Bulletin No. 2023–30

Agency decision

Ask Donna

What actually matters in this document.

Text

HIGHLIGHTS

OF THIS ISSUE

Bulletin No. 2023–30

July 24, 2023

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

EMPLOYEE PLANS, INCOME TAX

EXEMPT ORGANIZATIONS

REG-124123-22, page 369.

Announcement 2023-19, page 367.

These proposed regulations set forth rules specifying the

methodology for constructing the corporate bond yield curve

that is used to derive the interest rates used in calculating

present value and making other calculations under a defined

benefit plan, as well as for discounting unpaid losses and estimated salvage recoverable of insurance companies. These

regulations affect participants in, beneficiaries of, employers

maintaining, and administrators of certain retirement plans,

as well as insurance companies.

EXCISE TAX

Announcement 2023-18, page 366.

The purposes of this announcement are to announce that:

(1) taxpayers will not be required to report the new excise

tax imposed by section 4501 of the Internal Revenue Code

on repurchases of corporate stock during a covered corporation’s taxable year (stock repurchase excise tax) on any

returns filed with the IRS, or to make any payments of such

tax, before the time specified in forthcoming regulations;

(2) there will be no addition to tax under section 6651(a)

of the Internal Revenue Code (or any other provision of the

Internal Revenue Code) for failure to file a return reporting the

stock repurchase excise tax, or for failure to pay the stock

repurchase excise tax, before the time specified in the forthcoming regulations; and (3) the forthcoming regulations will

require covered corporations to keep complete and detailed

records to establish accurately any amount of stock repurchases (including repurchases made after December 31,

2022, but before the forthcoming regulations are published)

and to retain these records as long as their contents may

become material.

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)

Announcement 2023-20, page 368.

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

Notice 2023-37, page 359.

In response to the end of the Coronavirus Disease 2019

(COVID-19) public health emergency and the National

Emergency Concerning the Novel Coronavirus Disease 2019

Pandemic, this notice modifies prior guidance regarding benefits relating to testing for and treatment of COVID-19 that

can be provided by a health plan that otherwise satisfies the

requirements to be a high deductible health plan under section

223(c)(2)(A). Specifically, this notice provides that the relief

described in Notice 2020-15, 2020-14 IRB 559, applies only

with respect to plan years ending on or before December 31,

2024. This notice also clarifies whether certain items and services are treated as preventive care under section 223(c)(2)

(C). Specifically, this notice clarifies that the preventive care

safe harbor, as described in Notice 2004-23, 2004-15 IRB

725, does not include screening (i.e., testing) for COVID-19,

effective as of the date of publication of this notice. This notice

also provides that items and services recommended with an

“A” or “B” rating by the United States Preventive Services Task

Force on or after March 23, 2010, are treated as preventive care for purposes of section 223(c)(2)(C), regardless of

whether these items and services must be covered, without

cost sharing, under Public Health Service Act section 2713.

Notice 2023-50, page 361.

This notice announces that under § 613A(c)(6)(C) of the

Internal Revenue Code, the applicable percentage for purposes of determining percentage depletion on marginal

properties for calendar year 2023 is 15 percent. The format

of the notice is identical to the format of notices previously

published on this issue.

Notice 2023-51, page 362.

This notice publishes the inflation adjustment factor and reference price for calendar year 2023 for the renewable electricity production credit under section 45 of the Internal Revenue

Code. The 2023 inflation adjustment factor and reference

price are used in determining the availability of the credit and

apply to calendar year 2023 sales of kilowatt hours of electricity produced in the United States or a possession thereof

from qualified energy resources. This notice also provides

the credit amounts for calendar year 2023 under section 45.

T.D. 9976, page 354.

This document contains final regulations that finalize, in part,

proposed regulations issued on Oct. 9, 2019. The proposed

regulations were published to facilitate an orderly transition in

connection with the discontinuation of London interbank offer

rates (LIBOR) and other IBORs. One issue addressed by those

proposed regulations was to propose an alternative interest

rate (specifically, yearly average Secured Overnight Financing

Rate (SOFR)) for the election provided by § 1.882-5(d)(5)(ii)

(B) (the published rate election). Generally, § 1.882-5 provides

rules for determining the amount of a foreign corporation’s

interest expense that is allocable to its income effectively

connected with the conduct of a U.S. trade or business.

The published rate election permits a foreign bank to elect

to use the 30-day USD LIBOR rate to compute the interest

expense attributable to its excess U.S.-connected liabilities.

A comment to the proposed regulations asserted that SOFR

was not an appropriate replacement for 30-day USD LIBOR

and recommended that finalization be delayed until a suitable

replacement could be identified. In July 2022, a comment

recommended using the average published one-month Term

SOFR plus a static spread adjustment of 0.11448%. This final

regulation adopts that recommendation.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and

enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

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

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

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

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

modify, or amend any of those previously published in the

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

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

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

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

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

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

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

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

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

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

Secretary (Enforcement).

Part IV.—Items of General Interest.

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

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

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

July 24, 2023

Bulletin No. 2023–30

Part I

T.D. 9976

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 1

Additional Guidance

on the Transition from

Interbank Offer Rates to

Other Reference Rates

with Respect to the Interest

Rates of a Foreign Bank

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains

additional final regulations that provide

guidance on the transition away from the

use of interbank offer rates (“IBORs”) to

other reference rates. Specifically, this regulation provides the replacement rate for

the IBOR presently used in the published

rate election, which may be used by taxpayers to determine the amount of interest expense attributable to their excess

U.S.-connected liabilities and allocable to

income that is effectively connected with

the conduct of a trade or business within

the United States (“ECI”). The final regulations will affect foreign banks that have

income that is ECI.

DATES: Effective date: This regulation is

effective on June 30, 2023.

Applicability date: For dates of applicability, see § 1.882-5(f)(3).

FOR

FURTHER

INFORMATION

CONTACT: D. Peter Merkel or Caleb

W. Trimm, (202) 317-6938 (not a toll-free

number).

SUPPLEMENTARY INFORMATION:

Background

This document contains final regulations that provide for the replacement of

the 30-day IBOR rate presently referenced

by § 1.882-5(d)(5)(ii)(B) with the Secured

Overnight Financing Rate (“SOFR”) of the

same tenor, plus a fixed spread adjustment.

I. Discontinuation of IBORs and

Transition to SOFRs

The London Interbank Offered Rate

(“LIBOR”) is an interest rate benchmark

that was the dominant reference rate used

in financial contracts, at one point serving

as the benchmark for more than $200 trillion of contracts worldwide. On July 27,

2017, the Financial Conduct Authority,

the United Kingdom regulator tasked with

overseeing LIBOR, announced that publication of all currency and term variants of

LIBOR, including the U.S. dollar LIBOR

(“USD LIBOR”), may cease after the end

of 2021. On March 5, 2021, the administrator of LIBOR, Intercontinental Exchange

(ICE) Benchmark Association, announced

that publication of the overnight, onemonth, three-month, six-month, and

12-month USD LIBORs would cease following the LIBOR publication on June 30,

2023. The ICE Benchmark Association

will continue to publish an unrepresentative synthetic USD LIBOR in one-month,

three-month, and six-month tenors until

September 30, 2024.1 Publication of

all other currency and tenor variants of

LIBOR (including the one-week and twomonth USD LIBOR) ceased following

the LIBOR publication on December 31,

2021.

The Alternative Reference Rate

Committee (“ARRC”), whose ex officio

members include the Board of Governors

of the Federal Reserve System, the

Department of the Treasury (“Treasury

Department”), the Commodity Futures

Trading Commission, and the Office of

Financial Research, was convened by the

Board of Governors of the Federal Reserve

System and the Federal Reserve Bank of

New York to identify alternative reference rates that would be both more robust

than USD LIBOR and that would comply

with standards such as the International

Organization of Securities Commissions’

“Principles for Financial Benchmarks.” In

2017, the ARRC identified a SOFR-based

rate as its recommended replacement for

LIBOR.

In 2021, the ARRC recommended the

forward-looking term SOFRs published

by the Chicago Mercantile Exchange

Group Benchmark Administration, Ltd.

in one-month, three-month, and sixmonth tenors. The ARRC has also recommended static spread adjustments

to each of those tenors to adjust for the

fact that SOFRs are risk-free rates, while

IBORs include an element of bank credit

risk. The static spread adjustments are

based on the historical median over a

5-year lookback period calculating the

difference between USD LIBOR and

compounded averages of SOFR, set on

March 5, 2021.2 The recommended static

spread adjustment for one-month SOFR

is 0.11448%.

To support the transition away from

USD LIBOR, the ARRC has published

recommended fallback language for inclusion in the terms of certain cash products.

Contracts governed by U.S. law that reference USD LIBOR but that do not have

any (or that have inadequate) fallback

provisions are generally required by the

Adjustable Interest Rate Act (“LIBOR

Act”), Pub. L. 117-103, div. U, to use

the SOFR of the same tenor, plus a static

spread adjustment. The static spread

adjustments to SOFR for each USD tenor

The synthetic USD LIBOR will be the Term SOFR of the same tenor (published by the Chicago Mercantile Exchange Group Benchmark Administration, Ltd.), plus a fixed spread adjustment

of 0.11448%, 0.26161%, or 0.42826% for the one-, three-, and six-month tenors, respectively. Financial Conduct Authority, Article 23D Benchmarks Regulation Draft Notice of Requirements

(April 3, 2023), https://www.fca.org.uk/publication/libor-notices/article-23d-benchmarks-regulation-usd-draft-notice-requirements.pdf. This rate is not considered representative because it

uses a synthetic methodology to determine rates instead of the panel bank methodology that has historically been used to determine IBORs.

For an explanation of the SOFR averaging calculation, see Federal Reserve Bank of New York, Additional Information About the Reference Rates Administered by the New York Fed, https://

www.newyorkfed.org/markets/reference-rates/additional-information-about-reference-rates.

July 24, 2023

354

Bulletin No. 2023–30

required by the LIBOR Act are the same

as those recommended by the ARRC.

II. Regulatory Background

The transition from IBORs to SOFRs

or other reference rates may give rise to

various tax issues. To minimize market

disruption and facilitate an orderly transition in connection with the discontinuation of LIBOR and other IBORs, the

Treasury Department and IRS published

proposed regulations (REG-118784-18)

in the Federal Register (84 FR 54068)

on October 9, 2019 (“2019 Proposed

Regulations”).

One issue addressed by the 2019

Proposed Regulations was the election

provided by § 1.882-5(d)(5)(ii)(B). A foreign corporation that has a U.S. branch or

other trade or business within the United

States applies § 1.882-5 to determine its

interest expense allocable under section

882(c) to its ECI. If a foreign corporation

uses the method described in § 1.8825(b) through (d), that foreign corporation could have liabilities attributable to

its U.S. branch (U.S.-connected liabilities) that exceed its U.S.-booked liabilities (excess U.S.-connected liabilities).

When a foreign corporation has excess

U.S.-connected liabilities, § 1.882-5(d)

(5)(ii)(A) entitles the foreign corporation

to increase its interest expense allocable

to its ECI in an amount determined by

reference to the average U.S.-dollar borrowing cost on all U.S.-dollar liabilities

other than its U.S.-booked liabilities. If

the foreign corporation is a bank, it may

elect under § 1.882-5(d)(5)(ii)(B) to use a

published average 30-day LIBOR for the

year rather than the actual rate computed

under § 1.882-5(d)(5)(ii)(A). Because

use of that election will no longer be

possible when LIBOR is phased out, the

2019 Proposed Regulations included a

proposal to replace 30-day USD LIBOR

referenced in § 1.882-5(d)(5)(ii)(B) with

a yearly average SOFR. Because SOFR

is an overnight risk-free rate, the Treasury

Department and the IRS acknowledged

that the yearly average SOFR was likely

to result in a lower rate than the 30-day

LIBOR calculation previously allowed

under § 1.882-5(d)(5)(ii)(B) and requested

comments on whether another rate might

be more appropriate.

