Td 8963

intended tax consequences) are properly
allowable under the Internal Revenue
Code for substantially similar transactions. There is no minimum period of
time for which such a generally accepted
understanding must exist. In general,
however, a tax shelter promoter (or other
person who would be responsible for registration under this section) cannot reasonably determine whether the intended tax
treatment of a transaction has become
generally accepted unless information relating to the structure and tax treatment of
such transactions has been in the public
domain (e.g., rulings, published articles,
etc.) and widely known for a sufficient period of time (ordinarily a period of years)
to provide knowledgeable tax practitioners
and the IRS reasonable opportunity to
evaluate the intended tax treatment. The
mere fact that one or more knowledgeable
tax practitioners have provided an opinion
or advice to the effect that the intended tax
treatment of the transaction should or will
be sustained, if challenged by the IRS, is
not sufficient to satisfy the requirements
of this paragraph (b)(3)(ii).
(4) * * *
(i) In the case of a transaction other
than a transaction described in paragraph
(b)(2) of this section, the tax shelter promoter (or other person who would be responsible for registration under this section) reasonably determines that there is
no reasonable basis under Federal tax law
for denial of any significant portion of the
expected Federal income tax benefits
from the transaction. This paragraph
(b)(4)(i) applies only if the tax shelter
promoter (or other person who would be
responsible for registration under this section) reasonably determines that there is
no basis that would meet the standard applicable to taxpayers under §1.6662–
3(b)(3) of this chapter under which the
IRS could disallow any significant portion of the expected Federal income tax
benefits of the transaction. Thus, the reasonable basis standard is not satisfied by
an IRS position that would be merely arguable or that would constitute merely a
colorable claim. However, the determination of whether the IRS would or would
not have a reasonable basis for such a position must take into account the entirety
of the transaction and any combination of
tax consequences that are expected to result from any component steps of the

2001–35 I.R.B.

transaction, must not be based on any unreasonable or unrealistic factual assumptions, and must take into account all relevant aspects of Federal tax law, including
the statute and legislative history, treaties,
administrative guidance, and judicial decisions that establish principles of general
application in the tax law (e.g., Gregory v.
Helvering, 293 U.S. 465 (1935)). The determination of whether the IRS would or
would not have such a reasonable basis is
qualitative in nature and does not depend
on any percentage or other quantitative
assessment of the likelihood that the taxpayer would ultimately prevail if a significant portion of the expected tax benefits
were disallowed by the IRS.
*****
(6) Example. The following example illustrates the application of paragraphs
(b)(1) through (4) of this section. Assume,
for purposes of the example, that the transaction is not the same as or substantially
similar to any of the types of transactions
that the IRS has identified as listed transactions under section 6111 and, thus, is not
described in paragraph (b)(2) of this section. The example is as follows:
Example. * * *
(ii) Analysis. The transaction represented by this combination of financial instruments is a transaction described in
paragraph (b)(3) of this section. However,
if Y is uncertain whether this transaction is
described in paragraph (b)(3) of this section, or is otherwise uncertain whether
registration is required, Y may apply for a
ruling under paragraph(b)(5) of this section, and the transaction will not be required to be registered while the ruling is
pending or for sixty days thereafter.
(c) * * *
(3) Presumption. Unless facts and circumstances clearly indicate otherwise, an
offer is not considered made under conditions of confidentiality if the tax shelter
promoter provides express written authorization to each offeree permitting the offeree (and each employee, representative,
or other agent of such offeree) to disclose
to any and all persons, without limitation
of any kind, the structure and tax aspects
of the transaction, and all materials of any
kind (including opinions or other tax
analyses) that are provided to the offeree
related to such structure and tax aspects.
*****
(e) * * *

