Internal Revenue Bulletin 2019-24 (PDF rendition): IRS Announcements

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Bulletin No. 2019–24
June 10, 2019
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
ADMINISTRATIVE
NOT. 2019-39, page 1322.
This notice provides guidance regarding the issuance of
tax-exempt State and local bonds under section 103 of the
Internal Revenue Code and tax-exempt Indian tribal govern-
ment bonds under section 7871 in current refunding issues
(as defined in section 1.150-1(d)(3)).
EMPLOYMENT TAX
T.D. 9860, page 1297.
The Stephen Beck, Jr., Achieving a Better Life Experience
Act of 2014 requires the establishment of a voluntary certi-
fication program for professional employer organizations. A
professional employer organization, sometimes referred to as
an employee leasing company, is an organization that enters
into an agreement with a client to perform some or all of the
federal employment tax withholding, reporting, and payment
functions related to workers performing services for the client.
Being certified by the IRS as a certified professional employer
organization (CPEO) has certain federal employment tax con-
sequences for both the CPEO and its customers and clients.
These proposed regulations describe the requirements a per-
son must satisfy in order to become and remain a CPEO, and
set forth the federal employment tax liabilities and other obli-
gations of persons certified by the IRS as CPEOs.
INCOME TAX
TD 9859, page 1293.
The final regulations reduce the amount determined under
section 956 of the Internal Revenue Code with respect to
certain domestic corporations. The final regulations affect
certain domestic corporations that own (or are treated as
owning) stock in foreign corporations.
REV. PROC. 2019-26, page 1323.
This revenue procedure provides: (1) tables of limitations on
depreciation deductions for owners of passenger automo-
biles first placed in service by the taxpayer during calendar
year 2019; and (2) a table of amounts that must be included
in income by lessees of passenger automobiles first leased
by the taxpayer during calendar year 2019. The tables de-
tailing these depreciation limitations and lessee inclusion
amounts reflect the automobile price inflation adjustments
required by § 280F(d)(7). For purposes of this revenue pro-
cedure, the term “passenger automobiles” includes trucks
and vans.
ANN. 2019-06, page 1327.
Notice 2019-32, 2019-21 I.R.B. 1187 (May 20, 2019), con-
tains a typographical error in the first sentence of section
4.01 on page 1189. The sentence states that comments
may be submitted in writing on or before Thursday, June 4,
2019. The correct date is July 4, 2019. The sentence is
amended to delete “June 4,” and replace it with “July 4.”
Finding Lists begin on page ii.

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Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
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Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing of-
ficial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
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against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
June 10, 2019 Bulletin No. 2019–24

Part I.
26 CFR 1.956-1: Shareholder’s pro rata share of
the average of the amounts of United States property
held by a controlled foreign corporation.
T.D. 9859
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Amount Determined Under
Section 956 for Corporate
United States Shareholders
AGENCY: Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
SUMMARY: This document contains fi-
nal regulations that reduce the amount de-
termined under section 956 of the Internal
Revenue Code with respect to certain do-
mestic corporations. This document final-
izes the proposed regulations published on
November 5, 2018. The final regulations
affect certain domestic corporations that
own (or are treated as owning) stock in
foreign corporations.
DATES: Effective Date: These regulations
are effective on July 22, 2019.
Applicability Date: For the date of appli-
cability, see §1.956-1(g)(4).
FOR FURTHER INFORMATION CON-
TACT: Rose E. Jenkins, (202) 317-6934.
SUPPLEMENTARY INFORMATION:
Background
On November 5, 2018, the Department
of the Treasury (“Treasury Department”)
and the IRS published proposed regula-
tions (REG-114540-18) under section 956
in the Federal Register (83 FR 55324)
(the “proposed regulations”). No public
hearing was requested or held, and no
substantive comments were received with
respect to the proposed regulations. All
written comments received in response
to the proposed regulations are available
at www.regulations.gov or upon request.
This Treasury decision adopts the pro-
posed regulations, with the changes de-
scribed in the Summary of Comments and
Explanation of Revisions section of this
preamble, as final regulations.
Summary of Comments and
Explanation of Revisions
The final regulations, like the proposed
regulations, exclude corporations that are
United States shareholders (as defined
in section 951(b)) (“U.S. shareholders”)
from the application of section 956 to
maintain symmetry between the taxation
of actual repatriations and the taxation
of effective repatriations. To achieve this
result, the final regulations provide that
the amount otherwise determined under
section 956 (the “tentative section 956
amount”) with respect to a U.S. share-
holder for a taxable year of a controlled
foreign corporation (as defined in section
957) (“CFC”) is reduced to the extent that
the U.S. shareholder would be allowed a
deduction under section 245A if the U.S.
shareholder had received a distribution
from the CFC in an amount equal to the
tentative section 956 amount (the “hypo-
thetical distribution”).
In general, under section 245A and the
final regulations, respectively, neither an
actual dividend to a corporate U.S. share-
holder, nor such a shareholder’s tentative
section 956 amount, will result in addi-
tional U.S. tax.
I. Allocation of Hypothetical Distribution
While not raised in any written com-
ments, published commentary on the pro-
posed regulations raised concerns regard-
ing how the proposed rules apply in the
case of a CFC that has prior year earnings
and profits (“E&P”) described in section
959(c)(1) and current-year E&P described
in section 959(c)(3) that do not result in
an inclusion under section 951 or section
951A. Even though a dividend of the cur-
rent-year E&P would potentially be eligi-
ble for a deduction under section 245A, a
distribution by the CFC would not quali-
fy for a section 245A deduction, because
under section 959(c), the distribution
would be allocated to the prior-year E&P
described in section 959(c)(1) first. There-
fore, any tentative section 956 amount
for the year might not be reduced by the
proposed rule. To address this issue, the
final regulations include an ordering rule
treating a hypothetical distribution as at-
tributable first to E&P described in sec-
tion 959(c)(2), then to E&P described in
section 959(c)(3), consistent with the al-
location of an amount determined under
section 956 pursuant to section 959(f)(1).
This rule, which differs from the general
rule for allocation of distributions in sec-
tion 959(c) by not treating any amount as
attributable to E&P described in section
959(c)(1), is necessary to reflect the fact
that the amount to which the hypothetical
distribution applies is in fact a tentative
section 956 amount. This rule is illustrated
in a new example in §1.956-1(a)(3)(iii).
II. Domestic Partnerships and Their
Partners
Section 245A(g) grants the Secretary
authority to prescribe regulations for the
treatment of U.S. shareholders owning
stock of specified 10-percent owned for-
eign corporations through a partnership.
As noted in the Comments and Request
for Public Hearing section of the preamble
to the proposed regulations, the Treasury
Department and the IRS have studied the
appropriate application of the regulations
to U.S. shareholders that are domestic part-
nerships, which may have partners that are
a combination of domestic corporations,
U.S. individuals, or other persons. As noted
in the Background section of this preamble,
no substantive comments were received
with respect to the proposed regulations,
including with respect to the two methods
of applying the rules in the case of domes-
tic partnerships that were described in the
preamble to the proposed regulations. Ac-
cordingly, consistent with the first method
described in that preamble, the final regu-
lations provide that the tentative section
956 amount with respect to a domestic
partnership is reduced to the extent that one
or more domestic corporate partners would
be entitled to a section 245A deduction if
Bulletin No. 2019–24 1293 June 10, 2019

the partnership received such amount as a
distribution, and any remaining amount of
the domestic partnership’s inclusion under
sections 951(a)(1)(B) and 956 is allocated
to the partners in the same proportion as net
income would result to the partners upon a
hypothetical distribution (that is, a distribu-
tion from the CFC to the domestic partner-
ship). See §1.956-1(a)(2)(i) and (iii). The
rules concerning domestic partnerships are
illustrated in a new example in §1.956-1(a)
(3)(iv).
III. Revisions to Existing Examples
The final regulations also update cer-
tain examples in the regulations under sec-
tion 956 to reflect that section 956 may no
longer apply in the case of corporate U.S.
shareholders. See §1.956-1(b)(4) (amend-
ed facts common to several examples, to
refer to a United States citizen, rather than
domestic corporation).
IV. Applicability Date
The final regulations apply to taxable
years of a CFC beginning on or after July
22, 2019, and to taxable years of a U.S.
shareholder in which or with which such
taxable years of the CFC end. However,
consistent with the reliance allowed for
the proposed regulations, taxpayers may
apply the final regulations for taxable
years of a CFC beginning after Decem-
ber 31, 2017, and for taxable years of a
U.S. shareholder in which or with which
such taxable years of the CFC end, pro-
vided that the taxpayer and United States
persons that are related (within the mean-
ing of section 267 or 707) to the taxpayer
consistently apply the regulations with re-
spect to all CFCs in which they are U.S.
shareholders for taxable years of the CFCs
beginning after December 31, 2017. See
section 7805(b)(7).
Special Analyses
OIRA has determined that this final
rule is a significant regulatory action
pursuant to section 3(f) of Executive Or-
der (E.O.) 12866 and the April 11, 2018,
Memorandum of Agreement between the
Department of Treasury and the Office of
Management and Budget (OMB). Howev-
er, OIRA has waived review of this final
rule in accordance with section 6(a)(3)(A)
of E.O. 12866.
Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), it is hereby certi-
fied that this regulation will not have a sig-
nificant economic impact on a substantial
number of small entities, although some
small entities that are domestic corpora-
tions could be affected by the regulations.
However, even if a substantial number of
small entities were to be affected by this
regulation, the Treasury Department and
the IRS estimate that the economic im-
pact on such small entities would not be
significant as the regulation is expected to
marginally reduce compliance costs for
smaller entities. This is because the Trea-
sury Department and the IRS believe that
the cost-saving benefits of the regulations
with respect to complex third-party bor-
rowing arrangements, internal financial
management structures, and restructurings
of worldwide operations will generally be
available only to large U.S. multinational
corporations with 20 or more CFCs. The
Treasury Department and the IRS believe
that U.S. multinational corporations with
fewer than 20 CFCs generally will not
have the types of arrangements in place
that would otherwise need to be structured
and monitored to avoid section 956. The
regulations generally will not affect small
entities that are not domestic corporations.
Pursuant to section 7805(f), the notice
of proposed rulemaking preceding this
regulation was submitted to the Chief
Counsel for Advocacy of the Small Busi-
ness Administration for comment on its
impact on small businesses. No comments
were received.
There are no information collection
requirements associated with these final
regulations.
The Administrator of OIRA has deter-
mined that this is a major rule for purposes
of the Congressional Review Act (CRA)
(5 U.S.C. 801 et seq.). Under section
801(3) of the CRA, a major rule takes ef-
fect 60 days after the rule is published in
the Federal Register.
Drafting Information
The principal author of the final regu-
lations is Rose E. Jenkins of the Office of
Associate Chief Counsel (International).
However, other personnel from the Trea-
sury Department and the IRS participated
in their development.
* * * * *
Amendments to the Regulations
Accordingly, 26 CFR part 1 is amend-
ed as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by revising the entry for
§ 1.956-1 to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.956-1 also issued under 26
U.S.C. 245A(g), 956(d), and 956(e).
* * * * *
Par. 2. Section 1.956-1 is amended by:
1. Revising paragraph (a).
2. In the paragraph (b)(4) introductory
text, removing the language “following
examples” and adding in its place “exam-
ples in this paragraph (b)(4)” and remov-
ing the language “domestic corporation”
and adding in its place “United States cit-
izen.”
3. In paragraph (b)(4), designating Ex-
amples 1 through 8 as paragraphs (b)(4)(i)
through (viii), respectively.
4. In newly designated paragraphs (b)
(4)(i) through (viii), redesignating the
paragraphs in the first column as the para-
graphs in the second column:
Old ParagraphsNew Paragraphs
(b)(4)(i)(i) and (ii)(b)(4)(i)(A) and (B)
(b)(4)(ii)(i) and (ii)(b)(4)(ii)(A) and (B)
(b)(4)(iii)(i) and (ii)(b)(4)(iii)(A) and (B)
(b)(4)(iv)(i) and (ii)(b)(4)(iv)(A) and (B)
(b)(4)(v)(i) and (ii)(b)(4)(v)(A) and (B)
(b)(4)(vi)(i) and (ii)(b)(4)(vi)(A) and (B)
(b)(4)(vii)(i) and (ii)(b)(4)(vii)(A) and (B)
(b)(4)(viii)(i) and (ii)(b)(4)(viii)(A) and (B)
June 10, 2019 1294 Bulletin No. 2019–24

