Bulletin No. 2023–31

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HIGHLIGHTS

OF THIS ISSUE

Bulletin No. 2023–31

July 31, 2023

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. Proc. 2023-25, page 386.

This revenue procedure provides specifications for the private printing of red-ink substitutes for the 2023 Forms W-2

and W-3. This revenue procedure will be produced as the

next revision of Publication 1141. Rev. Proc. 2022-30 is

superseded.

EMPLOYEE PLANS / EXCISE TAX

Notice 2023-54, page 382.

The notice provides transition relief in connection with the

change to the required beginning date of required minimum

distributions (RMDs) from IRAs and employer plans pursuant

to section 107 of the SECURE 2.0 Act of 2022, enacted

on December 29, 2022, as Division T of the Consolidated

Appropriations Act, 2023, Pub. L. 117-328, 136 Stat. 4459

(2022). In addition, this notice provides guidance related to

certain provisions of section 401(a)(9) that apply for 2021,

2022, and 2023, and the related excise tax under section

4974. Finally, the notice announces that the final regulations

intended to be published relating to RMDs will apply for purposes of determining RMDs for calendar years beginning no

earlier than 2024.

EXEMPT ORGANIZATIONS

Announcement 2023-21, page 412.

Revocation of IRC 501(c)(3) Organizations for failure to meet

the code section requirements. Contributions made to the

Finding Lists begin on page ii.

organizations by individual donors are no longer deductible

under IRC 170(b)(1)(A).

INCOME TAX

T.D. 9977, page 375.

Section 2303 of the “Coronavirus Aid, Relief, and Economic

Security Act,” Pub. L. No. 116-136, 134 Stat. 281 (March

27, 2020) (the “CARES Act”), amended the carryback provisions related to net operating losses. As a result of the CARES

Act amendments, which specifically extended the carryback

period for certain net operating losses, temporary regulations

were issued on July 2, 2020, permitting certain acquiring

consolidated groups to elect to waive all or a portion of the

pre-acquisition portion of the extended carryback period under

section 172 for certain losses attributable to certain acquired

members. These final regulations adopt without substantive

change those temporary regulations.

Announcement 2023-17, page 411.

Rev. Proc. 2023-3, 2023-1 I.R.B. 144 (January 3, 2023) contains an error in the second 2022-19, 2022-42 I.R.B. 282, is

superseded. However, Rev. Proc. 2022-19, 2022-42 I.R.B.

282 remains in effect and is not superseded. Section 7 is

corrected to read, “Rev. Proc. 2022-3, 2022-1 I.R.B. 144,

is superseded. Rev. Proc. 2022-28, 2022-27 I.R.B. 65, is

superseded.

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.

July 31, 2023

Bulletin No. 2023–31

Part I

26 CFR 1.1502-21: Carryback of Consolidated Net

Operating Losses

T.D. 9977

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

Carryback of Consolidated

Net Operating Losses

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulations; removal of

temporary regulations.

SUMMARY: This document contains final

regulations that affect corporations filing

consolidated returns. These regulations permit consolidated groups that acquire new

members that were members of another

consolidated group to elect in a year subsequent to the year of acquisition to waive all

or part of the pre-acquisition portion of the

carryback period for certain losses attributable to the acquired members where there is

a retroactive statutory extension of the net

operating loss (NOL) carryback period. This

document finalizes certain provisions in

proposed regulations that were published on

July 8, 2020, and removes temporary regulations published on the same date.

DATES: Effective date: These final regulations are effective on July 10, 2023.

Applicability date: For the date of

applicability, see §1.1502-21(h)(9).

FOR FURTHER INFORMATION

CONTACT: Stephen R. Cleary at (202)

317-5353 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

I. Overview

This Treasury decision amends the

Income Tax Regulations (26 CFR part 1)

Bulletin No. 2023–31

under section 1502 of the Internal Revenue

Code (Code). Section 1502 authorizes the

Secretary of the Treasury or her delegate

(Secretary) to prescribe regulations for

an affiliated group of corporations that

join in filing (or that are required to join

in filing) a consolidated return (consolidated group, as defined in §1.1502-1(h))

to clearly reflect the Federal income tax

liability of the consolidated group and

to prevent avoidance of such tax liability. For purposes of carrying out those

objectives, section 1502 also permits the

Secretary to prescribe rules that may be

different from the provisions of chapter 1

of the Code that would apply if the corporations composing the consolidated group

filed separate returns. Terms used in the

consolidated return regulations generally

are defined in §1.1502-1.

On July 8, 2020, the Department of

the Treasury (Treasury Department) and

the IRS published a notice of proposed

rulemaking (REG-125716-18) in the

Federal Register (85 FR 40927) under

section 1502 (2020 proposed regulations).

The 2020 proposed regulations provided

guidance that, in part, implemented

amendments to section 172 under Public

Law 115-97, 131 Stat. 2054 (Dec. 22,

2017), commonly known as the Tax Cuts

and Jobs Act (TCJA), and the Coronavirus

Aid, Relief, and Economic Security Act

(CARES Act), Public Law 116-136, 134

Stat. 281 (Mar. 27, 2020). Specifically, the

2020 proposed regulations provided guidance for consolidated groups regarding

(i) the application of the 80-percent limitation in section 172(a)(2), as originally

enacted as part of the TCJA and subsequently amended by the CARES Act, and

(ii) the absorption of NOL carrybacks and

carryovers.

In connection with the 2020 proposed

regulations, the Treasury Department and

the IRS published on the same date temporary regulations (TD 9900) in the Federal

1502 (2020 temporary regulations). The

Treasury Department and the IRS issued

the 2020 temporary regulations to provide

guidance to consolidated groups regarding the application of the NOL carryback

rules under section 172(b), as amended by

(i) section 2303(b) of the CARES Act, and

375

(ii) any similar future statutory amendments to section 172. Specifically, if there

is a retroactive statutory extension of the

NOL carryback period under section 172

(retroactive statutory extension), the 2020

temporary regulations permit consolidated groups that, before the enactment

of the retroactive statutory extension,

acquired new members that were members of another consolidated group to elect

to waive, in a taxable year subsequent to

the taxable year of the acquisition, all or

part of the pre-acquisition portion of the

carryback period for consolidated net

operating losses (CNOLs) attributable to

the acquired members. The preamble to

the 2020 temporary regulations includes

a background discussion of the rules

regarding NOL carrybacks and carryovers

under section 172 and the related consolidated return regulations. Part II of this

Background describes the 2020 temporary

regulations in greater detail.

A correction to the 2020 temporary

regulations was published in the Federal

2020. The text of the 2020 temporary regulations also serves as the text of §1.150221(b)(3)(ii)(C) and (D) of the 2020

proposed regulations.

The 2020 proposed regulations, other

than proposed §1.1502-21(b)(3)(ii)(C)

and (D), were adopted as final regulations

on October 27, 2020. See TD 9927 (85 FR

67966).

The IRS received one comment in

response to the 2020 temporary regulations. A copy of the comment is available

for public inspection at https://www.regulations.gov (type IRS-2020-0020 in the

search field on the https://www.regulations.gov homepage) or upon request. No

public hearing was requested or held.

As described in greater detail in the

Summary of Comment and Explanation of

Revisions, the Treasury Department and

the IRS have considered the commenter’s

recommendations and concluded that their

adoption would necessitate conforming

changes to the split-waiver election provisions set forth in §1.1502-21(b)(3)(ii)

(B) (general split-waiver election), which

are beyond the scope of this guidance.

Therefore, the Treasury Department and

the IRS have determined that, aside from

July 31, 2023

non-substantive revisions to incorporate

the rules regarding retroactive statutory

extensions into §1.1502-21(b), improve

readability, and make other perfecting

edits, §1.1502-21(b)(3)(ii)(C) and (D)

of the 2020 proposed regulations should

be adopted as final regulations without

change, and that the 2020 temporary regulations should be removed. The Treasury

Department and the IRS continue to study

the commenter’s recommendations for

purposes of potential future guidance.

II. 2020 Temporary Regulations

On prior occasions, enacted legislation

has amended section 172 to retroactively

extend the carryback period for NOLs. See

Worker, Homeownership, and Business

Assistance Act of 2009, Public Law 11192, 123 Stat. 2984 (November 6, 2009);

Job Creation and Worker Assistance Act

of 2002, Public Law 107-147, 116 Stat. 21

(March 9, 2002). Most recently, section

2303(b) of the CARES Act added section

172(b)(1)(D) to the Code. Section 172(b)

(1)(D) requires (in the absence of a waiver

under section 172(b)(3)) a five-year carryback period for an NOL that arises in a

taxable year beginning after December 31,

2017, and before January 1, 2021.

Such retroactive statutory extensions

of NOL carryback periods uniquely

impact a consolidated group (acquiring group) that acquires one or more

corporations (acquired member) before

the enactment of the retroactive statutory extension of the carryback period.

During the past two decades, the Treasury

Department and the IRS have provided

an acquiring group with certain additional elections for waiving carrybacks

of losses into another consolidated group

of which an acquired member previously

was a member (former group). See 75 FR

35643 (June 23, 2010) (2010 split-waiver

regulations); 67 FR 38000 (May 31, 2002)

(2002 split-waiver regulations). These

additional elections, while responsive

to particular retroactive statutory extensions, have reflected common policy

objectives of providing affected groups

with the ability to waive all or a portion

of the NOL carryback period of acquired

members extended by retroactive statutory extensions applicable before, but

enacted after, the acquisition(s).

July 31, 2023

The Treasury Department and the IRS

determined that it is appropriate to provide similar rules with regard to the NOL

carryback rules retroactively amended by

section 2303(b) of the CARES Act in particular, or by future legislation enacting

retroactive statutory amendments to NOL

carryback rules more generally. Therefore,

the 2020 temporary regulations provided

principle-based rules, referred to in these

regulations as “amended carryback rules,”

applicable to CNOLs arising in taxable

years to which amended carryback rules

become applicable after the acquisition of

a member. Under these rules, an acquiring group possesses the opportunity to

waive, on a taxable-year-by-taxable-year

basis, all or a portion of the carryback

period with regard to CNOLs attributable

to acquired members for pre-acquisition

years during which the acquired members

were members of a former group.

The 2020 temporary regulations provide two types of split-waiver elections

for consolidated groups that (i) include

one or more acquired members, and (ii)

have CNOLs that, under amended carryback rules, become eligible to be carried

back for a greater number of years than

under statutory law in effect at the time of

the acquisition (default carryback period).

One type of election (amended statute

split-waiver election) permits an acquiring group to relinquish that part of the carryback period during which an acquired

member was a member of a former group

(for the portion of a CNOL attributable

to the acquired member), even though

the acquiring group did not file a splitwaiver election for the year in which the

acquired member became a member of the

acquiring group (as required by §1.150221(b)(3)(ii)(B)). See §1.1502-21T(b)(3)

(ii)(C)(2)(v). The other type of election

(extended split-waiver election) applies

solely to the extended carryback period

(that is, the additional carryback years

provided under amended carryback rules).

Through an extended split-waiver election, an acquiring group can ensure that

amended carryback CNOLs are carried

back to taxable years of former groups

only to the extent those losses would have

been carried back under prior law (that is,

limiting CNOL carrybacks to the default

carryback period). See §1.1502-21T(b)(3)

(ii)(C)(2)(ix). These two additional types

376

of split-waiver elections provide relief,

and are subject to conditions and procedures, consistent with the applicable splitwaiver elections set forth in the 2002 and

2010 split-waiver regulations.

Summary of Comment and

Explanation of Revisions

The Treasury Department and the IRS

received one comment that recommended

two changes to the split-waiver election

provisions set forth in the 2020 temporary

regulations (2020 split-waiver elections).

As discussed in the preamble to the

2020 temporary regulations, a general

split-waiver election and the 2020 splitwaiver elections may be made only with

respect to the portion of the carryback

period for which the acquired member

was a member of a former group. Thus,

such an election would not be effective

with respect to any portion of the carryback period during which the acquired

member was a stand-alone corporation.

The commenter recommended that splitwaiver elections be available whenever

a portion of a CNOL attributable to an

acquired member would be carried back

to a separate return year, regardless of

whether the acquired member was a member of a former group or a stand-alone corporation in that carryback year.

The commenter also suggested that,

although the rules governing split-waiver

elections are too narrow insofar as they

exclude acquisitions of stand-alone corporations, such rules also are too broad

insofar as they apply to situations in which

the acquired member was the common

parent of a former group (whole-group

acquisitions). See §1.1502-21(b)(3)(ii)(B)

(allowing the acquiring group to make a

general split-waiver election with respect

to the portion of the carryback period for

which the acquired member was “a member of another group”); §1.1502-21T(b)(3)

(ii)(C)(2)(v) and (ix) (allowing the acquiring group to make a 2020 split-waiver

election with respect to the portion of the

carryback period for which the acquired

member was “a member of any former

group”); §1.1502-1(b) (defining the term

“member” to include the common parent

of the group).

For example, assume that P is the common parent of Group 1 in Years 1 and 2. At

Bulletin No. 2023–31

the beginning of Year 3, Group 2 acquires

all the stock of P. In Year 6, Group 2 incurs

a CNOL, a portion of which is attributable

to P. In Year 7, Congress amends section

172 by extending the carryback period

for NOLs arising in Year 6 to five years.

Group 2 would be eligible to make either

a general split-waiver election (if it filed

the requisite statement with its Federal

income tax return for Year 3) or one

of the 2020 split-waiver elections. The

commenter contended that a split-waiver

election should not be available in such a

situation because disputes regarding NOL

carrybacks should not arise between the

former group and the acquiring group

(which controls the former group after the

acquisition).

