Reg 120476-07

Federal Register / Vol. 73, No. 137 / Wednesday, July 16, 2008 / Proposed Rules
Par. 2. Section 1.901–1 is amended by
revising paragraphs (a) and (b) to read
as follows:
§ 1.901–1

Allowance of credit for taxes.

(a) and (b) [The text of proposed
§ 1.901–2(a) and (b) is the same as the
text of § 1.901–1T(a) and (b) published
elsewhere in this issue of the Federal
Register.]
*
*
*
*
*
Par 3. Section 1.901–2 is amended by
revising paragraphs (e)(5)(iii), (e)(5)(iv),
and (h)(2) to read as follows:
§ 1.901–2 Income, war profits, or excess
profits tax paid or accrued.

*

*
*
*
*
(e) * * *
(5) * * *
(iii) and (iv) [The text of proposed
§ 1.901–2(e)(5)(iii) and (iv) is the same
as the text of § 1.901–2T(e)(5)(iii) and
(iv) published elsewhere in this issue of
the Federal Register.]
*
*
*
*
*
(h) * * *
(2) [The text of proposed § 1.901–
2(h)(2) is the same as the text of § 1.901–
2T(h)(2) published elsewhere in this
issue of the Federal Register.]
Linda E. Stiff,
Deputy Commissioner for Services and
Enforcement.
[FR Doc. E8–16331 Filed 7–15–08; 8:45 am]
BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–101258–08]
RIN 1545–BH66

Guidance Under Sections 642 and 643
(Income Ordering Rules); Correction
Internal Revenue Service (IRS),
Treasury.
ACTION: Correction to notice of proposed
rulemaking.
AGENCY:

This document contains
corrections to a notice of proposed
rulemaking (REG–101258–08) that was
published in the Federal Register on
Wednesday, June 18, 2008 (73 FR
34670) providing guidance under
Internal Revenue Code section 642(c)
with regard to the Federal tax
consequences of an ordering provision
in a trust, a will, or a provision of local
law that attempts to determine the tax
character of the amounts paid to a
charitable beneficiary of the trust or
estate. The proposed regulations also

jlentini on PROD1PC65 with PROPOSALS

SUMMARY:

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make conforming amendments to the
regulations under section 643(a)(5). The
proposed regulations affect estates,
charitable lead trusts (CLTs) and other
trusts making payments or permanently
setting aside amounts for a charitable
purpose.
FOR FURTHER INFORMATION CONTACT:
Vishal Amin at (202) 622–3060 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The correction notice that is the
subject of this document is under
sections 642 and 643 of the Internal
Revenue Code.
Need for Correction
As published, the notice of proposed
rulemaking (REG–101258–08) contains
errors that may prove to be misleading
and are in need of clarification.
Correction of Publication
Accordingly, the publication of the
notice of proposed rulemaking (REG–
101258–08), which was the subject of
FR Doc. E8–13611, is corrected as
follows:
1. On page 34671, column 1, in the
preamble, under the paragraph heading
‘‘Explanation of Provisions’’, first
paragraph, line 19, the language
‘‘proposed regulation will amend the’’ is
corrected to read ‘‘proposed regulations
will amend the’’.
2. On page 34671, column 2, in the
preamble, under the paragraph heading
‘‘Explanation of Provisions’’, first
paragraph of the column, line 3, the
language ‘‘unrelated business tax
income and tax-’’ is corrected to read
‘‘unrelated business taxable income and
tax-’’.
3. On page 34671, column 2, in the
preamble, under the paragraph heading
‘‘Explanation of Provisions’’, first
paragraph of the column, line 22, the
language ‘‘independent of the income
tax’’ is corrected to read ‘‘independent
of income tax’’.
§ 1.642(c)–3

[Corrected]

4. On page 34672, column 1,
§ 1.642(c)-3, paragraph 2., first entry of
the amendatory instructions, the
language ‘‘Revising the paragraph
heading of paragraph (b) and add a
heading to paragraph (b)(1).’’ is
corrected to read ‘‘Revising the
paragraph heading of paragraph (b) and
adding a heading to paragraph (b)(1).’’.
LaNita Van Dyke,
Chief, Publications and Regulations Branch,
Legal Processing Division, Associate Chief
Counsel, (Procedure and Administration).
[FR Doc. E8–16178 Filed 7–15–08; 8:45 am]
BILLING CODE 4830–01–P

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40793

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[REG–120476–07]
RIN 1545–BG71

Employer Comparable Contributions to
Health Savings Accounts Under
Section 4980G, and Requirement of
Return for Filing of the Excise Tax
Under Section 4980B, 4980D, 4980E or
4980G
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking
and notice of public hearing.
AGENCY:

This document contains
proposed regulations providing
guidance on employer comparable
contributions to Health Savings
Accounts (HSAs) under section 4980G
of the Internal Revenue Code (Code) as
amended by sections 302, 305 and 306
of the Tax Relief and Health Care Act of
2006 (the Act). The proposed
regulations also provide guidance
relating to the requirement of a return to
accompany payment of the excise tax
under section 4980B, 4980D, 4980E, or
4980G of the Code and the time for
filing that return. These proposed
regulations would affect employers that
contribute to employees’ HSAs and
Archer MSAs, employers or employee
organizations that sponsor a group
health plan, and certain third parties
such as insurance companies or HMOs
or third-party administrators who are
responsible for providing benefits under
the plan. This document also provides
notice of a public hearing on these
proposed regulations.
DATES: Written or electronic comments
must be received by October 14, 2008.
Outlines of topics to be discussed at the
public hearing scheduled for October
30, 2008, at 10 a.m., must be received
by October 13, 2008.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–120476–07),
Internal Revenue Service, room 5203,
POB 7604, Ben Franklin Station,
Washington, DC 20044. Submissions
may be hand-delivered Monday through
Friday between the hours of 8 a.m. and
4 p.m. to CC:PA:LPD:PR (REG–120476–
07), Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue,
NW., Washington, DC. Alternatively,
taxpayers may submit comments
electronically via the Federal
eRulemaking Portal at http://
www.regulations.gov (IRS REG–120476–
07). The public hearing will be held in
SUMMARY:

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Federal Register / Vol. 73, No. 137 / Wednesday, July 16, 2008 / Proposed Rules

room 2116, Internal Revenue Building,
1111 Constitution Avenue, NW.,
Washington, DC.
FOR FURTHER INFORMATION CONTACT:
Concerning the proposed regulations as
they relate to section 4980E or 4980G,
Mireille Khoury at (202) 622–6080;
concerning the proposed regulations as
they relate to section 4980B or 4980D,
Russ Weinheimer at (202) 622–6080;
concerning submissions of comments,
the hearing, and/or to be placed on the
building access list to attend the
hearing, Richard Hurst at (202) 622–
7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:

jlentini on PROD1PC65 with PROPOSALS

Paperwork Reduction Act
The collections of information
contained in this notice of proposed
rulemaking have 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
collections 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,
SE:W:CAR:MP:T:T:S Washington, DC
20224. Comments on the collection of
information should be received by
September 15, 2008.
Comments are specifically requested
concerning:
Whether the proposed collections of
information are necessary for the proper
performance of the functions of the IRS,
including whether the information will
have practical utility;
The accuracy of the estimated burden
associated with the proposed collection
of information;
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 collections of information in
these proposed regulations are in Q &
A–11 in § 4980B–2, Q & A–1 in
§ 4980D–1, Q & A–1 in § 4980E–1, and
Q & A–5 in § 4980G–1. These
collections of information result from
the requirement to file a return for the
payment of the excise tax under section

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4980B, 4980D, 4980E, or 4980G of the
Code. The likely respondents are
employers that contribute to employees’
HSAs and Archer MSAs, employers or
employee organizations that sponsor a
group health plan, and certain third
parties such as insurance companies or
HMOs or third-party administrators who
are responsible for providing benefits
under the plan.
Estimated total annual reporting
burden: 2,500 hours.
The estimated annual burden per
respondent is 30 minutes.
Estimated number of respondents:
5,000
The estimated frequency of responses
per respondent is occasional, less than
once per year.
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
This document contains proposed
Pension Excise Tax Regulations (26 CFR
part 54) under section 4980G of the
Code, as amended by Sections 302 and
305 of the Tax Relief and Health Care
Act of 2006 (the Act), under paragraph
(d) of section 4980G of the Code, as
enacted by section 306 of the Act, and
under Section 4980E of the Code.
Section 1201 of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003
(Modernization Act), Public Law 108–
173 (117 Stat. 2066, 2003), added
section 223 to the Code to permit
eligible individuals to establish HSAs
for taxable years beginning after
December 31, 2003. Section 4980G was
also added to the Code by the
Modernization Act. Section 4980G(a)
imposes an excise tax on the failure of
an employer to make comparable
contributions to the HSAs of its
employees for a calendar year. Section
4980G(b) provides that rules and
requirements similar to section 4980E
(the comparability rules for Archer
Medical Savings Accounts (Archer
MSAs)) apply for purposes of section
4980G. Section 4980E(b) imposes an
excise tax equal to 35% of the aggregate
amount contributed by an employer to
the Archer MSAs of employees during
the calendar year if an employer fails to

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make comparable contributions to the
Archer MSAs of its employees in a
calendar year. Therefore, if the
employer fails to make comparable
contributions to the HSAs of its
employees during a calendar year, an
excise tax equal to 35% of the aggregate
amount contributed by the employer to
the HSAs of its employees during that
calendar year is imposed on the
employer. See sections 4980G(a) and (b)
and 4980E(b). See also Notice 2004–2
(2004–2 IRB 269), Q & A–32. On July 31,
2006, final regulations on comparability
were published in the Federal Register,
72 FR 30501 (2007–26 IRB 1495), TD
9277. In addition, on April 17, 2008,
final regulations were published in the
Federal Register, 73 FR 20794 (2008–20
IRB 975), providing guidance on
employer comparable contributions to
HSAs in instances where an employee
has not established an HSA by
December 31st and in instances where
an employer accelerates contributions
for the calendar year for employees who
have incurred qualified medical
expenses. See § 601.601(d)(2).
This document also contains
proposed Pension Excise Tax
Regulations (26 CFR part 54) under
sections 4980B and 4980D of the Code.
Under section 4980B of the Code, group
health plans maintained by an employer
with 20 or more employees must
comply with continuation coverage
requirements. If a plan does not satisfy
these requirements, an excise tax is
imposed of $100 per day per affected
beneficiary. Final regulations under
section 4980B have been published,
including provisions concerning the
excise tax, but no return filing
requirement has previously been
imposed. See § 54.4980B–2, Q & A–9
and Q & A–10. Moreover, under chapter
100 of the Code, group health plans
must comply with various requirements,
including limitations on preexisting
condition exclusions, certification of
creditable coverage, special enrollments,
prohibitions against discrimination
based on a health factor, parity in the
annual and lifetime dollar limits placed
on mental health benefits with those
placed on medical/surgical benefits, and
minimum hospital lengths of stay in
connection with childbirth. If a plan
does not satisfy any of these
requirements under chapter 100, section
4980D imposes an excise tax of $100 per
day per affected individual. Regulations
interpreting the substantive
requirements of chapter 100 have
previously been published, but no
regulations have been published
concerning the excise tax under section
4980D.

