Bulletin No. 2024–44

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2024–44

October 28, 2024

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE

Rev. Proc. 2024-33, page 1030.

General Rules and Specifications for Substitute Forms and

Schedules

This procedure provides guidelines and general requirements for the development, printing, and approval of the

2024 substitute tax forms. This procedure will be reproduced as the next revision of Publication 1167. Rev. Proc.

2023-28 is superseded.

ADMINISTRATIVE, EXEMPT

ORGANIZATIONS, INCOME TAX

REG-113628-21, page 1074.

This document contains proposed regulations regarding the

Federal tax classification of entities wholly owned by Indian

Tribal governments (Tribes). The proposed regulations would

provide that entities that are wholly owned by Tribes and

organized or incorporated exclusively under the laws of the

Tribes that own them generally are not recognized as separate

entities for Federal tax purposes. The proposed regulations

would also provide that, for purposes of making certain elective payment elections (including determining eligibility for and

the consequences of such elections) for certain energy credits

under the Inflation Reduction Act of 2022, these entities and

certain Tribal corporations chartered by the Department of the

Interior (DOI) are treated as an instrumentality of one or more

Indian Tribal governments or subdivisions thereof. This document also requests comments and provides notice of a public

hearing on the proposed regulations that will be in addition to

Tribal consultation on the proposed regulations.

EMPLOYEE PLANS

Notice 2024-75, page 1026.

This notice expands the list of preventive care benefits

permitted to be provided by a high deductible health plan

Finding Lists begin on page ii.

(HDHP) under section 223(c)(2)(C) of the Internal Revenue

Code without a deductible, or with a deductible below the

applicable minimum deductible for the HDHP, to include

over-the-counter oral contraceptives (including emergency

contraceptives) and male condoms. This notice also clarifies that (1) all types of breast cancer screening for individuals who have not been diagnosed with breast cancer are

treated as preventive care under section 223(c)(2)(C), (2)

continuous glucose monitors for individuals diagnosed with

diabetes are generally treated as preventive care under section 223(c)(2)(C), and (3) the new safe harbor for absence of

a deductible for certain insulin products in section 223(c)(2)

(G) applies without regard to whether the insulin product is

prescribed to treat an individual diagnosed with diabetes or

prescribed for the purpose of preventing the exacerbation

of diabetes or the development of a secondary condition.

EXEMPT ORGANIZATIONS

Announcement 2024-36, page 1073.

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

meet the code section requirements. Contributions made to

the organizations by individual donors are nolonger deductible under IRC 170(b)(1)(A).

INCOME TAX

Notice 2024-71, page 1026.

This notice provides a safe harbor under section 213 of the

Internal Revenue Code for amounts paid for condoms.

T.D. 9994, page 1014.

This document contains final regulations that terminate

the continued application of certain tax provisions arising

from a previous transfer of intangible property to a foreign

corporation when the intangible property is repatriated to

certain United States persons. The final regulations affect

certain United States persons that previously transferred

intangible property to a foreign corporation.

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.

October 28, 2024 

Bulletin No. 2024–44

Part I

Sections 1.367(a)-1, 1.367(d)-1, 1.367(d)-1T, 1.367(e)2, 1.904-4, 1.951A-2, 1.951A-7, and 1.6038B-1

T.D. 9994

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 1

Section 367(d) Rules for

Certain Repatriations of

Intangible Property

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final rule.

SUMMARY: This document contains

final regulations that terminate the continued application of certain tax provisions

arising from a previous transfer of intangible property to a foreign corporation

when the intangible property is repatriated

to certain United States persons. The final

regulations affect certain United States

persons that previously transferred intangible property to a foreign corporation.

DATES: Effective date: These regulations

are effective on October 10, 2024.

Applicability date: For dates of applicability, see §§1.367(d)-1(j)(2), 1.904-(q)(3),

1.951A-7(e), and 1.6038B-1(g)(8).

FOR FURTHER INFORMATION

CONTACT: Concerning the final regulations other than §1.904-4, Brittany N.

Dobi (202) 317-6937; concerning §1.9044, Jeffrey L. Parry, (202) 317-6936 (not

toll-free numbers).

SUPPLEMENTARY INFORMATION:

Authority

This document contains final additions

and amendments to 26 CFR part 1 (final

regulations) under section 367(d) of the

Internal Revenue Code (Code) regarding

October 28, 2024

the termination of the continued application of certain tax provisions arising from

a previous transfer of intangible property

to a foreign corporation when the intangible property is repatriated to certain

United States persons. The primary provisions of the final regulations are issued

pursuant to the express delegations of

authority to the Secretary of the Treasury

(or her delegate) provided under sections

367(d) and 6038B. The provisions of the

final regulations related to foreign branch

income are issued pursuant to the express

delegations of authority provided under

sections 904(d)(2)(J) and (d)(7). The

final regulations are also issued under the

express delegation of authority under section 7805(a).

Background

On May 3, 2023, the Department of

the Treasury (Treasury Department) and

the IRS published a notice of proposed

rulemaking (REG-124064-19) in the Federal Register (88 FR 27819) under section

367 (the proposed regulations). The proposed regulations were intended to address

simple, common fact patterns involving

repatriations of intangible property by

terminating the continued application of

section 367(d) when a transferee foreign

corporation repatriates intangible property

subject to section 367(d) to a qualified

domestic person when certain reporting

requirements are satisfied. The proposed

regulations also included a rule coordinating the application of section 367(d) and

the provisions in §1.904-4(f)(2)(vi)(D) that

apply the principles of section 367(d) to

determine the appropriate amount of gross

income attributable to a foreign branch. A

“repatriation” denotes a subsequent transfer of intangible property to the U.S. transferor or a United States person (U.S. person) related to the U.S. transferor.

Summary of Comments and

Explanation of Revisions

I. In General

Five comments were submitted on the

proposed regulations, which are available

at https://www.regulations.gov or upon

1014

request. No public hearing on the proposed regulations was requested or held.

This Summary of Comments and

Explanation of Revisions describes those

comments and the revisions made in

response to those comments. The comments also made various requests for

future guidance, which the Treasury

Department and the IRS will consider

as part of a potential future rulemaking

addressing, among other things, general

issues under section 367(d).

II. Definition of Qualified Domestic

Person

A. In general

To terminate the continued application

of section 367(d) upon a repatriation of

intangible property, the proposed regulations required the recipient of the intangible property to be a qualified domestic

person. The proposed regulations defined

a qualified domestic person by reference

to an “initial U.S. transferor,” a “qualified

successor,” or a U.S. person that is either

an individual or “qualified corporation”

related to either the initial U.S. transferor or qualified successor. See proposed

§1.367(d)-1(f)(4)(iii).

As the preamble to the proposed regulations explained in part I.C of the Explanation of Provisions, the definition of

qualified domestic person was based on

the principle that it is generally appropriate to terminate the continued application

of section 367(d) only when all the income

produced by the intangible property during

its useful life, and all gain recognized on

a disposition of the intangible property,

will be subject to current tax in the United

States as to the qualified domestic person

while that person holds the property. See

88 FR 27819, 27824. The proposed regulations further described how, in the case

of a repatriation to an initial U.S. transferor, the repatriation restored the circumstances that existed at the time of the original section 367(d) transfer. See Id.

B. Partnerships

The proposed regulations neither

treated a domestic partnership as a qual-

Bulletin No. 2024–44

ified domestic person, nor adopted an

approach that would treat a partnership

as an aggregate of its partners (aggregate

approach) for purposes of determining

qualified domestic person status. One comment suggested that the Treasury Department and the IRS modify the definition

of qualified domestic person to include

partnerships in which all of the partners

in the partnership would themselves be

qualified domestic persons, or partnerships that made the original outbound

transfer of the intangible property subject

to section 367(d) when there is substantial

continuity of ownership of that partnership during the period beginning on the

date of the initial section 367(d) transfer

and ending on the date of the repatriation

of the intangible property. As part of the

modification, the comment also described

various approaches for addressing the

concerns identified in the proposed regulations regarding, for example, the potential for post-repatriation changes to partnership allocations or liquidation rights

to frustrate the purposes of the proposed

regulations if a partnership, or a partner in

the partnership, were permitted as a qualified domestic person in certain cases. See

88 FR 27819, 27824 for a discussion of

those concerns. Specifically, the comment

suggested that the final regulations, in

adopting the modification, could limit its

application by requiring a specific period

after the repatriation during which the

ownership or interests in the partnership

could not change. Additionally, the comment suggested that, to provide flexibility while protecting against the concerns

outlined in the proposed regulations, the

final regulations could allow the Commissioner to exercise discretion at a taxpayer’s request to determine that a post-distribution change in the ownership of the

partnership, or in the economic rights of

the partners with respect to the intangible property, would not taint the partnership’s status as a qualified domestic person. Finally, the comment also described

more general, long-standing issues under

section 367(d) related to the treatment

of partnerships within the section 367(d)

regime, and ultimately suggested that resolution of those issues should not impede

finalizing the proposed regulations.

The final regulations do not adopt this

comment and therefore adopt the defini-

Bulletin No. 2024–44

tion of qualified domestic person from the

proposed regulations without change. The

issues identified by the comment, along

with potential solutions to those issues,

were acknowledged in the preamble to the

proposed regulations, and the Treasury

Department and the IRS have determined

that the approach outlined in the proposed

regulations continues to strike the appropriate balance between implementing the

general purpose and scope of the proposed

regulations (ensuring that only appropriate repatriations terminate the continued

application of section 367(d)) and concerns regarding administrability and compliance. The solutions described in the

comment, like the alternatives described

in the proposed regulations, would not

achieve this balance because the solutions

would either expand the scope of the proposed regulations in an inappropriate manner (that is, by expanding the basic principle upon which the proposed regulations

rests), or the solutions would, given the

relatively narrow scope of the proposed

regulations, impose an undue burden on

taxpayers and the IRS. See 88 FR 27819,

27824 (describing, with respect to the latter, an approach modeled off of the rules

in §§1.367(a)-3 and 1.367(a)-8 regarding

gain recognition agreements and noting

that approach would be “unworkable due

to the compliance and administrative burden.”).

Another comment described general, long-standing issues under section 367(d) related to the treatment of

partnerships. These issues were generally identified in the proposed regulations. See id. For example, the comment

pointed to §§1.367(a)-1T(c)(3)(i) and

1.367(d)-1T(a), which apply an aggregate approach upon an initial outbound

transfer. The comment did not include any

explicit suggestion for change regarding

the proposed regulations, but the Treasury

Department and the IRS may consider

these issues as part of future rulemaking.

C. S corporations

As described in part I.A of this Summary of Comments and Explanation of

Revisions, the proposed regulations limited qualified domestic person status to

“qualified corporations” in the case of

a qualified successor or in the case of a

1015

U.S. person related to either the initial

U.S. transferor or qualified successor. See

proposed §1.367(d)-1(f)(4)(iii). A qualified corporation, in relevant part, did not

include an S corporation (as defined in

section 1361(a)). See Id.

One comment suggested that the final

regulations allow S corporations as qualified corporations. The comment noted that

the shareholders of an S corporation must

generally be U.S. individuals subject to

U.S. taxation, which ensures that income

attributable to intangible property held by

an S corporation would be subject to U.S.

taxation (though the comment noted that

the limitation is not absolute, as certain

plans described in section 401(a) may be

shareholders of an S corporation).

Section 512(e)(3) excludes a non-individual shareholder that is an employee

stock ownership plan (ESOP) (as defined

in section 4975(e)(7) from the scope of

section 512(e)(1), which provides that, in

the case of certain non-individual shareholders of the S corporation, any item of

income, gain, loss, or deduction, and any

gain or loss on the disposition of stock in

the S corporation, is taken into account by

such non-individual shareholders as unrelated business taxable income (UBTI). As

a result, the pro rata share of an S corporation’s items of income taken into account

by an ESOP shareholder is not subject to

current taxation as UBTI. As noted in part

I.A of this Summary of Comments and

Explanation of Revisions, a principle for

the definition of qualified domestic person is that termination of the continued

application of section 367(d) should occur

only when all the income produced by the

intangible property, as well as gain recognized on a disposition of the intangible

property, is subject to current tax in the

United States. In the case of an S corporation, that result is not guaranteed.

The final regulations, therefore, do not

adopt this comment and retain the definition of qualified domestic person from the

proposed regulations without change. The

Treasury Department and the IRS considered alternative approaches to address this

comment – such as an aggregate approach,

with prohibitions applicable to S corporation shareholders that are ESOPs – but

determined that such approaches were

effectively unworkable due to the compliance and administrative burden discussed

October 28, 2024

in part II.B of this Summary of Comment

and Explanation of Revisions in connection with the comment on partnerships.

III. Qualified Domestic Person’s Adjusted

Basis in Repatriated Intangible Property

Proposed §1.367(d)-1(f)(4)(iv) provided rules regarding a qualified domestic

person’s adjusted basis in the intangible

property it receives in a repatriation. The

proposed regulations described how these

rules were intended to achieve an appropriate result regarding a qualified domestic person’s adjusted basis in intangible

property upon a repatriation, but that general rules regarding adjusted basis under

section 367(d) (and not in the context of

a repatriation of intangible property to

a qualified domestic person) would be

addressed in future rulemaking. See 88 FR

27819, 27824, and 27825.

One comment described how existing

uncertainty regarding the treatment of

adjusted basis of intangible property subject to section 367(d) may be implicated

when that intangible property is repatriated. The comment noted that any solution would necessarily represent a broad

solution to existing section 367(d) issues,

instead of one limited to the proposed regulations, so the comment recommended

the Treasury Department and the IRS

address this issue in future rulemaking.

Another comment suggested that, when

a transferee foreign corporation incurs

expenditures with respect to repatriated

intangible property after the initial outbound transfer, proposed §1.367(d)-1(f)

(4)(iv) should be modified to allow a qualified domestic person’s adjusted basis in

repatriated intangible property to reflect

those expenditures, reduced by any attributable amortization allowed or allowable

to the transferee foreign corporation.

As noted in the proposed regulations,

proposed §1.367(d)-1(f)(4)(iv) operated

“in a manner intended to reach an appropriate result regarding a qualified domestic person’s basis in repatriated intangible property” until future rulemaking is

issued that can address general basis rules

under section 367(d). See id. The Treasury

Department and the IRS, in agreement

with the first comment, continue to believe

that any resolution of these issues necessarily implicates broader issues under

October 28, 2024

section 367(d) and, as such, is beyond

the scope of this rulemaking. Proposed

§1.367(d)-1(f)(4)(iv) is therefore finalized without change, though the Treasury

Department and the IRS may revisit these

issues as part of future rulemaking.

IV. Required Adjustments Related to an

Annual Section 367(d) Inclusion

The proposed regulations provided that

the deemed annual payment under section

367(d) by the transferee foreign corporation is treated as an allowable deduction

that must be allocated and apportioned

to the transferee foreign corporation’s

classes of gross income in accordance with

§§1.882-4(b)(1), 1.954-1(c), and 1.9601(c) and (d) (as applicable). See proposed

§1.367(d)-1(c)(2)(ii) and (e)(2)(ii). These

provisions, described as “minor clarifications” in the preamble to the proposed

regulations, clarified “that the allowable

deduction is allocated and apportioned

under the provisions cited in the previous sentence potentially to any class (or

classes) of gross income (as appropriate)

rather than solely to gross income subject

to subpart F in all circumstances.” See 88

FR 27819, 27822, and 27825.

One comment suggested that the

proposed regulations were unclear as

to whether the allowable deduction

described in proposed §1.367(d)-1(c)(2)

(ii) and (e)(2)(ii) was limited to the listed

provisions (§§1.882-4(b)(1), 1.954-1(c),

and 1.960-1(c) and (d)) or whether such

deduction was more generally available

(for example, as a deduction under section 162). The comment posited that the

latter approach was more appropriate and

requested that the final regulations clarify that the allowable deduction may be

allowed as a deduction under section 162.

In support, the comment described how,

in the case of certain transfers of intangible property to a U.S. person that is not

a qualified domestic person, “excessive

U.S. taxation” could result if the allowable deduction were limited to the listed

provisions, which are provisions relevant

to determinations with respect to foreign

corporations.

The final regulations do not adopt this

comment. The proposed regulations terminated the continued application of section 367(d) upon certain, rather than all,

1016

subsequent transfers of intangible property to a U.S. person (that is, upon a repatriation to a qualified domestic person if

certain reporting requirements are met).

