Corrections & Final_REG-114664-97

Federal Register/Vul. 65, No. 6O/Tuesday, March
Background
The final regulatio~~s
that are the
subject of this correction are under
section 7701(1) of the Internal Rcvcnue
Code.
Need for Correction
As published, the fmal regulations
(TD8853) coalain nn mmr tbal may.
prove t o be mislsadizlg and is in need
of clarification.
C o r d t i ofPublicdioa
Accordhgly. tbe publication of the
final regulations (TD88531, w*ch were
the s~bjerrtof FR Doc. 00-1 14, is
c o m t c d as follows:

5 1.7701(1H [Correctedj
1. On p g v 1316,in 5 1.7701[1)3@[2)(iij) fiampIe I, paragraph
(ii)(C)[2), in the tbird column of t h
table, tho hending "Arnortizabltp
pn,nium,. is corrlxtcd to md
discount".
Dale D. G d ,
FedmIRegislttr Liaison, Assistmi Chef
CcIuns~.IfCorpomiel.
II-?C Doc. 00-5235 Filed 3-27-00; 8:45 am1
W U N G CODE 4 8 5 b U l q

DEPARTMENT OF W E TREASURY

2 8 , 2000 /Rules

Need for Correction
As published. h e final regulations
(TD 8848) contain ermrs that may prove
to ho misleadkg and are iu need of
clarification.
Correction of Publication

Accordingiy, the publication of the
final reguiations (TDBMg), which were
the subject of FR Doc. 9%32694, is
cormted as fobows:
1. O n pagu 72542. in t
h preamble,
3rd column, undor the beading
"Effcdivc Dates", line 4. tbc language
"withrapect to d d o n t s who die
nftcr" is corrected to road "with rcspml
to decedents who die on or d-er" .

9 1.663(ck5

and Regulatinns

16317

FOR FURTHER INFORMATION COKTACT: Paul
Handlman at (202)622-3040 (not n

toll-hoe number).
SUPPLEMENTARY INFORMATION:

1x0find regulations that are the
subjcct of thoso cormtians d a t e to
owners of low-income housing projects
who claim the &it and the Agoncies
who administer ihe cmdit.
Need for Correction
& published, tbe final regulations
ITD 8859) contmh~a
s that are in need
of clarification.

G o r d o n of Publication

(C-w

Accordingly, thc p u b h t i o n of tbi?
2.On page 72544, column 3.
End regdotions (TD 88591. which wow
5 1 . 6 6 3 ( c ~ ~ n r n p l ~ 4 ( i J , l i ~ s 6 thesubjoctofPRDoc-00-111,js
~d7,
the l q u a g e , "the cWd in the amount
cormctod as follows:
necdod to reduce tho ostate taxes lo zero
§l-u-S
[COmcteq
and a bcqucrt of thew i s corroctd m
1. On page 2327,coIumu 2 . 5 1.42mad "'the child of tho lqcst amount
S(c)(l)txi),line 14, the language "1437s"
h a t c m pass h e of F d o n l estate
is corrected to read "1437f'.
and o bequest of rhc".

5 1.=tew

[Cmetedl
3. On page 72545, column 3,
5 1.663(c)-6, h e 5, the language

"decedentswho die aFtm December 228,"
is comcied t o read "dezedents w h o die
on or after Docember 28,".

fnternal Revenue Service

2. OUpagQ2328,CO~UELU1.
hstructionol Par. 3, paragraph I, in line
4, tho language "Report"" is comctcd to
mad "Repnri,""aud in line ti. the

lauguage "Repofl' *' is corrected i o rend'
"Report,'".
Dale D. Goode.
Fedenil Register Liaison, Assistant rSlit$
Counsel [ICarpmh?].
[PRDoc. f10-5239 Filed 3-2740; 8:45 am]

26 CFR Part 1

BtlLMG W O E 5
0
3
m
I
'

