Bulletin No. 2024–45

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Bulletin No. 2024–45

November 4, 2024

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE

Rev. Proc. 2024-40, page 1100.

This revenue procedure sets forth inflation-adjusted items

for 2025 for various Code provisions as in effect on October 22, 2024. The inflation adjusted items for the Code

sections set forth in section 2 of this revenue procedure are

generally determined by reference to § 1(f) of the Code. To

the extent amendments to the Code are enacted for 2025

after October 22, 2024, taxpayers should consult additional guidance to determine whether these adjustments

remain applicable for 2025.

EMPLOYEE PLANS

Notice 2024-76, page 1089.

This notice sets forth updates on the corporate bond

monthly yield curve, the corresponding spot segment

rates for September 2024 used under § 417(e)(3)(D), the

24-month average segment rates applicable for October

2024, and the 30-year Treasury rates, as reflected by the

application of § 430(h)(2)(C)(iv).

Notice 2024-77, page 1093.

This notice provides guidance in the form of questions and

answers with respect to sections 414(aa) and 402(c)(12)

of the Code as added by section 301(b) of the SECURE

2.0 Act. Section 414(aa) addresses the requirements of

sections 401(a) and 403 with respect to inadvertent benefit overpayments, and section 402(c)(12) addresses the

treatment of certain inadvertent benefit overpayments as

eligible rollover distributions.

T.D. 10008, page 1082.

This final regulation provides rules for determining whether

certain retirement plan and annuity distributions are subject

to income tax withholding pursuant to § 3405 and treats a

Finding Lists begin on page ii.

military or diplomatic post office address (such as an APO,

a DPO, or an FPO address) as an address within the United

States for purposes of the restriction on elections out of

withholding that applies to overseas payments under §

3405(e)(13).

EXEMPT ORGANIZATION, INCOME TAX

Rev. Proc. 2024-39, page 1097.

This revenue procedure grants certain applicable entities

under section 6417(d)(1)(A) of the Internal Revenue Code

an automatic six-month extension of time to file an original or superseding Form 990-T, Exempt Organization

Business Income Tax Return (and proxy tax under section

6033(e) of the Code), with any other relevant schedules

and forms (such as Form 3800, General Business Credit,

and any relevant source credit forms), to make an elective

payment election as provided under section 6417(d)(3) and

§1.6417-2(b).

In addition to the automatic six-month extension of time

to file for certain applicable entities, this revenue procedure allows certain applicable entities to make the elective

payment election on a paper-filed Form 990-T if they follow

certain procedural requirements. The document also provides a procedure allowing for assistance on processing an

elective payment election for applicable entities otherwise

eligible for relief that previously filed a return and received a

notice that their election was ineffective because the return

on which it was made was filed after the due date of the

return.

EXCISE TAX, INCOME TAX, SPECIAL

ANNOUNCEMENT

Notice 2024-74, page 1089.

Notice 2024-74 provides additional guidance to taxpayers

using the safe harbors in Notice 2024-37 with respect to

the sustainable aviation fuel (SAF) credit. Notice 2024-74

provides that a taxpayer using a 40BSAF-GREET 2024 safe

harbor to calculate its emissions reduction percentage

with respect to claims that relate to the sale or use of a

SAF qualified mixture after the effective date of the notice

must use the newly released October 2024 version of the

40BSAF-GREET 2024 model.

INCOME TAX

Rev. Rul. 2024-24, page 1086.

Federal rates; adjusted federal rates; adjusted federal longterm rate, and the long-term tax exempt rate. For purposes

of sections 382, 1274, 1288, 7872 and other sections of

the Code, tables set forth the rates for November 2024.

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.

November 4, 2024

Bulletin No. 2024–45

Part I

26 CFR 31.3405(e)-1: Questions and answers relating to withholding on pensions, annuities, and certain other deferred income

TD 10008

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 31

Withholding on Certain

Distributions under

Section 3405(a) and (b)

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulation.

SUMMARY: This document contains

a final regulation regarding income tax

withholding on certain periodic payments and nonperiodic distributions

from employer deferred compensation

plans, individual retirement plans, and

commercial annuities that are not eligible rollover distributions. The regulation

addresses a payor’s obligation to withhold income taxes in the circumstances

in which those payments or distributions

are made to payees outside of the United

States and affects payors and payees of

those periodic payments and nonperiodic

distributions.

DATES: Effective date. This regulation is

effective October 21, 2024.

Applicability date. This regulation applies

with respect to payments and distributions

made on or after January 1, 2026. However, taxpayers may apply it to earlier payments and distributions.

FOR FURTHER INFORMATION

CONTACT: Jeremy Lamb at (202) 3174575 or Isaac Stein at (202) 317-6320 (not

toll-free numbers).

SUPPLEMENTARY INFORMATION:

Authority

Section 7805(a) authorizes the Secretary to prescribe all needful rules and regulations for the enforcement of the Code.

Background

Section 3405(a)(1) of the Internal Revenue Code of 1986 (Code) requires the

payor of any periodic payment to withhold

income tax from the payment. Under section 3405(a)(2), an individual generally

may elect not to have section 3405(a)(1)

apply with respect to periodic payments

made to the individual. Section 3405(b)(1)

requires the payor of any nonperiodic distribution to withhold income tax from the

distribution. Under section 3405(b)(2), an

individual generally may elect not to have

section 3405(b)(1) apply with respect to

any nonperiodic distribution.

Section 3405(e)(2) defines a periodic

payment as a designated distribution that

is an annuity or similar periodic payment.

Section 3405(e)(3) defines a nonperiodic distribution as any designated distribution that is not a periodic payment.

A designated distribution is defined in

section 3405(e)(1) as generally any distribution or payment from or under an

employer deferred compensation plan,

an individual retirement plan (as defined

in section 7701(a)(37) of the Code), or

a commercial annuity. For this purpose,

an employer deferred compensation plan

is defined in section 3405(e)(5) as any

pension, annuity, profit sharing, or stock

bonus plan or other plan deferring the

receipt of compensation, and a commercial annuity is defined in section 3405(e)

(6) as an annuity, endowment, or life

insurance contract issued by an insurance

company licensed to do business under

the laws of any State.

Section 3405(e)(1)(B) identifies certain

amounts or payments that are not a “designated distribution” for purposes of section

3405 withholding. Under section 3405(e)

(1)(B)(iii), any amount that is subject to

withholding under subchapter A of chapter 3 of the Code (relating to withholding

of tax on nonresident aliens and foreign

corporations) by the person paying such

amount or which would be so subject but

for a tax treaty is not a designated distribution.

Section 3405(e)(13)(A) provides generally that, in the case of any periodic payment or nonperiodic distribution that is “to

be delivered outside of the United States

and any possession of the United States,”

no election may be made under section

3405(a)(2) or (b)(2) with respect to such

payment, with the result that withholding

may not be waived. Section 3405(e)(13)

(B) provides that section 3405(e)(13)(A)

does not apply if the recipient certifies to

the payor, in such manner as the Secretary

of the Treasury may prescribe, that the

recipient is not (i) a United States citizen

or a resident alien of the United States, or

(ii) an individual to whom section 877 of

the Code applies. Section 877(h) provides

that section 877 applies to certain nonresident alien individuals whose expatriation

date, as defined in section 877A(g)(3), is

before June 17, 2008.

Notice 87-7, 1987-1 CB 420, provides

guidance under section 3405(e)(13)(A) to

payors of designated distributions with

respect to their duty to withhold income

tax from such distributions. The notice

applies to designated distributions for the

following categories of payees: (1) payees who have provided the payors with

a residence address outside of the United

States;1 (2) payees who have provided the

payors with a residence address within the

United States; and (3) payees who have

not provided the payors with a residence

address.

Notice 87-7 specifies that, if a payee

has provided the payor with a residence

address outside of the United States, the

payor is required to withhold income

tax from designated distributions to the

payee. If a payee has provided the payor

with a residence address within the United

States, the payor is required to withhold

For purposes of this preamble, references to the “United States” include any possession of the United States.

November 4, 2024

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Bulletin No. 2024–45

income tax from these distributions to

the payee unless the payee has elected

no withholding in accordance with the

applicable provisions of section 3405. If

a payee has not provided the payor with a

residence address, the payor is required to

withhold income tax from designated distributions; included within this category

is a payee who has provided the payor

with an address for the payee’s nominee,

trustee, or agent without also providing

the payee’s residence address.

On May 31, 2019, the Department of

the Treasury (Treasury Department) and

the IRS published a notice of proposed

rulemaking regarding withholding on

certain periodic payments and nonperiodic distributions under section 3405

(other than eligible rollover distributions)

in the Federal Register (84 FR 25209).

No comments responsive to the notice of

proposed rulemaking were received, and

no public hearing was requested or held.

Thus, this final regulation adopts the provisions of the proposed regulation with no

modifications except for the change in the

applicability date to January 1, 2026, and

other minor changes in wording that are

nonsubstantive.

Explanation of Provisions

This document contains a final regulation under section 3405(e) that provides withholding guidance for payors

of periodic payments and nonperiodic

distributions under section 3405(a) and

(b), respectively. The regulation generally

addresses a payor’s obligation to withhold

under section 3405(a) and (b) in the following situations: (1) payments to payees

with a military or diplomatic Post Office

address; (2) payments to payees with

a residence address located within the

United States; (3) payments to payees with

a residence address located outside of the

United States or who have not provided a

residence address; and (4) payments subject to withholding under subchapter A of

chapter 3 (sections 1441 through 1446 of

the Code).

1. Payees with a Military or Diplomatic

Post Office Address

For purposes of section 3405(e)(13)

(A), the regulation treats an Army Post

Office (APO), a Fleet Post Office (FPO), or

a Diplomatic Post Office (DPO)2 address

as an address located within the United

States. In 1986, when this provision was

added to the Code by the Tax Reform Act

of 1986, Public Law 99-514 (TRA ‘86),

it was one of several provisions intended

to increase compliance with the internal

revenue laws by United States persons

resident abroad and green card holders.

The Senate Finance Committee Report

for TRA ‘86 indicates a concern, based

on data gathered by the General Accounting Office (GAO),3 that the percentage of

taxpayers who fail to file returns is substantially higher among Americans living

abroad than it is among those resident in

the United States, and that it is often difficult for the IRS to enforce compliance

by these taxpayers. S. Rep. No. 99-313, at

390 (1986).

The GAO data referred to in the legislative history does not include United

States military personnel and their families as taxpayers who are living abroad.

Johnny C. Finch, United States Citizens

Living in Foreign Countries and Not Filing Federal Income Tax Returns, United

States General Accounting Office, May

8, 1985. In addition, enforcement of

compliance by individuals receiving mail

at an APO, an FPO, or a DPO address

generally does not involve the same challenges as enforcing compliance by other

taxpayers living abroad. Because APO,

FPO, and DPO delivery destinations are

generally United States military or diplomatic facilities, taxpayers with an APO,

an FPO, or a DPO address commonly

maintain a current or former employment or contractor relationship with the

United States government. Moreover,

these addresses generally are treated as

“domestic” by the United States Postal

Service. United States Domestic Mail

Manual, 608.2.2.

For these reasons, the Treasury Department and the IRS have determined that

treating a United States military or diplomatic post office address as located

within the United States for purposes of

section 3405(e)(13)(A) is consistent with

the tax avoidance concerns underlying the

enactment of that provision. Accordingly,

the regulation provides that designated

distributions to United States military

and diplomatic personnel or their families

are not treated as delivered outside of the

United States solely because those payments or distributions are to be delivered

to an APO, an FPO, or a DPO address.

2. Payees with a Residence Address

Located Within the United States

The regulation imposes withholding

requirements on payors regarding certain

payees who have provided the payor with

a residence address located within the

United States. Under Notice 87-7, payors

are not required to withhold if a payee provides a residence address located within

the United States and the payee elects no

withholding. Notice 87-7 does not specifically address whether payors are required

to withhold when a payee provides a residence address located within the United

States, but also provides payment instructions indicating that the funds are to be

delivered outside of the United States. As

explained in the Background section of

this preamble, the mandatory withholding for amounts to be delivered outside

of the United States was enacted because

Congress was concerned about noncompliance. Section 3405(e)(13)(A) refers

to “any periodic payment or nonperiodic

distribution which is to be delivered outside of the United States.” Consistent with

the text of section 3405(e)(13)(A) and its

purpose, the regulation requires payors to

withhold in certain circumstances when

a payee provides a residence address

located within the United States but also

provides payment instructions indicating

that the funds are to be delivered outside

of the United States.

APO is associated with Army or Air Force installations. FPO is associated with Navy installations and ships. APO/FPO addresses are utilized by Department of Defense personnel, their

family members, and other authorized users. DPO provides global mail service to authorized personnel assigned to designated posts abroad.

Effective July 7, 2004, the GAO’s legal name was changed from the General Accounting Office to the Government Accountability Office.

Bulletin No. 2024–45

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November 4, 2024

3. Payees with a Residence Address

Located Outside of the United States

or Who Have not Provided a Residence

Address

Unless section 3405(e)(13)(B) (which

provides an exception for certain nonresident aliens) applies, if the payee’s residence address that is provided to the payor

is located outside of the United States, the

payor is required to withhold income tax

under section 3405 from any designated

distribution, without regard to the delivery instructions and without regard to any

attempt to elect no withholding. Thus, for

example, withholding under section 3405

would be required even if a payee with a

foreign residence address has requested

that the distribution be deposited with a

financial institution located within the

United States. Given the ease with which

the funds deposited with a financial institution in the United States can be withdrawn by a person located outside the

United States, the Treasury Department

and the IRS have concluded that the payee’s residence address is more likely to be

indicative of the place the distribution is

ultimately to be delivered than the location of the financial institution. The same

requirement to withhold income tax under

section 3405 applies if a payee has not

provided a residence address to the payor.

Furthermore, a payee who has provided

the payor with an address for the payee’s

nominee, trustee, or agent without also

providing the payee’s residence address

has not provided a residence address for

purposes of this regulation.

These rules are consistent with the

approach in Notice 87-7, which uses the

residence address of the payee in order to

determine whether a taxpayer is permitted to make an election not to have withholding apply under section 3405(a)(2) or

(b)(2). The Treasury Department and the

IRS have determined that this interpretation articulated in Notice 87-7 provides

an administrable standard that has been

relied upon for many years, is consistent

with the TRA ‘86 legislative history, and

appropriately addresses tax avoidance

concerns underlying section 3405(e)(13)

(A).4

4. Payments Subject to Withholding

under Subchapter A of Chapter 3

In accordance with section 3405(e)

(1)(B)(iii), the regulation clarifies that a

designated distribution does not include

a distribution that is subject to withholding under subchapter A of chapter 3 (or

that would be subject but for a tax treaty).

Therefore, the withholding rules under

section 3405(a) and (b) do not apply to

such a distribution. For example, section

3405(a) or (b) withholding would not

apply to a United States-source distribution to a nonresident alien individual from

a trust described in section 401(a) of the

Code. In such a case, the withholding

rules of section 1441 (within subchapter

A of chapter 3) that apply to nonresident

aliens would apply to such a distribution.

See §1.1441-1(b)(1).

Applicability Date

This regulation applies with respect to

payments and distributions made on or

after January 1, 2026. However, taxpayers may apply the regulation to earlier

payments and distributions. Notice 87-7

is obsoleted with respect to payments and

distributions made after December 31,

2025.

Statement of Availability of IRS

Documents

The IRS notice cited in this preamble is

published in the Cumulative Bulletin and

is available from the Superintendent of

Documents, U.S. Government Publishing

Office, Washington, DC 20402.

