Bulletin No. 2021–39

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HIGHLIGHTS

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Bulletin No. 2021–39

September 27, 2021

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE

T.D. 9952, page 428.

These final regulations modify regulations relating to IRS

administrative proceedings to reflect limitations that are required by the enactment of the Taxpayer First Act of 2019.

These final regulations implement new rules regarding the

persons who may be provided books, papers, records, or

other data obtained pursuant to section 7602 of the Internal Revenue Code (Code) for the sole purpose of providing expert evaluation and assistance to the IRS, and adopt

further limitations on the types of non-governmental attorneys to whom, under the authority of section 6103(n) of the

Code, any books, papers, records, or other data obtained

pursuant to section 7602 may be provided. These final

regulations also prohibit any IRS contractors from asking

substantive questions of a summoned witness under oath

or asking a summoned person’s representative to clarify an

objection or assertion of privilege. The regulations affect

persons who are examined by the IRS and any persons who

are questioned by the IRS under oath pursuant to section

7602.

EMPLOYMENT TAX

T.D. 9953, page 430.

Temporary and proposed regulations provide guidance on

the recapture of excess employment tax credits under the

American Rescue Plan Act of 2021 (ARP). Eligible employers may claim refundable paid sick and family leave and employee retention credits up to the total allowable amounts

either on their employment tax returns or as an advance

payment that is later reconciled on their employment tax

returns. Any refund of these credits paid to a taxpayer that

exceeds the credit amount the taxpayer is allowed is an er-

Finding Lists begin on page ii.

roneous refund. These temporary regulations authorize the

assessment and collection of any erroneous refund of the

credits in the normal course of processing the applicable

employment tax returns. This allows the IRS to efficiently

recover any refund, while preserving administrative protections for taxpayers.

REG-109077-21, page 445.

Temporary and proposed regulations provide guidance on

the recapture of excess employment tax credits under the

American Rescue Plan Act of 2021 (ARP). Eligible employers may claim refundable paid sick and family leave and employee retention credits up to the total allowable amounts

either on their employment tax returns or as an advance

payment that is later reconciled on their employment tax

returns. Any refund of these credits paid to a taxpayer that

exceeds the credit amount the taxpayer is allowed is an erroneous refund. These temporary regulations authorize the

assessment and collection of any erroneous refund of the

credits in the normal course of processing the applicable

employment tax returns. This allows the IRS to efficiently

recover any refund, while preserving administrative protections for taxpayers.

EMPLOYMENT TAX,

SELF-EMPLOYMENT TAX

Notice 2021-53, page 438.

Notice 2021-53 provides guidance to employers on the

requirement to report the amount of qualified sick leave

wages and qualified family leave wages paid to employees

under the Families First Coronavirus Response Act (Families

First Act), Pub. L. No. 116-127, 134 Stat. 178 (March 18,

2020), as amended by the COVID-Related Tax Relief Act of

2020, Pub. L. No. 116-260, 134 Stat. 1182 (December

INCOME TAX

27, 2020), and the American Rescue Plan Act of 2021,

Pub. L. No. 117-2, 135 Stat. 4 (March 11, 2021). Employers will be required to report these amounts either on Form

W-2, Box 14, or on a separate statement. This required

reporting provides employees who are also self-employed

with information necessary for properly claiming qualified

sick leave equivalent or qualified family leave equivalent

credits under the Families First Act, as amended by the

COVID-Related Tax Relief Act of 2020, and the American

Rescue Plan Act of 2021.

September 27, 2021

Rev. Proc. 2021-41, page 443.

Revenue Procedure 2021-41 provides domestic asset/liability percentages and domestic investment yields needed by

foreign life insurance companies and foreign property and

liability insurance companies to compute their minimum effectively connected net investment income under section

842(b) of the Internal Revenue Code for taxable years beginning after December 31, 2019.

Bulletin No. 2021–39

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.

September 27, 2021

Bulletin No. 2021–39

Part I

26 CFR Part 301

T.D. 9952

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 301

Certain Non-Government

Persons Not Authorized to

Participate in Examinations

of Books and Witnesses

as a Section 6103(n)

Contractor

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTIONS: Final regulations.

SUMMARY: This document contains final regulations modifying regulations relating to IRS administrative proceedings

to reflect limitations that are required by

the enactment of the Taxpayer First Act

of 2019. These final regulations implement new rules regarding the persons who

may be provided books, papers, records,

or other data obtained pursuant to section

7602 of the Internal Revenue Code (Code)

for the sole purpose of providing expert

evaluation and assistance to the IRS, and

adopt further limitations on the types of

non-governmental attorneys to whom,

under the authority of section 6103(n) of

the Code, any books, papers, records, or

other data obtained pursuant to section

7602 may be provided. These final regulations also prohibit any IRS contractors

from asking substantive questions of a

summoned witness under oath or asking

a summoned person’s representative to

clarify an objection or assertion of privilege. The regulations affect persons who

are examined by the IRS and any persons

who are questioned by the IRS under oath

pursuant to section 7602.

DATES: Effective date: These regulations

are effective on September 7, 2021.

September 27, 2021

Applicability date: For date of applicability, see §301.7602-1(d), which provides that the regulations promulgated

by this Treasury decision are applicable

to examinations begun or administrative

summonses served by the IRS on or after

August 6, 2020.

FOR FURTHER INFORMATION CON

TACT: Kilsy T. Barnes at (202) 317-6215

(not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

These final regulations amend Procedure and Administration Regulations

(26 CFR part 301) under section 7602(a)

of the Code relating to participation by

persons described in section 6103(n) of

the Code and 26 CFR §301.6103(n)-1(a)

of the Procedure and Administration

Regulations in receiving and reviewing

summoned books, papers, records, or

other data and in interviewing a summoned witness under oath. These final

regulations narrow the scope of the final

regulations (TD 9778) published in the

Federal Register (81 FR 45409) on July

14, 2016 (Summons Interview Regulations) by providing that certain non-government attorneys whom the IRS could

previously have hired are no longer authorized to participate in an examination

and by interpreting the requirements of

section 7602(f), which was added to the

Code by the Taxpayer First Act of 2019.

A notice of proposed rulemaking (REG132434-17) proposing these changes was

published in the Federal Register (85

FR 47931) on August 7, 2020 (proposed

regulations).

Summary of Comments

No public hearing was requested or

held regarding the proposed regulations.

Two responsive comments were received,

both of which concerned only one portion

of the proposed regulations – proposed

§301.7602-1(b)(3)(C), titled “Hiring of

certain non-government attorneys.”

The first commenter recommended

modifying the proposed rules to allow

428

any outside contractors working for the

IRS to examine, interview, and determine

whether a taxpayer was a “tax cheat.”

The Department of the Treasury (Treasury Department) and the IRS decline to

adopt this comment. While the IRS may

hire a contractor to assist the IRS in these

processes, examining a taxpayer and determining whether that taxpayer is in compliance with Federal tax laws are core IRS

functions that the IRS has never allowed a

contractor to perform. In addition, section

7602(f) now prohibits the IRS from allowing an IRS contractor to ask substantive

questions of a witness whose testimony is

being taken under oath pursuant to section

7602.

The second commenter noted that the

non-exclusive nature of the proposed

regulations left open the possibility that

the IRS could hire as a contractor in an

IRS examination a certified public accountant (CPA), enrolled agent, or another non-attorney to provide the IRS with

assistance in the application of Federal

tax laws. This commenter asserted that

the proposed regulations should be revised so as to prohibit the IRS from hiring as a contractor in an examination any

person, whether or not an attorney, for

that person’s expertise with the Federal

tax laws. The Treasury Department and

the IRS decline to adopt this comment.

The limitation on hiring attorneys as contactors in examinations for their expertise

in applying the Federal tax laws is a measure that goes beyond what is required

by section 7602(f). This hiring limitation

was introduced as a matter of sound tax

administration to address concerns expressed by a range of professional and

business associations over the IRS’s prior use of attorneys as contractors. While

the previous commenters addressing the

Summons Interview Regulations and Notice 2017-38, 2017-30 I.R.B. 147, noted

the potential hazards that could arise

from the IRS hiring attorney contractors

for their expertise with Federal tax laws,

the hiring of a CPA or other accountant

by the IRS as a contractor has not been

established as a widely held concern. Accordingly, the Treasury Department and

the IRS have determined (1) that hiring

outside CPAs and accountants as contrac-

Bulletin No. 2021–39

tors in an examination does not pose the

same potential risk to tax administration

that prior commenters had identified for

the IRS hiring of outside attorneys, who

are trained at developing facts and taking

testimony, and (2) that the IRS is justified in contracting for the resources and

expertise of CPAs and accountants from

outside of the IRS in certain large or

complex cases.

Explanation of the Final Regulations

The preamble to proposed regulations

explained the various provisions of the

proposed regulations in detail. Because

these final regulations adopt the proposed

regulations without any modifications,

any persons interested in understanding

the provisions of these final regulations

should consult the preamble discussion

of these provisions in the proposed regulations.

Special Analyses

These regulations are not subject to

review under section 6(b) of Executive

Order 12866 pursuant to the Memorandum of Agreement (April 11, 2018) between the Treasury Department and the

Office of Management and Budget regarding review of tax regulations. Therefore, a regulatory impact assessment is

not required.

Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby

certified that these regulations do not

impose a significant economic impact on

a substantial number of small entities.

The final regulations mainly affect the

IRS and do not impose requirements on

small entities. Thus, no economic impact

will result from these regulations on any

small entity. Accordingly, the Secretary

of the Treasury’s delegate certifies that

the rule will not have a significant economic impact on a substantial number of

small entities.

Pursuant to section 7805(f) of the

Code, the notice of proposed rulemaking

preceding these final regulations was submitted to the Chief Counsel for the Office

of Advocacy of the Small Business Administration for comments on its impact

on small business. No comments were

received from the Chief Counsel for the

Bulletin No. 2021–39

Office of Advocacy of the Small Business

Administration.

Drafting Information

The principal author of these final regulations is William V. Spatz of the Office

of Associate Chief Counsel (Procedure

and Administration). However, other

personnel from the Treasury Department

and the IRS 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 general authority citation for part 301 continues to read in part

as follows:

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

Par. 2. Section 301.7602-1 is amended:

1. In paragraph (b)(2), by adding “(Secretary)” at the end of the first sentence.

2. By revising paragraphs (b)(3) and

(d).

The revisions read as follows:

§ 301.7602-1 Examination of books and

witnesses.

*****

(b)* * *

(3) Participation of a person described

in section 6103(n)—(i) IRS contractor

access to books and records obtained by

the IRS administratively—(A) In general.

The Secretary may not, under the authority of section 6103(n), provide any books,

papers, records, or other data obtained

pursuant to section 7602 to any person

authorized under section 6103(n), except

when such person requires such information for the sole purpose of providing expert evaluation and assistance to the IRS.

429

(B) Persons providing expert evaluation and assistance. For the purposes of

paragraph (b)(3)(i)(A) of this section, persons providing expert evaluation and assistance may include, but are not limited

to, the following:

(1) Persons with specialized expertise

in certain substantive areas, including,

but not limited to, economists, engineers,

attorneys specializing in an area relevant

to an issue in the examination (such as

patent law, property law, environmental

law, or foreign, state, or local law (including foreign, state, or local tax law)),

industry experts, or other subject-matter

experts;

(2) Persons providing support as ancillary service contractors including, but not

limited to, court reporters, translators or

interpreters, photocopy services, providers of data processing programs or equipment, litigation support services, or other

similar contractors; and

(3) Whistleblower-related contractors

described in § 301.6103(n)-2.

attorneys. The IRS may not hire an attorney as a contractor to assist in an examination under section 7602 unless the attorney

is hired by the IRS as a specialist in foreign,

state, or local law (including foreign, state,

or local tax law), or in non-tax substantive

law that is relevant to an issue in the examination, such as patent law, property law, or

environmental law, or is hired for knowledge, skills, or abilities other than providing legal services as an attorney.

