Final_Reg_TD 8725

Federal Register / Vol. 62, No. 140 / Tuesday, July 22, 1997 / Rules and Regulations

PART 4—COMMODITY POOL
OPERATORS AND COMMODITY
TRADING ADVISORS

prominence than the surrounding text;
and
(3) A complete paper version of the
document that complies with the
applicable provisions of this part 4 must
be provided to the recipient upon
request.
(d) If graphic, image or audio material
is included in a document delivered to
a prospective or existing client or pool
participant, and such material cannot be
reproduced in an electronic filing, a fair
and accurate narrative description,
tabular representation or transcript of
the omitted material must be included
in the filed version of the document.
Inclusion of such material in a
Disclosure Document shall be subject to
the requirements of § 4.24(v) in the case
of pool Disclosure Documents, and
§ 4.34(n) in the case of commodity
trading advisor Disclosure Documents.
3. Section 4.21 paragraph (b) is to be
revised to read as follows:

Subpart A—General Provisions,
Definitions and Exemptions

Subpart B—Commodity Pool
Operators

1. The authority citation for part 4
continues to read as follows:

§ 4.21 Required delivery of pool
Disclosure Document.

Copies of the OMB approved
information collection package
associated with this rule may be
obtained from: Desk Officer, CFTC,
Office of Management and Budget,
Room 10202, NEOB Washington DC
20503, (202) 395–7340.
List of Subjects in 17 CFR Part 4
Advertising, Commodity futures,
Consumer protection, Reporting and
recordkeeping requirements.
In consideration of the foregoing, and
pursuant to the authority contained in
the Commodity Exchange Act, and in
particular sections 2(a)(1), 4b, 4c, 4l,
4m, 4n, 4o, and 8a, 7 U.S.C. 2, 6b, 6c,
6l, 6m, 6n, 6o, and 12a, the Commission
amends chapter I of title 17 of the Code
of Federal Regulations as follows:

Authority: 7 U.S.C. 1a, 2, 4, 6b, 6c, 6l, 6m,
6n, 6o, 12a and 23.

2. Section 4.1 is amended by adding
paragraphs (c) and (d) to read as follows:
§ 4.1

Requirements as to form.

(a) * * *
(b) * * *
(c) Where a document is distributed
through an electronic medium:
(1) The requirements of paragraphs (a)
of this section shall mean that required
information must be presented in a
format that is readily communicated to
the recipient. For purposes of this
paragraph (c), information is readily
communicated to the recipient if it is
accessible to the ordinary user by means
of commonly available hardware and
software and if the electronically
delivered document is organized in
substantially the same manner as would
be required for a paper document with
respect to the order of presentation and
the relative prominence of information.
Where a table of contents is required,
the electronic document must either
include page numbers in the text or
employ a substantially equivalent crossreference or indexing method or tool;
(2) The requirements of paragraph (b)
of this section shall mean that such
information must be presented in
capital letters and boldface type or, as
warranted in the context, another
manner reasonably calculated to draw
the recipient’s attention to the
information and accord it greater

(a) * * *
(b) The commodity pool operator may
not accept or receive funds, securities or
other property from a prospective
participant unless the pool operator first
receives from the prospective
participant an acknowledgment signed
and dated by the prospective participant
stating that the prospective participant
received a Disclosure Document for the
pool. Where a Disclosure Document is
delivered to a prospective pool
participant by electronic means, in lieu
of a manually signed and dated
acknowledgment, the pool operator may
establish receipt by electronic means
that use a unique identifier to confirm
the identity of the recipient of such
Disclosure Document, Provided,
however, That the requirement of
§ 4.23(a)(3) to retain the
acknowledgment specified in this
paragraph (b) applies equally to such
substitute evidence of receipt, which
must be retained either in hard copy
form or in another form approved by the
Commission.
Subpart C—Commodity Trading
Advisors
4. Section 4.31 paragraph (b) is to be
revised to read as follows:
§ 4.31 Required delivery of Disclosure
Document to prospective clients.

