Federal Register / Vol. 66, No. 42 / Friday, March 2, 2001 / Rules and Regulations 13013

SUMMARY: This document contains

corrections to final regulations that were

published in the Federal Register on

Wednesday, January 10, 2001 (66 FR

1837), relating to section 125 cafeteria

plans.

DATES: This correction is effective

January 10, 2001.

FOR FURTHER INFORMATION CONTACT:

Christine L. Keller (202) 622–6080 (not

a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The final regulations that are the

subject of these corrections are under

section 125 of the Internal Revenue

Code.

Need for Correction

As published, final regulations (TD

8921) contain errors that may prove to

be misleading and are in need of

clarification.

Correction of Publication

Accordingly, the publication of the

final regulations (TD 8921), which were

the subject of FR Doc. 01–258, is

corrected as follows:

1. On page 1838, column 1, in the

preamble under the paragraph heading

1. Changes in the March 2000 Final

Regulations, line 3 of the first

paragraph, the language ‘‘final

regulations issued earlier this year’’ is

corrected to read ‘‘final regulations

issued in March 2000’’.

2. On page 1838, column 3, under the

paragraph heading 2. Changes From the

March 2000 Proposed Regulations, line

4, the language ‘‘earlier this year, but

include various’’ is corrected to read ‘‘in

March 2000, but include various’’.

3. On page 1840, column 1,

amendatory instruction Par. 2. is

corrected by adding a new instruction

‘‘3a.’’ following item 3 to read as

follows:

3a. Revising paragraph (c)(3)(ii).

§ 1.125–4 [Corrected]

4. On page 1840, column 2, § 1.125–

4 is corrected by removing the 5

asterisks following paragraph (c)(1)(ii).

5. On page 1840, column 2, § 1.125–

4 is corrected by removing the 5

asterisks following paragraph (c)(3)(i)

and adding the text of revised paragraph

(c)(3)(ii) in their place to read as

follows:

§ 1.125–4 Permitted election changes.

* * * * *

(c) * * *

(3) * * *

(ii) Application to other qualified

benefits. An election change satisfies the

requirements of this paragraph (c)(3)

with respect to other qualified benefits

if the election change is on account of

and corresponds with a change in status

that affects eligibility for coverage under

an employer’s plan. An election change

also satisfies the requirements of this

paragraph (c)(3) if the election change is

on account of and corresponds with a

change in status that effects expenses

described in section 129 (including

employment-related expenses as

defined in section 21(b)(2)) with respect

to dependent care assistance, or

expenses described in section 137

(including qualified adoption expenses

as defined in section 137(d)) with

respect to adoption assistance.

* * * * *

6. On page 1841, column 3, § 1.125–

4(f)(5)(ii), line 4, the language ‘‘Service,

or a tribal organization’’ is corrected to

read ‘‘Service, or a tribal organization;’’.

Cynthia E. Grigsby,

Chief, Regulations Unit, Office of Special

Counsel (Modernization and Strategic

Planning).

[FR Doc. 01–4923 Filed 3–1–01; 8:45 am]

BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 53 and 301

[TD 8920]

RIN 1545–AY64

Excise Taxes on Excess Benefit

Transactions; Correction

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Correction to temporary

regulations.

SUMMARY: This document contains

corrections to temporary regulations

that were published in the Federal

Register on January 10, 2001 (66 FR

2144). This document relates to the

excise taxes on excess benefit

transactions under section 4958 of the

Internal Revenue Code.

DATES: This correction is effective

January 10, 2001.

FOR FURTHER INFORMATION CONTACT:

Phyllis D. Haney (202) 622–4290 (not a

toll-free number).

SUPPLEMENTARY INFORMATION:

Background

These temporary regulations that are

the subject of this correction are under

section 4958 of the Internal Revenue

Code.

Need for Correction

As published, these temporary

regulations (TD 8920) contain errors that

may prove to be misleading and are in

need of clarification.

Correction of Publication

Accordingly, the publication of the

temporary regulations (TD 8920), which

were the subject of FR Doc. 01–256, is

corrected as follows:

§ 53.4958–4T [Corrected]

1. On page 2164, column 3,

§ 53.4958–4T, paragraph (a)(3)(vii),

Example 1, line 12, the language ‘‘T (see

§ 53.4958–3T(a)). Under the initial’’ is

corrected to read ‘‘T (see § 53.4958–3T

(c)(3)). Under the initial’’.

