Bulletin No. 2020–27

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2020–27

June 29, 2020

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMNSTRATIVE, SPECIAL

ANNOUNCEMENT

EMPLOYMENT TAX, INCOME TAX

Notice 2020-47, page 7.

This notice provides guidance under the Internal Revenue

Code on the federal income and employment tax treatment

of cash payments made by employers under leave-based

donation programs to aid victims of the ongoing Coronavirus Disease 2019 (COVID-19) pandemic as described in

the notice.

The Department of the Treasury and the Internal Revenue

Service invite the public to submit recommendations for

items to be included on the 2020-2021 Priority Guidance

Plan.

EMPLOYEE PLANS

Notice 2020-45, page 3.

This notice sets forth updates on the corporate bond

monthly yield curve, the corresponding spot segment rates

for June 2020 used under § 417(e)(3)(D), the 24-month

average segment rates applicable for June 2020, and the

30-year Treasury rates, as reflected by the application of §

430(h)(2)(C)(iv).

EMPLOYMENT TAX

Rev. Proc. 2020-31, page 12.

General Rules and Specifications for Substitute Form 941,

Schedule B (Form 941), Schedule D (Form 941), Schedule R (Form 941), and Form 8974. This revenue procedure

provides general rules and specifications from the IRS for

paper and computer-generated substitutes for Form 941,

Schedule B (Form 941), Schedule D (Form 941), Schedule

R (Form 941) and Form 8974. This procedure will be reproduced as the next revision of Publication 4436. Rev. Proc.

2018-24 is superseded.

Finding Lists begin on page ii.

Notice 2020-46, page 7.

INCOME TAX

Notice 2020-49, page 8.

This notice postpones to December 31, 2020, the due

dates for making investments, making reinvestments, and

expending amounts for construction of real property under

§ 45D of the Internal Revenue Code (Code) due to be performed or expended on or after April 1, 2020, and before

December 31, 2020.

Rev. Proc. 2020-16, page 10.

Revenue Procedure 2020-16 provides an automatic procedure for a State or local government in which an empowerment zone is located to extend the empowerment zone

designation made under section 1391(a) of the Internal

Revenue Code. Specifically, the automatic procedure under section 3.01 of Rev. Proc. 2020-16 provides that a

State or local government that nominated an empowerment zone is deemed to extend until December 31, 2020,

the termination date designated by that State or local government in its empowerment zone nomination (designated

termination date), as described in section 1391(d)(1)(B).

Section 3.02 of Rev. Proc. 2020-16 provides a procedure

for such State or local government to decline this deemed

extension.

SPECIAL ANNOUNCEMENT

Notice 2020-43, page 1.

Partnerships and certain other persons report partner

capital accounts in Box L on the Schedule K-1 (Form

1065) or in Box F on the Schedule K-1 (Form 8865),

each as they currently appear on the 2019 forms (Tax

Capital Reporting Requirement). For purposes of satisfying the Tax Capital Reporting Requirement with respect

to partnership taxable years that end on or after December 31, 2020, the Department of the Treasury (Treasury

Department) and the Internal Revenue Service (IRS) propose to require the use of one of two alternative methods

described in this notice. As a result, partnerships and

certain other persons would no longer be permitted to

report partner capital accounts using any other method, including section 704(b) of the Code (§ 704(b)) and

generally accepted accounting principles (GAAP). This

notice requests comments concerning the Tax Capital

Reporting Requirement. Comments received in response

to this notice will help inform the development of the

instructions to be included in Form 1065, U.S. Return of

Partnership Income (to which the instructions for Form

8865, Return of U.S. Persons With Respect to Certain

Foreign Partnerships, refer), and Partner’s Instructions

for Schedule K-1 (Form 1065), for 2020.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

June 29, 2020 

Bulletin No. 2020–27

Part III

Tax Capital Reporting

- Notice Requesting

Comments

Notice 2020-43

I. PURPOSE

Partnerships and certain other persons

report partner capital accounts in Box L on

the Schedule K-1 (Form 1065) or in Box

F on the Schedule K-1 (Form 8865), each

as they currently appear on the 2019 forms

(Tax Capital Reporting Requirement). The

final versions of these 2019 forms and

their instructions provide that partnerships

and other persons must report partner capital accounts consistent with the reporting

requirements in the 2018 forms and instructions, including the requirement to

report negative tax basis capital accounts

on a partner-by-partner basis.

The purpose of this notice is to seek

public comment on a proposed requirement for partnerships to use only one of

two alternative methods described in section III of this notice to satisfy the Tax

Capital Reporting Requirement with respect to partnership taxable years that end

on or after December 31, 2020. As a result,

partnerships and certain other persons

would no longer be permitted to report

partner capital accounts using any other

method, including § 704(b) of the Internal

Revenue Code (Code) and U.S. generally

accepted accounting principles (GAAP).

Comments received in response to this

notice will help inform the development

of the instructions to be included in Form

1065, U.S. Return of Partnership Income

(to which the instructions for Form 8865,

Return of U.S. Persons With Respect to

Certain Foreign Partnerships, refer), and

Partner’s Instructions for Schedule K-1

(Form 1065), for taxable year 2020.

II. BACKGROUND

The 2019 instructions for Form 1065

and Partner’s Instructions for Schedule

K-1 (Form 1065), like the 2018 instructions for these forms, require that a partnership reporting its partners’ capital on a

Bulletin No. 2020–27

method other than the tax basis method report a partner’s tax capital account at both

the beginning and the end of the partnership’s taxable year if either amount is negative with respect to the partner. The 2019

instructions for Form 8865, Schedule K-1,

incorporate this requirement by reference

to the instructions for Form 1065.

On April 5, 2019, the IRS released Form

1065 Frequently Asked Questions (FAQs)

explaining how a partnership should determine a partner’s tax capital account and

providing a safe harbor approach based

on a partner’s outside basis in its partnership interest. Thereafter, early releases of

drafts of the 2019 Form 1065 and the 2019

Form 8865, released September 30, 2019,

and related draft instructions for the 2019

Form 1065 (to which the draft instructions

for the 2019 Form 8865 refer), and the

2019 Partner’s Instructions for Schedule

K-1 (Form 1065), released October 29,

2019, expanded partner tax capital reporting to require all partnerships and certain

other persons who file Form 8865 to report all partners’ tax capital accounts using the tax basis method.

In response to the change requiring all

partnerships to report their partners’ tax

capital on a tax basis method, commenters stated that some partnerships might be

unable to comply, either in a timely manner or ever. These commenters explained

that partnerships that have not historically

maintained partner tax capital accounts

may face difficulties in calculating their

partners’ tax capital by means of a historical transactional analysis of events. Commenters stated that a partnership would

find such a transactional analysis particularly difficult and burdensome where the

partnership has been operating for many

years and either documentation regarding

historical transactional events affecting

partner tax capital no longer exists, or the

documentation does exist, but its volume

or complexity precludes reconstruction of

accurate tax capital accounts. In addition,

commenters asked for guidance on how to

calculate tax capital using a transactional

analysis under complicated transactions

and structures.

Accordingly, the Department of the

Treasury (Treasury Department) and the

1

Internal Revenue Service (IRS) released

Notice 2019-66, 2019-52 I.R.B. 1509 on

December 11, 2019, removing the requirement that partnerships and other persons

required to furnish and file Form 1065,

Schedule K-1 or Form 8865, Schedule

K-1, report partner capital accounts in

Item L of the 2019 Form 1065, Schedule

K-1, or in Item F of the 2019 Form 8865,

Schedule K-1, using the tax basis method for 2019. In addition, Notice 2019-66

announced that further guidance would

be provided regarding the definition of

partner tax capital. In lieu of providing a

definition of tax basis capital, this notice

proposes two methods that satisfy the Tax

Capital Reporting Requirement. Section

III of this notice describes the two proposed methods for complying with the

Tax Capital Reporting Requirement. Part

IV of this notice requests comments on

those proposed methods. The Treasury

Department and the IRS anticipate that the

two proposed methods outlined in section

III of this notice will be the only methods

that meet the Tax Capital Reporting Requirement for partnership taxable years

ending on or after December 31, 2020.

III. PROPOSED METHODS

FOR COMPLYING WITH THE

TAX CAPITAL REPORTING

REQUIREMENT FOR TAXABLE

YEARS ENDING ON OR AFTER

DECEMBER 31, 2020

Commenters have indicated that many

partnerships that currently possess partner

tax capital information generally develop

and maintain partner tax capital by applying the provisions and principles of subchapter K of chapter 1 of the Code (subchapter K), including those contained in

§§ 705, 722, 733, and 742 of the Code,

to relevant partnership and partner events.

In such a situation, commenters have indicated that partnerships maintaining tax

capital (i) increase a partner’s tax capital

account by the amount of money and the

tax basis of property contributed by the

partner to the partnership (less any liabilities assumed by the partnership or to

which the property is subject) as well as

allocations of income or gain made by

June 29, 2020

the partnership to the partner, and (ii) decrease a partner’s tax capital account by

the amount of money and the tax basis of

property distributed by the partnership to

the partner (less any liabilities assumed

by the partner or to which the property is

subject) as well as allocations of loss or

deduction made by the partnership to the

partner (Transactional Approach).

The Treasury Department and the IRS

understand that many partnerships and

other persons have maintained partner tax

capital accounts according to the Transactional Approach, but due to the array

of transactions that might affect partner

tax capital, it is possible that partnerships

and other persons that have been using

the Transactional Approach may not have

been adjusting partner tax capital accounts

in the same way under similar fact patterns. Several commenters explained that

providing detailed guidance that would

make the Transactional Approach consistent in all potential transactions would be

a major project that would consume significant IRS resources.

