Bulletin No. 2021–15

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HIGHLIGHTS

OF THIS ISSUE

Bulletin No. 2021–15

April 12, 2021

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE

EMPLOYEE PLANS

Announcement 2021-6, page 1011.

Notice 2021-22, page 987.

This Announcement is issued pursuant to § 521(b) of Pub.

L. 106-170, the Ticket to Work and Work Incentives Improvement Act of 1999, which requires the Secretary of the

Treasury to report annually to the public concerning advance

pricing agreements (APAs) and the Advance Pricing and Mutual Agreement Program (APMA Program), formerly known

as the Advance Pricing Agreement Program (APA Program).

This twenty-second report describes the experience, structure, and activities of the APMA Program during calendar

year 2020.

Notice 2021-21, page 986.

This notice provides additional tax relief under section 7508A

of the Code for taxpayers affected by the Coronavirus Disease (COVID-19) emergency. Specified Federal income tax

filings and payments due on April 15, 2021, are postponed

to May 17, 2021. The filing and furnishing of specified

Forms 5498 are also postponed to June 30, 2021. Claims

for Federal income tax credit or refund that are expiring on

or after April 15, 2021, and before May 17, 2021, are also

postponed to May 17, 2021. This notice also postpones the

application date to participate in the Annual Filing Season

Program.

ADMINISTRATIVE, INCOME TAX

Rev. Proc. 2021-17, page 991.

This revenue procedure provides issuers of qualified mortgage bonds, as defined in § 143(a) of the Internal Revenue

Code (Code), and issuers of mortgage credit certificates, as

defined in § 25(c), with (1) the nationwide average purchase

price for residences located in the United States, and (2) average area purchase price safe harbors for residences located in statistical areas in each state, the District of Columbia,

Puerto Rico, the Northern Mariana Islands, American Samoa,

the Virgin Islands, and Guam.

Finding Lists begin on page ii.

This notice sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for

March 2021 used under § 417(e)(3)(D), the 24-month average segment rates applicable for March 2021, and the

30-year Treasury rates, as reflected by the application of §

430(h)(2)(C)(iv).

INCOME TAX

Action On Decision 2021-1, page 985.

Nonacquiescence to the holding that an interest in a defined

benefit pension plan is not an asset for purposes of applying

the insolvency exclusion in I.R.C. § 108.

Announcement 2021-7, page 1061.

Announcement 2021-7 notifies taxpayers that amounts paid

for personal protective equipment for the primary purpose of

preventing the spread of the Coronavirus Disease 2019 are

amounts treated as paid for medical care under § 213(d) of

the Internal Revenue Code. As a result, these amounts are

qualified medical expenses eligible to be paid or reimbursed

without being included in gross income under health flexible

spending arrangements (health FSAs), Archer medical savings accounts (Archer MSAs), health reimbursement arrangements (HRAs), or health savings accounts (HSAs). In addition,

the announcement notifies administrators of group health

plans regarding the ability to make certain plan amendments

pursuant to the announcement.

Rev. Proc. 2021-18, page 1007.

Revenue Procedure 2021-18 provides an automatic procedure for a State or local government in which an empowerment zone is located to extend the empowerment zone designation made under section 1391(a) of the Internal Revenue

Code (Code). Specifically, this revenue procedure provides

that a State or local government that nominated an empow-

erment zone is deemed to extend until December 31, 2025,

the termination date designated by that State or local government in its empowerment zone nomination (designated

termination date), as described in section 1391(d)(1)(B). This

revenue procedure further provides the procedure for such

State or local government to decline this deemed extension

of its designated termination date.

Rev. Proc. 2021-19, page 1008.

This revenue procedure provides guidance with respect to

the United States and area median gross income figures for

use by issuers of qualified mortgage bonds under § 143(a)

of the Internal Revenue Code and issuers of mortgage credit

certificates under § 25(c) (collectively, “issuers”) in computing the income requirements under § 143(f). This revenue

procedure provides that issuers must use either (1) the income figures the Department of Housing and Urban Development (“HUD”) released most recently or (2) the income

figures HUD released immediately prior to the income figures

HUD released most recently, determined as of the date a

mortgage loan or mortgage credit certificate is committed

to a mortgagor. This revenue procedure also provides a 90day transition period, following the release of the HUD income figures in a current calendar year, for issuers to use

the income figures HUD released during the second calendar

year prior to the current calendar year..

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.

April 12, 2021

Bulletin No. 2021–15

Actions Relating to Court

Decisions

It is the policy of the Internal Reve

nue Service to announce at an early date

whether it will follow the holdings in cer

tain cases. An Action on Decision is the

document making such an announcement.

An Action on Decision will be issued at

the discretion of the Service only on un

appealed issues decided adverse to the

government. Generally, an Action on De

cision is issued where its guidance would

be helpful to Service personnel working

with the same or similar issues. Unlike a

Treasury Regulation or a Revenue Ruling,

an Action on Decision is not an affirma

tive statement of Service position. It is not

intended to serve as public guidance and

may not be cited as precedent.

Actions on Decisions shall be relied

upon within the Service only as conclu

sions applying the law to the facts in the

particular case at the time the Action on

Decision was issued. Caution should be

exercised in extending the recommenda

tion of the Action on Decision to similar

cases where the facts are different. More

over, the recommendation in the Action

on Decision may be superseded by new

legislation, regulations, rulings, cases, or

Actions on Decisions.

Prior to 1991, the Service published

acquiescence or nonacquiescence only in

certain regular Tax Court opinions. The

Service has expanded its acquiescence

program to include other civil tax cases

where guidance is determined to be help

ful. Accordingly, the Service now may

acquiesce or nonacquiesce in the holdings

of memorandum Tax Court opinions, as

well as those of the United States District

Courts, Claims Court, and Circuit Courts

of Appeal. Regardless of the court decid

ing the case, the recommendation of any

Action on Decision will be published in

the Internal Revenue Bulletin.

The recommendation in every Action

on Decision will be summarized as ac

quiescence, acquiescence in result only,

or nonacquiescence. Both “acquiescence”

and “acquiescence in result only” mean

that the Service accepts the holding of the

court in a case and that the Service will fol

low it in disposing of cases with the same

controlling facts. However, “acquiescence”

indicates neither approval nor disapprov

al of the reasons assigned by the court for

its conclusions; whereas, “acqui

escence

in result only” indicates disagreement or

concern with some or all of those reasons.

“Nonacquiescence” signifies that, although

no further review was sought, the Service

does not agree with the holding of the court

and, generally, will not follow the decision

in disposing of cases involving other tax

payers. In reference to an opinion of a cir

cuit court of appeals, a “nonacquiescence”

indicates that the Service will not follow

the holding on a nationwide basis. Howev

er, the Service will recognize the preceden

tial impact of the opinion on cases arising

within the venue of the deciding circuit.

The Commissioner does NOT ACQUI

ESCE in the following decision:

Schieber v. Commissioner, T.C. Memo.

2017-32, T.C. Docket No. 21690-14.1

Nonacquiescence to the holding that an interest in a defined benefit pension plan is not an asset for purposes of applying the insolvency exclusion in I.R.C. § 108.

Bulletin No. 2021–15

985

April 12, 2021

Part III

RELIEF FOR FORM 1040

FILERS AFFECTED BY

ONGOING CORONAVIRUS

DISEASE 2019 PANDEMIC

Notice 2021-21

I. PURPOSE

On March 13, 2020, the President of

the United States issued an emergency

declaration under the Robert T. Stafford

Disaster Relief and Emergency Assistance

Act in response to the ongoing Coronavi

rus Disease 2019 (COVID-19) pandemic

(Emergency Declaration). The Emergen

cy Declaration instructed the Secretary of

the Treasury “to provide relief from tax

deadlines to Americans who have been

adversely affected by the COVID-19

emergency, as appropriate, pursuant to 26

U.S.C. 7508A(a).” Pursuant to the Emer

gency Declaration, this notice provides

relief under section 7508A of the Internal

Revenue Code (Code) for the persons de

scribed in section III.A of this notice that

the Secretary of the Treasury has deter

mined to be affected by the COVID-19

emergency.

II. BACKGROUND

Section 7508A provides the Secretary

of the Treasury or her delegate (Secretary)

with authority to postpone the time for

performing certain acts under the internal

revenue laws for a taxpayer determined by

the Secretary to be affected by a Federal

ly declared disaster as defined in section

165(i)(5)(A) of the Code. Pursuant to sec

tion 7508A(a), a period of up to one year

may be disregarded in determining wheth

er the performance of certain acts is timely

under the internal revenue laws.

III. GRANT OF RELIEF

A. Taxpayers Affected by COVID-19

Emergency

The Secretary has determined that any

person with a Federal income tax return

April 12, 2021

filed on Form 1040, Form 1040-SR, Form

1040-NR, Form 1040-PR, Form 1040-SS,

or Form 1040(SP) (Form 1040 series), or

a Federal income tax payment reported on

one of these forms, that absent this notice

would be due April 15, 2021, is affected

by the COVID-19 emergency for purpos

es of the relief described in this section III

(Affected Taxpayer). In addition, persons

who are required to file and furnish Form

5498, IRA Contribution Information,

Form 5498-ESA, Coverdell ESA Contri

bution Information, and Form 5498-SA,

HSA, Archer MSA, or Medicare Advan

tage MSA Information (Form 5498 series)

that absent this notice would generally be

due June 1, 2021, are Affected Taxpayers.

The Secretary has also determined that

any individual with a period of limitations

to file a claim for credit or refund of Feder

al income tax that absent this notice would

expire on or after April 15, 2021, and be

fore May 17, 2021 (for example, certain

individual taxpayers with claims for credit

or refund in respect of their 2017 taxable

years), is an Affected Taxpayer.

B. Postponement of Due Dates with

Respect to Certain Federal Tax

Returns and Federal Tax Payments

For an Affected Taxpayer, the due date

for filing Federal income tax returns in

the Form 1040 series and making Federal

income tax payments in connection with

one of these forms having an original due

date of April 15, 2021, is automatical

ly postponed to May 17, 2021. Affected

Taxpayers do not have to file any form,

including Form 4868, Application for Au

tomatic Extension of Time to File U.S.

Individual Income Tax Return, to obtain

this relief. This relief includes the filing of

all schedules, returns, and other forms that

are filed as attachments to the Form 1040

series or are required to be filed by the due

date of the Form 1040 series, including,

for example, Schedule H and Schedule

SE, as well as Forms 965-A, 3520, 5329,

5471, 8621, 8858, 8865, 8915-E, and

8938. Finally, elections that are made or

required to be made on a timely filed Form

1040 series (or attachment to such form)

will be timely made if filed on such form

986

or attachment, as appropriate, on or before

May 17, 2021.

As a result of the postponement of

the due date for Affected Taxpayers to

file Federal income tax returns and make

Federal income tax payments from April

15, 2021, to May 17, 2021, the period be

ginning on April 15, 2021, and ending on

May 17, 2021, will be disregarded in the

calculation of any interest, penalty, or ad

dition to tax for failure to file the Federal

income tax returns or to pay the Federal

income taxes postponed by this notice. In

terest, penalties, and additions to tax with

respect to such postponed Federal income

tax filings and payments will begin to ac

crue on May 18, 2021.

The postponement of the due date for

filing these Federal income tax returns to

May 17, 2021, also automatically post

pones to the same date the time for Affect

ed Taxpayers to make 2020 contributions

to their individual retirement arrangements

(IRAs and Roth IRAs), health savings ac

counts (HSAs), Archer Medical Savings

Accounts (Archer MSAs), and Coverdell

education savings accounts (Coverdell

ESAs). This postponement also automati

cally postpones to May 17, 2021, the time

for reporting and payment of the 10-per

cent additional tax on amounts includible

in gross income from 2020 distributions

from IRAs or workplace-based retirement

plans.

Forms in the Form 5498 series must be

filed with the IRS and furnished to partic

ipants and beneficiaries by the due date

specified in General Instructions for Cer

tain Information Returns (Forms 1096,

1097, 1098, 1099, 3921, 3922, 5498, and

W-2G). Because filers of Form 5498 se

ries are Affected Taxpayers, the due date

for filing and furnishing the Form 5498

series is postponed to June 30, 2021. The

period beginning on the original due date

of those forms and ending on June 30,

2021, will be disregarded in the calcula

tion of any penalty for failure to file those

forms. Penalties with respect to such a

postponed filing will begin to accrue on

July 1, 2021.

The relief provided in this section III.B

for filing Federal income tax returns and

paying Federal income taxes is available

Bulletin No. 2021–15

solely with respect to the Form 1040 se

ries returns having an original due date of

April 15, 2021, in respect of an Affected

Taxpayer’s 2020 taxable year, and the

Form 5498 series returns that are due as

described above. Businesses and any other

type of taxpayer who file Federal income

tax returns on forms outside of the Form

1040 series are not Affected Taxpayers for

purposes of the relief described in this sec

tion III.B.

No extension is provided in this notice

for the payment or deposit of any other

type of Federal tax, including Federal es

timated income tax payments, or for the

filing of any Federal return other than the

Form 1040 series and the Form 5498 se

ries for the 2020 taxable year.

C. Relief with Respect to Certain

Claims for Refund

Individuals with a period of limitations

to file a claim for credit or refund of Fed

eral income tax expiring on or after April

15, 2021, and before May 17, 2021, have

until May 17, 2021, to file those claims

for credit or refund. This postponement is

limited to claims for credit or refund prop

erly filed on the Form 1040 series or on a

Form 1040-X.

As a result of the postponement of the

time for individuals to file claims for cred

it or refund of Federal income tax where

the period to file that claim expires on or

after April 15, 2021, and before May 17,

2021, the period beginning on April 15,

2021, and ending on May 17, 2021, will

be disregarded in determining whether the

filing of those claims is timely.

IV. Extension of Time to Participate in

the Annual Filing Season Program

Revenue Procedure 2014-42, 201429 IRB 192, created a voluntary Annual

Filing Season Program to encourage tax

return preparers who do not have creden

tials as practitioners under Treasury De

partment Circular No. 230 (Regulations

Governing Practice before the Internal

Revenue Service) to complete continuing

education courses for the purpose of in

creasing their knowledge of the law rel

evant to Federal tax returns. Tax return

preparers who complete the requirements

in Rev. Proc. 2014-42 receive an annual

Record of Completion. Under Rev. Proc.

2014-42, applications to participate in the

Annual Filing Season Program for the

2021 calendar year must be received by

April 15, 2021. In light of the relief grant

ed in section III of this notice, the 2021

calendar year application deadline is post

poned to May 17, 2021.

V. CONTACT INFORMATION

The principal author of this notice is

Jennifer Auchterlonie of the Office of

Associate Chief Counsel, Procedure and

Administration. For further information

regarding this notice, you may call (202)

317-5436 (not a toll-free number).

Update for Weighted

Average Interest Rates,

Yield Curves, and Segment

Rates

Notice 2021-22

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 aver

age 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).

This notice does not provide 24-month

average segment rates determined under

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

the modifications made by § 9706(a) of

the American Rescue Plan Act of 2021,

Pub. L. No. 117-2 (ARPA), which was en

acted on March 11, 2021. Those rates will

be provided in future guidance.

YIELD CURVE AND SEGMENT

RATES

Section 430 specifies the minimum

funding requirements that apply to sin

gle-employer plans (except for CSEC

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

Section 430(h)(2) specifies the inter

est rates that must be used to determine

a plan’s target normal cost and funding

target. Under this provision, present val

ue is generally determined using three

24-month average interest rates (“segment

rates”), each of which applies to cash

flows during specified periods. To the ex

tent provided under § 430(h)(2)(C)(iv),

these segment rates are adjusted by the ap

plicable percentage of the 25-year average

segment rates for the period ending Sep

tember 30 of the year preceding the cal

endar 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. Con

sistent with the methodology specified in

Notice 2007-81, the monthly corporate

bond yield curve derived from February

2021 data is in Table 2021-2 at the end

of this notice. The spot first, second, and

third segment rates for the month of Feb

ruary 2021 are, respectively, 0.51, 2.54,

and 3.45.

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 applica

ble minimum and maximum percentages

of the corresponding 25-year average seg

ment rates. The 25-year average segment

rates for plan years beginning in 2020,

and 2021 were published Notice 2019-51,

2019-41 I.R.B. 866, and Notice 2020-72,

2020-40 I.R.B. 789, respectively.

Pursuant to § 433(h)(3)(A), the 3rd 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)).

Bulletin No. 2021–15

987

April 12, 2021

24-MONTH AVERAGE CORPORATE

BOND SEGMENT RATES

2021 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

1.54

2.89

Applicable Month

March 2021

AMERICAN RESCUE PLAN ACT

25-YEAR AVERAGE SEGMENT

RATES

Section 9706(a) of ARPA changes the

25-year average segment rates and the

applicable minimum and maximum per

centages used under § 430(h)(3)(C)(iv)

of the Code to adjust the 24-month av

erage segment rates. Prior to this change,

the applicable minimum and maximum

percentages were 90% and 110% for a

plan year beginning in 2020, and 85%

and 115% for a plan year beginning in

For Plan Years

Beginning In

The three 24-month average corporate

bond segment rates applicable for March

2021, respectively. After this change, the

applicable minimum and maximum per

centages are 95% and 105% for a plan

year beginning in 2020 or 2021. In addi

tion, pursuant to this change, any 25-year

average segment rate that is less than 5%

is deemed to be 5%.