197

(2) * * *
(ii) * * *
(E) Sign the Form 8264 and file the
form as prescribed in the instructions to
the form.
*****
(h) Effective date. * * * However, paragraphs (b)(1), (b)(3)(ii), (b)(4)(i), (b)(6)
Example (i) and (ii), (c)(3), and (e)(2)
(ii)(E) of this section apply to confidential
corporate tax shelters in which any interests are offered for sale after August 2,
2001. The rules in paragraphs (b)(1),
(b)(3)(ii), (b)(4)(i), (b)(6), (b)(6) Example
(i) and (ii), (c)(3), and (e)(2)(ii)(E), of this
section may be relied upon for confidential corporate tax shelters in which any interests are offered for sale after February
28, 2000. Otherwise, the rules that apply
to confidential corporate tax shelters in
which any interests are offered for sale
after February 28, 2000, and on or before
August 2, 2001, are contained in this
§301.6111–2T in effect prior to August 2,
2001 (see 26 CFR part 301 revised as of
April 1, 2001).
Par. 5. Section 301.6112–1T is
amended by removing the authority citation immediately following the section.
David A. Mader,
Acting Deputy Commissioner
of Internal Revenue.
Approved July 31, 2001.
Mark Weinberger,
Assistant Secretary
of the Treasury.
(Filed by the Office of the Federal Register on August 2, 2001, 2:50 p.m., and published in the issue of
the Federal Register for August 7, 2001, 66 F.R.
41133)

Section 6071.—Time for Filing
Returns and Other Documents
26 CFR 40.6071(a)–1: Time for filing returns.

T.D. 8963
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 40
Deposits of Excise Taxes
AGENCY: Internal Revenue Service
(IRS), Treasury.

August 27, 2001

ACTION: Final regulations.
SUMMARY: This document contains the
final regulations relating to the requirements for excise tax returns, payments,
and deposits. These regulations affect
persons required to report liability for excise taxes on Form 720, “Quarterly Federal Excise Tax Return.”
DATES: Effective Date: These regulations are effective August 9, 2001.
Applicability Date: These regulations
are applicable with respect to returns and
deposits that relate to calendar quarters
beginning on or after October 1, 2001.
FOR FURTHER INFORMATION CONTACT: Susan Athy (202) 622-3130 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains final amendments to the Excise Tax Procedural Regulations (26 CFR part 40) relating to the requirements for excise tax returns,
payments, and deposits. On January 7,
2000, an advance notice of proposed rulemaking (Ann. 2000–5, 2000–4 I.R.B. 427)
that invited comments from the public on
issues relating to the requirements for excise tax returns and deposits was published in the Federal Register (65 FR
1076). Several written comments were received and considered in drafting the proposed regulations. On February 16, 2001,
a notice of proposed rulemaking
(REG–106892–00, 2001–15 I.R.B. 1060)
was published in the Federal Register (66
FR 10650). Written comments and requests for a public hearing were solicited.
Written comments responding to the
notice were received from one commentator. The comments requested that the safe
harbor rule based on look-back quarter liability be modified to be applicable: to
each semimonthly period in a quarter if
one-sixth of look-back quarter liability is
deposited during that semimonthly period; when a taxpayer’s liability includes
new or reinstated taxes; and when a new
legal entity includes a party that filed a
Form 720 for the second preceding quarter. The final regulations do not adopt the
requested modifications to the look-back
safe harbor rule because doing so could
significantly reduce the percentage of excise tax liability deposited without any

August 27, 2001

corresponding reduction in the complexity of the deposit rules.
No public hearing was requested or
held. After consideration of all of the
comments, the proposed regulations are
adopted without change by this Treasury
decision.
Special Analyses
It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order
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 and, because these regulations do
not impose on small entities a collection
of information requirement, the Regulatory Flexibility Act (5 U.S.C. chapter 6)
does not apply. Therefore, a Regulatory
Flexibility Analysis 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 its impact on
small business.
Drafting Information
The principal author of these regulations is Susan Athy, Office of Associate
Chief Counsel (Passthroughs and Special
Industries). However, other personnel
from the IRS and Treasury Department
participated in their development.
* * * * *
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 40 is
amended as follows:
PART 40—EXCISE TAX
PROCEDURAL REGULATIONS
Paragraph 1. The authority citation for
part 40 is amended by removing the entries for Sections 40.6071(a)–1 and
40.6071(a)–2, and Sections 40.6302(c)–2,
40.6302(c)–3, and 40.6302(c)–4; and
adding entries in numerical order to read
in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 40.6071(a)–1 also issued under
26 U.S.C. 6071(a). * * *