(ii) IRS contractor participation in an

IRS summons interview—(A) In general.

No person other than an officer or employee of the IRS or its Office of Chief Counsel may, on behalf of the Secretary, question a witness under oath whose testimony

was obtained pursuant to section 7602.

Persons authorized by section 6103(n)

and with whom the Secretary may provide

books, papers, records, or other data obtained pursuant to section 7602 may also

attend a summons interview and provide

assistance to the IRS or Office of Chief

Counsel employees in attendance, but

may not question the summoned witness

under oath or ask a summoned person’s

representative to clarify an objection or

assertion of privilege.

(B) Court reporters, translators, and

interpreters are not barred from asking

September 27, 2021

questions. Court reporters who are hired

as contractors by the IRS to make a record

of an IRS summons interview are permitted to ask typical housekeeping questions

of a summoned witness. Examples of

such questions include, but are not limited

to, asking whether the witness swears to

tell the truth, asking the witness to spell

a word or phrase, and asking whether

the witness can speak up or speak rather

than gesture an answer. Translators and

interpreters who are hired as contractors

by the IRS to assist in the interview of a

summoned witness are permitted to translate any of the questions that are asked of

the witness by an IRS or Office of Chief

Counsel officer or employee and to ask

questions which may be necessary to clarify the translation.

*****

(d) Applicability date. This section is

applicable after September 3, 1982, except for paragraphs (b)(1) and (2) of this

section, which are applicable on and after

April 1, 2005, and paragraph (b)(3) of this

section, which applies to examinations begun or administrative summonses served

by the IRS on or after August 6, 2020.

For rules under paragraphs (b)(1) and (2)

of this section that are applicable to summonses issued on or after September 10,

2002 or under paragraph (b)(3) of this section that are applicable to summons interviews conducted on or after June 18, 2014

and before July 14, 2016, see 26 CFR

301.7602-1T (revised as of April 1, 2016).

For rules under paragraph (b)(3) of this

section that are applicable to administrative summonses served by the IRS before

August 6, 2020, see 26 CFR 301.7602-1

(revised as of April 1, 2020).

AGENCY: Internal Revenue Service

(IRS), Treasury.

116-127, 134 Stat. 178 (March 18, 2020),

the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Pub. L.

116-136, 134 Stat. 281 (March 27, 2020),

the COVID-related Tax Relief Act of 2020

(Tax Relief Act), enacted as Subtitle B of

Title II of Division N of the Consolidated

Appropriations Act, 2021, Pub. L. 116260, 134 Stat.1182 (December 27, 2020),

the Taxpayer Certainty and Disaster Relief

Tax Act of 2020 (Relief Act), enacted as

Division EE of the Consolidated Appropriations Act, 2021, and the American

Rescue Plan Act of 2021 (the ARP), Pub.

L. 117-2, 135 Stat. 4 (March 11, 2021),

provide relief to taxpayers from economic

hardships resulting from the Coronavirus

Disease 2019 (COVID-19). As described

below, this relief includes employment tax

credits for certain wages paid by employers.

ACTION: Temporary regulations.

I. Paid Sick and Family Leave Credits

SUMMARY: This document sets forth

temporary regulations under sections 3131,

3132, and 3134 of the Internal Revenue

Code (Code), added by sections 9641 and

9651 of the American Rescue Plan Act of

2021. These temporary regulations authorize the assessment of any erroneous refund

of the tax credits paid under sections 3131,

3132 (including any increases in those

credits under section 3133), and 3134 of

the Code. The text of these temporary regulations also serves as the text of the proposed regulations (REG-109077-21) set

forth in the notice of proposed rulemaking

on this subject in the Proposed Rules section of this issue of the Federal Register.

The Emergency Paid Sick Leave

Act (EPSLA) and the Emergency Family and Medical Leave Expansion Act

(EFMLEA), enacted as Divisions E and

C of the Families First Act, respectively,

generally required employers with fewer

than 500 employees to provide paid leave

due to certain circumstances related to

COVID-19. Sections 7001 and 7003 of

the Families First Act generally provided

that non-governmental employers subject

to the paid leave requirements under EPSLA and EFMLEA were entitled to fully

refundable tax credits to cover the wages

paid for leave taken for those periods of

time during which employees are unable

to work or telework for specified reasons

related to COVID-19, plus allocable qualified health plan expenses.

Although the requirement to provide

employees with paid leave under EPSLA and EFMLEA expired December 31,

2020, the tax credits for qualified leave

wages paid for periods of leave taken beginning on April 1, 2020, and ending on

December 31, 2020, were extended by the

Tax Relief Act through March 31, 2021,

for paid leave that would have satisfied the

requirements of EPSLA and EFMLEA.

The ARP added sections 3131 through

3133 of the Code, which extend the refundable tax credits for paid leave to

non-governmental employers with few-

26 CFR 31.3131-1T, 26 CFR 31.3132-1T & 26 CFR

31.3134-1T: Recapture of credits under the American Rescue Plan Act

T.D. 9953

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 31

Recapture of Excess

Employment Tax Credits

under the American Relief

Plan Act of 2021

Approved: August 20, 2021

DATES: Effective date: These temporary

regulations are effective on September

10, 2021.

Applicability date: For date of applicability, see §§ 31.3131-1T, 31.3132-1T, and

31.3134-1T of these temporary regulations.

Mark J. Mazur,

Acting Assistant Secretary of the Treasury (Tax Policy).

FOR FURTHER INFORMATION

CONTACT: Concerning these temporary

regulations, NaLee Park at 202-317-6798.

(Filed by the Office of the Federal Register on September 2, 2021, 4:15 p.m., and published in the issue

of the Federal Register for September 7, 2021, 86

FR 49923)

SUPPLEMENTARY INFORMATION:

Douglas W. O’Donnell,

Deputy Commissioner for Services

and Enforcement.

Background

The Families First Coronavirus Response Act (Families First Act), Pub. L.

September 27, 2021

430

Bulletin No. 2021–39

er than 500 employees, and certain governmental entities1 without regard to the

number of employees, that provide paid

sick and family leave for specified reasons related to COVID-19 with respect

to periods of leave beginning on April 1,

2021, through September 30, 2021. The

paid sick leave credit and the paid family

leave credit (collectively, “paid sick and

family leave credits”) under sections 3131

through 3133 are available to eligible

employers that provide employees with

paid leave that would have satisfied the

requirements of EPSLA and EFMLEA,

with certain modifications made pursuant

to the ARP.

Under section 3131, a credit is available to eligible employers who pay qualified sick leave wages to an employee for

up to 80 hours leave provided during the

period beginning April 1, 2021, and ending September 30, 2021, if the employee

is unable to work or telework because the

employee:

(1) is subject to a Federal, State, or local

quarantine or isolation order related

to COVID-19;

(2) has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

(3) is experiencing symptoms of

COVID-19 and seeking a medical

diagnosis, is seeking or awaiting the

results of a diagnostic test for, or a

medical diagnosis of, COVID-19

and the employee has been exposed

to COVID-19 or the employee’s employer has requested the test or diagnosis, or the employee is obtaining

immunization related to COVID-19

or recovering from any injury, disability, illness, or condition related to

the immunization;

(4) is caring for an individual who is

subject to a Federal, State, or local

quarantine or isolation order related

to COVID-19, or has been advised

by a health care provider to self-quarantine due to concerns related to

COVID-19;

(5) is caring for a son or daughter of such

employee if the school or place of

care of the son or daughter has been

closed, or the child care provider of

the son or daughter is unavailable,

due to COVID-19 precautions; or

(6) is experiencing any other substantially similar condition specified by the

Secretary of Health and Human Services (HHS) in consultation with the

Secretaries of the Treasury and Labor.

The Secretary of HHS has specified,

after consultation with the Secretaries

of Treasury and Labor, that a substantially similar condition is one in

which the employee takes leave:

to accompany an individual to obtain

immunization related to COVID-19,

to care for an individual who is recovering from any injury, disability,

illness, or condition related to the immunization.2

If an employee is unable to work or

telework for reasons related to COVID-19

described in (1), (2), or (3) above, qualified sick leave wages are wages paid at the

employee’s regular rate of pay or, if higher, the Federal minimum wage or any applicable State or local minimum wage, up

to a maximum of $511 per day and $5,110

in the aggregate. If an employee is unable

to work or telework for reasons related

to COVID-19 described in (4), (5), or (6)

above, qualified sick leave wages are twothirds of the wages paid at the employee’s

regular rate of pay or, if higher, the Federal

minimum wage or any applicable State or

local minimum wage, up to a maximum of

$200 per day and $2,000 in the aggregate.

Under section 3132, a credit is available to eligible employers who pay qualified family leave wages to an employee

for up to 12 weeks of paid family leave

provided during the period beginning

April 1, 2021, and ending September 30,

2021, if the employee is unable to work

or telework due to any of the conditions

for which eligible employers may provide

paid sick leave. Qualified family leave

wages are two-thirds of the wages paid at

the employee’s regular rate of pay, up to a

maximum of $200 per day and $12,000 in

the aggregate.

An eligible employer may not receive

the paid family leave credit for the same

wages for which it received the paid sick

leave credit. Further, an eligible employer

that receives the credits for qualified sick

leave wages under section 3131 of the

Code and qualified family leave wages

under section 3132 of the Code (collectively, “qualified leave wages”) may not

receive the employee retention credit allowed under section 2301 of the CARES

Act or section 3134 of the Code based on

the same wages. For the second calendar

quarter of 2021, if an eligible employer

receives the employee retention credit

under section 2301 of the CARES Act

based on wages paid that are also qualified leave wages on which the employer may claim the paid sick and family

leave credits, the employer must reduce

any paid sick and family leave credits by

the amount of the credit allowed under

section 2301 of the CARES Act that is

attributable to those same wages. See

sections 3131(f)(3) and 3132(f)(3). For

the third and fourth calendar quarters of

2021, any qualified leave wages eligible

employers take into account for purposes

of the paid sick and family leave credits

may not be taken into account for purposes of the employee retention credit under

section 3134 of the Code. See section

3134(c)(3)(D).

The paid sick and family leave credits are also reduced by the amount of the

credit allowed under section 41 (the credit

for increasing research activities) with respect to wages taken into account for determining both the credit under section 41

and the paid sick and family leave credits.

In addition, any wages taken into account

in determining paid sick and family leave

credits cannot be taken into account as

wages for purposes of the credits under

sections 45A, 45P, 45S, and 51. See sections 3131(f)(3) and 3132(f)(3).

Section 9641 of the ARP added sections 3131(f)(5) and 3132(f)(5) to the Code, which extend paid sick and family leave credits to certain governmental employers (without regard to the

number of employees). However, the credits are not allowed for the government of the United States, or any agency or instrumentality of the United States government, except for an organization described in section 501(c)(1) of the Code and exempt from tax under section 501(a) of the Code.

For more information on the paid sick and family leave credits, including who is an “individual” for purposes of this “substantially similar” condition, see Tax Credits for Paid Leave Under

the American Rescue Plan Act of 2021 for Leave After March 31, 2021 | Internal Revenue Service (irs.gov) at https://www.irs.gov/newsroom/tax-credits-for-paid-leave-under-the-americanrescue-plan-act-of-2021-for-leave-after-march-31-2021.

Bulletin No. 2021–39

431

September 27, 2021

Sections 3131(f)(2) and 3132(f)(2)

provide that, for purposes of sections 3131

and 3132, respectively, the term “wages”

means wages as defined in section 3121(a),

determined without regard to paragraphs

(1) through (22) of section 3121(b),

and compensation as defined in section

3231(e), determined without regard to the

sentence in section 3231(e)(1) that begins

“Such term does not include remuneration”. Eligible employers are entitled to

receive a credit equal to the amount of

qualified leave wages paid under sections

3131 and 3132. Under sections 3131(d)

and 3132(d), the credit is increased by

the eligible employer’s cost of maintaining health insurance coverage allocable

to the qualified leave wages (“allocable

qualified health plan expenses”). Under

sections 3131(e) and 3132(e), the credit

is also increased by certain amounts paid

under collectively bargained agreements

by the eligible employer that are properly allocable to the qualified leave wages

(“certain collectively bargained contributions”), subject to the daily and aggregate credit limitations. The credits for the

qualified leave wages and the collectively

bargained contributions combined cannot

exceed the $511 daily and $5110 aggregate limitation or $200 daily and $2000

aggregate limitation for paid sick leave

and the $200 daily and $12,000 aggregate

limitation for paid family leave. However,

the credit for the allocable qualified health

expenses is in addition to the credit for the

qualified leave wages and not subject to

the daily and aggregate credit limitations.