Special Analyses

I. Regulatory Planning and Review

Pursuant to the Memorandum of

Agreement, Review of Treasury Regulations under Executive Order 12866 (June

9, 2023), tax regulatory actions issued by

the IRS are not subject to the requirements

of section 6 of Executive Order 12866, as

amended. Therefore, a regulatory impact

assessment is not required.

II. Paperwork Reduction Act

The collection of information related

to the withholding requirements is captured within the forms and instructions

for Forms W-4P and W-4R. Both of these

forms are approved under OMB Number

1545-0074. This regulation does not alter

any previously approved information collection requirements contained within the

forms and instructions for Forms W-4P

and W-4R, and this regulation does not

create new collection requirements not

already approved by the Office of Management and Budget.

III. Regulatory Flexibility Act

Pursuant to the Regulatory Flexibility

Act (5 U.S.C. chapter 6) it is hereby certified that the collection of information

in this regulation will not have a significant economic impact on a substantial

number of small entities. The number of

small entities potentially affected by this

regulation is unknown but could be substantial because based on data and information available to the Treasury Department and the IRS, most defined benefit

and defined contribution retirement plans

are sponsored by small employers

(defined as employers with fewer than

100 employees), while annuities and

IRAs are typically set up by large financial institutions. Although a substantial

number of small entities is potentially

affected by this regulation, the Treasury

Department and the IRS have concluded

that this regulation will not have a significant economic impact on a substantial

number of small entities. This is because

the main purpose and effect of this regulation is to treat military and diplomatic post office addresses the same as

residence addresses located within the

United States for purposes of income

tax withholding, and payors of distributions from retirement plans and annuities

are already processing distributions to

payees with residence addresses located

within the United States. Accordingly,

this regulation will not have a significant

economic impact on a substantial number

of small entities. Therefore, a regulatory

The Senate Finance Committee Report states that “it will be appropriate to require withholding with respect to pension payments to persons with foreign addresses absent a showing that

withholding is not required.” S. Rep. No. 99-313, at 391 (1986).

November 4, 2024

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Bulletin No. 2024–45

flexibility analysis under the Regulatory

Flexibility Act is not required.

Pursuant to section 7805(f) of the

Code, the notice of proposed rulemaking

preceding this regulation was submitted

to the Chief Counsel for Advocacy of the

Small Business Administration for comment on its impact on small business.

IV. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates

Reform Act of 1995 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 regulation does not include any Federal mandate that may result in expenditures by

state, local, or tribal governments, or by

the private sector in excess of that threshold.

V. Executive Order 13132: Federalism

Executive Order 13132 (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 rule does not have federalism implications and does not impose substantial

direct compliance costs on state and local

governments or preempt state law within

the meaning of the Executive Order.

VI. Congressional Review Act

Pursuant to the Congressional Review

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

Information and Regulatory Affairs designated this rule as not a major rule, as

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

Drafting Information

The principal author of this regulation is Jeremy Lamb, of the IRS Office of

Associate Chief Counsel (Employee Ben-

Bulletin No. 2024–45

efits, Exempt Organizations, and Employment Taxes (EEE)). However, other personnel from the Treasury Department and

the IRS participated in the development of

the regulation.

List of Subjects in 26 CFR Part 31

Employment taxes, Income taxes,

Penalties, Pensions, Railroad retirement,

Reporting and recordkeeping requirements, Social security, Unemployment

compensation.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 31 is

amended as follows:

PART 31--EMPLOYMENT TAXES

AND COLLECTION OF INCOME AT

THE SOURCE

Paragraph 1. The authority citation

for part 31 continues to read in part as follows:

Authority: 26 U.S.C. 7805.

*****

Par. 2. Section 31.3405(e)-1 is added

to read as follows:

§31.3405(e)-1 Questions and answers

relating to withholding on pensions,

annuities, and certain other deferred

income.

(a) The following questions and

answers apply for purposes of determining whether a payor of periodic payments

or nonperiodic distributions from pensions, annuities, and certain other deferred

income (other than eligible rollover distributions) must withhold federal income tax

under section 3405(a) or (b) of the Code.

For purposes of this section, references to

the United States include possessions of

the United States.

(b)(1) Q-1. Is an Army Post Office

(APO), a Fleet Post Office (FPO), or a

Diplomatic Post Office (DPO) address an

address located within the United States

for purposes of section 3405(e)(13)(A)?

(2) A-1. For purposes of section

3405(e)(13)(A), an APO, an FPO, or a

DPO address is an address located within

the United States.

1085

(c)(1) Q-2. Is the payor of a designated distribution described in section

3405(a) or (b) required to withhold

income tax from the distribution if the

payee’s residence address that is provided to the payor is located within the

United States?

(2) A-2. If the payee’s residence

address that is provided to the payor of a

designated distribution described in section 3405(a) or (b) is located within the

United States, then the payor is required

to withhold income tax from the distribution unless the payee has made a valid

election of no withholding in accordance with section 3405(a)(2) or (b)(2).

Any election of no withholding with

respect to such a distribution under section 3405(a)(2) or (b)(2) is not valid if

the payee instructs the payor to do one or

more of the following in connection with

the distribution:

(i) Send the distribution to a financial

institution or other person located outside

of the United States;

(ii) Send the distribution to a financial institution or other person located

within the United States with further

instructions (such as for further credit

to instructions) directing that the funds

be forwarded to a financial institution

or other person located outside of the

United States; or

(iii) Send the distribution to a financial institution or other person pursuant to

payment instructions (including addenda

information) that reference an International Automated Clearing House Transaction (IAT), International Bank Account

Number (IBAN), Society for Worldwide

Interbank Financial Telecommunication

(SWIFT) Business Identifier Code (BIC),

or similar identifier linked to a financial

institution or other person located outside

of the United States.

(d)(1) Q-3. Is the payor of a designated

distribution described in section 3405(a)

or (b) required to withhold income tax

from the distribution if the payee’s residence address that is provided to the payor

is located outside of the United States?

(2) A-3. Unless section 3405(e)(13)

(B) (which provides an exception for

certain nonresident aliens) applies, if the

payee’s residence address that is provided to the payor is located outside of

the United States, the payor of a desig-

November 4, 2024

nated distribution described in section

3405(a) or (b) is required to withhold

income tax from the distribution without regard to the delivery instructions

and without regard to any request by the

payee to elect no withholding. Withholding would be required, in this case, even

if the payee has requested that the distribution be delivered to a financial institution or other person located within the

United States.

(e)(1) Q-4. Is the payor of a designated

distribution described in section 3405(a)

or (b) required to withhold income tax

from the distribution if the payee has not

provided the payor with the payee’s residence address?

(2) A-4. If a payee has not provided

the payor of a designated distribution

described in section 3405(a) or (b) with

the payee’s residence address, the payor is

required to withhold income tax from the

distribution. Such a payee may not elect

no withholding under section 3405(a)(2)

or (b)(2), and any purported election of no

withholding by such a payee is not valid.

For purposes of this section, a payee who

has provided the payor with an address

for the payee’s nominee, trustee, or agent

without also providing the payee’s residence address has not provided a residence address.

(f)(1) Q-5. Do the withholding rules

under section 3405(a) and (b) apply to a

payee who is to receive a payment or distribution that is subject to the withholding rules that apply to nonresident aliens

(or that would be so subject but for a tax

treaty)?

(2) A-5. In accordance with section

3405(e)(1)(B)(iii), a designated distri-

November 4, 2024

bution does not include a distribution of

a United States-source payment that is

subject to withholding under the rules of

sections 1441 through 1446 of the Code

(or that would be so subject but for a

tax treaty). Therefore, the withholding

rules under section 3405(a) and (b) do

not apply to such a distribution. For

example, section 3405(a) or (b) withholding would not apply to a pension or

other deferred compensation plan distribution to be made to a payee who is

a nonresident alien (or other individual

payee who is presumed to be a foreign

person under the presumption rules of

§1.1441-1(b)(3)). In such a case, withholding under the rules of section 1441,

rather than under the rules of section

3405(a) or (b), would apply to such a

distribution.

(g)(1) Q-6. What is the applicability

date of this section?

(2) A-6. This section applies with

respect to payments and distributions

made on or after January 1, 2026. However, taxpayers may apply it to earlier payments and distributions.

Douglas W. O’Donnell,

Deputy Commissioner.

Approved: September 21, 2024

Aviva R. Aron-Dine,

Deputy Assistant Secretary of the Treasury (Tax Policy).

(Filed by the Office of the Federal Register October

18, 2024, 8:45 a.m., and published in the issue of the

Federal Register for October 21, 2024, 89 FR 84079)

1086

Section 1274.—

Determination of Issue

Price in the Case of Certain

Debt Instruments Issued for

Property

(Also Sections 42, 280G, 382, 467, 468, 482, 483,

1288, 7520, 7872.)

Rev. Rul. 2024-24

This revenue ruling provides various

prescribed rates for federal income tax

purposes for November 2024 (the current

month). Table 1 contains the short-term,

mid-term, and long-term applicable federal rates (AFR) for the current month

for purposes of section 1274(d) of the

Internal Revenue Code. Table 2 contains

the short-term, mid-term, and long-term

adjusted applicable federal rates (adjusted

AFR) for the current month for purposes

of section 1288(b). Table 3 sets forth the

adjusted federal long-term rate and the

long-term tax-exempt rate described in

section 382(f). Table 4 contains the appropriate percentages for determining the

low-income housing credit described in

section 42(b)(1) for buildings placed in

service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service

after July 30, 2008, shall not be less than

9%. Finally, Table 5 contains the federal

rate for determining the present value of

an annuity, an interest for life or for a term

of years, or a remainder or a reversionary

interest for purposes of section 7520.

Bulletin No. 2024–45

AFR

110% AFR

120% AFR

130% AFR

AFR

110% AFR

120% AFR

130% AFR

150% AFR

175% AFR

AFR

110% AFR

120% AFR

130% AFR

Short-term adjusted AFR

Mid-term adjusted AFR

Long-term adjusted AFR

REV. RUL. 2024-24 TABLE 1

Applicable Federal Rates (AFR) for November 2024

Period for Compounding

Annual

Semiannual

Quarterly

Short-term

4.00%

3.96%

3.94%

4.41%

4.36%

4.34%

4.81%

4.75%

4.72%

5.22%

5.15%

5.12%

Mid-term

3.70%

3.67%

3.65%

4.08%

4.04%

4.02%

4.45%

4.40%

4.38%

4.83%

4.77%

4.74%

5.59%

5.51%

5.47%

6.52%

6.42%

6.37%

Long-term

4.15%

4.11%

4.09%

4.57%

4.52%

4.49%

4.99%

4.93%

4.90%

5.41%

5.34%

5.30%

Annual

3.03%

2.81%

3.14%

REV. RUL. 2024-24 TABLE 2

Adjusted AFR for November 2024

Period for Compounding

Semiannual

3.01%

2.79%

3.12%

Monthly

3.93%

4.32%

4.70%

5.10%

3.64%

4.01%

4.36%

4.72%

5.45%

6.34%

4.08%

4.48%

4.88%

5.28%

Quarterly

3.00%

2.78%

3.11%

Monthly

2.99%

2.77%

3.10%

REV. RUL. 2024-24 TABLE 3

Rates Under Section 382 for November 2024

Adjusted federal long-term rate for the current month

Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal

long-term rates for the current month and the prior two months.)

3.14%

3.31%

REV. RUL. 2024-24 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for November 2024

Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after

July 30, 2008, shall not be less than 9%.

Appropriate percentage for the 70% present value low-income housing credit

7.91%

Appropriate percentage for the 30% present value low-income housing credit

3.39%

Bulletin No. 2024–45

1087

November 4, 2024

REV. RUL. 2024-24 TABLE 5

Rate Under Section 7520 for November 2024

Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,

or a remainder or reversionary interest

Section 42.—Low-Income

Housing Credit

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

November 2024. See Rev. Rul. 2024-24, page 1086.

Section 280G.—Golden

Parachute Payments

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

November 2024. See Rev. Rul. 2024-24, page 1086.

Section 382.—Limitation

on Net Operating Loss

Carryforwards and

Certain Built-In Losses

Following Ownership

Change

The adjusted applicable federal long-term rate

is set forth for the month of November 2024. See

Rev. Rul. 2024-24, page 1086.

Section 467.—Certain

Payments for the Use of

Property or Services

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

November 2024. See Rev. Rul. 2024-24, page 1086.

Section 468.—Special

Rules for Mining and Solid

Waste Reclamation and

Closing Costs

The applicable federal short-term rates are set

forth for the month of November 2024. See Rev.

Rul. 2024-24, page 1086.

Section 482.—Allocation

of Income and Deductions

Among Taxpayers

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month

of November 2024. See Rev. Rul. 2024-24, page

1086.

4.4%

Section 483.—Interest on

Certain Deferred Payments

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

November 2024. See Rev. Rul. 2024-24, page 1086.

Section 1288.—Treatment

of Original Issue Discount

on Tax-Exempt Obligations

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of

November 2024. See Rev. Rul. 2024-24, page 1086.

Section 7520.—Valuation

Tables

The applicable federal mid-term rates are set

forth for the month of November 2024. See Rev.

Rul. 2024-24, page 1086.

Section 7872.—Treatment

of Loans With BelowMarket Interest Rates

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

November 2024. See Rev. Rul. 2024-24, page 1086.

November 4, 2024

1088

Bulletin No. 2024–45

Part III

Sustainable Aviation Fuel

Credit; 40BSAF-GREET

2024

Notice 2024-74

SECTION 1. PURPOSE

This notice provides additional guidance regarding the sustainable aviation

fuel (SAF) credits under §§ 40B and

6426(k) of the Internal Revenue Code

(collectively, SAF credit or SAF credits).1

Specifically, this notice instructs taxpayers

using the 40BSAF-GREET 2024 model

with respect to claims that relate to the

sale or use of a SAF qualified mixture on

or after October 18, 2024 to use the October 2024 version of the 40BSAF-GREET

2024 model and accompanying user manual for purposes of Notice 2024-37, 202421 I.R.B. 1191. The Department of the

Treasury (Treasury Department) and the

Internal Revenue Service (IRS) developed

the guidance in this notice in consultation

with the Department of Energy (DOE).

SECTION 2. BACKGROUND

Sections 40B and 6426(k) generally

allow a SAF credit for producing and then

selling or using a SAF qualified mixture.

Under § 40B(d)(1)(D), the SAF must be

certified to have a lifecycle greenhouse

gas emissions reduction percentage of at

least 50 percent. Section 40B(e) defines

the term “lifecycle greenhouse gas emissions reduction percentage” to mean, with

respect to any SAF, the percentage reduction in lifecycle greenhouse gas emissions

achieved by such fuel, as compared with

petroleum-based jet fuel, as defined in

accordance with (1) the most recent Carbon Offsetting and Reduction Scheme

for International Aviation that has been

adopted by the International Civil Aviation Organization with the agreement of

the United States or (2) any similar methodology that satisfies the criteria under

§ 211(o)(1)(H) of the Clean Air Act (42

U.S.C. 7545(o)(1)(H)), as in effect on

August 16, 2022.

The Treasury Department and IRS

have issued several notices regarding the

SAF credit, including Notice 2024-37,2

which allows a SAF producer to use the

40BSAF-GREET 2024 model, released

April 30, 2024 (April 2024 version), to

calculate the greenhouse gas emissions

reduction percentage for purposes of the

SAF credits.

The DOE has released an updated version of the 40BSAF-GREET 2024 model

and accompanying user manual. This

updated version of the 40BSAF-GREET

2024 model, released October 18, 2024

(October 2024 version), addresses a calculation issue in the April 2024 version

related to catalyst inputs for the Alcohol

to Jet (ATJ) SAF pathways. This calculation issue relates to the proportion of

catalyst used to produce certain amounts

of SAF for which the April 2024 version

does not account, resulting in inaccurate

estimates of the emissions associated with

the catalyst input. The October 2024 version changes the calculation of the ATJ

SAF pathways by lowering the emissions

associated with the catalyst input. This

is the only change made by the October

2024 version.

