These synopses are intended only as aids to the reader in

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2023–6

February 6, 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 2023-12, page 450.

This notice sets forth updates on the corporate bond monthly

yield curve, the corresponding spot segment rates for January

2023 used under § 417(e)(3)(D), the 24-month average segment rates applicable for January 2023, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).

EMPLOYMENT TAX

Notice 2023-13, page 454.

This guidance contains a notice of proposed revenue procedure establishing the Service Industry Tip Compliance

Agreement (SITCA) program. SITCA is a voluntary tip reporting program between the Internal Revenue Service and employers in the service industry (excluding the gaming industry) that is designed to enhance tax compliance through the

use of agreements instead of traditional audit techniques.

The SITCA program is intended to replace the Tip Rate Determination Agreement (TRDA) program and the Tip Reporting Alternative Commitment (TRAC) program as set forth in

Announcement 2001-1, 2001-2 I.R.B. 277, and replace the

Employer-­Designed Tip Reporting Program (EmTRAC) as set

Finding Lists begin on page ii.

forth in Notice 2001-1, 2001-2 I.R.B. 261. The IRS is issuing

this guidance in proposed form to provide an opportunity for

public comment.

INCOME TAX

Rev. Proc. 2023-14, page 466.

This revenue procedure provides: (1) two tables of limitations

on depreciation deductions for owners of passenger automobiles placed in service by the taxpayer during calendar year

2023; and (2) a table of dollar amounts that must be used to

determine income inclusions by lessees of passenger automobiles with a lease term beginning in calendar year 2023. The

tables detailing these depreciation limitations and amounts

used to determine lessee income inclusions reflect the automobile price inflation adjustments required by section 280F(d)

(7). For purposes of this revenue procedure, the term “passenger automobiles” includes trucks and vans.

Rev. Rul. 2023-3, page 448.

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

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

Code, tables set forth the rates for February 2023.

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.

February 6, 2023 

Bulletin No. 2023–6

Part I

Section 1274.—

Determination of Issue

Price in the Case of Certain

Debt Instruments Issued for

Property

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

1288, 7520, 7872.)

Rev. Rul. 2023-3

This revenue ruling provides various

prescribed rates for federal income tax

AFR

110% AFR

120% AFR

130% AFR

AFR

110% AFR

120% AFR

130% AFR

150% AFR

175% AFR

AFR

110% AFR

120% AFR

130% AFR

Short-term adjusted AFR

Mid-term adjusted AFR

Long-term adjusted AFR

February 6, 2023

purposes for February 2023 (the current month). Table 1 contains the shortterm, mid-term, and long-term applicable federal rates (AFR) for the current

month for purposes of section 1274(d)

of the Internal Revenue Code. Table 2

contains the short-term, mid-term, and

long-term adjusted applicable federal

rates (adjusted AFR) for the current

month for purposes of section 1288(b).

Table 3 sets forth the adjusted federal long-term rate and the long-term

tax-exempt rate described in section

382(f). Table 4 contains the appropri-

ate percentages for determining the

low-income housing credit described in

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

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

after July 30, 2008, shall not be less

than 9%. Finally, Table 5 contains the

federal rate for determining the present

value of an annuity, an interest for life

or for a term of years, or a remainder or

a reversionary interest for purposes of

section 7520.

REV. RUL. 2023-3 TABLE 1

Applicable Federal Rates (AFR) for February 2023

Period for Compounding

Annual

Semiannual

Quarterly

Short-term

4.47%

4.42%

4.40%

4.92%

4.86%

4.83%

5.37%

5.30%

5.27%

5.83%

5.75%

5.71%

Mid-term

3.82%

3.78%

3.76%

4.20%

4.16%

4.14%

4.59%

4.54%

4.51%

4.97%

4.91%

4.88%

5.75%

5.67%

5.63%

6.73%

6.62%

6.57%

Long-term

3.86%

3.82%

3.80%

4.24%

4.20%

4.18%

4.63%

4.58%

4.55%

5.03%

4.97%

4.94%

Annual

3.39%

2.89%

2.92%

REV. RUL. 2023-3 TABLE 2

Adjusted AFR for February 2023

Period for Compounding

Semiannual

3.36%

2.87%

2.90%

448

Quarterly

3.35%

2.86%

2.89%

Monthly

4.38%

4.81%

5.24%

5.68%

3.75%

4.12%

4.50%

4.86%

5.60%

6.53%

3.79%

4.16%

4.54%

4.92%

Monthly

3.34%

2.85%

2.88%

Bulletin No. 2023–6

REV. RUL. 2023-3 TABLE 3

Rates Under Section 382 for February 2023

Adjusted federal long-term rate for the current month

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

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

2.92%

3.29%

REV. RUL. 2023-3 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for February 2023

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

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

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

7.89%

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

3.38%

REV. RUL. 2023-3 TABLE 5

Rate Under Section 7520 for February 2023

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

remainder or reversionary interest

Section 42.—Low-Income

Housing Credit

The applicable federal short-term, mid-term,

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

February 2023. See Rev. Rul. 2023-3, page 448.

Section 280G.—Golden

Parachute Payments

The applicable federal short-term, mid-term,

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

February 2023. See Rev. Rul. 2023-3, page 448.

Section 382.—Limitation

on Net Operating Loss

Carryforwards and

Certain Built-In Losses

Following Ownership

Change

The adjusted applicable federal long-term rate

is set forth for the month of February 2023. See

Rev. Rul. 2023-3, page 448.

Section 467.—Certain

Payments for the Use of

Property or Services

The applicable federal short-term, mid-term,

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

February 2023. See Rev. Rul. 2023-3, page 448.

Section 468.—Special

Rules for Mining and Solid

Waste Reclamation and

Closing Costs

The applicable federal short-term rates are set

forth for the month of February 2023. See Rev. Rul.

2023-3, page 448.

Section 482.—Allocation

of Income and Deductions

Among Taxpayers

The applicable federal short-term, mid-term,

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

February 2023. See Rev. Rul. 2023-3, page 448.

4.60%

Section 483.—Interest on

Certain Deferred Payments

The applicable federal short-term, mid-term,

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

February 2023. See Rev. Rul. 2023-3, page 448.

Section 1288.—Treatment

of Original Issue Discount

on Tax-Exempt Obligations

The adjusted applicable federal short-term,

mid-term, and long-term rates are set forth for the

month of February 2023. See Rev. Rul. 2023-3,

page 448.

Section 7520.—Valuation

Tables

The applicable federal mid-term rates are set

forth for the month of February 2023. See Rev. Rul.

2023-3, page 448.

Section 7872.—Treatment

of Loans With BelowMarket Interest Rates

The applicable federal short-term, mid-term,

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

February 2023. See Rev. Rul. 2023-3, page 448.

Bulletin No. 2023–6

449

February 6, 2023

Part III

Update for Weighted

Average Interest Rates,

Yield Curves, and Segment

Rates

Notice 2023-12

This notice provides guidance on the

corporate bond monthly yield curve, the

corresponding spot segment rates used

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

Internal Revenue Code. In addition, this

notice provides guidance as to the interest

rate on 30-year Treasury securities under

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

years beginning before 2008 and the 30year Treasury weighted average rate under

§ 431(c)(6)(E)(ii)(I).

YIELD CURVE AND SEGMENT

RATES

Section 430 specifies the minimum

funding requirements that apply to sin

Applicable Month

January 2023

gle-employer plans (except for CSEC

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

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

a plan’s target normal cost and funding

target. Under this provision, present value is generally determined using three

24-month average interest rates (“segment

rates”), each of which applies to cash

flows during specified periods. To the extent provided under § 430(h)(2)(C)(iv),

these segment rates are adjusted by the applicable percentage of the 25-year average

segment rates for the period ending September 30 of the year preceding the calendar year in which the plan year begins.1

However, an election may be made under

§ 430(h)(2)(D)(ii) to use the monthly yield

curve in place of the segment rates.

Notice 2007-81, 2007-44 I.R.B. 899,

provides guidelines for determining the

monthly corporate bond yield curve, and

the 24-month average corporate bond

segment rates used to compute the target

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

Notice 2007-81, the monthly corporate

bond yield curve derived from December

2022 data is in Table 2022-12 at the end

of this notice. The spot first, second, and

third segment rates for the month of December 2022 are, respectively, 4.84, 5.15,

and 4.85.

The 24-month average segment rates

determined under § 430(h)(2)(C)(i)

through (iii) must be adjusted pursuant to

§ 430(h)(2)(C)(iv) to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates. The 25-year average

segment rates for plan years beginning

in 2021, 2022 and 2023 were published

in Notice 2020-72, 2020-40 I.R.B. 789,

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

Notice 2022-40, 2022-40 I.R.B. 266, respectively.

24-MONTH AVERAGE CORPORATE

BOND SEGMENT RATES

The three 24-month average corporate

bond segment rates applicable for January

2023 without adjustment for the 25-year

average segment rate limits are as follows:

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

First Segment

Second Segment

Third Segment

2.13

3.62

3.93

Section 9706(a) of the American Rescue Plan Act of 2021, Pub. L. 117-2 (the

ARP), which was enacted on March 11,

2021, changed the 25-year average segment rates and the applicable minimum

and maximum percentages used under

§ 430(h)(2)(C)(iv) of the Code to adjust

the 24-month average segment rates.2 Prior to this change, the applicable minimum

and maximum percentages were 85% and

115% for a plan year beginning in 2021,

and 80% and 120% for a plan year be-

ginning in 2022, respectively. After this

change, the applicable minimum and maximum percentages are 95% and 105% for

a plan year beginning in 2021, 2022, or

2023. In addition, pursuant to this change,

any 25-year average segment rate that is

less than 5% is deemed to be 5%.3

Pursuant to § 9706(c)(1) of the ARP,

these changes apply with respect to plan

years beginning on or after January 1,

2020. However, § 9706(c)(2) of the ARP

provides that a plan sponsor may elect not

to have these changes apply to any plan

year beginning before January 1, 2022.4

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

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

as amended by § 9706(a) of the ARP.

These adjusted 24-month average segment rates apply only for plan years for

which an election under § 9706(c)(2) of

the ARP is not in effect. For a plan year

for which such an election does not apply, the 24-month averages applicable

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

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

2

Section 80602 of the Infrastructure Investment and Jobs Act, Pub. L. 117-58, makes further changes to the time periods for which specified applicable minimum and maximum percentages

apply.

3

Pursuant to this change, the 25-year averages of the first segment rate for 2021 and 2022 are increased to 5.00% because those 25-year averages as originally published are below 5.00%.

4

This election may be made either for all purposes for which the amendments under § 9706 of the ARP apply or solely for purposes of determining the adjusted funding target attainment

percentage under § 436 of the Code for the plan year.

