Excise Tax on Repurchase of Corporate Stock-Procedure and Administration, 25829-25834 [2024-07118]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 89, Number 72 (Friday, April 12, 2024)]
[Proposed Rules]
[Pages 25829-25834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07118]



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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 58

[REG-118499-23]
RIN 1545-BQ60


Excise Tax on Repurchase of Corporate Stock--Procedure and 
Administration

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations that would provide 
guidance regarding reporting and payment of the new excise tax on 
repurchases of corporate stock made after December 31, 2022. The 
proposed regulations would affect certain publicly traded corporations 
that repurchase their stock or whose stock is acquired by certain 
specified affiliates. Another notice of proposed rulemaking on this 
topic is published elsewhere this issue of the Federal Register to 
propose rules on the general application of, and exceptions to, this 
new excise tax.

DATES: Written or electronic comments and requests for a public hearing 
must be received by May 13, 2024.

ADDRESSES: Commenters are strongly encouraged to submit public comments 
electronically. Submit electronic submissions via the Federal 
eRulemaking Portal at https://www.regulations.gov (indicate IRS and 
REG-118499-23) 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or withdrawn.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 comment submitted 
electronically or on paper to the IRS's public docket.
    Send paper submissions to: CC:PA:01:PR (REG-118499-23), Room 5203, 
Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Samuel G. Trammell at (202) 317-6975; concerning submissions of 
comments and requests for a public hearing, Vivian Hayes at (202) 317-
6901 (not toll-free numbers) or by email at [email protected] 
(preferred).

SUPPLEMENTARY INFORMATION:

Background

I. Overview

    This notice of proposed rulemaking proposes regulations under 
section 4501 of the Internal Revenue Code (Code) that would provide 
rules on procedure and administration applicable to the reporting and 
payment of the new excise tax on repurchases of corporate stock (stock 
repurchase excise tax) imposed by section 4501 for repurchases made 
after December 31, 2022. As proposed in this notice of proposed 
rulemaking, the regulations are proposed to be added as subpart B of 
new 26 CFR part 58 (Stock Repurchase Excise Tax Regulations), which is 
proposed to be added to subchapter D of 26 CFR chapter I (Miscellaneous 
Excise Taxes).
    Proposed subpart A of part 58, contained in another notice of 
proposed rulemaking (REG-115710-22) published elsewhere in this issue 
of the Federal Register, would provide operative rules under section 
4501. Proposed Sec.  58.4501-1 would provide an overview of the stock 
repurchase excise tax, generally applicable definitions, the scope of 
the regulations implementing the tax, and certain operating rules 
applicable to those regulations. Proposed Sec.  58.4501-2 would provide 
general rules regarding the application and computation of the stock 
repurchase excise tax. Proposed Sec.  58.4501-3 would provide rules 
regarding the application of the exceptions in section 4501(e) (other 
than the de minimis exception described in section 4501(e)(3) and to 
which proposed Sec.  58.4501-2(b)(2) applies). Proposed Sec.  58.4501-4 
would provide rules regarding the application of section 4501(c)(3). 
Proposed Sec. Sec.  58.4501-5 and 58.4501-6 would provide examples and 
applicability dates. Proposed Sec.  58.4501-7 would provide rules 
specifically relating to the application of section 4501(d).

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 corporation that is repurchased 
(as defined in section 4501(c)(1)) by the 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 describes 
certain operating rules for purposes of the stock repurchase excise tax 
that the Treasury Department and the IRS announced the intent to 
include in proposed regulations, along with anticipated rules for 
reporting and paying any liability for the stock repurchase excise tax.
    Section 4 of Notice 2023-2 describes 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 (1) the stock repurchase excise tax must be reported on IRS Form 
720, Quarterly Federal Excise Tax Return, (2) taxpayers must attach an 
additional form to the Form 720 reflecting the computation of the stock 
repurchase excise tax, (3) 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, (4) 
the deadline for payment of the stock repurchase excise tax is the same 
as the filing deadline, and (5) no extensions are permitted for 
reporting or paying the stock repurchase excise tax owed.
    Consistent with Notice 2023-2, and as explained in the Explanation 
of Provisions, these proposed regulations would prescribe the manner 
and method of reporting and paying the stock repurchase excise tax by 
adding rules on procedure and administration 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. The Treasury Department and the 
IRS have added items relevant to the stock repurchase excise tax to tax 
return forms other than Form 720, to assist in the identification of 
transactions subject to the stock repurchase excise tax. 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

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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.

