You are on page 1of 5

Federal Register / Vol. 72, No.

119 / Thursday, June 21, 2007 / Proposed Rules 34199

is within the scope of that authority Examining the AD Docket § 39.13 [Amended]
because it addresses an unsafe condition 2. The FAA amends § 39.13 by adding
that is likely to exist or develop on You may examine the AD docket that
contains the proposed AD, the the following new AD:
products identified in this rulemaking
action. regulatory evaluation, any comments Cirrus Design Corporation: Docket No. FAA–
received, and other information on the 2007–28246; Directorate Identifier 2007–
Regulatory Findings Internet at http://dms.dot.gov; or in CE–048–AD.
We have determined that this person at the Docket Management Comments Due Date
proposed AD would not have federalism Facility between 9 a.m. and 5 p.m., (a) We must receive comments on this
implications under Executive Order Monday through Friday, except Federal airworthiness directive (AD) action by
13132. This proposed AD would not holidays. The Docket Office (telephone August 20, 2007.
have a substantial direct effect on the (800) 647–5527) is located at the street
States, on the relationship between the address stated in the ADDRESSES section. Affected ADs
national Government and the States, or Comments will be available in the AD (b) None.
on the distribution of power and docket shortly after receipt. Applicability
responsibilities among the various
List of Subjects in 14 CFR Part 39 (c) This AD applies to Model SR20
levels of government. airplanes, serial numbers (SN) 1005 through
For the reasons discussed above, I Air transportation, Aircraft, Aviation 1796, and Model SR22 airplanes, SN 0002
certify that the proposed regulation: safety, Safety. through 2333, SN 2335 through 2419, and SN
1. Is not a ‘‘significant regulatory 2421 through 2437, that are certificated in
action’’ under Executive Order 12866; The Proposed Amendment any category.
2. Is not a ‘‘significant rule’’ under the
DOT Regulatory Policies and Procedures Accordingly, under the authority Unsafe Condition
(44 FR 11034, February 26, 1979); and delegated to me by the Administrator, (d) This AD results from an on-the-ground
3. Will not have a significant the FAA proposes to amend 14 CFR part jamming of the aileron and rudder controls
economic impact, positive or negative, 39 as follows: on a Model SR20 airplane. We are issuing
on a substantial number of small entities this AD to prevent the possibility of jamming
PART 39—AIRWORTHINESS of the rudder-aileron interconnect system,
under the criteria of the Regulatory
DIRECTIVES which may result in loss of rudder and
Flexibility Act. aileron flight controls.
We prepared a regulatory evaluation
of the estimated costs to comply with 1. The authority citation for part 39 Compliance
this proposed AD and placed it in the continues to read as follows: (e) To address this problem, you must do
AD docket. Authority: 49 U.S.C. 106(g), 40113, 44701. the following, unless already done:

Actions Compliance Procedures

Inspect and, as necessary, adjust the aileron Within the next 25 hours time-in-service (TIS) Follow Cirrus Service Bulletin No. SB 2X–27–
and rudder rigging and modify, inspect, and, after the effective date of this AD or within 14 R1, Issued: May 9, 2007, Revised: May
as necessary, adjust the rudder-aileron inter- the next 3 months after the effective date of 24, 2007.
connect system. this AD, whichever occurs first.