1

February 6, 2023

450

Bulletin No. 2023–6

for January 2023, adjusted to be within

the applicable minimum and maximum

percentages of the corresponding 25year average segment rates in accordance

with § 430(h)(2)(C)(iv) of the Code, are

as follows:

Adjusted 24-Month Average Segment Rates

For Plan Years

Beginning In

Applicable Month

First Segment

Second Segment

Third Segment

2021

January 2023

4.75

5.36

6.11

2022

January 2023

4.75

5.18

5.92

2023

January 2023

4.75

5.00

5.74

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

not reflect the changes to § 430(h)(2)(C)

(iv) of the Code made by § 9706(a) of the

ARP. These adjusted 24-month average

segment rates apply only for plan years

for which an election under § 9706(c)(2)

of the ARP is in effect. For a plan year

for which such an election applies, the

24-month averages applicable for January

2023, adjusted to be within the applicable

minimum and maximum percentages of

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

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

Pre-ARP Adjusted 24-Month Average Segment Rates

For Plan Years

Beginning In

Applicable Month

First Segment

Second Segment

Third Segment

2021

January 2023

3.32

4.79

5.47

30-YEAR TREASURY SECURITIES

INTEREST RATES

Section 431 specifies the minimum

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

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

for the full-funding limitation described in

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

liability. Section 431(c)(6)(E)(ii)(I) pro-

vides that the interest rate used to calculate

current liability for this purpose must be

no more than 5 percent above and no more

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

ending on the last day before the beginning

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

383, provides guidelines for determining

the weighted average interest rate. The rate

of interest on 30-year Treasury securities

for December 2022 is 3.66 percent. The

Service determined this rate as the average

of the daily determinations of yield on the

30-year Treasury bond maturing in November 2052. For plan years beginning in

January 2023, the weighted average of the

rates of interest on 30-year Treasury securities and the permissible range of rate used

to calculate current liability are as follows:

For Plan Years Beginning In

Treasury Weighted Average Rates

30-Year Treasury Weighted Average

Permissible Range 90% to 105%

January 2023

2.43

2.19 to 2.55

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

computed without regard to a 24-month

average. Notice 2007-81 provides guidelines for determining the minimum pres-

ent value segment rates. Pursuant to that

notice, the minimum present value segment rates determined for December 2022

are as follows:

MINIMUM PRESENT VALUE

SEGMENT RATES

In general, the applicable interest rates

Month

December 2022

Bulletin No. 2023–6

Minimum Present Value Segment Rates

First Segment

Second Segment

4.84

5.15

Third Segment

4.85

451

February 6, 2023

DRAFTING INFORMATION

The principal author of this notice is

Tom Morgan of the Office of Associate

February 6, 2023

Chief Counsel (Employee Benefits, Exempt Organizations, and Employment

Taxes). However, other personnel from

the IRS participated in the development

452

of this guidance. For further information

regarding this notice, contact Mr. Morgan at 202-317-6700 or Tony Montanaro at 626-927-1475 not toll-free calls).

Bulletin No. 2023–6

Table 2022-12

Monthly Yield Curve for December 2022

Derived from December 2022 Data

Maturity

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

15.5

16.0

16.5

17.0

17.5

18.0

18.5

19.0

19.5

20.0

Yield

4.96

4.94

4.92

4.89

4.85

4.81

4.77

4.75

4.75

4.75

4.78

4.81

4.85

4.90

4.95

5.00

5.05

5.10

5.14

5.17

5.20

5.23

5.25

5.27

5.28

5.28

5.29

5.29

5.28

5.27

5.26

5.25

5.24

5.22

5.21

5.19

5.18

5.16

5.14

5.13

Bulletin No. 2023–6

Maturity

20.5

21.0

21.5

22.0

22.5

23.0

23.5

24.0

24.5

25.0

25.5

26.0

26.5

27.0

27.5

28.0

28.5

29.0

29.5

30.0

30.5

31.0

31.5

32.0

32.5

33.0

33.5

34.0

34.5

35.0

35.5

36.0

36.5

37.0

37.5

38.0

38.5

39.0

39.5

40.0

Yield

5.11

5.10

5.08

5.07

5.05

5.04

5.03

5.02

5.01

4.99

4.98

4.98

4.97

4.96

4.95

4.94

4.94

4.93

4.92

4.92

4.91

4.91

4.90

4.89

4.89

4.88

4.88

4.87

4.87

4.87

4.86

4.86

4.85

4.85

4.85

4.84

4.84

4.83

4.83

4.83

Maturity

40.5

41.0

41.5

42.0

42.5

43.0

43.5

44.0

44.5

45.0

45.5

46.0

46.5

47.0

47.5

48.0

48.5

49.0

49.5

50.0

50.5

51.0

51.5

52.0

52.5

53.0

53.5

54.0

54.5

55.0

55.5

56.0

56.5

57.0

57.5

58.0

58.5

59.0

59.5

60.0

Yield

4.82

4.82

4.82

4.82

4.81

4.81

4.81

4.80

4.80

4.80

4.80

4.79

4.79

4.79

4.79

4.78

4.78

4.78

4.78

4.77

4.77

4.77

4.77

4.77

4.76

4.76

4.76

4.76

4.76

4.76

4.75

4.75

4.75

4.75

4.75

4.75

4.74

4.74

4.74

4.74

453

Maturity

60.5

61.0

61.5

62.0

62.5

63.0

63.5

64.0

64.5

65.0

65.5

66.0

66.5

67.0

67.5

68.0

68.5

69.0

69.5

70.0

70.5

71.0

71.5

72.0

72.5

73.0

73.5

74.0

74.5

75.0

75.5

76.0

76.5

77.0

77.5

78.0

78.5

79.0

79.5

80.0

Yield

4.74

4.74

4.73

4.73

4.73

4.73

4.73

4.73

4.73

4.73

4.72

4.72

4.72

4.72

4.72

4.72

4.72

4.72

4.71

4.71

4.71

4.71

4.71

4.71

4.71

4.71

4.71

4.71

4.70

4.70

4.70

4.70

4.70

4.70

4.70

4.70

4.70

4.70

4.70

4.69

Maturity

80.5

81.0

81.5

82.0

82.5

83.0

83.5

84.0

84.5

85.0

85.5

86.0

86.5

87.0

87.5

88.0

88.5

89.0

89.5

90.0

90.5

91.0

91.5

92.0

92.5

93.0

93.5

94.0

94.5

95.0

95.5

96.0

96.5

97.0

97.5

98.0

98.5

99.0

99.5

100.0

Yield

4.69

4.69

4.69

4.69

4.69

4.69

4.69

4.69

4.69

4.69

4.69

4.69

4.68

4.68

4.68

4.68

4.68

4.68

4.68

4.68

4.68

4.68

4.68

4.68

4.68

4.68

4.68

4.67

4.67

4.67

4.67

4.67

4.67

4.67

4.67

4.67

4.67

4.67

4.67

4.67

February 6, 2023

Service Industry Tip

Compliance Agreement

Program

Notice 2023-13

PURPOSE

This notice sets forth a proposed revenue

procedure that establishes the Service Industry Tip Compliance Agreement (SITCA)

program, a voluntary tip reporting program

offered by the Internal Revenue Service

(IRS) to employers in the service industry

(excluding gaming industry employers)1.

The SITCA program is intended to replace

the Tip Reporting Alternative Commitment

(TRAC) program and the Tip Rate Determination Agreement (TRDA) program, as

set forth in Announcement 2001-1, 2001-2

I.R.B. 277, as well as the Employer-Designed Tip Reporting Program (EmTRAC),

as set forth in Notice 2001-1, 2001-2 I.R.B.

261. The proposed revenue procedure provides that upon termination of the TRAC,

TRDA, and EmTRAC programs, employers with existing tip reporting agreements in

those programs will have a transition period

during which their existing agreements will

remain effective. The transition period will

end upon the earliest of (1) the employer’s

acceptance into the SITCA program, (2)

an IRS determination that the employer is

noncompliant with the terms of the TRAC,

TRDA, or EmTRAC agreement, or (3) the

end of the first calendar year beginning after

the date on which the final revenue procedure is published in the Internal Revenue

Bulletin. The IRS is issuing this guidance

in proposed form to provide an opportunity

for public feedback.

BACKGROUND

The Tip Reporting Determination/Education Program (TRD/EP) was designed

by the IRS to enhance tax compliance

through educational programs and the use

of voluntary tip reporting agreements instead of traditional audit techniques. Since

1995, TRD/EP has offered employers in

the food and beverage industry the opportunity to enter into TRAC agreements. In

general, TRAC agreements require employers to establish an educational program for tipped employees and tip reporting procedures for cash and charged tips.

In 1996, TRD/EP began offering employers in certain other industries the opportunity to enter into TRAC agreements and

introduced the TRDA program, which is

available to employers in a variety of tipping industries and requires the determination of minimum tip rates based on occupational categories that employees must

use to report tips to the employer. The

decision to enter into a TRAC or TRDA

agreement has always been voluntary.

In 2000, the IRS simultaneously published a series of announcements requesting comments on proposed new and

revised TRAC agreements and TRDAs

for various industries.2 Under the TRDA

program, the IRS and the employer work

together to arrive at a tip rate for the employer’s various occupational categories,

and employees enter into Tipped Employee Participation Agreements (TEPAs) with

their employers to report tips at the agreed

upon tip rates. The TRAC agreements do

not require employers or employees to report at agreed upon tip rates but do require

employers to (1) implement educational

programs for their employees for reporting

tips and (2) establish a procedure under

which a written or electronic statement is

prepared and processed on a regular basis

(no less frequently than monthly), reflecting all tips for services attributable to each

employee. At the same time, the IRS also

published Notice 2000-21, 2000-1 C.B.

967, which set forth the requirements employers in the food and beverage industry

must meet to participate in the new Em-

TRAC program. The EmTRAC program

is similar to the TRAC program but was

created for employers that wish to submit

their own educational programs and tip

reporting procedures for approval by the

IRS. Notice 2000-21 requested comments

on all aspects of the EmTRAC program,

and specifically on what types of electronic tip reporting systems would meet the

educational requirement.

Those proposed TRAC, TRDA, and

EmTRAC programs all provided a commitment that the IRS would provide

protection to the employer from section

3121(q) liability3 by not initiating any tip

examinations of the employer for periods

in which the agreements were in effect.

The proposed TRDAs included a similar

commitment for employers with respect

to their employees who reported tips at or

above the tip rate established for the employee. TRAC agreements did not specifically provide tip examination protection

for employees, but the IRS stated, in the

series of announcements concerning the

TRAC program that were published in

2000, that employees who properly report

tips would not be subject to challenge by

the IRS. Notice 2000-21 was silent as to

the tip examination impact on employees

in the EmTRAC program.

In 2001, the IRS issued Announcement

2001-1, which finalized pro forma TRAC

and TRDA agreements described in Announcements 2000-19 through 2000-23,

and provided that the final versions would

be available on http://www.irs.gov. In addition, the IRS issued Notice 2001-1 to supersede Notice 2000-21 and make several

non-substantive clarifying changes to the

EmTRAC program.

The TRAC, TRDA, and EmTRAC programs have continued largely unchanged

and have had substantial participation.

The TRAC agreements and TRDAs currently available on the Small Business/

Self-Employed (SB/SE) Division webpage on http://www.irs.gov are similar to

1

The Gaming Industry Tip Compliance Agreement (GITCA) program is available to employers in the gaming industry. Gaming industry employers are not eligible to participate in the SITCA

program, even if they are not currently enrolled in the GITCA program. The GITCA program was established by Rev. Proc. 2003-35, 2003-20 I.R.B. 919, and was updated by Rev. Proc. 200732, 2007-22 I.R.B. 1322, with a new model GITCA. Revenue Procedure 2020-47, 2020-48 I.R.B. 1121 modified Rev. Proc. 2007-32 to provide that the term of a GITCA is generally five years.

2

Announcement 2000-19, 2000-19 I.R.B. 973 (proposed TRAC for use in industries other than food and beverage, cosmetology and barber); Announcement 2000-20, 2000-19 I.R.B. 977

(proposed TRDA for use in industries other than food and beverage and gaming); Announcement 2000-21, 2000-19 I.R.B. 983 (proposed TRAC for cosmetology and barber industries);

Announcement 2000-22, 2000-19 I.R.B. 987 (proposed revision for TRAC for use in food and beverage industry); and Announcement 2000-23, 2000-19 I.R.B. 992 (proposed revision for

TRDA for use in food and beverage industry).

3

Protection from section 3121(q) liability ensures that the employer will not be liable for the employer share of FICA taxes on any tips that employees fail to report to the employer and will

not be subject to notice and demand from the IRS for the employer share of FICA taxes on the unreported tips.

February 6, 2023

454

Bulletin No. 2023–6

the agreements proposed in the series of

announcements from 2000 and 2001. The

EmTRAC program currently available on

the SB/SE Division webpage on www.irs.

gov is the program described in Notice

2001-1.

In Announcement 2012-25, 2012-26

I.R.B. 1054, the IRS stated that it planned

to request public comment on possible

changes to the existing TRD/EP. On April

29, 2013, the IRS issued Announcement

2013-29, 2013-18 I.R.B. 1024, soliciting

comments on all aspects of TRACs and

TRDAs and on ways to improve tip reporting compliance and utilize technological advancements to decrease the administrative burden on taxpayers and the IRS.

