Internal Revenue Bulletin 2020-26 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 2020–26
June 22, 2020
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
ADMINISTRATIVE
Rev. Rul. 2020-13, page 965.
Interest rates: underpayments and overpayments. The
rates for interest determined under Section 6621 of the
code for the calendar quarter beginning July 1, 2020, will
be 3 percent for overpayments (2 percent in the case of a
corporation), 3 percent for underpayments, and 5 percent
for large corporate underpayments. The rate of interest
paid on the portion of a corporate overpayment exceeding
$10,000 will be 0.5 percent.
EMPLOYEE PLANS
Notice 2020-42, page 986.
Notice 2020-42 provides participants, beneficiaries, and
administrators of qualified retirement plans and other tax-fa-
vored retirement arrangements with temporary relief from
the physical presence requirement in § 1.401(a)-21(d)(6)
for any participant election (1) witnessed by a notary public
in a state that permits remote notarization, or (2) witnessed
by a plan representative using certain safeguards. The guid-
ance accommodates local shutdowns and social distanc-
ing practices and is intended to facilitate the payment of
coronavirus-related distributions and plan loans to qualified
individuals, as permitted by CARES Act.
EXCISE TAX
Notice 2020-44, page 989.
Sections 4375 and 4376, added to the Code by the Af-
fordable Care Act, impose a fee on issuers of specified
health insurance policies and plan sponsors of applicable
self-insured health plans to help fund the Patient-Centered
Outcomes Research Trust Fund (PCORTF). This notice ad-
dresses the recent extension of the fee by the Further Con-
solidated Appropriations Act, 2020, Public Law 116-94,
and provides relief for calculating the average number of
lives for policy years and plan years that end on or after
October 1, 2019, and before October 1, 2020. This notice
provides that the adjusted applicable dollar amount that
applies for determining the PCORTF fee for policy years
and plan years ending on or after October 1, 2019 and
before October 1, 2020 is equal to $2.54. This adjusted
applicable dollar amount has been determined using the
percentage increase in the projected per capita amount of
the National Health Expenditures published by HHS in Feb-
ruary 2019.
INCOME TAX
Notice 2020-39, page 984.
This notice provides relief under section 7508A(a) of the In-
ternal Revenue Code (Code) for qualified opportunity funds
(QOFs) and their investors in response to the ongoing Coro-
navirus Disease 2019 (COVID-19) pandemic. This notice
also addresses the application of certain relief provisions in
the Income Tax Regulations under section 1400Z-2 of the
Code (section 1400Z-2 regulations).
REG-109755-19, page 994.
These proposed regulations provide guidance under sec-
tion 213 of the Internal Revenue Code regarding the treat-
ment of amounts paid for certain medical care arrange-
ments, including direct primary care arrangements, health
care sharing ministries, and certain government-sponsored
health care programs. The proposed regulations affect in-
dividuals who pay for these arrangements or programs and
Finding Lists begin on page ii.

want to deduct the amounts paid as medical expenses un-
der section 213.
Rev. Proc. 2020-34, page 990.
This revenue procedure grants temporary relief to trusts
which are, or have tenants who are, experiencing financial
hardship as a result of COVID-19, to allow them to make cer-
tain modifications to their mortgage loans and their lease
agreements, and to accept additional cash contributions
without jeopardizing their tax status as grantor trusts. The
revenue procedure indicates that a cash contribution from
one or more new trust interest holders to acquire a trust in-
terest or a non-pro rata cash contribution from one or more
current trust interest holders must be treated as a purchase
and sale under § 1001 of a portion of each non-contributing
(or lesser contributing) trust interest holder’s proportionate
interest in the trust’s assets.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing of-
ficial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
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.
June 22, 2020 Bulletin No. 2020–26

Part I
Section 6621.—
Determination of Rate of
Interest
26 CFR 301.6621-1: Interest rate.
Rev. Rul. 2020-13
Section 6621 of the Internal Reve-
nue Code establishes the interest rates
on overpayments and underpayments of
tax. Under section 6621(a)(1), the over-
payment rate is the sum of the federal
short-term rate plus 3 percentage points (2
percentage points in the case of a corpo-
ration), except the rate for the portion of a
corporate overpayment of tax exceeding
$10,000 for a taxable period is the sum of
the federal short-term rate plus 0.5 of a
percentage point. Under section 6621(a)
(2), the underpayment rate is the sum of
the federal short-term rate plus 3 percent-
age points.
Section 6621(c) provides that for pur-
poses of interest payable under section
6601 on any large corporate underpay-
ment, the underpayment rate under section
6621(a)(2) is determined by substituting
“5 percentage points” for “3 percentage
points.” See section 6621(c) and section
301.6621-3 of the Regulations on Proce-
dure and Administration for the definition
of a large corporate underpayment and
for the rules for determining the appli-
cable date. Section 6621(c) and section
301.6621-3 are generally effective for pe-
riods after December 31, 1990.
Section 6621(b)(1) provides that the
Secretary will determine the federal short-
term rate for the first month in each cal-
endar quarter. Section 6621(b)(2)(A)
provides that the federal short-term rate
determined under section 6621(b)(1) for
any month applies during the first calendar
quarter beginning after that month. Sec-
tion 6621(b)(3) provides that the federal
short-term rate for any month is the feder-
al short-term rate determined during that
month by the Secretary in accordance with
section 1274(d), rounded to the nearest
full percent (or, if a multiple of 1/2 of 1
percent, the rate is increased to the next
highest full percent).
Notice 88-59, 1988-1 C.B. 546, an-
nounced that in determining the quarterly
interest rates to be used for overpayments
and underpayments of tax under section
6621, the Internal Revenue Service will
use the federal short-term rate based on
daily compounding because that rate is
most consistent with section 6621 which,
pursuant to section 6622, is subject to dai-
ly compounding.
The federal short-term rate determined
in accordance with section 1274(d) during
April 2020 is the rate published in Revenue
Ruling 2020-11, 2020-19 IRB 776, to take
effect beginning May 1, 2020. The federal
short-term rate, rounded to the nearest full
percent, based on daily compounding de-
termined during the month of April 2020
is 0 percent. Accordingly, an overpayment
rate of 3 percent (2 percent in the case of a
corporation) and an underpayment rate of
3 percent are established for the calendar
quarter beginning July 1, 2020. The over-
payment rate for the portion of a corporate
overpayment exceeding $10,000 for the
calendar quarter beginning July 1, 2020 is
0.5 percent. The underpayment rate for
large corporate underpayments for the cal-
endar quarter beginning July 1, 2020, is
5 percent. These rates apply to amounts
bearing interest during that calendar quar-
ter.
Sections 6654(a)(1) and 6655(a)(1)
provide that the underpayment rate estab-
lished under section 6621 applies in deter-
mining the addition to tax under sections
6654 and 6655 for failure to pay estimated
tax for any taxable year. Thus, the 3 per-
cent rate also applies to estimated tax un-
derpayments for the third calendar quarter
beginning July 1, 2020. In addition, pursu-
ant to section 6603(d)(4), the rate of inter-
est on section 6603 deposits is 0 percent
for the third calendar quarter in 2020.
Interest factors for daily compound in-
terest for annual rates of 0.5 percent are
published in Appendix A of this Revenue
Ruling. Interest factors for daily com-
pound interest for annual rates of 2 per-
cent, 3 percent and 5 percent are published
in Tables 57, 59, and 63 of Rev. Proc. 95-
17, 1995-1 C.B. 611, 613, and 617.
Annual interest rates to be compounded
daily pursuant to section 6622 that apply
for prior periods are set forth in the tables
accompanying this revenue ruling.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Casey R. Conrad of the Office of
the Associate Chief Counsel (Procedure
and Administration). For further informa-
tion regarding this revenue ruling, contact
Mr. Conrad at (202) 317-6844 (not a toll-
free number).
Bulletin No. 2020–26 965 June 22, 2020

APPENDIX A
365 Day Year
0.5% Compound Rate 184 Days
DaysFactorDaysFactorDaysFactor
10.000013699630.0008633801250.001713784
20.000027397640.0008770911260.001727506
30.000041096650.0008908011270.001741228
40.000054796660.0009045121280.001754951
50.000068495670.0009182231290.001768673
60.000082195680.0009319341300.001782396
70.000095894690.0009456461310.001796119
80.000109594700.0009593571320.001809843
90.000123294710.0009730691330.001823566
100.000136995720.0009867811340.001837290
110.000150695730.0010004931350.001851013
120.000164396740.0010142061360.001864737
130.000178097750.0010279181370.001878462
140.000191798760.0010416311380.001892186
150.000205499770.0010553441390.001905910
160.000219201780.0010690571400.001919635
170.000232902790.0010827701410.001933360
180.000246604800.0010964841420.001947085
190.000260306810.0011101971430.001960811
200.000274008820.0011239111440.001974536
210.000287711830.0011376251450.001988262
220.000301413840.0011513391460.002001988
230.000315116850.0011650541470.002015714
240.000328819860.0011787681480.002029440
250.000342522870.0011924831490.002043166
260.000356225880.0012061981500.002056893
270.000369929890.0012199131510.002070620
280.000383633900.0012336291520.002084347
290.000397336910.0012473441530.002098074
300.000411041920.0012610601540.002111801
310.000424745930.0012747761550.002125529
320.000438449940.0012884921560.002139257
330.000452154950.0013022081570.002152985
340.000465859960.0013159251580.002166713
350.000479564970.0013296411590.002180441
360.000493269980.0013433581600.002194169
370.000506974990.0013570751610.002207898
380.0005206801000.0013707921620.002221627
390.0005343861010.0013845101630.002235356
400.0005480921020.0013982271640.002249085
410.0005617981030.0014119451650.002262815
June 22, 2020 966 Bulletin No. 2020–26

Bulletin No. 2020–26 967 June 22, 2020
420.0005755041040.0014256631660.002276544
430.0005892111050.0014393811670.002290274
440.0006029171060.0014531001680.002304004
450.0006166241070.0014668181690.002317734
460.0006303311080.0014805371700.002331465
470.0006440391090.0014942561710.002345195
480.0006577461100.0015079751720.002358926
490.0006714541110.0015216941730.002372657
500.0006851611120.0015354141740.002386388
510.0006988691130.0015491331750.002400120
520.0007125781140.0015628531760.002413851
530.0007262861150.0015765731770.002427583
540.0007399951160.0015902931780.002441315
550.0007537031170.0016040141790.002455047
560.0007674121180.0016177341800.002468779
570.0007811211190.0016314551810.002482511
580.0007948311200.0016451761820.002496244
590.0008085401210.0016588971830.002509977
600.0008222501220.0016726191840.002523710
610.0008359601230.001686340
620.0008496701240.001700062

June 22, 2020 968 Bulletin No. 2020–26
366 Day Year
0.5% Compound Rate 184 Days
DaysFactorDaysFactorDaysFactor
10.000013661630.0008610201250.001709097
20.000027323640.0008746931260.001722782
30.000040984650.0008883661270.001736467
40.000054646660.0009020401280.001750152
50.000068308670.0009157131290.001763837
60.000081970680.0009293871300.001777522
70.000095632690.0009430611310.001791208
80.000109295700.0009567351320.001804893
90.000122958710.0009704091330.001818579
100.000136620720.0009840841340.001832265
110.000150283730.0009977581350.001845951
120.000163947740.0010114331360.001859638
130.000177610750.0010251081370.001873324
140.000191274760.0010387831380.001887011
150.000204938770.0010524591390.001900698
160.000218602780.0010661341400.001914385
170.000232266790.0010798101410.001928073
180.000245930800.0010934861420.001941760
190.000259595810.0011071621430.001955448
200.000273260820.0011208391440.001969136
210.000286924830.0011345151450.001982824
220.000300590840.0011481921460.001996512
230.000314255850.0011618691470.002010201
240.000327920860.0011755461480.002023889
250.000341586870.0011892231490.002037578
260.000355252880.0012029001500.002051267
270.000368918890.0012165781510.002064957
280.000382584900.0012302561520.002078646
290.000396251910.0012439341530.002092336
300.000409917920.0012576121540.002106025
310.000423584930.0012712911550.002119715
320.000437251940.0012849691560.002133405
330.000450918950.0012986481570.002147096
340.000464586960.0013123271580.002160786
350.000478253970.0013260061590.002174477
360.000491921980.0013396851600.002188168
370.000505589990.0013533651610.002201859
380.0005192571000.0013670441620.002215550
390.0005329251010.0013807241630.002229242
400.0005465941020.0013944041640.002242933
410.0005602621030.0014080851650.002256625
420.0005739311040.0014217651660.002270317

Bulletin No. 2020–26 969 June 22, 2020
430.0005876001050.0014354461670.002284010
440.0006012691060.0014491271680.002297702
450.0006149391070.0014628081690.002311395
460.0006286081080.0014764891700.002325087
470.0006422781090.0014901701710.002338780
480.0006559481100.0015038521720.002352473
490.0006696181110.0015175331730.002366167
500.0006832891120.0015312151740.002379860
510.0006969591130.0015448971750.002393554
520.0007106301140.0015585801760.002407248
530.0007243011150.0015722621770.002420942
540.0007379721160.0015859451780.002434636
550.0007516431170.0015996281790.002448331
560.0007653151180.0016133111800.002462025
570.0007789861190.0016269941810.002475720
580.0007926581200.0016406781820.002489415
590.0008063301210.0016543611830.002503110
600.0008200031220.0016680451840.002516806
610.0008336751230.001681729
620.0008473481240.001695413

June 22, 2020 970 Bulletin No. 2020–26
TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986
OVERPAYMENTS AND UNDERPAYMENTS
PERIODRATEIn 1995-1 C.B.
DAILY RATE TABLE
Before Jul. 1, 19756%Table 2,pg. 557
Jul.1,1975–Jan.31,19769%Table4,pg.559
Feb.1,1976–Jan.31,19787%Table3,pg.558
Feb.1,1978–Jan.31,19806%Table2,pg.557
Feb.1,1980–Jan.31,198212%Table5,pg.560
Feb.1,1982–Dec.31,198220%Table6,pg.560
Jan.1,1983–Jun.30,198316%Table37,pg.591
Jul.1,1983–Dec.31,198311%Table27,pg.581
Jan.1,1984–Jun.30,198411%Table75,pg.629
Jul.1,1984–Dec.31,198411%Table75,pg.629
Jan.1,1985–Jun.30,198513%Table31,pg.585
Jul.1,1985–Dec.31,198511%Table27,pg.581
Jan.1,1986–Jun.30,198610%Table25,pg.579
Jul.1,1986–Dec.31,19869%Table23,pg.577
TABLE OF INTEREST RATES
FROM JAN. 1, 1987 - Dec. 31, 1998
OVERPAYMENTSUNDERPAYMENTS
1995-1 C.B.1995-1 C.B. RATE
RATETABLEPGRATETABLEPG
Jan.1,1987–Mar.31,19878%215759%23577
Apr.1,1987–Jun.30,19878%215759%23577
Jul.1,1987–Sep.30,19878%215759%23577
Oct.1,1987–Dec.31,19879%2357710%25579
Jan.1,1988–Mar.31,198810%7362711%75629
Apr.1,1988–Jun.30,19889%7162510%73627
Jul.1,1988–Sep.30,19889%7162510%73627
Oct.1,1988–Dec.31,198810%7362711%75629
Jan.1,1989–Mar.31,198910%2557911%27581
Apr.1,1989–Jun.30,198911%2758112%29583
Jul.1,1989–Sep.30,198911%2758112%29583
Oct.1,1989–Dec.31,198910%2557911%27581
Jan.1,1990–Mar.31,199010%2557911%27581
Apr.1,1990–Jun.30,199010%2557911%27581
Jul.1,1990–Sep.30,199010%2557911%27581

Bulletin No. 2020–26 971 June 22, 2020
Oct.1,1990–Dec.31,199010%2557911%27581
Jan.1,1991–Mar.31,199110%2557911%27581
Apr.1,1991–Jun.30,19919%2357710%25579
Jul.1,1991–Sep.30,19919%2357710%25579
Oct.1,1991–Dec.31,19919%2357710%25579
Jan.1,1992–Mar.31,19928%696239%71625
Apr.1,1992–Jun.30,19927%676218%69623
Jul.1,1992–Sep.30,19927%676218%69623
Oct.1,1992–Dec.31,19926%656197%67621
Jan.1,1993–Mar.31,19936%175717%19573
Apr.1,1993–Jun.30,19936%175717%19573
Jul.1,1993–Sep.30,19936%175717%19573
Oct.1,1993–Dec.31,19936%175717%19573
Jan.1,1994–Mar.31,19946%175717%19573
Apr.1,1994–Jun.30,19946%175717%19573
Jul.1,1994–Sep.30,19947%195738%21575
Oct.1,1994–Dec.31,19948%215759%23577
Jan.1,1995–Mar.31,19958%215759%23577
Apr.1,1995–Jun.30,19959%2357710%25579
Jul.1,1995–Sep.30,19958%215759%23577
Oct.1,1995–Dec.31,19958%215759%23577
Jan.1,1996–Mar.31,19968%696239%71625
Apr.1,1996–Jun.30,19967%676218%69623
Jul.1,1996–Sep.30,19968%696239%71625
Oct.1,1996–Dec.31,19968%696239%71625
Jan.1,1997–Mar.31,19978%215759%23577
Apr.1,1997–Jun.30,19978%215759%23577
Jul.1,1997–Sep.30,19978%215759%23577
Oct.1,1997–Dec.31,19978%215759%23577
Jan.1,1998–Mar.31,19988%215759%23577
Apr.1,1998–Jun.30,19987%195738%21575
Jul.1,1998–Sep.30,19987%195738%21575
Oct.1,1998–Dec.31,19987%195738%21575

June 22, 2020 972 Bulletin No. 2020–26
TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 - PRESENT
NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS
1995-1 C.B.
RATETABLEPAGE
1995-1 C.B.
RATETABLEPAGE
Jan.1,1999–Mar.31,19997%19573
Apr.1,1999–Jun.30,19998%21575
Jul.1,1999–Sep.30,19998%21575
Oct.1,1999–Dec.31,19998%21575
Jan.1,2000–Mar.31,20008%69623
Apr.1,2000–Jun.30,20009%71625
Jul.1,2000–Sep.30,20009%71625
Oct.1,2000–Dec.31,20009%71625
Jan.1,2001–Mar.31,20019%23577
Apr.1,2001–Jun.30,20018%21575
Jul.1,2001–Sep.30,20017%19573
Oct.1,2001–Dec.31,20017%19573
Jan.1,2002–Mar.31,20026%17571
Apr.1,2002–Jun.30,20026%17571
Jul.1,2002–Sep.30,20026%17571
Oct.1,2002–Dec.31,20026%17571
Jan.1,2003–Mar.31,20035%15569
Apr.1,2003–Jun.30,20035%15569
Jul.1,2003–Sep.30,20035%15569
Oct.1,2003–Dec.31,20034%13567
Jan.1,2004–Mar.31,20044%61615
Apr.1,2004–Jun.30,20045%63617
Jul.1,2004–Sep.30,20044%61615
Oct.1,2004–Dec.31,20045%63617
Jan.1,2005–Mar.31,20055%15569
Apr.1,2005–Jun.30,20056%17571
Jul.1,2005–Sep.30,20056%17571
Oct.1,2005–Dec.31,20057%19573
Jan.1,2006–Mar.31,20067%19573
Apr.1,2006–Jun.30,20067%19573
Jul.1,2006–Sep.30,20068%21575
Oct.1,2006–Dec.31,20068%21575
Jan.1,2007–Mar.31,20078%21575
Apr.1,2007–Jun.30,20078%21575
Jul.1,2007–Sep.30,20078%21575
Oct.1,2007–Dec.31,20078%21575
Jan.1,2008–Mar.31,20087%67621
Apr.1,2008–Jun.30,20086%65619

Bulletin No. 2020–26 973 June 22, 2020
Jul.1,2008–Sep.30,20085%63617
Oct.1,2008–Dec.31,20086%65619
Jan.1,2009–Mar.31,20095%15569
Apr.1,2009–Jun.30,20094%13567
Jul.1,2009–Sep.30,20094%13567
Oct.1,2009–Dec.31,20094%13567
Jan.1,2010–Mar.31,20104%13567
Apr.1,2010–Jun.30,20104%13567
Jul.1,2010–Sep.30,20104%13567
Oct.1,2010–Dec.31,20104%13567
Jan.1,2011–Mar.31,20113%11565
Apr.1,2011–Jun.30,20114%13567
Jul.1,2011–Sep.30,20114%13567
Oct.1,2011–Dec.31,20113%11565
Jan.1,2012–Mar.31,20123%59613
Apr.1,2012–Jun.30,20123%59613
Jul.1,2012–Sep.30,20123%59613
Oct.1,2012–Dec.31,20123%59613
Jan.1,2013–Mar.31,20133%11565
Apr.1,2013–Jun.30,20133%11565
Jul.1,2013–Sep.30,20133%11565
Oct.1,2013–Dec.31,20133%11565
Jan.1,2014–Mar.31,20143%11565
Apr.1,2014–Jun.30,20143%11565
Jul.1,2014–Sep.30,20143%11565
Oct.1,2014–Dec.31,20143%11565
Jan.1,2015–Mar.31,20153%11565
Apr.1,2015–Jun.30,20153%11565
Jul.1,2015–Sep.30,20153%11565
Oct.1.2015–Dec.31,20153%11565
Jan.1,2016–Mar.31,20163%59613
Apr.1,2016–Jun.30,20164%61615
Jul.1,2016–Sep.30,20164%61615
Oct.1,2016–Dec.31,20164%61615
Jan.1,2017–Mar.31,20174%13567
Apr.1,2017–Jun.30,20174%13567
Jul.1,2017–Sep.30,20174%13567
Oct.1,2017–Dec.31,20174%13567
Jan.1,2018–Mar.31,20184%13567
Apr.1,2018–Jun.30,20185%15569
Jul.1,2018–Sep.30,20185%15569
Oct.1,2018–Dec.31,20185%15569
Jan.1,2019–Mar.31,20196%17571
Apr.1,2019–Jun.30,20196%17571
Jul.1,2019–Sep.30,20195%15569

June 22, 2020 974 Bulletin No. 2020–26
Oct.1,2019–Dec. 31,20195%15569
Jan.1,2020–Mar.31, 20205%63617
Apr.1,2020–Jun.30,20205%63617
Jul.1,2020–Sep.30,20203%59613

Bulletin No. 2020–26 975 June 22, 2020
TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 - PRESENT
CORPORATE OVERPAYMENTS AND UNDERPAYMENTS
OVERPAYMENTSUNDERPAYMENTS
1995-1 C.B.1995-1 C.B.
RATETABLEPGRATETABLEPG
Jan.1,1999–Mar.31,19996%175717%19573
Apr.1,1999–Jun.30,19997%195738%21575
Jul.1,1999–Sep.30,19997%195738%21575
Oct.1,1999–Dec.31,19997%195738%21575
Jan.1,2000–Mar.31,20007%676218%69623
Apr.1,2000–Jun.30,20008%696239%71625
Jul.1,2000–Sep.30,20008%696239%71625
Oct.1,2000–Dec.31,20008%696239%71625
Jan.1,2001–Mar.31,20018%215759%23577
Apr.1,2001–Jun.30,20017%195738%21575
Jul.1,2001–Sep.30,20016%175717%19573
Oct.1,2001–Dec.31,20016%175717%19573
Jan.1,2002–Mar.31,20025%155696%17571
Apr.1,2002–Jun.30,20025%155696%17571
Jul.1,2002–Sep.30,20025%155696%17571
Oct.1,2002–Dec.31,20025%155696%17571
Jan.1,2003–Mar.31,20034%135675%15569
Apr.1,2003–Jun.30,20034%135675%15569
Jul.1,2003–Sep.30,20034%135675%15569
Oct.1,2003–Dec.31,20033%115654%13567
Jan.1,2004–Mar.31,20043%596134%61615
Apr.1,2004–Jun.30,20044%616155%63617
Jul.1,2004–Sep.30,20043%596134%61615
Oct.1,2004–Dec.31,20044%616155%63617
Jan.1,2005–Mar.31,20054%135675%15569
Apr.1,2005–Jun.30,20055%155696%17571
Jul.1,2005–Sep.30,20055%155696%17571
Oct.1,2005–Dec.31,20056%175717%19573
Jan.1,2006–Mar.31,20066%175717%19573
Apr.1,2006–Jun.30,20066%175717%19573
Jul.1,2006–Sep.30,20067%195738%21575
Oct.1,2006–Dec.31,20067%195738%21575
Jan.1,2007–Mar.31,20077%195738%21575
Apr.1,2007–Jun.30,20077%195738%21575
Jul.1,2007–Sep.30,20077%195738%21575
Oct.1,2007–Dec.31,20077%195738%21575
Jan.1,2008–Mar.31,20086%656197%67621
Apr.1,2008–Jun.30,20085%636176%65619
Jul.1,2008–Sep.30,20084%616155%63617

June 22, 2020 976 Bulletin No. 2020–26
Oct.1,2008–Dec.31,20085%636176%65619
Jan.1,2009–Mar.31,20094%135675%15569
Apr.1,2009–Jun.30,20093%115654%13567
Jul.1,2009–Sep.30,20093%115654%13567
Oct.1,2009–Dec.31,20093%115654%13567
Jan.1,2010–Mar.31,20103%115654%13567
Apr.1,2010–Jun.30,20103%115654%13567
Jul.1,2010–Sep.30,20103%115654%13567
Oct.1,2010–Dec.31,20103%115654%13567
Jan.1,2011–Mar.31,20112%95633%11565
Apr.1,2011–Jun.30,20113%115654%13567
Jul.1,2011–Sep.30,20113%115654%13567
Oct.1,2011–Dec.31,20112%95633%11565
Jan.1,2012–Mar.31,20122%576113%59613
Apr.1,2012–Jun.30,20122%576113%59613
Jul.1,2012–Sep.30,20122%576113%59613
Oct.1,2012–Dec.31,20122%576113%59613
Jan.1,2013–Mar.31,20132%95633%11565
Apr.1,2013–Jun.30,20132%95633%11565
Jul.1,2013–Sep.30,20132%95633%11565
Oct.1,2013–Dec.31,20132%95633%11565
Jan.1,2014–Mar.31,20142%95633%11565
Apr.1,2014–Jun.30,20142%95633%11565
Jul.1,2014–Sep.30,20142%95633%11565
Oct.1,2014–Dec.31,20142%95633%11565
Jan.1,2015–Mar.31,20152%95633%11565
Apr.1,2015–Jun.30,20152%95633%11565
Jul.1,z2015–Sep.30,20152%95633%11565
Oct.1,2015–Dec.31,20152%95633%11565
Jan.1,2016–Mar.31,20162%576113%59613
Apr.1,2016–Jun.30,20163%596134%61615
Jul.1,2016–Sep.30,20163%596134%61615
Oct.1,2016–Dec.31,20163%596134%61615
Jan.1,2017–Mar.31,20173%115654%13567
Apr.1,2017–Jun.30,20173%115654%13567
Jul.1,2017–Sep.30,20173%115654%13567
Oct.1,2017–Dec.31,,20173%115654%13567
Jan.1,2018–Mar.31,20183%115654%13567
Apr.1,2018–Jun.30,20184%135675%15569
Jul.1,2018–Sep.30,20184%135675%15569
Oct.1,2018–Dec.31,20184%135675%15569
Jan.1,2019–Mar.31,20195%155696%17571
Apr.1,2019–Jun.30,20195%155696%17571
Jul.1,2019–Sep.30,20194%135675%15569

Bulletin No. 2020–26 977 June 22, 2020
Oct.1,2019–Dec.31,20194%135675%15569
Jan.1,2020–Mar. 31,20204%616155%63617
Apr.1,2020–Jun.30,20204%616155%63617
Jul.1,2020–Sep.30,20202%576113%59613

June 22, 2020 978 Bulletin No. 2020–26
TABLE OF INTEREST RATES
FOR LARGE CORPORATE UNDERPAYMENTS
FROM JANUARY 1, 1991 - PRESENT
1995-1 C.B.
RATETABLEPG
Jan.1,1991–Mar.31,199113%31585
Apr.1,1991–Jun.30,199112%29583
Jul.1,1991–Sep.30,199112%29583
Oct.1,1991–Dec.31,199112%29583
Jan.1,1992–Mar.31,199211%75629
Apr.1,1992–Jun.30,199210%73627
Jul.1,1992–Sep.30,199210%73627
Oct.1,1992–Dec.31,19929%71625
Jan.1,1993–Mar.31,19939%23577
Apr.1,1993–Jun.30,19939%23577
Jul.1,1993–Sep.30,19939%23577
Oct.1,1993–Dec.31,19939%23577
Jan.1,1994–Mar.31,19949%23577
Apr.1,1994–Jun.30,19949%23577
Jul.1,1994–Sep.30,199410%25579
Oct.1,1994–Dec.31,199411%27581
Jan.1,1995–Mar.31,199511%27581
Apr.1,1995–Jun.30,199512%29583
Jul.1,1995–Sep.30,199511%27581
Oct.1,1995–Dec.31,199511%27581
Jan.1,1996–Mar.31,199611%75629
Apr.1,1996–Jun.30,199610%73627
Jul.1,1996–Sep.30,199611%75629
Oct.1,1996–Dec.31,199611%75629
Jan.1,1997–Mar.31,199711%27581
Apr.1,1997–Jun.30,199711%27581
Jul.1,1997–Sep.30,199711%27581
Oct.1,1997–Dec.31,199711%27581
Jan.1,1998–Mar.31,199811%27581
Apr.1,1998–Jun.30,199810%25579
Jul.1,1998–Sep.30,199810%25579
Oct.1,1998–Dec.31,199810%25579
Jan.1,1999–Mar.31,19999%23577
Apr.1,1999–Jun.30,199910%25579
Jul.1,1999–Sep.30,199910%25579
Oct.1,1999–Dec.31,199910%25579
Jan.1,2000–Mar.31,200010%73627
Apr.1,2000–Jun.30,200011%75629

Bulletin No. 2020–26 979 June 22, 2020
Jul.1,2000–Sep.30,200011%75629
Oct.1,2000–Dec.31,200011%75629
Jan.1,2001–Mar.31,200111%27581
Apr.1,2001–Jun.30,200110%25579
Jul.1,2001–Sep.30,20019%23577
Oct.1,2001–Dec.31,20019%23577
Jan.1,2002–Mar.31,20028%21575
Apr.1,2002–Jun.30,20028%21575
Jul.1,2002–Sep.30,20028%21575
Oct.1,2002–Dec.31,20028%21575
Jan.1,2003–Mar.31,20037%19573
Apr.1,2003–Jun.30,20037%19573
Jul.1,2003–Sep.30,20037%19573
Oct.1,2003–Dec.31,20036%17571
Jan.1,2004–Mar.31,20046%65619
Apr.1,2004–Jun.30,20047%67621
Jul.1,2004–Sep.30,20046%65619
Oct.1,2004–Dec.31,20047%67621
Jan.1,2005–Mar.31,20057%19573
Apr.1,2005–Jun.30,20058%21575
Jul.1,2005–Sep.30,20058%21575
Oct.1,2005–Dec.31,20059%23577
Jan.1,2006–Mar.31,20069%23577
Apr.1,2006–Jun.30,20069%23577
Jul.1,2006–Sep.30,200610%25579
Oct.1,2006–Dec.31,200610%25579
Jan.1,2007–Mar.31,200710%25579
Apr.1,2007–Jun.30,200710%25579
Jul.1,2007–Sep.30,200710%25579
Oct.1,2007–Dec.31,200710%25579
Jan.1,2008–Mar.31,20089%71625
Apr.1,2008–Jun.30,20088%69623
Jul.1,2008–Sep.30,20087%67621
Oct.1,2008–Dec.31,20088%69623
Jan.1,2009–Mar.31,20097%19573
Apr.1,2009–Jun.30,20096%17571
Jul.1,2009–Sep.30,20096%17571
Oct.1,2009–Dec.31,20096%17571
Jan.1,2010–Mar.31,20106%17571
Apr.1,2010–Jun.30,20106%17571
Jul.1,2010–Sep.30,20106%17571
Oct.1,2010–Dec.31,20106%17571
Jan.1,2011–Mar.31,20115%15569
Apr.1,2011–Jun.30,20116%17571
Jul.1,2011–Sep.30,20116%17571

June 22, 2020 980 Bulletin No. 2020–26
Oct.1,2011–Dec.31,20115%15569
Jan.1,2012–Mar.31,20125%63617
Apr.1,2012–Jun.30,20125%63617
Jul.1,2012–Sep.30,20125%63617
Oct.1,2012–Dec.31,20125%63617
Jan.1,2013–Mar.31,20135%15569
Apr.1,2013–Jun.30,20135%15569
Jul.1,2013–Sep.30,20135%15569
Oct.1,2013–Dec.31,20135%15569
Jan.1,2014–Mar.31,20145%15569
Apr.1,2014–Jun.30,20145%15569
Jul.1,2014–Sep.30,20145%15569
Oct.1,2014–Dec.31,20145%15569
Jan.1,2015–Mar.31,20155%15569
Apr.1,2015–Jun.30,20155%15569
Jul.1,2015–Sep.30,20155%15569
Oct.1,2015–Dec.31,20155%15569
Jan.1,2016–Mar.31,20165%63617
Apr.1,2016–Jun.30,20166%65619
Jul.1,2016–Sep.30,20166%65619
Oct.1,2016–Dec.31,20166%65619
Jan.1,2017–Mar.31,20176%17571
Apr.1,2017–Jun.30,20176%17571
Jul.1,2017–Sep.30,20176%17571
Oct.1,2017–Dec.31,20176%17571
Jan.1,2018–Mar.31,20186%17571
Apr.1,2018–Jun.30,20187%19573
Jul.1,2018–Sep.30,20187%19573
Oct.1,2018–Dec.31,20187%19573
Jan.1,2019–Mar.31,20198%21575
Apr.1,2019–Jun.30,20198%21575
Jul.1,2019–Sep.30,20197%19573
Oct.1,2019–Dec.31,20197%19573
Jan.1,2020–Mar.31,20207%67621
Apr.1,2020–Jun. 30,20207%67621
Jul.1,2020–Sep.30,20205%63617

Bulletin No. 2020–26 981 June 22, 2020
TABLE OF INTEREST RATES FOR CORPORATE
OVERPAYMENTS EXCEEDING $10,000
FROM JANUARY 1, 1995 – PRESENT
1995-1 C.B.
RATETABLEPG
Jan.1,1995–Mar.31,19956.5%18572
Apr.1,1995–Jun.30,19957.5%20574
Jul.1,1995–Sep.30,19956.5%18572
Oct.1,1995–Dec.31,19956.5%18572
Jan.1,1996–Mar.31,19966.5%66620
Apr.1,1996–Jun.30,19965.5%64618
Jul.1,1996–Sep.30,19966.5%66620
Oct.1,1996–Dec.31,19966.5%66620
Jan.1,1997–Mar.31,19976.5%18572
Apr.1,1997–Jun.30,19976.5%18572
Jul.1,1997–Sep.30,19976.5%18572
Oct.1,1997–Dec.31,19976.5%18572
Jan.1,1998–Mar.31,19986.5%18572
Apr.1,1998–Jun.30,19985.5%16570
Jul.1.1998–Sep.30,19985.5%16570
Oct.1,1998–Dec.31,19985.5%16570
Jan.1,1999–Mar.31,19994.5%14568
Apr.1,1999–Jun.30,19995.5%16570
Jul.1,1999–Sep.30,19995.5%16570
Oct.1,1999–Dec.31,19995.5%16570
Jan.1,2000–Mar.31,20005.5%64618
Apr.1,2000–Jun.30,20006.5%66620
Jul.1,2000–Sep.30,20006.5%66620
Oct.1,2000–Dec.31,20006.5%66620
Jan.1,2001–Mar.31,20016.5%18572
Apr.1,2001–Jun.30,20015.5%16570
Jul.1,2001–Sep.30,20014.5%14568
Oct.1,2001–Dec.31,20014.5%14568
Jan.1,2002–Mar.31,20023.5%12566
Apr.1,2002–Jun.30,20023.5%12566
Jul.1,2002–Sep.30,20023.5%12566
Oct.1,2002–Dec.31,20023.5%12566
Jan.1,2003–Mar.31,20032.5%10564
Apr.1,2003–Jun.30,20032.5%10564
Jul.1,2003–Sep.30,20032.5%10564
Oct.1,2003–Dec.31,20031.5%8562
Jan.1,2004–Mar.31,20041.5%56610
Apr.1,2004–Jun.30,20042.5%58612

June 22, 2020 982 Bulletin No. 2020–26
Jul.1,2004–Sep.30,20041.5%56610
Oct.1,2004–Dec.31,20042.5%58612
Jan.1,2005–Mar.31,20052.5%10564
Apr.1,2005–Jun.30,20053.5%12566
Jul.1,2005–Sep.30,20053.5%12566
Oct.1,2005–Dec.31,20054.5%14568
Jan.1,2006–Mar.31,20064.5%14568
Apr.1,2006–Jun.30,20064.5%14568
Jul.1,2006–Sep.30,20065.5%16570
Oct.1,2006–Dec.31,20065.5%16570
Jan.1,2007–Mar.31,20075.5%16570
Apr.1,2007–Jun.30,20075.5%16570
Jul.1,2007–Sep.30,20075.5%16570
Oct.1,2007–Dec.31,20075.5%16570
Jan.1,2008–Mar.31,20084.5%62616
Apr.1,2008–Jun.30,20083.5%60614
Jul.1,2008–Sep.30,20082.5%58612
Oct.1,2008–Dec.31,20083.5%60614
Jan.1,2009–Mar.31,20092.5%10564
Apr.1,2009–Jun.30,20091.5%8562
Jul.1,2009–Sep.30,20091.5%8562
Oct.1,2009–Dec.31,20091.5%8562
Jan.1,2010–Mar.31,20101.5%8562
Apr.1,2010–Jun.30,20101.5%8562
Jul.1,2010–Sep.30,20101.5%8562
Oct.1,2010–Dec.31,20101.5%8562
Jan.1,2011–Mar.31,20110.5%*
Apr.1,2011–Jun.30,20111.5%8562
Jul.1,2011–Sep.30,20111.5%8562
Oct.1,2011–Dec.31,20110.5%*
Jan.1,2012–Mar.31,20120.5%*
Apr.1,2012–Jun.30,20120.5%*
Jul.1,2012–Sep.30,20120.5%*
Oct.1,2012–Dec.31,20120.5%*
Jan.1,2013–Mar.31,20130.5%*
Apr.1,2013–Jun.30,20130.5%*
Jul.1,2013–Sep.30,20130.5%*
Oct.1,2013–Dec.31,20130.5%*
Jan.1,2014–Mar.31,20140.5%*
Apr.1,2014–Jun.30,20140.5%*
Jul.1,2014–Sep.30,20140.5%*

Bulletin No. 2020–26 983 June 22, 2020
Oct.1,2014–Dec.31,20140.5%*
Jan.1,2015–Mar.31,20150.5%*
Apr.1,2015–Jun.30,20150.5%*
Jul.1,2015–Sep.30,20150.5%*
Oct.1,2015–Dec.31,20150.5%*
Jan.1,2016–Mar.31,20160.5%*
Apr.1,2016–Jun.30,20161.5%56610
Jul.1,2016–Sep.30,20161.5%56610
Oct.1,2016–Dec.31,20161.5%56610
Jan.1,2017–Mar.31,20171.5%8562
Apr.1,2017–Jun.30,20171.5%8562
Jul.1,2017–Sep.30,20171.5%8562
Oct.1,2017–Dec.31,20171.5%8562
Jan.1,2018–Mar.31,20181.5%8562
Apr.1,2018–Jun.30,20182.5%10564
Jul.1,2018–Sep.30,20182.5%10564
Oct.1,2018–Dec.31,20182.5%10564
Jan.1,2019–Mar.31,20193.5%12566
Apr.1,2019–Jun.30,20193.5%12566
Jul.1,2019–Sep.30,20192.5%10564
Oct.1,2019–Dec. 31,20192.5%10564
Jan.1,2020–Mar.31,20202.5%58612
Apr.1,2020–Jun.30,20202.5%58612
Jul.1,2020–Sep. 30,20200.5%*
* The asterisk reflects the interest factors for daily compound interest for annual rates of 0.5 percent published in Appendix A of
this Revenue Ruling.

June 22, 2020 984 Bulletin No. 2020–26
Part III
Relief for Qualified
Opportunity Funds and
Investors Affected by
Ongoing Coronavirus
Disease 2019 Pandemic
Notice 2020-39
I. PURPOSE
This notice provides relief under sec-
tion 7508A(a) of the Internal Revenue
Code (Code) for qualified opportunity
funds (QOFs) and their investors in re-
sponse to the ongoing Coronavirus Dis-
ease 2019 (COVID-19) pandemic. This
notice also addresses the application of
certain relief provisions in the Income
Tax Regulations under section 1400Z-2 of
the Code (section 1400Z-2 regulations).
Part III of this notice (i) provides relief
for certain failures by a QOF to meet the
90-percent investment standard and (ii)
postpones the time periods for satisfying
certain other requirements. Part IV of this
notice confirms that (i) the 24-month ex-
tension for the working capital safe harbor
and (ii) the 12-month extension for QOFs
to reinvest certain proceeds, both as pro-
vided under the section 1400Z-2 regula-
tions, are available to otherwise qualify-
ing QOFs and qualified opportunity zone
businesses.
II. BACKGROUND
A. Emergency Declaration and Prior
Grants of Relief
On March 13, 2020, the President of
the United States issued an emergency
declaration under the Robert T. Staf-
ford Disaster Relief and Emergency As-
sistance Act (Stafford Act) (42 U.S.C.
5121 et seq.) in response to the ongoing
COVID-19 pandemic (Emergency Decla-
ration
1
). The Emergency Declaration in-
structed the Secretary of the Treasury “to
provide relief from tax deadlines to Amer-
icans who have been adversely affected by
the COVID-19 emergency, as appropriate,
pursuant to 26 U.S.C. 7508A(a).” Subse-
quent to the Emergency Declaration, the
President issued major disaster declara-
tions under the authority of the Stafford
Act with respect to all 50 states, the Dis-
trict of Columbia, and 5 territories (Major
Disaster Declarations).
2
The Major Disas-
ter Declarations declared that, beginning
on January 20, 2020, major disasters ex-
isted in each of these jurisdictions, within
which is located every population census
tract designated as a qualified opportunity
zone under section 1400Z-1 of the Code.
See Notice 2018-48, 2018-28 I.R.B. 9
(Nov. 21, 2018), and Notice 2019-42,
2019-29 I.R.B. 352 (October 10, 2019)
(which collectively list every designated
qualified opportunity zone).
Section 7508A provides the Secretary
of the Treasury or his delegate (Secre-
tary) with authority to postpone the time
for performing certain acts under the in-
ternal revenue laws for a taxpayer deter-
mined by the Secretary to be affected by
a Federally declared disaster, as defined in
section 165(i)(5)(A) of the Code. See sec-
tion 165(i)(5)(A) (defining “Federally de-
clared disaster” to mean “any disaster sub-
sequently determined by the President of
the United States to warrant assistance by
the Federal Government under the Robert
T. Stafford Disaster Relief and Emergen-
cy Assistance Act”). Pursuant to section
7508A(a), a period of up to one year may
be disregarded in determining whether the
performance of certain acts is timely un-
der the internal revenue laws.
On April 9, 2020, the Department of
the Treasury and the Internal Revenue
Service issued Notice 2020-23 to provide
relief under section 7508A(a) to taxpayers
affected by the COVID-19 emergency by
postponing due dates with respect to cer-
tain taxpayer and government acts. See
generally Part III of Notice 2020-23 (pro-
viding relief for certain time-sensitive ac-
tions due to be performed on or after April
1, 2020, and before July 15, 2020), am-
plifying Notice 2020-20, 2020-16 I.R.B.
660 (April 13, 2020) and Notice 2020-18,
2020-15 I.R.B. 590 (April 6, 2020), and
modifying Rev. Proc. 2014-42, 2014-29
I.R.B. 192 (July 1, 2014).
B. 180-Day Investment Requirement
for QOF Investors
Section 1400Z-2(a)(1)(A) provides
that, if a taxpayer has “gain from the sale
to, or exchange with, an unrelated person
of any property held by the taxpayer” the
taxpayer may elect to exclude from gross
income for the taxable year “so much of
such gain as does not exceed the aggre-
gate amount invested by the taxpayer in a
[QOF] during the 180-day period begin-
ning on the date of such sale or exchange”
(180-day investment requirement). Sec-
tion 1.1400Z2(a)-1 provides definitions
and rules to implement the 180-day in-
vestment requirement.
One of the time-sensitive acts post-
poned by Notice 2020-23 was the making
of “an investment at the election of a tax-
payer due to be made during the 180-day
period described in section 1400Z-2(a)
(1)(A) of the Code” (180-day investment
period). See Notice 2020-23, Part III.A
and C. Specifically, Notice 2020-23 post-
poned to July 15, 2020, any deadline for
the 180-day investment requirement that
otherwise would have occurred on or after
April 1, 2020 and before July 15, 2020.
See id., Part III.C.
C. 90-Percent Investment Standard for
QOFs
Section 1400Z-2(d)(1) defines a QOF
as any investment vehicle organized as a
corporation or a partnership for the pur-
pose of investing in qualified opportunity
zone property (other than another QOF).
This definition also requires a QOF to
hold at least 90 percent of its assets in
qualified opportunity zone property, de-
termined by the average of the percentage
1
See March 13, 2020, letter from the President to Secretaries of the Departments of Homeland Security, the Treasury, and Health and Human Services and the Administrator of the Federal
Emergency Management Agency, available at https://www.whitehouse.gov/wp-content/uploads/2020/03/LetterFromThePresident.pdf.
2
See https://www.fema.gov/coronavirus/disaster-declarations.

Bulletin No. 2020–26 985 June 22, 2020
of qualified opportunity zone property
held by that QOF as measured (i) on the
last day of the first 6-month period of the
taxable year of the QOF, and (ii) on the
last day of the taxable year of the QOF.
See section 1400Z-2(d)(1). The require-
ment that the average percentages of the
QOF’s qualified opportunity zone proper-
ty on these two dates (semi-annual testing
dates) must equal at least 90 percent of the
QOF’s assets is referred to as the 90-per-
cent investment standard. See section
1400Z-2(f). Section 1.1400Z2(d)-1 pro-
vides definitions and rules to implement
the 90-percent investment standard.
If the average of the percentages of
the qualified opportunity zone proper-
ty held by a QOF on these semi-annual
testing dates fails to meet the 90-percent
investment standard, section 1400Z-2(f)
(1) provides a general rule that the QOF
must pay a penalty for each month that the
QOF fails to meet that standard. Howev-
er, section 1400Z-2(f)(3) provides that no
such penalty is imposed “with respect to
any failure if it is shown that such failure
is due to reasonable cause.”
D. Working Capital Safe Harbor for
Qualified Opportunity Zone Businesses
An entity must meet certain require-
ments to be a qualified opportunity zone
business, including the requirement of
section 1397C(b)(8) that less than 5 per-
cent of the average of the aggregate un-
adjusted bases of the entity’s property
be attributable to nonqualified financial
property, as defined in section 1397C(e).
Section 1397C(e) excludes from non-
qualified financial property reasonable
amounts of working capital that are held
in cash, cash equivalents, or debt instru-
ments with a term of 18 months or less.
See § 1.1400Z2(d)-1(d)(3)(iv).
The section 1400Z-2 regulations pro-
vide qualified opportunity zone busi-
nesses with a safe harbor for treating an
amount of working capital as reasonable
for purposes of section 1397C(e) if certain
requirements are satisfied (working capi-
tal safe harbor). See § 1.1400Z2(d)-1(d)
(3)(v) (providing the scope of the work-
ing capital safe harbor and conditions for
eligibility). One of those requirements is
that there is a written schedule consistent
with the ordinary start-up of a trade or
business for the expenditure of the work-
ing capital assets within 31 months of the
receipt by the business of the assets. See
§ 1.1400Z2(d)-1(d)(3)(v)(B). A qualified
opportunity zone business may extend
the working capital safe harbor period
to a maximum 62-month period under
§ 1.1400Z2(d)-1(d)(3)(vi) if certain addi-
tional requirements are met.
If such qualified opportunity zone busi-
ness is located in a qualified opportunity
zone within a Federally declared disas-
ter (as defined in section 165(i)(5)(A)),
the qualified opportunity zone business
may receive not more than an additional
24 months to expend its working capital
assets, as long as the qualified opportu-
nity zone business otherwise meets the
requirements of the working capital safe
harbor. See § 1.1400Z2(d)-1(d)(3)(v)(D).
Therefore, a qualified opportunity zone
business may, if each applicable require-
ment of § 1.1400Z2(d)-1(d)(3)(v) and
(vi) is satisfied, have up to a maximum
86-months to expend working capital as-
sets if the qualified opportunity zone busi-
ness is located in a qualified opportunity
zone within a Federally declared disaster.
E. 30-Month Substantial Improvement
Period for QOFs
Section 1400Z-2(d)(2)(D)(i) provides
that tangible property is treated as qual-
ified opportunity zone business prop-
erty if the tangible property is used in a
trade or business of the QOF and satisfies
three general requirements. One of these
requirements is that the original use of
post-2017 acquired tangible property
in the qualified opportunity zone must
begin with the QOF (referred to as the
“original use requirement”), or the QOF
must substantially improve that property
(substantial improvement requirement).
See section 1400Z-2(d)(2)(D)(i)(II). The
substantial improvement requirement is
met only if, during any 30-month period
beginning after the date of acquisition of
the post-2017 acquired tangible property,
there are “additions to basis with respect
to such property” held by the QOF that,
in the aggregate, exceed the QOF’s adjust-
ed basis of that property as of the begin-
ning of that 30-month period (30-month
substantial improvement period). See
section 1400Z-2(d)(2)(D)(ii). Sec-
tion 1.1400Z2(d)-2(b)(4) provides rules
to implement the substantial improvement
requirement.
F. 12-Month Reinvestment Period for
QOFs
The section 1400Z-2 regulations pro-
vide generally that, if (i) a QOF sells or
disposes of some or all of its qualified op-
portunity zone property or if a distribution
with respect to the QOF’s qualified oppor-
tunity zone stock is treated as a return of
capital in the QOF’s hands, and if (ii) the
QOF reinvests some or all of the proceeds
in qualified opportunity zone property by
the last day of the 12-month period be-
ginning on the date of the distribution,
sale, or disposition, then the proceeds, to
the extent that they are so reinvested, are
treated as qualified opportunity zone prop-
erty for purposes of the 90-percent invest-
ment standard. See § 1.1400Z2(f)-1(b)(1).
This treatment is available to a QOF only
to the extent that, prior to the reinvestment
in qualified opportunity zone property, the
reinvested proceeds are continuously held
in cash, cash equivalents, or debt instru-
ments with a term of 18 months or less.
See id.
If the QOF’s plan to reinvest some or all
of the above-described proceeds in quali-
fied opportunity zone property is delayed
due to a Federally declared disaster (as
defined in section 165(i)(5)(A)), the QOF
may receive not more than an additional
12 months to reinvest the proceeds, pro-
vided that the QOF invests the proceeds in
the manner originally intended before the
disaster. See § 1.1400Z2(f)-1(b)(2).
III. GRANTS OF RELIEF FOR QOF
INVESTORS AND QOFS
A. 180-Day Investment Requirement
for QOF Investors
If the last day of the 180-day invest-
ment period within which a taxpayer must
make an investment in a QOF in order to
satisfy the 180-day investment require-
ment falls on or after April 1, 2020, and
before December 31, 2020, the last day
of that 180-day investment period is post-
poned to December 31, 2020. This relief
is automatic; taxpayers do not have to call
the IRS or send letters or other documents

