[Federal Register Volume 76, Number 11 (Tuesday, January 18, 2011)]
[Proposed Rules]
[Pages 2852-2853]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-928]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[REG-131151-10]
RIN 1545-BJ89
Rewards and Awards for Information Relating to Violations of
Internal Revenue Laws
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This document contains a proposed regulation relating to the
payment of rewards under section 7623(a) of the Internal Revenue Code
and awards under section 7623(b). The guidance is necessary to clarify
the definition of proceeds of amounts collected and collected proceeds
under section 7623. This regulation provides needed guidance to the
general public as well as officers and employees of the IRS who review
claims under section 7623.
DATES: Written or electronic comments and requests for a public hearing
must be received by April 18, 2011.
ADDRESSES: Send submissions to CC:PA:LPD:PR (REG-131151-10), Room 5203,
Internal Revenue Service, P.O. Box 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-
131151-10), Courier's Desk, Internal Revenue Service, 1111 Constitution
Avenue, NW., Washington, DC, or sent electronically, via the Federal
eRulemaking Portal at http://www.regulations.gov (IRS--REG-131151-10).
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulation,
Kirsten N. Witter, at (202) 927-0900; concerning submissions of
comments and requests for a public hearing, Richard A. Hurst at
[email protected], or (202) 622-7180 (not toll-free
numbers).
SUPPLEMENTARY INFORMATION:
Background and Explanation of Provision
Section 7623(a) provides the Secretary with the authority to pay
such sums as he deems necessary from proceeds of amounts collected
based on information provided to the Secretary when the information
relates to the detection of underpayments of tax or the detection and
bringing to trial and punishment persons guilty of violating the
internal revenue laws or conniving at the same. Section 7623(b)
provides the Secretary with the authority to pay awards to individuals
if the Secretary proceeds with an administrative or judicial action
described in section 7623(a) that results in collected proceeds based
on information provided by the individuals. Section 301.7623-1(a)
currently provides that proceeds of amounts (other than interest)
collected by reason of the information provided include both amounts
collected because of the information provided and amounts collected
prior to receipt of the information if the information leads to the
denial of a claim for refund that otherwise would have been paid. 63 FR
44777.
Section 301.7623-1(a) was promulgated prior to amendments of
section 7623 as part of the Tax Relief and Health Care Act of 2006,
division A, section 406, Public Law 109-432, 120 Stat. 2958. The
amendments designated the existing section 7623 as section 7623(a). As
originally enacted, section 7623 provided that rewards shall be paid
``from the proceeds of amounts (other than interest) collected by
reason of the information provided z5 * * * '' The 2006 amendments to
section 7623 struck the ``other than interest'' language. The
amendments also added section 7623(b), which provides that in certain
cases individuals shall receive an award of at least 15% but not more
than 30% of the collected proceeds resulting from the action with which
the Secretary proceeded based on information brought to the attention
of the Secretary by the individual. The 2006 amendments to section 7623
also created the IRS Whistleblower Office, which is responsible for
administering a whistleblower program within the IRS.
[[Page 2853]]
This regulation clarifies the definitions of proceeds of amounts
collected and collected proceeds for purposes of section 7623 and that
the provisions of Treas. Reg. Sec. 301.7623-1(a) concerning refund
prevention claims are applicable to claims under section 7623(a) and
(b). In clarifying the definitions of proceeds of amounts collected and
collected proceeds, this regulation provides that the reduction of an
overpayment credit balance is also considered proceeds of amounts
collected and collected proceeds under section 7623.
Special Analysis
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 Code, these regulations have
been submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on its impact on small businesses.
Comments and Requests for a Public Hearing
Before this proposed regulation is adopted as a final regulation,
consideration will be given to any electronic or written comments (a
signed original and eight (8) copies) that are submitted timely to the
IRS. The Treasury Department and the IRS request comments on the
clarity of the proposed rule and how it may be made easier to
understand. All comments will be available for public inspection and
copying. A public hearing may be scheduled if requested in writing by a
person that timely submits written comments. If a public hearing is
scheduled, notice of the date, time, and place of the hearing will be
published in the Federal Register.
Drafting Information
The principal author of this regulation is Kirsten N. Witter,
Office of the Associate Chief Counsel (General Legal Services).
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Proposed Amendment to the Regulations
Accordingly, 26 CFR part 301 is proposed to be amended as follows:
PART 301--PROCEDURE AND ADMINISTRATION
Paragraph 1. The authority citation for part 301 is amended by
adding an entry in numerical order to read as follows:
Authority: 26 U.S.C. 7805 * * * Section 301.7623-1 also issued
under 26 U.S.C. 7623. * * *
Par. 2. Section 301.7623-1 is amended by revising the section
heading, and paragraphs (a) and (g), to read as follows:
Sec. 301.7623-1 Rewards and awards for information relating to
violations of internal revenue laws.
(a) In general--(1) Rewards and awards. When information that has
been provided to the Internal Revenue Service results in the detection
of underpayments of tax or the detection and bringing to trial and
punishment persons guilty of violating the internal revenue laws or
conniving at the same, the IRS may approve a reward under section
7623(a) in a suitable amount from the proceeds of amounts collected in
cases when rewards are not otherwise provided by law, or shall
determine an award under section 7623(b) from collected proceeds.
(2) Proceeds of amounts collected and collected proceeds. For
purposes of section 7623 and this section, both proceeds of amounts
collected and collected proceeds include: tax, penalties, interest,
additions to tax, and additional amounts collected by reason of the
information provided; amounts collected prior to receipt of the
information if the information provided results in the denial of a
claim for refund that otherwise would have been paid; and a reduction
of an overpayment credit balance used to satisfy a tax liability
incurred because of the information provided.
* * * * *
(g) Effective/applicability date. This section is applicable with
respect to rewards paid after January 29, 1997, except the rules of
paragraph (a) of this section apply with respect to rewards and awards
paid after these regulations are published as final regulations in the
Federal Register.
Heather C. Maloy,
(Acting) Deputy Commissioner for Services and Enforcement.
[FR Doc. 2011-928 Filed 1-14-11; 8:45 am]
BILLING CODE 4830-01-P