2. On page 2165, column 1,

§ 53.4958–4T, paragraph (a)(3)(vii),

Example 6, line 19, the language

‘‘respect to B, Company X also becomes

a’’ is corrected to read ‘‘respect to

Hospital B, Company X also becomes

a’’.

3. On page 2165, column 1,

§ 53.4958–4T, paragraph (a)(3)(vii),

Example 6, line 20, the language

‘‘disqualified person with respect to B

(see’’ is corrected to read ‘‘disqualified

person with respect to Hospital B (see’’.

4. On page 2167, column 2,

§ 53.4958–4T, paragraph (c)(3)(i)(B), last

line in the paragraph, the language

‘‘paragraph (b)(3)(i)(A) of this section.’’

is corrected to read ‘‘paragraph

(c)(3)(i)(A) of this section.’’.

§ 53.4958–6T [Corrected]

5. On page 2168, column 1,

§ 53.4958–6T, paragraph (a)(1), first line

in the column, the language ‘‘the

organization with the meaning of’’ is

corrected to read ‘‘the organization

within the meaning of’’.

6. On page 2169, column 1,

§ 53.4958–6T, paragraph (c)(2)(iv),

Example 2, line 1, the language

‘‘Example 2. The facts are the same as’’

is corrected to read ‘‘Example 2. The

facts are the same as in’’.

7. On page 2169, column 1,

§ 53.4958–6T, paragraph (c)(2)(iv),

Example 4, line 1, the language

‘‘Example 4. The facts are the same as’’

is corrected to read ‘‘Example 4. The

facts are the same as in’’.

§ 301.7611–1 [Corrected]

8. On page 2171, column 3,

§ 301.7611–1, under the undesignated

centerheading ‘‘Application to Section

4958’’, A–19, line 1, the language ‘‘A–

19: See § 53.4958–7(b) of this’’ is

13014 Federal Register / Vol. 66, No. 42 / Friday, March 2, 2001 / Rules and Regulations

corrected to read ‘‘A–19: See § 53.4958–

8T(b) of this’’.

Cynthia E. Grigsby,

Chief, Regulations Unit, Office of Special

Counsel (Modernization and Strategic

Planning).

[FR Doc. 01–5006 Filed 3–1–01; 8:45 am]

BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and

Firearms

27 CFR Part 22

[T.D. ATF–443; Ref: Notice No. 828]

RIN 1512–AB57

Distribution and Use of Tax-Free

Alcohol (2000R–294P)

AGENCY: Bureau of Alcohol, Tobacco

and Firearms (ATF), Department of the

Treasury.

ACTION: Final rule (Treasury decision).

SUMMARY: This final rule amends the

regulations in 27 CFR part 22 by

eliminating the requirement for users of

tax-free alcohol to file a bond. It also

liberalizes certain qualification

requirements relating to tax-free alcohol

user permits. ATF believes that these

revisions will greatly reduce and

simplify the qualification process for

tax-free alcohol permits.

DATES: This rule is effective on May 1,

2001.

FOR FURTHER INFORMATION CONTACT: Lisa

M. Gesser, Regulations Division, Bureau

of Alcohol, Tobacco and Firearms, 650

Massachusetts Avenue NW.,

Washington, DC 20226, (202–927–9347)

or e-mail at alctob@atfhq.atf.treas.gov.

SUPPLEMENTARY INFORMATION:

Background

There are certain registration

requirements under the law and its

implementing regulations that must be

met prior to the issuance of a permit to

withdraw and use tax-free alcohol. Once

such registration requirements are met,

the applicant is issued a tax-free alcohol

users permit and may commence

conducting any of the uses authorized

under the law and regulations for taxfree alcohol permittees. The permittee is

allowed to purchase and acquire alcohol

from a registered distilled spirits plant

(DSP) free of the excise tax payments

normally required to be made by the

DSP proprietor.

