Qualified Zone Academy Bonds; Obligations of States and Political Subdivisions

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-105327-99]

RIN 1545-AX03

Qualified Zone Academy Bonds; Obligations of States and Political

Subdivisions

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 providing

guidance to holders and issuers of qualified zone academy bonds. These

proposed regulations would change the method of ascertaining the

qualified zone academy bond credit rate and would provide reimbursement

rules. State and local governments that issue qualified zone academy

bonds would be affected by these proposed regulations. The text of the

temporary regulations also serves as the text of these proposed

regulations. This document also provides a notice of public hearing on

these proposed regulations.

DATES: Written and electronic comments must be received by September

29, 1999. Outlines of topics to be discussed at the public hearing

scheduled for November 9, 1999, at 10 a.m. must be received by October

19, 1999.

ADDRESSES: Send Submissions to: CC:DOM:CORP:R (REG-105327-99), room

5226, Internal Revenue Service, POB 7604, Ben Franklin Station,

Washington, DC 20044. Submissions may be hand delivered Monday through

Friday between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-

105327-99), 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/tax__regs/reglist.html.

The public hearing will be held in the room 2615, Internal Revenue

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

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Timothy L.

Jones at 202-622-3980; concerning submissions of comments, the hearing

and/or to be placed on the building access list to attend the hearing,

Michael Slaughter at 202-622-7190 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

Section 226(a) of the Taxpayer Relief Act of 1997, Public Law 105-

34 (111 Stat. 788) amended the Internal Revenue Code by redesignating

section 1397E as 1397F and adding a new section 1397E. Section 1397E

authorizes a new type of debt instrument known as a qualified zone

academy bond. Temporary Regulations (TD 8755) interpreting section

1397E were published on January 7, 1998 (63 FR 671), as Sec. 1.1397E-

1T.

Temporary regulations amending Sec. 1.1397E-1T are published in the

Rules and Regulations portion of this issue of the Federal Register.

Section 1.1397E-1T is amended by revising paragraphs (b) and (j),

redesignating paragraph (h) as paragraph (i) and adding new paragraph

(h). The text of the temporary regulations also serves as the text of

these proposed regulations. An explanation of the regulations may be

found in the preamble of 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. It has also

been determined that section 553(b) of the Administrative Procedure Act

(5 U.S.C. chapter 5) does not apply. The Regulatory Flexibility Act (5

U.S.C. chapter 6) does not apply because these regulations do not

impose a collection of information on small entities. Pursuant to

section 7805(f) of the 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 or electronic comments (a

signed original and eight (8) copies, if written) that are submitted

timely to the IRS. The IRS and Treasury specifically request comments

on the clarity of the proposed regulations and how the regulations may

be made easier to understand. All comments will be available for public

inspection and copying.

A public hearing has been scheduled for November 19, 1999,

beginning at 10 a.m. in room 2615 of the Internal Revenue Building,

1111 Constitution Avenue, NW., Washington, DC. Due to building security

procedures, visitors must enter at the 10th Street entrance, located

between Constitution and Pennsylvania Avenues, NW. In addition, all

visitors must present photo identification to enter the building.

Because of access restrictions, visitors will not be admitted beyond

the immediate entrance area more than 15 minutes before the hearing

starts. For information about having your name placed on the building

access list to

[[Page 35580]]

attend the hearing, see the FOR FURTHER INFORMATION CONTACT section of

this preamble.

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

wish to present oral comments at the hearing must submit written

comments by September 29, 1999 and submit an outline of the topics to

be discussed and the time to be devoted to each topic (signed original

and eight (8) copies) by October 19, 1999. 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 regulations is Timothy L. Jones,

Office of Assistant Chief Counsel (Financial Institutions & Products).

However, other personnel from 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 1.1397E-1 as proposed to be added at 63 FR 708 is

amended by:

1. Revising paragraphs (b) and (j);

2. Redesignating paragraph (h) as paragraph (i);

3. Adding new paragraph (h).

The revisions and addition read as follows:

Sec. 1.1397E-1

Qualified zone academy bonds.

[The text of proposed paragraphs (b), (h) and (j) is the same as

the text of Sec. 1.1397E-1T(b), (h), and (j) published elsewhere in

this issue of the Federal Register.]

Robert E. Wenzel,

Deputy Commissioner of Internal Revenue.

[FR Doc. 99-16622 Filed 6-30-99; 8:45 am]

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