Federal Register / Vol. 74, No. 201 / Tuesday, October 20, 2009 / Rules and Regulations 53651 

DEPARTMENT OF HOMELAND 

SECURITY 

Bureau of Customs and Border 

Protection 

DEPARTMENT OF THE TREASURY 

19 CFR PART 4 

[CBP Dec. 09–40] 

RIN 1505–AB71 

Foreign Repairs to American Vessels 

AGENCY: Customs and Border Protection, 

Department of Homeland Security; 

Department of the Treasury. 

ACTION: Final rule. 

SUMMARY: This document amends the 

Customs and Border Protection (CBP) 

regulations in title 19 of the Code of 

Federal Regulations (19 CFR) to update 

provisions relating to the declaration, 

entry, and dutiable status of repair 

expenditures made abroad for certain 

vessels. The principal changes set forth 

in this document involve: conforming 

the regulations to statutory changes that 

provide an exemption from vessel repair 

duties for the cost of certain equipment, 

repair parts, and materials; and adding 

a provision to advise that certain free 

trade agreements between the United 

States and other countries may limit the 

duties due on vessel repair expenditures 

made in foreign countries that are 

parties to those agreements. 

DATES: Final rule effective October 20, 

2009. 

FOR FURTHER INFORMATION CONTACT: Glen 

Vereb, Regulations and Rulings, Office 

of International Trade, (202) 325–0212. 

SUPPLEMENTARY INFORMATION: 

Background 

Under section 466, Tariff Act of 1930, 

as amended (19 U.S.C. 1466), purchases 

for or repairs made to certain vessels 

while they are outside the United States 

are subject to declaration, entry and 

payment of ad valorem duty. These 

requirements are effective upon the first 

arrival of affected vessels in the United 

States or Puerto Rico. The vessels 

subject to these requirements include 

those documented under U.S. law for 

the foreign or coastwise trades, as well 

as those which were previously 

documented under the laws of some 

foreign nation or are undocumented at 

the time that foreign shipyard repairs 

are performed, but which exhibit an 

intent to engage in those trades under 

CBP interpretations. The regulations 

implementing 19 U.S.C. 1466 are found 

in § 4.14 of the CBP regulations (19 CFR 

4.14). 

Explanation of Amendments 

Section 4.14(a), CBP regulations, 

states that, under 19 U.S.C. 1466, 

‘‘purchases for or repairs made to 

certain vessels while they are outside 

the United States, including repairs 

made while those vessels are on the 

high seas, are subject to declaration, 

entry, and payment of duty.’’ However, 

section 1554 of the Miscellaneous Trade 

and Technical Corrections Act of 2004 

(Pub. L. 108–429, 118 Stat. 2434) 

amended 19 U.S.C. 1466(h) by adding a 

new paragraph (4) providing for an 

exemption from the declaration, entry, 

and duty requirements of the statute for 

the cost of equipment, repair parts, and 

materials that are installed on certain 

vessels by members of the regular crew 

of such vessels while the vessels are on 

the high seas. As this amendment 

exempted most repairs performed while 

vessels are on the high seas from the 

assessment of vessel repair duties, CBP 

is amending the first sentence of 

§ 4.14(a) to remove the words 

‘‘including repairs made while those 

vessels are on the high seas’’. 

Section 1631 of the Pension 

Protection Act of 2006 (Pub. L. 109–280, 

120 Stat. 1164) amended 19 U.S.C. 

1466(h)(4) to expand the exemption 

created by the 2004 amendment 

discussed above by also including the 

cost of equipment, repair parts, and 

materials that are installed on certain 

vessels by members of the regular crew 

of such vessels while the vessels are in 

foreign waters or in a foreign port, 

provided the installation does not 

involve foreign shipyard repairs by 

foreign labor. CBP is further amending 

§ 4.14(a) of the CBP regulations in this 

document to add a provision reflecting 

the above 2004 and 2006 statutory 

changes. 

Section 4.14(a) also provides that 

certain expenditures for vessel repairs 

and purchases made in Israel, Canada, 

and Mexico (countries that are parties to 

free trade agreements with the United 

States) are not subject to vessel repair 

duties, although they must be declared 

and entered. CBP believes it would be 

useful for the CBP regulations to 

indicate that other free trade agreements 

may also limit the duties due on vessel 

repair expenditures made in foreign 

countries that are parties to those 

agreements. Accordingly, this document 

amends § 4.14(a) by adding a sentence 

to that effect. 

