Internal Revenue Bulletin 2021-51 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 2021–51
December 20, 2021
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, INCOME TAX
Rev. Proc. 2021-52, page 883.
This revenue procedure will update Rev. Proc. 2020-54,
2020-53 I.R.B. 1806, and identifies circumstances under
which the disclosure on a taxpayer’s income tax return with
respect to an item or position is adequate for the purpose
of reducing the understatement of income tax under section
6662(d) of the Internal Revenue Code (relating to the sub-
stantial understatement aspect of the accuracy-related pen-
alty), and for the purpose of avoiding the tax return preparer
penalty under section 6694(a) (relating to understatements
due to unreasonable positions) with respect to income tax
returns. This revenue procedure will apply to any income tax
return filed on 2021 tax forms for a taxable year beginning in
2021 and to any income tax return filed in 2022 on 2021 tax
forms for short taxable years beginning in 2022.
EMPLOYMENT TAX
Notice 2021-65, page 880.
Notice 2021-65 provides guidance regarding the retroactive
termination of the employee retention credit under IRC sec-
tion 3134 in the fourth calendar quarter of 2021 for employ-
ers who are not recovery startup businesses. This notice
applies to employers that paid wages after September 30,
2021 and received an advance payment of the employee
retention credit for those wages or reduced employment tax
deposits in anticipation of the credit for the fourth calendar
quarter of 2021, but are now ineligible for the credit due to
the change in the law. The notice also provides guidance
regarding how the rules apply to recovery startup businesses
during the fourth calendar quarter of 2021.
EXEMPT ORGANIZATIONS
Announcement 2021-17, page 889.
Revocation of IRC 501(c)(3) Organizations for failure to meet
the code section requirements. Contributions made to the
organizations by individual donors are no longer deductible
under IRC 170(b)(1)(A).
INCOME TAX
REG-109128-21, page 890.
These proposed regulations would provide that mini-
mum essential coverage does not include Medicaid cov-
erage that is limited to COVID-19 testing and diagnostic
services provided under the Families First Coronavirus
Response Act, would provide an automatic extension
of time for providers of minimum essential coverage to
furnish individual statements regarding such coverage,
and would provide an alternative method for furnishing
individual statements when the shared responsibility
payment amount is zero. Additionally, the proposed
regulations would provide an automatic extension of
time for applicable large employers to furnish state-
ments relating to health insurance that the employer
offers to its full-time employees.
Rev. Proc. 2021-43, page 882.
This revenue procedure provides safe harbors for when an
obligation described in § 42(h)(4)(A) of the Internal Revenue
Code or an allocation of a low-income housing credit dollar
amount is more than de minimis for purposes of the asso-
ciated revenue ruling providing guidance on whether the 4
Finding Lists begin on page ii.

percent applicable percentage under § 42(b)(3) applies to
certain low-income buildings.
Rev. Proc. 2021-53, page 887.
Rev. Proc. 2021-53 provides temporary guidance regard-
ing the treatment of certain stock distributions by publicly
offered real estate investment trusts (REITs) and publicly
offered regulated investment companies (RICs). Specifi-
cally, in recognition of the need for liquidity as a result of the
impact of the COVID-19 pandemic, this Rev. Proc. modifies
the safe harbor provided in Rev. Proc. 2017-45, 2017-35
I.R.B. 216, by temporarily reducing the minimum required
aggregate amount of cash that distributee shareholders may
receive to not less than 10 percent of the total distribution
in order for § 301 of the Code, by reason of § 305(b) of the
Code, to apply to such distribution. This temporary modifica-
tion is effective solely with respect to distributions declared
by a publicly offered REIT or publicly offered RIC on or after
November 1, 2021, and on or before June 30, 2022.
Rev. Rul. 2021-20, page 875.
This revenue ruling provides guidance regarding whether
the 4 percent applicable percentage (4 percent floor)
under § 42(b)(3) of the Internal Revenue Code applies
to the low-income buildings described in the revenue
ruling. This revenue ruling holds that a draw-down bond
that is issued prior to 2021 (with draws occurring in
a subsequent year), a de minimis § 42(h)(4)(A) obliga-
tion issued after December 31, 2020, or a de minimis
allocation of low-income housing credit dollar amount
occurring after December 31, 2020, do not cause a
building to be subject to the minimum 4 percent floor
under § 42(b)(3).
December 20, 2021 2 Bulletin No. 2021–51

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial 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
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, 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.
December 20, 2021 Bulletin No. 2021–51

Part I
Section 42. - Low-Income
Housing Credit.
(Also §§ 141, 142, and 146, and 26 CFR 1.42-8,
1.42-13, and 1.150-1).
Rev. Rul. 2021-20
ISSUES
(1) Does the minimum 4 percent appli-
cable percentage (4 percent floor) under
§ 42(b)(3) of the Internal Revenue Code
(Code) apply to the building in Situation
1, which is financed in part with a draw-
down exempt facility bond issue that was
issued in 2020 and on which one or more
draws are taken after December 31, 2020?
(2) Does the 4 percent floor under
§ 42(b)(3) of the Code apply to the build-
ing in Situation 2, which is financed in
part with proceeds of an exempt facility
bond issue that was issued in 2020 and in
part with proceeds of a different exempt
facility bond issue that is issued in a de
minimis amount after December 31, 2020?
(3) Does the 4 percent floor under
§ 42(b)(3) of the Code apply to the build-
ing in Situation 3, which receives an allo-
cation of housing credit dollar amount in
2020 and a de minimis additional alloca-
tion after December 31, 2020?
FACTS
Situation 1: Draw-down loan with
issue date in 2020. Agency is a State
agency with authority to issue exempt
facility bonds to support qualified residen-
tial rental projects within the meaning of
§ 142(d) of the Code. Taxpayer X (Con-
duit Borrower
1
) and Agency entered into
an agreement that Agency would provide
exempt facility bond financing to the Con-
duit Borrower to construct a new building
for a qualified residential rental project.
In 2020, Agency borrowed pursuant to a
draw-down loan that qualifies as an issue
of exempt facility bonds (the Loan), and
the proceeds of the Loan are to be used
by the Conduit Borrower to construct the
building. Agency plans to make multiple
draws under the Loan over the course of
the construction, depending on the Con-
duit Borrower’s financing needs at the
time. In 2020, Agency drew an amount
under the Loan that exceeded the lesser
of $50,000 or 5 percent of the issue price.
In subsequent years, Agency draws, and
the Conduit Borrower uses, the remaining
amounts available under the issue to con-
struct the building. All of the draws on the
Loan (that is, the bonds of the issue) are
taken into account in applying the volume
cap for private activity bonds set forth in
§ 146 of the Code. The qualified low-in-
come building is placed in service after
December 31, 2020. Any low-income
housing credits earned with respect to the
building meet the requirements of § 42(h)
(4)(A) for not counting against the State’s
housing credit ceiling.
Situation 2: Post-2020 issuance of a de
minimis amount of exempt facility bonds.
The facts are the same as in Situation 1,
except that instead of borrowing pursuant
to a draw-down loan that qualifies as an
issue of exempt facility bonds, Agency
issued an issue of exempt facility bonds
in 2020 to finance the Conduit Borrow-
er’s construction of the new building for
the qualified residential rental project. In a
subsequent year, Agency issues a different
issue of exempt facility bonds (not pursu-
ant to a draw-down loan), in a de minimis
amount, that the Conduit Borrower sim-
ilarly uses to finance construction of the
building.
Situation 3: Additional allocation of a
de minimis housing credit dollar amount
after 2020. Agency is a housing credit
agency that allocates housing credit dollar
amounts under § 42(h). In 2020, Agency
and Taxpayer Y entered into a binding
agreement. Under the agreement, Agency
agreed to allocate to Y a housing credit
dollar amount for the acquisition of an
existing building and an additional hous-
ing credit dollar amount for the reha-
bilitation of the building into a qualified
low-income building. In 2020, Agency
made allocations both of the amount
related to the acquisition and of the addi-
tional amount related to the rehabilitation.
Each allocation qualified for an exception
under § 42(h)(1)(E), and thus each was
a valid carryover allocation. As a result
of those qualifications for an exception
under § 42(h)(1)(E), the State’s housing
credit ceiling for 2020 was reduced by the
amounts of the two carryover allocations.
Y completes the acquisition and rehabilita-
tion of the building into a qualified low-in-
come building and places the building in
service after December 31, 2020. After
2020, but before the building is placed
in service, Agency makes an additional
allocation of housing credit dollar amount
related to the acquisition of the existing
building. The amount of this additional
allocation is de minimis and reduces
Agency’s ceiling for housing credit dollar
amounts for the year after 2020 in which
the allocation is made.
LAW
Section 42(a) provides that the amount
of the low-income housing credit for any
taxable year in the credit period is an
amount equal to the applicable percent-
age of the qualified basis of each qualified
low-income building.
Section 42(b)(1) provides rules to
determine the applicable percentage. Sec-
tion 42(b)(1)(A) defines the term “appli-
cable percentage” with respect to any
building as the appropriate percentage
prescribed by the Secretary of the Treasury
or her delegate (Secretary) for the earlier
of (i) the month in which the building is
placed in service, or (ii) at the election of
the taxpayer—(I) the month in which the
taxpayer and the housing credit agency
enter into an agreement with respect to the
building (which is binding on the agency,
the taxpayer, and all successors in interest)
as to the housing credit dollar amount to
be allocated to such building, or (II) in the
case of any building to which § 42(h)(4)
(B) applies, the month in which the tax-ex-
empt obligations are issued. A month may
be elected under § 42(b)(1)(A)(ii) only if
the election is made not later than the fifth
1
A governmental issuer may serve as a conduit between investors who buy bonds, such as exempt facility bonds, and a person (like Taxpayer X) that receives the bond proceeds and is solely
responsible for debt service payments. That person is referred to as the “conduit borrower.” See § 1.150-1(b) of the Income Tax Regulations.
Bulletin No. 2021–51 875 December 20, 2021

December 20, 2021 876 Bulletin No. 2021–51
day after the close of such month. Such an
election, once made, is irrevocable.
Section 42(b)(2), which was enacted
by section 3002(a)(1) of the Housing
Assistance Tax Act of 2008 (2008 Act),
Division C of the Housing and Economic
Recovery Act of 2008, Public Law 110-
289, 122 Stat. 2654, 2879 (July 30, 2008),
provides a minimum credit rate of 9 per-
cent for new buildings that are not feder-
ally subsidized (9 percent floor). Section
3002(c) of the 2008 Act provides that the
9 percent floor under § 42(b)(2) applies to
buildings placed in service after July 30,
2008.
Notice 2008-106, 2008-49 IRB 1239,
provides guidance on application of the
9 percent floor. The notice clarifies that
the 9 percent floor applies even if, before
the 2008 Act, a taxpayer had made an
irrevocable election under § 42(b)(1)(A)
(ii) to apply to a building an applicable
percentage that is less than 9 percent. The
notice also concludes that: “Notwithstand-
ing the application of the 9 percent floor,
the housing credit dollar amount allocated
to a project shall not exceed the amount
the housing credit agency determines is
necessary for the financial feasibility of
the project and its viability as a qualified
low-income housing project throughout
the credit period. See 42(m)(2).”
Section 201(a) of the Taxpayer Cer-
tainty and Disaster Tax Relief Act of 2020
(Act), enacted as Division EE of the Con-
solidated Appropriations Act, 2021, Pub-
lic Law 116-260, 134 Stat. 1182, 3056
(December 27, 2020), added to the Code
a new § 42(b)(3), which provides a 4 per-
cent minimum credit rate for buildings
to which the 9 percent floor in § 42(b)
(2) does not apply and which are placed
in service by the taxpayer after Decem-
ber 31, 2020. The amendments to § 42(b)
made by section 201(a) of the Act “apply
to (1) any building which receives an allo-
cation of housing credit dollar amount
after December 31, 2020, and (2) in the
case of any building any portion of which
is financed with an obligation described
in section 42(h)(4)(A), any such building
if any such obligation which so finances
such building is issued after December 31,
2020.” Section 201(b)(1) and (2) of the
Act.
Section 42(d)(2)(B) provides that,
except as provided in § 42(f)(5), a credit is
allowable under § 42(a) by reason of reha-
bilitation expenditures that are treated as
a new building under § 42(e) with respect
to the building. Section 42(e)(1) provides
that if rehabilitation expenditures are paid
or incurred by the taxpayer with respect to
any building and if the expenditures meet
the criteria in § 42(e)(2) and (3), those
expenditures are treated as a separate new
building.
Under § 42(h)(1), the amount of the
credit determined under § 42(a) for any
taxable year with respect to any building
must not exceed the housing credit dollar
amount allocated to the building. Section
42(h)(1)(E) provides general rules for
carryover allocations of the low-income
housing credit. A carryover allocation is
defined in § 1.42-6(a)(1) as an allocation
that meets the requirements of § 42(h)(1)
(E) (relating to carryover allocations for
single buildings) or § 42(h)(1)(F) (relat-
ing to carryover allocations for multi-
ple-building projects).
Section 42(h)(4)(A) provides an
exception to the requirement in § 42(h)
(1). Thus, a building within the excep-
tion can earn low-income housing credits
without having received any allocation.
The exception applies to the portion of
any credit allowed under § 42(a) that is
attributable to a building’s eligible basis
financed by an obligation the interest on
which is exempt from tax under § 103
of the Code if: (i) the obligation is taken
into account under § 146; and (ii) princi-
pal payments on the financing are applied
within a reasonable period to redeem obli-
gations the proceeds of which were used
to provide such financing or such financ-
ing is refunded under § 146(i)(6).
Section 42(m)(2)(D) provides that §
42(h)(4) does not apply to any project
unless the governmental unit which issued
the bonds makes a determination under
rules similar to the rules provided for in
§ 42(m)(2)(A) and (B). Section 42(m)(2)
(A) provides that a housing credit dol-
lar amount allocated to a project cannot
exceed the amount the housing credit
agency determines is necessary for the
financial feasibility of the project and its
viability as a qualified low-income hous-
ing credit project throughout the credit
period. Under § 42(m)(2)(B) and § 1.42-
17(a)(3), when a housing credit agency
makes a determination under § 42(m)(2)
(A), it must consider a number of factors
including: (i) the sources and uses of funds
and total financing planned for the project;
(ii) any proceeds or receipts expected to
be generated by reason of tax benefits; (iii)
the percentage of housing credit dollar
amount used for project costs other than
the cost of intermediaries; and (iv) the
reasonableness of the developmental and
operational costs of the project.
Section 1.42-17(a)(4)(i) describes the
timing of the housing credit agency deter-
minations and certifications under § 1.42-
17(a)(3). They must be made at (A) the
time of the application for the housing
credit dollar amount; (B) the time of the
allocation of the housing credit dollar
amount; and (C) the date the building is
placed in service. Section 1.42-17(a)(5)
provides that, for the determination at the
time the building is placed in service, the
taxpayer must submit a schedule of proj-
ect costs. Section 1.42-17(a)(6), provides
that a project qualifying under § 42(h)(4)
(concerning bond-financed projects) is
not entitled to any credit unless the gov-
ernmental unit that issued the bonds, or
the housing credit agency responsible for
issuing the Form(s) 8609, Low-Income
Housing Credit Allocation and Certifica-
tion, to the project, makes determinations
under rules similar to the rules in § 1.42-
17(a)(3), (4), and (5).
Section 142 provides rules for exempt
facility bonds. Section 142(a) provides
that an exempt facility bond is any bond
issued as part of an issue 95 percent or
more of the net proceeds of which are to
be used to support certain categories of
building projects, one of which is a qual-
ified residential rental project. Section
142(d) generally defines a “qualified res-
idential rental project” as any project for
residential rental property if, at all times
during the qualified project period and
disregarding that part of the building in
which such property is located that is used
for purposes other than residential rental
purposes, either (1) 20 percent or more
of the residential units in such project are
occupied by individuals whose income is
50 percent or less of area median gross
income, or (2) 40 percent or more of the
residential units in such project are occu-
pied by individuals whose income is
60 percent or less of area median gross
income.