June 22, 2020 986 Bulletin No. 2020–26
to the IRS to receive this relief. However,
a taxpayer will still need to make a valid
deferral election in accordance with the
instructions to Form 8949, complete Form
8997, and file the completed Form 8949
and Form 8997 with a timely filed Federal
income tax return (including extensions)
or amended Federal income tax return for
the taxable year in which the gain would
be recognized if section 1400Z-2(a)(1) did
not apply to defer recognition of the gain.
For additional information, see https://
www.irs.gov/form8949https://www.irs.
gov/form8997.
B. 90-Percent Investment Standard for
QOFs
In the case of a QOF whose (i) last day
of the first 6-month period of the taxable
year or (ii) last day of the taxable year
falls within the period beginning on April
1, 2020, and ending on December 31,
2020, any failure by that QOF to satisfy
the 90-percent investment standard for
that taxable year of the QOF is—
(1) due to reasonable cause under sec-
tion 1400Z-2(f)(3); and
(2) disregarded for purposes of deter-
mining whether the QOF or any otherwise
qualifying investments in that QOF satisfy
the requirements of section 1400Z-2 and
the section 1400Z-2 regulations for any
taxable year of the QOF.
This relief is automatic; QOFs do not
have to call the IRS or send letters or oth-
er documents to the IRS to receive this
relief. However, a QOF must accurately
complete all lines on Form 8996 filed with
respect to each affected taxable year EX-
CEPT that the QOF should place a “0” in
Part IV, Line 8 (Penalty). The accurately
completed Form 8996 must be filed with
the QOF’s timely filed Federal income
tax return (including extensions) for the
affected taxable year(s). For addition-
al information, see https://www.irs.gov/
form8996
C. 30-Month Substantial Improvement
Period for QOFs and Qualified
Opportunity Zone Businesses
For purposes of the substantial im-
provement requirement with respect to
property held by a QOF or qualified op-
portunity zone business, the period be-
ginning on April 1, 2020, and ending on
December 31, 2020, is disregarded in de-
termining any 30-month substantial im-
provement period (that is, the 30-month
substantial improvement period is tolled
during the period beginning on April
1, 2020, and ending on December 31,
2020).
IV. REGULATORY EXTENSIONS FOR
WORKING CAPITAL SAFE HARBOR
AND QOF REINVESTMENT PERIOD
DUE TO FEDERALLY DECLARED
DISASTERS
A. Working Capital Safe Harbor for
Qualified Opportunity Zone Businesses
As a result of the Emergency Declara-
tion (that is, the declaration of a Federally
declared disaster for purposes of section
165(i)(5)(A)), all qualified opportunity
zone businesses holding working capital
assets intended to be covered by the work-
ing capital safe harbor before December
31, 2020, receive not more than an addi-
tional 24 months to expend the working
capital assets of the qualified opportunity
zone business, as long as the qualified op-
portunity zone business otherwise meets
the requirements of § 1.1400Z2(d)-1(d)
(3)(v) (that is, the requirements to qualify
for the working capital safe harbor). See
§ 1.1400Z2(d)-1(d)(3)(v)(D) (providing
such 24-month extension due to a Feder-
ally declared disaster).
B. 12-Month Reinvestment Period for
QOFs
If any QOF’s 12-month reinvestment
period includes January 20, 2020 (that is,
the date of the disaster identified in the
Major Disaster Declarations), that QOF
receives up to an additional 12 months
to reinvest in qualified opportunity zone
property some or all of the proceeds re-
ceived by the QOF from the return of cap-
ital or the sale or disposition of some or all
of the QOF’s qualified opportunity zone
property, provided that the QOF satisfies
the requirements of § 1.1400Z2(f)-1(b)
(1) and invests the proceeds in the man-
ner originally intended before January 20,
2020. See § 1.1400Z2(f)-1(b)(2) (provid-
ing such 12-month extension due to a Fed-
erally declared disaster).
V. EFFECT ON OTHER DOCUMENTS
Notice 2020-23 is modified.
VI. DRAFTING INFORMATION
The principal author of this notice is
Kyle C. Griffin of the Office of Associate
Chief Counsel (Income Tax and Account-
ing). For further information regarding this
notice, you may call the COVID-19 Disas-
ter Relief Hotline at (202) 317-5436 (not a
toll-free number). For further information
regarding the application of this notice to
section 1400Z-2 and the section 1400Z-2
regulations, please contact Mr. Griffin at
(202) 317-4718 (not a toll-free number).
Temporary Relief from
the Physical Presence
Requirement for Spousal
Consents Under Qualified
Retirement Plans
Notice 2020-42
I. PURPOSE
In response to the unprecedented public
health emergency caused by the Coronavi-
rus Disease 2019 (COVID-19) pandemic,
and the related social distancing that has
been implemented, this notice provides
temporary relief from the physical pres-
ence requirement in Treasury Regulations
§ 1.401(a)-21(d)(6) for participant elec-
tions required to be witnessed by a plan
representative or a notary public, includ-
ing a spousal consent required under §
417 of the Internal Revenue Code (Code).
While this temporary relief, which covers
the period from January 1, 2020, through
December 31, 2020, is intended to facil-
itate the payment of coronavirus-related
distributions and plan loans to qualified in-
dividuals, as permitted by section 2202 of
the Coronavirus Aid, Relief, and Econom-
ic Security Act, Pub. L. 116-136, 134 Stat.
281 (2020) (CARES Act), the temporary
relief applies to any participant election
that requires the signature of an individual
to be witnessed in the physical presence of
a plan representative or notary.

Bulletin No. 2020–26 987 June 22, 2020
II. BACKGROUND
On March 13, 2020, the President de-
termined that the COVID-19 pandemic
was of sufficient severity and magnitude
to warrant an emergency determination
under the Robert T. Stafford Disaster Re-
lief and Emergency Assistance Act, 42
U.S.C. 5121-5207. Providing alternative
procedures for notarization and consent
related to plan distributions that do not
require physical presence is an appro-
priate emergency protective measure
during this declared emergency period
and is consistent with the physical dis-
tancing procedures implemented by the
states.
As part of the response to the COVID-19
pandemic, Congress passed the CARES
Act to allow participants greater access to
their retirement benefits. Section 2202(a)
of the CARES Act permits certain in-
dividuals to receive up to $100,000 for
a coronavirus-related distribution from
an eligible retirement plan (as defined in
§ 402(c)(8)(B) of the Code). A coronavi-
rus-related distribution is defined as any
distribution from an eligible retirement
plan to a qualified individual made on or
after January 1, 2020, and before Decem-
ber 31, 2020. A distribution is not subject
to the 10% additional tax under § 72(t) to
the extent it meets the requirements of a
coronavirus-related distribution. In addi-
tion, the coronavirus-related distribution
may be included in gross income ratably
over the 3-year period beginning with the
taxable year of the distribution and may
be recontributed to an applicable eligible
retirement plan in which the taxpayer is a
beneficiary and to which a rollover can be
made.
Section 2202(b)(1) of the CARES Act
provides that in the case of any loan from
a qualified employer plan (as defined un-
der § 72(p)(4) of the Code) to a qualified
individual made during the 180-day peri-
od beginning on the date of enactment of
the CARES Act, the $50,000 aggregate
loan limit in § 72(p)(2)(A)(i) of the Code
is increased to $100,000. In addition, the
rule in § 72(p)(2)(A)(ii) limiting the ag-
gregate amount of the loans to one-half
of the present value of the vested accrued
benefit of the employee is increased to 100
percent of the employee’s vested accrued
benefit under the plan.
Section 1.401(a)-21 sets forth stan-
dards for the use of an electronic medium
to provide applicable notices to recipients
or to make participant elections with re-
spect to a retirement plan, an employee
benefit arrangement, or an individual
retirement plan. Section 1.401(a)-21(e)
(6) defines a participant election as any
consent, election, request, agreement, or
similar communication made by or from
a participant, beneficiary, alternate pay-
ee, or an individual entitled to benefits
under a retirement plan, employee bene-
fit arrangement, or individual retirement
plan. Section 1.401(a)-21(d) sets forth the
following conditions for participant elec-
tions:
(1) The individual must be effectively
able to access the electronic medium used
to make the participant election;
(2) The electronic system must be rea-
sonably designed to preclude any person
other than the appropriate individual from
making the participant election;
(3) The electronic system must pro-
vide the individual making the participant
election with a reasonable opportunity to
review, confirm, modify, or rescind the
terms of the election before it becomes
effective; and
(4) The individual making the partic-
ipant election, within a reasonable time,
must receive confirmation of the election
through either a written paper document
or an electronic medium under a system
that satisfies the applicable notice require-
ments under § 1.401(a)-21.
The participant election rules in
§ 1.401(a)-21(d) apply to plans that are
subject to the qualified joint and survi-
vor (QJSA) requirements of § 417. Ac-
cordingly, for a plan subject to the QJSA
requirements, a participant’s consent to
a distribution may be provided through
the use of electronic media if the plan
complies with the standards described in
§ 1.401(a)-21(d), provided that the partic-
ipant also obtains a valid spousal consent,
if applicable.
Section 417 requires spousal consent to
a waiver of a QJSA, which includes the
waiver of a QJSA as part of a request for
a plan distribution or a plan loan. Section
417 further requires that the spousal con-
sent be witnessed by a plan representative
or a notary public. Section 1.401(a)-21(d)
(6)(i) provides that, in the case of a par-
ticipant election that is required to be
witnessed by a plan representative or a
notary public (such as a spousal consent
to a waiver of a QJSA under § 417), the
signature of the individual making the
participant election must be witnessed in
the physical presence of a plan represen-
tative or a notary public. Section 1.401(a)-
21(d)(6)(ii) provides that, if the signature
is witnessed in the physical presence of a
notary public, an electronic signature ac-
knowledging the signature (in accordance
with section 101(g) of the Electronic Sig-
natures in Global and National Commerce
Act, Pub. L. 106-229, 114 Stat. 464 (2000)
(E-SIGN),
1
and applicable state law for
notaries public) will not be denied legal
effect.
Section 1.401(a)-21(d)(6)(iii) provides
that the Commissioner may provide in
guidance published in the Internal Rev-
enue Bulletin that the use of procedures
under an electronic system is deemed to
satisfy the physical presence requirement,
but only if those procedures with respect
to the electronic system provide the same
safeguards for participant elections as are
provided through the physical presence
requirement.
Section 1.401(a)-21(d) permits elec-
tronic notarization of participant elec-
tions. However, the physical presence
requirement in § 1.401(a)-21(d)(6) would
preclude the use of remote notarizations
of participant elections, including spousal
consents.
Remote electronic notarizations differ
from electronic notarizations in that re-
mote electronic notarizations generally
are conducted remotely over the internet
using digital tools and live audio-video
technologies, whereas electronic notari-
zations can be signed electronically but
still require that certain signatures be
witnessed in the physical presence of a
1
Section 101(g) of E-SIGN provides that “[i]f a statute, regulation, or other rule of law requires a signature or record relating to a transaction in or affecting interstate or foreign commerce
to be notarized, acknowledged, verified, or made under oath, that requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other
information required to be included by other applicable statute, regulation, or rule of law, is attached to or logically associated with the signature or record.”

June 22, 2020 988 Bulletin No. 2020–26
notary public or plan representative. The
Department of the Treasury and the Inter-
nal Revenue Service have received sev-
eral requests from stakeholders to permit
remote electronic notarization of spousal
consents for plan loans and distributions
during the COVID-19 pandemic. These
stakeholders state that due to the social
distancing measures with respect to the
COVID-19 pandemic, the physical pres-
ence requirement in § 1.401(a)-21(d)(6)
makes it difficult, if not impossible, for a
participant to receive a plan distribution
or plan loan (or for a qualified individual
to receive a coronavirus-related distri-
bution or plan loan) for which spousal
consent is required. While recognizing
the need for relief, one stakeholder re-
quested that any relief take into account
spousal protections, including limiting
the relief solely to the physical presence
requirement and making the relief tem-
porary.
Remote electronic notarization is not
uniformly applied by the states. In the
majority of states, remote electronic no-
tarization is either permanently or tempo-
rarily permitted by law, but in some states
remote electronic notarization is not cur-
rently permitted.
III. GRANT OF RELIEF
For the period from January 1, 2020,
through December 31, 2020, if the relat-
ed requirements in subsection A or B of
this Section III are satisfied, this notice
provides the following temporary relief
from the physical presence requirement in
§ 1.401(a)-21(d)(6):
(1) temporary relief from the physical
presence requirement for any participant
election witnessed by a notary public of a
state that permits remote electronic notari-
zation, and
(2) temporary relief from the physical
presence requirement for any participant
election witnessed by a plan representa-
tive.
A. Temporary Relief from the Physical
Presence Requirement for any
Participant Election Witnessed by a
Notary Public
In the case of a participant election
witnessed by a notary public, for the pe-
riod from January 1, 2020, through De-
cember 31, 2020, the physical presence
requirement in § 1.401(a)-21(d)(6) is
deemed satisfied for an electronic system
that uses remote notarization if execut-
ed via live audio-video technology that
otherwise satisfies the requirements of
participant elections under § 1.401(a)-
21(d)(6) and is consistent with state law
requirements that apply to the notary
public.
B. Temporary Relief from the Physical
Presence Requirement for any
Participant Election Witnessed by a
Plan Representative
In the case of a participant election
witnessed by a plan representative, for
the period from January 1, 2020, through
December 31, 2020, the physical pres-
ence requirement in § 1.401(a)-21(d)(6)
is deemed satisfied for an electronic sys-
tem if the electronic system using live au-
dio-video technology satisfies the follow-
ing requirements:
(1) The individual signing the partici-
pant election must present a valid photo
ID to the plan representative during the
live audio-video conference, and may not
merely transmit a copy of the photo ID
prior to or after the witnessing;
(2) The live audio-video conference
must allow for direct interaction between
the individual and the plan representative
(for example, a pre-recorded video of the
person signing is not sufficient);
(3) The individual must transmit by fax
or electronic means a legible copy of the
signed document directly to the plan rep-
resentative on the same date it was signed;
and
(4) After receiving the signed docu-
ment, the plan representative must ac-
knowledge that the signature has been
witnessed by the plan representative in
accordance with the requirements of this
notice and transmit the signed document,
including the acknowledgement, back to
the individual under a system that satisfies
the applicable notice requirements under
§ 1.401(a)-21(c).
IV. PAPERWORK REDUCTION ACT
The collection of information con-
tained in this notice has been reviewed
and approved by the Office of Manage-
ment and Budget in accordance with the
Paperwork Reduction Act (44 U.S.C.
3507) under control number 1545–1632.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collection of information is in
Section III.B of this notice. One of the
conditions for receiving temporary relief
from the physical presence requirement
in § 1.401(a)-21(d) is that the plan rep-
resentative acknowledge that he or she
has witnessed the signature and transmit
the signed document, including the ac-
knowledgement, back to the person un-
der a system that satisfies the applicable
notice requirements under § 1.401(a)-
21. This condition is similar to the con-
firmation requirement for participant
elections in § 1.401(a)-21(d), requiring
that the individual making a partici-
pant election, within a reasonable time,
receive a confirmation of the election
through either a written paper document
or an electronic medium under a sys-
tem that satisfies the applicable notice
requirements under § 1.401(a)-21(c). It
has been determined that the plan rep-
resentative’s acknowledgment that he or
she witnessed the signature of the par-
ticipant election is a minor modification
to the control number 1545–1632 and
should not result in any additional pa-
perwork burden.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mate-
rial in the administration of any internal
revenue law. Generally, tax returns and tax
return information are confidential, as re-
quired by 26 U.S.C. 6103.
V. DRAFTING INFORMATION
The principal authors of this notice are
Arslan Malik and Pamela R. Kinard of
the Office of the Associate Chief Coun-
sel (Employee Benefits, Exempt Orga-
nizations, and Employment Taxes). For
further information regarding this notice,
contact Arslan Malik at (202) 317-6700
and Pamela R. Kinard at (202) 317-6000
(not toll-free numbers).

