Bulletin No. 2023–13

Agency decision

Ask Donna

What actually matters in this document.

Text

HIGHLIGHTS

OF THIS ISSUE

Bulletin No. 2023–13

March 27, 2023

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

EMPLOYEE PLANS

Notice 2023-23, page 571.

Notice 2023-23 provides guidance to financial institutions

on reporting required minimum distributions (RMD) for

2023 after the amendment to section 401(a)(9) of the Internal Revenue Code made by Section 107, Division T of the

Consolidated Appropriations Act, 2023, P.L. 117-328 (the

SECURE 2.0 Act). Pursuant to Notice 2002-27, if an IRA

owner has an RMD due for 2023, the financial institution

that maintains the IRA must provide a statement by January

31, 2023, informing the IRA owner of the amount due (or

an offer to calculate such amount) and the date by which

the RMD must be distributed. Prior to the SECURE 2.0 Act,

this statement would have been required for all IRA owners

who will attain age 72 in 2023 (the year for which the first

RMD is due). However, after the Act, the first RMD will be

due for the year in which the IRA owner attains age 73. This

notice provides that if the RMD statement is provided in

the year in which the IRA owner attains age 72, the IRS will

not consider such statement to be incorrect provided the

financial institution notifies the IRA owner no later than April

28, 2023, that no RMD is due for 2023.

EMPLOYMENT TAX

Rev. Proc. 2023-13, page 581.

General Rules and Specifications for Substitute Form 941,

Schedule B (Form 941), Schedule D (Form 941), Schedule

R (Form 941), and Form 8974.

This revenue procedure provides general rules and specifications from the IRS for paper and computer-generated

substitutes for Form 941; Schedule B (Form 941); Schedule D (Form 941); Schedule R (Form 941); and Form 8974.

This revenue procedure supersedes Revenue Procedure

2022-15, 2022-13 I.R.B. 908.

Finding Lists begin on page ii.

Rev. Proc. 2023-18, page 605.

This revenue procedure modifies and supersedes both Rev.

Proc. 2016-33 and Rev. Proc. 2017-14. It addresses the

procedures for applying to be certified as a Certified Professional Employer Organization (CPEO), the requirements

for a CPEO to remain certified, and the procedures relating

to suspension and revocation of CPEO certification.

INCOME TAX

Notice 2023-24, page 571.

This notice provides the general rules for determining the

credit for production from advanced nuclear power facilities

under § 45J (§ 45J credit) and that the amount of the unutilized national megawatt capacity limitation (NMCL) available

for allocation is 6,000 megawatts. This notice also provides the procedures for taxpayers to apply for allocations

of, and that the Internal Revenue Service (IRS) will use to allocate, the unutilized NMCL to facilities that the Department

of Energy previously certified as an “advanced nuclear facility” under Notice 2013-68, 2013-46 I.R.B. 501. In addition,

the notice provides the procedures for a “qualified public

entity” to elect to transfer all or a portion of the § 45J credit

to an “eligible project partner.” Finally, the notice requests

comments on issues impacting the § 45J credit.

Notice 2023-26, page 577.

Notice 2023-26 provides for adjustments to the limitation

on housing expenses for purposes of section 911 of the

Internal Revenue Code for the 2023 tax year. These adjustments are made on the basis of geographic differences in

housing costs relative to housing costs in the United States.

If the limitation on housing expenses is higher for the 2023

tax year than the adjusted limitations on housing expenses

provided in Notice 2022-10, qualified taxpayers may apply

the adjusted limitations in this notice for the 2023 tax year

to their 2022 tax year.

Rev. Proc. 2023-17, page 604.

they can choose to exclude from their income a limited

amount of their foreign earned income (up to $120,000 for

2022). Both the bona fide residence test and the physical

presence test contain minimum time requirements. Revenue Procedure 2023-19 provides a waiver under section

911(d)(4) for the time requirements for individuals electing

to exclude their foreign earned income who must leave a

foreign country because of war, civil unrest, or similar adverse conditions in that country. Rev. Proc. 2023-19 adds

Ethiopia, Iraq, Ukraine, Belarus, China, and Mali to the list of

waiver countries for tax year 2022 for which the minimum

time requirements are waived.

This revenue procedure provides indexing adjustments for

the applicable dollar amounts under section 4980H(c)(1) and

(b)(1) of the Internal Revenue Code. These indexed amounts

are used to calculate the employer shared responsibility payments under section 4980H(a) and (b)(1), respectively.

Rev. Proc. 2023-19, page 626.

Generally, U.S. citizens or resident aliens living and working

abroad are taxed on their worldwide income. However, if

their tax home is in a foreign country and they meet either

the bona fide residence test or the physical presence test,

March 27, 2023

Bulletin No. 2023–13

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.

March 27, 2023

Bulletin No. 2023–13

Part III

Relief for Reporting

Required Minimum

Distributions for IRAs for

2023

Notice 2023-23

PURPOSE

This notice provides guidance to financial institutions on reporting required

minimum distributions (RMDs) for 2023

after the amendment to section 401(a)(9)

of the Internal Revenue Code made by the

Consolidated Appropriations Act, 2023, P.

L. 117-328 (the Act).

BACKGROUND

The Act was enacted on December 29,

2022. Division T of the Act, titled “SECURE 2.0 Act of 2022” (SECURE 2.0

Act), included a number of retirement

savings provisions. Section 107 of the SECURE 2.0 Act amended section 401(a)(9)

plans and other eligible retirement plans

described in section 402(c)(8), including

individual retirement accounts and annuities (IRAs). For an IRA owner who attains age 72 after December 31, 2022, and

age 73 before January 1, 2033, the new

required beginning date (that is, the date

by which RMDs must begin) is April 1 of

the calendar year following the calendar

year in which the individual attains age

73, rather than April 1 of the calendar year

following the calendar year in which the

individual attains age 72.

This amendment to section 401(a)(9)

to be made after December 31, 2022,

with respect to individuals who will attain

age 72 after that date. As a result of this

amendment, IRA owners who will attain

age 72 in 2023 (that is, individuals born in

1951) will have a required beginning date

of April 1, 2025, rather than April 1, 2024.

This delay in the required beginning date

means that these IRA owners (who, prior to enactment of the SECURE 2.0 Act,

Bulletin No. 2023–13

would have been required to take minimum distributions from their IRAs for

2023) will have no RMD due from their

IRAs for 2023.

IRA REPORTING

If an IRA owner has an RMD due

for 2023, the financial institution that is

the trustee, custodian, or issuer maintaining the IRA must file a 2022 Form

5498 (IRA Contribution Information) by

May 31, 2023, and indicate by a check

in Box 11 that an RMD is required for

2023. The financial institution may also

choose to provide further information in

Box 12a (RMD Date) and Box 12b (RMD

Amount). Additionally, under Notice

2002-27, 2002-1 CB 814, if an IRA owner

has an RMD due for 2023, the financial

institution must furnish a statement to the

IRA owner by January 31, 2023, that informs the IRA owner of the date by which

the RMD must be distributed, and either

provides the amount of the RMD or offers to calculate that amount upon request

(RMD statement).

For IRA owners who will attain age

72 in 2023, the RMD statement required

under Notice 2002–27 should not be sent,

and the 2022 Form 5498 should not include a check in Box 11 or any entries in

Box 12a or 12b. However, in recognition

of the short amount of time that financial

institutions have had to change their systems for furnishing the RMD statement

since the enactment of the SECURE 2.0

Act, relief is being provided with respect

to this reporting. Under this relief, the

Internal Revenue Service (IRS) will not

consider an RMD statement provided to

an IRA owner who will attain age 72 in

2023 to have been provided incorrectly if

the IRA owner is notified by the financial

institution no later than April 28, 2023,

that no RMD is actually required for 2023.

The SECURE 2.0 Act did not change

the required beginning date for IRA owners who attained age 72 prior to January 1,

2023. To reduce misunderstanding among

IRA owners, the IRS encourages all financial institutions, in communicating these

RMD changes, to remind IRA owners

who attained age 72 in 2022, and have not

571

yet taken their 2022 RMDs, that they are

still required to take those distributions by

April 1, 2023.

DRAFTING INFORMATION

The principal author of this notice is

Brandon Ford of the Office of the Associate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes). For further information regarding

this notice, contact Brandon Ford at (202)

317-4148 (not a toll-free number).

Section 45J Credit for

Production of Electricity

from Advanced Nuclear

Power Facilities

Notice 2023-24

SECTION 1. PURPOSE

.01 This notice provides guidance under § 45J of the Internal Revenue Code

(Code), relating to the credit for the production of electricity from advanced nuclear power facilities (§ 45J credit). In

response to the amendments to certain

requirements for the § 45J credit made by

§ 40501 of the Bipartisan Budget Act of

2018 (2018 Act), Public. Law. 115-123,

Div. D, Title I, 132 Stat. 64, 153 (February 9, 2018), this notice provides: (i)

guidance for computing the § 45J credit;

(ii) the amount of the unutilized national

megawatt capacity limitation (NMCL) (as

defined in § 45J(b)(5)(B)); (iii) the procedures for taxpayers to apply for allocations

of, and that the Internal Revenue Service

(IRS) will use to allocate, the unutilized

NMCL solely with respect to facilities

that the Department of Energy (DOE) previously certified as “advanced nuclear facilities” (as defined in § 45J(d)(2)) under

Notice 2013-68, 2013-46 I.R.B. 501; and

(iv) the procedures for a “qualified public

entity” (as defined in § 45J(e)(2)(A)) to

elect, pursuant to § 45J(e), to transfer the

§ 45J credit to an “eligible project partner”

(as defined in § 45J(e)(2)(B)). This notice

March 27, 2023

also requests public comment on topics

related to the § 45J credit that may require

guidance.

.02 The Department of the Treasury

(Treasury Department) and the IRS intend

to issue additional guidance regarding

the procedures by which any unutilized

NMCL will be allocated to a facility that

did not receive a certification from the

DOE as an “advanced nuclear facility”

under Notice 2013-68.

SECTION 2. BACKGROUND

.01 Section 45J was enacted by § 1306

of the Energy Policy Act of 2005, Public

Law 109-58, Title XIII, 119 Stat. 594, 997

(August 8, 2005). Subject to limitations

under § 45J(b) and (c), a taxpayer may be

allowed a § 45J credit of 1.8 cents for each

kilowatt hour of electricity (1) that the

taxpayer produces at an advanced nuclear

power facility during the eight-year period

beginning on the date the facility is placed

in service and (2) that the taxpayer sells

to an unrelated person during the taxable

year (qualifying electricity). See § 45J(a).

.02 Under § 45J(d)(1), an “advanced

nuclear power facility” is (i) any nuclear

facility the reactor design for which is approved by the Nuclear Regulatory Commission (NRC) after December 31, 1993

(and such design or a substantially similar

design of comparable capacity was not

approved on or before that date), (ii) that

is owned by the taxpayer, and (iii) uses

nuclear energy to produce electricity. See

§ 45J(d).

.03 On May 1, 2006, the Treasury Department and the IRS published Notice

2006-40, 2006-18 I.R.B. 855, to provide

guidance on the § 45J credit. Specifically,

Notice 2006-40 specified the method that

the IRS would use to allocate the NMCL

and prescribed the application process by

which taxpayers could request such an

allocation. The notice also provided guidance on the requirement that electricity

be sold to an unrelated person and on the

effect of grants, tax-exempt bonds, subsidized energy financing, and other credits.

.04 On November 12, 2013, the Treasury Department and the IRS published

Notice 2013-68, which modified and superseded Notice 2006-40. Notice 201368 generally republished the guidance

contained in Notice 2006-40, but also

provided a new streamlined application

process allowing an applicant to submit

a single application only to the IRS. The

IRS would then obtain necessary certification from the DOE. In addition, Notice

2013-68 provided guidance on the allocation rules for facilities that are directly or

indirectly owned by more than one person

and the time for filing an application with

the NRC.

.05 As originally enacted in 2005,

§ 45J(d)(1) required all advanced nuclear power facilities to be placed in service

before January 1, 2021, to be eligible for

a § 45J credit. Accordingly, section 6 of

Notice 2013-68 provided that the amount

of the NMCL allocated to a facility under

Notice 2013-68 will be withdrawn if the

facility is not placed in service before January 1, 2021, or if the DOE informs the IRS

that the DOE certification for the facility

has been withdrawn. However, effective

for taxable years beginning after its February 9, 2018, date of enactment, § 40501

of the 2018 Act added new § 45J(b)(5) to

the Code, which, in part, eliminates the

requirement for a facility receiving an allocation of unutilized NMCL pursuant to

§ 45J(b)(5) to be placed in service before

January 1, 2021, to qualify as an advanced

nuclear power facility.

.06 Under § 45J(b)(1) and (3), a taxpayer may be allowed a § 45J credit for

qualifying electricity only if an amount of

NMCL has been allocated to the facility,

in the manner prescribed by the Secretary

of the Treasury or her delegate (Secretary).1 The aggregate amount of NMCL

allocated by the Secretary cannot exceed

6,000 megawatts. See § 45J(b)(2).

.07 As added by § 40501 of the 2018

Act, § 45J(b)(5)(A) directs the Secretary

to allocate any unutilized NMCL (as defined in § 45J(b)(5)(B)) as rapidly as is

practicable after December 31, 2020, as

follows: (i) first to facilities placed in

service on or before December 31, 2020,

to the extent that such facilities did not

receive an allocation equal to their full

nameplate capacity under the procedures

provided in Notice 2013-68, and (ii) then

to facilities placed in service after December 31, 2020, in the order in which

such facilities are placed in service. Section 45J(b)(5)(B) defines the term “unutilized NMCL” as the excess (if any)

of 6,000 megawatts over the aggregate

amount of NMCL allocated by the Secretary before January 1, 2021, reduced by

any amount of such limitation that was

allocated to a facility that was not placed

in service before January 1, 2021. Under

§ 45J(b)(5)(C), any allocation of the unutilized NMCL is treated for purposes of

the § 45J credit in the same manner as an

allocation of the NMCL.

.08 The 2018 Act also added new

§ 45J(e) to the Code effective for taxable

years beginning after February 9, 2018.

Section 45J(e) permits a “qualified public

entity” to make an election for any taxable year with respect to all or any portion of its § 45J credits to transfer such

credits to one or more eligible project

partners specified in the election. With

respect to any § 45J credits transferred

by a qualified public entity to an eligible

project partner, the credit must be taken

into account in the first taxable year of

the eligible project partner ending with,

or after, the qualified public entity’s taxable year with respect to which the credit

was determined.

.09 Section 45J(e)(2)(A) defines the

term “qualified public entity” to mean (i)

a Federal, State, or local government entity, or any political subdivision, agency,

or instrumentality thereof; (ii) a mutual or

cooperative electric company described in

§ 501(c)(12) or § 1381(a)(2) of the Code;

or (iii) a not-for-profit electric utility

which had or has received a loan or loan

guarantee under the Rural Electrification

Act of 1936.

.10 Section 45J(e)(2)(B) defines the

term “eligible project partner” to mean

any person who (i) is responsible for, or

participates in, the design or construction

of the advanced nuclear power facility to

which the § 45J credit relates; (ii) participates in the provision of the nuclear steam

supply system to such facility; (iii) partic-

The amount of the § 45J credit allowed a taxpayer under § 45J(a) for a taxable year may be (i) limited (after the application of § 45J(b)) by an annual limitation under § 45J(c)(1) applicable

to each facility and (ii) reduced under § 45J(c)(2) based on an inflation adjusted reference price for electricity described in § 45(e)(2)(C) of the Code.

March 27, 2023

572

Bulletin No. 2023–13

ipates in the provision of nuclear fuel to

such facility; (iv) is a financial institution

providing financing for the construction

or operation of such facility; or (v) has an

ownership interest in such facility.

.11 In the case of a § 45J credit determined at the partnership level, a qualified

public entity is treated as the taxpayer

with respect to its distributive share of the

§ 45J credit, and the term “eligible project

partner” includes any partner of the partnership. See § 45J(e)(3)(A).

