Internal Revenue Bulletin 2019-32 (PDF rendition): IRS Revenue Rulings

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HIGHLIGHTS
OF THIS ISSUE
Bulletin No. 2019–32
August 5, 2019
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
ANN 2019-08, page 621.
The Office of Professional Responsibility (OPR) announces re-
cent disciplinary sanctions involving attorneys, certified pub-
lic accountants, enrolled agents, enrolled actuaries, enrolled
retirement plan agents, and appraisers. These individuals are
subject to the regulations governing practice before the Inter-
nal Revenue Service (IRS), which are set out in Title 31, Code
of Federal Regulations, Part 10, and which are published in
pamphlet form as Treasury Department Circular No. 230.
The regulations prescribe the duties and restrictions relating
to such practice and prescribe the disciplinary sanctions for
violating the regulations.
REV PROC 2019-28, page 596.
This procedure provides specifications for the private print-
ing of red-ink substitutes for the 2019 Forms W-2 and W-3.
This procedure will be produced as the next revision of Publi-
cation 1141. Rev. Proc. 2018-37 is superseded.
ADMINISTRATIVE, INCOME TAX
REV PROC 2019-29, page 620.
Rev. Proc. 2019-29 provides indexing adjustments required
by statute for certain provisions under section 36B. Spe-
cifically, this revenue procedure updates the applicable per-
centage table used to calculate an individual’s premium tax
credit for taxable years beginning in calendar year 2020 and
updates the required contribution percentage for plan years
beginning after calendar year 2019.
INCOME TAX
NOT 2019-45, page 593.
This notice expands upon previous guidance (Notice 2004-
23, Notice 2004-50 and Notice 2013-57) by providing an
appendix with a limited list of additional preventive care ser-
vices and items for certain chronic conditions that may be
treated as preventive care for purposes of section § 223(c)
(2)(C). These additional services and items are treated as
preventive only when prescribed to treat an individual diag-
nosed with the specified chronic condition, and only when
prescribed for the purpose of preventing the exacerbation
of the chronic condition or the development of a secondary
condition.
REV RUL 2019-17, page 583.
Federal rates; adjusted federal rates; adjusted federal long-
term rate, the long-term exempt rate, and the blended annual
rate. For purposes of sections 382, 1274, 1288, 7872 and
other sections of the Code, tables set forth the rates for
August 2019.
T.D. 9872, page 585.
These final regulations provide guidance on the income in-
clusion rules under section 50(d)(5) of the Internal Revenue
Code that are applicable to a lessee of investment credit
property when a lessor of the property elects to treat the
lessee as having acquired the property. The regulations
address the operation of the income inclusion rules when a
partnership or S corporation is treated as having acquired
the property. The regulations also coordinate the recapture
rules with the income inclusion rules and provide rules for the
income inclusion when there is a disposition or lease termina-
tion outside of the recapture period.
Finding Lists begin on page ii.

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them understand and meet their tax responsibilities and en-
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Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing of-
ficial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
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.
August 5, 2019 Bulletin No. 2019–32

Part I.
Section 1274.—
Determination of Issue
Price in the Case of Certain
Debt Instruments Issued for
Property
(Also Sections 42, 280G, 382, 467, 468, 482, 483,
1288, 7520, 7872.)
Rev. Rul. 2019-17
This revenue ruling provides various
prescribed rates for federal income tax
purposes for August 2019 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable feder-
al rates (AFR) for the current month for
purposes of section 1274(d) of the Inter-
nal Revenue Code. Table 2 contains the
short-term, mid-term, and long-term ad-
justed applicable federal rates (adjusted
AFR) for the current month for purposes
of section 1288(b). Table 3 sets forth the
adjusted federal long-term rate and the
long-term tax-exempt rate described in
section 382(f). Table 4 contains the ap-
propriate percentages for determining the
low-income housing credit described in
section 42(b)(1) for buildings placed in
service during the current month. Howev-
er, under section 42(b)(2), the applicable
percentage for non-federally subsidized
new buildings placed in service after July
30, 2008, shall not be less than 9%. Final-
ly, Table 5 contains the federal rate for de-
termining the present value of an annuity,
an interest for life or for a term of years, or
a remainder or a reversionary interest for
purposes of section 7520.
REV. RUL. 2019-17 TABLE 1
Applicable Federal Rates (AFR) for August 2019
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR1.91%1.90%1.90%1.89%
110% AFR2.10%2.09%2.08%2.08%
120% AFR2.29%2.28%2.27%2.27%
130% AFR2.49%2.47%2.46%2.46%
Mid-term
AFR1.87%1.86%1.86%1.85%
110% AFR2.06%2.05%2.04%2.04%
120% AFR2.24%2.23%2.22%2.22%
130% AFR2.43%2.42%2.41%2.41%
150% AFR2.81%2.79%2.78%2.77%
175% AFR3.29%3.26%3.25%3.24%
Long-term
AFR2.33% 2.32%2.31%2.31%
110% AFR2.57%2.55%2.54%2.54%
120% AFR2.80%2.78%2.77%2.76%
130% AFR3.04%3.02%3.01%3.00%
REV. RUL. 2019-17 TABLE 2
Adjusted AFR for August 2019
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted AFR1.45%1.44%1.44%1.44%
Mid-term adjusted AFR1.41%1.41%1.41%1.41%
Long-term adjusted AFR1.77%1.76%1.76%1.75%
Bulletin No. 2019–32 583 August 5, 2019

REV. RUL. 2019-17 TABLE 3
Rates Under Section 382 for August 2019
Adjusted federal long-term rate for the current month1.77%
Long-term tax-exempt rate for ownership changes during the current month (the highest of
the adjusted federal long-term rates for the current month and the prior two months.)
2.09%
REV. RUL. 2019-17 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for August 2019
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July
30, 2008, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit7.48%
Appropriate percentage for the 30% present value low-income housing credit 3.21%
REV. RUL. 2019-17 TABLE 5
Rate Under Section 7520 for August 2019
Applicable federal rate for determining the present value of an annuity, an interest for life or
a term of years, or a remainder or reversionary interest
2.2%

Section 42.—Low-Income
Housing Credit
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
August 2019. See Rev. Rul. 2019-17, page 583.

Section 280G.—Golden
Parachute Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
August 2019. See Rev. Rul. 2019-17, page 583.

Section 382.—Limitation
on Net Operating Loss
Carryforwards and
Certain Built-In Losses
Following Ownership
Change
The adjusted applicable federal long-term rate
is set forth for the month of August 2019. See Rev.
Rul. 2019-17, page 583.

Section 467.—Certain
Payments for the Use of
Property or Services
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
August 2019. See Rev. Rul. 2019-17, page 583.

Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
August 2019. See Rev. Rul. 2019-17, page 583.

Section 482.—Allocation
of Income and Deductions
Among Taxpayers
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
August 2019. See Rev. Rul. 2019-17, page 583.

Section 483.—Interest on
Certain Deferred Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
August 2019. See Rev. Rul. 2019-17, page 583.

Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of August 2019. See Rev. Rul. 2019-17, page 583.

Section 7520.—Valuation
Tables
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
August 2019. See Rev. Rul. 2019-17, page 583.

Section 7872.—Treatment
of Loans With Below-
Market Interest Rates
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
August 2019. See Rev. Rul. 2019-17, page 583.

August 5, 2019 584 Bulletin No. 2019–32

Bulletin No. 2019–32 585 August 5, 2019
26 CFR 1.50-1 Lessee’s income inclusion following
election of lessor of investment credit property to
treat lessee as acquirer.
T.D. 9872
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Income Inclusion When
Lessee Treated as Having
Acquired Investment Credit
Property
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations and removal
of temporary regulations.
SUMMARY: This document contains fi-
nal regulations that provide guidance con-
cerning the income inclusion rules under
section 50(d)(5) of the Internal Revenue
Code (Code) that are applicable to a lessee
of investment credit property when a les-
sor of such property elects to treat the les-
see as having acquired the property. These
final regulations also provide rules to co-
ordinate the section 50(a) recapture rules
with the section 50(d)(5) income inclusion
rules. In addition, these final regulations
provide rules regarding income inclusion
upon a lease termination, lease disposition
by a lessee, or disposition of a partner’s or
S corporation shareholder’s entire interest
in a lessee partnership or S corporation
outside of the recapture period. Accord-
ingly, these regulations will affect lessees
of investment credit property when the
lessor of the property makes an election
to treat the lessee as having acquired the
property and an investment credit is de-
termined under section 46 with respect to
such lessee.
DATES: Effective date: These regulations
are effective on July 17, 2019.
Applicability date: For date of applicabili-
ty, see §1.50-1(f).
FOR FURTHER INFORMATION
CONTACT: Barbara J. Campbell or Mi-
chael J. Torruella Costa, (202) 317-4137
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
I. Overview
This document amends the Income
Tax Regulations (26 CFR part 1) to fi-
nalize rules under section 50(d)(5) of the
Code. On July 22, 2016, the Department
of the Treasury (Treasury Department)
and the IRS published in the Federal
Register a notice of proposed rulemak-
ing by cross-reference to temporary
regulations ((REG-102516-15) (81 FR
47739)) (proposed regulations) and final
and temporary regulations ((TD 9776)
(81 FR 47701))(temporary regulations)
that amended §1.50-1 of the Income Tax
Regulations. On September 23, 2016, the
Treasury Department and the IRS pub-
lished corrections to the temporary reg-
ulations in the Federal Register (81 FR
65541). (Subsequent references in this
preamble to the temporary regulations are
to the temporary regulations as so correct-
ed.) The Treasury Department and the IRS
received two written comments on the
proposed regulations. No requests for a
public hearing were made, and no public
hearing was held. After consideration of
the comments received, these final regula-
tions adopt the proposed regulations with-
out modification.
II. Section 50 Background
Section 50(d) provides special rules
applicable to the investment credit de-
termined under section 46 (investment
credit property). Section 50(d)(5) pro-
vides the income inclusion rules appli-
cable to a lessee of investment credit
property when a lessor elects to treat
the lessee as having acquired the prop-
erty. Section 50(d)(5) provides that, for
purposes of the investment credit, rules
similar to former section 48(d) (as in ef-
fect prior to the enactment of the Reve-
nue Reconciliation Act of 1990 (Public
Law 101-508, 104 Stat 1388 (November
5, 1990))) apply.
Former section 48(d)(1) permitted a
lessor of new section 38 property to elect
to treat that property as having been ac-
quired by the lessee for an amount equal
to its fair market value (or, if the lessor
and lessee were members of a controlled
group of corporations, equal to the les-
sor’s basis). Former section 48(d)(3) pro-
vided that if the lessor made the election
provided in former section 48(d)(1) with
respect to any such property, the lessee
would be treated for all purposes of sub-
part E, part IV, subchapter A, Chapter 1,
subtitle A, as having acquired such prop-
erty. Section 50(a)(5)(A) replaced the
term “section 38 property” with the term
“investment credit property.”
Under former section 48(q), if a credit
was determined under section 46 with re-
spect to section 38 property, the basis of
the property was reduced by 50 percent
of the amount of the credit determined
(or 100 percent of the amount of the
credit determined in the case of a credit
for qualified rehabilitation expenditures).
Former section 48(d)(5) provided specific
rules coordinating the effect of the former
section 48(d) election with the basis ad-
justment rules under former section 48(q).
Because the lessee would have no basis in
the property that the lessee was deemed
to have acquired pursuant to the election,
former section 48(d)(5)(A) provided that
the basis adjustment rules under former
section 48(q) did not apply. Section 50(c)
replaced former section 48(q) and pro-
vides the current basis adjustment rules.
In lieu of a basis adjustment, former
section 48(d)(5)(B) provided that the
lessee was required to include ratably in
gross income, over the shortest recovery
period which could be applicable under
section 168 with respect to the property, an
amount equal to 50 percent of the amount
of the credit allowable under section 38 to
the lessee with respect to such property. In
the case of the rehabilitation credit, former
section 48(q)(3) provided that former sec-
tion 48(d)(5)(B) was to be applied without
the phrase “50 percent of.”
Former section 48(d)(5)(C) provided
that, in the case of a disposition of prop-
erty to which former section 47 (the for-
mer recapture rules) applied, the income
inclusion rules of former section 48(d)(5)
applied in accordance with regulations
prescribed by the Secretary. Section 50(a)

August 5, 2019 586 Bulletin No. 2019–32
replaced former section 47 and provides
the current recapture rules.
The temporary regulations provide the
applicable rules that the Secretary deter-
mined are similar to the rules of former
section 48(d)(5). The temporary regula-
tions are limited in scope to the income
inclusion rules that apply when a lessor
elects under §1.48-4 to treat the lessee as
having acquired investment credit proper-
ty.
The temporary regulations provide
general rules for coordinating the basis
adjustment rules under section 50(c) (the
successor to former section 48(q)) with
the rules under §1.48-4 pursuant to which
a lessor may elect to treat the lessee of
investment credit property as having ac-
quired such property for purposes of cal-
culating the investment credit. Similar to
the rule in former section 48(d)(5)(A),
which provided that the basis adjustment
rules under former section 48(q) did not
apply when a §1.48-4 election was made,
the temporary regulations provide that
section 50(c) does not apply when the
election is made. Thus, the lessor is not
required to reduce its basis in the proper-
ty by the amount of the investment credit
(or 50 percent of the amount of the credit
in the case of the energy credit under sec-
tion 48) determined under section 46.
The temporary regulations require that,
in lieu of a basis adjustment, and similar to
the rule contained in former section 48(d)
(5)(B), a lessee must include in gross in-
come an amount equal to the amount of
the credit (or 50 percent of the amount of
the credit in the case of the energy credit
under section 48) determined under sec-
tion 46. The lessee includes the amount
ratably over the shortest recovery period
applicable under the accelerated cost re-
covery system provided in section 168,
beginning on the date the investment cred-
it property is placed in service and con-
tinuing on each one-year anniversary date
thereafter until the end of the applicable
recovery period. The amount required to
be included by the lessee is not subject to
any limitations under section 38(c) on the
amount of the credit allowed based on the
amount of the lessee’s income tax.
Because section 50(c) replaces the old
basis adjustment rules under former sec-
tion 48(q), the amount the lessee is re-
quired to include in gross income under
the temporary regulations corresponds to
the current basis adjustment amounts re-
quired under section 50(c), rather than the
former basis adjustment amounts provid-
ed in former section 48(q).
The temporary regulations include spe-
cial rules for partnerships and S corpora-
tions. In the case of a partnership (other
than an electing large partnership) or an
S corporation for which an election is
made under §1.48-4 to treat such entity
as having acquired the investment credit
property, each partner or S corporation
shareholder that is the ultimate credit
claimant is treated as the lessee for purpos-
es of the income inclusion rules under the
temporary regulations. The term ultimate
credit claimant is defined in the temporary
regulations as any partner or S corpora-
tion shareholder that files (or that would
file) Form 3468, “Investment Credit” (or
its successor form), with such partner’s
or S corporation shareholder’s income tax
return to claim the investment credit de-
termined under section 46 that results in
the corresponding income inclusion under
the temporary regulations. Each partner
or S corporation shareholder that is the
ultimate credit claimant must include in
gross income the amount required under
the temporary regulations in proportion to
the amount of the credit determined under
section 46 (or 50 percent of the amount of
the credit in the case of the energy credit
under section 48) with respect to the part-
ner or S corporation shareholder.
The temporary regulations also coordi-
nate the income inclusion rules with the
credit recapture rules in section 50(a). The
temporary regulations provide that, when
the investment credit recapture rules un-
der section 50(a) are triggered (including
when there is a lease termination), caus-
ing a recapture of the credit or a portion
of the credit, an adjustment will be made
to the lessee’s (or, as applicable, the ul-
timate credit claimant’s) gross income
for any discrepancies between the total
amount included in gross income under
the income inclusion requirement in the
temporary regulations and the total credit
allowable after recapture. The adjustment
amount is taken into account in the taxable
year in which the property is disposed of
or otherwise ceases to be investment cred-
it property. The temporary regulations
provide rules for when the amount of the
unrecaptured credit (that is, the allowable
credit after taking into account the recap-
ture amount, or 50 percent of the unre-
captured credit in the case of the energy
credit) exceeds the income inclusion, and
when the income inclusion exceeds the
unrecaptured credit.
The temporary regulations also allow
a lessee or an ultimate credit claimant to
make an irrevocable election to include
in gross income any remaining income
required to be taken into account un-
der §1.50-1T(b)(2) in the taxable year in
which the lease terminates or is otherwise
disposed of. Similarly, the temporary reg-
ulations provide that if an ultimate cred-
it claimant disposes of its entire interest,
either direct or indirect, in a partnership
(other than an electing large partnership)
or an S corporation, the ultimate credit
claimant may make an irrevocable elec-
tion to include in gross income any re-
maining income required to be taken into
account by the temporary regulations in
the taxable year of the disposition. The
availability of this election allows a lessee
or an ultimate credit claimant to account
for any remaining required gross income
inclusion in the taxable year in which the
lease terminates or is otherwise disposed
of or in which an ultimate credit claimant
exits its investment.
This election is available only outside
of the section 50(a) recapture period, and
only if the lessee or the ultimate credit
claimant was not already required to ac-
celerate the gross income required to be
included under §1.50-1T(b)(2) because
of a recapture event during the recapture
period. Additionally, a former partner or
S corporation shareholder that no longer
owns a direct or indirect interest in the les-
see partnership or S corporation may not
elect to accelerate the gross income re-
quired to be included under the temporary
regulations at the time of a termination or
disposition of the lease by the lessee part-
nership or S corporation. The appropriate
time for a former partner or S corpora-
tion shareholder that is an ultimate cred-
it claimant to elect income acceleration
is the taxable year that it disposes of its
entire interest in a lessee partnership or
S corporation.

