These synopses are intended only as aids to the reader in

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2023–2

January 9, 2023

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE

Announcement 2023-2, page 344.

Section 80603 of the Infrastructure and Investment and

Jobs Act, Pub. L. No. 117-58, 135 Stat. 429, 1339 (2021)

clarifies and expands the rules regarding the reporting of

information on digital assets by brokers under sections 6045

and 6045A of the Internal Revenue Code. The announcement

clarifies that until the IRS issues new final regulations under

section 80603 with respect to section 6045, a broker may

continue to report gross proceeds and basis as required under existing law and regulations. In addition, until the IRS issues new final regulations under section 80603 with respect

to section 6045A, a broker may continue to issue statements

on transfers of covered securities as required under existing

law and regulations. Brokers will not be required to report

additional information with respect to dispositions of digital

assets, issue additional statements, or report to the IRS on

transfers of digital assets until those new final regulations

under sections 6045 and 6045A are issued.

Notice 2023-8, page 341.

This notice provides additional guidance for brokers to comply with the provisions of the final regulations under section

1446(f) (and certain provisions of the final regulations that

apply to section 1446(a)) (final regulations) that relate to

withholding on the transfer of an interest in a publicly traded

partnership (PTP interest). The Department of the Treasury

(Treasury Department) and the Internal Revenue Service (IRS)

intend to issue proposed regulations that would amend the

final regulations to implement this additional guidance.

T. D. 9970, page 311.

This document includes final regulations under the Internal Revenue Code that provide an automatic extension of

time for providers of minimum essential coverage (including

health insurance issuers, self-insured employers, and government agencies) to furnish individual statements regarding

such coverage and an alternative method for furnishing individual statements when the individual shared responsibility

payment amount is zero. The final regulations also provide an

automatic extension of time for “applicable large employers”

(generally employers with 50 or more full-time employees, including full-time equivalent employees) to furnish statements

relating to health insurance that the applicable large employers offer to their full-time employees. Additionally, the final

regulations provide that “minimum essential coverage,” as

that term is used in health insurance-related tax laws, does

not include Medicaid coverage limited to COVID-19 testing

and diagnostic services provided under the Families First

Coronavirus Response Act. The final regulations affect some

taxpayers who claim the premium tax credit; health insurance issuers, self-insured employers, government agencies,

and other persons that provide minimum essential coverage

to individuals; and applicable large employers.

EMPLOYEE PLANS

Notice 2023-5, page 324.

ADMINISTRATIVE, INCOME TAX

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

December 2022 used under § 417(e)(3)(D), the 24-month

average segment rates applicable for December 2022, and

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

§ 430(h)(2)(C)(iv).

Rev. Rul. 2023-1, page 309.

EMPLOYEE PLANS, EXCISE TAX

Federal rates; adjusted federal rates; adjusted federal longterm rate, and the long-term tax exempt rate. For purposes of

sections 382, 1274, 1288, 7702(f)(11), 7872 and other sections of the Code, tables set forth the rates for January 2023.

Finding Lists begin on page ii.

Notice 2023-4, page 321.

This notice provides the indexing factors to be used by

group health plans and health insurance issuers to cal-

culate the qualifying payment amount (QPA) for items or

services provided on or after January 1, 2023, and before January 1, 2024. The No Surprises Act (NSA) added

parallel provisions at Code sections 9816 and 9817, ERISA sections 716 and 717, and PHS Act sections 2799A1 and 2799A-2. These provisions provide protections

against balance-billing for certain out-of-network items or

services provided to patients. The QPA is the basis for

determining individual cost sharing for items and services

covered by the balance-billing protections in the NSA, under certain circumstances. The QPA for a given calendar year is based on information regarding median rates

for certain items and services from prior years and is

indexed based on changes in the consumer price index.

EXCISE TAX, INCOME TAX

Notice 2023-6, page 328.

Notice 2023-6 provides guidance on the new sustainable aviation fuel credits under §§ 40B and 6426(k) of

the Internal Revenue Code and related credit and payment rules under §§ 34(a)(3), 38, 87, and 6427(e)(1).

This notice also provides rules related to the § 4101

registration requirements. Finally, this notice requests

comments from the public related to the SAF credit to

assist the Department of the Treasury and the Internal

Revenue Service in developing additional guidance on

the SAF credit in the future.

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.

January 9, 2023 

Bulletin No. 2023–2

Part I

Section 1274.—

Determination of Issue

Price in the Case of Certain

Debt Instruments Issued for

Property

(Also Sections 42, 280G, 382, 467, 468, 482, 483,

1288, 7520, 7872.)

Rev. Rul. 2023-1

This revenue ruling provides various

prescribed rates for federal income tax purposes for January 2023 (the current month).

Table 1 contains the short-term, mid-term,

Annual

AFR

110% AFR

120% AFR

130% AFR

4.50%

4.96%

5.41%

5.87%

AFR

110% AFR

120% AFR

130% AFR

150% AFR

175% AFR

3.85%

4.23%

4.62%

5.01%

5.80%

6.78%

AFR

110% AFR

120% AFR

130% AFR

3.84%

4.22%

4.61%

5.00%

Short-term adjusted AFR

Mid-term adjusted AFR

Long-term adjusted AFR

Bulletin No. 2023–2

and long-term applicable federal rates

(AFR) for the current month for purposes

of section 1274(d) of the Internal Revenue

Code. Table 2 contains the short-term, midterm, and long-term adjusted applicable

federal rates (adjusted AFR) for the current

month for purposes of section 1288(b). Table 3 sets forth the adjusted federal longterm rate and the long-term tax-exempt

rate described in section 382(f). Table 4

contains the appropriate percentages for

determining the low-income housing credit described in section 42(b)(1) for buildings placed in service during the current

month. However, under section 42(b)(2),

the applicable percentage for non-federally

subsidized new buildings placed in service

after July 30, 2008, shall not be less than

9%. Table 5 contains the federal rate for determining the present value of an annuity,

an interest for life or for a term of years,

or a remainder or a reversionary interest

for purposes of section 7520. Table 6 contains the deemed rate of return for transfers

made during calendar year 2023 to pooled

income funds described in section 642(c)

(5) that have been in existence for less

than 3 taxable years immediately preceding the taxable year in which the transfer

was made. Finally, Table 7 contains the

average of the applicable federal mid-term

rates (based on annual compounding) for

the 60-month period ending December 31,

2022, for purposes of section 7702(f)(11).

REV. RUL. 2023-1 TABLE 1

Applicable Federal Rates (AFR) for January 2023

Period for Compounding

Semiannual

Quarterly

Short-term

4.45%

4.43%

4.90%

4.87%

5.34%

5.30%

5.79%

5.75%

Mid-term

3.81%

3.79%

4.19%

4.17%

4.57%

4.54%

4.95%

4.92%

5.72%

5.68%

6.67%

6.62%

Long-term

3.80%

3.78%

4.18%

4.16%

4.56%

4.53%

4.94%

4.91%

Annual

3.41%

2.91%

2.91%

REV. RUL. 2023-1 TABLE 2

Adjusted AFR for January 2023

Period for Compounding

Semiannual

3.38%

2.89%

2.89%

309

Quarterly

3.37%

2.88%

2.88%

Monthly

4.41%

4.85%

5.28%

5.72%

3.78%

4.15%

4.53%

4.90%

5.65%

6.58%

3.77%

4.14%

4.52%

4.89%

Monthly

3.36%

2.87%

2.87%

January 9, 2023

REV. RUL. 2023-1 TABLE 3

Rates Under Section 382 for January 2023

Adjusted federal long-term rate for the current month

Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal

long-term rates for the current month and the prior two months.)

2.91%

3.29%

REV. RUL. 2023-1 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for January 2023

Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after

July 30, 2008, shall not be less than 9%.

Appropriate percentage for the 70% present value low-income housing credit

7.89%

Appropriate percentage for the 30% present value low-income housing credit

3.38%

REV. RUL. 2023-1 TABLE 5

Rate Under Section 7520 for January 2023

Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a

remainder or reversionary interest

REV. RUL. 2023-1 TABLE 6

Deemed Rate for Transfers to New Pooled Income Funds During 2023

Deemed rate of return for transfers during 2023 to pooled income funds that have been in existence for

less than 3 taxable years

4.6%

2.2%

REV. RUL. 2023-1 TABLE 7

Average of the Applicable Federal Mid-Term Rates for 2022

For purposes of section 7702(f)(11), the average of the applicable federal mid-term rates (based on annual compounding) for the

60-month period ending December 31, 2022, is 1.85%, rounded to 2%.

Section 42.—Low-Income

Housing Credit

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

January 2023. See Rev. Rul. 2023-1, page 309.

Section 280G.—Golden

Parachute Payments

Section 382.—Limitation

on Net Operating Loss

Carryforwards and Certain

Built-In Losses Following

Ownership Change

The adjusted applicable federal long-term rate

is set forth for the month of January 2023. See Rev.

Rul. 2023-1, page 309.

Section 467.—Certain

Payments for the Use of

Property or Services

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

January 2023. See Rev. Rul. 2023-1, page 309.

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

January 2023. See Rev. Rul. 2023-1, page 309.

January 9, 2023

310

Bulletin No. 2023–2

Section 468.—Special

Rules for Mining and Solid

Waste Reclamation and

Closing Costs

The applicable federal short-term rates are set

forth for the month of January 2023. See Rev. Rul.

2023-1, page 309.

Section 482.—Allocation

of Income and Deductions

Among Taxpayers

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

January 2023. See Rev. Rul. 2023-1, page 309.

26 CFR 1.6055-1 Information reporting for minimum essential coverage

TD 9970

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Parts 1 and 301

Information Reporting of

Health Insurance Coverage

and Other Issues under

Sections 5000A, 6055, and

6056

AGENCY: Internal Revenue Service

(IRS), Treasury

ACTION: Final regulations

SUMMARY: This document includes

final regulations under the Internal Revenue Code that provide an automatic

extension of time for providers of minimum essential coverage (including

health insurance issuers, self-insured

employers, and government agencies) to

furnish individual statements regarding

such coverage and an alternative meth-

Bulletin No. 2023–2

Section 483.—Interest on

Certain Deferred Payments

Section 7520.—Valuation

Tables

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

January 2023. See Rev. Rul. 2023-1, page 309.

The applicable federal mid-term rates are set

forth for the month of January 2023. See Rev. Rul.

2023-1, page 309.

Section 1288.—Treatment

of Original Issue Discount

on Tax-Exempt Obligations

Section 7872.—Treatment

of Loans With BelowMarket Interest Rates

The adjusted applicable federal short-term,

mid-term, and long-term rates are set forth for the

month of January 2023. See Rev. Rul. 2023-1, page

309.

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

January 2023. See Rev. Rul. 2023-1, page 309.

od for furnishing individual statements

when the individual shared responsibility payment amount is zero. The final

regulations also provide an automatic

extension of time for “applicable large

employers” (generally employers with

50 or more full-time employees, including full-time equivalent employees)

to furnish statements relating to health

insurance that the applicable large employers offer to their full-time employees. Additionally, the final regulations

provide that “minimum essential coverage,” as that term is used in health

insurance-related tax laws, does not

include Medicaid coverage limited to

COVID-19 testing and diagnostic services provided under the Families First

Coronavirus Response Act. The final

regulations affect some taxpayers who

claim the premium tax credit; health insurance issuers, self-insured employers,

government agencies, and other persons

that provide minimum essential coverage to individuals; and applicable large

employers.

apply for calendar years beginning after

December 31, 2021.

DATES: Effective date: These regulations are effective on December 15, 2022.

Applicability date: The regulations under §1.5000A-2 apply for months beginning after September 28, 2020. The regulations under §§1.6055-1 and 301.6056‑1

311

FOR FURTHER INFORMATION

CONTACT: Gerald Semasek at (202)

317-7006 or Lisa Mojiri-Azad at (202)

317-4649 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains amendments

to the Income Tax Regulations (26 CFR

part 1) under sections 5000A and 6055 of

the Internal Revenue Code (Code) and to

the Procedure and Administration Regulations (26 CFR part 301) under section

6056 of the Code.

On December 6, 2021, a notice of

proposed rulemaking (REG-109128-21)

was published in the Federal Register

(86 FR 68939) (2021 proposed regulations). The 2021 proposed regulations

proposed amendments to the regulations

under:

• Section 5000A that would provide

that Medicaid coverage limited to

COVID‑19 testing and diagnostic

services under section 6004(a)(3)

of the Families First Coronavirus

Response Act, Public Law 116-127,

134 Stat. 178 (Mar. 18, 2020) is not

minimum essential coverage.

January 9, 2023

•

Section 6055 that would provide

an automatic extension of time for

furnishing statements to responsible

individuals1 and permit an alternative

manner for timely furnishing

statements.

• Section 6056 that would provide

an automatic extension of time for

furnishing statements to full-time

employees.

The preamble to the 2021 proposed regulations also included a renewed request

for comments on rules (REG-103058-16)

that were proposed in the Federal Register (81 FR 50671) on August 2, 2016

(2016 proposed regulations) relating to information reporting of minimum essential

coverage under section 6055.

Ten comments were received in response to the 2021 proposed regulations.

No public hearing was requested or held.

After consideration of the comments received, this Treasury decision adopts the

2021 proposed regulations with clarifying

modifications as final regulations, as discussed in the Summary of Comments and

Explanation of Revisions section of this

preamble. The Department of the Treasury

(Treasury Department) and the IRS continue to consider the 2016 proposed regulations in light of the public comments

received both in 2016 and in response to

the request in the 2021 proposed regulations. The Treasury Department and the

IRS expect to finalize the 2016 proposed

regulations separately.

Summary of Comments and

Explanation of Revisions

I. Minimum Essential Coverage Under

Section 5000A

Under the Patient Protection and Affordable Care Act, Public Law 111-148,

124 Stat. 119 (2010), and the Health

Care and Education Reconciliation Act

of 2010, Public Law 111-152, 124 Stat.

1029 (2010) (collectively the Affordable

Care Act or ACA), eligible individuals

who purchase coverage under a qualified

health plan through a Health Insurance

Exchange (Exchange) established under

section 1311 of the ACA may claim a premium tax credit pursuant to section 36B.

Section 36B and §1.36B-3 of the Income

Tax Regulations provide that a taxpayer

is allowed a premium tax credit only for

months that are coverage months for individuals in the taxpayer’s family, as defined

in §1.36B-1(d). Under section 36B(c)(2)

(B) and §1.36B-3(c)(1)(iii), a “coverage

month” for an individual includes only

those months for which the individual is

not eligible for minimum essential coverage other than coverage in the individual

market.

Section 5000A(f)(1) defines “minimum essential coverage” to include various types of health plans and programs,

including specified government-sponsored programs such as the Medicaid

program under Title XIX of the Social Security Act. Section 1.5000A-2(b)(2) lists

certain government-sponsored programs

that do not constitute minimum essential

coverage.

Notice 2020-66, 2020-40 I.R.B. 785,

provides that Medicaid coverage that is

limited to COVID-19 testing and diagnostic services under section 6004(a)(3) of

the Families First Coronavirus Response

Act is not minimum essential coverage

under a government-sponsored program.

Consequently, an individual’s eligibility

for such coverage for one or more months

does not prevent those months from qualifying as coverage months for purposes of

determining eligibility for the premium

tax credit under section 36B.

Consistent with the guidance provided in Notice 2020-66, the 2021 proposed

regulations would amend §1.5000A2 by adding Medicaid coverage for

COVID-19 testing and diagnostic services

to the enumerated health coverages under §1.5000A-2(b)(2) that do not qualify as minimum essential coverage under

a government-sponsored program. This

amendment to §1.5000A-2 would apply

for months beginning after September

28, 2020. Under the 2021 proposed regulations, for months beginning on or after

January 1, 2020, and before September

28, 2020, taxpayers could rely upon Notice 2020-66. No comments were received

on this proposed change. Accordingly,

the Treasury Department and the IRS are

finalizing the proposed amendment to

§1.5000A-2 without change.

II. Information Reporting Under Sections

6055 and 6056 and Penalties Under

Sections 6721 and 6722

Section 6055 requires all persons who

provide minimum essential coverage to an

individual to report certain information to

the IRS that identifies covered individuals

and the period of coverage. See section

6055(a) and (b). Those persons are also

required to furnish a statement to the covered individuals with the same information. See section 6055(c). These information returns and written statements were

needed to administer the individual shared

responsibility provisions under section

5000A until the individual shared responsibility payment amount was reduced to

zero for months beginning after December

31, 2018 by Public Law 115-97, 131 Stat.

2054, 2092 (2017), commonly referred

to as the Tax Cuts and Jobs Act (TCJA).

As a result, covered individuals no longer needed the information on the written

statements (Form 1095-B) to prepare and

file their individual returns. However, the

TCJA did not amend any of the reporting

or furnishing requirements under section

6055.