.12 Section 38(b)(21) includes the

§ 45J credit as a current year business

credit. Section 39(a)(1) provides, in part,

that if the amount of the current year business credit for the taxable year exceeds

the amount of the limitation imposed by

§ 38(c) for the taxable year (unused credit

year), the excess results in a 1-year business credit carryback to the taxable year

preceding the unused credit year, and a

business credit carryforward to each of

the twenty (20) taxable years following

the unused credit year. Section 39(a)(2)

(A) provides that the entire amount of the

unused credit for an unused credit year is

carried to the earliest of the twenty-one

(21) taxable years to which the credit may

be carried. Section 39(a)(2)(B) provides

that the amount of the unused credit for

the unused credit year is carried to each of

the other twenty (20) taxable years to the

extent that such unused credit may not be

taken into account under § 38(a) for a prior taxable year because of the limitations

of § 39(b) and (c).

SECTION 3. DETERMINATION OF

THE § 45J CREDIT

.01 In general. Under § 45J(a), (b)(1),

and (c), the § 45J credit allowed to a taxpayer for a taxable year with respect to

qualifying electricity is the lesser of:

(1) the tentative credit for the facility

for the taxable year (determined under

section 3.02(1) of this notice) multiplied

by the taxpayer’s credit percentage (determined under section 3.02(2) of this notice), or

(2) $125,000,000 per 1,000 megawatts

of the facility limitation determined under

section 5.03(1) and (2) of this notice that

is allocated to the taxpayer under section

5.03(3), (4), and (5) of this notice.

.02 Tentative credit; credit percentage

Bulletin No. 2023–13

(1) A facility’s tentative credit for the

taxable year is equal to 1.8 cents multiplied by the kilowatt hours of qualifying

electricity.

(2) The credit percentage for each taxpayer that has been allocated all or part

of the amount of the facility limitation is

determined by dividing the facility limitation that is allocated to the taxpayer

under section 5.03(3), (4), and (5) of this

notice by the nameplate capacity of the

facility.

.03 Credit determination for partnerships and S corporations. If a facility is

owned by a partnership or S corporation,

then the partnership or S corporation, and

not the partners or shareholders, will be

treated as the taxpayer that owns the facility for the purposes of this notice. In such

cases, the § 45J credit must be allocated to

the partners or shareholders in accordance

with § 1.704-1(b)(4)(ii) of the Income Tax

Regulations, in the case of partnerships,

or § 1.1366-1(a)(2)(v) of the Income Tax

Regulations, in the case of S corporations.

If the facility is owned through an organization that has made a valid election under

§ 761(a) of the Code (§ 761(a) election),

each member’s undivided ownership

share in the facility will be treated for purposes of this notice as a separate facility

owned by such member.

.04 Sale of Electricity to Unrelated

Person. The § 45J credit is allowed only

for qualifying electricity that the taxpayer

produces and sells to an unrelated person,

as defined in § 45(e)(4). Solely for purposes of § 45J, electricity will be treated as

sold to an unrelated person if the ultimate

purchaser of the electricity is not related

to the person that produces the electricity. Thus, the requirement of a sale to an

unrelated person will be treated as satisfied if the producer sells the electricity to

a related person for resale by the related

person to a person that is not related to the

producer.

.05 Effect of Grants, Tax-Exempt Bond

Proceeds, Subsidized Energy Financing,

and Other Credits. The amount of the

§ 45J credit with respect to any facility

for any taxable year is not reduced by the

amount of any grants, tax-exempt bond

proceeds, subsidized energy financing,

or other credits (as described in § 45(b)

(3)) used for, or in connection with, the

facility.

573

SECTION 4. DETERMINATION

OF THE UNUTILIZED NATIONAL

MEGAWATT CAPACITY

LIMITATION

After consultation with the DOE, the

Treasury Department and the IRS have

determined that no advanced nuclear

power facility that received an allocation of the NMCL under Notice 201368 was placed in service before January 1, 2021. Therefore, in accordance

with section 6 of Notice 2013-68 and

§ 45J(b)(5)(B), all previous allocations

of the NMCL are withdrawn and the

total unutilized NMCL is 6,000 megawatts. The unutilized NMCL is available

for allocation as provided in section 5 of

this notice.

SECTION 5. ALLOCATION OF

THE UNUTILIZED NATIONAL

MEGAWATT CAPACITY

LIMITATION

.01 Application Limited to Facilities

Certified by DOE. The IRS will allocate

the unutilized NMCL only to advanced

nuclear power facilities (within the meaning of § 45J(d)(1)(A)) for which the DOE

provides certification to the IRS that the

facility qualifies as an “advanced nuclear facility.” For purposes of this notice,

each nuclear power reactor located on a

multi-reactor site is a separate facility. At

this time, only an owner of an advanced

nuclear power facility that (i) either (I)

previously received a certification from

the DOE under Notice 2013-68 that such

facility qualified as an “advanced nuclear

facility” or (II) acquired the facility after

the IRS had provided a previous owner of

the facility a letter stating that the DOE

had certified that facility as an “advanced

nuclear facility” under Notice 2013-68,

and (ii) maintains an active NRC construction permit or license or combined

license, may apply for an allocation of the

unutilized NMCL pursuant to this notice.

In addition, the rule in section 4.04(3) and

(5) of Notice 2013-68 that undivided ownership shares in a facility would be treated

as separate facilities for purposes of that

notice is disregarded for purposes of determining whether a facility previously

received a DOE certification under Notice

2013-68.

March 27, 2023

.02 Application Required. The IRS will

not allocate the unutilized NMCL to any

owner of an advanced nuclear power facility unless such owner submits a completed application in accordance with section 6 of this notice.

.03 Allocation Method. The unutilized

NMCL will be allocated as follows:

(1) Each facility that meets the requirements of sections 5 and 6 of this notice

(qualified facility) will be allocated an

amount of the unutilized NMCL equal

to its nameplate capacity in the order in

which such facilities are placed in service

(provided the application deadline specified in section 6.02 of this notice is met).

The amount of the unutilized NMCL allocated to a qualified facility is referred to as

the facility limitation.

(2) The IRS will continue to allocate the

unutilized NMCL equal to the nameplate

capacity of a qualified facility until all the

unutilized NMCL is allocated. The final

recipient(s) of the remaining unutilized

NMCL may receive only a portion of the

unutilized NMCL for which it applied even

if it otherwise meets the requirements under this notice to receive a full allocation.

(3) If only one taxpayer owns a direct

interest in a qualified facility, the entire

facility limitation is allocated to such taxpayer. If more than one taxpayer owns a

direct interest in a qualified facility, each

taxpayer’s undivided ownership share in

the qualified facility will be treated for

purposes of this notice as a separate qualified facility owned by such taxpayer. In

such cases, a taxpayer’s application must

identify the portion of the total nameplate

capacity of the qualified facility that is

equal to its undivided ownership share in

the qualified facility.

(4) Except as provided in sections

3.03 and 5.03(5) of this notice, if a qualified facility is owned by a partnership

or S corporation, then the partnership

or S corporation, and not the partners or

shareholders, will be treated as the taxpayer that owns the qualified facility for the

purposes of this notice. In such cases, the

§ 45J credit must be allocated to the partners or shareholders in accordance with

§ 1.704-1(b)(4)(ii), in the case of partnerships, or § 1.1366-1(a)(2)(v), in the case

of S corporations.

(5) If the qualified facility is owned

through an organization that has made a

March 27, 2023

valid § 761(a) election, each member’s

undivided ownership share in the qualified facility will be treated for purposes of

this notice as a separate qualified facility

owned by such member. In such cases,

a member’s application for an allocation must identify the portion of the total

nameplate capacity of the qualified facility that is equal to its undivided ownership

share in the qualified facility.

SECTION 6. APPLICATION FOR

ALLOCATION OF UNUTILIZED

NATIONAL MEGAWATT CAPACITY

LIMITATION

.01 In general. (1) A taxpayer must submit, for each facility for which an allocation of the unutilized NMCL is requested,

an application to the IRS for an allocation

of the unutilized NMCL under § 45J(b)(5)

(Application for § 45J Allocation).

(2) An Application for § 45J Allocation should be marked or titled “APPLICATION FOR SECTION 45J ALLOCATION” and delivered in the manner

provided in section 6.04 of this notice.

(3) Multiple taxpayers owning (or treated as owning) a direct interest in a facility

(as described in section 5.03(3) or (5) of

this notice) must each file a separate Application for § 45J Allocation with respect

to a single facility. See section 6.03(6) of

this notice.

(4) No user fee is required for the

submission of an Application for § 45J

Allocation.

.02 Application Deadline. An Application for § 45J Allocation must be filed

no later than thirty (30) days after the date

that the facility is placed in service. A taxpayer may file its Application for § 45J

Allocation before the facility is placed in

service, but the taxpayer must supplement

its application with the statement required

under section 6.03(4) of this notice no later than thirty (30) days after the date that

the facility is placed in service.

.03 Required Information. An Application for § 45J Allocation must include the

following:

(1) The name, taxpayer identification

number (if available), and address of the

taxpayer who placed or who will place the

facility in service;

(2) The name and location of the

facility;

574

(3) The nameplate capacity of the

facility;

(4) A statement signed under penalties

of perjury (as provided in section 6.03(8)

of this notice) providing the date on which

the facility was placed in service, the date

the facility received an NRC construction

permit or license or combined license, and

a statement that such permit or license

remains active. If the date on which the

facility was placed in service is unknown

at the time of the Application for § 45J Allocation, such application may be supplemented at any time prior to the application

deadline specified in section 6.02 of this

notice;

(5) The total amount of unutilized

NMCL requested (not to exceed the nameplate capacity of the facility);

(6) If a taxpayer’s Application for

§ 45J Allocation relates to a facility in

which more than one person owns (or is

treated as owning) a direct interest (as

described in section 5.03(3) or (5) of this

notice), the taxpayer must submit documentation of its undivided ownership

share in the facility;

(7) If the facility is owned by an organization that has made a § 761(a) election,

a copy of the § 761 election;

(8) A declaration, applicable to the Application for § 45J Allocation and any required supplemental submissions, signed

by a person currently authorized to bind

the taxpayer in these matters, in the following form:

“Under penalties of perjury I declare

that I have examined the information

contained in this Application for § 45J

Allocation and the documents that substantiate this Application for § 45J Allocation, and to the best of my knowledge and belief, it is true, correct, and

complete.”

(9) The following additional statement:

“ I further declare that I have authority

to sign this Application for § 45J Allocation (and any supplemental submissions) on behalf of the taxpayer.”

.04 Where to Submit an Application for

§ 45J Allocation.

(1) An Application for § 45J Allocation

should be sent to the following address:

Bulletin No. 2023–13

Internal Revenue Service

Attn: CC:PSI:6, Room 5114

P.O. Box 7604

Ben Franklin Station

Washington, DC 20044

(2) If a private delivery service is used,

the address is:

Internal Revenue Service

Attn: CC:PSI:6, Room 5114

1111 Constitution Ave., N.W.

Washington, DC 20224

(3) An Application for § 45J Allocation may also be faxed or e-faxed to (855)

591-7868.

.05 IRS Action. (1) Upon receipt of a

taxpayer’s Application for § 45J Allocation, the IRS will determine whether the

Application for § 45J Allocation satisfies

the requirements of this notice. If the Application for § 45J Allocation does not satisfy the requirements of this notice, the IRS

may advise the taxpayer how to perfect its

Application for § 45J Allocation. The IRS

will not consider an Application for § 45J

Allocation to be complete until the IRS receives all the information requested in this

notice. The IRS will confirm that the DOE

previously certified the taxpayer’s facility

as an advanced nuclear facility pursuant to

the procedures of Notice 2013-68.

(2) Upon receipt of a completed Application for § 45J Allocation, the IRS

will review the taxpayer’s Application

for § 45J Allocation and will notify the

taxpayer, by letter, of its decision. If the

IRS accepts the taxpayer’s Application for

§ 45J Allocation, the acceptance letter will

state the amount of the facility limitation

and the portion of that facility limitation

being allocated to the taxpayer.

(3) The IRS will allocate the unutilized NMCL under this notice based on

the information provided in a taxpayer’s

Application for § 45J Allocation. If the

IRS determines upon an examination that

a facility was not placed in service on the

date the taxpayer specified under section

6.03(4) of this notice, the IRS may subsequently withdraw a facility’s allocation of

the unutilized NMCL.

SECTION 7. TRANSFER OF

CREDIT BY QUALIFIED PUBLIC

ENTITIES

.01 In general. Section 45J(e) permits

a qualified public entity (as defined in

Bulletin No. 2023–13

§ 45J(e)(2)(A)) to elect to transfer all or

a portion of its § 45J credit to an eligible project partner (as defined in § 45J(e)

(2)(B)) (§ 45J(e) Election). If a facility

is owned by a partnership, a qualified

public entity may elect to transfer its distributive share under § 1.704-1(b)(4)(ii)

of the credit to an eligible project partner. In addition, if a facility is owned by

a partnership, an eligible project partner

includes any partner of the partnership.

A § 45J(e) Election may be made by a

qualified public entity for a taxable year

only if a § 45J credit is determined for

the qualified public entity for such taxable year. If a qualified public entity is

not required to file an income tax return

for the taxable year that the § 45J credit

is determined, the qualified public entity

is still considered a taxpayer for purposes of making the § 45J(e) Election and

its taxable year is treated as the calendar year for purposes of determining the

§ 45J credit and making such election.

.02 Election Procedures. (1) A qualified public entity may make a § 45J(e)

Election by furnishing an eligible project partner with a statement titled “SECTION 45J(e) ELECTION STATEMENT”

(§ 45J(e) Election Statement) transferring

all or a portion of the qualified public entity’s § 45J credit. The statement must be

signed under penalties of perjury by an

individual with authority to legally bind

the qualified public entity. The election

statement must also include the written

consent of an individual with authority to

legally bind the eligible project partner.

A qualified public entity must furnish a

separate statement to each eligible project

partner to whom it transfers any portion of

its § 45J credit.

(2) The § 45J(e) Election Statement

must include the following information:

(a) The name, address, and taxpayer

identification number (if available) of the

qualified public entity;

(b) The name and location of the

facility;

(d) The date on which the facility was

placed in service;

(e) The full amount of the unutilized

NMCL allocated to the qualified public

entity with respect to the facility and a

copy of the letter issued by the IRS stating

575

the amount of the unutilized NMCL allocated to the qualified public entity;

(f) The taxable year of the qualified

public entity for which the § 45J credit is

determined and the election is made;

(g) The name, address and taxpayer

identification number of all known eligible project partners receiving any portion

of the qualified public entity’s transferred

§ 45J credit;

(h) The total kilowatt-hours of electricity produced by the facility and sold to an

unrelated taxpayer during the taxable year

of the qualified public entity for which the

election is made;

(i) The total amount of the § 45J credit

determined with respect to the qualified

public entity for the taxable year for which

the election is made and the amount of

that § 45J credit that the qualified public

entity is electing to transfer to the eligible

project partner;

(j) A statement providing how the § 45J

credit claimant qualifies as an eligible

project partner; and

(k) A declaration, applicable to the

§ 45J(e) Election Statement signed by a

person currently authorized to bind the

qualified public entity in these matters, in

the following form:

“Under penalties of perjury I declare

that I have examined the information

contained in this § 45J(e) Election

Statement and the documents that substantiate this § 45J(e) Election Statement, and to the best of my knowledge and belief, it is true, correct, and

complete.”

(l) The following additional statement:

“ I further declare that I have authority

to sign this § 45J(e) Election Statement

on behalf of the qualified public entity.”

(3) A § 45J(e) Election is an annual

election that must be made for each taxable year for which a qualified public entity will transfer the credit to an eligible

project partner. A separate election must

be made for each eligible project partner

for which a qualified public entity will

transfer a portion of the § 45J credit.