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Federal Register / Vol. 73, No. 137 / Wednesday, July 16, 2008 / Proposed Rules

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Explanation of Provisions
Special Rule for Contributions to
Nonhighly Compensated Employees
New paragraph (d) of section 4980G
provides an exception to the
comparability rules that allows, but
does not require, employers to make
larger contributions to the HSAs of
nonhighly compensated employees than
the employer makes to the HSAs of
highly compensated employees. These
proposed regulations interpret that
requirement. Specifically, the proposed
regulations, in § 54.4980G–4, provide
that employer contributions to the HSAs
of nonhighly compensated employees
may be larger than employer
contributions to the HSAs of highly
compensated employees with
comparable coverage during a period.
Conversely, employer contributions to
the HSAs of highly compensated
employees may not exceed employer
contributions to the HSAs of nonhighly
compensated employees with
comparable coverage during a period.
The comparability rules still apply
with respect to contributions to the
HSAs of all nonhighly compensated
employees who are comparable
participating employees (eligible
individuals who are in the same
category of employees with the same
category of high deductible health plan
(HDHP) coverage) and an employer
must make comparable contributions to
the HSA of each nonhighly
compensated employee who is a
comparable participating employee
during the calendar year. Similarly, the
comparability rules still apply with
respect to contributions to the HSAs of
all highly compensated employees who
are comparable participating employees
and an employer must make comparable
contributions to the HSA of each highly
compensated employee who is a
comparable participating employee
during the calendar year. Collectively
bargained employees are disregarded for
purposes of section 4980G, as are HSA
contributions made through a cafeteria
plan.
For purposes of § 4980G(d), highly
compensated employee is defined under
section 414(q) and includes any
employee who was (1) a five-percent
owner at any time during the year or the
preceding year; or (2) for the preceding
year, (A) had compensation from the
employer in excess of $105,000 (for
2008, indexed for inflation) and (B) if
elected by the employer, was in the
group consisting of the top 20 percent
of employees when ranked based on
compensation. Nonhighly compensated
employees are employees that are not
highly compensated employees.

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Maximum HSA Contribution Permitted
for Employees Who Become Eligible
Individuals Mid-Year
Section 305 of the Act provides that
individuals who are eligible individuals
during the last month of the taxable year
(that is, who, in the case of calendar
year taxpayers, are eligible individuals
on December 1 of the year) may make
or have made on their behalf the
maximum annual HSA contribution
based on their HDHP coverage (self only
or family) on that date. A portion of the
contribution is included in income and
subject to an additional 10 percent tax
if the individual fails to remain an
eligible individual for 12 months after
the last month of the taxable year. See
section 223(b)(8). Section 54.4980G–6 of
the proposed regulations provides that
the employer can contribute up to this
maximum contribution on behalf of all
employees who are eligible individuals
during the last month of the taxable
year, including employees who become
eligible individuals after January 1st of
the calendar year and eligible
individuals who are hired after January
1st of the calendar year (both such
classes of individuals are hereinafter
referred to as ‘‘mid-year eligible
individuals’’). An employer who makes
the maximum calendar year HSA
contribution, or who contributes more
than a pro-rata amount, on behalf of
employees who are mid-year eligible
individuals will not fail to satisfy
comparability merely because some
employees will have received more
contributions on a monthly basis than
employees who worked the entire
calendar year.
Employers are not required to make
these greater than pro-rata contributions
and may instead pro-rate contributions
based on the number of months that an
individual was both employed by the
employer and an eligible individual.
However, if an employer contributes
more than the monthly pro-rata amount
for the calendar year to the HSA of any
employee who is a mid-year eligible
individual, the employer must then
contribute, on an equal and uniform
basis, a greater than pro-rata amount to
the HSAs of all comparable
participating employees who are midyear eligible individuals. Likewise, if
the employer contributes the maximum
annual contribution amount for the
calendar year to the HSA of any
employee who is a mid-year eligible
individual, the employer must
contribute that same amount to the
HSAs of all comparable participating
employees who are mid-year eligible
individuals.

