# Bulletin No. 2020–26

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URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A24633f35c2efc191

## Record

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

## Text

HIGHLIGHTS
OF THIS ISSUE




Bulletin No. 2020–26
June 22, 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.

ADMINISTRATIVE
Rev. Rul. 2020-13, page 965.

Interest rates: underpayments and overpayments. The
rates for interest determined under Section 6621 of the
code for the calendar quarter beginning July 1, 2020, will
be 3 percent for overpayments (2 percent in the case of a
corporation), 3 percent for underpayments, and 5 percent
for large corporate underpayments. The rate of interest
paid on the portion of a corporate overpayment exceeding
$10,000 will be 0.5 percent.

EMPLOYEE PLANS
Notice 2020-42, page 986.

Notice 2020-42 provides participants, beneficiaries, and
administrators of qualified retirement plans and other tax-favored retirement arrangements with temporary relief from
the physical presence requirement in § 1.401(a)-21(d)(6)
for any participant election (1) witnessed by a notary public
in a state that permits remote notarization, or (2) witnessed
by a plan representative using certain safeguards. The guidance accommodates local shutdowns and social distancing practices and is intended to facilitate the payment of
coronavirus-related distributions and plan loans to qualified
individuals, as permitted by CARES Act.

EXCISE TAX
Notice 2020-44, page 989.

Sections 4375 and 4376, added to the Code by the Affordable Care Act, impose a fee on issuers of specified
health insurance policies and plan sponsors of applicable

Finding Lists begin on page ii.

self-insured health plans to help fund the Patient-Centered
Outcomes Research Trust Fund (PCORTF). This notice addresses the recent extension of the fee by the Further Consolidated Appropriations Act, 2020, Public Law 116-94,
and provides relief for calculating the average number of
lives for policy years and plan years that end on or after
October 1, 2019, and before October 1, 2020. This notice
provides that the adjusted applicable dollar amount that
applies for determining the PCORTF fee for policy years
and plan years ending on or after October 1, 2019 and
before October 1, 2020 is equal to $2.54. This adjusted
applicable dollar amount has been determined using the
percentage increase in the projected per capita amount of
the National Health Expenditures published by HHS in February 2019.

INCOME TAX
Notice 2020-39, page 984.

This notice provides relief under section 7508A(a) of the Internal Revenue Code (Code) for qualified opportunity funds
(QOFs) and their investors in response to the ongoing Coronavirus Disease 2019 (COVID-19) pandemic. This notice
also addresses the application of certain relief provisions in
the Income Tax Regulations under section 1400Z-2 of the
Code (section 1400Z-2 regulations).

REG-109755-19, page 994.

These proposed regulations provide guidance under section 213 of the Internal Revenue Code regarding the treatment of amounts paid for certain medical care arrangements, including direct primary care arrangements, health
care sharing ministries, and certain government-sponsored
health care programs. The proposed regulations affect individuals who pay for these arrangements or programs and

want to deduct the amounts paid as medical expenses under section 213.

Rev. Proc. 2020-34, page 990.

This revenue procedure grants temporary relief to trusts
which are, or have tenants who are, experiencing financial
hardship as a result of COVID-19, to allow them to make certain modifications to their mortgage loans and their lease

agreements, and to accept additional cash contributions
without jeopardizing their tax status as grantor trusts. The
revenue procedure indicates that a cash contribution from
one or more new trust interest holders to acquire a trust interest or a non-pro rata cash contribution from one or more
current trust interest holders must be treated as a purchase
and sale under § 1001 of a portion of each non-contributing
(or lesser contributing) trust interest holder’s proportionate
interest in the trust’s assets.

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 22, 2020 

Bulletin No. 2020–26

Part I
Section 6621.—
Determination of Rate of
Interest
26 CFR 301.6621-1: Interest rate.

Rev. Rul. 2020-13
Section 6621 of the Internal Revenue Code establishes the interest rates
on overpayments and underpayments of
tax. Under section 6621(a)(1), the overpayment rate is the sum of the federal
short-term rate plus 3 percentage points (2
percentage points in the case of a corporation), except the rate for the portion of a
corporate overpayment of tax exceeding
$10,000 for a taxable period is the sum of
the federal short-term rate plus 0.5 of a
percentage point. Under section 6621(a)
(2), the underpayment rate is the sum of
the federal short-term rate plus 3 percentage points.
Section 6621(c) provides that for purposes of interest payable under section
6601 on any large corporate underpayment, the underpayment rate under section
6621(a)(2) is determined by substituting
“5 percentage points” for “3 percentage
points.” See section 6621(c) and section
301.6621-3 of the Regulations on Procedure and Administration for the definition
of a large corporate underpayment and
for the rules for determining the applicable date. Section 6621(c) and section
301.6621-3 are generally effective for periods after December 31, 1990.
Section 6621(b)(1) provides that the
Secretary will determine the federal short-

Bulletin No. 2020–26

term rate for the first month in each calendar quarter. Section 6621(b)(2)(A)
provides that the federal short-term rate
determined under section 6621(b)(1) for
any month applies during the first calendar
quarter beginning after that month. Section 6621(b)(3) provides that the federal
short-term rate for any month is the federal short-term rate determined during that
month by the Secretary in accordance with
section 1274(d), rounded to the nearest
full percent (or, if a multiple of 1/2 of 1
percent, the rate is increased to the next
highest full percent).
Notice 88-59, 1988-1 C.B. 546, announced that in determining the quarterly
interest rates to be used for overpayments
and underpayments of tax under section
6621, the Internal Revenue Service will
use the federal short-term rate based on
daily compounding because that rate is
most consistent with section 6621 which,
pursuant to section 6622, is subject to daily compounding.
The federal short-term rate determined
in accordance with section 1274(d) during
April 2020 is the rate published in Revenue
Ruling 2020-11, 2020-19 IRB 776, to take
effect beginning May 1, 2020. The federal
short-term rate, rounded to the nearest full
percent, based on daily compounding determined during the month of April 2020
is 0 percent. Accordingly, an overpayment
rate of 3 percent (2 percent in the case of a
corporation) and an underpayment rate of
3 percent are established for the calendar
quarter beginning July 1, 2020. The overpayment rate for the portion of a corporate
overpayment exceeding $10,000 for the
calendar quarter beginning July 1, 2020 is

965

0.5 percent. The underpayment rate for
large corporate underpayments for the calendar quarter beginning July 1, 2020, is
5 percent. These rates apply to amounts
bearing interest during that calendar quarter.
Sections 6654(a)(1) and 6655(a)(1)
provide that the underpayment rate established under section 6621 applies in determining the addition to tax under sections
6654 and 6655 for failure to pay estimated
tax for any taxable year. Thus, the 3 percent rate also applies to estimated tax underpayments for the third calendar quarter
beginning July 1, 2020. In addition, pursuant to section 6603(d)(4), the rate of interest on section 6603 deposits is 0 percent
for the third calendar quarter in 2020.
Interest factors for daily compound interest for annual rates of 0.5 percent are
published in Appendix A of this Revenue
Ruling. Interest factors for daily compound interest for annual rates of 2 percent, 3 percent and 5 percent are published
in Tables 57, 59, and 63 of Rev. Proc. 9517, 1995-1 C.B. 611, 613, and 617.
Annual interest rates to be compounded
daily pursuant to section 6622 that apply
for prior periods are set forth in the tables
accompanying this revenue ruling.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Casey R. Conrad of the Office of
the Associate Chief Counsel (Procedure
and Administration). For further information regarding this revenue ruling, contact
Mr. Conrad at (202) 317-6844 (not a tollfree number).

June 22, 2020

APPENDIX A

Days
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21

Factor
0.000013699
0.000027397
0.000041096
0.000054796
0.000068495
0.000082195
0.000095894
0.000109594
0.000123294
0.000136995
0.000150695
0.000164396
0.000178097
0.000191798
0.000205499
0.000219201
0.000232902
0.000246604
0.000260306
0.000274008
0.000287711

365 Day Year
0.5% Compound Rate 184 Days
Days
Factor
63
0.000863380
64
0.000877091
65
0.000890801
66
0.000904512
67
0.000918223
68
0.000931934
69
0.000945646
70
0.000959357
71
0.000973069
72
0.000986781
73
0.001000493
74
0.001014206
75
0.001027918
76
0.001041631
77
0.001055344
78
0.001069057
79
0.001082770
80
0.001096484
81
0.001110197
82
0.001123911
83
0.001137625

22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41

0.000301413
0.000315116
0.000328819
0.000342522
0.000356225
0.000369929
0.000383633
0.000397336
0.000411041
0.000424745
0.000438449
0.000452154
0.000465859
0.000479564
0.000493269
0.000506974
0.000520680
0.000534386
0.000548092
0.000561798

84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103

June 22, 2020

0.001151339
0.001165054
0.001178768
0.001192483
0.001206198
0.001219913
0.001233629
0.001247344
0.001261060
0.001274776
0.001288492
0.001302208
0.001315925
0.001329641
0.001343358
0.001357075
0.001370792
0.001384510
0.001398227
0.001411945

966

Days
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145

Factor
0.001713784
0.001727506
0.001741228
0.001754951
0.001768673
0.001782396
0.001796119
0.001809843
0.001823566
0.001837290
0.001851013
0.001864737
0.001878462
0.001892186
0.001905910
0.001919635
0.001933360
0.001947085
0.001960811
0.001974536
0.001988262

146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165

0.002001988
0.002015714
0.002029440
0.002043166
0.002056893
0.002070620
0.002084347
0.002098074
0.002111801
0.002125529
0.002139257
0.002152985
0.002166713
0.002180441
0.002194169
0.002207898
0.002221627
0.002235356
0.002249085
0.002262815

Bulletin No. 2020–26

42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62

0.000575504
0.000589211
0.000602917
0.000616624
0.000630331
0.000644039
0.000657746
0.000671454
0.000685161
0.000698869
0.000712578
0.000726286
0.000739995
0.000753703
0.000767412
0.000781121
0.000794831
0.000808540
0.000822250
0.000835960
0.000849670

Bulletin No. 2020–26

104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124

0.001425663
0.001439381
0.001453100
0.001466818
0.001480537
0.001494256
0.001507975
0.001521694
0.001535414
0.001549133
0.001562853
0.001576573
0.001590293
0.001604014
0.001617734
0.001631455
0.001645176
0.001658897
0.001672619
0.001686340
0.001700062

967

166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184

0.002276544
0.002290274
0.002304004
0.002317734
0.002331465
0.002345195
0.002358926
0.002372657
0.002386388
0.002400120
0.002413851
0.002427583
0.002441315
0.002455047
0.002468779
0.002482511
0.002496244
0.002509977
0.002523710

June 22, 2020

Days
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42

June 22, 2020

Factor
0.000013661
0.000027323
0.000040984
0.000054646
0.000068308
0.000081970
0.000095632
0.000109295
0.000122958
0.000136620
0.000150283
0.000163947
0.000177610
0.000191274
0.000204938
0.000218602
0.000232266
0.000245930
0.000259595
0.000273260
0.000286924
0.000300590
0.000314255
0.000327920
0.000341586
0.000355252
0.000368918
0.000382584
0.000396251
0.000409917
0.000423584
0.000437251
0.000450918
0.000464586
0.000478253
0.000491921
0.000505589
0.000519257
0.000532925
0.000546594
0.000560262
0.000573931

366 Day Year
0.5% Compound Rate 184 Days
Days
Factor
63
0.000861020
64
0.000874693
65
0.000888366
66
0.000902040
67
0.000915713
68
0.000929387
69
0.000943061
70
0.000956735
71
0.000970409
72
0.000984084
73
0.000997758
74
0.001011433
75
0.001025108
76
0.001038783
77
0.001052459
78
0.001066134
79
0.001079810
80
0.001093486
81
0.001107162
82
0.001120839
83
0.001134515
84
0.001148192
85
0.001161869
86
0.001175546
87
0.001189223
88
0.001202900
89
0.001216578
90
0.001230256
91
0.001243934
92
0.001257612
93
0.001271291
94
0.001284969
95
0.001298648
96
0.001312327
97
0.001326006
98
0.001339685
99
0.001353365
100
0.001367044
101
0.001380724
102
0.001394404
103
0.001408085
104
0.001421765

968

Days
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166

Factor
0.001709097
0.001722782
0.001736467
0.001750152
0.001763837
0.001777522
0.001791208
0.001804893
0.001818579
0.001832265
0.001845951
0.001859638
0.001873324
0.001887011
0.001900698
0.001914385
0.001928073
0.001941760
0.001955448
0.001969136
0.001982824
0.001996512
0.002010201
0.002023889
0.002037578
0.002051267
0.002064957
0.002078646
0.002092336
0.002106025
0.002119715
0.002133405
0.002147096
0.002160786
0.002174477
0.002188168
0.002201859
0.002215550
0.002229242
0.002242933
0.002256625
0.002270317

Bulletin No. 2020–26

43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62

0.000587600
0.000601269
0.000614939
0.000628608
0.000642278
0.000655948
0.000669618
0.000683289
0.000696959
0.000710630
0.000724301
0.000737972
0.000751643
0.000765315
0.000778986
0.000792658
0.000806330
0.000820003
0.000833675
0.000847348

Bulletin No. 2020–26

105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124

0.001435446
0.001449127
0.001462808
0.001476489
0.001490170
0.001503852
0.001517533
0.001531215
0.001544897
0.001558580
0.001572262
0.001585945
0.001599628
0.001613311
0.001626994
0.001640678
0.001654361
0.001668045
0.001681729
0.001695413

969

167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184

0.002284010
0.002297702
0.002311395
0.002325087
0.002338780
0.002352473
0.002366167
0.002379860
0.002393554
0.002407248
0.002420942
0.002434636
0.002448331
0.002462025
0.002475720
0.002489415
0.002503110
0.002516806

June 22, 2020

TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986
OVERPAYMENTS AND UNDERPAYMENTS
PERIOD
Before
Jul.
Feb.
Feb.
Feb.
Feb.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.
Jan.
Jul.