.03 Due Date for Making Election. The

§ 45J(e) Election Statement must be furnished to the eligible project partner on or

March 27, 2023

before the due date (including extensions of

time) of the eligible project partner’s Federal income tax return on which it claims

the transferred § 45J credit for the taxable

year ending with, or after, the qualified

public entity’s taxable year with respect to

which the credit was determined.

.04 Election Irrevocable. An election

by a qualified public entity to transfer any

portion of the § 45J credit is irrevocable

once the § 45J(e) Election Statement referred to in section 7.02 of this notice is

furnished to the eligible project partner.

.05 Requirement for an Eligible Project

Partner to Claim the Credit. An eligible

project partner claims the § 45J credit by

filing the applicable IRS form for claiming the credit (and including all requested

information) and attaching the § 45J(e)

Election Statement furnished by the qualified public entity as provided in section

7.02 of this notice.

.06 Carryforwards and Carrybacks

of Credits. In the case of any credit or

portion thereof with respect to which a

§ 45J(e) Election is made, the credit must

be taken into account under § 38 by the

eligible project partner in the first taxable

year of the eligible project partner ending

with or after the qualified public entity’s

taxable year with respect to which the

credit was determined. The carryback and

carryforward rule provided in § 39 regarding unused business credits applies to the

eligible project partner.

SECTION 8. REQUEST FOR

COMMENTS

.01 Comments Requested. The Treasury Department and IRS request written

comments on issues relating to § 45J(b)

(5) and (e) and the guidance provided in

this notice. In particular, the Treasury Department and the IRS request comments to

address the following:

(1) Section 45J(b)(5) provides that the

unutilized NMCL is allocated to facilities

in the order in which a facility is placed

in service in an allocation amount up to

the facility’s nameplate capacity. The

Treasury Department and the IRS intend

to issue guidance to provide the proce-

March 27, 2023

dures for a facility that has not previously received a certification from the DOE

as an “advanced nuclear facility” under

Notice 2013-68 to be allocated unutilized

NMCL. Accordingly, the Treasury Department and the IRS invite comments regarding the procedures for allocating the

remaining unutilized NMCL.

(2) Section 45J(c)(2) provides that the

§ 45J credit phases out based on a ratio

of the credit determined in § 45J(a) to the

reference price defined in § 45(e)(2)(C).

The Treasury Department and the IRS invite comments regarding the method for

calculating the reference price for the generation of electricity at an advanced nuclear power facility.

.02 How to Submit Comments. All

commenters are strongly encouraged to

submit comments electronically. Comments should be submitted in writing by

May 8, 2023, and should include reference to Notice 2023-24. Comments may

be submitted electronically via the Federal eRulemaking Portal at www.regulations.gov (type IRS-2023-0008 in the

search field on the regulations.gov homepage to find this notice and submit comments). Alternatively, comments may be

mailed to: Internal Revenue Service, Attn:

CC:PA:LPD:PR (Notice 2023-24), 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 on www.regulations.gov.

SECTION 9. PAPERWORK

REDUCTION ACT

The collection of information contained

in this notice has been submitted to the

Office of Management and Budget in accordance with the Paperwork Reduction

Act (PRA) (44 U.S.C. 3507) under control

number 1545-2000. 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 collections of information in this

notice are in sections 6 and 7. The sec-

576

tion 6 requirements are not defined as a

collection of information under 5 CFR

1320.3(c). The information collection requirements contained in section 7 will be

submitted to OMB for review and approval in accordance with 5 CFR 1320.10.

Section 7 provides procedures for a

qualified public entity to make an election

to transfer the § 45J credits to an eligible

project partner (a third-party disclosure

under the PRA). The information will be

used to determine the portion of the § 45J

credits to which an eligible project partner is entitled. An eligible project partner

will use the election statement to claim the

§ 45J credit. This information is required

to be collected and retained for taxpayers

to claim the § 45J credit.

The collection of information is required to obtain a benefit. The likely respondents are corporations and

partnerships.

The estimated total annual reporting

burden is 406 hours.

The estimated annual burden per respondent is 5.07 hours. The estimated

number of respondents is 80.

The estimated frequency of responses

is on occasion.

Books or records relating to a collection of information must be retained as

long as their contents may become material in the administration of any internal

revenue law. Generally, tax returns and tax

return information are confidential, as required by § 6103 of the Code.

SECTION 10. EFFECT ON OTHER

DOCUMENTS

Notice 2013-68 is obsoleted.

SECTION 11. DRAFTING

INFORMATION

The principal author of this notice is

John M. Deininger of the Office of Associate Chief Counsel (Passthroughs &

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

Deininger at (202) 317-6853 (not a tollfree number).

Bulletin No. 2023–13

Determination of Housing

Cost Amounts Eligible for

Exclusion or Deduction for

2023

Notice 2023-26

SECTION 1. PURPOSE

This notice provides adjustments to the

limitation on housing expenses for purposes of section 911 of the Internal Revenue Code for specific locations for 2023.

These adjustments are based on geographic differences in housing costs relative to

housing costs in the United States.

SECTION 2. BACKGROUND

Section 911 allows a qualified individual to elect to exclude from gross income

the foreign earned income and to exclude

or deduct the housing cost amount of such

individual.

The term “housing cost amount” is

generally the total of the housing expenses

for the taxable year minus a base housing

Country

Angola

Argentina

Australia

Bahamas, The

Bahrain

Barbados

Belgium

Bermuda

Brazil

Canada

Cayman Islands

China

Bulletin No. 2023–13

amount. See § 911(c)(1). For this purpose,

the base housing amount for the taxable

year is limited to an amount that is tied to

the maximum foreign earned income exclusion amount of the qualified individual,

which is $120,000 for 2023. See § 911(c)

(1)(B). Specifically, the base housing

amount is 16 percent of the maximum

foreign earned income exclusion amount

(computed on a daily basis), multiplied

by the number of days in the applicable

period that fall within the taxable year.

Assuming that the entire taxable year of

a qualified individual is within the applicable period, the base housing amount for

2023 is $19,200 ($120,000 x .16).

Similarly, the housing expense amount

is also limited, based on a percentage of

the maximum foreign earned income exclusion amount. Specifically, the limit on

such housing expenses generally equals

30 percent of the maximum foreign earned

income exclusion amount (computed on a

daily basis), multiplied by the number of

days in the applicable period for which

the taxpayer is a qualified individual. See

§ 911(c)(2)(A) and (d)(1). Thus, under

this general limitation, a qualified individual whose entire taxable year is within the

applicable period is limited to maximum

housing expenses of $36,000 ($120,000

x .30) for 2023. However, section 911(c)

(2)(B) authorizes the Secretary to issue

regulations or other guidance to adjust

the percentage under section 911(c)(2)(A)

(i) (which determines the limit on housing expenses) based on geographic differences in housing costs relative to housing

costs in the United States. Pursuant to this

authority, the Department of the Treasury

(Treasury Department) and the Internal

Revenue Service (IRS) have published

annual notices concerning the limitation

on the section 911 housing cost amounts

since the 2006 taxable year.

For more background on the foreign

housing exclusion, see https://www.irs.

gov/individuals/international-taxpayers/

foreign-housing-exclusion-or-deduction.

SECTION 3. TABLE OF ADJUSTED

HOUSING LIMITATIONS FOR 2023

The following table provides adjusted

limitations on housing expenses (in lieu

of the otherwise applicable limitation of

$36,000) for 2023. All amounts are in U.S.

dollars.

Limitation on Housing

Expenses (full year)

84,000

56,500

66,500

49,700

48,300

37,700

38,700

90,000

56,600

38,600

52,600

46,100

59,900

56,800

41,300

48,000

69,600

Location

Luanda

Buenos Aires

Sydney

Nassau

Bahrain

Barbados and Bridgetown

Brussels

Bermuda

Sao Paulo

Calgary

Montreal

Ottawa

Toronto

Vancouver

Victoria

Grand Cayman

Beijing

577

Limitation on Housing

Expenses (daily/365 days)

230.14

154.79

182.19

136.16

132.33

103.29

106.03

246.58

155.07

105.75

144.11

126.30

164.11

155.62

113.15

131.51

190.68

March 27, 2023

Limitation on Housing

Expenses (full year)

114,300

57,001

58,700

49,400

37,800

42,000

Limitation on Housing

Expenses (daily/365 days)

313.15

156.17

160.82

135.34

103.56

115.07

43,704

45,500

38,200

46,600

66,400

119.74

124.66

104.66

127.67

181.92

36,700

39,800

39,600

100.55

109.04

108.49

42,000

56,200

41,000

46,500

39,900

115.07

153.97

112.33

127.40

109.32

Germany

Guatemala

Guinea

Holy See, The

India

Indonesia

Ireland

Israel

Copenhagen

Santo Domingo

Quito

Tallinn

Garches, Paris, Sevres,

Suresnes, and Versailles

Lyon

Berlin

Boeblingen, Ludwigsburg,

Nellingen, and Stuttgart

Bonn

Cologne

Gelnhausen and Hanau

Ingolstadt

Kaiserslautern, Landkreis,

Pirmasens, Sembach, and

Zweibrueken

Mainz and Wiesbanden

Munich

Wahn

Guatemala City

Conakry

Holy See, The

Mumbai

New Delhi

Jakarta

Dublin

Beer Sheva

Jerusalem

44,500

46,500

42,000

51,300

44,200

67,920

56,124

37,776

38,400

58,000

49,000

121.92

127.40

115.07

140.55

121.10

186.08

153.76

103.50

105.21

158.90

Israel

Italy

Tel Aviv

West Bank

Genoa

La Spezia

Milan

Naples

Rome

Vicenza

50,800

49,000

41,800

40,400

66,000

45,300

44,200

36,900

Country

Location

China

Colombia

Costa Rica

Democratic Republic of the

Congo

Denmark

Dominican Republic

Ecuador

Estonia

France

Hong Kong

Shanghai

Bogota

All cities other than Bogota

San Jose

Kinshasa

France

Germany

March 27, 2023

578

134.25

139.18

134.25

114.52

110.68

180.82

124.11

121.10

101.10

Bulletin No. 2023–13

Country

Jamaica

Japan

Kazakhstan

Korea

Kuwait

Luxembourg

Malaysia

Malta

Mexico

Mozambique

Netherlands

Netherlands Antilles

Oman

Panama

Peru

Poland

Portugal

Qatar

Romania

Russia

Saudi Arabia

Singapore

Slovenia

South Africa

Bulletin No. 2023–13

Location

Kingston

Gifu, Komaki, and Nagoya

Okinawa Prefecture

Osaka-Kobe

Tokyo

Yokohama

Yokosuka

Almaty

Camp Colbern

Camp Market, K-16, Kimpo

Airfield, Seoul, and Suwon

Camp Mercer

Kuwait City

All cities other than Kuwait

City

Luxembourg

Kuala Lumpur

Malta

Merida

Mexico City

All cities other than Ciudad

Juarez, Cuernavaca,

Guadalajara, Hermosillo,

Matamoros, Mazatlan,

Merida, Metapa, Mexico City,

Monterrey, Nogales, Nuevo

Laredo, Tijuana, and Veracruz

Maputo

Amsterdam and Schiphol

Aruba

Hague, The

Curacao

Muscat

Panama City

Lima

Warsaw

Alverca and Lisbon

Doha

Bucharest

Moscow

Saint Petersburg

Riyadh

Singapore

Ljubljana

Pretoria

579

Limitation on Housing

Expenses (full year)

41,200

74,300

47,200

90,664

77,000

41,000

44,300

48,000

54,200

48,600

Limitation on Housing

Expenses (daily/365 days)

112.88

203.56

129.32

248.39

210.96

112.33

121.37

131.51

148.49

133.15

54,200

64,400

57,700

148.49

176.44

158.08

36,200

46,200

55,100

37,900

47,900

39,400

99.18

126.58

150.96

103.84

131.23

107.95

39,500

52,900

39,300

52,700

45,800

41,300

39,500

39,100

50,200

40,400

45,888

41,200

108,000

60,000

40,000

82,900

46,400

39,300

108.22

144.93

107.67

144.38

125.48

113.15

108.22

107.12

137.53

110.68

125.72

112.88

295.89

164.38

109.59

227.12

127.12

107.67

March 27, 2023

Country

Spain

Switzerland

Taiwan

Tanzania

Thailand

Trinidad and Tobago

Ukraine

United Arab Emirates

United Kingdom

Venezuela

Vietnam

Location

Barcelona

Madrid

Bern

Geneva

Zurich

Taipei

Dar Es Salaam

Bangkok

Port of Spain

Kiev

Abu Dhabi

Dubai

Basingstoke

Bath

Bracknell, High Wycombe,

and Reading

Caversham

Cheltenham

Farnborough

Gibraltar

Lakenheath and Mildenhall

London

Loudwater

Southampton

Surrey

Caracas

Hanoi

Ho Chi Minh City

SECTION 4. OPTION TO APPLY

2023 ADJUSTED HOUSING

LIMITATIONS TO 2022 TAXABLE

YEAR

For some locations, the limitation on

housing expenses provided in Section

3 of this notice may be higher than the

limitation on housing expenses provided in the “Table of Adjusted Limitations

for 2022” in Notice 2022-10, 2022-10

I.R.B. 815. A qualified individual incurring housing expenses in such a location

during 2022 may apply the adjusted limitation on housing expenses provided in

Section 3 of this notice for 2023 in lieu

of the amounts provided in the “Table of

Adjusted Limitations for 2022” in Notice

2022-10 (and as set forth in the Instruc-

March 27, 2023

Limitation on Housing

Expenses (full year)

40,600

53,900

69,000

98,300

39,219

46,188

44,000

59,000

54,500

72,000

49,687

57,174

41,099

41,000

62,100

Limitation on Housing

Expenses (daily/365 days)

111.23

147.67

189.04

269.32

107.45

126.54

120.55

161.64

149.32

197.26

136.13

156.64

112.60

112.33

170.14

73,800

45,600

54,700

44,616

42,600

64,600

52,400

44,200

48,402

57,000

46,800

42,000

202.19

124.93

149.86

122.24

116.71

176.99

143.56

121.10

132.61

156.16

128.22

115.07

tions to Form 2555, Foreign Earned Income, for 2022).

The Treasury Department and the IRS

anticipate that future annual notices providing adjustments to housing expense

limitations will make a similar option

available to qualified individuals that incur housing expenses in the immediately

preceding year. For example, when adjusted housing expense limitations for 2024

are issued, it is expected that taxpayers

will be permitted to apply those adjusted

limitations to the 2023 taxable year.

SECTION 5. EFFECT ON OTHER

DOCUMENTS

This notice supersedes Notice 2022-10,

2022-10 I.R.B. 815.

580

SECTION 6. EFFECTIVE DATE

This notice is effective for taxable years

beginning on or after January 1, 2023. However, as provided in Section 4, taxpayers

may apply the 2023 adjusted housing limitations contained in Section 3 of this notice

to his or her taxable year beginning in 2022.

SECTION 7. DRAFTING

INFORMATION

The principal author of this notice is

Kate Y. Hwa of the Office of Associate

Chief Counsel (International). For further

information regarding this notice contact

Kate Y. Hwa at (202) 317-5001 (not a tollfree number).

Bulletin No. 2023–13

NOTE. This revenue procedure will be reproduced as the next revision of IRS Publication 4436, General Rules and Specifications for Substitute Form 941, Schedule

B (Form 941), Schedule D (Form 941), Schedule R (Form 941), and Form 8974.

Rev. Proc. 2023-13

TABLE OF CONTENTS

PART 1 –

Section 1.1 – Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 582

Section 1.2 – What’s New. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 584

Section 1.3 – Reminders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 584

Section 1.4 – General Requirements for Reproducing IRS Official Form 941, Schedule B, Schedule D,

Schedule R, and Form 8974 ��584

Section 1.5 – Reproducing Form 941, Schedule B, Schedule D, Schedule R, and Form 8974 for

Software-Generated Paper Forms��586

Section 1.6 – Specific Instructions for Schedule D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 588

Section 1.7 – Specific Instructions for Schedule R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 588

Section 1.8 – Specific Instructions for Form 8974. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589

Section 1.9 – Office of Management and Budget (OMB) Requirements for Substitute Forms. . . . . . . . . . . . . . . . . . . . . . . . 590

Section 1.10 – Order Forms and Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590

Section 1.11 – Effect on Other Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591

Section 1.12 – Helpful Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591

Section 1.13 – Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592

Bulletin No. 2023–13

581

March 27, 2023

Part 1

Section 1.1 – Purpose

.01 The purpose of this revenue procedure is to provide general rules and specifications from

the IRS for paper and computer-generated substitutes for Form 941, Employer’s QUARTERLY

Federal Tax Return; Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule

Depositors (referred to in this revenue procedure as “Schedule B”); Schedule D (Form 941),

Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations (referred

to in this revenue procedure as “Schedule D”); Schedule R (Form 941), Allocation Schedule for

Aggregate Form 941 Filers (referred to in this revenue procedure as “Schedule R”); and Form

8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities.

Caution. Before creating a substitute Form 941, see Pub. 1167, General Rules and Specifications

for Substitute Forms and Schedules, for additional rules and specifications for payment vouchers

(Vouchers), printing in margins (Marginal Printing), and additional instructions (Additional

Instructions for All Forms).

Note. Substitute territorial forms (941-PR, Planilla para la Declaración Federal TRIMESTRAL

del Patrono; 941-SS, Employer’s QUARTERLY Federal Tax Return (American Samoa, Guam,

the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands); and Anexo B

(Formulario 941-PR), Registro de la Obligación Contributiva para los Despositantes de Itinerario

Bisemanal), should also generally conform to the specifications outlined in this revenue procedure.

However, some of the measurements provided in the exhibits, later, may need to be adjusted for

substitute territorial forms.

.02 This revenue procedure provides information for substitute Form 941, Schedule B, Schedule

D, Schedule R, and Form 8974. If you need more in-depth information on who must complete

these forms and how to complete them, see the Instructions for Form 941, the Instructions for

Schedule B, the Instructions for Schedule D, the Instructions for Schedule R, the Instructions for

Form 8974, and Pub. 15, Employer’s Tax Guide, or go to IRS.gov.

Note. Failure to produce acceptable substitutes of the forms and schedules listed in this revenue

procedure may result in delays in processing. This may result in penalties.

.03 Forms that completely follow the guidelines in this revenue procedure and are exact replicas

of the official IRS forms do not need to be submitted to the IRS for specific approval. Substitute

forms and schedules need to be scanned using IRS scanning equipment.

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

March 27, 2023

Submit a letter citing the specification.

State your understanding of the specification.

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

understanding.

582

Bulletin No. 2023–13

Be sure to include your name, complete address, phone number, and, if applicable, your

email address with your correspondence. Send your request to SCRIPS@IRS.gov or

SubstituteForms@IRS.gov, or use the following address.

Internal Revenue Service

Attn: Substitute Forms Program

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

5000 Ellin Road, Mail Stop C6-110

Lanham, MD 20706

Note. Allow at least 30 days for the IRS to respond.

.04 However, software developers and form producers should send a blank copy of their substitute

Form 941, Schedule B, and Schedule R in Portable Document Format (PDF) to SCRIPS@IRS.

gov. The purpose is not specifically for approval but to assist the IRS in preparing to scan

these forms. Submitters will only receive comments if a significant problem is discovered

through this process. Submitters are not expected to delay marketing their forms in order to

receive feedback. Submitters must not include any “live” taxpayer data on any substitute form

submitted for review.

.05 Form 941, Schedule B, Schedule R, and Form 8974 have a six-digit form ID code in the upper

right-hand corner. The first two digits of the form ID code represent whether the form is an official

paper form or a substitute 6x10 grid. The third and fourth digits of the form ID code are a unique

identifier that is subject to change each quarter when changes are made to a page of the form. The

fifth and six digits of the form ID code generally represent the year in which the IRS made major

formatting changes to the layout of a page of the form. The following six-digit form ID codes,

some of which have been updated for the first quarter of 2023, are currently used on Form 941,

Schedule B, Schedule R, and Form 8974.

•

Official paper forms: 950122 (Form 941, page 1); 951222 (Form 941, page 2); 950922

(Form 941, page 3); 951020 (Form 941, page 4); 960311 (Schedule B); 951422 (Schedule R,

page 1); 951522 (Schedule R, page 2); and 950823 (Form 8974).

•

Substitute 6x10 grids: 970122 (Form 941, page 1); 971222 (Form 941, page 2); 970922

(Form 941, page 3); 971020 (Form 941, page 4); 970311 (Schedule B); 971422 (Schedule R,

page 1); 971522 (Schedule R, page 2); and 970823 (Form 8974).

You must always use the form ID code provided on the current form for the applicable quarter

for which you are creating a substitute form, even if this revenue procedure is not superseded to

reflect a change to a form ID code.

Note. Page 4 of Form 941 (page intentionally left blank) is not required to be filed with the IRS

as part of a substitute Form 941. However, if page 4 of the substitute Form 941 is filed, it must

include the form ID code.

.06 This revenue procedure will be updated only if there are major formatting changes to the

layout of the forms (that is, changes to the measurements provided in the exhibits at the end of this

revenue procedure) or there are other changes that impact the processing of substitute forms. This

revenue procedure won’t be updated solely because a line is changed to “Reserved for future use”

or solely because a form ID code changes without major formatting changes.

Bulletin No. 2023–13

583

March 27, 2023

Section 1.2 – What’s New

.01 Some measurements shown in the exhibits for Form 941 have changed due to minor design

changes.

.02 Some column headings on Schedule R were revised to make use of columns that were

previously “Reserved for future use.”

.03 Form 8974 was revised due to the Inflation Reduction Act of 2022. See the instructions for this

form at IRS.gov/Form8974.

.04 Form 941-SS and Form 941-PR will no longer be available after the fourth quarter of

2023. Instead, employers in the U.S. territories will file Form 941, or, if you prefer your form

and instructions in Spanish, you can file new Form 941 (sp), Declaración del Impuesto Federal

TRIMESTRAL del Empleador.

Section 1.3 – Reminders

.01 Draft forms. Draft forms can be found at IRS.gov/DraftForms.

Section 1.4 – General Requirements for Reproducing IRS Official Form 941, Schedule B, Schedule D, Schedule R,

and Form 8974

.01 Submit substitute Form 941, Schedule B, Schedule D, Schedule R, and Form 8974 to the IRS

for specifications review. Substitute Form 941, Schedule B, Schedule D, Schedule R, and Form

8974 that completely conform to the specifications contained in this revenue procedure do not

require prior approval from the IRS, but should be submitted to SCRIPS@IRS.gov to ensure that

they conform to IRS format and scanning specifications.

.02 Print the form on standard 8.5-inch wide by 11-inch paper.

.03 Use white paper that meets generally accepted weight, color, and quality standards (minimum

20 lb. white bond paper).

March 27, 2023

584

Bulletin No. 2023–13

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

standard are met.

.04 The IRS prefers printing Form 941 on both sides of a single sheet of paper, but it is acceptable

to print on one side of each of two separate sheets of paper.

.05 Make the substitute paper form as identical to the official form as possible.

.06 Print the substitute form using nonreflective black (not blue or other-colored) ink. Printing in

an ink color other than black may reduce readability in the scanning process. This may result in

figures being too faint to be recognizable.

.07 Use typefaces that are substantially identical in size and shape to the official form and use rules

and shading (if used) that are substantially identical to those on the official form. Use font size as

large as possible within the fields.

.08 In the same location as shown on the official IRS forms, print the six-digit form ID code (if one

exists on the official form) on each form using nonreflective black, carbon-based, 12-point font.

The use of non-OCR-A font may reduce readability for scanning. Use the official form to develop

your substitute form.

Note. Maintain as much white space as possible around the form ID code. Do not allow character

strings to print adjacent to the code.

The following six-digit form ID codes are used on Form 941, Schedule B, Schedule R, and Form

8974 for the first quarter of 2023. Print “950122” on Form 941, page 1; “951222” on Form 941,

page 2; “950922” on Form 941, page 3; “951020” on Form 941, page 4; “960311” on Schedule B;

“951422” on Schedule R, page 1; “951522” on Schedule R, page 2; and “950823” on Form 8974.

You must always use the form ID code provided on the current form for the applicable quarter

for which you are creating a substitute form, even if this revenue procedure is not superseded to

reflect a change to a form ID code. See Section 1.5 for information on form ID codes for softwaregenerated forms.

Note. Page 4 of Form 941 (page intentionally left blank) is not required to be filed with the IRS

as part of a substitute Form 941. However, if page 4 of the substitute Form 941 is filed, it must

include the form ID code.

.09 Print the OMB number in the same location as on the official form. Be sure to include the

OMB number on Form 941, Schedule B, Schedule D, Schedule R, and Form 8974.

.10 Print all entry boxes and checkboxes exactly as shown (location and size) on the official

forms.

Note. Instead of a four-sided checkbox for the entry, just the bottom line of the box can be used as

long as the location and size remain the same.

.11 Print “For Privacy Act and Paperwork Reduction Act Notice, see the back of the Payment

Voucher.” at the bottom of page 1 of Form 941.

Bulletin No. 2023–13

585

March 27, 2023

.12 Print “For Paperwork Reduction Act Notice, see separate instructions.” at the bottom of

Schedule B and Schedule D.

.13 Print “For Paperwork Reduction Act Notice, see the separate instructions.” at the bottom of

Schedule R.

.14 Print “For Paperwork Reduction Act Notice, see the separate instructions.” at the bottom of

Form 8974.

.15 Do not print the form catalog number (“Cat. No.”) at the bottom of the forms or instructions.

Instead, print your IRS-issued three-letter substitute form source code in place of the catalog

number on the left at the bottom of page 1 of Form 941, Schedule B, Schedule D, Schedule R, and

Form 8974.

Note. You can obtain a three-letter substitute form source code by requesting it by email at

SubstituteForms@IRS.gov. Enter “Substitute Forms” on the subject line.

.16 Do not print the Government Publishing Office (GPO) symbol at the bottom of the forms or

instructions.

Section 1.5 – Reproducing Form 941, Schedule B, Schedule D, Schedule R, and Form 8974 for Software-Generated

Paper Forms

.01 You may use the PDF files to develop the layout for your forms. Draft forms found at IRS.

gov/DraftForms can be used to develop interim formats until the forms are finalized. When forms

become finalized, they are posted and can be found at IRS.gov/Forms. You may use 6x10 grid

formats to develop software versions of Form 941, Schedule B, Schedule D, Schedule R, and

Form 8974.

Please follow the specifications exactly to develop the fields.

.02 If you are developing software using the 6x10 grid, the following six-digit form ID codes are

used on Form 941, Schedule B, Schedule R, and Form 8974 for the first quarter of 2023.

•

“970122” for Form 941, page 1; “971222” for Form 941, page 2; “970922” for Form 941,

page 3; “971020” for Form 941, page 4; “970311” for Schedule B; “971422” for Schedule R,

page 1; “971522” for Schedule R, page 2; and “970823” for Form 8974.

You must always use the form ID code provided on the current form, with the first two digits

changed to “97” when using a 6x10 grid, for the applicable quarter for which you are creating

a substitute form, even if this revenue procedure is not superseded to reflect a change to a form

ID code.

Note. Maintain as much white space as possible around the form ID code. Do not allow

character strings to print adjacent to the code.

March 27, 2023

586

Bulletin No. 2023–13

•

Place all 6x10 grid boxes and entry spaces in the same field locations as indicated on the

official forms.

•

Use single lines for “Employer Identification Number (EIN)” and other entry areas in the

entity section of Form 941, pages 1, 2, and 3; Schedule B; Schedule R, pages 1 and 2; and

Form 8974.

•

Reverse type is not needed as shown on the official form.

•

Do not pre-print decimal points in the data boxes. However, where the amounts are required,

the amounts should be printed with decimal points and place holders for cents.

•

Delete the pre-printed formatting in any “date” boxes.

•

Use a single box for “Personal Identification Number (PIN)” on Form 941.

•

You may delete all shading when using the 6x10 grid format.

.03 If producing both the form and the data or the form only, print your three-letter source code

at the bottom of Form 941, page 1; Schedule B; Schedule D; Schedule R, page 1; or Form 8974.

See Section 1.4.15.

.04 If producing only the data on the form, print your four-digit software industry vendor code

on Form 941. The four-digit vendor code preceded by four zeros and a slash (0000/9876) must

be pre-printed. If you have a valid vendor code issued to you through the National Association

of Computerized Tax Processors (NACTP), you should use that code. If you do not have a valid

vendor code, contact the NACTP via email at president@nactp.org for information on these codes.

.05 Print “For Privacy Act and Paperwork Reduction Act Notice, see the back of the Payment

Voucher.” at the bottom of Form 941, page 1.

.06 Print “For Paperwork Reduction Act Notice, see separate instructions.” at the bottom of

Schedule B and Schedule D.

.07 Print “For Paperwork Reduction Act Notice, see the separate instructions.” at the bottom of

Schedule R, page 1.

.08 Print “For Paperwork Reduction Act Notice, see the separate instructions.” at the bottom of

Form 8974.

.09 Be sure to print the OMB number in the same location as on the official forms on substitute

Form 941, Schedule B, Schedule D, Schedule R, and Form 8974.

.10 Do not print the form catalog number (“Cat. No.”) at the bottom of the forms or instructions.

.11 Do not print the Government Publishing Office (GPO) symbol at the bottom of the forms or

instructions.

.12 To ensure accurate scanning and processing, enter data on Form 941, Schedule B, Schedule D,

Schedule R, and Form 8974 as follows.

Bulletin No. 2023–13

587

March 27, 2023

•

Display/print the name and EIN on all pages and attachments in the proper associated fields.

•

Use 12-point (minimum 10-point) Courier font (where possible).

•

Omit dollar signs. Commas are optional.

•

Except for Form 941, lines 1, 2, and 12, leave blank any data field with a value of zero.

•

Enter negative amounts with a minus sign. For example, report “-10.59” instead of “(10.59).”

Note. The IRS prefers that you use a minus sign for negative amounts instead of parentheses or

some other means. However, if your software only allows for parentheses in reporting negative

amounts, you may use them.

Section 1.6 – Specific Instructions for Schedule D

.01 To properly file and to reduce delays and contact from the IRS, Schedule D must be produced

as close as possible to the official form.

.02 Use Schedule D to explain why you have certain discrepancies. See the Instructions for

Schedule D for more information. In many cases, the information on Schedule D helps the IRS

resolve discrepancies without contacting you.

.03 If a substitute Schedule D is not submitted in similar format to the official IRS schedule, the

substitutes may be returned, you may be contacted by the IRS, delays in processing may occur,

and you may be subject to penalties.

Section 1.7 – Specific Instructions for Schedule R

.01 To properly file and to reduce delays and contact from the IRS, Schedule R and Continuation

Sheets for Schedule R must be produced as close as possible to the official form.

Note. Do not present the information in spreadsheet or similar format. We may not be able to

properly process nonconforming documents with an excessive number of entries. Complete as

many Continuation Sheets for Schedule R (Schedule R, page 2) as necessary. If Continuation

Sheets are not used or they vary in form from the official form, processing may be delayed and

you may be subject to penalties.

.02 Use Schedule R to allocate the aggregate information reported on Form 941 to each client. If

you have more than 5 clients, complete as many Continuation Sheets for Schedule R as necessary.

Attach Schedule R, including any Continuation Sheets, to your aggregate Form 941 and file it

with your return.

March 27, 2023

588

Bulletin No. 2023–13

Enter your business information carefully.

Make sure all information exactly matches the information shown on the aggregate Form 941.

