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					                        Federal Register / Vol. 68, No. 16 / Friday, January 24, 2003 / Rules and Regulations                                          3381

     DEPARTMENT OF THE TREASURY                              recommendation that only three                         utilize existing Drawback personnel to
                                                             Drawback Centers be eliminated and the                 their potential;
     Customs Service                                         San Francisco Drawback Center remain                      • Transfer of backlogged drawback
                                                             operational. The Commissioner of                       cases;
     19 CFR Part 101                                         Customs concurred with this                               • Lack of specific published
                                                             recommendation and it was proposed to                  proposals demonstrating how service
     [T.D. 03–05]
                                                             phase-in the closure of the Drawback                   levels will be maintained; and
                                                             Centers located at the ports of Boston,                   • Lack of realistic methods of
     Consolidation of Customs Drawback
                                                             MA; Miami, FL; and New Orleans, LA.                    determining which Drawback Centers
     Centers
                                                                On August 21, 2002, Customs                         should have been closed;
     AGENCY: Customs Service, Department                     published in the Federal Register (67                     Customs Response: To ensure that the
     of the Treasury.                                        FR 54137) a proposed amendment to the                  level of service at the remaining
     ACTION: Final rule.                                                                                            Drawback Centers will remain the same
                                                             Customs Regulations to reflect the
                                                                                                                    as before the consolidation, Customs
                                                             planned closure of these Customs
     SUMMARY: This document adopts as a                                                                             reviewed the workload of each Center
                                                             Drawback Centers, and a request for
     final rule, with a clarification, the                                                                          and assessed the burden of any
                                                             public comment regarding the proposed
     proposed amendments to the Customs                                                                             workload that would be transferred to
                                                             actions. In that document, Customs
     Regulations that reflect the closure of                                                                        another Drawback Center as result of the
                                                             described a phased-in closure process
     the Customs Drawback Centers located                                                                           consolidation. The determination as to
                                                             whereby the Customs Drawback Centers
     at the ports of Boston, Massachusetts;                                                                         which Drawback Centers would receive
                                                             located at the ports of Boston and New
     Miami, Florida; and New Orleans,                                                                               drawback cases that remain
                                                             Orleans would close 30 days from the
     Louisiana. The closing of the three                                                                            unliquidated twelve months after
                                                             date a final rule adopting the proposed
     Drawback Centers is part of a planned                                                                          closure of a Center was based upon this
                                                             changes was published in the Federal
     consolidation and is intended to                                                                               review. It is noted, however, that the
                                                             Register, and the Drawback Center
     promote operational efficiency in the                                                                          workload transfers that were described
                                                             located at the port of Miami would close
     processing of drawback claims.                                                                                 in the August 21, 2002, Federal Register
                                                             180 days from such date. The document
     EFFECTIVE DATES: This regulation
                                                                                                                    document have been changed, due to
                                                             also stated that any unliquidated
     becomes effective January 24, 2003. The                                                                        further internal analysis of workloads,
                                                             drawback claims that remained at each
     closing of the Customs Drawback Center                                                                         staffing and backlogs, and are described
                                                             of these Drawback Centers twelve
     located at the port of New Orleans, LA                                                                         in the section of this document entitled
                                                             months after their respective closing
     becomes effective February 24, 2003.                                                                           ‘‘Further Customs Analysis,’’ set forth
                                                             dates would be transferred to another
     The closing of the Customs Drawback                                                                            below.
