Internal Revenue Bulletin 2020-48 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 2020–48
November 23, 2020
HIGHLIGHTS
OF THIS ISSUE
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. 2020-49, page 1122.
This revenue procedure provides temporary guidance re-
garding the public approval requirement under § 147(f) of
the Internal Revenue Code for tax-exempt qualified private
activity bonds. Specifically, in light of the continuing Corona-
virus Disease 2019 pandemic, this revenue procedure ex-
tends until September 30, 2021, the time period described
in section 4.02 of Rev. Proc. 2020-21, 2020-22 I.R.B. 872,
during which certain telephonic hearings are permitted.
EMPLOYEE PLANS
REG.-122462-20, page 1137.
The IRS is issuing temporary regulations regarding coverage
of preventive health services to implement section 3203
of the Coronavirus Aid, Relief, and Economic Security Act
(CARES Act), which shortens the timeframe under which
non-grandfathered group health plans and health insurance
issuers offering non-grandfathered group or individual health
insurance coverage must cover without cost sharing qualify-
ing coronavirus preventive services, including recommended
COVID-19 immunizations. The IRS is issuing the temporary
regulations at the same time that the Employee Benefits Se-
curity Administration of the Department of Labor and the Of-
fice of Consumer Information and Insurance Oversight of the
Department of Health and Human Services (HHS) are issuing
substantially similar interim final rules with request for com-
ments. The text of those temporary regulations also serves
as the text of these proposed regulations.
EMPLOYEE TAX
Rev. Proc. 2020-47, page 1121.
This revenue procedure modifies the general procedures
used by the IRS to implement the Gaming Industry Tip Com-
pliance Agreement (GITCA) program. The GITCA program
allows gaming industry employers to enter into voluntary
agreements with the IRS to establish minimum tip rates for
tipped employees in specified occupational categories. The
GITCA program was established by Rev. Proc. 2003-35, and
updated by Rev. Proc. 2007-32 with a new model GITCA.
This revenue procedure modifies Rev. Proc. 2007-32 by
extending the expiration and renewal term of a GITCA from
three to five years.
INCOME TAX
Rev. Rul. 2020-25, page 1109.
2020 Base Period T-Bill Rate. The “base period T-bill rate”
for the period ending September 30, 2020, is published as
required by section 995(f) of the Internal Revenue Code.
Rev. Proc. 2020-50, page 1122.
This revenue procedure provides guidance for taxpayers
wishing to apply §§ 1.168(k)-2 and 1.1502-68 of the Income
Tax Regulations, or to rely on the proposed regulations under
§ 168(k) (REG-106808-19) published in 2019 for: (1) certain
depreciable property acquired and placed in service by the
taxpayer after September 27, 2017; (2) certain plants plant-
ed or grafted by the taxpayer, as applicable, after September
27, 2017; and (3) components acquired or self-constructed
by the taxpayer after September 27, 2017, of certain larger
self-constructed property. If the taxpayer retroactively ap-
plies §§ 1.168(k)-2 and 1.1502-68, or relies on the 2019
proposed regulations, this revenue procedure also allows the
taxpayer to make a late election under § 168(k)(5), (k)(7),
or (k)(10), § 1.168(k)-2(c) of the 2020 final regulations or
the 2019 proposed regulations, or § 1.1502-68(c)(4), or to
revoke an election under § 168(k)(5), (k)(7), or (k)(10), or §
1.168(k)-2(c) of the 2019 proposed regulations.
Finding Lists begin on page ii.

T.D. 9919, page 1073.
Nonresident aliens and foreign corporations are taxable in
the United States on taxable income that is effectively con-
nected with the conduct of a trade or business in the United
States. These final regulations provide rules for determining
the amount of effectively connected gain or loss recognized
by a nonresident alien individual or foreign corporation from
the sale or exchange of an interest in a partnership that is
engaged in a trade or business within the United States. TD
9919. Published November 6, 2020.
TEMPORARY REGULATION
T.D. 9931, page 1087.
The IRS is issuing temporary regulations regarding coverage
of preventive health services to implement section 3203 of the
Coronavirus Aid, Relief, and Economic Security Act (CARES
Act), which shortens the timeframe under which non-grandfa-
thered group health plans and health insurance issuers offer-
ing non-grandfathered group or individual health insurance cov-
erage must cover without cost sharing qualifying coronavirus
preventive services, including recommended COVID-19 immu-
nizations. The IRS is issuing the temporary regulations at the
same time that the Employee Benefits Security Administration
of the Department of Labor and the Office of Consumer Infor-
mation and Insurance Oversight of the Department of Health
and Human Services (HHS) are issuing substantially similar in-
terim final rules with request for comments.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force 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 of-
ficial 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 sub-
stantive 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 other-
wise indicated. Procedures relating solely to matters of inter-
nal 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 rul-
ings 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
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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, disbar-
ment 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.
November 23, 2020 Bulletin No. 2020–48

Part I
26 CFR 1.864(c)(8)-1 Gain or Loss of Foreign Per-
sons from Sale or Exchange of Certain Partnership
Interests
T.D. 9919
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Gain or Loss of Foreign
Persons from Sale or
Exchange of Certain
Partnership Interests
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations and tempo-
rary regulations.
SUMMARY: This document contains reg-
ulations that provide guidance for certain
foreign persons that recognize gain or loss
from the sale or exchange of an interest
in a partnership that is engaged in a trade
or business within the United States. The
regulations also affect partnerships that,
directly or indirectly, have foreign persons
as partners.
DATES: Effective date: These regulations
are effective on November 6, 2020.
Applicability dates: For dates of applica-
bility, see §§1.864(c)(8)-1(j) and 1.897-
7(c).
FOR FURTHER INFORMATION CON-
TACT: Chadwick Rowland or Ronald M.
Gootzeit, (202) 317-6937 (not a toll-free
call).
SUPPLEMENTARY INFORMATION:
Background
On December 27, 2018, the Depart-
ment of the Treasury (the “Treasury
Department”) and the IRS published
proposed regulations (REG-113604-18)
under section 864(c)(8) in the Federal
Register (83 FR 66647) (the “proposed
regulations”). Section 864(c)(8) was
added to the Internal Revenue Code (the
“Code”) by the Tax Cuts and Jobs Act,
Public Law 115-97 (2017) (the “Act”),
which was enacted on December 22,
2017. The proposed regulations provide
rules for determining the amount of gain
or loss treated as effectively connected
with the conduct of a trade or business
within the United States (“effectively
connected gain” or “effectively connect-
ed loss”) under section 864(c)(8), includ-
ing certain rules that coordinate section
864(c)(8) with other relevant sections of
the Code.
The Treasury Department and the IRS
received written comments with respect
to the proposed regulations. All written
comments received in response to the pro-
posed regulations are available at www.
regulations.gov or upon request. No pub-
lic hearing on the proposed regulations
was requested or held.
The Treasury Department and the IRS
have also published proposed regulations
(REG-105476-18) in the Federal Reg-
ister relating to the withholding of tax
and information reporting with respect to
certain dispositions by a foreign person
of an interest in a partnership that is en-
gaged in the conduct of a trade or busi-
ness within the United States (the “pro-
posed withholding regulations”). See 84
FR 21198 (May 13, 2019). The Treasury
Department and the IRS plan to publish
final withholding and information report-
ing regulations in a later issue of the Fed-
eral Register.
Summary of Comments and
Explanation of Revisions
I. Overview
The final regulations retain the basic
approach and structure of the proposed
regulations with certain revisions. This
Summary of Comments and Explanation
of Revisions section discusses the com-
ments received in response to the solici-
tation of comments in the proposed regu-
lations and explains the revisions made in
response to those comments.
II. Comments and Revisions to Proposed
§1.864(c)(8)-1
A. Determining deemed sale EC gain or
deemed sale EC loss
Section 864(c)(8)(A) provides that
gain or loss of a nonresident alien indi-
vidual or foreign corporation (a “foreign
transferor”) from the sale, exchange, or
other disposition (“transfer”) of an in-
terest in a partnership that is engaged in
any trade or business within the United
States is treated as effectively connected
gain or loss to the extent such gain or loss
does not exceed the amount determined
under section 864(c)(8)(B). In general,
section 864(c)(8)(B) limits the amount of
effectively connected gain or loss to the
portion of the foreign transferor’s distrib-
utive share of gain or loss that would have
been effectively connected if the partner-
ship had sold all of its assets at fair mar-
ket value (the deemed sale limitation).
The proposed regulations illustrate how
to determine the deemed sale limitation
described in section 864(c)(8)(B), which
the proposed regulations refer to as the
aggregate deemed sale EC (“ADSEC”)
amount. Once the ADSEC amount has
been determined for each applicable cate-
gory of gain or loss, the foreign transfer-
or’s outside gain or loss in each category
is compared to the relevant ADSEC gain
or ADSEC loss amount for that category
to determine the amount of effectively
connected gain or effectively connected
loss under section 864(c)(8). In general,
this amount is determined through a three-
step process. Step one determines the
amount of gain or loss from each partner-
ship asset as if the partnership conducted
a deemed sale of all of its assets on the
date of transfer (these amounts, deemed
sale gain or deemed sale loss). Step two
determines the amount of the deemed sale
gain or loss that would be treated as effec-
tively connected gain or loss with respect
to each asset (these amounts are referred
to as deemed sale EC gain or deemed sale
EC loss). Finally, step three determines
the foreign transferor’s distributive share
of the deemed sale EC gain or deemed
sale EC loss amounts determined in step
two.
Bulletin No. 2020–48 1073 November 23, 2020

As noted in the preceding paragraph,
step two requires the gain or loss from the
deemed sale of each partnership asset to be
analyzed to determine if the gain or loss is
properly characterized as effectively con-
nected gain or effectively connected loss.
Sourcing determinations are often mate-
rial in determining whether gain or loss
is effectively connected with the conduct
of a trade or business within the United
States. See, for example, sections 864(c)
(2) and (3). Because the sourcing rules
in the Code and regulations are generally
fact-specific, the application of these rules
in the context of the deemed sale required
by section 864(c)(8)(B) is unclear. For
example, it is unclear how to apply the
sourcing rules and principles contained in
sections 865(e)(2)(A) and (e)(3) (and the
regulations implementing those sections)
(the U.S. office rule) to the deemed sale of
partnership property required by section
864(c)(8)(B). Specifically, the application
of the U.S. office rule depends upon fac-
tual determinations made regarding the
underlying sale; that is, whether it is at-
tributable to an office or other fixed place
of business in the United States, and, with
respect to inventory property, whether it
is sold for use, disposition, or consump-
tion outside the United States and whether
an office or other fixed place of business
maintained by the taxpayer in the foreign
country materially participated in the sale.
In a deemed sale, however, the required
facts are generally not determinable be-
cause a sale has not actually occurred.
Therefore, to address this lack of required
facts and provide guidance on how to
apply the sourcing provisions to deemed
sales, the proposed regulations provide
rules that serve as a proxy for the factual
determinations that apply for purposes of
sourcing deemed sale gain and loss and,
in turn, for determining deemed sale EC
gain and loss.
In general, proposed §1.864(c)(8)-
1(c)(2)(i) treats all deemed sale gain and
loss as attributable to an office or other
fixed place of business maintained by
the partnership in the United States, and
does not treat inventory property as sold
for use, disposition, or consumption out-
side the United States in a sale in which
an office or other fixed place of busi-
ness maintained by the partnership in a
foreign country materially participates.
Thus, the rule in proposed §1.864(c)(8)-
1(c)(2)(i) provides simplifying factual
assumptions that generally treat deemed
sale gain and loss as U.S. source. An ex-
ception to this rule is provided in the pro-
posed regulations if, during the ten-year
period ending on the date of transfer, the
asset in question produced no income or
gain that was taxable as income that was
effectively connected with the conduct
of a trade or business within the United
States by the partnership (or a predeces-
sor), and the asset has not been used, or
held for use, in the conduct of a trade or
business within the United States by the
partnership (or a predecessor) (the “ten-
year exception”). Proposed §1.864(c)(8)-
1(c)(2)(ii).
A comment on the interaction be-
tween section 864(c)(8) and the sourc-
ing rules suggested that the simplifying
factual assumptions supplied by the rule
in proposed §1.864(c)(8)-1(c)(2)(i) may
overstate the amount of effectively con-
nected gain or loss on a deemed sale of
the partnership’s assets, as compared to
an actual asset sale, by treating all gain or
loss from the deemed sale as attributable
to a U.S. office of the partnership, subject
only to the ten-year exception. As a result,
the proposed regulations would similarly
overstate the amount of the deemed sale
limitation. To address this concern, the
comment suggested that in determining
deemed sale EC gain and loss, the final
regulations should aim to provide a result
that is no better or worse than the result
that would occur upon an actual asset
sale by the partnership, but the comment
acknowledged the difficulty in achiev-
ing this objective because the underlying
source rules largely rely on fact-specific
determinations.
The Treasury Department and the IRS
generally agree with the broad principles
described in the comment regarding pro-
posed §1.864(c)(8)-1(c)(2). While these
final regulations retain the basic frame-
work of the proposed regulations, includ-
ing the factual determinations regarding
office attribution provided in proposed
§1.864(c)(8)-1(c)(2)(i), these final regula-
tions adjust their effects by adding rules
for sourcing gain or loss from specific
assets that may be particularly difficult to
source in a deemed sale. §1.864(c)(8)-1(c)
(2)(ii)(B) through (E).
1. Ten-year exception
The final regulations provide that
deemed sale EC gain and loss is deter-
mined by applying section 864 and the reg-
ulations thereunder. §1.864(c)(8)-1(c)(2)(i)
(A). These final regulations retain the ten-
year exception as an exception to the deter-
mination of deemed sale EC gain and loss
under §1.864(c)(8)-1(c)(2)(i)(A). The ten-
year exception is intended to remove assets
that have no nexus to the United States
from the deemed sale EC gain and loss
determination; therefore, for these assets,
a foreign transferor does not need to apply
the rules described in §1.864(c)(8)-1(c)(2)
(ii) to determine deemed sale EC gain and
loss. One comment requested that the final
regulations clarify that the ten-year excep-
tion applies to assets that were not held by
the partnership for the full ten-year period.
As requested by the comment, these final
regulations modify the relevant testing pe-
riod for the ten-year exception to account
for a partnership (including a predecessor
of the partnership) that has not existed for
at least ten years, or that has not held an
asset for at least ten years, by shortening
the relevant testing period to the lesser of
the ten-year period ending on the date of
the transfer or the period during which the
partnership (and a predecessor of the part-
nership) held the asset. §1.864(c)(8)-1(c)
(2)(i)(B). In addition, to ensure that the ten-
year exception is properly applied, these
final regulations also modify the relevant
testing period to include any period during
which the foreign transferor (and a prede-
cessor of the foreign transferor) held the as-
set. Id. Accordingly, an asset will not quali-
fy for the ten-year exception if it generated
effectively connected income or effectively
connected gain for the foreign transferor
(or a predecessor of the foreign transferor),
or if the asset was used in the conduct of a
trade or business within the United States
by the foreign transferor (or a predecessor
of the foreign transferor), within the rele-
vant testing period. Id.
2. Rules for Sourcing Deemed Sale Gain
and Loss for Purposes of Determining
Deemed Sale EC Gain and Loss
Proposed §1.864(c)(8)-1(c)(2)(i) treats
all gain or loss from the deemed sale of
an asset as attributable to an office or oth-
November 23, 2020 1074 Bulletin No. 2020–48

Bulletin No. 2020–48 1075 November 23, 2020
er fixed place of business maintained by
the partnership in the United States, and
does not treat inventory property as sold
for use, disposition, or consumption out-
side the United States in a sale in which
an office or other fixed place of business
maintained by the partnership in a foreign
country materially participated. These
final regulations make several changes
to the general rule provided in proposed
§1.864(c)(8)-1(c)(2)(i) in response to the
comment described in section II.A of this
Summary of Comments and Explanation
of Revisions; these final regulations also
clarify the scope of this rule. First, these
final regulations clarify that the general
rule applies only for purposes of applying
section 865(e)(2)(A) to personal property
held by the partnership on the date of the
deemed sale. §1.864(c)(8)-1(c)(2)(ii)(A).
Second, these final regulations provide
additional sourcing rules for determining
the foreign source portion of deemed sale
gain and loss attributable to specific assets
included in the deemed sale. §1.864(c)
(8)-1(c)(2)(ii)(B) through (E). The spe-
cific assets are inventory, intangibles, and
depreciable personal property. Additional
sourcing rules are needed because gain
or loss from actual sales of each of these
assets would be subject to specific sourc-
ing rules under the Code, but sourcing
deemed sale gain or loss under those rules
would generally require facts that are not
determinable in a deemed sale. These final
regulations also clarify that if the partner-
ship does not maintain an office or other
fixed place of business in the United States
(within the meaning of section 864(c)(5)
(A) and §1.864-7), neither the U.S. office
attribution described in §1.864(c)(8)-1(c)
(2)(ii)(A), nor the additional sourcing
rules described in §1.864(c)(8)-1(c)(2)
(ii)(B) through (E), will apply. §1.864(c)
(8)-1(c)(2)(ii)(A). Finally, the final reg-
ulations reorganize the proposed regula-
tions to account for the changes described
in this section II.A.2 of this Summary of
Comments and Explanation of Revisions,
and the phrase in proposed §1.864(c)(8)-
1(c)(2)(i) regarding use, disposition, or
consumption outside the United States is
removed to conform with changes made
to the general rule and the addition of a
specific inventory sourcing rule.
The asset-specific rules provided in
§1.864(c)(8)-1(c)(2)(ii)(B) through (E)
utilize available facts as a proxy for the
sourcing results, and the attendant ef-
fectively connected determinations, that
would occur in an actual sale by the
partnership of inventory, intangibles, or
depreciable personal property. These as-
set-specific rules use existing sourcing
rules and principles to provide fair, ad-
ministrable rules that can be applied con-
sistently. Specifically, the foreign source
portion of deemed sale gain or loss attrib-
utable to inventory property (as defined
in section 865(i)(1)) is determined using
a proxy method that is based on histori-
cal data (as suggested by the comment);
the foreign source portion of deemed
sale gain and loss attributable to intan-
gibles (as defined in section 865(d)(2))
is determined using a proxy method that
is based on the partnership’s historic in-
come; and the foreign source portion for
certain deemed sale gain or loss attribut-
able to depreciable personal property (as
defined in section 865(c)(4)(A)) is deter-
mined under a recapture principle and, to
the extent applicable, a proxy method that
is also based on historical data. Addition-
ally, these final regulations add a material
change in circumstances rule in §1.864(c)
(8)-1(c)(2)(ii)(E) that applies if, based on
a material change in circumstances, the
asset-specific rules for inventory property
or intangibles do not reach an appropriate
sourcing result.
Thus, to the extent that deemed sale
gain or loss is attributable to inventory,
intangibles, or depreciable personal prop-
erty, the sourcing result for these assets is
determined by first applying §1.864(c)(8)-
1(c)(2)(ii)(A) and then, to the extent appli-
cable, the asset-specific rules provided in
§1.864(c)(8)-1(c)(2)(ii)(B) through (D),
or the material change in circumstances
rule provided in §1.864(c)(8)-1(c)(2)(ii)
(E). Accordingly, the U.S. office attribu-
tion rule described in §1.864(c)(8)-1(c)(2)
(ii)(A) applies to these assets only to the
extent that the deemed sale gain or loss
exceeds the relevant foreign source por-
tion determined under the relevant rule
provided in §1.864(c)(8)-1(c)(2)(ii)(B)
through (E).
i. Look-back rule for inventory property
The comment on the interaction be-
tween section 864(c)(8) and the sourcing
rules recommended that the Treasury De-
partment and IRS consider a separate rule
for sourcing deemed sales of inventory
based on historical data showing how in-
ventory sales were sourced by the partner-
ship over a specified period. The Treasury
Department and the IRS agree with the
suggestion.
Section 1.864(c)(8)-1(c)(2)(ii)(B)
provides a look-back rule for determin-
ing the foreign source portion of deemed
sale gain or loss attributable to inventory
property (as defined in section 865(i)(1),
but not including gain sourced by refer-
ence to section 865(c)(2)) that is held by
the partnership on the date of the deemed
sale. Specifically, the general rule provid-
ed in §1.864(c)(8)-1(c)(2)(ii)(A) will not
apply, and the deemed sale of inventory
property will not be treated as attribut-
able to an office or other fixed place of
business maintained by the partnership in
the United States, to the extent of foreign
source inventory gain or loss. This amount
is determined by multiplying deemed sale
gain and loss attributable to inventory
by a fraction that determines the foreign
source inventory ratio. The numerator of
the fraction includes the gross income of
the partnership that is attributable to for-
eign source gain or loss from inventory
property (as determined under the rules
of sections 865(b) and 865(e)) sold within
the shorter of the period comprised of the
partnership’s three taxable years imme-
diately preceding the date of the deemed
sale, or the existence of the partnership
(measured by partnership taxable years);
the denominator of the fraction is the to-
tal gross income of the partnership that is
attributable to inventory over that period.
This approach addresses the concerns
raised in the comment by looking to the
partnership’s past operations to determine
the relevant sourcing result for invento-
ry property, instead of assuming that all
of the gain or loss from the deemed sale
of inventory property is attributable to a
U.S. office (unless the ten-year excep-
tion is met). That is, because sourcing the
deemed sale gain or loss attributable to
inventory property will require facts that
are not available in a deemed sale, this
approach sources the deemed sale gain
or loss by reference to the actual sourc-
ing results from prior sales of inventory
property during the look-back period, as

November 23, 2020 1076 Bulletin No. 2020–48
evidenced by the foreign source inventory
ratio. This rule can be applied by taxpay-
ers and administered by the government
with certainty.
ii. Look-back rule for intangibles
The comment on the interaction be-
tween section 864(c)(8) and the sourcing
rules also discussed how the simplify-
ing factual assumptions supplied by the
rule in proposed §1.864(c)(8)-1(c)(2)(i)
may overstate the amount of effective-
ly connected gain or loss with respect to
a deemed sale of intangibles held by the
partnership. While acknowledging the
difficulty of determining the source of
deemed sale gain and loss attributable to
intangibles, the comment described an
approach that would apply a separate rule
to determine the source of deemed sale
gain and loss attributable to intangibles
in lieu of the simplifying factual assump-
tions supplied by the rule in proposed
§1.864(c)(8)-1(c)(2)(i) as it applies to in-
tangibles. The Treasury Department and
the IRS agree that it is difficult to source
deemed sale gain or loss attributable to
intangibles and that a single, administra-
ble rule to address this issue is preferable.
To minimize the difficulty of applying the
sourcing rules to intangible property and
to provide more certainty, the final regu-
lations provide a separate rule for intangi-
bles (including going concern value) that
determines the foreign source portion of
deemed sale gain or loss attributable to
intangibles by using a proxy method that
is based on the source of the partnership’s
historic gross ordinary income.
Section 1.864(c)(8)-1(c)(2)(ii)(C) pro-
vides a look-back rule for determining the
foreign source portion of deemed sale gain
or loss attributable to an intangible (as
defined in section 865(d)(2)) held by the
partnership on the date of the deemed sale.
This rule is similar to the look-back rule
for inventory property because it provides
that the deemed sale of an intangible will
not be treated as attributable to an office or
other fixed place of business maintained
by the partnership in the United States
to the extent of a foreign source amount.
This amount is determined by multiplying
deemed sale gain or loss attributable to an
intangible by the foreign source intangible
ratio.
Thus, the approach for determining
the foreign source amount with respect
to intangibles employs the same general
approach provided for inventory property,
with certain modifications. Deemed sale
gain or loss attributable to intangibles,
like that attributable to inventory proper-
ty, cannot be reliably sourced in a deemed
sale because an actual sale has not oc-
curred. However, unlike inventory prop-
erty, intangibles may not have relevant
historical data indicating how deemed sale
gain and loss would be sourced in an actu-
al sale (for example, some intangibles do
not generate an identifiable income stream
on which a sourcing proxy could be
based). To address this issue, the numer-
ator of the foreign source intangible ratio
includes the foreign source gross ordinary
income of the partnership (other than from
dispositions of depreciable or amortizable
property) during the shorter of the peri-
od comprised of the partnership’s three
taxable years preceding the date of the
deemed sale or the existence of the part-
nership (measured by partnership taxable
years), to the extent that such income was
not effectively connected with the conduct
of a trade or business within the United
States; the denominator includes the total
gross ordinary income of the partnership
(other than from dispositions of deprecia-
ble or amortizable property) during that
period. §1.864(c)(8)-1(c)(2)(ii)(C)(1) and
(2). This foreign source intangible ratio
looks specifically to the historic gross or-
dinary income of the partnership (as op-
posed to all the historic gross income of
the partnership) in order to more accurate-
ly reflect the partnership’s income derived
from the use of the intangibles in the ordi-
nary course of its trade or business. This
rule does not apply to the extent of any
depreciation adjustments (as defined in
section 865(c)(4)(B)) with respect to an
amortizable intangible; instead, the rules
regarding depreciable personal property
will apply to such adjustments.
iii. Special rules for foreign source
inventory ratio and foreign source
intangible ratio
The foreign source inventory ratio
and foreign source intangible ratio may
in certain circumstances cause mathe-
matically impossible results or unclear
application if cost of goods sold exceed
gross receipts. Additional rules were
added to address these concerns. First,
the foreign source inventory ratio and the
foreign source intangible ratio cannot ex-
ceed one. §1.864(c)(8)-1(c)(2)(ii)(B) and
(C). Second, if the foreign source gross
income attributable to inventory or the
foreign gross ordinary income is not pos-
itive, then respectively the foreign source
inventory ratio or the foreign source in-
tangible ratio is zero. Id. Third, if the for-
eign source gross income attributable to
inventory is positive, but the total gross
income attributable to inventory is not
positive, or if the foreign gross ordinary
income is positive, but the total gross
ordinary income is not positive, then re-
spectively the foreign source inventory
ratio or the foreign source intangible ra-
tio is one. Id.
iv. Depreciable personal property
Section 1.864(c)(8)-1(c)(2)(ii)(D) pro-
vides a two-part approach for determining
the foreign source portion of deemed sale
gain and loss attributable to depreciable
personal property: the first part applies a
recapture principle to the extent of depre-
ciation adjustments taken with respect to
the property, and the second part focuses
on where the property is located to the ex-
tent the property has deemed sale gain in
excess of its depreciation adjustments or if
the property has deemed sale loss.
Section 1.864(c)(8)-1(c)(2)(ii)(D)(1)
applies a recapture principle by provid-
ing that the deemed sale of depreciable
personal property (as defined in section
865(c)(4)(A)), or the deemed sale of an
amortizable intangible (as defined in sec-
tion 865(d)(2)), will not be treated as at-
tributable to an office or other fixed place
of business maintained by the partner-
ship in the United States to the extent the
deemed sale gain is treated as sourced out-
side the United States after applying sec-
tion 865(c)(1) at the time of the deemed
sale. In contrast to the other sourcing rules
that could apply to assets held by the part-
nership on the date of the deemed sale, the
recapture rule provided in section 865(c)
(1) can be applied with certainty at the
time of the deemed sale because it is based
on data that is available at the time of the
deemed sale.

Bulletin No. 2020–48 1077 November 23, 2020
For deemed sale gain in excess of the
depreciation adjustments with respect
to depreciable personal property (other
than an amortizable intangible), or for
deemed sale loss from depreciable per-
sonal property (other than an amortizable
intangible), §1.864(c)(8)-1(c)(2)(ii)(D)
(2) provides that the relevant sourcing
determination is made based on where
the property is located. See §1.864(c)(8)-
1(c)(2)(ii)(C) and section II.A.2.ii of this
Summary of Comments and Explanation
of Revisions for the rule that applies to
gain in excess of depreciation adjustments
with respect to an amortizable intangible.
Although section 865(c)(2) sources the
excess gain as if it were attributable to
inventory property, such treatment would
require further clarification for purposes
of these final regulations. Specifically, in
contrast to inventory property, depreciable
personal property may not have historical
data readily available that evidences the
location of the economic activity associat-
ed with the property or that otherwise in-
dicates how the excess gain or loss would
be sourced in an actual sale. To address
this issue, while also providing a clear and
administrable rule, §1.864(c)(8)-1(c)(2)
(ii)(D)(2) sources the excess gain or loss
attributable to depreciable personal prop-
erty based on the location of the property.
v. Material change in circumstances rule
Section 1.864(c)(8)-1(c)(2)(ii)(E) pro-
vides a material change in circumstances
rule for inventory and intangibles. If this
rule applies, the foreign source portion of
deemed sale gain or loss attributable to
inventory property or intangibles may be
determined by applying the relevant rule
of §1.864(c)(8)-1(c)(2)(ii)(B) or (C) by
reference to a modified look-back period.
The Treasury Department and the IRS
have determined that the general rule pro-
vided in §1.864(c)(8)-1(c)(2)(ii)(A) and
the asset-specific determinations provid-
ed in §1.864(c)(8)-1(c)(2)(ii)(B) and (C)
will reach an appropriate sourcing result
in most cases; that is, an actual sale of the
partnership’s assets has not occurred, so
relevant sourcing information with respect
to an actual sale of the assets on the date of
the deemed sale will not be readily deter-
minable in most cases, and the look-back
rules use the partnership’s past operations
as a proxy for reaching a sourcing deter-
mination with respect to certain assets
included in the deemed sale. See sections
II.A.2.i and II.A.2.ii of this Summary of
Comments and Explanation of Revisions.
The Treasury Department and the IRS
realize, however, that the look-back rules
provided in §1.864(c)(8)-1(c)(2)(ii)(B)
and (C) for inventory property and intan-
gibles could reach incorrect sourcing re-
sults in certain cases; specifically, if a ma-
terial change in circumstances occurred
during the relevant look-back period de-
scribed in paragraph §1.864(c)(8)-1(c)(2)
(ii)(B)(1) or §1.864(c)(8)-1(c)(2)(ii)(C)
(1), the partnership’s historical data for
the entire look-back period may not be
an accurate proxy for reaching a sourcing
determination with respect to deemed sale
gain or loss attributable to such property.
In these cases, the final regulations allow
taxpayers to use this material change in
circumstances rule to remedy an incorrect
sourcing result with respect to inventory
property and intangibles.
The application of §1.864(c)(8)-1(c)(2)
(ii)(E), therefore, is limited to situations in
which a material change in circumstanc-
es causes the look-back rule provided in
§1.864(c)(8)-1(c)(2)(ii)(B), or the look-
back rule provided in §1.864(c)(8)-1(c)(2)
(ii)(C), to reach an inappropriate sourcing
result; that is, a sourcing result that is ma-
terially different from the sourcing result
that would occur if the applicable look-
back period began on the date on which the
material change in circumstance occurred
and ended on the last day of the partner-
ship’s taxable year immediately preceding
the year in which the deemed sale occurs
(the modified look-back period).
1
If the
material change in circumstances rule
applies, the applicable sourcing rule for
inventory or intangibles may be applied
by reference to the modified look-back
period. §1.864(c)(8)-1(c)(2)(ii)(E). The
determination of whether a sourcing re-
sult is materially different is determined
by comparing the foreign source invento-
ry ratio or foreign source intangible ratio
provided in §1.864(c)(8)-1(c)(2)(ii)(B) or
(C) (as applicable) with the foreign source
inventory ratio or foreign source intangi-
ble ratio if that ratio were determined by
reference to the modified look-back peri-
od. The sourcing result is not materially
different unless the percentage point dif-
ference between the two ratios described
in the preceding sentence is at least 30
percentage points. Id. See Example 2 in
§1.864(c)(8)-1(c)(2)(iii).
B. Treaty coordination
A comment questioned whether the
rules provided in proposed §1.864(c)(8)-
1(c) for determining a foreign transferor’s
deemed sale EC gain or deemed sale EC
loss were intended to apply in the trea-
ty context without regard to whether the
partnership in fact had a permanent estab-
lishment in the United States under the
terms of an income tax treaty at the time
of the transfer.
These final regulations clarify that the
U.S. office attribution rule described in
§1.864(c)(8)-1(c)(2)(ii)(A) does not apply
unless the partnership maintains an office
or other fixed place of business in the Unit-
ed States. A partnership without a U.S. of-
fice or other fixed place of business will
also generally not have a permanent estab-
lishment in the United States. In addition,
the treaty coordination rule in §1.864(c)
(8)-1(f) takes into account an applicable
treaty when computing the amount of a
foreign transferor’s distributive share of
deemed sale EC gain and deemed sale EC
loss. As a result, for purposes of §1.864(c)
(8)-1(c)(3) (that is, the third step in the
three-step process to determine the for-
eign transferor’s aggregate deemed sale
EC items), gain or loss derived by the
foreign transferor attributable to assets
deemed sold that would be exempt from
tax under an applicable U.S. income tax
treaty if disposed of by the partnership are
not taken into account.
The final regulations retain the general
rule that prevents taxation of gain on as-
sets that do not form part of a permanent
establishment, but also address certain
gains that may be taxed without regard
to whether there is a permanent establish-
ment (for example, gains from the dispo-
1
The material change in circumstances rule cannot apply to a change in circumstances that occurs in the year of the deemed sale because such a change does not occur during the relevant
look-back period and, in that case, there is no modified look-back period against which to measure the results that otherwise occur under §1.864(c)(8)-1(c)(2)(ii)(B) or (C).

November 23, 2020 1078 Bulletin No. 2020–48
sition of certain U.S. real property inter-
ests). The final regulations also modify the
structure of proposed §1.864(c)(8)-1(f) by
consolidating proposed §1.864(c)(8)-1(f)
(1) through (3) into a single paragraph and
make three additional changes.
First, §1.864(c)(8)-1(f) clarifies that a
foreign transferor is eligible for benefits
under an income tax treaty only if the
transferor meets the requirements of a
limitation on benefits article, if any, in the
treaty between the jurisdiction in which
the foreign transferor is resident and the
United States.
Second, §1.864(c)(8)-1(f) modifies
proposed §1.864(c)(8)-1(f)(2), which
stated that “[t]reaty provisions applicable
to gains from the alienation of property
forming part of a permanent establish-
ment, including gains from the alienation
of a permanent establishment in the Unit-
ed States, apply to the transfer by a for-
eign transferor of an interest in a partner-
ship with a permanent establishment in
the United States.” The final regulations
clarify that a gains article that permits
the taxation of gain from the alienation of
property forming part of a permanent es-
tablishment or fixed place of business in
the United States also permits the taxation
of gain from the alienation of a partnership
interest, to the extent the partnership’s as-
sets deemed sold under section 864(c)(8)
form a part of the U.S. permanent estab-
lishment or fixed place of business of the
partnership. Thus, the final regulations re-
move from the description of an applica-
ble gains provision the phrase “including
gains from the alienation of a permanent
establishment,” as that phrase, as used in
certain treaties, merely illustrates one ap-
plication of the underlying words and is
not a separate rule. This approach also is
consistent with the statutory framework
under section 864(c)(8), which determines
the amount of effectively connected gain
or loss of a foreign transferor based on
the amount of the transferor’s distributive
share of gain or loss that would have been
effectively connected if the partnership
had sold all of its assets at fair market val-
ue.
Finally, §1.864(c)(8)-1(f) adds a rule
coordinating these regulations with trea-
ty provisions governing the disposition
of United States real property interests,
which allow the United States to tax gain
derived from the disposition of the United
States real property interest without regard
to whether the U.S. real property interest
forms a part of a partnership’s permanent
establishment or fixed place of business in
the United States. Under this coordination
rule, if, after applying treaty benefits in
paragraph (c)(3) of this section, the only
gains or losses that would be taken into
account are gains or losses attributable to
United States real property interests, the
foreign transferor determines its effective-
ly connected gain and effectively connect-
ed loss pursuant to section 897 and not
under section 864(c)(8). This addition is
consistent with the approach taken in the
proposed regulations that the gain would
be computed under section 897 rather than
section 864(c)(8). See section IV of the
Explanation of Provisions section of the
preamble to the proposed regulations.
C. Partner-specific exclusions and
exceptions
A comment requested that the final
regulations more clearly address the inter-
action of section 864(c)(8) and §1.864(c)
(8)-1 with provisions of the Code provid-
ing for an exemption from U.S. federal
income tax. The Treasury Department
and the IRS agree with this suggestion;
accordingly, the final regulations provide
that a foreign transferor’s distributive
share of deemed sale EC gain or loss does
not include any amount that is excluded
from the foreign transferor’s gross income
or otherwise exempt from U.S. Federal in-
come tax by reason of an applicable provi-
sion of the Code. Section 1.864(c)(8)-1(c)
(3)(i). For this purpose, the final regula-
tions refer to sections 864(b)(2), 872(b),
and 883 as examples. Id.
Similarly, §1.864(c)(8)-1(c)(3) is mod-
ified to provide that a foreign transferor’s
distributive share of deemed sale EC gain
or deemed sale EC loss does not include
any amount to which an exception under
section 897 applies, such as section 897(k)
or section 897(l), provided that amount is
not otherwise treated as effectively con-
nected income under a provision of the
Code. This rule, which was provided in
proposed §1.864(c)(8)-1(c)(2) as part of
the determination of a foreign transferor’s
deemed sale EC gain and deemed sale EC
loss, is moved to §1.864(c)(8)-1(c)(3) in
these final regulations because the excep-
tions under section 897(k) and section
897(l) are specific to the foreign transfer-
or. This modification is intended to make
the three step-process for determining the
foreign transferor’s aggregate deemed sale
EC amounts more cohesive by placing all
partner-specific adjustments in step 3.
D. Section 731 distributions
Under the proposed regulations, a for-
eign transferor determines the amount of
outside gain and loss recognized on the
transfer of a partnership interest under all
relevant provisions of the Code and regu-
lations, including any applicable nonrec-
ognition provision. Proposed §1.864(c)
(8)-1(b)(2). Although section 864(c)(8)(E)
authorizes regulations or other guidance
with respect to the application of section
864(c)(8) to nonrecognition transactions,
the proposed regulations generally do not
provide special rules that apply to nonrec-
ognition transactions. But see proposed
§1.864(c)(8)-1(h) (the anti-stuffing rule).
However, the Treasury Department and
the IRS recognized that certain nonrec-
ognition transactions, for example certain
section 731 distributions, may have the ef-
fect of reducing gain or loss that would be
taken into account under the rules provided
in the proposed regulations. The preamble
to the proposed regulations, therefore, re-
quested comments regarding whether sec-
tions of the Code other than section 864(c)
(8) adequately address transactions that
rely on section 731 distributions to reduce
the scope of assets subject to U.S. feder-
al income taxation as a result of section
864(c)(8) and proposed §1.864(c)(8)-1. A
comment identified several relevant Code
sections and analyzed the application of
these sections to transactions involving
section 731 distributions. The Treasury
Department and the IRS continue to study
this issue and will, if necessary, address it
through future rulemaking.
E. Information exchange between a
partnership and non-controlling partners
A comment requested that foreign part-
ners that do not own a controlling interest
in a partnership be permitted to estimate
their effectively connected gain or loss
for purposes of section 864(c)(8) because