Bulletin No. 2020–26 989 June 22, 2020
Sections 4375 & 4376 –
Insured and Self-Insured
Health Plans
Adjusted Applicable Dollar
Amount for Fee Imposed by
§§ 4375 and 4376
Notice 2020-44
I. PURPOSE
This notice provides the adjusted ap-
plicable dollar amount to be multiplied by
the average number of covered lives for
purposes of calculating the fee imposed by
§§ 4375 and 4376 of the Internal Revenue
Code for policy years and plan years that
end on or after October 1, 2019, and before
October 1, 2020. This notice also provides
transition relief for calculating the average
number of covered lives as part of calculat-
ing the applicable fee for policy years and
plan years that end on or after October 1,
2019, and before October 1, 2020.
II. BACKGROUND
Prior to the December 20, 2019 enact-
ment of the Further Consolidated Appropri-
ations Act, 2020, Pub. L. No. 116-94, 133
Stat. 2534 (the Act), § 4375 imposed a fee
on the issuer of a specified health insurance
policy for each policy year ending after
September 30, 2012, and before October
1, 2019, and § 4376 imposed a fee on the
plan sponsor of an applicable self-insured
health plan for each plan year ending after
September 30, 2012, and before October
1, 2019. The fee imposed by §§ 4375 and
4376 helps to fund the Patient-Centered
Outcomes Research Trust Fund (PCORTF)
and is calculated using the average number
of lives covered under the policy or plan
and the applicable dollar amount for that
policy year or plan year. The Act extend-
ed the termination dates to provide that
§§ 4375 and 4376 will not apply to poli-
cy and plan years ending after September
30, 2029, rather than policy and plan years
ending after September 30, 2019.
Under §§ 4375(a) and 4376(a), the
applicable dollar amount is $2 for pol-
icy and plan years ending on or after
October 1, 2013, and before October 1,
2014.
1
Treas. Reg. §§ 46.4375-1(c)(4) and
46.4376-1(c)(3). Under §§ 4375(d) and
4376(d) and Treas. Reg. §§ 46.4375-1(c)
(4) and 46.4376-1(c)(3), the applicable
dollar amount for policy years and plan
years ending in any Federal fiscal year be-
ginning on or after October 1, 2014, is in-
creased based on increases in the project-
ed per capita amount of National Health
Expenditures. Specifically, the applicable
dollar amount is the sum of –
(i) The applicable dollar amount for the
policy year or plan year ending in the
previous Federal fiscal year; plus
(ii) The amount equal to the product of –
(A) The applicable dollar amount for
the policy year or plan year end-
ing in the previous Federal fiscal
year; and
(B) The percentage increase in the
projected per capita amount of
the National Health Expenditures
most recently released by the De-
partment of Health and Human
Services (HHS) before the begin-
ning of the Federal fiscal year.
Notice 2018-85, 2018-48, I.R.B. 788,
provides that the adjusted applicable dol-
lar amount for policy years and plan years
that end on or after October 1, 2018, and
before October 1, 2019, is $2.45.
The Act amended §§ 4375(e) and
4376(e) to provide that §§ 4375 and 4376
will no longer apply beginning with pol-
icy and plan years ending after Septem-
ber 30, 2029. Therefore, the fee under
§§ 4375 and 4376 applies to any specified
health insurance policy and any applica-
ble self-insured health plan with a policy
or plan year ending after September 30,
2012, and before September 30, 2029, in-
cluding any policy or plan year ending af-
ter September 30, 2019. The Department
of the Treasury and the IRS anticipate
amending the regulations at §§ 46.4375-
1, 46.4376-1, and 46.4377-1 to reflect the
statutory change in the termination dates.
III. TRANSITION RELIEF
Prior to enactment of the Act, due to the
anticipated termination of the fee under
§ 4375 for policy years ending after Sep-
tember 30, 2019, issuers of specified health
insurance policies for policy years ending
on or after October 1, 2019, and before
October 1, 2020, may not have anticipated
the need to identify the number of covered
lives for this period. Issuers may continue
to use one of the following four methods
specified in the regulations under § 4375
to calculate the average number of covered
lives for purposes of the fee imposed by
§ 4375: the actual count method, the snap-
shot method, the member months method,
and the state form method. See Treas. Reg.
§ 46.4375-1(c)(2)(i). In addition, for policy
years ending on or after October 1, 2019,
and before October 1, 2020, issuers may
use any reasonable method for calculating
the average number of covered lives. If an
issuer uses a reasonable method to calcu-
late the average number of covered lives
for policy years ending on or after October
1, 2019, and before October 1, 2020, then
that reasonable method must be applied
consistently for the duration of the year and
the issuer must use the same method for all
policies for which a liability is reported on
Form 720 for that year.
Similarly, prior to enactment of the
Act, due to the anticipated termination of
the fee under § 4376 for plan years ending
after September 30, 2019, plan sponsors
of applicable self-insured health plans for
plan years ending on or after October 1,
2019, and before October 1, 2020, may
not have anticipated the need to identify
the number of covered lives for this pe-
riod. Plan sponsors may continue to use
one of the following three methods spec-
ified in the regulations under § 4376 to
calculate the average number of covered
lives for purposes of the fee imposed by
§ 4376: the actual count method, the snap-
shot method, and the Form 5500 method.
See Treas. Reg. § 46.4376-1(c)(2)(i). In
addition, for plan years ending on or af-
ter October 1, 2019, and before October 1,
2020, plan sponsors may use any reason-
able method for calculating the average
number of covered lives. If a plan sponsor
uses a reasonable method to calculate the
average number of covered lives for plan
years ending on or after October 1, 2019,
and before October 1, 2020, then that rea-
sonable method must be applied consis-
tently for the duration of the plan year.
1
The applicable dollar amount is $1 for policy and plan years ending before October 1, 2013.

June 22, 2020 990 Bulletin No. 2020–26
IV. ADJUSTED APPLICABLE
DOLLAR AMOUNT
The applicable dollar amount that must
be used to calculate the fee imposed by
§§ 4375 and 4376 for policy years and plan
years that end on or after October 1, 2019,
and before October 1, 2020, is $2.54. The
increase from the prior amount is calculat-
ed by multiplying the adjusted applicable
dollar amount for policy years and plan
years ending in the previous Federal fis-
cal year, $2.45, by the percentage increase
of the projected per capita amount of Na-
tional Health Expenditures published by
HHS on February 19, 2019. See: https://
www.cms.gov/Research-Statistics-Da-
ta-and-Systems/Statistics-Trends-and-Re-
ports/NationalHealthExpendData/Na-
tionalHealthAccountsProjected,Table
3. The percentage increase is calculated
after adjustment to reflect updates to the
data used to calculate the prior amount,
$2.45, which was based on the per capita
amounts of National Health Expenditures
for 2018 and 2019 published by HHS on
February 14, 2018.
V. EFFECTIVE DATE
This notice is effective for policy years
and plan years ending on or after October
1, 2019.
VI. 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). For further information regarding
this notice, contact Mr. Fischer at (202)
317-5500 (not a toll-free number).
26 CFR 601.105: Examination of returns and claims
for refund, credit or abatement; determination of
correct tax liability.
(Also Part I, §§ 1001; 301.7701–2, 301.7701–3,
301.7701–4.)
Rev. Proc. 2020-34
SECTION 1. PURPOSE
In response to the Coronavirus Disease
2019 (COVID-19) emergency, this reve-
nue procedure describes temporary safe
harbors for the purpose of determining
the Federal tax status of certain arrange-
ments that hold real property as trusts.
Under the safe harbors, certain modifi-
cations to mortgage loans, certain modi-
fications to leases, and certain additional
capital contributions are not treated under
§ 301.7701–4(c) of the Procedure and Ad-
ministration Regulations as manifesting a
power to vary.
SECTION 2. BACKGROUND—
TRUSTS
.01 Section 301.7701–2(a) defines a
“business entity” as any entity recognized
for Federal tax purposes (including an en-
tity with a single owner that may be disre-
garded as an entity separate from its owner
under § 301.7701–3) that is not properly
classified as a trust under § 301.7701–4
or otherwise subject to special treatment
under the Internal Revenue Code (Code).
.02 Section 301.7701–4(a) provides
that, generally speaking, an arrangement
is treated as a trust if the purpose of the
arrangement is to vest in trustees respon-
sibility for the protection and conservation
of property for beneficiaries who cannot
share in the discharge of this responsibil-
ity and, therefore, are not associates in a
joint enterprise for the conduct of business
for profit.
.03 Section 301.7701–4(c) provides
that an “investment” trust is not classified
as a trust if there is a power under the trust
agreement to vary the investment of the
certificate holders. An investment trust
with a single class of ownership interests,
representing undivided beneficial interests
in the assets of the trust, is classified as a
trust if there is no power under the trust
agreement to vary the investments of the
certificate holders.
.04 Under § 677(a) of the Code, the
grantor of a trust is treated as the owner
of any portion of a trust whose income,
without the approval or consent of any ad-
verse party is, or, in the discretion of the
grantor or a non-adverse party, or both,
may be distributed, held, or accumulated
for future distribution to the grantor or the
grantor’s spouse.
.05 A person that is treated as the own-
er of an undivided fractional interest of a
trust under subpart E of part I, subchap-
ter J of chapter 1 of the Code (§§ 671 and
following), is considered to own the trust
assets attributable to that undivided frac-
tional interest of the trust for Federal in-
come tax purposes. See Rev. Rul. 88-103,
1988-2 C.B. 304; Rev. Rul. 85-45, 1985-
1 C.B. 183; and Rev. Rul. 85-13, 1985-1
C.B. 184. See also § 1.1001-2(c), Exam-
ple 5 of the Income Tax Regulations.
SECTION 3. REVENUE RULING
2004-86
.01 Rev. Rul. 2004-86, 2004-2 C.B.
191, holds that a Delaware statutory trust
(Trust) formed to hold real property sub-
ject to a lease under the trust agreement
described in the ruling is an arrangement
that is classified as a trust for Federal tax
purposes under § 301.7701-4(c). Each of
Trust’s owners is treated, by reason of
§ 677, as an owner of a pro rata portion
of Trust. Because an owner of an undi-
vided fractional interest in Trust owns for
Federal tax purposes the assets of Trust
attributable to that interest, each owner is
considered to own for those purposes an
undivided fractional interest in the rental
real property held by Trust. Accordingly,
under § 1031 of the Code, a taxpayer may
exchange an interest in real property for
an interest in Trust without recognition of
gain or loss, if the other requirements of §
1031 are satisfied.
.02 Under the facts of Rev. Rul. 2004-
86, an individual borrows money from a
bank and signs a 10-year note bearing ade-
quate stated interest. On the same day, the
individual uses the proceeds of the loan to
purchase Blackacre, rental real property.
The note is secured by Blackacre and is
nonrecourse to the individual. Immediate-
ly after this purchase, the individual enters
into a net lease with a tenant (Tenant) for a
term of 10 years.
.03 Under the terms of the lease,
Tenant must pay all taxes, assessments,
fees, or other charges imposed on Black-
acre by Federal, state, or local authorities.
In addition, Tenant must pay all insurance,
maintenance, ordinary repairs, and util-
ities relating to Blackacre. Tenant may
sublease Blackacre. Tenant’s rent is fixed.
The revenue ruling indicates that Tenant’s
rent qualifies as fixed even if the lease
agreement includes automatic periodic
adjustments to the rent that are based on a
fixed rate or on an objective index, such as

Bulletin No. 2020–26 991 June 22, 2020
an escalator clause based on the consumer
price index. No adjustments are within the
control of any of the parties of the lease.
The amount of rent is not contingent on
the tenant’s ability to lease the property,
on the tenant’s gross sales, or on net prof-
its derived from the property.
.04 On the same day that the lease was
executed, the individual forms Trust and
contributes Blackacre to Trust. Upon the
transfer of Blackacre, Trust assumes the
rights and obligations of the individual
as to the note with the bank and the lease
with Tenant.
.05 The terms of Trust provide for the
following—
(1) A single class of trust interests,
each representing an undivided interest in
the assets of Trust (in this case, Blackacre,
which is subject to both the lease and the
note);
(2) Authorization for the trustee to es-
tablish a reasonable reserve for expenses
that are associated with Trust’s holding
Blackacre and that are payable out of trust
funds;
(3) Required quarterly distributions of
all available cash, less reserves, to each
beneficial owner of Trust in proportion to
that owner’s relative interest in Trust;
(4) The right of each beneficial owner
to an in-kind distribution of that owner’s
proportionate share of trust property;
(5) A requirement that Trust invest all
cash that it holds in either—
(a) Short term obligations of (or guar-
anteed by) the United States, or any agen-
cy or instrumentality thereof; or
(b) Certificates of deposit of a bank or
trust company having a minimum stated
surplus and capital;
(6) Requirements that the trustee both
invest only in obligations maturing prior
to the next distribution date and hold those
obligations until maturity;
(7) A limitation on the activities of the
trustee to collection and distribution of in-
come;
(8) A prohibition against the trustee—
(a) Exchanging Blackacre for other
property;
(b) Purchasing assets other than the
short-term investments described above;
(c) Accepting additional contributions
of assets (including money) to Trust;
(d) Renegotiating the terms of the debt
used to acquire Blackacre; and
(e) Renegotiating the lease with Tenant
except in the case of Tenant’s bankruptcy
or insolvency;
(9) The termination of Trust at the
earlier of 10 years or the disposition of
Blackacre.
.06 The ruling states that Trust would
have been treated as a business entity and
not a trust if Trust’s trustee had a pow-
er under the trust agreement to, among
other things, renegotiate the lease with
its tenant, to enter into leases with other
tenants, or to renegotiate or refinance the
mortgage loan whose proceeds were used
to purchase Blackacre.
SECTION 4. COVID-19
EMERGENCY AND REVENUE
PROCEDURE 2020-26
.01 On March 13, 2020, the President
of the United States issued an emergency
declaration under the Robert T. Stafford
Disaster Relief and Emergency Assistance
Act in response to the ongoing Coronavi-
rus Disease 2019 (COVID-19) pandemic
(Emergency Declaration). The Emergen-
cy Declaration instructed the Secretary of
the Treasury “to provide relief from tax
deadlines to Americans who have been
adversely affected by the COVID-19
emergency, as appropriate, pursuant to 26
U.S.C. 7508A(a).”
1
.02 To provide additional relief, on
March 27, 2020, Congress and the Presi-
dent enacted the Coronavirus Aid, Relief,
and Economic Security Act, Pub. L. No.
116-136, 134 Stat. 281 (CARES Act).
.03 On April 13, 2020, the Department
of the Treasury (Treasury Department)
and the Internal Revenue Service (IRS)
issued safe harbors in Rev. Proc. 2020-26,
2020-18 I.R.B. 753. These safe harbors
apply for determining the Federal income
tax status of certain securitization vehicles
that hold mortgage loans. Under the safe
harbors, certain modifications of mort-
gage loans in connection with forbearance
programs described in that guidance are
not treated as replacing the unmodified
obligation with a newly issued obligation,
as giving rise to prohibited transactions, or
as manifesting a power to vary.
.04 In the case of mortgage loans held
by real estate mortgage investment con-
duits (REMICs) and investment trusts,
Rev. Proc. 2020-26 applies to—
(1) Forbearance (and all related modi-
fications) of a Federally backed mortgage
loan or a Federally backed multifamily
mortgage loan, if the forbearance is pro-
vided under section 4022 or 4023, respec-
tively, of the CARES Act (CARES Act
Forbearances); and
(2) Forbearances (and all related
modifications) that are not CARES Act
Forbearances, that are agreed to by the
borrower of any Federally backed or
non-Federally backed mortgage loan, and
that are provided by a holder or servicer
of the loan under a forbearance program
for borrowers experiencing a financial
hardship due, directly or indirectly, to the
COVID-19 emergency. The forbearance
programs covered are those—
(a) Which are identical or similar to
those described in section 2.07 of Rev.
Proc. 2020-26; and
(b) Pursuant to which, between March
27, 2020, and December 31, 2020, inclu-
sive, the borrower requests or agrees to
the forbearance (and all related modifica-
tions).
.05 Section 6.01 of Rev. Proc. 2020-
26 provides that for mortgage loans held
by REMICs, forbearances (and all related
modifications) described in section 5.01
of Rev. Proc. 2020-26 are not treated as
resulting in a newly issued mortgage loan
for purposes of § 1.860G-2(b)(1), are not
prohibited transactions under § 860F(a)
(2) of the Code, and do not result in a
deemed reissuance of the REMIC regular
interests.
.06 Under section 6.02 of Rev. Proc.
2020-26, in the case of mortgage loans
held by investment trusts, certain trans-
actions do not manifest a power to vary
the investment of the certificate holders.
These transactions are—
(1) CARES Act forbearances (and all
related modifications); and
(2) Forbearances (and all related modi-
fications) that are described in section 2.07
of Rev. Proc. 2020-26, that are requested,
or agreed to, between March 27, 2020, and
December 31, 2020, and that are granted
as a result of a borrower experiencing a
1
https://www.whitehouse.gov/wp-content/uploads/2020/03/LetterFromThePresident.pdf

