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## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

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.

461

(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

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletins are available at www.irs.gov/irb/.

We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it,
we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page
www.irs.gov) or write to the Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave.
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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A6652f8dfa0739ed1. Public record. Not legal advice.