Bulletin No. 2020–43

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2020–43

October 19, 2020

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

Notice 2020-70, page 913.

This notice modifies Notice 2011-26 (2011-17 I.R.B. 720)

to generally remove Form 1040-NR, U.S. Nonresident Alien

Income Tax Return, from the list of returns that are administratively exempt from the electronic filing requirement imposed on specified tax return preparers by section 6011(e)

(3) and to provide the circumstances under which the Form

1040-NR remains subject to the exemption. This notice also

provides that future updates to the list of returns in Notice

2011-26 that are administratively exempt from the electronic

filing requirement due to IRS e-file limitations will be set forth

in IRS Publication 4164, Modernized e-File (MeF) Guide for

Finding Lists begin on page ii.

Software Developers and Transmitters. This notice applies

to taxable years ending on or after December 31, 2020.

EMPLOYMENT TAX

T.D. 9920, page 909.

This document sets forth a final regulation that provides

rules for Federal income tax withholding on certain periodic

retirement and annuity payments to implement an amendment made by the Tax Cuts and Jobs Act. This final regulation affects payors of certain periodic payments, plan

administrators that are required to withhold on such payments, and payees who receive such payments.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

October 19, 2020 

Bulletin No. 2020–43

Part I

Section 3405.— Special

Rules for Pensions,

Annuities, and Certain

Other Deferred Income

26 CFR 31.3405(a)-1: Questions and answers relating to Federal income tax withholding on periodic

retirement and annuity payments

T. D. 9920

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Parts 31 and 35

Income Tax Withholding

on Certain Periodic

Retirement and Annuity

Payments Under Section

3405(a)

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulation.

SUMMARY: This document sets forth

a final regulation that provides rules for

Federal income tax withholding on certain

periodic retirement and annuity payments

to implement an amendment made by the

Tax Cuts and Jobs Act. This regulation af‑

fects payors of certain periodic payments,

plan administrators that are required to

withhold on such payments, and payees

who receive such payments.

DATES: Effective Date: This regulation is

effective October 1, 2020.

Applicability Date: For the appli‑

cability date of this regulation, see

§31.3405(a)‑1(d).

FOR FURTHER INFORMATION CON‑

TACT: Kara M. Soderstrom of the Office

of Associate Chief Counsel (Employee

Benefits, Exempt Organizations, and Em‑

ployment Taxes) at (202) 317-5234 (not a

toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This document sets forth an amendment

to the Employment Tax Regulations (26

CFR parts 31 and 35) under section 3405

of the Internal Revenue Code (Code).

1. Periodic Payments

Section 3405 provides Federal in‑

come tax withholding rules for payments

of pensions, annuities, and certain other

deferred income (retirement and annu‑

ity payments). Retirement and annuity

payments that are subject to withholding

under section 3405 include periodic pay‑

ments, nonperiodic distributions, and eli‑

gible rollover distributions.

A periodic payment is defined in sec‑

tion 3405(e)(2) as “a designated distri‑

bution which is an annuity or similar

periodic payment.” Subject to certain ex‑

ceptions,1 a designated distribution gener‑

ally is defined in section 3405(e)(1)(A) as

any distribution or payment from or under

an employer deferred compensation plan,

an individual retirement plan (as defined

in section 7701(a)(37)), or a commercial

annuity. For this purpose, an employer

deferred compensation plan is defined in

section 3405(e)(5) as any pension, annu‑

ity, profit-sharing, or stock bonus plan or

other plan deferring the receipt of com‑

pensation, and a commercial annuity is

defined in section 3405(e)(6) as an annu‑

ity, endowment, or life insurance contract

issued by an insurance company licensed

to do business under the laws of any State.

Section 35.3405-1T, Q&A a-9, provides

that a periodic payment includes an annu‑

ity or similar periodic payment, whether

paid by a licensed life insurance company,

a financial institution, or a plan, and that

an “annuity” is a series of payments pay‑

able over a period greater than one year

and taxable under section 72 as amounts

received as an annuity, whether or not the

payments are variable in amount.