Bulletin No. 2021–51 877 December 20, 2021
Under § 1.150-1(c)(4)(i), bonds issued
pursuant to a draw-down loan are treated
as part of a single issue. The issue date
of the issue is the first date on which the
aggregate draws under the loan exceed the
lesser of $50,000 or 5 percent of the issue
price.
ANALYSIS
In a determination of whether the 4
percent floor applies, all the buildings
described in the FACTS of this revenue
ruling satisfy the requirement of § 42(b)
(3) that a building be placed in service
after 2020. Each of these three situations,
however, raises the question whether the
post-2020 events in that situation meet the
relevant portions of the effective date pro-
visions in section 201(b) of the Act, which
require a post-2020 issuance of a tax-ex-
empt obligation or a post-2020 allocation
of housing credit dollar amount.
An evaluation of the effect of these
post-2020 events must consider the appar-
ent reasons for the requirement in sec-
tion 201(b) of the Act of certain post-2020
actions by State or local governments. For
example, when section 3002 of the 2008
Act added the 9 percent floor, the effec-
tive date required only that a building
be placed in service after July 30, 2008,
the applicable date of enactment. Section
42(b)(3) also expressly provides such a
placed-in-service effective date for the
4 percent floor. However, section 201(b)
of the Act adds an additional require-
ment—application of the 4 percent floor
to a qualified low-income building is also
dependent on the existence of some post-
2020 government action with respect to
the building. The apparent reason for the
additional effective date criteria in sec-
tion 201(b) of the Act can be inferred by
comparing buildings that satisfy only the
placed-in-service requirement with those
satisfying both that requirement and sec-
tion 201(b) of the Act.
Considered in this way, section 201(b)
of the Act functions to prevent a wind-
fall of credits in situations where, prior
to enactment of the 4 percent floor, the
taxpayer had substantially completed the
structuring of the transaction. Govern-
mental determinations of financial feasi-
bility under § 42(m)(2)(A) must occur not
later than an allocation of housing credit
dollar amounts or an issuance of exempt
facility bonds for a qualified residential
rental project. Because the date of enact-
ment of the Act occurred so late in 2020,
absence of a post-2020 allocation or issu-
ance means that the low-income building
had been planned, and its financial feasi-
bility had been assessed, without taking
the 4 percent floor into account. Absent
the restriction in section 201(b) of the Act,
buildings would receive unnecessary and
unanticipated credits on arrangements that
had been structured and vetted to function
without them. Thus, the requirements in
section 201(b) of the Act seem to treat the
possibility of those unplanned for credits
as if they are a windfall to be avoided.
In Situation 1, the building is financed
by a draw-down loan. Section 1.150-1(c)
(4)(i) treats bonds issued pursuant to a
draw-down loan as part of a single issue.
Further, under § 1.150-1(c)(4)(i), the issue
date of the issue in Situation 1 was in 2020
because amounts drawn exceeded the
lesser of $50,000 or 5 percent of the issue
price. This issue date of the issue in Situa-
tion 1 does not change under § 1.150-1(c)
(4)(i) because a subsequent draw (that is,
a bond) occurs after 2020.
The language of section 201(b)(2)
of the Act refers to the issue date of the
“obligation which so finances such build-
ing.” Thus, the question here is whether
this language refers to the issue or to the
individual draws. Interpreting the “obli-
gation” as the issue rather than the draws
is consistent with the apparent intent of
the effective date provisions in the Act,
as discussed above. Although individ-
ual draws occur at various times, the
maximum amount of the financing pro-
vided by the Loan was finalized before
2021. For example, in Situation 1, if the
financing structure had been finalized
during September 2020, the applicable
percentage for that month was 3.07 per-
cent. See Table 4 of Rev. Rul. 2020-16,
2020-37 IRB 550, 551. Hence, this is a
situation where the transaction was struc-
tured assuming an applicable percentage
that is not increased by a 4 percent floor.
Accordingly, if the post-2020 draws
under the 2020 issue caused the 4 per-
cent floor to apply, the result would be
a windfall of credits that were not taken
into account when the transaction was
structured.
Thus, in Situation 1, because the Loan
(that is, the draw-down issue of bonds)
was issued in 2020, the applicable per-
centage of the building is determined
without regard to the 4 percent floor. The
applicable percentage of the building is
the amount determined under § 42(b)(1)
(B) and (C) for the month determined
under § 42(b)(1)(A).
Unlike the circumstances with the Loan
in Situation 1 (which was a draw-down
loan), the post-2020 bond proceeds in Sit-
uation 2 were from a post-2020 issuance
of an exempt facility bond issue, and each
post-2020 bond is part of that post-2020
issue. Thus, the Situation 2 analysis does
not depend on whether the language of
section 201(b)(2) of the Act refers to the
issue date of a bond issue or to the issue
date of the individual bonds.
In Situation 2, the Conduit Borrower
receives financing from two issues of
exempt facility bonds—one issued in
2020 and one issued in a later year. The
latter issue, however, is only a de minimis
amount. See Rev. Proc. 2021-43, page 882
this bulletin, providing a safe harbor for
determining whether an exempt facility
bond issue that is issued after December
31, 2020, is more than de minimis for
purposes of this revenue ruling. Because
the building was placed in service after
2020, whether the 4 percent floor applies
depends on the effect, if any, of the post-
2020 de minimis issuance. That is, the
determination of whether the 4 percent
floor applies depends on whether the
post-2020 de minimis issuance satisfies
the effective date requirement in sec-
tion 201(b)(2) of the Act that a building
be financed by a § 42(h)(4)(A) obligation
issued after December 31, 2020.
As discussed in connection with Sit-
uation 1, section 201(b) of the Act func-
tions to prevent windfalls. It is neces-
sary, therefore, to consider whether a de
minimis post-2020 financing could create
a windfall of tax credits. When an issue
of exempt facility bonds is issued in a
non-de-minimis amount after 2020, any
concern over a windfall of credits is less-
ened. In those situations, because the post-
2020 issuance is not de minimis, the trans-
action is less likely to have been entirely
structured prior to the enactment of the 4
percent floor. Further, a greater portion of
the total credits generated by applying the

December 20, 2021 878 Bulletin No. 2021–51
4 percent floor to the building would be
expected to result from basis financed by
the post-2020 issuance. Thus, it is con-
sistent with the apparent intent of section
201(b) for the 4 percent floor to apply to
buildings whose financing includes both
pre-2021 exempt facility bonds and a
non-de-minimis amount of exempt facil-
ity bonds that are part of an issue that is
issued after December 31, 2020.
The situation is different, however, if
a de minimis amount of bonds constitute
a building’s only exempt facility bonds
issued as part of an issue issued after 2020.
In this case, Situation 2 aligns more closely
with a building whose only tax-exempt
financing was issued before 2021 (even if
it is placed in service after 2020). If a de
minimis amount of post-2020 tax-exempt
bond financing caused the project to qual-
ify for the 4 percent floor, then that project
would receive substantially more credit
than an economically equivalent project
all of whose tax-exempt financing was
issued pre-2021.
Further, application of the 4 percent
floor would produce an increase in cred-
its not commensurate with the de mini-
mis post-2020 financing. Except for the
de minimis subsequent financing, the
increased credit available by virtue of the
4 percent floor would be based on assets
whose ability to yield low-income hous-
ing credits was the result of their pre-2021
financing. There is no indication that Con-
gress contemplated such an incongruous
result in drafting the effective date provi-
sions in section 201(b) of the Act.
Moreover, the application of the 4 per-
cent floor would create an undesirable
incentive for taxpayers if a de minimis
amount of post-2020 financing were held
to satisfy section 201(b)(2) of the Act.
Under this approach, taxpayers might seek
nominal additional financing even in sit-
uations where the additional financing is
not necessary for the financial feasibility
of the building. Any such taxpayer efforts
would increase complexity when housing
credit agencies and bond issuers evaluate
the financial feasibility of projects for pur-
poses of § 42(m)(2)(D).
In addition, such a holding would
undercut § 42(m)(2) and § 1.42-17, which
guide housing credit agencies and bond
issuers when they determine whether an
amount is needed for the financial feasi-
bility of a project. Those requirements
reduce any incentive to seek de mini-
mis amounts that are not necessary for
the project’s financial feasibility. There
is no indication that Congress meant to
interpret the effective date requirement
to incentivize taxpayers to seek unneces-
sary amounts. This result is avoided by
interpreting section 201(b)(2) of the Act
as describing only non-de-minimis post-
2020 financing.
Thus, in Situation 2, the de minimis
amount of exempt facility bonds that are
part of an issue issued after 2020 fail to
cause the 4 percent floor to apply to the
building. See Rev. Proc. 2021-43, page
882 this bulletin, providing a safe harbor
for determining whether an exempt facil-
ity bond issue that is issued after Decem-
ber 31, 2020, is more than de minimis for
purposes of this revenue ruling. Because
the 4 percent floor does not apply, the
applicable percentage is the amount deter-
mined under § 42(b)(1)(B) and (C) for the
month determined under § 42(b)(1)(A).
This analysis would be the same for a
building that is financed in part with pro-
ceeds of an exempt facility bond issue
that was issued in 2020 and in part with
a portion of the proceeds of a different
exempt facility bond issue that is issued
in a non-de-minimis amount after Decem-
ber 31, 2020 (primarily to finance one or
more other buildings) when the portion of
the proceeds of the exempt facility bond
issue issued after December 31, 2020,
that finances the building represents a de
minimis portion of the building’s overall
exempt facility bond financing.
Finally, when the 4 percent floor
applies to a building, it applies to any
30-percent-present-value applicable per-
centage used to compute low-income
housing credits for the building. In these
cases, therefore, it is irrelevant whether
an election had been made under § 42(b)
(1)(A)(ii) to use a pre-placed-in-service
month for determining the applicable per-
centage. Cf. Notice 2008-106 (reaching a
similar result when the 9 percent floor was
enacted).
In Situation 3, Agency makes no more
than a de minimis allocation of housing
credit dollar amount after 2020. Although
the acquisition of the building was com-
pleted after 2020, and the building was
placed in service after 2020, the transac-
tion was structured in 2020, and at that
time, Y and Agency did not take the 4
percent floor into account. Arguably, the
windfall effect with an allocation is less
than in a building financed with exempt
facility bonds. The credits in this context
are limited to those allocated by a hous-
ing credit agency. By contrast, in projects
financed by § 42(h)(4)(A) obligations,
the credits are limited only by what the
qualified basis can generate. Neverthe-
less, the requirements of section 201(b)
(1) of the Act manifest the same legisla-
tive intent as section 201(b)(2) of the Act
and should therefore be interpreted con-
sistently. Thus, the principles that govern
de minimis amounts of bonds are equally
applicable to de minimis allocations. See
Rev. Proc. 2021-43, page 882 this bulletin,
providing a safe harbor for determining
whether an allocation of housing credit
dollar amounts that is made after Decem-
ber 31, 2020, is more than de minimis for
purposes of this revenue ruling. Accord-
ingly, the 4 percent floor does not apply
to the building described in Situation 3. Y
must use the applicable percentage deter-
mined under § 42(b)(1)(B) and (C) for the
month determined under § 42(b)(1)(A).
As described above, when the 4 percent
floor applies to a building, it applies to
any 30-percent-present-value applicable
percentage used to compute low-income
housing credits for the building. In these
cases, therefore, it is irrelevant whether
an election had been made under § 42(b)
(1)(A)(ii) to use a pre-placed-in-service
month for determining the applicable per-
centage.
HOLDINGS
(1) Situation 1. The 4 percent floor
under § 42(b)(3) does not apply to the
building in Situation 1, which is financed
in part with a draw-down exempt facility
bond issue that was issued in 2020 and on
which one or more draws are taken after
December 31, 2020.
(2) Situation 2. The 4 percent floor
under § 42(b)(3) does not apply to the
building in Situation 2, which is financed
in part with proceeds of an exempt facility
bond issue that was issued in 2020 and in
part with proceeds of a different exempt
facility bond issue that is issued in a de
minimis amount after December 31, 2020.

Bulletin No. 2021–51 879 December 20, 2021
(3) Situation 3. The 4 percent floor
under § 42(b)(3) does not apply to the
building in Situation 3, which receives an
allocation of housing credit dollar amount
in 2020 and a de minimis additional allo-
cation after December 31, 2020.
The analysis in this revenue ruling
applies only for purposes of determining
whether the 4 percent floor under § 42(b)
(3) applies to a building.
DRAFTING INFORMATION
The principal authors of this revenue
ruling are Dillon Taylor and Michael
Torruella Costa of the Office of Asso-
ciate Chief Counsel (Passthroughs &
Special Industries). For further informa-
tion regarding this revenue ruling, con-
tact Dillon Taylor or Michael Torruella
Costa at (202) 317-4137 (not a toll-free
number).

December 20, 2021 880 Bulletin No. 2021–51
Part III
Termination of the
Employee Retention Credit
under Section 3134 of
the Code in the Fourth
Calendar Quarter of 2021
for Certain Employers
Notice 2021-65
I. PURPOSE
This notice modifies Notice 2021-49,
2021-34 IRB 316, and Notice 2021-24,
2021-18 IRB 1122, to implement statu-
tory changes made by the Infrastructure
Investment and Jobs Act (Infrastructure
Act), Pub. L. 117-58, 135 Stat. 429 (2021),
enacted November 15, 2021.
II. BACKGROUND
Section 2301 of the Coronavirus
Aid, Relief, and Economic Security Act
(CARES Act), Pub. L. 116-136, 134 Stat.
281 (2020), as originally enacted, pro-
vides for an employee retention credit for
eligible employers, including tax-exempt
organizations, that pay qualified wages,
including certain health plan expenses,
to some or all employees after March 12,
2020, and before January 1, 2021. Section
206 of the Taxpayer Certainty and Disas-
ter Tax Relief Act of 2020 (Relief Act),
enacted as Division EE of the Consoli-
dated Appropriations Act, 2021, Pub. L.
116-260, 134 Stat. 1182 (2020), adopted
retroactive amendments and technical
changes to section 2301 of the CARES
Act for qualified wages paid after March
12, 2020, and before January 1, 2021, pri-
marily expanding eligibility for certain
employers to claim the credit. Section 207
of the Relief Act, effective for calendar
quarters beginning after December 31,
2020, further amended section 2301 of the
CARES Act to extend the application of
the employee retention credit to qualified
wages paid after December 31, 2020, and
before July 1, 2021, and to modify the
calculation of the credit amount for qual-
ified wages paid during that time. Section
9651 of the American Rescue Plan Act of
2021 (ARP), Pub. L. 117-2, 135 Stat. 4,
enacted section 3134 of the Internal Rev-
enue Code (Code), effective for calendar
quarters beginning after June 30, 2021,
and provides an employee retention credit
for wages paid after June 30, 2021, and
before January 1, 2022.
Prior to the enactment of section
3134, section 2301 of the CARES Act,
as amended by sections 206 and 207 of
the Relief Act, provided that an employer
may be eligible for the employee retention
credit with respect to a calendar quarter
only if (i) the operation of the employ-
er’s trade or business is fully or partially
suspended due to orders from an appro-
priate governmental authority limiting
commerce, travel, or group meetings (for
commercial, social, religious, or other pur-
poses) due to the coronavirus disease 19
(COVID-19),
1
or (ii)(a) for calendar quar-
ters in 2020, the employer experiences
a significant decline in gross receipts,
or (b) for calendar quarters in 2021, the
employer experiences a decline in gross
receipts.
2
Section 3134(c)(2) of the Code
added “recovery startup businesses” as a
third category of employers that are eli-
gible for the employee retention credit
for qualified wages paid in the third and
fourth calendar quarters of 2021.
Section 3134 also modified the
employee retention credit in other respects
for qualified wages paid in the third and
fourth calendar quarters of 2021. Sec-
tion 3134(j)(2) limited the amount of the
employee retention credit that could be
advanced and which employers could
request advance payments. In addition,
section 3134(j)(3)(B) allows for the direct
assessment of certain erroneous refunds
of advanced portions of the credit. It pro-
vides that if a small eligible employer
specified in section 3134(j)(2) receives
excess advance payments of the credit,
then the taxes imposed under section
3111(b), or so much of the taxes imposed
under section 3221(a) as are attributable
to the rate in effect under section 3111(b),
as applicable, for the calendar quarter are
increased by the amount of the excess
advance payments. Section 3134(m)(3)
provides that the Secretary will issue such
forms, instructions, regulations, and other
guidance as are necessary to prevent the
avoidance of the purposes of the limita-
tions under section 3134.
On March 31, 2020, the Department of
the Treasury (Treasury Department) and
the Internal Revenue Service (IRS) issued
Notice 2020-22, 2020-17 IRB 664, which
provides penalty relief under section 6656
to employers entitled to certain refundable
tax credits provided under the Families
First Coronavirus Response Act (Families
First Act), Pub. L. 116-127, 134 Stat. 178
(2020) and the CARES Act for an employ-
er’s failure to timely deposit Employment
Taxes
3
with the IRS.
4
On April 13, 2021,
the Treasury Department and the IRS
issued Notice 2021-24, which extended
the penalty relief provided under Notice
2020-22 to employers claiming certain
other credits under ARP, including the
employee retention credit under section
3134. On August 4, 2021, the Treasury
Department and the IRS issued Notice
2021-49, providing guidance on the
employee retention credit under section
3134. Notice 2021-49 amplified Notice
1
The rules for determining whether an employer’s trade or business is fully or partially suspended due to orders from an appropriate governmental authority limiting commerce, travel, or
group meetings (for commercial, social, religious, or other purposes) due to COVID-19 are set forth in section III.D. of Notice 2021-20, 2021-11 IRB 922 (guidance on the employee retention
credit under section 2301 of the CARES Act, as amended by section 206 of the Relief Act).
2
The rules for determining whether an employer experienced a significant decline in gross receipts in 2020 are set forth in section III.E. of Notice 2021-20. The rules for determining whether
an employer experienced a decline in gross receipts in the first or second calendar quarters of 2021 are set forth in section III.C. of Notice 2021-23, 2021-16 IRB 1113 (guidance on the
employee retention credit under section 2301 of the CARES Act, as amended by section 207 of the Relief Act).
3
For purposes of this notice, “Employment Taxes” means withheld income taxes, taxes under the Federal Insurance Contributions Act (FICA), and taxes under the Railroad Retirement Tax
Act (RRTA).
4
Relief from the failure to deposit penalty imposed by section 6656 is provided to the extent the amounts not deposited are equal to or less than the anticipated amount of refundable tax credits
to which the employer is entitled under the Families First Act and CARES Act and for which no advance payment was sought.