198

Section 40.6302(c)–2 also issued under
26 U.S.C. 6302(a).
Section 40.6302(c)–3 also issued under
26 U.S.C. 6302(a). * * *
§40.0–1 [Amended]
Par. 2. Section 40.0–1 is amended as
follows:
1. Paragraphs (d) and (e) are removed.
2. Paragraph (f) is redesignated as new
paragraph (d).
§40.6011(a)–1 [Amended]
Par. 3. Section 40.6011(a)–1 is
amended by removing paragraph (c).
§40.6011(a)–2 [Amended]
Par. 4. Section 40.6011(a)–2 is
amended as follows:
1. In paragraph (b)(2), the language
“§40.6302(c)–1(f)(2)” is removed and
“§40.6302(c)–1(e)(2)” is added in its
place.
2. Paragraph (d) is removed.
Par. 5. Section 40.6071(a)–1 is
amended by revising paragraphs (a),
(b)(2), and (c) to read as follows:
§40.6071(a)–1 Time for filing returns.
(a) Quarterly returns. Each quarterly
return required under §40.6011(a)–1(a)(2)
must be filed by the last day of the first
calendar month following the quarter for
which it is made.
(b) * * *
(2) Semimonthly returns. Each semimonthly return required under §40.6011
(a)–1(b) must be filed by the last day of
the semimonthly period (as defined in
§40.0–1(c)) following the semimonthly
period for which it is made.
(c) Effective date. This section is applicable with respect to returns that relate
to calendar quarters beginning on or after
October 1, 2001.
§40.6071(a)–2 [Removed]
Par. 6. Section 40.6071(a)–2 is removed.
§40.6091–1 [Amended]
Par. 7. Section 40.6091–1 is amended
by removing paragraph (d).
Par. 8. Section 40.6101–1 is revised to
read as follows:
§40.6101–1 Period covered by returns.

2001–35 I.R.B.

See §40.6011(a)–1(a)(2) for the rules
relating to the period covered by the return.
Par. 9. Sections 40.6109(a)–1 and
40.6151(a)–1 are revised to read as follows:
§40.6109(a)–1 Identifying numbers.
Every person required under
§40.6011(a)–1 to make a return must provide the identifying number required by
the instructions applicable to the form on
which the return is made.
§40.6151(a)–1 Time and place for paying
tax shown on return.
Except as provided by statute, the tax
must be paid at the time prescribed in
§40.6071(a)–1 for filing the return, and at
the place prescribed in §40.6091–1 for filing the return.
Par. 10. Section 40.6302(c)–1 is revised to read as follows:
§40.6302(c)–1 Use of Government
depositaries.
(a) In general—(1) Semimonthly deposits required. Except as provided by
statute or by paragraph (e) of this section,
each person required under §40.6011(a)
–1(a)(2) to file a quarterly return must
make a deposit of tax for each semimonthly period (as defined in §40.0–1(c))
in which tax liability is incurred.
(2) Treatment of taxes imposed by
chapter 33. For purposes of this part 40,
tax imposed by chapter 33 (relating to
communications and air transportation) is
treated as a tax liability incurred during
the semimonthly period—
(i) In which that tax is collected; or
(ii) In the case of the alternative
method, in which that tax is considered as
collected.
(3) Definition of net tax liability. Net
tax liability means the tax liability for the
specified period plus or minus any adjustments allowable in accordance with the
instructions applicable to the form on
which the return is made.
(4) Computation of net tax liability for
a semimonthly period. The net tax liability for a semimonthly period may be computed by—
(i) Determining the net tax liability incurred during the semimonthly period; or
(ii) Dividing by two the net tax liability

2001–35 I.R.B.

incurred during the calendar month that
includes that semimonthly period, provided that this method of computation is
used for all semimonthly periods in the
calendar quarter.
(b) Amount of deposit—(1) In general.
The deposit of tax for each semimonthly
period must be not less than 95 percent of
the amount of net tax liability incurred
during the semimonthly period.
(2) Safe harbor rules—(i) Applicability. The safe harbor rules of this paragraph (b)(2) are applied separately to
taxes deposited under the alternative
method provided in §40.6302(c)–3 (alternative method taxes) and to the other
taxes for which deposits are required
under this section (regular method
taxes).
(ii) Regular method taxes. Any person
that made a return of tax reporting regular
method taxes for the second preceding
calendar quarter (the look-back quarter) is
considered to have complied with the requirement of this part 40 for deposit of
regular method taxes for the current calendar quarter if—
(A) The deposit of regular method
taxes for each semimonthly period in the
current calendar quarter is not less than
1/6 of the net tax liability for regular
method taxes reported for the look-back
quarter;
(B) Each deposit is made on time;
(C) The amount of any underpayment
of regular method taxes is paid by the due
date of the return; and
(D) The person’s liability does not include any regular method tax that was not
imposed at all times during the look-back
quarter or a tax on a chemical not subject
to tax at all times during the look-back
quarter.
(iii) Alternative method taxes. Any
person that made a return of tax reporting
alternative method taxes for the look-back
quarter is considered to have complied
with the requirement of this part 40 for
deposit of alternative method taxes for the
current calendar quarter if—
(A) The deposit of alternative method
taxes for each semimonthly period in the
current calendar quarter is not less than
1/6 of the net tax liability for alternative
method taxes reported for the look-back
quarter;
(B) Each deposit is made on time;
(C) The amount of any underpayment

199

of alternative method taxes is paid by the
due date of the return; and
(D) The person’s liability does not include any alternative method tax that was
not imposed at all times during the lookback quarter and the month preceding the
look-back quarter.
(iv) Modification for tax rate increase.
The safe harbor rules of this paragraph
(b)(2) do not apply to regular method taxes
or alternative method taxes for the first and
second calendar quarters beginning on or
after the effective date of an increase in the
rate of any tax to which this part 40 applies
unless the deposit of those taxes for each
semimonthly period in the calendar quarter
is not less than 1/6 of the tax liability the
person would have had with respect to
those taxes for the look-back quarter if the
increased rate of tax had been in effect for
the look-back quarter.
(v) Failure to comply with deposit requirements. If a person fails to make deposits as required under this part 40, that
failure may be reported to the appropriate
IRS office and the IRS may withdraw the
person’s right to use the safe harbor rules
of this paragraph (b)(2).
(c) Time to deposit—(1) In general.
The deposit of tax for any semimonthly
period must be made by the 14th day of
the following semimonthly period unless
such day is a Saturday, Sunday, or legal
holiday in the District of Columbia in
which case the immediately preceding
day which is not a Saturday, Sunday, or
legal holiday in the District of Columbia
is treated as the 14th day. Thus, generally,
the deposit of tax for the first semimonthly period in a month is due by the
29th day of that month and the deposit of
tax for the second semimonthly period in
a month is due by the 14th day of the following month.
(2) Exceptions. See §40.6302(c)–2 for
the special rules for September. See
§40.6302(c)–3 for the special rules for deposits under the alternative method.
(d) Remittance of deposits—(1) Deposits by federal tax deposit coupon. A
completed Form 8109, “Federal Tax
Deposit Coupon,” must accompany
each deposit. The deposit must be remitted, in accordance with the instructions applicable to the form, to a financial institution authorized as a
depositary for federal taxes (as provided
in 31 CFR part 203).

August 27, 2001

(2) Deposits by electronic funds transfer. For the requirement to deposit excise
taxes by electronic funds transfer, see
§31.6302–1(h) of this chapter. A taxpayer
not required to deposit by electronic funds
transfer pursuant to §31.6302–1(h) of this
chapter remains subject to the rules of this
paragraph (d).
(e) Exceptions—(1) Taxes excluded.
No deposit is required in the case of the
taxes imposed by—
(i) Section 4042 (relating to fuel used
on inland waterways);
(ii) Section 4161 (relating to sport fishing equipment and bows and arrow components);
(iii) Section 4682(h) (relating to floor
stocks tax on ozone-depleting chemicals);
and
(iv) Section 48.4081–3(b)(1)(iii) of
this chapter (relating to certain removals
of gasohol from refineries).
(2) One-time filings. No deposit is required in the case of any taxes reportable
on a one-time filing (as defined in
§40.6011(a)–2(b)).
(3) De minimis exception. For any calendar quarter, no deposit is required if the
net tax liability for the quarter does not
exceed $2,500.
(f) Effective date. This section is applicable with respect to deposits that relate to calendar quarters beginning on or
after October 1, 2001.
Par. 11. Section 40.6302(c)–2 is revised to read as follows:
§40.6302(c)–2 Special rules for
September.
(a) In general—(1) Separate deposits
required for the second semimonthly period. In the case of deposits of taxes not
deposited under the alternative method
(regular method taxes) for the second
semimonthly period in September, separate deposits are required for the period
September 16th through 26th and for the
period September 27th through 30th.
(2) Amount of deposit—(i) In general.
The deposits of regular method taxes for
the period September 16th through 26th
and the period September 27th through
30th must be not less than 95 percent of
the net tax liability for regular method
taxes incurred during the respective periods. The net tax liability for regular
method taxes incurred during these periods may be computed by—