Compare the total of each column on Schedule R, line 9 (including your information on line 8),

to the amounts reported on the aggregate Form 941. For each column total of Schedule R, the

relevant line from Form 941 is noted in the column heading. If the totals on Schedule R, line 9, do

not match the totals on Form 941, there is an error that must be corrected before submitting Form

941 and Schedule R.

.03 Do:

•

Develop and submit only conforming Schedules R;

•

Follow the format and fields exactly as on the official Schedule R, even if this revenue

procedure is not superseded to reflect a change in a column heading on Schedule R; and

•

Maintain the same number of entry lines on the substitute Schedule R as on the official form.

.04 Do not:

•

Add or delete entry lines;

•

Submit spreadsheets, database printouts, or similar formatted documents instead of using the

Schedule R format to report data; and

•

Reduce or expand font size to add or delete extra data or lines.

.05 If substitute Schedules R and Continuation Sheets for Schedule R are not submitted in similar

format to the official schedule, the substitutes may be returned, you may be contacted by the IRS,

delays in processing may occur, and you may be subject to penalties.

Section 1.8 – Specific Instructions for Form 8974

.01 To properly file and to reduce delays and contact from the IRS, Form 8974 must be produced

as close as possible to the official form.

.02 Use Form 8974 only if you are claiming the qualified small business payroll tax credit for

increasing research activities.

.03 If a substitute Form 8974 is not submitted in similar format to the official IRS form, the

substitutes may be returned, you may be contacted by the IRS, delays in processing may occur,

and you may be subject to penalties.

Bulletin No. 2023–13

589

March 27, 2023

Section 1.9 – Office of Management and Budget (OMB) Requirements for Substitute Forms

.01 The Paperwork Reduction Act (the Act) of 1995 (P.L. 104-13) requires the following.

•

OMB approves all IRS tax forms that are subject to the Act.

•

Each IRS form contains the OMB approval number, if assigned. The official OMB numbers

may be found on the official IRS-printed forms.

•

Each IRS form (or its instructions) states:

Why the IRS needs the information,

How it will be used, and

Whether or not the information is required to be furnished to the IRS.

.02 This information must be provided to any users of official or substitute IRS forms or instructions.

.03 The OMB requirements for substitute IRS forms are the following.

•

Any substitute form or substitute statement to a recipient must show the OMB number as it

appears on the official form.

•

For Form 941, Schedule B, Schedule D, Schedule R, and Form 8974, the OMB number (15450029) must appear exactly as shown on the official form.

•

For Form 941, Schedule B, Schedule D, Schedule R, and Form 8974, the OMB number must

use one of the following formats.

OMB No. 1545-0029 (preferred).

OMB # 1545-0029 (acceptable).

.04 If no instructions are provided to users of your forms, you must furnish to them the exact text

of the Privacy Act and Paperwork Reduction Act Notice.

Section 1.10 – Order Forms and Instructions

.01 You can order forms and instructions at IRS.gov/OrderForms.

March 27, 2023

590

Bulletin No. 2023–13

Section 1.11 – Effect on Other Documents

.01 Revenue Procedure 2022-15, 2022-13 I.R.B. 908, dated March 28, 2022, is superseded.

Section 1.12 – Helpful Information

.01 Please follow the specifications and guidelines to produce substitute Form 941, Schedule B,

Schedule D, Schedule R, and Form 8974.

.02 These forms are subject to review and possible changes, as required. Therefore, employers are

cautioned against overstocking supplies of privately printed substitutes.

.03 Here is a review of references that were listed throughout this document.

Bulletin No. 2023–13

•

Form 941, Employer’s QUARTERLY Federal Tax Return.

•

Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors (referred

to in this revenue procedure as “Schedule B”).

•

Schedule D (Form 941), Report of Discrepancies Caused by Acquisitions, Statutory Mergers,

or Consolidations (referred to in this revenue procedure as “Schedule D”).

•

Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers (referred to in

this revenue procedure as “Schedule R”).

•

Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities.

•

Substitute territorial forms (941-PR, 941-SS, and Anexo B (Formulario 941-PR)).

•

Instructions for Form 941.

•

Instructions for Schedule B (Form 941).

•

Instructions for Schedule D (Form 941).

•

Instructions for Schedule R (Form 941).

•

Instructions for Form 8974.

•

Pub. 15, Employer’s Tax Guide.

•

SCRIPS@IRS.gov for submissions.

•

SubstituteForms@IRS.gov for questions.

591

March 27, 2023

•

For questions:

Internal Revenue Service

Attn: Substitute Forms Program

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

5000 Ellin Road, Mail Stop C6-110

Lanham, MD 20706

•

IRS.gov/DraftForms for draft forms.

•

IRS.gov/Forms for final forms.

Section 1.13 – Exhibits

March 27, 2023

592

Bulletin No. 2023–13

593

March 27, 2023

594

Bulletin No. 2023–13

595

March 27, 2023

596

Bulletin No. 2023–13

597

March 27, 2023

598

Bulletin No. 2023–13

599

March 27, 2023

600

Bulletin No. 2023–13

601

March 27, 2023

602

Bulletin No. 2023–13

603

March 27, 2023

26 CFR 601.601: Rules and Regulations.

(Also Part I, §§ 4980H; 54.4980H)

Rev. Proc. 2023-17

SECTION 1. PURPOSE

This revenue procedure provides indexing adjustments for the applicable dollar amounts under § 4980H(c)(1) and (b)

(1) of the Internal Revenue Code. These

indexed amounts are used to calculate the

employer shared responsibility payments

(ESRP) under § 4980H(a) and (b)(1),

respectively.

SECTION 2. ADJUSTED ITEMS

Under § 4980H(c)(5), in the case of any

calendar year after 2014, the applicable

dollar amounts of $2,000 and $3,000 under § 4980H(c)(1) and (b)(1), respectively, are increased by an amount equal to the

product of such dollar amount and the premium adjustment percentage (as defined

in § 1302(c)(4) of the Patient Protection

and Affordable Care Act1) for the calendar

year. If the amount of any increase is not a

multiple of $10, such increase is rounded

to the next lowest multiple of $10.

The Department of Health and Human

Services (HHS) published the premium

adjustment percentage for 2024 on December 12, 2022, using the most recent

National Health Expenditure Accounts

(NHEA) income and premium data that

was available at the time of publication.

For calculation of the 2024 benefit year

payment parameters, HHS used the NHEA

Projections 2021-2030, the data source

that reflected the most recent projections

available. Using the NHEA Projections

2021-2030, the premium adjustment percentage for 2024 is the percentage (if any)

by which the NHEA Projections 20212030 value for per enrollee ESI premiums

for 2023 ($7,292) exceeds the NHEA Projections 2021-2030 value for per enrollee

ESI premiums for 2013 ($4,894) carried

out to ten significant digits. Using this formula, the applicable premium adjustment

percentage is 1.4899877401.2 For calendar year 2024, the adjusted $2,000 amount

under § 4980H(c)(1) is $2,970 ($2,000

x 1.4899877401 = $2,979.9754802

rounded down to $2,970), and the adjusted $3,000 amount under § 4980H(b)

(1) is $4,460 ($3,000 x 1.4899877401 =

$4,469.9632203 rounded down to $4,460).

SECTION 3. EFFECTIVE DATE

This revenue procedure is effective for

taxable years and plan years beginning after December 31, 2023.

SECTION 4. DRAFTING

INFORMATION

The principal author of this revenue

procedure is Jennifer Friedman of the Office of Associate Chief Counsel (Employee Benefits, Exempt Organizations, and

Employment Taxes). For further information regarding this revenue procedure,

contact the Health and Welfare Branch

in the Office of Associate Chief Counsel

(Employee Benefits, Exempt Organizations, and Employment Taxes) at (202)

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

Pub. L. 111–148, 124 Stat. 119 (2010).

See https://www.cms.gov/files/document/2024-papi-parameters-guidance-2022-12-12.pdf.

March 27, 2023

604

Bulletin No. 2023–13

26 CFR 301.7705: Applying for and maintaining certification as a certified professional employer organization.

Rev. Proc. 2023-18

TABLE OF CONTENTS

SECTION 1. BACKGROUND AND DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 606

.01 Nature of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607

.02 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607

.03 Changes and request for comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609

SECTION 2. PROCEDURES FOR APPLYING FOR CERTIFICATION AS A CPEO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609

.01 Method of submission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609

.02 Controlled groups. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609

.03 User fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610

.04 Surety letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610

.05 Submission of annual audited financial statements, CPA opinion, and statement of working capital. . . . . . . . . . . . . . . 610

.06 Submission of quarterly assertions, attestations, and working capital statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611

SECTION 3. SUITABILITY AND TAX-COMPLIANCE CHECK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612

SECTION 4. STANDARDS FOR GRANTING CERTIFICATION AS A CPEO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612

.01 Eligibility for certification must be established in the application. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612

.02 Incomplete or inaccurate application. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612

.03 Even if an application is complete, additional information may be required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612

.04 CPEO applicant must notify IRS of material changes relevant to its application for certification . . . . . . . . . . . . . . . . . 613

SECTION 5. WITHDRAWAL OF APPLICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613

.01 Application may be withdrawn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613

.02 Information may be used in subsequent examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613

SECTION 6. NOTICE OF CERTIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613

.01 Notice of certification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613

.02 Proof of bond. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613

.03 Effective date of certification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613

.04 Disclosure of organizations certified as CPEOs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613

SECTION 7. DENIAL OF CERTIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613

.01 Notice of proposed denial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613

.02 Circumstances in which denial is final, with no opportunity for review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613

.03 Request for review of a notice of proposed denial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614

.04 Notice of final denial where no request for review of the proposed denial is submitted. . . . . . . . . . . . . . . . . . . . . . . . . 614

.05 How the IRS handles a request for review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614

.06 Consideration by OPR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615

.07 A request for review may be withdrawn. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615

SECTION 8. PROCEDURES FOR MAINTAINING CERTIFICATION AS A CPEO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615

.01 In general . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615

.02 Annual verification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615

.03 Bond requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616

.04 Submission of annual audited financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617

.05 Submission of quarterly assertions, attestations, and working capital statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 618

.06 Reporting Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 618

Bulletin No. 2023–13

605

March 27, 2023

SECTION 9. SUSPENSION AND REVOCATION OF CPEO CERTIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621

.01 In general . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621

.02 Specific failures resulting in suspension and proposed revocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622

.03 Notice of suspension and proposed revocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622

.04 Notice of final revocation issued if no request for review of the proposed revocation is submitted. . . . . . . . . . . . . . . . 623

.05 How the IRS handles a request for review of the proposed revocation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623

.06 Consideration by OPR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 624

.07 A request for review may be withdrawn. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 624

.08 Notice of final revocation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 624

.09 Consequences of revocation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625

.10 Reapplication after revocation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625

SECTION 10. VOLUNTARY TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625

.01 Notice of voluntary termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625

.02 Notice of termination sent to customers by IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625

.03 Effect of voluntary termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .625

.04 Reapplication after voluntary termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625

SECTION 11. EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625

SECTION 12. PAPERWORK REDUCTION ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625

SECTION 13. DRAFTING INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 626

SECTION 1. BACKGROUND AND

DEFINITIONS

The Stephen Beck, Jr., Achieving a Better Life Experience (ABLE) Act of 2014,

enacted on December 19, 2014, as part of

the Tax Increase Prevention Act of 2014

(Pub. L. 113-295), added sections 3511

and 7705 to the Internal Revenue Code

(Code) relating to the certification requirements for, and the federal employment tax

consequences of being, a certified professional employer organization (CPEO).

The ABLE Act requires the establishment

of a voluntary program for persons to apply to the Internal Revenue Service (IRS)

to become certified as a CPEO. On May

6, 2016, the Department of the Treasury

(Treasury Department) and the IRS published final and temporary regulations under section 7705 (TD 9768) in the Federal

12, 2016, at 81 FR 45012) that describe

the application process and certification

requirements necessary for a person to become and remain a CPEO. On the same

date, the Treasury Department and the IRS

published a notice of proposed rulemak-

March 27, 2023

ing (REG-127561-15) in the Federal Register (81 FR 27360) cross-referencing

the temporary regulations and proposing

additional regulations under section 3511

that describe the federal employment tax

consequences of becoming a CPEO for

CPEOs and their customers.

On June 3, 2016, Revenue Procedure

2016-33 (2016-25 I.R.B. 1034) was issued, providing procedures for applying

to be certified as a CPEO. To address several comments received in response to the

temporary and proposed regulations and

Revenue Procedure 2016-33 that required

prompt attention, the Treasury Department

and the IRS issued Notice 2016-49 (201634 I.R.B. 265) on August 5, 2016. The

Treasury Department and the IRS also issued Revenue Procedure 2017-14 (2017-3

I.R.B. 426) on December 29, 2016, which

addressed the requirements for a CPEO to

remain certified and the procedures relating to suspension and revocation of CPEO

certification. Final regulations under sections 3511 and 7705 (TD 9860) describing the certification requirements necessary for a person to become and remain

a CPEO, and the federal employment tax

606

consequences of being a CPEO, which incorporated changes from Notice 2016-49,

were published in the Federal Register (84

FR 24367) on May 28, 2019.

This revenue procedure modifies and

supersedes both Rev. Proc. 2016-33 and

Rev. Proc. 2017-14. It addresses the procedures for applying to be certified as a

CPEO, the requirements for a CPEO to

remain certified, and the procedures relating to suspension and revocation of CPEO

certification. This revenue procedure consolidates the ongoing requirements articulated in Rev. Proc. 2016-33, as modified

by Notice 2016-49, Rev. Proc. 2017-14,

and the regulations under sections 3511

and 7705. In addition, it reflects changes

in the ongoing operations of the CPEO

program, including updates to the IRS

Online Registration System, since Rev.

Proc. 2016-33 and Rev. Proc. 2017-14

were issued, and changes in response to

comments and questions received from

CPEOs and CPEO applicants.

The IRS received several written comments in response to the proposed and

temporary regulations, Rev. Proc. 201633, Rev. Proc. 2017-14, and Notice 2016-

Bulletin No. 2023–13

49. While all relevant comments were

considered and addressed in the final regulations, some comments were beyond the

scope of the regulations. When appropriate, comments not addressed in the final

regulations because they were beyond the

scope of the regulations were considered

in the drafting of this revenue procedure.

.01 Nature of Changes. This revenue

procedure provides clarifications and

substantive changes to the procedures

outlined in Rev. Proc. 2016-33 and Rev.

Proc. 2017-14. Specifically, this revenue

procedure:

(1) Expands and defines the role of the

application submitter in order to make

application processing, document and

information submission, and other communications with respect to the CPEO

applicant or CPEO more efficient. Because of this expanded role, this revenue

procedure also further clarifies who can

be an application submitter. Rev. Proc

2016-33, section 2.01, provided that the

individual submitting the online application for CPEO certification on behalf of

the CPEO applicant must be authorized

by section 6103(e) to inspect the return

of the CPEO applicant. Furthermore, Rev.

Prov. 2017-14, section 2.01, provided that

the individual submitting information

and documents on behalf of the CPEO

through the CPEO’s online account must

be authorized by section 6103(e) to inspect the returns and return information of

the CPEO. Under this revenue procedure,

an application submitter must either hold

a position specified in section 1.02(1)1 or

have a valid Form 2848, Power of Attorney and Declaration of Representative, for

the CPEO applicant or CPEO on file with

the IRS.

(2) Provides updates to the procedures

for a denial of CPEO certification and for

the suspension and proposed revocation

of a certification—specifically, procedures concerning what information the

IRS CPEO program office will consider

when reviewing a CPEO applicant’s or

CPEO’s request for review and when this

information should be submitted. Further,

additional detail is provided concerning

review by the IRS Office of Professional Responsibility (OPR), including rules

prohibiting most communications between OPR and the IRS CPEO Program

Office and between OPR and the CPEO

applicant or CPEO during OPR’s review.

(3) Provides information on how

CPEOs should submit Form 8973, Certified Professional Employer Organization/

Customer Reporting Agreement, unsigned

by a client, for CPEOs that occasionally

experience difficulty in obtaining a signature on Form 8973 from a client subject to a service agreement described in

§ 31.3504-2(b)(2).

(4) Provides additional details concerning the CPEO applicant’s and CPEO’s use

of the IRS Online Registration System account, including a requirement that CPEO

applicants and CPEOs that are members

of a controlled group in which more than

one member of the controlled group is a

CPEO applicant or CPEO must create a

controlled group license within the IRS

Online Registration System.

(5) Clarifies that as part of an examination level attestation indicating that the

CPEO or CPEO applicant failed to withhold or make deposits in certain immaterial aspects, the CPEO or CPEO applicant

may include an explanation not only as

to why the failures were immaterial, but

also how the failures were addressed, if

applicable.

(6) Provides updates to the fingerprint

procedures for responsible individuals.

Specifically, all responsible individuals

are now required to submit fingerprints

electronically using Fieldprint. Fingerprint submissions on Form FD-258 will

no longer be processed. All current responsible individuals will have until

June 1, 2023, to submit new fingerprints

electronically.

.02 Definitions. For purposes of this

revenue procedure—

(1) Application Submitter. The term

“application submitter” means the individual who is submitting an application

on behalf of a CPEO applicant and any

other individual submitting information

and documents to the IRS on behalf of

a CPEO. Except as provided in this section 1.02(1), the application submitter

must be a partner or limited partner if the

CPEO applicant or CPEO is a partner-

ship; the president, vice president, secretary, treasurer, chief accounting officer,

any tax officer (including Controller), 1%

shareholder (corporation), or shareholder

(S-corporation) if the CPEO applicant or

CPEO is a corporation or S-corporation;

or owner or sole proprietor if the CPEO

applicant or CPEO is a sole proprietorship. An individual who does not occupy

one of these positions must have a valid

Form 2848, Power of Attorney and Declaration of Representative, for the CPEO

applicant or CPEO on file with the IRS in

order to be the application submitter.

(2) Controlled Group. The term “controlled group” means any group of corporations or trades or businesses under

common control within the meaning of

section 414(b) and (c), and §§ 1.414(b)-1

and 1.414(c)-1 through 1.414(c)-6 of the

Treasury Regulations.

(3) Certified Public Accountant. The

term “certified public accountant” (CPA)

means a certified public accountant who-(a) With respect to a CPEO or CPEO

applicant, is independent of the CPEO

or CPEO applicant (as prescribed by the

American Institute of Certified Public Accountants’ Professional Standards, Code

of Professional Conduct, and its interpretations and rulings);

(b) Is not currently under suspension or

disbarment from practice before the IRS;

state; and

(d) Files with the IRS a written declaration that the CPA is currently qualified

as a CPA.

(4) Covered Employee. The term “covered employee” means, with respect to

a customer, any individual (other than a

self-employed individual, as defined in

section 1.02(18)) who performs services

for the customer and who is covered by

a CPEO contract between the CPEO and

the customer.

(5) CPEO. The term “CPEO” means a

person that has been certified by the Commissioner as meeting the requirements

of § 301.7705-2, this revenue procedure,

instructions in the online application, and

any applicable subsequent guidance, and

whose certification has not been revoked

or voluntarily terminated.

Unless otherwise indicated, all references to sections in this document refer to sections of this revenue procedure.

Bulletin No. 2023–13

607

March 27, 2023

(6) CPEO Applicant. The term “CPEO

applicant” means a person that submits

or has submitted an application to be

certified as a CPEO in accordance with

§ 301.7705-2, this revenue procedure,

the instructions in the online application,

and any applicable subsequent guidance.

A CPEO applicant remains a CPEO applicant until the CPEO applicant is certified

(meaning the CPEO applicant receives a

notice of certification described in section

6.01 and timely and correctly submits a

proof of bond, as described in section

6.02); withdraws its application; or receives a notice of final denial, as described

in section 7.04.

(7) CPEO Contract. The term “CPEO

contract” means a service contract between a CPEO and a customer that satisfies the requirements in section 7705(e)(2)

and § 301.7705-1(b)(3).

(8) Customer. The term “customer” means any person who enters into a

CPEO contract with a CPEO, except that

a provider of employment-related services

that uses its own employer identification

number (EIN) for filing federal employment tax returns on behalf of its clients (or

that used its own EIN for filing its clients’

returns immediately prior to entering into

a CPEO contract with the CPEO) is not

a customer, even if it has entered into a

CPEO contract with the CPEO.

(9) Federal Employment Taxes. The

term “federal employment taxes” means

the taxes imposed by subtitle C of the

Code.

(10) Guidance. The term “guidance”

includes guidance published in the Federal Register or Internal Revenue Bulletin,

as well as administrative guidance such as

forms, instructions, publications, or other

guidance on IRS.gov.

(11) IRS Online Registration System.

The term “IRS Online Registration System” means the system made available by

the IRS on IRS.gov and used by CPEO

applicants and CPEOs to apply for and

maintain certification, and by responsible individuals of CPEO applicants and

CPEOs to create a Responsible Individual

Personal Attestation. To apply for certification, CPEO applicants must create an

account on the IRS Online Registration

System, and CPEO applicants must use

this account to provide the IRS with the

information and supporting documenta-

March 27, 2023

tion necessary to obtain certification. A

CPEO must use its IRS Online Registration System account to annually verify

information previously submitted, to provide updates that reflect material changes

to previously submitted information, and

to comply with annual and quarterly program requirements. Responsible individuals of CPEO applicants and CPEOs must

use the IRS Online Registration System to

create a Responsible Individual Personal

Attestation (RIPA), through which they

provide the information necessary for

their CPEO applicants and CPEOs to obtain and maintain certification. See section

2.02 for a discussion of controlled group

licenses and their use on the IRS Online

Registration System.

(12) Online Application. The term

“online application” means the electronic

submission by a CPEO applicant and its

responsible individuals of all information

required by the CPEO application for certification on the IRS Online Registration

System, as well as the accompanying

forms and documentation required by

§ 301.7705-2, this revenue procedure, and

any applicable subsequent guidance.

(13) Precursor Entity. The term “precursor entity” means an entity described

in § 301.7705-1(b)(10).

(14) Qualified Surety. The term “qualified surety” means a surety that meets the

requirements of § 301.7705-2(g)(6).

(15) Related Entity. The term “related entity” means an entity described in

§ 301.7705-1(b)(12).

(16) Responsible Individual. The term

“responsible individual” means an individual described in § 301.7705-1(b)(13).

(17) Responsible Individual Personal Attestation. The term “Responsible

Individual Personal Attestation” (RIPA)

means the attestation a responsible individual must submit through the IRS Online Registration System as a prerequisite

to the organization submitting a CPEO

application via the IRS Online Registration System. The RIPA contains information that will allow the IRS to perform

a suitability check on the responsible

individual.

(18) Self-Employed Individual. The

term “self-employed individual” means an

individual with net earnings from self-employment (as defined in section 1402(a)

and without regard to the exceptions

608

thereunder) derived from providing services covered by a CPEO contract, whether the net earnings from self-employment

are derived from providing services as a

non-employee to a customer of the CPEO,

from the individual’s own trade or business as a sole proprietor customer of the

CPEO, or as an individual who is a partner

in a partnership that is a customer of the

CPEO, but in each case only with regard

to those net earnings.

(19) Work Site. The term “work site”

means a physical location at which an individual regularly performs services for

a customer of a CPEO or, if there is no

physical location at which an individual

regularly performs services for a customer

of a CPEO, the location from which the

customer assigns work to the individual.

A work site may not be the individual’s

residence or a telework site unless the

customer requires the individual to work

at that site. For purposes of this section

1.02(19), work sites that are contiguous

locations will be treated as a single physical location and thus a single work site,

and noncontiguous locations will be treated as separate physical locations and thus

separate work sites, except as provided in

the next sentence. A CPEO customer may

treat noncontiguous locations as a single

physical location and thus a single work

site if each of the locations is separated by

less than 35 miles from every other location in the single work site, and all locations in the single work site operate in the

same industry. For purposes of the preceding sentence, the determination of the industry of a work site is based on the nature

of the CPEO customer’s work at that work

site, irrespective of work performed by

other entities at the same site. When treating noncontiguous locations as a single

physical location and thus a single work

site, a noncontiguous location cannot be

included in more than one work site.

(20) Work Site Employee. The term

“work site employee” means, with respect

to a customer, a covered employee who

performs services for the customer at a

work site where, at any time during a calendar quarter, at least eighty-five percent

of the individuals performing services for

the customer are covered employees of

the customer. To be a work site employee,

a covered employee regularly performing services for a customer at a work site

Bulletin No. 2023–13

during a calendar quarter is not required

to be performing services for the customer

at the time the work site coverage requirement is met at that work site.

(a) Solely for purposes of determining

whether the eighty-five percent threshold

described in this section 1.02(20) is met,

a self-employed individual described in

section 1.02(18) is treated as a covered

employee if the individual is performing

services at the work site and would be a

covered employee but for the exclusion of

self-employed individuals from the definition of a covered employee in section

1.02(4).

(b) In determining whether the eightyfive percent threshold is met, an individual

who is an excluded employee described in

section 414(q)(5) is not treated as either an

individual providing services or covered

employee.

of a calendar quarter with respect to all

services performed for a customer at one

or more work sites if the employee qualifies as a work site employee with respect

to the customer at any work site during

that calendar quarter.

(d) The determination of whether a

work site meets the eighty-five percent

threshold is made separately with respect

to each customer of a CPEO and with

respect to each work site of a customer.

However, a covered employee may be

determined to be a work site employee of

more than one work site during a calendar

quarter.

(e) A CPEO’s determination that a covered employee is a work site employee

will be respected if the CPEO has made

a good faith determination that the covered employee meets the requirements

of section 7705(e), § 301.7705-1(b)(17),

this section 1.02(20), and any applicable

subsequent guidance related to work site

employee determinations.

.03 Changes and request for comments.

This revenue procedure may be updated

periodically to improve CPEO program

procedures. The IRS solicits comments on

this revenue procedure and the administration of the CPEO program. Comments

on whether additional guidance is needed due to ongoing changes in workforce

practices that have in part resulted from

the COVID-19 pandemic as those changes

relate to the definition of work site or work

site employee are specifically requested

and should be submitted by June 9, 2023.

All comments will be available for public

inspection and copying. Comments may

be submitted in one of two ways:

(1) Mail. Send paper submissions to:

CC:PA:LPD:PR (RP-2023-18), Room

5203, Internal Revenue Service, P.O. Box

7604, Ben Franklin Station, Washington,

DC 20044.

(2) Electronically. Submit electronic

submissions via the Federal eRulemaking

Portal at www.regulations.gov (indicate

IRS and RP-2023-18) by following the online instructions for submitting comments.

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

withdrawn. Commenters are strongly encouraged to submit public comments electronically. The Treasury Department and

the IRS will publish for public availability

any comment submitted electronically,

and to the extent practicable on paper, to

its public docket.

SECTION 2. PROCEDURES FOR

APPLYING FOR CERTIFICATION AS

A CPEO

.01 Method of submission. A person

seeking certification as a CPEO must

electronically submit through its IRS

Online Registration System account a

properly completed and executed online

application for CPEO certification and all

accompanying forms and documentation

required by § 301.7701-2, this revenue

procedure, the instructions in the online

application, and any applicable subsequent guidance. Paper submissions will

not be accepted and will be treated as an

incomplete application as described in

section 4.02. Except as otherwise provided in this revenue procedure or the instructions in the online application, documents required to be submitted after the

application is submitted must also be submitted electronically through the CPEO

applicant’s IRS Online Registration System account. Only an application submitter can submit the online application for

CPEO certification and all accompanying

forms and documentation. In addition,

each of the CPEO applicant’s responsible

individuals must electronically submit a

properly completed and executed RIPA at

the time and in the manner described in

the instructions in the online application.2

As of June 1, 2022, responsible individuals must also submit fingerprints electronically using Fieldprint, or by another

method permitted in the instructions in

the online application. Fingerprint submissions on an FD-258, Fingerprint Card,

will no longer be processed. All current

CPEO responsible individuals will have

until June 1, 2023, to submit new fingerprints electronically. For more information on the electronic fingerprinting

process, including scheduling an appointment, see Publication 5249, Fingerprint

Card Instructions for Voluntary Certification of Professional Employer Organizations. For more information on how

to electronically submit the information

and documents required in this revenue

procedure, see instructions in the online

application or responsible individual’s

RIPA accessible through the CPEO’s IRS

Online Registration System account.

.02 Controlled groups. If more than

one member of a controlled group seeks to

be certified as a CPEO, each such member

must submit a separate online application.

Members of a controlled group may not

apply jointly on one online application.

However, CPEOs and CPEO applicants

that are members of a controlled group in

which more than one member is a CPEO

or CPEO applicant must create a controlled group license within the IRS Online Registration System. The controlled

group license will formalize the link between members of the controlled group

in the system and will allow for certain

documents to be submitted only once for

all CPEO and CPEO applicant members

in the controlled group. See sections 2.04,

2.05(6), and 2.06(5) for details regarding

the necessary documentation relating to

the bond and financial review require-

Once the RIPA is submitted, the information contained in the RIPA becomes return information, under section 6103, of the CPEO applicant and may be disclosed to the CPEO applicant if

the IRS determines that the disclosure will not seriously impair federal tax administration.

Bulletin No. 2023–13

609

March 27, 2023

ments that CPEO applicants that are members of a controlled group must submit.

.03 User fee. Consistent with section

7528(b)(4), upon submission of the online

application for certification through the

IRS Online Registration System, the application submitter will be automatically

directed to pay a user fee in the amount of

$1,000. No CPEO application will be processed until the IRS receives the user fee.

Once processing of the application has begun, the user fee will not be returned, even

if the application is withdrawn or denied.

.04 Surety letter. With its online application, a CPEO applicant must submit

through its IRS Online Registration System account a signed letter from a qualified

surety confirming that the surety agrees to

issue a bond to the CPEO applicant if and

when it is certified as a CPEO (a “surety

letter”). The surety letter must also state

that the surety agrees to issue a bond in the

amount required by § 301.7705-2(g)(2)

and pursuant to the terms set forth in Form

14751, Certified Professional Employer

Organization Surety Bond. If a CPEO applicant is a member of a controlled group

of which other members are CPEO applicants or CPEOs, the surety letter must also

contain the name and EIN of each CPEO

applicant and each CPEO that is or will be

covered by the bond. All CPEO members

of a controlled group are required to be

on the same bond in the amount required

by § 301.7705-2(g)(2), applied as if all

such CPEO members (and any of their

precursor entities, if applicable) were one

organization.

.05 Submission of annual audited financial statements, CPA opinion, and

statement of working capital.

(1) Copy of annual audited financial

statements. With its online application, a

CPEO applicant must submit through its

IRS Online Registration System account a

copy of its annual audited financial statements for the most recently completed

fiscal year, except as provided in the next

sentence. If a CPEO applicant submits

its application before the last day of the

sixth month following its most recently completed fiscal year, and the audit

of the financial statements for that fiscal

year has not been completed at the time

it submits its application, the CPEO applicant must provide with its application

the annual audited financial statements for

March 27, 2023

the fiscal year immediately preceding the

most recently completed fiscal year, and

the CPEO applicant must subsequently

provide to the IRS the annual audited financial statements for the most recently

completed fiscal year by the last day of the

sixth month after such fiscal year ends. In

addition, for any fiscal year that ends after

the CPEO applicant submits its application for certification and on or before the

effective date of certification, the CPEO

applicant must provide the annual audited financial statements by the last day of

the sixth month after such fiscal year ends.

The obligations described in this section

2.05(1) continue even if the CPEO applicant is certified as a CPEO before the IRS

has received the annual audited financial

statements. See section 8.04 for obligations concerning annual audited financial

statements that continue after certification.