Authorized users of tax-free alcohol

include any State or political

subdivision of a State, or the District of

Columbia acquiring the alcohol for

nonbeverage purposes. Tax-free alcohol

may also be used by any educational

organization (exempt from income tax),

scientific university or college of

learning, laboratory for use exclusively

in scientific research, hospital, blood

bank, sanitarium, pathological

laboratory exclusively engaged in

making analyses, or tests, for hospitals

or sanitariums, or clinic operated for

charity and not for profit.

Notice of Proposed Rulemaking

On June 13, 1996, ATF published a

notice of proposed rulemaking (Notice

No. 828, 61 FR 30019) to solicit public

comment on proposed regulations that

would eliminate the bonding

requirements for tax-free alcohol users.

ATF also proposed to revise the

qualification requirements for obtaining

a permit to withdraw and use tax-free

alcohol. The public was invited to

submit written comments on this notice

for a period of 60 (sixty) days ending

August 12, 1996.

Comments on the NPRM

In response to Notice 828, ATF

received two written comments.

Comments were received from: the

Distilled Spirits Council of the United

States (DISCUS), and the Surety

Association of America.

Bonds and Consents of Surety

As discussed in Notice No. 828, 26

U.S.C. 5272 provides that bond coverage

may be required as part of the tax-free

alcohol permit qualification process.

Prior to 1985, the regulations in 27 CFR

part 22 required that every applicant,

with certain exceptions, obtain a bond

prior to issuance of a permit. Then, in

1985, the tax-free regulations were

revised and the exemption from bond

coverage was expanded. See T.D. ATF–

199 (50 FR 9152). Under the revisions

adopted in 1985, the percentage of users

of tax-free alcohol who were exempt

from filing a surety bond increased from

36 percent to 75 percent.

Based on the post-1985 experience in

administering part 22, ATF concluded

that bond coverage should no longer be

required of any applicant for a tax-free

alcohol permit. ATF believed that

elimination of the bond requirement in

part 22 would result in substantially

reduced administrative and financial

burdens on the tax-free alcohol

permittees. Accordingly, in Notice No.

828, ATF proposed to eliminate the

requirement to obtain a bond.

In response to this proposal, DISCUS

submitted a comment stating that they

support all efforts by ATF to eliminate

unnecessary regulation and to reduce

the administrative burdens imposed

upon industry.

The Surety Association of America

commented against this proposal. They

stated that ‘‘the ATF is overlooking the

importance of the bond requirement in

preventing losses. The bond provision

may be one of the primary reasons why

the experience has been favorable, and

without it, we believe the ATF runs the

risk of losing tax revenue without a

means of recapture.’’

While ATF agrees that bond

requirements for tax-free alcohol users

may have reduced the risk of tax

revenue losses at some time in the past,

our experience since 1985 indicates that

tax-free alcohol users pose a minimal

risk to the revenue. Further, the

elimination of the bond requirement

does not leave the ATF ‘‘without a

means of recapture.’’ Any permittee

who uses tax-free alcohol in a manner

that violates the laws and regulations is

still directly liable for the tax as

provided in 26 U.S.C. 5001(a)(4).

In summary, ATF has concluded that

the bond requirement in 27 CFR part 22

is unnecessary to protect the revenue

and the proposal to eliminate the bond

requirement for tax-free alcohol users

has been adopted in this final rule.

Qualification Requirements

Section 5271 of the Internal Revenue

Code of 1986 requires the submission of

an application before a permit may be

issued to procure or use tax-free alcohol.

Regulations have required the

submission of a detailed application

with supporting data by all applicants.

The appropriate ATF officer is

authorized to waive some of the detailed

data for applicants who are a State,

political subdivisions thereof, or the

District of Columbia or whose annual

withdrawal and usage of tax-free alcohol

will not exceed 1,500 proof gallons.

In Notice No. 828, ATF proposed that

this waiver should be available to all

applicants when the appropriate ATF

officer concludes that the revenue is

adequately protected with respect to the

person submitting the application.

In response to this proposal, the

DISCUS submitted a comment that

expressed their support. No one

commented in opposition to this

proposal. Accordingly, the proposal has

been adopted in this final rule.

Regulatory Flexibility Act

It is hereby certified that this

regulation will not have a significant

economic impact on a substantial

number of small entities. The

regulations will give ATF specific

regulatory authority to relax and remove

certain registration requirements. A