Initial guidance from Treasury on stock repurchase provisions

In brief

Treasury and the IRS on December 27 released Notice 2023-2 (the Notice), providing interim guidance addressing application of the new excise tax on repurchases of corporate stock under Section 4501 (the Excise Tax), which was enacted as part of the Inflation Reduction Act of 2022 (the IRA). The interim guidance applies until proposed regulations addressing the provision are issued. The Notice states that taxpayers may rely on the rules described in the Notice until such time. The Excise Tax applies to certain repurchases of stock made after December 31, 2022.

The Notice is 52 pages long with 26 examples and covers a broad range of areas as to which taxpayers had raised questions concerning the Excise Tax. Treasury requests comments on rules included in the Notice, as well as additional areas for future guidance to be considered in the forthcoming regulations. Comments are requested within 60 days of the publication of the Notice.