Note: Temporary revisions to the airplane Related Information DEPARTMENT OF THE TREASURY
maintenance manuals (AMM), SR20 AMM (h) To get copies of the service information
Temporary Revision No. 27–1 and SR22 Internal Revenue Service
referenced in this AD, contact Cirrus Design
AMM Temporary Revision No. 27–1, both
Corporation, 4515 Taylor Circle, Duluth,
dated May 9, 2007, contain information 26 CFR Part 301
pertaining to this subject. Minnesota 55811; telephone: (218) 727–2737;
Internet address: http:// [REG–149036–04]
(f) Compliance will be acceptable if the
www.cirrusdesign.com. To view the AD
above actions are done by following the
procedures described in Cirrus Service docket, go to the U.S. Department of RIN 1545–BG75
Bulletin No. SB 2X–27–14, Issued: May 9, Transportation, Docket Operations, M–30,
2007. You may take ‘‘unless already done’’ West Building Ground Floor, Room W12– Application of Section 6404(g) of the
credit, and no further action per this AD is 140, 1200 New Jersey Avenue, SE., Internal Revenue Code Suspension
necessary. Washington, DC 20590, or on the Internet at Provisions
http://dms.dot.gov. The docket number is
Alternative Methods of Compliance
Docket No. FAA–2007–28246; Directorate
AGENCY: Internal Revenue Service (IRS),
(AMOCs) Treasury.
Identifier 2007–CE–048–AD.
(g) The Manager, Chicago Aircraft ACTION: Notice of proposed rulemaking
Certification Office (ACO), FAA, has the Issued in Kansas City, Missouri, on June and notice of public hearing.
authority to approve AMOCs for this AD, if 14, 2007.
requested using the procedures found in 14 Kim Smith, SUMMARY: This document proposes
CFR 39.19. Send information to ATTN: Wess regulations for the suspension of
Manager, Small Airplane Directorate, Aircraft
Rouse, Aerospace Engineer, FAA, 2300 East interest, penalties, additions to tax, or
Certification Service.
Devon Avenue, Room 107, Des Plaines, additional amounts under section
Illinois 60018; telephone: (847) 294–8113; [FR Doc. E7–12006 Filed 6–20–07; 8:45 am]
6404(g) of the Internal Revenue Code
fax: (847) 297–7834. Before using any BILLING CODE 4910–13–P
sroberts on PROD1PC70 with RULES

approved AMOC on any airplane to which (Code) that explain the general rules for
the AMOC applies, notify your appropriate suspension as well as exceptions to
principal inspector (PI) in the FAA Flight those general rules. The proposed
Standards District Office (FSDO), or lacking regulations reflect changes to the law
a PI, your local FSDO. made by the Internal Revenue Service

VerDate Aug<31>2005 15:36 Jun 20, 2007 Jkt 211001 PO 00000 Frm 00020 Fmt 4702 Sfmt 4702 E:\FR\FM\21JNP1.SGM 21JNP1
34200 Federal Register / Vol. 72, No. 119 / Thursday, June 21, 2007 / Proposed Rules