Bulletin No. 2020–48 1079 November 23, 2020
non-controlling partners may not be able
to obtain from the partnership the infor-
mation required to perform the compu-
tations under these rules. The Treasury
Department and the IRS have determined
that such a rule is not needed under sec-
tion 864(c)(8) because the proposed with-
holding regulations address this issue.
Specifically, the proposed withholding
regulations provide rules in proposed
§1.864(c)(8)-2 that facilitate and encour-
age the transfer of information between
a foreign partner and a partnership for
purposes of section 864(c)(8). The infor-
mation reporting requirements of the pro-
posed withholding regulations require the
partnership to provide the foreign partner
with the information necessary to perform
the computations under these rules, even
if the foreign partner does not hold a con-
trolling interest in the partnership. How-
ever, this comment will be considered as
part of the proposed withholding regula-
tions, which will be finalized separately in
a later issue of the Federal Register.
F. Section 754 elections
A comment requested a special rule
for any foreign transferor that has a dif-
ference between its basis in the partner-
ship interest and its share of the partner-
ship’s inside basis that occurs because
no section 754 election is in effect at the
time of transfer; this special rule would,
in effect, deem a section 754 election.
Specifically, the comment indicated that
a foreign transferor may not have negoti-
ated for the partnership to make a section
754 election upon acquisition of an in-
terest in a partnership engaged in a trade
or business within the United States be-
cause the transferor considered Rev. Rul.
91-32, 1991-1 C.B. 107, to be incorrect.
As a result, upon a later transfer of the
acquired partnership interest, the foreign
transferor would have received a differ-
ent result under the rules in the section
864(c)(8) proposed regulations than if
the partnership had instead sold all of its
assets and then liquidated. Because this
result occurs due to the failure to make a
section 754 election and the mismatches
that follow from that failure, the Treasury
Department and the IRS have determined
that it would be inappropriate to adopt a
special rule in these circumstances.
G. Clarification of section 897
coordination rule with respect to
nonrecognition provisions
Proposed §1.864(c)(8)-1(d) coordi-
nates the taxation of United States real
property interests under section 897(g)
with section 864(c)(8) by providing that
when a partnership holds United States
real property interests and a transfer of
an interest in that partnership is subject to
section 864(c)(8) because the partnership
is engaged in the conduct of a trade or
business within the United States without
regard to section 897, the amount of the
foreign transferor’s effectively connect-
ed gain or loss will be determined under
section 864(c)(8) and not under section
897(g). However, the proposed regula-
tions did not provide explicit guidance on
the application of the section 897 coordi-
nation rule when a foreign transferor trans-
fers its partnership interest in a nonrecog-
nition transaction. The final regulations
clarify the interaction between the section
897 coordination rule and the nonrecogni-
tion provision described in §1.864(c)(8)-
1(b)(2)(ii). Specifically, §1.864(c)(8)-1(d)
provides that any transfer of an interest in
a partnership as part of a nonrecognition
transaction will not be subject to section
864(c)(8) to the extent that the gain or loss
on the transfer is not recognized; instead,
if the partnership owns one or more Unit-
ed States real property interests, section
897(g) and the regulations thereunder will
apply with respect to the unrecognized
gain or loss.
III. Applicability Dates
The proposed regulations were pro-
posed to apply to transfers occurring on
or after November 27, 2017. Because the
provisions contained in this rulemaking
are finalized after June 22, 2019, these
regulations generally apply to transfers
occurring on or after December 26, 2018
(that is, the date on which the proposed
regulations were filed with the Federal
Register). See sections 7805(b)(1)(B) and
(b)(2) and §§1.864(c)(8)-1(j) and 1.897-
7(c); see also the Applicability Dates
section of the Preamble to the proposed
regulations. While not subject to these
final regulations, transfers occurring on
or after November 27, 2017, but before
December 26, 2018, are subject to section
864(c)(8). In addition, these final regula-
tions apply to amounts taken into account
on or after December 26, 2018, pursuant
to an installment sale (as defined in sec-
tion 453(b)) occurring on or after Novem-
ber 27, 2017, and before December 26,
2018. §§1.864(c)(8)-1(j) and 1.897-7(c).
This rule is consistent with the manner in
which installment sales are treated under
existing law. See, e.g., Snell v. Commis-
sioner, 97 F.2d 891 (5th Cir. 1938) (the tax
laws in effect for the year the installment
gain is recognized apply to the gain); see
also Estate of Kearns v. Commissioner, 73
T.C. 1223 (1980); Klein v. Commission-
er, 42 T.C. 1000 (1964); Rev. Rul. 79-22,
1979-1 C.B. 275.
Special Analyses
These final regulations are not subject
to review under section 6(b) of Executive
Order 12866 pursuant to the Memoran-
dum of Agreement (April 11, 2018) be-
tween the Treasury Department and the
Office of Management and Budget regard-
ing review of tax regulations.
The Treasury Department and the IRS
have assessed that the final regulations do
not establish a new collection of infor-
mation nor modify an existing collection
that requires the approval of the Office of
Management and Budget under the Paper-
work Reduction Act (44 U.S.C. chapter
35).
Section 864(c)(8) and the final regula-
tions generally apply to nonresident alien
individuals and foreign corporations on
the transfer of an interest in a partnership
that is engaged in a trade or business with-
in the United States, and not directly to the
trade or business the partnership conducts
in the United States. Under section 605 of
the Regulatory Flexibility Act (5 U.S.C.
chapter 6), the Treasury Department and
the IRS certify that the final regulations
will not have a significant economic im-
pact on a substantial number of small
business entities. The reason is that the
final regulations generally apply to non-
resident alien individuals and foreign cor-
porations on the transfer of an interest in
a partnership and not directly to domestic
small business entities. Pursuant to section
7805(f), the notice of proposed rulemak-
ing preceding these final regulations was

November 23, 2020 1080 Bulletin No. 2020–48
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administration
for comment on its impact on small busi-
ness. No comments were received.
Drafting Information
The principal authors of these regula-
tions are Chadwick Rowland and Ronald
M. Gootzeit, Office of the Associate Chief
Counsel (International). However, other
personnel from the Treasury Department
and the IRS participated in their develop-
ment.
Statement of Availability
Revenue rulings and other guidance
cited in this document are published in the
Internal Revenue Bulletin (or Cumulative
Bulletin) and are available from the Su-
perintendent of Documents, U.S. Govern-
ment 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 record-
keeping requirements.
Amendments to the Regulations
Accordingly, 26 CFR part 1 is amend-
ed as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding entries in nu-
merical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.864(c)(8)-1 also issued under
26 U.S.C. 864(c)(8) and 897(g).
* * * * *
Section 1.897-7 also issued under 26
U.S.C. 897(g).
* * * * *
Par. 2. Section 1.864(c)(8)-1 is added
to read as follows:
§1.864(c)(8)-1 Gain or loss by foreign
persons on the disposition of certain
partnership interests.
(a) Overview. This section provides
rules and definitions under section 864(c)
(8). Paragraph (b) of this section provides
the general rule treating gain or loss rec-
ognized by a nonresident alien individual
or foreign corporation from the sale or ex-
change of a partnership interest as effec-
tively connected gain or effectively con-
nected loss. Paragraph (c) of this section
provides rules for determining the limita-
tions on the amount of effectively con-
nected gain or effectively connected loss
under section 864(c)(8) and paragraph
(b) of this section. Paragraph (d) of this
section provides rules regarding coordi-
nation with section 897. Paragraph (e) of
this section provides rules regarding cer-
tain tiered partnerships. Paragraph (f) of
this section provides rules regarding U.S.
income tax treaties. Paragraph (g) of this
section provides definitions. Paragraph
(h) of this section provides a rule regard-
ing certain contributions of property to a
partnership. Paragraph (i) of this section
contains examples illustrating the rules set
forth in this section. Paragraph (j) of this
section provides the applicability date.
(b) Gain or loss treated as effectively
connected gain or loss—(1) In general.
Notwithstanding any other provision of
subtitle A of the Internal Revenue Code,
if a foreign transferor owns, directly or in-
directly, an interest in a partnership that is
engaged in the conduct of a trade or busi-
ness within the United States, outside cap-
ital gain, outside capital loss, outside ordi-
nary gain, or outside ordinary loss (each
as defined in paragraph (b)(2) of this sec-
tion) recognized by the foreign transferor
on the transfer of all (or any portion) of the
interest is treated as effectively connected
gain or effectively connected loss, subject
to the limitations described in paragraph
(b)(3) of this section. Except as provided
in paragraph (d) of this section, this sec-
tion does not apply to prevent any portion
of the gain or loss that is otherwise treated
as effectively connected gain or effective-
ly connected loss under provisions of the
Internal Revenue Code other than section
864(c)(8) from being so treated.
(2) Determination of outside gain and
loss—(i) In general. The amount of gain
or loss recognized by the foreign trans-
feror in connection with the transfer of its
partnership interest is determined under
all relevant provisions of the Internal Rev-
enue Code and the regulations thereunder.
See, e.g., §§1.741-1(a) and 1.751-1(a)(2).
For purposes of this section, the amount of
gain or loss that is treated as capital gain or
capital loss under sections 741 and 751 is
referred to as outside capital gain or out-
side capital loss, respectively. The amount
of gain or loss that is treated as ordinary
gain or ordinary loss under sections 741
and 751 is referred to as outside ordinary
gain or outside ordinary loss, respectively.
(ii) Nonrecognition provisions. A for-
eign transferor’s gain or loss recognized
in connection with the transfer of its part-
nership interest does not include gain or
loss to the extent that the gain or loss is
not recognized by reason of one or more
nonrecognition provisions of the Internal
Revenue Code.
(3) Limitations. For purposes of apply-
ing this section, this paragraph (b)(3) lim-
its the amount of gain or loss recognized
by a foreign transferor that may be treated
as effectively connected gain or effective-
ly connected loss.
(i) Capital gain limitation. Outside
capital gain recognized by a foreign trans-
feror is treated as effectively connected
gain to the extent it does not exceed ag-
gregate deemed sale EC capital gain de-
termined under paragraph (c)(3)(ii)(B) of
this section.
(ii) Capital loss limitation. Outside
capital loss recognized by a foreign trans-
feror is treated as effectively connected
loss to the extent it does not exceed ag-
gregate deemed sale EC capital loss de-
termined under paragraph (c)(3)(ii)(B) of
this section.
(iii) Ordinary gain limitation. Outside
ordinary gain recognized by a foreign
transferor is treated as effectively con-
nected gain to the extent it does not ex-
ceed aggregate deemed sale EC ordinary
gain determined under paragraph (c)(3)(ii)
(A) of this section.
(iv) Ordinary loss limitation. Outside
ordinary loss recognized by a foreign
transferor is treated as effectively con-
nected loss to the extent it does not exceed
aggregate deemed sale EC ordinary loss
determined under paragraph (c)(3)(ii)(A)
of this section.
(c) Amount treated as effectively con-
nected with the conduct of a trade or
business within the United States. This
paragraph (c) describes the steps to be
followed in computing the limitations de-
scribed in paragraph (b)(3) of this section.
(1) Step 1: Determine deemed sale gain
and loss. Determine the amount of gain or

Bulletin No. 2020–48 1081 November 23, 2020
loss that the partnership would recognize
with respect to each of its assets (other
than interests in partnerships described
in paragraph (e) of this section) upon a
deemed sale of all of the partnership’s as-
sets on the date of the transfer of the part-
nership interest described in paragraph (b)
(1) of this section (deemed sale). For this
purpose, a deemed sale is treated as a sale
by the partnership to an unrelated person
of each of its assets (tangible and intangi-
ble) in a fully taxable transaction for cash
in an amount equal to the fair market value
of each asset (taking into account section
7701(g)) immediately before the partner’s
transfer of the interest in the partnership.
For rules concerning the deemed sale of
certain partnership interests, see para-
graph (e) of this section.
(2) Step 2: Determine deemed sale EC
gain and loss—(i) In general – (A) Ef-
fectively connected determination. With
respect to each asset deemed sold in para-
graph (c)(1) of this section, determine the
amount of gain or loss from the deemed
sale that would be treated as effectively
connected gain or effectively connected
loss (including by reason of section 897).
Gain described in this paragraph (c)(2) is
referred to as deemed sale EC gain, and
loss described in this paragraph (c)(2) is
referred to as deemed sale EC loss. Sec-
tion 864 and the regulations thereunder
apply for purposes of determining wheth-
er deemed sale gain or loss would be treat-
ed as effectively connected gain or loss.
See paragraph (c)(2)(ii) of this section
for sourcing rules that apply for purposes
of determining deemed sale EC gain and
deemed sale EC loss.
(B) 10-year exception. For purposes
of applying paragraph (c)(2)(i)(A) of this
section, gain or loss from the deemed sale
of an asset (other than a United States
real property interest within the meaning
of section 897(c)) will not be treated as
deemed sale EC gain or deemed sale EC
loss if—
(1) No income or gain produced by the
asset was taxable as income that was ef-
fectively connected with the conduct of a
trade or business within the United States
by the partnership (or the foreign transfer-
or, a predecessor of the foreign transferor,
or a predecessor of the partnership) during
the lesser of the ten-year period ending on
the date of the transfer or the period for
which the partnership (and, if applicable,
the foreign transferor, a predecessor of the
foreign transferor, and a predecessor of
the partnership) held the asset; and
(2) The asset has not been used, or
held for use, in the conduct of a trade or
business within the United States by the
partnership (or the foreign transferor, a
predecessor of the foreign transferor, or a
predecessor of the partnership) during that
same period.
(ii) Sourcing rules for determining
deemed sale EC gain and deemed sale EC
loss—(A) In general. For purposes of ap-
plying section 865(e)(2)(A) in connection
with the determination of deemed sale EC
gain and deemed sale EC loss under this
paragraph (c)(2)(ii)(A), except to the ex-
tent provided in paragraphs (c)(2)(ii)(B)
through (E) of this section, the deemed
sale of an asset will be treated as attrib-
utable to an office or other fixed place of
business maintained by the partnership in
the United States. However, if the partner-
ship does not maintain an office or other
fixed place of business in the United States
(within the meaning of section 864(c)(5)
(A) and §1.864-7), neither the office at-
tribution described in this paragraph (c)
(2)(ii)(A), nor the rules of paragraphs (c)
(2)(ii)(B) through (E) of this section, will
apply.
(B) Look-back rule for sale of inven-
tory property. The deemed sale of inven-
tory property (as defined in section 865(i)
(1)) will not be treated as attributable to
an office or other fixed place of business
maintained by the partnership in the Unit-
ed States to the extent of foreign source
inventory gain or loss. Foreign source in-
ventory gain or loss is determined by mul-
tiplying the deemed sale gain or deemed
sale loss attributable to inventory property
by the foreign source inventory ratio. The
foreign source inventory ratio cannot ex-
ceed one. If the amount in paragraph (c)
(2)(ii)(B)(1) of this section is not positive,
the foreign source inventory ratio is zero.
If the amount in paragraph (c)(2)(ii)(B)(1)
of this section is positive, but the amount
in in paragraph (c)(2)(ii)(B)(2) of this
section is not positive, the foreign source
inventory ratio is one. The foreign source
inventory ratio is—
(1) The gross income of the partnership
from sources without the United States
(as determined under sections 865(b) and
865(e)(2)) that was attributable to inven-
tory property sold during the lesser of—
(i) The period comprised of the part-
nership’s three taxable years immediately
preceding the date of the deemed sale, or
(ii) The period beginning on the date
the partnership (or any of its predecessors)
was formed and ending on the last day of
the partnership’s taxable year immediate-
ly preceding the date of the deemed sale;
over
(2) The total gross income of the part-
nership that was attributable to inventory
property sold during that same period.
(C) Look-back rule for intangibles. The
deemed sale of an intangible (as defined in
section 865(d)(2), including going concern
value) will not be treated as attributable to
an office or other fixed place of business
maintained by the partnership in the Unit-
ed States to the extent of foreign source
intangible gain or loss. Foreign source
intangible gain or loss is determined
by multiplying the deemed sale gain or
deemed sale loss from an intangible, with-
out regard to any gain described in section
865(d)(4)(A), by the foreign source intan-
gible ratio. The foreign source intangible
ratio cannot exceed one. If the amount in
paragraph (c)(2)(ii)(C)(1) of this section is
not positive, the foreign source intangible
ratio is zero. If the amount in paragraph
(c)(2)(ii)(C)(1) of this section is positive,
but the amount in in paragraph (c)(2)(ii)
(C)(2) of this section is not positive, the
foreign source inventory ratio is one. The
foreign source intangible ratio is–
(1) The gross ordinary income (other
than from dispositions of depreciable or
amortizable property) of the partnership
from sources without the United States
that was not effectively connected with
the conduct of a trade or business within
the United States, during the lesser of—
(i) The period comprised of the part-
nership’s three taxable years immediately
preceding the date of the deemed sale, or
(ii) The period beginning on the date
the partnership (or any of its predecessors)
is formed and ending on the last day of
the partnership’s taxable year immediately
preceding the year in which the deemed
sale occurs; over
(2) The total gross ordinary income
(other than from dispositions of deprecia-
ble or amortizable property) of the part-
nership during that period.

November 23, 2020 1082 Bulletin No. 2020–48
(D) Depreciable personal property—
(1) Depreciation recapture. The deemed
sale of depreciable personal property (as
defined in section 865(c)(4)(A)), including
from the sale of an amortizable intangible
(as defined in section 865(d)(2)), will not
be treated as attributable to an office or
other fixed place of business maintained
by the partnership in the United States to
the extent the deemed sale gain would be
treated as from sources outside the United
States after applying section 865(c)(1) at
the time of the deemed sale.
(2) Gain in excess of depreciation or
loss with respect to depreciable personal
property. For purposes of this section, if
the deemed sale of depreciable personal
property (other than an amortizable in-
tangible) results in deemed sale gain in
excess of the property’s depreciation ad-
justments (as defined in section 865(c)(4)
(B)), or results in deemed sale loss, attri-
bution to an office or other fixed place of
business maintained by the partnership
in the United States with respect to the
excess deemed sale gain, or deemed sale
loss, will be determined based on where
the property is located: if the property is
located outside the United States, the ex-
cess deemed sale gain, or the deemed sale
loss, will not be treated as attributable to
an office or other fixed place of business
maintained by the partnership in the Unit-
ed States; if the property is located with-
in the United States, the excess deemed
sale gain, or the deemed sale loss, will be
treated as attributable to an office or other
fixed place of business maintained by the
partnership in the United States.
(E) Material change in circumstances
rule. If a material change in circumstanc-
es occurred that causes the applicable rule
provided in paragraph (c)(2)(ii)(B) or (C)
of this section to provide a sourcing result
that is materially different from the sourc-
ing result that would occur if the applica-
ble period described in paragraph (c)(2)
(ii)(B)(1) or (c)(2)(ii)(C)(1) of this section
began on the date on which the materi-
al change in circumstance occurred and
ended on the last day of the partnership’s
taxable year immediately preceding the
year in which the deemed sale occurs (the
modified look-back period), the applicable
rule provided in paragraph (c)(2)(ii)(B) or
(C) of this section may be applied by ref-
erence to the modified look-back period.
The difference between the sourcing re-
sults is determined by comparing the for-
eign source inventory ratio (as described
in paragraph (c)(2)(ii)(B) of this section)
or the foreign source intangible ratio (as
described in paragraph (c)(2)(ii)(C) of this
section), as applicable, with the foreign
source inventory ratio or foreign source
intangible ratio, as applicable, if that ra-
tio were determined by reference to the
modified look-back period. For purposes
of this paragraph (c)(2)(ii)(E), the sourc-
ing results will not be materially different
unless the percentage point difference be-
tween the ratios described in the preceding
sentence is at least 30 percentage points.
(iii) Examples. This paragraph (c)(2)
(iii) provides examples that illustrate the
rules of paragraph (c)(2)(ii) of this section.
Except as otherwise provided, the follow-
ing facts apply for purposes of this para-
graph (c)(2)(iii). FP is a foreign corpora-
tion and a partner in PRS, a partnership
that is engaged in the conduct of a trade or
business within the United States (the U.S.
Business) and a business in Country A (the
Country A Business). Both businesses
purchase inventory property and sell the
purchased inventory property to unrelated
customers; this is the only income-gener-
ating activity carried on by the businesses.
PRS maintains an office or fixed place of
business within the U.S. (within the mean-
ing of section 864(c)(5)(A) and §1.864-7)
and, for its U.S. business, PRS sells its in-
ventory property through its U.S. office.
For the Country A business, PRS sells its
inventory property through its Country
A office for consumption in Country A;
PRS’s Country A office materially partic-
ipates in each sale. The gain or loss from
the inventory sold through PRS’s Country
A office is treated as from sources with-
out the United States and is not effectively
connected with PRS’s U.S. Business. In
year 4, FP sells its entire interest in PRS,
thereby triggering the deemed sale de-
scribed in paragraph (c)(1) of this section.
In the deemed sale, PRS recognizes $10x
of gain on the sale of its inventory prop-
erty (the only asset PRS holds other than
goodwill and going concern value). The
10-year exception provided in paragraph
(c)(2)(i)(B) of this section does not apply.
(A) Example 1: Determining foreign source in-
ventory gain–(1) Facts. Based on PRS’s sales records
for the three taxable years immediately preceding the
date of the deemed sale, PRS’s gross income from
sources without the United States that is attributable
to sales of inventory property is $12x and PRS’s total
gross income attributable to sales of inventory prop-
erty during that period is $30x.
(2) Analysis. To determine foreign source in-
ventory gain or loss described in paragraph (c)(2)
(ii)(B) of this section, the $10x deemed sale gain
attributable to inventory property is multiplied by
PRS’s foreign source inventory ratio. PRS’s foreign
source inventory ratio is PRS’s gross income from
sources without the United States that are attrib-
utable to sales of inventory property within PRS’s
three taxable years preceding the date of the deemed
sale, over PRS’s total gross income attributable to
sales of inventory property during the same period.
Thus, based on PRS’s sales records from the three
taxable years preceding the date of the deemed sale,
the foreign source inventory gain for PRS’s invento-
ry is $4x (the $10x deemed sale gain attributable to
inventory multiplied by the foreign source inventory
ratio of $12x over $30x).
(B) Example 2: Determining deemed sale EC
gain attributable to inventory property under the ma-
terial change in circumstances rule—(1) Facts. The
facts are the same as in paragraph (c)(2)(iii)(A)(1) of
this section (the facts of Example 1 in this paragraph
(c)(2)(iii)), except that at the beginning of year 3
(PRS’s taxable year immediately preceding the date
of the deemed sale), PRS started a new business in
Country B (the Country B Business) to take advan-
tage of favorable market prospects for its products in
Country B. For the Country B Business, PRS sells its
inventory property through its Country B office for
consumption in Country B; PRS’s Country B office
materially participates in each such sale. The gain or
loss from the inventory sold through PRS’s Coun-
try B office is foreign source gain or loss. Also, at
the beginning of year 3, PRS substantially reduced
its U.S. Business as a result of market factors. As a
result of these changes in year 3, 95% of PRS’s in-
ventory property is sold in its Country A Business
and Country B Business (collectively, the Foreign
Businesses) beginning on the date in which these
changes occurred; accordingly, 5% of PRS’ inven-
tory property is sold in its U.S. Business after these
changes. Based on PRS’s sales records for the three
taxable years preceding the date of the deemed sale,
PRS’s gross income from sources without the United
States that are attributable to sales of inventory prop-
erty is $15x and PRS’s total gross income attribut-
able to sales of inventory property during that period
is $30x; for year 3, PRS’s gross income from sources
without the United States that are attributable to sales
of inventory property is $9.5x, and PRS’s total gross
income attributable to sales of inventory property in
Year 3 is $10x.
(2) Analysis. The material change in circum-
stances rule described in paragraph (c)(2)(ii)(E) of
this section applies if due to a material change in cir-
cumstances, the sourcing rule provided in paragraph
(c)(2)(ii)(B) of this section provides a sourcing result
that is materially different from the sourcing result
that would occur if that sourcing rule was applied
by reference to the modified look-back period; that
is, the period beginning on the date in which a mate-
rial chance in circumstances occurred and ending on
the last day of the PRS’s taxable year immediately
preceding the date of the deemed sale. For this pur-

Bulletin No. 2020–48 1083 November 23, 2020
pose, the reduction in PRS’s U.S. business in year 3,
coupled with the creation of the Country B Business
in the same year, qualifies as a material change in
circumstances. Thus, the modified look-back period
consists of year 3; that is, the period starting at the
beginning of year 3, the date in which the materi-
al change in circumstances occurred, and ending of
the last day of year 3, the last day of PRS’s taxable
year immediately preceding the date of the deemed
sale. Based on PRS’s sales records for the three tax-
able years preceding the deemed sale, the foreign
source inventory ratio, expressed as a percentage,
is 50% ($15x attributable to PRS’s gross income
from sources without the United States with respect
to sales of its inventory property, over $30x attrib-
utable to PRS’s total gross income with respect to
sales of its inventory property). Due to the material
change in circumstances, however, 95% of PRS’s
inventory property is sold in its Foreign Business-
es. ($9.5x attributable to PRS’s gross income from
sources without the United States with respect to
sales of its inventory property, over $10x attrib-
utable to PRS’s total gross income with respect to
sales of its inventory property.) Accordingly, if PRS
applied the sourcing rule provided in paragraph (c)
(2)(ii)(B) of this section by reference to the modi-
fied look-back period, 95% ($9.5x/$10x), or $9.5x,
of the gain would be attributable to sales for PRS’s
Foreign Businesses (gain from sources without the
United States), and only 5% ($.5x/$10x), or $0.5x,
of the gain would be attributable to sales for PRS’s
U.S. Business (gain from United States sources). The
excess of the foreign source inventory ratio deter-
mined by reference to the modified look-back period
(expressed as a percentage), over the foreign source
inventory ratio (also expressed as a percentage) is
45%; that is 95% (as determined under the modified
look-back period) minus 50% (as determined under
the foreign source inventory ratio). Accordingly, the
sourcing results are materially different because the
45 percentage point difference is greater than the 30
percentage point threshold provided in paragraph (c)
(2)(ii)(E) of this section. Thus, the material change
in circumstances rule of paragraph (c)(2)(ii)(E) of
this section applies and the foreign source invento-
ry gain determined under paragraph (c)(2)(ii)(B) of
this section, determined by reference to the modified
look-back period, is $9.5x; that is, the deemed sale
gain attributable to inventory property ($10x), mul-
tiplied by the foreign source inventory ratio deter-
mined by reference to the modified look-back period
($9.5x/$10x).
(3) Step 3: Determine the foreign
transferor’s distributive share of deemed
sale EC gain or deemed sale EC loss—
(i) In general. A foreign transferor’s dis-
tributive share of deemed sale EC gain or
deemed sale EC loss with respect to each
asset is the amount of the deemed sale EC
gain and deemed sale EC loss determined
under paragraph (c)(2) of this section that
would have been allocated to the foreign
transferor by the partnership under all ap-
plicable Internal Revenue Code sections
(including section 704) upon the deemed
sale described in paragraph (c)(1) of this
section, taking into account allocations of
tax items applying the principles of sec-
tion 704(c), including any remedial allo-
cations (see §1.704-3(d)), and any section
743(b) basis adjustments (see §1.743-1(j)
(3)). For this purpose, a foreign transfer-
or’s distributive share of deemed sale EC
gain or deemed sale EC loss does not in-
clude any amount that is excluded from the
foreign transferor’s gross income or oth-
erwise exempt from U.S. Federal income
tax by reason of an applicable provision of
the Internal Revenue Code (including, for
example, by reason of section 864(b)(2),
872(b), or 883). Similarly, a foreign trans-
feror’s distributive share of deemed sale
EC gain or deemed sale EC loss does not
include any amount to which an exception
under section 897 applies, such as section
897(k) or section 897(l), if that amount is
not otherwise treated as effectively con-
nected under a provision of the Code.
For rules regarding the determination of
a foreign transferor’s distributive share of
deemed sale EC gain and deemed sale EC
loss under an applicable U.S. income tax
treaty, see paragraph (f) of this section.
(ii) Aggregate deemed sale EC items—
(A) Ordinary gain or loss. A foreign
transferor’s aggregate deemed sale EC
ordinary gain (if the net aggregate of the
foreign transferor’s distributive share of
the deemed sale EC ordinary gain and
loss is a gain) or aggregate deemed sale
EC ordinary loss (if the net aggregate of
the foreign transferor’s distributive share
of the deemed sale EC ordinary gain and
loss is a loss) is determined by taking into
account—
(1) The portion of the foreign trans-
feror’s distributive share of deemed sale
EC gain and deemed sale EC loss that is
attributable to the deemed sale of the part-
nership’s assets that are section 751(a)
property; and
(2) Deemed sale EC gain and deemed
sale EC loss from the deemed sale of as-
sets that are section 751(a) property that
would be allocated to the foreign transfer-
or with respect to interests in partnerships
that are engaged in the conduct of a trade
or business within the United States under
paragraph (e)(1)(ii) of this section upon
the deemed asset sales described in para-
graph (e)(1)(i) of this section.
(B) Capital gain or loss. A foreign
transferor’s aggregate deemed sale EC
capital gain (if the net aggregate of the
foreign transferor’s distributive share of
the deemed sale EC capital gain and loss
is a gain) or aggregate deemed sale EC
capital loss (if the net aggregate of the
foreign transferor’s distributive share of
the deemed sale EC capital gain and loss
is a loss) is determined by taking into ac-
count—
(1) The portion of the foreign transfer-
or’s distributive share of deemed sale EC
gain and deemed sale EC loss that is at-
tributable to the deemed sale of assets that
are not section 751(a) property; and
(2) Deemed sale EC gain and deemed
sale EC loss from the sale of assets that are
not section 751(a) property and that would
be allocated to the foreign transferor with
respect to all interests in partnerships that
are engaged in the conduct of a trade or
business within the United States under
paragraph (e)(1)(ii) of this section upon
the deemed asset sales described in para-
graph (e)(1)(i) of this section.
(iii) Partial transfers. If a foreign trans-
feror transfers less than all of its interest in
a partnership, then for purposes of para-
graph (c)(3)(i) of this section, the foreign
transferor’s distributive share of deemed
sale EC gain and deemed sale EC loss is
determined by reference to the amount of
deemed sale EC gain or deemed sale EC
loss determined under paragraph (c)(3)
(i) of this section that is attributable to the
portion of the foreign transferor’s partner-
ship interest that was transferred.
(d) Coordination with section 897. If a
foreign transferor transfers an interest in a
partnership in a transfer that is subject to
section 864(c)(8) and the partnership owns
one or more United States real property
interests (as defined in section 897(c)),
then the foreign transferor determines its
effectively connected gain and effectively
connected loss under this section, and not
pursuant to section 897(g). Accordingly,
with respect to a transfer that is subject
to section 864(c)(8), section 864(c)(8)(C)
does not reduce the amount of gain or loss
treated as effectively connected gain or
loss under this section. For rules regarding
a transfer not subject to section 864(c)(8)
of an interest in a partnership that owns
one or more United States real property
interests, see section 897(g) and the reg-
ulations thereunder. If a foreign transferor
transfers an interest in a partnership in the

November 23, 2020 1084 Bulletin No. 2020–48
manner described in paragraph (b)(2)(ii)
of this section, the transfer is treated as not
subject to section 864(c)(8) to the extent
of the gain or loss that is not recognized;
instead, if the partnership owns one or
more United States real property interests
at the time of transfer, the rules of section
897(g) and the regulations thereunder ap-
ply to the unrecognized gain or loss.
(e) Tiered partnerships—(1) Transfers
of upper-tier partnerships. Assets sold in
a deemed sale described in paragraph (c)
(1) of this section do not include interests
in partnerships that are engaged in the
conduct of a trade or business within the
United States or interests in partnerships
that hold, directly or indirectly, partner-
ships that are engaged in the conduct of a
trade or business within the United States.
Rather, if a foreign transferor transfers an
interest in a partnership (upper-tier part-
nership) that owns, directly or indirectly,
an interest in one or more partnerships that
are engaged in the conduct of a trade or
business within the United States, then—
(i) Beginning with the lowest-tier part-
nership that is engaged in the conduct of a
trade or business within the United States
in a chain of partnerships and going up the
chain, each partnership that is engaged in
the conduct of a trade or business within
the United States is treated as selling its
assets in a deemed sale in accordance with
the principles of paragraph (c)(1) of this
section; and
(ii) Each partnership must determine
its deemed sale EC gain and deemed sale
EC loss in accordance with the principles
of paragraph (c)(2) of this section, and de-
termine the distributive share of deemed
sale EC gain and deemed sale EC loss for
each partner that is either a partnership (in
which the foreign transferor is a direct or
indirect partner) or a foreign transferor,
in accordance with the principles of para-
graph (c)(3)(i) of this section.
(2) Transfers by upper-tier partner-
ships. If a foreign transferor is a direct or
indirect partner in an upper-tier partnership
and the upper-tier partnership transfers an
interest in a partnership that is engaged in
the conduct of a trade or business within
the United States (including a partnership
held indirectly through one or more part-
nerships), then the principles of this section
(including paragraph (e)(1) of this section)
apply with respect to the gain or loss on
the transfer that is allocated to the foreign
transferor by the upper-tier partnership.
(3) Coordination with section 897. For
purposes of this paragraph (e), a lower-tier
partnership that holds one or more United
States real property interests is treated as
engaged in the conduct of a trade or busi-
ness within the United States.
(f) Treaty coordination. This para-
graph (f) describes how paragraph (c)
(3) of this section applies in the case of
a transfer of an interest in a partnership
by a foreign transferor that is eligible for
benefits under an applicable U.S. income
tax treaty. As a general matter, a foreign
transferor must satisfy the requirements
of the limitation on benefits article, if
any, in the treaty between the jurisdiction
in which the transferor is resident and
the United States to be eligible for treaty
benefits. In the case of a foreign trans-
feror that is entitled to treaty benefits, in
determining the foreign transferor’s dis-
tributive share of deemed sale EC gain
and deemed sale EC loss, gain or loss
derived by the foreign transferor attrib-
utable to assets deemed sold that would
be exempt from tax under an applicable
U.S. income tax treaty if disposed of by
the partnership are not taken into account
under paragraph (c)(3) of this section. In
general, gain or loss on the alienation of
a partnership interest will be treated as
effectively connected gain or loss un-
der section 864(c)(8) to the extent that
the gain or loss is either attributable to
assets forming part of a U.S. permanent
establishment or fixed place of business,
or taxable under a provision govern-
ing the disposition of United States real
property interests. Gain or loss from the
alienation of a partnership interest will
be considered gain or loss attributable to
the alienation of assets forming part of a
permanent establishment or fixed place
of business in the United States to the ex-
tent the assets deemed sold under section
864(c)(8) form a part of the U.S. perma-
nent establishment or fixed place of busi-
ness of the partnership. If, however, af-
ter applying treaty benefits in paragraph
(c)(3) of this section, the only gains or
losses that would be taken into account
are gains or losses attributable to United
States real property interests, the foreign
transferor determines its effectively con-
nected gain and effectively connected
loss pursuant to section 897 and not un-
der this section.
(g) Definitions. The following defini-
tions apply for purposes of this section.
(1) Effectively connected gain. The
term effectively connected gain means
gain that is treated as effectively connect-
ed with the conduct of a trade or business
within the United States.
(2) Effectively connected loss. The
term effectively connected loss means loss
treated as effectively connected with the
conduct of a trade or business within the
United States.
(3) Foreign transferor. The term for-
eign transferor means a nonresident alien
individual or foreign corporation.
(4) Section 751(a) property. The term
section 751(a) property means unrealized
receivables described in section 751(c)
and inventory items described in section
751(d).
(5) Transfer. The term transfer means
a sale, exchange, or other disposition, and
includes a distribution from a partnership
to a partner to the extent that gain or loss
is recognized on the distribution, as well
as a transfer treated as a sale or exchange
under section 707(a)(2)(B).
(h) Anti-stuffing rule. If a foreign trans-
feror (or a person that is related to a for-
eign transferor within the meaning of sec-
tion 267(b) or 707(b)) transfers property
(including another partnership interest) to
a partnership in a transaction with a prin-
cipal purpose of reducing the amount of
gain treated as effectively connected gain,
or increasing the amount of loss treated as
effectively connected loss, under section
864(c)(8) or section 897, the transfer is
disregarded for purposes of section 864(c)
(8) or section 897, as appropriate.
(i) Examples. This paragraph (i) pro-
vides examples that illustrate the rules
of this section. Except as otherwise pro-
vided, the following facts are presumed
for purposes of this paragraph (i). FP is
a foreign corporation. USP is a domestic
corporation. PRS is a partnership that was
formed on January 1, 2018, when FP and
USP each contributed $100x in cash. PRS
has made no distributions and received no
contributions other than those described in
the preceding sentence. FP’s adjusted ba-
sis in its interest in PRS is $100x. X is a
foreign corporation that is unrelated to FP,
USP, or PRS. Upon the formation of PRS,

Bulletin No. 2020–48 1085 November 23, 2020
FP and USP entered into an agreement
providing that all income, gain, loss, and
deduction of PRS will be allocated equal-
ly between FP and USP. PRS is engaged in
the conduct of a trade or business within
the United States (the U.S. Business) and
an unrelated business in Country A (the
Country A Business). In a deemed sale de-
scribed in paragraph (c)(1) of this section,
gain or loss on assets of the U.S. Business
would be treated as effectively connected
gain or effectively connected loss, and
gain or loss on assets of the Country A
Business would not be so treated (includ-
ing by reason of paragraph (c)(2)(i)(B) of
this section). PRS has no liabilities.
(1) Example 1. Deemed sale limitation—(i)
Facts. On January 1, 2019, FP sells its entire interest
in PRS to X for $105x. FP does not qualify for the
benefits of an income tax treaty between the United
States and another country. Immediately before the
sale, PRS’s balance sheet appears as follows:
Adjusted BasisFair Market Value
U.S. Business section 1231 asset$100x$104x
Country A Business capital asset100x106x
Total$200x$210x
(ii) Analysis—(A) Outside gain or loss. FP is a
foreign transferor (within the meaning of paragraph
(g)(3) of this section) and transfers (within the mean-
ing of paragraph (g)(5) of this section) its interest
in PRS to X. For purposes of this example, for sim-
plicity, PRS is assumed to hold no section 751(a)
property and depreciation recapture is assumed to
be zero. FP recognizes a $5x capital gain under sec-
tion 741, which is an outside capital gain within the
meaning of paragraph (b)(2)(i) of this section. Un-
der paragraph (b)(1) of this section, FP’s $5x capital
gain is treated as effectively connected gain to the
extent that it does not exceed the limitation described
in paragraph (b)(3)(i) of this section, which is FP’s
aggregate deemed sale EC capital gain.
(B) Deemed sale. FP’s aggregate deemed sale
EC capital gain is determined according to the
three-step process set forth in paragraph (c) of this
section. First, the amount of gain or loss that PRS
would recognize with respect to each of its assets
upon a deemed sale described in paragraph (c)(1)
of this section is a $4x gain with respect to the
U.S. Business section 1231 asset and a $6x gain
with respect to the Country A Business capital as-
set. Second, under paragraph (c)(2) of this section,
PRS’s deemed sale EC gain is $4x. Third, under
paragraph (c)(3)(ii)(B) of this section, FP’s aggre-
gate deemed sale EC capital gain is $2x (that is, the
aggregate of its distributive share of deemed sale
EC gain attributable to the deemed sale of assets
that are not section 751(a) property, which is 50%
of $4x).
(C) Limitation. Under paragraph (b)(3)(i) of this
section, the $5x outside capital gain recognized by
FP is treated as effectively connected gain to the
extent that it does not exceed FP’s $2x aggregate
deemed sale EC capital gain. Accordingly, FP recog-
nizes $2x of capital gain that is treated as effectively
connected gain.
(2) Example 2. Outside gain limitation—(i)
Facts. On January 1, 2019, FP sells its entire interest
in PRS to X for $110x. FP does not qualify for the
benefits of an income tax treaty between the United
States and another country. Immediately before the
sale, PRS’s balance sheet appears as follows:
Adjusted BasisFair Market Value
U.S. Business section 1231 asset$100x$150x
Country A Business capital asset100x70x
Total$200x$220x
(ii) Analysis—(A) Outside gain or loss. FP is
a foreign transferor (within the meaning of para-
graph (g)(3) of this section) and transfers (within
the meaning of paragraph (g)(5) of this section)
its interest in PRS to X. For purposes of this ex-
ample, for simplicity, PRS is assumed to hold no
section 751(a) property and depreciation recapture
is assumed to be zero. FP recognizes a $10x capital
gain under section 741, which is an outside capital
gain within the meaning of paragraph (b)(2)(i) of
this section. Under paragraph (b)(1) of this section,
FP’s $10x capital gain is treated as effectively con-
nected gain to the extent that it does not exceed the
limitation described in paragraph (b)(3)(i) of this
section, which is FP’s aggregate deemed sale EC
capital gain.
(B) Deemed sale. FP’s aggregate deemed sale
EC capital gain is determined according to the three-
step process set forth in paragraph (c) of this sec-
tion. First, the amount of gain or loss that PRS would
recognize with respect to each of its assets upon a
deemed sale described in paragraph (c)(1) of this
section is a $50x gain with respect to the U.S. Busi-
ness section 1231 asset and a $30x loss with respect
to the Country A Business capital asset. Second, un-
der paragraph (c)(2) of this section, PRS’s deemed
sale EC gain is $50x. Third, under paragraph (c)(3)
(ii)(B) of this section, FP’s aggregate deemed sale
EC capital gain is $25x (that is, the aggregate of its
distributive share of deemed sale EC gain attribut-
able to the deemed sale of assets that are not section
751(a) property, which is 50% of $50x).
(C) Limitation. Under paragraph (b)(3)(i) of this
section, the $10x outside capital gain recognized
by FP is treated as effectively connected gain to the
extent that it does not exceed FP’s $25x aggregate
deemed sale EC capital gain. Accordingly, FP recog-
nizes $10x of capital gain that is treated as effective-
ly connected gain.
(3) Example 3. Interaction with section 751(a)—
(i) Facts. On January 1, 2019, FP sells its entire in-
terest in PRS to X for $95x. FP does not qualify
for the benefits of an income tax treaty between the
United States and another country. Through both its
U.S. Business and its Country A Business, PRS holds
inventory items and receivables that are section 751
property (as defined in §1.751-1(a)). Immediately be-
fore the sale, PRS’s balance sheet appears as follows:
Adjusted BasisFair Market Value
U.S. Business section 1231 asset$20x$50x
U.S. Business inventory and receivables30x50x
Country A Business capital asset100x80x
Country A Business inventory50x10x
Total$200x$190x