Bulletin No. 2021–51 881 December 20, 2021
2021-20,
5
which provides guidance on the
employee retention credit under section
2301 of the CARES Act, as amended by
section 206 of the Relief Act, and Notice
2021-23,
6
which provides guidance on the
employee retention credit under section
2301 of the CARES Act, as amended by
section 207 of the Relief Act.
7
On September 10, 2021, the Treasury
Department and the IRS published TD
9953, 86 FR 50,637, setting forth tem-
porary regulations on the Recapture of
Excess Employment Tax Credits under
the American Rescue Plan Act of 2021.
The temporary regulations, in part, autho-
rize the assessment and collection of
any erroneous refund of certain credits,
including the employee retention credit
under section 3134 of the Code, in the
normal course of processing applicable
employment tax returns.
Section 80604 of the Infrastructure
Act amended section 3134(n) of the Code
to provide that the employee retention
credit under section 3134 shall apply only
to wages paid after June 30, 2021, and
before October 1, 2021 (or, in the case of
wages paid by an eligible employer which
is a recovery startup business, January 1,
2022). Additionally, effective for calendar
quarters beginning after September 30,
2021, section 80604 of the Infrastructure
Act amended the definition of recovery
startup business under section 3134(c)(5)
of the Code to remove the requirement
that a recovery startup business not oth-
erwise be an eligible employer due to a
full or partial suspension of operations or
a decline in gross receipts.
III. GUIDANCE
In accordance with the amendments
made by section 80604 of the Infrastruc-
ture Act to section 3134(n) of the Code,
employers, other than recovery startup
businesses, are not entitled to the employee
retention credit for wages paid on or after
October 1, 2021. The Infrastructure Act
amendments require the modification of
guidance related to the employee reten-
tion credit for the fourth calendar quarter
of 2021.
A. Termination of Employee Retention
Credit for Employers other than
Recovery Startup Businesses
Section I of Notice 2021-49 provides
that the rules set forth in Notice 2021-20
and Notice 2021-23 addressing CARES
Act provisions that are the same as those
provided under section 3134 of the Code
continue to apply for the third and fourth
calendar quarters of 2021. Due to the
amendments made by section 80604 of
the Infrastructure Act, rules for determin-
ing whether an employer is an eligible
employer due to a full or partial suspen-
sion of operations (section III.D. of Notice
2021-20) or a decline in gross receipts
(section III.C. of Notice 2021-23) no lon-
ger apply for the fourth calendar quarter
of 2021. Any rules based upon the deter-
mination that an employer is an eligible
employer due to a full or partial suspen-
sion of operations or a decline in gross
receipts, such as rules relating to “severely
financially distressed employers” dis-
cussed in section III.E. of Notice 2021-49,
also no longer apply for the fourth calen-
dar quarter of 2021. Further, references
in Notice 2021-49 to eligible employers
claiming the employee retention credit for
qualified wages paid in the fourth calendar
quarter of 2021 no longer apply unless the
employer is a recovery startup business.
The rules related to recovery startup
businesses in section III.D. of Notice
2021-49 include the requirement that a
recovery startup business not otherwise be
an eligible employer due to a full or partial
suspension of operations or a decline in
gross receipts. Section 80604 of the Infra-
structure Act removes this requirement
for the fourth calendar quarter of 2021.
Accordingly, this requirement no longer
applies to recovery startup businesses in
the fourth calendar quarter of 2021.
All other rules set forth in Notice 2021-
20 and Notice 2021-23 addressing CARES
Act provisions that are the same as those
provided under section 3134 of the Code
continue to apply for the fourth calendar
quarter of 2021 to recovery startup busi-
nesses. Similarly, all other rules set forth
in Notice 2021-49 continue to apply for
the fourth calendar quarter of 2021 to
recovery startup businesses.
B. Repayment of Advance Payments for
Employers other than Recovery Startup
Businesses
Employers may have requested advance
payments of the employee retention credit
for wages paid in the fourth calendar quar-
ter of 2021 prior to the enactment of the
Infrastructure Act. An advance payment
of any portion of the employee reten-
tion credit to a taxpayer in excess of the
amount to which the taxpayer is entitled
is an erroneous refund that the employer
must repay. Accordingly, if an employer
requested and received an advance pay-
ment of the employee retention credit for
wages paid in the fourth calendar quarter
of 2021, and the employer is not a recov-
ery startup business, the employer is not
eligible for an employee retention credit
and must repay the amount of the advance.
Employers who need to repay these
excess advance payments of the employee
retention credit must do so by the due date
for the applicable employment tax return
that includes the fourth calendar quarter
of 2021. Employers should refer to the
instructions to the applicable employment
tax form for additional information. Fail-
ure to repay the advance payment by the
due date of the applicable employment tax
return may result in the imposition of fail-
ure to pay penalties under section 6651.
C. Failure to Deposit Penalties for
Employers other than Recovery Startup
Businesses
Prior to the enactment of the Infra-
structure Act, in accordance with the
guidance provided in Notice 2021-24,
employers may have reduced deposits of
Employment Taxes by the amount of the
employee retention credit the employer
anticipated for the fourth calendar quarter
of 2021 based on a full or partial suspen-
sion of operations or a decline in gross
receipts. Due to the termination of the
employee retention credit for wages paid
in the fourth calendar quarter of 2021 for
5
Supra note 1.
6
Supra note 2.
7
Notice 2021-49 also provides additional guidance on issues regarding the employee retention credit under both section 3134 and section 2301 of the CARES Act, as amended by sections
206 and 207 of the Relief Act.

December 20, 2021 882 Bulletin No. 2021–51
employers that are not recovery startup
businesses, the IRS will no longer waive
failure to deposit penalties for employers
that reduce deposits in anticipation of the
employee retention credit after December
20, 2021, unless the employer is a recov-
ery startup business.
For deposits due on or before Decem-
ber 20, 2021, with respect to wages paid
on or after October 1, 2021, but before
January 1, 2022, an employer that is not
a recovery startup business will not be
subject to a penalty under section 6656 for
failing to deposit Employment Taxes for
the fourth calendar quarter of 2021 if—
1. The employer reduced its deposits in
anticipation of the employee reten-
tion credit, consistent with the rules
provided in section 3.b. of Notice
2021-24; and
2. The employer deposits the amounts
initially retained in anticipation of
the employee retention credit on
or before the relevant due date for
wages paid on December 31, 2021
(regardless of whether the employer
actually pays wages on that date).
8

Deposit due dates will vary based on
the deposit schedule of the employer;
and
3. The employer reports the tax liability
resulting from the termination of the
employer’s employee retention credit
on the applicable employment tax
return or schedule that includes the
period from October 1, 2021 through
December 31, 2021. Employers
should refer to the instructions to the
applicable employment tax return or
schedule for additional information
on how to report the tax liability.
If an employer does not qualify for
relief under this Notice, it may reply to
a notice about a penalty with an explana-
tion and the IRS will consider reasonable
cause relief pursuant to section 6656(a).
IV. EFFECT ON OTHER DOCUMENTS
Notice 2021-49 is modified as provided
in this notice. Notice 2021-24 is modified
as provided in this notice.
V. PAPERWORK REDUCTION ACT
Any collection of information associ-
ated with this notice has been submitted
to the Office of Management and Budget
for review under OMB control number
1545-0029 in accordance with the Paper-
work Reduction Act of 1995 (44 U.S.C.
3507(d)). An agency may not conduct
or sponsor and a person is not required
to respond to a collection of information
unless it displays a valid OMB control
number.
VI. DRAFTING INFORMATION
The principal authors of this notice are
Danchai Mekadenaumporn of the Office
of the Associate Chief Counsel (Employee
Benefits, Exempt Organizations, and
Employment Taxes) and Michael A.
Franklin of the Office of the Associate
Chief Counsel (Procedure and Adminis-
tration), although other Treasury Depart-
ment and IRS officials participated in its
development. For further information on
the provisions of this notice, please con-
tact Mr. Mekadenaumporn at 202-317-
6798 (not a toll-free call) or Mr. Franklin
at 202-317-6844 (not a toll-free number).

26 CFR 601.105: Examination of returns and
claims for refund, credit, or abatement; determina-
tion of correct tax liability.
(Also §§ 42, 141, 142, and 146, and 26 CFR 1.42-8,
1.42-13, and 1.150-1.)
Rev. Proc. 2021-43
SECTION 1. PURPOSE
This revenue procedure provides
safe harbors for determining whether an
exempt facility bond issue that is issued
after December 31, 2020, or an allocation
of a housing credit dollar amount that is
made after December 31, 2020, is more
than de minimis for purposes of Holdings
2 and 3 of Rev. Rul. 2021-20, page 875 this
bulletin. That ruling addresses whether the
minimum 4 percent applicable percentage
(4 percent floor) under § 42(b)(3) of the
Internal Revenue Code applies to a build-
ing.
SECTION 2. BACKGROUND
.01 Section 42(a) provides that the
amount of the low-income housing credit
for any taxable year in the credit period is
an amount equal to the applicable percent-
age of the qualified basis of each qualified
low-income building.
.02 Section 42(b) describes rules to
determine the applicable percentage.
.03 Section 42(b)(2) provides a mini-
mum credit rate of 9 percent for non-fed-
erally subsidized new buildings.
.04 Section 201(a) of the Taxpayer
Certainty and Disaster Tax Relief Act of
2020 (Act), enacted as Division EE of the
Consolidated Appropriations Act, 2021,
Public Law 116-260, 134 Stat. 1182, 3056
(December 27, 2020), amended § 42(b) by
redesignating § 42(b)(3) as § 42(b)(4) and
adding a new § 42(b)(3).
.05 Section 42(b)(3), as added by
section 201(a) of the Act, provides that
in the case of any new or existing build-
ing to which § 42(b)(2) does not apply
and which is placed in service by the
taxpayer after December 31, 2020, the
applicable percentage cannot be less than
4 percent. The amendments to § 42(b)
in section 201(a) of the Act apply to (1)
any building which receives an alloca-
tion of housing credit dollar amount after
December 31, 2020, and (2) in the case
of any building any portion of which is
financed with an obligation described in
§ 42(h)(4)(A), any such building if any
such obligation which so finances such
building is issued after December 31,
2020.
.06 Rev. Rul. 2021–20 addresses
three situations. Situation 2 of the ruling
describes a building that is financed in
part with proceeds of an exempt facil-
ity bond issue that was issued in 2020
and in part with proceeds of a different
exempt facility bond issue that is issued
in a de minimis amount in a subsequent
year. (Generally, exempt facility bonds
8
If the amounts initially retained in anticipation of the employee retention credit total $100,000 or more with or without any additional liability on that date, then the employer is subject to
the $100,000 One-Day rule of § 31.6302-1(c)(3) (also referred to as the “Next-Day Deposit Rule”).

Bulletin No. 2021–51 883 December 20, 2021
are bonds issued pursuant to § 142 of
the Code, and the interest on these bonds
is exempt from tax under § 103 of the
Code provided certain requirements are
met.) Situation 3 of the ruling describes
a building that receives an allocation of
housing credit dollar amount in 2020 and
a de minimis additional allocation in a
subsequent year.
.07 Holdings 2 and 3 of Rev. Rul. 2021–
20 provide that a de minimis amount of
exempt facility bonds issued, or a de mini-
mis allocation made, after December 31,
2020, does not cause the 4 percent floor
under § 42(b)(3) to apply to a building.
SECTION 3. SCOPE
This revenue procedure applies to
taxpayers with buildings that are eligible
for the low-income housing credit under
§ 42 and that must determine whether the
4 percent floor under § 42(b)(3) applies to
their buildings.
SECTION 4. PROCEDURE
.01 For purposes of Situation 2 of Rev.
Rul. 2021–20, an exempt facility bond
issue issued after December 31, 2020, that
finances the building in question is not de
minimis if, as of the latest issue date of any
such issue, the aggregate amount of the
post-2020 obligations is at least 10 per-
cent of the total amount of all § 42(h)(4)
(A) obligations that finance the building.
For this section 4.01, an issue is taken into
account only to the extent that it finances
the particular building in question (such
as the building described in Situation 2 of
Rev. Rul. 2021–20).
.02 For purposes of Situation 3 of
Rev. Rul. 2021–20, an allocation of
housing credit dollar amounts to a build-
ing made after December 31, 2020, is
not de minimis if the allocation is at least
10 percent of the total allocations to
the building that have been made on or
before the date of the allocation in ques-
tion. For this section 4.02, all allocations
to a building of housing credit dollar
amounts that reduce a State’s housing
credit ceiling for one or more years after
2020 are treated as one allocation that
was made to the particular building in
question on the latest date of these post-
2020 allocations.
SECTION 5. EFFECTIVE DATE
This revenue procedure applies to
buildings financed with exempt facility
bond issues that are issued after December
31, 2020, and to buildings to which alloca-
tions of housing credit dollar amounts are
made after December 31, 2020.
DRAFTING INFORMATION
The principal authors of this revenue
procedure are Dillon Taylor and Michael
Torruella Costa, Office of Associate Chief
Counsel (Passthroughs & Special Indus-
tries). For further information regarding
this revenue procedure, please contact Dil-
lon Taylor or Michael Torruella Costa
on (202) 317-4137 (not a toll-free number).
26 CFR 601.105:

Examination of returns and
claims for refund, credit or abatement; determina-
tion of correct tax liability.
(Also: Part 1, §§ 6662, 6694, 1.6662-4, 1.6694-2)
Adequate Disclosure
Revenue Procedure
Renewal
Rev. Proc. 2021-52
SECTION 1. PURPOSE
This revenue procedure updates Rev.
Proc. 2020-54, 2020-53 I.R.B. 1806, and
identifies circumstances under which the
disclosure on a taxpayer’s income tax
return with respect to an item or position
is adequate for the purpose of reducing
the understatement of income tax under
section 6662(d) of the Internal Revenue
Code (relating to the substantial under-
statement aspect of the accuracy-related
penalty), and for the purpose of avoid-
ing the tax return preparer penalty under
section 6694(a) (relating to understate-
ments due to unreasonable positions)
with respect to income tax returns. This
revenue procedure does not apply with
respect to any other penalty provisions
(including but not limited to the disre-
gard provisions of the section 6662(b)
(1) accuracy-related penalty, the section
6662(i) increased accuracy-related pen-
alty in the case of nondisclosed non-
economic substance transactions, and
the section 6662(b)(7) and (j) increased
accuracy-related penalty in the case of
undisclosed foreign financial asset under-
statements). If this revenue procedure
does not include an item or position, dis-
closure is adequate with respect to that
item or position only if made on a prop-
erly completed Form 8275 or 8275-R, as
appropriate, attached to the return for the
year or to a qualified amended return. See
Treas. Reg. § 1.6664-2(c) for information
about qualified amended returns.
This revenue procedure applies to any
income tax return filed on 2021 tax forms
for a taxable year beginning in 2021, and
to any income tax return filed in 2022 on
2021 tax forms for short taxable years
beginning in 2022.
SECTION 2. CHANGES FROM REV.
PROC. 2020-54
The background section has been
changed to state that the section 6662
penalty rate is generally 20 percent. The
addition of “generally” acknowledges that
the penalty rate is higher in some circum-
stances, although this revenue procedure
does not apply in those circumstances.
In addition, editorial changes have been
made throughout this revenue proce-
dure. Changes have been made in order
to update the taxable years to which this
revenue procedure applies. No substantive
changes have been made.
SECTION 3. BACKGROUND
.01 If section 6662 applies to any por-
tion of an underpayment of tax required
to be shown on a return, an amount gen-
erally equal to 20 percent of the portion
of the underpayment is added to the tax.
Under section 6662(b)(2), the penalty
applies to the portion of any underpay-
ment of tax that is attributable to a sub-
stantial understatement of income tax.
The penalty rate increases to 40 percent in
the case of gross valuation misstatements
under section 6662(h), nondisclosed non-
economic substance transactions under
section 6662(i), or undisclosed foreign
financial asset understatements under
section 6662(j).
.02 Generally, there is a substantial
understatement of income tax if the