Under sections 3131 and 3132, qualified leave wages are subject to the taxes imposed on employers by sections

3111(a) (employer’s share of social security tax), 3111(b), and 3221(a), but section

3133(a) provides that the paid sick and

family leave credits under sections 3131

and 3132 are increased by the amount of

the taxes imposed by sections 3111(a),

3111(b), and 3221(a) on qualified leave

wages.

The paid sick and family leave credits

under sections 3131 and 3132 are allowed

against the taxes imposed on employers

under section 3111(b) (the Hospital Insurance tax (Medicare tax)), and against so

much of the taxes imposed under section

3221(a) (the Railroad Retirement Tax Act

Tier 1 tax) as are attributable to the rate

September 27, 2021

in effect under section 3111(b), as applicable, on all wages and compensation paid

to all employees, and any credit amounts

in excess of these taxes are treated as an

overpayment to be refunded under sections 6402(a) and 6413(b) of the Code.

See sections 3131(b)(4)(A), 3131(f)(1),

3132(b)(3)(A), and 3132(f)(1).

II. Employee Retention Credit

Section 2301 of the CARES Act, as

originally enacted, provides for an employee retention credit for eligible employers, including tax-exempt organizations, that pay qualified wages, including

certain health plan expenses, to some or

all employees after March 12, 2020, and

before January 1, 2021. Section 206 of

the Relief Act adopted amendments and

technical changes to section 2301 of the

CARES Act for qualified wages paid after March 12, 2020, and before January

1, 2021, primarily expanding eligibility

for certain employers to claim the credit.

Section 206 of the Relief Act is effective

retroactive to the effective date of section

2301 of the CARES Act. Section 207 of

the Relief Act, which is effective for calendar quarters beginning after December

31, 2020, further amends section 2301 of

the CARES Act to extend the application

of the employee retention credit to qualified wages paid after December 31, 2020,

and before July 1, 2021, and to modify the

calculation of the credit amount for qualified wages paid during that time. Section

9651 of the ARP enacted section 3134 of

the Code, effective for calendar quarters

beginning after June 30, 2021, to provide

an employee retention credit for qualified

wages paid after June 30, 2021, and before January 1, 2022. The Department of

the Treasury (Treasury Department) and

the Internal Revenue Service (IRS) will

continue to monitor potential legislation

related to the employee retention credit

that may impact certain rules described in

this preamble.

The employee retention credit is available to any employer carrying on a trade

or business during a calendar quarter that

meets the requirements to be an eligible

employer under section 3134, which include experiencing a full or partial suspension of business operations due to

orders from an appropriate governmen-

432

tal authority limiting commerce, travel,

or group meetings (for commercial, social, religious, or other purposes) due to

COVID-19, experiencing a decline in

gross receipts, or qualifying as a recovery

startup business.

For eligible employers that averaged

more than 500 full-time employees (within the meaning of section 4980H) during

2019 (large eligible employers), qualified

wages are wages and compensation (including allocable qualified health plan expenses), up to $10,000 per employee per

calendar quarter, paid to employees for the

time during which they are not providing

services due to a full or partial suspension of business operations or a decline

in gross receipts. For eligible employers that averaged 500 full-time employees or fewer during 2019 (small eligible

employers), and for severely financially

distressed employers as defined in section 3134(c)(3)(C)(ii) that are also large

eligible employers, qualified wages are

the wages and compensation (including

allocable qualified health plan expenses),

up to $10,000 per employee per calendar

quarter, paid with respect to an employee (regardless of whether the employee is

performing services) during any period in

the calendar quarter in which the business

operations are fully or partially suspended

due to a governmental order or during any

calendar quarter in which the employer is

experiencing a decline in gross receipts. If

an employer was not in existence in 2019,

an employer may use the average number of full-time employees in 2020 rather

than 2019. If an employer is an eligible

employer due to being a recovery startup

business, the maximum aggregate employee retention credit the employer may

claim in a calendar quarter is $50,000. In

the third and fourth calendar quarters of

2021, a recovery startup business that is a

small eligible employer may treat all wages paid with respect to an employee during

the quarter as qualified wages. See Notice

2021-49.

The same wages or compensation cannot be counted for both the paid sick and

family leave credits under sections 3131

and 3132 and the employee retention credit under section 3134. Qualified wages for

the employee retention credit also do not

include any wages taken into account under sections 41, 45A, 45P, 45S, 51, and

Bulletin No. 2021–39

1396 of the Code. See section 3134(c)(3)

(D). Additionally, qualified wages do not

include amounts taken into account as

payroll costs for Paycheck Protection Program loan forgiveness and certain grants.

See section 3134(h).

Section 3134(c)(4)(A) provides that,

for purposes of section 3134, the term

“wages” means wages as defined in section 3121(a)3 and compensation as defined

in section 3231(e).

The employee retention credit under

section 3134 is equal to 70 percent of

qualified wages paid. The credit is allowed against the taxes imposed on employers under section 3111(b), first reduced by any tax credits allowed under

sections 3131 and 3132, and against so

much of the taxes imposed under section

3221(a) as are attributable to the rate in effect under section 3111(b), as applicable,

first reduced by any credits allowed under

sections 3131 and 3132, on all wages and

compensation paid to all employees. Any

credit amounts in excess of these taxes

are treated as an overpayment that shall

be refunded under sections 6402(a) and

6413(b) of the Code.

III. Refundability of Credits

Sections 3131(b)(4)(A), 3132(b)(3)

(A), and 3134(b)(3) provide that if the

amount of the paid sick and family leave

credits (which would include any increases in the credits under section 3133(a))

and employee retention credit exceeds

the taxes imposed under section 3111(b)

and so much of the taxes imposed under

section 3221(a) as are attributable to the

rate in effect under section 3111(b), as

applicable, for any calendar quarter, after

application of the other credits previously

applied, such excess shall be treated as an

overpayment that shall be refunded under

sections 6402(a) and 6413(b).

Section 6402(a) generally provides

that, within the applicable period of limitations, overpayments may be credited

against any liability in respect of an inter-

nal revenue tax on the part of the person

who made the overpayment and any remaining balance refunded to such person.

Section 6413(b) provides that if more than

the correct amount of employment tax imposed by sections 3101, 3111, 3201, 3221,

or 3402 is paid or deducted and the overpayment cannot be adjusted under section

6413(a)4, the amount of the overpayment

shall be refunded (subject to the applicable statute of limitations) as the Secretary

may prescribe in regulations.

The IRS revised Form 941, Employer’s

Quarterly Federal Tax Return, Form 943,

Employer’s Annual Federal Tax Return

for Agricultural Employees, Form 944,

Employer’s Annual Federal Tax Return,

and Form CT-1, Employer’s Annual Railroad Retirement Tax Return, so that employers may use these returns to claim

the paid sick and family leave credits under sections 3131 through 3133 and the

employee retention credit under section

3134. The revised employment tax returns

allow for any of these credits in excess of

the taxes imposed under section 3111(b)

and so much of the taxes imposed under

section 3221(a) as are attributable to the

rate in effect under section 3111(b), as applicable, to be credited against other employment taxes and then for any remaining balance to be credited or refunded to

the employer in accordance with section

6402(a) or section 6413(b).

IV. Advance Payment of Credits and

Erroneous Refunds

Sections 3131(b)(4)(B) and 3132(b)

(3)(B) provide that, in anticipation of the

paid sick and family leave credits under

these sections (which would include any

increases in the credits under section

3133(a)), including any refundable portions, these credits are to be advanced,

according to forms and instructions provided by the Secretary, up to the total

allowable amount of the credits and subject to applicable limits for the calendar

quarter. Section 3134(j)(2) provides that

eligible employers for which the average

number of full-time employees (within the

meaning of section 4980H) employed by

the eligible employer during 2019 was not

greater than 500 may elect for any calendar quarter to receive an advance payment

of the employee retention credit for the

quarter in an amount not to exceed 70 percent of the average quarterly wages paid

in calendar year 2019.

To implement the advance payment

provisions, employers that are eligible to

receive an advance of the tax credits may

use IRS Form 7200, Advance Payment of

Employer Credits Due To COVID-19, to

request an advance of the paid sick and

family leave credits and the employee retention credit. Employers are required to

reconcile any advance payments claimed

on Form 7200 with total credits claimed

and total taxes due on their employment

tax returns.

A refund or credit of any portion of

these tax credits, regardless of whether

they are advanced, to a taxpayer in excess

of the amount to which the taxpayer is entitled is an erroneous refund that the employer must repay.

V. Assessment Authority

Section 6201 authorizes the Secretary

to determine and assess tax liabilities including interest, additional amounts, additions to the tax, and assessable penalties.

However, the general authority to assess

tax liabilities under section 6201(a) does

not provide for the assessment of any

non-rebate5 portion of an erroneous refund of a refundable tax credit, which may

include a portion of the credits available

under sections 3131, 3132, and 3134, if

the refund exceeds the amounts to which

an employer is properly entitled. While

these types of erroneous refunds are generally recovered or recaptured through

agreed upon voluntary repayments, setoff,

or through litigation, the Code in some

instances, such as in sections 3131, 3132,

and 3134, provides for the administrative

For purposes of certain governmental organizations or entities as described in section 3134(f)(2) of the Code, wages as defined in section 3121(a) are determined without regard to paragraphs

(5), (6), (7), (10), and (13) of section 3121(b) (except with respect to services performed in a penal institution by an inmate thereof).

Section 6413(a) addresses interest-free adjustments of overpayments. The section provides that if more than the correct amount of employment tax imposed by section 3101, 3111, 3201,

3221, or 3402 is paid with respect to any payment of remuneration, proper adjustments with respect to both the tax and the amount to be deducted, shall be made, without interest, in such

manner and at such times as the Secretary may by regulations prescribe.

As a general matter, ”non-rebate” refers to the portion of any refund of a tax credit that exceeds the IRS’s determination of the recipient’s tax liability (i.e., the remaining portion of the refund

that is paid to the recipient after the refund has been applied to the recipient’s tax liability).

Bulletin No. 2021–39

433

September 27, 2021

recapture of these non-rebate refunds either by directly authorizing assessment of

the erroneous non-rebate refunds or by authorizing the promulgation of regulations

or other guidance to do so.

Specifically, with regard to the paid

sick and family leave credits, sections

3131(g) and 3132(g) provide, in relevant

part, that the Secretary will provide such

regulations or other guidance as may be

necessary to carry out the purposes of

the credits, including regulations or other guidance to prevent the avoidance of

the purposes of the limitations under this

provision and to recapture the benefit of

the credit in cases where there is a subsequent adjustment to the credit. See sections 3131(g)(1), 3131(g)(4), 3132(g)(1),

and 3132(g)(4). With regard to the employee retention credit, section 3134(j)

(3)(B) allows for the direct assessment

of certain erroneous refunds of advanced

portions of the credit by providing that

if a small eligible employer specified in

section 3134(j)(2) receives excess advance payments of the credit, then the

taxes imposed under section 3111(b) or

so much of the taxes imposed under section 3221(a) as are attributable to the rate

in effect under section 3111(b), as applicable, for the calendar quarter are increased by the amount of the excess. Section 3134(m)(3) further provides that the

Secretary will issue such forms, instructions, regulations, and other guidance as

are necessary to prevent the avoidance

of the purposes of the limitations under

section 3134.

