[Federal Register Volume 89, Number 128 (Wednesday, July 3, 2024)]
[Rules and Regulations]
[Pages 55045-55051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-14426]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 58
[TD 10002]
RIN 1545-BQ60
Excise Tax on Repurchase of Corporate Stock--Procedure and
Administration
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
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SUMMARY: This document contains final regulations that provide guidance
regarding the reporting and payment of the excise tax on repurchases of
corporate stock made after December 31, 2022. The regulations affect
certain publicly traded corporations that repurchase their stock or
whose stock is acquired by certain specified affiliates.
DATES:
Effective date: These final regulations are effective on June 28,
2024.
Applicability dates: For dates of applicability, see Sec. Sec.
58.6001-(d), 58.6011-1(d), 58.6060-1(b), 58.6061-1(b), 58.6065-1(b),
58.6071-1(e), 58.6091-1(d), 58.6107-1(b), 58.6109-1(b), 58.6151-1(b),
58.6694-1(e), 58.6695-1(b), and 58.6696-1(b).
SUPPLEMENTARY INFORMATION:
Background
I. The Proposed Regulations
On April 12, 2024, the Department of the Treasury (Treasury
Department) and the IRS published proposed regulations (REG-118499-23)
in the Federal Register (89 FR 25829) that would provide rules on
procedure and administration applicable to the reporting and payment of
the excise tax on repurchases of corporate stock (stock repurchase
excise tax) imposed by section 4501 of the Internal Revenue Code (Code)
for repurchases made after December 31, 2022 (proposed procedural
regulations). This Treasury decision finalizes the proposed procedural
regulations (other than proposed Sec. 58.6011-1(c)) after taking into
account comments received, as described in the Summary of Comments and
Explanation of Revisions section of this preamble. The final
regulations are added as subpart B of new 26 CFR part 58 (Stock
Repurchase Excise Tax Regulations), which is added to subchapter D of
26 CFR chapter I (Miscellaneous Excise Taxes).
On April 12, 2024, the Treasury Department and the IRS also
published a separate notice of proposed rulemaking (REG-115710-22) in
the same issue of the Federal Register (89 FR 25980) that would provide
operating rules in proposed subpart A of part 58 relating to the
computation of the stock repurchase excise tax (proposed computational
regulations). This Treasury decision does not finalize the proposed
computational regulations. The Treasury Department and the IRS intend
to finalize the proposed computational regulations in a separate
Treasury decision after considering comments received with respect to
those proposed regulations.
II. Section 4501; Notice 2023-2
Section 4501 was added to a new chapter 37 of the Code by the
enactment of section 10201 of Public Law 117-169, 136 Stat. 1818
(August 16, 2022), commonly referred to as the Inflation Reduction Act
of 2022 (IRA). In general, section 4501 imposes the stock repurchase
excise tax on each covered corporation (as defined in section 4501(b))
for repurchases made after December 31, 2022. See section 10201(d) of
the IRA. The stock repurchase excise tax is equal to 1 percent of the
fair market value of any stock of the covered corporation that is
[[Page 55046]]
repurchased (as defined in section 4501(c)(1)) by the covered
corporation, or treated as repurchased by the covered corporation,
during the taxable year. Section 4501(a). The term ``covered
corporation'' includes an entity treated as a covered corporation under
section 4501(d)(1)(A) or (d)(2)(A).
Section 4501(f) authorizes the Secretary of the Treasury or her
delegate (Secretary) to prescribe regulations and other guidance as are
necessary or appropriate to carry out, and to prevent the avoidance of,
the purposes of section 4501.
On January 17, 2023, the Treasury Department and the IRS published
Notice 2023-2, 2023-3 I.R.B. 374, to provide initial guidance on the
application of the stock repurchase excise tax. The notice described
certain operating rules for purposes of the stock repurchase excise tax
that the Treasury Department and the IRS intended to include in
proposed regulations. In addition, section 4 of Notice 2023-2 described
the anticipated rules for reporting and paying any liability for the
stock repurchase excise tax. As described in Notice 2023-2, those
anticipated rules would provide that (i) the stock repurchase excise
tax must be reported on IRS Form 720, Quarterly Federal Excise Tax
Return, (ii) taxpayers must attach an additional form to the Form 720
reflecting the computation of the stock repurchase excise tax, (iii)
the stock repurchase excise tax must be reported once per taxable year
on the Form 720 that is due for the first full quarter after the close
of the taxpayer's taxable year, (iv) the deadline for payment of the
stock repurchase excise tax is the same as the filing deadline, and (v)
no extensions are permitted for reporting or paying the stock
repurchase excise tax.