Bulletin No. 2019–32 587 August 5, 2019
Summary of Comments and
Explanation of Provisions
I. Reconsideration of the Special Rule for
Partnerships and S Corporations
The temporary regulations (§1.50-
1T(b)(3)) clarify that the gross income
inclusion is not an item of partnership
income or an item of S corporation in-
come to which the rules of subchapter K
or subchapter S apply. One commenter
requested that the Treasury Department
and the IRS reconsider the rules in §1.50-
1T(b)(3) based on a concern that the oper-
ation of the rules will decrease the amount
of investment that flows into the credit
programs, which will result in less cash
available for projects. The commenter also
expressed a related concern that requiring
credit claimants to identify and track the
income inclusion will add additional com-
plexity to the investments.
As explained in the preamble to the
temporary regulations, because the in-
vestment credit and any limitations on the
credit itself are determined at the partner
or S corporation shareholder level it is ap-
propriate that the income inclusion occurs
at the partner or shareholder level. In the
case of a partnership that owns the invest-
ment credit property, a partner in a part-
nership is treated as the taxpayer with re-
spect to the partner’s share of the basis of
partnership investment credit property un-
der §1.46-3(f)(1) and separately computes
the investment credit based on its share of
the partnership’s basis in the investment
credit property. Similarly, in the case of a
lessee partnership where the lessor makes
an election under §1.48-4 to treat the part-
nership as having acquired investment
credit property, each partner in the lessee
partnership is the taxpayer with respect
to whom the investment credit is deter-
mined under section 46. Each partner in
the lessee partnership will separately com-
pute the investment credit based on each
partner’s share of the investment credit
property. The credit is therefore computed
at the partner level based on partner lev-
el limitations. Section 1.704-1(b)(4)(ii),
which requires allocations with respect
to the investment tax credit provided by
section 38 to be made in accordance with
the partners’ interests in the partnership,
provides that allocations of cost or quali-
fied investment (as opposed to the invest-
ment credit itself, which is not determined
at the partnership level) made in accor-
dance with §1.46-3(f) shall be deemed to
be made in accordance with the partners’
interests in the partnership.
Under similar principles, in the case
of a lessor that makes an election under
§1.48-4 to treat a lessee S corporation as
having acquired investment credit proper-
ty, each shareholder in the lessee S corpo-
ration is the taxpayer with respect to whom
the investment credit is determined under
section 46. The credit is therefore comput-
ed at the S corporation shareholder level
based on shareholder level limitations.
The Treasury Department and the IRS
have determined that the burden of income
inclusion should match the benefits of the
allowable credit. Therefore, because the
investment credit and any limitations on
the credit are determined at the partner or
shareholder level, these final regulations
adopt the rule from the proposed regula-
tions that provides that the gross income
required to be ratably included is not an
item of partnership income for purposes of
subchapter K or an item of S corporation
income for purposes of subchapter S. Ac-
cordingly, the basis adjustment rules that
would apply if such gross income was an
item of income under section 702 or sec-
tion 1366, such as section 705(a) (provid-
ing for an increase in a partner’s outside
basis for items of partnership income) or
section 1367(a) (providing for an increase
in an S corporation shareholder’s stock
basis for items of S corporation income),
do not apply.
When the temporary regulations were
issued, the Treasury Department and the
IRS were aware that some partnerships
and S corporations had taken the posi-
tion that this income is includible by the
partnership or S corporation and that their
partners or S corporation shareholders
were entitled to increase their bases in
their partnership interests or S corporation
stock as a result of the income inclusion.
The Treasury Department and the IRS
determined that such basis increases are
inconsistent with Congressional intent
as they thwart the purpose of the income
inclusion requirement in former sec-
tion 48(d)(5)(B) and confer an unintended
benefit upon partners and S corporation
shareholders of lessee partnerships and
S corporations that is not available to any
other credit claimant.
The investment credit rules operate
to allow a taxpayer to claim the benefit
of the credit in exchange for the recoup-
ment of that amount (or 50 percent of that
amount in the case of the section 48 ener-
gy credit) over time. Where the taxpayer
claiming the credit owns the investment
credit property, the basis reduction pro-
vided in section 50(c) results in reduced
cost recovery deductions over the life of
the property or the realization of gain (or
a reduction in the amount of loss realized)
upon the disposition of the property. In the
case of a lessor that elects under §1.48-
4 to treat the lessee of investment credit
property as having acquired such property,
§1.50-1T(b)(2) instead requires the lessee
to ratably include this amount in gross in-
come over the life of the property.
If that lessee is a partnership or an
S corporation, however, some partner-
ships and S corporations contend that this
income inclusion is treated as an item of
partnership or S corporation income that
entitles their partners or S corporation
shareholders to a corresponding outside
basis increase under section 705(a) or
section 1367(a). If these partners or S cor-
poration shareholders were entitled to an
outside basis increase equal to their share
of the income inclusion, they would be
able to claim an offsetting loss (or reduce
the amount of gain realized) upon the dis-
position of their partnership interests or
S corporation shares.
As noted, the Treasury Department and
the IRS have concluded that the income
inclusion is not properly treated as an item
of partnership income or of S corpora-
tion income. Nonetheless, had the Trea-
sury Department and the IRS determined
otherwise, the Treasury Department and
the IRS have decided that in addition to
being inconsistent with the purpose of
section 48(d)(5)(B), allowing a basis in-
crease for the income inclusion would
also be inconsistent with the purpose of
sections 705 and 1367. The income to
be included is a notional amount, which
has no current or future economic effect
on the basis of assets held by a partner-
ship or S corporation. In general, Con-
gress intended for sections 705 and 1367
to preserve inside and outside basis parity
for partnerships and S corporations so as

August 5, 2019 588 Bulletin No. 2019–32
to prevent any unintended tax benefit or
detriment to the partners or shareholders.
See H.R. Rep. No. 1337, 83d Cong., 2d
Sess. A225 (1954); S. Rep. No. 1622, 83d
Cong., 2d Sess. 384 (1954); H.R. Rep. No.
97-826, 97th Cong., 2d Sess. p. 17 (1982);
S. Rep. No. 97-640, 97th Cong., 2d Sess.
16, 18 (1982); and Rev. Rul. 96-11 (1996-1
CB 140). Ultimately, the Treasury Depart-
ment and the IRS have determined that,
under any approach, allowing partners
and S corporation shareholders a basis
increase to offset the income inclusion re-
quired by the temporary regulations upon
disposition of their partnership interests or
S corporation shares is inappropriate, and
that Congress did not intend to allow part-
ners and S corporation shareholders the
full benefit of the credit without any of the
corresponding burden.
Additionally, the Treasury Department
and the IRS are aware that one practitioner
questioned whether the Supreme Court’s
holding in U.S. v. Basye, 410 U.S. 441
(1973), is contrary to the position taken
in the temporary regulations that the no-
tional income created under section 50(d)
(5) is not an item of partnership income
computed under section 703. In Basye,
the partnership entered into a contractu-
al arrangement whereby a portion of the
payments it received for services rendered
was redirected to a trust established for
the benefit of the partnership’s partner and
non-partner physicians. The payments
were not forfeitable by the partnership or
recoverable by the payor upon the hap-
pening of any contingency. The Court
held that because the payments represent-
ed compensation for services rendered by
the partnership, the partnership was re-
quired to include them in current income
and each partner was required to include
his distributive share of those amounts in
his income. The Court stated:
This conclusion rests on two familiar
principles of income taxation, first, that
income is taxed to the party who earns
it and that liability may not be avoided
through an anticipatory assignment of
that income, and, second, that partners
are taxable on their distributive or pro-
portionate shares of current partnership
income irrespective of whether that in-
come is actually distributed to them.
Basye at 447-448.
The Treasury Department and the IRS
believe that Basye is inapplicable to the
determination that the notional income
created under section 50(d)(5) is not an
item of partnership income computed
under section 703. Unlike the income at
issue in Basye, the income created under
section 50(d)(5) is not “earned” by the
partnership. It has no economic effect as it
is merely a notional item created to mim-
ic the effect of the basis adjustment under
former section 48(q) with respect to a les-
see. Further, treating it as a partnership
income item would generate an inappro-
priate basis increase to the partners under
section 705 that would allow them to take
a non-economic loss.
II. Basis Reduction Election
The temporary regulations (§1.50-
1T(c)) allow a lessee or an ultimate credit
claimant, under certain circumstances, to
elect to accelerate the income inclusion
outside of the section 50(a) recapture pe-
riod (income acceleration election). This
income acceleration election is available
in the taxable year in which the lease ter-
minates or is otherwise disposed of or
when an ultimate credit claimant disposes
of their entire interest in the partnership
or the S corporation. One commenter re-
quested that the final regulations permit
the lessor and lessee of investment credit
property, together with the ultimate cred-
it claimant, to make an irrevocable “basis
reduction election.” This election would
allow the lessor of investment credit prop-
erty to reduce the basis of the property
by the remaining amount of the ultimate
credit claimant’s income inclusion in lieu
of requiring the ultimate credit claimant
to continue to account for the income in-
clusion or make the income acceleration
election. The commenter suggested that
the “basis reduction election” be permit-
ted after the recapture period when a lease
termination occurs or when an ultimate
credit claimant disposes of their entire in-
terest in the partnership or S corporation.
The commenter requested that the Trea-
sury Department and the IRS adopt the
“basis reduction election” based on policy
considerations the Treasury Department
and the IRS took into account when incor-
porating the income acceleration election
in the temporary regulations.
As previously noted, the investment
credit rules operate to allow a taxpayer to
claim the benefit of the credit in exchange
for the recoupment of that amount (or
50 percent of that amount in the case of
the section 48 energy credit) over time. In
the case of a lessee, in lieu of a basis ad-
justment, and similar to the rule contained
in former section 48(d)(5)(B), the lessee
(or an ultimate credit claimant) must in-
clude in gross income an amount equal
to the amount of the credit (or 50 percent
of the amount of the credit in the case of
the energy credit under section 48) de-
termined under section 46. The Treasury
Department and the IRS did consider the
administrative convenience and reduced
reporting burden for taxpayers when per-
mitting the income acceleration election.
The Treasury Department and the IRS also
determined that such an election is consis-
tent with the applicable rules in former
section 48(d)(5)(B), because a lessee (or
an ultimate credit claimant) that benefitted
from the credit is the appropriate party to
recognize the gross income inclusion de-
scribed in the statute.
The Treasury Department and the IRS
have determined that the suggested “basis
reduction election” is inconsistent with the
applicable rules in former section 48(d)(5)
(B) because the election would allow the
lessee or ultimate credit claimant that rec-
ognized the benefit of the credit to transfer
the burden of the offsetting income inclu-
sion to the lessor. The suggested “basis re-
duction election” would essentially permit
participants in investment credit leasing
transactions to unwind the transactions af-
ter the section 50(a) recapture period. For
these reasons, the Treasury Department
and the IRS do not adopt this recommen-
dation in the final regulations.
III. Amount of Credit Included Ratably in
Gross Income
The temporary regulations (§§1.50-
1T(b)(2) and (3)) require a lessee or an ul-
timate credit claimant to include ratably in
gross income, over the shortest recovery
period which could be applicable under
section 168 with respect to that property,
an amount equal to the amount of the cred-
it (or 50 percent of the amount of the en-
ergy credit under section 48). The tempo-
rary regulations made applicable the rule