On July 29, 2020, temporary regulations (TD 9904) amending the Employment Tax Regulations under sections 3111

and 3221 to provide for the recapture of erroneous refunds of the paid sick and family leave credits under the Families First

Act and erroneous refunds of the employee retention credit under the CARES Act,

pursuant to the authority granted under

these acts to prescribe those regulations,

were published in the Federal Register (85

FR 45514). A notice of proposed rulemaking (REG-111879-20) cross-referencing

the temporary regulations was published

in the Federal Register on the same day

(85 FR 45551). Because the ARP did not

amend the Families First Act or CARES

Act to extend the paid leave credits and

employee retention credit provided there-

September 27, 2021

under, but rather enacted new Code sections that provide for similar credits, the

temporary regulations in TD 9904 do not

apply to the credits under the ARP. Therefore, separate regulations are required to

provide for the recapture of the erroneous

refund of these credits pursuant to the authority granted under sections 3131, 3132,

and 3134.

Accordingly, this document amends the

Employment Tax Regulations (26 CFR

part 31) by adding temporary regulations

under new sections 3131, 3132, and 3134

of the Code. Concurrent with the publication of this Treasury decision, the Treasury

Department and the IRS are publishing in

the Proposed Rules section of this issue of

the Federal Register a notice of proposed

rulemaking (REG-109077-21) on this

subject that cross-references the text of

these temporary regulations. See section

7805(e)(1). Interested persons are directed

to the ADDRESSES and Comments and

Requests for a Public Hearing sections

of the preamble to REG-109077-21 for information on submitting public comments

or requesting a public hearing on the proposed regulations.

Explanation of Provisions

Sections 3131(b)(3), 3131(b)(4)(A),

3131(f)(1), 3132(b)(2), 3132(b)(3)(A),

3132(f)(1), 3134(b)(2), 3134(b)(3), and

3134(c)(1) provide that the credits described in these sections are taken against

the taxes imposed under section 3111(b)

and so much of the taxes imposed under

section 3221(a) as are attributable to the

rate in effect under section 3111(b), as

applicable, (although for the employee

retention credit, the taxes are first reduced by any paid sick and family leave

credits). Additionally, if the amount of

the credits exceeds these taxes for any

calendar quarter, then the excess shall be

treated as an overpayment to be refunded

or credited under sections 6402(a) and

6413(b). Any credits claimed that exceed the amount to which the employer

is entitled and that are actually credited

or refunded by the IRS are considered

to be erroneous refunds of these credits.

Section 3134(j)(3)(B) provides that if a

small eligible employer specified in section 3134(j)(2) receives excess advance

payments of the credit, then the taxes

434

imposed under section 3111(b) or so

much of the taxes imposed under section

3221(a) as are attributable to the rate in

effect under section 3111(b), as applicable, for the calendar quarter are increased

by the amount of the excess.

These temporary regulations provide

that erroneous refunds of these credits are

treated as underpayments of the taxes imposed under section 3111(b) and so much

of the taxes imposed under section 3221(a)

as are attributable to the rate in effect under section 3111(b), as applicable. These

temporary regulations authorize the IRS

to assess any credits erroneously credited,

paid, or refunded in excess of the amount

allowed as if those amounts were taxes

imposed under section 3111(b) and so

much of the taxes imposed under section

3221(a) as are attributable to the rate in effect under section 3111(b), as applicable,

subject to assessment and administrative

collection procedures. This allows the IRS

to prevent the avoidance of the purposes

of the limitations under the credit provisions and to recover the erroneous refund

amounts efficiently, while also preserving

administrative protections afforded to taxpayers with respect to contesting their tax

liabilities under the Code and avoiding

unnecessary costs and burdens associated with litigation. These assessment and

administrative collection procedures may

apply in the normal course in processing

employment tax returns that include advances in excess of claimed credits and

in examining returns for excess claimed

credits. These assessment and administrative collection procedures do not replace

the existing recapture methods, but rather

represent an alternative method available

to the IRS.

Specifically, these temporary regulations provide that any amount of the

credits for qualified leave wages and certain collectively bargained contributions

under sections 3131 and 3132, plus any

amount of credits for qualified health

plan expenses under sections 3131(d) and

3132(d), and including any increases in

these credits under section 3133, and any

amount of the employee retention credit

for qualified wages under section 3134 of

the Code that are erroneously refunded or

credited to an employer shall be treated

as underpayments of the taxes imposed

under section 3111(b) and so much of the

Bulletin No. 2021–39

taxes imposed under section 3221(a) as

are attributable to the rate in effect under section 3111(b), as applicable, by the

employer and may be administratively

assessed and collected in the same manner as the taxes. These temporary regulations provide that the determination of

any amount of credits erroneously refunded must take into account any credit

amounts advanced to an employer under

the process established by the IRS in accordance with sections 3131(b)(4)(B),

3132(b)(3)(B) and 3134(j)(2).

In certain situations, third-party payors

claim tax credits on behalf of their common law employer clients. These temporary regulations address this situation by

providing that employers against which

an erroneous refund of credits may be

assessed as an underpayment include persons treated as the employer under sections 3401(d), 3504, and 3511, consistent

with their liability for the employment

taxes against which the credits applied.

Sections 3131(h) and 3132(h) provide

that the paid sick and family leave credits

apply to wages paid with respect to a period of leave taken beginning on April 1,

2021 and ending on September 30, 2021.

Section 3134(n) provides that the employee retention tax credit applies to wages

paid after June 30, 2021, and before January 1, 2022.

Pursuant to section 7805(b)(2) of the

Code, these temporary regulations are

permitted to apply before the dates provided under section 7805(b)(1), including the date on which these temporary

regulations are filed with the Federal

of the date of the enactment of the relevant statutory provisions. Accordingly,

these temporary regulations apply to all

credits under sections 3131 and 3132, including any increases to the credits under

section 3133, credited or refunded on or

after April 1, 2021, including advanced

refunds, as well as all credits under section 3134 that are credited or refunded on

or after July 1, 2021, including advanced

refunds. These applicability dates correspond to the effective dates of the statutory sections that provide for these credits

and that authorize guidance to allow for

the administrative recapture of erroneous

refunds of these credits.

Bulletin No. 2021–39

Special Analyses

The Office of Management and Budget’s Office of Information and Regulatory Analysis has determined that these temporary regulations are not significant and

not subject to review under section 6(b) of

Executive Order 12866.

Pursuant to the Regulatory Flexibility

Act (5 U.S.C. chapter 6), the Secretary

certifies that these temporary regulations

will not have a significant economic impact on a substantial number of small entities because these temporary regulations

impose no compliance burden on any

business entities, including small entities.

Although these temporary regulations

will apply to all employers eligible for

the tax credits under sections 3131, 3132,

and 3134, including small businesses and

tax-exempt organizations with fewer than

500 employees, and will therefore be likely to affect a substantial number of small

entities, the economic impact will not be

significant. These temporary regulations

do not affect the employer’s employment

tax reporting or the necessary information

to substantiate entitlement to the credits. Rather, these temporary regulations

merely implement the statutory authority

granted under sections 3131(g), 3132(g),

and 3134(m) that authorize the IRS to assess, reconcile, and recapture any portion

of the credits erroneously credited, paid,

or refunded in excess of the actual amount

allowed as if the amounts were taxes

imposed under section 3111(b) and so

much of the taxes imposed under section

3221(a) as are attributable to the rate in effect under section 3111(b), as applicable,

subject to assessment and administrative

collection procedures. Notwithstanding

this certification, the Treasury Department

and the IRS invite comments on any impact these temporary regulations would

have on small entities.

Pursuant to section 7805(f), these temporary regulations have been submitted to

the Chief Counsel of the Office of Advocacy of the Small Business Administration

for comment on its impact on small business.

The Treasury Department and the IRS

have determined that there is good cause

to issue these regulations as temporary

regulations. Employers were required to

file Form 941, Employer’s Quarterly Fed-

435

eral Tax Return, for the second quarter

of calendar year 2021 by July 31, 2021,

as required by section 6071 of the Code

and Treas. Reg. § 31.6071(a)-1. Employers use Form 941 to claim paid sick and

family leave credits and the employee

retention credit, as well as to report any

advance of these credits they received

during the calendar quarter. In filing their

second quarter 2021 Form 941, some employers may have already received, as an

advance, refund amounts in excess of the

credits to which they are entitled. In addition to the statutory authority provided by

section 3134(j)(3) with regard to erroneous advance refunds of the employee retention credit, these temporary regulations

authorize the assessment of any erroneous refunds of the credits. Without these

temporary regulations, in some instances

the IRS may not be able to avoid bringing

costly and burdensome litigation to recover the erroneous refunds. Further, comments are being solicited in the cross-referenced notice of proposed rulemaking

that is in this issue of the Federal Register,

and any comments will be considered before final regulations are issued.

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

http://www.irs.gov.

Drafting Information

The principal author of these temporary regulations is NaLee Park, Office of

the Associate Chief Counsel (Employee

Benefits, Exempt Organizations, and Employment Taxes). However, other personnel from the Treasury Department and the

IRS participated in the development of

these temporary regulations.

List of Subjects in 26 CFR Part 31

Employment taxes, Income taxes, Penalties, Pensions, Railroad retirement, Reporting and recordkeeping requirements,

September 27, 2021

Social security, Unemployment compensation.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 31 is amended as follows:

PART 31—EMPLOYMENT TAXES

AND COLLECTION OF INCOME

TAX AT SOURCE

Paragraph 1. The authority citation for

part 31 is amended by adding entries for

§§31.3131-1T, 31.3132-1T, and 31.31341T in numerical order to read in part as

follows:

Authority: 26 U.S.C. 7805.

*****

Section 31.3131-1T also issued under

26 U.S.C. 3131(g).

Section 31.3132-1T also issued under

26 U.S.C. 3132(g).

Section 31.3134-1T also issued under

26 U.S.C. 3134(m)(3).

*****

Par. 2. Section 31.3131-1T is added to

read as follows:

§31.3131-1T Recapture of credits.

(a) Recapture of erroneously refunded credits. Any amount of credits for

qualified sick leave wages under section 3131(a), including any increase to

the amount of the credits under sections

3131(d), 3131(e), and 3133, that are

treated as overpayments and refunded

or credited to an employer under section

6402(a) or section 6413(b) and to which

the employer is not entitled, resulting in

an erroneous refund to the employer, shall

be treated as an underpayment of the taxes imposed under section 3111(b) and so

much of the taxes imposed under section

3221(a) as are attributable to the rate in effect under section 3111(b), as applicable,

and may be assessed and collected by the

Secretary in the same manner as the taxes.

(b) Advance credit amounts erroneously refunded. The determination of any

amount of credits erroneously refunded

as described in paragraph (a) of this section must take into account any amount of

credits advanced to an employer under the

process established by the Internal Reve-

September 27, 2021

nue Service in accordance with sections

3131(b)(4)(B) and 3131(g)(6).

of this section, employers against whom

an erroneous refund of the credits under

section 3131 (including any increases in

those credits under section 3133), can be

assessed as an underpayment of the taxes imposed under section 3111(b) and so

much of the taxes imposed under section

3221(a) as are attributable to the rate in

effect under section 3111(b), as applicable, include persons treated as the employer under sections 3401(d), 3504, and

3511, consistent with their liability for the

section 3111(b) or 3121(a) taxes against

which the credit applied.

(d) Applicability date. This section applies to all credit refunds under section

3131 (including any increases in those

credits under section 3133), advanced or

paid on or after April 1, 2021.

Par. 3. Section 31.3132-1T is added to

read as follows:

§31.3132-1T Recapture of credits.

(a) Recapture of erroneously refunded credits. Any amount of credits for

qualified family leave wages under sections 3132, including any increase to

the amount of the credits under sections

3132(d), 3132(e), and 3133, that are

treated as overpayments and refunded

or credited to an employer under section

6402(a) or section 6413(b) and to which

the employer is not entitled, resulting in

an erroneous refund to the employer, shall

be treated as an underpayment of the taxes imposed under section 3111(b) and so

much of the taxes imposed under section

3221(a) as are attributable to the rate in effect under section 3111(b), as applicable,

and may be assessed and collected by the

Secretary in the same manner as the taxes.