For purposes of clarity and 

transparency, CBP is making the abovediscussed changes to § 4.14(a) as part of 

an overall reorganization of that 

paragraph. Specifically, CBP is dividing 

§ 4.14(a) into three separate 

subparagraphs that are headed 

‘‘General’’, ‘‘Expenditures not subject to 

declaration, entry, or duty’’, and 

‘‘Expenditures subject to declaration 

and entry but not duty’’. 

CBP also is amending § 4.14 by 

replacing the word ‘‘Customs’’ with the 

term ‘‘CBP’’ each place that it appears 

to reflect the change in the agency name 

and by replacing an incorrect reference 

to ‘‘office’’ in paragraph (f) with the 

correct word ‘‘agency’’. 

Inapplicability of Notice and Delayed 

Effective Date Requirements 

The amendments set forth in this final 

rule document merely implement 

statutory changes and reorganize the 

CBP regulations relating to vessel 

repairs. Therefore, pursuant to 5 U.S.C. 

553(b)(B) and (d)(3), CBP has 

determined that it would be 

unnecessary to delay publication of this 

rule in final form pending an 

opportunity for public comment and 

that there is good cause for this final 

rule to become effective immediately 

upon publication. 

Regulatory Flexibility Act and 

Executive Order 12866 

Because a notice of proposed 

rulemaking is not required, the 

provisions of the Regulatory Flexibility 

Act, as amended (5 U.S.C. 601 et seq.), 

do not apply to this rulemaking. This 

document does not meet the criteria for 

a ‘‘significant regulatory action’’ as 

specified in Executive Order 12866. 

Signing Authority 

This document is being issued in 

accordance with § 0.1(a)(1) of the CBP 

regulations (19 CFR 0.1(a)(1)), 

pertaining to the authority of the 

Secretary of the Treasury (or his/her 

delegate) to approve regulations related 

to certain CBP revenue functions. 

List of Subjects in 19 CFR Part 4 

Customs duties and inspection, Entry 

procedures, Repairs, Reporting and 

recordkeeping requirements, Vessels. 

Amendments to the Regulations 

■ Accordingly, for the reasons set forth 

above, CBP is amending Part 4 of the 

CBP regulations (19 CFR part 4) as set 

forth below: 

PART 4—VESSELS IN FOREIGN AND 

DOMESTIC TRADES 

■ 1. The general authority citation for 

Part 4 and the specific authority citation 

for § 4.14 continue to read as follows: 

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 

1431, 1433, 1434, 1624, 2071 note; 46 U.S.C. 

501, 60105. 


cprice-sewell on DSKGBLS3C1PROD with RULES
53652 Federal Register / Vol. 74, No. 201 / Tuesday, October 20, 2009 / Rules and Regulations 

Section 4.14 also issued under 19 U.S.C. 

1466, 1498; 

* * * * * 

■ 2. In § 4.14: 

■ a. Paragraph (a) is revised; 

■ b. Paragraph (d) is amended by 

removing the word ‘‘Customs’’ each 

place it appears and adding, in its place, 

the term ‘‘CBP’’; 

■ d. Paragraph (e) is amended by 

removing the word ‘‘Customs’’ in the 

first sentence and adding, in its place, 

the term ‘‘CBP’’; 

■ e. Paragraph (f) is amended by 

removing the word ‘‘office’’ in the tenth 

sentence and adding, in its place, the 

word ‘‘agency’’; 

■ f. Paragraph (h) is amended by 

removing the word ‘‘Customs’’ in the 

first sentence of the introductory text 

and adding, in its place, the term 

‘‘CBP’’; and 

■ g. Paragraph (j)(1) is amended by 

removing the word ‘‘Customs’’ in the 

last sentence and adding, in its place, 

the term ‘‘CBP’’. 

Revised paragraph (a) reads as 

follows: 

§ 4.14 Foreign equipment purchases by, 

and repairs to, American vessels. 

(a) General provisions and 

applicability—(1) General. Under 

section 466, Tariff Act of 1930, as 

amended (19 U.S.C. 1466), purchases for 

or repairs made to certain vessels while 

they are outside the United States are 

subject to declaration, entry, and 

payment of ad valorem duty. These 

requirements are effective upon the first 

arrival of affected vessels in the United 

States or Puerto Rico. The vessels 

subject to these requirements include 

those documented under the U.S. law 

for the foreign or coastwise trades, as 

well as those which were previously 

documented under the laws of some 

foreign nation or are undocumented at 

the time that foreign shipyard repairs 

are performed, but which exhibit an 

intent to engage in those trades under 

CBP interpretations. Duty is based on 

actual foreign cost. This includes the 

original foreign purchase price of 

articles that have been imported into the 

United States and are later sent abroad 

for use. 