The changes recommended by the

commenter, if adopted, would necessitate revisions not only to the 2020 splitwaiver elections, but also to the general

split-waiver election provisions in

§1.1502-21(b)(3)(ii)(B). Both the general

split-waiver election and the 2020 splitwaiver elections may be made only with

respect to the portion of the carryback

period for which the acquired member was

a member of a former group. Moreover,

both the general split-waiver election and

the 2020 split-waiver elections may apply

to situations in which the acquired member was the common parent of a former

group (that is, whole-group acquisitions).

Consequently, after considering the comment, the Treasury Department and the

IRS have determined that the scope of

the changes suggested by the commenter

exceed the scope of §1.1502-21(b)(3)

(ii)(C) and (D) of the 2020 proposed

regulations.

Thus, as noted in part I of the

Background, the Treasury Department

and the IRS have concluded that the

split-waiver election provisions provided

by the 2020 proposed regulations should

be adopted without substantive change.

The Treasury Department and the IRS

continue to study the commenter’s recommendations for purposes of potential

future guidance. Accordingly, the final

regulations contained in this Treasury

decision adopt the provisions of §1.150221(b)(3)(ii)(C) and (D) of the 2020 proposed regulations without substantive

change.

Although no substantive changes are

made to the rules of §1.1502-21(b)(3)

(ii)(C) and (D) of the 2020 proposed

regulations, the final regulations make

the following non-substantive changes

to incorporate those rules into §1.150221(b) and to improve readability: (1) the

provisions of §1.1502-21(b)(3)(ii)(A)

have been redesignated as §1.1502-21(b)

(3)(ii); (2) the provisions of §1.150221(b)(3)(ii)(B) have been redesignated

as §1.1502-21(b)(4); (3) the provisions

of §1.1502-21(b)(3)(ii)(C) and (D) of

the 2020 proposed regulations have

been redesignated as §1.1502-21(b)(5)

and (6); (4) the provisions of §1.150221(b)(3)(iii) have been redesignated as

§1.1502-21(b)(7); (5) the provisions of

§1.1502-21(b)(3)(iv) and (v) have been

removed; and (6) corresponding perfecting edits have been made.

Special Analyses

I. Regulatory Planning and Review

Pursuant to the Memorandum

of Agreement, Review of Treasury

Regulations under Executive Order 12866

(June 9, 2023), tax regulatory actions

issued by the IRS are not subject to the

requirements of section 6(b) of Executive

Order 12866, as amended. Therefore,

a regulatory impact assessment is not

required.

II. Paperwork Reduction Act

The collections of information in these

final regulations are in §1.1502-21(b)

(5)(v)(A) and (B). The information is

required to inform the IRS on whether,

and to what extent, an acquiring group

makes either of the elections described in

these final regulations.

The collection of information provided by these final regulations has been

approved by the Office of Management

and Budget (OMB) under control number 1545-0123. For purposes of the

Paperwork Reduction Act, 44 U.S.C. 3501

et seq. (PRA), the reporting burden associated with the collection of information

in Form 1120, U.S. Corporation Income

Tax Return, will be reflected in the PRA

Submission associated with OMB control

number 1545-0123.

In general, if the acquiring group makes

an election under §1.1502-21(b)(5), the

acquiring group is required to attach a separate statement to its Form 1120 as provided in §1.1502-21(b)(5)(v)(A) and (B),

respectively. This statement must be filed

as provided in §1.1502-21(b)(5)(vi).

The following table displays the number of respondents estimated to be required

to report on Form 1120 with respect to the

collections of information required by

these final regulations. Due to the absence

of historical tax data, direct estimates of

the number of respondents required to

attach a statement to other types of tax

returns, as applicable, are not available.

Number of Respondents (Estimated)

Amended Statute Split-Waiver Election & Extended Split-Waiver Election

Form 1120

17,500

Source: RAAS:CDW

The numbers of respondents in the

table were estimated by the Research,

Applied Analytics, and Statistics Division

(RAAS) of the IRS from the Compliance

Data Warehouse (CDW). Data for Form

1120 represents estimates of the total

Bulletin No. 2023–31

number of taxpayers that may attach an

election statement to their Form 1120 to

make the elections in §1.1502-21(b)(5)(v)

(A) and (B).

It is estimated that 17,500 consolidated entities will be required to attach

377

a statement under these final regulations.

The burden estimates associated with

the information collections in these final

regulations are included in aggregated

burden estimates for the OMB control

number 1545-0123. The burden estimates

July 31, 2023

provided in the OMB control numbers in

the following table are aggregate amounts

that relate to the entire package of forms

associated with the OMB control number, and will in the future include, but

not isolate, the estimated burden of those

Form

Form 1120

Type of Filer

Corporation

information collections associated with

these final regulations. To guard against

over-counting the burden that consolidated tax provisions imposed prior to

§1.1502-21, the Treasury Department

and the IRS urge readers to recognize that

these burden estimates have also been

cited by regulations that rely on the applicable OMB control numbers in order to

collect information from the applicable

types of filers.

OMB Number(s)

1545-0123

Status

Published in the Federal Register on 12/22/2022. Public Comment

period closed on 01/19/2023. Approved by OMB through 12/31/2023.

Link: https://www.federalregister.gov/documents/2022/12/20/2022-27628/

comment-request-us-business-income-tax-returns

Source: RAAS:CDW

III. Regulatory Flexibility Act

Pursuant to the Regulatory Flexibility

Act (5 U.S.C. chapter 6), it is hereby

certified that this rulemaking will not

have a significant economic impact on

a substantial number of small entities

within the meaning of section 601(6) of

the Regulatory Flexibility Act. This certification is based on the fact that these

final regulations apply only to corporations that file consolidated Federal

income tax returns, and that such corporations almost exclusively consist of

larger businesses. Specifically, based on

data available to the IRS, corporations

that file consolidated Federal income

tax returns represent only approximately

two percent of all filers of Forms 1120,

U.S. Corporation Income Tax Return.

However, these consolidated Federal

income tax returns account for approximately 95 percent of the aggregate

amount of receipts provided on all Forms

1120. Therefore, these final regulations

will not create additional obligations for,

or impose an economic impact on, small

entities, and a regulatory flexibility analysis under the Regulatory Flexibility Act

is not required.

IV. Section 7805(f)

Pursuant to section 7805(f) of the

Code, the notice of proposed rulemaking

that preceded these final regulations was

submitted to the Chief Counsel for the

Office of Advocacy of the Small Business

Administration for comment on its impact

on small business. No comments on that

July 31, 2023

notice of proposed rulemaking were

received from the Chief Counsel for the

Office of Advocacy of the Small Business

Administration.

V. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates

Reform Act of 1995 requires that agencies

assess anticipated costs and benefits and

take certain other actions before issuing a

final rule that includes any Federal mandate that may result in expenditures in

any one year by a State, local, or Tribal

government, in the aggregate, or by the

private sector, of $100 million in 1995

dollars, updated annually for inflation.

These final regulations do not include any

Federal mandate that may result in expenditures by State, local, or Tribal governments, or by the private sector in excess of

that threshold.

VI. Executive Order 13132: Federalism

Executive Order 13132 (Federalism)

prohibits an agency from publishing any

rule that has federalism implications if

the rule either imposes substantial, direct

compliance costs on State and local governments, and is not required by statute,

or preempts State law, unless the agency

meets the consultation and funding

requirements of section 6 of the Executive

order. These final regulations do not have

federalism implications, do not impose

substantial direct compliance costs on

State and local governments, and do not

preempt State law within the meaning of

the Executive order.

378

VII. Congressional Review Act

Pursuant to the Congressional Review

Act (5 U.S.C. 801 et seq.), the Office

of Management and Budget’s Office of

Information and Regulatory Affairs has

designated this rule as not a “major rule,”

as defined by 5 U.S.C. 804(2).

Drafting Information

The principal author of these final regulations is Stephen R. Cleary of the Office

of Associate Chief Counsel (Corporate).

However, other personnel from the

Treasury Department and the IRS participated in their development.

List of Subjects

26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 602

Reporting

requirements.

and

recordkeeping

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR parts 1 and 602

are amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for

part 1 continues to read in part as follows:

Bulletin No. 2023–31

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.1502-21 is amended

by:

1. Removing the language “paragraph

(b)(3)(iii)” in paragraph (b)(2)(iii) and

adding the language “paragraph (b)(7)” in

its place.

2. Revising paragraph (b)(3).

3. Adding paragraphs (b)(4) through

(7).

4. Removing the language “(b)(3)(ii)

(B)” in paragraph (h)(5) and adding the

language “(b)(4)” in its place.

5. Revising paragraph (h)(9).

The additions and revisions read as

follows:

§1.1502-21 Net operating losses.

*****

(b) * * *

(3) Election to relinquish entire carryback period—(i) In general. A group

may make an irrevocable election under

section 172(b)(3) to relinquish the entire

carryback period with respect to a CNOL

for any consolidated return year. Except

as provided in paragraphs (b)(4) and (5)

of this section, the election may not be

made separately for any member (whether

or not it remains a member), and must be

made in a separate statement titled “THIS

IS AN ELECTION UNDER §1.150221(b)(3)(i) TO WAIVE THE ENTIRE

CARRYBACK PERIOD PURSUANT

TO SECTION 172(b)(3) FOR THE [insert

consolidated return year] CNOLs OF THE

CONSOLIDATED GROUP OF WHICH

[insert name and employer identification number of common parent] IS THE

COMMON PARENT.” The statement

must be filed with the group’s income tax

return for the consolidated return year in

which the loss arises. If the consolidated

return year in which the loss arises begins

before January 1, 2003, the statement

making the election must be signed by the

common parent. If the consolidated return

year in which the loss arises begins after

December 31, 2002, the election may be

made in an unsigned statement.

(ii) Groups that include insolvent

financial institutions. For rules applicable to relinquishing the entire carryback

period with respect to losses attributable

to insolvent financial institutions, see

§301.6402-7 of this chapter.

Bulletin No. 2023–31

(4) General split-waiver election. If

one or more members of a consolidated

group becomes a member of another consolidated group, the acquiring group may

make an irrevocable election to relinquish, with respect to all consolidated net

operating losses attributable to the member, the portion of the carryback period

for which the corporation was a member of another group, provided that any

other corporation joining the acquiring

group that was affiliated with the member

immediately before it joined the acquiring group is also included in the waiver.

This election is not a yearly election and

applies to all losses that would otherwise

be subject to a carryback to a former

group under section 172. The election

must be made in a separate statement

titled “THIS IS AN ELECTION UNDER

§1.1502-21(b)(4) TO WAIVE THE PRE[insert first taxable year for which the

member (or members) was not a member of another group] CARRYBACK

PERIOD FOR THE CNOLs attributable

to [insert names and employer identification number of members].” The statement must be filed with the acquiring

consolidated group’s original income tax

return for the year the corporation (or

corporations) became a member. If the

year in which the corporation (or corporations) became a member begins before

January 1, 2003, the statement must be

signed by the common parent and each

of the members to which it applies. If the

year in which the corporation (or corporations) became a member begins after

December 31, 2002, the election may be

made in an unsigned statement.

(5) Split-waiver elections to which

amended carryback rules apply—(i) In

general. An acquiring group may make

either (but not both) an amended statute split-waiver election or an extended

split-waiver election with respect to a

particular amended carryback CNOL.

These elections are available only if the

statutory amendment to the carryback

period referred to in paragraph (b)(5)(ii)

(D) of this section occurs after the date of

acquisition of an acquired member. A separate election is available for each taxable

year to which amended carryback rules

apply. An acquiring group may make an

amended statute split-waiver election or

an extended split-waiver election only if

379

the acquiring group, with regard to that

election—

(A) Satisfies the requirements in paragraph (b)(5)(iii) of this section; and

(B) Follows the procedures in paragraphs (b)(5)(v) and (vi) of this section, as

relevant to that election.

(ii) Definitions. The definitions provided in this paragraph (b)(5)(ii) apply for

purposes of paragraphs (b)(5) and (6) of

this section.

(A) Acquired member. The term

acquired member means a member of a

consolidated group that joins another consolidated group.

(B) Acquiring group. The term acquiring group means a consolidated group that

has acquired a former member of another

consolidated group (that is, an acquired

member).

term amended carryback CNOL means

the portion of a CNOL attributable to an

acquired member (determined pursuant

to paragraph (b)(2)(iv)(B) of this section)

arising in a taxable year to which amended

carryback rules apply.

(D) Amended carryback rules. The

term amended carryback rules means

the rules of section 172 of the Code after

amendment by statute to extend the carryback period for NOLs attributable to an

acquired member (determined pursuant to

paragraph (b)(2)(iv)(B) of this section).

(E) Amended statute split-waiver election. The term amended statute splitwaiver election means, with respect to any

amended carryback CNOL, an irrevocable election made by an acquiring group

to relinquish the portion of the carryback

period (including the default carryback

period and the extended carryback period)

for that loss during which an acquired member was a member of any former group.

(F) Amended statute split-waiver election statement. The term amended statute

split-waiver election statement has the

meaning provided in paragraph (b)(5)(v)

(A) of this section.

(G) Default carryback period. The

term default carryback period means the

NOL carryback period existing at the

time the acquiring group acquired the

acquired member, before the applicability

of amended carryback rules.

(H) Extended carryback period. The

term extended carryback period means

July 31, 2023

the additional taxable years added to a

default carryback period by any amended

carryback rules.

(I) Extended split-waiver election.

The term extended split-waiver election

means, with respect to any amended carryback CNOL, an irrevocable election

made by an acquiring group to relinquish

solely the portion of the extended carryback period (and no part of the default carryback period) for that loss during which

an acquired member was a member of any

former group.

(J) Extended split-waiver election

statement. The term extended split-waiver

election statement has the meaning provided in paragraph (b)(5)(v)(B) of this

section.

(K) Former group. The term former

group means a consolidated group of

which an acquired member previously

was a member.