Consistent with Notice 2023-2, on April 12, 2024, the Treasury
Department and the IRS published the proposed procedural regulations
prescribing the manner and method of reporting and paying the stock
repurchase excise tax in proposed subpart B of the proposed Stock
Repurchase Excise Tax Regulations (26 CFR part 58) under sections 6001,
6011, 6060, 6061, 6065, 6071, 6091, 6107, 6109, 6151, 6694, 6695, and
6696 of the Code. As noted in the preamble to the proposed procedural
regulations, to assist in the identification of transactions subject to
the stock repurchase excise tax, the Treasury Department and the IRS
have added items relevant to the stock repurchase excise tax to tax
return forms other than Form 720. See Form 1120, U.S. Corporation
Income Tax Return and Form 1065, U.S. Return of Partnership Income. The
Treasury Department and the IRS continue to evaluate amending or
developing other forms, including for information reporting with
respect to foreign owners of domestic business entities and domestic
owners of foreign business entities, to assist in the identification of
transactions subject to the stock repurchase excise tax.
Summary of Comments and Explanation of Revisions
After consideration of the comments received in response to the
proposed procedural regulations, this Treasury decision adopts those
regulations (other than proposed Sec. 58.6011-1(c)) with the revisions
described in this Summary of Comments and Explanation of Revisions.
I. Combination of Proposed Procedural Regulations and Proposed
Computational Regulations
One commenter suggested that the proposed computational regulations
and the proposed procedural regulations should be combined into one
proposal because they stem from the same piece of legislation, have the
same goal, and employ the same methodology of achieving that goal.
These final regulations do not adopt the commenter's suggestion.
Although the proposed computational regulations and the proposed
procedural regulations stem from, and facilitate the implementation of,
the same piece of legislation, the Treasury Department and the IRS
proposed these regulations in two separate notices of proposed
rulemaking to facilitate the prompt finalization of the proposed
procedural regulations, and to thereby provide taxpayers with certainty
regarding the manner of reporting and paying the stock repurchase
excise tax. Moreover, it is not uncommon for the Treasury Department
and the IRS to issue separate tranches of regulatory guidance with
respect to a single statutory provision.
II. Recordkeeping Requirement
Under proposed Sec. 58.6001-1(a), any covered corporation, or any
person treated as a covered corporation, that makes a repurchase or
that is treated as making a repurchase is required to keep complete and
detailed records sufficient to establish accurately the amount of
repurchases, adjustments, or exceptions required to be shown on its
stock repurchase excise tax return. Proposed Sec. 58.6001-1(b)
provides that the IRS may require any covered corporation or person
treated as a covered corporation to make such returns, render such
statements, or keep such specific records as to enable the IRS to
determine whether the covered corporation or person treated as a
covered corporation is liable for the stock repurchase excise tax.
Proposed Sec. 58.6001-1(c) provides that the records required to be
maintained must be available for inspection by the IRS and retained for
so long as their contents may become material.
One commenter suggested that a covered corporation should be
required to keep only complete and detailed records sufficient to
establish the amount of tax shown on its stock repurchase excise tax
return, which is defined under proposed Sec. 58.6011-1(b). For
example, according to the commenter, if the covered corporation chooses
one method for valuing the amount of the corporation's repurchases and
issuances, and the IRS asserts that the covered corporation should have
used a different method for valuing the amount of the corporation's
repurchases and issuances, the covered corporation should not be
required to maintain records sufficient to establish the amount of the
corporation's repurchases and issuances under the IRS's preferred
method of valuation.
The Treasury Department and the IRS disagree with the commenter.
The recordkeeping requirements in proposed Sec. 58.6001-1(a) are
similar to the recordkeeping requirements under section 6001 for other
excise taxes in subchapter D of 26 CFR chapter I (Miscellaneous Excise
Taxes). See, for example, Sec. Sec. 53.6001-1(a) (``Any person subject
to tax under chapter 42 . . . shall keep records as are sufficient to
enable the district director to determine accurately the amount of
liability''); 55.6001-1(a) (similar with respect to tax under chapter
44); 56.6001-1(a) (similar with respect to tax under chapter 41);
156.6001-1(a) (similar with respect to tax under chapter 54); and
157.6001-1(a) (similar with respect to tax under chapter 55). Moreover,
the valuation requirements in the proposed computational regulations
would allow covered corporations to choose from one of four acceptable
methods in determining the market price of publicly traded stock so
long as the covered corporation consistently applies such method
throughout the covered corporation's taxable year. See proposed
Sec. Sec. 58.4501-2(h) and -4(e). This recordkeeping requirement
appropriately balances the need for covered corporations to keep
records with the IRS's need to be able to establish accurately the
amount of repurchases, adjustments, or exceptions required to be shown
on a covered
[[Page 55047]]
corporation's stock repurchase excise tax return. Accordingly, these
final regulations do not adopt this comment.
