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## Record

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- **Document type:** Agency decision

## Text

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

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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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3Ab358609a59c3a68e. Public record. Not legal advice.