Pursuant to § 9706(c)(1) of ARPA,

these changes apply with respect to plan

years beginning on or after January 1,

2020. However, § 9706(c)(2) of ARPA

provides that a plan sponsor may elect

not to have these changes apply to any

plan year beginning before January 1,

2022.2

Third Segment

3.55

The rates set forth in this notice do not

reflect the changes to § 430(h)(2)(C)(iv)

of the Code made by § 9706(a) of ARPA.

Accordingly, the adjusted 24-month aver

age segment rates set forth in this notice

apply only for plan years for which an

election under § 9706(c)(2) of ARPA is

in effect. For a plan year for which such

an election applies, the 24-month aver

ages applicable for March 2021, adjusted

to be within the applicable minimum and

maximum percentages of the correspond

ing 25-year average segment rates in ac

cordance with § 430(h)(2)(C)(iv) of the

Code, are as follows:

Adjusted 24-Month Average Segment Rates

Applicable

First

Second

Month

Segment

Third

Segment

2020

March 2021

3.64

5.21

5.94

2021

March 2021

3.32

4.79

5.47

Section 431 specifies the minimum

funding requirements that apply to multi

employer 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 calcu

late 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 Trea

sury securities for February 2021 is 2.04

percent. The Service determined this rate

as the average of the daily determinations

For Plan Years

Beginning In

Treasury Weighted Average Rates

30-Year Treasury

Weighted Average

Permissible Range

90% to 105%

March 2021

2.25

2.03 to 2.37

30-YEAR TREASURY SECURITIES

INTEREST RATES

of yield on the 30-year Treasury bond ma

turing in November 2050 determined each

day through February 10, 2021, and the

yield on the 30-year Treasury bond ma

turing in February 2051 determined each

day for the balance of the month . For

plan years beginning in March 2021, the

weighted average of the rates of interest

on 30-year Treasury securities and the

permissible range of rates used to calcu

late current liability are as follows:

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

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

April 12, 2021

988

Bulletin No. 2021–15

MINIMUM PRESENT VALUE

SEGMENT RATES

In general, the applicable interest rates

Month

February 2021

ent value segment rates. Pursuant to that

notice, the minimum present value seg

ment rates determined for February 2021

are as follows:

Minimum Present Value Segment Rates

First Segment

Second Segment

0.51

2.54

DRAFTING INFORMATION

The principal author of this notice is

Tom Morgan of the Office of the Asso

Bulletin No. 2021–15

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

computed without regard to a 24-month

average. Notice 2007-81 provides guide

lines for determining the minimum pres

ciate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes). However, other personnel from

the IRS participated in the development

989

Third Segment

3.45

of this guidance. For further information

regarding this notice, contact Mr. Morgan

at 202-317-6700 or Paul Stern at 202-3178702 (not toll-free numbers).

April 12, 2021

Table 2021-2

Monthly Yield Curve for February 2021

Derived from February 2021 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

0.18

0.23

0.28

0.35

0.42

0.51

0.61

0.72

0.85

0.98

1.12

1.26

1.41

1.56

1.70

1.84

1.97

2.09

2.21

2.32

2.42

2.51

2.60

2.67

2.74

2.80

2.86

2.90

2.95

2.99

3.02

3.05

3.08

3.10

3.12

3.14

3.16

3.18

3.19

3.20

April 12, 2021

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

3.22

3.23

3.24

3.25

3.26

3.27

3.28

3.29

3.30

3.31

3.32

3.33

3.34

3.35

3.36

3.37

3.38

3.39

3.40

3.41

3.42

3.43

3.44

3.45

3.46

3.47

3.48

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

3.48

3.49

3.50

3.51

3.52

3.53

3.54

3.55

3.56

3.57

3.58

990

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

3.58

3.59

3.60

3.61

3.62

3.63

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

3.63

3.64

3.65

3.66

Bulletin No. 2021–15

Rev. Proc. 2021-17

gage financing provided by the issue are

used by the close of the first semiannual

period beginning after the date the prepay

ment (or complete repayment) is received

to redeem bonds that are part of the issue.

SECTION 1. PURPOSE

Average Area Purchase Price

This revenue procedure provides is

suers of qualified mortgage bonds, as de

fined in § 143(a) of the Internal Revenue

Code (Code), and issuers of mortgage

credit certificates, as defined in § 25(c),

with (1) the nationwide average purchase

price for residences located in the United

States, and (2) average area purchase price

safe harbors for residences located in sta

tistical areas in each state, the District of

Columbia, Puerto Rico, the Northern Mar

iana Islands, American Samoa, the Virgin

Islands, and Guam.

.03 Section 143(e)(1) provides that an

issue of bonds meets the purchase price

requirements of § 143(e) if the acquisi

tion cost of each residence financed by

the issue does not exceed 90 percent of

the average area purchase price applicable

to such residence. Section 143(e)(5) pro

vides that, in the case of a targeted area

residence (as defined in § 143(j)), § 143(e)

(1) shall be applied by substituting 110

percent for 90 percent.

.04 Section 143(e)(2) provides that

the term “average area purchase price”

means, with respect to any residence, the

average purchase price of single-family

residences (in the statistical area in which

the residence is located) that were pur

chased during the most recent 12-month

period for which sufficient statistical in

formation is available. Under §§ 143(e)(3)

and (4), respectively, separate determina

tions of average area purchase price are to

be made for new and existing residences,

and for two-, three-, and four-family res

idences.

.05 Section 143(e)(2) also provides that

the determination of the average area pur

chase price shall be made as of the date

on which the commitment to provide the

financing is made or, if earlier, the date of

the purchase of the residence.

.06 Section 143(k)(2)(A) provides that

the term “statistical area” means (i) a met

ropolitan statistical area (MSA), and (ii)

any county (or the portion thereof) that is

not within an MSA. Section 143(k)(2)(C)

further provides that if sufficient recent

statistical information with respect to a

county (or portion thereof) is unavailable,

the Secretary may substitute another area

for which there is sufficient recent statis

tical information for such county (or por

tion thereof). In the case of any portion

of a State which is not within a county, §

143(k)(2)(D) provides that the Secretary

may designate an area that is the equiva

lent of a county. Section 6a.103A-1(b)(4)

(i) of the Income Tax Regulations (issued

under § 103A of the Internal Revenue

26 CFR 601.601: Rules and Regulations

(Also Part 1, §§ 25, 143, 6a.103A-1(b)(4),

6a.103A-2(f)(5)).

SECTION 2. BACKGROUND

.01 Section 103(a) provides that, ex

cept as provided in § 103(b), gross income

does not include interest on any State or

local bond. Section 103(b)(1) provides

that § 103(a) shall not apply to any pri

vate activity bond that is not a “quali

fied bond” within the meaning of § 141.

Section 141(e) provides, in part, that the

term “qualified bond” means any private

activity bond if such bond (1) is a quali

fied mortgage bond under § 143, (2) meets

the volume cap requirements under § 146,

and (3) meets the applicable requirements

under § 147.

.02 Section 143(a)(1) provides that the

term “qualified mortgage bond” means a

bond that is issued as part of a qualified

mortgage issue. Section 143(a)(2)(A) pro

vides that the term “qualified mortgage is

sue” means an issue of one or more bonds

by a State or political subdivision thereof,

but only if: (i) all proceeds of the issue

(exclusive of issuance costs and a reason

ably required reserve) are to be used to fi

nance owner-occupied residences; (ii) the

issue meets the requirements of subsec

tions (c), (d), (e), (f), (g), (h), (i), and (m)

(7) of § 143; (iii) the issue does not meet

the private business tests of paragraphs (1)

and (2) of § 141(b); and (iv) with respect

to amounts received more than 10 years

after the date of issuance, repayments of

$250,000 or more of principal on mort

Bulletin No. 2021–15

991

Code of 1954, the predecessor of § 143 of

the Code) provides that the term “State”

includes a possession of the United States

and the District of Columbia.

.07 Section 6a.103A-2(f)(5)(i) pro

vides that an issuer may rely upon the

average area purchase price safe harbors

published by the Department of the Trea

sury (Treasury Department) for the statis

tical area in which a residence is located.

Section 6a.103A-2(f)(5)(i) further pro

vides that an issuer may use an average

area purchase price limitation different

from the published safe harbor if the issu

er has more accurate and comprehensive

data for the statistical area.

Qualified Mortgage Credit Certificate

Program

.08 Section 25(c) permits a State or

political subdivision thereof to establish

a qualified mortgage credit certificate

program. In general, a qualified mortgage

credit certificate program is a program

under which the issuing authority elects

not to issue an amount of private activity

bonds that it may otherwise issue during

the calendar year under § 146, and in its

place, issues mortgage credit certificates

to taxpayers in connection with the acqui

sition of their principal residences. Sec

tion 25(a)(1) provides, in general, that the

holder of a mortgage credit certificate may

claim a federal income tax credit equal to

the product of the credit rate specified in

the certificate and the interest paid or ac

crued during the tax year on the remaining

principal of the indebtedness incurred to

acquire the residence. Section 25(c)(2)(A)

(iii)(III) generally provides that residenc

es acquired in connection with the issu

ance of mortgage credit certificates must

meet the purchase price requirements of §

143(e).

Income Limitations for Qualified

Mortgage Bonds and Mortgage Credit

Certificates

.09 Section 143(f) imposes limitations

on the income of mortgagors for whom

financing may be provided by qualified

mortgage bonds. In addition, § 25(c)(2)(A)

(iii)(IV) provides that holders of mortgage

credit certificates must meet the income

requirement of § 143(f). Generally, under

April 12, 2021

§§ 143(f)(1) and 25(c)(2)(A)(iii)(IV), the

income requirement is met only if all own

er-financing under a qualified mortgage

bond and all mortgage credit certificates

issued under a qualified mortgage credit

certificate program are provided to mort

gagors whose family income is 115 percent

or less of the applicable median family in

come. Section 143(f)(5), however, general

ly provides for an upward adjustment to the

percentage limitation in high housing cost

areas. High housing cost areas are defined

in § 143(f)(5)(C) as any statistical area for

which the housing cost/income ratio is

greater than 1.2.

.10 Under § 143(f)(5)(D), the hous

ing cost/income ratio with respect to any

statistical area is determined by dividing

(a) the applicable housing price ratio for

such area by (b) the ratio that the area me

dian gross income for such area bears to

the median gross income for the United

States. The applicable housing price ratio

is the new housing price ratio (new hous

ing average area purchase price divided

by the new housing average purchase

price for the United States) or the existing

housing price ratio (existing housing av

erage area purchase price divided by the

existing housing average purchase price

for the United States), whichever results

in the housing cost/income ratio being

closer to 1.

Average Area and Nationwide Purchase

Price Limitations

.11 Average area purchase price safe

harbors for each state, the District of Co

lumbia, Puerto Rico, the Northern Mari

ana Islands, American Samoa, the Virgin

Islands, and Guam were last published in

Rev. Proc. 2020-18, I.R.B. 2020-15, 592.

.12 The nationwide average purchase

price limitation was last published in sec

tion 4.02 of Rev. Proc. 2020-18. Guidance

with respect to the United States and area

median gross income figures that are used

in computing the housing cost/income ra

tio described in § 143(f)(5) was published

in Rev. Proc. 2021-19, I.R.B. 2021-15 (re

leased on March 25, 2021).

.13 This revenue procedure uses Fed

eral Housing Administration (FHA) loan

limits for a given statistical area to calcu

late the average area purchase price safe

harbor for that area. FHA sets limits on the

April 12, 2021

dollar value of loans it will insure based on

median home prices and conforming loan

limits established by the Federal Home

Loan Mortgage Corporation. In particular,

FHA sets an area’s loan limit at 95 per

cent of the median home sales price for

the area, subject to certain floors and caps

measured against conforming loan limits.

.14 To calculate the average area pur

chase price safe harbors in this revenue

procedure, the FHA loan limits are ad

justed to take into account the differenc

es between average and median purchase

prices. Because FHA loan limits do not

differentiate between new and existing

residences, this revenue procedure con

tains a single average area purchase price

safe harbor for both new and existing res

idences in a statistical area. The Treasury

Department and the Internal Revenue Ser

vice (IRS) have determined that FHA loan

limits provide a reasonable basis for deter

mining average area purchase price safe

harbors. If the Treasury Department and

the IRS become aware of other sources

of average purchase price data, including

data that differentiate between new and

existing residences, consideration will be

given as to whether such data provide a

more accurate method for calculating av

erage area purchase price safe harbors.

.15 The average area purchase price

safe harbors listed in section 4.01 of this

revenue procedure are based on FHA loan

limits released December 2, 2020. FHA

loan limits are available for statistical ar

eas in each state, the District of Columbia,

Puerto Rico, the Northern Mariana Islands,

American Samoa, the Virgin Islands, and

Guam. See section 3.03 of this revenue

procedure with respect to FHA loan limits

revised after December 2, 2020.

.16 OMB Bulletin No. 03-04, dated

and effective June 6, 2003, revised the

definitions of the nation’s metropolitan

areas and recognized 49 new metropoli

tan statistical areas. The OMB bulletin no

longer includes primary metropolitan sta

tistical areas.

SECTION 3. APPLICATION

Average Area Purchase Price Safe

Harbors

.01 Average area purchase price safe

harbors for statistical areas in each state,

992

the District of Columbia, Puerto Rico,

the Northern Mariana Islands, American

Samoa, the Virgin Islands, and Guam are

set forth in section 4.01 of this revenue

procedure. Average area purchase price

safe harbors are provided for single-fam

ily and two to four-family residences.

For each type of residence, section 4.01

of this revenue procedure contains a sin

gle safe harbor that may be used for both

new and existing residences. Issuers of

qualified mortgage bonds and issuers of

mortgage credit certificates may rely on

these safe harbors to satisfy the require

ments of §§ 143(e) and (f). Section 4.01

of this revenue procedure provides safe

harbors for MSAs and for certain coun

ties and county equivalents. If no pur

chase price safe harbor is available for a

statistical area, the safe harbor for “ALL

OTHER AREAS” may be used for that

statistical area.

.02 If a residence is in an MSA, the

safe harbor applicable to it is the limita

tion of that MSA. If an MSA falls in more

than one state, the MSA is listed in sec

tion 4.01 of this revenue procedure under

each state.

.03 If the FHA revises the FHA loan

limit for any statistical area after Decem

ber 2, 2020, an issuer of qualified mort

gage bonds or mortgage credit certificates

may use the revised FHA loan limit for

that statistical area to compute (as provid

ed in the next sentence) a revised average

area purchase price safe harbor for the sta

tistical area provided that the issuer main

tains records evidencing the revised FHA

loan limit. The revised average area pur

chase price safe harbor for that statistical

area is computed by dividing the revised

FHA loan limit by 1.03.

.04 If, pursuant to § 6a.103A-2(f)

(5)(i), an issuer uses more accurate and

comprehensive data to determine the av

erage area purchase price for a statistical

area, the issuer must make separate av

erage area purchase price determinations

for new and existing residences. More

over, when computing the average area

purchase price for a statistical area that

is an MSA, as defined in OMB Bulletin

No. 03-04, the issuer must make the com

putation for the entire applicable MSA.

When computing the average area pur

chase price for a statistical area that is not

an MSA, the issuer must make the com

Bulletin No. 2021–15

putation for the entire statistical area and

may not combine statistical areas. Thus,

for example, the issuer may not combine

two or more counties.

.05 If an issuer receives a ruling per

mitting it to rely on an average area pur

chase price limitation that is higher than

the applicable safe harbor in this revenue

procedure, the issuer may rely on that

higher limitation for the purpose of satis

fying the requirements of §§ 143(e) and

(f) for bonds sold, and mortgage cred

it certificates issued, not more than 30

months following the termination date of

the 12-month period used by the issuer to

compute the limitation.

Nationwide Average Purchase Price

.06 Section 4.02 of this revenue pro

cedure sets forth a single nationwide

average purchase price for purposes of

computing the housing cost/income ratio

under § 143(f)(5).

.07 Issuers must use the nationwide

average purchase price set forth in section

4.02 of this revenue procedure when com

puting the housing cost/income ratio un

der § 143(f)(5) regardless of whether they

are relying on the average area purchase

price safe harbors contained in this reve

nue procedure or using more accurate and

comprehensive data to determine average

area purchase prices for new and existing

residences for a statistical area that are dif

ferent from the published safe harbors in

this revenue procedure.

.08 If, pursuant to section 6.02 of this

revenue procedure, an issuer relies on the

average area purchase price safe harbors

contained in Rev. Proc. 2020-18, the issuer

must use the nationwide average purchase

price set forth in section 4.02 of Rev. Proc.

2020-18 in computing the housing cost/

income ratio under § 143(f)(5). Likewise,

if, pursuant to section 6.04 of this revenue

procedure, an issuer relies on the nation

wide average purchase price published in

Rev. Proc. 2020-18, the issuer must use

the average area purchase price safe har

bors set forth in section 4.01 of Rev. Proc.

2020-18 in computing the housing cost/

income ratio under § 143(f)(5).

SECTION 4. AVERAGE AREA AND

NATIONWIDE AVERAGE PURCHASE

PRICES

.01 Average area purchase prices for

single-family and two to four-family resi

dences in MSAs, and for certain counties

and county equivalents are set forth be

low. The safe harbor for “ALL OTHER

AREAS” (found at the end of the table

below) may be used for a statistical area

that is not listed below.