Bulletin No. 2019–32 589 August 5, 2019
in former section 48(d)(5) that required
the lessee of investment credit property to
recognize the gross income inclusion over
the shortest applicable recovery period un-
der section 168. One commenter suggest-
ed that the final regulations allow a lessee
or ultimate credit claimant to calculate the
income inclusion based on the deprecia-
tion methods and conventions applicable
to the underlying investment credit prop-
erty. The commenter described an exam-
ple where an owner-lessor of investment
credit property elects to depreciate rental
property over 40 years instead of over the
usual 27½ year recovery period, and the
lessee or ultimate credit claimant reports
the offsetting income inclusion over the
same 40-year period instead of the short-
est recovery period. The commenter sug-
gested that the approach is equitable and
can be justified under the “rules similar
to” language in section 50(d)(5), which
provides that for purposes of the invest-
ment credit, rules similar to former sec-
tion 48(d) apply.
The Treasury Department and the IRS
have determined that the applicable rules
from the temporary regulations (§§1.50-
1T(b)(2) and (3)) are the correct interpre-
tation of the language in section 50(d)(5).
A rule that permits a lessee or ultimate
credit claimant to calculate the income in-
clusion based on the depreciation methods
and conventions applicable to the under-
lying investment credit property is dis-
similar to the rule in former section 48(d)
(5)(B), because it contradicts the plain
language of the statute. Adopting a rule
that would allow a lessor or an ultimate
credit claimant to recognize the income
inclusion over a longer recovery period
would facilitate an inappropriate income
deferral, and create additional reporting
and monitoring burden. For these reasons,
the Treasury Department and the IRS are
not adopting this recommendation in the
final regulations.
IV. Request for Comments in the
Proposed Regulations
The preamble to the proposed reg-
ulations included a specific request for
comments regarding whether guidance is
needed to address the applicability of the
income inclusion rules under section 50(d)
(5) to trusts, estates, and/or electing large
partnerships. No comments were received
in response to this request. However, the
Treasury Department and the IRS are
aware that, given the reference to electing
large partnerships, some questioned how
the temporary regulations would inter-
act with the centralized partnership audit
regime enacted as part of the Bipartisan
Budget Act of 2015. Such guidance is be-
yond the scope of these final regulations.
V. Effective and Applicability Dates
The temporary regulations were effec-
tive on July 22, 2016, and applicable to in-
vestment credit property placed in service
on or after the date that is 60 days after
the date of filing in the Federal Register
(September 19, 2016). The preamble to
the temporary regulations states that the
effective date of the regulations should not
be construed to create any inference con-
cerning the proper interpretation of sec-
tion 50(d) prior to the effective date of the
regulations. Both commenters requested
that the final regulations clarify the treat-
ment of pre-effective date transactions.
Both commenters also requested that
the effective date be modified to limit the
application of the rules for investment part-
nership transactions entered into in prior
years. Both commenters noted that differ-
ent portions of a project could be placed in
service both before and after the effective
date, because some historic rehabilitation
projects involve multiple placed in service
dates (for example, if a project involves
renovating multiple buildings over a peri-
od of years). One commenter proposed to
deem an entire project as placed in service
on the first placed in service date when
contemporaneous evidence shows that the
project will include more than one build-
ing. The other commenter suggested that
the effective date be based on timing of
investment in the investment partnership,
rather than the placed in service date.
The Treasury Department and the IRS
do not adopt these recommendations in
the final regulations. These final regula-
tions are effective on July 17, 2019, and
are applicable to investment credit prop-
erty placed in service on or after Septem-
ber 19, 2016. Section 7805(b)(1)(B) pro-
vides that a final regulation may apply to a
taxable period ending on or after the date
on which a proposed or temporary regu-
lation to which the final regulation relates
was filed with the Federal Register. The
applicability date of the rules in the final
regulations is September 19, 2016, the
same date as the applicability date of the
rules as set forth in the temporary regu-
lations. Those regulations were issued as
temporary regulations to address invest-
ment credit transactions in which part-
nerships and S corporations treated the
income inclusion as an item of partnership
or S corporation income that entitled their
partners or S corporation shareholders to
a corresponding outside basis increase
under section 705(a) or section 1367(a).
Such a basis increase would allow these
partners or S corporation shareholders
to claim an inappropriate loss (or reduce
the amount of gain realized) upon the dis-
position of their partnership interests or
S corporation shares. Revising the rules in
accordance with commenters’ suggestions
would conflict with the purpose of these
regulations. Accordingly, the applicability
date of the final regulations corresponds
to the applicability date of the temporary
regulations. Similar to the temporary reg-
ulations, the applicability date of these fi-
nal regulations should not be construed to
create any inference concerning the prop-
er interpretation of section 50(d) prior to
the applicability date of these regulations.
VI. Revenue Procedure 2014-12
As explained in the Effect on Oth-
er Documents section of TD 9776, the
temporary regulations modified Revenue
Procedure 2014-12 (2014-3 IRB 415). Be-
cause these final regulations remove the
temporary regulations from the Federal
Register, this Treasury decision includes
an identical modification to Rev. Proc.
2014-12 in the Effect on Other Documents
section. Rev. Proc. 2014-12 establishes
the requirements under which the IRS
will not challenge partnership allocations
of section 47 rehabilitation credits by a
partnership to its partners. Section 3 states
that Rev. Proc. 2014-12 does not address
how a partnership is required to allocate
the income inclusion required by sec-
tion 50(d)(5). Furthermore, section 4.07
of Rev. Proc. 2014-12 provides that, sole-
ly for purposes of determining whether a
partnership meets the requirements of that
section, the partnership’s allocation to its

August 5, 2019 590 Bulletin No. 2019–32
partners of the income inclusion required
by section 50(d)(5) shall not be taken into
account.
Because §1.704-1(b)(4)(ii) provides
that allocations of cost or qualified invest-
ment, and not the investment credit itself
(which is not determined at the partnership
level), made in accordance with §1.46-3(f)
shall be deemed to be made in accordance
with the partners’ interests in a partner-
ship, this Treasury decision modifies Rev.
Proc. 2014-12 by changing all references
to allocations of section 47 rehabilitation
credits to refer instead to allocations of
qualified rehabilitation expenditures un-
der section 47(c)(2). Additionally, because
§1.50-1(b)(3) provides that the gross in-
come required to be included under sec-
tion 50(d)(5) is not an item of partnership
income to which the rules of subchapter K
apply, this Treasury decision modifies Rev.
Proc. 2014-12 by deleting the sentences
in section 3 and section 4.07 that refer to
allocation by a partnership of the income
inclusion required under section 50(d)(5).
VII. Recapture of the Rehabilitation Credit
These regulations finalize the rules de-
scribed in §1.50-1T(c) that coordinate the
credit recapture rules in section 50(a) with
the income inclusion rules in §§1.50-1T(b)
(2) and (3). These final regulations incor-
porate the rule from the temporary regula-
tions requiring the lessee or ultimate credit
claimant to make an adjustment to gross
income for any discrepancies between the
total amounts included in gross income un-
der the income inclusion rules and the total
unrecaptured credit. When the temporary
regulations were published in 2016, sec-
tion 47(a) provided that the rehabilitation
credit was 20% of the qualified rehabilita-
tion expenditures (QREs) with respect to
a certified historic structure. Section 47(a)
was amended by section 13402 of the Tax
Cuts and Jobs Act, Public Law 115-97, 131
Stat. 2054, 2134 (TCJA). Section 47(a)
(1) now provides that for any taxable year
during the 5-year period beginning in the
taxable year in which the qualified rehabil-
itated building is placed in service, the re-
habilitation credit for the year is an amount
equal to the ratable share. Section 47(a)(2)
defines the ratable share as 20 percent of
the qualified rehabilitation expenditures
with respect to the qualified rehabilitated
building, as allocated ratably to each year
during the period. The TCJA did not amend
section 47(b), which provides that qualified
rehabilitation expenditures with respect
to any qualified rehabilitated building are
taken into account for the taxable year in
which the building is placed in service.
These final regulations adopt the rules from
the temporary regulations, but the Treasury
Department and the IRS request comments
addressing whether additional guidance
under section 50(a) is needed to coordinate
recapture of the rehabilitation credit.
Effect on Other Documents
Rev. Proc. 2014-12 (2014-3 IRB 415)
is modified by: (1) changing all references
to allocations of section 47 rehabilitation
credits to refer instead to allocations of
qualified rehabilitation expenditures un-
der section 47(c)(2); and (2) deleting the
sentences in section 3 and section 4.07
that refer to allocation by a partnership of
the income inclusion required under sec-
tion 50(d)(5).
Statement of Availability of IRS
Documents
Rev. Proc. 2014-12 (2014-3 IRB 415)
is published in the Internal Revenue
Bulletin (or Cumulative Bulletin) and is
available from the Superintendent of Doc-
uments, U.S. Government Printing Office,
Washington, DC 20402, or by visiting the
IRS website at http://www.irs.gov.
Special Analyses
This regulation is not subject to review
under section 6(b) of Executive Order 12866
pursuant to the Memorandum of Agreement
(April 11, 2018) between the Department
of the Treasury and the Office of Manage-
ment and Budget regarding review of tax
regulations. Therefore, a regulatory impact
assessment is not required. Because these
regulations do not impose a collection of
information on small entities, the Regulato-
ry Flexibility Act (5 U.S.C. chapter 6) does
not apply. Pursuant to section 7805(f) of the
Code, the notice of proposed rulemaking
preceding these regulations was submitted
to the Chief Counsel for Advocacy of the
Small Business Administration for com-
ment on their impact on small businesses.
No comments were received from the Small
Business Administration.
Drafting Information
The principal authors of these tem-
porary regulations are Barbara J. Camp-
bell and Michael J. Torruella Costa,
Office of the Associate Chief Counsel
(Passthroughs and Special Industries),
IRS. However, other personnel from the
Treasury Department and the IRS partic-
ipated in their development.
*****
List of Subjects in 26 CFR Part 1
Income Taxes, Reporting and record-
keeping requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is amend-
ed as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by removing the entry
for §1.50-1T to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.50-1 is revised to read
as follows:
§1.50-1 Lessee’s income inclusion follow-
ing election of lessor of investment credit
property to treat lessee as acquirer.
(a) In general. Section 50(d)(5) pro-
vides that, for purposes of computing
the investment credit, rules similar to
the rules of former section 48(d) (re-
lating to certain leased property) (as in
effect on the day before the date of the
enactment of the Revenue Reconciliation
Act of 1990 (Public Law 101-508, 104
Stat. 1388 (November 5, 1990))) apply.
This section provides rules similar to the
rules of former section 48(d)(5) that the
Secretary has determined shall apply for
purposes of determining the inclusion
in gross income required when a lessor
elects to treat a lessee as having acquired
investment credit property.
(b) Coordination with basis adjustment
rules. In the case of any property with re-
spect to which an election is made under
§1.48-4 by a lessor of investment credit

Bulletin No. 2019–32 591 August 5, 2019
property to treat the lessee as having ac-
quired the property—
(1) Basis adjustment. Section 50(c)
does not apply with respect to such prop-
erty.
(2) Amount of credit included ratably
in gross income—(i) In general. A lessee
of the property must include ratably in
gross income, over the shortest recovery
period which could be applicable under
section 168 with respect to that proper-
ty, an amount equal to the amount of the
credit determined under section 46 with
respect to that property. The ratable in-
come inclusion under this paragraph be-
gins on the date the investment credit
property is placed in service and continues
on each one year anniversary date thereaf-
ter until the end of the applicable recovery
period. The lessee will include in gross in-
come the amount of its credit determined
under section 46 regardless of limitations
on the amount of the credit allowed under
section 38(c) based on the amount of the
lessee’s income tax.
(ii) Special rule for the energy credit. In
the case of any energy credit determined
under section 48(a), paragraph (b)(2)(i) of
this section applies only to the extent of 50
percent of the amount of the credit deter-
mined under section 46.
(3) Special rule for partnerships and S
corporations—(i) In general. For purpos-
es of paragraph (b)(2) of this section, if the
lessee of the property is a partnership (oth-
er than an electing large partnership) or an
S corporation, the gross income includi-
ble under such paragraph is not an item of
partnership income to which the rules of
subchapter K of Chapter 1, subtitle A of
the Code apply or an item of S corporation
income to which the rules of subchapter S
of Chapter 1, subtitle A of the Code ap-
ply. Any partner or S corporation share-
holder that is an ultimate credit claimant
(as defined in paragraph (b)(3)(ii) of this
section) is treated as a lessee that must
include in gross income the amounts re-
quired under paragraph (b)(2) of this sec-
tion in proportion to the credit determined
under section 46 with respect to such part-
ner or S corporation shareholder.
(ii) Definition of ultimate credit claim-
ant. For purposes of this section, the term
ultimate credit claimant means any part-
ner or S corporation shareholder that files
(or that would file) Form 3468, “Invest-
ment Credit,” with such partner’s or S cor-
poration shareholder’s income tax return
to claim an investment credit determined
under section 46 with respect to such part-
ner or S corporation shareholder.
(c) Coordination with the recapture
rules—(1) In general. If section 50(a)
requires an increase in the lessee’s or the
ultimate credit claimant’s tax or a reduc-
tion in the carryback or carryover of an
unused credit (or both) as a result of an
early disposition (including a lease termi-
nation), etc., of leased property for which
an election had been made under §1.48-4,
the lessee or the ultimate credit claimant
is required to include in gross income an
amount equal to the excess, if any, of the
amount of the credit that is not recaptured
over the total increases in gross income
previously made under paragraph (b)(2)
of this section with respect to the property.
Such amount is in addition to the amounts
the lessee or the ultimate credit claimant
previously included in gross income under
paragraph (b)(2) of this section.
(2) Income inclusion exceeds unrecap-
tured credit. If section 50(a) requires an
increase in the lessee’s or ultimate credit
claimant’s tax or a reduction in the car-
ryback or carryover of an unused credit
(or both) as a result of an early disposi-
tion (including a lease termination), etc.,
of leased property for which an election
had been made under §1.48-4, the lessee’s
or the ultimate credit claimant’s gross in-
come shall be reduced by an amount equal
to the excess, if any, of the total increases
in gross income previously included under
paragraph (b)(2) of this section over the
amount of the credit that is not recaptured.
(3) Special rule for the energy credit. In
the case of any energy credit determined
under section 48(a), paragraphs (c)(1) and
(2) of this section apply by substituting the
phrase “50 percent of the amount of the
credit that is not recaptured” for the phrase
“the amount of the credit that is not recap-
tured.”
(4) Timing of income inclusion or re-
duction following recapture. Any adjust-
ment required by paragraphs (c)(1) and
(2) of this section is taken into account in
the taxable year in which the property is
disposed of or otherwise ceases to be in-
vestment credit property.
(d) Election to accelerate income in-
clusion outside of the recapture period—
(1) In general. If after the recapture pe-
riod described in section 50(a), but prior
to the expiration of the recovery period
described in paragraph (b)(2) of this sec-
tion, there is a lease termination, the les-
see otherwise disposes of the lease, or a
partner or S corporation shareholder that
is an ultimate credit claimant disposes of
its entire interest, either direct or indirect,
in a lessee partnership (other than an elect-
ing large partnership) or S corporation, the
lessee, or, in the case of a partnership or
S corporation, the ultimate credit claimant
may irrevocably elect to take into account
the remaining amount required to be in-
cluded in gross income under this section
in the taxable year of the disposition or
termination.
(2) Exceptions. The election provided
under paragraph (d)(1) of this section is
not available to—
(i) Lessees or ultimate credit claimants
required by paragraph (c) of this section
to account for the remaining amount re-
quired to be included in gross income af-
ter accounting for recapture in the taxable
year in which the property was disposed
of or otherwise ceased to be investment
credit property under section 50(a); or
(ii) Former partners or S corporation
shareholders that own no interest, either
direct or indirect, in a lessee partnership
or S corporation at the time of a lease ter-
mination or disposition.
(3) Manner and time for making elec-
tion. The election under paragraph (d)(1)
of this section is made by including the
remaining amount required to be includ-
ed under this section in gross income in
the taxable year of the lease termination
or disposition or the disposition of the ul-
timate credit claimant’s entire interest, ei-
ther direct or indirect, in a partnership or
S corporation. The election must be made
on or before the due date (including any
extension of time) of the lessee’s income
tax return, or, in the case of a partner-
ship or S corporation, the ultimate credit
claimant’s income tax return for the tax-
able year in which the lease termination
or disposition or the disposition of the
ultimate credit claimant’s entire interest,
either direct or indirect, in a partnership or
S corporation occurs.
(e) Examples. The provisions of this
section may be illustrated by the follow-
ing examples:

August 5, 2019 592 Bulletin No. 2019–32
(1) Example 1. X, a calendar year C corporation,
leases nonresidential real property from Y. The prop-
erty is placed in service on October 1, 2016. Y elects
under §1.48-4 to treat X as having acquired the prop-
erty. X’s investment credit determined under section
46 for 2016 with respect to such property is $9,750.
The shortest recovery period that could be available
to the property under section 168 is 39 years. Be-
cause Y has elected to treat X as having acquired the
property, Y does not reduce its basis in the proper-
ty under section 50(c). Instead, X, the lessee of the
property, must include ratably in gross income over
39 years an amount equal to the credit determined
under section 46 with respect to such property. Un-
der paragraph (b)(2) of this section, X’s increase in
gross income for each of the 39 years beginning with
2016 is $250 ($9,750/39 year recovery period).
(2) Example 2. The facts are the same as in Ex-
ample 1 in paragraph (e)(1) of this section, except
that instead of nonresidential real property, X leases
from Y solar energy equipment for which an energy
credit under section 48 is determined under section
46. X’s investment credit determined under section
46 for 2016 with respect to the property is $9,750.
The shortest recovery period that could be available
to the property under section 168 is 5 years. X, the
lessee of the property, must include ratably in gross
income over 5 years an amount equal to 50% of the
credit determined under section 46 with respect to
such property. Under paragraph (b)(2) of this section,
X’s increase in gross income for each of the 5 years
beginning with 2016 is $975 ($4,875/5 year recovery
period).
(3) Example 3. A and B, calendar year taxpay-
ers, form a partnership, the AB partnership, that
leases nonresidential real property from Y. The
property is placed in service on October 1, 2016. Y
elects under §1.48-4 to treat the AB partnership as
having acquired the property. A’s investment credit
determined under section 46 for 2016 is $3,900 and
B’s investment credit determined under section 46
for 2016 is $7,800 with respect to the property. The
shortest recovery period that could be available to
the property under section 168 is 39 years. Because
Y has elected to treat the AB partnership as having
acquired the property, Y does not reduce its basis
in the building under section 50(c). Instead, A and
B, the ultimate credit claimants, must include the
amount of the credit determined with respect to A
and B under section 46 ratably in gross income over
39 years, the shortest recovery period available with
respect to such property. Therefore, A and B must
include ratably in gross income over 39 years under
paragraph (b)(2) of this section an amount equal to
$3,900 and $7,800, respectively. Under paragraph
(b)(2) of this section, A’s increase in gross income
for each of the 39 years beginning with 2016 is $100
($3,900/39 year recovery period) and B’s is $200
($7,800/39 year recovery period). Because the gross
income A and B are required to include under para-
graph (b)(2) of this section is not an item of partner-
ship income, the rules under subchapter K applicable
to items of partnership income do not apply with re-
spect to such income. In particular, A and B are not
entitled to an increase in the outside basis of their
partnership interests under section 705(a) and are not
entitled to an increase in their capital accounts under
section 704(b).
(4) Example 4. The facts are the same as in Ex-
ample 3 in paragraph (e)(3) of this section, except
that on January 1, 2019, the lease between AB part-
nership and Y terminates (Y retains ownership of the
property), which is a recapture event under section
50(a). A’s and B’s income tax for 2019 is increased
under section 50(a) by $2,340 and $4,680, respec-
tively (60% of $3,900 and $7,800, respectively,
assuming that the aggregate decrease in the credits
allowed under section 38 was the full amount of the
investment credits determined as to A and B under
section 46). Therefore, the amount of the unrecap-
tured credit as to A and B is $1,560 and $3,120, re-
spectively (40% of $3,900 and $7,800, respectively).
The amounts that A and B previously included in
gross income under paragraph (b)(2) of this section
are $300 ($100 for each of 2016, 2017, and 2018)
and $600 ($200 for each of 2016, 2017, and 2018),
respectively. A and B are required under paragraph
(c)(1) of this section to include in gross income an
amount equal to the excess of the credit that is not
recaptured ($1,560 and $3,120, respectively) over
the total increases in gross income previously made
under paragraph (b)(2) of this section with respect to
the property ($300 and $600, respectively). There-
fore, A and B must include in gross income $1,260
and $2,520, respectively, in the taxable year of the
lease termination (2019) in addition to the recapture
amounts described above.
(5) Example 5. (i) The facts are the same as in
Example 4 in paragraph (e)(4) of this section, except
that instead of nonresidential real property, the AB
partnership leases from Y solar energy equipment
for which an energy credit under section 48 is de-
termined under section 46. Because the shortest re-
covery period that could be available to the property
under section 168 is 5 years, A and B are required
under paragraph (b)(2)(ii) of this section to include
ratably in gross income over 5 years an amount equal
to 50% of the credit determined under section 46
with respect to such property (50% of $3,900/5, or
$390, per year for A, and 50% of $7,800/5, or $780,
per year for B).
(ii) The January 1, 2019 lease termination re-
quires A’s and B’s income tax for 2019 to be in-
creased under section 50(a) by $2,340 and $4,680,
respectively (60% of $3,900 and $7,800, respective-
ly). Therefore, the amount of the unrecaptured cred-
it as to A and B is $1,560 and $3,120, respectively
(40% of $3,900 and $7,800, respectively). Under
paragraph (b)(2)(ii) of this section, the amounts
A and B previously included in gross income are
$1,170 ($390 for each of 2016, 2017, and 2018) and
$2,340 ($780 for each of 2016, 2017, and 2018),
respectively. A and B are entitled to a reduction in
gross income under paragraph (c)(2) of this section
equal to the excess of the total increases in gross in-
come made under paragraph (b)(2)(ii) of this section
($1,170 and $2,340, respectively) over 50% of the
amount of the credit that is not recaptured ($780 and
$1,560, respectively). Therefore, A and B are enti-
tled to a reduction in gross income in the amount of
$390 and $780, respectively, in the taxable year of
the lease termination (2019).
(6) Example 6. (i) The facts are the same as in
Example 3 in paragraph (e)(3) of this section, except
that on December 1, 2021, A sells its entire interest
to C, and on January 1, 2022, the lease between AB
partnership and Y terminates. At the time of the lease
termination, B is still a partner in the AB partnership.
There is no recapture event under section 50(a) be-
cause both the lease termination and the disposition
of A’s interest in the partnership occurred outside of
the recapture period.
(ii) At the time that A sold its interest in the AB
partnership to C, A had previously included $500
($100 for each of 2016-2020) in gross income under
paragraph (b)(2) of this section. Under paragraph (b)
(2) of this section, A must continue to include the re-
maining $3,400 (including $100 in 2021) in gross in-
come ratably over the remaining portion of the appli-
cable recovery period of 39 years. Alternatively, under
paragraph (d)(1) of this section, A may irrevocably
elect to include the remaining $3,400 in gross income
in the taxable year that A sold its entire interest in the
AB partnership to C (2021). Pursuant to paragraph (d)
(2) of this section, A cannot make this election in the
taxable year of the lease termination (2022).
(iii) At the time of the lease termination, B had
previously included $1,200 ($200 for each of 2016-
2021) in gross income under paragraph (b)(2) of this
section. Under paragraph (b)(2) of this section, B
must continue to include the remaining $6,600 re-
quired in gross income ratably over the remaining
portion of the applicable recovery period of 39 years.
Alternatively, under paragraph (d)(1) of this section,
B may irrevocably elect to include the remaining
$6,600 in gross income in the taxable year of the
lease termination (2022).
(f) Applicability date. This section ap-
plies to property placed in service on or
after September 19, 2016.
* * * * *
§1.50-1T [Removed]
Par. 3. Section 1.50-1T is removed.
Kirsten Wielobob
Deputy Commissioner for Services
and Enforcement.
Approved: June 21, 2019.
David J. Kautter
Assistant Secretary of the Treasury
(Tax Policy).
(Filed by the Office of the Federal Register on July
17, 2019, 4:15 p.m., and published in the issue of the
Federal Register for July 19, 2019, 84 F.R. 34755).

Bulletin No. 2019–32 593 August 5, 2019
Part III.
Additional Preventive
Care Benefits Permitted
to be Provided by a High
Deductible Health Plan
Under § 223
NOTICE 2019-45
PURPOSE
This notice expands the list of preven-
tive care benefits permitted to be provided
by a high deductible health plan (HDHP)
under section 223(c)(2) of the Internal
Revenue Code (Code) without a deduct-
ible, or with a deductible below the appli-
cable minimum deductible (self-only or
family) for an HDHP.
BACKGROUND
Section 223 of the Code permits eligi-
ble individuals to establish Health Savings
Accounts (HSAs). Among the require-
ments to qualify as an eligible individual
under section 223(c)(1) is that the individ-
ual be covered under an HDHP and have
no disqualifying health coverage. Only
eligible individuals under section 223(c)
(1) are allowed to make contributions to
an HSA or to receive contributions from
an employer to their HSA. An HDHP is
a health plan that satisfies certain require-
ments with respect to minimum deduct-
ibles and maximum out-of-pocket expens-
es.
Generally, under section 223(c)(2)(A),
an HDHP may not provide benefits for
any year until the minimum deductible
for that year is satisfied. However, sec-
tion 223(c)(2)(C) provides a safe harbor
for the absence of a deductible for pre-
ventive care. Under section 223(c)(2)(C),
“[a] plan shall not fail to be treated as a
high deductible health plan by reason of
failing to have a deductible for preventive
care (within the meaning of section 1861
of the Social Security Act, except as other-
wise provided by the Secretary).” There-
fore, an HDHP may provide preventive
care benefits without a deductible or, sub-
ject to any applicable requirements under
section 2713 of the Public Health Service
Act (PHS Act), with a deductible below
the minimum annual deductible otherwise
required by section 223(c)(2)(A). To be
a preventive care benefit as defined for
purposes of section 223, the benefit must
either be described as preventive care for
purposes of section 1861 of the Social Se-
curity Act (SSA) or be determined to be
preventive care in guidance issued by the
Department of the Treasury (Treasury De-
partment) and the Internal Revenue Ser-
vice (IRS).
1
Notice 2004-23 (2004-1 C.B. 725),
and Q&As 26 and 27 of Notice 2004-50
(2004-2 C.B. 196), provide guidance on
preventive care benefits allowed to be pro-
vided by an HDHP without regard to the
minimum deductible requirement of sec-
tion 223(c)(2)(A). Notice 2004-23 clar-
ifies that preventive care generally does
not include any service or benefit intended
to treat an existing illness, injury, or con-
dition.
Notice 2013-57 (2013-40 I.R.B. 293)
provides that any item that is a preventive
service under section 2713 of the PHS Act
will also be treated as preventive care un-
der section 223(c)(2)(C) of the Code.
Section 1001 of the Patient Protection
and Affordable Care Act, Pub. L. No. 111-
148, 124 Stat. 119 (2010)(PPACA), added
section 2713 to the PHS Act, requiring
non-grandfathered group health plans and
health insurance issuers offering group
and individual health insurance cover-
age to provide benefits for certain pre-
ventive health services without imposing
cost-sharing requirements.
2
The PPACA
also added section 715(a)(1) to the Em-
ployee Retirement Income Security Act of
1974 (ERISA) and section 9815(a)(1) to
the Code to incorporate the provisions of
part A of title XXVII of the PHS Act, in-
cluding section 2713, into ERISA and the
Code. Guidance under section 2713 of the
PHS Act is published jointly by the Trea-
sury Department and IRS and the Depart-
ments of Labor and Health and Human
Services (HHS).
Notice 2004-50, Q&A 26, provides
that any treatment incidental or ancillary
to preventive care services described in
Notice 2004-23 is within the preventive
care safe harbor if it would be unreason-
able or impracticable to perform another
procedure to treat the condition. Notice
2004-50, Q&A 27, provides that drugs
or medications are preventive care when
taken by a person who has developed risk
factors for a disease that has not manifest-
ed itself or become clinically apparent, or
to prevent the reoccurrence of a disease
from which a person has recovered.
Notice 2018-12 (2018-12 I.R.B. 441)
clarified that benefits for male sterilization
or male contraceptives are not preventive
care under the SSA, and no applicable
guidance issued by the Treasury Depart-
ment and the IRS provides for including
these benefits in the definition of preven-
tive care within the meaning of section
223(c)(2)(C). Accordingly, subject to cer-
tain transition relief, the notice provides
that a health plan that provides benefits for
male sterilization or male contraceptives
before satisfying the minimum deductible
for an HDHP under section 223(c)(2)(A)
does not constitute an HDHP, regardless
of whether the coverage of such benefits
is required by state law.
PREVENTIVE CARE AND
CHRONIC CONDITIONS
The Treasury Department and the IRS
have been directed to consider ways to ex-
pand the use and flexibility of HSAs and
HDHPs consistent with the provisions of
section 223 and the appropriate standard
for preventive care under section 223(c)
(2)(C). Specifically, on June 24, 2019,
President Trump issued Executive Order
13877,
3
“Improving Price and Quality
Transparency in American Healthcare
to Put Patients First,” including, among
other things, an order that the Secretary
1
The determination of whether an item or service is preventive care for these purposes is unrelated to the determination of whether an amount paid for an item or service is medical care under
section 213(d) as an amount paid for the prevention of disease.
2
42 U.S.C. 300gg-13.
3
84 FR 30849 (Jun. 27, 2019).

August 5, 2019 594 Bulletin No. 2019–32
of Treasury, to the extent consistent with
law, issue guidance to expand the ability
of patients to select HDHPs that can be
used alongside an HSA, and that cover
low-cost preventive care, before the de-
ductible, that helps maintain health status
for individuals with chronic conditions.
In response to Executive Order 13877,
the Treasury Department and the IRS are
issuing this notice. The Treasury Depart-
ment and the IRS continue to consider
appropriate standards for differentiating
between services and items that would be
considered preventive care for purposes of
section 223(c)(2)(C) and those that would
not.
As explained above, in prior guidance
the Treasury Department and the IRS
have stated that preventive care general-
ly does not include any service or benefit
intended to treat an existing illness, inju-
ry, or condition. However, the Treasury
Department and the IRS are aware that
the cost barriers for care have resulted in
some individuals who are diagnosed with
certain chronic conditions failing to seek
or utilize effective and necessary care that
would prevent exacerbation of the chronic
condition. Failure to address these chron-
ic conditions has been demonstrated to
lead to consequences, such as amputation,
blindness, heart attacks, and strokes that
require considerably more extensive med-
ical intervention.
The Treasury Department and the IRS,
in consultation with HHS, have deter-
mined that certain medical care services
received and items purchased, including
prescription drugs, for certain chronic
conditions should be classified as preven-
tive care for someone with that chronic
condition. These medical services and
items are limited to the specific medical
care services or items listed in the attached
Appendix for the chronic conditions spec-
ified in the Appendix. In making this de-
termination, the Treasury Department and
IRS are exercising the Secretary’s author-
ity under section 223(c)(2)(C).
In determining that these particular
medical services and items are classifiable
as preventive care with respect to an indi-
vidual with the relevant chronic condition,
consistent with the structure and purposes
of section 223, the Treasury Department
and the IRS noted that each medical ser-
vice or item, when prescribed for an indi-
vidual with the related chronic condition,
evidences the following characteristics:
• The service or item is low-cost;
• There is medical evidence supporting
high cost efficiency (a large expected
impact) of preventing exacerbation of
the chronic condition or the develop-
ment of a secondary condition; and
• There is a strong likelihood, doc-
umented by clinical evidence, that
with respect to the class of individu-
als prescribed the item or service, the
specific service or use of the item will
prevent the exacerbation of the chron-
ic condition or the development of a
secondary condition that requires sig-
nificantly higher cost treatments.
These criteria were used in determin-
ing the particular services and items listed
in the Appendix, but this notice does not
expand the scope of preventive care be-
yond the list. Therefore, services or items
that meet (or may meet) the criteria but are
not on the list are not treated as preven-
tive care as a result of this notice or on any
other basis (but see the Effect On Other
Documents section of this notice regard-
ing the continued applicability of previous
guidance).
The Treasury Department and the
IRS, in consultation with HHS, will pe-
riodically review the list of preventive
care services and items listed in the Ap-
pendix and similar services and items to
determine whether additional services or
items should be added or any should be re-
moved from the list. The periodic review
is expected to occur approximately every
five to ten years to promote stability and
to avoid confusion by participants in, or
sponsors or providers of, HDHP arrange-
ments.
LIST OF ADDITIONAL
PREVENTIVE CARE SERVICES
AND ITEMS FOR CHRONIC
CONDITIONS THAT MAY BE
TREATED AS PREVENTIVE CARE
FOR PURPOSES OF SECTION 223(c)
(2)(C)
The Treasury Department and the IRS
consider benefits for services and items
set forth in the Appendix to this notice as
preventive care for purposes of section
223(c)(2)(C). These specified services
and items are treated as preventive care
only when prescribed to treat an individ-
ual diagnosed with the associated chronic
condition specified in the Appendix, and
only when prescribed for the purpose
of preventing the exacerbation of the
chronic condition or the development of
a secondary condition. If an individual
is diagnosed with more than one chronic
condition, all listed services and items ap-
plicable to the two or more conditions are
preventive care. However, services and
items not listed in the Appendix that are
for secondary conditions or complications
that occur notwithstanding the preventive
care are not treated as preventive care for
purposes of section 223(c)(2)(C).
EFFECT ON OTHER DOCUMENTS
Any services and items that constitute
preventive care under the guidance in No-
tice 2004-23, Notice 2004-50, and Notice
2013-57 continue to be treated as pre-
ventive care for purposes of section 223.
Although this notice clarifies that benefits
for the specified services and items for in-
dividuals with the specified chronic condi-
tions listed in the Appendix are preventive
care for purposes of section 223(c)(2)(C),
it does not treat these services and items
as preventive care required to be provided
without cost sharing for purposes of sec-
tion 2713 of the PHS Act. Accordingly,
this notice does not affect the definition
of preventive care provided in § 54.9815-
2713.
EFFECTIVE DATE
This notice is effective as of July 17,
2019.
DRAFTING INFORMATION
The principal author of this notice is
William Fischer of the Office of Associ-
ate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes), though other Treasury Depart-
ment and IRS officials participated in its
development. For further information on
the provisions of this notice, contact Mr.
Fischer at (202) 317-5500 (not a toll-free
number).

