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IRS and Treasury Release Guidance on Corporate Stock Repurchase Excise Tax

Notice 2023-2 provides interim guidance regarding this tax provision in the Inflation Reduction Act.

In addition to the interim guidance the IRS and the Treasury Department released today on the new corporate alternative minimum tax, which was created by the Inflation Reduction Act, the IRS and Treasury also issued Notice 2023-2, which provides interim guidance regarding the application of the corporate stock repurchase excise tax until proposed regulations are issued.

The new code section added by the Inflation Reduction Act imposes a 1% excise tax on the aggregate fair market value of stock repurchased by certain corporations during the taxable year, subject to adjustments. Notice 2023-2 was issued on Tuesday to provide certainty to taxpayers in advance of Jan. 1, 2023, the date on which the new excise tax will apply to stock repurchases, the IRS and the Treasury Department said.

Notice 2023-2 describes certain rules and procedures that the IRS and Treasury intend to include in the forthcoming proposed regulations. Taxpayers may rely upon the information contained in Notice 2023-2 until the forthcoming proposed regulations are issued.

Notice 2023-2 also solicits comments on the rules contained in the notice and certain other issues under consideration. The IRS and Treasury recommend that comments be submitted within 60 days of the date on which the notice is published in the Internal Revenue Bulletin.