Recapture of Interest on Excess Credits Under the Families First Act, CARES Act, and ARP (proposed rule, 89 FR 54742, July 2, 2024)
Summary
A proposed rule from the Internal Revenue Service (IRS), Treasury, published in the Federal Register on July 2, 2024 (Vol. 89, No. 127; REG–109032–23). It proposes to let the IRS assess as an underpayment of tax any overpayment interest paid to a taxpayer on an erroneous refund of the COVID–19 employment tax credits. The proposal covers the credits under the Families First Coronavirus Response Act, the CARES Act and the American Rescue Plan Act of 2021. It would affect businesses, tax-exempt organizations and certain governmental entities that claim the paid sick leave credit, the paid family leave credit or the employee retention credit. It builds on final regulations (TD 9978) published on July 26, 2023 (88 FR 48118). Comments and requests for a public hearing must be received by August 16, 2024.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Recapture of Interest on Excess Credits Under the Families First Act, CARES Act, and ARP (proposed rule, 89 FR 54742, July 2, 2024).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/recapture-of-interest-on-excess-credits-under-the-families-first-act-c-32957e7dc2/
, SHA-256 74fd4cbed4a2d43f72aacf8e16305ad24a3f0a4ce55dba520453bf58317f9666.Full text
54742 Federal Register / Vol. 89, No. 127 / Tuesday, July 2, 2024 / Proposed Rules
air_traffic/publications/airspace_ certified that this proposed rule, when DEPARTMENT OF THE TREASURY
amendments/. promulgated, will not have a significant
You may review the public docket economic impact on a substantial Internal Revenue Service
containing the proposal, any comments number of small entities under the
received, and any final disposition in criteria of the Regulatory Flexibility Act. 26 CFR Part 31
person in the Dockets Operations office
Environmental Review [REG–109032–23]
(see ADDRESSES section for address,
phone number, and hours of This proposal will be subject to an RIN 1545–BQ79
operations). An informal docket may environmental analysis in accordance
also be examined during regular with FAA Order 1050.1F, Recapture of Interest on Excess
business hours at the office of the ‘‘Environmental Impacts: Policies and Credits Under the Families First Act,
Eastern Service Center, Federal Aviation Procedures,’’ prior to any final CARES Act, and ARP
Administration, Room 210, 1701 regulatory action by the FAA. AGENCY: Internal Revenue Service (IRS),
Columbia Ave., College Park, GA,
Lists of Subjects in 14 CFR Part 71 Treasury.
30337.
ACTION: Notice of proposed rulemaking.
Incorporation by Reference Airspace, Incorporation by reference,
Navigation (air). SUMMARY: This document sets forth
Class E airspace designations are
published in Paragraph 6005 of FAA The Proposed Amendment proposed regulations providing that the
Order JO 7400.11, Airspace IRS will assess as an underpayment of
In consideration of the foregoing, the tax any overpayment interest paid to a
Designations and Reporting Points, Federal Aviation Administration
which is incorporated by reference in 14 taxpayer on an erroneous refund of the
proposes to amend 14 CFR part 71 as employment tax credits provided under
CFR 71.1 on an annual basis. This follows:
document proposes to amend the the Families First Coronavirus Response
current version of that order, FAA Order Act, the Coronavirus Aid, Relief, and
PART 71—DESIGNATION OF CLASS A, Economic Security Act, and the
JO 7400.11H, Airspace Designations and B, C, D, AND E AIRSPACE AREAS; AIR
Reporting Points, dated August 11, American Rescue Plan Act of 2021.
TRAFFIC SERVICE ROUTES; AND These proposed regulations affect
2023, and effective September 15, 2023. REPORTING POINTS
These updates will be published in the businesses, tax-exempt organizations,
next update to FAA Order JO 7400.11. and certain governmental entities that
■ 1. The authority citation for part 71
FAA Order JO 7400.11H is publicly claim the paid sick leave credit and the
continues to read as follows:
available as listed in the ADDRESSES paid family leave credit under the
Authority: 49 U.S.C. 106(f), 106(g); 40103, Families First Coronavirus Response
section of this document. FAA Order JO 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR,
7400.11H lists Class A, B, C, D, and E Act and the American Rescue Plan Act
1959–1963 Comp., p. 389. of 2021, and that claim the employee
airspace areas, air traffic service routes,
and reporting points. § 71.1 [Amended] retention credit under the Coronavirus
Aid, Relief, and Economic Security Act
■ 2. The incorporation by reference in
The Proposal and the American Rescue Plan Act of
14 CFR 71.1 of FAA Order JO 7400.11H,
The FAA proposes an amendment to 2021.