2021 Average Area Purchase Prices for Mortgage Revenue Bonds

County Name

ALEUTIANS WEST

ANCHORAGE MUNIC

JUNEAU CITY AND

KETCHIKAN GATEW

KODIAK ISLAND B

MATANUSKA-SUSIT

NOME CENSUS ARE

SITKA CITY AND

SKAGWAY MUNICIP

YAKUTAT CITY AN

State

One-Unit

Limit

$530,235

$406,066

$469,828

$395,998

$406,066

$428,438

$473,184

$403,828

$409,422

Two-Unit

Limit

$678,770

$519,826

$601,438

$506,938

$519,826

$548,473

$605,767

$516,957

$524,106

Three-Unit

Limit

$820,497

$628,334

$727,018

$612,771

$628,334

$662,963

$732,222

$624,881

$633,538

Four-Unit

Limit

$1,019,712

$780,907

$903,519

$761,550

$780,907

$823,901

$909,988

$776,578

$787,375

COCONINO

MARICOPA

PINAL

$379,218

$357,964

$485,440

$458,253

$586,799

$553,921

$729,255

$688,400

ALAMEDA

ALPINE

AMADOR

CALAVERAS

CONTRA COSTA

EL DORADO

HUMBOLDT

INYO

$799,948

$450,811

$354,608

$363,557

$799,948

$581,692

$346,778

$363,557

$1,024,284

$577,120

$453,973

$465,402

$1,024,284

$744,673

$443,905

$465,402

$1,238,041

$697,593

$548,716

$562,578

$1,238,041

$900,115

$536,606

$562,578

$1,538,614

$866,945

$681,932

$699,149

$1,538,614

$1,118,638

$666,854

$699,149

Bulletin No. 2021–15

993

April 12, 2021

County Name

LOS ANGELES

MARIN

MENDOCINO

MONO

MONTEREY

NAPA

NEVADA

ORANGE

PLACER

RIVERSIDE

SACRAMENTO

SAN BENITO

SAN BERNARDINO

SAN DIEGO

SAN FRANCISCO

SAN JOAQUIN

SAN LUIS OBISPO

SAN MATEO

SANTA BARBARA

SANTA CLARA

SANTA CRUZ

SOLANO

SONOMA

STANISLAUS

SUTTER

VENTURA

YOLO

YUBA

State

One-Unit

Limit

$799,948

$430,676

$514,574

$719,284

$794,233

$512,336

$799,948

$581,692

$464,235

$581,692

$799,948

$464,235

$732,708

$799,948

$469,828

$682,369

$799,948

$642,098

$799,948

$535,828

$687,963

$385,930

$363,557

$719,284

$581,692

$363,557

Two-Unit

Limit

$1,024,284

$551,343

$658,732

$920,834

$1,016,745

$655,863

$1,024,284

$744,673

$594,289

$744,673

$1,024,284

$594,289

$938,003

$1,024,284

$601,438

$873,559

$1,024,284

$822,005

$1,024,284

$685,968

$880,709

$494,049

$465,402

$920,834

$744,673

$465,402

Three-Unit

Limit

$1,238,041

$666,417

$796,276

$1,113,045

$1,229,043

$792,823

$1,238,041

$900,115

$718,360

$900,115

$1,238,041

$718,360

$1,133,813

$1,238,041

$727,018

$1,055,946

$1,238,041

$993,594

$1,238,041

$829,154

$1,064,603

$597,207

$562,578

$1,113,045

$900,115

$562,578

Four-Unit

Limit

$1,538,614

$828,230

$989,557

$1,383,269

$1,527,379

$985,277

$1,538,614

$1,118,638

$892,771

$1,118,638

$1,538,614

$892,771

$1,409,095

$1,538,614

$903,519

$1,312,260

$1,538,614

$1,234,831

$1,538,614

$1,030,460

$1,323,009

$742,192

$699,149

$1,383,269

$1,118,638

$699,149

ADAMS

ARAPAHOE

BOULDER

BROOMFIELD

CHAFFEE

CLEAR CREEK

DENVER

DOUGLAS

EAGLE

EL PASO

ELBERT

GARFIELD

GILPIN

GRAND

$580,573

$636,505

$580,573

$380,337

$580,573

$799,826

$382,574

$580,573

$799,948

$580,573

$514,574

$743,214

$814,855

$743,214

$486,900

$743,214

$1,023,943

$489,769

$743,214

$1,024,284

$743,214

$658,732

$898,413

$984,937

$898,413

$588,550

$898,413

$1,237,700

$592,003

$898,413

$1,238,041

$898,413

$796,276

$1,116,498

$1,224,082

$1,116,498

$731,395

$1,116,498

$1,538,176

$735,724

$1,116,498

$1,538,614

$1,116,498

$989,557

April 12, 2021

994

Bulletin No. 2021–15

County Name

GUNNISON

HINSDALE

JEFFERSON

LA PLATA

LARIMER

MONTROSE

OURAY

PARK

PITKIN

ROUTT

SAN MIGUEL

SUMMIT

TELLER

WELD

State

One-Unit

Limit

$397,117

$416,133

$580,573

$436,269

$451,930

$413,896

$580,573

$799,948

$659,997

$799,948

$382,574

$417,252

Two-Unit

Limit

$508,348

$532,715

$743,214

$558,492

$578,531

$529,845

$743,214

$1,024,284

$844,912

$1,024,284

$489,769

$534,125

Three-Unit

Limit

$614,522

$643,947

$898,413

$675,074

$699,344

$640,493

$898,413

$1,238,041

$1,021,317

$1,238,041

$592,003

$645,649

Four-Unit

Limit

$763,690

$800,264

$1,116,498

$838,979

$869,085

$795,936

$1,116,498

$1,538,614

$1,269,265

$1,538,614

$735,724

$802,404

FAIRFIELD

LITCHFIELD

WINDHAM

$585,048

$347,897

$354,608

$748,953

$445,364

$453,973

$905,319

$538,357

$548,716

$1,125,107

$669,043

$681,932

DISTRICT OF COL

$799,948

$1,024,284

$1,238,041

$1,538,614

NEW CASTLE

$419,489

$536,995

$649,151

$806,733

BAKER

BROWARD

CLAY

COLLIER

DUVAL

MARTIN

MIAMI-DADE

MONROE

NASSAU

OKALOOSA

PALM BEACH

ST. JOHNS

ST. LUCIE

WALTON

$378,100

$391,523

$378,100

$447,455

$378,100

$371,388

$391,523

$591,760

$378,100

$429,557

$391,523

$378,100

$371,388

$429,557

$484,030

$501,199

$484,030

$572,791

$484,030

$475,421

$501,199

$757,561

$484,030

$549,884

$501,199

$484,030

$475,421

$549,884

$585,096

$605,864

$585,096

$692,389

$585,096

$574,688

$605,864

$915,727

$585,096

$664,714

$605,864

$585,096

$574,688

$664,714

$727,115

$752,941

$727,115

$860,476

$727,115

$714,226

$752,941

$1,137,996

$727,115

$826,090

$752,941

$727,115

$714,226

$826,090

BARROW

BARTOW

BUTTS

CARROLL

CHEROKEE

$401,591

$514,087

$621,428

$772,298

Bulletin No. 2021–15

995

April 12, 2021

County Name

CLARKE

CLAYTON

COBB

COWETA

DAWSON

DEKALB

DOUGLAS

FAYETTE

FORSYTH

FULTON

GREENE

GWINNETT

HARALSON

HEARD

HENRY

JASPER

LAMAR

MADISON

MERIWETHER

MORGAN

NEWTON

OCONEE

OGLETHORPE

PAULDING

PICKENS

PIKE

ROCKDALE

SPALDING

WALTON

State

One-Unit

Limit

$380,337

$401,591

$501,150

$401,591

$380,337

$401,591

$380,337

$401,591

Two-Unit

Limit

$486,900

$514,087

$641,563

$514,087

$486,900

$514,087

$486,900

$514,087

Three-Unit

Limit

$588,550

$621,428

$775,508

$621,428

$588,550

$621,428

$588,550

$621,428

Four-Unit

Limit

$731,395

$772,298

$963,780

$772,298

$731,395

$772,298

$731,395

$772,298

HAWAII

HONOLULU

KALAWAO

KAUAI

MAUI

$397,117

$701,386

$703,624

$700,268

$703,624

$508,348

$897,878

$900,747

$896,467

$900,747

$614,522

$1,085,371

$1,088,824

$1,083,620

$1,088,824

$763,690

$1,348,835

$1,353,163

$1,346,695

$1,353,163

ADA

BLAINE

BOISE

CAMAS

CANYON

GEM

KOOTENAI

$403,828

$628,675

$403,828

$628,675

$403,828

$378,100

$516,957

$804,836

$516,957

$804,836

$516,957

$484,030

$624,881

$972,826

$624,881

$972,826

$624,881

$585,096

$776,578

$1,209,005

$776,578

$1,209,005

$776,578

$727,115

April 12, 2021

996

Bulletin No. 2021–15

County Name

OWYHEE

TETON

VALLEY

State

One-Unit

Limit

$403,828

$799,948

$369,151

Two-Unit

Limit

$516,957

$1,024,284

$472,552

Three-Unit

Limit

$624,881

$1,238,041

$571,235

Four-Unit

Limit

$776,578

$1,538,614

$709,898

COOK

DEKALB

DUPAGE

GRUNDY

KANE

KENDALL

LAKE

MCHENRY

WILL

$369,151

$472,552

$571,235

$709,898

BOONE

BROWN

HAMILTON

HANCOCK

HENDRICKS

JASPER

JOHNSON

LAKE

MADISON

MARION

MORGAN

NEWTON

PORTER

PUTNAM

SHELBY

$369,151

$472,552

$571,235

$709,898

JOHNSON

LEAVENWORTH

LINN

MIAMI

WYANDOTTE

$379,218

$485,440

$586,799

$729,255

BARNSTABLE

BRISTOL

DUKES

ESSEX

MIDDLESEX

NANTUCKET

NORFOLK

$492,201

$799,948

$704,742

$799,948

$704,742

$630,085

$1,024,284

$902,206

$1,024,284

$902,206

$761,647

$1,238,041

$1,090,575

$1,238,041

$1,090,575

$946,563

$1,538,614

$1,355,303

$1,538,614

$1,355,303

Bulletin No. 2021–15

997

April 12, 2021

County Name

PLYMOUTH

SUFFOLK

WORCESTER

State

One-Unit

Limit

$704,742

$354,608

Two-Unit

Limit

$902,206

$453,973

Three-Unit

Limit

$1,090,575

$548,716

Four-Unit

Limit

$1,355,303

$681,932

ANNE ARUNDEL

BALTIMORE

BALTIMORE CITY

CALVERT

CARROLL

CECIL

CHARLES

FREDERICK

HARFORD

HOWARD

MONTGOMERY

PRINCE GEORGE’S

QUEEN ANNE’S

TALBOT

$523,523

$799,948

$523,523

$419,489

$799,948

$523,523

$799,948

$523,523

$397,117

$670,210

$1,024,284

$670,210

$536,995

$1,024,284

$670,210

$1,024,284

$670,210

$508,348

$810,137

$1,238,041

$810,137

$649,151

$1,238,041

$810,137

$1,238,041

$810,137

$614,522

$1,006,775

$1,538,614

$1,006,775

$806,733

$1,538,614

$1,006,775

$1,538,614

$1,006,775

$763,690

CUMBERLAND

SAGADAHOC

YORK

$392,642

$502,658

$607,567

$755,081

ANOKA

CARVER

CHISAGO

DAKOTA

HENNEPIN

ISANTI

LE SUEUR

MILLE LACS

RAMSEY

SCOTT

SHERBURNE

WASHINGTON

WRIGHT

$391,523

$501,199

$605,864

$752,941

BATES

CALDWELL

CASS

CLAY

CLINTON

JACKSON

$379,218

$485,440

$586,799

$729,255

April 12, 2021

998

Bulletin No. 2021–15

County Name

LAFAYETTE

PLATTE

RAY

State

One-Unit

Limit

$379,218

Two-Unit

Limit

$485,440

Three-Unit

Limit

$586,799

Four-Unit

Limit

$729,255

FLATHEAD

GALLATIN

MISSOULA

PARK

RICHLAND

$368,032

$465,354

$378,100

$366,913

$346,778

$471,141

$595,748

$484,030

$469,682

$443,905

$569,484

$720,111

$585,096

$567,782

$536,606

$707,758

$894,911

$727,115

$705,618

$666,854

CAMDEN

CHATHAM

CURRITUCK

DARE

DURHAM

FRANKLIN

GATES

GRANVILLE

HYDE

JOHNSTON

ORANGE

PASQUOTANK

PERQUIMANS

PERSON

WAKE

$446,337

$425,083

$446,337

$385,930

$425,083

$361,320

$446,337

$425,083

$469,828

$361,320

$425,083

$783,047

$425,083

$361,320

$571,381

$544,193

$571,381

$494,049

$544,193

$462,533

$571,381

$544,193

$601,438

$462,533

$544,193

$1,002,446

$544,193

$462,533

$690,686

$657,759

$690,686

$597,207

$657,759

$559,125

$690,686

$657,759

$727,018

$559,125

$657,759

$1,211,729

$657,759

$559,125

$858,336

$817,481

$858,336

$742,192

$817,481

$694,869

$858,336

$817,481

$903,519

$694,869

$817,481

$1,505,882

$817,481

$694,869

LINCOLN

LOGAN

MCPHERSON

$421,727

$539,865

$652,604

$811,013

HILLSBOROUGH

ROCKINGHAM

STRAFFORD

$363,557

$704,742

$465,402

$902,206

$562,578

$1,090,575

$699,149

$1,355,303

BERGEN

BURLINGTON

CAMDEN

CAPE MAY

ESSEX

GLOUCESTER

HUDSON

HUNTERDON

MIDDLESEX

$799,948

$419,489

$799,948

$419,489

$799,948

$1,024,284

$536,995

$1,024,284

$536,995

$1,024,284

$1,238,041

$649,151

$1,238,041

$649,151

$1,238,041

$1,538,614

$806,733

$1,538,614

$806,733

$1,538,614

Bulletin No. 2021–15

999

April 12, 2021

County Name

MONMOUTH

MORRIS

OCEAN

PASSAIC

SALEM

SOMERSET

SUSSEX

UNION

WARREN

State

One-Unit

Limit

$799,948

$419,489

$799,948

$362,439

Two-Unit

Limit

$1,024,284

$536,995

$1,024,284

$463,992

Three-Unit

Limit

$1,238,041

$649,151

$1,238,041

$560,827

Four-Unit

Limit

$1,538,614

$806,733

$1,538,614

$697,009

CATRON

LOS ALAMOS

SANTA FE

$390,405

$482,133

$402,710

$499,788

$617,197

$515,546

$604,113

$746,083

$623,179

$750,801

$927,205

$774,438

CARSON CITY

CLARK

DOUGLAS

STOREY

WASHOE

$369,151

$352,371

$486,608

$447,455

$472,552

$451,103

$622,936

$572,791

$571,235

$545,263

$752,990

$692,389

$709,898

$677,652

$935,814

$860,476

BRONX

DUTCHESS

KINGS

NASSAU

NEW YORK

ORANGE

PUTNAM

QUEENS

RICHMOND

ROCKLAND

SUFFOLK

WESTCHESTER

$799,948

$346,778

$799,948

$346,778

$799,948

$1,024,284

$443,905

$1,024,284

$443,905

$1,024,284

$1,238,041

$536,606

$1,238,041

$536,606

$1,238,041

$1,538,614

$666,854

$1,538,614

$666,854

$1,538,614

DELAWARE

FAIRFIELD

FRANKLIN

HOCKING

LICKING

MADISON

MORROW

PERRY

PICKAWAY

UNION

$387,049

$495,460

$598,909

$744,332

April 12, 2021

1000

Bulletin No. 2021–15

County Name

BENTON

CLACKAMAS

CLATSOP

COLUMBIA

DESCHUTES

HOOD RIVER

JACKSON

MARION

MULTNOMAH

POLK

WASHINGTON

YAMHILL

State

One-Unit

Limit

$418,371

$503,387

$369,151

$503,387

$447,455

$464,235

$346,778

$357,964

$503,387

$357,964

$503,387

Two-Unit

Limit

$535,585

$644,433

$472,552

$644,433

$572,791

$594,289

$443,905

$458,253

$644,433

$458,253

$644,433

Three-Unit

Limit

$647,400

$778,961

$571,235

$778,961

$692,389

$718,360

$536,606

$553,921

$778,961

$553,921

$778,961

Four-Unit

Limit

$804,544

$968,060

$709,898

$968,060

$860,476

$892,771

$666,854

$688,400

$968,060

$688,400

$968,060

BUCKS

CARBON

CHESTER

DELAWARE

LEHIGH

MONTGOMERY

NORTHAMPTON

PHILADELPHIA

PIKE

$419,489

$362,439

$419,489

$362,439

$419,489

$362,439

$419,489

$799,948

$536,995

$463,992

$536,995

$463,992

$536,995

$463,992

$536,995

$1,024,284

$649,151

$560,827

$649,151

$560,827

$649,151

$560,827

$649,151

$1,238,041

$806,733

$697,009

$806,733

$697,009

$806,733

$697,009

$806,733

$1,538,614

BRISTOL

KENT

NEWPORT

PROVIDENCE

WASHINGTON

$492,201

$630,085

$761,647

$946,563

BEAUFORT

BERKELEY

CHARLESTON

DORCHESTER

JASPER

$369,151

$402,710

$369,151

$472,552

$515,546

$472,552

$571,235

$623,179

$571,235

$709,898

$774,438

$709,898

CANNON

CHEATHAM

DAVIDSON

DICKSON

MACON

MAURY

ROBERTSON

RUTHERFORD

$570,506

$730,325

$882,800

$1,097,141

Bulletin No. 2021–15

1001

April 12, 2021

County Name

SMITH

SUMNER

TROUSDALE

WILLIAMSON

WILSON

State

One-Unit

Limit

$570,506

Two-Unit

Limit

$730,325

Three-Unit

Limit

$882,800

Four-Unit

Limit

$1,097,141

ATASCOSA

BANDERA

BASTROP

BEXAR

CALDWELL

COLLIN

COMAL

DALLAS

DENTON

ELLIS

GUADALUPE

HAYS

HUNT

JOHNSON

KAUFMAN

KENDALL

MEDINA

PARKER

ROCKWALL

TARRANT

TRAVIS

WILLIAMSON

WILSON

WISE

$392,642

$404,947

$392,642

$404,947

$400,473

$392,642

$400,473

$392,642

$404,947

$400,473

$392,642

$400,473

$404,947

$392,642

$400,473

$502,658

$518,416

$502,658

$518,416

$512,677

$502,658

$512,677

$502,658

$518,416

$512,677

$502,658

$512,677

$518,416

$502,658

$512,677

$607,567

$626,632

$607,567

$626,632

$619,677

$607,567

$619,677

$607,567

$626,632

$619,677

$607,567

$619,677

$626,632

$607,567

$619,677

$755,081

$778,767

$755,081

$778,767

$770,158

$755,081

$770,158

$755,081

$778,767

$770,158

$755,081

$770,158

$778,767

$755,081

$770,158

BOX ELDER

DAVIS

JUAB

MORGAN

RICH

SALT LAKE

SUMMIT

TOOELE

UTAH

WASATCH

WASHINGTON

WEBER

$628,675

$427,320

$628,675

$364,676

$440,744

$795,352

$440,744

$427,320

$795,352

$402,710

$628,675

$804,836

$547,014

$804,836

$466,861

$564,231

$1,018,204

$564,231

$547,014

$1,018,204

$515,546

$804,836

$972,826

$661,261

$972,826

$564,329

$682,029

$1,230,745

$682,029

$661,261

$1,230,745

$623,179

$972,826

$1,209,005

$821,761

$1,209,005

$701,289

$847,587

$1,529,568

$847,587

$821,761

$1,529,568

$774,438

$1,209,005

April 12, 2021

1002

Bulletin No. 2021–15

County Name

ALBEMARLE

ALEXANDRIA CITY

AMELIA

ARLINGTON

CHARLES CITY

CHARLOTTESVILLE

CHESAPEAKE CITY

CHESTERFIELD

CLARKE

COLONIAL HEIGHT

CULPEPER

DINWIDDIE

FAIRFAX

