Correction to TD 8920

Federal Register / Vol. 66, No. 42 / Friday, March 2, 2001 / Rules and Regulations
SUMMARY: This document contains
corrections to final regulations that were
published in the Federal Register on
Wednesday, January 10, 2001 (66 FR
1837), relating to section 125 cafeteria
plans.
DATES: This correction is effective
January 10, 2001.
FOR FURTHER INFORMATION CONTACT:
Christine L. Keller (202) 622–6080 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:

Background
The final regulations that are the
subject of these corrections are under
section 125 of the Internal Revenue
Code.
Need for Correction
As published, final regulations (TD
8921) contain errors that may prove to
be misleading and are in need of
clarification.
Correction of Publication
Accordingly, the publication of the
final regulations (TD 8921), which were
the subject of FR Doc. 01–258, is
corrected as follows:
1. On page 1838, column 1, in the
preamble under the paragraph heading
1. Changes in the March 2000 Final
Regulations, line 3 of the first
paragraph, the language ‘‘final
regulations issued earlier this year’’ is
corrected to read ‘‘final regulations
issued in March 2000’’.
2. On page 1838, column 3, under the
paragraph heading 2. Changes From the
March 2000 Proposed Regulations, line
4, the language ‘‘earlier this year, but
include various’’ is corrected to read ‘‘in
March 2000, but include various’’.
3. On page 1840, column 1,
amendatory instruction Par. 2. is
corrected by adding a new instruction
‘‘3a.’’ following item 3 to read as
follows:
3a. Revising paragraph (c)(3)(ii).
§ 1.125–4

[Corrected]

4. On page 1840, column 2, § 1.125–
4 is corrected by removing the 5
asterisks following paragraph (c)(1)(ii).
5. On page 1840, column 2, § 1.125–
4 is corrected by removing the 5
asterisks following paragraph (c)(3)(i)
and adding the text of revised paragraph
(c)(3)(ii) in their place to read as
follows:
§ 1.125–4

Permitted election changes.

*

*
*
*
*
(c) * * *
(3) * * *
(ii) Application to other qualified
benefits. An election change satisfies the

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requirements of this paragraph (c)(3)
with respect to other qualified benefits
if the election change is on account of
and corresponds with a change in status
that affects eligibility for coverage under
an employer’s plan. An election change
also satisfies the requirements of this
paragraph (c)(3) if the election change is
on account of and corresponds with a
change in status that effects expenses
described in section 129 (including
employment-related expenses as
defined in section 21(b)(2)) with respect
to dependent care assistance, or
expenses described in section 137
(including qualified adoption expenses
as defined in section 137(d)) with
respect to adoption assistance.
*
*
*
*
*
6. On page 1841, column 3, § 1.125–
4(f)(5)(ii), line 4, the language ‘‘Service,
or a tribal organization’’ is corrected to
read ‘‘Service, or a tribal organization;’’.
Cynthia E. Grigsby,
Chief, Regulations Unit, Office of Special
Counsel (Modernization and Strategic
Planning).
[FR Doc. 01–4923 Filed 3–1–01; 8:45 am]
BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 53 and 301
[TD 8920]
RIN 1545–AY64

Excise Taxes on Excess Benefit
Transactions; Correction
Internal Revenue Service (IRS),
Treasury.
ACTION: Correction to temporary
regulations.
AGENCY:

SUMMARY: This document contains
corrections to temporary regulations
that were published in the Federal
Register on January 10, 2001 (66 FR
2144). This document relates to the
excise taxes on excess benefit
transactions under section 4958 of the
Internal Revenue Code.
DATES: This correction is effective
January 10, 2001.
FOR FURTHER INFORMATION CONTACT:
Phyllis D. Haney (202) 622–4290 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:

Background
These temporary regulations that are
the subject of this correction are under
section 4958 of the Internal Revenue
Code.