All publicly available versions of the

40BSAF-GREET 2024 model, the accompanying user manual, additional information including Frequently Asked Questions, and a log of changes to the model

are available at https://www.energy.gov/

eere/greet.

SECTION 3. 40BSAF-GREET 2024

SAFE HARBORS IN NOTICE 202437

A taxpayer using a 40BSAF-GREET

2024 safe harbor described in sections

3.01(3) and 4.01(2) of Notice 2024-37 to

calculate its emissions reduction percentage with respect to claims that relate to the

sale or use of a SAF qualified mixture on

or after October 18, 2024, must use the

October 2024 version of the 40BSAFGREET 2024 model.

SECTION 4. EFFECTIVE DATE OF

THIS NOTICE

The guidance in this notice is effective

on October 18, 2024.

SECTION 5. EFFECT ON OTHER

DOCUMENTS

Sections 3.01(3) and 4.01(2) of Notice

2024-37 are amplified.

SECTION 6. DRAFTING

INFORMATION

The principal author of this notice

is Camille Edwards Bennehoff of the

Office of the Associate Chief Counsel

(Passthroughs & Special Industries). For

further information regarding this notice,

please contact Ms. Edwards Bennehoff at

(202) 317-6855 (not a toll-free number).

Update for Weighted

Average Interest Rates,

Yield Curves, and Segment

Rates

Notice 2024-76

This notice provides guidance on the

corporate bond monthly yield curve, the

corresponding spot segment rates used

under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the

Internal Revenue Code. In addition, this

notice provides guidance as to the interest rate on 30-year Treasury securities

under § 417(e)(3)(A)(ii)(II) as in effect for

plan years beginning before 2008 and the

30-year Treasury weighted average rate

under § 431(c)(6)(E)(ii)(I).

YIELD CURVE AND SEGMENT

RATES

Section 430 specifies the minimum

funding requirements that apply to sin-

Unless otherwise specified, all references to “section” or “§” are references to sections of the Internal Revenue Code.

Notice 2023-6, 2023-2 I.R.B. 328 and Notice 2024-6, 2024-2 I.R.B. 34 also address the SAF credits.

Bulletin No. 2024–45

1089

November 4, 2024

gle-employer plans (except for CSEC

plans under § 414(y)) pursuant to § 412.

Section 430(h)(2) specifies the interest rates that must be used to determine

a plan’s target normal cost and funding

target. Under this provision, present

value is generally determined using three

24-month average interest rates (“segment rates”), each of which applies to

cash flows during specified periods. To

the extent provided under § 430(h)(2)(C)

(iv), these segment rates are adjusted by

the applicable percentage of the 25-year

average segment rates for the period ending September 30 of the year preceding

the calendar year in which the plan year

begins.1 However, an election may be

made under § 430(h)(2)(D)(ii) to use the

monthly yield curve in place of the segment rates.

Applicable Month

October 2024

Section 1.430(h)(2)-1(d) provides

rules for determining the monthly corporate bond yield curve,2 and § 1.430(h)

(2)-1(c) provides rules for determining

the 24-month average corporate bond

segment rates used to compute the target

normal cost and the funding target. Consistent with the methodology specified in

§ 1.430(h)(2)-1(d), the monthly corporate

bond yield curve derived from September

2024 data is in Table 2024-9 at the end

of this notice. The spot first, second, and

third segment rates for the month of September 2024 are, respectively, 4.17, 4.76,

and 5.25.

The 24-month average segment rates

determined under § 430(h)(2)(C)(i)

through (iii) must be adjusted pursuant to

§ 430(h)(2)(C)(iv) to be within the applicable minimum and maximum percent-

ages of the corresponding 25-year average segment rates. Those percentages are

95% and 105% for plan years beginning

in 2023, 2024 and 2025. For this purpose,

any 25-year average segment rate that is

less than 5% is deemed to be 5%. The

25-year average segment rates for plan

years beginning in 2023, 2024 and 2025

were published in Notice 2022-40, 202240 I.R.B. 266, Notice 2023-66, 2023-40

I.R.B. 992, and Notice 2024-67, 2024-41

I.R.B. 726, respectively.

24-MONTH AVERAGE CORPORATE

BOND SEGMENT RATES

The three 24-month average corporate

bond segment rates applicable for October

2024 without adjustment for the 25-year

average segment rate limits are as follows:

24-Month Average Segment Rates Without 25-Year Average Adjustment

First Segment

Second Segment

5.05

5.31

The adjusted 24-month average segment rates set forth in the chart below

reflect § 430(h)(2)(C)(iv) of the Code. The

24-month averages applicable for October

2024, adjusted to be within the applicable

minimum and maximum percentages of

Third Segment

5.37

the corresponding 25-year average segment rates in accordance with § 430(h)(2)

(C)(iv) of the Code, are as follows:

Adjusted 24-Month Average Segment Rates

For Plan Years

Beginning In

Applicable Month

First Segment

Second Segment

Third Segment

2023

October 2024

5.05

5.31

5.74

2024

October 2024

5.05

5.31

5.59

2025

October 2024

5.05

5.31

5.50

30-YEAR TREASURY SECURITIES

INTEREST RATES

Section 431 specifies the minimum

funding requirements that apply to multiemployer plans pursuant to § 412. Section

431(c)(6)(B) specifies a minimum amount

for the full-funding limitation described in

§ 431(c)(6)(A), based on the plan’s current

liability. Section 431(c)(6)(E)(ii)(I) provides that the interest rate used to calculate

current liability for this purpose must be

no more than 5 percent above and no more

than 10 percent below the weighted average of the rates of interest on 30-year Treasury securities during the four-year period

ending on the last day before the beginning

of the plan year. Notice 88-73, 1988-2 C.B.

383, provides guidelines for determining

the weighted average interest rate. The rate

of interest on 30-year Treasury securities

for September 2024 is 4.04 percent. The

Service determined this rate as the average

of the daily determinations of yield on the

Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount

of the full funding limitation under § 433(c)(7)(C)).

For months before February 2024, the monthly corporate bond yield curve was determined in accordance with Notice 2007-81, 2007-44 I.R.B. 899. Section 1.430(h)(2)-1(d) generally adopts

the methodology for determining the monthly corporate bond yield curve under Notice 2007-81 but includes two enhancements to take into account subsequent changes in the bond market.

Those enhancements are described in the preamble to TD 9986 (89 FR 2127).

November 4, 2024

1090

Bulletin No. 2024–45

30-year Treasury bond maturing in August

2054. For plan years beginning in October

2024, the weighted average of the rates of

interest on 30-year Treasury securities and

the permissible range of rates used to calculate current liability are as follows:

For Plan Years Beginning In

Treasury Weighted Average Rates

30-Year Treasury Weighted Average

Permissible Range 90% to 105%

October 2024

3.67

3.30 to 3.85

under § 417(e)(3)(D) are segment rates

computed without regard to a 24-month

average. Section 1.417(e)-1(d)(3) provides guidelines for determining the min-

imum present value segment rates. Pursuant to that section, the minimum present

value segment rates determined for September 2024 are as follows:

MINIMUM PRESENT VALUE

SEGMENT RATES

In general, the applicable interest rates

Month

September 2024

Minimum Present Value Segment Rates

First Segment

Second Segment

4.17

4.76

DRAFTING INFORMATION

The principal author of this notice is

Tom Morgan of the Office of Associ-

Bulletin No. 2024–45

ate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes). However, other personnel from

the IRS participated in the development

1091

Third Segment

5.25

of this guidance. For further information

regarding this notice, contact Mr. Morgan

at 202-317-6700 or Tony Montanaro at

626-927-1475 (not toll-free number).

November 4, 2024

Table 2024-9

Monthly Yield Curve for September 2024

Derived from September 2024 Data

Maturity

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

15.5

16.0

16.5

17.0

17.5

18.0

18.5

19.0

19.5

20.0

Yield

4.66

4.43

4.23

4.10

4.03

4.00

4.01

4.04

4.08

4.13

4.18

4.24

4.29

4.34

4.40

4.45

4.50

4.55

4.59

4.63

4.67

4.71

4.75

4.78

4.82

4.85

4.88

4.90

4.93

4.95

4.98

5.00

5.02

5.03

5.05

5.07

5.08

5.09

5.10

5.11

November 4, 2024

Maturity

20.5

21.0

21.5

22.0

22.5

23.0

23.5

24.0

24.5

25.0

25.5

26.0

26.5

27.0

27.5

28.0

28.5

29.0

29.5

30.0

30.5

31.0

31.5

32.0

32.5

33.0

33.5

34.0

34.5

35.0

35.5

36.0

36.5

37.0

37.5

38.0

38.5

39.0

39.5

40.0

Yield

5.12

5.13

5.14

5.15

5.16

5.17

5.18

5.19

5.20

5.21

5.22

5.23

5.24

5.25

5.26

Maturity

40.5

41.0

41.5

42.0

42.5

43.0

43.5

44.0

44.5

45.0

45.5

46.0

46.5

47.0

47.5

48.0

48.5

49.0

49.5

50.0

50.5

51.0

51.5

52.0

52.5

53.0

53.5

54.0

54.5

55.0

55.5

56.0

56.5

57.0

57.5

58.0

58.5

59.0

59.5

60.0

Yield

5.26

5.27

5.28

5.29

5.30

5.31

5.32

5.33

1092

Maturity

60.5

61.0

61.5

62.0

62.5

63.0

63.5

64.0

64.5

65.0

65.5

66.0

66.5

67.0

67.5

68.0

68.5

69.0

69.5

70.0

70.5

71.0

71.5

72.0

72.5

73.0

73.5

74.0

74.5

75.0

75.5

76.0

76.5

77.0

77.5

78.0

78.5

79.0

79.5

80.0

Yield

5.33

5.34

5.35

5.36

5.37

Maturity

80.5

81.0

81.5

82.0

82.5

83.0

83.5

84.0

84.5

85.0

85.5

86.0

86.5

87.0

87.5

88.0

88.5

89.0

89.5

90.0

90.5

91.0

91.5

92.0

92.5

93.0

93.5

94.0

94.5

95.0

95.5

96.0

96.5

97.0

97.5

98.0

98.5

99.0

99.5

100.0

Yield

5.37

5.38

5.39

Bulletin No. 2024–45

Guidance Under Sections

414(aa) and 402(c)(12) of

the Internal Revenue Code

with Respect to Inadvertent

Benefit Overpayments

Notice 2024-77

I. PURPOSE

This notice provides guidance in the

form of questions and answers on sections

414(aa) and 402(c)(12) of the Internal

Revenue Code (Code) as added by section 301(b) of Division T of the Consolidated Appropriations Act, 2023, Pub. L.

117-328, 136 Stat. 4459 (2022), known as

the SECURE 2.0 Act of 2022 (SECURE

2.0 Act).1 Section 414(aa) of the Code

addresses the requirements of sections

401(a) and 403 with respect to inadvertent

benefit overpayments. Section 402(c)(12)

addresses the treatment of certain inadvertent benefit overpayments as eligible rollover distributions.

This notice provides guidance on the

impact of sections 414(aa) and 402(c)(12)

on the Employee Plans Compliance Resolution System (EPCRS), set forth in

Revenue Procedure 2021‑30, 2021-31

IRB 172, including the impact on correction of inadvertent benefit overpayments.

This notice is intended to assist taxpayers

by providing interim guidance and is not

intended to provide comprehensive guidance with respect to sections 414(aa) and

402(c)(12).

The Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) invite comments on

the guidance in this notice and any other

aspect of sections 414(aa) and 402(c)(12),

including how those sections are affected

by the provisions of section 301(c) and (d)

of the SECURE 2.0 Act.

II. BACKGROUND

A. Rev. Proc. 2021‑30.

Rev. Proc. 2021-30 sets forth EPCRS,

a system of correction programs for certain employer‑sponsored retirement plans.

Rev. Proc. 2021‑30 describes correction

methods for overpayments, including a

method by which overpayments may be

corrected through corrective payments

to the plan (whether recouped from participants or beneficiaries or paid by plan

sponsors or other third parties).2 A participant or beneficiary may make corrective

payments in a lump sum, in installments,

or, with regard to overpayments involving

periodic payments, through reductions

in future payments.3 If a plan sponsor

chooses not to seek recoupment from a

participant or beneficiary (or is unsuccessful in obtaining full recoupment), the

plan sponsor or another person generally

must make the corrective payments to the

extent the full overpayment amount is not

repaid to the plan.4 In addition, under Rev.

Proc. 2021‑30, if an overpayment is not

corrected by plan amendment, the plan

sponsor generally must notify the participant or beneficiary in writing that the overpayment is not eligible for the favorable

tax treatment accorded to distributions

from an eligible retirement plan and is not

eligible for tax-free rollover.5 For defined

benefit plans, Rev. Proc. 2021‑30 provides

two additional correction methods, the

funding exception correction method and

contribution credit correction method, that

reduce the need for corrective payments.6

Under the funding exception correction

method, if a plan subject to section 436

is sufficiently funded and satisfies other

eligibility requirements, no corrective

payments from any party are required.

Under the contribution credit correction

method, required corrective payments are

reduced, based on a specified formula, by

certain additional contributions in excess

of minimum funding requirements and by

increases in the plan’s minimum funding

requirements attributable to the overpayment.

B. Section 414(aa) of the Code.

Section 301(b)(1) of the SECURE 2.0

Act added section 414(aa) to the Code.

Section 414(aa)(1) provides that, as a general rule, a plan will not fail to be treated

as described in clause (i), (ii), (iii) or (iv)

of section 219(g)(5)(A)7 and will not fail

to be treated as satisfying the requirements of section 401(a) or 403 merely

because the plan fails to obtain payment

from a participant, beneficiary, employer,

plan sponsor, fiduciary, or other party on

account of any inadvertent benefit overpayment, or the plan sponsor amends the

plan to increase past, or decrease future,

benefit payments to affected participants

and beneficiaries in order to adjust for

prior inadvertent benefit overpayments.

Section 414(aa)(2) provides that section 414(aa)(1) will not fail to apply to

a plan merely because, after discovering

a benefit overpayment, the plan reduces

future benefit payments to the correct

amount provided for under the terms of

the plan or seeks recovery from the person

responsible for the overpayment.

Section 414(aa)(3) provides that

nothing in section 414(aa) relieves an

employer of any obligation imposed on it

to make contributions to a plan to meet the

minimum funding standards under sections 412 and 430 or to prevent or restore

an impermissible forfeiture in accordance

with section 411.

Section 414(aa)(4) provides that, notwithstanding section 414(aa)(1), a plan

to which section 414(aa)(1) applies must

observe any limitations imposed on it

by section 401(a)(17) or 415. The plan

may enforce these limitations using any

Section 301(a) of the SECURE 2.0 Act amends title I of the Employee Retirement Income Security Act of 1974, Pub. L. 93-406, 88 Stat. 829, as amended (ERISA), by adding section 206(h)

to ERISA. This notice does not address section 206(h) of ERISA.

Other correction methods may be available. For example, a plan sponsor may also be able to amend the plan to conform to the plan’s operations. See section 6.06(3)(a) and (4)(a) of Rev.

Proc. 2021–30.

See section 6.06(3)(c) and (4)(c) of Rev. Proc. 2021–30 and sections 2.04(2) and 2.05(2) of Appendix B to Rev. Proc. 2021–30.

See section 6.06(3)(b)(iii) and (4)(b)(iii) of Rev. Proc. 2021–30.