In addition to providing a list of items to

be updated, the IRS specifically solicited

comments on the processes, computational methodologies, agreement language,

and suggested topics for Frequently Asked

Questions. Comments received by the IRS

encouraged the use of a point-of-sale system (POS System) to track and improve

tip reporting for both directly and indirectly tipped employees and requested

that any changes to tip reporting compliance programs provide added flexibility

to cover a wide range of business models. Commenters requested that any new

agreement include incentives for employee participation and clarify when the IRS

may retroactively revoke a tip reporting

agreement. Some commenters suggested

that minimum tip rates should be established, and that consolidated reporting

be available for all establishments located in the same facility. Commenters also

requested that any new agreement be released with an additional opportunity for

public comment.

SUMMARY OF PROPOSED

REVENUE PROCEDURE

The proposed revenue procedure describes the SITCA program, which is a

new voluntary tip reporting program being

proposed by the National Tip Reporting

Compliance Program (NTRCP) to replace

the TRAC, TRDA, and EmTRAC programs. NTRCP is part of the Small Business/Self-Employed Division of the IRS.

Under the proposed revenue procedure,

the SITCA program is available to employers in all service industries (excluding

gaming industry employers) with at least

one business location, called a “Covered

Establishment,” operating under the Employer Identification Number (EIN) of

the employer. The SITCA program is designed to take advantage of advancements

in POS Systems and time and attendance

systems, as well as the use of electronic

payment settlement methods to improve

tip reporting compliance and to decrease

taxpayer and IRS administrative burden.

After acceptance into the SITCA program,

an employer must annually establish that

each of its participating Covered Establishments satisfies a minimum reported

tips requirement with respect to its tipped

employees in order for that Covered Establishment to continue with the program

into the next year. If the employer cannot

establish that a Covered Establishment

meets this requirement with respect to a

calendar year, the Covered Establishment

will be removed from the program retroactively to the beginning of that calendar

year and will not be eligible to participate

in the SITCA program again for the immediately succeeding three completed calendar years or as otherwise provided by the

IRS.

The proposed revenue procedure sets

forth requirements for an employer to participate in the SITCA program. An eligible

employer, called a “Service Industry Employer,” is generally an employer (excluding gaming industry employers) that (1)

is in a service industry where employees

perform services for customers and those

services generate sales that are subject to

tipping by customers, (2) has at least one

Covered Establishment, and (3) is compliant with Federal, state, and local tax laws

for the three completed calendar years

immediately preceding the date the application is filed (the preceding period), plus

the calendar quarters following the end of

the preceding period through any calendar

quarters during which the Service Industry Employer’s application is pending for

some or all of the quarter.4 After acceptance, Service Industry Employers must

continue to satisfy these requirements to

continue participating in the SITCA program.

The proposed revenue procedure also

sets forth the requirements for each Covered Establishment to participate in the

SITCA program. A Covered Establishment must have tipped employees who

utilize a technology-based time and attendance system to report tips under section

6053(a). Each Covered Establishment

must also utilize a POS System to record

all sales subject to tipping, and that POS

System must accept the same forms of

electronic payment for tips as it does for

sales. The IRS will accept employers and

Covered Establishments into the SITCA

program that meet the eligibility criteria if

the IRS also determines, in its sole discretion, that acceptance is warranted by the

facts and circumstances and is in the interest of sound tax administration.

Similar to the TRAC, TRDA, and EmTRAC programs, the proposed SITCA

program will provide accepted employers

with protection from section 3121(q) liability with respect to their Covered Establishments that remain in compliance with

the program unless the liability is based

on (1) tips received by a tipped employee

where the asserted liability is based upon

the final results of an audit or agreement

of the tipped employee, or (2) the reporting of additional tip income by a tipped

employee. The protection from section

3121(q) liability applies only to Service

Industry Employers with Covered Establishments for the periods for which they

have been approved to participate in the

SITCA program. It does not apply to Service Industry Employers to the extent they

have Covered Establishments that have

been removed from the SITCA program,

for the period of time between a Covered

Establishment’s removal and reinstatement (if applicable), or to the extent a Service Industry Employer has other business

locations, either with tipped employees or

without, that are not approved to participate in the SITCA program.

Service Industry Employer compliance

is measured, in part, by satisfying a minimum reported tips requirement with respect to total tips reported for a calendar

year by tipped employees at each Cov-

4

For a SITCA applicant that was not operating as an employer in a service industry for all or part of the preceding period of three completed calendar years, a preceding period of less than

three completed calendar years may be used upon approval by the IRS, but in no event may the preceding period be less than one completed calendar year.

Bulletin No. 2023–6

455

February 6, 2023

ered Establishment. In order for the Service Industry Employer to be compliant

with respect to a Covered Establishment

participating in the SITCA program, the

tips reported by tipped employees at each

Covered Establishment must meet or exceed the sum of (1) all charge tips, as established by the Covered Establishment’s

POS System, plus (2) an estimation of all

cash tips calculated using charge tips and

other data from the POS System and applying a minimum charge tip rate as well

as applying discount rates for both stiffing and the differential between cash and

charge tipping (cash tipping is typically

lower). In calculating the annual estimated

amount of all cash tips, the Covered Establishment will use three rates established

by the IRS: the SITCA Minimum Charge

Tip Percentage, the Cash Differential, and

the Stiff Rate. The IRS will calculate these

rates using tipping data it collects from

service industry establishments though the

TRDA program (until those agreements

have ended), the GITCA program (especially gaming-related food and beverage

establishments that participate in this program), and the SITCA program itself, once

data from this program becomes available. These three rates will be specified on

www.irs.gov and updated annually.5

For each calendar year in which the accepted employer demonstrates that a Covered Establishment has satisfied these and

the other requirements of the proposed

revenue procedure, the Service Industry

Employer will receive protection from liability under section 3121(q) and the Covered Establishment may continue to participate in the SITCA program through the

Service Industry Employer into the next

calendar year.

The proposed revenue procedure requires Service Industry Employers to

demonstrate compliance with the SITCA

program by submitting an annual report

on behalf of each Covered Establishment

after the close of the calendar year. If the

Service Industry Employer cannot establish that a Covered Establishment satisfied

the minimum reported tips requirements

in its annual report, the Service Industry Employer will not receive protection

from liability under section 3121(q) with

respect to that Covered Establishment for

the calendar year to which the annual report applies and that Covered Establishment will be removed from the SITCA

program. Once a Covered Establishment

is removed from the SITCA program, it is

generally eligible for reinstatement only

after the Service Industry Employer can

establish that it has satisfied the minimum

reported tips requirement with respect to

that Covered Establishment for three completed calendar years.

A study conducted by the Treasury Inspector General for Tax Administration

(TIGTA) in 2018 concluded that the IRS

was providing tip income audit protection to potentially noncompliant employers and employees.6 Using data from the

TIGTA Data Center Warehouse’s Business Returns Transaction File to review

samples and analyze trends, TIGTA determined that 30 percent of the employers

with tip reporting agreements that filed a

Form 1120, U.S. Corporation Income Tax

Return; Form 1120S, U.S. Income Tax Return for an S Corporation; or Form 1065,

U.S. Return of Partnership Income, and

Form 941, Employer’s Quarterly Federal Tax Return, for the 2016 tax year had

projected unreported tips totaling nearly

$1.66 billion. One of the problems identified by TIGTA is that the IRS rarely revokes tip reporting agreements, resulting

in continued tip income audit protection

for noncompliant employers, and in some

cases, their employees. TIGTA recommended that the IRS train its employees

on specific criteria for revoking tip reporting agreements with noncompliant taxpayers.

In response to these concerns, the proposed SITCA program has several features designed to result in increased tip

reporting compliance. The proposed SITCA program streamlines both compliance

with and enforcement of tip reporting requirements by eliminating employee participation and the corresponding employee

tip income audit protection and providing

for automatic removal of a Covered Establishment that fails to satisfy SITCA’s

minimum reported tip requirement in its

annual report. Unlike the GITCA and

TRDA programs, the proposed SITCA

program does not require any tax reporting commitment from employees. Employees are not required to report tips at

an hourly rate, nor are employers required

to provide educational or tip reporting

training programs to their employees as is

the case in the TRAC program. Employees have a responsibility to report actual

tips received pursuant to section 6053(a),

but employees do not sign participation

agreements or otherwise agree to be monitored for compliance by their employers,

as is the case in the GITCA and TRDA

programs. Providing employee tip examination protection to employees without a

measurable form of tip reporting compliance would not be in the interest of sound

tax administration and would impose significant additional recordkeeping burdens

on employers and the IRS to determine

the eligibility of individual employees.

Therefore, no tip examination protection

is provided to employees under the proposed SITCA program. Because any Covered Establishments that do not meet the

minimum reported tips requirement will

be removed from the program, the IRS

and Treasury view the SITCA program as

providing employers with an incentive to

train, educate, and implement procedures

for employees to provide an accurate report of all tips received. More accurate tip

reporting also benefits employees upon

audit and can result in higher social security wages credited to them upon retirement.

The SITCA program is intended to

serve as the sole tip reporting compliance

program for employers in all service industries (excluding gaming industry employers). The proposed revenue procedure

provides that for employers with existing

agreements in the TRAC, TRDA and EmTRAC programs, there will be a transition

period during which the existing agreements will remain in effect. The transition

period will end upon the earliest of (1) the

employer’s acceptance into the SITCA

program; (2) an IRS determination the

employer is noncompliant with the terms

of the TRAC, TRDA, or EmTRAC agree-

Based on existing data, the IRS estimates that the current values for these rates, if the SITCA program were in operation presently, would be a 16 percent SITCA Minimum Charge Tip

Percentage, a 2 percent Cash Differential, and a 5 percent Stiff Rate.

6

TIGTA Rep’t No. 2018-30-081, Billions in Tip-Related Tax Noncompliance Are Not Fully Addressed and Tip Agreements Are Generally Not Enforced.

5

February 6, 2023

456

Bulletin No. 2023–6

ment; or (3) the end of the first calendar

year beginning after the date on which the

final revenue procedure is published in the

Internal Revenue Bulletin. The proposed

revenue procedure provides that employers participating in the TRAC, TRDA, and

EmTRAC programs at the time the final

revenue procedure is published in the Internal Revenue Bulletin will continue to

have protection from section 3121(q) liability to the extent they are compliant with

their existing tip reporting agreements

prior to termination. Employees who have

been receiving protection from tip income

examination through their employer’s participation in an existing TRAC, TRDA, or

EmTRAC agreement will also continue to

receive that protection for the return periods covered by their employer’s agreement (including during the transition period) to the extent their employers remain

compliant with the terms of their agreement.

REQUEST FOR COMMENTS

The IRS requests comments on all aspects of the proposed revenue procedure,

and specifically requests comments on the

following issues:

• How a technology-based time and

attendance system may be used by

tipped employees to report tips,

including tips in cash and other

forms of tipping made through elec-

Bulletin No. 2023–6

tronic payments methods (other than

a credit card), regardless of whether

the tips are received directly from

customers or through tip sharing

arrangements;

• How tip sharing practices vary across

service industries and how the SITCA

program can support employer participation while accommodating potential differences in Federal, state, and

local labor and employment law

requirements;

• How employers of large food or beverage establishments participating in

the SITCA program may meet their

filing and reporting obligations under

section 6053(c) and also satisfy the

SITCA program requirements for

compliance, while minimizing the

administrative burdens on taxpayers

and the IRS.

Comments must be received by May 7,

2023 and may be submitted in one of two

ways:

(1) Mail. Send paper submissions to

CC:PA:LPD:PR (Notice 2023-13),

Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin

Station, Washington, D.C. 20044.

(2) Electronically. Submit electronic submissions via the Federal eRulemaking Portal at www.regulations.gov

(indicate IRS and Notice 2023-13)

by following the online instructions

for submitting comments. Once sub-

457

mitted to the Federal Rulemaking

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.