Bulletin No. 2023–30

Following publication of the 2019

Proposed Regulations, the Treasury

Department and the IRS received one

comment regarding the proposal to use

yearly average SOFR in place of 30-day

USD LIBOR for the election available

under § 1.882-5(d)(5)(ii)(B). The comment noted two key differences between

30-day LIBOR and the yearly average

SOFR, which the commenter stated made

the yearly average SOFR an inappropriate substitute for 30-day LIBOR. First,

SOFR is a risk-free rate, while LIBOR

is an unsecured rate. Second, SOFR is an

overnight rate, while the 30-day LIBOR is

a one-month rate. The comment noted that

SOFR removes the credit risk premium

and term liquidity premium from the

cost of borrowing as compared to 30-day

LIBOR. The comment, however, did not

identify a more reasonable substitute for

30-day LIBOR at that time and recommended that the Treasury Department and

the IRS defer finalizing the proposed rule

under § 1.882-5(d)(5)(ii)(B) because a

yearly average SOFR calculation was not

a reasonable replacement rate for 30-day

USD LIBOR.

On January 4, 2022, the Treasury

Department and the IRS published final

regulations (TD 9961) in the Federal

transition from IBORs to other reference

rates (“2022 Final Regulations”). The

2022 Final Regulations did not finalize

the proposed change to § 1.882-5(d)(5)

(ii)(B). Instead, the Treasury Department

and the IRS sought additional comments

regarding the appropriate replacement

rate for 30-day USD LIBOR for the purpose of the election under § 1.882-5(d)

(5)(ii)(B).

Following the publication of the

2022 Final Regulations, the Treasury

Department and the IRS received one

additional comment regarding the appropriate replacement rate for the 30-day

USD LIBOR rate referenced by § 1.8825(d)(5)(ii)(B).

This comment is available for public

inspection at https://www.regulations.gov

or upon request. No public hearing was

requested, and none was held. After consideration of the comments, the Treasury

Department and the IRS adopt the 2019

Proposed Regulation as amended by this

Treasury decision (“final regulations”).

355

Summary of Comments and

Explanation of Revisions

I. Appropriate Replacement Rate for 30Day LIBOR

In response to the request for additional

comments in TD 9961, one comment

was received relating to the 30-day USD

LIBOR replacement in § 1.882-5(d)(5)

(ii)(B). The comment made three recommendations for the final regulations under

§ 1.882-5(d)(5)(ii)(B).

A. One-Month Term SOFR Plus a Static

Spread Adjustment

First, the comment recommended finalizing the regulation using the one-month

term SOFR plus static spread adjustment of 0.11448% as recommended by

the ARRC (which endorsed Term SOFR

rates in June of 2021 and spread adjustments in October of 2021) and codified in

the LIBOR Act (enacted in December of

2021). The comment noted that the onemonth term SOFR plus a fixed spread

adjustment accounts for some of the differences between SOFR and LIBOR rates

and implied that one-month term SOFR

plus static spread adjustment of 0.11448%

is a more appropriate replacement than

yearly average SOFR. The published rate

election provides eligible taxpayers with

administrative relief from the burden of

calculating their actual borrowing rate,

which is based on data maintained outside

the United States.

The final regulations adopt this recommendation. The ARRC, whose ex

officio members include the Treasury

Department, has generally recommended

that contracts referencing USD LIBOR

adopt fallback provisions that reference

the term SOFR of the same tenor, plus a

static spread adjustment. The Treasury

Department has supported the recommendations of the ARRC in prior guidance

issued in Revenue Procedure 2020–44,

2020–45 I.R.B. 991 and the 2022 Final

Regulations. In addition, contracts governed by U.S. law that have not voluntarily adopted such fallback provisions are

generally required by the LIBOR Act to

use the SOFR of the same tenor, plus the

ARRC-recommended static spread adjustment, as a matter of law. Pub. L. 117-103,

July 24, 2023

div. U. Accordingly, both the Treasury

Department and the U.S. Congress have

endorsed, or required, the use of a term

SOFR of the same tenor, plus the ARRCrecommended static spread adjustment,

as a replacement for term USD LIBORs.

Because the published rate election available under § 1.882-5(d)(5)(ii)(B) references 30-day LIBOR, the one-month term

SOFR (plus static spread adjustment) is

the most appropriate replacement rate.

B. Alternative Method Approximating

Actual Rate

The comment also recommended that

the final regulations allow taxpayers to use

a rate that reasonably approximates the

bank’s actual rate and that is consistently

applied from year to year. This recommendation is based on the approach taken in

regulations that were in effect from 1981

through 1996. TD 7749, 46 FR 1681 (Jan.

7, 1981) (codified at former § 1.882-5(b)

(3)(i)(B)). This historical regulation provided that, if information needed to calculate the taxpayer’s actual interest rate

could not be reasonably obtained, then the

taxpayer could determine its interest rate

by applying any method that reasonably

approximated its actual interest rate and

that was consistently applied year over

year, including, for example, approximating its interest rate by reference to 30-day

LIBOR. Id. at 1684-85. The comment

expressed concern that the one-month

term SOFR plus static spread adjustment

may be less than the actual cost of borrowing; however, for some taxpayers it

may not be worthwhile or possible for the

corporation to calculate its actual borrowing rate.

The final regulations do not adopt this

recommendation. An approach based on a

reasonable approximation of a taxpayer’s

actual interest would establish a different method for determining a taxpayer’s

borrowing rate that does not provide the

certainty, accuracy, and simplicity of a

published rate election. Additionally, the

IRS would face significant challenges in

administering such a rule. For example,

the comment did not suggest any standard by which the IRS might determine

whether a taxpayer’s method is a reasonable approximation of its actual borrowing rate.

July 24, 2023

Finally, data from recent filing years

indicates that the actual rate calculation is

not a significant burden to taxpayers. For

taxable years 2020 and 2021 (the most

recent years for which data is available),

a majority of foreign banks with excess

U.S.-connected liabilities chose to calculate their actual rate rather than use the

published rate election. In both years,

approximately 80% of such taxpayers

opted to calculate their actual rate, while

less than 20% chose to use the published

rate election available under § 1.882-5(d)

(5)(ii)(B).

C. Mechanism for Endorsing Additional

Replacement Rates

Finally, the comment recommended

that the final regulations include a mechanism for identifying additional qualified

alternative reference rates via Internal

Revenue Bulletin, Revenue Procedure, or

another similar notice. The final regulations do not adopt this recommendation.

The Treasury Department and the IRS do

not anticipate a need to name additional

alternative reference rates, and, if the

need does arise in the future, the Treasury

Department and the IRS may prefer to

propose any new alternative reference rate

through the regulatory process.

II. Application of the Published Rate

Election by the IRS in an Examination

If a taxpayer failed to file a timely

return or incorrectly determined that it

did not have excess U.S.-connected liabilities, § 1.882-5(d)(5)(ii)(B) allowed

the Director of Field Operations to calculate the taxpayer’s interest expense with

respect to excess U.S.-connected liabilities using either the taxpayer’s actual

rate or the published rate provided by §

1.882-5(d)(5)(ii)(B). The final regulations

amend this rule to require the Director of

Field Operations to use the published rate

in order to reduce the administrative burden of calculating the actual rate for both

the IRS and taxpayers.

III. Transitional Rule For Taxable Years

Including the Date of LIBOR Cessation

For a taxable year that begins before

and ends after the USD LIBOR cessation

356

date of June 30, 2023, a taxpayer that

makes the published rate election available under § 1.882-5(d)(5)(ii)(B) must

calculate a blended published rate average for the taxable year which uses the

30-day USD LIBOR for the portion of

its taxable year ending on June 30, 2023,

and the one-month Term SOFR, plus

static spread adjustment, for the portion

of its taxable year beginning on July 1,

2023.

IV. Applicability Date

These final regulations apply to taxable

years ending after June 30, 2023.

Special Analyses

I. Regulatory Planning and Review –

Economic Analysis

Pursuant to the Memorandum

of Agreement, Review of Treasury

Regulations under Executive Order 12866

(June 9, 2023), tax regulatory actions

issued by the IRS are not subject to the

requirements of section 6 of Executive

Order 12866, as amended. Therefore,

a regulatory impact assessment is not

required.

II. Regulatory Flexibility Act

The final regulations affect any foreign bank that has ECI and that has

excess U.S.-connected liabilities, but

which cannot reasonably calculate its

actual borrowing rate. The number of

small entities potentially affected by

the final regulations is unknown; however, it is unlikely to be a substantial

number because the final regulations

only affect foreign banks that operate

in the United States. In addition, data

collected from Forms 1120-F, Schedule

I filed in recent taxable years indicates

that fewer than 100 total taxpayers are

foreign banks with both ECI and excess

U.S-connected liabilities. The data from

Forms 1120-F, Schedule I shows that the

number of foreign banks that elected to

use the 30-day USD LIBOR rate to compute the interest expense attributable to

their excess U.S.-connected liabilities

varied from year to year. In some years,

as many as 50 foreign banks made the

Bulletin No. 2023–30

election on Schedule I to use the 30-day

USD LIBOR rate; in other years, fewer

than ten taxpayers made that election.

The Secretary has determined that the

economic impact on any small entities

affected by the final regulations is not

significant.

The final regulations provide that the

annual published rate election available

under § 1.882-5(d)(5)(ii)(B) will be modified by substituting the one-month term

SOFR, plus a static spread adjustment,

for 30-day USD LIBOR. The rule does

not require taxpayers to collect additional information to determine whether

the taxpayer is eligible for the election.

Additionally, the rule does not impose

any new costs on taxpayers because it

only replaces the published rate used

for the purpose of the election and does

not affect a taxpayer’s obligation with

respect to the information to be gathered

and reported.

In accordance with the Regulatory

Flexibility Act (5 U.S.C. 601 et seq.) the

Secretary hereby certifies that these final

regulations will not have a significant economic impact on a substantial number of

small entities.

V. Executive Order 13132: Federalism

III. Section 7805(f)

Drafting Information

Pursuant to section 7805(f), the proposed regulations (REG-118784-18)

preceding these final regulations were submitted to the Chief Counsel for Advocacy

of the Small Business Administration for

comment on the impact on small business,

and no comments were received.

The principal authors of these regulations are D. Peter Merkel and Caleb

W. Trimm of the Office of Associate

Chief Counsel (International). However,

other personnel from the IRS and

Treasury Department participated in their

development.

IV. Unfunded Mandates Reform Act

List of Subjects in 26 CFR Part 1

Section 202 of the Unfunded Mandates

Reform Act of 1995 requires that agencies assess anticipated costs and benefits

and take certain other actions before issuing a final rule that includes any Federal

mandate that may result in expenditures

in any one year by a state, local, or tribal

government, in the aggregate, or by the

private sector, of $100 million in 1995

dollars, updated annually for inflation.

This 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.

Income taxes, Reporting and recordkeeping requirements.

Bulletin No. 2023–30

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 regulation 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.

Statement of Availability of IRS

Documents

IRS Notices and other guidance

cited in this preamble are published

in the Internal Revenue Bulletin (or

Cumulative Bulletin) and are available

from the Superintendent of Documents,

U.S. Government Publishing Office,

Washington, DC 20402, or by visiting the

IRS website at https://www.irs.gov.

Adoption of Amendments to the

Regulations

Accordingly, the Treasury Department

and IRS amend 26 CFR part 1 as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 is amended by revising the entry

for § 1.882-5 to read in part as follows:

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

357

*****

Section 1.882-5 also issued under

26 U.S.C. 882(c), 26 U.S.C. 864(e), 26

U.S.C. 988(d), and 26 U.S.C. 7701(l).

*****

Par. 2. Section 1.882-5 is amended by

revising the fourth sentence of paragraph

(a)(7)(i) and paragraphs (d)(5)(ii)(B) and

(f) to read as follows:

§ 1.882-5 Determination of interest

deduction.