FAIRFAX CITY

FALLS CHURCH CI

FAUQUIER

FLUVANNA

FRANKLIN CITY

FREDERICKSBURG

GLOUCESTER

GOOCHLAND

State

One-Unit

Limit

$425,083

$799,948

$521,285

$799,948

$521,285

$425,083

$446,337

$521,285

$799,948

$521,285

$799,948

$521,285

$799,948

$425,083

$446,337

$799,948

$446,337

$521,285

Two-Unit

Limit

$544,193

$1,024,284

$667,341

$1,024,284

$667,341

$544,193

$571,381

$667,341

$1,024,284

$667,341

$1,024,284

$667,341

$1,024,284

$544,193

$571,381

$1,024,284

$571,381

$667,341

GREENE

HAMPTON CITY

HANOVER

HENRICO

HOPEWELL CITY

ISLE OF WIGHT

JAMES CITY

KING AND QUEEN

KING GEORGE

KING WILLIAM

LANCASTER

LOUDOUN

MADISON

MANASSAS CITY

MANASSAS PARK C

MATHEWS

NELSON

NEW KENT

NEWPORT NEWS CI

NORFOLK CITY

PETERSBURG CITY

POQUOSON CITY

$425,083

$446,337

$521,285

$446,337

$521,285

$349,015

$521,285

$430,676

$799,948

$446,337

$425,083

$521,285

$446,337

$521,285

$446,337

$544,193

$571,381

$667,341

$571,381

$667,341

$446,774

$667,341

$551,343

$1,024,284

$571,381

$544,193

$667,341

$571,381

$667,341

$571,381

Bulletin No. 2021–15

1003

Three-Unit

Limit

$657,759

$1,238,041

$806,636

$1,238,041

$806,636

$657,759

$690,686

$806,636

$1,238,041

$806,636

$1,238,041

$806,636

$1,238,041

$657,759

$690,686

$1,238,041

$690,686

Four-Unit

Limit

$817,481

$1,538,614

$1,002,495

$1,538,614

$1,002,495

$817,481

$858,336

$1,002,495

$1,538,614

$1,002,495

$1,538,614

$1,002,495

$1,538,614

$817,481

$858,336

$1,538,614

$858,336

$806,636

$657,759

$690,686

$806,636

$690,686

$806,636

$540,059

$806,636

$666,417

$1,238,041

$690,686

$657,759

$806,636

$690,686

$806,636

$690,686

$1,002,495

$817,481

$858,336

$1,002,495

$858,336

$1,002,495

$671,183

$1,002,495

$828,230

$1,538,614

$858,336

$817,481

$1,002,495

$858,336

$1,002,495

$858,336

April 12, 2021

County Name

PORTSMOUTH CITY

POWHATAN

PRINCE GEORGE

PRINCE WILLIAM

RAPPAHANNOCK

RICHMOND CITY

SOUTHAMPTON

SPOTSYLVANIA

STAFFORD

SUFFOLK CITY

SUSSEX

VIRGINIA BEACH

WARREN

WILLIAMSBURG CI

YORK

State

One-Unit

Limit

$446,337

$521,285

$799,948

$521,285

$446,337

$799,948

$446,337

$521,285

$446,337

$799,948

$446,337

Two-Unit

Limit

$571,381

$667,341

$1,024,284

$667,341

$571,381

$1,024,284

$571,381

$667,341

$571,381

$1,024,284

$571,381

Three-Unit

Limit

$690,686

$806,636

$1,238,041

$806,636

$690,686

$1,238,041

$690,686

$806,636

$690,686

$1,238,041

$690,686

Four-Unit

Limit

$858,336

$1,002,495

$1,538,614

$1,002,495

$858,336

$1,538,614

$858,336

$1,002,495

$858,336

$1,538,614

$858,336

CHITTENDEN

FRANKLIN

GRAND ISLE

$369,151

$472,552

$571,235

$709,898

CHELAN

CLALLAM

CLARK

DOUGLAS

ISLAND

KING

KITSAP

PIERCE

SAN JUAN

SKAGIT

SKAMANIA

SNOHOMISH

THURSTON

WHATCOM

$361,320

$373,625

$503,387

$361,320

$419,489

$755,081

$423,964

$755,081

$484,370

$394,879

$503,387

$755,081

$394,879

$430,676

$462,533

$478,291

$644,433

$462,533

$536,995

$966,649

$542,734

$966,649

$620,066

$505,527

$644,433

$966,649

$505,527

$551,343

$559,125

$578,141

$778,961

$559,125

$649,151

$1,168,442

$656,057

$1,168,442

$749,536

$611,068

$778,961

$1,168,442

$611,068

$666,417

$694,869

$718,506

$968,060

$694,869

$806,733

$1,452,090

$815,341

$1,452,090

$931,485

$759,361

$968,060

$1,452,090

$759,361

$828,230

KENOSHA

MILWAUKEE

OZAUKEE

PIERCE

ST. CROIX

WASHINGTON

WAUKESHA

$369,151

$352,371

$391,523

$352,371

$472,552

$451,103

$501,199

$451,103

$571,235

$545,263

$605,864

$545,263

$709,898

$677,652

$752,941

$677,652

April 12, 2021

1004

Bulletin No. 2021–15

County Name

JEFFERSON

State

One-Unit

Limit

$799,948

Two-Unit

Limit

$1,024,284

Three-Unit

Limit

$1,238,041

Four-Unit

Limit

$1,538,614

SHERIDAN

TETON

$476,540

$799,948

$610,047

$1,024,284

$737,426

$1,238,041

$916,408

$1,538,614

GUAM

$548,133

$701,727

$848,220

$1,054,098

NORTHERN ISLAND

ROTA

SAIPAN

TINIAN

$510,099

$399,354

$514,574

$517,930

$652,993

$511,218

$658,732

$663,061

$789,321

$617,975

$796,276

$801,480

$980,949

$767,970

$989,557

$996,026

AGUAS BUENAS

AIBONITO

BARCELONETA

BARRANQUITAS

BAYAMON

CAGUAS

CANOVANAS

CAROLINA

CATANO

CAYEY

CEIBA

CIALES

CIDRA

COMERIO

COROZAL

DORADO

FAJARDO

FLORIDA

GUAYNABO

GURABO

HUMACAO

JUNCOS

LAS PIEDRAS

LOIZA

LUQUILLO

MANATI

MAUNABO

MOROVIS

NAGUABO

NARANJITO

OROCOVIS

$374,744

$479,750

$579,892

$720,646

Bulletin No. 2021–15

1005

April 12, 2021

County Name

RIO GRANDE

SAN JUAN

SAN LORENZO

TOA ALTA

TOA BAJA

TRUJILLO ALTO

VEGA ALTA

VEGA BAJA

YABUCOA

State

One-Unit

Limit

$374,744

Two-Unit

Limit

$479,750

Three-Unit

Limit

$579,892

Four-Unit

Limit

$720,646

ST. JOHN ISLAND

ST. THOMAS ISLA

$606,302

$434,032

$776,189

$555,623

$938,197

$671,621

$1,165,962

$834,699

$346,644

$443,832

$536,460

$666,708

All other areas 2695 counties

(floor):

.02 The nationwide average purchase

price (for use in the housing cost/income

ratio for new and existing residences) is

$331,900.

SECTION 5. EFFECT ON OTHER

DOCUMENTS

Rev. Proc. 2020-18 is obsolete except

as provided in section 6 of this revenue

procedure.

SECTION 6. EFFECTIVE DATES

.01 Issuers may rely on this revenue

procedure to determine average area pur

chase price safe harbors for commitments

to provide financing or issue mortgage

credit certificates that are made, or (if the

purchase precedes the commitment) for

residences that are purchased, in the pe

riod that begins on March 25, 2021, and

ends on the date as of which the safe har

bors contained in section 4.01 of this rev

enue procedure are rendered obsolete by a

new revenue procedure.

.02 Notwithstanding section 5 of this

revenue procedure, issuers may continue

to rely on the average area purchase price

safe harbors contained in Rev. Proc. 202018, with respect to bonds sold, or for mort

gage credit certificates issued with respect

to bond authority exchanged, before April

April 12, 2021

24, 2021, if the commitments to provide

financing or issue mortgage credit certifi

cates are made on or before May 24, 2021.

.03 Except as provided in section 6.04,

issuers must use the nationwide average

purchase price limitation contained in this

revenue procedure for commitments to

provide financing or issue mortgage credit

certificates that are made, or (if the pur

chase precedes the commitment) for res

idences that are purchased, in the period

that begins on March 25, 2021, and ends

on the date when the nationwide average

purchase price limitation is rendered ob

solete by a new revenue procedure.

.04 Notwithstanding sections 5 and

6.03 of this revenue procedure, issuers

may continue to rely on the nationwide

average purchase price set forth in Rev.

Proc. 2020-18 with respect to bonds sold,

or for mortgage credit certificates issued

with respect to bond authority exchanged,

before April 24, 2021, if the commitments

to provide financing or issue mortgage

credit certificates are made on or before

May 24, 2021.

SECTION 7. PAPERWORK

REDUCTION ACT

The collection of information con

tained in this revenue procedure has been

reviewed and approved by the Office of

1006

Management and Budget in accordance

with the Paperwork Reduction Act (44

U.S.C. 3507) under control number 15451877.

An agency may not conduct or sponsor,

and a person is not required to respond

to, a collection of information unless the

collection of information displays a valid

OMB control number.

This revenue procedure contains a col

lection of information requirement in sec

tion 3.03. The purpose of the collection

of information is to verify the applicable

FHA loan limit that issuers of qualified

mortgage bonds and qualified mortgage

certificates have used to calculate the

average area purchase price for a given

metropolitan statistical area for purposes

of §§ 143(e) and 25(c). The collection of

information is required to obtain the ben

efit of using revisions to FHA loan limits

to determine average area purchase prices.

The likely respondents are state and local

governments.

The estimated total annual reporting

and/or recordkeeping burden is: 15 hours.

The estimated annual burden per re

spondent and/or recordkeeper: 15 min

utes.

The estimated number of respondents

and/or recordkeepers: 60.

Books or records relating to a collec

tion of information must be retained as

Bulletin No. 2021–15

long as their contents may become mate

rial in the administration of any internal

revenue law. Generally, tax returns and tax

return information are confidential, as re

quired by 26 U.S.C. 6103.

SECTION 8. DRAFTING

INFORMATION

The principal authors of this revenue

procedure are Jian H. Grant and David

White of the Office of Associate Chief

Counsel (Financial Institutions & Prod

ucts). For further information regarding

this revenue procedure contact Mr. White

at (202) 317-4562 (not a toll-free number).

26 CFR 601.105: Examination of returns and

claims for refund, credit, or abatement; determination of correct tax liability.

(Also Part I, § 1391.)

Rev. Proc. 2021-18

SECTION 1. PURPOSE

This revenue procedure provides an au

tomatic procedure for a State or local gov

ernment in which an empowerment zone is

located to extend the empowerment zone

designation made under section 1391(a) of

the Internal Revenue Code (Code). Specif

ically, this revenue procedure provides that

a State or local government that nominated

an empowerment zone is deemed to extend

until December 31, 2025, the termination

date designated by that State or local gov

ernment in its empowerment zone nom

ination (designated termination date), as

described in section 1391(d)(1)(B). This

revenue procedure further provides the

procedure for such State or local govern

ment to decline this deemed extension of

its designated termination date.

SECTION 2. BACKGROUND

.01 Empowerment Zones. An empow

erment zone is an area of high poverty

and unemployment located in an urban or

rural area that is designated under section

1391(a), as appropriate, by the Secretary

of Housing and Urban Development or

the Secretary of Agriculture, each Sec

retary an “appropriate Secretary” under

Bulletin No. 2021–15

section 1393(a)(1) of the Code. See sec

tion 1391(a); see generally section 1393.

Qualifying taxpayers and businesses lo

cated within the boundaries of empow

erment zones are eligible for Federal in

come tax incentives to promote economic

development in those designated areas.

See section 1394 of the Code (regarding

tax-exempt enterprise zone facility bonds)

and section 1396 of the Code (regarding

empowerment zone employment credits).

.02 Empowerment Zone Designation

and Extensions.

(1) Initial designation. As originally

enacted in 1993, section 1391(d)(1) pro

vided that the designation of an empow

erment zone remained in effect during the

period beginning on the date of the desig

nation and ending on the earliest of (i) the

close of the 10th calendar year beginning

on or after such date of designation (statu

tory termination date), (ii) the termination

date designated by a State or local govern

ment in its nomination (that is, the desig

nated termination date), or (iii) the date

the appropriate Secretary revokes the des

ignation. See section 13301(a) of the Om

nibus Budget Reconciliation Act of 1993

(OBRA of 1993), Public Law 103-66, 107

Stat. 312 (August 10, 1993) (adding sec

tion 1391(d)(1) to the Code).

(2) Extensions of statutory termination date and automatic extensions of

designated termination date. The statu

tory termination date has been extended

multiple times, most recently in 2020 to

extend that date to December 31, 2025.

See section 118(a) of the Taxpayer Cer

tainty and Disaster Tax Relief Act of 2020

(TCDTRA of 2020), enacted as part of

Title I of Division EE of the Consolidat

ed Appropriations Act, 2021, Pub. L. No.

116-260, 134 Stat. 1182 (December 27,

2020). After each extension of the stat

utory termination date and pursuant to

specific statutory grants of authority, the

Department of the Treasury (Treasury De

partment) and the Internal Revenue Ser

vice (IRS) issued guidance automatically

treating a designated termination date as

extended to the date of the amended stat

utory termination date, unless the State or

local government declined the extension

in a written notification to the IRS. See,

for example, section 3 of Rev. Proc. 2020-

1007

16, 2020-27 I.R.B. 10 (deemed extension

to December 31, 2020); see also section 2

of Rev. Proc. 2020-16 (providing an over

view of each extension of the statutory ter

mination date).

(3) Current designated termination

date of all empowerment zones. The IRS

has received no written request from a

State or local government to decline any

extension of a designated termination

date otherwise provided in the previous

guidance described in section 2.02(2) of

this revenue procedure. Therefore, as of

March 26, 2021, all empowerment zones

have a designated termination date of

December 31, 2020, the latest statutory

termination date prior to enactment of the

TCDTRA of 2020.

.03 Statutory authority to extend current designated termination date. Section

118(d) of the TCDTRA of 2020 provides

that, if a nomination for an empower

ment zone includes a designated termi

nation date of December 31, 2020, sec

tion 1391(d)(1)(B) does not apply to the

designation if, after the date of enactment

of the TCDTRA of 2020, the State or lo

cal government that made such nomina

tion amends the nomination to provide a

new termination date in such manner as

may be provided by the Secretary of the

Treasury (or the Secretary’s designee).

Accordingly, section 3.01 of this revenue

procedure sets forth an automatic exten

sion procedure to extend a designated

termination date to December 31, 2025,

and section 3.02 of this revenue proce

dure sets forth a written declination pro

cedure consistent with the previous guid

ance described above.

SECTION 3. AUTOMATIC

EXTENSION OF DESIGNATED

TERMINATION DATE

.01 Automatic extension. Subject to

declination by written notification pur

suant to section 3.02 of this revenue pro

cedure, the designated termination date

with regard to all empowerment zones

is deemed to be extended from Decem

ber 31, 2020, to December 31, 2025.

