additional 

information. The 21 day period is 

consistent with the time period 

provided by the IRS in other instances 

for submitting additional information. 

See, for example, section 8.05 of Rev. 

Proc. 2014–1, 2014–1 IRB 1, 31 

(providing taxpayers with 21 days to 

submit additional information requested 

by the IRS in connection with the 

evaluation of a letter ruling request). 

Another commenter questioned the 

Commissioner’s authority to impose the 

two-year limitation on filing of claims 

for recovery of an overpayment of 

arbitrage rebate. The commenter also 

expressed a concern that an issuer’s 

right to proceed to court could expire 

while the issuer’s claim awaits review 

by the Commissioner. 

Treasury and the IRS believe that the 

Commissioner’s authority to impose the 

two-year limitation arises from the 

broad grant of authority to prescribe 

regulations under section 148(i). In 

addition, an issuer’s right to proceed to 

court cannot expire in the manner 

suggested by the commenter because 

sections 6532 and 7422 apply to the 

recovery of arbitrage rebate 

overpayments. Under section 7422, a 

claim for the recovery of an alleged 

arbitrage overpayment cannot be filed in 

any court until a claim for such amount 

has been filed with the Secretary. Under 

section 6532, a proceeding to recover an 

alleged overpayment of arbitrage 

generally may not begin before the 

expiration of six months from the date 

the claim required by section 7422 has 

been filed with the Secretary, nor after 

the expiration of two years from the date 

the taxpayer is notified of the claim 

denial. Thus, the final regulations adopt 

the two-year limitation without change. 

Certain changes made by the final 

regulations to the procedures for 

processing arbitrage rebate overpayment 

claims are not reflected in Rev. Proc. 

2008–37. As a result, the Treasury 

Department and the IRS intend to 

publish guidance updating Rev. Proc. 

2008–37 to take into account changes 

made by the final regulations. 

Comments are requested on whether 

other changes should be made to the 

procedures as part of that guidance. 

Effective/Applicability Date 

In accordance with section 

7805(b)(1)(C) and Rev. Proc. 2008–37, 

§ 1.148–3(i)(3)(i) of the final regulations 

applies to refund claims arising from an 

issue of bonds to which § 1.148–3(i) 

applies and for which the final 


rmajette on DSK2TPTVN1PROD with RULES
Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Rules and Regulations 67351 

computation date is after June 24, 2008. 

For purposes of applying § 1.148– 

3(i)(3)(i), issues for which the actual 

final computation date is on or before 

June 24, 2008, are deemed to have a 

final computation date of July 1, 2008. 

Section 1.148–3(i)(3)(ii) and (iii) of the 

final regulations apply to refund claims 

arising from an issue of bonds to which 

§ 1.148–3(i) applies and for which the 

final computation date is after 

September 16, 2013. 

Special Analyses 

It has been determined that this 

Treasury decision is not a significant 

regulatory action as defined in 

Executive Order 12866, as 

supplemented by Executive Order 

13563. 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. It is hereby certified that 

these regulations will not have a 

significant economic impact on a 

substantial number of small entities. 

Therefore, a Regulatory Flexibility 

Analysis under the Regulatory 

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

not required. The final regulations 

reaffirm or clarify filing deadlines 

previously published in other 

administrative guidance. Pursuant to 

section 7805(f) of the Code, the notice 

of proposed rulemaking that preceded 

these regulations was submitted to the 

Chief Counsel for Advocacy of the Small 

Business Administration for comment 

on its impact on small business, and no 

comments were received. 

Drafting Information 

The principal author of these 

regulations is Timothy Jones, Office of 

Associate Chief Counsel (Financial 

Institutions and Products), IRS. 

However, other personnel from the IRS 

and the Treasury Department 

participated in their development. 