(a) * * *
(b) The commodity trading advisor
may not enter into an agreement with a
prospective client to direct the client’s

39115

commodity interest account or to guide
the client’s commodity interest trading
unless the trading advisor first receives
from the prospective client an
acknowledgment signed and dated by
the prospective client stating that the
client received a Disclosure Document
for the trading program pursuant to
which the trading advisor will direct his
account or will guide his trading. Where
a Disclosure Document is delivered to a
prospective client by electronic means,
in lieu of a manually signed and dated
acknowledgment the trading advisor
may establish receipt by electronic
means that use a unique identifier to
confirm the identity of the recipient of
such Disclosure Document, Provided,
however, That the requirement of
§ 4.33(a)(2) to retain the
acknowledgment specified in this
paragraph (b) applies equally to such
substitute evidence of receipt, which
must be retained either in hard copy
form or in another form approved by the
Commission.
Issued in Washington, DC on July 15, 1997,
by the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 97–19147 Filed 7–21–97; 8:45 am]
BILLING CODE 6351–01–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 301
[TD 8725]
RIN 1545–AU64

Miscellaneous Sections Affected by
the Taxpayer Bill of Rights 2 and the
Personal Responsibility and Work
Opportunity Reconciliation Act of 1996
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
AGENCY:

This document contains final
regulations relating to joint returns,
property exempt from levy, interest,
penalties, offers in compromise, and the
awarding of costs and certain fees. The
regulations reflect changes to the law
made by the Taxpayer Bill of Rights 2
and a conforming amendment made by
the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996.
The regulations affect taxpayers with
respect to filing of returns, interest,
penalties, court costs, and payment,
deposit, and collection of taxes.
DATES: These regulations are effective
July 22, 1997.
SUMMARY:

39116

Federal Register / Vol. 62, No. 140 / Tuesday, July 22, 1997 / Rules and Regulations

For dates of applicability of these
regulations, see §§ 301.6334–1 (e) and
(f), 301.6601–1(f) (3) and (4), 301.6651–
1 (a)(3) and (g)(2), 301.6656–3(c),
301.7122–1(e)(2), 301.7430–2(c)(3)(i)(B),
301.7430–4(b)(3)(ii), 301.7430–5(a) and
(c)(3), and 301.7430–6.
FOR FURTHER INFORMATION CONTACT:
Beverly A. Baughman, (202) 622–4940
regarding joint returns and penalties;
Robert A. Miller, (202) 622–3640
regarding levy; Donna J. Welch, (202)
622–4910 regarding interest; Thomas D.
Moffitt, (202) 622–7900 regarding court
costs; and Kevin B. Connelly, (202) 622–
3640 regarding compromises (not tollfree numbers).
SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act
The collection of information
contained in these final regulations has
been reviewed and approved by the
Office of Management and Budget in
accordance with the Paperwork
Reduction Act (44 U.S.C. 3507) under
control number 1545–1356. Responses
to this collection of information are
required to obtain an award of
reasonable administrative costs.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information
displays a valid control number.
The estimated annual burden per
respondent varies from 10 minutes to 30
minutes, depending on individual
circumstances, with an estimated
average of 15 minutes.
Comments concerning the accuracy of
this burden estimate and suggestions for
reducing this burden should be sent to
the Internal Revenue Service, Attn: IRS
Reports Clearance Officer, PC:FP,
Washington, DC 20224, and to the
Office of Management and Budget, Attn:
Desk Officer for the Department of the
Treasury, Office of Information and
Regulatory Affairs, Washington, DC
20503.
Books or records relating to a
collection of information must be
retained as long as their contents may
become material in the administration
of any internal revenue law. Generally,
tax returns and tax return information
are confidential, as required by 26
U.S.C. 6103.
Background
This document contains amendments
to the Income Tax Regulations and the
Regulations on Procedure and
Administration (26 CFR parts 1 and 301,
respectively) relating to joint returns
under section 6013, levy under section
6334, interest under section 6601, the