2. Withholding on Periodic Payments

Section 3405(a) requires the payor of

any periodic payment to withhold from

the payment as if the payment were wages

paid by an employer to an employee, un‑

less an individual has elected under sec‑

tion 3405(a)(2) not to have withholding

apply, subject to the following exceptions.

First, section 3405(c)(1)(A) provides that

section 3405(a) does not apply in the case

of any designated distribution that is an

eligible rollover distribution (as defined

in section 402(f)(2)(A)). Second, section

3405(e)(12) provides that no election un‑

der section 3405(a)(2) will be treated as

in effect (and the provisions of section

3405(a)(4) for determining the default

rate of withholding will not apply) if a

payee fails to furnish the payee’s Taxpayer

Identification Number (TIN) to the payor

in the manner required by the Secretary

or the Secretary notifies the payor before

any payment or distribution that the TIN

furnished by the payee is incorrect. Third,

under section 3405(e)(13), no election un‑

der section 3405(a)(2) may be made with

respect to certain periodic payments to be

delivered outside of the United States and

its possessions.

3. Default Rate of Withholding on

Periodic Payments and TCJA Amendment

Before amendment by the Tax Cuts

and Jobs Act, Public Law 115-97, 131

Stat. 2054 (2017) (TCJA), section 3405(a)

(4) provided that, in the case of any pe‑

1

Under section 3405(e)(1)(B), a designated distribution does not include any amount that is wages without regard to section 3405; the portion of a distribution or payment (excluding any

distribution or payment from or under an individual retirement plan, other than a Roth IRA) which it is reasonable to believe is not includible in gross income; any amount that is subject to

withholding under subchapter A of chapter 3 (relating to withholding of tax on nonresident aliens and foreign corporations) by the person paying such amount or which would be so subject

but for a tax treaty; or any distribution described in section 404(k)(2) (relating to distributions of “applicable dividends” by an employee stock ownership plan).

Bulletin No. 2020–43

909

October 19, 2020

riodic payment with respect to which a

withholding certificate is not in effect,

the amount withheld from the periodic

payment is “determined by treating the

payee as a married individual claiming 3

withholding exemptions.” TCJA amend‑

ed section 3405(a)(4) to eliminate the

requirement that the payee be treated as

a married individual claiming three with‑

holding exemptions and to provide instead

that, in the case of any periodic payment

with respect to which a withholding cer‑

tificate is not in effect, the amount with‑

held from the periodic payment will be

“determined under rules prescribed by the

Secretary.” However, certain provisions of

§35.3405-1T continued to reflect the rule

under section 3405(a)(4) prior to amend‑

ment by TCJA.

Following enactment of TCJA, the

Department of the Treasury (Treasury De‑

partment) and the IRS issued three notices

addressing this change to section 3405(a)

(4). These notices provide that, for calen‑

dar years 2018, 2019, and 2020, the default

rate of withholding on periodic payments

under section 3405(a) is based on treating

the payee as a married individual claiming

three withholding allowances. See Notice

2020-3, 2020-3 I.R.B. 330 (for 2020);2

Notice 2018-92, 2018‑51 I.R.B. 1038 (for

2019); and Notice 2018-14, 2018-7 I.R.B.

353 (for 2018).

4. Notice of Proposed Rulemaking

On May 27, 2020, the Treasury De‑

partment and the IRS published a notice

of proposed rulemaking (proposed regu‑

lation) (REG-100320-20) in the Federal

Register (85 FR 31714) that proposed to

update certain provisions of §35.3405-1T

to conform to the TCJA change to sec‑

tion 3405(a)(4). Specifically, the notice of

proposed rulemaking proposed to remove

from §35.3405-1T Q&As a-10, b-3, and

b-4, which each provided that the default

rate of withholding on periodic payments

is determined by treating the payee as

married and claiming three withholding

allowances, and to update and replace the

provisions of each of these three Q&As

with new §31.3405(a)-1. These changes

are explained in detail in the preamble to

the proposed regulation.

The IRS did not receive any requests

for a public hearing on the proposed

regulation, and therefore no public hear‑

ing was held. All written comments re‑

sponding to the proposed regulation

are available for public inspection and

copying at http://www.regulations.gov

or upon request. After consideration of

the comments received on the proposed

regulation, this Treasury decision adopts

the proposed regulation as final with no

modifications, as explained in the Sum‑

mary of Comments and Explanation of

Provisions.

