Bulletin No. 2021–51

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Bulletin No. 2021–51

December 20, 2021

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, INCOME TAX

EXEMPT ORGANIZATIONS

Rev. Proc. 2021-52, page 883.

Announcement 2021-17, page 889.

This revenue procedure will update Rev. Proc. 2020-54,

2020-53 I.R.B. 1806, and identifies circumstances under

which the disclosure on a taxpayer’s income tax return with

respect to an item or position is adequate for the purpose

of reducing the understatement of income tax under section

6662(d) of the Internal Revenue Code (relating to the substantial understatement aspect of the accuracy-related penalty), and for the purpose of avoiding the tax return preparer

penalty under section 6694(a) (relating to understatements

due to unreasonable positions) with respect to income tax

returns. This revenue procedure will apply to any income tax

return filed on 2021 tax forms for a taxable year beginning in

2021 and to any income tax return filed in 2022 on 2021 tax

forms for short taxable years beginning in 2022.

EMPLOYMENT TAX

Notice 2021-65, page 880.

Notice 2021-65 provides guidance regarding the retroactive

termination of the employee retention credit under IRC section 3134 in the fourth calendar quarter of 2021 for employers who are not recovery startup businesses. This notice

applies to employers that paid wages after September 30,

2021 and received an advance payment of the employee

retention credit for those wages or reduced employment tax

deposits in anticipation of the credit for the fourth calendar

quarter of 2021, but are now ineligible for the credit due to

the change in the law. The notice also provides guidance

regarding how the rules apply to recovery startup businesses

during the fourth calendar quarter of 2021.

Finding Lists begin on page ii.

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

the code section requirements. Contributions made to the

organizations by individual donors are no longer deductible

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

INCOME TAX

REG-109128-21, page 890.

These proposed regulations would provide that minimum essential coverage does not include Medicaid coverage that is limited to COVID-19 testing and diagnostic

services provided under the Families First Coronavirus

Response Act, would provide an automatic extension

of time for providers of minimum essential coverage to

furnish individual statements regarding such coverage,

and would provide an alternative method for furnishing

individual statements when the shared responsibility

payment amount is zero. Additionally, the proposed

regulations would provide an automatic extension of

time for applicable large employers to furnish statements relating to health insurance that the employer

offers to its full-time employees.

Rev. Proc. 2021-43, page 882.

This revenue procedure provides safe harbors for when an

obligation described in § 42(h)(4)(A) of the Internal Revenue

Code or an allocation of a low-income housing credit dollar

amount is more than de minimis for purposes of the associated revenue ruling providing guidance on whether the 4

percent applicable percentage under § 42(b)(3) applies to

certain low-income buildings.

by a publicly offered REIT or publicly offered RIC on or after

November 1, 2021, and on or before June 30, 2022.

Rev. Proc. 2021-53, page 887.

Rev. Rul. 2021-20, page 875.

This revenue ruling provides guidance regarding whether

the 4 percent applicable percentage (4 percent floor)

under § 42(b)(3) of the Internal Revenue Code applies

to the low-income buildings described in the revenue

ruling. This revenue ruling holds that a draw-down bond

that is issued prior to 2021 (with draws occurring in

a subsequent year), a de minimis § 42(h)(4)(A) obligation issued after December 31, 2020, or a de minimis

allocation of low-income housing credit dollar amount

occurring after December 31, 2020, do not cause a

building to be subject to the minimum 4 percent floor

under § 42(b)(3).

Rev. Proc. 2021-53 provides temporary guidance regarding the treatment of certain stock distributions by publicly

offered real estate investment trusts (REITs) and publicly

offered regulated investment companies (RICs). Specifically, in recognition of the need for liquidity as a result of the

impact of the COVID-19 pandemic, this Rev. Proc. modifies

the safe harbor provided in Rev. Proc. 2017-45, 2017-35

I.R.B. 216, by temporarily reducing the minimum required

aggregate amount of cash that distributee shareholders may

receive to not less than 10 percent of the total distribution

in order for § 301 of the Code, by reason of § 305(b) of the

Code, to apply to such distribution. This temporary modification is effective solely with respect to distributions declared

December 20, 2021

Bulletin No. 2021–51

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.

December 20, 2021

Bulletin No. 2021–51

Part I

Section 42. - Low-Income

Housing Credit.

(Also §§ 141, 142, and 146, and 26 CFR 1.42-8,

1.42-13, and 1.150-1).

Rev. Rul. 2021-20

ISSUES

(1) Does the minimum 4 percent applicable percentage (4 percent floor) under

§ 42(b)(3) of the Internal Revenue Code

(Code) apply to the building in Situation

1, which is financed in part with a drawdown exempt facility bond issue that was

issued in 2020 and on which one or more

draws are taken after December 31, 2020?

(2) Does the 4 percent floor under

§ 42(b)(3) of the Code apply to the building in Situation 2, which is financed in

part with proceeds of an exempt facility

bond issue that was issued in 2020 and in

part with proceeds of a different exempt

facility bond issue that is issued in a de

minimis amount after December 31, 2020?

(3) Does the 4 percent floor under

§ 42(b)(3) of the Code apply to the building in Situation 3, which receives an allocation of housing credit dollar amount in

2020 and a de minimis additional allocation after December 31, 2020?

FACTS

Situation 1: Draw-down loan with

issue date in 2020. Agency is a State

agency with authority to issue exempt

facility bonds to support qualified residential rental projects within the meaning of

§ 142(d) of the Code. Taxpayer X (Conduit Borrower1) and Agency entered into

an agreement that Agency would provide

exempt facility bond financing to the Conduit Borrower to construct a new building

for a qualified residential rental project.

In 2020, Agency borrowed pursuant to a

draw-down loan that qualifies as an issue

of exempt facility bonds (the Loan), and

the proceeds of the Loan are to be used

by the Conduit Borrower to construct the

building. Agency plans to make multiple

draws under the Loan over the course of

the construction, depending on the Conduit Borrower’s financing needs at the

time. In 2020, Agency drew an amount

under the Loan that exceeded the lesser

of $50,000 or 5 percent of the issue price.

In subsequent years, Agency draws, and

the Conduit Borrower uses, the remaining

amounts available under the issue to construct the building. All of the draws on the

Loan (that is, the bonds of the issue) are

taken into account in applying the volume

cap for private activity bonds set forth in

§ 146 of the Code. The qualified low-income building is placed in service after

December 31, 2020. Any low-income

housing credits earned with respect to the

building meet the requirements of § 42(h)

(4)(A) for not counting against the State’s

housing credit ceiling.

Situation 2: Post-2020 issuance of a de

minimis amount of exempt facility bonds.

The facts are the same as in Situation 1,

except that instead of borrowing pursuant

to a draw-down loan that qualifies as an

issue of exempt facility bonds, Agency

issued an issue of exempt facility bonds

in 2020 to finance the Conduit Borrower’s construction of the new building for

the qualified residential rental project. In a

subsequent year, Agency issues a different

issue of exempt facility bonds (not pursuant to a draw-down loan), in a de minimis

amount, that the Conduit Borrower similarly uses to finance construction of the

building.

Situation 3: Additional allocation of a

de minimis housing credit dollar amount

after 2020. Agency is a housing credit

agency that allocates housing credit dollar

amounts under § 42(h). In 2020, Agency

and Taxpayer Y entered into a binding

agreement. Under the agreement, Agency

agreed to allocate to Y a housing credit

dollar amount for the acquisition of an

existing building and an additional housing credit dollar amount for the rehabilitation of the building into a qualified

low-income building. In 2020, Agency

made allocations both of the amount

related to the acquisition and of the additional amount related to the rehabilitation.

Each allocation qualified for an exception

under § 42(h)(1)(E), and thus each was

a valid carryover allocation. As a result

of those qualifications for an exception

under § 42(h)(1)(E), the State’s housing

credit ceiling for 2020 was reduced by the

amounts of the two carryover allocations.

Y completes the acquisition and rehabilitation of the building into a qualified low-income building and places the building in

service after December 31, 2020. After

2020, but before the building is placed

in service, Agency makes an additional

allocation of housing credit dollar amount

related to the acquisition of the existing

building. The amount of this additional

allocation is de minimis and reduces

Agency’s ceiling for housing credit dollar

amounts for the year after 2020 in which

the allocation is made.

LAW

Section 42(a) provides that the amount

of the low-income housing credit for any

taxable year in the credit period is an

amount equal to the applicable percentage of the qualified basis of each qualified

low-income building.

Section 42(b)(1) provides rules to

determine the applicable percentage. Section 42(b)(1)(A) defines the term “applicable percentage” with respect to any

building as the appropriate percentage

prescribed by the Secretary of the Treasury

or her delegate (Secretary) for the earlier

of (i) the month in which the building is

placed in service, or (ii) at the election of

the taxpayer—(I) the month in which the

taxpayer and the housing credit agency

enter into an agreement with respect to the

building (which is binding on the agency,

the taxpayer, and all successors in interest)

as to the housing credit dollar amount to

be allocated to such building, or (II) in the

case of any building to which § 42(h)(4)

(B) applies, the month in which the tax-exempt obligations are issued. A month may

be elected under § 42(b)(1)(A)(ii) only if

the election is made not later than the fifth

A governmental issuer may serve as a conduit between investors who buy bonds, such as exempt facility bonds, and a person (like Taxpayer X) that receives the bond proceeds and is solely

responsible for debt service payments. That person is referred to as the “conduit borrower.” See § 1.150-1(b) of the Income Tax Regulations.

Bulletin No. 2021–51

875

December 20, 2021

day after the close of such month. Such an

election, once made, is irrevocable.

Section 42(b)(2), which was enacted

by section 3002(a)(1) of the Housing

Assistance Tax Act of 2008 (2008 Act),

Division C of the Housing and Economic

Recovery Act of 2008, Public Law 110289, 122 Stat. 2654, 2879 (July 30, 2008),

provides a minimum credit rate of 9 percent for new buildings that are not federally subsidized (9 percent floor). Section

3002(c) of the 2008 Act provides that the

9 percent floor under § 42(b)(2) applies to

buildings placed in service after July 30,

2008.

Notice 2008-106, 2008-49 IRB 1239,

provides guidance on application of the

9 percent floor. The notice clarifies that

the 9 percent floor applies even if, before

the 2008 Act, a taxpayer had made an

irrevocable election under § 42(b)(1)(A)

(ii) to apply to a building an applicable

percentage that is less than 9 percent. The

notice also concludes that: “Notwithstanding the application of the 9 percent floor,

the housing credit dollar amount allocated

to a project shall not exceed the amount

the housing credit agency determines is

necessary for the financial feasibility of

the project and its viability as a qualified

low-income housing project throughout

the credit period. See 42(m)(2).”

Section 201(a) of the Taxpayer Certainty and Disaster Tax Relief Act of 2020

(Act), enacted as Division EE of the Consolidated Appropriations Act, 2021, Public Law 116-260, 134 Stat. 1182, 3056

(December 27, 2020), added to the Code

a new § 42(b)(3), which provides a 4 percent minimum credit rate for buildings

to which the 9 percent floor in § 42(b)

(2) does not apply and which are placed

in service by the taxpayer after December 31, 2020. The amendments to § 42(b)

made by section 201(a) of the Act “apply

to (1) any building which receives an allocation of housing credit dollar amount

after December 31, 2020, and (2) in the

case of any building any portion of which

is financed with an obligation described

in section 42(h)(4)(A), any such building

if any such obligation which so finances

such building is issued after December 31,

2020.” Section 201(b)(1) and (2) of the

Act.

Section 42(d)(2)(B) provides that,

except as provided in § 42(f)(5), a credit is

December 20, 2021

allowable under § 42(a) by reason of rehabilitation expenditures that are treated as

a new building under § 42(e) with respect

to the building. Section 42(e)(1) provides

that if rehabilitation expenditures are paid

or incurred by the taxpayer with respect to

any building and if the expenditures meet

the criteria in § 42(e)(2) and (3), those

expenditures are treated as a separate new

building.

Under § 42(h)(1), the amount of the

credit determined under § 42(a) for any

taxable year with respect to any building

must not exceed the housing credit dollar

amount allocated to the building. Section

42(h)(1)(E) provides general rules for

carryover allocations of the low-income

housing credit. A carryover allocation is

defined in § 1.42-6(a)(1) as an allocation

that meets the requirements of § 42(h)(1)

(E) (relating to carryover allocations for

single buildings) or § 42(h)(1)(F) (relating to carryover allocations for multiple-building projects).

Section 42(h)(4)(A) provides an

exception to the requirement in § 42(h)

(1). Thus, a building within the exception can earn low-income housing credits

without having received any allocation.

The exception applies to the portion of

any credit allowed under § 42(a) that is

attributable to a building’s eligible basis

financed by an obligation the interest on

which is exempt from tax under § 103

of the Code if: (i) the obligation is taken

into account under § 146; and (ii) principal payments on the financing are applied

within a reasonable period to redeem obligations the proceeds of which were used

to provide such financing or such financing is refunded under § 146(i)(6).

Section 42(m)(2)(D) provides that §

42(h)(4) does not apply to any project

unless the governmental unit which issued

the bonds makes a determination under

rules similar to the rules provided for in

§ 42(m)(2)(A) and (B). Section 42(m)(2)

(A) provides that a housing credit dollar amount allocated to a project cannot

exceed the amount the housing credit

agency determines is necessary for the

financial feasibility of the project and its

viability as a qualified low-income housing credit project throughout the credit

period. Under § 42(m)(2)(B) and § 1.4217(a)(3), when a housing credit agency

makes a determination under § 42(m)(2)

876

(A), it must consider a number of factors

including: (i) the sources and uses of funds

and total financing planned for the project;

(ii) any proceeds or receipts expected to

be generated by reason of tax benefits; (iii)

the percentage of housing credit dollar

amount used for project costs other than

the cost of intermediaries; and (iv) the

reasonableness of the developmental and

operational costs of the project.

Section 1.42-17(a)(4)(i) describes the

timing of the housing credit agency determinations and certifications under § 1.4217(a)(3). They must be made at (A) the

time of the application for the housing

credit dollar amount; (B) the time of the

allocation of the housing credit dollar

amount; and (C) the date the building is

placed in service. Section 1.42-17(a)(5)

provides that, for the determination at the

time the building is placed in service, the

taxpayer must submit a schedule of project costs. Section 1.42-17(a)(6), provides

that a project qualifying under § 42(h)(4)

(concerning bond-financed projects) is

not entitled to any credit unless the governmental unit that issued the bonds, or

the housing credit agency responsible for

issuing the Form(s) 8609, Low-Income

Housing Credit Allocation and Certification, to the project, makes determinations

under rules similar to the rules in § 1.4217(a)(3), (4), and (5).

Section 142 provides rules for exempt

facility bonds. Section 142(a) provides

that an exempt facility bond is any bond

issued as part of an issue 95 percent or

more of the net proceeds of which are to

be used to support certain categories of

building projects, one of which is a qualified residential rental project. Section

142(d) generally defines a “qualified residential rental project” as any project for

residential rental property if, at all times

during the qualified project period and

disregarding that part of the building in

which such property is located that is used

for purposes other than residential rental

purposes, either (1) 20 percent or more

of the residential units in such project are

occupied by individuals whose income is

50 percent or less of area median gross

income, or (2) 40 percent or more of the

residential units in such project are occupied by individuals whose income is

60 percent or less of area median gross

income.

Bulletin No. 2021–51

Under § 1.150-1(c)(4)(i), bonds issued

pursuant to a draw-down loan are treated

as part of a single issue. The issue date

of the issue is the first date on which the

aggregate draws under the loan exceed the

lesser of $50,000 or 5 percent of the issue

price.

ANALYSIS

In a determination of whether the 4

percent floor applies, all the buildings

described in the FACTS of this revenue

ruling satisfy the requirement of § 42(b)

(3) that a building be placed in service

after 2020. Each of these three situations,

however, raises the question whether the

post-2020 events in that situation meet the

relevant portions of the effective date provisions in section 201(b) of the Act, which

require a post-2020 issuance of a tax-exempt obligation or a post-2020 allocation

of housing credit dollar amount.