August 27, 2001

(A) Determining the amount of net tax
liability for regular method taxes reasonably expected to be incurred during the
second semimonthly period in September;
(B) Treating 11/15 of the amount determined under paragraph (a)(2)(i)(A) of this
section as the net tax liability for regular
method taxes incurred during the period
September 16th through 26th; and
(C) Treating the remainder of the
amount determined under paragraph
(a)(2)(i)(A) of this section (adjusted to reflect the amount of net tax liability for
regular method taxes actually incurred
through the end of September) as the net
tax liability for regular method taxes incurred during the period September 27th
through 30th.
(ii) Safe harbor rules. The safe harbor
rules in §40.6302(c)–1(b)(2) do not apply
for the third calendar quarter unless—
(A) The deposit of taxes for the period
September 16th through 26th is not less
than 11/90 of the net tax liability for regular method taxes reported for the lookback quarter; and
(B) The total deposit of taxes for the
second semimonthly period in September
is not less than 1/6 of the net tax liability
for regular method taxes reported for the
look-back quarter.
(3) Time to deposit. (i) The deposit required for the period beginning September 16th must be made by September 29th
unless—
(A) September 29th is a Saturday, in
which case the deposit must be made by
September 28th; or
(B) September 29th is a Sunday, in
which case the deposit must be made by
September 30th.
(ii) The deposit required for the period
ending September 30th must be made at
the time prescribed in §40.6302(c)–1(c).
(b) Persons not required to use electronic funds transfer. The rules of this
section are applied with the following
modifications in the case of a person not
required to deposit taxes by electronic
funds transfer.
(1) Periods. The deposit periods for
the separate deposits required under paragraph (a) of this section are September
16th through 25th and September 26th
through 30th.
(2) Amount of deposit. In computing
the amount of deposit required under
paragraph (a)(2)(i)(B) of this section, the

200

applicable fraction is 10/15. In computing the amount of deposit required under
paragraph (a)(2)(ii)(A) of this section, the
applicable fraction is 10/90.
(3) Time to deposit. In the case of the
deposit required under paragraph (a) of
this section for the period beginning September 16th, the deposit must be made by
September 28th unless—
(i) September 28th is a Saturday, in
which case the deposit must be made by
September 27th; or
(ii) September 28th is a Sunday, in
which case the deposit must be made by
September 29th.
(c) Effective date. This section is applicable with respect to deposits that relate to calendar quarters beginning on or
after October 1, 2001.
Par. 12. Section 40.6302(c)–3 is
amended as follows:
1. In paragraph (b)(1)(ii), the language
“9-day rule of §40.6302(c)–1(b)(6)” is removed and “rule of §40.6302(c)–1(c)(1)”
is added in its place.
2. In paragraph (b)(3), last sentence,
the language “6th” is removed and “16th”
is added in its place.
3. In paragraph (d), first sentence, the
language “not less than” is removed and
“not less than 95 percent of” is added in
its place.
4. In paragraph (f)(4) introductory text,
the language “§40.6302(c)–1(c)(2)(i)” is
removed and “§40.6302(c)–1(b)(2)” is
added in its place.
5. Paragraphs (f)(5) and (f)(7) are removed.
6. Paragraph (f)(6) is redesignated as
paragraph (f)(5).
7. Paragraph (g) is revised.
8. Paragraph (h) is removed.
The revision reads as follows:
§40.6302(c)–3 Special rules for use of
Government depositaries under chapter 33.
*****
(g) Effective date. This section is applicable with respect to deposits and returns that relate to taxes that are considered as collected in calendar quarters
beginning on or after October 1, 2001.
§40.6302(c)–4 [Removed]
Par. 13. Section 40.6302(c)–4 is removed.

2001–35 I.R.B.

§40.9999–1 [Removed]
Par. 14. Section 40.9999–1 is removed.
Robert E. Wenzel,
Deputy Commissioner
of Internal Revenue.
Approved July 31, 2001.
Mark A. Weinberger,
Assistant Secretary
of the Treasury.
(Filed by the Office of the Federal Register on August 8, 2001, 8:45 a.m., and published in the issue of
the Federal Register for August 9, 2001, 66 F.R.
41775)

Section 7701.—Definitions
26 CFR 301.7701–7: Trusts–domestic and foreign.

