A key element of the Biden administration’s 2022 corporate tax changes is the 1 percent excise tax on certain corporate stock repurchases or “buybacks” exceeding $1 million in the tax year. The new tax, under section 4501, is imposed on the fair market value of any stock repurchased by a covered corporation during the tax year, effective for repurchases after December 31, 2022. In December 2022 the IRS released the initial guidance under Notice 2023-2, 2023-3 IRB 374, which taxpayers could rely on in computing their excise tax liability until proposed regulations were issued.
On April 12 Treasury and the IRS released detailed proposed regulations providing guidance on numerous substantive and procedural issues concerning the tax. Taxpayers can generally rely on the proposed rules until final regulations are published. Comments and requests for a public hearing are due by June 11 for the general excise tax regulations (REG-115710-22) and were due by May 13 for the procedure and administration regulations (REG-118499-23).

In this Tax Notes article, “Proposed IRS Regulations on Stock Buyback Tax Clarify Some Benefits Issues,” Groom principal Lou Mazawey highlights the portions of the proposed regulations affecting employee benefit programs and discusses next steps.

To read the article, click here.