An evaluation of the effect of these

post-2020 events must consider the apparent reasons for the requirement in section 201(b) of the Act of certain post-2020

actions by State or local governments. For

example, when section 3002 of the 2008

Act added the 9 percent floor, the effective date required only that a building

be placed in service after July 30, 2008,

the applicable date of enactment. Section

42(b)(3) also expressly provides such a

placed-in-service effective date for the

4 percent floor. However, section 201(b)

of the Act adds an additional requirement—application of the 4 percent floor

to a qualified low-income building is also

dependent on the existence of some post2020 government action with respect to

the building. The apparent reason for the

additional effective date criteria in section 201(b) of the Act can be inferred by

comparing buildings that satisfy only the

placed-in-service requirement with those

satisfying both that requirement and section 201(b) of the Act.

Considered in this way, section 201(b)

of the Act functions to prevent a windfall of credits in situations where, prior

to enactment of the 4 percent floor, the

taxpayer had substantially completed the

structuring of the transaction. Governmental determinations of financial feasibility under § 42(m)(2)(A) must occur not

later than an allocation of housing credit

Bulletin No. 2021–51

dollar amounts or an issuance of exempt

facility bonds for a qualified residential

rental project. Because the date of enactment of the Act occurred so late in 2020,

absence of a post-2020 allocation or issuance means that the low-income building

had been planned, and its financial feasibility had been assessed, without taking

the 4 percent floor into account. Absent

the restriction in section 201(b) of the Act,

buildings would receive unnecessary and

unanticipated credits on arrangements that

had been structured and vetted to function

without them. Thus, the requirements in

section 201(b) of the Act seem to treat the

possibility of those unplanned for credits

as if they are a windfall to be avoided.

In Situation 1, the building is financed

by a draw-down loan. Section 1.150‑1(c)

(4)(i) treats bonds issued pursuant to a

draw-down loan as part of a single issue.

Further, under § 1.150-1(c)(4)(i), the issue

date of the issue in Situation 1 was in 2020

because amounts drawn exceeded the

lesser of $50,000 or 5 percent of the issue

price. This issue date of the issue in Situation 1 does not change under § 1.150-1(c)

(4)(i) because a subsequent draw (that is,

a bond) occurs after 2020.

The language of section 201(b)(2)

of the Act refers to the issue date of the

“obligation which so finances such building.” Thus, the question here is whether

this language refers to the issue or to the

individual draws. Interpreting the “obligation” as the issue rather than the draws

is consistent with the apparent intent of

the effective date provisions in the Act,

as discussed above. Although individual draws occur at various times, the

maximum amount of the financing provided by the Loan was finalized before

2021. For example, in Situation 1, if the

financing structure had been finalized

during September 2020, the applicable

percentage for that month was 3.07 percent. See Table 4 of Rev. Rul. 2020‑16,

2020-37 IRB 550, 551. Hence, this is a

situation where the transaction was structured assuming an applicable percentage

that is not increased by a 4 percent floor.

Accordingly, if the post-2020 draws

under the 2020 issue caused the 4 percent floor to apply, the result would be

a windfall of credits that were not taken

into account when the transaction was

structured.

877

Thus, in Situation 1, because the Loan

(that is, the draw-down issue of bonds)

was issued in 2020, the applicable percentage of the building is determined

without regard to the 4 percent floor. The

applicable percentage of the building is

the amount determined under § 42(b)(1)

(B) and (C) for the month determined

under § 42(b)(1)(A).

Unlike the circumstances with the Loan

in Situation 1 (which was a draw-down

loan), the post-2020 bond proceeds in Situation 2 were from a post-2020 issuance

of an exempt facility bond issue, and each

post-2020 bond is part of that post-2020

issue. Thus, the Situation 2 analysis does

not depend on whether the language of

section 201(b)(2) of the Act refers to the

issue date of a bond issue or to the issue

date of the individual bonds.

In Situation 2, the Conduit Borrower

receives financing from two issues of

exempt facility bonds—one issued in

2020 and one issued in a later year. The

latter issue, however, is only a de minimis

amount. See Rev. Proc. 2021-43, page 882

this bulletin, providing a safe harbor for

determining whether an exempt facility

bond issue that is issued after December

31, 2020, is more than de minimis for

purposes of this revenue ruling. Because

the building was placed in service after

2020, whether the 4 percent floor applies

depends on the effect, if any, of the post2020 de minimis issuance. That is, the

determination of whether the 4 percent

floor applies depends on whether the

post-2020 de minimis issuance satisfies

the effective date requirement in section 201(b)(2) of the Act that a building

be financed by a § 42(h)(4)(A) obligation

issued after December 31, 2020.

As discussed in connection with Situation 1, section 201(b) of the Act functions to prevent windfalls. It is necessary, therefore, to consider whether a de

minimis post-2020 financing could create

a windfall of tax credits. When an issue

of exempt facility bonds is issued in a

non-de-minimis amount after 2020, any

concern over a windfall of credits is lessened. In those situations, because the post2020 issuance is not de minimis, the transaction is less likely to have been entirely

structured prior to the enactment of the 4

percent floor. Further, a greater portion of

the total credits generated by applying the

December 20, 2021

4 percent floor to the building would be

expected to result from basis financed by

the post-2020 issuance. Thus, it is consistent with the apparent intent of section

201(b) for the 4 percent floor to apply to

buildings whose financing includes both

pre-2021 exempt facility bonds and a

non-de-minimis amount of exempt facility bonds that are part of an issue that is

issued after December 31, 2020.

The situation is different, however, if

a de minimis amount of bonds constitute

a building’s only exempt facility bonds

issued as part of an issue issued after 2020.

In this case, Situation 2 aligns more closely

with a building whose only tax-exempt

financing was issued before 2021 (even if

it is placed in service after 2020). If a de

minimis amount of post-2020 tax-exempt

bond financing caused the project to qualify for the 4 percent floor, then that project

would receive substantially more credit

than an economically equivalent project

all of whose tax-exempt financing was

issued pre-2021.

Further, application of the 4 percent

floor would produce an increase in credits not commensurate with the de minimis post-2020 financing. Except for the

de minimis subsequent financing, the

increased credit available by virtue of the

4 percent floor would be based on assets

whose ability to yield low-income housing credits was the result of their pre-2021

financing. There is no indication that Congress contemplated such an incongruous

result in drafting the effective date provisions in section 201(b) of the Act.

Moreover, the application of the 4 percent floor would create an undesirable

incentive for taxpayers if a de minimis

amount of post-2020 financing were held

to satisfy section 201(b)(2) of the Act.

Under this approach, taxpayers might seek

nominal additional financing even in situations where the additional financing is

not necessary for the financial feasibility

of the building. Any such taxpayer efforts

would increase complexity when housing

credit agencies and bond issuers evaluate

the financial feasibility of projects for purposes of § 42(m)(2)(D).

In addition, such a holding would

undercut § 42(m)(2) and § 1.42-17, which

guide housing credit agencies and bond

issuers when they determine whether an

amount is needed for the financial feasi-

December 20, 2021

bility of a project. Those requirements

reduce any incentive to seek de minimis amounts that are not necessary for

the project’s financial feasibility. There

is no indication that Congress meant to

interpret the effective date requirement

to incentivize taxpayers to seek unnecessary amounts. This result is avoided by

interpreting section 201(b)(2) of the Act

as describing only non-de-minimis post2020 financing.

Thus, in Situation 2, the de minimis

amount of exempt facility bonds that are

part of an issue issued after 2020 fail to

cause the 4 percent floor to apply to the

building. See Rev. Proc. 2021-43, page

882 this bulletin, providing a safe harbor

for determining whether an exempt facility bond issue that is issued after December 31, 2020, is more than de minimis for

purposes of this revenue ruling. Because

the 4 percent floor does not apply, the

applicable percentage is the amount determined under § 42(b)(1)(B) and (C) for the

month determined under § 42(b)(1)(A).

This analysis would be the same for a

building that is financed in part with proceeds of an exempt facility bond issue

that was issued in 2020 and in part with

a portion of the proceeds of a different

exempt facility bond issue that is issued

in a non-de-minimis amount after December 31, 2020 (primarily to finance one or

more other buildings) when the portion of

the proceeds of the exempt facility bond

issue issued after December 31, 2020,

that finances the building represents a de

minimis portion of the building’s overall

exempt facility bond financing.

Finally, when the 4 percent floor

applies to a building, it applies to any

30-percent-present-value applicable percentage used to compute low-income

housing credits for the building. In these

cases, therefore, it is irrelevant whether

an election had been made under § 42(b)

(1)(A)(ii) to use a pre-placed-in-service

month for determining the applicable percentage. Cf. Notice 2008-106 (reaching a

similar result when the 9 percent floor was

enacted).

In Situation 3, Agency makes no more

than a de minimis allocation of housing

credit dollar amount after 2020. Although

the acquisition of the building was completed after 2020, and the building was

placed in service after 2020, the transac-

878

tion was structured in 2020, and at that

time, Y and Agency did not take the 4

percent floor into account. Arguably, the

windfall effect with an allocation is less

than in a building financed with exempt

facility bonds. The credits in this context

are limited to those allocated by a housing credit agency. By contrast, in projects

financed by § 42(h)(4)(A) obligations,

the credits are limited only by what the

qualified basis can generate. Nevertheless, the requirements of section 201(b)

(1) of the Act manifest the same legislative intent as section 201(b)(2) of the Act

and should therefore be interpreted consistently. Thus, the principles that govern

de minimis amounts of bonds are equally

applicable to de minimis allocations. See

Rev. Proc. 2021-43, page 882 this bulletin,

providing a safe harbor for determining

whether an allocation of housing credit

dollar amounts that is made after December 31, 2020, is more than de minimis for

purposes of this revenue ruling. Accordingly, the 4 percent floor does not apply

to the building described in Situation 3. Y

must use the applicable percentage determined under § 42(b)(1)(B) and (C) for the

month determined under § 42(b)(1)(A).

As described above, when the 4 percent

floor applies to a building, it applies to

any 30-percent-present-value applicable

percentage used to compute low-income

housing credits for the building. In these

cases, therefore, it is irrelevant whether

an election had been made under § 42(b)

(1)(A)(ii) to use a pre-placed-in-service

month for determining the applicable percentage.

HOLDINGS

(1) Situation 1. The 4 percent floor

under § 42(b)(3) does not apply to the

building in Situation 1, which is financed

in part with a draw-down exempt facility

bond issue that was issued in 2020 and on

which one or more draws are taken after

December 31, 2020.

(2) Situation 2. The 4 percent floor

under § 42(b)(3) does not apply to the

building in Situation 2, which is financed

in part with proceeds of an exempt facility

bond issue that was issued in 2020 and in

part with proceeds of a different exempt

facility bond issue that is issued in a de

minimis amount after December 31, 2020.

Bulletin No. 2021–51

(3) Situation 3. The 4 percent floor

under § 42(b)(3) does not apply to the

building in Situation 3, which receives an

allocation of housing credit dollar amount

in 2020 and a de minimis additional allocation after December 31, 2020.

The analysis in this revenue ruling

applies only for purposes of determining

Bulletin No. 2021–51

whether the 4 percent floor under § 42(b)

(3) applies to a building.

DRAFTING INFORMATION

The principal authors of this revenue

ruling are Dillon Taylor and Michael

Torruella Costa of the Office of Asso-

879

ciate Chief Counsel (Passthroughs &

Special Industries). For further information regarding this revenue ruling, contact Dillon Taylor or Michael Torruella

Costa at (202) 317-4137 (not a toll-free

number).

December 20, 2021

Part III

Termination of the

Employee Retention Credit

under Section 3134 of

the Code in the Fourth

Calendar Quarter of 2021

for Certain Employers

Notice 2021-65

I. PURPOSE

This notice modifies Notice 2021-49,

2021-34 IRB 316, and Notice 2021-24,

2021-18 IRB 1122, to implement statutory changes made by the Infrastructure

Investment and Jobs Act (Infrastructure

Act), Pub. L. 117-58, 135 Stat. 429 (2021),

enacted November 15, 2021.

II. BACKGROUND

Section 2301 of the Coronavirus

Aid, Relief, and Economic Security Act

(CARES Act), Pub. L. 116-136, 134 Stat.

281 (2020), as originally enacted, provides for an employee retention credit for

eligible employers, including tax-exempt

organizations, that pay qualified wages,

including certain health plan expenses,

to some or all employees after March 12,

2020, and before January 1, 2021. Section

206 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act),

enacted as Division EE of the Consolidated Appropriations Act, 2021, Pub. L.

116-260, 134 Stat. 1182 (2020), adopted

retroactive amendments and technical

changes to section 2301 of the CARES

Act for qualified wages paid after March

12, 2020, and before January 1, 2021, primarily expanding eligibility for certain

employers to claim the credit. Section 207

of the Relief Act, effective for calendar

quarters beginning after December 31,

2020, further amended section 2301 of the

CARES Act to extend the application of

the employee retention credit to qualified

wages paid after December 31, 2020, and

before July 1, 2021, and to modify the

calculation of the credit amount for qualified wages paid during that time. Section

9651 of the American Rescue Plan Act of

2021 (ARP), Pub. L. 117-2, 135 Stat. 4,

enacted section 3134 of the Internal Revenue Code (Code), effective for calendar

quarters beginning after June 30, 2021,

and provides an employee retention credit

for wages paid after June 30, 2021, and

before January 1, 2022.

Prior to the enactment of section

3134, section 2301 of the CARES Act,

as amended by sections 206 and 207 of

the Relief Act, provided that an employer

may be eligible for the employee retention

credit with respect to a calendar quarter

only if (i) the operation of the employer’s trade or business is fully or partially

suspended due to orders from an appropriate governmental authority limiting

commerce, travel, or group meetings (for

commercial, social, religious, or other purposes) due to the coronavirus disease 19

(COVID-19),1 or (ii)(a) for calendar quarters in 2020, the employer experiences

a significant decline in gross receipts,

or (b) for calendar quarters in 2021, the

employer experiences a decline in gross

receipts.2 Section 3134(c)(2) of the Code

added “recovery startup businesses” as a

third category of employers that are eligible for the employee retention credit

for qualified wages paid in the third and

fourth calendar quarters of 2021.

Section 3134 also modified the

employee retention credit in other respects

for qualified wages paid in the third and

fourth calendar quarters of 2021. Sec-

tion 3134(j)(2) limited the amount of the

employee retention credit that could be

advanced and which employers could

request advance payments. In addition,

section 3134(j)(3)(B) allows for the direct

assessment of certain erroneous refunds

of advanced portions of the credit. It provides that if a small eligible employer

specified in section 3134(j)(2) receives

excess advance payments of the credit,

then the taxes imposed under section

3111(b), or so much of the taxes imposed

under section 3221(a) as are attributable

to the rate in effect under section 3111(b),

as applicable, for the calendar quarter are

increased by the amount of the excess

advance payments. Section 3134(m)(3)

provides that the Secretary will issue such

forms, instructions, regulations, and other

guidance as are necessary to prevent the

avoidance of the purposes of the limitations under section 3134.

On March 31, 2020, the Department of

the Treasury (Treasury Department) and

the Internal Revenue Service (IRS) issued

Notice 2020-22, 2020-17 IRB 664, which

provides penalty relief under section 6656

to employers entitled to certain refundable

tax credits provided under the Families

First Coronavirus Response Act (Families

First Act), Pub. L. 116-127, 134 Stat. 178

(2020) and the CARES Act for an employer’s failure to timely deposit Employment

Taxes3 with the IRS.4 On April 13, 2021,

the Treasury Department and the IRS

issued Notice 2021-24, which extended

the penalty relief provided under Notice

2020-22 to employers claiming certain

other credits under ARP, including the

employee retention credit under section

3134. On August 4, 2021, the Treasury

Department and the IRS issued Notice

2021-49, providing guidance on the

employee retention credit under section

3134. Notice 2021-49 amplified Notice

The rules for determining whether an employer’s trade or business is fully or partially suspended due to orders from an appropriate governmental authority limiting commerce, travel, or

group meetings (for commercial, social, religious, or other purposes) due to COVID-19 are set forth in section III.D. of Notice 2021-20, 2021-11 IRB 922 (guidance on the employee retention

credit under section 2301 of the CARES Act, as amended by section 206 of the Relief Act).