Accordingly, the designated termination

date is deemed to be the same date as the

date provided in section 1391(d)(1)(A)(i)

April 12, 2021

(that is, December 31, 2025). Therefore,

section 1391(d)(1)(B) does not apply and

the designation of all empowerment zones

will remain in effect until December 31,

2025 (unless terminated at an earlier date

by the appropriate Secretary under section

1391(d)(1)(C)).

.02 Declination of automatic extension.

(1) In general. Pursuant to section

3.02(2) of this revenue procedure, a State

or local government may decline the ex

tension of a designated termination date

described in section 3.01 of this revenue

procedure.

(2) Form and manner.

(a) Deadline for written notification. To

make a declination under section 3.02(1)

of this revenue procedure, not later than

May 25, 2021, the State or local govern

ment must provide written notification to

the IRS that affirmatively declines the De

cember 31, 2025, designated termination

date extension under section 3.01 of this

revenue procedure.

(b) Electronic delivery. This written

notification must be sent by electronic

facsimile to Bruce Chang, CC:ITA:B07,

at facsimile number (855) 576-2341.

SECTION 4. EFFECT ON OTHER

DOCUMENTS

Rev. Proc. 2020-16 is obsoleted for

taxable years beginning after 2020.

SECTION 5. EFFECTIVE DATE

This revenue procedure is effective for

taxable years beginning after December

31, 2020, the effective date of the amend

ments made by section 118 of the TC

DTRA of 2020.

SECTION 6. DRAFTING

INFORMATION

The principal author of this revenue

procedure is Bruce Chang of the Office

of Associate Chief Counsel (Income Tax

& Accounting). For further information

regarding this revenue procedure, contact

Mr. Chang at (202) 317-4870 (not a tollfree number).

April 12, 2021

26 CFR 601.601: Rules and Regulations.

(Also Part I, §§ 25, 143)

Rev. Proc. 2021-19

SECTION 1. PURPOSE

This revenue procedure provides guid

ance with respect to the United States and

area median gross income figures for use

by issuers of qualified mortgage bonds, as

defined in § 143(a) of the Internal Reve

nue Code, and issuers of mortgage credit

certificates, as defined in § 25(c), in com

puting the income requirements described

in § 143(f).

SECTION 2. BACKGROUND

.01 Section 103(a) provides that, ex

cept as provided in § 103(b), gross income

does not include interest on any State or

local bond. Section 103(b)(1) provides

that § 103(a) does not apply to any private

activity bond that is not a qualified bond

(within the meaning of § 141). Section

141(e) provides that the term “qualified

bond” includes any private activity bond

that (1) is a qualified mortgage bond, (2)

meets the applicable volume cap require

ments under § 146, and (3) meets the ap

plicable requirements under § 147.

.02 Section 143(a)(1) provides that the

term “qualified mortgage bond” means a

bond that is issued as part of a “qualified

mortgage issue”. Section 143(a)(2)(A)

provides that the term “qualified mort

gage issue” means an issue of one or more

bonds by a State or political subdivision

thereof, but only if: (i) all proceeds of the

issue (exclusive of issuance costs and a

reasonably required reserve) are to be

used to finance owner-occupied residenc

es; (ii) the issue meets the requirements of

subsections (c), (d), (e), (f), (g), (h), (i),

and (m)(7) of § 143; (iii) the issue does

not meet the private business tests of para

graphs (1) and (2) of § 141(b); and (iv)

with respect to amounts received more

than 10 years after the date of issuance,

repayments of $250,000 or more of prin

cipal on financing provided by the issue

are used not later than the close of the first

semi-annual period beginning after the

date the prepayment (or complete repay

ment) is received to redeem bonds that are

part of the issue.

1008

.03 Section 25(c)(1) provides that the

term “mortgage credit certificate” means

any certificate that: (1) is issued under a

qualified mortgage credit certificate pro

gram by the State or political subdivision

having the authority to issue a qualified

mortgage bond to provide financing on the

principal residence of the taxpayer; (2) is

issued to the taxpayer in connection with

the acquisition, qualified rehabilitation, or

qualified home improvement of the tax

payer’s principal residence; (3) specifies

the certificate credit rate and the certified

indebtedness amount; and (4) is in such

form as the Secretary of the Treasury or

the Secretary’s delegate (Secretary) may

prescribe.

.04 Section 25(c)(2) provides that the

term “qualified mortgage credit certifi

cate program” means any program under

which, among other requirements, the

indebtedness certified by mortgage cred

it certificates meets the requirements of

§ 143(f). See § 25(c)(2)(A)(iii)(IV).

.05 Section 143(f) imposes eligibility

requirements concerning the maximum

income of mortgagors for whom financ

ing may be provided by qualified mort

gage bonds. Generally, under §§ 143(f)

(1) and 25(c)(2)(A)(iii)(IV), these income

requirements are met only if all owner-fi

nancing under a qualified mortgage bond

and all certified indebtedness amounts un

der a mortgage credit certificate program

are provided to mortgagors whose family

income is 115 percent or less of the ap

plicable median family income. Under

§ 143(f)(3), in the case of targeted area res

idences, the income limitation of § 143(a)

applies to 2/3 of the owner financing and

is treated as satisfied if the family income

of the mortgagor is 140 percent or less

of the applicable median family income.

Under § 143(f)(6), if there are fewer than

three individuals in the family of the mort

gagor, the income limitation of § 143(a) is

reduced to 100 percent of the applicable

median family income and, in the case of

targeted area residences, the income lim

itation of § 143(a) is satisfied if the family

income of the mortgagor is 120 percent or

less of the applicable median family in

come.

.06 Section 143(f)(2) provides that, for

purposes of § 143(f), the family income

of mortgagors, and area median gross

income, are determined by the Secretary

Bulletin No. 2021–15

after taking into account the regulations

prescribed under section 8 of the United

States Housing Act of 1937 (if terminated,

a successor program) (Housing Act).

.07 Section 143(f)(4) provides that the

term “applicable median family income”

means, with respect to a residence, the

greater of (A) the area median gross in

come for the area in which the residence is

located, or (B) the statewide median gross

income for the state in which the residence

is located.

.08 Section 143(f)(5) provides for an

upward adjustment of the income limita

tions in certain high housing cost areas.

Under § 143(f)(5)(C), a high housing

cost area is a statistical area for which

the housing cost/income ratio is greater

than 1.2. The housing cost/income ratio

with respect to any statistical area is de

termined under § 143(f)(5)(D) by dividing

(a) the applicable housing price ratio for

such area by (b) the ratio that the area me

dian gross income for such area bears to

the median gross income for the United

States. The applicable housing price ratio

for any area is the new housing price ratio

(new housing average purchase price for

the area divided by the new housing aver

age purchase price for the United States)

or the existing housing price ratio (exist

ing housing average purchase price for the

area divided by the existing housing aver

age purchase price for the United States),

whichever results in the housing cost/in

come ratio being closer to 1.

.09 The Department of Housing and Ur

ban Development (HUD) annually com

putes the median gross income (adjust

ed by family size) for the United States,

the states, and statistical areas within the

states. HUD releases the annually updated

income figures to its regional offices in a

notice. The most recent income figures are

generally available by calling the HUD

reference service at 1-800-245-2691, or at

HUD’s website, http://www.huduser.gov/

portal/datasets/il.html (including a menu

from which the year and type of data of

interest may be selected).

.10 Rev. Rul. 86-124, 1986-2 C.B. 27,

provides the manner in which the income

limits under § 143(f) applicable to quali

fied mortgage bonds and mortgage credit

certificates are determined. In particular,

the revenue ruling provides that, for pur

poses of § 143(f)(4), to determine the area

Bulletin No. 2021–15

median gross income for an area or state

in a manner consistent with the determi

nation of “median gross income” for the

area or state under section 8 of the Hous

ing Act, issuers must use the income limits

released by HUD for Lower Income and

Very Low Income under the Housing Act.

Further, Rev. Rul. 86-124 provides the

manner in which issuers must apply these

income limits. See generally, Rev. Rul.

86-124, Guidelines.

.11 The Internal Revenue Service (IRS)

has published a revenue procedure in the

Internal Revenue Bulletin annually, pro

viding guidance with respect to the Unit

ed States and area median gross income

figures that are to be used by issuers of

qualified mortgage bonds and issuers of

mortgage credit certificates for purposes

of computing the income requirements

under § 143(f). See, e.g., Rev. Proc. 202033, 2020-25 I.R.B. 956.

.12 The IRS has also published a rev

enue procedure in the Internal Revenue

Bulletin annually, providing the most re

cent nationwide average purchase prices

and average area purchase price safe har

bor limitations for purposes of § 143(f)

(5). See, e.g., Rev. Proc. 2020-18, 2020-15

I.R.B. 592.

.13 The Department of the Treasury

(Treasury Department) and the IRS re

quested public comments on whether, in

stead of publishing a revenue procedure

annually, such as Rev. Proc. 2020-33, the

IRS should publish permanent guidance

that would allow issuers to rely on the

HUD income figures immediately upon

release. See Rev. Proc. 2020-33, Section

6. The Treasury Department and the IRS

also requested public comments on the

two-year convention with respect to the

issuers’ reliance on the HUD income fig

ures, as provided in section 3.01 of Rev.

Proc. 2020-33, and a transition period, if

necessary. See Rev. Proc. 2020-33, Sec

tion 6. Comments received consistently

favored publication of permanent guid

ance, retention of the two-year conven

tion, and provision of a transition period,

such as a period of 90 days following the

release of the HUD income figures. As a

result, the Treasury Department and the

IRS have decided to publish this revenue

procedure as permanent guidance consis

tent with comments received and to cease

publishing annual revenue procedures

1009

providing income figures for purposes of

computing the income requirements of

§ 143(f).

SECTION 3. SCOPE

This revenue procedure applies to

mortgage loans financed with qualified

mortgage bonds and to mortgage credit

certificates.

SECTION 4. APPLICATION

.01 Applicable Income Figures. Except

as provided in section 4.02 of this revenue

procedure, for purposes of computing the

income requirements of § 143(f), issuers

of qualified mortgage bonds or mortgage

credit certificates must use either (1) the

income figures HUD released most recent

ly (Most Recent HUD Figures) or (2) the

income figures HUD released immediate

ly prior to the Most Recent HUD Figures

(Immediately Prior HUD Figures), deter

mined as of the date a mortgage loan or

mortgage credit certificate is committed to

a mortgagor.

.02 Transition Period. For mortgage

loans and mortgage credit certificates

committed to mortgagors no later than 90

days after the date on which HUD releas

es updated income figures for the calendar

year, issuers of qualified mortgage bonds

or mortgage credit certificates may contin

ue to use the income figures HUD released

during the second preceding calendar year

for purposes of computing the income re

quirements of § 143(f).

.03 Consistency Requirement. If an is

suer uses the Most Recent HUD Figures

to compute the housing cost/income ratio

under § 143(f)(5), the issuer must use the

Most Recent HUD Figures for all purpos

es under § 143(f). Likewise, if an issuer

uses the Immediately Prior HUD Figures

to compute the housing cost/income ratio

under § 143(f)(5), the issuer must use the

Immediately Prior HUD Figures for all

purposes under § 143(f). For example, if

an issuer uses the income figures HUD

released in 2021 to compute the housing

cost/income ratio under § 143(f)(5), the

issuer must use the income figures HUD

released in 2021 for all purposes under

§ 143(f). Likewise, if an issuer uses the

income figures HUD released in 2020 to

compute the housing cost/income ratio

April 12, 2021

under § 143(f)(5), the issuer must use the

income figures HUD released in 2020 for

all purposes under § 143(f).

SECTION 5. EFFECT ON OTHER

DOCUMENTS

.01 This revenue procedure obsoletes

Rev. Proc. 2020-33.

April 12, 2021

.02 This revenue procedure amplifies

Rev. Rul. 86-124.

SECTION 6. EFFECTIVE DATE

This revenue procedure is effective for

mortgage loans and mortgage credit cer

tificates committed on or after March 25,

2021.

1010

DRAFTING INFORMATION

The principal authors of this revenue

procedure are Jian H. Grant and David

White of the Office of Associate Chief

Counsel (Financial Institutions & Prod

ucts). For further information regarding

this revenue procedure contact Mr. White

at (202) 317-6980 (not a toll-free number).

Bulletin No. 2021–15

Part IV

Announcement and Report

Concerning

Advance Pricing Agreements

March 23, 2021

Announcement 2021-6

This Announcement is issued pursuant to § 521(b) of Pub. L. 106-170, the Ticket to Work and Work Incentives Improvement Act of

1999, which requires the Secretary of the Treasury to report annually to the public concerning advance pricing agreements (APAs)

and the Advance Pricing and Mutual Agreement Program (APMA Program), formerly known as the Advance Pricing Agreement

Program (APA Program). The first report covered calendar years 1991 through 1999. Subsequent reports covered each calendar year

2000 through 2019 separately. This twenty-second report describes the experience, structure, and activities of the APMA Program

during calendar year 2020. It does not provide guidance regarding the application of the arm’s length standard.

Part I of this report includes information on the structure, composition, and operation of the APMA Program; Part II presents statisti

cal data; and Part III includes general descriptions of various elements of the APAs executed in 2020, including types of transactions

covered, transfer pricing methods used, and completion time.

John C. C. Hughes

Director, Advance Pricing and Mutual Agreement Program

Bulletin No. 2021–15

1011

April 12, 2021

Part I. The APMA Program – Structure, Composition, and Operation

[Pub. L. 106-170 § 521(b)(2)(A)]

In February 2012, the former APA Program was moved from the Office of Chief Counsel to the Office of Transfer Pricing Operations1

within the Large Business and International Division of the IRS and combined with the U.S. Competent Authority staff responsible

for transfer pricing cases, thereby forming the APMA Program.

In September 2018, APMA restructured its management and realigned its teams. As of December 31, 2020, the APMA Program com

prised 64 team leaders, 21 economists, 9 managers, and 3 assistant directors. Each assistant director oversees 3 managers who lead

teams comprised of both team leaders and economists. The APMA Program’s main office is in Washington, DC, and it also has offices

in northern California (San Francisco and San Jose), southern California (Los Angeles and Laguna Niguel), Chicago, and New York.

On August 31, 2015, new revenue procedures governing requests under the mutual agreement procedure (MAP) and APA appli

cations were published in 2015-35 I.R.B. on pages 236 and 263, respectively. Revenue Procedure (Rev. Proc.) 2015-41 provides

guidance and instructions on filing APA requests as well as guidance and information on the administration of APAs. Rev. Proc.

2015-41 updates and supersedes Rev. Proc. 2006-9, 2006-1 C.B. 278, as modified by Rev. Proc. 2008-31, 2008-1 C.B. 1133, which is

also superseded. Rev. Proc. 2015-40 provides procedures and guidance on requesting assistance from the U.S. Competent Authority

where the taxpayer believes that the actions of the United States or a treaty country result or will result in the taxpayer being subject

to taxation not in accordance with the applicable U.S. tax treaty. Rev. Proc. 2015-40 updates and supersedes Rev. Proc. 2006-54,

2006-2 C.B. 1035.

Model APAs appear as appendices to this report. Appendix 1 is the model for APAs covered by Rev. Proc. 2006-9. Appendix 2 is the

current model APA for APAs covered by Rev. Proc. 2015-41. A list of primary APMA contacts is available at https://www.irs.gov/

businesses/corporations/apma-contacts.

In 2017, Transfer Pricing Operations became Treaty & Transfer Pricing Operations.

April 12, 2021

1012

Bulletin No. 2021–15

Part II. APMA Program Statistical Data

[Pub.

L. 106-170 § 521(b)(2)(C)(i-viii)]

[Pub. L. 106-170 § 521(b)(2)(C)(i-viii)]

Table

1: APA Applications

Filed

Table 1:

APA Applications

Filed

§ 521(b)(2)(C)(i)

Filed 19911999

Filed 20002019

Filed inFiled

2020 in 2020

Total Filed 1991-2020

Unilateral

Total Filed 1991-2020

Bilateral

Bilateral Multilateral

MultilateralTotal Total

401 401

622 622

1,6211,621

26 26 2,2692,269

15 15

103 103

3 121 121

2,791

APA Applications Filed

2011-2020

250

200

150

100

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Bilateral APA Applications Filed

by Country

All Other Countries

18%

United Kingdom

Japan

41%

Korea

Switzerland

5% Germany

India

11%

Canada

10%

Theabove

chartsillustrate

abovethe

illustrate

numberapplications

of complete

filed

per year

andreceived

the bilateral

The charts

number the

of complete

filedapplications

per year and the

bilateral

requests

in 2020 by foreign

requests

received

2020

by foreign

Asuser

of fee

December

2020,

APMA

had also

country.

As of December

31,in2020,

APMA

had alsocountry.

received 25

filings that31,

were

not yet

accompanied

by substantially com

plete APA

applications,

in addition

to thethat

121were

complete

applications. by substantially complete APA

received

25 user

fee filings

notAPA

yet accompanied

applications, in addition to the 121 complete APA applications.

The first APA Statutory Report, which compiled APA data from 19911999, did not report the cumulative number

of applications for those years by submission type, so the cumulative totals cannot be reported in that manner.

The first APA Statutory Report, which compiled APA data from 19911999, did not report the cumulative number of applications for those years by submission type, so the cumulative totals

cannot be reported in that manner.