Restructuring and Reform Act of 1998, (GOZA), enacted on December 21, 2005; 303(b), the filing of an amended return
the American Jobs Creation Act of 2004, by section 426(b) of the Tax Relief and has no effect on the running of the
the Gulf Opportunity Zone Act of 2005, Health Care Act of 2006, Public Law eighteen-month period (or thirty-six
and the Tax Relief and Health Care Act 109–432 (120 Stat. 2922, 2975), enacted month period) under section 6404(g).
of 2006. The proposed regulations affect on December 20, 2006; and by section Accordingly, if a taxpayer files an
individual taxpayers who file timely 8242 of the Small Business and Work amended return or other signed written
income tax returns with respect to Opportunity Tax Act of 2007, Public document showing a decrease in tax
whom the IRS does not timely provide Law 110–28 (121 Stat. 112, 200), liability and the IRS at any time
a notice specifically stating an enacted on May 25, 2007. The Treasury proposes to adjust the changed item or
additional tax liability and the basis for Department and the Internal Revenue items, any interest, penalty, addition to
that liability. This document also Service are aware that questions have tax, or additional amount with respect
provides a notice of public hearing on been raised regarding the effective date to the changed item or items on the
the proposed regulations. of the changes made by the Small amended return or other signed written
DATES: Written or electronic comments Business and Work Opportunity Act of document will not be suspended. If
must be received by September 19, 2007 and are considering further married taxpayers file a return claiming
2007. Outlines of topics to be discussed guidance. These regulations are a change in filing status to married filing
at the public hearing scheduled for prescribed under section 7805. jointly, the general rule authorizing
October 11, 2007, at 10 a.m. must be suspension will not apply unless each
Explanation of Provisions
received by September 20, 2007. spouse’s separate return, if required to
ADDRESSES: Send submissions to: General Rule be filed, was timely. An amended return
CC:PA:LPD:PR (REG–149036–04), room If an individual taxpayer files a or other written document is provided
5203, Internal Revenue Service, PO Box Federal income tax return on or before to the IRS for purposes of these
7604, Ben Franklin Station, Washington, the due date for that return (including proposed regulations when it is received
DC 20044. Submissions may be hand- extensions), and if the IRS does not by the IRS.
delivered Monday through Friday timely provide a notice to that taxpayer
between the hours of 8 a.m. and 4 p.m. specifically stating the taxpayer’s Notice of Liability and the Basis for
to CC:PA:LPD:PR (REG–149036–04), liability and the basis for that liability, Liability
Courier’s Desk, Internal Revenue then the IRS must suspend any interest,
Service, 1111 Constitution Avenue, Notice to the taxpayer must be in
penalty, addition to tax, or additional writing and specifically state the
NW., Washington, DC, or sent amount with respect to any failure
electronically via the Federal amount of the liability and the basis for
relating to the return that is computed
eRulemaking Portal at http:// the liability. The notice must provide
by reference to the period of time the
www.regulations.gov (IRS REG–149036– the taxpayer with sufficient information
failure continues and that is properly
04). The public hearing will be held in to identify which items of income,
allocable to the suspension period. A
the Internal Revenue Building, 1111 deduction, loss, or credit the IRS has
notice is timely if provided before the
Constitution Avenue, NW., Washington, adjusted or proposes to adjust, and the
close of the eighteen-month period
DC. reason for that adjustment.
(thirty-six month period, in the case of
FOR FURTHER INFORMATION CONTACT: Administrative proceedings pertaining
notices provided after November 25,
Concerning the proposed regulations, 2007) beginning on the later of the date to adjustments to partnership items of
Stuart Spielman, (202) 622–7950; on which the return is filed or the due partnerships subject to the unified audit
concerning submissions of comments, date of the return without regard to and litigation procedures of Subchapter
the hearing, or to be placed on the extensions. The suspension period C of Chapter 63 of Subtitle F of the
building access list to attend the begins on the day after the close of the Internal Revenue Code (TEFRA) occur at
hearing, Richard Hurst, (202) 622–7180 eighteen-month period (or thirty-six the partnership level. Each partner has
(not toll-free numbers) or month period) and ends twenty-one the right to participate in partnership-
Richard.A.Hurst@irscounsel.treas.gov. days after the IRS provides the notice. level administrative proceedings. The
SUPPLEMENTARY INFORMATION: This suspension rule applies separately tax matters partner (TMP) of a TEFRA
with respect to each item or adjustment. partnership has a fiduciary relationship
Background to the partners and must provide the
This document amends the Procedure Amended Returns partners with information concerning
and Administration Regulations (26 CFR The proposed regulations provide significant administrative proceedings
part 301) by adding rules relating to the guidance on applying section 6404(g) to and actions within 30 days of the action
suspension of interest, penalties, amended returns and other signed or the receipt of information concerning
additions to tax, or additional amounts documents that show an increased tax the partnership matter. TEFRA
under section 6404(g). Section 6404(g) liability, as well as to amended returns partnership administrative proceedings
was added to the Code by section 3305 that show a decreased tax liability. If, on at the partnership level concern the
of the Internal Revenue Service or after December 21, 2005, a taxpayer treatment of partnership items and the
Restructuring and Reform Act of 1998, provides to the IRS an amended return partners’ allocable shares of those items
Public Law 105–206 (112 Stat. 685, 743) or other signed written document rather than the specific tax liability of
(RRA 98), effective for taxable years showing an additional tax liability, then each partner attributable to the
ending after July 22, 1998. Section the eighteen-month period (or thirty-six partnership items. Partners can,
6404(g) was amended by section 903(c) month period) does not begin to run however, compute the specific tax
of the American Jobs Creation Act of with respect to the items that gave rise attributable to adjustments to
sroberts on PROD1PC70 with RULES

2004, Public Law 108–357 (118 Stat. to the additional tax liability until that partnership items based on their
1418, 1652) (AJCA), enacted on October return or other signed written document interests in the partnership, so notice to
22, 2004; by section 303 of the Gulf is provided to the IRS. This rule is the TMP concerning the treatment of
Opportunity Zone Act of 2005, Public mandated by GOZA section 303(b). partnership items constitutes notice to
Law 109–135 (119 Stat. 2577, 2608–09) Except as provided in GOZA section the partners under section 6404(g).