(a) * * *

(7) * * *

(i) * * * An elected method (other than

the fair market value method under paragraph (b)(2)(ii) of this section, or the published rate election in paragraph (d)(5)(ii)

of this section) must be used for a minimum period of five years before the taxpayer may elect a different method. * * *

*****

(d) * * *

(5) * * *

(ii) * * *

(B) Annual published rate election—

(1) In general. For each taxable year in

which a taxpayer is a bank within the

meaning of section 585(a)(2)(B) (without

regard to the second sentence of section

585(a)(2)(B) or whether any such activities are effectively connected with a trade

or business within the United States), the

taxpayer may elect to compute the interest expense attributable to excess U.S.connected liabilities by using the average

published one-month Term Secured

Overnight Financing Rate published by

the Chicago Mercantile Exchange Group

Benchmark Administration, Ltd. (or any

successor administrator) (“Term SOFR”)

for the taxable year, plus a static spread

adjustment of 0.11448%, rather than the

interest rate provided in paragraph (d)

(5)(ii)(A) of this section. A taxpayer

may elect to apply the rate provided in

this paragraph (d)(5)(ii)(B) on an annual

basis and does not require the consent of

the Commissioner to change this election in a subsequent taxable year. If a

taxpayer that is eligible to make the published rate election either does not file a

timely return or files a calculation with

no excess U.S.-connected liabilities and

it is later determined by the Director of

Field Operations that the taxpayer has

July 24, 2023

excess U.S.-connected liabilities, then the

Director of Field Operations will apply the

interest rate provided under this paragraph

(d)(5)(ii)(B) to the taxpayer’s excess U.S.connected liabilities in determining interest expense.

(2) Transitional rule for taxable years

including June 30, 2023. For a taxable

year that includes June 30, 2023, a taxpayer that makes the annual published

rate election must compute the interest expense attributable to excess U.S.connected liabilities by ratably using

the average 30-day U.S. dollar London

Interbank Offered Rate for the portion

of its taxable year ending on June 30,

2023, and the average one-month Term

July 24, 2023

SOFR, plus a static spread adjustment of

0.11448%, for the portion of its taxable

year beginning on July 1, 2023.

*****

(f) Applicability date—(1) General

rule. Except as provided in paragraph (f)

(3) of this section, this section is applicable

for tax years ending on or after August 15,

2009. A taxpayer, however, may choose

to apply § 1.882-5T, rather than applying

the regulations in this section, for any taxable year beginning on or after August 16,

2008, but before August 15, 2009.

(2) [Reserved]

(3) Applicability date for published

rate election. Paragraphs (a)(7)(i) and (d)

(5)(ii)(B) of this section apply to taxable

358

years ending after June 30, 2023. For taxable years ending before July 1, 2023, see

§ 1.882-5(d)(5)(ii)(B) (as contained in 26

CFR part 1, revised as of April 1, 2023).

Douglas W. O’Donnell,

Deputy Commissioner for Services

and Enforcement.

Approved: June 19, 2023.

Lily Batchelder,

Assistant Secretary of the Treasury

(Tax Policy).

(Filed by the Office of the Federal Register June 29,

2023, 8:45 a.m., and published in the issue of the

Federal Register for June 30, 2023, 88 FR 42231)

Bulletin No. 2023–30

Part III

EXPENSES RELATED

TO COVID-19 AND

PREVENTIVE CARE FOR

PURPOSES OF HIGH

DEDUCTIBLE HEALTH

PLANS

Notice 2023-37

PURPOSE

In response to the end of the Coronavirus

Disease 2019 (COVID-19) public health

emergency (referred to in this document

as the PHE) and the National Emergency

Concerning the Novel Coronavirus

Disease 2019 Pandemic1 (referred to in

this document as the COVID-19 National

Emergency), this notice modifies prior

guidance regarding benefits relating to

testing for and treatment of COVID-19

that can be provided by a health plan that

otherwise satisfies the requirements to be

a high deductible health plan (HDHP)

under section 223(c)(2)(A) of the Internal

Revenue Code (Code). Specifically, this

notice provides that the relief described in

Notice 2020-15, 2020-14 IRB 559, applies

only with respect to plan years ending on

or before December 31, 2024.

This notice also clarifies whether certain items and services are treated as preventive care under section 223(c)(2)(C).

Specifically, this notice clarifies that the

preventive care safe harbor, as described

in Notice 2004-23, 2004-15 IRB 725,

does not include screening (i.e., testing)

for COVID-19, effective as of the date

of publication of this notice.2 This notice

also provides that items and services recommended with an “A” or “B” rating by

the United States Preventive Services

Task Force (USPSTF) on or after March

23, 2010, are treated as preventive care for

purposes of section 223(c)(2)(C), regardless of whether these items and services

must be covered, without cost sharing,

under Public Health Service Act3 (PHS

Act) section 2713.

BACKGROUND

Section 223 of the Code permits eligible individuals to deduct contributions

to Health Savings Accounts (HSAs).4

Among the requirements for an individual

to qualify as an eligible individual under

section 223(c)(1) is that the individual

be covered under an HDHP and have no

disqualifying health coverage. As defined

in section 223(c)(2), an HDHP is a health

plan that satisfies certain requirements,

including requirements with respect to

minimum deductibles and maximum outof-pocket expenses.

Generally, under section 223(c)(2)

(A), an HDHP is not permitted to provide benefits for any year until the minimum deductible for that year is satisfied.

However, section 223(c)(2)(C) provides a

safe harbor for the absence of a deductible

for preventive care. Under section 223(c)

(2)(C), “[a] plan shall not fail to be treated

as a high deductible health plan by reason

of failing to have a deductible for preventive care (within the meaning of section

1861 of the Social Security Act, except

as otherwise provided by the Secretary).”

Therefore, an HDHP may provide preventive care benefits without a deductible,

or with a deductible below the minimum

annual deductible otherwise required by

section 223(c)(2)(A). To be a preventive

care benefit as defined for purposes of

section 223, the benefit must either be

described as preventive care for purposes

of section 1861 of the Social Security Act

(SSA) or be determined to be preventive

care in guidance issued by the Department

of the Treasury (Treasury Department)

and the Internal Revenue Service (IRS).5

Notice 2013-57, 2013-40 IRB 293, provides that a health plan will not fail to

qualify as an HDHP under section 223(c)

(2) merely because it provides without

a deductible the preventive care health

services required under section 2713 of

the PHS Act to be covered without cost

sharing by a group health plan or a health

insurance issuer offering group or individual health insurance coverage.

In March 2020, the Treasury

Department and the IRS issued Notice

2020-15. The notice provides that due to

the unprecedented public health emergency posed by COVID-19, and the need

to eliminate potential administrative and

financial barriers to testing for and treatment of COVID-19, a health plan that

otherwise satisfies the requirements to be

an HDHP under section 223(c)(2)(A) will

not fail to be an HDHP merely because the

health plan provides benefits for medical

care services and items purchased related

to testing for and treatment of COVID-19

prior to the satisfaction of the applicable

minimum deductible.6 As a result, individuals covered by such a plan will not

On March 13, 2020, by Proclamation 9994 (85 FR 15337 (March 18, 2020)), the President declared a national emergency concerning the COVID-19 pandemic beginning March 1, 2020,

under both the National Emergencies Act (Pub. L. 94-412, 90 Stat. 1255 (1976)) and the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Pub. L. 93-288, 88 Stat. 143 (1974))

(the Stafford Act). The national emergency has since been extended, with the last announcement of continuation made by the President on February 10, 2023. See The White House, Notice

on the Continuation of the National Emergency Concerning the Coronavirus Disease 2019 (COVID-19) Pandemic (Feb. 10, 2023), available at https://www.whitehouse.gov/briefing-room/

presidential-actions/2023/02/10/notice-on-the-continuation-of-the-national-emergency-concerning-the-coronavirus-disease-2019-covid-19-pandemic-3/. Subsequently, the President signed

H.J. Res. 7 (Pub. L. 118-3, 137 Stat. 6), ending the national emergency under the National Emergencies Act on April 10, 2023, and the Federal Emergency Management Agency gave notice

in the Federal Register that the national emergency under the Stafford Act would end on May 11, 2023. See https://www.govinfo.gov/content/pkg/FR-2023-02-10/pdf/2023-02964.pdf.

Although the preventive care safe harbor does not include testing for COVID-19, an HDHP may continue to provide benefits related to testing for COVID-19 before satisfaction of the

applicable minimum deductible for plan years ending on or before December 31, 2024, pursuant to this notice.

See Pub. L. 111-148, 124 Stat. 119 (March 23, 2010).

Tax-favored contributions may also be made on behalf of eligible individuals by their employers. See Q&A 19 of Notice 2004-2 (2004-2 IRB 269).

The determination of whether an item or service is preventive care for these purposes is unrelated to the determination of whether an amount paid for an item or service is medical care

under section 213(d) of the Code as an amount paid for the prevention of disease. See Rev. Rul. 79-66 (1979-1 CB 114); Daniels v. Commissioner, 41 T.C. 324 (1963); and Stringham v.

Commissioner, 12 T.C. 580 (1949), (acq. 1950-2 CB 4), aff’d per curiam, 183 F.2d 579 (6th Cir. 1950).

Notice 2020-15 permitted, but not did require, an HDHP to provide these health benefits prior to the satisfaction of the applicable minimum deductible.

Bulletin No. 2023–30

359

July 24, 2023

fail to be eligible individuals under section 223(c)(1) merely because of the provision of those health benefits prior to the

satisfaction of the applicable minimum

deductible.

On January 31, 2020, the Secretary

of Health and Human Services (HHS)

declared that a nationwide PHE existed

as of January 27, 2020, as a result of

COVID-19.7 This declaration was continually renewed by the HHS Secretary, most

recently effective February 11, 2023.8 On

January 30 and February 9, 2023, respectively, the President and the HHS Secretary

announced their intent to end the COVID19 National Emergency and the PHE on

May 11, 2023.9 On February 10, 2023, the

Federal Emergency Management Agency

gave notice in the Federal Register that

the national emergency under the Stafford

Act would end on May 11, 2023.10 On

April 10, 2023, the President signed H.J.

Res. 7 ending the national emergency

under the National Emergencies Act on

April 10, 2023.11

On March 29, 2023, the Departments

of Labor, HHS, and the Treasury (the

Departments) issued Frequently Asked

Questions (FAQs) under the heading,

FAQs About Families First Coronavirus

Response Act, Coronavirus Aid, Relief,

and Economic Security Act, and Health

Insurance Portability and Accountability

Act Implementation Part 58 (FAQs

Part 58), which address changes in various rules as the result of the end of the

COVID-19 National Emergency and the

PHE.12 Question and Answer 8 of FAQs

Part 58 states that, while Notice 2020-15

applies until further guidance is issued,

the Treasury Department and the IRS are

reviewing the appropriateness of continuing the relief in Notice 2020-15 given the

anticipated end of the COVID-19 National

Emergency and the PHE and anticipate

issuing additional guidance in the near

future.

GUIDANCE

The Treasury Department and the IRS

have determined that, with the end of the

COVID-19 National Emergency and the

PHE, the relief described in Notice 202015 is no longer needed. Accordingly, this

notice modifies Notice 2020-15 to provide

that the relief described in Notice 202015 applies only with respect to plan years

ending on or before December 31, 2024.

For subsequent plan years, an HDHP is

not permitted to provide health benefits

associated with testing for and treatment

of COVID-19 without a deductible, or

with a deductible below the minimum

deductible (for self-only or family coverage) for an HDHP, except as otherwise

provided in this notice.

The Treasury Department and the IRS

note that Notice 2004-23 provides that

preventive care under section 223(c)(2)

to Notice 2004-23. However, preventive

care does not generally include any service or benefit intended to treat an existing illness, injury, or condition. As part

of the preventive care safe harbor, the

Appendix to Notice 2004-23 includes

Infectious Diseases Screening Services

for the following infections: Bacteriuria,

Chlamydial

Infection,

Gonorrhea,

Hepatitis B Virus Infection, Hepatitis C,

Human Immunodeficiency Virus (HIV)

Infection, Syphilis, and Tuberculosis

Infection. Screenings for common and

episodic illnesses, such as the flu, are

not included on the list. Accordingly, the

Treasury Department and the IRS are of

the view that COVID-19 differs from the

types of infectious diseases included in

the preventive care safe harbor as specified in Notice 2004-23, and this notice

clarifies that the preventive care safe harbor as described in Notice 2004-23 does

not include screening (i.e., testing) for

COVID-19, effective as of the date of

publication of this notice.