Bulletin No. 2019–32 595 August 5, 2019
APPENDIX
Preventive Care for Specified ConditionsFor Individuals Diagnosed with
Angiotensin Converting Enzyme (ACE) inhibitorsCongestive heart failure, diabetes, and/or coronary artery disease
Anti-resorptive therapyOsteoporosis and/or osteopenia
Beta-blockersCongestive heart failure and/or coronary artery disease
Blood pressure monitorHypertension
Inhaled corticosteroidsAsthma
Insulin and other glucose lowering agentsDiabetes
Retinopathy screeningDiabetes
Peak flow meterAsthma
GlucometerDiabetes
Hemoglobin A1c testingDiabetes
International Normalized Ratio (INR) testingLiver disease and/or bleeding disorders
Low-density Lipoprotein (LDL) testingHeart disease
Selective Serotonin Reuptake Inhibitors (SSRIs)Depression
StatinsHeart disease and/or diabetes

NOTE. This revenue procedure will be reproduced as the next revision of IRS Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3.
26 CFR 601.602: Tax forms and instructions.
(Also Part I, Sections 6041, 6051, 6071, 6081, 6091; 1.6041-1, 1.6041-2, 31.6051-1, 31.6051-2, 31.6071(a)-1, 31.6081(a)-1, 31.6091-1.)
Rev. Proc. 2019-28
TABLE OF CONTENTS
Part 1 – GENERAL
Section 1.1 – Purpose ................................................................................597
Section 1.2 – What’s New .............................................................................599
Section 1.3 – General Rules for Paper Forms W-2 and W-3 ...................................................599
Section 1.4 – General Rules for Filing Forms W-2 (Copy A) Electronically ......................................600
Part 2 – SPECIFICATIONS FOR SUBSTITUTE FORMS W-2 AND W-3
Section 2.1 – Specifications for Red-Ink Substitute Form W-2 (Copy A) and Form W-3 Filed With the SSA ............601
Section 2.2 – Specifications for Substitute Black-and-White Copy A and W-3 Forms Filed With the SSA ..............604
Section 2.3 – Requirements for Substitute Forms Furnished to Employees (Copies B, C, and 2 of Form W-2) ...........606
Section 2.4 – Electronic Delivery of Form W-2 and W-2c Recipient Statements ..................................609
Part 3 – ADDITIONAL INSTRUCTIONS
Section 3.1 – Additional Instructions for Form Printers ......................................................610
Section 3.2 – Instructions for Employers .................................................................611
Section 3.3 – OMB Requirements for Both Red-Ink and Black-and-White Substitute Forms W-2 and W-3 .............612
Section 3.4 – Order Forms and Instructions ...............................................................612
Section 3.5 – Effect on Other Documents .................................................................613
Section 3.6 – Exhibits ................................................................................613
August 5, 2019 596 Bulletin No. 2019–32

Bulletin No. 2019–32 597 August 5, 2019
Part 1
General
Section 1.1 – Purpose
.01 The purpose of this revenue procedure is to state the requirements of the Internal Revenue
Service (IRS) and the Social Security Administration (SSA) regarding the preparation and use of
substitute forms for Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and
Tax Statements, for wages paid during the 2019 calendar year.
.02 For purposes of this revenue procedure, substitute Form W-2 (Copy A) and substitute Form
W-3 are forms that are not printed by the IRS. Copy A or any other copies of a substitute Form W-2
or a substitute Form W-3 must conform to the specifications in this revenue procedure to be ac-
ceptable to the IRS and the SSA. No IRS office is authorized to allow deviations from this revenue
procedure. Preparers also should refer to the 2019 General Instructions for Forms W-2 and W-3 for
details on how to complete these forms. See Section 3.4 for information on obtaining the official
IRS forms and instructions. See Sections 2.3 and 2.4 for requirements for the copies of substitute
forms furnished to employees and for electronic delivery of employee copies.
.03 For purposes of this revenue procedure, the official IRS-printed red dropout ink Forms W-2
(Copy A) and W-3, and their exact substitutes, are referred to as “red-ink.” The SSA-approved
black-and-white Forms W-2 (Copy A) and W-3 are referred to as “substitute black-and-white Copy
A” and “substitute black-and-white W-3” forms.
Any questions about the red-ink Form W-2 (Copy A) and Form W-3 and the substitute employee
statements should be emailed to Substituteforms@irs.gov. Please enter “Substitute Forms” on the
subject line. Or send your questions to:
Internal Revenue Service
Attn: Substitute Forms Program
SE:W:CAR:MP:P:TP
1111 Constitution Ave. NW Room 6550
Washington, DC 20224
Any questions about the black-and-white Copy A and W-3 forms should be emailed to copy.a.
forms@ssa.gov or sent to:
Social Security Administration
Direct Operations Center
Attn: Substitute Black-and-White Copy A Forms, Room 341
1150 E. Mountain Drive
Wilkes-Barre, PA 18702-7997
Note. You should receive a response from either the IRS or the SSA within 30 days.
.04 Some Forms W-2 that include logos, slogans, and advertisements (including advertisements
for tax preparation software) may be considered as suspicious or altered Forms W-2 (also known
as “questionable Forms W-2”). An employee may not recognize the importance of the employee
copy for tax reporting purposes due to the use of logos, slogans, and advertisements. Thus, the
IRS has determined that logos, slogans, and advertising will not be allowed on Copy A of Forms
W-2, Forms W-3, or any employee copies reporting wages, with the following exceptions for the
employee copies.

August 5, 2019 598 Bulletin No. 2019–32
• Forms may include the exact name of the employer or agent, primary trade name, trademark,
service mark, or symbol of the employer or agent.
• Forms may include an embossment or watermark on the information return (and copies) that is
a representation of the name, a primary trade name, trademark, service mark, or symbol of the
employer or agent.
• Presentation may be in any typeface, font, stylized fashion, or print color normally used by the
employer or agent, and used in a nonintrusive manner.
• These items must not materially interfere with the ability of the recipient to recognize, under-
stand, and use the tax information on the employee copies.
The IRS e-file logo on the IRS official employee copies may be included, but it is not required, on
any of the substitute form copies.
The information return and employee copies must clearly identify the employer’s name associated
with its employer identification number.
Logos and slogans may be used on permissible enclosures, such as a check or account statement,
but not on information returns and employee copies.
Forms W-2 and W-3 are subject to annual review and possible change. This revenue procedure
may be revised to state other requirements of the IRS and the SSA regarding the preparation and
use of substitute forms for Form W-2 and Form W-3 for wages paid during the 2019 calendar year
at a future date. If you have comments about the restrictions on including logos, slogans, and ad-
vertising on information returns and employee copies, send or email your comments to: Internal
Revenue Service, Attn: Substitute Forms Program, SE:W:CAR:MP:P:TP, 1111 Constitution Ave.
NW, Room 6550, Washington, DC 20224, or Substituteforms@irs.gov.
.05 The Internal Revenue Service/Information Returns Branch (IRS/IRB) maintains a centralized
customer service call site to answer questions related to information returns (Forms W-2, W-3,
W-2c, W-3c, 1099 series, 1096, etc.).
You can reach the call site at 866-455-7438 (toll free) or 304-263-8700 (not a toll-free number).
Persons with a hearing or speech disability with access to Telecommunication Device for the Deaf
(TDD) can call 304-579-4827 (not a toll-free number). You also may email questions to mccirp@
irs.gov. Do not submit employee information via email because it is not secure and the information
may be compromised.
File paper or electronic Forms W-2 (Copy A) with the SSA. IRS/IRB does not process Forms W-2
(Copy A). However, IRS/IRB does process Form 8508, Request for Waiver From Filing Informa-
tion Returns Electronically, and Form 8809, Application for Extension of Time To File Informa-
tion Returns, for Forms W-2 (Copy A) and requests for an extension of time to furnish the employ-
ee copies of Form W-2. See Publication 1220, Specifications for Electronic Filing of Forms 1097,
1098, 1099, 3921, 3922, 5498, and W-2G, for information on waivers and extensions of time.
.06 The following form instructions and publications provide more detailed filing procedures for
certain information returns.
• General Instructions for Forms W-2 and W-3 (Including Forms W-2AS, W-2CM, W-2GU,
W-2VI, W-3SS, W-2c, and W-3c).
• Publication 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c.

Bulletin No. 2019–32 599 August 5, 2019
Section 1.2 – What’s New
.01 Box 9 Verification code. The Verification code pilot program has ended. Box 9 is no longer
in use.
.02 Editorial changes. We made editorial changes. Redundancies were eliminated as much as
possible.
Section 1.3 – General Rules for Paper Forms W-2 and W-3
.01 Employers not filing electronically must file paper Forms W-2 (Copy A) along with Form W-3
with the SSA by using either the official IRS form or a substitute form that exactly meets the spec-
ifications shown in Parts 2 and 3 of this revenue procedure.
Note. Substitute territorial forms (W-2AS, W-2GU, W-2VI, W-3SS) also must conform to the
specifications as outlined in this revenue procedure. These forms require the form designation
(“W-2AS,” “W-2GU,” “W-2VI”) on Copy A to be in black ink. If you are an employer in the Com-
monwealth of the Northern Mariana Islands, you must contact Department of Finance, Division of
Revenue and Taxation, Commonwealth of the Northern Mariana Islands, P.O. Box 5234 CHRB,
Saipan, MP 96950 or www.cnmidof.net to get Form W-2CM and instructions for completing and
filing the form. For information on Forms 499R-2/W-2PR, go to www.hacienda.gobierno.pr.
Employers may design their own statements to furnish to employees. Employee statements de-
signed by employers must comply with the requirements shown in Parts 2 and 3.
.02 Red-ink substitute forms that completely conform to the specifications contained in this reve-
nue procedure may be privately printed without prior approval from the IRS or the SSA. Only the
substitute black-and-white Copy A and W-3 forms need to be submitted to the SSA for approval,
prior to their use (see Section 2.2).
.03 As in the past, SSA-approved black-and-white Copy A and Form W-3 may be generated using
a printer by following all guidelines and specifications (also see Section 2.2). In general, regard-
less of the method of entering data, use black ink on Forms W-2 and W-3, which provides better
readability for processing by scanning equipment. Colors other than black are not easily read by
the scanner and may result in delays or errors in the processing of Forms W-2 (Copy A) and W-3.
The printing of the data should be centered within the boxes. The size of the variable data must be
printed in a font no smaller than 10-point.
Note. With the exception of the identifying number, the year, the form number for Form W-3, and
the corner register marks, the preprinted form layout for the red-ink Forms W-2 (Copy A) and W-3
must be in Flint J-6983 red OCR dropout ink or an exact match.
.04 Substitute forms filed with the SSA and substitute copies furnished to employees that do not
conform to these specifications are unacceptable. Penalties may be assessed for not complying
with the form specifications. Forms W-2 (Copy A) and W-3 filed with the SSA that do not conform
may be returned.

August 5, 2019 600 Bulletin No. 2019–32
.05 Substitute red-ink forms should not be submitted to either the IRS or the SSA for specific ap-
proval. If you are uncertain of any specification and want clarification, do the following.
• Submit a letter or email to the appropriate address in Section 1.1 citing the specification.
• State your understanding of the specification.
• Enclose an example (if appropriate) of how the form would appear if produced using your un-
derstanding. Do not use actual employee information in the example.
• Be sure to include your name, complete address, and phone number with your correspondence.
If you want the IRS to contact you via email, also provide your email address.
.06 Any questions about the specifications, especially those for the red-ink Form W-2 (Copy A)
and Form W-3, should be emailed to Substituteforms@irs.gov.
Please enter “Substitute Forms” on the subject line. Or send your questions to:
Internal Revenue Service
Attn: Substitute Forms Program
SE:W:CAR:MP:P:TP
1111 Constitution Ave. NW Room 6550
Washington, DC 20224
Any questions about the substitute black-and-white Copy A and W-3 should be emailed to copy.a.
forms@ssa.gov or sent to:
Social Security Administration
Direct Operations Center
Attn: Substitute Black-and-White Copy A Forms, Room 341
1150 E. Mountain Drive
Wilkes-Barre, PA 18702-7997
Note. You should receive a response within 30 days from either the IRS or the SSA.
.07 Forms W-2 and W-3 are subject to annual review and possible change. Therefore, employers
are cautioned against overstocking supplies of privately printed substitutes.
.08 Separate instructions for Forms W-2 and W-3 are provided in the 2019 General Instructions
for Forms W-2 and W-3. Form W-3 should be used only to transmit paper Forms W-2 (Copy A).
Form W-3 is a single sheet including only essential filing information. Be sure to make a copy of
your completed Form W-3 for your records. You can order current year official IRS Forms W-2,
W-2AS, W-2GU, W-2VI, W-3, and W-3SS, and the 2019 General Instructions for Forms W-2 and
W-3, online at www.irs.gov/OrderForms. The IRS provides only cut sheet sets of Forms W-2 and
cut sheets of Form W-3.
.09 Because substitute Forms W-2 (Copy A) and W-3 are machine-imaged and scanned by the
SSA, the forms must meet the same specifications as the official IRS Forms W-2 and W-3 (as
shown in the exhibits).
Section 1.4 – General Rules for Filing Forms W-2 (Copy A) Electronically

Bulletin No. 2019–32 601 August 5, 2019
.01 Employers must file Forms W-2 (Copy A) with the SSA electronically if they are required to
file 250 or more for a calendar year unless the IRS grants a waiver. For details, see the 2019 Gen-
eral Instructions for Forms W-2 and W-3. The SSA publication EFW2, Specifications for Filing
Forms W-2 Electronically, contains specifications and procedures for electronic filing of Form W-2
information with the SSA. Employers are cautioned to obtain the most recent revision of EFW2
(and supplements) in case there are any subsequent changes in specifications and procedures.
.02 You may obtain a copy of the EFW2 by:
• Accessing the SSA website at www.ssa.gov/employer/ EFW2&EFW2C.htm.
.03 Electronic filers do not file a paper Form W-3. See the SSA publication EFW2 for guidance on
transmitting Form W-2 (Copy A) information to SSA electronically.
.04 Employers filing fewer than 250 Forms W-2 are encouraged to electronically file Forms W-2
(Copy A) with the SSA. Doing so will enhance the timeliness and accuracy of forms processing.
You may visit the SSA’s employer website at www.ssa.gov/employer. This helpful site has links
to Business Services Online (BSO) and tutorials on registering and using BSO to file your Forms
W-2.
.05 Employers who do not comply with the electronic filing requirements for Form W-2 (Copy
A) and who are not granted a waiver by the IRS may be subject to penalties. Employers who file
Form W-2 information with the SSA electronically must not send the same data to the SSA on
paper Forms W-2 (Copy A). Any duplicate reporting may subject filers to unnecessary contacts by
the SSA or the IRS.
Part 2
Specifications for Substitute Forms W-2 and W-3
Section 2.1 – Specifications for Red-Ink Substitute Form W-2 (Copy A) and Form W-3 Filed With the SSA
.01 The official IRS-printed red dropout ink Form W-2 (Copy A) and W-3 and their exact substi-
tutes are referred to as red-ink in this revenue procedure. Employers may file substitute Forms W-2
(Copy A) and W-3 with the SSA. The substitute forms must be exact replicas of the official IRS
forms with respect to layout and content because they will be read by scanner equipment.
Note. Even the slightest deviation can result in incorrect scanning, and may affect money amounts
reported for employees.
.02 Paper used for cut sheets and continuous-pinfed forms for substitute Form W-2 (Copy A) and
Form W-3 that are to be filed with the SSA must be white 100% bleached chemical wood, 18-20
pound paper only, optical character recognition (OCR) bond produced in accordance with the
following specifications.
•Acidity: Ph value, average, not less than . . . . . . . . . . . . . . . . . . . . ..4.5
•Basis weight: 17 x 22 inch 500 cut sheets, pound . . . . . . . . . . . . . . ..18-20
•Metric equivalent—gm./sq. meter
(a tolerance of +5 pct. is allowed) . . . . . . . . . . . . . . . . . . . . . . . ....68-75