VerDate Aug<31>2005 15:36 Jun 20, 2007 Jkt 211001 PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 E:\FR\FM\21JNP1.SGM 21JNP1
Federal Register / Vol. 72, No. 119 / Thursday, June 21, 2007 / Proposed Rules 34201

Exceptions to the General Rule for 6404(g)(1), in that the election calls for (signed original and eight (8) copies) by
Suspension the IRS to defer proposing adjustments September 20, 2007. A period of ten
The general rule for suspension does regarding the activity. minutes will be allotted to each person
not apply to (1) Any penalty imposed by for making comments. An agenda
Proposed Effective Date
section 6651 for failing to file a tax showing the scheduling of the speakers
The regulations, as proposed, apply as will be prepared after the deadline for
return or for failing to pay tax; (2) any of the date of publication of a Treasury
interest, penalty, addition to tax, or receiving outlines has passed. Copies of
decision adopting these rules as final the agenda will be available free of
additional amount in a case involving regulations in the Federal Register.
fraud; (3) any interest, penalty, addition charge at the hearing.
to tax, or additional amount with Special Analyses Drafting Information
respect to any tax liability shown on a It has been determined that this notice The principal author of these
return; (4) any interest, penalty, of proposed rulemaking is not a regulations is Stuart Spielman of the
addition to tax, or additional amount significant regulatory action as defined Office of Associate Chief Counsel
with respect to any gross misstatement; in Executive Order 12866. Therefore, a (Procedure and Administration).
(5) any interest, penalty, addition to tax, regulatory assessment is not required. It
or additional amount with respect to has also been determined that section List of Subjects in 26 CFR Part 301
any reportable transaction not meeting 553(b) of the Administrative Procedure Employment taxes, Estate taxes,
the disclosure requirement of section Act (5 U.S.C. chapter 5) does not apply Excise taxes, Gift taxes, Income taxes,
6664(d)(2)(A) or any listed transaction to these regulations, and because these Penalties, Reporting and recordkeeping
as defined in section 6707A(c); and (6) regulations do not impose a collection requirements.
any criminal penalty. of information on small entities, the
The proposed regulations limit the Regulatory Flexibility Act (5 U.S.C. Proposed Amendments to the
exception pertaining to a case involving chapter 6) does not apply. Pursuant to Regulations
fraud to the taxpayer and the taxable section 7805(f) of the Internal Revenue Accordingly 26 CFR part 301 is
year in issue. The proposed regulations Code, these regulations have been proposed to be amended as follows:
also provide that the exception in submitted to the Chief Counsel for
section 6404(g) for ‘‘a case involving Advocacy of the Small Business PART 301—PROCEDURE AND
fraud’’ means that fraud on the return Administration for comment on its ADMINISTRATION
with respect to any item will preclude impact on small business.
suspension under section 6404(g) with Paragraph 1. The authority citation
respect to all items on the return. Comments and Public Hearing for part 301 continues to read in part as
AJCA section 903(b) added Before these proposed regulations are follows:
subparagraph (D), pertaining to gross adopted as final regulations, Authority: 26 U.S.C. 7805 * * *
misstatements, to section 6404(g)(2), consideration will be given to any Par. 2. Section 301.6404–0 is
effective for taxable years beginning written (a signed original and eight (8) amended as follows:
after December 31, 2003. The proposed copies) or electronic comments that are 1. The introductory text is revised.
regulations define ‘‘gross misstatement’’ submitted timely to the IRS. The IRS 2. Entries are added for § 301.6404–4.
as the reporting of any item on the and Treasury Department request The addition reads as follows:
original or any amended return if that comments on the clarity of the proposed
item is attributable to a gross valuation rules and how they can be made easier § 301.6404–0 Table of contents.
misstatement as defined in section to understand. All comments will be This section lists the paragraphs
6662(h), a substantial omission of made available for public inspection contained in §§ 301.6404–1 through
income as described in section and copying. 301.6404–4.
6501(e)(1) or section 6229(c), or a A public hearing has been scheduled * * * * *
frivolous position or a desire to delay or for October 11, 2007, beginning at 10 § 301.6404–4 Suspension of interest and
impede the administration of the a.m. in the Auditorium, Internal certain penalties where the Internal
Federal income tax laws as described in Revenue Building, 1111 Constitution Revenue Service does not contact the
section 6702. Avenue, NW., Washington, DC. Due to taxpayer.
building security procedures, visitors (a) Suspension.
Special Rules (1) In general.
must enter at the Constitution Avenue
Section 6404(g)(2)(C) provides that entrance. In addition, all visitors must (2) Treatment of amended returns and
interest suspension does not apply to present photo identification to enter the other documents.
any tax liability shown on a return. building. Because of access restrictions, (i) Amended returns filed on or after
Consistent with this exception, any December 21, 2005, that show an increase in
visitors will not be admitted beyond the tax liability.
interest, penalty, addition to tax, or immediate entrance area more than 30 (ii) Amended returns that show a decrease
additional amount with respect to an minutes before the hearing starts. For in tax liability.
erroneous tentative carryback or refund information about having your name (iii) Amended return and other documents
adjustment will not be suspended placed on the building access list to as notice.
because the disallowance of the attend the hearing, see the FOR FURTHER (iv) Joint return after filing separate return.
erroneous tentative carryback or refund INFORMATION CONTACT section of this (3) Separate application.
adjustment does not change the tax preamble. (4) Duration of suspension period.
liability originally shown on the The rules of 26 CFR 601.601(a)(3) (5) Example.
taxpayer’s return. An election under apply to the hearing. Persons who wish (6) Notice of liability and the basis for the
liability.
sroberts on PROD1PC70 with RULES