See 88 FR 27819,27821, and 27822. The

comment, if adopted, would effectively

terminate the continued application of

section 367(d) by, for example, providing

a deduction under section 162 corresponding to each annual inclusion under section

367(d). Indeed, as the proposed regulations explained, the solution contained in

the proposed regulations was premised, in

relevant part, on the fact that “the deemed

(substituted) transferee foreign corporation is not allowed a deduction that could

reduce taxable income, even though that

deemed transferee foreign corporation is

the U.S. transferor or a related U.S. person.” See id. Thus, a fundamental premise

underlying the proposed regulations, and

the existing section 367(d) regulations,

is that an allowable deduction, instead

of being generally available, is limited

to the provisions listed in the proposed

regulations (§§1.882-4(b)(1), 1.954-1(c),

and 1.960-1(c) and (d)). To adopt the

comment’s suggestion would therefore be

inconsistent with the proposed regulations

and section 367(d) generally.

The comment also suggested that,

when a subsequent transfer of intangible

property results in treating the same entity

as U.S. transferor and transferee foreign

corporation under the section 367(d)

regulations, the continued application of

section 367(d) should terminate by reason of that convergence. As support, the

comment cited to a case and guidance

involving circumstances in which a taxpayer acquired its own debt. The Treasury

Department and the IRS do not agree with

this suggestion for the reasons described

in the preceding paragraph, and references

to cases or guidance involving a taxpayer

acquiring its own debt are not instructive

for, nor consistent with, the statutory and

regulatory framework of section 367(d).

Section 367(d) relies upon a statutory

fiction that imposes a notional regime

with a prescribed payor and payee, and

the regulations describe cases in which a

successor succeeds to the notional payment on both sides of the construct. For

example, §1.367(d)-1T(e)(1) provides

that a related person can succeed an initial U.S. transferor for purposes of includ-

Bulletin No. 2024–44

ing income under section 367(d), and

§1.367(d)-1T(f)(3) provides that a related

person can succeed to the payor side of

the deemed payment fiction. Where intangible property is returned to the original

U.S. transferor, that U.S. transferor is also

the successor transferee under the statutory and regulatory framework of section

367(d), and, under the express language

of §1.367(d)-1T(f)(3), the annual inclusion under section 367(d) continues. This

is precisely the issue the proposed regulations were intended to address, and new

regulations providing a rule for terminating an annual inclusion stream would have

been largely unnecessary if the deemed

payment construct collapsed automatically in such cases. Instead, this Treasury

Decision provides the exclusive means by

which the continued application of section

367(d) may be terminated by reason of a

subsequent transfer of intangible property

to a U.S. person.

V. Multiple Transfers Before Repatriation

One comment suggested changes to

the proposed regulations to accommodate repatriations preceded by certain

transfers of intangible property subject

to section 367(d) between related foreign

corporations. To illustrate this suggestion,

the comment posited an example pursuant to which a repatriation was first preceded by a distribution under section 311

of the intangible property (first section

311 distribution) from one CFC (original

transferee foreign corporation, or TFC) to

another CFC (successor TFC). The successor TFC then distributes the intangible

property under section 311 to a qualified

domestic person (second 311 distribution)

in a transaction with respect to which the

successor TFC did not recognize gain

or loss (under the theory that successor

TFC’s adjusted basis in the intangible

property equaled the intangible property’s

fair market value).

On those modified facts, the comment

described how the original TFC could

recognize gain subject to U.S. taxation

by reason of the first section 311 distribution (not under section 367(d), but rather

under, for example, section 951A(a) as to

a United States shareholder), and the qualified domestic person could recognize that

same amount of gain upon the repatriation

Bulletin No. 2024–44

after the second 311 distribution under the

proposed regulations (by reason of the

application of the gain recognition rule in

proposed §1.367(d)-1(f)(4)(ii)(B), under

which gain is determined by reference

to the U.S. transferor’s former adjusted

basis in the property). And, because the

successor TFC is the TFC at the time of

the repatriation (that is, at the time of

the second section 311 distribution), the

required adjustments described in proposed §1.367(d)-1(f)(2) would apply by

reference to the successor TFC, which did

not recognize gain or loss on the repatriation under the theory described above,

rather than to the original TFC, which

recognized gain on the first section 311

distribution. To address this concern, the

comment suggested modifying the proposed regulations in a manner that would

effectively negate a prior transfer that was

subject to tax under a separate regime (for

example, section 951A).

The example provided in the comment

highlights significant potential interactions

between the operation of section 367(d)

and other generally operative provisions

in the Code and regulations. For example,

§1.367(d)-1T(f)(3) explicitly provides

that the ongoing annual royalty construct

is unaffected by the taxable distribution of

intangible property from the original TFC

to the successor TFC in the first section

311 distribution, and §1.367(d)-1T(d)(1)

and (f)(1) are clear that the amount of

income recognized by the U.S. transferor

upon a later indirect or direct disposition

of intangible property to an unrelated person is determined using the transferor’s

original basis in the property. However,

the distribution of the intangible property

from the original TFC to the successor

TFC described in the comment’s example

might result in taxable gain to the original TFC that would be treated as tested

income under section 951A, notwithstanding the lack of an acceleration of

income under section 367(d). Similarly,

the successor TFC might take the intangible property with a fair market value basis

under section 301(d), even though that

increased basis would not be available to

reduce gain under section 367(d). Essentially, the example posited in the comment

highlights that it may be possible to recognize income under both sections 951A

and 367(d) with respect to the same prop-

1017

erty in some fact patterns where separate

transactions occur in separate foreign corporations, notwithstanding that that result

would not occur in cases where the property is not transferred among multiple foreign corporations. Coordinating potential

disparities between income recognition

under section 367(d) as compared to other

generally applicable provisions of the

Code, and potential disparities in tax basis

for purposes of section 367(d) as compared

to adjusted basis for other purposes, is

beyond the scope of this rulemaking. The

request for additional guidance addressing

multiple related transfers, therefore, is not

adopted.

VI. Reporting

As a condition for terminating the

application of section 367(d) with respect

to repatriated intangible property, proposed §1.367(d)-1(f)(4)(i)(B) would

have required a U.S. transferor to provide

the information described in proposed

§1.6038B-1(d)(2)(iv). If a U.S. transferor failed to provide that information,

the repatriation was subject to proposed

§1.367(d)-1(f)(3) such that the section

367(d) regulations, including the requirement to take an annual inclusion into

account over the useful life of the intangible property, continued to apply. However,

a U.S. transferor was eligible for relief

under the proposed regulations if proposed §1.367(d)-1(f)(4)(i)(B)(2) would

have applied to the subsequent transfer

of intangible property but for the fact that

the required information was not provided

and the U.S. transferor, upon becoming

aware of the failure, promptly provided

the required information, explained its

failure to comply, and met certain other

requirements (if applicable).

One comment requested clarifications

of the reporting and relief provisions.

First, the comment requested that the final

regulations clarify whether relief for a

failure to comply is, in relevant part, also

conditioned on the U.S. transferor timely

filing one or more amended returns for

the taxable year in which the subsequent

transfer occurred and succeeding years,

and, if the U.S. transferor is under examination when an amended return is filed,

providing a copy of the amended return(s)

to the IRS personnel conducting the exam-

October 28, 2024

ination. The Treasury Department and the

IRS adopt this comment by revising of

§1.367(d)-1(f)(5) to clarify that the relief

for a failure to comply is conditioned upon

the requirements listed in the previous

sentence (if applicable).

The comment also requested that the

Treasury Department and the IRS consider prescribing in the future a particular

form for filing the required information

under proposed §1.367(d)-1(f)(5). The

Treasury Department and the IRS will

consider prescribing a particular form as

part of future improvements to reporting

with respect to section 367(d) generally.

However, to provide taxpayers with additional guidance on the manner for providing a U.S. transferor’s explanation for

its failure to comply to the IRS, the final

regulations provide an eFax number for

such purpose (and, if a taxable year of

the U.S. transferor is under examination,

that information should instead be provided to the IRS personnel conducting

the examination).

Finally, the comment suggested clarifications or modifications to the requirements in proposed §1.367(d)-1(f)(5) that

a U.S. transferor “promptly” address

its failure to file and to the way the U.S.

transferor provides the remedial information (that is, to the Director of Field Operations, Cross Border Activities Practice

Area of Large Business & International,

or any successor to that role). The comment suggested that “promptly” does not

provide sufficient guidance to taxpayers (the comment requested a prescribed

period) and the comment asserted that it

is unusual for regulations to require a taxpayer to provide information directly to a

specified official within the IRS. The final

regulations do not adopt these suggestions.

The Treasury Department and the IRS

believe that “promptly” requiring the U.S.

transferor to address its failure to comply,

rather than providing a specific period,

allows flexibility so that the relief may

apply as appropriate to a taxpayer’s particular facts and circumstances. Additionally,

proposed §1.367(d)-1(f)(5) is modeled

on similar relief provisions in other contexts (for example, §§1.367(a)-8(p) and

1.721(c)-6(f)).

The Treasury Department and the

IRS clarify proposed §1.367(d)-1(f)(5)

by striking the last clause that appeared

October 28, 2024

in the second sentence. That sentence

described the consequences of a failure

to comply, namely the continued application of the annual inclusion stream

pursuant to proposed §1.367(d)-1(f)(3)

and application of the gain recognition

rule of proposed §1.367(d)-1(f)(4)(i)

(A). If the failure to comply is remedied,

the rules of the proposed regulations are

treated as satisfied as of the date of the

repatriation (so, the repatriation terminates the continued application of section

367(d) and the U.S. transferor, if applicable, would take a partial annual inclusion into account pursuant to proposed

§1.367(d)-1(f)(4)(i)(B)(1)).

VII. Clarification to Example 3

Proposed

§1.367(d)-1(f)(6)(ii)(C)

(Example 3) illustrated the determination

of a qualified domestic person’s adjusted

basis in intangible property under the

proposed regulations. In that example,

TFC transferred the intangible property

to USS (a qualified domestic person as

defined in proposed §1.367(d)-1(f)(4)

(iii)) in an exchange described in section

351(b) pursuant to which TFC recognized

$50x of gain and USP recognized $50x

of gain under proposed §1.367(d)-1(f)

(4)(i)(A). The analysis under proposed

§1.367(d)-1(f)(6)(ii)(C)(2) was, and

remains in this Treasury decision, limited

to the determination of USS’s adjusted

basis in the intangible property.

One comment requested, in relevant

part, that the final regulations clarify that

TFC’s earnings and profits and gross

income arising by reason of the repatriation are reduced by the amount of

gain recognized by USP under proposed

§1.367(d)-1(f)(4)(i)(A) ($50x). The Treasury and the IRS adopt the comment by

clarifying in the facts of the example

that, under §1.367(d)-1(f)(2)(i), TFC

will reduce its earnings and profits and

gross income by $50x, the amount arising by reason of the repatriation and the

amount of gain recognized by USP under

§1.367(d)-1(f)(4)(i)(A).

VIII. Section 904(d) Foreign Branch

Income Rules

Proposed

§1.904-4(f)(2)(vi)(D)(4)

described the application of the prin-

1018

ciples of section 367(d) to subsequent

transfers of intangible property in determining adjustments to the amount of

gross income attributable to a foreign

branch under §1.904-4(f)(2)(vi)(D).

Specifically, the proposed regulations

would have provided that each transfer

to which §1.904-4(f)(2)(vi)(D) applies is

considered independently from any other

preceding or subsequent transfer of the

intangible property, with the result that

the subsequent transfer rules in the regulations under section 367(d), including

the rules for repatriations provided in

the proposed regulations, do not apply

in determining gross income attributable

to a foreign branch under §1.904-4(f)(2)

(vi)(D). See 88 FR 27819, 27825, and

27826.

One comment requested that the Treasury Department and the IRS finalize the

provisions of the proposed regulations

without finalizing proposed §1.904-4(f)

(2)(vi)(D)(4). The comment suggested

that such an approach could allow for further consideration of ways to simplify the

application of section 367(d) principles in

§1.904-4(f)(2)(vi)(D). The comment suggested that instead of finalizing proposed

§1.904-4(f)(2)(vi)(D)(4), that provision

could be adopted as a temporary regulation, or alternatively, this preamble could

state that, until the implementation of final

regulations addressing this issue, the Treasury Department and the IRS intend that

rules related to section 367(d) and subsequent transfer will not apply for purposes

of section 904(d).

A broader reconsideration of the

application of section 367(d) principles in §1.904-4(f)(2)(vi)(D) is beyond

the scope of these final regulations. The

Treasury Department and the IRS believe

it is necessary to finalize proposed

§1.904-4(f)(2)(vi)(D)(4) to ensure the

proper application of the foreign branch

income rules under §1.904-4(f)(2)(vi)

(D) as those rules currently stand. This is

because, as explained in the preamble to

the proposed regulations, while §1.9044(f)(2)(vi)(D) relies on the principles of

section 367(d) to determine the appropriate amount of gross income that is attributable to a foreign branch, the purposes

of section 367(d) and §1.904-4(f)(2)

(vi)(D) are different. See 88 FR 27819,

27825 (providing that, with respect to

Bulletin No. 2024–44

§1.904-4(f)(2)(vi)(D), “[i]f there are

multiple transfers of an item of intangible

property over time, each transfer must be

separately evaluated and could result in

differing amounts of deemed annual payments depending on any interim changes

in the value of the intangible property

between successive transfers…these

proposed regulations provide that each

successive transfer to which §1.904-4(f)

(2)(vi)(D) applies is considered independently from any other preceding or

subsequent transfers.”). Accordingly, the

final regulations do not adopt this comment and proposed §1.904-4(f)(2)(vi)(D)

is finalized without change.

IX. Applicability Dates

The proposed regulations were generally proposed to apply to subsequent dispositions of intangible property occurring

on or after the date of publication of the

Treasury decision adopting these rules as

final regulations in the Federal Register.

See proposed §§1.367(d)-1(j)(2), 1.9044(q)(3), and 1.6038B-1(g). Comments

recommended that the proposed regulations apply retroactively.

The Treasury Department and the IRS

generally consider several factors when

evaluating whether a rule should apply

retroactively on an elective basis. For

example, and as relevant to the proposed

regulations, retroactive application may

be more compelling where the regulations

are issued with respect to new legislation,

or where retroactive application is necessary to achieve certain policy objectives.

The Treasury Department and the IRS

also evaluate the additional administrative

burden likely to result from retroactive

application. Finally, where the regulations represent a change in existing regulations, consideration is given to whether

retroactive application could advantage

certain taxpayers over similarly situated

taxpayers, based on whether the relevant

taxable year remains open for the taxpayer

to amend their return to take advantage of

the change. The Treasury Department and

the IRS have determined that, on balance,

these factors, though not representing an

exhaustive list of factors, weigh against

permitting the retroactive application of

the final regulations and therefore do not

adopt these comments.

Bulletin No. 2024–44

Special Analyses

I. Regulatory Planning and Review –

Economic Analysis

Pursuant to the Memorandum of

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

9, 2023), tax regulatory actions issued by

the IRS are not subject to the requirements

of section 6 of Executive Order 12866, as

amended. Therefore, a regulatory impact

assessment is not required.

II. Paperwork Reduction Act

The collection of information contained

in these regulations has been reviewed and

approved by the Office of Management and

Budget in accordance with the Paperwork

Reduction Act of 1995 (44 U.S.C. 3507(d))

under control number 1545–0026. The collection of information in these final regulations is in §1.6038B-1(d)(2)(iv). This information is necessary to ensure that proposed

§1.367(d)-1(f)(4) is appropriately applied

to the subsequent transfer. The collection

of information is required to comply with

section 367(d). The likely respondents are

domestic corporations. Burdens associated

with these requirements will be reflected in

the burden for Form 926, Return by a U.S.

Transferor of Property to a Foreign Corporation.

Estimated total annual reporting burden is 1,601 hours.

Estimated average annual burden per

respondent is 2.4 hours.

Estimated number of respondents is

667.

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 control number assigned by

the Office of Management and Budget.

Books or records relating to a collection

of information must be retained if their

contents may become material in the

administration of any Internal Revenue

law. Generally, tax returns and tax return

information are confidential, as required

by section 6103.

III. Regulatory Flexibility Act

Pursuant to the Regulatory Flexibility

Act (5 U.S.C. chapter 6), it is hereby cer-

1019

tified that these final regulations will not

have a significant economic impact on a

substantial number of small entities.

The Treasury Department and the IRS

do not have data readily available to assess

the number of small entities potentially

affected by the final regulations. However,

entities potentially affected by these proposed regulations are generally not small

entities, because of the resources and

investment necessary to develop intangible property and, once so developed,

transfer the intangible property to a foreign corporation. Therefore, the Treasury

Department and the IRS have determined

that there will not be a substantial number

of domestic small entities affected by the

final regulations. Consequently, the Treasury Department and the IRS certify that

the final regulations will not have a significant economic impact on a substantial

number of small entities.

IV. Section 7805(f)

Pursuant to section 7805(f) of the Code,

the proposed regulations (REG-11383922) preceding these final regulations were

submitted to the Chief Counsel for Advocacy of the Small Business Administration

for comment on its impact on small business, and no comments were received.

V. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates

Reform Act of 1995 requires that agencies

assess anticipated costs and benefits and

take certain other actions before issuing a

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

any one year by a State, local, or Tribal

government, in the aggregate, or by the

private sector, of $100 million in 1995

dollars, updated annually for inflation.

These final regulations do not include any

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

that threshold.

VI. Executive Order 13132: Federalism

Executive Order 13132 (entitled

“Federalism”) prohibits an agency from

publishing any rule that has federalism

implications if the rule either imposes sub-

October 28, 2024

stantial, direct compliance costs on State

and local governments, and is not required

by statute, or preempts State law, unless

the agency meets the consultation and

funding requirements of section 6 of the

Executive order. These final regulations

do not have federalism implications and

do not impose substantial direct compliance costs on State and local governments

or preempt State law within the meaning

of the Executive order.

Drafting Information

The principal author of these regulations is Brittany N. Dobi, of the Office of

Associate Chief Counsel (International).

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

in their development.

List of Subjects in 26 CFR Part 1

Income Taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the

Regulations

Accordingly, the Treasury Department

and the IRS amend 26 CFR part 1 as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 continues to read in part as follows:

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

*****

Section 1.367(d)-1 also issued under

26 U.S.C. 367(d).

*****

§1.367(a)-1 [Amended]

Par. 2. Section 1.367(a)-1 is amended

by removing the language “section 936(h)

(3)(B)” in paragraphs (d)(5) and (6) and

adding the language “section 367(d)(4)”

in its place.

Par. 3. Section 1.367(d)-1 is amended

by:

a. Removing reserved paragraphs (c)

(1) through (2).

b. Adding paragraph (c) heading and

paragraphs (c)(1) and (2).

October 28, 2024

c. Removing reserved paragraphs (c)

(4) through (g)(2) (introductory text).

d. Adding paragraphs (c)(4) and (d)

through (f).

e. Removing paragraph (g)(2)(i),

reserved paragraphs (g)(2)(ii) through (iii)

(D), paragraph (g)(2)(iii)(E), and reserved

paragraph (g)(2)(iii) undesignated concluding paragraph.

f. Adding paragraph (g) heading and

paragraphs (g)(1) and (2).

g. Removing reserved paragraphs (g)

(4) through (i).

h. Adding paragraphs (g)(4) through

(6), (h), and (i).

i. Revising paragraph (j).

The additions and revision read as follows:

§1.367(d)-1 Transfers of intangible

property to foreign corporations.

*****

(c) Deemed payments upon transfer of

intangible property to foreign corporation—(1) In general. For further guidance,

see §1.367(d)-1T(c)(1).

(2) Required adjustments. For further

guidance, see §1.367(d)-1T(c)(2) introductory text and (c)(2)(i).

(i) [Reserved]

(ii) The deemed payment is treated as

an allowable deduction (whether or not

that amount is paid) of the transferee foreign corporation properly allocated and

apportioned to the appropriate classes of

gross income in accordance with §§1.8824(b)(1), 1.951A-2(c)(3), 1.954-1(c), and

1.960-1(c) and(d), as applicable.

*****

(4) Blocked income. For further guidance, see §1.367(d)-1T(c)(4).

(d) Subsequent transfer of stock of

transferee corporation to unrelated person.

For further guidance, see §1.367(d)-1T(d).

(e) Subsequent transfer of stock of

transferee foreign corporation to related

person—(1) Transfer to related U.S.

person treated as disposition of intangible property. For further guidance, see

§1.367(d)-1T(e)(1).

(2) Required adjustments. For further

guidance, see §1.367(d)-1T(e)(2) introductory text and (e)(2)(i).

(i) [Reserved]

(ii) The deemed payment is treated as

an allowable deduction (whether or not

1020

that amount is paid) of the transferee foreign corporation properly allocated and

apportioned to the appropriate classes of

gross income in accordance with §§1.8824(b)(1), 1.951A-2(c)(3), 1.954-1(c), and

1.960-1(c) and(d), as applicable.

(iii) For further guidance, see

§1.367(d)-1T(e)(2)(iii) through (e)(4).

(iv) [Reserved]

(3) through (4) [Reserved]

(f) Subsequent disposition of transferred intangible property by transferee

foreign corporation—(1) In general. For

further guidance, see §1.367(d)-1T(f)(1).

(2) Required adjustments. If a U.S.

transferor is required to recognize gain

under paragraph (f)(4)(i)(A) of this section

or §1.367(d)-1T(f)(1), then, in addition to

the adjustments described in paragraph (c)

(2)(ii) of this section and §1.367(d)-1T(c)

(2) with respect to the deemed payment

described in §1.367(d)-1T(f)(1)(ii)—

(i) For purposes of chapter 1 of the

Code, the transferee foreign corporation

reduces (but not below zero) the portion of

its earnings and profits and gross income

arising by reason of the subsequent disposition of the intangible property by the

amount of gain recognized by the U.S.

transferor under paragraph (f)(4)(i)(A) of

this section or §1.367(d)-1T(f)(1); and

(ii) The U.S. transferor may establish

an account receivable from the transferee

foreign corporation equal to the amount of

gain recognized under paragraph (f)(4)(i)

(A) of this section or §1.367(d)-1T(f)(1)

in accordance with §1.367(d)-1T(g)(1).

(3) Subsequent transfer of intangible property to related person. Except as

provided in paragraph (f)(4)(i)(B) of this

section, a U.S. person’s requirement to

recognize income under §1.367(d)-1T(c)

or (e) is not affected by the transferee

foreign corporation’s subsequent disposition of the transferred intangible property

to a related person. For purposes of any

required adjustments, and of any accounts

receivable created under §1.367(d)-1T(g)

(1), the related person that receives the

intangible property is treated as the transferee foreign corporation.

(4) Subsequent transfer of intangible

property to qualified domestic person—(i)

In general. Except as provided in paragraph (f)(4)(v) of this section, if a U.S.

person transfers intangible property subject to section 367(d) and the rules of this

Bulletin No. 2024–44

section and §1.367(d)-1T to a foreign corporation in an exchange described in section 351 or 361 and, within the useful life

of the intangible property, that transferee

foreign corporation subsequently disposes

of the intangible property to a qualified

domestic person, then—

(A) The U.S. transferor of the intangible property (or any person treated as

such pursuant to §1.367(d)-1T(e)(1)) is

required to recognize gain, as applicable,

equal to the amount described in paragraph (f)(4)(ii) of this section; and

(B) If the U.S. transferor provides the

information described in §1.6038B-1(d)

(2)(iv), then—

(1) The U.S. transferor is required to

recognize a deemed payment as provided

in §1.367(d)-1T(f)(1)(ii); and

(2) The intangible property is no longer

subject to section 367(d), this section, or

§1.367(d)-1T after applying paragraphs

(f)(4)(i)(A) and (f)(4)(i)(B)(1) of this section.

(ii) Gain recognition for U.S. transferor. The amount of gain a U.S. transferor must recognize under paragraph (f)

(4)(i)(A) of this section is determined as

follows—

(A) If the intangible property is transferred basis property (as defined in section 7701(a)(43)) by reason of the subsequent disposition (determined without

regard to section 367(d), this section,

and §1.367(d)-1T), the amount of gain,

if any, the transferee foreign corporation

would recognize if its adjusted basis in the

intangible property were equal to the U.S.

transferor’s former adjusted basis in the

property; or

(B) If the intangible property is not

transferred basis property by reason of the

subsequent disposition (determined without regard to section 367(d), this section,

and §1.367(d)-1T), the excess, if any, of

the fair market value of the intangible

property on the date of the subsequent disposition over the U.S. transferor’s former

adjusted basis in that property.

(iii) Qualified domestic person. For

purposes of this paragraph (f)(4), a qualified domestic person means—

(A) The U.S. transferor that initially

transferred intangible property subject to

section 367(d).

(B) A U.S. person treated as a U.S.

transferor under §1.367(d)-1T(e)(1),

Bulletin No. 2024–44

provided such person is an individual or

a corporation other than a corporation

exempt from tax under section 501(a), a

regulated investment company (as defined

in section 851(a)), a real estate investment trust (as defined in section 856(a)),

a DISC (as defined in section 992(a)(1)),

or an S corporation (as defined in section

1361(a));

(C) A U.S. person that is an individual related, within the meaning of

paragraph (h)(2)(ii) of this section and

§1.367(d)-1T(h), to the person described

in paragraph (f)(4)(iii)(A) or (B) of this

section; or

(D) A U.S. person that is a corporation related, within the meaning of

paragraph (h)(2)(ii) of this section and

§1.367(d)-1T(h), to the person described

in paragraph (f)(4)(iii)(A) or (B) of this

section, other than a corporation exempt

from tax under section 501(a), a regulated

investment company (as defined in section 851(a)), a real estate investment trust

(as defined in section 856(a)), a DISC (as

defined in section 992(a)(1)), or an S corporation (as defined in section 1361(a)).

(iv) Qualified domestic person’s basis

in the intangible property. The qualified

domestic person’s adjusted basis in the

intangible property is—

(A) In the case of a subsequent disposition of intangible property described in

paragraph (f)(4)(ii)(A) of this section, and

subject to any applicable limitations that

may apply under the Code, the lesser of

the U.S. transferor’s former adjusted basis

in the intangible property or the transferee

foreign corporation’s adjusted basis in the

intangible property (as determined immediately before the subsequent disposition),

in each case increased by the greater of

the amount of gain (if any) described in

paragraph (f)(4)(ii)(A) of this section and

recognized by the U.S. transferor or the

amount of gain (if any) recognized by the

transferee foreign corporation as to the

intangible property by reason of the subsequent disposition; or

(B) In the case of a subsequent disposition of intangible property described in

paragraph (f)(4)(ii)(B) of this section, the

fair market value of the intangible property (as determined on the date of the subsequent disposition).

(v) Special rule for related transactions. If the transferee foreign corporation

1021

subsequently disposes of the transferred

intangible property to a person that would,

absent this paragraph (f)(4)(v), be a qualified domestic person (initial transferee)

and, as part of a series of related transactions, the intangible property is subsequently disposed of to any other person,

including by reason of multiple dispositions, then the initial transferee is treated

as a qualified domestic person only if the

ultimate recipient of the intangible property is a qualified domestic person. See

paragraphs (f)(6)(ii)(D) and (E) of this

section (Examples 4 and 5) for illustrations of the application of this paragraph

(f)(4)(v).

(5) Relief for certain failures to comply. This paragraph (f)(5) provides relief

if paragraph (f)(4)(i)(B)(2) of this section

would apply but for the U.S. transferor’s

failure to provide the information required

by paragraph (f)(4)(i)(B) of this section

(a “failure to comply”). When a failure to

comply occurs, the subsequent disposition

of the transferred intangible property is

generally subject to paragraphs (f)(3) and

(f)(4)(i)(A) of this section. Nevertheless,

a failure to comply is deemed not to have

occurred (regardless of whether the U.S.

transferor continued to include amounts

in gross income under §1.367(d)-1T(c) or

(e) after the subsequent disposition), and

the requirements of paragraph (f)(4)(i)(B)

of this section are treated as satisfied as of

the date of the subsequent disposition if—

(i) Promptly after the U.S. transferor

becomes aware of the failure, the U.S.

transferor provides such information and

provides a reasonable explanation for its

failure to comply to the Director of Field

Operations, Cross Border Activities Practice Area of Large Business & International (or any successor to the roles and

responsibilities of such position, as appropriate), by eFax at (855) 582-4842 (or as

otherwise directed on irs.gov), or, if any

taxable year of the U.S. transferor is under

examination when the discovery is made,

to the Internal Revenue Service personnel

conducting the examination;

(ii) The U.S. transferor timely files an

amended return for the taxable year in

which the subsequent disposition occurred

(and, if applicable, for each taxable year

starting with the taxable year immediately

after the taxable year in which the subsequent disposition occurred and ending

October 28, 2024

with the taxable year in which the U.S.

transferor seeks relief under this paragraph (f)(5)) that includes the information

required by paragraph (f)(4)(i)(B) of this

section; and

(iii) If any taxable year of the U.S.

transferor is under examination when an

amended return is filed, the U.S. transferor

provides a copy of the amended return

(or, if applicable, amended returns) to the

Internal Revenue Service personnel conducting the examination.

(6) Examples—(i) Assumed facts. For

purposes of the examples in paragraph (f)

(6)(ii) of this section, and except where

otherwise indicated, the following facts

are assumed.

(A) USP and USS are domestic corporations that each use a calendar taxable

year.

(B) TFC is a foreign corporation whose

functional currency is the U.S. dollar.

(C) In year 1, USP transfers intangible

property, as defined in section 367(d)(4),

with a $0 adjusted basis, to TFC in a section 351 exchange (the transferred IP), and

such transfer is subject to section 367(d).

(D) Each annual inclusion (including

any amount described in §1.367(d)-1T(f)

(1)(ii)) is taken into account under section

367(d)(2)(A)(ii)(I) and §1.367(d)-1T(c)

(1).

(E) Any subsequent transfer or disposition of stock of TFC or the transferred IP

occurs within the useful life of the transferred IP.

(F) All transactions are respected under

general principles of tax law.

(ii) Examples. The following examples

illustrate the application of paragraph (f)

(4) of this section and other paragraphs of

this section that relate to paragraph (f)(4).

(A) Example 1: Complete liquidation of transferee foreign corporation into a qualified domestic

person—(1) Facts. In year 2, USP transfers all the

stock of TFC to USS, a related person within the

meaning of §1.367(d)-1T(h) and paragraph (h)(2)(ii)

of this section, in a section 351 exchange to which

§1.367(d)-1T(e)(1) applies (the year 2 transfer). In

year 3, TFC distributes all its property (including the

transferred IP) to USS pursuant to a complete liquidation to which sections 332 and 337 apply (the year

3 liquidation). The all earnings and profits amount

determined under §1.367(b)-2(d) with respect to the

stock of TFC held by USS is $0. The information

described in §1.6038B-1(d)(2) is provided by USS

for the taxable year in which the year 3 liquidation

occurs.

(2) Analysis—(i) The year 2 transfer. Because

the year 2 transfer involves a transfer of all the

October 28, 2024

stock of TFC by USP (the initial U.S. transferor) to

a related U.S. person (USS), under §1.367(d)-1T(e)

(1)(i) USS (a successor U.S. transferor) is treated as

receiving the right to receive a proportionate share of

the contingent annual payments that USP would have

otherwise taken into account under §1.367(d)-1T(c).

As determined under §1.367(d)-1T(e)(4), USS’s

proportionate share of such payments is 100 percent. Accordingly, USS will annually include in its

gross income the full amount of each of the annual

payments that USP would otherwise have taken into

account under §1.367(d)-1T(c) over the useful life

of the transferred IP, and USP will not recognize any

gain upon the year 2 transfer. See §1.367(d)-1T(e)

(1)(ii) and (iii).

(ii) The year 3 liquidation. The year 3 liquidation results in a subsequent disposition of the

transferred IP to USS. USS, a U.S. person treated

as the U.S. transferor pursuant to §1.367(d)-1T(e)

(1), is a qualified domestic person within the meaning of paragraph (f)(4)(iii) of this section. Pursuant to paragraph (f)(4)(i)(A) of this section, USS

must recognize the amount of gain described in

paragraph (f)(4)(ii) of this section. Because the

year 3 liquidation is a complete liquidation to

which sections 332 and 337 apply, the intangible

property is transferred basis property (as defined in

section 7701(a)(43) and determined without regard

to section 367(d), this section, and §1.367(d)-1T),

and therefore paragraph (f)(4)(ii)(A) of this section

applies to determine the amount of any gain USS

must recognize. Because TFC does not recognize

gain with respect to the transferred IP (regardless

of the adjusted basis in the intangible property) by

reason of the year 3 liquidation, the amount of gain

described in paragraph (f)(4)(ii)(A) of this section

is $0. Accordingly, USS does not recognize gain

pursuant to paragraph (f)(4)(i)(A) of this section

by reason of the year 3 liquidation. Additionally,

because USS provides the information described

in §1.6038B-1(d)(2), paragraph (f)(4)(i)(B) of this

section applies to the year 3 liquidation. USS therefore recognizes a deemed payment representing the

part of USS’s taxable year during which TFC held

the transferred IP pursuant to paragraph (f)(4)(i)

(B)(1) of this section, and the required adjustments

described in paragraph (c)(2)(ii) of this section and

§1.367(d)-1T(c)(2)(i) apply as to the deemed payment. Also, because USS does not recognize gain

pursuant to paragraph (f)(4)(i)(A) of this section,

the required adjustments described in paragraph (f)

(2) of this section do not apply. Pursuant to paragraph (f)(4)(i)(B)(2) of this section, after taking the

deemed payment into account, the transferred IP is

no longer subject to section 367(d), this section, and

§1.367(d)-1T. Finally, pursuant to paragraph (f)(4)

(iv)(A) of this section, USS’s adjusted basis in the

transferred IP is $0, which is equal to USP’s former

adjusted basis in the transferred IP ($0), increased

by the greater of the amount of gain recognized by

USS under paragraph (f)(4)(i)(A) of this section

($0) or the amount of gain recognized by TFC upon

the year 3 liquidation ($0).