See section 6.06(3)(b)(ii) and (4)(b)(ii) of Rev. Proc. 2021–30.

See section 6.06(3)(d) of Rev. Proc. 2021–30 and section 2.05(3) and (4) of Appendix B to Rev. Proc. 2021–30.

A plan described in section 219(g)(5)(A)(i), (ii), (iii), or (iv) is (i) a plan described in section 401(a) which includes a trust exempt from tax under section 501(a), (ii) an annuity plan

described in section 403(a), (iii) a plan established for its employees by the United States, by a State or political subdivision thereof or any agency or instrumentality of any of the foregoing,

or (iv) an annuity contract described in section 403(b).

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November 4, 2024

method approved by the Secretary for

recouping benefits previously paid or allocations previously made in excess of the

limitations.

Section 414(aa)(5) provides that the

Secretary may issue regulations or other

guidance of general applicability specifying how benefit overpayments and their

recoupment or non-recoupment from a

participant are taken into account for purposes of satisfying any requirement applicable to a plan to which section 414(aa)(1)

applies.

C. Section 402(c)(12) of the Code.

Section 301(b)(2) of the SECURE 2.0

Act added section 402(c)(12) to the Code.

Section 402(c)(12) applies in the case of

an inadvertent benefit overpayment from

a plan to which section 414(aa)(1) applies

that is transferred to an eligible retirement plan by or on behalf of a participant

or beneficiary. Section 402(c)(12)(A)

provides that the portion of the overpayment with respect to which recoupment is

not sought on behalf of the plan will be

treated as having been paid in an eligible

rollover distribution if the payment would

have been an eligible rollover distribution

but for being an overpayment. Section

402(c)(12)(B) provides that the portion

of the overpayment with respect to which

recoupment is sought on behalf of the plan

will be permitted to be returned to the

plan and, in the case of an overpayment

returned to the plan, will be treated as an

eligible rollover distribution transferred to

the plan by the participant or beneficiary

who received the overpayment (and the

plans making and receiving the transfer

are treated as permitting the transfer).

D. Sections 301(c) and (d) of the

SECURE 2.0 Act.

Section 301(c) of the SECURE 2.0

Act provides that the amendments made

by section 301 are effective as of the date

of enactment of the SECURE 2.0 Act

(December 29, 2022).

Section 301(d) provides that plans,

fiduciaries, employers, and plan sponsors

are entitled to rely on:

(1) a reasonable good faith interpretation of then existing administrative guidance for inadvertent benefit overpayment

recoupments and recoveries that commenced before December 29, 2022, and

(2) determinations made before

December 29, 2022, by the responsible

plan fiduciary, in the exercise of its fiduciary discretion, not to seek recoupment

or recovery of all or part of an inadvertent

benefit overpayment.

In the case of a benefit overpayment

that occurred before December 29, 2022,

any installment payments made by the

participant or beneficiary to the plan or

any reduction in periodic benefit payments

to the participant or beneficiary that were

made in recoupment of such overpayment,

and that commenced before December 29,

2022, may continue after that date.

Nothing in section 301(d) relieves a

fiduciary from responsibility for an overpayment that resulted from a breach of its

fiduciary duties.

III. GUIDANCE REGARDING

SECTIONS 414(aa) AND 402(c)(12)

OF THE CODE

Q-1. How is an “inadvertent benefit

overpayment” defined for purposes of

sections 414(aa) and 402(c)(12) and this

notice?

A-1. An “inadvertent benefit overpayment,” for purposes of sections 414(aa)

and 402(c)(12) and this notice, is an eligible inadvertent failure, as defined in section 305(e) of the SECURE 2.0 Act,8 that

occurs due to a payment made from a plan

described in section 219(g)(5)(A)(i)-(iv)

of the Code9 that exceeded the amount

payable under the terms of the plan or a

limitation provided in the Code or regulations. An inadvertent benefit overpayment

also includes a payment made before a

distribution is permitted under the Code or

under the terms of the plan. However, an

inadvertent benefit overpayment does not

include (i) a payment made to a disqualified person as defined in section 4975(e)(2)

or owner-employee as defined in section

401(c), or (ii) a payment that is made

pursuant to a correction method provided

under Rev. Proc. 2021–30 for a different

qualification failure.

Q-2. Does section 414(aa)(1)(A) affect

the requirement in section 6.06 of Rev.

Proc. 2021‑3010 that an overpayment be

corrected through corrective payments?

A-2. Yes. Except as provided in section

414(aa)(4) and (5), under section 414(aa)

(1)(A), a failure to obtain payment on

account of any inadvertent benefit overpayment does not affect a plan’s satisfaction of the applicable provisions of sections

401(a) and 403. Thus, except as described

in Q&A-5 of this notice with respect to failures to observe any of the funding-based

benefit restrictions of section 436(b), (c),

(d), or (e) applicable to certain single-employer defined benefit plans (section 436

failure) and as described in Q&A‑6 of this

notice with respect to failures to observe

any limitation imposed by section 401(a)

(17) or 415 (section 401(a)(17) and 415

failures), any requirement described in

section 6.06 of Rev. Proc. 2021‑30 that a

corrective payment be made to a plan with

respect to an inadvertent benefit overpayment no longer applies.

Although a corrective payment generally is not required for an inadvertent

benefit overpayment, other failures may

occur as the result of an inadvertent benefit overpayment that could require a corrective payment. For example, if a plan

participant received an inadvertent benefit

overpayment due to an incorrect allocation of a profit-sharing contribution under

a plan, another plan participant may have

received a benefit underpayment. In this

case, the benefit underpayment would be

considered an additional failure in need of

An “eligible inadvertent failure” is defined in section 305(e) of the SECURE 2.0 Act as a failure that (1) occurs despite the existence of established practices and procedures that, as relevant

to employer-sponsored plans, satisfy the standards set forth in section 4.04 of Rev. Proc. 2021–30, (2) is not egregious, (3) does not relate to the diversion or misuse of plan assets, and (4)

is not directly or indirectly related to an abusive tax avoidance transaction. See Notice 2023-43, 2023-24 IRB 919, for additional information and conditions with respect to expansion of

EPCRS under section 305 of the SECURE 2.0 Act.

See footnote 7 for the definition of a plan described in section 219(g)(5)(A)(i), (ii), (iii), or (iv).

Some of the correction methods described in section 6.06 of Rev. Proc. 2021‑30 are also described in sections 2.04 and 2.05 of Appendix B to Rev. Proc. 2021–30. In this notice, a reference

to section 6.06 also includes parallel language in section 2.04 or 2.05 of Appendix B.

November 4, 2024

1094

Bulletin No. 2024–45

correction, which may require a corrective

payment. In addition, section 414(aa)(3)

may require an employer to make a corrective payment to prevent or restore an

impermissible forfeiture in accordance

with section 411.

Q-3. Does section 414(aa)(1) prohibit

a plan sponsor from seeking recoupment

of inadvertent benefit overpayments from

overpayment recipients?

A-3. No. Section 414(aa)(1) does not

change the rule in section 6.06 of Rev.

Proc. 2021‑30 that recoupment from overpayment recipients is permitted but not

required. For example, a plan sponsor

may continue to use the overpayment correction methods in section 6.06(3)(c) and

(4)(c) and in section 2.05(2)(c) of Appendix B to Rev. Proc. 2021‑30. As noted in

footnote 1, this notice does not address

ERISA section 206(h), which, in part,

imposes conditions on recoupment of an

inadvertent benefit overpayment from a

participant or beneficiary.

Q-4. Under what circumstances may

an individual who rolls over an inadvertent benefit overpayment to an eligible

retirement plan retain the overpayment in

tax-favored status?

A-4. Under section 402(c)(12)(A), the

portion of a rolled-over inadvertent benefit

overpayment for which recoupment is not

sought is treated as an eligible rollover distribution if the payment would have been

an eligible rollover distribution but for

being an overpayment. Accordingly, subject to the exception described in Q&A-6

of this notice for a section 401(a)(17) or

415 failure, an individual who receives an

inadvertent benefit overpayment and rolls

over that overpayment pursuant to a direct

or 60-day rollover retains the tax-favored

status of the overpayment for the portion

of the overpayment for which recoupment

is not sought.

Under section 402(c)(12)(B), if an

inadvertent benefit payment is rolled

over from an originating plan to a second plan and recoupment of all or a portion of the inadvertent benefit payment

is sought, then the amount that is sought

and transferred back to the originating

plan is treated both as an eligible rollover

distribution from the originating plan and

as an eligible rollover distribution transferred back to the originating plan. Additionally, under section 402(c)(12)(B),

Bulletin No. 2024–45

both the originating plan and the second

plan are treated as permitting the transfer

back to the originating plan. Thus, without

regard to plan terms, the originating plan

is treated as permitting the transfer back

of the inadvertent benefit overpayment as

an eligible rollover distribution, and the

transfer from the second plan is treated as

an eligible rollover distribution.

The portion of an inadvertent benefit overpayment for which recoupment

is sought that is not returned to the originating plan is not treated as an eligible

rollover distribution. In accordance with

the requirements of section 6.06(3)(b)(ii)

or (4)(ii) of Rev. Proc. 2021‑30, the plan

sponsor must notify the individual that

any unreturned portion of the inadvertent benefit overpayment is not eligible

for favorable tax treatment accorded to

distributions from an eligible retirement

plan, as defined in section 402(c)(8)(B)

(and, specifically, is not eligible for taxfree rollover). The notice provided to the

participant regarding tax treatment of the

unreturned portion of the overpayment

may be combined with a plan sponsor’s

recoupment request.

Q-5. What is the treatment under sections 414(aa) and 402(c)(12) for inadvertent benefit overpayments resulting from a

section 436 failure?

A-5. With respect to a section 436 failure under a plan that occurs as a result

of an inadvertent benefit overpayment to

an individual, to the extent the inadvertent benefit overpayment is not recouped

on behalf of the plan from the individual, the plan sponsor or another person

must make a corrective payment under

the same circumstances as apply generally under Rev. Proc. 2021–30 for an

overpayment that is not an inadvertent

benefit overpayment. This requirement

is provided pursuant to the Secretary’s

authority under section 414(aa)(5) to

issue guidance specifying how benefit

overpayments and their recoupment or

non-recoupment are taken into account

for purposes of satisfying any requirement applicable to a plan to which section 414(aa)(1) applies and is an exception to the rule described in Q&A‑2 that

section 6.06 of Rev. Proc. 2021–30 no

longer requires a corrective payment to a

plan with respect to an inadvertent benefit overpayment.

1095

In addition, to the extent an individual

rolled over an inadvertent benefit overpayment resulting from a section 436 failure,

the rules relating to rollover treatment if

an inadvertent benefit overpayment either

is or is not sought that are described in

Q&A‑4 apply.

Q-6. What is the treatment under sections 414(aa) and 402(c)(12) for inadvertent benefit overpayments resulting from

section 401(a)(17) or 415 failures?

A-6. Under section 414(aa)(4), a plan

must observe the limitations imposed

by sections 401(a)(17) and 415 and may

enforce those limitations using any method

approved by the Secretary for recouping

benefits previously paid or allocations

previously made in excess of those limitations. This requirement to comply with

sections 401(a)(17) and 415 is an exception to the rule described in Q&A-2 of this

notice that any requirement described in

section 6.06 of Rev. Proc. 2021‑30 that a

corrective payment be made to a plan with

respect to an inadvertent benefit overpayment no longer applies. Accordingly, with

respect to a section 401(a)(17) or 415 failure under a plan that occurs as a result of

an inadvertent benefit overpayment to an

individual, to the extent the inadvertent

benefit overpayment is not recouped on

behalf of the plan from the individual, the

plan sponsor or another person must make

a corrective payment under the same circumstances as apply under section 6.06 of

Rev. Proc. 2021–30 for an overpayment

that is not an inadvertent benefit overpayment.

As described in Q&A-4 of this notice,

the portion of an inadvertent benefit overpayment for which recoupment is sought

that is not returned to the originating plan

is not treated as an eligible rollover distribution under section 402(c)(12). For purposes of this rule, an inadvertent benefit

overpayment occurring as a result of a section 401(a)(17) or 415 failure that requires

corrective payments under section 6.06 of

Rev. Proc. 2021‑30 is treated as an inadvertent benefit overpayment for which

recoupment is sought. Accordingly, if, on

behalf of a plan, the plan sponsor does

not recoup from an individual a rolledover inadvertent benefit overpayment that

occurs as a result of a section 401(a)(17)

or 415 failure, the inadvertent benefit

overpayment is not treated as an eligible

November 4, 2024

rollover distribution. In accordance with

the requirements of section 6.06(3)(b)(ii)

and (4)(ii), the plan sponsor must notify

the individual that any portion of the inadvertent benefit overpayment not returned

to the plan is not eligible for favorable tax

treatment accorded to distributions from

an eligible retirement plan, as defined in

section 402(c)(8)(B) (and, specifically,

is not eligible for tax-free rollover). The

notice provided to the participant regarding tax treatment of the unreturned portion of the overpayment may be combined

with a recoupment request.

Q-7. May a plan sponsor amend a

plan to increase past benefit payments to

affected participants and beneficiaries,

in order to adjust for prior inadvertent

benefit overpayments pursuant to section

414(aa)(1)(B), in a manner that results in

a violation of section 401(a)(17), 415, or

436 for a past year?

A-7. Under section 414(aa)(4), notwithstanding section 414(aa)(1), a plan

to which section 414(aa)(1) applies must

observe any limitations imposed on it by

sections 401(a)(17) and 415. Additionally, under Q&A‑1 of Notice 2023‑43, a

plan sponsor may self-correct an eligible

inadvertent failure (which includes an

inadvertent benefit overpayment) only

if certain requirements are met, including that the plan sponsor does not use

a correction method that is prohibited

under Rev. Proc. 2021‑30. Under section

6.02(2)(d) of Rev. Proc. 2021‑30, a correction method under Rev. Proc. 2021‑30

should not violate another applicable

specific requirement of section 401(a) or

403(b), or a parallel requirement in part

2 of subtitle B of title I of ERISA (for

plans that are subject to part 2 of subtitle B of title I of ERISA). Therefore, an

amendment to increase past benefit payments pursuant to section 414(aa)(1)(B)

of the Code in a manner that results in a

violation of section 401(a)(17) or 415 for

a past year is not permitted.

An amendment to increase past benefits pursuant to section 414(aa)(1)(B) that

results in a section 436 failure for a past

year is permitted only if contributions are

made in accordance with section 436(c)(2)

and section 6.02(4) of Rev. Proc. 2021‑30.

Q-8. Are there any provisions of Rev.

Proc. 2021‑30 that are modified or are no

longer applicable with respect to an inad-

November 4, 2024

vertent benefit overpayment to which section 414(aa) or 402(c)(12) applies?

A-8. The following provisions of Rev.

Proc. 2021‑30 are modified or are no longer applicable with respect to an inadvertent benefit overpayment to which section

414(aa) or 402(c)(12) applies:

• The definition of an overpayment

in sections 5.01(3)(c) and 5.02(4) of Rev.

Proc. 2021‑30 is modified by Q&A-1 of

this notice for an overpayment that is an

inadvertent benefit overpayment.

• Any requirement in section 6.06(3)

(b)(ii) and (4)(b)(ii) of Rev. Proc. 2021‑30

that a plan sponsor must notify an individual that an overpayment is not an eligible

rollover distribution no longer applies to

the portion of an inadvertent benefit overpayment not sought for recoupment (other

than as specified in Q&A‑4, Q&A‑5, and

Q&A‑6 of this notice with respect to the

portion of an inadvertent benefit overpayment for which recoupment is sought but

is not returned to the originating plan).

• Any requirement of a corrective

payment in section 6.06 of Rev. Proc.