(2) Expenditures not subject to 

declaration, entry, or duty. The 

following vessel repair expenditures are 

not subject to declaration, entry, or 

duty: 

(i) Expenditures made in American 

Samoa, the Guantanamo Bay Naval 

Station, Guam, Puerto Rico, or the U.S. 

Virgin Islands because they are 

considered to have been made in the 

United States; 

(ii) Reimbursements paid to members 

of the regular crew of a vessel for labor 

expended in making repairs to vessels; 

and 

(iii) The cost of equipment, repair 

parts, and materials that are installed on 

a vessel documented under the laws of 

the United States and engaged in the 

foreign or coasting trade, if the 

installation is done by members of the 

regular crew of such vessel while the 

vessel is on the high seas, in foreign 

waters, or in a foreign port, and does not 

involve foreign shipyard repairs by 

foreign labor. 

(3) Expenditures subject to 

declaration and entry but not duty. 

Under separate provisions of law, the 

cost of labor performed, and of parts and 

materials produced and purchased in 

Israel are not subject to duty under the 

vessel repair statute. Additionally, 

expenditures made in Canada or in 

Mexico are not subject to any vessel 

repair duties. Furthermore, certain free 

trade agreements between the United 

States and other countries also may 

reduce the duties on vessel repair 

expenditures made in foreign countries 

that are parties to those agreements, 

although the final duty amount may 

depend on each agreement’s schedule 

for phasing in those reductions. In these 

situations and others where there is no 

liability for duty, it is still required, 

except as otherwise required by law, 

that all repairs and purchases be 

declared and entered. 

* * * * * 

Jayson P. Ahern, 

Acting Commissioner, Customs and Border 

Protection. 

Approved: October 15, 2009. 

Timothy E. Skud, 

Deputy Assistant Secretary of the Treasury. 

[FR Doc. E9–25220 Filed 10–19–09; 8:45 am] 

BILLING CODE 9111–14–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 20 

[TD 9468] 

RIN 1545–BC56 

Guidance Under Section 2053 

Regarding Post-Death Events 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains final 

regulations relating to the amount 

deductible from a decedent’s gross 

estate for claims against the estate under 

section 2053(a)(3) of the Internal 

Revenue Code (Code). In addition, the 

regulations update the provisions 

relating to the deduction for certain 

state death taxes to reflect the statutory 

amendments made in 2001 to sections 

2053(d) and 2058. The regulations 

primarily will affect estates of decedents 

against which there are claims 

outstanding at the time of the decedent’s 

death. 

DATES: Effective Date: The regulations 

are effective on October 20, 2009. 

Applicability Dates: For dates of 

applicability, see §§ 20.2051–1(c), 

20.2053–1(f), 20.2053–3(e), 20.2053– 

4(f), 20.2053–6(h), 20.2053–9(f), and 

20.2053–10(e). 

FOR FURTHER INFORMATION CONTACT: 

Karlene M. Lesho, (202) 622–3090 (not 

a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

Section 2001 of the Code imposes a 

tax on the transfer of the taxable estate, 

determined as provided in section 2051, 

of every decedent, citizen, or resident of 

the United States. Section 2031(a) 

generally provides that the value of the 

decedent’s gross estate shall include the 

value at the time of decedent’s death of 

all property, real or personal, tangible or 

intangible, wherever situated. Section 

2051 provides that the value of the 

taxable estate is determined by 

deducting from the value of the gross 

estate the deductions provided for in 

sections 2051 through 2058. Pursuant to 

section 2053(a), ‘‘the value of the 

taxable estate shall be determined by 

deducting from the value of the gross 

estate such amounts: (1) For funeral 

expenses, (2) for administration 

expenses, (3) for claims against the 

estate, and (4) for unpaid mortgages on, 

or any indebtedness in respect of, 

property where the value of the 

decedent’s interest therein, 

undiminished by such mortgage or 

indebtedness, is included in the value of 

the gross estate, as are allowable by the 

laws of the jurisdiction, whether within 

or without the United States, under 

which the estate is being administered.’’ 

The amount an estate may deduct for 

claims against the estate has been a 

highly litigious issue. See the 

Background in the notice of proposed 

rulemaking published in the Federal 

Register on April 23, 2007 (REG– 

143316–03, 72 FR 20080). Unlike 

section 2031, section 2053(a) does not 

contain a specific directive to value a 

deductible claim at its value at the time 

of the decedent’s death. Section 2053 

specifically contemplates expenses such 


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