failure to file penalty under section
6651, the failure to deposit penalty
under section 6656, compromise under
section 7122, and awards of costs and
certain fees under section 7430. These
sections were amended by the Taxpayer
Bill of Rights 2 (TBOR2) (Pub. L. 104–
168, 110 Stat. 1452 (1996)) and section
110(l)(6) of the Personal Responsibility
and Work Opportunity Reconciliation
Act of 1996 (Pub. L. 104–193, 110 Stat.
2105, 2173 (1996)). The changes made
by TBOR2 and the Personal
Responsibility and Work Opportunity
Reconciliation Act of 1996 are reflected
in the final regulations.
A notice of proposed rulemaking was
published in the Federal Register for
January 2, 1997 (62 FR 77). One written
comment was received in response to
the notice of proposed rulemaking. No
public hearing was requested or held.
The proposed regulations under
sections 6013, 6334, 6601, 6651, 6656,
7122, and 7430 are adopted by this
Treasury decision with minor revisions,
which are discussed below.
Explanation of Revisions and Summary
of Comments
The IRS received one comment
regarding the proposed regulations. The
commentator remarked that § 301.6601–
1(f)(3) of the proposed regulations is
unclear because, as drafted, the
regulation implies that interest on all
additions to tax, including those
covered by section 6601(e)(2)(B), runs
from the date of the notice and demand.
Therefore, the final regulations clarify
that interest on any addition to tax,
except additions to tax described in
section 6601(e)(2)(B), begins to run from
the date of the notice and demand.
The commentator also requested
clarification for purposes of computing
the $100,000 threshold in §§ 301.6601–
1(f)(3) and (4) and 301.6651–1(a)(3).
Sections 303(a) and (b) of TBOR2 extend
the interest-free period to 21 calendar
days or 10 business days if the amount
for which the notice and demand is
made equals or exceeds $100,000. The
commentator suggested that the
$100,000 threshold should include tax,
interest, and penalties. The language in
the statute supports this interpretation.
Under section 303(b)(1) of TBOR2, the
10 day period specifically applies to a
notice and demand for interest and
penalties. Therefore, the final
regulations clarify that 10 business days
is the applicable interest-free period if
the total amount assessed, including tax,
penalties, and interest, and shown on
the notice and demand equals or
exceeds $100,000.
In addition, § 301.6651–1(a)(3),
regarding the failure to pay penalty, has

been clarified by cross-referencing the
definitions of calendar day and business
day in § 301.6601–1(f)(5).
Effective Dates
These regulations are applicable on
July 31, 1996, except that § 301.7122–
1(e) is applicable on July 30, 1996, and
§ 301.6334–1(a)(2), (a)(3), (a)(11)(i), and
(e), § 301.6601–1(f)(3), (f)(4), and (f)(5),
§ 301.6651–1(a)(3), and § 301.7430–
4(b)(3)(ii) are applicable on January 1,
1997.
Special Analyses
It has been determined that this
Treasury decision is not a significant
regulatory action as defined in EO
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. Moreover, it is hereby
certified that the regulations in this
document will not have a significant
economic impact on a substantial
number of small entities. This
certification is based on a determination
that in the past only an average of 38
taxpayers per year, the majority of
whom were individuals, have filed a
request to recover administrative costs.
Accordingly, a Regulatory Flexibility
Analysis under the Regulatory
Flexibility Act (5 U.S.C. chapter 6) is
not required.
Pursuant to section 7805(f) of the
Internal Revenue Code, the notice of
proposed rulemaking preceding these
regulations was submitted to the Chief
Counsel for Advocacy of the Small
Business Administration for comment
on the impact of the proposed
regulations on small business.
Drafting Information: The principal
authors of these regulations are Beverly
A. Baughman and Donna J. Welch,
Office of Assistant Chief Counsel
(Income Tax and Accounting), Robert A.
Miller and Kevin B. Connelly, Office of
Assistant Chief Counsel (General
Litigation), and Thomas D. Moffitt,
Office of Assistant Chief Counsel (Field
Service). However, other personnel from
the IRS and Treasury Department
participated in their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
26 CFR Part 301
Employment taxes, Estate taxes,
Excise taxes, Gift taxes, Income taxes,