Airspace Designations and Reporting
14 CFR part 71 to amend Class E Points, dated August 11, 2023, and DATES: Written or electronic comments
airspace by adding airspace extending effective September 15, 2023, is and requests for a public hearing must
upward from 700 feet above the surface amended as follows: Paragraph 6005. be received by August 16, 2024.
within a 6.1-mile radius of the point in Class E Airspace Areas Extending ADDRESSES: Commenters are strongly
space (lat 30°27′26″ N, long 84°15′40″ Upward from 700 feet or More Above encouraged to submit public comments
W) for Tallahassee Memorial Hospital the Surface of the Earth. electronically via the Federal
Heliport, Tallahassee, FL. Controlled eRulemaking Portal at http://
* * * * *
airspace is necessary for the safety and www.regulations.gov (indicate IRS and
management of instrument flight rules ASO FL E5 Tallahassee, FL [Amended]
REG–109032–23) by following the
(IFR) operations in the area. Tallahassee Regional Airport online instructions for submitting
(Lat 30°23′48″ N, long 84°21′02″ W) comments. Requests for a public hearing
Regulatory Notices and Analyses Quincy Municipal Airport
The FAA has determined that this (Lat 30°35′53″ N, long 84°33′27″ W)
must be submitted as prescribed in the
proposed regulation only involves an Tallahassee Memorial Hospital Heliport ‘‘Comments and Requests for a Public
established body of technical (Lat 30°27′26″ N, long 84°15′40″ W) Hearing’’ section. Once submitted to the
regulations for which frequent and That airspace extending upward from 700 Federal eRulemaking Portal, comments
routine amendments are necessary to feet above the surface within a 10-mile radius cannot be edited or withdrawn. The
keep them operationally current. It, of the Tallahassee Regional Airport within a Department of the Treasury (Treasury
therefore, (1) is not a ‘‘significant 6.3-mile radius of Quincy Municipal Airport Department) and the IRS will publish
and within a 6-mile radius of Tallahassee for public availability any comments
regulatory action’’ under Executive Memorial Hospital Heliport.
Order 12866; (2) is not a ‘‘significant submitted to the IRS’s public docket.
rule’’ under Department of * * * * * Send paper submissions to CC:PA:01:PR
Transportation (DOT) Regulatory Issued in College Park, Georgia, on June 25, (REG–109032–23), Room 5203, Internal
lotter on DSK11XQN23PROD with PROPOSALS1
Policies and Procedures (44 FR 11034; 2024 Revenue Service, P.O. Box 7604, Ben
February 26, 1979); and (3) does not Andreese C. Davis, Franklin Station, Washington, DC
warrant preparation of a regulatory Manager, Airspace & Procedures Team South,
20044.