The IRS and Treasury believe that a

consistent framework for all partnerships

and other persons to comply with the Tax

Capital Reporting Requirement will aid

the IRS in administering the tax law, and

consistency will ultimately reduce complexity of the preparation of partnership

returns. Accordingly, this notice proposes

two alternative methods that a partnership

would be required to use to comply with

the Tax Capital Reporting Requirement.

For such purpose, a partnership may report, for each partner, either (i) the partner’s basis in its partnership interest, reduced by the partner’s allocable share of

partnership liabilities, as determined under § 752 of the Code (Modified Outside

Basis Method) or (ii) the partner’s share

of previously taxed capital, as calculated

under a modified version of § 1.743-1(d)

of the Income Tax Regulations (Modified

Previously Taxed Capital Method). Both

methods are further described below. It

is intended that a partnership must use

one of these two methods for purposes of

satisfying the Tax Capital Reporting Requirement and the method selected must

be used with respect to all of the partnership’s partners. Capital account amounts

based on the Transactional Approach

will not satisfy the Tax Capital Report-

June 29, 2020

ing Requirement. For taxable years after

2020, a partnership may change its Tax

Capital Reporting Requirement method

from the Modified Outside Basis Method

to the Modified Previously Taxed Capital

Method, or vice versa, by attaching a disclosure to each Schedule K-1 describing

the change, if any, to the amount attributable to each partner’s beginning and end

of year balances, and the reason for the

change.

(1) The Modified Outside Basis Method

A partnership may satisfy the Tax Capital Reporting Requirement by determining, or being provided by its partners, the

partner’s adjusted basis in its partnership

interest, determined under the principles

and provisions of subchapter K (including

those contained in §§ 705, 722, 733, and

742), and subtracting from that basis the

partner’s share of partnership liabilities

under § 752.

If the partnership is satisfying the Tax

Capital Reporting Requirement by using

the Modified Outside Basis Method, a

partner must notify its partnership, in writing, of any changes to the partner’s basis

in its partnership interest during each partnership taxable year other than changes

attributable to contributions to and distributions from the partnership and the partner’s share of income, gain, loss, or deduction that are otherwise reflected on the

partnership’s schedule K-1. The partner

must provide such written notification of

such changes to the partner’s basis within thirty days or by the taxable year-end

of the partnership, whichever is later. For

example, if a person purchases an interest

in a partnership that has chosen to use the

Modified Outside Basis Method, the purchasing partner must notify the partnership of its basis in the acquired partnership

interest, regardless of whether the partnership has an election under § 754 of the

Code in effect or has a substantial built-in

loss, as defined in § 743(d) of the Code,

at the time of such interest purchase. For

purposes of the Modified Outside Basis

Method, a partnership is entitled to rely on

the partner basis information that the partnership is provided by its partners unless

the partnership has knowledge of facts indicating that the provided information is

clearly erroneous.

2

(2) Modified Previously Taxed Capital

Method

A partnership that does not satisfy the

Tax Capital Reporting Requirement by

using the Modified Outside Basis Method would be required to do so by using

the Modified Previously Taxed Capital

Method. Section 1.743-1(d)(1) generally

provides that a partnership interest transferee’s (transferee’s) share of the adjusted basis of partnership property is equal

to the sum of the transferee’s interest as

a partner in the partnership’s previously

taxed capital, plus the transferee’s share

of partnership liabilities. The regulation

further provides that the transferee’s previously taxed capital is equal to—

(i) The amount of cash that the partner

would receive on a liquidation of the

partnership following a hypothetical

transaction; increased by

(ii) The amount of tax loss (including any remedial allocations under § 1.704-3(d) of

the Income Tax Regulations) that would

be allocated to the partner from the hypothetical transaction; and decreased by

(iii) The amount of tax gain (including any remedial allocations under

§ 1.704-3(d)) that would be allocated

to the partner from the hypothetical

transaction.

The hypothetical transaction is a disposition by the partnership of all of its assets in a fully taxable transaction for cash

equal to the fair market value of the assets.

See § 1.743-1(d)(2).

Part (i) of the above calculation is intended to quantify, for each partner, the

partner’s economic right to a share of the

distributable proceeds of the partnership

immediately after the hypothetical transaction and the payment by the partnership

of all of its liabilities (partnership net liquidity value). The Treasury Department

and the IRS understand that although

some partnerships may be able to determine the fair market value of their assets

for each taxable period, such information

will not be readily available for all partnerships. In most instances, a partnership

that calculates its partnership net liquidity

value by using a consistent measurement

for the value of its assets (such as GAAP

basis or § 704(b) basis) rather than their

actual fair market value will determine

the same amount for each of its partners

Bulletin No. 2020–27

as would be determined if the partnership

had calculated its partnership net liquidity

value by hypothesizing a sale of its assets

for actual fair market value. Accordingly,

for purposes of the Tax Capital Reporting

Requirement, the Modified Previously

Taxed Capital Method modifies the calculation described in § 1.743-1(d)(2) (for

purposes of the Tax Capital Reporting Requirement only) as follows:

(i) The cash a partner would receive on

a partnership liquidation and calculations of gain and loss in the hypothetical transaction would be based on the

assets’ fair market value, if readily

available. Otherwise, a partnership

may determine its partnership net liquidity value and gain or loss by using

such assets’ bases as determined under

§ 704(b), GAAP, or the basis set forth

in the partnership agreement for purposes of determining what each partner would receive if the partnership

were to liquidate, as determined by

partnership management; and

(ii) All liabilities are treated as nonrecourse for purposes of parts (ii) and

(iii) of the calculation referring to

gain or loss, respectively. This is to

avoid the burden of having to characterize the underlying debt and to

simplify the computation.

Example – Facts. A and B are equal

partners in AB LLC, a calendar-year

partnership. On December 31, 2020, AB

LLC’s balance sheet reflects the following

assets and liabilities:

• $500 of cash;

• Inventory with a tax and book basis

of $1,000;

• Equipment with a tax and book basis

of $500;

• Land with a tax and book basis of

$1,000; and

• A long-term loan of $5,000.

AB LLC chooses to comply with the

Tax Capital Reporting Requirement by using the Previously Taxed Capital Method

and calculating liquidation values, gains,

and losses, based on the book basis of

the assets. Each of A and B’s Previously

Taxed Capital under that method would

be $(1,000), an amount equal to (i) the

cash each would receive after the hypothetical liquidation (zero, because the debt

of $5,000 exceeds the $3,000 book basis

of the assets), less (ii) gain that would be

Bulletin No. 2020–27

allocated to each partner on the hypothetical liquidation and sale ($1,000, each

partner’s 50% share of the excess of the

$5,000 amount realized on a sale of the

property for the debt over the tax basis of

$3,000), plus (iii) loss that would be allocated to each partner (zero).

A partnership that adopts the Modified

Previously Taxed Capital Method would

be required, for each taxable year in which

the method is used, to attach a statement

indicating that the Modified Previously Taxed Capital Method is used and the

method it used to determine its partnership net liquidity value (for example, fair

market value, §704(b) book basis, etc.).

IV. REQUEST FOR COMMENTS

The Treasury Department and the IRS

request comments on the following topics:

(i) Whether the methods used to satisfy

the Tax Capital Reporting Requirement described in section III of this

notice should be modified or adopted;

(ii) Whether an ordering rule should apply to the basis used in determining

the partnership’s net liquidity value;

for example, use of fair market value

is required, but if not readily available, §704(b) book basis is required,

and, if the partnership does not maintain § 704(b) capital, GAAP is required, etc.;

(iii) How, if at all, the Tax Capital Reporting Requirement should be modified

to apply to partnerships that are treated as publicly traded partnerships under § 7704 of the Code;

(iv) Whether the Transactional Approach,

or similar method, should be permitted for purposes of meeting the Tax

Capital Reporting Requirement and,

if recommended, what additional

guidance would be necessary; and

(v) Whether and in what circumstances limitations should be imposed

on partnerships to change from one

method to another (for example,

whether there should be a limit on

how many times the method can be

changed over a period of years), including compliance with such rules in

the case of the merger of partnerships

using different methods.

Written or electronic comments must

be received by August 4th, 2020, and

3

should contain a reference to Notice 202043. Commenters are strongly encouraged

to submit comments electronically, as access to mail may be limited. Comments

may be submitted in one of two ways:

(1) Electronically via the Federal

eRulemaking Portal at www.regulations.

gov (type IRS Notice 2020-43 in the

search field on the regulations.gov homepage to find the docket for this notice and

submit comments).

(2) Alternatively, by mail to Internal

Revenue Service, CC:PA: LPD (Notice

2020-43, Room 5207, P.O. Box 7604,

Ben Franklin Station, Washington, D.C.

20044. Comments will be available for

public inspection and copying.

V. DRAFTING INFORMATION

The principal author of this notice is

Kara Altman of the Office of Associate

Chief Counsel (Passthroughs & Special

Industries). For further information regarding this notice contact Kara Altman at

(202) 317-5576 (not a toll-free number).

Update for Weighted

Average Interest Rates,

Yield Curves, and Segment

Rates

Notice 2020-45

This notice provides guidance on the

corporate bond monthly yield curve, the

corresponding spot segment rates used

under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the

Internal Revenue Code. In addition, this

notice provides guidance as to the interest

rate on 30-year Treasury securities under

§ 417(e)(3)(A)(ii)(II) as in effect for plan

years beginning before 2008 and the 30year Treasury weighted average rate under

§ 431(c)(6)(E)(ii)(I).