Summary of Comments and

Explanation of Provisions

The Treasury Department and the IRS

received two written comments that re‑

sponded to the proposed regulation. As

explained in this Summary of Comments

and Explanation of Provisions, these com‑

ments make recommendations regarding

the default rate of withholding on periodic

payments that would not require a change

to the proposed regulation. Accordingly,

the proposed regulation is adopted as fi‑

nal without modification. However, the

comments remain under consideration

for future revisions to forms, instructions,

publications, and other guidance relating

to withholding on periodic payments,

including revisions to the Form W-4P,

“Withholding Certificate for Pension or

Annuity Payments.”

1. Default Rate of Withholding on

Periodic Payments

The proposed regulation proposed to

remove Q&As a-10, b-3, and b-4 from

§35.3405-1T because they prescribed

the substantive default rate of withhold‑

ing rule under section 3405(a)(4) prior

to amendment by TCJA. Specifically,

the proposed regulation proposed to up‑

date and replace the provisions of each of

these three Q&As with new §31.3405(a)1, which provides that the default rate of

withholding on periodic payments made

after December 31, 2020, is determined

in the manner described in the applicable

forms, instructions, publications, and oth‑

er guidance prescribed by the Commis‑

sioner.

Both responsive comments recom‑

mend that the default rate of withholding

on periodic payments be a flat 10 percent

rate, rather than a rate based on Federal

income tax withholding on wages, to sim‑

plify the default rate of withholding on pe‑

riodic payments and provide transparency,

flexibility, efficiency, and accuracy.

The proposed regulation did not set

forth a specific default rate of withhold‑

ing on periodic payments, instead provid‑

ing a flexible and admininstrable rule that

leaves the communication and mechanical

details of the default rate of withholding

on periodic payments to be provided in

applicable forms, instructions, publica‑

tions, and other guidance prescribed by

the Commissioner. This approach enables

the Treasury Department and the IRS to

make updates more quickly, including to

address legislative changes, to provide

payors and plan administrators processing

payments adequate time to program their

systems to withhold the proper amount of

income tax. Accordingly, this final regula‑

tion adopts the proposed regulation with‑

out modification.

2. Implementation of a New Default Rate

of Withholding on Periodic Payments

As an alternative to a flat 10 percent

rate for the default rate of withholding

on periodic payments, both comments

recommend that a new default rate of

withholding on periodic payments apply

prospectively only and have a January 1

(rather than a mid‑year) effective date.

The comments additionally recommend a

January 1 effective date that is at least two

full years after the end of the 2020 calen‑

dar year (or at least two full years after the

Notice 2020-3 also provides that the Treasury Department and the IRS are considering whether the default rate of withholding on periodic payments that is in effect for 2020 will continue

to be appropriate for calendar years after 2020 and requests comments on whether the adoption of a new default rate of withholding on periodic payments that applies prospectively would

present any administrative challenges. One comment was received on this issue (available at: https://www.regulations.gov/document?D=IRS-2019-0051-0004). The commenter provides sug‑

gestions regarding the effective date and prospective application of any change to the default rate of withholding on periodic payments and suggestions regarding the applicable withholding

tables for periodic payments for calendar years after 2020.

2

October 19, 2020

910

Bulletin No. 2020–43

end of the calendar year for which Form

W-4P is redesigned to mirror Form W-4,

“Employee’s Withholding Certificate,” if

later), in order to provide payors time to

update their systems, forms, and proce‑

dures. (The comments also recommend

avoiding a mid-year implementation

deadline for any revised version of Form

W-4P that reflects changes made to Form

W‑4 in light of TCJA.)

