Bulletin No. 2021–32

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2021–32

August 9, 2021

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE

REG-102951-16, page 272.

The proposed regulations would amend the rules for filing certain returns and statements electronically to reflect

changes made by the Taxpayer First Act of 2019 and to promote electronic filing. The NPRM also withdraws proposed

regulations published in the Federal Register on May 31,

2018, amending the rules for determining whether information returns must be filed electronically.

INCOME TAX

Notice 2021-47, page 269.

The notice announces the inflation adjustment factor and

phase-out amount for the enhanced oil recovery credit for

Finding Lists begin on page ii.

taxable years beginning in the 2021 calendar year. The format of the notice is identical to the format of previously

published notices on this issue. The notice concludes that

because the reference price for the 2020 calendar year

($37.07) does not exceed $28 multiplied by the inflation adjustment factor for the 2020 calendar year ($28 multiplied

by 1.7849 = $49.9772), the enhanced oil recovery credit

for qualified costs paid or incurred in 2021 is determined

without regard to the phase-out for crude oil price increases. The notice contains the previously published figures for

taxable years beginning in the 1991 through 2020 calendar

years. This year, calendar year 2021, is similar to 2016

and 2017 where the enhanced oil recovery credit is determined without regard to the phase-out for crude oil price

increases.

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.

August 9, 2021 

Bulletin No. 2021–32

Part III

2021 Section 43 Inflation

Adjustment

Notice 2021-47

Section 43(a) provides that for purposes of section 38, the enhanced oil recovery

credit for any taxable year is an amount

equal to 15 percent of the taxpayer’s qualified enhanced oil recovery costs for such

taxable year.

Section 43(b)(1) provides that the

amount of the credit determined under

subsection (a) for any taxable year shall

be reduced by an amount which bears the

same ratio to the amount of such credit

(determined without regard to this para-

Bulletin No. 2021–32

graph) as — (A) the amount by which

the reference price for the calendar year

preceding the calendar year in which the

taxable year begins exceeds $28, bears to

(B) $6.

Section 43(b)(3)(B) of the Internal

Revenue Code requires the Secretary to

publish an inflation adjustment factor. The

enhanced oil recovery credit under § 43

for any taxable year is reduced if the “reference price,” determined under § 45K(d)

(2)(C), for the calendar year preceding the

calendar year in which the taxable year begins is greater than $28 multiplied by the

inflation adjustment factor for that year.

The term “inflation adjustment factor”

means, with respect to any calendar year,

a fraction the numerator of which is the

269

GNP implicit price deflator for the preceding calendar year and the denominator of

which is the GNP implicit price deflator

for 1990.

Because the reference price for the

2020 calendar year ($37.07) does not exceed $28 multiplied by the inflation adjustment factor for the 2020 calendar year

($28 multiplied by 1.7849 = $49.9772),

the enhanced oil recovery credit for qualified costs paid or incurred in 2021 is determined without regard to the phase-out for

crude oil price increases.

Table 1 contains the GNP implicit price

deflator used for the 2021 calendar year,

as well as the previously published GNP

implicit price deflators used for the 1991

through 2020 calendar years.

August 9, 2021

Notice 2021-47 TABLE 1

GNP IMPLICIT PRICE DEFLATORS

Calendar Year

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

GNP Implicit Price Deflator

112.9 (used for 1991)

117.0 (used for 1992)

120.9 (used for 1993)

124.1 (used for 1994)

126.0 (used for 1995)*

107.5 (used for 1996)

109.7 (used for 1997)**

112.35 (used for 1998)

112.64 (used for 1999)***

104.59 (used for 2000)

106.89 (used for 2001)

109.31 (used for 2002)

110.63 (used for 2003)

105.67 (used for 2004)****

108.23 (used for 2005)

112.129 (used for 2006)

116.036 (used for 2007)

119.656 (used for 2008)

122.407 (used for 2009)

109.764 (used for 2010)*****

110.654 (used for 2011)

113.347 (used for 2012)******

115.387 (used for 2013)

106.710 (used for 2014)*******

108.407 (used for 2015)********

109.868 (used for 2016)

111.528 (used for 2017)

113.500 (used for 2018)

110.308 (used for 2019)*********

112.257 (used for 2020)

113.586 (used for 2021)

* Beginning in 1995, the GNP implicit price deflator was rebased relative to 1992. The 1990 GNP implicit price deflator used to compute the 1996 § 43 inflation

adjustment factor is 93.6.

** Beginning in 1997, two digits follow the decimal point in the GNP implicit price deflator. The 1990 GNP price deflator used to compute the 1998 § 43 inflation

adjustment factor is 93.63.

*** Beginning in 1999, the GNP implicit price deflator was rebased relative to 1996. The 1990 GNP implicit price deflator used to compute the 2000 § 43 inflation

adjustment factor is 86.53.

**** Beginning in 2003, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute the 2004 § 43 inflation adjustment

factor is 81.589.

***** Beginning in 2009, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute the 2010 § 43 inflation adjustment

factor is 72.199.

****** Beginning in 2011, the 1990 GNP implicit price deflator used to compute the 2012 § 43 inflation adjustment factor is 72.260.

******* Beginning in 2013, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute the 2014 § 43 inflation adjustment

factor is 66.803.

******** Beginning in 2014, the 1990 GNP implicit price deflator used to compute the 2015 § 43 inflation adjustment factor is 66.732.

********* Beginning in 2018, the 1990 GNP implicit price deflator used to compute the 2019 § 43 inflation adjustment factor is 63.637.

August 9, 2021

270

Bulletin No. 2021–32

Table 2 contains the inflation adjustment factor and the phase-out amount

for taxable years beginning in the 2021

calendar year as well as the previously

published inflation adjustment factors

and phase-out amounts for taxable years

Calendar Year

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Notice 2021-47 TABLE 2

INFLATION ADJUSTMENT FACTORS AND

PHASE-OUT AMOUNTS

Inflation Adjustment Factor

1.0000

1.0363

1.0708

1.0992

1.1160

1.1485

1.1720

1.1999

1.2030

1.2087

1.2353

1.2633

1.2785

1.2952

1.3266

1.3743

1.4222

1.4666

1.5003

1.5203

1.5326

1.5686

1.5968

1.5974

1.6245

1.6464

1.6713

1.7008

1.7334

1.7640

1.7849

DRAFTING INFORMATION

The principal author of this notice is

Bulletin No. 2021–32

Martha M. Garcia of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information

271

beginning in the 1991 through 2020 calendar years.

Phase-out Amount

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

100 percent

100 percent

100 percent

100 percent

100 percent

100 percent

100 percent

100 percent

100 percent

100 percent

0

0

1.069 percent

100 percent

100 percent

0

regarding this notice, contact Ms. Garcia

at (202) 317-6853 (not a toll-free number).

August 9, 2021

Part IV

Notice of Proposed

Rulemaking

Electronic-Filing

Requirements for

Specified Returns and

Other Documents

REG-102951-16

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Withdrawal of notice of proposed rulemaking; notice of proposed

rulemaking.

SUMMARY: This document contains proposed regulations amending the rules for

filing electronically and affects persons

required to file partnership returns, corporate income tax returns, unrelated business income tax returns, withholding tax

returns, and certain information returns,

registration statements, disclosure statements, notifications, actuarial reports, and

certain excise tax returns. The proposed

amendments reflect changes made by the

Taxpayer First Act of 2019 (TFA) and are

consistent with the TFA’s emphasis on increasing electronic filing. This document

also withdraws proposed regulations published in the Federal Register on May 31,

2018, amending the rules for determining

whether information returns must be filed

electronically.

DATES: Written or electronic comments

must be received by September 21, 2021.

The public hearing is being held by teleconference on September 22, 2021 at 10

a.m. EST. Requests to speak and outlines

of topics to be discussed at the public

hearing must be received by September

21, 2021. If no outlines are received by

September 21, 2021, the public hearing

will be cancelled. Requests to attend the

public hearing must be received by 5:00

p.m. EST on September 20, 2021. The

telephonic hearing will be made accessible to people with disabilities. Requests

for special assistance during the telephon-

August 9, 2021

ic hearing must be received by September

17, 2021.

ADDRESSES: Commenters are strongly

encouraged to submit public comments

electronically. Submit electronic submissions via the Federal eRulemaking Portal

at www.regulations.gov (indicate IRS and

REG–102951–16) by following the online

instructions for submitting comments.

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

withdrawn. The Department of the Treasury (Treasury Department) and the IRS

will publish for public availability any

comments submitted to its public docket.

Send paper submissions to: CC:PA:LPD:PR (REG–102951–16), room 5203,

Internal Revenue Service, P.O. Box 7604,

Ben Franklin Station, Washington, DC

20044.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, call Casey R. Conrad of the Office

of the Associate Chief Counsel (Procedure

and Administration), (202) 317-6844;

concerning submission of comments or

requests for a public hearing, call Regina Johnson, (202) 317-5177 (not toll-free

numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed

amendments to the Regulations on Income

Taxes (26 CFR part 1) under sections

1461 and 1474 of the Internal Revenue

Code (Code), which provide that persons

required to deduct and withhold tax are

liable for such tax, and section 6050I of

the Code, which requires persons to report

information about financial transactions to

the IRS; to the Regulations on Pension Excise Taxes (26 CFR part 54) under section

6011 of the Code, which requires persons

to report information for certain excise

taxes related to employee benefit plans; to

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

1474, 6011, 6012, 6033, 6057, 6058, and

6059 of the Code for determining whether

272

returns must be filed using magnetic media; and to the Regulations on Foundation

and Similar Excise Taxes (26 CFR part

53) under section 6011 of the Code to remove the option—available to a person

required to report certain excise taxes on

Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code—to designate a Form

4720 filed by a private foundation or trust

as that person’s return if the foundation is

reporting the same transaction. This document also withdraws proposed regulations

under section 6011 that were published in

the Federal Register on May 31, 2018

(May 2018 proposed regulations), amending the rules for determining whether

information returns must be filed using

magnetic media.

Section 6011(e) was added to the Code

by section 319 of the Tax Equity and Fiscal Responsibility Act of 1982, Public

Law 97-248, 96 Stat. 610, and required

the Secretary of the Treasury or her delegate (Secretary) to prescribe regulations

providing standards for determining

which returns were required to be filed on

magnetic media (hereinafter references

to filing “in electronic form” will be used

in place of filing “on magnetic media”).

A year later, the statute was amended by

section 109 of the Interest and Dividend

Tax Compliance Act of 1983, Public Law

98-67, 97 Stat. 383, to require information returns under sections 6042(a) (dividends and corporate earnings and profits), 6044(a) (patronage dividends), and

6049(a) (interest), with respect to more

than 50 payees for any calendar year, to be

filed electronically. The amendment also

added a waiver provision from electronically filing to any person who established

undue hardship.

On March 25, 1986, the Secretary first

published guidance under section 6011(e)

with respect to the electronic filing requirement as §301.6011-2 (TD 8081),

which specified Forms 1042-S, 1098,

1099 series, 5498, 6248, 8027, W-2G,

W-2, W-2P as the information returns

covered by the regulation that had to be

filed electronically unless the person was

granted a waiver or was a low-volume

filer. The term “low-volume filers” was

Bulletin No. 2021–32

defined as persons not required to file,

for any calendar year beginning on or after January 1, 1987, 250 or more of the

specified returns (other than Forms 1099DIV, Dividends and Distributions; 1099PATR, Taxable Distributions Received

from Cooperatives; 1099-INT, Interest

Income; or 1099-OID, Original Issue

Discount). For those four Forms 1099,

the regulation provided a special rule that

reduced the 250-return threshold to 50

and required that the four forms be aggregated for purposes of determining whether a person met the 50-return threshold.

The regulation also provided that the

Commissioner of Internal Revenue or his

delegate (Commissioner) could prescribe

by revenue procedure additional forms to

be covered by the regulation.

Section 6011(e) was again amended in 1989 by section 7713, Title VII, of

the Revenue Reconciliation Act of 1989

(1989 Act), Public Law 101-239, 103

Stat. 2394, to prohibit the Secretary from

requiring any person to file returns electronically unless that person was required

to file at least 250 returns during the calendar year. The 1989 Act also required the

Secretary to consider the taxpayer’s ability to comply at reasonable costs with the

regulation’s requirements.

On June 30, 1998, the Secretary promulgated amending regulations under

section 6011(e), §301.6011-2 (TD 8772),

that removed the special rules related to

the four Forms 1099 and clarified that the

250-return threshold applied separately to each information return covered by

§301.6011-2. The regulation also added

Forms 499R-2/W-2PR, W-2VI, W-2GU,

and W-2AS as information returns covered by the regulation and removed

Form 6248.

On August 5, 1997, the President

signed into law the Taxpayer Relief Act of

1997, Public Law 105–34. Section 1224

of that Act amended 6011(e)(2) by adding

a sentence that required the Secretary to

promulgate regulations to require partnerships with over 100 partners to file returns

electronically. On November 12, 1999, the

Secretary promulgated regulations under

section 6011(e) relating to this special rule

for partnerships with more than 100 partners, §301.6011-3 (TD 8843), requiring

partnerships with more than 100 partners

to file partnership returns and all informa-

Bulletin No. 2021–32

tion required by the applicable forms and

schedules electronically.

On April 29, 2002, the Secretary

promulgated regulations under section

6011(e) (TD 8992) to add Form 1098-E as

an information return covered by the regulation; on February 7, 2003, the Secretary

promulgated regulations under section

6011(e) (TD 9029) to add Form 1098-T

as an information return covered by the

regulation.

On November 13, 2007, the Secretary promulgated regulations relating

to the requirements for filing corporate

income tax returns and returns of organizations required to file returns under

section 6033 electronically under section 6011(e), §301.6011-5, §301.6033-4,

and §301.6037-2 (TD 9363). The regulations specify that all returns required to be

filed during the calendar year, including

income tax returns, employment tax returns, excise tax returns, and information

returns, are counted in determining whether a corporation or organization meets the

250-return threshold. Sections 301.60115 and 301.6037-2 apply to large corporations and S corporations, respectively, if

the corporation is required to file at least

250 returns during the calendar year and

the corporation reports total assets at the

end of the corporation’s taxable year that

equal or exceed $10 million on Schedule

L of their Form 1120 ($10 million rule).

Section 301.6033-4 applies to organizations required to file Form 990, Return of

Organization Exempt From Income Tax,

that have total assets of $10 million or

more as of the end of the taxable year, and

that are required to file at least 250 returns

during the calendar year; it also applies to

any organization (regardless of total assets) required to file Form 990-PF, Return

of Private Foundation or Section 4947(a)

(1) Trust Treated as Private Foundation,

if the organization is required to file at

least 250 returns during the calendar year.

Section 6011(e)(4) was added to the

Code in 2010 by section 522, Title V, of

the Hiring Incentives to Restore Employment (HIRE) Act, Public Law 111-147,

124 Stat. 71, to authorize the Secretary

to require financial institutions that file

returns with respect to withholding on

foreign transfers to file those returns electronically regardless of the number. On

January 28, 2013, the Secretary promul-

273

gated regulations under section 1474(f),

§301.1474-1 (TD 9610), to require financial institutions defined in section 1471(d)

(5) to electronically file Form 1042-S,

Foreign Persons’ U.S. Source Income

Subject to Withholding, regardless of the

number of returns filed for the calendar

year, but did not include in those regulations a requirement to electronically file

Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign

Persons.

On March 10, 2014, the Secretary

promulgated regulations under section 6011(e), §301.6011-2 (TD 9660), to

add the Forms 1094 series and 1095 series

as information returns covered by the regulation. And on December 19, 2016, the

Secretary promulgated regulations under

section 6011(e), §301.6011-2 (TD 9804),

to remove the Form 1095 series and add

Form 1095-B and Form 1095-C as information returns covered by the regulation.

On March 23, 2018, the President

signed into law the Tax Technical Corrections Act of 2018 (TTCA), Public

Law 115-141. Section 301, div. U, title

III, of the TTCA added a new paragraph

(5), Special rule for partnerships, to section 6011(e). Section 6011(e)(5)(A), Partnerships permitted to be required to file

on magnetic media, authorized the Secretary to lower the electronic-filing threshold to 200 returns and statements for all

partnerships filing returns and statements

relating to calendar year 2018, reducing

that number by 50 each year until 2023,

when partnerships filing more than 20 returns and statements relating to 2022 or

any subsequent calendar year could be

required to file electronically. The TTCA

also moved the rule authorizing the Secretary to require partnerships with more than

100 partners to file their returns electronically from section 6011(e)(2) to new section 6011(e)(5)(B), Partnerships required

to file on magnetic media. The Secretary

did not promulgate regulations under section 6011(e) relating to the lower electronic-filing thresholds for partnerships.

