Bulletin No. 2024–50

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2024–50

December 9, 2024

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE

T.D. 10013, page 1220.

This document contains amendments to the regulations

relating to the disclosure of specified return information to

the Census Bureau. The amendments would ensure the efficient and appropriate disclosure of return information to the

Census Bureau and would permit the disclosure of additional

return information pursuant to a request from the Secretary

of Commerce.

EMPLOYEE PLANS

Announcement 2024-38, page 1230.

This announcement notifies the public that the IRS intends

to issue opinion letters on November 29, 2024, or as soon

as possible thereafter, for § 403(b) pre-approved plans that

were updated for changes with respect to the requirements

of § 403(b), including the 2022 Cumulative List, and that

were filed during the second remedial amendment cycle for

§ 403(b) pre-approved plans. This announcement also notifies the public of the date by which an adopting employer

intending to maintain a § 403(b) pre-approved plan for the

second cycle must adopt that plan, and announces the beginning and ending dates of the period during which an adopting

employer may file for an individual determination letter under

the second remedial amendment cycle. This announcement

also discusses a procedural restatement rule that applies to

all pre-approved plans and provides a reminder for adopting

employers of § 403(b)(9) retirement income account plans of

a requirement provided by § 403(b)(9).

EXEMPT ORGANIZATIONS

Announcement 2024-39, page 1231.

Revocation of IRC 501(c)(3) Organizations for failure to meet

the code section requirements. Contributions made to the

Finding Lists begin on page ii.

organizations by individual donors are no longer deductible

under IRC 170(b)(1)(A).

INCOME TAX

Notice 2024-84, page 1229.

This notice extends the transition process for claiming a statutory exception to the elective payment phaseouts contained

in section 5 of Notice 2024-9, 2024-2 I.R.B. 358. Thus, if an

Applicable Entity provides an attestation described in section

5.02 of Notice 2024-9 with respect to an Applicable Credit

Property the construction of which begins before the later

of January 1, 2027, or the issuance of further guidance, the

Department of the Treasury and the Internal Revenue Service

will treat the attestation as establishing that a Domestic Content Exception is met with respect to such Applicable Credit

Property.

REG-116017-24, page 1232.

These proposed regulations would provide certain administrative requirements for unincorporated organizations taking

advantage of modifications to the rules governing elections

to be excluded from the application of partnership tax rules.

They would also require all organizations to submit additional

information before making such an election. These proposed

regulations would affect unincorporated organizations and

their members, potentially including tax-exempt organizations, the District of Columbia, State and local governments,

Indian Tribal governments, Alaska Native Corporations, the

Tennessee Valley Authority, rural electric cooperatives, and

certain agencies and instrumentalities. The proposed regulations would also update the procedure for obtaining permission to revoke a section 761(a) election.

T.D. 10012, page 1207.

These final regulations would modify existing requirements

regarding elections by certain unincorporated organizations

to be excluded from the application of otherwise applicable

partnership tax rules. These modifications would apply to

certain unincorporated organizations owned, in whole or in

part, by one or more “applicable entities,” including tax-exempt organizations, the District of Columbia, State and

local governments, Indian Tribal governments, Alaska Native

Corporations, the Tennessee Valley Authority, rural electric

cooperatives, and certain agencies and instrumentalities.

After making an election under the modified rules, such owners would be permitted to make elective payment elections

under section 6417(a) of the Code with respect to certain

property held by the unincorporated organization.

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.

December 9, 2024 

Bulletin No. 2024–50

Part I

26 CFR 1.761-2: Exclusion of certain unincorporated organizations from the application of all or

part of subchapter K of chapter 1 of the Internal

Revenue Code.

SUPPLEMENTARY INFORMATION:

T.D. 10012

This document contains amendments

to the Income Tax Regulations (26 CFR

part 1) under section 761(a) of the Internal

Revenue Code (Code) issued by the Secretary of the Treasury (Secretary) pursuant to the authority granted under sections

761(a), 6031(a), 6417(d) and (h), and

7805(a) of the Code (final regulations).

Section 761(a) provides, in part, an

express grant of regulatory authority for

section 761(a) stating, “[u]nder regulations the Secretary may, at the election

of all the members of an unincorporated

organization, exclude such organization

from the application of all or a part of this

subchapter.”

Section 6031(a) provides an express

grant of regulatory authority for the Secretary to prescribe in forms or regulations

partnership reporting information required

“for the purpose of carrying out the provisions of subtitle A.”

Section 6417(d) provides several

express delegations of authority to the

Secretary to enforce requirements for

elective payments of applicable credits

under section 6417 and recapture excessive payments. Section 6417(h) provides

an express delegation of authority with

respect to elective payments under section

6417, stating, in part, that “[t]he Secretary

shall issue such regulations or other guidance as may be necessary to carry out the

purposes of this section.”

Finally, section 7805(a) authorizes the

Secretary to “prescribe all needful rules

and regulations for the enforcement of

[the Code], including all rules and regulations as may be necessary by reason of

any alteration of law in relation to internal

revenue.”

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 1

Election to Exclude

Certain Unincorporated

Organizations Owned by

Applicable Entities from

Application of the Rules on

Partners and Partnerships

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document sets forth

final regulations that modify existing

regulations to allow certain unincorporated organizations that are owned in

whole or in part by applicable entities to

be excluded from the application of partnership tax rules. These regulations affect

unincorporated organizations and their

members, including tax-exempt organizations, the District of Columbia, State and

local governments, Indian Tribal governments, Alaska Native Corporations, the

Tennessee Valley Authority, rural electric

cooperatives, and certain agencies and

instrumentalities. The final regulations

also update certain outdated language in

the existing regulations.

DATES: Effective date: These regulations

are effective on January 19, 2025.

Applicability date: For the date of applicability, see §1.761-2(f).

FOR FURTHER INFORMATION

CONTACT: Concerning these final regulations, contact Cameron Williamson at

(202) 317-6684 (not a toll-free number).

Bulletin No. 2024–50

Authority

Background

I. Elective payment of applicable credits

Section 6417 was added to the Code

by section 13801(a) of Public Law 117–

169, 136 Stat. 1818, 2003 (August 16,

2022), commonly referred to as the Inflation Reduction Act of 2022 (IRA). Sec-

1207

tion 6417 allows an “applicable entity”

(including tax-exempt organizations,

the District of Columbia, State and local

governments, Indian Tribal governments,

Alaska Native Corporations, the Tennessee Valley Authority, rural electric cooperatives, and certain agencies and instrumentalities) to make an election to treat

an “applicable credit” (as defined in section 6417(b)) determined with respect to

such entity as making a payment by such

entity against the tax imposed by subtitle

A of the Code, for the taxable year with

respect to which such credit is determined,

equal to the amount of such credit. Section

6417 also provides special rules relating

to partnerships and directs the Secretary to

provide rules for making elections under

section 6417. Section 13801(g) of the IRA

provides that section 6417 applies to taxable years beginning after December 31,

2022.

On March 11, 2024, the Department of

the Treasury (Treasury Department) and

the IRS published in the Federal Register (88 FR 40528) final regulations (TD

9988) providing guidance on the section

6417 elective payment election (section

6417 regulations). Section 1.6417-2(a)

(1)(iv) provides that partnerships are not

applicable entities described in section

6417(d)(1)(A) or §1.6417-1(c), regardless

of how many of their partners are themselves applicable entities. Accordingly,

any partnership making an elective payment election must be an electing taxpayer (as defined in §1.6417-1(g)), and,

as such, the only applicable credits with

respect to which the partnership could

make an elective payment election would

be credits determined under sections 45Q,

45V, and 45X for the time periods allowed

in section 6417(d). However, §1.64172(a)(1)(iii) provides that if an applicable

entity is a co-owner in an applicable credit

property (as defined in §1.6417-1(e)),

through an organization that has made a

valid election under section 761(a) (section 761(a) election) to be excluded from

the application of the partnership tax rules

of subchapter K of chapter 1 of the Code

(subchapter K), then the applicable entity’s undivided ownership share of the

applicable credit property is treated as a

separate applicable credit property owned

December 9, 2024

by such applicable entity. As a result,

the applicable entity may make an elective payment election for the applicable

credit(s) determined with respect to such

applicable credit property.

Also on March 11, 2024, the Treasury Department and the IRS published

in the Federal Register (89 FR 17613)

proposed amendments (REG-101552-24)

to the regulations under section 761(a)

to carry out the purposes of section

6417 (proposed regulations). Generally,

the proposed regulations would have

amended certain provisions of §1.761-2 as

in effect and contained in 26 CFR part 1 to

provide that unincorporated organizations

meeting certain requirements (applicable

unincorporated organizations) are eligible

for certain modifications (referred to in

the proposed regulations as “exceptions”)

to the existing requirements for making a

section 761(a) election. The provisions of

the proposed regulations are explained in

greater detail in the preamble to the proposed regulations.

Concurrently with the publication

of these final regulations, the Treasury

Department and the IRS are publishing

in the Proposed Rules section of this edition of the Federal Register a notice of

proposed rulemaking (REG-116017-24)

proposing to further add to and revise the

provisions of §1.761-2 (November 2024

proposed regulations). The proposed revisions to the provisions of §1.761-2 by the

November 2024 proposed regulations are

explained in greater detail in the preamble

to the November 2024 proposed regulations.

II. Overview of section 761(a) and prior

§1.761-2(a)(3)

Section 761(a) provides, in part, that

under regulations the Secretary may, at

the election of all of the members of an

unincorporated organization, exclude

such organization from the application of

all or part of subchapter K if the organization is availed of: (1) for investment purposes only and not for the active conduct

of a business, (2) for the joint production,

extraction, or use of property, but not for

the purpose of selling services or property

produced or extracted, or (3) by dealers in

securities for a short period for the purpose

of underwriting, selling, or distributing a

December 9, 2024

particular issue of securities, provided that

the income of the members of the organization may be adequately determined

without the computation of partnership

taxable income.

As discussed in the preamble to the

proposed regulations, unincorporated

organizations seeking to be excluded

from the application of subchapter K so

that one or more of their members can

make an election under section 6417 are

likely to be availed of for the purposes

listed in section 761(a)(2), that is, for

the joint production, extraction, or use

of property, but not for the purpose of

selling services or property produced

or extracted. Pursuant to the authority

in section 761(a), prior §1.761-2(a)(3)

provides additional requirements for an

unincorporated organization to elect to

be excluded from the application of subchapter K under section 761(a)(2). Specifically, prior §1.761-2(a)(3) requires

that the participants in the joint production, extraction, or use of property: (i)

own the property as co-owners, either in

fee or under lease or other form of contract granting exclusive operating rights

(co-ownership requirement), (ii) reserve

the right separately to take in kind or

dispose of their shares of any property

produced, extracted, or used (severance

requirement), and (iii) do not jointly sell

services or the property produced or

extracted (joint marketing requirement),

although each separate participant may

delegate authority to sell the participant’s share of the property produced or

extracted for the time being for the participant’s account, but not for a period

of time in excess of the minimum needs

of the industry, and in no event for more

than one year (one-year exception).

These additional regulatory requirements are hereinafter referred to as the

“existing regulatory requirements” and,

along with the previously discussed

statutory requirements, are referred to

herein as the “existing requirements” to

be eligible to elect out of the application

of subchapter K.

As discussed in the Summary of Comments and Explanation of Revisions, the

proposed regulations would have modified

some of the existing regulatory requirements for unincorporated organizations

that meet certain requirements.

1208

Summary of Comments and

Explanation of Revisions

The Treasury Department and the IRS

received 11 written comments in response

to the proposed regulations. The comments are available for public inspection

at www.regulations.gov or upon request.

A public hearing on the proposed regulations was scheduled for May 20, 2024.

There were no requests to speak at the

scheduled public hearing. Consequently,

the public hearing was cancelled. See

Election To Exclude Certain Unincorporated Organizations Owned by Applicable

Entities From Application of the Rules on

Partners and Partnerships; Hearing Cancellation, 89 FR 43349 (May 17, 2024).

After full consideration of the comments

received, these final regulations adopt the

proposed regulations with modifications

in response to the comments described in

this Summary of Comments and Explanation of Revisions. The provisions of

§1.761-2 as amended by the final regulations are referred to as “revised §1.761-2”

in this Summary of Comments and Explanation of Revisions.

Comments merely summarizing the

statute or proposed regulations, recommending statutory revisions to section

761 or other statutes, addressing unrelated issues, or recommending changes

to IRS forms or procedures are generally

not addressed in this Summary of Comments and Explanation of Revisions

or adopted in these final regulations.

These comments included recommendations and questions regarding fact

patterns specific to section 6417, the

domestic content rules of section 45(b)

(10), the credit for qualified commercial

clean vehicles of section 45W, and the

credit for alternative fuel vehicle refueling property of section 30C. While

the Treasury Department and the IRS

are studying some of those issues and

intend to issue future guidance on those

provisions, those recommendations and

questions are unrelated to the purpose of

these final regulations. Unless otherwise

indicated in this Summary of Comments

and Explanation of Revisions, provisions of the proposed regulations with

respect to which no comments were

received are adopted without substantive change.

Bulletin No. 2024–50

I. Overview

Proposed §1.761-2(a)(4)(ii) would

have defined “applicable unincorporated

organizations” as unincorporated organizations that meet several requirements.

Proposed §1.761-2(a)(4)(iii) would have

modified the regulatory requirements in

prior §1.761-2(a)(3)(i) and (iii) for an

applicable unincorporated organization

that also met the regulatory requirements

of prior §1.761-2(b) and (e).

Part II of this Summary of Comments

and Explanation of Revisions discusses

comments received concerning the general effects of a section 761(a) election.

Part III of this Summary of Comments and

Explanation of Revisions discusses the

comments received on the definition of an

applicable unincorporated organization.

Part IV of this Summary of Comments and

Explanation of Revisions discusses the

comments received on the modifications

to the existing regulatory requirements.

Part V of this Summary of Comments

and Explanation of Revisions discusses

the applicability date of these final regulations, the elimination of certain obsolete language, and certain administrative

requirements that are under consideration

for organizations taking advantage of the

modifications to the existing regulatory

requirements. Part VI of this Summary of

Comments and Explanation of Revisions

summarizes two comments not addressed

in these final regulations.

II. Effects of an Election under Section

761(a)

A. General

Subchapter K provides rules governing

the taxation of partners and partnerships.

When an unincorporated organization

makes a valid section 761(a) election out

of subchapter K, the rules of subchapter

K no longer apply to that organization.

As a result, for purposes of subchapter K,

the unincorporated organization ceases to

be a partnership and each member of the

unincorporated organization is generally

treated as a co-owner, that is, as directly

owning its proportionate share of the organization’s assets.

For example, an unincorporated organization that has made a valid section 761(a)

Bulletin No. 2024–50

election is not subject to section 704, which

provides the rules for determining a partner’s distributive share of a partnership’s

tax items. Instead, each member of an

unincorporated organization that has made

a valid section 761(a) election takes into

account directly its ownership share of the

organization’s tax items. Accordingly, if an

unincorporated organization with a valid

section 761(a) election purchases depreciable property, an owner of a 30 percent interest in the organization may claim depreciation deductions as if it owned an undivided

30 percent interest in the organization’s

property (provided the owner is otherwise

eligible for such deductions). That member cannot claim depreciation deductions

beyond that member’s ownership interest

in the organization’s property. Thus, any

agreement among the members to specially

allocate one member’s depreciation deductions to another member would make the

organization ineligible for a section 761(a)

election.

One commenter asked for clarification of whether the following fact pattern is compatible with an election under

section 761(a). A church (an applicable

entity) forms a partnership with a nonprofit investor and a for-profit developer.

The church contributes a site for energy

property, which generates electricity and

reduces the church’s energy bill. The nonprofit investor makes grants and loans to

the organization and is repaid by virtue of

renewable energy credits or net metering

from the clean energy property. The forprofit developer enters into a contract to

maintain the system in exchange for a fee.