(iii) Conditions for making an amended

statute split-waiver election or an

extended split-waiver election. An acquiring group may make an amended statute

split-waiver election or an extended splitwaiver election (but not both) with respect

to an amended carryback CNOL only if—

(A) The acquiring group has not filed

a valid election described in paragraph

(b)(4) of this section with respect to the

acquired member on or before the effective date of the amended carryback rules;

(B) The acquiring group has not filed a

valid election described in section 172(b)

(3) and paragraph (b)(3)(i) of this section

with respect to a CNOL of the acquiring

group from which the amended carryback CNOL is attributed to the acquired

member;

acquiring group that was affiliated with

the acquired member immediately before

the acquired member joined the acquiring

group is included in the waiver; and

(D) A former group does not claim any

carryback (as provided in paragraph (b)

(5)(iv) of this section) to any taxable year

in the carryback period (in the case of an

amended statute split-waiver election) or

in the extended carryback period (in the

case of an extended split-waiver election)

with respect to the amended carryback

CNOL on a return or other filing filed on

or before the date the acquiring group files

the election.

July 31, 2023

(iv) Claim for a carryback. For purposes of paragraph (b)(5)(iii)(D) of this

section, a carryback is claimed with

respect to an amended carryback CNOL

if there is a claim for refund, an amended

return, an application for a tentative carryback adjustment, or any other filing that

claims the benefit of the NOL in a taxable

year prior to the taxable year of the loss,

whether or not subsequently revoked in

favor of a claim based on the period provided for in the amended carryback rules.

(v) Procedures for making an amended

statute split-waiver election or an extended

split-waiver election—(A) Amended statute split-waiver election. An amended

statute split-waiver election must be made

in a separate amended statute split-waiver

election statement titled “THIS IS AN

ELECTION UNDER SECTION 1.150221(b)(5)(i) TO WAIVE THE PRE-[insert

first day of the first taxable year for which

the acquired member was a member of the

acquiring group] CARRYBACK PERIOD

FOR THE CNOLS ATTRIBUTABLE

TO THE [insert taxable year of losses]

TAXABLE YEAR(S) OF [insert names

and employer identification numbers of

members]”. The amended statute splitwaiver election statement must be filed

as provided in paragraph (b)(5)(vi) of this

section.

(B) Extended split-waiver election. An

extended split-waiver election must be

made in a separate extended split-waiver

election statement titled “THIS IS AN

ELECTION UNDER SECTION 1.150221(b)(5)(i) TO WAIVE THE PRE-[insert

first day of the first taxable year for

which the acquired member was a member of the acquiring group] EXTENDED

CARRYBACK PERIOD FOR THE

CNOLS ATTRIBUTABLE TO THE

[insert taxable year of losses] TAXABLE

YEAR(S) OF [insert names and employer

identification numbers of members]”. The

extended split-waiver election statement

must be filed as provided in paragraph (b)

(5)(vi) of this section.

(vi) Time and manner for filing statement—(A) In general. Except as otherwise provided in paragraph (b)(5)(vi)

(B) or (C) of this section, an amended

statute split-waiver election statement or

extended split-waiver election statement

must be filed with the acquiring group’s

timely filed consolidated return (including

380

extensions) for the year during which the

amended carryback CNOL is incurred.

(B) Amended returns. This paragraph

(b)(5)(vi)(B) applies if the date of the filing required under paragraph (b)(5)(vi)

(A) of this section is not at least 150 days

after the date of the statutory amendment

to the carryback period referred to in paragraph (b)(5)(ii)(D) of this section. Under

this paragraph (b)(5)(vi)(B), an amended

statute split-waiver election statement or

extended split-waiver election statement

may be attached to an amended return filed

by the date that is 150 days after the date

of the statutory amendment referred to in

paragraph (b)(5)(ii)(D) of this section.

before January 1, 2021. This paragraph

(b)(5)(vi)(C) applies to taxable years

beginning before January 1, 2021, for

which the date of the filing required under

paragraph (b)(5)(vi)(A) of this section

precedes November 30, 2020. Under

this paragraph (b)(5)(vi)(C), an amended

statute split-waiver election statement or

extended split-waiver election statement

may be attached to an amended return

filed by November 30, 2020.

(6) Examples. The following examples

illustrate the rules of paragraph (b)(5) of

this section. For purposes of these examples: All affiliated groups file consolidated

returns; all corporations are includible corporations that have calendar taxable years;

each of P, X, and T is a corporation having

one class of stock outstanding; each of P

and X is the common parent of a consolidated group (P Group and X Group,

respectively); neither the P Group nor the

X Group includes an insolvent financial

institution or an insurance company; no

NOL is a farming loss; there are no other

relevant NOL carrybacks to the X Group’s

consolidated taxable years; except as otherwise stated, the X Group has sufficient

consolidated taxable income determined

under §1.1502-11 (CTI) to absorb the

stated NOL carryback by T; T has sufficient SRLY register income within the X

Group to absorb the stated NOL carryback

by T; all transactions occur between unrelated parties; and the facts set forth the

only relevant transactions.

(i) Example 1: Computation and absorption

of amended carrybacks—(A) Facts. In Year 1, T

became a member of the X Group. On the last day

of Year 5, P acquired all the stock of T from X. At

the time of P’s acquisition of T stock, the default

Bulletin No. 2023–31

carryback period was zero taxable years. The P

Group did not make an irrevocable split-waiver

election under paragraph (b)(4) of this section to

relinquish, with respect to all CNOLs attributable

to T while a member of the P Group, the portion of

the carryback period for which T was a member of

the X Group (that is, a former group). In Year 7, the

P Group sustained a $1,000 CNOL, $600 of which

was attributable to T pursuant to paragraph (b)(2)

(iv)(B) of this section. In that year, P did not make

an irrevocable general waiver election under section

172(b)(3) and paragraph (b)(3)(i) of this section

with respect to the $1,000 CNOL when the P Group

filed its consolidated return for Year 7. In Year 8,

legislation was enacted that amended section 172 to

require a carryback period of five years for NOLs

arising in a taxable year beginning after Year 5 and

before Year 9.

(B) Analysis. As a result of the amended carryback rules enacted in Year 8, the P Group’s $1,000

CNOL in Year 7 must be carried back to Year 2.

Therefore, T’s $600 attributed portion of the P

Group’s Year 7 CNOL (that is, T’s amended carryback CNOL) must be carried back to taxable years

of the X Group. See paragraphs (b)(1) and (b)(2)(i)

of this section. To the extent T’s amended carryback

CNOL is not absorbed in the X Group’s Year 2 taxable year, the remaining portion must be carried to

the X Group’s Year 3, Year 4, and Year 5 taxable

years, as appropriate. See id. Any remaining portion

of T’s amended carryback CNOL is carried to consolidated return years of the P Group. See paragraph

(b)(1) of this section.

(ii) Example 2: Amended statute split-waiver

election—(A) Facts. The facts are the same as in

paragraph (b)(6)(i)(A) of this section (Example 1),

except that, following the change in statutory carryback period in Year 8, the P Group made a valid

amended statute split-waiver election under paragraph (b)(5)(i) of this section to relinquish solely the

carryback of T’s amended carryback CNOL.

(B) Analysis. Because the P Group made a valid

amended statute split-waiver election, T’s amended

carryback CNOL is not eligible to be carried back to

any taxable years of the X Group (that is, a former

group). However, the amended statute split-waiver

election does not prevent T’s Year 7 amended carryback CNOL from being carried back to years of

the P group (that is, the acquiring group) during

which T was a member. See paragraph (b)(5)(ii)(E)

of this section. As a result, the entire amount of T’s

amended carryback CNOL is eligible to be carried

back to taxable Year 6 of the P Group. Any remaining

CNOL may then be carried over within the P Group.

See paragraph (b)(1) of this section.

(iii) Example 3: Computation and absorption

of extended carrybacks—(A) Facts. The facts are

the same as in paragraph (b)(6)(i)(A) of this section

(Example 1), except that the X Group had $300 of

CTI in Year 4 and $200 of CTI in Year 5 and, at the

time of the P Group’s acquisition of T, the default

carryback period was two years. Therefore, T’s $600

attributed portion of the P Group’s Year 7 CNOL was

required to be carried back to the X Group’s Year

5 taxable year, and the X Group was able to offset

$200 of CTI in Year 5.

(B) Analysis. As a result of the amended carryback rules, the X Group must offset its $300 of CTI

in Year 4 against T’s amended carryback CNOL. See

paragraphs (b)(1) and (b)(2)(i) of this section. The

remaining $100 ($600-$300-$200) of T’s amended

carryback CNOL is carried to taxable years of the P

Group. See paragraph (b)(1) of this section.

(iv) Example 4: Extended split-waiver election—

(A) Facts. The facts are the same as in paragraph (b)

(6)(iii)(A) of this section (Example 3), except that,

following the change in law in Year 8, the P Group

made a valid extended split-waiver election under

paragraph (b)(5)(i) of this section to relinquish the

extended carryback period for T’s amended carryback CNOL for years in which T was a member of

the X Group.

(B) Analysis. As a result of the P Group’s

extended split-waiver election, T’s amended carryback CNOL is not eligible to be carried back to any

portion of the extended carryback period (that is, any

taxable year prior to Year 5). See paragraph (b)(5)(ii)

(I) of this section. As a result, the X Group absorbs

$200 of T’s $600 loss in Year 5, and the remaining

$400 ($600-$200) is carried to taxable years of the P

Group. See paragraph (b)(1) of this section.

(7) Short years in connection with

transactions to which section 381(a)

applies. If a member distributes or transfers assets to a corporation that is a member immediately after the distribution or

transfer in a transaction to which section

381(a) applies, the transaction does not

cause the distributor or transferor to have

a short year within the consolidated return

year of the group in which the transaction

occurred that is counted as a separate year

for purposes of determining the years to

which a net operating loss may be carried.

*****

(h) * * *

(9) Amended carryback rules.

Paragraphs (b)(5) and (6) of this section

apply to any CNOLs arising in a taxable

year ending after July 2, 2020. However,

taxpayers may apply paragraphs (b)(5)

and (6) of this section to any CNOLs

arising in a taxable year beginning after

December 31, 2017.

*****

§1.1502-21T [Removed]

Par. 3. Section 1.1502-21T is removed.

§1.1502-78 [Amended]

Par. 4. Section 1.1502-78 is amended

by removing the language “§ 1.1502-21(b)

(3)(ii)(B)” in paragraph (a) and adding the

language “§1.1502-21(b)(4)” in its place.

PART 602—OMB CONTROL

NUMBERS UNDER THE

PAPERWORK REDUCTION ACT

Par. 5. The authority citation for part

602 continues to read as follows:

Authority: 26 U.S.C. 7805.

Par. 6. In §602.101, amend the table in

paragraph (b) by:

a. Revising the entry for “§1.1502-21”;

and

Removing

the

entry

for

“§1.1502.21T”.

The revision reads as follows:

§602.101 OMB Control Numbers.

*****

(b) * * *

Current OMB control No.

CFR part or section where identified and described

*******

1545-0123

1.1502-21 . . . . . . . . . . . . . . . . . . . . . . . .

*******

Douglas W. O’Donnell,

Deputy Commissioner for Services

and Enforcement.

Lily Batchelder,

Assistant Secretary of the Treasury

(Tax Policy).

Approved: June 21, 2023.

(Filed by the Office of the Federal Register July 10,

2023, 4:15 p.m., and published in the issue of the

Federal Register for July 12, 2023, 88 FR 44210)

Bulletin No. 2023–31

381

July 31, 2023

Part III

Transition Relief and

Guidance Relating to

Certain Required Minimum

Distributions

Notice 2023-54

I. PURPOSE

This notice provides transition relief

for plan administrators, payors, plan participants, IRA owners, and beneficiaries in

connection with the change in the required

beginning date for required minimum distributions (RMDs) under § 401(a)(9) of

the Internal Revenue Code (Code) pursuant to § 107 of the SECURE 2.0 Act

of 2022 (SECURE 2.0 Act), enacted on

December 29, 2022, as Division T of the

Consolidated Appropriations Act, 2023,

Pub. L. 117-328, 136 Stat. 4459 (2022).

This notice also provides guidance related

to certain specified RMDs for 2023. In

addition, this notice announces that the

final regulations that the Department of

the Treasury (Treasury Department) and

the Internal Revenue Service (IRS) intend

to issue related to RMDs will apply for

purposes of determining RMDs for calendar years beginning no earlier than 2024.

II. BACKGROUND

A. Section 401(a)(9)

Section 401(a)(9) of the Code requires

a stock bonus, pension, or profit-sharing

plan described in § 401(a) (or an annuity

contract described in § 403(a)) to make

minimum distributions starting by the

required beginning date (as well as minimum distributions to beneficiaries if the

employee dies before the required beginning date). Individual retirement accounts

and individual retirement annuities (IRAs)

described in § 408(a) and (b), annuity contracts, custodial accounts, and retirement

income accounts described in § 403(b)

(§ 403(b) plans), and eligible deferred

compensation plans under § 457(b), are

also subject to the rules of § 401(a)(9) pursuant to §§ 408(a)(6) and (b)(3), 403(b)

July 31, 2023

(10), and 457(d)(2), respectively, and the

regulations under those sections.

B. Required Beginning Date

Section 107 of the SECURE 2.0

Act amended § 401(a)(9) of the Code

to change the required beginning date

applicable to § 401(a) plans and other

eligible retirement plans, including

IRAs. Rather than defining the required

beginning date by reference to April 1 of

the calendar year following the calendar

year in which an individual attains age

72, the new required beginning date for

an employee or IRA owner is defined by

reference to April 1 of the calendar year

after the calendar year in which the individual attains the applicable age (which

is either age 73 or age 75, depending on

the individual’s date of birth). Thus, for

example, an IRA owner who was born

in 1951 will have a required beginning

date of April 1, 2025, rather than April

1, 2024, (and the first distribution made

to that IRA owner that will be treated as

an RMD will be a distribution made for

2024, rather than 2023).