The rules for determining whether an employer experienced a significant decline in gross receipts in 2020 are set forth in section III.E. of Notice 2021-20. The rules for determining whether

an employer experienced a decline in gross receipts in the first or second calendar quarters of 2021 are set forth in section III.C. of Notice 2021-23, 2021-16 IRB 1113 (guidance on the

employee retention credit under section 2301 of the CARES Act, as amended by section 207 of the Relief Act).

For purposes of this notice, “Employment Taxes” means withheld income taxes, taxes under the Federal Insurance Contributions Act (FICA), and taxes under the Railroad Retirement Tax

Act (RRTA).

Relief from the failure to deposit penalty imposed by section 6656 is provided to the extent the amounts not deposited are equal to or less than the anticipated amount of refundable tax credits

to which the employer is entitled under the Families First Act and CARES Act and for which no advance payment was sought.

December 20, 2021

880

Bulletin No. 2021–51

2021-20,5 which provides guidance on the

employee retention credit under section

2301 of the CARES Act, as amended by

section 206 of the Relief Act, and Notice

2021-23,6 which provides guidance on the

employee retention credit under section

2301 of the CARES Act, as amended by

section 207 of the Relief Act.7

On September 10, 2021, the Treasury

Department and the IRS published TD

9953, 86 FR 50,637, setting forth temporary regulations on the Recapture of

Excess Employment Tax Credits under

the American Rescue Plan Act of 2021.

The temporary regulations, in part, authorize the assessment and collection of

any erroneous refund of certain credits,

including the employee retention credit

under section 3134 of the Code, in the

normal course of processing applicable

employment tax returns.

Section 80604 of the Infrastructure

Act amended section 3134(n) of the Code

to provide that the employee retention

credit under section 3134 shall apply only

to wages paid after June 30, 2021, and

before October 1, 2021 (or, in the case of

wages paid by an eligible employer which

is a recovery startup business, January 1,

2022). Additionally, effective for calendar

quarters beginning after September 30,

2021, section 80604 of the Infrastructure

Act amended the definition of recovery

startup business under section 3134(c)(5)

of the Code to remove the requirement

that a recovery startup business not otherwise be an eligible employer due to a

full or partial suspension of operations or

a decline in gross receipts.

III. GUIDANCE

In accordance with the amendments

made by section 80604 of the Infrastructure Act to section 3134(n) of the Code,

employers, other than recovery startup

businesses, are not entitled to the employee

retention credit for wages paid on or after

October 1, 2021. The Infrastructure Act

amendments require the modification of

guidance related to the employee retention credit for the fourth calendar quarter

of 2021.

A. Termination of Employee Retention

Credit for Employers other than

Recovery Startup Businesses

Section I of Notice 2021-49 provides

that the rules set forth in Notice 2021-20

and Notice 2021-23 addressing CARES

Act provisions that are the same as those

provided under section 3134 of the Code

continue to apply for the third and fourth

calendar quarters of 2021. Due to the

amendments made by section 80604 of

the Infrastructure Act, rules for determining whether an employer is an eligible

employer due to a full or partial suspension of operations (section III.D. of Notice

2021-20) or a decline in gross receipts

(section III.C. of Notice 2021-23) no longer apply for the fourth calendar quarter

of 2021. Any rules based upon the determination that an employer is an eligible

employer due to a full or partial suspension of operations or a decline in gross

receipts, such as rules relating to “severely

financially distressed employers” discussed in section III.E. of Notice 2021-49,

also no longer apply for the fourth calendar quarter of 2021. Further, references

in Notice 2021-49 to eligible employers

claiming the employee retention credit for

qualified wages paid in the fourth calendar

quarter of 2021 no longer apply unless the

employer is a recovery startup business.

The rules related to recovery startup

businesses in section III.D. of Notice

2021-49 include the requirement that a

recovery startup business not otherwise be

an eligible employer due to a full or partial

suspension of operations or a decline in

gross receipts. Section 80604 of the Infrastructure Act removes this requirement

for the fourth calendar quarter of 2021.

Accordingly, this requirement no longer

applies to recovery startup businesses in

the fourth calendar quarter of 2021.

All other rules set forth in Notice 202120 and Notice 2021-23 addressing CARES

Act provisions that are the same as those

provided under section 3134 of the Code

continue to apply for the fourth calendar

quarter of 2021 to recovery startup businesses. Similarly, all other rules set forth

in Notice 2021-49 continue to apply for

the fourth calendar quarter of 2021 to

recovery startup businesses.

B. Repayment of Advance Payments for

Employers other than Recovery Startup

Businesses

Employers may have requested advance

payments of the employee retention credit

for wages paid in the fourth calendar quarter of 2021 prior to the enactment of the

Infrastructure Act. An advance payment

of any portion of the employee retention credit to a taxpayer in excess of the

amount to which the taxpayer is entitled

is an erroneous refund that the employer

must repay. Accordingly, if an employer

requested and received an advance payment of the employee retention credit for

wages paid in the fourth calendar quarter

of 2021, and the employer is not a recovery startup business, the employer is not

eligible for an employee retention credit

and must repay the amount of the advance.

Employers who need to repay these

excess advance payments of the employee

retention credit must do so by the due date

for the applicable employment tax return

that includes the fourth calendar quarter

of 2021. Employers should refer to the

instructions to the applicable employment

tax form for additional information. Failure to repay the advance payment by the

due date of the applicable employment tax

return may result in the imposition of failure to pay penalties under section 6651.

C. Failure to Deposit Penalties for

Employers other than Recovery Startup

Businesses

Prior to the enactment of the Infrastructure Act, in accordance with the

guidance provided in Notice 2021-24,

employers may have reduced deposits of

Employment Taxes by the amount of the

employee retention credit the employer

anticipated for the fourth calendar quarter

of 2021 based on a full or partial suspension of operations or a decline in gross

receipts. Due to the termination of the

employee retention credit for wages paid

in the fourth calendar quarter of 2021 for

Supra note 1.

Supra note 2.

Notice 2021-49 also provides additional guidance on issues regarding the employee retention credit under both section 3134 and section 2301 of the CARES Act, as amended by sections

206 and 207 of the Relief Act.

Bulletin No. 2021–51

881

December 20, 2021

employers that are not recovery startup

businesses, the IRS will no longer waive

failure to deposit penalties for employers

that reduce deposits in anticipation of the

employee retention credit after December

20, 2021, unless the employer is a recovery startup business.

For deposits due on or before December 20, 2021, with respect to wages paid

on or after October 1, 2021, but before

January 1, 2022, an employer that is not

a recovery startup business will not be

subject to a penalty under section 6656 for

failing to deposit Employment Taxes for

the fourth calendar quarter of 2021 if—

1. The employer reduced its deposits in

anticipation of the employee retention credit, consistent with the rules

provided in section 3.b. of Notice

2021-24; and

2. The employer deposits the amounts

initially retained in anticipation of

the employee retention credit on

or before the relevant due date for

wages paid on December 31, 2021

(regardless of whether the employer

actually pays wages on that date).8

Deposit due dates will vary based on

the deposit schedule of the employer;

and

3. The employer reports the tax liability

resulting from the termination of the

employer’s employee retention credit

on the applicable employment tax

return or schedule that includes the

period from October 1, 2021 through

December 31, 2021. Employers

should refer to the instructions to the

applicable employment tax return or

schedule for additional information

on how to report the tax liability.

If an employer does not qualify for

relief under this Notice, it may reply to

a notice about a penalty with an explanation and the IRS will consider reasonable

cause relief pursuant to section 6656(a).

IV. EFFECT ON OTHER DOCUMENTS

Notice 2021-49 is modified as provided

in this notice. Notice 2021-24 is modified

as provided in this notice.

V. PAPERWORK REDUCTION ACT

Any collection of information associated with this notice has been submitted

to the Office of Management and Budget

for review under OMB control number

1545-0029 in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.

3507(d)). An agency may not conduct

or sponsor and a person is not required

to respond to a collection of information

unless it displays a valid OMB control

number.

VI. DRAFTING INFORMATION

The principal authors of this notice are

Danchai Mekadenaumporn of the Office

of the Associate Chief Counsel (Employee

Benefits, Exempt Organizations, and

Employment Taxes) and Michael A.

Franklin of the Office of the Associate

Chief Counsel (Procedure and Administration), although other Treasury Department and IRS officials participated in its

development. For further information on

the provisions of this notice, please contact Mr. Mekadenaumporn at 202-3176798 (not a toll-free call) or Mr. Franklin

at 202-317-6844 (not a toll-free number).

26 CFR 601.105: Examination of returns and

claims for refund, credit, or abatement; determination of correct tax liability.

(Also §§ 42, 141, 142, and 146, and 26 CFR 1.42-8,

1.42-13, and 1.150-1.)

Rev. Proc. 2021-43

SECTION 1. PURPOSE

This revenue procedure provides

safe harbors for determining whether an

exempt facility bond issue that is issued

after December 31, 2020, or an allocation

of a housing credit dollar amount that is

made after December 31, 2020, is more

than de minimis for purposes of Holdings

2 and 3 of Rev. Rul. 2021‑20, page 875 this

bulletin. That ruling addresses whether the

minimum 4 percent applicable percentage

(4 percent floor) under § 42(b)(3) of the

Internal Revenue Code applies to a building.

SECTION 2. BACKGROUND

.01 Section 42(a) provides that the

amount of the low-income housing credit

for any taxable year in the credit period is

an amount equal to the applicable percentage of the qualified basis of each qualified

low-income building.

.02 Section 42(b) describes rules to

determine the applicable percentage.

.03 Section 42(b)(2) provides a minimum credit rate of 9 percent for non-federally subsidized new buildings.

.04 Section 201(a) of the Taxpayer

Certainty and Disaster Tax Relief Act of

2020 (Act), enacted as Division EE of the

Consolidated Appropriations Act, 2021,

Public Law 116-260, 134 Stat. 1182, 3056

(December 27, 2020), amended § 42(b) by

redesignating § 42(b)(3) as § 42(b)(4) and

adding a new § 42(b)(3).

.05 Section 42(b)(3), as added by

section 201(a) of the Act, provides that

in the case of any new or existing building to which § 42(b)(2) does not apply

and which is placed in service by the

taxpayer after December 31, 2020, the

applicable percentage cannot be less than

4 percent. The amendments to § 42(b)

in section 201(a) of the Act apply to (1)

any building which receives an allocation of housing credit dollar amount after

December 31, 2020, and (2) in the case

of any building any portion of which is

financed with an obligation described in

§ 42(h)(4)(A), any such building if any

such obligation which so finances such

building is issued after December 31,

2020.

.06 Rev. Rul. 2021–20 addresses

three situations. Situation 2 of the ruling

describes a building that is financed in

part with proceeds of an exempt facility bond issue that was issued in 2020

and in part with proceeds of a different

exempt facility bond issue that is issued

in a de minimis amount in a subsequent

year. (Generally, exempt facility bonds

If the amounts initially retained in anticipation of the employee retention credit total $100,000 or more with or without any additional liability on that date, then the employer is subject to

the $100,000 One-Day rule of § 31.6302-1(c)(3) (also referred to as the “Next-Day Deposit Rule”).

December 20, 2021

882

Bulletin No. 2021–51

are bonds issued pursuant to § 142 of

the Code, and the interest on these bonds

is exempt from tax under § 103 of the

Code provided certain requirements are

met.) Situation 3 of the ruling describes

a building that receives an allocation of

housing credit dollar amount in 2020 and

a de minimis additional allocation in a

subsequent year.

.07 Holdings 2 and 3 of Rev. Rul. 2021–

20 provide that a de minimis amount of

exempt facility bonds issued, or a de minimis allocation made, after December 31,

2020, does not cause the 4 percent floor

under § 42(b)(3) to apply to a building.

SECTION 3. SCOPE

This revenue procedure applies to

taxpayers with buildings that are eligible

for the low-income housing credit under

§ 42 and that must determine whether the

4 percent floor under § 42(b)(3) applies to

their buildings.

SECTION 4. PROCEDURE

.01 For purposes of Situation 2 of Rev.

Rul. 2021–20, an exempt facility bond

issue issued after December 31, 2020, that

finances the building in question is not de

minimis if, as of the latest issue date of any

such issue, the aggregate amount of the

post-2020 obligations is at least 10 percent of the total amount of all § 42(h)(4)

(A) obligations that finance the building.

For this section 4.01, an issue is taken into

account only to the extent that it finances

the particular building in question (such

as the building described in Situation 2 of

Rev. Rul. 2021–20).

.02 For purposes of Situation 3 of

Rev. Rul. 2021–20, an allocation of

housing credit dollar amounts to a building made after December 31, 2020, is

not de minimis if the allocation is at least

10 percent of the total allocations to

the building that have been made on or

before the date of the allocation in question. For this section 4.02, all allocations

to a building of housing credit dollar

amounts that reduce a State’s housing

credit ceiling for one or more years after

2020 are treated as one allocation that

was made to the particular building in

question on the latest date of these post2020 allocations.

Bulletin No. 2021–51

SECTION 5. EFFECTIVE DATE

This revenue procedure applies to

buildings financed with exempt facility

bond issues that are issued after December

31, 2020, and to buildings to which allocations of housing credit dollar amounts are

made after December 31, 2020.

DRAFTING INFORMATION

The principal authors of this revenue

procedure are Dillon Taylor and Michael

Torruella Costa, Office of Associate Chief

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

this revenue procedure, please contact Dillon Taylor or Michael Torruella Costa

on (202) 317-4137 (not a toll-free number).

26 CFR 601.105: Examination of returns and

claims for refund, credit or abatement; determination of correct tax liability.

(Also: Part 1, §§ 6662, 6694, 1.6662-4, 1.6694-2)

Adequate Disclosure

Revenue Procedure

Renewal

Rev. Proc. 2021-52

SECTION 1. PURPOSE

This revenue procedure updates Rev.

Proc. 2020-54, 2020-53 I.R.B. 1806, and

identifies circumstances under which the

disclosure on a taxpayer’s income tax

return with respect to an item or position

is adequate for the purpose of reducing

the understatement of income tax under

section 6662(d) of the Internal Revenue

Code (relating to the substantial understatement aspect of the accuracy-related

penalty), and for the purpose of avoiding the tax return preparer penalty under

section 6694(a) (relating to understatements due to unreasonable positions)

with respect to income tax returns. This

revenue procedure does not apply with

respect to any other penalty provisions

(including but not limited to the disregard provisions of the section 6662(b)

(1) accuracy-related penalty, the section

6662(i) increased accuracy-related penalty in the case of nondisclosed non-

883

economic substance transactions, and

the section 6662(b)(7) and (j) increased

accuracy-related penalty in the case of

undisclosed foreign financial asset understatements). If this revenue procedure

does not include an item or position, disclosure is adequate with respect to that

item or position only if made on a properly completed Form 8275 or 8275-R, as

appropriate, attached to the return for the

year or to a qualified amended return. See

Treas. Reg. § 1.6664-2(c) for information

about qualified amended returns.

This revenue procedure applies to any

income tax return filed on 2021 tax forms

for a taxable year beginning in 2021, and

to any income tax return filed in 2022 on

2021 tax forms for short taxable years

beginning in 2022.

SECTION 2. CHANGES FROM REV.

PROC. 2020-54

The background section has been

changed to state that the section 6662

penalty rate is generally 20 percent. The

addition of “generally” acknowledges that

the penalty rate is higher in some circumstances, although this revenue procedure

does not apply in those circumstances.

In addition, editorial changes have been

made throughout this revenue procedure. Changes have been made in order

to update the taxable years to which this

revenue procedure applies. No substantive

changes have been made.

SECTION 3. BACKGROUND

.01 If section 6662 applies to any portion of an underpayment of tax required

to be shown on a return, an amount generally equal to 20 percent of the portion

of the underpayment is added to the tax.

Under section 6662(b)(2), the penalty

applies to the portion of any underpayment of tax that is attributable to a substantial understatement of income tax.