November 23, 2020 1086 Bulletin No. 2020–48
(ii) Analysis—(A) Outside gain or loss. FP is a
foreign transferor (within the meaning of paragraph
(g)(3) of this section) and transfers (within the mean-
ing of paragraph (g)(5) of this section) its interest in
PRS to X. Under sections 741 and 751, FP recog-
nizes a $10x ordinary loss and a $5x capital gain.
See §1.751-1(a). Under paragraph (b)(2)(i) of this
section, FP has outside ordinary loss equal to $10x
and outside capital gain equal to $5x. Under para-
graph (b)(1) of this section, FP’s outside ordinary
loss and outside capital gain are treated as effectively
connected loss and effectively connected gain to the
extent that each does not exceed the applicable lim-
itation described in paragraph (b)(3) of this section.
In the case of FP’s outside ordinary loss, the appli-
cable limitation is FP’s aggregate deemed sale EC
ordinary loss. In the case of FP’s outside capital gain,
the applicable limitation is FP’s aggregate deemed
sale EC capital gain.
(B) Deemed sale. FP’s aggregate deemed sale EC
ordinary loss and aggregate deemed sale EC capital
gain are determined according to the three-step pro-
cess set forth in paragraph (c) of this section.
(1) Step 1. The amount of gain or loss that PRS
would recognize with respect to each of its assets
upon a deemed sale described in paragraph (c)(1) of
this section is as follows:
AssetGain/(Loss)
U.S. Business section 1231 asset$30x
U.S. Business inventory and receivables20x
Country A Business capital asset(20x)
Country A Business inventory(40x)
(2) Step 2. Under paragraph (c)(2) of this section,
PRS’s deemed sale EC gain and deemed sale EC loss
must be determined with respect to each asset. The amounts determined under paragraph (c)(2) of this
section are as follows:
AssetDeemed Sale EC Gain/(Loss)
U.S. Business section 1231 asset$30x
U.S. Business inventory and receivables20x
Country A Business capital asset0
Country A Business inventory0
(3) Step 3. Under paragraph (c)(3)(ii)(B) of this
section, FP’s aggregate deemed sale EC capital gain
is $15x (that is, the aggregate of its distributive
share of deemed sale EC gain that is attributable to
the deemed sale of assets that are not section 751(a)
property, which is 50% of $30x) and FP’s aggregate
deemed sale EC ordinary loss is $0 (that is, the ag-
gregate of its distributive share of deemed sale EC
loss that is attributable to the deemed sale of assets
that are section 751(a) property).
(C) Limitation—(i) Capital gain. Under para-
graph (b)(3)(i) of this section, the $5x outside cap-
ital gain recognized by FP is treated as effectively
connected gain to the extent that it does not exceed
FP’s $15x aggregate deemed sale EC capital gain.
Accordingly, the amount of FP’s capital gain that is
treated as effectively connected gain is $5x.
(ii) Ordinary loss. Under paragraph (b)(3)(iv) of
this section, the $10x outside ordinary loss recog-
nized by FP is treated as effectively connected loss
to the extent that it does not exceed FP’s $0 aggre-
gate deemed sale EC ordinary loss. Accordingly, the
amount of FP’s ordinary loss that is treated as effec-
tively connected loss is $0.
(4) Example 4. Coordination with income tax
treaties—(i) Facts—(A) Sale of interest. On January
1, 2019, FP sells its entire interest in PRS to X for
$105x. Immediately before the sale, PRS’s balance
sheet appears as follows:
Adjusted BasisFair Market Value
U.S. Business section 1231 asset$100x$104x
Country A Business capital asset100x106x
Total$200x$210x
(B) Treaty benefits. FP is a qualified resident of
Country A under a U.S. income tax treaty between
the United States and Country A that is similar or
identical in all material respects to the 2006 U.S.
Model Income Tax Convention (the Treaty). PRS is
treated as fiscally transparent for purposes of Coun-
try A tax law. PRS does not carry on its U.S. Busi-
ness through a U.S. permanent establishment (PE).
(ii) Analysis—(A) Outside gain or loss. FP is a
foreign transferor (within the meaning of paragraph
(g)(3) of this section) and transfers (within the mean-
ing of paragraph (g)(5) of this section) its interest
in PRS to X. For purposes of this example, for sim-
plicity, PRS is assumed to hold no section 751(a)
property and depreciation recapture is assumed to
be zero. FP recognizes a $5x capital gain under sec-
tion 741, which is an outside capital gain within the
meaning of paragraph (b)(2)(i) of this section. Un-
der paragraph (b)(1) of this section, FP’s $5x capital
gain is treated as effectively connected gain to the
extent that it does not exceed the limitation described
in paragraph (b)(3)(i) of this section, which is FP’s
aggregate deemed sale EC capital gain.
(B) Deemed sale. FP’s aggregate deemed sale EC
capital gain is determined according to the three-step
process set forth in paragraph (c) of this section by
taking into account the treaty coordination rule under
paragraph (f) of this section.
(1) Step 1. The amount of gain or loss that PRS
would recognize with respect to each of its assets
upon a deemed sale described in paragraph (c)(1) of
this section is as follows:
AssetGain/(Loss)
U.S. Business section 1231 asset$4x
Country A Business capital asset6x

Bulletin No. 2020–48 1087 November 23, 2020
(2) Step 2. Under paragraph (c)(2) of this section, PRS’s deemed sale EC gain is as follows:
AssetGain/(Loss)
U.S. Business section 1231 asset$4x
Country A Business capital asset0x
(3) Step 3. FP is eligible for benefits under the
Treaty and derives the gain on the deemed sale of
U.S. Business section 1231 asset. Under paragraph
(c)(3)(i) and paragraph (f) of this section, because
gain from the disposition of the U.S. Business sec-
tion 1231 asset does not form part of a U.S. PE, the
gain is exempt from U.S. tax under the Treaty, and is
not taken into account in determining FP’s distribu-
tive share of deemed sale EC gain under paragraphs
(c)(3)(i) and paragraph (f) of this section. Therefore,
FP’s aggregate deemed sale EC capital gain is $0x
under paragraph (c)(3)(ii)(B) of this section.
(C) Limitation. Under paragraph (b)(3)(i) of this
section, the $5x outside capital gain recognized by
FP is not treated as effectively connected gain since
all of it would exceed FP’s $0x aggregate deemed
sale EC capital gain.
(j) Applicability date. This section ap-
plies to transfers occurring on or after De-
cember 26, 2018, and to amounts received
on or after December 26, 2018, pursuant
to an installment sale (as defined in sec-
tion 453(b)) occurring on or after Novem-
ber 27, 2017.
Par. 3. Section 1.897-7 is added to read
as follows:
§1.897-7 Treatment of certain
partnership interests, trusts and estates
under section 897(g).
(a) through (b) [Reserved]. For further
guidance, see § 1.897-7T(a) through (b).
(c) Coordination with section 864(c)
(8). Except as provided in §1.864(c)(8)-
1, the amount of any money, and the fair
market value of any property, received
by a nonresident alien individual or for-
eign corporation in exchange for all or
part of its interest in a partnership, trust,
or estate will, to the extent attributable to
United States real property interests, be
considered as an amount received from
the sale or exchange in the United States
of such property. See also §1.864(c)(8)-
1(h) for an anti-stuffing rule that may
apply to transactions subject to section
897. This paragraph applies to trans-
fers occurring on or after December 26,
2018, and to amounts received on or af-
ter December 26, 2018, pursuant to an
installment sale (as defined in section
453(b)) occurring on or after November
27, 2017.
Par. 4. Section 1.897-7T is amended by
adding paragraph (c) to read as follows:
§1.897-7T Treatment of certain
partnership interests as entirely U.S. real
property interests under sections 897(g)
and 1445(e) (temporary).
* * * * *
(c) Coordination with section 864(c)
(8). [Reserved]. For further guidance, see
§1.897-7(c).
Sunita Lough,
Deputy Commissioner for Services
and Enforcement.
Approved: September 10, 2020.
David J. Kautter,
Assistant Secretary of the Treasury
(Tax Policy).
(Filed by the Office of the Federal Register on No-
vember 05, 2020, 8:45 a.m., and published in the is-
sue of the Federal Register for November 06, 2020,
85 F.R. 70958)
26 CFR § 54.9815-2713
T.D. 9931
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 54
DEPARTMENT OF THE
TREASURY
Office of the Secretary
31 CFR Part 33
DEPARTMENT OF HEALTH
AND HUMAN SERVICES
Centers for Medicare &
Medicaid Services
42 CFR Parts 410, 411,
414, 417, 433, and 510
Office of the Secretary
45 CFR Parts 147, 155
and 182
[CMS-9912-IFC]
Additional Policy and
Regulatory Revisions in
Response to the COVID-19
Public Health Emergency
AGENCY: Centers for Medicare &
Medicaid Services (CMS), Department
of Health and Human Services (HHS);
Internal Revenue Service, Department
of the Treasury; Employee Benefits Se-
curity Administration, Department of
Labor.
ACTION: Interim final rule with request
for comments.
SUMMARY: * * *
This rule also amends regulations regard-
ing coverage of preventive health services
to implement section 3203 of the CARES
Act, which shortens the timeframe with-
in which non-grandfathered group health
plans and health insurance issuers offer-
ing non-grandfathered group or individu-
al health insurance coverage must begin
to cover without cost sharing qualifying
coronavirus preventive services, includ-
ing recommended COVID-19 immuniza-
tions. This IFC also revises regulations to
set forth flexibilities in the public notice
requirements and post award public par-
ticipation requirements for State Innova-
tion Waivers under section 1332 of the Pa-
tient Protection and Affordable Care Act
(PPACA)

during the public health emer-
gency for COVID-19.

November 23, 2020 1088 Bulletin No. 2020–48
DATES: Effective date: These regulations
are effective on [Insert the date of display
for public inspection at the Office of the
Federal Register], except for amendatory
instructions 36 and 37, which are effective
on January 1, 2021.
Applicability date: Except as other-
wise specified in this paragraph, these
regulations are applicable from [Insert
the date of display for public inspection
at the Office of the Federal Register]
until the end of the public health emer-
gency for COVID-19 as determined
by the HHS Secretary. The regulations
at 42 CFR 410.57, 410.152, 410.160,
411.15, 414.701, 414.707, 414.900, and
414.904 and at 42 CFR part 510 (other
than 42 CFR 510.300(a)(1)(i) and (iii))
are applicable [Insert the date of dis-
play for public inspection at the Office
of the Federal Register]. Because the
requirement at section 6008(b)(3) of the
Families First Coronavirus Response
Act (FFCRA) is not limited to the du-
ration of the public health emergency
for COVID-19, regulations at 42 CFR
part 433, subpart G, apply from [Insert
the date of display for public inspection
at the Office of the Federal Register]
through the end of the last month of the
public health emergency for COVID-19
in accordance with section 6008(b)(3) of
the Families First Coronavirus Response
Act. Regulations at 42 CFR 510.300(a)
(1)(i) and (a)(1)(iii) are applicable Oc-
tober 1, 2020.
Comment date: To be assured consider-
ation, comments must be received at one
of the addresses provided below, no later
than 5 p.m. on [Insert date 60 days after
date of display in the Federal Register].
ADDRESSES: In commenting, please re-
fer to file code CMS-9912-IFC.
Comments, including mass comment
submissions, must be submitted in one of
the following three ways (please choose
only one of the ways listed):
1. Electronically. You may submit
electronic comments on this regulation to
http://www.regulations.gov. Follow the
“Submit a comment” instructions.
2. By regular mail. You may mail writ-
ten comments to the following address
ONLY:
Centers for Medicare & Medicaid Ser-
vices,
Department of Health and Human Ser-
vices,
Attention: CMS-9912-IFC,
P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed
comments to be received before the close
of the comment period.
3. By express or overnight mail. You
may send written comments to the follow-
ing address ONLY:
Centers for Medicare & Medicaid Ser-
vices,
Department of Health and Human Ser-
vices,
Attention: CMS-9912-IFC,
Mail Stop C4-26-05,
7500 Security Boulevard,
Baltimore, MD 21244-1850
For information on viewing public
comments, see the beginning of the “SUP-
PLEMENTARY INFORMATION” sec-
tion.
FOR FURTHER INFORMATION
CONTACT: * * *
Lina Rashid, (443) 902-2823, or Mi-
chelle Koltov, (301) 492-4225, Centers for
Medicare & Medicaid Services, Depart-
ment of Health and Human Services, Ser-
vices, Kimberly Koch, (202) 622-0854,
Department of the Treasury, for issues re-
lated to State Innovation Waivers Policy
and Regulatory Revisions in Response to
the COVID-19 Public Health Emergency
* * *
David Mlawsky, (410) 786–1565,
Centers for Medicare & Medicaid Ser-
vices, Department of Health and Human
Services, Elizabeth Schumacher, (202)
693–8335, Employee Benefits Security
Administration, Department of Labor,
Dara Alderman, (202) 317-5500, Internal
Revenue Service, Department of the Trea-
sury, for issues related to Rapid Coverage
of Preventive Services for Coronavirus.
* * *
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All
comments received before the close of the
comment period are available for viewing
by the public, including any personally
identifiable or confidential business in-
formation that is included in a comment.
We post all comments received before the
close of the comment period on the fol-
lowing website as soon as possible after
they have been received: http://regula-
tions.gov. Follow the search instructions
on that website to view public comments.
Background
The United States is responding to an
outbreak of respiratory disease caused by
a novel coronavirus that was first detect-
ed in China and has now been detected in
more than 190 countries internationally,
and all 50 States, the District of Columbia,
and U.S. territories. The virus has been
named “severe acute respiratory syndrome
coronavirus 2” (“SARS-CoV-2”) and the
disease it causes has been named “corona-
virus disease 2019” (“COVID-19”).
On January 30, 2020, the Internation-
al Health Regulations Emergency Com-
mittee of the World Health Organization
(WHO) declared the outbreak a “Public
Health Emergency of International Con-
cern.” On January 31, 2020, pursuant to
section 319 of the Public Health Service
(PHS) Act (42 U.S.C. 247d), the Health
and Human Services Secretary (the Secre-
tary) determined that a public health emer-
gency (PHE) exists for the United States
to aid the nation’s health care community
in responding to COVID-19 (hereafter re-
ferred to as the PHE for COVID-19). On
March 11, 2020, the WHO publicly de-
clared COVID-19 a pandemic. On March
13, 2020, President Donald J. Trump (the
President) declared the COVID-19 pan-
demic a national emergency. Effective
October 23, 2020, the Secretary renewed
the January 31, 2020 determination that
was previously renewed on April 21, 2020
and July 23, 2020 that a PHE exists and
has existed since January 27, 2020.
The Administration is committed to
ensuring that Americans have access to
a COVID-19 vaccine through Operation
Warp Speed, a partnership among com-
ponents of the HHS, including the Cen-
ters for Disease Control and Prevention
(CDC), the Food and Drug Administration
(FDA), the National Institutes of Health
(NIH), and the Biomedical Advanced
Research and Development Authority
(BARDA). Operation Warp Speed en-
gages with private firms and other Feder-
al agencies, including the Department of
Defense (DoD), Department of Agricul-

Bulletin No. 2020–48 1089 November 23, 2020
ture, the Department of Energy, and the
Department of Veterans Affairs. Through
the work of the Federal Government and
the private sector, Operation Warp Speed
seeks to accelerate the development, man-
ufacture, and distribution of a COVID-19
vaccine to the American people.
The CDC has reported that some peo-
ple are at higher risk of severe illness from
COVID-19.
1
These higher-risk categories
include:
• Older adults, with risk increasing by
age.
• People who have serious chronic
medical conditions such as:
++ Obesity.
++ Cardiovascular disease.
++ Diabetes mellitus.
++ Hypertension.
++ Chronic lung disease.
++ Neurologic/Neurodevelopmental
disability.
2
++ Immunocompromised individuals.
• Residents of Long Term Care (LTC)
facilities, including nursing homes, In-
termediate Care Facilities for Individuals
with Intellectual and Developmental Dis-
abilities (ICF/IIDs), inpatient psychiatric
and substance abuse treatment facilities
including Institutions for Mental Dis-
ease (IMDs) & Psychiatric Residential
Treatment Facilities (PRTFs), assisted
living facilities, group homes for individ-
uals with developmental disabilities and
board-and-care facilities.
3
As the health care community imple-
ments and updates recommended pre-
vention and control practices, regulato-
ry agencies operating under appropriate
waiver authority granted by the PHE for
COVID-19 are also working to revise
and implement regulations that support
these health care community infection
prevention and treatment practices. Based
on the current and projected increases in
the incidence rate of COVID-19 in the
US, observed fatalities in the older adult
population, and the impact on health care
workers at increased risk due to treating
special populations, CMS
4
is reviewing
and revising regulations, as appropriate,
to offer states, providers, suppliers, and
group health plans and health insurance
issuers additional flexibilities in furnish-
ing and providing services to combat the
PHE for COVID-19 and to address and
minimize the unique impact of the PHE
for COVID-19 on other regulatory provi-
sions.
CMS addressed additional policies
in three previous interim final rules with
comment period (IFCs). The “Medi-
care and Medicaid Programs; Policy and
Regulatory Revisions in Response to the
COVID-19 Public Health Emergency”
IFC appeared in the April 6, 2020 Fed-
eral Register (85 FR 19230) with an ef-
fective date of March 31, 2020, and the
“Medicare and Medicaid Programs, Basic
Health Program, and Exchanges; Addi-
tional Policy and Regulatory Revisions in
Response to the COVID-19 Public Health
Emergency and Delay of Certain Report-
ing Requirements for the Skilled Nursing
Facility Quality Reporting Program” IFC
appeared in the May 8, 2020 Federal
Register (85 FR 27550) with an effective
date of May 8, 2020. The “Medicare and
Medicaid Programs, Clinical Laboratory
Improvement Amendments, and Patient
Protection and Affordable Care Act: Ad-
ditional Policy and Regulatory Revisions
in Response to the COVID-19 Public
Health Emergency” IFC appeared in the
September 2, 2020 Federal Register (85
FR 54820) with an effective date of Sep-
tember 2, 2020.
This IFC implements a number of mea-
sures intended to further the Administra-
tion’s commitment to ensure every Amer-
ican has timely access to a COVID-19
vaccine without any out-of-pocket ex-
penses, no matter their source of cover-
age, or whether they are covered at all.
* * *
In this IFC, HHS and the Departments
of Labor and the Treasury (referred to
collectively as “the Departments”) clarify
certain aspects of coverage of preventive
services without cost sharing under the
current regulations implementing section
2713 of the Public Health Service (PHS)
Act, as added by PPACA and incorporat-
ed into the Employee Retirement Income
Security Act of 1974 (ERISA) by section
715 of ERISA and into the Internal Rev-
enue Code (the Code) by section 9815 of
the Code. The Departments also amend
those regulations to implement the unique
requirements related to rapid coverage of
qualifying coronavirus preventive services
under section 3203 of the CARES Act.
Specifically, this IFC clarifies that plans
and issuers subject to section 2713 of the
PHS Act must cover without cost sharing
recommended immunizations as well as
the administration of such immunizations,
regardless of how the administration is
billed. This IFC also defines qualifying
coronavirus preventive services consis-
tent with the definition provided in section
3203 of the CARES Act and clarifies that
plans and issuers subject to section 2713
of the PHS Act must cover recommend-
ed immunizations for COVID-19 that are
qualifying coronavirus preventive ser-
vices, even if not listed for routine use on
the Immunization Schedules of the CDC.
Due to the urgent need to ensure cover-
age of and access to qualifying coronavi-
rus preventive services, and to ensure that
participants, beneficiaries, and enrollees
can access qualifying coronavirus pre-
ventive services on the expedited basis
specified by statute, this IFC also provides
that during the PHE for COVID-19, plans
and issuers must cover, without cost shar-
ing, qualifying coronavirus preventive
services, regardless of whether such ser-
vices are delivered by an in-network or
out-of-network provider. This coverage is
required to be provided within 15 business
days after the date the United States Pre-
ventive Services Task Force (USPSTF) or
the Advisory Committee on Immunization
Practices of the CDC (ACIP) makes an
applicable recommendation relating to a
qualifying coronavirus preventive service.
* * *
This IFC provides for flexibilities in
the public notice requirements for a State
Innovation Waiver (also referred to as a
section 1332 waiver) described in sec-
tion 1332 of PPACA that apply during
the PHE for COVID-19. Specifically, this
IFC gives the Secretary of HHS and the
1
https://www.cdc.gov/mmwr/volumes/69/wr/mm6915e3.htm.
2
https://www.cdc.gov/ mmwr/ volumes/ 69/ wr/ mm6924e2.htm? s_ cid= mm6924e2_ w.
3
https://www.cdc.gov/ coronavirus/ 2019-ncov/ cases-updates/ summary.html.
4
Throughout this IFC, unless otherwise specified, “we” and “our” refer to CMS only.

November 23, 2020 1090 Bulletin No. 2020–48
Secretary of the Treasury the authority to
modify, in part, the public notice proce-
dures to expedite a decision on a proposed
waiver request that is submitted or would
otherwise become due during the PHE
for COVID-19. This IFC also gives these
Secretaries the authority to modify, in
part, the post-award public notice require-
ments for an approved waiver request that
would otherwise take place or become due
during the PHE for COVID-19.
II. Provisions of the Interim Final Rule
– Department of Health and Human
Services
* * *
III. Provisions of the Interim Final
Rule – Departments of the Treasury,
Labor and Health and Human Services
A. Rapid Coverage of Preventive
Services for Coronavirus
1. Background
In addition to the steps Congress took
to ensure coverage of COVID-19 diagnos-
tic testing, in section 3203 of the CARES
Act, Congress required group health plans
and health insurance issuers offering
group or individual health insurance cov-
erage to cover, without cost sharing, qual-
ifying coronavirus preventive services.
This coverage is required to be provided
“pursuant to section 2713(a) of the [PHS]
Act,” including its implementing regula-
tions or any successor regulations.
Section 2713 of the PHS Act was add-
ed by section 1001 of PPACA and incor-
porated by reference into ERISA by sec-
tion 715 of ERISA and into the Code by
section 9815 of the Code. Section 2713
of the PHS Act and the regulations im-
plementing section 2713 of the PHS Act
require non-grandfathered group health
plans and health insurance issuers offer-
ing non-grandfathered group or individual
health insurance coverage to provide cov-
erage of certain specified preventive items
and services without cost sharing. These
services include:
• Evidence-based items or services that
have in effect a rating of “A” or “B” in the
current recommendations of the USPSTF
with respect to the individual involved.
• Immunizations for routine use in chil-
dren, adolescents, and adults that have in
effect a recommendation from ACIP with
respect to the individual involved. A rec-
ommendation of ACIP is considered to be
“in effect” after it has been adopted by the
Director of the CDC. A recommendation
is considered to be for “routine use” if it
appears on the Immunization Schedules of
the CDC.
• With respect to infants, children, and
adolescents, evidence-informed preven-
tive care and screenings provided for in
the comprehensive guidelines supported
by the Health Resources and Services Ad-
ministration (HRSA).
• With respect to women, preventive
care and screenings provided for in com-
prehensive guidelines supported by HRSA
(not otherwise addressed by the recom-
mendations of the USPSTF), subject to
certain exemptions and accommodations
(see 45 CFR 147.131 through 147.133).
The Departments’ current regulations
(herein referred to as the 2015 Final Reg-
ulations) under section 2713 of the PHS
Act at 26 CFR 54.9815-2713; 29 CFR
2590.715-2713; and 45 CFR 147.130 re-
quire that plans and issuers provide cover-
age of recommended preventive services
for plan years that begin on or after Sep-
tember 23, 2010, or, if later, for plan years
that begin on or after the date that is one
year after the date the recommendation or
guideline is issued.
Under the 2015 Final Regulations, if a
recommended preventive service is billed
separately (or is tracked as individual en-
counter data separately) from an office
visit, then a plan or issuer may impose
cost-sharing requirements with respect to
the office visit. However, if a preventive
service is not billed separately (or is not
tracked as individual encounter data sepa-
rately) from an office visit and the primary
purpose of the office visit is the delivery
of such an item or service, then a plan or
issuer may not impose cost-sharing re-
quirements with respect to the office visit.
The 2015 Final Regulations generally
do not require a plan and issuer that has a
network of providers to provide benefits
for applicable preventive items or services
that are delivered by an out-of-network
provider. Moreover, the 2015 Final Reg-
ulations generally do not preclude a plan
or issuer that has a network of providers
from imposing cost-sharing requirements
for preventive services that are delivered
by an out-of-network provider. However,
if a plan or issuer does not have in its net-
work a provider who can provide a pre-
ventive service, then the plan or issuer
must cover the recommended preventive
service when performed by an out-of-net-
work provider and may not impose cost
sharing with respect to the recommended
preventive service.
Many items and services required to
be covered under section 2713 of the PHS
Act typically are provided as part of the
usual course of preventive care, often ac-
cording to regularly scheduled intervals.
Examples include immunizations pro-
vided according to schedules established
by the CDC and other annual screenings
or counseling. Therefore, the 2015 Final
Regulations require coverage without cost
sharing for applicable immunizations that
are recommended by ACIP for routine
use, and state that a recommendation is
considered to be for “routine use” if it ap-
pears on the Immunization Schedules of
the CDC.
Section 3203 of the CARES Act es-
tablishes a more accelerated timeline for
required coverage of qualifying coronavi-
rus preventive services than other recom-
mended preventive services under PHS
Act section 2713. As stated above, cover-
age of qualifying coronavirus preventive
services must be provided no later than 15
business days following an applicable rec-
ommendation. In addition, it is possible
that items, services, and immunizations
used to prevent or mitigate COVID-19
will not, in the immediate future, be rec-
ommended as part of a usual course of
preventive care, but rather for more urgent
use. As reflected by the expedited time-
line for coverage Congress established
in section 3203 of the CARES Act, the
need to provide coverage of qualifying
coronavirus preventive services is urgent.
Therefore, as discussed below, this IFC
requires coverage of COVID-19 immuni-
zations within 15 business days after the
immunization has been recommended by
ACIP and adopted by the CDC, regardless
of whether it appears on the Immunization
Schedules of the CDC for routine use.
Additionally, in light of the current
PHE for COVID-19, it is imperative that
group health plans and health insurance

Bulletin No. 2020–48 1091 November 23, 2020
issuers provide full coverage for these
items and services, including costs for
the administration of vaccines, and ensure
timely access to coverage as Congress in-
tended. Accordingly, in this IFC, the De-
partments provide certain clarifications
previously made with respect to the 2015
Final Regulations and amend those regu-
lations to implement unique requirements
related to covering qualifying coronavirus
preventive services.
5
2. Scope of Requirement to Cover
Certain Recommended Preventive
Services under Section 2713 of the Public
Health Service Act
a. Related Items and Services
In implementing section 2713 of the
PHS Act, the 2015 Final Regulations ad-
dressed whether office visit charges as-
sociated with certain recommended pre-
ventive services must be covered without
cost sharing. Specifically, Example 1 in
the 2015 Final Regulations illustrates how
the requirements apply in situations where
a provider bills a plan for an office visit
where a preventive screening for choles-
terol abnormalities (which has in effect
a rating of A or B from the USPSTF) is
conducted and for the laboratory work
of the cholesterol screening test. In that
example, the plan may not impose any
cost-sharing requirements with respect
to the separately billed laboratory work
of the cholesterol screening test. Because
the office visit is billed separately from the
cholesterol screening test, the 2015 Final
Regulations provide that the plan may
impose cost-sharing requirements for the
office visit.
Prior to the publication of the 2015 Fi-
nal Regulations, the Departments received
questions from stakeholders regarding
discrete coverage issues related to cer-
tain recommended preventive services. In
particular, with respect to colonoscopies,
stakeholders asked whether certain relat-
ed services (such as the cost of polyp re-
moval or anesthesia) must also be covered
without cost sharing. The Departments
clarified in subregulatory guidance that a
plan or issuer may not impose cost shar-
ing for polyp removal during a preventive
screening colonoscopy, as such service is
an integral part of a colonoscopy, and also
stated that anesthesia provided in connec-
tion with a preventive colonoscopy must
be covered without cost sharing.
6
Consistent with the examples provided
in the 2015 Final Regulations and subreg-
ulatory guidance cited in the preamble to
the rulemaking promulgating the 2015 Fi-
nal Regulations, the Departments further
clarify that under the 2015 Final Regula-
tions and this IFC, plans and issuers sub-
ject to section 2713 of the PHS Act must
cover, without cost sharing, items and
services that are integral to the furnishing
of the recommended preventive service,
regardless of whether the item or service
is billed separately. For example, several
of the recommended preventive services
involve screenings for the presence of cer-
tain health conditions, such as diabetes,
or a variety of sexually transmitted infec-
tions. These recommended screenings,
typically performed by laboratories, can-
not be conducted without first collecting a
specimen. Accordingly, plans and issuers
subject to section 2713 of the PHS Act
must cover without cost sharing both the
specimen collection and the recommend-
ed preventive service, regardless of how
the specimen collection is billed. Simi-
larly, a recommended immunization gen-
erally cannot be furnished without being
administered by a medical professional.
As qualifying coronavirus preventive ser-
vices are expected to include immuniza-
tions, plans and issuers subject to section
2713 of the PHS Act must cover without
cost sharing such an immunization and
its administration, regardless of how the
administration is billed, and regardless of
whether a COVID-19 vaccine or any other
immunization requires the administration
of multiple doses in order to be consid-
ered a complete vaccination. This includes
coverage without cost sharing of the ad-
ministration of a required preventive im-
munization in instances where a third par-
ty, such as the Federal Government, pays
for the preventive immunization. Further,
if a COVID-19 immunization is not billed
separately (or is not tracked as individu-
al encounter data separately) from an of-
fice visit and the primary purpose of the
visit is the delivery of the recommended
COVID-19 immunization, then consistent
with the 2015 Final Regulations, the plan
or issuer may not impose cost-sharing re-
quirements with respect to the office visit.
The Departments seek comment on this
clarification.
b. Out-of-Network Coverage During the
PHE for COVID-19
The 2015 Final Regulations permit a
group health plan or issuer that has a net-
work of providers to omit coverage or to
impose cost-sharing requirements for rec-
ommended preventive services when such
services are provided by an out-of-network
provider, unless the plan or issuer does
not have in its network a provider who
can provide the service.
7
This approach
reflects that, as noted earlier in this section
of the preamble, recommended preventive
services generally are obtained as part of a
regular course of preventive care, so par-
ticipants, beneficiaries, and enrollees typ-
ically have the opportunity to seek such
care from an in-network provider. By con-
trast, in the immediate term, newly devel-
oped qualifying coronavirus preventive
services might be available from a nar-
rower range of providers than other, more
established recommended preventive ser-
vices. To help ensure full access to and the
widespread use of qualifying coronavirus
preventive services to mitigate the effect
5
The 2015 Final Regulations address the obligation to continue to provide coverage for recommended preventive services that are in effect on the first day of a plan or policy year when there
are changes in recommendations or guidelines. See 26 CFR 54.9815–2713(b)(2)(i) and (ii); 29 CFR 2590.715–2713(b)(2)(i) and (ii); 45 CFR 147.130(b)(2)(i) and (ii). Given the expedited
timeline for coverage under section 3203 of the CARES Act, this IFC amends the 2015 Final Regulations to make clear that these paragraphs apply to recommended preventive services that
are covered on the first day of the plan or policy year or, with respect to qualifying coronavirus preventive services, “as otherwise specified in paragraph (b)(3) of this section.”
6
See FAQs About Affordable Care Act Implementation Part 12, Q5 (Feb. 20, 2013), available at https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/
faqs/aca-part-xii.pdf and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs12 and FAQs About Affordable Care Act Implementation Part XXVI, Q7
(May 11, 2015), available at https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-xxvi.pdf and https://www.cms.gov/CCIIO/Resources/Fact-
Sheets-and-FAQs/Downloads/aca_implementation_faqs26.pdf.
7
26 CFR 54.9815-2713(a)(3); 29 CFR 2590.715-2713(a)(3); 45 CFR 147.130(a)(3).

November 23, 2020 1092 Bulletin No. 2020–48
of the PHE for COVID-19 and slow trans-
mission of the virus, it is critical that in-
dividuals be able to receive such services
from any provider authorized to provide
the service. Therefore, this IFC amends
the 2015 Final Regulations to require that
plans and issuers subject to section 2713
of the PHS Act must cover without cost
sharing a qualifying coronavirus preven-
tive service, regardless of whether such
service is delivered by an in-network or
out-of-network provider. This is based on
the Departments’ view that participants,
beneficiaries, and enrollees may not be
able to locate in-network providers con-
sistently during the emergency period.
To satisfy this requirement, the Depart-
ments are of the view that plans and is-
suers must administer this out-of-network
coverage requirement in such a way that
makes receiving out-of-network services
for qualifying coronavirus preventive
services a meaningful benefit for partici-
pants, beneficiaries, and enrollees. To be
a meaningful benefit, the Departments are
of the view that plans and issuers must
administer this out-of-network coverage
requirement in a way that ensures that
participants, beneficiaries, and enrollees
have access to a variety of out-of-net-
work providers for such services. To the
extent plans and issuers reimburse out-
of-network providers an unreasonably
low amount for qualifying coronavirus
preventive services, including for admin-
istration of a COVID-19 vaccine, this ap-
proach could severely limit the number of
such providers that are willing to provide
the service, which would contravene the
purpose of the requirement to provide out-
of-network coverage without cost sharing
of qualifying coronavirus preventive ser-
vices. Therefore, this IFC provides that
with respect to a qualifying coronavirus
preventive service and a provider with
whom the plan or issuer does not have a
negotiated rate for such service (such as an
out-of-network provider), the plan or issu-
er must reimburse the provider for such
service in an amount that is reasonable,
as determined in comparison to prevailing
market rates for such service. The Depart-
ments will consider the amount of pay-
ment to be reasonable, for example, if the
plan or issuer pays the provider the amount
that would be paid under Medicare for the
item or service. In the Departments’ view,
these minimum payment standards are
necessary and appropriate because provid-
ers that participate in the CDC COVID-19
Vaccination Program contractually agree
to administer a COVID-19 vaccine re-
gardless of an individual’s ability to pay
and regardless of their coverage status,
and also may not seek any reimbursement,
including through balance billing, from a
vaccine recipient.
The Departments request comment on
all aspects of this approach. The Depart-
ments request comment on the issue of
network adequacy and whether and, if so,
how long provider networks are expected
to be inadequate. The Departments also
request comment on the safeguards in this
IFC to ensure that out-of-network reim-
bursement rates are reasonable and that
providers administering a publicly fund-
ed COVID-19 vaccine are reimbursed by
group health plans and issuers prevailing
market rates in the absence of a negotiated
rate, and whether other examples of rea-
sonable reimbursement rates, in addition
to Medicare rates, would be useful.
3. Definition of Qualifying Coronavirus
Preventive Services
Section 3203(b)(1) of the CARES Act
defines “qualifying coronavirus preven-
tive service” as an item, service, or im-
munization that is intended to prevent or
mitigate COVID-19 and that is—(A) an
evidence-based item or service that has in
effect a rating of ‘A’ or ‘B’ in the current
recommendations of the USPSTF; or (B)
an immunization that has in effect a rec-
ommendation from ACIP with respect to
the individual involved. The statutory pro-
visions describing USPSTF and ACIP rec-
ommendations in this definition are sub-
stantively identical to the ones at section
2713(a)(1) and (2) of the PHS Act. How-
ever, as stated above, under the 2015 Fi-
nal Regulations, only “immunizations for
routine use in children, adolescents, and
adults” that are recommended by ACIP
must be covered without cost sharing.
8
A
recommendation is considered to be for
routine use if it is listed on the CDC’s Im-
munization Schedules.
9
This IFC provides a definition of qual-
ifying coronavirus preventive services
that is consistent with the statutory defi-
nition in section 3203 of the CARES Act.
However, the Departments note that un-
like the other preventive service immu-
nizations required to be covered without
cost sharing under section 2713 of the
PHS Act and the 2015 Final Regulations,
this definition and related coverage re-
quirement are not limited to COVID-19
immunizations recommended by ACIP
for “routine use.” While other preventive
items and services may be recommend-
ed for routine use, for reasons described
elsewhere in this section of the preamble,
the PHE for COVID-19 presents unique
circumstances and qualifying coronavi-
rus preventive services might not, in the
immediate term, be recommended for
routine use, according to specified sched-
ules. Rather, the Departments generally
expect consumers should receive an im-
munization for COVID-19 as soon as it
becomes available to the general public,
or as soon as it becomes available to them
based on their status as part of a high-risk
or high-priority population, as recom-
mended by ACIP. Plans and issuers sub-
ject to section 2713 of the PHS Act must
cover, without cost sharing, COVID-19
immunizations that are recommended
by ACIP and adopted by the Director of
CDC, even if not listed for routine use
on the CDC Immunization Schedules,
pursuant to 26 CFR 54.9815-2713T(a);
29 CFR 2590.715-2713(a); and 45 CFR
147.130(a), and subject to the additional
changes described later in this section of
the preamble.
10
8
See 75 FR 41726, 41728 (July 19, 2010), codified at 26 CFR 54.9815-2713(a)(1)(ii); 29 CFR 2590.715-2713(a)(1)(ii); 45 CFR 147.130(a)(1)(ii).
9
Id.
10
HHS reminds states that the HHS Office for Civil Rights enforces applicable Federal civil rights laws as described above, as well as laws protecting the exercise of conscience and religious
freedom, including the Religious Freedom Restoration Act (42 U.S.C. 2000bb through 2000bb-4). HHS’s requirements are subject to these laws, and states may have obligations under these
laws to protect conscience, prohibit coercion, and to ensure the free exercise of religion. U.S. Department of Health & Human Services, Office for Civil Rights, Conscience and Religious
Freedom, https://www.hhs.gov/conscience/index.html (last visited Aug. 20, 2020).