2021‑30 no longer applies to an inadvertent benefit overpayment (other than as

specified in Q&A‑5 of this notice with

respect to a section 436 failure and in

Q&A‑6 of this notice with respect to a

section 401(a)(17) or 415 failure).

• Section 6.09(5) of Rev. Proc. 202130, which provides relief from the excise

tax under section 4973, is no longer necessary for any inadvertent benefit overpayment that is treated as an eligible rollover

distribution under section 402(c)(12).

Accordingly, under those circumstances,

section 6.09(5) of Rev. Proc. 2021-30 no

longer applies.

• Section 6.09(6) of Rev. Proc.

2021‑30, which provides relief from the 10

percent additional income tax under section 72(t), is no longer necessary for any

inadvertent benefit overpayment that is

treated as an eligible rollover distribution

under section 402(c)(12). Accordingly,

under those circumstances, section 6.09(6)

of Rev. Proc. 2021-30 no longer applies.

IV. APPLICABILITY DATE

This notice applies with respect to section 414(aa) on the date it is issued. For

periods before the date of issuance of this

notice, a taxpayer may rely on a good

1096

faith, reasonable interpretation of section

414(aa).

This notice applies with respect to section 402(c)(12) on the date it is issued.

Section 402(c)(12) applies as of December 29, 2022, regardless of when an inadvertent benefit overpayment was made.

For periods before the date of issuance of

this notice, a taxpayer may rely on a good

faith, reasonable interpretation of section

402(c)(12).

A plan sponsor that interpreted section 414(aa) or 402(c)(12) during periods

before the date of issuance of this notice

in a manner that accords with this notice

will be treated as having applied a good

faith, reasonable interpretation of section

414(aa) or 402(c)(12).

V. REQUEST FOR COMMENTS

The Treasury Department and the IRS

invite comments on the guidance in this

notice and any other aspect of sections

414(aa) and 402(c)(12), including as those

sections are affected by the provisions of

section 301(c) and (d) of the SECURE 2.0

Act.

Comments should be submitted in

writing on or before December 16, 2024,

and should include a reference to Notice

2024-77. Comments may be submitted

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

“IRS Notice 2024-77” in the search field

on the Regulations.gov home page to find

this notice and submit comments). Alternatively, comments may be submitted by

mail to: Internal Revenue Service, Attn:

CC:PA:LPD:PR (Notice 2024-77), Room

5203, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044.

The Treasury Department and the IRS

will publish for public availability any

comment submitted electronically or on

paper to its public docket.

VI. PAPERWORK REDUCTION ACT

An agency may not conduct or sponsor,

and a person is not required to respond

to, a collection of information unless the

collection of information displays a valid

OMB control number. The collection of

information mentioned in this IRS Notice

has been reviewed and approved by the

Office of Management and Budget in

Bulletin No. 2024–45

accordance with the Paperwork Reduction

Act (44 U.S.C. 3507) under control number 1545-1673.

The mentioned collection of information is a third-party disclosure requirement

listed in Q&A‑4, Q&A‑5, and Q&A‑6.

This information is required to notify

plan participants of the tax implications

of a distribution from a plan that is not

an eligible rollover distribution. Notice

2024-77 does not alter any previously

accounted for information collection

requirements and does not create new collection requirements not already approved

by the Office of Management and Budget.

VII. DRAFTING INFORMATION

The principal authors of this notice are

Christina Cerasale and Amy Moskowitz of the Office of the 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 this guidance. For

further information regarding this notice,

contact Ms. Cerasale or Ms. Moskowitz at

(202) 317‑4102 (not a toll-free number).

26 CFR 1.6417-2: Rules for Making Elective Payment Election

(Also: 6417(h), 6081, 7803)

Rev. Proc. 2024-39

SECTION 1. PURPOSE

This revenue procedure grants certain

applicable entities under section 6417(d)

(1)(A) of the Internal Revenue Code

(Code)1 an automatic six-month extension

of time to file an original or superseding

Form 990-T, Exempt Organization Business Income Tax Return (and proxy tax

under section 6033(e) of the Code), with

any other relevant schedules and forms

(such as Form 3800, General Business

Credit, and any relevant source credit

forms), to make an elective payment election as provided under section 6417(d)(3)

and §1.6417-2(b) (elective payment election). This automatic six-month extension,

described in section 3 of this revenue procedure, means that certain applicable entities that did not timely file an extension

on Form 8868, Application for Extension

of Time To File an Exempt Organization

Return, will nevertheless be granted an

automatic six-month extension of time to

file a Form 990-T for purposes of making

an elective payment election. Taxpayers are not required to file a Form 8868

to receive the extension provided in this

guidance.

Section 4 of this revenue procedure

allows applicable entities to make the

elective payment election on a paper-filed

Form 990-T if they follow the procedural

requirements of section 4.03 of this revenue procedure. The IRS strongly encourages electronic filing of returns to ensure

more efficient processing of elective payment elections.

Section 5 of this revenue procedure

provides procedures allowing for assistance on processing an elective payment

election for applicable entities that are

otherwise eligible for the relief in section

3 but receive a notice from the Internal

Revenue Service (IRS) that their elective

payment election was ineffective because

the return on which it was made was filed

after the due date of the return.

This relief is being granted for certain

applicable entities making elective payment elections in the first year such elections are available because the Department

of the Treasury (Treasury Department)

and the IRS are aware that many applicable entities were unfamiliar with the

filing and extension process with respect

to Form 990-T. Further, many applicable

entities have been unable to make an elective payment election on a timely, electronically-filed Form 990-T because of

limitations in electronic filing capabilities

of third-party return preparers.

SECTION 2. BACKGROUND

.01 Section 6417, which applies to

taxable years beginning on or after January 1, 2023, allows applicable entities

defined in section 6417(d)(1) to make an

elective payment election under section

6417 with respect to any applicable credit

determined with respect to the applicable

entity for the taxable year. If an applicable

entity makes an elective payment election,

the applicable entity is treated as making

a payment against Federal income taxes

imposed by subtitle A of the Code for the

taxable year with respect to which such

credit was determined that is equal to the

amount of such credit (elective payment

amount). An election under section 6417

must be made at such time and in such

manner as provided by the Secretary of

the Treasury or her delegate (Secretary).

.02 Section 1.6417-2(b)(1)(i) provides

an elective payment election is made

on the annual tax return, as defined in

§1.6417-1(b), in the manner prescribed

by the IRS in guidance, along with any

required completed source credit form(s)

with respect to the applicable credit

property, a completed Form 3800 (or its

successor), and any additional information, including supporting calculations,

required in instructions. Section 1.64171(b)(1) defines annual tax return for any

taxpayer normally required to file a tax

return with the IRS on an annual basis as

the required return (including the Form

990-T for organizations subject to tax

imposed by section 511 of the Code or a

proxy tax under section 6033(e) or that

are required to file a Form 990 pursuant to

section 6033(a)).

.03 Section 6417(d)(3)(A)(i) provides

rules regarding the due date for making an elective payment election. Under

§1.6417-2(b)(3)(i), in the case of any

taxpayer for which no Federal income

tax return is required under sections 6011

or no Federal return is required under

6033(a) of the Code (such as a State; the

District of Columbia; an Indian Tribal

government; any U.S. territory; a political subdivision of a State, the District of

Columbia, or a U.S. territory, or a subdivision of an Indian Tribal government;

certain agencies or instrumentalities of a

State, the District of Columbia, an Indian

Tribal government, or a U.S. territory; or a

taxpayer excluded from filing pursuant to

section 6033(a)(3)), an elective payment

election is due by the 15th day of the fifth

month after the end of such applicable

entity’s taxable year. However, subject to

Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Income Tax Regulations (26 CFR Part 1).

Bulletin No. 2024–45

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November 4, 2024

the issuance of guidance that specifies the

manner in which such entities can request

an extension of time to file and make the

elective payment election, an automatic

six-month extension from the 15th day of

the fifth month after the end of the taxable

year is deemed to be allowed. In the case

of an applicable entity for which a return

is required under section 6011 or 6033(a),

an elective payment election under section 6417(a) cannot be made later than the

due date (including extensions of time)

for the tax return for the taxable year for

which the election is made, and there is no

deemed automatic extension of time from

the original due date.

.04 For example, a State government

with a taxable year ending December

31, 2023, would have an original due

date to file Form 990-T to make an elective payment election of May 15, 2024,

with an automatic six-month extension

of time to November 15, 2024. A tax-exempt entity with a taxable year ending

December 31, 2023, would have an original due date to file Form 990-T to make

an elective payment election of May 15,

2024, but, without the relief granted in

section 3.02 of this revenue procedure,

would receive a six-month extension of

time to file only if the tax-exempt entity

properly filed Form 8868 on or before

May 15, 2024.

.05 Section 6417(h) authorizes the Secretary to issue such regulations or other

guidance as may be necessary to carry

out the purposes of section 6417, including guidance to ensure that the amount

of the payment or deemed payment made

under section 6417 is commensurate with

the amount of the credit that would be

otherwise allowable (determined without

regard to section 38(c)).

.06 Section 6081(a) permits the Secretary to grant a reasonable extension of

time, generally no more than six months,

for filing any return, statement, or other

required document.

.07 Section 7803(a)(2)(A) provides

that the Commissioner of Internal Revenue “shall have such duties and powers

as the Secretary may prescribe, including

the power to administer, manage, con-

duct, direct, and supervise the execution

and application of the internal revenue

laws or related statutes and tax conventions to which the United States is a

party.”

.08 As previously described in section

1 of this revenue procedure, the Treasury

Department and the IRS are aware that

many applicable entities that had otherwise intended to timely and properly

make an elective payment election on

an electronically-filed Form 990-T were

nevertheless unable to do so. For example, some applicable entities that did not

previously have an obligation to file Form

990-T timely filed the required Form

990, Return of Organization Exempt from

Income Tax, but failed to file a Form 990T, which is required to make an elective

payment election. Other applicable entities have been unable to engage thirdparty return preparers to electronically file

the Form 990-T with any other relevant

schedules and forms due to service limitations.

SECTION 3. AUTOMATIC

SIX-MONTH EXTENSION OF

TIME GRANTED TO CERTAIN

APPLICABLE ENTITIES

.01 Scope. An applicable entity

defined in section 6417(d)(1)(A) and

§1.6417-1(c) is eligible for the relief

provided in section 3.02 of this revenue

procedure if the applicable entity (1) had

a filing obligation under sections 6011 or

6033(a); (2) did not otherwise receive an

extension of time to file a return2; (3) is

filing a Form 990-T to make an elective

payment election for a taxable year ending on any day between, and including,

December 31, 2023 through November

30, 2024, regardless of whether the applicable entity previously filed a return for

that taxable year; and (4) meets all other

requirements for making an elective payment election, including pre-filing registration as required by §1.6417-2(b)(2)

and described in §1.6417-5.

.02 Extension Relief.

(1) An applicable entity described in

section 3.01 of this revenue procedure is

granted an automatic six-month extension of time to file an original or superseding Form 990-T (with any other relevant schedules and source credit forms

necessary to make an elective payment

election) electronically or on paper.

This relief does not require the filing of

a Form 8868 for the Form 990-T. See

section 5.02 of this revenue procedure

if the applicable entity’s elective payment election made during the extension period is rejected and the applicable

entity receives a letter (for example, a

CP131, CP131A, CP132 or CP133) from

the IRS. If the applicable entity’s original due date has not passed, however, the

applicable entity may also choose to file

Form 8868, which should prevent any

erroneous rejection described in section

5 of this revenue procedure. Form 8868

may be filed on paper or electronically,

but the IRS recommends electronic filing

whenever possible.

(2) This automatic six-month extension

of time to file an original or superseding

Form 990-T means that, for example, an

applicable entity with a taxable year ending on December 31, 2023, which meets

the other requirements of section 3.01,

may timely file a Form 990-T to make

an elective payment election on or before

November 15, 2024. Similarly, an applicable entity with a taxable year ending

on November 30, 2024, which meets the

other requirements of section 3.01, may

timely file a Form 990-T to make an elective payment election on or before October 15, 2025.

SECTION 4. ELECTIVE PAYMENT

ELECTION MAY BE MADE ON A

PAPER-FILED FORM 990-T

.01 Scope. An applicable entity

defined in section 6417(d)(1)(A) and

§1.6417-1(c) is eligible for the relief

provided in section 4.02 of this revenue

procedure if the applicable entity (1) is

eligible to file a Form 990-T to make an

elective payment election; (2) is filing

a Form 990-T to make an elective payment election for a taxable year ending on any day between, and including,

An applicable entity that already received an extension of time to file a Form 990-T from an original due date will continue to have that 6-month extended due date, and therefore does not

need the relief provided in this section 3. Such applicable entity, however, may be eligible to paper file its Form 990-T as described in section 4 of this revenue procedure.

November 4, 2024

1098

Bulletin No. 2024–45

December 31, 2023 through November

30, 2024; and (3) meets all other requirements for making an elective payment

election, including pre-filing registration as required by §1.6417-2(b)(2) and

described in §1.6417-5.

.02 Paper-Filing Relief. An applicable

entity described in section 4.01 of this

revenue procedure may make an elective

payment election on a paper-filed Form

990-T (along with any other relevant

schedules and source credit forms necessary to make an elective payment election) if it complies with the procedures

described in section 4.03 of this revenue

procedure.

.03 Procedure for paper-filing Form

990-T. An applicable entity using the

relief provided by section 4.02 of this revenue procedure must mail the paper Form

990-T (along with any other relevant

schedules and forms) to Department of the

Treasury, Internal Revenue Service Center, Ogden, UT 84201-0027 and notate

“Paper Filed under Revenue Procedure

2024-39” at the top of the return.

Bulletin No. 2024–45

SECTION 5. PROCEDURE FOR

APPLICABLE ENTITIES THAT HAVE

RECEIVED A NOTICE THAT THEIR

ELECTIVE PAYMENT ELECTION IS

INEFFECTIVE

.01 Scope. When an applicable entity

files an ineffective elective payment election because the election is late, the IRS

generally will issue a letter (for example, a

CP131, CP131A, CP132 or CP133) to that

applicable entity. If an applicable entity

described in section 3.01 of this revenue

procedure makes an elective payment

election on a Form 990-T filed from a

date after the original due date through the

extended due date, and receives a letter

that the elective payment election is ineffective because the return was late filed,

then the applicable entity should follow

the procedures in section 5.02 to ensure

their elective payment election is properly

processed.

.02 Procedure for responding to a letter stating the elective payment election

is ineffective. An applicable entity that

1099

is described in section 5.01 (meaning an

applicable entity that has filed Form 990-T

for an elective payment election within

the extended filing period but received

a notice indicating the elective payment

election is ineffective due to a late filed

return) can obtain assistance by calling

IRS Tax Exempt and Government Entities

Customer Account Services at 877-8295500 (toll-free number) and referencing

that the applicable entity is entitled to an

automatic extension of time to file under

Rev. Proc. 2024-39.

SECTION 6. DRAFTING

INFORMATION

The principal author of this revenue

procedure is Waheed Olayan of the Office

of Associate Chief Counsel (Passthroughs

& Special Industries). For further information regarding this revenue procedure

contact Mr. Olayan at (202) 317-6239 (not

a toll-free number).

November 4, 2024

26 CFR 601.602: Tax forms and instructions.

(Also Part I, §§ 1, 23, 24, 32, 36B, 42, 45R, 55, 59, 62, 63, 125, 132(f), 135, 137, 146, 147, 148, 152, 179, 179D, 199A, 213, 220, 221, 448, 461, 512, 513, 642, 831,

877, 877A, 911, 1274A, 2010, 2032A, 2503, 2523, 4161, 4261, 4611, 6033, 6039F, 6323, 6334, 6601, 6651, 6652, 6695, 6698, 6699, 6721, 6722, 7345, 7430, 7702B,

9831; 1.148-5.)