DEPARTMENT OF THE TREASURY

Sectlon 663Ie); Separate Share Ruks
Applicable to Estates: Correction

26 CFR Part 1

Internal Revenue Sarvicc [as),
CrD saw
Treasury.
ACTION: Cormtion to final regulations.
AGENCY:

T h i documont
~
contains
cormtiom to find rogulatioas which
wore published in tho Faderal Register
on Tuesday, Dmcrnber 28,1999 (64 FX
72540), dating to sepamls share rula
applicable to estates under sectian
(ifi3(c] of the Intoma) Rer.enue Code,
DATES: This comciion is effective
December 28,1999.
SUMMARY:

FOR FURTHER INFORMATIOH CONTACT:

Laura Howell at (202) 622-3060 (not a
toll-kee number).
SUPPIEMENTAW INFORMATION:

The final roglllatims thal are he
subject of this correction am under
(i631c) of the Internal Revenuc! Code,

DEPARTMEW OF THE TREASURY

Internal Revenue Servics

(, J-77

Compllan= Monitoring and
Miscellaneous Issues Relating to the
Law-Income Houslng Credit;

Internal Reventte Service
26 CFR Part 1

Subchapter S Subsidiaries; Correction

Internd Revmue %vice (N),
Correetlon
Trnasury.
AGENCY: Internal &venue Service [iRS). ACTH~N:Correction to final regulations.
Treasury.
Correctiotk to final regulations.

ACllOH:

This documellt contains
corrections to final regulations which
were published in the Federal Rqister
on Friday, January 14, 2000 165 FK
23231,affecting oimers of low-income
housing projccts who clnim the credit
and thc Agoncics who adminislcr tho
credit.
DATES; This cormlion is effective
J a n u 1.~ 2001.
SUMY:

AGENCY:

-

-

This document contains
mrrections to find regulations which
weir! published td the Federal Register
on Tuesday, Jarmary 25, 2000 (65 FR
38431, r c I n t i q to the lrcatmoilt of
corporate subsidiaries of S corporatio~~s
and inteywt the rules added to b e
Iilternal Revenue Cade Iry section 1308
of the Small Busi~lessJobProtection Act
of 1996.
DATES: This correction is e h l i v e
SUhf#IARY:

January 25,20W.

Federal Register1 VoI.

65,

No. 10/Friday, January 14, 2000 /Rules and Regulations

prsmarkst notifirration procedures in
§ 892-5550 Manual radionuclkle applicator
SYdemsubpart E OF part 807 ofthis chapter
*
a
*
*
*
subject to 5 892.9.
IbJ Clasificotion. CIass I (general
239. Section 892.1893 is amended by
revising paragraph fi] to read as follows: controls). The device is exempt from the
premarket notification procedures in
$892.?890 Radlogmphlc film illuminator.
subpart E of part 807 of thise b p t e r
*

*

*

*

A

[b]Classification.Class I (general
controls). The device is exempt horn the
pnmprke'
procedur" in
subpart E of part 807 of this chapte~
subject to 5 892.9.
240. Section 892.1910 is amended bg
revising parawpb (b) to read as follows:
5 8921910
4

*

Radlognphic grid.
*

*

*

(b) Classification. C ~ . S IS(general
controls). The d e v i c ~is exempt h m the
premarket notification procedures in
subpart E of part 807 of this chapter
subject to 3 092.9.
241. Section 892.2960 is amended by
revising paragraph &I to read as follows:

5 8 9 2 I960
screen.

*

.

