[Federal Register: March 6, 2003 (Volume 68, Number 44)]
[Rules and Regulations]
[Page 10655-10656]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06mr03-3]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9045]
RIN 1545-BA34
Earned Income Credit for Taxable Years Beginning After December
31, 1978
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
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[[Page 10656]]
SUMMARY: This document contains final regulations relating to the
earned income credit. The regulations reflect changes in the law since
the existing regulations were published in the Federal Register on
March 13, 1980. Due to subsequent statutory changes in the applicable
tax law, substantial portions of the regulations are no longer in
conformity with current law. Accordingly, portions of the existing
regulations are removed. These regulations apply to individual
taxpayers claiming the earned income credit.
DATES: Effective Date: These regulations are effective March 6, 2003.
FOR FURTHER INFORMATION CONTACT: Shoshanna Tanner at (202) 622-6080
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to the Income Tax Regulations (26
CFR Part 1) under section 32 of the Internal Revenue Code (Code).
Section 32 allows a refundable credit to low-income taxpayers who meet
certain income and eligibility requirements. Section 43 (the
predecessor of section 32) was added to the Code by the Tax Reduction
Act of 1975 (Pub. L. 94-12, 89 Stat. 26) and made permanent by the
Revenue Act of 1978 (Pub. L. 95-600, 92 Stat. 2763). Final regulations
(TD 7683) under section 43 were published in the Federal Register (45
FR 16174) on March 13, 1980. Section 43 was redesignated as section 32
by the Tax Reform Act of 1984 (Pub. L. 98-369, 98 Stat. 494). Section
1.43-2 was redesignated as Sec. 1.32-2 in Treasury Decision 8448 (57
FR 54919) on November 23, 1992.
Section 1.32-2(b)(2) of the existing regulations refers to section
143 for an explanation of the term ``married individual''. The
provisions of section 143 were reenacted as section 7703 by the Tax
Reform Act of 1986 (Pub. L. 99-514, 100 Stat. 2085).
In addition, portions of the existing regulations are inconsistent
with changes made by the Omnibus Budget Reconciliation Act of 1990
(Pub. L. 101-508, 104 Stat. 1388), the Economic Growth and Tax Relief
Reconciliation Act of 2001 (Pub. L. 107-16, 115 Stat. 38), and various
other legislative enactments.
Explanation of Provisions
To comport with the redesignation of section 43 to section 32 and
Sec. Sec. 1.43-2 to 1.32-2, these final regulations replace references
to section 43 with references to section 32. Similarly, these
regulations replace the references to section 143 in Sec. 1.32-2(b)(2)
with references to section 7703. These regulations also remove the
inconsistent provisions in the existing regulations.
Special Analyses
It has been determined that these final regulations are not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It has also been
determined that section 553(b) of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these regulations. Because no
notice of proposed rulemaking is required, the provisions of the
Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply. Pursuant
to section 7805(f), these regulations were submitted to the Chief
Counsel for Advocacy of the Small Business Administration for comment
on their impact on small business.
Drafting Information
The principal author of these regulations is Shoshanna Tanner of
the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and
Government Entities). However, other personnel from the IRS and
Department of Treasury participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR Part 1 is amended as follows:
PART 1--INCOME TAXES
1. The authority for part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
2. Section 1.32-2 is amended as follows:
1. Paragraphs (a), (b)(1), (c)(1), and (d) are removed and
reserved.
2. Paragraphs (b)(2), (b)(3), (c)(2), and (e)(2) are revised.
The revisions read as follows:
Sec. 1.32-2 Earned income credit for taxable years beginning after
December 31, 1978.
(a) [Reserved].
(b) * * * (1) [Reserved].
(2) Married individuals. No credit is allowed by section 32 in the
case of an eligible individual who is married (within the meaning of
section 7703 and the regulations thereunder) unless the individual and
spouse file a single return jointly (a joint return) for the taxable
year (see section 6013 and the regulations thereunder relating to joint
returns of income tax by husband and wife). The requirements of the
preceding sentence do not apply to an eligible individual who is not
considered as married under section 7703(b) and the regulations
thereunder (relating to certain married individuals living apart).
(3) Length of taxable year. No credit is allowed by section 32 in
the case of a taxable year covering a period of less than 12 months.
However, the rule of the preceding sentence does not apply to a taxable
year closed by reason of the death of the eligible individual.
(c) * * * (1) [Reserved].
(2) Earned income. For purposes of this section, earned income is
computed without regard to any community property laws which may
otherwise be applicable. Earned income is reduced by any net loss in
earnings from self-employment. Earned income does not include amounts
received as a pension, an annuity, unemployment compensation, or
workmen's compensation, or an amount to which section 871(a) and the
regulations thereunder apply (relating to income of nonresident alien
individuals not connected with United States business).
(d) [Reserved].
(e) * * * (1) * * *.
(2) Reconciliation of payments advanced and credit allowed. Any
additional amount of tax under paragraph (e)(1) of this section is not
treated as a tax imposed by chapter 1 of the Internal Revenue Code for
purposes of determining the amount of any credit (other than the earned
income credit) allowable under part IV, subchapter A, chapter 1 of the
Internal Revenue Code.
David A. Mader,
Assistant Deputy Commissioner of Internal Revenue.
Approved: February 11, 2003.
Pamela F. Olson,
Assistant Secretary of the Treasury.
[FR Doc. 03-5339 Filed 3-5-03; 8:45 am]
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