[Federal Register Volume 91, Number 157 (Monday, August 17, 2026)]
[Proposed Rules]
[Pages 53217-53221]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-16769]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-109082-25]
RIN 1545-BR58
Proposed Removal of a Reporting Requirement for Trusts Whose
Charitable Contribution Deductions Are Solely for Contributions Made by
Passthrough Entities
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document contains proposed regulations that would amend
existing regulations that require certain trusts to report all
charitable contributions and amounts permanently set aside for a
charitable purpose on Form 1041-A, U.S. Information Return Trust
Accumulation of Charitable Amounts. The proposed regulations would
remove the reporting requirement for these trusts with respect to
taxable years in which the trust's only claimed charitable contribution
deduction results from charitable
[[Page 53218]]
contributions made by a passthrough entity in which the trust owns an
interest. The proposed regulations would also modify the existing
regulations to clarify that split-interest trusts satisfy their filing
obligations by filing Form 5227, Split-Interest Trust Information
Return, rather than Form 1041-A. The proposed regulations would affect
certain trusts that are required to report all charitable contributions
and amounts permanently set aside for a charitable purpose.
DATES: Written or electronic comments and requests for a public hearing
must be received by October 16, 2026.
ADDRESSES: Commenters are strongly encouraged to submit public comments
electronically via the Federal eRulemaking Portal at https://www.regulations.gov (indicate IRS and REG-109082-25) by following the
online instructions for submitting comments. Requests for a public
hearing must be submitted as prescribed in the ``Comments and Requests
for a Public Hearing'' section. Once submitted to the Federal
eRulemaking Portal, comments cannot be edited or withdrawn. The
Department of the Treasury (Treasury Department) and the IRS will
publish for public availability any comments submitted to the IRS's
public docket. Send paper submissions to: CC:PA:01:PR (REG-109082-25),
Room 5503, Internal Revenue Service, P.O. Box 7604, Ben Franklin
Station, Washington, DC 20044.
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
contact Ganesh Gangasingh or David D. Lee of the Office of Associate
Chief Counsel (Passthroughs, Trusts, and Estates), (202) 317-6007 (not
a toll-free number); concerning submissions of comments and/or requests
for a public hearing, Publications and Regulations Section at (202)
317-6901 (not a toll-free number) or by email at [email protected]
(preferred).
SUPPLEMENTARY INFORMATION:
Authority
This document contains a proposed amendment to the Income Tax
Regulations (26 CFR part 1) under section 6034 of the Internal Revenue
Code (Code) relating to the return filing requirements of certain
trusts. Section 6034(a) contains an express delegation of authority to
the Secretary of the Treasury or the Secretary's delegate (Secretary)
to require every trust described in section 4947(a)(2) to furnish the
information prescribed by forms or regulations with respect to the
taxable year. Section 6034(b) contains an express delegation of
authority to the Secretary to require a trust not described in section
4947(a)(1) or (2) of the Code but claiming a deduction under section
642(c) of the Code for the taxable year to furnish the information
prescribed by forms or regulations with respect to that taxable year.
These proposed regulations also are issued under the express
delegation of authority under section 7805(a) of the Code, which
authorizes the Secretary to ``prescribe all needful rules and
regulations for the enforcement of [the Code], including all rules and
regulations as may be necessary by reason of any alteration of law in
relation to internal revenue.''
Background
In the case of an estate or trust (other than a ``simple trust''
meeting the specifications of sections 651 and 652 of the Code),
section 642(c)(1) generally allows as a deduction in computing its
taxable income (in lieu of the deduction allowed by section 170(a) of
the Code, relating to the deduction for charitable contributions and
gifts) any amount of the trust's gross income, without limitation,
which pursuant to the terms of the trust's governing instrument is,
during the taxable year, paid for a purpose specified in section 170(c)
(determined without regard to section 170(c)(2)(A), which denies
deductions for contributions to foreign charities). In addition, if a
charitable contribution is paid at any time during the calendar year
immediately following the close of such taxable year, then the trustee
or administrator may elect, at such time and in such manner as the
Secretary prescribes by regulations, to treat such contribution as
having been paid during such taxable year.