                                                             Drawback Center for processing as                         Regarding staffing issues, Customs
     Centers located at the ports of Boston,                 follows: Remaining claims from Boston                  recognizes that Drawback personnel
     MA and Miami, FL become effective                       would be transferred to the New York/                  levels at the remaining Drawback
     July 23, 2003.                                          Newark, NJ Drawback Center; remaining                  Centers will have to be routinely
     FOR FURTHER INFORMATION CONTACT:                        claims from New Orleans would be                       reviewed to ensure that the centers are
     Sherri Lee Hoffman, Entry and                           transferred to the Houston Drawback                    able to sustain pre-consolidation levels
     Drawback Management, Office of Field                    Center; and remaining claims from                      of service. Customs is striving to
     Operations, U.S. Customs Service, Tel.                  Miami would be transferred to the                      automate and simplify the drawback
     (202) 927–0300.                                         Chicago Drawback Center.                               process to reduce the workload of
     SUPPLEMENTARY INFORMATION:                                 In accordance with the proposal, the                Drawback Specialists. In an effort to
                                                             five Drawback Centers located at the                   utilize Drawback personnel to their
     Background                                              ports of New York/Newark, NJ;                          potential, Drawback Specialists will
        Since 1996, Customs has recognized a                 Houston, TX; Chicago, IL; Los Angeles,                 continue to receive annual training.
     decrease in both the number of                          CA; and San Francisco, CA, will remain                    The Customs Drawback Program has
     drawback claims and the amount of                       operational.                                           evolved over the years, and the
     drawback payments. To verify these                      Discussion of Comments                                 processing procedures in place today
     trends, and to determine how to most                                                                           are to ensure that the workload
     efficiently operate the Drawback                           Fourteen comments were received in                  increases do not create unworkable
     Program, Customs conducted an                           response to the solicitation of public                 backlogs and preserve a pre-
     internal evaluation of the program.                     comment published in the August 21,                    consolidation level of service to the
     Customs also retained the services of an                2002, Federal Register document. A                     trade.
     independent contractor to review the                    description of the comments received,                     Lastly, Customs notes that its
     Drawback Program to ensure that the                     together with Customs analyses, is set                 determination to close three Drawback
     agency’s findings were valid. The                       forth below.                                           Centers was based on a detailed internal
     findings of both the agency-led review                     Comment: Several commenters                         evaluation of the program, as well as the
     and the independent contractor’s                        expressed concern that closure of three                findings of an independent contractor.
     assessment indicated the benefits of                    Drawback Centers will negatively                       The findings of the agency-led review
     consolidating the processing of                         impact the level of service at the                     and the independent contractor’s
     drawback claims by reducing the                         remaining Drawback Centers. Specific                   assessment were based on facts and
     number of Drawback Centers.                             comments were submitted regarding                      clearly indicated the benefits of
        In a Notice to Congress on March 12,                 anticipated inefficiencies at the                      consolidation of the program.
     2001, filed in accordance with 19 U.S.C.                remaining Drawback Centers resulting                      Comment: Two commenters requested
     2075, Customs proposed the closure of                   from:                                                  that the requirement to re-apply for a
     four Drawback Centers. The Senate                          • Reduction in full-time Customs                    new letter of intent to operate under a
     Finance and House Ways and Means                        Drawback Specialist positions;                         general drawback ruling when
     Committees concurred with the                              • Increased workload for remaining                  transferring from one drawback center
     proposal for consolidation, but with the                Drawback Specialists and failure to                    to another be waived.


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     3382               Federal Register / Vol. 68, No. 16 / Friday, January 24, 2003 / Rules and Regulations

        Customs response: Claimants will not                 completed by Regulatory Auditors with                  make any changes to the Regulatory
     have to re-file a general drawback ruling               input from the Drawback Specialist. It is              Audit functions of drawback.
     request at the Drawback Center                          noted that the number of audits over the                 Comment: One commenter viewed the
     designated to receive their claims. If,                 years has remained consistent.                         requirement to provide advance
     however, a claimant opts to file a claim                   Comment: One commenter noted that                   notification to Customs of any changes
     at a Drawback Center other than the one                 the proposed rulemaking should have                    to a drawback claim as impractical, and
     designated to receive their claims, that                stated that only a customs broker                      questioned who, within Customs,
     claimant will have to file a new letter of              requires a license/permit to file a                    should be notified in such instances.