The facts described in the comment letter do not provide sufficient information to

determine whether this situation is compatible with a section 761(a) election. If the

investor receives all payments in its capacity as a lender and the for-profit developer

receives its profits in its capacity as a thirdparty service provider, there might not be

an unincorporated organization at all. If

there is an unincorporated organization and

it intends to make a section 761(a) election,

each of its members must reserve the right

separately to take in kind or dispose of their

shares of any property produced, extracted,

or used. If the investor or developer

receives payments in excess of its pro rata

ownership interests, this requirement will

not be met. Moreover, if the contributions

1209

mentioned in this situation are intended

to be non-recognition transfers for Federal income tax purposes, the contributing

members would generally need to make

such contributions under section 721(a),

which is part of subchapter K. However,

if a section 761(a) election is made, the

organization is not subject to subchapter K,

and thus, section 721(a) is inapplicable to

transfers to the organization. Without section 721(a), the transfers would generally

be taxable events.

One commenter asked how certain capital stacking combinations (including loans,

forgivable loans, and grants) affect an

organization’s eligibility to make a section

761(a) election. To make a valid section

761(a) election, an unincorporated organization must comply with the requirements

of section 761(a) and revised §1.761-2.

Provided that those requirements are met,

the structure of an organization’s capital

stack would not appear to preclude it from

making a valid section 761(a) election.

Federal income tax law governs the treatment of these arrangements for purposes

of determining whether an arrangement

violates the requirements of section 761(a).

For example, loans between members of

the organization will be treated as debt to

the extent they are treated as debt under

Federal income tax law. Likewise, loans by

a member to an organization would not be

treated as a partnership liability under section 752, but a loan to each member of the

organization in proportion to the member’s

ownership interest.

One commenter asked that applicable

entities who are members in an applicable

unincorporated organization that makes a

761(a) election be permitted to claim all

applicable tax credit bonuses and adders.

Bonus credit amounts, such as amounts

for applicable credit properties located

in energy communities, apply to property

co-owned through an applicable unincorporated organization. The Treasury

Department and the IRS have determined

that no change to the final regulations is

required to clarify this issue.

B. Effect of a Section 761(a) Election

on Sections of the Code Outside of

Subchapter K

One commenter requested a discussion

of the effects of a section 761(a) election

December 9, 2024

on provisions of the Code outside of subchapter K that reference partnerships,

including section 6417. A detailed discussion of the effects of a section 761(a)

election on provisions of the Code outside

of subchapter K would require a careful

examination of numerous provisions of

the Code apart from those relevant to these

final regulations and is not necessary for

purposes of these final regulations. However, the application of a section 761(a)

election to section 6417 is fundamental

to the purpose of these final regulations,

which is to carry out the purposes of section 6417 and thus, is addressed herein.

An organization with a valid section

761(a) election may be treated as a partnership for purposes of sections of the

Code outside of subchapter K. In Bryant v.

Commissioner, 46 T.C. 848 (1966), aff’d,

399 F.2d 800 (5th Cir. 1968), the Tax Court

concluded that an organization that made

a section 761(a) election was still a partnership for purposes of other parts of the

Code, including the $50,000 investment

tax credit limit on partnership assets provided by then section 48(c)(2)(D) of the

Code. See also Cokes v. Commissioner,

91 T.C. 222 (1988) (section 761 election

did not affect partnership status under the

self-employment tax provisions of section

1402(a) of the Code); Madison Gas and

Electric Company v. Commissioner, 72

T.C. 521 (1979), aff’d, 633 F.2d 512 (7th

Cir. 1980) (notwithstanding a section 761

election, the startup costs of a joint venture were attributable to the partnership

business and were not deductible under

section 162(a) of the Code as the ordinary

and necessary business expenses of the

individual partners).

Though section 6417 is not in subchapter K, a section 761(a) election affects

whether an entity is treated as a partnership for purposes of section 6417. Section

6417(h) provides that the Secretary shall

issue such regulations or other guidance

as may be necessary to carry out the purposes of section 6417. Pursuant to this

broad authority, the Treasury Department

and the IRS published §1.6417-2(a)(1)

(iii), which provides that if an applicable

entity is a co-owner in an applicable credit

property through an organization that

has made a valid section 761(a) election,

then the applicable entity’s undivided

ownership share of the applicable credit

December 9, 2024

property will be treated as a separate

applicable credit property owned by such

applicable entity, and the applicable entity

may make an elective payment election

for the applicable credits determined with

respect to such applicable credit property.

This means that a section 761(a) election

effectively causes an unincorporated organization not to be treated as a partnership

for purposes of section 6417, including

section 6417(c). Thus, the effect of a valid

section 761(a) election for purposes of

section 6417 is that each member of the

organization is treated as directly owning

its proportionate share of the applicable

credit property. As a result, each applicable entity member of the organization may

make an elective payment election (or, if

not an applicable entity member, a transfer

election under section 6418) with respect

to its proportionate share of the applicable

credit property.

Another commenter requested confirmation that a Tribal Energy Development

Organization that makes a section 761(a)

election is not a partnership for purposes

of sections 168(h)(5) and (6) and 50(b)(3).

Section 168(h) describes tax-exempt

use property (generally, certain property leased to a tax-exempt entity), the

cost recovery of which is subject to

special rules. Section 168(h)(5) generally provides that the determination of

whether property leased to a partnership

is tax-exempt use property shall be made

by treating each tax-exempt entity partner’s proportionate share as being leased

to such partner. Section 168(h)(6) generally provides that, if any property which

is not tax-exempt use property is owned

by a partnership that has as partners both

a tax-exempt entity and a person who is

not a tax-exempt entity, an amount equal

to such tax-exempt entity’s proportionate

share of such property is treated as tax-exempt use property. This rule applies only

if any allocation to the tax-exempt entity

of partnership items is not a “qualified

allocation,” which (i) is consistent with

such entity’s being allocated the same

distributive share of each item of income,

gain, loss, deduction, credit, and basis and

such share remains the same during the

entire period the entity is a partner in the

partnership, and (ii) has substantial economic effect within the meaning of section 704(b)(2). See section 168(h)(6)(B).

1210

Section 50(b)(3) and (4) preclude certain

property used by tax-exempt organizations, governmental entities, and foreign

persons from qualifying for an investment

tax credit. For these purposes, section

50(b)(4)(D) provides that rules similar to

those in section 168(h)(5) and (6) apply.

The existence of a partnership for purposes of these sections does not change

the amount of depreciation deductions

attributable to each member of an unincorporated organization that has validly

made a section 761(a) election. A valid

section 761(a) election requires the shares

of property leased to or owned by an organization to be treated as leased to or owned

by the members of the organization in proportion to their shares of the organization.

This is how partnership property would be

treated under section 168(h)(5) and would

cause all allocations to the partners to be

treated as “qualified allocations” for purposes of section 168(h)(6). Similarly, the

IRS has determined in other areas of the

law that co-owners of property may make

independent elections with respect to

deductions affecting their taxable income.

See Rev. Rul. 83-129, 1983-2 C.B. 105,

in which the IRS ruled that the co-owners of mineral leases that make a section

761(a) election may independently elect

to deduct or capitalize their shares of mining development costs under section 616

of the Code; see also Rev. Rul. 81-261,

1981-2 C.B. 60, where the IRS noted that

if a partnership makes a section 761(a)

election, each partner is deemed to own

directly its proportionate share of the partnership property for purposes of computing depreciation. Moreover, in the case of

an applicable entity that makes an election

under section 6417(a), section 6417(d)

(2)(A) provides that applicable credits

are determined without regard to section

50(b)(3) and (4)(A)(i).

III. Applicable Unincorporated

Organizations

A. Applicable Entity Owner

Proposed §1.761-2(a)(4)(ii)(A) would

have required an applicable unincorporated organization to be owned, in whole

or in part, by one or more applicable entities, as defined in section 6417(d)(1)(A)

and §1.6417-1(c). The Treasury Depart-

Bulletin No. 2024–50

ment and the IRS received no comments

related to this section and adopt the proposed language without changes.

B. Joint Operating Agreements

Proposed §1.761-2(a)(4)(ii)(B) would

have provided that an applicable unincorporated organization must be an organization the members of which enter into a

joint operating agreement (JOA) in which

the members reserve the right separately

to take in kind or dispose of their pro

rata shares of the electricity produced,

extracted, or used, and any associated

renewable energy credits or similar credits. Proposed §1.761-2(a)(4)(ii)(C) would

also have provided, in part, that an applicable unincorporated organization must

be organized pursuant to a JOA.

1. General

Commenters requested more information about the types of JOAs required

by these provisions. Some commenters requested examples of permissible

JOAs, and another commenter requested

identification of any JOA provisions that

would “create issues” for a JOA. One

commenter asked whether JOAs that satisfy the requirements of §1.761-2(a)(3)

would also satisfy the requirements of

proposed §1.761-2(a)(4)(ii)(B) and (C)

and requested that any specific rules applicable to JOAs solely for purposes of the

proposed regulations apply prospectively

so as to avoid any uncertainty with respect

to existing JOAs.

As used in the proposed regulations,

the term “joint operating agreement” is

intended to refer to agreements similar to

those used by organizations that made an

election under section 761(a) prior to the

proposed regulations. Such agreements

typically provide the terms by which the

members of the unincorporated organization will meet the existing requirements

to make a section 761(a) election. JOAs

should continue to serve this purpose

under the final regulations, regardless of

whether an applicable unincorporated

organization holds its property in an entity

organized under local law. Accordingly,

as a general matter, a JOA that satisfies

the requirements of revised §1.761-2(a)

(1) and (3) will satisfy the requirements in

Bulletin No. 2024–50

revised §1.761-2(a)(4)(ii)(B) and (C), provided that the organization to which that

JOA applies satisfies the existing regulatory requirements, as modified by revised

§1.761-2(a)(4)(iii), if applicable. Because

the final regulations do not change the

rules currently applicable to JOAs, these

final regulations do not need to make such

rules apply prospectively. For the same

reason, further clarification of the JOA

requirements is unnecessary.

2. Right to Pro Rata Share

Commenters requested clarification

of how credits and ownership interests

would be allocated when members of an

unincorporated organization reserve the

right separately to take in kind or dispose

of their pro rata shares of the electricity

produced, extracted, or used, and any

associated renewable energy credits or

similar credits.

Pursuant to proposed §1.761-2(a)(4)

(ii)(B), each member of an applicable

unincorporated organization would have

been required to reserve the right separately to take in kind or dispose of their

pro rata shares of any property produced,

extracted, or used, and any associated

renewable energy credits or similar credits. The determination of each member’s

ownership interest of an unincorporated

organization (and, accordingly, each

member’s proportionate share of property produced, extracted, or used) must be

made by the members and based on their

ownership interests in the same manner as

if they were co-owners in the underlying

properties.

To illustrate, a co-owner of 40 percent

of an unincorporated organization that

has made a section 761(a) election must

reserve the right separately to take in kind

or dispose of its 40 percent pro rata share

of the property produced, extracted, or

used by the co-owners. This is true even

when the members of an applicable unincorporated organization own property

through an entity, as permitted by revised

§1.761-2(a)(4)(iii)(A). Example 1 has

been added in revised §1.761-2(a)(5)(i) to

illustrate the general rule.

One commenter requested clarification

that renewable energy certificates (RECs)

produced through the generation of clean

energy qualify as “similar credits” for

1211

these purposes. The Treasury Department

and the IRS clarify that RECs are included

as “renewable energy credits or similar

credits” pursuant to revised §1.761-2(a)

(4)(ii)(B) and thus, each member of an

unincorporated organization must reserve

the right separately to take in kind or dispose of their pro rata shares of any RECs

generated as a result of the organization’s

activities.

3. Joint Marketing

Some commenters asked whether specific JOA provisions or activities would

violate requirements that apply to applicable

unincorporated

organizations,

including that the organization’s members

do not jointly sell services or property

produced or extracted. One commenter

asked whether appointing a manager, creating an ownership committee, having

expense-sharing agreements or incurring

project-level debt would violate the existing requirements to make a section 761(a)

election. Another commenter requested

clarification that a managing member or

general partner-equivalent (presumably,

if the unincorporated organization takes

advantage of the modification in proposed

§1.761-2(a)(4)(iii)(A)) can conduct normal project management functions for

an unincorporated organization without

violating the joint marketing requirement.

That commenter requested, in the alternative, a “roadmap” setting forth how a

managing member or general partner can

comply with the joint marketing requirement in a practical manner. The same

commenter also requested allowing representatives of an unincorporated organization to perform pre-filing and other ministerial services on behalf of the entities

jointly owning applicable credit property.

An applicable unincorporated organization must meet all applicable requirements, including the existing requirements with the modifications contained

in these final regulations, to elect out of

subchapter K under section 761(a) and to

maintain a section 761(a) election. Generally, the members of an unincorporated

organization are permitted to have a representative handle management and ministerial duties typical of a managing member of a limited liability company (LLC)

or general partner of a limited partnership

December 9, 2024

without violating these requirements. The

Treasury Department and the IRS understand that representatives with such duties

may be required by local law for entities

that may hold the organization’s property

under §1.761-2(a)(4)(iii)(A) of these final

regulations. These final regulations, however, do not provide a “roadmap” for permissible arrangements or rights and duties

of such representatives as the list would

not be exhaustive and could cause unintentional inferences to be drawn.

One commenter proposed allowing an

applicable entity to direct some or all of

its elective payments of applicable credit

amounts under section 6417 to a separate

account jointly owned by the applicable

entity and other members of an applicable unincorporated organization to pay

expenses directly related to the underlying

applicable credit property’s co-ownership.

The commenter suggested applying rules

similar to those applicable to assignments

of payments under section 1603 (regarding grants for specified energy properties

in lieu of tax credits) of the American

Recovery and Reinvestment Act of 2009,

Public Law 111-5, 123 Stat. 115 (2009),

including that each payment be assigned to

a bank or other financing institution, that

the assignment cover all amounts payable

and not be subject to further assignment

(except that any assignment may be made

to one party acting as an agent or trustee

for the co-owners), and that the assignee

file a Notice of Assignment.

As already discussed, §1.6417-2(a)(1)

(iii) provides that if an applicable entity

is a co-owner in an applicable credit

property through an organization that

has made a valid section 761(a) election, then the applicable entity’s undivided ownership share of the applicable

credit property will be treated as a separate applicable credit property owned by

such applicable entity, and the applicable

entity may make an election under section 6417(a) for the applicable credits

determined with respect to such applicable credit property. When an applicable

entity makes an election under section

6417(a), such entity is treated as making

a payment against the tax imposed by

subtitle A of the Code. If this payment

causes the entity to have an “overpayment” of tax in a taxable year, section

6402(a) generally provides that the entity

December 9, 2024

may receive a refund equal to the amount

of the overpayment over the entity’s tax

liability. This refund must be made to the

person who made the overpayment (i.e.,

the applicable entity). If that applicable

member is a partnership or S corporation,

section 6417(c)(1)(A) specifies that the

payment for such election is made to the

partnership or S corporation that made

the section 6417(a) election. Accordingly, similar to the general rule under

section 6417(a), refunds or payments

under section 6417(c) generally cannot

be paid to accounts in the name of someone other than the entity making the election. A valid section 761(a) election does

not affect the application of this general

rule and, therefore, these final regulations

do not adopt the commenter’s proposal.

C. Purpose of Organization

Proposed §1.761-2(a)(4)(ii)(C) would

have provided that an organization is an

applicable unincorporated organization

if it “is organized exclusively to produce

electricity from its applicable credit property (as defined in §1.6417-1(e)) and with

respect to which one or more applicable

credits listed in section 6417(b)(2), (4),

(8), (10), and (12) is determined.” The

scope of this rule was intended to remove

certain impediments for these types of

applicable unincorporated organizations

that would otherwise comply with existing requirements. The Treasury Department and the IRS sought comments on the

scope and requirements of the proposed

regulations, including whether modifications similar to those in proposed §1.7612(a)(4)(iii) are needed for applicable entities that own applicable credit properties

that do not produce electricity.

Commenters generally recommended

that the modifications in proposed §1.7612(a)(4)(iii) are also needed for organizations organized to own applicable

credit property with respect to which any

other applicable credit listed in section

6417(b) is determined. Some commenters requested clarity that certain facilities, especially battery storage facilities,

“produce electricity” for purposes of the

definition of an applicable unincorporated

organization. One commenter asserted

that the “non-generative” credits from

section 6417(b) that were not included in

1212

proposed §1.761-2(a)(4)(ii)(C) could be

claimed by organizations “availed of…

for the joint…use of property” and that

such organizations should therefore be

permitted to make a section 761(a) election if other existing requirements are met.