T.D. 8962
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
Classification of Certain Pension
and Employee Benefit Trusts,
and Other Trusts
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains
final regulations amending the regulations
defining a domestic or foreign trust for
federal tax purposes. The regulations will
affect certain specified employee benefit
trusts and investment trusts. The regulations provide that these employee benefit
trusts and investment trusts are deemed to
satisfy the control test for domestic trust
treatment if United States trustees control
all of the substantial decisions of the trust
made by the trustees of the trust.
DATES: Effective Date: These regulations are effective August 9, 2001.
Applicability Dates: For dates of
applicability of §301.7701–7(d)(1)
(iv) and (v) Examples 1 and 5, see
§ 301.7701–7(e)(3).
FOR FURTHER INFORMATION CONTACT: James A. Quinn at (202) 6223060 (not a toll-free number).
SUPPLEMENTARY INFORMATION:

2001–35 I.R.B.

Background
On October 12, 2000, the Treasury Department and the IRS published a notice
of proposed rulemaking (REG–
108553–00, 2000–44 I.R.B. 452) under
section 7701 of the Internal Revenue
Code (Code) in the Federal Register (65
FR 60822). The proposed regulations add
group trusts consisting of qualified plan
trusts and IRA trusts, as described in Rev.
Rul. 81–100 (1981–1 C.B. 326), and certain investment trusts to the categories of
trusts that may use the safe harbor in
§301.7701–7(d)(1)(iv) of the Procedure
and Administration Regulations relating
to the application of the control test of
section 7701(a)(30)(E). The proposed
regulations also modify the safe harbor in
§301.7701–7(d)(1)(iv) to clarify that employee benefit trusts and investment trusts
identified in the regulations are deemed to
satisfy the control test if United States
trustees control all of the substantial decisions of the trust made by the trustees of
the trust. No one requested to speak at the
public hearing scheduled for January 31,
2001. Accordingly, the public hearing
was canceled on January 26, 2001 (66 FR
7867). Comments in response to the notice of proposed rulemaking were received and are addressed in the following
Explanation and Summary of Comments.
This document finalizes the proposed regulations without change.
Explanation and Summary of
Comments

Application to Certain Pension Trusts
Created or Organized in Puerto Rico
Section 1022(i)(1) of the Employee
Retirement Income Security Act of
1974, Public Law 93–406 (88 Stat. 829)
(September 2, 1974), provides for tax
exemption for certain trusts created or
organized in Puerto Rico that form part
of a pension, profit-sharing, or stock
bonus plan. Section 1022(i)(2) and
§1.401(a)–50 of the Income Tax Regulations generally provide that the administrator of such a trust may elect to have
the trust treated as a trust created or organized in the United States for purposes of section 401(a). In light of the
changes made to section 7701(a)(30) in
the Small Business Job Protection Act,
Public Law 104–188 (110 Stat. 1755)
(August 20, 1996), and the Taxpayer Relief Act of 1997, Public Law 105–34
(111 Stat. 788) (August 5, 1997), and the
ensuing regulations, some taxpayers
have expressed concerns regarding the
continuing application of sections
1022(i)(1) and (2) and §1.401–50 to a
pension trust created or organized in
Puerto Rico that is not a domestic trust
within the meaning of section
7701(a)(30). Because the application of
these provisions is not restricted to
trusts that are domestic trusts within the
meaning of section 7701(a)(30), the
1996 and 1997 amendments to section
7701(a)(30) and the ensuing regulations
do not affect the application of these
provisions.

Reporting Requirements for Foreign
Widely Held Fixed Investment Trusts

Special Analyses

Two commentators were concerned
about United States investors in widely
held fixed investment trusts that are outside the safe harbor provided by
§301.7701–7(d)(1)(iv)(I) and therefore
are treated as foreign trusts. These commentators suggested that United States investors in such trusts should not be subject to reporting under section 6048 and to
the corresponding penalties in section
6677 for failure to comply with the section 6048 reporting requirements. A guidance project under section 671 concerning
reporting requirements for all widely held
fixed investment trusts is currently under
consideration. Accordingly, these regulations do not specifically address this
issue.

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive
Order 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, and, because the regulations do not impose a collection of
information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter
6) does not apply. Pursuant to section
7805(f) of the Code, the notice of proposed rulemaking preceding these regulations was submitted to the Small Business Administration for comment on the
regulations’ impact on small business.

201

August 27, 2001