Bulletin No. 2020–48 1093 November 23, 2020
4. Qualifying Coronavirus Preventive
Services – Timing Requirement
Section 2713 of the PHS Act and the
2015 Final Regulations require plans and
issuers to cover recommended preventive
items and services beginning with the first
plan year (or in the individual market, pol-
icy year) that is one year after the date the
recommendation or guideline is issued.
Section 3203 of the CARES Act acceler-
ates the timeline for coverage of qualify-
ing coronavirus preventive services with-
out cost sharing, requiring coverage to be
provided within 15 business days after the
date on which a recommendation is made
relating to such service. This IFC codi-
fies these timing requirements at 26 CFR
54.9815-2713T(b)(3); 29 CFR 2590.715-
2713(b)(3); and 45 CFR 147.130(b)(3).
In addition, the IFC adds a sunset
provision at 26 CFR 54.9815-2713T(e);
29 CFR 2590.715-2713(e); and 45 CFR
147.130(e), under which the amendments
made to the regulations will not apply
with respect to qualifying coronavirus
preventive services furnished on or after
the expiration of the PHE for COVID-19.
The Departments note, however, that cov-
erage under section 3203 of the CARES
Act is not limited to the duration of the
PHE for COVID-19 and therefore the stat-
utory provisions will continue to apply.
B. Diagnostic Testing for COVID-19
Section 6001 of the FFCRA generally
requires group health plans and health in-
surance issuers offering group or individ-
ual health insurance coverage to provide
benefits for COVID-19 diagnostic tests
and certain items and services related to
diagnostic testing for COVID-19 when
those items or services are furnished on or
after March 18, 2020, and during the du-
ration of the PHE for COVID-19. Under
the FFCRA, plans and issuers must pro-
vide this coverage without imposing any
cost-sharing requirements (including de-
ductibles, copayments, and coinsurance)
or prior authorization or other medical
management requirements. Section 3201
of the CARES Act, enacted on March
27, 2020, amended section 6001 of the
FFCRA to include a broader range of di-
agnostic tests that plans and issuers must
cover without any cost-sharing require-
ments or prior authorization or other med-
ical management requirements.
Section 3202(a) of the CARES Act
provides that a plan or issuer providing
coverage of items or services described
in section 6001(a) of the FFCRA shall
reimburse the provider of the diagnostic
testing at a rate negotiated with the pro-
vider, or if there is no negotiated rate, at an
amount that equals the cash price for such
service as listed by the provider on a pub-
lic internet website. As previously articu-
lated in guidance, the Departments inter-
pret the requirement to provide coverage
without cost sharing in section 6001 of
the FFCRA, together with section 3202(a)
of the CARES Act, as establishing a pro-
cess for setting reimbursement rates and
protecting participants, beneficiaries, and
enrollees from being balance billed for an
applicable COVID-19 test.
11
These provi-
sions help ensure consumers can be tested
for COVID-19 without barriers related to
cost, and are critical to the ability to detect
the virus and stop its spread. However,
testing efforts have continued to be ham-
pered by challenges, such as delays in ob-
taining results, issues with test accuracy,
and supply shortages
.12
The Departments encourage group
health plans and issuers of group or in-
dividual health insurance coverage to
consider market-driven approaches to ad-
dressing these continued challenges sur-
rounding COVID-19 diagnostic testing.
The Departments encourage plans and
issuers to explore using payment arrange-
ments that create incentives for providers
to reduce the time it takes to provide re-
sults for diagnostic testing for COVID-19,
while maintaining the accuracy rates of
their test results in instances where it is
within the ability of providers to address
a delay.
At certain points in this PHE, there
have been wide variations in the time it
takes providers to make test results avail-
able to consumers. These delays in ob-
taining test results increase the risk that
infected individuals may unknowingly in-
fect others. These delays could be caused
by large volumes of tests to process and/
or inadequate resources. Pay-for-perfor-
mance arrangements, where reimburse-
ment rates are based on the time it takes to
make test results available, could encour-
age innovative approaches by providers
to reduce the turnaround time. The De-
partments encourage group health plans
and issuers of group or individual health
insurance coverage to consider develop-
ing such arrangements with providers,
and strongly encourage plans and issu-
ers that do so to incorporate safeguards
to ensure that the payment arrangements
are not structured in a way that prioritizes
speed over accuracy or that result in un-
intended consequences, such as reduction
in access to COVID-19 diagnostic testing
or non-compliance with balance billing
restrictions.
IV. Provisions of the Interim Final
Rule Regarding State Innovation
Waivers – Department of the Treasury
and Health and Human Services
A. State Innovation Waivers Policy and
Regulatory Revisions in Response to
the PHE for COVID-19 Public Health
Emergency
1. Background
Section 1332 of the PPACA permits
states to apply for a State Innovation
Waiver (also referred to as “section 1332
waivers” or “State Relief and Empow-
erment Waivers”) to pursue innovative
strategies for providing their residents
with access to higher value, more afford-
able health coverage. The overarching
goal of section 1332 waivers is to give
all Americans the opportunity to obtain
high value and affordable health cover-
age regardless of income, geography,
age, sex, or health status, while simul-
taneously empowering states to develop
health coverage strategies that best meet
11
FAQs About Families First Coronavirus Response Act and Coronavirus Aid, Relief, and Economic Security Act Implementation Part 43 (June 23, 2020), available at https://www.cms.gov/
files/document/FFCRA-Part-43-FAQs.pdf and https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-43.pdf.
12
American Society for Microbiology, “Supply Shortages Impacting COVID-19 and Non-COVID Testing” (Oct. 15, 2020), available at https://asm.org/Articles/2020/September/Clinical-Mi-
crobiology-Supply-Shortage-Collecti-1.

November 23, 2020 1094 Bulletin No. 2020–48
the needs of their residents. Section 1332
waivers provide states an opportunity to
promote a stable health insurance mar-
ket that offers more choice and afford-
ability to their residents. Under section
1332 of the PPACA, a State Innovation
Waiver can be approved by HHS and the
Department of the Treasury if it provides
access to quality health coverage that is
at least as comprehensive and affordable
as would be provided absent the waiver,
provides coverage to a comparable num-
ber of residents of the state as would be
provided coverage absent a waiver, and
does not increase the Federal deficit. To
date, HHS and the Department of the
Treasury have approved 15 state waiver
requests, 14 of which implement state-
based reinsurance programs.
13
As noted
in a recent data brief issued by CMS, sec-
tion 1332 state-based reinsurance waiv-
ers have resulted in a statewide average
premium reduction ranging from four to
37 percent in calendar year 2020 for res-
idents in states with approved waivers.
14

Reinsurance provides a direct benefit to
consumers by paying a portion of provid-
er claims that would otherwise be paid
by consumers through higher premiums
and lowering premiums for people in the
individual health insurance market. HHS
and the Department of the Treasury con-
tinue to encourage states to take advan-
tage of the flexibilities available through
section 1332 waivers in order to pursue
solutions to help lower costs and increase
coverage choices for Americans faced
with unaffordable premiums and reduced
competition in the insurance market both
during and after the PHE for COVID-19.
Section 1332(a)(4)(B) of the PPACA
requires the Secretary of HHS and the
Secretary of the Treasury (the Secretar-
ies) to issue regulations regarding proce-
dures for State Innovation Waivers. On
March 14, 2011, HHS and the Department
of the Treasury published the “Applica-
tion, Review, and Reporting Process for
Waivers for State Innovation” proposed
rule (76 FR 13553) to implement section
1332(a)(4)(B) of the PPACA.
15
On Feb-
ruary 27, 2012, HHS and the Department
of the Treasury published the “Applica-
tion, Review, and Reporting Process for
Waivers for State Innovation” final rule
(77 FR 11700) (hereinafter referred to
as the “2012 Final Rule”).
16
On October
24, 2018, HHS and the Department of
the Treasury issued the “State Relief and
Empowerment Waivers” guidance (83
FR 53575) (hereinafter referred to as the
“2018 Guidance”), which superseded the
previous guidance published on Decem-
ber 16, 2015 (80 FR 78131), and provided
additional information about the require-
ments that states must meet regarding
section 1332 waiver proposals, the Sec-
retaries’ application review procedures,
pass-through funding determinations,
certain analytical requirements, and oper-
ational considerations.
17, 18
Section 1332(a)(4)(B) of the PPACA
also directs HHS and the Department of
the Treasury to issue regulations that pro-
vide for state and Federal public notice and
comment sufficient to ensure a meaning-
ful level of public input regarding a state’s
section 1332 waiver plan, both during the
application process and after a waiver is
implemented. Current regulations and
guidance

address how states may apply
for a waiver, information states must in-
clude in an application, public notice and
comment requirements, and HHS’ and the
Department of the Treasury’s monitoring
and compliance activities, including state
reporting requirements (collectively re-
ferred to as public notice procedures).
The Secretaries are setting forth a pro-
cess for states to request modifications
to the public notice procedures during
the PHE for COVID-19 prior to and af-
ter approval of a section 1332 waiver that
continue to meet the statutory and regu-
latory requirements that the public has an
opportunity to provide meaningful input.
Further the Secretaries are promulgating
this rule so that HHS and the Department
of the Treasury do not impose require-
ments that are unreasonable or unneces-
sarily burdensome regarding state com-
pliance consistent with section 1332(a)(4)
(B)(iii) of the PPACA during the PHE for
COVID 19. This IFC promulgates rules to
establish a framework for the Secretaries
to modify some of the existing regulato-
ry public notice procedures to expedite
a decision on a proposed waiver request
during the PHE for COVID-19 when a de-
lay would undermine or compromise the
purpose of the proposed waiver request
and be contrary to the interests of con-
sumers. The Secretaries will also make
available such flexibility regarding public
notice procedures should any state with an
approved section 1332 waiver request an
extension or amendment of an approved
section 1332 waiver during the PHE for
COVID-19.
Similarly, this IFC also establishes a
framework for the Secretaries to modify,
in part, post award public notice proce-
dures for an approved waiver request that
would otherwise take place or become due
during the PHE for COVID-19. The Sec-
retaries will also make available such flex-
ibility for post award public notice pro-
cedures for approved waiver extensions,
amendments, or phase-out for a waiver
should those otherwise take place or be-
come due during the PHE for COVID-19.
HHS and the Department of the Treasury
are of the view that section 1332 waiv-
ers are a critical tool for states to ensure
patients have stable access to health care
coverage, including during the PHE for
COVID-19. These interim final provisions
are effective immediately for the duration
of the PHE for COVID-19. HHS and the
Department of the Treasury note that ex-
isting threats to consumers’ access to
health coverage or care—such as in geo-
graphic areas in which issuer participation
has been low for some time—would not
be considered emergency situations for
purposes of applying the flexibilities ad-
opted in this rulemaking.
13
More information on section 1332 waivers that are approved is available online: https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Section_1332_State_In-
novation_Waivers-.
14
CCIIO Data Brief Series: State Relief and Empowerment Waives: State-based Reinsurance Programs. June 2020. Available online: https://www.cms.gov/CCIIO/Programs-and-Initiatives/
State-Innovation-Waivers/Downloads/1332-Data-Brief-June2020.pdf.
15
https://www.govinfo.gov/content/pkg/FR-2011-03-14/pdf/2011-5583.pdf.
16
https://www.govinfo.gov/content/pkg/FR-2012-02-27/pdf/2012-4395.pdf.
17
https://www.govinfo.gov/content/pkg/FR-2018-10-24/pdf/2018-23182.pdf.
18
https://www.govinfo.gov/content/pkg/FR-2015-12-16/pdf/2015-31563.pdf.

Bulletin No. 2020–48 1095 November 23, 2020
2. Public Notice Procedures and Approval
Processes During the PHE (31 CFR
33.118 and 45 CFR 155.1318)
Section 1332(a)(4)(B) of the PPACA
provides that the Secretary of HHS and
the Secretary of the Treasury shall issue
regulations providing a process for public
notice and comment at the state level, in-
cluding public hearings, and a process for
providing public notice and comment af-
ter the application is received by the Sec-
retaries, that are both sufficient to ensure a
meaningful level of public input. Current
regulations at §§ 33.112 and 155.1312
specify state public notice and participa-
tion requirements for proposed waiver re-
quests, and §§ 33.116(b) and 155.1316(b)
specify the accompanying public notice
and comment period requirements under
the Federal public notice and approval
process.
Under the current regulations at
§§ 33.112 and 155.1312, states are re-
quired to provide a public notice and
comment period prior to submitting an
application for a new section 1332 waiver.
The notice must include a comprehensive
description of the section 1332 waiver
application; information about where the
application is available for public review;
where the written comments may be sub-
mitted; and the location, date, and time of
public hearings that will be convened by
the state to seek public input on the ap-
plication for a section 1332 waiver.
19
After
issuing the public notice and prior to sub-
mitting an application for a section 1332
waiver, the state must hold public hear-
ings to allow the public to learn about and
comment on the state’s application, and
must publish the date, time, and location
of the hearings in a prominent location on
the state’s public website.
20
As set forth
in §§ 33.112(a)(2) and 155.1312(a)(2),
as part of the public notice and comment
period, a state with one or more federally
recognized tribes must conduct a separate
process for meaningful consultation with
such tribes, if applicable. As HHS and the
Department of the Treasury explained in
the 2012 Final Rule preamble, this tribal
consultation must be conducted in accor-
dance with Executive Order (E.O.) 13175,
and, as E.O. 13175 also applies to Med-
icaid, a state may use a Medicaid consul-
tation process to satisfy the consultation
needed for a section 1332 waiver (77 FR
11700, 11706). Furthermore, the state
should include in its section 1332 waiver
application a description of issues raised
and comments received.
In addition, under section 1332(a)(4)
(B)(iii) of the PPACA and the existing
implementing regulations at §§ 33.116(b)
and 155.1316(b), the Secretary of HHS
and the Secretary of the Treasury are re-
quired to provide a Federal public notice
and comment period following their pre-
liminary determination that a state’s sec-
tion 1332 waiver application is complete.
Section 1332 waivers may vary sig-
nificantly in their complexity and breadth.
The existing regulations generally provide
states and the Federal Government flex-
ibility in determining and/or extending
the length of the comment periods. Both
the state and the Federal public notice
and comment periods must be sufficient
to ensure a meaningful level of public
input. The 2018 Guidance
21
further spec-
ifies that the state comment period should
be no less than 30 days, and explains that
consistent with HHS regulations, waiver
applications must be posted online in a
manner that meets technical standards for
website accessibility similar to applicable
national standards
22
to ensure access for
individuals with disabilities.
HHS and the Department of the Trea-
sury recognize that the current section
1332 regulations regarding state and Fed-
eral public notice procedures and comment
period requirements may impose barriers
for states pursuing a proposed waiver re-
quest during the PHE for COVID-19.
23
It
is the mission of HHS to enhance and pro-
tect the health and well-being of all Amer-
icans. As such, HHS and the Department
of the Treasury are issuing this guidance
to protect public health and to prevent the
spread of COVID-19 by limiting the need
for in-person gatherings related to section
1332 waivers during the PHE. Additional-
ly, states may face uncertainty as to wheth-
er their waiver request will be approved in
time, given the state and Federal public
notice procedures or other public partic-
ipation requirement associated with state
procedures that would otherwise require
an in-person gathering, to expeditiously
reform their health insurance markets and
to protect consumers from the effects of
the PHE for COVID-19. Some states may
not consider more robust changes because
they are concerned that the current section
1332 waiver application requirements are
too time-consuming or burdensome to
pursue during the PHE for COVID-19.
Therefore, HHS and the Department of
the Treasury are of the view that having
the flexibility to modify certain public no-
tice procedures and participation require-
ments during the PHE for COVID-19 will
protect public health and health insurance
markets, and will increase flexibility and
19
31 CFR 33.112(b); 45 CFR 155.1312(b).
20
In response to a question from a commenter, the 2012 Final Rule states that “hearings,” as used in 31 CFR 33.112(c)(1) and 45 CFR 155.1312(c)(1), means no less than two hearings. (77 FR
11700, 11706). The HHS and the Department of Treasury continue to interpret the regulatory requirement that a State shall hold “hearings” to refer to at least two hearings, except as otherwise
provided by the amendments made in this IFC. The existing regulation does not expressly rely on the statutory requirement that the Secretaries of HHS and Treasury establish “a process for
public notice and comment at the State level, including public hearings...,” and HHS and the Department of the Treasury are of the view that language, by itself, does not require a particular
state to hold more than one hearing. Rather, the statutory language describes a process applicable across multiple states, which will, in the aggregate, necessarily involve multiple hearings.
21
83 FR 53575 (https://www.govinfo.gov/content/pkg/FR-2018-10-24/pdf/2018-23182.pdf).
22 “
National standards” refers to standards issued by the Architectural and Transportation Barriers Compliance Board (often referred to as “section 508” standards), or alternatively, the World
Wide Web Consortium’s Web Content Accessibility Guidelines (WCAG) 2.0 Level AA standards. See 83 FR 53575, 53583 (Oct. 24, 2018).
23
During the PHE for COVID-19, under the Secretaries’ discretion, HHS and the Department of the Treasury have allowed states to conduct their public forums virtually, both prior to appli-
cation submission and post award. For example, following the scheduling and notice of the hearings, and in consultation with CMS, the New Hampshire Insurance Department rescheduled
planned in-person public hearings to an online webinar format in response to social distancing guidance provided by New Hampshire Governor Chris Sununu and the Federal government.
(https://www.nh.gov/insurance/lah/documents/nh-section-1332-waiver-draft.pdf). Georgia also offered public hearings virtually because of public health concerns regarding large, in-person
gatherings during the COVID-19 pandemic. In addition, as of July 13, 2020, several states with approved waivers conducted their post award forum virtually due to COVID-19, including
Alaska, Colorado, Delaware, Maine, Maryland, Minnesota, Montana, Oregon, North Dakota, Rhode Island, and Wisconsin. In this IFC, the Secretaries expand and build upon this approach
by providing more flexibility to allow HHS and the Department of the Treasury to expedite a decision on a proposed waiver request. (https://medicaid.georgia.gov/document/document/
georgia1332waiverapplicationfinal07312020vfpdf/download)

November 23, 2020 1096 Bulletin No. 2020–48
reduce burdens for states seeking to use
section 1332 waivers as a means of inno-
vation for providing coverage, lowering
premiums, and improving their health
care markets.
Section 1332 waivers are a critical tool
for states to ensure patients across the
country have access to health care cov-
erage. About 10.7 million individuals on
average rely on the Exchanges to purchase
individual health insurance coverage
throughout the year.
24, 25
Although recently
there have been positive premium stabili-
zation and insurer participation trends, the
COVID-19 pandemic has introduced new
uncertainties in the individual and small
group markets such that past trends re-
sulting in limited access and affordability
may return in some areas. For example, in
response to the uncertainty created by the
PHE for COVID-19 regarding health care
utilization rates and claims costs, such as
those associated with testing and treatment
for COVID-19, premiums may increase
and issuers may reduce their presence or
coverage options in the individual and
small group markets. Additionally, due to
the PHE for COVID-19, some issuers may
have difficulty predicting the composition
of their risk pools given uncertainty about
the risk profiles of many new enrollees
coming from employer-sponsored cover-
age and the potential transition of other
enrollees to Medicaid due to income loss.
Therefore, HHS and the Department of
the Treasury are concerned that past trends
that threaten the stability of the individual
market risk pool may return, leading some
issuers to cease offering coverage on the
Exchanges in some states and counties
and leading other issuers to increase their
rates, leaving some geographic areas with
limited or no affordable Exchange cover-
age options. Permitting the Secretary of
HHS and the Secretary of the Treasury to
modify the public notice procedures, in
part, will help states seeking section 1332
waivers to address such circumstanc-
es more quickly and develop innovative
ways to ensure consumers have access to
affordable health care coverage. As such,
HHS and the Department of the Treasury
are of the view that, if certain safeguards
are met, it is in the best interest of the pub-
lic to provide states applying for section
1332 waivers with the option to request
to modify public notice procedures during
the PHE for COVID-19.
This IFC adds the new §§ 33.118 and
155.1318 and provides that the Secretary
of HHS and the Secretary of the Treasury
may modify, in part, the state public notice
requirements specified in §§ 33.112 and
155.1312 and the Federal public notice re-
quirements specified at §§ 33.116(b) and
155.1316(b) to expedite a decision on a
proposed waiver request during the PHE
for COVID-19 when a delay would un-
dermine or compromise the purpose of the
proposed waiver request and be contrary
to the interests of consumers. Examples of
the public notice procedures that currently
apply under the aforementioned regula-
tions that a state may seek to have waived
or modified include the requirement that
states notify the public and hold hearings
prior to submitting an application, that the
state hold more than one public hearing in
more than one location and that HHS and
the Department of the Treasury provide
for public notice and comment after an
application is determined to be complete.
States may also seek to modify the state
and/or Federal comment periods to be less
than 30 days and to host public hearings
virtually rather than in-person.
For a state to qualify for modifica-
tion of the state or Federal public notice
requirements to expedite a decision on a
proposed waiver request during the PHE
for COVID-19, a delay must undermine or
compromise the purpose of the proposed
waiver request and be contrary to the in-
terests of consumers. During the PHE for
COVID-19, the Secretary of HHS and the
Secretary of the Treasury (the Secretaries)
may modify the Federal and/or state pub-
lic notice procedures, in part, if the state
meets all of the following:
• The state requests a modification in
the form and manner specified by the Sec-
retaries.
• The state acted in good faith, and in
a diligent, timely, and prudent manner in
the preparation of the request for the mod-
ification for the waiver, and the waiver ap-
plication request.
• The state details in its request for a
modification, as applicable, the reason(s)
the state seeks a modification from the
state public notice procedures, describes
how the state meets the modification cri-
teria, and describes the alternative public
notice procedures it proposes to imple-
ment at the state level, including public
hearings, that are designed to provide the
greatest opportunity and level of meaning-
ful public input from impacted stakehold-
ers that is practicable given the emergen-
cy circumstances underlying the state’s
request for a modification.
• The state details in its request for a
modification, as applicable, the justifi-
cation for the request and the alternative
public notice procedures it requests to be
implemented at the Federal level.
• The state must, as applicable, imple-
ment the alternative public notice proce-
dures at the state level if the state’s modifi-
cation request is approved and, if required,
amend the waiver application to specify
that it is the state’s intent to comply with
those alternative public notice procedures
in the state’s modification request.
Any state submitting a proposed waiv-
er request during the PHE for COVID-19
can submit a request to the Secretary of
HHS and the Secretary of the Treasury
for this modification from the state and/
or Federal public notice procedures or
include such a request in its section 1332
waiver application request.
The Secretary of HHS and the Secre-
tary of the Treasury’s review and consid-
eration of a modification request will vary
based on the state’s circumstances, its
modification request, and the complexity
and breadth of the state’s proposed section
1332 waiver request. For example, during
the PHE for COVID-19, many states are
prohibiting in-person public gatherings or
establishing stay-at-home orders due to the
public health threat.
26
States seeking new
24
American Health Benefit Exchanges, or ‘‘Exchanges,’’ are entities established under PPACA through which qualified individuals and qualified employers can purchase health insurance
coverage in qualified health plans (QHPs).
25
First Half of 2020 Average Effectuated Enrollment Data, available at https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/Early-2020-2019-Effectu-
ated-Enrollment-Report.pdf.
26
https://khn.org/morning-breakout/states-declare-emergencies-ban-large-gatherings-as-coronavirus-sweeps-the-nation/. https://www.axios.com/states-shelter-in-place-coronavirus-
66e9987a-a674-42bc-8d3f-070a1c0ee1a9.html.

Bulletin No. 2020–48 1097 November 23, 2020
section 1332 waiver(s) that have such pro-
hibitions in effect at the time they would
have otherwise have to conduct public no-
tice would most likely be unable to com-
ply with the public notice requirements to
hold two in-person public hearings prior
to submission of their section 1332 waiver
applications in accordance with the 2018
Guidance addressing requirements under
§§ 33.112(b) and 155.1312(b). In such
cases, this IFC will allow the Secretar-
ies to grant the state’s request to hold the
two public hearings virtually, rather than
in-person, or to hold one public hearing at
the state level, rather than two public hear-
ings at the state level. As another example,
the Secretaries may agree with a state that,
due to emergency circumstances that have
arisen related to the PHE for COVID-19,
there is insufficient time for the state to
provide public notice and hold any public
hearings at the state level prior to submit-
ting its section 1332 waiver application as
required by §§ 33.112(a) and 155.1312(a),
and grant the state’s request to provide
public notice and hold public hearings at
the state level after the state submits its
section 1332 waiver application.
In situations where HHS and the De-
partment of the Treasury determine that
public notice and hearings are warranted
on a different timeframe and may occur
after the submission of a state’s waiver
application request, the state will be re-
quired to amend the application request
as necessary to reflect public comments
or other relevant feedback received during
the alternative public notice procedures.
HHS and the Department of the Trea-
sury will evaluate a state’s request for a
modification and issue their modification
determination within approximately 15
calendar days after the request is received.
In assessing whether a state acted in good
faith, and in a diligent, timely, and prudent
manner in the preparation of the modifi-
cation request for the waiver, and for the
waiver application, HHS and the Depart-
ment of the Treasury will evaluate wheth-
er the relevant circumstances constitute an
emergency.
HHS and the Department of the Trea-
sury remind states that any public partici-
pation processes must continue to comply
with applicable Federal civil rights laws,
including taking reasonable steps to pro-
vide meaningful access for individuals
with limited English proficiency and tak-
ing appropriate steps to ensure effective
communication with individuals with
disabilities, including accessibility of in-
formation and communication technolo-
gy. Please note that virtual meetings may
present additional accessibility challenges
for people with communications and mo-
bility disabilities, as well as to those who
lack broadband access. Ensuring effective
communication may include providing
American Sign Language interpretation
and real-time captioning, and ensuring
that the platform is interoperable with as-
sistive technology for those with mobility
difficulties. HHS and the Department of
the Treasury especially encourage states
to strive to obtain meaningful input from
potentially affected populations, including
low-income residents, residents with high
expected health care costs, persons less
likely to have access to care, and members
of federally-recognized tribes, if applica-
ble, as part of any alternative public par-
ticipation process.
27
The Secretary of HHS will publish on
the CMS website any modification deter-
minations within 15 calendar days of the
Secretary of HHS and the Secretary of the
Treasury making such a determination, as
well as the approved revised timeline for
public comment at the state and Federal
level, as applicable. In addition, under the
new §§ 33.118 and 155.1318, the state
will be required to publish on its website
any modification requests and determina-
tions within 15 calendar days of receipt of
the determination, as well as the approved
revised timeline for public comment at the
state and Federal level, as applicable.
3. Monitoring and Compliance (31
CFR 33.120 and 45 CFR 155.1320)
As section 1332 waivers are likely to a
have a significant impact on individuals,
states, and the Federal Government, the
2012 Final Rule established processes and
methodologies to ensure that the Secretary
of HHS and the Secretary of the Treasury
receive adequate and appropriate infor-
mation regarding section 1332 waivers
(consistent with section 1332(a)(4)(B)(iv)
of the PPACA). Under §§ 33.120(c) and
155.1320(c), to ensure continued public
input within at least 6 months after the
implementation date, and annually there-
after, states are required to hold a public
forum at which members of the public
have an opportunity to provide comments
on the progress of the program authorized
by the section 1332 waiver and to provide
a summary of this forum to the Secretary
of HHS as part of the quarterly and an-
nual reports required under §§ 33.124
and 155.1324. Under §§ 33.120(c)(1) and
155.1320(c)(1), states are required to pub-
lish the date, time, and location of the pub-
lic forum in a prominent location on the
state’s public website at least 30 days prior
to the date of the planned public forum.
This IFC adds new §§ 33.120(c)(2)
and 155.1320(c)(2), which provide that
the Secretary of HHS and the Secretary of
the Treasury (the Secretaries) may waive,
in part, post award public notice require-
ments for an approved waiver outlined in
§§ 33.120(c) and 155.1320(c) during the
PHE for COVID-19 when the application
of the post award public notice procedures
would be contrary to the interests of con-
sumers during the PHE for COVID-19.
The Secretaries may modify the post
award public notice procedures, in part,
when the state meets all of the following:
• The state requests a modification in
the form and manner specified by the Sec-
retaries.
• The state acts in good faith, and in
a diligent, timely, and prudent manner to
comply with the monitoring and compli-
ance requirements under the regulations
and specific terms and conditions of the
waiver and to submit and prepare the re-
quest for a modification.
• The state details in its request for a
modification the reason(s) the state seeks
a modification from the state post award
public notice procedures, describes how
the state meets the modification criteria,
and describes the alternative post award
public notice procedures it proposes to
27
As noted above, the HHS Office for Civil Rights enforces applicable Federal civil rights laws as described above, as well as laws protecting the exercise of conscience and religious freedom,
including the Religious Freedom Restoration Act (42 U.S.C. 2000bb through 2000bb-4). HHS’s requirements are subject to these laws, and states may have obligations under these laws to
protect conscience, prohibit coercion, and to ensure the free exercise of religion. U.S. Department of Health & Human Services, Office for Civil Rights, Conscience and Religious Freedom,
https://www.hhs.gov/conscience/index.html (last visited Aug. 20, 2020).

November 23, 2020 1098 Bulletin No. 2020–48
implement at the state level, including
public hearings, that are designed to pro-
vide the greatest opportunity and level of
meaningful public input from impacted
stakeholders that is practicable given the
emergency circumstances underlying the
state’s request for a modification.
As part of HHS and the Department of
the Treasury’s monitoring and oversight
of approved section 1332 waivers, the
Secretary of HHS and the Secretary of the
Treasury, at their discretion, monitor the
state’s compliance with the specific terms
and conditions of the waiver including,
but not limited to, compliance with the
guardrails, reporting requirements, and the
post award forum requirements. Under the
flexibilities provided in this IFC, the Sec-
retaries may, for example, allow the public
forum for an approved waiver that would
take place or become due during the PHE
for COVID-19 to be held virtually rather
than as an in person gathering. HHS and
the Department of the Treasury will work
closely with states that have these ap-
proved flexibilities through oversight and
monitoring activities to ensure open com-
munication with states during the PHE for
COVID-19. HHS and the Department of
the Treasury also will remain focused on
ensuring the public is informed about the
implementation of programs authorized
by section 1332 waivers and have a mean-
ingful opportunity to comment on the im-
plementation.
The Secretary of HHS and the Secre-
tary of the Treasury will evaluate a state’s
request for a modification and issue their
modification determination within ap-
proximately 15 calendar days after the
request is received. The state is required
to publish on its website any modification
requests and determinations by HHS and
the Department of the Treasury within 15
calendar days of receipt of the determi-
nation, as well as information on the ap-
proved revised timeline for the state’s post
award public notice procedures, as appli-
cable. Since the state is already required
to post materials as part of post award
annual reporting requirements, such as
the notice for the public forum and an-
nual report, states will be responsible for
ensuring that the public is aware of the
determination to modify the public notice
procedures and must include this informa-
tion along with the information required
under §§ 33.120(c)(1) and 155.1320(c)(1)
in a prominent location on the state’s pub-
lic website.
HHS and the Department of the Trea-
sury are of the view that post award forums
are critical to ensure that the public has a
regular opportunity to learn about and com-
ment on the progress of section 1332 waiv-
ers. States that receive approval, to modify,
in part, these post award public notice pro-
cedures would still need to meet all other
requirements specified in §§ 33.112(b) and
155.1312(b). For example, should the state
receive a modification approval that per-
mits it to hold the post award public forum
virtually instead of in person, the state must
still publish the notice of its post award
public notice on the state’s public website
and use other effective means to communi-
cate the required information to the public.
The public notice must include the website,
date, and time of the public forum that will
be convened by the state, information re-
lated to the timeframe for comments, and
how comments from the public on the sec-
tion 1332 waiver must be submitted. HHS
and the Department of the Treasury remind
states that they still must also comply with
Federal civil rights requirements, includ-
ing laws pertaining to accessibility, if the
Secretary of HHS and the Secretary of the
Treasury approve a modification from all
or a portion of the post award public no-
tice procedures. In such a circumstance,
the state would need to ensure these vir-
tual public hearings are as accessible as
possible during the PHE for COVID-19 so
members of the public can participate and
submit comments. The state should also
track how many people are attending these
forums, if possible.
V. Waiver of Proposed Rulemaking
Section 553(b) of the APA requires
the agency to publish a notice of the pro-
posed rule in the Federal Register that
includes a reference to the legal authority
under which the rule is proposed, and the
terms and substance of the proposed rule
or a description of the subjects and issues
involved. Section 553(c) further requires
the agency to give interested parties the
opportunity to participate in the rulemak-
ing through public comment before the
provisions of the rule take effect. Section
553(b)(B) authorizes the agency to waive
these procedures, however, if the agency
finds good cause that notice and comment
procedures are impracticable, unneces-
sary, or contrary to the public interest and
incorporates a statement of the finding and
its reasons in the rule issued.
Section 553(d) ordinarily requires a
30-day delay in the effective date of a fi-
nal rule from the date of its publication in
the Federal Register. This 30-day delay
in effective date can be waived, however,
if an agency finds good cause to support
an earlier effective date. Finally, the Con-
gressional Review Act (CRA) requires a
delay in the effective date for major rules
unless an agency finds good cause that no-
tice and public procedure are impractica-
ble, unnecessary, or contrary to the public
interest, in which case the rule shall take
effect at such time as the agency deter-
mines. 5 U.S.C. 801(a)(3), 808(2).
As noted earlier in this preamble, on
January 30, 2020, the International Health
Regulations Emergency Committee of
the WHO declared the outbreak a “Public
Health Emergency of international con-
cern.” On January 31, 2020, pursuant to
section 319 of the PHS, the HHS Secretary
determined that a PHE exists for the Unit-
ed States to aid the nation’s health care
community in responding to COVID-19.
On March 11, 2020, the WHO public-
ly declared COVID-19 a pandemic. On
March 13, 2020, the President declared
the COVID-19 pandemic a national emer-
gency. Effective October 23, 2020, the
HHS Secretary renewed the January 31,
2020 determination, which was previous-
ly renewed on April 21, 2020 and July 25,
2020, that a PHE exists and has existed
since January 27, 2020. This declaration,
along with the HHS Secretary’s January
30, 2020 declaration of a PHE, conferred
on the HHS Secretary certain waiver au-
thorities under section 1135 of the Act. On
March 13, 2020, the HHS Secretary au-
thorized waivers under section 1135 of the
Act, effective March 1, 2020.
28
28
https://www.phe.gov/emergency/news/healthactions/section1135/Pages/covid19-13March20.aspx.

Bulletin No. 2020–48 1099 November 23, 2020
It is critically important that the Depart-
ments implement the policies in this IFC as
quickly as possible. As the United States
is in the midst of the PHE for COVID-19,
the Departments find good cause to waive
notice of proposed rulemaking under the
APA, 5 U.S.C. 553(b)(B). For those same
reasons, as authorized by section 808(2)
of the CRA, the Departments find it is im-
practicable and contrary to the public in-
terest not to waive the delay in effective
date of this IFC under section 801 of the
CRA. Therefore, the Departments find
there is good cause to waive the CRA’s
delay in effective date pursuant to section
808(2) of the CRA. Thus, the Departments
find good cause to waive the applicable
delays in the effective date and, moreover,
to establish these policies in this IFC ap-
plicable as of the date of display at the Of-
fice of the Federal Register.
In this IFC, consistent with section
1902(a)(4) and (a)(19) of the Act, the
Department adds a new subpart G to 42
CFR part 433 to provide states with more
flexibility, subject to certain safeguards,
in implementing the requirement in sec-
tion 6008(b)(3) of the FFCRA that states
maintain Medicaid beneficiary enrollment
in order to receive the temporary increase
in Federal funding in the FFCRA. This
temporary funding increase is effective
beginning January 1, 2020 and could ex-
tend through the last day of the calendar
quarter in which the PHE for COVID-19,
including any extensions, terminates, if
the state claims the temporary funding
increase in that quarter. This provision of
the IFC is immediately necessary to en-
sure that states can determine eligibility
and provide care and services during the
PHE in a manner that is consistent with
simplicity of administration and the best
interests of beneficiaries and also claim
the temporary funding increase.
In this IFC, HHS and the Department
of the Treasury are setting forth flexibil-
ities in the public notice and post award
public participation requirements for a
State Innovation Waiver described in
section 1332 of PPACA during the PHE
for COVID-19. HHS and the Department
of the Treasury recognize that following
the normal state and Federal public no-
tice procedures and the state post award
requirements for section 1332 waivers
may impose barriers for states pursuing a
proposed waiver request during the PHE
for COVID-19. This guidance is intended
to protect public health and prevent the
spread of COVID-19 by limiting the need
for in-person gatherings related to a sec-
tion 1332 waiver. Additionally, states may
face uncertainty as to whether their waiver
requests will be approved in time to ex-
peditiously reform their health insurance
markets and to protect consumers from
the effects of the PHE for COVID-19.
Some states may not consider more robust
changes because they were concerned that
the current section 1332 waiver applica-
tion requirements are too time-consuming
or burdensome to be helpful during the
PHE for COVID-19. HHS and the Depart-
ment of the Treasury are of the view that
the flexibility to modify certain public no-
tice procedures and participation require-
ments will increase flexibility and reduce
burden for states seeking to use section
1332 waivers as a means of innovation for
providing coverage, lowering premiums,
and improving their health care markets
during the PHE for COVID-19. As such,
these flexibilities are immediately neces-
sary to provide states applying for a sec-
tion 1332 waiver or during the post award
period with the option to request a modifi-
cation from the state and/or Federal public
notice requirements when a delay would
undermine or compromise the purpose of
the waiver and be contrary to the interests
of consumers. HHS and the Department of
the Treasury are of the view that it could
be contrary to the public interest to require
full notice and comment during the cur-
rent PHE for COVID-19 because follow-
ing the normal timeframes and require-
ments could result in waiver approvals
for innovative waivers taking effect after
issuers have already made their decisions
regarding issuer participation in the indi-
vidual market and after rates for the up-
coming plan year have been submitted. A
modification from the public participation
requirements would be beneficial to the
public interest by providing states and the
Federal Government the flexibilities nec-
essary to review and approve, as appro-
priate, section 1332 waivers that expand
access to coverage on a faster timeframe.
In this IFC, the Departments amend
the regulations under section 2713 of the
PHS Act to implement the requirement
in section 3203 of the CARES Act that
non-grandfathered group health plans
and health insurance issuers offering
non-grandfathered group or individual
health insurance coverage provide cov-
erage without cost sharing for qualifying
coronavirus preventive services. This cov-
erage must be provided within 15 business
days after the date on which a recommen-
dation is made by the USPSTF or ACIP.
The Departments also establish in this
IFC that this coverage must be provided
regardless of whether the service is deliv-
ered by an in-network or out-of-network
provider.
The Departments are issuing these
amendments under the authority of sec-
tion 9833 of the Code, section 734 of
ERISA, and section 2792 of the PHS Act.
These sections authorize the Secretaries
of the Treasury, Labor, and HHS to pro-
mulgate any interim final rules that the
Secretaries determine are appropriate to
carry out the provisions of chapter 100 of
the Code, part 7 of subtitle B of title I of
ERISA, and part A of title XXVII of the
PHS Act, which include PHS Act sections
2701 through 2728 and the incorporation
of those sections into ERISA section 715
and Code section 9815. In addition, sec-
tion 7805(e) of the Code restricts any tem-
porary regulation issued by Treasury and
the IRS under the Code, such as interim
final regulations, to a duration of 3 years.
Several COVID-19 vaccine candidates
are currently in late-stage development.
Once a vaccine is authorized or approved
by FDA, the Departments expect that
ACIP may move expeditiously to recom-
mend the immunization. In addition, un-
like other preventive items and services
typically provided according to regularly
scheduled intervals, items and services in-
tended to prevent or mitigate COVID-19
will not, in the immediate future, be pro-
vided as part of a usual course of preven-
tive care. Instead, the Departments expect
consumers to receive these services once
they are recommended for the general
public or specific high-risk or high-priori-
ty populations. To help ensure full access
to and the widespread use of qualifying
coronavirus preventive services to miti-
gate the PHE for COVID 19, it is critical
that individuals be able to receive such
services from any provider authorized to
provide the service. This is consistent with
the objectives of Operation Warp Speed,

November 23, 2020 1100 Bulletin No. 2020–48
which, as mentioned above, is a partner-
ship among components of the Federal
Government that engages with private
firms to accelerate the development, man-
ufacture, and distribution of a COVID-19
vaccine to the American people.
The provisions of this IFC therefore
are immediately necessary to ensure
group health plan and group and individ-
ual health insurance coverage of these
items and services is prompt and broad, to
ensure timely access to combat the pan-
demic. In this IFC, the Department adds
a requirement at § 417.454 to require sec-
tion 1876 cost plans to cover without cost
sharing the COVID 19 vaccine and its ad-
ministration described in section 1861(s)
(10)(A) of the Act without cost sharing for
the duration of the PHE for the COVID-19
pandemic, specifically the end of the
emergency period defined in paragraph (1)
(B) of section 1135(g) of the Act, which
is the PHE declared by the Secretary on
January 31, 2020 and any renewals there-
of. While section 1876(c)(2) of the Act
ensures that enrollees in Medicare cost
plans will have coverage of a COVID-19
vaccine and its administration, section
3713 of the CARES Act did not amend
section 1876 of the Act to provide similar
cost-sharing protections for enrollees in
cost plans who receive the vaccine from
an in-network provider. Currently, there
is no requirement for cost plans to cover
the COVID-19 vaccine and its administra-
tion without cost sharing (that is, with cost
sharing that is the same as original Medi-
care) when the vaccine is furnished by an
in-network health care provider. This pro-
vision of the IFC is immediately neces-
sary to ensure that cost plan enrollees, like
other Medicare beneficiaries, are provided
access to the COVID-19 vaccine and its
administration without cost sharing. This
immediate action will ensure that cost is
not a barrier for beneficiaries to get the
vaccine, particularly during the public
health emergency when ensuring access is
paramount importance. The delay neces-
sary for notice and comment rulemaking
is both contrary to the public interest and
impractical here as it would delay access
to a COVID-19 vaccine without cost shar-
ing and be contrary to the need to ensure
access to a COVID-19 vaccine for enroll-
ees in cost plans on the same basis as is
ensured for other Medicare beneficiaries.
Further, as underscored by the time-
line for coverage Congress established in
section 3203 of the CARES Act, the need
to provide coverage of qualifying corona-
virus preventive services is urgent. Fol-
lowing a recommendation of the USPTF
or ACIP, the requirement to provide
coverage without cost sharing of qual-
ifying coronavirus preventive services,
which are expected to include immuni-
zations, takes effect within 15 business
days. Plans and issuers need immediate
guidance to understand their obligations
under section 3203 of the CARES Act
and to take steps that will enable them
to comply with those requirements as
soon as the coverage requirement goes
into effect. Delaying these provisions
would likewise delay plans’ and issuers’
ability to prepare for the availability of a
COVID-19 vaccine, resulting in barriers
in access to coverage of these critical ser-
vices during the PHE for COVID-19. As
of the date of display of this regulation,
there are not any coronavirus preventive
services including vaccines for coronavi-
rus that are required to be covered. How-
ever, because emergency use authoriza-
tion or approval of a COVID-19 vaccine
may be imminent, the Departments are
of the view it is critical that these reg-
ulations under section 2713 of the PHS
Act be issued and effective prior to such
authorization or approval. The Depart-
ments are of the view that it would be
impracticable and contrary to the public
interest to undertake normal notice and
comment rulemaking procedures in light
of the urgent need to ensure coverage
of and access to qualifying coronavirus
preventive services to protect the public
health as well as the health and safety of
individuals and communities to prevent
the spread of COVID-19. For these same
reasons, the Departments are of the view
a delayed effective date would also be
contrary to the public interest. Ensuring
individuals have access to a COVID-19
vaccine as soon as it becomes available is
critical to ending the PHE for COVID-19,
and therefore it is imperative that these
regulations are in effect on the date such
a vaccine becomes available and recom-
mended by ACIP. Undertaking the stan-
dard rulemaking process of publishing
a proposed rule, seeking public com-
ment, carefully analyzing those public
comments, and subsequently publishing
a final rule would possibly and perhaps
likely jeopardize such an effective date.
The Departments are of the view that
it would be impracticable and contrary
to the public interest to undertake nor-
mal notice and comment procedures and
to thereby delay the effective date of this
IFC. The Departments find good cause
to waive notice of proposed rulemaking
under the APA, 5 U.S.C. 553(b)(B). For
those same reasons, as authorized by sec-
tion 808(2) of the CRA, the Departments
find it is impracticable and contrary to the
public interest not to waive the delay in
effective date of this IFC under section
801 of the CRA. Therefore, the Depart-
ments find there is good cause to waive
the CRA’s delay in effective date pursuant
to section 808(2) of the CRA. The provi-
sions in this IFC will go into effect on the
date of display.
* * *
VI. Collection of Information
Requirements
Under the Paperwork Reduction Act
of 1995, the Departments are required to
provide 30-day notice in the Federal Reg-
ister and solicit public comment before a
collection of information requirement is
submitted to OMB for review and approv-
al. In order to fairly evaluate whether an
information collection should be approved
by OMB, section 3506(c)(2)(A) of the Pa-
perwork Reduction Act of 1995 (PRA)
requires that the Departments solicit com-
ment on the following issues:
• The need for the information collec-
tion and its usefulness in carrying out the
proper functions of the agency.
• The accuracy of the estimate of the
information collection burden.
• The quality, utility, and clarity of the
information to be collected.
• Recommendations to minimize the
information collection burden on the af-
fected public, including automated collec-
tion techniques.
The Departments are soliciting public
comment on each of the section 3506(c)
(2)(A)-required issues for the follow-
ing information collection requirements
(ICRs). The requirements and burden
will be submitted to under OMB Control
Number 0938-NEW.

