Obligations of States and Political Subdivisions

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-110965-97]

RIN 1545-AV47

Obligations of States and Political Subdivisions

AGENCY: Internal Revenue Service (IRS), Treasury.

[[Page 3297]]

ACTION: Partial withdrawal of notice of proposed rulemaking; notice of

proposed rulemaking by cross-reference to temporary regulations; and

notice of public hearing.

-----------------------------------------------------------------------

SUMMARY: This document withdraws portions of the notice of proposed

rulemaking published in the Federal Register (59 FR 67658) on December

30, 1994. In the Rules and Regulations section of this issue of the

Federal Register, the IRS is issuing temporary regulations that provide

guidance to state and local governments that issue bonds for output

facilities and to certain nongovernmental persons that are engaged in

the local furnishing of electric energy or gas using facilities

financed with state or local bonds. These proposed regulations reflect

changes made by the Tax Reform Act of 1986 and the Small Business Job

Protection Act of 1996. The text of those temporary regulations also

serves as the text of these proposed regulations. This document

provides a notice of public hearing on these proposed regulations.

DATES: Written comments must be received by April 22, 1998. Outlines of

topics to be discussed at the public hearing scheduled for April 28,

1998, at 10:00 a.m. must be received by April 7, 1998.

ADDRESSES: Send Submissions to: CC:DOM:CORP:R (REG-110965-97), room

5226, 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-110965-97), 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 the Auditorium,

Internal Revenue Building, 1111 Constitution Avenue, NW, Washington,

DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Allan B.

Seller, 202-622-3980; concerning submissions and the hearing, Michael

L. Slaughter, Jr., 202-622-7190 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

Proposed regulations Secs. 1.141-7 and 1.141-8, published on

December 30, 1994 (59 FR 67658) addressed the application of the

private activity bond tests of section 141(b)(2) to output contract for

output facilities and the application of the $15 million limitation on

output facility financings of section 141(b)(4). These proposed

sections are withdrawn. These sections were issued as part of proposed

regulations under Secs. 1.141-0 through 1.141-16, Definition of Private

Activity Bonds, which were finalized in part in TD 8712 published in

the Federal Register on January 16, 1997.

Sections 1.141-7T, 1.141-8T, 1.141-15T, 1.142(f)(4)-1T, and 1.150-

5T published in the Rules and Regulations portion of this issue of the

Federal Register are issued to provide guidance on certain aspects of

the private activity bond restrictions under section 141 of the

Internal Revenue Code.

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 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.

It is hereby certified that these regulations do not have a

significant impact on a substantial number of small entities. This

certification is based upon the fact that in the years 1987 through

1993 a total of 61 different state or local government issuers of

exempt facility bonds issued under section 142(f) for the local

furnishing of electric energy or gas filed information returns with the

Internal Revenue Service under section 149(e). Further, an election

under section 142(f)(4) is in no event required to be filed with the

Internal Revenue Service more than once by a person engaged in the

local furnishing of electric energy or gas. Therefore, a Regulatory

Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C.

Chapter 6) is not required. 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 that are submitted

timely (a signed original and eight (8) copies) to the IRS. All

comments will be available for public inspection and copying.

A public hearing has been scheduled for April 28, 1998, at 10:00

a.m. in the Auditorium, Internal Revenue Building, 1111 Constitution

Avenue, NW, Washington, DC. Because of access restrictions, visitors

will not be admitted beyond the lobby more than 15 minutes before the

hearing starts.

The rules of 26 CFR 601.601(a)(3) apply to the hearing.

Persons that wish to present oral comments at the hearing must

submit written comments by April 22, 1998 and submit an outline of the

topics to be discussed and the time to be devoted to each topic by

April 7, 1998.

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 authors of these regulations are Michael G. Bailey

and Allan Seller, Office of the Assistant Chief Counsel (Financial

Institutions and Products), and Nancy M. Lashnits, formerly of that

office. However, other personnel from the IRS and Treasury Department

participated in their development.

Partial Withdrawal of Notice of Proposed Rulemaking

Under the authority of 26 U.S.C. 7805, Secs. 1.141-7 and 1.141-8 in

the notice of proposed rulemaking that was published on December 30,

1994 (59 FR 67658) are withdrawn.

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 as

follows:

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

Par. 2. Section 1.141-7 is added to read as follows:

Sec. 1.141-7 Special rules for output facilities.

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

Secs. 1.141-7T

[[Page 3298]]

published elsewhere in this issue of the Federal Register.]

Par. 3. Section 1.141-8 is amended by adding the text of the

section to read as follows:

Sec. 1.141-8 $15 million limitation for output facilities.

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

Sec. 1.141-8T published elsewhere in this issue of the Federal

Register.]

Par. 4. Section 1.141-15 is amended by adding paragraphs (f)

through (i) to read as follows:

Sec. 1.141-15 Effective dates.

* * * * *

(f) through (i) [The text of proposed paragraphs (f) through (i)

are the same as the text of Sec. 1.141-15T(f) through (i) published

elsewhere in this issue of the Federal Register.]

Par. 5. Section 1.142(f)(4)-1 is added to read as follows:

Sec. 1.142(f)(4)-1 Manner of making election to terminate tax-exempt

bond financing.

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

Sec. 1.142(f)(4)-1T published elsewhere in this issue of the Federal

Register.]

Par. 6. Section 1.150-5 is added to read as follows:

Sec. 1.150-5 Filing notices and elections.

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

Sec. 1.150-5T published elsewhere in this issue of the Federal

Register.]

Michael P. Dolan,

Deputy Commissioner of Internal Revenue.

[FR Doc. 98-717 Filed 1-21-98; 8:45 am]

BILLING CODE 4830-01-U