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## Text

HIGHLIGHTS
OF THIS ISSUE




Bulletin No. 2022–7
February 14, 2022

These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.

ADMINISTRATIVE
Rev. Proc. 2022-12, page 494.
This revenue procedure provides simplified electronic
and paper filing procedures for individuals not otherwise required to file 2021 Federal income tax returns to
facilitate their ability to claim the child tax credit, 2021
recovery rebate credit, and earned income credit. In addition, this revenue procedure provides a special electronic filing procedure for individuals with zero adjusted
gross income that permits them to file complete 2021
Federal income tax returns electronically.

EMPLOYEE PLANS
Notice 2022-8, page 491.
The notice sets forth the 2022 Cumulative List of
Changes in Section 403(b) Requirements for Section 403(b) Pre-approved Plans (2022 Cumulative
List). The 2022 Cumulative List will assist providers
of section 403(b) pre-approved plans applying to
the IRS for opinion letters for the second remedial
amendment cycle (Cycle 2) under the IRS’s section
403(b) pre-approved plan program. The 2022 Cumulative List identifies changes in the requirements of
section 403(b) that will be taken into account by the
IRS with respect to a plan document submitted to the
IRS for Cycle 2 and that were not taken into account
during the first remedial amendment cycle.

INCOME TAX
REG-118250-20, page 753.
This document contains proposed regulations regarding the treatment of domestic partnerships and
Finding Lists begin on page ii.

S corporations that own stock of passive foreign
investment companies and their domestic partners
and shareholders. These proposed regulations also
provide guidance regarding the determination of the
controlling domestic shareholders of foreign corporations, the owner of a controlled foreign corporation
or qualified electing fund that makes an election under section 1411, the treatment of S corporations
with accumulated earnings and profits under subpart F of part III of subchapter N of chapter 1 of the
Internal Revenue Code, and the determination and
inclusion of related person insurance income under
section 953(c). These proposed regulations affect
United States persons that own, directly or indirectly,
stock in certain foreign corporations.
Rev. Proc. 2022-14, page 502.
This revenue procedure provides the List of Automatic Changes to which the automatic change procedures in Rev. Proc. 2015-13, 2015-5 I.R.B. 419, as
clarified and modified, apply.
T.D. 9960, page 481.
This document contains final regulations under section 958 regarding the treatment of domestic partnerships for purposes of determining amounts included in the gross income of their partners with respect
to foreign corporations. The final regulations affect
United States persons that own stock of foreign corporations through domestic partnerships and domestic partnerships that are United States shareholders
of foreign corporations.

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.

February 14, 2022 

Bulletin No. 2022–7

Part I
26 CFR 1.958-1: Direct and indirect ownership
of stock

T.D. 9960
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Guidance under Section
958 on Determining Stock
Ownership
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains final regulations regarding the treatment of
domestic partnerships for purposes of determining amounts included in the gross
income of their partners with respect to
foreign corporations. The final regulations
affect United States persons that own
stock of foreign corporations through domestic partnerships and domestic partnerships that are United States shareholders
of foreign corporations.
DATES: Effective date: These regulations
are effective on January 25, 2022.
Applicability dates: For dates of applicability, see §§1.956-1(g)(4) and 1.958-1(d)
(4).
FOR FURTHER INFORMATION
CONTACT: Edward J. Tracy at (202)
317-6934 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On October 10, 2018, the Department
of the Treasury (“Treasury Department”)
and the IRS published proposed regulations (REG-104390-18) under sections
951, 951A, 1502, and 6038 in the Federal Register (83 FR 51072) that included

Bulletin No. 2022–7

guidance with respect to the treatment of
domestic partnerships that own stock in
controlled foreign corporations, as defined
in section 957 (“CFCs”), for purposes of
section 951A (the “2018 proposed regulations”). The 2018 proposed regulations
set forth a “hybrid approach” that generally treated a domestic partnership that is
a United States shareholder, as defined in
section 951(b) (“U.S. shareholder”), with
respect to a CFC (“U.S. shareholder partnership”) as an entity with respect to its
partners that are not U.S. shareholders
(“non-U.S. shareholder partners”) but as
an aggregate of its partners with respect
to its partners that are U.S. shareholders
(“U.S. shareholder partners”).
On June 21, 2019, the Treasury Department and the IRS published final regulations (TD 9866) in the Federal Register (84 FR 29288, as corrected at 84 FR
44223, 84 FR 44693, and 84 FR 53052)
under sections 951, 951A, 1502, and 6038
that include guidance with respect to the
treatment of domestic partnerships that
own stock in CFCs for purposes of section 951A (the “final section 951A regulations”). Instead of the “hybrid approach”
described in the 2018 proposed regulations, the final section 951A regulations
generally treat a domestic partnership
as an aggregate of all of its partners for
purposes of computing income inclusions
under section 951A (and other provisions
that apply by reference to section 951A).
§1.951A-1(e)(1). That is, under the final
section 951A regulations, partners do not
take into account a distributive share of
the partnership’s section 951A inclusion
with respect to the partnership-owned
CFCs but instead are treated as proportionately owning the stock of the partnership-owned CFCs. See id. Thus, as in
the case of foreign partnerships, income
inclusions under section 951A are determined directly by U.S. shareholder partners of a domestic partnership that owns
CFCs. The final section 951A regulations
apply to taxable years of foreign corporations beginning after December 31, 2017,
and to taxable years of U.S. shareholders
in which or with which those taxable years
of foreign corporations end. §1.951A-7.
Concurrent with the issuance of the
final section 951A regulations, the Trea-

481

sury Department and the IRS published
proposed regulations (REG-101828-19)
under sections 951, 951A, 954, 956, 958,
and 1502 in the Federal Register (84
FR 29114, as corrected at 84 FR 37807)
(the “2019 proposed regulations”). Consistent with the approach adopted in the
final section 951A regulations, the 2019
proposed regulations generally extended
the treatment of domestic partnerships as
aggregates of their partners for purposes
of determining income inclusions under
section 951 and for purposes of provisions
that apply by reference to section 951.
Proposed §1.958-1(d).
On August 22, 2019, the Treasury Department and the IRS published Notice
2019-46, 2019-37 I.R.B. 695, which announced the intent to issue regulations
that would permit, in certain cases, the
“hybrid approach” described in the 2018
proposed regulations to be applied to domestic partnerships or S corporations for
taxable years ending before June 22, 2019.
On July 23, 2020, the Treasury Department and the IRS published final regulations (TD 9902) in the Federal Register (85 FR 44620, as corrected at 85 FR
64040 and 85 FR 79853) related to the
portion of the 2019 proposed regulations
under sections 951A and 954 addressing
the treatment of income subject to a high
rate of foreign tax.
A notice of proposed rulemaking published in the Proposed Rules section of
this issue of the Federal Register (REG118250-20) provides guidance on the
treatment of domestic partnerships and S
corporations that own passive foreign investment companies (as defined in section
1297(a)) (“PFICs”) and their domestic
partners and shareholders, as well as on
other PFIC and CFC-related issues (the
“2022 proposed PFIC regulations”).
This rulemaking finalizes the portion
of the 2019 proposed regulations that
generally treat domestic partnerships as
aggregates of their partners for purposes
of determining income inclusions under
section 951 and for purposes of provisions
that apply specifically by reference to section 951 (the “final regulations”).
In the 2019 proposed regulations, the
Treasury Department and the IRS requested comments on the other provisions in

February 14, 2022

the Internal Revenue Code (“Code”) that
apply by reference to ownership within
the meaning of section 958(a) for which
aggregate treatment for domestic partnerships would be appropriate. The 2019
proposed regulations also requested
comments on the aggregate treatment of
domestic partnerships in specific areas,
including for purposes of determining
the controlling domestic shareholders of
a CFC and for purposes of applying the
PFIC regime. The Treasury Department
and the IRS received three comments in
response to the 2019 proposed regulations, each of which were considered in
these final regulations. No public hearing
on the 2019 proposed regulations was held
because there were no requests to speak.
Summary of Comments and
Explanation of Revisions
Comments outside the scope of this
rulemaking are generally not addressed
but may be considered in connection with
future guidance projects. All written comments received in response to the proposed regulations that are being finalized
in this rulemaking are available at www.
regulations.gov or upon request.
I. Application of Section 956
Subject to certain exceptions, the 2019
proposed regulations treated domestic
partnerships as aggregates of their partners for purposes of sections 951 and 951A
and for purposes of any other provision
that applies by reference to section 951
or section 951A. Proposed §1.958-1(d)
(1) and (2). Although section 951(a)(1)
(B) requires a U.S. shareholder of a CFC
to include in gross income the amount determined under section 956 with respect
to the U.S. shareholder (to the extent not
excluded from gross income under section
959(a)(2)), section 956 itself does not specifically apply by reference to section 951
(or section 951A). Accordingly, the final
regulations clarify that aggregate treatment of domestic partnerships applies for
purposes of section 956(a) and any provisions that specifically apply by reference
to section 956(a) (such as §1.956-1(a)(2))
to ensure that a U.S shareholder partner
determines a section 956 amount with respect to CFCs owned through a domestic

February 14, 2022

partnership as part of the U.S. shareholder
partner’s section 951(a) inclusion. §1.9581(d)(1) and (d)(3)(iii). Aggregate treatment does not apply, however, for purposes of section 956(c) or (d) (or provisions
that apply by reference to these sections)
because treating a domestic partnership
as an entity separate from its partners is
more appropriate to carry out the purposes
of these provisions. See, e.g., §1.956-4(e)
(providing rules concerning the application of section 956 to, for example, obligations of partnerships). As discussed in
the preamble to the 2019 proposed regulations, the treatment of a partnership as
an entity or an aggregate is determined
in part based on the policies underlying
the specific provision at issue. See 84 FR
29115-29116.
To avoid similar confusion regarding
the scope of §1.958-1(d), the final regulations replace the language “any other
provision that applies by reference” to
section 951 or section 951A in proposed
§1.958-1(d)(1) with “any provision that
specifically applies by reference” to
section 951, section 951A, or section
956(a). The addition of the word “specifically” is intended to clarify that the rule
in §1.958-1(d) applies only to the particular provision within a Code section
or regulation that applies specifically by
reference to section 951, section 951A,
or section 956(a) rather than the section
or regulation in its entirety. Additionally,
the final regulations clarify that the rule
in §1.958-1(d)(1) applies for purposes
of any provision that specifically applies
by reference to regulations issued under or relating to the sections identified
in §1.958-1(d)(1). Corresponding revisions are made to the cross references to
§1.958-1(d) provided in §§1.951-1(a)(4)
and 1.951A-1(e).
Certain existing final regulations treat
domestic partnerships as entities separate
from their partners for purposes of section
956. §1.956-1(a)(2)(i) and (iii) and (a)
(3)(iv). Because this treatment is inconsistent with the aggregate approach, the
2019 proposed regulations modified the
applicability date of these provisions so
they would cease to apply once the 2019
proposed regulations were finalized. Proposed §1.956-1(g)(4). Rather than modifying the applicability dates as was done
in the 2019 proposed regulations, how-

482

ever, the final regulations simply remove
these provisions. Accordingly, because
those provisions are being removed as
part of the final regulations, the proposed
applicability date provisions under section
956 are no longer relevant and are not being finalized.
II. Passive Foreign Investment
Companies
The preamble to the 2019 proposed
regulations requested comments with
respect to the application of the PFIC
regime to domestic partnerships that directly or indirectly own PFIC stock, particularly with respect to whether elections
and income inclusions are more appropriate at the level of the domestic partnership
or at the level of its partners. 84 FR 29120.
Comments were received regarding PFIC
elections and inclusions, the CFC overlap rule in section 1297(d), and other PFIC-related issues involving domestic partnerships. These comments are addressed
in the 2022 proposed PFIC regulations in
order to provide taxpayers additional opportunity to comment.
III. Related Person Insurance Income
Section 952(a) provides that subpart F
income includes insurance income, as defined in section 953. Under section 953(c)
(2), related person insurance income
(“RPII”) is any insurance income (as defined in section 953(a)) attributable to a
policy of insurance or reinsurance that directly or indirectly insures a United States
shareholder (as defined in section 953(c)
(1)(A)) of the controlled foreign corporation (as defined in section 953(c)(1)(B)),
or a person related to the United States
shareholder.
A comment requested that aggregate
treatment be applied for purposes of determining RPII such that there would only
be RPII to the extent of the domestic partnership’s domestic partners, which is the
same result as for foreign partnerships.
The Treasury Department and the IRS
agree that aggregate principles should apply for purposes of section 953(c). However, in order to provide taxpayers an
additional opportunity to comment, this
comment is addressed in the 2022 proposed PFIC regulations.