Bulletin No. 2020–48 1101 November 23, 2020
A. ICRs for Price Transparency for
COVID-19 Diagnostic Tests
* * *
B. ICRs for State Innovation Waivers
Policy and Regulatory Revision in
Response to COVID-19 Public Health
Emergency
This IFC provides that states are re-
quired to submit modification requests to
the Secretary of HHS and the Secretary of
the Treasury in order to obtain approval
for the modifications made available by
this IFC. Any state can submit a request
to the Secretaries for a modification from
the state and/or Federal public notice pro-
cedures or include such a request in their
section 1332 waiver application if the
waiver application is submitted during
the PHE for COVID-19. The request must
describe the reason the state seeks a mod-
ification from the state public notice pro-
cedures, describe how the state meets the
modification criteria, describe the alterna-
tive public notice procedures it proposes
to implement at the state level, including
public hearings, that are designed to pro-
vide the greatest opportunity and level of
meaningful public input from impacted
stakeholders that is practicable given the
emergency circumstances underlying the
state’s request for a modification. The re-
quest must describe the reason the state
seeks a modification from the Federal
public notice procedures and the alterna-
tive public notice procedures it requests
to be implemented at the Federal level, as
applicable.
A state with an approved section 1332
waiver can submit a request to HHS and
the Department of Treasury for a mod-
ification from post award public notice
procedures. The request must specify the
reason the state seeks a modification from
the post award public notice procedures,
describe how the state meets the modifica-
tion criteria, and describe the alternative
procedures it proposes to implement at the
state level, including public hearings, that
are designed to provide the greatest op-
portunity and level of meaningful public
input from impacted stakeholders that is
practicable given the emergency circum-
stances underlying the state’s request for
a modification.
While HHS and the Department of
Treasury do not have data available to
predict the number of states that will
likely request a modification of either
the waiver application or the post award
public notice procedures, HHS and the
Department of Treasury estimate it will
take a senior manager 1 hour to prepare a
state’s request, with an equivalent cost of
approximately $118.
29
In addition, if HHS
and the Department of Treasury approve a
state’s modification request, the state will
have to post the determination on their
Web site within 15 days of the approv-
al. HHS and the Department of Treasury
estimate that for each state, it will take a
network and computer systems admin-
istrator 15 minutes to post the approval
with an equivalent cost of approximately
$21.
30
Assuming that approximately 15
states will submit a modification request,
the total burden hours for all states will
be 15 hours, with an equivalent cost of
approximately $1,775. HHS and the De-
partment of Treasury have assumed that
15 states will submit a request because,
as of display of this IFC, 15 states have
an approved 1332 waiver. This is an upper
bound, since some states may not need to
request the available modification for their
waivers, and therefore, will incur no bur-
den. Furthermore, assuming that approx-
imately 15 states receive approval of the
modification request and then must post
the approval, the total burden hours for all
states will be approximately 3.75 hours,
with an equivalent cost of approximate-
ly $319. This is an upper bound, since
some states may not receive approval, and
therefore, will incur a lower (or no) bur-
den. The total estimated burden hours as-
suming approximately 15 states apply for
and receive approval of the modification
request is 18.75 hours, with an equivalent
cost of approximately $2,094.
TABLE 3: Estimated Cost and Burden Hours per respondent.
BLS OccupationAverage Burden Hour
per Respondent
(in hours)
Hourly
Wage Rates
Total Cost per
Respondent
Senior Manager1$118.30$118.30
Network and Computer Systems Administrator0.25$85.02$21.26
Total1.25$139.56
TABLE 4: Estimated Total Cost and Burden for all Respondents.
Number of
Respondents
Number of
Responses
Burden Hours Per Re-
spondent
Total Burden
Hours
Total
Cost
Modification Request1515115$1,775
Posting modification approval15150.253.75$319
Total151.2518.75$2,094
29
Using data from the Bureau of Labor Statistics (BLS) for General and Operations Managers (Code 11-1020), we estimate that the average hourly labor cost will be $118.30, including 100
percent increase for overhead and fringe benefits. https://www.bls.gov/oes/current/oes_stru.htm.
30
Using data from the BLS for Network and Computer Systems Administrators (Code 15-1244), we estimate that the average hourly labor cost will be $85.02, including 100 percent increase
for overhead and fringe benefits. https://www.bls.gov/oes/current/oes_stru.htm.

November 23, 2020 1102 Bulletin No. 2020–48
Response to Comments
Because of the large number of public
comments normally received on Feder-
al Register documents, the Departments
are not able to acknowledge or respond to
them individually. All comments received
by the date and time specified in the
“DATES” section of this preamble will be
considered, and, when the Departments
proceed with a subsequent document, the
Departments will respond to the com-
ments in the preamble to that document.
Regulatory Impact Analysis
A. Statement of Need
The flexibilities and changes contained
within this IFC are responsive to the PHE
for COVID-19. The policies implemented
in this IFC will provide flexibilities, during
the PHE for COVID-19, to states pursuing
waivers under section 1332 of the PPACA
and to states with approved section 1332
waivers. Additionally, the policies and
regulatory updates implemented in this
IFC will increase the affordability with re-
gards to section 1332 waiver applications
and support continuity of health insurance
coverage for consumers in the individ-
ual and small group (or merged) market
during the PHE for COVID-19.
* * *
In section 3203 of the CARES Act,
Congress required group health plans
and issuers of group or individual health
insurance coverage to cover without cost
sharing qualifying coronavirus preventive
services, and required such coverage to be
provided within 15 business days after the
date on which an applicable recommenda-
tion is made relating to such service. The
Departments codify these requirements in
this IFC, and finalize amendments to the
regulations implementing section 2713 of
the PHS Act at 26 CFR 54.9815-2713; 29
CFR 2590.715-2713; and 45 CFR 147.130
that are intended to help ensure full access
to and the widespread use of qualifying
coronavirus preventive services to miti-
gate the public health emergency.
B. Overall Impact
The Departments have examined the
potential impacts of this rule as required
by Executive Order 12866 on Regulato-
ry Planning and Review (September 30,
1993), Executive Order 13563 on Im-
proving Regulation and Regulatory Re-
view (January 18, 2011), the Regulatory
Flexibility Act (RFA) (September 19,
1980, Pub. L. 96 354), section 1102(b)
of the Act, section 202 of the Unfunded
Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), Executive Order
13132 on Federalism (August 4, 1999),
the Congressional Review Act (5 U.S.C.
804(2)), and Executive Order 13771 on
Reducing Regulation and Controlling
Regulatory Costs (January 30, 2017).
Executive Orders 12866 and 13563 di-
rect agencies to assess all costs and ben-
efits of available regulatory alternatives
and, if regulation is necessary, to select
regulatory approaches that maximize net
benefits (including potential economic,
environmental, public health and safety
effects, distributive impacts, and equity).
Section 3(f) of Executive Order 12866 de-
fines a “significant regulatory action” as
an action that is likely to result in a rule:
(1) having an annual effect on the econ-
omy of $100 million or more in any one
year, or adversely and materially affect-
ing a sector of the economy, productivi-
ty, competition, jobs, the environment,
public health or safety, or state, local or
tribal governments or communities (also
referred to as “economically significant”);
(2) creating a serious inconsistency or oth-
erwise interfering with an action taken or
planned by another agency; (3) materially
altering the budgetary impacts of entitle-
ment grants, user fees, or loan programs
or the rights and obligations of recipients
thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the
President’s priorities, or the principles set
forth in the Executive Order.
A regulatory impact analysis (RIA)
must be prepared for major rules with
economically significant effects ($100
million or more in any one year), and a
“significant” regulatory action is subject
to review by the OMB. The Departments
have determined that these rules are like-
ly to have economic impacts of $100
million or more in at least one year, and
thus, meet the definition of “economically
significant” under Executive Order 12866
and a major rule under the Congressional
Review Act. Therefore, the Departments
have provided an assessment of the poten-
tial costs, benefits, and transfers associat-
ed with this rule. In accordance with the
provisions of Executive Order 12866, this
regulation was reviewed by OMB.
C. Detailed Economic Analysis
1. Effects of Rapid Coverage of
Preventative Services for Coronavirus
This IFC requires that non-grandfa-
thered group health plans and health insur-
ance issuers offering non-grandfathered
group or individual health insurance cov-
erage provide coverage for qualifying
coronavirus preventive services, including
recommended COVID-19 immunizations
and their administration, without any cost
sharing. It also requires plans and issuers
to provide coverage within 15 business
days after the date on which an applicable
recommendation is made by USPSTF or
ACIP relating to such a service. In addi-
tion, it requires that during the PHE for
COVID-19 a group health plan or issuer
that has a network of providers to provide
coverage without cost sharing regardless
of whether the service is delivered by an
in-network or out-of-network provider.
Making these qualifying coronavirus pre-
ventive services, including COVID-19
immunizations, available without any de-
lay is in the interest of public health, as
making these services available as quick-
ly as possible may encourage individuals
to take advantage of these services and
therefore may slow the transmission of
COVID-19. Access to qualifying coro-
navirus preventive services without cost
sharing will encourage more individuals
to obtain them. Increased use of qualify-
ing coronavirus preventive services may
reduce the transmission and spread of
the disease and thus potentially result in
better overall health outcomes. In the im-
mediate term, newly developed qualifying
coronavirus preventive services might be
available from a narrower range of pro-
viders than other, more established rec-
ommended preventive items and services.
If COVID-19 immunizations require spe-
cialized storage and administration ser-
vices, only a limited number of providers
may be able to offer them at first. If con-
sumers have to incur additional burdens,
long wait times, and increased travel times

Bulletin No. 2020–48 1103 November 23, 2020
to find an in-network provider that can
provide such services, it will limit access
and discourage them from obtaining such
services. Therefore, the Departments are
of the view that requiring out-of-network
coverage without cost sharing for qualify-
ing coronavirus preventive services will
help ensure that consumers are able to ob-
tain the preventive services without cost
sharing as soon as possible.
Plans and issuers will incur the cost of
the qualifying coronavirus preventive ser-
vices and administration of such services.
Providing coverage within 15 business
days after a recommendation is made re-
lating to such services is likely to impose
significant administrative costs on issu-
ers, group health plans, and other service
providers to update systems to include
billing codes for the preventive services,
negotiate prices with network providers,
determine reimbursements for out-of-
network providers, and conduct outreach
to providers, participants, beneficiaries,
and enrollees in a very short time period.
Depending on the magnitude of the costs
of qualifying coronavirus preventive ser-
vices and administration of such services
relative to the potential cost of treatment
for the disease, this may have an impact
on premiums. There are uncertainties re-
garding the price of potential qualifying
coronavirus preventive services, including
COVID-19 immunizations. If the prices
are high and there is widespread use of
such services, premiums may increase. If
the timing of availability of the preventive
services is such that plans and issuers are
unable to take them into account when
setting premiums, it may result in lower
profits or losses for plans and issuers. The
costs to plans and issuers will be lower
if a third party, such as the Federal Gov-
ernment, covers the cost of the immuni-
zations. In addition, the costs associated
with providing coverage for qualifying
coronavirus preventive services may be
offset by savings from avoidance of treat-
ment for COVID-19.
During the PHE for COVID-19, costs
to group health plans or issuers that have
networks of providers will be higher if a
significant number of participants, ben-
eficiaries, or enrollees go to out-of-net-
work providers, and the issuers and plans
reimburse those out-of-network provid-
ers at higher levels than their negotiated
rate with in-network providers. However,
if consumers can obtain the qualifying
coronavirus preventive services where
they usually obtain health care services,
consumers are likely to receive the ser-
vices from an in-network provider. Plans
and issuers may also wish to educate
participants, beneficiaries, or enrollees
about the availability of the services from
in-network providers and encourage them
to obtain these services from their usual
providers. This approach could limit the
number of participants, beneficiaries, or
enrollees going to out-of-network provid-
ers instead of staying in network, but there
will be associated administrative burdens
and costs.
The total cost to plans and issuers re-
lated to qualifying coronavirus preventive
services that are immunizations will de-
pend on the cost and number of required
immunization doses to be administered,
the number of people who will choose to
get immunized against COVID-19 and
which providers will be able to provide
the preventive services. For the 2018-19
influenza season, 62.6 percent of children
6 months through 17 years and 45.3 per-
cent of adults 18 years and older obtained
the influenza vaccine.
31
Given the severity
of COVID-19, the Departments anticipate
the immunization rates for COVID-19
are likely to ultimately be higher than for
influenza, although initial rates may be
lower until an adequate supply is avail-
able. Total costs to plans and issuers will
depend on the cost of covering qualifying
coronavirus preventive services, the num-
ber of people choosing to obtain such ser-
vices, and whether a third party such as
the Federal Government covers the costs
of any immunizations.
The Departments seek comment on
any potential costs and burdens that may
be incurred by plans and issuers due to
the requirements to cover the costs and
administration of such qualifying corona-
virus preventive services without any cost
sharing regardless of whether the service
is delivered by an in-network or out-of-
network provider. The Departments also
seek comment on the potential effects and
costs consumers may face as a result of
this provision.
2. Effects of Changes to State Innovation
Waivers Policy and Regulatory Revisions
in Response to the COVID-19 Public
Health Emergency
This IFC establishes a framework for
states to request the Secretary of HHS
and the Secretary of the Treasury to mod-
ify, in part, the public notice procedures
outlined in 31 CFR 33.112 and 33.116
and 45 CFR 155.1312 and 155.1316 to
expedite a decision on a proposed sec-
tion 1332 waiver request during the PHE
for COVID-19. Regulations at §§ 33.112
and 155.1312 require a state to provide
a public notice and comment period at
the state level prior to submitting an ap-
plication for a section 1332 waiver. The
regulations at §§ 33.116 and 155.1316
establish Federal public notice require-
ments for state section 1332 waiver ap-
plications. This IFC also establishes a
framework at the new 31 CFR 33.120(c)
(2) and 45 CFR 155.1320(c)(2) for states
to request the Secretaries to modify, in
part, the post award public notice pro-
cedures outlined in §§ 33.120(c) and
155.1320(c) for an approved waiver that
would otherwise take place or become
due during the PHE for COVID-19. As
stated above, HHS and the Department
of the Treasury are of the view that re-
quiring states that meet the criteria out-
lined in this IFC to comply with the full
public notice procedures during the PHE
for COVID-19 could cause undue harm
to the public. Allowing the Secretaries to
modify, in part, these requirements will
enable states to request and receive ap-
proval for waiver requests more quick-
ly and also implement changes that will
provide consumers with access to afford-
able health insurance coverage during
the current PHE for COVID-19. States
that request modifications from the pub-
lic notice procedures will incur some
burden, as discussed in the Collection
of Information Requirements section.
For a state that requests and receives a
modification of the public notice proce-
31
See Flu Vaccination Coverage, United States, 2018–19 Influenza Season. Center for Disease Control and Prevention, available at https://www.cdc.gov/flu/fluvaxview/coverage-1819esti-
mates.htm.

November 23, 2020 1104 Bulletin No. 2020–48
dures, we acknowledge that consumers
may receive less prior notice than would
occur without the modification. Through
this IFC, the HHS and the Department of
Treasury intend to provide an appropri-
ate balance and permit flexibility where
a state can ensure a sufficient opportuni-
ty for meaningful public input given the
circumstances in the PHE for COVID-19
while also ensuring the safety of the pub-
lic. If a state’s modification request is ap-
proved there may be a shorter comment
period at the state or Federal level, or the
comment periods may be the same num-
ber of days (for example 30 days) but
perhaps on a different timeframe. For
example, a state may conduct the state
public comment period concurrently
with the Federal public comment period
instead of before. States with approved
modification requests may experience a
reduction in costs related to post award
public notice procedures. However, if the
state’s modification request is approved,
the state must also implement alterna-
tive public notice procedures and, if re-
quired, amend the waiver application to
specify that it is the state’s intent to com-
ply with those alternative public notice
requirements in the state’s modification
request. States may also need to employ
additional technologies to host virtual
hearings instead of in person gatherings.
In this case, there may be no reduction in
costs related to public notice procedures.
HHS and the Department of the Trea-
sury seek comment on any potential costs
and burdens that may be incurred by states
due to the flexibilities afforded in this IFC.
HHS and the Department of the Treasury
also seek comment on the potential effects
and costs consumers may face as a result
of a state’s action taken as a result of the
flexibilities in this IFC.
D. Regulatory Alternatives Considered
* * *
The Departments considered not re-
quiring plans and issuers to provide cov-
erage for qualifying coronavirus preven-
tive services without cost sharing from
out-of-network providers. However, in
the near term, newly developed quali-
fying coronavirus preventive services
might be available from a narrower range
of providers than other, more established
recommended preventive services be-
cause of specialized storage and admin-
istration requirements. If there are only
a limited number of in-network provid-
ers that can administer these services,
consumers may incur additional burden
related to travel and long wait times to
obtain these services, which can result in
lower utilization. The Departments are
concerned that allowing plans and issuers
to impose cost sharing for COVID-19 im-
munizations provided by out-of-network
providers would discourage individuals
from seeking immunization, potential-
ly leading to reduced administration of
any COVID-19 vaccine and prolonging
the PHE for COVID-19, contrary to the
intent of the CARES Act. In order to en-
sure that the immunization services will
be available to all consumers enrolled
in non-grandfathered group health plans
and non-grandfathered group and indi-
vidual health insurance coverage, the
Departments are therefore requiring such
plans and issuers to cover without cost
sharing a qualifying coronavirus preven-
tive service, regardless of whether such
service is delivered by an in-network or
out-of-network provider. The Depart-
ments anticipate that as such services
become more widely available over time,
consumers will be able to obtain them
more easily from in-network providers.
HHS and the Department of the Trea-
sury considered providing states with
the flexibility to waive all of the public
notice procedures outlined in 31 CFR
33.112 and 33.116 and 45 CFR 155.1312
and 155.1316 to expedite a decision on
a proposed section 1332 waiver request
during the PHE for COVID-19. This
approach would have allowed a state to
request to completely eliminate a public
notice or reporting requirement pre- or
post-award. However, HHS and the De-
partment of the Treasury were concerned
that that this would violate the statuto-
ry requirements regarding a meaningful
level of input from the public. In addi-
tion, HHS and the Department of Trea-
sury are committed to transparency and
value public input on waiver proposals
and value public feedback to ensure
consumers are aware of waiver propos-
als that may affect them. HHS and the
Department of the Treasury anticipate
working with states on their modification
request to ensure the public is provided
the opportunity to provide feedback on
waiver proposals and the progress of the
program authorized by the section 1332
waiver.
E. Regulatory Flexibility Act
The Regulatory Flexibility Act, (5
U.S.C. 601, et seq.), requires agencies to
analyze options for regulatory relief of
small entities to prepare an initial regula-
tory flexibility analysis to describe the im-
pact of the proposed rule on small entities,
unless the head of the agency can certify
that the rule will not have a significant
economic impact on a substantial number
of small entities. The RFA generally de-
fines a “small entity” as (1) a proprietary
firm meeting the size standards of the
Small Business Administration (SBA),
(2) a not-for-profit organization that is not
dominant in its field, or (3) a small gov-
ernment jurisdiction with a population of
less than 50,000. States and individuals
are not included in the definition of “small
entity.” HHS uses a change in revenues of
more than 3 to 5 percent as its measure of
significant economic impact on a substan-
tial number of small entities. For purposes
of the RFA, small entities include small
businesses, nonprofit organizations, and
small governmental jurisdictions. Indi-
viduals and states are not included in the
definition of a small entity. This IFC is not
preceded by a general notice of proposed
rulemaking, and thus the requirements of
RFA do not apply.
In addition, section 1102(b)(2) of the
Act provides that whenever the Secretar-
ies promulgate a final version of a rule or
regulation with respect to which an initial
regulatory impact analysis is required,
the Secretaries shall prepare a final regu-
latory impact analysis with respect to the
final version of such rule or regulation.
Such analysis is required to set forth,
with respect to small rural hospitals, the
matters required under section 604 of ti-
tle 5, United States Code, to be set forth
with respect to small entities. The De-
partments are not required to prepare a
final regulatory impact analysis, because
this regulatory action is being issued as
an interim final rule without being pre-
ceded by a general notice of proposed
rulemaking.

Bulletin No. 2020–48 1105 November 23, 2020
F. Unfunded Mandates
Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires
that agencies assess anticipated costs and
benefits and take certain other actions
before issuing any proposed rule or any
final rule for which a general notice of
proposed rulemaking was published that
includes any Federal mandate that may
result in expenditures in any 1 year by a
state, local, or Tribal governments, in the
aggregate, or by the private sector, of $100
million in 1995 dollars, updated annually
for inflation. In 2020, that threshold is ap-
proximately $156 million. This IFC was
not preceded by a general notice of pro-
posed rulemaking, and thus the require-
ments of UMRA do not apply.
G. Federalism
Executive Order 13132 establishes
certain requirements that an agency must
meet when it promulgates a proposed rule
(and subsequent final rule) that imposes
substantial direct requirement costs on
State and local governments, preempts
State law, or otherwise has Federalism im-
plications. Since this rule aims to alleviate
burden on State and local governments,
the requirements of Executive Order
13132 are not applicable.
In compliance with the requirement
of Executive Order 13132 that agencies
examine closely any policies that may
have federalism implications or limit the
policy making discretion of the states, the
Departments have engaged in efforts to
consult with and work cooperatively with
affected states, including participating in
conference calls with and attending con-
ferences of the NAIC, and consulting with
state insurance officials on an individual
basis.
While developing this rule, the De-
partments attempted to balance the states’
interests in regulating health insurance is-
suers with the need to ensure market sta-
bility. By doing so, the Departments com-
plied with the requirements of Executive
Order 13132.
H. Reducing Regulation and Controlling
Regulatory Costs
Executive Order 13771, titled Reduc-
ing Regulation and Controlling Regulato-
ry Costs, was issued on January 30, 2017
and requires that the costs associated with
significant new regulations “shall, to the
extent permitted by law, be offset by the
elimination of existing costs associated
with at least two prior regulations.” This
IFC’s designation under Executive Or-
der 13771, titled Reducing Regulation
and Controlling Regulatory Costs (82 FR
9339), which was issued on January 30,
2017, will be informed by public com-
ments received.
List of Subjects
26 CFR Part 54
Excise taxes, Health care, Health in-
surance, Pensions, Reporting and record-
keeping requirements.
* * *
31 CFR Part 33
Health care, Health insurance, Report-
ing and recordkeeping requirements.
Dated: October 21, 2020.
Seema Verma,
Administrator,
Centers for Medicare & Medicaid
Services.
Dated: October 26, 2020.
Alex M. Azar II,
Secretary,
Department of Health and Human
Services.
Sunita Lough,
Deputy Commissioner for Services
and Enforcement
Internal Revenue Service
Approved: October 28, 2020.
David J. Kautter
Assistant Secretary of the Treasury
(Tax Policy).
Signed at Washington DC, this 29th
day of October, 2020
Jeanne Klinefelter Wilson,
Acting Assistant Secretary,
Employee Benefits Security
Administration,
Department of Labor.

November 23, 2020 1106 Bulletin No. 2020–48
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
Amendments to the
Regulations
For the reasons set forth in the pre-
amble, the Department of the Treasury
amends 26 CFR part 54 as set forth below:
PART 54—PENSION EXCISE TAXES
Par. 1. The authority citation for part 54
continues to read in part as follows:
Authority: 26 U.S.C. 7805, unless oth-
erwise noted.
* * * * *
Section 54.9815-2713T also issued un-
der 26 U.S.C. 9833.
* * * * *
2. Section 54.9815-2713T is added to
read as follows:
§ 54.9815-2713T Coverage of
preventive health services (temporary).
(a) Services—(1) In general. Begin-
ning at the time described in paragraph (b)
of this section and subject to § 54.9815-
2713A, a group health plan, or a health
insurance issuer offering group health in-
surance coverage, must provide coverage
for and must not impose any cost-sharing
requirements (such as a copayment, coin-
surance, or a deductible) for –
(i) Evidence-based items or services
that have in effect a rating of A or B in
the current recommendations of the Unit-
ed States Preventive Services Task Force
with respect to the individual involved
(except as otherwise provided in para-
graph (c) of this section);
(ii) Immunizations for routine use in
children, adolescents, and adults that have
in effect a recommendation from the Ad-
visory Committee on Immunization Prac-
tices of the Centers for Disease Control
and Prevention with respect to the indi-
vidual involved (for purposes of this para-
graph (a)(1)(ii), a recommendation from
the Advisory Committee on Immunization
Practices of the Centers for Disease Con-
trol and Prevention is considered in effect
after it has been adopted by the Director of
the Centers for Disease Control and Pre-
vention, and a recommendation is consid-
ered to be for routine use if it is listed on
the Immunization Schedules of the Cen-
ters for Disease Control and Prevention);
(iii) With respect to infants, children,
and adolescents, evidence-informed pre-
ventive care and screenings provided for
in comprehensive guidelines supported
by the Health Resources and Services Ad-
ministration;
(iv) With respect to women, such ad-
ditional preventive care and screenings
not described in paragraph (a)(1)(i) of this
section as provided for in comprehensive
guidelines supported by the Health Re-
sources and Services Administration for
purposes of section 2713(a)(4) of the Pub-
lic Health Service Act, subject to 45 CFR
147.131, 147.132, and 147.133; and
(v) Any qualifying coronavirus preven-
tive service, which means an item, service,
or immunization that is intended to pre-
vent or mitigate coronavirus disease 2019
(COVID-19) and that is, with respect to
the individual involved—
(A) An evidence-based item or service
that has in effect a rating of A or B in the
current recommendations of the United
States Preventive Services Task Force; or
(B) An immunization that has in ef-
fect a recommendation from the Advisory
Committee on Immunization Practices of
the Centers for Disease Control and Pre-
vention (regardless of whether the immu-
nization is recommended for routine use).
For purposes of this paragraph (a)(1)(v)
(B), a recommendation from the Advisory
Committee on Immunization Practices of
the Centers for Disease Control and Pre-
vention is considered in effect after it has
been adopted by the Director of the Cen-
ters for Disease Control and Prevention.
(2) Office visits. (i) If an item or service
described in paragraph (a)(1) of this sec-
tion is billed separately (or is tracked as
individual encounter data separately) from
an office visit, then a plan or issuer may
impose cost-sharing requirements with re-
spect to the office visit.
(ii) If an item or service described in
paragraph (a)(1) of this section is not
billed separately (or is not tracked as indi-
vidual encounter data separately) from an
office visit and the primary purpose of the
office visit is the delivery of such an item
or service, then a plan or issuer may not
impose cost-sharing requirements with re-
spect to the office visit.
(iii) If an item or service described
in paragraph (a)(1) of this section is not
billed separately (or is not tracked as indi-
vidual encounter data separately) from an
office visit and the primary purpose of the
office visit is not the delivery of such an
item or service, then a plan or issuer may
impose cost-sharing requirements with re-
spect to the office visit.
(iv) The rules of this paragraph (a)(2)
are illustrated by the following examples:
(A) Example 1—(1) Facts. An indi-
vidual covered by a group health plan
visits an in-network health care provider.
While visiting the provider, the individual
is screened for cholesterol abnormalities,
which has in effect a rating of A or B in
the current recommendations of the Unit-
ed States Preventive Services Task Force
with respect to the individual. The pro-
vider bills the plan for an office visit and
for the laboratory work of the cholesterol
screening test.
(2) Conclusion. In paragraph (a)(2)
(iv)(A)(1) of this section, the plan may
not impose any cost-sharing requirements
with respect to the separately-billed lab-
oratory work of the cholesterol screening
test. Because the office visit is billed sepa-
rately from the cholesterol screening test,
the plan may impose cost-sharing require-
ments for the office visit.
(B) Example 2—(1) Facts. Same facts
as in paragraph (a)(2)(iv)(A)(1) of this
section (Example 1). As the result of the
screening, the individual is diagnosed
with hyperlipidemia and is prescribed a
course of treatment that is not included in
the recommendations under paragraph (a)
(1) of this section.
(2) Conclusion. In paragraph (a)(2)
(iv)(B)(1) of this section, because the
treatment is not included in the recom-
mendations under paragraph (a)(1) of this
section, the plan is not prohibited from
imposing cost-sharing requirements with
respect to the treatment.
(C) Example 3—(1) Facts. An individ-
ual covered by a group health plan visits
an in-network health care provider to dis-
cuss recurring abdominal pain. During the
visit, the individual has a blood pressure
screening, which has in effect a rating of
A or B in the current recommendations

Bulletin No. 2020–48 1107 November 23, 2020
of the United States Preventive Services
Task Force with respect to the individual.
The provider bills the plan for an office
visit.
(2) Conclusion. In paragraph (a)(2)(iv)
(C)(1) of this section, the blood pressure
screening is provided as part of an office
visit for which the primary purpose was
not to deliver items or services described
in paragraph (a)(1) of this section. There-
fore, the plan may impose a cost-sharing
requirement for the office visit charge.
(D) Example 4—(1) Facts. A child
covered by a group health plan visits an
in-network pediatrician to receive an an-
nual physical exam described as part of
the comprehensive guidelines supported
by the Health Resources and Services
Administration. During the office visit,
the child receives additional items and
services that are not described in the com-
prehensive guidelines supported by the
Health Resources and Services Adminis-
tration, nor otherwise described in para-
graph (a)(1) of this section. The provider
bills the plan for an office visit.
(2) Conclusion. In paragraph (a)(2)(iv)
(D)(1) of this section, the service was not
billed as a separate charge and was billed
as part of an office visit. Moreover, the
primary purpose for the visit was to deliv-
er items and services described as part of
the comprehensive guidelines supported
by the Health Resources and Services Ad-
ministration. Therefore, the plan may not
impose a cost-sharing requirement with
respect to the office visit.
(3) Out-of-network providers. (i) Sub-
ject to paragraphs (a)(3)(ii) and (iii) of this
section, nothing in this section requires a
plan or issuer that has a network of pro-
viders to provide benefits for items or ser-
vices described in paragraph (a)(1) of this
section that are delivered by an out-of-net-
work provider, or precludes a plan or is-
suer that has a network of providers from
imposing cost-sharing requirements for
items or services described in paragraph
(a)(1) of this section that are delivered by
an out-of-network provider.
(ii) If a plan or issuer does not have in
its network a provider who can provide an
item or service described in paragraph (a)
(1) of this section, the plan or issuer must
cover the item or service when performed
by an out-of-network provider, and may
not impose cost-sharing with respect to
the item or service.
(iii) A plan or issuer must provide
coverage for and must not impose any
cost-sharing requirements (such as a co-
payment, coinsurance, or a deductible)
for any qualifying coronavirus preventive
service described in paragraph (a)(1)(v)
of this section, regardless of whether such
service is delivered by an in-network or
out-of-network provider. For purposes of
this paragraph (a)(3)(iii), with respect to
a qualifying coronavirus preventive ser-
vice and a provider with whom the plan or
issuer does not have a negotiated rate for
such service (such as an out-of-network
provider), the plan or issuer must reim-
burse the provider for such service in an
amount that is reasonable, as determined
in comparison to prevailing market rates
for such service.
(4) Reasonable medical management.
Nothing prevents a plan or issuer from
using reasonable medical management
techniques to determine the frequency,
method, treatment, or setting for an item
or service described in paragraph (a)(1) of
this section to the extent not specified in
the relevant recommendation or guideline.
To the extent not specified in a recommen-
dation or guideline, a plan or issuer may
rely on the relevant clinical evidence base
and established reasonable medical man-
agement techniques to determine the fre-
quency, method, treatment, or setting for
coverage of a recommended preventive
health service.
(5) Services not described. Nothing in
this section prohibits a plan or issuer from
providing coverage for items and services
in addition to those recommended by the
United States Preventive Services Task
Force or the Advisory Committee on Im-
munization Practices of the Centers for
Disease Control and Prevention, or pro-
vided for by guidelines supported by the
Health Resources and Services Adminis-
tration, or from denying coverage for items
and services that are not recommended by
that task force or that advisory committee,
or under those guidelines. A plan or issuer
may impose cost-sharing requirements for
a treatment not described in paragraph (a)
(1) of this section, even if the treatment
results from an item or service described
in paragraph (a)(1) of this section.
(b) Timing—(1) In general. A plan or
issuer must provide coverage pursuant to
paragraph (a)(1) of this section for plan
years that begin on or after September 23,
2010, or, if later, for plan years that begin
on or after the date that is one year after
the date the recommendation or guideline
is issued, except as provided in paragraph
(b)(3) of this section.
(2) Changes in recommendations or
guidelines. (i) A plan or issuer that is re-
quired to provide coverage for any items
and services specified in any recommen-
dation or guideline described in para-
graph (a)(1) of this section on the first day
of a plan year, or as otherwise provided
in paragraph (b)(3) of this section, must
provide coverage through the last day of
the plan or policy year, even if the recom-
mendation or guideline changes or is no
longer described in paragraph (a)(1) of
this section, during the applicable plan or
policy year.
(ii) Notwithstanding paragraph (b)(2)
(i) of this section, to the extent a recom-
mendation or guideline described in para-
graph (a)(1)(i) of this section that was in
effect on the first day of a plan year, or as
otherwise provided in paragraph (b)(3) of
this section, is downgraded to a “D” rat-
ing, or any item or service associated with
any recommendation or guideline speci-
fied in paragraph (a)(1) of this section is
subject to a safety recall or is otherwise
determined to pose a significant safety
concern by a Federal agency authorized to
regulate the item or service during a plan
or policy year, there is no requirement un-
der this section to cover these items and
services through the last day of the appli-
cable plan or policy year.
(3) Rapid coverage of preventive ser-
vices for coronavirus. In the case of a
qualifying coronavirus preventive service
described in paragraph (a)(1)(v) of this
section, a plan or issuer must provide cov-
erage for such item, service, or immuniza-
tion in accordance with this section by the
date that is 15 business days after the date
on which a recommendation specified in
paragraph (a)(1)(v)(A) or (B) of this sec-
tion is made relating to such item, service,
or immunization.
(c) Recommendations not current. For
purposes of paragraph (a)(1)(i) of this
section, and for purposes of any other