CONTINUED APPLICATION OF

ANNOUNCEMENT 2001-1 AND

NOTICE 2001-1

Pending publication of the final revenue procedure in the Internal Revenue Bulletin, Announcement 2001-1

and Notice 2001-1 continue to apply

with respect to participating employers.

However, the IRS will not enter into

any new TRAC, TRDA, or EmTRAC

agreements with any employers that do

not already have an agreement, as of

March 8, 2023.

DRAFTING INFORMATION

The principal author of this notice is

Stephanie Caden of the Office of the Associate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes). For further information regarding

this notice, contact Stephanie Caden at

202-317-4774 (not a toll-free number).

February 6, 2023

PROPOSED REVENUE PROCEDURE

TABLE OF CONTENTS

SECTION 1: PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458

SECTION 2: BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458

SECTION 3: DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459

SECTION 4. REQUIREMENTS FOR SITCA APPLICANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461

SECTION 5. APPLYING TO PARTICIPATE IN THE SITCA PROGRAM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461

SECTION 6. MAINTAINING COMPLIANCE WITH THE SITCA PROGRAM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463

SECTION 7. ANNUAL FILING REQUIREMENTS FOR EMPLOYERS WITH LARGE FOOD OR

BEVERAGE ESTABLISHMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464

SECTION 8. ADDING COVERED ESTABLISHMENTS AFTER ACCEPTANCE INTO THE SITCA PROGRAM. . . . . . . . . . 464

SECTION 9. REMOVAL OF COVERED ESTABLISHMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465

SECTION 10. WITHDRAWING FROM OR TERMINATING PARTICIPATION IN THE SITCA PROGRAM. . . . . . . . . . . . . . 465

SECTION 11. EMPLOYER PROTECTION FROM SECTION 3121(Q) LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466

SECTION 12. COMPLIANCE REVIEWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466

SECTION 13. EFFECT OF THIS REVENUE PROCEDURE ON OTHER TIP REPORTING PROGRAMS. . . . . . . . . . . . . . . . 466

SECTION 14. EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466

SECTION 1. PURPOSE

The purpose of this revenue procedure

is to establish the Service Industry Tip

Compliance Agreement (SITCA) program, a voluntary tip reporting program

offered by the Internal Revenue Service

(IRS) to employers in the service industry (excluding gaming industry employers). The SITCA program will replace the

Tip Reporting Alternative Commitment

(TRAC) program and the Tip Rate Determination Agreement (TRDA) program, as

provided in Announcement 2001-1, 20012 I.R.B. 277, and the Employer-Designed

Tip Reporting Program (EmTRAC), as

provided in Notice 2001-1, 2001-2 I.R.B.

261. Upon termination of the TRAC,

TRDA, and EmTRAC programs, this revenue procedure provides that a transition

period will apply to employers with existing tip reporting agreements and their

February 6, 2023

employees. For such employers, the existing agreements will end upon the earliest

of (1) the employer’s acceptance into the

SITCA program, (2) an IRS determination

that the employer is noncompliant with the

terms of the TRAC, TRDA, or EmTRAC

agreement, or (3) the end of the first calendar year beginning after the date on which

the final revenue procedure is published in

the Internal Revenue Bulletin.

The SITCA program is part of the Tip

Rate Determination/Education Program

implemented by the National Tip Reporting Compliance Program (NTRCP).

NTRCP is part of the Small Business/

Self-Employed Division of the IRS. The

SITCA program is designed to promote

voluntary compliance by employers and

employees with the provisions of the Internal Revenue Code (Code) related to the

Federal taxation of tips, promote accurate

tip reporting, and reduce disputes under

458

section 3121(q) of the Code while reducing taxpayer burden. Additionally, the

SITCA program is intended to facilitate

and promote the use of current financial

information technology in the tip reporting process.

SECTION 2. BACKGROUND

Sections 3101 and 3111 impose Federal

Insurance Contributions Act (FICA) taxes on employees and employers, respectively, equal to a percentage of the wages

received by an individual with respect to

employment. FICA taxes consist of two

separate taxes, the Old Age, Survivors,

and Disability Insurance (social security)

tax and the Hospital Insurance (Medicare)

tax. Sections 3101(a) and 3101(b) impose

the employee portions of social security

tax and the Medicare tax, respectively.

Sections 3111(a) and 3111(b) impose the

Bulletin No. 2023–6

employer portions of the social security

tax and the Medicare tax, respectively.

All wages are subject to Medicare tax;

however, the amount of wages subject to

social security tax is limited by an annual

contribution and benefit base.

Section 3102(c) provides that the employer shall withhold the employee share

of FICA taxes on the reported tips from the

wages of the employee (generally excluding tips) or from other funds made available by the employee for this purpose.

Section 3121(a) defines “wages,” for

FICA tax purposes, as all remuneration

for employment, with certain exceptions.

Section 3121(a)(12)(A) excludes, from

the definition of wages, tips paid in any

medium other than cash; section 3121(a)

(12)(B) excludes cash tips received by an

employee in any calendar month in the

course of the employee’s employment by

an employer unless the amount of the cash

tips is $20 or more.

Under section 3121(q), tips received by

an employee in the course of the employee’s employment are considered remuneration for that employment and are deemed

to have been paid by the employer for

purposes of the employer portion of FICA

taxes imposed by sections 3111(a) and (b).

Generally, the remuneration is deemed to

be paid when a written statement including the tips is furnished to the employer by

the employee pursuant to section 6053(a),

as discussed below.

Section 3111 imposes the employer portion of Medicare tax on the total

amount of cash tips received by the employee. It also imposes the employer portion of social security tax on the amount

of cash tips received by the employee up

to (when combined with all other wages)

the contribution and benefit base as determined under section 3121(a)(1). Special

rules apply if the employee did not furnish

the employer with the statement required

by section 6053(a) or furnished an incomplete or otherwise inaccurate statement.

In those cases, the employer’s liability in

connection with taxes imposed by section

3111 with respect to tips is determined

based on the amount of remuneration

deemed to have been paid on the date on

which notice and demand is made to the

employer by the IRS. Section 3121(q).

Section 6053(a) requires every employee who, in the course of the employ-

Bulletin No. 2023–6

ee’s employment by an employer, receives

in any calendar month tips that are wages

(as defined in section 3121(a) for FICA

tax purposes or section 3401(a) for income tax withholding purposes) to report

all those tips in one or more written statements furnished to the employer on or before the tenth day of the following month.

The employee is to furnish the statements

in the form and manner prescribed by the

IRS. See § 31.6053-1(b) of the Employment Tax Regulations.

Under § 31.6053-1(b) the statement

may be provided on paper or transmitted

electronically and must be signed by the

employee. The statement must disclose

the name, address, and social security

number of the employee and the name and

address of the employer, and must specify

the date of the report and the period that

the report covers.

Section 6053(c)(3) states that employers of large food or beverage establishments must allocate tips among employees performing services who customarily

receive tip income if the total tips reported are below eight percent of gross receipts.

The factors used to determine whether payments constitute tips or service

charges (extra amounts automatically

added to a bill for services rendered) are

set forth in Rev. Rul. 2012-18, 2012-26

I.R.B. 1032. Q&A-1 of Rev. Rul. 2012-18

provides that the absence of any of the following factors creates a doubt as to whether a payment is a tip and indicates that the

payment may be a service charge: (1) the

payment must be made free from compulsion; (2) the customer must have the unrestricted right to determine the amount; (3)

the payment should not be the subject of

negotiation or dictated by employer policy; and (4) generally, the customer has the

right to determine who receives the payment. All the surrounding facts and circumstances must be considered. Q&A-1

also provides an example illustrating that

a fixed charge added to all bills for parties

of six or more customers at a restaurant,

which the restaurant distributes to waiters and bussers, is not a tip but a service

charge. To the extent any portion of a service charge paid by a customer is distributed to an employee, it is included in the

employee’s wages for FICA tax purposes

and not separately required to be reported

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as tips by the employee. See also Rev. Rul.

59-252, 1959-2 C.B. 215.

SECTION 3. DEFINITIONS

The following definitions apply for

purposes of this revenue procedure.

.01 “Annual Report” is the yearly report submitted by a Service Industry Employer to the IRS on behalf of each Covered Establishment participating in the

SITCA program.

.02 “Cash Differential” is the fixed percentage point reduction established by the

IRS (to be updated annually) and applied

to the SITCA Charge Tip Percentage that

takes into account the different tipping

practices customers utilize when paying

tips in cash as compared to when they

charge tips.

.03 “Cash Tip Percentage” is the percentage determined by reducing the SITCA Charge Tip Percentage by the Cash

Differential. This percentage is then used

to calculate Tips in Cash.

.04 “Compliance Review” is a review

or other inspection of a Service Industry

Employer’s books, records and filed federal tax and information returns related to

a Service Industry Employer’s participation in the SITCA program. A Compliance

Review is neither an examination nor an

inspection of books for purposes of either

section 7605(b) or the IRS’s policy and

procedures for reopening cases closed

after examination. In addition, a Compliance Review is not an audit for purposes

of section 530 of the Revenue Act of 1978.

.05 “Covered Establishment” is a business location at which Service Industry

Tipped Employees who report tips under

section 6053(a) perform services and that

operates under the Service Industry Employer or SITCA Applicant’s employer

identification number (EIN). If a Service

Industry Employer or SITCA Applicant

has just a single business location, that

Service Industry Employer or SITCA Applicant will be a Covered Establishment

for purposes of all the provisions of this

revenue procedure.

.06 “Covered Establishment Charge

Tip Percentage” is the percentage of Tips

by Charge made on Covered Establishment Sales Subject to Charge Tipping.

This percentage is calculated for a Covered Establishment by dividing the total

February 6, 2023

Tips by Charge by total Covered Establishment Sales Subject to Charge Tipping

for a calendar year.

.07 “Covered Establishment Sales Subject to Charge Tipping” are Sales Subject

to Tipping for which Tips by Charge are

included with the payment, as reflected in

a Covered Establishment’s POS System.

.08 The “Employee Tips Report” or

“ETR” is a report of the total tips received

by a Service Industry Tipped Employee

in the course of the employee’s employment by the Service Industry Employer at

a Covered Establishment for a time period

not greater than one calendar month. The

ETR is generated by the Time and Attendance System utilized by the Service Industry Employer at a Covered Establishment and is based on information entered

into the Time and Attendance System by

the Service Industry Tipped Employee.

The ETR must meet the requirements set

forth in section 6053(a) and § 31.6053-1

for reporting tips by the employee to the

employer, and must include categories for

cash tips, credit and debit card tips, and

tips paid out, as reported by the Service

Industry Employee.

.09 “Large Food or Beverage Establishment” is a trade or business described

in section 6053(c)(4) and § 31.6053-3(j)

(7).

.10 “Minimum Reported Tips Requirement” is the SITCA program requirement

that a Covered Establishment’s Reported

Tips for the calendar year meet or exceed

the sum of Tips by Charge and Tips in

Cash.

.11 A “Point-of-Sale (POS) System”

is a technology-based system utilized at

a Covered Establishment to process and

record the retail transactions taking place

between the Service Industry Employer

or SITCA Applicant and its customers, at

the time that goods and services are purchased.

.12 “Reported Tips” are the total

amount of tips reported by Service Industry Tipped Employees for the calendar year

pursuant to section 6053(a), determined

on a Covered Establishment-by-Covered

Establishment basis and as reflected in the

Covered Establishment’s Time and Attendance System.

.13 “Requisite Prior Period” is the period of three completed calendar years

immediately preceding the date the SIT-

February 6, 2023

CA Applicant applies to participate in the

SITCA program (these completed years

are referred to as the preceding period),

plus the completed calendar quarters between the end of the preceding period and

the date of the SITCA Application. For a

SITCA Applicant that was operating as

an employer in a Service Industry for less

than the preceding period of three completed calendar years, the Requisite Prior

Period may include a preceding period of

less than three completed calendar years

upon approval by the IRS, but in no event

may the preceding period be less than one

completed calendar year.

.14 “Sales Adjustment for Stiffing” is

a reduction in the amount of Sales Subject

to Cash Tipping reflecting the Stiff Rate.

