Internal Revenue Bulletin: 2008-9
March 3, 2008
Table of Contents
This document contains final and temporary regulations relating to the financing of presidential primary campaigns. The temporary regulations relate to Treasury procedures for making payments from the Presidential Primary Matching Payment Account (Primary Account). These temporary regulations affect all candidates eligible to receive payments from the Primary Account. The text of the temporary regulations also serves as the text for the proposed regulations (REG-149475-07) set forth in the notice of proposed rulemaking on this subject in this issue of the Bulletin.
Effective Date: These regulations are effective on February 14, 2008.
Applicability Date: For dates of applicability, see §§702.9037-1(b), 702.9037-1T(b), 702.9037-2(e) and 702.9037-2T(c).
Under section 6096 of the Internal Revenue Code (Code), individuals whose income tax liability for the taxable year is $3 or more may designate $3 for the Presidential Election Campaign Fund (Fund) on their tax returns. Section 9006(a) establishes the Fund and requires the Treasury Secretary (Treasury) to transfer amounts designated under section 6096 to the Fund. Three types of payments are made from the Fund: (1) payments to the national committee of each major and minor party, (2) payments to the eligible candidates of a political party for President and Vice President, and (3) payments to eligible candidates seeking nomination for election to be President. See sections 9008(b)(3), 9006(b) and 9037(b).
Section 9008 requires the Treasury to maintain a separate account in the Fund for payments to the national committee of each major and minor party for their presidential nominating conventions, to be made upon receipt of certification by the Federal Election Commission (Commission). Section 9008(a) directs the Treasury to fund this account before making payments under section 9006(b) to eligible candidates for President and Vice President. Section 9037(a) directs the Treasury to establish within the Fund an additional separate account, the Primary Account. Section 9037(a) also directs the Treasury to make deposits to the Primary Account only after funds “are available” for payments for the nominating conventions under section 9008 and the general election under section 9006. Section 9037(b) requires the Treasury to transfer amounts certified by the Commission from the Primary Account to candidates seeking nomination for President. Section 9037(b) also provides that in making such transfers to candidates of the same political party, the Treasury will seek to achieve an equitable distribution of available funds, and will take into account, in seeking to achieve an equitable distribution, the sequence in which certifications from the Commission are received. Under section 9032(6), primary candidates may receive payments under section 9037(b) beginning on the first day of the calendar year of the presidential general election.
Section 702.9037-2(c) establishes a “shortfall rule,” which provides that if the amount certified by the Commission for primary candidates in a calendar month exceeds the balance in the Primary Account on the last day of the calendar month, the amount paid to a candidate for that month from the Primary Account is determined by multiplying the amount certified by the Commission for the candidate during that month by the ratio of the balance in the Primary Account on the last day of the calendar month over the total amount certified by the Commission for all the candidates during that month. Any amount certified by the Commission, but not paid to a candidate because of the operation of this shortfall rule, is treated as an amount certified by the Commission for that candidate during the succeeding calendar month.
Notice 96-13, 1996-1 C.B. 366, announced a change in the payment procedures contained in §702.9037-2(c). The notice stated that when the Primary Account is in a shortfall position, the Treasury may make an additional payment between regular payment dates promptly after funds are available. Such payment is determined by multiplying the amount certified by the Commission for the candidate in month 1 by the ratio of the balance in the Primary Account (but not to exceed the shortfall) on the 15th day of month 2 (or the first business day thereafter if the 15th is not a business day) over the total amount certified by the Commission for all the candidates in month 1. Notice 96-13 stated that the regulations would be amplified to reflect these changed procedures and that the revised regulations would have an effective date of February 2, 1996. See §601.601(d)(2)(ii)(b).
Notice 2007-96, 2007-49 I.R.B. 1091, superseded Notice 96-13 and announced that the procedures for making payments from the Primary Account would be changed. The notice also announced that the Treasury intended to modify the regulations under section 9037 to reflect the changed procedures. In compliance with section 7805(b)(1)(C), and as stated in Notice 2007-96, pursuant to Notice 96-13, the effective date of these amendments to the regulations would be February 2, 1996.
The regulations under section 9037 were promulgated in 1991 and provide procedures for administering the Primary Account. The procedures specified in these regulations have not kept pace with technological changes that allow the Primary Account to be administered and operated more efficiently. For example, the regulations do not provide for more than monthly payments in the event of a shortfall as contemplated by Notice 96-13. Accordingly, the temporary regulations remove these outdated administrative procedures. Concurrently with the issuance of these temporary regulations the Internal Revenue Service is publishing a revenue procedure specifying revised procedures for administering the Primary Account. These revised procedures allow weekly payments from the Primary Account to candidates.
These temporary regulations apply to payments from the Primary Account on or after February 2, 1996.
It has been determined that this Treasury decision 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. For the applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6) refer to the Special Analysis section of the preamble to the cross-reference notice of proposed rulemaking published in this issue of the Bulletin. Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.
Accordingly, 26 CFR part 702 is amended as follows:
Paragraph 1. The authority citation for part 702 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 702.9037-1 is amended as follows:
1. The undesignated text is designated as paragraph (a).
2. Paragraph (b) is added.
The revision reads as follows:
* * * * *
(b) Effective/applicability date. These regulations apply to the Primary Account before February 2, 1996.
Par. 3. Section 702.9037-1T is added to read as follows:
(a) In general. The Secretary will deposit amounts into the Presidential Primary Matching Payment Account (Primary Account) only to the extent that there are amounts in the Presidential Election Campaign Fund (Fund) after the transfers prescribed by §701.9006-1(c) and (d). The Secretary will make this deposit promptly from amounts that have actually been transferred to the Fund under §701.9006-1(a). Any amounts in the Primary Account after October 31 following a presidential election will be returned to the Fund for the purpose of making the transfers prescribed by §701.9006-1(c), (d), and (f) for the next presidential election.
(b) Effective/applicability date. (1) These regulations apply to the Primary Account on or after February 2, 1996.
(2) Expiration Date. This section expires on February 11, 2011.
Par. 4. Section 702.9037-2 is amended by adding paragraph (e) to read as follows:
* * * * *
(e) Effective/applicability date. These regulations apply to the Primary Account before February 2, 1996.
Par. 5. Section 702.9037-2T is added to read as follows:
(a) In general. Pursuant to section 9036, the Federal Election Commission (Commission) will certify to the Secretary the full amount of payment to which a candidate is entitled under section 9034. The Secretary will pay promptly, but not before the start of the matching payment period under section 9032(6), the amounts certified by the Commission from the Presidential Primary Matching Payment Account (Primary Account) to the candidate.
(b) Additional guidance. The Internal Revenue Service may publish guidance in the Internal Revenue Bulletin (see §601.601(d)(2)(ii)(b) of this chapter) prescribing additional rules and procedures for the Primary Account.
(c) Effective/applicability date. (1) These regulations apply to the Primary Account on or after February 2, 1996.
(2) Expiration Date. This section expires on February 11, 2011.
Deputy Commissioner for
Services and Enforcement.
Approved February 1, 2008.
Assistant Secretary of
the Treasury (Tax Policy).
(Filed by the Office of the Federal Register on February 11, 2008, 12:09 p.m., and published in the issue of the Federal Register for February 14, 2008, 73 F.R. 8608)
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