Under section 6055 and §1.6055-1(f)

and (g), every person that provides minimum essential coverage to an individual

during the calendar year is required to file

with the IRS an information return and

a transmittal on or before February 28

(March 31 if filed electronically) of the

year following the calendar year to which

it relates and to furnish to the responsible

individual identified on the return a written

statement on or before January 31 of the

year following the calendar year to which

the statement relates. The IRS generally

has designated Form 1094-B, Transmittal

of Health Coverage Information Returns,

and Form 1095-B, Health Coverage, to

meet the section 6055 requirements.

Section 6056 requires an applicable

large employer (ALE), as defined in sec-

As provided in §1.6055-1(b)(11), a responsible individual includes a primary insured, employee, former employee, uniformed services sponsor, parent, or other related person named on an

application who enrolls one or more individuals, including him or herself, in minimum essential coverage.

1

January 9, 2023

312

Bulletin No. 2023–2

tion 4980H(c)(2) of the Code, that is subject to the requirements of section 4980H

to file information returns annually and

furnish written statements with respect to

the health insurance, if any, that the employer offers to its full-time employees.

The information returns are used by the

IRS to administer the employer shared responsibility provisions of section 4980H,

and by certain full-time employees to help

determine if they are eligible for the premium tax credit under section 36B.

Under section 6056 and §301.60561(e) and (g), every ALE and member of an

aggregated group that is determined to be

an ALE (collectively, ALE member) is required to file with the IRS an information

return and a transmittal on or before February 28 (March 31 if filed electronically)

of the year following the calendar year

to which it relates and to furnish to fulltime employees a written statement on or

before January 31 of the year following

the calendar year to which the statement

relates. The IRS generally has designated Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and

Coverage Information Returns, and Form

1095-C, Employer-Provided Health Insurance Offer and Coverage, to meet the

section 6056 requirements.

In addition, an ALE member that offers

coverage through a self-insured health

plan must complete the reporting required

under section 6055, specifically, the information regarding each individual enrolled

in the self-insured health plan, using Form

1095-C, Part III, rather than Form 1095-B.

The current regulations under sections

6055 and 6056 allow the IRS to grant an

extension of time of up to 30 days to furnish statements to individuals for good

cause shown. See §§1.6055-1(g)(4)(i)(B)

(1) and 301.6056-1(g)(1)(ii)(A). Additionally, under the current regulations the

Commissioner may prescribe guidance

or procedures for automatic extensions

of time for furnishing statements to individuals. See §§1.6055-1(g)(4)(i)(B)(2)

and 301.6056-1(g)(1)(ii)(B). Through a

series of notices, the Treasury Department

and the IRS extended the due date for fur-

nishing statements to individuals under

sections 6055 and 6056 for calendar years

2015 through 2020.2

Section 6721 imposes a penalty for

failing to timely file an information return

or for filing an incorrect or incomplete

information return. Section 6722 imposes a penalty for failing to timely furnish

an information statement or furnishing an

incorrect or incomplete information statement. The section 6721 and 6722 penalties are imposed regarding information

returns and statements listed in section

6724(d), which include those required

by sections 6055 and 6056. Section 6724

provides that no penalty will be imposed

under section 6721 or 6722 with respect to

any failure if it is shown that the failure is

due to reasonable cause and not to willful

neglect.

a. Automatic Extension of Time to

Furnish Statements under Section 6055

To reduce administrative burdens for

reporting entities and the IRS, the 2021

proposed regulations provided that reporting entities would be granted an automatic

extension of time, not to exceed 30 days

after January 31, in which to furnish the

written statements required by §1.60551(g)(1). The 2021 proposed regulations

also provided that if the extended furnishing date falls on a weekend or legal

holiday, statements would be timely if furnished on the next business day.

Because this extension would be automatic, the 2021 proposed regulations

would eliminate §1.6055-1(g)(4)(i)(B)(1),

which allows a reporting entity to make a

written application to the IRS to request an

extension of time to furnish the statement.

The 2021 proposed regulations also would

eliminate §1.6055-1(g)(4)(i)(B)(2), under

which the Commissioner may prescribe

guidance or procedures for automatic

extensions of time for furnishing written

statements pursuant to section 6055.

Commenters expressed strong support

for the proposal to amend §1.6055-1(g)

(4) to provide a permanent, automatic extension of time during which a provider of

minimum essential coverage must furnish

written statements to individuals. One

commenter acknowledged that the addition of the permanent, automatic extension of time for reporting entities to furnish statements obviates the need for the

IRS to provide other extensions of time to

furnish statements in most circumstances. The commenter nonetheless requested

that the final regulations retain the provisions in §1.6055-1(g)(4)(i)(B)(2) allowing

the Commissioner, in appropriate cases, to

prescribe additional guidance or procedures for automatic extensions of time for

furnishing written statements.

After consideration of the comments

received, the Treasury Department and

the IRS are adopting with one clarifying

change the proposal for a permanent, automatic extension of time for furnishing

written statements to individuals pursuant

to §1.6055-1(g). The 2021 proposed regulations provided that reporting entities

would be granted an automatic extension

of time not exceeding 30 days in which to

furnish required statements. To provide a

clear, definite rule, these final regulations

expressly provide a 30-day, automatic extension of time. The permanent, 30-day

automatic extension of time to furnish

written statements replaces §1.6055-1(g)

(4)(i) and provides adequate time for furnishing in most situations. Additionally,

because a reporting entity may qualify for

penalty relief pursuant to section 6724 by

showing that a failure was due to reasonable cause and not to willful neglect, the

request that §1.6055-1(g)(4)(i)(B)(2) be

retained is not adopted.

While expressing support for the proposed rule, one commenter requested

that the IRS communicate the automatic extension clearly and directly to state

governmental bodies that have their own

individual health insurance mandates and

reporting requirements. According to the

commenter, some states impose requirements similar to the reporting and furnishing requirements of section 6055. In these

cases, the commenter suggested that the

deadlines should be coordinated or made

the same.

Notice 2016-04, 2016-3 I.R.B. 279 (Jan. 19, 2016); Notice 2016-70, 2016-49 I.R.B. 784 (Dec. 5, 2016); Notice 2018-06, 2018-3 I.R.B. 300 (Jan. 16, 2018); Notice 2018-94, 2018-51 I.R.B.

1042 (Dec. 17, 2018); Notice 2019-63, 2019-51 I.R.B. 1390 (Dec. 16, 2019); and Notice 2020-76, 2020-47 I.R.B. 1058 (Nov. 16, 2020).

2

Bulletin No. 2023–2

313

January 9, 2023

The Treasury Department and the IRS

intend to revise the instructions for Form

1094-B and Form 1095-B to communicate the final rule’s permanent, 30-day

automatic extension of time for furnishing the required statements. However, the

Treasury Department and the IRS have no

authority over state reporting and furnishing requirements. Whether state deadlines

for filing returns or other documents relating to health coverage will align with the

regulations is a question of state law. Accordingly, the Treasury Department and

the IRS are not revising the regulations

to coordinate with state reporting and furnishing requirements.

b. Automatic Extension of Time to

Furnish Statements under Section 6056

To reduce administrative burdens for

ALE members and the IRS, the 2021

proposed regulations provided that ALE

members would be granted an automatic

extension of time, not to exceed 30 days

after January 31, in which to furnish written statements to full-time employees. The

2021 proposed regulations also provided

that if the extended furnishing date falls

on a weekend or legal holiday, statements

would be timely if furnished on the next

business day.

Because this extension would be automatic, the 2021 proposed regulations

would eliminate §301.6056-1(g)(1)(ii)

(A), which allows an ALE member to

make a written application to the IRS to

request an extension of time to furnish the

statement. The 2021 proposed regulations

also would eliminate §1.6056-1(g)(1)(ii)

(B), under which the Commissioner may

prescribe guidance or procedures for automatic extensions of time for furnishing

written statements pursuant to section

6056.

Commenters expressed strong support

for the proposal to amend §301.60561(g)(1) by providing a permanent automatic extension of time during which an

ALE must furnish written statements to

full-time employees. One commenter

acknowledged that the addition of a permanent, automatic extension of time for

reporting entities to furnish statements ob-

3

viates the need for the IRS to provide other extensions of time to furnish statements

in most circumstances. The commenter

nonetheless requested that the final regulations retain the provisions in §301.60561(g)(1)(ii)(B) allowing the Commissioner,

in appropriate cases, to prescribe additional guidance or procedures for automatic

extensions of time for furnishing written

statements pursuant to section 6056.

After consideration of the comments

received, the Treasury Department and

the IRS are adopting with one clarifying

change the proposal for a permanent, automatic extension of time for furnishing

written statements to individuals pursuant

to §301.6056-1(g)(1). The 2021 proposed

regulations provided that ALEs would be

granted an automatic extension of time

not exceeding 30 days in which to furnish

required statements. To provide a clear,

definite rule, these final regulations expressly provide a 30-day, automatic extension of time. The permanent, 30-day automatic extension of time to furnish written

statements replaces §301.6056-1(g)(1)

and provides adequate time for furnishing

in most situations. Additionally, because

a reporting entity may qualify for penalty

relief pursuant to section 6724 by showing

that a failure was due to reasonable cause

and not to willful neglect, the request that

§1.6056-1(g)(1)(ii)(B) be retained is not

adopted.

c. Alternative Manner of Furnishing

Statements under Section 6055

The 2021 proposed regulations provided an alternative manner for a reporting

entity to timely furnish Forms 1095-B to

responsible individuals.3 Under proposed

§1.6055-1(g)(4)(ii)(B), the reporting entity first would be required to post a clear

and conspicuous notice on the entity’s

website stating that responsible individuals may receive a copy of their statement

upon request. The notice would have to

include an email address, a physical address to which a request may be sent, and

a telephone number responsible individuals may use to contact a reporting entity

with any questions. Additionally, the 2021

proposed regulations provided that the no-

tice would satisfy the requirements for the

alternative manner of furnishing if it were

written in plain, non-technical terms and

with letters of a font size large enough,

including any visual clues or graphical

figures, to call to a viewer’s attention that

the information pertains to tax statements

reporting that individuals had health coverage. Under the 2021 proposed regulations, a reporting entity would be required

to retain the notice in the same location

on its website until October 15 of the year

following the calendar year to which the

statement relates. The reporting entity

would have to provide a Form 1095-B to

a responsible individual within 30 days

of the date of receipt of the individual’s

request. The proposed alternative manner

of furnishing would apply only to taxable

years when the individual shared responsibility payment amount under section

5000A(b) is zero.

Commenters generally supported the

proposed amendments to §1.6055-1(g) allowing reporting entities to satisfy the furnishing requirements for Form 1095-B by

using the alternative manner of furnishing.

One commenter requested that the regulations under section 6056 also be amended to extend the alternative manner of

furnishing rule to ALEs. The commenter

asserted that the information included on

Form 1095-C has limited utility because it

only helps full-time employees determine

if they are eligible for the premium tax

credit. The commenter noted the potential

environmental benefits, specifically the

reduced use of paper and resources, that

would result by allowing for the furnishing of forms only upon request.

As noted in Notice 2020-76, the preamble to the 2021 proposed regulations,

and earlier in this Summary of Comments

and Explanation of Revisions, individuals

no longer need Form 1095-B because the

TCJA reduced the amount of the individual shared responsibility payment to zero.

This change in federal law caused the

Treasury Department and the IRS to consider whether it was possible to amend the

section 6055 regulations to reduce burdens on providers of minimum essential

coverage, while providing for continued

compliance with the unchanged statutory

Notice 2020-76 provided a similar alternative manner of furnishing statements for coverage year 2020.

January 9, 2023

314

Bulletin No. 2023–2

requirements of section 6055. Thus, the

Treasury Department and the IRS proposed the alternative manner of furnishing

Form 1095-B in recognition that the TCJA

mooted the primary purpose for which individuals would need Form 1095-B.

However, as noted earlier, Form 1095C serves a different purpose than Form

1095-B. Form 1095-C is used to administer the employer shared responsibility

provisions of section 4980H and by certain full-time employees to help determine

eligibility for the premium tax credit under section 36B. Neither the TCJA nor any

other change in federal law affects the employer shared responsibility provisions of

section 4980H or the need for certain fulltime employees to have information about

their coverage offer to help determine eligibility for the premium tax credit under

section 36B. Because the primary purpose

for furnishing Form 1095-C is distinct

from the primary purpose for furnishing

Form 1095-B and was not affected by the

changes made by the TCJA, the Treasury

Department and the IRS conclude that it is

not appropriate to amend the regulations

under section 6056 to extend the alternative manner of furnishing rule to ALEs

with regard to their full-time employees.

However, the 2021 proposed regulations

permitted, and these final regulations permit, ALEs to use the alternative manner

of furnishing for non-employees and nonfull-time employees for whom furnishing

is required under §1.6055-1.

The commenter that requested the alternative manner of furnishing for Form

1095-C also expressed concern about the

environmental impact of providing Forms

1095-C on paper, but that concern does

not take into account the potential mitigation of providing the information electronically.

One commenter requested that the

Treasury Department and the IRS eliminate the section 6055 reporting requirement for years when the individual shared

responsibility payment amount is zero.

According to the commenter, under the

proposed alternative manner of furnishing statements, health insurance issuers

and plan sponsors must continue to main-

4

5

tain record-keeping systems to complete

Forms 1095-B that must be provided upon

request. The continued requirement to

maintain records, according to the commenter, imposes burdens and costs. Thus,

the commenter requested that the regulations be revised to eliminate the requirement to furnish Form 1095-B even upon

request.

As noted, the TCJA reduced the individual shared responsibility payment

amount to zero for months beginning after

December 31, 2018; however, the TCJA

did not amend any of the reporting or furnishing requirements under section 6055.

Because Congress did not repeal or otherwise modify the reporting and furnishing

requirements in section 6055, the Treasury Department and the IRS have determined that there is insufficient statutory

authority to eliminate the Form 1095-B

requirement. Accordingly, the commenter’s suggestion is not adopted.

The final regulations include clarifying, non-substantive changes to the language in proposed §1.6055-1(g)(4)(ii)(B)

describing the alternative manner of furnishing. The final regulations also modify proposed §1.6055-1(g)(4)(ii)(B)(2) to

provide that a reporting entity using the

alternative manner of furnishing must post

a notice on its website by the date specified in §1.6055-1(g)(4)(i) of these final

regulations.

After consideration of the comments

received, the Treasury Department and the

IRS are adopting the proposed alternative

manner of furnishing written statements to

individuals under section 6055 with these

clarifying changes.

III. Elimination of Transitional Good

Faith Relief

The preamble to the 2021 proposed

regulations described the genesis of the

transitional good faith relief from penalties under sections 6721 and 6722, which

the Treasury Department and the IRS provided to reporting entities in the preambles

to the regulations under sections 6055 and

60564 for calendar year 2015 and in IRS

notices for calendar years 2016-2020.5

Under the transitional good faith relief,

the IRS did not impose penalties under

sections 6721 and 6722 on reporting entities if the entities could show that they

made good faith efforts to comply with

the information reporting requirements.

In Notice 2020-76, the Treasury Department and the IRS stated that 2020 was the

last year that transitional good faith relief

would be provided. Consistent with Notice 2020-76, the Treasury Department

and the IRS reiterated in the preamble

to the 2021 proposed regulations that the

transitional good faith relief would be discontinued after 2020.

Two commenters requested that the

Treasury Department and the IRS reconsider terminating the transitional good

faith relief, with one of the commenters

suggesting that the relief be retained at

least for calendar years 2022, 2023, and

2024. Specifically, one commenter advocated for continuation of the relief because health coverage information reporting, especially for ALEs, is complicated,

and many employers continue to make unintentional mistakes. The commenter asserted that the reasonable cause standard

would be insufficient to relieve employers

from significant penalties. The commenter

requested, at a minimum, good faith penalty relief for small employers (as defined

under applicable state law) that are ALEs.

The other commenter asked that the

transitional good faith relief be retained

because, although the individual shared

responsibility payment amount is zero,

several states have imposed individual

mandates regarding health insurance that

require reporting; instructions for IRS

forms respecting reporting are modified

annually; and plans have faced compliance problems caused by the COVID-19

pandemic.

As discussed in the preamble to the

2021 proposed regulations, the good faith

relief offered beginning in calendar year

2015 was intended to be transitional to accommodate public concerns with implementing the new reporting requirements

under the ACA. These reporting requirements have now been in place for seven

years, and transitional relief is no longer

See T.D. 9660, 79 FR 13220 (Mar. 10, 2014); T.D. 9661, 79 FR 13231 (Mar. 10, 2014).

See Notice 2016-70; Notice 2018-06; Notice 2018-94; Notice 2019-63; and Notice 2020-76.

Bulletin No. 2023–2

315

January 9, 2023

appropriate. Also, the Treasury Department and the IRS are of the view that additional good faith relief is not necessary

to address the commenters’ concerns. The

reasonable cause exception under section

6724 already provides adequate relief

from penalties under sections 6721 and

6722 for filers who have reasonable cause

for failing to timely or accurately complete their reporting requirements.

Applicability Date

The regulations under §1.5000A-2 apply for months beginning after September

28, 2020. For months beginning on or after January 1, 2020, and before September

28, 2020, taxpayers may continue to rely

on Notice 2020-66.