This amount is calculated by multiplying

the Sales Subject to Cash tipping by the

Stiff Rate.

.15 “Sales Subject to Cash Tipping”

is an amount calculated by subtracting

the SITCA Sales Subject to Charge Tipping from Sales Subject to Tipping. This

amount is used to calculate Tips in Cash.

.16 “Sales Subject to Tipping” are

amounts from the sale of products and services for which Service Industry Tipped

Employees may receive tips in the course

of their employment, as reflected in a

Covered Establishment’s POS System.

When a tip is provided, Sales Subject to

Tipping also include the retail value of

complimentary products and services provided at or by a Covered Establishment

and the receipts from carry-out or delivery

sales. Sales Subject to Tipping do not include state or local taxes, nor do they include investment income, rental income,

royalties, service fees, sales subject to

service charges when no additional tip is

paid, commissions, and income from the

sale of products and services to customers

that are not related to services provided by

the Service Industry Tipped Employee.

.17 A “Service Industry” is an industry

(excluding the gaming industry) in which

employees are hired to perform services

for customers and those services generate

Sales Subject to Tipping.

.18 A “Service Industry Employer” is

an employer (other than a gaming industry employer) in a Service Industry that

is required to report tips under Subtitle F

of the Code and has been accepted to participate in the SITCA program. A Service

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Industry Employer may comprise a single

Covered Establishment or have multiple

Covered Establishments that all operate

under the same EIN. For purposes of this

revenue procedure, the entity for which

an employee performs services (that is,

the employer that operates the Covered

Establishment) is considered the Service

Industry Employer.

.19 A “Service Industry Tipped Employee” is an employee who receives tip

income of $20 or more in any calendar

month in the course of the employee’s

employment by the Service Industry Employer or SITCA Applicant at one or more

Covered Establishments, including those

who receive $20 or more in any calendar

month through tip-sharing arrangements.

.20 A “SITCA Applicant” is an employer that submits or has submitted (including through the services of a third

party) an application to be a Service Industry Employer in the SITCA program

in accordance with this revenue procedure, the instructions in the online application, and any subsequent applicable

guidance. A SITCA Applicant remains a

SITCA Applicant until the SITCA Applicant either receives a notice of acceptance into the SITCA program described

in section 5.11 of this revenue procedure,

withdraws its application pursuant to

section 5.09 of this revenue procedure, or

receives a notice of denial as described

in section 5.10 of this revenue procedure.

When a SITCA Applicant utilizes the

service of a third party to submit the application, the SITCA Applicant must ensure that the third party has a valid Form

2848, Power of Attorney and Declaration

of Representative, for the SITCA Applicant on file with the IRS.

.21 A “SITCA Application” is the online application to participate in the SITCA program in accordance with this revenue procedure, the instructions in the

online application, and any subsequent

applicable guidance.

.22 The “SITCA Charge Tip Percentage” is the greater of the Covered Establishment Charge Tip Percentage or the

SITCA Minimum Charge Tip Percentage.

It is used to calculate the Cash Tip Percentage.

.23 The “SITCA Minimum Charge Tip

Percentage” is a fixed percentage established by the IRS and updated annually. It

Bulletin No. 2023–6

is used as the SITCA Charge Tip Percentage if the Covered Establishment Charge

Tip Percentage is lower than the SITCA

Minimum Charge Tip Percentage.

.24 The “SITCA Sales Subject to

Charge Tipping” is calculated by dividing

the Tips by Charge by the SITCA Charge

Tip Percentage. This amount will be the

same as the Covered Establishment Sales

Subject to Charge Tipping unless the Covered Establishment Charge Tip Percentage

is below the SITCA Minimum Charge Tip

Percentage. The SITCA Sales Subject to

Charge Tipping is used to calculate Sales

Subject to Cash Tipping.

.25 The “Stiff Rate” is the fixed percentage established by the IRS and updated annually to take into account that

sometimes customers do not leave a tip on

cash sales.

.26 A “Time and Attendance System” is

a technology-based system utilized by an

employer in a Service Industry for tipped

employees to report all tips received at an

establishment in the course of their employment.

.27 “Tips by Charge” are tips paid by

credit card, debit card, gift card, or any

other form of electronic settlement or mobile payment application (excluding virtual currency) that are reflected in a Covered

Establishment’s POS System.

.28 “Tips in Cash” is an estimate of tips

received that are not paid by credit card,

debit card, gift card, or any form of electronic settlement or digital payment that

are included in Tips by Charge. The Tips

in Cash amount is an estimate of the total

tips paid by coin, paper money cash and

other forms of monetary settlement that

are not reflected in the Covered Establishment’s POS System. Tips in Cash is calculated by reducing the Sales Subject to

Cash Tipping by the Sales Adjustment for

Stiffing and then multiplying the result by

the Cash Tip Percentage.

SECTION 4. REQUIREMENTS FOR

SITCA APPLICANTS

.01 To be eligible to participate in the

SITCA program, a SITCA Applicant must

meet the following requirements:

(1) Length of time in operation. A SITCA Applicant must have operated as an

employer in a Service Industry for at least

one completed calendar year immediately

Bulletin No. 2023–6

preceding the date the SITCA Applicant

applies to participate in the SITCA program.

(2) Covered Establishments. A SITCA

Applicant must have one or more Covered

Establishments. The Covered Establishments may all share the same Service Industry, or they may operate in a different

Service Industry.

(3) Compliance. The SITCA Applicant

must be in compliance with Federal, state,

and local tax laws during the following

periods, as applicable: (1) the Requisite

Prior Period, (2) the period that a SITCA

Application is pending, and (3) the period between acceptance into the SITCA

Program and the start of the next calendar

year, taking into consideration any applicable IRS relief provisions (collectively

referred to as the applicable periods). The

SITCA Applicant must timely and accurately file all Federal, state, and local tax

and information returns (including Federal employment tax returns) and deposit

and pay any applicable Federal, state, and

local tax (including any Federal employment taxes), during the applicable periods.

A SITCA Applicant that fails to satisfy this

requirement may be considered in compliance if the failure to comply is determined

to be due to reasonable cause and not due

to willful neglect.

(4) No fraud penalties. The SITCA Applicant must not have been assessed any

fraud penalties by the IRS or a state or

local tax authority during the applicable

periods.

(5) Gaming Industry Tip Compliance

Agreement (GITCA) program. The SITCA

Applicant must not be a participant in the

GITCA program or a gaming industry employer that is eligible to participate in the

GITCA program.

.02 Eligibility of Covered Establishments. A SITCA Applicant must establish

that each Covered Establishment submitted with its SITCA Application individually satisfies the following requirements:

(1) Time and Attendance System. The

Covered Establishment must utilize a

Time and Attendance System for Service

Industry Tipped Employees to report all

tips received in the course of their employment, which includes tips paid in cash, by

credit card, debit card, gift card, or by any

other form of electronic settlement or digital payment.

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(2) POS System. The Covered Establishment must utilize a POS System to

record all Sales Subject to Tipping during

the calendar year and must accept the

same forms of payment for tips as it does

for Sales Subject to Tipping. The POS

System must be able to determine both the

Tips by Charge and the Covered Establishment Sales Subject to Charge Tipping

for the calendar year.

(3) Minimum Reported Tips for Covered Establishment. The Covered Establishment must satisfy the Minimum

Reported Tips Requirement for the prior

completed calendar year.

(4) Employee Tips Report (ETR). The

Covered Establishment must provide

an ETR to each Service Industry Tipped

Employee showing the amount of tips

reported by the Service Industry Tipped

Employee as reflected in the Time and

Attendance System for that Covered Establishment, no less frequently than every

calendar month.

.03 IRS Discretion. The IRS has the

discretion to determine whether acceptance of a SITCA Applicant and each of its

Covered Establishments is in the interest

of sound tax administration.

.04 Suitability of Large Food or Beverage Establishment for SITCA program. A

Covered Establishment that is also a Large

Food or Beverage Establishment generally will not be suitable for the SITCA program if it allocates tips to Service Industry

Employees under section 6053(c).

SECTION 5: APPLYING TO

PARTICIPATE IN THE SITCA

PROGRAM

.01 Method of submission. A SITCA

Applicant must electronically submit a

properly completed and executed SITCA

Application along with all accompanying

forms and documentation required by this

revenue procedure, the instructions in the

online application, and any subsequent

applicable guidance. A paper submission

will be treated as an incomplete application as described in section 5.06 of this

revenue procedure.

.02 Required documents, representations and information. As part of the

SITCA Application, a SITCA Applicant

must submit certain documents, representations, and information, as well as any

February 6, 2023

additional materials the IRS requests to

determine a SITCA Applicant’s suitability

for the SITCA program.

(1) A SITCA Applicant must provide a

representation that the SITCA Applicant

is in compliance with Federal, state, and

local tax laws for the Requisite Prior Period (taking into consideration any applicable IRS relief provisions). Any failure

to comply must be determined to be due

to reasonable cause and not due to willful

neglect. Documentation must accompany

the representation that demonstrates the

timely and accurate filing of Federal, state,

and local tax and information returns (including Federal employment tax returns),

and the timely and accurate deposit and

payment of all applicable Federal, state,

and local taxes (including any Federal

employment taxes). The SITCA Applicant

must also provide a representation that it

has not been assessed any fraud penalties

by the IRS or a state or local tax authority

for any period during the Requisite Prior

Period. The SITCA Applicant must provide these representations and documentation for every subsequent calendar quarter during which its SITCA Application

is pending for some or all of the quarter.

These representations and documentation

must be provided by the last day of the

second month after the end of each such

subsequent quarter, even if the SITCA

Applicant receives a notice of acceptance

before this deadline.

(2) If applicable, a SITCA Applicant

must provide information relating to its

participation in any other existing tip reporting programs (TRAC, TRDA, or EmTRAC) with the IRS, including providing

copies of tip reporting agreements, annual filing requirements, reports, tip rate

reviews, and compliance reviews for the

Requisite Prior Period. If participation in

another tip reporting program has been

for less than the full three-year Requisite

Prior Period at the time the SITCA Application is submitted, the SITCA Applicant

must provide the information described

in this paragraph for the shorter period in

which the tip reporting agreement was in

effect. The SITCA Applicant must provide

the information described in this paragraph for every subsequent calendar quarter during which its SITCA Application is

pending for some or all of the quarter. This

information must be provided by the last

February 6, 2023

day of the second month after the end of

each subsequent quarter, even if the SITCA Applicant receives a notice of acceptance before this deadline.

(3) A SITCA Applicant must provide a

statement of agreement signed by an individual authorized to sign on behalf of the

SITCA Applicant that states, “On behalf

of the SITCA applicant, I agree that the

review of records and information under

[Revenue Procedure XXXX-XX], including the instructions in the online application, and any subsequent applicable

guidance does not constitute an inspection

within the meaning of section 7605(b) of

the Internal Revenue Code (Code) and

will not preclude or impede (under section 7605(b) of the Code or any administrative provisions adopted by the Internal Revenue Service (IRS)) the IRS from

later examining any return or inspecting

any records of the SITCA Applicant or

of the Service Industry Employer, should

the SITCA Applicant be accepted into

the SITCA program. I further agree that

procedural restrictions, such as providing

notice under section 7605(b) of the Code,

do not apply to actions taken under [Revenue Procedure XXXX-XX], including the

instructions in the online application, and

any subsequent applicable guidance.”

(4) A SITCA Applicant must provide a

penalties of perjury statement signed by

an individual authorized to sign on behalf

of the SITCA Applicant that states, “Under penalties of perjury, I declare that I

have examined this submission, including

accompanying documents, and, to the best

of my knowledge and belief, the facts presented in support of this submission are

true, correct, and complete.”

(5) If a SITCA Applicant utilizes the

services of a third party to submit the

SITCA Application, the SITCA Applicant

must ensure that the third party has a valid

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

Applicant on file with the IRS.

.03 Participation of Covered Establishments. With its SITCA Application, the

SITCA Applicant must provide information about each Covered Establishment it

requests to participate in the SITCA program.