Bulletin No. 2022–7

IV. Controlling Domestic Shareholders
The “controlling domestic shareholders” of a CFC make certain elections with
respect to the CFC, such as electing the
method of calculating the CFC’s earnings and profits under section 964(a) and
electing to exclude tentative gross tested
income items from gross tested income
under section 951A(c)(2)(A)(i)(III). See
§§1.964-1(c)(3) and 1.951A-2(c)(7)(viii).
Under §1.964-1(c)(5)(i), the controlling
domestic shareholders of a CFC are the
U.S. shareholders that, in the aggregate, own (within the meaning of section
958(a)) more than 50 percent of the total
combined voting power of all classes of
stock of the CFC entitled to vote and that
undertake to act on the CFC’s behalf. If
the ownership requirement is not satisfied,
the controlling domestic shareholders of
the CFC are all of the U.S. shareholders
that own (within the meaning of section
958(a)) stock of the CFC. Id.
With respect to U.S. shareholder partnerships, the 2019 proposed regulations
did not apply aggregate treatment for purposes of determining a CFC’s controlling
domestic shareholders, and a domestic
partnership could qualify as a controlling
domestic shareholder of the CFC. Proposed §1.958-1(d)(2). The preamble to
the 2019 proposed regulations requested
comments on whether aggregate treatment should apply in this context so that
some or all of the U.S. shareholder partners, rather than the partnership, would
make elections applicable to the CFC for
purposes of sections 951 and 951A. 84 FR
29119. One comment was received that
recommended, on balance, that aggregate
treatment should not apply for purposes
of determining the controlling domestic
shareholders of CFCs under §1.964-1(c)
(5)(i).
The final regulations do not extend
aggregate treatment for determining the
controlling domestic shareholders of a
CFC under §1.964-1(c)(5)(i). However,
the Treasury Department and the IRS believe that aggregate treatment should apply to domestic partnerships for purposes
of determining the controlling domestic
shareholders of a CFC under §1.964-1(c)
(5). Thus, the 2022 proposed PFIC regulations revise §1.958-1(d)(2) to provide that
aggregate treatment applies for purposes

Bulletin No. 2022–7

of determining the controlling domestic
shareholders of a CFC. This change is
included in the 2022 proposed PFIC regulations to give taxpayers an additional
opportunity to comment.
V. Previously Taxed Earnings and Profits
and Basis Adjustments
The preamble to the 2019 proposed
regulations noted that, historically, domestic partnerships had been treated as owning stock within the meaning of section
958(a) for purposes of determining their
section 951 inclusions, and, thus, previously taxed earnings and profits (“PTEP”)
accounts under section 959 were maintained, and related basis adjustments under section 961 were made, at the partnership level. 84 FR 29119. As a result,
comments were requested on appropriate
rules, such as necessary adjustments to
PTEP and related basis amounts, for the
transition to the aggregate approach to
domestic partnerships described in the
2019 proposed regulations once those regulations were finalized. 84 FR 29119-20.
These issues, and the comments received,
are beyond the scope of this rulemaking
and therefore are not addressed herein;
however, the Treasury Department and
the IRS intend to address these comments
in a separate guidance project involving
PTEP (the “proposed PTEP regulations”).
The proposed PTEP regulations will provide guidance on a broad range of issues,
such as the maintenance of PTEP accounts
under section 959, the treatment of PTEP
distributions, and basis adjustments under section 961, including with respect to
CFCs held by partnerships.
VI. Application of Section 1248
The preamble to the 2019 proposed
regulations stated that, subject to certain
exceptions, aggregate treatment of domestic partnerships applied only with respect
to sections 951 and 951A, and any provision that applies by reference to sections
951 and 951A, and, therefore, did not
apply for any other purpose of the Code,
including section 1248. 84 FR 29119.
Comments were received regarding section 1248, including with respect to dispositions by domestic partnerships of CFC
stock, dispositions of interests in domestic

483

partnerships that own CFC stock, and the
interaction between section 1248 and section 751.
The final regulations do not address
these comments, which are beyond the
scope of this rulemaking. The Treasury
Department and the IRS recognize, however, that section 1248 applies in part by
reference to section 951 and section 951A
(in the latter case, as a result of section
951A(f)(1)(A)). See section 1248(b)(1)
(A) and (d)(1). Therefore, the final regulations clarify that the aggregate approach
set forth in §1.958-1(d)(1) does not apply
for purposes of section 1248, which is
consistent with the intended scope of the
rules as described in the preamble to the
2019 proposed regulations. §1.958-1(d)
(2)(iv). The final regulations do not affect
the application of §1.1248-1(a)(4). Future
guidance, including the proposed PTEP
regulations, may address the application
of section 1248(b)(1)(A) and (d)(1) to
transactions involving a domestic partnership’s sale of a CFC, such as the transaction described in Rev. Rul. 69-124, 1969-1
C.B. 203.
VII. Non-Grantor Trusts and Estates
The preamble to the 2019 proposed
regulations requested comments on
whether aggregate treatment should be extended to other pass-through entities such
as certain trusts or estates. In response to
this request, one comment recommended
that aggregate treatment not be extended
to domestic non-grantor trusts and domestic estates, noting that there is no corollary
authority to section 7701(a)(4) (authorizing the treatment of domestic partnerships as not domestic when the context requires) which would permit the Treasury
Department and the IRS to treat domestic
non-grantor trusts and domestic estates as
not domestic. The comment further noted
that if the domestic non-grantor trust or
domestic estate had a section 951(a) or
section 951A inclusion but did not distribute the income to its beneficiaries, the
trust or estate itself would be liable for
tax on that income (unlike a partnership);
thus, two separate taxing regimes could be
necessary if an aggregate approach were
limited to distributed income. Finally, the
comment suggested that identifying U.S.
shareholders of a CFC the stock of which

February 14, 2022

is owned by a domestic non-grantor trust
or a domestic estate would be complex if
the trust or estate had discretionary beneficiaries.
Although aggregate treatment of domestic partnerships for purposes of sections 951 and 951A (and provisions that
specifically apply by reference to those
sections) is not based on the grant of authority under section 7701(a)(4), the Treasury Department and the IRS nevertheless
agree, for the other reasons stated in the
comment, that aggregate treatment should
not be extended to domestic non-grantor
trusts and domestic estates.
VIII. Other Changes
The final section 951A regulations
generally adopted aggregate treatment of
domestic partnerships for purposes of section 951A. §1.951A-1(e). The preamble
to the 2019 proposed regulations noted
that once those regulations were finalized, §1.951A-1(e) would be unnecessary
because that rule would be subsumed by
§1.958-1(d). 84 FR 29119. The preamble
to the 2019 proposed regulations further
noted that §1.951-1(h), which treated
certain controlled domestic partnerships
as foreign partnerships for purposes of
determining the stock of a CFC owned
(within the meaning of section 958(a))
by a U.S. person, would similarly be unnecessary. Id. No comments addressed
those proposed regulations. As a result,
§1.951A-1(e) is amended to remove paragraphs (e)(1) through (3) and include a
general cross-reference to §1.958-1(d) in
§1.951A-1(e) for the treatment of domestic partnerships for purposes of section
951A. The final regulations also remove
paragraph (h) of §1.951-1.
IX. Applicability Dates
A. Application before finalization date
Proposed §1.958-1(d)(4) provided that
the regulations under section 958 would
apply to taxable years of foreign corporations beginning on or after the date the
final regulations are published in the Federal Register (the “finalization date”) and
to taxable years of U.S. persons in which
or with which such taxable years of the
foreign corporations end (the “general

February 14, 2022

applicability rule”). However, domestic
partnerships could apply the regulations,
when finalized, to taxable years of a foreign corporation beginning after December 31, 2017, and to taxable years of the
domestic partnership in which or with
which such taxable years of the foreign
corporation end, subject to the requirement that the partnership, its U.S. shareholder partners, and other related domestic partnerships and their U.S. shareholder
partners consistently apply the regulations
with respect to all foreign corporations
the partnerships own (within the meaning of section 958(a), determined without
regard to proposed §1.958-1(d)(1)) (the
“pre-finalization applicability option”).
Proposed §1.958-1(d)(4). The 2019 proposed regulations also permitted domestic
partnerships, their U.S. shareholder partners, and related domestic partnerships
and their U.S. shareholder partners to rely
on proposed §1.958-1(d)(4), subject to the
same consistency requirement (the “reliance option”). See 84 FR 29119.
One comment made several recommendations with respect to the applicability date of proposed §1.958-1(d). First, the
comment suggested that the reference to a
“domestic partnership” in the pre-finalization applicability option was inconsistent
with the reference to “U.S. persons” in the
general applicability rule and recommended that the final regulations be revised to
reference “U.S. person” in both places.
With respect to the consistency requirements (including consistency between
years), the comment suggested that U.S.
persons owning stock of a foreign corporation through a domestic partnership be
allowed to take individual positions as to
whether to apply the pre-finalization applicability option, subject to all related
partners taking the same position. The
comment noted that an individualized approach would allow non-U.S. shareholder
partners to decide whether to be subject to
section 951 inclusions or potentially to be
subject to the PFIC regime during the period before the finalization date and would
not materially impact U.S. shareholder
partners.
The reference to “domestic partnerships” and their U.S. shareholder partners
in the pre-finalization applicability option
was intentional. Although the general applicability rule applies to all affected U.S.

484

persons, certain persons may choose to apply the regulations before the finalization
date. By limiting this group of persons
to domestic partnerships and their U.S.
shareholder partners (and related domestic partnerships), the rule aims to strike a
balance between identifying a small group
of persons who may be able to coordinate
with respect to the decision to apply the
pre-finalization applicability option versus all persons that may be affected by
that decision. Accordingly, the suggested
revision to reference “U.S. persons” in the
pre-finalization applicability option is not
adopted.
In addition, the suggested revision
would allow partners to take individualized positions with respect to the pre-finalization applicability option and could
cause significant administrative, partnership accounting, and reporting difficulties.
For example, if each partner were allowed
to take an individual position on the applicability date of the regulations, partners
following the general applicability rule
(regardless of the extent of their ownership) might receive a distributive share of
the partnership’s section 951 inclusions
while U.S. shareholder partners applying
the pre-finalization applicability option
have direct section 951 inclusions. The
Treasury Department and the IRS believe
that consistency among all affected parties
in applying the pre-finalization applicability option is important for proper administration of the regulations. As a result, the
Treasury Department and the IRS have
determined that the difficulty posed by
an individualized approach outweighs the
potential benefit the approach would provide to a partner, and this comment is not
adopted. The Treasury Department and
the IRS are aware that, given the potential scope of the consistency requirement,
it may be difficult to meet in more widely
held partnership structures, and thus application of the pre-finalization applicability option may be limited.
The comment recommended that if
the individualized approach is not adopted, the final regulations should require
a formal election in order to apply the
pre-finalization applicability option instead of the consistency requirement. The
election would be made only by a domestic partnership and all related domestic
partnerships and would be binding on all