On May 31, 2018, the Secretary proposed regulations under section 6011(e)

(83 FR 24948) amending §301.6011-2.

The proposed regulations would have required that all information returns covered

under that regulation, regardless of type,

be included in determining whether the

August 9, 2021

returns a person must file meet the 250-return threshold and the person must file the

information returns electronically. The

May 2018 proposed regulations also provided that corrected information returns

would be required to be filed electronically if the corresponding original return was

required to be filed electronically.

On July 1, 2019, the President signed

into law the Taxpayer First Act of 2019

(TFA), Public Law 116-25. Section 2301

of the TFA amended section 6011(e) by

adding new paragraph 5 that authorizes

the Secretary to prescribe regulations that

decrease, in accordance with the TFA,

the number of returns a taxpayer may file

without being required to file electronically. These amendments included changes

to the special rule for partnerships. Section 2301 of the TFA moved the rule requiring partnerships with more than 100

partners to file returns electronically from

section 6011(e)(5), titled “Partnerships required to file on magnetic media”, to new

section 6011(e)(6). Section 3101 of the

TFA amended section 6011 to require any

charitable or other organization required

to file an annual return that relates to any

tax imposed by section 511 on unrelated

business taxable income to file those returns in electronic form. Section 3101 of

the TFA also amended section 6033 to

require any organization required to file

a return under section 6033 to file those

returns in electronic form.

On November 19, 2020, the Secretary promulgated regulations under section 529A of the Code, which amended

a regulation under section 6011(e) of the

Code, §301.6011-2 (TD 9923), to add the

Forms 5498-ESA, Coverdell ESA Contribution Information, 5498-QA, ABLE

Account Contribution Information, and

5498-SA, HSA, Archer MSA, or Medicare

Advantage MSA Information, as information returns covered by the regulation.

On December 20, 2019, the President

signed into law the Setting Every Community Up for Retirement Enhancement

Act of 2019 (SECURE Act), enacted as

part of the Further Consolidated Appropriations Act, 2020, Public Law 116-94,

div. O. Section 202 of the SECURE Act

allows a group of plans to file a single aggregated annual return or report for plan

years beginning after December 31, 2021.

Section 202(d) of the SECURE Act clari-

August 9, 2021

fies the electronic-filing requirements for

these deferred compensation plans. Section 202 of the SECURE Act also added

to section 6011 a second paragraph (e)

(6), although the headings of the two

paragraphs (e)(6) differ. The one moved

to paragraph (e)(6) by the TFA is titled

“Partnerships required to file on magnetic

media.” The one added by the SECURE

Act is titled “Application of numerical

limitation to returns related to deferred

compensation plans” and treats information regarding each plan for which information is provided on a return required to

be filed under section 6058 of the Code as

a separate return for purposes of determining the number of returns a taxpayer may

file without being required to file electronically. These proposed regulations do

not address amendments made by section

202(d) of the SECURE Act.

Explanation of Provisions

1. Scope of the Proposed Regulations for

Filing Returns Electronically

These proposed regulations would

impose electronic-filing requirements on

persons required to file certain returns as

authorized by the TFA by amending the

following regulations:

(1) §301.6011-2, Required use of electronic form, which prescribes standards for determining whether certain information returns must be

filed electronically;

(2) §1.6045-2, Furnishing statement

required with respect to certain substitute payments, which requires

persons to report certain substitute

payments;

(3) §1.6045-4, Information reporting on

real estate transactions with dates of

closing on or after January 1, 1991,

which requires persons to report on

real estate transactions;

(4) §1.6050I-0, Table of contents,

which lists the major captions that

appear in §§1.6050I-1 and 1.6050I2;

(5) §1.6050I-1, Returns relating to cash

in excess of $10,000 received in a

trade or business, which requires

persons to report information about

these financial transactions to the

IRS;

274

(6)

(7)

(8)

(9)

(10)

(11)

(12)

(13)

(14)

§1.6050I-2, Returns relating to cash

in excess of $10,000 received as

bail by court clerks, which requires

persons to report information about

these financial transactions to the

IRS;

§1.6050M-1, Information returns

relating to persons receiving contracts from certain Federal executive agencies, which requires certain

Federal executive agencies to report

information with respect to each

contract entered into by that agency;

§301.6721-1, Failure to file correct

information returns, which provides

the penalty for failure to file correct

information returns;

§301.6011-3, Required use of electronic form for partnership returns,

which prescribes standards for determining whether a partnership

must file its partnership return electronically;

§301.6011-5, Required use of electronic form for corporate income tax

returns, which prescribes standards

for determining whether a corporation must file its corporate income

tax returns electronically;

§1.6037-2, Required use of electronic form for income tax returns

of electing small business corporations, which prescribes standards

for determining whether an electing

small-business corporation (S corporation) must file its S corporation

return electronically;

§301.6037-2, Required use of electronic form for returns of electing

small business corporations, which

prescribes standards for determining whether an electing small-business corporation (S corporation)

must file its S corporation return

electronically;

§1.6033‑4, Required filing in electronic form for returns by organizations required to file returns under section 6033, which prescribes

standards for filing returns required

to be filed electronically under

§301.6033-4;

§301.6033-4, Required filing in

electronic form for returns by organizations required to file returns under section 6033, which prescribes

standards for determining whether

Bulletin No. 2021–32

returns by organizations required to

file a return under section 6033 must

be filed electronically;

(15) §53.6011-1, General requirement

of return, statement or list, which

requires persons subject to certain enumerated excise taxes under

Chapter 42 of the Code to file a

Form 4720 to accompany payment

of those excise taxes;

(16) §301.6057-3, Required use of electronic form for filing requirements

relating to deferred vested retirement benefit, which prescribes standards for determining whether a

registration statement required to be

filed under section 6057(a) or a notification required to be filed under

section 6057(b) must be filed electronically;

(17) §301.6058-2, Required use of electronic form for filing requirements

relating to information required in

connection with certain plans of

deferred compensation, which prescribes standards for determining

whether a return required to be filed

under section 6058 with respect to

an employee benefit plan must be

filed electronically; and

(18) §301.6059-2, Required use of electronic form for filing requirements

relating to periodic report of actuary, which prescribes standards for

determining whether an actuarial

report required to be filed under

section 6059 with respect to an employee benefit plan must be filed

electronically.

The proposed regulations would also

create the following new regulations that

impose an electronic-filing requirement:

(1) §301.6011-10, Certain organizations,

including trusts, required to file unrelated business income tax returns in

electronic form, which requires certain organizations, including trusts, to

file their unrelated business income

tax returns electronically;

(2) §301.6011-11, Required use of electronic form for certain returns for

tax-advantaged bonds, which prescribes standards for determining

whether a return for credit payments

to issuers of qualified bonds must be

filed electronically;

Bulletin No. 2021–32

(3) §301.6011-12, Required use of electronic form for returns of certain excise taxes under chapters 41 and 42

of the Internal Revenue Code, which

prescribes standards for determining

whether an excise tax return on Form

4720 must be filed electronically;

(4) §301.6011-13, Required use of electronic form for split-interest trust returns, which prescribes standards for

determining whether an information

return on Form 5227 must be filed

electronically;

(5) §301.6011-14, Required use of electronic form or other machine-readable form for material advisor disclosure statements, which prescribes

standards for determining whether a

material advisor disclosure statement

on Form 8918 must be filed electronically or in other machine-readable

form;

(6) §301.6012-2, Required use of electronic form for income tax returns of

certain political organizations, which

prescribes standards for determining whether an income tax return on

Form 1120-POL must be filed electronically;

(7) §54.6011-3, Required use of electronic form for the filing requirements

for the return for certain excise taxes related to employee benefit plans,

which prescribes standards for determining whether an income tax return

on Form 5330, Return of Excise Taxes Related to Employee Benefit Plans,

must be filed electronically; and

(8) §301.6011-15, Required use of electronic form for withholding tax returns, which prescribes standards for

determining whether an income tax

return filed by a withholding agent on

Form 1042 must be filed electronically.

In addition, the proposed regulations

would amend the following regulations

regarding the filing requirements of withholding agents:

(1) §1.1461-1, Payment and returns of

tax withheld, which prescribes requirements for withholding agents

to file returns with respect to U.S.

source income of foreign persons;

(2) §1.1471-0, Outline of regulation provisions for sections 1471 through

1474, which lists the major captions

275

that appear in §§1.1471-1 through

1.1474-7 and §301.1474-1;

(3) §1.1474-1, Liability for withheld

tax and withholding agent reporting,

which provides rules for withholding

agents making payments under chapters 3 or 4 of the Code; and

(4) §301.1474-1, Required use of electronic form for financial institutions

filing Form 1042-S or Form 8966,

which provides rules for withholding

agents making payments under chapter 4 of the Code.

The regulations proposed in this document include reordering and renumbering of paragraphs when necessary for

clarification and logic. In addition, cross

references have been updated, and typographical, grammatical, and punctuation

corrections have been made.

As many of these regulations imposing

electronic-filing requirements also provide a waiver from electronically filing to

any person who establishes undue hardship, the Treasury Department and the

IRS request comments on how the hardship waiver procedures should be administered, including suggestions for revising

the procedures for requesting, and criteria

for granting, a hardship waiver.

2. Proposed §301.6011-2, Rules for

Filing Certain Information Returns

Electronically

These proposed regulations would

amend §301.6011-2 as discussed in detail

in the following sections 2.A though 2.G.

A. Additional information returns

required to be filed electronically

i. Forms 1098-C and 1098-Q

Section 301.6011-2(b)(1) provides a

list of information returns required to be

filed electronically in accordance with

§301.6011-2. Among those returns are

three in the Form 1098 series: Form 1098,

Mortgage Interest Statement; Form 1098E, Student Loan Interest Statement; and

Form 1098-T, Tuition Statement, added

to §301.6011‑2(b)(1) by, respectively,

TD 8081 (March 25, 1986), TD 8992

(April 29, 2002), and TD 9029 (February

7, 2003). After those three forms were

added to §301.6011-2(b)(1), the IRS cre-

August 9, 2021

ated additional returns in the Form 1098

series: Form 1098-C, Contributions of

Motor Vehicles, Boats, and Airplanes;

and Form 1098-Q, Qualifying Longevity

Annuity Contract Information. These two

additional 1098 series forms, as well as

the three currently listed in §301.60112(b), are all filed and furnished by larger

organizations and institutions that generally electronically file returns even when

not required to do so by §301.6011-2.

Based on the size and sophistication of

the entities that file these forms and the

accessibility and availability of electronic filing, the Treasury Department and

the IRS have determined that filers of

Forms 1098-C and 1098-Q are unlikely

to incur unreasonable costs to electronically file these returns. Thus, the proposed

regulations would amend §301.6011-2(b)

(1) to add Forms 1098-C and 1098-Q to

the list of information returns covered by

§301.6011-2(b).

ii. Forms 3921 and 3922

The proposed regulations would also

amend §301.6011-2(b)(1) to add the

Form 3921, Exercise of an Incentive

Stock Option Under Section 422(b), and

Form 3922, Transfer of Stock Acquired

Through an Employee Stock Purchase

Plan Under Section 423(c). These forms

are filed and furnished by sophisticated

taxpayers that generally electronically file

returns even when not required to do so by

§301.6011 2. Based on the sophistication

of these filers and the accessibility and

availability of electronic filing, the Treasury Department and the IRS have determined that filers of Forms 3921 and 3922

are unlikely to incur unreasonable costs to

electronically file these returns.

iii. Form 1097-BTC

The proposed regulations would also

amend §301.6011-2(b)(1) to add the

Form 1097-BTC, Bond Tax Credit. This

form is filed and furnished by bond issuers

with respect to certain tax credit bonds.

For the reasons discussed in this preamble, the Treasury Department and the IRS

have determined that filers of Form 1097BTC should not incur any unreasonable

costs to electronically file this return. See

section 2.D., Aggregation of returns to

August 9, 2021

determine whether the electronic-filing

threshold is met. Proposed §301.6011-2

would allow for a waiver of the electronic

filing requirements for Form 1097-BTC if

hardship is shown in a request for waiver

made in accordance with the regulation.

B. Form 8300 required to be filed

electronically

Form 8300, Report of Cash Payments

Over $10,000 Received in a Trade or Business, is a dual-purpose form, designed to

meet both the section 6050I reporting requirement and, since January 1, 2002, a

similar Bank Secrecy Act (BSA) reporting

requirement found in 31 U.S.C. 5331 and

31 CFR 1010.330. Generally, any person

in a trade or business who receives more

than $10,000 in cash in a single transaction or related transactions must file Form

8300. The IRS uses the information on

the Form 8300 for civil and criminal tax

administration and compliance. The Financial Crimes Enforcement Network

(FinCEN) relies on up-to-date Form 8300

filings for law enforcement, reporting,

and statistical purposes. The instructions

on Form 8300 state that filers can file the

form either on paper with the IRS or electronically through FinCEN’s BSA E-Filing System.

Approximately 250,000 of the 300,000

Forms 8300 filed during each calendar

year from 2015 to 2018 were filed on paper with the IRS. IRS employees manually input data from the paper-filed Forms

8300 into FinCEN’s BSA E-Filing System. This procedure requires significant

resources to be spent on processing and

data entry. Manual data entry can cause

delays in the input and retrieval of data,

affecting the timeliness of information

available for law enforcement and other

users to detect potential money laundering, terrorist financing, and other tax and

financial fraud.

These proposed regulations would

require filers who are required to file at

least the applicable number of returns

identified in paragraphs (b)(1) and (b)(2)

of proposed §301.6011-2 during the calendar year to also file their Forms 8300

electronically, as directed by the form’s

instructions. This requirement would increase the timeliness and accuracy of data

entry, reduce postage costs, promote IT

276

modernization efforts, reallocate IRS staff

for priority assignments, and provide IRS

criminal and civil investigators and other

agencies with access to the data with upto-date and accurate information. Electronic filing would also protect against

possible future disruption and delays in

processing paper-filed Forms 8300. It is

anticipated that the form will direct filers

to use FinCEN’s BSA E-Filing system

(https://bsaefiling.fincen.treas.gov/main.

html), which is an internet-based secure

system with no cost to the user. The only

technical requirement of the BSA E-Filing

System is to have an internet connection

for access to the system. Nonetheless, the

proposed regulations would continue to

allow the Commissioner to waive the requirement to file information returns electronically if the request for waiver demonstrates hardship. The principal factor in

determining hardship will be the extent,

if any, to which the cost of electronically filing Form 8300 exceeds the cost of

filing Form 8300 on paper. The proposed

regulations would also edit the example in

§1.6050I-1(d)(2)(iv) to provide additional

clarity for the rule illustrated in that example.

C. Amending the electronic-filing

threshold

Under section 6011(e)(1), the Secretary

must prescribe regulations providing standards for determining which returns must

be filed electronically. Section 6011(e)(2)

(A), however, until it was amended by the

TFA, prevented the Secretary from requiring any person to file returns electronically unless the person was required to file

at least 250 returns during the calendar

year. Section 2301 of the TFA amended

section 6011(e), changing the statutory

250-return threshold to a decreasing number over several years, as set forth in new

section 6011(e)(5). In accordance with

section 2301 of the TFA, these proposed

regulations would amend §301.60112(c)(1)(i), which currently provides that

no person is required to electronically

file an information return covered under

§301.6011-2(b) unless the person is required to file 250 or more returns during

the calendar year. The proposed amendments would remove references to the

250-return threshold in §301.6011-2(c)

Bulletin No. 2021–32

(1)(i) and add a new paragraph (c)(3)(i) to

§301.6011-2 that, in accordance with the

TFA, reduces the electronic-filing threshold for information returns covered under

§301.6011-2(b) from 250 to 100, for returns required to be filed during calendar

year 2022, and from 100 to 10, for returns

required to be filed during calendar years

after 2022.