1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,

Jul.
1975–Jan.
1976–Jan.
1978–Jan.
1980–Jan.
1982–Dec.
1983–Jun.
1983–Dec.
1984–Jun.
1984–Dec.
1985–Jun.
1985–Dec.
1986–Jun.
1986–Dec.

RATE
1,
31,
31,
31,
31,
31,
30,
31,
30,
31,
30,
31,
30,
31,

1975
1976
1978
1980
1982
1982
1983
1983
1984
1984
1985
1985
1986
1986

6%
9%
7%
6%
12%
20%
16%
11%
11%
11%
13%
11%
10%
9%

Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table

In 1995-1 C.B.
DAILY RATE TABLE
2,
pg.
4,
pg.
3,
pg.
2,
pg.
5,
pg.
6,
pg.
37,
pg.
27,
pg.
75,
pg.
75,
pg.
31,
pg.
27,
pg.
25,
pg.
23,
pg.

557
559
558
557
560
560
591
581
629
629
585
581
579
577

TABLE OF INTEREST RATES
FROM JAN. 1, 1987 - Dec. 31, 1998

Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.

1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,

June 22, 2020

1987–Mar.
1987–Jun.
1987–Sep.
1987–Dec.
1988–Mar.
1988–Jun.
1988–Sep.
1988–Dec.
1989–Mar.
1989–Jun.
1989–Sep.
1989–Dec.
1990–Mar.
1990–Jun.
1990–Sep.

31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,

1987
1987
1987
1987
1988
1988
1988
1988
1989
1989
1989
1989
1990
1990
1990

RATE
8%
8%
8%
9%
10%
9%
9%
10%
10%
11%
11%
10%
10%
10%
10%

970

OVERPAYMENTS
1995-1 C.B.
TABLE
PG
21
575
21
575
21
575
23
577
73
627
71
625
71
625
73
627
25
579
27
581
27
581
25
579
25
579
25
579
25
579

UNDERPAYMENTS
1995-1 C.B. RATE
RATE
TABLE
PG
9%
23
577
9%
23
577
9%
23
577
10%
25
579
11%
75
629
10%
73
627
10%
73
627
11%
75
629
11%
27
581
12%
29
583
12%
29
583
11%
27
581
11%
27
581
11%
27
581
11%
27
581

Bulletin No. 2020–26

Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.

1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,

1990–Dec.
1991–Mar.
1991–Jun.
1991–Sep.
1991–Dec.
1992–Mar.
1992–Jun.
1992–Sep.
1992–Dec.
1993–Mar.
1993–Jun.
1993–Sep.
1993–Dec.
1994–Mar.
1994–Jun.
1994–Sep.
1994–Dec.
1995–Mar.
1995–Jun.
1995–Sep.
1995–Dec.
1996–Mar.
1996–Jun.
1996–Sep.
1996–Dec.
1997–Mar.
1997–Jun.
1997–Sep.
1997–Dec.
1998–Mar.
1998–Jun.
1998–Sep.
1998–Dec.

Bulletin No. 2020–26

31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,

1990
1991
1991
1991
1991
1992
1992
1992
1992
1993
1993
1993
1993
1994
1994
1994
1994
1995
1995
1995
1995
1996
1996
1996
1996
1997
1997
1997
1997
1998
1998
1998
1998

10%
10%
9%
9%
9%
8%
7%
7%
6%
6%
6%
6%
6%
6%
6%
7%
8%
8%
9%
8%
8%
8%
7%
8%
8%
8%
8%
8%
8%
8%
7%
7%
7%

971

25
25
23
23
23
69
67
67
65
17
17
17
17
17
17
19
21
21
23
21
21
69
67
69
69
21
21
21
21
21
19
19
19

579
579
577
577
577
623
621
621
619
571
571
571
571
571
571
573
575
575
577
575
575
623
621
623
623
575
575
575
575
575
573
573
573

11%
11%
10%
10%
10%
9%
8%
8%
7%
7%
7%
7%
7%
7%
7%
8%
9%
9%
10%
9%
9%
9%
8%
9%
9%
9%
9%
9%
9%
9%
8%
8%
8%

27
27
25
25
25
71
69
69
67
19
19
19
19
19
19
21
23
23
25
23
23
71
69
71
71
23
23
23
23
23
21
21
21

581
581
579
579
579
625
623
623
621
573
573
573
573
573
573
575
577
577
579
577
577
625
623
625
625
577
577
577
577
577
575
575
575

June 22, 2020

TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 - PRESENT
NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS
1995-1 C.B.
RATE

Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.

June 22, 2020

1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,

1999–Mar.
1999–Jun.
1999–Sep.
1999–Dec.
2000–Mar.
2000–Jun.
2000–Sep.
2000–Dec.
2001–Mar.
2001–Jun.
2001–Sep.
2001–Dec.
2002–Mar.
2002–Jun.
2002–Sep.
2002–Dec.
2003–Mar.
2003–Jun.
2003–Sep.
2003–Dec.
2004–Mar.
2004–Jun.
2004–Sep.
2004–Dec.
2005–Mar.
2005–Jun.
2005–Sep.
2005–Dec.
2006–Mar.
2006–Jun.
2006–Sep.
2006–Dec.
2007–Mar.
2007–Jun.
2007–Sep.
2007–Dec.
2008–Mar.
2008–Jun.

31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,

1999
1999
1999
1999
2000
2000
2000
2000
2001
2001
2001
2001
2002
2002
2002
2002
2003
2003
2003
2003
2004
2004
2004
2004
2005
2005
2005
2005
2006
2006
2006
2006
2007
2007
2007
2007
2008
2008

972

RATE
7%
8%
8%
8%
8%
9%
9%
9%
9%
8%
7%
7%
6%
6%
6%
6%
5%
5%
5%
4%
4%
5%
4%
5%
5%
6%
6%
7%
7%
7%
8%
8%
8%
8%
8%
8%
7%
6%

TABLE
1995-1 C.B.
TABLE
19
21
21
21
69
71
71
71
23
21
19
19
17
17
17
17
15
15
15
13
61
63
61
63
15
17
17
19
19
19
21
21
21
21
21
21
67
65

PAGE
PAGE
573
575
575
575
623
625
625
625
577
575
573
573
571
571
571
571
569
569
569
567
615
617
615
617
569
571
571
573
573
573
575
575
575
575
575
575
621
619

Bulletin No. 2020–26

Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.

1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1.
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,

Bulletin No. 2020–26

2008–Sep.
2008–Dec.
2009–Mar.
2009–Jun.
2009–Sep.
2009–Dec.
2010–Mar.
2010–Jun.
2010–Sep.
2010–Dec.
2011–Mar.
2011–Jun.
2011–Sep.
2011–Dec.
2012–Mar.
2012–Jun.
2012–Sep.
2012–Dec.
2013–Mar.
2013–Jun.
2013–Sep.
2013–Dec.
2014–Mar.
2014–Jun.
2014–Sep.
2014–Dec.
2015–Mar.
2015–Jun.
2015–Sep.
2015–Dec.
2016–Mar.
2016–Jun.
2016–Sep.
2016–Dec.
2017–Mar.
2017–Jun.
2017–Sep.
2017–Dec.
2018–Mar.
2018–Jun.
2018–Sep.
2018–Dec.
2019–Mar.
2019–Jun.
2019–Sep.

30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,

2008
2008
2009
2009
2009
2009
2010
2010
2010
2010
2011
2011
2011
2011
2012
2012
2012
2012
2013
2013
2013
2013
2014
2014
2014
2014
2015
2015
2015
2015
2016
2016
2016
2016
2017
2017
2017
2017
2018
2018
2018
2018
2019
2019
2019

973

5%
6%
5%
4%
4%
4%
4%
4%
4%
4%
3%
4%
4%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
4%
4%
4%
4%
4%
4%
4%
4%
5%
5%
5%
6%
6%
5%

63
65
15
13
13
13
13
13
13
13
11
13
13
11
59
59
59
59
11
11
11
11
11
11
11
11
11
11
11
11
59
61
61
61
13
13
13
13
13
15
15
15
17
17
15

617
619
569
567
567
567
567
567
567
567
565
567
567
565
613
613
613
613
565
565
565
565
565
565
565
565
565
565
565
565
613
615
615
615
567
567
567
567
567
569
569
569
571
571
569

June 22, 2020

Oct.
Jan.
Apr.
Jul.

June 22, 2020

1,
1,
1,
1,

2019–Dec.
2020–Mar.
2020–Jun.
2020–Sep.

31,
31,
30,
30,

2019
2020
2020
2020

974

5%
5%
5%
3%

15
63
63
59

569
617
617
613

Bulletin No. 2020–26

TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 - PRESENT
CORPORATE OVERPAYMENTS AND UNDERPAYMENTS

Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.

1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,

1999–Mar.
1999–Jun.
1999–Sep.
1999–Dec.
2000–Mar.
2000–Jun.
2000–Sep.
2000–Dec.
2001–Mar.
2001–Jun.
2001–Sep.
2001–Dec.
2002–Mar.
2002–Jun.
2002–Sep.
2002–Dec.
2003–Mar.
2003–Jun.
2003–Sep.
2003–Dec.
2004–Mar.
2004–Jun.
2004–Sep.
2004–Dec.
2005–Mar.
2005–Jun.
2005–Sep.
2005–Dec.
2006–Mar.
2006–Jun.
2006–Sep.
2006–Dec.
2007–Mar.
2007–Jun.
2007–Sep.
2007–Dec.
2008–Mar.
2008–Jun.
2008–Sep.

Bulletin No. 2020–26

31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,

1999
1999
1999
1999
2000
2000
2000
2000
2001
2001
2001
2001
2002
2002
2002
2002
2003
2003
2003
2003
2004
2004
2004
2004
2005
2005
2005
2005
2006
2006
2006
2006
2007
2007
2007
2007
2008
2008
2008

OVERPAYMENTS
1995-1 C.B.
RATE
TABLE
PG
6%
17
571
7%
19
573
7%
19
573
7%
19
573
7%
67
621
8%
69
623
8%
69
623
8%
69
623
8%
21
575
7%
19
573
6%
17
571
6%
17
571
5%
15
569
5%
15
569
5%
15
569
5%
15
569
4%
13
567
4%
13
567
4%
13
567
3%
11
565
3%
59
613
4%
61
615
3%
59
613
4%
61
615
4%
13
567
5%
15
569
5%
15
569
6%
17
571
6%
17
571
6%
17
571
7%
19
573
7%
19
573
7%
19
573
7%
19
573
7%
19
573
7%
19
573
6%
65
619
5%
63
617
4%
61
615

975

UNDERPAYMENTS
1995-1 C.B.
RATE
TABLE
PG
7%
19
573
8%
21
575
8%
21
575
8%
21
575
8%
69
623
9%
71
625
9%
71
625
9%
71
625
9%
23
577
8%
21
575
7%
19
573
7%
19
573
6%
17
571
6%
17
571
6%
17
571
6%
17
571
5%
15
569
5%
15
569
5%
15
569
4%
13
567
4%
61
615
5%
63
617
4%
61
615
5%
63
617
5%
15
569
6%
17
571
6%
17
571
7%
19
573
7%
19
573
7%
19
573
8%
21
575
8%
21
575
8%
21
575
8%
21
575
8%
21
575
8%
21
575
7%
67
621
6%
65
619
5%
63
617

June 22, 2020

Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.

1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,z
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,

June 22, 2020

2008–Dec.
2009–Mar.
2009–Jun.
2009–Sep.
2009–Dec.
2010–Mar.
2010–Jun.
2010–Sep.
2010–Dec.
2011–Mar.
2011–Jun.
2011–Sep.
2011–Dec.
2012–Mar.
2012–Jun.
2012–Sep.
2012–Dec.
2013–Mar.
2013–Jun.
2013–Sep.
2013–Dec.
2014–Mar.
2014–Jun.
2014–Sep.
2014–Dec.
2015–Mar.
2015–Jun.
2015–Sep.
2015–Dec.
2016–Mar.
2016–Jun.
2016–Sep.
2016–Dec.
2017–Mar.
2017–Jun.
2017–Sep.
2017–Dec.
2018–Mar.
2018–Jun.
2018–Sep.
2018–Dec.
2019–Mar.
2019–Jun.
2019–Sep.

31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,,
31,
30,
30,
31,
31,
30,
30,

2008
2009
2009
2009
2009
2010
2010
2010
2010
2011
2011
2011
2011
2012
2012
2012
2012
2013
2013
2013
2013
2014
2014
2014
2014
2015
2015
2015
2015
2016
2016
2016
2016
2017
2017
2017
2017
2018
2018
2018
2018
2019
2019
2019

5%
4%
3%
3%
3%
3%
3%
3%
3%
2%
3%
3%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
3%
3%
3%
3%
3%
3%
3%
3%
4%
4%
4%
5%
5%
4%

976

63
13
11
11
11
11
11
11
11
9
11
11
9
57
57
57
57
9
9
9
9
9
9
9
9
9
9
9
9
57
59
59
59
11
11
11
11
11
13
13
13
15
15
13

617
567
565
565
565
565
565
565
565
563
565
565
563
611
611
611
611
563
563
563
563
563
563
563
563
563
563
563
563
611
613
613
613
565
565
565
565
565
567
567
567
569
569
567

6%
5%
4%
4%
4%
4%
4%
4%
4%
3%
4%
4%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
3%
4%
4%
4%
4%
4%
4%
4%
4%
5%
5%
5%
6%
6%
5%

65
15
13
13
13
13
13
13
13
11
13
13
11
59
59
59
59
11
11
11
11
11
11
11
11
11
11
11
11
59
61
61
61
13
13
13
13
13
15
15
15
17
17
15

619
569
567
567
567
567
567
567
567
565
567
567
565
613
613
613
613
565
565
565
565
565
565
565
565
565
565
565
565
613
615
615
615
567
567
567
567
567
569
569
569
571
571
569

Bulletin No. 2020–26

Oct.
Jan.
Apr.
Jul.