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40795

Special Comparability Rules for
Qualified HSA Distributions
Section 302(a) of the Act provides for
qualified HSA distributions. See section
106(e) and Notice 2007–22 (2007–10
IRB 670). See § 601.601(d)(2). A
qualified HSA distribution is a direct
distribution of an amount from a health
flexible spending arrangement (health
FSA) or a health reimbursement
arrangement (HRA) to an HSA. The
distribution must not exceed the lesser
of the balance in the health FSA or HRA
on September 21, 2006, or as of the date
of the distribution. Section 54.4980G–7
of the proposed regulations would
provide that if an employer offers
qualified HSA distributions to any
employee who is an eligible individual
covered under any HDHP, the employer
must offer qualified HSA distributions
to all employees who are eligible
individuals covered under any HDHP.
However, an employer that offers
qualified HSA distributions only to
employees who are eligible individuals
covered under the employer’s HDHP is
not required to offer qualified HSA
distributions to employees who are
eligible individuals but are not covered
under the employer’s HDHP.
Requirement of Return and Time for
Filing of the Excise Tax Under Section
4980B, 4980D, 4980E or 4980G
The regulations provide that persons
who are liable for the excise tax under
section 4980B, 4980D, 4980E, or 4980G
are required to file a return on Form
8928, ‘‘Return of Certain Excise Taxes
Under Chapter 43 of the Internal
Revenue Code.’’ The excise tax under
section 4980B, 4980D, 4980E or 4980G
must be paid at the time prescribed for
filing of the excise tax return (without
extensions). With respect to the excise
tax under section 4980B or 4980D for
employers and third parties such as
insurers or third party administrators,
the return is due on or before the due
date for filing the person’s federal
income tax return. An extension to file
the person’s income tax return does not
extend the date for filing Form 8928.
With respect to the excise tax under
section 4980B or 4980D for
multiemployer or specified multiple
employer health plans, the return is due
on or before the last day of the seventh
month after the end of the plan year.
Finally, with respect to the excise tax
under section 4980E or 4980G for
noncomparable contributions, the return
is due on or before the 15th day of the
fourth month following the calendar
year in which the noncomparable
contributions were made.

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Federal Register / Vol. 73, No. 137 / Wednesday, July 16, 2008 / Proposed Rules

Proposed Effective/Applicability Date
The sections of these regulations that
provide guidance on employer
comparable contributions to HSAs
under section 4980G are proposed to
apply to employer contributions made
on or after the first day of the first
calendar year after the final regulations
are published in the Federal Register.
However, taxpayers may rely on these
regulations for guidance with respect to
employer contributions made on or after
January 1, 2007, and before the effective
date of final regulations.
The sections of these regulations that
provide guidance relating to the excise
tax under section 4980B, 4980D, 4980E
and 4980G are proposed to be effective
for calendar years (or plan years, where
applicable) beginning after the date the
final regulations are published in the
Federal Register.
Special Analyses
It has been determined that these
regulations are 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. It is hereby
certified that the collection of
information in these regulations will not
have a significant economic impact on
a substantial number of small entities.
This certification is based on the fact, as
previously noted, the estimated burden
associated with the information
collection averages thirty minutes per
respondent and the estimated number of
respondents is 5000. Moreover, the
burden imposed under the collection of
information in these regulations arises
only if there has been a failure that
triggers liability for the excise tax under
section 4980B, 4980D, 4980E, or 4980G
of the Code. 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 Code, this
regulation has been submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment
on its impact on small business.

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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 (8) copies) or electronic comments
that are submitted timely to the IRS. The
IRS and the Treasury Department
request comments on the clarity of the
proposed regulations and how they can

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be made easier to understand. All
comments will be available for public
inspection and copying.
The public hearing has been
scheduled for October 30, 2008,
beginning at 10 a.m. in room 2116,
Internal Revenue Building, 1111
Constitution Avenue, NW., Washington,
DC. Due to building security
procedures, visitors must enter at the
Constitution Avenue entrance. 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 30
minutes before the hearing starts. For
information about having your name
placed on the building access list to
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 or electronic
comments by October 14, 2008, and
submit an outline of the topics to be
discussed and the time to be devoted to
each topic (a signed original and eight
(8) copies) by October 13, 2008. A
period of 10 minutes will be allocated
to each person for making comments.
An agenda showing the scheduling of
the speakers will be prepared after the
deadline for receiving comments 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 Mireille Khoury,
Office of Division Counsel/Associate
Chief Counsel (Tax Exempt and
Government Entities), Internal Revenue
Service. However, personnel from other
offices of the IRS and Treasury
Department participated in their
development.
List of Subjects in 26 CFR Part 54
Excise taxes, Pensions, Reporting and
recordkeeping requirements.
Proposed Amendment to the
Regulations
Accordingly, 26 CFR part 54 is
proposed to be amended as follows:
PART 54—PENSION EXCISE TAXES
Paragraph 1. The authority citation
for part 54 is amended by adding entries
to the table to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 54.4980G–6 also issued under 26
U.S.C. 4980G. Section 54.4980G–7 also
issued under 26 U.S.C. 4980G. * * *

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Par. 2. Section 54.4980B–0 is
amended by adding a new Q–11 to
§ 54.4980B–2 in the list of questions to
read as follows:
§ 54.4980B–0

*

*

*

Table of contents.