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13013

Need for Correction
As published, these temporary
regulations (TD 8920) contain errors that
may prove to be misleading and are in
need of clarification.
Correction of Publication
Accordingly, the publication of the
temporary regulations (TD 8920), which
were the subject of FR Doc. 01–256, is
corrected as follows:
§ 53.4958–4T

[Corrected]

1. On page 2164, column 3,
§ 53.4958–4T, paragraph (a)(3)(vii),
Example 1, line 12, the language ‘‘T (see
§ 53.4958–3T(a)). Under the initial’’ is
corrected to read ‘‘T (see § 53.4958–3T
(c)(3)). Under the initial’’.
2. On page 2165, column 1,
§ 53.4958–4T, paragraph (a)(3)(vii),
Example 6, line 19, the language
‘‘respect to B, Company X also becomes
a’’ is corrected to read ‘‘respect to
Hospital B, Company X also becomes
a’’.
3. On page 2165, column 1,
§ 53.4958–4T, paragraph (a)(3)(vii),
Example 6, line 20, the language
‘‘disqualified person with respect to B
(see’’ is corrected to read ‘‘disqualified
person with respect to Hospital B (see’’.
4. On page 2167, column 2,
§ 53.4958–4T, paragraph (c)(3)(i)(B), last
line in the paragraph, the language
‘‘paragraph (b)(3)(i)(A) of this section.’’
is corrected to read ‘‘paragraph
(c)(3)(i)(A) of this section.’’.
§ 53.4958–6T

[Corrected]

5. On page 2168, column 1,
§ 53.4958–6T, paragraph (a)(1), first line
in the column, the language ‘‘the
organization with the meaning of’’ is
corrected to read ‘‘the organization
within the meaning of’’.
6. On page 2169, column 1,
§ 53.4958–6T, paragraph (c)(2)(iv),
Example 2, line 1, the language
‘‘Example 2. The facts are the same as’’
is corrected to read ‘‘Example 2. The
facts are the same as in’’.
7. On page 2169, column 1,
§ 53.4958–6T, paragraph (c)(2)(iv),
Example 4, line 1, the language
‘‘Example 4. The facts are the same as’’
is corrected to read ‘‘Example 4. The
facts are the same as in’’.
§ 301.7611–1

[Corrected]

8. On page 2171, column 3,
§ 301.7611–1, under the undesignated
centerheading ‘‘Application to Section
4958’’, A–19, line 1, the language ‘‘A–
19: See § 53.4958–7(b) of this’’ is

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13014

Federal Register / Vol. 66, No. 42 / Friday, March 2, 2001 / Rules and Regulations

corrected to read ‘‘A–19: See § 53.4958–
8T(b) of this’’.
Cynthia E. Grigsby,
Chief, Regulations Unit, Office of Special
Counsel (Modernization and Strategic
Planning).
[FR Doc. 01–5006 Filed 3–1–01; 8:45 am]
BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY
Bureau of Alcohol, Tobacco and
Firearms
27 CFR Part 22
[T.D. ATF–443; Ref: Notice No. 828]
RIN 1512–AB57

Distribution and Use of Tax-Free
Alcohol (2000R–294P)
AGENCY: Bureau of Alcohol, Tobacco
and Firearms (ATF), Department of the
Treasury.
ACTION: Final rule (Treasury decision).

This final rule amends the
regulations in 27 CFR part 22 by
eliminating the requirement for users of
tax-free alcohol to file a bond. It also
liberalizes certain qualification
requirements relating to tax-free alcohol
user permits. ATF believes that these
revisions will greatly reduce and
simplify the qualification process for
tax-free alcohol permits.
DATES: This rule is effective on May 1,
2001.
FOR FURTHER INFORMATION CONTACT: Lisa
M. Gesser, Regulations Division, Bureau
of Alcohol, Tobacco and Firearms, 650
Massachusetts Avenue NW.,
Washington, DC 20226, (202–927–9347)
or e-mail at alctob@atfhq.atf.treas.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:

Background
There are certain registration
requirements under the law and its
implementing regulations that must be
met prior to the issuance of a permit to
withdraw and use tax-free alcohol. Once
such registration requirements are met,
the applicant is issued a tax-free alcohol
users permit and may commence
conducting any of the uses authorized
under the law and regulations for taxfree alcohol permittees. The permittee is
allowed to purchase and acquire alcohol
from a registered distilled spirits plant
(DSP) free of the excise tax payments
normally required to be made by the
DSP proprietor.
Authorized users of tax-free alcohol
include any State or political
subdivision of a State, or the District of