(1) Covered Establishment identification number. Each Covered Establishment

shall have a unique identification number

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that will be used in the SITCA Application

and, if accepted, in the SITCA program.

A Covered Establishment identification

number shall be determined as follows:

(A) The first nine digits shall be the

Service Industry Employer’s EIN.

(B) The next digit shall identify the

type of Covered Establishment, with the

categories as follows:

(i) The number “1” signifies a Large

Food or Beverage Establishment

(subject to section 6053(c) reporting

requirements); and

(ii) The number “2” signifies another

type of Service Industry establishment, including a non-Large Food or

Beverage Establishment.

(C) The last five digits are to differentiate between multiple Covered Establishments sharing the same EIN. For this

purpose, the SITCA Applicant shall assign each Covered Establishment a unique

five-digit number. For example, each

Covered Establishment could be assigned

a number beginning with “00001” and

progressing in numerical sequence (i.e.,

“00002”, “00003”, “00004” “00005”) until each Covered Establishment has been

assigned a number.

(2) Submission of additional information. The SITCA Applicant must submit

the information set forth in this paragraph

(2) on behalf of each Covered Establishment for the Requisite Prior Period. Specifically, the SITCA Applicant must submit:

(A) The name and address of each

Covered Establishment, and verification

that each Covered Establishment operates

under the EIN of the Service Industry Employer;

(B) A summary of the Covered Establishment’s activities, including the sources

of its receipts and the nature of its expenditures, as prescribed by the IRS in the

SITCA Application;

(C) A description of the Covered Establishment’s Time and Attendance System

and its tip reporting capabilities, as well

as reports that include all Reported Tips

by Service Industry Tipped Employees at

that Covered Establishment;

(D) A description of the Covered Establishment’s POS System and reports

that include all Sales Subject to Tipping

and information describing what forms of

payment (e.g. cash, credit card, debit card)

Bulletin No. 2023–6

are accepted in the POS System for tips

and Sales Subject to Tipping at that Covered Establishment;

(E) Payroll reports for all employees,

including all Service Industry Tipped Employees, employed by the SITCA Applicant at that Covered Establishment;

(F) A representation and supporting

documents that establish that the Reported Tips for that Covered Establishment

meet or exceed the Minimum Reported

Tips Requirement needed to participate

in the SITCA program under this revenue

procedure and any subsequent applicable

guidance.

.04 Time period to apply. A SITCA

Applicant must complete and submit the

SITCA Application during the time period

determined by the IRS and provided in the

instructions in the online application.

.05 Additional requirements for Large

Food or Beverage Establishments. For

SITCA Applications that include a Covered

Establishment that is a Large Food or Beverage Establishment, the SITCA Applicant

must also submit the Forms 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, that were filed on

behalf of that Large Food or Beverage Establishment for the Requisite Prior Period.

.06 Incomplete or inaccurate application. A SITCA Application must be complete and accurate. A SITCA Application

is not complete or accurate if it is missing

any item of information required by this

revenue procedure, the instructions in the

online application, and any subsequent applicable guidance. If an incomplete SITCA

Application is submitted, the IRS generally will request from the SITCA Applicant

the additional information needed for a

completed SITCA Application. However,

the IRS may deny an incomplete SITCA

Application without requesting additional

information.

.07 Additional information may be

required. Even if a SITCA Application

is complete, the IRS may request additional information or documentation if

it determines that further information or

documentation is necessary to evaluate a

SITCA Applicant’s or Covered Establishment’s suitability to participate in the SITCA program. A SITCA Applicant should

not send any additional information or

documentation to the IRS unless the IRS

requests the information. The IRS will not

Bulletin No. 2023–6

consider any unrequested information or

documentation received from the SITCA

Applicant if the SITCA Application is otherwise complete unless the information

pertains to a material change as provided

in sections 5.08 and 6.05 of this revenue

procedure, with respect to the accuracy of

the SITCA Application.

.08 SITCA Applicant must notify IRS

of material changes relevant to its SITCA

Application. Within 30 days of its occurrence, a SITCA Applicant must notify the

IRS of any change that materially affects

the continuing accuracy of any information that was previously provided to the

IRS as part of its SITCA Application. Examples of material changes include, but

are not limited to, any change in the SITCA Applicant’s tax compliance, changes to the information provided about the

Covered Establishments under section

5.03 of this revenue procedure, or discovery of significant errors or new facts relevant to information the SITCA Applicant

provided to the IRS.

.09 SITCA Application may be withdrawn. A SITCA Application may be

withdrawn only upon the request of the

SITCA Applicant in the manner prescribed

by the IRS. When a SITCA Application is

withdrawn, the IRS may retain and use for

tax administration the SITCA Application,

all supporting documents, and the information submitted in connection with the

withdrawn request.

.10 Denial of SITCA Application. The

IRS may deny a SITCA Application when

the SITCA Applicant fails to satisfy the

requirements of this revenue procedure,

the instructions accompanying the online application, and any subsequent applicable guidance. Denial of the SITCA

Application means that no Covered Establishments that the SITCA Applicant

has requested to participate have been

approved to participate in the SITCA program. The IRS may also determine that a

SITCA Applicant is not suitable for the

SITCA program or that its participation

is not warranted based on the facts and

circumstances, including that its participation is not in the interest of sound tax

administration. If the IRS denies a SITCA

Application, it will issue electronically a

notice of denial to the SITCA Applicant,

which will provide further contact information for the SITCA Applicant, and the

463

reason for the denial. The notice of denial

will not include an opportunity for review.

Denial of a SITCA Application does not

preclude an employer from reapplying to

participate in the SITCA program in accordance with the provisions of this revenue procedure, the instructions accompanying the online application, and any

subsequent applicable guidance.

.11 Acceptance into SITCA program.

The IRS may accept a SITCA Applicant

to participate in the SITCA program as a

Service Industry Employer if the SITCA

Applicant satisfies the requirements of

this revenue procedure, the instructions

accompanying the online application, and

any subsequent applicable guidance. Upon

acceptance into the SITCA program, the

IRS will electronically issue a notice of

acceptance to the SITCA Applicant. The

notice of acceptance will include a list

of the specific Covered Establishments

that have been approved to participate in

the SITCA program. While participation

in the SITCA program will typically begin on the first day of the calendar year

following a Service Industry Employer’s

acceptance into the SITCA program, participation may begin on a different date as

determined by the IRS and provided in the

notice of acceptance.

SECTION 6: MAINTAINING

COMPLIANCE WITH THE SITCA

PROGRAM

.01 In general. To maintain compliance

with the SITCA program for each calendar year, a Service Industry Employer and

its Covered Establishments must continue

to satisfy the eligibility requirements described in this section and sections 4.01

and 4.02 of this revenue procedure for the

period that the Service Industry Employer

participates in the SITCA program. This

includes maintaining compliance with

Federal, state, and local tax laws (taking

into consideration any applicable IRS relief provisions). A Service Industry Employer that fails to satisfy this requirement

will be considered to be in compliance if

the failure to comply is determined to be

due to reasonable cause and not due to

willful neglect. The Service Industry Employer must also not have been assessed

any fraud penalties by the IRS or a state or

local tax authority during the period that a

February 6, 2023

Service Industry Employer participates in

the SITCA program.

.02 Method of Submission. Except as

otherwise provided in this revenue procedure or other subsequent applicable

guidance, the information and documents

required in this section must be submitted

electronically. A Service Industry Employer may utilize the services of a third

party to submit the information and documents required under this section if the

third party has a valid Form 2848, Power

of Attorney and Declaration of Representative, for the Service Industry Employer

on file with the IRS.

.03 Annual Report. The Service Industry Employer must electronically submit a

properly completed and executed Annual

Report for the calendar year with respect

to each Covered Establishment participating in the SITCA program. The due date

for submitting the Annual Report is March

31 following the end of the calendar year.

.04 Prescribed form. The Annual Report required by this revenue procedure

shall be made in the manner and form prescribed by the IRS. The form required for

the Annual Report and the accompanying

instructions will be specified on www.irs.

gov.

.05 Reporting of material changes. The

Service Industry Employer must notify the

IRS of any change that materially affects

the continuing accuracy of any information provided to the IRS (material change)

that is relevant to its compliance with the

SITCA program, including both a modification to information that was previously

provided as part of its SITCA Application

and new information. The Service Industry Employer must notify the IRS of a material change no later than 30 days after

the date of the material change. Material

changes that must be reported in this section 6.05 include, but are not limited to:

(1) Any change to the information previously provided by the Service Industry

Employer as part of its initial SITCA Application or subsequent requests for Covered Establishments to participate in the

SITCA program that relates to business

name or organization, EIN, address, or

background information;

(2) Any change to the tax compliance

information previously provided by the

Service Industry Employer (1) as part of

its initial SITCA Application, (2) for the

February 6, 2023

period that a SITCA Application was pending, (3) for the period between acceptance

into the SITCA program and the start of the

next calendar year, and (4) for any year that

the Service Industry Employer is a participant in the SITCA program, including the

discovery of any failure by the Service Industry Employer to timely and accurately

file Federal, state, and local tax and information returns (including Federal employment tax returns) or deposit and pay any

applicable Federal, state, and local taxes

(including any Federal employment taxes);

(3) The assessment of fraud penalties

by the IRS or a state or local tax authority against the Service Industry Employer

for any year that the Service Industry Employer is a participant in the SITCA program, and during the Requisite Prior Period and the period in between acceptance

into the SITCA program and the start of

the next calendar year when a Service Industry Employer becomes a participant in

the SITCA program;

(4) The discovery by the Service Industry Employer of tax fraud or criminal activity in the Service Industry Employer’s

business that is in violation of Federal,

state, or local laws;

(5) The commencement of an active

IRS criminal investigation of the Service

Industry Employer, or an entity that is a

member of a controlled group that includes the Service Industry Employer, or

a responsible individual as described in

§ 301.7705-1(b)(13) (substituting Service Industry Employer for CPEO everywhere it appears in § 301.7705-1(b)(13)).

For purposes of this revenue procedure, a

controlled group has the meaning given

to such term by sections 414(b) and (c),

§ 1.414(b)-1, and §§ 1.414(c)-1 through

1.414(c)-(6). Additionally, entities that,

but for their status as disregarded entities

would separately be members of a controlled group that includes the Service Industry Employer, are treated as members

of a controlled group that includes the Service Industry Employer; and

(6) The sale, transfer, or disposition

of all or substantially all of the Service

Industry Employer’s business, or the reorganization, spinoff or similar division,

liquidation, dissolution, or closure of the

Service Industry Employer business entity, directly or indirectly, regardless of

whether the event is taxable or tax free.

464

SECTION 7: ANNUAL FILING

REQUIREMENT FOR SERVICE

INDUSTRY EMPLOYERS WITH

LARGE FOOD OR BEVERAGE

ESTABLISHMENTS

Participation in the SITCA program

does not change the reporting requirements described in section 6053(c).

Namely, it does not change the requirement that an employer must file a separate information return for each calendar

year with respect to each Large Food or

Beverage Establishment for which the

employer’s employees perform services.

Accordingly, a Service Industry Employer that has one or more Large Food or

Beverage Establishments participating

in the SITCA program must file a Form

8027, Employer’s Annual Information

Return of Tip Income and Allocated Tips

(and Form 8027-T, Transmittal of Employer’s Annual Information Return of

Tip Income and Allocated Tips, if applicable) with respect to each of the Covered Establishments that is a Large Food

or Beverage Establishment in order to

remain in compliance with the SITCA

program.

SECTION 8: ADDING COVERED

ESTABLISHMENTS AFTER

ACCEPTANCE IN THE SITCA

PROGRAM

.01 In general. A Service Industry

Employer may request that an additional

Covered Establishment participate in the

SITCA program after its SITCA Application has been approved. The request must

be made electronically in the form prescribed by the IRS and in the time period

specified on www.irs.gov.