Information returns are generally required to be filed between January and

March of the year following the calendar

year to which such returns relate. See sections 6071(b) and (c). If a taxpayer has,

for example, 13 employees in calendar

year 2022 and is required to file Forms

W-2 for those employees during calendar year 2023, that taxpayer would, under

these proposed regulations, be required to

file those 13 Forms W-2 electronically.

The proposed incremental step-down

from 250 to 100 for information returns

required to be filed during calendar year

2022, and then from 100 to 10 for information returns required to be filed after 2022,

will allow the IRS time to ensure it has

sufficient resources and updated programming to seamlessly handle and process the

increased volume of electronically-filed

information returns and the applications

required to file those information returns

electronically.

The Treasury Department and the IRS

expect that by calendar year 2023 the IRS

will be prepared to handle and process the

anticipated increased volume of returns

and applications, and that no further incremental step-down would be necessary

if these proposed regulations are finalized

and applicable to returns required to be

filed during calendar year 2023. Consequently, persons required to file at least

10 information returns during the calendar

year 2023 would be required to file those

returns electronically. The Treasury Department and the IRS request comments

on why persons required to file at least 10

information returns during the calendar

year 2023 would not be able to file those

returns electronically during that calendar

year and whether the Treasury Department and the IRS should provide an incremental step-down to 100 for information

returns required to be filed during calendar year 2023, and then from 100 to 10

for information returns required to be filed

during calendar years after 2023.

Bulletin No. 2021–32

D. Aggregation of returns to determine

whether the electronic-filing threshold is

met

Section 301.6011-2(c)(1)(iii) provides

that each type of information return covered under §301.6011-2(b) is considered

separately for purposes of determining

whether a person meets the 250-return

electronic-filing threshold. Therefore, different types of information returns are not

counted in the aggregate for purposes of

determining whether a person is required

to file a number of returns that equals or

exceeds the 250-return electronic-filing threshold during the calendar year

(non-aggregation rule).

These proposed regulations would

remove the non-aggregation rule from

§301.6011-2(c)(1)(iii). Section 6011(e)

does not prohibit the aggregation of information returns of different types in

determining whether a person meets the

electronic-filing threshold during a calendar year. When the regulations specifically

providing for non-aggregation were published in 1998, electronic filing was still

in the early stages of development and

not as commonly used as it is today. Both

the 250-return limitation that Congress

had included in the 1989 amendment to

section 6011(e) and the non-aggregation

rule that the Secretary prescribed helped

ensure that electronic-filing burdens and

costs were appropriate, given the existing

limits and accessibility to electronic-filing

technology at that time.

Since that time, electronic filing has become more common, accessible, and economical, as evidenced by the prevalence

of tax-return preparers and third-party

service providers who offer return-preparation and electronic-filing services, by

the availability of tax-return-preparation

software, and by the numbers of returns

already being filed electronically on a

voluntary basis. In 2018, for example, approximately 98.5 percent of information

returns were filed electronically. Moreover, electronic filing increases the IRS’s

timeliness and accuracy in processing return information, which, in turn, provides

faster and better customer service to taxpayers with respect to those returns.

In light of the prevalence of electronic filing and Congress’s enactment of the

TFA, which significantly expanded the

277

Secretary’s authority to prescribe regulations requiring persons to file returns electronically, the Treasury Department and

the IRS have determined that the non-aggregation rule is no longer necessary and

propose to remove it from §301.60112(c). The proposed regulations would add

a new paragraph (c)(4)(i) to §301.6011-2

to provide that a person required to file

original information returns of any type

covered by §301.6011-2(b)(1) and (b)

(2) must count all those returns together

to determine whether the person meets or

exceeds the electronic-filing threshold for

the relevant calendar year.

The proposed regulations do not include Forms 8300 in the aggregation rule,

and no Form 8300 would be included in

determining whether a person is required

to file the applicable number of information returns. A Form 8300 generally must

be filed within 15 days after a reportable

payment of more than $10,000 is received.

A filer may not know the number of Forms

8300 it will file in a calendar year until after the year is over, because the filer will

not know how many cash transactions

over $10,000 will occur during the year.

On the other hand, other information returns described in §301.6011-2(b)(1) and

(2) do not need to be filed until after the

calendar year of the event being reported.

A filer of those other information returns

will therefore know at the beginning of the

calendar year whether the filer is required

to file at least the applicable number of

those other information returns because

those returns relate to the preceding calendar year. Thus, the Treasury Department

and the IRS propose to require electronic filing of Forms 8300 only if the filer is

required to file other information returns

electronically.

Under these proposed regulations, filers would generally understand early in

the calendar year their electronic-filing obligations for Forms 8300 without an unduly complex aggregation rule. In addition,

these proposed regulations are consistent

with the TFA’s emphasis on development,

improvement, and expansion of modern

technology (see, for example, “An Act To

amend the Internal Revenue Code of 1986

to modernize and improve the Internal

Revenue Service, and for other purposes”

and “Subtitle B—Development of Information Technology” under “Title II—21st

August 9, 2021

Century IRS”), and are within the Secretary’s expanded authority under the TFA

to prescribe regulations requiring persons

to file returns electronically.

E. Corrected returns must be filed in the

same manner as the original return

Section 301.6011-2 provides that the

non-aggregation rule applies separately to

each type of corrected information return

covered by §301.6011-2(b) such that, for

purposes of determining whether a person meets the 250-return electronic-filing

threshold, corrected information returns

are counted separately from original information returns, and each type of corrected

information return is counted separately.

The Treasury Department and the

IRS have determined that, to increase

the IRS’s timeliness and accuracy in processing information returns, if persons

are required to file original information

returns electronically, they must file any

corresponding corrected information returns electronically. Likewise, if persons

permitted to file information returns on

paper file those information returns on paper, they must also file any corresponding

corrected information returns on paper.

As discussed in the next three paragraphs,

this will increase the IRS’s efficiency in

processing returns and should not cause

taxpayers to incur unreasonable costs.

Paper information returns are generally

filed at one of three different IRS Submission Processing Centers, depending on the

filer’s legal residence (for individuals) or

principal place of business (for entities).

When the IRS receives paper returns, it

must convert the return to an electronic-data record before it can use the information effectively. Electronic information returns, on the other hand, do not go

through Submission Processing Centers;

they are generally filed through the IRS’s

Filing Information Returns Electronically

(FIRE) system or Affordable Care Act Information Returns (AIR) system, depending on the type of return.

Because the procedures for processing electronic returns and paper returns

are different, when an original return is

filed on paper and a corrected return is

filed electronically shortly thereafter, the

IRS may not have finished processing the

original paper return before the electronic

August 9, 2021

return is received. The IRS is thus not able

to reconcile differences as quickly as when

the original and corrected returns are filed

in the same manner. Similar processing issues arise when an original return is filed

electronically and the corrected return is

filed on paper.

This proposed requirement will not result in any additional costs or burdens on

taxpayers with respect to electronic filing

because a filer who filed the original return

electronically has the software necessary

to file a corrected return electronically.

Thus, the proposed regulations would add

new paragraphs (c)(4)(ii)(A) and (c)(4)(ii)

(B) to §301.6011-2 to provide that corrected information returns must be filed electronically if the corresponding original

return was required to be filed electronically, and that corrected returns must be

filed on paper if the corresponding original return was permitted to be, and was,

filed on paper. In addition, the proposed

regulations would amend §301.6721-1(a)

(2)(ii), as discussed under section 5, Proposed §301.6721-1, Rules Relating to

Penalties for Failure to File Correct Information Returns, to provide that a failure to

file a corrected information return in the

same manner as the corresponding original will be deemed a failure to correct the

corresponding original information return.

F. Special electronic-filing threshold for

partnerships of any size

Section 2301 of the TFA amended

the special rule for partnerships in section 6011(e)(5) to authorize the Secretary

to reduce the electronic-filing threshold

for partnerships required to file returns.

The amended special rule for partnerships authorized the Secretary to reduce

the electronic-filing threshold at an accelerated rate when compared to the general electronic-filing threshold, phasing

out this special rule for partnerships for

returns required to be filed during calendar years after 2021. These proposed

regulations do not include a special electronic-filing threshold for partnerships

because the final regulations are not expected to be applicable before the 2022 filing season, at which point the special rule

for partnerships will be phased out. For

all the reasons discussed in this preamble,

the proposed regulations would reduce,

278

for all persons, including partnerships, the

electronic-filing threshold for information

returns covered under §301.6011-2(b)

from 250 to 100, for returns required to be

filed during calendar year 2022, and from

100 to 10, for returns required to be filed

during calendar years after 2022. See section 2.C., Amending the electronic-filing

threshold.

G. Special electronic-filing rule for

partnerships having more than 100

partners

Paragraph (6) of section 6011(e), as

that section was amended by the TFA,

provides, “Notwithstanding paragraph (2)

(A), the Secretary shall require partnerships having more than 100 partners to

file returns on magnetic media” (100-partner rule). The statute uses the general term

“returns” without specifying the type of

returns that must be filed electronically.

But the legislative history of the Taxpayer Relief Act of 1997, which added

the 100-partner rule to section 6011(e),

mentions the rule’s application only with

respect to partnership returns. H.R. Rep.

No. 105-220, at 675 (1997) (Conf. Rep.)

(“The House bill provides generally that

any partnership is required to provide the

tax return of the partnership (Form 1065),

as well as copies of the schedule[s] sent

to each partner (Form K–1), to the Internal Revenue Service on magnetic media.

An exception is provided for partnerships

with 100 or fewer partners.”).

In accordance with this legislative

history, the Secretary promulgated regulations in 1999, §301.6011-3 (TD 8843),

requiring partnerships with more than

100 partners to file partnership returns

and all other information required by the

applicable forms and schedules electronically.

In 2018, however, Congress enacted

the TTCA and moved this 100-partner rule

from section 6011(e)(2), where it appeared

as flush language under the 250-threshold

limitation, to a new subparagraph (B) under section 6011(e)(5), “Special rules for

partnerships.” There is no legislative history to the 2018 TTCA that explains why

Congress moved the 100-partner rule. But

after the TTCA was enacted, the Joint

Committee on Taxation describes the rule

with respect to “returns,” rather than “tax

Bulletin No. 2021–32

return of the partnership (Form 1065),”

which is how the legislative history of the

Taxpayer Relief Act of 1997 described it.

Staff of the J. Comm. On Taxation, Technical Explanation of the Revenue Provisions

of the House Amendment to the Senate

Amendment to H.R. 1625, at 52 (JCX-618) (“Present law requires that …. partnerships having more than 100 partners

are required to file returns electronically.”). In 2019, a year after TTCA moved

the 100-partner rule, Congress, in Title II

of the TFA, under Subtitle D, “Expanded

Use of Electronic Systems,” again moved

the 100-partner rule to a new paragraph

(6) under section 6011(e), “Partnerships

required to file on magnetic media.”

In light of the Joint Committee on Taxation’s referring to “returns” in general in

describing this provision of the TTCA,

the TFA’s emphasis on development, improvement, and expansion of modern

technology, as discussed in this preamble, the TFA’s emphasis on electronic filing (see “Subtitle D—“Expanded Use of

Electronic Systems” under Title II), and

the accessibility and prevalence of electronic filing, the Treasury Department and

the IRS propose to add a new paragraph

(c)(3)(ii)(B) to §301.6011-2 to require

partnerships with more than 100 partners

to file their information returns covered

by §301.6011-2(b) electronically, regardless of the number of information returns

being filed.

3. Proposed §1.6050I-0, Table of

contents, and §1.6050I-1, Returns

Relating to Cash in Excess of $10,000

Received in a Trade or Business

Section 1.6050I-1(e)(1) provides that

Form 8300 must be filed with the IRS by

the 15th day after the date cash in excess

of $10,000 is received in a trade or business. Section 1.6050I-1(e)(3) provides

that Form 8300 must be filed by mailing

it to the address shown in the instructions

on the form. For all the reasons discussed

in this preamble, the proposed regulations would remove references to mailing

Form 8300 to the IRS and require that the

form be filed as directed by the form’s instructions. See section 2.B., Form 8300

required to be filed electronically; section 2.C., Amending the electronic-filing

threshold; and section 2.D., Aggregation

Bulletin No. 2021–32

of returns to determine whether the electronic-filing threshold is met. The instructions to Form 8300 will explain how to

file the form electronically. The proposed

regulations would also update outdated citations in §1.6050I-0 and §1.6050I-1 that

cross-reference to the regulations under

Title 31 of the CFR and clarify the example in §1.6050I-1(d)(2)(iv).

4. Proposed §1.6050I-2, Returns Relating

to Cash in Excess of $10,000 Received as

Bail by Court Clerks

Section 1.6050I-2(c)(1)(i) provides

that Form 8300 must be filed with the

IRS by the 15th day after the date cash

bail in excess of $10,000 is received.

Section 1.6050I-2(c)(3)(i) provides that

Form 8300 must be filed with the IRS office designated in the instructions on the

form. For all the reasons discussed in this

preamble, the proposed regulations would

remove references to filing Form 8300

with a specific IRS office and require that

the form be filed as directed by the form’s

instructions. See section 2.B., Form 8300

required to be filed electronically; section 2.C., Amending the electronic-filing

threshold; and section 2.D., Aggregation

of returns to determine whether the electronic-filing threshold is met. The instructions to Form 8300 will explain how to file

the form electronically.

5. Proposed §301.6721-1, Rules Relating

to Penalties for Failure to File Correct

Information Returns

Paragraph (a)(2)(ii) of §301.6721-1,

Failure to file correct information returns,

states that no penalty will be imposed

solely by reason of failing to file electronically, except to the extent that a failure

occurs with respect to more than 250 returns. In accordance with changes made to

the 250-return threshold by section 2301

of the TFA, the proposed amendments to

§301.6721-1 would remove references to

a 250-return threshold with respect to penalties for failure to file correct information

returns.

Section 301.6721-1(a)(2)(ii) also states

that the threshold requirements apply separately to original and corrected returns,

such that a filer that files 300 returns on

Form 1099-DIV and later files 70 cor-

279

rected returns on Form 1099-DIV could

file the corrected returns either on the

prescribed paper form (because they fall

below the 250-threshold requirement) or

electronically. For the reasons discussed

in this preamble, the Treasury Department

and the IRS propose to remove this rule

because they have determined that corrected returns should be filed electronically if the corresponding original returns

were so filed. See section 2.E., Corrected

returns must be filed in the same manner

as the original return. These proposed

regulations would thus amend §301.67211(a)(2)(ii) to provide that a failure to file a

corrected information return in the same

manner as the corresponding original will

be deemed a failure to correct the corresponding original information return such

that the filer will not receive the benefit of

a reduced penalty under §301.6721-1(b)

for that corrected information return.

6. Proposed §301.6011-3, Rules for

Filing Partnership Returns Electronically

Section 301.6011-3 prescribes standards for determining whether a partnership must file its partnership return electronically. In 2018, the TTCA amended

section 6011(e) to authorize the Secretary

to incrementally reduce, by regulation,

the electronic-filing threshold for partnerships. When section 2301 of the TFA

amended that particular statute again in

2019, to further reduce the electronic-filing threshold for partnerships, the Secretary had not yet promulgated regulations

to implement that reduced-threshold rule

for partnerships. As discussed in this preamble, these proposed regulations do not

include a special electronic-filing threshold for partnerships because the final regulations are not expected to be applicable

before the 2022 filing season, at which

point the special rule for partnerships will

be phased out. See section 2.F., Special

electronic-filing threshold for partnerships

of any size. For returns required to be filed

during calendar years after 2021, section

2301 of the TFA authorizes the Secretary

to reduce the electronic-filing threshold

to 10 for all persons, including partnerships. These proposed regulations would

amend §301.6011-3(a) to reduce the electronic-filing threshold to 10 returns for

any partnership, in accordance with sec-

August 9, 2021

tion 6011(e), as amended by the TFA. In

addition, for all the reasons discussed in

this preamble, the proposed regulations

would add a new paragraph (a)(5) to

§301.6011-3 that provides that all returns

of any type, including partnership returns,

excise-tax returns, employment-tax returns, and information returns (but not including schedules required to be attached

to or included with a partnership return),

are counted in the aggregate for purposes of determining whether a partnership

of any size meets the electronic-filing

threshold of 10 returns in a calendar year,

and thus must file its partnership return

electronically. See sections 2.D., Aggregation of returns to determine whether

the electronic-filing threshold is met; and

2.G., Special electronic-filing rule for

partnerships having more than 100 partners. These rules relating to the requirements for determining when a partnership

is required to file its partnership return

electronically do not limit the application

of any other statute affecting partnership

returns that must be filed electronically,

such as section 6033(n), which requires

a partnership return filed by a section

501(d) apostolic organization to be filed

electronically.