Explanation of Provisions

I. Requirement for Return and Recordkeeping

    Under proposed Sec.  58.6011-1(a), a stock repurchase excise tax 
return would be required 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. Any covered corporation or person treated as a 
covered corporation, that makes a repurchase, or that is treated as 
making a repurchase, would be 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. See proposed Sec.  58.6001-1(a). Under the proposed 
regulations, any covered corporation that makes a repurchase must 
comply with these requirements, even if every repurchase is eligible 
for a statutory exception (for example, in the case of repurchases by a 
regulated investment company or a real estate investment trust) or is 
offset by issuances.
    Under proposed Sec.  58.6011-1(b), the stock repurchase excise tax 
return would include the Form 720, on which the stock repurchase excise 
tax liability would be reported, and an attached Form 7208, Excise Tax 
on Repurchase of Corporate Stock, on which the stock repurchase excise 
tax would be calculated. 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. The records that would be required to 
be maintained would need to be available for inspection by the IRS and 
retained for so long as their contents may become material. See 
proposed Sec.  58.6001-1(c).
    Under proposed Sec.  58.6061-1(a), the person required to file the 
stock repurchase excise tax return would be required to sign that 
return in accordance with the applicable forms and their corresponding 
instructions, and the signature would be prima facie evidence that the 
individual is authorized to sign the stock repurchase excise tax 
return. In addition, proposed Sec.  58.6065-1(a) would provide that any 
person signing a stock repurchase excise tax return is required to 
include a written declaration that the return is made under penalties 
of perjury when required by the return or the forms or their 
corresponding instructions.

II. Time and Place for Filing Return and Paying Tax

    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 the date of publication of final regulations in 
the Federal Register, proposed Sec.  58.6071-1(c) would require the 
stock repurchase excise tax return for such taxable year to be filed by 
the due date of the Form 720 for the first full calendar quarter after 
the date of publication of final regulations in the Federal Register.
    For example, if a covered corporation had a taxable year ending 
December 31, 2023, and if the date of publication of final regulations 
in the Federal Register were September 16, 2024, the covered 
corporation would be required to file the stock repurchase excise tax 
return for its 2023 taxable year by January 31, 2025 (the due date of 
the Form 720 for the calendar quarter ending December 31, 2024).
    Proposed Sec.  58.6071-1(a) generally would require the stock 
repurchase excise tax return to be filed by the due date of the Form 
720 for the first full calendar quarter after the taxable year of the 
covered corporation or person treated as a covered corporation ends. 
This rule would be applicable for taxable years ending after the date 
of publication of final regulations in the Federal Register.
    For example, if a covered corporation had a taxable year ending 
December 31, 2024, and if the date of publication of final regulations 
in the Federal Register were September 16, 2024, the covered 
corporation would be required to file the stock repurchase excise tax 
return for its 2024 taxable year by April 30, 2025 (the due date of the 
Form 720 for the calendar quarter ending March 31, 2025). Proposed 
Sec.  58.6091-1(a) and (b) would require the stock repurchase excise 
tax to be filed at the place specified in the instructions applicable 
to Form 720 or, if the return is hand-carried, with any person assigned 
the responsibility to receive hand-carried returns in the local IRS 
office that serves the principal place of business, principal office, 
or agency of the taxpayer. In exceptional cases, proposed Sec.  
58.6091-1(c) would provide that the Commissioner of Internal Revenue 
(Commissioner) would be able to permit the filing of the stock 
repurchase excise tax return in any local IRS office. Full payment of 
the stock repurchase excise tax liability would be required to 
accompany the filed stock repurchase excise tax return. See proposed 
Sec.  58.6151-1(a).
    A covered corporation or a person treated as a covered corporation 
that is required to file a stock repurchase excise tax return or pay 
the stock repurchase excise tax but does not timely file such return or 
pay such tax may be subject to additions to tax under section 6651 and 
Sec.  301.6651-1.