III. Return Requirement
A. Overview
Proposed Sec. 58.6011-1(a) would require a stock repurchase excise
tax return to be filed by any covered corporation, or any person
treated as a covered corporation, that makes a repurchase (as defined
in section 4501(c)(1)), or that is treated as making a repurchase under
section 4501(c)(2)(A), (d)(1)(B), or (d)(2)(B), after December 31,
2022. Under the proposed procedural regulations, any covered
corporation, or any person treated as a covered corporation, that makes
a repurchase, or that is treated as making a repurchase, is required to
comply with these requirements, even if every repurchase is eligible
for a statutory exception under section 4501(e) (for example, in the
case of repurchases by a regulated investment company (RIC), as defined
in section 851 of the Code, or a real estate investment trust (REIT),
as defined in section 856(a) of the Code) or is offset by issuances or
provisions of the covered corporation's stock under section 4501(c)(3).
B. Filing Obligations of Regulated Investment Companies and Real Estate
Investment Trusts
One commenter recommended that RICs and REITs should be exempt from
filing the Form 7208, Excise Tax on Repurchase of Corporate Stock,
provided all repurchases during the relevant reporting period are made
by the RIC or the REIT and thereby qualify for the statutory exception
under section 4501(e)(5). Alternatively, the commenter recommended
that, in lieu of requiring RICs and REITs to file Form 7208 with
respect to their repurchases, the IRS could add a ``checkbox'' to Form
1120-RIC, U.S. Income Tax Return for Regulated Investment Companies,
and Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment
Trusts, pursuant to which RICs and REITs could certify that all stock
repurchases made during the taxable year qualified for the statutory
exception under section 4501(e)(5). According to the commenter,
requiring RICs and REITs to file a Form 7208 in situations in which all
their repurchases qualify for the statutory exception under section
4501(e)(5) would be unnecessary, burdensome, and duplicative of filings
already required by the Securities and Exchange Commission (SEC), with
no apparent benefit for tax compliance.
The Treasury Department and the IRS agree that, so long as a
covered corporation qualifies as a RIC or a REIT for a taxable year,
then all of such corporation's repurchases of its stock during that
year would qualify for the statutory exception under section
4501(e)(5). Accordingly, the final regulations adopt the commenter's
primary recommendation and exempt RICs and REITs from the obligation to
file a stock repurchase excise tax return. See Sec. 58.6011-1(a).
However, RICs and REITs would continue to be subject to the
recordkeeping requirement in Sec. 58.6001-1 under the final
regulations. Records establishing a RIC's or a REIT's repurchases,
adjustments, and exceptions under the stock repurchase excise tax could
become relevant in the event a covered corporation ceases to qualify as
a RIC or a REIT for the taxable year, or if the corporation revokes its
election to be a REIT for the taxable year. In such cases, the
corporation's repurchases would not qualify for the exception under
section 4501(e)(5), and the information required to be retained under
Sec. 58.6001-1 would be required to compute the corporation's stock
repurchase excise tax liability.
C. Filing Obligation Only for Taxable Years in Which a Repurchase Is
Made
Commenters have asked whether proposed Sec. 58.6011-1(a) could be
construed as mandating a continuing annual filing requirement for any
covered corporation or any person treated as a covered corporation that
has made a repurchase, or that is treated as having made a repurchase,
in a previous taxable year. For example, commenters have suggested that
the language of proposed Sec. 58.6011-1(a) could be read as requiring
a covered corporation to file a stock repurchase excise tax return even
with respect to taxable years in which the covered corporation has not
made a repurchase, because proposed Sec. 58.6011-1(a) requires any
covered corporation that makes a repurchase after December 31, 2022, to
file a stock repurchase excise tax return, without specifying that a
repurchase must occur within the period for which such return is filed.
The Treasury Department and the IRS intended a stock repurchase
excise tax return to be filed only with respect to a taxable year in
which a repurchase, or a transaction treated as a repurchase, is made.
Accordingly, these final regulations revise Sec. 58.6011-1(a) to
clarify that a stock repurchase excise tax return must be filed with
respect to any taxable year in which the covered corporation or person
treated as a covered corporation makes a repurchase or is treated as
making a repurchase.
D. Special Rules for Multiple Section 4501(d) Covered Corporations With
Respect to a Covered Surrogate Foreign Corporation
Proposed Sec. 58.6011-1(c) cross-references proposed Sec.
58.4501-7(d)(2) for special rules applicable to persons treated as a
covered corporation (as described in section 4501(d)(2)(A)) with
respect to a covered surrogate foreign corporation (as defined in
section 4501(d)(3)(B)). These final regulations reserve Sec. 58.6011-
1(c). The Treasury Department and the IRS intend to finalize proposed
Sec. 58.6011-1(c) when proposed Sec. 58.4501-7(d)(2) is finalized.
