# Bulletin No. 2020–27

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URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A1a04ba89f076be95

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

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2018-24 is superseded.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

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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.

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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-

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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.

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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.

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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.

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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

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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.

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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

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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

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletins are available at www.irs.gov/irb/.

We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it,
we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page
www.irs.gov) or write to the Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave.
NW, IR-6230 Washington, DC 20224.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A1a04ba89f076be95. Public record. Not legal advice.