The same commenter requested clarification that certain activities with respect to

applicable credits, including time-limited

delegations of relevant powers, would

not violate the existing requirements to

make a section 761(a) election. Another

commenter asked for clarification that

common, non-electricity revenue streams

related to jointly owned projects, such

as revenues from the sale of capacity

and ancillary services, do not violate the

requirement that an organization must be

organized exclusively to produce electricity.

The Treasury Department and the

IRS agree that organizations formed

to own applicable credit property with

respect to which any applicable credits

(including non-generative credits) are

determined should be permitted to apply

the modifications to the existing section

761(a) rules contained in the proposed

regulations. Section 761(a)(2) refers to

organizations availed of “for the joint

production, extraction, or use of property,” which is not limited to activities

that produce electricity. Accordingly,

pursuant to the authority in sections

761(a) and 6417(h), the final regulations

revise the definition of an applicable

unincorporated organization to include

organizations organized exclusively to

own and operate applicable credit property (as defined in §1.6417-1(e)). The

adoption in the final regulations of this

definition of applicable unincorporated

organization should not be read to imply

that any particular factual arrangement

permits a valid section 761(a) election.

To make a valid section 761(a) election,

an unincorporated organization, including an applicable unincorporated organization, must meet all the requirements

of section 761(a) and the regulations

thereunder.

D. Section 6417 Election

Proposed §1.761-2(a)(4)(ii)(D) would

have provided that an unincorporated

organization is an applicable unincorpo-

Bulletin No. 2024–50

rated organization only if one or more of

its applicable entity members will make

an elective payment election under section 6417(a) for the applicable credits

determined with respect to its share of the

applicable credit property.

One commenter recommended extending the modifications in proposed §1.7612(a)(4)(iii) to organizations for which

no applicable entity member will make

an election under section 6417. These

final regulations are of limited scope and

are promulgated, in part, pursuant to the

authority in section 6417(h) to carry out

the purposes of section 6417 by facilitating joint-ownership arrangements of

applicable credit property by applicable

entities. These final regulations do not

adopt this commenter’s recommendation

because it is not necessary for purposes of

these final regulations.

E. Other Requirements

Proposed §1.761-2(a)(4)(ii) would

have provided that an applicable unincorporated organization is an unincorporated

organization described in prior §1.7612(a)(1) that meets the requirements of

proposed §1.761-2(a)(4)(ii)(A) through

(D). The reference to prior §1.761-2(a)(1)

was intended to emphasize the statutory

requirements under section 761(a) and

prior §1.761-2(a)(1) that: (1) the members

of the unincorporated organization must

be able to compute their income without

the necessity of computing partnership

income, and (2) the unincorporated organization must not be a syndicate, group,

pool, or joint venture which is classifiable

as an association, or operate under an

agreement which creates an organization

classifiable as an association. For clarity,

the final regulations remove the reference to prior §1.761-2(a)(1) in proposed

§1.761-2(a)(4)(ii) and include the requirements of prior §1.761-2(a)(1) as revised

§1.761-2(a)(4)(ii)(E) and (F). In the final

regulations, therefore, an applicable unincorporated organization is an unincorporated organization that meets the requirements of revised §1.761-2(a)(4)(ii)(A)

through (F).

One commenter requested that a

Tribal Energy Development Organization

(TEDO) be permitted to make an elective

payment election regardless of its partner-

Bulletin No. 2024–50

ship status and be permitted to make special allocations. A TEDO that is formed as

a partnership and meets the requirements

may make a 761(a) election. Section

761 does not apply, however, to entities

formed as corporations. In addition, special allocations are inconsistent with a

section 761(a) election, which is available

under the statute only to organizations

that satisfy the severance requirement and

the members of which can compute their

income without the necessity of computing partnership taxable income. Accordingly, the final regulations do not adopt

these requested changes.

Another commenter requested clarity

about the eligibility of a “partnership flip”

structure to make a section 761(a) election.

Generally, these structures involve allocations of income, gains, losses, deductions,

or credits that change at some point after

the partnership has been formed. In the

commenter’s proposed structure, a taxable

member of an unincorporated organization does not control the organization but

owns a profits interest in the organization

that allows the member to earn preferred

returns over the course of its investment.

The commenter suggested that this type of

member should be permitted to individually elect out of partnership tax treatment

under subchapter K, and then elect back

into partnership treatment under subchapter K after it has recouped its investment.

Partnership flip structures, such as the

one described by the commenter, violate

the existing statutory requirements for

electing out of subchapter K, even as modified by proposed §1.761-2(a)(4)(iii). This

is because such structures provide members with disproportionate amounts of

income, gains, losses, deductions, or credits and thereby require an unincorporated

organization to compute partnership taxable income to determine each member’s

share of the organization’s income. These

arrangements are also incompatible with

the severance requirement, under which

members must reserve the right separately

to take in kind or dispose of their shares of

any property produced, extracted, or used

because members do not have a determinate “share” of the applicable credit

property. For these reasons, the Treasury

Department and the IRS clarify that partnership flip structures are not eligible to

make a section 761(a) election.

1213

IV. Specified Modifications for Applicable

Unincorporated Organizations

A. Modified Co-ownership Requirement

For applicable unincorporated organizations, proposed §1.761-2(a)(4)(iii)(A)

would have modified the co-ownership

requirement such that the participants in

the applicable unincorporated organization would be permitted to own applicable

credit property through an unincorporated

organization that is a legal entity, other

than one treated as a corporation under

any provision of the Code (modified

co-ownership requirement).

One commenter requested confirmation whether the following situation is

compatible with an election under section

761(a). A tax-exempt entity forms an LLC

to raise money and serve as a special purpose vehicle to own and operate a clean

energy project. The tax-exempt entity then

sells equity securities in the LLC to investors. Prior to submitting the pre-filing registration with the IRS, the LLC makes an

election under section 761(a). The tax-exempt entity or operator then decides if,

and when, investors should be paid dividends based on their fractional ownership.

This situation is inconsistent with

the modified co-ownership requirement.

Organizations that have made a section

761(a) election do not pay dividends for

Federal income tax purposes. Because

each member of such organization is generally treated as directly owning its proportionate share of the organization’s assets,

each member is entitled to payments or

credits with respect to the member’s share

of property produced, extracted, or used,

regardless of whether any other member

would have approved the distribution of

such amounts.

B. Joint Marketing Modification and

Agent Delegation Rule

For applicable unincorporated organizations, proposed §1.761-2(a)(4)(iii)(B)

would have modified the joint marketing

requirement in prior §1.761-2(a)(3)(iii)

to provide that a delegation of authority

to sell the participant’s share of the property produced may allow the delegee to

enter into contracts the duration of which

exceeds the minimum needs of the indus-

December 9, 2024

try and may be for longer than one year

(the joint marketing modification), provided that the delegation of authority to act

on behalf of the participant may not be for

a period of time that exceeds the minimum

needs of the industry, and in no event for

more than one year (the agent delegation

rule). Proposed §1.761-2(a)(4)(vi) would

have provided an example illustrating

this modification to the existing regulatory requirements, in which each member

of an unincorporated organization grants

to the same agent a one-year delegation

(not exceeding the minimum needs of

the industry) of the member’s authority

to sell the member’s share of electricity

produced by the organization. The agent

commits each member to a 15-year power

purchase agreement (PPA). Because the

delegation of authority is for a period no

longer than one year, the requirements of

proposed §1.761-2(a)(4)(iii)(B) are met.

Commenters requested clarification

on several issues relating to the joint

marketing modification. Some commenters asked whether two or more members

of an applicable unincorporated organization that has made a section 761(a)

election may sell their share of the organization’s output in the same contract.

Some commenters also asked whether

the 15-year period for the contract in the

example is intended to serve as a safe

harbor or limitation on the duration of

such agreements.

Provided that the agent delegation rule

and all other requirements under section

761(a) are satisfied, the joint marketing

modification allows members of an applicable unincorporated organization to enter

into contracts of any duration. Multiple

members of the same applicable unincorporated organization may be party to the

same contract. Members can also choose

to sell their shares without a multi-year

contract. The example merely illustrates

the joint marketing modification and is

not intended to be a safe harbor. No clarification is required to the joint marketing

modification in the final regulations.

Commenters also requested clarification of the agent delegation rule.

One commenter asked whether an agent

would be subject to the rule if it was

an Indian Tribal government or other

applicable entity. Some commenters

suggested eliminating the one-year lim-

December 9, 2024

itation on agent delegations or allowing

agent delegations to automatically renew

after each year. One commenter suggested that certain organizations would

need to sell their output into an organized market rather than pursuant to a

fixed PPA. In this situation, according

to the commenter, authority to sell the

output for each applicable entity may

need to be pursuant to an agreement that

automatically renews annually. Another

commenter suggested that the one-year

limitation on agent delegations will harm

applicable entities without technical

expertise because non-applicable entities

with their own expertise will not require

an agent and could be able to take advantage of an applicable entity that is only

able to use an agent for one year. Another

commenter asked for clarification that

a member of an unincorporated organization may delegate powers to an agent

without limitation as long as no other

member makes such a delegation.

The purpose of the agent delegation

rule is to fulfill the statutory requirement

in section 761(a)(2) that no organization making a section 761(a) election is

formed “for the purpose of selling services or property produced or extracted.”

This is a prohibition on joint marketing;

accordingly, any member of an unincorporated organization may have an agent

for any duration of time, provided that

the agent does not represent more than

one member of the applicable unincorporated organization. The agent delegation rule applies to any person or group

of people acting on behalf of more than

one member of an unincorporated organization, regardless of their status as an

applicable entity.

The longstanding one-year exception

to the joint marketing requirement in the

existing regulations reflects a balancing

of the statutory language with commercial necessities, and the proposed regulations reflected a similar balancing. Section 761(a)(2) does not permit an electing

organization to conduct sales through an

agent with indefinite authority on behalf

of multiple members. Such a structure is

necessarily “availed of…for the purpose

of selling services or property produced or

extracted” and is not eligible to elect out

of subchapter K. These final regulations,

therefore, do not adopt the suggestions

1214

to eliminate the agent delegation rule or

allow agent delegations to automatically

renew. However, in any given year, an

agent may be delegated authority on terms

identical to those in a past year, provided

that the delegation of authority to act is

not for a period of time that exceeds the

minimum needs of the industry and each

member delegating authority to that agent

consents to those terms in writing at least

once per year. Example 3 has been added

in revised §1.761-2(a)(5)(iii) to illustrate

this rule.

One commenter requested that the

phrase “minimum needs of the industry”

be either clarified or deleted. That phrase

is intended to be fact-sensitive; like the

rest of the joint marketing requirement,

the phrase is intended to balance statutory

requirements with commercial necessities. These final regulations, therefore, do

not adopt the commenter’s request to clarify or eliminate it.

C. Specific Examples

Several commenters generally asked

for more examples showing applications

of the proposed regulations. In response,

the Treasury Department and the IRS have

added two examples to the final regulations.

V. Additional Information

A. Applicability date

Except as provided in §1.761-2(d),

these final regulations apply to taxable

years ending on or after March 11, 2024,

the date on which the proposed regulations were published in the Federal

Register. An applicable unincorporated

organization that validly made a section

761(a) election meeting the requirements

of these final regulations for a taxable year

ending on or after March 11, 2024, will

be treated as having made a valid section

761(a) election even if the election was

made prior to the publication of these final

regulations in the Federal Register.

B. Administrative Requirements

The preamble to the proposed regulations noted that the Treasury Department

and the IRS were considering certain rules

Bulletin No. 2024–50

to prevent abuse of the modifications in

proposed §1.761-2(a)(4)(iii). One rule

described in the preamble to the proposed

regulations would have prevented the

deemed election rules in prior §1.761-2(b)

(2)(ii) from applying to any unincorporated organization relying on a modification in proposed §1.761-2(a)(4)(iii). One

commenter recommended against adopting such a rule, which the commenter

believed would be inconsistent with the

goals of the proposed regulations and

increase the likelihood of inadvertent disallowances of section 761(a) elections in

non-abusive situations.

Although these final regulations do

not adopt any rules regarding deemed

elections, more administrative guidance

is needed under section 761(a) to fulfill

the purposes of section 6417. As a result,

concurrently with the publication of these

final regulations, the Treasury Department and the IRS are publishing in the

Proposed Rules section of this edition of

the Federal Register the November 2024

proposed regulations under section 761(a)

(REG-116017-24), which would provide

rules affecting the validity of elections

under section 761(a) by applicable unincorporated organizations whose elections

would not have been valid without the

application of revised §1.761-2(a)(4)(iii).

C. Obsolete language

Section 1.761-2(b)(3)(i) provides, in

part, that an application for permission to

revoke a section 761(a) election must be

submitted to the Commissioner of Internal Revenue, Attention: T:I, Washington,

DC 20224, no later than 30 days after the

beginning of the first taxable year to which

the revocation is to apply. This language

no longer reflects the correct procedure for

obtaining permission to revoke a section

761(a) election and is therefore eliminated

by these final regulations. The November

2024 proposed regulations would instead

provide that such an application must be

made by submitting a letter ruling request

that complies with the requirements of

Rev. Proc. 2024-1 or successor guidance.

Section 1.761-2(b)(3)(i) also provides, in

part, that a section 761(a) will be effective

unless a member of the organization sends

proper notice to the Commissioner “within

90 days after the formation of the organi-

Bulletin No. 2024–50

zation (or by October 15, 1956, whichever

is later)…”. The final regulations would

strike the parenthetical language to update

and streamline the paragraph.

Special Analyses

I. Regulatory Planning and Review

Two comments received were related

to section 761 but outside the scope of

these final regulations. These comments

are summarized in this Part VI.

Pursuant to the Memorandum of

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

9, 2023), tax regulatory actions issued by

the IRS are not subject to the requirements

of section 6 of Executive Order 12866, as

amended. Therefore, a regulatory impact

assessment is not required.

A. Implementation

II. Paperwork Reduction Act

One commenter asked for clarification

of how audits of joint structures would

take place, including by identifying the

specific parts of Treasury and the IRS

involved in such audits and the standard

of review for such audits. Another commenter requested the development of

educational materials, “office hours,” and

other guidance to improve understanding

of the regulations and uptake of applicable credits. Another commenter requested

that the Treasury Department and the IRS

provide clear rules for the pre-registration filing process for applicable credit

property co-owned by taxpayers making

transferability elections. These final regulations do not provide information about

audit procedures or the development of

further guidance, but the Treasury Department and the IRS will continue to monitor

the elective payment process to determine

whether there are areas in which more

efficiencies can be created.

The Paperwork Reduction Act of 1995

(44 U.S.C. 3501–3520) (PRA) generally

requires that a federal agency obtain the

approval of the Office of Management

and Budget (OMB) before collecting

information from the public, whether such

collection of information is mandatory,

voluntary, or required to obtain or retain

a benefit. 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 control number.

These final regulations mention reporting and recordkeeping requirements that

must be satisfied for unincorporated organizations to elect out of subchapter K.

These collections of information are generally used by the IRS for tax compliance

purposes and by taxpayers to facilitate

proper reporting and recordkeeping. The

likely respondents to these collections are

businesses and tax-exempt organizations.

Unincorporated entities meeting the

requirements outlined in §1.761-2(a)(4)

of these final regulations satisfy relevant

reporting requirements by submitting a

statement attached to, or incorporated in,

a properly executed partnership return,

Form 1065, U.S. Return of Partnership

Income, containing, in lieu of the information required by Form 1065 and by the

instructions relating thereto, only the name

or other identification and the address

of the organization together with information on the return, or in the statement

attached to the return, showing the names,

addresses, and identification numbers of all

the members of the organization; a statement that the organization qualifies under

§1.761-2(a)(1) and either §1.761-2(a)(2)

or (3); a statement that all of the members

VI. Comments That Are Not Addressed in

These Final Regulations

B. Tribal organizations

One commenter noted that wholly

owned Tribal corporations appear to be

incapable of making an election under

section 761(a) because such entities are

corporations for Federal tax purposes.

The treatment of entities wholly owned by

Tribal governments is addressed by a separate rulemaking and is therefore outside

the scope of these final regulations. For

information on how to provide comments

in response to that separate rulemaking,

see the notice of proposed rulemaking

(REG-113628-21), Entities Wholly Owned

by Indian Tribal Governments, published

in the Federal Register (89 FR 81871) on

October 9, 2024.