section 183(e) to defer the determination to present oral comments at the hearing (i) In general.
as to whether the presumption applies must submit written or electronic (ii) Tax attributable to TEFRA partnership
that an activity is engaged in for profit comments on September 19, 2007, and items.
tolls the notification period and the an outline of the topics to be discussed, (iii) Examples.
suspension period described in section and the time to be devoted to each topic (7) Providing notice by the IRS.

VerDate Aug<31>2005 15:36 Jun 20, 2007 Jkt 211001 PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 E:\FR\FM\21JNP1.SGM 21JNP1
34202 Federal Register / Vol. 72, No. 119 / Thursday, June 21, 2007 / Proposed Rules

(i) In general. proposes to adjust the changed item or the deduction begins on October 15, 2006, so
(ii) Providing notice in TEFRA partnership items on the amended return or other the IRS will suspend interest, penalties,
proceedings. signed written document. additions to tax, and additional amounts
(b) Exceptions. (iii) Amended return and other with respect to the disallowed deduction and
(1) Failure to file tax return or to pay tax. additional tax liability from that date through
documents as notice. As to the items February 6, 2007, which is twenty-one days
(2) Fraud.
(3) Tax shown on return. reported, an amended return or one or after the IRS provided notice of the
(4) Gross misstatement. more other signed written documents additional tax liability and the basis for that
(i) Description. showing that the taxpayer owes an liability.
(5) [Reserved]. additional amount of tax for the taxable (6) Notice of liability and the basis for
(c) Special rules. year serves as the notice described in the liability—(i) In general. Notice to the
(1) Tentative carryback and refund paragraph (a)(1) of this section.
adjustments.
taxpayer must be in writing and
(iv) Joint return after filing separate specifically state the amount of the
(2) Election under section 183(e). return. A joint return filed under section
(d) Effective/applicability date. liability and the basis for the liability.
6013(b) is subject to the rules for The notice must provide the taxpayer
Par. 3. Section 301.6404–4 is added to amended returns described in this with sufficient information to identify
read as follows: paragraph (a)(2). The IRS will not which items of income, deduction, loss,
suspend any interest, penalty, addition or credit the IRS has adjusted or
§ 301.6404–4 Suspension of interest and to tax, or additional amount on a joint
certain penalties where the Internal proposes to adjust, and the reason for
Revenue Service does not contact the
return filed under section 6013(b) that adjustment. Notice of the reason for
taxpayer. unless each spouse, if required to file a the adjustment does not require a
return, filed a timely separate return. detailed explanation or a citation to any
(a) Suspension—(1) In general. Except
(3) Separate application. This
as provided in paragraph (b) of this Internal Revenue Code section or other
paragraph (a) shall be applied separately
section, if an individual taxpayer files a legal authority. The IRS does not have
with respect to each item or adjustment.
return of tax imposed by subtitle A on (4) Duration of suspension period. to incorporate all the information
or before the due date for the return The suspension period described in necessary to satisfy the notice
(including extensions) and the Internal paragraph (a)(1) of this section begins requirement within a single document
Revenue Service (IRS) does not timely the day after the close of the eighteen- or provide all the information at the
provide the taxpayer with a notice month period (thirty-six month period, same time. Documents that may contain
specifically stating the amount of any in the case of notices provided after information sufficient to qualify as