August 5, 2019 602 Bulletin No. 2019–32
•Stiffness: Average, each direction, not less than—milligrams
Cross direction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Machine direction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80
•Tearing strength: Average, each direction, not less
than—grams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
•Opacity: Average, not less than—percent . . . . . . . . . . . . . . . . . . . . .82
•Reflectivity: Average, not less than—percent . . . . . . . . . . . . . . . . . .68
•Thickness: Average—inch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..0.0038
Metric equivalent—mm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.097
(a tolerance of +0.0005 inch (0.0127 mm) is allowed). Paper cannot vary
more than 0.0004 inch (0.0102 mm) from one edge to the other.
•Porosity: Average, not less than—seconds . . . . . . . . . . . . . . . . . 10
•Finish (smoothness): Average, each side—seconds . . . . . . . . . . . 20-55
(for information only) the Sheffield equivalent— units . . . . . . . . . . . . . . . .170-d200
•Dirt: Average, each side, not to exceed—parts per million . . . . . . . . . . . . .8
Note. Reclaimed fiber in any percentage is permitted, provided the requirements of this standard
are met.
.03 All printing of red-ink substitute Forms W-2 (Copy A) and W-3 must be in Flint red OCR
dropout ink except as specified below. The following must be printed in nonreflective black ink.
• Identifying number “22222” or “33333” at the top of the forms.
• Tax year at the bottom of the forms.
• The four (4) corner register marks on the forms.
• The form identification number (“W-3”) at the bottom of Form W-3.
• All the instructions below Form W-3 beginning with “Send this entire page....” line to the bot-
tom of Form W-3.
.04 The vertical and horizontal spacing for all federal payment and data boxes on Forms W-2 and
W-3 must meet specifications. On Form W-3 and Form W-2 (Copy A), all the perimeter rules must
be 1-point (0.014-inch), while all other rules must be one-half point (0.007-inch). Vertical rules
must be parallel to the left edge of the form; horizontal rules parallel to the top edge.
.05 The official red-ink Form W-3 and Form W-2 (Copy A) are 7.50 inches wide. Employers fil-
ing Forms W-2 (Copy A) with the SSA on paper also must file a Form W-3. Form W-3 must be
the same width (7.50 inches) as the Form W-2. One Form W-3 is printed on a standard size, 8.5
x 11-inch page. Two official Forms W-2 (Copy A) are contained on a single 8.5 x 11-inch page
(exclusive of any snap-stubs).
.06 The top, left, and right margins for the Form W-2 (Copy A) and Form W-3 are 0.50 inches (1/2
inch). All margins must be free of printing except for the words “DO NOT STAPLE” on red-ink
Form W-3. The space between the two Forms W-2 (Copy A) is 1.33 inches.
.07 The identifying numbers are “22222” for Form W-2 (Copies A (and 1)) and “33333” for Form
W-3. No printing should appear anywhere near the identifying numbers.
Note. The identifying number must be printed in nonreflective black ink in OCR-A font of 10
characters per inch.

Bulletin No. 2019–32 603 August 5, 2019
.08 The depth of the individual scannable image on a page must be the same as that on the official
IRS forms. The depth from the top line to the bottom line of an individual Form W-2 (Copy A)
must be 4.17 inches and the depth from the top line to the bottom line of Form W-3 must be 4.67
inches.
.09 Continuous-pinfed Forms W-2 (Copy A) must be separated into 11-inch deep pages. The pin-
fed strips must be removed when Forms W-2 (Copy A) are filed with the SSA. The two Forms W-2
(Copy A) on the 11-inch page must not be separated (only the pages are to be separated (burst)).
The words “Do Not Cut, Fold, or Staple Forms on This Page” must be printed twice between the
two Forms W-2 (Copy A) in Flint red OCR dropout ink. All other copies (Copies 1, B, C, 2, and
D) must be able to be distinguished and separated into individual forms.
.10 Box 12 of Form W-2 (Copy A) contains four entry boxes – 12a, 12b, 12c, and 12d. Do not
make more than one entry per box. Enter your first code in box 12a (for example, enter Code D
in box 12a, not 12d, if it is your first entry). If more than four items need to be reported in box 12,
use a second Form W-2 to report the additional items (see “Multiple forms” in the 2019 General
Instructions for Forms W-2 and W-3). Do not report the same federal tax data to the SSA on more
than one Form W-2 (Copy A). However, repeat the identifying information (employee’s name,
address, and SSN; employer’s name, address, and EIN) on each additional form.
.11 The checkboxes in box 13 of Form W-2 (Copy A) and in box b of Form W-3 must be 0.14 inch-
es each. The space before the first checkbox is 0.24 inches; the space between the first and second
checkbox and between the second and third checkbox must be 0.36 inches; the space between the
third checkbox to the right border of box 13 should be 0.32 inches (see Exhibit A).
Note. More than 50% of an applicable checkbox must be covered by an “X.”
.12 All substitute Forms W-2 (Copy A) and W-3 in the red-ink format must have the tax year, form
number, and form title printed on the bottom face of each form using type identical to that of the
official IRS form. The red-ink substitute Form W-2 (Copy A) and Form W-3 must have the form
producer’s EIN entered directly to the left of “Department of the Treasury,” in red.
.13 The words “For Privacy Act and Paperwork Reduction Act Notice, see the separate instruc-
tions.” must be printed in Flint red OCR dropout ink in the same location as on the official Form
W-2 (Copy A). The words “For Privacy Act and Paperwork Reduction Act Notice, see the separate
instructions.” must be printed at the bottom of the page of Form W-3 in black ink.
.14 The Office of Management and Budget (OMB) Number must be printed on substitute Forms
W-3 and W-2 (on each ply) in the same location as on the official IRS forms.
.15 All substitute Forms W-3 must include the instructions that are printed on the same sheet below
the official IRS form.
.16 The back of substitute Form W-2 (Copy A) and Form W-3 must be free of all printing.
.17 All copies must be clearly legible. Fading must be minimized to assure legibility.
.18 Chemical transfer paper is permitted for Form W-2 (Copy A) only if the following standards
are met.
• Only chemically backed paper is acceptable for Form W-2 (Copy A). Front and back chemical-
ly treated paper cannot be processed properly by scanning equipment.
• Chemically transferred images must be black.
• Carbon-coated forms are not permitted.

August 5, 2019 604 Bulletin No. 2019–32
.19 The Government Printing Office (GPO) symbol and the Catalog Number (Cat. No.) must be
deleted from substitute Form W-2 (Copy A) and Form W-3.
Section 2.2 – Specifications for Substitute Black-and-White Copy A and W-3 Forms Filed With the SSA
.01 The SSA-approved substitute black-and-white Forms W-2 (Copy A) and W-3 are referred to
as substitute black-and-white Copy A and W-3. Specifications for the substitute black-and-white
Copy A and W-3 are similar to the red-ink forms (Section 2.1) except for the items that follow (see
Exhibits D and E). Exhibits are samples only and must not be downloaded to meet tax obligations.
1. Forms must be printed on 8.5 x 11-inch single-sheet paper only. There must be two Forms W-2
(Copy A) printed on a page. There must be no horizontal perforations between the two Forms
W-2 (Copy A) on each page.
2. All forms and data must be printed in nonreflective black ink only.
3. The data and forms must be programmed to print simultaneously. Forms cannot be produced
separately from wage data entries.
4. The forms must not contain corner register marks.
5. The forms must not contain any shaded areas, including those boxes that are entirely shaded
on the red-ink forms.
6. Identifying numbers on both Form W-2 (“22222”) and Form W-3 (“33333”) must be preprint-
ed in 14-point Arial bold font or a close approximation.
7. The form numbers (“W-2” and “W-3”) must be in 18-point Arial font or a close approxima-
tion. The tax year (for example, “2019”) on Forms W-2 (Copy A) and W-3 must be in 20-point
Arial font or a close approximation.
8. No part of the box titles or the data printed on the forms may touch any of the vertical or
horizontal lines, nor should any of the data intermingle with the box titles. The data should be
centered in the boxes.
9. Do not print any information in the margins of the substitute black-and-white Copy A and W-3
forms (for example, do not print “DO NOT STAPLE” in the top margin of Form W-3).
10. The word “Code” must not appear in box 12 on Form W-2 (Copy A).
11. A 4-digit vendor code preceded by four zeros and a slash (for example, 0000/9876) must
appear in 12-point Arial font, or a close approximation, under the tax year in place of the Cat.
No. on Form W-2 (Copy A) and in the bottom right corner of the “For Official Use Only” box
at the bottom of Form W-3. Do not display the form producer’s EIN to the left of “Department
of the Treasury.” The vendor code will be used to identify the form producer.
12. Do not print Catalog Numbers (Cat. No.) on either Form W-2 (Copy A) or Form W-3.
13. Do not print the checkboxes in:
• Box 13 of Form W-2 (Copy A). The “X” should be programmed to be printed and centered
directly below the applicable box title.

Bulletin No. 2019–32 605 August 5, 2019
14. Do not print dollar signs. If there are no money amounts being reported, the entire field should
be left blank.
15. The space between the two Forms W-2 (Copy A) is 1.33 inches.
.02 You must submit samples of your substitute black-and-white Copy A and W-3 forms to the
SSA. Only black-and-white substitute Forms W-2 (Copy A) and W-3 for tax year 2019 will be
accepted for approval by the SSA. Questions regarding other red-ink forms (that is, red-ink Forms
W-2c, W-3c, 1099 series, 1096, etc.) must be directed to the IRS only.
.03 You will be required to send one set of blank and one set of dummy-data substitute black-and-
white Copy A and W-3 forms for approval. Sample data entries should be filled in to the maximum
length for each box entry, preferably using numeric data or alpha data, depending upon the type
required to be entered. Include in your submission the name, telephone number, fax number, and
email address of a contact person who can answer questions regarding your sample forms.
.04 To receive approval, you may first contact the SSA at copy.a.forms@ssa.gov to obtain a tem-
plate and further instructions. You may send your 2019 sample substitute black-and-white Copy
A and W-3 forms to:
Social Security Administration
Direct Operations Center
Attn: Substitute Black-and-White Copy A Forms, Room 341
1150 E. Mountain Drive
Wilkes-Barre, PA 18702-7997
Send your sample forms via private mail carrier or certified mail in order to verify their receipt. You
can expect approval (or disapproval) by the SSA within 30 days of receipt of your sample forms.
.05 Vendor codes from the National Association of Computerized Tax Processors (NACTP)
are required by those companies producing the W-2 family of forms as part of a product for resale
to be used by multiple employers and payroll professionals. Employers developing Forms W-2 or
W-3 to be used only for their individual company require a vendor code issued by the Social
Security Administration.
.06 The 4-digit vendor code preceded by four zeros and a slash (0000/9876) must be preprinted on
the sample substitute black-and-white Copy A and W-3 forms. Forms not containing a vendor code
will be rejected and will not be submitted for testing or approval. If you have a valid vendor code
provided to you through the NACTP, you should use that code. If you do not have a valid vendor
code, contact the Social Security Administration at copy.a.forms@ssa.gov to obtain an SSA-issued
code. (Additional information on vendor codes may be obtained from the SSA or the NACTP via
email at president@nactp.org.)
.07 If you use forms produced by a vendor and have questions concerning approval, do not
send the forms to the SSA for approval. Instead, you may contact the software vendor to obtain a
copy of SSA’s dated approval notice supplied to that vendor.
.08 In response to feedback from the user community, the SSA (and the IRS) have added a 2-D
barcoded version for the substitute Form W-2 and Form W-3 to the list of acceptable submission
formats. This version is an optional alternative to the nonbarcoded substitute Forms W-2 and W-3.
Both versions are fully supported by the SSA. At this time, neither the IRS nor the SSA mandates
the use of 2-D barcoded substitute forms.
Note. The data contained in the barcode must not differ from the data displayed on the form. If
they differ, the data in the barcode will be ignored and the data displayed on the form will be con-
sidered the submission. This also occurs when the barcode is not read correctly. The information
on the form needs to be manually keyed into the database.

August 5, 2019 606 Bulletin No. 2019–32
To get the barcode information:
• See the SSA’s BSO website at www.ssa.gov/bso,
• Get the PDF version of the specifications at copy.a.forms@ssa.gov, and
• Download the substitute W3/W2 2-D barcoding standards from www.ssa.gov/employer/sub-
BarCodeStd.pdf.
If you are using a form produced by another vendor that contains a 2-D barcode, you must submit
the form for approval using your own NACTP code. Prior to sending your first submission for ap-
proval, contact the SSA at copy.a.forms@ssa.gov to register your NACTP code and explain what
forms you want to submit.
Section 2.3 – Requirements for Substitute Forms Furnished to Employees (Copies B, C, and 2 of Form W-2)
Note. Rules in Section 2.3 apply only to employee copies of Form W-2 (Copies B, C, and 2).
Printers are cautioned that the paper filers who send Forms W-2 (Copy A) to the SSA must follow
the requirements in Sections 2.1 and/or 2.2 above.
.01 All employers (including those who file electronically) must furnish employees with at least
two copies of Form W-2 (three or more for employees required to file a state, city, or local income
tax return). The following rules are guidelines for preparing employee copies.
The dimensions of these copies (Copies B, C, and 2), but not Copy A, may differ from the di-
mensions of the official IRS form to allow space for reporting additional information, including
additional entries such as withholding for health insurance, union dues, bonds, or charity in box
14. The limitation of a maximum of four items in box 12 of Form W-2 applies only to Copy A,
which is filed with the SSA.
Note. Employee copies (Copies B, C, and 2 of Form W-2) may be furnished electronically if em-
ployees give their consent (as described in Treasury Regulations Section 31.6051-1(j)). See also
Publication 15-A, Employer’s Supplemental Tax Guide.
.02 The minimum dimensions for employee copies only (not Copy A) of Form W-2 should be 2.67
inches deep by 4.25 inches wide. The maximum dimensions should be no more than 6.50 inches
deep by no more than 8.50 inches wide.
Note. The maximum and minimum size specifications in this document are for tax year 2019 only
and may change in future years.
.03 Either horizontal or vertical format is permitted (see Exhibit F).
.04 The paper for all copies must be white and printed in black ink. The substitute Copy B, which
employees are instructed to attach to their federal income tax returns, should be at least 9-pound
paper (basis 17 x 22-500). Other copies furnished to employees also should be at least 9-pound
paper (basis 17 x 22-500) unless a state, city, or local government provides other specifications.
.05 Employee copies of Form W-2 (Copies B, C, and 2), including those that are printed on a single
sheet of paper, must be easily separated. The best method of separation is to provide perforations
between the individual copies. Whatever method of separation is used, each copy should be easily
distinguished.