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Columbia acquiring the alcohol for
nonbeverage purposes. Tax-free alcohol
may also be used by any educational
organization (exempt from income tax),
scientific university or college of
learning, laboratory for use exclusively
in scientific research, hospital, blood
bank, sanitarium, pathological
laboratory exclusively engaged in
making analyses, or tests, for hospitals
or sanitariums, or clinic operated for
charity and not for profit.
Notice of Proposed Rulemaking
On June 13, 1996, ATF published a
notice of proposed rulemaking (Notice
No. 828, 61 FR 30019) to solicit public
comment on proposed regulations that
would eliminate the bonding
requirements for tax-free alcohol users.
ATF also proposed to revise the
qualification requirements for obtaining
a permit to withdraw and use tax-free
alcohol. The public was invited to
submit written comments on this notice
for a period of 60 (sixty) days ending
August 12, 1996.
Comments on the NPRM
In response to Notice 828, ATF
received two written comments.
Comments were received from: the
Distilled Spirits Council of the United
States (DISCUS), and the Surety
Association of America.
Bonds and Consents of Surety
As discussed in Notice No. 828, 26
U.S.C. 5272 provides that bond coverage
may be required as part of the tax-free
alcohol permit qualification process.
Prior to 1985, the regulations in 27 CFR
part 22 required that every applicant,
with certain exceptions, obtain a bond
prior to issuance of a permit. Then, in
1985, the tax-free regulations were
revised and the exemption from bond
coverage was expanded. See T.D. ATF–
199 (50 FR 9152). Under the revisions
adopted in 1985, the percentage of users
of tax-free alcohol who were exempt
from filing a surety bond increased from
36 percent to 75 percent.
Based on the post-1985 experience in
administering part 22, ATF concluded
that bond coverage should no longer be
required of any applicant for a tax-free
alcohol permit. ATF believed that
elimination of the bond requirement in
part 22 would result in substantially
reduced administrative and financial
burdens on the tax-free alcohol
permittees. Accordingly, in Notice No.
828, ATF proposed to eliminate the
requirement to obtain a bond.
In response to this proposal, DISCUS
submitted a comment stating that they
support all efforts by ATF to eliminate
unnecessary regulation and to reduce

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the administrative burdens imposed
upon industry.
The Surety Association of America
commented against this proposal. They
stated that ‘‘the ATF is overlooking the
importance of the bond requirement in
preventing losses. The bond provision
may be one of the primary reasons why
the experience has been favorable, and
without it, we believe the ATF runs the
risk of losing tax revenue without a
means of recapture.’’
While ATF agrees that bond
requirements for tax-free alcohol users
may have reduced the risk of tax
revenue losses at some time in the past,
our experience since 1985 indicates that
tax-free alcohol users pose a minimal
risk to the revenue. Further, the
elimination of the bond requirement
does not leave the ATF ‘‘without a
means of recapture.’’ Any permittee
who uses tax-free alcohol in a manner
that violates the laws and regulations is
still directly liable for the tax as
provided in 26 U.S.C. 5001(a)(4).
In summary, ATF has concluded that
the bond requirement in 27 CFR part 22
is unnecessary to protect the revenue
and the proposal to eliminate the bond
requirement for tax-free alcohol users
has been adopted in this final rule.
Qualification Requirements
Section 5271 of the Internal Revenue
Code of 1986 requires the submission of
an application before a permit may be
issued to procure or use tax-free alcohol.
Regulations have required the
submission of a detailed application
with supporting data by all applicants.
The appropriate ATF officer is
authorized to waive some of the detailed
data for applicants who are a State,
political subdivisions thereof, or the
District of Columbia or whose annual
withdrawal and usage of tax-free alcohol
will not exceed 1,500 proof gallons.
In Notice No. 828, ATF proposed that
this waiver should be available to all
applicants when the appropriate ATF
officer concludes that the revenue is
adequately protected with respect to the
person submitting the application.
In response to this proposal, the
DISCUS submitted a comment that
expressed their support. No one
commented in opposition to this
proposal. Accordingly, the proposal has
been adopted in this final rule.
Regulatory Flexibility Act
It is hereby certified that this
regulation will not have a significant
economic impact on a substantial
number of small entities. The
regulations will give ATF specific
regulatory authority to relax and remove
certain registration requirements. A

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