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February 2006 Plain Language Regulations

Procedures for Administrative Review of a Determination that an Authorized Recipient has failed to Safeguard Tax Returns or Return Information
The Internal Revenue Code requires that designated recipients of returns and return information to provide safeguards protecting this sensitive information. Under current regulations, the IRS has established administrative procedures for the termination of disclosures to state and local tax administration agencies that fail to provide adequate safeguards for the returns and return information they receive.  The temporary regulation withdraws the current regulation and sets forth new administrative review procedures for all authorized recipients of returns and return information who have safeguarding responsibilities.
TD 9252.  Published February 24, 2006.
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Procedures for Administrative Review of a Determination that an Authorized Recipient has failed to Safeguard Tax Returns and Return Information
The IRS is issuing temporary regulations regarding administrative review procedures for certain government agencies and other authorized recipients of tax returns or return information (authorized recipients) whose receipt of returns and return information may be suspended or terminated because they do not maintain proper safeguards.  The temporary regulations provide guidance to responsible IRS personnel and authorized recipients as to these administrative procedures.  The Notice of Proposed Rulemaking withdraws Treas. Reg. section 301.6103(p)(7)-1 and presents the proposed regulations for intermediate review and termination procedures for all authorized recipients with safeguarding responsibilities. 
REG-157271-05.  Published February 24, 2006.
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Special Rules Regarding Certain Section 951 Pro Rata Share Allocations
Under subpart F of the Internal Revenue Code (sections 951 through 965), a United States shareholder of a controlled foreign corporation (CFC) is currently taxed on his pro rata share of the CFC's subpart F income.  These regulations provide two special rules for determining certain pro rata share allocations.  One of these rules, which is based upon the value of the class of shares, is intended to ensure that a CFC's earnings and profits for a taxable year attributable to a section 304 transaction will not be allocated in a manner that results in the avoidance of Federal income tax.  The other rule is intended to ensure that earnings and profits of a CFC are not allocated to certain preferred stock in a manner inconsistent with the economic interest that such stock represents.  TD 9251.  Published February 22, 2006.
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Application of Section 367 in Cross Border Section 304 Transactions; Certain Transfers of Stock Involving Foreign Corporations
If under section 304(a)(1), a transfer of stock in a domestic or foreign corporation by a U.S. person to a foreign corporation is treated as a transaction to which section 351 applies, such transfer is not subject to section 367(a).  Also, if under section 304(a)(1) a transfer of foreign corporation stock to a foreign corporation is treated as a transaction to which section 351 applies, such transfer is not subject to section 367(b).  TD 9250.  Published February 21, 2006.
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Regulations Governing Practice Before the Internal Revenue Service
This notice of proposed rulemaking provides proposed amendments to the provisions of Circular 230 relating to various non-shelter items.  On December 19, 2002, the Treasury Department and the IRS issued an advance notice of proposed rulemaking (2002 ANPRM) requesting comments on amendments to the regulations relating to the Office of Professional Responsibility, unenrolled practice, eligibility for enrollment, sanctions and disciplinary proceedings, contingent fees and confidentiality agreements.  This document proposes amendments reflecting the Treasury Department and the IRS consideration of the comments received in response to the 2002 ANPRM and reflecting amendments to section 330 of title 31 made by the American Jobs Creation Act of 2004.  The proposed regulations also include conforming amendments to reflect the final regulations relating to best practices, covered opinions and other written advice published as TD 9165 on December 20, 2004 and as TD 9201 on May 19, 2005, but do not otherwise address those final regulations.
REG-122380-02.  Published February 8, 2006.
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Escrow Funds and Other Similar Funds
When assets are placed in escrow accounts, trusts, or other funds until the ownership of the assets is determined, the income from these escrow accounts, trusts, or other funds is subject to current income tax.  The tax may be payable by the individuals that have an interest in the assets in the account or fund or by the account or fund itself.  The regulations provide rules for taxing the income earned by pre-closing escrow accounts used in connection with the sale of property and by disputed ownership funds that contain property under the jurisdiction of a court to which two or more parties claim ownership.  The regulations also allow a person that transfers property to a qualified settlement fund to choose to be taxed like a grantor trust.
TD 9249.  Published February 7, 2006.
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Escrow Accounts, Trusts, and Other Funds Used During Deferred Exchanges of Like-Kind Property
In a deferred like-kind exchange, the proceeds from the sale of a relinquished property are often placed in an escrow account, trust, or other fund until the proceeds are used to purchase the replacement property or are paid to the seller.  These proposed regulations explain who is taxed on the income from the escrow account, trust, or other fund containing these proceeds.  The proposed regulations affect sellers that engage in deferred like-kind exchanges and escrow holders, trustees, qualified intermediaries, and others that hold funds in connection with these exchanges.
REG-113365-04.  Published February 7, 2006.
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Page Last Reviewed or Updated: 22-Jan-2014