1215

December 9, 2024

of the organization elect that it be excluded

from all of subchapter K; and a statement

indicating where a copy of the agreement

under which the organization operates is

available (or if the agreement is oral, from

whom the provisions of the agreement

may be obtained). These requirements and

associated forms are already approved by

OMB under 1545-0123 for business filers.

These final regulations are not changing or

creating new collection requirements not

already approved by OMB.

The

recordkeeping

requirements

mentioned in these final regulations are

considered general tax records under

§1.6001-1(e). These records are required

for the IRS to validate that electing taxpayers have consistently met the regulatory requirements outlined in §1.761-2.

For PRA purposes, general tax records are

already approved by OMB under 15450123 for business filers and 1545-0047 for

tax-exempt organizations.

III. Regulatory Flexibility Act

The Secretary of the Treasury hereby

certifies that the final regulations will not

have a significant economic impact on a

substantial number of small entities pursuant to the Regulatory Flexibility Act (5

U.S.C. chapter 6).

These final regulations would affect

unincorporated organizations that elect

out of subchapter K in connection with an

election under section 6417, as well as the

members of such organizations.

Data is not readily available about these

organizations. Such organizations could

not have made an election out of subchapter K under the preexisting regulations, so

information about existing organizations

that have made section 761(a) elections is

not instructive.

Even if these final regulations affect a

substantial number of small entities, such

impact will not be significant. The final

regulations do not make it more costly to

make or maintain an election under section 761(a).

These final regulations do not change

the procedural requirements under

§1.761-2(b) for making an election under

section 761(a). Other than to conform to

modern formatting conventions, the final

regulations would amend §1.761-2(b)

only by adding a parenthetical to clarify

December 9, 2024

that in making a valid section 761 election, which requires attaching certain

statements to a Form 1065 as required

in accordance with the preexisting regulations, §1.761-2(a)(4) should be taken

into account, as applicable, with regard

to the required statement that the organization qualifies under §1.761-2(a)(1) and

either §1.761-2(a)(2) or (3) “(taking into

account §1.761-2(a)(4), as applicable)”.

Otherwise, an unincorporated organization making an election under these final

regulations would not be required to submit anything additional or different than

required under the preexisting version of

§1.761-2(b).

These final regulations impose no new

ongoing compliance costs. Though any

unincorporated organization that has made

an election under section 761(a) should

ensure that it remains qualified under

§1.761-2(a)(1) and either §1.761-2(a)(2)

or (3) (taking into account §1.761-2(a)

(4), as applicable), the final regulations

do not add to this obligation. In fact, these

final regulations could make it simpler

for certain unincorporated organizations

to stay qualified, given their joint operating agreements that satisfy the modified

co-ownership and severance requirements

and multi-year contracts that satisfy the

modified joint marketing requirement.

For the reasons stated, a regulatory

flexibility analysis under the Regulatory

Flexibility Act is not required.

Pursuant to section 7805(f), the notice

of proposed rulemaking preceding these

regulations was submitted to the Chief

Counsel for the Office of Advocacy of the

Small Business Administration for comment on its impact on small business, and

no comments were received.

IV. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandate

Reform Act of 1995 requires that agencies

assess anticipated costs and benefits and

take certain other actions before issuing a

final rule that includes any Federal mandate that may result in expenditures in

any one year by a State, local, or Tribal

government, in the aggregate, or by the

private sector, of $100 million (updated

annually for inflation). These final regulations do not include any Federal mandate

that may result in expenditures by State,

1216

local, or Tribal governments or by the private sector in excess of that threshold.

V. Executive Order 13132: Federalism

Executive Order 13132 (Federalism)

prohibits an agency from publishing any

rule that has federalism implications if

the rule either imposes substantial, direct

compliance costs on State and local governments, and is not required by statute,

or preempts State law, unless the agency

meets the consultation and funding

requirements of section 6 of the Executive

order. These final regulations do not have

federalism implications and do not impose

substantial, direct compliance costs on

State and local governments or preempt

State law within the meaning of the Executive order.

VI. Executive Order 13175: Consultation

and Coordination With Indian Tribal

Governments

Executive Order 13175 (Consultation

and Coordination With Indian Tribal Governments) prohibits an agency from publishing any rule that has Tribal implications if the rule either imposes substantial

direct compliance costs on Indian Tribal

governments, and is not required by statute, or preempts Tribal law, unless the

agency meets the consultation and funding requirements of section 5 of the Executive order. These final rules do not have

substantial direct effects on one or more

federally recognized Indian tribes and do

not impose substantial direct compliance

costs on Indian Tribal governments within

the meaning of the Executive order.

Nevertheless, on April 5, 2024, the

Treasury Department and the IRS held a

consultation with Tribal leaders requesting

assistance in addressing questions related

to the section 761(a) proposed rules published on March 11, 2024, which informed

the development of these final regulations.

VII. Executive Order 14112: Reforming

Federal Funding and Support for Tribal

Nations To Better Embrace Our Trust

Responsibilities and Promote the Next

Era of Tribal Self-Determination

Executive Order 14112 (Reforming

Federal Funding and Support for Tribal

Bulletin No. 2024–50

Nations to Better Embrace Our Trust

Responsibilities and Promote the Next Era

of Tribal Self-Determination) reaffirms

the executive branch’s support for Tribal

self-determination as the most effective

policy for the economic growth of Tribal

Nations and the economic well-being of

Tribal citizens. Executive Order 14112

requires agency heads to take certain

actions, consistent with applicable law

and to the extent practicable, to increase

access to “Federal funding and support

programs for Tribal Nations”; provide

Tribal Nations with the flexibility to

improve economic growth and address

the specific needs of their communities;

and reduce administrative burdens. Section 2(b) of the Executive order defines

“Federal funding and support programs

for Tribal Nations” as including “funding, programs, technical assistance, loans,

grants, or other financial support or direct

services that the Federal Government provides to Tribal Nations or Indians because

of their status as Indians.” As section 1

of the Executive order explains, “As we

continue to support Tribal Nations, we

must respect their sovereignty by better

ensuring that they are able to make their

own decisions about where and how to

meet the needs of their communities. No

less than for any other sovereign, Tribal

self-governance is about the fundamental

right of a people to determine their own

destiny and to prosper and flourish on their

own terms.” These commitments build on

a recognition of principles of sovereignty,

sovereign immunity, and self-governance

that have been repeatedly reaffirmed by

the Supreme Court. See, e.g., Three Affiliated Tribes of the Fort Berthold Reservation v. Wold Engineering, P.C., et al.,

476 U.S. 877, 890-91 (1986); Oklahoma

Tax Comm’n v. Citizen Band Potawatomi

Indian Tribe of Oklahoma, 498 U.S. 505,

510 (1991). The Treasury Tribal Advisory Committee has advised that Tribes

consider “financial support” in Executive

Order 14112 to include tax matters that

range from tax credits to Federal tax rules

that regulate Tribal revenue.

Consistent with Executive Order

14112, the Treasury Department and the

IRS recognize the importance of protecting and supporting Tribal sovereignty and

self-determination. These final regulations

would further Tribal self-determination

Bulletin No. 2024–50

and self-governance and reduce administrative burdens by providing Tribes the

ability to directly make section 6417 elections for applicable credit property held

through applicable unincorporated organizations provided all applicable statutory

and regulatory requirements are satisfied.

VIII. Congressional Review Act

Pursuant to the Congressional Review

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

Information and Regulatory Affairs has

designated this rule as a “major rule,” as

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

Statement of Availability of IRS

Documents

IRS notices and other guidance cited in

this preamble are published in the Internal

Revenue Bulletin (or Cumulative Bulletin)

and are available from the Superintendent

of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by

visiting the IRS website at https://www.

irs.gov.

Drafting Information

The principal author of these final regulations is Cameron Williamson. However, other personnel from the Treasury

Department and the IRS participated in

their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Amendments to the Regulations

Accordingly, the Treasury Department

and the IRS amend 26 CFR part 1 as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 is amended by revising the entry

for §1.761-2 to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

*****

Section 1.761-2 also issued under 26

U.S.C. 446(b), 761(a), 6031(a), 6417(d),

and 6417(h).

1217

*****

Par. 2. Section 1.761-2 is amended by:

a. Revising and republishing paragraphs (a)(1), (a)(2)(i), and (a)(3)(i);

b. Adding paragraphs (a)(4) and (5);

c. Revising and republishing paragraphs (b)(1) and (2), (b)(3)(i), (c), and

(e); and

d. Adding paragraph (f).

The revisions and additions read as follows:

§1.761-2 Exclusion of certain

unincorporated organizations from the

application of all or part of subchapter

K of chapter 1 of the Internal Revenue

Code.

(a) * * *

(1) In general. Under the conditions

set forth in this section, an unincorporated organization described in paragraph

(a)(2) or (3) of this section (taking into

account paragraph (a)(4) of this section,

as applicable) may be excluded from the

application of all or a part of the provisions of subchapter K of chapter 1 of

the Internal Revenue Code (subchapter

K). Such organization must be availed

of for investment purposes only and not

for the active conduct of a business, or

for the joint production, extraction, or

use of property, but not for the purpose

of selling services or property produced

or extracted. The members of such organization must be able to compute their

income without the necessity of computing partnership taxable income. Any

syndicate, group, pool, or joint venture

which is treated as a corporation for Federal tax purposes does not fall within the

provisions in this paragraph (a)(1).

(2) * * *

(i) Own the property as co-owners;

*****

(3) * * *

(i) Own the property as co-owners,

either in fee or under lease or other form

of contract granting exclusive operating

rights; and

*****

(4) Modifications for certain joint ownership arrangements of applicable credit

property—(i) Scope. Paragraph (a)(4)(iii)

of this section provides certain modifications to specified rules in paragraph (a)(3)

of this section in the case of an applicable

December 9, 2024

unincorporated organization meeting the

requirements of paragraph (a)(4)(ii) of

this section.

(ii) Applicable unincorporated organization. For purposes of this section, an

applicable unincorporated organization is

an unincorporated organization:

(A) That is owned, in whole or in

part, by one or more applicable entities,

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

§1.6417-1(c);

(B) The members of which enter into

a joint operating agreement in which the

members reserve the right separately

to take in kind or dispose of their pro

rata shares of any property produced,

extracted, or used, and any associated

renewable energy credits or similar credits;

(C) That, pursuant to the joint operating agreement, is organized exclusively to

own and operate applicable credit property (as defined in §1.6417-1(e));

(D) For which one or more of the

applicable entities will make an elective

payment election under section 6417(a)

for the applicable credits determined with

respect to its share of the applicable credit

property;

(E) The members of which are able to

compute their income without the necessity of computing partnership taxable

income; and

(F) Which is not a syndicate, group,

pool, or joint venture which is classifiable

as an association, or any group operating under an agreement which creates an

organization classifiable as an association.

(iii) Specified modifications for applicable unincorporated organizations.

Solely for purposes of an election under

section 761(a) by an applicable unincorporated organization that meets the

requirements of paragraphs (b) and (e) of

this section:

(A) The requirement in paragraph (a)

(3)(i) of this section is modified such that

the participants are permitted to own the

applicable credit property through an

unincorporated organization that is an

entity, other than one that is treated as a

corporation for Federal tax purposes; and

(B) The requirement in paragraph (a)

(3)(iii) of this section is modified such

that the delegation of authority to sell the

participant’s share of the property pro-

December 9, 2024

duced or used may allow the delegee to

enter into contracts the duration of which

exceeds the minimum needs of the industry and may be for more than one year,

provided that the delegation of authority

to act on behalf of the participant may not

be for a period of time that exceeds the

minimum needs of the industry, and in no

event for more than one year.

(5) Examples. The following examples

are intended to illustrate the principles of

this section.

(i) Example 1—(A) Facts. G and H enter into

a joint operating agreement to own and operate a

facility that will produce solar energy. G, an applicable entity, is entitled under the joint operating

agreement to take in kind or dispose of 40% of

the energy produced by the unincorporated organization and H, which is not an applicable entity,

is entitled to the remaining 60%. G and H form

LLC, a limited liability company, to hold the solar

energy property that G and H intend to operate

pursuant to the joint operating agreement. In accordance with the joint operating agreement, G owns

a 40% ownership interest in LLC and H owns the

remaining 60% ownership interest. G will sell its

share of energy produced by the facility in a manner

designed to generate applicable credits under section 45(a) and will make an election under section

6417(a) with respect thereto. LLC makes a valid

election under section 761(a) to be excluded from

subchapter K.

(B) Analysis. G will be entitled to any credits

under section 45(a) generated by its sale of energy

produced by LLC that G has the right to take in

kind or dispose of (which, under the joint operating

agreement, is 40% of the energy produced by LLC).

Assuming all other requirements are met, G will be

able to make an elective payment election under section 6417 for the applicable credits determined with

respect to its ownership share of the solar energy

property.

(ii) Example 2—(A) Facts. T is an Indian Tribal

government as defined in §1.6417-1(c) and an applicable entity. Through a limited liability company

organized under T’s Tribal law (TLLC), T and Y own

and operate applicable credit property that will generate electricity the sale of which will generate applicable credits under section 45(a). TLLC is not treated

as an association taxable as a corporation for Federal

tax purposes and no election under §301.7701-3 of

this chapter has been made to treat TLLC as such.

T and Y enter into a joint operating agreement with

respect to the ownership and operation of the applicable credit property in which each of T and Y reserve

the right separately to take in kind or dispose of their

pro rata shares of property produced, extracted, or

used and any associated renewable energy credits

or similar credits. TLLC is formed exclusively to

own and operate an applicable credit property with

respect to which section 45(a) credits will be determined. On January 1st of year 1, T and Y enter into

delegation agreements with Q that delegate T’s and

Y’s authority to Q to sell the electricity generated

1218

by T’s and Y’s shares of the applicable credit property. The term of the delegation agreements is one

year, which does not exceed the minimum needs of

the industry. On June 1st of year 1, Q enters into a

power purchase agreement with Utility on T’s and

Y’s behalf that commits T and Y to sell the electricity

produced from their shares of the applicable credit

property to Utility for a term of 15 years. At the end

of the day on December 31st of year 1, the delegation

agreements terminate.

(B) Analysis. Because T and Y did not delegate

authority for a period of more than one year to sell

the output from their shares of the applicable credit

property, the requirements of paragraph (a)(3)(iii)

of this section (as modified by paragraph (a)(4)(iii)

(B) of this section) are met. Assuming that TLLC

otherwise qualifies as an applicable unincorporated

organization, TLLC is an organization described in

paragraph (a)(4)(iii)(A) of this section and can make

an election under paragraphs (b) and (e) of this section to be excluded from the application of all of subchapter K under section 761(a). As such, T can make

an elective payment election for the applicable credits determined with respect to its share of the applicable credit property held by TLLC, assuming the

requirements of section 6417 are otherwise met. The

analysis in this example would be the same whether

Y is also an Indian Tribal government, another applicable entity, or some other person.

(iii) Example 3—(A) Facts. The facts are the

same as in paragraph (a)(5)(ii)(A) of this section

(Example 2), except that at the end of the day on

December 31, T and Y each agree, in writing, to a

new agent delegation agreement with Q with substantively identical terms as the agent delegation

agreement in effect during year 1.

(B) Analysis. Because each of T and Y have

agreed, in writing, to engage Q in an agency relationship lasting no longer than one year, the results

are the same as in paragraph (a)(5)(ii)(B) of this

section (Example 2). In contrast, if the agent delegation agreement renewed automatically, T and Y have

effectively entered into an agent delegation agreement lasting longer than one year and have violated

the requirements of paragraph (a)(4)(iii)(B) of this

section. In that case, TLLC would not be eligible to

make or maintain an election under section 761(a).

As such, T could not make an elective payment

election for the applicable credits determined with

respect to its share of the applicable credit property

held through TLLC.

(b) * * *

(1) Time for making election for exclusion. Any unincorporated organization

described in paragraph (a)(1) of this section and either paragraph (a)(2) or (3) of

this section (taking into account paragraph (a)(4) of this section, as applicable) that wishes to be excluded from all

of subchapter K must make the election

provided in section 761(a) not later than

the time prescribed by §1.6031(a)–1(e)

(including extensions thereof) for filing

the partnership return for the first tax-

Bulletin No. 2024–50

able year for which exclusion from subchapter K is desired. Notwithstanding the

prior sentence, such organization may be

deemed to have made the election in the

manner prescribed in paragraph (b)(2)(ii)

of this section.