YIELD CURVE AND SEGMENT

RATES

Section 430 specifies the minimum

funding requirements that apply to single-employer plans (except for CSEC

June 29, 2020

plans under § 414(y)) pursuant to § 412.

Section 430(h)(2) specifies the interest rates that must be used to determine

a plan’s target normal cost and funding

target. Under this provision, present value is generally determined using three

24-month average interest rates (“segment

rates”), each of which applies to cash

flows during specified periods. To the extent provided under § 430(h)(2)(C)(iv),

these segment rates are adjusted by the applicable percentage of the 25-year average

segment rates for the period ending September 30 of the year preceding the calendar year in which the plan year begins.1

However, an election may be made under

§ 430(h)(2)(D)(ii) to use the monthly yield

curve in place of the segment rates.

Applicable Month

Notice 2007-81, 2007-44 I.R.B. 899,

provides guidelines for determining the

monthly corporate bond yield curve, and

the 24-month average corporate bond

segment rates used to compute the target

normal cost and the funding target. Consistent with the methodology specified in

Notice 2007-81, the monthly corporate

bond yield curve derived from May 2020

data is in Table 2020-5 at the end of this

notice. The spot first, second, and third

segment rates for the month of May 2020

are, respectively, 1.08, 2.78, and 3.47.

The 24-month average segment rates

determined under § 430(h)(2)(C)(i)

through (iii) must be adjusted pursuant to

§ 430(h)(2)(C)(iv) to be within the applicable minimum and maximum percentag-

24-MONTH AVERAGE CORPORATE

BOND SEGMENT RATES

The three 24-month average corporate

bond segment rates applicable for June

2020 without adjustment for the 25-year

average segment rate limits are as follows:

24-Month Average Segment Rates Without 25-Year Average Adjustment

First Segment

Second Segment

June 2020

2.54

Based on § 430(h)(2)(C)(iv), the

24-month averages applicable for June

For Plan Years

Beginning In

es of the corresponding 25-year average

segment rates. For plan years beginning

before 2021, the applicable minimum percentage is 90% and the applicable maximum percentage is 110%. The 25-year

average segment rates for plan years beginning in 2019 and 2020 were published

in Notice 2018-73, 2018-40 I.R.B. 526,

and Notice 2019-51, 2019-41 I.R.B. 866,

respectively.

Third Segment

3.61

2020, adjusted to be within the applicable

minimum and maximum percentages of

4.09

the corresponding 25-year average segment rates, are as follows:

Adjusted 24-Month Average Segment Rates

Applicable

First

Second

Month

Segment

Segment

Third

Segment

2019

June 2020

3.74

5.35

6.11

2020

June 2020

3.64

5.21

5.94

Section 431 specifies the minimum

funding requirements that apply to multiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum

amount for the full-funding limitation

described in § 431(c)(6)(A), based on the

plan’s current liability. Section 431(c)(6)

(E)(ii)(I) provides that the interest rate

used to calculate current liability for this

purpose must be no more than 5 percent

above and no more than 10 percent below the weighted average of the rates

of interest on 30-year Treasury securities during the four-year period ending

on the last day before the beginning of

the plan year. Notice 88-73, 1988-2 C.B.

383, provides guidelines for determining

the weighted average interest rate. The

rate of interest on 30-year Treasury securities for May 2020 is 1.38 percent. The

Service determined this rate as the aver-

age of the daily determinations of yield

on the 30-year Treasury bond maturing

in February 2050 determined each day

through May 12, 2020 and the yield on

the 30-year Treasury bond maturing in

May 2050 determined each day for the

balance of the month. For plan years beginning in June 2020, the weighted average of the rates of interest on 30-year

Treasury securities and the permissible

range of rates used to calculate current

liability are as follows:

For Plan Years

Beginning In

Treasury Weighted Average Rates

30-Year Treasury

Weighted Average

Permissible Range

90% to 105%

June 2020

2.59

2.33 to 2.72

30-YEAR TREASURY SECURITIES

INTEREST RATES

Pursuant to § 433(h)(3)(A), the 3rd segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount

of the full funding limitation under § 433(c)(7)(C)).

1

June 29, 2020

4

Bulletin No. 2020–27

MINIMUM PRESENT VALUE

SEGMENT RATES

In general, the applicable interest rates

Month

ent value segment rates. Pursuant to that

notice, the minimum present value segment rates determined for May 2020 are

as follows:

Minimum Present Value Segment Rates

First Segment

Second Segment

May 2020

DRAFTING INFORMATION

The principal author of this notice is

Tom Morgan of the Office of the Asso-

Bulletin No. 2020–27

under § 417(e)(3)(D) are segment rates

computed without regard to a 24-month

average. Notice 2007-81 provides guidelines for determining the minimum pres-

1.08

2.78

ciate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes). However, other personnel from

the IRS participated in the development

5

Third Segment

3.47

of this guidance. For further information

regarding this notice, contact Mr. Morgan

at 202-317-6700 or Paul Stern at 202-3178702 (not toll-free numbers).

June 29, 2020

Table 2020-5

Monthly Yield Curve for May 2020

Derived from May 2020 Data

Maturity

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

15.5

16.0

16.5

17.0

17.5

18.0

18.5

19.0

19.5

20.0

Yield

0.67

0.80

0.92

1.01

1.08

1.13

1.19

1.26

1.34

1.43

1.54

1.65

1.78

1.90

2.03

2.16

2.28

2.39

2.50

2.60

2.69

2.78

2.85

2.92

2.98

3.04

3.08

3.12

3.16

3.19

3.21

3.24

3.26

3.27

3.29

3.30

3.31

3.32

3.33

3.34

June 29, 2020

Maturity

20.5

21.0

21.5

22.0

22.5

23.0

23.5

24.0

24.5

25.0

25.5

26.0

26.5

27.0

27.5

28.0

28.5

29.0

29.5

30.0

30.5

31.0

31.5

32.0

32.5

33.0

33.5

34.0

34.5

35.0

35.5

36.0

36.5

37.0

37.5

38.0

38.5

39.0

39.5

40.0

Yield

3.34

3.35

3.35

3.36

3.36

3.37

3.37

3.38

3.38

3.39

3.39

3.39

3.40

3.40

3.41

3.41

3.42

3.42

3.42

3.43

3.43

3.44

3.44

3.44

3.45

3.45

3.45

3.46

3.46

3.46

3.47

3.47

3.47

3.47

3.48

3.48

3.48

3.48

3.49

3.49

Maturity

40.5

41.0

41.5

42.0

42.5

43.0

43.5

44.0

44.5

45.0

45.5

46.0

46.5

47.0

47.5

48.0

48.5

49.0

49.5

50.0

50.5

51.0

51.5

52.0

52.5

53.0

53.5

54.0

54.5

55.0

55.5

56.0

56.5

57.0

57.5

58.0

58.5

59.0

59.5

60.0

Yield

3.49

3.49

3.49

3.50

3.50

3.50

3.50

3.50

3.51

3.51

3.51

3.51

3.51

3.51

3.52

3.52

3.52

3.52

3.52

3.52

3.53

3.53

3.53

3.53

3.53

3.53

3.53

3.53

3.54

3.54

3.54

3.54

3.54

3.54

3.54

3.54

3.54

3.55

3.55

3.55

6

Maturity

60.5

61.0

61.5

62.0

62.5

63.0

63.5

64.0

64.5

65.0

65.5

66.0

66.5

67.0

67.5

68.0

68.5

69.0

69.5

70.0

70.5

71.0

71.5

72.0

72.5

73.0

73.5

74.0

74.5

75.0

75.5

76.0

76.5

77.0

77.5

78.0

78.5

79.0

79.5

80.0

Yield

3.55

3.55

3.55

3.55

3.55

3.55

3.55

3.56

3.56

3.56

3.56

3.56

3.56

3.56

3.56

3.56

3.56

3.56

3.56

3.56

3.57

3.57

3.57

3.57

3.57

3.57

3.57

3.57

3.57

3.57

3.57

3.57

3.57

3.57

3.57

3.58

3.58

3.58

3.58

3.58

Maturity

80.5

81.0

81.5

82.0

82.5

83.0

83.5

84.0

84.5

85.0

85.5

86.0

86.5

87.0

87.5

88.0

88.5

89.0

89.5

90.0

90.5

91.0

91.5

92.0

92.5

93.0

93.5

94.0

94.5

95.0

95.5

96.0

96.5

97.0

97.5

98.0

98.5

99.0

99.5

100.0

Yield

3.58

3.58

3.58

3.58

3.58

3.58

3.58

3.58

3.58

3.58

3.58

3.58

3.58

3.58

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.59

3.60

3.60

Bulletin No. 2020–27

Treatment of Amounts

Paid to Section 170(c)

Organizations under

Employer Leave-Based

Donation Programs to Aid

Victims of the Coronavirus

Disease (COVID-19)

Pandemic

Notice 2020-46

Subsequent to the March 13, 2020,

emergency declaration issued by the President of the United States under the authority of the Robert T. Stafford Disaster Relief

and Emergency Assistance Act (Stafford

Act) (42 U.S.C. 5121 et seq.) in response

to the ongoing Coronavirus Disease 2019

(COVID-19) pandemic, the President issued major disaster declarations under the

authority of the Stafford Act for each of the

50 states, the District of Columbia, and five

U.S. territories (affected geographic areas).1 This notice provides guidance under

the Internal Revenue Code (Code) on the

federal income and employment tax treatment of cash payments made by employers under leave-based donation programs

to aid victims of the ongoing COVID-19

pandemic in the affected geographic areas.