Section 642(c)(2) also permits such a deduction in computing
taxable income for a decedent's estate, and for a trust (other than a
simple trust) that is required by its governing instrument to set aside
amounts for such charitable purposes, but this provision generally
applies only if the estate was established by a will executed, or the
trust was created, on or before October 10, 1969, and certain other
requirements are met. Such an estate or trust may deduct amounts in
computing taxable income that are not paid until a later calendar year.
The predecessor provision to section 6034 under the Internal
Revenue Code of 1939 was enacted in the Revenue Act of 1950, Public Law
81-814, 64 Stat. 906 (1950), as part of a larger package of substantive
and procedural requirements imposed upon charities and related
organizations. With regard to trusts claiming the income tax charitable
deduction under the predecessor provision to section 642(c), Congress
was concerned that deductions were being claimed for amounts
accumulated in the trust that might not actually be paid to charity for
an extended period.\1\
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\1\ S. Rept. No. 2375, 81st Cong., 2d Sess. at 34, 35 (1950);
H.R. Rept. No. 81-2319, 81st Cong., 2d Sess. at 40 (1950).
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Section 6034(a) provides that every trust described in section
4947(a)(2) \2\ (split-interest trust) must furnish such information
with respect to the taxable year as the Secretary may by forms or
regulations require. Section 1201(b)(1) of the Pension Protection Act
of 2006, Public Law 109-280, 1201(b)(1), 120 Stat. 780, 1066 (2006),
broadly amended section 6034 to allow the IRS to make changes to
information reporting requirements for trusts described in section
4947(a)(2). In response, the IRS revised Form 5227, Split-Interest
Trust Information Return. Form 5227 replaced Form 1041-A, U.S.
Information Return Trust Accumulation of Charitable Amounts, for trusts
described in section 4947(a)(2) for taxable years beginning on or after
January 1, 2007. Revised Form 5227 incorporated information previously
reported on Form 1041-A, specifically information relating to
distributions of principal for charitable purposes and accumulated
income set aside for charitable purposes and income distributions for
charitable purposes.
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\2\ Section 4947(a)(2) describes a category of trusts, not tax-
exempt under section 501(a) of the Code, with both charitable and
non-charitable beneficiaries for which a charitable deduction was
allowed at creation or funding, which are subject to some of the
same excise tax rules as private foundations.
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With regard to all other trusts that claim a charitable deduction
under section 642(c) for the taxable year, section 6034(b)(1) generally
requires the trust to furnish such information with respect to the
taxable year as the Secretary may by forms or regulations prescribe,
including (A) the amount of the deduction taken under section 642(c)
within such year, (B) the amount paid out within such year that
represents amounts for which deductions under section 642(c) were taken
in prior years, (C) the amount for which such deductions were taken in
prior years but that has not been paid out at the beginning of such
year, (D) the cumulative amount paid out of principal in the current
and prior years for the purposes described in section 642(c), (E) the
total income of the trust within such year and the expenses
attributable thereto, and (F) a balance sheet showing the assets,
liabilities, and
[[Page 53219]]
net worth of the trust as of the beginning of such year.
Section 6034(b)(2) provides that the reporting requirements under
section 6034(b)(1) do not apply to a trust for any taxable year if
either (A) all the trust's net income for such year is required to be
distributed currently to the trust beneficiaries, or (B) the trust is a
charitable trust described in section 4947(a)(1).\3\ This reporting, in
addition to the trust's annual income tax return, makes it easier for
the IRS to determine whether a charitable deduction claimed under
section 642(c) relates to funds that have actually been paid and
whether a deduction has been claimed more than once for the same
charitable contribution. The current revision of Form 1041-A (Sept.
2018), after the initial section identifying the trust and trustee,
includes four parts that together account for the six categories of
information required to be furnished under section 6034(b)(1)(A)
through (F).
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\3\ Section 4947(a)(1) describes certain trusts, not tax-exempt
under section 501(a), but all of the unexpired interests in which
are devoted to charitable purposes.