1,
1,
1,
1,

2019–Dec.
2020–Mar.
2020–Jun.
2020–Sep.

Bulletin No. 2020–26

31,
31,
30,
30,

2019
2020
2020
2020

4%
4%
4%
2%

977

13
61
61
57

567
615
615
611

5%
5%
5%
3%

15
63
63
59

569
617
617
613

June 22, 2020

TABLE OF INTEREST RATES
FOR LARGE CORPORATE UNDERPAYMENTS
FROM JANUARY 1, 1991 - PRESENT

Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.

June 22, 2020

1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,

1991–Mar.
1991–Jun.
1991–Sep.
1991–Dec.
1992–Mar.
1992–Jun.
1992–Sep.
1992–Dec.
1993–Mar.
1993–Jun.
1993–Sep.
1993–Dec.
1994–Mar.
1994–Jun.
1994–Sep.
1994–Dec.
1995–Mar.
1995–Jun.
1995–Sep.
1995–Dec.
1996–Mar.
1996–Jun.
1996–Sep.
1996–Dec.
1997–Mar.
1997–Jun.
1997–Sep.
1997–Dec.
1998–Mar.
1998–Jun.
1998–Sep.
1998–Dec.
1999–Mar.
1999–Jun.
1999–Sep.
1999–Dec.
2000–Mar.
2000–Jun.

31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,

1991
1991
1991
1991
1992
1992
1992
1992
1993
1993
1993
1993
1994
1994
1994
1994
1995
1995
1995
1995
1996
1996
1996
1996
1997
1997
1997
1997
1998
1998
1998
1998
1999
1999
1999
1999
2000
2000

978

RATE
13%
12%
12%
12%
11%
10%
10%
9%
9%
9%
9%
9%
9%
9%
10%
11%
11%
12%
11%
11%
11%
10%
11%
11%
11%
11%
11%
11%
11%
10%
10%
10%
9%
10%
10%
10%
10%
11%

1995-1 C.B.
TABLE
31
29
29
29
75
73
73
71
23
23
23
23
23
23
25
27
27
29
27
27
75
73
75
75
27
27
27
27
27
25
25
25
23
25
25
25
73
75

PG
585
583
583
583
629
627
627
625
577
577
577
577
577
577
579
581
581
583
581
581
629
627
629
629
581
581
581
581
581
579
579
579
577
579
579
579
627
629

Bulletin No. 2020–26

Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.

1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,

Bulletin No. 2020–26

2000–Sep.
2000–Dec.
2001–Mar.
2001–Jun.
2001–Sep.
2001–Dec.
2002–Mar.
2002–Jun.
2002–Sep.
2002–Dec.
2003–Mar.
2003–Jun.
2003–Sep.
2003–Dec.
2004–Mar.
2004–Jun.
2004–Sep.
2004–Dec.
2005–Mar.
2005–Jun.
2005–Sep.
2005–Dec.
2006–Mar.
2006–Jun.
2006–Sep.
2006–Dec.
2007–Mar.
2007–Jun.
2007–Sep.
2007–Dec.
2008–Mar.
2008–Jun.
2008–Sep.
2008–Dec.
2009–Mar.
2009–Jun.
2009–Sep.
2009–Dec.
2010–Mar.
2010–Jun.
2010–Sep.
2010–Dec.
2011–Mar.
2011–Jun.
2011–Sep.

30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,

2000
2000
2001
2001
2001
2001
2002
2002
2002
2002
2003
2003
2003
2003
2004
2004
2004
2004
2005
2005
2005
2005
2006
2006
2006
2006
2007
2007
2007
2007
2008
2008
2008
2008
2009
2009
2009
2009
2010
2010
2010
2010
2011
2011
2011

979

11%
11%
11%
10%
9%
9%
8%
8%
8%
8%
7%
7%
7%
6%
6%
7%
6%
7%
7%
8%
8%
9%
9%
9%
10%
10%
10%
10%
10%
10%
9%
8%
7%
8%
7%
6%
6%
6%
6%
6%
6%
6%
5%
6%
6%

75
75
27
25
23
23
21
21
21
21
19
19
19
17
65
67
65
67
19
21
21
23
23
23
25
25
25
25
25
25
71
69
67
69
19
17
17
17
17
17
17
17
15
17
17

629
629
581
579
577
577
575
575
575
575
573
573
573
571
619
621
619
621
573
575
575
577
577
577
579
579
579
579
579
579
625
623
621
623
573
571
571
571
571
571
571
571
569
571
571

June 22, 2020

Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.
Oct.
Jan.
Apr.
Jul.

June 22, 2020

1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,
1,

2011–Dec.
2012–Mar.
2012–Jun.
2012–Sep.
2012–Dec.
2013–Mar.
2013–Jun.
2013–Sep.
2013–Dec.
2014–Mar.
2014–Jun.
2014–Sep.
2014–Dec.
2015–Mar.
2015–Jun.
2015–Sep.
2015–Dec.
2016–Mar.
2016–Jun.
2016–Sep.
2016–Dec.
2017–Mar.
2017–Jun.
2017–Sep.
2017–Dec.
2018–Mar.
2018–Jun.
2018–Sep.
2018–Dec.
2019–Mar.
2019–Jun.
2019–Sep.
2019–Dec.
2020–Mar.
2020–Jun.
2020–Sep.

31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,
31,
31,
30,
30,

2011
2012
2012
2012
2012
2013
2013
2013
2013
2014
2014
2014
2014
2015
2015
2015
2015
2016
2016
2016
2016
2017
2017
2017
2017
2018
2018
2018
2018
2019
2019
2019
2019
2020
2020
2020

980

5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
6%
6%
6%
6%
6%
6%
6%
6%
7%
7%
7%
8%
8%
7%
7%
7%
7%
5%

15
63
63
63
63
15
15
15
15
15
15
15
15
15
15
15
15
63
65
65
65
17
17
17
17
17
19
19
19
21
21
19
19
67
67
63

569
617
617
617
617
569
569
569
569
569
569
569
569
569
569
569
569
617
619
619
619
571
571
571
571
571
573
573
573
575
575
573
573
621
621
617

Bulletin No. 2020–26

TABLE OF INTEREST RATES FOR CORPORATE
OVERPAYMENTS EXCEEDING $10,000
FROM JANUARY 1, 1995 – PRESENT
1995-1 C.B.
RATE

TABLE

PG

Jan.

1,

1995–Mar.

31,

1995

6.5%

18

572

Apr.

1,

1995–Jun.

30,

1995

7.5%

20

574

Jul.

1,

1995–Sep.

30,

1995

6.5%

18

572

Oct.

1,

1995–Dec.

31,

1995

6.5%

18

572

Jan.

1,

1996–Mar.

31,

1996

6.5%

66

620

Apr.

1,

1996–Jun.

30,

1996

5.5%

64

618

Jul.

1,

1996–Sep.

30,

1996

6.5%

66

620

Oct.

1,

1996–Dec.

31,

1996

6.5%

66

620

Jan.

1,

1997–Mar.

31,

1997

6.5%

18

572

Apr.

1,

1997–Jun.

30,

1997

6.5%

18

572

Jul.

1,

1997–Sep.

30,

1997

6.5%

18

572

Oct.

1,

1997–Dec.

31,

1997

6.5%

18

572

Jan.

1,

1998–Mar.

31,

1998

6.5%

18

572

Apr.

1,

1998–Jun.

30,

1998

5.5%

16

570

Jul.

1.

1998–Sep.

30,

1998

5.5%

16

570

Oct.

1,

1998–Dec.

31,

1998

5.5%

16

570

Jan.

1,

1999–Mar.

31,

1999

4.5%

14

568

Apr.

1,

1999–Jun.

30,

1999

5.5%

16

570

Jul.

1,

1999–Sep.

30,

1999

5.5%

16

570

Oct.

1,

1999–Dec.

31,

1999

5.5%

16

570

Jan.

1,

2000–Mar.

31,

2000

5.5%

64

618

Apr.

1,

2000–Jun.

30,

2000

6.5%

66

620

Jul.

1,

2000–Sep.

30,

2000

6.5%

66

620

Oct.

1,

2000–Dec.

31,

2000

6.5%

66

620

Jan.

1,

2001–Mar.

31,

2001

6.5%

18

572

Apr.

1,

2001–Jun.

30,

2001

5.5%

16

570

Jul.

1,

2001–Sep.

30,

2001

4.5%

14

568

Oct.

1,

2001–Dec.

31,

2001

4.5%

14

568

Jan.

1,

2002–Mar.

31,

2002

3.5%

12

566

Apr.

1,

2002–Jun.

30,

2002

3.5%

12

566

Jul.

1,

2002–Sep.

30,

2002

3.5%

12

566

Oct.

1,

2002–Dec.

31,

2002

3.5%

12

566

Jan.

1,

2003–Mar.

31,

2003

2.5%

10

564

Apr.

1,

2003–Jun.

30,

2003

2.5%

10

564

Jul.

1,

2003–Sep.

30,

2003

2.5%

10

564

Oct.

1,

2003–Dec.

31,

2003

1.5%

8

562

Jan.

1,

2004–Mar.

31,

2004

1.5%

56

610

Apr.

1,

2004–Jun.

30,

2004

2.5%

58

612

Bulletin No. 2020–26

981

June 22, 2020

Jul.

1,

2004–Sep.

30,

2004

1.5%

56

610

Oct.

1,

2004–Dec.

31,

2004

2.5%

58

612

Jan.

1,

2005–Mar.

31,

2005

2.5%

10

564

Apr.

1,

2005–Jun.

30,

2005

3.5%

12

566

Jul.

1,

2005–Sep.

30,

2005

3.5%

12

566

Oct.

1,

2005–Dec.

31,

2005

4.5%

14

568

Jan.

1,

2006–Mar.

31,

2006

4.5%

14

568

Apr.

1,

2006–Jun.

30,

2006

4.5%

14

568

Jul.

1,

2006–Sep.

30,

2006

5.5%

16

570

Oct.

1,

2006–Dec.

31,

2006

5.5%

16

570

Jan.

1,

2007–Mar.

31,

2007

5.5%

16

570

Apr.

1,

2007–Jun.

30,

2007

5.5%

16

570

Jul.

1,

2007–Sep.

30,

2007

5.5%

16

570

Oct.

1,

2007–Dec.

31,

2007

5.5%

16

570

Jan.

1,

2008–Mar.

31,

2008

4.5%

62

616

Apr.

1,

2008–Jun.

30,

2008

3.5%

60

614

Jul.

1,

2008–Sep.

30,

2008

2.5%

58

612

Oct.

1,

2008–Dec.

31,

2008

3.5%

60

614

Jan.

1,

2009–Mar.

31,

2009

2.5%

10

564

Apr.

1,

2009–Jun.

30,

2009

1.5%

8

562

Jul.

1,

2009–Sep.

30,

2009

1.5%

8

562

Oct.

1,

2009–Dec.

31,

2009

1.5%

8

562

Jan.

1,

2010–Mar.

31,

2010

1.5%

8

562

Apr.

1,

2010–Jun.

30,

2010

1.5%

8

562

Jul.

1,

2010–Sep.

30,

2010

1.5%

8

562

Oct.

1,

2010–Dec.

31,

2010

1.5%

8

562

Jan.

1,

2011–Mar.

31,

2011

0.5%*

Apr.

1,

2011–Jun.

30,

2011

1.5%

8

562

Jul.

1,

2011–Sep.

30,

2011

1.5%

8

562

Oct.

1,

2011–Dec.

31,

2011

0.5%*

Jan.

1,

2012–Mar.

31,

2012

0.5%*

Apr.

1,

2012–Jun.

30,

2012

0.5%*

Jul.

1,

2012–Sep.

30,

2012

0.5%*

Oct.

1,

2012–Dec.

31,

2012

0.5%*

Jan.

1,

2013–Mar.

31,

2013

0.5%*

Apr.

1,

2013–Jun.

30,

2013

0.5%*

Jul.

1,

2013–Sep.

30,

2013

0.5%*

Oct.

1,

2013–Dec.

31,

2013

0.5%*

Jan.

1,

2014–Mar.

31,

2014

0.5%*

Apr.

1,

2014–Jun.

30,

2014

0.5%*

Jul.

1,

2014–Sep.

30,

2014

0.5%*

June 22, 2020

982

Bulletin No. 2020–26

Oct.

1,

2014–Dec.

31,

2014

0.5%*

Jan.

1,

2015–Mar.

31,

2015

0.5%*

Apr.

1,

2015–Jun.

30,

2015

0.5%*

Jul.

1,

2015–Sep.

30,

2015

0.5%*

Oct.

1,

2015–Dec.

31,

2015

0.5%*

Jan.

1,

2016–Mar.

31,

2016

0.5%*

Apr.

1,

2016–Jun.

30,

2016

1.5%

56

610

Jul.

1,

2016–Sep.

30,

2016

1.5%

56

610

Oct.

1,

2016–Dec.

31,

2016

1.5%

56

610

Jan.

1,

2017–Mar.

31,

2017

1.5%

8

562

Apr.

1,

2017–Jun.

30,

2017

1.5%

8

562

Jul.

1,

2017–Sep.

30,

2017

1.5%

8

562

Oct.

1,

2017–Dec.

31,

2017

1.5%

8

562

Jan.

1,

2018–Mar.

31,

2018

1.5%

8

562

Apr.

1,

2018–Jun.

30,

2018

2.5%

10

564

Jul.

1,

2018–Sep.

30,

2018

2.5%

10

564

Oct.

1,

2018–Dec.

31,

2018

2.5%

10

564

Jan.

1,

2019–Mar.

31,

2019

3.5%

12

566

Apr.