7. Proposed §301.6011-5, Rules for

Filing Corporate Income Tax Returns

Electronically

Section 301.6011-5 prescribes standards for determining whether a corporation must file its income tax returns

electronically and requires large corporations to file the corporate income tax

return electronically if the corporation is

required to file during the calendar year at

least 250 returns of any type. The regulation, however, applies only to those corporations that report total assets at the end of

the corporate taxable year of $10 million

or more on Schedule L of their Form 1120.

Section 2301 of the TFA amended section

6011(e) to authorize the Secretary to prescribe regulations to reduce the number

of returns that a person may be required

to file during a calendar year before the

Secretary may impose an electronic-filing

requirement. These proposed regulations

would remove references to the 250-return threshold and reduce the electronic-filing threshold for corporate income

August 9, 2021

tax returns to 10, for returns required to

be filed during calendar years after 2021,

in accordance with section 6011(e), as

amended by the TFA. In addition, the

Treasury Department and the IRS propose

to remove the $10 million rule, making

the regulation applicable to all corporations regardless of reportable assets. The

$10 million rule was never required by the

Code; rather, the Treasury Department and

the IRS prescribed the rule in 2007 to help

ensure that electronic-filing burdens and

costs were appropriate, given the existing

limits and accessibility to electronic-filing

technology at that time. With the current

prevalence and accessibility of electronic

filing even for small businesses, as well as

the benefits of quicker return processing,

the $10-million rule is no longer needed.

Accordingly, the proposed regulations

would require that any corporation required to file a corporate income tax return under §1.6012-2, regardless of the

corporation’s reported total assets at the

end of its taxable year, file that return electronically if the corporation is required to

file at least 10 returns of any type during

calendar years after 2021. The proposed

regulations would also update the example to reflect these changes. The proposed

regulations do not change the existing rule

in §301.6011-5 that all returns of any type

are counted in determining whether a corporation is required to file its income tax

return electronically.

8. Proposed §301.6037-2, Required

Use of Electronic Form for Returns of

Electing-Small Business Corporation

Section 301.6037-2 prescribes standards for determining whether an S corporation must file its S corporation return

electronically. Section 301.6037-2 requires S corporations to file their corporate income tax return electronically if the

corporation is required to file during the

calendar year at least 250 returns of any

type, but the regulation applies only to

those S corporations that report total assets at the end of the corporation’s taxable

year that equal or exceed $10 million on

Schedule L of Form 1120-S.

Section 2301 of the TFA amended

section 6011(e), authorizing the IRS to

change the 250-return threshold to 10, for

returns required to be filed during calen-

280

dar years after 2021. These proposed regulations would remove references to the

250-return threshold and reduce the electronic-filing threshold for S corporations

to 10 in accordance with section 6011(e),

as amended by the TFA. In addition, the

Treasury Department and the IRS propose

to remove the $10 million rule for the

same reasons that it is eliminating the rule

for corporations. See section 7, Proposed

§301.6011-5, Rules for Filing Corporate

Income Tax Returns Electronically. With

the current prevalence and accessibility of

e-filing, as well as the benefits of quicker

processing of returns, the $10 million rule

is no longer needed. Accordingly, the proposed regulations would require that any

S corporation required to file an S-corporation return under §1.6037-1, regardless

of the corporation’s reported total assets at

the end of its taxable year, file its income

tax return electronically if the corporation is required to file at least 10 returns

of any type during the calendar year. The

proposed regulations would also update

the example illustrating this rule to reflect

these changes.

9. Proposed §§1.6033-4 and 301.6033-4,

Required Filing in Electronic Form for

Returns by Organizations Required to

File Returns Under Section 6033

Section 1.6033-4 provides that the return of an organization that is required to

be filed electronically under §301.6033-4

must be filed in accordance with IRS revenue procedures, publications, forms, or

instructions, including those posted electronically.

Section 301.6033-4 provides that an

organization required to file a return under section 6033 on Form 990 must file its

Form 990 electronically if the organization is required to file during the calendar

year at least 250 returns of any type and if

the organization has total assets as of the

end of the taxable year of $10 million or

more. It also provides that any organization (regardless of total assets) required to

file Form 990-PF must file its Form 990PF electronically if it is required to file at

least 250 returns of any type during the

calendar year.

In accordance with section 3101 of the

TFA, these proposed regulations would

amend §§1.6033-4 and 301.6033-4 to re-

Bulletin No. 2021–32

place the term “magnetic media” with “in

electronic form.” These proposed regulations would also amend §301.6033-4 to

remove any references to thresholds that

establish a requirement to file electronically because the TFA now requires that

any organization required to file a return

under section 6033 must file such return

in electronic form. Likewise, the proposed

regulations would amend §301.6033-4

by removing the following paragraphs:

paragraph (d)(1), which defines the term

“magnetic media”; paragraph (d)(3),

which defines the term “determination of

250 returns”; and paragraph (e), which illustrates by example how the 250 number

is determined. In addition, the proposed

regulations would remove §301.60334(b), which provides that the Commissioner may grant waivers of the electronic-filing requirement.

Section 3101 of the TFA does not provide for any waiver of or alternate method

to the electronic-filing requirements for

returns required to be filed under section

6033. Accordingly, these proposed regulations would amend §301.6033-4 by removing paragraph (b) that provides for a

waiver of the requirements.

Finally, these proposed regulations

would amend §301.6033-4(d)(2) to include Form 990-EZ, “Short Form Return

of Organization Exempt From Income

Tax,” as a return required to be filed under

section 6033, clarifying that section 3101

of the TFA mandates that all returns required to be filed under section 6033 must

be filed in electronic form.

10. Proposed §53.6011-1(c) Deletion,

Joint Filing of a Form 4720 Return

Section 3101(a) of the TFA amended

section 6033(n) to provide that any exempt organization required to file a return

under section 6033 must file such return

in electronic form. Section 1.6033-2(a)

(2) provides, under the broad authority of

section 6033(a)(1) (requiring every organization exempt from taxation under section 501(a) to file an annual return, stating

specifically the items of gross income, receipts, and disbursements, and such other

information for the purpose of carrying

out the internal revenue laws as the Secretary may by forms or regulations prescribe), that every private foundation must

Bulletin No. 2021–32

file Form 990-PF, Return of Private Foundation, as its annual information return. In

the case of a private foundation liable for

tax under chapter 42, such information as

is required by Form 4720 is to be furnished

by the private foundation as part of its annual information return. See §1.6033-2(a)

(2)(ii)(J). The preamble to the final regulations adding §1.6033-2(a)(2)(ii)(J) specifically noted that Form 4720, when filed by

a private foundation, is part of the annual information return required to be filed

under section 6033 as well as a tax return

required to be filed under section 6011.

Accordingly, Form 4720 filed by a private

foundation as part of the Form 990-PF is

a return required to be filed under section 6033 and is thus required to be filed in

electronic form as a return required under

section 6033(n). For the electronic-filing

requirement for persons not described under section 509(a) as a private foundation,

see section 16 of this preamble, Proposed

§301.6011-12, Required Use of Electronic

Form for Returns of Certain Excise Taxes

Under Chapters 41 And 42 of the Internal

Revenue Code.

If Form 4720 is filed by a private foundation (or by a trust described in section 4947(a)(2)) with respect to a transaction to which other persons are required

to file under §53.6011-1(b) (persons liable

for excise tax imposed by Chapters 41 and

42 of the Code), and if the other persons’

tax years are the same as the foundation’s

or trust’s, §53.6011-1(c) allows the private foundation and such other persons to

file a joint Form 4720, and, to the extent

applicable, that form will be considered

as the other persons’ return for purposes

of complying with the filing requirement

under §53.6011-1(b). This current regulatory permission to jointly file Form 4720,

however, is incompatible with the requirement under section 6033(n) to file the return electronically. Accordingly, because

the Form 4720 cannot be filed jointly in

electronic form, the proposed regulations

would delete §53.6011-1(c). Disqualified

persons thus will no longer be able to meet

their tax filing obligation under §53.60111(b) by the joint-filing process.

Notice 2021-01, 2021-2 I.R.B. 315

(January 11, 2021), announced the IRS’s

intent to remove §53.6011-1(c) because

the amendments the TFA made to sections 6104 (that any annual return re-

281

quired to be filed electronically under

section 6033(n) must be made available

by the Secretary to the public as soon as

practicable in a machine-readable format)

and 6033 rendered unfeasible the ability

for a private foundation and other persons to jointly file the same Form 4720

electronically. Notice 2021-01 was first

released to the public on December 16,

2020, and substantially described the expected contents of the proposed amendments to §53.6011-1, in accordance with

section 7805(b)(1)(C). Thus, the proposed

changes to §53.6011-1 described in this

section are proposed to apply retroactively

as of January 1, 2021, as allowed by section 7805(b)(1)(C).

11. Proposed §301.6057-3, Required

Use of Electronic Form for Filing

Requirements Relating to Deferred Vested

Retirement Benefit

Section 6057(a) requires the plan administrator (within the meaning of section 414(g)) of each plan, to which the

vesting standards of section 203 of the

Employee Retirement Income Security

Act of 1974 (ERISA) apply for a plan year,

to file, within the time prescribed by regulations, a registration statement with the

Secretary. The registration statement must

set forth the following information relating to the plan: (1) the name of the plan;

(2) the name and address of the plan administrator; (3) the name and identifying

information of plan participants who separated from service covered by the plan and

are entitled to deferred vested retirement

benefits; and (4) the nature, amount, and

form of deferred vested retirement benefits to which the plan participants are entitled. The form used to satisfy the reporting

requirements under section 6057 is Form

8955-SSA, Annual Registration Statement

Identifying Separated Participants with

Deferred Vested Benefits.

Section 6057(b) provides that any plan

administrator required to register under

section 6057(a) must, within the time

prescribed by regulations, also notify the

Secretary of any change in the name of the

plan or the name and address of the plan

administrator, the termination of the plan,

or the merger or consolidation of the plan

with any other plan or its division into two

or more plans.

August 9, 2021

Section 301.6057-3 provides that a

registration statement required to be filed

under section 6057(a) or a notification required to be filed under section 6057(b)

must be filed electronically if the filer is required by the Code or regulations to file at

least 250 returns during the calendar year

that includes the first day of the plan year.

For the reasons discussed in this preamble, and consistent with section 6011(e),

as amended by the TFA, these proposed

regulations would remove references to

the 250-return threshold and would reduce

the electronic-filing threshold to 10 for

registration statements required to be filed

under section 6057(a) and notifications required under section 6057(b) with respect

to an employee benefit plan for any plan

year that begins after December 31, 2021

(but only for filings with a filing deadline,

not taking into account extensions, after

July 31, 2022). See section 2.C., Amending the electronic-filing threshold.

12. Proposed §301.6058-2, Required

Use of Electronic Form for Filing

Requirements Relating to Information

Required in Connection with Certain

Plans of Deferred Compensation

Section 6058(a) generally requires that

every employer maintaining a pension,

annuity, stock bonus, profit-sharing, or

other funded plan of deferred compensation, or the plan administrator (within the

meaning of section 414(g)) of the plan,

file an annual return stating such information as the Secretary may by regulations

prescribe with respect to the qualification,

financial condition, and operations of the

plan. The reporting requirement under

section 6058(a) is satisfied by filing a return in the Form 5500 series. The Form

5500, Annual Return/Report of Employee Benefit Plan, the Form 5500-SF, Short

Form Annual Return/Report of Small

Employee Benefit Plan, and Form 5500EZ, Annual Return of A One-Participant

(Owners/Partners and Their Spouses) Retirement Plan or A Foreign Plan, make up

the Form 5500 series.

Section 301.6058-2(a) provides that

a return required to be filed under section 6058 with respect to an employee

benefit plan must be filed electronically if

the filer is required by the Code or regulations to file at least 250 returns during

August 9, 2021

the calendar year that includes the first day

of the plan year. For the reasons discussed

in this preamble, and in accordance with

section 6011(e), as amended by the TFA,

these proposed regulations would remove

references to the 250-return threshold and

reduce the electronic-filing threshold to

10 for returns required to be filed under

section 6058 with respect to an employee

benefit plan for any plan year that begins

after December 31, 2021 (but only for filings with a filing deadline, not taking into

account extensions, after July 31, 2022).

See section 2.C., Amending the electronic-filing threshold. In addition, these proposed regulations would provide a cross

reference, under §301.6058-2(d)(3), Calculating the number of returns, to new

section 6011(e)(6) to alert taxpayers that

information regarding each plan for which

information is provided on a combined

annual return to satisfy the requirements

under section 6058 is treated as a separate

return for purposes of determining the

electronic-filing threshold.

Under section 104 of ERISA, the plan

administrator of a plan described in section 6058(a) of the Code that is also an

employee pension benefit plan within the

meaning of section 3(2) of ERISA must

file an annual report on Form 5500, Annual Return/Report of Employee Benefit

Plan, or Form 5500-SF, Short Form Annual Return/Report of Small Employee

Benefit Plan (and all attachments to those

forms, including Schedules SB and MB)

electronically using the Department of Labor’s EFAST2 system, without regard to

the number of returns the filer is required

to file under the Code. The Department of

Labor has advised the Treasury Department and the IRS that this proposed regulation does not affect the obligations of

any person required to file an annual report

electronically under 29 CFR 2520.104a-2

and section 104 of ERISA. An electronic

filing on Form 5500 or Form 5500-SF also

satisfies any obligation to file such forms

using electronic form under section 6011

of the Code. An employer that maintains

a one-participant or foreign plan (which

is not subject to section 104 of ERISA)

or the plan administrator of the plan may

satisfy the annual return filing requirements under section 6058(a) of the Code

by filing a Form 5500-EZ, Annual Return

of A One-Participant (Owners/Partners

282

and Their Spouses) Retirement Plan or

A Foreign Plan, which is required to be

filed electronically using the Department

of Labor’s EFAST2 system only if the employer or plan administrator is otherwise

required to file using electronic form under section 6011.

13. Proposed §301.6059-2, Required

Use of Electronic Form for Filing

Requirements Relating to Periodic Report

of Actuary

Section 6059(a) generally requires that

a plan administrator (as defined in section

414(g)) of each defined benefit plan to

which section 412 applies file the actuarial report described in section 6059(b) for

the first plan year for which section 412

applies to the plan and for each third plan

year thereafter (or more frequently if the

Secretary determines that more frequent

reports are necessary). The reporting requirements under section 6059(a) and

(b) are satisfied by filing Schedule SB

(Form 5500), Single Employer Defined

Benefit Plan Actuarial Information and

Schedule MB (Form 5500), Multiemployer Defined Benefit Plan and Certain

Money Purchase Plan Actuarial Information. Section 301.6059-2 provides that an

actuarial report required to be filed under

section 6059 with respect to an employee

benefit plan must be filed electronically if

the filer is required by the Code or regulations to file at least 250 returns during

the calendar year that includes the first day

of the plan year. For the reasons discussed

in this preamble, and in accordance with

section 6011(e), as amended by the TFA,

these proposed regulations would remove

references to the 250-return threshold and

would reduce the electronic-filing threshold to 10, for actuarial reports required to

be filed under section 6059 with respect to

an employee benefit plan for any plan year

that begins after December 31, 2021 (but

only for filings with a filing deadline, not

taking into account extensions, after July

31, 2022). See section 2.C., Amending the

electronic-filing threshold. The Department of Labor has advised the Treasury

Department and the IRS that the electronic-filing threshold under section 6011(e)

does not affect the obligation of a plan

administrator or plan sponsor to file electronically with the Department of Labor

Bulletin No. 2021–32

a Schedule SB or Schedule MB as an attachment to the Form 5500, as required by

29 CFR 2520.104a-2 and section 104 of

ERISA.