(2) Method of making election—(i) In

general. Except as provided in paragraph

(b)(2)(ii) of this section, any unincorporated organization described in paragraph (a)(1) of this section and either

paragraph (a)(2) or (3) of this section

(taking into account paragraph (a)(4) of

this section, as applicable) which wishes

to be excluded from all of subchapter K

must make the election provided in section 761(a) in a statement attached to,

or incorporated in, a properly executed

partnership return, Form 1065, U.S.

Return of Partnership Income, which

must contain the information required in

this paragraph (b)(2)(i). Such return must

be filed with the Internal Revenue Service Center where the partnership return,

Form 1065, would be required to be filed

if no election were made. To determine

the appropriate Internal Revenue Service

Center, the principal office or place of

business of the person filing the return

will be considered the principal office or

place of business of the organization. The

partnership return must be filed not later

than the time prescribed §1.6031(a)–1(e)

(including extensions thereof) for filing

the partnership return with respect to the

first taxable year for which exclusion

from subchapter K is desired. Such partnership return must contain, in lieu of the

information required by Form 1065 and

by the instructions relating thereto, only

the name or other identification and the

address of the organization together with

information on the return, or in the statement attached to the return, showing the

names, addresses, and taxpayer identification numbers of all the members of the

organization; a statement that the organization qualifies under paragraph (a)(1) of

this section and either paragraph (a)(2)

or (3) of this section (taking into account

paragraph (a)(4) of this section, as applicable); a statement that all of the members of the organization elect that it be

excluded from all of subchapter K; and a

Bulletin No. 2024–50

statement indicating where a copy of the

agreement under which the organization

operates is available (or if the agreement

is oral, from whom the provisions of the

agreement may be obtained).

(ii) Deemed election rule. If an

unincorporated organization described

in paragraph (a)(1) of this section and

either paragraph (a)(2) or (3) of this section (taking into account paragraph (a)

(4) of this section, as applicable) does

not make the election provided in section 761(a) in the manner prescribed

by paragraph (b)(2)(i) of this section,

it will nevertheless be deemed to have

made the election if it can be shown

from all the surrounding facts and circumstances that it was the intention of

the members of such organization at the

time of its formation to secure exclusion

from all of subchapter K beginning with

the first taxable year of the organization.

Although the following facts are not

exclusive, either one of such facts may

indicate the requisite intent:

(A) At the time of the formation of

the organization there is an agreement

among the members that the organization

be excluded from subchapter K beginning

with the first taxable year of the organization; or

(B) The members of the organization

owning substantially all of the capital

interests report their respective shares of

the items of income, deductions, and credits of the organization on their respective

returns (making such elections as to individual items as may be appropriate) in a

manner consistent with the exclusion of

the organization from subchapter K beginning with the first taxable year of the organization.

(3) * * *

(i) In general. An election under this

section to be excluded will be effective

unless within 90 days after the formation of the organization any member of

the organization notifies the Commissioner that the member desires subchapter K to apply to such organization, and

also advises the Commissioner that the

member has so notified all other members of the organization by registered or

certified mail. Such election is irrevoca-

1219

ble as long as the organization remains

qualified under paragraph (a)(1) of this

section and either paragraph (a)(2) or

(3) of this section (taking into account

paragraph (a)(4) of this section, as

applicable), or unless approval of revocation of the election is secured from the

Commissioner.

*****

(c) Partial exclusion from subchapter K. An unincorporated organization

which wishes to be excluded from only

certain sections of subchapter K must

submit to the Commissioner, no later

than 90 days after the beginning of the

first taxable year for which partial exclusion is desired, a request for permission

to be excluded from certain provisions of

subchapter K. The request must set forth

the sections of subchapter K from which

exclusion is sought and must state that

such organization qualifies under paragraph (a)(1) of this section and either

paragraph (a)(2) or (3) of this section

(taking into account paragraph (a)(4) of

this section, as applicable), and that the

members of the organization elect to be

excluded to the extent indicated. Such

exclusion will be effective only upon

approval of the election by the Commissioner and subject to the conditions the

Commissioner may impose.

*****

(e) Cross reference. For requirements

with respect to the filing of a return

on Form 1065 by a partnership, see

§1.6031(a)–1.

(f) Applicability date. Except as provided in paragraph (d) of this section, this

section applies to taxable years ending on

or after March 11, 2024.

Heather C. Maloy,

Acting Deputy Commissioner.

Approved: November 6, 2024.

Aviva R. Aron-Dine,

Deputy Assistant Secretary of

the Treasury (Tax Policy).

(Filed by the Office of the Federal Register November 19, 2024, 8:45 a.m., and published in the issue

of the Federal Register for November 20, 2024, 89

FR 91552)

December 9, 2024

26 CFR 301.6103(j)(1)-1 Disclosures of return information reflected on returns to officers and employees

of the Department of Commerce for certain statistical ...

T.D. 10013

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 301

Disclosures of Return

Information Reflected

on Returns to Officers

and Employees of the

Department of Commerce,

including the Bureau of

the Census, for Certain

Statistical Purposes and

Related Activities

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains

final regulations that amend existing

regulations relating to the disclosure

of specified return information to the

Bureau of the Census (Bureau). The

final regulations ensure the efficient and

appropriate transfer of return information

to the Bureau and permit the disclosure

of additional return information pursuant to a request from the Secretary of

Commerce. These regulations require no

action by taxpayers and have no effect on

their tax liabilities.

DATES: Effective date: These final regulations are effective on November 26,

2024.

Applicability date: For the date of applicability, see §301.6103(j)(1)-1.

FOR FURTHER INFORMATION

CONTACT: Elizabeth Erickson of the

Office of the Associate Chief Counsel

(Procedure and Administration), at (202)

317-6834; (not a toll-free number).

December 9, 2024

SUPPLEMENTARY INFORMATION:

Authority

This document amends the Procedure

and Administration Regulations, 26 CFR

part 301, relating to section 6103(j)(1)

(A) of the Internal Revenue Code (Code),

by adding final regulations under section

6103 (final regulations). Section 6103(j)

(1) provides an express delegation of

authority to the Secretary of the Treasury

or her delegate (Secretary), stating that,

“[u]pon request in writing by the Secretary of Commerce, the Secretary shall

furnish . . . such returns, or return information reflected thereon, to officers and

employees of the Bureau of the Census”

and “such return information reflected

on returns of corporations to officers and

employees of the Bureau of Economic

Analysis” “as the Secretary may prescribe

by regulation for the purpose of, but only to

the extent necessary in, the structuring of

censuses and national economic accounts

and conducting related statistical activities

authorized by law.” Section 6103(q) further authorizes the Secretary to “prescribe

such other regulations as are necessary to

carry out the provisions of” section 6103.

The final regulations are also issued under

the express delegation of authority under

section 7805(a) of the Code.

Background

There is a long history of providing

return information to the Bureau under

section 6103(j)(1)(A), and the regulations promulgated under this section have

been amended periodically to increase the

amount of return information provided to

facilitate the statistical activities of the

Bureau. See e.g., TD 9037, 68 FR 2693,

January 21, 2003; TD 9188, 70 FR 12141,

March 11, 2005; TD 9267, 71 FR 38263,

July 6, 2006; TD 9372, 72 FR 73262,

December 27, 2007; TD 9439, 73 FR

79361, December 29, 2008; TD 9500, 75

FR 52459, August 26, 2010; TD 9631, 78

FR 52857, August 27, 2013; TD 9754, 81

FR 9767, February 26, 2016; TD 9856, 84

FR 14011, April 9, 2019.

The existing regulations under section 6103(j)(1)(A) are set forth in 26

CFR 301.6103(j)(1)-1. They authorize

the Bureau to receive return information

1220

that supports many different Bureau projects and programs, including the Economic Census, the Longitudinal Employer-Household Dynamics program, and the

Small Area Income and Poverty Estimates

program, among others.

Pursuant to section 6103(p)(4), the

IRS sets stringent privacy and security

requirements for agencies receiving return

information, including the Bureau. These

requirements are currently detailed in IRS

Publication 1075, Tax Information Security Guidelines For Federal, State and

Local Agencies. See also §301.6103(p)

(4)-1.

By letter dated February 29, 2024, the

Secretary of Commerce requested the

Secretary amend existing §301.6103(j)

(1)-1 to provide for the disclosure of additional items of return information to the

Bureau to enable the Bureau to perform

mission critical statistical functions. The

Secretary of Commerce further stated

that the additional items would allow the

Bureau to conduct its economic, demographic, decennial, and research statistics programs, censuses, and related program evaluations. The amendments to

the existing regulations would permit the

Bureau to publish statistical information,

enhance the use of administrative records,

improve the quality of program estimates,

and support the reduction of burden. The

Secretary of Commerce’s letter lists the

additional items of return information

requested based on the Bureau’s specific

need for each item of information.

On March 29, 2024, a notice of proposed rulemaking (REG-123376-22) was

published in the Federal Register (89 FR

22101) (proposed regulations). The proposed regulations proposed amending the

regulations that authorize disclosure of

specified return information to the Bureau.

The proposed regulations would allow the

disclosure of additional items of return

information requested by the Secretary of

Commerce to enable the Bureau to perform mission critical statistical functions.

The proposed regulations would also permit the disclosure of return information

if an item of return information currently

listed in the regulations is subsequently

reported in a substantially similar format

or on a substantially similar document.

The proposed regulations would formalize existing practice to include (1) the

Bulletin No. 2024–50

requirement that all projects that use return

information disclosed under these regulations be approved by the IRS Director

of Statistics of Income, and (2) language

related to the IRS’s and the Bureau’s disclosure review obligations.

Summary of Comments and

Explanation of Revisions

The Department of the Treasury (Treasury Department) and the IRS received

eighteen comments in response to the

proposed regulations. The comments are

available for public inspection at https://

www.regulations.gov or upon request.

There was no request for a public hearing,

and none was held. After full consideration of the comments received, which are

described in this Summary of Comments

and Explanation of Revisions, these final

regulations adopt the proposed regulations

with minor changes.

A. Comments Supporting the Proposed

Regulations.

Nine of the comments received did not

seek to modify the items of return information permitted to be disclosed to the

Bureau pursuant to the proposed regulations. Of these comments, six were supportive of the proposed regulations. One

comment noted the importance of administrative tax data in measuring and understanding income and wealth in the United

States. Another comment noted that the

proposed regulations would improve the

Bureau’s ability to accurately estimate

household income and otherwise evaluate

and improve the Bureau’s statistical products. This same comment also encouraged

the IRS and the Bureau, along with the

Office of Management and Budget and

other statistical agencies, to explore additional pathways for increasing the statistical agencies’ access to Federal tax data, as

well as a greater sharing of administrative

data across statistical agencies, noting that

increased use of administrative data has

significant promise for improving statistics on U.S. households and businesses.

Finally, this comment noted its support for

further consideration of possible means of

expanding access to tax data for appropriate purposes in a reliably secure and confidential way.

Bulletin No. 2024–50

Another comment supported the proposed regulations and stated that the data

that could be disclosed as outlined in the

proposed regulations was crucial for the

IRS’s efforts to advance equity. As one

example, this comment noted that, if

finalized, the proposed regulations would

provide an important opportunity for government and independent researchers to

understand demographic trends regarding the Child Tax Credit (CTC) and other

refundable credits, as well as to identify and track potential disparities in tax

administration. Another comment noted

that the proposed changes to the existing

regulations would enable the Bureau to

produce data that provides more detail

about the economic conditions of various populations across the United States,

including populations that have been historically underserved, marginalized, and

adversely affected by health inequity.

These comments reflect support for

the proposed regulations’ items of return

information permitted to be disclosed to

the Bureau. The Treasury Department and

IRS agree that disclosure of this information will further the needs of the Bureau by

authorizing the Bureau to receive return

information that supports many different

Bureau projects and programs, including

the Economic Census, the Longitudinal

Employer-Household Dynamics program,

and the Small Area Income and Poverty

Estimates program, among others.

B. Comments Proposing that Additional

Items of Return Information be Disclosed

to the Bureau.

Two comments suggested that additional information on the variety of energy

credits under the Inflation Reduction Act

of 2022 (IRA) be furnished to the Bureau.

The IRA, Public Law 117-169, 136 Stat.

1818 (August 16, 2022), featured a significant number of new tax provisions related

to clean energy. Section 6103(j)(1)(A)

provides that the Secretary “shall furnish”

returns or return information requested

by the Secretary of Commerce “for the

purpose of, but only to the extent necessary in, the structuring of the censuses

and national economic accounts and conducting related statistical activities authorized by law.” In her request to the Secretary, the Secretary of Commerce did not

1221

request the furnishing of the return information recommended by the comments.

Because the Secretary of Commerce did

not request that information, the final regulations do not adopt these comments.

Similarly, two other comments recommended that additional data regarding

partnership returns be furnished to the

Bureau – specifically, the zip code of partners included on Form 1065, U.S. Return

of Partnership Income, Schedule K-1. The

Secretary of Commerce in her request to

the Secretary did not request the return

information recommended by the comments. Accordingly, the final regulations

do not adopt these comments.

One comment suggested that it is

important for the Bureau to have access

to the series of Forms 1099 for both filers

and non-filers because such information is

important for measuring and understanding income and its distribution, and that

the accuracy of income estimates would

improve. The comment in particular identified Forms 1099-INT, Interest Income,

and 1099-DIV, Dividends and Distributions, along with certain data from Form

1098-T, Tuition Statement (identifiers of

the college attended, and tuition amount).

The Secretary of Commerce in her request

to the Secretary did not request the disclosure of the Form 1099 series in general or the Forms 1099-INT or 1099-DIV

specifically. The proposed regulations

would permit the disclosure of payments

received for qualified tuition and related

expenses as well as the identity of the eligible educational institution filing Form

1098-T. Accordingly, no change to the

final regulations is necessary to adopt

these comments.

Two other comments requested that

payer and payee taxpayer identification

numbers (TINs) from information returns

be disclosed to the Bureau. Payer and

payee TINs may already be disclosed to

the Bureau under the existing regulations.

See §§301.6103(j)(1)-1(b)(1) (relating to

individual taxpayers); 301.6103(j)(1)-1(b)

(2)(i) (relating to taxpayers engaged in a

trade or business); 301.6103(j)(1)-1(b)

(3) (relating to business-related return

information); and 301.6103(j)(1)-1(b)(4)

(relating to tax-exempt organizations).

The proposed regulations similarly provide for the ability to disclose payer and

payee TINs. See proposed §§301.6103(j)

December 9, 2024

(1)-1(b)(1)(i)(A) (relating to individual taxpayers); 301.6103(j)(1)-1(b)(1)

(ii) (relating to returns filed on behalf of

a trade or business); 301.6103(j)(1)-1(b)

(1)(iii) (relating to tax-exempt organizations). Accordingly, no change to the final

regulations is necessary to adopt these

comments.

A comment supported the language

in the proposed regulations that would

provide the Bureau with information on

health coverage (such as marketplace

coverage parameters, and employer coverage on Forms 1095-A, Health Insurance Marketplace Statement, 1095-B,

Health Coverage, and 1095-C, Employer-Provided Health Insurance Offer

and Coverage) noting that the information reported on these forms provides a

comprehensive record of health coverage nationwide and fills important gaps

in data. The comment also noted that

information regarding health savings

accounts (HSAs) from Form 5498-SA,

HSA, Archer MSA, or Medicare Advantage MSA Information, would also be

valuable to policymakers, as the policy

considerations with respect to HSAs are

a frequent and important focus of ongoing research. The Treasury Department

and the IRS note that certain data from

Form 5498-SA are already included in

the information that would be permitted

to be disclosed to the Bureau under the

proposed regulations. The final regulations in this regard adopt the proposed

regulations without modification.

This same comment requested that

the Bureau release (a) enhanced Annual

Social and Economic Supplement (ASEC)

of the Current Population Survey (CPS)

data with new IRS data matched to it, and

(b) detailed cross tabulations of newly

released tax data by income, geographic

area, filing type, and other available tax

return statistics. In addition, this comment

also encouraged the IRS to continue to

carefully evaluate technical and policy

solutions for safely sharing the various

blended data and implement data governance principles such as accessibility and

transparency, through the blending of IRS

and Bureau data.