EMPLOYER LEAVE-BASED

DONATION PROGRAMS

In response to the need to provide relief to victims of the COVID-19 pandemic

throughout the affected geographic areas,

employers may have adopted or may be

considering adopting leave-based donation programs. Under leave-based donation programs, employees can elect to

forgo vacation, sick, or personal leave in

exchange for cash payments that the employer makes to charitable organizations

described in section 170(c) of the Code

(section 170(c) organizations).

TREATMENT OF EMPLOYER LEAVEBASED DONATION PAYMENTS

Cash payments an employer makes to

section 170(c) organizations in exchange

1

for vacation, sick, or personal leave that

its employees elect to forgo will not be

treated as wages (or compensation, as applicable) to the employees or otherwise

be included in the gross income of the

employees if the payments are: (1) made

to the section 170(c) organizations for the

relief of victims of the COVID-19 pandemic in the affected geographic areas;

and (2) paid to the section 170(c) organizations before January 1, 2021. Similarly, employees electing to forgo leave will

not be treated as having constructively

received gross income or wages (or compensation, as applicable). The amount of

cash payments to which this guidance

applies should not be included in Box 1,

3 (if applicable), or 5 of the Form W-2.

Electing employees may not claim a

charitable contribution deduction under

section 170 with respect to the value of

forgone leave.

An employer may deduct these cash

payments under the rules of section 170

or the rules of section 162 if the employer

otherwise meets the respective requirements of either section.

DRAFTING INFORMATION

For further information, please contact

Suzanne R. Sinno of the Office of Associate Chief Counsel (Income Tax and Accounting) at (202) 317-4718 (not a tollfree number).

Public Recommendations

Invited on Items to be

Included on the 2020-2021

Priority Guidance Plan

Notice 2020-47

The Department of the Treasury (Treasury Department) and the Internal Revenue Service (Service) invite the public to

submit recommendations for items to be

included on the 2020-2021 Priority Guidance Plan.

The Treasury Department’s Office of

Tax Policy and the Service use the Pri-

ority Guidance Plan each year to identify

and prioritize the tax issues that should

be addressed through regulations, revenue rulings, revenue procedures, notices,

and other published administrative guidance. The 2020-2021 Priority Guidance

Plan will identify guidance projects that

the Treasury Department and the Service intend to actively work on as priorities during the period from July 1, 2020,

through June 30, 2021.

The Treasury Department and the Service recognize the importance of public

input in formulating a Priority Guidance

Plan that focuses resources on guidance

items that are most important to taxpayers

and tax administration. Published guidance plays an important role in increasing

voluntary compliance by helping to clarify ambiguous areas of the tax law. The

published guidance process is most successful if the Treasury Department and the

Service have the benefit of the experience

and knowledge of taxpayers and practitioners who must apply the rules implementing the tax laws.

In reviewing recommendations and selecting additional projects for inclusion on

the 2020-2021 Priority Guidance Plan, the

Treasury Department and the Service will

consider the following:

1. Whether the recommended guidance

resolves significant issues relevant to

a broad class of taxpayers;

2. Whether the recommended guidance

reduces controversy and lessens the

burden on taxpayers or the Service;

3. Whether the recommended guidance

relates to recently enacted legislation;

4. Whether the recommendation involves existing regulations or other

guidance that is outdated, unnecessary, ineffective, insufficient, or

unnecessarily burdensome and that

should be modified, streamlined, expanded, replaced, or withdrawn;

5. Whether the recommended guidance

would be in accordance with Executive Order 13771 (82 FR 9339), Executive Order 13777 (82 FR 12285),

Executive Order 13789 (82 FR

19317), or other executive orders.

6. Whether the recommended guidance

promotes sound tax administration;

See https://www.fema.gov/coronavirus/disaster-declarations.

Bulletin No. 2020–27

7

June 29, 2020

7.

Whether the Service can administer

the recommended guidance on a uniform basis; and

8. Whether the recommended guidance

can be drafted in a manner that will

enable taxpayers to easily understand

and apply the guidance.

Please submit recommendations for

guidance by Wednesday, July 22, 2020,

for possible inclusion on the original

2020-2021 Priority Guidance Plan. Taxpayers may, however, submit recommendations for guidance at any time during

the year. The Treasury Department and

the Service will update the 2020-2021 Priority Guidance Plan periodically to reflect

additional guidance that the Treasury Department and the Service intend to publish

during the plan year. The periodic updates

allow the Treasury Department and the

Service to respond in a timely manner to

the need for additional guidance that may

arise during the plan year.

Taxpayers are not required to submit

recommendations for guidance in any

particular format. Taxpayers should,

however, briefly describe the recommended guidance and explain the need

for the guidance. In addition, taxpayers

may include an analysis of how the issue

should be resolved. For recommendations to modify, streamline, or withdraw

existing regulations or other guidance,

taxpayers should explain how the changes would reduce taxpayer cost and/or

burden or benefit tax administration. It

would be helpful if taxpayers suggesting

more than one guidance project prioritize

the projects by order of importance. If a

large number of projects are being suggested, it would be helpful if the projects

were grouped by subject matter and then

in terms of high, medium, or low priority. Requests for guidance in the form

of petitions for rulemaking will be considered with other recommendations for

guidance in accordance with the considerations described in this notice.

Taxpayers are strongly encouraged to

submit recommendations for guidance

electronically via the Federal eRulemaking Portal at www.regulations.gov (type

IRS-2020-0015 in the search field on the

regulations.gov homepage to find this notice and submit recommendations). The

IRS expects to have limited personnel

June 29, 2020

available to process recommendations

that are submitted on paper through the

mail. Until further notice, any recommendations submitted on paper will be considered to the extent practicable. Taxpayers

submitting recommendations by mail

should send them to:

Internal Revenue Service

Attn: CC:PA:LPD:PR (Notice 202047) Room 5203

P.O. Box 7604

Ben Franklin Station

Washington, D.C. 20044

All recommendations for guidance

submitted by the public in response to

this notice will be available for public inspection and copying in their entirety. For

further information regarding this notice,

contact Emily M. Lesniak of the Office of

the Associate Chief Counsel (Procedure

and Administration) at (202) 317-3400

(not a toll-free number).

Notice 2020-49

I. PURPOSE

On March 13, 2020, the President of

the United States issued an emergency

declaration under the Robert T. Stafford

Disaster Relief and Emergency Assistance

Act (42 U.S.C. 5121 et seq.) in response

to the ongoing Coronavirus Disease 2019

(COVID-19) pandemic (Emergency Declaration). The Emergency Declaration instructed the Secretary of the Treasury “to

provide relief from tax deadlines to Americans who have been adversely affected by

the COVID-19 emergency, as appropriate,

pursuant to 26 U.S.C. 7508A(a).” This notice postpones to December 31, 2020, the

due dates for making investments, making

reinvestments, and expending amounts for

construction of real property under § 45D

of the Internal Revenue Code (Code) due

to be performed or expended on or after

April 1, 2020, and before December 31,

2020.

II. BACKGROUND

Section 38(b) of the Code provides a

credit against income taxes for certain

business credits, including the new mar-

8

kets tax credit determined under § 45D(a).

See § 38(b)(13).

Under § 45D(a)(1), a taxpayer may

claim the new markets tax credit on certain credit allowance dates described in

§ 45D(a)(3) over a 7-year credit period

with respect to a qualified equity investment (QEI) in a qualified community

development entity (CDE) described in

§ 45D(c).

Under § 45D(b), in general, a QEI

means any equity investment in a CDE

if: (A) the investment is acquired by the

taxpayer at its original issue (directly or

through an underwriter) solely in exchange for cash; (B) substantially all of

such cash is used by the CDE to make

qualified low-income community investments (QLICIs); and (C) the investment is

designated for purposes of § 45D as a QEI

by the CDE.

Section 45D(c)(1) provides that a domestic corporation or partnership is a

CDE if: (A) the primary mission of the

entity is serving, or providing investment

capital for, low-income communities (as

defined in § 45D(e)) or low-income persons; (B) the entity maintains accountability to residents of low-income communities through their representation on any

governing board of the entity or on any

advisory board to the entity; and (C) the

entity is certified by the Secretary of the

Treasury or his delegate (Secretary) as a

qualified CDE.

Section 45D(d)(1) defines a QLICI as:

(A) any capital or equity investment in,

or loan to, any qualified active low-income community business (as defined in

§ 45D(d)(2)); (B) the purchase from another qualified CDE of any loan made by

such entity that is a QLICI; (C) financial

counseling and other services specified

in regulations prescribed by the Secretary

to businesses located in, and residents of,

low-income communities; and (D) any

equity investment in, or loan to, any qualified CDE.

Section 45D(d)(2)(A) defines a qualified active low-income community business (QALICB), with respect to any taxable year, as any corporation (including a

nonprofit corporation) or partnership if for

such year, among other requirements, (i) at

least 50 percent of the total gross income

of the entity is derived from the active

Bulletin No. 2020–27

conduct of a qualified business within any

low-income community, (ii) a substantial

portion of the use of the tangible property

of the entity (whether owned or leased) is

within any low-income community, (iii)

a substantial portion of the services performed for the entity by its employees are

performed in any low-income community,

and (iv) less than 5 percent of the average of the aggregate unadjusted bases of

the property of the entity is attributable to

nonqualified financial property (as defined

in § 1397C(e)).