Bulletin No. 2022–7

domestic partners. The comment asserted
that this approach would clarify the application of the pre-finalization applicability
option by avoiding potential uncertainty
as to whether all U.S. shareholder partners
took a consistent position. The comment
further suggested that a partnership-only election to apply the pre-finalization
applicability option would prevent U.S.
shareholder partners from refusing, without justification, to act in accordance with
the partnership’s election.
The Treasury Department and the
IRS have determined that, although the
consistency requirement among all related domestic partnerships and their U.S.
shareholder partners may be difficult to
meet in certain cases, requiring consistency among all persons required to apply
the pre-finalization applicability option is
important for proper administration of the
rules. Absent this requirement, U.S. shareholder partners could choose not to amend
their returns, and therefore continue to
report under the entity approach, even
though the partnership and other partners
amended their returns and reported under
the aggregate approach pursuant to the
pre-finalization applicability option.1 In
addition, maintaining the U.S. shareholder consistency requirement minimizes administrative, partnership accounting, and
reporting difficulties (for example, in connection with PTEP accounts) that could
arise if a partnership-only election were
adopted and one or more U.S. shareholder
partners chose not to amend their returns
in accordance with the partnership’s election. The consistency requirement is also
expected to enhance compliance and administration at the U.S. shareholder partner-level with respect to amended returns
(or administrative adjustment requests)
because it requires more coordination between the partnership and its partners than
a partnership-only election would require.
Under either approach, if a partnership
chooses the pre-finalization applicability
option on an amended return (or by initiating an administrative adjustment request),
any U.S. shareholder partner would receive updated information that it no longer has a distributive share of the partnership’s section 951 inclusions but would

still need to take into account section 951
inclusions directly under the aggregate approach. Further, the Treasury Department
and the IRS are concerned that the lack of
coordination involved in a partnership-only election, as opposed to the consistency
requirement, may create uncertainty at the
U.S. shareholder partner level as to whether the partner merely accounts for the reduction in the distributive share from the
partnership or must also directly take into
account income inclusions. Accordingly,
this comment is not adopted.
The comment also requested that the
final regulations clarify whether the pre-­
finalization applicability option is available if all required parties file amended
returns. The Treasury Department and the
IRS confirm that, subject to the consistency requirement, a domestic partnership
may apply the regulations on an amended
return or through initiating an administrative adjustment request under section
6227. In instances where a domestic partnership files an amended return (that is,
in the case of partnerships not subject to
sections 6221 through 6241), its partners
(both U.S. shareholder partners and nonU.S. shareholder partners) will likely need
to also file amended returns in order to satisfy the consistency requirement.
Finally, the comment expressed concern for cases in which a domestic partnership filed its income tax return for
calendar year 2018 before the issuance of
the 2019 proposed regulations reporting
section 951 inclusions by the partnership
in accordance with then current law (including issuing Schedules K-1 to its partners) but subsequently filed a superseding
original or amended return for such taxable year relying on the 2019 proposed
regulations. In that case, the comment recommended that the ability to rely on the
2019 proposed regulations should not be
contingent upon all U.S. shareholder partners filing superseding or amended returns
on the same basis and that all partners
should be permitted to decide separately
whether to file a superseding or amended
return to rely on the proposed regulations.
The comment further recommended that,
if a non-U.S. shareholder partner decides
to rely on the proposed regulations and

the foreign corporation is also a PFIC, the
mechanism for the non-U.S. shareholder
partner to make a QEF or mark-to-­market
election under section 1295 or section
1296, respectively, should be simplified
and that purging elections should not be
required solely due to the status of the
CFC/PFIC during the period before the
general applicability rule applies. The
comment analogized these recommendations to relief provided in Notice 2019-46,
which permitted domestic partnerships
and partners to file returns for 2018 applying the hybrid approach in the 2018 proposed regulations rather than the aggregate approach adopted by the final section
951A regulations.
The Treasury Department and the IRS
believe that, in all cases, proper administration of the regulations before the general applicability rule requires the satisfaction of the consistency requirement in
§1.958-1(d)(4)(i) and precludes the ability
of non-U.S. shareholder partners to unilaterally apply the regulations. Therefore, the final regulations do not adopt
more permissive rules because a domestic
partnership filed a tax return and issued
Schedule K-1s to its partners before the issuance of the 2019 proposed regulations.
Furthermore, the Treasury Department
and the IRS find this situation sufficiently
different from the relief provided in Notice 2019-46 for domestic partnerships
that had already reported a different position on a Schedule K-1 based on the 2018
proposed regulations. Although the final
section 951A regulations applied retroactively and superseded the 2018 proposed
regulations, the notice provided flexibility to apply the 2018 proposed regulations
due to the compliance burdens associated
with the change from the hybrid approach
in the 2018 proposed regulations to the
aggregate approach in the final section
951A regulations and the relatively short
period until the extended filing deadline
for calendar-year partnerships. This same
concern does not exist here because, before the prospective application of the
regulations under the general applicability
rule, taxpayers were permitted to rely on
the 2019 proposed regulations (in accordance with proposed §1.958-1(d)(4)) or to

A U.S. shareholder partner’s liability could differ under an aggregate or entity approach if, for example, the partner is a U.S. shareholder partner with respect to some, but not all, of the CFCs
that are owned by the domestic partnership.
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485

February 14, 2022

continue to apply prior law. Accordingly,
the final regulations do not adopt these
comments.
B. Different taxable years of the
partnership, partners, and CFC
Proposed §1.958-1(d)(4) provided that
§1.958-1(d), when finalized, would apply
to taxable years of foreign corporations
beginning on or after the finalization date
and to taxable years of U.S. persons in
which or with which the taxable years of
the foreign corporations end. A comment
noted that, under this rule, in certain circumstances where a fiscal year U.S. shareholder partnership with U.S. shareholder
partners has a different taxable year than
its CFC and U.S. shareholder partners,
the applicability date could cause the U.S.
shareholder partners to have two years of
section 951 inclusions in the same taxable
year with respect to the same CFC – that
is, a distributive share of the partnership’s
section 951 inclusion from the CFC’s last
taxable year before the application of the
final regulations, and a direct section 951
inclusion with respect to the first taxable
tax year of the CFC subject to the final
regulations. For example, if a U.S. shareholder partnership has a June 30 taxable
year and both the CFC it owns and its
U.S. shareholder partners have a calendar
taxable year, the final regulations would,
under the general applicability rule, first
apply to the CFC’s taxable year ending
December 31, 2023. Accordingly, for their
taxable year ending December 31, 2023,
the U.S. shareholder partners would have
a distributive share of the partnership’s
section 951 inclusion for the CFC’s taxable year ending December 31, 2022 (for
the U.S. shareholder partnership’s taxable
year ending June 30, 2023) and would
also have a direct section 951 inclusion for
the CFC’s taxable year ending December
31, 2023. The comment suggested that if
the result in the example is intended, the
Treasury Department and the IRS should
consider treating the transition to aggregate treatment as a change in method of

accounting with an accompanying spread
in reporting the second inclusion under
section 481.
The result described by the comment
(the possibility of a U.S. shareholder partner having, in one of its taxable years, a
distributive share of a partnership’s section 951(a) inclusion with respect to a CFC
for one taxable year of the CFC as well as
the U.S. shareholder partner’s own section
951(a) inclusion with respect to the CFC
for the CFC’s subsequent taxable year) is
intended. In situations where a partnership
and a partner have different taxable years,
the partner can generally achieve deferral
on its share of the partnership’s income
to the extent of the difference between its
taxable year and the partnership’s required
taxable year. However, under the final regulations, because a domestic partnership
is not treated as owning stock of a CFC
within the meaning of section 958(a) for
purposes of computing income inclusions
with respect to a CFC under section 951
and section 951A, the applicable taxable
year for income inclusions arising as a result of a domestic partnership’s ownership
of the CFC is the U.S. shareholder partner’s taxable year, not the partnership’s
taxable year. As a result, the final regulations eliminate any deferral of income
inclusions under section 951 and section
951A for a U.S. shareholder partner with
respect to any CFC owned by the U.S.
shareholder partnership. This elimination
of a U.S. shareholder partner’s deferral
with respect to income of any CFC owned
by the U.S. shareholder partnership, combined with the partner’s existing deferral
of section 951 income inclusions before
the application of the final regulations,
causes the U.S. shareholder partner to recognize two years of section 951 income
inclusions with respect to any CFC owned
by the U.S. shareholder partnership in this
transition taxable year.
The Treasury Department and the IRS
considered whether the adoption of the
aggregate approach should be viewed as
a change in method of accounting under
section 446 and, if so, whether an adjust-

ment should be imposed under section
481. The Treasury Department and the
IRS determined that the adoption of the
aggregate approach is not a change in
method of accounting. Accordingly, no
adjustment under section 481 should be
imposed.
Further, even if the adoption of the
aggregate approach were considered to
be a change in accounting method, the
Treasury Department and the IRS do not
believe imposing an adjustment under
section 481 would be appropriate as part
of such change. Section 481(a) adjustments are intended to prevent the permanent duplication or omission of income
or expense that would otherwise arise as
a result of a change in accounting method. However, the change to the aggregate
approach under section 958 does not give
rise to an omission or duplication of any
item of income or expense. Under the
prior entity approach, the domestic partnership would be treated as the foreign
corporation’s owner under section 958(a)
and would take into account its applicable section 951 inclusion in its taxable
year in which or with which such foreign
corporation’s taxable year ends. The partnership’s section 951 inclusion would, in
turn, be included in each partner’s distributive share and would be recognized by
each partner in the partner’s taxable year
in which or with which the partnership’s
taxable year ends.
By contrast, under the new aggregate
approach, each U.S. shareholder partner of
the partnership will be treated as an owner of the foreign corporation under section
958(a). As a result, each partner will have
its own section 951 inclusion for the foreign
corporation’s taxable years beginning on or
after January 25, 2022 and will recognize
the section 951 inclusion in its taxable year
in which or with which the foreign corporation’s taxable year ends.2 Therefore, the
partners would not have a permanent duplication or omission of income or expense
that would otherwise arise as a result of a
change in accounting method and require a
section 481(a) adjustment.

In the first taxable year to which the aggregate approach applies, the U.S. shareholder partner could in certain cases have two section 951 inclusions: (1) its distributive share of the partnership’s section 951 inclusion for the CFC’s last taxable year that begins before January 25, 2022, and (2) its own section 951 inclusion for the CFC’s first taxable year beginning on or after
January 25, 2022. However, these inclusions represent subpart F income with respect to two different taxable years of the CFC. Therefore, there is no duplication or omission of the CFC’s
subpart F income to the U.S. shareholder partner.
2

February 14, 2022

486

Bulletin No. 2022–7

Special Analyses
I. Regulatory Planning and Review –
Economic Analysis
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.
II. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520) (‘‘PRA’’) generally requires that a federal agency obtain
the approval of the OMB before collecting
information from the public, whether such
collection of information is mandatory,
voluntary, or required to obtain or retain
a benefit.
There are no information collection
requirements associated with these final
regulations.
III. Regulatory Flexibility Act
It is hereby certified that these final
regulations will not have a significant economic impact on a substantial number of
small entities within the meaning of section 601(6) of the Regulatory Flexibility
Act (5 U.S.C. chapter 6).
The final regulations may affect a substantial number of small entities, but the
economic impact is not likely to be significant. These regulations treat domestic
partnerships as an aggregate of their partners for purposes of section 951, which reduces the burden on taxpayer partners that
are not U.S. shareholders of a CFC owned
by a partnership because these partners
are no longer subject to section 951 inclusions with respect to CFCs held by the
partnership. The regulations may also reduce burden on domestic partnerships that
hold CFCs because these partnerships are
no longer required to calculate their partners’ distributive share of the partnerships’
section 951 inclusions, which will likely

lower their compliance costs. In addition,
the regulations do not impose a collection
of information burden on any person, including small entities.
The Treasury Department and the IRS
estimate that approximately 7,500 U.S.
partnerships that own CFCs e-filed at least
one Form 5471 as Category 4 or 5 filers
in 2018.3 These partnerships had approximately 1.75 million domestic and foreign
partners. To estimate the impact of the
final regulations related to domestic partnerships on small entities, the Treasury
Department and the IRS reviewed the percentage of filers that own CFCs by class
size based on gross receipts. For 2018, the
smaller size classes constituted a relatively small fraction of filers that own CFCs,
suggesting that many domestic small business entities would be unaffected by these
regulations. Further, domestic partnerships should only constitute a portion of
the smaller size classes of filers that own
CFCs.
Consequently, the Treasury Department and the IRS have determined that the
final regulations will not have a significant
economic impact on a substantial number
of small entities. Accordingly, it is hereby certified that these regulations will not
have a significant economic impact on a
substantial number of small entities.
IV. Section 7805(f)
Pursuant to section 7805(f), the proposed regulations preceding the final regulations (the 2019 proposed regulations)
were submitted to the Chief Counsel for
Advocacy of the Small Business Administration for comment on their impact on
small business. No comments were received.
V. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 requires that agencies
assess anticipated costs and benefits and
take certain other actions before issuing a
final rule that includes any Federal mandate that may result in expenditures in any

one year by a state, local, or tribal government, in the aggregate, or by the private
sector, of $100 million in 1995 dollars, updated annually for inflation. These regulations do not include any Federal mandate
that may result in expenditures by state,
local, or tribal governments, or by the private sector in excess of that threshold.
VI. Executive Order 13132: Federalism
Executive Order 13132 (entitled
“Federalism”) prohibits an agency from
publishing any rule that has federalism
implications if the rule either imposes
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. These regulations do
not have federalism implications and do
not impose substantial direct compliance
costs on state and local governments or
preempt state law within the meaning of
the Executive order.
Drafting Information
The principal author of these regulations is Edward J. Tracy of the Office of
Associate Chief Counsel (International).
However, other personnel from the Treasury Department and the IRS participated
in their development.
Statement of Availability of IRS
Documents
IRS Revenue Procedures, Revenue
Rulings, Notices, and other guidance cited
in this document are published in the Internal Revenue Bulletin and are available
from the Superintendent of Documents,
U.S. Government Publishing Office,
Washington, DC 20402, or by visiting the
IRS website at https://www.irs.gov.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.