IV. Signing of Stock Repurchase Excise Tax Return
Under proposed Sec. 58.6061-1(a), any stock repurchase excise tax
return, statement, or other document required to be made with respect
to the stock repurchase excise tax would be required to be signed by
the person required to file the return, statement, or other document,
or by the persons required or duly authorized to sign in accordance
with the regulations, forms, or instructions prescribed with respect to
such return, statement, or document.
One commenter suggested that the signing requirement under proposed
Sec. 58.6061-1(a) should be coordinated with the signing requirement
under section 6062 of the Code. Section 6062 provides that ``[t]he
return of a corporation with respect to income shall be signed by the
president, vice-president, treasurer, assistant treasurer, chief
accounting officer or any other officer duly authorized so to act''
(emphasis added).
These final regulations do not adopt this comment. By its terms,
section 6062 addresses corporate income tax returns and does not apply
to excise tax returns, including the stock repurchase excise tax
return. Accordingly, the appropriate party to sign the stock repurchase
excise return must be designated under section 6061, rather than
section 6062. Moreover, proposed Sec. 58.6011-1(b) would provide that
the stock repurchase excise tax return is the Form 720 with an attached
Form 7208. The Form 7208 does not have a signature line, and the
instructions to the Form 7208 require the form to be attached to a Form
720, which must be signed under penalties of perjury. See Instructions
to Form 7208. As such, the appropriate party to sign the stock
repurchase excise tax return is the party who signs the Form 720.
[[Page 55048]]
V. Example in Proposed Sec. 58.6071-1(d)
The Treasury Department and the IRS have made non-substantive
revisions to the Example in proposed Sec. 58.6071-1(d) to align it
with the effective date of these final regulations.
VI. Modification of Applicability Date
The rules described in the proposed procedural regulations
generally were proposed to have applied to stock repurchase excise tax
returns (and to the extent relevant, claims for refund) required to be
filed after the date final regulations were published in the Federal
Register, and during taxable years ending after the date final
regulations were published in the Federal Register. These final
regulations will apply to stock repurchase excise tax returns (and to
the extent relevant, claims for refund) required to be filed after the
date these final regulations are filed with the Federal Register, and
during taxable years ending after the date these final regulations are
filed in the Federal Register. The Treasury Department and the IRS have
made this slight adjustment to the applicability dates to facilitate
the IRS's administration and enforcement of the stock repurchase excise
tax and provide guidance to taxpayers as quickly as possible.
Statement of Availability for IRS Documents
Any IRS Revenue Procedure, Revenue Ruling, Notice, or other
guidance cited in this preamble is published in the Internal Revenue
Bulletin (or Cumulative Bulletin) and is available from the
Superintendent of Documents, U.S. Government Publishing Office,
Washington, DC 20402, or by visiting the IRS website at https://www.irs.gov.
Special Analyses
I. Regulatory Planning and Review--Economic Analysis
Pursuant to the Memorandum of Agreement, Review of Treasury
Regulations under Executive Order 12866 (June 9, 2023), tax regulatory
actions issued by the IRS are not subject to the requirements of
section 6 of Executive Order 12866, as amended. Therefore, a regulatory
impact assessment is not required.
II. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) (PRA)
requires that a Federal agency obtain the approval of Office of
Management and Budget (OMB) before collecting information from the
public, whether such collection of information is mandatory, voluntary,
or required to obtain or retain a benefit. A Federal agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless the collection of information displays
a valid control number.
The collections of information in these final regulations contain
reporting and recordkeeping requirements in Sec. Sec. 58.6001-1 and
58.6011-1 necessary for the IRS to accurately determine the stock
repurchase excise tax due. The collection of information is required by
law to comply with the provisions of section 4501 of the Code as
enacted by section 10201 of the IRA.
The recordkeeping requirements mentioned within these final
regulations are considered general tax records under section 6001.
These records are required for the IRS to validate that taxpayers have
met the regulatory requirements. The reporting requirements, including
the written penalty of perjury statement, are covered within Form 7208
and its instructions. The IRS obtained OMB approval for Form 7208 and
the associated collections under 1545-2323 in accordance with the
procedures outlined in 5 CFR 1320.10.
These final regulations mention reporting and recordkeeping
requirements for tax preparers. These final regulations are not
changing the requirements contained within Sec. 1.6107-1, which is
included in 1545-1231.
III. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it
is hereby certified that these final regulations will not have a
significant economic impact on a substantial number of small entities.