     intent to operate under a general                       drawback claim, and not a drawback                       Customs response: Notification of
     drawback ruling at that location.                       claimant.                                              changes to a drawback claim should be
        Comment: Several commenters                             Customs response: Customs agrees;                   provided to the Drawback Specialist
     questioned whether consolidating the                    the background section of the proposed                 handling the original claim.
     drawback program would subvert the                      rulemaking published in the Federal                      Comment: One commenter questioned
     intent of Congress to assist in increasing              Register (67 FR 54137) on August 21,                   whether the Government will actually
     U.S. exports.                                           2002, should have specified that a                     save money by closing three Drawback
        Customs response: Consolidation of                   drawback claimant’s customs broker                     Centers and reducing personnel, given
     the drawback program will not                           must possess a district or national                    the fact that no specific information as
     negatively impact U.S. exports.                         permit to file a drawback claim.                       to the expected savings have been
        Comment: One commenter objected to                      Comment: One commenter questioned                   presented.
     the fact that the identity of the                       whether a broker must file drawback                      Customs response: The proposed
     independent contractor brought in to                    claims via the Automated Broker                        rulemaking published in the August 21,
     perform the review of the Drawback                      Interface (ABI) to have a national                     2002, Federal Register stated that the
     Program was not made public.                            permit, and noted that the Customs                     consolidation is ‘‘intended to promote
        Customs response: The purpose of                     Regulations permit drawback claims to                  operational efficiency in the processing
     retaining an independent contractor was                 be filed either manually or                            of drawback claims.’’ The document
     to have an unbiased third party conduct                 electronically (via ABI).                              does not suggest savings as a reason for
     a review of the Drawback Program.                          Customs response: Section 111.19(f)                 the consolidation.
     Individuals seeking more information                    of the Customs Regulations (19 CFR                       Comment: One commenter noted that
     may file a request for information                      111.19(f)) allows for national broker                  consolidation of the Drawback Program
     pursuant to the Freedom of Information                  permits under any of the circumstances                 will necessitate submission of drawback
     Act (5 U.S.C. 552).                                     described in § 111.2(b)(2)(i) (19 CFR                  applications to Customs Drawback
        Comment: Several commenters noted                    111.2(b)(2)(i)). Section 111.2(b)(2)(i)(B)             Centers that are outside the Customs
     that although the number of drawback                    allows for electronic (ABI) drawback                   port areas most familiar with the
     claims has decreased, the volume of                     claims. There is no allowance in                       claimant/company and thereby further
     import and export shipments that                        § 111.2(b)(2)(i) for manual drawback                   increase delays and backlogs.
     appear on claims has increased.                         claims. Drawback claims may be filed                   Additionally, if drawback claims are
        Customs response: Customs has data                   manually by brokers with a district                    required to be submitted at ports other
     that reflects that the number of                        permit. See 19 CFR 111.2(b)(2)(ii).                    than the port of import, the process of
     underlying imports in 2001 decreased                       Comment: Several commenters noted                   obtaining records will be more difficult,
     over 40% from 1999 levels. While it is                  that by closing Drawback Centers,                      time-consuming and expensive.
     true that more exports are being claimed                Customs will be unable to liquidate and                  Customs response: The Drawback
     in a summarized format, consolidation                   audit drawback claims within the three                 Program is not currently a port-specific
     of the drawback program is a legitimate                 year time period allowed by law.                       program. Therefore, Drawback
     means of increasing the program’s                          Customs response: As stated                         Specialists are already adept at
     efficiency without impairing U.S.                       previously, Customs believes that                      reviewing claims that originate from
     exports.                                                consolidation of the Drawback Program                  outside their geographical area. Also,
        Comment: Two commenters                              will bring about more efficient and                    the process of transmitting or shipping
     questioned why claimants are not                        effective drawback claim processing,                   data to other Customs ports is already
     allowed to file a single application for                and thereby claims should get                          followed by all ports that do not have
     the waivers and privileges set forth in                 liquidated more expeditiously. It is                   a Drawback Center.