III. Tax Return Preparers

    Proposed Sec.  58.6107-1(a) would require a person who is a signing 
tax return preparer (as defined in Sec.  301.7701-15(b)(1) of the 
Procedure and Administration Regulations) of any stock repurchase 
excise tax return or claim for refund of the stock repurchase excise 
tax to furnish a completed copy of the 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 the Income Tax Regulations (26 CFR part 1).
    Proposed Sec.  58.6109-1(a) would require each stock repurchase 
excise tax return or claim for refund of the stock repurchase excise 
tax prepared by one or more signing tax return preparers to include the 
identifying number of the preparer required by Sec.  1.6695-1(b) to 
sign the return or claim for refund in the manner stated in Sec.  
1.6109-2.
    In addition, proposed Sec.  58.6060-1(a) would require a person 
that engages or employs one or more signing tax return preparers to 
prepare a stock repurchase excise tax return or claim for refund of the 
stock repurchase excise tax (other than for the person itself) to 
satisfy the recordkeeping and inspection requirements in Sec.  1.6060-
1.
    These proposed regulations also would provide certain rules 
relating to penalties that may be assessed against tax return preparers 
under sections 6694, 6695, and 6696. Under proposed Sec.  58.6694-1(b) 
and (c), a person who is a tax return preparer of any stock repurchase 
excise tax return or claim for refund of the stock repurchase excise 
tax would be subject to penalties under section 6694(a) for an 
understatement of liability due to an unreasonable position or under 
section 6694(b) for an understatement of liability due to willful or 
reckless conduct.

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    Under proposed Sec.  58.6695-1(a), a person who is a tax return 
preparer of any stock repurchase excise tax return or claim for refund 
of the stock repurchase excise tax would be subject to penalties for: 
(1) a failure to furnish a copy of the tax return or claim for refund 
to the taxpayer under section 6695(a); (2) a failure to sign the return 
under section 6695(b); (3) a failure to furnish an identifying number 
under section 6695(c); (4) a failure to retain a copy or list under 
section 6695(d); (5) a failure to file a correct information return 
under section 6695(e); or (6) endorsing or negotiating any check issued 
to the taxpayer under section 6695(f).
    Lastly, proposed Sec.  58.6696-1(a) would require a claim for 
credit or refund of a penalty assessed against a tax return preparer 
under section 6694 or 6695 (or the corresponding regulations) to be 
made in the manner set forth in Sec.  1.6696-1.

Proposed Applicability Date

    Proposed Sec.  58.6001-1 would be applicable to repurchases, 
adjustments, or exceptions required to be shown in any stock repurchase 
excise tax return required to be filed after the date of publication of 
final regulations in the Federal Register. Proposed Sec. Sec.  58.6011-
1, 58.6060-1, 58.6061-1, 58.6065-1, 58.6071-1, 58.6091-1, 58.6107-1, 
58.6109-1, 58.6151-1, 58.6694-1, 58.6695-1, and 58.6696-1 would be 
applicable to stock repurchase excise tax returns and claims for refund 
required to be filed after the date of publication of final regulations 
in the Federal Register.

