Excise Tax on Repurchase of Corporate Stock-Procedure and Administration, 55045-55051 [2024-14426]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[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]


=======================================================================
-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

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