ACTION: Notice of proposed rulemaking by cross-reference to temporary regulations.
In this issue of the Bulletin, the IRS is issuing temporary regulations
(T.D. 9217) relating to the capitalization of costs under the simplified service
cost method and the simplified production method provided by the Income Tax
Regulations. The regulations affect taxpayers that use the simplified service
cost method or the simplified production method for self-constructed assets
that are constructed on a routine and repetitive basis in the ordinary course
of their businesses. The text of those regulations also serves as the text
of these proposed regulations.
Written or electronic comments must be received by November 1, 2005.
Send submissions to: CC:PA:LPD:PR (REG-121584-05), room 5203, 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
4 p.m. to CC:PA:LPD:PR (REG-121584-05), Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue, NW, Washington, DC, or sent electronically
via the IRS Internet site at www.irs.gov/regs or the
Federal eRulemaking Portal at http://www.regulations.gov (IRS
and REG-121584-05 or RIN-1545-BE57).
FOR FURTHER INFORMATION CONTACT:
Concerning the proposed regulations, Scott Rabinowitz, (202) 622-4970;
concerning submission of comments and/or requests for a public hearing, LaNita
Van Dyke, (202) 622-7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background and Explanation of Provisions
Temporary regulations in this issue of the Bulletin amend the Income
Tax Regulations (26 CFR part 1) relating to section 263A of the Internal Revenue
Code (Code). The temporary regulations provide that self-constructed property
is considered produced on a routine and repetitive basis for purposes of the
simplified service cost method and the simplified production method when numerous
units of tangible personal property are mass-produced, i.e.,
substantially identical assets are manufactured within a taxable year using
standardized designs and assembly line techniques, and the
recovery period of the assets under section 168(c) is not longer than 3 years.
The text of those regulations also serves as the text of these proposed regulations.
The preamble to the temporary regulations explains the amendments.
It has been determined that this notice of proposed rulemaking is 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, and, because the regulations do not impose
a collection of information on small entities, the Regulatory Flexibility
Act (5 U.S.C. chapter 6) does not apply. 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 Requests for a 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 specifically request comments on
the clarity of the proposed rules and how they can be made easier to understand.
All comments will be available for public inspection and copying. The IRS
and the Treasury Department also request comments on whether additional simplified
methods should be made available to taxpayers in certain industries. A public
hearing will be scheduled if requested in writing by any person that timely
submits written comments. If a public hearing is scheduled, notice of the
date, time, and place for the hearing will be published in the Federal
Register.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
Paragraph 1. The authority citation for part 1 continues to read, in
part, as follows:
Authority: 26 USC 7805 * * *
Par. 2. Section 1.263A-1 is amended by revising paragraph (h)(2)(i)(D)
and adding paragraphs (k) and (l) to read as follows:
§1.263A-1 Uniform capitalization of costs.
* * * * *
(h) * * *
(2) * * *
(i) * * *
(D) [The text of this proposed paragraph (h)(2)(i)(D) is the same as
the text of §1.263A-1T(h)(2)(i)(D) published elsewhere in this issue
of the Bulletin.]
* * * * *
(k) [The text of this proposed paragraph (k) is the same as the text
of §1.263A-1T(k) published elsewhere in this issue of the Bulletin.]
(l) [The text of this proposed paragraph (l) is the same as the text
of §1.263A-1T(l) published elsewhere in this issue of the Bulletin.]
Par. 3. Section 1.263A-2 is amended by revising paragraph (b)(2)(i)(D)
and adding paragraphs (e) and (f) to read as follows:
§1.263A-2 Rules relating to property produced by the
taxpayer.
* * * * *
(b) * * *
(2) * * *
(i) * * *
(D) [The text of this proposed paragraph (b)(2)(i)(D) is the same as
the text of §1.263A-2T(b)(2)(i)(D) published elsewhere in this issue
of the Bulletin.]
* * * * *
(e) The text of this proposed paragraph (e) is the same as the text
of §1.263A-2T(e) published elsewhere in this issue of the Bulletin.]
(f) The text of this proposed paragraph (f) is the same as the text
of §1.263A-2T(f) published elsewhere in this issue of the Bulletin.]
Mark E. Matthews,
Deputy
Commissioner for
Services and Enforcement.
Note
(Filed by the Office of the Federal Register on August 2, 2005, 8:45
a.m., and published in the issue of the Federal Register for August 3, 2005,
70 F.R. 44535)
The principal author of these regulations is Scott Rabinowitz of the
Office of Associate Chief Counsel (Income Tax & Accounting). However other
personnel from the IRS and Treasury Department participated in their development.
* * * * *