evaluation as the anticipated impact is Eastern Service Center, Air Traffic FOR FURTHER INFORMATION CONTACT:
so minimal. Since this is a routine Organization. Concerning these proposed regulations,
matter that will only affect air traffic [FR Doc. 2024–14271 Filed 7–1–24; 8:45 am] Andrew Holubeck at (202) 317–4774
procedures and air navigation, it is BILLING CODE 4910–13–P (not a toll-free number); concerning
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Federal Register / Vol. 89, No. 127 / Tuesday, July 2, 2024 / Proposed Rules 54743
submissions of comments and/or The paid sick and family leave credits the ARP, the Treasury Department and
requests for a public hearing, Vivian under the Families First Act and the IRS published regulations (TD 9978)
Hayes by email at publichearings@ sections 3131 through 3133 of the Code in the Federal Register on July 26, 2023
irs.gov (preferred) or by phone at (202) and the ERC under the CARES Act and (88 FR 48118) under sections 3111,
317–6901 (not a toll-free number). section 3134 of the Code (collectively, 3131, 3132, 3134, and 3221 of the Code
SUPPLEMENTARY INFORMATION: COVID–19 credits) are refundable (collectively, Recapture Regulations)
credits, meaning that if the amount of that provide for the administrative
Background the credits exceeds the taxes against recapture of erroneously refunded
I. Statutes Providing Employment Tax which the credits are taken, then this COVID–19 credits. Under the Recapture
Credits for COVID–19 Relief excess is treated as an overpayment that Regulations, erroneous refunds of
is refunded under sections 6402(a) and COVID–19 credits are treated as
The Families First Coronavirus
6413(b). Any amount of the COVID–19 underpayments of the taxes imposed
Response Act (Families First Act),
credits claimed by a taxpayer that is under section 3111(a) or (b), as
Public Law 116–127, 134 Stat. 178
treated as an overpayment under section applicable, and so much of the taxes
(March 18, 2020), as amended and
6402(a) or section 6413(b), is refunded imposed under section 3221(a) as are
extended by the COVID-related Tax
or credited to the taxpayer. Any such attributable to the rate in effect under
Relief Act of 2020 (Tax Relief Act),
refund to which the taxpayer is not section 3111(a) or (b), as applicable, and
enacted as Subtitle B of Title II of
entitled, is an erroneous refund that the are, therefore, subject to assessment and
Division N of the Consolidated
taxpayer must repay. administrative collection procedures.
Appropriations Act, 2021, Public Law
The Recapture Regulations allow the
116–260, 134 Stat.1182 (December 27, II. Assessment Authority
IRS to prevent the avoidance of the
2020), provided COVID–19 related Section 6201 authorizes and requires purposes of the limitations under the
economic relief that included paid sick the Secretary to determine and assess credit provisions and to recover the
and family leave credits to eligible tax liabilities, including interest, erroneous refund amounts efficiently
employers with respect to qualified additional amounts, additions to the tax, while also preserving administrative
leave wages paid for a period of leave and assessable penalties. The Code or protections afforded to taxpayers with
taken beginning April 1, 2020, and other statutory authority described respect to contesting their tax liabilities
ending March 31, 2021. The American herein provides for the administrative under the Code and avoiding
Rescue Plan Act of 2021 (ARP), Public recapture of certain erroneous refunds unnecessary costs and burdens
Law 117–2, 135 Stat. 4 (March 11, of the COVID–19 credits either by associated with litigation.
2021), provided similar paid leave directly authorizing the assessment of
credits under sections 3131, 3132, and the erroneous refunds or by authorizing IV. Interest on Overpayments Under
3133 of the Code with respect to the promulgation of regulations or other Section 6611
qualified leave wages paid for a period guidance to do so. Section 6611 provides that interest
of leave taken beginning April 1, 2021, Specifically, regarding paid sick and shall be allowed and paid on any
and ending September 30, 2021. family leave credits, sections 7001(f) overpayment in respect of any Internal
The Coronavirus Aid, Relief, and and 7003(f) of the Families First Act and Revenue tax at the overpayment rate
Economic Security Act (CARES Act), established under section 6621. Section
sections 3131(g) and 3132(g) of the Code
Public Law 116–136, 134 Stat. 281 6611(b)(2) provides that interest shall be
provide, in relevant part, that the
(March 27, 2020), as amended and allowed and paid in the case of a refund
Secretary shall provide such regulations
extended by the Taxpayer Certainty and from the date of the overpayment to a
or other guidance as may be necessary
Disaster Tax Relief Act of 2020 (Relief date (determined by the Secretary)
to carry out the purposes of the credits,
Act), enacted as Division EE of the preceding the date of the refund check
including regulations or other guidance
Consolidated Appropriations Act, 2021, by not more than 30 days. When a
to prevent the avoidance of the purposes
provided an employee retention credit taxpayer files an amended return, such
of the limitations under those
(ERC) with respect to qualified wages as Form 941–X, Adjusted Employer’s
provisions and to recapture the benefit
paid after March 12, 2020, and before Quarterly Federal Tax Return or Claim
July 1, 2021, respectively. The ARP of the credit where there is a subsequent
adjustment to the credit. for Refund, claiming COVID–19 credits
provided a substantially similar ERC that were not claimed on the originally
Regarding the ERC, section 2301(l) of
under section 3134 of the Code with
the CARES Act, as amended by sections filed return and resulting in an
respect to qualified wages paid after
206 and 207 of the Relief Act, provides overpayment, interest is allowed under
June 30, 2021, and before January 1,
that the Secretary shall issue such section 6611 on any overpayment
2022.1
forms, instructions, regulations, and refunded to the taxpayer.
