Final Regs Eliminate Transition Rule for Most Election Extension Requests

 [4830-01-u]

 ACTION: Final regulations.

 SUMMARY: This document amends the Treasury Regulations concerning the extension of time for making certain elections or applications for relief under the Internal Revenue Code. This document generally conforms the regulations to the new standards that the Commissioner of the Internal Revenue Service will use to grant taxpayers extensions of time for making elections or applications for relief. This document is intended to foster greater compliance by providing an administrative means for taxpayers to correct certain errors.

 EFFECTIVE DATE: April 5, 1991.

 FOR FURTHER INFORMATION CONTACT: Barbara B. Walker 202-622-3060 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

BACKGROUND

This document contains final amendments to section 301.9100-1 of the Procedure and Administration Regulations. Section 301.9100-1 was adopted in 1959 (24 FR 1206) and was amended in 1970 (35 FR 17840) and in 1991 (56 FR 64980) under the authority of section 7805(a) of the Internal Revenue Code (Code). Section 301.9100-1 concerns extensions of time for making certain elections or applications for relief where the time is not expressly prescribed by statute.

EXPLANATION OF PROVISIONS

 Under section 301.9100-1(a), the Commissioner has the discretion to grant a reasonable extension of time for making an election when the time for making the election is not expressly prescribed by statute.

 Section 301.9100-1(b) of the regulations, as amended in 1991, contained a special transitional rule that applied to elections or applications for relief under subtitles B, C, D, and F, required to be made prior to April 5, 1991. The rule required taxpayers to request relief by the later of October 2, 1991, or the date that was one year after the date the election or application was required to be made and to show clear evidence of intent to make the election. The deadline for requesting relief and the intent requirement in the special transitional rule were consistent with the Service's general practice, at that time, of granting relief under section 301.9100- 1(a) only if a taxpayer requested relief within one year of the missed election and could demonstrate an intent to timely make the election.

 In 1992, the Service modified the standards for granting relief under section 301.9100-1(a) by issuing Rev. Proc. 92-85, 1992-42 I.R.B. 32, and eliminating the intent requirement and the one-year general practice described in the preceding paragraph for elections covered by that section. These regulations generally conform the standards for relief for elections previously covered by the special transitional rule to the new standards for relief under section 301.9100-1(a) by eliminating the special transitional rule for all elections other than those under section 4980A(f)(5) of the Code. Thus, even if a taxpayer could not satisfy the requirements of the special transitional rule for such elections, relief will be granted as long as the taxpayer satisfies the requirements of section 301.9100-1(a).

 Section 4980A of the Code, enacted by the Tax Reform Act of 1986, imposes a 15 percent excise tax on certain pension plan distributions or accumulations. If the value of the taxpayer's pension benefit, determined as of August 1, 1986, equals or exceeds $562,500, the taxpayer could have elected to exclude that amount from taxation under section 4980A. Section 4980A(f)(5) provides that these elections must have been made on an individual's income or estate tax return for a taxable year beginning before January 1, 1989. The purpose of these elections was to provide a transition for the new excise taxes. An exception is made for section 4980A(f)(5) elections because they are one-time transitional elections that present special opportunities for retroactive tax planning.

SPECIAL ANALYSES

 It has been determined that these rules are not major rules as defined in Executive Order 12291. Therefore, a Regulatory Impact Analysis is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. Chapter 5) and the Regulatory Flexibility Act (5 U.S.C. Chapter 6) do not apply to these regulations; therefore, a Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Code, a copy of these regulations was 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 Barbara B. Walker, Office of the Assistant Chief Counsel (Passthroughs and Special Industries), Internal Revenue Service. However, personnel from other offices of the IRS and Treasury Department participated in their development.

LIST OF SUBJECTS IN 26 CFR PART 301

 Administrative practice and procedure, Alimony, Bankruptcy, Child support, Continental shelf, Courts, Crime, Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Investigations, Law enforcement, Oil pollution, Penalties, Pensions, Reporting and recordkeeping requirements, Seals and insignia, Statistics, Taxes.

ADOPTION OF AMENDMENTS TO THE REGULATIONS

Accordingly, 26 CFR part 301 is amended as follows:

Paragraph 1. The authority citation for part 301 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 301.9100-1(b) is revised to read as follows:

SECTION 301.9100-1 EXTENSION OF TIME FOR MAKING CERTAIN ELECTIONS.

* * * * *

(b) Special transitional rule for section 4980A(f)(5) elections. Taxpayers may request relief under this paragraph (b) for section 4980A(f)(5) elections for any year as to which the period of limitations has not expired. Requests for relief must be filed with the Commissioner by October 2, 1991. In addition to satisfying all other requirements for relief, a taxpayer must demonstrate clear evidence of intent to make the election at the time it was required to be made.

* * * * *