November 23, 2020 1108 Bulletin No. 2020–48
provision of law, recommendations of the
United States Preventive Services Task
Force regarding breast cancer screening,
mammography, and prevention issued in
or around November 2009 are not consid-
ered to be current.
(d) Applicability date. The provisions
of paragraphs (a)(1)(i) through (iv), (a)(2),
(a)(3)(i) and (ii), (a)(4) through (5), (b)(1)
and (2), and (c) of this section are applica-
ble as of April 16, 2012.
(e) Sunset date. The provisions of para-
graphs (a)(1)(v), (a)(3)(iii), and (b)(3) of
this section will not apply with respect to a
qualifying coronavirus preventive service
furnished on or after the expiration of the
public health emergency determined on
January 31, 2020, to exist nationwide as
of January 27, 2020, by the Secretary of
Health and Human Services pursuant to
section 319 of the Public Health Service
Act, as a result of COVID-19, including
any subsequent renewals of that determi-
nation.
* * *
DEPARTMENT OF THE TREASURY
Office of the Secretary
Amendments to the Regulations
For the reasons set forth in the pream-
ble, the Department of Treasury amends
31 CFR part 33 as set forth below:
PART 33—WAIVERS FOR STATE
INNOVATION
5. The authority citation for part 33
continues to read as follows:
Authority: Sec. 1332, Pub. L. 111-
148, 124 Stat. 119.
6. Section 33.118 is added to read as
follows:
§ 33.118 Modification from the normal
public notice requirements during the
public health emergency.
(a) The Secretary and the Secretary of
Health and Human Services may modify,
in part, the State public notice require-
ments under § 33.112 and the Federal
public notice procedures under § 33.116
to expedite a decision on a proposed
waiver request during the public health
emergency for COVID-19, as defined in
42 CFR 400.200, when a delay would
undermine or compromise the purpose of
the proposed waiver request and be con-
trary to the interests of consumers. These
flexibilities are limited to event-triggered,
emergent situations, and the flexibilities
outlined in this section will not be avail-
able for States seeking to address a threat
to consumers’ access to health coverage or
care that existed prior to the public health
emergency for COVID-19.
(b) A State must meet all of the follow-
ing criteria to request a modification under
paragraph (a) of this section:
(1) The State must request a modifica-
tion under paragraph (a) of this section,
in the form and manner specified by the
Secretaries.
(2) The State must have acted in good
faith, and in a diligent, timely, and prudent
manner in the preparation of the request
for a modification under paragraph (a) of
this section, and the waiver application re-
quest, as applicable.
(3) The State must, as applicable, de-
tail in its request for a modification from
State-level notice procedures under para-
graph (a) of this section the justification
for the request and the alternative public
notice procedures it proposes to imple-
ment at the State level, including public
hearings, that are designed to provide the
greatest opportunity and level of meaning-
ful public input from impacted stakehold-
ers that is practicable given the emergency
circumstances underlying the State’s re-
quest for a modification. As a condition of
receiving a modification approval, a State
must implement public notice procedures,
including public hearings, at the State lev-
el and, if required, amend the waiver ap-
plication request.
(4) The State must, as applicable, detail
in its request for a modification from Fed-
eral-level notice procedures under para-
graph (a) of this section the justification
for the request as it relates to the public
health emergency and the alternative pub-
lic notice procedures it requests to be im-
plemented at the Federal level.
(c) The Secretary and the Secretary of
Health and Human Services will evaluate
a State’s request for a modification under
paragraph (a) of this section and issue
their exemption determination within ap-
proximately 15 calendar days after the re-
quest is received.
(d) The Secretary of Health and Human
Services will publish on the Centers for
Medicare and Medicaid Services (CMS)
website any modification determinations
within 15 calendar days of the Secretary
and the Secretary of Health and Human
Services making such a determination,
as well as the approved revised timeline
for public comment under the approved
alternative State or Federal public notice
procedures, as applicable.
(e) The State must publish on its web-
site any modification requests and deter-
minations within 15 calendar days of re-
ceipt of the determination, as well as the
approved revised timeline for public com-
ment under the alternative State or Federal
public notice procedures, as applicable.
(f) The State must, as applicable, im-
plement the alternative public notice pro-
cedures at the State level if the State’s
exemption request is approved and, if
required, amend the waiver application
request.
7. Section 33.120 is amended—
a. In paragraph (c)(1) by adding a para-
graph heading; and
b. By adding paragraph (c)(2).
The additions read as follows:
§ 33.120 Monitoring and compliance.
* * * * *
(c) * * *
(1) Notification requirements for public
forum. * * *
(2) Modification from the normal
post-award requirements during the
public health emergency. (i) The Sec-
retary and the Secretary of Health and
Human Services may modify, in part,
State post-award requirements under this
paragraph (c)(2) for an approved waiver
request during the public health emergen-
cy for COVID-19, as defined in 42 CFR
400.200, when the application of the post
award public notice requirements would
be contrary to the interests of consumers
during the public health emergency. These
flexibilities are limited to event-triggered,
emergent situations, and the flexibilities
outlined in this section will not be avail-
able for States seeking to address a threat

Bulletin No. 2020–48 1109 November 23, 2020
to consumers’ access to health coverage or
care that existed prior to the public health
emergency for COVID-19.
(ii) A State must meet all of the follow-
ing criteria to request a modification under
paragraph (c) of this section:
(A) The State must request a modifi-
cation under this paragraph (c)(2), in the
form and manner specified by the Secre-
taries.
(B) The State must have acted in good
faith, and in a diligent, timely, and prudent
manner to comply with the monitoring
and compliance requirement under the
waiver and the terms and conditions of the
agreement between the Secretary and the
Secretary of Health and Human Services,
as applicable, and the State to implement
a section 1332 waiver and to submit and
prepare the request for a modification un-
der this paragraph (c)(2).
(C) The State must detail in its request
for a modification under this paragraph (c)
(2) the alternative post award public notice
procedures it proposes to implement at the
State level, including public hearings, that
are designed to provide the greatest op-
portunity and level of meaningful public
input from impacted stakeholders that is
practicable given the emergency circum-
stances underlying the State’s request for
a modification.
(D) The Secretary and the Secretary of
Health and Human Services will evaluate
a State’s request for a modification under
this paragraph (c)(2) and issue their mod-
ification determination within approxi-
mately 15 calendar days after the request
is received.
(E) The State must publish on its Web
site any modification requests and deter-
minations within 15 calendar days of the
receipt of the determination as well as in-
formation on the approved revised time-
line for the state’s post award public no-
tice procedures, as applicable.
* * * * *
(Filed by the Office of the Federal Register on No-
vember 2, 2020, 4:15 p.m., and published in the issue
of the Federal Register for November 06, 2020, 85
F.R. 71142)
Section 995.—Taxation
of DISC Income to
Shareholders
2020 Base Period T-Bill
Rate. The “base period
T-bill rate” for the period
ending September 30,
2020, is published as
required by section 995(f)
of the Internal Revenue
Code
Rev. Rul. 2020-25
Section 995(f)(1) of the Internal Reve-
nue Code provides that a shareholder of a
domestic international sales corporation
(“DISC”) shall pay interest each taxable
year in an amount equal to the product of
the “shareholder’s DISC-related deferred
tax liability” for the year (as defined in
section 995(f)(2)) and the “base period
T-bill rate.” Under section 995(f)(4), the
base period T-bill rate is “the annual rate
of interest determined by the Secretary
to be equivalent to the average of the
1-year constant maturity Treasury yields,
as published by the Board of Governors
of the Federal Reserve System, for the
1-year period ending on September 30 of
the calendar year ending with (or of the
most recent calendar year ending before)
the close of the taxable year of the share-
holder.”
The base period T-bill rate for the pe-
riod ending September 30, 2020, is 0.73
percent.
Pursuant to section 6622 of the Inter-
nal Revenue Code, interest must be com-
pounded daily. The table below provides
factors for compounding the 2020 base
period T-bill rate daily for any number
of days in the shareholder’s taxable year
(including for a 52-53 week taxable year).
To compute the amount of the interest
charge for the shareholder’s taxable year,
multiply the amount of the shareholder’s
DISC-related deferred tax liability for that
year by the base period T-bill rate factor
corresponding to the number of days in
the shareholder’s taxable year for which
the interest charge is being computed.
Generally, one would use the factor for
365 days. One would use a different factor
only if the shareholder’s taxable year for
which the interest charge is being deter-
mined is a short taxable year, if the share-
holder uses a 52-53 week taxable year, or
if the shareholder’s taxable year is a leap
year.
For the base period T-bill rates for pe-
riods ending in prior years, see Rev. Rul.
2019-27, 2019-51 I.R.B. 1378; Rev. Rul.
2018-31, 2018-50 I.R.B. 848; Rev. Rul.
2017-23, 2017-49 I.R.B. 546; Rev. Rul.
2017-01, 2017-03 I.R.B. 377; and Rev.
Rul. 2015-26, 2015-49 I.R.B. 696.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Kathleen C. Arsenault of the Of-
fice of Associate Chief Counsel (Interna-
tional). For further information regarding
the revenue ruling, contact Ms. Arsenault
at (202) 317-3800 (not a toll-free num-
ber).

November 23, 2020 1110 Bulletin No. 2020–48
ANNUAL RATE, COMPOUNDED DAILY
0.73 PERCENT
DAYSFACTOR
10.000019945
20.000039891
30.000059837
40.000079784
50.000099731
60.000119678
70.000139626
80.000159574
90.000179523
100.000199471
110.000219421
120.000239371
130.000259321
140.000279271
150.000299222
160.000319173
170.000339125
180.000359077
190.000379030
200.000398983
210.000418936
220.000438890
230.000458844
240.000478798
250.000498753
260.000518709
270.000538664
280.000558620
290.000578577
300.000598534
310.000618491
320.000638449
330.000658407
340.000678365
350.000698324

Bulletin No. 2020–48 1111 November 23, 2020
ANNUAL RATE, COMPOUNDED DAILY
0.73 PERCENT
DAYSFACTOR
360.000718283
370.000738243
380.000758203
390.000778164
400.000798125
410.000818086
420.000838048
430.000858010
440.000877972
450.000897935
460.000917898
470.000937862
480.000957826
490.000977790
500.000997755
510.001017720
520.001037686
530.001057652
540.001077619
550.001097586
560.001117553
570.001137520
580.001157488
590.001177457
600.001197426
610.001217395
620.001237365
630.001257335
640.001277305
650.001297276
660.001317247
670.001337219
680.001357191
690.001377163
700.001397136

November 23, 2020 1112 Bulletin No. 2020–48
ANNUAL RATE, COMPOUNDED DAILY
0.73 PERCENT
DAYSFACTOR
710.001417109
720.001437083
730.001457057
740.001477031
750.001497006
760.001516981
770.001536957
780.001556933
790.001576909
800.001596886
810.001616863
820.001636841
830.001656819
840.001676797
850.001696776
860.001716755
870.001736735
880.001756715
890.001776695
900.001796676
910.001816657
920.001836639
930.001856621
940.001876603
950.001896586
960.001916569
970.001936553
980.001956537
990.001976521
1000.001996506
1010.002016491
1020.002036477
1030.002056463
1040.002076449
1050.002096436

Bulletin No. 2020–48 1113 November 23, 2020
ANNUAL RATE, COMPOUNDED DAILY
0.73 PERCENT
DAYSFACTOR
1060.002116423
1070.002136411
1080.002156399
1090.002176387
1100.002196376
1110.002216365
1120.002236354
1130.002256344
1140.002276335
1150.002296325
1160.002316317
1170.002336308
1180.002356300
1190.002376293
1200.002396285
1210.002416278
1220.002436272
1230.002456266
1240.002476260
1250.002496255
1260.002516250
1270.002536246
1280.002556242
1290.002576238
1300.002596235
1310.002616232
1320.002636229
1330.002656227
1340.002676226
1350.002696224
1360.002716224
1370.002736223
1380.002756223
1390.002776223
1400.002796224

November 23, 2020 1114 Bulletin No. 2020–48
ANNUAL RATE, COMPOUNDED DAILY
0.73 PERCENT
DAYSFACTOR
1410.002816225
1420.002836227
1430.002856229
1440.002876231
1450.002896234
1460.002916237
1470.002936240
1480.002956244
1490.002976249
1500.002996253
1510.003016258
1520.003036264
1530.003056270
1540.003076276
1550.003096283
1560.003116290
1570.003136297
1580.003156305
1590.003176314
1600.003196322
1610.003216331
1620.003236341
1630.003256351
1640.003276361
1650.003296372
1660.003316383
1670.003336395
1680.003356406
1690.003376419
1700.003396431
1710.003416445
1720.003436458
1730.003456472
1740.003476486
1750.003496501

Bulletin No. 2020–48 1115 November 23, 2020
ANNUAL RATE, COMPOUNDED DAILY
0.73 PERCENT
DAYSFACTOR
1760.003516516
1770.003536531
1780.003556547
1790.003576564
1800.003596580
1810.003616597
1820.003636615
1830.003656633
1840.003676651
1850.003696670
1860.003716689
1870.003736708
1880.003756728
1890.003776749
1900.003796769
1910.003816790
1920.003836812
1930.003856834
1940.003876856
1950.003896879
1960.003916902
1970.003936925
1980.003956949
1990.003976973
2000.003996998
2010.004017023
2020.004037049
2030.004057074
2040.004077101
2050.004097127
2060.004117154
2070.004137182
2080.004157210
2090.004177238
2100.004197267

November 23, 2020 1116 Bulletin No. 2020–48
ANNUAL RATE, COMPOUNDED DAILY
0.73 PERCENT
DAYSFACTOR
2110.004217296
2120.004237325
2130.004257355
2140.004277385
2150.004297416
2160.004317447
2170.004337479
2180.004357511
2190.004377543
2200.004397575
2210.004417609
2220.004437642
2230.004457676
2240.004477710
2250.004497745
2260.004517780
2270.004537815
2280.004557851
2290.004577887
2300.004597924
2310.004617961
2320.004637999
2330.004658036
2340.004678075
2350.004698113
2360.004718152
2370.004738192
2380.004758232
2390.004778272
2400.004798313
2410.004818354
2420.004838395
2430.004858437
2440.004878479
2450.004898522

Bulletin No. 2020–48 1117 November 23, 2020
ANNUAL RATE, COMPOUNDED DAILY
0.73 PERCENT
DAYSFACTOR
2460.004918565
2470.004938609
2480.004958652
2490.004978697
2500.004998741
2510.005018786
2520.005038832
2530.005058878
2540.005078924
2550.005098971
2560.005119018
2570.005139065
2580.005159113
2590.005179161
2600.005199210
2610.005219259
2620.005239308
2630.005259358
2640.005279408
2650.005299459
2660.005319510
2670.005339562
2680.005359613
2690.005379666
2700.005399718
2710.005419771
2720.005439825
2730.005459879
2740.005479933
2750.005499988
2760.005520043
2770.005540098
2780.005560154
2790.005580210
2800.005600267

November 23, 2020 1118 Bulletin No. 2020–48
ANNUAL RATE, COMPOUNDED DAILY
0.73 PERCENT
DAYSFACTOR
2810.005620324
2820.005640381
2830.005660439
2840.005680498
2850.005700556
2860.005720615
2870.005740675
2880.005760735
2890.005780795
2900.005800856
2910.005820917
2920.005840978
2930.005861040
2940.005881102
2950.005901165
2960.005921228
2970.005941291
2980.005961355
2990.005981419
3000.006001484
3010.006021549
3020.006041615
3030.006061680
3040.006081747
3050.006101813
3060.006121880
3070.006141948
3080.006162016
3090.006182084
3100.006202153
3110.006222222
3120.006242291
3130.006262361
3140.006282431
3150.006302502

Bulletin No. 2020–48 1119 November 23, 2020
ANNUAL RATE, COMPOUNDED DAILY
0.73 PERCENT
DAYSFACTOR
3160.006322573
3170.006342644
3180.006362716
3190.006382789
3200.006402861
3210.006422934
3220.006443008
3230.006463082
3240.006483156
3250.006503231
3260.006523306
3270.006543381
3280.006563457
3290.006583533
3300.006603610
3310.006623687
3320.006643764
3330.006663842
3340.006683921
3350.006703999
3360.006724078
3370.006744158
3380.006764238
3390.006784318
3400.006804399
3410.006824480
3420.006844561
3430.006864643
3440.006884725
3450.006904808
3460.006924891
3470.006944974
3480.006965058
3490.006985143
3500.007005227

November 23, 2020 1120 Bulletin No. 2020–48
ANNUAL RATE, COMPOUNDED DAILY
0.73 PERCENT
DAYSFACTOR
3510.007025312
3520.007045398
3530.007065484
3540.007085570
3550.007105657
3560.007125744
3570.007145831
3580.007165919
3590.007186007
3600.007206096
3610.007226185
3620.007246275
3630.007266365
3640.007286455
3650.007306546
3660.007326637
3670.007346728
3680.007366820
3690.007386912
3700.007407005
3710.007427098

Bulletin No. 2020–48 1121 November 23, 2020
Part III
3121(q)
Gaming Industry Tip
Compliance Agreement
Program
Rev. Proc. 2020-47
SECTION 1. PURPOSE
This revenue procedure modifies
Revenue Procedure 2007-32, 2007-22
I.R.B.1322, to extend the term of a Gam-
ing Industry Tip Compliance Agreement
( GITCA). Revenue Procedure 2007-32
provides that the term of a GITCA is gen-
erally three years. This revenue procedure
modifies Revenue Procedure 2007-32 to
provide that the term of a GITCA is gen-
erally five years and to extend the renew-
al term of a GITCA from three years to a
term of up to five years.
SECTION 2. BACKGROUND
The Gaming Industry Tip Compliance
Agreement Program ( GITCA Program) is
designed to promote compliance by gam-
ing industry employers and employees
with the provisions of the Internal Rev-
enue Code relating to tip income and to
reduce disputes under section 3121(q).
Under section 3121(q), tips received by an
employee in the course of the employee’s
employment are considered remunera-
tion for that employment and are deemed
to have been paid by the employer for
purposes of the employer share of social
security and Medicare tax imposed by
sections 3111(a) and (b). The remunera-
tion is deemed to be paid when a written
statement including the tips is furnished to
the employer by the employee pursuant to
section 6053(a). The GITCA Program was
established by Revenue Procedure 2003-
35, 2003-20 I.R.B. 919, and was updated
by Revenue Procedure 2007-32 with a
new model GITCA. The model GITCA in
Revenue Procedure 2007-32 was intended
to enhance administration of the GITCA
Program by facilitating and promoting the
use of financial information technology in
the tip reporting process.
Under the GITCA Program, a gaming
industry employer and the Internal Rev-
enue Service (Service) work together to
reach a GITCA that establishes minimum
tip rates for participating tipped employees
in specified occupational categories, pre-
scribes a threshold level of participation
by the employer’s employees, and reduces
compliance burdens for the employer and
enforcement burdens for the Service.
SECTION 3. MODIFICATION TO
REV. PROC. 2007-32
Sections 4.03 and 4.04 of Revenue Pro-
cedure 2007-32 are modified, and as mod-
ified these sections read in their entirety
as follows:
.03 In general, a Gaming Industry Tip
Compliance Agreement shall be for a term
of five years. For new properties and for
properties that do not have a prior agreement
with the Service, however, the initial term of
the Agreement may be for a shorter period.
.04 A Gaming Industry Tip Compliance
Agreement may be renewed for addition-
al terms of up to five years, in accordance
with Section IX of the model Gaming In-
dustry Tip Compliance Agreement. Begin-
ning not later than six months prior to the
termination date of a Gaming Industry Tip
Compliance Agreement, the Service and
the employer shall commence discussions
as to any appropriate revisions to the agree-
ment, including any appropriate revisions
to the tip rates described in Section VIII
of the model Gaming Industry Tip Com-
pliance Agreement. In the event that the
Service and the employer have not reached
final agreement on the terms and conditions
of a renewal agreement, the parties may,
by mutual agreement, extend the existing
agreement for an appropriate time to final-
ize and execute a renewal agreement.
SECTION 4. EFFECTIVE DATE
This revenue procedure is effective
November 23, 2020.
SECTION 5. EFFECT ON OTHER
DOCUMENTS
Revenue Procedure 2007-32 is modi-
fied. A GITCA executed pursuant to Reve-
nue Procedure 2003-35 and Revenue Pro-
cedure 2007-32 will remain in effect until
the expiration date set forth in that agree-
ment, unless modified by the renewal of
a GITCA under section 4.04 of Revenue
Procedure 2007-32 (as modified by sec-
tion 3 of this revenue procedure).
SECTION 6. DRAFTING AND
CONTACT INFORMATION
The principal author of this revenue
procedure is Stephanie Caden of the Of-
fice of Associate Chief Counsel (Em-
ployee Benefits, Exempt Organizations,
and Employment Taxes). For further in-
formation about this revenue procedure,
contact Ms. Caden at (202) 317-4774 (not
a toll-free number). For inquiries into par-
ticipating in the GITCA Program or for
questions about the program, contact the
National Tip Reporting Compliance Pro-
gram office in SB/SE, Employment Tax
Examination, at (616) 365-4603 (not a
toll-free number).
26 CFR 601.601: Rules and Regulations.
(Also: §§ 147, 1.147(f)-1)
Rev. Proc. 2020-49
SECTION 1. PURPOSE
This revenue procedure provides tem-
porary guidance regarding the public ap-
proval requirement under § 147(f) of the
Internal Revenue Code for tax-exempt
qualified private activity bonds. Specifi-
cally, in light of the continuing Coronavi-
rus Disease 2019 (COVID-19) pandemic,
this revenue procedure extends until Sep-
tember 30, 2021, the time period described
in section 4.02 of Rev. Proc. 2020-21,
2020-22 I.R.B. 872, during which certain
telephonic hearings are permitted.
SECTION 2. BACKGROUND
.01 Pursuant to § 147(f), tax-exempt
qualified private activity bonds are subject
to a public approval requirement. Except
for refunding bonds described in § 147(f)
(2)(D), a bond issue must be approved by
the governmental unit issuing the bonds

November 23, 2020 1122 Bulletin No. 2020–48
(or on behalf of which such bonds are is-
sued) and by the governmental unit hav-
ing jurisdiction over the area in which any
facility to be financed by the issue is lo-
cated. Under § 147(f)(2)(B), an issue will
be treated as having been approved by any
governmental unit if the issue is approved
by the applicable elective representative
of the governmental unit after a public
hearing following reasonable public no-
tice, or by voter referendum of the gov-
ernmental unit.
.02 Section 1.147(f)-1(d)(1) of the In-
come Tax Regulations provides that public
hearing means a forum providing a reason-
able opportunity for interested individuals
to express their views, orally or in writing,
on the proposed issue of bonds and the lo-
cation and nature of the proposed project
to be financed. Section 1.147(f)-1(d)(2)
provides that the public hearing must be
held in a location that, based on the facts
and circumstances, is convenient for resi-
dents of the approving governmental unit.
The location is presumed convenient for
residents of the governmental unit if it is
located in the approving governmental
unit’s capital or seat of government. Fur-
ther, if more than one governmental unit
is required to hold a public hearing, the
hearings may be combined as long as the
combined hearing affords the residents of
all of the participating governmental units
a reasonable opportunity to be heard. The
location of any combined hearing is pre-
sumed convenient for residents of each
participating governmental unit if it is no
farther than 100 miles from the seat of
government of each participating govern-
mental unit beyond whose geographic ju-
risdiction the hearing is conducted.
.03 In light of the COVID-19 pan-
demic, state and local governmental units
sought alternatives to in-person hearings
held to meet the public approval require-
ment. In response to these concerns, Rev.
Proc. 2020-21, effective May 4, 2020,
provides temporary guidance regarding
the public approval requirement under §
147(f). Rev. Proc. 2020-21 provides that
for the period ending on December 31,
2020, hearings held by teleconference
that are accessible to the residents of the
approving governmental unit by calling a
toll-free telephone number will be treat-
ed as held in a location that, based on the
facts and circumstances, is convenient for
residents of the approving governmental
unit for purposes of § 1.147(f)-1(d)(2).
The Department of the Treasury and the
Internal Revenue Service have received
several requests for extension of the time
period set forth in section 4.02 of Rev.
Proc. 2020-21. This revenue procedure
extends that time period until September
30, 2021.
SECTION 3. EXTENSION OF TIME
PERIOD
The period described in section 4.02 of
Rev. Proc. 2020-21 is extended. Accord-
ingly, section 4.02 of Rev. Proc. 2020-21
is modified as follows:
.02 Time period. The period described
in this section 4.02 is the period beginning
on May 4, 2020, and ending on September
30, 2021.
SECTION 4. EFFECT ON OTHER
DOCUMENTS
This revenue procedure modifies sec-
tion 4.02 of Rev. Proc. 2020-21.
SECTION 5. DRAFTING
INFORMATION
The principal authors of this revenue
procedure are Johanna Som de Cerff and
David White of the Office of Associate
Chief Counsel (Financial Institutions &
Products). For further information regard-
ing this revenue procedure, contact Ms.
Som de Cerff or Mr. White on (202) 317-
6980 (not a toll-free number).
26 CFR 1.168(k)-2: Additional first year
depreciation deduction for property acquired and
placed in service after September 27, 2017.
(Also Part I, §§ 168, 446; 1.446-1, 1.1502-68)
Rev. Proc. 2020-50
SECTION 1. PURPOSE
This revenue procedure provides
guidance for taxpayers wishing to apply
§§ 1.168(k)-2 and 1.1502-68 of the In-
come Tax Regulations, or to rely on the
proposed regulations under § 168(k) of
the Internal Revenue Code (Code) (REG-
106808-19) that were published in the
Federal Register on September 24, 2019
(84 FR 50152; 2019-41 I.R.B. 912) (2019
proposed regulations), for: (1) certain de-
preciable property acquired and placed
in service after September 27, 2017, by
the taxpayer during its taxable years end-
ing on or after September 28, 2017, and
before the taxpayer’s first taxable year
that begins on or after January 1, 2021;
(2) certain plants planted or grafted, as
applicable, after September 27, 2017, by
the taxpayer during its taxable years end-
ing on or after September 28, 2017, and
before the taxpayer’s first taxable year
that begins on or after January 1, 2021;
and (3) components acquired or self-con-
structed after September 27, 2017, of
certain larger self-constructed property
and placed in service by the taxpayer
during its taxable years ending on or af-
ter September 28, 2017, and before the
taxpayer’s first taxable year that begins
on or after January 1, 2021. If the tax-
payer retroactively applies §§ 1.168(k)-
2 and 1.1502-68, or relies on the 2019
proposed regulations, this revenue proce-
dure also allows the taxpayer to make a
late election under § 168(k)(5), (k)(7), or
(k)(10), § 1.168(k)-2(c) of the 2020 final
regulations (as defined in section 2.02(4)
of this revenue procedure) or the 2019
proposed regulations, or § 1.1502-68(c)
(4) of the 2020 final regulations, or to re-
voke an election under § 168(k)(5), (k)
(7), or (k)(10), or § 1.168(k)-2(c) of the
2019 proposed regulations, for the tax-
payer’s taxable years ending on or after
September 28, 2017, and before the tax-
payer’s first taxable year that begins on
or after January 1, 2021.
SECTION 2. BACKGROUND
.01 Amendments to § 168(k).
(1) Prior to amendment by § 13201
of Public Law 115-97 (131 Stat. 2054),
commonly referred to as the Tax Cuts and
Jobs Act (TCJA), § 168(k)(1) allowed a
50-percent additional first year deprecia-
tion deduction for qualified property for
the taxable year in which the qualified
property is placed in service by the tax-
payer. Qualified property was defined in
part as property the original use of which
begins with the taxpayer.
(2) Section 13201 of the TCJA made
several amendments to § 168(k). For ex-

Bulletin No. 2020–48 1123 November 23, 2020
ample, the additional first year deprecia-
tion deduction percentage was increased
from 50 to 100 percent; the property eli-
gible for the additional first year depreci-
ation deduction was expanded to include
certain used depreciable property and cer-
tain film, television, or live theatrical pro-
ductions; the placed-in-service date was
extended from before January 1, 2020, to
before January 1, 2027 (from before Jan-
uary 1, 2021, to before January 1, 2028,
for property described in § 168(k)(2)(B)
or (C)); and the date on which a specified
plant is planted or grafted by the taxpay-
er was extended from before January 1,
2020, to before January 1, 2027.
(3) Section 13201(d) of the TCJA also
amended § 168(k) by adding § 168(k)(9)
to the Code. It excludes from the definition
of qualified property the following proper-
ty: any property that is primarily used in a
trade or business described in § 163(j)(7)
(A)(iv), or any property used in a trade or
business that has had floor plan financing
indebtedness, as defined in § 163(j)(9), if
the floor plan financing interest related to
such indebtedness was taken into account
under § 163(j)(1)(C).
(4) Section 13201(h) of the TCJA pro-
vides the effective dates of the amend-
ments to § 168(k) made by § 13201 of the
TCJA. Except as provided in § 13201(h)
(2) of the TCJA, these amendments apply
to property acquired and placed in ser-
vice after September 27, 2017. However,
property is not treated as acquired after
the date on which a written binding con-
tract is entered into for such acquisition.
Section 13201(h)(2) of the TCJA provides
that these amendments apply to specified
plants planted or grafted after September
27, 2017.
(5) Unless otherwise provided, all ref-
erences hereinafter in this revenue proce-
dure to § 168(k) are references to § 168(k)
as amended by the TCJA.
.02 Regulations under § 168(k).
(1) On August 8, 2018, the Department
of the Treasury (Treasury Department)
and the Internal Revenue Service (IRS)
published a notice of proposed rulemak-
ing (REG-104397-18) in the Federal Reg-
ister (83 FR 39292; 2018-41 I.R.B. 558)
containing proposed regulations under
§ 168(k) (2018 proposed regulations).
Because of the amendments to § 168(k)
by the TCJA, the 2018 proposed regu-
lations updated existing regulations in
§ 1.168(k)-1 by providing a new section
at § 1.168(k)-2 for property acquired and
placed in service after September 27,
2017. The 2018 proposed regulations clar-
ified statutory requirements that must be
met for depreciable property to qualify for
the additional first year depreciation de-
duction under § 168(k).
(2) On September 24, 2019, the Trea-
sury Department and the IRS published fi-
nal regulations adopting the 2018 proposed
regulations with modifications in response
to comments and testimony as T.D. 9874
(84 FR 50108; 2019-41 I.R.B. 809) (the
2019 final regulations). The 2019 final
regulations made several modifications to
the 2018 proposed regulations. For exam-
ple, the 2019 final regulations provide: (a)
a 5-year safe harbor for determining if the
taxpayer or a predecessor previously had a
depreciable interest in used property; (b) a
rule for determining whether substantially
renovated property was used by the tax-
payer or a predecessor before its acquisi-
tion; (c) that the acquisition date of prop-
erty that the taxpayer acquired pursuant to
a written binding contract is the later of
(i) the date on which the contract was en-
tered into, (ii) the date on which the con-
tract is enforceable under State law, (iii) if
the contract has one or more cancellation
periods, the date on which all cancella-
tion periods end, or (iv) if the contract has
one or more contingency clauses, the date
on which all conditions subject to such
clauses are satisfied; and (d) that property
manufactured, constructed, or produced
for a taxpayer by another person under a
written binding contract entered into prior
to the manufacture, construction, or pro-
duction of the property for use by the tax-
payer in its trade or business or production
of income, is self-constructed property for
purposes of determining the acquisition
date of such property.
(3) Along with the publication of the
2019 final regulations, the Treasury De-
partment and the IRS published the 2019
proposed regulations, which propose
amendments to the 2019 final regulations
to provide additional guidance beyond
that provided in the 2019 final regulations.
For example, the 2019 proposed regula-
tions provide rules regarding: (a) property
described in § 168(k)(9), as described in
section 2.01(3) of this revenue procedure;
(b) whether the taxpayer or a predecessor
previously had a depreciable interest in (i)
used property where the prior use was de
minimis, (ii) property acquired in a series
of related transactions, and (iii) proper-
ty acquired by a consolidated group; (c)
a partner’s prior depreciable interest in
property held by a partnership; (d) when
a contract to acquire a trade or business
or an entity is binding; (e) the acquisition
date for property not acquired pursuant to
a written binding contract; and (f) com-
ponents acquired or self-constructed after
September 27, 2017, for larger self-con-
structed property for which manufacture,
construction, or production began before
September 28, 2017.
(4) On November 10, 2020, the Trea-
sury Department and the IRS published
final regulations adopting the 2019 pro-
posed regulations with modifications in
response to comments and testimony as
T.D. 9916 85 FR 71734 (2020 final reg-
ulations). The 2020 final regulations
made several modifications to the 2019
proposed regulations. For example, the
2020 final regulations modified the rules
regarding: (a) whether the taxpayer or a
predecessor previously had a depreciable
interest in (i) used property where the pri-
or use was de minimis, (ii) property ac-
quired in a series of related transactions,
and (iii) property acquired by a consoli-
dated group; and (b) components acquired
or self-constructed after September 27,
2017, for larger self-constructed property
for which manufacture, construction, or
production began before September 28,
2017. The 2020 final regulations also did
not retain the rules regarding a partner’s
prior depreciable interest in property held
by a partnership. These rules will be with-
drawn effective January 11, 2021 (85 FR
71587). The rules regarding whether the
taxpayer or a predecessor previously had
a depreciable interest in property acquired
by a consolidated group were moved from
§ 1.168(k)-2 to § 1.1502-68.
(5) The 2020 final regulations also
made a few modifications to the 2019 final
regulations. For example, the 2020 final
regulations: (a) clarified the application of
the 5-year safe harbor for determining if
the taxpayer or a predecessor previously
had a depreciable interest in used property;
(b) clarified the definitions of predecessor
and class of property for basis adjustments

November 23, 2020 1124 Bulletin No. 2020–48
under § 743; and (c) modified the defini-
tion of qualified improvement property to
reflect the amendments made to § 168(e)
(6) by § 2307 of the Coronavirus Aid, Re-
lief, and Economic Security Act, Pub. L.
116-136, 134 Stat. 281 (March 27, 2020)
(CARES Act).
(6) Hereinafter, the 2019 final regu-
lations and the 2020 final regulations to-
gether are referred in this revenue proce-
dure as the Final Regulations.
(7) Section 1.168(k)-2(h) provides
the applicability dates of § 1.168(k)-2 in
the Final Regulations. Section 1.1502-
68(e) provides the applicability dates of
§ 1.1502-68 in the Final Regulations.
(8) In general, § 1.168(k)-2(h)(1) and
§ 1.1502-68(e)(1) of the 2020 final reg-
ulations provide that § 1.168(k)-2 and
§ 1.1502-68 in the Final Regulations, re-
spectively, apply to: (a) depreciable prop-
erty acquired after September 27, 2017,
by the taxpayer and placed in service by
the taxpayer during or after the taxpayer’s
taxable year that begins on or after Janu-
ary 1, 2021; (b) a specified plant for which
the taxpayer properly made an election
to apply § 168(k)(5) and that is planted,
or grafted to a plant that was previously
planted, by the taxpayer during or after the
taxpayer’s taxable year that begins on or
after January 1, 2021; and (c) components
acquired or self-constructed after Septem-
ber 27, 2017, of larger self-constructed
property described in § 1.168(k)-2(c)(2)
of the 2020 final regulations and placed in
service by the taxpayer during or after the
taxpayer’s taxable year that begins on or
after January 1, 2021.
(9) Section 1.168(k)-2(h)(2) of the
2020 final regulations directs taxpayers to
§ 1.168(k)-2 of the 2019 final regulations
for the applicability of those regulations to
taxable years beginning before January 1,
2021.
(10) Sections 1.168(k)-2(h)(3) and
1.1502-68(e)(2) of the 2020 final regula-
tions allow a taxpayer to choose to apply
the Final Regulations to periods before
their specified applicability dates. In gen-
eral, § 1.168(k)-2(h)(3)(i) and § 1.1502-
68(e)(2)(i) allow a taxpayer to apply both
the rules in § 1.168(k)-2 and, to the extent
relevant, in § 1.1502-68, of the Final Reg-
ulations, in their entirety and in a consis-
tent manner, to: (a) depreciable property
acquired and placed in service after Sep-
tember 27, 2017, by the taxpayer during
the taxpayer’s taxable years ending on
or after September 28, 2017; (b) a speci-
fied plant for which the taxpayer proper-
ly made an election to apply § 168(k)(5)
and that is planted, or grafted to a plant
that was previously planted, after Sep-
tember 27, 2017, by the taxpayer during
the taxpayer’s taxable years ending on or
after September 28, 2017; and (c) com-
ponents acquired or self-constructed after
September 27, 2017, of larger self-con-
structed property described in § 1.168(k)-
2(c)(2) of the 2020 final regulations and
placed in service by the taxpayer during
the taxpayer’s taxable years ending on or
after September 28, 2017. In the case of
property described in § 1.1502-68(e)(2)(i)
of the Final Regulations that is acquired
in a transaction that satisfies the require-
ments of § 1.1502-68(c)(1)(ii) or (c)(2)(ii)
of the Final Regulations, §§ 1.168(k)-2(h)
(3)(ii) and 1.1502-68(e)(2)(ii) of the Final
Regulations provide that the taxpayer may
apply §§ 1.168(k)-2 and 1.1502-68 of the
Final Regulations, in their entirety and in
a consistent manner, to such property only
if those rules are applied, in their entirety
and in a consistent manner, by all parties
to the transaction, including the transferor
member, the transferee member, and the
target, as applicable, and the consolidat-
ed groups of which they are members, for
the taxable year(s) in which the transac-
tion occurs and the taxable year(s) that
includes the day after the deconsolidation
date, as defined in § 1.1502-68(a)(2)(iii) of
the Final Regulations. Finally, § 1.168(k)-
2(h)(3)(iii) and § 1.1502-68(e)(2)(iii) of
the Final Regulations provide that, once
a taxpayer applies the rules of § 1.168(k)-
2 and, to the extent relevant, the rules of
§ 1.1502-68, in their entirety, for a taxable
year, the taxpayer must continue to apply
the rules of § 1.168(k)-2 and, to the extent
relevant, the rules of § 1.1502-68, in their
entirety, for the taxpayer’s subsequent tax-
able years.
(11) The preamble to the 2020 final reg-
ulations provides that a taxpayer also may
rely on § 1.168(k)-2 in the 2019 proposed
regulations with respect to depreciable
property, including certain components,
acquired and placed in service after Sep-
tember 27, 2017, or certain plants planted
or grafted after September 27, 2017, as
applicable, by the taxpayer during taxable
years ending on or after September 28,
2017, and ending before the taxpayer’s
first taxable year that begins on or after
January 1, 2021, if (a) the taxpayer follows
these proposed regulations in their entire-
ty, except for § 1.168(k)-2(b)(3)(iii)(B)(5)
in the 2019 proposed regulations, and in a
consistent manner, and (b) all members of
a consolidated group consistently rely on
the same set of rules. Further, in the case of
such property that is acquired in a transac-
tion described in § 1.168(k)-2(b)(3)(v)(C)
or (D) in the 2019 proposed regulations,
the taxpayer may rely on § 1.168(k)-2 in
the 2019 proposed regulations for such
property only if the rules are followed, in
their entirety and in a consistent manner,
by all parties to the transaction, includ-
ing the transferor member, the transferee
member, and the target, as applicable, and
the consolidated groups of which they are
members, for the taxable year(s) in which
the transaction occurs and the taxable
year(s) that includes the day after the De-
consolidation Date. For this purpose, the
terms transferor member, transferee mem-
ber, and target have the meanings provid-
ed in § 1.168(k)-2(b)(3)(v)(C) and (D) in
the 2019 proposed regulations, and the
term Deconsolidation Date has the mean-
ing provided in § 1.168(k)-2(b)(3)(v)(C)
(1) in the 2019 proposed regulations.
.03 Elections.
(1) Section 168(k)(5)(A) allows a tax-
payer to make an election to apply the spe-
cial rules of § 168(k)(5) to one or more
specified plants that are planted, or grafted
to a plant that has already been planted, by
the taxpayer in the ordinary course of its
farming business, as defined in § 263A(e)
(4) (§ 168(k)(5) election). The rules and
procedures for making the § 168(k)(5)
election are set forth in § 1.168(k)-2(f)
(2) of the Final Regulations. Pursuant to
§ 1.168(k)-2(f)(2)(ii) of the Final Regu-
lations, the § 168(k)(5) election must be
made by the due date, including exten-
sions, of the Federal income tax return or
Form 1065, U.S. Return of Partnership
Income, for the taxable year in which the
taxpayer planted or grafted the specified
plant to which the § 168(k)(5) election ap-
plies, and is made in the manner prescribed
on Form 4562, Depreciation and Amorti-
zation, and its instructions. For specified
plants planted, or grafted to a plant that
was previously planted, by the taxpayer