     §§ 191.91, 191.92 and 191.195 of the                    noted that there is no legal or regulatory               Comment: One commenter requested
     Customs Regulations (i.e., waiver of                    requirement to liquidate or audit a                    that Customs publish each Drawback
     prior notice of intent to export,                       drawback claim within three years. A                   Center’s drawback claims filing
     accelerated payment, certification in the               drawback claimant is required to retain                statistics (i.e., dollar amounts claimed,
     drawback compliance program).                           records for three years after payment of               number of drawback personnel assigned
        Customs response: Claimants do have                  a drawback claim. See 19 CFR                           to the Drawback Center, number of
     the option of filing a single application               163.4(b)(1). If drawback is paid via                   exports being claimed).
     for these waivers and privileges                        accelerated payment, pursuant to 19                      Customs response: Relevant export
     pursuant to 19 CFR 191.93.                              CFR 191.92, and the three year time                    data is unavailable because it is not part
        Comment: Several commenters noted                    period to retain records expires prior to              of Customs automated system. The other
     that all Drawback Specialists must now                  the underlying claim being liquidated,                 types of drawback statistics specified in
     perform more mandatory audits and/or                    there may be instances where the                       the comment may be available by
     desk reviews as ordered by the General                  records necessary to verify a claim are                information requests made pursuant to
     Accounting Office (GAO).                                no longer available. This problem,                     the Freedom of Information Act (5
        Customs response: Customs has                        however, has no bearing on the                         U.S.C. 552).
     enhanced the processing procedures for                  consolidation of the Drawback Program.                   Comment: One commenter noted that
     drawback so that fewer full desk                        It is further noted that audits are                    a decline in the number of drawback
     reviews are completed by each                           performed on unliquidated drawback                     claims suggests that existing Drawback
     Drawback Specialist. Audits are                         claims, and this document does not                     Centers have idle time and that


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                        Federal Register / Vol. 68, No. 16 / Friday, January 24, 2003 / Rules and Regulations                                           3383

     privileges and claims should all be                        Customs response: Customs views a                      The original phased-in consolidation
     approved on time, including those                       consolidated, more efficient Drawback                  plan, which detailed the transfer of
     applications made at Customs                            Program as consistent with the trade                   remaining unliquidated drawback cases
     Headquarters.                                           trends cited in the comment above.                     and the time frames for Drawback
        Customs response: Applications for                      Comment: Several commenters are of                  Center closures, as published in the
     privileges are not approved at Customs                  the view that it is not prudent to change              August 21, 2002, Federal Register
     Headquarters. Customs is being                          the Drawback Program during this time                  document, remains in effect except for
     proactive, rather than reactive, by                     of transition of the Customs Service to                the following changes:
     consolidating the Drawback Program                      the Homeland Security Department and
     and ensuring that Drawback resources                    that any such changes will distract from                  (1) Drawback claims that remain
     are used optimally.                                     the goals of fighting terrorism.                       unliquidated twelve months after
        Comment: One commenter stated that                      Customs response: Customs is of the                 closure of the Miami Drawback Center
     Customs will increase costs by closing                  view that the agency’s efforts regarding               and require Customs review will be
     some of the Drawback Centers because                    anti-terrorism and its move to the                     forwarded to the Los Angeles Drawback
     a Drawback Specialist usually visits the                Homeland Security Department will not                  Center (not to the Chicago Drawback
     drawback claimant with an Auditor and                   be impacted by any of the changes to the               Center); and
     this will increase Customs travel                       Drawback Program discussed in this                        (2) The Drawback Center at the port
     expenses. In a related comment, several                 document.