Under § 45D(d)(3), with certain exceptions, a qualified business is any

trade or business within the meaning of

§ 1397C(d) of the Code. Together, these

sections and § 1.45D-1(d)(5)(ii) of the

Income Tax Regulations provide that the

rental to others of real property located in

any low-income community is a qualified

business (for purposes of § 45D) only if

the property is not residential rental property (as defined in § 168(e)(2)(A) of the

Code) and there are substantial improvements located on the real property.

Section 1.45D-1(c)(5)(i) provides a

safe harbor with respect to a CDE’s investment in QLICIs. Generally, a CDE

must invest at least 85 percent of its QEI

in QLICIs.

Section 1.45D-1(c)(5)(iv) provides the

timing requirement of a CDE’s investment

in QLICIs. Specifically, it provides that a

taxpayer’s cash investment received by a

CDE is treated as invested in a QLICI as

defined in § 1.45D-1(d)(1) only to the extent that the cash is so invested within the

12-month period beginning on the date the

cash is paid by the taxpayer (directly or

through an underwriter) to the CDE. Thus,

a CDE generally has a 12-month period to

invest cash it receives that is designated

as a QEI in a QLICI under § 1.45D-1(c)

(5)(iv).

Section 1.45D-1(d)(2)(i) provides in

general that amounts received by a CDE

in payment of, or for, capital, equity or

principal with respect to a QLICI must be

reinvested by the CDE in a QLICI no later

than 12 months from the date of receipt

to be treated as continuously invested in

a QLICI.

Under § 1.45D-1(d)(4)(i)(E), in general, with respect to any taxable year, a

QALICB must have less than 5 percent of

the average of the aggregate unadjusted

Bulletin No. 2020–27

basis of its property that is attributable to

nonqualified financial property. Nonqualified financial property means debt, stock,

partnership interests, options, futures contracts, forward contracts, warrants, notional principal contracts, annuities, and

other similar property except reasonable

amounts of working capital held in cash

and other forms, and certain debt instruments. See § 1.45D-1(d)(4)(i)(E)(1)(i);

see also § 1397C(e).

Section 1.45D-1(d)(4)(i)(E)(2) provides that the proceeds of a capital or

equity investment or loan by a CDE that

will be expended for construction of real

property within 12 months after the date

the investment or loan is made are treated

as a reasonable amount of working capital

under § 1.45D-1(d)(4)(i)(E)(1)(i).

III. TIME-SENSITIVE ACTIONS

AFFECTED BY COVID-19

EMERGENCY

A time-sensitive action to which this

notice applies is an action required to be

performed by a CDE or QALICB, which

is due to be performed on or after April

1, 2020, and before December 31, 2020,

in order to meet the requirements under

§§ 1.45D-1(c)(5)(iv), 1.45D-1(d)(2)(i), or

1.45D-1(d)(4)(i)(E)(2).

IV. RELIEF FOR SPECIFIED TIMESENSITIVE ACTIONS AFFECTED BY

COVID‑19 EMERGENCY

A. TIME LIMIT FOR MAKING

INVESTMENTS

For purposes of § 1.45D-1(c)(5)(iv), if

the last day of the 12-month period during

which a CDE must invest the cash it receives in a QLICI would fall on or after

April 1, 2020, and before December 31,

2020, the last day of the 12-month period is postponed to December 31, 2020.

Accordingly, the 12-month investment

requirement is treated as timely satisfied

if the cash is so invested by December 31,

2020.

which a CDE must reinvest in a QLICI

amounts it receives, in payment of, or for

capital, equity or principal with respect to

a QLICI, would fall on or after April 1,

2020, and before December 31, 2020, the

last day of the 12-month period is postponed to December 31, 2020. Accordingly, the 12-month reinvestment requirement is treated as timely satisfied to the

extent that the amounts are reinvested in a

QLICI by December 31, 2020.

C. TIME LIMIT FOR EXPENDING

AMOUNTS FOR CONSTRUCTION

OF REAL PROPERTY

For purposes of § 1.45D-1(d)(4)(i)(E)(1)

and (2), if the last day of the 12-month period for a QALICB to expend the proceeds

of a capital or equity investment or loan

by a CDE for construction of real property

would fall on or after April 1, 2020, and

before December 31, 2020, the last day

of the 12-month period is postponed to

December 31, 2020. Accordingly, the proceeds are treated as a reasonable amount

of working capital of the QALICB and the

12-month requirement is treated as timely

satisfied if the proceeds are so expended

by December 31, 2020.

D. OTHER REQUIREMENTS

Except as expressly provided in this

notice, all other rules and requirements of

§ 45D and § 1.45D-1 continue to apply by

their terms.

V. DRAFTING INFORMATION

The principal authors of this notice

are Dillon Taylor and Michael J. Torruella Costa, Office of the Associate Chief

Counsel (Passthroughs and Special Industries). For further information regarding

this notice, contact Dillon Taylor or Michael J. Torruella Costa at (202) 317-4137

(not a toll-free number).

B. TIME LIMIT FOR MAKING

REINVESTMENTS

For purposes of § 1.45D-1(d)(2)(i), if

the last day of the 12-month period during

9

June 29, 2020

26 CFR 601.105: Examination of returns and claims

for refund, credit, or abatement; determination of

correct tax liability.

(Also Part I, § 1391.)

Rev. Proc. 2020-16

SECTION 1. PURPOSE

This revenue procedure provides an

automatic procedure for a State or local

government in which an empowerment

zone is located to extend the empowerment zone designation made under

section 1391(a) of the Internal Revenue

Code (Code). Specifically, the automatic

procedure under section 3.01 of this revenue procedure provides that a State or

local government that nominated an empowerment zone is deemed to extend until

December 31, 2020, the termination date

designated by that State or local government in its empowerment zone nomination (designated termination date), as described in section 1391(d)(1)(B). Section

3.02 of this revenue procedure provides a

procedure for such State or local government to decline this deemed extension of

its designated termination date.

SECTION 2. BACKGROUND

.01 Empowerment Zones. An empowerment zone is an area of high poverty

and unemployment located in an urban or

rural area that is designated under section

1391(a), as appropriate, by the Secretary

of Housing and Urban Development or

the Secretary of Agriculture, each Secretary an “appropriate Secretary” under

section 1393(a)(1) of the Code. See section 1391(a); see generally section 1393.

Qualifying taxpayers and businesses located within the boundaries of empowerment zones are eligible for Federal

income tax incentives to promote economic development in those designated

areas. See section 1396 of the Code (regarding empowerment zone employment

credits); section 1397A of the Code (providing an increase in expensing under

section 179 of the Code); section 1397B

of the Code (providing nonrecognition of

gain on rollover of empowerment zone

investments).

.02 Duration of Empowerment Zone

Designation and Extensions.

June 29, 2020

(1) Initial duration of designation.

As originally enacted in 1993, section

1391(d)(1) provided that the designation

of an empowerment zone remained in effect during the period beginning on the

date of the designation and ending on the

earliest of (i) the close of the 10th calendar year beginning on or after such date of

designation (statutory termination date),

(ii) the termination date designated by a

State or local government in its nomination (that is, the designated termination

date), or (iii) the date the appropriate Secretary revokes the designation. See section

13301(a) of the Omnibus Budget Reconciliation Act of 1993 (OBRA of 1993),

Public Law 103-66, 107 Stat. 312 (August

10, 1993) (adding section 1391(d)(1) to

the Code).

(2) First extension of empowerment

zone designations. Section 112 of the

Community Renewal Tax Relief Act of

2000 (CRTA of 2000), enacted as part

of the Consolidated Appropriations Act,

2001, Appendix G, Public Law 106-554,

114 Stat. 2763A-587 (December 21,

2000), amended section 1391(d)(1)(A)

(i) to extend the designation of empowerment zones through December 31, 2009,

regardless of the designated termination

date provided by a State or local government in its nomination. See also part II

of Notice 2013-38, 2013-25 I.R.B. 1251.

Therefore, following the enactment of the

CRTA of 2000, the respective nominations

for all empowerment zones were treated at

that time as having a designated termination date of December 31, 2009. See id.

(3) Subsequent extensions of statutory

termination date. The statutory termination date has been extended several additional times, most recently in 2019 to

extend that date to December 31, 2020.

See section 118(a) of the Taxpayer Certainty and Disaster Tax Relief Act of 2019

(TCDTRA of 2019), enacted as part of

the Further Consolidated Appropriations

Act, 2020, Division Q, Public Law 11694, 133 Stat. 2534 (December 20, 2019).

See also section 40311(a)(1) of the Bipartisan Budget Act of 2018 (BBA of 2018),

Public Law 115-123, 132 Stat. 64 (February 9, 2018); section 171(a)(1) of the

Protecting Americans from Tax Hikes Act

of 2015 (PATH ACT of 2015), enacted as

part of the Consolidated Appropriations

Act, 2016, Division Q, Public Law 114-

10

113, 129 Stat. 2242 (December 18, 2015);

section 139(a) of the Tax Increase Prevention Act of 2014 (TIPA of 2014), Public

Law 113-295, 128 Stat. 4010 (December

19, 2014); section 327(a) of the American Taxpayer Relief Act of 2012 (ATRA

of 2012), Public Law 112-240, 126 Stat.

2313 (January 2, 2013); section 753(a)(1)

of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation

Act of 2010 (TRUIRJCA of 2010), Public

Law 111-312, 124 Stat. 3296 (December

17, 2010).

(4) Subsequent extensions of designated termination date. After each subsequent extension of the statutory termination date, the Department of the Treasury

(Treasury Department) and the Internal

Revenue Service (IRS) have issued guidance for automatically treating a designated termination date as extended to the date

of the amended statutory termination date,

unless the State or local government declined the extension in a written notification to the IRS. See part III of Notice 201847, 2018-21 I.R.B. 621 (deemed extension

to December 31, 2017); part III of Notice

2016-28, 2016-15 I.R.B. 576 (deemed

extension to December 31, 2016); part

III of Notice 2015-26, 2015-13 I.R.B.