(2) CPA opinion. With each of these

annual audited financial statements, the

CPEO applicant must submit an opinion

of a CPA that the financial statements are

presented fairly and in accordance with

generally accepted accounting principles

(GAAP). The CPA opinion must be an

unmodified opinion (i.e., it cannot be a

qualified opinion, an adverse opinion, or

a disclaimer of opinion), accompanied by

a written and signed declaration that the

CPA is currently qualified as a CPA.

(3) Working capital statement. Each

of the annual audited financial statements

submitted to the IRS must include a statement in the Note to the Financial Statements covered by the CPA opinion that the

CPEO applicant’s annual audited financial

statements reflect positive working capital or, only if the CPEO applicant satisfies

the requirements of section 2.05(4) of this

section, reflect negative working capital.

The statement must set forth a detailed

calculation of the CPEO applicant’s working capital as reflected in the annual audited financial statements (a working capital

statement).

(4) Exception for negative working capital. A CPA statement described in section

2.05(3) may state that a CPEO applicant’s

annual audited financial statements reflect

negative working capital, but in that case

the statement will meet the requirements

of section 2.05(3) only if-(a) The CPEO applicant has negative

working capital for no more than two con-

610

secutive fiscal quarters of the fiscal year,

as demonstrated by the required annual

audited financial statements, or the statements described in section 2.06(3), or the

submission of quarterly unaudited financial statements;

(b) The CPEO applicant provides with

the statement a detailed calculation of its

negative working capital and an explanation to the IRS describing the reason for

the failure to demonstrate positive working capital; and

positive working capital does not present

a material risk to the IRS’s collection of

federal employment taxes. The determination of whether the failure to demonstrate

positive working capital presents a material risk to the IRS’s collection of federal

employment taxes may depend, in part, on

whether the CPEO applicant has identified

facts and circumstances that will result in

positive working capital in the near future.

(5) Newly established CPEO applicants. A CPEO applicant that was not operating as a provider of payroll services for

all or part of the most recently completed

fiscal year as of the date it applies for certification must also provide for the entity

or entities listed in section 2.05(5)(a) and

(b) a copy of each entity’s audited financial statements for the most recently completed fiscal year, subject to the exception

provided in section 2.05(1), accompanied

by an unmodified opinion of a CPA that

such financial statements are presented

fairly and in accordance with GAAP, and

including a statement in the Note to the Financial Statements that the annual audited

financial statements reflect positive working capital or, only if the requirements of

section 2.05(4) are met (as applied to the

entity), reflect negative working capital,

with the statement in either case setting

forth in detail a calculation of the entity’s

working capital as reflected in the financial statements. The entity or entities for

which this information is required are:

(a) Any precursor entity of the CPEO

applicant; or

(b) If the CPEO applicant does not

have a precursor entity, any related entity

described in § 301.7705-1(b)(12)(ii)(B).

(6) Annual Audited Financial statements for controlled groups. In satisfaction of the requirement in section 2.05(1),

Bulletin No. 2023–13

if a CPEO applicant is a member of a

controlled group of which other members

are also CPEO applicants or CPEOs, the

CPEO applicant must submit copies of

combined or consolidated annual audited

financial statements for all CPEO applicants and CPEOs in the controlled group,

with an accompanying unmodified opinion of a CPA that such financial statements

are presented fairly and in accordance

with GAAP. The combined or consolidated annual audited financial statements

may, but are not required to, also include

all members of the controlled group that

are not CPEO applicants or CPEOs. The

statements and opinion must contain the

name and EIN of each CPEO applicant

and CPEO in the controlled group. If the

statements and opinion include members

of the controlled group that are not CPEOs

or CPEO applicants, the name and EIN of

these members must also be included. Although the CPEO applicant is not required

to provide a copy of its separate financial

statements as part of its application, if the

financial position of a CPEO applicant is

unclear from the combined or consolidated financial statements of the controlled

group of which the CPEO applicant is a

member, the IRS may request additional financial information that is needed to

evaluate the CPEO applicant’s financial

position, such as the annual balance sheet,

income statement, and statement of cash

flow, of the individual CPEO applicant.

Notwithstanding the foregoing, and as

required by section 2.05(3), the annual

audited financial statement submitted by

a CPEO applicant that is a member of a

controlled group of which other members

are also CPEO applicants or CPEOs must

include a statement in the Note to the Financial Statements that each individual

CPEO applicant’s financial statements

reflect positive working capital or, if the

requirements of section 2.05(4) are met,

reflect negative working capital, with each

statement in either case setting forth in detail a calculation of the individual CPEO

applicant’s working capital. For purposes

of the requirements of section 2.05(4), if

it is unclear whether the CPEO applicant

has positive or negative working capital

for the last quarter of the fiscal year based

on the combined or consolidated financial statements of the controlled group of

which the CPEO applicant is a member,

Bulletin No. 2023–13

the IRS may request additional financial

information on an individual CPEO applicant basis. The status of other CPEO

applicants and CPEOs in the controlled

group is not affected if the CPEO applicant is denied certification because the

annual audited financial statements reflect that the CPEO applicant has negative

working capital and the CPEO applicant

fails to meet the exception described in

section 2.05(4).

(7) Fiscal year. A fiscal year will be

considered completed once the last day

of that fiscal year has ended, regardless of

whether the CPEO applicant was in operation or certified for all 12 months of the

fiscal year or the fiscal year consisted of

fewer than 12 months.

.06 Submission of quarterly assertions,

attestations, and working capital statements. For the most recently completed

calendar quarter as of the date of its application for certification, a CPEO applicant must submit through its IRS Online

Registration System account an assertion,

as described in section 2.06(1), that it has

withheld and made deposits of all federal

employment taxes for which the CPEO

applicant is liable for the quarter; an examination level attestation from a CPA, as

described in section 2.06(2), stating that

this assertion is fairly stated in all material

respects; and a statement verifying that the

CPEO applicant has positive working capital, as described in section 2.06(3). The

CPEO applicant must continue to provide

this documentation for every subsequently

completed calendar quarter during which

its application for certification is pending

for some or all of the quarter. This documentation must be provided by the last

day of the second month after the end of

each subsequent quarter, even if the CPEO

applicant receives its certification before

this deadline.

(1) Assertion. The assertion must be

signed under penalties of perjury by a responsible individual of the CPEO applicant and state that the CPEO applicant has

withheld and made deposits of all federal

employment taxes for the calendar quarter as required by subtitle C of the Code

(except that federal employment taxes imposed by chapter 23 are not required to be

included in the assertion).

(2) Examination level attestation. The

examination level attestation from a CPA

611

must state that the assertion described in

section 2.06(1) is fairly stated in all material respects and complies with the requirements of the American Institute of

Certified Public Accountants’ Statements

of Standards for Attestation Engagements,

including the specific requirements for

Examination Reports. The attestation must

be accompanied by a written declaration,

signed by the CPA or the accounting firm

where the CPA is employed or is an owner, or with which the CPA is otherwise affiliated, that the CPA is currently qualified

as a CPA. A CPEO applicant will not fail

to meet the requirements of this section

2.06(2) if the examination level attestation indicates that the CPEO applicant has

failed to withhold or make deposits in certain immaterial respects, provided that-(a) The attestation provides a summary

of the immaterial failures that were found;

(b) The attestation states that, and explains why, the failures were immaterial

and isolated (including how the failures

were addressed, if applicable) and do not

reflect a meaningful lapse in compliance

with federal employment tax withholding

and deposit requirements; and

failures identified by the CPA do not present a material risk to the IRS’s collection

of federal employment taxes.

(3) Statement of positive working capital. The statement verifying positive working capital must be signed by a responsible individual under penalties of perjury

and verify that the CPEO applicant has

positive working capital (as defined by

GAAP) with respect to the most recently

completed fiscal quarter. The statement

must include a detailed calculation of the

CPEO applicant’s working capital and be

accompanied by a copy of the CPEO applicant’s unaudited financial statements

for the most recently completed fiscal

quarter, if such statements are available. A

CPEO applicant will not fail to meet the

requirements of this section 2.06(3) as a

result of having negative working capital

at the end of the fiscal quarter if-(a) The CPEO applicant does not have

negative working capital at the end of each

of the two fiscal quarters immediately preceding such fiscal quarter, as demonstrated by the required annual audited financial statements described in section 2.05

March 27, 2023

or the statements described in this section

2.06(3), or the submission of quarterly unaudited financial statements;

(b) The CPEO applicant provides a detailed calculation of its negative working

capital, unaudited financial statements for

the quarter, if available, and an explanation to the IRS describing the reason for

negative working capital; and

(c) The IRS determines, in its sole discretion, that the negative working capital does not present a material risk to the

IRS’s collection of federal employment

taxes. The determination of whether the

failure presents a material risk to the

IRS’s collection of federal employment

taxes may depend, in part, on whether the

CPEO applicant has identified facts and

circumstances that will result in positive

working capital in the near future.

(4) CPEO applicant with precursor

entity. If a CPEO applicant was not operating as a provider of employment-related services for all or part of the most

recently completed calendar quarter as of

the date of its application for certification

or during any calendar quarter that ends

while its application for certification is

pending, the CPEO applicant must provide the assertion, examination level attestation, and working capital statement

described in this section 2.06 with respect

to any precursor entity, if applicable.

The information required by this section

2.06(4) must be provided by the last day

of the second month after the end of each

applicable calendar quarter, beginning

with the most recently completed calendar

quarter as of the date of the application (or

as of the date the entity became a precursor entity while the application was pending) and for all subsequent quarters while

the application is pending and the CPEO

applicant is not operating as a provider of

employment-related services for all or any

portion of a quarter.

(5) Quarterly assertions, attestations,

and working capital statements for controlled groups. In satisfaction of the requirement in this section 2.06, if a CPEO

applicant is a member of a controlled

group of which other members are CPEO

applicants or CPEOs, the CPEO applicant

must submit the quarterly assertions and

attestations described in this section 2.06

for all CPEO applicants and CPEOs in the

controlled group on a combined or consolidated controlled group basis, rather than

for the CPEO applicant individually. The

quarterly assertions and attestations must

include the name and EIN of each CPEO

and CPEO applicant in the controlled

group. However, the quarterly working

capital statement described in section

2.06(3) must relate to the CPEO applicant alone and must not be prepared on a

combined or consolidated basis with other members of the controlled group. For

purposes of the requirements of section

2.06(3), if it is unclear whether the CPEO

applicant has positive or negative working

capital for the last quarter of the fiscal year

based on the combined or consolidated financial statements of the controlled group

of which the CPEO applicant is a member,

the IRS may request additional financial

information about the individual CPEO

applicant. The status of other CPEO applicants and CPEOs in the controlled group

is not affected if the CPEO applicant is

denied certification because the quarterly

working capital statement described in

section 2.06(3) reflects negative working

capital and the CPEO applicant fails to

meet the exception described in section

2.06(3).

SECTION 3. SUITABILITY AND TAXCOMPLIANCE CHECK

A CPEO applicant will be required to

identify its related entities, precursor entities, and responsible individuals as part

of its online application for certification.

The IRS will investigate the accuracy of

statements and representations made by

a CPEO applicant and its responsible individuals in the CPEO applicant’s online

application by conducting background

checks of the CPEO applicant, any related entities or precursor entities,3 and responsible individuals. These background

checks may include checks on tax compliance, criminal background, professional

experience, credit history, professional

sanctions, and other relevant facts. By

submitting an application, a CPEO applicant and its responsible individuals agree

to provide the IRS with additional information the IRS may request to facilitate

its background checks (see section 4.03).

A CPEO applicant and each of its responsible individuals must authorize the IRS to

conduct required background checks and

to investigate the accuracy of statements

and submissions, including waiving confidentiality and privilege in situations in

which the IRS is otherwise unable to obtain information or would otherwise be

prevented from obtaining or confirming

information necessary to evaluate a CPEO

applicant’s qualification for certification

from relevant third parties (such as former

employers) because of the existence of

confidentiality, non-disclosure, or similar

agreements. Failure to provide such information or take such action may result in

denial of certification.

SECTION 4. STANDARDS FOR

GRANTING CERTIFICATION AS A

CPEO

.01 Eligibility for certification must be

established in the application. A CPEO

applicant will be certified as a CPEO only

if its application for certification and supporting documentation establish to the

satisfaction of the IRS that the CPEO

applicant meets the requirements of

§ 301.7705-2, this revenue procedure, the

instructions in the online application, and

any applicable subsequent guidance, so as

not to present a material risk to the IRS’s

collection of federal employment taxes.

.02 Incomplete or inaccurate application. All applications for certification must

be complete and accurate. An application

is not complete and accurate if it does

not contain all of the items required by

§ 301.7705-2, this revenue procedure, the

instructions in the online application, and

any applicable subsequent guidance. If an

incomplete application is submitted, the

IRS generally will request from the CPEO

applicant additional information needed

for a completed application. However, the

IRS may deny an incomplete application

without requesting additional information.

.03 Even if an application is complete,

additional information may be required.

Even if an application is complete, the

In order for the application submitter to discuss a return of a related entity of the CPEO applicant with the IRS, the application submitter must be authorized by section 6103(e)to inspect the

return information of the CPEO applicant or have a Form 8821, Tax Information Authorization, for that related entity and that return on file with the IRS.

March 27, 2023

612

Bulletin No. 2023–13

IRS may request additional information

before approving or denying certification.

For instance, if the results of a background

check as described in section 3, including

the result of a tax compliance check, suggest a potential failure to meet a requirement described in § 301.7705-2, the IRS

may request that the CPEO applicant provide an explanation of the results. As another example, the IRS may ask a CPEO

applicant to support its representations

with respect to its experience by providing a written work history or third-party

references.

.04 CPEO applicant must notify IRS of

material changes relevant to its application for certification. Within 30 days of its

occurrence, a CPEO applicant must notify

the IRS through its IRS Online Registration System account of any change that

materially affects the continuing accuracy of any previously made agreement or

other information provided to the IRS as

a part of its application for certification.

Examples of material changes are provided in section 8.06(3) and include, but

are not limited to, any change in the tax

compliance, criminal background, or professional license or registration status of

the CPEO applicant, or any of its precursor entities, related entities, or responsible

individuals; any change to the CPEO applicant’s fiscal year; and any change that

results in another individual being considered a responsible individual of the CPEO

applicant or another entity being considered a precursor entity or a related entity

of the CPEO applicant. For purposes of

this section 4.04, a material change also

includes the discovery of significant errors

in or new facts relevant to any agreement

or information provided to the IRS as part

of the application for certification.

SECTION 5. WITHDRAWAL OF

APPLICATION

.01 Application may be withdrawn. An

application may be withdrawn upon the

written request of an application submitter

submitted through the CPEO applicant’s

IRS Online Registration System account.

.02 Information may be used in subsequent examination. When an application

is withdrawn, the IRS may retain and use

for tax administration, the application,

all supporting documents, and the infor-

Bulletin No. 2023–13

mation submitted in connection with the

withdrawal request.

SECTION 6. NOTICE OF

CERTIFICATION

.01 Notice of certification. If a CPEO

applicant is approved for certification,

the IRS will electronically issue a notice

of certification to the CPEO applicant

through its IRS Online Registration System account. If a CPEO applicant is a

member of a controlled group and other

members of the controlled group are also

applying for certification, the IRS will

issue a separate notice of certification to

each CPEO applicant member of the controlled group that has been approved for

certification. The notice of certification

will specify the effective date of certification and indicate that the effective date

of certification is contingent upon timely

receipt by the IRS of an acceptable Form

14751 as set forth in section 6.02.

.02 Proof of bond. A CPEO applicant

has 30 days from the date of the notice of

certification to submit to the IRS, through

the CPEO applicant’s IRS Online Registration System account, proof of a bond in

the form of a properly completed and executed Form 14751, signed by both a qualified surety and the CPEO (or CPEOs in

the case of a controlled group), and in an

amount prescribed by § 301.7705-2(g)(2).