December 20, 2021 884 Bulletin No. 2021–51
amount of the understatement exceeds
the greater of (i) 10 percent of the
amount of tax required to be shown on
the return for the taxable year or (ii)
$5,000. Section 6662(d)(1). Section
6662(d)(1)(C) provides a special rule
for taxpayers claiming a section 199A
deduction. In the case of any taxpayer
who claims any deduction allowed under
section 199A for the taxable year, there
is a substantial understatement of income
tax if the amount of the understatement
exceeds the greater of (i) 5 percent of
the amount of tax required to be shown
on the return for the taxable year or (ii)
$5,000. Section 6662(d)(1)(B) provides
a special rule for corporations. A cor-
poration (other than an S corporation
or a personal holding company) has a
substantial understatement of income
tax if the amount of the understatement
exceeds the lesser of (i) 10 percent of the
tax required to be shown on the return
for a taxable year (or, if greater, $10,000)
or (ii) $10,000,000. Generally, an under-
statement is the excess of the amount of
tax required to be shown on the return
for the taxable year over the amount
of the tax that is shown on the return
reduced by any rebate, where the excess
is determined without regard to items to
which the reportable transaction under-
statement penalty under section 6662A
applies. Section 6662(d)(2)(A). For pur-
poses of determining whether an under-
statement is substantial, the understate-
ment determined under the general rule
is increased by the aggregate amount of
any reportable transaction understate-
ments relating to the return. Section
6662A(e)(1)(A).
.03 In the case of an item not attribut-
able to a tax shelter, if the taxpayer has a
reasonable basis for the tax treatment of
the item, the amount of the understate-
ment is reduced by the portion of the
understatement attributable to the item
with respect to which the relevant facts
affecting the item’s tax treatment are
adequately disclosed in the return or in a
statement attached to the return. Section
6662(d)(2)(B)(ii).
.04 Section 6694(a) imposes a penalty
on a tax return preparer who prepares
a return or claim for refund reflecting
an understatement of liability due to an
“unreasonable position” if the tax return
preparer knew (or reasonably should have
known) of the position. A position (other
than a position with respect to a tax shelter
or a reportable transaction to which sec-
tion 6662A applies) is generally treated
as unreasonable unless (i) there is or was
substantial authority for the position, or
(ii) the position was properly disclosed
in accordance with section 6662(d)(2)(B)
(ii)(I) and had a reasonable basis. If the
position is with respect to a tax shelter
(as defined in section 6662(d)(2)(C)(ii))
or a reportable transaction to which sec-
tion 6662A applies, the position is treated
as unreasonable unless it is reasonable
to believe that the position would more
likely than not be sustained on the merits.
See Notice 2009-5, 2009-3 I.R.B. 309, for
interim penalty compliance rules for tax
shelter transactions.
.05 In general, this revenue proce-
dure provides guidance for determining
when disclosure by return is adequate
for purposes of section 6662(d)(2)(B)(ii)
and section 6694(a)(2)(B). For purposes
of this revenue procedure, the taxpayer
must furnish all required information in
accordance with the applicable forms
and instructions, and the money amounts
entered on these forms must be verifiable.
.06 This revenue procedure may apply
to a return for a fiscal tax year that begins
in 2021 and ends in 2022. This revenue
procedure may also apply to a short year
return for a period beginning in 2022 if
the return is to be filed before the 2022
forms are available. (Note that individu-
als are generally not put in this position.)
The most frequent situation in which a
short year arises is when filing a dece-
dent’s final return for a fractional part of a
year. In that situation, the 2022 form will
be available because the final return is
due the fifteenth day of the fourth month
following the close of the 12-month
period that began with the first day of
such fractional part of the year (mean-
ing the due date is not accelerated). See
Treas. Reg. § 1.6072-1(b). In the case of
fiscal year and short year returns, the tax-
payer must take into account any tax law
changes that are effective for tax years
beginning after December 31, 2021, even
though these changes are not reflected on
the form or instructions.
.07 This document does not take into
account the effect of tax law changes
effective for tax years beginning after
December 31, 2021. If a line referenced in
this revenue procedure is affected by such
a change and requires additional reporting,
a taxpayer may have to file Form 8275,
Disclosure Statement, or Form 8275-R,
Regulation Disclosure Statement, until the
Service prescribes criteria for complying
with the requirement.
.08 A complete and accurate disclosure
of a tax position on the appropriate year’s
Schedule UTP, Uncertain Tax Position
Statement, will be treated as if the corpo-
ration filed a Form 8275 or Form 8275-R
regarding the tax position. The filing of
a Form 8275 or Form 8275-R, however,
will not be treated as if the corporation
filed a Schedule UTP.
SECTION 4. PROCEDURE
.01 General
(1) Additional disclosure of facts rel-
evant to, or positions taken with respect
to, issues involving any of the items set
forth below is unnecessary for purposes
of reducing any understatement of income
tax under section 6662(d) (except as oth-
erwise provided in section 4.02(3) con-
cerning Schedules M-1 and M-3), pro-
vided that the forms and attachments are
completed in a clear manner and in accor-
dance with their instructions.
(2) The money amounts entered on the
forms must be verifiable, and the informa-
tion on the return must be disclosed in the
manner described below. For purposes of
this revenue procedure, a number is veri-
fiable if, on audit, the taxpayer can prove
the origin of the amount (even if that
number is not ultimately accepted by the
Service) and the taxpayer can show good
faith in entering that number on the appli-
cable form.
(3) The disclosure of an amount as
provided in section 4.02 below is not
adequate when the understatement arises
from a transaction between parties who
are related within the meaning of section
267(b). If an entry may present a legal
issue or controversy because of a relat-
ed-party transaction, then that transaction
and the relationship must be disclosed on
a Form 8275 or Form 8275-R.
(4) When the amount of an item is
shown on a line that does not have a pre-
printed description identifying that item

Bulletin No. 2021–51 885 December 20, 2021
(such as on an unnamed line under an
“Other Expense” category), the taxpayer
must clearly identify the item by including
the description on that line. For example,
to disclose a bad debt for a sole proprietor-
ship, the words “bad debt” must be written
or typed on the line of Schedule C (Form
1040 or 1040SR) that shows the amount
of the bad debt. Also, for Schedule M-3
(Form 1120), Part II, line 25, Other income
(loss) items with differences, or Part III,
line 38, Other expense/deduction items
with differences, the entry must provide
descriptive language; for example, “Cost
of non-compete agreement deductible not
capitalizable,” and the description must be
provided on an attachment. Similarly, for
other forms, if space limitations on a form
do not allow for an adequate description,
the description must be continued on an
attachment.
(5) Although a taxpayer may literally
meet the disclosure requirements of this
revenue procedure, the disclosure will
have no effect for purposes of the section
6662 accuracy-related penalty if the item
or position on the return (1) does not have
a reasonable basis as defined in Treas.
Reg. § 1.6662-3(b)(3); (2) is attributable
to a tax shelter item as defined in section
6662(d)(2)(C)(ii); or (3) is not properly
substantiated or the taxpayer failed to
keep adequate books and records with
respect to the item or position.
(6) Disclosure also will have no effect
for purposes of the section 6694(a) pen-
alty as applicable to tax return preparers if
the position is with respect to a tax shelter
(as defined in section 6662(d)(2)(C)(ii)) or
a reportable transaction to which section
6662A applies.
.02 Items
(1) Form 1040, Schedule A, Itemized
Deductions:
(a) Medical and Dental Expenses:
Complete lines 1 through 4, supplying all
required information.
(b) Taxes: Complete lines 5 through 7,
supplying all required information. Line 6
must list each type of tax and the amount
paid.
(c) Interest Expenses: Complete lines 8
through 10, supplying all required infor-
mation. This section 4.02(1)(c) does not
apply to (i) amounts disallowed under sec-
tion 163(d) unless Form 4952, Investment
Interest Expense Deduction, is completed,
or (ii) amounts disallowed under section
265.
(d) Charitable Contributions: Complete
lines 11 through 14, supplying all required
information and attaching all related forms
required pursuant to statute or regulation.
(e) Casualty and Theft Losses: Com-
plete Form 4684, Casualties and Thefts,
and attach to the return. Each item or arti-
cle for which a casualty or theft loss is
claimed must be listed on Form 4684.
(2) Certain Trade or Business Expenses
(including, for purposes of this section,
the following six expenses as they relate
to the rental of property):
(a) Casualty and Theft Losses: The
procedure outlined in section 4.02(1)(e)
must be followed.
(b) Legal Expenses: The amount
claimed must be stated. This section does
not apply, however, to amounts properly
characterized as capital expenditures, per-
sonal expenses, or non-deductible lobby-
ing or political expenditures, including
amounts that are required to be (or that
are) amortized over a period of years.
(c) Specific Bad Debt Charge-off: The
amount written off must be stated.
(d) Officers’ Compensation: Complete
Form 1125-E, Compensation of Officers,
when its instructions require completion.
You must express the “percent of time
devoted to business” as a numerical per-
centage, rather than as a non-numerical
description such as “part” or “as needed.”
This section does not apply to “excess
parachute payments,” as defined in sec-
tion 280G. This section does not apply
to the extent that remuneration paid or
incurred exceeds an applicable employ-
ee-remuneration deduction limitation
under section 162(m).
(e) Repair Expenses: The amount
claimed must be stated. This section does
not apply, however, to any amount prop-
erly characterized as capital expenditures
or personal expenses.
(f) Taxes (other than foreign taxes):
The amount claimed must be stated.
(3) Differences in book and income tax
reporting:
For Schedule M-1 and all Schedules
M-3, including those listed in (a)-(f)
below, the information provided must
reasonably apprise the Service of the
potential controversy concerning the tax
treatment of the item. If the information
provided does not so apprise the Service, a
Form 8275 or Form 8275-R must be used
to adequately disclose the item (see Part II
of the instructions for those forms).
Note: An item reported on a line with
a pre-printed description, shown on
an attached schedule or “itemized”
on Schedule M-1, may represent the
aggregate amount of several trans-
actions producing that item (i.e.,
a group of similar items, such as
amounts paid or incurred for supplies
by a taxpayer engaged in business).
In some instances, a potentially con-
troversial item may involve a portion
of the aggregate amount disclosed on
the schedule. The Service will not be
reasonably apprised of a potential con-
troversy by the aggregate amount dis-
closed. In these instances, the taxpayer
must use Form 8275 or Form 8275-R
regarding that portion of the item.
Combining unlike items, whether on
Schedule M-1 or Schedule M-3 (or on an
attachment when directed by the instruc-
tions), will not constitute an adequate dis-
closure.
Additionally, taxpayers that file the
Schedule M-3 (Form 1120), Net Income
(Loss) Reconciliation for Corporations
With Total Assets of $10 Million or More,
may be required to complete Schedule B
(Form 1120), Additional Information for
Schedule M-3 Filers. For further infor-
mation, see Who Must File in the Gen-
eral Instructions for Schedule B (Form
1120). Taxpayers that file the Schedule
M-3 (Form 1065), Net Income (Loss)
Reconciliation for Certain Partnerships,
may be required to complete Schedule C
(Form 1065), Additional Information for
Schedule M-3 Filers. For further infor-
mation, see Who Must File in the Gen-
eral Instructions for Schedule C (Form
1065). When required, these schedules
are necessary to constitute adequate dis-
closure:

December 20, 2021 886 Bulletin No. 2021–51
(a) Form 1065. Schedule M-3 (Form 1065), Net Income (Loss) Reconciliation for Certain Partnerships:
Part II (reconciliation of income (loss) items)
Column (a), Income (Loss) per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Income (Loss) per Tax Return
Part III (reconciliation of expense/deduction
items)
Column (a), Expense per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Deduction per Tax Return
(b) Form 1120. (i) Schedule M-1, Reconciliation of Income (Loss) per Books With Income per Return.
(ii) Schedule M-3 (Form 1120), Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 Million or More:
Part II (reconciliation of income (loss) items)
Column (a), Income (Loss) per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Income (Loss) per Tax Return
Part III (reconciliation of expense/deduction
items)
Column (a), Expense per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Deduction per Tax Return
(c) Form 1120-L. Schedule M-3 (Form 1120-L), Net Income (Loss) Reconciliation for U.S. Life Insurance Companies With Total
Assets of $10 Million or More:
Part II (reconciliation of income (loss) items)
Column (a), Income (Loss) per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Income (Loss) per Tax Return
Part III (reconciliation of expense/deduction
items)
Column (a), Expense per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Deduction per Tax Return
(d) Form 1120-PC. Schedule M-3 (Form 1120-PC), Net Income (Loss) Reconciliation for U.S. Property and Casualty Insurance
Companies With Total Assets of $10 Million or More:
Part II (reconciliation of income (loss) items)
Column (a), Income (Loss) per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Income (Loss) per Tax Return
Part III (reconciliation of expense/deduction
items)
Column (a), Expense per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Deduction per Tax Return

Bulletin No. 2021–51 887 December 20, 2021
(e) Form 1120-S. Schedule M-3 (Form 1120-S), Net Income (Loss) Reconciliation for S Corporations With Total Assets of $10
Million or More:
Part II (reconciliation of income (loss) items)
Column (a), Income (Loss) per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Income (Loss) per Tax Return
Part III (reconciliation of expense/deduction
items)
Column (a), Expense per Income Statement;
Column (b), Temporary Difference;
Column (c), Permanent Difference; and
Column (d), Deduction per Tax Return
(f) Form 1120-F. Schedule M-3 (Form 1120-F), Net Income (Loss) Reconciliation for Foreign Corporations With Reportable
Assets of $10 Million or More:
Part II (reconciliation of income (loss) items)
Column (b), Temporary Differences;
Column (c), Permanent Differences; and
Column (d), Other Permanent Differences for Allocations to Non-ECI and ECI
Part III (reconciliation of expense/deduction
items)
Column (b), Temporary Differences;
Column (c), Permanent Differences; and
Column (d), Other Permanent Differences for Allocations to Non-ECI and ECI
(4) Foreign Tax Items:
(a) International Boycott Transactions:
Transactions disclosed on Form 5713,
International Boycott Report; Schedule
A, International Boycott Factor (Sec-
tion 999(c)(1)); Schedule B, Specifically
Attributable Taxes and Income (Section
999(c)(2)); and Schedule C, Tax Effect
of the International Boycott Provisions,
must be completed when required by their
instructions.
(b) Treaty-Based Return Position:
Transactions and amounts under sec-
tion 61 14 or section 7701(b) as disclosed
on Form 8833, Treaty-Based Return
Position Disclosure Under Section 6114
or 7701(b), must be completed when
required by its instructions.
(5) Other:
(a) Moving Expenses: Complete Form
3903, Moving Expenses, and attach to the
return.
(b) Employee Business Expenses:
Complete Form 2106, Employee Business
Expenses (for use only by Armed Forces
reservists, qualified performing artists,
fee-basis state or local government offi-
cials, and employees with impairment-re-
lated work expenses), and attach to the
return. This section does not apply to club
dues or to travel expenses for any non-em-
ployee accompanying the taxpayer on the
trip.
(c) Fuels Credit: Complete Form 4136,
Credit for Federal Tax Paid on Fuels, and
attach to the return.
(d) Investment Credit: Complete Form
3468, Investment Credit, and attach to the
return.
SECTION 5. EFFECTIVE DATE
This revenue procedure applies to any
income tax return filed on a 2021 tax form
for a taxable year beginning in 2021 and
to any income tax return filed on a 2021
tax form in 2022 for a short taxable year
beginning in 2022.
SECTION 6. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Han Huang of the Office of
the Associate Chief Counsel (Procedure &
Administration). For further information
regarding this revenue procedure, contact
Branch 2 of Procedure and Administration
at (202) 317-6844 (not a toll free number).

26 CFR 601.105:

Examination of returns and
claims for refund, credit, or abatement; determina-
tion of correct tax liability.
(Also: Part I, §§ 301, 305, 852, 857; 1.305-1,
1.305-2)
Rev. Proc. 2021-53
SECTION 1. PURPOSE
This revenue procedure provides tem-
porary guidance regarding the treatment
of certain stock distributions by pub-
licly offered real estate investment trusts
(REITs) and publicly offered regulated
investment companies (RICs) under the
Internal Revenue Code (Code). Specifi-
cally, in recognition of the need for liquid-
ity as a result of the impacts of the Coro-
navirus Disease 2019 (COVID-19) pan-
demic, this revenue procedure, like Rev.
Proc. 2020-19, 2020-22 I.R.B. 871, modi-
fies the safe harbor provided in Rev. Proc.
2017-45, 2017-35 I.R.B. 216, by tempo-
rarily reducing the minimum required
aggregate amount of cash that distribu-
tee shareholders may receive to not less
than 10 percent of the total distribution
in order for § 301 of the Code, by reason
of § 305(b) of the Code, to apply to such
distribution. This temporary modification
is effective solely with respect to distri-
butions declared by a publicly offered
REIT or publicly offered RIC on or after
November 1, 2021, and on or before June
30, 2022.