Bulletin No. 2021–15

1013

April 12, 2021

and

Pending APAs

2: Executed

Table 2:Table

Executed

and Pending

APAs

§ 521(b)(2)(C)(ii-vi)

§ 521(b)(2)(C)(ii-vi)45

Total Executed

19912019 19912019

Total Executed

in 2020 in 2020

Total Executed

1991-2020 1991-2020

Total Executed

UnilateralBilateral

Bilateral

MultilateralTotal Total

Unilateral

Multilateral

643 643 1,280 1,280

17 1,940 1,940

105 105

127 127

662 662 1,385 1,385

20 2,067 2,067

Total Pending

as of 12/31/2020

Total Pending

as of 12/31/2020

384

448

Renewals Executed in 20204

Renewals Executed in 2020 4

Renewals Pending5 as of 12/31/2020

154

187

Renewals Pending as of 12/31/2020

Executed APAs

2011-2020

150

100

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Executed Bilateral APAs

by Country

All Other Countries

18%

Japan

52%

Denmark

United Kingdom

Canada

India

11%

2020,

the percentage

renewals

executed

remained(59

fairly

consistent

(59 percent

in in

2020

In 2020,Inthe

percentage

of renewals of

executed

remained

fairly consistent

percent

in 2020 versus

57 percent

2019). The charts

above illustrate

the total

number

of APAsThe

executed

perabove

year and

the countries

involved

in the executed

APAs.

versus 57

percent

in 2019).

charts

illustrate

the total

number

of APAsbilateral

executed

per

Executed APAs refer to all APAs finalized or renewed.

The number of renewals executed is included in the total number of APAs executed during the year.

The number of renewals still pending as of yearend is also included in the total number of pending APAs.

Executed APAs refer to all APAs finalized or renewed.

The number of renewals executed is included in the total number of APAs executed during the year.

The number of renewals still pending as of yearend is also included in the total number of pending APAs.

April 12, 2021

1014

Bulletin No. 2021–15

year and the countries involved in the executed bilateral APAs.

Pending APAs

2011-2020

500

400

300

200

100

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Pending Bilateral APAs

by Country

All Other Countries

16%

United Kingdom

Italy

Mexico

Japan

25%

Korea

India

20%

Canada

11%

Germany

10%

top

chart illustrates,

numberrequests

of pending

requests

slightly relative

As theAs

topthe

chart

illustrates,

the numberthe

of pending

decreased

slightlydecreased

relative to December

31, 2019.toAs of December 31,

2020, over

half of the

APA requests31,

involved

India,

Canada.bilateral APA requests

December

31,pending

2019. bilateral

As of December

2020,either

overJapan,

half of

the or

pending

involved either Japan, India, or Canada.

Table 3: APAs Revoked or Cancelled and Applications Withdrawn

§ 521(b)(2)(C)(vii)67

Table 3: APAs Revoked or Cancelled and Applications Withdrawn

Unilateral

Bilateral

Multilateral

Total

§ 521(b)(2)(C)(vii)

Revoked or Cancelled in 2020

Unilateral

Bilateral

Multilateral

Total

Total Revoked or Cancelled 1991-2020

Revoked or Cancelled in 2020

Total Revoked or Cancelled 1991-2020

Applications Withdrawn in 2020

Total Applications Withdrawn 1991-20207

Applications Withdrawn in 2020

Total Applications Withdrawn 1991-2020 7

272

The first APA Statutory Report, which compiled APA data from 19911999, did not report the cumulative number

of applications for those years by submission type, so the cumulative totals cannot be reported in that manner.

See supra note 6.

The first APA Statutory Report, which compiled APA data from 19911999, did not report the cumulative number of applications for those years by submission type, so the cumulative totals

cannot be reported in that manner.

See supra note 6.

Bulletin No. 2021–15

1015

April 12, 2021

Table 4: APAs Executed in 2020 by Industry

§ 521(b)(2)(C)(viii)

Manufacturing

Industry

Manufacturing

Wholesale/Retail

Trade

Wholesale/Retail

Trade

Services Services

Finance, and

Insurance,

and Real Estate

Finance, Insurance,

Real Estate

Management

Other Industries

All OtherAll

Industries

APAs Executed

in 2020 by Industry

Wholesale/Retail

Trade

31%

Manufacturing

34%

Services

17%

Finance, Insurance

and Real Estate

All Other Industries

Management

Table 4a: Manufacturing APAs Executed in 2020

Table 4a: Manufacturing

ManufacturingAPAs Executed in 2020

Manufacturing

Chemical Manufacturing

Transportation

Equipment

Manufacturing

Chemical

Manufacturing

Miscellaneous

Manufacturing

Transportation

Equipment Manufacturing

Food Manufacturing

Miscellaneous Manufacturing

Computer and Electronic Product Manufacturing

Food Manufacturing

Machinery Manufacturing

Computer and Electronic Product Manufacturing

Plastics and Rubber Products Manufacturing

Machinery

Manufacturing

All Other Manufacturing

Plastics and Rubber Products Manufacturing

All Other Manufacturing

Manufacturing APAs

Executed in 2020

Chemical

Manufacturing

All Other

19%

Manufacturing

Plastics and Rubber

Products

Manufacturing

Machinery

Manufacturing

Table 4b: Wholesale/Retail Trade APAs Executed in 2020

Wholesale/Retail Trade

April 12, 2021

1016

Merchant Wholesalers, Durable Goods

Transportation

Equipment

Manufacturing

19%

Miscellaneous

Manufacturing

16%

Food Manufacturing

14%

Computer and

Electronic Product

Manufacturing

11%

Bulletin No. 2021–15

Products

Manufacturing

Machinery

Manufacturing

Table 4b: Wholesale/Retail Trade APAs Executed in 2020

14%

Computer and

Electronic Product

Manufacturing

11%

Table 4b: Wholesale/Retail

Trade APAs Executed in 2020

Wholesale/Retail Trade

Wholesale/Retail

Trade

Merchant Wholesalers, Durable

Goods

Merchant

Wholesalers,

Durable

Goods

Merchant Wholesalers, Nondurable Goods

8 24

Merchant

Wholesalers,

Electronics

and Appliance

Stores Nondurable Goods

Electronics

All Other

Wholesalersand Appliance Stores

All Other Wholesalers

All Other

Wholesalers

Wholesale/Retail Trade APAs

Executed in 2020

Electronics and

Appliance Stores

12%

Merchant

Wholesalers, Durable

Goods

60%

Merchant

Wholesalers,

Nondurable Goods

20%

Part III. General Descriptions of APAs Executed in 2020

[Pub.

L.General

106-170

§ 521(b)(2)(D)

(E)] in 2020

Part III.

Descriptions

of APAsand

Executed

Nature of the Relationships

[Pub. L. 106-170 § 521(b)(2)(D) and (E)]

Nature

of the Relationships

§ 521(b)(2)(D)(i)

Relationships between

Controlled Parties

U.S. Parent & Non

U.S. Subsidiary

27%

Sister Companies

11%

NonU.S. Parent &

U.S. Subsidiary

61%

All Other

Relationships

As in prior years, more than half of the APAs executed in 2020 involved transactions between nonU.S. parents and U.S. subsidiaries.

As in prior years, more than half of the APAs executed in 2020 involved transactions between

nonU.S. parents and U.S. subsidiaries.

Covered Transactions, Functions and Risks, and Tested Parties

§ 521(b)(2)(D)(ii-iii)

Types of Covered Transactions

Sale of Tangible

Property into the U.S.

25%

All Other

Types of

Bulletin

No. 2021–15

Transactions

1017

Provision of Services

by a U.S. Entity

19%

Provision of Services

by a NonU.S. Entity

April 12, 2021

As in prior years, more than half of the APAs executed in 2020 involved transactions between

nonU.S. parents and U.S. subsidiaries.

Covered

Transactions,

Functions

and

Risks,

and Tested Parties

Covered

Transactions,

Functions and

Risks, and

Tested

Parties

521(b)(2)(D)(ii-iii)

§ 521(b)(2)(D)(ii-iii)

Types of Covered Transactions

Sale of Tangible

Property into the U.S.

25%

All Other Types of

Transactions

Use of Intangible

Property by a Non

U.S. Entity

6% Sale of Tangible

Property from the

U.S.

10%

Provision of Services

by a U.S. Entity

19%

Provision of Services

by a NonU.S. Entity

19%

Use of Intangible

Property by a U.S.

Entity

18%

most

the transactions

covered

in in

APAs

executed

involve

theorsale

of risks.

InAlthough

the

majority

ofofAPAs,

transactions

involve

numerous

functions

and

8 the covered

Although

most

of the

transactions

covered in APAs

executed

2020

involve

the in

sale2020

ofbusiness

tangible

goods

the provision

of services,

tangible

goods

the

provision

services,

approximately

percent

transactions

covered

in can be

For

instance,

with

respect

functions,

APAs

involving

manufactured

products

typically

involve

approximately 25 percent of transactions covered in APAs executed in 2020 involve the use of intangible property,

which

executed

inthat

2020

involve

the useinventory.

ofand

intangible

property,

which

can beinamong

thedesign

most

among

the

most

challenging

transactions

in APMA’s

aAPAs

controlled

group

conducts

research

development

(R&D),

engages

product

challenging

transactions

in APMA’s

inventory.

and

engineering,

manufactures

the product,

markets and distributes the product, and performs

In thesupport

majority functions

of APAs, thesuch

covered

transactions

involve

business functions

and risks.

For the

instance,

with respect to func

as legal,

finance,

andnumerous

human resources.

Regarding

risks,

controlled

tions, APAs

involving

manufactured

products

typically

involve a controlled group that conducts research and development (R&D),

APAs

often

cover

than

one

type

transaction.

group may assume a variety of risks, including market risks, R&D risks, financial risks, credit

engages in product design and engineering, manufactures the product, markets and distributes the product, and performs support

and such

collection

product

liability

risks,

and general

business

risks.

Inmay

theassume

APA evaluation

functions

as legal,risks,

finance,

and human

resources.

Regarding

risks, the

controlled

group

a variety of risks, including

process,

significant

amount

time

and

effort

devoted

understanding

how

the functions

8 product liability risks, and general business

market risks, R&D risks, financial risks, credit and collection risks,

risks. In the APA eval

risksa are

allocated

amongst

controlled

group

of companies

are partyand

to risks

the covered

uationand

process,

signifi

cant amount

of time the

and effort

is devoted

to understanding

howthat

the functions

are allocated amongst

the controlled

group For

of companies

are partyselection

to the covered

Forthe

methods

selection

of a tested party, the

transactions.

methodsthat

requiring

of a transactions.

tested party,

testedrequiring

party that

is chosen

testedgenerally

party that iswill

chosen

generally

be the least

complex

of the controlled

taxpayers.

be the

least will

complex

of the

controlled

taxpayers.

Types of Tested Parties

U.S. Distributor

41%

U.S. Service Provider

17%

All Othey Types of

Tested Parties

NonU.S. Distributor

10%

U.S. Manufacturer

15%

NonU.S. Service

Provider

16%

Consistent

with prior

years,

a majority

parties

2020 parties

were U.S.

distributors,

U.S.

manufacturers,

or U.S.

service providers.

Consistent

with

prior

years,ofa tested

majority

of9 in

tested

2020 were

U.S.

distributors,

U.S.

manufacturers, or U.S. service providers.

Transfer Pricing Methods Used

§ 521(b)(2)(D)(iv)

In 2020, the most commonly used transfer pricing method (TPM) for both the sale of tangible

property and the use of intangible property continued to be the comparable profits

method/transactional net margin method (CPM/TNMM). The CPM/TNMM was used for 84

percent of transfers of tangible and intangible property.

April 12, 2021

1018

Bulletin No. 2021–15

For covered transfers of tangible and intangible property that used the CPM/TNMM, the

APAs often cover more than one type of transaction.

Not all the executed APAs involve a tested party.

Transfer Pricing Methods Used

§ 521(b)(2)(D)(iv)

In 2020, the most commonly used transfer pricing method (TPM) for both the sale of tangible property and the use of intangible

property continued to be the comparable profits method/transactional net margin method (CPM/TNMM). The CPM/TNMM was used

for 84 percent of transfers of tangible and intangible property.

For covered transfers of tangible and intangible property that used the CPM/TNMM, the operating margin (OM) is still the most com

mon profit level indicator (PLI) used to benchmark results. It was used 69 percent of the time. Other PLIs, such as the Berry Ratio and

net cost plus, made up the other 31 percent. As used here, “OM” is defined as the ratio of operating profit to sales,10 and “Berry Ratio”

is defined as the ratio of gross profit to operating expenses.11 Most services transactions (85 percent) also used the CPM/TNMM with

the OM and operating profit to operating expense being the most common PLIs (used 57 percent of the time).12

Sources of Comparables, Comparables Selection Criteria, and Nature of Adjustments to Comparables or Tested Party Data

§ 521(b)(2)(D)(v-vii)

For the APAs executed in 2020 that involved CPM/TNMM with a North American tested party, the most widely used data source for

comparables was Standard and Poor’s Compustat/Capital IQ database. Different sources were used in other cases (e.g., where the

tested party was not a U.S. or Canadian entity or where transaction-based methods were applied). The other most commonly used

databases are listed in the table below.

Table 5: Sources of Comparable Data

Avention (formerly known as OneSource)

Bloomberg

Bureau van Dijk (BvD)

Global Vantage

ktMINE

LoanConnector

Mergent

Orbis

Prowess

RoyaltySource

RoyaltyStat

Worldscope

In making comparability adjustments, typical balance sheet adjustments, as identified in Treas. Reg. §§ 1.482-1(d)(2) and 1.482-5(c)

(2)(iv), were made in most cases, including adjustments for differing amounts of payables, receivables, and inventory. Where appro

priate, adjustments for different accounting practices were made to convert from LIFO to FIFO inventory accounting, and a small

number of cases also involved the accounting reclassification of expenses, e.g., from COGS to operating expenses.

Ranges, Goals, and Adjustment Mechanisms

§ 521(b)(2)(D)(viii-ix)

Most transactions covered in APAs target an interquartile range as described in Treas. Reg. § 1.482-1(e)(2)(iii)(C). Where the trans

action involves a royalty payment for the use of intangible property, both specific royalty rates and ranges have been used. Where the

covered transaction is the sale or license of intangible property, and the payment for such transfer would be a royalty based solely on

external comparable uncontrolled transactions, a secondary or confirming method, e.g., a test of the post-royalty operating margin

or cost-plus mark-up, has sometimes also been used. The testing periods of the APAs executed in 2020 were either a single year, the

term of the APA only, or the term of the APA plus rollback years.

APAs executed in 2020 included several mechanisms for making adjustments to the tested party results when the results fall outside

the range or do not match the point required by the APA. Examples of the mechanisms used are an adjustment bringing the tested

party’s results to the closer edge of the range applied to the results of a single year, an adjustment to the closer edge of the range

applied to the results over the APA term, an adjustment to the specified point or royalty rate, or an adjustment to the median of the

range for a single year.

See Treas. Reg. § 1.482-5(b)(4)(ii)(A).

See Treas. Reg. § 1.482-5(b)(4)(ii)(B).

The majority of APAs that covered services transactions also included tangible/intangible transactions and are not tested under a separate PLI.

Bulletin No. 2021–15

1019

April 12, 2021

Critical Assumptions

§ 521(b)(2)(D)(v)

The model APAs used by the IRS (included as Appendix 1 of this report) include standard critical assumptions that there will be no

material changes to the taxpayer’s business or to its tax or financial accounting practices during the APA term. A few bilateral cases

have also included critical assumptions tied to the taxpayer’s profitability in a certain year or over the term of the APA. Pursuant to

§ 7.06(3) of Rev. Proc. 2015-41, APMA will cancel an APA in the event of a failure of a critical assumption unless the parties agree

to revise the APA.

Term Lengths of APAs Executed in 2020

§ 521(b)(2)(D)(x)

Table 6: Term Lengths of APAs Executed in 2020

Term Length

(years)

Average

Number of

APAs

As described in § 3.03(1) of Rev. Proc. 2015-41, taxpayers should request an APA term that would cover at least five prospective

years and may also request that the APA be “rolled back” to cover one or more earlier taxable years, although the appropriate

APA term is decided on a case-by-case basis. Of the APAs executed in 2020, 11 percent included rollback years. A substantial number

of those APAs with terms of greater than five years were submitted as a request for a five-year term, and the additional years were

agreed to between the taxpayer and the IRS (or, in the case of a bilateral APA, between the IRS and the foreign government upon the

taxpayer’s request) to ensure a reasonable amount of prospectivity in the APA term.

Amount of Time Taken to Complete New and Renewal APAs

§ 521(b)(2)(E)

Table 7: Months to Complete New and Renewal APAs Executed in 2020

New

Renewal

New & Renewal

April 12, 2021

Unilateral

Average

Median

36.2

35.3

25.4

21.0

29.0

24.0

Bilateral

Average

Median

50.8

43.7

34.1

30.3

40.1

36.3

1020

Unilateral & Bilateral

Average

Median

48.9

43.7

32.8

29.6

38.5

32.7

Bulletin No. 2021–15

New

Renewal

New & Renewal

36.2

25.4

29.0

35.3

21.0

24.0

50.8

34.1

40.1

48.9

32.8

38.5

43.7

30.3

36.3

43.7

29.6

32.7

Months to Complete New and Renewal APAs Executed in 2020

Months to Complete

60.0

New

50.0

40.0

Renewal

30.0

New &

Renewal

20.0

10.0

0.0

Average

Median

Unilateral

Average

Median

Bilateral

Type of APA

Average

Median

Unilateral &

Bilateral

The median time required to complete an APA continued to decrease in 2020 to 32.7 months

The median

complete

an APA

(fromtime

38.8required

monthsto in

2019 and

40.2continued

monthstoindecrease

2018). in 2020 to 32.7 months (from 38.8 months in 2019 and 40.2

months in 2018).