Federal Register / Vol. 62, No. 140 / Tuesday, July 22, 1997 / Rules and Regulations
Penalties, Reporting and recordkeeping
requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and 301
are 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 1.6013–2(b)(1) is
amended by removing the language
‘‘Unless’’ and adding ‘‘Beginning on or
before July 30, 1996, unless’’ in its
place.
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 3. The authority citation for part
301 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *

Par. 4. Section 301.6334–1 is
amended by:
1. Revising paragraph (a)(2).
2. Removing the language ‘‘$1,100
($1,050 for levies issued prior to January
1, 1990)’’ from paragraph (a)(3) and
adding ‘‘$1,250’’ in its place.
3. Removing the language ‘‘(relating to
aid to families with dependent
children)’’ from paragraph (a)(11)(i).
4. Revising paragraph (e).
5. Adding paragraph (f).
The additions and revisions read as
follows:
§ 301.6334–1 Property exempt from levy.

(a) * * *
(2) Fuel, provisions, furniture, and
personal effects. So much of the fuel,
provisions, furniture, and personal
effects in the taxpayer’s household, and
of the arms for personal use, livestock,
and poultry of the taxpayer, that does
not exceed $2,500 in value.
*
*
*
*
*
(e) Inflation adjustment. For any
calendar year beginning after December
31, 1997, each dollar amount referred to
in paragraphs (a)(2) and (3) of this
section will be increased by an amount
equal to the dollar amount multiplied
by the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year (substituting ‘‘calendar
year 1996’’ for ‘‘calendar year 1992’’ in
section 1(f)(3)(B)). If any dollar amount
as adjusted is not a multiple of $10, the
dollar amount will be rounded to the
nearest multiple of $10 (rounding up if
the amount is a multiple of $5).
(f) Effective date. Generally, these
provisions are applicable with respect to
levies made on or after July 1, 1989.

However, any reasonable attempt by a
taxpayer to comply with the statutory
amendments addressed by the
regulations in this section prior to
February 21, 1995, will be considered as
meeting the requirements of the
regulations in this section. In addition,
paragraphs (a)(2), (3), (11)(i) and (e) of
this section are applicable with respect
to levies issued after December 31, 1996.
Par. 5. Section 301.6601–1 is
amended by:
1. Revising paragraphs (f)(3) and (f)(4).
2. Redesignating paragraph (f)(5) as
paragraph (f)(6) and adding new
paragraph (f)(5).
The additions and revisions read as
follows:
§ 301.6601–1

*

Interest on underpayments.

*
*
*
*
(f) * * *
(3) Interest will not be imposed on
any assessable penalty, addition to the
tax (other than an addition to tax
described in section 6601(e)(2)(B)), or
additional amount if the amount is paid
within 21 calendar days (10 business
days if the amount assessed and shown
on the notice and demand equals or
exceeds $100,000) from the date of the
notice and demand. If interest is
imposed, it will be imposed only for the
period from the date of the notice and
demand to the date on which payment
is received. This paragraph (f)(3) is
applicable with respect to any notice
and demand made after December 31,
1996.
(4) If notice and demand is made after
December 31, 1996, for any amount and
the amount is paid within 21 calendar
days (10 business days if the amount
assessed and shown on the notice and
demand equals or exceeds $100,000)
from the date of the notice and demand,
interest will not be imposed for the
period after the date of the notice and
demand.
(5) For purposes of paragraphs (f)(3)
and (4) of this section—
(i) The term business day means any
day other than a Saturday, Sunday, legal
holiday in the District of Columbia, or
a statewide legal holiday in the state
where the taxpayer resides or where the
taxpayer’s principal place of business is
located. With respect to the tenth
business day (after taking into account
the first sentence of this paragraph
(f)(5)(i)), see section 7503 relating to
time for performance of acts where the
last day falls on a statewide legal
holiday in the state where the act is
required to be performed.
(ii) The term calendar day means any
day. With respect to the twenty-first
calendar day, see section 7503 relating
to time for performance of acts where