December 20, 2021 888 Bulletin No. 2021–51
SECTION 2. BACKGROUND
.01 Rev. Proc. 2017-45 provides a safe
harbor for Publicly Offered REITs and
Publicly Offered RICs that make a distri-
bution to their shareholders with respect
to their stock to ensure that such distribu-
tions of stock pursuant to a distribution
in which each shareholder may elect to
receive up to all of the shareholder’s dis-
tribution in cash or stock of equivalent
value are treated as distributions of prop-
erty to which § 301 applies by reason of
§ 305(b). See generally Rev. Proc. 2017-
45, section 3.12 (defining Publicly Offered
REIT), section 3.13 (defining Publicly
Offered RIC), and section 5 (enumerat-
ing safe harbor requirements). Rev. Proc.
2017-45 allows a Publicly Offered REIT
or Publicly Offered RIC to eliminate C
corporation earnings and profits in order
to satisfy the REIT or RIC distribution
requirements while maintaining sufficient
liquidity. If each condition set forth in
sections 5.01 through 5.07 of Rev. Proc.
2017-45 is met, (1) the Internal Revenue
Service will treat the stock distribution as
a distribution of property under § 301 by
reason of § 305(b), and (2) the value of the
stock received by any shareholder in lieu
of cash will be considered to be equal to
the amount of cash which could have been
received instead.
.02 Section 5.03 of Rev. Proc. 2017-45
requires that the Cash Limitation Percent-
age be at least 20 percent. Section 3.05
of Rev. Proc. 2017-45 defines the Cash
Limitation Percentage as the percentage
obtained by dividing (1) the maximum
aggregate amount of cash to be distrib-
uted to all shareholders as limited by
the Publicly Offered REIT’s or Publicly
Offered RIC’s declaration of the distribu-
tion, by (2) the amount of cash that would
be distributed if each shareholder elected
to receive solely cash under their respec-
tive Cash-or-Stock Election. Section 3.06
of Rev. Proc. 2017-45 generally defines
a Cash-or-Stock Election as an election
each shareholder may make to receive up
to all of the shareholder’s entire distribu-
tion subject to the election either (1) in
cash, or (2) in stock of the distributing
corporation of equivalent value as deter-
mined under section 5.07 of Rev. Proc.
2017-45.
.03 To enable Publicly Offered REITs
and Publicly Offered RICs to conserve
capital and thereby enhance their liquidity,
Rev. Proc. 2020-19 temporarily allowed
such REITs and RICs to further limit the
amount of cash available to be distributed
to their shareholders by reducing the Cash
Limitation Percentage to 10 percent. Rev.
Proc. 2020-19 applied to distributions
declared on or after April 1, 2020, and on
or before December 31, 2020.
.04 For the same reasons, this revenue
procedure temporarily allows Publicly
Offered REITs and Publicly Offered RICs
to limit the amount of cash available to be
distributed to their shareholders by reduc-
ing the Cash Limitation Percentage to 10
percent.
SECTION 3. TEMPORARY
REDUCTION OF CASH
LIMITATION PERCENTAGE
With respect to distributions declared
by a Publicly Offered REIT or a Publicly
Offered RIC on or after November 1, 2021,
and on or before June 30, 2022, section
5.03 of Rev. Proc. 2017-45 is modified by
striking “The Cash Limitation Percentage
is not less than 20 percent” and inserting
“The Cash Limitation Percentage is not
less than 10 percent”.
SECTION 4. EFFECT ON OTHER
DOCUMENTS
This revenue procedure modifies Rev.
Proc. 2017-45 solely with respect to dis-
tributions declared by a Publicly Offered
REIT or Publicly Offered RIC on or after
November 1, 2021, and on or before June
30, 2022.
SECTION 5. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Justin O. Kellar of the Office
of Associate Chief Counsel (Corporate).
For further information regarding this rev-
enue procedure, contact Justin O. Kellar
on (202) 317-6847 (not a toll-free num-
ber).

Bulletin No. 2021–51 889 December 20, 2021
Part IV
Deletions From Cumulative
List of Organizations,
Contributions to Which are
Deductible Under Section
170 of the Code
Announcement 2021-17
The Internal Revenue Service has
revoked its determination that the organi-
zations listed below qualify as organiza-
tions described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.
Generally, the IRS will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the IRS is not pre-
cluded from disallowing a deduction for
any contributions made after an organiza-
tion ceases to qualify under section 170(c)
(2) if the organization has not timely filed
a suit for declaratory judgment under sec-
tion 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declar-
atory judgment has been timely filed,
contributions from individuals and orga-
nizations described in section 170(c)(2)
that are otherwise allowable will continue
to be deductible. Protection under sec-
tion 7428(c) would begin on December
20, 2021 and would end on the date the
court first determines the organization is
not described in section 170(c)(2) as more
particularly set for in section 7428(c)(1).
For individual contributors, the maximum
deduction protected is $1,000, with a hus-
band and wife treated as one contributor.
This benefit is not extended to any indi-
vidual, in whole or in part, for the acts or
omissions of the organization that were
the basis for revocation.
NAME OF ORGANIZATION
Effective Date of
Revocation
LOCATION
A Greener Globe1/1/2015San Francisco, CA
A Positive Progress Service Inc1/1/2016Red Springs, NC
American Medical Missionary Care Inc1/1/2014Alpharetta, GA
Arizona Bike Week Charities1/1/2014Mesa, AZ
Beam Global Initiatives1/1/2016Portsmouth, OH
Community Worship Church8/1/2012Portland, OR
Dan Hartman Foundation for Music and Arts1/1/2017Northridge, CA
Disabled American Veteran’s (AKA Chapter 2 Cactus)7/1/2015Tucson, AZ
DMC Foundation7/1/2016Richmond, CA
Father’s Rights Organization7/1/2014Toledo, OH
Friends of Fiver Foundation2/1/2017New York, NY
Kingdom Victories Outreach Ministries1/1/2016Inkster, MI
Light of the World Inc1/1/2015Unionville, CT
Michael Patrick Hollins Memorial Foundation1/1/2016MT Ephraim, NJ
Moses Hill Cemetery Inc1/1/2016Holdrege, NE
New World Sanctuary Foundation1/1/2016Ashland, OR
Nia Comprehensive Center for Developmental Disabilities Inc7/1/2013Chicago, IL
Real Pay It Forward Inc1/1/2016Clearwater, FL
Retreat and Rescue1/1/2017Saint Louis, MO
Roife-Nissenbaum Trust1/1/2016Hopkins, MN
Sigma Theta Tau International Inc7/1/2014Mayaguez, PR
Strength for the Journey Inc1/1/2015Hobe Sound, FL
Support Our Veterans Inc1/1/2014Central Village, CT
SV Festival1/1/2016Reading, PA
Teen Leadership Foundation1/1/2015Newport Beach, CA

December 20, 2021 890 Bulletin No. 2021–51
NAME OF ORGANIZATION
Effective Date of
Revocation
LOCATION
The Atlantis Educational Foundation7/1/2016Fall River, MA
Thirty Thousand Feet Booster Club3/21/2014Travis AFB, CA
Uplift Individuals in Christ1/1/2015Ft. Washington, MD
Walter’s Family Foundation1/1/2015Tamarac, FL
Washington County Hospital Inc10/1/2015Plymouth, NC
You Are Loved LLC1/1/2016Mandeville, LA
Notice of Proposed
Rulemaking
Information Reporting of
Health Insurance Coverage
and Other Issues
REG-109128-21
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
SUMMARY: This document contains
proposed regulations providing that “min-
imum essential coverage,” as that term is
used in health insurance-related tax laws,
does not include Medicaid coverage that is
limited to COVID-19 testing and diagnos-
tic services provided under the Families
First Coronavirus Response Act. The pro-
posed regulations also would provide an
automatic extension of time for providers
of minimum essential coverage (includ-
ing health insurance issuers, self-insured
employers, and government agencies) to
furnish individual statements regarding
such coverage and would provide an alter-
native method for furnishing individual
statements when the shared responsibility
payment amount is zero. Additionally, the
proposed regulations would provide an
automatic extension of time for “applica-
ble large employers” (generally employ-
ers with 50 or more full-time or full-time
equivalent employees) to furnish state-
ments relating to health insurance that the
employer offers to its full-time employ-
ees. The proposed regulations would
affect some taxpayers who claim the pre-
mium tax credit; health insurance issuers,
self-insured employers, government agen-
cies, and other persons that provide min-
imum essential coverage to individuals;
and applicable large employers.
DATES: Written or electronic comments
and requests for a public hearing must be
received by February 4, 2022. Requests
for a public hearing must be submitted
as prescribed in the “Comments and
Requests for a Public Hearing” section.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic submis-
sions via the Federal eRulemaking Portal
at www.regulations.gov (indicate IRS and
REG-109128-21) by following the online
instructions for submitting comments.
Once submitted to the Federal eRulemak-
ing Portal, comments cannot be edited or
withdrawn. The Internal Revenue Service
(IRS) expects to have limited personnel
available to process public comments that
are submitted on paper through mail. Until
further notice, any comments submitted
on paper will be considered to the extent
practicable. The Department of the Trea-
sury (Treasury Department) and the IRS
will publish for public availability any
comment submitted electronically, and
to the extent practicable, on paper, to its
public docket. Send paper submissions
to: CC:PA:LPD:PR (REG-109128-21),
Room 5203, Internal Revenue Service,
P.O. Box 7604, Ben Franklin Station,
Washington, DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, call Gerald Semasek, Office
of Associate Chief Counsel (Income Tax
and Accounting), (202) 317-7006 (not
a toll-free number); concerning submis-
sions of comments and requests for a pub-
lic hearing, call Regina Johnson at (202)
317-5177 (not a toll-free number) or send
an email to publichearings@irscounsel.
treas.gov.
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed
amendments to 26 CFR parts 1 (Income
Tax Regulations) and 301 (Procedure and
Administration Regulations) under sec-
tions 5000A, 6055, and 6056 of the Inter-
nal Revenue Code (Code).
1. Minimum Essential Coverage under
Section 5000A
Beginning in 2014, under the Patient
Protection and Affordable Care Act, Pub.
L. 111-148 ,124 Stat. 119 (2010), and the
Health Care and Education Reconciliation
Act of 2010, Pub. L. 111-152, 124 Stat.
1029 (2010) (collectively, the Affordable
Care Act or ACA), eligible individuals
who purchase coverage under a qualified
health plan through a Health Insurance
Exchange (Exchange) established under
section 1311 of the ACA may claim a pre-
mium tax credit under section 36B of the
Code. Section 36B and § 1.36B-3 of the
Income Tax Regulations provide that a
taxpayer is allowed a premium tax credit
only for months that are coverage months
for individuals in the taxpayer’s family, as
defined in § 1.36B-1(d). Under § 1.36B-
3(c)(1)(iii), a “coverage month” for an
individual includes only those months the
individual is not eligible for minimum
essential coverage other than coverage in
the individual market.

Bulletin No. 2021–51 891 December 20, 2021
Section 5000A was added to the Code
by section 1501 of the ACA. Section
5000A(f)(1) defines “minimum essen-
tial coverage” to include various types of
health plans and programs, including, for
example, specified government-sponsored
programs such as the Medicare program
under Part A of title XVIII of the Social
Security Act; the Medicaid program under
Title XIX of the Social Security Act; the
Children’s Health Insurance Program
under Title XXI of the Social Security Act
(CHIP); the TRICARE program under
chapter 55 of Title 10, United States Code
(U.S.C.); health care programs for veter-
ans and other individuals under chapter
17 or 18 of Title 38, U.S.C.; coverage for
Peace Corps volunteers under 22 U.S.C.
2504(e); coverage under the Nonappro-
priated Fund Health Benefits Program
under section 349 of Public Law 103-337;
and coverage under an eligible employ-
er-sponsored plan. Section 1.5000A-2(b)
(2) of the Income Tax Regulations lists
certain government-sponsored programs
that do not constitute minimum essential
coverage.
Section 5000A requires that individu-
als have minimum essential coverage for
each month in the taxable year, qualify for
an exemption from the minimum essential
coverage requirement, or make an individ-
ual shared responsibility payment upon
filing a federal income tax return. Section
11081 of Public Law 115-97, 131 Stat.
2054, 2092 (2017), commonly referred
to as the Tax Cuts and Jobs Act (TCJA),
reduces the individual shared responsibil-
ity payment amount to zero for months
beginning after December 31, 2018.
2. Information Reporting under Sections
6055 and 6056
Section 6055 of the Code provides that
all persons who provide minimum essen-
tial coverage to an individual must report
certain information to the IRS that iden-
tifies covered individuals and the period
of coverage. See section 6055(a) and (b).
Those persons also must furnish a state-
ment to the covered individuals contain-
ing the same information. See section
6055(c). Under section 6055(a), (c)(2),
and § 1.6055-1(f) and (g), every person
that provides minimum essential coverage
to an individual during the calendar year
is required to file with the IRS an informa-
tion return and a transmittal on or before
February 28 (March 31 if filed electroni-
cally) of the year following the calendar
year to which it relates and to furnish to
the responsible individual identified on
the return a written statement on or before
January 31 of the year following the cal-
endar year to which the statement relates.
The information returns and written state-
ments must include certain information
about the reporting entity, the name and
taxpayer identification number (TIN) of
the responsible individual, the name and
TIN of each individual covered under the
health policy, and any other information
specified in IRS instructional materials.
See § 1.6055-1(e) and (g)(4). The IRS
generally has designated Form 1094-B,
Transmittal of Health Coverage Informa-
tion Returns, and Form 1095-B, Health
Coverage, to meet the section 6055
requirements.
Section 6056 of the Code requires
an applicable large employer (ALE), as
defined in section 4980H(c) of the Code,
that is required to meet the requirements
of section 4908H to file annually informa-
tion returns and furnish written statements
in relation to the health insurance, if any,
that the employer offers to its full-time
employees. These information returns and
written statements are needed in order to
administer the employer shared responsi-
bility provisions of section 4980H.
Under section 6056(a), (c)(2), and
§ 301.6056-1(e) and (g), every ALE or
member of an aggregated group that is
determined to be an ALE (ALE member)
is required to file with the IRS an informa-
tion return and a transmittal on or before
February 28 (March 31 if filed electroni-
cally) of the year following the calendar
year to which it relates and to furnish to
full-time employees a written statement
on or before January 31 of the year fol-
lowing the calendar year to which the
statement relates. The IRS generally has
designated Form 1094-C, Transmittal
of Employer-Provided Health Insurance
Offer and Coverage Information Returns,
and Form 1095-C, Employer-Provided
Health Insurance Offer and Coverage, to
meet the section 6056 requirements.
In addition, an ALE member that offers
coverage through a self-insured health
plan must complete the reporting required
under section 6055, specifically the infor-
mation regarding each individual enrolled
in the self-insured health plan, using Form
1095-C, Part III, rather than Form 1095-
B. ALE members use Form 1095-C, Part
III, to meet the section 6055 reporting
requirement for all employees. For indi-
viduals who are not full-time employees,
ALE members report only certain infor-
mation to reflect that the Form 1095-C is
being used to complete the section 6055
reporting applicable to individuals who
are not full-time employees, but not the
section 6056 reporting applicable only to
full-time employees.
The current regulations under sections
6055 and 6056 allow the IRS to grant an
extension of time of up to 30 days to fur-
nish Forms 1095-B and 1095-C for good
cause shown. See §§ 1.6055-1(g)(4)(i)(B)
(1) and 301.6056-1(g)(1)(ii)(A). Addi-
tionally, filers of Forms 1095-B, 1094-C
and 1095-C may receive an automatic
30-day extension of time to file the forms
with the IRS by submitting Form 8809,
Application for Extension of Time to File
Information Returns, on or before the due
date for filing the forms. See §§ 1.6081-1
and 1.6081-8.
3. Information Reporting Penalties under
Sections 6721 and 6722
Section 6721 imposes a penalty for
failing to timely file an information return
or for filing an incorrect or incomplete
information return. Section 6722 imposes
a penalty for failing to timely furnish an
information statement or furnishing an
incorrect or incomplete information state-
ment. The section 6721 and 6722 penalties
are imposed with regard to information
returns and statements listed in section
6724(d), which include those required
by sections 6055 and 6056. Section 6724
provides that no penalty will be imposed
under section 6721 or 6722 with respect to
any failure if it is shown that the failure is
due to reasonable cause and not to willful
neglect.
The preambles to the section 6055
and 6056 regulations provided that the
IRS would not impose section 6721 and
6722 penalties on reporting entities for
the reporting of 2015 health coverage and
offers of coverage if those entities could
show that they made good faith efforts

December 20, 2021 892 Bulletin No. 2021–51
to comply with the information report-
ing requirements (transitional good faith
relief). See T.D. 9660, 79 FR 13220 at
13226 (Mar. 10, 2014); T.D. 9661, 79 FR
13231 at 13246 (Mar. 10, 2014). The tran-
sitional good faith relief covered incor-
rect or incomplete information, including
TINs or dates of birth, reported on infor-
mation returns or statements. The relief
did not apply to a failure to timely file or
furnish a return or statement, or when the
filer failed to make a good faith effort to
comply with the reporting requirements.
The preambles to the section 6055 and
6056 regulations also stated that report-
ing entities failing to meet the reporting
requirements of the regulations may have
been eligible for penalty relief if the IRS
determined the standards for reasonable
cause under section 6724 were satisfied.
The Treasury Department and the IRS reit-
erated the transitional good faith relief in
Notice 2015-68, 2015-41 I.R.B. 547 (Oct.
13, 2015), and Notice 2015-87, 2015-52
I.R.B. 889 (Dec. 28, 2015).
Explanation of Provisions
1. Medicaid Coverage of COVID-19
Testing and Diagnostic Services under
Section 5000A
Notice 2020-66, 2020-40 I.R.B. 785
(Sept. 28, 2020), provides that Medic-
aid coverage that is limited to COVID-
19 testing and diagnostic services under
section 6004(a)(3) of the Families First
Coronavirus Response Act, Pub. L. 116-
127, 134 Stat. 178 (Mar. 18, 2020) is not
minimum essential coverage under a gov-
ernment-sponsored program. As a conse-
quence, an individual’s eligibility for such
coverage for one or more months does not
prevent those months from qualifying as
coverage months for purposes of deter-
mining eligibility for the premium tax
credit under section 36B. Notice 2020-66
applies to taxable years beginning in or
after 2020.
Notice 2020-66 further indicates that
the Treasury Department and the IRS
intend to amend § 1.5000A-2 to provide
guidance respecting Medicaid coverage
for COVID-19 testing and diagnostic ser-
vices. Accordingly, these proposed regu-
lations propose to amend § 1.5000A-2 by
adding Medicaid coverage for COVID-
19 testing and diagnostic services to the
enumerated health coverages under §
1.5000A-2(b)(2) that do not qualify as
minimum essential coverage under a gov-
ernment-sponsored program.
Notice 2020-66 provides that taxpay-
ers, including ALEs, may continue to rely
on the guidance described in Notice 2020-
66 if no proposed regulations or other
guidance are released within 18 months
after September 28, 2020, which is the
date that Notice 2020-66 was published in
the Internal Revenue Bulletin.
2. Time and Manner for Furnishing
Statements under Sections 6055 and 6056
Through a series of notices, the Trea-
sury Department and the IRS extended
the due dates for furnishing statements to
individuals under sections 6055 and 6056
for years 2015 through 2019. See Notice
2016-04, 2016-3 I.R.B. 279 (Jan. 19,
2016); Notice 2016-70, 2016-49 I.R.B. 784
(Dec. 5, 2016); Notice 2018-06, 2018-3
I.R.B. 300 (Jan. 16, 2018); Notice 2018-
94, 2018-51 I.R.B. 1042 (Dec. 17, 2018);
and Notice 2019-63, 2019-51 I.R.B. 1390
(Dec. 16, 2019). Those notices extended
the due date for furnishing Forms 1095-B
and 1095-C by 30 days (or the next busi-
ness day if the 30th day fell on a Saturday,
Sunday or legal holiday), except that for
2015 information statements, the furnish-
ing due date was extended by 60 days.
In addition to extending the due dates
for furnishing statements, Notices 2018-
94 and 2019-63 stated that, as a result of
the TCJA’s reduction of the shared respon-
sibility payment amount under section
5000A(c) to zero for months beginning
after December 31, 2018, the Treasury
Department and the IRS were studying
how the reporting requirements under sec-
tion 6055 should change, if at all, for future
years. Notice 2019-63 also requested
comments on whether an extension of the
due date for furnishing statements to indi-
viduals pursuant to section 6056 would be
necessary for future years, and whether
the reporting requirements under section
6055 should change for future years. Only
one comment was received.
Notice 2020-76, 2020-47 I.R.B. 1058
(Nov. 16, 2020) provided an automatic
extension of time for reporting entities
to furnish 2020 information statements
(Forms 1095-B and 1095-C) to individ-
uals from January 31, 2021, to March
2, 2021. The notice stated that the Trea-
sury Department and the IRS determined
that a substantial number of employers,
insurers, and other providers of mini-
mum essential coverage needed additional
time beyond January 31, 2021, to gather
and analyze the information necessary to
prepare and issue the Forms 1095-B and
1095-C. Notice 2020-76 also provided
that because of the grant of the automatic
extension to March 2, 2021, for furnishing
Forms 1095-B and 1095-C, §§ 1.6055-
1(g)(4)(i)(B)(1) and 301.6056-1(g)(1)(ii)
(A) (allowing the IRS to grant an exten-
sion of time of up to 30 days to furnish
Forms 1095-B and 1095-C) would not
apply. The notice did not extend the due
dates for filing 2020 Forms 1095-B, 1094-
C, or 1095-C with the IRS. The provisions
of §§ 1.6081-1 and 1.6081-8 (allowing
an automatic extension of time for filing
information returns by submission of a
Form 8809 before the due date) were not
affected by Notice 2020-76.
The Treasury Department and the
IRS received 119 public comments in
response to Notice 2020-76. The com-
menters included health insurance pro-
viders, employers, associations, govern-
mental agencies, payroll processors, and
others. Nearly all commenters generally
supported an extension of the due date for
furnishing Forms 1095-B and 1095-C to
responsible individuals and employees.
The commenters generally indicated that
the current January 31 deadline to furnish
Forms 1095-B and 1095-C to responsible
individuals and employees, under section
6055(c)(2) and 6056(c)(2), and §§ 1.6055-
1(g)(4)(i)(A) and 1.6056-1(g)(1)(i), is dif-
ficult to meet.
Commenters noted that the process by
which reporting entities compile accurate
health coverage offer and enrollment infor-
mation is complex and often takes more
time than the current January 31 deadline
allows. Employers are required to compile
offer and enrollment information for large
numbers of employees, sometimes from
multiple systems, verify the accuracy of
the information, and transmit the informa-
tion to vendors so that the statements can
be timely issued to individuals. Comment-
ers further indicated that, while health
coverage information is tracked through-

Bulletin No. 2021–51 893 December 20, 2021
out the year, accurate reporting on Forms
1095-B and 1095-C includes data and
information from the month of December,
which necessarily requires employers to
spend substantial time after the close of
the year compiling and verifying data. A
number of commenters stated that the data
and information necessary to prepare the
forms is not available until mid-January
and that the period required to prepare and
mail the large numbers of forms can take
from three to seven weeks.
Commenters also pointed out that the
January 31 deadline for furnishing Forms
1095-B and 1095-C to individuals may
make it difficult for employers to make
changes to their benefit plans near the
end of the calendar year. Commenters
further noted that the January 31 dead-
line coincides with the due dates of other
government forms, including Form W-2,
Form 1099-NEC, Form 941 for the fourth
quarter, and annual Forms 940 and 945.
One commenter wrote that the substan-
tial time necessary to complete Forms
1095-B and 1095-C is attributable to the
fact that the information required depends
upon detailed employer and employee
activities. The commenter stated that, in
some cases, employers must undertake a
day-by-day or person-by-person assess-
ment, which may lead to varied individual
results in the codes that are required to be
entered on the forms. These factors, the
commenter noted, make the Forms 1095-B
and 1095-C meaningfully distinguishable
from other information returns on which
aggregate dollar amounts are reported for
the year – for example, Form W-2 – with-
out regard to day-by-day activity.
Some of the commenters indicated that,
if a more permanent automatic extension
of the January 31 furnishing deadline is
not provided for future reporting, entities
will annually request additional time to
produce and mail accurate Forms 1095-B
and 1095-C pursuant to the current exten-
sion procedures. The result would be that
the IRS would need to process a signifi-
cant number of extension requests each
year.
a. Extension of Deadline for Furnishing
Statements under Section 6055
To reduce administrative burdens for
reporting entities and the IRS, the Trea-
sury Department and the IRS have deter-
mined that the furnishing requirements
under § 1.6055-1(g) should be modified
by providing an automatic extension of
time for reporting entities to furnish state-
ments to responsible individuals. This
proposed amendment to the regulations
under section 6055 is consistent with
Notice 2020-76.
Under these proposed regulations,
§ 1.6055-1(g)(4)(i) is proposed to be
amended to provide that reporting enti-
ties are granted an automatic extension of
time, not to exceed 30 days, in which to
furnish the written statements required by
§ 1.6055-1(g). Because this extension is
automatic, the proposed regulations elimi-
nate the requirement in § 1.6055-1(g)(4)(i)
(B)(1) that a reporting entity make a writ-
ten application to the IRS showing good
cause to request an extension of time to
furnish the statement. Under this proposed
amendment to the regulations, statements
(Forms 1095-B) furnished to responsible
individuals will be timely if furnished no
later than 30 days after January 31 of the
calendar year following the calendar year
in which minimum essential coverage is
provided. If the extended furnishing date
falls on a weekend day or legal holiday,
statements will be timely if furnished on
the next business day. See section 7503.
The automatic 30-day extension would
replace both the 30-day extension for
good cause in § 1.6055-1(g)(4)(i)(B)(1)
and the authorization for the Commis-
sioner to provide automatic extensions in
§ 1.6055-1(g)(4)(i)(B)(2).
b. Alternative Manner of Furnishing
Statements under Section 6055
Notice 2020-76 indicates that, because
the TCJA reduced the individual shared
responsibility payment amount to zero
for 2020, responsible individuals do not
need the information on Form 1095-B to
prepare and file their individual returns.
Nonetheless, reporting entities required
to furnish Forms 1095-B must expend
resources to do so. In light of those fac-
tors, the Treasury Department and the IRS
determined that relief from the penalty
under section 6722 for failing to furnish
a statement (Form 1095-B) required under
section 6055 for 2020 was in the inter-
est of sound tax administration in certain
cases. Thus, Notice 2020-76 provided that
the IRS would not assess a section 6722
penalty against a reporting entity for fail-
ing to furnish Form 1095-B to responsible
individuals for 2020 in cases when two
conditions were met (2020 section 6055
furnishing relief). First, a reporting entity
was required to post a notice prominently
on its website stating that responsible indi-
viduals may receive a copy of their 2020
Form 1095-B upon request, accompanied
by an email address and a physical address
to which a request may be sent, along
with a telephone number that responsible
individuals may use to contact the report-
ing entity with any questions. Second, a
reporting entity was required to provide a
2020 Form 1095-B to a responsible indi-
vidual upon request within 30 days of the
date the request was received. A report-
ing entity could furnish the statements to
responsible individuals electronically if
the requirements of § 1.6055-2 were sat-
isfied.
Because of the combined reporting
by ALE members under sections 6055
and 6056 on Form 1095-C for full-time
employees of ALE members enrolled in
self-insured health plans, the 2020 section
6055 furnishing relief was not extended to
the requirement to furnish Forms 1095-C
to full-time employees. The 2020 section
6055 furnishing relief, however, applied
to penalty assessments related to the
requirement to furnish Form 1095-C to
a part-time employee enrolled in an ALE
member’s self-insured plan for any month
in 2020, subject to the two requirements
of the 2020 section 6055 furnishing relief.
Finally, the 2020 section 6055 furnishing
relief did not extend to the assessment
of penalties relating to failures to file the
2020 Forms 1094-B or 1095-B or the
Forms 1094-C or 1095-C, as applicable,
with the IRS.
In response to Notice 2020-76, a num-
ber of health plan providers, governmental
agencies, and associations requested that
the 2020 section 6055 furnishing relief
be made permanent or extended at least
for the time periods when the individual
shared responsibility payment amount is
zero. These commenters echoed the con-
siderations identified in Notice 2020-76
supporting the 2020 section 6055 furnish-
ing relief. Namely, commenters pointed to
the high costs associated with producing

December 20, 2021 894 Bulletin No. 2021–51
and mailing Forms 1095-B although indi-
viduals have no need for the information
on the Form 1095-B to correctly compute
federal tax liability and timely file returns.
Commenters cited additional produc-
tion and/or mailing costs ranging from
a half million to more than four million
dollars annually without the relief. One
state agency reported receiving only 478
requests for Form 1095-B from approxi-
mately one million Medicaid recipients
for 2019. Other commenters indicated
that a small number of individuals need
proof of minimum essential coverage
to satisfy certain state requirements, but
that very few individuals have otherwise
requested the Form 1095-B. Some com-
menters pointed out that taxpayers may be
confused by the receipt of Forms 1095-B.
In light of the public comments
received, § 1.6055-1(g)(4) is proposed to
be amended by adding new paragraph (g)
(4)(ii)(B) to provide an alternative man-
ner for a reporting entity to timely furnish
statements. Under this alternative manner
of furnishing, the reporting entity must
post a clear and conspicuous notice on
the entity’s website stating that respon-
sible individuals may receive a copy of
their statement upon request. The notice
must include an email address, a physical
address to which a request may be sent,
and a telephone number that responsible
individuals may use to contact a reporting
entity with any questions. This alterna-
tive manner of furnishing will apply only
to taxable years when the shared respon-
sibility payment amount under section
5000A(b) is zero.
One commenter requested that, if the
2020 section 6055 furnishing relief is
extended, a self-insured ALE member
should continue to be permitted to use the
relief for employees who are enrolled in
the ALE’s self-insured plan and who are
not full-time employees of the ALE. The
commenter also requested that the pro-
posed regulations allow a self-insured
ALE member to use the 2020 section 6055
furnishing relief for non-employees, such
as former employees of the ALE, who
are enrolled in the self-insured plan. The
proposed regulations adopt both requests
in the rules for the alternative method of
furnishing. However, consistent with the
guidance in Notice 2020-76, the proposed
regulations do not allow ALE members to
use the alternative method of furnishing
for full-time employees who are enrolled
in the self-insured plan.
The proposed regulations also address
a suggestion of a commenter to Notice
2020-76 who requested that future guid-
ance specify the time period a reporting
entity is required to retain the notice on
its website and also explain how prom-
inent the notice must be. The provisions
of proposed § 1.6055-1(g)(4)(ii)(B) pro-
vide that a reporting entity satisfies the
furnishing requirements under § 1.6055-
1(g)(4) by retaining the website notice
until October 15 of the year following
the calendar year to which the statement
relates. Additionally, the proposed regu-
lations clarify the requirement in Notice
2020-76 that a reporting entity include a
prominently posted notice on its website.
Under the proposal, a reporting entity
must include a clear and conspicuous
notice on the reporting entity’s website
that is reasonably accessible by individ-
uals who may search the entity’s web-
site for tax information. A notice posted
on a reporting entity’s website will sat-
isfy the requirement under proposed §
1.6055-1(g)(4)(ii)(B) if written in plain,
non-technical terms and with letters of
a font size large enough (including any
visual clues or graphical figures) to call
to a viewer’s attention that the informa-
tion pertains to tax statements reporting
that individuals had health coverage. For
example, a reporting entity’s website that
includes a statement on the main page,
or a link on the main page, reading “Tax
Information,” to a secondary page that
includes a statement, in capital letters,
“IMPORTANT HEALTH COVERAGE
TAX DOCUMENTS;” explains how
responsible individuals may request a
copy of Form 1095-B, Health Coverage,
or Form 1095-C, Employer-Provided
Health Insurance Offer and Coverage,
as applicable; and includes the reporting
entity’s email address, mailing address,
and telephone number, is a clear and
conspicuous notice under these proposed
regulations.
One commenter requested that the
2020 section 6055 furnishing relief be
modified to allow a reporting entity to
satisfy the furnishing requirement under
§ 1.6055-1(g) by including only a link to
a member portal through which respon-
sible individuals may receive a copy of
the Form 1095-B via electronic down-
load. The commenter stated that because
responsible individuals will have located
and navigated the website of a reporting
entity to locate the entity’s address and
other contact information, the website
notice informing individuals of the abil-
ity to request a Form 1095-B should not
have to also include contact information.
The commenter noted that the process
under which responsible individuals will
send written requests or call customer ser-
vice representatives of reporting entities
to request Forms 1095-B will take time
and add costs to providing health care.
Under the commenter’s proposal, report-
ing entities that do not provide a member
portal for individuals to download and
receive the Form 1095-B will be required
to include a website notice with an email
address, physical address, and telephone
number for individuals to call to request
the form, consistent with the first condi-
tion of the 2020 section 6055 furnishing
relief.
The requirement in these proposed
regulations that a reporting entity include
its email address, mailing address, and
telephone number on a website notice
informing individuals of the ability to
request a Form 1095-B is consistent with
other information reporting provisions.
See, for example, § 1.6050S-1(c)(1)(iii)
(G) (an educational institution or insurer
issuing Form 1098-T, Tuition Statement,
is required to include contact informa-
tion on statement). A responsible indi-
vidual may have questions about how to
request a copy of the statement required
under § 1.6055-1(g) for the taxable year
or may have questions about some of the
information on the statement. The pro-
posed rule requiring the reporting entity’s
contact information on a posted website
notice fulfills that need for responsible
individuals. Accordingly, the comment
recommending that a reporting entity may
provide only website access to a member
portal (and capability to electronically
download Form 1095-B) without the
reporting entity’s contact information is
not adopted.
If, in the future, the shared respon-
sibility payment amount under sec-
tion 5000A(b) is not zero, the Treasury
Department and the IRS anticipate that