The regulations under §§1.6055-1 and

301.6056-1 apply for calendar years beginning after December 31, 2021. As discussed in the Proposed Applicability Date

section of the 2021 proposed regulations,

taxpayers may rely on §§1.6055-1 and

301.6056-1 of the 2021 proposed regulations for calendar years beginning after

December 31, 2020, and before December

15, 2022.

Statement of Availability of IRS

Documents

IRS revenue procedures, revenue rulings, notices, and other guidance cited in

this preamble are published in the Internal

Revenue Bulletin and are available from

the Superintendent of Documents, U.S.

Government Publishing Office, Washington, DC 20402, or by visiting the IRS

website at http://www.irs.gov.

Special Analyses

I. Regulatory Planning and Review –

Economic Analysis

These final regulations are not subject

to review under section 6(b) of Executive

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

Office of Management and Budget (OMB)

regarding review of tax regulations. It has

been determined that a final regulatory

flexibility analysis under 5 U.S.C. 604 is

required for this final rule. The analysis is

January 9, 2023

set forth under the heading, ‘‘Final Regulatory Flexibility Analysis.’’

II. Paperwork Reduction Act

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

OMB.

There is no collection of information

contained in these final regulations. The

collections of information contained in

§§1.6055-1 and 301.6056-1 were previously reviewed and approved by OMB in

accordance with the Paperwork Reduction

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

associated with control numbers 15452251 (associated with Form 1095-C) and

1545-2252 (associated with Form 1095B).

The Paperwork Reduction Act (44

U.S.C. 3501-3520) relates to information

collection requests by any government

agency. A collection of information generally means the “obtaining, causing to

be obtained, soliciting, or requiring the

disclosure to third parties or the public,

of facts or opinions by or for an agency,

regardless of form or format, calling for

either (1) answers to identical questions

posted to, or identical reporting or recordkeeping requirements imposed on ten or

more persons, other than agencies, instrumentalities, or employees of the United

States, or (2) answers to questions posed

to agencies, instrumentalities, or employees of the United States which are to be

used for general statistical purposes.” 44

U.S.C. 3502(3). A collection of information is commonly referred to as a reporting, recordkeeping, or disclosure requirement.

These final regulations do not require

a reporting entity to provide any information to the Federal Government, to maintain specific records, or to disclose any

additional information that the reporting

entity did not already have a requirement

to disclose.

III. Final Regulatory Flexibility Analysis

When an agency either issues a final rule that follows a required notice

of proposed rulemaking or issues a final

interpretative rule involving the internal

316

revenue laws that imposes a collection of

information requirement on small entities

as described in 5 U.S.C. 603(a), the Regulatory Flexibility Act (5 U.S.C. chapter

6) (Act) requires the agency to “prepare

a final regulatory flexibility analysis.” A

final regulatory flexibility analysis must,

pursuant to 5 U.S.C. 604(a), include the

five elements listed in this final regulatory

flexibility analysis. For purposes of this final regulatory flexibility analysis, a small

entity is defined as a small business, small

nonprofit organization, or small governmental jurisdiction. See 5 U.S.C. 601(3)(6). Small business size standards define

whether a business is “small” and have

been established for types of economic

activities, or industry, generally under the

North American Industry Classification

System (NAICS). See Title 13, Part 121

of the Code of Federal Regulations (Small

Business Size Regulations). The size standards look at various factors, including

annual receipts, number of employees,

and amount of assets, to determine whether the business is small. See Title 13, Part

121.201 of the Code of Federal Regulations for the Small Business Size Standards by NAICS Industry.

The Treasury Department and the IRS

conclude that, although the overall impact

of these final regulations will reduce the

burden on small entities, these final regulations will impact a substantial number

of small entities and the economic impact

on those small entities may be significant.

As a result, although the impact of these

final regulations is positive for small entities, a final regulatory flexibility analysis

is required.

A Statement of the Need for, and the

Objectives of, the Final Rule

The final regulations under §1.5000A2 make permanent the guidance in Notice 2020-66 regarding whether certain

Medicaid coverage of COVID-19 testing

and diagnostic services is minimum essential coverage. These final regulations

will ensure that taxpayers have accurate

guidance when determining whether they

have minimum essential coverage, which

in turn will assist taxpayers in determining

whether they qualify for the premium tax

credit.

Bulletin No. 2023–2

The principal objective of the final regulations under section 5000A is to provide

certainty that Medicaid coverage limited

to certain COVID-19 testing and diagnostic services is not minimum essential

coverage. Minimum essential coverage is

defined in section 5000A(f)(1) and generally includes coverage under the Medicaid program under title XIX of the Social

Security Act. However, §1.5000A-2(b)

(2) lists certain types of services that are

excluded from the definition of minimum

essential coverage and these final regulations will add Medicaid coverage of

certain COVID-19 testing and diagnostic

services to that list. Thus, eligibility for

this coverage will not preclude an individual from qualifying for the premium tax

credit.

The final regulations under §§1.6055-1

and 301.6056-1 make permanent the extension of time to furnish Forms 1095-B

and 1095-C to responsible individuals and

employees that has been provided every

calendar year since 2015. These final regulations will reduce the burden on reporting entities by extending the time to satisfy their furnishing obligations for certain

health care coverage without the penalty

under section 6722 being imposed. This

extension should result in an increase in

the timeliness and accuracy of the reporting.

The final regulations under §1.60551 also allow reporting entities to furnish

the statement required by section 6055 by

providing notice on their website and by

providing the statement to the responsible

individual upon request. These final regulations will reduce the burden on reporting

entities by providing a less costly option

to satisfy the furnishing obligation under

section 6055 for tax years when individuals do not need to report health coverage

information on their federal income tax

returns.

The principal objectives of the final

regulations under section 6055 are to (1)

provide reporting entities under section

6055 and section 6056 with additional

time to complete and furnish accurate

statements to responsible individuals and

full-time employees; and (2) to offer reporting entities a minimally burdensome

option by which to furnish the statement

required by section 6055. The legal basis

for the extended due date for statements

Bulletin No. 2023–2

required under section 6055 and section

6056 was originally set forth in the series

of notices referenced in the Summary

of Comments and Explanation of Revisions section of this preamble. In those

notices, the Treasury Department and

the IRS extended the dates for furnishing statements to responsible individuals

and full-time employees and provided

that reporting entities that satisfy the furnishing requirement by the extended due

date will not be subject to penalties under

sections 6721 and 6722. Section 6724(a)

provides that no penalty is imposed under section 6721 or 6722 if it is shown

that the failure is due to reasonable cause

and not to willful neglect. The legal basis

for the alternative manner of furnishing

statements under section 6055 is in section 6055(b)(1)(A), which authorizes the

Secretary to prescribe the form of the return that is required to be furnished under

section 6055(c).

Summaries of the Significant Issues

Raised in the Public Comments

Responding to the Initial Regulatory

Flexibility Analysis (IRFA) and of the

Agency’s Assessment of the Issues, and a

Statement of Any Changes Made to the

Rule as a Result of the Comments

No comments were received in response to the IRFA in the proposed regulations.

The response of the agency to any

comments filed by the Chief Counsel for

Advocacy of the SBA in response to the

proposed rule

Pursuant to section 7805(f) of the Code,

the proposed regulations were submitted

to the Chief Counsel of the Office of Advocacy of the Small Business Administration for comment on its impact on small

business, and no comments were received.

A Description and an Estimate of the

Number of Small Entities to Which the

Rule Will Apply or an Explanation of

Why an Estimate is Not Available

These final regulations apply to health

insurance issuers, self-insured employers,

government agencies, and other providers

of minimum essential coverage required

317

to furnish individual statements regarding

such coverage under section 6055, and to

ALE members that are required by section 6056 to furnish information relating

to health insurance that the ALE offers to

its full-time employees. An estimate of the

number of small entities subject to these

final regulations is not feasible because a

correlation between small entities and this

type of reporting cannot be made. These

final regulations affect entities in all industries using any NAICS code.

A Description of the Projected Reporting,

and Other Compliance Requirements

of the Rule, Including an Estimate of

the Classes of Small Entities Subject

to the Requirements and the Type

of Professional Skills Necessary for

Preparation of the Report or Record.

As discussed in the Paperwork Reduction Act section earlier in this preamble,

these final regulations do not impose any

reporting, recordkeeping, or similar requirements on any small entities that did

not already apply to small entities.

A Description of the Steps the Agency

Has Taken to Minimize the Significant

Economic Impact On Small Entities

Consistent With the Stated Objectives of

Applicable Statutes, Including a Statement

of the Factual, Policy, and Legal Reasons

for Selecting Any Alternative Adopted in

the Final Rule and Why Other Significant

Alternatives Affecting the Impact on Small

Entities That the Agency Considered Were

Rejected.

The Treasury Department and the IRS

are not aware of any steps that could be

taken to minimize the economic impact

on small entities that would also be consistent with the objectives of these final

regulations and have determined that,

without a legislative change, there are no

viable alternatives to the provisions in the

final regulations that would enable reporting entities to continue to satisfy their reporting obligations with a lesser burden.

These final regulations do not impose any

more requirements on small entities than

are necessary to effectively administer the

internal revenue laws. Further, these final

regulations do not subject small entities

to any requirements that are not also ap-

January 9, 2023

plicable to larger entities covered by the

regulations.

Accordingly, the Treasury Department

and the IRS conclude that the provisions

of these final regulations will effectively promote sound tax administration.

The additional exclusion from the definition of minimum essential coverage

in §1.5000A-2 will provide guidance to

ensure that taxpayers can adequately determine whether they have minimum essential coverage that would preclude them

from qualifying for a premium tax credit.

An automatic extension of time to furnish

statements under §§1.6055-1(g)(4)(i) and

301.6056-1(g)(1) will assist reporting entities to timely and accurately satisfy their

statutory reporting obligations, while also

reducing the cost and burden of having

to request an extension. Last, the alternative manner of furnishing a statement in

§1.6055-1(g)(4)(ii)(B), at a time when the

individual shared responsibility payment

amount is zero, will also help reporting

entities reduce costs. Accordingly, implementation of these final regulations will

increase tax compliance by providing definitive guidance to individuals, will allow

reporting entities the time needed to furnish timely and accurate statements under

sections 6055 and 6056, and will allow

reporting entities an alternative method of

furnishing statements under section 6055

to minimize their production and distribution costs.

IV. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates

Reform Act of 1995 (UMRA) requires

that agencies assess anticipated costs and

benefits and take certain other actions before issuing a final rule that includes any

federal mandate that may result in expenditures in any one year by a state, local, or

tribal government, in the aggregate, or by

the private sector, of $100 million (updated annually for inflation). This final rule

does not include any federal mandate that

may result in expenditures by state, local,

or tribal governments, or by the private

sector in excess of that threshold.

V. Executive Order 13132: Federalism

Executive Order 13132 (Federalism)

prohibits an agency from publishing any

January 9, 2023

rule that has federalism implications if

the rule either imposes substantial, direct

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

or preempts state law, unless the agency

meets the consultation and funding requirements of section 6 of the Executive Order.

This final rule does not have federalism implications and does 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 final regulations is Gerald Semasek of the Office

of Associate Chief Counsel (Income Tax

and Accounting). Other personnel from

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

List of Subjects

26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 301

Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements.

Adoption of Amendments to the

Regulations

Accordingly, the Treasury Department

and the IRS amend 26 CFR parts 1 and

301 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 * * *

Par. 2. Section 1.5000A-2 is amended

by:

1. Revising paragraph (b)(2)(vii) and

(viii); and

2. Adding paragraph (b)(2)(ix).

The revisions and addition read as follows:

318

§1.5000A-2 Minimum Essential

Coverage.

*****

(b) * * *

(2) * * *

(vii) Coverage under section 1079(a),

1086(c)(1), or 1086(d)(1) of title 10,

U.S.C., that is solely limited to space

available care in a facility of the uniformed services for individuals excluded

from TRICARE coverage for care from

private sector providers;

(viii) Coverage under section 1074a

and 1074b of title 10, U.S.C., for an injury, illness, or disease incurred or aggravated in the line of duty for individuals who

are not on active duty; and

(ix) Medicaid coverage limited to

COVID-19 testing and diagnostic services

provided under section 6004(a)(3) of the

Families First Coronavirus Response Act,

Pub. L. 116-127, 134 Stat. 178 (March 18,

2020).

Par. 3. Section 1.5000A-5 is amended

by revising paragraph (c) to read as follows:

§1.5000A-5 Administration and

procedure.

*****

(c) Applicability date. Except as otherwise provided in this paragraph (c), this

section and §1.5000A-1 through 1.5000A4 apply for months beginning after December 31, 2013. Section 1.5000A-2(b)

(2)(ix) applies for months beginning after

September 28, 2020.

Par. 4. Section 1.6055-1 is amended

by:

1. Revising the first sentence of paragraph (g)(1);

2. Revising paragraph (g)(4)(i) and (ii);

3. Revising paragraph (j)

The revisions read as follows:

§1.6055-1 Information reporting for

minimum essential coverage.

*****

(g) * * * Except as otherwise provided

in paragraph (g)(4)(ii)(B) of this section,

every person required to file a return under

this section must furnish to the responsible individual identified on the return a

written statement. * * *

Bulletin No. 2023–2

*****

(4) Time and manner for furnishing

statements--(i) Time for furnishing—Except as otherwise provided in this paragraph (g)(4)(i), a reporting entity must

furnish the statements required under

paragraph (g)(1) of this section on or before January 31 of the year following the

calendar year in which the minimum essential coverage is provided. Reporting

entities are granted an automatic, 30-day

extension of time in which to furnish these

statements.

(ii) Manner of furnishing—(A) In

general. Except as otherwise provided

in paragraph (g)(4)(ii)(B) of this section,

if mailed, the statement must be sent to

the responsible individual’s last known

permanent address or, if no permanent

address is known, to the individual’s

temporary address. For purposes of this

paragraph (g)(4)(ii)(A), a reporting entity’s first class mailing to the last known

permanent address, or if no permanent

address is known, the temporary address,

discharges the requirement to furnish the

statement. A reporting entity may furnish

the statement electronically if the requirements of §1.6055-2 are satisfied.

(B) Alternative manner of furnishing.

A reporting entity shall be treated as furnishing the statement in a timely manner

under this paragraph (g)(4) if the individual shared responsibility payment amount

under section 5000A(c) for the calendar

year in which the minimum essential coverage is provided is zero and the reporting entity satisfies the requirements in

this paragraph (g)(4)(ii)(B). If the reporting entity is an applicable large employer member that sponsors a self-insured

group health plan and makes a return in

accordance with paragraph (f)(2)(i) of this

section related to that plan, the applicable

large employer member may use the alternative manner of furnishing described in

this paragraph (g)(4)(ii)(B) for statements

to non-full-time employees and non-employees who are enrolled in the applicable

large employer’s self-insured group health

plan. The reporting entity satisfies the requirements of this paragraph (g)(4)(ii)(B)

only if the reporting entity:

(1) Provides clear and conspicuous

notice, in a location on its website that

is reasonably accessible to all responsi-

Bulletin No. 2023–2

ble individuals, stating that responsible

individuals may receive a copy of their

statement upon request. The notice must

include an email address, a physical address to which a request for a statement

may be sent, and a telephone number

that responsible individuals may use to

contact the reporting entity with any

questions. A notice posted on a reporting entity’s website satisfies the requirements of this paragraph (g)(4)(ii)(B)

(1) if it is written in plain, non-technical terms and with letters of a font size

large enough, including any visual clues

or graphical figures, to call to a viewer’s

attention that the information pertains to

tax statements reporting that individuals

had health coverage. For example, a reporting entity’s website provides a clear

and conspicuous notice if it includes a

statement on the main page -- or a link

on the main page, reading “Tax Information”, to a secondary page that includes a statement -- in capital letters,

“IMPORTANT HEALTH COVERAGE

TAX DOCUMENTS”; explains how

responsible individuals may request a

copy of Form 1095-B, Health Coverage, (or, for an applicable large employer member that sponsors a self-insured

group health plan and makes a return in

accordance with paragraph (f)(2)(i) of

this section, explains how non-full-time

employees and non-employees who are

enrolled in the plan may request a copy

of Form 1095-C, Employer-Provided

Health Insurance Offer and Coverage);

and includes the reporting entity’s email

address, mailing address, and telephone

number;

(2) Posts the notice on its website by

the date specified in paragraph (g)(4)(i) of

this section and retains the notice in the

same location on its website through October 15 of the year following the calendar year to which the statements relate (or

the first business day after October 15, if

October 15 falls on a Saturday, Sunday or

legal holiday); and

(3) Furnishes the statement to a requesting responsible individual within 30

days of the date the request is received. To

satisfy the requirement of this paragraph

(g)(4)(ii)(B)(3), a reporting entity may

furnish the statement electronically pursuant to §1.6055-2(a)(2) through (a)(6).