39117

the last day falls on a Saturday, Sunday,
or legal holiday.
*
*
*
*
*
Par. 6. Section 301.6651–1 is
amended by:
1. Revising paragraph (a)(3).
2. Adding paragraph (g).
The addition and revision read as
follows:
§ 301.6651–1
pay tax.

Failure to file tax return or to

(a) * * *
(3) Failure to pay tax not shown on
return. In the case of failure to pay any
amount of any tax required to be shown
on a return specified in paragraph (a)(1)
of this section that is not so shown
(including an assessment made
pursuant to section 6213(b)) within 21
calendar days from the date of the
notice and demand (10 business days if
the amount assessed and shown on the
notice and demand equals or exceeds
$100,000) with respect to any notice and
demand made after December 31, 1996,
there will be added to the amount stated
in the notice and demand the amount
specified below unless the failure to pay
the tax within the prescribed time is
shown to the satisfaction of the district
director or the director of the service
center to be due to reasonable cause and
not to willful neglect. The amount
added to the tax is 0.5 percent of the
amount stated in the notice and demand
if the failure is for not more than 1
month, with an additional 0.5 percent
for each additional month or fraction
thereof during which the failure
continues, but not to exceed 25 percent
in the aggregate. For purposes of this
paragraph (a)(3), see § 301.6601–1(f)(5)
for the definition of calendar day and
business day.
*
*
*
*
*
(g) Treatment of returns prepared by
the Secretary—(1) In general. A return
prepared by the Secretary under section
6020(b) will be disregarded for purposes
of determining the amount of the
addition to tax for failure to file any
return pursuant to paragraph (a)(1) of
this section. However, the return
prepared by the Secretary will be treated
as a return filed by the taxpayer for
purposes of determining the amount of
the addition to tax for failure to pay the
tax shown on any return and for failure
to pay the tax required to be shown on
a return that is not so shown pursuant
to paragraphs (a)(2) and (3) of this
section, respectively.
(2) Effective date. This paragraph (g)
applies to returns the due date for
which (determined without regard to
extensions) is after July 30, 1996.
Par. 7. Section 301.6656–3 is added to
read as follows:

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Federal Register / Vol. 62, No. 140 / Tuesday, July 22, 1997 / Rules and Regulations

§ 301.6656–3

Abatement of penalty.

(a) Exception for first time depositors
of employment taxes—(1) Waiver. The
Secretary will generally waive the
penalty imposed by section 6656(a) on
a person’s failure to deposit any
employment tax under subtitle C of the
Internal Revenue Code if—
(i) The failure is inadvertent;
(ii) The person meets the
requirements referred to in section
7430(c)(4)(A)(ii) (relating to the net
worth requirements applicable for
awards of attorney’s fees);
(iii) The failure occurs during the first
quarter that the person is required to
deposit any employment tax; and
(iv) The return of the tax is filed on
or before the due date.
(2) Inadvertent failure. For purposes
of paragraph (a)(1)(i) of this section, the
Secretary will determine if a failure to
deposit is inadvertent based on all the
facts and circumstances.
(b) Deposit sent to Secretary. The
Secretary may abate the penalty
imposed by section 6656(a) if the first
time a depositor is required to make a
deposit, the amount required to be
deposited is inadvertently sent to the
Secretary instead of to the appropriate
government depository.
(c) Effective date. This section applies
to deposits required to be made after
July 30, 1996.
Par. 8. In § 301.7122–1, paragraph (e)
is revised to read as follows:
§ 301.7122–1

*

Compromises.