The penalty rate increases to 40 percent in

the case of gross valuation misstatements

under section 6662(h), nondisclosed noneconomic substance transactions under

section 6662(i), or undisclosed foreign

financial asset understatements under

section 6662(j).

.02 Generally, there is a substantial

understatement of income tax if the

December 20, 2021

amount of the understatement exceeds

the greater of (i) 10 percent of the

amount of tax required to be shown on

the return for the taxable year or (ii)

$5,000. Section 6662(d)(1). Section

6662(d)(1)(C) provides a special rule

for taxpayers claiming a section 199A

deduction. In the case of any taxpayer

who claims any deduction allowed under

section 199A for the taxable year, there

is a substantial understatement of income

tax if the amount of the understatement

exceeds the greater of (i) 5 percent of

the amount of tax required to be shown

on the return for the taxable year or (ii)

$5,000. Section 6662(d)(1)(B) provides

a special rule for corporations. A corporation (other than an S corporation

or a personal holding company) has a

substantial understatement of income

tax if the amount of the understatement

exceeds the lesser of (i) 10 percent of the

tax required to be shown on the return

for a taxable year (or, if greater, $10,000)

or (ii) $10,000,000. Generally, an understatement is the excess of the amount of

tax required to be shown on the return

for the taxable year over the amount

of the tax that is shown on the return

reduced by any rebate, where the excess

is determined without regard to items to

which the reportable transaction understatement penalty under section 6662A

applies. Section 6662(d)(2)(A). For purposes of determining whether an understatement is substantial, the understatement determined under the general rule

is increased by the aggregate amount of

any reportable transaction understatements relating to the return. Section

6662A(e)(1)(A).

.03 In the case of an item not attributable to a tax shelter, if the taxpayer has a

reasonable basis for the tax treatment of

the item, the amount of the understatement is reduced by the portion of the

understatement attributable to the item

with respect to which the relevant facts

affecting the item’s tax treatment are

adequately disclosed in the return or in a

statement attached to the return. Section

6662(d)(2)(B)(ii).

.04 Section 6694(a) imposes a penalty

on a tax return preparer who prepares

a return or claim for refund reflecting

an understatement of liability due to an

“unreasonable position” if the tax return

December 20, 2021

preparer knew (or reasonably should have

known) of the position. A position (other

than a position with respect to a tax shelter

or a reportable transaction to which section 6662A applies) is generally treated

as unreasonable unless (i) there is or was

substantial authority for the position, or

(ii) the position was properly disclosed

in accordance with section 6662(d)(2)(B)

(ii)(I) and had a reasonable basis. If the

position is with respect to a tax shelter

(as defined in section 6662(d)(2)(C)(ii))

or a reportable transaction to which section 6662A applies, the position is treated

as unreasonable unless it is reasonable

to believe that the position would more

likely than not be sustained on the merits.

See Notice 2009-5, 2009-3 I.R.B. 309, for

interim penalty compliance rules for tax

shelter transactions.

.05 In general, this revenue procedure provides guidance for determining

when disclosure by return is adequate

for purposes of section 6662(d)(2)(B)(ii)

and section 6694(a)(2)(B). For purposes

of this revenue procedure, the taxpayer

must furnish all required information in

accordance with the applicable forms

and instructions, and the money amounts

entered on these forms must be verifiable.

.06 This revenue procedure may apply

to a return for a fiscal tax year that begins

in 2021 and ends in 2022. This revenue

procedure may also apply to a short year

return for a period beginning in 2022 if

the return is to be filed before the 2022

forms are available. (Note that individuals are generally not put in this position.)

The most frequent situation in which a

short year arises is when filing a decedent’s final return for a fractional part of a

year. In that situation, the 2022 form will

be available because the final return is

due the fifteenth day of the fourth month

following the close of the 12-month

period that began with the first day of

such fractional part of the year (meaning the due date is not accelerated). See

Treas. Reg. § 1.6072-1(b). In the case of

fiscal year and short year returns, the taxpayer must take into account any tax law

changes that are effective for tax years

beginning after December 31, 2021, even

though these changes are not reflected on

the form or instructions.

.07 This document does not take into

account the effect of tax law changes

884

effective for tax years beginning after

December 31, 2021. If a line referenced in

this revenue procedure is affected by such

a change and requires additional reporting,

a taxpayer may have to file Form 8275,

Disclosure Statement, or Form 8275-R,

Regulation Disclosure Statement, until the

Service prescribes criteria for complying

with the requirement.

.08 A complete and accurate disclosure

of a tax position on the appropriate year’s

Schedule UTP, Uncertain Tax Position

Statement, will be treated as if the corporation filed a Form 8275 or Form 8275-R

regarding the tax position. The filing of

a Form 8275 or Form 8275-R, however,

will not be treated as if the corporation

filed a Schedule UTP.

SECTION 4. PROCEDURE

.01 General

(1) Additional disclosure of facts relevant to, or positions taken with respect

to, issues involving any of the items set

forth below is unnecessary for purposes

of reducing any understatement of income

tax under section 6662(d) (except as otherwise provided in section 4.02(3) concerning Schedules M-1 and M-3), provided that the forms and attachments are

completed in a clear manner and in accordance with their instructions.

(2) The money amounts entered on the

forms must be verifiable, and the information on the return must be disclosed in the

manner described below. For purposes of

this revenue procedure, a number is verifiable if, on audit, the taxpayer can prove

the origin of the amount (even if that

number is not ultimately accepted by the

Service) and the taxpayer can show good

faith in entering that number on the applicable form.

(3) The disclosure of an amount as

provided in section 4.02 below is not

adequate when the understatement arises

from a transaction between parties who

are related within the meaning of section

267(b). If an entry may present a legal

issue or controversy because of a related-party transaction, then that transaction

and the relationship must be disclosed on

a Form 8275 or Form 8275-R.

(4) When the amount of an item is

shown on a line that does not have a preprinted description identifying that item

Bulletin No. 2021–51

(such as on an unnamed line under an

“Other Expense” category), the taxpayer

must clearly identify the item by including

the description on that line. For example,

to disclose a bad debt for a sole proprietorship, the words “bad debt” must be written

or typed on the line of Schedule C (Form

1040 or 1040SR) that shows the amount

of the bad debt. Also, for Schedule M-3

(Form 1120), Part II, line 25, Other income

(loss) items with differences, or Part III,

line 38, Other expense/deduction items

with differences, the entry must provide

descriptive language; for example, “Cost

of non-compete agreement deductible not

capitalizable,” and the description must be

provided on an attachment. Similarly, for

other forms, if space limitations on a form

do not allow for an adequate description,

the description must be continued on an

attachment.

(5) Although a taxpayer may literally

meet the disclosure requirements of this

revenue procedure, the disclosure will

have no effect for purposes of the section

6662 accuracy-related penalty if the item

or position on the return (1) does not have

a reasonable basis as defined in Treas.

Reg. § 1.6662-3(b)(3); (2) is attributable

to a tax shelter item as defined in section

6662(d)(2)(C)(ii); or (3) is not properly

substantiated or the taxpayer failed to

keep adequate books and records with

respect to the item or position.

(6) Disclosure also will have no effect

for purposes of the section 6694(a) penalty as applicable to tax return preparers if

the position is with respect to a tax shelter

(as defined in section 6662(d)(2)(C)(ii)) or

a reportable transaction to which section

6662A applies.

.02 Items

(1) Form 1040, Schedule A, Itemized

Deductions:

(a) Medical and Dental Expenses:

Complete lines 1 through 4, supplying all

required information.

(b) Taxes: Complete lines 5 through 7,

supplying all required information. Line 6

must list each type of tax and the amount

paid.

through 10, supplying all required information. This section 4.02(1)(c) does not

Bulletin No. 2021–51

apply to (i) amounts disallowed under section 163(d) unless Form 4952, Investment

Interest Expense Deduction, is completed,

or (ii) amounts disallowed under section

265.

(d) Charitable Contributions: Complete

lines 11 through 14, supplying all required

information and attaching all related forms

required pursuant to statute or regulation.

(e) Casualty and Theft Losses: Complete Form 4684, Casualties and Thefts,

and attach to the return. Each item or article for which a casualty or theft loss is

claimed must be listed on Form 4684.

(2) Certain Trade or Business Expenses

(including, for purposes of this section,

the following six expenses as they relate

to the rental of property):

(a) Casualty and Theft Losses: The

procedure outlined in section 4.02(1)(e)

must be followed.

(b) Legal Expenses: The amount

claimed must be stated. This section does

not apply, however, to amounts properly

characterized as capital expenditures, personal expenses, or non-deductible lobbying or political expenditures, including

amounts that are required to be (or that

are) amortized over a period of years.

amount written off must be stated.

(d) Officers’ Compensation: Complete

Form 1125-E, Compensation of Officers,

when its instructions require completion.

You must express the “percent of time

devoted to business” as a numerical percentage, rather than as a non-numerical

description such as “part” or “as needed.”

This section does not apply to “excess

parachute payments,” as defined in section 280G. This section does not apply

to the extent that remuneration paid or

incurred exceeds an applicable employee-remuneration deduction limitation

under section 162(m).

(e) Repair Expenses: The amount

claimed must be stated. This section does

not apply, however, to any amount properly characterized as capital expenditures

or personal expenses.

(f) Taxes (other than foreign taxes):

The amount claimed must be stated.

(3) Differences in book and income tax

reporting:

885

For Schedule M-1 and all Schedules

M-3, including those listed in (a)-(f)

below, the information provided must

reasonably apprise the Service of the

potential controversy concerning the tax

treatment of the item. If the information

provided does not so apprise the Service, a

Form 8275 or Form 8275-R must be used

to adequately disclose the item (see Part II

of the instructions for those forms).

Note: An item reported on a line with

a pre-printed description, shown on

an attached schedule or “itemized”

on Schedule M-1, may represent the

aggregate amount of several transactions producing that item (i.e.,

a group of similar items, such as

amounts paid or incurred for supplies

by a taxpayer engaged in business).

In some instances, a potentially controversial item may involve a portion

of the aggregate amount disclosed on

the schedule. The Service will not be

reasonably apprised of a potential controversy by the aggregate amount disclosed. In these instances, the taxpayer

must use Form 8275 or Form 8275-R

regarding that portion of the item.

Combining unlike items, whether on

Schedule M-1 or Schedule M-3 (or on an

attachment when directed by the instructions), will not constitute an adequate disclosure.

Additionally, taxpayers that file the

Schedule M-3 (Form 1120), Net Income

(Loss) Reconciliation for Corporations

With Total Assets of $10 Million or More,

may be required to complete Schedule B

(Form 1120), Additional Information for

Schedule M-3 Filers. For further information, see Who Must File in the General Instructions for Schedule B (Form

1120). Taxpayers that file the Schedule

M-3 (Form 1065), Net Income (Loss)

Reconciliation for Certain Partnerships,

may be required to complete Schedule C

(Form 1065), Additional Information for

Schedule M-3 Filers. For further information, see Who Must File in the General Instructions for Schedule C (Form

1065). When required, these schedules

are necessary to constitute adequate disclosure:

December 20, 2021

(a) Form 1065. Schedule M-3 (Form 1065), Net Income (Loss) Reconciliation for Certain Partnerships:

Part II (reconciliation of income (loss) items)

Part III (reconciliation of expense/deduction

items)

Column (a), Income (Loss) per Income Statement;

Column (b), Temporary Difference;

Column (c), Permanent Difference; and

Column (d), Income (Loss) per Tax Return

Column (a), Expense per Income Statement;

Column (b), Temporary Difference;

Column (c), Permanent Difference; and

Column (d), Deduction per Tax Return

(b) Form 1120. (i) Schedule M-1, Reconciliation of Income (Loss) per Books With Income per Return.

(ii) Schedule M-3 (Form 1120), Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 Million or More:

Part II (reconciliation of income (loss) items)

Part III (reconciliation of expense/deduction

items)

Column (a), Income (Loss) per Income Statement;

Column (b), Temporary Difference;

Column (c), Permanent Difference; and

Column (d), Income (Loss) per Tax Return

Column (a), Expense per Income Statement;

Column (b), Temporary Difference;

Column (c), Permanent Difference; and

Column (d), Deduction per Tax Return

(c) Form 1120-L. Schedule M-3 (Form 1120-L), Net Income (Loss) Reconciliation for U.S. Life Insurance Companies With Total

Assets of $10 Million or More:

Part II (reconciliation of income (loss) items)

Part III (reconciliation of expense/deduction

items)

Column (a), Income (Loss) per Income Statement;

Column (b), Temporary Difference;

Column (c), Permanent Difference; and

Column (d), Income (Loss) per Tax Return

Column (a), Expense per Income Statement;

Column (b), Temporary Difference;

Column (c), Permanent Difference; and

Column (d), Deduction per Tax Return

(d) Form 1120-PC. Schedule M-3 (Form 1120-PC), Net Income (Loss) Reconciliation for U.S. Property and Casualty Insurance

Companies With Total Assets of $10 Million or More:

Part II (reconciliation of income (loss) items)

Part III (reconciliation of expense/deduction

items)

December 20, 2021

Column (a), Income (Loss) per Income Statement;

Column (b), Temporary Difference;

Column (c), Permanent Difference; and

Column (d), Income (Loss) per Tax Return

Column (a), Expense per Income Statement;

Column (b), Temporary Difference;

Column (c), Permanent Difference; and

Column (d), Deduction per Tax Return

886

Bulletin No. 2021–51

(e) Form 1120-S. Schedule M-3 (Form 1120-S), Net Income (Loss) Reconciliation for S Corporations With Total Assets of $10

Million or More:

Part II (reconciliation of income (loss) items)

Part III (reconciliation of expense/deduction

items)

Column (a), Income (Loss) per Income Statement;

Column (b), Temporary Difference;

Column (c), Permanent Difference; and

Column (d), Income (Loss) per Tax Return

Column (a), Expense per Income Statement;

Column (b), Temporary Difference;

Column (c), Permanent Difference; and

Column (d), Deduction per Tax Return

(f) Form 1120-F. Schedule M-3 (Form 1120-F), Net Income (Loss) Reconciliation for Foreign Corporations With Reportable

Assets of $10 Million or More:

Part II (reconciliation of income (loss) items)

Part III (reconciliation of expense/deduction

items)

(4) Foreign Tax Items:

(a) International Boycott Transactions:

Transactions disclosed on Form 5713,

International Boycott Report; Schedule

A, International Boycott Factor (Section 999(c)(1)); Schedule B, Specifically

Attributable Taxes and Income (Section

999(c)(2)); and Schedule C, Tax Effect

of the International Boycott Provisions,

must be completed when required by their

instructions.

(b) Treaty-Based Return Position:

Transactions and amounts under section 6114 or section 7701(b) as disclosed

on Form 8833, Treaty-Based Return

Position Disclosure Under Section 6114

or 7701(b), must be completed when

required by its instructions.

(5) Other:

(a) Moving Expenses: Complete Form

3903, Moving Expenses, and attach to the

return.

(b) Employee Business Expenses:

Complete Form 2106, Employee Business

Expenses (for use only by Armed Forces

reservists, qualified performing artists,

fee-basis state or local government officials, and employees with impairment-related work expenses), and attach to the

return. This section does not apply to club

dues or to travel expenses for any non-employee accompanying the taxpayer on the

trip.

Bulletin No. 2021–51

Column (b), Temporary Differences;

Column (c), Permanent Differences; and

Column (d), Other Permanent Differences for Allocations to Non-ECI and ECI

Column (b), Temporary Differences;

Column (c), Permanent Differences; and

Column (d), Other Permanent Differences for Allocations to Non-ECI and ECI

Credit for Federal Tax Paid on Fuels, and

attach to the return.

(d) Investment Credit: Complete Form

3468, Investment Credit, and attach to the

return.

SECTION 5. EFFECTIVE DATE

This revenue procedure applies to any

income tax return filed on a 2021 tax form

for a taxable year beginning in 2021 and

to any income tax return filed on a 2021

tax form in 2022 for a short taxable year

beginning in 2022.

SECTION 6. DRAFTING

INFORMATION

The principal author of this revenue

procedure is Han Huang of the Office of

the Associate Chief Counsel (Procedure &

Administration). For further information

regarding this revenue procedure, contact

Branch 2 of Procedure and Administration

at (202) 317-6844 (not a toll free number).