In addition, the Treasury Department

and the IRS note that on April 13, 2023,

the Departments issued FAQs entitled,

FAQs About Affordable Care Act and

Coronavirus Aid, Relief, and Economic

Security Act Implementation Part 59

(FAQs Part 59), which provide initial guidance on how the decision in Braidwood

Management Inc. v. Becerra13 affects the

requirement to cover preventive services

without cost sharing under PHS Act section 2713.14 Question and Answer 7 of

FAQs Part 59 states that, until further

guidance is issued, items and services recommended with an “A” or “B” rating by

the USPSTF on or after March 23, 2010,

will be treated as preventive care for purposes of section 223(c)(2)(C) of the Code,

regardless of whether these items and services must be covered, without cost sharing, under PHS Act section 2713.

Consistent with the position taken in

Question and Answer 7 of FAQs Part

See HHS Office of the Assistant Secretary for Preparedness and Response, Determination of the HHS Secretary that a Public Health Emergency Exists (Jan. 31, 2020), available at https://

www.phe.gov/emergency/news/healthactions/phe/Pages/2019-nCoV.aspx.

See HHS Office of the Assistant Secretary for Preparedness and Response, Renewal of Determination That A Public Health Emergency Exists (Feb. 9, 2023), available at https://aspr.hhs.

gov/legal/PHE/Pages/COVID19-9Feb2023.aspx.

See Executive Office of the President, Office of Management and Budget, Statement of Administration Policy: H.R. 382 and H.J. Res. 7 (Jan. 30, 2023), available at https://www.whitehouse.

gov/wp-content/uploads/2023/01/SAP-H.R.-382-H.J.-Res.-7.pdf; Letter to U.S. Governors from HHS Secretary Xavier Becerra on renewing COVID-19 Public Health Emergency (PHE)

(Feb. 9, 2023), available at https://www.hhs.gov/about/news/2023/02/09/letter-us-governors-hhs-secretary-xavier-becerra-renewing-covid-19-public-health-emergency.html; Executive

Office of the President, Notice on the Continuation of the National Emergency Concerning the Coronavirus Disease 2019 (COVID-19) Pandemic (Feb. 10, 2023), available at https://www.

whitehouse.gov/briefing-room/presidential-actions/2023/02/10/notice-on-the-continuation-of-the-national-emergency-concerning-the-coronavirus-disease-2019-covid-19-pandemic-3/.

See https://www.govinfo.gov/content/pkg/FR-2023-02-10/pdf/2023-02964.pdf.

The April 10, 2023, end of the national emergency under the National Emergencies Act did not change the anticipated end date of the PHE or the end date of the national emergency under

the Stafford Act.

See https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-58 and https://www.cms.gov/cciio/resources/fact-sheets-and-faqs/downloads/faqs-part-58.

pdf. Question and Answer 5 of FAQs Part 58 states that the Treasury Department, the IRS, and the Department of Labor “anticipate that the Outbreak Period will end July 10, 2023 (60 days

after the anticipated end of the COVID-19 National Emergency).” The Treasury Department and the IRS, in coordination with the Department of Labor, clarify that the Outbreak Period ends

July 10, 2023, irrespective of the last day of the national emergency under the National Emergencies Act or the last day of the national emergency under the Stafford Act.

Civil Action No. 4:20-cv-00283-O (N.D. Tex. March 30, 2023). On May 15, 2023, the Fifth Circuit issued an administrative stay of the decision pending appeal, and the Fifth Circuit issued

a further Order regarding the stay pending appeal on June 13, 2023.

See https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-59 and https://www.cms.gov/files/document/faqs-part-59.pdf.

July 24, 2023

360

Bulletin No. 2023–30

59, this notice provides that items and

services recommended with an “A” or

“B” rating by the USPSTF on or after

March 23, 2010, are treated as preventive care for purposes of section 223(c)

(2)(C) of the Code, regardless of

whether these items and services must

be covered, without cost sharing, under

PHS Act section 2713. Accordingly, if

COVID-19 testing were to be recommended with an “A” or “B” rating by

the USPSTF, then that testing would be

treated as preventive care under section 223(c)(2)(C) of the Code, regardless of whether it must be covered,

without cost sharing, under PHS Act

section 2713.

EFFECT ON OTHER GUIDANCE

Notice 2020-15 is modified. Notice

2004-23 is clarified.

DRAFTING INFORMATION

The principal author of this notice

is Jennifer Friedman of the Office of

Associate Chief Counsel (Employee

Benefits, Exempt Organizations, and

Employment Taxes), though other

Treasury Department and IRS officials

participated in its development. For further information on the provisions of this

notice, contact Jennifer Friedman at (202)

317-5500 (not a toll-free number).

2023 Marginal Production

Rates

Notice 2023-50

This notice announces the applicable

percentage under § 613A of the Internal

Revenue Code to be used in determining

percentage depletion for marginal properties for the 2023 calendar year.

Section 613A(c)(6)(C) defines the term

“applicable percentage” for purposes of

determining percentage depletion for oil

and gas produced from marginal properties. The applicable percentage is the

percentage (not greater than 25 percent)

equal to the sum of 15 percent, plus one

percentage point for each whole dollar

by which $20 exceeds the reference price

(determined under § 45K(d)(2)(C)) for

crude oil for the calendar year preceding

the calendar year in which the taxable year

begins. The reference price determined

under § 45K(d)(2)(C) for the 2022 calendar year is $93.97.

The following table contains the applicable percentages for marginal production

for taxable years beginning in calendar

years 1991 through 2023.

Notice 2023-50

APPLICABLE PERCENTAGE FOR MARGINAL PRODUCTION

Calendar Year

Applicable Percentage

1991

15 percent

1992

18 percent

1993

19 percent

1994

20 percent

1995

21 percent

1996

20 percent

1997

16 percent

1998

17 percent

1999

24 percent

2000

19 percent

2001

15 percent

2002

15 percent

2003

15 percent

2004

15 percent

2005

15 percent

2006

15 percent

2007

15 percent

2008

15 percent

2009

15 percent

2010

15 percent

2011

15 percent

2012

15 percent

2013

15 percent

Bulletin No. 2023–30

361

July 24, 2023

Notice 2023-50

APPLICABLE PERCENTAGE FOR MARGINAL PRODUCTION

Calendar Year

Applicable Percentage

2014

15 percent

2015

15 percent

2016

15 percent

2017

15 percent

2018

15 percent

2019

15 percent

2020

15 percent

2021

15 percent

2022

15 percent

2023

15 percent

The principal author of this notice

is Elimelech Brander of the Office of

Associate Chief Counsel (Passthroughs

and Special Industries). For further information regarding this notice contact Mr.

Brander at (202) 317-6853 (not a toll-free

number).

Credit for Renewable

Electricity Production and

Publication of Inflation

Adjustment Factor and

Reference Price for

Calendar Year 2023

Notice 2023-51

This notice publishes the inflation

adjustment factor and reference price for

calendar year 2023 for the renewable electricity production credit under section 45

of the Internal Revenue Code (section 45

credit). The 2023 inflation adjustment factor and reference price are used in determining the availability of the credit and

apply to calendar year 2023 sales of kilowatt hours of electricity produced in the

United States or a possession thereof from

qualified energy resources.

BACKGROUND

Section 45 was amended by section

13101 of Public Law 117-169, 136 Stat.

1818 (August 16, 2022), commonly

known as the Inflation Reduction Act of

2022 (IRA). The IRA changed the manner

in which the section 45 credit amounts are

calculated for any qualified facility placed

in service after December 31, 2021. The

IRA also removed the one-half reduction

of the credit amount under section 45(b)

(4)(A) for qualified hydropower facilities

and marine and hydrokinetic renewable

energy facilities placed in service after

December 31, 2022. In the case of any

qualified facility placed in service before

January 1, 2022, the section 45 credit

amounts are determined under the calculation rules provided by the prior version

of section 45.

As amended by the IRA, section 45(b)

(6)(A) provides that, in the case of any

qualified facility that satisfies the requirements of section 45(b)(6)(B), the credit

amount determined under section 45(a)

(determined after the application of section 45(b)(1) through (5) and without

regard to section 45(b)(6)) is equal to such

amount multiplied by 5. A qualified facility satisfies the requirements of section

45(b)(6)(B) if it is placed in service after

December 31, 2021, and it is one of the

following: (i) a facility with a maximum

net output of less than 1 megawatt (as

measured in alternating current); (ii) a

facility the construction of which began

prior to January 29, 2023, which is the

date that is 60 days after the publication of

the guidance with respect to the requirements of section 45(b)(7)(A) (prevailing

wage requirements) and section 45(b)(8)

(apprenticeship requirements);1 or (iii) a

facility that satisfies the requirements of

section 45(b)(7)(A) and (8). The IRA also

added bonus credit amounts with respect

to qualified facilities placed in service after

December 31, 2022, that meet domestic

content requirements under section 45(b)

(9)2 or energy community requirements

under section 45(b)(11).3

The IRA amended the phaseout of the

section 45 credit for wind facilities under

section 45(b)(5) such that it does not

apply to facilities placed in service after

December 31, 2021. The IRA also added

a new phaseout of the section 45 credit

under section 45(b)(10) in the case of

qualified facilities placed in service after

December 31, 2022, for taxpayers making

an elective payment election under section

6417. The IRA also amended the credit

amount reduction under section 45(b)(3)

in the case of qualified facilities the construction of which began after August 16,

2022.

The IRA amended section 45(d)(4) to

restore the section 45 credit for electricity

See Notice 2022-61, 2022-52 I.R.B. 560 (Dec. 27, 2022), for additional information regarding the prevailing wage and apprenticeship requirements.

See Notice 2023-38, 2023-22 I.R.B. 872 (May 12, 2023), for additional information regarding the domestic content bonus credit.

See Notice 2023-45, 2023-29 I.R.B. 317 (July 17, 2023), for additional information regarding the energy community bonus credit.

July 24, 2023

362

Bulletin No. 2023–30

produced in solar energy facilities in the

case of qualified facilities placed in service after December 31, 2021, and the

construction of which begins before

January 1, 2025. Effective for facilities

placed in service after December 31, 2022,

the IRA amended the definition of marine

and hydrokinetic renewable energy under

section 45(c)(10) and the definition of

a marine and hydrokinetic renewable

energy facility under section 45(d)(11).

The IRA extended certain deadlines in the

definitions under section 45(d) for wind

facilities, closed-loop biomass facilities,

open-loop biomass facilities, geothermal facilities, landfill gas facilities, trash

facilities, qualified hydropower facilities,

and marine and hydrokinetic renewable

energy facilities.

Section 45(a) provides that the renewable electricity production credit for any

tax year is an amount equal to the product

of the kilowatt hours of specified electricity produced by the taxpayer and sold to

an unrelated person during the tax year

multiplied by 1.5 cents (in the case of a

qualified facility placed in service before

January 1, 2022) or 0.3 cents (in the case

of a qualified facility placed in service

after December 31, 2021). This electricity

must be produced from qualified energy

resources and at a qualified facility during

the 10-year period beginning on the

date the facility was originally placed in

service.

Section 45(b)(1) provides that the

amount of the credit determined under

section 45(a) is reduced by an amount

which bears the same ratio to the amount

of the credit as the amount by which the

reference price for the calendar year in

which the sale occurs exceeds 8 cents,

bears to 3 cents. Under section 45(b)(2),

the 1.5 cent (or 0.3 cent) amount in section 45(a) and the 8 cent amount in section

45(b)(1) are each adjusted by multiplying

such amount by the inflation adjustment

factor for the calendar year in which the

sale occurs. In the case of any qualified

facility placed in service before January

1, 2022, if any amount as increased under

section 45(b)(2) is not a multiple of 0.1

cent, such amount is rounded to the nearest multiple of 0.1 cent. In the case of any

qualified facility placed in service after

December 31, 2021, if the 0.3 cent amount

as increased under section 45(b)(2) is not

a multiple of 0.05 cent, such amount is

rounded to the nearest multiple of 0.05

cent.

In the case of electricity produced in

open-loop biomass facilities, landfill gas

facilities, trash facilities, qualified hydropower facilities, and marine and hydrokinetic renewable energy facilities, section

45(b)(4)(A) requires the amount in effect

under section 45(a)(1) (determined before

rounding as required by section 45(b)(2))

to be reduced by one-half. As amended

by the IRA, the one-half reduction under

section 45(b)(4)(A) no longer applies to

qualified hydropower facilities and marine

and hydrokinetic renewable energy facilities placed in service after December 31,

2022.