Bulletin No. 2021–51 895 December 20, 2021
reporting entities will need adequate
time to develop or restart processes for
preparing and mailing paper statements
to responsible individuals. If the shared
responsibility payment amount is mod-
ified in the future, the Treasury Depart-
ment and the IRS anticipate providing
guidance, if necessary, to allow sufficient
time for reporting entities to restart the
reporting process.
c. Extension of Deadline for Furnishing
Statements under Section 6056
For the reasons discussed in section
2 of the Explanation of Provisions, the
Treasury Department and the IRS have
determined that, to reduce administra-
tive burdens for ALE members and the
IRS, the furnishing requirements under §
301.6056-1(g)(1) should be modified by
providing an automatic extension of time
for ALE members to furnish written state-
ments to full-time employees. This pro-
posed amendment to the regulations under
section 6056 is consistent with Notice
2020-76.
Under these proposed regulations,
§ 301.6056-1(g)(1) is proposed to be
amended to provide that ALE members
are granted an automatic extension of
time, not to exceed 30 days, in which to
furnish the written statements to full-time
employees. Because the extension is auto-
matic, the proposed regulations eliminate
the requirement in § 301.6056-1(g)(1)(ii)
(A) that an ALE member make a written
application to the IRS showing good cause
or to otherwise request an extension of
time to furnish the statement. Under this
proposed amendment to the regulations,
statements (Forms 1095-C) furnished to
full-time employees will be timely if fur-
nished no later than 30 days after January
31 of the calendar year in accordance with
applicable Internal Revenue Service pro-
cedures and instructions. If the extended
furnishing date falls on a weekend day or
legal holiday, statements will be timely
furnished if provided on the next busi-
ness day. See section 7503. The automatic
30-day extension would replace both the
30-day extension for good cause in §
301.6056-1(g)(1)(ii)(A) and the authori-
zation for the Commissioner to provide
automatic extensions in § 301.6056-1(g)
(1)(ii)(B).
3. Elimination of Transitional Good Faith
Relief
As noted in the Background section of
this preamble, the preambles to the reg-
ulations under sections 6055 and 6056
provided that the IRS would grant tran-
sitional good faith relief by not imposing
penalties under sections 6721 and 6722
on reporting entities for the reporting of
2015 health coverage and offers of cover-
age if those entities could show that they
made good faith efforts to comply with
the information reporting requirements.
See T.D. 9660; T.D. 9661. The Treasury
Department and the IRS extended that
transitional good faith relief for years
2015 through 2019 in the series of notices
that extended the due dates for the require-
ments for furnishing statements to indi-
viduals under sections 6055 and 6056 for
those years. See Notice 2016-04; Notice
2016-70; Notice 2018-06; Notice 2018-
94; Notice 2019-63; and Notice 2020-76.
In Notice 2020-76, the Treasury Depart-
ment and the IRS stated that 2020 was the
last year that transitional good faith relief
would be provided. Thus, the transitional
good faith relief from penalties under sec-
tions 6721 and 6722 for the reporting of
incorrect or incomplete information on
information returns or statements is not
available for reporting for tax year 2021
and subsequent years.
This good faith relief was intended to be
transitional to accommodate public con-
cerns with implementing the then newly
enacted reporting requirements under the
ACA. These reporting requirements have
now been in place for six years, and tran-
sitional relief is no longer appropriate.
Some commenters requested that the relief
be extended due to continued difficulty in
understanding the reporting requirements,
periodic changes to the ACA, and the
uncertainty related to the COVID-19 pan-
demic. Although the Treasury Department
and the IRS are sympathetic to those con-
cerns, additional good faith relief is not
necessary to address them. The reason-
able cause exception under section 6724
already provides adequate relief from
penalties under sections 6721 and 6722
for filers who have reasonable cause for
failing to timely or accurately complete
their reporting requirements. Therefore,
the Treasury Department and the IRS will
discontinue the transitional good faith
relief after tax year 2020.
4. Renewed Comment Request on the
Section 6055 2016 Proposed Regulations
In Notice 2015-68, the Treasury
Department and the IRS announced that
they intended to propose regulations
under section 6055 that would: (1) pro-
vide that health insurance issuers must
report coverage in a catastrophic plan; (2)
allow filers reporting on insured group
health plans to use a truncated TIN to
identify the employer on the statement
furnished to a taxpayer; and (3) specify
when a provider of minimum essential
coverage is not required to report duplica-
tive or supplemental coverage. The notice
also invited comments on issues relat-
ing to TIN solicitation and provided that
until the issuance of additional guidance,
reporting entities would not be subject
to penalties for failure to report a TIN if
they met certain requirements. Finally, the
notice advised that governments of United
States possessions or territories are not
required to report coverage under Med-
icaid and the Children’s Health Insurance
Program (CHIP) and that a state govern-
ment agency sponsoring coverage under
the Basic Health Program is required to
report that coverage.
On August 2, 2016, the Treasury
Department and the IRS published a
notice of proposed rulemaking (REG-
103058-16) in the Federal Register (81
FR 50671) (2016 proposed regulations).
Consistent with Notice 2015-68, the 2016
proposed regulations proposed to address
catastrophic health coverage, truncated
TINs, and duplicative or supplemental
coverage. With regard to TIN solicitations,
the 2016 proposed regulations incorpo-
rated the penalty relief in Notice 2015-68,
with certain revisions to the requirements
in response to comments. The 2016 pro-
posed regulations also proposed to incor-
porate the guidance in Notice 2015-68
related to United States possessions or ter-
ritories and reporting regarding the Basic
Health Program. The 2016 proposed regu-
lations provided that, until the regulations
were finalized, reporting entities could
rely on the guidance in Notice 2015-68. In
addition, any issuer that voluntarily files
returns or furnishes statements on cata-

December 20, 2021 896 Bulletin No. 2021–51
strophic coverage before final regulations
are issued will not be subject to penalties
for those returns or statements. See Notice
2017-41, 2017-34 I.R.B. 211 (Aug. 21,
2017).
The Treasury Department and the IRS
received 16 comments on the 2016 pro-
posed regulations but have not issued a
Treasury Decision finalizing the 2016 pro-
posed regulations. No public hearing was
requested or held. The Treasury Depart-
ment and the IRS are renewing their
request for comments on all aspects of the
2016 proposed regulations and, after con-
sidering the comments received, intend
to finalize the 2016 proposed regulations
as part of any Treasury Decision finaliz-
ing these proposed regulations. Written or
electronic comments must be received by
February 4, 2022.
Statement of Availability of IRS
Documents
IRS revenue procedures, revenue rul-
ings, notices, and other guidance cited in
this preamble are published in the Internal
Revenue Bulletin and are available from
the Superintendent of Documents, U.S.
Government Publishing Office, Wash-
ington, DC 20402, or by visiting the IRS
website at http://www.irs.gov.
Proposed Applicability Date
The regulations under § 1.5000A-
2, once final, are proposed to apply for
months beginning after September 28,
2020. For months beginning on or after
January 1, 2020, and before September
28, 2020, taxpayers may continue to rely
on Notice 2020-66. Taxpayers may rely
on § 1.5000A-2 of these proposed regu-
lations for months beginning after Sep-
tember 28, 2020, and before the date a
Treasury Decision finalizing these regu-
lations is published in the Federal Reg-
ister. The regulations under §§ 1.6055-1
and 301.6056-1, once final, are proposed
to apply for calendar years beginning after
December 31, 2021. Taxpayers may rely
on §§ 1.6055-1 and 301.6056-1 of these
proposed regulations for calendar years
beginning after December 31, 2020, and
before the date a Treasury Decision final-
izing the regulations is published in the
Federal Register. See the 2016 proposed
regulations for the proposed applicability
dates of those proposed rules.
Special Analyses
I. Regulatory Planning and Review –
Economic Analysis
These proposed regulations are not
subject to review under section 6(b) of
Executive Order 12866 pursuant to the
Memorandum of Agreement (April 11,
2018) between the Treasury Department
and the Office of Management and Bud-
get (OMB) regarding review of tax regu-
lations.
II. Paperwork Reduction Act
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless it dis-
plays a valid control number assigned by
OMB.
There is no collection of information
contained in these proposed regulations.
The collections of information contained
in §§ 1.6055-1 and 301.6056-1 were pre-
viously reviewed and approved by OMB
in accordance with the Paperwork Reduc-
tion Act of 1995 (44 U.S.C. 3507(d)) and
are associated with control numbers 1545-
2251 (associated with Form 1095-C) and
1545-2252 (associated with Form 1095-
B).
The Paperwork Reduction Act (44
U.S.C. 3501-3520) relates to information
collection requests by any government
agency. A collection of information gen-
erally means the “obtaining, causing to
be obtained, soliciting, or requiring the
disclosure to third parties or the public,
of facts or opinions by or for an agency,
regardless of form or format, calling for
either (1) answers to identical questions
posted to, or identical reporting or record-
keeping requirements imposed on ten or
more persons, other than agencies, instru-
mentalities, or employees of the United
States, or (2) answers to questions posed
to agencies, instrumentalities, or employ-
ees of the United States which are to be
used for general statistical purposes.” 44
U.S.C. 3502(3). A collection of informa-
tion is commonly referred to as a report-
ing, recordkeeping, or disclosure require-
ment.
These proposed regulations do not
require a reporting entity to provide any
information to the Federal government, to
maintain specific records, or to disclose
any additional information that the report-
ing entity did not already have a require-
ment to disclose.
III. Initial Regulatory Flexibility Analysis
When an agency issues a proposed
rulemaking, the Regulatory Flexibility
Act (5 U.S.C. chapter 6) (Act) requires
the agency to “prepare and make avail-
able for public comment an initial
regulatory flexibility analysis” that
“describe[s] the impact of the proposed
rule on small entities.” 5 U.S.C. 603(a).
The term “small entities” is defined in
5 U.S.C. 601 to mean “small business,”
“small organization,” and “small gov-
ernmental jurisdiction,” which are also
defined in 5 U.S.C. 601. Small business
size standards define whether a business
is “small” and have been established for
types of economic activities, or indus-
try, generally under the North American
Industry Classification System (NAICS).
See Title 13, Part 121 of the Code of Fed-
eral Regulations (titled “Small Business
Size Regulations”). The size standards
look at various factors, including annual
receipts, number of employees, and
amount of assets, to determine whether
the business is small. See Title 13, Part
121.201 of the Code of Federal Regula-
tions for the Small Business Size Stan-
dards by NAICS Industry.
Section 605 of the Act provides an
exception to the requirement to prepare
an initial regulatory flexibility analysis
if the agency certifies that the proposed
rulemaking will not have a significant
economic impact on a substantial number
of small entities.
The Treasury Department and the IRS
conclude that, although the overall impact
of these proposed regulations will sub-
stantially reduce the burden on small enti-
ties, these proposed regulations, if final-
ized, will impact a substantial number of
small entities and the economic impact
on those small entities will be significant.
As a result, although the impact of these
regulations is positive for small entities,
an initial regulatory flexibility analysis is
required.

Bulletin No. 2021–51 897 December 20, 2021
Description of the reasons why the
agency action is being considered.
The proposed regulations under §
1.5000A-2 propose to make permanent
the guidance in Notice 2020-66 regard-
ing whether certain Medicaid coverage
of COVID-19 testing and diagnostic ser-
vices is minimum essential coverage. The
proposed regulations under §§ 1.6055-1
and 301.6056-1 propose to make per-
manent the extension of time to furnish
Forms 1095-B and 1095-C to responsible
individuals and employees that has been
provided every year since 2015. The pro-
posed regulations under § 1.6055-1 also
allow reporting entities to furnish the
statement required by section 6055 by
providing notice on their website and by
providing the statement to the responsible
individual upon request.
The proposed regulations under §
1.5000A-2 will ensure that taxpayers
have accurate guidance when determin-
ing whether they have minimum essen-
tial coverage, which in turn will assist
taxpayers in determining whether they
qualify for the premium tax credit. The
proposed regulations under §§ 1.6055-1
and 301.6056-1 will reduce the burden
on reporting entities by extending the
time to satisfy their reporting obligations
with regard to health care coverage with-
out worrying whether the penalty under
section 6722 will be imposed. The exten-
sion should result in increased timely and
accurate reporting. Those proposed regu-
lations also reduce the burden on report-
ing entities by providing a low-cost option
to satisfy the reporting obligation under
section 6055 at a time when responsible
individuals do not need the information to
complete their returns.
Statement of the objectives of, and the
legal basis for, the proposed rule.
The principal objectives of the pro-
posed regulations are to provide tax-
payers with definitive guidance of what
constitutes, or does not constitute,
minimum essential coverage, to pro-
vide reporting entities with a sufficient
amount of time to complete and furnish
accurate statements to responsible indi-
viduals and full-time employees, and
to offer reporting entities under section
6055 a minimally burdensome option by
which to furnish the required statement.
The legal basis for defining minimum
essential coverage is section 5000A(f)
(1)(E), which provides the Secretary of
the Treasury or her delegate (Secretary)
with the authority to determine what
types of health coverage constitute mini-
mum essential coverage. The legal basis
for the extended due date was originally
set forth in the series of notices refer-
enced in the Explanation of Provisions
section above, under which the Trea-
sury Department and the IRS extended
the dates for furnishing statements to
responsible individuals and full-time
employees, providing that taxpayers that
satisfy the furnishing requirement by the
extended due date will not be subject to
penalties under sections 6721 and 6722.
Section 6724(a) provides that no pen-
alty is imposed under section 6721 or
6722 if it is shown that the failure is due
to reasonable cause and not to willful
neglect. Section 7803(a)(2)(A) gives the
Commissioner the power to administer,
manage, conduct, direct, and supervise
the execution and application of inter-
nal revenue laws. That same legal basis
applies for these proposed regulations.
Additionally, §§ 1.6055-1(g)(4)(i)(B)
and 301.6056-1(g)(1)(ii) provide the
Secretary with the authority to provide
extensions of time to furnish statements
under sections 6055 and 6056. Regard-
ing the form of the statement to be
furnished, sections 6055(b)(1)(A) and
6056(b)(1) provide the Secretary with
the authority to prescribe the form of the
return that is the basis for the furnishing
requirements in sections 6055(c) and
6056(c).
Description and estimate (where feasi-
ble) of the number of small entities subject
to the proposed rule.
The proposed regulations apply to
health insurance issuers, self-insured
employers, government agencies, and
other providers of minimum essential
coverage required to furnish individual
statements regarding such coverage under
section 6055 and ALE members that are
required to furnish information relating to
health insurance that the ALE offers to its
full-time employees under section 6056.
An estimate of the number of small enti-
ties subject to the proposed regulations is
not feasible because a correlation between
small taxpayers and this type of reporting
cannot be made. The proposed regulations
affect all industries. Taxpayers using any
NAICS code could be subject to the pro-
posed regulations.
Description of the projected reporting,
recordkeeping, and related requirements
of the proposed rule, including an esti-
mate of the classes of small entities that
will be subject to the requirements and the
type of professional skills necessary for
preparation of the report or record.
As discussed in the Paperwork Reduc-
tion Act section above, these proposed
regulations do not impose any reporting,
recordkeeping, or similar requirements on
any small entities.
Identification, to the extent practica-
ble, of all relevant Federal rules that may
duplicate, overlap, or conflict with the
proposed rule.
The proposed regulations do not dupli-
cate, overlap, or conflict with any Federal
statutes or other rules.
Description of any significant alterna-
tives to the proposed rule that accomplish
the stated objectives of applicable statutes
and minimize any significant economic
impact on small entities.
The Treasury Department and the IRS
have determined that, without a legislative
change, there are no viable alternatives to
the provisions in the proposed regulations
that would enable reporting entities to
continue to satisfy their reporting obliga-
tions with a lesser burden.
Accordingly, the Treasury Department
and the IRS conclude that the provisions
of the proposed regulations will most
effectively promote sound tax adminis-
tration. The revisions to the definition of
what is not minimum essential coverage
in § 1.5000A-2 will provide concrete
advice to ensure that taxpayers can ade-
quately determine whether they have min-
imum essential coverage. An automatic
extension of time to furnish statements
under proposed §§ 1.6055-1(g)(4)(i) and
301.6056-1(g)(1) will assist in timely and
more accurate reporting. Last, the addi-
tional electronic manner of furnishing a
statement in proposed § 1.6055-1(g)(4)(ii)
(B), at a time when the shared responsi-
bility payment amount is zero, will help
reporting entities reduce costs, while still
satisfying their statutory reporting obli-
gations. Accordingly, implementation of
these proposed regulations will increase
tax compliance by providing definitive