Efforts

to Ensure

Compliance

Efforts

to Ensure

Compliance

with APAs with APAs

521(b)(2)(F)

§ 521(b)(2)(F)

As described

in § 7.02(1)

Rev. Proc.

201541,

taxpayers

are required

to fiare

le annual

reports

compliance

As described

in §of7.02(1)

of Rev.

Proc.

201541,

taxpayers

required

to to

filedemonstrate

annual reports

to with the

terms demonstrate

and conditions of

their APAs. The

review

these annual of

reports

criticalThe

partsfiling

of the APA

annual

compliance

withfiling

theand

terms

andofconditions

theirareAPAs.

and process.

reviewThrough

reportthese

review,annual

the APMA

Program

monitors

taxpayer

compliance

with

APAs

contemporaneous

basis.

Annual

report

review

also

reports are critical parts of the APA process. Through annual report review, the

provides current information on the success or problems associated with the various TPMs adopted in the APA process.

APMA Program monitors taxpayer compliance with APAs on a contemporaneous basis. Annual

report

review also Required

providesincurrent

on the success or problems associated with the

Nature

of Documentation

Annualinformation

Report

various

TPMs

adopted

the

APA

process.

§ 521(b)(2)(D)(xi)

APAs require taxpayers to file timely and complete annual reports describing their operations and demonstrating compliance with the

APA’s terms and conditions. Not every annual report will include each of the items listed in the following table 13; they are required

where the facts demonstrate a need for such documentation.

Statement regarding all material differences between Taxpayer’s business operations during APA year and description of

Taxpayer’s business operations contained in Taxpayer’s APA request. If there are no material differences, a statement to

that effect.

Statement concerning all material changes in Taxpayer’s accounting methods and classifications, and methods of estima

tion, from those described or used in Taxpayer’s request for the APA. If there has been no material change in accounting

methods and classifications or methods of estimation, a12

statement to that effect.

Any change to the Taxpayer notice information.

Description of any failure to meet critical assumptions. If there has been none, a statement to that effect.

Statement identifying whether any material information submitted while the APA request was pending is discovered to be

false, incorrect, or incomplete.

The amount, reason for, and financial analysis of any compensating adjustment, for the APA year, including but not limited

to the amounts paid or received by each affected entity; the character (such as capital or ordinary expense) and country

source of the funds transferred, and the specific line item(s) of any affected U.S. tax return; and any change to any entity

classification for federal income tax purposes of any member of Taxpayer’s group that is relevant to the APA.

The amounts, description, reason for, and financial analysis of any booktax difference relevant to the TPM for the APA

year, as reflected on Schedule M1 or Schedule M3 of the U.S. return for the APA year.

Statement regarding whether Taxpayer contemplates requesting, or has requested, to renew, modify, or cancel the APA.

The source of this list is the 2009 Model APA and requirements remain largely unchanged in the 2015 Model APA.

Bulletin No. 2021–15

1021

April 12, 2021

Financial statements and any necessary account detail to show compliance with the TPM, with a copy of the opinion from

an independent certified public accountant or other documentation required by paragraph 5(f) of the APA.

10.

Financial analysis demonstrating Taxpayer’s compliance with TPM.

11.

Organizational chart.

12.

A copy of the APA and any amendment.

13.

A penalty of perjury statement.

Approaches for Sharing of Currency or Other Risks

§ 521(b)(2)(D)(xii)

In appropriate cases, APAs may provide specific approaches for dealing with risks, including currency risk, such as adjustment mech

anisms and/or critical assumptions.

April 12, 2021

1022

Bulletin No. 2021–15

APPENDIX 1– Model APA (based on Rev. Proc. 2006-9)

ADVANCE PRICING AGREEMENT

between

[Insert Taxpayer’s Name]

and

THE INTERNAL REVENUE SERVICE

PARTIES

The Parties to this Advance Pricing Agreement (APA) are the Internal Revenue Service (IRS) and [Insert Taxpayer’s Name], EIN

________.

RECITALS

[Insert Taxpayer Name] is the common parent of an affiliated group filing consolidated U.S. tax returns (collectively referred to as

“Taxpayer”), and is entering into this APA on behalf of itself and other members of its consolidated group.

Taxpayer’s principal place of business is [City, State]. [Insert general description of taxpayer and other relevant parties].

This APA contains the Parties’ agreement on the best method for determining arm’s-length prices of the Covered Transactions

under I.R.C. section 482, the Treasury Regulations thereunder, and any applicable tax treaties.

{If renewal, add} [Taxpayer and IRS previously entered into an APA covering taxable years ending _____ to ______, executed on

________.]

AGREEMENT

The Parties agree as follows:

Covered Transactions. This APA applies to the Covered Transactions, as defined in Appendix A.

Transfer Pricing Method. Appendix A sets forth the Transfer Pricing Method (TPM) for the Covered Transactions.

Term. This APA applies to the APA Term, as defined in Appendix A.

Operation.

a. Revenue Procedure 2006-9 governs the interpretation, legal effect, and administration of this APA.

b. Nonfactual oral and written representations, within the meaning of sections 10.04 and 10.05 of Revenue Procedure 2006-9

(including any proposals to use particular TPMs), made in conjunction with the APA Request constitute statements made in

compromise negotiations within the meaning of Rule 408 of the Federal Rules of Evidence.

5. Compliance.

a. Taxpayer must report its taxable income in an amount that is consistent with Appendix A and all other requirements of this

APA on its timely filed U.S. Return. However, if Taxpayer’s timely filed U.S. Return for any taxable year covered by this

APA (APA Year) is filed prior to, or no later than 60 days after, the effective date of this APA, then Taxpayer must report its

taxable income for that APA Year in an amount that is consistent with Appendix A and all other requirements of this APA

either on the original U.S. Return or on an amended U.S. Return filed no later than 120 days after the effective date of this

APA, or through such other means as may be specified herein.

b. {Use or edit the following when U.S. Group or Foreign Group contains more than one member.} [This APA addresses the

arm’s-length nature of prices charged or received in the aggregate between Taxpayer and Foreign Participants with respect

to the Covered Transactions. Except as explicitly provided, this APA does not address and does not bind the IRS with respect

to prices charged or received, or the relative amounts of income or loss realized, by particular legal entities that are members

of U.S. Group or that are members of Foreign Group.]

Bulletin No. 2021–15

1023

April 12, 2021

For each APA Year, if Taxpayer complies with the terms and conditions of this APA, then the IRS will not make or propose

any allocation or adjustment under I.R.C. section 482 to the amounts charged in the aggregate between Taxpayer and For

eign Participant[s] with respect to the Covered Transactions.

d. If Taxpayer does not comply with the terms and conditions of this APA, then the IRS may:

i. enforce the terms and conditions of this APA and make or propose allocations or adjustments under I.R.C. section 482

consistent with this APA;

ii. cancel or revoke this APA under section 11.06 of Revenue Procedure 2006-9; or

iii. revise this APA, if the Parties agree.

e. Taxpayer must timely file an Annual Report (an original and four copies) for each APA Year in accordance with Appendix C

and section 11.01 of Revenue Procedure 2006-9. Taxpayer must file the Annual Report for all APA Years through the APA

Year ending [insert year] by [insert date]. Taxpayer must file the Annual Report for each subsequent APA Year by [insert

month and day] immediately following the close of that APA Year. (If any date falls on a weekend or holiday, the Annual

Report shall be due on the next date that is not a weekend or holiday.) The IRS may request additional information reason

ably necessary to clarify or complete the Annual Report. Taxpayer will provide such requested information within 30 days.

Additional time may be allowed for good cause.

f. The IRS will determine whether Taxpayer has complied with this APA based on Taxpayer’s U.S. Returns, the Financial

Statements, and other APA Records, for the APA Term and any other year necessary to verify compliance. For Taxpayer

to comply with this APA, {use the following or an alternative} an independent certified public accountant must render an

opinion that Taxpayer’s Financial Statements present fairly, in all material respects, Taxpayer’s financial position under U.S.

GAAP.

g. In accordance with section 11.04 of Revenue Procedure 2006-9, Taxpayer will (1) maintain the APA Records, and (2) make

them available to the IRS in connection with an examination under section 11.03. Compliance with this subparagraph consti

tutes compliance with the record-maintenance provisions of I.R.C. sections 6038A and 6038C for the Covered Transactions

for any taxable year during the APA Term.

h. The True Taxable Income within the meaning of Treasury Regulations sections 1.482-1(a)(1) and (i)(9) of a member of an

affiliated group filing a U.S. consolidated return will be determined under the I.R.C. section 1502 Treasury Regulations.

i. {Optional for US Parent Signatories} To the extent that Taxpayer’s compliance with this APA depends on certain acts of

Foreign Group members, Taxpayer will ensure that each Foreign Group member will perform such acts.

6. Critical Assumptions. This APA’s critical assumptions, within the meaning of Revenue Procedure 2006-9, section 4.05, appear in

Appendix B. If any critical assumption has not been met, then Revenue Procedure 2006-9, section 11.06, governs.

7. Disclosure. This APA, and any background information related to this APA or the APA Request, are: (1) considered “return in

formation” under I.R.C. section 6103(b)(2)(C); and (2) not subject to public inspection as a “written determination” under I.R.C.

section 6110(b)(1). Section 521(b) of Pub. L. 106-170 provides that the Secretary of the Treasury must prepare a report for public

disclosure that includes certain specifically designated information concerning all APAs, including this APA, in a form that does

not reveal taxpayers’ identities, trade secrets, and proprietary or confidential business or financial information.

8. Disputes. If a dispute arises concerning the interpretation of this APA, the Parties will seek a resolution by the Director of the

Advance Pricing and Mutual Agreement Program, to the extent reasonably practicable, before seeking alternative remedies.

9. Materiality. In this APA the terms “material” and “materially” will be interpreted consistently with the definition of “material

facts” in Revenue Procedure 2006-9, section 11.06(4).

10. Section Captions. This APA’s section captions, which appear in italics, are for convenience and reference only. The captions do

not affect in any way the interpretation or application of this APA.

11. Terms and Definitions. Unless otherwise specified, terms in the plural include the singular and vice versa. Appendix D contains

definitions for capitalized terms not elsewhere defined in this APA.

12. Entire Agreement and Severability. This APA is the complete statement of the Parties’ agreement. The Parties will sever, delete,

or reform any invalid or unenforceable provision in this APA to approximate the Parties’ intent as nearly as possible.

13. Successor in Interest. This APA binds, and inures to the benefit of, any successor in interest to Taxpayer.

14. Notice. Any notices required by this APA or Revenue Procedure 2006-9 must be in writing. Taxpayer will send notices to the IRS

at the address and in the manner set forth in Revenue Procedure 2006-9, section 4.11. The IRS will send notices to:

Taxpayer Corporation

Attn: Jane Doe, Sr. Vice President (Taxes)

1000 Any Road

Any City, USA 10000

(phone: _________)

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15. Effective Date and Counterparts. This APA is effective starting on the date, or later date of the dates, upon which all Parties

execute this APA. The Parties may execute this APA in counterparts, with each counterpart constituting an original.

WITNESS,

The Parties have executed this APA on the dates below.

[Taxpayer Name in all caps]

By: ___________________________

Jane Doe

Sr. Vice President (Taxes)

Date: ___________________, 201___

IRS

By: ___________________________ Date: ___________________, 201___

John C. C. Hughes

Director, Advance Pricing and Mutual Agreement Program

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APPENDIX A

COVERED TRANSACTIONS AND TRANSFER PRICING METHOD (TPM)

Covered Transactions.

[Define the Covered Transactions.]

APA Term.

This APA applies to Taxpayer’s taxable years ending __________ through ________ (APA Term).

TPM.

{Note: If appropriate, adapt language from the following examples.}

[The Tested Party is __________.]

•

CUP Method

The TPM is the comparable uncontrolled price (CUP) method. The Arm’s Length Range of the price charged for _________

is between _______ and ___________ per unit.

•

CUT Method

The TPM is the CUT Method. The Arm’s Length Range of the royalty charged for the license of ______is between ____%

and ___ % of [Taxpayer’s, Foreign Participants’, or other specified party’s] Net Sales Revenue. [Insert definition of net sales

revenue or other royalty base.]

•

Resale Price Method (RPM)

The TPM is the resale price method (RPM). The Tested Party’s Gross Margin for any APA Year is defined as follows: the

Tested Party’s gross profit divided by its sales revenue (as those terms are defined in Treasury Regulations sections 1.4825(d)(1) and (2)) for that APA Year. The Arm’s Length Range is between ____% and ___ %, and the Median of the Arm’s

Length Range is ___%.

•

Cost Plus Method

The TPM is the cost plus method. The Tested Party’s Cost Plus Markup is defined as follows for any APA Year: the Tested

Party’s ratio of gross profit to production costs (as those terms are defined in Treasury Regulations sections 1.482-3(d)(1)

and (2)) for that APA Year. The Arm’s Length Range is between ___% and ___%, and the Median of the Arm’s Length Range

is ___%.

•

CPM with Berry Ratio PLI

The TPM is the comparable profits method (CPM). The profit level indicator is a Berry Ratio. The Tested Party’s Berry Ratio

is defined as follows for any APA Year: the Tested Party’s gross profit divided by its operating expenses (as those terms are

defined in Treasury Regulations sections 1.482-5(d)(2) and (3)) for that APA Year. The Arm’s Length Range is between ____

and ___, and the Median of the Arm’s Length Range is ___.

•

CPM using an Operating Margin PLI

The TPM is the comparable profits method (CPM). The profit level indicator is an operating margin. The Tested Party’s

Operating Margin is defined as follows for any APA Year: the Tested Party’s operating profit divided by its sales revenue (as

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those terms are defined in Treasury Regulations section 1.482-5(d)(1) and (4)) for that APA Year. The Arm’s Length Range

is between ____% and ___ %, and the Median of the Arm’s Length Range is ___%.

•

CPM using a Three-year Rolling Average Operating Margin PLI

The TPM is the comparable profits method (CPM). The profit level indicator is an operating margin. The Tested Party’s

Three-Year Rolling Average operating margin is defined as follows for any APA Year: the sum of the Tested Party’s operat

ing profit (within the meaning of Treasury Regulation section 1.482-5(d)(4) for that APA Year and the two preceding years,

divided by the sum of its sales revenue (within the meaning of Treasury Regulation section 1.482-5(d)(1)) for that APA Year

and the two preceding years. The Arm’s Length Range is between ____% and ____%, and the Median of the Arm’s Length

Range is ___%.

•

Residual Profit Split Method

The TPM is the residual profit split method. [Insert description of routine profit level determinations and residual profit-split

mechanism].

[Insert additional provisions as needed.]

Application of TPM.

For any APA Year, if the results of Taxpayer’s actual transactions produce a [price per unit, royalty rate for the Covered Transactions]

[or] [Gross Margin, Cost Plus Markup, Berry Ratio, Operating Margin, Three-Year Rolling Average Operating Margin for the Tested

Party] within the Arm’s Length Range, then the amounts reported on Taxpayer’s U.S. Return must clearly reflect such results.

For any APA year, if the results of Taxpayer’s actual transactions produce a [price per unit, royalty rate] [or] [Gross Margin, Cost

Plus Markup, Berry Ratio, Operating Margin, Three-Year Rolling Average Operating Margin for the Tested Party] outside the Arm’s

Length Range, then amounts reported on Taxpayer’s U.S. Return must clearly reflect an adjustment that brings the [price per unit,

royalty rate] [or] [Tested Party’s Gross Margin, Cost Plus Markup, Berry Ratio, Operating Margin, Three-Year Rolling Average Op

erating Margin] to the Median.

For purposes of this Appendix A, the “results of Taxpayer’s actual transactions” means the results reflected in Taxpayer’s and Tested

Party’s books and records as computed under U.S. GAAP [insert another relevant accounting standard if applicable], with the fol

lowing adjustments:

(a) [The fair value of stock-based compensation as disclosed in the Tested Party’s audited financial statements shall be treated as an

operating expense]; and

(b) To the extent that the results in any prior APA Year are relevant (for example, to compute a multi-year average), such results shall

be adjusted to reflect the amount of any adjustment made for that prior APA Year under this Appendix A.

APA Revenue Procedure Treatment

If Taxpayer makes an adjustment under paragraph 4 of this Appendix A (a “primary adjustment”), Taxpayer and its related foreign

entity may elect APA Revenue Procedure Treatment in accordance with section 11.02(3) of Revenue Procedure 2006-9 and avoid the

possible adverse tax consequences of a secondary adjustment that would otherwise follow the primary adjustment.

[Insert additional provisions as needed.]

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APPENDIX B

CRITICAL ASSUMPTIONS

This APA’s critical assumptions are:

1. The business activities, functions performed, risks assumed, assets employed, and financial and tax accounting methods and

classifications [and methods of estimation] of Taxpayer in relation to the Covered Transactions will remain materially the same as

described or used in Taxpayer’s APA Request. A mere change in business results will not be a material change.

[Insert additional provisions as needed.]

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APPENDIX C

APA RECORDS AND ANNUAL REPORT

APA RECORDS

The APA Records will consist of all documents listed below for inclusion in the Annual Report, as well as all documents, notes,

work papers, records, or other writings that support the information provided in such documents.

ANNUAL REPORT

The Annual Report (and each of the four copies required by paragraph 5(e) of this APA) will include:

Two copies of a properly completed APA Annual Report Summary in the form of Appendix E to this APA, one copy of the form

bound with, and one copy provided separately from, the rest of the Annual Report.