*
*
*
*
(e) Record—(1) In general. If an offer
in compromise is accepted, there will be
placed on file the opinion of the Chief
Counsel of the IRS with respect to the
compromise, with the reasons for the
opinion, and including a statement of—
(i) The amount of tax assessed;
(ii) The amount of interest, additional
amount, addition to the tax, or
assessable penalty, imposed by law on
the person against whom the tax is
assessed; and
(iii) The amount actually paid in
accordance with the terms of the
compromise.
(2) Exception. For compromises
accepted on or after July 30, 1996, no
opinion will be required with respect to
the compromise of any civil case in
which the unpaid amount of tax
assessed (including any interest,
additional amount, addition to the tax,
or assessable penalty) is less than
$50,000. However, the compromise will
be subject to continuing quality review
by the Secretary.
*
*
*
*
*

Par 9. Section 301.7430–0 is amended
by adding entries for § 301.7430–1(b)(4)
and 301.7430–5(c)(3) to read as follows:
§ 301.7430–0

*

*

*

§ 301.7430–1
remedies.

*

*

*

Table of contents.

*

*

Exhaustion of administrative

*

*

(b) * * *
(4) Failure to agree to extension of time for
assessments.

*

*

*

§ 301.7430–5

*

*

*

*

*

Prevailing party.

*

*

(c) * * *
(3) Presumption.

*

*
*
*
*
Par. 10. Section 301.7430–1 is
amended by adding paragraph (b)(4) to
read as follows:
§ 301.7430–1
remedies.

Exhaustion of administrative

*

*
*
*
*
(b) * * *
(4) Failure to agree to extension of
time for assessments. Any failure by the
prevailing party to agree to an extension
of the time for the assessment of any tax
will not be taken into account for
purposes of determining whether the
prevailing party has exhausted the
administrative remedies available to the
party within the Internal Revenue
Service.
*
*
*
*
*
Par. 11. Section 301.7430–2 is
amended by:
1. Removing the language
‘‘7430(c)(4)(B)(ii)’’ from the third
sentence of paragraph (b)(2) and adding
‘‘7430(c)(4)(C)(ii)’’ in its place.
2. Removing the colon from the
introductory text of paragraph (c)(3) and
adding a dash in its place.
3. Revising paragraph (c)(3)(i)(B).
4. Removing the language ‘‘If more
than $75’’ from paragraph (c)(3)(ii)(C)
and adding ‘‘In the case of
administrative proceedings commenced
after July 30, 1996, if more than $110’’
in its place.
The revision reads as follows:
§ 301.7430–2 Requirements and
procedures for recovery of reasonable
administrative costs.

*

*
*
*
*
(c) * * *
(3) * * *
(i) * * *
(B) A clear and concise statement of
the reasons why the taxpayer alleges
that the position of the Internal Revenue
Service in the administrative proceeding
was not substantially justified. For
administrative proceedings commenced

after July 30, 1996, if the taxpayer
alleges that the Internal Revenue Service
did not follow any applicable published
guidance, the statement must identify
all applicable published guidance that
the taxpayer alleges that the Internal
Revenue Service did not follow. For
purposes of this paragraph (c)(3)(i)(B),
the term applicable published guidance
means final or temporary regulations,
revenue rulings, revenue procedures,
information releases, notices,
announcements, and, if issued to the
taxpayer, private letter rulings, technical
advice memoranda, and determination
letters. Also, for purposes of this
paragraph (c)(3)(i)(B), the term
administrative proceeding includes only
those administrative proceedings or
portions of administrative proceedings
occurring on or after the administrative
proceeding date as defined in
§ 301.7430–3(c);
*
*
*
*
*
Par. 12. Section 301.7430–4 is
amended by:
1. Removing the language ‘‘$75’’ from
paragraph (b)(3)(i) and adding ‘‘, in the
case of proceedings commenced after
July 30, 1996, $110’’ in its place.
2. Revising paragraph (b)(3)(ii).
3. Removing the language ‘‘$75’’ from
the first, second, and third sentences of
paragraph (b)(3)(iii)(B) and adding
‘‘$110’’ in its place.
4. Removing the language ‘‘$75’’ from
the first sentence of paragraph
(b)(3)(iii)(C) and adding ‘‘$110’’ in its
place.
5. Removing the language ‘‘$75’’ from
the third sentence of the example in
paragraph (b)(3)(iii)(D) and adding
‘‘$110’’ in its place.
6. Removing the language ‘‘$75’’ from
the second and third sentences of
paragraph (c)(2)(ii) and adding ‘‘$110’’
in its place.
The revision reads as follows:
§ 301.7430–4
costs.