This same comment suggested that

various data elements should be disclosed to the Bureau to allow the Bureau

to have a more accurate understanding of

December 9, 2024

the impact of current tax benefits and the

potential impact of modifications to these

provisions. The suggested data elements

included: tax-filing status, income from

various sources, the number of earned

income tax credit (EITC) eligible qualifying children, the amount of tax credits like EITC and the CTC that families

receive, and tax liabilities. Each of these

data elements may be disclosed either

directly or indirectly under the existing

regulations and also under the proposed

regulations. See proposed §§301.6103(j)

(1)-1(b)(1)(i) (reflecting returns and

return information related to individual

taxpayers); 301.6103(j)(1)-1(b)(1)(i)(B)

(regarding tax-filing status); 301.6103(j)

(1)-1(b)(1)(i)(O)

(regarding

earned

income as defined under section 32(c)(2));

301.6103(j)(1)-1(b)(1)(i)(GG)

(regarding the EITC); 301.6103(j)(1)-1(b)(1)(i)

(P) (regarding EITC-eligible qualifying

children); 301.6103(j)(1)-1(b)(1)(i)(PP)

(regarding the CTC). The overall tax liability of an individual taxpayer, which the

Treasury Department and IRS interpret to

mean the total amount of tax due or paid

by an individual taxpayer, may be ascertained through the items of income, gain,

deduction, and credit, that may similarly

be disclosed under the proposed and final

regulations. Accordingly, the final regulations adopt the proposed regulations in

this respect without modification.

C. Comments Expressing Concerns

Regarding Data Security.

One comment suggested that in its

finalized form, the proposed regulations

should state affirmatively that, in addition to IRS data privacy protections, data

are and will remain confidential under 13

U.S.C. 9, whether in their original form or

when comingled or linked.

The final regulations do not adopt this

recommendation. The provision cited in

the comment, 13 U.S.C. 9, governs the

protection and use of confidential data by

the Department of Commerce. Section

214 of title 13, United States Code governs criminal penalties against employees

or staff members of the Bureau for prohibited disclosure of such confidential data.

The disclosures that would be permitted

by the proposed regulations concern disclosures made by the IRS under section

1222

6103(j) of Title 26, United States Code

(Title 26). The proposed regulations, as

well as these final regulations, do not govern data privacy or confidentiality requirements outside of Title 26. The Secretary

of Commerce affirmed the application of

13 U.S.C. 9 and 214 in her February 29,

2024, request to the Secretary.

Two other comments expressed concerns that the data sharing contemplated

by the proposed regulations would

weaken the confidentiality of personal tax

data held by the IRS, encourage the inappropriate release of personal tax information, and increase the vulnerability of

individual tax return information to data

breaches, intrusion, data theft, and abuse.

The Treasury Department and the IRS

take taxpayer confidentiality seriously.

Section 6103(a) prohibits the unauthorized disclosure of tax returns and return

information by officers or employees of

the United States, which includes officers

or employees of the Treasury Department,

the IRS, the Department of Commerce,

and the Bureau. Unauthorized disclosure

of returns and return information, if willful, is a felony. See section 7213 of the

Code. Unauthorized disclosure may also

be punishable through civil damages.

See section 7431 of the Code. Pursuant

to section 6103(p)(4), the IRS sets stringent privacy and security requirements

for agencies receiving return information,

including the Bureau. See §301.6103(p)

(4)-1. Proposed §301.6103(j)(1)-1(d)

did not propose to modify the requirements set forth in section 6103(p)(4) and,

instead, noted their applicability, stating

that if the IRS determines that the Bureau

fails to satisfy those requirements, the IRS

may take action to ensure that the requirements are satisfied, “including suspension

of disclosures of return information” until

the IRS determines that the requirements

of section 6103(p)(4) have been, or will

be, satisfied.

No comments were received regarding proposed §301.6103(j)(1)-1(d), and

accordingly, the final regulations adopt the

proposed regulation in this respect without modification. The regulation ensures

that disclosures of returns and return

information are made consistent with the

requirements set forth in the Code and

regulations, and that the IRS may suspend any disclosures to the Bureau should

Bulletin No. 2024–50

either entity fail to satisfy the requirements under section 6103(p)(4).

D. Comments Expressing Concerns

about the Impacts of the Use of Data for

Certain Classes of Taxpayers.

One comment requesting that the proposed regulations be withdrawn expressed

concerns that sharing additional tax data

with the Bureau would result in unintended

adverse consequences for immigrant communities. Specifically, the comment noted

that additional data sharing could result in

a “chilling effect” for immigrant taxpayers, suggesting that individuals may not

file tax returns because they are concerned

that their tax return data will be shared

with immigration enforcement agencies.

The comment also expressed a concern

that the proposed regulations could result

in the creation of a list of taxpayers who

file returns using Individual Taxpayer

Identification Numbers that could be

used to target individuals presumed to be

undocumented for immigration enforcement purposes. The comment noted that

the IRS should continue to assure taxpayers that their data is secure and that they

can safely file their taxes without being

concerned that their information will be

used for reasons beyond tax administration.

As discussed previously in this Summary of Comments and Explanation of

Revisions, return information that a taxpayer provides to the IRS may not be

disclosed unless otherwise permitted by

Title 26, and unauthorized disclosures of

returns or return information may be subject to criminal and civil penalties. There

is no provision in the United States Code

that authorizes the disclosure or redisclosure of returns or return information for

enforcement of immigration laws. Comments regarding other possible lawful disclosures of taxpayer information are outside the scope of these regulations because

the proposed regulations relate to the disclosure of specified return information to

the Bureau, as permitted by law, and not to

any other agency, such as U.S. Immigration and Customs Enforcement or the U.S.

Department of Homeland Security.

Another comment requested that

the proposed regulations be withdrawn

because sharing such personal and

Bulletin No. 2024–50

entity tax data encourages a racial and/

or gender diversity impact analysis of

tax policy decisions. The comment further stated that such a racial or gender

diversity impact analysis is inappropriate

where no discriminatory intent has been

demonstrated and where tax provisions

have been introduced by Congress based

on independent considerations of tax

policy without any design or purpose to

create disproportionate racial or gender

impact. The Treasury Department and the

IRS do not adopt this comment. As previously described in this preamble, section

6103(j) states that the Secretary “shall

furnish” returns and return information,

upon the request of the Secretary of Commerce, to the Bureau “for the purpose of,

but only to the extent necessary in, the

structuring of censuses and national economic accounts and conducting related

statistical activities authorized by law.”

These regulations provide for disclosure

to the Bureau that is fully consistent with

that statutory mandate.

E. Modification to Clarify “Taxpayer

Identity Information”.

No comments were received regarding

the definition of taxpayer identity information. Proposed §301.6103(j)(1)-1(b)

(1)(i)(A) is the first instance of where that

term is used and includes the parenthetical

“(as defined under section 6103(b)(6) of

the Code).” Other references to taxpayer

identity information in the proposed regulations lack that parenthetical descriptor.

To provide consistency, the final regulations modify the proposed regulations to

include that descriptor. See §§301.6103(j)

(1)-1(b)(1)(ii)(A) (regarding taxpayer

identity information of taxpayers engaged

in a trade or business); 301.6103(j)(1)1(b)(1)(ii)(P) (regarding taxpayer identity information of a parent corporation,

shareholder, partner, and employer identity information); 301.6103(j)(1)-1(b)(1)

(iii)(A) (regarding taxpayer identity information of a tax-exempt organization);

301.6103(j)(1)-1(b)(3)(i)(A)(1) (regarding taxpayer identity information reflected

on returns of corporations); 301.6103(j)

(1)-1(b)(3)(i)(B)(2) (regarding taxpayer

identity information from Form SS-4,

Application for Employer Identification

Number).

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Special Analyses

I. Regulatory Planning and Review

Pursuant to the Memorandum of

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

9, 2023), tax regulatory actions issued by

the IRS are not subject to the requirements

of section 6 of Executive Order 12866, as

amended. Therefore, a regulatory impact

assessment is not required.

II. Regulatory Flexibility Act

Because these regulations would not

impose any requirements on small entities, the Regulatory Flexibility Act (5

U.S.C. chapter 6) does not apply. Pursuant

to section 7805(f) of the Internal Revenue

Code, the notice of proposed rulemaking

was submitted to the Chief Counsel for the

Office of Advocacy of the Small Business

Administration for comment on its impact

on small business. The Chief Counsel for

the Office of Advocacy of the Small Business Administration did not provide any

written comments.

III. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates

Reform Act of 1995 (UMRA) requires

that agencies assess anticipated costs and

benefits and take certain other actions

before issuing a final rule that includes

any Federal mandate that may result in

expenditures in any one year by a State,

local, or Tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for

inflation. In 2024, that threshold was $200

million. This rule does not include any

Federal mandate that may result in expenditures by State, local, or Tribal governments, or by the private sector in excess of

that threshold.

IV. Executive Order 13132: Federalism

Executive Order 13132 (Federalism)

prohibits an agency from publishing any

rule that has federalism implications if

the rule either imposes substantial direct

compliance costs on State and local governments, and is not required by statute,

or preempts State law, unless the agency

December 9, 2024

meets the consultation and funding

requirements of section 6 of the Executive order. These regulations do not have

federalism implications and do not impose

substantial direct compliance costs on

State and local governments or preempt

State law within the meaning of the Executive order.

V. Congressional Review Act

Pursuant to the Congressional Review

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

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

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

Drafting Information

The principal author of these regulations is Elizabeth Erickson of the Office

of the Associate Chief Counsel (Procedure

and Administration). However, other personnel from the Treasury Department and

the IRS also participated in their development.

List of Subjects in 26 CFR Part 301

Employment taxes, Estate taxes,

Excise taxes, Gift taxes, Income taxes,

Penalties, Reporting and recordkeeping

requirements.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 301 is

amended as follows:

PART 301–PROCEDURE AND

ADMINISTRATION

Paragraph 1. The authority citation

for part 301 is amended by revising the

entry for §301.6103(j)(1)-1 and removing

the entry for §301.6103(j)(1)-1T to read in

part as follows:

Authority: 26 U.S.C. 7805.

*****

Section 301.6103(j)(1)-1 also issued

under 26 U.S.C. 6103(j)(1) and 6103(q).

*****

Par 2. Section 301.6103(j)(1)-1 is

amended by adding a sentence to the end

of paragraph (a) and revising paragraphs

(b), (d), and (e) to read as follows:

December 9, 2024

§301.6103(j)(1)-1 Disclosures of

return information reflected on

returns to officers and employees of

the Department of Commerce for

certain statistical purposes and related

activities.

(a) * * * To the extent a particular form,

schedule, or other document filed with the

Internal Revenue Service is referenced in

this section, such information shall continue to be disclosable pursuant to this

section even if subsequently reported in a

substantially similar format or on a substantially similar document filed with the

Internal Revenue Service.

(b) Disclosure of return information reflected on returns to officers and

employees of the Bureau of the Census.

(1) Officers or employees of the Internal

Revenue Service will disclose the following return information reflected on returns

to officers and employees of the Bureau

of the Census for purposes of, but only to

the extent necessary in, the structuring of

censuses and national economic accounts

and conducting related statistical activities

authorized by law.

(i) With respect to returns filed by individual taxpayers:

(A) Taxpayer identity information (as

defined in section 6103(b)(6) of the Internal Revenue Code (Code)), validity code

with respect to the taxpayer identifying

number (as described in section 6109 of

the Code), and taxpayer identity information of spouse and dependents, if reported.

(B) Filing status.

(C) Number and classification of

reported exemptions.

(D) Wage and salary income.

(E) Dividend income.

(F) Interest income.

(G) Gross rent and royalty income.

(H) Total of—

(1) Wages, salaries, tips, etc.;

(2) Interest income;

(3) Dividend income;

(4) Alimony received;

(5) Business income;

(6) Pensions and annuities;

(7) Income from rents, royalties, partnerships, estates, trusts, etc.;

(8) Farm income;

(9) Unemployment compensation; and

(10) Total Social Security benefits.

(I) Adjusted gross income.

1224

(J) Type of tax return filed.

(K) Entity code.

(L) Code indicators for Form 1040,

Form 1040 (Schedules A, C, D, E, F, and

SE), and Form 8814.

(M) Posting cycle date relative to filing.

(N) Social Security benefits.

(O) Earned income (as defined in section 32(c)(2) of the Code).

(P) Number of Earned income credit-eligible qualifying children.

(Q) Electronic filing system indicator.

(R) Return processing indicator.

(S) Paid preparer code.

(T) Dependent Social Security numbers.

(U) Total income.

(V) Ordinary dividends.

(W) Taxable refunds, credits, or offsets

of State and local income taxes.

(X) Business income or (loss).

(Y) Capital gain or (loss).

(Z) Other gains or (losses).

(AA) Individual Retirement Arrangement (IRA) distributions.

(BB) Taxable amount of IRA distributions.

(CC) Pensions and annuities.

(DD) Taxable amount of pensions and

annuities.

(EE) Rental real estate, royalties, partnerships, S corporations, trusts, etc.

(FF) Farm income or (loss).

(GG) Earned income credit.

(HH) Taxable amount of Social Security benefits.

(II) Other income.

(JJ) Itemized deductions.

(KK) Taxable income.

(LL) Tax.

(MM) Credit for child and dependent

care expenses.

(NN) Education credits.

(OO) Retirement savings contributions

credit.

(PP) Child tax credit.

(QQ) Nontaxable combat pay election.

(RR) Additional Child Tax Credit.

(SS) American Opportunity Tax Credit.

(TT) Medical and dental expenses.

(UU) State and local income taxes.

(VV) State and local general sales

taxes.

(WW) State and local personal property taxes.

(XX) State and local real estate taxes.

Bulletin No. 2024–50

(YY) Other taxes (amount).

(ZZ) Home mortgage interest and

points.

(AAA) Mortgage interest not on a

Form 1098.

(BBB) Points not on a Form 1098.

(CCC) Investment interest.

(DDD) Total gifts to charity, including

carryover from prior year.

(EEE) Casualty and theft losses.

(FFF) Total itemized deductions.

(GGG) Ordinary dividends.

(HHH) Qualified dividends.

(III) Tax-exempt interest.

(JJJ) Unemployment compensation.

(KKK) From Form 1098–

(1) Borrower taxpayer identification

number;

(2) Mortgage interest;

(3) Outstanding mortgage principal;

(4) Refund of overpaid interest;

(5) Mortgage insurance premiums;

(6) Points paid on purchase of principal

residence;

(7) Payee/payer/employee taxpayer

identification number;

(8) Payee/payer/employee name (first,

middle, last, suffix);

(9) Street address;

(10) City;

(11) State;

(12) Zip code (9 digit);

(13) Posting cycle week;

(14) Posting cycle year; and

(15) Document code.

(LLL) From Form 1098-E—Student

loan interest.

(MMM) From Form 1098-T–

(1) Payments received for qualified tuition and related expenses;

(2) Scholarships or grants;

(3) Check box indicating that the

amount in box 1 or 2 includes amounts for

an academic period beginning in the following year;

(4) Check box indicating that student is

at least a half-time student; and

(5) Check box indicating that student is

a graduate student.

(NNN) From Form 5498–

(1) IRA contributions (other than

amounts in certain boxes);

(2) Rollover contributions;

(3) Roth IRA conversion amount;

(4) Fair market value of account;

(5) Checkboxes: IRA, Simplified

Employee Pension (SEP), Savings Incen-

Bulletin No. 2024–50

tive Match Plan for Employees of Small

Employers (SIMPLE), Roth IRA;

(6) SEP contributions; and

(7) SIMPLE contributions.

(OOO) From Form SSA-1099/RRB1099–

(1) Net benefits;

(2) Address; and

(3) Trust fund description.

(PPP) From Form 1099-G—Unemployment compensation.

(QQQ) From Form 1099-K–

(1) Filer name;

(2) Filer address;

(3) Filer taxpayer identification number;

(4) Payee taxpayer identification number;

(5) Payee name;

(6) Payee address;

(7) Gross payments;

(8) Card not present transactions;

(9) Merchant category code;

(10) Number of payment transactions;

and

(11) Payments by month.

(RRR) From Form 1099-MISC—Nonemployee compensation.

(SSS) From Form 1099-NEC—Nonemployee compensation.

(TTT) From Form 1099-Q–

(1) Gross distribution; and

(2) Plan type checkboxes.

(UUU) From Form 1099-R/RRB1099-R—

(1) Gross distribution;

(2) Distribution code(s); and

(3) Plan type checkboxes.