Bulletin No. 2019–24 1295 June 10, 2019
5. In newly redesignated paragraph (b)
(4)(ii)(A), removing the language “Exam-
ple 1 of this paragraph (b)(4)” and adding
in its place “paragraph (b)(4)(i)(A) of this
section (the facts in Example 1).”
6. Revising the heading for paragraph
(g).
7. In the first sentence of paragraph (g)
(1), removing the language “Paragraph
(a)” and adding in its place “Paragraph (a)
(1)”.
8. Adding paragraphs (g)(4) and (5).
9. Removing the parenthetical authori-
ty citation at the end of the section.
The revisions and additions read as fol-
lows:
§1.956-1 Shareholder’s pro rata share
of the average of the amounts of United
States property held by a controlled for-
eign corporation.
(a) Overview and scope—(1) In gen-
eral. Subject to the provisions of section
951(a) and the regulations in this part, a
United States shareholder of a controlled
foreign corporation is required to include
in gross income the amount determined
under section 956 with respect to the
shareholder for the taxable year but only
to the extent not excluded from gross in-
come under section 959(a)(2) and the reg-
ulations in this part.
(2) Reduction for certain United States
shareholders—(i) In general. For a tax-
able year of a controlled foreign cor-
poration, the amount determined under
section 956 with respect to each share of
stock of the controlled foreign corpora-
tion owned (within the meaning of section
958(a)) by a United States shareholder
is the amount that would be determined
under section 956 with respect to such
share for the taxable year, absent the ap-
plication of this paragraph (a)(2) for the
taxable year (such amount, the tentative
section 956 amount, and in the aggregate
with respect to all shares owned (with-
in the meaning of section 958(a)) by the
United States shareholder, the aggregate
tentative section 956 amount), reduced by
the amount of the deduction under section
245A, if any, that the shareholder would
be allowed if the shareholder received
as a distribution from the controlled for-
eign corporation an amount equal to the
tentative section 956 amount with respect
to such share on the last day during the
taxable year on which the foreign corpo-
ration is a controlled foreign corporation
(hypothetical distribution). For purposes
of the preceding sentence, in the case of a
United States shareholder that is a domes-
tic partnership, the aggregate amount of
the deductions under section 245A, if any,
that domestic corporations that are part-
ners of the domestic partnership (includ-
ing indirect partners through other part-
nerships) would be allowed with respect
to a hypothetical distribution is treated as
the amount of the deduction under section
245A that the domestic partnership would
be allowed.
(ii) Determination of the amount of
the deduction that would be allowed un-
der section 245A with respect to a hy-
pothetical distribution. For purposes of
determining the amount of the deduction
under section 245A that a United States
shareholder would be allowed with re-
spect to a share of stock of a controlled
foreign corporation by reason of a hy-
pothetical distribution, the rules in para-
graphs (a)(2)(ii)(A) through (C) of this
section apply—
(A) If a United States shareholder owns
a share of stock of a controlled foreign
corporation indirectly (within the meaning
of section 958(a)(2)), then—
(1) Sections 245A(a) through (d),
246(a), and 959 apply to the hypothetical
distribution as if the United States share-
holder directly owned (within the mean-
ing of section 958(a)(1)(A)) the share;
(2) Section 245A(e) applies to the
hypothetical distribution as if the distri-
bution were made to the United States
shareholder through each entity by reason
of which the United States shareholder in-
directly owns such share and pro rata with
respect to the equity that gives rise to such
indirect ownership;
(3) To the extent that a distribution
treated as made to a controlled foreign
corporation pursuant to the hypothetical
distribution by reason of paragraph (a)(2)
(ii)(A)(2) of this section would be subject
to section 245A(e)(2), the United States
shareholder is treated as not being allowed
a deduction under section 245A by reason
of the hypothetical distribution; and
(4) Section 246(c) applies to the hy-
pothetical distribution by substituting the
phrase “owned (within the meaning of
section 958(a))” for the term “held” each
place it appears in section 246(c);
(B) Section 246(c) applies to the hypo-
thetical distribution by substituting “the
last day during the taxable year on which
the foreign corporation is a controlled for-
eign corporation” for the phrase “the date
on which such share becomes ex-dividend
with respect to such dividend” in section
246(c)(1)(A); and
(C) The hypothetical distribution is
treated as attributable first to earnings and
profits of the controlled foreign corpora-
tion described in section 959(c)(2), then
to earnings and profits of the controlled
foreign corporation described in section
959(c)(3).
(iii) Special rule in the case of domestic
partnerships—(A) In general. In the case
of a domestic partnership whose tentative
section 956 amount with respect to a share
of stock of a controlled foreign corpora-
tion is reduced pursuant to paragraph (a)
(2)(i) of this section for a taxable year,
the portion of any inclusion under section
951(a)(1)(B) of the domestic partnership
with respect to such share for the taxable
year allocated to a partner of the domestic
partnership (including an indirect partner
through one or more other partnerships)
must equal the product of the inclusion
and the ratio determined by dividing—
(1) The net hypothetical distribution in-
come with respect to the partner; by
(2) The aggregate of the net hypotheti-
cal distribution income with respect to all
of the partners of the domestic partner-
ship.
(B) Definition of net hypothetical distri-
bution income. The term net hypothetical
distribution income means, with respect to
a hypothetical distribution to a domestic
partnership and a partner of the domestic
partnership (including an indirect partner
through one or more other partnerships),
the amount of the hypothetical distribu-
tion that would be allocable to the partner
reduced by the amount of the deduction
under section 245A with respect to the
hypothetical distribution that would be al-
lowable to the partner.
(3) Examples. The examples in this
paragraph (a)(3) illustrate the application
of paragraph (a)(2) of this section.
(i) Example 1—(A) Facts. (1) USP, a domestic
corporation, owns all of the single class of stock of
FC, a foreign corporation. The stock of FC consists
of 100 shares, and USP satisfies the holding period
requirement of section 246(c) (as modified by para-
graph (a)(2)(ii)(B) of this section) with respect to

June 10, 2019 1296 Bulletin No. 2019–24
each share of FC stock. Any dividend from FC to
USP would not constitute a hybrid dividend for pur-
poses of section 245A(e). FC owns all of the stock of
USS, a domestic corporation. FC’s adjusted basis in
the stock of USS is $0.
(2) The functional currency of FC is the U.S.
dollar. FC has $100x of undistributed earnings as de-
fined in section 245A(c)(2) at the end of the taxable
year, $90x of which constitute undistributed foreign
earnings as defined in section 245A(c)(3), and $10x
of which are described in section 245(a)(5)(B) (that
is, earnings attributable to a dividend that FC re-
ceived from USS). None of the earnings and profits
of FC are described in section 959(c)(1) or (2) or are
earnings and profits attributable to income excluded
from subpart F income under section 952(b). FC’s
applicable earnings (as defined in section 956(b)(1))
are $100x. FC also has held an obligation of USP
with an adjusted basis of $120x on every day during
the taxable year of FC, and such obligation was ac-
quired while all of its stock was owned by USP.
(B) Analysis. Because USP directly owns all
of the stock of FC at the end of FC’s taxable year,
USP’s aggregate tentative section 956 amount with
respect to FC is $100x, the lesser of USP’s pro rata
share of the average amounts of United States prop-
erty held by FC ($120x) and its pro rata share of FC’s
applicable earnings ($100x). Under paragraph (a)(2)
(i) of this section, USP’s section 956 amount with
respect to FC is its aggregate tentative section 956
amount with respect to FC reduced by the deduc-
tion under section 245A that USP would be allowed
if USP received an amount equal to its aggregate
tentative section 956 amount as a distribution with
respect to the FC stock. USP would be allowed a
$90x deduction under section 245A with respect to
the foreign-source portion of the $100x hypothetical
distribution (that is, an amount of the dividend that
bears the same ratio to the dividend as the $90x of
undistributed foreign earnings bears to the $100x of
undistributed earnings). Accordingly, USP’s section
956 amount with respect to FC is $10x, its aggregate
tentative section 956 amount ($100x) with respect to
FC reduced by the amount of the deduction that USP
would have been allowed under section 245A with
respect to the hypothetical distribution ($90x).
(ii) Example 2—(A) Facts. The facts are the
same as in paragraph (a)(3)(i)(A) of this section (the
facts in Example 1), except that all $100x of FC’s un-
distributed earnings are described in section 959(c)
(2).
(B) Analysis. As in paragraph (a)(3)(i)(B) of this
section (the analysis in Example 1), USP’s aggre-
gate tentative section 956 amount with respect to FC
is $100x, the lesser of USP’s pro rata share of the
average amounts of United States property held by
FC ($120x) and its pro rata share of FC’s applicable
earnings ($100x). However, paragraph (a)(2) of this
section does not reduce USP’s section 956 amount
because USP would not be allowed any deduction
under section 245A with respect to the $100x hy-
pothetical distribution by reason of section 959(a)
and (d). Accordingly, USP’s section 956 amount
is $100x. However, under sections 959(a)(2) and
959(f)(1), USP’s inclusion under section 951(a)(1)
(B) with respect to FC is $0, because USP’s sec-
tion 956 amount with respect to FC does not exceed
the earnings and profits of FC described in section
959(c)(2) with respect to USP. The $100x of earn-
ings and profits of FC described in section 959(c)(2)
are reclassified as earnings and profits described in
section 959(c)(1).
(iii) Example 3—(A) Facts. The facts are the
same as in paragraph (a)(3)(i)(A) of this section (the
facts in Example 1), except that FC has $200x of un-
distributed earnings, which constitute undistributed
foreign earnings as defined in section 245A(c)(3), of
which $100x are described in section 959(c)(1)(A)
and $100x are described in section 959(c)(3).
(B) Analysis. USP’s aggregate tentative section
956 amount with respect to FC is $20x, the lesser
of $20x, the excess of USP’s pro rata share of the
average amounts of United States property held by
FC ($120x) over the earnings and profits described
in section 959(c)(1)(A) with respect to USP ($100x),
and its pro rata share of FC’s applicable earnings
($100x). Under paragraph (a)(2)(i) of this section,
USP’s section 956 amount with respect to FC is
its aggregate tentative section 956 amount with re-
spect to FC reduced by the deduction under section
245A that USP would be allowed if USP received
an amount equal to its aggregate tentative section
956 amount as a distribution with respect to the FC
stock. USP would be allowed a $20x deduction un-
der section 245A with respect to the foreign-source
portion of the $20x hypothetical distribution, which,
under paragraph (a)(2)(ii)(C) of this section, is treat-
ed as attributable to the earnings and profits of FC
described in section 959(c)(3) despite the fact that
FC has $100x of earnings and profits described in
section 959(c)(1)(A) that would otherwise be distrib-
uted before earnings and profits described in section
959(c)(3). Accordingly, USP’s section 956 amount
with respect to FC is $0, its aggregate tentative sec-
tion 956 amount ($20x) with respect to FC reduced
by the amount of the deduction that USP would have
been allowed under section 245A with respect to the
hypothetical distribution after applying the rule in
paragraph (a)(2)(ii)(C) of this section ($20x).
(iv) Example 4—(A) Facts. The facts are the
same as in paragraph (a)(3)(i)(A) of this section (the
facts in Example 1), except that USP is a domestic
partnership in which USC1 and USC2, each a do-
mestic corporation, and USI, a United States citizen,
have owned 50%, 30%, and 20%, respectively, of the
capital and profits interests for five years.
(B) Analysis. As in paragraph (a)(3)(i)(B) of this
section (the analysis in Example 1), USP’s aggregate
tentative section 956 amount with respect to FC is
$100x. Under paragraph (a)(2)(i) of this section,
USP’s section 956 amount with respect to FC is its
aggregate tentative section 956 amount with respect
to FC reduced by the aggregate amount of deduc-
tions under section 245A that USC1, USC2, and USI
would be allowed if USP received an amount equal
to its aggregate tentative section 956 amount as a
distribution with respect to the FC stock. Assuming
that, under section 245A, USC1 and USC2 would
be allowed a $45x deduction and a $27x deduction,
respectively, with respect to the foreign-source por-
tion of their $50x and $30x distributive shares of the
$100x hypothetical distribution (that is, an amount
of the dividend that bears the same ratio to the div-
idend as the $90x of undistributed foreign earnings
bears to the $100x of undistributed earnings), USP’s
section 956 amount with respect to FC is $28x, its
aggregate tentative section 956 amount ($100x) with
respect to FC reduced by the aggregate amount of
the deductions that its partners would have been
allowed under section 245A with respect to the hy-
pothetical distribution ($72x ($45x + $27x)). Under
paragraph (a)(2)(iii) of this section, the portion of its
$28x inclusion under section 951(a)(1)(B) with re-
spect to FC that is allocated to USC1 is $5x ($28x
x (($50x-$45x)/($50x-$45x+$30x-$27x+$20x)));
the portion that is allocated to USC2 is $3x ($28x x
(($30x-$27x)/($50x-$45x+$30x-$27x+$20x))); and
the portion that is allocated to USI is $20x ($28x x
($20x/($50x-$45x+$30x-$27x+$20x))).
(v) Example 5—(A) Facts. (1) USP, a domestic
corporation, owns all of the single class of stock of
FC1, a foreign corporation, and has held such stock
for five years. FC1 has held 70% of the single class of
stock of FC2, a foreign corporation, for three years.
The other 30% of the FC2 stock has been held since
FC2’s formation by a foreign individual unrelated to
USP or FC1. Any dividend from FC2 or FC1 to FC1
or USP, respectively, would not constitute a hybrid
dividend for purposes of section 245A(e). FC2 has a
calendar taxable year. On December 1, Year 1, FC1
acquires the remaining 30% of the stock of FC2 for
cash. On June 30, Year 2, FC1 sells to a third party
the 30% of FC2 stock acquired in Year 1 at no gain.
FC2 made no distributions during Year 1.
(2) The functional currency of FC1 and FC2 is
the U.S. dollar. For Year 1, FC2 has $120x of un-
distributed earnings as defined in section 245A(c)
(2), all of which constitute undistributed foreign
earnings. None of the earnings and profits of FC2 are
described in section 959(c)(1) or (2) or are earnings
and profits attributable to income excluded from sub-
part F income under section 952(b). FC2’s applicable
earnings (as defined in section 956(b)(1)) for Year 1
are $120x. FC2 has held an obligation of USP with
an adjusted basis of $100x on every day of Year 1
that was acquired while USP owned all of the stock
of FC1 and FC1 held 70% of the single class of stock
of FC2.
(B) Analysis. Because USP indirectly owns
(within the meaning of section 958(a)) all of the
stock of FC2 at the end of Year 1, USP’s aggregate
tentative section 956 amount with respect to FC2 for
Year 1 is $100x, the lesser of USP’s pro rata share
of the average amounts of United States property
held by FC2 ($100x) and its pro rata share of FC2’s
applicable earnings ($120x). Under paragraph (a)(2)
(i) of this section, USP’s section 956 amount with
respect to FC2 for Year 1 is its aggregate tentative
section 956 amount with respect to FC2 reduced by
the deduction under section 245A that USP would
be allowed if USP received an amount equal to its
aggregate tentative section 956 amount as a distribu-
tion with respect to the FC2 stock that USP owns in-
directly within the meaning of section 958(a)(2). For
purposes of determining the consequences of this hy-
pothetical distribution, under paragraph (a)(2)(ii)(A)
(1) of this section, USP is treated as owning the FC2
stock directly. In addition, under paragraph (a)(2)(ii)
(A)(4) of this section, the holding period requirement
of section 246(c) is applied by reference to the pe-
riod during which USP owned (within the meaning
of section 958(a)) the stock of FC2. Therefore, with
respect to the hypothetical distribution from FC2 to
USP, USP would satisfy the holding period require-