(B) Example 2: Taxable distribution of the transferred intangible property to a qualified domestic

person—(1) Facts. The facts are the same as in

paragraph (f)(6)(ii)(A) of this section (Example 1),

except that, instead of in year 3 TFC distributing all

1022

its property to USS pursuant to a complete liquidation, in year 3 TFC distributes the transferred IP to

USS in a distribution described in section 311(b)

when the fair market value of the transferred IP is

$100x (the year 3 distribution). TFC’s adjusted basis

in the transferred IP immediately before the distribution is $0.

(2) Analysis. The consequence of the year 2

transfer is the same as described in paragraph (f)(6)

(ii)(A)(2)(i) of this section (Example 1). Like the

consequences described in paragraph (f)(6)(ii)(A)

(2) of this section (Example 1), the year 3 distribution is a subsequent disposition of the transferred

IP to USS, a qualified domestic person. Pursuant

to paragraph (f)(4)(i)(A) of this section, USS must

recognize the amount of gain described in paragraph (f)(4)(ii) of this section. Because the year

3 distribution is described in section 311(b) the

intangible property is not transferred basis property (as defined in section 7701(a)(43) and determined without regard to section 367(d), this section, and §1.367(d)-1T), and therefore USS must

recognize $100x gain under paragraph (f)(4)(ii)(B)

of this section. The $100x gain amount equals the

excess of the fair market value of the transferred IP

on the date of the year 3 distribution ($100x) over

USP’s former adjusted basis in the property ($0).

TFC, because of USS’s gain recognition under

paragraph (f)(4)(i)(A) of this section, reduces (but

not below zero) the portion of its earnings and profits and gross income arising by reason of the year 3

distribution by the amount of such gain under paragraph (f)(2)(i) of this section. Specifically, because

the year 3 distribution requires USS to recognize

$100x of gain, TFC reduces the portion of its earnings and profits and gross income that arise by reason of the year 3 distribution, which is $100x (the

excess of the fair market value of the transferred

IP ($100x) over TFC’s adjusted basis in the transferred IP ($0)), by $100x (the amount of gain USS

recognizes pursuant to paragraph (f)(4)(i)(A) of

this section). As a result, after taking into account

the reduction, TFC has no earnings and profits or

gross income that arise by reason of the year 3

distribution. Furthermore, USS may establish an

account receivable from TFC equal to $100x under

paragraph (f)(2)(ii) of this section. Additionally,

and as described in paragraph (f)(6)(ii)(A)(2) of

this section (Example 1), pursuant to paragraph

(f)(4)(i)(B)(1) of this section, USS recognizes a

deemed payment for the portion of USS’s taxable

year during which TFC held the transferred IP, and

the required adjustments described in paragraph (c)

(2)(ii) of this section and §1.367(d)-1T(c)(2) apply

to this deemed payment. After taking these consequences into account, pursuant to paragraph (f)

(4)(i)(B)(2) of this section, the transferred IP is no

longer subject to section 367(d), this section, and

§1.367(d)-1T. Finally, pursuant to paragraph (f)(4)

(iv)(B) of this section, USS’s adjusted basis in the

transferred IP is $100x, which is the fair market

value of the transferred IP on the date of the year

3 distribution.

(C) Example 3: Qualified domestic person’s

basis in intangible property when intangible property is repatriated in an exchange described in section 351(b)—(1) Facts. The facts are the same as

in paragraph (f)(6)(ii)(A) of this section (Example

Bulletin No. 2024–44

1), except that the transfer of stock of TFC to USS

in year 2 does not occur and instead of the year 3

liquidation, in year 3 TFC transfers the intangible

property to USS (a qualified domestic person as

defined in paragraph (f)(4)(iii) of this section) in

an exchange described in section 351(b) pursuant

to which TFC recognizes $50x of gain and USP

recognizes $50x of gain under paragraph (f)(4)(i)

(A) of this section (the year 3 exchange), which

amount will reduce TFC’s earnings and profits and

gross income by $50x under paragraph (f)(2)(i) of

this section.

(2) Analysis. Pursuant to paragraph (f)(4)(iv)(A)

of this section, USS’s adjusted basis in the intangible

property is $50x, which is the amount equal to the

lesser of USP’s former adjusted basis in the property

($0) or TFC’s adjusted basis in the property ($0),

increased by the greater of the amount of gain recognized by USP under paragraph (f)(4)(i)(A) of this

section ($50x) or the amount of gain recognized by

TFC upon the year 3 exchange ($50x).

(D) Example 4: Repatriation as part of a series

of related transactions culminating in transfer to a

foreign corporation—(1) Facts. The facts are the

same as in paragraph (f)(6)(ii)(A)(1) of this section (Example 1), except that the year 3 liquidation

occurs as part of a series of related transactions pursuant to which USS transfers the transferred IP that

it receives from TFC to a related foreign corporation

(FC1) in exchange for stock in FC1.

(2) Analysis. Because the year 3 liquidation

occurs as part of a series of related transactions

pursuant to which the transferred IP is ultimately

contributed to a FC1, a foreign corporation, and

because a foreign corporation is not a qualified

domestic person pursuant to paragraph (f)(4)(iii)

of this section, then, under paragraph (f)(4)(v) of

this section, the year 3 liquidation is not treated as

a subsequent disposition described in paragraph (f)

(4)(i) of this section, but is instead treated as a subsequent disposition described in paragraph (f)(3) of

this section.

(E) Example 5: Repatriation as part of a series

of related transactions culminating in transfer to

a qualified domestic person—(1) Facts. The facts

are the same as in paragraph (f)(6)(ii)(B)(1) of this

section (Example 2), except that the year 3 distribution occurs as part of a series of related transactions

pursuant to which USS disposes of the transferred IP

that it receives from TFC to USP.

(2) Analysis. Because the year 3 distribution

occurs as part of a series of related transactions pursuant to which the transferred IP is distributed to

USP, and because USP is a qualified domestic person

pursuant to paragraph (f)(4)(iii) of this section, paragraph (f)(4)(v) of this section does not prevent paragraph (f)(4)(i) of this section from applying to the

year 3 distribution. Accordingly, the consequences

under section 367(d) of the year 3 distribution are

the same as those described in paragraph (f)(6)(ii)(B)

(2) of this section (Example 2), and the consequences

of the subsequent disposition of the transferred IP by

USS to USP are determined after applying paragraph

(f)(4) of this section to the transfer of the transferred

IP by TFC to USS.

(g) Special rules—(1) Establishment of

accounts receivable. For further guidance,

see §1.367(d)-1T(g)(1).

Bulletin No. 2024–44

(2) Election to treat transfer as sale.

For further guidance, see §1.367(d)-1T(g)

(2) introductory text.

(i) The intangible property transferred

constitutes an operating intangible, as

defined in § 1.367(a)-1(d)(6).

(ii) For further guidance, see §1.3671T(g)(2)(ii) through (g)(2)(iii)(D).

(iii)(A) through (D) [Reserved]

(E) The transferred intangible property will be used in the active conduct of

a trade or business outside of the United

States within the meaning of § 1.367(a)-2

and will not be used in connection with the

manufacture or sale of products in or for

use or consumption in the United States.

(F) For further guidance, see §

1.367(d)-1T(g)(2)(iii)(F).

*****

(4) Coordination with section 482. For

further guidance, see § 1.367(d)-1T(g)(4)

(5) Determination of fair market value.

For further guidance, see §1.367(d)1T(g)(5).

(6) Anti-abuse rule. For further guidance, see §1.367(d)-1T(g)(6).

(h) Related person. For further guidance, see §1.367(d)-1T(h) introductory

text through (h)(1).

(1) [Reserved]

(2) For further guidance, see

§1.367(d)-1T(h)(2) introductory text and

(h)(2)(i).

(i) [Reserved]

(ii) Section 1563 applies (for purposes

of section 267(f)) without regard to section 1563(b)(2).

(i) Effective date. For further guidance,

see §1.367(d)-1T(i).

(j) Applicability dates—(1) In general.

This section applies to transfers occurring

on or after September 14, 2015, and to

transfers occurring before September 14,

2015, resulting from entity classification

elections made under §301.7701-3 of this

chapter that are filed on or after September

14, 2015. For transfers occurring before

this section is applicable, see §1.367(d)1T as contained in 26 CFR part 1 revised

as of April 1, 2016.

(2) Certain subsequent dispositions of

intangible property. Paragraphs (c)(2)(ii),

(e)(2)(ii), (f)(2) through (5), and (h)(2)(ii)

of this section apply to subsequent dispositions of intangible property occurring

on or after October 10, 2024. For subsequent dispositions of intangible property

1023

occurring before October 10, 2024 see

§1.367(d)-1T as contained in 26 CFR part

1 revised as of April 1, 2022.

Par. 4. Section 1.367(d)-1T is amended

by:

a. Revising paragraph (c)(2)(ii).

b. Removing the undesignated paragraph following paragraph (c)(2)(ii).

d. Revising paragraphs (e)(2)(ii) and

(f)(2).

e. Removing and reserving paragraph

(f)(3) and adding reserved paragraphs (f)

(4) through (6).

f. Designating the undesignated paragraph following paragraph (g)(2)(iii)(E)

as paragraph (g)(2)(iii)(F).

g. Revising paragraph (h)(2)(ii).

The revisions read as follows:

§1.367(d)-1T Transfers of intangible

property to foreign corporations

(temporary).

*****

(c) * * *

(2) * * *

(ii) For further guidance, see §1.367(d)1(c)(2)(ii).

*****

(e) * * *

(2) * * *

(ii) For further guidance, see §1.367(d)1(e)(2)(ii);

*****

(f) * * *

(2) Required adjustments. For further

guidance, see §1.367(d)-1(f)(2) through

(6).

(3) through (6) [Reserved]

*****

(h) * * *

(2) * * *

(ii) For further guidance, see §1.367(d)1(h)(2)(ii).

*****

§1.367(e)-2 [Amended]

Par. 5. Section 1.367(e)-2 is amended

by removing the language “section 936(h)

(3)(B)” in the last sentence of paragraph

(b)(2)(i)(B) and adding the language “section 367(d)(4)” in its place.

Par. 6. Section 1.904-4 is amended

by adding paragraph (f)(2)(vi)(D)(4) and

revising paragraph (q)(3) to read as follows:

October 28, 2024

§1.904-4 Separate application of

section 904 with respect to certain

categories of income.

*****

(f) * * *

(2) * * *

(vi) * * *

(D) * * *

(4) Multiple transfers of intangible

property. If the same intangible property is transferred in a series of transfers

described in paragraph (f)(2)(vi)(D)(1)

of this section, each successive transfer

is separately subject to the provisions of

paragraph (f)(2)(vi)(D)(1) and will not

terminate or otherwise affect the application of paragraph (f)(2)(vi)(D)(1) to a

prior transfer described in paragraph (f)

(2)(vi)(D)(1).

*****

(q) * * *

(3) Except as provided in the following sentence, paragraph (f) of this section

applies to taxable years that begin after

December 31, 2019, and end on or after

November 2, 2020. Paragraph (f)(2)(vi)

(D)(4) of this section applies to taxable

years that begin on or after October 10,

2024.

Par. 7. Section 1.951A-2 is amended

by revising paragraph (c)(2) to read as follows:

§1.951A-2 Tested income and tested

loss.

*****

(c) * * *

(2) Determination of gross income and

allowable deductions. For purposes of

determining tested income and tested loss,

the gross income and allowable deductions of a controlled foreign corporation

for a CFC inclusion year are determined

under the rules of § 1.952-2 for determining the subpart F income (as defined

in section 952) of the controlled foreign

corporation, except, for a controlled foreign corporation which is engaged in the

business of reinsuring or issuing insurance or annuity contracts and which, if it

were a domestic corporation engaged only

in such business, would be taxable as an

insurance company to which subchapter L

of chapter 1 of the Code applies, the text

October 28, 2024

“the principles of §§ 1.953-4 and 1.9535” means “the rules of sections 953 and

954(i)” in § 1.952-2(b)(2).

*****

Par. 8. Section 1.951A-7 is amended

by adding a paragraph (e) to read as follows:

§1.951A-7 Applicability dates.

*****

(e) Determination of gross income and

allowable deductions. Section 1.951A2(c)(2) applies to taxable years of foreign

corporations ending on or after October

10, 2024, and to taxable years of United

States shareholders in which or with

which such taxable years end. For taxable years of foreign corporations ending

before October 10, 2024, and to taxable

years of United States shareholders in

which or with which such taxable years

end, see §1.951A-2(c)(2)(i) and (ii) as

contained in 26 CFR part 1, revised as of

April 1, 2022.

Par. 9. Section 1.6038B-1 is amended

by:

a. Removing reserved paragraphs (d)

(1) through (1)(iii).

b. Adding paragraphs (d) heading and

(d)(1) introductory text and reserved

paragraphs (d)(1)(i) through (iii).

c. Removing reserved paragraphs (d)

(1)(viii) through (d)(2).

d. Adding paragraphs (d)(1)(viii), (d)

(2), and (g)(8).

The additions read as follows:

§1.6038B-1 Reporting of certain

transfers to foreign corporations.

*****

(d) Transfers subject to section

367(d)—(1) Initial transfer. For further

guidance,

see §1.6038B–1T(d)(1) introductory

text through (d)(1)(iii).

(i) through (iii) [Reserved]

*****

(viii) Other intangibles. For further

guidance, see § 1.6038B-1T(d)(1)(viii).

(2) Subsequent transfers. For additional, see § 1.6038B–1T(d)(2) introductory text through (d)(2)(ii).

(i) through (ii) [Reserved]

1024

(iii) Subsequent transfer. Except for

a subsequent transfer described in paragraph (d)(2)(iv) of this section, provide

the following information concerning the

subsequent transfer:

(A) For further guidance, see §

1.6038B–1T(d)(2)(iii)(A) through (C).

(B) through (C) [Reserved]

(iv) Subsequent transfer of intangible

property to a qualified domestic person.

Provide the following information concerning a subsequent transfer of intangible

property described in §1.367(d)-1(f)(4)(i):

(A) A statement providing that

§1.367(d)-1(f)(4)(i)(B) applies to the subsequent transfer;

(B) A general description of the subsequent transfer and any wider transaction

of which it forms a part, including the

U.S. transferor’s former adjusted basis

in the intangible property and the transferee foreign corporation’s adjusted basis

in the intangible property (as determined

immediately before the subsequent transfer), the amount and computation of

any gain recognized by the U.S. transferor under §1.367(d)-1(f)(4)(i)(A), and

a description of whether the intangible

property was, or is expected to be, subsequently transferred to one or more other

persons (as described in §1.367(d)-1(f)

(4)(v));

(C) A description of the intangible

property;

(D) A copy of the Form 926 with

respect to the original transfer of the intangible property and any attachments identifying the intangible property as within the

scope of section 367(d).

(E) The name, address, and taxpayer

identification number of the qualified

domestic person that receives the intangible property, including a statement

describing the relationship between the

U.S. transferor and the qualified domestic

person, and, if applicable, such information regarding any other persons described

in §1.367(d)-1(f)(4)(v); and

(F) Any other information as may be

prescribed by the Commissioner in publications, forms, instructions, or other guidance.

*****

(g) * * *

(8) Paragraphs (d)(2)(iii) introductory

text and (d)(2)(iv) of this section apply to

Bulletin No. 2024–44

transfers occurring on or after October 10,

2024.

Par. 10. Section 1.6038B-1T is

amended by revising paragraph (d)(2)(iii)

introductory text to read as follows:

§ 1.6038B-1T Reporting of certain

transactions to foreign corporations

(temporary).

*****

Bulletin No. 2024–44

(d) * * *

(2) * * *

(iii) Subsequent transfer. For further

guidance, see § 1.6038B-1T(d)(2)(iii)

introductory text:

*****

Aviva Aron-Dine,

Deputy Assistant Secretary of the Treasury (Tax Policy).

(Filed by the Office of the Federal Register October

09, 2024, 8:45 a.m., and published in the issue of the

Federal Register for October 10, 2024, 89 FR 82160)

Douglas W. O’Donnell,

Deputy Commissioner.

Approved: September 23, 2024.