increased liability and the basis for that November 25, 2007) beginning on the notice, either alone or in conjunction
liability, then the IRS must suspend any later of the date on which the return is with other documents, include, but are
interest, penalty, addition to tax, or filed or the due date of the return not limited to, statutory notices of
additional amount with respect to any without regard to extensions. The deficiency, examination reports (for
failure relating to the return. This suspension period ends twenty-one example, Forms 4549 ‘‘Income Tax
suspension is computed by reference to days after the earlier of the date on Examination Changes,’’ Forms 886–A
the period of time the failure continues which the IRS mails the required notice ‘‘Explanation of Items’’), Forms 870
to exist. The notice described in this to the taxpayer’s last known address, the ‘‘Waiver of Restrictions on Assessments
paragraph (a)(1) is timely if provided date on which the required notice is and Collection of Deficiency in Tax and
before the close of the eighteen-month hand-delivered to the taxpayer, or the Acceptance of Overassessment,’’ notices
period (thirty-six month period in the date on which the IRS receives an of proposed deficiency that allow the
case of notices provided after November amended return or other signed written taxpayer an opportunity for review in
25, 2007) beginning on the later of the document showing an increased the Office of Appeals (30-day letters),
date on which the return is filed or the liability. notices pursuant to section 6213(b)
due date of the return without regard to (5) Example. The following example (mathematical or clerical errors), and
extensions. illustrates the rules of this paragraph (a): notice and demand for payment of a
(2) Treatment of amended returns and jeopardy assessment under section
other documents—(i) Amended returns Example. An individual taxpayer timely 6861.
files an income tax return for taxable year
filed on or after December 21, 2005, that 2004 on the due date of the return, April 15,
(ii) Tax attributable to TEFRA
show an increase in tax liability. If a 2005. On December 11, 2006, the taxpayer partnership items. Notice to the partner
taxpayer, on or after December 21, 2005, mails to the IRS an amended return reporting or the tax matters partner (TMP) of a
provides to the IRS an amended return an additional item of income and an partnership subject to the Unified Audit
or one or more other signed written increased tax liability for taxable year 2004. and Litigation Procedures of subchapter
documents showing an increase in tax The IRS receives the amended return on C of chapter 63 of subtitle F of the
liability, the date on which the return December 13, 2006. On January 16, 2007, the Internal Revenue Code (TEFRA) that
was filed will, for purposes of this IRS provides the taxpayer with a notice provides specific information about the
stating that the taxpayer has an additional tax
paragraph (a), be the date on which the liability based on the disallowance of a
basis for the adjustments to partnership
last of the documents was provided. deduction the taxpayer claimed on his items is sufficient notice if a partner
Documents described in this paragraph original return and did not change on his could reasonably compute the specific
(a)(2)(i) are provided on the date that amended return. The date the amended tax attributable to the partnership item
they are received by the IRS. return was received substitutes for the date based on the proposed adjustments as
(ii) Amended returns that show a that the original return was filed with respect applied to the partner’s individual tax
decrease in tax liability. If a taxpayer to the additional item of tax liability reported situation. Documents provided by the
provides to the IRS an amended return on the amended return. Thus, the IRS will IRS during a TEFRA partnership
not suspend interest, penalties, additions to
sroberts on PROD1PC70 with RULES