Bulletin No. 2019–24 1297 June 10, 2019
ment under section 246(c) with respect to the 70%
of the FC2 stock that USP indirectly owned for three
years through FC1, but not with respect to the 30%
of the FC2 stock that USP indirectly owned through
FC1 for a period of less than 365 days. Accordingly,
USP’s section 956 amount with respect to FC2 for
Year 1 is $30x, its aggregate tentative section 956
amount ($100x) reduced by the amount of the de-
duction that USP would have been allowed under
section 245A with respect to the hypothetical distri-
bution ($70x).
* * * * *
(g) Applicability dates.* * *
(4) Paragraphs (a)(2) and (3) of this
section apply to taxable years of con-
trolled foreign corporations beginning on
or after July 22, 2019, and to taxable years
of a United States shareholder in which or
with which such taxable years of the con-
trolled foreign corporations end. Notwith-
standing the preceding sentence, a United
States shareholder may apply paragraphs
(a)(2) and (3) of this section to taxable
years of controlled foreign corporations
beginning after December 31, 2017, and
to taxable years of the United States share-
holder in which or with which such tax-
able years of the controlled foreign cor-
porations end, provided that the United
States shareholder and United States per-
sons that are related (within the meaning
of section 267 or 707) to the United States
shareholder consistently apply those para-
graphs with respect to all controlled for-
eign corporations in which they are Unit-
ed States shareholders for taxable years of
the controlled foreign corporations begin-
ning after December 31, 2017.
(5) Paragraph (e)(6) of this section ap-
plies to property acquired in exchanges
occurring on or after June 24, 2011.
Kirsten Wielobob,
Deputy Commissioner for Services
and Enforcement.
Approved: May 9, 2019.
David J. Kautter,
Assistant Secretary of the Treasury
(Tax Policy).
(Filed by the Office of the Federal Register on May
22, 2019, 8:45 a.m., and published in the issue of the
Federal Register for May 23, 2019, 84 F.R. 23716)
26 CFR 301.7705-1: Certified professional employer
organization; 26 CFR 301.7705-2: CPEO certifica-
tion requirements.
T.D. 9860
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Parts 31, 301, and
602
Certified Professional
Employer Organizations
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document sets forth fi-
nal regulations relating to certified profes-
sional employer organizations (CPEOs).
The Stephen Beck, Jr., Achieving a Better
Life Experience Act of 2014, required the
IRS to establish a voluntary certification
program for professional employer orga-
nizations. These final regulations set forth
the requirements a person must satisfy in
order to become and remain a CPEO and
the federal employment tax liabilities and
other obligations of persons certified by
the IRS as CPEOs. These final regulations
will affect persons who apply to be treated
as CPEOs and who are certified by the IRS
as meeting the applicable requirements. In
certain instances, the final regulations will
also affect the federal employment tax lia-
bilities and other obligations of customers
of the CPEO.
DATES: Effective date: These regulations
are effective on May 28, 2019.
Applicability date: For dates of applicabil-
ity see §§31.3511-1(i), 301.7705-1(c), and
301.7705-2(o).
FOR FURTHER INFORMATION CON-
TACT: Nina Roca at (202) 317-6798 (this
is not a toll-free number)
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information con-
tained in these final regulations has been
reviewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)) under control
number 1545-2266.
The collection of information in these
regulations is in §31.3511-1(g), which
provides that the Secretary shall develop
such reporting and recordkeeping rules,
regulations, and procedures as the Secre-
tary determines necessary or appropriate
to ensure compliance by CPEOs with
subtitle C of the Internal Revenue Code
(Code), and in §301.7705-2, which relates
to the requirements that a person must sat-
isfy to become and remain certified as a
CPEO.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless it dis-
plays a valid control number assigned by
the Office of Management and Budget.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mate-
rial in the administration of any internal
revenue law. Generally, tax returns and
return information are confidential, as re-
quired by 26 U.S.C. 6103.
Background
The Stephen Beck, Jr., Achieving a
Better Life Experience Act of 2014 (the
ABLE Act), enacted on December 19,
2014 (Pub. L. 113-295), added new sec-
tions 3511 and 7705 to the Code relating
to the certification requirements for, and
the federal employment tax consequenc-
es of, being a “certified professional em-
ployer organization” (CPEO). The ABLE
Act required the Internal Revenue Service
(IRS) to establish a voluntary certification
program for persons to become CPEOs.
Additionally, the ABLE Act made con-
forming amendments to sections 3302,
3303(a), 6053(c), 6652, and 7528 relating
to the obligations, requirements, and pen-
alties applicable to a CPEO.
Section 7705(a) defines a CPEO as a
person who applies to be treated as a CPEO
for purposes of section 3511 and has been
certified by the Secretary as meeting the

June 10, 2019 1298 Bulletin No. 2019–24
requirements of section 7705(b), which
include requirements related to tax status
and background, satisfying certain bond,
financial review, and quarterly reporting
requirements (as provided for in section
7705(c)), and notifying the IRS of any
change that materially affects the continu-
ing accuracy of information provided by
the CPEO.
Section 7705(d) gives the Secretary
the authority to suspend or revoke the
certification of any person for purposes of
section 3511 if the Secretary determines
that the person is not satisfying the agree-
ments or requirements of sections 7705(b)
or (c), or fails to satisfy applicable ac-
counting, reporting, payment, or deposit
requirements. Section 7705(f) provides
that the Secretary shall make available to
the public the name and address of each
person certified as a CPEO and each per-
son whose certification is suspended or
revoked.
Under sections 3511(a)(1) and (c)
(1), for purposes of federal employment
taxes and other obligations under the
federal employment tax rules, a CPEO
is generally treated as the employer of
any individual performing services for
a customer of the CPEO and covered by
a contract meeting the requirements of
section 7705(e)(2) (CPEO contract) be-
tween the CPEO and the customer (cov-
ered employee), but only with respect to
remuneration remitted to the covered em-
ployee by the CPEO. With respect to an
individual covered by a CPEO contract
who performs services for a customer at
a work site that meets the coverage re-
quirements of section 7705(e)(3) (a work
site employee), section 3511(a)(1) speci-
fies that no person other than the CPEO
is treated as the employer for federal em-
ployment tax purposes with respect to
remuneration remitted by the CPEO to
such individual.
Under section 3511(g), the Secretary is
directed to develop such reporting and re-
cordkeeping rules, regulations, and proce-
dures as the Secretary determines neces-
sary or appropriate to ensure compliance
with the applicable federal employment
tax provisions by CPEOs. In addition,
under section 3511(h), the Secretary is
directed to prescribe such regulations as
may be necessary or appropriate to carry
out the purposes of section 3511.
On May 6, 2016, the Department of the
Treasury (Treasury Department) and the
IRS published final and temporary regu-
lations under section 7705 (TD 9768) in
the Federal Register (81 FR 27315, as
corrected July 12, 2016 at 81 FR 45012)
that describe the application process and
certification requirements necessary for
a person to become and remain a CPEO.
On the same date, the Treasury Depart-
ment and the IRS published a notice of
proposed rulemaking (REG-127561-15)
in the Federal Register (81 FR 27360)
cross-referencing the temporary regula-
tions and proposing additional regulations
under section 3511 that describe the fed-
eral employment tax consequences for
CPEOs and their customers. On June 3,
2016, Revenue Procedure 2016-33 (2016-
25 I.R.B. 1034) was also issued, which
set forth the detailed procedures for ap-
plying to be certified as a CPEO. The IRS
did not receive any requests for a public
hearing on the regulations, and therefore
no public hearing was held. Several com-
ments responding to the proposed and
temporary regulations and the revenue
procedure were received. The Treasury
Department and the IRS determined that
it was important to respond promptly to
some of these comments and issued No-
tice 2016-49 (2016-34 I.R.B. 265) on Au-
gust 5, 2016 in response. Notice 2016-49
provided interim guidance and described
modifications to certain certification re-
quirements, which are reflected in these
final regulations. Finally, the Treasury De-
partment and the IRS also issued Revenue
Procedure 2017-14 (2017-3 I.R.B. 426)
on December 29, 2016, which addressed
the requirements for a CPEO to remain
certified and the procedures relating to
suspension and revocation of CPEO cer-
tification. The written comments received
are available for public inspection and
copying at http://www.regulations.gov or
upon request. After consideration of all
the comments, the proposed regulations
are adopted as amended by these final reg-
ulations.
Summary of Comments and
Explanation of Revisions
The IRS received seven written com-
ments in response to the proposed and
temporary regulations. Several of the
points made in the comments related to
items specifically addressed in the online
application for certification, Rev. Proc.
2016-33, Notice 2016-49, Rev. Proc.
2017-14, Form 8973 “Certified Profes-
sional Employer Organization/Customer
Reporting Agreement”, Schedule R (Form
941) “Allocation Schedule for Aggregate
Form 941 Filers”, and/or Form 14751
“Certified Professional Employer Organi-
zation Surety Bond”. Except to the extent
that certain of these comments also relate
to issues covered by the regulations, the
comments are beyond the scope of the
regulations and they are not otherwise
addressed herein. They are under further
consideration for future revisions of the
revenue procedures and possible modifi-
cations to the application program and ap-
plicable forms.
1. Annual Wage Base and Withholding
Threshold for Covered Employees
Sections 3511(a) and (c), provide that,
for federal employment tax purposes, a
CPEO is treated as the employer of cov-
ered employees that are work site em-
ployees (section 3511(a)(1)) and covered
employees that are not work site employ-
ees (non-work site covered employees)
(section 3511(c)(1)) with regard to remu-
neration it pays to these covered employ-
ees. Remuneration paid by an employer
to an employee within any calendar year
is not subject to the social security por-
tions of Federal Insurance Contributions
Act (FICA) taxes, the equivalent portions
of tier 1 Railroad Retirement Tax Act
(RRTA) taxes, or Federal Unemployment
Tax Act (FUTA) taxes to the extent it ex-
ceeds the applicable annual wage base
for these taxes (collectively referred to in
this Summary of Comments and Expla-
nation of Revisions as the “annual wage
base”). See sections 3121(a), 3231(e), and
3306(b) for FICA, RRTA, and FUTA tax-
es respectively. Under section 3102(f)(1),
employers are required to withhold Ad-
ditional Medicare Tax (AdMT) from an
employee’s wages only to the extent that
those wages exceed $200,000 in a calen-
dar year (referred to in this Summary of
Comments and Explanation of Revisions
as the “withholding threshold”). The an-
nual wage base applies on an employ-
er-by-employer basis, unless the prede-

Bulletin No. 2019–24 1299 June 10, 2019
cessor-successor employer rule discussed
below applies; thus, only remuneration
received during any calendar year by an
employee from the same employer is con-
sidered in applying the annual wage base
for purposes of the remuneration paid by
that employer. See §§31.3121(a)(1)-1(a)
(3) and 31.3306(b)(1)–1(a)(3) for FICA
and FUTA taxes, respectively. Similarly,
the AdMT withholding threshold applies
only with regard to remuneration received
during any calendar year by an employee
from the same employer. See §31.3102-
4(a).
By contrast, the annual wage base is not
applied separately to successor and pre-
decessor employers. See section 3121(a)
(1). In accordance with section 3511(b),
§31.3511-1(d) of the proposed regulations
provides that, for purposes of the annual
wage base: (1) a customer is considered a
predecessor employer and a CPEO is con-
sidered a successor employer upon enter-
ing into a CPEO contract with respect to
a work site employee who is performing
services for the customer, and (2) a CPEO
is considered a predecessor employer and
a customer is considered a successor em-
ployer upon termination of the CPEO con-
tract between the CPEO and the customer
with respect to a work site employee who
is performing services for the customer.
The proposed regulations also provide
that, except as provided with respect to
successor and predecessor employers in
§31.3511-1(d), remuneration received
by a covered employee from a CPEO for
performing services for a customer of the
CPEO within any calendar year is subject
to a separate annual wage base and with-
holding threshold that are each computed
with respect to such remuneration, with-
out regard to any remuneration received
by the covered employee during the calen-
dar year from any other employer (includ-
ing, if applicable, remuneration received
directly from the customer receiving ser-
vices from the employee). Thus, upon
entering into a CPEO contract with a cus-
tomer with respect to a covered employee,
the CPEO starts a new annual wage base
and withholding threshold with respect to
the covered employee (unless the CPEO
is treated as a successor employer under
§31.3511-1(d)).
The proposed regulations also provide
that if, during a calendar year, a covered
employee receives remuneration from
a CPEO for services performed by the
covered employee for more than one cus-
tomer of the CPEO, the annual wage base
and withholding threshold do not apply
to the aggregate remuneration received
by the covered employee from the CPEO
for services performed for all such cus-
tomers. Rather, the annual wage base and
withholding threshold apply separately to
the remuneration received by the covered
employee from the CPEO with respect to
services performed for each customer.
The Treasury Department and the IRS
received several comments on the annu-
al wage base and withholding threshold
rules for covered employees under the
proposed regulations. One commenter
recommended that current law, unaffect-
ed by section 3511 and the regulations
thereunder, should apply for purposes of
determining whether remuneration paid
by a CPEO to a non-work site covered
employee is subject to a separate annual
wage base. The commenter asserted that
the statutory distinction between the tax
treatment of work site employees and the
tax treatment of non-work site covered
employees was intended to address CPEO
and customer liability only in each case,
and was not meant to otherwise change
the federal employment tax treatment of
wages paid to work site employees versus
non-work site covered employees.
The Treasury Department and the
IRS disagree with that assertion. Section
31.3121(a)(1)-1(a)(3) provides that if an
employee receives remuneration from
more than one employer in a calendar year,
the annual wage base does not apply to the
aggregate remuneration received from all
of such employers, but instead applies to
the remuneration received during that cal-
endar year from each employer. Because
section 3511 treats a CPEO as an em-
ployer separate and apart from the CPEO
customer for whom the employees are
performing services, employees receiving
remuneration from both the CPEO and the
CPEO customer in a calendar year must
be treated as receiving remuneration from
two different employers and the annual
wage base therefore applies separately,
unless the successor and predecessor rules
under section 3511(b) apply.
The same commenter also suggested
that, if an employee performs services for
multiple customers of a CPEO, the annual
wage base should apply to the aggregate
remuneration received by the employee
from the CPEO for services performed
for all customers. The commenter argued
that the customer-by-customer treatment
of the annual wage base in the proposed
regulations was contrary to the statutory
language that treats the CPEO as the sole
employer of work site employees.
A customer-by-customer treatment of
the annual wage base is consistent with
section 3511. Specifically, the mainte-
nance of a separate annual wage base and
withholding threshold with respect to each
customer for which a covered employee
performs services during a calendar year
is consistent with the statutory language
of section 3511(a)(1) which provides that
the CPEO will “be treated as the employ-
er (and no other person will be treated as
the employer) of any work site employee
performing services for any customer of
such organization, but only with respect to
remuneration remitted by such organiza-
tion to such work site employee” (empha-
sis added). This language contemplates
that the CPEO will have a separate annual
wage base under 3121(a), 3231(e), and
3306(b) (subject to the application of the
predecessor-successor employer rules on
a customer-by-customer basis). Further-
more, under section 3511(a)(2) (applica-
ble to work site employees) and section
3511(c)(2) (applicable to non-work site
covered employees), the exemptions,
exclusions, definitions, and other rules,
which are based on the type of employer
in most cases will be based on the CPEO
customer (assuming the typical situation
in which the CPEO customer is the com-
mon law employer of the covered employ-
ees). In these instances, the attributes of
the CPEO customer (e.g. tax-exempt or
not) will be used to determine the taxes
on the remuneration paid by the CPEO
with respect to services performed for a
customer. In addition, section 3511(d)(1)
(A) provides that, for purposes of certain
specified credits, with respect to services
performed by a work site employee for a
CPEO customer, the credits apply to the
CPEO customer, not the CPEO. Thus,
section 3511 requires, for both work site
and non-work site covered employees, the
separate treatment of amounts paid by the
CPEO to one employee with respect to