*

*

List of Questions
*

*

*

§ 54.4980B–2

*

*

Plans that must comply.

*

*
*
*
*
Q–11: If a person is liable for the
excise tax under section 4980B, what
form must the person file and what is
the due date for the filing and payment
of the excise tax?
*
*
*
*
*
Par. 3. Section 54.4980B–2 is
amended by adding a new Q & A–11 to
read as follows:
§ 54.4980B–2

*

Plans that must comply.

*
*
*
*
Q–11: If a person is liable for the
excise tax under section 4980B, what
form must the person file and what is
the due date for the filing and payment
of the excise tax?
A–11: (a) In general. Any person who
is liable for the excise tax under section
4980B must report this tax by filing
Form 8928, ‘‘Return of Certain Excise
Taxes Under Chapter 43 of the Internal
Revenue Code’’, and the tax must be
paid at the time prescribed for filing
such return (without extensions). The
return must include the information
required by Form 8928 and the
instructions issued with respect to it.
(b) Due date for filing of return by
employers or other persons responsible
for benefits under a group health plan.
If the person liable for the excise tax is
an employer or other person responsible
for providing or administering benefits
under a group health plan (such as an
insurer or a third party administrator),
the return must be filed on or before the
due date for filing the person’s income
tax return and must reflect the portion
of the noncompliance period for each
failure under section 4980B that falls
during the person’s taxable year. An
extension to file the person’s income tax
return does not extend the date for filing
Form 8928.
(c) Due date for filing of return by
multiemployer plans. If the person
liable for the excise tax is a
multiemployer plan, the return must be
filed on or before the last day of the
seventh month following the end of the
plan’s plan year. The filing of Form
8928 by a plan must reflect the portion
of the noncompliance period for each
failure under section 4980B that falls
during the plan’s plan year.

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Federal Register / Vol. 73, No. 137 / Wednesday, July 16, 2008 / Proposed Rules
(d) Effective/applicability date. In the
case of an employer or other person
mentioned in paragraph (b) of this Q &
A–11, the rules in this Q & A–11 are
effective for taxable years beginning
after the date the final regulations are
published in the Federal Register. In the
case of a plan mentioned in paragraph
(c) of this Q & A–11, the rules in this
Q & A–11 are effective for plan years
beginning after the date the final
regulations are published in the Federal
Register.
Par. 4. Section 54.4980D–1 is added
to read as follows:

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§ 54.4980D–1 Requirement of return and
time for filing of the excise tax under
section 4980D.

Q–1: If a person is liable for the excise
tax under section 4980D, what form
must the person file and what is the due
date for the filing and payment of the
excise tax?
A–1: (a) In general. Any person who
is liable for the excise tax under section
4980D must report this tax by filing
Form 8928, ‘‘Return of Certain Excise
Taxes Under Chapter 43 of the Internal
Revenue Code’’, and the tax must be
paid at the time prescribed for filing
such return (without extensions). The
return must include the information
required by Form 8928 and the
instructions issued with respect to it.
(b) Due date for filing of return by
employers. If the person liable for the
excise tax is an employer, the return
must be filed on or before the due date
for filing the employer’s income tax
return and must reflect the portion of
the noncompliance period for each
failure under chapter 100 that falls
during the employer’s taxable year. An
extension to file the employer’s income
tax return does not extend the date for
filing Form 8928.
(c) Due date for filing of return by
multiemployer plans or multiple
employer health plans. If the person
liable for the excise tax is a
multiemployer plan or a specified
multiple employer health plan, the
return must be filed on or before the last
day of the seventh month following the
end of the plan’s plan year. The filing
of Form 8928 by a plan must reflect the
portion of the noncompliance period for
each failure under chapter 100 that falls
during the plan’s plan year.
(d) Effective/applicability date. In the
case of an employer or other person
mentioned in paragraph (b) of this Q &
A–1, the rules in this Q & A–1 are
effective for taxable years beginning
after the date the final regulations are
published in the Federal Register. In the
case of a plan mentioned in paragraph
(c) of this Q & A–1, the rules in this Q

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& A–1 are effective for plan years
beginning after the date the final
regulations are published in the Federal
Register.
Par. 5. Section 54.4980E–1 is added to
read as follows:
§ 54.4980E–1 Requirement of return and
time for filing of the excise tax under
section 4980E.

Q–1: If a person is liable for the excise
tax under section 4980E, what form
must the person file and what is the due
date for the filing and payment of the
excise tax?
A–1: (a) In general. Any employer
who is liable for the excise tax under
section 4980E must report this tax by
filing Form 8928, ‘‘Return of Certain
Excise Taxes Under Chapter 43 of the
Internal Revenue Code’’, on or before
the 15th day of the fourth month
following the calendar year in which the
noncomparable contributions were
made. The tax must be paid at the time
prescribed for filing such return
(without extensions), and the return
must include the information required
by Form 8928 and the instructions
issued with respect to it.
(b) Effective/applicability date. The
rules in this Q & A–1 are effective for
plan years beginning after the date the
final regulations are published in the
Federal Register.
Par. 6. Section 54.4980G–1 is
amended by:
1. Revising the last sentence in A–1
and adding a new sentence at the end
of paragraph (a) in A–2.
2. Adding a new Q & A–5.
The revisions and addition read as
follows:
§ 54.4980G–1 Failure of employer to make
comparable health savings account
contributions.