Bulletin No. 2019–32 607 August 5, 2019
Note. Perforation does not apply to printouts of copies of Forms W-2 that are furnished electron-
ically to employees (as described in Treasury Regulations Section 31.6051-1(j)). However, these
employees should be cautioned to carefully separate the copies of Form W-2. See Publication 15-A
for information on electronically furnishing Forms W-2 to employees.
.06 Interleaved carbon and chemical transfer paper employee copies must be clearly legible. Fad-
ing must be minimized to assure legibility.
.07 The electronic tax logo on the IRS official employee copies is not required on any of the sub-
stitute form copies. To avoid confusion and questions by employees, employers are encouraged to
delete the identifying number (“22222”) from the employee copies of Form W-2.
.08 All substitute employee copies must contain boxes, box numbers, and box titles that match the
official IRS Form W-2. Boxes that do not apply can be deleted. However, certain core boxes must
be included. The placement, numbering, and size of this information is specified as follows.
• The core boxes must be printed in the exact order shown on the official IRS form. The items and
box numbers that constitute the core data are:
Box 1 — Wages, tips, other compensation,
Box 2 — Federal income tax withheld,
Box 3 — Social security wages,
Box 4 — Social security tax withheld,
Box 5 — Medicare wages and tips, and
Box 6 — Medicare tax withheld.
• The core data boxes (1 through 6) must be placed in the upper right of the form. Substitute verti-
cal-format copies may have the core data across the top of the form. Boxes or other information
definitely will not be permitted to the right of the core data.
• The form title, number, or copy designation (B, C, or 2) may be at the top of the form. Also, a
reversed or blocked-out area to accommodate a postal permit number or other postal consider-
ations is allowed in the upper right.
• Boxes 1 through 6 must each be a minimum of 1⅛ inches wide x ¼ inch deep.
• Other required boxes are:
a) Employee’s social security number,
b) Employer identification number (EIN),
c) Employer’s name, address, and ZIP code,
e) Employee’s name, and
f) Employee’s address and ZIP code.
Identifying items must be present on the form and be in boxes similar to those on the official IRS
form. However, they may be placed in any location other than the top or upper right. You do not
need to use the lettering system (a-c, e-f) used on the official IRS form. The employer identification
number (EIN) may be included with the employer’s name and address and not in a separate box.

August 5, 2019 608 Bulletin No. 2019–32
Note. Box d (“Control number”) is not required.
.09 All copies of Form W-2 furnished to employees must clearly show the form number, the form
title, and the tax year prominently displayed together in one area of the form. The title of Form
W-2 is “Wage and Tax Statement.” It is recommended (but not required) that this be located on the
bottom left of substitute Forms W-2. The reference to the “Department of the Treasury — Internal
Revenue Service” must be on all copies of substitute Forms W-2 furnished to employees. It is rec-
ommended (but not required) that this be located on the bottom right of Form W-2.
.10 If the substitute employee copies are labeled, the forms must contain the applicable description.
• “Copy B, To Be Filed With Employee’s FEDERAL Tax Return.”
• “Copy C, For EMPLOYEE’S RECORDS.”
• “Copy 2, To Be Filed With Employee’s State, City, or Local Income Tax Return.”
It is recommended (but not required) that these be located on the lower left of Form W-2. If the
substitute employee copies are not labeled as to the disposition of the copies, then written notifica-
tion using similar wording must be provided to each employee.
.11 The tax year (for example, 2019) must be clearly printed on all copies of substitute Form W-2.
It is recommended (but not required) that this information be in the middle at the bottom of the
Form W-2. The use of 24-pt. OCR-A font is recommended (but not required).
.12 Boxes 1 and 2 (if applicable) on Copy B must be outlined in bold 2-point rule or highlighted
in some manner to distinguish them. If “Allocated tips” are being reported, it is recommended (but
not required) that box 8 also be outlined. If reported, “Social security tips” (box 7) must be shown
separately from “Social security wages” (box 3).
Note. Boxes 8 and 9 may be omitted if not applicable.
.13 If employers are required to withhold and report state or local income tax, the applicable boxes
also are considered core information and must be placed at the bottom of the form. State informa-
tion is included in:
• Box 15 (State, Employer’s state ID number)
• Box 16 (State wages, tips, etc.)
• Box 17 (State income tax)
Local information is included in:
• Box 18 (Local wages, tips, etc.)
• Box 19 (Local income tax)
• Box 20 (Locality name)
.14 Boxes 7 through 14 may be omitted from substitute employee copies unless the employer must
report any of that information to the employee. For example, if an employee did not have “Social
security tips” (box 7), the form could be printed without that box. But if an employer provided
dependent care benefits, the amount must be reported separately, shown in box 10, and labeled
“Dependent care benefits.”

Bulletin No. 2019–32 609 August 5, 2019
.15 Employers may enter more than four codes in box 12 of substitute Copies B, C, and 2 (and 1
and D) of Form W-2, but each entry must use Codes A-HH (see the 2019 General Instructions for
Forms W-2 and W-3).
.16 If an employer has employees in any of the three categories in box 13, all checkbox headings
must be shown and the proper checkmark made, when applicable.
.17 Employers may use box 14 for any other information that they wish to give to their employees.
Each item must be labeled. (See the instructions for box 14 in the 2019 General Instructions for
Forms W-2 and W-3.)
.18 The front of Copy C of a substitute Form W-2 must contain the note “This information is being
furnished to the Internal Revenue Service. If you are required to file a tax return, a negligence
penalty or other sanction may be imposed on you if this income is taxable and you fail to report it.”
.19 Instructions similar to those contained on the back of Copies B, C, and 2 of the official IRS
Form W-2 must be provided to each employee. An employer may modify or delete instructions
that do not apply to its employees. (For example, remove Railroad Retirement Tier 1 and Tier 2
compensation information for nonrailroad employees or information about dependent care benefits
that the employer does not provide.)
.20 Employers must notify their employees who have no income tax withheld that they may be
able to claim a tax refund because of the earned income credit (EIC). They will meet this notifica-
tion requirement if they furnish a substitute Form W-2 with the EIC notice on the back of Copy B,
IRS Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or on their
own statement containing the same wording. They also may change the font on Copies B, C, and 2
so that the EIC notification and Form W-2 instructions fit differently. For more information about
notification requirements, see Notice 1015, “Have You Told Your Employees About the Earned
Income Credit (EIC)?”
Note. An employer does not have to notify any employee who claimed exemption from withhold-
ing on Form W-4, Employee’s Withholding Allowance Certificate, for the calendar year.
Section 2.4 – Electronic Delivery of Form W-2 and W-2c Recipient Statements
.01 If you are required to furnish a written statement (Copy B or an acceptable substitute) to a
recipient, then you may furnish the statement electronically instead of on paper. This includes
furnishing the statement to recipients of Forms W-2 and W-2c.
If you meet the requirements listed below, you are treated as furnishing the statement timely.
.02 The recipient must consent in the affirmative and not have withdrawn the consent before the
statement is furnished. The consent by the recipient must be made electronically in a way that
shows that he or she can access the statement in the electronic format in which it will be furnished.
You must notify the recipient of any hardware or software changes prior to furnishing the state-
ment. A new consent to receive the statement electronically is required after any new hardware or
software is put into service.
To furnish Forms W-2 electronically, you must meet the following disclosure requirements as
described in Treasury Regulations Section 31.6051-1(j) and Publication 15-A and provide a clear
and conspicuous statement of each requirement to your employees.

August 5, 2019 610 Bulletin No. 2019–32
• The employee must be informed that he or she will receive a paper Form W-2 if consent isn’t
given to receive it electronically.
• The employee must be informed of the scope and duration of the consent.
• The employee must be informed of any procedure for obtaining a paper copy of his or her Form
W-2 and whether or not the request for a paper statement is treated as a withdrawal of his or her
consent to receiving his or her Form W-2 electronically.
• The employee must be notified about how to withdraw a consent and the effective date and
manner by which the employer will confirm the withdrawn consent.
• The employee also must be notified that the withdrawn consent doesn’t apply to the previously
issued Forms W-2.
• The employee must be informed about any conditions under which electronic Forms W-2 will
no longer be furnished (for example, termination of employment).
• The employee must be informed of any procedures for updating his or her contact information
that enables the employer to provide electronic Forms W-2.
• The employer must notify the employee of any changes to the employer’s contact information.
.03 Additionally, you must:
• Ensure the electronic format complies with the guidelines in this
document and contains all the
required information described in the 2019 General Instructions for Forms W-2 and W-3.
• If posting the statement on a website, post it for the recipient to access on or before the January
31 due date through October 15 of that year.
• Inform the recipient in person, electronically, or by mail, of the posting and how to access and
print the statement.
Part 3
Additional Instructions
Section 3.1 – Additional Instructions for Form Printers
.01 If paper copies are used for filing with the SSA, the substitute copies of Forms W-2 (either
red-ink or substitute black-and-white forms) must be assembled in the same order as the official
IRS Forms W-2. Copy A must be first, followed sequentially by perforated sets (Copies 1, B, C,
2, and D).
.02 The substitute form to be filed by the employer with the SSA must carry the designation “Copy
A.”
Note. Electronic filers do not submit either red-ink or substitute black-and-white paper Form W-2
(Copy A) or Form W-3 to the SSA.

Bulletin No. 2019–32 611 August 5, 2019
.03 Employers must retain a copy of Forms W-2 and W-3 (or be able to reconstruct the informa-
tion) for at least 4 years. Employers also must be able to generate Forms W-2 (Copy A) that meet
the requirements of this revenue procedure in case of loss.
.04 Except for copies in the official assembly, described in Section 3.1.01 above, no additional
copies that may be prepared by employers should be placed ahead of Form W-2 (Copy C) “For
EMPLOYEE’S RECORDS.”
.05 You must provide instructions similar to those contained on the back of Copies B, C, and 2
of the official IRS Form W-2 to each employee. You may print them on the back of the substitute
Copies B, C, and 2 or provide them to employees on a separate statement. You do not need to use
the back of Copy 2. If you do not use Copy 2, you may include all the information that appears
on the back of the official Copies B, C, and 2 on the back of your substitute Copies B and C only.
As an example, you may use the “Note” on the back of the official Copy C as the dividing point
between the text for your substitute Copies B and C. Do not print these instructions on the back of
Copy 1. Any Forms W-2 (Copy A) and W-3 that are filed with the SSA must have no printing on
the reverse side.
Section 3.2 – Instructions for Employers
.01 Only originals of Form W-2 (Copy A) and Form W-3 may be filed with the SSA. Carbon copies
and photocopies are unacceptable.
.02 Employers should type or machine-print data entries on plain paper forms whenever possible.
Ensure good quality by using a high-quality type face, inserting data in the middle of blocks that
are well separated from other printing and guidelines, and taking any other measures that will
guarantee clear, sharp images. Black ink must be used with no script type, inverted font, italics, or
dual-case alpha characters.
Note. 12-point Courier font is preferred by the SSA.
.03 Form W-2 (Copy A) requires decimal entries for wage data. Do not print dollar signs with
money amounts on Forms W-2 (Copy A) and W-3.
.04 The employer must provide a machine-scannable Form W-2 (Copy A). The employer also must
provide employee copies (Copies B, C, and 2) that are legible and able to be photocopied (by the
employee). Do not print any data in the top margin of the payee copies of the forms.
Note. Do not print Forms W-2 (Copy A) on double-sided paper.
.05 Any printing in box d (Control number) on Form W-2 or box a on Form may not touch any
vertical or horizontal lines and should be centered in the box.
.06 The filer’s employer identification number (EIN) must be entered in box b of Form W-2 and
box e of Form W-3. The EIN entered on Form(s) W-2 (box b) and Form W-3 (box e) must be the
same as on Forms 941, 941-SS, 943, 944, CT-1, Schedule H (Form 1040), or any other correspond-
ing forms filed with the IRS. Be sure to use EIN format (00-0000000) rather than SSN format
(000-00-0000).
.07 The employer’s name, address, and EIN may be preprinted.

August 5, 2019 612 Bulletin No. 2019–32
Section 3.3 – OMB Requirements for Both Red-Ink and Black-and-White Substitute Forms W-2 and W-3
.01 The Paperwork Reduction Act (the Act) of 1995 (Public Law 104-13) requires the following.
• The Office of Management and Budget (OMB) approves all IRS tax forms that are subject to
the Act.
• Each IRS form contains (in or near the upper right corner) the OMB approval number, if as-
signed. (The official OMB numbers may be found on the official IRS printed forms and also are
shown on the forms in the Exhibits in Section 3.6.)
• Each IRS form (or its instructions) states:
1. Why the IRS needs the information,
2. How it will be used, and
3. Whether or not the information is required to be furnished to the IRS.
.02 This information must be provided to any users of official or substitute IRS forms or instruc-
tions.
.03 The OMB requirements for substitute IRS Form W-2 and Form W-3 are the following.
• Any substitute form or substitute statement to a recipient must show the
OMB number as it
appears on the official IRS form.
• The OMB number for both Form W-2 (Copy A) and Form W-3 is 1545-0008 and must appear
exactly as shown on the official IRS form.
• For any copy of Form W-2 other than Copy A, the OMB number must use one of the following
formats.
1. OMB No. 1545-0008 (preferred), or
2. OMB # 1545-0008 (acceptable).
.04 Any substitute Form W-2 (Copy A only) and Form W-3 must state “For Privacy Act and Pa-
perwork Reduction Act Notice, see the separate instructions.” If no instructions are provided to
users of your forms, you must furnish them with the exact text of the Privacy Act and Paperwork
Reduction Act Notice in the 2019 General Instructions for Forms W-2 and W-3.
Section 3.4 – Order Forms and Instructions
.01 You can order IRS Forms W-2, Forms W-3, the General Instructions for Forms W-2 and W-3,
and other tax material online at www.irs.gov/OrderForms.

Bulletin No. 2019–32 613 August 5, 2019
.02 Copies of Form W-2 (Copy A) and Form W-3 downloaded from IRS.gov cannot be used for
filing with the SSA. These copies of Forms W-2 and W-3 are for information purposes only.
Section 3.5 – Effect on Other Documents
.01 Revenue Procedure 2018-37, I.R.B. 2018-29, dated July 16, 2018 (reprinted as Publication
1141, Revised 07-2018), is superseded.
Section 3.6 – Exhibits
Exhibits A through F provide the general measurements for Forms W-2 and W-3 as discussed in
this revenue procedure. Certain exhibits show a 0000/ in the location designated for your vendor
code. See Section 2.2.01, item 11, and Section 2.2.05 for more information.
Exhibit A — Form W-2 (Copy A) (Red-Ink) 2019
Exhibit B — Form W-2 (Copy B) 2019
Exhibit C — Form W-3 (Red-Ink) 2019
Exhibit D — Form W-2 (Copy A) (Substitute Black-and-White) 2019
Exhibit E — Form W-3 (Substitute Black-and-White) 2019
Exhibit F — Form W-2 Alternative Employee Copies (Illustrating Horizontal and Vertical
Formats)

August 5, 2019 614 Bulletin No. 2019–32
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August 5, 2019 616 Bulletin No. 2019–32
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Bulletin No. 2019–32 617 August 5, 2019
24

August 5, 2019 618 Bulletin No. 2019–32
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Bulletin No. 2019–32 619 August 5, 2019
26