June 10, 2019 1300 Bulletin No. 2019–24
services performed by the employee for
two or more different customers. A sep-
arate annual wage base and withholding
threshold with respect to each customer
for which a covered employee performs
services is needed for purposes of apply-
ing some of the exemptions, exclusions,
definitions, and other rules addressed
in section 3511(a)(2) and (c)(2) and the
treatment of some of the credits discussed
in section 3511(d). Therefore, if a single
employee receives remuneration from a
CPEO pursuant to multiple CPEO con-
tracts with different customers, the CPEO
must maintain a separate annual wage
base and withholding threshold for the
employee with respect to each customer.
For instance, wages paid to employees
for services performed in the employ of a
religious, charitable, educational, or other
type of organization described under sec-
tion 501(c)(3) are not subject to FUTA tax
under section 3306(c)(8). Consequently,
under sections 3511(a)(2) and (c)(2), wag-
es paid by a CPEO to covered employees
for services performed for a CPEO cus-
tomer that is an organization described in
section 501(c)(3) are not subject to FUTA
tax. Wages paid by a CPEO to a covered
employee for services performed for a
CPEO customer that is a section 501(c)(3)
organization cannot be used in determin-
ing FUTA tax liability for wages paid by
the CPEO for services performed by that
same employee for a CPEO customer that
is subject to FUTA tax. The FUTA annual
wage base must be applied separately to
the remuneration paid by the CPEO for
services performed for the non-section
501(c)(3) employer because under sec-
tions 3511(a)(2) and (c)(2) the exemption
from FUTA tax applies only to the CPEO
customer that is a 501(c)(3) organization.
For these reasons, the commenter’s
proposed changes are not adopted in these
final regulations.
Finally, one commenter suggested that,
because a CPEO that is treated as a succes-
sor employer will need to determine the
amount of wages paid and applied toward
the annual wage base by a customer that
is treated as the predecessor employer and
in some cases that information provided
by a customer may be incorrect, the IRS
should issue guidance stating that a CPEO
may rely on the wage report provided by
the customer. Whether, and to what extent,
a CPEO relies on a wage report from its
customer is a business decision for the
CPEO. The CPEO still has the obligation
to report accurate information. General
guidance on the procedures applicable to
preparing and reporting wage information
in predecessor and successor employer
situations is addressed in the regulations
under section 3121(a)(1) and in Revenue
Procedure 2004-53, 2004-34 I.R.B. 320,
(the revenue procedure specifically pro-
vides guidance on filing Forms 941, W-2,
W-4, and W-5 in predecessor and succes-
sor employer situations). CPEOs that are
treated as successor employers should re-
fer to those provisions for guidance. For
these reasons, the commenter’s suggestion
is not adopted in these final regulations.
2. Treatment of Credits
a. Non-work site covered employees
Under section 3302(h), if a CPEO,
or a customer of a CPEO, makes a con-
tribution to a state’s unemployment fund
with respect to wages paid to a work site
employee, the CPEO is eligible for the
credits available under section 3302 for
purposes of calculating FUTA tax with
respect to that contribution. Similarly, un-
der section 3303(a)(4), a CPEO is allowed
an additional credit under section 3302(b)
with respect to any reduced rate of con-
tributions permitted by a state law if the
Secretary of Labor finds that under that
law the CPEO is permitted to collect and
remit contributions during the taxable
year to the state unemployment fund with
respect to a work site employee. Because
section 3302(h) and section 3303(a)(4)
apply exclusively with respect to wages
paid to work site employees, the Treasury
Department and the IRS requested com-
ments on the application of the credits in
sections 3302(h) and 3303(a)(4) with re-
spect to wages paid to non-work site cov-
ered employees.
Under section 3511(d), for purposes
of various tax credits enumerated in sec-
tion 3511(d)(2) under which the amount
of the credit is determined by reference to
the amount of federal employment taxes
or the amount of wages subject to federal
employment taxes, the credit with respect
to a work site employee performing ser-
vices for a customer applies to the cus-
tomer, not to the CPEO. Consequently, in
determining the amount of the credit, the
customer, and not the CPEO, takes into
account the federal employment taxes and
wages paid by the CPEO with respect to
the work site employee and for which the
CPEO receives payment from the custom-
er. Because the application of the specified
tax credits to the customer under section
3511(d) applies exclusively with respect
to work site employees, the Treasury De-
partment and the IRS requested comments
on the treatment of tax credits with respect
to non-work site covered employees.
One commenter responded to these
requests for comments. Concerning the
application of the FUTA tax credits in sec-
tions 3302(h) and 3303(a)(4) to non-work
site covered employees, the commenter
stated that the application of the credits
should be governed by current law with-
out regard to the statutory provisions re-
lated to the CPEO program. But the com-
menter also suggested that “it is equitable,
consistent with the intent of the law, and
in the best interests of employment ad-
ministration efficiency (without regard to
the application of [section] 3511) to apply
the application of the pass-through of the
FUTA tax credit to a CPEO with respect
to wages paid to ... individuals covered
by a CPEO contract that are not Work Site
Employees.” In addition, this commenter
requested that the preamble to the final
regulations note that “as a general matter,
the CPEO that is liable for the FUTA taxes
on remuneration it pays would be eligible
for the tax credits under sections 3302(h)
and 3303(a)(4).”
The Treasury Department and the IRS
have determined that, because amend-
ments to regulations under section 3302(h)
and section 3303(a)(4) were not included
in the notice of proposed rulemaking,
these final regulations will not address
the general application of the credits in
sections 3302(h) and 3303(a)(4) in con-
nection with wages paid to non-work site
covered employees. The Treasury Depart-
ment and the IRS will continue to consider
this issue.
Concerning the treatment of tax credits
described in section 3511(d) with respect
to non-work site covered employees, the
commenter suggested that, just as with
the credits under sections 3302(h) and
3303(a)(4), the application of these cred-

Bulletin No. 2019–24 1301 June 10, 2019
its should be governed by current law.
The commenter also added that there is
“no basis or advantage” to treating work
site employees and non-work site covered
employees differently and therefore, as a
general matter, the customer, and not the
CPEO, should be eligible for the tax cred-
its listed in section 3511(d). The Treasury
Department and the IRS agree that current
law should govern the eligibility for the
tax credits listed in section 3511(d) with
respect to wages paid to non-work site
covered employees. For this reason, these
final regulations do not include provisions
regarding the application of the tax credits
in section 3511(d) to non-work site cov-
ered employees. The Treasury Depart-
ment and the IRS note that, in computing
these credits under current law, general-
ly the customer, and not the CPEO, will
take into account wages and federal em-
ployment taxes paid by the CPEO with
respect to the covered employee and for
which the CPEO receives payment from
the customer. This is the same treatment
accorded to tax credits listed in sec-
tion 3511(d) for work site employees.
b. Additional credits
As discussed in the previous section,
section 3511(d) governs the treatment of
various tax credits under which the amount
of the credit is determined by reference to
the amount of wages or federal employ-
ment taxes and section 3511(d)(2) speci-
fies these credits. Under section 3511(d)
(2)(H), the Secretary may specify other
credits subject to the treatment provided
for under section 3511(d). Consistent with
this section, the Treasury Department and
the IRS requested comments on whether
other credits should be specified in these
regulations or in other guidance.
One commenter requested that the re-
cently enacted employer credit for paid
family and medical leave under section
45S be added to the list of specified credits
in the regulations. Section 45S was add-
ed to the Code by the Tax Cuts and Jobs
Act (Pub. L. 115-97) enacted December
22, 2017. Notice 2018-71, 2018-41 I.R.B.
548, published October 9, 2018, provides
that, for wages paid by a CPEO to qualify-
ing employees for services performed for
an eligible employer, the eligible employ-
er, not the CPEO, may take into account
wages paid to qualifying employees for
services performed for the eligible em-
ployer in determining the credit under sec-
tion 45S. The notice also announces the
IRS’s intention to publish proposed reg-
ulations under section 45S. The Treasury
Department and the IRS have determined
that, although the credit under section 45S
does not apply to wages paid in taxable
years beginning after December 31, 2019
(unless extended), it is appropriate to add
this credit to the list of specified credits.
Therefore, these final regulations include
the credit under section 45S in the list
of specified credits under §31.3511-1(e)
(2) (which provides a list of credits that
apply to the CPEO customer, and not the
CPEO, with respect to services performed
by a work site employee for a CPEO cus-
tomer). In addition, §31.3511-1(e)(2)(ix)
of these final regulations provides that the
IRS may specify any other section as a
specified credit in further guidance.
No other comments on the proposed
regulations were received specifying ad-
ditional credits to be included in the fi-
nal regulations. However, subsequent to
the issuance of the proposed regulations,
the IRS did receive questions concerning
whether wages paid by a CPEO to em-
ployees for services performed for a cus-
tomer can be used by the customer in de-
termining the employee retention credit in
section 503 of the Disaster Tax Relief and
Airport and Airway Extension Act of 2017
(The Disaster Relief Act (Pub. L. 115-63))
(assuming that the customer otherwise
meets the requirements for the credit). In
response to these inquiries, the IRS pro-
vided, in Publication 976 “Disaster Re-
lief”, and on irs.gov, that for purposes of
the employee retention credit, qualified
wages paid by a CPEO to eligible employ-
ees of an eligible employer are considered
qualified wages incurred by the eligible
employer. The employee retention cred-
it for disaster relief found in The Disas-
ter Relief Act is substantially similar to
the credit provided for in section 1400R,
which provides an employee retention
credit for employers affected by Hurricane
Katrina. In addition, several other disaster
relief acts have provided employee reten-
tion credits modeled after the credit in
section 1400R. Since future disaster relief
acts may continue to include employee re-
tention credits similar to those provided in
section 1400R and in The Disaster Relief
Act, these final regulations add statutory
employee retention credits that are similar
to the employee retention credit in section
1400R and that provide disaster relief to
employers in designated disaster areas to
the list in §31.3511-1(e)(2).
3. Treatment of Self-Employed
Individuals
Consistent with section 3511(f), which
provides that a self-employed individual
is not a work site employee with respect
to remuneration paid by a CPEO, and
with section 3511(c), which provides that
a CPEO is not treated as an employer of
a self-employed individual, the proposed
regulations provide that section 3511 does
not apply to any self-employed individual.
The proposed regulations define a
“self-employed individual” as an individ-
ual with net earnings from self-employ-
ment (as defined in section 1402(a), with-
out regard to the exceptions thereunder)
derived from providing services covered
by a CPEO contract, whether such net
earnings are derived from providing ser-
vices as a non-employee to a customer of
a CPEO, from the individual’s own trade
or business as a sole proprietor customer
of the CPEO, or as a partner in a partner-
ship that is a customer of the CPEO, but
only with regard to such net earnings.
In addition, the preamble discussion
of the definition of “work site employee”
in the proposed regulations provides that
a self-employed individual, whether an
independent contractor to the customer,
a sole proprietor customer of the CPEO,
or a partner in a partnership customer of
the CPEO, is not considered to be a work
site employee under section 3511(f) with
regard to those earnings, but also provides
that in the limited case in which a self-em-
ployed individual who is an independent
contractor of a customer is also paid wages
by the CPEO under a CPEO contract with
the customer, the individual may neverthe-
less be a work site employee with respect
to those wages. This latter language was
intended to address the uncommon situa-
tion in which one individual is receiving
payments from the CPEO for services
provided to a customer in two separate
capacities, i.e., for services performed for
the CPEO customer as a common law em-
ployee of the customer and for completely
separate and distinct services provided to

June 10, 2019 1302 Bulletin No. 2019–24
the customer as an independent contrac-
tor. The CPEO is treated as the employer
of the individual for federal employment
tax purposes with respect to the payments
the CPEO makes to the individual for the
services the individual performs as a com-
mon law employee of the CPEO customer,
and these payments are reported as wages
by the CPEO. The payments for the ser-
vices provided as an independent contrac-
tor are not wages and must be reported as
payments to a self-employed individual.
Further, any payment made by a CPEO
to a partner in a partnership under a con-
tract between the partnership and the
CPEO must always be treated as a payment
to a self-employed individual and report-
ed as such. Under Revenue Ruling 69-184
(1969-1 C.B. 256) “[b]ona fide members
of a partnership are not employees of the
partnership” for federal employment tax
purposes. “Such a partner who devotes
... time and energies in the conduct of the
trade or business of the partnership, or in
providing services to the partnership as an
independent contractor, is, in either event,
a self-employed individual rather than an
individual who, under the usual common
law rules applicable in determining the
employer-employee relationship, has the
status of an employee.” Thus, “[r]emuner-
ation received by a partner from the part-
nership is not ‘wages’ with respect to ‘em-
ployment.’” Instead, under the statutory
framework of Subchapter K of the Code,
an allocation or distribution between a
partnership and a partner for the provision
of services generally can be treated in one
of three ways: (1) a distributive share un-
der section 704(b) (reported as such by the
partnership on Schedule K-1 (Form 1065),
“Partner’s Share of Income, Deductions,
Credits, etc.”); (2) a guaranteed payment
under section 707(c) (reported as such by
the partnership on Schedule K-1 (Form
1065)); or (3) as a transaction in which
a partner has rendered services to the
partnership in its capacity as other than a
partner under section 707(a) (reported by
the partnership like a payment to an inde-
pendent contractor on Form 1099-MISC,
“Miscellaneous Income”). It is irrelevant
to the characterization of the payment
whether a CPEO pays the partner or the
partnership pays the partner directly.
One commenter requested that the IRS
permit reporting of payments by CPEOs
to self-employed individuals using Form
W-2, “Wage and Tax Statement.” How-
ever, the reporting of amounts paid to
self-employed individuals is outside of the
scope of these regulations. For example,
under the section 6041 regulations, certain
payments to self-employed individuals are
reported using information returns such
as Form 1099-MISC, “Miscellaneous In-
come,” and not on Form W-2. Payments
(within the meaning of section 6041
and the regulations thereunder) made to
self-employed individuals should be re-
ported in accordance with the rules under
these and other applicable provisions.
4. Reporting to the IRS by CPEOs
a. Reporting commencement or
termination of CPEO contracts and
service agreements
Section 3511(g) sets forth the reporting
requirements and obligations that persons
must satisfy in order to maintain certifica-
tion as a CPEO. The proposed regulations
provide that a CPEO must report informa-
tion relating to the commencement or ter-
mination of (1) any CPEO contract with
a customer and (2) any service agreement
described in §31.3504-2(b)(2) with a cli-
ent and the name and EIN of such custom-
er or client. The proposed regulations also
provide that, with any Form 940, “Em-
ployer’s Annual Federal Unemployment
(FUTA) Tax Return”, or Form 941, “Em-
ployer’s Quarterly Federal Tax Return”,
that a CPEO files, the CPEO must attach
the applicable Schedule R (or any succes-
sor form) including such information as
the Commissioner may require about each
of its customers under a CPEO contract
and any clients under a service agreement
described in §31.3504-2(b)(2). The only
comment the IRS received related to these
reporting requirements stated that they
should be eliminated as they relate to cli-
ents under a service agreement described
in §31.3504-2(b)(2) because they are un-
necessarily burdensome, ineffective, and
not supported by statute. The commenter
also stated that reporting commencement
or termination of CPEO contracts or ser-
vice agreements should be required only
quarterly.
Section 3511(g) provides that the “Sec-
retary shall develop such reporting and
recordkeeping rules, regulations, and pro-
cedures as the Secretary determines neces-
sary or appropriate to ensure compliance
with this title by certified professional em-
ployer organizations.” Because a CPEO
contract potentially affects the liability of
CPEO customers under such contracts,
the proposed regulations provide that
CPEOs must report service agreements
described in §31.3504-2(b)(2) with cli-
ents so that the IRS has a record that ex-
plicitly provides which CPEO clients are
not under a CPEO contract, in the event
that disputes concerning liability arise. In
addition, the instructions to Form 8973,
which is the form used to report a CPEO
contract with a customer and a service
agreement described in §31.3504-2(b)(2)
with a client, require that customers and
clients sign Form 8973 and that a copy of
this form be provided to the customers and
clients to ensure the customers and clients
understand the nature of their relationship
with the CPEO. This requirement is in line
with the statutory requirement in section
7705(e)(2)(F) that a CPEO contract in-
clude a provision that the CPEO agrees
to be treated as a CPEO for purposes of
3511 with respect to the CPEO customer’s
employees. Thus, requiring that CPEOs
report service agreements described in
§31.3504-2(b)(2) with clients not only fa-
cilitates the IRS’s recordkeeping, but also
provides a means for the IRS to verify that
the CPEO has properly represented to cli-
ents and customers the nature of their con-
tractual arrangement (i.e., whether they
are covered by a CPEO contract or not).
Similarly, the proposed regulations pro-
vide that CPEOs must include information
about clients under a service agreement
described in §31.3504-2(b)(2) on Sched-
ule R so that the IRS has a record of which
amounts reported on Forms 941 and 940
are not subject to the liability provisions
in sections 3511(a) and (c), in the event
disputes concerning liability arise, and so
that the IRS can better reconcile the total
amounts of wages and taxes reported on
Forms 940 and 941 with the amounts of
wages and taxes reported on Schedule R.
Because the proposed regulations’ re-
porting requirements relating to clients
under a service agreement described in
§31.3504-2(b)(2) assist the IRS in ensur-
ing CPEO compliance with rules gov-
erning federal employment tax liability,