1,

2019–Jun.

30,

2019

3.5%

12

566

Jul.

1,

2019–Sep.

30,

2019

2.5%

10

564

Oct.

1,

2019–Dec.

31,

2019

2.5%

10

564

Jan.

1,

2020–Mar.

31,

2020

2.5%

58

612

Apr.

1,

2020–Jun.

30,

2020

2.5%

58

612

Jul.

1,

2020–Sep.

30,

2020

0.5%*

* The asterisk reflects the interest factors for daily compound interest for annual rates of 0.5 percent published in Appendix A of
this Revenue Ruling.

Bulletin No. 2020–26

983

June 22, 2020

Part III
Relief for Qualified
Opportunity Funds and
Investors Affected by
Ongoing Coronavirus
Disease 2019 Pandemic
Notice 2020-39
I. PURPOSE
This notice provides relief under section 7508A(a) of the Internal Revenue
Code (Code) for qualified opportunity
funds (QOFs) and their investors in response to the ongoing Coronavirus Disease 2019 (COVID-19) pandemic. This
notice also addresses the application of
certain relief provisions in the Income
Tax Regulations under section 1400Z-2 of
the Code (section 1400Z‑2 regulations).
Part III of this notice (i) provides relief
for certain failures by a QOF to meet the
90-percent investment standard and (ii)
postpones the time periods for satisfying
certain other requirements. Part IV of this
notice confirms that (i) the 24-month extension for the working capital safe harbor
and (ii) the 12-month extension for QOFs
to reinvest certain proceeds, both as provided under the section 1400Z-2 regulations, are available to otherwise qualifying QOFs and qualified opportunity zone
businesses.
II. BACKGROUND
A. Emergency Declaration and Prior
Grants of Relief
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 (Stafford Act) (42 U.S.C.
5121 et seq.) in response to the ongoing
COVID-19 pandemic (Emergency Declaration1). 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).” Subsequent to the Emergency Declaration, the
President issued major disaster declarations under the authority of the Stafford
Act with respect to all 50 states, the District of Columbia, and 5 territories (Major
Disaster Declarations).2 The Major Disaster Declarations declared that, beginning
on January 20, 2020, major disasters existed in each of these jurisdictions, within
which is located every population census
tract designated as a qualified opportunity
zone under section 1400Z-1 of the Code.
See Notice 2018-48, 2018-28 I.R.B. 9
(Nov. 21, 2018), and Notice 2019-42,
2019-29 I.R.B. 352 (October 10, 2019)
(which collectively list every designated
qualified opportunity zone).
Section 7508A provides the Secretary
of the Treasury or his delegate (Secretary) with authority to postpone the time
for performing certain acts under the internal revenue laws for a taxpayer determined by the Secretary to be affected by
a Federally declared disaster, as defined in
section 165(i)(5)(A) of the Code. See section 165(i)(5)(A) (defining “Federally declared disaster” to mean “any disaster subsequently determined by the President of
the United States to warrant assistance by
the Federal Government under the Robert
T. Stafford Disaster Relief and Emergency Assistance Act”). Pursuant to section
7508A(a), a period of up to one year may
be disregarded in determining whether the
performance of certain acts is timely under the internal revenue laws.
On April 9, 2020, the Department of
the Treasury and the Internal Revenue
Service issued Notice 2020-23 to provide
relief under section 7508A(a) to taxpayers
affected by the COVID-19 emergency by
postponing due dates with respect to certain taxpayer and government acts. See
generally Part III of Notice 2020-23 (providing relief for certain time-sensitive actions due to be performed on or after April

1, 2020, and before July 15, 2020), amplifying Notice 2020-20, 2020-16 I.R.B.
660 (April 13, 2020) and Notice 2020-18,
2020-15 I.R.B. 590 (April 6, 2020), and
modifying Rev. Proc. 2014-42, 2014-29
I.R.B. 192 (July 1, 2014).
B. 180-Day Investment Requirement
for QOF Investors
Section 1400Z-2(a)(1)(A) provides
that, if a taxpayer has “gain from the sale
to, or exchange with, an unrelated person
of any property held by the taxpayer” the
taxpayer may elect to exclude from gross
income for the taxable year “so much of
such gain as does not exceed the aggregate amount invested by the taxpayer in a
[QOF] during the 180-day period beginning on the date of such sale or exchange”
(180-day investment requirement). Section 1.1400Z2(a)-1 provides definitions
and rules to implement the 180-day investment requirement.
One of the time-sensitive acts postponed by Notice 2020-23 was the making
of “an investment at the election of a taxpayer due to be made during the 180-day
period described in section 1400Z-2(a)
(1)(A) of the Code” (180-day investment
period). See Notice 2020-23, Part III.A
and C. Specifically, Notice 2020-23 postponed to July 15, 2020, any deadline for
the 180-day investment requirement that
otherwise would have occurred on or after
April 1, 2020 and before July 15, 2020.
See id., Part III.C.
C. 90-Percent Investment Standard for
QOFs
Section 1400Z-2(d)(1) defines a QOF
as any investment vehicle organized as a
corporation or a partnership for the purpose of investing in qualified opportunity
zone property (other than another QOF).
This definition also requires a QOF to
hold at least 90 percent of its assets in
qualified opportunity zone property, determined by the average of the percentage

See March 13, 2020, letter from the President to Secretaries of the Departments of Homeland Security, the Treasury, and Health and Human Services and the Administrator of the Federal
Emergency Management Agency, available at https://www.whitehouse.gov/wp-content/uploads/2020/03/LetterFromThePresident.pdf.
2
See https://www.fema.gov/coronavirus/disaster-declarations.
1

June 22, 2020

984

Bulletin No. 2020–26

of qualified opportunity zone property
held by that QOF as measured (i) on the
last day of the first 6-month period of the
taxable year of the QOF, and (ii) on the
last day of the taxable year of the QOF.
See section 1400Z-2(d)(1). The requirement that the average percentages of the
QOF’s qualified opportunity zone property on these two dates (semi-annual testing
dates) must equal at least 90 percent of the
QOF’s assets is referred to as the 90-percent investment standard. See section
1400Z-2(f). Section 1.1400Z2(d)-1 provides definitions and rules to implement
the 90-percent investment standard.
If the average of the percentages of
the qualified opportunity zone property held by a QOF on these semi-annual
testing dates fails to meet the 90-percent
investment standard, section 1400Z-2(f)
(1) provides a general rule that the QOF
must pay a penalty for each month that the
QOF fails to meet that standard. However, section 1400Z-2(f)(3) provides that no
such penalty is imposed “with respect to
any failure if it is shown that such failure
is due to reasonable cause.”
D. Working Capital Safe Harbor for
Qualified Opportunity Zone Businesses
An entity must meet certain requirements to be a qualified opportunity zone
business, including the requirement of
section 1397C(b)(8) that less than 5 percent of the average of the aggregate unadjusted bases of the entity’s property
be attributable to nonqualified financial
property, as defined in section 1397C(e).
Section 1397C(e) excludes from nonqualified financial property reasonable
amounts of working capital that are held
in cash, cash equivalents, or debt instruments with a term of 18 months or less.
See § 1.1400Z2(d)-1(d)(3)(iv).
The section 1400Z-2 regulations provide qualified opportunity zone businesses with a safe harbor for treating an
amount of working capital as reasonable
for purposes of section 1397C(e) if certain
requirements are satisfied (working capital safe harbor). See § 1.1400Z2(d)-1(d)
(3)(v) (providing the scope of the working capital safe harbor and conditions for
eligibility). One of those requirements is
that there is a written schedule consistent
with the ordinary start-up of a trade or

Bulletin No. 2020–26

business for the expenditure of the working capital assets within 31 months of the
receipt by the business of the assets. See
§ 1.1400Z2(d)-1(d)(3)(v)(B). A qualified
opportunity zone business may extend
the working capital safe harbor period
to a maximum 62-month period under
§ 1.1400Z2(d)-1(d)(3)(vi) if certain additional requirements are met.
If such qualified opportunity zone business is located in a qualified opportunity
zone within a Federally declared disaster (as defined in section 165(i)(5)(A)),
the qualified opportunity zone business
may receive not more than an additional
24 months to expend its working capital
assets, as long as the qualified opportunity zone business otherwise meets the
requirements of the working capital safe
harbor. See § 1.1400Z2(d)-1(d)(3)(v)(D).
Therefore, a qualified opportunity zone
business may, if each applicable requirement of § 1.1400Z2(d)-1(d)(3)(v) and
(vi) is satisfied, have up to a maximum
86-months to expend working capital assets if the qualified opportunity zone business is located in a qualified opportunity
zone within a Federally declared disaster.
E. 30-Month Substantial Improvement
Period for QOFs
Section 1400Z-2(d)(2)(D)(i) provides
that tangible property is treated as qualified opportunity zone business property if the tangible property is used in a
trade or business of the QOF and satisfies
three general requirements. One of these
requirements is that the original use of
post-2017 acquired tangible property
in the qualified opportunity zone must
begin with the QOF (referred to as the
“original use requirement”), or the QOF
must substantially improve that property
(substantial improvement requirement).
See section 1400Z-2(d)(2)(D)(i)(II). The
substantial improvement requirement is
met only if, during any 30-month period
beginning after the date of acquisition of
the post-2017 acquired tangible property,
there are “additions to basis with respect
to such property” held by the QOF that,
in the aggregate, exceed the QOF’s adjusted basis of that property as of the beginning of that 30-month period (30-month
substantial improvement period). See
section
1400Z-2(d)(2)(D)(ii).
Sec-

985

tion 1.1400Z2(d)-2(b)(4) provides rules
to implement the substantial improvement
requirement.
F. 12-Month Reinvestment Period for
QOFs
The section 1400Z-2 regulations provide generally that, if (i) a QOF sells or
disposes of some or all of its qualified opportunity zone property or if a distribution
with respect to the QOF’s qualified opportunity zone stock is treated as a return of
capital in the QOF’s hands, and if (ii) the
QOF reinvests some or all of the proceeds
in qualified opportunity zone property by
the last day of the 12-month period beginning on the date of the distribution,
sale, or disposition, then the proceeds, to
the extent that they are so reinvested, are
treated as qualified opportunity zone property for purposes of the 90-percent investment standard. See § 1.1400Z2(f)-1(b)(1).
This treatment is available to a QOF only
to the extent that, prior to the reinvestment
in qualified opportunity zone property, the
reinvested proceeds are continuously held
in cash, cash equivalents, or debt instruments with a term of 18 months or less.
See id.
If the QOF’s plan to reinvest some or all
of the above-described proceeds in qualified opportunity zone property is delayed
due to a Federally declared disaster (as
defined in section 165(i)(5)(A)), the QOF
may receive not more than an additional
12 months to reinvest the proceeds, provided that the QOF invests the proceeds in
the manner originally intended before the
disaster. See § 1.1400Z2(f)-1(b)(2).
III. GRANTS OF RELIEF FOR QOF
INVESTORS AND QOFS
A. 180-Day Investment Requirement
for QOF Investors
If the last day of the 180-day investment period within which a taxpayer must
make an investment in a QOF in order to
satisfy the 180-day investment requirement falls on or after April 1, 2020, and
before December 31, 2020, the last day
of that 180-day investment period is postponed to December 31, 2020. This relief
is automatic; taxpayers do not have to call
the IRS or send letters or other documents

June 22, 2020

to the IRS to receive this relief. However,
a taxpayer will still need to make a valid
deferral election in accordance with the
instructions to Form 8949, complete Form
8997, and file the completed Form 8949
and Form 8997 with a timely filed Federal
income tax return (including extensions)
or amended Federal income tax return for
the taxable year in which the gain would
be recognized if section 1400Z-2(a)(1) did
not apply to defer recognition of the gain.
For additional information, see https://
www.irs.gov/form8949https://www.irs.
gov/form8997.

ginning on April 1, 2020, and ending on
December 31, 2020, is disregarded in determining any 30-month substantial improvement period (that is, the 30-month
substantial improvement period is tolled
during the period beginning on April
1, 2020, and ending on December 31,
2020).

B. 90-Percent Investment Standard for
QOFs

A. Working Capital Safe Harbor for
Qualified Opportunity Zone Businesses

In the case of a QOF whose (i) last day
of the first 6-month period of the taxable
year or (ii) last day of the taxable year
falls within the period beginning on April
1, 2020, and ending on December 31,
2020, any failure by that QOF to satisfy
the 90-percent investment standard for
that taxable year of the QOF is—
(1) due to reasonable cause under section 1400Z-2(f)(3); and
(2) disregarded for purposes of determining whether the QOF or any otherwise
qualifying investments in that QOF satisfy
the requirements of section 1400Z-2 and
the section 1400Z-2 regulations for any
taxable year of the QOF.
This relief is automatic; QOFs do not
have to call the IRS or send letters or other documents to the IRS to receive this
relief. However, a QOF must accurately
complete all lines on Form 8996 filed with
respect to each affected taxable year EXCEPT that the QOF should place a “0” in
Part IV, Line 8 (Penalty). The accurately
completed Form 8996 must be filed with
the QOF’s timely filed Federal income
tax return (including extensions) for the
affected taxable year(s). For additional information, see https://www.irs.gov/
form8996

As a result of the Emergency Declaration (that is, the declaration of a Federally
declared disaster for purposes of section
165(i)(5)(A)), all qualified opportunity
zone businesses holding working capital
assets intended to be covered by the working capital safe harbor before December
31, 2020, receive not more than an additional 24 months to expend the working
capital assets of the qualified opportunity
zone business, as long as the qualified opportunity zone business otherwise meets
the requirements of § 1.1400Z2(d)-1(d)
(3)(v) (that is, the requirements to qualify
for the working capital safe harbor). See
§ 1.1400Z2(d)-1(d)(3)(v)(D) (providing
such 24-month extension due to a Federally declared disaster).