1025

October 28, 2024

Part III

Expenses Treated as

Amounts Paid for Medical

Care

Notice 2024-71

SECTION 1. PURPOSE

This notice provides a safe harbor

under section 213 of the Internal Revenue

Code for amounts paid for condoms.

SECTION 2. BACKGROUND

Section 213 allows an individual taxpayer an itemized deduction for expenses

paid during the taxable year, not compensated for by insurance or otherwise, for

medical care of the taxpayer, the taxpayer’s spouse, or the taxpayer’s dependent,

to the extent that such expenses exceed

7.5 percent of the taxpayer’s adjusted

gross income. Section 213(d) provides, in

relevant part, that the term “medical care”

means amounts paid for the diagnosis,

cure, mitigation, treatment, or prevention

of disease, or for the purpose of affecting

any structure or function of the body. Section 1.213-1(e)(1)(ii) of the Income Tax

Regulations provides that deductions for

medical care expenses under section 213

are limited to expenses “incurred primarily for the prevention or alleviation of a

physical or mental defect or illness” and

do not include deductions for expenses

that are merely beneficial to an individual’s general health.

Amounts treated as expenses for medical care under section 213(d) are eligible

to be paid or reimbursed under a health

flexible spending arrangement (health

FSA), Archer medical savings account

(Archer MSA), health reimbursement

arrangement (HRA), or health savings

account (HSA). However, if an amount

is paid or reimbursed under a health FSA,

Archer MSA, HRA, HSA, or any other

health plan or otherwise, it is not a deductible expense under section 213.

The determination of whether an

expense is incurred for the prevention

1

of disease, or other form of medical care

under section 213(d), depends upon the

facts and circumstances. Stringham v.

Commissioner, 12 T.C. 580, 584 (1949).

Thus, depending on the specific facts and

circumstances, amounts paid for condoms

may or may not be considered medical

expenses under section 213(d).

SECTION 3. SAFE HARBOR

The Treasury Department and the IRS

will treat amounts paid for condoms as

amounts paid for medical care under section 213(d).

SECTION 4. APPLICATION OF

SAFE HARBOR

Because amounts paid for condoms are

treated as expenses for medical care under

section 213(d), if the other requirements

of section 213(a) are met (for example, if a

taxpayer’s total medical expenses exceed

the 7.5-percent adjusted gross income

limitation and are not compensated for

by insurance or otherwise), then amounts

paid by the taxpayer for condoms for the

taxpayer, the taxpayer’s spouse, or the

taxpayer’s dependent are deductible as

expenses for medical care under section

213. Additionally, because amounts paid

for condoms are treated as expenses for

medical care under section 213(d), the

amounts are also eligible to be paid or

reimbursed under a health FSA, Archer

MSA, HRA, or HSA. However, if an

amount paid for condoms is paid or reimbursed under a health FSA, Archer MSA,

HRA, HSA, or any other health plan or

otherwise, it is not a deductible expense

under section 213.

SECTION 5. DRAFTING

INFORMATION

The principal authors of this notice

are Elizabeth Choi and Amy S. Wei of

the Office of Associate Chief Counsel

(Income Tax & Accounting). However,

additional personnel in the Office of Chief

Counsel and at the Treasury Department

participated in the development of this

notice. For additional information, contact

Branch 3 of the Office of Associate Chief

Counsel (Income Tax and Accounting) at

(202) 317-5100 (not a toll-free number).

Preventive Care for

Purposes of Qualifying as

a High Deductible Health

Plan under Section 223

Notice 2024-75

I. PURPOSE

This notice expands the list of preventive care benefits permitted to be provided

by a high deductible health plan (HDHP)

under section 223(c)(2)(C) of the Internal

Revenue Code (Code) without a deductible, or with a deductible below the applicable minimum deductible for the HDHP,

to include over-the-counter (OTC) oral

contraceptives (including emergency

contraceptives) and male condoms.1 This

notice also clarifies that (1) all types of

breast cancer screening for individuals

who have not been diagnosed with breast

cancer are treated as preventive care under

section 223(c)(2)(C), (2) continuous glucose monitors for individuals diagnosed

with diabetes are generally treated as preventive care under section 223(c)(2)(C),

and (3) the new safe harbor for absence

of a deductible for certain insulin products in section 223(c)(2)(G) applies without regard to whether the insulin product

is prescribed to treat an individual diagnosed with diabetes or prescribed for the

purpose of preventing the exacerbation of

diabetes or the development of a secondary condition.

II. BACKGROUND

A. Preventive Care

Section 223 of the Code permits eligible individuals to establish tax-favored

For purposes of this notice, a “male condom” refers to an external condom and a “female condom” refers to an internal condom.

October 28, 2024

1026

Bulletin No. 2024–44

Health Savings Accounts (HSAs). Among

the requirements to qualify as an eligible

individual under section 223(c)(1) is that

the individual be covered under an HDHP

and have no disqualifying health coverage. As defined in section 223(c)(2), an

HDHP is a health plan that satisfies certain requirements, including requirements

with respect to minimum deductibles and

maximum out-of-pocket expenses.

Generally, under section 223(c)(2)

(A), an HDHP is not permitted to provide

benefits for any year until the minimum

deductible for that year is satisfied. However, section 223(c)(2)(C) provides a safe

harbor for the absence of a deductible for

preventive care. Under section 223(c)(2)

(C), “[a] plan shall not fail to be treated as

a high deductible health plan by reason of

failing to have a deductible for preventive

care (within the meaning of section 1861

of the Social Security Act, except as otherwise provided by the Secretary).” Therefore, an HDHP may provide preventive

care benefits without a deductible, or with

a deductible below the minimum annual

deductible otherwise required by section

223(c)(2)(A). To be a preventive care

benefit as defined for purposes of section

223, the benefit must either be described

as preventive care for purposes of section

1861 of the Social Security Act (SSA) or

be determined to be preventive care in

guidance issued by the Department of the

Treasury (Treasury Department) and the

Internal Revenue Service (IRS).2

Section 2713 of the Public Health Service Act3 (PHS Act) requires non-grandfathered group health plans and health

insurance issuers offering non-grandfathered group or individual health insurance coverage4 to provide benefits for certain preventive services without imposing

cost-sharing requirements. Notice 201357, 2013-40 IRB 293, provides that any

item or service that is a preventive service under section 2713 of the PHS Act

will also be treated as preventive care

under section 223(c)(2)(C) of the Code.

With respect to women,5 preventive services under section 2713 of the PHS Act

include those provided for in comprehensive guidelines supported by the Health

Resources and Services Administration

(HRSA-Supported Guidelines).

Notice 2004-23, 2004-15 IRB 725,

provides that preventive care under section 223(c)(2)(C) includes, among other

types of care, “Breast Cancer (e.g., Mammogram)” screening services.

Notice 2018-12, 2018-12 IRB 441,

states that, absent further guidance to the

contrary, benefits for male sterilization or

male contraceptives would not be considered preventive care. The notice bases its

reasoning on the fact that, at the time of

publication of the notice: (1) male sterilization and male contraceptives were

not preventive care under the SSA; (2)

HRSA-Supported Guidelines did not provide for coverage of benefits or services

relating to a man’s reproductive capacity,

such as vasectomies and condoms; and (3)

no applicable guidance issued by the Treasury Department or the IRS provided for

the treatment of male sterilization or male

contraceptives as preventive care within

the meaning of section 223(c)(2)(C).

B. Oral Contraceptives

The HRSA-Supported Guidelines

include the full range of U.S. Food and

Drug Administration (FDA)-approved,

-granted, or -cleared contraceptives,

including those currently listed in the

FDA’s Birth Control Guide, such as “oral

contraceptives (progestin only)” and

“emergency contraception (levonorgestrel).”6 An OTC progestin-only daily oral

contraceptive was recently approved by

the Food and Drug Administration (FDA)

and is currently available.7 Some emergency contraceptives also are available as

OTC products (e.g., levonorgestrel). Additional recommended preventive products

may also become available as OTC products in the future. The HRSA-Supported

Guidelines relating to contraceptives have

been updated and no longer contain the

“as prescribed” restriction they once did.

C. Male Condoms

Notice 2024-71, 2024-44 IRB 1026,

provides a safe harbor, under which the

Treasury Department and the IRS will treat

amounts paid for condoms as amounts

paid for medical care under section 213(d).

While the HRSA-Supported Guidelines

previously included only female condoms, the HRSA-Supported Guidelines

were expanded in 2021 after Notice 201812 was published to encompass contraceptives that are not female-controlled,

such as male condoms.8 However, the

expanded HRSA-Supported Guidelines

made no changes to the recommendations

regarding male sterilization and continue

not to include male sterilization.

D. Breast Cancer Screening

Notice 2004-23 provides that breast

cancer screening is treated as preventive

care under section 223(c)(2)(C) but provides a “mammogram” as the only listed

example of such screenings. Breast cancer

screening recommended with an “A” or

The determination of whether an item or service is preventive care for these purposes is separate and distinct from the determination of whether an amount paid for an item or service is

medical care under section 213(d) of the Code as an amount paid for the prevention of disease. See Rev. Rul. 79-66, 1979-1 C.B. 114; Daniels v. Commissioner, 41 T.C. 324 (1963); and

Stringham v. Commissioner, 12 T.C. 580 (1949) acq., 1950-2 C.B. 4, aff'd per curiam, 183 F.2d 579 (6th Cir. 1950).

3

See 42 U.S.C. chapter 6A.

4

The Department of Health and Human Services, the Department of Labor, and the Treasury Department (collectively, the Departments) share interpretive jurisdiction over section 1251

of the Patient Protection and Affordable Care Act, Pub. L. 111-148, 124 Stat. 119 (2010) (ACA), as amended, which generally provides that certain group health plans and health insurance

coverage existing as of March 23, 2010, the date of enactment of ACA (referred to collectively in the statute as grandfathered health plans), are subject to only certain provisions of ACA.

5

The references to “women” in this notice are not limited based on sex assigned at birth, gender identity, or gender of the individual otherwise recorded by the plan or issuer in accordance

with FAQs about Affordable Care Act implementation Part XXVI (May 11, 2015), Q5, available at https://www.dol.gov/​sites/​dolgov/​files/​ebsa/​about-ebsa/​our-activities/​resource-center/​faqs/​

aca-part-xxvi.pdf and https://www.cms.gov/​CCIIO/​Resources/​Fact-Sheets-and-FAQs/​Downloads/​aca_​implementation_​faqs26.pdf.

6

https://www.hrsa.gov/womens-guidelines.

7

On July 13, 2023, the FDA announced that it had approved a progestin-only birth control pill as the first daily oral contraceptive for use in the United States available without a prescription

by a health care provider. See FDA Approves First Nonprescription Daily Oral Contraceptive, July 13, 2023, https://www.fda.gov/​news-events/​press-announcements/​fda-approves-first-nonprescription-daily-oral-contraceptive. Progestin-only oral contraceptives are a product that is already available in a prescription form and are a category of contraceptives listed in the

HRSA-Supported Guidelines.

8

HRSA made this change to allow women to purchase male condoms for pregnancy prevention. See 86 FR 59741, 59742 (Oct. 28, 2021).

2

Bulletin No. 2024–44

1027

October 28, 2024

“B” rating by the United States Preventive

Services Task Force (USPSTF), which

must be covered without cost-sharing for

certain individuals under section 2713 of

the PHS Act, generally is limited to mammography.9

E. Continuous Glucose Monitors and

Insulin

Notice 2019-45 provides that specified

services and items, including glucometers

and insulin, are treated as preventive care

under section 223(c)(2)(C). However,

the notice also provides that specified

services and items are treated as preventive care only when prescribed to treat an

individual diagnosed with the specified

associated chronic condition (diabetes in

the case of glucometers and insulin), and

only when prescribed for the purpose of

preventing the exacerbation of the chronic

condition or the development of a secondary condition.

While Notice 2019-45 provides that

glucometers are treated as preventive care,

it does not directly refer to continuous glucose monitors, which similarly measure

glucose levels.

Section 11408 of the Inflation Reduction Act of 202210 amended section 223 of

the Code with respect to insulin products

effective for plan years beginning after

December 31, 2022, by adding a new section 223(c)(2)(G) to provide that a plan

shall not fail to be treated as an HDHP by

reason of failing to have a deductible for

selected insulin products described in that

section.

III. QUESTIONS AND ANSWERS

A. Oral Contraceptives

Q-1. Will a health plan fail to qualify as

an HDHP under section 223(c)(2) of the

Code merely because it provides benefits

for OTC oral or emergency contraceptives

without a prescription before an individual satisfies the minimum annual deductible for an HDHP under section 223(c)(2)

(A)?

A-1. No. Regardless of whether OTC

contraceptives without a prescription are

preventive care required to be covered

without cost sharing under section 2713

of the PHS Act, the Treasury Department

and the IRS have determined that it is not

appropriate to distinguish OTC oral contraceptives that are now available from

other types of contraceptives that are considered to be preventive care for purposes

of the safe harbor for the absence of a

preventive care deductible under section

223(c)(2)(C).

Consequently, preventive care for purposes of section 223(c)(2)(C) includes all

benefits for OTC oral contraceptives for a

covered individual potentially capable of

becoming pregnant, including, but not limited to, OTC birth control pills and emergency contraception, regardless of whether

they are purchased with a prescription.

Accordingly, a health plan will not fail to

qualify as an HDHP under section 223(c)

(2) merely because it provides benefits

for those contraceptives before such an

individual satisfies the minimum annual

deductible for an HDHP under section

223(c)(2)(A). This guidance is effective for

plan years (in the individual market, policy

years) that begin on or after December 30,

2022.

B. Male Condoms

Q-2. Will a health plan fail to qualify as

an HDHP under section 223(c)(2) of the

Code merely because it provides benefits

for male condoms (with or without a prescription) before an individual satisfies the

minimum annual deductible for an HDHP

under section 223(c)(2)(A)?

A-2. No. Notice 2024-71, as well as

the expansion of the HRSA-Supported

Guidelines to encompass male condoms

as described above in paragraph II.C. of

the Background section of this notice, has

caused the Treasury Department and the

IRS to revisit the position on male contraceptives as set forth in Notice 2018-12.

Upon reconsideration, the Treasury

Department and the IRS have determined

that preventive care for purposes of section 223(c)(2)(C) includes all benefits

for male condoms, regardless of whether

they are purchased with a prescription and

regardless of the gender of the individual

covered under the HDHP who purchases

them. Accordingly, a health plan will not

fail to qualify as an HDHP under section 223(c)(2) merely because it provides

benefits for male condoms (with or without a prescription) before an individual

satisfies the minimum deductible for an

HDHP under section 223(c)(2)(A).11 This

guidance is effective for plan years (in the

individual market, policy years) that begin

on or after December 30, 2022.

C. Breast Cancer Screening

Q-3. Will a health plan fail to qualify as an HDHP under section 223(c)(2)

of the Code merely because it provides

benefits for breast cancer screening other

than mammograms before an individual

satisfies the minimum annual deductible

for an HDHP under section 223(c)(2)

(A)?

A-3. No. The Treasury Department and

the IRS have determined that, because

breast cancer screening may include imaging other than mammograms,12 the reference in Notice 2004-23 to breast cancer

screening should be changed to “Breast

Cancer (e.g., Mammograms, Magnetic

Resonance Imaging (MRIs), Ultrasounds,

and similar breast cancer screening services).” This language change is effective

https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/breast-cancer-screening and https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/breast-cancer-screening-2002 (in effect until January 1, 2026). FAQs about Affordable Care Act and Coronavirus Aid, Relief, and Economic Security Act Implementation Part 59 (July 28, 2022), Q7,

available at https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-59 and https://www.cms.gov/files/document/faqs-part-59.pdf, provides that items and

services recommended with an "A" or "B" rating by the USPSTF on or after March 23, 2010, will be treated as preventive care for purposes of Code section 223(c)(2)(C), regardless of

whether these items and services must be covered, without cost sharing, under PHS Act section 2713. The HRSA-Supported Guidelines likewise mention only “mammography screening.”

10

Pub. L. 117-169, § 11408, 136 Stat. 1818, 1905 (Aug. 16, 2022).

11

While this guidance applies to male condoms, it does not apply to any other male contraceptives, such as male sterilization.

12

According to the American Cancer Society, individuals who are at high risk for breast cancer based on certain factors should get a breast MRI in addition to a mammogram. See https://www.

cancer.org/cancer/types/breast-cancer/screening-tests-and-early-detection/american-cancer-society-recommendations-for-the-early-detection-of-breast-cancer.html. Also, ultrasound can be

helpful in individuals with dense breast tissue, which can make it hard to see abnormal areas on mammograms. See https://www.cancer.org/cancer/types/breast-cancer/screening-tests-and-early-detection/breast-ultrasound.html.