List of Subjects in 26 CFR Part 1 

Income taxes, 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 is amended by revising the 

entry for §§ 1.148–0 through 1.148–11 to 

read in part as follows: 

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

Section 1.148–0 through 1.148–11 also 

issued under 26 U.S.C. 148(i). * * * 

■ Par. 2. Section 1.148–0 is amended by 

adding entries to paragraph (c) Table of 

contents for §§ 1.148–3(i)(3) and 1.148– 

11(k) and (l), and revising § 1.148–11 

section heading to read as follows: 

§ 1.148–0 Scope and table of contents. 

* * * * * 

(c) * * * 

* * * * * 

§ 1.148–3 General arbitrage rebate rules. 

* * * * * 

(i) * * * 

(3) Time and manner for requesting 

refund. 

* * * * * 

§ 1.148–11 Effective/applicability dates. 

* * * * * 

(k) [Reserved] 

(l) Additional arbitrage guidance 

updates. 

(1) [Reserved] 

(2) [Reserved] 

(3) [Reserved] 

(4) Application. 

■ Par. 3. Section 1.148–3 is amended by 

adding paragraph (i)(3) to read as 

follows: 

§ 1.148–3 General arbitrage rebate rules. 

* * * * * 

(i) * * * 

(3) Time and manner for requesting 

refund. (i) An issuer must request a 

refund of an overpayment (claim) no 

later than the date that is two years after 

the final computation date for the issue 

to which the overpayment relates (the 

filing deadline). The claim must be 

made using the form provided by the 

Commissioner for this purpose. 

(ii) The Commissioner may request 

additional information to support a 

claim. The issuer must file the 

additional information by the date 

specified in the Commissioner’s request, 

which date may be extended by the 

Commissioner if unusual circumstances 

warrant. An issuer will be given at least 

21 calendar days to respond to a request 

for additional information. 

(iii) A claim described in either 

paragraph (i)(3)(iii)(A) or (B) of this 

section that has been denied by the 

Commissioner may be appealed to the 

Office of Appeals under this paragraph 

(i)(3)(iii). Upon a determination in favor 

of the issuer, the Office of Appeals must 

return the undeveloped case to the 

Commissioner for further consideration 

of the substance of the claim. 

(A) A claim is described in this 

paragraph (i)(3)(iii)(A) if the 

Commissioner asserts that the claim was 

filed after the filing deadline. 

(B) A claim is described in this 

paragraph (i)(3)(iii)(B) if the 

Commissioner asserts that additional 

information to support the claim was 

not submitted within the time specified 

in the request for information or in any 

extension of such specified time period. 

* * * * * 

■ Par. 4. Section 1.148–11 is amended 

by revising the section heading and 

adding reserved paragraph (k) and 

paragraph (l) to read as follows: 

§ 1.148–11 Effective/applicability dates. 

* * * * * 

(k) [Reserved] 

(l) Additional arbitrage guidance 

updates. 

(1) [Reserved] 

(2) [Reserved] 

(3) [Reserved] 

(4) Application. (i) Section 1.148– 

3(i)(3)(i) applies to claims arising from 

an issue of bonds to which § 1.148–3(i) 

applies and for which the final 

computation date is after June 24, 2008. 

For purposes of this paragraph (l)(4), 

issues for which the actual final 

computation date is on or before June 

24, 2008, are deemed to have a final 

computation date of July 1, 2008 for 

purposes of applying § 1.148–3(i)(3)(i). 

(ii) Section 1.148–3(i)(3)(ii) and (iii) 

apply to claims arising from an issue of 

bonds to which § 1.148–3(i) applies and 

for which the final computation date is 

after September 16, 2013. 

John Dalrymple, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: October 17, 2014. 

Mark J. Mazur, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. 2014–26738 Filed 11–12–14; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 801 

[TD 9703] 

RIN 1545–BL89 

Balanced System for Measuring 

Organizational and Employee 

Performance Within the Internal 

Revenue Service 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Temporary and final 

regulations. 

SUMMARY: This document contains 

temporary and final regulations relating 


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