.02 Approval. The IRS may approve

a Covered Establishment’s participation

in the SITCA program through the Service Industry Employer if the Covered

Establishment meets the requirements of

section 4.02 of this revenue procedure,

and any subsequent applicable guidance,

and the IRS determines that the Covered

Establishment’s participation in the SITCA program is in the interest of sound

tax administration. Upon approval of a

Covered Establishment’s participation

in the SITCA program, the IRS will notify the Service Industry Employer elec-

Bulletin No. 2023–6

tronically. A Covered Establishment’s

participation in the SITCA program will

generally begin on the first day of the calendar year to which the approved request

applies. If a Covered Establishment that

is approved to participate in the SITCA

program pursuant to this paragraph is

subsequently removed for the same calendar year pursuant to section 9 of this

revenue procedure, the provisions of section 9 will control when the removal will

be effective for purposes of that Covered

Establishment participating in the SITCA

program.

.03 Requesting reinstatement after removal. A Service Industry Employer may

request that a Covered Establishment that

has been removed from the SITCA program pursuant to section 9.01 or 9.02 of

this revenue procedure be reinstated after

demonstrating compliance with section

4.02 of this revenue procedure, or any

subsequent applicable guidance, for the

three completed calendar years preceding

the date of its request for reinstatement or

another time frame as determined by the

IRS. The IRS discretion under section

4.03 of this revenue procedure to determine whether the acceptance of a Covered

Establishment into the SITCA program is

in the interest of sound tax administration

applies to any request to reinstate a Covered Establishment after removal from the

SITCA program. The request for reinstatement shall be made electronically in the

form prescribed by the IRS and specified

on irs.gov.

SECTION 9: REMOVAL OF

COVERED ESTABLISHMENTS

.01 Removal by Service Industry Employer. A Service Industry Employer may

voluntarily remove a Covered Establishment from the SITCA program for any

reason by providing an electronic notice

of removal to the IRS in the form prescribed by the IRS and specified on irs.

gov. The removal will be effective retroactive to the first day of the calendar year

in which the notice of removal is received.

A Covered Establishment that is removed

by the Service Industry Employer may not

participate in the SITCA program unless

and until the Service Industry Employer

requests to reinstate a Covered Establishment pursuant to section 8.03 of this rev-

Bulletin No. 2023–6

enue procedure, or any subsequent applicable guidance, and the IRS approves the

request.

.02 Removal by IRS. The IRS will remove a Covered Establishment from the

SITCA program if, for the calendar year,

the Covered Establishment fails to meet

the requirements of sections 4.02 or 6 of

this revenue procedure or any subsequent

applicable guidance, or the IRS determines that the Covered Establishment’s

continued participation in the SITCA

program is no longer in the interest of

sound tax administration. The IRS will

notify the Service Industry Employer of

the removal electronically. Determination of whether a Covered Establishment

has met the requirements of section 4.02

of this revenue procedure for a calendar year will be made after the Service

Industry Employer submits its Annual

Report under section 6 of this revenue

procedure for that calendar year. If a Service Industry Employer fails to submit

its Annual Report under section 6 of this

revenue procedure with respect to any

Covered Establishment for the calendar

year, the IRS may remove the Covered

Establishment from the SITCA program

at any time after the Annual Report was

due without regard to whether the participation requirements of section 4.02 of

this revenue procedure or any subsequent

applicable guidance have been met. The

removal will be effective retroactive to

the first day of the calendar year to which

the Annual Report applies or would have

applied if no Annual Report is submitted.

A Covered Establishment that is removed

from the SITCA program by the IRS may

not participate in the SITCA program

unless and until the Service Industry

Employer seeks to reinstate a Covered

Establishment pursuant to section 8.03

of this revenue procedure, or any subsequent applicable guidance, and the IRS

approves the request.

SECTION 10: WITHDRAWING

FROM OR TERMINATING

PARTICIPATION IN THE SITCA

PROGRAM

.01. Withdrawal by Service Industry

Employer. The Service Industry Employer

may voluntarily withdraw from the SITCA program for any reason by providing

465

an electronic notice of withdrawal to the

IRS in the form prescribed by the IRS.

The withdrawal will be effective on the

first day of the calendar year in which the

notice of withdrawal is received. Upon a

Service Industry Employer’s withdrawal

from the SITCA program, all the Covered Establishments participating in the

SITCA program through the withdrawn

Service Industry Employer will also be

removed from the SITCA program, effective on the same first day of the calendar

year in which the notice of withdrawal is

received.

.02 Termination by the IRS. The IRS

may terminate a Service Industry Employer from the SITCA program if any of the

following conditions are met:

(1) The Service Industry Employer notifies the IRS pursuant to section 6.05 of

this revenue procedure that it is going out

of existence;

(2) The IRS determines that the Service

Industry Employer is no longer eligible

under section 4 of this revenue procedure,

or any subsequent applicable guidance;

(3) The Service Industry Employer

fails to submit the Annual Report for the

calendar year required under section 6 of

this revenue procedure, or any subsequent

applicable guidance;

(4) The Service Industry Employer

utilizes a third-party payer to report and

pay Federal employment taxes that is not

a Covered Establishment and that treats

itself as the employer for Federal employment tax purposes with respect to all or

more than 50 percent of the Service Industry Employer’s Service Industry Tipped

Employees for a period in excess of 12

months;

(5) All the Covered Establishments included in the SITCA program through the

Service Industry Employer have been removed;

(6) The Service Industry Employer otherwise fails to meet the requirements of

this revenue procedure, or any subsequent

applicable guidance;

(7) The IRS determines that the Service Industry Employer’s continuation in

the SITCA program is no longer warranted by the facts and circumstances, or is no

longer in the interest of sound tax administration; or

(8) The IRS discontinues the SITCA

program.

February 6, 2023

SECTION 11: EMPLOYER

PROTECTION FROM SECTION

3121(q) LIABILITY

For a Service Industry Employer that

satisfies sections 4 and 6 of this revenue

procedure with respect to a Covered Establishment participating in the SITCA

program, the IRS will not assert liability

pursuant to section 3121(q) with respect

to that Covered Establishment unless the

liability is based on (1) tips received by a

Service Industry Tipped Employee where

the asserted liability is based upon the final results of an audit or agreement of the

Service Industry Tipped Employee, or (2)

the reporting of additional tip income by

a Service Industry Tipped employee. The

protection from section 3121(q) liability

provided under this section applies only to

Service Industry Employers with Covered

Establishments for the periods for which

they have been approved to participate in

the SITCA program pursuant to section

5.11 or section 8.02 of this revenue procedure. It does not apply to Service Industry Employers to the extent they have

Covered Establishments that have been

removed from the SITCA program pursuant to section 9.01 or 9.02 of this revenue

procedure, for the period of time between

a Covered Establishment’s removal and

reinstatement (if applicable), or to the extent a Service Industry Employer has other

business locations, either with tipped employees or without, that are not approved

to participate in the SITCA program.

SECTION 12. COMPLIANCE

REVIEWS

The IRS may conduct a Compliance Review to evaluate (1) a Covered Establishment’s continued participation in the SITCA

program through a Service Industry Employer, or (2) a Service Industry Employer’s

continued participation in the SITCA program. A Compliance Review may be conducted no more than once per calendar year.

SECTION 13. EFFECT OF

THIS REVENUE PROCEDURE

ON OTHER TIP REPORTING

PROGRAMS

01. Effect on TRAC, TRDA, and EmTRAC programs. This revenue proce-

February 6, 2023

dure terminates the TRAC and TRDA

programs by superseding Announcement

2001-1. This revenue procedure also terminates the EmTRAC program by superseding Notice 2001-1, which set forth the

requirements for employers in the food

and beverage industry to participate in the

EmTRAC program.

.02 Transition period for employers

with existing agreements. For employers

with existing agreements in the TRAC,

TRDA, and EmTRAC programs, there

will be a transition period during which

the existing agreements will remain in effect after the publication of this revenue

procedure terminating those programs.

The transition period is the period from the

date of the publication of the final revenue

procedure in the Internal Revenue Bulletin until the earliest of (1) the employer’s

acceptance into the SITCA program, (2)

an IRS determination that the employer is noncompliant with the terms of the

TRAC, TRDA, or EmTRAC agreement,

or (3) the end of the first calendar year beginning after the date of the publication of

the final revenue procedure in the Internal

Revenue Bulletin. An employer’s existing

agreement in the TRAC, TRDA, or EmTRAC program is terminated for all periods after the end of its transition period.

.03 Continued employer protection

for years covered by agreement. After

the transition period described in section

13.02 has ended and an existing TRAC,

TRDA, or EmTRAC agreement has terminated, employers with existing TRAC,

TRDA, and EmTRAC agreements who

are compliant with the terms of their

agreements will continue to have protection from section 3121(q) liability for

all prior return periods covered by their

agreement (including during the transition

period described in section 13.02 of this

revenue procedure). No employer with

an existing TRAC, TRDA, or EmTRAC

agreement will have protection from section 3121(q) liability after the conclusion

of the transition period described in section 13.02.

.04 Employee protection from tip income examination. After the transition

period described in section 13.02 has

ended and an existing TRAC, TRDA, or

EmTRAC agreement has terminated, employees who have been receiving protection from tip income examination through

466

their employer’s participation in an existing TRAC, TRDA, or EmTRAC agreement will continue to receive that protection for the prior return periods covered

by their employer’s agreement (including

during the transition period described in

section 13.02 of this revenue procedure)

to the extent their employers remain compliant with the terms of their agreement.

No employee will have protection from

tip income examination through their employer’s participation in a TRAC, TRDA,

or EmTRAC agreement after the conclusion of the transition period described in

section 13.02.

SECTION 14. EFFECTIVE DATE

This revenue procedure is effective on

the date of the publication of the final revenue procedure in the Internal Revenue

Bulletin.

26 CFR 601.105: Examination of returns and claims

for refund, credit, or abatement; determination of

correct tax liability.

(Also Part I, §§ 280F; 1.280F-7.)

Rev. Proc. 2023-14

SECTION 1. PURPOSE

This revenue procedure provides: (1)

two tables of limitations on depreciation

deductions for owners of passenger automobiles placed in service by the taxpayer

during calendar year 2023; and (2) a table of dollar amounts that must be used to

determine income inclusions by lessees of

passenger automobiles with a lease term

beginning in calendar year 2023. These tables reflect the automobile price inflation

adjustments required by § 280F(d)(7) of

the Internal Revenue Code. For purposes

of this revenue procedure, the term “passenger automobiles” includes trucks and

vans.

SECTION 2. BACKGROUND

.01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations

on the depreciation deduction for the year

the taxpayer places the passenger automobile in service and for each succeeding

year. For passenger automobiles placed in

Bulletin No. 2023–6

service after 2018, § 280F(d)(7) requires

the Internal Revenue Service to increase

the amounts allowable as depreciation deductions by a price inflation adjustment

amount that is determined using the automobile component of the Chained Consumer Price Index for all Urban Consumers published by the Department of Labor

(C-CPI-U).

.02 Section 168(k)(1) provides that, in

the case of qualified property, the depreciation deduction allowed under § 167(a)

for the taxable year in which the property

is placed in service includes an allowance

equal to the applicable percentage of the

property’s adjusted basis, referred to as

“§ 168(k) additional first year depreciation deduction” hereinafter. Pursuant to

§ 168(k)(6)(A), the applicable percentage

is 100 percent for qualified property acquired and placed in service after September 27, 2017, and placed in service before

January 1, 2023, and is phased down 20

percent each year for property placed in

service through December 31, 2026. Accordingly, the applicable percentage for

qualified property acquired after September 27, 2017, and placed in service after

December 31, 2022, and before January 1,

2024, is 80 percent. Pursuant to § 168(k)

(8)(D)(i), no § 168(k) additional first year

depreciation deduction is allowed or allowable for qualified property acquired by

the taxpayer before September 28, 2017,

and placed in service by the taxpayer after 2019. For qualified property acquired

and placed in service after September 27,

2017, § 168(k)(2)(F)(i) increases the firstyear depreciation allowed under § 280F(a)

(1)(A)(i) by $8,000.