This certification is based on the fact that these final regulations
provide specific administrative, procedural, and recordkeeping rules
that apply only to certain tax return preparers and to publicly traded
corporations, which tend to consist of larger businesses. Specifically,
based on data available to the IRS, for tax year 2021, 4,366
corporations reported publicly traded common stock. Of those
corporations, 2,407 (over 55 percent) reported gross receipts over $100
million, and 3,272 (approximately 75 percent) reported gross receipts
over $10 million. Meanwhile, for tax year 2021, the IRS received
7,464,790 Corporation Income Tax Returns and 4,710,457 U.S. Returns of
Partnership Income. IRS Publication 6292, Fiscal Year Projections for
the United States: 2022-2029, Fall 2022, Table 2. Of these corporation
and partnership returns for tax year 2021, 11,685,207 reported total
assets below $10 million. Thus, the number of corporations affected by
these final regulations that reported total assets below $10 million is
less than one hundredth of one percent of the total number of
businesses that reported total assets below $10 million for tax year
2021. Therefore, these final regulations will not create additional
obligations for, or impose an economic impact on, a substantial number
of small entities. Accordingly, the Secretary certifies that the final
regulations will not have a significant economic impact on a
substantial number of small entities and a regulatory flexibility
analysis under the Regulatory Flexibility Act is not required.
IV. Section 7805(f)
Pursuant to section 7805(f) of the Internal Revenue Code, the
proposed procedural regulations (REG-118499-23) preceding these final
regulations were submitted to the Chief Counsel for Advocacy of the
Small Business Administration for comment on the impact on small
business, and no comments were received.
V. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that agencies assess anticipated costs and benefits and take certain
other actions before issuing a final rule that includes any Federal
mandate that may result in expenditures in any one year by a State,
local, or Tribal government, in the aggregate, or by the private
sector, of $100 million in 1995 dollars, updated annually for
inflation. These final regulations do not include any Federal mandate
that may result in expenditures by State, local, or Tribal governments,
or by the private sector in excess of that threshold.
VI. Executive Order 13132: Federalism
Executive Order 13132 (Federalism) prohibits an agency (to the
extent practicable and permitted by law) from promulgating any
regulation that has federalism implications, unless the agency meets
the consultation and funding requirements of section 6 of the Executive
order, if the rule either imposes substantial, direct compliance costs
on State and local governments, and is not required by statute, or
preempts State law. This final rule does not have federalism
implications and does not impose substantial direct compliance costs on
State and local governments or preempt State law within the meaning of
the Executive order.
[[Page 55049]]
VII. Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a ``major rule,'' as defined by 5 U.S.C. 804(2).
Drafting Information
The principal authors of these regulations are Kailee H. Farrell
and Samuel G. Trammell of the Office of Associate Chief Counsel
(Corporate). However, other personnel from the Treasury Department and
the IRS participated in their development.
List of Subjects in 26 CFR Part 58
Excise taxes, Stock repurchase excise tax, Reporting and
recordkeeping requirements.
Adoption of Amendments to the Regulations
0
Accordingly, 26 CFR part 58 is added to read as follows:
PART 58--STOCK REPURCHASE EXCISE TAX
Subpart A--[Reserved]
Subpart B--Procedure and Administration
Sec.
58.6001-1 Notice or regulations requiring records, statements, and
special returns.
58.6011-1 General requirement of return, statement, or list.
58.6060-1 Reporting requirements for tax return preparers.
58.6061-1 Signing of returns and other documents.
58.6065-1 Verification of returns.
58.6071-1 Time for filing returns.
58.6091-1 Place for filing tax returns under chapter 37 of the
Internal Revenue Code.
58.6107-1 Tax return preparer must furnish copy of return or claim
for refund to taxpayer and must retain a copy or record.
58.6109-1 Tax return preparers furnishing identifying numbers for
returns or claims for refund.
58.6151-1 Time and place for paying of tax shown on returns.
58.6694-1 Section 6694 penalties.
58.6695-1 Other assessable penalties with respect to the preparation
of tax returns or claims for refund for other persons.
58.6696-1 Claims for credit or refund by tax return preparers
Authority: 26 U.S.C. 4501(f) and 7805.
Section 58.6001-1 also issued under 26 U.S.C. 6001;
Section 58.6011-1 also issued under 26 U.S.C. 6011(a);
Section 58.6060-1 also issued under 26 U.S.C. 6060(a);
Section 58.6061-1 also issued under 26 U.S.C. 6061(a);
Section 58.6065-1 also issued under 26 U.S.C. 6065;
Section 58.6071-1 also issued under 26 U.S.C. 6071(a);
Section 58.6091-1 also issued under 26 U.S.C. 6091(a);
Section 58.6107-1 also issued under 26 U.S.C. 6107;
Section 58.6109-1 also issued under 26 U.S.C. 6109(a);
Section 58.6151-1 also issued under 26 U.S.C. 6151;
Section 58.6694-1 also issued under 26 U.S.C. 6694;
Section 58.6695-1 also issued under 26 U.S.C. 6695;
Section 58.6696-1 also issued under 26 U.S.C. 6696.