1 Section 80604 of the Infrastructure Investment
other guidance as are necessary to While the Recapture Regulations
and Jobs Act (Infrastructure Act), Public Law 117– prevent the avoidance of the purposes of provide for the assessment of erroneous
68, 135 Stat. 429 (November 15, 2021), amended the limitations under section 2301 of the refunds of COVID–19 credits as an
section 3134(n) of the Code to provide that the ERC CARES Act. Correspondingly, section underpayment of certain employment
under section 3134 applies only to wages paid after taxes, they do not address overpayment
June 30, 2021, and before October 1, 2021 (or, in
3134(m)(3) of the Code provides, in
the case of wages paid by an eligible employer relevant part, that the Secretary shall interest paid to a taxpayer on an
which is a recovery startup business, January 1, issue such forms, instructions, erroneous refund. These proposed
2022). Therefore, the only type of employer eligible regulations, and other guidance as are regulations provide for the assessment
for the ERC for wages paid after September 30,
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necessary to prevent the avoidance of of this interest as an underpayment of
2021, and before January 1, 2022, is an employer
that meets the definition of a recovery startup the purposes of the limitations under tax.
business under section 3134(c)(5). See Notice 2021– section 3134. The Families First Act, CARES Act,
65, 2021–51 IRB 880 (December 20, 2021) for and the Code as amended by the ARP
guidance for employers that received an advance III. Regulations for the Recapture of authorize and require the Secretary to
payment of the ERC or reduced tax deposits in Erroneous Refunds of COVID–19 Credits issue regulations to prevent the
anticipation of the credit for the fourth quarter of
2021 prior to the amendments made by the Under the authority provided by the avoidance of the limitations placed on
Infrastructure Act. Families First Act, the CARES Act, and the credits by these statutes. When a
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54744 Federal Register / Vol. 89, No. 127 / Tuesday, July 2, 2024 / Proposed Rules
taxpayer is issued an erroneous refund Therefore, a regulatory impact V. Executive Order 13132: Federalism
of COVID–19 credits for which the assessment is not required. Executive Order 13132 (Federalism)
taxpayer is not eligible, the taxpayer prohibits an agency from publishing any
II. Regulatory Flexibility Act
incurs a liability to repay that refund. rule that has federalism implications if
The taxpayer also incurs a liability to Pursuant to the Regulatory Flexibility
the rule either imposes substantial,
repay any overpayment interest paid on Act (5 U.S.C. chapter 6), the Secretary
direct compliance costs on State and
the erroneous refund. In pursuing certifies that these proposed regulations
local governments, and is not required
collection of these liabilities, the IRS is would not have a significant economic
by statute, or preempts State law, unless
enforcing the statutory limitations on impact on a substantial number of small
the agency meets the consultation and
the COVID–19 credits that made the entities because these proposed
funding requirements of section 6 of the
taxpayer’s refund, and any regulations impose no compliance
Executive order. These proposed
accompanying overpayment interest, burden on any business entities,
regulations do not have federalism
erroneous. Regulations providing for the including small entities. Although these
implications, do not impose substantial
administrative recapture of proposed regulations would apply to all
direct compliance costs on State and
overpayment interest paid on refunds taxpayers eligible for the employment
local governments, and do not preempt
subsequently determined to be tax credits under the Families First Act,
State law within the meaning of the
erroneous assist in resolving taxpayers’ the CARES Act, and sections 3131,
Executive order.
repayment liabilities while also 3132, and 3134 of the Code, including
preserving administrative protections small businesses and tax-exempt Statement of Availability of IRS
afforded to these taxpayers with respect organizations with fewer than 500 Documents
to contesting their tax liabilities under employees, and would therefore be IRS notices and other guidance cited
the Code and avoiding unnecessary likely to affect a substantial number of in this preamble are published in the
costs and burdens associated with small entities, the economic impact Internal Revenue Bulletin (or
litigation. would not be significant. These Cumulative Bulletin) and are available
Accordingly, under the authority proposed regulations do not affect the from the Superintendent of Documents,
granted by the Families First Act, taxpayer’s employment tax reporting or U.S. Government Publishing Office,
CARES Act, and the Code, these the necessary information to Washington, DC 20402, or by visiting
proposed regulations would amend the substantiate entitlement to the credits. the IRS website at https://www.irs.gov.