Section 45(b)(5) provides that in the

case of any qualified wind facility placed

in service before January 1, 2022, the

amount of the credit determined under

section 45(a) (determined after the application of section 45(b)(1), (2), and (3) and

without regard to section 45(b)(5)) shall

be reduced by (A) in the case of any facility the construction of which began after

December 31, 2016, and before January 1,

2018, 20 percent, (B) in the case of any

facility the construction of which began

after December 31, 2017, and before

January 1, 2019, 40 percent, (C) in the

case of any facility the construction of

which began after December 31, 2018,

and before January 1, 2020, 60 percent,

and (D) in the case of any facility the construction of which began after December

31, 2019, and before January 1, 2022, 40

percent.

Section 45(c)(1) defines qualified

energy resources as wind, closed-loop

biomass, open-loop biomass, geothermal energy, solar energy, small irrigation

power,4 municipal solid waste, qualified

hydropower production, and marine and

hydrokinetic renewable energy.

Section 45(d)(1) defines a qualified

facility using wind to produce electricity as any facility owned by the taxpayer

that is originally placed in service after

December 31, 1993, and the construction

of which begins before January 1, 2025.

See section 45(e)(7) for rules relating to

the inapplicability of the credit to electricity sold to utilities under certain contracts.

Section 45(d)(2)(A) defines a qualified facility using closed-loop biomass to

produce electricity as any facility owned

by the taxpayer that is originally placed

in service after December 31, 1992, and

the construction of which begins before

January 1, 2025, or owned by the taxpayer

which before January 1, 2025, is originally placed in service and modified to use

closed-loop biomass to co-fire with coal,

with other biomass, or with both, but only

if the modification is approved under the

Biomass Power for Rural Development

Programs or is part of a pilot project of

the Commodity Credit Corporation as

described in 65 FR 63052. For purposes

of section 45(d)(2)(A)(ii), a facility shall

be treated as modified before January 1,

2025, if the construction of such modification begins before such date. Section 45(d)

(2)(C) provides that in the case of a qualified facility described in section 45(d)(2)

(A)(ii), the 10-year period referred to in

section 45(a) is treated as beginning no

earlier than the date of the enactment of

section 45(d)(2)(C)(i) (October 22, 2004),

and if the owner of such facility is not the

producer of the electricity, the person eligible for the credit allowable under section

45(a) is the lessee or the operator of such

facility. A qualified facility using closedloop biomass includes a new unit placed

in service after the date of the enactment

of section 45(d)(2)(B) (October 3, 2008)

in connection with a qualified facility

using closed-loop biomass, but only to the

extent of the increased amount of electricity produced at the facility by reason of

such new unit.

Section 45(d)(3)(A) defines a qualified facility using open-loop biomass to

produce electricity as any facility owned

by the taxpayer which in the case of a

facility using agricultural livestock waste

nutrients, is originally placed in service

after the date of the enactment of section

45(d)(3)(A)(i)(I) (October 22, 2004) and

the construction of which begins before

January 1, 2025, and the nameplate capacity rating of which is not less than 150

The section 45 credit is expired for small irrigation power facilities.

Bulletin No. 2023–30

363

July 24, 2023

kilowatts, and in the case of any other

facility, the construction of which begins

before January 1, 2025. In the case of any

facility described in section 45(d)(3)(A),

if the owner of such facility is not the producer of the electricity, section 45(d)(3)

the credit allowable under section 45(a) is

the lessee or the operator of such facility.

A qualified facility using open-loop biomass includes a new unit placed in service

after the date of the enactment of section

45(d)(3)(B) (October 3, 2008) in connection with a qualified facility using openloop biomass, but only to the extent of the

increased amount of electricity produced

at the facility by reason of such new unit.

Section 45(d)(4) defines a qualified

facility using geothermal energy to produce electricity as any facility owned by

the taxpayer that is originally placed in

service after the date of the enactment of

section 45(d)(4) (October 22, 2004) and

the construction of which begins before

January 1, 2025. A qualified facility using

geothermal energy does not include any

property described in section 48(a)(3) the

basis of which is taken into account by the

taxpayer for purposes of determining the

energy credit under section 48.

As amended by the IRA and effective

for solar energy facilities placed in service

after December 31, 2021, section 45(d)(4)

also defines a qualified facility using solar

energy to produce electricity as any facility owned by the taxpayer that is originally placed in service after the date of the

enactment of section 45(d)(4) (October

22, 2004) and the construction of which

begins before January 1, 2025. A qualified

facility using solar energy does not include

any property described in section 48(a)(3)

the basis of which is taken into account by

the taxpayer for purposes of determining

the energy credit under section 48.

Section 45(d)(6) defines a qualified

facility using gas derived from the biodegradation of municipal solid waste to

produce electricity as any facility owned

by the taxpayer that is originally placed in

service after the date of the enactment of

section 45(d)(6) (October 22, 2004) and

the construction of which begins before

January 1, 2025.

Section 45(d)(7) defines a qualified

facility (other than a facility described in

section 45(d)(6)) that uses municipal solid

July 24, 2023

waste to produce electricity as any facility owned by the taxpayer that is originally placed in service after the date of the

enactment of section 45(d)(7) (October

22, 2004) and the construction of which

begins before January 1, 2025. A qualified facility using municipal solid waste

includes a new unit placed in service in

connection with a facility placed in service on or before the date of the enactment

of section 45(d)(7), but only to the extent

of the increased amount of electricity produced at the facility by reason of such new

unit.

Section 45(d)(9) defines a qualified

facility producing qualified hydroelectric

production described in section 45(c)(8)

as (i) any facility producing incremental

hydropower production, but only to the

extent of its incremental hydropower production attributable to efficiency improvements or additions to capacity described in

section 45(c)(8)(B) placed in service after

the date of the enactment of section 45(d)

(9) (August 8, 2005) and before January

1, 2025, and (ii) any other facility placed

in service after the date of the enactment

of section 45(d)(9) (August 8, 2005) and

the construction of which begins before

January 1, 2025. Section 45(d)(9)(B) provides that, in the case of a qualified facility described in section 45(d)(9)(A), the

10-year period referred to in section 45(a)

shall be treated as beginning on the date

the efficiency improvements or additions

to capacity are placed in service. Section

45(d)(9)(C) provides that for purposes

of section 45(d)(9)(A)(i), an efficiency

improvement or addition to capacity shall

be treated as placed in service before

January 1, 2025, if the construction of

such improvement or addition begins

before such date.

As amended by the IRA, section 45(d)

(11) provides in the case of a facility

producing electricity from marine and

hydrokinetic renewable energy, the term

“qualified facility” means any facility

owned by the taxpayer which has a nameplate capacity rating of at least 150 kilowatts (or at least 25 kilowatts in the case of

a facility placed in service after December

31, 2022), and is originally placed in service on or after the date of the enactment

of section 45(d)(11) (October 3, 2008) and

the construction of which begins before

January 1, 2025.

364

Section 45(e)(2)(A) requires the

Secretary to determine and publish in the

Federal Register each calendar year the

inflation adjustment factor and the reference price for such calendar year. The

inflation adjustment factor and the reference price for the 2023 calendar year were

published in the Federal Register at 88 FR

40400 on June 21, 2023.

Section 45(e)(2)(B) defines the inflation adjustment factor for a calendar year

as a fraction the numerator of which is

the GDP implicit price deflator for the

preceding calendar year and the denominator of which is the GDP implicit price

deflator for the calendar year 1992. The

term “GDP implicit price deflator” means

the most recent revision of the implicit

price deflator for the gross domestic product as computed and published by the

Department of Commerce before March

15 of the calendar year.

Section 45(e)(2)(C) provides that the

reference price with respect to a calendar year is the Secretary’s determination

of the annual average contract price per

kilowatt hour of electricity generated

from the same qualified energy resource

and sold in the previous year in the United

States. Only contracts entered into after

December 31, 1989 are taken into account.

INFLATION ADJUSTMENT

FACTOR AND REFERENCE PRICE

The inflation adjustment factor for

calendar year 2023 for qualified energy

resources is 1.8909.

The reference price for calendar year

2023 for facilities producing electricity from wind (based upon information

provided by the Department of Energy)

is 3.74 cents per kilowatt hour. The reference prices for facilities producing

electricity from closed-loop biomass,

open-loop biomass, geothermal energy,

solar energy, municipal solid waste, qualified hydropower production, and marine

and hydrokinetic energy have not been

determined for calendar year 2023.

PHASEOUT CALCULATION

Because the 2023 reference price for

electricity produced from wind (3.74 cents

per kilowatt hour) does not exceed 8 cents

multiplied by the inflation adjustment

Bulletin No. 2023–30

factor (1.8909), the phaseout of the credit

provided in section 45(b)(1) does not

apply to such electricity sold during calendar year 2023. However, section 45(b)

(5) provides an additional phaseout of the

credit for wind facilities placed in service before January 1, 2022, and the construction of which began after December

31, 2016. For electricity produced from

closed-loop biomass, open-loop biomass,

geothermal energy, solar energy, municipal solid waste, qualified hydropower

production, and marine and hydrokinetic

energy, the phaseout of the credit provided

in section 45(b)(1) does not apply to such

electricity sold during calendar year 2023.

CREDIT AMOUNT FOR A

QUALIFIED FACILITY PLACED

IN SERVICE BEFORE JANUARY 1,

2022

As required by section 45(b)(2), the

1.5 cent amount provided in section

45(a)(1) is adjusted by multiplying such

amount by the inflation adjustment factor for the calendar year in which the

sale occurs. If any amount as increased

under section 45(b)(2) is not a multiple

of 0.1 cent, such amount is rounded to

the nearest multiple of 0.1 cent. In the

case of electricity produced in open-loop

biomass facilities, landfill gas facilities,

trash facilities, qualified hydropower

facilities, and marine and hydrokinetic

renewable energy facilities, section 45(b)

(4)(A) requires the amount in effect

under section 45(a)(1) (before rounding

to the nearest 0.1 cent as required by section 45(b)(2)) to be reduced by one-half.

Under the calculation required by section 45(b)(2), the credit for renewable

Bulletin No. 2023–30

electricity production for calendar year

2023 determined under section 45(a) is

2.8 cents per kilowatt hour on the sale

of electricity produced in any qualified

facility placed in service before January

1, 2022, from the qualified energy

resources of wind, closed-loop biomass,

and geothermal energy, and 1.4 cents

per kilowatt hour on the sale of electricity produced in any qualified facility

placed in service before January 1, 2022,

from the qualified energy resources of

open-loop biomass, landfill gas, trash,

qualified hydropower, and marine and

hydrokinetic energy.

CREDIT AMOUNT FOR A

QUALIFIED FACILITY PLACED IN

SERVICE AFTER DECEMBER 31,

2021

As required by section 45(b)(2), the 0.3

cent amount provided in section 45(a)(1)

is adjusted by multiplying such amount by

the inflation adjustment factor for the calendar year in which the sale occurs. If the

0.3 cent amount as adjusted for inflation

is not a multiple of 0.05 cent, the amount

is rounded to the nearest multiple of 0.05

cent. In the case of electricity produced in

open-loop biomass facilities, landfill gas

facilities, trash facilities, qualified hydropower facilities, and marine and hydrokinetic renewable energy facilities, section

45(b)(4)(A) requires the amount in effect

under section 45(a)(1) (determined before

rounding as required by section 45(b)(2))

to be reduced by one-half.

Under the calculation required by section 45(b)(2), the credit for renewable

electricity production for calendar year

2023 determined under section 45(a) is

365

0.55 cents per kilowatt hour on the sale of

electricity produced in any qualified facility placed in service after December 31,

2021, from the qualified energy resources

of wind, closed-loop biomass, geothermal

energy, and solar energy, and 0.3 cents

per kilowatt hour on the sale of electricity

produced in any qualified facility placed

in service after December 31, 2021, from

the qualified energy resources of openloop biomass, landfill gas, trash, qualified

hydropower, and marine and hydrokinetic

renewable energy.