*

*
*
*
*
A–1: * * * But see Q & A–6 in
§ 54.4980G–3 for treatment of
collectively bargained employees and Q
& A–1 in § 54.4980G–6 for the rules
allowing larger comparable
contributions to nonhighly compensated
employees.
*
*
*
*
*
A–2: (a) * * * See also § 54.4980G–6
for the rules allowing larger comparable
contributions to nonhighly compensated
employees.
*
*
*
*
*
Q–5: If a person is liable for the excise
tax under section 4980G, what form
must the person file and what is the due
date for the filing and payment of the
excise tax?
A–5: (a) In general. Any employer
who is liable for the excise tax under
section 4980E must report this tax by

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40797

filing Form 8928, ‘‘Return of Certain
Excise Taxes Under Chapter 43 of the
Internal Revenue Code’’, on or before
the 15th day of the fourth month
following the calendar year in which the
noncomparable contributions were
made. The tax must be paid at the time
prescribed for filing such return
(without extensions), and the return
must include the information required
by Form 8928 and the instructions
issued with respect to it. See Q & A–4
of § 54.4980G–1 for the rules on
computation of the excise tax under
section 4980G.
(b) Effective/applicability date. The
rules in this Q & A–5 are effective for
plan years beginning after the date the
final regulations are published in the
Federal Register.
Par. 7. Section 54.4980G–3 is
amended by:
1. Revising the introductory text in
paragraph (a) of A–5.
2. Adding a new sentence at the end
of paragraph (c) of A–5 and paragraph
(a) of A–9.
The revision and additions read as
follows:
§ 54.4980G–3 Failure of employer to make
comparable health savings account
contributions.

*

*
*
*
*
A–5: (a) Categories. The categories of
employees for comparability testing are
as follows (but see Q & A–6 of this
section for the treatment of collectively
bargained employees and Q & A–1 of
§ 54.4980G–6 for a special rule for
contributions made to the HSAs of
nonhighly compensated employees)—
*
*
*
*
*
(c) * * * But see § 54.4980G–6 for a
special rule for contributions made to
the HSAs of nonhighly compensated
employees.
*
*
*
*
*
A–9: (a) * * * See § 54.4980G–6 for a
special rule for contributions made to
the HSAs of nonhighly compensated
employees.
*
*
*
*
*
Par. 8. Section 54.4980G–4 is
amended by:
1. Adding a new sentence at the end
of paragraph (a) of A–1.
2. Adding paragraphs (h) and (i) to A–
2.
The additions read as follows:
§ 54.4980G–4 Calculating comparable
contributions.

*

*
*
*
*
A–1: (a) * * * But see Q & A–1 of
§ 54.4980G–6 for a special rule for
contributions made to the HSAs of
nonhighly compensated employees.
*
*
*
*
*

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Federal Register / Vol. 73, No. 137 / Wednesday, July 16, 2008 / Proposed Rules

A–2: * * *
*
*
*
*
(h) Maximum contribution permitted
for all employees who are eligible
individuals during the last month of the
taxable year. An employer may
contribute up to the maximum annual
contribution amount for the calendar
year (based on the employees’ HDHP
coverage) to the HSAs of all employees
who are eligible individuals during the
last month of the taxable year, including
employees who worked for the
employer for less than the entire
calendar year and employees who
became eligible individuals after
January 1st of the calendar year. For
example, such contribution may be
made on behalf of an eligible individual
who is hired after January 1st or an
employee who becomes an eligible
individual after January 1st. Employers
are not required to provide more than a
pro-rata contribution based on the
number of months that an individual
was an eligible individual and
employed by the employer during the
year. However, if an employer
contributes more than a pro-rata amount
for the calendar year to the HSA of any
eligible individual who is hired after
January 1st of the calendar year or any
employee who becomes an eligible
individual any time after January 1st of
the calendar year, the employer must
contribute that same amount on an
equal and uniform basis to the HSAs of
all comparable participating employees
(as defined in Q & A–1 in § 54.4980G–
1) who are hired or become eligible
individuals after January 1st of the
calendar year. Likewise, if an employer
contributes the maximum annual
contribution amount for the calendar
year to the HSA of any eligible
individual who is hired after January 1st
of the calendar year or any employee
who becomes an eligible individual any
time after January 1st of the calendar
year, the employer must contribute the
maximum annual contribution amount
on an equal and uniform basis to the
HSAs of all comparable participating
employees (as defined in Q & A–1 in
§ 54.4980G–1) who are hired or become
eligible individuals after January 1st of
the calendar year. An employer who
makes the maximum calendar year
contribution or more than a pro-rata
contribution to the HSAs of employees
who become eligible individuals after
the first day of the calendar year or
eligible individuals who are hired after
the first day of the calendar year will
not fail to satisfy comparability merely
because some employees will have
received more contributions on a