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.
    The collections of information in these proposed 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. 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 recordkeeping requirements mentioned within these proposed 
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. For PRA purposes, general tax records 
are already approved by OMB under 1545-0123 for business filers and 
1545-0074 for individual filers.
    The reporting requirements, including the written penalty of 
perjury statement, will be covered within Form 7208 and its 
instructions. The IRS is seeking OMB approval and requesting a new OMB 
control number for Form 7208 in accordance with the procedures outlined 
in 5 CFR 1320.10.
    These proposed regulations mention reporting, third-party 
disclosures, and recordkeeping requirements for tax preparers. These 
proposed 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 proposed regulations will not have a 
significant economic impact on a substantial number of small entities. 
This certification is based on the fact that these proposed regulations 
provide specific administrative, procedural, and recordkeeping rules 
that would apply only to certain tax return preparers and to publicly 
traded corporations, which tends 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 proposed 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 proposed 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 
proposed 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 Code, this notice of proposed 
rulemaking has been submitted to the Chief Counsel for the Office of 
Advocacy of the Small Business Administration for comment on its impact 
on small business.

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 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.

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

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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 proposed 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.

Comments and Requests for a Public Hearing

    Before the proposed regulations are adopted as final regulations, 
consideration will be given to any comments that are submitted timely 
to the IRS as prescribed in this preamble under the ADDRESSES heading. 
The Treasury Department and the IRS request comments on all aspects of 
the proposed regulations and on forms related to the proposed 
regulations. All commenters are strongly encouraged to submit comments 
electronically. The Treasury Department and the IRS will publish for 
public availability any comment submitted electronically or on paper to 
the IRS's public docket on https://www.regulations.gov.
    A public hearing will be scheduled if requested in writing by any 
person who timely submits electronic or written comments. Requests for 
a public hearing are encouraged to be made electronically. If a public 
hearing is scheduled, a notice of the date and time for the public 
hearing will be published in the Federal Register. A telephonic option 
will remain available for those who prefer to attend or testify at a 
public hearing by telephone. Any telephonic hearing will be made 
accessible to people with disabilities.

Drafting Information

    The principal author of these regulations is 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.

Proposed Amendments to the Regulations

    Accordingly, the Treasury Department and the IRS propose to amend 
26 CFR part 58, as proposed to be added elsewhere in this issue of the 
Federal Register, as follows:

PART 58--STOCK REPURCHASE EXCISE TAX

0
Paragraph 1. The authority citation for part 58 is revised to read as 
follows:

    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.

0
Par 2. Add subpart B to read as follows:

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.

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 [DATE OF PUBLICATION OF 
FINAL REGULATIONS IN THE FEDERAL REGISTER], and during taxable years 
ending after [DATE OF PUBLICATION OF FINAL REGULATIONS IN THE FEDERAL 
REGISTER].


Sec.  58.6011-1  General requirement of return, statement, or list.

    (a) In general. Any covered corporation (as defined in the Internal 
Revenue Code (Code), section 4501 (section 4501), subsection (b)), 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), after December 31, 
2022, must file a stock repurchase excise tax return.
    (b) Stock Repurchase Excise Tax Return. For purposes of this part, 
the term stock repurchase excise tax return means a Form 720, Quarterly 
Federal Excise Tax Return, with an attached Form 7208, Excise Tax on 
Repurchase of Corporate Stock, or any other forms, schedules, or 
statements prescribed by

[[Page 25833]]

the Commissioner for the purpose of making a return to report the tax 
under chapter 37 of the Code.
    (c) Special rules for multiple section 4501(d) covered corporations 
with respect to a covered surrogate foreign corporation. For special 
rules applicable for 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)), see Sec.  
58.4501-7(d)(2).
    (d) Applicability date. This section applies to stock repurchase 
excise tax returns required to be filed after [DATE OF PUBLICATION OF 
FINAL REGULATIONS IN THE FEDERAL REGISTER], and during taxable years 
ending after [DATE OF PUBLICATION OF FINAL REGULATIONS IN THE FEDERAL 
REGISTER].


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 
[DATE OF PUBLICATION OF FINAL REGULATIONS IN THE FEDERAL REGISTER], and 
during taxable years ending after [DATE OF PUBLICATION OF FINAL 
REGULATIONS IN THE FEDERAL REGISTER].