June 22, 2020 992 Bulletin No. 2020–26
financial hardship due to the COVID-19
emergency.
SECTION 5. COMMENTS
RECEIVED
.01 The Treasury Department and the
IRS received comments addressing ar-
rangements organized as trusts under §
301.7701-4(c) and Rev. Rul. 2004-86 that
hold rental real property. The commenters
reported that many of these arrangements
and their tenants are experiencing finan-
cial hardship due, directly or indirectly, to
the COVID-19 emergency.
.02 These comments indicate that, in
order to respond appropriately to these
challenges, trustees may find it necessary
to—
(1) Respond to the COVID-19 finan-
cial hardship of their tenants by modify-
ing the trust’s real property leases with the
tenants to defer or waive rent payments;
(2) Request relief under various for-
bearance programs with respect to debt
service on the mortgage loan secured by
the trust’s real property; and
(3) Accept additional cash contri-
butions in order to avoid default on the
trust’s loan obligations, to satisfy lender
demands on which receiving a loan mod-
ification may be contingent, to pay trust
expenses, or to bolster trust reserves for
the payment of expenses and loan pay-
ments. Depending on the circumstances
for a particular trust, these contributions
may come pro rata from current trust in-
terest holders, non-pro rata from these
current interest holders, or from outside
investors.
SECTION 6. SCOPE
.01 This revenue procedure applies
to arrangements that are trusts under
§ 301.7701-4(c) and Rev. Rul. 2004-86
2

and that hold real property and engage in
one or more of the actions described in
sections 6.02, 6.03, or 6.04 of this revenue
procedure.
.02 Modification of one or more mort-
gage loans that secure the trust’s real prop-
erty in—
(1) A CARES Act Forbearance (and
all related modifications); or
(2) A forbearance (and all related
modifications)—
(a) That are described in section 2.07
of Rev. Proc. 2020-26;
(b) That the trust requested, or agreed
to, between March 27, 2020, and Decem-
ber 31, 2020; and
(c) That were granted as a result of the
trust experiencing a financial hardship due
to the COVID-19 emergency.
.03 Modifications of one or more real
property leases (including modifications
to the specific allocations of fixed rent
in the lease agreements as described in
§ 467 of the Code and the regulations un-
der § 467; see section 9.01 of this revenue
procedure). The lease must have been en-
tered into by the trust on or before March
13, 2020, and the modifications must have
been requested and agreed to on or after
March 27, 2020, and on or before Decem-
ber 31, 2020. The reason for the modifica-
tions must be—
(1) To coordinate the lease cash flows
with the cash flows that result from one
or more transactions described in section
6.02 of this revenue procedure; or
(2) To defer or waive one or more
tenants’ rental payments for any period
between March 27, 2020, and December
31, 2020 (and all related modifications),
because the tenants are experiencing a
financial hardship due to the COVID-19
emergency.
.04 Acceptance of cash contributions
that are made between March 27, 2020,
and December 31, 2020, as a result of the
trust experiencing financial hardship due
to the COVID-19 emergency, provided the
contribution must be needed to increase
permitted trust reserves, to maintain trust
property, to fulfill obligations under mort-
gage loans, or to fulfill obligations under
real property leases. See section 10 of
this revenue procedure regarding the tax
treatment of non-pro rata contributions or
contributions from new investors for an
interest in the trust.
SECTION 7. SAFE HARBOR
For the purpose of determining wheth-
er the arrangement is treated as a trust un-
der § 301.7701-4(c) and Revenue Ruling
2004-86, the actions described in section
6 of this revenue procedure are not mani-
festations of a power to vary.
SECTION 8. NO INFERENCE
.01 No inferences should be drawn
about whether similar consequences
would obtain if an arrangement takes ac-
tions that fall outside the limited scope of
this revenue procedure.
.02 Thus, an arrangement’s qualifica-
tion as a trust under § 301.7701-4(c) may
be affected by a waiver or deferral of rent
(and related modifications) that is incon-
sistent with section 3.03 of this revenue
procedure and the lease arrangement de-
scribed in Rev. Rul. 2004-86.
.03 Similarly, contributions that are
not described in section 6.04 of this rev-
enue procedure are outside the scope of
the safe harbor in section 7 of this reve-
nue procedure. For example, the scope of
the safe harbor does not include addition-
al contributions to the trust that are used
to make more than minor, non-structural
modifications to the trust’s real property.
Additionally, contributions of property
other than cash generally manifest a pow-
er to vary.
SECTION 9. GUIDANCE ON
MODIFICATIONS OF REAL
PROPERTY LEASES
.01 The regulations under § 467 in-
clude rules for determining the income
and deductions required to be taken into
account in connection with § 467 rental
agreements (generally, rental agreements
with increasing or decreasing rents, or
deferred or prepaid rents, as described in
§ 1.467-1). The fixed rent under a § 467
rental agreement is included in the income
of the lessor and deducted by the lessee
in accordance with the allocations of fixed
rent provided in the rental agreement. See
§ 1.467-1(d)(2)(iii). For agreements with
no specific allocation of fixed rent as de-
scribed in § 1.467-1(c)(2)(ii), rent is in-
cluded in the lessor’s income and deduct-
ed by the lessee in accordance with the
agreement’s rent payment schedule. For
agreements with a specific allocation of
rent, the specific allocation of rent is used
2
Although Rev. Rul. 2004–86 describes a trust that had been formed under a specific Delaware statute, the SCOPE of this revenue procedure includes trusts formed under the equivalent law
(if any) of other states or the District of Columbia.

Bulletin No. 2020–26 993 June 22, 2020
to determine the income and deductions
under the agreement.
.02 For § 467 rental agreements that
have a specific allocation of fixed rent, if
the payment terms under the rental agree-
ment are modified under this revenue pro-
cedure because the tenant is experiencing
a financial hardship due to the COVID-19
emergency, amendments are also permit-
ted to the agreement’s specific allocation
of fixed rent. In addition, any amendments
to the rental agreement must be given ap-
propriate tax effect under the applicable
provisions of the Code and regulations,
including the provisions in § 1.467-1(f)
relating to substantial modifications of
§ 467 rental agreements.
SECTION 10. GUIDANCE ON
TAX TREATMENT OF NON-PRO
RATA CONTRIBUTIONS FROM
CURRENT TRUST INTEREST
HOLDERS AND CONTRIBUTIONS
FROM NEW INVESTORS.
A cash contribution from one or more
new trust interest holders to acquire a trust
interest or a non-pro rata cash contribu-
tion from one or more current trust inter-
est holders must be treated as a purchase
and sale under § 1001 of the Code of a
portion of each non-contributing (or lesser
contributing) trust interest holder’s pro-
portionate interest in the trust’s assets.
SECTION 11. DRAFTING
INFORMATION
The principal author of this reve-
nue procedure is Christiaan Cleary of
the Office of Associate Chief Counsel
(Passthroughs and Special Industries). For
further information, contact Christiaan
Cleary at (202) 317-6850 (not a toll-free
number).

June 22, 2020 994 Bulletin No. 2020–26
Part IV
Notice of Proposed
Rulemaking
Certain Medical Care
Arrangements
REG-109755-19
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing.
SUMMARY: This document contains
proposed regulations relating to section
213 of the Internal Revenue Code (Code)
regarding the treatment of amounts paid
for certain medical care arrangements, in-
cluding direct primary care arrangements,
health care sharing ministries, and certain
government-sponsored health care pro-
grams. The proposed regulations affect
individuals who pay for these arrange-
ments or programs and want to deduct the
amounts paid as medical expenses under
section 213.
DATES: Written or electronic comments
and requests for a public hearing must be
received by August 10, 2020. Requests
for a public hearing must be submitted as
prescribed in the “Comments and Re-
quests for a Public Hearing” section.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic submis-
sions via the Federal eRulemaking Portal
at www.regulations.gov (indicate IRS and
REG-109755-19) by following the online
instructions for submitting comments.
Once submitted to the Federal eRulemak-
ing Portal, comments cannot be edited
or withdrawn. The IRS expects to have
limited personnel available to process
public comments that are submitted on
paper through mail. Until further notice,
any comments submitted on paper will
be considered to the extent practicable.
The Department of the Treasury (Trea-
sury Department) and the Internal Reve-
nue Service (IRS) will publish for public
availability any comment submitted elec-
tronically, and to the extent practicable
on paper, to its public docket. Send paper
submissions to: CC:PA:LPD:PR (REG-
109755-19), Room 5203, Internal Reve-
nue Service, P.O. Box 7604, Ben Franklin
Station, Washington, DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, call Richard C. Gano IV of
the Office of Associate Chief Counsel
(Income Tax and Accounting), (202) 317-
7011 (not a toll-free call); concerning the
preamble discussion of health reimburse-
ment arrangements or health savings ac-
counts, call William Fischer of the Office
of Associate Chief Counsel (Employee
Benefits, Exempt Organizations, and Em-
ployment Taxes), (202) 317-5500 (not a
toll-free call); concerning the submission
of comments and/or requests for public
hearing, call Regina Johnson, (202) 317-
5177 (not a toll-free call).
SUPPLEMENTARY INFORMATION:
Background
1. Executive Order 13877
On June 24, 2019, President Trump is-
sued Executive Order 13877, “Improving
Price and Quality Transparency in Amer-
ican Healthcare to Put Patients First” (84
FR 30849 (June 27, 2019)). The Executive
Order states that it is the policy of the Fed-
eral Government to ensure that patients
are engaged with their healthcare deci-
sions and have the information requisite
for choosing the healthcare they want and
need. In furtherance of that policy, section
6(b) of the Executive Order directs the
Secretary of the Treasury, to the extent
consistent with law, to “propose regula-
tions to treat expenses related to certain
types of arrangements, potentially includ-
ing direct primary care arrangements and
healthcare sharing ministries, as eligible
medical expenses under Section 213(d)”
of the Code. The proposed regulations
have been developed in response to this
Executive Order.
2. Deduction for Medical Expenses
Section 213(a) allows a deduction for
expenses paid during the taxable year,
not compensated for by insurance or oth-
erwise, for medical care of the taxpayer,
the taxpayer’s spouse, or the taxpayer’s
dependent (as defined in section 152, de-
termined without regard to subsections (b)
(1), (b)(2), and (d)(1)(B) of section 152),
to the extent the expenses exceed 10 per-
cent of adjusted gross income (AGI) (7.5
percent of AGI for a taxable year begin-
ning before January 1, 2021).
1
A section
213 deduction is allowable only with
respect to medical expenses actually
paid during the taxable year, regardless
of when the incident or event that occa-
sioned the expenses occurred, and regard-
less of the method of accounting used by
the taxpayer for filing income tax returns.
Section 1.213-1(a)(1) of the Income Tax
Regulations.
3. Definition of Medical Care under
Section 213(d)(1)
For purposes of determining whether
medical expenses are deductible under
section 213, section 213(d)(1) defines
“medical care” as amounts paid for (A)
the diagnosis, cure, mitigation, treatment,
or prevention of disease, or for the pur-
pose of affecting any structure or function
of the body (referred to in this preamble
as “medical care under section 213(d)(1)
(A)”); (B) transportation primarily for and
essential to obtaining medical care referred
to in (A); (C) qualified long-term care ser-
vices; or (D) insurance covering medical
care and transportation as described in (A)
and (B), respectively (referred to in this
preamble as “medical insurance”), includ-
ing supplementary medical insurance for
1
Section 103 of the Taxpayer Certainty and Disaster Tax Relief Act of 2019, enacted as part of the Further Consolidated Appropriations Act, 2020, Pub. L. No. 116-94, 133 Stat. 2534, Div.
Q, Title I (2019)), amending section 213(f) to reduce the threshold for the deduction to 7.5 percent of AGI for tax years beginning before January 1, 2021.

Bulletin No. 2020–26 995 June 22, 2020
the aged (Medicare Part B), and any quali-
fied long-term care insurance contract. See
also §1.213-1(e).
A. Medical Care under Section 213(d)
(1)(A)
Deductions for amounts paid for med-
ical care under section 213(d)(1)(A) are
confined strictly to expenses incurred pri-
marily for the prevention or alleviation of
a physical or mental defect or illness and
for operations or treatment affecting any
portion of the body. Section 1.213-1(e)(1)
(ii). Thus, payments for the following are
payments for medical care under section
213(d)(1)(A): hospital services; nursing
services; medical, laboratory, surgical,
dental and other diagnostic and healing
services; obstetrical expenses, expenses
of therapy, and X-rays; prescribed drugs
or insulin; and artificial teeth or limbs.
Section 213(b) and §1.213-1(e)(1)(ii).
However, an expenditure which is merely
beneficial to the general health of an in-
dividual, such as an expenditure for a va-
cation, is not an expenditure for medical
care. Section 1.213-1(e)(1)(ii). Amounts
paid for illegal operations or treatments
are not deductible. Id.
B. Medical Insurance under Section
213(d)(1)(D)
Expenditures for medical insurance
described in section 213(d)(1)(D) are
amounts paid for medical care only to the
extent such amounts are paid for insur-
ance covering the diagnosis, cure, mitiga-
tion, treatment, or prevention of disease;
for the purpose of affecting any structure
or function of the body; or for transpor-
tation primarily for and essential to med-
ical care. Section 1.213-1(e)(4)(i)(a).
Amounts are considered payable for other
than medical care under a contract if the
contract provides for the waiver of premi-
ums upon the occurrence of an event. Id.
In the case of an insurance contract under
which amounts are payable for other than
medical care (as, for example, a policy
providing an indemnity for loss of income
or for loss of life, limb, or sight), (1) no
amount may be treated as paid for med-
ical insurance unless the charge for such
insurance is either separately stated in the
contract or furnished to the policyholder
by the insurer in a separate statement, (2)
the amount treated as paid for medical in-
surance may not exceed such charge, and
(3) no amount may be treated as paid for
medical insurance if the amount specified
in the contract (or furnished to the policy-
holder by the insurer in a separate state-
ment) as the charge for such insurance is
unreasonably large in relation to the total
charges under the contract (considering
the relationship of the coverages under the
contract together with all the facts and cir-
cumstances). Id.
In determining whether a contract
constitutes an “insurance” contract for
purposes of section 213, it is irrelevant
whether the benefits are payable in cash
or in services. Section 1.213-1(e)(4)(i)(a).
For example, amounts paid for hospital-
ization insurance, for membership in an
association furnishing cooperative or so-
called free-choice medical service, or for
group hospitalization and clinical care are
payments for medical insurance. Id. In ad-
dition, premiums paid for Medicare Part
B are amounts paid for medical insurance.
Id.
Explanation of Provisions
In developing the proposed regulations,
the Treasury Department and the IRS con-
sidered how to carry out the objectives of
Executive Order 13877 in a way permit-
ted by law and supported by sound poli-
cy. The Treasury Department and the IRS
undertook a review of direct primary care
arrangements and health care sharing min-
istries by meeting with practitioners and
individuals who operate the arrangements
to analyze the facts of those arrangements.
After gathering information on those ar-
rangements and considering the relevant
legal authorities, the Treasury Department
and the IRS propose that expenditures
for direct primary care arrangements and
health care sharing ministry memberships
are amounts paid for medical care as de-
fined in section 213(d), and that amounts
paid for those arrangements may be de-
ductible medical expenses under section
213(a). The proposed regulations also
clarify that amounts paid for certain ar-
rangements and programs, such as health
maintenance organizations (HMO) and
certain government-sponsored health care
programs, are amounts paid for medical
insurance under section 213(d)(1)(D).
2

These proposed regulations do not affect
the tax treatment of any medical care ar-
rangement that currently qualifies as med-
ical care under section 213(d).
1. Definition of Direct Primary Care
Arrangement
The proposed regulations define a
“direct primary care arrangement” as a
contract between an individual and one
or more primary care physicians under
which the physician or physicians agree to
provide medical care (as defined in section
213(d)(1)(A)) for a fixed annual or peri-
odic fee without billing a third party. The
proposed regulations define a “primary
care physician” as an individual who is a
physician (as described in section 1861(r)
(1) of the Social Security Act (SSA)) who
has a primary specialty designation of
family medicine, internal medicine, geri-
atric medicine, or pediatric medicine. The
definition is adopted from paragraph (I)
of the definition of “primary care practi-
tioner” in section 1833(x)(2)(A)(i) of the
SSA. The Treasury Department and the
IRS request comments on the definition of
primary care physician and on the defini-
tion of direct primary care arrangement.
The Treasury Department and the IRS
also request comments on whether to ex-
pand the definition of a direct primary
care arrangement to include a contract
between an individual and a nurse practi-
2
The proposed regulations and this preamble do not address any issues under Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA) that are within the inter-
pretive and regulatory jurisdiction of the U.S. Department of Labor. For example, the proposed regulations and this preamble do not address whether any particular arrangement or payment
constitutes, or is part of, an employee welfare benefit plan within the meaning of ERISA section 3(1). Rather, the Department of Labor advised the Treasury Department and the IRS that an
employer’s funding of a benefit arrangement, in most circumstances, is sufficient to treat an arrangement that provides health benefits to employees as an ERISA-covered plan. Compare 29
CFR 2510.3-1(l), which provides a safe harbor from ERISA-coverage for certain reimbursements for non-group health insurance premiums solely for individual health insurance coverage as
defined in 29 CFR 2590.701-2 that does not consist solely of excepted benefits as defined in 29 CFR 2590.732(c).