14. Proposed §301.6011-10, Certain

Organizations, Including Trusts, Required

To File Unrelated Business Income Tax

Returns in Electronic Form

Section 3101(b)(2) of the TFA amended

section 6011 to redesignate paragraph (h)

as paragraph (i) and add new paragraph

(h) that requires any organization required

to file an annual return under section 6011

that relates to any tax imposed by section

511 to file such return in electronic form,

effective for taxable years beginning after July 1, 2019. Section 3101 of the TFA

does not provide for any waiver of or alternative method to the electronic-filing

requirement for returns required to be

filed under section 6011(h). The proposed

regulations would add a new regulation

under section 6011(h), §301.6011-10, in

accordance with the TFA, to require any

organization described in section 511(a)

(2) subject to the tax under section 511(a)

(1) or any trust described in section 511(b)

(2) subject to the tax under section 511(b)

(1) on their respective unrelated business

taxable income to file their unrelated business income tax returns electronically.

15. Proposed §301.6011-11, Required

Use of Electronic Form for Returns for

Certain Tax-Advantaged Bonds

Under former sections 54AA and

6431(f) of the Code, issuers of qualified

taxable bonds that provide a refundable

federal tax credit payable directly to the

issuer of the bond, such as build-America

bonds, recovery zone economic development bonds, new clean renewable energy bonds, qualified energy conservation

bonds, qualified zone academy bonds,

and qualified school construction bonds,

can elect to receive a direct payment from

the federal government based upon a percentage of the interest payments on these

bonds. Section 3.1 of Notice 2009-26,

2009-16 I.R.B. 833, 836 (April 20, 2009),

and section 3 of Notice 2010-35, 2010-19

I.R.B. 660, 662 (May 10, 2010), provide

that issuers of qualified bonds must submit a Form 8038-CP, Return for Credit

Bulletin No. 2021–32

Payments to Issuers of Qualified Bonds,

to request payment of the amount of the

credit within a prescribed time before or

after each applicable interest payment

date, depending on whether the bonds are

fixed rate or variable rate. During 2013

to 2018, the IRS processed an average

of $5 billion in direct payment requests;

amounts paid on each return varied from

less than $1,000 to more than $65 million.

During 2019, state and local governments

filed approximately 10,000 Forms 8038CP in paper form. The IRS expects that it

will continue to receive Forms 8038-CP

from these issuers during the entire term

of the bonds, which may be more than 20

years.

The proposed regulations would require filers who are required to file at least

10 returns of any type during the calendar

year to file their Forms 8038-CP electronically, as directed by the form’s instructions. This requirement would increase

the timeliness and accuracy of processing these forms and promote IT modernization efforts. Proposed §301.6011-11

would also provide that the Commissioner

may grant individual waivers of the e-filing requirement of this section in cases of

undue hardship. The Treasury Department

and the IRS anticipate issuing guidance

that will set forth procedures whereby a

taxpayer may request a hardship waiver

for filing Form 8038-CP electronically.

16. Proposed §301.6011-12, Required

Use of Electronic Form for Returns of

Certain Excise Taxes Under Chapters 41

and 42 of the Internal Revenue Code

Section 2301 of the TFA amended

section 6011(e), changing the 250-return

threshold to a 10-return threshold for returns required to be filed in calendar years

after 2021. The proposed regulations

would add a new regulation under section

6011(e), §301.6011-12, that would require

the electronic filing of Form 4720, Return

of Certain Excise Taxes Under Chapters

41 and 42 of the Internal Revenue Code.

The proposed regulations would require a

person to file the Form 4720 electronically if that person is required to file at least

10 returns of any type during the calendar

year. Proposed §301.6011-12 would also

provide that the Commissioner may grant

individual waivers of the requirements of

283

this section in cases of undue hardship.

The Treasury Department and the IRS

anticipate issuing guidance that will set

forth procedures whereby a taxpayer may

request a hardship waiver for filing Form

4720 electronically. The proposed regulations relating to the requirements for determining whether a person must file its

Form 4720 electronically would not limit

the application of any other statute affecting Form 4720, such as section 6033(n),

which requires a Form 4720 filed by organizations recognized as tax exempt under

section 501(c)(3) and classified as private

foundations under section 509(a) to be

filed electronically, as discussed under

section 10, Proposed §53.6011-1(c) Deletion, Joint Filing of a Form 4720 Return.

17. Proposed §301.6011-13, Required

Use of Electronic Form for Split-Interest

Trust Returns

Section 2301 of the TFA amended

section 6011(e), changing the 250-return threshold to a 10-return threshold

for returns required to be filed in calendar years after 2021. The proposed regulations would add a new regulation under section 6011(e), §301.6011-13, that

would require the filing of Form 5227,

Split-Interest Trust Information Return,

electronically. Forms 5227 are filed by

split-interest trusts to report the trust’s

financial activities, including distributions to the beneficiaries. The proposed

regulations would require a trust to file

the Form 5227 electronically if the trust

is required to file at least 10 returns of

any type during the calendar year. Proposed §301.6011-13 would also provide

that the Commissioner may grant individual waivers of the requirements of

this section in cases of undue hardship.

The Treasury Department and the IRS

anticipate issuing guidance that will set

forth procedures whereby a taxpayer may

request a hardship waiver for filing Form

5227 electronically.

18. Proposed §301.6011-14, Required

Use of Electronic Form or Other

Machine-Readable Form for Material

Advisor Disclosure Statements

The proposed regulations would add

a new regulation under section 6011(e),

August 9, 2021

§301.6011-14, that would require the

filing of Form 8918, Material Advisor

Disclosure Statement, electronically

or in other machine-readable form, in

accordance with revenue procedures,

publications, forms, instructions, or other guidance, including postings on the

IRS.gov website. Section 6111 requires

each material advisor with respect to

any reportable transaction to make a

return setting forth certain information

with respect to the reportable transaction. Section 301.6111-3(d) clarifies

that the return required to be filed under section 6111(a) is the Form 8918.

Form 8918 is currently filed on paper

and must be mailed to the Office of Tax

Shelter Analysis in Ogden, Utah. The

proposed regulations would require a

material advisor to file the Form 8918

electronically or in other machine-readable form if the material advisor is required to file at least 10 returns of any

type during the calendar year, in accordance with section 6011(e), as amended

by section 2301 of the TFA. This requirement would increase the timeliness

and accuracy of processing the data on

Form 8918, reduce postage costs, and

promote IT modernization efforts. Proposed §301.6011-14 would also provide that the Commissioner may grant

individual waivers of the requirements

of this section in cases of undue hardship. The Treasury Department and the

IRS anticipate issuing guidance that will

set forth procedures whereby a taxpayer

may request a hardship waiver from filing Form 8918 electronically.

19. Proposed §301.6011-15, Required

Use of Electronic Form for Withholding

Tax Returns

The proposed regulations would add

a new regulation under section 6011(e),

§301.6011-15, that would require the filing of Form 1042, Annual Withholding

Tax Return for U.S. Source Income of Foreign Persons, electronically in accordance

with revenue procedures, publications,

forms, instructions, or other guidance, including postings on the IRS.gov website.

Sections 1441 and 1442 require withholding agents to withhold tax from payments

made to foreign persons with respect to

certain U.S. source income and to report

August 9, 2021

those payments and the tax withheld for

each recipient. Section 1.1461-1(c) specifies that the reporting be on Form 1042-S,

Foreign Persons’ U.S. Source Income Subject to Withholding. In addition, §1.14611(b) requires withholding agents to make

an annual income tax return on Form 1042

that reports the aggregate income paid and

taxes withheld for the preceding calendar

year.

The IRS verifies the amount of withholding reported on Form 1042 and deposited with the IRS against amounts

reported as withheld on Forms 1042-S.

Form 1042-S is already required to be

electronically filed to the extent provided under §301.6011-2 for a withholding

agent that is not a financial institution.

But the Form 1042 is not required to

be electronically filed. To increase the

timeliness and accuracy of processing

refunds and credits claimed by foreign

persons that have amounts withheld

and reported on Form 1042-S, proposed

§301.6011-15 would require Form 1042

filers—except for individuals, estates, or

trusts—to file Form 1042 electronically

if they are required to file 10 or more

returns of any type during the calendar

year, in accordance with section 6011(e),

as amended by section 2301 of the TFA.

Proposed §301.6011-15 would also require partnerships with more than 100

partners to file their Forms 1042 electronically, regardless of the number of

returns the partnership is required to

file during the calendar year. Proposed

§301.6011-15 would also provide that

the Commissioner may grant individual

waivers of the requirements of this section in cases of undue hardship.

20. Proposed §301.6012-2, Required

Use of Electronic Form for Income

Tax Returns of Certain Political

Organizations

Section 2301 of the TFA amended

section 6011(e), changing the 250-return threshold to a 10-return threshold

for returns required to be filed in calendar years after 2021. The proposed

regulations would add a new regulation

under sections 6011(e) and 6012(a),

§301.6012-2, to require the filing of

Form 1120-POL, U.S. Income Tax Return

for Certain Political Organizations elec-

284

tronically. The Form 1120-POL is filed

by political organizations, described in

section 527 of the Code, to report income

not specifically excluded from tax under

section 527 and by exempt organizations

subject to tax under section 527(f)(1)

of the Code. The proposed regulations

would require an organization to file the

Form 1120-POL electronically if the organization is required to file at least 10

returns of any type during the calendar

year. Proposed §301.6012-2 would also

provide that the Commissioner may grant

individual waivers of the requirements of

this section in cases of undue hardship.

The Treasury Department and the IRS

anticipate issuing guidance that will set

forth procedures whereby a taxpayer may

request a hardship waiver for filing Form

1120-POL electronically.

21. Proposed §54.6011-3, Required

Use of Electronic Form for the Filing

Requirements for the Return for Certain

Excise Taxes Related to Employee Benefit

Plans

The proposed regulations would add

a new regulation under section 6011(e),

§54.6011-3, to require the filing of Forms

5330, Return of Excise Taxes Related to

Employee Benefit Plans, electronically.

Section 2301 of the TFA amended section 6011(e), changing the 250-return

threshold to a 10-return threshold for

returns required to be filed during calendar years after 2021. The proposed

regulations would require a filer to file

the Form 5330 electronically if the filer

is required to file at least 10 returns of

any type during the calendar year. Proposed §54.6011-3 would also provide

that the Commissioner may grant individual waivers of the requirements of

this section in cases of undue hardship.

The Treasury Department and the IRS

anticipate issuing guidance that will set

forth procedures whereby a taxpayer may

request a hardship waiver for filing Form

5330 electronically.

22. Proposed §1.1461-1, Payment and

Returns of Tax Withheld

Section 1.1461-1 prescribes requirements for withholding agents to file information returns with respect to U.S.

Bulletin No. 2021–32

source income of foreign persons. Section 1.1461-1(c)(5) provides that a withholding agent that makes 250 or more

Form 1042–S information returns for a

taxable year must file those forms electronically as required under §301.60112(b). The proposed regulations would

amend §1.1461-1 to remove paragraph (c)

(5) because the electronic-filing requirement for Form 1042-S is contained in

§301.6011-2(b) and the 250-return threshold would no longer apply if the proposed

amendments to §301.6011-2 are finalized

in a Treasury decision.

25. Proposed §1.6050M-1, Information

returns relating to persons receiving

contracts from certain federal executive

agencies

Section 1.1474-1 provides rules for

withholding agents making payments

under chapter 4 of the Code. The first

sentence in §1.1474-1(e) provides that

withholding agents that are not financial institutions and that are required

to file 250 or more Forms 1042–S for a

taxable year must file those forms electronically, referencing §301.6011-2(b).

The proposed regulations would amend

§1.1474-1 to remove the first sentence in

§1.1474-1(e) because the electronic-filing

requirement for Form 1042-S is contained

in §301.6011-2(b) and the 250-return

threshold would no longer apply if the

proposed amendments to §301.6011-2 are

finalized in a Treasury decision.

Section 1.6050M-1 requires federal

executive agencies who enter into certain

contracts, as defined under §1.6050M-1(b)

(2), to file information returns with respect

to those contracts. Under §1.6050M-1(d),

the information returns must be filed on a

quarterly basis; in addition, if the federal

executive agency, on any October 1, expects to enter into 250 or more contracts

during the one-year period beginning on

October 1, it must file the information returns electronically.

Section 2301 of the TFA amended section 6011(e), authorizing the IRS to change

the 250-return threshold to 10, for returns

required to be filed during calendar years

after 2021. For the reasons discussed in

this preamble, and consistent with section

6011(e), as amended by the TFA, these

proposed regulations would remove references to the 250-return threshold under

§1.6050M-1 and would reduce the electronic-filing threshold from 250 to 100,

for information returns required to be filed

during calendar year 2022, and from 100

to 10, for information returns required to

be filed during calendar years after 2022.

Proposed §1.6050M-1 would also provide that the Commissioner may grant

individual waivers of the requirements of

this section in cases of undue hardship.

24. Proposed §301.1474-1, Required

Use of Electronic Form for Financial

Institutions Filing Form 1042, Form

1042-S, or Form 8966

26. Proposed §1.6045-4, Information

returns relating to persons receiving

contracts from certain federal executive

agencies.

These proposed regulations would

amend §301.1474-1 to add a requirement

that a financial institution must file its

Form 1042 electronically, without regard

to the number of returns required to be

filed during the calendar year, in accordance with section 6011(e)(4). The existing provision in §301.1474-1(b), which

provides that the Commissioner may grant

individual waivers of the requirements

of §301.1474-1 in cases of undue hardship, would also apply to the proposed

electronic-filing requirement relating to

Form 1042.

Section 1.6045-4 requires a real estate

reporting person to file information returns with respect to real-estate transactions. Section 1.6045-4(k) provides rules

for filing these returns electronically. The

form used to report these transactions is

a form covered under §301.6011-2(b)(1).

Section 301.6011-2 provides the rules for

electronically filing the forms listed in

§301.6011-2(b)(1). These proposed regulations would thus remove paragraph

(k) from §1.6045-4 because the electronic-filing requirement is contained in

§301.6011-2.

23. Proposed §1.1474-1, Liability for

Withheld Tax and Withholding Agent

Reporting

Bulletin No. 2021–32

285

27. Withdrawal of May 2018 proposed

regulations

In light of the TFA, the Treasury Department and the IRS withdraw the May

2018 proposed regulations under section

6011(e) because those proposed regulations interpret a provision of the Code that

has been amended. The Treasury Department and the IRS have determined that

the amendments made to section 6011(e)

by the TFA require guidance to be issued

by regulations. Withdrawing the proposed

regulations and reissuing new proposed

regulations ensure that all persons affected by the proposed regulations will have a

meaningful opportunity to publicly comment.

Special Analyses

These regulations are not subject to review under section 6(b) of Executive Order 12866 pursuant to the Memorandum

of Agreement (April 11, 2018) between

the Treasury Department and the Office

of Management and Budget regarding review of tax regulations.

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

certified that this proposed rule, if finalized, will not have a significant economic

impact on a substantial number of small

entities. Although these rules may affect

a substantial number of small entities, for

the reasons discussed in the following

paragraphs, the economic impact is not

significant.

Under section 6011(e) of the Code and

§§1.6050M-1, 301.6011-2, 301.60113, 301.6011-5, 301.6037-2, 301.6057-3,

301.6058-2, and 301.6059-2, filers are

already required to file returns and statements electronically if, during a calendar year, they are required to file 250 or

more returns. The eight proposed rules—

§§1.6050M-1, 301.6011-2, 301.6011-3,

301.6011-5, 301.6037-2, 301.6057-3,

301.6058-2, and 301.6059-2—would

lower the 250-return threshold as authorized by section 6011(e), as amended by

section 2301 of the TFA. A filer may request that the IRS waive the electronic-filing requirement if the filer’s cost to comply with the rule would cause a financial

hardship. The IRS routinely grants meri-

August 9, 2021

torious hardship waiver requests. Accordingly, the economic burden on the limited

number of small entities that are not currently filing electronically will be slight;

and small entities that would experience a

hardship because of these seven proposed

rules may seek a waiver.

Under section 6050I of the Code and

§§1.6050I-1 and 1.6050I-2, filers are required to file Forms 8300 if, in the course

of their trade or business, they receive more

than $10,000 in cash in one transaction or in

two or more related transactions. The proposed rule under §301.6011-2(b)(3) would

require filers of Forms 8300 to file those

forms electronically if such filers are also

required to file returns electronically under

paragraphs (b)(1) and (b)(2) of §301.60112. The Treasury Department and the IRS

expect filers of Form 8300 to use FinCEN’s

BSA E-Filing System, which is free, requiring only an internet connection. The

economic impact on small entities should

thus not be significant. Nonetheless, small

entities that would experience a hardship

because of this proposed rule may seek a

hardship waiver.

