n-16-28.pdf

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Empowerment Zone Designation Extension

Notice 2016-28

I. PURPOSE

This notice provides the manner in which a State or local government may
amend an empowerment zone nomination to provide for a new termination date of
December 31, 2016. This notice is issued pursuant to § 1391 of the Internal Revenue
Code, as amended by § 171(a) of the Protecting Americans from Tax Hikes Act of 2015
(PATH Act), enacted as part of the Consolidated Appropriations Act, 2016, Division Q,
Pub. L. 114-113, ____ Stat. ____ (December 18, 2015).
II. BACKGROUND
Section 1391 was enacted in 1993 to allow a State or local government (“entity”)
to nominate an area or areas in its jurisdiction for designation as an empowerment
zone. The Secretary of Housing and Urban Development, in the case of any nominated
area that is located in an urban area, and the Secretary of Agriculture, in the case of
any nominated area that is located in a rural area, have since designated which of the
nominated areas are empowerment zones. Unless an earlier termination date was
provided by the nominating entity, a designation was originally effective for the period
beginning on the date of designation and ending on the close of the 10
th
taxable year
beginning on or after the date of designation. Section 112 of the Community Renewal
Tax Relief Act of 2000, Pub. L. No. 106-554, 114 Stat. 2763A-587 (December 21, 2000)
(CRTRA), amended § 1391(d)(1) to extend the designation period for all empowerment
zones through December 31, 2009, regardless of the original termination date.

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Subsequent amendments to § 1391(d)(1)(A) further extended the designation period
through December 31, 2014. See § 753(a) of the Tax Relief, Unemployment Insurance
Reauthorization, and Job Creation Act of 2010, Pub. L. No. 111-312, 124 Stat. 3296
(December 17, 2010) (TRUIRJCA), § 327(a) of the American Taxpayer Relief Act of
2012, Pub. L. 112-240, 126 Stat. 2313 (January 2, 2013) (ATRA), and § 139(a) of the
Tax Increase Prevention Act of 2014, Pub. L. 113-295, 128 Stat. 4010 (December 19,
2014) (TIPA).
In 2013, the Treasury Department and the Internal Revenue Service (IRS) issued
Notice 2013-38, 2013-25 I.R.B. 1251, pursuant to § 753(c) of TRUIRJCA and § 327(c)
of ATRA. Notice 2013-38 provided that any nomination for an empowerment zone that
was in effect on December 31, 2009, is deemed to be amended to provide for a new
termination date of December 31, 2013, unless the nominating entity declined the
extension in a written notification to the IRS. In 2015, the Treasury Department and the
IRS issued Notice 2015-26, 2015-13 I.R.B. 814, pursuant to § 139(b) of TIPA. Notice
2015-26 provided that any nomination for an empowerment zone that was in effect on
December 31, 2013, is deemed to be amended to provide for a new termination date of
December 31, 2014, unless the nominating entity declined the extension in a written
notification to the IRS. No written requests were received under either Notice 2013-28
or Notice 2015-26. Accordingly, the designations of all empowerment zones currently
have a termination date of December 31, 2014.
In 2015, Congress further amended § 1391(d)(1) to extend the period for which
an empowerment zone designation is in effect by an additional two years. As amended
by § 171(a)(1) of the PATH Act, § 1391(d)(1) provides that any designation of an

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empowerment zone ends on the earliest of (A) December 31, 2016, (B) the termination
date designated by the State and local governments as provided for in their nomination,
or (C) the date the appropriate Secretary revokes the designation. Section 171(a)(2) of
the PATH Act provides that where a nomination of an empowerment zone included a
termination date of December 31, 2014, § 1391(d)(1)(B) shall not apply with respect to
such designation if, after the date of the enactment of the PATH Act, the entity that
made such nomination amends the nomination, in such manner as the Secretary of the
Treasury may provide, to provide for a new termination date. The amendments made
by § 171(a) of the PATH Act apply to taxable years beginning after December 31, 2014.
Thus, pursuant to the PATH Act, an entity must amend its nomination to provide
for a new termination date of December 31, 2016, in order to retain an empowerment
zone designation that is effective through that date. Section III of this notice provides
the procedures that an entity must follow to amend its termination date.
III. AMENDMENT OF A NOMINATION TO EXTEND EMPOWERMENT ZONE
DESIGNATION THROUGH DECEMBER 31, 2016
Any nomination for an empowerment zone with a current termination date (as
amended by CRTRA, Notice 2013-38, and Notice 2015-26) of December 31, 2014, is
deemed to be amended to provide for a new termination date of December 31, 2016,
unless the nominating entity sends written notification to the IRS by May, 24, 2016. The
written notification must affirmatively decline extension of the empowerment zone
nomination through December 31, 2016. If the United States mail is used, the
notification should be sent to the following address:
Internal Revenue Service
Attn: Charles Magee, CC:ITA:7, Room 4136

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P.O. Box 7604
Ben Franklin Station
Washington, DC 20044

If a private delivery service is used, the notification should be sent to the following
address:
Internal Revenue Service
Attn: Charles Magee, CC:ITA:7, Room 4136
1111 Constitution Ave., NW
Washington, DC 20224

If the entity that nominated an empowerment zone does not send written
notification, the nomination of that empowerment zone will be deemed extended from
December 31, 2014, through December 31, 2016. Accordingly, § 1391(d)(1)(B) does
not apply and, pursuant to § 1391(d)(1)(A)(i), the designation of that empowerment
zone ends on December 31, 2016.
IV. DRAFTING INFORMATION
The principal author of this notice is Charles Magee of the Office of Associate
Chief Counsel (Income Tax & Accounting). For further information regarding this notice
contact Mr. Magee at (202) 317-7005 (not a toll-free call).