                                                                Comment: Several commenters                         of Boston, MA will close 180 days from
     commenters noted that by closing the                                                                           the date of publication of this document
     Boston Drawback Center, Customs                         questioned why California will have
                                                             two Drawback Centers operating after                   in the Federal Register (not 30 days
     expenses will increase because Auditors                                                                        from such date as originally planned).
     and Inspectors will have to travel to                   the consolidation, even though Boston
                                                             has more volume than the Los Angeles                   As of that date, drawback claims will no
     remote customs sites beyond their port’s                                                                       longer be accepted at the Boston
     geographical area to review and audit                   Drawback Center. The commenters also
                                                             suggested documenting the length of                    Drawback Center and claims must be
     drawback claims.                                                                                               filed at one of the five remaining
                                                             time it takes certain Drawback Centers
        Customs response: A Drawback                                                                                Drawback Centers. Drawback claims
                                                             to process drawback claims and
     Specialist does not always accompany                                                                           submitted to the Boston Drawback
                                                             correcting inefficiencies.
     an Auditor. Moreover, Drawback                             Customs response: As stated above,                  Center after this date will be rejected.
     Specialists are technical experts that an               many factors were taken into                           Once rejected, it is the responsibility of
     Auditor can consult as a resource either                consideration in making the
     electronically or telephonically.                                                                              the claimant to ensure timely filing of
                                                             determination to close the Boston                      the drawback claim at one of the five
     Customs already incurs some of these                    Drawback Center. Regarding workload
     travel expenditures in that a drawback                                                                         remaining Drawback Centers. Customs
                                                             volume, Customs notes that the volume                  personnel at the port of Boston will
     claimant can use any of the eight                       at the Boston and Los Angeles Centers
     existing Drawback Centers and does not                                                                         continue to process drawback claims for
                                                             is approximately the same.                             a period of 12-months after closure of
     always choose to file a drawback claim                     Comment: Several commenters stated
     at the Center located nearest the                                                                              the Boston Drawback Center. After this
                                                             that exporters will have their costs                   time, all remaining unliquidated
     claimant. Regarding the comment                         increased by having to submit drawback
     directed at the Boston Drawback Center,                                                                        drawback claims filed at the Boston
                                                             applications and claims to remote
     it is noted that Auditors and Inspectors                                                                       Drawback Center prior to its closure that
                                                             Drawback Centers. The commenters also
     are located throughout the Customs                                                                             require Customs review will be
                                                             expected increased delays in having to
     Service. Regulatory Auditors will                       wait for shipment inspections and                      forwarded to the Chicago Drawback
     remain in Boston, as well as other sites.               payment of drawback claims.                            Center for final processing (not to the
     Inspectors located at the port of export                   Customs response: Exporters file their              New York/Newark Drawback Center as
     will perform the export examinations, as                claims at the port of exportation. A                   originally planned).
     they always have. They perform                          Drawback Center has no bearing on the
     functions separate from those of a                                                                             Conclusion
                                                             export process. There is no reason to
     Drawback Specialist and the role of                     believe there will be any delays in                      After analysis of the comments and
     Inspectors will not be affected by the                  shipment inspections, as there have                    further review of the matter, Customs
     consolidation.                                          been no changes made to this process.                  has determined to adopt as a final rule
        Comment: Several commenters stated                                                                          the amendments proposed in the Notice
     that the cost of staffing and training new              Further Customs Analysis
                                                                                                                    of Proposed Rulemaking published in
     Drawback personnel will be significant.                    Customs has determined that based                   the Federal Register (67 FR 54137) on
        Customs response: The remaining                      on the above comments, no change is                    August 21, 2002.
