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April 9, 2024

BREAKING TAX NEWS | IRS releases proposed rules on stock buyback excise tax

The IRS has released proposed rules (REG-115710-22) on applying the excise tax under IRC Section 4501, enacted by the Inflation Reduction Act, which imposes a 1% surcharge on certain corporate stock buybacks occurring after December 31, 2022. The IRS had issued interim guidance in January 2023 (see Tax Alert 2023–0054). The proposed rules adopt much of the interim guidance but modify, among other things, the funding rule for foreign-parented groups. The IRS simultaneously released proposed rules (REG-118499-23) on the procedures for reporting and paying the new excise tax. A Tax Alert is forthcoming.

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Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor