[Federal Register: June 1, 2006 (Volume 71, Number 105)]
[Proposed Rules]
[Page 31128-31129]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jn06-24]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-111578-06]
RIN 1545-BF56
Computer Software Under Section 199(c)(5)(B)
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking by cross-reference to temporary
regulations and notice of public hearing.
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SUMMARY: In the Rules and Regulations section of this issue of the
Federal Register, the IRS is issuing temporary regulations concerning
the application of section 199 of the Internal Revenue Code, which
provides a deduction for income attributable to domestic production
activities, to certain transactions involving computer software. The
text of those regulations also serves as the text of these proposed
regulations. This document also provides notice of a public hearing on
these proposed regulations.
DATES: Written or electronic comments must be received by August 30,
2006. Outlines of topics to be discussed at the public hearing
scheduled for Tuesday, August 29, 2006, must be received by August 8,
2006.
ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-111578-06), Room
5203, Internal Revenue Service, POB 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand delivered Monday through
Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-
111578-06), Courier's Desk, Internal Revenue Service, 1111 Constitution
Avenue, NW., Washington, DC, or sent electronically, via the IRS
Internet site at http://www.irs.gov/regs or via the Federal eRulemaking Portal at http://www.regulations.gov (IRS-REG-111578-06). The public
hearing will be held in the IRS Auditorium, Internal Revenue Building,
1111 Constitution Avenue, NW., Washington, DC.
FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Paul
Handleman or Lauren Ross Taylor, (202) 622-3040; concerning submission
of comments, the hearing, and/or to be placed on the building access
list to attend the hearing, Richard A. Hurst, (202) 622-7180 (not toll-
free numbers).
SUPPLEMENTARY INFORMATION:
Background
Temporary regulations in the Rules and Regulations section of this
issue of the Federal Register amend the Income Tax Regulations (26 CFR
part 1) relating to section 199. The temporary regulations provide
guidance under section 199 for taxpayers providing computer software to
customers for the customers' direct use while connected to the
Internet. The text of those regulations also serves as the text of
these proposed regulations. The preamble to the temporary regulations
explains the amendments.
Special Analyses
It has been determined that this notice of proposed rulemaking 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 Internal Revenue Code, this
notice of proposed rulemaking will be submitted to the Chief Counsel
for Advocacy of the Small Business Administration for comment on their
impact on small business.
Comments and Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any written comments (a signed original
and eight (8) copies) or electronic comments that are submitted timely
to the IRS. Comments are requested on all aspects of the proposed
regulations. In addition, the IRS and Treasury Department specifically
request comments on the clarity of the proposed rules and how they can
be made easier to understand. All comments will be available for public
inspection and copying.
A public hearing has been scheduled for Tuesday, August 29, 2006,
at 10 a.m. in the IRS Auditorium, Internal Revenue Building, 1111
Constitution Avenue, NW., Washington, DC. Due to building security
procedures, visitors must enter at the Constitution Avenue entrance. In
addition, all visitors must present photo identification to enter the
building. Because of access restrictions, visitors will not be admitted
beyond the immediate entrance area more than 30 minutes before the
hearing starts. For information about having your name placed on the
building access list to attend the hearing, see the FOR FURTHER
INFORMATION CONTACT section of this preamble.
The rules of 26 CFR 601.601(a)(3) apply to the hearing.
Persons who wish to present oral comments at the hearing must
submit electronic or written comments and an outline of the topics to
be discussed and the time to be devoted to each topic (a signed
original and eight (8) copies) by August 8, 2006. A period of 10
minutes will be allotted to each person for making comments. An agenda
showing the scheduling of the speakers will be prepared after the
deadline for receiving outlines has passed. Copies of the agenda will
be available free of charge at the hearing.
Drafting Information
The principal authors of these regulations are Paul Handleman and
Lauren Ross Taylor, Office of Associate Chief Counsel (Passthroughs and
Special Industries), IRS. However, other personnel from the IRS and
Treasury Department participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 1 is proposed to be 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 * * *
Section 1.199-3 also issued under 26 U.S.C. 199(d). * * *
Section 1.199-8 also issued under 26 U.S.C. 199(d). * * *
Par. 2. Section 1.199-3 is amended to read as follows:
Sec. 1.199-3 Domestic production gross receipts.
[The text of the amendments to this proposed section is the same as
the text of Sec. 1.199-3T published elsewhere in this issue of the
Federal Register.]
Par. 3. Section 1.199-8 is amended to read as follows:
[[Page 31129]]
Sec. 1.199-8 Other rules.
[The text of the amendments to this proposed section is the same as
the text of Sec. 1.199-8T published elsewhere in this issue of the
Federal Register.]
Mark E. Mathews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 06-4827 Filed 5-24-06; 11:47 am]
BILLING CODE 4830-01-P