C. RMD Distribution Period

Section 401(a)(9) provides rules for

RMDs from a qualified plan during the

life of the employee in § 401(a)(9)(A)

and after the death of the employee in

§ 401(a)(9)(B). In addition to setting forth

a required beginning date for distributions, these rules identify the period over

which the employee’s entire interest must

be distributed.

Specifically, § 401(a)(9)(A)(ii) provides that the entire interest of an

employee in a qualified plan must be

distributed, beginning not later than the

employee’s required beginning date, in

accordance with regulations, over the life

of the employee or over the lives of the

employee and a designated beneficiary

(or over a period not extending beyond

the life expectancy of the employee and a

designated beneficiary).

Section 401(a)(9)(B)(i) provides that,

if the employee dies after distributions

have begun, the employee’s remaining

382

interest must be distributed at least as

rapidly as under the method of distributions being used by the employee under

section 401(a)(9)(A)(ii) as of the date

of the employee’s death. Section 401(a)

(9)(B)(ii) and (iii) provides that, if the

employee dies before RMDs have begun,

the employee’s interest must either be: (1)

distributed within 5 years after the death

of the employee (5-year rule), or (2) distributed (in accordance with regulations)

over the life or life expectancy of the designated beneficiary with the distributions

beginning no later than 1 year after the

date of the employee’s death (subject to

an exception in § 401(a)(9)(B)(iv) if the

designated beneficiary is the employee’s

surviving spouse).

The rules of § 401(a)(9) are incorporated by reference in § 408(a)(6) and (b)

(3) for IRAs, § 403(b)(10) for § 403(b)

plans), and § 457(d) for eligible deferred

compensation plans.

D. Section 401(a)(9)(H) as added by the

SECURE Act

1. Ten-year rule

Section 401(a)(9) of the Code was

amended by § 401(a)(1) of the Setting

Every Community Up for Retirement

Enhancement Act of 2019 (SECURE

Act), enacted on December 20, 2019, as

Division O of the Further Consolidated

Appropriations Act, 2020, Pub. L. 11694, 133 Stat. 2534 (2019), to add § 401(a)

(9)(H) to the Code. Generally, pursuant

to § 401(a)(9)(H)(i), if an employee in

a defined contribution plan has a designated beneficiary, the 5-year period under

the 5-year rule is lengthened to 10 years

(10-year rule) and the 10-year rule applies

regardless of whether the employee dies

before the required beginning date. In

addition, pursuant to § 401(a)(9)(H)(ii),

the § 401(a)(9)(B)(iii) exception to the

10-year rule (under which the 10-year rule

is treated as satisfied if distributions are

paid over the designated beneficiary’s lifetime or life expectancy) applies only if the

designated beneficiary is an eligible designated beneficiary, as that term is defined in

§ 401(a)(9)(E)(ii).

Bulletin No. 2023–31

Section 401(a)(9)(H)(iii) provides that

when an eligible designated beneficiary

dies before that individual’s portion of the

employee’s interest in the plan has been

entirely distributed, the beneficiary of the

eligible designated beneficiary will be

subject to a requirement that the remainder

of that individual’s portion be distributed

within 10 years of the eligible designated

beneficiary’s death. In addition, § 401(a)

(9)(E)(iii) provides that when an eligible

designated beneficiary who is a minor

child of the employee reaches the age of

majority, that child will no longer be considered an eligible designated beneficiary

and the remainder of that child’s portion

of the employee’s interest in the plan must

be distributed within 10 years of that date.

2. Section 401(a)(9)(H) effective date

Section 401(b)(1) of the SECURE Act

provides that, generally, the amendments

made to § 401(a)(9)(H) of the Code apply

to distributions with respect to employees who die after December 31, 2019.

Pursuant to § 401(b)(2) and (3) of the

SECURE Act, later effective dates apply

for certain collectively bargained plans

and governmental plans (as defined in

§ 414(d) of the Code).

Section 401(b)(4) of the SECURE Act

provides that § 401(a)(9)(H) of the Code

does not apply to payments under certain

annuity contracts under which payment

commenced (or the manner of payments

was fixed) before December 20, 2019.

Section 401(b)(5) of the SECURE Act

provides that if an employee who participated in a plan died before § 401(a)(9)(H)

of the Code became effective with respect

to the plan, and the employee’s designated

beneficiary died after that effective date,

then that designated beneficiary is treated

as an eligible designated beneficiary and

§ 401(a)(9)(H) applies to any beneficiary

of that designated beneficiary.

E. Excise tax under § 4974(a)

Section 4974(a) provides that if the

amount distributed during a year to a

payee under any qualified retirement plan

(as defined in § 4974(c)) or any eligible

deferred compensation plan (as defined

in § 457(b)) is less than that year’s minimum required distribution (as defined in

Bulletin No. 2023–31

§ 4974(b)), then an excise tax is imposed

on the payee. Pursuant to § 302 of the

SECURE 2.0 Act, for taxable years beginning after December 29, 2022, this excise

tax is equal to 25 percent of the amount by

which the minimum required distribution

for a year exceeds the amount actually

distributed in that year. If a failure to take

a minimum required distribution is corrected by the end of the correction window

(generally, the end of the second year that

begins after the year of the missed minimum required distribution), the excise tax

is reduced from 25 percent to 10 percent.

F. Section 401(a)(9) proposed regulations

The Treasury Department and the IRS

published proposed regulations regarding

RMDs under § 401(a)(9) of the Code and

related provisions in the Federal Register

on February 24, 2022 (87 FR 10504),

which provided that the regulations,

when finalized, would apply beginning

with the 2022 calendar year. Along with

other matters, the proposed regulations

address issues relating to the 10-year rule

in § 401(a)(9)(H). Specifically, Prop. Reg.

§ 1.401(a)(9)-5(d)(1)(i) requires that, in

the case of an employee who dies on or

after the employee’s required beginning

date, distributions to the employee’s beneficiaries for calendar years after the calendar year of the employee’s death must

satisfy § 401(a)(9)(B)(i). In addition, distributions to the employee’s beneficiaries

must also satisfy § 401(a)(9)(B)(ii) (or

if applicable, § 401(a)(9)(B)(iii)), taking

into account § 401(a)(9)(E)(iii), (H)(ii),

and (H)(iii).

In order to satisfy § 401(a)(9)(B)(i),

the beneficiary of an employee who died

after the employee’s required beginning

date must take an annual RMD beginning

in the first calendar year after the calendar year of the employee’s death. In order

to satisfy § 401(a)(9)(B)(ii) (applied by

substituting “10 years” for “5 years”),

the remaining account balance must be

distributed by the 10th calendar year after

the calendar year of the employee’s death

(subject to an exception under § 401(a)

(9)(B)(iii), if applicable). In order to satisfy both of those requirements, the proposed regulations generally provide that,

in the case of an employee who dies after

the employee’s required beginning date

383

with a designated beneficiary who is not

an eligible designated beneficiary (and

for whom the § 401(a)(9)(B)(iii) alternative to the 10-year rule is not applicable),

annual RMDs must continue to be taken

after the death of the employee, with a full

distribution required by the end of the 10th

calendar year following the calendar year

of the employee’s death.

In the case of a designated beneficiary

who is an eligible designated beneficiary,

the proposed regulations include an alternative to the 10-year rule under which

annual lifetime or life expectancy payments would be made to the beneficiary

beginning in the year following the year

of the employee’s death, in accordance

with § 401(a)(9)(B)(iii). Under the proposed regulations, if an eligible designated beneficiary of an employee is using

the lifetime or life expectancy payment

alternative to the 10-year rule, then the

eligible designated beneficiary (and, after

the death of the eligible designated beneficiary, the beneficiary of the eligible designated beneficiary) would need to continue

to take annual RMDs after the death of

the employee (with the employee’s entire

interest distributed by no later than the 10th

year after the year of the eligible designated beneficiary’s death). The proposed

regulations provide for similar treatment

(that is, continued annual RMDs with a

requirement that the employee’s entire

interest be distributed no later than the 10th

year after a specified event) in the case of

a designated beneficiary who is a minor

child of the employee (with the specified

event being the child’s reaching the age of

majority).

G. Comments received by the Treasury

Department and the IRS

The Treasury Department and the IRS

provided a 90-day comment period for the

proposed regulations. Some individuals

who are owners of inherited IRAs or are

beneficiaries under defined contribution

plans submitted comments indicating that

they thought the new 10-year rule would

apply differently than it would under the

proposed regulations. Specifically, these

commenters expected that, regardless of

when an employee died, the 10-year rule

would operate like the 5-year rule, such

that there would not be any RMD due for

July 31, 2023

a calendar year until the last year of the 5or 10-year period following the specified

event (the death of the employee, the death

of the eligible designated beneficiary, or

the attainment of the age of majority for

the employee’s child who is an eligible

designated beneficiary). Commenters

who are heirs or beneficiaries of individuals who died in 2020 explained that they

did not take an RMD in 2021 and were

unsure of whether they would be required

to take an RMD in 2022. Commenters

asserted that, if final regulations adopt the

interpretation of the 10-year rule set forth

in the proposed regulations, the Treasury

Department and the IRS should provide

transition relief for failure to take distributions that are RMDs due in 2021 or 2022

pursuant to § 401(a)(9)(H) in the case of

the death of an employee (or designated

beneficiary) in 2020 or 2021.

In response to the comments received

on the proposed regulations, the Treasury

Department and the IRS issued Notice

2022-53, 2022-45 IRB 437. Notice 202253 announced that the final regulations

will apply no earlier than the 2023 distribution calendar year and provided guidance regarding certain amounts that were

not paid in 2021 or 2022. Specifically,

Notice 2022-53 provided that a defined

contribution plan will not fail to be qualified for failing to make a specified RMD

(as defined in that notice) in 2021 or 2022

and the taxpayer who did not take a specified RMD will not be subject to the excise

tax under § 4974 for failing to take the

specified RMD.

H. Eligible Rollover Distributions

Section 402(c) generally provides that

the payment of any portion of an employee’s interest in a qualified trust to the

employee or the employee’s surviving

spouse in an eligible rollover distribution is not includible in gross income if

the distribution is rolled over to an eligible retirement plan described in § 402(c)

(8) no later than the 60th day following

the day of receipt. An eligible rollover

distribution is defined in § 402(c)(4) as a

distribution to an employee of all or any

portion of the balance to the credit of the

employee in a qualified trust other than

a distribution that is: (A) one of a series

of substantially equal periodic payments

made over a specified period; (B) a distribution required under § 401(a)(9)1; or

employee’s hardship. Section 402(c)(3)

(B) provides that the Secretary may waive

the 60-day rollover deadline under certain

circumstances. Section 402(c)(11) provides for the direct rollover of a deceased

employee’s interest in a qualified trust

to an inherited IRA established for the

deceased employee’s nonspouse designated beneficiary.

Section 401(a)(31) provides that a trust

does not constitute a qualified trust unless

the plan of which the trust is a part provides that, if the distributee of any eligible rollover distribution elects to have the

distribution paid directly to an eligible

retirement plan and specifies the eligible

retirement plan to which the distribution

is to be paid, the distribution will be made

in the form of a direct trustee-to-trustee

transfer. Within a reasonable period of

time prior to making an eligible rollover

distribution, the plan administrator of a

plan qualified under § 401(a) is required to

provide to the recipient the written explanation described in § 402(f)(1).

Rules similar to those described in

the preceding two paragraphs apply to

§ 403(a) annuity plans, § 403(b) plans,

and § 457 eligible governmental plans.

See §§ 403(a)(4) and (5), 403(b)(8) and

(10), and 457(d)(1)(C) and (e)(16).

If the recipient of an eligible rollover

distribution does not elect in accordance

with § 401(a)(31) to have the distribution paid directly to an eligible retirement

plan described in § 402(c)(8), then under

§ 3405(c), the payor of the distribution

is required to withhold from the distribution an amount equal to 20 percent of the

distribution.

Section 408(d)(3) generally provides

that an amount distributed from an IRA to

the IRA owner, or to the surviving spouse

of the IRA owner, is not included in gross

income if the distribution is rolled over to

an eligible retirement plan no later than

the 60th day following the day of receipt.

A distribution of an after-tax amount

may only be rolled over to another IRA.

Section 408(d)(3)(B) provides that an

IRA owner may roll over only one IRA

distribution in a 12-month period, and

§ 408(d)(3)(E) provides that an RMD

may not be rolled over. Section 408(d)(3)

(I) provides that the Secretary may waive

the 60-day rollover deadline under certain

circumstances.

III. APPLICABILITY DATE OF FINAL

REGULATIONS

Final regulations regarding RMDs

under § 401(a)(9) and related provisions

will apply for calendar years beginning no

earlier than 2024.

IV. RELIEF RELATING TO CHANGE

IN REQUIRED BEGINNING DATE

UNDER SECURE 2.0 ACT

Following enactment of the SECURE

2.0 Act, plan administrators and other

payors indicated that automated payment

systems would need to be updated to

reflect the change in the required beginning date under § 401(a)(9)(C) pursuant

to § 107 of the SECURE 2.0 Act. They

expressed concern that these revisions

could take some time to implement and,

as a result, plan participants and IRA

owners who would have been required to

begin receiving RMDs for calendar year

2023 but for § 107 of the SECURE 2.0

Act (i.e., those who will attain age 72 in

2023) and who receive distributions in

2023 could have had those distributions

mischaracterized as RMDs (and therefore ineligible for rollover). This Section

IV grants certain relief relating to certain

distributions made during 2023 to individuals that were characterized as RMDs

but are not actually RMDs as a result of

the enactment of § 107 of the SECURE

2.0 Act.

A. Payor and plan administrator guidance related to SECURE 2.0 Act change to

required beginning date. A payor or plan

administrator will not be considered to

have failed to satisfy the requirements of

Under § 1.402(c)-2, in determining which amounts are treated as eligible rollover distributions, if a minimum distribution is required for a calendar year, the amounts distributed during that

calendar year are treated as RMDs to the extent that the total RMD under § 401(a)(9) for the calendar year has not been satisfied.