26 CFR 601.105: Examination of returns and

claims for refund, credit, or abatement; determination of correct tax liability.

(Also: Part I, §§ 301, 305, 852, 857; 1.305-1,

1.305-2)

887

Rev. Proc. 2021-53

SECTION 1. PURPOSE

This revenue procedure provides temporary guidance regarding the treatment

of certain stock distributions by publicly offered real estate investment trusts

(REITs) and publicly offered regulated

investment companies (RICs) under the

Internal Revenue Code (Code). Specifically, in recognition of the need for liquidity as a result of the impacts of the Coronavirus Disease 2019 (COVID-19) pandemic, this revenue procedure, like Rev.

Proc. 2020-19, 2020-22 I.R.B. 871, modifies the safe harbor provided in Rev. Proc.

2017-45, 2017-35 I.R.B. 216, by temporarily reducing the minimum required

aggregate amount of cash that distributee shareholders may receive to not less

than 10 percent of the total distribution

in order for § 301 of the Code, by reason

of § 305(b) of the Code, to apply to such

distribution. This temporary modification

is effective solely with respect to distributions declared by a publicly offered

REIT or publicly offered RIC on or after

November 1, 2021, and on or before June

30, 2022.

December 20, 2021

SECTION 2. BACKGROUND

.01 Rev. Proc. 2017-45 provides a safe

harbor for Publicly Offered REITs and

Publicly Offered RICs that make a distribution to their shareholders with respect

to their stock to ensure that such distributions of stock pursuant to a distribution

in which each shareholder may elect to

receive up to all of the shareholder’s distribution in cash or stock of equivalent

value are treated as distributions of property to which § 301 applies by reason of

§ 305(b). See generally Rev. Proc. 201745, section 3.12 (defining Publicly Offered

REIT), section 3.13 (defining Publicly

Offered RIC), and section 5 (enumerating safe harbor requirements). Rev. Proc.

2017-45 allows a Publicly Offered REIT

or Publicly Offered RIC to eliminate C

corporation earnings and profits in order

to satisfy the REIT or RIC distribution

requirements while maintaining sufficient

liquidity. If each condition set forth in

sections 5.01 through 5.07 of Rev. Proc.

2017-45 is met, (1) the Internal Revenue

Service will treat the stock distribution as

a distribution of property under § 301 by

reason of § 305(b), and (2) the value of the

stock received by any shareholder in lieu

of cash will be considered to be equal to

the amount of cash which could have been

received instead.

.02 Section 5.03 of Rev. Proc. 2017-45

requires that the Cash Limitation Percentage be at least 20 percent. Section 3.05

of Rev. Proc. 2017-45 defines the Cash

December 20, 2021

Limitation Percentage as the percentage

obtained by dividing (1) the maximum

aggregate amount of cash to be distributed to all shareholders as limited by

the Publicly Offered REIT’s or Publicly

Offered RIC’s declaration of the distribution, by (2) the amount of cash that would

be distributed if each shareholder elected

to receive solely cash under their respective Cash-or-Stock Election. Section 3.06

of Rev. Proc. 2017-45 generally defines

a Cash-or-Stock Election as an election

each shareholder may make to receive up

to all of the shareholder’s entire distribution subject to the election either (1) in

cash, or (2) in stock of the distributing

corporation of equivalent value as determined under section 5.07 of Rev. Proc.

2017-45.

.03 To enable Publicly Offered REITs

and Publicly Offered RICs to conserve

capital and thereby enhance their liquidity,

Rev. Proc. 2020-19 temporarily allowed

such REITs and RICs to further limit the

amount of cash available to be distributed

to their shareholders by reducing the Cash

Limitation Percentage to 10 percent. Rev.

Proc. 2020-19 applied to distributions

declared on or after April 1, 2020, and on

or before December 31, 2020.

.04 For the same reasons, this revenue

procedure temporarily allows Publicly

Offered REITs and Publicly Offered RICs

to limit the amount of cash available to be

distributed to their shareholders by reducing the Cash Limitation Percentage to 10

percent.

888

SECTION 3. TEMPORARY

REDUCTION OF CASH

LIMITATION PERCENTAGE

With respect to distributions declared

by a Publicly Offered REIT or a Publicly

Offered RIC on or after November 1, 2021,

and on or before June 30, 2022, section

5.03 of Rev. Proc. 2017-45 is modified by

striking “The Cash Limitation Percentage

is not less than 20 percent” and inserting

“The Cash Limitation Percentage is not

less than 10 percent”.

SECTION 4. EFFECT ON OTHER

DOCUMENTS

This revenue procedure modifies Rev.

Proc. 2017-45 solely with respect to distributions declared by a Publicly Offered

REIT or Publicly Offered RIC on or after

November 1, 2021, and on or before June

30, 2022.

SECTION 5. DRAFTING

INFORMATION

The principal author of this revenue

procedure is Justin O. Kellar of the Office

of Associate Chief Counsel (Corporate).

For further information regarding this revenue procedure, contact Justin O. Kellar

on (202) 317-6847 (not a toll-free number).

Bulletin No. 2021–51

Part IV

Deletions From Cumulative

List of Organizations,

Contributions to Which are

Deductible Under Section

170 of the Code

Announcement 2021-17

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.

Effective Date of

Revocation

NAME OF ORGANIZATION

A Greener Globe

A Positive Progress Service Inc

American Medical Missionary Care Inc

Arizona Bike Week Charities

Beam Global Initiatives

Community Worship Church

Dan Hartman Foundation for Music and Arts

Disabled American Veteran’s (AKA Chapter 2 Cactus)

DMC Foundation

Father’s Rights Organization

Friends of Fiver Foundation

Kingdom Victories Outreach Ministries

Light of the World Inc

Michael Patrick Hollins Memorial Foundation

Moses Hill Cemetery Inc

New World Sanctuary Foundation

Nia Comprehensive Center for Developmental Disabilities Inc

Real Pay It Forward Inc

Retreat and Rescue

Roife-Nissenbaum Trust

Sigma Theta Tau International Inc

Strength for the Journey Inc

Support Our Veterans Inc

SV Festival

Teen Leadership Foundation

Bulletin No. 2021–51

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 December

20, 2021 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.

889

1/1/2015

1/1/2016

1/1/2014

1/1/2016

8/1/2012

1/1/2017

7/1/2015

7/1/2016

7/1/2014

2/1/2017

1/1/2016

1/1/2015

1/1/2016

7/1/2013

1/1/2016

1/1/2017

1/1/2016

7/1/2014

1/1/2015

1/1/2014

1/1/2016

1/1/2015

LOCATION

San Francisco, CA

Red Springs, NC

Alpharetta, GA

Mesa, AZ

Portsmouth, OH

Portland, OR

Northridge, CA

Tucson, AZ

Richmond, CA

Toledo, OH

New York, NY

Inkster, MI

Unionville, CT

MT Ephraim, NJ

Holdrege, NE

Ashland, OR

Chicago, IL

Clearwater, FL

Saint Louis, MO

Hopkins, MN

Mayaguez, PR

Hobe Sound, FL

Central Village, CT

Reading, PA

Newport Beach, CA

December 20, 2021

Effective Date of

Revocation

NAME OF ORGANIZATION

The Atlantis Educational Foundation

Thirty Thousand Feet Booster Club

Uplift Individuals in Christ

Walter’s Family Foundation

Washington County Hospital Inc

You Are Loved LLC

Notice of Proposed

Rulemaking

Information Reporting of

Health Insurance Coverage

and Other Issues

REG-109128-21

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of proposed rulemaking

SUMMARY: This document contains

proposed regulations providing that “minimum essential coverage,” as that term is

used in health insurance-related tax laws,

does not include Medicaid coverage that is

limited to COVID-19 testing and diagnostic services provided under the Families

First Coronavirus Response Act. The proposed regulations also would provide an

automatic extension of time for providers

of minimum essential coverage (including health insurance issuers, self-insured

employers, and government agencies) to

furnish individual statements regarding

such coverage and would provide an alternative method for furnishing individual

statements when the shared responsibility

payment amount is zero. Additionally, the

proposed regulations would provide an

automatic extension of time for “applicable large employers” (generally employers with 50 or more full-time or full-time

equivalent employees) to furnish statements relating to health insurance that the

employer offers to its full-time employees. The proposed regulations would

affect some taxpayers who claim the pre-

December 20, 2021

LOCATION

7/1/2016

3/21/2014

1/1/2015

10/1/2015

1/1/2016

mium tax credit; health insurance issuers,

self-insured employers, government agencies, and other persons that provide minimum essential coverage to individuals;

and applicable large employers.

DATES: Written or electronic comments

and requests for a public hearing must be

received by February 4, 2022. Requests

for a public hearing must be submitted

as prescribed in the “Comments and

Requests for a Public Hearing” section.

ADDRESSES: Commenters are strongly

encouraged to submit public comments

electronically. Submit electronic submissions via the Federal eRulemaking Portal

at www.regulations.gov (indicate IRS and

REG-109128-21) by following the online

instructions for submitting comments.

Once submitted to the Federal eRulemaking Portal, comments cannot be edited or

withdrawn. The Internal Revenue Service

(IRS) expects to have limited personnel

available to process public comments that

are submitted on paper through mail. Until

further notice, any comments submitted

on paper will be considered to the extent

practicable. The Department of the Treasury (Treasury Department) and the IRS

will publish for public availability any

comment submitted electronically, and

to the extent practicable, on paper, to its

public docket. Send paper submissions

to: CC:PA:LPD:PR (REG-109128-21),

Room 5203, Internal Revenue Service,

P.O. Box 7604, Ben Franklin Station,

Washington, DC 20044.

FOR FURTHER INFORMATION

CONTACT: Concerning the proposed

regulations, call Gerald Semasek, Office

of Associate Chief Counsel (Income Tax

and Accounting), (202) 317-7006 (not

890

Fall River, MA

Travis AFB, CA

Ft. Washington, MD

Tamarac, FL

Plymouth, NC

Mandeville, LA

a toll-free number); concerning submissions of comments and requests for a public hearing, call Regina Johnson at (202)

317-5177 (not a toll-free number) or send

an email to publichearings@irscounsel.

treas.gov.

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed

amendments to 26 CFR parts 1 (Income

Tax Regulations) and 301 (Procedure and

Administration Regulations) under sections 5000A, 6055, and 6056 of the Internal Revenue Code (Code).

1. Minimum Essential Coverage under

Section 5000A

Beginning in 2014, under the Patient

Protection and Affordable Care Act, Pub.

L. 111-148 ,124 Stat. 119 (2010), and the

Health Care and Education Reconciliation

Act of 2010, Pub. L. 111-152, 124 Stat.

1029 (2010) (collectively, the Affordable

Care Act or ACA), eligible individuals

who purchase coverage under a qualified

health plan through a Health Insurance

Exchange (Exchange) established under

section 1311 of the ACA may claim a premium tax credit under section 36B of the

Code. Section 36B and § 1.36B-3 of the

Income Tax Regulations provide that a

taxpayer is allowed a premium tax credit

only for months that are coverage months

for individuals in the taxpayer’s family, as

defined in § 1.36B-1(d). Under § 1.36B3(c)(1)(iii), a “coverage month” for an

individual includes only those months the

individual is not eligible for minimum

essential coverage other than coverage in

the individual market.

Bulletin No. 2021–51

Section 5000A was added to the Code

by section 1501 of the ACA. Section

5000A(f)(1) defines “minimum essential coverage” to include various types of

health plans and programs, including, for

example, specified government-sponsored

programs such as the Medicare program

under Part A of title XVIII of the Social

Security Act; the Medicaid program under

Title XIX of the Social Security Act; the

Children’s Health Insurance Program

under Title XXI of the Social Security Act

(CHIP); the TRICARE program under

chapter 55 of Title 10, United States Code

(U.S.C.); health care programs for veterans and other individuals under chapter

17 or 18 of Title 38, U.S.C.; coverage for

Peace Corps volunteers under 22 U.S.C.

2504(e); coverage under the Nonappropriated Fund Health Benefits Program

under section 349 of Public Law 103-337;

and coverage under an eligible employer-sponsored plan. Section 1.5000A-2(b)

(2) of the Income Tax Regulations lists

certain government-sponsored programs

that do not constitute minimum essential

coverage.

Section 5000A requires that individuals have minimum essential coverage for

each month in the taxable year, qualify for

an exemption from the minimum essential

coverage requirement, or make an individual shared responsibility payment upon

filing a federal income tax return. Section

11081 of Public Law 115-97, 131 Stat.

2054, 2092 (2017), commonly referred

to as the Tax Cuts and Jobs Act (TCJA),

reduces the individual shared responsibility payment amount to zero for months

beginning after December 31, 2018.

2. Information Reporting under Sections

6055 and 6056

Section 6055 of the Code provides that

all persons who provide minimum essential coverage to an individual must report

certain information to the IRS that identifies covered individuals and the period

of coverage. See section 6055(a) and (b).

Those persons also must furnish a statement to the covered individuals containing the same information. See section

6055(c). Under section 6055(a), (c)(2),

and § 1.6055-1(f) and (g), every person

that provides minimum essential coverage

to an individual during the calendar year

Bulletin No. 2021–51

is required to file with the IRS an information return and a transmittal on or before

February 28 (March 31 if filed electronically) of the year following the calendar

year to which it relates and to furnish to

the responsible individual identified on

the return a written statement on or before

January 31 of the year following the calendar year to which the statement relates.

The information returns and written statements must include certain information

about the reporting entity, the name and

taxpayer identification number (TIN) of

the responsible individual, the name and

TIN of each individual covered under the

health policy, and any other information

specified in IRS instructional materials.

See § 1.6055-1(e) and (g)(4). The IRS

generally has designated Form 1094-B,

Transmittal of Health Coverage Information Returns, and Form 1095-B, Health

Coverage, to meet the section 6055

requirements.

Section 6056 of the Code requires

an applicable large employer (ALE), as

defined in section 4980H(c) of the Code,

that is required to meet the requirements

of section 4908H to file annually information returns and furnish written statements

in relation to the health insurance, if any,

that the employer offers to its full-time

employees. These information returns and

written statements are needed in order to

administer the employer shared responsibility provisions of section 4980H.

Under section 6056(a), (c)(2), and

§ 301.6056-1(e) and (g), every ALE or

member of an aggregated group that is

determined to be an ALE (ALE member)

is required to file with the IRS an information return and a transmittal on or before

February 28 (March 31 if filed electronically) of the year following the calendar

year to which it relates and to furnish to

full-time employees a written statement

on or before January 31 of the year following the calendar year to which the

statement relates. The IRS generally has

designated Form 1094-C, Transmittal

of Employer-Provided Health Insurance

Offer and Coverage Information Returns,

and Form 1095-C, Employer-Provided

Health Insurance Offer and Coverage, to

meet the section 6056 requirements.

In addition, an ALE member that offers

coverage through a self-insured health

plan must complete the reporting required

891

under section 6055, specifically the information regarding each individual enrolled

in the self-insured health plan, using Form

1095-C, Part III, rather than Form 1095B. ALE members use Form 1095-C, Part

III, to meet the section 6055 reporting

requirement for all employees. For individuals who are not full-time employees,

ALE members report only certain information to reflect that the Form 1095-C is

being used to complete the section 6055

reporting applicable to individuals who

are not full-time employees, but not the

section 6056 reporting applicable only to

full-time employees.

The current regulations under sections

6055 and 6056 allow the IRS to grant an

extension of time of up to 30 days to furnish Forms 1095-B and 1095-C for good

cause shown. See §§ 1.6055-1(g)(4)(i)(B)

(1) and 301.6056-1(g)(1)(ii)(A). Additionally, filers of Forms 1095-B, 1094-C

and 1095-C may receive an automatic

30-day extension of time to file the forms

with the IRS by submitting Form 8809,

Application for Extension of Time to File

Information Returns, on or before the due

date for filing the forms. See §§ 1.6081-1

and 1.6081-8.