C. 30-Month Substantial Improvement
Period for QOFs and Qualified
Opportunity Zone Businesses
For purposes of the substantial improvement requirement with respect to
property held by a QOF or qualified opportunity zone business, the period be-

June 22, 2020

IV. REGULATORY EXTENSIONS FOR
WORKING CAPITAL SAFE HARBOR
AND QOF REINVESTMENT PERIOD
DUE TO FEDERALLY DECLARED
DISASTERS

B. 12-Month Reinvestment Period for
QOFs
If any QOF’s 12-month reinvestment
period includes January 20, 2020 (that is,
the date of the disaster identified in the
Major Disaster Declarations), that QOF
receives up to an additional 12 months
to reinvest in qualified opportunity zone
property some or all of the proceeds received by the QOF from the return of capital or the sale or disposition of some or all
of the QOF’s qualified opportunity zone
property, provided that the QOF satisfies
the requirements of § 1.1400Z2(f)-1(b)
(1) and invests the proceeds in the manner originally intended before January 20,
2020. See § 1.1400Z2(f)-1(b)(2) (providing such 12-month extension due to a Federally declared disaster).

986

V. EFFECT ON OTHER DOCUMENTS
Notice 2020-23 is modified.
VI. DRAFTING INFORMATION
The principal author of this notice is
Kyle C. Griffin of the Office of Associate
Chief Counsel (Income Tax and Accounting). For further information regarding this
notice, you may call the COVID-19 Disaster Relief Hotline at (202) 317-5436 (not a
toll-free number). For further information
regarding the application of this notice to
section 1400Z-2 and the section 1400Z-2
regulations, please contact Mr. Griffin at
(202) 317-4718 (not a toll-free number).

Temporary Relief from
the Physical Presence
Requirement for Spousal
Consents Under Qualified
Retirement Plans
Notice 2020-42
I. PURPOSE
In response to the unprecedented public
health emergency caused by the Coronavirus Disease 2019 (COVID-19) pandemic,
and the related social distancing that has
been implemented, this notice provides
temporary relief from the physical presence requirement in Treasury Regulations
§ 1.401(a)-21(d)(6) for participant elections required to be witnessed by a plan
representative or a notary public, including a spousal consent required under §
417 of the Internal Revenue Code (Code).
While this temporary relief, which covers
the period from January 1, 2020, through
December 31, 2020, is intended to facilitate the payment of coronavirus-related
distributions and plan loans to qualified individuals, as permitted by section 2202 of
the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116-136, 134 Stat.
281 (2020) (CARES Act), the temporary
relief applies to any participant election
that requires the signature of an individual
to be witnessed in the physical presence of
a plan representative or notary.

Bulletin No. 2020–26

II. BACKGROUND
On March 13, 2020, the President determined that the COVID-19 pandemic
was of sufficient severity and magnitude
to warrant an emergency determination
under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42
U.S.C. 5121-5207. Providing alternative
procedures for notarization and consent
related to plan distributions that do not
require physical presence is an appropriate emergency protective measure
during this declared emergency period
and is consistent with the physical distancing procedures implemented by the
states.
As part of the response to the COVID-19
pandemic, Congress passed the CARES
Act to allow participants greater access to
their retirement benefits. Section 2202(a)
of the CARES Act permits certain individuals to receive up to $100,000 for
a coronavirus-related distribution from
an eligible retirement plan (as defined in
§ 402(c)(8)(B) of the Code). A coronavirus-related distribution is defined as any
distribution from an eligible retirement
plan to a qualified individual made on or
after January 1, 2020, and before December 31, 2020. A distribution is not subject
to the 10% additional tax under § 72(t) to
the extent it meets the requirements of a
coronavirus-related distribution. In addition, the coronavirus-related distribution
may be included in gross income ratably
over the 3-year period beginning with the
taxable year of the distribution and may
be recontributed to an applicable eligible
retirement plan in which the taxpayer is a
beneficiary and to which a rollover can be
made.
Section 2202(b)(1) of the CARES Act
provides that in the case of any loan from
a qualified employer plan (as defined under § 72(p)(4) of the Code) to a qualified
individual made during the 180-day period beginning on the date of enactment of
the CARES Act, the $50,000 aggregate
loan limit in § 72(p)(2)(A)(i) of the Code
is increased to $100,000. In addition, the
rule in § 72(p)(2)(A)(ii) limiting the aggregate amount of the loans to one-half

of the present value of the vested accrued
benefit of the employee is increased to 100
percent of the employee’s vested accrued
benefit under the plan.
Section 1.401(a)-21 sets forth standards for the use of an electronic medium
to provide applicable notices to recipients
or to make participant elections with respect to a retirement plan, an employee
benefit arrangement, or an individual
retirement plan. Section 1.401(a)-21(e)
(6) defines a participant election as any
consent, election, request, agreement, or
similar communication made by or from
a participant, beneficiary, alternate payee, or an individual entitled to benefits
under a retirement plan, employee benefit arrangement, or individual retirement
plan. Section 1.401(a)-21(d) sets forth the
following conditions for participant elections:
(1) The individual must be effectively
able to access the electronic medium used
to make the participant election;
(2) The electronic system must be reasonably designed to preclude any person
other than the appropriate individual from
making the participant election;
(3) The electronic system must provide the individual making the participant
election with a reasonable opportunity to
review, confirm, modify, or rescind the
terms of the election before it becomes
effective; and
(4) The individual making the participant election, within a reasonable time,
must receive confirmation of the election
through either a written paper document
or an electronic medium under a system
that satisfies the applicable notice requirements under § 1.401(a)-21.
The participant election rules in
§ 1.401(a)-21(d) apply to plans that are
subject to the qualified joint and survivor (QJSA) requirements of § 417. Accordingly, for a plan subject to the QJSA
requirements, a participant’s consent to
a distribution may be provided through
the use of electronic media if the plan
complies with the standards described in
§ 1.401(a)-21(d), provided that the participant also obtains a valid spousal consent,
if applicable.

Section 417 requires spousal consent to
a waiver of a QJSA, which includes the
waiver of a QJSA as part of a request for
a plan distribution or a plan loan. Section
417 further requires that the spousal consent be witnessed by a plan representative
or a notary public. Section 1.401(a)-21(d)
(6)(i) provides that, in the case of a participant election that is required to be
witnessed by a plan representative or a
notary public (such as a spousal consent
to a waiver of a QJSA under § 417), the
signature of the individual making the
participant election must be witnessed in
the physical presence of a plan representative or a notary public. Section 1.401(a)21(d)(6)(ii) provides that, if the signature
is witnessed in the physical presence of a
notary public, an electronic signature acknowledging the signature (in accordance
with section 101(g) of the Electronic Signatures in Global and National Commerce
Act, Pub. L. 106-229, 114 Stat. 464 (2000)
(E-SIGN),1 and applicable state law for
notaries public) will not be denied legal
effect.
Section 1.401(a)-21(d)(6)(iii) provides
that the Commissioner may provide in
guidance published in the Internal Revenue Bulletin that the use of procedures
under an electronic system is deemed to
satisfy the physical presence requirement,
but only if those procedures with respect
to the electronic system provide the same
safeguards for participant elections as are
provided through the physical presence
requirement.
Section 1.401(a)-21(d) permits electronic notarization of participant elections. However, the physical presence
requirement in § 1.401(a)-21(d)(6) would
preclude the use of remote notarizations
of participant elections, including spousal
consents.
Remote electronic notarizations differ
from electronic notarizations in that remote electronic notarizations generally
are conducted remotely over the internet
using digital tools and live audio-video
technologies, whereas electronic notarizations can be signed electronically but
still require that certain signatures be
witnessed in the physical presence of a

Section 101(g) of E-SIGN provides that “[i]f a statute, regulation, or other rule of law requires a signature or record relating to a transaction in or affecting interstate or foreign commerce
to be notarized, acknowledged, verified, or made under oath, that requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other
information required to be included by other applicable statute, regulation, or rule of law, is attached to or logically associated with the signature or record.”
1

Bulletin No. 2020–26

987

June 22, 2020

notary public or plan representative. The
Department of the Treasury and the Internal Revenue Service have received several requests from stakeholders to permit
remote electronic notarization of spousal
consents for plan loans and distributions
during the COVID-19 pandemic. These
stakeholders state that due to the social
distancing measures with respect to the
COVID-19 pandemic, the physical presence requirement in § 1.401(a)-21(d)(6)
makes it difficult, if not impossible, for a
participant to receive a plan distribution
or plan loan (or for a qualified individual
to receive a coronavirus-related distribution or plan loan) for which spousal
consent is required. While recognizing
the need for relief, one stakeholder requested that any relief take into account
spousal protections, including limiting
the relief solely to the physical presence
requirement and making the relief temporary.
Remote electronic notarization is not
uniformly applied by the states. In the
majority of states, remote electronic notarization is either permanently or temporarily permitted by law, but in some states
remote electronic notarization is not currently permitted.
III. GRANT OF RELIEF
For the period from January 1, 2020,
through December 31, 2020, if the related requirements in subsection A or B of
this Section III are satisfied, this notice
provides the following temporary relief
from the physical presence requirement in
§ 1.401(a)-21(d)(6):
(1) temporary relief from the physical
presence requirement for any participant
election witnessed by a notary public of a
state that permits remote electronic notarization, and
(2) temporary relief from the physical
presence requirement for any participant
election witnessed by a plan representative.
A. Temporary Relief from the Physical
Presence Requirement for any
Participant Election Witnessed by a
Notary Public
In the case of a participant election
witnessed by a notary public, for the pe-

June 22, 2020

riod from January 1, 2020, through December 31, 2020, the physical presence
requirement in § 1.401(a)-21(d)(6) is
deemed satisfied for an electronic system
that uses remote notarization if executed via live audio-video technology that
otherwise satisfies the requirements of
participant elections under § 1.401(a)21(d)(6) and is consistent with state law
requirements that apply to the notary
public.
B. Temporary Relief from the Physical
Presence Requirement for any
Participant Election Witnessed by a
Plan Representative
In the case of a participant election
witnessed by a plan representative, for
the period from January 1, 2020, through
December 31, 2020, the physical presence requirement in § 1.401(a)-21(d)(6)
is deemed satisfied for an electronic system if the electronic system using live audio-video technology satisfies the following requirements:
(1) The individual signing the participant election must present a valid photo
ID to the plan representative during the
live audio-video conference, and may not
merely transmit a copy of the photo ID
prior to or after the witnessing;
(2) The live audio-video conference
must allow for direct interaction between
the individual and the plan representative
(for example, a pre-recorded video of the
person signing is not sufficient);
(3) The individual must transmit by fax
or electronic means a legible copy of the
signed document directly to the plan representative on the same date it was signed;
and
(4) After receiving the signed document, the plan representative must acknowledge that the signature has been
witnessed by the plan representative in
accordance with the requirements of this
notice and transmit the signed document,
including the acknowledgement, back to
the individual under a system that satisfies
the applicable notice requirements under
§ 1.401(a)-21(c).
IV. PAPERWORK REDUCTION ACT
The collection of information contained in this notice has been reviewed

988

and approved by the Office of Management and Budget in accordance with the
Paperwork Reduction Act (44 U.S.C.
3507) under control number 1545–1632.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collection of information is in
Section III.B of this notice. One of the
conditions for receiving temporary relief
from the physical presence requirement
in § 1.401(a)-21(d) is that the plan representative acknowledge that he or she
has witnessed the signature and transmit
the signed document, including the acknowledgement, back to the person under a system that satisfies the applicable
notice requirements under § 1.401(a)21. This condition is similar to the confirmation requirement for participant
elections in § 1.401(a)-21(d), requiring
that the individual making a participant election, within a reasonable time,
receive a confirmation of the election
through either a written paper document
or an electronic medium under a system that satisfies the applicable notice
requirements under § 1.401(a)-21(c). It
has been determined that the plan representative’s acknowledgment that he or
she witnessed the signature of the participant election is a minor modification
to the control number 1545–1632 and
should not result in any additional paperwork burden.
Books or records relating to a collection of information must be retained as
long as their contents may become material in the administration of any internal
revenue law. Generally, tax returns and tax
return information are confidential, as required by 26 U.S.C. 6103.
V. DRAFTING INFORMATION
The principal authors of this notice are
Arslan Malik and Pamela R. Kinard of
the Office of the Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes). For
further information regarding this notice,
contact Arslan Malik at (202) 317-6700
and Pamela R. Kinard at (202) 317-6000
(not toll-free numbers).