319

*****

(j) Applicability date. Except as otherwise provided in this paragraph (j), this

section applies for calendar years beginning after December 31, 2014. Paragraphs (g)(1), (g)(4)(i), and (g)(4)(ii)

of this section apply for calendar years

beginning after December 31, 2021, but

reporting entities may choose to apply

paragraphs (g)(1), (g)(4)(i), and (g)(4)(ii)

of this section for calendar years beginning after December 31, 2020. Except as

otherwise provided in this paragraph (j),

paragraph (g)(4), as contained in 26 CFR

part 1 edition revised as of April 1, 2021,

applies to calendar years ending after December 31, 2014, and beginning before

January 1, 2022.

Part 301—PROCEDURE AND

ADMINISTRATION

Par. 5. The authority citation for part

301 continues to read in part as follows:

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

*****

Par. 6. Section 301.6056-1 is amended

by revising paragraphs (g)(1) and (m) to

read as follows:

§301.6056-1 Rules relating to reporting

by applicable large employers on health

insurance coverage offered under

employer-sponsored plans—

*****

(g) * * *(1) Time for furnishing--Except as otherwise provided in this paragraph (g)(1), each statement required by

this section for a calendar year must be

furnished to a full-time employee on or

before January 31 of the year succeeding

the calendar year in accordance with applicable Internal Revenue Service procedures and instructions. Applicable large

employers are granted an automatic, 30day extension of time in which to furnish

these statements.

*****

(m) Applicability date. Except as otherwise provided in this paragraph (m), this

section applies for calendar years beginning after December 31, 2014. Paragraph

(g)(1) of this section applies for calendar years beginning after December 31,

2021, but applicable large employers may

January 9, 2023

choose to apply paragraph (g)(1) of this

section for calendar years beginning after

December 31, 2020. Except as otherwise

provided in this paragraph (m), paragraph

(g)(1), as contained in 26 CFR part 1 edition revised as of April 1, 2021, applies

to calendar years ending after December

January 9, 2023

31, 2014, and beginning before January 1,

2022.

Melanie R. Krause,

Acting Deputy Commissioner for

Services and Enforcement.

Approved: December 6, 2022.

320

Lily Batchelder,

Assistant Secretary of the Treasury

(Tax Policy).

(Filed by the Office of the Federal Register on December 12, 2022, 4:15 p.m. and published in the issue of the Federal Register for December 15, 2022,

87 FR 76569)

Bulletin No. 2023–2

Part III

26 CFR 54.9816-6T: Calculating the qualifying payment amounts in 2023

Notice 2023-4

SECTION 1. PURPOSE AND SCOPE

Pursuant to Treas. Reg. § 54.98166T(c), 29 CFR 2590.716-6(c), and 45

CFR 149.140(c), this notice provides the

percentage increase for calculating the

qualifying payment amounts for items

and services furnished during 2023 for

purposes of sections 9816 and 9817 of the

Internal Revenue Code (Code), sections

716 and 717 of the Employee Retirement

Income Security Act of 1974 (ERISA),

and sections 2799A-1 and 2799A-2 of the

Public Health Service Act (PHS Act). This

notice was drafted in consultation with the

Departments of Labor and Health and Human Services. Similar guidance for items

and services furnished during 2022 was

published in Revenue Procedure 202211, 2022-3 IRB 449, and Notice 2022-11,

2022-14 IRB 939.1 Percentage increases

for calculating the qualifying payment

amounts for items and services furnished

in future years may be published in the annual revenue procedure containing inflation-adjusted items for the following tax

year.

SECTION 2. BACKGROUND

The No Surprises Act was enacted as

Title I of Division BB of the Consolidated

Appropriations Act, 2021.2 The No Surprises Act added sections 9816 and 9817

to the Code, sections 716 and 717 to ERISA, and sections 2799A-1 and 2799A-2

to the PHS Act. These provisions provide

protections against surprise medical bills

in certain circumstances. Surprise medical

bills can occur when a patient unexpectedly receives health care from a provider,

facility, or provider of air ambulance services that does not participate in the network of the individual’s group health plan

or group or individual health insurance

coverage (an out-of-network or nonparticipating provider, facility, or provider of air

ambulance services).3

Before the enactment of the No Surprises Act, when the terms of a group health

plan or group or individual health insurance coverage did not provide for coverage of the entire amount billed by a nonparticipating provider, facility, or provider

of air ambulance services, the provider,

facility, or provider of air ambulance services could balance bill the patient for the

amount in excess of the amount paid by the

plan or coverage and any applicable patient cost sharing (unless prohibited under

applicable state law). For non-emergency

services and air ambulance services, the

patient could also have been responsible

for out-of-network cost-sharing amounts,

which may have been higher than in-network cost-sharing amounts. Under the No

Surprises Act, in certain circumstances,

the nonparticipating provider, facility, or

provider of air ambulance services can

no longer balance bill the patient for the

excess amount, and patient cost sharing

is generally limited to in-network levels.

The No Surprises Act and implementing

regulations4 provide that, generally, in the

absence of an All-Payer Model Agreement

under section 1115A of the Social Security Act or specified state law,5 a patient’s

cost-sharing amount must be calculated

based on the lesser of the qualifying payment amount6 or the amount billed by the

provider or facility. In the case of air am-

bulance services, the patient’s cost-sharing

amount must be calculated based on the

lesser of the qualifying payment amount

or the billed amount for the services.

Further, in the absence of an All-Payer

Model Agreement or specified state law,7

the No Surprises Act and its implementing

regulations provide for a 30-business-day

open negotiation period for group health

plans or health insurance issuers offering

group or individual health insurance coverage (plans and issuers) and the nonparticipating providers, facilities, or providers

of air ambulance services to determine the

amount to be paid by the plans or issuers

as the out-of-network rate.8 If the parties

are unable to reach an agreement through

open negotiation, the No Surprises Act

provides for the out-of-network rate to

be determined by a certified independent

dispute resolution (IDR) entity through a

Federal IDR process set forth in sections

9816(c) and 9817(b) of the Code, sections

716(c) and 717(b) of ERISA, and sections

2799A-1(c) and 2799A-2(b) of the PHS

Act. The statute and implementing interim

final regulations issued in October 20219

and the final regulations issued in August

202210 provide that, under the Federal

IDR process, the certified IDR entity considers the qualifying payment amount for

the item or service, among other additional circumstances and information as provided for in the statute and implementing

regulations, in determining which offer to

select as the out-of-network rate.

Under § 54.9816-6T(c), 29 CFR

2590.716-6(c), and 45 CFR 149.140(c),

for an item or service furnished during

2022, plans and issuers must calculate

the qualifying payment amount by increasing the median contracted rate (as

determined in accordance with § 54.9816-

https://www.irs.gov/pub/irs-drop/rp-22-11.pdf and https://www.irs.gov/pub/irs-drop/n-22-11.pdf.

Pub. L. 116-260, 134 Stat. 1182 (2020).

3

The protections against surprise billing additionally apply to health benefits plans offered by carriers under the Federal Employees Health Benefits (FEHB) Act pursuant to 5 U.S.C. 8902(p).

Accordingly, the guidance provided in this notice applies to FEHB carriers to the extent consistent with their contracts. See also 5 CFR 890.114.

4

86 FR 36872 (July 13, 2021).

5

If an All-Payer Model Agreement or specified state law applies, the applicable Agreement or law determines the cost-sharing amount. “Specified state law” is defined in § 54.9816-3T, 29

CFR 2590.716-3, and 45 CFR 149.30.

6

“Qualifying payment amount” is defined in § 54.9816-6T(a)(16), 29 CFR 2590.716-6(a)(16), and 45 CFR 149.140(a)(16).

7

If an All-Payer Model Agreement or specified state law applies, the applicable Agreement or law determines the out-of-network rate.

8

“Out-of-network rate” is defined in § 54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30.

9

86 FR 55980 (October 7, 2021).

10

87 FR 52618 (August 26, 2022).

1

2

Bulletin No. 2023–2

321

January 9, 2023

6T(b), 29 CFR 2590.716-6(b), and 45

CFR 149.140(b)) for the same or similar

item or service under such plan or coverage, on January 31, 2019, by the combined percentage increase as published by

the Department of the Treasury (Treasury

Department) and the Internal Revenue

Service (IRS) to reflect the percentage

increase in the consumer price index for

all urban consumers (U.S. city average)

(CPI-U) over 2019, such percentage increase over 2020, and such percentage increase over 2021.11 Pursuant to Rev. Proc.

2022-11, for items and services provided

on or after January 1, 2022, and before

January 1, 2023, the combined percentage

increase to adjust the median contracted

rate for the same or similar item or service

under such plan or coverage, on January

31, 2019, is 1.0648523983. The revenue

procedure also provides that plans and issuers may round to the nearest dollar any

resulting qualifying payment amounts.

Pursuant to § 54.9816-6T(c)(3)(i), 29

CFR 2590.716-6(c)(3)(i), and 45 CFR

149.140(c)(3)(i), for an item or service

furnished during 2022, a plan or issuer

that does not have sufficient information

to calculate the median of the contracted

rates in 2019 for the same or similar item

or service provided in a geographic region

must calculate the qualifying payment

amount by first identifying the rate that

is equal to the median of the in-network

allowed amounts for the same or similar

item or service provided in the geographic

region in 2021, determined by the plan or

issuer through use of any eligible database,

and then increasing that rate by the percentage increase in the CPI-U over 2021.

Similarly, in the case of a newly covered

item or service furnished during the first

coverage year, when a plan or issuer does

not have sufficient information to calculate the median of the contracted rates in

the first coverage year for the item or service, the plan or issuer must calculate the

qualifying payment amount by using an

eligible database to determine the rate that

is equal to the median of the in-network

allowed amounts for the same or similar

item or service provided in the geographic

region in the year immediately preceding

the first coverage year, and then increasing

that rate by the percentage increase in the

CPI-U over the preceding year.

Under § 54.9816-6T(c)(3)(ii), 29

CFR 2590.716-6(c)(3)(ii), and 45 CFR

149.140(c)(3)(ii), for an item or service

furnished in a subsequent year (before

the first sufficient information year for the

item or service with respect to the plan or

coverage), the plan or issuer must calculate the qualifying payment amount by

increasing the qualifying payment amount

determined for the item or service for the

year immediately preceding the subsequent year, by the percentage increase in

the CPI-U over the preceding year.

The percentage increase in the CPI-U

for items and services provided in 2022

over the preceding year is the average

CPI-U for 2021 over the average CPI-U

for 2020. Pursuant to Notice 2022-11, the

percentage increase from 2021 to 2022 is

1.0299772040. The notice also provides

that plans and issuers may round any resulting qualifying payment amounts to the

nearest dollar.

Under § 54.9816-6T(c)(2)(i), 29

CFR 2590.716-6(c)(2)(i), and 45 CFR

149.140(c)(2)(i), with respect to a sponsor of a plan or issuer offering group or

individual health insurance coverage in a

geographic region in which the sponsor or

issuer did not offer any group health plan

or health insurance coverage in 2019, for

the first year in which the group health

plan or group or individual health insurance coverage is offered in the region, if

the plan or issuer does not have sufficient

information to calculate the median of the

contracted rates for an item or service provided in the geographic region, the plan

or issuer must determine the qualifying

payment amount pursuant to § 54.98166T(c)(3)(i), 29 CFR 2590.716-6(c)(3)(i),

and 45 CFR 149.140(c)(3)(i) for an item

or service furnished in 2022, as previously

discussed. For each subsequent year the

group health plan or group or individual

health insurance coverage is offered in the

region, the plan or issuer must calculate

the qualifying payment amounts by increasing the qualifying payment amounts

so determined for items or services provided in the immediately preceding year,

by the percentage increase in the CPI-U

over the preceding year.12

Under § 54.9816-6T(c)(4)(i), 29

CFR 2590.716-6(c)(4)(i), and 45 CFR

149.140(c)(4)(i), in the case of a plan or

issuer that does not have sufficient information to calculate the median of the contracted rates for the same or similar item

or service provided in a geographic region

and determine the qualifying payment

amount in accordance with the previously described methodology because the

item or service is billed under a new service code, for items or services furnished

in 2022 (or for newly covered items and

services, during the first coverage year

for the item or service), the plan or issuer must calculate the qualifying payment

amounts pursuant to § 54.9816‑6T(c)(4)

(i), 29 CFR 2590.716-6(c)(4)(i), and 45

CFR 149.140(c)(4)(i).

Under § 54.9816-6T(c)(4)(ii), 29

CFR 2590.716-6(c)(4)(ii), and 45 CFR

149.140(c)(4)(ii), for such an item or service furnished in a subsequent year (before the first sufficient information year

for the item or service with respect to such

plan or coverage or before the first year

for which an eligible database has sufficient information to calculate a rate under

§ 54.9816-6T(c)(3)(i), 29 CFR 2590.7166(c)(3)(i), and 45 CFR 149.140(c)(3)(i) in

the immediately preceding year), the plan

or issuer must calculate the qualifying

payment amount by increasing the qualifying payment amount determined for the

item or service for the year immediately preceding the subsequent year, by the

percentage increase in the CPI-U over the

preceding year.

The calculations of the qualifying payment amounts for anesthesia services, air ambulance services, and certain other items or services furnished during 2022 for which a plan or issuer has

sufficient information to calculate the median of the contracted rates in 2019 differ slightly, but all use the same formula for increasing a base rate by the combined percentage increase as

published by the Treasury Department and the IRS to reflect the percentage increase in the CPI-U over 2019 and subsequent years. See § 54.9816-6T(c)(1)(iii)-(vii), 29 CFR 2590.716-6(c)

(1)(iii)-(vii), and 45 CFR 149.140(c)(1)(iii)-(vii).

12

The calculations of the qualifying payment amounts for anesthesia services, air ambulance services, and certain other items or services furnished in a subsequent year differ slightly, but all

use the same formula for increasing the indexed median contracted rate determined for the item or service in the immediately preceding year by the percentage increase. See § 54.9816-6T(c)

(2)(ii), 29 CFR 2590.716-6(c)(2)(ii), and 45 CFR 149.140(c)(2)(ii).

11

January 9, 2023

322

Bulletin No. 2023–2

SECTION 3. GUIDANCE

The percentage increase in the CPI-U

over a preceding year is calculated by dividing the average CPI-U for the preceding

year by the average CPI-U for the year immediately prior to the preceding year. For

this purpose, the average CPI-U for a year

is the average of the monthly CPI-Us published by the Bureau of Labor Statistics of

the Department of Labor for the 12-month

period ending on August 31 of each year,

rounded to 10 decimal places. The percentage increase in the CPI-U for items and services provided in 2023 over the preceding

year is the average CPI-U for 2022 over the

average CPI-U for 2021. Pursuant to this

calculation, the percentage increase from

2022 to 2023 is 1.0768582128. Further,

pursuant to this notice, plans and issuers

may round any resulting qualifying payment amounts to the nearest dollar.

.01 Adjusting qualifying payment

amounts based on January 31, 2019 rates.

For qualifying payment amounts calculated by increasing the median contracted

rate for 201913, the qualifying payment

amounts for items and services furnished

in 2023 are determined by taking the

qualifying payment amounts calculated

for items and services furnished in 2022

and multiplying the 2022 adjusted qualifying payment amounts by the percentage increase from 2022 to 2023, that is,

1.0768582128.

For example: An item is furnished in

2023. The median contracted rate for the

item on January 31, 2019 was $1,500.

The 2022 adjusted qualifying payment

amount for the item was $1,597 ($1,500 x

1.0648523983). The 2023 adjusted qualifying payment amount for the item is

$1,720 ($1,597 x 1.0768582128).

.02 Adjusting qualifying payment

amounts based on 2021 rates.

For items and services furnished in

2022, for which the qualifying payment

amounts were calculated by increasing the

median of the in-network allowed amounts

for the same or similar item or service provided in the geographic region in 2021,

drawn from any eligible database, by the

percentage increase from 2021 to 202214,

the qualifying payment amounts for items

and services furnished in 2023 are determined by taking the qualifying payment

amounts calculated for the items and services furnished in 2022 and multiplying

the 2022 adjusted qualifying payment

amounts by the percentage increase from

2022 to 2023 (that is, 1.0768582128).

For example: A newly covered service

for which the plan or issuer does not have

sufficient information to calculate the median of the contracted rates is furnished

in 2022. The median of the in-network

allowed amounts for the same or similar service provided in the geographic

region in 2021, drawn from an eligible

database, was $2,100. The 2022 adjusted

qualifying payment amount for the service

was $2,163 ($2,100 x 1.0299772040).

The 2023 adjusted qualifying payment

amount for the service is $2,329 ($2,163

x 1.0768582128).

The adjustment to the qualifying payment amounts will be applied similarly

for items and services covered by a new

plan or new group or individual health insurance coverage that was not offered in

a geographic region in a prior year. For

items and services first offered by a new

plan or new group or individual health insurance coverage in a geographic region

in 2022 for which the plan or issuer does

not have sufficient information to calculate the median of the contracted rates for

the items or services provided in the geographic region15, the qualifying payment

amounts would be calculated by increasing the median of the in-network allowed

amounts for the same or similar item or

service provided in the geographic region

in 2021, drawn from any eligible database,

by the percentage increase from 2021 to

2022 (1.0299772040). For that plan or

coverage, the qualifying payment amounts

for items and services furnished in 2023

is determined by taking the qualifying

payment amounts calculated for items and

services furnished in 2022 and multiplying the 2022 adjusted qualifying payment

amounts by the percentage increase from

2022 to 2023, that is, 1.0768582128.