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Section 1.6034-1(a) generally follows the statutory provisions of
section 6034(b), requiring that the categories of information specified
in the statute be reported on Form 1041-A. Section 1.6034-1(a) also
provides that every trust described in section 4947(a)(2) must file a
Form 1041-A, unless an exception applies.\4\ Section 1.6034-1(b)
excepts two categories of trusts from the requirement of filing Form
1041-A: (1) simple trusts, and (2) trusts described in 4947(a)(1).
Section 1.6034-1(c) provides that Form 1041-A is to be filed on or
before the 15th day of the fourth month following the close of the
trust's taxable year, with the Internal Revenue officer designated by
the form instructions, and that an extension may be permitted under
Sec. 1.6081-1. Section 1.6034-1(d) includes cross-references to
section 6104 (regarding public access to the information on Form 1041-
A), section 6652(d) (now section 6652(c)) of the Code (regarding
penalties), and sections 7203, 7206, and 7207 of the Code (regarding
criminal penalties).\5\
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\4\ As explained below, Sec. 1.6034-1(a) does not reflect the
fact that Form 5227 replaced Form 1041-A for trusts described in
section 4947(a)(2) for taxable years beginning on or after January
1, 2007.
\5\ Sections 7203, 7206, and 7207 do not specifically refer to
section 6034 or Form 1041-A, but provide general criminal penalties
for, respectively, willful failures to file returns, fraud or false
statements, and fraudulent returns.
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Section 6104 provides for public disclosure of tax information for
certain tax-exempt organizations and trusts. Under section 6104(b),
this includes the information required to be furnished by section 6034.
Section 6652(c)(2) imposes penalties on a trust and/or the persons
required to file returns for the trust for failure to file a return
required under section 6034. Section 6652(c)(2)(A) provides that the
failure to file penalty generally is $10 per day up to a maximum of
$5,000 per return.
Explanation of Provisions
I. Reason for Proposed Regulations
Some deductions under section 642(c) are for a trust's distribution
of its own income for purposes specified in section 170(c), but other
deductions under section 642(c) can be for charitable contributions
made by a passthrough entity in which the trust has an interest. A
trust holding a partnership interest would take its distributive share
of any of the partnership's charitable contributions by operation of
section 702 of the Code, which requires, in determining a partner's
income tax, that each partner take into account separately the
partner's distributive share of the partnership's items, including
charitable contributions (as defined in section 170(c)). Similarly, by
operation of section 1366 of the Code, trusts that hold S corporation
stock would take into account their pro rata share of the S
corporation's items of, among other things, deduction or credit, the
separate treatment of which could affect the liability for tax of any
shareholder. In either case, it would be the underlying passthrough
entity, not the trust, that makes the contribution giving rise to a
deduction under section 642(c). The ability for trusts to take into
account charitable contributions from passthroughs is addressed in
Revenue Ruling 2004-5, 2004-1 C.B. 295 (concerning trusts holding
partnership interests) and Sec. 1.641(c)-1(d)(2)(ii) (concerning
trusts holding stock in S corporations). In each case, a trust's share
of the charitable deduction being passed through from the partnership
or S corporation is reported to the IRS on the Schedule K-1 issued to
the trust in connection with the entity's own annual return.
Commenters have requested that the Form 1041-A filing requirement
be eliminated for each trust whose section 642(c) deductions consist
solely of the trust's allocable share of a contribution made by a
partnership or S corporation in which the trust holds an interest. Such
trusts are not accumulating any income that may be distributed to
charity in the future. Instead, these charitable deductions are based
solely on the current contributions of a passthrough entity made
directly to a charity and are not from any prior year's accumulation of
income by the trusts. The trusts themselves never received the amounts
that were given to charity and never made any direct charitable
contributions. Under these circumstances, the commenters argue, the
requirement to file Form 1041-A places an unnecessary burden on those
trustees who may not be aware of this filing requirement and who may
not have the necessary information to fill out the form.
II. Summary of Proposed Regulations
The Treasury Department and IRS believe that an administrative
exception should be created for trusts whose section 642(c) deductions
consist solely of the trust's allocable share of a contribution made by
a partnership or S corporation in which the trust holds an interest,
because these trusts do not fall within the purpose of the information
reporting requirement of section 6034(b). The Treasury Department and
the IRS propose to remove the section 6034 reporting requirements for
trusts whose charitable deduction is exclusively the result of
contributions made by a passthrough entity in which the trust directly
or indirectly holds an interest.