9

October 28, 2024

1028

Bulletin No. 2024–44

as of the date of publication of Notice

2004-23 (April 12, 2004).

D. Continuous Glucose Monitors and

Insulin

Q-4. Will a health plan fail to qualify as

an HDHP under section 223(c)(2) of the

Code merely because it provides benefits

for continuous glucose monitors before an

individual satisfies the minimum annual

deductible for an HDHP under section

223(c)(2)(A)?

A-4. Generally, no. This notice clarifies

that in accordance with Notice 2019-45

continuous glucose monitors are preventive care for purposes of section 223(c)(2)

(C) in the same circumstances as other glucometers if the continuous glucose monitor

is measuring glucose levels using a similar

detection method or mechanism to other

glucometers (i.e., piercing the skin).13

Consequently, this notice clarifies

that preventive care for purposes of section 223(c)(2)(C) includes all benefits

for continuous glucose monitors subject

to the conditions in the preceding paragraph. Accordingly, a health plan will not

fail to qualify as an HDHP under section

223(c)(2) merely because it provides such

benefits before an individual satisfies the

minimum annual deductible for an HDHP

under section 223(c)(2)(A). This guidance is effective as of the effective date of

Notice 2019-45 (July 17, 2019).

Some continuous glucose monitors may

have additional medical functions, such as

insulin delivery, or non-medical functions.

If so, those functions also would need to

be preventive care in order for an HDHP

to cover any benefits for the continuous

glucose monitor before an individual satisfies the minimum annual deductible for an

HDHP under section 223(c)(2)(A). A continuous glucose monitor that both monitors

and provides insulin may be treated as preventive care as explained in Q&A-5 of this

notice because it is a device for delivering

insulin. If a continuous glucose monitor

provides additional medical or non-medical

functions that are not preventive care (other

than minor functions, such as clock and date

functions), however, then the HDHP may

not cover the continuous glucose monitor

before an individual satisfies the minimum

annual deductible for an HDHP.

Q-5. May an HDHP provide benefits for

the selected insulin products described in

section 223(c)(2)(G) of the Code, as added

by section 11408 of the Inflation Reduction

Act of 2022, prior to satisfying the minimum annual deductible for an HDHP under

section 223(c)(2)(A), effective for plan

years after December 31, 2022?

A-5. Yes. This notice clarifies that

an HDHP may provide benefits for the

selected insulin products described in

section 223(c)(2)(G) before an individual

satisfies the minimum annual deductible

for an HDHP under section 223(c)(2)

(A) without regard to whether the insulin

product is prescribed to treat an individual diagnosed with diabetes or prescribed

for the purpose of preventing the exacerbation of diabetes or the development

of a secondary condition. The Treasury

Department and the IRS interpret section

223(c)(2)(G) to include any devices used

to administer or deliver the selected insulin products described in that section. This

guidance is effective for plan years (in the

individual market, policy years) beginning after December 31, 2022.

IV. EFFECT ON OTHER

DOCUMENTS

Notice 2004-23 is clarified by noting

the safe harbor for absence of a deductible

for breast cancer screening.

Notice 2018-12 is superseded with

respect to the guidance regarding male

condoms.

Notice 2019-45 is clarified and

expanded by noting the safe harbor for

absence of a deductible for continuous

glucose monitors and for certain insulin

products pursuant to the Inflation Reduction Act of 2022.

V. DRAFTING INFORMATION

The principal authors of this notice are

Jennifer Friedman and William Fischer

of the Office of Associate Chief Counsel

(Employee Benefits, Exempt Organizations, and Employment Taxes), though

other Treasury Department and IRS officials participated in its development. For

further information on the provisions of

this notice, contact William Fischer at

(202) 317-5500 (not a toll-free number).

The FDA has warned consumers, patients, caregivers, and health care providers of risks related to using smartwatches or smart rings that claim to measure blood glucose levels without

piercing the skin. These devices are different than smartwatch applications that display data from FDA-authorized blood glucose measuring devices that pierce the skin, like continuous glucose monitoring devices. The FDA has not authorized, cleared, or approved any smartwatch or smart ring that is intended to measure or estimate blood glucose values on its own. See https://

www.fda.gov/medical-devices/safety-communications/do-not-use-smartwatches-or-smart-rings-measure-blood-glucose-levels-fda-safety-communication.

13

Bulletin No. 2024–44

1029

October 28, 2024

NOTE. This revenue procedure will be reproduced as the next revision of IRS Publication 1167, General Rules and Specifications for Substitute Forms and Schedules.

Rev. Proc. 2024-33

TABLE OF CONTENTS

Part 1 – INTRODUCTION TO SUBSTITUTE FORMS

Section 1.1 – Overview of Revenue Procedure 2024-33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1031

Section 1.2 – IRS Contacts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1032

Section 1.3 – What’s New. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1033

Section 1.4 – Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1033

Section 1.5 – Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1035

Part 2 – GENERAL GUIDELINES FOR SUBMISSIONS AND APPROVALS

Section 2.1 – General Specifications for Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1036

Section 2.2 – Highlights of Permitted Changes and Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1038

Section 2.3 – Vouchers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1038

Section 2.4 – Restrictions on Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1041

Section 2.5 – Guidelines for Obtaining IRS Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1041

Section 2.6 – Office of Management and Budget (OMB) Requirements for All Substitute Forms. . . . . . . . . . . . . . . . . . . . 1044

Part 3 – PHYSICAL ASPECTS AND REQUIREMENTS

Section 3.1 – General Guidelines for Substitute Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1045

Section 3.2 – Paper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1047

Section 3.3 – Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1048

Section 3.4 – Margins. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1049

Section 3.5 – Miscellaneous Information for Substitute Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1050

Part 4 – ADDITIONAL RESOURCES

Section 4.1 – Guidance From Other Revenue Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1051

Section 4.2 – Electronic Tax Products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1051

Part 5 – REQUIREMENTS FOR SPECIFIC TAX RETURNS

Section 5.1 – Tax Returns (Forms 1040, 1040-SR, 1120, etc.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1052

Section 5.2 – Changes Permitted to Graphics (Form 1040 or 1040-SR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1052

Part 6 – FORMAT AND CONTENT OF SUBSTITUTE RETURNS

Section 6.1 – Acceptable Formats for Substitute Forms and Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1055

Section 6.2 – Additional Instructions for All Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1056

Part 7 – MISCELLANEOUS FORMS AND PROGRAMS

Section 7.1 – Specifications for Substitute Schedules K-1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1058

Section 7.2 – Guidelines for Substitute Forms 8655. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1063

Section 7.3 – Guidelines for Substitute Image Character Recognition (ICR) Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1064

Part 8 – ADDITIONAL INFORMATION

Section 8.1 – Forms for Electronically Filed Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1065

Section 8.2 – Effect on Other Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1066

Section 8.3 – Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1066

October 28, 2024

1030

Bulletin No. 2024–44

Part 1

Introduction to Substitute Forms

Section 1.1 – Overview of Revenue Procedure 2024-33

1.1.1

Purpose

The purpose of this revenue procedure is to provide guidelines and general requirements for the

development, printing, and approval of the 2024 substitute tax forms. Approval will be based on

these guidelines. After review and approval, submitted forms will be accepted as substitutes for

official IRS forms.

1.1.2

Unique Forms

Certain unique specialized forms require the use of other publications that supplement this

publication. See Part 4.

1.1.3

Scope

The IRS accepts quality substitute tax forms that are consistent with the official forms and have no

adverse impact on processing. The IRS Substitute Forms Program (the Program) administers the

formal acceptance and processing of these forms nationwide. While this Program deals with paper

documents, it also reviews for approval other processing and filing forms used in electronic filing.

Only those substitute forms that fully comply with these requirements are acceptable. This revenue

procedure is updated as required to reflect pertinent tax year form changes and to meet processing

and/or legislative requirements.

1.1.4

Forms Covered by This

Revenue Procedure

1.1.5

Forms Not Covered by This

Revenue Procedure

Bulletin No. 2024–44

The following types of forms are covered by this revenue procedure.

•

IRS tax forms and their related schedules.

•

Worksheets as they appear in the instructions.

•

Applications for permission to file returns electronically and forms used as required documentation for electronically filed returns.

•

Powers of Attorney.

•

Over-the-counter estimated tax payment vouchers.

•

Forms and schedules relating to partnerships, exempt organizations, and employee plans.

The following types of forms are not covered by this revenue procedure. Refer to the publication

for questions.

•

W-2 and W-3. See Pub. 1141, General Rules and Specifications for Substitute Forms W-2 and

W-3.

•

W-2c and W-3c. See Pub. 1223, General Rules and Specifications for Substitute Forms W-2c

and W-3c.

1031

October 28, 2024

1.1.6

Other Information Not

Covered by This Revenue

Procedure

•

941 and attached schedules. See Pub. 4436, General Rules and Specifications for Substitute

Form 941, Schedule B (Form 941), Schedule D (Form 941), Schedule R (Form 941), and

Form 8974.

•

1096, 1097-BTC, 1098 series, 1099 series, 3921, 3922, 5498 series, W-2G, and 1042-S. See

Pub. 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498,

and Certain Other Information Returns.

•

1095-A, 1094-B, 1095-B, 1094-C, and 1095-C. See Pub. 5223, General Rules and Specifications for Affordable Care Act Substitute Forms 1095-A, 1094-B, 1095-B, 1094-C, and

1095-C.

•

8027. See Pub. 1239, Specifications for Electronic Filing of Form 8027, Employer’s Annual

Information Return of Tip Income and Allocated Tips.

•

Forms 1040-ES (OCR) and 1041-ES (OCR), which may not be reproduced.

•

Form 5500 series (for more information on these forms, go to the Department of Labor website at https://www.efast.dol.gov).

•

Forms used internally by the IRS.

•

State tax forms.

•

Forms developed outside the IRS.

The following information is not covered by this revenue procedure.

•

Requests for information or documentation initiated by the IRS.

•

General Instructions and Specific Instructions (these are not reviewed by the Program).

Section 1.2 – IRS Contacts

1.2.1

Where To Send Substitute

Forms

Send your substitute forms for approval to the following offices. Do not send forms with taxpayer

data.

Form

5500

Software developer vouchers

(see Sections 2.3.7–2.3.9)

ACA Forms 1094-B, 1095-B, 1094-C, and

1095-C (for more information, see Pub.

5223), and Schedule K-1 forms must be

emailed for scannability testing.

October 28, 2024

1032

Office and Address

Check EFAST2 information at the Department of

Labor website at https://www.efast.dol.gov.

Internal Revenue Service

Attn: Jason Lane

3211 S. Northpointe Dr.

Santa Fe Bldg. Rm 3018

Fresno, CA 93725

Jason.L.Lane@irs.gov

scrips@irs.gov

Bulletin No. 2024–44

Form

Schedule K-1 2-D bar-coded forms

All others covered by this publication (see

Section 1.1.4)

Office and Address

For mailing addresses for sending Schedule K-1

2-D bar-coded forms for testing, see Section 7.1.6.

Internal Revenue Service

Attn: Substitute Forms Program

SE:W:CAR:MP:P:TP:TP

ATSC

4800 Buford Highway

Mail Stop: 061-N

Chamblee, GA 30341

substituteforms@irs.gov

Section 1.3 – What’s New

1.3.1

What’s New

The following changes have been made to this year’s revenue procedure.

•

.01 Editorial changes. We made editorial changes as needed and eliminated repetitive information.

•

.02 Form 8717 can no longer be submitted as a substitute form. Form 8717 must be submitted electronically through https://www.pay.gov. For more information about electronically

submitting Form 8717, go to https://www.irs.gov/form8717.

Section 1.4 – Definitions

1.4.1

Substitute Form

A tax form (or related schedule) that differs in any way from the official version and is intended to

replace the form that is printed and distributed by the IRS. This term also covers those approved

substitute forms exhibited in this revenue procedure.

1.4.2

Printed/Preprinted Form

A form produced using conventional printing processes or a printed form which has been

reproduced by photocopying or a similar process.

1.4.3

Preprinted Pin-Fed Form

A printed form that has marginal perforations for use with automated and high-speed printing

equipment.

1.4.4

Computer-Prepared

Substitute Form

A preprinted form in which the taxpayer’s tax entry information has been inserted by a computer,

a computer printer, or other computer-type equipment.

Bulletin No. 2024–44

1033

October 28, 2024

1.4.5

Computer-Generated

Substitute Tax Return or

Form

A tax return or form that is entirely designed and printed using a computer printer on plain white

paper. This return or form must conform to the physical layout of the corresponding IRS form,

although the typeface may differ. The text should match the text on the officially printed form as

closely as possible. Condensed text and abbreviations will be considered on a case-by-case basis.

Exception. All jurats (perjury statements) must be reproduced verbatim.

1.4.6

Manually Prepared Form

A preprinted reproduced form in which the taxpayer’s tax entry information is entered by an

individual using a pen, a pencil, or other nonautomated equipment.

1.4.7

Graphics

Parts of a printed tax form that are not tax amount entries or required text. Examples of graphics

are line numbers, captions, shadings, special indicators, borders, rules, and strokes created by

typesetting, photographics, photocomposition, etc.

1.4.8

Acceptable Reproduced

Form

A legible photocopy or an exact replica of an original form.

1.4.9

Supporting Statement

(Supplemental Schedule)

A document providing detailed information to support a line entry on an official or approved

substitute form and filed with (attached to) a tax return.

Note. A supporting statement is not a tax form and does not take the place of an official form.

1.4.10

Specific Form Terms

The following specific terms are used throughout this revenue procedure in reference to all

substitute forms: format, sequence, line reference, item caption, and data entry field.

1.4.11

Format

The overall physical arrangement and general layout of a substitute form.

1.4.12

Sequence

Sequence is an integral part of the total format requirement. The substitute form should show the

same numeric and logical placement order of data as shown on the official form.

1.4.13

Line Reference

The line numbers, letters, or alphanumerics used to identify each captioned line on an official

form. These line references are printed to the immediate left of each caption and/or data entry

field.

1.4.14

Item Caption

The text on each line of a form, which identifies the data required.

1.4.15

Data Entry Field

October 28, 2024

Designated areas for the entry of data such as dollar amounts, quantities, responses, and checkboxes.

1034

Bulletin No. 2024–44

1.4.16

Advance Draft

A draft version of a new or revised form may be posted to the IRS website (https://www.irs.gov/

draftforms) for information purposes. Substitute forms may be submitted based on these advance

drafts, but any submitter that receives forms approval based on these early drafts is responsible

for monitoring and revising forms to reflect any revisions in the final forms provided by the IRS.

1.4.17

Approval

Generally, approval could be in writing or assumed after 20 business days from our receipt for

forms that have not been substantially changed by the IRS. This does not apply to newly created

or substantially revised IRS forms. However, the Program reserves the right to notify vendors of

any inaccuracies even after 20 business days have lapsed.

1.4.18

National Association

of Computerized Tax

Processors (NACTP)

The NACTP is a nonprofit association that represents tax processing software and hardware

developers, electronic filing processors, tax form publishers, tax processing service bureaus, and

payroll processors. The association promotes standards in tax processing to advance efficient and

effective tax filing. For more information, go to https://www.nactp.org.

Section 1.5 – Agreement

1.5.1

Important Stipulation of

This Revenue Procedure

1.5.2

Response Policy and

Stipulations

Any person or company who uses substitute forms and makes all or part of the changes specified

in this revenue procedure agrees to the following stipulations.

•

The IRS presumes that any required changes are made in accordance with these revenue procedures and will not be disruptive to the processing of the tax return.

•

Should any of the changes be disruptive to the IRS’s processing of the tax return, the person

or company agrees to accept the determination of the IRS as to whether the form may continue to be filed.

•

The person or company agrees to work with the IRS in correcting noted deficiencies. Notification of deficiencies may be made by any combination of letter, email, or phone contact and

may include the request for the resubmission of unacceptable forms.

The Program will email confirmation of receipt of your forms submission, if possible. Even if

you do not receive emailed confirmation of receipt, you will receive an emailed “submission

receipt,” which will provide feedback on your submission. If the Program anticipates problems

in completing the review of your submission within the 20-business-day period, the Program will

send an interim email notifying you of the extended period for review.

Once the substitute forms have been approved by the Program, you can release them after the final

versions of the forms have been issued by the IRS. Before releasing the forms, you are responsible

for updating forms approved as draft and for making form changes requested.

The policy has the following stipulations.

•

Bulletin No. 2024–44

This 20-business-day policy applies to electronic submissions only. It does not apply to substitute submissions mailed to the Program.

1035

October 28, 2024

•

The policy applies to submissions of 15 (optimal) or fewer items and submissions containing

75 pages or less. Submissions of more than 15 items may require additional review time.

•

If you send a large number of submissions within a short period of time, processing may be

delayed.