3. Information Reporting Penalties under

Sections 6721 and 6722

Section 6721 imposes a penalty for

failing to timely file an information return

or for filing an incorrect or incomplete

information return. Section 6722 imposes

a penalty for failing to timely furnish an

information statement or furnishing an

incorrect or incomplete information statement. The section 6721 and 6722 penalties

are imposed with regard to information

returns and statements listed in section

6724(d), which include those required

by sections 6055 and 6056. Section 6724

provides that no penalty will be imposed

under section 6721 or 6722 with respect to

any failure if it is shown that the failure is

due to reasonable cause and not to willful

neglect.

The preambles to the section 6055

and 6056 regulations provided that the

IRS would not impose section 6721 and

6722 penalties on reporting entities for

the reporting of 2015 health coverage and

offers of coverage if those entities could

show that they made good faith efforts

December 20, 2021

to comply with the information reporting requirements (transitional good faith

relief). See T.D. 9660, 79 FR 13220 at

13226 (Mar. 10, 2014); T.D. 9661, 79 FR

13231 at 13246 (Mar. 10, 2014). The transitional good faith relief covered incorrect or incomplete information, including

TINs or dates of birth, reported on information returns or statements. The relief

did not apply to a failure to timely file or

furnish a return or statement, or when the

filer failed to make a good faith effort to

comply with the reporting requirements.

The preambles to the section 6055 and

6056 regulations also stated that reporting entities failing to meet the reporting

requirements of the regulations may have

been eligible for penalty relief if the IRS

determined the standards for reasonable

cause under section 6724 were satisfied.

The Treasury Department and the IRS reiterated the transitional good faith relief in

Notice 2015-68, 2015-41 I.R.B. 547 (Oct.

13, 2015), and Notice 2015-87, 2015-52

I.R.B. 889 (Dec. 28, 2015).

Explanation of Provisions

1. Medicaid Coverage of COVID-19

Testing and Diagnostic Services under

Section 5000A

Notice 2020-66, 2020-40 I.R.B. 785

(Sept. 28, 2020), provides that Medicaid coverage that is limited to COVID19 testing and diagnostic services under

section 6004(a)(3) of the Families First

Coronavirus Response Act, Pub. L. 116127, 134 Stat. 178 (Mar. 18, 2020) is not

minimum essential coverage under a government-sponsored program. As a consequence, an individual’s eligibility for such

coverage for one or more months does not

prevent those months from qualifying as

coverage months for purposes of determining eligibility for the premium tax

credit under section 36B. Notice 2020-66

applies to taxable years beginning in or

after 2020.

Notice 2020-66 further indicates that

the Treasury Department and the IRS

intend to amend § 1.5000A-2 to provide

guidance respecting Medicaid coverage

for COVID-19 testing and diagnostic services. Accordingly, these proposed regulations propose to amend § 1.5000A-2 by

adding Medicaid coverage for COVID-

December 20, 2021

19 testing and diagnostic services to the

enumerated health coverages under §

1.5000A-2(b)(2) that do not qualify as

minimum essential coverage under a government-sponsored program.

Notice 2020-66 provides that taxpayers, including ALEs, may continue to rely

on the guidance described in Notice 202066 if no proposed regulations or other

guidance are released within 18 months

after September 28, 2020, which is the

date that Notice 2020-66 was published in

the Internal Revenue Bulletin.

2. Time and Manner for Furnishing

Statements under Sections 6055 and 6056

Through a series of notices, the Treasury Department and the IRS extended

the due dates for furnishing statements to

individuals under sections 6055 and 6056

for years 2015 through 2019. See Notice

2016-04, 2016-3 I.R.B. 279 (Jan. 19,

2016); Notice 2016-70, 2016-49 I.R.B. 784

(Dec. 5, 2016); Notice 2018-06, 2018-3

I.R.B. 300 (Jan. 16, 2018); Notice 201894, 2018-51 I.R.B. 1042 (Dec. 17, 2018);

and Notice 2019-63, 2019-51 I.R.B. 1390

(Dec. 16, 2019). Those notices extended

the due date for furnishing Forms 1095-B

and 1095-C by 30 days (or the next business day if the 30th day fell on a Saturday,

Sunday or legal holiday), except that for

2015 information statements, the furnishing due date was extended by 60 days.

In addition to extending the due dates

for furnishing statements, Notices 201894 and 2019-63 stated that, as a result of

the TCJA’s reduction of the shared responsibility payment amount under section

5000A(c) to zero for months beginning

after December 31, 2018, the Treasury

Department and the IRS were studying

how the reporting requirements under section 6055 should change, if at all, for future

years. Notice 2019-63 also requested

comments on whether an extension of the

due date for furnishing statements to individuals pursuant to section 6056 would be

necessary for future years, and whether

the reporting requirements under section

6055 should change for future years. Only

one comment was received.

Notice 2020-76, 2020-47 I.R.B. 1058

(Nov. 16, 2020) provided an automatic

extension of time for reporting entities

to furnish 2020 information statements

892

(Forms 1095-B and 1095-C) to individuals from January 31, 2021, to March

2, 2021. The notice stated that the Treasury Department and the IRS determined

that a substantial number of employers,

insurers, and other providers of minimum essential coverage needed additional

time beyond January 31, 2021, to gather

and analyze the information necessary to

prepare and issue the Forms 1095-B and

1095-C. Notice 2020-76 also provided

that because of the grant of the automatic

extension to March 2, 2021, for furnishing

Forms 1095-B and 1095-C, §§ 1.60551(g)(4)(i)(B)(1) and 301.6056-1(g)(1)(ii)

(A) (allowing the IRS to grant an extension of time of up to 30 days to furnish

Forms 1095-B and 1095-C) would not

apply. The notice did not extend the due

dates for filing 2020 Forms 1095-B, 1094C, or 1095-C with the IRS. The provisions

of §§ 1.6081-1 and 1.6081-8 (allowing

an automatic extension of time for filing

information returns by submission of a

Form 8809 before the due date) were not

affected by Notice 2020-76.

The Treasury Department and the

IRS received 119 public comments in

response to Notice 2020-76. The commenters included health insurance providers, employers, associations, governmental agencies, payroll processors, and

others. Nearly all commenters generally

supported an extension of the due date for

furnishing Forms 1095-B and 1095-C to

responsible individuals and employees.

The commenters generally indicated that

the current January 31 deadline to furnish

Forms 1095-B and 1095-C to responsible

individuals and employees, under section

6055(c)(2) and 6056(c)(2), and §§ 1.60551(g)(4)(i)(A) and 1.6056-1(g)(1)(i), is difficult to meet.

Commenters noted that the process by

which reporting entities compile accurate

health coverage offer and enrollment information is complex and often takes more

time than the current January 31 deadline

allows. Employers are required to compile

offer and enrollment information for large

numbers of employees, sometimes from

multiple systems, verify the accuracy of

the information, and transmit the information to vendors so that the statements can

be timely issued to individuals. Commenters further indicated that, while health

coverage information is tracked through-

Bulletin No. 2021–51

out the year, accurate reporting on Forms

1095-B and 1095-C includes data and

information from the month of December,

which necessarily requires employers to

spend substantial time after the close of

the year compiling and verifying data. A

number of commenters stated that the data

and information necessary to prepare the

forms is not available until mid-January

and that the period required to prepare and

mail the large numbers of forms can take

from three to seven weeks.

Commenters also pointed out that the

January 31 deadline for furnishing Forms

1095-B and 1095-C to individuals may

make it difficult for employers to make

changes to their benefit plans near the

end of the calendar year. Commenters

further noted that the January 31 deadline coincides with the due dates of other

government forms, including Form W-2,

Form 1099-NEC, Form 941 for the fourth

quarter, and annual Forms 940 and 945.

One commenter wrote that the substantial time necessary to complete Forms

1095-B and 1095-C is attributable to the

fact that the information required depends

upon detailed employer and employee

activities. The commenter stated that, in

some cases, employers must undertake a

day-by-day or person-by-person assessment, which may lead to varied individual

results in the codes that are required to be

entered on the forms. These factors, the

commenter noted, make the Forms 1095-B

and 1095-C meaningfully distinguishable

from other information returns on which

aggregate dollar amounts are reported for

the year – for example, Form W-2 – without regard to day-by-day activity.

Some of the commenters indicated that,

if a more permanent automatic extension

of the January 31 furnishing deadline is

not provided for future reporting, entities

will annually request additional time to

produce and mail accurate Forms 1095-B

and 1095-C pursuant to the current extension procedures. The result would be that

the IRS would need to process a significant number of extension requests each

year.

a. Extension of Deadline for Furnishing

Statements under Section 6055

To reduce administrative burdens for

reporting entities and the IRS, the Trea-

Bulletin No. 2021–51

sury Department and the IRS have determined that the furnishing requirements

under § 1.6055-1(g) should be modified

by providing an automatic extension of

time for reporting entities to furnish statements to responsible individuals. This

proposed amendment to the regulations

under section 6055 is consistent with

Notice 2020-76.

Under these proposed regulations,

§ 1.6055-1(g)(4)(i) is proposed to be

amended to provide that reporting entities are granted an automatic extension of

time, not to exceed 30 days, in which to

furnish the written statements required by

§ 1.6055-1(g). Because this extension is

automatic, the proposed regulations eliminate the requirement in § 1.6055-1(g)(4)(i)

(B)(1) that a reporting entity make a written application to the IRS showing good

cause to request an extension of time to

furnish the statement. Under this proposed

amendment to the regulations, statements

(Forms 1095-B) furnished to responsible

individuals will be timely if furnished no

later than 30 days after January 31 of the

calendar year following the calendar year

in which minimum essential coverage is

provided. If the extended furnishing date

falls on a weekend day or legal holiday,

statements will be timely if furnished on

the next business day. See section 7503.

The automatic 30-day extension would

replace both the 30-day extension for

good cause in § 1.6055-1(g)(4)(i)(B)(1)

and the authorization for the Commissioner to provide automatic extensions in

§ 1.6055-1(g)(4)(i)(B)(2).

b. Alternative Manner of Furnishing

Statements under Section 6055

Notice 2020-76 indicates that, because

the TCJA reduced the individual shared

responsibility payment amount to zero

for 2020, responsible individuals do not

need the information on Form 1095-B to

prepare and file their individual returns.

Nonetheless, reporting entities required

to furnish Forms 1095-B must expend

resources to do so. In light of those factors, the Treasury Department and the IRS

determined that relief from the penalty

under section 6722 for failing to furnish

a statement (Form 1095-B) required under

section 6055 for 2020 was in the interest of sound tax administration in certain

893

cases. Thus, Notice 2020-76 provided that

the IRS would not assess a section 6722

penalty against a reporting entity for failing to furnish Form 1095-B to responsible

individuals for 2020 in cases when two

conditions were met (2020 section 6055

furnishing relief). First, a reporting entity

was required to post a notice prominently

on its website stating that responsible individuals may receive a copy of their 2020

Form 1095-B upon request, accompanied

by an email address and a physical address

to which a request may be sent, along

with a telephone number that responsible

individuals may use to contact the reporting entity with any questions. Second, a

reporting entity was required to provide a

2020 Form 1095-B to a responsible individual upon request within 30 days of the

date the request was received. A reporting entity could furnish the statements to

responsible individuals electronically if

the requirements of § 1.6055-2 were satisfied.

Because of the combined reporting

by ALE members under sections 6055

and 6056 on Form 1095-C for full-time

employees of ALE members enrolled in

self-insured health plans, the 2020 section

6055 furnishing relief was not extended to

the requirement to furnish Forms 1095-C

to full-time employees. The 2020 section

6055 furnishing relief, however, applied

to penalty assessments related to the

requirement to furnish Form 1095-C to

a part-time employee enrolled in an ALE

member’s self-insured plan for any month

in 2020, subject to the two requirements

of the 2020 section 6055 furnishing relief.

Finally, the 2020 section 6055 furnishing

relief did not extend to the assessment

of penalties relating to failures to file the

2020 Forms 1094-B or 1095-B or the

Forms 1094-C or 1095-C, as applicable,

with the IRS.

In response to Notice 2020-76, a number of health plan providers, governmental

agencies, and associations requested that

the 2020 section 6055 furnishing relief

be made permanent or extended at least

for the time periods when the individual

shared responsibility payment amount is

zero. These commenters echoed the considerations identified in Notice 2020-76

supporting the 2020 section 6055 furnishing relief. Namely, commenters pointed to

the high costs associated with producing

December 20, 2021

and mailing Forms 1095-B although individuals have no need for the information

on the Form 1095-B to correctly compute

federal tax liability and timely file returns.

Commenters cited additional production and/or mailing costs ranging from

a half million to more than four million

dollars annually without the relief. One

state agency reported receiving only 478

requests for Form 1095-B from approximately one million Medicaid recipients

for 2019. Other commenters indicated

that a small number of individuals need

proof of minimum essential coverage

to satisfy certain state requirements, but

that very few individuals have otherwise

requested the Form 1095-B. Some commenters pointed out that taxpayers may be

confused by the receipt of Forms 1095-B.

In light of the public comments

received, § 1.6055-1(g)(4) is proposed to

be amended by adding new paragraph (g)

(4)(ii)(B) to provide an alternative manner for a reporting entity to timely furnish

statements. Under this alternative manner

of furnishing, the reporting entity must

post a clear and conspicuous notice on

the entity’s website stating that responsible individuals may receive a copy of

their statement upon request. The notice

must include an email address, a physical

address to which a request may be sent,

and a telephone number that responsible

individuals may use to contact a reporting

entity with any questions. This alternative manner of furnishing will apply only

to taxable years when the shared responsibility payment amount under section

5000A(b) is zero.

One commenter requested that, if the

2020 section 6055 furnishing relief is

extended, a self-insured ALE member

should continue to be permitted to use the

relief for employees who are enrolled in

the ALE’s self-insured plan and who are

not full-time employees of the ALE. The

commenter also requested that the proposed regulations allow a self-insured

ALE member to use the 2020 section 6055

furnishing relief for non-employees, such

as former employees of the ALE, who

are enrolled in the self-insured plan. The

proposed regulations adopt both requests

in the rules for the alternative method of

furnishing. However, consistent with the

guidance in Notice 2020-76, the proposed

regulations do not allow ALE members to

December 20, 2021

use the alternative method of furnishing

for full-time employees who are enrolled

in the self-insured plan.

The proposed regulations also address

a suggestion of a commenter to Notice

2020-76 who requested that future guidance specify the time period a reporting

entity is required to retain the notice on

its website and also explain how prominent the notice must be. The provisions

of proposed § 1.6055-1(g)(4)(ii)(B) provide that a reporting entity satisfies the

furnishing requirements under § 1.60551(g)(4) by retaining the website notice

until October 15 of the year following

the calendar year to which the statement

relates. Additionally, the proposed regulations clarify the requirement in Notice

2020-76 that a reporting entity include a

prominently posted notice on its website.

Under the proposal, a reporting entity

must include a clear and conspicuous

notice on the reporting entity’s website

that is reasonably accessible by individuals who may search the entity’s website for tax information. A notice posted

on a reporting entity’s website will satisfy the requirement under proposed §

1.6055-1(g)(4)(ii)(B) if written in plain,

non-technical terms and with letters of

a font size large enough (including any

visual clues or graphical figures) to call

to a viewer’s attention that the information pertains to tax statements reporting

that individuals had health coverage. For

example, a reporting entity’s website that

includes a statement on the main page,

or a link on the main page, reading “Tax

Information,” to a secondary page that

includes a statement, in capital letters,

“IMPORTANT HEALTH COVERAGE

TAX DOCUMENTS;” explains how

responsible individuals may request a

copy of Form 1095-B, Health Coverage,

or Form 1095-C, Employer-Provided

Health Insurance Offer and Coverage,

as applicable; and includes the reporting

entity’s email address, mailing address,

and telephone number, is a clear and

conspicuous notice under these proposed

regulations.

One commenter requested that the

2020 section 6055 furnishing relief be

modified to allow a reporting entity to

satisfy the furnishing requirement under

§ 1.6055-1(g) by including only a link to

a member portal through which respon-

894

sible individuals may receive a copy of

the Form 1095-B via electronic download. The commenter stated that because

responsible individuals will have located

and navigated the website of a reporting

entity to locate the entity’s address and

other contact information, the website

notice informing individuals of the ability to request a Form 1095-B should not

have to also include contact information.