Radiographic Intensifying

*

*

*

[bl cldssifimtion. Class 1 (%eneral
controls). The device is exsnpt from the
premarket notifimtion procedurss in
subpart E of part 807 ofthis chapter
subject to § 892.9.
242. Section 892.2970 is amended by
revising parapph @I to read as follows:

8 8 9 2 1970

Radlbgraphic ECGlrespimtor

synchmnlrer.
*

*

*

a

*

(b) Clossipicnrion. Class 1 Igeneral
controls). The device is exempt from the
prematket notification procedures in
subpart E of part 807 of this chapter
subject to $ 892.9.
243. Ssction 892.2010is amended by
revising paragraph m) to read as follows:

subject 10 5 892.9.

applicability of the amendment made to
1.42-6, see 5 I . 4 ~ - z ? ( c ] .For date of
appIicabiIity of the amendments made
to 3 1.42-13, see 5 1.42-13[d). For date
of applicability of 5 1.42-17, see 5 1.4217b).

Paul
Handleman, (202)622-3040 [nota tollfree nmberl,
FOR FURTHER INFMUAATIONMNFACT:

246. Ssction 892.6500 is amended by
rsvisingparagrapb ib) to read as follows: SwPEMEKTARY

P e r s ~ n e proYctIve
!
shield.

(89265W

.

*
*
*
+
Ib) Class$corim. Class 1 (generd
cfintmls)+ me device is exempt fmm the
pmarbet soti8MtiOn procedures in

'

of paH

'07 of

subject to 6 892.9.

,NFORMAnOPI:

P l p e w O l ~ hdwhon

An

The collections DC information
"ntined in these final =gulations have
been reviewed and approved by the
Office of Management and Budget in
a&ance

cb.~ter

2323

apmwar

Reduction Act of 3995 (44 U.S.C. 3507)

Bated: December 22, 1999.
under cone01 number 1545-1357.
Linda S. Kaban,
Responses to these collections of
Deputy Directorfor Regulations Policy, Center infomat ion are -datary.
for Devices and Radiologicnl Health.
An agency may not conduct or
IFR Doc. OW804 Filed 1-1 3-00; 0:45 am1
sponsor, and a person is not required to
WUUG
cow 41-I-F
respond to, a colleclion of information
unless the collection of inFormation
displays a valid control number.
Par 8 1.42-5, the estimated annual
DEPARTMENT OF THE TREASURY
burden per respondent varies from -5
internal Revenue
1
how to a hours for lolpaysrr and 150
to 5,000 hours for Agencies, with an
26 CFR Pa* iand 6
estimated average of 1 hour for

7

[fD 88591

R H 1545AV4.4
Compliance Manitwing

~sce~laneous
L ~ ~ n Housing
~ m eC r d i t

to the

Inlernal Revenue Service
Treasury.
AWCY:

regula

(m1,

taxpayers and 1,500 hours for Agencies.
For 5 1.42-1 3, the estimated annual
burden per respondent variea from -5
hour to 10 hours for taxpayers and
Agencies, mth an estimated avemge of
3.5 hours for taxpayers and 3 hours lor
Agencies. For 5 1.42-17, the estimated
annual burden per respondent varies
from . 5 hour to 2 hours for taxpayers
and .5 hour to 5 hours for Agencies,
with a n estimated average of I hour for
taxpayers and 2 hours for Agencies.
Comments
the accuracy of
tbsse burden estimates and suggestions
fm reducing these bumlens should be
sent to the Internal Revenue Service,
Ath: IRS Reports CIearance Officer.
0P:FS:FP.Washington, DC 20224, and
t o the Office of Management and
~ ~ dA ttn:
~ Desk
~ tOfficer
,
for tbe
Dspartment of the Treasury, 0 5 c e of
Information and Regillatmy Affairs,
Washington. DC 20503.
Bmks or records reIating t o this
collection of information must be
retained as long as their contents may
become material in h e administration
of any internal revenue law. Genarally,
tax returns and tax return information
are conf~dential,as required by 26
U.S.C. 6103.

