EIC Eligibility Requirements

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-116608-97]

RIN 1545-AV61

EIC Eligibility Requirements

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 pertaining

to the eligibility requirements for certain taxpayers denied the earned

income credit (EIC) as a result of the deficiency procedures. The text

of those temporary 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 comments must be received by September 23, 1998.

Requests to speak (with outlines of oral comments) at a public hearing

scheduled for Wednesday, October 21, 1998, must be received by

September 30, 1998.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-116608-97), room

5228, Internal Revenue Service, POB 7604, Ben Franklin Station,

Washington, DC 20044. Submissions may be hand delivered between the

hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-116608-97), Courier's

Desk, Internal Revenue Service, 1111 Constitution Avenue, NW.,

Washington, DC. Alternatively, taxpayers may submit comments

electronically via the Internet by selecting the ``Tax Regs'' option on

the IRS Home Page, or by submitting comments directly to the IRS

Internet site at http://www.irs.ustreas.gov/prod/tax__regs/

comments.html. The public hearing will be held in room 2615, Internal

Revenue Building, 1111 Constitution Avenue, NW., Washington, DC 20224.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Karin

Loverud, 202-622-6060; concerning submissions or the hearing, LaNita

VanDyke, 202-622-7190 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information contained in this notice of proposed

rulemaking has been submitted to the Office of Management and Budget

for review in accordance with the Paperwork Reduction Act of 1995 (44

U.S.C. 3507(d)). Comments on the collection of information should be

sent to the Office of Management and Budget, Attn: Desk Officer for the

Department of the Treasury, Office of Information and Regulatory

Affairs, Washington, DC 20503, with copies to the Internal Revenue

Service, Attn: IRS Reports Clearance Officer, T:FP, Washington, DC

20224. Comments on the collection of information should be received by

August 24, 1998. Comments are specifically requested concerning:

Whether the proposed collection of information is necessary for the

proper performance of the functions of the Internal Revenue Service,

including whether the information will have practical utility;

The accuracy of the estimated burden associated with the proposed

collection of information (see below);

How the quality, utility, and clarity of the information to be

collected may be enhanced;

How the burden of complying with the proposed collection of

information may be minimized, including through the application of

automated collection techniques or other forms of information

technology; and

Estimates of capital or start-up costs and costs of operation,

maintenance, and purchase of services to provide information.

The collection of information in this proposed regulation is in

Sec. 1.32-3. This information is required to conform with the statute

and to permit the taxpayer to claim the EIC. This information will be

used by the IRS to determine whether the taxpayer is entitled to claim

the EIC. The collection of information is mandatory. The likely

respondents are individuals.

The burden is reflected in the burden of Form 8862.

An agency may not conduct or sponsor, and a person is not required

to respond to, a collection of information unless it displays a valid

control number assigned by the Office of Management and Budget.

Books or records relating to a collection of information must be

retained as long as their contents may become material in the

administration of any internal revenue law. Generally, tax returns and

tax return information are confidential, as required by 26 U.S.C. 6103.

Background

The temporary regulations published in the Rules and Regulations

section of this issue of the Federal Register add Sec. 1.32-3T to the

Income Tax Regulations.

The text of those temporary regulations also serves as the text of

these proposed regulations. The preamble to the temporary regulations

explains the temporary regulations.

Special Analyses

It has been determined that this notice of proposed rulemaking is

not a significant regulatory action as defined in EO 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.

It is hereby certified that these regulations will not have a

significant economic impact on a substantial number of small entities.

This certification is based upon the fact that the underlying statute

applies only to individuals. Therefore, a Regulatory Flexibility

Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is

not required.

[[Page 34616]]

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 its

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 copies) that are submitted timely (in the manner described in

the ADDRESSES portion of this preamble) to the IRS. All comments will

be available for public inspection and copying.

A public hearing has been scheduled for Wednesday, October 21,

1998, at 10 a.m., in room 2615, Internal Revenue Building, 1111

Constitution Avenue, NW., Washington, DC. Because of access

restrictions, visitors will not be admitted beyond the building lobby

more than 15 minutes before the hearing starts.

The rules of Sec. 601.601(a)(3) apply to the hearing.

Persons that have submitted written comments by September 23, 1998,

and want to present oral comments at the hearing must submit, not later

than September 30, 1998, an outline of the topics to be discussed and

the time to be devoted to each topic. 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 author of these proposed regulations is Karin

Loverud, Office of the Associate Chief Counsel (Employee Benefits and

Exempt Organizations), IRS. However, other personnel from the IRS and

the 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 * * *

Par. 2. Section 1.32-3 is added to read as follows:

Sec. 1.32-3 Eligibility requirements.

[The text of this proposed section is the same as the text of

Sec. 1.32-3T published elsewhere in this issue of the Federal

Register].

Michael P. Dolan,

Deputy Commissioner of Internal Revenue.

[FR Doc. 98-16853 Filed 6-24-98; 8:45 am]

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