Bulletin No. 2020–26

Sections 4375 & 4376 –
Insured and Self-Insured
Health Plans
Adjusted Applicable Dollar
Amount for Fee Imposed by
§§ 4375 and 4376
Notice 2020-44
I. PURPOSE
This notice provides the adjusted applicable dollar amount to be multiplied by
the average number of covered lives for
purposes of calculating the fee imposed by
§§ 4375 and 4376 of the Internal Revenue
Code for policy years and plan years that
end on or after October 1, 2019, and before
October 1, 2020. This notice also provides
transition relief for calculating the average
number of covered lives as part of calculating the applicable fee for policy years and
plan years that end on or after October 1,
2019, and before October 1, 2020.
II. BACKGROUND
Prior to the December 20, 2019 enactment of the Further Consolidated Appropriations Act, 2020, Pub. L. No. 116-94, 133
Stat. 2534 (the Act), § 4375 imposed a fee
on the issuer of a specified health insurance
policy for each policy year ending after
September 30, 2012, and before October
1, 2019, and § 4376 imposed a fee on the
plan sponsor of an applicable self-insured
health plan for each plan year ending after
September 30, 2012, and before October
1, 2019. The fee imposed by §§ 4375 and
4376 helps to fund the Patient-Centered
Outcomes Research Trust Fund (PCORTF)
and is calculated using the average number
of lives covered under the policy or plan
and the applicable dollar amount for that
policy year or plan year. The Act extended the termination dates to provide that
§§ 4375 and 4376 will not apply to policy and plan years ending after September
30, 2029, rather than policy and plan years
ending after September 30, 2019.
Under §§ 4375(a) and 4376(a), the
applicable dollar amount is $2 for pol1

icy and plan years ending on or after
October 1, 2013, and before October 1,
2014.1 Treas. Reg. §§ 46.4375-1(c)(4) and
46.4376-1(c)(3). Under §§ 4375(d) and
4376(d) and Treas. Reg. §§ 46.4375-1(c)
(4) and 46.4376-1(c)(3), the applicable
dollar amount for policy years and plan
years ending in any Federal fiscal year beginning on or after October 1, 2014, is increased based on increases in the projected per capita amount of National Health
Expenditures. Specifically, the applicable
dollar amount is the sum of –
(i) The applicable dollar amount for the
policy year or plan year ending in the
previous Federal fiscal year; plus
(ii) The amount equal to the product of –
(A) The applicable dollar amount for
the policy year or plan year ending in the previous Federal fiscal
year; and
(B) The percentage increase in the
projected per capita amount of
the National Health Expenditures
most recently released by the Department of Health and Human
Services (HHS) before the beginning of the Federal fiscal year.
Notice 2018-85, 2018-48, I.R.B. 788,
provides that the adjusted applicable dollar amount for policy years and plan years
that end on or after October 1, 2018, and
before October 1, 2019, is $2.45.
The Act amended §§ 4375(e) and
4376(e) to provide that §§ 4375 and 4376
will no longer apply beginning with policy and plan years ending after September 30, 2029. Therefore, the fee under
§§ 4375 and 4376 applies to any specified
health insurance policy and any applicable self-insured health plan with a policy
or plan year ending after September 30,
2012, and before September 30, 2029, including any policy or plan year ending after September 30, 2019. The Department
of the Treasury and the IRS anticipate
amending the regulations at §§ 46.43751, 46.4376-1, and 46.4377-1 to reflect the
statutory change in the termination dates.
III. TRANSITION RELIEF
Prior to enactment of the Act, due to the
anticipated termination of the fee under
§ 4375 for policy years ending after Sep-

tember 30, 2019, issuers of specified health
insurance policies for policy years ending
on or after October 1, 2019, and before
October 1, 2020, may not have anticipated
the need to identify the number of covered
lives for this period. Issuers may continue
to use one of the following four methods
specified in the regulations under § 4375
to calculate the average number of covered
lives for purposes of the fee imposed by
§ 4375: the actual count method, the snapshot method, the member months method,
and the state form method. See Treas. Reg.
§ 46.4375-1(c)(2)(i). In addition, for policy
years ending on or after October 1, 2019,
and before October 1, 2020, issuers may
use any reasonable method for calculating
the average number of covered lives. If an
issuer uses a reasonable method to calculate the average number of covered lives
for policy years ending on or after October
1, 2019, and before October 1, 2020, then
that reasonable method must be applied
consistently for the duration of the year and
the issuer must use the same method for all
policies for which a liability is reported on
Form 720 for that year.
Similarly, prior to enactment of the
Act, due to the anticipated termination of
the fee under § 4376 for plan years ending
after September 30, 2019, plan sponsors
of applicable self-insured health plans for
plan years ending on or after October 1,
2019, and before October 1, 2020, may
not have anticipated the need to identify
the number of covered lives for this period. Plan sponsors may continue to use
one of the following three methods specified in the regulations under § 4376 to
calculate the average number of covered
lives for purposes of the fee imposed by
§ 4376: the actual count method, the snapshot method, and the Form 5500 method.
See Treas. Reg. § 46.4376-1(c)(2)(i). In
addition, for plan years ending on or after October 1, 2019, and before October 1,
2020, plan sponsors may use any reasonable method for calculating the average
number of covered lives. If a plan sponsor
uses a reasonable method to calculate the
average number of covered lives for plan
years ending on or after October 1, 2019,
and before October 1, 2020, then that reasonable method must be applied consistently for the duration of the plan year.

The applicable dollar amount is $1 for policy and plan years ending before October 1, 2013.

Bulletin No. 2020–26

989

June 22, 2020

IV. ADJUSTED APPLICABLE
DOLLAR AMOUNT
The applicable dollar amount that must
be used to calculate the fee imposed by
§§ 4375 and 4376 for policy years and plan
years that end on or after October 1, 2019,
and before October 1, 2020, is $2.54. The
increase from the prior amount is calculated by multiplying the adjusted applicable
dollar amount for policy years and plan
years ending in the previous Federal fiscal year, $2.45, by the percentage increase
of the projected per capita amount of National Health Expenditures published by
HHS on February 19, 2019. See: https://
www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected,Table
3. The percentage increase is calculated
after adjustment to reflect updates to the
data used to calculate the prior amount,
$2.45, which was based on the per capita
amounts of National Health Expenditures
for 2018 and 2019 published by HHS on
February 14, 2018.
V. EFFECTIVE DATE
This notice is effective for policy years
and plan years ending on or after October
1, 2019.
VI. DRAFTING INFORMATION
The principal author of this notice is
William Fischer of the Office of Associate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). For further information regarding
this notice, contact Mr. Fischer at (202)
317-5500 (not a toll-free number).
26 CFR 601.105: Examination of returns and claims
for refund, credit or abatement; determination of
correct tax liability.
(Also Part I, §§ 1001; 301.7701–2, 301.7701–3,
301.7701–4.)

Rev. Proc. 2020-34
SECTION 1. PURPOSE
In response to the Coronavirus Disease
2019 (COVID-19) emergency, this revenue procedure describes temporary safe

June 22, 2020

harbors for the purpose of determining
the Federal tax status of certain arrangements that hold real property as trusts.
Under the safe harbors, certain modifications to mortgage loans, certain modifications to leases, and certain additional
capital contributions are not treated under
§ 301.7701–4(c) of the Procedure and Administration Regulations as manifesting a
power to vary.
SECTION 2. BACKGROUND—
TRUSTS
.01 Section 301.7701–2(a) defines a
“business entity” as any entity recognized
for Federal tax purposes (including an entity with a single owner that may be disregarded as an entity separate from its owner
under § 301.7701–3) that is not properly
classified as a trust under § 301.7701–4
or otherwise subject to special treatment
under the Internal Revenue Code (Code).
.02 Section 301.7701–4(a) provides
that, generally speaking, an arrangement
is treated as a trust if the purpose of the
arrangement is to vest in trustees responsibility for the protection and conservation
of property for beneficiaries who cannot
share in the discharge of this responsibility and, therefore, are not associates in a
joint enterprise for the conduct of business
for profit.
.03 Section 301.7701–4(c) provides
that an “investment” trust is not classified
as a trust if there is a power under the trust
agreement to vary the investment of the
certificate holders. An investment trust
with a single class of ownership interests,
representing undivided beneficial interests
in the assets of the trust, is classified as a
trust if there is no power under the trust
agreement to vary the investments of the
certificate holders.
.04 Under § 677(a) of the Code, the
grantor of a trust is treated as the owner
of any portion of a trust whose income,
without the approval or consent of any adverse party is, or, in the discretion of the
grantor or a non-adverse party, or both,
may be distributed, held, or accumulated
for future distribution to the grantor or the
grantor’s spouse.
.05 A person that is treated as the owner of an undivided fractional interest of a
trust under subpart E of part I, subchapter J of chapter 1 of the Code (§§ 671 and

990

following), is considered to own the trust
assets attributable to that undivided fractional interest of the trust for Federal income tax purposes. See Rev. Rul. 88-103,
1988-2 C.B. 304; Rev. Rul. 85-45, 19851 C.B. 183; and Rev. Rul. 85-13, 1985-1
C.B. 184. See also § 1.1001-2(c), Example 5 of the Income Tax Regulations.
SECTION 3. REVENUE RULING
2004-86
.01 Rev. Rul. 2004-86, 2004-2 C.B.
191, holds that a Delaware statutory trust
(Trust) formed to hold real property subject to a lease under the trust agreement
described in the ruling is an arrangement
that is classified as a trust for Federal tax
purposes under § 301.7701-4(c). Each of
Trust’s owners is treated, by reason of
§ 677, as an owner of a pro rata portion
of Trust. Because an owner of an undivided fractional interest in Trust owns for
Federal tax purposes the assets of Trust
attributable to that interest, each owner is
considered to own for those purposes an
undivided fractional interest in the rental
real property held by Trust. Accordingly,
under § 1031 of the Code, a taxpayer may
exchange an interest in real property for
an interest in Trust without recognition of
gain or loss, if the other requirements of §
1031 are satisfied.
.02 Under the facts of Rev. Rul. 200486, an individual borrows money from a
bank and signs a 10-year note bearing adequate stated interest. On the same day, the
individual uses the proceeds of the loan to
purchase Blackacre, rental real property.
The note is secured by Blackacre and is
nonrecourse to the individual. Immediately after this purchase, the individual enters
into a net lease with a tenant (Tenant) for a
term of 10 years.
.03 Under the terms of the lease,
Tenant must pay all taxes, assessments,
fees, or other charges imposed on Blackacre by Federal, state, or local authorities.
In addition, Tenant must pay all insurance,
maintenance, ordinary repairs, and utilities relating to Blackacre. Tenant may
sublease Blackacre. Tenant’s rent is fixed.
The revenue ruling indicates that Tenant’s
rent qualifies as fixed even if the lease
agreement includes automatic periodic
adjustments to the rent that are based on a
fixed rate or on an objective index, such as

Bulletin No. 2020–26

an escalator clause based on the consumer
price index. No adjustments are within the
control of any of the parties of the lease.
The amount of rent is not contingent on
the tenant’s ability to lease the property,
on the tenant’s gross sales, or on net profits derived from the property.
.04 On the same day that the lease was
executed, the individual forms Trust and
contributes Blackacre to Trust. Upon the
transfer of Blackacre, Trust assumes the
rights and obligations of the individual
as to the note with the bank and the lease
with Tenant.
.05 The terms of Trust provide for the
following—
(1) A single class of trust interests,
each representing an undivided interest in
the assets of Trust (in this case, Blackacre,
which is subject to both the lease and the
note);
(2) Authorization for the trustee to establish a reasonable reserve for expenses
that are associated with Trust’s holding
Blackacre and that are payable out of trust
funds;
(3) Required quarterly distributions of
all available cash, less reserves, to each
beneficial owner of Trust in proportion to
that owner’s relative interest in Trust;
(4) The right of each beneficial owner
to an in-kind distribution of that owner’s
proportionate share of trust property;
(5) A requirement that Trust invest all
cash that it holds in either—
(a) Short term obligations of (or guaranteed by) the United States, or any agency or instrumentality thereof; or
(b) Certificates of deposit of a bank or
trust company having a minimum stated
surplus and capital;
(6) Requirements that the trustee both
invest only in obligations maturing prior
to the next distribution date and hold those
obligations until maturity;
(7) A limitation on the activities of the
trustee to collection and distribution of income;
(8) A prohibition against the trustee—
(a) Exchanging Blackacre for other
property;
(b) Purchasing assets other than the
short-term investments described above;
(c) Accepting additional contributions
of assets (including money) to Trust;
1

(d) Renegotiating the terms of the debt
used to acquire Blackacre; and
(e) Renegotiating the lease with Tenant
except in the case of Tenant’s bankruptcy
or insolvency;
(9) The termination of Trust at the
earlier of 10 years or the disposition of
Blackacre.
.06 The ruling states that Trust would
have been treated as a business entity and
not a trust if Trust’s trustee had a power under the trust agreement to, among
other things, renegotiate the lease with
its tenant, to enter into leases with other
tenants, or to renegotiate or refinance the
mortgage loan whose proceeds were used
to purchase Blackacre.
SECTION 4. COVID-19
EMERGENCY AND REVENUE
PROCEDURE 2020-26
.01 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 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).”1
.02 To provide additional relief, on
March 27, 2020, Congress and the President enacted the Coronavirus Aid, Relief,
and Economic Security Act, Pub. L. No.
116-136, 134 Stat. 281 (CARES Act).
.03 On April 13, 2020, the Department
of the Treasury (Treasury Department)
and the Internal Revenue Service (IRS)
issued safe harbors in Rev. Proc. 2020-26,
2020-18 I.R.B. 753. These safe harbors
apply for determining the Federal income
tax status of certain securitization vehicles
that hold mortgage loans. Under the safe
harbors, certain modifications of mortgage loans in connection with forbearance
programs described in that guidance are
not treated as replacing the unmodified
obligation with a newly issued obligation,
as giving rise to prohibited transactions, or
as manifesting a power to vary.