July 31, 2023

384

Bulletin No. 2023–31

§§ 401(a)(31), 402(f), and 3405(c) merely

because of a failure to treat certain distributions as eligible rollover distributions.

This relief applies with respect to any

distribution made from a plan between

January 1, 2023, and July 31, 2023, to a

participant born in 1951 (or that participant’s surviving spouse) that would have

been an RMD but for the change in the

required beginning date under § 107 of the

SECURE 2.0 Act.

B. Extension of 60-day deadline

for rollover of certain distributions.

Pursuant to § 402(c)(3)(B), the Treasury

Department and the IRS are extending the

60-day rollover period for any distribution

described in section IV.A of this notice so

that the deadline for rolling over such a

distribution will be September 30, 2023.

For example, if a participant who was

born in 1951 received a single-sum distribution in January 2023, part of which was

treated as ineligible for rollover because

it was mischaracterized as an RMD, that

participant will have until September 30,

2023, to roll over that mischaracterized

part of the distribution.

C. Relief relating to RMDs previously

distributed from an IRA. Pursuant to

§ 408(d)(3)(I), the Treasury Department

and the IRS are extending the 60-day

rollover period for certain IRA distributions made to an IRA owner (or the IRA

owner’s surviving spouse), so that the

deadline for rolling over that portion of

the distribution will be September 30,

2023. The distributions that are subject

to this extension are distributions made

from an IRA between January 1, 2023,

Bulletin No. 2023–31

and July 31, 2023, to an IRA owner born

in 1951 (or that individual’s surviving

spouse) that would have been RMDs but

for the change in the required beginning

date under § 107 of the SECURE 2.0

Act. This rollover is permitted even if

the IRA owner or surviving spouse has

rolled over a distribution within the last

twelve months. However, making such

a rollover of the portion of an IRA distribution mischaracterized as an RMD

will preclude the IRA owner or surviving

spouse from rolling over a distribution in

the next twelve months. In that case, that

individual could still make a direct trustee-to-trustee transfer as described in Rev.

Rul. 78-406, 1978-2 CB 157.

V. GUIDANCE FOR SPECIFIED RMDs

FOR 2023

A. Guidance for defined contribution

plans that did not make a specified RMD.

A defined contribution plan that failed

to make a specified RMD (as defined in

section V.C of this notice) will not be

treated as having failed to satisfy § 401(a)

(9) merely because it did not make that

distribution.

B. Guidance for certain taxpayers who

did not take a specified RMD. To the extent

a taxpayer did not take a specified RMD

(as defined in section V.C of this notice),

the IRS will not assert that an excise tax is

due under § 4974.

C. Definition of specified RMD. For

purposes of this notice, a specified RMD is

any distribution that, under the interpretation included in the proposed regulations,

385

would be required to be made pursuant to

§ 401(a)(9) in 2023 under a defined contribution plan or IRA that is subject to

the rules of § 401(a)(9)(H) for the year in

which the employee (or designated beneficiary) died if that payment would be

required to be made to:

• a designated beneficiary of an

employee under the plan (or IRA

owner) if: (1) the employee (or IRA

owner) died in 2020, 2021, or 2022,

and on or after the employee’s (or

IRA owner’s) required beginning

date, and (2) the designated beneficiary is not using the lifetime or

life expectancy payments exception

under § 401(a)(9)(B)(iii); or

• a beneficiary of an eligible designated

beneficiary (including a designated

beneficiary who is treated as an eligible designated beneficiary pursuant to

§ 401(b)(5) of the SECURE Act) if:

(1) the eligible designated beneficiary

died in 2020, 2021, or 2022, and (2)

that eligible designated beneficiary

was using the lifetime or life expectancy payments exception under

§ 401(a)(9)(B)(iii) of the Code.

VI. DRAFTING INFORMATION

The principal author of this notice

is Jessica Weinberger of the Office of

Associate Chief Counsel (Employee

Benefits, Exempt Organizations, and

Employment Taxes). For further information regarding this notice, contact Jessica

Weinberger at (202) 317-6349 (not a tollfree number).

July 31, 2023

NOTE. This revenue procedure will be reproduced as the next revision of IRS Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3.

26 CFR 601.602: Tax forms and instructions. (Also Part I, Sections 6041, 6051, 6071, 6081, 6091; 1.6041-1, 1.6041-2, 31.6051-1, 31.6051-2, 31.6071(a)-1, 31.6081(a)1, 31.6091-1.)

Rev. Proc. 2023-25

TABLE OF CONTENTS

Part 1 – GENERAL

Section 1.1 – Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387

Section 1.2 – What’s New. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389

Section 1.3 – General Rules for Paper Forms W-2 and W-3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389

Section 1.4 – General Rules for Filing Forms W-2 (Copy A) Electronically. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391

Part 2 – SPECIFICATIONS FOR SUBSTITUTE FORMS W-2 AND W-3

Section 2.1 – Specifications for Red-Ink Substitute Form W-2 (Copy A) and Form W-3 Filed With the SSA. . . . . . . . . . . . . 392

Section 2.2 – Specifications for Substitute Black-and-White Form W-2 (Copy A) and Form W-3 Filed With the SSA. . . . . . 394

Section 2.3 – Requirements for Substitute Forms Furnished to Employees (Copies B, C, and 2 of Form W-2) . . . . . . . . . . . 397

Section 2.4 – Electronic Delivery of Forms W-2 and W-2c Recipient Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400

Part 3 – ADDITIONAL INSTRUCTIONS

Section 3.1 – Additional Instructions for Form Printers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402

Section 3.2 – Instructions for Employers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402

Section 3.3 – OMB Requirements for Both Red-Ink and Black-and-White Substitute Forms W-2 and W-3. . . . . . . . . . . . . . 403

Section 3.4 – Order Forms and Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404

Section 3.5 – Effect on Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404

Section 3.6 – Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404

July 31, 2023

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Part 1

General

Section 1.1 – Purpose

.01 The purpose of this revenue procedure is to state the requirements of the Internal Revenue

Service (IRS) and the Social Security Administration (SSA) regarding the preparation and use of

substitute forms for Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and

Tax Statements, for wages paid during the 2023 calendar year.

.02 For purposes of this revenue procedure, substitute Form W-2 (Copy A) and substitute Form

W-3 are forms that are not printed by the IRS. Copy A or any other copies of a substitute Form

W-2 or a substitute Form W-3 must conform to the specifications in this revenue procedure to

be acceptable to the IRS and the SSA. No IRS office is authorized to allow deviations from this

revenue procedure. Preparers should also refer to the 2023 General Instructions for Forms W-2

and W-3 for details on how to complete these forms. See Section 3.4, later, for information on

obtaining the official IRS forms and instructions. See Sections 2.3 and 2.4, later, for requirements

for the copies of substitute forms furnished to employees and for electronic delivery of employee

copies.

.03 For purposes of this revenue procedure, the official IRS-printed red dropout ink Forms W-2

(Copy A) and Form W-3, and their exact substitutes, are referred to as “red-ink.” The SSAapproved black-and-white Forms W-2 (Copy A) and Form W-3 are referred to as “substitute

black-and-white Forms W-2 (Copy A)” and “substitute black-and-white Form W-3,” respectively.

Any questions about the red-ink Form W-2 (Copy A) and Form W-3 and the substitute employee

statements should be emailed to substituteforms@irs.gov. Please enter “Substitute Forms” on the

subject line. Or send your questions to:

Internal Revenue Service

Attn: Substitute Forms Program

SE:W:CAR:MP:P:TP:TP

NCFB

5000 Ellin Road

Mail Stop C6-175

Lanham, MD 20706

Note. Do not send completed forms to the Substitute Forms Program via email or mail as they are

unable to process those forms. Any examples/samples of substitute forms sent to the Substitute

Forms Program should not contain taxpayer information.

Any questions about the black-and-white Form W-2 (Copy A) and Form W-3 should be emailed to

copy.a.forms@ssa.gov or sent to:

Social Security Administration

Direct Operations Center

Attn: Substitute Black-and-White Copy A Forms, Room 341

1150 E. Mountain Drive

Wilkes-Barre, PA 18702-7997

Note. You should receive a response from either the IRS or the SSA within 30 days.

Bulletin No. 2023–31

387

July 31, 2023

.04 Some Forms W-2 that include logos, slogans, and advertisements (including advertisements

for tax preparation software) may be considered as suspicious or altered Forms W-2 (also known

as questionable Forms W-2). An employee may not recognize the importance of the employee

copy for tax reporting purposes due to the use of logos, slogans, and advertisements. Thus, the

IRS has determined that logos, slogans, and advertising will not be allowed on Copy A of Forms

W-2, Forms W-3, or any employee copies reporting wages, with the following exceptions for the

employee copies.

•

Forms may include the exact name of the employer or agent, primary trade name, trademark,

service mark, or symbol of the employer or agent.

•

Forms may include an embossment or watermark on the information return (and copies) that

is a representation of the name, a primary trade name, trademark, service mark, or symbol of

the employer or agent.

•

Presentation may be in any typeface, font, stylized fashion, or print color normally used by

the employer or agent, and used in a nonintrusive manner.

•

These items must not materially interfere with the ability of the recipient to recognize,

understand, and use the tax information on the employee copies.

The IRS e-file logo on the IRS official employee copies may be included, but it is not required, on

any of the substitute form copies.

The information return and employee copies must clearly identify the employer’s name associated

with its employer identification number (EIN).

Logos and slogans may be used on permissible enclosures, such as a check or account statement,

but not on information returns and employee copies.

Forms W-2 and W-3 are subject to annual review and possible change. This revenue procedure

may be revised to state other requirements of the IRS and the SSA regarding the preparation and

use of substitute forms for Form W-2 and Form W-3 for wages paid during the 2023 calendar

year at a future date. If you have comments about the restrictions on including logos, slogans, and

advertising on information returns and employee copies, send or email your comments to: Internal

Revenue Service, Attn: Substitute Forms Program, SE:W:CAR:MP:P:TP:TP, NCFB, 5000 Ellin

Road, Mail Stop C6-175, Lanham, MD 20706, or substituteforms@irs.gov.

.05 The Internal Revenue Service/Information Returns Branch (IRS/IRB) maintains a centralized

customer service call site to answer questions related to information returns (Forms W-2, W-3,

W-2c, W-3c, 1099 series, 1096, etc.). You can reach the call site at 866-455-7438 (toll free) or

304-263-8700 (not a toll-free number). Deaf or hard-of-hearing customers may call any of our

toll-free numbers using their choice of relay service. You may also email questions to mccirp@irs.

gov. Do not submit employee information via email because it is not secure and the information

may be compromised.

File paper or electronic Forms W-2 (Copy A) with the SSA. The IRS/IRB does not process Forms

W-2 (Copy A). However, the IRS/IRB does process Form 8508, Application for a Waiver from

Electronic Filing of Information Returns, and Form 8809, Application for Extension of Time To

File Information Returns, for Forms W-2 (Copy A) and requests for an extension of time to furnish

the employee copies of Form W-2. See Publication 1220, Specifications for Electronic Filing of

July 31, 2023

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Bulletin No. 2023–31

Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G, for information on waivers and extensions

of time. See Regulations section 301.6011-2 for information on when you are required to file

electronically and the exclusions from the electronic filing requirements.

.06 The following form instructions and publications provide more detailed filing procedures for

certain information returns.

•

General Instructions for Forms W-2 and W-3 (Including Forms W-2AS, W-2CM, W-2GU,

W-2VI, W-3SS, W-2c, and W-3c).

•

Publication 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c.

Section 1.2 – What’s New

.01 Electronic filing of returns. The Department of the Treasury and the IRS issued final

regulations (T.D. 9972) that reduce the threshold for mandatory electronic filing from 250 nonaggregate returns to 10 aggregate returns as authorized under the Taxpayer First Act, enacted

July 1, 2019. If you file 10 or more information returns, you must file electronically. See

Regulations section 301.6011-2 for more information, including exclusions from the electronic

filing requirements.

.02 Exhibits. All of the exhibits in this publication were updated per the 2023 revisions of those

forms.

.03 Editorial changes. We made editorial changes throughout, including updated references.

Redundancies were eliminated as much as possible.

Section 1.3 – General Rules for Paper Forms W-2 and W-3

.01 Employers not filing electronically must file paper Forms W-2 (Copy A) along with Form

W-3 with the SSA by using either the official IRS form or a substitute form that exactly meets the

specifications shown in Parts 2 and 3 of this revenue procedure.

Note. Substitute territorial forms (W-2AS, W-2GU, W-2VI, W-3SS) must also conform to the

specifications as outlined in this revenue procedure. These forms require the form designation

(“W-2AS,” “W-2GU,” “W-2VI”) on Form W-2 (Copy A) to be in black ink. If you are an employer

in the Commonwealth of the Northern Mariana Islands, you must contact Department of Finance,

Division of Revenue and Taxation, Commonwealth of the Northern Mariana Islands, P.O. Box

5234 CHRB, Saipan, MP 96950 or www.finance.gov.mp/forms.php to get Form W-2CM and

instructions for completing and filing the form. For information on Forms 499R-2/W-2PR, go to

www.hacienda.gobierno.pr.

Employers may design their own statements to furnish to employees. Employee statements

.02 Red-ink substitute forms that completely conform to the specifications contained in this

revenue procedure may be privately printed without prior approval from the IRS or the SSA. Only

Bulletin No. 2023–31

389

July 31, 2023

the substitute black-and-white Forms W-2 (Copy A) and Form W-3 need to be submitted to the

SSA for approval prior to their use (see Section 2.2).