Subpart A--[Reserved]
Subpart B--Procedure and Administration
Sec. 58.6001-1 Notice or regulations requiring records, statements,
and special returns.
(a) In general. Any covered corporation (as defined in section
4501(b) of the Internal Revenue Code (Code)), or any person treated as
a covered corporation (as described in section 4501(d)(1)(A) or
(d)(2)(A)), that makes a repurchase (as defined in section 4501(c)(1)),
or that is treated as making a repurchase under section 4501(c)(2)(A),
(d)(1)(B), or (d)(2)(B), must keep such complete and detailed records
as are sufficient to establish accurately the amount of repurchases,
adjustments, or exceptions required to be shown by the covered
corporation or person treated as a covered corporation in any stock
repurchase excise tax return (as defined in Sec. 58.6011-1(b)).
(b) Notice by IRS requiring returns, statements, or the keeping of
records. The Internal Revenue Service (IRS) may require any covered
corporation or person treated as a covered corporation, by notice
served upon such corporation or person, to make such returns, render
such statements, or keep such specific records as will enable the IRS
to determine whether or not such corporation or person is liable for
tax under chapter 37 of the Code.
(c) Retention of records. The records required by this section must
be kept at all times available for inspection by the IRS and must be
retained for so long as the contents thereof may become material in the
administration of any internal revenue law.
(d) Applicability date. This section applies to repurchases,
adjustments, or exceptions required to be shown in any stock repurchase
excise tax return required to be filed after June 28, 2024, and during
taxable years ending after June 28, 2024.
Sec. 58.6011-1 General requirement of return, statement, or list.
(a) In general. Any covered corporation (as defined in section
4501(b) of the Internal Revenue Code (Code)), or any person treated as
a covered corporation (as described in section 4501(d)(1)(A) or
(d)(2)(A)), other than a regulated investment company (as defined in
section 851 of the Code) or a real estate investment trust (as defined
in section 856(a) of the Code), that makes a repurchase (as defined in
section 4501(c)(1)), or that is treated as making a repurchase under
section 4501(c)(2)(A), (d)(1)(B), or (d)(2)(B), after December 31,
2022, must file a stock repurchase excise tax return with respect to
any taxable year in which the covered corporation or person treated as
a covered corporation makes a repurchase or is treated as making a
repurchase under section 4501(c)(2)(A), (d)(1)(B), or (d)(2)(B).
(b) Stock Repurchase Excise Tax Return. For purposes of this part,
the term stock repurchase excise tax return means the Form 720,
Quarterly Federal Excise Tax Return, due for the first full calendar
quarter after the end of the covered corporation's taxable year, with
an attached Form 7208, Excise Tax on Repurchase of Corporate Stock, or
any other forms, schedules, or statements prescribed by the
Commissioner for the purpose of making a return to report the tax under
chapter 37 of the Code.
(c) [Reserved]
(d) Applicability date. This section applies to stock repurchase
excise tax returns required to be filed after June 28, 2024, and during
taxable years ending after June 28, 2024.
Sec. 58.6060-1 Reporting requirements for tax return preparers.
(a) In general. A person that engages or employs one or more
signing tax return preparers (as defined in Sec. 301.7701-15(b)(1) of
this chapter) to prepare a stock repurchase excise tax return (as
defined in Sec. 58.6011-1(b)) or claim for refund of tax under chapter
37 of the Internal Revenue Code, other than for the person, at any time
during a return period, must satisfy the recordkeeping and inspection
requirements in the manner stated in Sec. 1.6060-1 of this chapter.
(b) Applicability date. This section applies to stock repurchase
excise tax returns and claims for refund required to be filed after
June 28, 2024, and during taxable years ending after June 28, 2024.
[[Page 55050]]
Sec. 58.6061-1 Signing of returns and other documents.
(a) In general. Any stock repurchase excise tax return (as defined
in Sec. 58.6011-1(b)), statement, or other document required to be
made with respect to the tax imposed by chapter 37 of the Internal
Revenue Code must be signed by the person required to file the return,
statement, or other document, or by the persons required or duly
authorized to sign in accordance with the regulations, forms, or
instructions prescribed with respect to such return, statement, or
document. An individual's signature on such a return, statement, or
other document is prima facie evidence that the individual is
authorized to sign the return, statement, or other document.