Rev. Proc. 2024-40

TABLE OF CONTENTS

SECTION 1. PURPOSE

Code Section1

SECTION 2. 2025 ADJUSTED ITEMS

.01 Tax Rate Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1(j)(2) (A)-(E)

.02 Unearned Income of Minor Children Subject to the “Kiddie Tax” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1(g)

.03 Maximum Capital Gains Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1(h)

.04 Adoption Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

.05 Child Tax Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

.06 Earned Income Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

.07 Refundable Credit for Coverage Under a Qualified Health Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36B(f)(2)(B)

.08 Rehabilitation Expenditures Treated as Separate New Building. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42(e)

.09 Low-Income Housing Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42(h)

.10 Employee Health Insurance Expense of Small Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45R

.11 Exemption Amounts for Alternative Minimum Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

.12 Alternative Minimum Tax Exemption for a Child Subject to the “Kiddie Tax” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59(j)

.13 Certain Expenses of Elementary and Secondary School Teachers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62(a)(2)(D)

.14 Transportation Mainline Pipeline Construction Industry Optional Expense Substantiation Rules for

Payments to Employees Under Accountable Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62(c)

.15 Standard Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

.16 Cafeteria Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

.17 Qualified Transportation Fringe Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132(f)

.18 Income from United States Savings Bonds for Taxpayers Who Pay Qualified Higher Education Expenses . . . . . . . . . 135

.19 Adoption Assistance Programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

.20 Private Activity Bonds Volume Cap. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146(d)

.21 Loan Limits on Agricultural Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147(c)(2)

.22 General Arbitrage Rebate Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148(f)

.23 Safe Harbor Rules for Broker Commissions on Guaranteed Investment Contracts or Investments

Purchased for a Yield Restricted Defeasance Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

.24 Gross Income Limitation for a Qualifying Relative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152(d)(1)(B)

.25 Election to Expense Certain Depreciable Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179

.26 Energy Efficient Commercial Buildings Deduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179D

.27 Qualified Business Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199A

.28 Eligible Long-Term Care Premiums. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213(d)(10)

.29 Medical Savings Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220

.30 Interest on Education Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221

.31 Limitation on Use of Cash Method of Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448

.32 Threshold for Excess Business Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461(l)

.33 Treatment of Dues Paid to Agricultural or Horticultural Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512(d)

.34 Insubstantial Benefit Limitations for Contributions Associated With Charitable Fund-Raising Campaigns. . . . . . . 513(h)

.35 Special Rules for Credits and Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 642

.36 Tax on Insurance Companies Other than Life Insurance Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 831

.37 Expatriation to Avoid Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 877

.38 Tax Responsibilities of Expatriation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 877A

.39 Foreign Earned Income Exclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 911

Unless otherwise specified, all references to “section” or “§” are to provisions of the Internal Revenue Code (Code).

November 4, 2024

1100

Bulletin No. 2024–45

.40 Debt Instruments Arising Out of Sales or Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1274A

.41 Unified Credit Against Estate Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2010

.42 Valuation of Qualified Real Property in Decedent’s Gross Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2032A

.43 Annual Exclusion for Gifts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2503; 2523

.44 Tax on Arrow Shafts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4161

.45 Passenger Air Transportation Excise Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4261

.46 Tax on Certain Uses of Crude Oil and Petroleum Products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4611

.47 Reporting Exception for Certain Exempt Organizations with Nondeductible Lobbying Expenditures . . . . . . . . 6033(e)(3)

.48 Notice of Large Gifts Received from Foreign Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6039F

.49 Persons Against Whom a Federal Tax Lien Is Not Valid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6323

.50 Property Exempt from Levy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6334(a)

.51 Exempt Amount of Wages, Salary, or Other Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6334(d)

.52 Interest on a Certain Portion of the Estate Tax Payable in Installments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6601(j)

.53 Failure to File Tax Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6651

.54 Failure to File Certain Information Returns, Registration Statements, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6652

.55 Other Assessable Penalties With Respect to the Preparation of Tax Returns for Other Persons. . . . . . . . . . . . . . . . . . 6695

.56 Failure to File Partnership Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6698

.57 Failure to File S Corporation Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6699

.58 Failure to File Correct Information Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6721

.59 Failure to Furnish Correct Payee Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6722

.60 Revocation or Denial of Passport in Case of Certain Tax Delinquencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7345

.61 Attorney Fee Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7430

.62 Periodic Payments Received Under Qualified Long-Term Care Insurance Contracts or Under Certain

Life Insurance Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7702B(d)

.63 Qualified Small Employer Health Reimbursement Arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9831

SECTION 3. EFFECTIVE DATE

SECTION 4. DRAFTING INFORMATION

SECTION 1. PURPOSE

This revenue procedure sets forth inflation-adjusted items for 2025 for various

Code provisions as in effect on October

22, 2024. The inflation adjusted items for

the Code sections set forth in section 2 of

this revenue procedure are generally determined by reference to § 1(f). If amendments to the Code are enacted for 2025

after October 22, 2024, taxpayers should

consult additional guidance to determine

whether these adjustments remain applicable for 2025.

SECTION 2. 2025 ADJUSTED ITEMS

.01 Tax Rate Tables. For taxable years

beginning in 2025, the tax rate tables

under § 1 are as follows:

TABLE 1 - Section 1(j)(2)(A) – Married Individuals Filing Joint Returns and Surviving Spouses

If Taxable Income Is:

The Tax Is:

Not over $23,850

10% of the taxable income

Over $23,850 but

$2,385 plus 12% of

not over $96,950

the excess over $23,850

$11,157 plus 22% of

Over $96,950 but

not over $206,700

the excess over $96,950

Over $206,700 but

$35,302 plus 24% of

not over $394,600

the excess over $206,700

Over $394,600 but

$80,398 plus 32% of

not over $501,050

the excess over $394,600

Over $501,050

$114,462 plus 35% of

but not over $751,600

the excess over $501,050

Over $751,600

$202,154.50 plus 37% of

the excess over $751,600

Bulletin No. 2024–45

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November 4, 2024

TABLE 2 - Section 1(j)(2)(B) – Heads of Households

If Taxable Income Is:

Not over $17,000

Over $17,000 but

not over $64,850

Over $64,850 but

not over $103,350

Over $103,350 but

not over $197,300

Over $197,300 but

not over $250,500

Over $250,500 but

not over $626,350

Over $626,350

The Tax Is:

10% of the taxable income

$1,700 plus 12% of

the excess over $17,000

$7,442 plus 22% of

the excess over $64,850

$15,912 plus 24% of

the excess over $103,350

$38,460 plus 32% of

the excess over $197,300

$55,484 plus 35% of

the excess over $250,500

$187,031.50 plus 37% of

the excess over $626,350

TABLE 3 - Section 1(j)(2)(C) – Unmarried Individuals (other than Surviving Spouses and Heads of Households)

If Taxable Income Is:

The Tax Is:

Not over $11,925

10% of the taxable income

Over $11,925 but

$1,192.50 plus 12% of

not over $48,475

the excess over $11,925

$5,578.50 plus 22% of

Over $48,475 but

not over $103,350

the excess over $48,475

Over $103,350 but

$17,651 plus 24% of

not over $197,300

the excess over $103,350

Over $197,300 but

$40,199 plus 32% of

not over $250,525

the excess over $197,300

Over $250,525 but

$57,231 plus 35% of

not over $626,350

the excess over $250,525

Over $626,350

$188,769.75 plus 37% of

the excess over $626,350

TABLE 4 - Section 1(j)(2)(D) – Married Individuals Filing Separate Returns

If Taxable Income Is:

The Tax Is:

Not over $11,925

10% of the taxable income

Over $11,925 but

$1,192.50 plus 12% of

not over $48,475

the excess over $11,925

$ 5,578.50 plus 22% of

Over $48,475 but

not over $103,350

the excess over $48,475

Over $103,350 but

$17,651 plus 24% of

not over $197,300

the excess over $103,350

Over $197,300 but

$40,199 plus 32% of

not over $250,525

the excess over $197,300

Over $250,525 but

$57,231 plus 35% of

not over $375,800

the excess over $250,525

Over $375,800

$101,077.25 plus 37% of

the excess over $375,800

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1102

Bulletin No. 2024–45

TABLE 5 - Section 1(j)(2)(E) – Estates and Trusts

If Taxable Income Is:

Not over $3,150

Over $3,150 but

not over $11,450

Over $11,450 but

not over $15,650

Over $15,650

.02 Unearned Income of Minor Children Subject to the “Kiddie Tax”. For taxable years beginning in 2025, the amount

in § 1(g)(4)(A)(ii)(I), which is used to

reduce the net unearned income reported

on the child’s return that is subject to

the “kiddie tax,” is $1,350. This $1,350

amount is the same as the amount provided

in § 63(c)(5)(A), as adjusted for inflation.

The Tax Is:

10% of the taxable income

$315 plus 24% of

the excess over $3,150

$2,307 plus 35% of

the excess over $11,450

$3,777 plus 37% of

the excess over $15,650

The same $1,350 amount is used for purposes of § 1(g)(7) to determine whether a

parent may elect to include a child’s gross

income in the parent’s gross income and

to calculate the “kiddie tax.” For example,

one of the requirements for the parental

election is that a child’s gross income is

more than the amount referenced in § 1(g)

(4)(A)(ii)(I) but less than 10 times that

Filing Status

Married Individuals Filing Joint Returns and Surviving Spouse

Married Individuals Filing Separate Returns

Heads of Household

All Other Individuals

Estates and Trusts

.04 Adoption Credit. For taxable years

beginning in 2025, under § 23(a)(3) the

credit allowed for an adoption of a child

with special needs is $17,280. For taxable

years beginning in 2025, under § 23(b)

(1) the maximum credit allowed for other

adoptions is the amount of qualified adoption expenses up to $17,280. The available adoption credit begins to phase out

under § 23(b)(2)(A) for taxpayers with

modified adjusted gross income in excess

of $259,190 and is completely phased out

for taxpayers with modified adjusted gross

income of $299,190 or more. See section

2.19 of this revenue procedure for the

adjusted items relating to adoption assistance programs.

Bulletin No. 2024–45

Maximum Zero

Rate Amount

$96,700

$48,350

$64,750

$48,350

$3,250

.05 Child Tax Credit. For taxable years

beginning in 2025, the amount used in

§ 24(d)(1)(A) to determine the amount of

credit under § 24 that may be refundable

is $1,700.

.06 Earned Income Credit.

(1) In general. For taxable years beginning in 2025, the following amounts are

used to determine the earned income

credit under § 32(b). The “earned income

amount” is the amount of earned income

at or above which the maximum amount

of the earned income credit is allowed.

The “threshold phaseout amount” is the

amount of adjusted gross income (or, if

greater, earned income) above which the

maximum amount of the credit begins

1103

amount; thus, a child’s gross income for

2025 must be more than $1,350 but less

than $13,500.

.03 Maximum Capital Gains Rate (§

1(h), § 1(j)(5)). For taxable years beginning in 2025, the maximum zero rate

amounts and maximum 15 percent rate

amounts under § 1(j)(5)(B), as adjusted

for inflation, are as follows:

Maximum15%

Rate Amount

$600,050

$300,000

$566,700

$533,400

$15,900

to phase out. The “completed phaseout

amount” is the amount of adjusted gross

income (or, if greater, earned income) at

or above which no credit is allowed. The

threshold phaseout amounts and the completed phaseout amounts shown in the

table below for married taxpayers filing a

joint return include the increase provided

in § 32(b)(2)(B), as adjusted for inflation

for taxable years beginning in 2025. The

threshold phaseout amounts and the completed phaseout amounts shown in the

table below for taxpayers with all other

filing statuses also apply to married taxpayers who are not filing a joint return

and satisfy the special rules for separated

spouses in § 32(d).

November 4, 2024

Item

Earned Income Amount

Maximum Amount of Credit

Threshold Phaseout Amount (Married Filing Jointly)

Completed Phaseout Amount (Married Filing Jointly)

Threshold Phaseout Amount (All other filing statuses)

Completed Phaseout Amount (All other filing statuses)

One

$12,730

$4,328

$30,470

$57,554

$23,350

$50,434

Number of Qualifying Children

Two

Three or More

$17,880

$7,152

$8,046

$30,470

$64,430

$68,675

$23,350

$57,310

$61,555

None

$8,490

$649

$17,730

$26,214

$10,620

$19,104

.07 Refundable Credit for Coverage

Under a Qualified Health Plan. For taxable years beginning in 2025, the limitation on tax imposed under § 36B(f)(2)

(B) for excess advance credit payments

is determined using the following table:

The instructions for the Form 1040

series provide tables showing the amount

of the earned income credit for each type

of taxpayer.

(2) Excessive Investment Income.

For taxable years beginning in 2025, the

earned income tax credit is not allowed

under § 32(i) if the aggregate amount

of certain investment income exceeds

$11,950.

If the household income (expressed as a

percent of poverty line) is:

Less than 200%

At least 200% but less than 300%

At least 300% but less than 400%

The limitation amount for unmarried individuals

The limitation amount

(other than surviving spouses and heads of household) is: for all other taxpayers is:

$375

$750

$975

$1,950

$1,625

$3,250

.08

Rehabilitation

Expenditures

Treated as Separate New Building. For

calendar year 2025, the per low-income

unit qualified basis amount under § 42(e)

(3)(A)(ii)(II) is $8,500.

.09 Low-Income Housing Credit. For

calendar year 2025, the amount used under

§ 42(h)(3)(C)(ii) to calculate the State hous-

ing credit ceiling for the low-income housing

credit is the greater of (1) $3.00 multiplied

by the State population, or (2) $3,455,000.

.10 Employee Health Insurance

Expense of Small Employers. For taxable

years beginning in 2025, the dollar amount

in effect under § 45R(d)(3)(B) is $33,300.

This amount is used under § 45R(c) for

limiting the small employer health insurance credit and under § 45R(d)(1)(B)

for determining who is an eligible small

employer for purposes of the credit.

.11 Exemption Amounts for Alternative

Minimum Tax. For taxable years beginning in 2025, the exemption amounts

under § 55(d)(1) are:

Joint Returns or Surviving Spouses

Unmarried Individuals (other than Surviving Spouses)

Married Individuals Filing Separate Returns

Estates and Trusts

For taxable years beginning in 2025,

under § 55(b)(1), the excess taxable

$137,000

$88,100

$68,500

$30,700

income above which the 28 percent tax

rate applies is:

Married Individuals Filing Separate Returns

All Other Taxpayers

For taxable years beginning in 2025,

the amounts used under § 55(d)(2) to

determine the phaseout of the exemption

amounts are:

Joint Returns or Surviving Spouses

Unmarried Individuals (other than Surviving Spouses)

Married Individuals Filing Separate Returns

Estates and Trusts

November 4, 2024

$119,550

$239,100

Threshold Phaseout Amount

$1,252,700

$626,350

$102,500

1104

Complete Phaseout Amount

$1,800,700

$978,750

$900,350

$225,300

Bulletin No. 2024–45

.12 Alternative Minimum Tax Exemption

for a Child Subject to the “Kiddie Tax.” For

taxable years beginning in 2025, for a child

to whom the § 1(g) “kiddie tax” applies,

the exemption amount under §§ 55(d) and

59(j) for purposes of the alternative minimum tax under § 55 may not exceed the

sum of (1) the child’s earned income for the

taxable year, plus (2) $9,550.