Data are from IRS's Research, Applied Analytics, and Statistics division based on data available in the Compliance Data Warehouse. Category 4 filer includes a U.S. person who had control
of a foreign corporation during the annual accounting period of the foreign corporation. Category 5 includes a U.S. shareholder who owns stock in a foreign corporation that is a CFC and who
owned that stock on the last day in the tax year of the foreign corporation in that year in which it was a CFC. For full definitions, see https://www.irs.gov/​pub/​irs-pdf/​i5471.pdf.
3

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February 14, 2022

Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805.
*****
Par. 2. Section 1.951-1 is amended by:
1. Adding paragraph (a)(4);
2. Removing paragraph (h);
3. Redesignating paragraph (i) as paragraph (h); and
4. Removing the last sentence of newly
redesignated paragraph (h).
The addition reads as follows:
§1.951-1 Amounts included in gross
income of United States shareholders.
(a) * * *
(4) See §1.958-1(d) for rules regarding the ownership of stock of a foreign
corporation through a domestic partnership for purposes of section 951 and for
purposes of any provision that specifically applies by reference to section 951 or
the regulations in this part under section
951.
*****
Par. 3. Section 1.951A-1 is amended by
revising paragraph (e) to read as follows:
§1.951A-1 General provisions.
*****
(e) Stock owned through domestic
partnerships. See §1.958-1(d) for rules
regarding the ownership of stock of a foreign corporation through a domestic partnership for purposes of section 951A and
for purposes of any provision that specifically applies by reference to section 951A
or the section 951A regulations.
*****
Par. 4. Section 1.956-1 is amended by:
1. Adding a sentence at the end of paragraph (a)(1);
2. Removing the last sentence of paragraph (a)(2)(i);
3. Removing paragraphs (a)(2)(iii) and
(a)(3)(iv);

February 14, 2022

4. Redesignating paragraph (a)(3)(v) as
paragraph (a)(3)(iv);
5. Revising the newly redesignated
paragraph (a)(3)(iv) heading; and
6. Adding a sentence at the end of paragraph (g)(4).
The additions and revision read as follows:
§1.956-1 Shareholder’s pro rata share
of the average of the amounts of United
States property held by a controlled
foreign corporation.
(a) * * * (1) * * * See §1.958-1(d) for
rules regarding the ownership of stock of
a foreign corporation through a domestic partnership for purposes of section
956(a) and for purposes of any provision
that specifically applies by reference to
section 956(a) or the regulations in this
part under section 956 that relate to section 956(a).
*****
(3) * * *
(iv) Example 4. * * *
*****
(g) * * *
(4) * * * For taxable years of controlled foreign corporations beginning before January 25, 2022, and taxable years
of United States shareholders in which or
with which such taxable years of foreign
corporations end, see §1.956-1(a)(2)(i)
and (iii) and (a)(3)(iv) as in effect and contained in 26 CFR part 1, as revised April
1, 2021.
*****
Par. 5. Section 1.958-1 is amended by:
1. Redesignating paragraph (d) as paragraph (f); and
2. Adding a new paragraph (d) and reserved paragraph (e).
The additions read as follows:
§1.958-1 Direct and indirect ownership
of stock.
*****
(d) Stock of foreign corporations
owned through domestic partnerships—
(1) In general. Except as otherwise provided in paragraph (d)(2) of this section,
for purposes of sections 951, 951A, and
956(a), and for purposes of any provision
that specifically applies by reference to

488

any of such sections or the regulations
in this part under section 951, 951A, or
956 (but only as the regulations in this
part under section 956 relate to section
956(a)), a domestic partnership is not
treated as owning stock of a foreign corporation within the meaning of section
958(a). For purposes of determining
the persons that own stock of the foreign corporation within the meaning of
section 958(a) when the preceding sentence applies, stock of a foreign corporation owned by a domestic partnership is
treated in the same manner as stock of a
foreign corporation owned by a foreign
partnership under section 958(a)(2) and
paragraph (b) of this section.
(2) Non-application for certain purposes. Paragraph (d)(1) of this section
does not apply for purposes of—
(i) Determining whether any United
States person is a United States shareholder (as defined in section 951(b));
(ii) Determining whether any foreign
corporation is a controlled foreign corporation (CFC) (as defined in section
957(a));
(iii) Applying section 956(c) and (d);
(iv) Applying section 1248; or
(v) Determining whether any United
States shareholder is a controlling domestic shareholder (as defined in §1.964-1(c)
(5)).
(3) Examples. The following examples illustrate the application of this paragraph (d).
(i) Example 1—(A) Facts. USP, a domestic corporation, and Individual A, a United States citizen
unrelated to USP, own 95% and 5%, respectively, of
PRS, a domestic partnership. PRS owns 100% of the
single class of stock of FC, a foreign corporation.
(B) Analysis—(1) United States shareholder
and CFC determinations. Under paragraphs (d)
(2)(i) and (ii) of this section, respectively, the determination of whether PRS, USP, and Individual
A (each a United States person) are United States
shareholders of FC, and whether FC is a controlled
foreign corporation, is made without regard to paragraph (d)(1) of this section. PRS, a United States
person, owns 100% of the total combined voting
power or value of the FC stock within the meaning of section 958(a). Accordingly, PRS is a United
States shareholder under section 951(b), and FC
is a controlled foreign corporation under section
957(a). USP is also a United States shareholder of
FC because it owns 95% of the total combined voting power or value of the FC stock under sections
958(b) and 318(a)(2)(A). Individual A, however, is
not a United States shareholder of FC because Individual A owns only 5% of the total combined vot-

Bulletin No. 2022–7

ing power or value of the FC stock under sections
958(b) and 318(a)(2)(A).
(2) Application of sections 951 and 951A. Under paragraph (d)(1) of this section, for purposes of
sections 951 and 951A, PRS is not treated as owning (within the meaning of section 958(a)) the FC
stock; instead, for purposes of determining the persons that own the FC stock within the meaning of
section 958(a), the FC stock is treated as if it were
owned by a foreign partnership under paragraph (b)
of this section. Therefore, for purposes of sections
951 and 951A, USP is treated as owning 95% of
the FC stock under section 958(a), and Individual
A is treated as owning 5% of the FC stock under
section 958(a). USP is a United States shareholder
of FC, and therefore USP determines its income inclusions under sections 951 and 951A directly with
respect to FC based on its ownership of FC stock
under section 958(a). However, because Individual
A is not a United States shareholder of FC, Individual A does not have an income inclusion under
section 951 with respect to FC or a pro rata share
of any amount of FC for purposes of section 951A.
This is the case even though PRS is a United States
shareholder of FC.
(ii) Example 2—(A) Facts. USP, a domestic corporation, and Individual A, a United States citizen,
own 90% and 10%, respectively, of PRS1, a domestic partnership. PRS1 and Individual B, a nonresident
alien individual, own 90% and 10%, respectively, of
PRS2, a domestic partnership. PRS2 owns 100% of
the single class of stock of FC, a foreign corporation.
USP, Individual A, and Individual B are unrelated to
each other.
(B) Analysis—(1) United States shareholder
and CFC determinations. Under paragraphs (d)
(2)(i) and (ii) of this section, the determination of
whether PRS1, PRS2, USP, and Individual A (each
a United States person) are United States shareholders of FC, and whether FC is a controlled foreign
corporation, is made without regard to paragraph
(d)(1) of this section. PRS2 owns 100% of the total
combined voting power or value of the FC stock
within the meaning of section 958(a). Accordingly,
PRS2 is a United States shareholder under section
951(b), and FC is a controlled foreign corporation
under section 957(a). Under sections 958(b) and
318(a)(2)(A), PRS1 is treated as owning 90% of
the FC stock owned by PRS2. Accordingly, PRS1
is also a United States shareholder under section
951(b). Further, under section 958(b)(2), PRS1 is
treated as owning 100% of the FC stock for purposes of determining the FC stock treated as owned
by USP and Individual A under section 318(a)(2)
(A). Therefore, USP is treated as owning 90% of
the FC stock under section 958(b) (100% x 100% x
90%), and Individual A is treated as owning 10% of
the FC stock under section 958(b) (100% x 100% x
10%). Accordingly, both USP and Individual A are
also United States shareholders of FC under section
951(b).
(2) Application of sections 951 and 951A.
Under paragraph (d)(1) of this section, for purposes of sections 951 and 951A, PRS1 and PRS2
are not treated as owning (within the meaning of
section 958(a)) the FC stock; instead, for purposes of determining the persons that own the

Bulletin No. 2022–7

FC stock within the meaning of section 958(a),
as the FC stock is treated as if it were owned by
foreign partnerships under paragraph (b) of this
section. Therefore, for purposes of determining
the amount included in gross income under sections 951 and 951A, under section 958(a) USP is
treated as owning 81% (100% x 90% x 90%) of
the FC stock, and Individual A is treated as owning 9% (100% x 90% x 10%) of the FC stock.
Because USP and Individual A are both United
States shareholders of FC, USP and Individual A
determine their respective inclusions under sections 951 and 951A directly with respect to FC
based on their ownership of FC stock under section 958(a). This is the case even though PRS2 is
a United States shareholder of FC.
(iii) Example 3—(A) Facts. Individual A, a
United States citizen, Individual B, a United States
citizen unrelated to Individual A, and Individual
C, a foreign person unrelated to both Individuals
A and B, own 10%, 5%, and 85%, respectively, of
PRS, a domestic partnership. PRS owns 100% of
the single class of stock of FC, a foreign corporation. FC holds an account receivable from PRS that
constitutes an obligation of a United States person
within the meaning of section 956(c)(1)(C) and
§1.956-2(a)(1)(iii).
(B) Analysis—(1) United States shareholder
and CFC determinations. Under paragraphs (d)(2)
(i) and (ii) of this section, respectively, the determination of whether PRS, Individual A, and Individual B (each a United States person) are United
States shareholders of FC, and whether FC is a controlled foreign corporation, is made without regard
to paragraph (d)(1) of this section. PRS, a United
States person, owns 100% of the total combined
voting power or value of the FC stock within the
meaning of section 958(a). Accordingly, PRS is a
United States shareholder under section 951(b),
and FC is a controlled foreign corporation under
section 957(a). Individual A is also a United States
shareholder of FC because it owns 10% of the total
combined voting power or value of the FC stock
under sections 958(b) and 318(a)(2)(A). Individual
B, however, is not a United States shareholder of
FC because Individual B owns only 5% of the total
combined voting power or value of the FC stock
under sections 958(b) and 318(a)(2)(A).
(2) Application of section 956(a). Under paragraph (d)(1) of this section, for purposes of section
956(a), PRS is not treated as owning (within the
meaning of section 958(a)) the FC stock; instead,
for purposes of determining the persons that own
the FC stock within the meaning of section 958(a),
as the FC stock is treated as if it were owned by
a foreign partnership under paragraph (b) of this
section. Therefore, for purposes of section 956(a),
under section 958(a) Individual A is treated as owning 10% of the FC stock, and Individual B is treated
as owning 5% of the FC stock. Individual A is a
United States shareholder of FC, and therefore Individual A determines the amount it must include in
gross income under section 951(a)(1)(B) by reason
of the PRS obligation held by FC based on its ownership of FC stock under section 958(a) as determined under paragraph (d)(1) of this section. However, because Individual B is not a United States

489

shareholder of FC, Individual B does not have an
amount to include in income under sections 956(a)
and 951(a)(1)(B).

(3) Application of section 956(c) and
(d). Under paragraph (d)(2)(iii) of this
section, for purposes of section 956(c)
and (d), the determination of whether
FC holds United States property is made
without regard to paragraph (d)(1) of this
section. Therefore, PRS is treated as owning stock of FC within the meaning of section 958(a) for purposes of determining
the amount of United States property held
by FC arising from its account receivable
from PRS.
(4) Applicability dates—(i) Paragraphs (d)(1) through (3) of this section. Paragraphs (d)(1) through (3) of
this section apply to taxable years of
foreign corporations beginning on or
after January 25, 2022, and to taxable
years of United States persons in which
or with which such taxable years of foreign corporations end. For taxable years
of a foreign corporation that precede the
taxable years described in the preceding
sentence, a domestic partnership may apply paragraphs (d)(1) through (3) of this
section in their entirety to taxable years
of a foreign corporation beginning after
December 31, 2017, and to taxable years
of the domestic partnership in which or
with which such taxable years of the foreign corporation end, provided that the
partnership, its partners that are United
States shareholders of the foreign corporation, and other domestic partnerships
that bear relationships described in section 267(b) or 707(b) to the partnership
(and their United States shareholder
partners) consistently apply paragraphs
(d)(1) through (3) of this section with
respect to all foreign corporations whose
stock the domestic partnerships own
within the meaning of section 958(a) (determined without regard to paragraph (d)
(1) of this section).
(ii) Rules applicable before January
25, 2022. For taxable years of foreign
corporations beginning before January
25, 2022, and to taxable years of United
States persons in which or with which
such taxable years of foreign corporations
end, see §§1.951-1(h) and 1.951A-1(e) as
in effect and contained in 26 CFR part 1,
as revised April 1, 2021.

February 14, 2022

(e) [Reserved]
*****
Par. 6. Section 1.1502-51 is amended
by revising the last sentence in paragraph
(b) to read as follows:
§1.1502-51 Consolidated section 951A.
*****

February 14, 2022

(b) * * * In addition, see §1.951A-1(e)
(cross-referencing §1.958-1(d)).
*****

Lily Batchelder,
Assistant Secretary of the Treasury
(Tax Policy).

Douglas W. O’Donnell,
Deputy Commissioner for Services
and Enforcement.

(Filed by the Office of the Federal Register on January 24, 2021, 8:45 a.m., and published in the issue
of the Federal Register for January 25, 2022, 87 F.R.
3648)

Approved: December 8, 2021.

490

Bulletin No. 2022–7

Part III
2022 Cumulative List of
Changes in Section 403(b)
Requirements for Section
403(b) Pre-approved Plans
Notice 2022-8
I. PURPOSE
This notice sets forth the 2022 Cumulative List of Changes in Section 403(b)
Requirements for Section 403(b) Pre-approved Plans (2022 Cumulative List). The
2022 Cumulative List will assist providers of section 403(b) pre-approved plans
applying to the Internal Revenue Service
(IRS) for opinion letters for the second
remedial amendment cycle (Cycle 2) under the IRS’s section 403(b) pre-approved
plan program. Cycle 2 began on July 1,
2020. The 2022 Cumulative List identifies changes in the requirements of section 403(b) of the Internal Revenue Code
(Code) that will be taken into account by
the IRS with respect to a plan document
submitted to the IRS for Cycle 2 and that
were not taken into account during the
first remedial amendment cycle (Cycle 1).
Section 403(b) plans may be submitted
for approval during the Cycle 2 on-cycle
submission period, which begins May 2,
2022, and ends May 1, 2023.
The list of changes in section IV of
this notice does not extend the deadline
by which a section 403(b) pre-approved
plan must be amended to comply with
any change in the section 403(b) requirements (which are requirements of section
403(b), including requirements provided
in the Code, regulations, and other guidance published in the Internal Revenue
Bulletin). The general deadline for timely adoption of an interim or discretionary
amendment is provided in section 12 of
Rev. Proc. 2019-39, 2019‑42 IRB 945, as
modified by section 4 of Rev. Proc. 202040, 2020-38 IRB 575, and section 22 of
Rev. Proc. 2021-37, 2021-38 IRB 385.

II. BACKGROUND
Rev. Proc. 2021-37 sets forth procedures for issuing opinion letters for section 403(b) pre-approved plans for Cycle
2. In section 13.02 of Rev. Proc. 2021-37,
the IRS announced its intention to publish
a cumulative list for each remedial amendment cycle to identify changes in the
section 403(b) requirements that will be
taken into account with respect to a plan
document submitted to the IRS for that
remedial amendment cycle and that were
not taken into account by the IRS in its
review during any prior remedial amendment cycle. A change in the section 403(b)
requirements includes a statutory change
or a change in the requirements provided
in regulations or other guidance published
in the Internal Revenue Bulletin.
To assist eligible employers in achieving operational compliance, the IRS intends to provide an Operational Compliance List periodically to identify changes
in section 403(b) requirements that are
effective during a calendar year. For the
current Operational Compliance List, see
https://www.irs.gov/retirement-plans/operational-compliance-list.
III. APPLICATION OF THE 2022
CUMULATIVE LIST
The 2022 Cumulative List set forth in
section IV of this notice lists specific items
the IRS has identified for review in determining whether the plan document for a
section 403(b) pre-approved plan that has
been submitted to the IRS for a Cycle 2
opinion letter has been properly updated.1
Except as provided in section IV of this
notice, the IRS will not consider any of the
following items in its review of any opinion letter application for Cycle 2:
1. Guidance (regulations and other
guidance published in the Internal Revenue Bulletin) issued after November 1,
2021.
2. Statutes enacted after November 1,
2021.

3. Statutes, regardless of when they are
enacted, that are first effective in 2022 or
later for which there is no guidance identified in this notice.
4. Section 403(b) requirements that are
first effective in 2023 or later, regardless
of when the section 403(b) requirements
are enacted or issued.
The 2022 Cumulative List sets forth
only changes in section 403(b) requirements that were not taken into account
during Cycle 1. However, in order to satisfy section 403(b) of the Code, a plan must
comply with all relevant section 403(b)
requirements, not only those on the 2022
Cumulative List.
IV. 2022 CUMULATIVE LIST OF
CHANGES IN SECTION 403(b)
REQUIREMENTS FOR SECTION
403(b) PRE-APPROVED PLANS
The 2022 Cumulative List sets forth
items that were enacted or issued after
October 1, 2012. However, if a plan was
not reviewed during Cycle 1, the IRS will
review the plan taking into account items
on the 2022 Cumulative List, as well
as the section 403(b) requirements that
were reviewed during Cycle 1. The section 403(b) requirements reviewed during
Cycle 1 included the final regulations
under section 403(b) and any applicable
requirements of the 2012 Cumulative
List of Changes in Plan Qualification Requirements set forth in Notice 2012‑76,
2012‑52 IRB 775.
1. Section 401(m):
a. Safe Harbor Plans
• Final regulations under section 401(k)
and (m) that were published on November 15, 2013 (TD 9641, 78 FR 68735), (1)
provide guidance on permitted mid-year
reductions or suspensions of safe harbor
nonelective contributions in certain circumstances for amendments adopted after
May 18, 2009 and (2) revise the require-

The 2022 Cumulative List includes items that are specific to section 403(b) plans, as well as items that, although not specific to section 403(b) plans, are applicable to section 403(b)
plans. For example, because § 1.403(b)-6(d)(2) provides that a hardship distribution has the same meaning as a distribution on account of hardship under § 1.401(k)-1(d)(3) and is subject to
the rules and restrictions set forth in § 1.401(k)-1(d)(3), the 2022 Cumulative List includes items that changed hardship distribution requirements under § 1.401(k)-1(d)(3).
1

Bulletin No. 2022–7

491

February 14, 2022

ments for permitted mid-year reductions
or suspensions of safe harbor matching
contributions for plan years beginning on
or after January 1, 2015.
• Notice 2016-16, 2016-7 IRB 318, permits mid-year changes to a section 401(k)
safe harbor plan or section 401(m) safe
harbor plan under certain circumstances
and if certain conditions are satisfied.
• Notice 2020-52, 2020-29 IRB 79,
clarifies the requirements that apply to
a mid-year amendment to a safe harbor
section 401(k) or 401(m) plan that reduces only contributions made on behalf of
highly compensated employees. It also
provides, in connec­
tion with the ongoing Coronavirus Dis­ease 2019 pandemic,
temporary relief (which requires plan language as a condition of obtaining the relief) from certain requirements that would
otherwise apply to a mid‑year amendment
to a safe harbor section 401(k) or 401(m)
plan adopted between March 13, 2020,
and August 31, 2020, that reduces or suspends safe harbor contributions.
• Section 102 of the Setting Every
Community Up for Retirement Enhancement Act of 2019 (SECURE Act),
Pub. L. 116-94, 133 Stat. 2534, amends
section 401(k)(13)(C)(iii) of the Code to
increase the 10-percent cap for automatic
enrollment safe harbor plans (including
certain section 401(m) safe harbor plans).
• Section 103 of the SECURE Act
amends section 401(k) of the Code to
(1) eliminate certain safe harbor notice
requirements for plans (including certain
section 401(m) safe harbor plans) that
provide for safe harbor nonelective contributions and (2) add new provisions for the
retroactive adoption of safe harbor status
for those plans.
• Notice 2020-86, 2020-53 IRB 1786,
provides guidance with re­spect to sections
102 and 103 of the SECURE Act.
b. Definition of Qualified Matching
Contributions
• Proposed regulations under section
401(k) and (m) of the Code that were
published on January 18, 2017 (82 FR
5477), amend the definitions of qualified matching contributions (QMACs)
and qualified nonelective contributions
(QNECs) to provide that QMACs and
QNECs must satisfy applicable nonfor-

February 14, 2022

feitability and distribution requirements
at the time they are allocated to participants’ accounts, but need not meet these
requirements when they are contributed
to the plan. The proposed regulations apply only to taxable years beginning on or
after the publication of final regulations,
but taxpayers may choose to rely on the
proposed regulations upon publication
and for prior periods.
• Final regulations under section 401(k)
and (m) that were published on July 20,
2018 (TD 9835, 83 FR 34469), amend
the definitions of QMACs and QNECs to
provide that QMACs and QNECs must
satisfy applicable nonforfeitability and
distribution requirements at the time they
are allocated to participants’ accounts, but
need not meet these requirements when
they are contributed to the plan.
2. Section 403(b)(7) and (11):
a. In-Plan Roth Rollovers
• Section 902 of the American Taxpayer Relief Act of 2012, Pub. L. 112240, 126 Stat. 2313 (2013), adds section 402A(c)(4)(E) of the Code, which
provides that rollovers from a plan account
to the plan’s designated Roth account may
include a rollover of an otherwise nondistributable amount.
• Notice 2013-74, 2013-52 IRB 819,
provides guidance regarding amounts
transferred to a designated Roth account
as described in section 402A(c)(4)(E)
and also provides guidance that applies
to all in-plan Roth rollovers under section 402A(c)(4).
b. Hardship Distributions
• Section 41113 of the Bipartisan
Budget Act of 2018 (BBA), Pub. L.
115-123, 132 Stat. 64, in part, directs
the Secretary of the Treasury to modify
Treas. Reg. § 1.401(k)‑1(d)(3)(iv)(E) to
delete the 6-month prohibition on contributions after a hardship distribution and to
make any other modifications necessary to
carry out the purposes of section 401(k)
(2)(B)(i)(IV) of the Code.
• Section 41114 of the BBA amends
section 401(k) of the Code to modify
the hardship distribution rules to expand
the sources of hardship distributions to

492

include elective contributions, qualified nonelective contributions, qualified
matching contributions, and earnings
on those contributions. The rules relating to hardship distributions of elective
contributions from a section 401(k) plan
generally apply to section 403(b) plans.
However, because section 403(b)(11) of
the Code was not amended by section
41114 of the BBA, earnings attributable
to section 403(b) elective deferrals continue to be ineligible for hardship distribution.
• Proposed regulations under section
401(k) of the Code that were published
on November 14, 2018 (83 FR 56763),
amend the rules relating to hardship distributions from section 401(k) plans to
reflect statutory changes affecting section
401(k) plans, including changes made by
the BBA. Under the proposed regulations,
the changes to the hardship distribution
rules made by the BBA generally apply
to distributions made in plan years beginning after December 31, 2018. However,
the prohibition on suspending an employee’s elective contributions and employee
contributions as a condition of obtaining
a hardship distribution may be applied as
of the first day of the first plan year beginning after December 31, 2018, even
if the distribution was made in the prior
plan year. In addition, the revised list of
safe harbor expenses for which distributions are deemed to be made on account
of an immediate and heavy financial need
may be applied to distributions made on
or after a date that is as early as January 1,
2018.
• Final regulations under section
401(k) that were published on September
23, 2019 (TD 9875, 84 FR 49651), amend
the rules relating to hardship distributions
from section 401(k) plans to reflect statutory changes affecting section 401(k)
plans, including recent changes made by
the BBA.
c. Lifetime Income Investment Options
• Section 109 of the SECURE Act provides that section 403(b) plans may permit
certain transfers and distributions of lifetime income investment options in cases
in which the investment options are no
longer authorized to be held as investment
options under the plan.

Bulletin No. 2022–7

d. Distribution of Individual Custodial
Accounts Upon Plan Termination
• Section 110 of the SECURE Act provides that the Secretary of the Treasury
shall issue guidance providing that, if an
employer terminates a plan under which
amounts are contributed to a custodial
account un­
der section 403(b)(7) of the
Code, the plan administrator or custodian may distribute an individual custodial
account (ICA) in kind to a participant or
beneficiary of the plan. It also provides
that the distributed custodial account
will be maintained by the custodi­an on a
tax-deferred basis as a section 403(b)(7)
custodial account, similar to the treatment
of fully paid individual annuity contracts
under Rev. Rul. 2011‑7, until amounts are
actually paid to the participant or benefi­
ciary.
• Rev. Rul. 2020-23, 2020-47 IRB 1028,
pursuant to section 110 of the SECURE
Act, provides that, under the situations
described in the revenue ruling, a section
403(b) plan may be ter­minated in accordance with the rules of § 1.403(b)-10(a)
using a distribution of an ICA in kind to a
participant or beneficiary, and such a distribution is not includible in gross income
until amounts are actually paid to the participant or beneficia­ry out of the ICA, so
long as the ICA maintains its status as a
section 403(b)(7) custodial account.
e. Qualified Birth or Adoption
Distributions
• Section 113 of the SECURE Act
amends section 72(t)(2) of the Code to add
a new exception to the 10-percent additional
tax for any qualified birth or adoption distribution. An individual generally may recontribute a qualified birth or adoption distribution (not to exceed the aggregate amount of
all qualified birth and adoption distributions
made to the individual from the plan) to an
applicable eligible retirement plan in which
the individual is a beneficiary and to which
a rollover may be made.
• Notice 2020-68, 2020-38 IRB 567,
provides guidance with respect to the SECURE Act, including section 113 of the
SECURE Act.

3. Section 403(b)(8):

7. Section 415:

• Section 306 of the Protecting Americans from Tax Hikes Act of 2015 (PATH
Act), Pub. L. 114-113, 129 Stat. 2242,
amends section 408(p)(1)(B) of the Code
to permit rollovers from a section 403(b)
plan to a SIMPLE IRA.
• Section 41104 of the BBA adds section 6343(f) of the Code to hold an individual harmless in the case of a wrongful
levy upon an eligible retirement plan. The
eligible retirement plan may permit the
contribution of any property or money returned to the individual as a result of the
wrongful levy, and such contribution will
be treated as a rollover.

• Section 116 of the SECURE Act
amends section 415(c) of the Code to
treat difficulty of care payments that are
excluded from gross income as compensation for determining retirement contribution limitations.
• Notice 2020-68 provides guidance
with respect to the SECURE Act, including section 116 of the SECURE Act.

4. Section 403(b)(9):
• Section 111 of the SECURE Act
amends section 403(b)(9) of the Code to
clarify that an employee described in section 414(e)(3)(B) may be included in a section 403(b)(9) retirement income account.
5. Section 403(b)(10):
• Final regulations under section 401(a)
(9) that were published on July 2, 2014
(TD 9673, 79 FR 37633), provide a limited
modification of the required minimum distribution rules for section 403(b) plans holding qualifying longevity annuity contracts.
• Section 114 of the SECURE Act
amends section 401(a)(9)(C)(i)(I) of the
Code to increase the age with respect to
which the required beginning date for
required minimum distributions is determined from age 70 ½ to age 72.
• Section 401 of the SECURE Act
amends section 401(a)(9) of the Code to
provide new required minimum distribution rules for designated beneficiaries.
6. Section 403(b)(12):
• Notice 2018-95, 2018-52 IRB 1058,
provides transition relief from the “oncein-always-in” condition for excluding parttime employees under § 1.403(b)‑5(b)(4)
(iii)(B), including relief regarding plan
language for section 403(b) pre-approved
plans.

8. Definition of Spouse:
• United States v. Windsor, 570 U.S.
744 (2013). The Supreme Court found
that section 3 of the Defense of Marriage
Act (DOMA), which provides that, in
determining the meaning of any Act of
Congress or of any ruling, regulation, or
interpretation of the various administrative bureaus and agencies of the United
States, the word “marriage” means only
a legal union between one man and one
woman as husband and wife, and the word
“spouse” refers only to a person of the
opposite sex who is a husband or a wife,
is unconstitutional because it violates the
principles of equal protection.
• Rev. Rul. 2013-17, 2013-38 IRB 201,
provides that for Federal tax purposes,
the terms “spouse,” “husband and wife,”
“husband,” and “wife” include an individual married to a person of the same sex
if the individuals are lawfully married
under state law, and the term “marriage”
includes such a marriage between individuals of the same sex, and the IRS adopts
a general rule recognizing a marriage of
same-sex individuals that was validly entered into in a state whose laws authorize
the marriage of two individuals of the
same sex even if the married couple is domiciled in a state that does not recognize
the validity of same-sex marriages.
• Notice 2014-19, 2014-17 IRB 979,
provides guidance on the application
(including the retroactive application) of
the decision in United States v. Windsor,
and the holdings of Rev. Rul. 2013-17, to
retirement plans qualified under section
401(a) of the Code.2
• Notice 2014-37, 2014-24 IRB 1100,
provides guidance on a mid-year amend-

For the application of Notice 2014-19 to section 403(b) plans, see Frequently Asked Question 5 https://www.irs.gov/retirement-plans/application-of-the-windsor-decision-and-post-windsorpublished-guidance-to-qualified-retirement-plans-faqs.
2

Bulletin No. 2022–7

493

February 14, 2022

ment to a section 401(k) safe harbor plan
or section 401(m) safe harbor plan to reflect the outcome of United States v. Windsor, pursuant to Notice 2014-19.
• Final regulations under section 7701
that were published on September 2, 2016
(TD 9785, 81 FR 60609), define terms describing the marital status of taxpayers for
federal tax purposes.
9. Disaster-related Rules:
• Section 502 of the Disaster Tax Relief
and Airport and Airway Extension Act of
2017, Pub. L. 115-63, 131 Stat. 1168, as
amended by section 20201 of the BBA,
provides special disaster-related rules for
use of retirement funds.
• Section 11028 of the Tax Cuts and
Jobs Act of 2017 (TCJA), Pub. L. 11597, 131 Stat. 2054, provides special disaster-related rules for use of retirement
funds.
• Section 20101 of the BBA provides
special disaster-related rules for use of retirement funds.
• Section 202 of the Taxpayer Certainty and Disaster Tax Relief Act of 2019,
Pub. L. 116-94, 133 Stat. 2534, provides
special disaster-related rules for use of retirement funds.
• Section 2202 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Pub. L. 116-136,
134 Stat. 281 (2020), provides special
rules for coronavirus-related distributions
and plan loans made to qualified individuals.
• Notice 2020-50, 2020-28 IRB 35,
provides guidance relating to the application of section 2202 of the CARES Act for
qualified individuals and eligible retirement plans.
• Section 302 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020,
Pub. L. 116-260, 134 Stat. 1182, provides
special disaster-related rules for use of retirement funds.
10. Church Plan Clarification:
• Section 336 of the PATH Act amends
section 414(c) of the Code to provide special rules for church plans for purposes of

1

determining controlled groups, automatic enrollment arrangements, certain plan
transfers and mergers, and investments in
collective trusts.
• Notice 2018-81, 2018-43 IRB 666,
which provides guidance under section
336(a) of the PATH Act, describes the
manner in which taxpayers notify the IRS
of revocation of an election to aggregate
or disaggregate certain church-related
organizations from treatment as a single
employer under section 414(c)(2)(C) and
(D).
V. DRAFTING INFORMATION
The principal author of this notice is
Patrick Gutierrez of the Office of Associate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). For further information regarding this notice, contact Employee Plans at
(513) 975-6319 (not a toll-free number).
26 CFR 1.6012-1: Individuals required to make returns of income.

Rev. Proc. 2022-12
SECTION 1. PURPOSE
.01 This revenue procedure provides
procedures for individuals who are not
otherwise required to file Federal income
tax returns for taxable year 2021 to claim
the child tax credit under § 24, to claim
the 2021 recovery rebate credit under
§ 6428B, and to claim the earned income
credit under § 32.1 Section 2 of this revenue procedure describes these Federal income tax benefits in further detail. Section
3 of this revenue procedure describes the
scope of the procedures provided in this
revenue procedure.
.02 Section 4 of this revenue procedure
provides an electronic filing procedure
for individuals who (i) are not required to
file a Federal income tax return for taxable year 2021 and (ii) had zero adjusted
gross income (AGI) for taxable year 2021.
These individuals generally are not able to
file Federal income tax returns electronically due to certain tax return preparation

software and return processing parameters. Because Federal income tax returns
filed on paper do not pose this processing
issue, section 4 of this revenue procedure
does not apply to a Federal income tax
return filed on paper, although the procedures provided by section 5 and section 6
of this revenue procedure do apply to paper-filed returns.
.03 Section 5 of this revenue procedure
provides a simplified Federal income tax
return filing procedure for individuals
who (i) are not required to file a Federal income tax return for taxable year
2021, (ii) had gross income that was less
than their applicable standard deduction
amount for taxable year 2021, and (iii) are
not eligible for the earned income credit
for taxable year 2021 (for example, because they did not have earned income
during taxable year 2021 for purposes of
the earned income credit) or do not want
to claim the credit.
.04 Section 6 of this revenue procedure
provides a simplified Federal income tax
return filing procedure for individuals who
(i) are not required to file a Federal income tax return for taxable year 2021, (ii)
had gross income that was less than their
applicable standard deduction amount for
taxable year 2021, and (iii) had earned
income during taxable year 2021 for purposes of the earned income credit.
SECTION 2. BACKGROUND
.01 Child Tax Credit for Taxable Year
2021.
(1) Overview. Section 9611(a), (b)(1),
and (b)(2) of the American Rescue Plan
Act of 2021 (American Rescue Plan),
Public Law 117-2, 135 Stat. 4, 144-149
(March 11, 2021), added §§ 24(i), 24(j),
and 7527A to the Code. Section 24(i)
modifies the child tax credit rules set forth
in § 24 for any taxable year beginning after December 31, 2020, and before January 1, 2022 (taxable year 2021).
(2) Credit allowed. Under § 24(a),
a taxpayer may claim a child tax credit
against the taxpayer’s Federal income tax
(as imposed by chapter 1 of subtitle A of
the Code) for the taxable year with respect
to each CTC qualifying child (as defined

Unless otherwise specified, all “section” or “§” references are to sections of the Internal Revenue Code (Code).

February 14, 2022

494

Bulletin No. 2022–7

in section 2.01(5) of this revenue procedure) of the taxpayer.
(3) Credit fully refundable. The child
tax credit for taxable year 2021 is fully
refundable for a taxpayer if the taxpayer (or spouse, if filing a joint return) has
a principal place of abode in the United
States (determined as provided in § 32) for
more than one-half of taxable year 2021.
See § 24(i)(1). Full refundability means
that taxpayers can benefit from the maximum amount of the credit even if they do
not have earned income or do not owe any
Federal income tax for taxable year 2021.
(4) Credit amounts. Taxpayers claiming the child tax credit for taxable year
2021 may receive up to $3,000 for each
CTC qualifying child who is between the
ages of 6 and 17 as of the end of taxable
year 2021 and $3,600 for each CTC qualifying child who is under the age of 6 as of
the end of taxable year 2021. See § 24(i)
(2) and (3).
(5) CTC qualifying child. A “CTC
qualifying child” is a qualifying child of
the taxpayer (as defined in § 152(c)) who
has not attained age of 18 at the close of
taxable year 2021. See § 24(i)(2)(A). No
child tax credit is allowed for a qualifying child unless the social security number
(SSN) of the child, which must be valid for
employment and be issued by the Social
Security Administration before the due
date of the taxpayer’s taxable year Federal
income tax return (including extensions),
is provided on the return. See § 24(h)(7).
If the taxpayer’s child was a U.S. citizen
when the child received the SSN, the SSN
is valid for employment.
(6) Nonresident aliens. Only certain
nonresident aliens who are U.S. nationals; residents of Canada, Mexico, or South
Korea; or students and business apprentices from India who qualify for benefits under Article 21(2) of the income tax treaty
with India may claim the child tax credit
or credit for other dependents (described
in section 2.03 of this revenue procedure).
(7) Reconciliation requirement regarding credit and advance payments.
(a) Overview of reconciliation requirement. Taxpayers who received advance
child tax credit payments (described in
section 2.02(1) of this revenue procedure)
during calendar year 2021 must reduce
(but not below zero) the amount of the
child tax credit claimed for taxable year