The proposed regulation did not speci‑

fy an effective date for a new default rate

of withholding on periodic payments or

how a new default rate of withholding

should be applied. Although the proposed

regulation was proposed to apply to peri‑

odic payments made after December 31,

2020, this applicability date describes the

periodic payments for which the default

rate of withholding is determined in the

manner described in the applicable forms,

instructions, publications and other guid‑

ance prescribed by the Commissioner. The

effective date and application of a new de‑

fault rate of withholding on periodic pay‑

ments, like the default rate of withholding

on periodic payments itself, would be

described in that guidance. The proposed

approach provides a flexible and adminin‑

strable rule that leaves the communication

and mechanical details of the default rate

of withholding on periodic payments to

be provided in applicable forms, instruc‑

tions, publications, and other guidance

prescribed by the Commissioner that may

be updated more quickly, including to

address legislative changes. Accordingly,

this final regulation adopts the proposed

regulation without modification.

Effective and Applicability Dates

This regulation is effective October 1,

2020. This regulation applies to periodic

payments made after December 31, 2020.

Special Analyses

1. Regulatory Planning and Review

This final regulation is not subject to re‑

view under section 6(b) of Executive Or‑

der 12866 pursuant to the Memorandum

of Agreement (April 11, 2018) between

the Treasury Department and the Office

of Management and Budget regarding re‑

view of tax regulations.

Bulletin No. 2020–43

2. Paperwork Reduction Act

Any collection of information associat‑

ed with this final regulation has been sub‑

mitted to the Office of Management and

Budget (OMB) for review under OMB

control number 1545-0074 in accordance

with the Paperwork Reduction Act of

1995 (44 U.S.C. 3507(d)). In general, the

collection of information is required un‑

der section 3405 of the Code. The Trea‑

sury Department and the IRS request

comments on all aspects of information

collection burdens related to this final reg‑

ulation, including estimates for how much

time it would take to comply with the pa‑

perwork burdens described in OMB con‑

trol number 1545-0074 and ways for the

IRS to minimize the paperwork burden.

An agency may not conduct or sponsor

and a person is not required to respond to

a collection of information unless it dis‑

plays a valid OMB control number.

3. Regulatory Flexibility Act

Under the Regulatory Flexibility Act

(RFA) (5 U.S.C. chapter 6), it is hereby

certified that this final regulation will not

have a significant economic impact on a

substantial number of small entities that

are directly affected by the final regulation.

This final regulation will apply to all pay‑

ors of periodic payments, including small

entities, and is likely to affect a substantial

number of small entities. The economic

impact, however, will not be significant.

The primary change is to effect a TCJA

legislative amendment to remove the ref‑

erence in section 3405(a)(4) to a married

individual claiming three exemptions as

the default withholding rate and to provide,

in its place, that the amount to be withheld

is determined pursuant to the applicable

forms, instructions, publications, and other

guidance prescribed by the Commissioner.

Accordingly, this rule would conform the

current regulation to the statute and will

not have a significant economic impact on

a substantial number of small entities.

Pursuant to section 7805(f), the notice

of proposed rulemaking preceding this

regulation was submitted to the Chief

Counsel for Advocacy of the Small Busi‑

ness Administration for comment on its

impact on small business, and no com‑

ments were received.

911

Statement of Availability of IRS

Documents

IRS Notices cited in this preamble are

published in the Internal Revenue Bulletin

and are available from the Superintendent

of Documents, U.S. Government Publishing

Office, Washington, DC 20402, or by visit‑

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

Drafting Information

The principal author of this final reg‑

ulation is Kara M. Soderstrom, Office of

Associate Chief Counsel (Employee Ben‑

efits, Exempt Organizations, and Employ‑

ment Taxes). However, other personnel

from the Treasury Department and the

IRS participated in its development.

List of Subjects

26 CFR Part 31

Employment taxes, Fishing vessels,

Gambling, Income taxes, Penalties, Pen‑

sions, Railroad retirement, Reporting and

recordkeeping requirements, Social secu‑

rity, Unemployment compensation.

26 CFR Part 35

Employment taxes, Income taxes, Pen‑

sions, Reporting and recordkeeping re‑

quirements.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR parts 31 and 35

are amended as follows:

PART 31—EMPLOYMENT TAXES

AND COLLECTION OF INCOME TAX

AT SOURCE

Paragraph 1. The authority citation for

part 31 is amended by adding an entry for

§31.3405(a)-1 in numerical order to read

in part as follows:

Authority: 26 U.S.C. 7805.