.13 Certain Expenses of Elementary

and Secondary School Teachers. For

taxable years beginning in 2025, under

§ 62(a)(2)(D) the amount of the deduction allowed under § 162 that consists of

expenses paid or incurred by an eligible

educator in connection with books, supplies (other than nonathletic supplies for

courses of instruction in health or physical education), computer equipment

(including related software and services)

and other equipment, and supplementary

materials used by the eligible educator in

the classroom is $300.

.14 Transportation Mainline Pipeline

Construction Industry Optional Expense

Substantiation Rules for Payments to

Employees Under Accountable Plans. For

calendar year 2025, an eligible employer

may pay certain welders and heavy equipment mechanics an amount up to $22

per hour for rig-related expenses that are

deemed substantiated under an accountable plan if paid in accordance with Rev.

Proc. 2002-41, 2002-1 C.B. 1098. If the

employer provides fuel or otherwise reimburses fuel expenses, an amount up to $14

per hour is deemed substantiated if paid

under Rev. Proc. 2002-41.

.15 Standard Deduction.

(1) In general. For taxable years beginning in 2025, the standard deduction

amounts under § 63(c)(2) are as follows:

Filing Status

Married Individuals Filing Joint Returns and Surviving Spouses (§ 1(j)(2)(A))

Heads of Households (§ 1(j)(2)(B))

Unmarried Individuals (other than Surviving Spouses and Heads of Households) (§ 1(j)(2)(C))

Married Individuals Filing Separate Returns (§ 1(j)(2)(D))

(2) Dependent. For taxable years

beginning in 2025, the standard deduction

amount under § 63(c)(5) for an individual who may be claimed as a dependent

by another taxpayer cannot exceed the

greater of (1) $1,350, or (2) the sum of

$450 and the individual’s earned income.

(3) Aged or blind. For taxable years

beginning in 2025, the additional standard

deduction amount under § 63(f) for the

aged or the blind is $1,600. The additional

standard deduction amount is increased to

$2,000 if the individual is also unmarried

and not a surviving spouse.

.16 Cafeteria Plans. For taxable years

beginning in 2025, the dollar limitation

under § 125(i) on voluntary employee salary reductions for contributions to health

flexible spending arrangements is $3,300.

If the cafeteria plan permits the carryover

of unused amounts, the maximum carryover amount is $660.

.17 Qualified Transportation Fringe

Benefit. For taxable years beginning in

2025, the monthly limitation under §

132(f)(2)(A) regarding the aggregate

fringe benefit exclusion amount for transportation in a commuter highway vehicle

and any transit pass is $325. The monthly

limitation under § 132(f)(2)(B) regarding

the fringe benefit exclusion amount for

qualified parking is $325.

.18 Income from United States Savings

Bonds for Taxpayers Who Pay Qualified

Bulletin No. 2024–45

Higher Education Expenses. For taxable years beginning in 2025, the exclusion under § 135, regarding income from

United States savings bonds for taxpayers who pay qualified higher education

expenses, begins to phase out for modified

adjusted gross income above $149,250

for joint returns and $99,500 for all other

returns. The exclusion is completely

phased out for modified adjusted gross

income of $179,250 or more for joint

returns and $114,500 or more for all other

returns.

.19 Adoption Assistance Programs.

For taxable years beginning in 2025,

under § 137(a)(2), the amount that can

be excluded from an employee’s gross

income for the adoption of a child with

special needs is $17,280. For taxable years

beginning in 2025, under § 137(b)(1) the

maximum amount that can be excluded

from an employee’s gross income for the

amounts paid or expenses incurred by an

employer for qualified adoption expenses

furnished pursuant to an adoption assistance program for adoptions by the

employee is $17,280. The amount excludable from an employee’s gross income

begins to phase out under § 137(b)(2)

(A) for taxpayers with modified adjusted

gross income in excess of $259,190 and

is completely phased out for taxpayers

with modified adjusted gross income of

$299,190 or more. (See section 2.04 of

1105

Standard Deduction

$30,000

$22,500

$15,000

this revenue procedure for the adjusted

items relating to the adoption credit.)

.20 Private Activity Bonds Volume

Cap. For calendar year 2025, the amounts

used under § 146(d) to calculate the State

ceiling for the volume cap for private

activity bonds is the greater of (1) $130

multiplied by the State population, or (2)

$388,780,000.

.21 Loan Limits on Agricultural

Bonds. For calendar year 2025, the loan

limit amount on agricultural bonds under

§ 147(c)(2)(A) for first-time farmers is

$667,500.

.22 General Arbitrage Rebate Rules.

For bond years ending in 2025, the amount

of the computation credit determined

under § 1.148-3(d)(4) of the Income Tax

Regulations is $2,120.

.23 Safe Harbor Rules for Broker

Commissions on Guaranteed Investment

Contracts or Investments Purchased for a

Yield Restricted Defeasance Escrow. For

calendar year 2025, under § 1.148-5(e)(2)

(iii)(B)(1) of the Income Tax Regulations,

a broker’s commission or similar fee for

the acquisition of a guaranteed investment

contract or investments purchased for a

yield restricted defeasance escrow is reasonable if (1) the amount of the fee that

the issuer treats as a qualified administrative cost does not exceed the lesser of

(A) $50,000, and (B) 0.2 percent of the

computational base (as defined in § 1.148-

November 4, 2024

5(e)(2)(iii)(B)(2)) or, if more, $5,000; and

(2) for any issue, the issuer does not treat

more than $141,000 in brokers’ commissions or similar fees as qualified administrative costs for all guaranteed investment contracts and investments for yield

restricted defeasance escrows purchased

with gross proceeds of the issue.

.24 Gross Income Limitation for a

Qualifying Relative. For taxable years

beginning in 2025, the exemption amount

referenced in § 152(d)(1)(B) is $5,200.

.25 Election to Expense Certain Depreciable Assets. For taxable years beginning

in 2025, under § 179(b)(1), the aggregate

cost of any § 179 property that a taxpayer

elects to treat as an expense cannot exceed

$1,250,000 and under § 179(b)(5)(A), the

cost of any sport utility vehicle that may

be taken into account under § 179 cannot exceed $31,300. Under § 179(b)(2),

the $1,250,000 limitation under § 179(b)

(1) is reduced (but not below zero) by the

amount by which the cost of § 179 property placed in service during the 2025 taxable year exceeds $3,130,000.

.26 Energy Efficient Commercial

Buildings Deduction. For taxable years

beginning in 2025, the applicable dollar value used to determine the maximum allowance of the deduction under

§ 179D(b)(2) is $0.58 increased (but

not above $1.16) by $0.02 for each percentage point by which the total annual

Filing Status

Married Individuals Filing Joint Returns

Married Individuals Filing Separate Returns

All Other Returns

.28 Eligible Long-Term Care Premiums. For taxable years beginning in 2025,

Threshold amount

$394,600

$197,300

the limitations under § 213(d)(10), regarding eligible long-term care premiums

Attained Age Before the Close of the Taxable Year

40 or less

More than 40 but not more than 50

More than 50 but not more than 60

More than 60 but not more than 70

More than 70

.29 Medical Savings Accounts.

(1) Self-only coverage. For taxable

years beginning in 2025, the term “high

deductible health plan” as defined in

§ 220(c)(2)(A) means, for self-only coverage, a health plan that has an annual

deductible that is not less than $2,850

and not more than $4,300, and under

which the annual out-of-pocket expenses

required to be paid (other than for premiums) for covered benefits do not exceed

$5,700.

(2) Family coverage. For taxable

years beginning in 2025, the term “high

deductible health plan” means, for family

coverage, a health plan that has an annual

deductible that is not less than $5,700

and not more than $8,550, and under

which the annual out-of-pocket expenses

November 4, 2024

energy and power costs for the buildings

are certified to be reduced by a percentage greater than 25 percent. For taxable

years beginning in 2025, the applicable dollar value used to determine the

increased deduction amount for certain

property under § 179D(b)(3) is $2.90

increased (but not above $5.81) by $0.12

for each percentage point by which the

total annual energy and power costs for

the building are certified to be reduced by

a percentage greater than 25 percent.

.27 Qualified Business Income. For taxable years beginning in 2025, the threshold

amounts under § 199A(e)(2) and phase-in

range amounts under § 199A(b)(3)(B) and

§ 199A(d)(3)(A) are:

Phase-in range amount

$494,600

$247,300

includible in the term “medical care”, as

adjusted for inflation, are as follows:

Limitation on Premiums

$480

$900

$1,800

$4,810

$6,020

required to be paid (other than for premiums) for covered benefits do not exceed

$10,500.

.30 Interest on Education Loans. For

taxable years beginning in 2025, the

$2,500 maximum deduction for interest

paid on qualified education loans under

§ 221 begins to phase out under § 221(b)

(2)(B), as adjusted for inflation, for taxpayers with modified adjusted gross income

in excess of $85,000 ($170,000 for joint

returns), and is completely phased out for

taxpayers with modified adjusted gross

income of $100,000 or more ($200,000 or

more for joint returns).

.31 Limitation on Use of Cash

Method of Accounting. For taxable

years beginning in 2025, a corporation

or partnership meets the gross receipts

1106

test of § 448(c) for any taxable year if

the average annual gross receipts of

such entity for the 3-taxable-year period

ending with the taxable year which precedes such taxable year does not exceed

$31,000,000.

.32 Threshold for Excess Business

Loss. For taxable years beginning in 2025,

in determining a taxpayer’s excess business loss, the amount under § 461(l)(3)

(A)(ii)(II) is $313,000 ($626,000 for joint

returns).

.33 Treatment of Dues Paid to Agricultural or Horticultural Organizations.

For taxable years beginning in 2025, the

limitation under § 512(d)(1), regarding

the exemption of annual dues required to

be paid by a member to an agricultural or

horticultural organization, is $207.

Bulletin No. 2024–45

.34 Insubstantial Benefit Limitations

for Contributions Associated with Charitable Fund-Raising Campaigns.

(1) Low cost article. For taxable years

beginning in 2025, for purposes of defining the term “unrelated trade or business”

for certain exempt organizations under

§ 513(h)(2), “low cost articles” are articles

costing $13.60 or less.

(2) Other insubstantial benefits. For

taxable years beginning in 2025, under

§ 170, the $5, $25, and $50 guidelines in

section 3 of Rev. Proc. 90-12, 1990-1 C.B.

471 (as amplified by Rev. Proc. 92-49,

1992-1 C.B. 987, and modified by Rev.

Proc. 92-102, 1992-2 C.B. 579), for the

value of insubstantial benefits that may be

received by a donor in return for a contribution, without causing the contribution

to fail to be fully deductible, are $13.60,

$68.00 and $136.00, respectively.

.35 Special Rules for Credits and

Deductions. For taxable years beginning

in 2025, the amount of the deduction

under § 642(b)(2)(C)(i) is $5,100.

.36 Tax on Insurance Companies Other

than Life Insurance Companies. For

taxable years beginning in 2025, under

§ 831(b)(2)(A)(i) the amount of the limit

on net written premiums or direct written premiums (whichever is greater) is

$2,850,000 to elect the alternative tax for

certain small companies under § 831(b)

(1) to be taxed only on taxable investment

income.

.37 Expatriation to Avoid Tax. For

calendar year 2025, under § 877A(g)(1)

(A), unless an exception under § 877A(g)

(1)(B) applies, an individual is a covered

expatriate if the individual’s “average

annual net income tax” under § 877(a)

(2)(A) for the five taxable years ending

before the expatriation date is more than

$206,000.

.38 Tax Responsibilities of Expatriation. For taxable years beginning in 2025,

the amount that would be includible in

the gross income of a covered expatriate

by reason of § 877A(a)(1) is reduced (but

not below zero) by $890,000 pursuant to §

877A(a)(3).

.39 Foreign Earned Income Exclusion.

For taxable years beginning in 2025, the

foreign earned income exclusion amount

under § 911(b)(2)(D)(i) is $130,000.

.40 Debt Instruments Arising Out of

Sales or Exchanges. For calendar year

Bulletin No. 2024–45

2025, a qualified debt instrument under

§ 1274A(b) has stated principal that does

not exceed $7,296,700, and a cash method

debt instrument under § 1274A(c)(2)

has stated principal that does not exceed

$5,211,900.

.41 Unified Credit Against Estate Tax.

For an estate of any decedent dying in

calendar year 2025, the basic exclusion

amount is $13,990,000 for determining

the amount of the unified credit against

estate tax under § 2010.

.42 Valuation of Qualified Real Property in Decedent’s Gross Estate. For an

estate of a decedent dying in calendar

year 2025, if the executor elects to use

the special use valuation method under

§ 2032A for qualified real property, the

aggregate decrease in the value of qualified real property resulting from electing

to use § 2032A for purposes of the estate

tax cannot exceed $1,420,000.

.43 Annual Exclusion for Gifts.

(1) For calendar year 2025, the first

$19,000 of gifts to any person (other than

gifts of future interests in property) are

not included in the total amount of taxable

gifts under § 2503 made during that year.

(2) For calendar year 2025, the first

$190,000 of gifts to a spouse who is not

a citizen of the United States (other than

gifts of future interests in property) are

not included in the total amount of taxable

gifts under §§ 2503 and 2523(i)(2) made

during that year.

.44 Tax on Arrow Shafts. For calendar year 2025, the tax imposed under

§ 4161(b)(2)(A) on the first sale by the

manufacturer, producer, or importer of

any shaft of a type used in the manufacture of certain arrows is $0.63 per shaft.

.45 Passenger Air Transportation

Excise Tax. For calendar year 2025, the

tax under § 4261(b)(1) on the amount paid

for each domestic segment of taxable air

transportation is $5.20. For calendar year

2025, the tax under § 4261(c)(1) on any

amount paid (whether within or without

the United States) for any international air

transportation, if the transportation begins

or ends in the United States, generally is

$22.90. Under § 4261(c)(3), however, a

lower rate of tax applies under § 4261(c)

(1) to a domestic segment beginning or

ending in Alaska or Hawaii, and the tax

applies only to departures. For calendar

year 2025, the rate of tax is $11.40.

1107

.46 Tax on Certain Uses of Crude Oil

and Petroleum Products. For calendar year

2025, the tax imposed under § 4611(a) on

crude oil received at a United States refinery and petroleum products entered into

the United States for consumption, use, or

warehousing is $0.26 cents per barrel.

.47 Reporting Exception for Certain

Exempt Organizations with Nondeductible Lobbying Expenditures. For taxable

years beginning in 2025, the annual per

person, family, or entity dues limitation to

qualify for the reporting exception under

§ 6033(e)(3) (and section 5.05 of Rev.

Proc. 98-19, 1998-1 C.B. 547), regarding certain exempt organizations with

nondeductible lobbying expenditures, is

$143.00 or less.

.48 Notice of Large Gifts Received

from Foreign Persons. For taxable years

beginning in 2025, § 6039F authorizes the

Secretary of the Treasury or her delegate

to require recipients of gifts from certain

foreign persons to report these gifts if the

aggregate value of gifts received in the

taxable year exceeds $20,116.

.49 Persons Against Whom a Federal Tax Lien Is Not Valid. For calendar

year 2025, a federal tax lien is not valid

against (1) certain purchasers under

§ 6323(b)(4) who purchased personal

property in a casual sale for less than

$1,960, or (2) a mechanic’s lienor under

§ 6323(b)(7) who repaired or improved

certain residential property if the contract price with the owner is not more

than $9,790.

.50 Property Exempt from Levy. For

calendar year 2025, the value of property

exempt from levy under § 6334(a)(2) (fuel,

provisions, furniture, and other household

personal effects, as well as arms for personal use, livestock, and poultry) cannot

exceed $11,710. The value of property

exempt from levy under § 6334(a)(3)

(books and tools necessary for the trade,

business, or profession of the taxpayer)

cannot exceed $5,860.