Bulletin No. 2019–24 1303 June 10, 2019
consistent with section 3511(g), these
final regulations retain the reporting re-
quirements as they were in the proposed
regulations.
The proposed regulations do not ad-
dress the time and manner of reporting the
commencement or termination of CPEO
contracts and service agreements. Rath-
er, this information is provided in Rev.
Proc. 2017-14 and in the instructions to
the Form 8973. Requirements relating
to the time and manner of reporting the
commencement or termination of CPEO
contracts and service agreements are cri-
teria for tax administration that may need
to be modified as processes or technology
change or more knowledge about admin-
istrative challenges is acquired. Therefore,
these requirements are more appropriately
addressed in tax forms and publications or
revenue procedures.
b. Form 943 – attaching Schedule R and
reporting on magnetic media
The proposed regulations provide
that, with every Form 940 and Form 941
it files, a CPEO must attach all required
schedules, including, but not limited to,
the applicable Schedule R (or any succes-
sor form). The proposed regulations also
provide that a CPEO must file Forms 940
and 941, and all required accompanying
schedules, on magnetic media unless the
CPEO is provided a waiver by the Com-
missioner. The proposed regulations de-
fine magnetic media as electronic filing, as
well as other media specifically permitted
under the applicable regulations, revenue
procedures, publications, forms, instruc-
tions, or other guidance.
For certain agricultural employer cli-
ents and customers, CPEOs must report
federal employment taxes using Form
943, “Employer’s Annual Federal Tax Re-
turn for Agricultural Employees.” At the
time the proposed regulations were pro-
mulgated, a Schedule R was not available
for Form 943, and the form could not be
filed electronically. However, Schedule R
(Form 943) is now available, and electron-
ic filing has since been made available for
Form 943. For this reason, these final reg-
ulations provide that, just like Forms 940
and 941, Form 943 must be filed with all
required schedules, including Schedule R,
attached and Form 943 must be filed on
magnetic media unless the CPEO is pro-
vided a waiver by the Commissioner.
c. Waivers of the requirement to report on
magnetic media
The proposed regulations provide that
the requirement to file Forms 940 and
941 on magnetic media can be waived in
cases of undue economic hardship. Since
the promulgation of the proposed regula-
tions, some CPEOs experienced difficul-
ties in electronic filing due to temporary
software and technological issues, and
one commenter asked the IRS to clarify
that undue economic hardship can include
economic hardships resulting from soft-
ware and technological issues. The IRS
provided these clarifications on irs.gov,
and these final regulations also clarify that
undue economic hardship includes eco-
nomic hardships resulting from software
and technological issues.
5. Applicable Definitions
a. Certified public accountant (CPA)
In connection with the financial state-
ment and quarterly assertion and attesta-
tion requirements in the temporary regula-
tions, the CPEO applicant or CPEO must
submit an opinion or an examination level
attestation, as applicable, from a CPA.
The temporary regulations define a CPA
as an individual who is independent of
the CPEO (as prescribed by the American
Institute of Certified Public Accountants’
(AICPA) Professional Standards, Code of
Professional Conduct), and among other
things, files with the IRS a written decla-
ration that he or she is authorized to repre-
sent the CPEO applicant or CPEO before
the IRS. The Treasury Department and the
IRS requested comments regarding wheth-
er the CPA independence guidelines or
requirements of other governmental agen-
cies or departments of industry self-regu-
latory bodies (such as the Department of
Labor’s guidelines on the independence of
CPAs retained by employee benefit plans
under 29 CFR 2509.75-9, the Securities
and Exchange Commission’s (SEC) inde-
pendence guidelines for auditors reporting
on financial statements included in SEC
filings, and the Government Account-
ability Office’s auditor independence re-
quirements under Government Auditing
Standards that cover federal entities and
organizations receiving federal funds),
as adapted for a CPA of a CPEO, would
better ensure the impartiality of CPAs
providing opinions on a CPEO’s financial
statements. One commenter responded
that the AICPA’s independence guidelines
are the most appropriate for the CPEO
program, and that most CPAs are more fa-
miliar with those guidelines than the other
guidelines referenced in the preamble to
the temporary regulations. The Treasury
Department and the IRS agree that the
AICPA’s independence guidelines are the
most appropriate for the CPEO program.
Therefore, these final regulations retain
the reference to the AICPA professional
standards.
Several commenters also noted that the
requirement that a CPA be authorized to
represent the CPEO applicant or CPEO
before the IRS could conflict with the
CPA independence requirements of the
AICPA. Consistent with Notice 2016-49,
and to ensure that the CPA may be “inde-
pendent” within the meaning of the AIC-
PA guidelines, these final regulations omit
the requirement that the CPA file with the
IRS a written declaration of authorization
to represent the CPEO applicant or CPEO
before the IRS.
b. Responsible individual
Section 7705(b)(1) provides that the
Secretary may establish requirements
for certification that apply not only to the
CPEO applicant or CPEO, but also to “any
owner, officer, and other persons as may
be specified in regulations.” Accordingly,
the temporary regulations include a num-
ber of requirements that apply to certain
owners, officers, and other individuals (re-
ferred to in the regulations as “responsible
individuals”). The temporary regulations
generally define a responsible individual as
an individual in any of the following cate-
gories with respect to the CPEO applicant
or CPEO: (1) certain owners; (2) directors
and officers; (3) individuals with ultimate
responsibility for implementing the deci-
sions of the organization’s governing body;
(4) individuals with ultimate responsibili-
ty for the organization’s management and
operations; (5) individuals with ultimate
responsibility for managing the organiza-

June 10, 2019 1304 Bulletin No. 2019–24
tion’s finances; (6) managing members or
general partners; (7) the sole proprietor of
a sole proprietorship; and (8) any other in-
dividuals with primary responsibility for
federal employment tax compliance of the
organization. With respect to determining
whether an individual is a responsible in-
dividual by reason of ownership, the tem-
porary regulations specify that a responsi-
ble individual includes any individual who
owns 33 percent or more of the total com-
bined voting power of all classes of stock
of a corporation entitled to vote or the total
value of shares of all classes of stock of a
corporation, or any individual who owns
33 percent or more of the profits interest or
capital interest in a partnership.
The Treasury Department and the IRS
requested comments regarding the ad-
ministrability of applying the definition
of responsible individual with respect to
ownership of profits interests in a part-
nership, the value of which may fluctuate
over time. One commenter indicated that,
although there would be situations where
a partner’s capital interest or profits inter-
est will fluctuate, similar fluctuations will
likely occur with respect to changes in
corporate ownership. The commenter did
not suggest revising the definition of re-
sponsible individual with respect to own-
ership percentages, but the commenter
did suggest that the IRS require only an-
nual reporting of responsible individuals
unless there is significant turnover in the
CPEO’s responsible individuals. The tem-
porary regulations require that a CPEO
applicant or CPEO notify the IRS, in the
time and manner prescribed by the Com-
missioner in further guidance (as defined
in §301.7705-1(b)(8)), of any change that
materially affects the continuing accuracy
of any agreement or information that was
previously made or provided to the IRS.
A change in responsible individuals is
an example of a material change, and the
time and manner for reporting this infor-
mation to the IRS is currently set forth in
Rev. Proc. 2016-33 and Rev. Proc. 2017-
14. Accordingly, the final regulations do
not adopt this suggestion, but the Treasury
Department and the IRS will consider this
comment in any future updates to these
two revenue procedures. Additionally, the
final regulations adopt the definition of re-
sponsible individuals from the temporary
regulations, with additional language re-
garding disregarded entities as described
in paragraph 7(a) of this Summary of
Comments and Explanation of Revisions.
The temporary regulations also require
the CPEO, and each of its responsible indi-
viduals, to take such actions as are neces-
sary to authorize the IRS to investigate the
accuracy of statements and submissions
made by the CPEO, including waiving
confidentiality and privilege when neces-
sary and submitting fingerprints to con-
duct comprehensive background checks,
including, but not limited to, checks on
tax compliance and criminal background.
With respect to suitability requirements
applicable to responsible individuals,
the Treasury Department and the IRS re-
quested comments regarding the possible
expansion of the category of individuals
who must authorize the IRS to conduct
comprehensive background checks and
submit fingerprint cards to include certain
directors, officers, and owners of a CPEO
applicant’s or CPEO’s related entities.
The Treasury Department and the IRS
received one comment in response. The
commenter requested that the category
not be expanded because such an expan-
sion would impose additional paperwork
burdens on professional employer organi-
zations (PEOs), responsible individuals,
and the IRS without any meaningful im-
provements in the program. The Treasury
Department and the IRS considered the
likely impact on PEOs, responsible in-
dividuals, and the IRS of expanding this
category and the likely value of this ad-
ditional information to the IRS. As of the
date of these final regulations, the IRS has
certified 120 CPEOs, and the information
provided regarding each CPEO applicant,
its related entities, precursor entities, and
responsible individuals, coupled with the
ongoing certification requirements appli-
cable to CPEOs and responsible individu-
als, has been sufficient for the IRS to make
determinations regarding certification.
Therefore, these final regulations do not
expand the category of individuals who
must authorize the IRS to conduct com-
prehensive background checks and submit
fingerprint cards beyond what was includ-
ed in the temporary regulations.
c. Provider of employment-related
services
The temporary regulations define a
provider of employment-related services
as a person that provides employment tax
administration, payroll services, or other
employment-related compliance services
to clients. One commenter suggested that
the phrase “or other employment-relat-
ed compliance services” in the definition
of provider of employment-related ser-
vices could be interpreted to include en-
tities that only provide (1) labor through
a staffing service, or (2) employment
background screening services. The com-
menter suggested revising the definition
to refer to “other similar employment-re-
lated compliance services.” The Treasury
Department and the IRS agree with the
commenter that the phrase “or other em-
ployment-related compliance services”
could be construed to apply more broadly
than was intended. As noted in the pream-
ble to the temporary regulations, the term
is intended to capture entities that provide
payroll or other federal employment tax
administration and compliance services.
Accordingly, these regulations replace
the term “provider of employment-re-
lated services” with “provider of payroll
services” and revise the definition of this
term to clarify that the entity must provide
payroll, federal employment tax adminis-
tration, or other similar federal employ-
ment tax-related compliance services.
d. Work site
The proposed regulations define “work
site” as a physical location at which an in-
dividual regularly performs services for a
customer of a CPEO (except that a work
site may not be the individual’s residence
or a telework site unless the customer re-
quires the individual to work at that site)
and if there is no such location, the work
site is the location from which the cus-
tomer assigns work to the individual. The
proposed regulations also provide that, in
applying the term “work site,” contiguous
locations are treated as a single physical
location and thus a single work site, and
noncontiguous locations that are not rea-
sonably proximate are treated as separate
physical locations and thus separate work
sites. A CPEO may treat noncontiguous
locations that are reasonably proximate
as a single physical location and thus a
single work site, but any two work sites
that are separated by 35 or more miles or
that operate in a different industry or in-
dustries will not be treated as reasonably

Bulletin No. 2019–24 1305 June 10, 2019
proximate. Because the physical location
at which an individual regularly performs
services can, at times, be difficult to ascer-
tain, the Treasury Department and the IRS
requested comments on the definition of
work site and any additional clarifications
that would facilitate a determination of an
individual’s work site.
One commenter responded to this
request for comments. The comment-
er suggested that the definition focus on
the physical location where an individual
“primarily” performs services and that,
when appropriate, various client locations
should be considered one work site lo-
cation rather than providing for separate
work sites for each location at which the
CPEO customer’s workers perform ser-
vices. The commenter also suggested that
work sites in different industries and work
sites that are maintained as a separate
operation for bona fide business reasons
(based on facts and circumstances) are
factors that should be taken into account
for purposes of determining whether two
or more work sites should be treated as
one work site.
The definition of work site in the pro-
posed regulations, as a location where an
individual regularly performs services,
was intended to take into account CPEO
customers whose workers provide services
in multiple noncontiguous, non-proximate
locations and/or locations that operate in a
different industry or industries. Under the
proposed regulations, the determination of
whether a covered employee is a work site
employee is made separately with regard
to each work site at which the covered em-
ployee regularly provides services; under
this standard, a covered employee may be
determined to be a work site employee at
more than one work site during a calendar
quarter. Furthermore, the proposed regula-
tions provide that a covered employee will
be considered a work site employee for
the entirety of a calendar quarter if the em-
ployee qualifies as a work site employee at
any time during that quarter. Therefore, a
covered employee that regularly performs
services for a customer at multiple sites
need only qualify as a work site employ-
ee at one of the sites in a calendar quarter
to be considered a work site employee for
that entire quarter.
The use of the phrase “primarily per-
forms services” instead of the phrase
“regularly performs services” would not
provide the customer this flexibility, but
would instead require customers with
covered employees at multiple sites either
to identify the site at which covered em-
ployees “primarily” perform services or
to make a determination (with appropriate
substantiation) that it maintains separate
work sites for a bona fide business reason
such that these sites can be treated as one
work site. To avoid that result, these final
regulations do not adopt this suggested
change.
However, the Treasury Department and
the IRS recognize that certain employers
have employees regularly working at the
location of clients of varying industries,
all doing work in the employer’s indus-
try rather than the industry of the client.
For example, an information technology
business might have employees regularly
performing services related to information
technology at the locations of clients in
a variety of unrelated industries (factory,
restaurant, museum, etc.). To address this
situation, these final regulations provide
that the determination of the industry of
a work site is based on the nature of the
CPEO customer’s work at that work site,
irrespective of work performed by other
entities at the same site.
In addition, these final regulations pro-
vide that when treating noncontiguous lo-
cations as a single physical location and
thus a single work site, one noncontigu-
ous location cannot be included in more
than one work site. The final regulations
contain an example illustrating this rule.
Finally, for clarification, non-substantive
changes were made to the language in the
proposed regulations.
e. Work site employee
The proposed regulations, consis-
tent with section 7705(a), provide that a
work site employee means, with respect
to a customer, a covered employee who
performs services for the customer at a
work site where at least 85 percent of the
individuals performing services for the
customer are covered employees of the
customer. The proposed regulations also
provide that a covered employee will be
considered a work site employee for the
entirety of a calendar quarter if he or she
qualifies as a work site employee at any
time during that quarter. Consequently, a
covered employee can be a work site em-
ployee for one or more calendar quarters
of the year and a non-work site covered
employee for other calendar quarters
during the same year. One commenter
suggested a safe harbor rule providing
that a covered employee who qualifies as
a work site employee at any time during a
calendar quarter is considered a work site
employee for the entirety of that quarter
and for the remainder of the calendar year.
Since the CPEO program began in 2016,
the IRS has not been made aware of any
issues concerning the quarterly determi-
nation of work site employees. For this
reason, and because a quarter-by-quarter
work site employee determination coin-
cides with a CPEO’s quarterly federal em-
ployment tax reporting, these final regula-
tions do not adopt this suggestion.
The same commenter also requested
that the regulations clarify the rules re-
garding excluded employees under sec-
tion 414(q)(5). In accordance with section
7705(e)(3), the proposed regulations pro-
vide that, in determining whether the 85
percent threshold is met, individuals who
are excluded employees within the mean-
ing of section 414(q)(5) (such as newly
hired or part-time employees) are not tak-
en into account as either covered employ-
ees or individuals performing services,
although those individuals may otherwise
be covered employees and work site em-
ployees under the proposed regulations.
The commenter was concerned that this
rule could be interpreted to mean that all
employees of a startup company would be
excluded employees for purposes of deter-
mining whether the 85 percent threshold
is met. The commenter suggested that the
regulations incorporate the flush language
from section 414(q)(5), which provides
that an employer may substitute a shorter
period of service, smaller number of hours
or months, or lower age for the period of
service, number of hours or months, or age
specified in section 414(q)(5), though the
commenter also suggested that the regula-
tions provide that any such modifications
must be on a consistent and uniform ba-
sis with respect to individuals performing
services at the work site.
Because the application of section
414(q)(5) is outside the scope of these
regulations, these final regulations do
not provide for any further explanation
of the application of section 414(q)(5).
Therefore, employers should look to the