Under section 6011(e)(4) of the Code

and §301.1474-1, financial institutions

defined in section 1471(d)(5) of the Code

already are required to electronically file

Forms 1042-S. The proposed rule under

§301.1474-1(a) would extend this filing

requirement to Forms 1042 filed by the

same financial institutions. The economic

impact on small entities should thus not

be significant. Nonetheless, small entities

that would experience a hardship because

of this proposed rule may seek a hardship

waiver.

Under section 6011(h) of the Code, as

amended by section 3101 of the TFA, organizations required to file annual returns

relating to any tax imposed by section 511

must file those returns in electronic form.

The proposed regulation §301.6011-10

implements this statutory requirement.

The economic impact of the proposed regulation should thus be insignificant.

Under section 6033(n), as amended by section 3101 of the TFA, organizations required to file returns under

section 6033 must file those returns in

electronic form. The proposed regulations under §§1.6033-4, 53.6011-1, and

301.6033-4 implement this statutory

August 9, 2021

requirement. The economic impact of

these proposed regulations should thus

be insignificant.

The seven proposed regulations under

§§54.6011-3, 301.6011-11, 301.6011-12,

301.6011-13, 301.6011-14, 301.6011-15,

and 301.6012-2 would require electronic

filing for certain returns not currently required to be filed electronically. Because

electronic filing has become more common, accessible, and economical, the

economic impact of these proposed rules

on small entities should be insignificant.

But if the cost to comply with these electronic-filing requirements would cause a

financial hardship, an entity may request a

waiver. The IRS routinely grants meritorious hardship waiver requests. Accordingly, the burden on small entities affected by

these rules will be slight.

Accordingly, it is hereby certified that

these proposed regulations will not have

a significant economic impact on a substantial number of small entities within the meaning of section 601(6) of the

RFA.

Section 202 of the Unfunded Mandates

Reform Act of 1995 requires that agencies

assess anticipated costs and benefits and

take certain other actions before issuing a

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

one year by a state, local, or tribal government, in the aggregate, or by the private

sector, of $100 million in 1995 dollars,

updated annually for inflation. This regulation 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.

Executive Order 13132 (titled Federalism) prohibits an agency from publishing

any rule that has federalism implications

if the rule either imposes substantial, direct compliance costs on state and local

governments, and is not required by statute, or preempts state law, unless the agency meets the consultation and funding requirements of section 6 of the Executive

Order. This 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.

286

Pursuant to section 7805(f) of the

Code, this proposed regulation has been

submitted to the Chief Counsel for the

Office of Advocacy of the Small Business

Administration for comment on its impact

on small business.

Comments and Public Hearing

Before these proposed regulations are

adopted as final regulations, consideration

will be given to comments that are submitted timely to the IRS as prescribed in

this preamble under the ADDRESSES

section. The Treasury Department and the

IRS request comments on all aspects of

the proposed regulations. Any comments

submitted will be available at www.regulations.gov or upon request.

The public hearing is being held by

teleconference on September 22, 2021 at

10 a.m. EST. Requests to speak and outlines of topics to be discussed at the public hearing must be received by September 21, 2021. If no outlines are received

by September 21, 2021, the public hearing

will be cancelled. Requests to attend the

public hearing must be received by 5:00

p.m. EST on September 20, 2021. The

telephonic hearing will be made accessible to people with disabilities. Requests

for special assistance during the telephonic hearing must be received by September

17, 2021.

Drafting Information

The principal author of these proposed

regulations is Casey R. Conrad of the Office of the Associate Chief Counsel (Procedure and Administration). Other personnel from the Treasury Department and the

IRS participated in the development of the

regulations.

Statement of Availability of IRS

Documents

IRS revenue procedures, notices, and

other guidance cited in this document are

published in the Internal Revenue Bulletin

(or Cumulative Bulletin) and are available

from the Superintendent of Documents,

U.S. Government Publishing Office,

Washington, DC 20402, or by visiting the

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

Bulletin No. 2021–32

Withdrawal of Proposed Regulations

Under the authority of 26 U.S.C. 7805,

§301.6011-2 and §301.6721-1 of the

notice of proposed rulemaking (REG102951-16) that was published in the Federal Register on Thursday, May 31, 2018

(83 FR 24948) is withdrawn.

List of Subjects

26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 53

Excise taxes, Foundations, Investments, Lobbying, Reporting and recordkeeping requirements.

26 CFR Part 54

Excise taxes, Pensions, Reporting and

recordkeeping requirements.

26 CFR Part 301

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

Proposed Amendments to the

Regulations

Accordingly, 26 CFR parts 1, 53, 54

and 301 are proposed to be amended as

follows:

PART 1-INCOME TAXES

Paragraph 1. The authority citation for

part 1 is amended by adding the following

entries in numerical order:

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

Section 1.6033-4 also issued under 26

U.S.C. 6033.

Section 1.6037-2 also issued under 26

U.S.C. 6037.

*****

Par. 2. Section 1.1461-1 is amended by

removing paragraph (c)(5) and revising

paragraph (i) to read as follows:

Bulletin No. 2021–32

§1.1461-1. Payment and returns of tax

withheld.

*****

(i) Applicability date. Except as provided in paragraph (c)(2)(iii) of this

section, this section applies to returns

required for payments made on or after

[the date of publication of the Treasury

decision adopting these rules as final regulations in the Federal Register]. (For

payments made before [Date of publication of the Treasury decision adopting these rules as final regulations in the

Federal Register] and on or after January 1, 2022, see this section as in effect

and contained in 26 CFR part 1, as revised April 1, 2021. For payments made

before January 1, 2022, see this section

as in effect and contained in 26 CFR part

1, as revised April 1, 2020.)

Par. 3. Section 1.1471-0 is amended by

revising the entries in the table of contents

for §1.1474-1(e) and (j) and §301.14741(d)(1) and (e) to read as follows:

§1.1471-0 Outline of regulation

provisions for sections 1471 through

1474.

*****

§1.1474-1 Liability for withheld tax

and withholding agent reporting.

*****

(e) Reporting in electronic form.

*****

(j) Applicability date.

*****

§301.1474-1 Required use of electronic

form for financial institutions filing Form

1042, Form 1042-S, or Form 8966.

*****

(d) * * *

(1) Magnetic media or electronic form.

*****

(e) Applicability date.

Par. 4. Section 1.1474-1 is amended by

revising paragraphs (e) and (j) to read as

follows:

§1.1474-1 Liability for withheld tax

and withholding agent reporting.

*****

(e) Reporting in electronic form. See

§301.6011-2(b) of this chapter for the re-

287

quirements of a withholding agent that is

not a financial institution with respect to

the filing of Forms 1042-S in electronic

form. See §301.1474-1(a) of this chapter

for the requirements applicable to a withholding agent that is a financial institution

with respect to the filing of Forms 1042-S

in electronic form.

*****

(j) Applicability date. This section

applies to returns required for payments

made on or after [Date of publication of

the Treasury decision adopting these rules

as final regulations in the Federal Register]. (For the rules that apply before [the

date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register] and on or

after January 6, 2017, see this section as

in effect and contained in 26 CFR part 1,

as revised April 1, 2021.)

Par. 5. Section 1.6033-4 is revised to

read as follows:

§1.6033-4 Required filing in electronic

form for returns by organizations

required to file returns under

section 6033.

(a) In general. The return of an organization that is required to be filed in

electronic form under §301.6033-4 of this

chapter must be filed in accordance with

revenue procedures, publications, forms,

instructions, or other guidance.

(b) Applicability date. The rules of this

section apply for returns required to be

filed for taxable years ending on or after

[Date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register].

Par. 6. Section 1.6037-2 is revised to

read as follows:

§1.6037-2 Required use of electronic

form for income tax returns of electing

small business corporations.

(a) In general. The return of an electing small business corporation that is

required to be filed electronically under

§301.6037-2 of this chapter must be filed

in accordance with Internal Revenue Service revenue procedures, publications,

forms, or instructions, including those

posted electronically.

August 9, 2021

(b) Applicability date. The rules of this

section apply for returns required to be

filed for taxable years ending on or after

[Date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register].

Par. 7. Section 1.6045-2 is amended by

revising paragraphs (g)(2) and (i) to read

as follows:

§1.6045-2 Furnishing statement

required with respect to certain

substitute payments.

*****

(g) * * *

(2) Reporting in electronic form. For

information returns filed after December

31, 1996, see §301.6011-2 of this chapter

for rules relating to filing information returns in electronic form and for rules relating to waivers granted for undue hardship.

A broker or barter exchange that fails to

file a Form 1099 electronically, when required, may be subject to a penalty under

section 6721 for each such failure. See

paragraph (g)(4) of this section.

*****

(i) Applicability date. This section applies to substitute payments received by

a broker after December 31, 1984. The

amendments to paragraph (c) of this section apply to payee statements due after

December 31, 2014. For payee statements

due before January 1, 2015, §1.6045-2(c)

(as contained in 26 CFR part 1, revised

April 2013) shall apply. The amendments

to paragraph (g)(2) of this section apply

to information returns required to be filed

during calendar years beginning after

[Date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register].

Par. 8. Section 1.6045-4 is amended by

removing and reserving paragraph (k) and

revising paragraph (s) to read as follows:

§1.6045-4 Information reporting on

real estate transactions with dates of

closing on or after January 1, 1991.

*****

(s) Applicability date. This section applies for real estate transactions with dates

of closing (as determined under paragraph

(h)(2)(ii) of this section) that occur on or

after January 1, 1991. The amendments

August 9, 2021

to paragraphs (b)(2)(i)(E), (b)(2)(ii) and

(c)(2)(i) of this section apply to sales or

exchanges of standing timber for lumpsum payments completed after May 28,

2009. The amendments to paragraph (m)

(1) of this section apply to payee statements due after December 31, 2014. For

payee statements due before January 1,

2015, §1.6045-4(m)(1) (as contained in

26 CFR part 1, revised April 2013) shall

apply. The removal of paragraph (k) of

this section applies for information returns

required to be filed during calendar years

beginning after [Date of publication of the

Treasury decision adopting these rules as

final regulations in the Federal Register].

Par. 9. Section 1.6050I-0 is amended

by revising the entry in the table of contents for §1.6050I-1(d)(2)(ii) as follows:

§1.6050I-0 Table of contents.

*****

(d) * * *

(2) * * *

(ii) Casinos exempt under 31 CFR

1010.970(c).

*****

Par. 10. Section 1.6050I-1 is amended

by:

1. Revising paragraphs (a)(3)(ii), (c)(1)

(iv), (d)(2)(i), (d)(2)(ii):

2. In paragraph (d)(2)(iv), designating

the example as paragraph (d)(2)(iv)

(A);

3. Revising newly designated paragraph

(d)(2)(iv)(A) and adding paragraph

(d)(2)(iv)(B);

4. Revising paragraphs (e)(1) and (e)(3)

(i); and

5. Adding paragraph (h).

The revisions and additions read as follows:

§1.6050I-1 Returns relating to cash in

excess of $10,000 received in a trade or

business.

(a) * * *

(3) * * *

(ii) Exception. An agent who receives

cash from a principal and uses all of the

cash within 15 days in a cash transaction

(second cash transaction) which is reportable under section 6050I or 5312 of title

31 of the United States Code and the regulations thereunder (31 CFR Chapter X),

288

and who discloses the name, address, and

taxpayer identification number of the principal to the recipient in the second cash

transaction need not report the initial receipt of cash under this section.

*****

(c) * * *

(1) * * *

(iv) Exception for certain loans. A cashier’s check, bank draft, traveler’s check,

or money order received in a designated

reporting transaction is not treated as cash

pursuant to paragraph (c)(1)(ii)(B)(1) of

this section if the instrument constitutes

the proceeds of a loan from a bank (as that

term is defined in 31 CFR Chapter X).

*****

(d) * * *

(2) * * * (i) In general. If a casino receives cash in excess of $10,000 and is

required to report the receipt of such cash

directly to the Treasury Department under

31 CFR 1021.310 or 1010.360 and is subject to the recordkeeping requirements of

31 CFR 1021.400, then the casino is not

required to make a return with respect

to the receipt of such cash under section

6050I and these regulations.

(ii) Casinos exempt under 31 CFR

1010.970(c). Under the authority of section 6050I(c)(1)(A), the Secretary may

exempt from the reporting requirements

of section 6050I casinos with gross annual

gaming revenue in excess of $1,000,000

that are exempt under 31 CFR 1010.970(c)

from reporting certain cash transactions to

the Treasury Department under 31 CFR

1021.310 or 1010.360. The determination

whether a casino which is granted an exemption under 31 CFR 1010.970(c) will

be required to report under section 6050I

will be made on a case by case basis, concurrently with the granting of such an exemption.

*****

(iv) * * *

(A) Example. A and B are casinos

having gross annual gaming revenue in

excess of $1,000,000. C is a casino with

gross annual gaming revenue of less than

$1,000,000. Casino A receives $15,000

in cash from a customer with respect to a

gaming transaction which the casino reports to the Treasury Department under

31 CFR 1021.310 and 1010.360. Casino

B’s hotel division receives $15,000 in

cash from a customer in payment for ac-

Bulletin No. 2021–32

commodations provided to that customer

at Casino B’s hotel. Casino C receives

$15,000 in cash from a customer with

respect to a gaming transaction. Casino

A is not required to report the transaction

under section 6050I or these regulations

because the exception for certain casinos

provided in paragraph (d)(2)(i) of this

section (casino exception) applies. Casino B’s hotel division is required to report

under section 6050I and these regulations

because the casino exception does not apply to the receipt of cash by a nongaming

business division. Casino C is required to

report under section 6050I and these regulations because the casino exception does

not apply to casinos having gross annual gaming revenue of $1,000,000 or less

which do not have to report to the Treasury Department under 31 CFR 1021.310

and 1010.360.

(B) [Reserved]

*****

(e) * * * (1) Time of reporting. The reports required by this section must be filed

in accordance with the Form 8300 instructions and related publications by the 15th

day after the date the cash is received.

However, in the case of multiple payments

relating to a single transaction (or two or

more related transactions), see paragraph

(b) of this section.

*****

(3) * * * (i) Where to file. A person

making a return of information under this

section must file Form 8300 in accordance

with the form instructions and related

publications.

*****

(h) Applicability date. The rules of

this section apply for returns required to

be filed during calendar years beginning

after [Date of publication of the Treasury

decision adopting these rules as final regulations in the Federal Register].

Par. 11. Section 1.6050I-2 is amended

by revising paragraphs (c)(1)(i), (c)(3)(i),

and (f) to read as follows:

§1.6050I-2 Returns relating to cash in

excess of $10,000 received as bail by

court clerks.

*****

(c) * * *

(1) * * * (i) In general. The information return required by this section must

Bulletin No. 2021–32

be filed in accordance with the Form 8300

instructions and related publications by

the 15th day after the date the cash bail is

received.

*****

(3) * * * (i) Where to file. Returns required by this section must be filed in accordance with the Form 8300 instructions

and related publications. A copy of the information return required to be filed under

this section must be retained for five years

from the date of filing.

*****

(f) Applicability date. The rules of this

section apply for returns required to be

filed during calendar years beginning after

[Date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register].

Par. 12. Section 1.6050M-1 is amended

by revising paragraphs (d)(2), (d)(3), and

(f) as follows:

§1.6050M-1 Information returns

relating to persons receiving contracts

from certain federal executive agencies.

*****

(d) * * *

(2) Form of reporting—(i) General rule

concerning electronic filing. The information returns required by this section with

respect to contracts of a federal executive

agency for each calendar quarter must be

made in one submission (or in multiple

submissions if permitted by paragraph (d)

(4) of this section). Except as provided in

paragraph (d)(2)(ii) of this section, the required returns must be made in electronic

form (within the meaning of §301.60112(a)(1)) in accordance with any applicable

revenue procedure or other guidance promulgated by the Internal Revenue Service

for the filing of such returns under section

6050M.

(ii) Exceptions from electronic filing.

Any federal executive agency that, on October 1, has a reasonable expectation of

entering into, during the one-year period

beginning on that date, fewer than 100

contracts subject to the reporting requirements under this section that are to be filed

during the calendar year 2022, or fewer

than 10 contracts subject to the reporting

requirements under this section that are

to be filed during the calendar years after

2022, may make the information returns

289

required by this section for each quarter

of that one-year period on the prescribed

paper Form 8596 in accordance with the

instructions accompanying such form.