(b) Advance credit amounts erroneously refunded. The determination of any

amount of credits erroneously refunded

as described in paragraph (a) of this section must take into account any amount of

credits advanced to an employer under the

process established by the Internal Revenue Service in accordance with sections

3132(b)(3)(B) and 3132(g)(6).

of this section, employers against whom

an erroneous refund of the credits under

436

section 3132 (including any increases in

those credits under section 3133), can be

assessed as an underpayment of the taxes imposed under section 3111(b) and so

much of the taxes imposed under section

3121(a) as are attributable to the rate in

effect under section 3111(b), as applicable, include persons treated as the employer under sections 3401(d), 3504, and

3511, consistent with their liability for the

section 3111(b) or 3121(a) taxes against

which the credit applied.

(d) Applicability date. This section applies to all credit refunds under section

3132 (including any increases in those

credits under section 3133) advanced or

paid on or after April 1, 2021.

Par. 4. Section 31.3134-1T is added to

read as follows:

§31.3134-1T Recapture of credits.

(a) Recapture of erroneously refunded

credits. Any amount of credits for qualified wages under section 3134 of the Code

that is treated as an overpayment and refunded or credited to an employer under

section 6402(a) or section 6413(b) of the

Code and to which the employer is not

entitled, resulting in an erroneous refund

to the employer, shall be treated as an underpayment of the taxes imposed under

section 3111(b) and so much of the taxes

imposed under section 3221(a) as are attributable to the rate in effect under section 3111(b), as applicable, and may be

assessed and collected by the Secretary in

the same manner as the taxes.

(b) Advance credit amounts erroneously refunded. The determination of any

amount of credits erroneously refunded

as described in paragraph (a) of this section must take into account any amount of

credits advanced to an employer under the

process established by the Internal Revenue Service in accordance with sections

3134(j) and 3134(m).

this section, employers against whom an

erroneous refund of the credits under section 3134 can be assessed as an underpayment of the taxes imposed under section

3111(b) and so much of the taxes imposed

under section 3121(a) as are attributable to

the rate in effect under section 3111(b), as

applicable, include persons treated as the

employer under sections 3401(d), 3504,

Bulletin No. 2021–39

and 3511, consistent with their liability

for the section 3111(b) or 3121(a) taxes

against which the credit applied.

(d) Applicability date. This section applies to all credit refunds under section

3134 advanced or paid on or after July 1,

2021.

Bulletin No. 2021–39

Douglas W. O’Donnell,

Deputy Commissioner for Services

and Enforcement.

Approved: August 18, 2021.

437

Mark J. Mazur,

Acting Assistant Secretary of the Treasury (Tax Policy).

(Filed by the Office of the Federal Register on September 7, 2021, 8:45 a.m., and published in the issue

of the Federal Register for September 8, 2021, 86

FR 50295)

September 27, 2021

Part III

Guidance on Reporting

Qualified Sick Leave Wages

and Qualified Family Leave

Wages Paid For Leave

Provided in 2021

Notice 2021-53

I. PURPOSE

This notice provides guidance to employers on the requirement to report the

following qualified sick leave wages and

qualified family leave wages (qualified

leave wages)1 paid to employees for leave

provided in 2021:2

• Qualified leave wages under the Families First Coronavirus Response Act

(Families First Act), Pub. L. No. 116127, 134 Stat. 178 (March 18, 2020),

as amended by the COVID-related

Tax Relief Act of 2020 (Tax Relief

Act), enacted as Subtitle B of Title

II of Division N of the Consolidated

Appropriations Act, 2021, Pub. L.

No. 116-260, 134 Stat. 1182 (December 27, 2020), paid for leave provided

to employees beginning January 1,

2021, through March 31, 2021.3

• Qualified leave wages under sections

3131, 3132, and 3133 of the Internal Revenue Code (Code), added by

section 9641 of the American Rescue

Plan Act of 2021 (ARP), Pub. L. No.

117-2, 135 Stat. 4 (March 11, 2021),

paid for leave provided to employees beginning April 1, 2021, through

September 30, 2021.

Employers are required to report qualified leave wages either on a 2021 Form

W-2, Box 14, or on a separate statement.

This reporting provides employees who

are also self-employed with information

necessary for properly claiming qualified

sick leave equivalent or qualified family

leave equivalent credits for the 2021 taxable year under the Families First Act or

the ARP.

II. BACKGROUND

In general

The Families First Act and sections

3131 and 3132 of the Code provide refundable tax credits to employers with fewer

than 500 employees (eligible employers)

to reimburse them for the cost of providing

qualified leave wages. Sections 3131 and

3132 also permit certain governmental employers to claim these tax credits, without

regard to the number of their employees.4

Accordingly, when this notice addresses

the credits provided under these Code sections, the term “eligible employer” also includes these governmental employers.

Division E of the Families First Act,

the Emergency Paid Sick Leave Act (EPSLA), and Division C of the Families First

Act, the Emergency Family and Medical

Leave Expansion Act (EFMLEA), generally required eligible employers to provide paid sick leave and expanded family

and medical leave, respectively, beginning April 1, 2020, through December 31,

2020, up to specified limits, to employees

unable to work or telework due to certain

circumstances related to COVID-19. The

EPSLA entitled workers to up to 80 hours

of paid sick time and the EFMLEA entitled workers to up to 10 weeks of paid

family and medical leave if they were

unable to work for certain reasons related to COVID-19. The Families First Act

also provided eligible employers with fully refundable tax credits to cover the cost

of the leave required to be paid under the

EPSLA and EFMLEA. The requirement

that eligible employers provide leave under the EPSLA and EFMLEA does not

apply after December 31, 2020. However,

the Tax Relief Act extended the availability of the tax credits under the Families

First Act through March 31, 2021, for paid

leave that would have satisfied the EPSLA

or EFMLEA requirements.

Specifically, sections 7001 and 7003

of the Families First Act provide refundable tax credits against the tax imposed

by section 3111(a) of the Code (referring

to the eligible employer’s share of the social security portion of the Federal Insurance Contributions Act (FICA) tax), and

so much of the Railroad Retirement Tax

Act (RRTA) Tier 1 tax as is attributable

to the rate in effect under section 3111(a),

on all wages or compensation paid to all

employees for each calendar quarter in an

amount equal to the qualified leave wages

paid by the eligible employer, plus allocable qualified health plan expenses, with

respect to leave provided to employees

beginning April 1, 2020, through March

31, 2021. The credits under sections 7001

and 7003 of the Families First Act are increased by the amount of the tax imposed

by section 3111(b) of the Code (referring

to the eligible employer’s share of Medicare tax) and so much of the RRTA Tier 1

tax imposed as is attributable to the rate in

effect under section 3111(b) on qualified

leave wages. See section 7005(b)(1) of the

Families First Act.

Section 9641 of the ARP added sections 3131 through 3133 to the Code,

which extend the availability of the credits for paid leave through September 30,

2021. Section 3131 provides the credit for

paid sick leave, section 3132 provides the

credit for paid family leave, and section

3133 provides that the credits allowed under sections 3131 and 3132 are increased

by the eligible employer’s share of both

the social security and Medicare portions

of FICA tax (and the eligible employer’s

share of the RRTA Tier 1 tax) imposed on

For the definition of “qualified sick leave wages,” see sections 7001(c) of the Families First Act and 3131(c) of the Code. For the definition of “qualified family leave wages,” see sections

7003(c) of the Families First Act and 3132(c) of the Code.

Separate reporting requirements apply for calendar year 2020. Notice 2020-54, 2020-31 I.R.B. 226, provides guidance to employers on the requirement to report the amount of qualified sick

leave wages and qualified family leave wages for leave provided to employees beginning April 1, 2020, through December 31, 2020.

The amendments made by section 288 of the Tax Relief Act apply as if included in the provisions of the Families First Act to which they relate. Therefore, references to the Families First

Act throughout this notice should be read as the Families First Act, as amended by the Tax Relief Act.

For purposes of the Families First Act, these credits do not apply to the government of the United States, the government of any State or political subdivision thereof, or any agency or

instrumentality of any of the foregoing. See sections 7001(e)(4) and 7003(e)(4) of the Families First Act. For purposes of the ARP, these credits do not apply to the government of the United

States or any agency or instrumentality thereof that is not an organization described in section 501(c)(1) of the Code. See sections 3131(f)(5) and 3132(f)(5).

September 27, 2021

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Bulletin No. 2021–39

the qualified leave wages. Sections 3131

and 3132 of the Code provide that eligible

employers are entitled to claim refundable

tax credits with respect to leave provided

voluntarily to employees beginning April

1, 2021, through September 30, 2021, if

the leave would have satisfied the EPSLA

or EFMLEA requirements.5 Specifically,

sections 3131 and 3132 of the Code provide refundable tax credits against the tax

imposed by section 3111(b) (referring to

an eligible employer’s share of Medicare

tax), and so much of the RRTA Tier 1 tax

as is attributable to the rate in effect under section 3111(b), on all wages or compensation paid to all employees for each

calendar quarter in an amount equal to the

qualified leave wages paid by the eligible

employer plus (i) the allocable qualified

health plan expenses and (ii) certain collectively bargained contributions allocable to qualified leave wages. See sections

3131(d), 3131(e), 3132(d), and 3132(e).

Sections 7001(c) and 7003(c) of the

Families First Act and sections 3131(f)

(2) and 3132(f)(2) of the Code define the

terms wages and compensation to mean

“wages” as defined in section 3121(a),

but without regard to section 3121(b)

(1) through (22), and “compensation” as

defined in section 3231(e), but without

regard to the exclusions under section

3231(e)(1).6

A self-employed individual carrying

on a trade or business in 2021 within the

meaning of section 1402 who would have

received qualified leave wages if the individual were treated as an employee of

an employer (other than himself or herself) may claim refundable tax credits if

the individual is unable to work or telework (eligible self-employed individual).

Specifically, sections 7002 and 7004 of

the Families First Act permit an eligible

self-employed individual to claim refundable tax credits for qualified sick leave

equivalent amounts and qualified family

leave equivalent amounts (qualified leave

equivalent amounts) if the individual is unable to work or telework during the period

beginning April 1, 2020, through March

31, 2021, due to certain circumstanc-

es related to COVID-19. Sections 9642

and 9643 of the ARP permit an eligible

self-employed individual to claim refundable tax credits for qualified leave equivalent amounts if the individual is unable to

work or telework during the period beginning April 1, 2021, through September 30,

2021, due to certain circumstances related

to COVID-19. An eligible self-employed

individual may have to reduce qualified

leave equivalent amounts by some or all

of the qualified leave wages the individual

received from an employer. See sections

7002 and 7004 of the Families First Act

and sections 9642 and 9643 of the ARP.

Sections 7002(g) and 7004(e) of the

Families First Act provide that the Secretary of the Treasury will prescribe such

regulations or other guidance as may be

necessary to carry out the purposes of

sections 7002 and 7004 of the Families

First Act, respectively. Section 9642(h)

and section 9643(h) of the ARP provide

that the Secretary of the Treasury will

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

purposes of sections 9642 and 9643 of the

ARP, respectively.