Bulletin No. 2022–7

2021 by the total amount of those advance
child tax credit payments. See § 24(j)(1).
If the amount of a taxpayer’s advance
child tax credit payments received in calendar year 2021 exceeds the taxpayer’s
allowable child tax credit for taxable year
2021, the taxpayer’s Federal income tax
imposed for taxable year 2021 will be increased by the excess. See § 24(j)(2)(A).
(b) Safe harbor based on modified AGI.
The amount by which a taxpayer’s Federal income tax for taxable year 2021 is increased by operation of § 24(j)(2)(A) may
be reduced or eliminated if the taxpayer
qualifies for the statutory safe harbor set
forth in § 24(j)(2)(B). Under § 24(j)(2)
(B), a taxpayer’s increase in tax is reduced
by the “safe harbor amount.” The safe
harbor amount is equal to a maximum of
$2,000 multiplied by the difference in the
number of CTC qualifying children the
Internal Revenue Service (IRS) included
when estimating the taxpayer’s advance
child tax credit payments disbursed in
calendar year 2021 and the number of
CTC qualifying children properly taken
into account in determining the allowed
child tax credit amount (excess qualifying
child). See § 24(j)(2)(B)(iv). The safe harbor amount reduces to zero as a taxpayer’s modified AGI exceeds certain income
thresholds. See § 24(j)(2)(B)(ii). Because
the income thresholds of this revenue procedure are lower than those of the safe
harbor, an individual within the scope of
this revenue procedure will qualify for the
full safe harbor and will not have to repay
any increase in tax if the increase in tax
is attributable to the individual’s excess
qualifying children. The increase in tax
will be attributable to the individual’s excess qualifying children if the individual’s
main home was in the United States for
more than half of taxable year 2021.
.02 Advance Child Tax Credit Payments for Calendar Year 2021.
(1) In general. Section 7527A(a) requires the Secretary of the Treasury or
her delegate (Secretary) to establish a program for making periodic advance child
tax credit payments to taxpayers the total
of which, during any calendar year, equals
the “annual advance amount” (as defined
in § 7527A(b)(1)) determined with respect
to that taxpayer for that calendar year.
These advance child tax credit payments
were required to be made between July 1,

495

2021, and December 31, 2021, and generally were disbursed in equal amounts. See
§§ 7527A(a), (b)(3), and (f).
(2) Definition of annual advance
amount. Section 7527A(b)(1) defines the
term “annual advance amount” to mean,
with respect to any taxpayer for any calendar year, the amount (if any) that the
Secretary estimates as being equal to 50
percent of the refundable child tax credit
amount that would be treated as allowed
by reason of § 24(i)(1) for the taxpayer’s
taxable year beginning in that calendar
year if:
(a) The U.S. principal place of abode
status is determined with respect to the
“reference taxable year,” as defined in
§ 7527A(b)(2);
(b) The taxpayer’s modified AGI for
that taxable year is equal to the taxpayer’s
modified AGI for the reference taxable
year;
(c) The only children of the taxpayer
for that taxable year are qualifying children properly claimed on the taxpayer’s
return of tax for the reference taxable
year; and
(d) The ages of those children (and the
status of those children as CTC qualifying
children) are determined for that taxable
year by taking into account the passage of
time since the reference taxable year.
.03 Credit for Other Dependents. For
a taxable year beginning after December
31, 2017, and before January 1, 2026, a
$500 credit may be available for a dependent of the taxpayer (within the meaning
of § 152) who is not a CTC qualifying
child or who is a CTC qualifying child but
does not have an SSN valid for employment. See § 24(h)(4). The credit for other
dependents is not addressed by this revenue procedure because the credit cannot
be claimed unless income tax is owed and
therefore is not applicable to individuals
within the scope of this revenue procedure.
.04 Earned Income Credit.
(1) Overview. The earned income
credit is a refundable credit that low- to
moderate-income individuals and families
may claim. Section 32(a) provides that, in
the case of an eligible individual, there is
allowed as a credit against the tax imposed
by subtitle A of the Code for the taxable
year an amount equal to the credit percentage of so much of the taxpayer’s earned

February 14, 2022

income for the taxable year as does not
exceed the earned income amount.
(2) Amount of credit.
(a) Maximum amounts. For taxable
year 2021, the four maximum amounts of
the earned income credit are the following:
(i) $1,502, if the eligible individual
does not have a “qualifying child,” as defined in § 32(c)(3) (EIC qualifying child),
or if none of the eligible individual’s EIC
qualifying children has a valid SSN;
(ii) $3,618, if the eligible individual
has one EIC qualifying child who has a
valid SSN;
(iii) $5,980, if the eligible individual
has two EIC qualifying children who have
valid SSNs; and
(iv) $6,728, if the eligible individual
has three or more EIC qualifying children
who have valid SSNs.
(b) Factors for determining credit
amount. The amount of the earned income
credit that can be claimed by an eligible
individual depends on the following factors:
(i) The individual’s “earned income
amount,” which is the amount of earned
income at or above which the maximum
amount of the earned income credit is allowed.
(ii) The individual’s “applicable percentage,” which depends on the number
of the individual’s EIC qualifying children, if any.
(iii) The individual’s applicable phaseout amount. With regard to that amount,
each individual has a “threshold phaseout amount” and a “completed phaseout
amount,” both of which depend on the
individual’s income and filing status. The
“threshold phaseout amount” is the amount
of AGI (or, if greater, earned income)
above which the maximum amount of the
credit begins to phase out. The “completed phaseout amount” is the amount of AGI
(or, if greater, earned income) at or above
which no credit is allowed. See generally
§ 32(a), (b), and (n). See also Rev. Proc.
2021-23, 2021-19 I.R.B. 1153.
(3) SSN requirement. To claim the
earned income credit for taxable year
2021, the eligible individual (and spouse,
if filing a joint return) must have a valid
SSN issued by the Social Security Administration by the due date of the individual’s Federal income tax return (including

February 14, 2022

extensions). The individual is not permitted to claim the earned income credit if
the individual’s SSN is not valid for employment and was issued for purposes of
receiving a federally funded benefit. See
generally § 32(c)(1)(E) and (m).
(4) Eligibility.
(a) In general. Individuals who are
eligible to claim the earned income credit include individuals who have an EIC
qualifying child for taxable year 2021, as
well as individuals who do not have an
EIC qualifying child but satisfy the three
following eligibility conditions for taxable
year 2021. See § 32(c)(1)(A). First, the
individual has a principal place of abode
in the United States (determined as provided in § 32) for more than one-half of
taxable year 2021. See § 32(c)(1)(A)(ii)
(I). Second, the individual (or spouse, if
filing a joint return) has attained age 19
(except for specified students who are
eligible to claim the earned income credit if they have attained age 24, and qualified homeless youth or qualified former
foster youth who are eligible to claim the
earned income credit if they have attained
age 18). See § 32(c)(1)(A)(ii)(II) and (n).
Third, the individual is not a dependent
for whom a deduction is allowable under
§ 151 to another taxpayer for taxable year
2021. See § 32(c)(1)(A)(ii)(III).
(b) Eligibility restrictions. An individual who elects for the taxable year to
exclude foreign earned income and housing cost amount under § 911 is not an
eligible individual for that taxable year.
See § 32(c)(1)(C). In addition, an individual is not eligible for the earned income
credit if he or she is a nonresident alien
individual for any portion of taxable year
2021, unless the individual is treated as a
resident of the United States for taxable
year 2021 by reason of having made the
election under § 6013(g) or § 6013(h). See
§ 32(c)(1)(D). Lastly, an individual who is
the EIC qualifying child of a taxpayer for
taxable year 2021 is not eligible to claim
the earned income credit for taxable year
2021. See § 32(c)(1)(B).
.05 2021 Recovery Rebate Credit and
Third-Round Economic Impact Payments.
(1) 2021 recovery rebate credit. Section 9601(a) of the American Rescue
Plan added § 6428B to the Code. Section 6428B(a) provides an eligible individual a refundable tax credit against the

496

eligible individual’s Federal income tax
liability (as imposed by subtitle A of the
Code) for the eligible individual’s taxable
year 2021 (2021 recovery rebate credit).
(a) Definition of eligible individual.
Section 6428B(c) defines the term “eligible individual” for purposes of § 6428B to
mean any individual other than (i) a nonresident alien individual, (ii) an individual
who is a dependent of another taxpayer (as
defined in § 152) for the taxable year, or
(iii) an estate or trust.
(b) Amount of 2021 recovery rebate
credit.
(i) In general. Section 6428B(a) provides that the amount of the 2021 recovery
rebate credit equals the sum of (i) $1,400
per eligible individual ($2,800 in the case
of a joint return) and (ii) an amount equal
to the product of $1,400 multiplied by the
number of the eligible individual’s dependents (within the meaning of § 152).
(ii) Reductions in amount due to lack
of SSN. If an eligible individual does not
have an SSN, or if two eligible individuals who do not have an SSN file a joint
return, § 6428B(e)(2) does not allow the
$1,400 amount for the eligible individual
or the $2,800 amount for the joint return,
but will allow an amount for dependents
(as defined in § 152) with certain taxpayer
identification numbers. Section 6428B(e)
(2) reduces the $2,800 amount for a joint
return to $1,400 if one spouse has an SSN,
one spouse does not have an SSN, and neither spouse was a member of the Armed
Forces of the United States at any time
during the taxable year. Only a dependent
with an SSN or an IRS adoption taxpayer
identification number (ATIN) is counted
for purposes of determining the amount
of the 2021 recovery rebate credit. See
§ 6428B(e)(2)(C) and (D). For purposes
of qualifying for the 2021 recovery rebate
credit, any type of SSN is sufficient if it
was issued by the Social Security Administration by the due date of the eligible individual’s 2021 Federal income tax return
(including extensions). See § 6428B(e)(2)
(D)(i).
(iii) Reduction in amount due to AGI.
Section 6428B(d) provides phaseouts of
the credit amount based on an eligible individual’s AGI.
(iv) Reduction in amount due to receipt
of advance payments. Section 6428B(f)
reduces the 2021 recovery rebate credit

Bulletin No. 2022–7

amount that an eligible individual may
claim by the aggregate refunds allowed
to the eligible individual as an advance
refund in calendar year 2021 (that is,
through the receipt of one or more thirdround economic impact payments).
(2) Economic impact payments. Section 6428B(g) addresses the payment
of advanced refunds and credits during
calendar year 2021. It authorized a third
round of economic impact payments
which followed two earlier rounds of advance refunds and credits for taxable year
2020. See §§ 6428(f) (regarding the first
round of economic impact payments),
6428A(f) (regarding the second round of
economic impact payments). All thirdround economic impact payments under
§ 6428B(g) have been disbursed.
.06 Revenue Procedure 2021-24. Rev.
Proc. 2021-24, 2021-29 I.R.B. 19, provided two procedures for individuals not
otherwise required to file 2020 Federal income tax returns to file returns to receive
certain tax benefits. The first procedure,
set forth in section 4 of Rev. Proc. 202124, permitted these individuals to file simplified returns to (i) receive advance child
tax credit payments during calendar year
2021, (ii) claim the 2020 recovery rebate
credit, (iii) claim the additional 2020 recovery rebate credit, and (iv) receive the
third-round economic impact payment.
The second procedure, set forth in section
5 of Rev. Proc. 2021-24, enabled these individuals who have zero AGI to file complete returns electronically to receive (i)
advance child tax credit payments during
calendar year 2021 and (ii) the third-round
economic impact payment.
SECTION 3. SCOPE
.01 Overview. This revenue procedure
allows individuals who are not required
to file a Federal income tax return for
taxable year 2021 to provide information
to the IRS to claim the child tax credit,
the 2021 recovery rebate credit, and the
earned income credit, as well as for other
purposes. Section 4 of this revenue procedure allows individuals described in
that section to provide this information
through an electronically filed return. The
procedures set forth in section 5 and section 6 of this revenue procedure allow the

Bulletin No. 2022–7

individuals described in those sections to
provide this information in the form of a
simplified return, whether filed on paper
or electronically.
.02 Purposes of Zero AGI Filing Procedure under Section 4. The Department
of the Treasury and the IRS are aware
that individuals otherwise not required
to file Federal income tax returns for taxable year 2021 may want to file Federal
income tax returns electronically. These
individuals may use tax return preparation software that does not permit them
to file pursuant to a simplified procedure
provided by section 5 or section 6 of this
revenue procedure, or the individuals
may need to file complete Federal income
tax returns to receive certain State or local benefits. Many Federal income tax returns, however, cannot be filed electronically if the filer reports an AGI of zero
(as opposed to an AGI of $1 or more) and
does not claim the 2021 recovery rebate
credit, the child tax credit, or any amount
as a refund. To facilitate the processing
of electronic returns filed by individuals
with zero AGI who are not otherwise required to file Federal income tax returns,
section 4 of this revenue procedure provides a procedure for these individuals to
file complete electronic Federal income
tax returns.
.03 Purpose of Simplified Filing Procedure under Section 5. Section 5 of this
revenue procedure provides a simplified
filing procedure that permits individuals
who are not required to file a Federal income tax return for taxable year 2021 to
receive certain Federal income tax benefits. Specifically, individuals who file a
Federal income tax return for taxable year
2021 in accordance with section 5 of this
revenue procedure may provide necessary
information to claim (i) the child tax credit for taxable year 2021 and (ii) the 2021
recovery rebate credit.
.04 Purpose of Simplified Filing Procedure under Section 6. Section 6 of this
revenue procedure provides a simplified
filing procedure that permits individuals
who are not required to file a Federal income tax return for taxable year 2021,
but who earned income during 2021 and
are eligible to claim the earned income
credit, to receive certain Federal income
tax benefits. Specifically, eligible indi-