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monthly basis than employees who
worked the entire calendar year.
(i) Examples. The following examples
illustrate the rules in paragraph (h) in
this Q & A–2. In the following examples,
no contributions are made through a
section 125 cafeteria plan and none of
the employees are covered by a
collective bargaining agreement.
Example 1. On January 1, 2009, Employer
Q contributes $1,000 for the calendar year to
the HSAs of employees who are eligible
individuals with family HDHP coverage. In
mid-March of the same year, Employer Q
hires Employee A, an eligible individual with
family HDHP coverage. On April 1, 2009,
Employer Q contributes $1,000 to the HSA of
Employee A. In September of the same year,
Employee B becomes an eligible individual
with family HDHP coverage. On October 1,
2009, Employer G contributes $1,000 to the
HSA of Employee B. Employer Q does not
make any other contributions for the 2009
calendar year. Employer Q’s contributions
satisfy the comparability rules.
Example 2. For the 2009 calendar year,
Employer R only has two employees,
Employee C and Employee D. Employee C,
an eligible individual with family HDHP
coverage, works for Employer R for the entire
calendar year. Employee D, an eligible
individual with family HDHP coverage works
for Employer R from July 1st through
December 31st. Employer R contributes
$1,200 for the calendar year to the HSA of
Employee C and $600 to the HSA of
Employee D. Employer R does not make any
other contributions for the 2009 calendar
year. Employer R’s contributions satisfy the
comparability rules.

*

*
*
*
*
Par. 9. Section 54.4980G–6 is added
to read as follows:
§ 54.4980G–6 Special rule for
contributions made to the HSAs of
nonhighly compensated employees.

Q–1: May an employer make larger
contributions to the HSAs of nonhighly
compensated employees than to the
HSAs of highly compensated
employees?
A–1: Yes. Employers may make larger
HSA contributions for nonhighly
compensated employees who are
comparable participating employees
than for highly compensated employees
who are comparable participating
employees. See Q & A–1 in § 54.4980G–
1 for the definition of comparable
participating employee. For purposes of
this section, highly compensated
employee is defined under section
414(q). Nonhighly compensated
employees are employees that are not
highly compensated employees. The
comparability rules continue to apply
with respect to contributions to the
HSAs of all nonhighly compensated
employees. Employers must make
comparable contributions for the
calendar year to the HSA of each

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nonhighly compensated employee who
is a comparable participating employee.
Q–2: May an employer make larger
contributions to the HSAs of highly
compensated employees than to the
HSAs of nonhighly compensated
employees?
A–2: (a) In general. No. Employer
contributions to HSAs for highly
compensated employees who are
comparable participating employees
may not be larger than employer HSA
contributions for nonhighly
compensated employees who are
comparable participating employees.
The comparability rules continue to
apply with respect to contributions to
the HSAs of all highly compensated
employees. Employers must make
comparable contributions for the
calendar year to the HSA of each highly
compensated comparable participating
employee. See Q & A–1 in § 54.4980G–
1 for the definition of comparable
participating employee.
(b) Examples. The following examples
illustrate the rules in Q & A–1 and Q &
A–2 of this section. No contributions are
made through a section 125 cafeteria
plan and none of the employees in the
following examples are covered by a
collective bargaining agreement. All of
the employees in the following
examples have the same HDHP
deductible for the same category of
coverage.
Example 1. In 2009, Employer A
contributes $1,000 for the calendar year to
the HSA of each full-time nonhighly
compensated employee who is an eligible
individual with self-only HDHP coverage.
Employer A makes no contribution to the
HSA of any full-time highly compensated
employee who is an eligible individual with
self-only HDHP coverage. Employer A’s HSA
contributions for calendar year 2009 satisfy
the comparability rules.
Example 2. In 2009, Employer B
contributes $2,000 for the calendar year to
the HSA of each full-time nonhighly
compensated employee who is an eligible
individual with self-only HDHP coverage.
Employer B also contributes $1,000 for the
calendar year to the HSA of each full-time
highly compensated employee who is an
eligible individual with self-only HDHP
coverage. Employer B’s HSA contributions
for calendar year 2009 satisfy the
comparability rules.
Example 3. In 2009, Employer C
contributes $1,000 for the calendar year to
the HSA of each full-time nonhighly
compensated employee who is an eligible
individual with self-only HDHP coverage.
Employer C contributes $2,000 for the
calendar year to the HSA of each full-time
highly compensated employee who is an
eligible individual with self-only HDHP
coverage. Employer C’s HSA contributions
for calendar year 2009 do not satisfy the
comparability rules.

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Federal Register / Vol. 73, No. 137 / Wednesday, July 16, 2008 / Proposed Rules

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Example 4. In 2009, Employer D
contributes $1,000 for the calendar year to
the HSA of each full-time nonhighly
compensated employee who is an eligible
individual with self-only HDHP coverage.
Employer D also contributes $1,000 to the
HSA of each full-time highly compensated
employee who is an eligible individual with
self-only HDHP coverage. In addition, the
employer contributes an additional $500 to
the HSA of each nonhighly compensated
employee who participates in a wellness
program. The nonhighly compensated
employees did not receive comparable
contributions, and, therefore, Employer D’s
HSA contributions for calendar year 2009 do
not satisfy the comparability rules.
Example 5. In 2009, Employer E
contributes $1,000 for the calendar year to
the HSA of each full-time non-management
nonhighly compensated employee who is an
eligible individual with family HDHP
coverage. Employer E also contributes $500
for the calendar year to the HSA of each fulltime management nonhighly compensated
employee who is an eligible individual with
family HDHP coverage. The nonhighly
compensated employees did not receive
comparable contributions, and, therefore,
Employer E’s HSA contributions for calendar
year 2009 do not satisfy the comparability
rules.