SUMWRY: This document contains final
regulations regarding the proced-s for
compliaoce monitofing by state
I O C ~ housing agencies (Agencies1 with
[he ~equirementsof the low-income
h0u-g
the requirements for
9 892.2070 Medkal bmge stwage device.
the rules
*
*
*
*
+
for Agencies' correction of
administrative errors or omissions; and
&) Clossificotion. Class I [general
controls). The device is exempt h m the the independent vsrscation of
information on sources and uses of
premarket notification procedures in
subpart E of part 807 of this chapter
funds submitted by taxpayers to
Agencies. These h a 1 regulations affect
subject to 5 892.9.
owners of low-income housing projects
2 4 4 . Section 892.2020 is amended by
and the Agmcies
revising paragraph {b] to read as foIlows: who claim the
who administer the credit.
5 8922020 Wedk a l Image communications DATEX
Dates: These
device.
regulations are effective January 1, 2001,
=
*
*
*
*
except that the amendments made to
[b) Chssification. Class I (general
55 1.42-5[c](5) and (e){3)(i),and 1.42-13
controls). The device is exempt horn the
effective ]an14, 2000, and the
prernarket notification procedures in
amendment mads io5 1.42-6Id](4)[ii) is
subpart E of part 807 of this chapter
On January 8, 1999, the IRS published
effective January1,2000.
subj~ctto 5 892.9.
ApplicabiIity Dates: For dates of
reguIations (REG114664-97)
in the Federal Register (64 F R 11431
245. Section 892.5650 is amended by
applicability of the amendments to
inviting comments under section 42. A
revising paragraph [b)t o read as f ~ l l o w s : 5 1.42-5, see 9 1.42-5(h).For date of

2324

Federal Register / Vol. 65, No. 10 /Friday, January 14, 2000 1Rules and Regulations

public hearing was held M a y 27, 2999.
Numerous comments have bean
received. After consideration o f all the
conlments, the proposed regulations are
adopted as revised by this Treasury
Decision.

Public Comments
A. Compliance Monitoring
1.Inspection Requirement for New

hildings
The proposed regulations require that,
by the end ofthe d e n d m yeat
following the year the last building in a
projecr is placed in service, the Agency
conduct on-site inspections of the
projects and review the low-income
certification, the documentation
supporting such certification, and the
rant record for each keoant in the
project. Most commentators view the
requuement for reviewing all tenant
records for all buildings in a project as
unnecessary and burdensome. Most
commentators suggest limiting
inspections for n 8 W buildings to 20
percent of the project's low-income
units.
Commentators also suggest extending

the time limit for inspecting new
buildings to the end of the calendar year
E o l l o h g the first year of h a credit
perid or at least until a reasonable t h e
after the Agency issues Form 8609,
"Low-income Housing Credit Allocation
Certification." This added flexibility
would allow the Agency to combine a
physical, inspection with a file review of
the &st year of the credit period.
h response to the comments, the h a 1
regulations reduce the inspection
burden for new buildings by requiring
the Agency to conduct on-site
inspections of all new buildings in h a
project and. for at least 20 percenl of the
project's low-income units, to inspect
the units and review h a low-income
certifications, the documentation
supporting the certifications, and the
rent records for tbe tenants in those
units. To allow the Agency sufficient
time to review the tenant files for the
first year of ~e credit period, the final
reguiations extend the time limit for
inspec~ngnew buildings to the end of
thp second calendar year following b e
year the l w t building in the project is
p l ~ c e din s e ~ c s .
2. Three-year Inspedion Requirement
The proposed regulations require that,
at least once every 3 years, each Agency
conduct on-site inspertions of all
buildings in each low-income housing
project and, for each tenant in at Isast
20 percent of the project's low-income
units selected by the Agency, review the
low-hlcome certification, the