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 (chapter 37) 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 [DATE OF PUBLICATION OF FINAL REGULATIONS IN THE FEDERAL 
REGISTER], and during taxable years ending after [DATE OF PUBLICATION 
OF FINAL REGULATIONS IN THE FEDERAL REGISTER].


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 
(chapter 37), 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 [DATE OF PUBLICATION OF FINAL REGULATIONS IN THE FEDERAL 
REGISTER], and during taxable years ending after [DATE OF PUBLICATION 
OF FINAL REGULATIONS IN THE FEDERAL REGISTER].


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 taxable year of the covered corporation, or person treated as 
a covered corporation (as described in the Internal Revenue Code 
(Code), section 4501 (section 4501), paragraph (d)(1)(A) or (d)(2)(A)), 
ends.
    (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 before date of publication of final 
regulations. 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 [EFFECTIVE DATE OF FINAL RULE], 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 [DATE OF PUBLICATION OF FINAL 
REGULATIONS IN THE FEDERAL REGISTER]. 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 [EFFECTIVE DATE OF 
FINAL RULE], the covered corporation, or person treated as a covered 
corporation, should file a single Form 720 with two separate Forms 7208 
(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). If the date the Treasury decision adopting these rules as 
final regulations is published in the Federal Register were September 
16, 2024, Corporation Y would be required to file the stock repurchase 
excise tax return for its 2023 taxable year by the due date for a 
fourth-quarter Form 720 (that is, January 31, 2025).
    (e) Applicability date. This section applies to stock repurchase 
excise tax returns required to be filed after [DATE OF PUBLICATION OF 
FINAL REGULATIONS IN THE FEDERAL REGISTER], and during taxable years 
ending after [DATE OF PUBLICATION OF FINAL REGULATIONS IN THE FEDERAL 
REGISTER].


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

[[Page 25834]]

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 [DATE OF PUBLICATION OF 
FINAL REGULATIONS IN THE FEDERAL REGISTER], and during taxable years 
ending after [DATE OF PUBLICATION OF FINAL REGULATIONS IN THE FEDERAL 
REGISTER].


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 
[DATE OF PUBLICATION OF FINAL REGULATIONS IN THE FEDERAL REGISTER], and 
during taxable years ending after [DATE OF PUBLICATION OF FINAL 
REGULATIONS IN THE FEDERAL REGISTER].


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 
[DATE OF PUBLICATION OF FINAL REGULATIONS IN THE FEDERAL REGISTER], and 
during taxable years ending after [DATE OF PUBLICATION OF FINAL 
REGULATIONS IN THE FEDERAL REGISTER].


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 [DATE OF PUBLICATION OF 
FINAL REGULATIONS IN THE FEDERAL REGISTER], and during taxable years 
ending after [DATE OF PUBLICATION OF FINAL REGULATIONS IN THE FEDERAL 
REGISTER].


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 (section 6694) 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 for tax 
pays 15 percent of a penalty for understatement of taxpayer's liability 
and procedural matters relating to 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 of the Code.
    (e) Applicability date. This section applies to returns and claims 
for refund filed, and advice provided, after [DATE OF PUBLICATION OF 
FINAL REGULATIONS IN THE FEDERAL REGISTER], and during taxable years 
ending after [DATE OF PUBLICATION OF FINAL REGULATIONS IN THE FEDERAL 
REGISTER].


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 [DATE OF PUBLICATION OF FINAL REGULATIONS IN THE 
FEDERAL REGISTER], and during taxable years ending after [DATE OF 
PUBLICATION OF FINAL REGULATIONS IN THE FEDERAL REGISTER].


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 [DATE OF 
PUBLICATION OF FINAL REGULATIONS IN THE FEDERAL REGISTER], and during 
taxable years ending after [DATE OF PUBLICATION OF FINAL REGULATIONS IN 
THE FEDERAL REGISTER].

Douglas W. O'Donnell,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2024-07118 Filed 4-9-24; 4:15 pm]
BILLING CODE 4830-01-P