497

viduals who file a Federal income tax return for taxable year 2021 in accordance
with section 6 of this revenue procedure
may provide necessary information to
claim (i) the earned income credit for taxable year 2021, (ii) the child tax credit for
taxable year 2021, and (iii) the 2021 recovery rebate credit. This procedure also
permits individuals to claim a refund of
withheld Federal income tax for taxable
year 2021.
.05 U.S. Territory Residents Not Eligible. The procedures provided by this revenue procedure do not apply to a resident
of American Samoa, Guam, the Commonwealth of the Northern Mariana Islands,
the Commonwealth of Puerto Rico (Puerto Rico), or the U.S. Virgin Islands (each,
a U.S. territory). A resident of a U.S. territory should contact their local territory tax
agency for additional information about
the earned income credit, the child tax
credit, and the 2021 recovery rebate credit.
However, a resident of Puerto Rico should
refer to Form 1040-PR, Planilla para la
Declaración de la Contribución Federal
sobre el Trabajo por Cuenta Propia, or
Form 1040-SS, U.S. Self-Employment Tax
Return, and their instructions, to claim the
child tax credit for taxable year 2021.
.06 Individuals Who Are Required to
File a 2021 Federal Income Tax Return
Not Eligible. The procedures provided by
this revenue procedure do not apply to individuals who are required to file Federal
income tax returns for taxable year 2021
(for example, individuals reconciling advance payment of the premium tax credit
under § 36B).
.07 Individuals Who Previously Filed
a 2021 Federal Income Tax Return Not
Eligible. The procedures provided by
this revenue procedure do not apply to
individuals who already filed a paper or
electronic Federal income tax return for
taxable year 2021. Such individuals do
not need to file any additional forms or
otherwise contact the IRS to claim (i) the
earned income credit for themselves and
each EIC qualifying child, (ii) the child
tax credit for each CTC qualifying child,
or (iii) a 2021 recovery rebate credit for
themselves and each eligible dependent
(as defined in § 152), if those credits were
claimed on the previously filed return for
taxable year 2021.

February 14, 2022

SECTION 4. SPECIAL PROCEDURE
FOR ZERO AGI FILERS
.01 Federal Income Tax Return Filed
Electronically.
(1) Electronic filing procedure. Subject
to section 4.01(2) of this revenue procedure, under the requirements in this section 4, a zero AGI filer may file electronically Form 1040, U.S. Individual Income
Tax Return, Form 1040-SR, U.S. Tax Return for Seniors, or Form 1040-NR, U.S.
Nonresident Alien Income Tax Return, for
taxable year 2021.
(2) Procedure does not apply to paper returns. The special procedure in this
section 4 applies only to an electronically
filed return for a zero AGI filer and does
not apply to a return filed on paper.
.02 Definition of Zero AGI Filer. For
purposes of this section 4, a “zero AGI
filer” is an individual-(1) Who is not required to file a Federal
income tax return for taxable year 2021;
(2) Who has gross income for taxable
year 2021 that is less than their applicable
standard deduction amount;
(3) Who has zero AGI for taxable year
2021 (that is, the individual has zero AGI
for taxable year 2021 reportable on line 11
of Form 1040, Form 1040-SR, or Form
1040-NR);
(4) Who has not already filed a Federal
income tax return for taxable year 2021;
(5) Who—
(a) has a principal place of abode in the
United States (determined as provided in
§ 32) for more than one-half of taxable
year 2021, or
(b) files a joint return with an individual who satisfies the requirement described
in section 4.02(5)(a) of this revenue procedure; and
(6) Who is not a resident of a U.S. territory.
.03 Required Information. In addition
to all other information required to be entered on Form 1040, Form 1040-SR, or
Form 1040-NR, a zero AGI filer must enter the following:
(1) $1 as taxable interest on line 2b of
the form;
(2) $1 as total income on line 9 of the
form; and
(3) $1 as AGI on line 11 of the form.
.04 Signature. A zero AGI filer must
sign the return under penalties of perju-

February 14, 2022

ry, including the filer’s identity protection
personal identification number (that is,
the filer’s IP PIN), if applicable, as part
of the filer’s signature. In addition, a zero
AGI filer may enter the identifying information of any third-party designee, if applicable, at the bottom of page 2 of Form
1040, Form 1040-SR, or Form 1040-NR.
A zero AGI filer who has been assigned an
IP PIN, but has misplaced it, may retrieve
the IP PIN at https://www.irs.gov/identitytheft-fraud-scams/retrieve-your-ip-pin.
.05 Accuracy of Return. Individuals
who report incorrect information regarding qualifying children or other dependents or otherwise provide incorrect information on their returns may be liable for
civil or criminal penalties. However, the
IRS will not challenge the accuracy of the
items of income reported on a return that
an individual files in accordance with this
section 4 if the individual is eligible to use
the procedure in this section 4 and the instructions in this section 4 direct that the
items be so reported.
SECTION 5. SPECIAL PROCEDURE
FOR CTC/RRC FILERS
.01 Federal Income Tax Return Filed
on Paper or Electronically. Under the
simplified procedure set forth in this section 5, a simplified return may be filed, on
paper or electronically, for taxable year
2021 on a Form 1040, Form 1040-SR, or
Form 1040-NR. A Federal income tax return for taxable year 2021 filed under the
simplified procedure in this section 5 will
result in the following:
(1) The CTC/RRC filer may claim the
child tax credit for taxable year 2021.
(2) The CTC/RRC filer may claim the
2021 recovery rebate credit for taxable
year 2021. A nonresident alien is not eligible under § 6428B(c)(1) to claim the 2021
recovery rebate credit.
.02 Definition of CTC/RRC Filer. For
purposes of this section 5, a “CTC/RRC
filer” is an individual—
(1) Who is not required to file a Federal
income tax return for taxable year 2021;
(2) Who has gross income for taxable
year 2021 that is less than their applicable
standard deduction amount;
(3) Who has not already filed a paper
or electronic Federal income tax return for
taxable year 2021;

498

(4) Who has an SSN or IRS individual
taxpayer identification number (ITIN);
(5) Who-(a) has a principal place of abode in the
United States (determined as provided in
§ 32) for more than one-half of taxable
year 2021, or
(b) files a joint return with an individual who satisfies the requirement described
in section 5.02(5)(a) of this revenue procedure; and
(6) Who is not a resident of a U.S. territory.
.03 Simplified Filing Method.
(1) Overview. In the case of a CTC/
RRC filer, the IRS will process the filer’s
Form 1040, Form 1040-SR, or Form 1040NR for taxable year 2021 to calculate the
Federal income tax benefits described in
section 5.01 of this revenue procedure
if the form is prepared in the manner required by this section 5.03. The Form
1040, Form 1040-SR, or Form 1040-NR
must include the information described in
this section 5.03.
(2) Write Rev. Proc. 2022-12 on form.
A CTC/RRC filer who files the Form
1040, Form 1040-SR, or Form 1040-NR
on paper must indicate “Rev. Proc. 202212” above the printed material at the top
of page 1.
(3) Required general information.
(a) Filing status. A CTC/RRC filer
must select their filing status for taxable
year 2021 at the top of Form 1040, Form
1040-SR, or Form 1040-NR.
(b) Personal information. A CTC/RRC
filer must enter their name, mailing address, and SSN or ITIN, and the name and
SSN or ITIN of their spouse if filing a joint
return, on the appropriate lines of Form
1040, Form 1040-SR, or Form 1040-NR.
(4) Individuals who could be claimed
as dependents by other individuals. A
CTC/RRC filer must check the applicable
boxes in the top line of the “Standard Deduction” section of the Form 1040, Form
1040-SR, or Form 1040-NR for each individual who can be claimed as a dependent
by any other individual for taxable year
2021.
(5) General information regarding dependents.
(a) In general. A CTC/RRC filer should
complete the appropriate lines in the “Dependents” section of Form 1040, Form
1040-SR, or Form 1040-NR regarding

Bulletin No. 2022–7

each dependent for taxable year 2021 who
has an SSN or an ATIN. For each individual claimed as a dependent, a CTC/RRC
filer must provide the name, SSN or ATIN,
and relationship to the individual.
(b) CTC qualifying children. A CTC/
RRC filer should check the child tax credit box in Column (4) of the “Dependents”
section for each dependent who is a CTC
qualifying child for taxable year 2021 who
has an SSN that is valid for employment.
(6) Limited information to provide in
lines 1 through 38. A CTC/RRC filer must
leave blank lines 1 through 38 of Form
1040, Form 1040-SR, or Form 1040-NR
even if the values for these lines are in fact
not zero, except as provided in this section
5.03(6):
(a) Line 12 (standard deduction or
itemized deductions). A CTC/RRC filer
must enter the applicable standard deduction amount for their filing status on line
12a (standard deduction or itemized deductions) and line 12c (sum of lines 12a
and 12b). The filer must leave line 12b
blank.
(b) Line 14 (sum of lines 12c and 13).
A CTC/RRC filer must enter the amount
entered on line 12c.
(c) Line 15 (taxable income). A CTC/
RRC filer must enter $0 on line 15.
(d) Line 28 (2021 child tax credit entry).
A CTC/RRC filer may enter the amount of
the filer’s child tax credit for taxable year
2021 on line 28. The credit amount may
be computed using Schedule 8812 (Form
1040), available at https://www.irs.gov/
Schedule8812, and information from the
filer’s Letter 6419 or the filer’s IRS online
account at https://www.irs.gov/account.
must attach the Schedule 8812 to the filer’s Form 1040, Form 1040-SR, or Form
1040-NR. Providing the correct amount of
the filer’s child tax credit for taxable year
2021 will allow for faster processing of
the return and issuance of any tax refund.
The IRS will correct any incorrect amount
claimed on line 28, but the correction will
delay processing of the return and the issuance of any tax refund.
(e) Line 30 (2021 recovery rebate credit entry). A CTC/RRC filer may enter the
amount of the filer’s 2021 recovery rebate
credit on line 30. The credit amount may
be computed using the Recovery Rebate
Credit Worksheet for line 30 in the 2021
Instructions for Form 1040 and Form

Bulletin No. 2022–7

1040-SR, available at https://www.irs.
gov/Form1040, and information from the
filer’s Letter 6475 or the filer’s IRS online
account at https://www.irs.gov/account.
Providing the correct amount of the filer’s 2021 recovery rebate credit will allow for faster processing of the return and
issuance of any tax refund. The IRS will
correct any incorrect amount (other than
$0) claimed on line 30, but the correction
will delay processing of the return and the
issuance of any tax refund.
(f) Lines 32 through 35a. A CTC/RRC
filer must enter the sum of lines 28 and 30
on lines 32 through 35a.
(g) Line 35a checkbox (split direct deposit indicator). A CTC/RRC filer may
not check the box on line 35a.
(h) Lines 35b through 35d (direct deposit information). A CTC/RRC filer may
request the direct deposit of their taxable
year 2021 tax refund into an account at
a bank or other financial institution by
entering the information on lines 35b
through 35d. The CTC/RRC filer must not
request their taxable year 2021 tax refund
be deposited into an account that is not in
the name of that filer (for example, a CTC/
RRC filer must not request a direct deposit
of their taxable year 2021 tax refund into
their tax return preparer’s account).
.04 Signature. A CTC/RRC filer must
sign the return under penalties of perjury,
including the filer’s identity protection
personal identification number (that is,
the filer’s IP PIN), if applicable, as part of
the filer’s signature. In addition, the CTC/
RRC filer may enter the identifying information of any third-party designee, if applicable, at the bottom of page 2 of Form
1040, Form 1040-SR, or Form 1040-NR.
A CTC/RRC filer who has been assigned
an IP PIN, but has misplaced it, may retrieve the IP PIN at https://www.irs.gov/
identity-theft-fraud-scams/retrieve-yourip-pin.
.05 Simplified Return Is a Federal Income Tax Return. A simplified return completed in accordance with the procedure
described in section 5.03 of this revenue
procedure is a taxable year 2021 Federal
income tax return for all purposes, whether filed on paper or electronically.
.06 Accuracy of Return. Individuals
who report incorrect information regarding qualifying children or other dependents or otherwise provide incorrect infor-

499

mation on simplified returns may be liable
for civil or criminal penalties. However,
the IRS will not challenge the omission of
the items of income on a simplified return
that an individual files in accordance with
this section 5 if the individual is eligible to
use the procedure i

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3Ac767cf07596d4591. Public record. Not legal advice.