.03 Calculating qualifying payment

amounts when 2023 is the first coverage

year.

For newly covered items and services

furnished in 2023 for which the plan or

issuer does not have sufficient information, when 2023 is the first coverage year

for the item or service with respect to

the plan or coverage, the qualifying payment amounts for the items and services

first furnished in 2023 are determined

by multiplying the median of the in-network allowed amounts for the same or

similar item or service provided in the

geographic region in 2022, drawn from

any eligible database, by the percentage increase from 2022 to 2023, that is,

1.0768582128.

For example: A newly covered service

is furnished in 2023. The median of the

in-network allowed amounts for the service provided in the geographic region in

2022, drawn from an eligible database,

was $3,000. The 2023 adjusted qualifying

payment amount for the service is $3,231

($3,000 x 1.0768582128).

SECTION 4. EFFECTIVE DATE

The effective date of this notice is January 1, 2023.

SECTION 5. DRAFTING

INFORMATION

The principal author of this notice is

Jason Sandoval of the Office of Associate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes). For further information regarding

this notice, contact Jason Sandoval at 202317-5500 (not a toll-free number).

These qualifying payment amounts are calculated by increasing the median contracted rate for the same or similar item or service under the plan or coverage, on January 31, 2019, by the

combined percentage increase (2019, 2020, and 2021) published in Rev. Proc. 2022-11 (that is, 1.0648523983).

14

These qualifying payment amounts are calculated by multiplying the median of the in-network allowed amounts for the same or similar item or service provided in the geographic region

in 2021, drawn from any eligible database, by the percentage increase from 2021 to 2022 (that is, 1.0299772040).

15

These qualifying payment amounts are calculated by multiplying the median of the in-network allowed amounts for the same or similar item or service provided in the geographic region

in 2021, drawn from any eligible database, by the percentage increase from 2021 to 2022 (that is, 1.0299772040).

13

Bulletin No. 2023–2

323

January 9, 2023

Update for Weighted

Average Interest Rates,

Yield Curves, and Segment

Rates

Notice 2023-5

This notice provides guidance on the

corporate bond monthly yield curve, the

corresponding spot segment rates used

under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the

Internal Revenue Code. In addition, this

notice provides guidance as to the interest

rate on 30-year Treasury securities under

§ 417(e)(3)(A)(ii)(II) as in effect for plan

years beginning before 2008 and the 30year Treasury weighted average rate under

§ 431(c)(6)(E)(ii)(I).

YIELD CURVE AND SEGMENT

RATES

Section 430 specifies the minimum

funding requirements that apply to sin-

Applicable Month

December 2022

gle-employer plans (except for CSEC

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

Section 430(h)(2) specifies the interest rates that must be used to determine

a plan’s target normal cost and funding

target. Under this provision, present value is generally determined using three

24-month average interest rates (“segment rates”), each of which applies to

cash flows during specified periods. To

the extent provided under § 430(h)(2)

(C)(iv), these segment rates are adjusted

by the applicable percentage of the 25year average segment rates for the period

ending September 30 of the year preceding the calendar year in which the plan

year begins.1 However, an election may

be made under § 430(h)(2)(D)(ii) to use

the monthly yield curve in place of the

segment rates.

Notice 2007-81, 2007-44 I.R.B. 899,

provides guidelines for determining the

monthly corporate bond yield curve, and

the 24-month average corporate bond

segment rates used to compute the target

normal cost and the funding target. Consistent with the methodology specified in

Notice 2007-81, the monthly corporate

bond yield curve derived from November

2022 data is in Table 2022-11 at the end

of this notice. The spot first, second, and

third segment rates for the month of November 2022 are, respectively, 5.09, 5.60,

and 5.41.

The 24-month average segment rates

determined under § 430(h)(2)(C)(i)

through (iii) must be adjusted pursuant to

§ 430(h)(2)(C)(iv) to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates. The 25-year average

segment rates for plan years beginning

in 2021, 2022 and 2023 were published

in Notice 2020-72, 2020-40 I.R.B. 789,

Notice 2021-54, 2021-41 I.R.B. 457, and

Notice 2022-40, 2022-40 I.R.B. 266, respectively.

24-MONTH AVERAGE CORPORATE

BOND SEGMENT RATES

The three 24-month average corporate bond segment rates applicable for

December 2022 without adjustment for

the 25-year average segment rate limits

are as follows:

24-Month Average Segment Rates Without 25-Year Average Adjustment

First Segment

Second Segment

Third Segment

1.95

3.50

3.85

Section 9706(a) of the American

Rescue Plan Act of 2021, Pub. L. 117-2

(the ARP), which was enacted on March

11, 2021, changed the 25-year average

segment rates and the applicable minimum and maximum percentages used

under § 430(h)(2)(C)(iv) of the Code to

adjust the 24-month average segment

rates.2 Prior to this change, the applicable minimum and maximum percentages

were 85% and 115% for a plan year beginning in 2021, and 80% and 120% for

a plan year beginning in 2022, respectively. After this change, the applicable

minimum and maximum percentages are

95% and 105% for a plan year beginning

in 2021 or 2022. In addition, pursuant

to this change, any 25-year average segment rate that is less than 5% is deemed

to be 5%.3

Pursuant to § 9706(c)(1) of the ARP,

these changes apply with respect to plan

years beginning on or after January 1,

2020. However, § 9706(c)(2) of the ARP

provides that a plan sponsor may elect not

to have these changes apply to any plan

year beginning before January 1, 2022.4

The adjusted 24-month average segment rates set forth in the chart below

reflect § 430(h)(2)(C)(iv) of the Code as

amended by § 9706(a) of the ARP. These

adjusted 24-month average segment rates

apply only for plan years for which an

election under § 9706(c)(2) of the ARP is

not in effect. For a plan year for which such

an election does not apply, the 24-month

Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount

of the full funding limitation under § 433(c)(7)(C)).

2

Section 80602 of the Infrastructure Investment and Jobs Act, Pub. L. 117-58, makes further changes to the time periods for which specified applicable minimum and maximum percentages

apply.

3

Pursuant to this change, the 25-year averages of the first segment rate for 2021 and 2022 are increased to 5.00% because those 25-year averages as originally published are below 5.00%.

4

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

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

1

January 9, 2023

324

Bulletin No. 2023–2

averages applicable for December 2022,

adjusted to be within the applicable min-

imum and maximum percentages of the

corresponding 25-year average segment

rates in accordance with § 430(h)(2)(C)

(iv) of the Code, are as follows:

Adjusted 24-Month Average Segment Rates

For Plan Years Beginning In

Applicable Month

First Segment

Second Segment

Third Segment

2021

December 2022

4.75

5.36

6.11

2022

December 2022

4.75

5.18

5.92

2023

December 2022

4.75

5.00

5.74

The adjusted 24-month average segment rates set forth in the chart below do

not reflect the changes to § 430(h)(2)(C)

(iv) of the Code made by § 9706(a) of the

ARP. These adjusted 24-month average

segment rates apply only for plan years

for which an election under § 9706(c)(2)

of the ARP is in effect. For a plan year

for which such an election applies, the

24-month averages applicable for Decem-

ber 2022, adjusted to be within the applicable minimum and maximum percentages of the corresponding 25-year average

segment rates in accordance with § 430(h)

(2)(C)(iv) of the Code, are as follows:

Pre-ARP Adjusted 24-Month Average Segment Rates

For Plan Years Beginning In

Applicable Month

First Segment

Second Segment

Third Segment

2021

December 2022

3.32

4.79

5.47

30-YEAR TREASURY SECURITIES

INTEREST RATES

Section 431 specifies the minimum

funding requirements that apply to multiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum

amount for the full-funding limitation

described in § 431(c)(6)(A), based on the

plan’s current liability. Section 431(c)(6)

(E)(ii)(I) provides that the interest rate

used to calculate current liability for this

purpose must be no more than 5 percent

above and no more than 10 percent below

the weighted average of the rates of interest on 30-year Treasury securities during

the four-year period ending on the last

day before the beginning of the plan year.

Notice 88-73, 1988-2 C.B. 383, provides

guidelines for determining the weighted

average interest rate. The rate of interest

on 30-year Treasury securities for November 2022 is 3.99 percent. The Service

determined this rate as the average of the

daily determinations of yield on the 30year Treasury bond maturing in August

2052 determined each day through August 9, 2022 and the yield on the 30-year

Treasury bond maturing in November

2052 determined each day for the balance

of the month. For plan years beginning in

December 2022, the weighted average of

the rates of interest on 30-year Treasury

securities and the permissible range of

rate used to calculate current liability are

as follows:

For Plan Years Beginning In

Treasury Weighted Average Rates

30-Year Treasury Weighted Average

Permissible Range 90% to 105%

December 2022

2.38

2.14 to 2.50

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

computed without regard to a 24-month

average. Notice 2007-81 provides guidelines for determining the minimum pres-

ent value segment rates. Pursuant to that

notice, the minimum present value segment rates determined for November 2022

are as follows:

MINIMUM PRESENT VALUE

SEGMENT RATES

In general, the applicable interest rates

Month

November 2022

Bulletin No. 2023–2

Minimum Present Value Segment Rates

First Segment

Second Segment

5.09

5.60

Third Segment

5.41

325

January 9, 2023

DRAFTING INFORMATION

The principal author of this notice is

Tom Morgan of the Office of Associate

January 9, 2023

Chief Counsel (Employee Benefits, Exempt Organizations, and Employment

Taxes). However, other personnel from

the IRS participated in the development of

326

this guidance. For further information regarding this notice, contact Mr. Morgan at

202-317-6700 or Tony Montanaro at 626927-1475 not toll-free numbers).

Bulletin No. 2023–2

Table 2022-11

Monthly Yield Curve for November 2022

Derived from October 2022 Data

Maturity

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

15.5

16.0

16.5

17.0

17.5

18.0

18.5

19.0

19.5

20.0

Yield

4.94

5.04

5.11

5.14

5.15

5.13

5.11

5.09

5.09

5.10

5.13

5.17

5.22

5.28

5.34

5.40

5.45

5.51

5.56

5.60

5.64

5.68

5.70

5.73

5.74

5.76

5.76

5.77

5.77

5.76

5.76

5.75

5.74

5.73

5.71

5.70

5.69

5.67

5.66

5.65

Bulletin No. 2023–2

Maturity

20.5

21.0

21.5

22.0

22.5

23.0

23.5

24.0

24.5

25.0

25.5

26.0

26.5

27.0

27.5

28.0

28.5

29.0

29.5

30.0

30.5

31.0

31.5

32.0

32.5

33.0

33.5

34.0

34.5

35.0

35.5

36.0

36.5

37.0

37.5

38.0

38.5

39.0

39.5

40.0

Yield

5.63

5.62

5.61

5.59

5.58

5.57

5.56

5.55

5.54

5.53

5.52

5.51

5.50

5.50

5.49

5.48

5.48

5.47

5.47

5.46

5.46

5.45

5.45

5.44

5.44

5.44

5.43

5.43

5.42

5.42

5.42

5.41

5.41

5.41

5.40

5.40

5.40

5.39

5.39

5.39

Maturity

40.5

41.0

41.5

42.0

42.5

43.0

43.5

44.0

44.5

45.0

45.5

46.0

46.5

47.0

47.5

48.0

48.5

49.0

49.5

50.0

50.5

51.0

51.5

52.0

52.5

53.0

53.5

54.0

54.5

55.0

55.5

56.0

56.5

57.0

57.5

58.0

58.5

59.0

59.5

60.0

Yield

5.38

5.38

5.38

5.38

5.37

5.37

5.37

5.37

5.36

5.36

5.36

5.36

5.36

5.35

5.35

5.35

5.35

5.35

5.34

5.34

5.34

5.34

5.34

5.34

5.33

5.33

5.33

5.33

5.33

5.33

5.32

5.32

5.32

5.32

5.32

5.32

5.32

5.32

5.31

5.31

327

Maturity

60.5

61.0

61.5

62.0

62.5

63.0

63.5

64.0

64.5

65.0

65.5

66.0

66.5

67.0

67.5

68.0

68.5

69.0

69.5

70.0

70.5

71.0

71.5

72.0

72.5

73.0

73.5

74.0

74.5

75.0

75.5

76.0

76.5

77.0

77.5

78.0

78.5

79.0

79.5

80.0

Yield

5.31

5.31

5.31

5.31

5.31

5.31

5.30

5.30

5.30

5.30

5.30

5.30

5.30

5.30

5.30

5.29

5.29

5.29

5.29

5.29

5.29

5.29

5.29

5.29

5.29

5.29

5.29

5.28

5.28

5.28

5.28

5.28

5.28

5.28

5.28

5.28

5.28

5.28

5.28

5.28

Maturity

80.5

81.0

81.5

82.0

82.5

83.0

83.5

84.0

84.5

85.0

85.5

86.0

86.5

87.0

87.5

88.0

88.5

89.0

89.5

90.0

90.5

91.0

91.5

92.0

92.5

93.0

93.5

94.0

94.5

95.0

95.5

96.0

96.5

97.0

97.5

98.0

98.5

99.0

99.5

100.0

Yield

5.27

5.27

5.27

5.27

5.27

5.27

5.27

5.27

5.27

5.27

5.27

5.27

5.27

5.27

5.27

5.26

5.26

5.26

5.26

5.26

5.26

5.26

5.26

5.26

5.26

5.26

5.26

5.26

5.26

5.26

5.26

5.26

5.26

5.26

5.25

5.25

5.25

5.25

5.25

5.25

January 9, 2023

Sustainable Aviation Fuel

Credit; Registration;

Certificates; Request for

Public Comments

Notice 2023-6

SECTION 1. PURPOSE

This notice provides guidance on the

new sustainable aviation fuel credits under

§§ 40B and 6426(k) of the Internal Revenue Code (Code) (collectively referred

to as a SAF credit or the SAF credit) and

related credit and payment rules under

§§ 34(a)(3), 38, 87, and 6427(e)(1). This

notice also provides rules related to the §

4101 registration requirements. Finally,

this notice requests comments from the

public related to the SAF credit to assist

the Department of the Treasury (Treasury

Department) and the Internal Revenue

Service (IRS) in developing additional

guidance on the SAF credit in the future.

SECTION 2. OVERVIEW

Section 13203 of Public Law 117-169,

136 Stat. 1818 (August 16, 2022), commonly known as the Inflation Reduction

Act of 2022, added § 40B and amended

§§ 38(b), 40A, 87, 4101(a), 6426, and

6427(e)(1), enacting a sustainable aviation fuel credit, effective for certain fuel

mixtures containing sustainable aviation

fuel sold or used after December 31, 2022,

and prior to January 1, 2025.

The SAF credit is equal to the product

of— (1) the number of gallons of sustainable aviation fuel in a qualified mixture,

multiplied by (2) the sum of— (A) $1.25,

plus (B) the applicable supplementary

amount (as calculated under section 4.05

of this notice) with respect to such sustainable aviation fuel. See §§ 40B(a) and

6426(k). In general, the applicable supplementary amount increases the $1.25

base credit by $0.01 for each percentage

point by which the lifecycle greenhouse

gas emissions reduction percentage (as

defined in section 3.01(4) of this notice)

of the sustainable aviation fuel exceeds

50 percent. See section 3 of this notice for

the requirements of sustainable aviation

fuel and qualified mixtures; see section 4

January 9, 2023

of this notice for calculating the applicable supplementary amount and lifecycle

greenhouse gas emissions reduction percentage.

For a claimant to qualify for the SAF

credit, §§ 40B(f)(1) and 6426(k)(3) require the producer or importer of the sustainable aviation fuel to be registered with

the IRS under § 4101. See section 5 of this

notice for information on how a producer

or importer may register; see section 6.02

of this notice for which party is the proper

claimant.

A claimant who qualifies for the SAF

credit may either: (1) claim an excise tax

credit under § 6426(k), in which case the

claimant first claims the SAF credit against

its § 4081 excise tax liability for a particular quarter and, to the extent that the credit

exceeds the claimant’s § 4081 excise tax

liability for that quarter, the claimant may

claim either a payment under § 6427(e)(1)

or a refundable income tax credit under

§ 34(a)(3); or (2) claim a nonrefundable §

38 general business income tax credit under § 38(b)(35) and include the amount of

the § 40B credit in gross income under §

87. See section 6 of this notice regarding

the procedures for making a claim as well

as the claim requirements.

Sections 40B and 6426(k) allow a SAF

credit for the production of a qualified

mixture which, broadly speaking, is a mixture of sustainable aviation fuel and kerosene. Section 40B(d)(1)(A) defines sustainable aviation fuel by reference to two

American Society for Testing and Materials (ASTM) specifications: ASTM D7566

and certain Fischer Tropsch provisions of

ASTM D1655 Annex A1. The referenced

ASTM specifications describe two distinct

processes to produce a qualified mixture.