Additionally, there is a discrepancy between Sec. 1.6034-1 and
published instructions for Form 5227 (revised Dec. 2025). Section
1.6034-1 requires every trust described in section 4947(a)(2) to file a
Form 1041-A, unless an exception applies. The published instructions
for Form 5227, revised after the Pension Protection Act of 2006, state
that Form 5227 replaces Form 1041-A for split-interest trusts (after
noting that Sec. 1.6034-1 references Form 1041-A). The Treasury
Department and the IRS therefore propose updates to Sec. 1.6034-1 to
reflect that split-interest trusts must file Form 5227 (or a successor
form) rather than Form 1041-A. Proposed Sec. 1.6034-1(a) would clarify
the filing requirements by providing that trusts described in section
4947(a)(2) must file a Form 5227 (or a successor form) for each taxable
year and that every other trust claiming a charitable or other
deduction under section 642(c) for the taxable year must file a Form
1041-A (or a successor form) for each taxable year.
The proposed regulations would create an additional exception under
Sec. 1.6034-1(b) for trusts whose section 642(c) deduction for a given
taxable year arises solely as a result of the operation of section 702
or section 1366, representing a charitable contribution made at the
level of a passthrough entity
[[Page 53220]]
in which the trust directly or indirectly holds an interest. Proposed
Sec. 1.6034-1(b)(3) would provide that any trust that falls within the
exception for a taxable year will not be required to furnish the amount
of such deduction on Form 1041-A (or a successor form) for that year.
Proposed Applicability Date
The proposed regulations are proposed to apply to taxable years of
trusts ending on or after the date these regulations are published as
final regulations in the Federal Register. An entity described in
proposed Sec. 1.6034-1(b)(3) or a trust described in section
4947(a)(2) may rely on the proposed regulations for taxable years
ending before that date.
Special Analyses
I. Regulatory Planning and Review
The Office of Management and Budget's Office of Information and
Regulatory Analysis has determined that this proposed regulation is not
significant and is not subject to review under section 6(b) of
Executive Order 12866. Therefore, a regulatory impact assessment is not
required.
The Executive Order 14192 designation for this rule is expected to
be deregulatory.
II. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) generally
requires that a Federal agency obtain the approval of the 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. An 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 burdens associated with the collections of
information in these proposed regulations are included in Form 5227 and
its instructions and approved under OMB control numbers 1545-0047 and
1545-0092 in accordance with PRA procedures under 5 CFR 1320.10.
II. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it
is hereby certified that the proposed regulations would not have a
significant economic impact on a substantial number of small entities.
This rule primarily affects trusts, which are not small entities for
purposes of the Regulatory Flexibility Act. Although it is anticipated
that there may be an incremental economic impact on trustees and
advisors that are small entities, including entities that provide tax
and legal services that assist individuals and trusts in preparing tax
returns, any impact would not be significant and would not affect a
substantial number of small entities. Therefore, a Regulatory
Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C.
chapter 6) is not required.
III. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandate Reform Act of 1995 (UMRA)
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 (updated annually for inflation). These
proposed 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.
IV. Executive Order 13132: Federalism
Executive Order 13132 (Federalism) prohibits an agency from
publishing any rule that has federalism implications if the rule either
imposes substantial, direct compliance costs on State and local
governments, is not required by statute, or preempts State law, unless
the agency meets the consultation and funding requirements of section 6
of the Executive order. These proposed regulations do not have
federalism implications and do not impose substantial, direct
compliance costs on State and local governments or preempt State law
within the meaning of the Executive order.
V. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments
Executive Order 13175 (Consultation and Coordination With Indian
Tribal Governments) prohibits an agency from publishing any rule that
has Tribal implications if the rule either imposes substantial, direct
compliance costs on Indian Tribal governments, and is not required by
statute, or preempts Tribal law, unless the agency meets the
consultation and funding requirements of section 5 of the Executive
order. This proposed rule does not have substantial direct effects on
one or more federally recognized Indian tribes and does not impose
substantial direct compliance costs on Indian Tribal governments within
the meaning of the Executive order.