.51 Exempt Amount of Wages, Salary,

or Other Income. For taxable years beginning in 2025, the dollar amount used to

calculate the amount determined under

§ 6334(d)(4)(B) is $5,100.

.52 Interest on a Certain Portion of the

Estate Tax Payable in Installments. For an

estate of a decedent dying in calendar year

2025, the dollar amount used to determine

November 4, 2024

the “2-percent portion” (for purposes of

calculating interest under § 6601(j)) of the

estate tax extended as provided in § 6166

is $1,900,000.

.53 Failure to File Tax Return. In the

case of any return required to be filed

in 2026, the amount of the addition to

tax under § 6651(a) for failure to file an

income tax return within 60 days of the

due date of such return (determined with

regard to any extensions of time for filing)

will not be less than the lesser of $525 or

100 percent of the amount required to be

shown as tax on such return.

.54 Failure to File Certain Information

Returns, Registration Statements, etc. For

returns required to be filed in 2026, the

penalty amounts under § 6652(c) are:

(1) for failure to file a return required

under § 6033(a)(1) (relating to returns

by exempt organization) or § 6012(a)(6)

(relating to returns by political organizations):

Scenario

Organization (§ 6652(c)(1)(A))

Daily Penalty

$25

Organization with gross receipts exceeding $1,309,500 (§ 6652(c)(1)(A))

Managers (§ 6652(c)(1)(B))

Public inspection of annual returns and reports (§ 6652(c)(1)(C))

Public inspection of applications for exemption and notice of status

(§ 6652(c)(1)(D))

$130

$10

$25

(2) for failure to file a return required

under § 6034 (relating to returns by cer-

Maximum Penalty

Lesser of $13,000 or 5% of gross

receipts of the organization for

the year.

$65,000

$6,500

$13,000

No Limit

tain trust) or § 6043(b) (relating to terminations, etc., of exempt organizations):

Scenario

Organization or trust (§ 6652(c)(2)(A))

Managers (§ 6652(c)(2)(B))

Split-Interest Trust (§ 6652(c)(2)(C)(ii))

Any trust with gross income exceeding $327,000 (§ 6652(c)(2)(C)(ii))

Daily Penalty

$10

$25

$130

Maximum Penalty

$6,500

$13,000

$65,000

(3) for failure to file a disclosure required under § 6033(a)(2):

Scenario

Tax–exempt entity (§ 6652(c)(3)(A))

Failure to comply with written demand (§ 6652(c)(3)(B)(ii))

Daily Penalty

$130

.55 Other Assessable Penalties With

Respect to the Preparation of Tax Returns

filed in 2026, the penalty amounts under

§ 6695 are:

for Other Persons. In the case of any failure relating to a return or claim for refund

Scenario

Failure to furnish copy to taxpayer (§ 6695(a))

Failure to sign return (§ 6695(b))

Failure to furnish identifying number (§ 6695(c))

Failure to retain copy or list (§ 6695(d))

Failure to file correct information returns (§ 6695(e))

Negotiation of check (§ 6695(f))

Failure to be diligent in determining eligibility for head of household

filing status, child tax credit, American Opportunity tax credit, and

earned income credit (§ 6695(g))

November 4, 2024

1108

Per Return or Claim for

Refund

$65

$65 per return and item in

return

$650 per check

$650 per failure

Maximum Penalty

$65,000

$13,000

Maximum Penalty

$32,500

No limit

Bulletin No. 2024–45

.56 Failure to File Partnership Return.

In the case of any return required to be

filed in 2026, the dollar amount used to

determine the amount of the penalty under

§ 6698(b)(1) is $255.

.57 Failure to File S Corporation

Return. In the case of any return required

to be filed in 2026, the dollar amount used

to determine the amount of the penalty

under § 6699(b)(1) is $255.

.58 Failure to File Correct Information

Returns. In the case of any failure relating

to a return required to be filed in 2026, the

penalty amounts under § 6721 are:

Scenario

General Rule (§ 6721(a)(1))

Corrected on or before 30 days after required filing date (§ 6721(b)(1))

Corrected after 30th day but on or before August 1, 2026 (§ 6721(b)(2))

(2) for persons with average annual

gross receipts for the most recent three

(1) for persons with average annual

gross receipts for the most recent three

taxable years of more than $5,000,000,

for failure to file correct information

returns:

Penalty Per Return

$340

$60

$130

taxable years of $5,000,000 or less, for

failure to file correct information returns:

Scenario

Penalty Per Return

General Rule (§ 6721(d)(1)(A))

$340

Corrected on or before 30 days after required filing date (§ 6721(d)(1)(B)) $60

Corrected after 30th day but on or before August 1, 2026 (§ 6721(d)(1)(C)) $130

(3) for failure to file correct information returns due to intentional disregard

Calendar Year Maximum

$4,098,500

$683,000

$2,049,000

Calendar Year Maximum

$1,366,000

$239,000

$683,000

of the filing requirement (or the correct

information reporting requirement):

Scenario

Penalty Per Return

Return other than a return required to be filed under

§ 6045(a), 6041A(b), 6050H, 6050I, 6050J, 6050K,

or 6050L (§ 6721(e)(2)(A))

Return required to be filed under § 6045(a), 6050K,

or 6050L (§ 6721(e)(2)(B))

Return required to be filed under § 6050I(a)

(§ 6721(e)(2)(C))

Return required to be filed under § 6050V (§ 6721(e)

(2)(D))

Greater of (i) $680, or (ii) 10% of aggregate amount of

items required to be reported correctly

.59 Failure to Furnish Correct Payee

Statements. In the case of any failure

relating to a statement required to be furnished in 2026, the penalty amounts under

§ 6722 are:

Greater of (i) $680, or (ii) 5% of aggregate amount of

items required to be reported correctly

Greater of (i) $34,150, or (ii) amount of cash received

up to $136,500

Greater of (i) $680, or (ii) 10% of the value of the benefit of any contract with respect to which information is

required to be included on the return

No limit

(1) for persons with average annual

gross receipts for the most recent three

taxable years of more than $5,000,000,

for failure to furnish correct payee statements:

Scenario

General Rule (§ 6722(a)(1))

Corrected on or before 30 days after required furnishing date (§ 6722(b)(1))

Corrected after 30th day but on or before August 1, 2026 (§ 6722(b)(2))

Bulletin No. 2024–45

Calendar Year

Maximum

No limit

1109

Penalty Per Statement

$340

$60

$130

Calendar Year Maximum

$4,098,500

$683,000

$2,049,000

November 4, 2024

(2) for persons with average annual

gross receipts for the most recent 3 taxable

years of $5,000,000 or less, for failure to

furnish correct payee statements:

Scenario

General Rule (§ 6722(d)(1)(A))

Corrected on or before 30 days after required furnishing date (§ 6722(d)(1)(B))

Corrected after 30th day but on or before August 1, 2026 (§ 6722(d)(1)(C))

(3) for failure to furnish correct payee

statements due to intentional disregard of

the requirement to furnish a payee state-

Penalty Per Statement

$340

$60

$130

Calendar Year Maximum

$1,366,000

$239,000

$683,000

ment (or the correct information reporting

requirement):

Scenario

Penalty Per Statement

Payee statement other than a statement required under

§ 6045(b), 6041A(e) (in respect of a return required under

§ 6041A(b)), 6050H(d), 6050J(e), 6050K(b), or 6050L(c)

(§ 6722(e)(2)(A))

Payee statement required under § 6045(b), 6050K(b), or

6050L(c) (§ 6722(e)(2)(B))

Greater of (i) $680, or (ii) 10% of aggregate

amount of items required to be reported

correctly

.60 Revocation or Denial of Passport

in Case of Certain Tax Delinquencies.

For calendar year 2025, the amount of a

serious delinquent tax debt under § 7345

is $64,000.

.61 Attorney Fee Awards. For fees

incurred in calendar year 2025, the attorney fee award limitation under § 7430(c)

(1)(B)(iii) is $250 per hour.

.62 Periodic Payments Received Under

Qualified Long-Term Care Insurance

Contracts or Under Certain Life Insurance Contracts. For calendar year 2025,

the stated dollar amount of the per diem

limitation under § 7702B(d)(4), regarding

periodic payments received under a qualified long-term care insurance contract or

periodic payments received under a life

insurance contract that are treated as paid

by reason of the death of a chronically ill

individual, is $420.

.63 Qualified Small Employer Health

Reimbursement Arrangement. For taxable years beginning in 2025, to qualify

as a qualified small employer health reimbursement arrangement under § 9831(d),

the arrangement must provide that the

total amount of payments and reimburse-

November 4, 2024

Greater of (i) $680, or (ii) 5% of aggregate

amount of items required to be reported

correctly

ments for any year cannot exceed $6,350

($12,800 for family coverage).

SECTION 3. EFFECTIVE DATE

.01 General Rule. Except as provided

in section 3.02 of this revenue procedure,

this revenue procedure applies to taxable

years beginning in 2025.

.02 Calendar Year Rule. This revenue procedure applies to transactions or

events occurring in calendar year 2025 for

purposes of sections 2.08 (rehabilitation

expenditures treated as separate new building), 2.09 (low-income housing credit),

2.14 (transportation mainline pipeline construction industry optional expense substantiation rules for payments to employees under accountable plans), 2.20 (private

activity bonds volume cap), 2.21 (loan

limits on agricultural bonds), 2.22 (general

arbitrage rebate rules), 2.23 (safe harbor

rules for broker commissions on guaranteed investment contracts or investments

purchased for a yield restricted defeasance

escrow), 2.37 (expatriation to avoid taxes),

2.40 (debt instruments arising out of sales

or exchanges), 2.41 (unified credit against

1110

Calendar Year

Maximum

No limit

estate tax), 2.42 (valuation of qualified real

property in decedent’s gross estate), 2.43

(annual exclusion for gifts), 2.44 (tax on

arrow shafts), 2.45 (passenger air transportation excise tax), 2.46 (tax on certain uses

of crude oil and petroleum products), 2.49

(persons against whom a federal tax lien

is not valid), 2.50 (property exempt from

levy), 2.52 (interest on a certain portion of

the estate tax payable in installments), 2.60

(revocation or denial of passport in case of

certain tax delinquencies), 2.61 (attorney

fee awards), and 2.62 (periodic payments

received under qualified long-term care

insurance contracts or under certain life

insurance contracts) of this revenue procedure.

SECTION 4. DRAFTING

INFORMATION

The principal author of this revenue

procedure is Kyle Walker of the Office

of Associate Chief Counsel (Income Tax

& Accounting). For further information

regarding this revenue procedure, contact

Mr. Walker at (202) 317-4718 (not a tollfree number).

Bulletin No. 2024–45

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. 2024–45

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.

November 4, 2024

Numerical Finding List1

Bulletin 2024–45

Announcements:

2024-26, 2024-27 I.R.B. 14

2024-27, 2024-27 I.R.B. 14

2024-28, 2024-28 I.R.B. 39

2024-29, 2024-29 I.R.B. 71

2024-31, 2024-34 I.R.B. 533

2024-32, 2024-35 I.R.B. 535

2024-30, 2024-36 I.R.B. 581

2024-39, 2024-39 I.R.B. 639

2024-34, 2024-41 I.R.B. 758

2024-35, 2024-43 I.R.B. 1013

2024-36, 2024-44 I.R.B. 1073

Notices:

2024-47, 2024-27 I.R.B. 1

2024-52, 2024-27 I.R.B. 2

2024-53, 2024-27 I.R.B. 4

2024-54, 2024-28 I.R.B. 24

2024-55, 2024-28 I.R.B. 31

2024-56, 2024-29 I.R.B. 64

2024-57, 2024-29 I.R.B. 67

2024-58, 2024-30 I.R.B. 120

2024-59, 2024-32 I.R.B. 348

2024-60, 2024-34 I.R.B. 515

2024-61, 2024-34 I.R.B. 520

2024-62, 2024-36 I.R.B. 570

2024-63, 2024-36 I.R.B. 573

2024-64, 2024-39 I.R.B. 632

2024-65, 2024-39 I.R.B. 633

2024-66, 2024-40 I.R.B. 682

2024-67, 2024-41 I.R.B. 726

2024-68, 2024-41 I.R.B. 729

2024-69, 2024-41 I.R.B. 733

2024-70, 2024-43 I.R.B. 1001

2024-72, 2024-43 I.R.B. 1005

2024-73, 2024-43 I.R.B. 1007

2024-71, 2024-44 I.R.B. 1026

2024-75, 2024-44 I.R.B. 1026

2024-74, 2024-45 I.R.B. 1089

2024-76, 2024-45 I.R.B. 1089

2024-77, 2024-45 I.R.B. 1093

Proposed Regulations:

REG-124593-23, 2024-28 I.R.B. 40

REG-109032-23, 2024-31 I.R.B. 332

REG-120137-19, 2024-31 I.R.B. 336

REG-119283-23, 2024-32 I.R.B. 351

REG-102161-23 2024-33 I.R.B. 502

REG-103529-23, 2024-33 I.R.B. 512

REG-105128-23, 2024-35 I.R.B. 536

REG-108920-24, 2024-38 I.R.B. 607

REG-111629-23, 2024-39 I.R.B. 640

Proposed Regulations:—Continued

REG-106851-21, 2024-40 I.R.B. 684

REG-116787-23, 2024-40 I.R.B. 709

REG-119683-22, 2024-40 I.R.B. 716

REG-118269-23, 2024-41 I.R.B. 761

REG-112129-23, 2024-42 I.R.B. 787

REG-113628-21, 2024-44 I.R.B. 1074

Revenue Procedures:

2024-26, 2024-27 I.R.B. 7

2024-29, 2024-30 I.R.B. 121

2024-30, 2024-30 I.R.B. 183

2024-27, 2024-31 I.R.B. 300

2024-28, 2024-31 I.R.B. 326

2024-32, 2024-34 I.R.B. 523

2024-34, 2024-38 I.R.B. 604

2024-35, 2024-39 I.R.B. 638

2024-36, 2024-41 I.R.B. 737

2024-37, 2024-41 I.R.B. 755

2024-38, 2024-43 I.R.B. 1010

2024-33, 2024-44 I.R.B. 1030

2024-39, 2024-45 I.R.B. 1097

2024-40, 2024-45 I.R.B. 1100

Revenue Rulings:

2024-13, 2024-28 I.R.B. 18

2024-14, 2024-28 I.R.B. 18

2024-15, 2024-32 I.R.B. 340

2024-16, 2024-35 I.R.B. 534

2024-17, 2024-36 I.R.B. 568

2024-18, 2024-37 I.R.B. 584

2024-20, 2024-40 I.R.B. 646

2024-21, 2024-41 I.R.B. 724

2024-22, 2024-43 I.R.B. 980

2024-23, 2024-43 I.R.B. 981

2024-24, 2024-45 I.R.B. 1086

Treasury Decisions:

10002, 2024-29 I.R.B. 56

9999, 2024-30 I.R.B. 72

10000, 2024-31 I.R.B. 185

10003, 2024-32 I.R.B. 342

10001, 2024-33 I.R.B. 412

10004, 2024-33 I.R.B. 489

9998, 2024-34 I.R.B. 412

10005, 2024-34 I.R.B. 510

9991, 2024-40 I.R.B. 646

10007, 2024-43 I.R.B. 981

9994, 2024-44 I.R.B. 1014

10008, 2024-45 I.R.B. 1082

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2024–27 through 2024–52 is in Internal Revenue Bulletin

2024–52, dated December 30, 2024.

November 4, 2024

Bulletin No. 2024–45

Finding List of Current Actions on

Previously Published Items1

Bulletin 2024–45

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2024–27 through 2024–52 is in Internal Revenue Bulletin

2024–52, dated December 30, 2024.

Bulletin No. 2024–45

iii

November 4, 2024

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

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