Qualified leave wages paid for leave

beginning January 1, 2021, through

March 31, 2021

With respect to paid leave provided

under the Families First Act to employees beginning January 1, 2021, through

March 31, 2021, qualified sick leave wages are wages and compensation, as defined

under section 7001(c), paid for leave that

would have satisfied the requirements of

the EPSLA. In general, eligible employers are permitted to claim refundable tax

credits if they provide employees with up

to 80 hours of paid sick leave due to the

employee being unable to work or telework because the employee—

(1) is subject to a Federal, State, or local

quarantine or isolation order related

to COVID-19;

(2) has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

(3) is experiencing symptoms of

COVID-19 and seeking a medical diagnosis;

(4) is caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to

COVID-19, or has been advised by a

health care provider to self-quarantine

due to concerns related to COVID-19;

(5) is caring for a son or daughter of such

employee if the school or place of

care of the son or daughter has been

closed, or the child care provider of

such son or daughter is unavailable,

due to COVID-19 precautions; or

(6) is experiencing any other substantially similar condition specified by the

Secretary of Health and Human Services in consultation with the Secretaries of the Treasury and Labor.7

An employee who receives paid sick

leave due to the inability to work or telework for reasons related to COVID-19

described in (1), (2), or (3) above must be

paid sick leave wages at the employee’s

regular rate of pay or, if higher, the Federal

minimum wage or any applicable State or

local minimum wage, up to $511 per day

and $5,110 in the aggregate, for the eligible employer to claim the credit for leave

provided to that employee during the period beginning April 1, 2020, through March

31, 2021. An employee who receives paid

sick leave due to the inability to work or

telework for reasons related to COVID-19

described in (4), (5), or (6) above must be

paid sick leave wages at two-thirds the employee’s regular rate of pay or, if higher,

the Federal minimum wage or any applicable State or local minimum wage, up to

$200 per day and $2,000 in the aggregate.

Because the sick leave wage cap is not increased for the period beginning January

1, 2021, and ending March 31, 2021, no

more than $5,110 (or $2,000 for absences

described in (4), (5), and (6) above) in the

aggregate may be claimed by an employer

with respect to leave provided to an employee during the period beginning April 1,

2020, through March 31, 2021.

With respect to paid leave provided to

employees during the period beginning

When this notice addresses the credits provided under the ARP, references to EPSLA should be read as EPSLA, with certain modifications pursuant to the ARP. Similarly, references to

EFMLEA should be read as EFMLEA, with certain modifications pursuant to the ARP.

Qualified leave wages under the Families First Act are also determined without regard to section 7005(a) of the Families First Act.

The U.S. Department of Health and Human Services has not specified any other conditions for credits available under the Families First Act, but see the discussion regarding the additional

conditions specified that apply for credits available under the ARP.

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439

September 27, 2021

January 1, 2021, through March 31, 2021,

qualified family leave wages are wages

and compensation, as defined under section 7003(c) of the Families First Act, paid

for leave that would have satisfied the requirements of the EFMLEA. In general,

eligible employers are permitted to claim

refundable tax credits if they provide employees with up to 10 weeks of paid family

leave due to the employee being unable to

work or telework because the employee is

caring for a son or daughter whose school

or place of care is closed or whose child

care provider is unavailable for reasons

related to COVID-19. To receive the credit, the eligible employer must pay the employee family leave wages at two-thirds

the employee’s regular rate of pay, up to

$200 per day and $10,000 in the aggregate. Because the family leave wage cap

is not increased for the period beginning

January 1, 2021, and ending March 31,

2021, no more than $10,000 in the aggregate may be claimed by an employer with

respect to leave provided to an employee

during the period beginning April 1, 2020,

through March 31, 2021.

Reduction to qualified leave equivalent

amounts for qualified leave wages paid

beginning January 1, 2021, through

March 31, 2021

If a self-employed individual is entitled to a refundable tax credit for a qualified sick leave equivalent amount under

section 7002(a) of the Families First Act

and also receives qualified sick leave

wages as an employee, section 7002(d)

(3) of the Families First Act reduces the

qualified sick leave equivalent amount for

which the eligible self-employed individual may claim a credit to the extent that

the sum of the qualified sick leave equivalent amount described in section 7002(c)

of the Families First Act and any qualified

sick leave wages under section 7001(b)(1)

of the Families First Act exceeds $2,000

(or $5,110 in the case of any day any portion of which is paid sick time described

in paragraphs (1), (2), or (3) of section

5102(a) of the EPSLA). Similarly, if a

self-employed individual is entitled to a

refundable tax credit for a qualified family leave equivalent amount under section

7004(a) of the Families First Act and also

receives qualified family leave wages as

an employee, section 7004(d)(3) of the

Families First Act reduces the qualified

family leave equivalent amount for which

the self-employed individual may claim

a credit to the extent that the sum of the

qualified family leave equivalent amount

described in section 7004(c) of the Families First Act and the qualified family

leave wages under section 7003(b)(1) of

the Families First Act exceeds $10,000.

Under the Families First Act, the requirement to reduce qualified leave equivalent amounts is not applied separately for

2020 and 2021. Instead, the reduction to

the qualified leave equivalent amounts in

each case is figured using the sum of the

qualified leave equivalent amounts and

the qualified leave wages for the entire

period beginning April 1, 2020, through

March 31, 2021. As a result, if an eligible self-employed individual reduced a

qualified sick leave equivalent amount for

2020 because the sum of the qualified sick

leave equivalent amount and the qualified

sick leave wages exceeded $5,110, then

no credit under section 7002 of the Families First Act will be available for 2021.

Likewise, if an eligible self-employed individual reduced a qualified family leave

equivalent amount for 2020 because the

sum of the qualified family leave equivalent amount and the qualified family leave

wages exceeded $10,000, then no credit

under section 7004 of the Families First

Act will be available for 2021.

Qualified leave wages paid for leave

beginning April 1, 2021, through

September 30, 2021

With respect to leave provided under

sections 3131 and 3132 of the Code to employees beginning April 1, 2021, through

September 30, 2021, qualified sick leave

wages are wages and compensation, as de-

fined under section 3131(f)(2), paid with

respect to leave that would have satisfied

the requirements of the EPSLA. In general, eligible employers are permitted to

claim refundable tax credits under section

3131 if they provide employees with up to

80 hours of paid sick leave due to the employee being unable to work or telework

because the employee—

(1) is subject to a Federal, State, or local

quarantine or isolation order related

to COVID-19;

(2) has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

(3) is experiencing symptoms of

COVID-19 and is seeking a medical

diagnosis; or is seeking or awaiting

the results of a diagnostic test for, or

a medical diagnosis of, COVID-19

and has been exposed to COVID-19,

or the employer has requested such

test or diagnosis, or is obtaining immunization related to COVID-19 or is

recovering from any injury, disability,

illness, or condition related to such

immunization;8

(4) is caring for an individual who is

subject to a Federal, State, or local

quarantine or isolation order related

to COVID-19 or has been advised by

a health care provider to self-quarantine due to concerns related to

COVID-19;

(5) is caring for a son or daughter of such

employee if the school or place of

care of the son or daughter has been

closed, or the child care provider of

such son or daughter is unavailable,

due to COVID-19 precautions; or

(6) is experiencing any other substantially

similar condition specified by the Secretary of Health and Human Services

in consultation with the Secretaries

of the Treasury and Labor, including

if the employee is accompanying an

individual to obtain immunization related to COVID-19, or is caring for an

individual who is recovering from any

injury, disability, illness, or condition

related to the immunization.9

For purposes of the ARP, paragraph (3) of section 5102(a) of the EPSLA was modified to include certain absences related to receiving or recovering from vaccinations (see section 3131(c)

(2) of the Code).

As of the date of this notice, the IRS has posted FAQs titled “Tax Credits for Paid Leave Under the American Rescue Plan Act of 2021 for Leave After March 31, 2021,” on IRS.gov,

which reflect the substantially similar conditions designated by the Secretary of Health and Human Services in consultation with the Secretaries of Labor and the Treasury. The FAQs will

be periodically updated with new information as necessary. See https://www.irs.gov/newsroom/tax-credits-for-paid-leave-under-the-american-rescue-plan-act-of-2021-specific-provisionsrelated-to-self-employed-individuals.

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An employee who receives paid sick

leave due to the inability to work or telework for reasons related to COVID-19 described in paragraphs (1), (2), or (3) above

after March 31, 2021, and before October

1, 2021, must be paid sick leave wages at

the employee’s regular rate of pay or, if

higher, the Federal minimum wage or any

applicable State or local minimum wage,

up to $511 per day and $5,110 in the aggregate for the eligible employer to claim

the credit for leave provided to that employee beginning April 1, 2021, through

September 30, 2021. An employee who

receives paid sick leave due to the inability to work or telework for reasons related

to COVID-19 described in paragraphs (4),

(5), or (6) above after March 31, 2021, and

before October 1, 2021, must be paid sick

leave wages at two-thirds of the employee’s regular rate of pay or, if higher, the

Federal minimum wage or any applicable

State or local minimum wage, up to $200

per day and $2,000 in the aggregate for

the eligible employer to claim the credit

for leave provided to that employee beginning April 1, 2021, through September 30,

2021.

With respect to leave provided to employees during the period beginning April

1, 2021, through September 30, 2021,

qualified family leave wages are wages

and compensation, as defined under section 3132(f)(2) of the Code, paid with respect to leave that would have satisfied the

requirements of the EFMLEA. In general,

eligible employers are permitted to claim

refundable tax credits under section 3132

if they provide employees with up to 12

weeks of paid family leave due to the employee being unable to work or telework

for any of the same reasons for which an

employee can take paid sick leave. To

receive the credit, the eligible employer

must pay the employee family leave wages at two-thirds of the employee’s regular

rate of pay, up to $200 per day and $12,000

in the aggregate, with respect to leave provided to that employee during the period

beginning April 1, 2021, through September 30, 2021.

Reduction to qualified leave equivalent

amounts for qualified leave wages

paid beginning April 1, 2021, through

September 30, 2021

If a self-employed individual is entitled

to a refundable tax credit for a qualified

sick leave equivalent amount under section 9642(a) of the ARP and also receives

qualified sick leave wages as an employee, section 9642(e)(2) of the ARP reduces

the qualified sick leave equivalent amount

for which the eligible self-employed individual may claim a credit to the extent

that the sum of the qualified sick leave

equivalent amount described in section

9642(c) of the ARP and any qualified sick

leave wages under section 3131(b)(1) of

the Code exceeds $2,000 (or $5,110 in the

case of any day any portion of which is

paid sick time described in paragraph (1),

(2), or (3) of section 5102(a) of the EPSLA). Similarly, if a self-employed individual is entitled to a refundable tax credit for a qualified family leave equivalent

amount under section 9643(a) of the ARP,

and also receives qualified family leave

wages that meet the requirements of the

EFMLEA, section 9643(e)(2) of the ARP

reduces the qualified family leave equivalent amount for which the self-employed

individual may claim a credit to the extent

that the sum of the qualified family leave

equivalent amount described in section

9643(c) of the ARP and the qualified family leave wages under section 3132(b)(1)

of the Code exceeds $12,000.

III. REPORTING REQUIREMENTS

In order to provide eligible self-employed individuals who also receive wages or compensation as employees with the

information they need to properly claim

any qualified sick leave equivalent or

qualified family leave equivalent credits

for the 2021 taxable year, this notice requires eligible employers to report to employees the amount of qualified sick leave

wages and qualified family leave wages

paid to the employees under (i) sections

7001 or 7003 of the Families First Act

for leave provided during the period beginning January 1, 2021, through March

31, 2021, and (ii) sections 3131 and 3132

of the Code for leave provided during the

period beginning April 1, 2021, through

September 30, 2021. Furthermore, since

qualified leave wages are defined under

both the Families First Act and sections

3131 and 3132 of the Code as wages defined in section 3121(a) without regard to

the exclusions from employment under

section 3121(b)(1) through (22) and compensation defined in section 3231(e) without regard to the exclusions from compensation under section 3231(e)(1), eligible

employers must determine the amount of

qualified leave wages to report without regard to the exclusions from employment

under section 3121(b)(1) through (22)

and without regard to the exclusions from

compensation under section 3231(e)(1).10

Only eligible employers who claim

credits under the Families First Act or

sections 3131 and 3132 of the Code are

required to separately report qualified sick

leave wages and qualified family leave

wages to their employees. Eligible employers who forego claiming refundable

tax credits under the Families First Act or

sections 3131 and 3132 of the Code for

qualified leave wages are not required to

separately report qualified sick leave wages or qualified family leave wages paid to

employees to the extent those wages are

not claimed as a credit. Furthermore, governmental employers that are prohibited

from claiming credits for qualified leave

wages are not required to separately report

any qualified sick leave wages or qualified

family leave wages paid to employees.