.04 In the case of mortgage loans held
by real estate mortgage investment conduits (REMICs) and investment trusts,
Rev. Proc. 2020-26 applies to—
(1) Forbearance (and all related modifications) of a Federally backed mortgage
loan or a Federally backed multifamily
mortgage loan, if the forbearance is provided under section 4022 or 4023, respectively, of the CARES Act (CARES Act
Forbearances); and
(2) Forbearances (and all related
modifications) that are not CARES Act
Forbearances, that are agreed to by the
borrower of any Federally backed or
non-Federally backed mortgage loan, and
that are provided by a holder or servicer
of the loan under a forbearance program
for borrowers experiencing a financial
hardship due, directly or indirectly, to the
COVID-19 emergency. The forbearance
programs covered are those—
(a) Which are identical or similar to
those described in section 2.07 of Rev.
Proc. 2020-26; and
(b) Pursuant to which, between March
27, 2020, and December 31, 2020, inclusive, the borrower requests or agrees to
the forbearance (and all related modifications).
.05 Section 6.01 of Rev. Proc. 202026 provides that for mortgage loans held
by REMICs, forbearances (and all related
modifications) described in section 5.01
of Rev. Proc. 2020-26 are not treated as
resulting in a newly issued mortgage loan
for purposes of § 1.860G-2(b)(1), are not
prohibited transactions under § 860F(a)
(2) of the Code, and do not result in a
deemed reissuance of the REMIC regular
interests.
.06 Under section 6.02 of Rev. Proc.
2020-26, in the case of mortgage loans
held by investment trusts, certain transactions do not manifest a power to vary
the investment of the certificate holders.
These transactions are—
(1) CARES Act forbearances (and all
related modifications); and
(2) Forbearances (and all related modifications) that are described in section 2.07
of Rev. Proc. 2020-26, that are requested,
or agreed to, between March 27, 2020, and
December 31, 2020, and that are granted
as a result of a borrower experiencing a

https://www.whitehouse.gov/wp-content/uploads/2020/03/LetterFromThePresident.pdf

Bulletin No. 2020–26

991

June 22, 2020

financial hardship due to the COVID-19
emergency.
SECTION 5. COMMENTS
RECEIVED
.01 The Treasury Department and the
IRS received comments addressing arrangements organized as trusts under §
301.7701-4(c) and Rev. Rul. 2004-86 that
hold rental real property. The commenters
reported that many of these arrangements
and their tenants are experiencing financial hardship due, directly or indirectly, to
the COVID-19 emergency.
.02 These comments indicate that, in
order to respond appropriately to these
challenges, trustees may find it necessary
to—
(1) Respond to the COVID-19 financial hardship of their tenants by modifying the trust’s real property leases with the
tenants to defer or waive rent payments;
(2) Request relief under various forbearance programs with respect to debt
service on the mortgage loan secured by
the trust’s real property; and
(3) Accept additional cash contributions in order to avoid default on the
trust’s loan obligations, to satisfy lender
demands on which receiving a loan modification may be contingent, to pay trust
expenses, or to bolster trust reserves for
the payment of expenses and loan payments. Depending on the circumstances
for a particular trust, these contributions
may come pro rata from current trust interest holders, non-pro rata from these
current interest holders, or from outside
investors.
SECTION 6. SCOPE
.01 This revenue procedure applies
to arrangements that are trusts under
§ 301.7701‑4(c) and Rev. Rul. 2004-862
and that hold real property and engage in
one or more of the actions described in
sections 6.02, 6.03, or 6.04 of this revenue
procedure.
.02 Modification of one or more mortgage loans that secure the trust’s real property in—
(1) A CARES Act Forbearance (and
all related modifications); or

(2) A forbearance (and all related
modifications)—
(a) That are described in section 2.07
of Rev. Proc. 2020-26;
(b) That the trust requested, or agreed
to, between March 27, 2020, and December 31, 2020; and
(c) That were granted as a result of the
trust experiencing a financial hardship due
to the COVID-19 emergency.
.03 Modifications of one or more real
property leases (including modifications
to the specific allocations of fixed rent
in the lease agreements as described in
§ 467 of the Code and the regulations under § 467; see section 9.01 of this revenue
procedure). The lease must have been entered into by the trust on or before March
13, 2020, and the modifications must have
been requested and agreed to on or after
March 27, 2020, and on or before December 31, 2020. The reason for the modifications must be—
(1) To coordinate the lease cash flows
with the cash flows that result from one
or more transactions described in section
6.02 of this revenue procedure; or
(2) To defer or waive one or more
tenants’ rental payments for any period
between March 27, 2020, and December
31, 2020 (and all related modifications),
because the tenants are experiencing a
financial hardship due to the COVID-19
emergency.
.04 Acceptance of cash contributions
that are made between March 27, 2020,
and December 31, 2020, as a result of the
trust experiencing financial hardship due
to the COVID-19 emergency, provided the
contribution must be needed to increase
permitted trust reserves, to maintain trust
property, to fulfill obligations under mortgage loans, or to fulfill obligations under
real property leases. See section 10 of
this revenue procedure regarding the tax
treatment of non-pro rata contributions or
contributions from new investors for an
interest in the trust.
SECTION 7. SAFE HARBOR
For the purpose of determining whether the arrangement is treated as a trust under § 301.7701-4(c) and Revenue Ruling
2004-86, the actions described in section

6 of this revenue procedure are not manifestations of a power to vary.
SECTION 8. NO INFERENCE
.01 No inferences should be drawn
about whether similar consequences
would obtain if an arrangement takes actions that fall outside the limited scope of
this revenue procedure.
.02 Thus, an arrangement’s qualification as a trust under § 301.7701-4(c) may
be affected by a waiver or deferral of rent
(and related modifications) that is inconsistent with section 3.03 of this revenue
procedure and the lease arrangement described in Rev. Rul. 2004-86.
.03 Similarly, contributions that are
not described in section 6.04 of this revenue procedure are outside the scope of
the safe harbor in section 7 of this revenue procedure. For example, the scope of
the safe harbor does not include additional contributions to the trust that are used
to make more than minor, non-structural
modifications to the trust’s real property.
Additionally, contributions of property
other than cash generally manifest a power to vary.
SECTION 9. GUIDANCE ON
MODIFICATIONS OF REAL
PROPERTY LEASES
.01 The regulations under § 467 include rules for determining the income
and deductions required to be taken into
account in connection with § 467 rental
agreements (generally, rental agreements
with increasing or decreasing rents, or
deferred or prepaid rents, as described in
§ 1.467-1). The fixed rent under a § 467
rental agreement is included in the income
of the lessor and deducted by the lessee
in accordance with the allocations of fixed
rent provided in the rental agreement. See
§ 1.467-1(d)(2)(iii). For agreements with
no specific allocation of fixed rent as described in § 1.467-1(c)(2)(ii), rent is included in the lessor’s income and deducted by the lessee in accordance with the
agreement’s rent payment schedule. For
agreements with a specific allocation of
rent, the specific allocation of rent is used

Although Rev. Rul. 2004–86 describes a trust that had been formed under a specific Delaware statute, the SCOPE of this revenue procedure includes trusts formed under the equivalent law
(if any) of other states or the District of Columbia.
2

June 22, 2020

992

Bulletin No. 2020–26

to determine the income and deductions
under the agreement.
.02 For § 467 rental agreements that
have a specific allocation of fixed rent, if
the payment terms under the rental agreement are modified under this revenue procedure because the tenant is experiencing
a financial hardship due to the COVID-19
emergency, amendments are also permitted to the agreement’s specific allocation
of fixed rent. In addition, any amendments
to the rental agreement must be given appropriate tax effect under the applicable
provisions of the Code and regulations,
including the provisions in § 1.467-1(f)

Bulletin No. 2020–26

relating to substantial modifications of
§ 467 rental agreements.
SECTION 10. GUIDANCE ON
TAX TREATMENT OF NON-PRO
RATA CONTRIBUTIONS FROM
CURRENT TRUST INTEREST
HOLDERS AND CONTRIBUTIONS
FROM NEW INVESTORS.
A cash contribution from one or more
new trust interest holders to acquire a trust
interest or a non-pro rata cash contribution from one or more current trust interest holders must be treated as a purchase

993

and sale under § 1001 of the Code of a
portion of each non-contributing (or lesser
contributing) trust interest holder’s proportionate interest in the trust’s assets.
SECTION 11. DRAFTING
INFORMATION
The principal author of this revenue procedure is Christiaan Cleary of
the Office of Associate Chief Counsel
(Passthroughs and Special Industries). For
further information, contact Christiaan
Cleary at (202) 317-6850 (not a toll-free
number).

June 22, 2020

Part IV
Notice of Proposed
Rulemaking
Certain Medical Care
Arrangements
REG-109755-19
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking.
SUMMARY: This document contains
proposed regulations relating to section
213 of the Internal Revenue Code (Code)
regarding the treatment of amounts paid
for certain medical care arrangements, including direct primary care arrangements,
health care sharing ministries, and certain
government-sponsored health care programs. The proposed regulations affect
individuals who pay for these arrangements or programs and want to deduct the
amounts paid as medical expenses under
section 213.
DATES: Written or electronic comments
and requests for a public hearing must be
received by August 10, 2020. Requests
for a public hearing must be submitted as
prescribed in the “Comments and Requests for a Public Hearing” section.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic submissions via the Federal eRulemaking Portal
at www.regulations.gov (indicate IRS and
REG-109755-19) by following the online
instructions for submitting comments.
Once submitted to the Federal eRulemaking Portal, comments cannot be edited
or withdrawn. The IRS expects to have
limited personnel available to process
public comments that are submitted on
paper through mail. Until further notice,
any comments submitted on paper will

be considered to the extent practicable.
The Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) will publish for public
availability any comment submitted electronically, and to the extent practicable
on paper, to its public docket. Send paper
submissions to: CC:PA:LPD:PR (REG109755-19), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin
Station, Washington, DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, call Richard C. Gano IV of
the Office of Associate Chief Counsel
(Income Tax and Accounting), (202) 3177011 (not a toll-free call); concerning the
preamble discussion of health reimbursement arrangements or health savings accounts, call William Fischer of the Office
of Associate Chief Counsel (Employee
Benefits, Exempt Organizations, and Employment Taxes), (202) 317-5500 (not a
toll-free call); concerning the submission
of comments and/or requests for public
hearing, call Regina Johnson, (202) 3175177 (not a toll-free call).
SUPPLEMENTARY INFORMATION:
Background
1. Executive Order 13877
On June 24, 2019, President Trump issued Executive Order 13877, “Improving
Price and Quality Transparency in American Healthcare to Put Patients First” (84
FR 30849 (June 27, 2019)). The Executive
Order states that it is the policy of the Federal Government to ensure that patients
are engaged with their healthcare decisions and have the information requisite
for choosing the healthcare they want and
need. In furtherance of that policy, section
6(b) of the Executive Order directs the
Secretary of the Treasury, to the extent
consistent with law, to “propose regulations to treat expenses related to certain
types of arrangements, potentially includ-

ing direct primary care arrangements and
healthcare sharing ministries, as eligible
medical expenses under Section 213(d)”
of the Code. The proposed regulations
have been developed in response to this
Executive Order.
2. Deduction for Medical Expenses
Section 213(a) allows a deduction for
expenses paid during the taxable year,
not compensated for by insurance or otherwise, for medical care of the taxpayer,
the taxpayer’s spouse, or the taxpayer’s
dependent (as defined in section 152, determined without regard to subsections (b)
(1), (b)(2), and (d)(1)(B) of section 152),
to the extent the expenses exceed 10 percent of adjusted gross income (AGI) (7.5
percent of AGI for a taxable year beginning before January 1, 2021).1 A section
213 deduction is allowable only with
respect to medical expenses actually
paid during the taxable year, regardless
of when the incident or event that occasioned the expenses occurred, and regardless of the method of accounting used by
the taxpayer for filing income tax returns.
Section 1.213-1(a)(1) of the Income Tax
Regulations.
3. Definition of Medical Care under
Section 213(d)(1)
For purposes of determining whether
medical expenses are deductible under
section 213, section 213(d)(1) defines
“medical care” as amounts paid for (A)
the diagnosis, cure, mitigation, treatment,
or prevention of disease, or for the purpose of affecting any structure or function
of the body (referred to in this preamble
as “medical care under section 213(d)(1)
(A)”); (B) transportation primarily for and
essential to obtaining medical care referred
to in (A); (C) qualified long-term care services; or (D) insurance covering medical
care and transportation as described in (A)
and (B), respectively (referred to in this
preamble as “medical insurance”), including supplementary medical insurance for

Section 103 of the Taxpayer Certainty and Disaster Tax Relief Act of 2019, enacted as part of the Further Consolidated Appropriations Act, 2020, Pub. L. No. 116-94, 133 Stat. 2534, Div.
Q, Title I (2019)), amending section 213(f) to reduce the threshold for the deduction to 7.5 percent of AGI for tax years beginning before January 1, 2021.
1

June 22, 2020

994

Bulletin No. 2020–26

the aged (Medicare Part B), and any qualified long-term care insurance contract. See
also §1.213-1(e).
A. Medical Care under Section 213(d)
(1)(A)
Deductions for amounts paid for medical care under section 213(d)(1)(A) are
confined strictly to expenses incurred primarily for the prevention or alleviation of
a physical or mental defect or illness and
for operations or treatment affecting any
portion of the body. Section 1.213-1(e)(1)
(ii). Thus, payments for the following are
payments for medical care under section
213(d)(1)(A): hospital services; nursing
services; medical, laboratory, surgical,
dental and other diagnostic and healing
services; obstetrical expenses, expenses
of therapy, and X-rays; prescribed drugs
or insulin; and artificial teeth or limbs.
Section 213(b) and §1.213-1(e)(1)(ii).
However, an expenditure which is merely
beneficial to the general health of an individual, such as an expenditure for a vacation, is not an expenditure for medical
care. Section 1.213-1(e)(1)(ii). Amounts
paid for illegal operations or treatments
are not deductible. Id.
B. Medical Insurance under Section
213(d)(1)(D)
Expenditures for medical insurance
described in section 213(d)(1)(D) are
amounts paid for medical care only to the
extent such amounts are paid for insurance covering the diagnosis, cure, mitigation, treatment, or prevention of disease;
for the purpose of affecting any structure
or function of the body; or for transportation primarily for and essential to medical care. Section 1.213-1(e)(4)(i)(a).
Amounts are considered payable for other
than medical care under a contract if the
contract provides for the waiver of premiums upon the occurrence of an event. Id.
In the case of an insurance contract under
which amounts are payable for other than