Bulletin No. 2020–48 1125 November 23, 2020
before the applicability date set forth in
§ 1.168(k)-2(h)(1) of the 2019 final reg-
ulations, section 4.05 of Rev. Proc. 2017-
33, 2017-19 I.R.B. 1236, provides the
time and manner for making the § 168(k)
(5) election, and such procedures are the
same as in § 1.168(k)-2(f)(2)(ii) of the
Final Regulations. Further, if a taxpayer
timely filed its Federal income tax return
or Form 1065 for the taxpayer’s taxable
year beginning in 2017 and ending on or
after September 28, 2017, sections 4.01(2)
and 4.02 of Rev. Proc. 2019-33, 2019-34
I.R.B. 662, provide special procedures
to allow the taxpayer to make a deemed
§ 168(k)(5) election or a late § 168(k)
(5) election for a specified plant planted,
or grafted to a plant that was previously
planted, by the taxpayer after September
27, 2017. Also, if a taxpayer timely filed
its Federal income tax return or Form
1065 for the taxpayer’s taxable year end-
ing in 2018, 2019, or 2020, and such re-
turn was filed on or before April 17, 2020,
section 4 of Rev. Proc. 2020-25, 2020-19
I.R.B. 785, as modified by section 8 of
this revenue procedure, provides special
procedures to allow the taxpayer to make
a late § 168(k)(5) election for a specified
plant planted, or grafted to a plant that was
previously planted, by the taxpayer after
September 27, 2017, during such taxable
year. Finally, pursuant to § 1.168(k)-2(f)
(7) of the 2020 final regulations, the IRS
may issue guidance published in the Inter-
nal Revenue Bulletin (IRB) that provides
alternative procedures for making the §
168(k)(5) election.
(2) Section 168(k)(7) allows a taxpay-
er to make an election not to deduct the
additional first year depreciation for any
class of property that is qualified property
placed in service during the taxable year
(§ 168(k)(7) election). The rules and pro-
cedures for making the § 168(k)(7) elec-
tion are set forth in § 1.168(k)-2(f)(1) of
the Final Regulations. Section 1.168(k)-
2(f)(1)(ii) of the Final Regulations de-
fines “class of property” for purposes
of the § 168(k)(7) election. Pursuant to
§ 1.168(k)-2(f)(1)(iii) of the Final Regu-
lations, the § 168(k)(7) election must be
made by the due date, including exten-
sions, of the Federal income tax return or
Form 1065 for the taxable year in which
the qualified property is placed in service
by the taxpayer, and is made in the man-
ner prescribed on Form 4562, Depreci-
ation and Amortization, and its instruc-
tions. For qualified property placed in
service by the taxpayer before the appli-
cability date set forth in § 1.168(k)-2(h)
(1) of the 2019 final regulations, section
4.04 of Rev. Proc. 2017-33 provides the
time and manner for making the § 168(k)
(7) election, and such procedures are the
same as in § 1.168(k)-2(f)(1)(iii) of the
Final Regulations. Further, if a taxpayer
timely filed its Federal income tax return
or Form 1065 for the taxpayer’s taxable
year beginning in 2017 and ending on
or after September 28, 2017, sections
5.02(2) and 5.03 of Rev. Proc. 2019-33
provide special procedures to allow the
taxpayer to make a deemed § 168(k)(7)
election or a late § 168(k)(7) election
for a class of property that is qualified
property acquired by the taxpayer after
September 27, 2017, and placed in ser-
vice by the taxpayer during such taxable
year. Also, if a taxpayer timely filed its
Federal income tax return or Form 1065
for the taxpayer’s taxable year ending in
2018, 2019, or 2020, and such return was
filed on or before April 17, 2020, section
4 of Rev. Proc. 2020-25, as modified by
section 8 of this revenue procedure, pro-
vides special procedures to allow a tax-
payer to make a late § 168(k)(7) election
for a class of property that is qualified
property acquired by the taxpayer after
September 27, 2017, and placed in ser-
vice by the taxpayer during such taxable
year. Finally, pursuant to § 1.168(k)-2(f)
(7) of the 2020 final regulations, the IRS
may issue guidance published in the IRB
that provides alternative procedures for
making the § 168(k)(7) election.
(3) Section 168(k)(10) allows a tax-
payer to make an election to deduct 50
percent, instead of 100 percent, additional
first year depreciation for: (a) all qualified
property acquired by the taxpayer after
September 27, 2017, and placed in service
by the taxpayer during its taxable year that
includes September 28, 2017; and (b) all
specified plants that are planted, or grafted
to a plant that has already been planted,
after September 27, 2017, by the taxpay-
er in the ordinary course of the taxpayer’s
farming business during its taxable year
that includes September 28, 2017, if the
taxpayer makes the § 168(k)(5) election
for that taxable year (§ 168(k)(10) elec-
tion). The rules and procedures for mak-
ing the § 168(k)(10) election are set forth
in § 1.168(k)-2(f)(3) of the Final Reg-
ulations. Pursuant to § 1.168(k)-2(f)(3)
(ii) of the Final Regulations, the § 168(k)
(10) election must be made by the due
date, including extensions, of the Feder-
al income tax return or Form 1065 for the
taxpayer’s taxable year that includes Sep-
tember 28, 2017, and is made in the man-
ner prescribed on the 2017 Form 4562,
Depreciation and Amortization, and its
instructions. For qualified property placed
in service, and specified plants planted,
or grafted to a plant that was previously
planted, by the taxpayer before the appli-
cability date set forth in § 1.168(k)-2(h)(1)
of the 2019 final regulations, section 6.02
of Rev. Proc. 2019-33 provides the time
and manner for making the § 168(k)(10)
election, and such procedures are the same
as in § 1.168(k)-2(f)(3)(ii) of the Final
Regulations. Further, if a taxpayer time-
ly filed its Federal income tax return or
Form 1065 for the taxpayer’s taxable year
beginning in 2017 and ending on or after
September 28, 2017, sections 6.03(2) and
6.04 of Rev. Proc. 2019-33 provide spe-
cial procedures to allow the taxpayer to
make a deemed § 168(k)(10) election or a
late § 168(k)(10) election for all qualified
property acquired by the taxpayer after
September 27, 2017, and placed in service
by the taxpayer during such taxable year,
or for all specified plants planted, or graft-
ed to a plant that was previously planted,
by the taxpayer after September 27, 2017.
Also, if a taxpayer timely filed its Fed-
eral income tax return or Form 1065 for
the taxpayer’s taxable year that includes
September 27, 2017, section 4 of Rev.
Proc. 2020-25, as modified by section 8 of
this revenue procedure, provides special
procedures to allow a taxpayer to make a
late § 168(k)(10) election for all qualified
property acquired by the taxpayer after
September 27, 2017, and placed in service
by the taxpayer during such taxable year,
or for all specified plants planted, or graft-
ed to a plant that was previously planted,
by the taxpayer after September 27, 2017,
during such taxable year. Finally, pursu-
ant to § 1.168(k)-2(f)(7) of the 2020 final
regulations, the IRS may issue guidance
published in the IRB that provides alter-
native procedures for making the § 168(k)
(10) election.

November 23, 2020 1126 Bulletin No. 2020–48
(4) Section 1.168(k)-2(f)(5) of the Fi-
nal Regulations provides that, in gener-
al, the § 168(k)(5) election, § 168(k)(7)
election, and § 168(k)(10) election, once
made, may be revoked only by filing a
request for a private letter ruling and ob-
taining the written consent of the Com-
missioner of Internal Revenue (Commis-
sioner) to revoke the election. Further, if
a taxpayer timely filed its Federal income
tax return or Form 1065 for the taxpayer’s
taxable year beginning in 2017 and ending
on or after September 28, 2017, sections
4.03, 5.04, and 6.05 of Rev. Proc. 2019-
33 provide special procedures to allow the
taxpayer to revoke its § 168(k)(5) elec-
tion, § 168(k)(7) election, and § 168(k)
(10) election, respectively, made for such
taxable year. Also, if a taxpayer timely
filed its Federal income tax return or Form
1065 for the taxpayer’s taxable year end-
ing in 2018, 2019, or 2020, and such re-
turn was filed on or before April 17, 2020,
section 5 of Rev. Proc. 2020-25 provides
special procedures to allow a taxpayer to
revoke its § 168(k)(5) election or § 168(k)
(7) election made for such taxable year.
And, if a taxpayer timely filed its Feder-
al income tax return or Form 1065 for the
taxpayer’s taxable year that includes Sep-
tember 28, 2017, and such return was filed
on or before April 17, 2020, section 5 of
Rev. Proc. 2020-25 provides special pro-
cedures to allow a taxpayer to revoke its
§ 168(k)(10) election made for such tax-
able year. Finally, pursuant to § 1.168(k)-
2(f)(7) of the 2020 final regulations, the
IRS may issue guidance published in the
IRB that provides alternative procedures
for revoking the § 168(k)(5) election,
§ 168(k)(7) election, or § 168(k)(10) elec-
tion.
(5) Section 1.168(k)-2(c)(1) of the
2020 final regulations allows a taxpayer to
make an election to treat any acquired or
self-constructed component, as described
in § 1.168(k)-2(c)(3) of the 2020 final
regulations, of the larger self-constructed
property, as described in § 1.168(k)-2(c)
(2) of the 2020 final regulations, as be-
ing eligible for the additional first year
depreciation deduction under § 1.168(k)-
2, assuming all requirements of § 168(k)
and § 1.168(k)-2 are met (component
election). The rules and procedures for
making the component election are set
forth in § 1.168(k)-2(c) of the 2020 final
regulations. Pursuant to § 1.168(k)-2(c)
(6) of the 2020 final regulations, the com-
ponent election must be made by the due
date, including extensions, of the Federal
income tax return or Form 1065 for the
taxable year in which the taxpayer placed
in service the larger self-constructed prop-
erty, and is made by attaching a statement
to such return or Form 1065 indicating
that the taxpayer is making the compo-
nent election and whether the taxpayer
is making the component election for all
or some of the components described in
§ 1.168(k)-2(c)(3) of the 2020 final regula-
tions. Section 1.168(k)-2(c)(7) of the 2020
final regulations provides that, in general,
the component election, once made, may
be revoked only by filing a request for
a private letter ruling and obtaining the
written consent of the Commissioner to
revoke the component election. Pursuant
to § 1.168(k)-2(c)(8) of the 2020 final reg-
ulations, the IRS may issue guidance pub-
lished in the IRB that provides alternative
procedures for making, or revoking, the
component election.
(6) Pursuant to § 1.168(k)-2(c)(1) of
the 2019 proposed regulations, a taxpayer
may elect to treat any component acquired
or self-constructed after September 27,
2017, of certain larger self-constructed
property, as being eligible for the addi-
tional first year depreciation deduction
under § 1.168(k)-2, assuming all require-
ments of § 168(k) and § 1.168(k)-2 are
met (proposed component election). Spe-
cifically, the larger self-constructed prop-
erty must be manufactured, constructed,
or produced beginning before Septem-
ber 28, 2017, qualified property under
§ 168(k)(2) as in effect before the en-
actment of the TCJA, and placed in ser-
vice by the taxpayer after September 27,
2017, during its taxable years ending on
or after September 28, 2017, and ending
before the taxpayer’s first taxable year
that begins on or after January 1, 2021.
The time and manner for making the pro-
posed component election are set forth in
§ 1.168(k)-2(c)(6) of the 2019 proposed
regulations, and such procedures are the
same as in § 1.168(k)-2(c)(6) of the 2020
final regulations.
(7) Section 1.1502-68(c)(4) of the 2020
final regulations allows a transferee mem-
ber, as defined in § 1.1502-68(a)(2)(xii),
or the target, as defined in § 1.1502-68(a)
(2)(xi), to make an election not to apply
the Consolidated Asset Acquisition Rule
in § 1.1502-68(c)(1)(i) or the Consolidat-
ed Deemed Acquisition Rule in § 1.1502-
68(c)(2)(i), respectively, to all eligible
property, as defined in § 1.1502-68(a)(2)
(vii), that is acquired or deemed acquired
in a transaction that otherwise satisfies
the requirements of the Consolidated As-
set Acquisition Rule or the Consolidated
Deemed Acquisition Rule (designated
transaction election). The rules and pro-
cedures for making the designated trans-
action election are set forth in § 1.1502-
68(c)(4) of the 2020 final regulations.
Pursuant to § 1.1502-68(c)(4)(ii)(A) and
(B) of the 2020 final regulations, the des-
ignated transaction election must be made
by the due date, including extensions,
of the Federal income tax return for the
taxable year of the transferee member or
target that begins on the day after the de-
consolidation date, as defined in § 1.1502-
68(a)(2)(iii), and is made by attaching a
statement to such return describing the
transaction(s) to which the Consolidated
Asset Acquisition Rule or the Consolidat-
ed Deemed Acquisition Rule otherwise
would apply and stating that the transferee
member or the target, as applicable, is not
claiming the additional first year depreci-
ation deduction for any eligible property
transferred in such transaction(s). Pursu-
ant to § 1.1502-68(c)(4)(ii)(C) of the 2020
final regulations, the IRS may issue guid-
ance published in the IRB that provides
alternative procedures for making the
designated transaction election. Section
1.1502-68(c)(4)(iii) provides that the des-
ignated transaction election, once made,
may be revoked only by filing a request
for a private letter ruling and obtaining the
written consent of the Commissioner to
revoke the election.
.04 Method of accounting.
(1) Section 446(e) and § 1.446-1(e)(2)
require a taxpayer to secure the consent
of the Commissioner before changing a
method of accounting for Federal income
tax purposes. Section 1.446-1(e)(3)(ii)
authorizes the Commissioner to prescribe
administrative procedures setting forth the
limitations, terms, and conditions neces-
sary to permit a taxpayer to obtain consent
to change a method of accounting.
(2) Section 2.05 of Rev. Proc. 2015-
13, 2015-5 I.R.B 419, 425, provides that

Bulletin No. 2020–48 1127 November 23, 2020
a taxpayer may not request, or otherwise
make, a retroactive change in method of
accounting, unless specifically authorized
by the Commissioner or by statute.
(3) Section 1.446-1(e)(2)(ii)(d)(3)(iii)
provides that the making of a late depreci-
ation election or the revocation of a timely
valid depreciation election is not a change
in method of accounting, except as other-
wise expressly provided by the Code, the
regulations under the Code, or other guid-
ance published in the Internal Revenue
Bulletin.
(4) Section 1.446-1(e)(2)(ii)(d)(5)
(iii) provides that, except as otherwise
expressly provided by the Code, the reg-
ulations under the Code, or other guid-
ance published in the Internal Revenue
Bulletin, no § 481 adjustment is required
or permitted for a change from one per-
missible method of computing depre-
ciation to another permissible method
of computing depreciation for an asset
because this change is implemented by
either a cut-off method, as described in
section 2.07 of Rev. Proc. 2015-13, or a
modified cut-off method under which the
adjusted depreciable basis of the asset as
of the beginning of the year of change
is recovered using the new permissible
method of accounting, as appropriate.
However, a change from an impermis-
sible method of computing depreciation
to a permissible method of computing
depreciation for an asset results in a
§ 481(a) adjustment.
(5) With the publication of the 2020 fi-
nal regulations, guidance is needed under
§ 168 for taxpayers that want to apply the
2020 final regulations, the 2019 final reg-
ulations, and/or the 2019 proposed regula-
tions retroactively. Accordingly, this rev-
enue procedure permits certain taxpayers
to file an amended return, administrative
adjustment request under § 6227 (AAR),
or a Form 3115, Application for Change
in Accounting Method, to change their
method of accounting for depreciation of
certain depreciable property acquired by
the taxpayer after September 27, 2017,
and placed in service by the taxpayer after
September 27, 2017, and during the tax-
payer’s taxable years ending on or after
September 28, 2017, and ending before
the taxpayer’s first taxable year that be-
gins on or after January 1, 2021, and cer-
tain plants that are planted or grafted, as
applicable, after September 27, 2017, by
the taxpayer during its taxable years end-
ing on or after September 28, 2017, and
ending before the taxpayer’s first taxable
year that begins on or after January 1,
2021. See section 4 of this revenue proce-
dure for the procedures for changing the
depreciation of such property or plants.
Further, this revenue procedure permits
certain taxpayers to make a late § 168(k)
(5) election, a late § 168(k)(7) election, a
late § 168(k)(10) election, a late compo-
nent election, a late designated transaction
election, or a late proposed component
election, or to revoke a § 168(k)(5) elec-
tion, a § 168(k)(7) election, a § 168(k)
(10) election, or a proposed component
election, for certain property or plants for
a limited period of time. Because of the
administrative burden of filing amended
returns and AARs, the Treasury Depart-
ment and the IRS also have determined
that it is appropriate to treat the making
of these late elections or the revocation
of these elections as a change in method
of accounting with a § 481(a) adjustment
for a limited period of time. See sections
5 and 6 of this revenue procedure for the
procedures to make these late elections or
to revoke these elections.
SECTION 3. SCOPE
This revenue procedure applies to a
taxpayer that chooses to:
.01 Apply both § 1.168(k)-2 and, to the
extent relevant, § 1.1502-68, of the Final
Regulations, in their entirety and in a con-
sistent manner, to:
(1) All depreciable property acquired
by the taxpayer after September 27, 2017,
and placed in service by the taxpayer af-
ter September 27, 2017, and during the
taxpayer’s taxable year: (a) beginning in
2016 or 2017 (2017 taxable year); (b) be-
ginning in 2018 (2018 taxable year); (c)
beginning in 2019 (2019 taxable year);
or (d) beginning in 2020, and ending be-
fore the taxpayer’s first taxable year that
begins on or after January 1, 2021 (2020
taxable year);
(2) All specified plants for which
the taxpayer properly made or makes a
§ 168(k)(5) election and that are planted,
or grafted to a plant that was previously
planted, after September 27, 2017, by the
taxpayer during the taxpayer’s 2017 tax-
able year, 2018 taxable year, 2019 taxable
year, or 2020 taxable year; and
(3) Components acquired or self-con-
structed by the taxpayer after September
27, 2017, of larger self-constructed prop-
erty described in § 1.168(k)-2(c)(2) of
the 2020 final regulations and placed in
service by the taxpayer during the taxpay-
er’s 2017 taxable year, 2018 taxable year,
2019 taxable year, or 2020 taxable year;
.02 Apply § 1.168(k)-2 of the 2019 fi-
nal regulations, in its entirety, to:
(1) All depreciable property acquired
by the taxpayer after September 27, 2017,
and placed in service by the taxpayer after
September 27, 2017, and during the tax-
payer’s 2017 taxable year, 2018 taxable
year, 2019 taxable year, or 2020 taxable
year; and
(2) All specified plants for which
the taxpayer properly made or makes a
§ 168(k)(5) election and that are planted,
or grafted to a plant that was previously
planted, after September 27, 2017, by the
taxpayer during the taxpayer’s 2017 tax-
able year, 2018 taxable year, 2019 taxable
year, or 2020 taxable year; or
.03 Apply both § 1.168(k)-2 of the 2019
final regulations and the 2019 proposed
regulations, in their entirety, except for
§ 1.168(k)-2(b)(3)(iii)(B)(5) in the 2019
proposed regulations, and in a consistent
manner, to:
(1) All depreciable property acquired
by the taxpayer after September 27, 2017,
and placed in service by the taxpayer after
September 27, 2017, and during the tax-
payer’s 2017 taxable year, 2018 taxable
year, 2019 taxable year, or 2020 taxable
year;
(2) All specified plants for which
the taxpayer properly made or makes a
§ 168(k)(5) election and that are planted,
or grafted to a plant that was previously
planted, after September 27, 2017, by the
taxpayer during the taxpayer’s 2017 tax-
able year, 2018 taxable year, 2019 taxable
year, or 2020 taxable year; and
(3) Components acquired or self-con-
structed by the taxpayer after September
27, 2017, of larger self-constructed prop-
erty for which manufacture, construction,
or production begins before September
28, 2017, and that is qualified property
under § 168(k)(2) as in effect before the
enactment of the TCJA and placed in ser-
vice by the taxpayer after September 27,

November 23, 2020 1128 Bulletin No. 2020–48
2017, and during the taxpayer’s 2017 tax-
able year, 2018 taxable year, 2019 taxable
year, or 2020 taxable year.
SECTION 4. METHOD CHANGE
PROCEDURES TO APPLY
ADDITIONAL FIRST YEAR
DEPRECIATION REGULATIONS
.01 Scope. This section 4 applies to a
taxpayer within the scope of section 3 of
this revenue procedure that is changing its
method of accounting for depreciation un-
der § 168 for depreciable property, includ-
ing components described in § 1.168(k)-
2(c) of the 2020 final regulations or the
2019 proposed regulations for which the
taxpayer has already made the component
election or proposed component election,
as applicable, and specified plants, with-
in the scope of section 3 of this revenue
procedure to comply with the Final Regu-
lations, the 2019 final regulations, or both
the 2019 final regulations and the 2019
proposed regulations, as applicable. How-
ever, this section 4:
(1) Does not apply to property that is
affected by a late election, or withdrawn
election, made/withdrawn by the tax-
payer under § 163(j)(7)(B) (electing real
property trade or business) or § 163(j)(7)
(C) (electing farming business) after No-
vember 16, 2020, in accordance with Rev.
Proc. 2020-22, 2020-18 I.R.B. 745. Any
changes to depreciation for such proper-
ty that result from such a late election, or
withdrawn election, are made in accor-
dance with sections 4.02 and 4.03, or 5.02
of Rev. Proc. 2020-22, as applicable;
(2) Does not apply to property or a
specified plant for which the taxpayer is
changing from deducting the cost or oth-
er basis of such property as an expense to
capitalizing and depreciating the cost or
other basis, or vice versa;
(3) Does not apply to property or a
specified plant that the taxpayer does
not own at the beginning of the year of
change. However, and solely for purposes
of this section 4:
(a) In the case of property described in
§ 1.1502-68(e)(2)(i) of the 2020 final reg-
ulations that is acquired in a transaction
that satisfies the requirements of § 1.1502-
68(c)(1)(ii) or (c)(2)(ii) of the 2020 final
regulations, such property is treated as
owned by the taxpayer at the beginning
of the year of change if any party to the
transaction owned such property at that
time; and
(b) In the case of property that is ac-
quired in a transaction described in
§ 1.168(k)-2(b)(3)(v)(C) or (D) in the
2019 proposed regulations, such property
is treated as owned by the taxpayer at the
beginning of the year of change if any par-
ty to the transaction owned such property
at that time; and
(4) Cannot be used to make a late elec-
tion, or revoke an election, under § 168,
§ 179, or § 1.1502-68. However, see sec-
tions 5 and 6 of this revenue procedure for
procedures for making or revoking certain
elections.
.02 Changing to the depreciation al-
lowable under the additional first year
depreciation regulations.
(1) In general. A taxpayer within the
scope of this section 4 has a choice to ap-
ply the Final Regulations, the 2019 final
regulations, or both the 2019 final regu-
lations and the 2019 proposed regulations
for (a) depreciable property within the
scope of this section 4 that is placed in ser-
vice by the taxpayer during the same tax-
able year, and (b) specified plants within
the scope of this section 4 that are planted
or grafted by the taxpayer during the same
taxable year in which the taxpayer planted
or grafted the specified plant to which the
§ 168(k)(5) election applies (the planting
year). However, once a taxpayer applies
§ 1.168(k)-2 and, to the extent relevant,
§ 1.1502-68, of the Final Regulations, in
their entirety, for a taxable year, the tax-
payer must continue to apply § 1.168(k)-2
and, to the extent relevant, § 1.1502-68, of
the Final Regulations, in their entirety, for
the taxpayer’s subsequent taxable years.
For example, if Partnership ABC applies
§ 1.168(k)-2 of the Final Regulations, in
its entirety, for its 2018 taxable year and if
§ 1.1502-68 of the Final Regulations does
not apply to Partnership ABC, Partnership
ABC must apply § 1.168(k)-2 of the Fi-
nal Regulations for its 2019 taxable year,
2020 taxable year, and subsequent taxable
years.
(2) Change from impermissible or
permissible method of accounting. The
first time the taxpayer changes its meth-
od of accounting for depreciation under
this revenue procedure for depreciable
property and specified plants described in
section 4.02(1) of this revenue procedure
to comply with the Final Regulations, the
2019 final regulations, or both the 2019
final regulations and the 2019 proposed
regulations, as applicable, is deemed to be
a change from an impermissible method
of accounting to a permissible method of
accounting that is made with a § 481(a)
adjustment. See section 4.03 of this reve-
nue procedure for the procedures to make
this change in method of accounting. Any
subsequent time the taxpayer changes its
method of accounting for depreciation for
such depreciable property and such speci-
fied plants to comply with the Final Regu-
lations, the 2019 final regulations, or both
the 2019 final regulations and the 2019
proposed regulations, is a change from a
permissible method of accounting to an-
other permissible method of accounting
that is made on a cut-off basis. See section
4.04 of this revenue procedure for the pro-
cedures to make this change in method of
accounting.
(3) For example, for its taxable year
beginning on January 1, 2020, and end-
ing on December 31, 2020, Taxpayer X
changes its method of accounting for de-
preciation for qualified property acquired
by Taxpayer X after September 27, 2017,
and placed in service by Taxpayer X af-
ter September 27, 2017, and during its
2017 and 2018 taxable years to comply
with § 1.168(k)-2 of the 2019 final regu-
lations. This change is a change from an
impermissible method of accounting to a
permissible method of accounting that is
made with a § 481(a) adjustment. Subse-
quently, for its taxable year beginning on
January 1, 2021, Taxpayer X changes its
method of accounting for depreciation for
qualified property acquired by Taxpayer
X after September 27, 2017, and placed
in service by Taxpayer X after Septem-
ber 27, 2017, and during its 2017, 2018,
and 2019 taxable years to comply with
§ 1.168(k)-2 and, to the extent relevant,
§ 1.1502-68 of the Final Regulations. This
change is (a) a change from a permissible
method of accounting to another permis-
sible method of accounting that is made
on a cut-off basis for qualified property
acquired after September 27, 2017, and
placed in service by Taxpayer X after Sep-
tember 27, 2017, and during its 2017 and
2018 taxable years, and (b) a change from
an impermissible method of accounting to

Bulletin No. 2020–48 1129 November 23, 2020
a permissible method of accounting that is
made with a § 481(a) adjustment for quali-
fied property acquired after September 27,
2017, and placed in service by Taxpayer X
after September 27, 2017, and during its
2019 taxable year.
(4) Ordering rules. If, for the same tax-
able year, a taxpayer within the scope of
this section 4 makes a late election under
section 5 of this revenue procedure and/
or revokes an election under section 6 of
this revenue procedure and also makes a
change in method of accounting for the
same depreciable property or same spec-
ified plant, the taxpayer applies the late
election or the revocation, as applicable,
first.
(5) Special rules for applying consoli-
dated group rules. In the case of property
described in § 1.1502-68(e)(2)(i) of the
2020 final regulations that is acquired in a
transaction that satisfies the requirements
of § 1.1502-68(c)(1)(ii) or (c)(2)(ii) of the
2020 final regulations, all parties to the
transaction, including the transferor mem-
ber, the transferee member, and the target,
as applicable, and the consolidated groups
of which they are members for the tax-
able year(s) in which the transaction oc-
curs and the taxable year(s) that includes
the day after the deconsolidation date, as
defined in § 1.1502-68(a)(2)(iii) of the
2020 final regulations, must change their
methods of accounting for depreciation
for the property and specified plants in the
same manner under this section 4. For ex-
ample, if the transferor member changes
its method of accounting for depreciation
for property by filing an amended return
in accordance with section 4.03 of this
revenue procedure, all other parties to the
transaction must do the same. Similarly, in
the case of property to which § 1.168(k)-2
of the 2019 proposed regulations applies
and that is acquired in a transaction de-
scribed in § 1.168(k)-2(b)(3)(v)(C) or (D)
in the 2019 proposed regulations, all par-
ties to the transaction, including the trans-
feror member, the transferee member,
and the target, as applicable, as defined
in § 1.168(k)-2(b)(3)(v)(C) or (D) in the
2019 proposed regulations, and the con-
solidated groups of which they are mem-
bers for the taxable year(s) in which the
transaction occurs and the taxable year(s)
that includes the day after the Deconsoli-
dation Date, as defined in § 1.168(k)-2(b)
(3)(v)(C)(1) in the 2019 proposed regula-
tions, must change their methods of ac-
counting for depreciation for the property
and specified plants in the same manner
under this section 4. If a party to a transac-
tion described in this section 4.02(5) was
a member of a consolidated group for the
taxable year(s) in which the transaction
occurs and/or the taxable year(s) that in-
cludes the day after the deconsolidation
date, then the change in the method of ac-
counting for depreciation is made by the
agent for the group, within the meaning of
§ 1.1502-77(a) and (c), in accordance with
this section 4.
.03 Change from an impermissible to
permissible method of accounting for de-
preciation.
(1) Applicability. This section 4.03
applies to the first time that the taxpayer
changes its method of accounting for de-
preciation under this revenue procedure
to comply with the Final Regulations, the
2019 final regulations, or both the 2019
final regulations and the 2019 proposed
regulations for (a) depreciable property
within the scope of this section 4 that is
placed in service during the same taxable
year, and (b) specified plants within the
scope of this section 4 that are planted
or grafted during the same planting year.
This initial change in determining depre-
ciation is a change from an impermissible
to a permissible method of accounting.
(2) One-year property. For depreciable
property that is within the scope of this
section 4.03 and is placed in service by the
taxpayer in the taxable year immediately
preceding the year of change, as defined
in section 3.19 of Rev. Proc. 2015-13 (1-
year Property), the taxpayer may change
from the impermissible method of deter-
mining depreciation to the permissible
method of determining depreciation for
the 1-year Property by filing a Form 3115
for this change in accordance with section
4.03(4)(b) of this revenue procedure, pro-
vided the § 481(a) adjustment reported on
the Form 3115 includes the amount of any
adjustment attributable to all property, in-
cluding the 1-year Property, subject to the
Form 3115. Similarly, for a specified plant
that is within the scope of this section 4.03
and is planted or grafted by the taxpayer
in the taxable year immediately preceding
the year of change, as defined in section
3.19 of Rev. Proc. 2015-13 (1-year Plant),
the taxpayer may change from the imper-
missible method of determining depreci-
ation to the permissible method of deter-
mining depreciation for the 1-year Plant
by filing a Form 3115 for this change in
accordance with section 4.03(4)(b) of this
revenue procedure, provided the § 481(a)
adjustment reported on the Form 3115
includes the amount of any adjustment
attributable to all property, including the
1-year Plant, subject to the Form 3115. Al-
ternatively, the taxpayer may change from
the impermissible method of determining
depreciation to the permissible method of
determining depreciation for the 1-year
Property or 1-year Plant by filing an
amended return or AAR, as applicable.
(3) Retroactive change in method of
accounting. The Commissioner allows a
taxpayer within the scope of this section
4.03 to make a retroactive change in meth-
od of accounting under this section 4.03
for a limited period of time, provided the
taxpayer files the amended return(s) or
AAR(s) within the time and manner pro-
vided in section 4.03(4)(a) of this revenue
procedure and satisfies, to the extent rel-
evant, section 4.02 of this revenue pro-
cedure. A Form 3115 is not required to
be filed with such amended return(s) or
AAR(s).
(4) Changing from the impermissible
to the permissible method of determining
depreciation. The taxpayer may change
from the impermissible method of de-
termining depreciation to a permissible
method of determining depreciation under
this section 4.03 by filing either:
(a) A Federal amended income tax
return or amended Form 1065 for the
placed-in-service year of the depreciable
property and for the planting year of the
specified plant on or before December 31,
2021, but in no event later than the appli-
cable period of limitations on assessment
for the taxable year for which the amended
return is being filed. A partnership subject
to the centralized partnership audit regime
enacted as part of the Bipartisan Budget
Act of 2015 (BBA partnership) may file
an AAR for the placed-in-service year of
the depreciable property or the planting
year of the specified plant, as applicable,
on or before December 31, 2021, but in
no event later than the applicable period of
limitations on making adjustments under
§ 6235 for the reviewed year as defined

November 23, 2020 1130 Bulletin No. 2020–48
in § 301.6241-1(a)(8) of the Procedure
and Administration Regulations. This
amended return or AAR must include
the adjustment to taxable income for the
change in determining depreciation of the
depreciable property or specified plant
and any collateral adjustments to taxable
income or to tax liability (for example,
proper amount allowed as a deduction for
interest expense, taking into account the
business interest limitation under § 163(j)
and the regulations thereunder, for a trade
or business with floor plan financing in-
debtedness that is applying § 1.168(k)-
2(b)(2)(ii)(G) of the Final Regulations,
§ 1.168(k)-2(b)(2)(ii)(G) of the 2019 final
regulations, or both § 1.168(k)-2(b)(2)
(ii)(G) of the 2019 final regulations and
§ 1.168(k)-2(b)(2)(ii)(G) of the 2019 pro-
posed regulations). Such collateral adjust-
ments also must be made on original or
amended Federal returns or AARs for any
affected succeeding taxable years. If the
taxpayer satisfies this section 4.03(4)(a)
for all depreciable property placed in ser-
vice during the same taxable year and all
specified plants planted or grafted during
the same planting year, the Commissioner
grants consent to the taxpayer to make this
retroactive method change for such prop-
erty and plant; or
(b) A Form 3115 with the taxpayer’s
timely filed original Federal income tax
return or Form 1065 under the automatic
change procedures in Rev. Proc. 2015-
13. This change in method of account-
ing is made with a § 481(a) adjustment.
However, consent to make a change in
method of accounting under this section
4.03(4)(b) will be granted by the Com-
missioner only if the taxpayer satisfies,
to the extent relevant, section 4.02 of
this revenue procedure. Further, if a tax-
payer that has a trade or business with
floor plan financing indebtedness is ap-
plying § 1.168(k)-2(b)(2)(ii)(G) of the
Final Regulations, § 1.168(k)-2(b)(2)(ii)
(G) of the 2019 final regulations, or both
§ 1.168(k)-2(b)(2)(ii)(G) of the 2019 fi-
nal regulations and § 1.168(k)-2(b)(2)
(ii)(G) of the 2019 proposed regulations
for depreciable property placed in ser-
vice by the taxpayer in its 2018, 2019,
or 2020 taxable year, consent to make a
change in method of accounting under
this section 4.03(4)(b) will be granted
by the Commissioner only if the amount
of the § 481(a) adjustment is adjusted to
account for the proper amount of interest
expense, taking into account the busi-
ness interest limitation under § 163(j)
and the regulations thereunder, as of the
beginning of the year of change. See sec-
tion 7.03 of this revenue procedure for
the procedures for making this change in
method of accounting.
.04 Change from a permissible to an-
other permissible method of accounting
for the depreciation.
(1) Applicability. This section 4.04
applies to the taxpayer that previously
changed its method of accounting for de-
preciation under this revenue procedure
to comply with the Final Regulations, the
2019 final regulations, or both the 2019
final regulations and the 2019 proposed
regulations, as applicable, for depreciable
property within the scope of this section 4
that is placed in service during the same
taxable year and specified plants within
the scope of this section 4 that are planted
or grafted during the same planting year,
and now wants to make another change
in method of accounting for depreciation
to comply with the Final Regulations, the
2019 final regulations, or both the 2019
final regulations and the 2019 proposed
regulations for the same depreciable prop-
erty or specified plant. This subsequent
change in determining depreciation is a
change from one permissible method of
accounting to another permissible method
of accounting.
(2) Changing from a permissible to
another permissible method of determin-
ing depreciation allowable. The taxpayer
may change from a permissible method
of accounting for depreciation to anoth-
er permissible method of accounting for
depreciation under this section 4.04 by
filing a Form 3115 with the taxpayer’s
timely filed original Federal income tax
return or Form 1065 under the automatic
change procedures in Rev. Proc. 2015-13.
Consent to make a change in method of
accounting under this section 4.04 will
be granted by the Commissioner only if
the taxpayer satisfies section 4.02 of this
revenue procedure, to the extent relevant.
Further, this change in method of account-
ing is made on a cut-off basis. See section
7.03 of this revenue procedure for the pro-
cedures for making this change in method
of accounting.
SECTION 5. AUTOMATIC
EXTENSION OF TIME TO FILE
CERTAIN ELECTIONS UNDER
SECTIONS 1.168(k)-2 AND 1.1502-68
.01 Scope.
(1) This section 5 applies to a taxpayer
within the scope of section 3 of this reve-
nue procedure that:
(a) placed in service depreciable prop-
erty during its 2017, 2018, 2019, or 2020
taxable year, or planted or grafted the
specified plant during its 2017, 2018,
2019, or 2020 taxable year to which the
late § 168(k)(5) election applies, as appli-
cable;
(b) timely filed its Federal income tax
return or Form 1065 for the placed-in-ser-
vice year of such depreciable property or
the planting year of such specified plant,
and such return was filed before Novem-
ber 17, 2020;
(c) applies the Final Regulations, the
2019 final regulations, or both the 2019
final regulations and the 2019 proposed
regulations for the placed-in-service year
of such depreciable property or the plant-
ing year of such specified plant;
(d) wants to (i) make a § 168(k)(5)
election for the planting year of such spec-
ified plant or make a § 168(k)(7) election
for the placed-in-service year of the class
of such depreciable property, or (ii) make
a component election, designated trans-
action election, or proposed component
election for the placed-in-service year of
such depreciable property or the planting
year of such specified plant and such elec-
tion(s) is permitted for the placed-in-ser-
vice year of such depreciable property or
the planting year of such specified plant
under the specific regulation in section
5.01(1)(c) of this revenue procedure that
is applied by the taxpayer for that placed-
in-service year or planting year; and
(e) did not (i) previously revoke such
election(s) in accordance with section 6.02
of this revenue procedure, (ii) previously
revoke such election(s) after November
16, 2020, in accordance with section 5 of
Rev. Proc. 2020-25, or (iii) previously re-
voke such election(s) after November 16,
2020, in accordance with section 4.03 or
5.04 of Rev. Proc. 2019-33, as applicable.
(2) This section 5 also applies to a tax-
payer within the scope of section 3 of this
revenue procedure that:

Bulletin No. 2020–48 1131 November 23, 2020
(a) placed in service depreciable prop-
erty during its taxable year that includes
September 28, 2017, or planted or graft-
ed specified plants during its taxable year
that includes September 28, 2017, as ap-
plicable;
(b) timely filed its Federal income tax
return or Form 1065 for the taxpayer’s
taxable year that includes September 28,
2017;
(c) applies the Final Regulations, the
2019 final regulations, or both the 2019
final regulations and the 2019 proposed
regulations for its taxable year that in-
cludes September 28, 2017;
(d) wants to make a § 168(k)(10) elec-
tion for such taxable year; and
(e) did not (i) previously revoke a
§ 168(k)(10) election for such taxable year
in accordance with section 6.02 of this
revenue procedure, (ii) previously revoke
a § 168(k)(10) election for such taxable
year after November 16, 2020, in accor-
dance with section 5 of Rev. Proc. 2020-
25, or (iii) previously revoke a § 168(k)
(10) election after November 16, 2020, in
accordance with section 6.05 of Rev. Proc.
2019-33.
(3) Solely for purposes of section 5.01
of this revenue procedure, a taxpayer ap-
plies the Final Regulations, the 2019 final
regulations, or both the 2019 final regu-
lations and the 2019 proposed regulations
under section 5.01(1)(c) of this revenue
procedure for the placed-in-service year
of the depreciable property described in
section 5.01(1)(a) of this revenue proce-
dure or for the planting year of the spec-
ified plant described in section 5.01(1)(a)
of this revenue procedure, or applies the
Final Regulations, the 2019 final regula-
tions, or both the 2019 final regulations
and the 2019 proposed regulations under
section 5.01(2)(c) of this revenue proce-
dure for the placed-in-service year of the
depreciable property described in section
5.01(2)(a) of this revenue procedure or
for the planting year of the specified plant
described in section 5.01(2)(a) of this
revenue procedure, either by (a) making
a change in method of accounting under
section 4.03 of this revenue procedure
to apply that specific regulation for the
placed-in-service year of such depreciable
property or for the planting year of such
specified plant, or (b) complying with that
specific regulation on its timely filed orig-
inal Federal income tax return or Form
1065 for the placed-in-service year of
such depreciable property or for the plant-
ing year of such specified plant.
(4) A taxpayer within the scope of sec-
tion 5.01(1) of this revenue procedure
makes the § 168(k)(5) election, § 168(k)
(7) election, component election, pro-
posed component election, or designated
transaction election in accordance with
section 2.03(1), (2), (5), (6), or (7), respec-
tively, of this revenue procedure or under
section 5.02 of this revenue procedure.
A taxpayer within the scope of section
5.01(2) of this revenue procedure makes
the § 168(k)(10) election in accordance
with section 2.03(3) of this revenue proce-
dure or under section 5.02 of this revenue
procedure.
.02 Time and manner of making a late
§ 168(k)(5) election, a late § 168(k)(7)
election, a late § 168(k)(10) election, a
late component election, a late designat-
ed transaction election, or a late proposed
component election. A taxpayer within the
scope of this section 5 may make the late
§ 168(k)(5) election, the late § 168(k)(7)
election, the late § 168(k)(10) election, the
late component election, the late designat-
ed transaction election, or the late pro-
posed component election by filing either:
(1) A Federal amended income tax
return or amended Form 1065 for the
placed-in-service year of the property, or
for the planting year of the specified plant,
as applicable, on or before December 31,
2021, but in no event later than the appli-
cable period of limitations on assessment
for the taxable year for which the amend-
ed return is being filed. A BBA partnership
may file an AAR for the placed-in-service
year of the property or the planting year
of the specified plant, as applicable, on
or before December 31, 2021, but in no
event later than the applicable period of
limitations on making adjustments under
§ 6235 for the reviewed year as defined
in § 301.6241-1(a)(8). This amended re-
turn or AAR must include the adjustment
to taxable income for the late election
and any collateral adjustments to taxable
income or to tax liability. Such collateral
adjustments also must be made on original
or amended Federal returns or AARs for
any affected succeeding taxable years; or
(2) A Form 3115 (a) with the taxpay-
er’s timely filed original Federal income
tax return or Form 1065 for the taxpayer’s
first or second taxable year succeeding the
taxable year in which the taxpayer placed
in service the property or the planting
year of the specified plant, as applicable,
or (b) if later, with the taxpayer’s timely
filed original Federal income tax return or
Form 1065 that is filed on or after Novem-
ber 6, 2020, and on or before December
31, 2021. The late § 168(k)(5) election,
late § 168(k)(7) election, late § 168(k)(10)
election, late component election, late
designated transaction election, or late
proposed component election under this
section 5.02(2) will be treated as a change
in method of accounting with a § 481(a)
adjustment only during this limited period
of time. The time and manner of making
this late election are described in section
7.02(2) of this revenue procedure, which
modifies section 6.20 of Rev. Proc. 2019-
43 to include this late election.
.03 Examples. The application of this
section 5 is illustrated by the following
examples.
Example 1. Taxpayer A, a calendar year taxpayer,
placed in service several depreciable assets during its
2018 taxable year that are eligible for the additional
first year depreciation under § 168(k) as in effect be-
fore the enactment of the TCJA. On its timely filed
Federal income tax return for the 2018 taxable year,
Taxpayer A deducted 40-percent additional first year
depreciation for such assets. After the issuance of the
2020 final regulations, Taxpayer A determined that
one such asset is larger self-constructed property un-
der § 1.168(k)-2(c)(2) of the 2020 final regulations
and some components of that property are eligible
for the component election under § 1.168(k)-2(c) of
the 2020 final regulations. Pursuant to section 4.03(4)
(a) of this revenue procedure, Taxpayer A (a) makes
a retroactive change in method of accounting by fil-
ing in February 2021 amended Federal income tax
returns for its 2018 and 2019 taxable years to apply
the Final Regulations, and (b) timely files its origi-
nal Federal income tax return for the 2020 taxable
year applying the Final Regulations. Because Tax-
payer A retroactively applied the Final Regulations
to the 2018 taxable year in accordance with section
4 of this revenue procedure, Taxpayer A is eligible
to make the late component election under this sec-
tion 5 for eligible components placed in service by
Taxpayer A during its 2018 taxable year. The result
would be the same if, pursuant to section 4.03(4)(b)
of this revenue procedure, Taxpayer A filed a Form
3115 with its timely filed original Federal income tax
return for the 2020 taxable year under the automatic
change procedures in Rev. Proc. 2015-13 and section
6.21 of Rev. Proc. 2019-43, as added by section 7.03
of this revenue procedure, to apply the Final Regu-
lations for property placed in service by Taxpayer A
during its 2018 and 2019 taxable years.
Example 2. The facts are the same as in Example
1, except Taxpayer A files the amended Federal in-

November 23, 2020 1132 Bulletin No. 2020–48
come tax returns for its 2018 and 2019 taxable years
to apply the 2019 final regulations and timely files
its original Federal income tax return for the 2020
taxable year applying the 2019 final regulations. Be-
cause the component election under § 1.168(k)-2(c)
of the 2020 final regulations is not permitted under
the 2019 final regulations, Taxpayer A is not eligible
to make the late component election under this sec-
tion 5 for components that are eligible for the com-
ponent election under § 1.168(k)-2(c) of the 2020
final regulations and placed in service by Taxpayer
A during its 2018 taxable year.
Example 3. Taxpayer B, a calendar year taxpayer,
placed in service several depreciable assets during its
2018 taxable year. On its timely filed Federal income
tax return for the 2018 taxable year, Taxpayer B de-
ducted 100-percent additional first year depreciation
for such assets. Now, Taxpayer B wants to make a
late § 168(k)(7) election for all qualified property
placed in service during its 2018 taxable year. Tax-
payer B did not apply, and is not applying, the Final
Regulations, the 2019 final regulations, or both the
2019 final regulations and the 2019 proposed regula-
tions for the 2018 taxable year. As a result, Taxpayer
B is not eligible to make a late § 168(k)(7) election
under this revenue procedure for the 2018 taxable
year. Instead, Taxpayer B must submit a private letter
ruling request under § 301.9100-3 of the Procedure
and Administration Regulations to obtain the Com-
missioner’s consent to make such late election.
SECTION 6. CONSENT TO REVOKE
CERTAIN ELECTIONS UNDER
SECTION 168
.01 Scope.
(1) This section 6 applies to a taxpayer
within the scope of section 3 of this reve-
nue procedure that:
(a) placed in service depreciable prop-
erty during its 2017, 2018, 2019, or 2020
taxable year, or planted or grafted the
specified plant during its 2017, 2018,
2019, or 2020 taxable year to which the
§ 168(k)(5) election applies, as applicable;
(b) applies the Final Regulations, the
2019 final regulations, or both the 2019
final regulations and the 2019 proposed
regulations for the placed-in-service year
of such depreciable property or the plant-
ing year of such specified plant;
(c) made a § 168(k)(5) election,
§ 168(k)(7) election, or proposed compo-
nent election on its timely filed original
Federal income tax return or Form 1065
for the placed-in-service year of such de-
preciable property or class of such depre-
ciable property, as applicable, or for the
planting year of the specified plant, and
such return was filed before November
17, 2020, or made a § 168(k)(5) election
or § 168(k)(7) election in accordance with
section 4 or 5 of Rev. Proc. 2019-33, re-
spectively, or in accordance with section
4 of Rev. Proc. 2020-25, as modified by
section 8 of this revenue procedure, before
November 17, 2020; and
(d) wants to revoke such election.
(2) This section 6 also applies to a tax-
payer within the scope of section 3 of this
revenue procedure that:
(a) applies the Final Regulations, the
2019 final regulations, or both the 2019
final regulations and the 2019 proposed
regulations for the taxpayer’s taxable year
that includes September 28, 2017;
(b) made a § 168(k)(10) election on its
timely filed original Federal income tax
return or Form 1065 for the taxpayer’s
taxable year that includes September 28,
2017, or made a § 168(k)(10) election in
accordance with section 6 of Rev. Proc.
2019-33 or section 4 of Rev. Proc. 2020-
25, as modified by section 8 of this reve-
nue procedure, for the taxpayer’s taxable
year that includes September 28, 2017,
before November 17, 2020; and
(c) wants to revoke the § 168(k)(10)
election.
(3) Solely for purposes of section 6.01
of this revenue procedure, a taxpayer ap-
plies the Final Regulations, the 2019 final
regulations, or both the 2019 final regula-
tions and the 2019 proposed regulations
under section 6.01(1)(b) of this revenue
procedure for the placed-in-service year
of the depreciable property described in
section 6.01(1)(a) of this revenue proce-
dure or for the planting year of the spec-
ified plant described in section 6.01(1)
(a) of this revenue procedure, or applies
the Final Regulations, the 2019 final reg-
ulations, or both the 2019 final regula-
tions and the 2019 proposed regulations
under section 6.01(2)(a) of this revenue
procedure for the taxpayer’s taxable year
that includes September 28, 2017, ei-
ther by (a) making a change in method
of accounting under section 4.03 of this
revenue procedure to apply that specific
regulation for the placed-in-service year
of such depreciable property or for the
planting year of such specified plant, or
(b) complying with that specific regula-
tion on its timely filed original Federal
income tax return or Form 1065 for the
placed-in-service year of such deprecia-
ble property or for the planting year of
such specified plant.
(4) If a taxpayer within the scope of
section 6.01(1) of this revenue procedure
revokes the § 168(k)(7) election in accor-
dance with section 6.02(2) of this revenue
procedure, the revocation applies to all
property included in the class of property
and placed in service during the same tax-
able year. If a taxpayer within the scope of
section 6.01(2) of this revenue procedure
revokes the § 168(k)(10) election in accor-
dance with section 6.02(2) of this revenue
procedure, the revocation applies to (a) all
qualified property acquired by the taxpay-
er after September 27, 2017, and placed in
service by the taxpayer during its taxable
year that includes September 28, 2017,
and (b) all specified plants that are plant-
ed, or grafted to a plant that has already
been planted, after September 27, 2017,
by the taxpayer in the ordinary course of
the taxpayer’s farming business during its
taxable year that includes September 28,
2017, if the taxpayer made the § 168(k)(5)
election for that taxable year.
.02 Consent granted to revoke election.
(1) In general. The Commissioner
grants a taxpayer within the scope of this
section 6 consent to revoke its § 168(k)(5)
election, § 168(k)(7) election, § 168(k)
(10) election, or proposed component
election provided the taxpayer makes this
revocation in the time and manner de-
scribed in this section 6.02.
(2) Revocation of § 168(k)(5) election,
§ 168(k)(7) election, or § 168(k)(10) elec-
tion, or proposed component election. A
taxpayer within the scope of this section
6 may revoke its § 168(k)(5) election,
§ 168(k)(7) election, § 168(k)(10) elec-
tion, or proposed component election by
filing either:
(a) A Federal amended income tax
return or amended Form 1065 for the
placed-in-service year of the property or
the planting year of the specified plant,
as applicable, on or before December 31,
2021, but in no event later than the appli-
cable period of limitations on assessment
for the taxable year for which the amend-
ed return is being filed. A BBA partnership
may file an AAR for the placed-in-service
year of the property or the planting year
of the specified plant, as applicable, on
or before December 31, 2021, but in no
event later than the applicable period of
limitations on making adjustments under
§ 6235 for the reviewed year as defined in

Bulletin No. 2020–48 1133 November 23, 2020
§ 301.6241-1(a)(8). This amended return
or AAR must include the adjustment to
taxable income for the revocation of the
§ 168(k)(5) election, § 168(k)(7) election,
§ 168(k)(10) election, or proposed com-
ponent election and any collateral adjust-
ments to taxable income or to tax liability.
Such collateral adjustments also must be
made on original or amended Federal re-
turns or AARs for any affected succeeding
taxable years; or
(b) A Form 3115 (a) with the taxpay-
er’s timely filed original Federal income
tax return or Form 1065 for the taxpay-
er’s first or second taxable year succeed-
ing the taxable year in which the tax-
payer placed in service the property or
the planting year of the specified plant,
as applicable, or (b) if later, with the
taxpayer’s timely filed original Federal
income tax return or Form 1065 that is
filed on or after November 6, 2020, and
on or before December 31, 2021. The
revocation of the § 168(k)(5) election,
the § 168(k)(7) election, the § 168(k)
(10) election, or the proposed compo-
nent election under this section 6.02(2)
(b) will be treated as a change in method
of accounting with a § 481(a) adjustment
only during this limited period of time.
The time and manner of making this re-
vocation are described in section 7.02(2)
of this revenue procedure, which modi-
fies section 6.20 of Rev. Proc. 2019-43
to include this revocation.
SECTION 7. CHANGES IN
METHOD OF ACCOUNTING
.01 In general. The making of a late
election, or the revocation of an election,
under sections 5.02(2) and 6.02(2)(b)
of this revenue procedure is treated as a
change in method of accounting for a lim-
ited period of time to which §§ 446(e) and
481, and the corresponding regulations,
apply. A taxpayer that wants to make a
late election, or revoke an election, un-
der sections 5.02(2) and 6.02(2)(b) of this
revenue procedure must use the automatic
change procedures in Rev. Proc. 2015-13
or its successor.
.02 Modifications to existing automatic
changes.
(1) Section 6.01(1)(c) of Rev. Proc.
2019-43, 2019-48 I.R.B. 1107, is modi-
fied by:
(a) Revising section 6.01(1)(c)(xvii) to
read as follows:
(xvii) any qualified improvement prop-
erty, as defined in § 168(e)(6), placed in
service by the taxpayer after December
31, 2017, to which section 6.19 of this rev-
enue procedure applies. However, an orig-
inal Form 3115 for such change in meth-
od of accounting may be filed under this
section 6.01 instead of section 6.19 of this
revenue procedure if the original Form
3115 was filed before November 17, 2020;
(b) At the end of section 6.01(1)(c)
(xviii), adding “; or”;
(c) Adding a new section 6.01(1)(c)
(xix) to read as follows:
(xix) any change in method of account-
ing to which section 6.21 of this revenue
procedure applies.
(2) Section 6.19 of Rev. Proc. 2019-43
is modified by:
(a) At the end of section 6.19(1)(c)(ii),
deleting “or”;
(b) At the end of section 6.19(1)(c)(iii),
adding “; or”;
(c) Adding a new section 6.19(1)(c)(iv)
to read as follows:
(iv) any change in method of account-
ing to which section 6.21 of this revenue
procedure applies.
(3) Section 6.20 of Rev. Proc. 2019-43
is modified to read as follows:
6.20 Certain late elections under §§
168 and 1502 or revocation of certain
elections under § 168.
(1) Description of change.
(a) Applicability. This change applies
to:
(i) A taxpayer within the scope of sec-
tion 4 of Rev. Proc. 2020-25, 2020-19
I.R.B. 785, as modified by section 8 of
Rev. Proc. 2020-50, 2020-48 I.R.B. 1122,
that wants to make a late election provided
in section 4.02(2) of Rev. Proc. 2020-25
under § 168(g)(7), (k)(5), (k)(7), or (k)
(10). This change also applies to a taxpay-
er within the scope of section 5 of Rev.
Proc. 2020-25 that wants to revoke an
election provided in section 5.02(2)(b) of
Rev Proc. 2020-25 under § 168(k)(5), (k)
(7), or (k)(10); or
(ii) A taxpayer within the scope of
section 5 of Rev. Proc. 2020-50, 2020-
48 I.R.B. 1122, that wants to make a late
election under § 168(k)(5), (7), or (10),
§ 1.168(k)-2(c) (component election),
§ 1.1502-68(c)(4) (designated transaction
election), or proposed § 1.168(k)-2(c)
(proposed component election) as provid-
ed in section 5.02(2) of Rev. Proc. 2020-
50. This change also applies to a taxpayer
within the scope of section 6 of Rev. Proc.
2020-50 that wants to revoke an election
under § 168(k)(5), (k)(7), or (k)(10), or a
proposed component election as provided
in section 6.02(2)(b) of Rev Proc. 2020-
50.
(b) Inapplicability.
(i) The IRS will treat the making of a
late election provided in section 4 of Rev.
Proc. 2020-25 under § 168(g)(7), (k)(5),
(k)(7), and (k)(10), or the revocation of
an election provided in section 5 of Rev.
Proc. 2020-25 under § 168(k)(5), (k)(7),
and (k)(10), as a change in method of ac-
counting with a § 481(a) adjustment only
for the taxable years specified in section
6.20(2)(a) of this revenue procedure. This
treatment does not apply to a taxpayer that
makes these late elections or revocations
before or after the time specified in section
6.20(2)(a) of this revenue procedure, and
any such late election or revocation is not
a change in method of accounting pursu-
ant to § 1.446-1(e)(2)(ii)(d)(3)(iii).
(ii) The IRS will treat the making of
a late election under § 168(k)(5), (7), or
(10), a late component election, a late
designated transaction election, or a late
proposed component election as provided
in section 5 of Rev. Proc. 2020-50, or the
revocation of an election under § 168(k)
(5), (k)(7), or (k)(10), or a proposed com-
ponent election as provided in section 6 of
Rev Proc. 2020-50, as a change in method
of accounting with a § 481(a) adjustment
only for the taxable years specified in
section 6.20(2)(b) of this revenue proce-
dure. This treatment does not apply to a
taxpayer that makes these late elections or
revocations before or after the time spec-
ified in section 6.20(2)(b) of this revenue
procedure, and any such late election or
revocation is not a change in method of
accounting pursuant to § 1.446-1(e)(2)(ii)
(d)(3)(iii).
(2) Time for making the change.
(a) The change under section 6.20(1)
(a)(i) and (b)(i) of this revenue procedure
must be made for (i) the taxpayer’s first or
second taxable year succeeding the taxable
year in which the taxpayer placed in service
the property affected by the late election
under § 168(g)(7), (k)(5), (k)(7), or (k)(10),

November 23, 2020 1134 Bulletin No. 2020–48
as applicable, or revocation of the election
under § 168(k)(5), (k)(7), or (k)(10), as ap-
plicable, or, if later, (ii) any taxable year for
which the taxpayer timely files an original
Federal income tax return or Form 1065, as
applicable, on or after April 17, 2020, and
on or before October 15, 2021.
(b) The change under section 6.20(1)
(a)(ii) and (b)(ii) of this revenue proce-
dure must be made for:
(i) The taxpayer’s first or second tax-
able year succeeding the taxable year in
which the taxpayer (A) placed in service
the property affected by the late election
under § 168(k)(7) or (10), the late com-
ponent election, the late designated trans-
action election, or the late proposed com-
ponent election, as applicable, or by the
revocation of the election under § 168(k)
(7) or (k)(10), or the proposed compo-
nent election, as applicable, or (B) plant-
ed or grafted the specified plant to which
the late § 168(k)(5) election applies or to
which the revocation of the election under
§ 168(k)(5) applies; or, if later
(ii) Any taxable year for which the
taxpayer timely files an original Federal
income tax return or Form 1065, as appli-
cable, on or after November 6, 2020, and
on or before December 31, 2021.
(3) Certain eligibility rules inapplica-
ble.
(a) The eligibility rules in section
5.01(1)(d) and (f) of Rev. Proc. 2015-13,
2015-5 I.R.B. 419, do not apply to the
change under section 6.20(1)(a)(i) and
(b)(i) of this revenue procedure for the
taxpayer’s first or second taxable year
succeeding the taxable year in which the
taxpayer placed in service the property af-
fected by the late election under § 168(g)
(7), (k)(5), (k)(7), or (k)(10), as applica-
ble, or revocation of the election under
§ 168(k)(5), (k)(7), or (k)(10), as appli-
cable, or if later, for any taxable year for
which the taxpayer timely files an original
Federal income tax return or Form 1065,
as applicable, on or after April 17, 2020,
and on or before October 15, 2021.
(b) The eligibility rules in section
5.01(1)(d) and (f) of Rev. Proc. 2015-13,
2015-5 I.R.B. 419, do not apply to the
change under section 6.20(1)(a)(ii) and (b)
(ii) of this revenue procedure for:
(i) The taxpayer’s first or second tax-
able year succeeding the taxable year in
which the taxpayer (A) placed in service
the property affected by the late election
under § 168(k)(7) or (10), the late com-
ponent election, the late designated trans-
action election, or the late proposed com-
ponent election, as applicable, or by the
revocation of the election under § 168(k)
(7) or (k)(10), or the proposed compo-
nent election, as applicable, or (B) plant-
ed or grafted the specified plant to which
the late § 168(k)(5) election applies or to
which the revocation of the election under
§ 168(k)(5) applies; or, if later
(ii) Any taxable year for which the
taxpayer timely files an original Federal
income tax return or Form 1065, as appli-
cable, on or after November 6, 2020, and
on or before December 31, 2021.
(4) Reduced filing requirement. A tax-
payer making a change under this sec-
tion 6.20 is required to complete only
the following information on Form 3115
(Rev. December 2018):
(a) The identification section of page 1
(above Part I);
(b) The signature section at the bottom
of page 1;
(c) Part I;
(d) Part II, all lines except lines 11, 12,
13, 15, 16, 17, and 19;
(e) Part IV, all lines; and
(f) Schedule E, all lines except lines 1,
4b, 5, and 6.
(5) Concurrent automatic change.
(a) A taxpayer making one or more late
elections, and/or revoking one or more
elections, under sections 4 and 5 of Rev.
Proc. 2020-25, or under sections 5 and 6
of Rev. Proc. 2020-50, for the same year
of change must file a single Form 3115 for
all such changes. The single Form 3115
must provide a single net § 481(a) adjust-
ment for all such changes for all assets
placed in service, and all specified plants
planted or grafted, by the taxpayer during
the same taxable year. See section 6.03(1)
(b) of Rev. Proc. 2015-13 for information
on making concurrent changes.
(b) A taxpayer making one or more
changes under this section 6.20 and the
change in section 6.01, 6.19, or 6.21 of
this revenue procedure for the same year
of change must file a single Form 3115
for all such changes and must enter the
designated automatic accounting method
change numbers on the appropriate line
on the Form 3115. The single Form 3115
must provide a single net § 481(a) adjust-
ment for all such changes for all assets
placed in service, and all specified plants
planted or grafted, by the taxpayer during
the same taxable year. See section 6.03(1)
(b) of Rev. Proc. 2015-13 for information
on making concurrent changes.
(6) Designated automatic accounting
method change number. The designat-
ed automatic accounting method change
number for a change to the method of ac-
counting under this section 6.20 is “245.”
(7) Contact information. For further
information regarding a change under this
section 6.20, contact Elizabeth R. Binder
at (202) 317-7005 (not a toll-free number).
.03 New automatic change. Rev. Proc.
2019-43 is modified to add new section
6.21 to read as follows:
6.21 Change in depreciation as a result
of applying the additional first year depre-
ciation regulations.
(1) Description of Change.
(a) Applicability. This change applies
to a taxpayer within the scope of section
4 of Rev. Proc. 2020-50, 2020-48 I.R.B.
1122, that wants to change its method of
accounting for depreciation under § 168
to comply with the Final Regulations, the
2019 final regulations, or both the 2019
final regulations and the 2019 proposed
regulations, as applicable, and as defined
in section 2.02 of Rev. Proc. 2020-50, for
depreciable property and specified plants
within the scope of section 4 of Rev. Proc.
2020-50. A change under this section 6.21
applies to (i) a taxpayer that is changing
from an impermissible method of ac-
counting to a permissible method of ac-
counting under section 4.03(4)(b) of Rev.
Proc. 2020-50, and (ii) a taxpayer that is
changing from one permissible method of
accounting to another permissible method
of accounting under section 4.04 of Rev.
Proc. 2020-50.
(b) Inapplicability. This change does
not apply to any property for which the
taxpayer is changing its method of ac-
counting for depreciation to the method
of accounting for depreciation provided in
§ 1.168(i)-4, which applies when there is a
change in use of the property (but see sec-
tion 6.04 or 6.05 of this revenue procedure
for making this change).
(2) Certain eligibility rules inapplica-
ble.
(a) In general. The eligibility rule in
section 5.01(1)(d) of Rev. Proc. 2015-13,

Bulletin No. 2020–48 1135 November 23, 2020
2015-5 I.R.B. 419, does not apply to a tax-
payer making this change for the proper-
ty and specified plant within the scope of
section 4 of Rev. Proc. 2020-50, as modi-
fied by section 6.21(1)(b) of this revenue
procedure.
(b) Special rule. The eligibility rule in
section 5.01(1)(f) of Rev. Proc. 2015-13,
2015-5 I.R.B. 419, does not apply to a tax-
payer making this change for the proper-
ty and specified plant within the scope of
section 4 of Rev. Proc. 2020-50, as modi-
fied by section 6.21(1)(b) of this revenue
procedure, for:
(i) The taxpayer’s first or second tax-
able year succeeding the taxable year in
which the taxpayer placed in service such
property, or planted or grafted such speci-
fied plant, as applicable; or, if later
(ii) Any taxable year for which the
taxpayer timely files an original Federal
income tax return or Form 1065, as appli-
cable, on or after November 6, 2020, and
on or before December 31, 2021.
(3) Impermissible to permissible meth-
od of determining the depreciation deduc-
tion allowable.
(a) A taxpayer may change from an
impermissible method of accounting to a
permissible method of accounting under
section 4.03 of Rev. Proc. 2020-50 for the
property and specified plant within the
scope of section 4.03 of Rev. Proc. 2020-
50, as modified by section 6.21(1)(b) of
this revenue procedure, for which the tax-
payer used the impermissible method of
accounting in at least two taxable years
immediately preceding the year of change
(but see section 6.21(3)(b) of this revenue
procedure for property placed in service
or a specified plant planted or grafted in
the taxable year immediately preceding
the year of change).
(b) If a taxpayer does not satisfy sec-
tion 6.21(3)(a) of this revenue procedure
for depreciable property that is within the
scope of section 4.03 of Rev. Proc. 2020-
50, as modified by section 6.21(1)(b) of
this revenue procedure, because the de-
preciable property is placed in service by
the taxpayer in the taxable year immedi-
ately preceding the year of change (1-year
Property), the taxpayer may change from
the impermissible method of determining
depreciation to the permissible method of
determining depreciation for the 1-year
Property by filing a Form 3115 for this
change in accordance with this section
6.21(3), provided the § 481(a) adjustment
reported on the Form 3115 includes the
amount of any adjustment attributable to
all property, including the 1-year Proper-
ty, subject to the Form 3115. Similarly, for
a specified plant that is within the scope
of section 4.03 of Rev. Proc. 2020-50, as
modified by section 6.21(1)(b) of this rev-
enue procedure, and is planted or grafted
by the taxpayer in the taxable year imme-
diately preceding the year of change (1-
year Plant), the taxpayer may change from
the impermissible method of determining
depreciation to the permissible method of
determining depreciation under this sec-
tion 6.21(3) for the 1-year Plant by filing a
Form 3115 for this change in accordance
with this section 6.21(3), provided the
§ 481(a) adjustment reported on the Form
3115 includes the amount of any adjust-
ment attributable to all property, including
the 1-year Plant, subject to the Form 3115.
Alternatively, the taxpayer may change
from the impermissible method of deter-
mining depreciation to the permissible
method of determining depreciation for
the 1-year Property or 1-year Plant by fil-
ing an amended return or AAR, as appli-
cable.
(c) A change under section 4.03(4)
(b) of Rev. Proc. 2020-50 and this sec-
tion 6.21(3) is made with a § 481(a) ad-
justment. However, consent to make a
change in method of accounting under
this section 6.21 will be granted by the
Commissioner only if the taxpayer satis-
fies section 4.02 of Rev. Proc. 2020-50,
to the extent relevant. Further, if a tax-
payer that has a trade or business with
floor plan financing indebtedness is ap-
plying § 1.168(k)-2(b)(2)(ii)(G) of the
Final Regulations, § 1.168(k)-2(b)(2)(ii)
(G) of the 2019 final regulations, or both
§ 1.168(k)-2(b)(2)(ii)(G) of the 2019 fi-
nal regulations and § 1.168(k)-2(b)(2)(ii)
(G) of the 2019 proposed regulations for
depreciable property placed in service by
the taxpayer in its 2018, 2019, or 2020
taxable year, consent to make a change
in method of accounting under this sec-
tion 6.21 will be granted by the Commis-
sioner only if the amount of the § 481(a)
adjustment is adjusted to account for the
proper amount of interest expense, taking
into account the business interest limita-
tion under § 163(j) and the regulations
thereunder, as of the beginning of the
year of change.
(4) Permissible to another permissible
method of determining the depreciation
deduction allowable.
(a) A taxpayer may change from one
permissible method of accounting to an-
other permissible method of accounting
under section 4.04 of Rev. Proc. 2020-50
for the property and specified plant with-
in the scope of section 4.04 of Rev. Proc.
2020-50, as modified by section 6.21(1)
(b) of this revenue procedure.
(b) A change under section 4.04 of Rev.
Proc. 2020-50 and this section 6.21(4)
is made on a cut-off basis. Accordingly,
neither the modified cut-off method, as
described in § 1.446-1(e)(2)(ii)(d)(5)(iii),
nor a § 481(a) adjustment is permitted or
required.
(5) Additional requirement. A taxpay-
er making a change under this section
6.21 also must comply with section 4.02
of Rev. Proc. 2020-50, to the extent rele-
vant. Once a taxpayer applies § 1.168(k)-
2 and, to the extent relevant, § 1.1502-68,
of the Final Regulations, in their entirety,
for a taxable year, the taxpayer must con-
tinue to apply § 1.168(k)-2 and, to the
extent relevant, § 1.1502-68, of the Fi-
nal Regulations, in their entirety, for the
taxpayer’s subsequent taxable years. See
§§ 1.168(k)-2(h)(3)(iii) and 1.1502-68(e)
(2)(iii) of the Final Regulations and sec-
tion 4.02(1) of Rev. Proc. 2020-50.
(6) Reduced filing requirement. A tax-
payer making a change under this section
6.21 is required to complete only the fol-
lowing information on Form 3115 (Rev.
December 2018):
(a) The identification section of page 1
(above Part I);
(b) The signature section at the bottom
of page 1;
(c) Part I;
(d) Part II, all lines except lines 11, 12,
13, 15, 16, 17, and 19;
(e) Part IV, all lines; and
(f) Schedule E, all lines except lines 1,
4b, 5, and 6.
(7) Concurrent automatic change.
(a) A taxpayer making this change
must file a single Form 3115 for all assets
placed in service, and all specified plants
planted or grafted, by the taxpayer during
the same taxable year and must provide a

November 23, 2020 1136 Bulletin No. 2020–48
single net § 481(a) adjustment for all the
changes included in that Form 3115.
(b) A taxpayer making one or more
changes under section 6.21(3) of this rev-
enue procedure and the change in section
6.01, 6.19, or 6.20 of this revenue proce-
dure for the same year of change must file
a single Form 3115 for all such changes
and must enter the designated automatic
accounting method change numbers on
the appropriate line on the Form 3115. The
single Form 3115 must provide a single net
§ 481(a) adjustment for all such changes for
all assets placed in service, and all specified
plants planted or grafted, by the taxpayer
during the same taxable year. See section
6.03(1)(b) of Rev. Proc. 2015-13 for infor-
mation on making concurrent changes.
(8) Designated automatic accounting
method change numbers. The designat-
ed automatic accounting method change
number for (a) a change under section
6.21(3) of this revenue procedure is “246”,
and (b) a change under section 6.21(4) of
this revenue procedure is “247.”
(9) Contact information. For further
information regarding a change under this
section 6.21, contact Elizabeth R. Binder
at (202) 317-7005 (not a toll-free number).
SECTION 8. MODIFICATIONS TO
REV. PROC. 2020-25
.01 Section 4.01 of Rev. Proc. 2020-25
is modified to read as follows:
.01 Scope. This section 4 applies to:
(1) A taxpayer that (a) placed in ser-
vice depreciable property during its
2018, 2019, or 2020 taxable year, (b)
timely filed its Federal income tax return
or Form 1065 for the placed-in-service
year of such depreciable property and
such return was filed on or before April
17, 2020, (c) wants to make a § 168(g)(7)
election, § 168(k)(5) election, or § 168(k)
(7) election for such depreciable proper-
ty, and (d)(i) did not previously revoke or
withdraw such election(s) in accordance
with section 5.02 of this revenue proce-
dure, or (ii) did not previously revoke
such § 168(k)(5) election or § 168(k)(7)
election in accordance with section 6 of
Rev. Proc. 2020-50, 2020-48 I.R.B. 1122.
The taxpayer makes the § 168(g)(7) elec-
tion, § 168(k)(5) election, or § 168(k)
(7) election in accordance with section
2.02(1), (2), or (3), respectively, of this
revenue procedure or under section 4.02
of this revenue procedure; or
(2) A taxpayer that (a) timely filed its
Federal income tax return or Form 1065
for the taxpayer’s taxable year that in-
cludes September 28, 2017, (b) wants to
make a § 168(k)(10) election for such tax-
able year, and (c) did not previously re-
voke a § 168(k)(10) election for such tax-
able year in accordance with section 5.02
of this revenue procedure or with section
6 of Rev. Proc. 2020-50. The taxpayer
makes the § 168(k)(10) election in accor-
dance with section 2.02(4) of this revenue
procedure or under section 4.02 of this
revenue procedure.
SECTION 9. EFFECT ON OTHER
DOCUMENTS
.01 Section 6 of Rev. Proc. 2019-43 is
modified to include the modifications pro-
vided in section 7.02 of this revenue pro-
cedure and the accounting method change
provided in section 7.03 of this revenue
procedure.
.02 Section 4.01 of Rev. Proc. 2020-25
is modified.
SECTION 10. EFFECTIVE DATE
This revenue procedure is effective
November 6, 2020.
SECTION 11. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Kathleen Reed of the Office
of Associate Chief Counsel (Income Tax
& Accounting). For further information
regarding this revenue procedure, contact
Elizabeth Binder at (202) 317-4869 (not
a toll-free number) or Ms. Reed at (202)
317-4660 (not a toll-free number).

Bulletin No. 2020–48 1137 November 23, 2020
Part IV
26 CFR Part 54
Notice of Proposed
Rulemaking
Additional Policy and
Regulatory Revisions in
Response to the COVID-19
Public Health Emergency
REG-122462-20
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing by cross-reference to temporary reg-
ulations.
SUMMARY: Elsewhere in this issue of
the Federal Register, the IRS is issuing
temporary regulations regarding coverage
of preventive health services to implement
section 3203 of the in the Coronavirus
Aid, Relief, and Economic Security Act
(CARES Act), which shortens the time-
frame under which non-grandfathered
group health plans and health insurance
issuers offering non-grandfathered group
or individual health insurance coverage
must cover without cost sharing quali-
fying coronavirus preventive services,
including recommended COVID-19 im-
munizations. The IRS is issuing the tem-
porary regulations at the same time that
the Employee Benefits Security Admin-
istration of the Department of Labor and
the Office of Consumer Information and
Insurance Oversight of the Department
of Health and Human Services (HHS) are
issuing substantially similar interim final
rules with request for comments. The text
of those temporary regulations also serves
as the text of these proposed regulations.
DATES: To be assured consideration,
comments must be received at one of the
addresses provided below, no later than 5
p.m. on January 5, 2021.
ADDRESSES: In commenting, please re-
fer to file code CMS-9912-IFC.
Comments, including mass comment
submissions, must be submitted in one of
the following three ways (please choose
only one of the ways listed):
1. Electronically. You may submit
electronic comments on this regulation to
http://www.regulations.gov. Follow the
“Submit a comment” instructions.
2. By regular mail. You may mail writ-
ten comments to the following address
ONLY:
Centers for Medicare & Medicaid Ser-
vices,
Department of Health and Human Ser-
vices,
Attention: CMS-9912-IFC,
P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed
comments to be received before the close
of the comment period.
3. By express or overnight mail. You
may send written comments to the follow-
ing address ONLY:
Centers for Medicare & Medicaid Ser-
vices,
Department of Health and Human Ser-
vices,
Attention: CMS-9912-IFC,
Mail Stop C4-26-05,
7500 Security Boulevard,
Baltimore, MD 21244-1850
FOR FURTHER INFORMATION
CONTACT: Dara Alderman, (202) 317-
5500, Internal Revenue Service, Depart-
ment of the Treasury, for issues related to
Rapid Coverage of Preventive Services
for Coronavirus.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All
comments received before the close of
the comment period are available for
viewing by the public, including any
personally identifiable or confidential
business information that is included in
a comment. We post all comments re-
ceived before the close of the comment
period on the following website as soon
as possible after they have been received:
http://regulations.gov. Follow the search
instructions on that website to view pub-
lic comments.
Background and Regulatory Impact
Analysis
The temporary regulations published
elsewhere in this issue of the Federal Reg-
ister add §54.9815–2713T to the Miscel-
laneous Excise Tax Regulations. The pro-
posed and temporary regulations are being
published as part of a joint rulemaking
with the Department of Labor and HHS.
The text of those temporary regulations
also serves as the text of these proposed
regulations. The preamble to the tempo-
rary regulations explains the temporary
regulations and provides a regulatory im-
pact analysis.
Drafting Information
The principal author of this notice of
proposed rulemaking is Dara Alderman,
Office of the Chief Counsel (Employee
Benefits, Exempt Organizations and Em-
ployment Taxes). The proposed regula-
tions, as well as the temporary regulations,
have been developed in coordination with
personnel from the Department of Labor
and HHS.
List of Subjects in 26 CFR Part 54
Excise taxes, Pensions, Reporting and
recordkeeping requirements.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 54 is pro-
posed to be amended as follows:
PART 54—PENSION EXCISE TAXES
Par. 1. The authority citation for part 54
continues to read in part as follows:
Authority: 26 U.S.C. 7805, unless oth-
erwise noted.
* * * * *
Section 54.9815-2713 also issued un-
der 26 U.S.C. 9833;
* * * * *
2. Section 54.9815-2713 is revised to
read as follows:

November 23, 2020 1138 Bulletin No. 2020–48
§ 54.9815-2713 Coverage of preventive
health services.
[The text of proposed § 54.9815–2713
is the same as the text of § 54.9815–2713T
published elsewhere in this issue of the
Federal Register].
Sunita Lough,
Deputy Commissioner for Services
and Enforcement,
Internal Revenue Service.
(Filed by the Office of the Federal Register on No-
vember 2, 2020, 4:15 pm., and published in the issue
of the Federal Register for November 06, 2020, 85
F.R. 71142)

Bulletin No. 2020–48 i November 23, 2020
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.
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.
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.

November 23, 2020 ii Bulletin No. 2020–48
Numerical Finding List
1
Bulletin 2020–48
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
2020-40, 2020-45 I.R.B. 999
2020-47, 2020-19 I.R.B. 1070
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
2020-77, 2020-45 I.R.B. 988
2020-79, 2020-46 I.R.B. 1014
2020-76, 2020-47 I.R.B. 1058
2020-80, 2020-47 I.R.B. 1060
Proposed Regulations:
REG-119307-19, 2020-28 I.R.B. 44
REG-112339-19, 2020-30 I.R.B. 155
Proposed Regulations:—Continued
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
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
REG-119890-18, 2020-47 I.R.B. 1063
REG-122462-20, 2020-48 I.R.B. 1137
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
2020-43, 2020-45 I.R.B. 991
2020-44, 2020-45 I.R.B. 991
2020-46, 2020-45 I.R.B. 995
2020-45, 2020-46 I.R.B. 1016
2020-47, 2020-48 I.R.B. 1121
2020-49, 2020-48 I.R.B. 1122
2020-50, 2020-48 I.R.B. 1122
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
2020-22, 2020-45 I.R.B. 963
2020-24, 2020-45 I.R.B. 965
2020-23, 2020-47 I.R.B. 1028
2020-25, 2020-48 I.R.B. 1109
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
Treasury Decisions:—Continued
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
9910, 2020-44 I.R.B. 915
9924, 2020-44 I.R.B. 943
9911, 2020-45 I.R.B. 966
9913, 2020-45 I.R.B. 975
9927, 2020-47 I.R.B. 1031
9918, 2020-45 I.R.B. 979
9914, 2020-46 I.R.B. 1000
9919, 2020-48 I.R.B. 1073
9931, 2020-48 I.R.B. 1087
1
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.

Bulletin No. 2020–48 iii November 23, 2020
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2020–48
1
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.

Internal Revenue Service
Washington, DC 20224
Official Business
Penalty for Private Use, $300
INTERNAL REVENUE BULLETIN
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