814 (deemed extension to December 31,

2014); part III of Notice 2013-38 (deemed

extension to December 31, 2013). The

Treasury Department and the IRS issued

each of these notices pursuant to a specific

grant of authority provided in the statutes

described in section 2.02(3) of this revenue procedure. See section 40311(a)(2) of

the BBA of 2018; section 171(a)(2) of the

PATH ACT of 2015; section 139(b) of the

TIPA of 2014; section 327(c) of the ATRA

of 2012; section 753(c) of TRUIRJCA of

2010.

(5) Current designated termination

date of all empowerment zones. The IRS

has received no written request from a

State or local government to decline any

extension otherwise provided under Notice 2013-38, Notice 2015-26, Notice

2016-28, or Notice 2018-47. Therefore,

as of June 11, 2020, all empowerment

zones have a designated termination date

of December 31, 2017, the latest statutory

termination date prior to enactment of the

TCDTRA of 2019.

.03 Statutory authority to extend

current designated termination date.

Bulletin No. 2020–27

Section 118(b) of the TCDTRA of 2019

provides that, if a nomination for an empowerment zone includes a designated

termination date of December 31, 2017,

section 1391(d)(1)(B) does not apply to

the designation if, after the date of enactment of the TCDTRA of 2019, the

State or local government that made

such nomination extends the termination date to December 31, 2020 (that is,

the statutory designation date), in such

manner as may be provided by the Secretary of the Treasury (or the Secretary’s

designee). Accordingly, to provide procedures to extend a designated termination date to December 31, 2020, section

3.01 of this revenue procedure sets forth

an automatic extension procedure and

section 3.02 of this revenue procedure

sets forth a written declination procedure consistent with the notices described above.

SECTION 3. AUTOMATIC

EXTENSION OF DESIGNATED

TERMINATION DATE

.01 Automatic extension. Subject to

declination by written notification pur-

Bulletin No. 2020–27

suant to section 3.02 of this revenue procedure, the designated termination date

with regard to all empowerment zones is

deemed to be extended from December

31, 2017 to December 31, 2020. Accordingly, the designated termination date is

deemed to be the same date as the date

provided in section 1391(d)(1)(A)(i) (that

is, December 31, 2020). Therefore, section 1391(d)(1)(B) does not apply and the

designation of all empowerment zones

will remain in effect until December 31,

2020 (unless terminated at an earlier date

by the appropriate Secretary under section

1391(d)(1)(C)).

.02 Declination of automatic extension.

(1) In general. Pursuant to section

3.02(2) of this revenue procedure, a State

or local government may decline the extension of a designated termination date

described in section 3.01 of this revenue

procedure.

(2) Form and manner.

(a) Deadline for written notification. To

make a declination under section 3.02(1)

of this revenue procedure, not later than

August 10, 2020, the State or local government must provide written notification

to the IRS that affirmatively declines the

11

December 31, 2020, designated termination date extension under section 3.01 of

this revenue procedure.

(b) Electronic delivery. This written

notification must be sent by electronic

facsimile to Bruce Chang, CC:ITA:B07,

at facsimile number (855) 576-2341.

SECTION 4. EFFECT ON OTHER

DOCUMENTS

Notice 2018-47 is obsoleted for taxable

years beginning after 2017.

SECTION 5. EFFECTIVE DATE

This revenue procedure is effective

June 11, 2020.

SECTION 6. DRAFTING

INFORMATION

The principal author of this revenue

procedure is Bruce Chang of the Office

of Associate Chief Counsel (Income Tax

& Accounting). For further information

regarding this revenue procedure, contact

Mr. Chang at (202) 317-4870 (not a tollfree number).

June 29, 2020

Part III

NOTE. This revenue procedure will be reproduced as the next revision of IRS Publication 4436, General Rules and Specifications for Substitute Form 941, Schedule

B (Form 941), Schedule D (Form 941), Schedule R (Form 941), and Form 8974.

Rev. Proc. 2020-31

TABLE OF CONTENTS

Part 1 –

Section 1.1 – Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 1.2 – What’s New. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Section 1.3 – Reminders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Section 1.4 – General Requirements for Reproducing IRS Official Form 941, Schedule B,

Schedule D, Schedule R, and Form 8974. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Section 1.5 – Reproducing Form 941, Schedule B, Schedule D, Schedule R, and Form 8974 for

Software-Generated Paper Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Section 1.6 – Specific Instructions for Schedule D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Section 1.7 – Specific Instructions for Schedule R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Section 1.8 – Specific Instructions for Form 8974. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Section 1.9 – Office of Management and Budget (OMB) Requirements for Substitute Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Section 1.10 – Order Forms and Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Section 1.11 – Effect on Other Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Section 1.12 – Helpful Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Section 1.13 – Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Part 1

Section 1.1 – Purpose

.01 The purpose of this Revenue Procedure 2020-31, IRB 2020-27, at IRS.gov/irb/2020-27_IRB#RP-2020-31, is to provide general rules and specifications from the IRS for paper and computer-generated substitutes for Form 941, Employer’s QUARTERLY Federal Tax Return; Schedule

B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors (referred to in this

revenue procedure as “Schedule B”); Schedule D (Form 941), Report of Discrepancies Caused

by Acquisitions, Statutory Mergers, or Consolidations (referred to in this revenue procedure as

“Schedule D”); Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers (referred to in this revenue procedure as “Schedule R”); and Form 8974, Qualified Small Business

Payroll Tax Credit for Increasing Research Activities.

Caution. Before creating a substitute Form 941, see Pub. 1167, General Rules and Specifications

for Substitute Forms and Schedules, for additional rules and specifications for payment vouchers

(Vouchers), printing in margins (Marginal Printing), and additional instructions (Additional Instructions for All Forms).

Note. Substitute territorial forms (941-PR, Planilla para la Declaración Federal TRIMESTRAL

del Patrono; 941-SS, Employer’s QUARTERLY Federal Tax Return (American Samoa, Guam,

the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands); and Anexo B

(Formulario 941-PR), Registro de la Obligación Contributiva para los Despositantes de Itinerario

Bisemanal), should also conform to the specifications outlined in this revenue procedure.

.02 This revenue procedure provides information for substitute Form 941, Schedule B, Schedule

D, Schedule R, and Form 8974. If you need more in-depth information on who must complete

these forms and how to complete them, see the Instructions for Form 941, the Instructions for

June 29, 2020

12

Bulletin No. 2020–27

Schedule B, the Instructions for Schedule D, the instructions included with Schedule R, the Instructions for Form 8974, and Pub. 15, Employer’s Tax Guide, or visit IRS.gov.

Note. Failure to produce acceptable substitutes of the forms and schedules listed in this revenue

procedure may result in delays in processing and penalties.

.03 Forms that completely follow the guidelines in this revenue procedure and are exact replicas

of the official IRS forms do not need to be submitted to the IRS for specific approval. Substitute

forms and schedules need to be scanned using IRS scanning equipment.

If you are uncertain of any specification and want clarification, do the following.

1.

Submit a letter citing the specification.

2.

State your understanding of the specification.

3.

Enclose an example (if appropriate) of how the form would appear if produced using your

understanding.

4.

Be sure to include your name, complete address, phone number, and, if applicable, your email

address with your correspondence. Send your request to SCRIPS@IRS.gov or SubstituteForms@IRS.gov, or use the following address.

Internal Revenue Service

Attn: Substitute Forms Program SE:W:CAR:MP:P:TP

1111 Constitution Ave. NW, Room 6554

Washington, DC 20224

Note. Allow at least 30 days for the IRS to respond.

.04 However, software developers and form producers should send a blank copy of their substitute

Form 941 and Schedule B in Portable Document Format (PDF) to SCRIPS@IRS.gov. The purpose

is not specifically for approval but to assist the IRS in preparing to scan these forms. Submitters

will only receive comments if a significant problem is discovered through this process.

Submitters are not expected to delay marketing their forms in order to receive feedback. Submitters must not include any “live” taxpayer data on any substitute form submitted for review.

.05 The following six-digit form ID codes are used on Form 941, the schedules for Form 941, and

Form 8974.

•

Official paper forms: 950120 (Form 941, page 1); 950220 (Form 941, page 2); 950920

(Form 941, page 3); 951020 (Form 941, page 4); 960311 (Schedule B); 950420 (Schedule R,

page 1); 950520 (Schedule R, page 2); and 950817 (Form 8974).

•

Substitute 6x10 grids: 970120 (Form 941, page 1); 970220 (Form 941, page 2); 970920

(Form 941, page 3); 971020 (Form 941, page 4); 970311 (Schedule B); 970420 (Schedule R,

page 1); 970520 (Schedule R, page 2); and 970817 (Form 8974).

Generally, the last two digits of the form ID code represent the last year in which the IRS made

major formatting changes to the layout of the form.

Note. Page 4 of Form 941 (page intentionally left blank) is not required to be filed with the IRS

as part of a substitute Form 941. However, if page 4 of the substitute Form 941 is filed, it must

include the form ID code.

Bulletin No. 2020–27

13

June 29, 2020

.06 This revenue procedure will be updated only if there are major formatting changes to the

layout of the forms or there are other changes that impact the processing of substitute forms. This

revenue procedure won’t be updated solely because a line is changed to “Reserved for future use.”