documentation supporting such
certification,and the rent record.
Most commentators agree with
requiring physical inspections of the
buildings at [east once every 3 gears.
Howevsr, commentators recommerld
reviewing tenant income and rent
records once every 5 years, which is one
of the options under the current
compliance monitoring regulations (see
6 1.42-5{c){Z][ii) @) requiring an Agency
to review tenant files for 20 percent of
the low-income housing projects each
year). Commentators also recommend
reviewine tenant files oither on-site or at
other locations, including desk audits.
Although the physical inspection and
file review requirements fornew
buildings are relaxed in the final
regulations, the final regulations retain
the 3-year inspection cycle for existing
buildings. The final regulations do not
separate the physical inspection and file
review cycles [every 3 years for physical
instlections and everv 5 vears for file
reGsws) as suggested b~commentalors
because it is ahinistrativelv cumple[e
to do both during the same year. he
tenant income and rent reseictions in
section 42b) are equally important as
the habitability standards for a lowincome unit in secCion 42{i)(3)[B)(ii).
The final re ulations adopt the
suggestion t at the file review may be
done wherever the tenant files me
maintained.
3. Health, Safety, and Building Code
Inspections
The proposed regulations require the
Agency to determine whether the
pmject is suitable for occupancy, taking
into account local health, safety, and
building codes.
Many commentators object to this
requirement as too costly and
s m h i n i s t e r a b l e because building
codes vary considerably within states.
Commentators also asked for guidajines
as to what constitutes an "inspection"
Some commentators propose defining
an inspection as looking at sal~cted
units in the building and common areas
for visible problems or defects without
applying the local hedth, safety, and
building codes standards. One
commentator suggests inspections based
on a complaint &om the local
jurisdiction or from a tenant. Some
commentators suggest using a uniform
physical standard such as the uniform
physical condition standards for public
housing established by the Department
of Housing and Urban Development
(HUD) in 24 CFR 5.703.
Section 42[i)(3)(B](i)excludes from
the definition of a "low-income unit" a
unit that is not suitable for occupancy.
Under section 42[i)[3)IB){ii),suitability
of a unit for occlrpanq shall be

f

determined under regulations

prescribed by the Secretary taking into
account local health,safety, and
buiIding codes. Recognizing that these
codes vary considerably within states,
the final regulations require an Agency
lo determine whether a low-income
housing project satisfies these codes. o r
satisfies the HUD uniform physical
con& tion standards. The HUD
standards are intended to ensure thai
housing is decent, safe, sanitary, and in
good repair. Though it woukd be
appropriate that an Agency use m ' s
insoection nrotacol under 24 CFR 5.705,
thefinal rGulations do not mandate use
o € H m ' sins~ectionprotocol bacause to
do so could increase Lasts to the
Agencies as well as limit their latitude
in applying standards consistent with
their own operating procedures and
practices. The final regulations except a
building from the inspection
requirement if the building is financed
by the Rural Rousing Service (REIS)
under the section 515 program, the RnS
inspects the building [undsr 7 CFR part
I Y30(c)), and the RBS and Agency enter
into a memorandum of undmstanding,
or other similar arrangement, under
which he RHS agrees to notify the
Agency of the inspection results.
hespective of the p h y s i d inspection
standard selectod by the Agency, a lowincome housing project under section
4 2 must continue to satisfy local health,
safety,and building codes.
The proposed regulations Limit an
Agency's delegation of the physical
of a project to only a state OF
local government w i t responsible for
making building code inspectionsCommentators suggest expanding the
delegation of inspections to professional
firms. The h a 1 regulations remove the
delegation limitatiw and Agencies may
delegate the physiml inspection
requirement to state or local
governmental agencies, HUD, or private
contractors.
4. Locd Reports of Building Code
Violalions
The proposed regulations q u i r e the
owner of a low-income housing project
to certify that for the peceding 12month period the state or local
government unit responsible for making
building code inspections did not issue
a report of aviolation for the project. If
the governmental unit issued a report OF
a violation, the owner is required to
attach a copy of the report of the
violation to the annual certification
submitled lo the Agen
A commentator noteTthat the number
of vi~lationsattached to the annual
owner certification wouid be
considerable because even the highest