The commenter noted that the process

under which responsible individuals will

send written requests or call customer service representatives of reporting entities

to request Forms 1095-B will take time

and add costs to providing health care.

Under the commenter’s proposal, reporting entities that do not provide a member

portal for individuals to download and

receive the Form 1095-B will be required

to include a website notice with an email

address, physical address, and telephone

number for individuals to call to request

the form, consistent with the first condition of the 2020 section 6055 furnishing

relief.

The requirement in these proposed

regulations that a reporting entity include

its email address, mailing address, and

telephone number on a website notice

informing individuals of the ability to

request a Form 1095-B is consistent with

other information reporting provisions.

See, for example, § 1.6050S-1(c)(1)(iii)

(G) (an educational institution or insurer

issuing Form 1098-T, Tuition Statement,

is required to include contact information on statement). A responsible individual may have questions about how to

request a copy of the statement required

under § 1.6055-1(g) for the taxable year

or may have questions about some of the

information on the statement. The proposed rule requiring the reporting entity’s

contact information on a posted website

notice fulfills that need for responsible

individuals. Accordingly, the comment

recommending that a reporting entity may

provide only website access to a member

portal (and capability to electronically

download Form 1095-B) without the

reporting entity’s contact information is

not adopted.

If, in the future, the shared responsibility payment amount under section 5000A(b) is not zero, the Treasury

Department and the IRS anticipate that

Bulletin No. 2021–51

reporting entities will need adequate

time to develop or restart processes for

preparing and mailing paper statements

to responsible individuals. If the shared

responsibility payment amount is modified in the future, the Treasury Department and the IRS anticipate providing

guidance, if necessary, to allow sufficient

time for reporting entities to restart the

reporting process.

c. Extension of Deadline for Furnishing

Statements under Section 6056

For the reasons discussed in section

2 of the Explanation of Provisions, the

Treasury Department and the IRS have

determined that, to reduce administrative burdens for ALE members and the

IRS, the furnishing requirements under §

301.6056-1(g)(1) should be modified by

providing an automatic extension of time

for ALE members to furnish written statements to full-time employees. This proposed amendment to the regulations under

section 6056 is consistent with Notice

2020-76.

Under these proposed regulations,

§ 301.6056-1(g)(1) is proposed to be

amended to provide that ALE members

are granted an automatic extension of

time, not to exceed 30 days, in which to

furnish the written statements to full-time

employees. Because the extension is automatic, the proposed regulations eliminate

the requirement in § 301.6056-1(g)(1)(ii)

(A) that an ALE member make a written

application to the IRS showing good cause

or to otherwise request an extension of

time to furnish the statement. Under this

proposed amendment to the regulations,

statements (Forms 1095-C) furnished to

full-time employees will be timely if furnished no later than 30 days after January

31 of the calendar year in accordance with

applicable Internal Revenue Service procedures and instructions. If the extended

furnishing date falls on a weekend day or

legal holiday, statements will be timely

furnished if provided on the next business day. See section 7503. The automatic

30-day extension would replace both the

30-day extension for good cause in §

301.6056-1(g)(1)(ii)(A) and the authorization for the Commissioner to provide

automatic extensions in § 301.6056-1(g)

(1)(ii)(B).

Bulletin No. 2021–51

3. Elimination of Transitional Good Faith

Relief

discontinue the transitional good faith

relief after tax year 2020.

As noted in the Background section of

this preamble, the preambles to the regulations under sections 6055 and 6056

provided that the IRS would grant transitional good faith relief by not imposing

penalties under sections 6721 and 6722

on reporting entities for the reporting of

2015 health coverage and offers of coverage if those entities could show that they

made good faith efforts to comply with

the information reporting requirements.

See T.D. 9660; T.D. 9661. The Treasury

Department and the IRS extended that

transitional good faith relief for years

2015 through 2019 in the series of notices

that extended the due dates for the requirements for furnishing statements to individuals under sections 6055 and 6056 for

those years. See Notice 2016-04; Notice

2016-70; Notice 2018-06; Notice 201894; Notice 2019-63; and Notice 2020-76.

In Notice 2020-76, the Treasury Department and the IRS stated that 2020 was the

last year that transitional good faith relief

would be provided. Thus, the transitional

good faith relief from penalties under sections 6721 and 6722 for the reporting of

incorrect or incomplete information on

information returns or statements is not

available for reporting for tax year 2021

and subsequent years.

This good faith relief was intended to be

transitional to accommodate public concerns with implementing the then newly

enacted reporting requirements under the

ACA. These reporting requirements have

now been in place for six years, and transitional relief is no longer appropriate.

Some commenters requested that the relief

be extended due to continued difficulty in

understanding the reporting requirements,

periodic changes to the ACA, and the

uncertainty related to the COVID-19 pandemic. Although the Treasury Department

and the IRS are sympathetic to those concerns, additional good faith relief is not

necessary to address them. The reasonable cause exception under section 6724

already provides adequate relief from

penalties under sections 6721 and 6722

for filers who have reasonable cause for

failing to timely or accurately complete

their reporting requirements. Therefore,

the Treasury Department and the IRS will

4. Renewed Comment Request on the

Section 6055 2016 Proposed Regulations

895

In Notice 2015-68, the Treasury

Department and the IRS announced that

they intended to propose regulations

under section 6055 that would: (1) provide that health insurance issuers must

report coverage in a catastrophic plan; (2)

allow filers reporting on insured group

health plans to use a truncated TIN to

identify the employer on the statement

furnished to a taxpayer; and (3) specify

when a provider of minimum essential

coverage is not required to report duplicative or supplemental coverage. The notice

also invited comments on issues relating to TIN solicitation and provided that

until the issuance of additional guidance,

reporting entities would not be subject

to penalties for failure to report a TIN if

they met certain requirements. Finally, the

notice advised that governments of United

States possessions or territories are not

required to report coverage under Medicaid and the Children’s Health Insurance

Program (CHIP) and that a state government agency sponsoring coverage under

the Basic Health Program is required to

report that coverage.

On August 2, 2016, the Treasury

Department and the IRS published a

notice of proposed rulemaking (REG103058-16) in the Federal Register (81

FR 50671) (2016 proposed regulations).

Consistent with Notice 2015-68, the 2016

proposed regulations proposed to address

catastrophic health coverage, truncated

TINs, and duplicative or supplemental

coverage. With regard to TIN solicitations,

the 2016 proposed regulations incorporated the penalty relief in Notice 2015-68,

with certain revisions to the requirements

in response to comments. The 2016 proposed regulations also proposed to incorporate the guidance in Notice 2015-68

related to United States possessions or territories and reporting regarding the Basic

Health Program. The 2016 proposed regulations provided that, until the regulations

were finalized, reporting entities could

rely on the guidance in Notice 2015-68. In

addition, any issuer that voluntarily files

returns or furnishes statements on cata-

December 20, 2021

strophic coverage before final regulations

are issued will not be subject to penalties

for those returns or statements. See Notice

2017-41, 2017-34 I.R.B. 211 (Aug. 21,

2017).

The Treasury Department and the IRS

received 16 comments on the 2016 proposed regulations but have not issued a

Treasury Decision finalizing the 2016 proposed regulations. No public hearing was

requested or held. The Treasury Department and the IRS are renewing their

request for comments on all aspects of the

2016 proposed regulations and, after considering the comments received, intend

to finalize the 2016 proposed regulations

as part of any Treasury Decision finalizing these proposed regulations. Written or

electronic comments must be received by

February 4, 2022.

Statement of Availability of IRS

Documents

IRS revenue procedures, revenue rulings, notices, and other guidance cited in

this preamble are published in the Internal

Revenue Bulletin and are available from

the Superintendent of Documents, U.S.

Government Publishing Office, Washington, DC 20402, or by visiting the IRS

website at http://www.irs.gov.

Proposed Applicability Date

The regulations under § 1.5000A2, once final, are proposed to apply for

months beginning after September 28,

2020. For months beginning on or after

January 1, 2020, and before September

28, 2020, taxpayers may continue to rely

on Notice 2020-66. Taxpayers may rely

on § 1.5000A-2 of these proposed regulations for months beginning after September 28, 2020, and before the date a

Treasury Decision finalizing these regulations is published in the Federal Register. The regulations under §§ 1.6055-1

and 301.6056-1, once final, are proposed

to apply for calendar years beginning after

December 31, 2021. Taxpayers may rely

on §§ 1.6055-1 and 301.6056-1 of these

proposed regulations for calendar years

beginning after December 31, 2020, and

before the date a Treasury Decision finalizing the regulations is published in the

Federal Register. See the 2016 proposed

December 20, 2021

regulations for the proposed applicability

dates of those proposed rules.

Special Analyses

I. Regulatory Planning and Review –

Economic Analysis

These proposed regulations are not

subject to review under section 6(b) of

Executive Order 12866 pursuant to the

Memorandum of Agreement (April 11,

2018) between the Treasury Department

and the Office of Management and Budget (OMB) regarding review of tax regulations.

II. Paperwork Reduction Act

An agency may not conduct or sponsor,

and a person is not required to respond to,

a collection of information unless it displays a valid control number assigned by

OMB.

There is no collection of information

contained in these proposed regulations.

The collections of information contained

in §§ 1.6055-1 and 301.6056-1 were previously reviewed and approved by OMB

in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) and

are associated with control numbers 15452251 (associated with Form 1095-C) and

1545-2252 (associated with Form 1095B).

The Paperwork Reduction Act (44

U.S.C. 3501-3520) relates to information

collection requests by any government

agency. A collection of information generally means the “obtaining, causing to

be obtained, soliciting, or requiring the

disclosure to third parties or the public,

of facts or opinions by or for an agency,

regardless of form or format, calling for

either (1) answers to identical questions

posted to, or identical reporting or recordkeeping requirements imposed on ten or

more persons, other than agencies, instrumentalities, or employees of the United

States, or (2) answers to questions posed

to agencies, instrumentalities, or employees of the United States which are to be

used for general statistical purposes.” 44

U.S.C. 3502(3). A collection of information is commonly referred to as a reporting, recordkeeping, or disclosure requirement.

896

These proposed regulations do not

require a reporting entity to provide any

information to the Federal government, to

maintain specific records, or to disclose

any additional information that the reporting entity did not already have a requirement to disclose.

III. Initial Regulatory Flexibility Analysis

When an agency issues a proposed

rulemaking, the Regulatory Flexibility

Act (5 U.S.C. chapter 6) (Act) requires

the agency to “prepare and make available for public comment an initial

regulatory flexibility analysis” that

“describe[s] the impact of the proposed

rule on small entities.” 5 U.S.C. 603(a).

The term “small entities” is defined in

5 U.S.C. 601 to mean “small business,”

“small organization,” and “small governmental jurisdiction,” which are also

defined in 5 U.S.C. 601. Small business

size standards define whether a business

is “small” and have been established for

types of economic activities, or industry, generally under the North American

Industry Classification System (NAICS).

See Title 13, Part 121 of the Code of Federal Regulations (titled “Small Business

Size Regulations”). The size standards

look at various factors, including annual

receipts, number of employees, and

amount of assets, to determine whether

the business is small. See Title 13, Part

121.201 of the Code of Federal Regulations for the Small Business Size Standards by NAICS Industry.

Section 605 of the Act provides an

exception to the requirement to prepare

an initial regulatory flexibility analysis

if the agency certifies that the proposed

rulemaking will not have a significant

economic impact on a substantial number

of small entities.

The Treasury Department and the IRS

conclude that, although the overall impact

of these proposed regulations will substantially reduce the burden on small entities, these proposed regulations, if finalized, will impact a substantial number of

small entities and the economic impact

on those small entities will be significant.

As a result, although the impact of these

regulations is positive for small entities,

an initial regulatory flexibility analysis is

required.

Bulletin No. 2021–51

Description of the reasons why the

agency action is being considered.

The proposed regulations under §

1.5000A-2 propose to make permanent

the guidance in Notice 2020-66 regarding whether certain Medicaid coverage

of COVID-19 testing and diagnostic services is minimum essential coverage. The

proposed regulations under §§ 1.6055-1

and 301.6056-1 propose to make permanent the extension of time to furnish

Forms 1095-B and 1095-C to responsible

individuals and employees that has been

provided every year since 2015. The proposed regulations under § 1.6055-1 also

allow reporting entities to furnish the

statement required by section 6055 by

providing notice on their website and by

providing the statement to the responsible

individual upon request.

The proposed regulations under §

1.5000A-2 will ensure that taxpayers

have accurate guidance when determining whether they have minimum essential coverage, which in turn will assist

taxpayers in determining whether they

qualify for the premium tax credit. The

proposed regulations under §§ 1.6055-1

and 301.6056-1 will reduce the burden

on reporting entities by extending the

time to satisfy their reporting obligations

with regard to health care coverage without worrying whether the penalty under

section 6722 will be imposed. The extension should result in increased timely and

accurate reporting. Those proposed regulations also reduce the burden on reporting entities by providing a low-cost option

to satisfy the reporting obligation under

section 6055 at a time when responsible

individuals do not need the information to

complete their returns.

Statement of the objectives of, and the

legal basis for, the proposed rule.

The principal objectives of the proposed regulations are to provide taxpayers with definitive guidance of what

constitutes, or does not constitute,

minimum essential coverage, to provide reporting entities with a sufficient

amount of time to complete and furnish

accurate statements to responsible individuals and full-time employees, and

to offer reporting entities under section

6055 a minimally burdensome option by

which to furnish the required statement.

The legal basis for defining minimum

Bulletin No. 2021–51

essential coverage is section 5000A(f)

(1)(E), which provides the Secretary of

the Treasury or her delegate (Secretary)

with the authority to determine what

types of health coverage constitute minimum essential coverage. The legal basis

for the extended due date was originally

set forth in the series of notices referenced in the Explanation of Provisions

section above, under which the Treasury Department and the IRS extended

the dates for furnishing statements to

responsible individuals and full-time

employees, providing that taxpayers that

satisfy the furnishing requirement by the

extended due date will not be subject to

penalties under sections 6721 and 6722.

Section 6724(a) provides that no penalty is imposed under section 6721 or

6722 if it is shown that the failure is due

to reasonable cause and not to willful

neglect. Section 7803(a)(2)(A) gives the

Commissioner the power to administer,

manage, conduct, direct, and supervise

the execution and application of internal revenue laws. That same legal basis

applies for these proposed regulations.

Additionally, §§ 1.6055-1(g)(4)(i)(B)

and 301.6056-1(g)(1)(ii) provide the

Secretary with the authority to provide

extensions of time to furnish statements

under sections 6055 and 6056. Regarding the form of the statement to be

furnished, sections 6055(b)(1)(A) and

6056(b)(1) provide the Secretary with

the authority to prescribe the form of the

return that is the basis for the furnishing

requirements in sections 6055(c) and

6056(c).

Description and estimate (where feasible) of the number of small entities subject

to the proposed rule.

The proposed regulations apply to

health insurance issuers, self-insured

employers, government agencies, and

other providers of minimum essential

coverage required to furnish individual

statements regarding such coverage under

section 6055 and ALE members that are

required to furnish information relating to

health insurance that the ALE offers to its

full-time employees under section 6056.

An estimate of the number of small entities subject to the proposed regulations is

not feasible because a correlation between

small taxpayers and this type of reporting

cannot be made. The proposed regulations

897

affect all industries. Taxpayers using any

NAICS code could be subject to the proposed regulations.

Description of the projected reporting,

recordkeeping, and related requirements

of the proposed rule, including an estimate of the classes of small entities that

will be subject to the requirements and the

type of professional skills necessary for

preparation of the report or record.

As discussed in the Paperwork Reduction Act section above, these proposed

regulations do not impose any reporting,

recordkeeping, or similar requirements on

any small entities.

Identification, to the extent practicable, of all relevant Federal rules that may

duplicate, overlap, or conflict with the

proposed rule.

The proposed regulations do not duplicate, overlap, or conflict with any Federal

statutes or other rules.

Description of any significant alternatives to the proposed rule that accomplish

the stated objectives of applicable statutes

and minimize any significant economic

impact on small entities.