Eligible employers have separate reporting requirements for (i) leave provided

to employees during the period beginning

January 1, 2021, through March 31, 2021,

under the Families First Act; and (ii) leave

provided to employees during the period

beginning April 1, 2021, through September 30, 2021, under sections 3131 and

3132 of the Code. With respect to leave

provided to employees during the period

For purposes of determining qualified leave wages under the Families First Act, employers must also disregard section 7005(a). For more information about the definition of wages for

purposes of sections 3131 and 3132 of the Code, see Tax Credits for Paid Leave Under the American Rescue Plan Act of 2021 for Leave After March 31, 2021: Special Issues for Employers—Other Issues, FAQ 93 for examples, which may be found at https://www.irs.gov/newsroom/tax-credits-for-paid-leave-under-the-american-rescue-plan-act-of-2021-special-issues-foremployers-other-issues.

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September 27, 2021

beginning January 1, 2021, through March

31, 2021, eligible employers claiming a

credit under sections 7001 or 7003 of the

Families First Act must separately state

the total amount of qualified sick leave

wages paid under the provisions of paragraphs (1), (2), or (3) of section 5102(a)

of the EPSLA, qualified sick leave wages

paid under the provisions of paragraphs

(4), (5), or (6) of section 5102(a) of the

EPSLA, and qualified family leave wages paid under the provisions of section

3102(b) of the EFMLEA. With respect to

leave provided to employees during the

period beginning April 1, 2021, through

September 30, 2021, eligible employers

claiming a credit under sections 3131 or

3132 of the Code must separately state the

total amount of qualified sick leave wages

paid under the provisions of paragraphs

(1), (2), or (3) of section 5102(a) of the

EPSLA, qualified sick leave wages paid

under the provisions of paragraphs (4),

(5), or (6) of section 5102(a) of the EPSLA, and qualified family leave wages paid

under the EFMLEA.

Employers must separately state each

of these wage amounts either on the 2021

Form W-2, Box 14, or on a separate statement included with each employee’s Form

W-2, Wage and Tax Statement. Self-employed individuals claiming a credit for a

qualified sick leave equivalent amount or

qualified family leave equivalent amount

must report these qualified sick leave

wages and qualified family leave wages

on Form 7202, Credits for Sick Leave and

Family Leave for Certain Self-Employed

Individuals, included with their 2021 income tax returns, and may have to reduce

(but not below zero) any qualified sick

leave or qualified family leave equivalent

amounts by these qualified leave wages.

Specific Reporting Instructions

Qualified leave wages paid in 2021

under the Families First Act and sections

3131 and 3132 of the Code are to be reported in Box 1 of Form W-2. To the extent that qualified leave wages are social

security wages or Medicare wages, they

must also be included in Box 3 (up to the

social security wage base) and Box 5, respectively. To the extent qualified leave

wages are compensation subject to the

RRTA, they must also be included in Box

14 under the appropriate RRTA reporting

label(s).11

In addition to the regular reporting

requirements, employers must report to

the employee the following types and

amounts of the wages that were paid, with

each amount separately reported either

in Box 14 of Form W-2 or on a separate

statement:12

• The total amount of qualified sick

leave wages paid for reasons described in paragraphs (1), (2), or (3)

of section 5102(a) of the EPSLA with

respect to leave provided to employees during the period beginning on

January 1, 2021, through March 31,

2021. In labeling this amount, employers must use the following, or

similar language: “sick leave wages

subject to the $511 per day limit paid

for leave taken after December 31,

2020, and before April 1, 2021.”

• The total amount of qualified sick

leave wages paid for reasons described in paragraphs (4), (5), or (6)

of section 5102(a) of the EPSLA with

respect to leave provided to employees during the period beginning on

January 1, 2021, through March 31,

2021. In labeling this amount, employers must use the following, or

similar language: “sick leave wages

subject to the $200 per day limit paid

for leave taken after December 31,

2020, and before April 1, 2021.”

• The total amount of qualified family leave wages paid to the employee

under the EFMLEA with respect to

leave provided to employees during

the period beginning on January

1, 2021, through March 31, 2021.

In labeling this amount, employers

must use the following, or similar

language: “emergency family leave

wages paid for leave taken after December 31, 2020, and before April 1,

2021.”

•

The total amount of qualified sick

leave wages paid for reasons described in paragraphs (1), (2), or (3)

of section 5102(a) of the EPSLA with

respect to leave provided to employees during the period beginning on

April 1, 2021, through September

30, 2021. In labeling this amount,

employers must use the following, or

similar language: “sick leave wages

subject to the $511 per day limit paid

for leave taken after March 31, 2021,

and before October 1, 2021.”

• The total amount of qualified sick

leave wages paid for reasons described in paragraphs (4), (5), or (6)

of section 5102(a) of the EPSLA with

respect to leave provided to employees during the period beginning on

April 1, 2021, through September

30, 2021. In labeling this amount,

employers must use the following, or

similar language: “sick leave wages

subject to the $200 per day limit paid

for leave taken after March 31, 2021,

and before October 1, 2021.”

• The total amount of qualified family leave wages paid to the employee

under the EFMLEA with respect to

leave provided to employees during

the period beginning on April 1, 2021,

through September 30, 2021. In labeling this amount, employers must use

the following, or similar language:

“emergency family leave wages paid

for leave taken after March 31, 2021,

and before October 1, 2021.”

If a separate statement is provided and

the employee receives a paper Form W-2,

then the statement must be included with

the Form W-2 sent to the employee, and if

the employee receives an electronic Form

W-2, then the statement must be provided

in the same manner and at the same time

as the Form W-2.

If an employer that does not claim

credits under these provisions or an employer that is prohibited from claiming

those credits erroneously reports sick

leave wages or family leave wages to an

employee on Form W-2, Box 14, or on

a separate statement, the employer must

Railroad employers are directed by the instructions to Form W-2 to report certain specified amounts in Box 14. Other employers are directed to use Box 14 “for any other information that

you want to give to your employee. Label each item.” This notice directs all employers to use Box 14 to report qualified sick leave wages and qualified family leave wages, unless a separate

statement is used instead.

Qualified leave wages for leave provided to employees beginning April 1, 2020, through December 31, 2020, should be separately reported on a 2020 Form W-2 or separate statement as

described in Notice 2020-54.

September 27, 2021

442

Bulletin No. 2021–39

either furnish a Form W-2c, Corrected

Wage and Tax Statement, or provide a

corrected statement to the employee correcting the erroneous reporting. The Form

W-2c or corrected statement should be

sent only to the employee. The employer

should not file Form W-2c with the Social

Security Administration solely to correct

the amount in Box 14.

Model language for employee

instructions

As part of the Instructions for Employee, under the instructions for Box 14, for

the Forms W-2, or in a separate statement

sent to the employee, the employer may

provide additional information about

qualified sick leave wages and qualified

family leave wages and explain that these

wages may limit the amount of the qualified sick leave equivalent or qualified

family leave equivalent credits to which

the employee may be entitled with respect

to any self-employment income. The following model language (modified as necessary) may be used. Please note that this

language has been modified from that suggested in Notice 2020-54.

“Included in Box 14, if applicable,

are amounts paid to you as qualified sick

leave wages or qualified family leave

wages under the Families First Coronavirus Response Act and/or sections 3131

and 3132 of the Internal Revenue Code.

Specifically, up to six types of paid qualified sick leave wages or qualified family

leave wages may be reported in Box 14:

• Sick leave wages subject to the $511

per day limit paid for leave taken after

December 31, 2020, and before April

1, 2021, because of care you required.

• Sick leave wages subject to the $200

per day limit paid for leave taken after

December 31, 2020, and before April

1, 2021, because of care you provided

to another.

• Emergency family leave wages paid

for leave taken after December 31,

2020, and before April 1, 2021.

• Sick leave wages subject to the $511

per day limit paid for leave taken after

March 31, 2021, and before October

1, 2021, because of care you required.

• Sick leave wages subject to the $200

per day limit paid for leave taken after March 31, 2021, and before Oc-

Bulletin No. 2021–39

tober 1, 2021, because of care you

provided to another.

• Emergency family leave wages paid

for leave taken after March 31, 2021,

and before October 1, 2021.

If you have self-employment income in

addition to wages paid by your employer,

and you intend to claim any qualified sick

leave or qualified family leave equivalent

credits, you must report the qualified sick

leave or qualified family leave wages on

Form 7202, Credits for Sick Leave and

Family Leave for Certain Self-Employed

Individuals, included with your income

tax return, and may have to reduce (but

not below zero) any qualified sick leave

or qualified family leave equivalent credits by the amount of these qualified leave

wages. If you have self-employment income, you should refer to the instructions

for your individual income tax return for

more information.”

IV. PAPERWORK REDUCTION ACT

Any collection of information associated with this notice has been submitted

to the Office of Management and Budget

for review under OMB control number

1545-0008 in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.

3507(d)). An agency may not conduct or

sponsor and a person is not required to respond to a collection of information unless

it displays a valid OMB control number.

V. DRAFTING INFORMATION

The principal authors of this notice are

Michael Gitlin and Jason Healey. For further information on the provisions of this

notice, please contact Mr. Gitlin or Mr.

Healey at 202-317-6798 (not a toll-free

number).

26 CFR 601.105: Examination of returns and

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

(Also: 842(b))

Rev. Proc. 2021-41

SECTION 1. PURPOSE

This revenue procedure provides the

domestic asset/liability percentages and

443

domestic investment yields needed by foreign life insurance companies and foreign

property and liability insurance companies to compute their minimum effectively connected net investment income under

section 842(b) of the Internal Revenue

Code for taxable years beginning after December 31, 2019. Instructions are provided for computing foreign insurance companies’ liabilities for the estimated tax and

installment payments of estimated tax for

taxable years beginning after December

31, 2019. For more specific guidance regarding the computation of the amount of

net investment income to be included by a

foreign insurance company on its U.S. income tax return, see Notice 89-96, 1989-2

C.B. 417. For the domestic asset/liability

percentage and domestic investment yield,

as well as instructions for computing foreign insurance companies’ liabilities for

estimated tax and installment payments of

estimated tax for taxable years beginning

after December 31, 2018, see Rev. Proc.

2020-41, 2020-40 I.R.B. 793.

SECTION 2. PERCENTAGES AND

YIELDS

.01 DOMESTIC ASSET/LIABILITY

PERCENTAGES FOR 2020. The Secretary determines the domestic asset/liability percentage separately for life insurance

companies and property and liability insurance companies. For the first taxable

year beginning after December 31, 2019,

the relevant domestic asset/liability percentages are:

130.9 percent for foreign life insurance

companies, and

217.3 percent for foreign property and

liability insurance companies.

.02 DOMESTIC INVESTMENT

YIELDS FOR 2020. The Secretary prescribes separate domestic investment

yields for foreign life insurance companies and for foreign property and liability

insurance companies. For the first taxable

year beginning after December 31, 2019,

the relevant domestic investment yields

are:

3.3 percent for foreign life insurance

companies, and

2.6 percent for foreign property and liability insurance companies.

.03 SOURCE OF DATA FOR 2020.

The section 842(b) percentages to be used

September 27, 2021

for the 2020 taxable year are based on tax

return data from the 2018 taxable year.

SECTION 3. ESTIMATED TAXES

To compute estimated tax and the installment payments of estimated tax due

for taxable years beginning after December 31, 2019, a foreign insurance company must compute its estimated tax payments by adding to its income other than

net investment income the greater of (i)

its net investment income as determined

under section 842(b)(5) that is actually

effectively connected with the conduct

of a trade or business within the United

States for the relevant period, or (ii) the

minimum effectively connected net investment income under section 842(b)

September 27, 2021

that would result from using the most

recently available domestic asset/liability percentage and domestic investment

yield. Thus, for installment payments

due after the publication of this revenue

procedure, the domestic asset/liability

percentages and the domestic investment

yields provided in this revenue procedure

must be used to compute the minimum

effectively connected net investment

income. However, if the due date of an

installment is less than 20 days after the

date this revenue procedure is published

in the Internal Revenue Bulletin, the

asset/liability percentages and domestic investment yields provided in Rev.