CREDIT AMOUNT FOR

QUALIFIED HYDROPOWER

FACILITIES AND MARINE AND

HYDROKINETIC RENEWABLE

ENERGY FACILITIES PLACED IN

SERVICE AFTER DECEMBER 31,

2022

Under the calculation required by section 45(b)(2), the credit for renewable

electricity production for calendar year

2023 determined under section 45(a) is

0.55 cents per kilowatt hour on the sale of

electricity produced in any qualified facility placed in service after December 31,

2022, from the qualified energy resources

of qualified hydropower and marine and

hydrokinetic renewable energy.

DRAFTING AND CONTACT

INFORMATION

The principal author of this notice is

Charles Hyde of the Office of Associate

Chief Counsel (Passthroughs & Special

Industries). For further information

regarding this notice contact Mr. Hyde at

(202) 317-6853 (not a toll-free number).

July 24, 2023

Part IV

Transitional Guidance

with Respect to Stock

Repurchase Excise Tax

Announcement 2023-18

This announcement confirms that no

taxpayer is required to report the new

excise tax imposed by section 4501 of the

Internal Revenue Code (Code) on repurchases of corporate stock during a covered

corporation’s taxable year (stock repurchase excise tax) on any returns filed with

the Internal Revenue Service (IRS), or to

make any payments of such tax, before the

time specified in forthcoming regulations.

The stock repurchase excise tax applies

to repurchases made after December

31, 2022. On January 17, 2023, the

Department of the Treasury (Treasury

Department) and the IRS published Notice

2023-2, 2023-3 I.R.B. 374, to provide initial guidance regarding the application of

the stock repurchase excise tax. The notice

announced that the Treasury Department

and the IRS intend to issue forthcoming

regulations addressing the application of

the stock repurchase excise tax. The notice

describes certain rules for determining the

amount of stock repurchase excise tax

July 24, 2023

owed that the Treasury Department and

the IRS intend to include in the forthcoming regulations and provides that taxpayers

may rely on these rules until the publication of the forthcoming regulations.

Additionally, the notice describes anticipated procedures for reporting and paying any liability for the stock repurchase

excise tax that the Treasury Department

and the IRS intend to include in the

forthcoming regulations. Specifically,

the notice states that the forthcoming

regulations are expected to provide that

(i) the stock repurchase excise tax will

be reported once per taxable year on the

Form 720, Quarterly Federal Excise Tax

Return, that is due for the first full quarter

after the close of the taxpayer’s taxable

year, (ii) the deadline for payment of the

stock repurchase excise tax will be the

same as the filing deadline, and (iii) no

extensions will be permitted for reporting

or paying the stock repurchase excise tax.

For those taxpayers with a taxable year

ending after December 31, 2022, but prior

to publication of the forthcoming regulations, such regulations are expected

to provide that any liability for the stock

repurchase excise tax for such taxable

year will be reported on the Form 720

that is due for the first full quarter after

the date of publication of the forthcoming

366

regulations, and that the deadline for payment of the stock repurchase excise tax

is the same as the filing deadline. There

will be no addition to tax under section

6651(a) of the Code (or any other provision of the Code) for failure to file a return

reporting the stock repurchase excise tax,

or for failure to pay the stock repurchase

excise tax, before the time specified in the

forthcoming regulations.

The Treasury Department and the IRS

expect the forthcoming regulations will

require covered corporations to keep

complete and detailed records to establish

accurately any amount of stock repurchases (including repurchases made after

December 31, 2022, but before the forthcoming regulations are published) and to

retain these records as long as their contents may become material.

DRAFTING INFORMATION

The principal author of this announcement is Samuel G. Trammell of the

Office of the Associate Chief Counsel

(Corporate). For further information

regarding this announcement contact Mr.

Trammell at (202) 317-6975 (not a tollfree number).

Bulletin No. 2023–30

Deletions From Cumulative

List of Organizations,

Contributions to Which are

Deductible Under Section

170 of the Code

Announcement 2023-19

Table of Contents

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

01/01/2018

NAME OF ORGANIZATION

AMERICAN CANCER OF SOCIETY FLORIDA

AMERICAN CANCER SOCIETY OF WASHINGTON

AMERICAN CANCER SOCIETY OF MASSACHUSETTS

AMERICAN CANCER SOCIETY OF BALTIMORE

AMERICAN CANCER SOCIETY OF CINNCINATI

AMERICAN CANCER PF OF GEORGIA

AMERICAN CANCER SOCIETY OF MARYLAND

AMERICAN CANCER SOCIETY OF OHIO

CHILDREN’S CANCER SOCIETY OF TEXAS

Bulletin No. 2023–30

If on the other hand a suit for declaratory judgment has been timely filed,

contributions from individuals and organizations described in section 170(c)(2)

that are otherwise allowable will continue

to be deductible. Protection under section

7428(c) would begin on July 24, 2023 and

would end on the date the court first determines the organization is not described

in section 170(c)(2) as more particularly

set for in section 7428(c)(1). For individual contributors, the maximum deduction

protected is $1,000, with a husband and

wife treated as one contributor. This benefit is not extended to any individual, in

whole or in part, for the acts or omissions

of the organization that were the basis for

revocation.

367

LOCATION

New York, NY

New York NY

New York, NY

July 24, 2023

Deletions From Cumulative

List of Organizations,

Contributions to Which are

Deductible Under Section

170 of the Code

Announcement 2023-20

Table of Contents

The Internal Revenue Service has

revoked its determination that the organizations listed below qualify as organizations described in sections 501(c)(3) and

170(c)(2) of the Internal Revenue Code of

1986.

Generally, the IRS will not disallow

deductions for contributions made to a

listed organization on or before the date

of announcement in the Internal Revenue

Bulletin that an organization no longer

qualifies. However, the IRS is not precluded from disallowing a deduction for

any contributions made after an organization ceases to qualify under section 170(c)

(2) if the organization has not timely filed

a suit for declaratory judgment under section 7428 and if the contributor (1) had

knowledge of the revocation of the ruling

or determination letter, (2) was aware that

such revocation was imminent, or (3) was

in part responsible for or was aware of the

activities or omissions of the organization

that brought about this revocation.

NAME OF ORGANIZATION

AMERICAN CANCER SOCIETY OF GREEN BAY

AMERICAN CANCER SOCIETY OF DETROIT

AMERICAN CANCER SOCIETY FOR CHILDREN OF NEW YORK

COACHELLA VALLEY CHURCH

AMERICAN CANCER FDN OF BROOKLYN

AMERICAN CANCER FDN OF COLUMBUS INC.

AMERICAN CANCER FDN OF AMERICA INC

AMERICAN CANCER FDN OF GEORGIA

AMERICAN CANCER FDN OF GREEN BAY INC.

AMERICAN CANCER FDN OF FRESNO

July 24, 2023

368

If on the other hand a suit for declaratory judgment has been timely filed,

contributions from individuals and organizations described in section 170(c)(2)

that are otherwise allowable will continue

to be deductible. Protection under section

7428(c) would begin on July 24, 2023 and

would end on the date the court first determines the organization is not described

in section 170(c)(2) as more particularly

set for in section 7428(c)(1). For individual contributors, the maximum deduction

protected is $1,000, with a husband and

wife treated as one contributor. This benefit is not extended to any individual, in

whole or in part, for the acts or omissions

of the organization that were the basis for

revocation.

Effective Date of

Revocation

01/01/2021

01/01/2017

01/01/2021

LOCATION

STATEN ISLAND, NY

SAN JOSE, CA

STATEN ISLAND, NY

Bulletin No. 2023–30

Notice of Proposed

Rulemaking

Corporate Bond Yield

Curve for Determining

Present Value

REG-124123-22

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION:

Notice

Proposed

Rulemaking and Notice of Public Hearing.

SUMMARY: This document sets forth

proposed regulations specifying the methodology for constructing the corporate

bond yield curve that is used to derive the

interest rates used in calculating present

value and making other calculations under

a defined benefit plan, as well as for discounting unpaid losses and estimated salvage recoverable of insurance companies.

These regulations affect participants in,

beneficiaries of, employers maintaining,

and administrators of certain retirement

plans, as well as insurance companies.

DATES: Written or electronic comments must be received by August 22,

2023. A public hearing on this proposed

regulation has been scheduled for August

30, 2023 at 10:00 a.m. ET. Requests to

speak and outlines of topics to be discussed

at the public hearing must be received

by August 22, 2023. If no outlines are

received by August 22, 2023, the public

hearing will be cancelled. Requests to

attend the public hearing must be received

by 5:00 p.m. ET on August 28, 2023. The

public hearing will be made accessible to

people with disabilities. Requests for special assistance during the public hearing

must be received by August 25, 2023.

ADDRESSES: Commenters are strongly

encouraged to submit public comments

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

(indicate IRS and REG-124123-22) by

following the online instructions for submitting comments. Requests for a public

hearing must be submitted as prescribed

in the “Comments and Requests for a

Public Hearing” section. Once submitted

to the Federal eRulemaking Portal, comments cannot be edited or withdrawn. The

Department of the Treasury (Treasury

Department) and the IRS will publish for

public availability any comments submitted to the IRS’s public docket. Send paper

submissions to: CC:PA:LPD:PR (REG124123-22), room 5203, Internal Revenue

Service, P.O. Box 7604, Ben Franklin

Station, Washington, DC 20044.

FOR FURTHER INFORMATION

CONTACT: Concerning the regulations,

Arslan Malik or Linda S. F. Marshall at

(202) 317-6700 (not a toll-free number);

concerning submissions of comments, the

hearing, and/or to be placed on the building access list to attend the hearing, Vivian

Hayes at (202) 317-5306 (not a toll-free

number) or by sending an email to publichearings@irs.gov (preferred).

SUPPLEMENTARY INFORMATION:

Background

Section 412 of the Internal Revenue

Code (Code) prescribes minimum funding

requirements for defined benefit pension

plans. Section 430 specifies the minimum

funding requirements that apply generally to defined benefit plans that are not

multiemployer plans.1 For a plan subject

to section 430, section 430(a) defines the

minimum required contribution for a plan

year by reference to the plan’s funding target for the plan year. Under section 430(d)

(1), a plan’s funding target for a plan year

generally is the present value of all benefits accrued or earned under the plan as of

the first day of that plan year.

Section 430(h)(2) provides rules

regarding the interest rates to be used

under section 430. Section 430(h)(2)

(B) provides that a plan’s funding target

and target normal cost for a plan year are

determined using three interest rates: (1)

the first segment rate, which applies to

benefits reasonably determined to be payable during the 5-year period beginning

on the valuation date; (2) the second segment rate, which applies to benefits reasonably determined to be payable during

the next 15-year period; and (3) the third

segment rate, which applies to benefits

reasonably determined to be paid after

that 15‑year period. Under section 430(h)

(2)(C)(i) through (iii), each of these segment rates is determined for a month on

the basis of the corporate bond yield curve

for the month, taking into account only

that portion of the yield curve that is based

on bonds maturing during the period for

which the segment rate is used.

Section 430(h)(2)(C)(iv), which was

added to the Code in 2012 by section

40211 of the Moving Ahead for Progress in

the 21st Century Act, Pub. L.112-141, 126

Stat. 405, and has been modified several

times since then (most recently in 2021

by section 80602 of the Infrastructure

Investment and Jobs Act, Pub. L. 117-58,

135 Stat. 429), provides interest rate stabilization rules under which the segment

rates are constrained by reference to the

25-year average segment rates. Under section 430(h)(2)(C)(iv), if a segment rate for

a month is less than the applicable minimum percentage, or more than the applicable maximum percentage, of the average

of the corresponding segment rates for

years in the 25-year period ending with

September 30 of the calendar year preceding the calendar year in which the plan

year begins, then the segment rate for that

month is equal to the applicable minimum

percentage or the applicable maximum

percentage of the corresponding 25-year

average segment rate, whichever is closest. The last sentence of section 430(h)(2)

(C)(iv)(I) provides that any 25-year average segment rate that is less than 5 percent

is deemed to be 5 percent.