.03 SSA-approved black-and-white Forms W-2 (Copy A) and Form W-3 may be generated using a

printer by following all guidelines and specifications (also see Section 2.2). In general, regardless

of the method of entering data, use black ink on Forms W-2 (Copy A) and Form W-3, which

provides better readability for processing by scanning equipment. Colors other than black are

not easily read by the scanner and may result in delays or errors in the processing of Forms W-2

(Copy A) and Form W-3. The printing of the data should be centered within the boxes. The size of

the variable data must be printed in a font no smaller than 10-points.

Note. With the exception of the identifying number, the year, the form number for Form W-3,

and the corner register marks, the preprinted form layout for the red-ink Forms W-2 (Copy A) and

Form W-3 must be in Flint J-6983 red OCR dropout ink or an exact match.

.04 Substitute forms filed with the SSA and substitute copies furnished to employees that do not

conform to these specifications are unacceptable. Penalties may be assessed for not complying

with the form specifications. Forms W-2 (Copy A) and Form W-3 filed with the SSA that do not

conform may be returned.

.05 Substitute red-ink forms should not be submitted to either the IRS or the SSA for specific

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

•

Submit a letter or email to the appropriate address in Section 1.3.06 (listed next) citing the

specification.

•

State your understanding of the specification.

•

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

understanding. Do not use actual employee information in the example.

•

Be sure to include your name, complete address, and phone number with your correspondence.

If you want the IRS to contact you via email, also provide your email address.

.06 Any questions about the specifications, especially those for the red-ink Form W-2 (Copy A)

and Form W-3, should be emailed to substituteforms@irs.gov. Please enter “Substitute Forms” on

the subject line. Or send your questions to:

Internal Revenue Service

Attn: Substitute Forms Program

SE:W:CAR:MP:P:TP:TP

NCFB

5000 Ellin Road

Mail Stop C6-175

Lanham, MD 20706

Note. Do not send completed forms to the Substitute Forms Program via email or mail as they are

unable to process those forms. Any examples/samples of substitute forms sent to the Substitute

Forms Program should not contain taxpayer information.

Any questions about the substitute black-and-white Form W-2 (Copy A) and Form W-3 should be

emailed to copy.a.forms@ssa.gov or sent to:

July 31, 2023

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Bulletin No. 2023–31

Social Security Administration

Direct Operations Center

Attn: Substitute Black-and-White Copy A Forms, Room 341

1150 E. Mountain Drive

Wilkes-Barre, PA 18702-7997

Note. You should receive a response within 30 days from either the IRS or the SSA.

.07 Forms W-2 and W-3 are subject to annual review and possible change. Therefore, employers

are cautioned against overstocking supplies of privately printed substitutes.

.08 Separate instructions for Forms W-2 and W-3 are provided in the 2023 General Instructions

for Forms W-2 and W-3. Form W-3 should be used only to transmit paper Forms W-2 (Copy A).

Form W-3 is a single sheet including only essential filing information. Be sure to make a copy of

your completed Form W-3 for your records. You can order current year official IRS Forms W-2,

W-2AS, W-2GU, W-2VI, W-3, and W-3SS, and the 2023 General Instructions for Forms W-2 and

W-3, online at IRS.gov/OrderForms. The IRS provides only cut sheet sets of Forms W-2 and cut

sheets of Form W-3.

.09 Because substitute Forms W-2 (Copy A) and Form W-3 are machine-imaged and scanned by

the SSA, the forms must meet the same specifications as the official IRS Forms W-2 and Form

W-3 (as shown in the exhibits).

Section 1.4 – General Rules for Filing Forms W-2 (Copy A) Electronically

.01 Employers must file Forms W-2 (Copy A) with the SSA electronically if they are required to

file 10 or more information returns unless the IRS grants a waiver or exemption. See Regulations

section 301.6011-2 for more information. The SSA publication EFW2, Specifications for Filing

Forms W-2 Electronically, contains specifications and procedures for electronic filing of Form W-2

information with the SSA. Employers are cautioned to obtain the most recent revision of EFW2

(and supplements) in case there are any subsequent changes in specifications and procedures.

.02 You may obtain a copy of the EFW2 by:

•

Accessing the SSA website at www.ssa.gov/employer/EFW2&EFW2C.htm.

.03 Electronic filers do not file a paper Form W-3. See the SSA publication EFW2 for guidance on

transmitting Form W-2 (Copy A) information to the SSA electronically.

.04 Employers are encouraged to electronically file Forms W-2 (Copy A) with the SSA even if

not required. Doing so will enhance the timeliness and accuracy of forms processing. You may

visit the SSA’s employer website at www.ssa.gov/employer. This helpful site has links to Business

Services Online (BSO) and tutorials on registering and using BSO to file your Forms W-2.

.05 Employers who do not comply with the electronic filing requirements for Form W-2 (Copy

A) and who are not granted a waiver or an exemption by the IRS may be subject to penalties.

Employers who file Form W-2 information with the SSA electronically must not send the same

data to the SSA on paper Forms W-2 (Copy A). Any duplicate reporting may subject filers to

unnecessary contacts by the SSA or the IRS.

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July 31, 2023

Part 2

Specifications for Substitute Forms W-2 and W-3

Section 2.1 – Specifications for Red-Ink Substitute Form W-2 (Copy A) and Form W-3 Filed With the SSA

.01 The official IRS-printed red dropout ink Form W-2 (Copy A) and Form W-3 and their exact

substitutes are referred to as “red-ink” in this revenue procedure. Employers may file substitute Forms

W-2 (Copy A) and Form W-3 with the SSA. The substitute forms must be exact replicas of the official

IRS forms with respect to layout and content because they will be read by scanner equipment.

Note. Even the slightest deviation can result in incorrect scanning and may affect money amounts

reported for employees.

.02 Paper used for cut sheets and continuous-pinfed forms for substitute Forms W-2 (Copy A) and

Form W-3 that are to be filed with the SSA must be white 100% bleached chemical wood, 18–20

pound paper only, optical character recognition (OCR) bond produced in accordance with the

following specifications.

• Acidity: Ph value, average, not less than . . . . . . . . . . . . . . . . . .

• Basis weight: 17 x 22 inch 500 cut sheets, pound . . . . . . . . . . . . . .

• Metric equivalent—gm./sq. meter

4.5

18–20

(a tolerance of +5 pct. is allowed) . . . . . . . . . . . . . . . . . . . . .

68–75

• Stiffness: Average, each direction, not less than—milligrams

Cross direction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Machine direction . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• Tearing strength: Average, each direction, not less

than—grams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• Opacity: Average, not less than—percent . . . . . . . . . . . . . . . . .

• Reflectivity: Average, not less than—percent . . . . . . . . . . . . . . .

• Thickness: Average—inch . . . . . . . . . . . . . . . . . . . . . . . .

Metric equivalent—mm . . . . . . . . . . . . . . . . . . . . . . . . .

0.0038

0.097

(a tolerance of +0.0005 inch (0.0127 mm) is allowed). Paper cannot

vary more than 0.0004 inch (0.0102 mm) from one edge to the other.

• Porosity: Average, not less than—seconds . . . . . . . . . . . . . . . . .

• Finish (smoothness): Average, each side—seconds . . . . . . . . . . . . .

(for information only) the Sheffield equivalent—

20–55

units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

170-d200

• Dirt: Average, each side, not to exceed—parts per

million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Note. Reclaimed fiber in any percentage is permitted, provided the requirements of this standard

are met.

.03 All printing of red-ink substitute Forms W-2 (Copy A) and Form W-3 must be in Flint red OCR

dropout ink except as specified below. The following must be printed in nonreflective black ink.

•

July 31, 2023

Identifying number “22222” for Forms W-2 (Copy A) and “33333” for Form W-3 at the top

of the forms.

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•

Tax year at the bottom of the forms.

•

The four (4) corner register marks on the forms.

•

The form identification number (“W-3”) at the bottom of Form W-3.

•

All the instructions below Form W-3 beginning with “Send this entire page. . . . ” line to the

bottom of Form W-3.

.04 The vertical and horizontal spacing for all federal payment and data boxes on Forms W-2 and

W-3 must meet specifications. On Form W-3 and Form W-2 (Copy A), all the perimeter rules must

be 1 point (0.014 inch), while all other rules must be one-half point (0.007 inch). Vertical rules

must be parallel to the left edge of the form; horizontal rules parallel to the top edge.

.05 The official red-ink Form W-3 and Form W-2 (Copy A) are 7.50 inches wide. Employers

filing Forms W-2 (Copy A) with the SSA on paper must also file a Form W-3. Form W-3 must be

the same width (7.50 inches) as the Form W-2. One Form W-3 is printed on a standard size 8.5

x 11-inch page. Two official Forms W-2 (Copy A) are contained on a single 8.5 x 11-inch page

(exclusive of any snap-stubs).

.06 The top, left, and right margins for the Form W-2 (Copy A) and Form W-3 are 0.50 inches (1/2

inch). All margins must be free of printing except for the words “DO NOT STAPLE” on red-ink

Form W-3. The space between the two Forms W-2 (Copy A) is 1.33 inches.

.07 The identifying numbers are “22222” for Form W-2 (Copy A (and 1)) and “33333” for Form

W-3. No printing should appear anywhere near the identifying numbers.

Note. The identifying number must be printed in nonreflective black ink in OCR-A font of 10

characters per inch.

.08 The depth of the individual scannable image on a page must be the same as that on the official

IRS forms. The depth from the top line to the bottom line of an individual Form W-2 (Copy A)

must be 4.17 inches and the depth from the top line to the bottom line of Form W-3 must be 4.67

inches.

.09 Continuous-pinfed Forms W-2 (Copy A) must be separated into 11-inch deep pages. The

pinfed strips must be removed when Forms W-2 (Copy A) are filed with the SSA. The two Forms

W-2 (Copy A) on the 11-inch page must not be separated (only the pages are to be separated

(burst)). The words “Do Not Cut, Fold, or Staple Forms on This Page” must be printed twice

between the two Forms W-2 (Copy A) in Flint red OCR dropout ink. All other copies (Copies 1,

B, C, 2, and D) must be able to be distinguished and separated into individual forms.

.10 Box 12 of Form W-2 (Copy A) contains four entry boxes—12a, 12b, 12c, and 12d. Do not

make more than one entry per box. Enter your first code in box 12a (for example, enter code D

in box 12a, not 12d, if it is your first entry). If more than four items need to be reported in box

12, use a second Form W-2 to report the additional items (see Multiple forms in the 2023 General

Instructions for Forms W-2 and W-3). Do not report the same federal tax data to the SSA on

more than one Form W-2 (Copy A). However, repeat the identifying information (employee’s

name, address, and social security number (SSN); employer’s name, address, and EIN) on each

additional form.

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.11 The checkboxes in box 13 of Form W-2 (Copy A) and in box b of Form W-3 must be 0.14

inches each. The space before the first checkbox is 0.24 inches; the spaces between the first

and second checkboxes and between the second and third checkboxes must be 0.36 inches;

the space between the third checkbox to the right border of box 13 should be 0.32 inches (see

Exhibit A).

Note. More than 50% of an applicable checkbox must be covered by an “X.”

.12 All substitute Forms W-2 (Copy A) and Form W-3 in the red-ink format must have the tax year,

form number, and form title printed on the bottom face of each form using type identical to that

of the official IRS form. The red-ink substitute Form W-2 (Copy A) and Form W-3 must have the

form producer’s EIN entered directly to the left of “Department of the Treasury,” in red.

.13 The words “For Privacy Act and Paperwork Reduction Act Notice, see the separate

instructions.” must be printed in Flint red OCR dropout ink in the same location as on the official

Form W-2 (Copy A). The words “For Privacy Act and Paperwork Reduction Act Notice, see the

separate instructions.” must be printed at the bottom of the page of Form W-3 in black ink.

.14 The Office of Management and Budget (OMB) Number must be printed on substitute Forms

W-3 and W-2 (on each ply) in the same location as on the official IRS forms.

.15 All substitute Forms W-3 must include the instructions that are printed on the same sheet below

the official IRS form.

.16 The back of substitute Form W-2 (Copy A) and Form W-3 must be free of all printing.

.17 All copies must be clearly legible. Fading must be minimized to assure legibility.

.18 Chemical transfer paper is permitted for Form W-2 (Copy A) only if the following standards

are met.

•

Only chemically backed paper is acceptable for Form W-2 (Copy A). Front and back

chemically treated paper cannot be processed properly by scanning equipment.

•

Chemically transferred images must be black.

•

Carbon-coated forms are not permitted.

.19 The Government Printing Office (GPO) symbol and the Catalog Number (Cat. No.) must be

deleted from substitute Form W-2 (Copy A) and Form W-3.

Section 2.2 – Specifications for Substitute Black-and-White Form W-2 (Copy A) and Form W-3 Filed With the SSA

.01 Specifications for the SSA-approved substitute black-and-white Forms W-2 (Copy A) and

Form W-3 are similar to the red-ink forms (Section 2.1) except for the items that follow (see

Exhibits D and E). Exhibits are samples only and may not show the required typeface and/or font.

Exhibits must not be downloaded to meet tax obligations.

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Forms must be printed on 8.5 x 11-inch single-sheet paper only. There must be two Forms

W-2 (Copy A) printed on a page. There must be no horizontal perforations between the two

Forms W-2 (Copy A) on each page.

All forms and data must be printed in nonreflective black ink only.

The data and forms must be programmed to print simultaneously. Forms cannot be produced

separately from wage data entries.

The forms must not contain corner register marks.

The forms must not contain any shaded areas, including those boxes that are entirely shaded

on the red-ink forms.

Identifying numbers on both Form W-2 (Copy A) (“22222”) and Form W-3 (“33333”) must

be preprinted in 14-point Arial bold font or a close approximation.