*

Reasonable administrative

*
*
*
*
(b) * * *
(3) * * *
(ii) Cost of living adjustment. The
Internal Revenue Service will make a
cost of living adjustment to the $110 per
hour limitation for fees incurred in any
calendar year beginning after December
31, 1996. The cost of living adjustment
will be an amount equal to $110
multiplied by the cost of living
adjustment determined under section
1(f)(3) for the calendar year (substituting
‘‘calendar year 1995’’ for ‘‘calendar year
1992’’ in section 1(f)(3)(B)). If the dollar
limitation as adjusted by this cost of
living increase is not a multiple of $10,
the dollar amount will be rounded to

Federal Register / Vol. 62, No. 140 / Tuesday, July 22, 1997 / Rules and Regulations
the nearest multiple of $10 (rounding up
if the amount is a multiple of $5).
*
*
*
*
*
Par. 13. Section 301.7430–5 is
amended by:
1. Revising paragraph (a).
2. Adding paragraph (c)(3).
The addition and revision read as
follows:
§ 301.7430–5

Prevailing party.

(a) In general. For purposes of an
award of reasonable administrative costs
under section 7430 in the case of
administrative proceedings commenced
after July 30, 1996, a taxpayer is a
prevailing party only if—
(1) The position of the Internal
Revenue Service was not substantially
justified;
(2) The taxpayer substantially prevails
as to the amount in controversy or with
respect to the most significant issue or
set of issues presented; and
(3) The taxpayer satisfies the net
worth and size limitations referenced in
paragraph (f) of this section.
*
*
*
*
*
(c) * * *
(3) Presumption. If the Internal
Revenue Service did not follow any
applicable published guidance in an
administrative proceeding commenced
after July 30, 1996, the position of the
Internal Revenue Service, on those
issues to which the guidance applies
and for all periods during which the
guidance was not followed, will be
presumed not to be substantially
justified. This presumption may be
rebutted. For purposes of this paragraph
(c)(3), the term applicable published
guidance means final or temporary
regulations, revenue rulings, revenue
procedures, information releases,
notices, announcements, and, if issued
to the taxpayer, private letter rulings,
technical advice memoranda, and
determination letters (see
§ 601.601(d)(2) of this chapter). Also, for
purposes of this paragraph (c)(3), the
term administrative proceeding includes
only those administrative proceedings
or portions of administrative
proceedings occurring on or after the
administrative proceeding date as
defined in § 301.7430–3(c).
*
*
*
*
*
Par. 14. Section 301.7430–6 is revised
to read as follows:
§ 301.7430–6

Effective dates.

Sections 301.7430–2 through
301.7430–6, other than §§ 301.7430–
2(b)(2), (c)(3)(i)(B), (c)(3)(ii)(C), and
(c)(5); §§ 301.7430–4(b)(3)(i), (b)(3)(ii),
(b)(3)(iii)(B), (b)(3)(iii)(C), (b)(3)(iii)(D),
and (c)(2)(ii); and §§ 301.7430–5(a) and

39119

(c)(3), apply to claims for reasonable
administrative costs filed with the
Internal Revenue Service after December
23, 1992, with respect to costs incurred
in administrative proceedings
commenced after November 10, 1988.
Section 301.7430–2(c)(5) is applicable
March 23, 1993. Sections 301.7430–
2(b)(2), (c)(3)(i)(B), and (c)(3)(ii)(C);
301.7430–4(b)(3)(i), (b)(3)(ii),
(b)(3)(iii)(B), (b)(3)(iii)(C), (b)(3)(iii)(D),
and (c)(2)(ii); and 301.7430–5(a) and
(c)(3) are applicable for administrative
proceedings commenced after July 30,
1996.

officers killed or permanently and
totally disabled in the line of duty.