Employment Tax Regulations (26 CFR Rather, these proposed regulations
merely implement the statutory Comments and Requests for a Public
part 31) under sections 3111, 3131, Hearing
3132, 3134, and 3221 to provide that authority granted under the Families
overpayment interest paid to taxpayers First Act, the CARES Act, and the Code Before these proposed amendments to
on erroneous refunds of COVID–19 as amended by the ARP to issue the final regulations are adopted as final
credits is treated as an underpayment of regulations or other guidance to prevent regulations, consideration will be given
the applicable employment taxes and the avoidance of the purposes of the to any comments that are submitted
may be assessed and collected by the limitations under these provisions by timely to the IRS as prescribed in this
IRS in the same manner as the taxes. providing that overpayment interest preamble under the ADDRESSES heading.
paid to taxpayers on erroneous refunds The Treasury Department and the IRS
Explanation of Provisions of COVID–19 credits is treated as an request comments on all aspects of the
These proposed regulations would underpayment of the applicable proposed regulations. Any comments
provide that any overpayment interest employment taxes and may be assessed submitted will be available at https://
paid under section 6611 to an employer and collected by the IRS in the same www.regulations.gov or upon request. A
for an erroneous refund of the COVID– manner as the taxes. public hearing will be scheduled if
19 credits will be treated as an requested in writing by any person who
III. Section 7805(f)
underpayment of the taxes imposed timely submits electronic or written
under section 3111(a) or (b), as Pursuant to section 7805(f) of the comments. Requests for a public hearing
applicable, and so much of the taxes Code, these proposed regulations have are also encouraged to be made
imposed under section 3221(a) as are been submitted to the Chief Counsel of electronically. If a public hearing is
attributable to the rate in effect under the Office of Advocacy of the Small scheduled, notice of the date, time, and
section 3111(a) or (b), as applicable, and Business Administration for comment place for the public hearing will be
may be assessed and collected by the on its impact on small business. published in the Federal Register.
Secretary in the same manner as the IV. Unfunded Mandates Reform Act Drafting Information
taxes. These proposed regulations Section 202 of the Unfunded
would be applicable to all interest The principal author of these
Mandates Reform Act of 1995 requires proposed regulations is NaLee Park,
amounts paid under section 6611 on or that agencies assess anticipated costs
after July 2, 2024 for any erroneous Office of the Associate Chief Counsel
and benefits and take certain other (Employee Benefits, Exempt
refund of the COVID–19 credits. actions before issuing a final rule that Organizations, and Employment Taxes).
Special Analyses includes any Federal mandate that may However, other personnel from the
result in expenditures in any one year Treasury Department and the IRS
I. Regulatory Planning and Review— by a State, local, or Tribal government,
Economic Analysis participated in the development of these
in the aggregate, or by the private sector,
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proposed regulations.
Pursuant to the Memorandum of of $100 million in 1995 dollars, updated
Agreement, Review of Treasury annually for inflation. These proposed List of Subjects in 26 CFR 31
Regulations under Executive Order regulations do not include any Federal Employment taxes, Fishing vessels,
12866 (June 9, 2023), tax regulatory mandate that may result in expenditures Gambling, Income taxes, Penalties,
actions issued by the IRS are not subject by State, local, or Tribal governments, or Pensions, Railroad retirement, Reporting
to the requirements of section 6 of by the private sector, in excess of that and recordkeeping requirements, Social
Executive Order 12866, as amended. threshold. security, Unemployment compensation.