August 5, 2019 620 Bulletin No. 2019–32
26 CFR 601.105: Examination of returns and claims
for refund, credit, or abatement; determination of
correct tax liability.
(Also §§ 36B, 1.36B-2, 1.36B-3.)
Rev. Proc. 2019-29
SECTION 1. PURPOSE
This revenue procedure provides in-
dexing adjustments for certain provisions
under § 36B of the Internal Revenue Code.
In particular, it updates the applicable per-
centage table in § 36B(b)(3)(A)(i) (Ap-
plicable Percentage Table) to provide the
Applicable Percentage Table for calendar
year 2020. This table is used to calculate
an individual’s premium tax credit. This
revenue procedure also updates the re-
quired contribution percentage in § 36B(c)
(2)(C)(i)(II) for plan years beginning after
calendar year 2019 (Section 36B Required
Contribution Percentage). This percentage
is used to determine whether an individual
is eligible for affordable employer-spon-
sored minimum essential coverage under
§ 36B. This revenue procedure uses the
methodology described in Section 4 of
Rev. Proc. 2014-37, 2014-2 C.B. 363, and
the Department of Health and Human Ser-
vices (HHS) Notice of Benefit and Pay-
ment Parameters for 2020, 84 Fed. Reg. at
17454 (April 25, 2019) (2020 Benefit and
Payment Notice), to index the Applicable
Percentage Table and the Section 36B Re-
quired Contribution Percentage.
In addition to the adjustments described
in Rev. Proc. 2014-37, for adjusting the
Applicable Percentage Table, § 36B(b)(3)
(A)(ii)(II) provides that, except as provid-
ed in § 36B(b)(3)(A)(ii)(III), an addition-
al adjustment must be made for calendar
years after 2018 to reflect the rates of pre-
mium growth relative to the growth in the
consumer price index. The Department of
the Treasury (Treasury Department) and
the Internal Revenue Service (IRS) have
determined that the failsafe exception de-
scribed in § 36B(b)(3)(A)(ii)(III) applies
for calendar year 2020 and no additional
adjustment under § 36B(b)(3)(A)(ii)(II) is
required for calendar year 2020.
SECTION 2. CHANGE
TO PREMIUM GROWTH
ADJUSTMENT METHODOLOGY
The Applicable Percentage Table and
the Section 36B Required Contribution
Percentage are adjusted annually by
the ratio of premium growth to income
growth for the preceding calendar year,
and may be further adjusted to reflect up-
dates to the data and data sources used
to compute the ratio of premium growth
to income growth. See
§§ 1.36B-2(c)
(3)(v)(C) and 1.36B-3(g). These adjust-
ments are computed using a premium
adjustment percentage provided in guid-
ance issued by HHS. For years prior to
2020, the rate of premium growth was
based on per enrollee spending for em-
ployer-sponsored insurance as published
in the National Health Expenditure Ac-
count. However, in the 2020 Benefit and
Payment Notice, HHS provided a new
premium growth measure beginning in
calendar year 2020 that captures increas-
es in individual market premiums in
addition to increases in employer-spon-
sored insurance premiums for purposes
of calculating the premium adjustment
percentage for the 2020 benefit year and
beyond. The Treasury Department and
the IRS adopt the new premium growth
measure provided in the 2020 Benefit and
Payment Notice for purposes of the Ap-
plicable Percentage Table and the Section
36B Required Contribution Percentage
indexing adjustments.
SECTION 3. ADJUSTED ITEMS
.01 Applicable Percentage Table for
2020. For taxable years beginning in cal-
endar year 2020, the Applicable Percent-
age Table for purposes of § 36B(b)(3)(A)
(i) and § 1.36B-3(g) is:
Household income percentage of Federal poverty line:
Less than 133%
Initial percentage
2.06%
Final percentage
2.06%
At least 133% but less than 150%3.09%4.12%
At least 150% but less than 200%4.12%6.49%
At least 200% but less than 250%6.49%8.29%
At least 250% but less than 300%8.29%9.78%
At least 300% but not more than 400%9.78%9.78%
.02 Section 36B Required Contribution
Per
centage for 2020. For plan years begin-
ning in calendar year 2020, the required
contribution percentage for purposes of
§ 36B(c)(2)(C)(i)(II) and § 1.36B-2(c)(3)
(v)(C) is 9.78%.
SECTION 4. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2014-37 is supplemented.
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective for
taxable years and plan years beginning af-
ter December 31, 2019.
SECTION 6. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Bill Ruane of the Office of
Associate Chief Counsel (Income Tax and
Accounting). For further information re-
garding this revenue procedure, contact
Mr. Ruane at (202) 317-4718 (not a toll-
free number).

Bulletin No. 2019–32 621 August 5, 2019
Part IV.
Announcement of
Disciplinary Sanctions
From the Office of
Professional Responsibility
Announcement 2019-8
The Office of Professional Respon-
sibility (OPR) announces recent disci-
plinary sanctions involving attorneys,
certified public accountants, enrolled
agents, enrolled actuaries, enrolled re-
tirement plan agents, appraisers, and
unenrolled/unlicensed return preparers
(individuals who are not enrolled to
practice and are not licensed as attor-
neys or certified public accountants).
Licensed or enrolled practitioners are
subject to the regulations governing
practice before the Internal Revenue
Service (IRS), which are set out in Title
31, Code of Federal Regulations, Subti-
tle A, Part 10, and which are released as
Treasury Department Circular No. 230.
The regulations prescribe the duties and
restrictions relating to such practice and
prescribe the disciplinary sanctions for
violating the regulations. Unenrolled/
unlicensed return preparers are subject
to Revenue Procedure 81-38 and super-
seding guidance in Revenue Procedure
2014-42, which govern a preparer’s eli-
gibility to represent taxpayers before the
IRS in examinations of tax returns the
preparer both prepared for the taxpayer
and signed as the preparer. Additionally,
unenrolled/unlicensed return preparers
who voluntarily participate in the Annu-
al Filing Season Program under Revenue
Procedure 2014-42 agree to be subject
to the duties and restrictions in Circular
230, including the restrictions on incom-
petent or disreputable conduct.
The disciplinary sanctions to be im-
posed for violation of the applicable stan-
dards are:
Disbarred from practice before the
IRS—An individual who is disbarred
is not eligible to practice before the IRS
as defined at 31 C.F.R. § 10.2(a)(4) for a
minimum period of five (5) years.
Suspended from practice before the
IRS—An individual who is suspended is
not eligible to practice before the IRS as
defined at 31 C.F.R. § 10.2(a)(4) during
the term of the suspension.
Censured in practice before the
IRS—Censure is a public reprimand. Un-
like disbarment or suspension, censure
does not affect an individual’s eligibility
to practice before the IRS, but OPR may
subject the individual’s future practice
rights to conditions designed to promote
high standards of conduct.
Monetary penalty—A monetary pen-
alty may be imposed on an individual who
engages in conduct subject to sanction,
or on an employer, firm, or entity if the
individual was acting on its behalf and it
knew, or reasonably should have known,
of the individual’s conduct.
Disqualification of appraiser—An
appraiser who is disqualified is barred
from presenting evidence or testimony in
any administrative proceeding before the
Department of the Treasury or the IRS.
Ineligible for limited practice—An
unenrolled/unlicensed return preparer
who fails to comply with the requirements
in Revenue Procedure 81-38 or to comply
with Circular 230 as required by Revenue
Procedure 2014-42 may be determined in-
eligible to engage in limited practice as a
representative of any taxpayer. Under the
regulations, individuals subject to Circu-
lar 230 may not assist, or accept assistance
from, individuals who are suspended or
disbarred with respect to matters consti-
tuting practice (i.e., representation) before
the IRS, and they may not aid or abet sus-
pended or disbarred individuals to prac-
tice before the IRS.
Disciplinary sanctions are described in
these terms:
Disbarred by decision, Suspended by
decision, Censured by decision, Mone-
tary penalty imposed by decision, and
Disqualified after hearing—An adminis-
trative law judge (ALJ) issued a decision
imposing one of these sanctions after the
ALJ either (1) granted the government’s
summary judgment motion or (2) con-
ducted an evidentiary hearing upon OPR’s
complaint alleging violation of the regu-
lations. After 30 days from the issuance
of the decision, in the absence of an ap-
peal, the ALJ’s decision becomes the final
agency decision.
Disbarred by default decision, Sus-
pended by default decision, Censured
by default decision, Monetary penalty
imposed by default decision, and Dis-
qualified by default decision—An ALJ,
after finding that no answer to OPR’s
complaint was filed, granted OPR’s mo-
tion for a default judgment and issued a
decision imposing one of these sanctions.
Disbarment by decision on appeal,
Suspended by decision on appeal, Cen-
sured by decision on appeal, Monetary
penalty imposed by decision on appeal,
and Disqualified by decision on ap-
peal—The decision of the ALJ was ap-
pealed to the agency appeal authority, act-
ing as the delegate of the Secretary of the
Treasury, and the appeal authority issued a
decision imposing one of these sanctions.
Disbarred by consent, Suspended by
consent, Censured by consent, Mone-
tary penalty imposed by consent, and
Disqualified by consent—In lieu of a
disciplinary proceeding being instituted or
continued, an individual offered a consent
to one of these sanctions and OPR accept-
ed the offer. Typically, an offer of consent
will provide for: suspension for an indef-
inite term; conditions that the individual
must observe during the suspension; and
the individual’s opportunity, after a stat-
ed number of months, to file with OPR a
petition for reinstatement affirming com-
pliance with the terms of the consent and
affirming current fitness and eligibility
to practice (i.e., an active professional li-
cense or active enrollment status, with no
intervening violations of the regulations).
Suspended indefinitely by decision in
expedited proceeding, Suspended indef-
initely by default decision in expedited
proceeding, Suspended by consent in
expedited proceeding—OPR instituted
an expedited proceeding for suspension
(based on certain limited grounds, in-
cluding loss of a professional license for
cause, and criminal convictions).
Determined ineligible for limited
practice—There has been a final deter-
mination that an unenrolled/unlicensed
return preparer is not eligible for limited
representation of any taxpayer because the
preparer violated standards of conduct or
failed to comply with any of the require-
ments to act as a representative.

August 5, 2019 622 Bulletin No. 2019–32
A practitioner who has been disbarred
or suspended under 31 C.F.R. § 10.60, or
suspended under § 10.82, or a disqualified
appraiser may petition for reinstatement
before the IRS after the expiration of 5
years following such disbarment, suspen-
sion, or disqualification (or immediately
following the expiration of the suspension
or disqualification period if shorter than 5
years). Reinstatement will not be granted
unless the IRS is satisfied that the peti-
tioner is not likely to engage thereafter in
conduct contrary to Circular 230, and that
granting such reinstatement would not be
contrary to the public interest.
Reinstatement decisions are published
at the individual’s request, and described
in these terms:
Reinstated to practice before the
IRS—The individual’s petition for re-
instatement has been granted. The indi-
vidual is an attorney, certified public ac-
countant, enrolled agent, enrolled actuary,
or an enrolled retirement plan agent, and
eligible to practice before the IRS, or in
the case of an appraiser, the individual is
no longer disqualified.
Reinstated to engage in limited
practice before the IRS—The individ-
ual’s petition for reinstatement has been
granted. The individual is an unenrolled/
unlicensed return preparer and eligible to
engage in limited practice before the IRS.
OPR has authority to disclose the
grounds for disciplinary sanctions in these
situations: (1) an ALJ or the Secretary’s
delegate on appeal has issued a final de-
cision; (2) the individual has settled a dis-
ciplinary case by signing OPR’s “consent
to sanction” agreement admitting to one
or more violations of the regulations and
consenting to the disclosure of the admit-
ted violations (for example, failure to file
Federal income tax returns, lack of due
diligence, conflict of interest, etc.); (3)
OPR has issued a decision in an expedited
proceeding for indefinite suspension; or
(4) OPR has made a final determination
(including any decision on appeal) that an
unenrolled/unlicensed return preparer is
ineligible to represent any taxpayer before
the IRS.
Announcements of disciplinary sanc-
tions appear in the Internal Revenue Bul-
letin at the earliest practicable date. The
sanctions announced below are alphabet-
ized first by state and second by the last
names of the sanctioned individuals.
City & StateNameProfessional
Designation
Disciplinary SanctionEffective Date(s)
Delaware
ClaymontRice, Donald R.C PASuspended by decision in expedited
proceeding under 31 C.F.R. § 10.82(b)
Indefinite from
April 18, 2019
Florida
TampaWebber, Zane P.C PASuspended by default decision in expedited
proceeding under 31 C.F.R. § 10.82(b)
Indefinite from
June 11, 2019
Georgia
Patterson,
Shannon D., see
North Caroline
Illinois
Crystal LakeLamping, Anthony A.C PASuspended by default decision in expedited
proceeding under 31 C.F.R. § 10.82(b)
Indefinite from
April 11, 2019
Lake ZurichJung, Soo-HyunAttorneySuspended by default decision in expedited
proceeding under 31 C.F.R. § 10.82(b)
Indefinite from
June 11, 2019
Iowa
Jung, Soo-Hyun,
see Illinois
CrescoKowalke, Todd W.AttorneySuspended by decision in expedited proceed-
ing under 31 C.F.R. § 10.82(b)
Indefinite from
April 11, 2019

Bulletin No. 2019–32 623 August 5, 2019
City & StateNameProfessional
Designation
Disciplinary SanctionEffective Date(s)
Michigan
ChesterfieldBowser, James C.AttorneySuspended by default decision in expedited
proceeding under 31 C.F.R. § 10.82(b)
Indefinite from
April 30, 2019
New Jersey
BogotaFriedman, Barry D.AttorneySuspended by default decision in expedited
proceeding under 31 C.F.R. § 10.82(b)
Indefinite from
May 8, 2019
New Mexico
AlbuquerqueBecerra, StevenEnrolled
Agent
Suspended by consent under 31 C.F.R.
§§ 10.51(a)(2), 10.51(a)(3)
Indefinite from
April 30, 2019
New York
New YorkEtkind, Steven M.AttorneySuspended by default decision in expedited
proceeding under 31 C.F.R. § 10.82(b)
Indefinite from
May 21, 2019
Ohio
SteubenvilleMarshall, Michael J.CPA/AttorneySuspended by default decision in expedited
proceeding under 31 C.F.R. § 10.82(b)
Indefinite from
June 18, 2019
North Carolina
Winston SalemPatterson, Shannon D.AttorneySuspended by default decision in expedited
proceeding under 31 C.F.R. § 10.82(b)
Indefinite from
May 08, 2019
West Virginia
Marshall, Michael J.,
see Ohio

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion. It
is not used where a position in a prior rul-
ing is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previous-
ly published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cas-
es in litigation, or the outcome of a Ser-
vice study.
Abbreviations
The following abbreviations in current use
and formerly used will appear in material
published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI
—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Bulletin No. 2019–32 i August 5, 2019

August 5, 2019 ii Bulletin No. 2019–32
Numerical Finding List
1
Bulletin 2019–32
Announcements:
2019-07, 2019-27 I.R.B. 62
2019-08, 2019-32 I.R.B. 621
Notices:
2019-12, 2019-27 I.R.B. 57
2019-40, 2019-27 I.R.B. 59
2019-41, 2019-28 I.R.B. 256
2019-42, 2019-29 I.R.B. 352
2019-27, 2019-31 I.R.B. 484
2019-43, 2019-31 I.R.B. 487
2019-24, 2019-31 I.R.B. 489
2019-45, 2019-32 I.R.B. 593
Proposed Regulations:
REG-105476-18, 2019-27 I.R.B. 63
REG-106282-18, 2019-28 I.R.B. 259
REG-101828-19, 2019-29 I.R.B. 412
REG-106877-18, 2019-30 I.R.B. 441
REG-121508-18, 2019-30 I.R.B. 456
REG-105474-18, 2019-31 I.R.B. 493
REG-118425-18, 2019-31 I.R.B. 539
Revenue Rulings:
2019-16, 2019-28 I.R.B. 96
2019-17, 2019-32 I.R.B. 583
Revenue Procedures:
2019-24, 2019-29 I.R.B. 353
2019-28, 2019-32 I.R.B. 596
2019-29, 2019-32 I.R.B. 620
Treasury Decisions:
9863, 2019-27 I.R.B. 1
9864, 2019-27 I.R.B. 6
9865, 2019-27 I.R.B. 27
9867, 2019-28 I.R.B. 98
9868, 2019-28 I.R.B. 252
9866, 2019-29 I.R.B. 261
9861, 2019-30 I.R.B. 433
9869, 2019-30 I.R.B. 438
9862, 2019-31 I.R.B. 477
9872, 2019-32 I.R.B. 585
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2018–27 through 2018–52 is in Internal Revenue Bulletin
2018–52, dated December 27, 2018.

Bulletin No. 2019–32 iii August 5, 2019
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2019–32
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2018–27 through 2018–52 is in Internal Revenue Bulletin
2018–52, dated December 27, 2018.

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