The form numbers (“W-2” and “W-3”) must be in 18-point Arial font or a close approximation.

The tax year (for example, “2023”) on Forms W-2 (Copy A) and Form W-3 must be in

20-point Arial bold font or a close approximation.

No part of the box titles or the data printed on the forms may touch any of the vertical or

horizontal lines, nor should any of the data intermingle with the box titles. The data should be

centered in the boxes.

Do not print any information in the margins of the substitute black-and-white Forms W-2

(Copy A) and Form W-3 (for example, do not print “DO NOT STAPLE” in the top margin of

Form W-3).

10. The word “Code” must not appear in box 12 on Form W-2 (Copy A).

11. A 4-digit vendor code preceded by four zeros and a slash (for example, 0000/9876) must

appear in 12-point Arial font, or a close approximation, under the tax year in place of the

Cat. No. on Form W-2 (Copy A) and in the bottom right corner of the “For Official Use

Only” box at the bottom of Form W-3. Do not display the form producer’s EIN to the left

of “Department of the Treasury.” The vendor code will be used to identify the form producer.

12. Do not print Catalog Numbers (Cat. No.) on either Form W-2 (Copy A) or Form W-3.

13. Do not print the checkboxes in box 13 of Form W-2 (Copy A). The “X” should be programmed

to be printed and centered directly below the applicable box title.

14. Do not print dollar signs. If there are no money amounts being reported, the entire field should

be left blank.

15. The space between the two Forms W-2 (Copy A) is 1.33 inches.

.02 You must submit samples of your substitute black-and-white Forms W-2 (Copy A) and Form

W-3 to the SSA. Only black-and-white substitute Forms W-2 (Copy A) and Form W-3 for tax year

2023 will be accepted for approval by the SSA. Questions regarding other red-ink forms (that is,

red-ink Forms W-2c, W-3c, 1099 series, 1096, etc.) must be directed to the IRS only.

.03 You will be required to send one set of blank and one set of dummy-data substitute blackand-white Forms W-2 (Copy A) and Forms W-3 for approval. Data entries on the sample forms

must fill the length for each box, preferably using numeric data or alpha data, depending on

the requirements. The “VOID” checkbox must be electronically checked on the dummy-data

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substitute black-and-white Form W-2 (Copy A). All “Xs” must show in box 13 centered under the

applicable checkbox titles on the dummy-data substitute black-and-white Form W-2 (Copy A).

All checkboxes on the dummy-data substitute black-and-white Form W-3 must be electronically

checked in box b (Kind of Payer, Kind of Employer, and Third-party sick pay). Include in your

submission the name, telephone number, fax number, and email address of a contact person who

can answer questions regarding your sample forms.

.04 To receive approval, you may first contact the SSA via email at copy.a.forms@ssa.gov to

obtain a template and further instructions. You can either submit your 2023 sample substitute

black-and-white Forms W-2 (Copy A) and Forms W-3 in a PDF version electronically for approval

to the copy.a.forms@ssa.gov mailbox or send your paper 2023 sample substitute black-and-white

Forms W-2 (Copy A) and Forms W-3 to:

Social Security Administration

Direct Operations Center

Attn: Substitute Black-and-White Copy A Forms, Room 341

1150 E. Mountain Drive

Wilkes-Barre, PA 18702-7997

Send your sample forms via private mail carrier or certified mail in order to verify their receipt.

You can expect approval (or disapproval) by the SSA within 30 days of receipt of your sample

forms.

.05 Vendor codes from the National Association of Computerized Tax Processors (NACTP) are

required by those companies producing the W-2 family of forms as part of a product for resale

to be used by multiple employers and payroll professionals. Employers developing Form W-2

or W-3 to be used only for their individual company require a vendor code issued by the SSA.

.06 The 4-digit vendor code preceded by four zeros and a slash (0000/9876) must be preprinted on

the sample substitute black-and-white Forms W-2 (Copy A) and Forms W-3. Forms not containing

a vendor code will be rejected and will not be submitted for testing or approval. If you have a valid

vendor code provided to you through the NACTP, you should use that code. If you do not have

a valid vendor code, contact the SSA via email at copy.a.forms@ssa.gov to obtain an SSA-issued

code. (Additional information on vendor codes may be obtained from the SSA or the NACTP via

email at president@nactp.org.)

.07 If you use forms produced by a vendor and have questions concerning approval, do not

send the forms to the SSA for approval. Instead, you may contact the software vendor to obtain a

copy of the SSA’s dated approval notice supplied to that vendor.

.08 In response to feedback from the user community, the SSA (and the IRS) have added a 2-D

barcoded version for the substitute Form W-2 and Form W-3 to the list of acceptable submission

formats. This version is an optional alternative to the nonbarcoded substitute Forms W-2 and W-3.

Both versions are fully supported by the SSA. At this time, neither the IRS nor the SSA mandates

the use of 2-D barcoded substitute forms.

Note. The data contained in the barcode must not differ from the data displayed on the form. If they

differ, the data in the barcode will be ignored and the data displayed on the form will be considered

the submission. This also occurs when the barcode is not read correctly. The information on the

form needs to be manually keyed into the database.

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To get the barcode information:

•

See the SSA’s BSO website at www.ssa.gov/bso ,

•

Request the PDF version of the specifications by emailing copy.a.forms@ssa.gov , and

•

Download the Substitute Forms W3/W2 2-D Barcoding Standards from www.ssa.gov/

employer/subBarCodeStd.pdf .

If you are using a form produced by another vendor that contains a 2-D barcode, you must submit

the form for approval using your own NACTP code. Prior to sending your first submission for

approval, contact the SSA via email at copy.a.forms@ssa.gov to register your NACTP code and

explain what forms you want to submit.

Section 2.3 – Requirements for Substitute Forms Furnished to Employees (Copies B, C, and 2 of Form W-2)

Note. Rules in Section 2.3 apply only to employee copies of Form W-2 (Copies B, C, and 2).

Printers are cautioned that the paper filers who send Forms W-2 (Copy A) to the SSA must follow

the requirements in Sections 2.1 and/or 2.2 above.

.01 All employers (including those who file electronically) must furnish employees with at least

two copies of Form W-2 (three or more for employees required to file a state, city, or local income

tax return). The following rules are guidelines for preparing employee copies.

The dimensions of these copies (Copies B, C, and 2), but not Copy A, may differ from the

dimensions of the official IRS form to allow space for reporting additional information, including

additional entries such as withholding for health insurance, union dues, bonds, or charity in box

14. The limitation of a maximum of four items in box 12 of Form W-2 applies only to Copy A,

which is filed with the SSA.

Note. Employee copies (Copies B, C, and 2 of Form W-2) may be furnished electronically if

employees give their consent (as described in Regulations section 31.6051-1(j)). See also

Publication 15-A, Employer’s Supplemental Tax Guide.

.02 The minimum dimensions for employee copies only (not Copy A) of Form W-2 should be 2.67

inches deep by 4.25 inches wide. The maximum dimensions should be no more than 6.50 inches

deep by no more than 8.50 inches wide.

Note. The maximum and minimum size specifications in this document are for tax year 2023 only

and may change in future years.

.03 Either horizontal or vertical format is permitted (see Exhibit F).

.04 The paper for all copies must be white and printed in black ink. The substitute Copy B, which

employees are instructed to attach to their federal income tax returns, should be at least 9-pound

paper (basis 17 x 22-500). Other copies furnished to employees should also be at least 9-pound

paper (basis 17 x 22-500) unless a state, city, or local government provides other specifications.

.05 Employee copies of Form W-2 (Copies B, C, and 2), including those that are printed on a single

sheet of paper, must be easily separated. The best method of separation is to provide perforations

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between the individual copies. Whatever method of separation is used, each copy should be easily

distinguished.

Note. Perforation does not apply to printouts of copies of Forms W-2 that are furnished

electronically to employees (as described in Regulations section 31.6051-1(j)). However, these

employees should be cautioned to carefully separate the copies of Form W-2. See Publication

15-A for information on electronically furnishing Forms W-2 to employees.

.06 Interleaved carbon and chemical transfer paper employee copies must be clearly legible.

Fading must be minimized to assure legibility.

.07 The electronic tax logo on the IRS official employee copies is not required on any of the

substitute form copies. To avoid confusion and questions by employees, employers are encouraged

to delete the identifying number (“22222”) from the employee copies of Form W-2.

.08 All substitute employee copies must contain boxes, box numbers, and box titles that match

the official IRS Form W-2. Boxes that do not apply can be deleted. However, certain core boxes

must be included. The placement, numbering, and size of this information is specified as follows.

•

July 31, 2023

The core boxes must be printed in the exact order shown on the official IRS form. The items

and box numbers that constitute the core data are:

Box 1 — Wages, tips, other compensation

Box 2 — Federal income tax withheld

Box 3 — Social security wages

Box 4 — Social security tax withheld

Box 5 — Medicare wages and tips

Box 6 — Medicare tax withheld

•

The core data boxes (1 through 6) must be placed in the upper right of the form. Substitute

vertical-format copies may have the core data across the top of the form. Boxes or other

information will definitely not be permitted to the right of the core data.

•

The form title, number, or copy designation (B, C, or 2) may be at the top of the form.

Also, a reversed or blocked-out area to accommodate a postal permit number or other postal

considerations is allowed in the upper right.

•

Boxes 1 through 6 must each be a minimum of 1 1/8 inches wide x 1/4 inch deep.

•

Other required boxes are:

Box a — Employee’s social security number

Box b — Employer identification number (EIN)

Box c — Employer’s name, address, and ZIP code

Box e — Employee’s name

Box f — Employee’s address and ZIP code

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Note. Employers may truncate the employee’s SSN on employee copies of Forms W-2. See the

2023 General Instructions for Forms W-2 and W-3 for more information.

Identifying items must be present on the form and be in boxes similar to those on the official

IRS form. However, they may be placed in any location other than the top or upper right. You

do not need to use the lettering system (a–c, e–f) used on the official IRS form. The employer

identification number (EIN) may be included with the employer’s name and address and not in a

separate box.

Note. Box d (“Control number”) is not required.

.09 All copies of Form W-2 furnished to employees must clearly show the form number, the form

title, and the tax year prominently displayed together in one area of the form. The title of Form

W-2 is “Wage and Tax Statement.” It is recommended (but not required) that this be located on the

bottom left of substitute Forms W-2. The reference to the “Department of the Treasury — Internal

Revenue Service” must be on all copies of substitute Forms W-2 furnished to employees. It is

recommended (but not required) that this be located on the bottom right of Form W-2.

.10 If the substitute employee copies are labeled, the forms must contain the applicable description.

•

“Copy B, To Be Filed With Employee’s FEDERAL Tax Return.”

•

“Copy C, For EMPLOYEE’S RECORDS.”

•

“Copy 2, To Be Filed With Employee’s State, City, or Local Income Tax Return.”

It is recommended (but not required) that these be located on the lower left of Form W-2. If

the substitute employee copies are not labeled as to the disposition of the copies, then written

notification using similar wording must be provided to each employee.

.11 The tax year (for example, “2023”) must be clearly printed on all copies of substitute Form

W-2. It is recommended (but not required) that this information be in the middle at the bottom of

the Form W-2. The use of 24-point. OCR-A font is recommended (but not required).

.12 Boxes 1 and 2 (if applicable) on Copy B must be outlined in bold 2-point rule or highlighted in

some manner to distinguish them. If “Allocated tips” are being reported, it is recommended (but

not required) that box 8 also be outlined. If reported, “Social security tips” (box 7) must be shown

separately from “Social security wages” (box 3).

Note. Box 8 may be omitted if not applicable.

.13 If employers are required to withhold and report state or local income tax, the applicable

boxes are also considered core information and must be placed at the bottom of the form. State

information is included in:

Bulletin No. 2023–31

•

Box 15 (State, Employer’s state ID number),

•

Box 16 (State wages, tips, etc.), and

•

Box 17 (State income tax).

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Local information is included in:

•

Box 18 (Local wages, tips, etc.),

•

Box 19 (Local income tax), and

•

Box 20 (Locality name).

.14 Boxes 7 through 14 may be omitted from substitute employee copies unless the employer must

report any of that information to the employee. For example, if an employee did not have “Social

security tips” (box 7), the form could be printed without that box. But, if an employer provided

dependent care benefits, the amount must be reported separately, shown in box 10, and labeled

“Dependent care benefits.”

.15 Employers may enter more than four codes in box 12 of substitute Copies B, C, and 2 (and 1

and D) of Form W-2, but each entry must use codes A–HH (see the 2023 General Instructions for

Forms W-2 and W-3).

.16 If an employer has employees in any of the three categories in box 13, all checkbox headings

must be shown and the proper checkmark made, when applicable.

.17 Employers may use box 14 for any other information that they wish to give to their employees.

Each item must be labeled. (See the instructions for box 14 in the 2023 General Instructions for

Forms W-2 and W-3.)

.18 The front of Copy C of a substitute Form W-2 must contain the note “This information is being

furnished to the Internal Revenue Service. If you are required to file a tax return, a negligence

penalty or other sanction may be imposed on you if this income is taxable and you fail to report it.”

.19 Instructions similar to those contained on the back of Copies B, C, and 2 of the official IRS

Form W-2 must be provided to each employee. An employer may modify or delete instructions

that do not apply to its employees. (For example, remove Railroad Retirement Tier 1 and Tier

2 compensation information for nonrailroad employees or information about dependent care

benefits that the employer does not provide.)

.20 Employers must notify their employees who have no income tax withheld that they may be able

to claim a tax refund because of the earned income credit (EIC). They will meet this notification

requirement if they furnish a substitute Form W-2 with the EIC notice on the back of Copy B; IRS

Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC); or on their own

statement containing the same wording. They may also change the font on Copies B, C, and 2 so

that the EIC notification and Form W-2 instructions fit differently. For more information about the

EIC notification requirements, see section 10 in Publication 15 (Circular E), Employer’s Tax Guide.