Under section 430(h)(2)(D)(i), the term

“corporate bond yield curve” means, with

respect to any month, a yield curve prescribed by the Secretary for the month

that reflects the average, for the 24-month

period ending with the month preceding

such month, of monthly yields on investment grade corporate bonds with varying

maturities and that are in the top 3 quality

Section 302 of the Employee Retirement Income Security Act of 1974, Pub. L. No. 93-406, 88 Stat. 829 (1974), as amended (ERISA) sets forth funding rules that are parallel to those in

section 412 of the Code, and section 303 of ERISA sets forth additional funding rules for defined benefit plans (other than multiemployer plans) that are parallel to those in section 430 of the

Code. Pursuant to section 101 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App., as amended, the Secretary of the Treasury has interpretive jurisdiction over the subject matter addressed

in these regulations for purposes of ERISA, as well as the Code. Thus, these Treasury regulations issued under section 430 of the Code also apply for purposes of section 303 of ERISA.

Bulletin No. 2023–30

369

July 24, 2023

levels available. Section 430(h)(2)(D)(ii)

permits a plan sponsor to elect to use the

corporate bond yield curve, rather than

the segment rates, to determine the plan’s

minimum required contribution. The yield

curve that applies pursuant to this election

is determined without regard to 24-month

averaging. This election, once made, may

be revoked only with the consent of the

Secretary.

Under section 430(h)(2)(F), the

Secretary is instructed to publish for each

month the corporate bond yield curve

(without regard to the 24‑month averaging

specification), the segment rates described

in section 430(h)(2)(C), and the 25‑year

averages of segment rates used under

section 430(h)(4)(C)(iv). The Secretary

is also instructed to publish a description

of the methodology used to determine

the yield curve and segment rates which

is sufficiently detailed to enable plans to

make reasonable projections regarding the

yield curve and segment rates for future

months based on the plan’s projection of

future interest rates.

Section 1.430(h)(2)-1 was issued in

2009 to provide rules regarding the interest rates to be used under section 430. T.D.

9467, 74 FR 53004. Section 1.430(h)(2)1(d) provides that the methodology for

determining the yield curve is provided in

guidance that is published in the Internal

Revenue Bulletin. Notice 2007-81, 2007-2

CB 899, describes the methodology

used by the Department of the Treasury

(Treasury Department) to develop the corporate bond yield curve. Section 1.430(h)

(2)-1(d) also provides that the yield curve

for each month will be set forth in guidance published in the Internal Revenue

Bulletin. Monthly IRS notices set forth the

corporate bond yield curve for the month

(without regard to the 24‑month averaging

specification), the section 430 segment

interest rates (before and after adjustment

pursuant to section 430(h)(3)(C)(iv)), and

the 25-year average segment rates (which

are updated annually).

Section 417(e)(3) provides assumptions for determining minimum present

value for certain purposes, including the

determination of a lump-sum that is the

present value of an annuity, and prescribes

an applicable interest rate for this purpose. Section 417(e)(3)(C) provides that

the term “applicable interest rate” means

the adjusted first, second, and third segment rates applied under rules similar to

the rules of section 430(h)(2)(C) for the

month before the date of a distribution or

such other time as the Secretary may prescribe by regulations. However, for purposes of section 417(e)(3), these rates are

determined without regard to the segment

rate stabilization rules of section 430(h)(2)

(C)(iv). In addition, under section 417(e)

(3)(D), these rates are determined using

the average yields for a month, rather than

the 24-month average used under section

430(h)(2)(D).

Under section 846(c), the Secretary

determines the applicable interest rate to

be used by insurance companies to discount unpaid losses on the basis of the

corporate bond yield curve (as defined in

section 430(h)(2)(D)(i), determined by

substituting “60-month period” for “24month period”). Under §1.832-4(c), the

applicable interest rate determined under

section 846(c) is also used by insurance

companies to discount estimated salvage

recoverable, unless the Commissioner

publishes applicable discount factors to be

used for that purpose.

Explanation of Provisions

These proposed regulations specify the

methodology used to develop the corporate bond yield curve. This methodology

is generally the same as the methodology

set forth in Notice 2007-81 but would

include two refinements to take into

account changes in the bond market since

2007. The proposed regulations would

also amend the existing regulations under

section 430(h)(2) to reflect the addition

of the interest rate stabilization rules of

section 430(h)(2)(C)(iv) and to eliminate

transition rules that applied to plan years

beginning before January 1, 2010.

Under these proposed regulations, as

under Notice 2007-81, the monthly corporate bond yield curve for a month is

defined as the set of spot rates at specified

durations. The specified durations are at

6-month intervals ranging from 6 months

through 100 years, and the spot rate at a

duration is the yield (when compounded

semiannually) for a bond that matures

at that duration with a single payment at

maturity. Each spot rate at a specified duration on the monthly corporate bond yield

curve for a month is equal to the arithmetic average for each business day of that

month of the spot rates at that duration on

the daily corporate bond yield curves.

Under these proposed regulations, as

under Notice 2007-81, each spot rate on

the daily corporate bond yield curve is calculated using a discount function, which is

derived from a forward interest rate function (that is, the projected instantaneous

interest rate at each point in time). The

forward interest rate function is defined

by the selection of five coefficients of

B-splines that are determined using the

bond data and taking into account certain

adjustment factors.

Two of those adjustment factors, which

are included in the methodology set forth

in Notice 2007-81, take into account the

ratings of the bonds used to develop the

daily corporate bond yield curve. The third

adjustment factor, which was not included

in the methodology set forth in that notice,

is a hump adjustment variable that peaks

at 20 years maturity2 and serves to capture

the effects of the hump in spot rates that is

often seen around 20 years maturity.

These proposed regulations generally adopt the specification for the bond

data set for a month in Notice 2007-81

but modify an exclusion from that bond

data set. Under Notice 2007-81 and the

proposed regulations, subject to certain

exclusions, the bonds that are used to construct the daily corporate bond yield curve

for a business day are bonds with the

following characteristics: (1) maturities

longer than a ½ year,3 (2) at least two payment dates, (3) designated as corporate,

The hump adjustment variable is a mathematical function that is a cubic spline in the interval from 10 years maturity through 30 years maturity made up of two polynomials with a smooth

junction at 20 years maturity.

Under Notice 2007-81 and the proposed regulations, the data for durations equal to or below ½ year that is used to construct the daily corporate bond yield curve consists of AA financial

and AA nonfinancial commercial paper rates, as reported by the Federal Reserve Board.

July 24, 2023

370

Bulletin No. 2023–30

(4) high quality ratings (that is, AAA,

AA, or A) as of that business day from

the nationally recognized statistical rating

organizations,4 (5) at least $250 million in

par amount outstanding on at least one day

during the month, (6) payment of fixed

nominal semiannual coupons and the principal amount at maturity, and (7) maturity

not later than 30 years after that day.

Under Notice 2007-81 and these proposed regulations, the following categories of bonds are excluded from the bond

data set: (1) bonds not denominated in

U.S. dollars, (2) bonds not issued by U.S.

corporations, (3) bonds that are capital

securities (sometimes referred to as hybrid

preferred stock), (4) bonds having variable

coupon rates, (5) convertible bonds, (6)

bonds issued by a government-sponsored

enterprise (such as the Federal National

Mortgage Association), (7) asset-backed

bonds, (8) putable bonds, (9) bonds with

sinking funds, and (10) bonds with a par

amount outstanding below $250 million

for the day for which the daily yield curve

is constructed.

Notice 2007-81 also excluded callable

bonds (unless the call feature is makewhole) from the bond data set used to

construct the daily corporate bond yield

curve. The proposed regulations generally

retain this exclusion but narrow it. Under

the proposed regulations, this exclusion

does not apply if the call feature is exercisable only during the last year before maturity. This type of call feature has recently

become more widely used, and the inclusion of bonds with this feature in the data

set will result in a significantly larger pool

of bonds that more accurately reflects the

market for high quality corporate bonds.

Proposed Applicability Date

The rules in the proposed regulations

are proposed to apply for months that

begin more than 15 days after the date

final regulations specifying the methodology for constructing the corporate bond

yield curve are published in the Federal

Statement of Availability of IRS

Documents

IRS Revenue Rulings, Revenue

Procedures, and Notices cited in this

document are published in the Internal

Revenue Bulletin (or Cumulative Bulletin)

and are available from the Superintendent

of Documents, U.S. Government Printing

Office, Washington, DC 20402, or by visiting the IRS website at www.irs.gov.

Special Analyses

Regulatory Planning and Review

(Executive Orders 12866 and 13563)

These 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 regarding

review of tax regulations.

Regulatory Flexibility Act (5 U.S.C.

chapter 6).

It is hereby certified that this rule will

not have a significant economic impact on

a substantial number of small entities. The

vast majority of plan sponsors of defined

benefit plans that are subject to section

430 choose to use the segment rates under

section 430(h)(2)(C), rather than the corporate bond yield curve under section

430(h)(2)(D), to determine minimum

required contributions. Furthermore, most

of the plan sponsors who choose to use the

corporate bond yield curve for this purpose are not small employers. Therefore,

the methodology set forth in the proposed

regulations for constructing the corporate

bond yield curve will not have a significant effect on minimum required contributions for small employers. In addition,

the insurance companies that are required

to use a modified version of the corporate bond yield curve to discount unpaid

losses are typically not small employers. Accordingly, a regulatory flexibility

analysis under the Regulatory Flexibility

Act is not required.

Pursuant to section 7805(f) of the Code,

these proposed regulations will be submitted to the Chief Counsel for Advocacy

of the Small Business Administration

for comment on their impact on small

business.

Comments and Requests for a Public

Hearing

Before these proposed amendments to

the regulation are adopted as a final regulation, consideration will be given to comments regarding the notice of proposed

rulemaking that are submitted timely

to the IRS as prescribed in the preamble under the ADDRESSES section. The

Treasury Department and the IRS request

comments on all aspects of the proposed

regulation. All comments will be made

available at www.regulations.gov. Once

submitted to the Federal eRulemaking

Portal, comments cannot be edited or

withdrawn.

A public hearing has been scheduled for

August 30, 2023 beginning at 10 a.m. ET

in the Auditorium of the Internal Revenue

Building, 1111 Constitution Avenue NW,

Washington, DC. Due to building security procedures, visitors must enter at the

Constitution Avenue entrance. In addition,

all visitors must present photo identification to enter the building. Because of

access restrictions, visitors will not be

admitted beyond the immediate entrance

area more than 30 minutes before the hearing starts. Participants may alternatively

attend the public hearing by telephone. .

The rules of 26 CFR §601.601(a)(3)

apply to the hearing. Persons who wish

to present oral comments must submit

an outline of the topics to be addressed

and the time to be devoted to each topic

by August 22, 2023, as prescribed in

the preamble under the ADDRESSES

section. A period of 10 minutes will be

allocated to each person for making comments. An agenda showing the scheduling

of the speakers will be prepared after the

Although section 939A(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376, generally prohibits federal agencies from issuing regulations

that apply a standard that is based on credit ratings from statistical rating organizations, this prohibition does not apply to the construction of the daily corporate bond yield curve because the

use of those credit ratings is required by section 430(h)(2)(D) of the Code.

Bulletin No. 2023–30

371

July 24, 2023

deadline for receiving outlines has passed.

Copies of the agenda will be available

free of charge at the hearing. If no outline

of the topics to be discussed at the hearing

is received by August 22, 2023, the public hearing will be cancelled. If the public

hearing is cancelled, a notice of cancellation of the public hearing will be published in the Federal Register.

Individuals who want to testify in

person at the public hearing must send

an email to publichearings@irs.gov to

have your name added to the building

access list. The subject line of the email

must contain the regulation number REG124123-22 and the language TESTIFY In

Person. For example, the subject line may

say: Request to TESTIFY In Person at

Hearing for REG-124123-22.

Individuals who want to testify by

telephone at the public hearing must send

an email to publichearings@irs.gov to

receive the telephone number and access

code for the hearing. The subject line

of the email must contain the regulation

number REG-124123-22 and the language

TESTIFY Telephonically. For example, the subject line may say: Request to

TESTIFY Telephonically at Hearing for

REG-124123-22.

Individuals who want to attend the

public hearing in person without testifying must also send an email to publichearings@irs.gov to have your name added to

the building access list. The subject line

of the email must contain the regulation

number REG-124123-22 and the language

ATTEND In Person. For example, the

subject line may say: Request to ATTEND

Hearing In Person for REG-124123-22.

