The Internal Revenue Service and the Treasury Department have issued guidance on the corporate stock repurchase excise tax.

excise tax

The Internal Revenue Service and the Treasury Department have issued guidance on the corporate stock repurchase excise tax.

The Inflation Reduction Act’s tax provision is addressed in interim guidance set forth in Notice 2023-2.

The IRS and Treasury Department additionally issued Notice 2023-2, which offers temporary guidance regarding the application of the corporate stock repurchase excise tax until proposed regulations are published, in addition to the interim guidance they previously released on the new corporate alternative minimum tax, which was established by the Inflation Reduction Act.

The Inflation Reduction Act’s new code section imposes a 1% excise tax, subject to adjustments, on the total fair market value of the stock repurchased by specific corporations during the taxable year. Prior to January 1, 2023, when the new excise tax will begin to apply to stock repurchases, the IRS and the Treasury issued Notice 2023-2 on Tuesday to give taxpayers assurance.

In the upcoming proposed regulations, the IRS and Treasury plan to include specific rules and procedures, which are covered by Notice 2023-2. Until the upcoming proposed regulations are published, taxpayers may rely on the information in Notice 2023-2.

Additionally, Notice 2023-2 requests feedback on the notice’s rules as well as a few other matters. Following the date the notice is published in the Internal Revenue Bulletin, the IRS and Treasury advise that comments be submitted within 60 days.

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