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Federal Register / Vol. 89, No. 127 / Tuesday, July 2, 2024 / Proposed Rules 54745
Proposed Amendments to the section 2301 of the CARES Act be treated as an underpayment of the
Regulations advanced or paid on or after July 24, taxes imposed under section 3111(b)
Accordingly, the Treasury Department 2020, except that paragraph (e) of this and so much of the taxes imposed under
and the IRS propose to amend 26 CFR section applies to all interest amounts section 3221(a) as are attributable to the
part 31 as follows: paid under section 6611 on or after July rate in effect under section 3111(b), as
2, 2024 for any erroneous refund applicable, and may be assessed and
PART 31—EMPLOYMENT TAXES AND described in paragraph (a) or (b) of this collected by the Secretary in the same
COLLECTION OF INCOME TAX AT section. manner as the taxes.
SOURCE ■ Par. 3. Section 31.3131–1 is amended (e) Applicability date. This section
by: applies to all credit refunds under
■ Paragraph 1.The authority citation for ■ a. Redesignating paragraph (d) as section 3132 (including any increases in
part 31 continues to read in part as paragraph (e) and adding new paragraph those credits under section 3133)
follows: (d); and advanced or paid on or after September
Authority: 26 U.S.C. 7805. ■ b. Revising the newly redesignated 8, 2021, except that paragraph (d) of this
* * * * * paragraph (e). section applies to all interest amounts
Section 31.3111–6 also issued under secs. The addition and revision read as paid under section 6611 on or after July
7001 and 7003, Public Law 116–127, 134 follows: 2, 2024 for any erroneous refund
Stat. 178, and sec. 2301, Public Law 116–136, described in paragraph (a) of this
§ 31.3131–1 Recapture of credits.
134 Stat. 281. section.
* * * * * * * * * *
(d) Recapture of interest on ■ Par. 5. Section 31.3134–1 is amended
Section 31.3131–1 also issued under 26
U.S.C. 3131(g). erroneously refunded credits. For by:
Section 31.3132–1 also issued under 26 purposes of this section, any ■ a. Redesignating paragraph (d) as
U.S.C. 3132(g). overpayment interest paid under section paragraph (e) and adding new paragraph
Section 31.3134–1 also issued under 26 6611 to an employer, or any third party (d); and
U.S.C. 3134(m)(3). payor as described in paragraph (c) of ■ b. Revising the newly redesignated
Section 31.3221–5 also issued under secs. this section, with respect to an
7001 and 7003, Public Law 116–127, 134 paragraph (e).
erroneous refund amount described in
Stat. 178, and sec. 2301, Public Law 116–136, The addition and revision read as
134 Stat. 281. paragraph (a) of this section shall also
follows:
be treated as an underpayment of the
* * * * * taxes imposed under section 3111(b)
■ Par. 2. Section 31.3111–6 is amended
§ 31.3134–1 Recapture of credits.
and so much of the taxes imposed under * * * * *
by:
■ a. Redesignating paragraph (e) as
section 3221(a) as are attributable to the
(d) Recapture of interest on
paragraph (f) and adding new paragraph rate in effect under section 3111(b), as
erroneously refunded credits. For
(e); and applicable, and may be assessed and
purposes of this section, any
■ b. Revising newly redesignated collected by the Secretary in the same
overpayment interest paid under section
paragraph (f). manner as the taxes.
(e) Applicability date. This section 6611 to an employer, or any third party
The addition and revision read as payor as described in paragraph (c) of
follows: applies to all credit refunds under
section 3131 (including any increases in this section, with respect to an
§ 31.3111–6 Recapture of credits under the those credits under section 3133), erroneous refund amount described in
Families First Coronavirus Response Act advanced or paid on or after September paragraph (a) of this section shall also
and the Coronavirus Aid, Relief, and 8, 2021, except that paragraph (d) of this be treated as an underpayment of the
Economic Security Act. section applies to all interest amounts taxes imposed under section 3111(b)
* * * * * paid under section 6611 on or after July and so much of the taxes imposed under
(e) Recapture of interest on 2, 2024 for any erroneous refund section 3221(a) as are attributable to the
erroneously refunded credits under the described in paragraph (a) of this rate in effect under section 3111(b), as
Families First Act and CARES Act. For section. applicable, and may be assessed and
purposes of this section, any ■ Par. 4. Section 31.3132–1 is amended
collected by the Secretary in the same
overpayment interest paid under section by: manner as the taxes.
6611 to an employer, or any third party ■ a. Redesignating paragraph (d) as (e) Applicability date. This section
payor as described in paragraph (d) of paragraph (e) and adding new paragraph applies to all credit refunds under
this section, with respect to an (d); and section 3134 advanced or paid on or
erroneous refund amount described in ■ b. Revising the newly redesignated after September 8, 2021, except that
paragraph (a) or (b) of this section shall paragraph (e). paragraph (d) of this section applies to
also be treated as an underpayment of The addition and revision read as all interest amounts paid under section
the taxes imposed under section 3111(a) follows: 6611 on or after July 2, 2024 for any
of the Code and may be assessed and erroneous refund described in
collected by the Secretary in the same § 31.3132–1 Recapture of credits. paragraph (a) of this section.
manner as the taxes. * * * * * ■ Par. 6. Section 31.3221–5 is amended
(f) Applicability date. This section (d) Recapture of interest on by:
applies to all credit refunds under erroneously refunded credits. For
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■ a. Redesignating paragraph (e) as
sections 7001 and 7003 of the Families purposes of this section, any
First Act (including any increases in overpayment interest paid under section paragraph (f) and adding new paragraph
those credits under section 7005 of the 6611 to an employer, or any third party (e); and
Families First Act), as modified by payor as described in paragraph (c) of ■ b. Revising the newly redesignated
section 3606 of the CARES Act, this section, with respect to an paragraph (f).
advanced or paid on or after July 24, erroneous refund amount described in The addition and revision read as
2020, and all credit refunds under paragraph (a) of this section shall also follows:
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54746 Federal Register / Vol. 89, No. 127 / Tuesday, July 2, 2024 / Proposed Rules
§ 31.3221–5 Recapture of credits under the DATES: Electronic or written comments such payments are made in the manner
Families First Coronavirus Response Act and requests for a public hearing must and in accordance with the forms,
and the Coronavirus Aid, Relief, and be received by September 3, 2024. instructions, and procedures prescribed
Economic Security Act. by the Commissioner of Internal
ADDRESSES: Commenters are strongly
* * * * * encouraged to submit public comments Revenue (Commissioner).
(e) Recapture of interest on electronically. Submit electronic Prior to passage of the TFA, section
erroneously refunded credits under the submissions via the Federal 6311(d)(2) authorized the Secretary to
Families First Act and CARES Act. For eRulemaking Portal at https:// enter into contracts to obtain services
purposes of this section, any www.regulations.gov (indicate IRS and related to receiving payment of taxes by
overpayment interest paid under section REG–120137–19) by following the credit card or debit card, or charge card,
6611 to an employer, or any third party online instructions for submitting but prohibited the Secretary from
payor as described in paragraph (d) of comments. Requests for a public hearing paying any fee or other consideration
this section, with respect to an must be submitted as prescribed in the under any such contract. Existing
erroneous refund amount described in ‘‘Comments and Requests for a Public § 301.6311–2(f) implements this rule.
paragraph (a) or (b) of this section shall Hearing’’ section. Once submitted to the Existing § 301.6311–2(e) prohibits the
also be treated as an underpayment of Federal eRulemaking Portal, comments IRS from imposing any fee or charge on
the taxes imposed under section 3221(a) cannot be edited or withdrawn. The persons making payment of taxes by
and may be assessed and collected by Department of the Treasury (Treasury credit card or debit card. Currently, the
the Secretary in the same manner as the Department) and the IRS will publish IRS utilizes third-party processors to
taxes. for any comments submitted process payment of taxes by credit
(f) Applicability date. This section electronically or on paper to the public cards, which includes charge cards, and
applies to all credit refunds under docket. Send paper submissions to: debit cards for which taxpayers pay a
sections 7001 and 7003 of the Families CC:PA:01:PR (REG–120137–19), Room processing fee directly to the third-party
First Act, as modified by section 3606 5203, Internal Revenue Service, P.O. processor. Third-party processors charge
of the CARES Act, advanced or paid on Box 7604, Ben Franklin Station, a variable percentage fee for payment by
or after July 24, 2020, and all credit Washington, DC 20044. credit card and a flat fee for payment by
refunds under section 2301 of the debit card.