Requests to attend the public hearing must

be received by 5:00 p.m. EST on August

28, 2023.

Individuals who want to attend the

public hearing by telephone without

testifying must also send an email to

publichearings@irs.gov to receive the

telephone number and access code for

the hearing. The subject line of the email

must contain the regulation number REG124123-22 and the language ATTEND

Hearing Telephonically. For example, the

subject line may say: Request to ATTEND

Hearing Telephonically for REG-12412322. Requests to attend the public hearing

must be received by 5:00 p.m. EST on

August 28, 2023.

July 24, 2023

Hearings will be made accessible to

people with disabilities. To request special

assistance during a hearing please contact

the Publications and Regulations Branch

of the Office of Associate Chief Counsel

(Procedure and Administration) by sending an email to publichearings@irs.

gov (preferred) or by telephone at (202)

317-6901 (not a toll-free number) at least

August 25, 2023.

Drafting Information

The principal authors of these regulations are Arslan Malik and Linda S.

F. Marshall of the Office of Associate

Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes). However, other personnel from

the Treasury Department and the IRS

participated in the development of these

regulations.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the

Regulations

Accordingly, the Treasury Department

and the IRS propose to amend 26 CFR

part 1 as follows:

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. Amend § 1.430(h)(2)-1 as

follows:

1. Amend paragraph (a)(1) by removing the phrase “and transition rules” in the

last sentence.

2. Revise paragraph (b)(2).

3. Amend paragraph (c)(1) by removing the last sentence.

4. Amend paragraphs (c)(2)(i), (c)(2)

(ii), and (c)(2)(iii) by removing the phrase

“under the transition rule of paragraph (h)

(4) of this section” and adding the phrase

“under the interest rate stabilization rules

in section 430(h)(2)(C)(iv)” in its place.

5. Revise paragraph (d).

6. Remove paragraph (e)(3) and redesignate paragraph (e)(4) as paragraph (e)

372

(3) and paragraph (e)(5) as paragraph (e)

(4).

7. In newly redesignated paragraph (e)

(3)(ii), remove the phrase “this paragraph

(e)(4)” and add the phrase “this paragraph

(e)(3)” in its place.

8. Revise paragraph (h).

The revisions and additions read as

follows:

§1.430(h)(2)-1 Interest rates used to

determine present value.

*****

(b) * * *

(2) In the case of benefits expected to

be payable during the 5-year period beginning on the valuation date for the plan

year, the interest rate used in determining

the present value of the benefits that are

included in the target normal cost and

the funding target for the plan is the first

segment rate with respect to the applicable month, as described in paragraph (c)

(2)(i) of this section.

*****

(d) Monthly corporate bond yield

curve—(1) In general—(i) Construction

of monthly corporate bond yield curve.

For purposes of this section, the monthly

corporate bond yield curve for a month is

defined as the set of spot rates at specified

durations. The specified durations are at

6-month intervals ranging from 6 months

through 100 years and the spot rate at a

duration is the yield (when compounded

semiannually) for a bond that matures

at that duration with a single payment at

maturity. The monthly corporate bond

yield curve is constructed as the average

of the spot rates from the set of daily corporate bond yield curves as specified in

paragraph (d)(1)(ii) of this section. Each

daily corporate bond yield curve is constructed using the methodology set forth

in paragraph (d)(2) of this section based

on the data described in paragraph (d)(3)

of this section. Note 1 to paragraph (d)(1)

of this section, the yield curve for each

month will be published in the Internal

Revenue Bulletin. See § 601.601(d) of

this chapter.

(ii) Monthly corporate bond yield curve

constructed through averaging. Each spot

rate at a specified duration on the monthly

corporate bond yield curve for a month is

equal to the arithmetic average, for each

Bulletin No. 2023–30

business day of that month, of the spot

rates at that duration on the daily corporate bond yield curves.

(2) Construction of the daily corporate

bond yield curve—(i) In general—(A)

Calculation of spot rates. Each spot rate

at duration t on a daily corporate bond

yield curve is calculated from the discount

function described in paragraph (d)(2)(i)

(B) of this section and the hump adjustment variable described in paragraph (d)

(2)(iii)(D) of this section.

(B) Derivation of discount function.

The discount function for a day at duration

t is derived from the forward interest rate

function as described in paragraph (d)(2)

(ii) of this section (denoted f(z)) using the

following equation:



d (t ) = exp −





∫ f ( z)dz

(ii) Determination of forward interest

rates—(A) In general. The forward interest rate function used to derive the discount function is determined as a series of

cubic polynomials (referred to as a cubic

spline) that have a smooth junction at

specified knot points (maturities of 0, 1.5,

3, 7, 15, and 30 years). The requirement

that the polynomials have a smooth junction at a knot point is satisfied if the two

polynomials that are meeting at the knot

have the same value, the same derivative,

and the same second derivative at that

knot point.

(B) Constraints on the forward interest

function. The following three constraints

are placed on the forward interest rate

function—

(1) The second derivative of the function is set to zero at maturity zero.

(2) The value of the forward interest

rate function at and after 30 years is constrained to equal its average value from 15

to 30 years.

(3) The derivative of the forward interest rate function is set to zero at maturity

30 years.

(iii) Parameters for daily bond price

model—(A) B-spline coefficients. The

assumed cubic spline for the forward

interest rate function can be described as

a linear combination of B-splines, with

five parameters, which are determined

taking into account the two coefficients

for the bond-quality adjustment variables

Bulletin No. 2023–30

described in paragraphs (d)(2)(iii)(B) and

the hump adjustment variable described

in paragraph (d)(2)(iii)(D) of this section.

The five parameters and three coefficients are determined using the bond data

weighted as described in paragraph (d)(2)

(iv) of this section. After this weighting

of the bond data, the five parameters and

three coefficients are chosen to minimize

the sum of the squared differences between

the bid price for each of the bonds (or ask

price for commercial paper) and the price

estimated for each of those bonds determined using the specified parameters and

coefficients, and taking into account the

bond’s coupon rate, number of years until

maturity, and rating.

(B) Adjustment factor for share of

bonds that are AA-rated. The first adjustment variable is based on the proportion

of bonds that are rated AA within the universe of bonds in the data set that are rated

AA or AAA, weighted by par value. In

the case of an AAA-rated bond the adjustment variable described in this paragraph

(d)(2)(iii)(B) is equal to the product of

the proportion described in the preceding

sentence and the number of years until

maturity for the bond. In the case of an

AA-rated bond the adjustment variable

described in this paragraph (d)(2)(iii)(B)

is equal to the product of (1- that proportion) and the number of years until maturity for the bond. In the case of an A‑rated

bond, the adjustment variable described in

this paragraph (d)(2)(iii)(B) is set to 0.

bonds that are A‑rated. The second adjustment variable is based on the proportion of

bonds rated A within the universe of bonds

in the data set, weighted by par value.

In the case of an AAA-rated bond or an

AA-rated bond, the adjustment variable

described in this paragraph (d)(2)(iii)(C)

is equal to the product of the proportion

described in the preceding sentence and

the number of years until maturity for the

bond. In the case of an A-rated bond the

adjustment variable described in this paragraph (d)(2)(iii)(C) is equal to the product

of (1- that proportion) and the number of

years until maturity for the bond.

(D) Hump adjustment variable. The

hump adjustment variable is a mathematical function that is a cubic spline in the

interval from 10 years maturity through

373

30 years maturity made up of two polynomials with a smooth junction (as described

in paragraph (d)(2)(ii)(A) of this section)

at 20 years maturity. The spline rises from

zero at 10 years maturity to 1.0 at 20 years

maturity, then falls back down to zero at

30 years maturity. The hump adjustment

variable is zero for maturities less than 10

years and maturities greater than 30 years.

(iv) Weighting of bond data. The bond

data are weighted in two steps. First, equal

weights are assigned to the commercial

paper rates at the short end of the curve,

and the par amounts outstanding of all the

bonds are rescaled so that their sum equals

the sum of the weights for commercial

paper. Then, the squared price difference

for each bond is multiplied by the bond’s

rescaled par amount outstanding, and the

squared difference for each commercial

paper rate is multiplied by the commercial

paper weight. In the second stage, applicable for bonds with duration greater than 1,

the weighted squared price difference for

each bond from the first stage is divided

by the bond’s duration.

(3) Data used—(i) In general. Except

as otherwise provided in this paragraph

(d)(3), the bonds that are used to construct

the daily corporate bond yield curve for

a business day are bonds with maturities

longer than a ½ year, with at least two

payment dates, and that:

(A) Are designated as corporate;

(B) Have high quality ratings (AAA,

AA, or A) as of that business day from

the nationally recognized statistical rating

organizations;

amount outstanding on at least one day

during the month;

(D) Pay fixed nominal semiannual coupons and the principal amount at maturity;

and

(E) Mature not later than 30 years after

that business day.

(ii) Excluded bonds. The following

types of bonds are not used to construct

the daily corporate bond yield curve for a

date:

(A) Bonds not denominated in U.S.

dollars;

(B) Bonds not issued by U.S.

corporations;

(sometimes referred to as hybrid preferred

stock);

July 24, 2023

(D) Bonds having variable coupon

rates;

(E) Convertible bonds;

(F) Bonds issued by a government-sponsored enterprise (such as the

Federal National Mortgage Association);

(G) Asset-backed bonds;

(H) Callable bonds unless the call

feature is make-whole or the call feature

is exercisable only during the last year

before maturity;

(I) Putable bonds;

(J) Bonds with sinking funds; and

July 24, 2023

(K) Bonds with a par amount outstanding below $250 million for the day for

which the daily yield curve is constructed.

(iii) Durations equal to or below a ½

year. The data for durations equal to or

below a ½ year that is used to construct

the daily corporate bond yield curve consists of AA financial and AA nonfinancial

commercial paper rates, as reported by the

Federal Reserve Board.

****

(h) Applicability date of regulations. This

section applies to months that begin more

374

than 15 days after the date final regulations

issued pursuant to these proposed regulations are published in the Federal Register.

For rules that apply for earlier periods, see

§1.430(h)(2)-1, as it appeared in the April 1,

2022, edition of 26 CFR part 1.

Douglas W. O’Donnell,

Deputy Commissioner for Services

and Enforcement.

(Filed by the Office of the Federal Register June 22,

2023, 8:45 a.m., and published in the issue of the

Federal Register for June 23, 2023, 88 FR 41047)

Bulletin No. 2023–30

Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

effect:

Amplified describes a situation where

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

being extended to apply to a variation of

the fact situation set forth therein. Thus, if

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

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

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

caused, or may cause, some confusion. It

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

Distinguished describes a situation

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

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

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

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

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

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

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

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

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

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

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

Suspended is used in rare situations

to show that the previous published rulings will not be applied pending some

future action such as the issuance of new

or amended regulations, the outcome of

cases in litigation, or the outcome of a

Service study.

Abbreviations

The following abbreviations in current

use and formerly used will appear in

material published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

Bulletin No. 2023–30

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

July 24, 2023

Numerical Finding List1

Bulletin 2023–30

Announcements:

2023-18, 2023-30 I.R.B. 366

2023-19, 2023-30 I.R.B. 367

2023-20, 2023-30 I.R.B. 368

Notices:

2023-29, 2023-29 I.R.B. 1

2023-45, 2023-29 I.R.B. 317

2023-47, 2023-29 I.R.B. 318

2023-37, 2023-30 I.R.B. 359

2023-50, 2023-30 I.R.B. 361

2023-51, 2023-30 I.R.B. 362

Proposed Regulations:

REG-124123-22, 2023-30 I.R.B. 369

Treasury Decisions:

9976, 2023-30 I.R.B. 354

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2023–27 through 2023–52 is in Internal Revenue Bulletin

2023–52, dated December 27, 2023.

July 24, 2023

Bulletin No. 2023–30

Finding List of Current Actions on

Previously Published Items1

Bulletin 2023–30

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2023–27 through 2023–52 is in Internal Revenue Bulletin

2023–52, dated December 27, 2023.

Bulletin No. 2023–30

iii

July 24, 2023

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue

Bulletins are available at www.irs.gov/irb/.

We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it,

we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page

www.irs.gov) or write to the Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave.

NW, IR-6230 Washington, DC 20224.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.