The Treasury Department and the IRS

have determined that, without a legislative

change, there are no viable alternatives to

the provisions in the proposed regulations

that would enable reporting entities to

continue to satisfy their reporting obligations with a lesser burden.

Accordingly, the Treasury Department

and the IRS conclude that the provisions

of the proposed regulations will most

effectively promote sound tax administration. The revisions to the definition of

what is not minimum essential coverage

in § 1.5000A-2 will provide concrete

advice to ensure that taxpayers can adequately determine whether they have minimum essential coverage. An automatic

extension of time to furnish statements

under proposed §§ 1.6055-1(g)(4)(i) and

301.6056-1(g)(1) will assist in timely and

more accurate reporting. Last, the additional electronic manner of furnishing a

statement in proposed § 1.6055-1(g)(4)(ii)

(B), at a time when the shared responsibility payment amount is zero, will help

reporting entities reduce costs, while still

satisfying their statutory reporting obligations. Accordingly, implementation of

these proposed regulations will increase

tax compliance by providing definitive

December 20, 2021

guidance and will allow reporting entities the time needed to furnish timely and

accurate statements, with minimal production and distribution burden regarding

the furnishing.

Pursuant to section 7805(f) of the

Code, this notice of proposed rulemaking

has been submitted to the Chief Counsel

of the Office of Advocacy of the Small

Business Administration for comment on

its impact on small business.

IV. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates

Reform Act of 1995 (UMRA) 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 (updated annually for inflation). This

proposed rule does 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.

V. Executive Order 13132: Federalism

Executive Order 13132 (entitled “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. This proposed rule does not

have federalism implications and does

not impose substantial direct compliance

costs on state and local governments or

preempt state law within the meaning of

the Executive Order.

Comments and Requests for Public

Hearing

Before these proposed regulations

or the 2016 proposed regulations are

adopted as final regulations, consideration will be given to any comments

that are submitted timely to the IRS as

December 20, 2021

prescribed in this preamble under the

“ADDRESSES” section. The Treasury

Department and the IRS request comments on all aspects of these proposed

regulations, as well as all aspects of the

2016 proposed regulations. Any electronic comments submitted, and to the

extent practicable any paper comments

submitted, will be made available at www.

regulations.gov or upon request. All comments, including comments on the 2016

proposed regulations, should reference

REG-109128-21.

A public hearing will be scheduled

if requested in writing by any person

who timely submits written comments.

Requests for a public hearing are also

encouraged to be made electronically. If a

public hearing is scheduled, notice of the

date, time, and place for the public hearing

will be published in the Federal Register.

Announcement 2020-4, 2020-17 I.R.B. 1

(Apr. 20, 2020), provides that until further

notice, public hearings conducted by the

IRS will be held telephonically. Any telephonic hearing will be made accessible to

people with disabilities.

PART 1—INCOME TAXES

Paragraph 1. The authority citation for

part 1 continues to read in part as follows:

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

Par. 2. Section 1.5000A-2 is amended

by:

1. Revising paragraph (b)(2)(vii) and

(viii);

2. Adding paragraph (b)(2)(ix).

The revisions and addition read as follows:

§ 1.5000A-2 Minimum essential

coverage.

26 CFR Part 1

*****

(b) * * *

(2) * * *

(vii) Coverage under section 1079(a),

1086(c)(1), or 1086(d)(1) of title 10,

U.S.C., that is solely limited to space

available care in a facility of the uniformed services for individuals excluded

from TRICARE coverage for care from

private sector providers;

(viii) Coverage under section 1074a

and 1074b of title 10, U.S.C., for an injury,

illness, or disease incurred or aggravated

in the line of duty for individuals who are

not on active duty; and

(ix) Medicaid coverage limited to

COVID-19 testing and diagnostic services

provided under section 6004(a)(3) of the

Families First Coronavirus Response Act,

Pub. L. 116-127, 134 Stat. 178 (March 18,

2020).

Par. 3. Section 1.5000A-5 is amended

by revising paragraph (c) to read as follows:

Income taxes, Reporting and recordkeeping requirements.

§ 1.5000A-5 Administration and

procedure.

26 CFR Part 301

*****

this section and § 1.5000A-1 through

1.5000A-4 apply for months beginning after December 31, 2013. Section

1.5000A-2(b)(2)(ix) applies for months

beginning after September 28, 2020.

Par. 4. Section 1.6055-1 is amended by:

1. Revising the first sentence of paragraph (g)(1);

2. Revising paragraph (g)(4)(i) and (ii);

Drafting Information

The principal author of these proposed

regulations is Gerald Semasek, Office of

Associate Chief Counsel (Income Tax and

Accounting). Other personnel from the

Treasury Department and the IRS participated in their development.

List of Subjects

Employment taxes, Estate taxes,

Excise taxes, Gift taxes, Income taxes,

Penalties, Reporting and recordkeeping

requirements.

Proposed Amendments to the

Regulations

Accordingly, IRS proposes to amend

26 CFR parts 1 and 301 as follows:

898

Bulletin No. 2021–51

3. Revising paragraph (j).

The revisions read as follows:

§ 1.6055-1 Information reporting for

minimum essential coverage.

*****

(g) * * * Except as otherwise provided

in paragraph (g)(4)(ii)(B) of this section,

every person required to file a return under

this section must furnish to the responsible individual identified on the return a

written statement. * * *

*****

(4) * * * (i) Time for furnishing—

Except as otherwise provided in this paragraph (g)(4)(i), a reporting entity must

furnish the statements required under

paragraph (g)(1) of this section on or

before January 31 of the year following

the calendar year in which the minimum

essential coverage is provided. Reporting

entities are granted an automatic extension

of time not exceeding 30 days in which to

furnish these statements.

(ii) Manner of furnishing—(A) In

general. Except as otherwise provided

in paragraph (g)(4)(ii)(B) of this section,

if mailed, the statement must be sent to

the responsible individual’s last known

permanent address or, if no permanent

address is known, to the individual’s

temporary address. For purposes of this

paragraph (g)(4)(ii)(A), a reporting entity’s first class mailing to the last known

permanent address, or if no permanent

address is known, the temporary address,

discharges the requirement to furnish the

statement. A reporting entity may furnish

the statement electronically if the requirements of § 1.6055-2 are satisfied.

(B) Alternative manner of furnishing. A

reporting entity shall be treated as furnishing the statement in a timely manner under

this paragraph (g)(4) if the shared responsibility payment amount under section

5000A(c) for the calendar year in which

the minimum essential coverage is provided is zero and the reporting entity satisfies the requirements in this paragraph

(g)(4)(ii)(B). If the reporting entity is an

applicable large employer member that

sponsors a self-insured group health plan

and makes a return in accordance with

paragraph (f)(2)(i) of this section related

to that plan, the applicable large employer

member may use the alternative manner of

Bulletin No. 2021–51

furnishing described in this paragraph (g)

(4)(ii)(B) for statements to non-full-time

employees and non-employees who are

enrolled in the applicable large employer’s

self-insured group health plan. A reporting

entity may use the alternative manner of

furnishing described in this paragraph (g)

(4)(ii)(B) only if the reporting entity:

(1) Provides clear and conspicuous

notice, in a location on its website that

is reasonably accessible to all responsible individuals, stating that responsible

individuals may receive a copy of their

statement upon request. The notice must

include an email address, a physical

address to which a request for a statement

may be sent, and a telephone number that

responsible individuals may use to contact the reporting entity with any questions. A notice posted on a reporting entity’s website will satisfy the requirements

of this paragraph (g)(4)(ii)(B)(1) if it is

written in plain, non-technical terms and

with letters of a font size large enough,

including any visual clues or graphical

figures, to call to a viewer’s attention that

the information pertains to tax statements

reporting that individuals had health coverage. For example, a reporting entity’s

website provides a clear and conspicuous

notice if it includes a statement on the

main page -- or a link on the main page,

reading “Tax Information”, to a secondary page that includes a statement -- in

capital letters, “IMPORTANT HEALTH

COVERAGE TAX DOCUMENTS”;

explains how responsible individuals

may request a copy of Form 1095-B,

Health Coverage, (or, for an applicable

large employer member that sponsors a

self-insured group health plan and makes

a return in accordance with paragraph (f)

(2)(i) of this section, explains how nonfull-time employees and non-employees

who are enrolled in the plan may request

a copy of Form 1095-C, Employer-Provided Health Insurance Offer and Coverage); and includes the reporting entity’s

email address, mailing address, and telephone number;

(2) Retains the notice in the same location on its website through October 15 of

the year following the calendar year to

which the statements relate (or the first

business day after October 15, if October

15 falls on a Saturday, Sunday or legal

holiday); and

899

(3) Furnishes the statement to a requesting responsible individual within 30 days

of the date the request is received. To satisfy the requirement of this paragraph (g)

(4)(ii)(B)(3), a reporting entity may furnish the statement electronically pursuant

to § 1.6055-2(a)(2) through (a)(6).

*****

(j) Applicability date. Except as otherwise provided in this paragraph (j), this

section applies for calendar years beginning after December 31, 2014. Paragraphs

(g)(1), (g)(4)(i), and (g)(4)(ii) of this section apply for calendar years beginning

after December 31, 2021, but reporting

entities may choose to apply paragraphs

(g)(1), (g)(4)(i), and (g)(4)(ii) of this section for calendar years beginning after

December 31, 2020. Except as otherwise

provided in this paragraph (j), paragraph

(g)(4), as contained in 26 CFR part 1 edition revised as of April 1, 2021, applies

to calendar years ending after December

31, 2014 and beginning before January 1,

2022.

PART 301—PROCEDURE AND

ADMINISTRATION

Par. 5. The authority citation for part

301 continues to read in part as follows:

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

*****

Par. 6. Section 301.6056-1 is amended

by revising paragraphs (g)(1) and (m) to

read as follows:

§ 301.6056-1 Rules relating to

reporting by applicable large

employers on health insurance

coverage offered under employersponsored plans.

*****

(g) * * * (1) Time for furnishing--Except as otherwise provided in this paragraph (g)(1), each statement required by

this section for a calendar year must be

furnished to a full-time employee on or

before January 31 of the year succeeding the calendar year in accordance with

applicable Internal Revenue Service

procedures and instructions. Applicable

large employers are granted an automatic

extension of time not exceeding 30 days in

which to furnish these statements.

*****

December 20, 2021

(m) Applicability date. Except as otherwise provided in this paragraph (m), this

section applies for calendar years beginning after December 31, 2014. Paragraph

(g)(1) of this section applies for calendar years beginning after December 31,

2021, but applicable large employers may

choose to apply paragraph (g)(1) of this

December 20, 2021

section for calendar years beginning after

December 31, 2020. Except as otherwise

provided in this paragraph (m), paragraph

(g)(1), as contained in 26 CFR part 1 edition revised as of April 1, 2021, applies

to calendar years ending after December

31, 2014 and beginning before January 1,

2022.

900

Douglas W. O’Donnell,

Deputy Commissioner for Services

and Enforcement.

(Filed by the Office of the Federal Register on

December 3, 2021, 8:45 a.m., and published in the

issue of the Federal Register for December 6, 2021,

86 F.R. 68939)

Bulletin No. 2021–51

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. 2021–51

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.

December 20, 2021

Numerical Finding List1

Bulletin 2021–51

Announcements:

2021-12, 2021-31 I.R.B. 267

2021-13, 2021-33 I.R.B. 314

2021-14, 2021-33 I.R.B. 315

2021-15, 2021-49 I.R.B. 846

2021-16, 2021-50 I.R.B. 872

2021-17, 2021-51 I.R.B. 889

AOD:

2021-4, 2021-47 I.R.B. 725

Notices:

2021-39, 2021-27 I.R.B. 3

2021-40, 2021-28 I.R.B. 15

2021-41, 2021-29 I.R.B. 17

2021-42, 2021-29 I.R.B. 19

2021-38, 2021-30 I.R.B. 155

2021-44, 2021-31 I.R.B. 166

2021-45, 2021-31 I.R.B. 170

2021-47, 2021-32 I.R.B. 269

2021-46, 2021-33 I.R.B. 303

2021-48, 2021-33 I.R.B. 305

2021-49, 2021-34 I.R.B. 316

2021-43, 2021-35 I.R.B. 332

2021-50, 2021-35 I.R.B. 333

2021-51, 2021-36 I.R.B. 361

2021-52, 2021-38 I.R.B. 381

2021-53, 2021-39 I.R.B. 438

2021-54, 2021-41 I.R.B. 457

2021-55, 2021-41 I.R.B. 461

2021-58, 2021-43 I.R.B. 660

2021-59, 2021-43 I.R.B. 664

2021-57, 2021-44 I.R.B. 706

2021-56, 2021-45 I.R.B. 716

2021-60, 2021-45 I.R.B. 719

2021-35, 2021-46 I.R.B. 723

2021-61, 2021-47 I.R.B. 738

2021-62, 2021-49 I.R.B. 831

2021-63, 2021-49 I.R.B. 835

2021-64, 2021-50 I.R.B. 869

2021-65, 2021-51 I.R.B. 880

Proposed Regulations:

REG-107705-21, 2021-30 I.R.B. 162

REG-102951-16, 2021-32 I.R.B. 272

REG-109077-21, 2021-39 I.R.B. 445

REG-100718-21, 2021-42 I.R.B. 653

REG-107707-21, 2021-42 I.R.B. 657

REG 117575-21, 2021-49 I.R.B. 847

REG-109128-21, 2021-51 I.R.B. 890

Revenue Procedures:

2021-28, 2021-27 I.R.B. 5

2021-29, 2021-27 I.R.B. 12

2021-24, 2021-29 I.R.B. 19

2021-14, 2021-30 I.R.B. 158

2021-30, 2021-31 I.R.B. 172

2021-31, 2021-33 I.R.B. 324

2021-33, 2021-34 I.R.B. 327

2021-34, 2021-35 I.R.B. 337

2021-35, 2021-35 I.R.B. 355

2021-36, 2021-35 I.R.B. 357

2021-37, 2021-38 I.R.B. 385

2021-38, 2021-38 I.R.B. 425

2021-39, 2021-38 I.R.B. 426

2021-40, 2021-38 I.R.B. 426

2021-41, 2021-39 I.R.B. 443

2021-32, 2021-42 I.R.B. 465

2021-44, 2021-42 I.R.B. 469

2021-42, 2021-43 I.R.B. 666

2021-46, 2021-47 I.R.B. 740

2021-45, 2021-48 I.R.B. 764

2021-47, 2021-48 I.R.B. 775

2021-48, 2021-49 I.R.B. 835

2021-49, 2021-49 I.R.B. 838

2021-50, 2021-49 I.R.B. 844

2021-43, 2021-51 I.R.B. 882

2021-52, 2021-51 I.R.B. 883

2021-53, 2021-51 I.R.B. 887

Revenue Rulings:

2021-12, 2021-27 I.R.B. 1

2021-13, 2021-30 I.R.B. 152

2021-14, 2021-31 I.R.B. 164

2021-19, 2021-42 I.R.B. 470

2021-15, 2021-35 I.R.B. 331

2021-16, 2021-36 I.R.B. 359

2021-17, 2021-37 I.R.B. 362

2021-18, 2021-40 I.R.B. 447

2021-21, 2021-44 I.R.B. 704

2021-22, 2021-47 I.R.B. 726

2021-23, 2021-49 I.R.B. 779

2021-24, 2021-50 I.R.B. 850

2021-20, 2021-51 I.R.B. 875

Treasury Decisions:

9951, 2021-30 I.R.B. 25

9952, 2021-39 I.R.B. 428

9953, 2021-39 I.R.B. 430

9956, 2021-41 I.R.B. 449

9957, 2021-41 I.R.B. 452

9955, 2021-42 I.R.B. 471

9958, 2021-49 I.R.B. 781

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin

2021–52, dated December 27, 2021.

December 20, 2021

Bulletin No. 2021–51

Finding List of Current Actions on

Previously Published Items1

Bulletin 2021–51

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin

2021–52, dated December 27, 2021.

Bulletin No. 2021–51

iii

December 20, 2021

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

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Bulletins are available at www.irs.gov/irb/.

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