Section 1.2 – What’s New

Due to the enactment of P.L. 116-127, Families First Coronavirus Response Act (FCCRA), and

P.L. 116-136, The Coronavirus Aid, Relief, and Economic Security (CARES) Act, we have made

significant changes to Form 941 and Schedule R (Form 941). See the Instructions for Form 941 at

IRS.gov/Form941 and the Instructions for Schedule R (Form 941) at IRS.gov/Form941 for information on the changes made to these forms.

Due to the COVID-19 pandemic, CPEOs are permitted to file a paper Form 941 and its accompanying schedules in lieu of electronic submissions for the second, third, and fourth quarters of

calendar year 2020. For more information about the waiver, see Notice 2020-35, available at IRS.

gov/pub/irs-drop/n-20-35.

Caution. Don’t use the April 2020 revision of Form 941 to report employment taxes for the first

quarter of 2020. Use the January 2020 revision of Form 941 to report employment taxes for the

first quarter of 2020.

Section 1.3 – Reminders

.01 Qualified small business payroll tax credit for increasing research activities. For tax years

beginning after December 31, 2015, a qualified small business may elect to claim up to $250,000

of its credit for increasing research activities as a payroll tax credit against the employer’s share of

social security tax. The portion of the credit used against the employer’s share of social security

tax is allowed in the first calendar quarter beginning after the date that the qualified small business

filed its income tax return electing to take the payroll tax credit. The election and determination

of the credit amount that will be used against the employer’s share of social security tax is made

on Form 6765, Credit for Increasing Research Activities. The amount from Form 6765, line 44,

must then be reported on Form 8974, Qualified Small Business Payroll Tax Credit for Increasing

Research Activities. Form 8974 is used to determine the amount of the credit that can be used in

the current quarter. The amount from Form 8974, line 12, is reported on Form 941, line 11a. If

you are claiming the research payroll tax credit on your Form 941, you must attach Form 8974 to

that Form 941.

.02 Draft forms. Draft forms can be found at IRS.gov/DraftForms.

.03 Certification program for professional employer organizations. The Stephen Beck, Jr.,

Achieving a Better Life Experience Act of 2014 required the IRS to establish a voluntary certification program for professional employer organizations (PEOs). PEOs handle various payroll

administration and tax reporting responsibilities for their business clients and are typically paid a

fee based on payroll costs. To become and remain certified under the certification program, certified professional employer organizations (CPEOs) must meet tax status, background, experience,

business location, financial reporting, bonding, and other requirements described in sections 3511

and 7705 and related published guidance. The IRS began accepting applications for PEO certifica-

June 29, 2020

14

Bulletin No. 2020–27

tion in July 2016. Certification as a CPEO affects the employment tax liabilities of both the CPEO

and its customers. A CPEO is generally treated as the employer of any individual performing

services for a customer of the CPEO and covered by a contract described in section 7705(e)(2)

between the CPEO and the customer (CPEO contract), but only for wages and other compensation

paid to the individual by the CPEO. For more information, visit the IRS website at IRS.gov/CPEO.

CPEOs must generally file Form 941 and Schedule R electronically. However, CPEOs are permitted to file a paper Form 941 and its accompanying schedules in lieu of electronic submission for

the second, third, and fourth quarters of calendar year 2020. For more information about a CPEO’s

requirement to file electronically, and the waiver for 2020, see Revenue Procedure 2017-14, 20173 I.R.B. 426, available at IRS.gov/irb/2017-03_IRB#RP-2017-14, and Notice 2020-35, available

at IRS.gov/pub/irs-drop/n-20-35, respectively.

Section 1.4 – General Requirements for Reproducing IRS Official Form 941, Schedule B, Schedule D,

Schedule R, and Form 8974

.01 Submit substitute Form 941, Schedule B, Schedule D, Schedule R, and Form 8974 to the IRS

for specifications review. Substitute Form 941, Schedule B, Schedule D, Schedule R, and Form

8974 that completely conform to the specifications contained in this revenue procedure do not

require prior approval from the IRS, but should be submitted to SCRIPS@IRS.gov to ensure that

they conform to IRS format and scanning specifications.

.02 Print the form on standard 8.5-inch wide by 11-inch paper.

.03 Use white paper that meets generally accepted weight, color, and quality standards (minimum

20 lb. white bond paper).

Note. Reclaimed fiber in any percentage is permitted provided that the requirements of this standard are met.

.04 The IRS prefers printing Form 941 on both sides of a single sheet of paper, but it is acceptable

to print on one side of each of two separate sheets of paper.

.05 Make the substitute paper form as identical to the official form as possible.

.06 Print the substitute form using nonreflective black (not blue or other-colored) ink. Printing in

an ink color other than black may reduce readability in the scanning process. This may result in

figures being too faint to be recognizable.

.07 Use typefaces that are substantially identical in size and shape to the official form and use rules

and shading (if used) that are substantially identical to those on the official form. Use font size as

large as possible within the fields.

.08 In the same location as shown on the official IRS forms, print the six-digit form ID code (if one

exists on the official form) on each form using nonreflective black, carbon-based, 12-point font.

The use of non-OCR-A font may reduce readability for scanning. Use the official form to develop

your substitute form.

Note. Maintain as much white space as possible around the form ID code. Do not allow character

strings to print adjacent to the code.

Bulletin No. 2020–27

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June 29, 2020

The year digits represent the last year in which the IRS made major formatting changes to the

layout of the form. Therefore, the last two digits may not be the same as the current tax year. For

the tax period starting April 2020 and until this revenue procedure is superseded, print “950120”

on Form 941, page 1; “950220” on Form 941, page 2; “950920” on Form 941, page 3; “951020”

on Form 941, page 4; “960311” on Schedule B; “950420” on Schedule R, page 1; “950520” on

Schedule R, page 2; and “950817” on Form 8974. See Section 1.5 for information on form ID

codes for software-generated forms.

Note. Page 4 of Form 941 (page intentionally left blank) is not required to be filed with the IRS

as part of a substitute Form 941. However, if page 4 of the substitute Form 941 is filed, it must

include the form ID code.

.09 Print the OMB number in the same location as on the official form. Be sure to include the

OMB number on Form 941, Schedule B, Schedule D, Schedule R, and Form 8974.

.10 Print all entry boxes and checkboxes exactly as shown (location and size) on the official

forms.

Note. Instead of a four-sided checkbox for the entry, just the bottom line of the box can be used as

long as the location and size remain the same.

.11 Print “For Privacy Act and Paperwork Reduction Act Notice, see the back of the Payment

Voucher.” at the bottom of page 1 of Form 941.

.12 Print “For Paperwork Reduction Act Notice, see separate instructions.” at the bottom of

Schedule B and Schedule D.

.13 Print “For Paperwork Reduction Act Notice, see the separate instructions.” at the bottom of

Schedule R.

.14 Print “For Paperwork Reduction Act Notice, see the separate instructions.” at the bottom of

Form 8974.

.15 Do not print the form catalog number (“Cat. No.”) at the bottom of the forms or instructions.

Instead, print your IRS-issued three-letter substitute form source code in place of the catalog

number on the left at the bottom of page 1 of Form 941, Schedule B, Schedule D, Schedule R,

and Form 8974.

Note. You can obtain a three-letter substitute form source code by requesting it by email at SubstituteForms@IRS.gov. Please enter “Substitute Forms” on the subject line.

.16 Do not print the Government Printing Office (GPO) symbol at the bottom of the forms or

instructions.

Section 1.5 – Reproducing Form 941, Schedule B, Schedule D, Schedule R, and Form 8974 for

Software-Generated Paper Forms

.01 You may use the PDF files to develop the layout for your forms. Draft forms found at IRS.

gov/DraftForms can be used to develop interim formats until the forms are finalized. When forms

become finalized, they are posted and can be found at IRS.gov/Forms. You may use 6x10 grid

formats to develop software versions of Form 941, Schedule B, Schedule D, Schedule R, and

Form 8974.

June 29, 2020

16

Bulletin No. 2020–27

Please follow the specifications exactly to develop the fields.

.02 If you are developing software using the 6x10 grid, you may make the following modifications.

•

“970120” for Form 941, page 1; “970220” for Form 941, page 2; “970920” for Form 941,

page 3; “971020” for Form 941, page 4; “970311” for Schedule B; “970420” for Schedule R,

page 1; “970520” for Schedule R, page 2; and “970817” for Form 8974, as the form ID codes.

Note. Maintain as much white space as possible around the form ID code. Do not allow character strings to print adjacent to the code.

•

Place all 6x10 grid boxes and entry spaces in the same field locations as indicated on the

official forms.

•

Use single lines for “Employer Identification Number (EIN)” and other entry areas in the entity section of Form 941, pages 1, 2, and 3; Schedule B; Schedule R, pages 1 and 2; and Form

8974.

•

Reverse type is not needed as shown on the official form.

•

Do not pre-print decimal points in the data boxes. However, where the amounts are required,

the amounts should be printed with decimal points and place holders for cents.

•

Delete the pre-printed formatting in any “date” boxes.

•

Use a single box for “Personal Identification Number (PIN)” on Form 941.

•

You may delete all shading when using the 6x10 grid format.

.03 If producing both the form and the data or the form only, print your three-letter source code

at the bottom of Form 941, page 1; Schedule B; Schedule D; Schedule R, page 1; or Form 8974.

See Section 1.4.15.

.04 If producing only the data on the form, print your four-digit software industry vendor code

on Form 941. The four-digit vendor code preceded by four zeros and a slash (0000/9876) must

be pre-printed. If you have a valid vendor code issued to you through the National Association of

Computerized Tax Processors (NACTP), you should use that code. If you do not have a valid vendor code, contact the NACTP via email at president@nactp.org for information on these codes.