     Drawback Centers have well-trained,                     necessary to the proposed rulemaking
     capable staffs and there is no need to                  published in the Federal Register on                   Inapplicability of Delayed Effective
     immediately increase staffing levels at                 August 21, 2002 (67 FR 54137).                         Date
     those Centers. New staff will be hired to               However, it has come to Customs
     replace personnel lost through attrition                attention, upon further review of the                     Although this final rule was issued
     or retirement and to accommodate any                    proposed consolidation, that a                         after a notice for public comments, it is
     sustained increase in drawback filings                  redistribution of the workload that is to              not subject to the notice and public
     nationwide.                                             be transferred from the closed Drawback                procedure requirements of 5 U.S.C. 553
        Comment: Several commenters noted                    Centers, as well as an extension of the                because it relates to agency management
     that as proposed Free Trade Agreements                  time period that the Boston Drawback                   and organization. Customs solicited and
     and yearly reductions in duty rates will                Center will remain operational, will                   reviewed comments as a courtesy to the
     eventually eliminate the need for                       assist in maintaining the level of service             public. Accordingly, there is no
     drawback, closure of the Drawback                       at the remaining Drawback Centers that                 requirement for a delayed effective date
     Centers at this time is unwarranted.                    existed prior to consolidation.                        for this regulation.


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     3384               Federal Register / Vol. 68, No. 16 / Friday, January 24, 2003 / Rules and Regulations

     The Regulatory Flexibility Act and                      DEPARTMENT OF THE TREASURY                             subchapter S subsidiary (within the
     Executive Order 12866                                                                                          meaning of section 1361(b)(3)(B))
                                                             Internal Revenue Service                               (hereinafter sometimes referred to as
        Because these amendments relate to                                                                          ‘‘QSub’’).
     agency management and organization,                     26 CFR Part 1                                             Because a QRS and QSub are
     they are not subject to the notice and                                                                         corporations under state law, state
                                                             [TD 9038]
     public procedure requirements of 5                                                                             merger laws generally permit them to
     U.S.C. 553. Accordingly, this document                  RIN 1545–BB46                                          merge with other corporations. In
     is not subject to the Regulatory                                                                               addition, many state merger laws permit
     Flexibility Act (5 U.S.C. 601 et seq.).                 Statutory Mergers and Consolidations                   a limited liability company (LLC) to
     Agency organization matters, such as                    AGENCY: Internal Revenue Service (IRS),                merge with another LLC or with a
     this proposed closing of three Customs                  Treasury.                                              corporation.
     Drawback Centers, are not subject to                    ACTION: Final and temporary                            C. Previous Proposals of Regulations
     Executive Order 12866.                                  regulations.
                                                                                                                       On May 16, 2000, the IRS and
     Drafting Information                                                                                           Treasury issued a notice of proposed
                                                             SUMMARY:   This document contains
       The principal author of this document                 temporary regulations that define the                  rulemaking (REG–106186–98; 65 FR
     was Ms. Suzanne Kingsbury,                              term statutory merger or consolidation                 31115) (hereinafter referred to as the
                                                             as that term is used in section                        2000 proposed regulations) providing
     Regulations Branch, Office of
                                                             368(a)(1)(A). These regulations affect                 that neither the merger of a disregarded
     Regulations and Rulings, U.S. Customs
                                                             corporations engaging in statutory                     entity into a corporation nor the merger
     Service. However, personnel from other                                                                         of a corporation into a disregarded
     offices participated in its development.                mergers and consolidations, and their
                                                             shareholders. The text of the temporary                entity would qualify as a reorganization
     List of Subjects in 19 CFR Part 101                     regulations also serves as the text of the             under section 368(a)(1)(A). While
                                                             proposed regulations set forth in the                  commentators generally agreed that the
       Customs duties and inspection,                        notice of proposed rulemaking on this                  merger of a disregarded entity into a
     Customs ports of entry.                                 subject in the proposed rules section in               corporation should not qualify as a
                                                             this issue of the Federal Register.                    reorganization under section
     Amendments to the Regulations
                                                             DATES: Effective Date: These regulations
                                                                                                                    368(a)(1)(A), commentators asserted that
       For the reasons set forth in the                      are effective January 24, 2003.                        the merger of a corporation into a
                                                                                                                    disregarded entity with a corporate
     preamble, amend part 101 of the                         FOR FURTHER INFORMATION CONTACT:                       owner should be able to qualify as a
     Customs Regulations (19 CFR 101) as                     Richard M. Heinecke or Reginald                        reorganization under section
     follows:                                                Mombrun at (202) 622–7930 (not a toll-                 368(a)(1)(A).