June 22, 2020 996 Bulletin No. 2020–26
tioner, clinical nurse specialist, or physi-
cian assistant (as those terms are defined
in section 1861(aa)(5) of the SSA) who
provides primary care services under the
contract. The Treasury Department and
the IRS request comments on how to de-
fine primary care services provided by
a non-physician practitioner, including
whether the definition of primary care
services in section 1833(x)(2)(B) of the
SSA is appropriate.
In addition, the Treasury Department
and the IRS understand that other types
of medical arrangements between health
practitioners and individuals exist that
do not fall within the definition of direct
primary care. For example, an agreement
between a dentist and a patient to provide
dental care, or an agreement between a
physician and a patient to provide spe-
cialty care, would not be a direct primary
care arrangement but nonetheless may be
the provision of medical care under sec-
tion 213(d). The Treasury Department and
the IRS request comments on whether the
final regulations should clarify the treat-
ment of other types of arrangements that
are similar to direct primary care arrange-
ments but do not meet the definition in the
proposed regulations.
2. Definition of Health Care Sharing
Ministry
For the purposes of section 213, the
proposed regulations define a health care
sharing ministry as an organization: (1)
which is described in section 501(c)(3)
and is exempt from taxation under sec-
tion 501(a); (2) members of which share
a common set of ethical or religious be-
liefs and share medical expenses among
members in accordance with those be-
liefs and without regard to the State in
which a member resides or is employed;
(3) members of which retain member-
ship even after they develop a medical
condition; (4) which (or a predecessor
of which) has been in existence at all
times since December 31, 1999, and
medical expenses of its members have
been shared continuously and without
interruption since at least December 31,
1999; and (5) which conducts an annual
audit which is performed by an indepen-
dent certified public accounting firm in
accordance with generally accepted ac-
counting principles and which is made
available to the public upon request.
This definition is from section 5000A(d)
(2)(B)(ii), which provides that the in-
dividual shared responsibility payment
(which is zero after December 31, 2018)
does not apply to an individual who is
a member of a health care sharing min-
istry. The Treasury Department and the
IRS request comments on the definition
of a health care sharing ministry.
3. Analysis of Medical Care under
Section 213(d)(1)(A)
Direct primary care arrangements, as
defined in the proposed regulations, may
encompass a broad range of facts. Depend-
ing on the facts, a payment for a direct pri-
mary care arrangement may be a payment
for medical care under section 213(d)(1)
(A) or, as discussed below, may be a pay-
ment for medical insurance under section
213(d)(1)(D). For example, payments for
a direct primary care arrangement that
solely provides for an anticipated course
of specified treatments of an identified
condition, or solely provides for an an-
nual physical examination, are payments
for medical care under section 213(d)(1)
(A). However, so long as a direct primary
care arrangement meets the definition set
forth in the proposed regulations, amounts
paid for the arrangement will qualify as
an expense for medical care under section
213(d), regardless of whether the arrange-
ment is for medical care under section
213(d)(1)(A) or medical insurance under
section 213(d)(1)(D).
Health care sharing ministries, un-
like direct primary care arrangements,
do not themselves provide any medical
treatment or services that would qualify
as medical care under section 213(d)(1)
(A). Instead, membership in a health care
sharing ministry entitles members to share
their medical bills through the ministry
and potentially receive payments from
other members to help with their medical
bills. The membership payments are not
payments for medical care under section
213(d)(1)(A). However, as further ex-
plained below, these proposed regulations
provide that amounts paid for membership
in a health care sharing ministry may be
payments for medical insurance under
section 213(d)(1)(D).
4. Analysis of Medical Insurance under
Section 213(d)(1)(D)
Section 213(d)(1)(D) does not define
the term “insurance.” When a federal stat-
ute uses a term without an accompanying
definition, the meaning of the term must
be determined from the ordinary use of the
term, in conjunction with any guidance
found in the structure of the relevant stat-
ute and its legislative history. See Group
Life & Health Insurance Co. v. Royal
Drug. Co., 440 U.S. 205, 211 (1979).
The predecessor to section 213, section
23x, was originally enacted in 1942 and
allowed a deduction for medical care ex-
penses, including amounts paid for health
insurance. Although the statutory lan-
guage did not define “insurance” for pur-
poses of the medical expense deduction,
the legislative history specifically states
that amounts paid for health insurance
are included in the category of medical
expenses, and that payments for “hospi-
talization insurance, or for membership
in an association furnishing cooperative
or so-called free-choice medical service,
or group hospitalization and clinical care
are intended, for purposes of this section,
to be included as amounts which may be
deducted.” This language from the legisla-
tive history was incorporated into the sec-
tion 213 regulations in 1957 and remains
unchanged. See §1.213-1(e)(4)(i)(a).
Based on that legislative history, the Trea-
sury Department and the IRS conclude
that Congress intended that “insurance”
for section 213 purposes be read broadly.
Indeed, the Treasury Department and the
IRS have interpreted “insurance” broadly
over the years in guidance under section
213. See, e.g., Rev. Rul. 79-175, 1979-1
C.B. 117 (premiums paid for Medicare
Part A coverage are amounts paid for med-
ical insurance); Rev. Rul. 74-429, 1974-2
C.B. 83 (nonrefundable fixed amount paid
by a taxpayer for an agreement with an
optometrist to replace the taxpayer’s con-
tact lenses for one year if they became lost
or damaged is an amount paid for medical
insurance); Rev. Rul. 68-433, 1968-2 C.B.
110 (insurance premiums paid for a policy
that provides only for reimbursement of
the cost of prescription drugs are amounts
paid for medical insurance). Further, IRS
Publication 502 (Medical and Dental Ex-
penses) states the long-standing IRS posi-

Bulletin No. 2020–26 997 June 22, 2020
tion that amounts paid for membership in
an HMO are treated as medical insurance
premiums.
The Treasury Department and the IRS
also conclude that the general insurance
principles used for subchapter L pur-
poses are not controlling for purposes of
determining whether payment for an ar-
rangement is treated as an amount paid
for medical insurance under section 213.
Subchapter L does not define insurance.
It provides a definition of the term “in-
surance company” for purposes of deter-
mining whether an entity is an insurance
company for federal income tax purposes.
However, there is no requirement in sec-
tion 213 that amounts be paid to an insur-
ance company to qualify as payments for
medical insurance. Further, the legislative
history of section 213 indicates that med-
ical insurance is not limited to traditional
health insurance provided by an insurance
company. Thus, although payments to an
insurance company for medical care may
be amounts paid for medical insurance
under section 213(d)(1)(D), amounts need
not be paid to an insurance company to
be payments for medical insurance under
section 213.
As noted above, depending on the spe-
cific facts regarding an arrangement, a pay-
ment for a direct primary care arrangement
may be a payment for medical care under
section 213(d)(1)(A) or may be a payment
for medical insurance under section 213(d)
(1)(D). Regardless of the characterization
of an arrangement as medical care under
section 213(d)(1)(A) or medical insurance
under section 213(d)(1)(D), an amount
paid for the arrangement will qualify as a
medical expense under section 213. How-
ever, the characterization of a direct prima-
ry care arrangement as medical insurance
under section 213(d)(1)(D) has implica-
tions for purposes of the rules for health
savings accounts (HSAs) under section
223. Specifically, as explained later in this
preamble, if an individual enters into a di-
rect primary care arrangement, the type of
coverage provided by the arrangement will
impact whether or not he or she is an eligi-
ble individual for purposes of section 223.
Under these proposed regulations, pay-
ments for membership in a health care
sharing ministry that shares expenses for
medical care, as defined in section 213(d)
(1)(A), are payments for medical insur-
ance under section 213(d)(1)(D). The pur-
pose of a health care sharing ministry is
for members to share the burden of their
medical expenses with other members.
Members assist in the payment of other
members’ medical bills, and possibly re-
ceive reimbursement for their own med-
ical bills in return. Whether this is done
by making membership payments to the
ministry or by sending the payments di-
rectly to other members, the substance
of the transaction is the same. Similar to
traditional medical insurance premiums,
amounts paid for membership in a health
care sharing ministry allow members who
incur expenses for medical care under
section 213(d)(1)(A) to submit claims for
those expenses and potentially receive
payments to help cover those expenses.
Accordingly, the proposed regulations
provide that medical insurance under sec-
tion 213(d)(1)(D) includes health care
sharing ministries that share expenses
for medical care under section 213(d)(1)
(A). This proposal under section 213 has
no bearing on whether a health care shar-
ing ministry is considered an insurance
company, insurance service, or insurance
organization (health insurance issuer) for
other purposes of the Code, ERISA, the
Public Health Service Act (PHS Act), or
any other Federal or State law. In addition,
the proposed regulations incorporate the
long-standing position of the IRS treating
amounts paid for membership in an HMO
as medical insurance premiums for sec-
tion 213 purposes. In contrast, amounts
paid to an HMO or a provider to cover
coinsurance, copayment, or deductible
obligations under an HMO’s terms are
payments for medical care under section
213(d)(1)(A). Regardless of their classifi-
cation, both HMO amounts paid are eli-
gible for deduction as a medical expense
under section 213(a).
Finally, the proposed regulations clar-
ify that amounts paid for coverage under
certain government-sponsored health care
programs are treated as amounts paid for
medical insurance under section 213(d)(1)
(D). The proposed regulations incorporate
the guidance in section 213(d)(1)(D) and
Rev. Rul. 79-175, respectively, that Medi-
care Parts A and B are medical insurance,
and clarify that Medicare Parts C and D
are medical insurance, for purposes of
section 213. The proposed regulations
also provide that Medicaid, the Children’s
Health Insurance Program (CHIP), TRI-
CARE, and certain veterans’ health care
programs are medical insurance under
section 213(d)(1)(D). Thus, to the extent
a particular government-sponsored health
program requires individuals to pay pre-
miums or enrollment fees for coverage
under the program, those amounts are el-
igible for deduction as a medical expense
under section 213. The Treasury Depart-
ment and the IRS request comments on
whether amounts paid for other govern-
ment-sponsored health care programs
should be treated as amounts paid for
medical insurance, and if so, which spe-
cific government-sponsored health care
programs should be treated as medical
insurance.
5. Direct Primary Care Arrangements,
Health Reimbursement Arrangements
(HRAs), and HSAs
A. Direct Primary Care Arrangements
and HRAs
An HRA (other than a qualified small
employer health reimbursement ar-
rangement (QSEHRA)) is a type of ac-
count-based group health plan funded
solely by employer contributions (with
no salary reduction contributions or oth-
er contributions by employees) that re-
imburses an employee solely for medical
care expenses incurred by the employee
(and, at the discretion of the plan spon-
sor, the employee’s family), up to a maxi-
mum dollar amount for a coverage period.
See Notice 2002-45, 2002-2 C.B. 93 and
Rev. Rul. 2002-41, 2002-2 C.B. 75. Be-
cause an HRA cannot by itself satisfy the
prohibition on lifetime and annual dollar
limits for group health plans under PHS
Act section 2711 or the requirement to
provide coverage for certain preventive
services without cost sharing under PHS
Act section 2713 (both of which are in-
corporated by reference in section 9815),
unless an applicable exception applies,
it must be integrated with coverage that
otherwise satisfies those requirements.
See §54.9815-2711. A QSEHRA is a type
of HRA, except that it generally is not a
group health plan and is subject to addi-
tional specific requirements, including
the requirement that it may be provided

June 22, 2020 998 Bulletin No. 2020–26
only by an employer that is not an appli-
cable large employer, as defined in section
4980H(c)(2). See section 9831. Because
QSEHRAs are generally not group health
plans, there is no need for them to be inte-
grated with other coverage.
3
An HRA, including a QSEHRA, an
HRA integrated with a traditional group
health plan, an HRA integrated with in-
dividual health insurance coverage or
Medicare (individual coverage HRA), or
an excepted benefit HRA, generally may
reimburse expenses for medical care, as
defined under section 213(d). Thus, an
HRA may provide reimbursements for di-
rect primary care arrangement fees.
B. Direct Primary Care Arrangements
and HSAs
Section 223 permits eligible individ-
uals to establish and contribute to HSAs.
In general, an HSA is a tax-exempt trust
or custodial account established exclu-
sively for the purpose of paying qualified
medical expenses of the account bene-
ficiary who, for the months for which
contributions are made to an HSA, is
covered under a high deductible health
plan (HDHP). See section 223(d); No-
tice 2004-2, 2004-1 C.B. 269, Q&A 1.
An eligible individual is, with respect
to any month, any individual if (i) such
individual is covered under an HDHP as
of the first day of such month, and (ii)
such individual is not, while covered un-
der an HDHP, covered under any health
plan which is not an HDHP, and which
provides coverage for any benefit which
is covered under the HDHP. See sec-
tion 223(c)(1); Notice 2004-2, Q&A 2.
An HDHP is a health plan that satisfies
the minimum annual deductible require-
ment and maximum out-of-pocket ex-
penses requirement under section 223(c)
(2)(A), and meets certain other require-
ments. See section 223(c)(2); Notice
2004-2, Q&A 3.
Section 223(c)(1)(B) provides that,
in addition to coverage under an HDHP,
an eligible individual may have “disre-
garded coverage,” which includes only
certain permitted insurance under sec-
tion 223(c)(3), and coverage (whether
through insurance or otherwise) for acci-
dents, disability, dental care, vision care,
long-term care, or certain health flexible
spending arrangements. Section 223(c)
(3) provides that permitted insurance is
insurance relating to liabilities incurred
under worker’s compensation laws, tort
liabilities, or liabilities relating to own-
ership or use of property, insurance for a
specified disease or illness, and insurance
paying a fixed amount per day (or other
period) of hospitalization. In addition,
section 223(c)(2)(C) provides that an
HDHP may provide preventive care be-
fore the minimum annual deductible for
an HDHP is met.
The legislative history to section 223
states that “[e]ligible individuals for
HSAs are individuals who are covered by
a high deductible health plan and no oth-
er health plan that is not a high deductible
health plan.” H.R. Conf. Rep. No. 391,
108th Cong., 1st Sess. 841 (2003). The
legislative history also states that, “[a]n
individual with other coverage in addition
to a high deductible health plan is still el-
igible for an HSA if such other coverage
is certain permitted insurance or permitted
coverage.” Id.
In Rev. Rul. 2004-38, 2004-1 C.B. 717,
an individual was covered by a health
plan that satisfied the requirements to be
an HDHP under section 223(c)(2) (in-
cluding the minimum annual deductible
under section 223(c)(2)(A)), but the plan
did not include coverage for prescription
drugs. The individual was also covered
by another plan (or rider) providing pre-
scription drug benefits that required co-
pays but was not subject to the minimum
annual deductible under section 223(c)
(2)(A). Rev. Rul. 2004-38 held that an in-
dividual covered by an HDHP that does
not cover prescription drugs, and who is
also covered by a separate plan (or rider)
that provides prescription drug benefits
before the minimum annual deductible
is met, is not an eligible individual un-
der section 223(c)(1)(A) and may not
contribute to an HSA. Accordingly, if an
individual has coverage that is not disre-
garded coverage or preventive care, and
that provides benefits before the mini-
mum annual deductible is met, the indi-
vidual is not an eligible individual. See
also Notice 2008-59, 2008-2 C.B. 123,
Q&A 2 and 3.
The Treasury Department and the IRS
understand that direct primary care ar-
rangements typically provide for an array
of primary care services and items, such
as physical examinations, vaccinations,
urgent care, laboratory testing, and the di-
agnosis and treatment of sickness or inju-
ries. This type of DPC arrangement would
constitute a health plan or insurance that
provides coverage before the minimum
annual deductible is met, and provides
coverage that is not disregarded coverage
or preventive care. Therefore, an individu-
al generally is not eligible to contribute to
an HSA if that individual is covered by a
direct primary care arrangement. Howev-
er, in the limited circumstances in which
an individual is covered by a direct prima-
ry care arrangement that does not provide
coverage under a health plan or insurance
(for example, the arrangement solely pro-
vides for an anticipated course of specified
treatments of an identified condition) or
solely provides for disregarded coverage
or preventive care (for example, it solely
provides for an annual physical examina-
tion), the individual would not be preclud-
ed from contributing to an HSA solely due
to participation in the direct primary care
arrangement. If the direct primary care ar-
rangement fee is paid by an employer, that
payment arrangement would be a group
health plan and it (rather than the direct
primary care arrangement), would dis-
qualify the individual from contributing
to a HSA.
6. Health Care Sharing Ministries, HRAs,
and HSAs
Under the regulations authorizing
individual coverage HRAs, health care
sharing ministries cannot integrate with
an individual coverage HRA. Howev-
er, under these proposed regulations, an
HRA, including an HRA integrated with
a traditional group health plan, an indi-
vidual coverage HRA, a QSEHRA, or an
3
However, under section 9831(d)(2)(B)(ii), a QSEHRA may only provide reimbursements to an eligible employee after the eligible employee provides proof of coverage, and consistent with
section 106(g), the coverage must qualify as minimum essential coverage as defined in section 5000A(f).