*****

Section 31.3405(a)-1 also issued under

26 U.S.C. 3405(a)(4).

*****

Par. 2. Section 31.3405(a)-1 is added to

read as follows:

October 19, 2020

§31.3405(a)-1 Questions and answers

relating to Federal income tax

withholding on periodic retirement and

annuity payments.

(a) The questions and answers in

this section relate to Federal income tax

withholding on periodic payments un‑

der section 3405(a), as amended by sec‑

tion 11041(c)(2)(G) of the Tax Cuts and

Jobs Act (Pub. L. 115-97, 131 Stat. 2054

(2017)). The withholding rules of section

3405(a) do not apply to periodic payments

that are eligible rollover distributions (as

defined in section 402(f)(2)(A)). See gen‑

erally section 3405(c) and §31.3405(c)-1

for Federal income tax withholding rules

applicable to eligible rollover distribu‑

tions. See section 3405(e)(13) for addi‑

tional rules applicable to certain period‑

ic payments under section 3405(a) and

nonperiodic distributions under section

3405(b) that are to be delivered outside

the United States and its possessions. For

additional guidance regarding periodic

payments, see §§35.3405-1 and 35.34051T of this chapter.

(b)(1) Q-1: How will Federal income

tax be withheld from a periodic payment?

(2) A-1: In the case of a periodic pay‑

ment that is subject to withholding under

section 3405(a), amounts are withheld as

if the payment were a payment of wag‑

es by an employer to the employee for

the appropriate payroll period. If the

payee has not furnished a withholding

October 19, 2020

certificate, the amount to be withheld is

determined in the manner described in

the applicable forms, instructions, pub‑

lications, and other guidance prescribed

by the Commissioner. The rules for with‑

holding when the payee has not furnished

a withholding certificate apply regardless

of whether the payor is aware of the pay‑

ee’s actual marital status or actual Feder‑

al income tax filing status.

(c)(1) Q-2: Do rules similar to those for

wage withholding apply to the furnishing

of a withholding certificate for periodic

payments?

(2) A-2: Yes. Unless the rules of sec‑

tion 3405 specifically conflict with the

rules of section 3402, the rules for with‑

holding on periodic payments that are not

eligible rollover distributions will paral‑

lel the rules for wage withholding. Thus,

if a withholding certificate is furnished

by a payee, it will generally take effect

in accordance with section 3402(f)(3)

and as provided in applicable forms, in‑

structions, publications, and other guid‑

ance prescribed by the Commissioner. If

no withholding certificate is furnished,

the amount withheld must be determined

in the manner described in the applica‑

ble forms, instructions, publications, and

other guidance prescribed by the Com‑

missioner for withholding on periodic

payments when no withholding certifi‑

cate is furnished.

(d)(1) Q-3: What is the applicability

date of this section?

912

(2) A-3: This section applies with re‑

spect to periodic payments made after De‑

cember 31, 2020.

PART 35—EMPLOYMENT TAX AND

COLLECTION OF INCOME TAX AT

SOURCE REGULATIONS UNDER

THE TAX EQUITY AND FISCAL

RESPONSIBILITY ACT OF 1982

Par. 3. The authority citation for part 35

continues to read in part as follows:

Authority: 26 U.S.C. 6047(e), 7805;

68A Stat. 917; 96 Stat. 625; Public Law

97‑248 (96 Stat. 623)* * *

§35.3405-1T [Amended]

Par. 4. Section 35.3405-1T is amended

by removing and reserving entry a-10 in

section A and entries b-3 and b-4 in sec‑

tion B.

Sunita Lough,

Deputy Commissioner for Services

and Enforcement

Approved: September 25, 2020.

David J. Kautter,

Assistant Secretary of the Treasury

(Tax Policy).