.03 Tables 1 and 2 of this revenue

procedure provide depreciation limitations for passenger automobiles placed in

service by the taxpayer during calendar

year 2023. Table 1 provides depreciation

limitations for passenger automobiles acquired by the taxpayer after September 27,

2017, and placed in service by the taxpayer during calendar year 2023, for which

the § 168(k) additional first year depreciation deduction applies. Table 2 provides

depreciation limitations for passenger automobiles placed in service by the taxpayer during calendar year 2023 for which no

§ 168(k) additional first year depreciation

deduction applies. The § 168(k) additional

first year depreciation deduction does not

Bulletin No. 2023–6

apply for 2023 if the taxpayer: (1) did not

use the passenger automobile during 2023

more than 50 percent for business purposes; (2) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(7) for the class of property

that includes passenger automobiles; (3)

acquired the passenger automobile used

and the acquisition of such property did

not meet the acquisition requirements in

§ 168(k)(2)(E)(ii) and § 1.168(k)-2(b)(3)

(iii) of the Income Tax Regulations; or (4)

acquired the passenger automobile before

September 28, 2017, and placed it in service after 2019.

.04 Section 280F(c)(2) requires a reduction to the amount allowable as a deduction to the lessee of a leased passenger

automobile. Pursuant to § 280F(c)(3), the

reduction must be substantially equivalent

to the limitations on the depreciation deductions imposed on owners of passenger

automobiles. Under § 1.280F-7(a), this

reduction is accomplished by requiring

the lessee to include in gross income an

amount determined by applying a formula

to a dollar amount obtained from a table.

.05 Table 3 of this revenue procedure

provides the dollar amount used by lessees of passenger automobiles with a lease

term beginning in 2023 to determine the

income inclusion amount for those passenger automobiles. The table provides

dollar amounts for a range of fair market

values.

SECTION 3. SCOPE

.01 The limitations on depreciation

deductions in Tables 1 and 2 in section

4.01(2) of this revenue procedure apply to

passenger automobiles, other than leased

passenger automobiles, that are placed in

service by the taxpayer in calendar year

2023, and continue to apply for each taxable year that the passenger automobile

remains in service.

.02 The dollar amount in Table 3 of this

revenue procedure applies to leased passenger automobiles with a lease term beginning in calendar year 2023, and continues to apply for each taxable year during

the lease.

.03 See Rev. Proc. 2018-25, 2018-18

I.R.B. 543, for passenger automobiles

placed in service or leased during calendar year 2018; Rev. Proc. 2019-26, 2019-

467

24 I.R.B. 1323, for passenger automobiles

placed in service or leased during calendar year 2019; Rev. Proc. 2020-37, 202033 I.R.B. 381, for passenger automobiles

placed in service or leased during calendar year 2020; Rev. Proc. 2021-31, 202134 I.R.B. 324, for passenger automobiles

placed in service or leased during calendar

year 2021; and Rev. Proc. 2022-17, 202213 I.R.B. 930, for passenger automobiles

placed in service or leased during calendar

year 2022.

SECTION 4. APPLICATION

.01 Limitations on Depreciation Deductions for Certain Automobiles.

(1) Amount of the inflation adjustment.

Under § 280F(d)(7)(B)(i), the automobile

price inflation adjustment for any calendar

year is the percentage (if any) by which the

C-CPI-U automobile component for October of the preceding calendar year exceeds

the automobile component of the CPI (as

defined in § 1(f)(4)) for October of 2017,

multiplied by the amount determined under § 1(f)(3)(B). The amount determined

under § 1(f)(3)(B) is the amount obtained

by dividing the new vehicle component

of the C-CPI-U for calendar year 2016 by

the new vehicle component of the CPI for

calendar year 2016, where the C-CPI-U

and the CPI for calendar year 2016 means

the average of such amounts as of the

close of the 12-month period ending on

August 31, 2016. Section 280F(d)(7)(B)

(ii) defines the term “C-CPI-U automobile

component” as the automobile component

of the Chained Consumer Price Index for

All Urban Consumers as described in §

1(f)(6). The product of the October 2017

CPI new vehicle component (144.868)

and the amount determined under § 1(f)

(3)(B) (0.694370319) is 100.592. The

new vehicle component of the C-CPI-U

released in November 2022 was 122.399

for October 2022. The October 2022

C-CPI-U new vehicle component exceeded the product of the October 2017 CPI

new vehicle component and the amount

determined under § 1(f)(3)(B) by 21.807

(122.399 - 100.592). The percentage by

which the C-CPI-U new vehicle component for October 2022 exceeds the product of the new vehicle component of the

CPI for October of 2017 and the amount

determined under § 1(f)(3)(B) is 21.679

February 6, 2023

percent (21.807/100.592 x 100%), the

automobile price inflation adjustment for

2023 for passenger automobiles. The dollar limitations in § 280F(a) are therefore

multiplied by a factor of 0.21679, and the

resulting increases, after rounding to the

nearest $100, are added to the 2018 limitations to give the depreciation limitations

applicable to passenger automobiles for

calendar year 2023. This adjustment applies to all passenger automobiles that are

placed in service in calendar year 2023.

(2) Amount of the limitation. Tables

1 and 2 of this revenue procedure contain the depreciation limitation for each

taxable year for passenger automobiles a

taxpayer placed in service during calendar year 2023. Use Table 1 for a passen-

ger automobile to which the § 168(k) additional first year depreciation deduction

applies that is acquired by the taxpayer

after September 27, 2017, and placed in

service by the taxpayer during calendar

year 2023; use Table 2 for a passenger

automobile for which no § 168(k) additional first year depreciation deduction

applies.

REV. PROC. 2023-14 TABLE 1

DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES ACQUIRED AFTER SEPTEMBER 27, 2017, AND

PLACED IN SERVICE DURING CALENDAR YEAR 2023, FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR

DEPRECIATION DEDUCTION APPLIES

Tax Year

1st Tax Year

2nd Tax Year

3rd Tax Year

Each Succeeding Year

Amount

$ 20,200

$ 19,500

$ 11,700

$ 6,960

REV. PROC. 2023-14 TABLE 2

DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES

PLACED IN SERVICE DURING CALENDAR YEAR 2023 FOR WHICH NO § 168(k) ADDITIONAL FIRST YEAR

DEPRECIATION DEDUCTION APPLIES

Tax Year

1st Tax Year

2nd Tax Year

3rd Tax Year

Each Succeeding Year

.02 Inclusions in Income of Lessees of

Passenger Automobiles.

A taxpayer must follow the procedures in § 1.280F-7(a) for determining

February 6, 2023

Amount

$ 12,200

$ 19,500

$ 11,700

$ 6,960

the inclusion amounts for passenger automobiles with a lease term beginning

in calendar year 2023. In applying these

procedures, lessees of passenger automo-

468

biles should use Table 3 of this revenue

procedure.

Bulletin No. 2023–6

REV. PROC. 2023-14 TABLE 3

DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES

WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2023

Fair Market

Value of

Passenger

Automobile

Over

$60,000

62,000

64,000

66,000

68,000

70,000

72,000

74,000

76,000

78,000

80,000

85,000

90,000

95,000

100,000

110,000

120,000

130,000

140,000

150,000

160,000

170,000

180,000

190,000

200,000

210,000

220,000

230,000

240,000

Fair Market

Value of

Passenger

Automobile

Not Over

$62,000

64,000

66,000

68,000

70,000

72,000

74,000

76,000

78,000

80,000

85,000

90,000

95,000

100,000

110,000

120,000

130,000

140,000

150,000

160,000

170,000

180,000

190,000

200,000

210,000

220,000

230,000

240,000

and over

1 Tax Year

During Lease

0

13

26

39

52

65

78

91

104

117

140

172

204

237

286

350

415

480

545

610

675

740

805

870

935

999

1,064

1,129

1,194

SECTION 5. EFFECTIVE DATE

This revenue procedure applies to

passenger automobiles placed in service

during calendar year 2023 or with a lease

term beginning in calendar year 2023.

Bulletin No. 2023–6

st

2 Tax Year

During Lease

0

29

57

86

114

143

171

200

228

257

306

378

449

520

627

769

912

1,054

1,196

1,339

1,481

1,623

1,766

1,908

2,050

2,193

2,335

2,478

2,620

nd

3 Tax Year

During Lease

1

43

86

128

170

212

255

296

339

381

455

560

666

772

930

1,142

1,353

1,564

1,776

1,986

2,198

2,409

2,620

2,831

3,043

3,254

3,465

3,676

3,887

rd

SECTION 6. DRAFTING

INFORMATION

The principal author of this revenue

procedure is Bernard P. Harvey of the Office of Associate Chief Counsel (Income

469

4 Tax Year

During Lease

3

54

104

154

206

256

306

358

408

459

548

674

801

927

1,117

1,371

1,623

1,877

2,130

2,384

2,637

2,891

3,143

3,397

3,650

3,903

4,157

4,410

4,664

th

5th Tax Year

During Lease &

later

5

63

122

181

239

297

356

414

473

531

634

780

926

1,073

1,292

1,584

1,877

2,169

2,462

2,754

3,046

3,338

3,632

3,924

4,216

4,509

4,801

5,094

5,386

Tax & Accounting). For further information regarding this revenue procedure,

contact Mr. Harvey at (202) 317-4640 (not

a toll-free number).

February 6, 2023

Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

­effect:

Amplified describes a situation where

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

being extended to apply to a variation of

the fact situation set forth therein. Thus, if

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

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

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

caused, or may cause, some confusion. It

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

Distinguished describes a situation

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

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

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

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

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

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

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

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

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

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

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

Suspended is used in rare situations to

show that the previous published rulings

will not be applied pending some future

action such as the issuance of new or

amended regulations, the outcome of cases in litigation, or the outcome of a Service study.

Abbreviations

The following abbreviations in current

use and formerly used will appear in

material published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

Bulletin No. 2023–6

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

i

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

February 6, 2023

Numerical Finding List1

Bulletin 2023–6

Announcements:

2023-2, 2023-2 I.R.B. 344

2023-1, 2023-3 I.R.B. 422

2023-3, 2023-5 I.R.B. 447

Notices:

2023-4, 2023-2 I.R.B. 321

2023-5, 2023-2 I.R.B. 324

2023-6, 2023-2 I.R.B. 328

2023-8, 2023-2 I.R.B. 341

2023-1, 2023-3 I.R.B. 373

2023-2, 2023-3 I.R.B. 374

2023-3, 2023-3 I.R.B. 388

2023-7, 2023-3 I.R.B. 390

2023-9, 2023-3 I.R.B. 402

2023-10, 2023-3 I.R.B. 403

2023-11, 2023-3 I.R.B. 404

2023-12, 2023-6 I.R.B. 450

2023-13, 2023-6 I.R.B. 454

Proposed Regulations:

REG-100442-22, 2023-3 I.R.B. 423

REG-146537-06, 2023-3 I.R.B. 436

REG-114666-22, 2023-4 I.R.B. 437

Revenue Procedures:

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

2023-2, 2023-1 I.R.B. 120

2023-3, 2023-1 I.R.B. 144

2023-4, 2023-1 I.R.B. 162

2023-5, 2023-1 I.R.B. 265

2023-7, 2023-1 I.R.B. 305

2023-8, 2023-3 I.R.B. 407

2023-10, 2023-3 I.R.B. 411

2023-11, 2023-3 I.R.B. 417

2023-14, 2023-6 I.R.B. 466

Revenue Rulings:

2023-1, 2023-2 I.R.B. 309

2023-3, 2023-6 I.R.B. 448

Treasury Decisions:

9970, 2023-2 I.R.B. 311

9771, 2023-3 I.R.B. 346

1

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2022–27 through 2022–52 is in Internal Revenue Bulletin

2022–52, dated December 27, 2022.

February 6, 2023

ii

Bulletin No. 2023–6

Finding List of Current Actions on

Previously Published Items1

Bulletin 2023–6

1

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2022–27 through 2022–52 is in Internal Revenue Bulletin

2022–52, dated December 27, 2022.

Bulletin No. 2023–6

iii

February 6, 2023

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

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