Bulletin No. 2020–26 999 June 22, 2020
excepted benefit HRA, may reimburse
payments for membership in a health
care sharing ministry as a medical care
expense under section 213(d). Because
the proposed regulations provide that
health care sharing ministries are med-
ical insurance under section 213(d)(1)
(D) that is not permitted insurance, mem-
bership in a health care sharing ministry
would preclude an individual from con-
tributing to an HSA.
Proposed Applicability Date
These regulations are proposed to ap-
ply for taxable years that begin on or after
the date of publication of a Treasury deci-
sion adopting these rules as final regula-
tions in the Federal Register.
Special Analyses
I. Regulatory Planning and Review
This regulation is subject to review un-
der section 6 of Executive Order 12866
pursuant to the April 11, 2018, Memo-
randum of Agreement (“April 11, 2018
MOA”) between the Treasury Depart-
ment and the Office of Management and
Budget (“OMB”) regarding review of tax
regulations. The Acting Administrator of
the Office of Information and Regulatory
Affairs (“OIRA”), OMB, has waived re-
view of this proposed rule in accordance
with section 6(a)(3)(A) of Executive Or-
der 12866. OIRA will subsequently make
a significance determination of the final
rule under Executive Order 12866 pursu-
ant to the terms of section 1 of the April
11, 2018 MOA.
II. Unfunded Mandates Reform Act
Section 202 of the Unfunded Man-
dates Reform Act of 1995 (UMRA) re-
quires that agencies assess anticipated
costs and benefits and take certain oth-
er actions before issuing a final rule that
includes any Federal mandate that may
result in expenditures in any one year
by a state, local, or tribal government, in
the aggregate, or by the private sector, of
$100 million (updated annually for infla-
tion). This proposed rule does not include
any Federal mandate that may result in
expenditures by state, local, or tribal gov-
ernments, or by the private sector in ex-
cess of that threshold.
III. Executive Order 13132: Federalism
Executive Order 13132 (entitled
“Federalism”) prohibits an agency from
publishing any rule that has federalism
implications if the rule either imposes
substantial, direct compliance costs on
state and local governments, and is not
required by statute, or preempts state law,
unless the agency meets the consultation
and funding requirements of section 6 of
the Executive Order. This proposed rule
does not have federalism implications and
does not impose substantial direct compli-
ance costs on state and local governments
or preempt state law within the meaning
of the Executive Order.
IV. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), it is hereby cer-
tified that these proposed regulations will
not have a significant economic impact on
a substantial number of small entities. The
proposed regulations directly affect indi-
viduals and not entities. Accordingly, the
proposed rule will not have a significant
economic impact on a substantial number
of small entities.
In accordance with section 7805(f),
this notice of proposed rulemaking has
been submitted to the Chief Counsel of the
Office of Advocacy of the Small Business
Administration for comment on its impact
on small business.
Comments and Requests for a Public
Hearing
Before these proposed regulations are
adopted as final regulations, consider-
ation will be given to comments that are
submitted timely to the IRS as prescribed
in this preamble in the “ADDRESSES”
section. The Treasury Department and the
IRS request comments on all aspects of
the proposed regulations. Any electronic
comments submitted, and to the extent
practicable any paper comments submit-
ted, will be made available at www.regu-
lations.gov or upon request.
A public hearing will be scheduled if
requested in writing by any person who
timely submits electronic or written com-
ments. Requests for a public hearing are
also encouraged to be made electronical-
ly. If a public hearing is scheduled, notice
of the date, time, and place for the public
hearing will be published in the Federal
Register. Announcement 2020-4, 2020-
17 IRB 1, provides that until further no-
tice, public hearings conducted by the IRS
will be held telephonically. Any telephon-
ic hearing will be made accessible to peo-
ple with disabilities.
Statement of Availability of IRS
Documents
IRS revenue procedures, revenue rul-
ings, notices, and other guidance cited in
this preamble are published in the Internal
Revenue Bulletin and are available from
the Superintendent of Documents, U.S.
Government Publishing Office, Wash-
ington, DC 20402, or by visiting the IRS
website at http://www.irs.gov.
Drafting Information
The principal author of these proposed
regulations is Richard C. Gano IV of the
Office of Associate Chief Counsel (In-
come Tax and Accounting). However,
other personnel from the Treasury Depart-
ment and the IRS participated in their de-
velopment.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is pro-
posed to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.213-1 is amended by:
1. Redesignating paragraphs (e)(1)(v)
and (vi) as (e)(1)(vi) and (vii) respec-
tively.
2. Adding a new paragraph (e)(1)(v).

June 22, 2020 1000 Bulletin No. 2020–26
3. Redesingnating newly redesignated
paragraphs (e)(1)(vi)(a) through (c)
as (e)(1)(vi)(A) through (C).
4. Redesignating paragraphs (e)(4)(i)(a)
and (b) as (e)(4)(i)(B) and (C) respec-
tively.
5. Adding a new paragraph (e)(4)(i)(A).
6. Revising newly redesignated para-
graph (e)(4)(i)(B).
7. In newly redesignated paragraph (e)
(4)(i)(C):
i. Adding a subject heading;
ii. Redsignating the introductory
text as paragraph (e)(4)(i)(C)(1)
introductory text and paragraphs
(e)(4)(i)(C)(1) and (2) as para-
graphs (e)(4)(i)(C)(1)(i) and (ii);
iii. Removing the words “(a) of this
subdivision” and add in their
place the words “paragraphs (e)
(4)(i)(A) and (B) of this section”
in newly redesignated paragraph
(e)(4)(i)(C)(1) introductory text;
iv. Designating the undesignated
paragraph following newly red-
signated paragraph (e)(4)(i)(C)
(1)(ii) as paragraph (e)(4)(i)(C)
(2); and
v. Removing “subdivision (b)” and
adding in its place “paragraph (e)
(4)(i)(C)” in newly designated
paragraph (e)(4)(i)(C)(2)
The additions and revision read as fol-
lows:
§1.213-1 Medical, dental, etc., expens-
es.
* * * * *
(e)* * *
(1)* * *
(v)(A) Direct primary care arrange-
ments. Expenses paid for medical care un-
der section 213(d) include amounts paid
for a direct primary care arrangement. A
“direct primary care arrangement” is a
contract between an individual and one
or more primary care physicians under
which the physician or physicians agree
to provide medical care (as defined in sec-
tion 213(d)(1)(A)) for a fixed annual or
periodic fee without billing a third party. A
“primary care physician” is an individual
who is a physician (as described in sec-
tion 1861(r)(1) of the Social Security Act)
who has a primary specialty designation
of family medicine, internal medicine,
geriatric medicine, or pediatric medicine.
(B) Applicability date. The rules of this
paragraph (e)(1)(v) apply to taxable years
ending on or after [the date of publication
of the Treasury decision adopting these
rules as final regulations in the Federal
Register].
* * * * *
(4)(i)(A) Medical insurance contracts
and programs—(1) In general. In deter-
mining whether a contract constitutes an
“insurance” contract under section 213(d)
(1)(D), it is irrelevant whether the bene-
fits are payable in cash or in services. For
example, amounts paid for hospitalization
insurance, for membership in an associ-
ation furnishing cooperative or so-called
free-choice medical service, for group
hospitalization and clinical care, or for
membership in a health maintenance orga-
nization (HMO) are payments for medical
insurance under section 213(d)(1)(D).
(2) Health care sharing ministries.—
Amounts paid for membership in a health
care sharing ministry that shares expens-
es for medical care, as defined in section
213(d)(1)(A), are payments for medical
insurance under section 213(d)(1)(D). A
health care sharing ministry is an organi-
zation:
(i) Which is described in section 501(c)
(3) and is exempt from taxation under sec-
tion 501(a);
(ii) Members of which share a common
set of ethical or religious beliefs and share
medical expenses among members in ac-
cordance with those beliefs and without
regard to the State in which a member re-
sides or is employed;
(iii) Members of which retain mem-
bership even after they develop a medical
condition;
(iv) Which (or a predecessor of which)
has been in existence at all times since De-
cember 31, 1999, and medical expenses of
its members have been shared continuous-
ly and without interruption since at least
December 31, 1999; and
(v) Which conducts an annual audit
which is performed by an independent
certified public accounting firm in accor-
dance with generally accepted accounting
principles and which is made available to
the public upon request.
(3) Government-sponsored health
care programs. Amounts paid for cover-
age under government-sponsored health
care programs may be amounts paid for
medical insurance under section 213(d)
(1)(D). Taxes imposed by any govern-
mental unit that fund such a program,
however, do not constitute amounts paid
for medical insurance. The following
government-sponsored health care pro-
grams are medical insurance under sec-
tion 213(d)(1)(D):
(i) The Medicare program under Ti-
tle XVIII of the Social Security Act (42
U.S.C. 1395c and following sections), in-
cluding Parts A, B, C, and D;
(ii) Medicaid programs under title XIX
of the Social Security Act (42 U.S.C. 1396
and following sections);
(iii) The Children’s Health Insurance
Program (CHIP) under title XXI of the
Social Security Act (42 U.S.C. 1397aa and
following sections);
(iv) Medical coverage under chapter 55
of title 10, U.S.C., including coverage un-
der the TRICARE program; and
(v) Veterans’ health care programs un-
der chapter 17 or 18 of Title 38 U.S.C.
(4) Applicability date. The rules of this
paragraph (e)(4)(i)(A) apply to taxable
years ending on or after [the date of pub-
lication of the Treasury decision adopting
these rules as final regulations in the Fed-
eral Register].
(B) Insurance contract covering
more than medical care. Amounts are
paid for medical insurance under section
213(d)(1)(D) only to the extent that such
amounts are paid for insurance covering
expenses of medical care referred to in
paragraph (e)(1) of this section or for
any qualified long-term care insurance
contract as defined in section 7702B(b).
Amounts will be considered payable for
other than medical insurance under a
contract if the contract provides for the
waiver of premiums upon the occurrence
of an event. In the case of an insurance
contract under which amounts are pay-
able for other than medical insurance
(as, for example, a policy providing an
indemnity for loss of income or for loss
of life, limb, or sight) –
(1) No amount shall be treated as
paid for medical insurance under section
213(d)(1)(D) unless the charge for such
insurance is either separately stated in the
contract or furnished to the policyholder
by the insurer in a separate statement,

Bulletin No. 2020–26 1001 June 22, 2020
(2) The amount taken into account as
the amount paid for such medical insur-
ance shall not exceed such charge, and
(3) No amount shall be treated as paid
for such medical insurance if the amount
specified in the contract (or furnished to
the policyholder by the insurer in a sepa-
rate statement) as the charge for such in-
surance is unreasonably large in relation
to the total charges under the contract. In
determining whether a separately stated
charge for insurance covering expenses of
medical care is unreasonably large in rela-
tion to the total premium, the relationship
of the coverage under the contract togeth-
er with all of the facts and circumstances
shall be considered.
(C) Premiums paid after taxpayer at-
tains the age of 65. * * *
* * * * *
Sunita Lough,
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register on July
10, 2020, 4:15 p.m., and published in the issue of the
Federal Register for June 13, 2020, 85 F.R. 35398)

Bulletin No. 2020–26 i June 22, 2020
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion. It
is not used where a position in a prior rul-
ing is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previous-
ly published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cas-
es in litigation, or the outcome of a Ser-
vice study.
Abbreviations
The following abbreviations in current use
and formerly used will appear in material
published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

June 22, 2020 ii Bulletin No. 2020–26
Numerical Finding List
1
Bulletin 2020–26
AOD:
2020-1, 2020-12 I.R.B. 521
2020-2, 2020-14 I.R.B. 558
2020-3, 2020-17 I.R.B. 663
Announcements:
2020-1, 2020-5 I.R.B. 552
2020-2, 2020-15 I.R.B. 609
2020-3, 2020-15 I.R.B. 655
2020-4, 2020-17 I.R.B. 667
2020-5, 2020-19 I.R.B. 796
2020-6, 2020-23 I.R.B. 911
2020-7, 2020-25 I.R.B. 959
Notices:
2020-1, 2020-2 I.R.B. 290
2020-2, 2020-3 I.R.B. 327
2020-3, 2020-3 I.R.B. 330
2020-4, 2020-4 I.R.B. 380
2020-5, 2020-4 I.R.B. 380
2020-6, 2020-7 I.R.B. 411
2020-7, 2020-7 I.R.B. 411
2020-8, 2020-7 I.R.B. 415
2020-9, 2020-7 I.R.B. 417
2020-10, 2020-10 I.R.B. 456
2020-11, 2020-11 I.R.B. 492
2020-12, 2020-11 I.R.B. 495
2020-13, 2020-11 I.R.B. 502
2020-14, 2020-13 I.R.B. 555
2020-15, 2020-14 I.R.B. 559
2020-16, 2020-14 I.R.B. 559
2020-17, 2020-15 I.R.B. 590
2020-18, 2020-15 I.R.B. 590
2020-19, 2020-15 I.R.B. 591
2020-20, 2020-16 I.R.B. 660
2020-21, 2020-16 I.R.B. 660
2020-22, 2020-17 I.R.B. 664
2020-23, 2020-18 I.R.B. 742
2020-26, 2020-18 I.R.B. 744
2020-27, 2020-19 I.R.B. 778
2020-28, 2020-19 I.R.B. 781
2020-30, 2020-19 I.R.B. 781
2020-31, 2020-19 I.R.B. 783
2020-32, 2020-21 I.R.B. 837
2020-34, 2020-21 I.R.B. 838
2020-36, 2020-21 I.R.B. 840
2020-25, 2020-22 I.R.B. 863
2020-29, 2020-22 I.R.B. 864
2020-33, 2020-22 I.R.B. 868
2020-37, 2020-23 I.R.B. 900
2020-38, 2020-23 I.R.B. 903
Notices:—Continued
2020-35, 2020-25 I.R.B. 948
2020-40, 2020-25 I.R.B. 952
2020-41, 2020-25 I.R.B. 954
2020-39, 2020-26 I.R.B. 984
2020-42, 2020-26 I.R.B. 986
2020-44, 2020-26 I.R.B. 989
Proposed Regulations:
REG-107431-19, 2020-3 I.R.B. 332
REG-122180-18, 2020-3 I.R.B. 342
REG-100956-19, 2020-4 I.R.B. 383
REG-125710-18, 2020-5 I.R.B. 554
REG-132741-17, 2020-10 I.R.B. 458
REG-100814-19, 2020-12 I.R.B. 542
REG-132529-17, 2020-12 I.R.B. 667
REG-106013-19, 2020-18 I.R.B. 757
REG-117138-17, 2020-19 I.R.B. 796
REG-106864-18, 2020-20 I.R.B. 805
REG-113295-18, 2020-22 I.R.B. 875
REG-104591-18, 2020-23 I.R.B. 911
REG-100320-20, 2020-25 I.R.B. 960
REG-109755-19, 2020-25 I.R.B. 994
Revenue Procedures:
2020-1, 2020-01 I.R.B. 1
2020-2, 2020-01 I.R.B. 107
2020-3, 2020-01 I.R.B. 131
2020-4, 2020-01 I.R.B. 148
2020-5, 2020-01 I.R.B. 241
2020-7, 2020-01 I.R.B. 281
2020-9, 2020-02 I.R.B. 294
2020-10, 2020-02 I.R.B. 295
2020-11, 2020-06 I.R.B. 406
2020-8, 2020-08 I.R.B. 447
2020-12, 2020-11 I.R.B. 511
2020-13, 2020-11 I.R.B. 515
2020-17, 2020-12 I.R.B. 539
2020-18, 2020-15 I.R.B. 592
2020-14, 2020-16 I.R.B. 661
2020-22, 2020-18 I.R.B. 745
2020-23, 2020-18 I.R.B. 749
2020-24, 2020-18 I.R.B. 750
2020-26, 2020-18 I.R.B. 753
2020-25, 2020-19 I.R.B. 785
2020-28, 2020-19 I.R.B. 792
2020-20, 2020-20 I.R.B. 801
2020-27, 2020-20 I.R.B. 803
2020-29, 2020-21 I.R.B. 859
2020-19, 2020-22 I.R.B. 871
2020-21, 2020-22 I.R.B. 872
2020-30, 2020-22 I.R.B. 873
2020-15, 2020-23 I.R.B. 905
2020-33, 2020-25 I.R.B. 956
2020-34, 2020-26 I.R.B. 990
Revenue Rulings:
2020-1, 2020-3 I.R.B. 296
2020-2, 2020-3 I.R.B. 298
2020-3, 2020-3 I.R.B. 409
2020-4, 2020-4 I.R.B. 444
2020-5, 2020-5 I.R.B. 454
2020-6, 2020-11 I.R.B. 490
2020-7, 2020-12 I.R.B. 522
2020-9, 2020-15 I.R.B. 563
2020-10, 2020-15 I.R.B. 565
2020-8, 2020-19 I.R.B. 775
2020-11, 2020-19 I.R.B. 776
2020-13, 2020-26 I.R.B. 965
Treasury Decisions:
9886, 2020-2 I.R.B. 285
9887, 2020-3 I.R.B. 302
9888, 2020-3 I.R.B. 306
9891, 2020-8 I.R.B. 419
9892, 2020-8 I.R.B. 439
9893, 2020-9 I.R.B. 449
9895, 2020-15 I.R.B. 565
9896, 2020-18 I.R.B. 681
9897, 2020-23 I.R.B. 882
9898, 2020-25 I.R.B. 935
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. 2020–26 iii June 22, 2020
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2020–26
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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