(b) Applicability date. This section applies to stock repurchase
excise tax returns, statements, or other documents that are required to
be made with respect to the tax imposed by chapter 37 and required to
be filed after June 28, 2024, and during taxable years ending after
June 28, 2024.
Sec. 58.6065-1 Verification of returns.
(a) In general. If either a stock repurchase excise tax return (as
defined in Sec. 58.6011-1(b)), statement, or other document made with
respect to any tax imposed by chapter 37 of the Internal Revenue Code,
or the related form and instructions, requires that such return,
statement, or other document contain or be verified by a written
declaration that it is made under the penalties of perjury, then it
must be so verified by the person or persons required to sign such
return, statement, or other document. In addition, any other statement
or document submitted under any provision of chapter 37, subtitle F, or
regulations under this part with respect to any tax imposed by chapter
37 may be required to contain or be verified by a written declaration
that it is made under the penalties of perjury.
(b) Applicability date. This section applies to stock repurchase
excise tax returns, statements, or other documents that are required to
be made with respect to the tax imposed by chapter 37 and required to
be filed after June 28, 2024, and during taxable years ending after
June 28, 2024.
Sec. 58.6071-1 Time for filing returns.
(a) In general. Except as provided in paragraph (c) of this
section, a stock repurchase excise tax return required by Sec.
58.6011-1(a) must be filed by the due date of the Form 720, Quarterly
Federal Excise Tax Return, that is for the first full calendar quarter
after the end of the taxable year of the covered corporation (as
defined in section 4501(b) of the Internal Revenue Code (Code)), or
person treated as a covered corporation (as described in section
4501(d)(1)(A) or (d)(2)(A)).
(b) Example. Corporation X is a covered corporation with a taxable
year that ends on December 31. During its 2024 taxable year,
Corporation X makes a repurchase within the meaning of section
4501(c)(1). Because Corporation X's taxable year ends in the fourth
quarter of the calendar year, Corporation X must file a stock
repurchase excise tax return reporting liability for the tax imposed by
chapter 37 of the Code by the due date for a first-quarter Form 720
(that is, April 30, 2025).
(c) Taxable years ending on or before June 28, 2024. With respect
to a covered corporation, or person treated as a covered corporation,
with a taxable year ending after December 31, 2022, and on or before
June 28, 2024, the stock repurchase excise tax return required by Sec.
58.6011-1(a) for such taxable year must be filed by the due date of the
Form 720 for the first full calendar quarter after June 28, 2024. If a
covered corporation, or person treated as a covered corporation, has
more than one taxable year ending after December 31, 2022, and on or
before June 28, 2024, the covered corporation, or person treated as a
covered corporation, should file a single Form 720 with two separate
Forms 7208, Excise Tax on Repurchase of Corporate Stock (one for each
taxable year) attached.
(d) Example. Corporation Y is a covered corporation with a taxable
year ending December 31, 2023. During its 2023 taxable year,
Corporation Y makes a repurchase within the meaning of section
4501(c)(1). Corporation Y is required to file the stock repurchase
excise tax return for its 2023 taxable year by the due date of the Form
720 for the first full calendar quarter after June 28, 2024. The due
date for the Form 720 for the first full calendar quarter after June
28, 2024 (that is, the third quarter Form 720), is October 31, 2024.
(e) Applicability date. This section applies to stock repurchase
excise tax returns required to be filed after June 28, 2024, and during
taxable years ending after June 28, 2024.
Sec. 58.6091-1 Place for filing tax returns under chapter 37 of the
Internal Revenue Code.
(a) In general. Except as provided in paragraphs (b) and (c) of
this section, stock repurchase excise tax returns required by Sec.
58.6011-1(a) must be filed in accordance with the instructions
applicable to such returns.
(b) Hand-carried returns. Notwithstanding paragraph (a) of this
section, stock repurchase excise tax returns that are filed by hand
carrying must be filed with any person assigned the responsibility to
receive hand-carried returns in the local Internal Revenue Service
(IRS) office that serves the principal place of business, principal
office, or agency of the taxpayer.
(c) Exceptional cases. Notwithstanding paragraph (a) of this
section, the Commissioner may permit the filing of any stock repurchase
excise tax return in any local IRS office.
(d) Applicability date. This section applies to stock repurchase
excise tax returns required to be filed after June 28, 2024, and during
taxable years ending after June 28, 2024.
Sec. 58.6107-1 Tax return preparer must furnish copy of return or
claim for refund to taxpayer and must retain a copy or record.
(a) In general. A person who is a signing tax return preparer (as
defined in Sec. 301.7701-15(b)(1) of this chapter) of any stock
repurchase excise tax return required by Sec. 58.6011-1(a) or claim
for refund of tax under chapter 37 of the Internal Revenue Code must
furnish a completed copy of the stock repurchase excise tax return or
claim for refund to the taxpayer and retain a completed copy or record
in the manner stated in Sec. 1.6107-1 of this chapter.