Comments and Requests for a Public Hearing
Pursuant to the Administrative Procedure Act at 5 U.S.C. 553(b)(4),
a plain language summary of these proposed regulations is available on
the rulemaking docket at https://www.regulations.gov.
Before these proposed regulations are adopted as final regulations,
consideration will be given to any comments that are submitted timely
to the IRS as prescribed in the preamble under the ADDRESSES heading.
The Treasury Department and the IRS request comments on all aspects of
the proposed regulations. All comments submitted will be made available
at https://www.regulations.gov or upon request.
A public hearing will be scheduled if requested in writing by any
person that timely submits electronic or written comments. Requests for
a public hearing are also encouraged to be made electronically. If a
public hearing is scheduled, notice of the date and time for the public
hearing will be published in the Federal Register.
Statement of Availability of IRS Documents
IRS notices and other guidance cited in this preamble are published
in the Internal Revenue Bulletin (or Cumulative Bulletin) and are
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.
Drafting Information
The principal authors of these proposed regulations are Ganesh
Gangasingh and David Lee, Office of the Associate Chief Counsel
(Passthroughs, Trusts, and Estates). However, other personnel from the
Treasury Department and the IRS participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, the Treasury Department and the IRS propose to amend
26 CFR part 1 as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 continues to read, in
part, as follows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
[[Page 53221]]
0
Par. 2. Section 1.6034-1 is amended by:
0
1. Revising the section heading.
0
2. Revising paragraph (a) introductory text.
0
3. In paragraph (b)(1), adding the language ``(or a successor form)''
after ``Form 1041-A'' in the first sentence.
0
4. Adding the language ``(or a successor form)'' at the end of
paragraph (b)(2).
0
5. Adding paragraph (b)(3).
0
6. Revising paragraphs (c) and (d).
0
7. Adding paragraph (e).
The additions and revisions read as follows:
Sec. 1.6034-1 Information returns required of trusts described in
section 4947(a) or claiming charitable or other deductions under
section 642(c).
(a) In general. Except as provided in paragraph (b) of this
section, every trust described in section 4947(a)(2) of the Internal
Revenue Code (Code) (including trusts described in section 664 of the
Code) must file a return of information on Form 5227 (or a successor
form) for each taxable year, unless all transfers in trust occurred
before May 27, 1969, or no deduction was allowed under section
4947(a)(2) for any transfer after that date to a trust created before
that date. In addition, except as provided in paragraph (b) of this
section, every other trust claiming a charitable or other deduction
under section 642(c) for the taxable year must file a return of
information on Form 1041-A (or a successor form) for such taxable year.
The return must set forth the name and address of the trust and the
following information concerning the trust in such detail as is
prescribed by the form or in the instructions issued with respect to
such form:
* * * * *
(b) * * *
(3) Trusts claiming section 642(c) deductions resulting from
amounts paid by a passthrough entity. A trust is not required to file a
Form 1041-A (or a successor form) if the trust's only claimed
deductions under section 642(c) of the Code are attributable to
contributions taken into account by the trust under section 702(a)(4)
of the Code, section 1366(a)(1) of the Code, or both, for amounts of
gross income paid for a purpose specified in section 170(c) of the
Code.
(c) Time and place for filing return. The return on Form 1041-A or
on Form 5227 (or a successor to either form) must be filed on or before
the 15th day of the 4th month following the close of the taxable year
of the trust, with the Internal Revenue officer designated by the
instructions applicable to such form. For extensions of time for filing
returns under this section, see Sec. 1.6081-1.
(d) Other provisions. For publicity of information on Form 1041-A
or on Form 5227 (or a successor to either form), see section 6104 of
the Code and the regulations thereunder in part 301 of this chapter.
For provisions relating to penalties for failure to file a return
required by this section, see section 6652(d) of the Code. For the
criminal penalties for a willful failure to file a return and filing a
false or fraudulent return, see sections 7203, 7206, and 7207 of the
Code.
(e) Applicability date. This section applies to taxable years
ending on or after [date of publication of final regulations in the
Federal Register].
Frank J. Bisignano,
Chief Executive Officer.
[FR Doc. 2026-16769 Filed 8-14-26; 8:45 am]
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