Dated: June 27, 1997.
Margaret Milner Richardson,
Commissioner of Internal Revenue.

Executive Order 12612
This regulation will not have
substantial direct effects on the States,
on the relationship between the national
government and the States, or on
distribution of power and
responsibilities among the various
levels of government. Therefore, in
accordance with Executive Order 12612,
it is determined that this rule does not
have sufficient federalism implications
to warrant the preparation of a
Federalism Assessment.

Approved:
Donald C. Lubick,
Acting Assistant Secretary of the Treasury.
[FR Doc. 97–19052 Filed 7–21–97; 8:45 am]
BILLING CODE 4830–01–P

DEPARTMENT OF JUSTICE
Office of Justice Programs
28 CFR Part 32
[OJP(BJA)–1121]
RIN 1121–AA44

Federal Law Enforcement Dependents
Assistance Program; Correction
Office of Justice Programs,
Bureau of Justice Assistance, Public
Safety Officers’ Benefits Office, Justice.
ACTION: Correction to final rule.
AGENCY:

This document contains
corrections to the final regulations that
were published Tuesday, July 15, 1997
(62 FR 37713). These regulations were
issued to comply with the Federal Law
Enforcement Dependents Assistance
(FLEDA) Act of 1996.
DATES: This correction is effective July
22, 1997.
FOR FURTHER INFORMATION CONTACT: Jeff
Allison, Chief, Public Safety Officers’
Benefits Office, 633 Indiana Avenue,
NW., Washington, DC 20531.
Telephone: (202) 307–0635.
SUPPLEMENTARY INFORMATION: The final
regulations that are the subject of these
corrections were drafted in accordance
with the Federal Law Enforcement
Dependents Assistance Act, Pub. L.
104–238, 110 Stat. 3114, Oct. 3, 1996,
which established a new subpart 2 in
Part L of title I of the Omnibus Crime
Control and Safe Streets Act of 1968, 42
U.S.C. 3796 et seq.) to provide financial
assistance to the children and spouses
of Federal civilian law enforcement
SUMMARY:

Executive Order 12866
This regulation has been written and
reviewed in accordance with Executive
Order 12866, section 1(b), Principles of
Regulation. The Office of Justice
Programs has determined that this rule
is not a ‘‘significant regulatory action’’
under Executive Order 12866, section
3(f), Regulatory Planning and Review,
and accordingly this rule has not been
reviewed by the Office of Management
and Budget.

Regulatory Flexibility Act
The Office of Justice Programs, in
accordance with the Regulatory
Flexibility Act (5 U.S.C. 605(b)), has
reviewed this regulation and by
approving it certifies that this regulation
will not have a significant economic
impact upon a substantial number of
small entities for the following reasons:
The FLEDA program will be
administered by the Office of Justice
Programs, and any funds distributed
under it shall be distributed to
individuals, not entities, and the
economic impact is limited to the Office
of Justice Program’s appropriated funds.
Unfunded Mandates Reform Act of
1995
This rule will not result in the
expenditure by State, local and tribal
governments, in the aggregate, or by the
private section, of $100,000,000 or more
in any one year, and it will not
significantly or uniquely affect small
governments. Therefore, no actions were
deemed necessary under the provisions
of the Unfunded Mandates Reform Act
of 1995.
Small Business Regulatory Enforcement
Fairness Act of 1996
This rule is not a major rule as
defined by section 804 of the Small
Business Regulatory Enforcement
Fairness Act of 1996. This rule will not
result in an annual effect on the
economy of $100,000,000 or more; a
major increase in cost or prices; or