medical care (as, for example, a policy
providing an indemnity for loss of income
or for loss of life, limb, or sight), (1) no
amount may be treated as paid for medical insurance unless the charge for such
insurance is either separately stated in the
contract or furnished to the policyholder
by the insurer in a separate statement, (2)
the amount treated as paid for medical insurance may not exceed such charge, and
(3) no amount may be treated as paid for
medical insurance if the amount specified
in the contract (or furnished to the policyholder by the insurer in a separate statement) as the charge for such insurance is
unreasonably large in relation to the total
charges under the contract (considering
the relationship of the coverages under the
contract together with all the facts and circumstances). Id.
In determining whether a contract
constitutes an “insurance” contract for
purposes of section 213, it is irrelevant
whether the benefits are payable in cash
or in services. Section 1.213-1(e)(4)(i)(a).
For example, amounts paid for hospitalization insurance, for membership in an
association furnishing cooperative or socalled free-choice medical service, or for
group hospitalization and clinical care are
payments for medical insurance. Id. In addition, premiums paid for Medicare Part
B are amounts paid for medical insurance.
Id.
Explanation of Provisions
In developing the proposed regulations,
the Treasury Department and the IRS considered how to carry out the objectives of
Executive Order 13877 in a way permitted by law and supported by sound policy. The Treasury Department and the IRS
undertook a review of direct primary care
arrangements and health care sharing ministries by meeting with practitioners and
individuals who operate the arrangements
to analyze the facts of those arrangements.
After gathering information on those arrangements and considering the relevant

legal authorities, the Treasury Department
and the IRS propose that expenditures
for direct primary care arrangements and
health care sharing ministry memberships
are amounts paid for medical care as defined in section 213(d), and that amounts
paid for those arrangements may be deductible medical expenses under section
213(a). The proposed regulations also
clarify that amounts paid for certain arrangements and programs, such as health
maintenance organizations (HMO) and
certain government-sponsored health care
programs, are amounts paid for medical
insurance under section 213(d)(1)(D).2
These proposed regulations do not affect
the tax treatment of any medical care arrangement that currently qualifies as medical care under section 213(d).
1. Definition of Direct Primary Care
Arrangement
The proposed regulations define a
“direct primary care arrangement” as a
contract between an individual and one
or more primary care physicians under
which the physician or physicians agree to
provide medical care (as defined in section
213(d)(1)(A)) for a fixed annual or periodic fee without billing a third party. The
proposed regulations define a “primary
care physician” as an individual who is a
physician (as described in section 1861(r)
(1) of the Social Security Act (SSA)) who
has a primary specialty designation of
family medicine, internal medicine, geriatric medicine, or pediatric medicine. The
definition is adopted from paragraph (I)
of the definition of “primary care practitioner” in section 1833(x)(2)(A)(i) of the
SSA. The Treasury Department and the
IRS request comments on the definition of
primary care physician and on the definition of direct primary care arrangement.
The Treasury Department and the IRS
also request comments on whether to expand the definition of a direct primary
care arrangement to include a contract
between an individual and a nurse practi-

The proposed regulations and this preamble do not address any issues under Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA) that are within the interpretive and regulatory jurisdiction of the U.S. Department of Labor. For example, the proposed regulations and this preamble do not address whether any particular arrangement or payment
constitutes, or is part of, an employee welfare benefit plan within the meaning of ERISA section 3(1). Rather, the Department of Labor advised the Treasury Department and the IRS that an
employer’s funding of a benefit arrangement, in most circumstances, is sufficient to treat an arrangement that provides health benefits to employees as an ERISA-covered plan. Compare 29
CFR 2510.3-1(l), which provides a safe harbor from ERISA-coverage for certain reimbursements for non-group health insurance premiums solely for individual health insurance coverage as
defined in 29 CFR 2590.701-2 that does not consist solely of excepted benefits as defined in 29 CFR 2590.732(c).
2

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995

June 22, 2020

tioner, clinical nurse specialist, or physician assistant (as those terms are defined
in section 1861(aa)(5) of the SSA) who
provides primary care services under the
contract. The Treasury Department and
the IRS request comments on how to define primary care services provided by
a non-physician practitioner, including
whether the definition of primary care
services in section 1833(x)(2)(B) of the
SSA is appropriate.
In addition, the Treasury Department
and the IRS understand that other types
of medical arrangements between health
practitioners and individuals exist that
do not fall within the definition of direct
primary care. For example, an agreement
between a dentist and a patient to provide
dental care, or an agreement between a
physician and a patient to provide specialty care, would not be a direct primary
care arrangement but nonetheless may be
the provision of medical care under section 213(d). The Treasury Department and
the IRS request comments on whether the
final regulations should clarify the treatment of other types of arrangements that
are similar to direct primary care arrangements but do not meet the definition in the
proposed regulations.
2. Definition of Health Care Sharing
Ministry
For the purposes of section 213, the
proposed regulations define a health care
sharing ministry as an organization: (1)
which is described in section 501(c)(3)
and is exempt from taxation under section 501(a); (2) members of which share
a common set of ethical or religious beliefs and share medical expenses among
members in accordance with those beliefs and without regard to the State in
which a member resides or is employed;
(3) members of which retain membership even after they develop a medical
condition; (4) which (or a predecessor
of which) has been in existence at all
times since December 31, 1999, and
medical expenses of its members have
been shared continuously and without
interruption since at least December 31,
1999; and (5) which conducts an annual
audit which is performed by an independent certified public accounting firm in
accordance with generally accepted ac-

June 22, 2020

counting principles and which is made
available to the public upon request.
This definition is from section 5000A(d)
(2)(B)(ii), which provides that the individual shared responsibility payment
(which is zero after December 31, 2018)
does not apply to an individual who is
a member of a health care sharing ministry. The Treasury Department and the
IRS request comments on the definition
of a health care sharing ministry.
3. Analysis of Medical Care under
Section 213(d)(1)(A)
Direct primary care arrangements, as
defined in the proposed regulations, may
encompass a broad range of facts. Depending on the facts, a payment for a direct primary care arrangement may be a payment
for medical care under section 213(d)(1)
(A) or, as discussed below, may be a payment for medical insurance under section
213(d)(1)(D). For example, payments for
a direct primary care arrangement that
solely provides for an anticipated course
of specified treatments of an identified
condition, or solely provides for an annual physical examination, are payments
for medical care under section 213(d)(1)
(A). However, so long as a direct primary
care arrangement meets the definition set
forth in the proposed regulations, amounts
paid for the arrangement will qualify as
an expense for medical care under section
213(d), regardless of whether the arrangement is for medical care under section
213(d)(1)(A) or medical insurance under
section 213(d)(1)(D).
Health care sharing ministries, unlike direct primary care arrangements,
do not themselves provide any medical
treatment or services that would qualify
as medical care under section 213(d)(1)
(A). Instead, membership in a health care
sharing ministry entitles members to share
their medical bills through the ministry
and potentially receive payments from
other members to help with their medical
bills. The membership payments are not
payments for medical care under section
213(d)(1)(A). However, as further explained below, these proposed regulations
provide that amounts paid for membership
in a health care sharing ministry may be
payments for medical insurance under
section 213(d)(1)(D).

996

4. Analysis of Medical Insurance under
Section 213(d)(1)(D)
Section 213(d)(1)(D) does not define
the term “insurance.” When a federal statute uses a term without an accompanying
definition, the meaning of the term must
be determined from the ordinary use of the
term, in conjunction with any guidance
found in the structure of the relevant statute and its legislative history. See Group
Life & Health Insurance Co. v. Royal
Drug. Co., 440 U.S. 205, 211 (1979).
The predecessor to section 213, section
23x, was originally enacted in 1942 and
allowed a deduction for medical care expenses, including amounts paid for health
insurance. Although the statutory language did not define “insurance” for purposes of the medical expense deduction,
the legislative history specifically states
that amounts paid for health insurance
are included in the category of medical
expenses, and that payments for “hospitalization insurance, or for membership
in an association furnishing cooperative
or so-called free-choice medical service,
or group hospitalization and clinical care
are intended, for purposes of this section,
to be included as amounts which may be
deducted.” This language from the legislative history was incorporated into the section 213 regulations in 1957 and remains
unchanged. See §1.213-1(e)(4)(i)(a).
Based on that legislative history, the Treasury Department and the IRS conclude
that Congress intended that “insurance”
for section 213 purposes be read broadly.
Indeed, the Treasury Department and the
IRS have interpreted “insurance” broadly
over the years in guidance under section
213. See, e.g., Rev. Rul. 79-175, 1979-1
C.B. 117 (premiums paid for Medicare
Part A coverage are amounts paid for medical insurance); Rev. Rul. 74-429, 1974-2
C.B. 83 (nonrefundable fixed amount paid
by a taxpayer for an agreement with an
optometrist to replace the taxpayer’s contact lenses for one year if they became lost
or damaged is an amount paid for medical
insurance); Rev. Rul. 68-433, 1968-2 C.B.
110 (insurance premiums paid for a policy
that provides only for reimbursement of
the cost of prescription drugs are amounts
paid for medical insurance). Further, IRS
Publication 502 (Medical and Dental Expenses) states the long-standing IRS posi-

Bulletin No. 2020–26

tion that amounts paid for membership in
an HMO are treated as medical insurance
premiums.
The Treasury Department and the IRS
also conclude that the general insurance
principles used for subchapter L purposes are not controlling for purposes of
determining whether payment for an arrangement is treated as an amount paid
for medical insurance under section 213.
Subchapter L does not define insurance.
It provides a definition of the term “insurance company” for purposes of determining whether an entity is an insurance
company for federal income tax purposes.
However, there is no requirement in section 213 that amounts be paid to an insurance company to qualify as payments for
medical insurance. Further, the legislative
history of section 213 indicates that medical insurance is not limited to traditional
health insurance provided by an insurance
company. Thus, although payments to an
insurance company for medical care may
be amounts paid for medical insurance
under section 213(d)(1)(D), amounts need
not be paid to an insurance company to
be payments for medical insurance under
section 213.
As noted above, depending on the specific facts regarding an arrangement, a payment for a direct primary care arrangement
may be a payment for medical care under
section 213(d)(1)(A) or may be a payment
for medical insurance under section 213(d)
(1)(D). Regardless of the characterization
of an arrangement as medical care under
section 213(d)(1)(A) or medical insurance
under section 213(d)(1)(D), an amount
paid for the arrangement will qualify as a
medical expense under section 213. However, the characterization of a direct primary care arrangement as medical insurance
under section 213(d)(1)(D) has implications for purposes of the rules for health
savings accounts (HSAs) under section
223. Specifically, as explained later in this
preamble, if an individual enters into a direct primary care arrangement, the type of
coverage provided by the arrangement will
impact whether or not he or she is an eligible individual for purposes of section 223.
Under these proposed regulations, payments for membership in a health care
sharing ministry that shares expenses for
medical care, as defined in section 213(d)
(1)(A), are payments for medical insur-

Bulletin No. 2020–26

ance under section 213(d)(1)(D). The purpose of a health care sharing ministry is
for members to share the burden of their
medical expenses with other members.
Members assist in the payment of other
members’ medical bills, and possibly receive reimbursement for their own medical bills in return. Whether this is done
by making membership payments to the
ministry or by sending the payments directly to other members, the substance
of the transaction is the same. Similar to
traditional medical insurance premiums,
amounts paid for membership in a health
care sharing ministry allow members who
incur expenses for medical care under
section 213(d)(1)(A) to submit claims for
those expenses and potentially receive
payments to help cover those expenses.
Accordingly, the proposed regulations
provide that medical insurance under section 213(d)(1)(D) includes health care
sharing ministries that share expenses
for medical care under section 213(d)(1)
(A). This proposal under section 213 has
no bearing on whether a health care sharing ministry is considered an insurance
company, insurance service, or insurance
organization (health insurance issuer) for
other purposes of the Code, ERISA, the
Public Health Service Act (PHS Act), or
any other Federal or State law. In addition,
the proposed regulations incorporate the
long-standing position of the IRS treating
amounts paid for membership in an HMO
as medical insurance premiums for section 213 purposes. In contrast, amounts
paid to an HMO or a provider to cover
coinsurance, copayment, or deductible
obligations under an HMO’s terms are
payments for medical care under section
213(d)(1)(A). Regardless of their classification, both HMO amounts paid are eligible for deduction as a medical expense
under section 213(a).
Finally, the proposed regulations clarify that amounts paid for coverage under
certain government-sponsored health care
programs are treated as amounts paid for
medical insurance under section 213(d)(1)
(D). The proposed regulations incorporate
the guidance in section 213(d)(1)(D) and
Rev. Rul. 79-175, respectively, that Medicare Parts A and B are medical insurance,
and clarify that Medicare Parts C and D
are medical insurance, for purposes of
section 213. The proposed regulations

997

also provide that Medicaid, the Children’s
Health Insurance Program (CHIP), TRICARE, and certain veterans’ health care
programs are medical insurance under
section 213(d)(1)(D). Thus, to the extent
a particular government-sponsored health
program requires individuals to pay premiums or enrollment fees for coverage
under the program, those amounts are eligible for deduction as a medical expense
under section 213. The Treasury Department and the IRS request comments on
whether amounts paid for other government-sponsored health care programs
should be treated as amounts paid for
medical insurance, and if so, which specific government-sponsored health care
programs should be treated as medical
insurance.
5. Direct Primary Care Arrangements,
Health Reimbursement Arrangements
(HRAs), and HSAs
A. Direct Primary Care Arrangements
and HRAs
An HRA (other than a qualified small
employer health reimbursement arrangement (QSEHRA)) is a type of account-based group health plan funded
solely by employer contributions (with
no salary reduction contributions or other contributions by employees) that reimburses an employee solely for medical
care expenses incurred by the employee
(and, at the discretion of the plan sponsor, the employee’s family), up to a maximum dollar amount for a coverage period.
See Notice 2002-45, 2002-2 C.B. 93 and
Rev. Rul. 2002-41, 2002-2 C.B. 75. Because an HRA cannot by itself satisfy the
prohibition on lifetime and annual dollar
limits for group health plans under PHS
Act section 2711 or the requirement to
provide coverage for certain preventive
services without cost sharing under PHS
Act section 2713 (both of which are incorporated by reference in section 9815),
unless an applicable exception applies,
it must be integrated with coverage that
otherwise satisfies those require

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A24633f35c2efc191. Public record. Not legal advice.