December 20, 2021 898 Bulletin No. 2021–51
guidance and will allow reporting enti-
ties the time needed to furnish timely and
accurate statements, with minimal pro-
duction and distribution burden regarding
the furnishing.
Pursuant to section 7805(f) of the
Code, this notice of proposed rulemaking
has been submitted to the Chief Counsel
of the Office of Advocacy of the Small
Business Administration for comment on
its impact on small business.
IV. Unfunded Mandates Reform Act
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 a final rule that includes
any Federal mandate that may result in
expenditures in any one year by a state,
local, or tribal government, in the aggre-
gate, or by the private sector, of $100 mil-
lion (updated annually for inflation). This
proposed rule does not include any Fed-
eral mandate that may result in expendi-
tures by state, local, or tribal governments,
or by the private sector in excess of that
threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (entitled “Fed-
eralism”) prohibits an agency from pub-
lishing any rule that has federalism impli-
cations if the rule either imposes substan-
tial, direct compliance costs on state and
local governments, and is not required by
statute, or preempts state law, unless the
agency meets the consultation and fund-
ing requirements of section 6 of the Exec-
utive Order. This proposed rule does not
have federalism implications and does
not impose substantial direct compliance
costs on state and local governments or
preempt state law within the meaning of
the Executive Order.
Comments and Requests for Public
Hearing
Before these proposed regulations
or the 2016 proposed regulations are
adopted as final regulations, consid-
eration will be given to any comments
that are submitted timely to the IRS as
prescribed in this preamble under the
“ADDRESSES” section. The Treasury
Department and the IRS request com-
ments on all aspects of these proposed
regulations, as well as all aspects of the
2016 proposed regulations. Any elec-
tronic comments submitted, and to the
extent practicable any paper comments
submitted, will be made available at www.
regulations.gov or upon request. All com-
ments, including comments on the 2016
proposed regulations, should reference
REG-109128-21.
A public hearing will be scheduled
if requested in writing by any person
who timely submits written comments.
Requests for a public hearing are also
encouraged to be made electronically. If a
public hearing is scheduled, notice of the
date, time, and place for the public hearing
will be published in the Federal Register.
Announcement 2020-4, 2020-17 I.R.B. 1
(Apr. 20, 2020), provides that until further
notice, public hearings conducted by the
IRS will be held telephonically. Any tele-
phonic hearing will be made accessible to
people with disabilities.
Drafting Information
The principal author of these proposed
regulations is Gerald Semasek, Office of
Associate Chief Counsel (Income Tax and
Accounting). Other personnel from the
Treasury Department and the IRS partic-
ipated in their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
26 CFR Part 301
Employment taxes, Estate taxes,
Excise taxes, Gift taxes, Income taxes,
Penalties, Reporting and recordkeeping
requirements.
Proposed Amendments to the
Regulations
Accordingly, IRS proposes to amend
26 CFR parts 1 and 301 as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.5000A-2 is amended
by:
1. Revising paragraph (b)(2)(vii) and
(viii);
2. Adding paragraph (b)(2)(ix).
The revisions and addition read as fol-
lows:
§ 1.5000A-2 Minimum essential
coverage.
* * * * *
(b) * * *
(2) * * *
(vii) Coverage under section 1079(a),
1086(c)(1), or 1086(d)(1) of title 10,
U.S.C., that is solely limited to space
available care in a facility of the uni-
formed services for individuals excluded
from TRICARE coverage for care from
private sector providers;
(viii) Coverage under section 1074a
and 1074b of title 10, U.S.C., for an injury,
illness, or disease incurred or aggravated
in the line of duty for individuals who are
not on active duty; and
(ix) Medicaid coverage limited to
COVID-19 testing and diagnostic services
provided under section 6004(a)(3) of the
Families First Coronavirus Response Act,
Pub. L. 116-127, 134 Stat. 178 (March 18,
2020).
Par. 3. Section 1.5000A-5 is amended
by revising paragraph (c) to read as fol-
lows:
§ 1.5000A-5 Administration and
procedure.
* * * * *
(c) Applicability date. Except as oth-
erwise provided in this paragraph (c),
this section and § 1.5000A-1 through
1.5000A-4 apply for months begin-
ning after December 31, 2013. Section
1.5000A-2(b)(2)(ix) applies for months
beginning after September 28, 2020.
Par. 4. Section 1.6055-1 is amended by:
1. Revising the first sentence of para-
graph (g)(1);
2. Revising paragraph (g)(4)(i) and (ii);

Bulletin No. 2021–51 899 December 20, 2021
3. Revising paragraph (j).
The revisions read as follows:
§ 1.6055-1 Information reporting for
minimum essential coverage.
* * * * *
(g) * * * Except as otherwise provided
in paragraph (g)(4)(ii)(B) of this section,
every person required to file a return under
this section must furnish to the responsi-
ble individual identified on the return a
written statement. * * *
* * * * *
(4) * * * (i) Time for furnishing—
Except as otherwise provided in this para-
graph (g)(4)(i), a reporting entity must
furnish the statements required under
paragraph (g)(1) of this section on or
before January 31 of the year following
the calendar year in which the minimum
essential coverage is provided. Reporting
entities are granted an automatic extension
of time not exceeding 30 days in which to
furnish these statements.
(ii) Manner of furnishing—(A) In
general. Except as otherwise provided
in paragraph (g)(4)(ii)(B) of this section,
if mailed, the statement must be sent to
the responsible individual’s last known
permanent address or, if no permanent
address is known, to the individual’s
temporary address. For purposes of this
paragraph (g)(4)(ii)(A), a reporting enti-
ty’s first class mailing to the last known
permanent address, or if no permanent
address is known, the temporary address,
discharges the requirement to furnish the
statement. A reporting entity may furnish
the statement electronically if the require-
ments of § 1.6055-2 are satisfied.
(B) Alternative manner of furnishing. A
reporting entity shall be treated as furnish-
ing the statement in a timely manner under
this paragraph (g)(4) if the shared respon-
sibility payment amount under section
5000A(c) for the calendar year in which
the minimum essential coverage is pro-
vided is zero and the reporting entity sat-
isfies the requirements in this paragraph
(g)(4)(ii)(B). If the reporting entity is an
applicable large employer member that
sponsors a self-insured group health plan
and makes a return in accordance with
paragraph (f)(2)(i) of this section related
to that plan, the applicable large employer
member may use the alternative manner of
furnishing described in this paragraph (g)
(4)(ii)(B) for statements to non-full-time
employees and non-employees who are
enrolled in the applicable large employer’s
self-insured group health plan. A reporting
entity may use the alternative manner of
furnishing described in this paragraph (g)
(4)(ii)(B) only if the reporting entity:
(1) Provides clear and conspicuous
notice, in a location on its website that
is reasonably accessible to all responsi-
ble individuals, stating that responsible
individuals may receive a copy of their
statement upon request. The notice must
include an email address, a physical
address to which a request for a statement
may be sent, and a telephone number that
responsible individuals may use to con-
tact the reporting entity with any ques-
tions. A notice posted on a reporting enti-
ty’s website will satisfy the requirements
of this paragraph (g)(4)(ii)(B)(1) if it is
written in plain, non-technical terms and
with letters of a font size large enough,
including any visual clues or graphical
figures, to call to a viewer’s attention that
the information pertains to tax statements
reporting that individuals had health cov-
erage. For example, a reporting entity’s
website provides a clear and conspicuous
notice if it includes a statement on the
main page -- or a link on the main page,
reading “Tax Information”, to a second-
ary page that includes a statement -- in
capital letters, “IMPORTANT HEALTH
COVERAGE TAX DOCUMENTS”;
explains how responsible individuals
may request a copy of Form 1095-B,
Health Coverage, (or, for an applicable
large employer member that sponsors a
self-insured group health plan and makes
a return in accordance with paragraph (f)
(2)(i) of this section, explains how non-
full-time employees and non-employees
who are enrolled in the plan may request
a copy of Form 1095-C, Employer-Pro-
vided Health Insurance Offer and Cover-
age); and includes the reporting entity’s
email address, mailing address, and tele-
phone number;
(2) Retains the notice in the same loca-
tion on its website through October 15 of
the year following the calendar year to
which the statements relate (or the first
business day after October 15, if October
15 falls on a Saturday, Sunday or legal
holiday); and
(3) Furnishes the statement to a request-
ing responsible individual within 30 days
of the date the request is received. To sat-
isfy the requirement of this paragraph (g)
(4)(ii)(B)(3), a reporting entity may fur-
nish the statement electronically pursuant
to § 1.6055-2(a)(2) through (a)(6).
* * * * *
(j) Applicability date. Except as oth-
erwise provided in this paragraph (j), this
section applies for calendar years begin-
ning after December 31, 2014. Paragraphs
(g)(1), (g)(4)(i), and (g)(4)(ii) of this sec-
tion apply for calendar years beginning
after December 31, 2021, but reporting
entities may choose to apply paragraphs
(g)(1), (g)(4)(i), and (g)(4)(ii) of this sec-
tion for calendar years beginning after
December 31, 2020. Except as otherwise
provided in this paragraph (j), paragraph
(g)(4), as contained in 26 CFR part 1 edi-
tion revised as of April 1, 2021, applies
to calendar years ending after December
31, 2014 and beginning before January 1,
2022.
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 5. The authority citation for part
301 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
Par. 6. Section 301.6056-1 is amended
by revising paragraphs (g)(1) and (m) to
read as follows:
§ 301.6056-1 Rules relating to
reporting by applicable large
employers on health insurance
coverage offered under employer-
sponsored plans.
* * * * *
(g) * * * (1) Time for furnishing--Ex-
cept as otherwise provided in this para-
graph (g)(1), each statement required by
this section for a calendar year must be
furnished to a full-time employee on or
before January 31 of the year succeed-
ing the calendar year in accordance with
applicable Internal Revenue Service
procedures and instructions. Applicable
large employers are granted an automatic
extension of time not exceeding 30 days in
which to furnish these statements.
* * * * *

December 20, 2021 900 Bulletin No. 2021–51
(m) Applicability date. Except as oth-
erwise provided in this paragraph (m), this
section applies for calendar years begin-
ning after December 31, 2014. Paragraph
(g)(1) of this section applies for calen-
dar years beginning after December 31,
2021, but applicable large employers may
choose to apply paragraph (g)(1) of this
section for calendar years beginning after
December 31, 2020. Except as otherwise
provided in this paragraph (m), paragraph
(g)(1), as contained in 26 CFR part 1 edi-
tion revised as of April 1, 2021, applies
to calendar years ending after December
31, 2014 and beginning before January 1,
2022.
Douglas W. O’Donnell,
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register on
December 3, 2021, 8:45 a.m., and published in the
issue of the Federal Register for December 6, 2021,
86 F.R. 68939)

Bulletin No. 2021–51 i December 20, 2021
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
applied 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
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling 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 previously
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 rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service 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.

December 20, 2021 ii Bulletin No. 2021–51
Numerical Finding List
1
Bulletin 2021–51
Announcements:
2021-12, 2021-31 I.R.B. 267
2021-13, 2021-33 I.R.B. 314
2021-14, 2021-33 I.R.B. 315
2021-15, 2021-49 I.R.B. 846
2021-16, 2021-50 I.R.B. 872
2021-17, 2021-51 I.R.B. 889
AOD:
2021-4, 2021-47 I.R.B. 725
Notices:
2021-39, 2021-27 I.R.B. 3
2021-40, 2021-28 I.R.B. 15
2021-41, 2021-29 I.R.B. 17
2021-42, 2021-29 I.R.B. 19
2021-38, 2021-30 I.R.B. 155
2021-44, 2021-31 I.R.B. 166
2021-45, 2021-31 I.R.B. 170
2021-47, 2021-32 I.R.B. 269
2021-46, 2021-33 I.R.B. 303
2021-48, 2021-33 I.R.B. 305
2021-49, 2021-34 I.R.B. 316
2021-43, 2021-35 I.R.B. 332
2021-50, 2021-35 I.R.B. 333
2021-51, 2021-36 I.R.B. 361
2021-52, 2021-38 I.R.B. 381
2021-53, 2021-39 I.R.B. 438
2021-54, 2021-41 I.R.B. 457
2021-55, 2021-41 I.R.B. 461
2021-58, 2021-43 I.R.B. 660
2021-59, 2021-43 I.R.B. 664
2021-57, 2021-44 I.R.B. 706
2021-56, 2021-45 I.R.B. 716
2021-60, 2021-45 I.R.B. 719
2021-35, 2021-46 I.R.B. 723
2021-61, 2021-47 I.R.B. 738
2021-62, 2021-49 I.R.B. 831
2021-63, 2021-49 I.R.B. 835
2021-64, 2021-50 I.R.B. 869
2021-65, 2021-51 I.R.B. 880
Proposed Regulations:
REG-107705-21, 2021-30 I.R.B. 162
REG-102951-16, 2021-32 I.R.B. 272
REG-109077-21, 2021-39 I.R.B. 445
REG-100718-21, 2021-42 I.R.B. 653
REG-107707-21, 2021-42 I.R.B. 657
REG 117575-21, 2021-49 I.R.B. 847
REG-109128-21, 2021-51 I.R.B. 890
Revenue Procedures:
2021-28, 2021-27 I.R.B. 5
2021-29, 2021-27 I.R.B. 12
2021-24, 2021-29 I.R.B. 19
2021-14, 2021-30 I.R.B. 158
2021-30, 2021-31 I.R.B. 172
2021-31, 2021-33 I.R.B. 324
2021-33, 2021-34 I.R.B. 327
2021-34, 2021-35 I.R.B. 337
2021-35, 2021-35 I.R.B. 355
2021-36, 2021-35 I.R.B. 357
2021-37, 2021-38 I.R.B. 385
2021-38, 2021-38 I.R.B. 425
2021-39, 2021-38 I.R.B. 426
2021-40, 2021-38 I.R.B. 426
2021-41, 2021-39 I.R.B. 443
2021-32, 2021-42 I.R.B. 465
2021-44, 2021-42 I.R.B. 469
2021-42, 2021-43 I.R.B. 666
2021-46, 2021-47 I.R.B. 740
2021-45, 2021-48 I.R.B. 764
2021-47, 2021-48 I.R.B. 775
2021-48, 2021-49 I.R.B. 835
2021-49, 2021-49 I.R.B. 838
2021-50, 2021-49 I.R.B. 844
2021-43, 2021-51 I.R.B. 882
2021-52, 2021-51 I.R.B. 883
2021-53, 2021-51 I.R.B. 887
Revenue Rulings:
2021-12, 2021-27 I.R.B. 1
2021-13, 2021-30 I.R.B. 152
2021-14, 2021-31 I.R.B. 164
2021-19, 2021-42 I.R.B. 470
2021-15, 2021-35 I.R.B. 331
2021-16, 2021-36 I.R.B. 359
2021-17, 2021-37 I.R.B. 362
2021-18, 2021-40 I.R.B. 447
2021-21, 2021-44 I.R.B. 704
2021-22, 2021-47 I.R.B. 726
2021-23, 2021-49 I.R.B. 779
2021-24, 2021-50 I.R.B. 850
2021-20, 2021-51 I.R.B. 875
Treasury Decisions:
9951, 2021-30 I.R.B. 25
9952, 2021-39 I.R.B. 428
9953, 2021-39 I.R.B. 430
9956, 2021-41 I.R.B. 449
9957, 2021-41 I.R.B. 452
9955, 2021-42 I.R.B. 471
9958, 2021-49 I.R.B. 781
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin
2021–52, dated December 27, 2021.

Bulletin No. 2021–51 iii December 20, 2021
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2021–51
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin
2021–52, dated December 27, 2021.

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