or other signed written document that tax, or additional amounts with respect to the
proceeding that may contain
shows a decrease in tax liability, any additional item of income and the increased information sufficient to satisfy the
interest, penalty, addition to tax, or tax liability reported on the amended return. notice requirements include, but are not
additional amount will not be The suspension period for the additional tax limited to, a Notice of Final Partnership
suspended if the IRS at any time liability based on the IRS’ disallowance of Administrative Adjustment,

VerDate Aug<31>2005 15:36 Jun 20, 2007 Jkt 211001 PO 00000 Frm 00023 Fmt 4702 Sfmt 4702 E:\FR\FM\21JNP1.SGM 21JNP1
Federal Register / Vol. 72, No. 119 / Thursday, June 21, 2007 / Proposed Rules 34203

examination reports (for example, as of the date of mailing or delivery in to tax, or additional amount with
Forms 4549, Forms 886–A), or a letter person. respect to any tax liability shown on a
that allows the partners an opportunity (ii) Providing notice in TEFRA return.
for review in the Office of Appeals (60- partnership proceedings. In the case of (4) Gross misstatement—(i)
day letter). TEFRA partnership proceedings, the IRS Description. Paragraph (a) of this section
(iii) Examples. The following must provide notice of final partnership does not apply and interest will not be
examples illustrate the rules of this administrative adjustments (FPAA) by suspended with respect to any interest,
paragraph (a)(6). mail to those partners specified in penalty, addition to tax, or additional
section 6223. Within 60 days of an amount with respect to a gross
Example 1. During an audit of Taxpayer
A’s 2005 taxable year return, the IRS FPAA being mailed, the TMP is misstatement. A gross misstatement for
questions a charitable deduction claimed on required to forward notice of the FPAA purposes of this paragraph (b) means—
the return. The IRS provides A with a ‘‘30- to those partners not entitled to direct
(A) A substantial omission of income
day letter’’ that proposes a deficiency of notice from the IRS under section 6223.
as described in section 6501(e)(1) or
$1,000 based on the disallowance of the Certain partners with small interests in
charitable deduction and informs A that A section 6229(c)(2);
partnerships with more than 100
may file a written protest of the proposed partners may form a Notice Group and (B) A gross valuation misstatement
deficiency to the Office of Appeals within 30 designate a partner to receive the FPAA within the meaning of section 6662(h);
days. The letter includes as an attachment a on their behalf. The IRS may provide or
copy of the revenue agent’s report that states (C) A misstatement to which the
other information after the beginning of
that ‘‘It has not been established that the
amount shown on your return as a charitable the partnership administrative penalty under section 6702(a) applies.
contribution was paid during the tax year. proceeding to the TMP who, in turn, (ii) If a gross misstatement occurs,
Therefore, this deduction is not allowable.’’ must provide that information to the then interest will not be suspended with
The information in the 30-day letter and partners specified in § 301.6223(g)–1 respect to any items of income omitted
attachment provides A with notice of the within 30 days of receipt. Pass-thru from the return and with respect to
specific amount of the liability and the basis partners who receive notices and other overstated deductions, even though one
for that liability as described in this information from the IRS or the TMP or more of the omitted items would not
paragraph (a). must forward that notice or information constitute a substantial omission, gross
Example 2. Taxpayer B is a partner in within 30 days to those holding an
partnership P, a TEFRA partnership for valuation misstatement, or misstatement
interest through the pass-thru partner. to which section 6702(a) applies.
taxable year 2005. B claims a distributive
share of partnership income on B’s Federal Information provided by the IRS to the (5) [Reserved].
income tax return for 2005 filed on April 17, TMP is deemed to be notice for
purposes of this section to those (c) Special rules—(1) Tentative
2006. On October 1, 2007, during the course carryback and refund adjustments. If an
of a partnership audit of P for taxable year partners specified in § 301.6223(g)–1 as