The CPEO is not obligated to use the same

qualified surety company that signed the

Surety Letter. If the CPEO applicant fails

to provide proof of a bond within 30 days

after the date of the notice, its certification

will not become effective, and the CPEO

applicant will subsequently be sent a final

notice of denial (with no opportunity to

request review of the denial). If a CPEO

applicant in a controlled group receives a

notice of certification after other members

of its controlled group are already certified by the IRS, the controlled group will

be required to post a properly completed

and executed Form 14751 that includes

the CPEO applicant in its identification

of all CPEOs in the controlled group and

that reflects the correct bond amount for

all CPEOs in the controlled group, including the CPEO applicant. To add the newly

certified CPEO to the controlled group’s

bond and to increase the bond amount,

if applicable, a CPEO may amend an ex-

613

isting bond through the use of a rider, or

post a superseding or new bond, where applicable, as described in section 8.03(3).

If the CPEO applicant fails to submit a

properly completed and executed Form

14751 reflecting the addition of the newly certified CPEO within the time period

provided in this section 6.02, the CPEO

applicant’s certification will not become

effective, and it will subsequently be sent

a final notice of denial (with no opportunity to request review of the denial). However, the status of the other CPEOs in the

controlled group will remain unaffected.

.03 Effective date of certification. The

effective date of certification will typically be the first day of the first calendar

quarter following the date of the notice of

certification.

.04 Disclosure of organizations certified as CPEOs. The IRS will publish a

list of all organizations that are certified

as CPEOs, and the effective date of their

certification, on IRS.gov, which will be

updated to reflect newly certified CPEOs

by the 15th day of the first month of every calendar quarter. However, an organization will not appear on this list until

the IRS has received the proof of bond on

Form 14751, as described in section 6.02.

SECTION 7. DENIAL OF

CERTIFICATION

.01 Notice of proposed denial. If the

IRS decides that an application for certification should be denied based on the

CPEO applicant’s failure to satisfy one or

more of the requirements of § 301.77052, this revenue procedure, the instructions

accompanying the online application, and

any applicable subsequent guidance, the

IRS will issue a notice of proposed denial

(unless the circumstances in section 7.02

apply) to the CPEO applicant’s IRS Online Registration System account, which

will (i) include the reason(s) for the denial

of certification; and (ii) inform the CPEO

applicant of its opportunity to request review of the proposed denial.

.02 Circumstances in which denial is

final, with no opportunity for review. In

situations in which the denial of an application is based on the CPEO applicant’s

failure to comply with a requirement in

§ 301.7705-2, this revenue procedure,

the instructions in the online application,

March 27, 2023

or any applicable subsequent guidance,

and such failure is not subject to reasonable factual or legal dispute, the IRS will

not issue a notice of proposed denial, but

will instead issue a notice of final denial,

which will include the reason(s) for the

denial of certification, but will not provide for an opportunity for review. Denials based on failures that are not subject

to reasonable factual or legal dispute include, but are not limited to, denial based

on the following:

(1) Incomplete application. The CPEO

applicant submits an incomplete application as described in section 4.02 or fails

to respond to a request from the IRS for

additional information needed for a complete application (as described in section

4.02) by the date required.

(2) Modified opinion. The CPA opinion of annual audited financial statements

submitted by the CPEO applicant is a

modified opinion (which includes a qualified opinion, an adverse opinion, or a disclaimer of opinion).

(3) Negative working capital. The annual audited financial statements submitted by the CPEO applicant or the quarterly statements submitted by a responsible

individual of the CPEO applicant reflect

negative working capital, and the CPEO

applicant fails to meet the exceptions

described in section 2.05(4) or 2.06(3),

respectively.

(4) Failure to provide proof of bond.

The CPEO applicant fails to provide proof

of the bond required in section 6.02 within 30 days after the date of the notice of

certification.

.03 Request for review of a notice of

proposed denial. A notice of proposed denial, in accordance with section 7.01, will

inform the CPEO applicant of its opportunity to request a review by OPR.

(1) How to request a review of a notice

of proposed denial. To request a review,

the CPEO applicant, using its IRS Online

Registration System account, must submit a written statement of the facts, law,

and arguments in support of its position

within 30 days from the date of the notice of proposed denial. The arguments in

support of the CPEO applicant’s position

should focus on the factual information

provided by the CPEO applicant and its

responsible individuals, including whether any information provided as part of the

March 27, 2023

application has changed or was incorrect.

Arguments concerning the materiality of

information provided or whether certain

facts present a material risk to the IRS’s

collection of federal employment taxes

are outside the scope of review and will

not be considered.

(2) Additional materials. Subject

to the exceptions in section 7.05(1) and

(3), after a CPEO applicant has submitted

a written request for review, the CPEO

applicant may not submit any additional

or new information as part of its request

for review or any additional arguments in

support of the CPEO applicant’s position.

The IRS CPEO program office will not

consider any additional or new information or arguments as part of its handling

of the request for review under section

7.05, unless new information is provided

pursuant to section 7.05(1) or (3). The IRS

CPEO program office also will not forward any additional or new information or

arguments to OPR under section 7.05(5),

unless new information was provided pursuant to section 7.05(1) or (3).

(3) Extension of time to request review.

The IRS CPEO program office may extend the deadline for submitting a request

for review by an additional 30 days. To

request this 30-day extension, a CPEO

applicant must submit a written request

through its IRS Online Registration System account explaining the need for the

extension. A CPEO applicant must submit its request not later than 20 days after

the date of the notice of proposed denial.

A CPEO applicant may request only one

extension.

(a) The IRS CPEO program office will

grant the extension if, in its sole discretion and based on a review of the relevant

facts and circumstances, it determines

that the extension is in the interest of tax

administration.

(b) A request for an extension, a denial

of an extension, or any other matter related to this section 7.03(3) is not subject to

the review described in section 7, including section 7.06.

.04 Notice of final denial where no request for review of the proposed denial

is submitted. If the CPEO applicant does

not submit a timely request for review of

a notice of proposed denial in accordance

with section 7.03, including any extension

of time under section 7.03(3), a notice of

614

final denial will be issued to the CPEO

applicant.

.05 How the IRS handles a request for

review. If a CPEO applicant submits a

timely request for review, the IRS CPEO

program office will first review the request

and accompanying written statement of

the facts, law, and arguments in support of

the CPEO applicant’s position.

(1) Request for additional information.

In reviewing a CPEO applicant’s request

for review, the IRS CPEO program office

may request additional information from

the CPEO applicant, if it determines that

further information is required to sufficiently evaluate the initial request for

review.

(a) The CPEO applicant must provide

the requested information or materials by

the date specified in the request. The IRS

CPEO program office will consider any

request by the CPEO applicant for an extension of the time by which the requested

information or materials must be provided

on a case-by-case basis.

(b) In accordance with section 7.03(2),

a CPEO applicant should not send any

additional information or documentary

materials to the IRS CPEO program office unless the information or materials

are requested, and the IRS CPEO program

office will not consider any unrequested

information or materials received from the

CPEO applicant.

office requests additional information or

materials, the IRS CPEO program office

will not consider any additional information or materials not timely provided by

the CPEO applicant (by the date specified

in the request or any extended date) or that

is not responsive to or is outside the scope

of the request.

(2) Additional failures. Before referring a proposed denial to OPR for review,

the IRS CPEO program office will provide written notice to the CPEO applicant

of any additional failures to satisfy one or

more of the requirements of § 301.77052, this revenue procedure, and any applicable subsequent guidance, that arose or

that were discovered after the issuance

of the notice of proposed denial and give

the CPEO applicant additional time to

respond to the notice regarding the failures. The CPEO applicant must provide

any response regarding the additional

Bulletin No. 2023–13

failures by the date specified by the IRS

CPEO program office. The IRS CPEO

program office will consider any request

by the CPEO applicant for an extension of

the time by which the response must be

provided on a case-by-case basis. The IRS

CPEO program office will not consider

any additional information or materials

not timely provided by the CPEO applicant by the date specified in the notice of

additional failures, or any extended date,

or that is not factually responsive to or is

outside the scope of, the notice.

(3) IRS CPEO program office review.

In conducting its review, the IRS CPEO

program office will consider the initial

request for review, any additional information provided by the CPEO applicant

in response to a request made in accordance with section 7.05(1), any additional failures, as defined in section 7.05(2),

that arise or that are discovered after the

issuance of the notice of proposed denial,

and any timely responses by the CPEO applicant to the notice of additional failures.

(4) Notice of certification. After reviewing the request for review, if the IRS

CPEO program office determines that the

CPEO applicant qualifies for certification,

it will issue the CPEO applicant a notice

of certification in accordance with section

(5) Forwarding to OPR. If, upon review, the IRS CPEO program office affirms the proposed denial, it will forward

the administrative record to OPR for review. The administrative record will consist of the notice of proposed denial, the

CPEO applicant’s request for review, the

IRS CPEO program office’s written analysis of the CPEO applicant’s request for

review, any other information timely provided by the CPEO applicant in response

to a request by the IRS CPEO program office, including information with regard to

any additional failures, and all supporting

documentation. The administrative record

will include only information that was either: (i) stated in the notice of proposed denial or in a notice described in this section

7.05 and all supporting documentation;

or (ii) related to the IRS CPEO program

office’s determination, upon review of all

information subject to consideration under

sections 7.03(1) and 7.05(1)-(3), that the

CPEO does not qualify for certification.

The IRS CPEO program office will notify

Bulletin No. 2023–13

the CPEO applicant after it forwards the

administrative record to OPR for review.

.06 Consideration by OPR.

(1) OPR consideration. OPR will consider only the information provided in the

administrative record.

(2) Conducting the review.

(a) During OPR’s review, subject to

the exception described in section 7.06(2)

(b), neither the IRS CPEO program office nor the CPEO applicant may contact

OPR with respect to the pending review,

and OPR will not contact the IRS CPEO

program office or the CPEO applicant or

its authorized representative with respect

to the pending review. Further, except

as provided in section 7.06(2)(b), during

OPR’s review, a CPEO applicant and its

authorized representative may not:

(i) Submit any information or documentation to OPR;

(ii) Request or offer to have a telephone

conference with OPR;

(iii) Request the name or contact information of any OPR employee who has

been assigned to conduct the review; or

(iv) Attempt to contact the employee,

such as by telephone or email.

(b) Notwithstanding section 7.06(2)

(a), the IRS CPEO program office and the

CPEO applicant may contact OPR to request the status of a pending review and

an estimate of when OPR expects to complete its review. Either OPR or the CPEO

program office will provide the CPEO applicant with contact information for these

purposes.

and either the CPEO applicant or the IRS

CPEO program office will conform to current IRS security and authentication policies and procedures, as applicable.

(3) OPR will establish procedures to

ensure that no additional information is

considered. To facilitate an independent

review, OPR will establish procedures to

ensure that any information from a CPEO

applicant or authorized representative that

is sent to OPR outside of the administrative record will not be considered.

(4) Standard of review. OPR will apply

an abuse of discretion standard to its review, and if OPR concludes that the IRS

CPEO program office erred in denying

certification, it will issue a letter notifying

the CPEO applicant that a notice of certification will be issued by the IRS CPEO

615

program office. Under an abuse of discretion standard, the Director, OPR will

not change the decision of the IRS CPEO

program office unless the IRS CPEO program office’s determination is arbitrary,

capricious, clearly unlawful, or without a

sound basis in fact or law. See Ewing v.

Commissioner, 122 T.C. 32, 39 (2004),

vacated on other grounds, 439 F.3d 1009

(9th Cir. 2006); see also Woodral v. Commissioner, 112 T.C. 19, 23 (1999). If OPR

finds no abuse of discretion, it will issue a

letter of final denial.

.07 A request for review may be withdrawn. A CPEO applicant may withdraw its request for review of the notice

of proposed denial before OPR issues its

final determination. A request for review

may be withdrawn only upon the written request of an application submitter,

submitted through the CPEO applicant’s

IRS Online Registration System account.

Upon receipt of the CPEO applicant’s

withdrawal request, the IRS will complete the processing of the application in

the same manner as if the CPEO applicant

was issued a final denial.

SECTION 8. PROCEDURES FOR

MAINTAINING CERTIFICATION AS

A CPEO

.01 In general. To maintain certification, a CPEO must meet the applicable

requirements described in § 301.7705-2,

this revenue procedure, and any applicable subsequent guidance. In addition, any

responsible individuals of the CPEO must

meet any requirements applicable to them

that are described in § 301.7705-2, this

revenue procedure, and any applicable

subsequent guidance. Except as otherwise

provided in this revenue procedure or

other guidance, the information and documents required in sections 8.02(1) and

(2) and 8.03 through 8.05 must be submitted electronically via the CPEO’s IRS

Online Registration System account. Only

an application submitter can submit the

information and documents required in

sections 8.02(1) and (2) and 8.03 through

8.05.

.02 Annual verification.

(1) In general. Consistent with section

7705(b)(5) and § 301.7705-2(j), to maintain its certification, a CPEO must submit

through its IRS Online Registration Sys-

March 27, 2023

tem account a properly completed and executed online annual verification. CPEOs

that are members of a controlled group

must each submit a separate annual verification. The due date for submitting the

annual verification is 30 days before the

anniversary of the date (month and day)

on which the CPEO’s certification became

effective.

(2) User fee. Consistent with section

7528(b)(4), upon submission of the online

annual verification, the individual that

submits the verification on behalf of the

CPEO will be automatically directed to

pay a user fee in the amount of $1,000.

No CPEO annual verification will be

processed until the IRS receives the user

fee. Once processing of the annual verification has begun, the user fee will not be

returned.

(3) Background check and tax compliance check. As part of a CPEO’s annual

verification, the IRS may investigate the

accuracy of statements and representations

made by a CPEO and its responsible individuals by conducting background checks,

including checks on tax compliance, criminal background, professional experience,

credit history, professional sanctions, and

other relevant facts. By submitting an annual verification, a CPEO and its responsible individuals agree to provide the IRS

with such additional information as the

IRS may request to facilitate its background investigations. A CPEO and each

of its responsible individuals must take

such actions as are necessary to authorize

the IRS to conduct background checks

and to investigate the accuracy of statements and submissions. This may include

waiving confidentiality and privilege in

situations in which the IRS would otherwise be prevented from obtaining or confirming information necessary to evaluate

a CPEO’s continued qualification for certification from relevant third parties (such

as former employers) because of the existence of confidentiality, non-disclosure,

or similar agreements. Failure to provide

such information or take such action may

result in revocation of certification.

.03 Bond requirements.

(1) In general. After the initial posting

of a bond as provided in section 7705(c),

§ 301.7705-2(g), and section 6.02, a

CPEO must continue to post a bond (or

bonds, as described in section 8.03(3))

March 27, 2023

from a qualified surety for the payment

of federal employment taxes, using Form

14751 through its IRS Online Registration System account, in the amount described in § 301.7705-2(g)(2) and this

section 8.03, for each period beginning on

April 1st of any calendar year and ending

on March 31st of the following calendar

year (the bond period). As prescribed by

§ 301.7705-2(g)(2)(i), the amount of the

bond (or bonds, as described in section

8.03(3)) with respect to the bond period

must be at least equal to the greater of five

percent of the CPEO’s liability under section 3511 during the preceding calendar

year (up to $1,000,000) or $50,000. See

§ 301.7705-2(g)(2)(ii) for special rules

applying to a CPEO in its first or second

year of certification. The bond, any riders

thereto, and any strengthening bonds posted to satisfy the requirements of section

8.03(3), are considered one continuous

obligation of the surety for unpaid tax liabilities accrued by the CPEO under subtitle C from the effective date of the bond

until the bond is superseded, as described

in section 8.03(3), or cancelled, as described in section 8.03(4) (the term of the

bond).

(2) Controlled groups. In the case of

a controlled group in which more than

one member of the controlled group is

a CPEO, all CPEO members of the controlled

This text is long and has been trimmed here. Open the source document for the complete record.

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