June 10, 2019 1306 Bulletin No. 2019–24
language of section 414(q)(5) in deter-
mining which employees should be ex-
cluded under section 7705(e)(3). Howev-
er, the Treasury Department and the IRS
agree that the flush language from section
414(q)(5) can be applied in the context of
determining whether the 85 percent work
site coverage requirement threshold is
met under section 7705(e)(3), such that
an employer may substitute a shorter peri-
od of service, smaller number of hours or
months, or lower age for the period of ser-
vice, number of hours or months, or age
specified in section 414(q)(5).
Finally, this commenter suggested that
the regulations provide that reasonable
good faith determinations concerning the
application of the 85 percent coverage
test in determining work site employees
will be respected unless there is a pattern
of abuse of this rule by the CPEO or its
customer. The Treasury Department and
the IRS agree that, because applying the
85 percent coverage rules for determining
work site employees may be challenging
in certain situations, a good faith standard
is appropriate. For this reason, these final
regulations provide that a CPEO’s deter-
mination that a covered employee is a
work site employee will be respected if
the CPEO has made a good faith determi-
nation that the covered employee meets
the requirements of section 7705(e), the
regulations, and further guidance.
6. Application Process
The temporary regulations provide that
a CPEO applicant will be notified by the
IRS whether its application for certifica-
tion has been approved or denied, as well
as the effective date of certification or the
reason(s) for the denial, each as applica-
ble. One commenter noted that the tempo-
rary regulations do not address the reap-
plication process for CPEO applicants that
are denied certification. The commenter
requested that the final regulations clari-
fy that a CPEO applicant may not reapply
for certification for at least one year fol-
lowing a denial of certification, unless the
CPEO applicant has resolved the issues
identified by the IRS as the reason for the
certification denial. The commenter also
suggested that the final regulations clarify
that a CPEO applicant that withdraws its
application before the IRS makes a deci-
sion regarding certification may reapply
for certification at any time. Rev. Proc.
2016-33 sets forth the detailed procedures
for applying to be certified, including the
ability to withdraw an application, but it
does not address reapplication following
a denial of certification. The Treasury De-
partment and the IRS agree that the final
regulations should address the ability to
reapply after a denial of certification or
withdrawal. Accordingly, the final regula-
tions provide that a CPEO applicant may
reapply for certification in such time and
manner, and must include such informa-
tion, as the Commissioner may prescribe
in further guidance. Because procedur-
al requirements relating to the time and
manner of applying for certification may
need to be modified as processes or tech-
nology change or more knowledge about
administrative challenges is acquired, the
Treasury Department and the IRS intend
to address these requirements in a future
revision of Rev. Proc. 2016-33.
7. Suitability
a. Disregarded entities and sole
proprietorships
The temporary regulations provide that
a CPEO may not be a business entity that
is disregarded as an entity separate from
its owner for federal tax purposes under
§§301.7701-2 and 301.7701-3 (without re-
gard to the special rule in §301.7701-2(c)
(2)(iv) that provides that such entities are
corporations for federal employment tax
purposes). Several commenters expressed
concerns regarding the prohibition against
disregarded entities becoming CPEOs.
The commenters indicated that the tempo-
rary regulations may unnecessarily limit
the ability of persons to apply for certifi-
cation. They explained that PEOs may be
structured as disregarded entities for legit-
imate business reasons, such as to reduce
the overall compliance burden associated
with filing state income tax returns. As a
result of those comments, the Treasury
Department and the IRS announced in
Notice 2016-49 the expectation that the fi-
nal regulations would not prohibit a busi-
ness entity that is disregarded as separate
from its owner under §§301.7701-2 and
301.7701-3 from becoming a CPEO, pro-
vided the disregarded entity is (1) wholly
owned directly (including through one or
more disregarded entities organized in the
United States) by a United States person
(as defined in section 7701(a)(30)), and (2)
created or organized in the United States
or under the law of the United States or
of any state (collectively, a domestic dis-
regarded entity). Consistent with Notice
2016-49, these final regulations allow
domestic disregarded entities to apply for
certification as CPEOs. The Treasury De-
partment and the IRS requested comments
on the appropriateness of allowing a dis-
regarded entity that is domestically orga-
nized but not wholly owned directly by a
United States person to apply for certifi-
cation as a CPEO, but no comments were
received on this issue. Accordingly, these
final regulations require the disregarded
entity to be both domestically organized
and wholly owned directly by a United
States person.
As a result of the change permitting
certain disregarded entities to apply for
certification as a CPEO, these final reg-
ulations also revise the definition of “re-
sponsible individual” to include: (1) in the
case of a disregarded entity owned by a
corporation or partnership, the responsible
individuals of that corporation or partner-
ship, and (2) in the case of a disregarded
entity owned by an individual, the indi-
vidual owner. These final regulations also
clarify that CPEO applicants and CPEOs
that, but for their status as disregarded en-
tities, would separately be members of a
controlled group, are treated as members
of a controlled group for purposes of sec-
tions 3511 and 7705 and the regulations
thereunder.
One commenter noted that the require-
ment that a CPEO must be a business enti-
ty would preclude an individual operating
a business through a sole proprietorship
from becoming a CPEO. As stated in No-
tice 2016-49, to ensure parity between
sole proprietorships and disregarded enti-
ties that are wholly owned by individuals,
these final regulations also expressly al-
low sole proprietorships to apply for certi-
fication as CPEOs.
b. Fingerprint cards and background
checks
The temporary regulations provide that
each responsible individual must submit

Bulletin No. 2019–24 1307 June 10, 2019
fingerprints in the time and manner and
under the circumstances prescribed by
the Commissioner in further guidance.
Currently, the specific requirements re-
garding the time and manner of finger-
print submissions, including whether a
responsible individual needs to submit
multiple cards are included in Rev. Proc.
2016-33, the CPEO application for certi-
fication, and in the Responsible Individual
Personal Attestation (RIPA) instructions.
One commenter requested that the tempo-
rary regulations be revised to clarify that a
responsible individual may submit a sin-
gle fingerprint card that will be used for
background check purposes for all CPEO
applicants in a controlled group for which
that person is a responsible individual.
The final regulations do not adopt this
suggestion because the Treasury Depart-
ment and the IRS have determined that the
regulations should continue to provide the
IRS with the flexibility to include specif-
ic instructions regarding fingerprint cards
in other guidance, such as revenue proce-
dures and the application for certification,
as the program develops and as changes
in technology permit new procedures.
The Treasury Department and the IRS
will consider this comment in any future
updates to Rev. Proc. 2016-33. However,
the Treasury Department and the IRS con-
sider it appropriate to include a specific
reference to Federal Bureau of Investiga-
tions (FBI) background checks in order to
acknowledge the scope of the background
check. Accordingly, these final regulations
expressly state that a CPEO or CPEO ap-
plicant, and each of its responsible in-
dividuals must take such actions as are
necessary to authorize the IRS to conduct
comprehensive background checks, in-
cluding, but not limited to, FBI or other
similar criminal background checks.
One commenter requested that respon-
sible individuals who are attorneys, CPAs,
enrolled agents, and officers of publicly
traded companies be allowed to provide
professional status information (e.g., cre-
dential number, state of jurisdiction, and
date of expiration) in lieu of submitting
fingerprints. The commenter indicated that
this would be consistent with the IRS’s
e-file program. Under sections 3511(a)(1)
and (c)(1), with respect to remuneration
remitted to an individual by a CPEO, for
purposes of federal employment taxes and
other obligations under the federal em-
ployment tax rules, the CPEO is treated as
the employer of any individual perform-
ing services for a customer of the CPEO
and covered by a CPEO contract. This
treatment and the tax liability associated
with it makes the CPEO program unlike
other contractual arrangements, includ-
ing a relationship with an e-file provider.
The Treasury Department and the IRS
continue to view the criminal background
of a CPEO applicant and its responsible
individuals as an important factor in de-
termining whether the CPEO applicant’s
or the CPEO’s certification presents a ma-
terial risk to the IRS’s collection of federal
employment taxes. Accordingly, the final
regulations do not adopt the suggestion to
rely on professional status data in lieu of
an FBI or other similar background check.
c. Waiving confidentiality and privilege
The temporary regulations require that
CPEOs and responsible individuals take
such actions as are necessary to autho-
rize the IRS to investigate the accuracy
of statements and submissions, including
waiving confidentiality and privilege when
necessary. One commenter noted that this
requirement could be read to imply that
responsible individuals and CPEOs are
required to provide a blanket waiver of
confidentiality and privilege on all issues.
The temporary regulations were not in-
tended to require responsible individuals
and CPEOs to provide a blanket waiver.
However, the Treasury Department and
the IRS recognize that the language in the
temporary regulations could be read more
broadly than intended. Accordingly, and
consistent with similar provisions in Rev.
Proc. 2016-33, the final regulations clarify
that the waiver will be required only in in-
stances in which the IRS is otherwise un-
able to obtain or confirm the information
it needs to evaluate a CPEO applicant’s
or CPEO’s qualification for certification
(e.g., from relevant third parties, such as
former employers, because of the exis-
tence of confidentiality, non-disclosure, or
similar agreements).
d. Financial institution
The temporary regulations require
CPEO applicants and CPEOs to use only
financial institutions described in section
265(b)(5) to hold cash and cash equiva-
lents. One commenter stated that CPEOs
may violate this requirement by keeping
small amounts of cash and cash equiv-
alents on their premises. The comment-
er noted that this is a common practice
and that certain cash equivalents are not
ordinarily deposited in financial institu-
tions. To address this concern, the final
regulations require CPEO applicants and
CPEOs to hold substantially all of their
cash and cash equivalents in financial in-
stitutions described in section 265(b)(5).
This change is intended to allow CPEO
applicants and CPEOs to hold petty cash
and cash equivalents (such as undeposited
checks) on their premises.
8. Working Capital Requirements
The temporary regulations provide that
CPEO applicants and CPEOs must cause
to be prepared and provided to the IRS, by
the same date they must provide a copy of
their annual audited financial statements,
an opinion of an independent CPA that the
financial statements reflect positive work-
ing capital for the fiscal year, unless an
exception applies. In addition, the tempo-
rary regulations require this opinion to set
forth in detail, a calculation of the CPEO
applicant’s or CPEO’s working capital and
state that the financial statements are pre-
sented fairly in accordance with generally
accepted accounting principles (GAAP).
Two commenters suggested that the fi-
nal regulations eliminate the requirement
that a CPEO applicant and CPEO have
positive working capital. The comment-
ers maintained that because the specific
requirement of positive working capital
is not included in the language of section
7705, the IRS should not impose this re-
quirement on CPEOs. The commenters
suggested that the IRS, instead, make its
decision regarding whether to certify (or
suspend) a CPEO applicant or CPEO, as
applicable, based on the entity’s financial
situation, experience, and other factors in
their entirety. Additionally, the comment-
ers cautioned against the imposition of a
rigid and difficult-to-monitor requirement.
The Treasury Department and the IRS
consider a CPEO with annual audited fi-
nancial statements that reflect positive
working capital (as determined in accor-