(iii) Undue hardship. The Commissioner may grant waivers of the electronic-filing requirements of this section in

cases of undue hardship. The principal

factor in determining hardship will be the

amount, if any, by which the cost of filing the return electronically in accordance

with this section exceeds the cost of filing

the return on paper. A request for a waiver

must be made in accordance with applicable IRS revenue procedures, publications,

forms, instructions, or other guidance, including postings to the IRS.gov website.

The waiver will specify the type of filing

(that is, a return required under paragraph

(a) of this section) and the period to which

it applies.

(3) Place of filing--(i) Returns in electronic form. Information returns made under this section in electronic form must be

filed with the Internal Revenue Service in

accordance with any applicable revenue

procedure or other guidance promulgated

by the Internal Revenue Service relating to

the filing of returns under section 6050M.

(ii) Form 8596. Information returns

made on paper Form 8596 must be filed

with the Internal Revenue Service at the

location specified in the instructions for

that form.

*****

(f) Applicability date—(1) Contracts

required to be reported. Except as otherwise provided in this paragraph (f), this

section applies to each federal executive

agency with respect to its contracts entered into on or after January 1, 1989 (including any increase in amount obligated

on or after January 1, 1989, that is treated

as a new contract under paragraph (e) of

this section).

(2) Contracts not required to be reported. A federal executive agency is not

required to report—

(i) Any basic or initial contract entered

into before January 1, 1989,

(ii) Any increase contract action occurring before January 1, 1989, that is treated

as a new contract under paragraph (e) of

this section, or

(iii) Any increase contract action that is

treated as a new contract under paragraph

(e) of this section if the basic or initial

August 9, 2021

contract to which that contract action relates was entered into before January 1,

1989, and—

(A) The increase occurs before April 1,

1990, or

(B) The amount of the increase does

not exceed $50,000.

(3) Illustration. (i) If federal executive agency enters into an initial contract

on December 1, 1988, and the amount

of money obligated under the contract is

increased by $55,000 on April 15, 1990,

then (A) there is no reporting requirement

with respect to the contract when entered

into on December 1, 1988, and (B) the

April 15, 1990, increase, which is treated as a new contract under paragraph (e)

of this section, is subject to the reporting

requirements of this section because it is

considered to be a new contract entered

into on April 15, 1990.

(ii) If the $55,000 increase had occurred before April 1, 1990, there would

have been no reporting requirement with

respect to that increase.

(4) Filing requirements for contracts

required to be reported. The amendments

to paragraphs (d)(2) and (d)(3) of this section apply for information returns required

to be filed during calendar years beginning

after [Date of publication of the Treasury

decision adopting these rules as final regulations in the Federal Register].

PART 53—FOUNDATION AND

SIMILAR EXCISE TAXES

Par. 13. The authority citation for part

53 is amended by adding the following

entry:

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

Section 53.6011-1 also issued under 26

U.S.C. 6011.

*****

Par. 14. Section 53.6011-1 is amended

by:

1. Removing paragraph (c).

2. Redesignating paragraphs (d) and (e)

as paragraphs (c) and (d), respectively.

3. Adding a new paragraph (e).

The addition reads as follows:

§53.6011-1 General requirement of

return, statement or list.

*****

August 9, 2021

(e) Applicability Date. The rules of this

section apply for any returns required to

be filed under this section on or after January 11, 2021.

PART 54—PENSION EXCISE TAXES

Par. 15. The authority citation for part

54 is amended by adding the following

entry:

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

Section 54.6011-3 also issued under 26

U.S.C. 6011.

*****

Par. 16. Section 54.6011-3 is added to

read as follows:

§54.6011-3 Required use of electronic

form for the filing requirements for the

return for certain excise taxes related

to employee benefit plans.

(a) Excise tax returns required in electronic form. Any employer or individual

required to file an excise tax return on

Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, under

§54.6011-1 of this chapter must file the

excise tax return electronically if the filer

is required by the Internal Revenue Code

or regulations to file at least 10 returns of

any type during the calendar year that the

Form 5330 is due. The Commissioner may

direct the type of electronic filing and may

also exempt certain returns from the electronic filing requirements of this section

through revenue procedures, publications,

forms, instructions, or other guidance, including postings on the IRS.gov website.

Returns filed electronically must be made

in accordance with the applicable revenue

procedures, publications, forms, instructions, or other guidance.

(b) Undue hardship. The Commissioner may grant waivers of the requirements

of this section in cases of undue hardship.

The principal factor in determining hardship will be the amount, if any, by which

the cost of filing the return electronically

in accordance with this section exceeds

the cost of filing the return on paper. A request for a waiver must be made in accordance with applicable IRS revenue procedures, publications, forms, instructions, or

other guidance, including postings to the

IRS.gov website. The waiver will specify

the type of filing (that is, a return required

290

under §54.6011-1) and the period to which

it applies.

(c) Failure to file. If a filer required to

file the Form 5330 fails to file the report

electronically when required to do so by

this section, the filer is deemed to have

failed to file the report. See generally section 6651(a)(1) for the penalty for the failure to file a tax return or to pay tax. For

general rules relating to the failure to file

tax return or to pay tax, see the regulations

under 26 CFR 301.6651 (Regulations on

Procedure and Administration).

(d) Meaning of terms. The following

definitions apply for purposes of this section:

(1) Magnetic media or electronic form.

The terms magnetic media or electronic

form mean any media or form permitted

under applicable regulations, revenue procedures, or publications. These generally

include electronic filing, as well as magnetic tape, tape cartridge, diskette, and

other media specifically permitted under

the applicable regulations, procedures,

publications, forms, instructions, or other

guidance.

(2) Calculating the number of returns a

filer is required to file--(i) In general. For

purposes of this section, a filer is required

to file at least 10 returns during a calendar

year if the filer is required to file at least

10 returns of any type, including information returns (for example, Forms W-2 and

Forms 1099), income tax returns, employment tax returns, and excise tax returns.

(ii) Definition of filer. For purposes of

this section, the term filer means the person required to report the tax on the Form

5330. For general rules on who is required

to report the tax on the Form 5330, see the

Instructions to the Form 5330.

(e) Example. The following example

illustrates the provisions of paragraph (d)

(2) of this section:

(1) In 2022, Employer A (the plan sponsor and

plan administrator of Plan B) is required to file

Form 5330 for its nondeductible contribution under

section 4972 to Plan B. During the 2023 calendar

year, Employer A is required to file 20 returns (including 19 Forms 1099-R Distributions From Pensions, Annuities, Retirement, Profit-Sharing Plans,

IRAs, Insurance Contracts, etc. and one Form 5500

series Annual Return/Report of the Employee Benefit Plan). Plan B’s plan year is the calendar year.

Because Employer A is required to file at least 10

returns during the 2023 calendar year, Employer A

must file the 2022 Form 5330 for Plan B electronically.

Bulletin No. 2021–32

(2) [Reserved]

(f) Applicability date. The rules of this

section apply for any Form 5330 required

to be filed for taxable years ending on or

after [Date of publication of the Treasury

decision adopting these rules as final regulations in the Federal Register].

PART 301—PROCEDURE AND

ADMINISTRATION

Par. 17. The authority citation for part

301 is amended by adding entries in numerical order to read as follows:

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

Section 301.6011-10 also issued under

26 U.S.C. 6011.

Section 301.6011-11 also issued under

26 U.S.C. 6011.

Section 301.6011-12 also issued under

26. U.S.C. 6011.

Section 301.6011-13 also issued under

26 U.S.C. 6011.

Section 301.6011-14 also issued under

26 U.S.C. 6011.

Section 301.6011-15 also issued under

26 U.S.C. 6011.

Section 301.6012-2 also issued under

26 U.S.C. 6012.

*****

Section 301.6057-3 also issued under

26 U.S.C. 6011 and 6057.

Section 301.6058-2 also issued under

26 U.S.C. 6011 and 6058.

Section 301.6059-2 also issued under

26 U.S.C. 6011 and 6059.

*****

Section 301.6721-1 also issued under

26 U.S.C. 6011 and 6721.

*****

Par. 18. Section 301.1474-1 is amended by:

1. Revising the section heading.

2. Revising paragraphs (a) through (c).

3. Revising paragraph (d)(1).

4. Adding a sentence at the end of paragraph (e).

The revisions and addition read as follows:

§301.1474-1 Required use of electronic

form for financial institutions filing

Form 1042, Form 1042-S, or Form

8966.

(a) Financial institutions filing certain

returns. If a financial institution is required

Bulletin No. 2021–32

to file a Form 1042, Annual Withholding

Tax Return for U.S. Source Income of Foreign Persons, (or successor form) under

§1.1474-1(c) of this chapter, the financial

institution must file the return information required by the applicable forms and

schedules electronically. If a financial institution is required to file a Form 1042-S,

Foreign Person’s U.S. Source Income Subject to Withholding, (or such other form as

the IRS may prescribe) under §1.14741(d) of this chapter, the financial institution must file the information required

by the applicable forms and schedules

electronically. Additionally, if a financial

institution is required to file Form 8966,

“FATCA Report,” (or such other form as

the IRS may prescribe) to report certain

information about U.S. accounts, substantial U.S. owners of foreign entities, or

owner-documented FFIs as required under

this chapter, the financial institution must

file the required information in electronic

form. Returns filed electronically must be

made in accordance with applicable regulations, revenue procedures, publications,

forms, instructions, and the IRS.gov Internet site. In prescribing regulations, revenue procedures, publications, forms, and

instructions, including those on the IRS.

gov Internet site, the Commissioner may

direct the type of electronic filing.

(b) Undue hardship. The Commissioner may grant waivers of the requirements

of this section in cases of undue hardship.

The principal factor in determining hardship will be the amount, if any, by which

the cost of filing the return electronically

in accordance with this section exceeds

the cost of filing the return on paper. A request for a waiver must be made in accordance with applicable IRS revenue procedures, publications, forms, instructions, or

other guidance, including postings to the

IRS.gov website. The waiver will specify

the type of filing (that is, a return required

under §1.1474-1(c) or (d) of this chapter,

or a Form 8966) and the period to which

it applies.

(c) Failure to file. If a financial institution fails to file a Form 1042 electronically when required to do so by this section, the financial institution is deemed to

have failed to file the return. (See section

6651 for the addition to tax for failure

to file a return). In determining whether

there is reasonable cause for failure to

291

file the return, §301.6651-1(c) and rules

similar to the rules in §301.6724-1(c)(3)

(undue economic hardship related to filing information returns electronically)

will apply. If a financial institution fails to

file a Form 1042-S or a Form 8966 electronically when required to do so by this

section, the financial institution is deemed

to have failed to comply with the information reporting requirements under section

6721 of the Code. See section 6724(c)

for failure to meet magnetic media requirements. In determining whether there

is reasonable cause for failure to file the

return, §301.6651-1(c) and rules similar

to the rules in §301.6724-1(c)(3) (undue

economic hardship related to filing information returns on magnetic media) will

apply.

(d) * * * (1) Magnetic media or electronic form. The terms magnetic media or

electronic form mean any media or form

permitted under applicable regulations,

revenue procedures, or publications.

These generally include electronic filing,

as well as magnetic tape, tape cartridge,

diskette, and other media specifically permitted under the applicable regulations,

procedures, publications, forms, instructions, or other guidance.

*****

(e) * * * This section applies to any

Form 1042 (or successor form) filed

during calendar years beginning after

[Date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register].

Par. 19. Section 301.6011-2 is amended

by:

1. Revising paragraphs (a)(1).

2. Revising paragraph (b).

3. Revising the heading of paragraph (c)

and paragraph (c)(1).

4. Redesignating paragraph (c)(2) as (c)

(6) and adding new paragraphs (c)(2)

through (5).

5. Revising newly redesignated paragraphs (c)(6)(i) and (ii).

6. Revising paragraph (g).

The revisions and additions read as follows:

§301.6011-2 Required use of electronic

form.

(a) * * * (1) Magnetic media or electronic form. The terms magnetic media or

August 9, 2021

electronic form mean any media or form

permitted under applicable regulations,

revenue procedures or publications, or,

in the case of returns filed with the Social

Security Administration, Social Security

Administration publications. These generally include electronic filing, as well

as magnetic tape, tape cartridge, diskette,

and other media specifically permitted under the applicable regulations, procedures,

or publications.

*****

(b) Returns required electronically. (1)

If the use of Form 1042–S, Form 1094 series, Form 1095–B, Form 1095–C, Form

1097-BTC, Form 1098, Form 1098-C,

Form 1098–E, Form 1098-Q, Form 1098–

T, Form 1099 series, Form 3921, Form

3922, Form 5498 series, Form 8027,

Form W–2G, or other forms prescribed

under paragraph (b)(4) of this section

treated as forms specified in this paragraph (b)(1) is required by the applicable

regulations or revenue procedures for the

purpose of making an information return,

the information required by the form must

be submitted electronically, except as otherwise provided in paragraph (c) of this

section. Returns filed electronically must

be made in accordance with applicable

revenue procedures, publications, forms,

or instructions.

(2) If the use of Form W–2 (Wage and

Tax Statement), Form 499R–2/W–2PR

(Withholding Statement (Puerto Rico)),

Form W–2VI (U.S. Virgin Islands Wage

and Tax Statement), Form W–2GU (Guam

Wage and Tax Statement), Form W–2AS

(American Samoa Wage and Tax Statement), or other forms prescribed under

paragraph (b)(4) of this section as treated

as forms specified in this paragraph (b)

(2) is required for the purpose of making

an information return, the information

required by the form must be submitted

electronically, except as otherwise provided in paragraph (c) of this section. Returns

described in this paragraph (b)(2) must be

made in accordance with applicable Social Security Administration procedures

or publications (which may be obtained

from the local office of the Social Security

Administration).

(3) If a person is required to make a

return for the purpose of section 6050I,

and such person is required to file returns

described in paragraphs (b)(1) and (2) of

August 9, 2021

this section electronically, then such person must also file the information required

by section 6050I on Form 8300 electronically. Returns described in this paragraph (b)(3) must be made in accordance

with applicable IRS revenue procedures,

publications, forms, instructions, or other

guidance, including postings to the IRS.

gov website.

(4) The Commissioner may prescribe

by revenue procedure that additional

forms are treated, for purposes of this section, as forms specified in paragraphs (b)

(1) or (2) of this section. In addition, the

Commissioner may exempt certain returns from the electronic requirements of

this section through revenue procedures,

publications, forms, instructions, or other

guidance, including postings to the IRS.

gov website.

(c) Applicable number-threshold--(1)

In general. No person is required to file

information returns electronically in a calendar year unless the person is required

to file at least the applicable number of

returns during that calendar year. Persons

required to file fewer than the applicable

number of returns during the calendar year

may make the returns on the prescribed

paper form or, alternatively, electronically

in accordance with paragraph (b) of this

section.

(2) Machine-readable forms. Returns

made on a paper form under paragraph (c)

(1) of this section must be machine-readable, as described in paragraph (a)(2) of

this section, if applicable revenue procedures provide for a machine-readable paper form.

(3) Calculating the applicable number--(i) In general. For purposes of paragraph (c)(1) of this section, the applicable

number is 100, for returns required to be

filed during calendar year 2022, and 10,

for returns required to be filed during calendar years after 2022.

(ii) Special rule for partnerships. Notwithstanding paragraph (c)(3)(i) of this

section, a partnership with more than

100 partners is required to file its information returns covered under paragraph (b)

of this section electronically.

(4) Calculating the number of returns-(i) Aggregation of returns. In calculating whether a person is required to file

at least the applicable number of returns

under paragraph (c)(3) of this section,

292

all the information returns described in

paragraphs (b)(1) and (b)(2) of this section required to be filed during the calendar year, are counted in the aggregate.

Corrected information returns and information returns described in paragraph

(b)(3) of this section are not taken into

account in calculating whether a person

is required to file at least the applicable

number of returns.

(ii) Corrected returns. (A) If an original information return covered by paragraph (b) of this section is required to be

filed electronically, any corrected information return corresponding to that original return must also be filed electronically.

(B) If an original information return is

permitted to be filed on paper and is filed

on paper, any corrected information return

corresponding to that original return must

be filed on paper.