Generally, under ASTM D7566, a person

produces a qualified mixture by mixing a

synthetic blending component with kerosene. In contrast, under ASTM D1655

Annex A1, a person produces a qualified

mixture by co-processing an appropriate feedstock with a petroleum feedstock

during the production of kerosene that results in a qualified mixture, although no

separate step of mixing a sustainable aviation fuel with kerosene occurs.

This notice primarily addresses the

SAF credit requirements applicable to a

qualified mixture produced under ASTM

D7566. Treasury and the IRS, in consul-

328

tation with the Department of Transportation and the Federal Aviation Administration, understand that no jet fuel is

currently produced in the United States

under ASTM D1655 Annex A1 that would

qualify for the SAF credit. As a result, this

notice provides limited information with

respect to ASTM D1655 Annex A1 and

requests comments with respect to ASTM

D1655 Annex A1 so that future guidance

may accurately address these types of

claims.

SECTION 3. SUSTAINABLE

AVIATION FUEL; QUALIFIED

MIXTURES; TAXATION OF

SUSTAINABLE AVIATION FUELS

AND QUALIFIED MIXTURES

.01 Sustainable aviation fuel. Under

§ 40B(d)(1), the term sustainable aviation

fuel means the portion of liquid fuel that is

not kerosene that (i) either (A) meets the

specifications of “ASTM D7566” (as defined in section 3.01(1)(a) of this notice to

mean the ASTM D7566 Annexes), or (B)

meets the specifications of ASTM D1655

Annex A1 (as defined in section 3.01(1)

(b) of this notice); and (ii) satisfies the

requirements of section 3.01(2) through

(4) of this notice regarding sustainability.

A liquid fuel that meets the specifications

of one of the ASTM D7566 Annexes or

meets the specifications of ASTM D1655

Annex A1, but does not meet the requirements of section 3.01(2) through (4) of

this notice is ineligible for the SAF credit.

Sustainable aviation fuel may be categorized as either (i) a SAF synthetic

blending component or (ii) a co-processed

liquid fuel that was produced by co-processing petroleum with synthesized hydrocarbons derived from synthesis gas

via the Fischer Tropsch process (FT hydrocarbons). This notice refers to a liquid

fuel that meets the specifications of one of

the ASTM D7566 Annexes and that satisfies the requirements of 3.01(2) through

(4) of this notice as a SAF synthetic blending component. This notice refers to a liquid fuel that meets the specifications of

ASTM D1655 Annex A1, in which the FT

hydrocarbons were derived from biomass

that satisfies the requirements of section

3.01(2) through (4) of this notice as a SAF

co-processed qualified mixture. FT hydrocarbons, which are derived from biomass

Bulletin No. 2023–2

that satisfies the requirements of section

3.01(2) through (4) of this notice, are referred to as SAF FT hydrocarbons.

(1) ASTM International specifications.

For purposes of this notice, references to

ASTM or ASTM International Standard

are references to specifications published

by ASTM International (formerly ASTM).

For availability of ASTM specifications,

see § 48.4081-1(d) of the Manufacturers

and Retailers Excise Tax Regulations (26

CFR part 48).

(a) ASTM D7566 Annexes. The term

ASTM D7566 Annexes means any of the

annexes in ASTM D7566 that provide

the specifications for a pathway to create

a synthetic blending component that can

be blended with ASTM D1655 kerosene

(as defined in section 3.02(2)(a) of this notice) to make a qualified mixture.

(b) ASTM D1655 Annex A1. The term

ASTM D1655 Annex A1 means the Fischer Tropsch provisions of ASTM D1655

Annex A1 that are contained in section

A1.2.2.2, which provides a pathway for

producing a liquid fuel by co-processing

up to five percent of FT hydrocarbons

with petroleum to make a qualified mixture. For purposes of this notice, the term

petroleum includes any conventionally

sourced hydrocarbons permitted under

ASTM D1655 Annex A1.

Liquid fuel produced under section

A1.2.2.1 does not qualify for the SAF

credit because section A1.2.2.1 defines a

pathway for producing a liquid fuel from

co-processing an applicable material (or

materials derived from an applicable material) with a feedstock that is not biomass

(for example, petroleum), which § 40B(d)

(1)(B) excludes from the SAF credit. See

section 3.01(2) of this notice.

(2) Not derived from co-processing applicable materials. To qualify as sustainable aviation fuel, the liquid fuel must not

be derived from co-processing an “applicable material” (or materials derived from

an applicable material) with a feedstock

that is not biomass (within the meaning of

§ 45K(c)(3) of the Code). Section 40B(d)

(2)(A) defines the term applicable material for this purpose to mean (i) monoglycerides, diglycerides, and triglycerides,

(ii) free fatty acids, and (iii) fatty acid esters. Section 45K(c)(3) defines the term

biomass to mean any organic material

other than (A) oil and natural gas (or any

Bulletin No. 2023–2

product thereof), and (B) coal (including

lignite) or any product thereof.

(3) Not derived from palm fatty acid

distillates or petroleum. To qualify as sustainable aviation fuel, the liquid fuel must

not be derived from palm fatty acid distillates or petroleum.

(4) Lifecycle greenhouse gas emissions

reduction percentage. To qualify as sustainable aviation fuel, the liquid fuel must

have been certified in accordance with

§ 40B(e) as having a lifecycle greenhouse

gas emissions reduction percentage of at

least 50 percent. Section 40B(e) defines

the term lifecycle greenhouse gas emissions reduction percentage to mean, with

respect to any sustainable aviation fuel, the

percentage reduction in lifecycle greenhouse gas emissions achieved by such

fuel as compared with petroleum-based

jet fuel, as defined in accordance with (i)

the most recent Carbon Offsetting and Reduction Scheme for International Aviation

(CORSIA) that has been adopted by the

International Civil Aviation Organization

(ICAO) with the agreement of the United

States and is set out in Annex 16 - Environmental Protection: Carbon Offsetting and

Reduction Scheme for International Aviation (CORSIA) (2018), https://elibrary.

icao.int/home/product-details/229739,

and related documents, or (2) any similar methodology that satisfies the criteria

under § 211(o)(1)(H) of the Clean Air Act

(42 U.S.C. 7545(o)(1)(H)), as in effect on

August 16, 2022. See section 4.04 of this

notice for a safe harbor to calculate the

lifecycle greenhouse gas emissions reduction percentage.

.02 Qualified mixture.

(1) Requirements. Under § 40B(c), a

qualified mixture means a mixture of sustainable aviation fuel and kerosene, but

only if— (1) such mixture is produced by

the taxpayer in the United States (defined

in § 7701(a)(9) of the Code to mean the

states and the District of Columbia); (2)

such mixture is used by the taxpayer (or

sold by the taxpayer for use) in an aircraft; (3) such sale or use is in the ordinary

course of a trade or business of the taxpayer; and (4) the transfer of such mixture to

the fuel tank of such aircraft occurs in the

United States.

A qualified mixture may be produced

by either mixing a SAF synthetic blending

component with kerosene (to produce a

329

SAF qualified mixture; see section 3.02(2)

of this notice) or by co-processing SAF

FT hydrocarbons with petroleum to produce a co-processed liquid fuel (which is

a SAF co-processed qualified mixture; see

section 3.02(3) of this notice).

(2) SAF qualified mixture. A SAF qualified mixture means a mixture of a SAF

synthetic blending component (within the

meaning of section 3.01 of this notice)

with ASTM D1655 kerosene (as defined

in section 3.02(2)(a) of this notice) that

meets the requirements of ASTM D7566

(as defined in section 3.02(2)(b) of this

notice) and which may be regarded as

ASTM D1655 compliant SAF.

(a) ASTM D1655 kerosene and ASTM

D1655 compliant SAF. The term ASTM

D1655 kerosene means petroleum-based

kerosene that meets the specifications

set forth in ASTM D1655 and does not

include liquid fuel co-processed with FT

hydrocarbons or the addition of a synthetic blending component.

The term ASTM D1655 compliant

SAF means ASTM D1655 kerosene that

has been blended with a SAF synthetic

blending component described in a specific ASTM D7566 Annex and meets the

batch specifications described in ASTM

D7566, Table 1. It also means kerosene

produced by co-processing SAF FT hydrocarbons with petroleum under ASTM

D1655 Annex A1. Once the mixture meets

those batch specifications or is produced

under ASTM D1655 Annex A1, the mixture may be regarded as jet fuel under

ASTM D1655. ASTM D1655 compliant

SAF is fully fungible with ASTM D1655

kerosene.

The terms ASTM D1655 kerosene

and ASTM D1655 compliant SAF are not

ASTM designations, but rather are used

in this notice to distinguish between two

types of fuel (for federal excise tax purposes) that qualify as jet fuel under the

ASTM D1655 specifications for jet fuel.

(b) ASTM D7566. The term ASTM

D7566 means the batch specifications set

forth under ASTM D7566, Table 1, which

includes the blending requirements for

each synthetic blending component and

the overall specifications and requirements for the blended mixture to be regarded as ASTM D1655 compliant SAF.

Blending percentage requirements for

various synthetic blending components

January 9, 2023

with ASTM D1655 kerosene are listed in

section 6 of ASTM D7566 and range from

10 to 50 percent.

(3) SAF co-processed qualified mixture. A SAF co-processed qualified mixture means a co-processed liquid fuel that

meets the requirements of ASTM D1655

Annex A1 (within the meaning of section

3.01(1)(b) of this notice) and in which the

biomass used to create the FT hydrocarbons satisfies the requirements of section

3.01(2) through (4) of this notice.

ASTM D1655 Annex A1 provides a

pathway for producing a liquid fuel by

co-processing FT hydrocarbons with petroleum that results in a qualified mixture

if the producer uses SAF FT hydrocarbons. This process is functionally different

from mixing two distinct products, such as

a synthetic blending component and kerosene, to create a qualified mixture. Here,

petroleum-based hydrocarbons and up to

five percent of SAF FT hydrocarbons are

processed together to produce kerosene,

a portion of which was derived from sustainable sources. Before processing, neither the petroleum-based hydrocarbons

nor the SAF FT hydrocarbons qualify as

kerosene.

As a result, a SAF co-processed qualified mixture must be produced in the

United States. A co-processed liquid fuel

that is imported into the United States is

ineligible for the SAF credit. The requirement that the SAF co-processed qualified

mixture be produced in the United States

is not met by mixing co-processed liquid

fuel with additional ASTM D1655 kerosene or ASTM D1655 compliant SAF (as

defined in section 3.02(2)(a) of this notice) in the United States.

Only the portion of the SAF co-processed qualified mixture attributable to the

SAF FT hydrocarbons (derived from biomass) qualifies for the SAF credit. Conversely, no portion of the kerosene derived

from a petroleum-based source in a SAF

co-processed qualified mixture qualifies

for the SAF credit.

.03 Taxation of sustainable aviation fuels and qualified mixtures.

(1) In general.

(a) Taxable fuel. Section 4081(a)(1)

imposes an excise tax on certain removals,

entries, and sales of taxable fuel. Section

4083(a) defines taxable fuel as gasoline,

diesel fuel, and kerosene. The term kero-

January 9, 2023

sene, for the purpose of kerosene-type jet

fuel, means any liquid covered by ASTM

D1655 or military specification MIL–

DTL–5624T (Grade JP–5) or MIL–DTL–

83133E (Grade JP–8).

(b) Blended taxable fuel. Section

4081(b)(1) imposes an excise tax on taxable fuel removed or sold by the “blender”

thereof, subject to certain credits provided

in § 4081(b)(2). Section 48.4081-1(b) defines blender as any person that produces

blended taxable fuel. Section 48.4081-1(c)

(1)(i) generally defines the term blended

taxable fuel as any taxable fuel that is produced outside the bulk transfer/terminal

system by mixing (A) taxable fuel with

respect to which tax has been imposed

under § 4041(a)(1) or 4081(a) (other than

taxable fuel for which a credit or payment

has been allowed) and (B) any other liquid

on which tax has not been imposed under

§ 4081.

(2) SAF synthetic blending component.

A SAF synthetic blending component will

not be treated as a taxable fuel for purposes of the excise tax imposed on taxable

fuel under § 4081. A liquid fuel produced

under the ASTM D7566 Annexes cannot, by definition, meet the specifications

of ASTM D1655 until it is blended with

kerosene. Accordingly, a SAF synthetic blending component is not treated as

a taxable fuel for purposes of § 4081(a).

However, the SAF synthetic blending

component is taxable under § 4041(a) or

(c) if it is used in a diesel-powered highway vehicle or a diesel-powered train, or

as fuel in aviation.

(3) SAF qualified mixture. After a

SAF qualified mixture is produced, the

entire mixture is taxable under § 4081.

The SAF qualified mixture is taxable under § 4081(a) if produced within the bulk

transfer/terminal system. Alternatively,

the SAF qualified mixture is taxable under

§ 4081(b) if it is produced with previously-taxed kerosene outside the bulk transfer/terminal system (subject to the credit

for previously-taxed fuel under § 4081(b)

(2)).

(4) Co-processed liquid fuel and SAF

co-processed qualified mixture. Both

co-processed liquid fuel and a SAF

co-processed qualified mixture meet the

specifications of ASTM D1655 and are

therefore kerosene. As a result, any product produced under ASTM D1655 An-

330

nex A1 is a taxable fuel for purposes of

§ 4081(a).

SECTION 4. LIFECYCLE

GREENHOUSE GAS EMISSIONS

REDUCTION PERCENTAGE AND

APPLICABLE SUPPLEMENTARY

AMOUNT

.01 Applicability. The methods of determining the lifecycle greenhouse gas

emissions reduction percentage and the

applicable supplementary amount under

section 4 of this notice apply only to a

SAF qualified mixture.

.02 In general. The SAF synthetic

blending component must be certified,

in accordance with § 40B(e), as having

a lifecycle greenhouse gas emissions reduction percentage of at least 50 percent.

See section 4.04 of this notice. This requirement also applies to § 6426(k). See

§ 6426(k)(2).

Once the SAF synthetic blending component meets the minimum 50 percent

reduction threshold, the lifecycle greenhouse gas emissions reduction percentage

is then used to calculate the applicable

supplementary amount of the SAF credit

under § 40B(b) or 6426(k). The applicable supplementary amount increases the

$1.25 base credit by $0.01 for each whole

percentage point by which the lifecycle

greenhouse gas emissions reduction percentage with respect to such fuel exceeds

50 percent. The applicable supplementary

amount determined under §§ 40B(b) and

6426(k) is calculated in $0.01 increments

and cannot exceed $0.50.

.03 Lifecycle greenhouse gas emissions

of petroleum-based jet fuel. Until further

notice, for purposes of calculating the lifecycle greenhouse gas emissions reduction

percentage, the IRS will treat the lifecycle greenhouse gas emissions of petroleum-based jet fuel as equal to 89 grams

of carbon dioxide equivalent per megajoule of energy or 89 gCO2e/MJ as the

baseline. This is the standard adopted by

the ICAO. See Annex 16 - Environmental Protection: Carbon Offsetting and Reduction Scheme for International Aviation

(CORSIA) (2018), https://elibrary.icao.

int/home/product-details/229739.

.04 Calculating the lifecycle greenhouse gas emissions reduction percentage; safe harbor. The IRS will accept a

Bulletin No. 2023–2

lifecycle greenhouse gas emissions reduction percentage calculated from the

ICAO’s most recent publication of the

CORSIA Default Life Cycle Emissions

Values for CORSIA Eligible Fuels. At the

time of publication of this notice, the most

recently published version (Fourth Edition, June 2022) is available at: https://

www.icao.int/environmental-protection/

CORSIA/Pages/CORSIA-Eligible-Fuels.

aspx.

The IRS will also accept a lifecycle

greenhouse gas emissions reduction percentage calculated from the ICAO’s most

recent publication of the CORSIA Methodology for Calculating Actual Life Cycle

Emissions Values. At the time of publication of this notice, the most recently published version (Third Edition, June 2022)

is available at: https://www.icao.int/environmental-protection/CORSIA/Pages/

CORSIA-Eligible-Fuels.aspx.

The lifecycle greenhouse gas emissions

reduction percentage is calculated by multiplying a fraction, the numerator of which

is the baseline for the lifecycle greenhouse

gas emissions of petroleum-based jet fuel

(LC) minus the lifecycle emissions value

(LSf), and the denominator of which is

the baseline (LC), by 100 percent ([(LC LSf)/ LC] × 100% = lifecycle greenhouse

gas emissions reduction percentage). The

lifecycle greenhouse gas emissions reduction percentage must be rounded down to

the nearest whole percent.

The registered producer or importer of

the SAF synthetic blending component

must record the lifecycle greenhouse gas

emissions reduction percentage on the Certificate for SAF Synthetic Blending Component. See section 7.02 of this notice.

.05 Calculating the applicable supplementary amount. To calculate the applicable supplementary amount for purposes of

§§ 40B(b) and 6426(k), subtract 50 from

the lifecycle greenhouse gas emissions

reduction percentage, then multiply that

number by the applicable rate for the supplementary amount (currently $0.01) ([lifecycle greenhouse gas emissions reduction

percentage – 50] × applicable rate for the

supplementary amount). The applicable

supplementary amount under §§ 40B(b)

and 6426(k) must be calculated using the

same methodology used to determine the

lifecycle greenhouse gas emissions reduction percentage under § 40B(e).