June 10, 2019 1308 Bulletin No. 2019–24
dance with GAAP) to present a materially
lower risk to the IRS’s collection of feder-
al employment taxes than a CPEO with-
out positive working capital. Accordingly,
pursuant to section 7705(b)(1) and consis-
tent with several state PEO certification
and registration laws, the final regulations
have retained the positive working capi-
tal requirement. The Treasury Depart-
ment and the IRS recognize that working
capital may fluctuate over the course of a
CPEO’s fiscal year due to normal business
operations. To allow for some fluctuation
in working capital, the final regulations re-
tain the exception to the positive working
capital requirement set forth in the tempo-
rary regulations. This exception allows the
CPEO applicant or CPEO to have nega-
tive working capital for no more than two
consecutive quarters, provided the CPEO
applicant or CPEO explains the reason it
has negative working capital and demon-
strates that the failure to have positive
working capital does not present a mate-
rial risk to the IRS’s collection of federal
employment taxes.
Several commenters indicated that
CPAs may be prevented from including a
statement on working capital in the CPA
opinion due to certain AICPA limitations
on what can be included in a CPA opin-
ion. As stated in Notice 2016-49, to ensure
consistency with the AICPA guidelines
applicable to CPA opinion letters, these
final regulations have been revised to re-
quire a CPEO applicant or CPEO to sub-
mit a copy of its annual audited financial
statements and an opinion of a CPA that
the annual audited financial statements are
presented fairly in accordance with GAAP,
provided that the audited annual financial
statements covered by the opinion include
a Note to the Financial Statements that
states that the financial statements reflect
positive working capital or that the CPEO
applicant or CPEO satisfies the positive
working capital exception included in
these final regulations. The Treasury De-
partment and the IRS anticipate making
similar changes in future revisions of Rev.
Proc. 2016-33 and Rev. Proc. 2017-14.
The temporary regulations further re-
quire a responsible individual of a CPEO
applicant or CPEO to provide, by the last
day of the second month after the end of
each calendar quarter and beginning with
the most recently completed quarter as of
the date of the application for certification,
a statement verifying under penalties of
perjury that the CPEO applicant or CPEO
has positive working capital with respect
to the most recently completed fiscal quar-
ter. The temporary regulations further pro-
vide that although CPEO applicants and
CPEOs that are members of a controlled
group, within the meaning of sections
414(b) and (c), and the regulations there-
under, will be treated as a single CPEO
applicant or CPEO for purposes of the
annual audited financial statements, quar-
terly assertion and attestation, and bond
requirements, the annual and quarterly
requirements imposed with respect to pos-
itive working capital apply to each CPEO
applicant or CPEO on a separate basis.
With respect to both the annual and
quarterly requirements regarding positive
working capital, two commenters sug-
gested that these requirements should not
apply on an individual CPEO basis. The
commenters noted that many PEOs have
multiple related PEO entities that main-
tain combined or consolidated financial
statements, and these entities should be
permitted to demonstrate compliance with
any positive working capital requirement
on an aggregate basis. The commenters
suggested that the IRS could impose a re-
quirement that each related entity guaran-
tee the liabilities of its related CPEOs to
the IRS.
Under the CPEO program, the decision
regarding whether to certify, suspend, or
revoke each CPEO applicant or CPEO (as
applicable) is made on an entity-by-entity
basis. Although the suitability of related
and precursor entities is relevant when
determining whether to certify a CPEO
applicant, the IRS makes a separate cer-
tification determination with respect to
each CPEO applicant. Accordingly, the
final regulations adopt without change the
provisions in the temporary regulations
that the annual and quarterly requirements
imposed with respect to positive working
capital apply to each CPEO applicant or
CPEO on a separate basis.
9. Examination Level Attestation
In accordance with section 7705(c)
(3)(B), §301.7705-2T(f)(1)(i) and (f)(3)
(i) of the temporary regulations provide
that CPEOs and CPEO applicants must
provide, on a quarterly basis, an asser-
tion, signed by a responsible individual
under penalties of perjury, stating that the
CPEO has withheld and made deposits of
all federal employment taxes (other than
taxes imposed by chapter 23 of the Code)
as required by subtitle C for such calendar
quarter, and an examination level attesta-
tion from a CPA stating that this assertion
is fairly stated in all material respects. One
commenter suggested that the final regu-
lations provide the IRS with authority to
provide an agreed-upon procedural alter-
native to the examination level attestation
requirement because that option would
provide uniformity, greater certainty, and
potential cost savings. The Treasury De-
partment and the IRS note that section
7705(c)(3)(B) specifically requires an ex-
amination level attestation on a quarterly
basis and does not provide authority for
other options. For this reason, these final
regulations do not adopt this suggestion.
10. Bond Requirements
Section 7705(c)(2) sets forth the bond
requirements that a person must satisfy in
order to become and remain a CPEO. The
temporary regulations provide, among
other things, that a CPEO must meet the
bond requirements without posting collat-
eral. Two commenters suggested that the
final regulations remove the requirement
that a CPEO meet the bond requirements
without posting collateral. The comment-
ers suggested that the “no collateral” re-
quirement could limit access to CPEO
certification for “small and medium sized
PEOs,” but the commenters did not sug-
gest what size entity would qualify as
a small or medium sized PEO. As an al-
ternative to removing the requirement in
its entirety, one commenter suggested the
IRS include the fact that a CPEO has ob-
tained a bond with collateral as a factor in
evaluating the application for certification.
Alternatively, one commenter suggested
that a surety be permitted to request col-
lateral for small CPEO applicants (those
with a required surety bond penal sum of
under $1,000,000). Finally, one comment-
er suggested that the IRS retain the discre-
tion to not automatically revoke a CPEO’s
certification merely because the surety
has sought collateralization of its risk af-
ter the CPEO is certified. The commenter

Bulletin No. 2019–24 1309 June 10, 2019
suggested that the request for collateral be
treated as a material change that must be
reported and explained to the IRS.
One commenter remarked that “[a]s
a general matter, a surety prefers to pro-
vide bonds on an uncollateralized basis.”
The commenter further noted that a sure-
ty may require collateral if a bond appli-
cant is qualified, but the obligation being
secured is “particularly risky.” The com-
menter noted that the potential duration of
the CPEO bond (which is the time during
which the IRS may make a claim and col-
lect tax under sections 6501 and 6502)
may make the CPEO bond particularly
risky, and indicated that this increased risk
could conceivably be addressed by a col-
lateral requirement.
As indicated in the preamble to the
temporary regulations, one of the main
benefits of the bond requirement in sec-
tion 7705(c) is that a CPEO must submit
to the bonding surety’s financial under-
writing process to obtain the bond. This
underwriting process provides the IRS
with a certain level of assurance concern-
ing the financial condition of the CPEO.
As of the date of these final regulations,
the IRS has certified 120 CPEOs. Each
CPEO (or controlled group, where appli-
cable) has provided the IRS with a bond
without posting collateral, including sev-
eral with bond amounts below the $1 mil-
lion threshold. The Treasury Department
and the IRS view the surety’s financial
underwriting process as a fundamental
component of the bond requirement in
section 7705(c), and have determined
that the purpose of the bond requirement
is substantially undermined if the CPEO
obtains the bond by posting collateral in
the amount of the bond. However, the
Treasury Department and the IRS ac-
knowledge that in certain limited circum-
stances, an exception to the prohibition
on posting collateral may be appropriate.
Accordingly, these final regulations state
that the Commissioner may provide ex-
ceptions to this rule in further guidance.
The Treasury Department and the IRS
will continue to consider this issue in con-
nection with anticipated revisions to Rev.
Proc. 2017-14. In addition, the Treasury
Department and the IRS recognize that in
certain situations, a surety may want to
retain the right to request collateral of a
CPEO and that this right by itself does
not violate the regulatory requirement
that a CPEO must meet the bond require-
ments without posting collateral. For this
reason, the final regulations provide that
a surety’s retention of the right to request
collateral does not violate the rule against
posting collateral, as long as no collateral
is actually required by the surety or post-
ed by the CPEO. However, if a surety lat-
er exercises this right and seeks collateral
for a CPEO’s bond, this action qualifies
as a material change that must be timely
reported to the IRS and will result in the
revocation of the CPEO’s certification
if the CPEO cannot obtain a bond from
another surety that does not require the
CPEO to post collateral, subject to any
exceptions the Commissioner may pro-
vide, as described above.
The Treasury Department and the
IRS also received comments requesting
that the regulations clarify whether a
CPEO must provide a separate bond for
each year or adjust the penal sum of the
bond based on its liability for the appli-
cable bond period. One commenter also
requested that the Treasury Department
and the IRS define the terms strengthen-
ing bond and superseding bond. Consis-
tent with guidance issued in Rev. Proc.
2017-14, these regulations clarify that
the bond, any riders thereto, and any
strengthening bonds are one continuous
obligation from the effective date of the
bond through the date the bond is super-
seded or cancelled. These regulations
also provide definitions for riders, and
for strengthening, superseding, and new
bonds, and incorporate other guidance
from Rev. Proc. 2017-14.
11. Accrual Method of Accounting
Consistent with section 7705(b)(4)
of the Code, the temporary regulations
provide that a CPEO must compute its
taxable income using an accrual method
of accounting or, if applicable, another
method that the Commissioner provides
for in further guidance. One commenter
requested that the IRS issue guidance ap-
proving the cash method of accounting as
long as the entity provides audited finan-
cial statements using the accrual method.
The final regulations do not adopt this
suggestion. Like the temporary regula-
tions, however, the final regulations allow
the Commissioner to provide for other ac-
counting methods in further guidance, and
the Treasury Department and the IRS will
continue to consider the issue of whether
to allow CPEOs to use the cash method of
accounting.
12. Tip Reporting
The ABLE Act added section 6053(c)
(8) to the Code regarding the application
of the reporting requirements relating to
certain large food or beverage establish-
ments with respect to CPEOs and their
customers. Section 6053(c)(8) provides
that the CPEO customer with respect to
whom a work site employee performs
services is the employer for purposes of
reporting under section 6053(c), and the
CPEO is required to furnish to the custom-
er and the IRS any information the IRS
prescribes as necessary to complete this
reporting. One commenter requested that
these regulations clarify that the informa-
tion required to be provided by section
6053(c)(8) is limited to information gen-
erated by the CPEO as a function of the
services it performs as a CPEO and that is
not already available to the customer. The
Treasury Department and the IRS have
determined that, because amendments to
the regulations under section 6053 were
not included in the notice of proposed
rulemaking, these final regulations will
not address information that must be pro-
vided under section 6053(c)(8). However,
the Treasury Department and the IRS will
continue to consider this issue.
13. Maintain Employee Records
Under section 7705(e)(2)(E), a ser-
vice contract must provide that a CPEO
will maintain employee records, and the
proposed regulations include the same
requirement with respect to a CPEO con-
tract. One commenter asked for further
guidance regarding this requirement to
maintain employee records. Although
the statutory and regulatory provisions
regarding service agreements and CPEO
contracts require that the contract or
agreement include certain provisions, in-
cluding that the CPEO maintain employee
records, the CPEO and its customers and
client may choose to include additional
provisions in their contracts. To allow for

June 10, 2019 1310 Bulletin No. 2019–24
some flexibility and business judgment
in negotiating CPEO contracts, the final
regulations do not adopt the suggestion to
expand upon the statutory requirements
concerning maintaining employee re-
cords, and retain without modification the
requirements for CPEO contracts set forth
in the proposed regulations.
14. Marketing as CPEOs
One commenter asked the Treasury
Department and the IRS to clarify that
only CPEOs may market themselves as
CPEOs. Section 7705(f) and §301.7705-
2(a)(3) and (n)(4)(ii) provide that the IRS
will make available the name and address
of every person certified as a CPEO and
every CPEO whose certification is sus-
pended or revoked. These regulations
impose rules and requirements on CPEO
applicants and CPEOs, but they do not ap-
ply to those entities that do not apply for
or obtain certification. Whether an entity
other than a CPEO incorrectly represents
its classification in its business materi-
als is not a matter for IRS enforcement.
Accordingly, the final regulations do not
adopt this suggestion, but the Treasury
Department and the IRS encourage cus-
tomers and clients of entities claiming to
be CPEOs to confirm that those entities
are listed and remain listed as CPEOs on
www.irs.gov.
15. Confidentiality of Information
One commenter requested guidance in-
dicating that information submitted to the
IRS will be kept confidential. This com-
ment is beyond the scope of these regula-
tions, so no changes were made in these
final regulations. Generally, returns and
return information, including CPEO ap-
plications, are confidential and may only
be disclosed as authorized by the Internal
Revenue Code. See section 6103. Section
7705(f) provides for the public disclosure
of the name and address of CPEOs and
whether a CPEO’s certification was sus-
pended or revoked.
16. No Inference Language
One commenter requested that the
regulations reiterate language in section
206(h) of the ABLE Act that nothing in
section 206 of the ABLE Act (which in-
cludes sections 3511 and 7705) shall be
construed to create any inference with
respect to the determination of who is an
employee or employer (1) for federal tax
purposes (other than the purposes set forth
in the amendments made by section 206),
or (2) for purposes of any other provision
of law. This suggested addition to the fi-
nal regulations is not necessary. Section
7705(g) sufficiently addresses the impli-
cations of the no inference provisions with
respect to the Code. It provides that ex-
cept to the extent necessary for purposes
of section 3511, nothing in section 7705
shall be construed to affect the determina-
tion of who is an employee or employer
for purposes of Title 26. Comments re-
lated to other laws are beyond the scope
of these regulations, and they are not ad-
dressed herein.
17. Other Changes
In addition to the changes discussed
above, these final regulations include
non-substantive or clarifying changes to
the text of the proposed and temporary
regulations.
Special Analyses
This regulation is not subject to review
under section 6(b) of Executive Order
12866 pursuant to the Memorandum of
Agreement (April 11, 2018) between the
Treasury Department and the Office of
Management and Budget regarding re-
view of tax regulations. It is hereby cer-
tified that the collection of information
contained in these regulations will not
have a significant economic impact on a
substantial number of small entities. The
collection of information is in §§31.3511-
1(g) and 301.7705-2. The certification is
based on the following:
The Treasury Department and the
IRS anticipate that the organizations that
choose to apply for this voluntary certi-
fication program are likely to be entities
that already have many of the systems
and processes in place that are needed
to comply with these regulations. For
example, it is expected that CPEOs will
generally maintain annual audited finan-
cial statements during the normal course
of their business, rather than solely as
a result of §301.7705-2(e). Moreover,
the requirements in §301.7705-2(e) and
(f) for demonstrating positive working
capital on an annual basis and for the
quarterly assertions regarding federal
employment tax compliance build upon
requirements already reflected in many
state PEO certification and registration
laws, thereby minimizing the econom-
ic impact on those CPEO applicants
already subject to the similar state law
requirements.
In addition, many of the requirements
in §§31.3511-1(g) and 301.7705-2 that
impose a collection of information on
CPEOs constitute one-time notifications
to the IRS, customers, or clients or notifi-
cations that relate to events in the life cy-
cle of a CPEO that are less predictable and
may be infrequent – such as transfers of
existing CPEO contracts, making material
changes to agreements previously provid-
ed to the IRS, suspension or revocation of
the CPEO’s certification, or the reclassifi-
cation of employees at a particular work
site as non-work site covered employees
– and thus will have a minimal economic
impact on the CPEO. Moreover, the Trea-
sury Department and the IRS expect that
CPEOs participating in this voluntary pro-
gram will be able to build upon pre-exist-
ing systems and processes through which
they already communicate with their cli-
ents.
For these reasons, pursuant to the Reg-
ulatory Flexibility Act (5 U.S.C. chapter
6) it is hereby certified that this rule will
not have a significant economic impact
on a substantial number of small entities.
Pursuant to section 7805(f) of the Code,
the NPRM preceding these regulations
was submitted to the Chief Counsel for
Advocacy of the Small Business Admin-
istration for comment on their impact on
small business.
Drafting Information
The principal authors of these regu-
lations are Melissa Duce, Andrew Holu-
beck, Nina Roca, and Neil Shepherd of the
Office of Associate Chief Counsel (Em-
ployee Benefits, Exempt Organizations,
and Employment Taxes). However, other
personnel from the Treasury Department
and the IRS participated in the develop-
ment of these regulations.

