Daily Rules, Proposed Rules, and Notices of the Federal Government
This document contains amendments to the Income Tax Regulations (26 CFR part 1) under section 6050P relating to information reporting for cancellation of indebtedness by certain entities. In general, section 6050P requires certain entities to file information returns with the IRS, and to furnish information statements to debtors, reporting discharges of indebtedness of $600 or more. The amendments in this document will avoid premature reporting of cancellation of indebtedness income by reducing the information reporting burden on certain entities that were not originally within the scope of section 6050P. The amendments will also protect debtors from receiving information returns that prematurely report cancellation of indebtedness income from such entities.
Final and temporary regulations (TD 9430) were published in the
The sole commenter agrees with the amendments in the proposed regulations to reduce the information reporting burden on certain entities that were not originally within the scope of section 6050P and thereby avoid premature reporting of cancellation of indebtedness income. The commenter, however, requested additional guidance on several other areas addressed in the existing regulations under section 6050P including: (1) The meaning of “stated principal” as used in § 1.6050P-1(c) and (d)(3) when applied to transactions involving entities that acquire a loan from another person; (2) what information, if any, must be provided to a debtor prior to filing Form 1099-C, “Cancellation of Debt”; (3) what constitutes significant bona fide collection activity under § 1.6050P-1(b)(2)(iv)(A); and (4) how to report the discharge of a debt that has been reduced to judgment. These other areas are beyond the scope of the proposed regulations and are therefore not addressed in these final regulations. The Treasury Department and the IRS will consider the concerns raised in these comments in determining whether to issue additional guidance under section 6050P.
No revisions were made to the proposed and temporary regulations or the corrections to those regulations. Accordingly, this Treasury decision adopts the proposed regulations without substantive change and removes the corresponding temporary regulations.
It has been determined that this Treasury decision 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 regulation does 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, the notice of proposed rulemaking preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
The principal author of these regulations is Barbara Pettoni, Office of Associate Chief Counsel (Procedure and Administration).
Income tax, Reporting and recordkeeping requirements.
26 U.S.C. 7805 * * *.
The revisions and addition read as follows:
This section lists the major captions that appear in §§ 1.6050P-1 and 1.6050P-2.
(b) * * *
(2) * * *
(v) Special rule for certain entities required to file in a year prior to 2008.
(b) * * *
(2) * * *
(i) * * *
(H) In the case of an entity described in section 6050P(c)(2)(A) through (C),
(h) * * *