FOR FURTHER INFORMATION CONTACT:
CARES Act advanced or paid on or after Section 2303 of the TFA amended
Concerning the proposed regulations, section 6311(d)(2) by adding a
July 24, 2020, except paragraph (e) of Crystal Jackson-Kaloz of the Office of
this section applies to all interest discretionary exception whereby the
the Associate Chief Counsel (Procedure Secretary is no longer prohibited from
amounts paid under section 6611 on or and Administration), (202) 317–5191
after July 2, 2024 for any erroneous paying a fee under a contract related to
(not a toll-free number); concerning the receiving payment of taxes by credit or
refund described in paragraph (a) or (b) submission of comments and requests
of this section. debit card to the extent that the
for a public hearing, Publications and Secretary ensures that any such fee is
Douglas W. O’Donnell, Regulations Section at (202) 317–6901 fully recouped from the persons paying
Deputy Commissioner. (not a toll-free number), or by sending taxes by credit or debit card pursuant to
[FR Doc. 2024–14167 Filed 7–1–24; 8:45 am] an email at publichearings@irs.gov such contract. This provision enables
BILLING CODE 4830–01–P
(preferred). the IRS to receive similar benefits as
SUPPLEMENTARY INFORMATION: other entities that accept credit or debit
cards, including guaranteed receipt of
Background
DEPARTMENT OF THE TREASURY funds and reduction of paper check
This document contains proposed processing costs. This provision also
Internal Revenue Service amendments to the Procedure and enables taxpayers to make a payment
Administration Regulations (26 CFR more easily by credit or debit card
26 CFR Part 301 part 301) under section 6311 of the directly to the IRS, such as over the
Internal Revenue Code (Code). These telephone, without having to separately
[REG–120137–19] proposed regulations would amend wait for the IRS to connect them to
provisions of § 301.6311–2 of the third-party processors. See H.R. Rep.
RIN 1545–BP66
existing regulations (existing 116–39(I), 116th Cong., 1st Sess. at 90
Update of Regulations Regarding § 301.6311–2) to implement the changes (2019).1 Section 2303 of the TFA now
Payment of Tax by Commercially made to section 6311 of the Code by gives the IRS flexibility to enter into a
Acceptable Means section 2303 of the Taxpayer First Act
(TFA), Public Law 116–25, 133 Stat. 1 In 2019, different versions of the TFA were
AGENCY: Internal Revenue Service (IRS), 981, 1013 (2019). introduced in the House and Senate and both bills
Section 6311(a) provides that it is contained provisions to amend section 6311 of the
Treasury. Code. H.R. 1957 was introduced in the House on
ACTION: Notice of proposed rulemaking. lawful for the Secretary of the Treasury March 28, 2019, and passed the House on April 9,
or her delegate (Secretary) to receive 2019, but did not pass the Senate. Section 2303 of
SUMMARY: This document contains payment for Internal Revenue taxes by H.R. 1957 contained proposed statutory language
amending section 6311(d) that was identical to the
proposed amendments to regulations any commercially acceptable means that statutory language that was enacted a short time
regarding the payment of tax by the Secretary deems appropriate to the later on July 1, 2019, in section 2303 of H.R. 3151.
commercially acceptable means. The extent and under the conditions
lotter on DSK11XQN23PROD with PROPOSALS1
Due to the procedural way in which H.R. 3151
proposed amendments would reflect provided in regulations prescribed by became a vehicle for enacting the TFA, there are no
separate House, Senate, or Conference Reports
changes to the law made by the the Secretary. Existing § 301.6311–2, regarding H.R. 3151, which became the TFA, Public
Taxpayer First Act that would allow the which was adopted by the publication Law 116–25. Therefore, it is appropriate for the
IRS to directly accept payments of tax of TD 8969 in the Federal Register (66 Treasury Department and the IRS to look to the
House Ways and Means Committee Report for H.R.
by credit or debit card, without having FR 64740–01) on December 14, 2001, 1957, the immediate predecessor to H.R. 3151, to
to connect taxpayers to third-party authorizes payment of Internal Revenue understand the intended scope of section 2303 of
payment processors. taxes by credit or debit card so long as the TFA.
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