(VVV) From Form W-2–

(1) Employee’s Social Security number;

(2) Employer identification number;

(3) Employer’s name, address, and Zip

code;

(4) Employee’s name and address;

(5) Social Security tips;

(6) Medicare wages and tips;

(7) Box 12 codes and values; and

(8) Statutory employee, retirement

plan, and third-party sick pay checkboxes.

(WWW) From Form 1040, Schedule D–

(1) Net short-term capital gain/loss;

and

(2) Net long-term capital gain/loss.

(XXX) From Form 1040, Schedule E–

(1) Total rental real estate and royalty

income or (loss); and

1225

(2) Total estate and trust income or

(loss).

(YYY) From Form 1040, Schedule F–

(1) Gross income;

(2) Total expenses;

(3) Net farm profit (or loss); and

(4) Gross income (accrual).

(ii) With respect to taxpayers filing a

return on behalf of a trade or business—

(A) The taxpayer name directory and

entity records consisting of taxpayer identity information (as defined in section

6103(b)(6) of the Code) with respect to

taxpayers engaged in a trade or business.

(B) The principal industrial activity

code.

(C) The filing requirement code.

(D) The employment code.

(E) The physical location.

(F) Monthly corrections of, and additions to, the information described in paragraphs (b)(1)(ii)(A) through (E) of this

section.

(G) From Form SS–4, all information

reflected on such form.

(H) From an employment tax return—

(1) Taxpayer identifying number of the

employer;

(2) Total compensation reported;

(3) Master file tax account code (MFT);

(4) Taxable period covered by such

return;

(5) Employer code;

(6) Document locator number;

(7) Record code;

(8) Total number of individuals

employed in the taxable period covered

by the return;

(9) Total taxable wages paid for purposes of chapter 21 of the Code;

(10) Total taxable tip income reported

for purposes of chapter 21 of the Code;

(11) If a business has closed or stopped

paying wages;

(12) Final date a business paid wages;

and

(13) If a business is a seasonal employer

and does not have to file a return for every

quarter of the year.

(I) From Form 1040, Schedule C—

(1) Purchases less cost of items withdrawn for personal use;

(2) Materials and supplies;

(3) Gross income;

(4) Total expenses; and

(5) Net profit or loss.

(J) From Form 1040 (Schedule SE)—

December 9, 2024

(1) Taxpayer identifying number of

self-employed individual;

(2) Business activities subject to the tax

imposed by chapter 21 of the Code;

(3) Net earnings from farming;

(4) Net earnings from nonfarming

activities;

(5) Total net earnings from self-employment;

(6) Taxable self-employment income

for purposes of chapter 2 of the Code;

(7) Net profit and loss; and

(8) Church employee income.

(K) Total Social Security taxable earnings.

(L) Quarters of Social Security coverage.

(M) From Form 940–

(1) State of state unemployment tax;

and

(2) Total payments to all employees.

(N) From Form 941–

(1) Number of employees who received

wages, tips, or other compensation for the

pay period including: March 12 (Quarter

1), June 12 (Quarter 2), September 12

(Quarter 3), or December 12 (Quarter 4);

and

(2) Wages, tips, and other compensation.

(O) From Form 943–

(1) Agricultural employees; and

(2) Total wages subject to Social Security tax.

(P) Taxpayer identity information (as

defined in section 6103(b)(6) of the Code)

including parent corporation, shareholder,

partner, and employer identity information.

(Q) Gross income, profits, or receipts.

(R) Returns and allowances.

(S) Cost of labor, salaries, and wages.

(T) Total expenses or deductions,

including totals of the following components thereof:

(1) Repairs (and maintenance) expense;

(2) Rents (or lease) expense;

(3) Taxes and licenses expense;

(4) Interest expense, including mortgage or other interest;

(5) Depreciation expense;

(6) Depletion expense;

(7) Advertising expense;

(8) Pension and profit-sharing plans

(retirement plans) expense;

(9) Employee benefit programs expense;

(10) Utilities expense;

December 9, 2024

(11) Supplies expense;

(12) Contract labor expense; and

(13) Management (and investment

advisory) fees.

(U) Total assets.

(V) Beginning- and end-of-year inventory.

(W) Royalty income.

(X) Interest income, including portfolio interest.

(Y) Rental income, including gross

rents.

(Z) Tax-exempt interest income.

(AA) Net gain from sales of business

property.

(BB) Other income.

(CC) Total income.

(DD) Percentage of stock owned by

each shareholder.

(EE) Percentage of capital ownership

of each partner.

(FF) Principal industrial activity code,

including the business description.

(GG) Consolidated return indicator.

(HH) Wages, tips, and other compensation.

(II) Social Security wages.

(JJ) Deferred wages.

(KK) Social Security tip income.

(LL) Total Social Security taxable

earnings.

(MM) From Form 1099-R— Gross

distributions from employer-sponsored

and individual retirement plans.

(NN) From Form 3921–

(1) Date option granted;

(2) Date option exercised;

(3) Exercise price paid per share;

(4) Fair market value per share on exercise date; and

(5) Number of shares transferred.

(OO) From Form 6765 (when filed

with corporation income tax returns)—

(1) Indicator that total qualified

research expenses is greater than zero, but

less than $1 million; greater than or equal

to $1 million, but less than $3 million; or,

greater than or equal to $3 million;

(2) Cycle posted; and

(3) Research tax credit amount to be

carried over to a business return, schedule, or form.

(PP) Total number of documents

reported on Form 1096 transmitting Forms

1099–MISC.

(QQ) Total amount reported on Form

1096 transmitting Forms 1099–MISC.

1226

(RR) From Form 1125–A, purchases.

(SS) From Form 1041–

(1) Interest income;

(2) Total ordinary dividends;

(3) Total income;

(4) Charitable deduction; and

(5) Taxable income.

(TT) From Form 1041, Schedule K-1–

(1) Beneficiary identifying number;

(2) Beneficiary name;

(3) Interest income;

(4) Total ordinary dividends;

(5) Net short-term capital gain;

(6) Net long-term capital gain;

(7) Other portfolio and non-business

income;

(8) Ordinary business income;

(9) Net rental and real estate income;

and

(10) Other rental income.

(UU) From Form 1120–

(1) Cost of goods sold;

(2) Compensation of officers; and

(3) Salaries and wages (less employment credits).

(VV) From Form 1120-REIT–

(1) Compensation of officers;

(2) Salaries and wages (less employment credits);

(3) Total assets;

(4) Principal Business Activity (PBA)

code; and

(5) Type of real estate investment trust

(REIT).

(WW) From Form 1120-S–

(1) Cost of goods sold; and

(2) Salaries and wages (less employment credits).

(XX) From Form 1120-S, Schedule

K–1–

(1) Ordinary business income (loss);

(2) Net rental real estate income;

(3) Other net rental income;

(4) Interest income;

(5) Total ordinary dividends;

(6) Royalties;

(7) Net short-term capital gain;

(8) Net long-term capital gain;

(9) Other income (loss); and

(10) Current year allocation percentage.

(YY) From Form 1065–

(1) Gross receipts or sales less returns

and allowances;

(2) Cost of goods sold; and

(3) Ordinary dividends.

(ZZ) From Form 1065, Schedule K–1—

Bulletin No. 2024–50

(1) Publicly-traded partnership indicator;

(2) Partner’s share of nonrecourse,

qualified nonrecourse, and recourse liabilities;

(3) Ordinary business income;

(4) Net rental real estate income;

(5) Other net rental income;

(6) Total guaranteed payments;

(7) Interest income;

(8) Total ordinary dividends;

(9) Dividend equivalents;

(10) Royalties;

(11) Net short-term capital gain;

(12) Net long-term capital gain; and

(13) Other income.

(AAA) From Form 3800 Part II (Current Year General Business Credit from

Form 6765).

(BBB) From Form 3800, Part III,

Increasing research activities (Form

6765).

(CCC) Dividends, including ordinary

or qualified.

(iii) With respect to returns filed on

behalf of a tax-exempt organization–

(A) Taxpayer identity information (as

defined in section 6103(b)(6) of the Code).

(B) Activity codes.

(C) Filing requirement code.

(D) Monthly corrections of, and additions to, the information described in paragraphs (b)(1)(iii)(A) through (C) of this

section.

(E) From Form 990, Salaries, other

compensation, employee benefits.

(F) From Form 990-PF–

(1) Compensation of officers, directors,

trustees, etc.; and

(2) Pension plans, employee benefits.

(G) From Form 990-EZ, Salaries, other

compensation, employee benefits.

(iv) With respect to taxpayers filing

information returns relating to health

insurance:

(A) From Form 1095-A–

(1) Marketplace information;

(2) Policy issuer’s name;

(3) Recipient’s name;

(4) Recipient’s Social Security number;

(5) Recipient’s spouse’s name;

(6) Recipient’s spouse’s Social Security number;

(7) Policy start date;

(8) Policy termination date;

(9) Covered individual Social Security

number;

Bulletin No. 2024–50

(10) Coverage start date;

(11) Coverage termination date;

(12) Monthly enrollment premium;

(13) Monthly second lowest cost silver

plan premium;

(14) Monthly advance payment of premium tax credit;

(15) Annual premium;

(16) Annual second lowest cost silver

plan premium; and

(17) Annual advance payment of premium tax credit.

(B) From Form 1095-B–

(1) Name;

(2) Social Security number;

(3) Date of birth;

(4) Origin of health coverage;

(5) Employer name;

(6) Employer identification number of

issuer or other coverage provider;

(7) Employer address;

(8) Employer identification number;

(9) Name control validation;

(10) Social Security number of covered

individuals;

(11) Date of birth of covered individuals; and

(12) Coverage by month of covered

individuals.

(C) From Form 1095-C–

(1) Name of employee;

(2) Social Security number or other taxpayer identification number of employee;

(3) Address of employee;

(4) Name of employer;

(5) Employer identification number;

(6) Employer address;

(7) Offer of coverage code;

(8) Checkbox for employer provided

self-insured coverage;

(9) Employee required contribution, all

12 months;

(10) Name control validation;

(11) Social Security number or other

taxpayer identification number of covered

individuals; and

(12) Coverage by month of covered

individuals.

(v) With respect to taxpayers filing

information returns related to health savings accounts, from Form 5498-SA–

(A) Taxpayer identification number;

(B) Total contributions;

(C) Fair market value of accounts; and

(D) Account type checkboxes.

(2) Subject to the requirements of paragraph (d) of this section and §301.6103(p)

1227

(2)(B)-1, officers or employees of the

Social Security Administration to whom

the following return information reflected

on returns has been disclosed as provided

by section 6103(l)(1)(A) or (l)(5) may

disclose such information to officers and

employees of the Bureau of the Census

for necessary purposes described in paragraph (b)(1) of this section:

(i) From Form SS-4, all information

reflected on such form.

(ii) From Form 1040 (Schedule SE)—

(A) Taxpayer identifying number of

self-employed individual;

(B) Business activities subject to the

tax imposed by chapter 21 of the Code;

(C) Net earnings from farming;

(D) Net earnings from nonfarming

activities;

(E) Total net earnings from self-employment; and

(F) Taxable self-employment income

for purposes of chapter 2 of the Code.

(iii) From Form W-2, and related forms

and schedules—

(A) Social Security number;

(B) Employer identification number;

(C) Wages, tips, and other compensation;

(D) Social Security wages; and

(E) Deferred wages.

(iv) Total Social Security taxable earnings.

(v) Quarters of Social Security coverage.

(3)(i) Officers or employees of the

Internal Revenue Service will disclose

the following return information (but not

including return information described in

section 6103(o)(2)) reflected on returns

of corporations with respect to the tax

imposed by chapter 1 of the Code to officers and employees of the Bureau of the

Census for purposes of, but only to the

extent necessary in, developing and preparing, as authorized by law, the Quarterly

Financial Report:

(A) From the business master files of

the Internal Revenue Service—

(1) Taxpayer identity information

(as defined in section 6103(b)(6) of the

Code), including parent corporation identity information;

(2) Document code;

(3) Consolidated return and final return

indicators;

(4) Principal industrial activity code;

December 9, 2024

(5) Partial year indicator;

(6) Annual accounting period;

(7) Gross receipts less returns and

allowances; and

(8) Total assets.

(B) From Form SS–4—

(1) Month and year in which such form

was executed;

(2) Taxpayer identity information

(as defined in section 6103(b)(6) of the

Code); and

(3) Principal industrial activity, geographic, firm size, and reason for application codes.

(C) From Form 1120–REIT—

(1) Type of REIT; and

(2) Gross rents from real property.

(D) From Form 1120F, corporation’s

method of accounting.

(E) From Form 1096, total amount

reported.

(ii) Subject to the requirements of paragraph (d) of this section and §301.6103(p)

(2)(B)–1, officers or employees of the

Social Security Administration to whom

return information reflected on returns of

corporations described in paragraph (b)(3)

(i)(B) of this section has been disclosed as

provided by section 6103(l)(1)(A) or (l)

(5) may disclose such information to officers and employees of the Bureau of the

Census for a purpose described in paragraph (b)(3)(i) of this section.

(iii) Return information reflected on

employment tax returns disclosed pursuant to paragraph (b)(1)(ii)(H)(1), (2), (4),

(9), or (10) of this section may be used by

officers and employees of the Bureau of

the Census for the purpose described in

and subject to the limitations of paragraph

(b)(3)(i) of this section.

*****

(d) Procedures and restrictions. (1)

Disclosure of return information reflected

on returns by officers or employees of the

Internal Revenue Service or the Social

Security Administration as provided by

paragraphs (b) and (c) of this section will

be made only upon written request to the

December 9, 2024

Commissioner of Internal Revenue by the

Secretary of Commerce describing—

(i) The particular return information

reflected on returns to be disclosed;

(ii) The taxable period or date to which

such return information reflected on

returns relates; and

(iii) The particular purpose for which

the return information reflected on returns

is to be used, and designating by name

and title the officers and employees of the

Bureau of the Census or the Bureau of

Economic Analysis to whom such disclosure is authorized.

(2) No officer or employee of the

Bureau of the Census or the Bureau of

Economic Analysis to whom return information reflected on returns is disclosed

pursuant to the provisions of paragraph

(b) or (c) of this section may disclose

such information to any person, other

than, pursuant to section 6103(e)(1), the

taxpayer to whom such return information reflected on returns relates or other

officers or employees of such bureau

whose duties or responsibilities require

such disclosure for a purpose described

in paragraph (b) or (c) of this section,

except in a form that cannot be associated with, or otherwise identify, directly

or indirectly, a particular taxpayer. If the

Internal Revenue Service determines that

the Bureau of the Census or the Bureau

of Economic Analysis, or any officer or

employee thereof, has failed to, or does

not, satisfy the requirements of section

6103(p)(4) of the Code or regulations

in this part or published procedures

(see §601.601(d)(2) of this chapter),

the Internal Revenue Service may take

such actions as are deemed necessary to

ensure that such requirements are or will

be satisfied, including suspension of disclosures of return information reflected

on returns otherwise authorized by section 6103(j)(1) and paragraph (b) or (c)

of this section, until the Internal Revenue

Service determines that such requirements have been or will be satisfied.

1228

(3) All projects using returns or return

information disclosed to the Bureau

of Census under this section must be

approved by the Internal Revenue Service

Director of Statistics of Income, the Director’s successor, or the Director’s delegate,

prior to the release of such information.

(4) In its sole discretion, the Internal Revenue Service may authorize the

use of the Bureau of Census’s disclosure review processes prior to any public disclosure by the Bureau of Census

of a project using information provided

pursuant to this section. Any Bureau of

Census disclosure review process authorized under this paragraph (d)(4) must

ensure that all releases meet or exceed

all requirements set by the Internal Revenue Service for protecting the confidentiality of returns and return information.

Additionally, in its sole discretion, the

Internal Revenue Service Statistics of

Income Disclosure Review Board may

review a Bureau of Census project using

information provided pursuant to this

section prior to disclosure of that project

to the public to ensure that any proposed

releases meet or exceed all requirements

set by the Internal Revenue Service for

protecting the confidentiality of returns

and return information. This review

requirement may be imposed at any

stage of the project.

(e) Applicability date. This section

applies to disclosures of return information made on or after November 26, 2024.

Heather C. Maloy,

Acting Deputy Commissioner.