Note. An employer does not have to notify any employee who claimed exemption from withholding

on Form W-4, Employee’s Withholding Certificate, for the calendar year.

Section 2.4 – Electronic Delivery of Forms W-2 and W-2c Recipient Statements

.01 If you are required to furnish a Form W-2 or W-2c written statement (Copy B or an acceptable

substitute) to a recipient, you may furnish the statement electronically instead of on paper.

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If you meet the requirements listed below, you are treated as furnishing the statement timely.

.02 The recipient must consent in the affirmative and not have withdrawn the consent before the

statement is furnished. The consent by the recipient must be made electronically in a way that

shows that they can access the statement in the electronic format in which it will be furnished.

You must notify the recipient of any hardware or software changes prior to furnishing the

statement. A new consent to receive the statement electronically is required after any new hardware

or software is put into service.

To furnish Forms W-2 electronically, you must meet the following disclosure requirements as

described in Regulations section 31.6051-1(j) and Publication 15-A and provide a clear and

conspicuous statement of each requirement to your employees before or at the time consent is

provided.

•

The employee must be informed that they will receive a paper Form W-2 if consent isn’t

given to receive it electronically.

•

The employee must be informed of the scope and duration of the consent.

•

The employee must be informed of any procedure for obtaining a paper copy of their Form

W-2 and whether or not the request for a paper statement is treated as a withdrawal of the

employee’s consent to receiving their Form W-2 electronically.

•

The employee must be notified of the right to withdraw a consent, in writing (electronically

or on paper), and the employer must confirm the withdrawal in writing (electronically or on

paper), as well as the date the withdrawal takes effect.

•

The employee must also be notified that the withdrawn consent doesn’t apply to the previously

issued Forms W-2.

•

The employee must be informed about any conditions under which electronic Forms W-2 will

no longer be furnished (for example, termination of employment).

•

The employee must be informed of any procedures for updating their contact information that

enables the employer to provide electronic Forms W-2.

•

The employer must notify the employee of any changes to the employer’s contact information.

•

The employee must be provided with a description of the hardware and software used to

access the Form W-2 and the date when the Form W-2 will no longer be available on the

website.

•

The employee must be informed that they may be required to print the Form W-2 and attach

it to a federal, state, or local income tax return.

.03 Additionally, you must do the following.

Bulletin No. 2023–31

•

Ensure the electronic format complies with the guidelines in this document and contains all

the required information described in the 2023 General Instructions for Forms W-2 and W-3.

•

If posting the statement on a website, post it for the recipient to access on or before the

January 31 due date through October 15 of that year.

•

Inform the recipient in person, electronically, or by mail, of the posting and how to access and

print the statement.

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Part 3

Additional Instructions

Section 3.1 – Additional Instructions for Form Printers

.01 If paper copies are used for filing with the SSA, the substitute copies of Forms W-2 (either

red-ink or substitute black-and-white forms) must be assembled in the same order as the official

IRS Forms W-2. Copy A must be first, followed sequentially by perforated sets (Copies 1, B, C,

2, and D).

.02 The substitute form to be filed by the employer with the SSA must carry the designation

“Copy A.”

Note. Electronic filers do not submit either red-ink or substitute black-and-white paper Form W-2

(Copy A) or Form W-3 to the SSA.

.03 Employers must retain a copy of Forms W-2 and W-3 (or be able to reconstruct the information)

for at least 4 years. Employers must also be able to generate Forms W-2 (Copy A) that meet the

requirements of this revenue procedure in case of loss.

.04 Except for copies in the official assembly, described in Section 3.1.01 above, no additional

copies that may be prepared by employers should be placed ahead of Form W-2 (Copy C) “For

EMPLOYEE’S RECORDS.”

.05 You must provide instructions similar to those contained on the back of Copies B, C, and 2

of the official IRS Form W-2 to each employee. You may print them on the back of the substitute

Copies B, C, and 2 or provide them to employees on a separate statement. You do not need to use

the back of Copy 2. If you do not use Copy 2, you may include all the information that appears

on the back of the official Copies B, C, and 2 on the back of your substitute Copies B and C only.

As an example, you may use the “Note” on the back of the official Copy C as the dividing point

between the text for your substitute Copies B and C. Do not print these instructions on the back

of Copy 1. Any Forms W-2 (Copy A) and Form W-3 that are filed with the SSA must have no

printing on the reverse side.

Section 3.2 – Instructions for Employers

.01 Only originals of Form W-2 (Copy A) and Form W-3 may be filed with the SSA. Carbon

copies and photocopies are unacceptable.

.02 Employers should type or machine-print data entries on plain paper forms whenever possible.

Ensure good quality by using a high-quality typeface, inserting data in the middle of blocks that

are well separated from other printing and guidelines, and taking any other measures that will

guarantee clear, sharp images. Black ink must be used with no script type, inverted font, italics, or

dual-case alpha characters.

Note. 12-point Courier font is preferred by the SSA.

July 31, 2023

402

Bulletin No. 2023–31

.03 Form W-2 (Copy A) requires decimal entries for wage data. Do not print dollar signs with

money amounts on Forms W-2 (Copy A) and Form W-3.

.04 The employer must provide a machine-scannable Form W-2 (Copy A). The employer must

also provide employee copies (Copies B, C, and 2) that are legible and able to be photocopied (by

the employee). Do not print any data in the top margin of the payee copies of the forms.

Note. Do not print Forms W-2 (Copy A) on double-sided paper.

.05 Any printing in box d (Control number) on Form W-2 or box a (Control number) on Form W-3

may not touch any vertical or horizontal lines and should be centered in the box.

.06 The filer’s employer identification number (EIN) must be entered in box b of Form W-2 and

box e of Form W-3. The EIN entered on Form(s) W-2 (box b) and Form W-3 (box e) must be

the same as on Forms 941, 941-SS, 943, 944, and CT-1; Schedule H (Form 1040); or any other

corresponding forms filed with the IRS. Be sure to use EIN format (00-0000000) rather than SSN

format (000-00-0000).

.07 The employer’s name, address, and EIN may be preprinted.

.08 Employers must not truncate the employee’s SSN on Copy A of Forms W-2. See the 2023

General Instructions for Forms W-2 and W-3 for more information.

Section 3.3 – OMB Requirements for Both Red-Ink and Black-and-White Substitute Forms W-2 and W-3

.01 The Paperwork Reduction Act (the Act) of 1995 (Public Law 104-13) requires that:

•

The Office of Management and Budget (OMB) approves all IRS tax forms that are subject to

the Act;

•

Each IRS form contains (in or near the upper right corner) the OMB approval number, if

assigned — the official OMB numbers may be found on the official IRS printed forms and

are also shown on the forms in the Exhibits in Section 3.6; and

•

Each IRS form (or its instructions) states:

Why the IRS needs the information,

How it will be used, and

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

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

.03 The OMB requirements for substitute IRS Form W-2 and Form W-3 are the following.

Bulletin No. 2023–31

•

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

appears on the official IRS form.

•

The OMB number for both Form W-2 (Copy A) and Form W-3 is 1545-0008 and must appear

exactly as shown on the official IRS form.

403

July 31, 2023

•

For any copy of Form W-2 other than Copy A, the OMB number must use one of the following

formats.

OMB No. 1545-0008 (preferred).

OMB # 1545-0008 (acceptable).

.04 Any substitute Form W-2 (Copy A only) and Form W-3 must state “For Privacy Act and

Paperwork Reduction Act Notice, see the separate instructions.” If no instructions are provided to

users of your forms, you must furnish them with the exact text of the Privacy Act and Paperwork

Reduction Act Notice in the 2023 General Instructions for Forms W-2 and W-3.

Section 3.4 – Order Forms and Instructions

.01 You can order IRS Forms W-2, Forms W-3, the General Instructions for Forms W-2 and W-3,

and other tax material online at IRS.gov/OrderForms.

.02 Copies of Form W-2 (Copy A) and Form W-3 downloaded from IRS.gov cannot be used for

filing with the SSA. These copies of Forms W-2 and W-3 are for information purposes only.

Section 3.5 – Effect on Other Documents

.01 Revenue Procedure 2022-30, I.R.B. 2022-31, dated August 01, 2022 (reprinted as Publication

1141, Revised 08-2022), is superseded.

Section 3.6 – Exhibits

Exhibits A through F provide the general measurements for Forms W-2 and W-3 as discussed in

this revenue procedure. Exhibits are samples only and may not show the required typeface and/or

font. Exhibits must not be downloaded to meet tax obligations. Certain exhibits show a 0000/ in

the location designated for your vendor code. See Section 2.2.01, item 11, and Section 2.2.05 for

more information.

Exhibit A — Form W-2 (Copy A) (Red-Ink) 2023

Exhibit B — Form W-2 (Copy B) 2023

Exhibit C — Form W-3 (Red-Ink) 2023

Exhibit D — Form W-2 (Copy A) (Substitute Black-and-White) 2023

Exhibit E — Form W-3 (Substitute Black-and-White) 2023

Exhibit F — Form W-2 Alternative Employee Copies (Illustrating Horizontal and Vertical Formats)

July 31, 2023

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July 31, 2023

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Bulletin No. 2023–31

Part IV

Announcement 2023-17

Rev. Proc. 2023-3, 2023-1 I.R.B. 144

(January 3, 2023) contains an error in the

Bulletin No. 2023–31

second sentence of section 7 on page 161.

The sentence incorrectly states that Rev.

Proc. 2022-19, 2022-42 I.R.B. 282, is

superseded. However, Rev. Proc. 2022-19,

2022-42 I.R.B. 282 remains in effect and

411

is not superseded. Section 7 is corrected

to read, “Rev. Proc. 2022-3, 2022-1 I.R.B.

144, is superseded. Rev. Proc. 2022-28,

2022-27 I.R.B. 65, is superseded.”

July 31, 2023

Deletions From Cumulative

List of Organizations,

Contributions to Which are

Deductible Under Section

170 of the Code

Announcement 2023-21

The Internal Revenue Service has

revoked its determination that the organizations listed below qualify as organizations

described in sections 501(c)(3) and 170(c)

(2) of the Internal Revenue Code of 1986.

Generally, the IRS will not disallow deductions for contributions made

to a listed organization on or before the

date of announcement in the Internal

Revenue Bulletin that an organization

no longer qualifies. However, the IRS is

not precluded from disallowing a deduction for any contributions made after

an organization ceases to qualify under

section 170(c)(2) if the organization has

not timely filed a suit for declaratory

judgment under section 7428 and if the

contributor (1) had knowledge of the

revocation of the ruling or determination

letter, (2) was aware that such revocation

was imminent, or (3) was in part responsible for or was aware of the activities

or omissions of the organization that

brought about this revocation.

NAME OF ORGANIZATION

Effective Date of

Revocation

Taxes for a Cause Inc

United Way of New York

Step Up Youth Corp

National Waterfowl Alliances

Hockey Hall Inc

01/01/2020

04/02/2018

2/06/2019

02/01/2021

01/01/2019

July 31, 2023

412

If on the other hand a suit for declaratory judgment has been timely filed,

contributions from individuals and organizations described in section 170(c)(2)

that are otherwise allowable will continue

to be deductible. Protection under section

7428(c) would begin on July 31, 2023 and

would end on the date the court first determines the organization is not described in

section 170(c)(2) as more particularly set

for in section 7428(c)(1). For individual

contributors, the maximum deduction protected is $1,000, with a husband and wife

treated as one contributor. This benefit is

not extended to any individual, in whole or

in part, for the acts or omissions of the organization that were the basis for revocation.

LOCATION

Rockville Center, NY

New York, NY

Denver, CO

Oak Forest, IL

Tulsa, OK

Bulletin No. 2023–31

Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

effect:

Amplified describes a situation where

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

being extended to apply to a variation of

the fact situation set forth therein. Thus, if

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

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

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

caused, or may cause, some confusion. It

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

Distinguished describes a situation

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

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

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

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

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

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

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

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

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

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

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

Suspended is used in rare situations

to show that the previous published rulings will not be applied pending some

future action such as the issuance of new

or amended regulations, the outcome of

cases in litigation, or the outcome of a

Service study.

Abbreviations

The following abbreviations in current

use and formerly used will appear in

material published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

Bulletin No. 2023–31

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

July 31, 2023

Numerical Finding List1

Bulletin 2023–31

Announcements:

2023-18, 2023-30 I.R.B. 366

2023-19, 2023-30 I.R.B. 367

2023-20, 2023-30 I.R.B. 368

2023-17, 2023-31 I.R.B. 411

2023-21, 2023-31 I.R.B. 412

Notices:

2023-29, 2023-29 I.R.B. 1

2023-45, 2023-29 I.R.B. 317

2023-47, 2023-29 I.R.B. 318

2023-37, 2023-30 I.R.B. 359

2023-50, 2023-30 I.R.B. 361

2023-51, 2023-30 I.R.B. 362

2023-54, 2023-31 I.R.B. 382

Proposed Regulations:

REG-124123-22, 2023-30 I.R.B. 369

Revenue Procedures:

2023-31, 2023-25 I.R.B. 386

Treasury Decisions:

9976, 2023-30 I.R.B. 354

9977, 2023-31 I.R.B. 375

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2023–27 through 2023–52 is in Internal Revenue Bulletin

2023–52, dated December 27, 2023.

July 31, 2023

Bulletin No. 2023–31

Finding List of Current Actions on

Previously Published Items1

Bulletin 2023–31

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2023–27 through 2023–52 is in Internal Revenue Bulletin

2023–52, dated December 27, 2023.

Bulletin No. 2023–31

iii

July 31, 2023

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue

Bulletins are available at www.irs.gov/irb/.

We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it,

we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page

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NW, IR-6230 Washington, DC 20224.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.