Bulletin No. 2023–2

The registered producer or importer of

the SAF synthetic blending component

must record the applicable supplementary

amount on the Certificate for SAF Synthetic Blending Component. See section

7.02 of this notice.

.06 Example. A blender used 100,000

gallons of a SAF synthetic blending component to produce a SAF qualified mixture. The SAF synthetic blending component was produced via a pathway that has

a lifecycle carbon dioxide emission equivalent of 28.9 grams per megajoule of energy. To calculate the amount of the credit,

first calculate the lifecycle greenhouse gas

emissions reduction percentage (rounding

down to the nearest whole percent): [(89

gCO2e/MJ – 28.9 gCO2e/MJ)/ 89 gCO2e/

MJ] × 100% = 67.5%, rounded down to

67%.

Because the lifecycle greenhouse gas

emissions reduction percentage is at least

50 percent, the SAF synthetic blending

component qualifies for the $1.25/gallon

credit. Additionally, the SAF synthetic

blending component qualifies for the applicable supplementary amount, which is

calculated by subtracting 50 from the lifecycle greenhouse gas emissions reduction

percentage (67), and then multiplying by

the applicable rate ($0.01): (67 – 50) ×

$0.01 = $0.17 per gallon.

The SAF credit is calculated as follows: 100,000 gallons × ($1.25 + $0.17)

= $142,000.00.

SECTION 5. REGISTRATION;

SUSTAINABLE AVIATION

FUEL; BLENDERS OF SAF

SYNTHETIC BLENDING

COMPONENTS; PRODUCERS OF

SAF CO-PROCESSED QUALIFIED

MIXTURES

.01 Registration.

(1) In general. Section 4101(a)(1)

provides that every person producing or

importing sustainable aviation fuel must

register with the Secretary at such time, in

such form and manner, and subject to such

terms and conditions, as the Secretary may

by regulations prescribe. Section 48.41011 provides the registration requirements

for fuel registrants.

Section 40B(f) provides that no SAF

credit is allowed with respect to any sustainable aviation fuel unless the producer

331

or importer of such fuel is registered with

the Secretary under § 4101, and provides

such information with respect to such fuel

as the Secretary may require for purposes

of carrying out § 40B, including certification (in such form and manner as the Secretary prescribes) from an unrelated party demonstrating compliance with— (1)

any general requirements, supply chain

traceability requirements, and information

transmission requirements established under the CORSIA described in § 40B(e)(1),

or (2) in the case of any methodology established under § 40B(e)(2), requirements

similar to the requirements described in

§ 40B(f)(2)(A)(i). See also § 6426(k)(3).

Until further notice, the IRS will treat

the producer or importer of a SAF synthetic blending component and the United States producer of a SAF co-processed

qualified mixture as the persons required

to register under § 4101. The IRS will

not register an importer of a co-processed

liquid fuel or an importer of a SAF qualified mixture as an importer of sustainable

aviation fuel due to the requirement that a

qualified mixture be produced in the United States. See § 40B(c)(1).

(2) Procedure for registering. Application for registration is made on Form 637,

Application for Registration (For Certain

Excise Tax Activities), under Activity Letter “SA,” in accordance with the instructions for that form. The IRS is revising

Form 637 to add Activity Letter “SA.”

Until the revised Form 637 is released, applicants may use the current Form 637 by

writing in “Activity Letter SA” and providing the following:

(a) The annual volume of the sustainable aviation fuel the applicant produces;

(b) The locations and a description of

the applicant’s production facilities;

(c) The feedstocks and sources of feedstocks used to produce the sustainable aviation fuel;

(d) A statement indicating whether the

applicant produces sustainable aviation

fuel under an ASTM D7566 Annex or

ASTM D1655 Annex A1, and if applicable, the specific ASTM D7566 Annex

under which the SAF synthetic blending

component is produced;

(e) A sample Certificate of Analysis (as

defined in section 6.04(3) of this notice)

for the type of sustainable aviation fuel the

applicant produces, demonstrating confor-

January 9, 2023

mance with either an ASTM D7566 Annex or ASTM D1655 Annex A1;

(f) Certification from the International Sustainability and Carbon Certification

(ISCC), Roundtable on Sustainable Biomaterials (RSB), or other unrelated party demonstrating compliance with— (i)

any general requirements, supply chain

traceability requirements, and information

transmission requirements established under CORSIA, which has been adopted by

the ICAO with the agreement of the United

States, or (ii) any similar methodology that

satisfies the criteria under section 211(o)(1)

(H) of the Clean Air Act (42 U.S.C. 7545(o)

(1)(H)), as in effect on August 16, 2022;

(g) Certification in accordance with

§ 40B(e) that the SAF synthetic blending

component has a lifecycle greenhouse gas

emissions reduction percentage of at least

50 percent;

(h) The names and addresses of any

person(s) acting for the applicant as an

agent or broker in buying, selling, or

transporting any sustainable aviation fuel;

(i) The business entities to which the

applicant sells sustainable aviation fuel;

(j) The business entities from or with

which the applicant buys, trades, transfers, or exchanges any sustainable aviation fuel; and

(k) The annual volume of the sustainable aviation fuel the applicant buys, sells,

trades, transfers, or exchanges.

(3) Requirements. The IRS will register an applicant with Activity Letter “SA”

only if the IRS— (A) concludes that the

applicant is engaged as a producer or importer of a SAF synthetic blending component or the producer of a SAF co-processed qualified mixture, or is likely to

become so engaged within a reasonable

time after being registered under § 4101;

and (B) is satisfied with the filing, deposit,

payment, reporting, and claim history for

all federal taxes of the applicant and any

related person (as defined in § 48.41011(b)(5)).

The IRS will not consider an applicant

likely to become engaged in the business

of producing or importing a SAF synthetic

blending component or producing a SAF

co-processed qualified mixture unless the

producer or importer (as applicable) can

provide certification from an unrelated

party demonstrating compliance with

§ 40B(d)(1)(D) and (f)(2)(A).

January 9, 2023

(4) Certification demonstrating compliance with § 40B(f)(2)(A); safe harbor.

The IRS will consider a producer or importer of a SAF synthetic blending component or the producer of a SAF co-processed qualified mixture to meet the

requirements of § 40B(f)(2)(A), relating

to the sustainability requirements of CORSIA, if the producer or importer (as applicable) has a valid, relevant certificate from

ISCC, RSB, or other ICAO-approved sustainability certification scheme. At the

time of publication of this notice, the most

recently published version (First Edition,

November 2020) of CORSIA Approved

Sustainability Certification Schemes,

which lists ICAO-approved sustainability certification schemes, is available at

https://www.icao.int/environmental-protection/CORSIA/Pages/CORSIA-Eligible-Fuels.aspx.

.02 Blenders of SAF synthetic blending

components and ASTM D1655 kerosene

used to produce SAF qualified mixtures.

Section 4101 and § 48.4101-1 require

any person who produces taxable fuel to

be registered. Section 4083(a)(1) defines

taxable fuel to include kerosene, which

for jet fuel means ASTM D1655 kerosene (and ASTM D7566 and D1655 compliant SAF). The person who blends the

SAF synthetic blending component with

ASTM D1655 kerosene to produce a SAF

qualified mixture produces ASTM D1655

compliant SAF, which meets the specifications of ASTM D1655 and is a taxable

fuel.

As a result, the blender is required to

be registered either under Activity Letter

“S” if the blending occurs within the bulk

transfer/terminal system (that is, above the

rack) or under Activity Letter “M” if the

blending occurs outside the bulk transfer/

terminal system (that is, below the rack).

Pursuant to § 48.4101-1(h)(1)(v), each

registrant must notify the IRS of any

change in the information the registrant

submitted in connection with its application for registration within 10 days after

the change occurs. A previously-registered

“S” registrant or a previously-registered

“M” registrant that begins producing SAF

qualified mixtures must inform the IRS of

this change by contacting the IRS office

with which the registrant is registered.

.03 Producers of SAF co-processed

qualified mixtures and co-processed liq-

332

uid fuel. As stated above, § 4101 and §

48.4101-1 require any person who produces taxable fuel to be registered. The

person who produces a SAF co-processed

qualified mixture is also producing kerosene, a taxable fuel under § 4083(a)(1).

As a result, the producer is required to be

registered under Activity Letter “S” in addition to Activity Letter “SA.”

A person who produces co-processed

liquid fuel (regardless of whether it qualifies for the SAF credit or as a SAF co-processed liquid fuel) is also producing kerosene. As a result, the producer is required

to be registered under Activity Letter “S.”

In addition, a previously-registered “S”

registrant that begins producing co-processed liquid fuel or a SAF co-processed

qualified mixture must inform the IRS of

this change by contacting the IRS office

with which the registrant is registered.

SECTION 6. CLAIMS; MAKING A

CLAIM; CLAIM REQUIREMENTS

.01 In general. In order to qualify for

a SAF credit, the claimant must produce,

then use or sell for use, a qualified mixture

that meets all requirements set forth in this

notice. The producer or importer of the

sustainable aviation fuel must also be registered under § 4101. See also §§ 40B(f)

(1), 6426(k)(3). See section 6.04 of this

notice for the claim requirements applicable to a SAF qualified mixture produced

under ASTM D7566.

.02 Claimant. The person eligible to

claim the SAF credit is the person who

produces the qualified mixture, assuming

all other statutory requirements are met.

With respect to a SAF qualified mixture,

the person who produces the SAF qualified mixture does not have to be the same

person that produced or imported the SAF

synthetic blending component. With respect to a SAF co-processed qualified

mixture, the person who produces the

SAF co-processed qualified mixture is the

proper claimant.

.03 Making a claim.

(1) Excise tax claims under §§ 6426(k)

and 6427(e)(1); refundable income tax

claims under § 34(a)(3).

(a) In general. First, the claimant must

claim an excise tax SAF credit under

§ 6426(k), along with any credit under §

6426(c) or (e) against its § 4081 excise tax

Bulletin No. 2023–2

liability. To the extent that the SAF credit under § 6426(k) (along with the sum of

any credit under § 6426(c) or (e)) exceeds

the claimant’s § 4081 liability for a particular quarter, the claimant may claim a

payment under § 6427(e)(1) or a refundable income tax credit under § 34(a)(3).

A claimant may only make one claim for

each gallon of sustainable aviation fuel

used in a qualified mixture. A claimant

may not make a claim under § 6427(e)(1)

or § 34(a)(3) for an amount that will be

claimed or is required to be claimed under

§ 6426(k).

(b) Procedure for making a claim.

A claimant claiming an excise tax SAF

credit under § 6426(k) must first make the

claim on a Form 720, Quarterly Federal

Excise Tax Return, if reporting excise tax

liability, in accordance with the instructions for that form. For federal income tax

purposes, a claimant’s expense for the §

4081 excise tax, whether taken as a deduction or as a component of cost of goods

sold, is reduced by the amount of the excise tax credit under § 6426(k). See generally Exxon Mobil Corp. v. United States,

43 F.4th 424 (5th Cir. 2022).

The payment under § 6427(e)(1) is

claimed on Form 720 or Form 8849,

Schedule 3, Certain Fuel Mixtures and

the Alternative Fuel Credit, in accordance

with the instructions for those forms. A

person may not make a claim on a Form

8849, Schedule 3 for an amount that is

claimed (or will be claimed) on Form 720,

Form 720X, Amended Quarterly Federal

Excise Tax Return, or Form 4136, Credit

for Federal Tax Paid on Fuels.

The § 34(a)(3) refundable income tax

credit is claimed on Form 4136 in accordance with the instructions for that form,

for amounts otherwise allowable under §

6427(e)(1), but that were not claimed on

Form 720 or Form 8849, Schedule 3.

Although the SAF credit applies to fuel

sold or used after December 31, 2022, a

claimant will be ineligible to make a claim

immediately after the credit goes into effect due to the registration requirements

imposed by §§ 40B and 6426(k). In general, a claimant will be able to file an amended return (Form 720X) to claim a credit

under § 6426(k) with respect to qualified

mixtures produced beginning on January

1, 2023, once the appropriate persons are

registered and the other requirements of

Bulletin No. 2023–2

this notice are met. Similarly, a claimant

will be able to use § 34(a)(3) to claim a

refundable income tax credit, which it

would otherwise be eligible to claim as a

payment under § 6427(e)(1).

(2) Nonrefundable income tax credit.

The § 40B credit is a § 38 general business

credit. A claimant may make this claim on

Form 8864, Biodiesel, Renewable Diesel,

and Sustainable Aviation Fuels Credit, in

accordance with the instructions for that

form.

Section 87 provides that gross income

includes the SAF credit determined with

respect to the taxpayer for the taxable

year under § 40B(a). Therefore, a claimant must include the amount of the § 40B

credit in its gross income.

The amount of the credit determined

under § 40B with respect to any sustainable aviation fuel must be properly

reduced to take into account any benefit

provided with respect to such sustainable aviation fuel solely by reason of the

application of § 6426(k) or 6427(e)(1).

See § 40B(g). In addition, for purposes

of § 40A (biodiesel and renewable diesel

used as fuel), the term biodiesel shall not

include any liquid with respect to which

a credit may be determined under § 40

or 40B.

A claimant will be ineligible to make

a claim immediately after the credit goes

into effect due to the registration requirements; however, a claimant generally will

be able to file a Form 8864 with an amended income tax return to claim a credit under § 40B once the appropriate persons

are registered and the other requirements

of this notice are met.

.04 Claim requirements.

(1) Applicability. The claim requirements under section 6.04 of this notice

apply only to claims made with respect to

a SAF qualified mixture produced under

ASTM D7566.

(2) Certificate for SAF Synthetic

Blending Component. Each claim for a

credit or payment under § 34(a)(3), 40B,

6426(k), or 6427(e)(1) with respect to a

SAF qualified mixture must contain an

original Certificate for SAF Synthetic

Blending Component described in section

7.02 of this notice and, if applicable, the

Statement(s) of SAF Synthetic Blending

Component Reseller described in section

7.03 of this notice. However, in the case of

333

a certificate and statement that support a

claim made on more than one claim form,

the certificate and statement are to be included with the first claim and the claimant is to provide information related to the

certificate on any subsequent claim in accordance with the instructions applicable

to the claim form.

(3) Declaration for SAF Qualified Mixture. Each claim for a credit or payment

under § 34(a)(3), 40B, 6426(k), or 6427(e)

(1) with respect to a SAF qualified mixture

must contain a Declaration for SAF Qualified Mixture. The declaration consists of a

statement that is signed under penalties of

perjury by a person with authority to bind

the claimant, is substantially in the same

form as the model declaration in Appendix A of this notice, and contains all the

information necessary to complete such

declaration.

The declaration must contain the Certificate of Analysis (COA) reference number for the COA associated with the SAF

qualified mixture, as well as the COA

reference numbers for the SAF synthetic

blending component and the D1655 kerosene that the claimant blended to produce

the SAF qualified mixture. A COA is a

document from an unrelated party used to

verify the type and quality of fuel used as

jet fuel. Separate COAs are generated for

each synthetic blending component, for

the kerosene used to mix with the synthetic blending component, and for the SAF

qualified mixture. The COA reference

number for the SAF synthetic blending

component must match the COA reference number for the SAF synthetic blending component on the Certificate for SAF

Synthetic Blending Component.

SECTION 7. CERTIFICATES AND

STATEMENTS

.01 Applicability. This section describes the certificate and reseller statement applicable only to SAF synthetic

blending components.

.02 Certificate for SAF Synthetic Blending Component. The Certificate for SAF

Synthetic Blending Component required

by section 6.04(2) of this notice consists

of (i) a statement that is signed under penalties of perjury by a person with authority to bind the producer or importer of a

SAF synthetic blending component, (ii)

January 9, 2023

is substantially in the same form as the

model certificate in Appendix B of this

notice, and (iii) contains all the information necessary to complete the certificate.

The certificate identification number is determined by the producer or importer and

must be unique to each certificate.

A producer or importer may, with respect to a particular sale of a SAF synthetic blending component, provide multiple

separate certificates, each applicable to

a portion of the total volume of the SAF

synthetic blending component sold. Thus,

for example, a producer or importer that

sells 5,000 gallons of a SAF synthetic

blending component may provide its buyer with five certificates for 1,000 gallons

each. The multiple certificates may be

provided to the buyer at or after the time

of sale or to a reseller in the circumstances

described in section 7.03(1) of this notice.

.03 Statement of SAF Synthetic Blending Component Reseller.

(1) In general. A person that receives

a Certificate for SAF Synthetic Blending

Component, and subsequently sells the

SAF synthetic blending component without producing a SAF qualified mixture,

must provide to its buyer the certificate,

and a statement that is substantially in

the same form as the model statement in

Appendix C of this notice. The statement

must contain all of the information necessary to complete the model statement in

Appendix C and be attached to the original Certificate for SAF Synthetic Blending Component.