A table of contents, organized as follows:

Statements that fully identify, describe, analyze, and explain:

All material differences between the U.S. Group’s business operations (including functions, risks assumed, markets, con

tractual terms, economic conditions, property, services, and assets employed) during the APA Year from the business oper

ations described in the APA Request. If there have been no material differences, the Annual Report will include a statement

to that effect.

All material differences between the U.S. Group’s accounting methods and classifications, and methods of estimation used

during the APA Year, from those described or used in the APA Request. If any change was made to conform to changes in

U.S. GAAP (or other relevant accounting standards) Taxpayer will specifically identify the change. If there has been no ma

terial change in accounting methods and classifications or methods of estimation, the Annual Report will include a statement

to that effect.

Any change to the Taxpayer notice information in paragraph 14 of this APA.

Any failure to meet any critical assumption. If there has been no failure, the Annual Report will include a statement to that

effect.

Whether or not material information submitted while the APA Request was pending is discovered to be false, incorrect, or

incomplete.

Any change to any entity classification for federal income tax purposes (including any change that causes an entity to be

disregarded for federal income tax purposes) of any Worldwide Group member that is a party to the Covered Transactions

or is otherwise relevant to the TPM.

The amount, reason for, and financial analysis of (1) any primary adjustments made under Appendix A for the APA Year; and

(2) any (a) secondary adjustments that follow such primary adjustments or (b) accounts receivable that Taxpayer establishes,

in lieu of secondary adjustments, by electing APA Revenue Procedure Treatment pursuant to paragraph 5 of Appendix A and

Revenue Procedure 2006-9, section 11.02(3), for the APA Year, including but not limited to:

the amounts due or owed, and paid or received by each affected entity;

ii. the character (such as capital, ordinary, income, expense) and country source of the funds transferred, and the specific

affected line item(s) of any affected U.S. Return;

iii. the date(s) and means by which the payments are or will be made; and

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iv. whether or not APA Revenue Procedure Treatment was elected pursuant to paragraph 5 of Appendix A and Revenue

Procedure 2006-9, section 11.02(3).

The amounts, description, reason for, and financial analysis of any book-tax difference relevant to the TPM for the APA Year,

as reflected on Schedule M-1 or Schedule M-3 of the U.S. Return for the APA Year.

Whether Taxpayer contemplates requesting, or has requested, to renew, modify, or cancel the APA.

The Financial Statements, and any necessary account detail to show compliance with the TPM, including consolidating financial

statements, segmented financial data, records from the general ledger, or similar information if the assets, liabilities, income, or

expenses relevant to showing compliance with the TPM are a subset of the assets, liabilities, income, or expenses presented in

the Financial Statements.

{Use the following or the alternative prescribed by paragraph 5(f) of this APA:} A copy of the independent certified public ac

countant’s opinion required by paragraph 5(f) of this APA.

A financial analysis that reflects Taxpayer’s TPM calculations for the APA Year. The calculations must reconcile with and refer

ence the information required under item 4 above in sufficient account detail to allow the IRS to determine whether Taxpayer has

complied with the TPM.

An organizational chart for the Worldwide Group, revised annually to reflect all ownership or structural changes of entities that

are parties to the Covered Transactions or are otherwise relevant to the TPM.

A copy of the APA and any amendment.

A penalty of perjury statement, executed in accordance with Revenue Procedure 2006-9, section 11.01(6) and (7).

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APPENDIX D

DEFINITIONS

The following definitions control for all purposes of this APA. The definitions appear alphabetically below:

Term

Annual Report

APA

Definition

A report within the meaning of Revenue Procedure 2006-9, section 11.01.

This Advance Pricing Agreement, which is an “advance pricing agreement” within the meaning of

Revenue Procedure 2006-9, section 2.04.

APA Records

The records specified in Appendix C.

APA Request

Taxpayer’s request for this APA dated _________, including any amendments or supplemental or

additional information thereto.

APA Year

This term is defined in paragraph 5(a) of this APA.

Covered Transaction(s)

This term is defined in Appendix A.

Financial Statements

Financial statements prepared in accordance with U.S. GAAP and stated in U.S. dollars.

Foreign Group

Worldwide Group members that are not U.S. persons.

Foreign Participants

[name the foreign entities involved in Covered Transactions].

I.R.C.

The Internal Revenue Code of 1986, 26 U.S.C., as amended.

Pub. L. 106-170

The Ticket to Work and Work Incentives Improvement Act of 1999.

Revenue Procedure 2006-9 Rev. Proc. 2006-9, 2006-1 C.B. 278.

Transfer Pricing Method

A transfer pricing method within the meaning of Treasury Regulation section 1.482-1(b) and Reve

(TPM)

nue Procedure 2006-9, section 2.04.

U.S. GAAP

U.S. generally-accepted accounting principles.

U.S. Group

Worldwide Group members that are U.S. persons.

U.S. Return

For each taxable year, the “returns with respect to income taxes under subtitle A” that Taxpayer

must “make” in accordance with I.R.C. section 6012. {Or substitute for partnership: For each tax

able year, the “return” that Taxpayer must “make” in accordance with I.R.C. section 6031.}

Worldwide Group

Taxpayer and all organizations, trades, businesses, entities, or branches (whether or not incorpo

rated, organized in the United States, or affiliated) owned or controlled directly or indirectly by the

same interests.

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APPENDIX E

APA ANNUAL REPORT SUMMARY FORM

The APA Annual Report Summary on the next page is a required APA Record. The APA Team Leader supplies some of the infor

mation requested on the form. Taxpayer is to supply the remaining information requested by the form and submit the form as part of

its Annual Report.

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APA Annual Report

Department of the Treasury—Internal Revenue Service

SUMMARY

Large Business and International Division

Team Leader _______________________

Treaty and Transfer Pricing Operations

Economist _______________________________

Advance Pricing and Mutual Agreement Program

Intl Examiner _____________________________

APA Information

APA No. _______________

Taxpayer Name: ___________________________________________________

Taxpayer EIN:_________________ NAICS:___________________

APA Term: Taxable years ending ________ to ____________

Original APA [ ] Renewal APA [ ]

Annual Report due dates:

_________________, 201__ for all APA Years through APA Year ending in 200__; for each APA Year

thereafter, on _________________ [month and day] immediately following the close of the APA Year

Principal foreign country(ies) involved in covered transaction(s): _______________________________________

Type of APA: [ ] unilateral [ ] bilateral with ________________

Tested party is [ ] US [ ] foreign [ ] both

Approximate dollar volume of covered transactions (on an annual basis) involving tangible goods and services:

[ ] N/A [ ] <$50 million [ ] $50100 million [ ] $100250 million [ ] $250500 million [ ] >$500 million

APA tests on (check all that apply):

[ ] annual basis [ ] multiyear basis [ ] term basis

APA provides (check all that apply) a:

[ ] range [ ] point [ ] floor only [ ] ceiling only [ ] other_____________

APA provides for adjustment (check all that apply) to:

[ ] nearest edge [ ] median [ ] other point

APA Annual Report

Information

(to be completed

by the Taxpayer)

APA date executed: ______________, 201__

This APA Annual Report Summary is for APA Year(s) ending in 200__ and was filed on _____________, 201__

Check here [ ] if Annual Report was filed after original due date but in accordance with extension.

Has this APA been amended or changed? [ ] yes [ ] no

Effective Date: ______________________

Has Taxpayer complied with all APA terms and conditions? [ ] yes [ ] no

Were all the critical assumptions met? [ ] yes [ ] no

Has a Primary Compensating Adjustment been made in any APA Year covered by this Annual Report?

[ ] yes [ ] no If yes, which year(s): 200___

Have any necessary Secondary Compensating Adjustments been made? [ ] yes [ ] no

Did Taxpayer elect APA Revenue Procedure treatment? [ ] yes [ ] no

Any change to the entity classification of a party to the APA? [ ] yes [ ] no

Taxpayer notice information contained in the APA remains unchanged? [ ] yes [ ] no

Taxpayer’s current US principal place of business: (City, State) _____________________________________

APA Annual Report

Financial analysis reflecting TPM calculations

[ ] yes [ ] no

Checklist of

Financial statements showing compliance with TPM(s)

[ ] yes [ ] no

Key Contents

Schedule M1 or M3 booktax differences

[ ] yes [ ] no

(to be completed

Current organizational chart of relevant portion of worldwide group

[ ] yes [ ] no

by the Taxpayer)

Attach copy of APA

[ ] yes [ ] no

Other APA records and documents included:

Contact Information

Authorized Representative

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Affiliation and Address

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APPENDIX 2– Model APA (bAsed on Rev. PRoc. 2015-41)

TEMPLATE FOR

ADVANCE PRICING AGREEMENT

UNDER REVENUE PROCEDURE 2015-41

_______________

The Advance Pricing and Mutual Agreement Program (“APMA”) of the Internal Revenue Service (“IRS”) is providing this

template for use in drafting advance pricing agreements (“APAs”) issued under IRS Revenue Procedure 201541, 201535 I.R.B.

263 (“Rev. Proc. 201541”). This template is designed to systematize how taxpayers propose terms for their APAs and standardize

language used in executed APAs. It will improve efficiency in the APA process and enhance consistency in the administration of the

APA program.

Rev. Proc. 201541 requires that taxpayers include as part of a complete APA request a draft APA and a “redline” comparison of the

proposed draft APA against the current model APA. See section 2.03, exhibit 15, of the Appendix to Rev. Proc. 201541. This template

serves as the model APA. A taxpayer is required to produce the “redline” comparison by following the instructions below to edit this

template with tracked changes. The draft APA and “redline” comparison are then to be included in Word format in the complete APA

request. (Before editing the template with tracked changes, a taxpayer should remove this introduction and the instructions below

from the Microsoft Word file.)

The assigned APMA team will review the APA’s terms proposed in the draft APA. If the APMA team accepts the proposed terms

in light of its review of the taxpayer’s complete APA request and other information obtained during the APA process, then the text of

the draft APA, edited as needed to fill in any information not available at the time of the APA Request, will be adopted as the text of

a finally executed APA. If the APMA team does not accept the proposed terms, it will discuss modifications to the draft APA with the

taxpayer during the APA process. For bilateral and multilateral APAs, the terms of the executed APA will of necessity be consistent

with the terms of the underlying mutual agreement between the United States and one or more treaty partners.

GENERAL INSTRUCTIONS

The template is designed to minimize editing by using an optionsbased format for selecting from terms presented in certain sec

tions of the model APA. The options presented are those which APMA considers standard and which it has accepted in final APAs.

These options are not binding on APMA, however. APMA reserves the right to modify the option selections, the specific option lan

guage used, or any other terms before executing an APA with the taxpayer.

Options are indicated by square brackets (“[]”). An “x” should be inserted between the brackets to indicate the selected option

(“[x]”). Options that are not selected should not be deleted, but instead should be left in the text of the draft APA. The options to which

APMA and the taxpayer ultimately agree for the final APA will be indicated by the presence or absence of an “x”. The term associated

with the “x” will be given operative effect in the executed APA.

Certain options are flagged with an asterisk after the square brackets (“[]*”). To facilitate the APMA team’s subsequent review of

the draft APA, the asterisks should not be deleted. Taxpayers that select flagged options are required to specifically provide justifica

tion for the selection in the APA request. See section 1.02, Part 5, of the Appendix to Rev. Proc. 201541.

The template contains placeholder phrases consisting of a hashtag followed by one or more words in block capital letters (e.g.,

“#COUNTRY”). Generally, the taxpayer should replace a placeholder phrase with appropriate text, subject to the following conven

tions:

•

If a placeholder phrase occurs within an option that the taxpayer has rejected, the taxpayer should change the hashtag to a

caret (e.g., change “#COUNTRY” to “^COUNTRY”) but otherwise leave the phrase intact.14 The caret indicates that the

Taxpayer has rejected this option. For example, for a bilateral APA with Japan, the lines on the first page just below the title

would read:

As a result, almost all occurrences of the hashtag in the template will be replaced with a caret or other text in the taxpayer’s draft APA. The few remaining occurrences of the hashtag will

mark a placeholder phrase that cannot yet be replaced with appropriate text (see, for example, the placeholder phrase in paragraph 6(e) for a date that cannot be determined until the APA nears

execution). Searching the draft APA for the hashtag will locate all placeholder phrases that still need replacement.

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[x] Bilateral with Japan

[] Multilateral with ^COUNTRIES

[] Unilateral

•

The placeholder phrase “#CURRENCY” should be replaced, for example, with “U.S. dollars,” “Euros,” or “Japanese yen.”

•

The placeholder phrase “#DATE” should be replaced with a date in the format of “December 31, 2020.”

The APA Term will be expressed as dates certain, e.g., “January 1, 2017 to December 31, 2022, inclusive”, rather than as particular

tax years.

Taxpayers may need to draft custom text for situations or options not included in the template. For example, a taxpayer may pro

pose additional critical assumptions to address specific regulatory contingencies or conditions the taxpayer is expected to face during

the term of the APA. As another example, the provision titled “Limitation on Assistance” at the end of the Recitals might be modified

based on an understanding reached in the prefiling stage of the APA process. In some cases, a particular critical assumption might fa

cilitate reaching an agreement on an APA. Taxpayers that include custom text are required to specifically provide justification for the

inclusion in the APA request, just as selecting an option with an asterisk requires justification. Any custom text must also be evident

in the “redline” comparison of the proposed draft APA.

INSTRUCTIONS ON TABLES

The template contains certain tables that the taxpayer should edit. Entries in the tables will not contain hashtags, but taxpayers

nevertheless should fill in the information and add additional rows to the tables if needed. Taxpayers also should fill in the “APA

Information” in the table in Appendix D, to the extent available or proposed.

INSTRUCTIONS ON APPENDIX A

Appendix A of this template contains the description of the APA’s covered issue(s) and covered method(s). Taxpayers should note

the following points in completing Appendix A:

•

The template includes just one covered issue with one corresponding covered method. If there is more than one covered Is

sue proposed for the APA, the taxpayer should add additional covered issues in Appendix A, section 3, with tracked changes.

•

If there is more than one covered method, the taxpayer should first replicate the template’s entire text for Covered Method

1 in Appendix A, section 4, without tracked changes, to provide template text for each additional covered method, and then

edit the text for each covered method with tracked changes.

•

Normally, each covered issue will have its own corresponding covered method. However, in some cases, a covered method

may apply at once to more than one covered issue. For example, covered issues may be proposed to be aggregated and tested

by a single covered method. In such cases, the heading for that covered method could read, for example, “Covered Method

for Covered Issues 1-3”.

•

Any interaction between different covered methods should be adequately explained in the text, and in an appropriate man

ner. For example, an explanation might be provided in an introduction at the start of section 4 of Appendix A, preceding the

description of the respective covered methods.

Appendix A uses the term “Tested Party.” When applied in the context of methods that consider, or test, data from only one party

to a transaction, this term is similar in concept to the term “tested party” as discussed in the OECD Guidelines at paragraphs 3.18

and 3.19, and as defined in the U.S. Treasury Regulations section 1.482-5(b)(2). However, some methods consider, or test, data from

both parties to a transaction, where there is no singular “tested” party. Even in applying such methods, however, it is typically the

case that one particular party’s results are formally tested for compliance with the method. For purposes of this template, in such

circumstances, the party whose results are formally tested in applying any particular method is the “Tested Party”, even if that party

is not strictly a “tested party” as discussed in the OECD Guidelines paragraphs 3.18 and 3.19, or as defined in the U.S. Treasury

Regulations section 1.482-5(b)(2).

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ADVANCE PRICING AGREEMENT

between

#SIGNATORY

and

THE INTERNAL REVENUE SERVICE

[] Bilateral with #COUNTRY

[] Multilateral with #COUNTRIES

[] Unilateral

Term: #DATE to #DATE, inclusive

[] This APA is commonly referred to as #APA NAME.

PARTIES

The Parties to this APA are the Internal Revenue Service (“IRS”) and #NAME OF EACH NON-IRS SIGNATORY, WITH EIN.

[]

#SIGNATORY will be referred to as “U.S. Taxpayer.”

[]

#SIGNATORY is the common parent of an affiliated group filing consolidated U.S. tax returns and is entering into this APA

on behalf of both itself and the following members of its consolidated group: #MEMBERS OF GROUP. All members of this

consolidated group will be referred to collectively as “U.S. Taxpayer.”

RECITALS

[]

This APA is a renewal of one or more prior APAs, which are listed below in reverse chronological order:

Party(ies)

Execution Date

Term

Key:

•

Party(ies): The signatory(ies) to the prior APA, other than the IRS, with each signatory’s taxpayer identification

number;

•

Execution Date: The date, or the later of the dates, on which the prior APA was executed;

•

Term: The term of the prior APA.

[]

This is a bilateral APA within the meaning of Rev. Proc. 2015-41 and implements the terms of a mutual agreement reached

between the United States and #COUNTRY.

[]

This is a multilateral APA within the meaning of Rev. Proc. 2015-41 and implements the terms of a mutual agreement

reached among the United States, #COUNTRIES.

[]

This APA is a unilateral APA within the meaning of Rev. Proc. 2015-41 and is not based on any mutual agreement.

The Parties to this APA are defined in the ”Parties” section above. Regarding the Party(ies) to this APA other than the IRS:

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No such Party has an immediate parent or owner that is not a U.S. entity.

[]

One or more such Parties has an immediate parent or owner that is not a U.S. entity, as follows:

April 12, 2021

1036

Bulletin No. 2021–15

Party

Parent’s or Owner’s Identifying

Information

Parent’s or Owner’s Contact Information

Key:

•

Part

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