•

Delays in processing could occur if the Program finds significant errors in your submission or

has experienced an increase in submissions. The Program will send you an interim email in

this case.

•

Any anticipated problems in processing your submission within the 20-business-day period

will generate an interim email on or about the 15th business day.

•

If any significant inaccuracies are discovered after the 20-business-day period, the Program

reserves the right to inform you and will require that changes be made to correct the inaccuracies.

•

The policy does not apply to substantially revised forms or to new forms created by the IRS

for which you have already made an initial submission.

Part 2

General Guidelines for Submissions and Approvals

Section 2.1 – General Specifications for Approval

2.1.1

Overview

If you produce any substitute tax forms that fully comply or follow the changes specifically outlined

by the Program, then you can generate your own substitute forms without further approval. Also,

if your substitutes have received approval in the past, and there are no substantial formatting

or text changes for the tax year, then changes can be made without additional approval. If your

changes are more extensive, you must get IRS approval before using substitute forms. More

extensive changes include different font style; decreasing or increasing the font size of caption

titles; adjusting or omitting format/layout elements; changing page orientation; and repositioning

line items, tables, and legends.

2.1.2

Email Submissions

The Program accepts submissions of substitute forms for review and approval via email. The

email address is substituteforms@irs.gov. Include the term “PDF Submissions” on the subject

line.

Follow these guidelines.

October 28, 2024

•

The emailed submission should include all the forms you wish to submit in one Portable

Document Format (PDF) file. Do not email or attach each form individually.

•

The emailed submission should include a maximum of 3 PDF files to include a checksheet,

a cover letter or accompanying statement, and a single PDF file that includes all of the forms

listed on your checksheet, cover letter, or accompanying statement.

•

A submission should contain a maximum of 15 forms.

•

An approval checksheet listing the forms you are submitting should always be included in

the PDF file along with the forms. Excluding the checksheet can slow the reviewing process

1036

Bulletin No. 2024–44

down, which can result in a delayed response to your submission. See a sample checksheet in

Exhibit B.

•

Optimize PDF files before submitting.

•

The maximum allowable email attachment is 2.5 megabytes.

•

The Program accepts zip files.

•

To alleviate delays during the peak time of September through December, submit advance

draft forms as early as possible.

If the guidelines are not followed, you may need to resubmit.

Emailing PDF submissions will not expedite review and approval. Submitting your substitute

forms package via email is the preferred and suggested method for submitting forms for review.

If, for some reason, you are not able to email your submission(s), you can mail your submission(s)

to:

Internal Revenue Service

Attn: Substitute Forms Program

SE:W:CAR:MP:P:TP:TP

ATSC

4800 Buford Highway

Mail Stop: 061-N

Chamblee, GA 30341

2.1.3

Expediting the Process

Follow these basic guidelines for expediting the process.

•

Always include a checksheet for the Program’s response.

•

Include an accompanying statement identifying most, if not all, of the deviations your substitute forms may have from the official IRS versions.

•

Follow the guidance in this publication for general substitute form guidelines. Follow the

guidance in specialized publications produced by the Program for other specific forms.

•

To spread out the workload, send in draft versions of substitute forms when they are posted.

Note. Be sure to make any changes to approved drafts before releasing final versions.

2.1.4

Schedules

Some schedules are considered to be an integral part of a complete tax return and must be submitted

as part of the form. Other schedules may be submitted separately and do not need to be included

with the tax form.

2.1.5

Examples of Schedules That

Must Be Submitted With

the Return

Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is an example

of this situation. For the Form 706 to be considered for approval, all schedules that affect or are

applicable to any election or position taken by the filer, as well as all applicable schedules that

affect the tax, must be submitted.

Bulletin No. 2024–44

1037

October 28, 2024

2.1.6

Examples of Schedules

That Can Be Submitted

Separately

Schedules C, D, and E for Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S.

Tax Return for Seniors, are examples of schedules that can be submitted separately. Although

printed by the IRS as a supplement to Form 1040 or 1040-SR, these schedules are not required to

be submitted for approval with Form 1040 or 1040-SR. These schedules may be separated from

Form 1040 or 1040-SR and submitted as substitute forms.

2.1.7

Use and Distribution of

Unapproved Forms

The IRS is continuing a program to identify and contact tax return preparers, forms developers,

and software publishers who use or distribute unapproved forms that do not conform to this

revenue procedure. The use of unapproved forms hinders the processing of the returns.

Section 2.2 – Highlights of Permitted Changes and Requirements

2.2.1

Methods of Reproducing

IRS Forms

There are methods of reproducing IRS printed tax forms suitable for use as substitutes without

prior approval.

•

You can photocopy most tax forms and use them instead of the official ones. The entire substitute form, including entries, must be legible.

•

You can reproduce any current tax form as cut sheets, snap sets, and marginally punched,

pin-fed forms as long as you use an official IRS version as the master copy.

•

You can reproduce a form that requires a signature as a valid substitute form. Many tax

forms (including returns) have a taxpayer signature requirement as part of the form layout.

The jurat/perjury statement/signature line areas must be retained and worded exactly as on

the official form. The requirement for a signature, by itself, does not prohibit a tax form from

being properly computer generated.

Section 2.3 – Vouchers

2.3.1

Overview

2.3.2

Scan Line Specifications

October 28, 2024

All payment vouchers (Forms 940-V, 941-V, 943-V, 944-V, 945-V, 1040-ES, 1040-V, 1041-V,

and 2290-V) must be reproduced in conjunction with their forms. Substitute vouchers must be

the same size as the officially printed vouchers. Vouchers that are prepared for printing on a laser

printer may include a scan line.

NNNNNNNNN

AA

XXXX

NN

N

NNNNNN

NNN

Item:

A

B

C

D

E

F

G

A.

Social Security Number/Employer Identification Number/Individual Taxpayer Identification Number/Adoption Taxpayer Identification Number (SSN/EIN/ITIN/ATIN) has 9

numeric (N) spaces.

B.

Check Digits have 2 alpha (A) spaces.

C.

Name Control has 4 alphanumeric (X) spaces.

D.

Master File Tax (MFT) Code has 2 numeric (N) spaces (see Section 2.3.3).

E.

Taxpayer Identification Number (TIN) Type has 1 numeric (N) space (see Section 2.3.4).

F.

Tax Period has 6 numeric (N) spaces in year/month format (YYYYMM).

G.

Transaction Code has 3 numeric (N) spaces.

1038

Bulletin No. 2024–44

2.3.3

MFT Code

2.3.4

TIN Type

Code Number for Forms:

•

1040 (family) – 30,

•

940 – 10,

•

941 – 01,

•

943 – 11,

•

944 – 14,

•

945 – 16,

•

1041-V – 05,

•

2290 – 60, and

•

4868 – 30.

Type Number for:

•

Form 1040 (family) and Form 4868 – 0; and

•

Forms 940, 941, 943, 944, 945, 1041-V, and 2290 – 2.

2.3.5

Voucher Size

The voucher size must be exactly 8.0″ x 3.25″ (Forms 1040-ES and 1041-ES must be 7.625″ x

3.0″). The document scan line must be vertically positioned 0.25 inch from the bottom of the scan

line to the bottom of the voucher. The last character on the right of the scan line must be placed

3.5 inches from the right leading edge of the document. The minimum required horizontal clear

space between characters is 0.014 inch. The line to be scanned must have a clear band 0.25 inch

in height from top to bottom of the scan line, and from border to border of the document. “Clear

band” means no printing except for dropout ink.

2.3.6

Print and Paper Weight

Vouchers must be imaged in black ink using OCR A, OCR B, or Courier 10. These fonts may not

be mixed in the scan line. The horizontal character pitch is 10 CPI. The preferred paper weight is

20 to 24 pound OCR bond.

2.3.7

Specifications for Software

Developers

Certain vouchers may be reproduced for use in the IRS lockbox system. These include the 1040-V,

1040-ES, 1041-V, 94X series, and 2290 vouchers. Software developers must follow these specific

guidelines to produce scannable vouchers strictly for lockbox purposes. Also see Exhibit A.

Bulletin No. 2024–44

•

The total depth must be 3.25 inches.

•

The scan line must be 0.5 inch from the bottom edge and 1.75 inches from the left edge of the

voucher and left justified.

•

Software developers’ vouchers must be 8.5 inches wide (instead of 8 inches with a cut line).

Therefore, no vertical cut line is required.

1039

October 28, 2024

•

Scan line positioning must be exact.

•

Do not use the over-the-counter format voucher and add the scan line to it.

•

All scanned data must be in 12-point OCR A font.

•

The 4-digit NACTP ID code or IRS source code should be placed under the box designated

for the payment dollar amount.

•

Windowed envelopes must not display the scan line in order to avoid disclosure and privacy

issues.

Note. All software developers must ensure that their software uses OCR A font so taxpayers will

be able to print the vouchers in the correct font.

2.3.8

Specific Line Positions

Follow these line specifications for entering taxpayer data in the lockbox vouchers.

Start Row Start Column Width End Column

Line Specifications for Taxpayer Data:

Taxpayer Name

Taxpayer Address, Apt.

Taxpayer City, State, ZIP

Foreign Country Name

Foreign Province/County

Foreign Postal Code

Line Specifications for Mail-To Data:

Mail Name

Mail Address

Mail City, State, ZIP

Line Specifications for:

Scan Line

2.3.9

How To Get Approval

56

57

58

59

60

60

6

6

6

6

6

26

36

36

36

36

17

16

41

41

41

41

22

41

56

57

58

43

43

43

38

38

38

80

80

80

63

26

n/a

n/a

Send an approval sheet with each form type for IRS signature to Jason Lane at Jason.L.Lane@irs.

gov. You should include in the email an example of each type of voucher the site will be testing.

Note. Do not mail any test vouchers to Jason Lane.

You are required to send 25 voucher samples of each form in PDF format by December 6, 2024.

You should email the test vouchers to raul.t.mariduena@jpmorgan.com. You can also print the

vouchers and send them to his mailing address at:

JP Morgan Chase

Attn: Raul Mariduena

830 Tyvola Road, Suite 114

Charlotte, NC 28217

For further information, contact Jason Lane at Jason.L.Lane@irs.gov, or at 559-550-8740 (not

toll free).

October 28, 2024

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Bulletin No. 2024–44

Section 2.4 – Restrictions on Changes

2.4.1

What You Cannot Do

to Forms Suitable for

Substitute Tax Forms

You cannot, without prior IRS approval, change any IRS tax form or use your own (nonapproved)

versions including graphics, unless specifically permitted by this revenue procedure. See Sections

2.5.7 through 2.5.11.

You cannot adjust any of the graphics on Form 1040 or 1040-SR (except in those areas specified

in Part 5 of this revenue procedure) without prior approval from the Program.

You cannot rearrange or redistribute data entry fields, and/or allow data entry fields to flow from

one page onto the next (that is, each page of a substitute form must contain the exact number of

data entry fields as there are on the official IRS form). The order of information on the substitute

form must be identical to the IRS version of the form. Publications for specific substitute forms

will state allowances for those respective forms.

Note. The 20-business-day turnaround policy may not apply to extensive changes.

Section 2.5 – Guidelines for Obtaining IRS Approval

2.5.1

Basic Requirements

Preparers who submit substitute privately designed, privately printed, computer-generated, or

computer-prepared tax forms must develop these substitutes using the guidelines established in

this part. These forms, unless there is an exception outlined by this revenue procedure, must be

approved by the IRS before being filed.

2.5.2

Conditional Approval

Based on Advance Drafts

The IRS cannot grant final approval of your substitute form until the official form has been

published. However, the IRS posts advance draft forms on its website at https://www.irs.gov/

draftforms.

Submission of proposed substitutes of these advance draft forms is encouraged, and conditional

approval will be granted based solely on these early drafts. These advance drafts are subject to

significant change before forms are finalized. If these advance drafts are used as the basis for your

substitute forms, you will be responsible for subsequently updating your final forms to agree with

the final official version. These revisions need not be resubmitted for further approval.

Note. Approval of forms based on advance drafts will not be granted after the final version of an

official form is published.

2.5.3

Submission Procedures

Bulletin No. 2024–44

Follow these general guidelines when submitting substitute forms for approval.

•

Any alteration of forms must be within the limits acceptable to the IRS. It is possible that,

from one filing period to another, a change in law or a change in internal need (processing,

audit, compliance, etc.) may change the allowable limits for the alteration of the official form.

1041

October 28, 2024

•

When approval of any substitute form (other than those exceptions specified in Part 1, Section 1.2) is requested, a sample of the proposed substitute form should be emailed for consideration to the Program at the address shown in Section 1.2.1.

•

Schedules and forms (for example, Forms 3468, 4136, etc.) that can be used with more than one type

of return (for example, Forms 1040, 1040-SR, 1041, 1120, etc.) should be submitted only once for

approval, without regard to the number of different tax returns with which they may be associated.

Also, all pages of multi-page forms or returns should be submitted in the same package.

2.5.4

Approving Offices

Because only the Program is authorized to approve substitute forms, unnecessary delays may

occur if forms are sent to the wrong office. You may receive an interim letter about the delay.

The Program may then coordinate the response with the originator responsible for revising that

particular form. Such coordination may include allowing the originator to officially approve the

form. No IRS office is authorized to allow deviations from this revenue procedure.

2.5.5

IRS Review of Software

Programs, etc.

The IRS does not review or approve the logic of specific software programs, nor does the IRS

confirm the calculations on the forms produced by these programs. The accuracy of the program

remains the responsibility of the software package developer, distributor, or user.

The Program is primarily concerned with the pre-filing quality review of the final forms that are

expected to be processed by IRS field offices. For this purpose, you should submit forms without

including any taxpayer information such as names, addresses, monetary amounts, etc.

If the software used is programmed to produce copies with populated fields, then you must use dummy

information. This will allow the Program to review and provide feedback or approval. Vendors should

use “0” for all number values and “X” for any information that requires alpha characters.

2.5.6

When To Send Proposed

Substitutes

Proposed substitutes, which are required to be submitted per this revenue procedure, should be

sent as much in advance of the filing period as possible. This is to allow adequate time for analysis

and response.

2.5.7

Accompanying Statement

When submitting sample substitutes, you should include an accompanying statement that lists each

form number and its changes from the official form (position, arrangement, appearance, line numbers,

additions, deletions, etc.). With each of the items, you should include a detailed reason for the change.

When requesting approval, include a checksheet. Checksheets expedite the approval process. The

checksheet may look like the example in Exhibit B displayed in the back of this revenue procedure

or may be one of your own design. Include your email address on the checksheet.

2.5.8

Approval/Nonapproval

Notice

October 28, 2024

The Program will email the checksheet or an approval letter to the originator, unless:

•

The requester has asked for a formal letter, or

•

Significant corrections to the submitted forms are required.

1042

Bulletin No. 2024–44

Notice of approval may impose qualifications before using the substitutes. Notices of unapproved

forms may specify the changes required for approval and require resubmission of the form(s) in

question. When appropriate, you will be contacted by telephone.

2.5.9

Duration of Approval

Most signature tax returns and many of their schedules and related forms have the tax year printed

in the upper right corner. Approvals for these annual forms are usually good for 1 calendar year

(January through December of the year of filing). Quarterly tax forms in the 94X series and Form

720 require approval for any quarter in which the form has been revised.

Because changes are usually made to an annual form every year, each new filing season generally

requires a new submission of a substitute form. Very rarely is updating the preprinted year the

only change made to an annual form. However, if no significant content, formatting, or layout

changes were made to a tax form, then review and approval received for the prior tax year can be

carried over into the current tax year.

2.5.10

Limited Continued Use of

an Approved Change

Limited changes approved for one tax year may be allowed for the same form in the following

tax year. Examples are the use of abbreviated words, revised form spacing, compressed text lines,

shortened captions, etc., which do not change the integrity of lines or text on the official forms.

If the vendor or filer makes substantial changes to the form, new substitutes must be submitted

for approval. If the vendor or filer makes only minor editorial changes to the form, or makes any

changes that mirror changes the IRS makes to the form’s official version, the new substitute does

not need to be submitted for approval. It is the responsibility of each vendor who has been granted

permission to produce substitute forms to monitor and revise forms to mirror any revisions to the

official forms made by the IRS. If there are any questions, contact the Program.

2.5.11

When Approval Is Not

Required

If you received approval for a specific change on a form last year, you may make the same change

this year if the item is still present on the official form.

•

The new substitute form does not have to be submitted to the IRS and approval based on that

change is not required.

•

However, the new substitute form must conform to the official current year IRS form in

other respects, such as date, Office of Management and Budget (OMB) approval number,

attachment sequence number, Paperwork Reduction Act Notice statement, arrangement, item

caption, line number, line reference, data sequence, etc.