Proc. 2020-41 may be used to compute

the minimum effectively connected net

investment income for such installment.

444

For further guidance in computing estimated tax, see Notice 89-96.

SECTION 4. EFFECTIVE DATE

This revenue procedure is effective for

taxable years beginning after December

31, 2019.

SECTION 5. DRAFTING

INFORMATION

The principal author of this revenue

procedure is Sheila Ramaswamy of the

Office of Associate Chief Counsel (International). For further information regarding this revenue procedure contact Sheila Ramaswamy at (202) 317-6938 (not a

toll-free number).

Bulletin No. 2021–39

Part IV

Notice of Proposed

Rulemaking

Recapture of Excess

Employment Tax Credits

under the American Relief

Plan Act of 2021

REG-109077-21

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of Proposed Rulemaking by cross-reference to temporary regulations.

SUMMARY: In the Rules and Regulations section of this issue of the Federal

regulations pursuant to the regulatory

authority granted under sections 3131,

3132, and 3134 of the Internal Revenue Code, added by sections 9641 and

9651 of the American Rescue Plan Act

of 2021, to prescribe regulations as may

be necessary for recapturing the benefit

of the employment tax credits provided

under these sections when necessary and

to prevent the avoidance of the purposes

of the limitations under these sections.

These proposed regulations affect businesses and tax-exempt organizations, as

well as certain governmental entities,

that claim the paid sick leave credit and

the paid family leave credit under sections 3131 and 3132, respectively, and

that claim the employee retention credit under section 3134. The text of those

temporary regulations serves as the text

of these proposed regulations.

DATES: Written or electronic comments

and requests for a public hearing must

be received by November 09, 2021. Requests for a public hearing must be submitted as prescribed in the “Comments

and Requests for a Public Hearing”

section.

ADDRESSES: Commenters are strongly

encouraged to submit public comments

Bulletin No. 2021–39

electronically. Submit electronic submissions via the Federal eRulemaking Portal

at www.regulations.gov (indicate IRS and

REG-109077-21) by following the online

instructions for submitting comments.

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

withdrawn. The IRS expects to have limited personnel available to process public

comments that are submitted on paper

through the mail. Until further notice,

any comments submitted on paper will

be considered to the extent practicable.

The Department of the Treasury (Treasury Department) and the IRS will publish for public availability any comment

submitted electronically, and to the extent

practicable on paper, to its public docket.

Send paper submissions to: CC:PA:LPD:PR (REG-109077-21), room 5203,

Internal Revenue Service, PO Box 7604,

Ben Franklin Station, Washington, D.C.

20044.

FOR FURTHER INFORMATION

CONTACT: Concerning the proposed

regulations, NaLee Park at (202) 3176879; concerning submissions of comments and/or requests for a public hearing,

Regina Johnson at (202) 317-5177 (not

toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of

Provisions

Temporary regulations in the Rules

and Regulations section of this issue of

the Federal Register amend the Employment Taxes and Collection of Income at

the Source Regulations (26 CFR part 31)

under sections 3131, 3132, and 3134 of

the Internal Revenue Code (Code) pursuant to the regulatory authority granted

under these sections to prescribe regulations as may be necessary for recapturing

the benefit of the employment tax credits

provided under these sections when necessary and to prevent the avoidance of the

purposes of the limitations under these

sections. Consistent with this authority,

these proposed regulations authorize the

assessment of erroneous refunds of the

445

credits paid under sections 3131, 3132

(including any increases in those credits

under section 3133), and 3134. The text of

those temporary regulations also serves as

the text of these proposed regulations. The

preamble to the temporary regulations explains the amendments.

Special Analyses

The Office of Management and Budget’s Office of Information and Regulatory Analysis has determined that these regulations are not significant and not subject

to review under section 6(b) of Executive

Order 12866.

Pursuant to the Regulatory Flexibility

Act (5 U.S.C. chapter 6), the Secretary certifies that these proposed regulations will

not have a significant economic impact on

a substantial number of small entities because these proposed regulations impose

no compliance burden on any business entities, including small entities. Although

these proposed regulations will apply to

all employers eligible for the credits under

sections 3131, 3132, and 3134, including

small businesses and tax-exempt organizations with fewer than 500 employees as

well as certain governmental employers,

and therefore are likely to affect a substantial number of small entities, the economic

impact will not be significant. These proposed regulations do not affect the employer’s employment tax reporting or the

necessary information to substantiate entitlement to the credits. Rather, these proposed regulations merely implement the

statutory authority granted under sections

3131(g), 3132 (g), 3134(j), and 3134(m)

that authorize the Service to assess, reconcile, and recapture any portion of the

credits erroneously paid or refunded in

excess of the actual amount allowed as if

those amounts were taxes imposed under

section 3111(b) (the Hospital Insurance

tax (Medicare tax)), and so much of the

taxes imposed under section 3221(a) (the

Railroad Retirement Tax Act Tier 1 tax) as

are attributable to the rate in effect under

section 3111(b), as applicable, subject to

assessment and administrative collection

procedures. Notwithstanding this certification, the Treasury Department and the

September 27, 2021

IRS invite comments on any impact these

regulations would have on small entities.

Pursuant to section 7805(f), this notice

of proposed rulemaking has been submitted to the Chief Counsel of the Office of

Advocacy of the Small Business Administration for comment on its impact on small

business.

ternal 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

http://www.irs.gov.

Comments and Requests for Public

Hearing

The principal author of these regulations is NaLee Park, Office of the Associate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes). However, other personnel from

the Treasury Department and the IRS participated in the development of these regulations.

Before these proposed regulations are

adopted as final regulations, consideration

will be given to any comments that are

timely submitted to the IRS as prescribed

in the preamble under the “ADDRESSES” section. The Treasury Department

and the IRS request comments on all aspects of these proposed regulations. Any

electronic comments submitted, and to the

extent practicable any paper comments

submitted, will be made available at www.

regulations.gov or upon request.

A public hearing will be scheduled if

requested in writing by any person who

timely submits electronic or written comments. Requests for a hearing are strongly

encouraged to be submitted electronically.

If a public hearing is scheduled, notice of

the date and time for the public hearing

will be published in the Federal Register. Announcement 2020-4, 2020-17 IRB

1, provides that until further notice, public hearings conducted by the IRS will be

held telephonically. Any telephonic hearing will be made accessible to people with

disabilities.

Statement of Availability of IRS

Documents

IRS notices and other guidance cited

in this preamble are published in the In-

September 27, 2021

Drafting Information

List of Subjects in 26 CFR 31

Employment taxes, Income taxes, Penalties, Pensions, Railroad retirement, Reporting and recordkeeping requirements,

Social security, Unemployment compensation.

Proposed Amendments to the

Regulations

Accordingly, 26 CFR part 31 is proposed to be amended as follows:

PART 31—EMPLOYMENT TAXES

AND COLLECTION OF INCOME

TAX AT SOURCE

Paragraph 1. The authority citation for

part 31 is amended by adding entries for

§§31.3131-1, 31.3132-1, and 31.3134-1 in

numerical order to read in part as follows:

Authority: 26 U.S.C. 7805.

*****

Section 31.3131-1 also issued under 26

U.S.C. 3131(g).

446

ection 31.3132-1 also issued under 26

U.S.C. 3132(g).

Section 31.3134-1 also issued under 26

U.S.C. 3134(m)(3).

*****

Par. 2. Section 31.3131-1 is added to

read as follows:

§31.3131-1 Recapture of credits.

[The text of proposed §31.3131-1 is the

same as the text of §31.3131-1T published

elsewhere in this issue of the Federal

Par. 3. Section 31.3132-1 is added to

read as follows:

§31.3132-1 Recapture of credits.

[The text of proposed §31.3132-1 is the

same as the text of §31.3132-1T published

elsewhere in this issue of the Federal

Par. 4. Section 31.3134-1 is added to

read as follows:

§31.3134-1 Recapture of credits.

[The text of proposed §31.3134-1 is the

same as the text of §31.3134-1T published

elsewhere in this issue of the Federal

Douglas W. O’Donnell,

Deputy Commissioner for Services

and Enforcement.

(Filed by the Office of the Federal Register on September 7, 2021, 8:45 a.m., and published in the issue

of the Federal Register for September 8, 2021, 86

FR 50295)

Bulletin No. 2021–39

Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

effect:

Amplified describes a situation where

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

being extended to apply to a variation of

the fact situation set forth therein. Thus, if

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

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

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

caused, or may cause, some confusion. It

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

Distinguished describes a situation

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

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

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

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

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

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

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

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

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

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

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

Suspended is used in rare situations to

show that the previous published rulings

will not be applied pending some future

action such as the issuance of new or

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

Abbreviations

The following abbreviations in current use

and formerly used will appear in material

published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

Bulletin No. 2021–39

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

September 27, 2021

Numerical Finding List1

Bulletin 2021–39

Announcements:

Treasury Decisions:

9951, 2021-30 I.R.B. 25

9952, 2021-39 I.R.B. 428

9953, 2021-39 I.R.B. 430

2021-12, 2021-31 I.R.B. 267

2021-13, 2021-33 I.R.B. 314

2021-14, 2021-33 I.R.B. 315

Notices:

2021-39, 2021-27 I.R.B. 3

2021-40, 2021-28 I.R.B. 15

2021-41, 2021-29 I.R.B. 17

2021-42, 2021-29 I.R.B. 19

2021-38, 2021-30 I.R.B. 155

2021-44, 2021-31 I.R.B. 166

2021-45, 2021-31 I.R.B. 170

2021-47, 2021-32 I.R.B. 269

2021-46, 2021-33 I.R.B. 303

2021-48, 2021-33 I.R.B. 305

2021-49, 2021-34 I.R.B. 316

2021-43, 2021-35 I.R.B. 332

2021-50, 2021-35 I.R.B. 333

2021-51, 2021-36 I.R.B. 361

2021-52, 2021-38 I.R.B. 381

2021-53, 2021-39 I.R.B. 438

Proposed Regulations:

REG-107705-21, 2021-30 I.R.B. 162

REG-102951-16, 2021-32 I.R.B. 272

REG-109077-21, 2021-39 I.R.B. 445

Revenue Procedures:

2021-28, 2021-27 I.R.B. 5

2021-29, 2021-27 I.R.B. 12

2021-24, 2021-29 I.R.B. 19

2021-14, 2021-30 I.R.B. 158

2021-30, 2021-31 I.R.B. 172

2021-31, 2021-33 I.R.B. 324

2021-33, 2021-34 I.R.B. 327

2021-34, 2021-35 I.R.B. 337

2021-35, 2021-35 I.R.B. 355

2021-36, 2021-35 I.R.B. 357

2021-37, 2021-38 I.R.B. 385

2021-38, 2021-38 I.R.B. 425

2021-39, 2021-38 I.R.B. 426

2021-40, 2021-38 I.R.B. 426

2021-41, 2021-39 I.R.B. 443

Revenue Rulings:

2021-12, 2021-27 I.R.B. 1

2021-13, 2021-30 I.R.B. 152

2021-14, 2021-31 I.R.B. 164

2021-15, 2021-35 I.R.B. 331

2021-16, 2021-36 I.R.B. 359

2021-17, 2021-37 I.R.B. 362

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin

2021–52, dated December 27, 2021.

September 27, 2021

Bulletin No. 2021–39

Finding List of Current Actions on

Previously Published Items1

Bulletin 2021–39

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin

2021–52, dated December 27, 2021.

Bulletin No. 2021–39

iii

September 27, 2021

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue

Bulletins are available at www.irs.gov/irb/.

We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it,

we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page

www.irs.gov) or write to the Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave.

NW, IR-6230 Washington, DC 20224.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.