                                                             free number).                                             On November 15, 2001, after
     PART 101—GENERAL PROVISIONS                             SUPPLEMENTARY INFORMATION:                             consideration of the comments received
       1. The general authority citation for                 Background                                             regarding the 2000 proposed
     part 101 continues to read as follows:                                                                         regulations, the IRS and Treasury
                                                             A. Section 368(a) Generally                            withdrew the 2000 proposed regulations
       Authority: 5 U.S.C. 301; 19 U.S.C. 2, 66,                The Internal Revenue Code of 1986                   (REG–106186–98; 66 FR 57400) and
     1202 (General Note 23, Harmonized Tariff                (Code) provides general nonrecognition                 issued another notice of proposed
     Schedule of the United States), 1623, 1624,             treatment for reorganizations                          rulemaking (REG–126485–01; 66 FR
     1646a.                                                  specifically described in section 368(a).              57400) (hereinafter referred to as the
       Section 101.3 and 101.4 also issued under             Section 368(a)(1)(A) provides that the                 2001 proposed regulations).
     19 U.S.C. 1 and 58b;                                    term reorganization includes ‘‘a                          The 2001 proposed regulations
     *      *     *       *      *                           statutory merger or consolidation.’’                   provide that, for purposes of section
                                                             Section 1.368–2(b)(1) currently provides               368(a)(1)(A), a statutory merger or
     § 101.3    [Amended]                                    that a statutory merger or consolidation               consolidation must be effected pursuant
       2. In § 101.3, the table in paragraph                 must be ‘‘effected pursuant to the                     to the laws of the United States or a
                                                             corporation laws of the United States or               State or the District of Columbia.
     (b)(1) is amended by removing the plus
                                                             a State or Territory or the District of                Pursuant to such laws, the following
     sign in the ‘‘Ports of entry’’ column
                                                             Columbia.’’                                            events must occur simultaneously at the
     before the column listings for ‘‘Miami’’
                                                                                                                    effective time of the transaction: (1) All
     under the state of Florida, ‘‘New                       B. Disregarded Entities Generally                      of the assets (other than those
     Orleans’’ under the state of Louisiana,                   A business entity (as defined in                     distributed in the transaction) and
     and ‘‘Boston’’ under the state of                       § 301.7701–2(a)) that has only one                     liabilities (except to the extent satisfied
     Massachusetts.                                          owner may be disregarded as an entity                  or discharged in the transaction) of each
     Robert C. Bonner,                                       separate from its owner for Federal tax                member of one or more combining units
                                                             purposes. Examples of disregarded                      (each a transferor unit) become the
     Commissioner of Customs.
                                                             entities include a domestic single                     assets and liabilities of one or more
       Approved: January 22, 2003.                           member limited liability company that                  members of one other combining unit
     Timothy E. Skud,                                        does not elect to be classified as a                   (the transferee unit); and (2) the
     Deputy Assistant Secretary of the Treasury.             corporation for Federal tax purposes, a                combining entity of each transferor unit
     [FR Doc. 03–1758 Filed 1–23–03; 8:45 am]                corporation (as defined in § 301.7701–                 ceases its separate legal existence for all
     BILLING CODE 4820–02–P                                  2(b)) that is a qualified REIT subsidiary              purposes. For this purpose, a combining
                                                             (within the meaning of section 856(i)(2))              entity is a business entity that is a
                                                             (hereinafter referred to as ‘‘QRS’’), and              corporation (as defined in § 301.7701–
                                                             a corporation that is a qualified                      2(b)) that is not a disregarded entity)


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