•

The new substitute form must also comply with changes to the guidelines in this revenue

procedure. This revenue procedure may have eliminated, added to, or otherwise changed the

guideline(s) that affected the change approved in the prior year.

•

An approved change is authorized only for the period from a prior tax year substitute form to

a current tax year substitute form.

Exception. Forms with temporary, limited, or interim approvals (or with approvals that state a

change is not allowed in any other tax year) are subject to review in subsequent years.

Bulletin No. 2024–44

1043

October 28, 2024

2.5.12

Required Copies

Generally, you must send us one copy of each form being submitted for approval. However, if

you are producing forms for different computer platforms (for example, Microsoft vs. Apple),

different tax preparation software (for example, TurboTax® vs. TaxSlayer®), or different types

of printers (for example, inkjet vs. impact), and these forms differ significantly in appearance,

submit one copy for each type of platform, tax preparation software, or printer.

2.5.13

Requestor’s Responsibility

Following receipt of an initial approval for a substitute forms package or a software output

program to print substitute forms, it is the responsibility of the originator (designer or distributor)

to provide client firms or individuals with forms that meet the IRS’s requirements for continuing

acceptability. Examples of this responsibility include:

2.5.14

Source Code

•

Using the prescribed print paper, font size, legibility, state tax data deletion, etc.; and

•

Informing all users of substitute forms of the legal requirements of the Paperwork Reduction

Act Notice, which is generally found in the instructions for the official IRS forms.

The Program will assign a unique source code to each firm that submits substitute forms for

approval. This source code will be a permanent identifier that must be used on every submission

by a particular firm.

The source code consists of three alpha characters and should generally be printed under or to the

left of the “Paperwork Reduction Act” statement. Vendors must ensure that the source code is not

printed too close to or within the left or bottom 0.5-inch margin to avoid the source code from

being cut off during printing.

Section 2.6 – Office of Management and Budget (OMB) Requirements for All Substitute Forms

2.6.1

OMB

Requirements for All

Substitute Forms

There are legal requirements of the Paperwork Reduction Act of 1995 (the Act). Public Law 10413 requires the following.

•

OMB approves all IRS tax forms that are subject to the Act.

•

Each IRS form contains (in the upper right corner) the OMB number, if assigned.

•

Each IRS form (or its instructions) states why the IRS needs the information, how it will be

used, and whether or not the information is required to be furnished to the IRS.

This information must be provided to every user of official or substitute IRS forms or instructions.

2.6.2

Application of the

Paperwork Reduction Act

October 28, 2024

On forms that have been assigned OMB numbers:

•

All substitute forms must contain in the upper right corner the OMB number that is on the

official form, and

•

The required format is: OMB No. 1545-XXXX (preferred) or OMB # 1545-XXXX (acceptable).

1044

Bulletin No. 2024–44

2.6.3

Required Explanation to

Users

You must inform the users of your substitute forms of the IRS use and collection requirements

stated in the instructions for official IRS forms.

•

If you provide your users or customers with the official IRS instructions, each form must

retain either the Paperwork Reduction Act Notice (or Disclosure, Privacy Act, and Paperwork

Reduction Act Notice), or a reference to it as the IRS does on the official forms (usually in the

lower left corner of the forms).

•

This notice reads, in part, “We ask for tax return information to carry out the tax laws of the

United States. . . .”

Note. If no IRS instructions are provided to users of your forms, the exact text of the Paperwork

Reduction Act Notice (or Disclosure, Privacy Act, and Paperwork Reduction Act Notice) must be

furnished separately or on the form.

2.6.4

Finding the OMB Number

and Paperwork Reduction

Act Notice

The OMB number and the Paperwork Reduction Act Notice, or references to it, may be found

printed on an official form (or its instructions). The number and the notice are included on the

official paper format and in other formats produced by the IRS.

Part 3

Physical Aspects and Requirements

Section 3.1 – General Guidelines for Substitute Forms

3.1.1

General Information

The official form is the standard. Because a substitute form is a variation from the official form,

you should know the requirements of the official form for the year of use before you modify it to

meet your needs. To obtain the most frequently used tax forms, go to https://www.irs.gov/forms.

3.1.2

Design

Each form must follow the design of the official form as to format arrangement, item caption, line

numbers, line references, and sequence.

3.1.3

State Tax Information

Prohibited

Generally, state tax information must not appear on the federal tax return, associated form, or

schedule that is filed with the IRS. Exceptions occur when amounts are claimed on, or required

by, the federal return (for example, state and local income taxes on Schedule A (Form 1040)).

3.1.4

Vertical Alignment of

Amount Fields

IF a form is to be...

manually prepared and the official

IRS form still has a separate cents

entry field

Bulletin No. 2024–44

1045

THEN...

1. the entry column must have a vertical line or some

type of indicator in the amount field to separate

dollars from cents, and

2. the cents column must be at least 0.3 inch wide.

October 28, 2024

IF a form is to be...

computer generated

THEN...

1. vertically align the amount entry fields where possible, and

2. use one of the following amount formats.

a) 0,000,000.

b) 0,000,000.00.

1. you may remove the vertical line in the amount field

that separates dollars from cents, and

2. use one of the following amount formats.

a) 0,000,000.

b) 0,000,000.00.

computer prepared

3.1.5

Attachment Sequence

Number

Many individual income tax forms have a required “attachment sequence number” located just

below the year designation in the upper right corner of the form. The IRS uses this number to

indicate the order in which forms are to be attached to the tax return for processing. Some of the

attachment sequence numbers may change from year to year.

The following apply to computer-prepared forms.

3.1.6

Assembly of Forms

•

The sequence number may be printed in no less than 12-point boldface type and centered

below the form’s year designation.

•

The sequence number may also be placed following the year designation for the tax form and

separated with an asterisk.

•

The actual number may be printed without labeling it the “Attachment Sequence Number.”

When developing software or forms for use by others, inform your customers/clients that the

order in which the forms are arranged may affect the processing of the package. A return must be

arranged in the order indicated below.

IF the form is...

1040 or 1040-SR

any other tax return

(Form 1120, 1120-S,

1065, 1041,

etc.)

THEN the sequence is...

• Form 1040 or 1040-SR, and schedules and forms in attachment

sequence number order.

• the tax returns, directly associated schedules (Schedule D,

etc.), directly associated forms, additional schedules in alphabetical order, and additional forms in numerical order.

Supporting statements should then follow in the same sequence as the forms they support.

Additional information required should be attached last.

In this way, the forms are received in the order in which they must be processed. If you do not send

returns to the IRS in order, processing may be delayed.

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3.1.7

Paid Preparer’s

Information and Signature

Area

On Forms 1040, 1040-SR, and 1120, and any other applicable tax forms, the “Paid Preparer Use

Only” area may not be rearranged or relocated. You may, however, add three extra lines to the

paid preparer’s address area, and remove the horizontal rules in that area without prior approval.

3.1.8

Some Common Reasons

for Requiring Changes to

Substitute Forms

Some reasons that substitute form submissions may require changes include the following.

•

Shading areas incorrectly.

•

Failing to include a reference to the location of the Paperwork Reduction Act Notice.

•

Not including parentheses for losses.

•

Not including “Attach Statement” when appropriate.

•

Including line references or entry spaces that do not match the official form.

•

Printing text that is different from the official form.

•

Altering the jurat (perjury statement).

•

Having an incorrect OMB number.

•

Including the IRS catalog number (Cat. No.) on the form.

•

Failing to include preprinted amounts in entry fields.

•

Missing IRS source code or NACTP software ID.

•

Missing 3-letter FFF code on paper Form 1040 from tax software companies that participate

in the IRS Free File Program.

•

Incorrect dimensions.

Section 3.2 – Paper

3.2.1

Paper Content

3.2.2

Paper With Chemical

Transfer Properties

The paper must be:

•

Chemical wood writing paper that is equal to or better than the quality used for the official

form,

•

At least 18 pound (17″ x 22″, 500 sheets), or

•

At least 50 pound offset book (25″ x 38″, 500 sheets).

There are several kinds of paper prohibited for substitute forms. These are:

1.

Carbon-bonded paper, and

2.

Chemical transfer paper except when the following specifications are met.

a.

Bulletin No. 2024–44

Each ply within the chemical transfer set of forms must be labeled.

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October 28, 2024

b.

Only the top ply (ply one and white in color), the one that contains chemical on the back

only (coated back), may be filed with the IRS.

Example. A set containing three plies would be constructed as follows: ply one (coated back),

“Federal Return, File with IRS”; ply two (coated front and back), “Taxpayer’s copy”; and ply

three (coated front), “Preparer’s copy.”

The file designation, “Federal Return, File with IRS” for ply one, must be printed in the bottom

right margin (just below the last line of the form) in 12-point boldface type.

It is not mandatory, but recommended, that the file designation “Federal Return, File with IRS” be

printed in a contrasting ink for visual emphasis.

3.2.3

Paper and Ink Color

It is preferred that the color and opacity of paper substantially duplicate that of the original form.

This means that your substitute must be printed in black ink and may be on white paper or on the

colored paper the IRS form is printed on. Form 1040 or 1040-SR substitute reproductions may be

in black ink without the colored shading. The only exception to this rule is Form 1041-ES, which

should be printed with a PMS 100 yellow shading in the color-screened area. This is necessary to

assist us in expeditiously separating this form from the very similar Form 1040-ES.

3.2.4

Page Size

Substitute or reproduced forms and computer-prepared/-generated substitutes may be the same

size as the official form or they may be the standard commercial size (8.5″ x 11″). The thickness

of the stock cannot be less than 0.003 inch.

Section 3.3 – Printing

3.3.1

Printing Medium

The private printing of all substitute tax forms must be by conventional printing processes,

photocopying, computer graphics, or similar reproduction processes.

3.3.2

Legibility

All forms must have a high standard of legibility as to printing, reproduction, and fill-in matter.

Entries of taxpayer data may be no smaller than 8 points. The IRS reserves the right to reject

those with poor legibility. The ink and printing method used must ensure that no part of a form

(including text, graphics, data entries, etc.) develops “smears” or similar quality deterioration. This

standard must be followed for any subsequent copies or reproductions made from an approved

master substitute form, either during preparation or during IRS processing.

3.3.3

Type Font

Many federal tax forms are printed using Helvetica as the basic type font. It is preferred that you

use this type font when composing substitute forms.

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Bulletin No. 2024–44

3.3.4

Print Spacing

Substitute forms should be printed using a 6 lines/inch vertical print option. They should also be

printed horizontally in 10-pitch pica (that is, 10 print characters per inch) or 12-pitch elite (that is,

12 print positions per inch).

3.3.5

Image Size

The image size of a printed substitute form should be as close as possible to that of the official

form. You may omit any text on both computer-prepared and computer-generated forms that is

solely instructional.

3.3.6

Title Area Changes

To allow a large top margin for marginal printing and more lines per page, the title line(s) for all

substitute forms (not including the form’s year designation and sequence number, when present)

may be photographically reduced by 40% or reset as one line of type. When reset as one line, the

type size may be no smaller than 14 points. You may omit “Department of the Treasury—Internal

Revenue Service” and all references to instructions in the form’s title area.

3.3.7

Remove Government

Publishing Office (GPO)

Symbol and IRS Catalog

Number

When privately printing substitute tax forms, the GPO symbol and/or jacket number must be

removed. In the same place using the same type size, print the EIN of the printer or designer, or

the IRS-assigned source code. (Preferably, this last number should be printed in the lower left area

of the first page of each form.) Also, remove the IRS catalog number (Cat. No.) and the recycle

symbol if the substitute is not produced on recycled paper.

3.3.8

Printing Single-Page Forms

Substitute single-page forms should be reproduced the same as IRS single-page forms. Other

forms or schedules should not be printed on the back or on blank portions of a single-page form.

However, printing instructions on the back or on blank portions of a single-page form is acceptable.

3.3.9

Photocopy Equipment

The IRS does not undertake to approve or disapprove the specific equipment or process used in

reproducing official forms. Photocopies of forms must be entirely legible and satisfy the conditions

stated in this and other revenue procedures.

3.3.10

Reproductions

Reproductions of official forms and substitute forms that do not meet the requirements of this

revenue procedure may not be filed instead of the official forms. Illegible photocopies are subject

to being returned to the filer for resubmission of legible copies.

3.3.11

Removal of Instructions

Generally, you may remove references to instructions. No prior approval is needed. However, in

some instances, you may be requested to include references to instructions.

Exception. The words “For Paperwork Reduction Act Notice, see instructions” must be retained,

or a similar statement indicating the location of the Notice must be provided on each form.

Section 3.4 – Margins

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October 28, 2024

3.4.1

Margin Size

3.4.2

Marginal Printing

The format of a reproduced tax form when printed on the page must have margins on all sides at

least as large as the margins on the official form. This allows room for IRS employees to make

necessary entries on the form during processing.

•

A 0.5-inch to 0.25-inch margin must be maintained across the top, bottom, and both sides of

all substitute forms.

•

The marginal, perforated strips containing pin-fed holes must be removed from all forms

prior to filing with the IRS.

Prior approval is not required for the marginal printing allowed when printed on an official form

or on a photocopy of an official form.

•

With the exception of the actual tax return forms (for example, Forms 1040, 1040-SR, 1120,

940, 941, etc.), you may print in the left vertical margin and in the left half of the bottom

margin.

•

Printing is never allowed in the top right margin of the tax return form (for example, Forms

1040, 1040-SR, 1120, 940, 941, etc.). The IRS uses this area to imprint a Document Locator

Number for each return. There are no exceptions to this requirement.

Section 3.5 – Miscellaneous Information for Substitute Forms

3.5.1

Filing Substitute Forms

To be acceptable for filing, a substitute form must print out in a format that will allow the filer to

follow the same instructions that accompany official forms.The form must be legible, must be on

the appropriately sized paper, and must include a jurat (perjury statement) where one appears on

the published form.

3.5.2

Caution to Software

Publishers

The IRS has received returns produced by software packages with approved output where either

the form heading was altered or the lines were spaced irregularly. This produces an illegible or

unrecognizable return or a return with the wrong number of pages. While many of these problems

are caused by individual printer differences, they may delay input of return data and, in some

cases, generate correspondence to the taxpayer. Therefore, in the instructions to the purchasers

of your product, both individual and professional, stress that their returns will be processed more

efficiently if they are properly formatted. This includes:

3.5.3

Caution to Producers of

Software Packages

October 28, 2024

•

Having the correct form numbers, six-digit form identifying numbers, and titles at the top of

the returns; and

•

Submitting the same number of pages as if the form were an official IRS form with the line

items on the proper pages.

If you are producing a software package that generates name and address data onto the tax return,

do not, under any circumstances, program either the IRS preprinted check digits or a practitionerderived name control to appear on any return prepared and filed with the IRS.

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Bulletin No. 2024–44

3.5.4

Programming to Print

Forms

Whenever applicable:

•

Use only the following label information format for single filers: JOHN Q. DOE 000 OAK

DRIVE HOMETOWN, STATE 00000;

•

Use only the following label information format for joint filers: JOHN Q. DOE MARY Q.

DOE 000 OAK DRIVE HOMETOWN, STATE 00000; and

•

Use “0” for number values and “X” for alpha characters entered in data entry fields as dummy copy.

Part 4

Additional Resources

Section 4.1 – Guidance From Other Revenue Procedures

4.1.1

General

The IRS publications listed below provide guidance for substitute tax forms not covered in this

revenue procedure. These publications are available on the IRS website. Use the publication

number listed below to search for the requested document.

•

Pub. 1141, General Rules and Specifications for Substitute Forms W-2 and W-3.

•

Pub. 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498,

and Certain Other Information Returns.

•

Pub. 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c.

•

Pub. 4436, General Rules and Specifications for Substitute Form 941, Schedule B (Form

941), Schedule D (Form 941), Schedule R (Form 941), and Form 8974.

•

Pub. 5223, General Rules and Specifications for Affordable Care Act Substitute Forms 1095A, 1094-B, 1095-B, 1094-C, and 1095-C.

Section 4.2 – Electronic Tax Products

4.2.1

The IRS Website

Copies of tax forms and their instructions, publications, fillable forms, and prior year forms and

publications may be found on the IRS website at https://www.irs.gov/forms.

Draft forms and instructions may be found at https://www.irs.gov/draftforms.

Other tax-related information may be found at https://www.irs.gov/.

4.2.2

System Requirements

and Ordering Forms and

Instructions

Bulletin No. 2024–44

For system requirements, contact the National Technical Information Service (NTIS) at https://

www.ntis.gov. Prices are subject to change.

You can order IRS forms and other tax material at https://www.irs.gov/orderforms.

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Part 5

Requirements for Specific Tax Returns

Section 5.1 – Tax Returns (Forms 1040, 1040-SR, 1120, etc.)

5.1.1

Acceptable Forms

5.1

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