EIC Eligibility Requirements

DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Part 1 [REG-116608-97] RIN 1545-AV61

TITLE: EIC Eligibility Requirements

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to
temporary regulations and notice of public hearing.

SUMMARY: In the Rules and Regulations section of this issue of the
Federal Register, the IRS is issuing temporary regulations
pertaining to the eligibility requirements for certain taxpayers
denied the earned income credit (EIC) as a result of the deficiency
procedures. The text of those temporary regulations also serves as
the text of these proposed regulations. This document also provides
notice of a public hearing on these proposed regulations.

DATES: Written comments must be received by September 23, 1998.
Requests to speak (with outlines of oral comments) at a public
hearing scheduled for Wednesday, October 21, 1998, must be received
by September 30, 1998.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-116608-97), room
5228, Internal Revenue Service, POB 7604, Ben Franklin Station,
Washington, DC 20044.

Submissions may be hand delivered between the hours of 8 a.m. and 5
p.m. to: CC:DOM:CORP:R (REG-116608-97), Courier's Desk, Internal
Revenue Service, 1111 Constitution Avenue, NW., Washington, DC.
Alternatively, taxpayers may submit comments electronically via the
Internet by selecting the "Tax Regs" option on the IRS Home Page, or
by submitting comments directly to the IRS Internet site at
http://www.irs.ustreas.gov/prod/tax_regs/comments.html. The public
hearing will be held in room 2615, Internal Revenue Building, 1111
Constitution Avenue, NW., Washington, DC 20224.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Karin
Loverud, 202-622-6060; concerning submissions or the hearing, LaNita
VanDyke, 202-622-7190 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information contained in this notice of proposed
rulemaking has 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 collection 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, T:FP, Washington, DC
20224. Comments on the collection of information should be received
by August 24, 1998. Comments are specifically requested concerning:

Whether the proposed collection of information is necessary for the
proper performance of the functions of the Internal Revenue Service,
including whether the information will have practical utility;

The accuracy of the estimated burden associated with the proposed
collection of information (see below);

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 collection of information in this proposed regulation is in
§1.32-3. This information is required to conform with the statute
and to permit the taxpayer to claim the EIC. This information will
be used by the IRS to determine whether the taxpayer is entitled to
claim the EIC.

The collection of information is mandatory. The likely respondents
are individuals.

The burden is reflected in the burden of Form 8862. 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

The temporary regulations published in the Rules and Regulations
section of this issue of the Federal Register add §1.32-3T to the
Income Tax Regulations.

The text of those temporary regulations also serves as the text of
these proposed regulations. The preamble to the temporary
regulations explains the temporary regulations.

Special Analyses

It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in EO 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 these regulations will not have a
significant economic impact on a substantial number of small
entities. This certification is based upon the fact that the
underlying statute applies only to individuals. 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 Internal Revenue 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 Public Hearing

Before these proposed regulations are adopted as final regulations,
consideration will be given to any written comments (a signed
original and eight copies) that are submitted timely (in the manner
described in the ADDRESSES portion of this preamble) to the IRS. All
comments will be available for public inspection and copying.

A public hearing has been scheduled for Wednesday, October 21, 1998,
at 10 a.m., in room 2615, Internal Revenue Building, 1111
Constitution Avenue, NW., Washington, DC.

Because of access restrictions, visitors will not be admitted beyond
the building lobby more than 15 minutes before the hearing starts.

The rules of §601.601(a)(3) apply to the hearing.

Persons that have submitted written comments by September 23, 1998,
and want to present oral comments at the hearing must submit, not
later than September 30, 1998, an outline of the topics to be
discussed and the time to be devoted to each topic. A period of 10
minutes will be allotted to each person for making comments.

An agenda showing the scheduling of the speakers will be prepared
after the deadline for receiving outlines 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 Karin Loverud,
Office of the Associate Chief Counsel (Employee Benefits and Exempt
Organizations), IRS. However, other personnel from the IRS and the
Treasury Department participated in their development.

List of Subjects in 26 CFR Part 1 Income taxes, Reporting and
recordkeeping requirements.

Proposed Amendments to the Regulations Accordingly, 26 CFR part 1 is
proposed to be amended as follows:

PART 1--INCOME TAXES

Paragraph 1. The authority citation for part 1 continues to read in
part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.32-3 is added to read as follows:

§1.32-3 Eligibility Requirements.

[The text of this proposed section is the same as the text of
§1.32-3T published elsewhere in this issue of the Federal Register].

Deputy Commissioner of Internal Revenue

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