2005, the IRS provides P’s TMP a ‘‘60-day of the date the IRS provides that notice amount applied, credited, or refunded
letter’’ proposing to adjust P’s income by to the TMP. A similar rule applies to under section 6411 exceeds the
$10,000. The IRS had previously provided notice provided to the designated overassessment properly attributable to
the TMP with a copy of the examination partner of a Notice Group, and to notice a tentative carryback or refund
report explaining that the adjustment was provided to a pass-thru partner. In the adjustment, any interest, penalty,
based on $10,000 of unreported net income. addition to tax, or additional amount
foregoing situations, the TMP,
On October 31, 2007, P’s TMP informs B of with respect to the excess will not be
the proposed adjustment as required by designated partner, and pass-thru
partner are agents for direct and indirect suspended.
§ 301.6223(g)-1(b). By accounting for B’s
distributive share of the $10,000 of partners. Consequently, notice to these (2) Election under section 183(e). If a
unreported income from P with B’s other agents is deemed to be notice to the taxpayer elects under section 183(e) to
income tax items, B can determine B’s tax partners for whom they act. defer the determination as to whether
attributable to the $10,000 partnership (b) Exceptions—(1) Failure to file tax the presumption applies that an activity
adjustment. The information in the 60-day return or to pay tax. Paragraph (a) of this is engaged in for profit, the 18-month (or
letter and the examination report allows B to section does not apply and interest will 36-month) notification period described
compute the specific amount of the liability not be suspended with respect to any in paragraph (a)(1) of this section or, if
attributable to the adjustment to the penalty imposed by section 6651. that period has passed as of the date the
partnership item and the basis for that (2) Fraud. Paragraph (a) of this section election is made, the suspension period
adjustment and therefore satisfies the notice
requirement of paragraph (a). Because the IRS
does not apply and interest will not be described in paragraph (a)(4) of this
provided that notice to the TMP, B’s agent suspended with respect to any interest, section will be tolled for the period to
under the TEFRA partnership provisions, penalty, addition to tax, or additional which the election applies. Tolling will
within eighteen months of the April 17, 2006, amount in a case involving fraud. Fraud begin on the date the election is made
filing date of B’s return, any interest, penalty, has the same meaning in this paragraph and end on the later of the date the
addition to tax, or additional amount with (b) as in section 6501(c)(1) and is not return for the last taxable year to which
respect to B’s tax liability attributable to B’s attributed from one taxpayer to another the election applies is filed or is due
distributive share of the $10,000 of taxpayer. If a taxpayer files a fraudulent without regard to extensions.
unreported partnership income will not be return for one year, paragraph (a) of this
suspended under section 6404(g). (d) Effective/applicability date. The
section may apply to any other tax year rules of this section apply as of the date
(7) Providing notice by the IRS—(i) In of the taxpayer that does not involve of publication of a Treasury decision
general. The IRS may provide notice by fraud. Fraud affecting one item on a adopting these rules as final regulations
mail or in person to the taxpayer or the return precludes paragraph (a) of this in the Federal Register.
taxpayer’s representative. If the IRS section from applying to any other items
sroberts on PROD1PC70 with RULES

mails the notice, it must be sent to the on that return. Kevin M. Brown,
taxpayer’s last known address under (3) Tax shown on return. Paragraph (a) Deputy Commissioner for Services and
rules similar to section 6212(b), except of this section does not apply and Enforcement.
that certified or registered mail is not interest will not be suspended with [FR Doc. E7–12082 Filed 6–20–07; 8:45 am]
required. Notice is considered provided respect to any interest, penalty, addition BILLING CODE 4830–01–P

VerDate Aug<31>2005 15:36 Jun 20, 2007 Jkt 211001 PO 00000 Frm 00024 Fmt 4702 Sfmt 4702 E:\FR\FM\21JNP1.SGM 21JNP1