(5) Examples. The provisions of paragraphs (c)(3) and (4) of this section are

illustrated by the following examples:

(i) Example 1. During the 2023 calendar year,

Company W, is required to file 5 Forms 1099-INT,

Interest Income, and 5 Forms 1099-DIV, Dividends

and Distributions, for a total of 10 returns covered by

paragraph (b) of this section. The applicable number

for returns required to be filed during calendar year

2023 is 10. Because Company W is required to file

the applicable number of returns covered by paragraph (c)(3) of this section during the 2023 calendar

year, Company W must file all its 2022 Forms 1099INT and Forms 1099-DIV electronically.

(ii) Example 2. Same facts as paragraph (c)(5)(i)

of this section (Example 1), except after electronically filing its 10 Forms 1099-DIV and 1099-INT,

Company W files 2 corrected Forms 1099-DIV and

4 corrected Forms 1099-INT. Because Company W

electronically filed its original 2022 Forms 1099DIV and 1099-INT, Company W must electronically

file its corrected 2022 Forms 1099-DIV and 1099INT.

(iii) Example 3. Same facts as paragraph (c)(5)(i)

of this section (Example 1), except on May 16, 2023,

Company W received cash in excess of $10,000 and

must file a Form 8300 by May 31, 2023. Because

Company W is required to file information returns

covered under paragraphs (b)(1) and (2) of this section electronically during the 2023 calendar year,

Company W must also file all its Forms 8300 electronically during the 2023 calendar year.

(iv) Example 4. Same facts as paragraph (c)(5)

(i) of this section (Example 1), except Company W

is not required to file any Forms 1099-INT during

calendar year 2023. On December 19, 2022, Company W receives cash in excess of $10,000 and must

file a Form 8300 by January 3, 2023. Because Company W is not required to file information returns

covered under paragraphs (b)(1) and (b)(2) of this

section electronically during the 2023 calendar year,

Company W is not required to file this Form 8300

electronically.

Bulletin No. 2021–32

(v) Example 5. During the 2023 calendar year,

Partnership P, a partnership with 15 partners, is required to file 8 Forms 1099-MISC, Miscellaneous

Income, and 5 Forms 1099-INT. The applicable

number of returns required to be filed by partnerships

during calendar year 2023 is 10. Because Partnership

P is required to file at least the applicable number

of returns covered by paragraph (b) of this section

during the 2023 calendar year, Partnership P must

electronically file all its 2022 Forms 1099-MISC and

1099-INT.

(6) * * *

(i) The Commissioner may grant waivers of the requirements of this section in

cases of undue hardship. The principal

factor in determining hardship will be the

amount, if any, by which the cost of filing the return electronically in accordance

with this section exceeds the cost of filing the return on paper. Notwithstanding

the foregoing, if an employer is required

to make a final return on Form 941, or a

variation thereof, and expedited filing

of Forms W-2, Forms 499R-2/W-2PR,

Forms W-2VI, Forms W-2GU, or Form

W-2AS is required, the unavailability

of the specifications for electronic filing

will be treated as creating a hardship (see

§31.6071(a)-1(a)(3)(ii) of this chapter).

A request for a waiver must be made in

accordance with applicable IRS revenue

procedures, publications, forms, instructions, or other guidance, including postings to the IRS.gov website. The waiver

will specify the type of filing (that is, a

return required under paragraph (b) of this

section) and the period to which it applies.

(ii) The Commissioner may supplement the provisions of paragraph (c)(6)

(i) of this section through revenue procedures, publications, forms, instructions, or

other guidance, including postings on the

IRS.gov website.

*****

(g) Applicability date. The rules of this

section apply for information returns required to be filed during calendar years

beginning after [Date of publication of the

Treasury decision adopting these rules as

final regulations in the Federal Register].

Par. 20. Section 301.6011-3 is amended

by:

1. Revising the section heading.

2. Revising paragraphs (a), (b), and (d)

(1).

3. Redesignating paragraph (d)(5) as (d)

(6) and adding new paragraph (d)(5).

4. Revising newly redesignated paragraph (d)(6).

Bulletin No. 2021–32

5.

Revising paragraphs (e) and (f).

The revisions and addition read as follows:

§301.6011-3 Required use of electronic

form for partnership returns.

(a) Partnership returns required electronically. (1) Except as otherwise provided in paragraph (b) of this section, a

partnership required to file a partnership

return pursuant to §1.6031(a)-1 of this

chapter, must file the information required

by the applicable forms and schedules

electronically, if:

(i) the partnership is required by the Internal Revenue Code or regulations to file

at least 10 returns (as described in paragraph (d)(5) of this section) during the

calendar year, or

(ii) the partnership has more than 100

partners during the partnership’s taxable

year.

(2) The Commissioner may direct the

type of electronic filing and may also exempt certain returns from the electronic

requirements of this section through revenue procedures, publications, forms, instructions, or other guidance, including

postings on the IRS.gov website. Returns

filed electronically must be made in accordance with the applicable revenue procedures, publications, forms, instructions, or

other guidance.

(b) Undue hardship. The Commissioner may grant waivers of the requirements

of this section in cases of undue hardship.

The principal factor in determining hardship will be the amount, if any, by which

the cost of filing the return electronically

in accordance with this section exceeds

the cost of filing the return on paper. A request for a waiver must be made in accordance with applicable IRS revenue procedures, publications, forms, instructions, or

other guidance, including postings to the

IRS.gov website. The waiver will specify

the type of filing (that is, a return required

under §1.6031(a)-1 of this chapter) and

the period to which it applies.

*****

(d) * * * (1) Magnetic media or electronic form. The terms magnetic media or

electronic form mean any media or form

permitted under applicable regulations,

revenue procedures, or publications.

These generally include electronic filing,

293

as well as magnetic tape, tape cartridge,

diskette, and other media specifically permitted under the applicable regulations,

procedures, publications, forms, instructions, or other guidance.

*****

(5) Calculating the number of returns.

For purposes of this section, a partnership

is required to file at least 10 returns if,

during the calendar year ending with or

within the taxable year of the partnership,

the partnership is required to file at least

10 returns of any type, including income

tax returns, employment tax returns, excise tax returns, and information returns

(for example, Forms W-2 and Forms 1099,

but not including schedules required to be

included with a partnership return). In the

case of a short-period return, a partnership

is required to file at least the applicable

number of returns if, during the calendar

year in which the partnership’s short taxable year ends, the partnership is required

to file at least the applicable number of

returns of any type, including information returns (for example, Forms W-2 and

Forms 1099, but not including schedules

required to be included with a partnership

return), income tax returns, employment

tax returns, and excise tax returns.

(6) Partnerships with more than 100

partners. A partnership has more than

100 partners if, over the course of the

partnership’s taxable year, the partnership

had more than 100 partners, regardless of

whether a partner was a partner for the

entire year or whether the partnership had

over 100 partners on any particular day in

the year. For purposes of this paragraph

(d)(6), however, only those persons having a direct interest in the partnership must

be considered partners for purposes of determining the number of partners during

the partnership’s taxable year.

(e) Examples. The following examples

illustrate the provisions of this section. In

the examples, the partnerships’ taxable

year is the calendar year 2023 and the

partnerships had fewer than 10 returns

required to be filed during calendar year

2023:

(1) Example 1. Partnership P had five general

partners and 90 limited partners on January 1, 2023.

On March 15, 2023, 10 more limited partners acquired an interest in P. On September 29, 2023, the

10 newest partners sold their individual partnership

interests to C, a corporation which was one of the

original 90 limited partners. On December 31, 2023,

August 9, 2021

P had the same five general partners and 90 limited

partners it had on January 1, 2023. P had a total of

105 partners over the course of partnership taxable

year 2023. Therefore, P must file its 2023 partnership

return electronically.

(2) Example 2. Partnership Q is a general partnership that had 95 partners on January 1, 2023. On

March 15, 2023, 10 partners sold their individual

partnership interests to corporation D, which was not

previously a partner in Q. On September 29, 2023,

corporation D sold one-half of its partnership interest in equal shares to five individuals, who were not

previously partners in Q. On December 31, 2023, Q

had a total of 91 partners, and on no date in 2023 did

Q have more than 100 partners. Over the course of

the year, however, Q had 101 partners. Therefore, Q

must file its 2023 partnership return electronically.

(3) Example 3. Partnership G is a general partnership with 100 partners on January 1, 2023. There

are no new partners added to G in 2023. One of G’s

partners, A, is a partnership with 53 partners. A is one

partner, regardless of the number of partners A has.

Therefore, G has 100 partners and is not required to

file its 2023 partnership return electronically.

(4) Example 4. Same facts as paragraph (e)(3) of

this section (Example 3), except partnership G is also

required to file 9 Forms 1099-MISC during calendar

year 2023 in addition to its 2022 partnership return.

Because partnership G is required to file at least 10

returns of any type during calendar year 2023, partnership G must file its 2023 partnership return electronically.

(f) Applicability date. The rules of this

section apply for partnership returns required to be filed during calendar years

beginning after [Date of publication of the

Treasury decision adopting these rules as

final regulations in the Federal Register].

Par. 21. Section 301.6011-5 is amended

by revising paragraphs (a), (b), (d)(1) and

(5), (e), and (f) to read as follows:

§301.6011-5 Required use of electronic

form for corporate income tax returns.

(a) Corporate income tax returns required electronically. (1) A corporation

required to file a corporate income tax

return on Form 1120, U.S. Corporation

Income Tax Return, under §1.6012-2 of

this chapter must file its corporate income

tax return electronically if the corporation

is required by the Internal Revenue Code

or regulations to file at least 10 returns (as

defined in paragraph (d)(5) of this section)

during the calendar year ending with or

within the taxable year of the corporation.

(2) All members of a controlled group

of corporations must file their corporate

income tax returns electronically if the

aggregate number of returns required to

be filed by the controlled group of corpo-

August 9, 2021

rations is at least 10 (as defined in paragraph (d)(5) of this section) during the

calendar year ending with or within the

taxable year of the controlled group of

corporations.

(3) The Commissioner may direct the

type of electronic filing and may also exempt certain returns from the electronic

requirements of this section through revenue procedures, publications, forms, instructions, or other guidance, including

postings on the IRS.gov website. Returns

filed electronically must be made in accordance with the applicable revenue procedures, publications, forms, instructions, or

other guidance.

(b) Undue hardship. The Commissioner may grant waivers of the requirements

of this section in cases of undue hardship.

The principal factor in determining hardship will be the amount, if any, by which

the cost of filing the return electronically

in accordance with this section exceeds

the cost of filing the return on paper. A request for a waiver must be made in accordance with applicable IRS revenue procedures, publications, forms, instructions, or

other guidance, including postings to the

IRS.gov website. The waiver will specify

the type of filing (that is, a return required

under §1.6012-2 of this chapter) and the

period to which it applies.

*****

(d) * * * (1) Magnetic media or electronic form. The terms magnetic media or

electronic form mean any media or form

permitted under applicable regulations,

revenue procedures, or publications.

These generally include electronic filing,

as well as magnetic tape, tape cartridge,

diskette, and other media specifically permitted under the applicable regulations,

procedures, publications, forms, instructions, or other guidance.

*****

(5) Calculating the number of returns.

For purposes of this section, a corporation or controlled group of corporations

is required to file at least 10 returns if,

during the calendar year ending with or

within the taxable year of the corporation

or the controlled group, the corporation

or the controlled group is required to file

at least 10 returns of any type, including

information returns (for example, Forms

W-2 and Forms 1099), income tax returns,

employment tax returns, and excise tax re-

294

turns. In the case of a short-period return,

a corporation is required to file at least

10 returns if, during the calendar year in

which the corporation’s short taxable year

ends, the corporation is required to file

at least 10 returns of any type, including

information returns (for example, Forms

W-2 and Forms 1099), income tax returns,

employment tax returns, and excise tax returns. If the corporation is a member of a

controlled group, calculating the number

of returns the corporation is required to

file includes all returns required to be filed

by all members of the controlled group

during the calendar year ending with or

within the taxable year of the controlled

group.

(e) Example. The following example

illustrates the provisions of this section:

(1) The taxable year of Corporation X, a fiscal-year taxpayer, ends on September 30. During

the calendar year ending December 31, 2022, X was

required to file one Form 1120, U.S. Corporation

Income Tax Return, 6 Forms W-2, Wage and Tax

Statement, 3 Forms 1099-DIV, Dividends and Distributions, one Form 940, Employer’s Annual Federal

Unemployment (FUTA) Tax Return, and four Forms

941, Employer’s Quarterly Federal Tax Return.

Because X is required to file 10 returns of any type

during calendar year 2022, the calendar year that

ended within its taxable year ending September 30,

2023, X is required to file its Form 1120 electronically for its taxable year ending September 30, 2023.

(2) [Reserved]

(f) Applicability date. The rules of this

section apply for corporate income tax returns required to be filed during calendar

years beginning after [Date of publication

of the Treasury decision adopting these

rules as final regulations in the Federal

Register].

Par. 22. Section 301.6011-10 is added

to read as follows:

§301.6011-10 Certain organizations,

including trusts, required to file

unrelated business income tax returns

in electronic form.

(a) Unrelated business income tax returns required in electronic form. (1) Organizations, including trusts, subject to tax

under section 511 that are required to file a

return under §1.6012-2(e) or 1.6012-3(a)

(5) of this chapter to report gross income

included in computing unrelated business taxable income, as defined in section

512, or that are otherwise required to file

Form 990-T, Exempt Organization Busi-

Bulletin No. 2021–32

ness Income Tax Return (and proxy tax

under section 6033(e)), are required to file

that return in electronic form.

(2) Returns filed in electronic form

must be filed in accordance with applicable revenue procedures, publications,

forms, instructions, or other guidance.

(b) Failure to file. If an organization or

trust fails to file an unrelated business income tax return in electronic form when

required to do so by this section, the organization or trust is deemed to have failed

to file the return. (See section 6651 for the

addition to tax for failure to file a return.)

In determining whether there is reasonable cause for failure to file the return,

§301.6651-1(c) will apply.

(c) Applicability date. The rules of

this section apply for unrelated business

income tax returns required to be filed

during calendar years beginning after [the

date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register].

Par. 23. Section 301.6011-11 is added

to read as follows:

§301.6011-11 Required use of electronic

form for certain returns for taxadvantaged bonds.

(a) Return for credit payments to issuers of qualified bonds. (1) An issuer of a

qualified bond required to file a return for

credit payments on Form 8038-CP, Return

for Credit Payments to Issuers of Qualified Bonds, must file its return electronically if the issuer is required to file at least

10 returns (as defined in paragraph (d)(4)

of this section) during the calendar year.

(2) Returns filed electronically must be

made in accordance with applicable revenue procedures, publications, forms, instructions, or other guidance.

(3) The Commissioner may provide

an exemption from the electronic requirements of paragraph (a) of this section

through revenue procedures, publications,

forms, instructions, or other guidance.

(b) Other returns for tax-advantaged

bonds. The Commissioner may prescribe

by revenue procedure that additional

forms for tax-advantaged bonds (as defined in §1.150-1(b) of this chapter) required under the Internal Revenue Code,

regulations, or other administrative guidance published by the Internal Revenue

Bulletin No. 2021–32

Service must be filed electronically if the

issuer is required to file at least 10 returns

during the calendar year.

(c) Undue hardship. The Commissioner may grant waivers of the requirements

of this section in cases of undue hardship.

The principal factor in determining hardship will be the amount, if any, by which

the cost of filing the return electronically

in accordance with this section exceeds

the cost of filing the return on paper. A request for a waiver must be made in accordance with applicable IRS revenue procedures, publications, forms, instructions, or

other guidance, including postings to the

IRS.gov website. The waiver will specify

the type of filing (that is, a return for credit

payments on Form 8038-CP) and the period to which it applies.

(d) Meaning of terms. The following

definitions apply for purposes of this section:

(1) Magnetic media or electronic form.

The terms magnetic media or electronic

form mean any media or form permitted

under applicable regulations, revenue procedures, or publications. These generally

include electronic filing, as well as magnetic tape, tape cartridge, diskette, and

other media specifically permitted under

the applicable regulations, procedures,

publications, forms, instructions, or other

guidance.

(2) Qualified bond. The term qualified

bond means a tax-advantaged bond that is

a taxable bond that provides a refundable

federal tax credit payable directly to the

issuer of the bond under former section

6431 or any other tax-advantaged bond (as

defined in §1.150-1(b) of this chapter) that

provides a tax credit payment to issuers of

such bonds similar to the credit provided

wit

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