A reseller cannot make multiple copies

of a Certificate for SAF Synthetic Blending Component in order to use it for multiple buyers. If a single certificate applies

to a SAF synthetic blending component

that a reseller expects to sell to multiple

buyers, then the reseller should return the

certificate (together with any statements

provided by intervening resellers) to the

producer or importer. The producer or importer may reissue multiple Certificates

for SAF Synthetic Blending Component

to the reseller that reflect the appropriate

volumes. The reissued certificates must

include the certificate identification number from the certificate that was returned.

(2) Withdrawal of the right to provide

a statement. The IRS may withdraw the

right of a buyer of a SAF synthetic blending component to provide the buyer’s Cer-

January 9, 2023

tificate for SAF Synthetic Blending Component and Statement of SAF Synthetic

Blending Component Reseller under this

section 7 if the IRS cannot verify the accuracy of the buyer’s statements.

SECTION 8. REQUEST FOR

COMMENTS

.01 General comments. The Treasury

Department and the IRS request comments on whether any issues related to the

SAF credit provided in this notice require

clarification or additional guidance. The

IRS anticipates issuing additional guidance on the SAF credit.

.02 Comments on specific questions.

The Treasury Department and IRS invite

specific comments in response to the following questions:

(1) Section 40B(e)(2) provides that

“any similar methodology, which satisfies

the criteria under § 211(o)(1)(H) of the

Clean Air Act (42 U.S.C. 7545(o)(1)(H)),

as in effect on the date of enactment of this

section” may be used to determine the reduction in lifecycle greenhouse gas emissions. What methods exist that could qualify as a “similar methodology”? Do the

lifecycle emissions values that have been

developed by the Environmental Protection Agency for the Renewable Fuel Standard qualify as a “similar methodology”?

Does the Greenhouse Gases, Regulated

Emissions, and Energy Use in Transportation (GREET) model developed by the

Argonne National Laboratory qualify as a

“similar methodology”?

(2) Section 40B(f)(2)(A)(ii) (concerning general requirements, supply chain

traceability requirements, and information

requirements established under CORSIA)

provides that in the case of any methodology established under § 40B(e)(2) (concerning any similar methodology, which

satisfies the criteria § 211(o)(1)(H) of the

Clean Air Act (42 U.S.C. 7545(o)(1)(H))),

requirements similar to the requirements

described in section 40B(e)(1) apply.

What CORSIA requirements are needed

to ensure supply chain traceability of information related to lifecycle greenhouse

gas emissions and what unrelated party or

parties are qualified to demonstrate compliance?

(3) Are any SAF co-processed qualified mixtures currently being produced in

334

the United States? Are any SAF FT hydrocarbons currently being produced in the

United States?

(4) With respect to the registration requirements under § 4101, this notice treats

the person who produces a SAF co-processed qualified mixture as a sustainable

aviation fuel producer. Is it more appropriate to treat the producer of the SAF FT

hydrocarbons as the sustainable aviation

fuel producer?

(5) What types of verification exist to

show what portion of a SAF co-processed

qualified mixture is attributable to FT hydrocarbons versus petroleum? Are carbon dating or mass balancing appropriate

types of verification?

(6) What entities are capable of providing the certifications required by § 40B(d)

(1)(D) (relating to a lifecycle greenhouse

gas emissions reduction percentage of at

least 50 percent) and (f)(2)(A) (concerning general requirements, supply chain

traceability requirements, and information

requirements established under CORSIA

or a similar methodology under the Clean

Air Act) with respect to SAF co-processed

qualified mixtures?

(7) Section 40B(c)(4) requires that the

transfer of the qualified mixture into an

aircraft occur in the United States. What

types of verification exist to show that the

qualified mixture is transferred to the fuel

tank of an aircraft in the United States?

SECTION 9. SUBMISSION OF

COMMENTS

.01 Written comments should be submitted by February 17, 2023. The subject

line for the comments should include a

reference to Notice 2023-06. Comments

may be submitted in one of two ways:

(1) electronically via the Federal

eRulemaking Portal at http://www.regulations.gov (type IRS-2022-0036 in the

search field on the regulations.gov homepage to find this notice and submit comments); or

(2) alternatively, by mail to: Internal Revenue Service, CC:PA:LPD:PR

(Notice 2023-06), Room 5203, P.O. Box

7604, Ben Franklin Station, Washington,

DC 20044.

.02 All commenters are strongly encouraged to submit comments electronically. The Treasury Department and the

Bulletin No. 2023–2

IRS will publish for public availability

any comment submitted electronically, or

on paper, to its public docket on www.regulations.gov.

SECTION 10. PAPERWORK

REDUCTION ACT

Sections 5 and 6.04 of this notice set

forth collections of information to be

provided to the IRS with Form 637, and

to determine whether a claimant qualifies for a SAF credit. The collections of

Bulletin No. 2023–2

information will be reflected in the submission to the Office of Management and

Budget (OMB) for review in accordance

with the Paperwork Reduction Act (44

U.S.C. 3507(c)) that is associated with

Form 637 (OMB control number 15451835). This submission will be updated

in the ordinary course. An agency may

not conduct or sponsor, and a person is

not required to respond to, a collection

of information unless the collection of

information displays a valid OMB control number.

335

SECTION 11. DRAFTING

INFORMATION

The principal author of this notice is

Elisabeth Shellan of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information

regarding this notice, call the energy security guidance contact number at (202)

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

January 9, 2023

Appendix A – Model Declaration for SAF Qualified Mixture

DECLARATION FOR SAF QUALIFIED MIXTURE

(To support a claim related to sustainable aviation fuel (SAF)

under the Internal Revenue Code)

The undersigned blender of a SAF qualified mixture (“Claimant”) hereby declares the following:

1.

___________________________________________________________________________________________________

___________________________________________________________________________________________________

___________________________________________________________________________________________________

Claimant’s name, address, and employer identification number (EIN)

2.

Claimant declares that the SAF qualified mixture to which this declaration relates:

(A) Is a mixture of SAF synthetic blending component and kerosene;

(1) The SAF synthetic blending component used to create the mixture meets the requirements of an ASTM D7566 Annex

(the certificate of analysis reference number demonstrating conformance with such standard is ____________________,

dated ____________ and the Certificate for SAF Synthetic Blending Component, for the SAF synthetic blending

component used to create the mixture, certificate identification number is ____________________, dated __________);

(2) The kerosene used to create the mixture meets the requirements of ASTM D1655 (the certificate of analysis reference

number demonstrating conformance with such standard is ____________________, dated __________);

(3) The SAF qualified mixture meets the requirements of ASTM D7566 (the certificate of analysis reference number

demonstrating conformance with such standard is ____________________, dated __________);

(B) The mixture was produced by Claimant in the United States;

(C) The mixture was used by Claimant (or sold by Claimant) for use in an aircraft;

(D) Such sale or use was in the ordinary course of the trade or business of the Claimant;

(E) The transfer of such mixture to the fuel tank of such aircraft occurred in the United States.

3.

Claimant is registered under activity letter M or S or both with registration number(s) ____________________. Claimant’s

registration has not been suspended or revoked by the Internal Revenue Service.

Under penalties of perjury, I, ___________________________________________ declare that I have examined this declaration, and

to the best of my knowledge and belief, it is true, correct, and complete.

___________________________________________

Printed or typed name of person signing this declaration

___________________________________________

Title of person signing

___________________________________________

Signature and date signed

January 9, 2023

336

Bulletin No. 2023–2

Appendix B – Model Certificate for SAF Synthetic Blending Component

CERTIFICATE FOR SAF SYNTHETIC BLENDING COMPONENT

Certificate Identification Number: ____________________

(To support a claim related to sustainable aviation fuel (SAF)

under the Internal Revenue Code)

The undersigned producer or importer of a SAF synthetic blending component (“Producer”) hereby certifies the following under

penalties of perjury:

1.

___________________________________________________________________________________________________

___________________________________________________________________________________________________

___________________________________________________________________________________________________

Producer’s name, address, and employer identification number (EIN)

2.

___________________________________________________________________________________________________

___________________________________________________________________________________________________

___________________________________________________________________________________________________

Name, address, and EIN of person buying the SAF synthetic blending component from Producer.

3.

___________________________________________________________________________________________________

___________________________________________________________________________________________________

___________________________________________________________________________________________________

Name and address of the unrelated party certifying compliance with the general requirements, supply chain traceability

requirements, and information transmission requirements established under the Carbon Offsetting and Reduction Scheme

for International Aviation (CORSIA) or similar requirements for methodologies established under section 211(o)(1)(H) of

the Clean Air Act (42 U.S.C. 7545(o)(1)(H)).

4.

___________________________________________________________________________________________________

Date and location of sale to buyer

5.

This certificate applies to __________ gallons of a SAF synthetic blending component.

6.

Producer certifies that the SAF synthetic blending component to which this certificate relates:

(A) Meets the requirements of an ASTM D7566 Annex (the certificate of analysis reference number demonstrating

conformance with such standard is ____________________, dated __________ );

(B) Is not derived from co-processing an applicable material (monoglycerides, diglycerides, triglycerides, free fatty acids,

or fatty acid esters) or materials derived from an applicable material with a feedstock that is not biomass (as defined in

section 45K(c)(3));

(C) Is not derived from palm fatty acid distillates or petroleum; and

(D) Has been certified in accordance with section 40B(e) as having a lifecycle greenhouse gas emissions reduction percentage

of at least 50 percent.

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January 9, 2023

7.

The lifecycle greenhouse gas emissions reduction percentage of the SAF synthetic blending component to which this

certificate relates is __________. (This percent must be rounded down to the nearest whole percent.)

(Check one)

______ The lifecycle greenhouse gas emissions reduction percentage is calculated from the “Default Life Cycle Emissions

Values for CORSIA Eligible Fuels” in the most recently published version by the International Civil Aviation Organization

(ICAO).

______ The lifecycle greenhouse gas emissions reduction percentage is calculated from the “CORSIA Methodology for

Calculating Actual Life Cycle Emission Values” in the most recently published version by the ICAO.

______ The lifecycle greenhouse gas emissions reduction percentage is calculated according to a methodology that satisfies

the criteria of section 211(o)(1)(H) of the Clean Air Act (42 U.S.C. 7545(o)(1)(H)). Describe method: _________________

___________________________________________________________________________________________________

___________________________________________________________________________________________________

8.

The applicable supplementary amount with respect to the SAF synthetic blending component to which this certificate relates

is __________. In no event can the applicable supplementary amount exceed $0.50.

9.

This certificate applies to the following sale:

______ Invoice or delivery ticket number

______ Total number of gallons of the SAF synthetic blending component sold under that invoice or delivery ticket number

(including SAF synthetic blending component not covered by this certificate)

______ Total number of certificates issued for that invoice or delivery ticket number

10. ___________________________________________________________________________________________________

___________________________________________________________________________________________________

___________________________________________________________________________________________________

Name, address, and EIN of reseller to whom certificate is issued (only in the case of certificates reissued to a reseller after

the return of the original certificate)

January 9, 2023

338

Bulletin No. 2023–2

11. _________ Original Certificate Identification Number (only in the case of certificates reissued to a reseller after return of the

original certificate)

12. Producer is registered as a sustainable aviation fuel (activity letter SA) producer or importer with registration number

__________. Producer’s registration has not been suspended or revoked by the Internal Revenue Service.

Producer understands that the fraudulent use of this certificate may subject Producer and all parties making any fraudulent use of this

certificate to a fine or imprisonment, or both, together with the costs of prosecution.

___________________________________________

Printed or typed name of person signing this certificate

___________________________________________

Title of person signing

___________________________________________

Signature and date signed

Note: In the case of a claimant that is also the producer or importer of the SAF synthetic blending component, the information required on lines 2, 4, and 10 of the model certificate is not applicable and those lines do not need to be completed.

Bulletin No. 2023–2

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January 9, 2023

Appendix C – Model Statement of SAF Synthetic Blending Component Reseller

STATEMENT OF SAF SYNTHETIC BLENDING COMPONENT RESELLER

(To support a claim related to sustainable aviation fuel (SAF)

under the Internal Revenue Code)

The undersigned SAF synthetic blending component reseller (“Reseller”) hereby certifies the following under penalties of perjury:

1.

___________________________________________________________________________________________________

___________________________________________________________________________________________________

___________________________________________________________________________________________________

Reseller’s name, address, and employer identification number (EIN)

2.

___________________________________________________________________________________________________

___________________________________________________________________________________________________

___________________________________________________________________________________________________

3.

Name, address, and EIN of Reseller’s buyer

___________________________________________________________________________________________________

Date and location of sale to buyer

4.

__________________________________Volume of the SAF synthetic blending component sold

5.

__________________________________Certificate Identification Number on the Certificate for SAF Synthetic Blending

Component

Reseller has bought the SAF synthetic blending component described in the accompanying Certificate for SAF Synthetic Blending

Component and reseller has no reason to believe that any information in the certificate is false.

Reseller has not been notified by the Internal Revenue Service that its right to provide a certificate and a statement has been withdrawn.

Reseller understands that the fraudulent use of this statement may subject Reseller and all parties making any fraudulent use of this

statement to a fine or imprisonment, or both, together with the costs of prosecution.

___________________________________________

Printed or typed name of person signing this certificate

___________________________________________

Title of person signing

___________________________________________

Signature and date signed

January 9, 2023

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Bulletin No. 2023–2

Additional Guidance

Related to Transfers of

Publicly Traded Partnership

Interests under Section

1446(f)

Notice 2023-8

I. PURPOSE

This notice provides additional guidance for brokers to comply with the provisions of the final regulations under section

1446(f) (and certain provisions of the final

regulations that apply to section 1446(a))

(final regulations) that relate to withholding on the transfer of an interest in a publicly traded partnership (PTP interest).

The Department of the Treasury (Treasury

Department) and the Internal Revenue

Service (IRS) intend to issue proposed

regulations that would amend the final

regulations to implement this additional

guidance.

II. BACKGROUND

Sections 864(c)(8) and 1446(f) were

added to the Code by the Tax Cuts and

Jobs Act, Pub. L. 115-97, on December

22, 2017. Section 864(c)(8) generally provides that gain or loss of a foreign person

on the sale or exchange of an interest in

a partnership engaged in a U.S. trade or

business is treated as effectively connected gain or loss and, therefore, is subject

to U.S. tax. Section 1446(f)(1) requires a

transferee of an interest in a partnership

to withhold 10 percent of the amount realized if any portion of the gain on the

disposition would be treated under section

864(c)(8) as effectively connected with

the conduct of a trade or business within

the United States (unless an exception applies).

On November 30, 2020, the Treasury

Department and the IRS published the final regulations (TD 9926) in the Federal

Register (85 FR 76910, as corrected at 86

FR 13191), primarily relating to withholding and information reporting under section 1446(f). The final regulations include

withholding requirements under section

1446(f)(1) that generally require a broker

that effects a transfer of a PTP interest on

Bulletin No. 2023–2

behalf of a transferor to withhold on the

payment of an amount realized made to

the transferor. However, a broker is not

required to withhold, or may withhold at

a reduced rate, if it can rely on (i) a certification from the transferor that claims

an exception or reduction to withholding

(generally provided on a valid Form W-8

or W-9) or (ii) a representation made by

the publicly traded partnership (PTP) on

a qualified notice indicating that the exception under §1.1446(f)-4(b)(3)(ii) applies (ten-percent exception). A broker

is also not required to withhold when it

makes the payment of an amount realized

to a qualified intermediary (QI), or a U.S.

branch treated as a U.S. person, that assumes primary withholding responsibility

under section 1446(f)(1).

The provisions of the final regulations

that relate to a broker’s obligation to withhold on the transfer of a PTP interest apply

to transfers that occur on or after January

1, 2022. However, on September 7, 2021,

the Treasury Department and the IRS released Notice 2021-51, 2021-36 I.R.B.

361, deferring the applicability date of

these provisions to transfers that occur on

or after January 1, 2023. On May 16, 2022,

the Treasury Department and the IRS released Notice 2022-23, 2022-20 I.R.B.

1062, proposing changes to the qualified

intermediary agreement (QI agreement),

including rules that will apply to QIs required to withhold on the transfer of a PTP

interest under section 1446(f) starting January 1, 2023. Subsequently, the Treasury

Department and the IRS released Revenue

Procedure 2022-43, 2022-52 I.R.B. 570,

which provides the final QI agreement effective as of January 1, 2023.

III. SALES OF INTERESTS IN

FOREIGN PUBLICLY TRADED

PARTNERSHIPS

Following the publication of the final

regulations, taxpayers and other stakeholders raised concerns regarding the difficulty

of brokers to determine, for withholding

under section 1446(f), whether entities

organized outside of the United States are

classified as PTPs for U.S. tax purposes.

Because the final regulations generally

require withholding on the sale of a PTP

interest unless the PTP represents on a

qualified notice that the ten-percent ex-

341

ception applies, or the transferor provides

a certification claiming another exception

to withholding under §1.1446(f)-4(b)),

a broker that is unable to determine the

classification of an entity may be required

to withhold on each sale of an interest in

such entity. The view of these stakeholders was that it is impractical to identify a

complete list of entities organized outside

of the United States that are classified as

partnerships for U.S. tax purposes and that

are traded on a foreign

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