.05 Print “For Privacy Act and Paperwork Reduction Act Notice, see the back of the Payment

Voucher.” at the bottom of Form 941, page 1.

.06 Print “For Paperwork Reduction Act Notice, see separate instructions.” at the bottom of

Schedule B and Schedule D.

.07 Print “For Paperwork Reduction Act Notice, see the separate instructions.” at the bottom of

Schedule R, page 1.

.08 Print “For Paperwork Reduction Act Notice, see the separate instructions.” at the bottom of

Form 8974.

.09 Be sure to print the OMB number in the same location as on the official forms on substitute

Form 941, Schedule B, Schedule D, Schedule R, and Form 8974.

.10 Do not print the form catalog number (“Cat. No.”) at the bottom of the forms or instructions.

Bulletin No. 2020–27

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June 29, 2020

.11 Do not print the Government Printing Office (GPO) symbol at the bottom of the forms or

instructions.

.12 To ensure accurate scanning and processing, enter data on Form 941, Schedule B, Schedule D,

Schedule R, and Form 8974 as follows.

•

Display/print the name and EIN on all pages and attachments in the proper associated fields.

•

Use 12-point (minimum 10-point) Courier font (where possible).

•

Omit dollar signs, but use commas when showing amounts.

•

Except for Form 941, lines 1 and 2, leave blank any data field with a value of zero.

•

Enter negative amounts with a minus sign. For example, report “-10.59” instead of “(10.59).”

Note. The IRS prefers that you use a minus sign for negative amounts instead of parentheses

or some other means. However, if your software only allows for parentheses in reporting

negative amounts, you may use them.

Section 1.6 – Specific Instructions for Schedule D

.01 To properly file and to reduce delays and contact from the IRS, Schedule D must be produced

as close as possible to the official form.

.02 Use Schedule D to explain why you have certain discrepancies. See the Instructions for Schedule D for more information. In many cases, the information on Schedule D helps the IRS resolve

discrepancies without contacting you.

.03 If a substitute Schedule D is not submitted in similar format to the official IRS schedule, the

substitutes may be returned, you may be contacted by the IRS, delays in processing may occur,

and you may be subject to penalties.

Section 1.7 – Specific Instructions for Schedule R

Schedule R has been redesigned to allow the new lines from the April 2020 revision of Form 941

to be reported on Schedule R.

Caution. Columns x and y, if applicable, are used only on a Schedule R filed with the second

quarter 2020 Form 941. Don’t enter any amounts in columns x and y for the third or fourth quarter

of 2020.

.01 To properly file and to reduce delays and contact from the IRS, Schedule R and Continuation

Sheets for Schedule R must be produced as close as possible to the official form.

Note. Do not present the information in spreadsheet or similar format. We may not be able to

properly process nonconforming documents with an excessive number of entries. Complete as

June 29, 2020

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Bulletin No. 2020–27

many Continuation Sheets for Schedule R (Schedule R, page 2) as necessary. If Continuation

Sheets are not used or they vary in form from the official form, processing may be delayed and

you may be subject to penalties.

.02 Use Schedule R to allocate the aggregate information reported on Form 941 to each client. If

you have more than 5 clients, complete as many Continuation Sheets for Schedule R as necessary.

Attach Schedule R, including any Continuation Sheets, to your aggregate Form 941 and file it with

your return. Enter your business information carefully.

Make sure all information exactly matches the information shown on the aggregate Form 941. Compare the total of each column on Schedule R, line 9 (including your information on line 8), to the

amounts reported on the aggregate Form 941. For each column total of Schedule R, the relevant line

from Form 941 is noted in the column heading. If the totals on Schedule R, line 9, do not match the totals on Form 941, there is an error that must be corrected before submitting Form 941 and Schedule R.

.03 Do:

•

Develop and submit only conforming Schedules R,

•

Follow the format and fields exactly as on the official Schedule R, and

•

Maintain the same number of entry lines on the substitute Schedule R as on the official form.

.04 Do not:

•

Add or delete entry lines;

•

Submit spreadsheets, database printouts, or similar formatted documents instead of using the

Schedule R format to report data; and

•

Reduce or expand font size to add or delete extra data or lines.

.05 If substitute Schedules R and Continuation Sheets for Schedule R are not submitted in similar

format to the official schedule, the substitutes may be returned, you may be contacted by the IRS,

delays in processing may occur, and you may be subject to penalties.

Section 1.8 – Specific Instructions for Form 8974

.01 To properly file and to reduce delays and contact from the IRS, Form 8974 must be produced

as close as possible to the official form.

.02 Use Form 8974 only if you are claiming the qualified small business payroll tax credit for

increasing research activities.

.03 If a substitute Form 8974 is not submitted in similar format to the official IRS form, the substitutes may be returned, you may be contacted by the IRS, delays in processing may occur, and

you may be subject to penalties.

Section 1.9 – Office of Management and Budget (OMB) Requirements for Substitute Forms

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June 29, 2020

.01 The Paperwork Reduction Act (the Act) of 1995 (P.L. 104-13) requires the following.

•

OMB approves all IRS tax forms that are subject to the Act.

•

Each IRS form contains the OMB approval number, if assigned. The official OMB numbers

may be found on the official IRS-printed forms.

•

Each IRS form (or its instructions) states:

1. Why the IRS needs the information,

2. How it will be used, and

3. Whether or not the information is required to be furnished to the IRS.

.02 This information must be provided to any users of official or substitute IRS forms or instructions.

.03 The OMB requirements for substitute IRS forms are the following.

•

Any substitute form or substitute statement to a recipient must show the OMB number as it

appears on the official form.

•

For Form 941, Schedule B, Schedule D, Schedule R, and Form 8974, the OMB number

(1545-0029) must appear exactly as shown on the official form.

•

For Form 941, Schedule B, Schedule D, Schedule R, and Form 8974, the OMB number must

use one of the following formats.

1. OMB No. 1545-0029 (preferred).

2. OMB # 1545-0029 (acceptable).

.04 If no instructions are provided to users of your forms, you must furnish to them the exact text

of the Privacy Act and Paperwork Reduction Act Notice.

Section 1.10 – Order Forms and Instructions

.01 You can order forms and instructions at IRS.gov/OrderForms.

Section 1.11 – Effect on Other Documents

.01 Revenue Procedure 2018-24, 2018-18 I.R.B. 525, dated April 30, 2018, is superseded.

June 29, 2020

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Section 1.12 – Helpful Information

.01 Please follow the specifications and guidelines to produce substitute Form 941, Schedule B,

Schedule D, Schedule R, and Form 8974.

.02 These forms are subject to review and possible changes, as required. Therefore, employers are

cautioned against overstocking supplies of privately printed substitutes.

.03 Here is a review of references that were listed throughout this document.

•

Form 941, Employer’s QUARTERLY Federal Tax Return.

•

Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors (referred to in this revenue procedure as “Schedule B”).

•

Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers,

or Consolidations (referred to in this revenue procedure as “Schedule D”).

•

Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers (referred to in

this revenue procedure as “Schedule R”).

•

Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities.

•

Substitute territorial forms (941-PR, 941-SS, and Anexo B (Formulario 941-PR)).

•

Instructions for Form 941.

•

Instructions for Schedule B (Form 941).

•

Instructions for Schedule D (Form 941).

•

Instructions for Schedule R (Form 941).

•

Instructions for Form 8974.

•

Pub. 15, Employer’s Tax Guide.

•

SCRIPS@IRS.gov for submissions.

•

SubstituteForms@IRS.gov for questions.

•

For questions:

Internal Revenue Service

Attn: Substitute Forms Program SE:W:CAR:MP:P:TP

1111 Constitution Ave. NW, Room 6554

Washington, DC 20224

Bulletin No. 2020–27

•

IRS.gov/DraftForms for draft forms.

•

IRS.gov/Forms for final forms.

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Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

­effect:

Amplified describes a situation where

no change is being made in a prior published position, but the prior position is

being extended to apply to a variation of

the fact situation set forth therein. Thus, if

an earlier ruling held that a principle applied to A, and the new ruling holds that

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

where the language in a prior ruling is being made clear because the language has

caused, or may cause, some confusion. It

is not used where a position in a prior ruling is being changed.

Distinguished describes a situation

where a ruling mentions a previously published ruling and points out an essential

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions.

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

new ruling does more than restate the substance of a prior ruling, a combination of

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

restate the valid portion of the previously published ruling in a new ruling that is

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

which a list, such as a list of the names of

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

the additions, and supersedes all prior rulings in the series.

Suspended is used in rare situations to

show that the previous published rulings

will not be applied pending some future

action such as the issuance of new or

amended regulations, the outcome of cases in litigation, or the outcome of a Service study.

Abbreviations

The following abbreviations in current use

and formerly used will appear in material

published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

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ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

i

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

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Numerical Finding List1

Bulletin 2020–27

Notices:

2020-43, 2020-27 I.R.B. 1

2020-45, 2020-27 I.R.B. 3

2020-46, 2020-27 I.R.B. 7

2020-47, 2020-27 I.R.B. 7

2020-49, 2020-27 I.R.B. 8

Revenue Procedures:

2020-16, 2020-27 I.R.B. 10

2020-31, 2020-27 I.R.B. 12

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2018–27 through 2018–52 is in Internal Revenue Bulletin

2018–52, dated December 27, 2018.

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Finding List of Current Actions on

Previously Published Items1

Bulletin 2020–27

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2018–27 through 2018–52 is in Internal Revenue Bulletin

2018–52, dated December 27, 2018.

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Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

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