Approved: November 6, 2024.

Aviva R. Aron-Dine,

Deputy Assistant Secretary of the Treasury (Tax Policy).

(Filed by the Office of the Federal Register (TBD),

and published in the issue of the Federal Register for

TBD, TBD FR TBD)

Bulletin No. 2024–50

Part III

Extension of Transition

Process for Claiming the

Statutory Exceptions to

the Elective Payment

Phaseouts

Notice 2024-84

SECTION 1. PURPOSE

This notice extends the transition process for claiming a statutory exception to

the elective payment phaseouts contained

in section 5 of Notice 2024-9, 2024-2

I.R.B. 358. Thus, if an Applicable Entity

provides an attestation described in section 5.02 of Notice 2024-9 with respect

to an Applicable Credit Property the construction of which begins before the later

of January 1, 2027, or the issuance of further guidance, the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) will treat the

attestation as establishing that a Domestic

Content Exception is met with respect to

such Applicable Credit Property.

The Treasury Department and the IRS

intend to propose regulations addressing

the process by which the Secretary of the

Treasury or her delegate (Secretary) will

implement the statutorily-required exceptions to the phaseouts under §§ 45Y(g)

(12) and 48E(d)(5) of the Internal Revenue Code (Code).1 The provisions of this

notice apply with respect to an Applicable

Credit Property the construction of which

begins before the later of January 1, 2027,

or the issuance of further guidance.

SECTION 2. BACKGROUND

On January 8, 2024, the Treasury Department and the IRS published Notice 2024-9,

2024-2 I.R.B. 358, providing that an Applicable Entity may attest, under penalties of

perjury, that it has reviewed the requirements

for the Increased Cost Exception and the

Non-Availability Exception (each defined

in section 2 of Notice 2024-9) provided

under §§ 45(b)(10)(D), 48(a)(13), 45Y(g)

(12)(D), or 48E(d)(5), as applicable, and

1

has made a good faith determination that the

Applicable Credit Property qualifies for the

Increased Cost Exception, the Non-Availability Exception, or both. The attestation

must be signed by a person with the legal

authority to bind the Applicable Entity in

federal tax matters and must be attached to a

Form 8835, Renewable Electricity Production Credit; Form 3468, Investment Credit;

or other applicable form required to be filed

by the Applicable Entity to make an elective

payment election under § 6417. The notice

states that the Treasury Department and the

IRS will accept such attestations as establishing that one or both statutory exceptions

to the application of the Statutory Elective

Payment Phaseouts are met with respect to

Applicable Credit Property the construction

of which begins before January 1, 2025.

SECTION 3. CONTINUED

TRANSITION

.01 Exception for Eligible Construction. If an Applicable Entity provides an

attestation described in section 3.02 of this

notice with respect to an Applicable Credit

Property the construction of which begins

before the later of January 1, 2027, or the

issuance of further guidance (Eligible Construction), the Treasury Department and the

IRS will treat the attestation as establishing

that one or both statutory exceptions to the

application of the Statutory Elective Payment Phaseouts are met with respect to the

Applicable Credit Property.

.02 Attestation. An attestation is

described in this section 3.02 if an Applicable Entity attests, under penalties of

perjury, that it has reviewed the requirements for the Increased Cost Exception

and the Non-Availability Exception provided under §§ 45(b)(10)(D), 48(a)(13),

45Y(g)(12)(D), or 48E(d)(5), as applicable, and has made a good faith determination that the qualified facility, energy project, or qualified investment with respect

to a qualified facility or energy storage

technology, as applicable, qualifies for

either the Increased Cost Exception or the

Non-Availability Exception, or both. The

attestation described in this section 3.02

must be signed by a person with the legal

authority to bind the Applicable Entity in

federal tax matters and must be attached

to a Form 8835, Renewable Electricity

Production Credit; Form 3468, Investment

Credit; or other applicable form required to

be filed by the Applicable Entity to make

an elective payment election under § 6417.

.03 Recordkeeping. An Applicable

Entity providing an attestation described

in section 3.02 of this notice must meet the

general recordkeeping requirements under

§ 6001 and the regulations thereunder to

substantiate its attestation.

SECTION 4. PAPERWORK

REDUCTION ACT

Any collection burden associated with

this notice is accounted for in Office of

Management and Budget (OMB) control

numbers 1545-0123 and 1545-0047. The

collection of information (the attestation

detailed in section 3 of this notice) is associated with the IRA-related changes to Form

3468 and Form 8835 and is approved, and

will continue to be approved, under OMB

control numbers 1545-0123 and 15450047. The IRS will use this attestation to

allow exceptions to the phaseout of elective payments. This notice does not alter

any previously approved information collection requirements and does not create

new collection requirements not already

approved by OMB.

SECTION 5. EFFECT ON OTHER

DOCUMENTS

Notice 2024-9 is modified by extending the date for Eligible Construction.

SECTION 6. DRAFTING

INFORMATION

The principal author of this notice

is the Office of Associate Chief Counsel (Passthroughs & Special Industries).

However, other personnel from the Treasury Department and the IRS participated

in its development. For further information regarding this notice, call the energy

security guidance contact number at (202)

317-5254 (not a toll-free number).

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

Bulletin No. 2024–50

1229

December 9, 2024

Part IV

Second Remedial

Amendment Cycle for

§ 403(b) Pre-approved

Plans: Issuance of Opinion

Letters, Plan Adoption

Deadline, Opening of

Determination Letter

Program, and Related

Issues

Announcement 2024-38

Section 1. Purpose and Scope

The Internal Revenue Service (IRS)

intends to begin issuing opinion letters regarding the satisfaction in form

of § 403(b) pre-approved plans with

respect to the requirements of § 403(b)

of the Internal Revenue Code, including

the 2022 Cumulative List of changes

in those requirements.1 Opinion letter applications were filed with the IRS

for the second remedial amendment

cycle (Cycle 2) under the remedial

amendment cycle system for § 403(b)

pre-approved plans established under

Rev. Proc. 2019-39, 2019-42 IRB 945.

The IRS expects to issue the opinion letters by November 29, 2024, or as soon

as possible thereafter.

This announcement provides a deadline for when an employer intending

to maintain a Cycle 2 § 403(b) pre-approved plan must adopt that plan and the

period during which the IRS will accept

an application for an individual determination letter from an adopting employer

of a Cycle 2 § 403(b) pre-approved plan

that is eligible to submit a determination

letter request.

This announcement also discusses a

procedural restatement rule that applies

to all pre-approved plans and provides

1

a reminder for adopting employers of

§ 403(b)(9) retirement income account

plans of a requirement provided by

§ 403(b)(9).

Section 2. Background

Rev. Proc. 2019-39, in relevant part,

sets forth a system of recurring remedial

amendment cycles and recurring remedial amendment periods for correcting

form defects in § 403(b) pre-approved

plans. Section 13.04 of Rev. Proc. 201939 includes a procedural rule regarding restatements for the first remedial

amendment cycle (Cycle 1) for § 403(b)

pre-approved plans providing that a plan

that is restated using a Cycle 1 § 403(b)

pre-approved plan will not be treated as

superseding a previously adopted interim

amendment. This restatement rule is analogous to the restatement rule for qualified

defined contribution and defined benefit

pre-approved plans that currently applies

to the third remedial amendment cycle

(Cycle 3) for qualified pre-approved plans

pursuant to section 15.07 of Rev. Proc.

2016-37, 2016-29 IRB 136.

Rev. Proc. 2021-37, 2021-38 IRB 385,

sets forth the procedures for a provider to

apply for an opinion letter with respect to

a Cycle 2 § 403(b) pre-approved plan.

Section 25 of Rev. Proc. 2023-37, 202351 IRB 1491, sets forth the procedures

for an adopting employer of a § 403(b)

pre-approved plan, including a Cycle 2

plan, to apply for a determination letter

with respect to its plan.

Section 3. Deadline for Employer Adoption of Cycle 2 § 403(b) Pre-approved Plans

An employer intending to maintain a

§ 403(b) pre-approved plan for Cycle 2

for § 403(b) pre-approved plans must

adopt that pre-approved plan on or before

December 31, 2026. See section 5.02 of

Rev. Proc. 2023-37.

Section 4. Determination Letter Program for an Adopter of a Cycle 2 § 403(b)

Pre-approved Plan

An adopting employer of a Cycle 2

§ 403(b) pre-approved plan may generally

apply for an individual determination

letter (if otherwise eligible) during the

period beginning January 1, 2025, and

ending December 31, 2026. Additional

information regarding individual determination letter applications for § 403(b)

pre-approved plans, including guidance

on employer eligibility to apply for a

determination letter for a pre-approved

plan and the filing requirements for

Form 5307 (or Form 5300, if applicable), may be found in section 25 of

Rev. Proc. 2023‑37.

Section 5. Clarification on Applicability

of the Restatement Rule

The restatement rule in Rev. Proc. 201939 and Rev. Proc. 2016-37 does not specifically address its application to Cycle 2

(and future) § 403(b) pre-approved plans

or Cycle 4 (and future) qualified pre-approved plans. Future guidance will clarify that the restatement rule in Rev. Proc.

2019-39 and Rev. Proc. 2016-37 continues

to apply to all pre-approved plans, including Cycle 2 (and future) § 403(b) pre-approved plans and Cycle 4 (and future)

qualified pre-approved plans.

Section 6. Reminder for Adopting

Employers of § 403(b)(9) Retirement

Income Account Plans

Section 403(b)(9) provides that a retirement income account must either be

established or maintained by a church, or

a convention or association of churches,

including an organization described

in § 414(e)(3)(A). Thus, for a retirement income account plan, the adopting

employer may be a church, a church-controlled organization described in § 501(c)

(3) that is a qualified church-controlled

The 2022 Cumulative List of Changes in Section 403(b) Requirements for Section 403(b) Pre-approved Plans was published as Notice 2022-8, 2022-7 IRB 491.

December 9, 2024

1230

Bulletin No. 2024–50

organization within the meaning of § 3121

(QCCO), a church-controlled tax-exempt

organization listed in § 501(c)(3) that is

not a QCCO, or a minister. However, pursuant to the “established or maintained”

language of § 403(b)(9), if the plan is not

established by a church, or a convention

or association of churches, including an

organization described in § 414(e)(3)(A),

the plan must be maintained by a church,

or a convention or association of churches,

including an organization described in

§ 414(e)(3)(A).

Taxes). For further information regarding this announcement, contact Employee

Plans at (513) 975-6319 (not a toll-free

number).

Section 7. Paperwork Reduction Act

Announcement 2024-39

The collection of information contained

in Rev. Proc. 2021-37 with respect to

the § 403(b) pre-approved plan program

has been reviewed and approved by the

Office of Management and Budget in

accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control

number 1545-0047.

Section 8. Drafting Information

The principal author of this announcement

is Sarah Sandusky of the Office of Associate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Deletions From Cumulative

List of Organizations,

Contributions to Which are

Deductible Under Section

170 of the Code

Table of Contents

The Internal Revenue Service has revoked

its determination that the organizations

listed below qualify as organizations

described in sections 501(c)(3) and 170(c)

(2) of the Internal Revenue Code of 1986.

Generally, the IRS will not disallow

deductions for contributions made to a

listed organization on or before the date

of announcement in the Internal Revenue

Bulletin that an organization no longer

qualifies. However, the IRS is not pre-

Name Of Organization

Heritage Foundation for Art & Cultural Sustainability

Esperanza Education Foundation

Bulletin No. 2024–50

cluded from disallowing a deduction for

any contributions made after an organization ceases to qualify under section 170(c)

(2) if the organization has not timely filed

a suit for declaratory judgment under section 7428 and if the contributor (1) had

knowledge of the revocation of the ruling

or determination letter, (2) was aware that

such revocation was imminent, or (3) was

in part responsible for or was aware of the

activities or omissions of the organization

that brought about this revocation.

If on the other hand a suit for declaratory

judgment has been timely filed, contributions from individuals and organizations described in section 170(c)(2) that

are otherwise allowable will continue

to be deductible. Protection under section 7428(c) would begin on November

25, 2024, and would end on the date the

court first determines the organization is

not described in section 170(c)(2) as more

particularly set for in section 7428(c)(1).

For individual contributors, the maximum

deduction protected is $1,000, with a husband and wife treated as one contributor.

This benefit is not extended to any individual, in whole or in part, for the acts or

omissions of the organization that were

the basis for revocation.

Effective Date of Revocation

1/1/2021

7/1/2020

1231

Location

New Orleans, LA

Albuquerque, NM

December 9, 2024

Notice of Proposed

Rulemaking

Administrative

Requirements for an

Election to Exclude

Applicable Unincorporated

Organizations from

the Application of

Subchapter K

REG-116017-24

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of proposed rulemaking; notice of public hearing.

SUMMARY: This document contains proposed regulations that would provide certain administrative requirements for unincorporated organizations taking advantage

of modifications to the rules governing elections to be excluded from the application

of partnership tax rules. These proposed

regulations would affect unincorporated

organizations and their members, including tax-exempt organizations, the District

of Columbia, State and local governments, Indian Tribal governments, Alaska

Native Corporations, the Tennessee Valley

Authority, rural electric cooperatives, and

certain agencies and instrumentalities. The

proposed regulations would also update

the procedure for obtaining permission to

revoke a section 761(a) election.

DATES: Written or electronic comments

must be received by January 21, 2025. A

public hearing on these proposed regulations has been scheduled for February 7,

2025, at 10 a.m. EST. Requests to speak

and outlines of topics to be discussed at the

public hearing must be received by January 21, 2025. If no outlines are received

by January 21, 2025, the public hearing

will be cancelled. Requests to attend the

public hearing must be received by 5 p.m.

on February 5, 2025.

ADDRESSES: Commenters are strongly

encouraged to submit public comments

December 9, 2024

electronically via the Federal eRulemaking Portal at https://www.regulations.gov

(indicate IRS and REG-116017-24) by

following the online instructions for submitting comments. Requests for a public

hearing must be submitted as prescribed

in the “Comments and Public Hearing”

section. Once submitted to the Federal

eRulemaking Portal, comments cannot be

edited or withdrawn. The Department of

the Treasury (Treasury Department) and

the IRS will publish for public availability any comments submitted to the IRS’s

public docket.

Send paper submissions to: CC:PA:01:PR

(REG-116017-24), Room 5203, Internal

Revenue Service, P.O. Box 7604, Ben

Franklin Station, Washington, DC 20044.

FOR FURTHER INFORMATION

CONTACT: Concerning the proposed

regulations, contact Cameron Williamson

at (202) 317-6684; and concerning submissions of comments and requests for a

public hearing, contact the Publications

and Regulations Section at (202) 3176901 (not toll-free numbers) or by email

to publichearings@irs.gov (preferred).

SUPPLEMENTARY INFORMATION:

Authority

This document contains proposed

amendments to the Income Tax Regulations (26 CFR part 1) under section 761(a)

of the Internal Revenue Code (Code)

issued by the Secretary of the Treasury or

her delegate (Secretary) under the express

authority granted under sections 761(a),

6031(a), 6417(d) and (h), and 7805(a) of

the Code (proposed regulations).

Section 761(a) provides, in part, an

express grant of regulatory authority for

section 761(a) stating, “[u]nder regulations the Secretary may, at the election

of all the members of an unincorporated

organization, exclude such organization

from the application of all or a part of this

subchapter.”

Section 6031(a) provides an express

grant of a regulatory authority for the

Secretary to prescribe in forms or regulations partnership reporting information

required “for the purpose of carrying out

the provisions of subtitle A.”

1232

Section 6417(d) provides several

express delegations of authority to the

Secretary to enforce requirements for

elective payments of applicable credits

under section 6417 and recapture excessive payments. Section 6417(h) requires

the Secretary to issue regulations or other

guidance as may be necessary to carry

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

of the payment or deemed payment made

under this section is commensurate with

the amount of the credit that would be

otherwise allowable (determined without

regard to section 38(c)).

Finally, section 7805(a) authorizes the

Secretary to “prescribe all needful rules

and regulations for the enforcement of

[the Code], including all rules and regulations as may be necessary by reason of

any alteration of law in relation to internal

revenue.”

Background

I. Elective Payment of Applicable Credits

Section 6417 was added to the Code

by section 13801(a) of Public Law 117–

169, 136 Stat. 1818, 2003 (August 16,

2022), commonly referred to as the Inflation Reduction Act

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