Q–3: May an employer make larger
HSA contributions for employees with
self plus two HDHP coverage than
employees with self plus one HDHP
coverage even if the employees with self
plus two are all highly compensated
employees and the employees with self
plus one are all nonhighly compensated
employees?
A–3: (a) Yes. Q & A–1 in § 54.4980G–
4 provides that an employer’s
contribution with respect to the self
plus two category of HDHP coverage
may not be less than the contribution
with respect to the self plus one
category and the contribution with
respect to the self plus three or more
category may not be less than the
contribution with respect to the self
plus two category. Therefore, the
comparability rules are not violated if
an employer makes a larger HSA
contribution for the self plus two
category of HDHP coverage than to self
plus one coverage, even if the
employees with self plus two coverage
are all highly compensated employees
and the employees with self plus one
coverage are all nonhighly compensated
employees. Likewise, the comparability
rules are not violated if an employer
makes a larger HSA contribution for the
self plus three category of HDHP
coverage than to self plus two coverage,
even if the employees with self plus
three coverage are all highly
compensated employees and the
employees with self plus two coverage
are all nonhighly compensated
employees.

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(b) Example. The following example
illustrates the rules in paragraph (a) of
this Q & A–3. In the following examples,
no contributions are made through a
section 125 cafeteria plan and none of
the employees are covered by a
collective bargaining agreement.
Example. In 2009, Employer F contributes
$1,000 for the calendar year to the HSA of
each full-time employee who is an eligible
individual with self plus one HDHP
coverage. Employer F contributes $1,500 for
the calendar year to the HSA of each
employee who is an eligible individual with
self plus two HDHP coverage. The deductible
for both the self plus one HDHP and the self
plus two HDHP is $2,000. Employee A, an
eligible individual, is a nonhighly
compensated employee with self plus one
coverage. Employee B, an eligible individual,
is a highly compensated employee with self
plus two coverage. For the 2009 calendar
year, Employer F contributes $1,000 for to
Employee A’s HSA and $1,500 to Employee
B’s HSA. Employer F’s HSA contributions
satisfy the comparability rules.

Par. 10. Section 54.4980G–7 is added
to read as follows:
§ 54.4980G–7 Special comparability rules
for qualified HSA distributions contributed
to HSAs on or after December 20, 2006 and
before January 1, 2012.

Q–1: How do the comparability rules
of section 4980G apply to qualified HSA
distributions under section 106(e)(2)?
A–1: The comparability rules of
section 4980G do not apply to amounts
contributed to employee HSAs through
qualified HSA distributions. However,
in order to satisfy the comparability
rules, if an employer offers qualified
HSA distributions, as defined in section
106(e)(2), to any employee who is an
eligible individual covered under any
HDHP, the employer must offer
qualified HSA distributions to all
employees who are eligible individuals
covered under any HDHP. However, if
an employer offers qualified HSA
distributions only to employees who are
eligible individuals covered under the
employer’s HDHP, the employer is not
required to offer qualified HSA
distributions to employees who are
eligible individuals but are not covered
under the employer’s HDHP.
Linda E. Stiff,
Deputy Commissioner for Services and
Enforcement.
[FR Doc. E8–16175 Filed 7–15–08; 8:45 am]
BILLING CODE 4830–01–P

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40799

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[REG–121698–08]
RIN 1545–BI00

Amendments to the Section 7216
Regulations—Disclosure or Use of
Information by Preparers of Returns;
Correction
Internal Revenue Service (IRS),
Treasury.

AGENCY:

Correction to a notice of
proposed rulemaking by cross-reference
to temporary regulations.

ACTION:

This document contains a
correction to a notice of proposed
rulemaking by cross-reference to
temporary regulations (REG–121698–08)
that was published in the Federal
Register on Wednesday, July 2, 2008 (73
FR 37910) providing updated guidance
affecting tax return preparers regarding
the disclosure of a taxpayer’s social
security number to a tax return preparer
located outside of the United States in
order to provide an exception allowing
such disclosure with the taxpayer’s
consent in limited circumstances.
SUMMARY:

FOR FURTHER INFORMATION CONTACT:

Lawrence E. Mack, (202) 622–4940 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:

Background
The correction notice that is the
subject of this document is under
section 7216 of the Internal Revenue
Code.
Need for Correction
As published, a notice of proposed
rulemaking by cross-reference to
temporary regulations (REG–121698–08)
contains an error that may prove to be
misleading and is in need of
clarification.
Correction of Publication
Accordingly, the publication of a
notice of proposed rulemaking by crossreference to temporary regulations
(REG–121698–08), which was the
subject of FR Doc. E8–15047, is
corrected as follows:
On page 37911, column 2, in the
preamble, under the paragraph heading
‘‘Comments and Public Hearing’’, line 4
of the last paragraph, the language
‘‘must submit written comments on’’ is

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