(Filed by the Office of the Federal Register on Sep‑

tember 30-2020, 8:45 a.m., and published in the is‑

sue of the Federal Register for October 1, 2020, 70

F.R. 61813)

Bulletin No. 2020–43

Part III

Requirement that Specified

Tax Return Preparers

Electronically File Form

1040-NR (U.S. Nonresident

Alien Income Tax Return)

Notice 2020-70

SECTION 1. PURPOSE

This notice modifies Notice 2011-26

(2011-17 I.R.B. 720) to generally re‑

move Form 1040-NR, U.S. Nonresident

Alien Income Tax Return, from the list of

returns that are administratively exempt

from the electronic filing requirement

imposed on specified tax return prepar‑

ers by section 6011(e)(3) of the Internal

Revenue Code and § 301.6011-7 of the

Procedure and Administration Regula‑

tions, and to provide the circumstances

under which the Form 1040-NR remains

subject to the exemption. This notice

further provides that future updates to

the list of returns in Notice 2011-26 that

are administratively exempt from the

electronic filing requirement due to IRS

e-file limitations will be provided for in

IRS Publication 4164, Modernized e-File

(MeF) Guide for Software Developers

and Transmitters.

SECTION 2. BACKGROUND

Section 6011(e)(3)(A) and § 301.60117(b) contain an electronic filing require‑

ment for any individual income tax return

that is prepared by and filed by a specified

tax return preparer.

Under section 6011(e)(3)(B) and as

further defined in § 301.6011-7(a)(3), a

“specified tax return preparer” means,

with respect to any calendar year, any tax

return preparer within the meaning of sec‑

tion 7701(a)(36) and § 301.7701-15, who

prepares any individual income tax return,

unless the tax return preparer (or his or her

firm, if the tax return preparer is a member

of a firm) reasonably expects to file 10 or

fewer individual income tax returns in the

calendar year.

Bulletin No. 2020–43

Section 301.6011-7(c)(2) permits ad‑

ministrative exemptions from the electron‑

ic filing requirement for certain classes of

specified tax return preparers, or regarding

certain types of individual income tax re‑

turns, as the IRS determines necessary to

promote effective and efficient tax admin‑

istration.

Notice 2011-26 sets forth the specific

administrative exemptions to the elec‑

tronic filing requirement under section

6011(e)(3) and § 301.6011-7(b). These

administrative exemptions apply to cer‑

tain categories of specified tax return

preparers and certain types of individual

income tax returns, including certain indi‑

vidual income tax returns and attachments

to returns for which IRS barriers or other

system limitations prevent the electronic

filing of those returns and attachments.

See Notice 2011-26 at 721-722.

For the exemption relating to IRS elec‑

tronic filing (e-file) limitations, Notice

2011-26 provides a list of the exempt re‑

turns, which includes the Form 1040-NR.

The IRS e-file limitations that previously

prevented the electronic filing of the Form

1040-NR have been resolved. Except as

provided in section 3.B. of this notice, IRS

e-file limitations no longer apply to the

Form 1040-NR, and many taxpayers can

now file income tax returns on that form

electronically.

To reflect the changes in IRS e-file ca‑

pacities and limitations, this notice modi‑

fies Notice 2011-26 as it applies to returns

that cannot be electronically filed because

of the IRS e-file limitations. This notice

does not affect the exemptions provided

in Notice 2011-26 for certain categories of

specified tax return preparers, including

certain foreign tax return preparers. For‑

eign tax return preparers without a social

security number who live and work abroad

remain exempt from the electronic filing

requirement if they are not a member of

a firm that is eligible for electronic filing

with the IRS and they applied for a Pre‑

parer Tax Identification Number (PTIN)

under one of the methods described in

Notice 2011-26.

913

SECTION 3. THE EXEMPTION FOR

FORM 1040-NR

A. In General

Except as otherwise provided in the

continued exemptions set forth in sec‑

tion 3.B. of this notice, the exemption for

Form 1040-NR from the electronic filing

requirement under section 6011(e)(3) is

removed for tax returns filed for taxable

years ending on or after December 31,

2020. Accordingly, a specified tax return

preparer must electronically file a Form

1040-NR, unless (1) an exemption de‑

scribed in section 3.B. of this notice for

these taxable years or (2) an exemption

under § 301.6011-7(c) or Notice 2011-26,

as modified by this notice, applies.

B. Continued Exemptions

The IRS does not currently accept

Form 1040-NR tax returns via electronic

filing by certain taxpayers. Accordingly,

the exemption from the electronic filing

requirement set forth in section 6011(e)

(3) remains in effect for a Form 1040-NR

filed for the following taxpayers:

(1) dual-status taxpayers (taxpayers who

have changed status between resident

alien and nonresident alien during the

taxable year),

(2) fiscal-year taxpayers,

(3) trusts, and

(4) estates.

The exemption for Form 1040-NR-EZ,

U.S. Income Tax Return for Certain Non‑

resident Aliens With No Dependents, also

remains in effect.

SECTION 4. FUTURE UPDATES

TO THE LIST OF RETURNS

ADMINISTRATIVELY EXEMPT

FROM ELECTRONIC FILING DUE TO

IRS E-FILE LIMITATIONS

The remaining administrative exemp‑

tions in Notice 2011-26 for certain types of

individual income tax returns that are ex‑

empt due to IRS e-file limitations remain

in effect until a revision to IRS Publication

4164, Modernized e-File (MeF) Guide for

October 19, 2020

Software Developers and Transmitters, or

a successor publication, announces that an

individual income tax return can be elec‑

tronically filed and announces the taxable

year for which the exemption from the

electronic filing requirement under sec‑

tion 6011(e)(3) is removed with respect to

that return. See https://www.irs.gov/pub/

irs-pdf/p4164.pdf.b

Updates to all other administrative

exemptions described in Notice 2011-26

(aside from exemptions due to IRS e-file

limitations) will continue to be announced

October 19, 2020

in a notice or other appropriate guidance,

rather than in IRS Publication 4164.

SECTION 7. DRAFTING

INFORMATION

SECTION 5. EFECT ON OTHER

DOCUMENTS

The principal author of this notice

is Han Huang of the Office of the Associ‑

ate Chief Counsel (Procedure and Admin‑

istration). For further information regard‑

ing this notice contact Ms. Huang at (202)

317-6844 (not a toll-free number).

Notice 2011-26 is modified.

SECTION 6. EFFECTIVE DATE

This notice is effective for individual

tax returns filed for taxable years ending

on or after December 31, 2020.

914

Bulletin No. 2020–43

Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

­effect:

Amplified describes a situation where

no change is being made in a prior pub‑

lished position, but the prior position is

being extended to apply to a variation of

the fact situation set forth therein. Thus, if

an earlier ruling held that a principle ap‑

plied to A, and the new ruling holds that

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

where the language in a prior ruling is be‑

ing made clear because the language has

caused, or may cause, some confusion. It

is not used where a position in a prior rul‑

ing is being changed.

Distinguished describes a situation

where a ruling mentions a previously pub‑

lished ruling and points out an essential

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

Obsoleted describes a previously pub‑

lished ruling that is not considered deter‑

minative with respect to future transactions.

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

new ruling does more than restate the sub‑

stance of a prior ruling, a combination of

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

restate the valid portion of the previous‑

ly published ruling in a new ruling that is

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

which a list, such as a list of the names of

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

the additions, and supersedes all prior rul‑

ings in the series.

Suspended is used in rare situations to

show that the previous published rulings

will not be applied pending some future

action such as the issuance of new or

amended regulations, the outcome of cas‑

es in litigation, or the outcome of a Ser‑

vice study.

Abbreviations

The following abbreviations in current use

and formerly used will appear in material

published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

Bulletin No. 2020–43

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

i

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

October 19, 2020

Numerical Finding List1

Bulletin 2020–43

Announcements:

2020-8, 2020-32 I.R.B. 244

2020-9, 2020-32 I.R.B. 244

2020-10, 2020-33 I.R.B. 385

2020-11, 2020-33 I.R.B. 385

2020-13, 2020-35 I.R.B. 492

2020-14, 2020-36 I.R.B. 549

2020-15, 2020-38 I.R.B. 577

2020-16, 2020-38 I.R.B. 578

2020-17, 2020-40 I.R.B. 794

2020-12, 2020-41 I.R.B. 893

Notices:

2020-43, 2020-27 I.R.B. 1

2020-45, 2020-27 I.R.B. 3

2020-46, 2020-27 I.R.B. 7

2020-47, 2020-27 I.R.B. 7

2020-49, 2020-27 I.R.B. 8

2020-50, 2020-28 I.R.B. 35

2020-48, 2020-29 I.R.B. 72

2020-51, 2020-29 I.R.B. 73

2020-52, 2020-29 I.R.B. 79

2020-53, 2020-30 I.R.B. 151

2020-54, 2020-31 I.R.B. 226

2020-56, 2020-32 I.R.B. 239

2020-57, 2020-32 I.R.B. 240

2020-58, 2020-34 I.R.B. 419

2020-55, 2020-35 I.R.B. 467

2020-61, 2020-35 I.R.B. 468

2020-62, 2020-35 I.R.B. 476

2020-63, 2020-35 I.R.B. 491

2020-60, 2020-36 I.R.B. 514

2020-64, 2020-36 I.R.B. 519

2020-65, 2020-38 I.R.B. 567

2020-68, 2020-38 I.R.B. 567

2020-69, 2020-39 I.R.B. 604

2020-59, 2020-40 I.R.B. 782

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

2020-71, 2020-40 I.R.B. 786

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

2020-73, 2020-41 I.R.B. 886

2020-74, 2020-41 I.R.B. 887

2020-70, 2020-43 I.R.B. 913

Proposed Regulations:—Continued

REG-111879-20, 2020-34 I.R.B. 421

REG-112042-19, 2020-34 I.R.B. 422

REG-132766-18, 2020-34 I.R.B. 436

REG-132434-17, 2020-35 I.R.B. 508

REG-116475-19, 2020-37 I.R.B. 553

REG-107911-18, 2020-40 I.R.B. 795

REG-110059-20, 2020-42 I.R.B. 904

Revenue Procedures:

2020-16, 2020-27 I.R.B. 10

2020-31, 2020-27 I.R.B. 12

2020-35, 2020-29 I.R.B. 82

2020-36, 2020-32 I.R.B. 243

2020-37, 2020-33 I.R.B. 381

2020-38, 2020-36 I.R.B. 522

2020-39, 2020-36 I.R.B. 546

2020-40, 2020-38 I.R.B. 575

2020-41, 2020-40 I.R.B. 793

2020-42, 2020-41 I.R.B. 891

Revenue Rulings:

2020-14, 2020-28 I.R.B. 33

2020-15, 2020-32 I.R.B. 233

2020-16, 2020-37 I.R.B. 550

2020-17, 2020-37 I.R.B. 552

2020-18, 2020-39 I.R.B. 584

2020-19, 2020-40 I.R.B. 611

2020-20, 2020-41 I.R.B. 880

2020-21, 2020-41 I.R.B. 882

Treasury Decisions:

9899, 2020-29 I.R.B. 62

9900, 2020-30 I.R.B. 143

9903, 2020-32 I.R.B. 235

9901, 2020-33 I.R.B. 266

9902, 2020-33 I.R.B. 349

9904, 2020-34 I.R.B. 413

9907, 2020-38 I.R.B. 559

9906, 2020-39 I.R.B. 579

9905, 2020-40 I.R.B. 614

9915, 2020-41 I.R.B. 882

9908, 2020-42 I.R.B. 894

9920, 2020-43 I.R.B. 909

Proposed Regulations:

REG-119307-19, 2020-28 I.R.B. 44

REG-112339-19, 2020-30 I.R.B. 155

REG-117589-18, 2020-30 I.R.B. 184

REG-125716-18, 2020-30 I.R.B. 197

REG-123027-19, 2020-31 I.R.B. 229

REG-130081-19, 2020-32 I.R.B. 246

REG-127732-19, 2020-33 I.R.B. 385

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2019–27 through 2019–52 is in Internal Revenue Bulletin

2019–52, dated December 27, 2019.

1

October 19, 2020

ii

Bulletin No. 2020–43

Finding List of Current Actions on

Previously Published Items1

Bulletin 2020–43

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2019–27 through 2019–52 is in Internal Revenue Bulletin

2019–52, dated December 27, 2019.

1

Bulletin No. 2020–43

iii

October 19, 2020

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue

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we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page

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