(b) Applicability date. This section applies to stock repurchase
excise tax returns and claims for refund required to be filed after
June 28, 2024, and during taxable years ending after June 28, 2024.
Sec. 58.6109-1 Tax return preparers furnishing identifying numbers
for returns or claims for refund.
(a) In general. Each stock repurchase excise tax return required by
Sec. 58.6011-1(a) or claim for refund of tax under chapter 37 of the
Internal Revenue Code prepared by one or more signing tax return
preparers (as defined in Sec. 301.7701-15(b)(1) of this chapter) must
include the identifying number of the preparer required by Sec.
1.6695-1(b) of this chapter to sign the stock repurchase excise tax
return or claim for refund in the manner stated in Sec. 1.6109-2 of
this chapter.
(b) Applicability date. This section applies to stock repurchase
excise tax returns and claims for refund required to be filed after
June 28, 2024, and during taxable years ending after June 28, 2024.
[[Page 55051]]
Sec. 58.6151-1 Time and place for paying of tax shown on returns.
(a) In general. The tax shown on any stock repurchase excise tax
return required by Sec. 58.6011-1(a) must, without assessment or
notice and demand, be paid to the Internal Revenue Service at the time
and place for filing such stock repurchase excise tax return. For
provisions relating to the time and place for filing the stock
repurchase excise tax return required under Sec. 58.6011-1(a), see
Sec. Sec. 58.6071-1 and 58.6091-1.
(b) Applicability date. This section applies to payments of stock
repurchase excise tax required to be paid after June 28, 2024, and
during taxable years ending after June 28, 2024.
Sec. 58.6694-1 Section 6694 penalties.
(a) Penalties applicable to tax return preparer. For general
definitions regarding penalties under section 6694 of the Internal
Revenue Code (Code) applicable to preparers of tax returns or claims
for refund of tax under chapter 37 of the Code, see Sec. 1.6694-1 of
this chapter.
(b) Penalties for understatement due to an unreasonable position. A
person who is a tax return preparer of any return or claim for refund
of tax under chapter 37 may be subject to penalties under section
6694(a) in the manner stated in Sec. 1.6694-2 of this chapter.
(c) Penalties for understatement due to willful, reckless, or
intentional conduct. A person who is a tax return preparer of any
return or claim for refund of tax under chapter 37 may be subject to
penalties under section 6694(b) in the manner stated in Sec. 1.6694-3
of this chapter.
(d) Extension of period of collection when tax return preparer pays
15 percent of a penalty for understatement of taxpayer's liability and
certain other procedural matters. The rules under Sec. 1.6694-4 of
this chapter, relating to the extension of period of collection when a
tax return preparer who prepared a return or claim for refund of tax
pays 15 percent of a penalty for understatement of taxpayer's liability
and to procedural matters regarding the investigation, assessment, and
collection of the penalties under sections 6694(a) and (b), apply to a
tax return preparer who prepared a return or claim for refund for tax
under chapter 37.
(e) Applicability date. This section applies to returns and claims
for refund filed, and advice provided, after June 28, 2024, and during
taxable years ending after June 28, 2024.
Sec. 58.6695-1 Other assessable penalties with respect to the
preparation of tax returns or claims for refund for other persons.
(a) In general. A person who is a tax return preparer of any return
or claim for refund of tax under chapter 37 of the Internal Revenue
Code (Code) may be subject to penalties for failure to furnish a copy
to the taxpayer under section 6695(a) of the Code, failure to sign the
return under section 6695(b), failure to furnish an identifying number
under section 6695(c), failure to retain a copy or list under section
6695(d), failure to file a correct information return under section
6695(e), and endorsement or negotiation of a check under section
6695(f), in the manner stated in Sec. 1.6695-1 of this chapter.
(b) Applicability date. This section applies to returns and claims
for refund filed after June 28, 2024, and during taxable years ending
after June 28, 2024.
Sec. 58.6696-1 Claims for credit or refund by tax return preparers.
(a) In general. The rules under Sec. 1.6696-1 of this chapter
apply to claims for credit or refund by a tax return preparer who
prepared a return or claim for credit or refund for tax under chapter
37 of the Internal Revenue Code.
(b) Applicability date. This section applies to returns and claims
for credit or refund filed, and advice provided, after June 28, 2024,
and during taxable years ending after June 28, 2024.
Douglas W. O'Donnell,
Deputy Commissioner.
Approved: June 24, 2024.
Aviva R. Aron-Dine,
Acting Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2024-14426 Filed 6-28-24; 4:15 pm]
BILLING CODE 4830-01-P