Bulletin No. 2019–24 1311 June 10, 2019
Statement of Availability of IRS
Documents
IRS Revenue Procedures, Revenue
Rulings notices, and other guidance cit-
ed in this document are published in the
Internal Revenue Bulletin (or Cumula-
tive Bulletin) and are available from the
Superintendent of Documents, U.S. Gov-
ernment Printing Office, Washington, DC
20402, or by visiting the IRS website at
http://www.irs.gov.
* * * * *
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 31, 301,
and 602 are amended as follows:
PART 31—EMPLOYMENT TAXES
AND COLLECTION OF INCOME TAX
AT THE SOURCE
Paragraph 1. The authority citation for
part 31 is amended by adding an entry for
§31.3511-1 in numerical order to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 31.3511-1 is also issued under
26 U.S.C. 3511(h).
* * * * *
Par. 2. Section 31.3511-1 is added to
subpart F to read as follows:
§31.3511-1 Certified professional em-
ployer organization.
(a) Treatment as employer--(1) In gen-
eral. For purposes of the federal employ-
ment taxes and other obligations imposed
under chapters 21 through 25 of subtitle C
of the Internal Revenue Code (federal em-
ployment taxes), a certified professional
employer organization (CPEO) (as de-
fined in §301.7705-1(b)(1) of this chapter)
is treated as the employer of any covered
employee (as defined in §301.7705-1(b)
(5) of this chapter), but only with respect
to remuneration remitted by the CPEO to
the covered employee.
(2) Work site employee. In the case of
a covered employee who is a work site
employee (as defined in §301.7705-1(b)
(17) of this chapter) of the customer, no
person other than the CPEO is treated as
the employer of the work site employee
with respect to the customer for purposes
of federal employment taxes imposed on
remuneration remitted by the CPEO to the
work site employee.
(3) Non-work site covered employee. In
the case of a covered employee who is not
a work site employee, a person other than
the CPEO is also treated as an employer of
the employee for purposes of federal em-
ployment taxes imposed on remuneration
remitted by the CPEO to the employee if
such person is determined to be an em-
ployer of the employee without regard to
the application of this paragraph (a) and
section 3511.
(b) Exemptions, exclusions, definitions,
and other rules--(1) In general. Solely
for purposes of federal employment tax-
es imposed on remuneration remitted by
a CPEO to a covered employee, the ap-
plication of exemptions, exclusions, defi-
nitions, and other rules that are based on
the type of employer is presumed to be
based on the type of employer of the cus-
tomer of the CPEO for whom the covered
employee performs services. If a covered
employee performs services for more than
one customer of the CPEO during the cal-
endar year, the presumption described in
the previous sentence applies separately to
remuneration remitted by the CPEO to the
covered employee for services performed
with respect to each such customer.
(2) Presumption rebutted. The pre-
sumption set forth in paragraph (b)(1) of
this section may be rebutted if either the
Commissioner determines, or the CPEO
demonstrates by clear and convincing ev-
idence, that the relationship between the
customer and the covered employee is
not the legal relationship of employer and
employee as set forth in §31.3401(c)-1. If
such a determination or demonstration is
made, then, with respect to remuneration
remitted by a CPEO to a covered employ-
ee, the application of exemptions, exclu-
sions, definitions, and other rules that
are based on the type of employer will
be based on the type of employer of the
person determined by the Commissioner
or demonstrated by the CPEO to be the
common law employer of the covered em-
ployee in accordance with §31.3401(c)-1.
(3) No inference from presumption.
The presumption set forth in paragraph
(b)(1) of this section does not create any
inference with respect to the determina-
tion of who is an employer or employee or
whether the legal relationship of employer
and employee exists for federal tax pur-
poses or for purposes of any other provi-
sion of law (other than for paragraph (b)
(1) of this section).
(c) Annual wage limitation, contribu-
tion base, and withholding threshold--(1)
CPEO has separate taxable wage base,
contribution base, and withholding
threshold. For purposes of applying the
annual wage limitations under sections
3121(a)(1) and 3306(b)(1) (relating to
the Federal Insurance Contributions Act
and the Federal Unemployment Tax Act,
respectively), the contribution base under
section 3231(e)(2) (relating to the Rail-
road Retirement Tax Act), and the with-
holding threshold under section 3102(f)
(1) (relating to the Additional Medicare
Tax), remuneration received by a covered
employee from a CPEO for performing
services for a customer of the CPEO
within any calendar year is subject to a
separate annual wage limitation, contri-
bution base, and withholding threshold
that are each computed without regard
to any remuneration received by the cov-
ered employee during the calendar year
from any other employer (including, if
applicable, remuneration received direct-
ly from the customer receiving services
from the employee). Notwithstanding the
preceding sentence, a CPEO is treated as
a successor or predecessor employer for
purposes of the annual wage limitations
and contribution base upon entering into
or terminating a CPEO contract (as de-
fined in §301.7705-1(b)(3) of this chap-
ter) with respect to a work site employ-
ee, as described in paragraph (d) of this
section.
(2) Performance of services for more
than one customer. If, during a calendar
year, a covered employee receives remu-
neration from a CPEO for services per-
formed by the covered employee for more
than one customer of the CPEO, the an-
nual wage limitation, contribution base,
and withholding threshold do not apply
to the aggregate remuneration received by
the covered employee from the CPEO for
services performed for all such customers.
Rather, the annual wage limitation, con-
tribution base, and withholding threshold
apply separately to the remuneration re-
ceived by the covered employee from the
CPEO with respect to services performed
for each customer.

June 10, 2019 1312 Bulletin No. 2019–24
(d) Successor employer status--(1) In
general. For purposes of sections 3121(a)
(1), 3231(e)(2)(C), and 3306(b)(1), a
CPEO and its customer are treated as--
(i) A successor and predecessor em-
ployer, respectively, upon entering into a
CPEO contract with respect to a work site
employee who is performing services for
the customer; and
(ii) A predecessor and successor em-
ployer, respectively, upon termination of
the CPEO contract between the CPEO and
the customer with respect to the work site
employee who is performing services for
the customer.
(2) Non-work site covered employee. A
CPEO entering into a CPEO contract with
a customer during a calendar quarter with
respect to a covered employee who is not
a work site employee at any time during
that calendar quarter will not be treated as
a successor employer (and the customer
will not be treated as a predecessor em-
ployer) for purposes of paragraph (d)(1)
(i) of this section regardless of whether,
during the term of the CPEO contract,
the covered employee subsequently be-
comes a work site employee. Similarly, a
CPEO terminating a CPEO contract with
a customer during a calendar quarter with
respect to a covered employee who is not
a work site employee at any time during
that calendar quarter will not be treated as
a predecessor employer (and the custom-
er will not be treated as a successor em-
ployer) for purposes of paragraph (d)(1)
(ii) of this section regardless of whether,
during the term of the CPEO contract, the
covered employee had previously been a
work site employee.
(e) Treatment of credits--(1) In gener-
al. For purposes of the credits specified in
paragraph (e)(2) of this section--
(i) The credit with respect to a work
site employee performing services for a
customer applies to the customer, not to
the CPEO; and
(ii) In computing the credit, the cus-
tomer, and not the CPEO, is to take into
account wages and federal employment
taxes paid by the CPEO with respect to
the work site employee and for which the
CPEO receives payment from the custom-
er.
(2) Credits specified. A credit is speci-
fied in this paragraph (e) if such credit is
allowed under--
(i) Section 41 (credit for increasing re-
search activity);
(ii) Section 45A (Indian employment
credit);
(iii) Section 45B (credit for portion of
employer social security taxes paid with
respect to employee cash tips);
(iv) Section 45C (clinical testing ex-
penses for certain drugs for rare diseases
or conditions);
(v) Section 45R (employee health in-
surance expenses for small employers);
(vi) Section 45S (employer credit for
paid family and medical leave);
(vii) Section 51 (work opportunity
credit);
(viii) Section 1396 (empowerment
zone employment credit);
(ix) Statutory employee retention cred-
its that are similar to the employee re-
tention credit in section 1400R and that
provide disaster relief to employers in
designated disaster areas; and
(x) Any other section specified by the
Commissioner in further guidance (as de-
fined in §301.7705-1(b)(8) of this chap-
ter).
(f) Section not applicable to related
customers, self-employed individuals, and
other circumstances. This section does not
apply--
(1) In the case of any customer that--
(i) Has a relationship to a CPEO de-
scribed in section 267(b) (including, by
cross-reference, section 267(f)) or section
707(b), except that “10 percent” shall be
substituted for “50 percent” wherever it
appears in such sections; or
(ii) Has commenced a CPEO contract
with the CPEO but such commencement
has not been reported to the IRS as de-
scribed in paragraph (g)(3)(i) of this sec-
tion; or
(2) To remuneration paid by a CPEO to
any self-employed individual (as defined
in §301.7705-1(b)(14) of this chapter) in
that capacity;
(3) To any CPEO contract that a CPEO
enters into while its certification has been
suspended by the IRS; or
(4) To any CPEO whose certification
has been revoked or voluntarily terminat-
ed for periods after the effective date of
revocation or voluntary termination.
(g) Reporting and recordkeeping--(1)
Reporting and recordkeeping for employ-
ers. A CPEO that is treated as an employer
of a covered employee pursuant to para-
graph (a) of this section must meet all re-
porting and recordkeeping requirements
described in subtitle F of the Code that are
applicable to employers in a manner con-
sistent with such treatment.
(2) Reporting on magnetic media--(i)
In general. A CPEO must file on magnetic
media any Form 940, “Employer’s Annu-
al Federal Unemployment (FUTA) Tax
Return,” Form 941, “Employer’s QUAR-
TERLY Federal Tax Return,” and Form
943, “Employer’s Annual Federal Tax
Return for Agricultural Employees,” and
all required accompanying schedules, as
well as such other returns, schedules, and
other required forms and documents as is
required by further guidance.
(ii) Waiver. The Commissioner may
waive the requirements of this paragraph
(g)(2) in case of undue economic hardship
(including economic hardship resulting
from temporary software and technolog-
ical issues). The principal factor in de-
termining hardship will be the amount, if
any, by which the cost of filing the return,
schedule, or other required form or doc-
ument on magnetic media in accordance
with this paragraph (g)(2) exceeds the cost
of filing on or by other media. A request
for a waiver must be made in accordance
with applicable guidance. The waiver
must specify the type of filing (that is, the
name of the form or schedule) and the pe-
riod to which it applies. In addition, the
waiver will be subject to such terms and
conditions regarding the method of filing
as may be prescribed by the Commission-
er in further guidance.
(iii) Magnetic media. The term mag-
netic media means any magnetic media
permitted under applicable guidance.
These generally include electronic filing,
as well as other media specifically permit-
ted under the applicable guidance.
(3) Reporting to the IRS by CPEOs.
A CPEO must report the following to the
IRS in such time and manner, and includ-
ing such information, as the Commission-
er may prescribe in further guidance:
(i) The commencement or termina-
tion of any CPEO contract (as defined in
§301.7705-1(b)(3) of this chapter) with a
customer, or any service agreement as de-
scribed in §31.3504-2(b)(2) with a client,
and the name and employer identification
number (EIN) of such customer or client.

Bulletin No. 2019–24 1313 June 10, 2019
(ii) With any Form 940, Form 941, and
Form 943 that it files, all required sched-
ules, including, but not limited to, the
applicable Schedule R (or any successor
form), containing such information as the
Commissioner may require about each of
its customers under a CPEO contract (as
defined in §301.7705-1(b)(3) of this chap-
ter) and each of its clients under a service
agreement (as described in §31.3504-2(b)
(2)). A CPEO must file Form 940, Form
941, and Form 943, along with all required
schedules, on magnetic media, unless the
CPEO is granted a waiver by the Commis-
sioner in accordance with paragraph (g)
(2)(ii) of this section.
(iii) A periodic verification that it
continues to meet the requirements of
§301.7705-2 of this chapter, as described
in §301.7705-2(j).
(iv) Any change that materially affects
the continuing accuracy of any agreement
or information that was previously made
or provided by the CPEO to the IRS, as
described in §301.7705-2(k) of this chap-
ter.
(v) A copy of its audited financial state-
ments and an opinion of a certified public
accountant regarding such financial state-
ments, as described in §301.7705-2(e)(1)
of this chapter.
(vi) The quarterly statements, asser-
tions, and attestations regarding those as-
sertions described in §301.7705-2(f)(1) of
this chapter.
(vii) Any information the IRS deter-
mines is necessary to promote compliance
with respect to the credits described in
paragraph (e)(2) of this section and pro-
vided in section 3302.
(viii) Any other information the Com-
missioner may prescribe in further guid-
ance.
(4) Reporting to customers by CPEOs.
A CPEO must meet the following re-
porting requirements with respect to its
customers in such time and manner, and
including such information, as the Com-
missioner may prescribe in further guid-
ance:
(i) Provide each of its customers with
the information necessary for the custom-
er to claim the credits described in para-
graph (e)(2) of this section.
(ii) Notify any customer if its CPEO
contract has been transferred to another
person (or if another person will report,
withhold, or pay, under such other per-
son’s EIN, any applicable federal employ-
ment taxes with respect to the wages of
any individuals covered by its CPEO con-
tract) and provide the customer with the
name and EIN of such other person.
(iii) If the CPEO’s certification is
suspended or revoked as described in
§301.7705-2(n) of this chapter, notify
each of its current customers of such sus-
pension or revocation.
(iv) If any covered employees are not,
or cease to be, work site employees be-
cause they perform services at a location at
which the 85 percent threshold described
in §301.7705-1(b)(17) of this chapter is
not met, notify the customer that it may
also be liable for federal employment tax-
es imposed on remuneration remitted by
the CPEO to such covered employees, as
described in paragraph (a)(3) of this sec-
tion.
(5) Information and agreements in any
contract or agreement between a CPEO
and a customer or client. Any CPEO con-
tract (as defined in §301.7705-1(b)(3) of
this chapter) between a CPEO and a cus-
tomer or service agreement described in
§31.3504-2(b)(2) between a CPEO and a
client must--
(i) In the case of a contract that is a
CPEO contract--
(A) Contain the name and EIN of the
CPEO reporting, withholding, and paying
any applicable federal employment tax-
es with respect to any remuneration paid
to individuals covered by the contract or
agreement;
(B) Require the CPEO to provide to the
customer the notices and information re-
quired by paragraph (g)(4) of this section;
(C) Describe the information that the
CPEO will provide that is necessary for
the customer to claim the credits specified
in paragraph (e)(2) of this section; and
(D) Require the CPEO to notify the
customer that the customer may also be
liable for federal employment taxes on re-
muneration remitted by the CPEO to cov-
ered employees if the work sites at which
they perform services do not (or ever
cease to) meet the 85 percent threshold
described in §301.7705-1(b)(17) of this
chapter; and
(ii) In the case of a service agreement
described in §31.3504-2(b)(2) that is not
a CPEO contract (and thus the individuals
covered by that contract are not covered
employees), or if this section does not ap-
ply to the contract under paragraph (f) of
this section, notify, or be accompanied by
a notification to, the client that the service
agreement or contract is not covered by
section 3511 and does not alter the client’s
liability for federal employment taxes on
remuneration remitted by the CPEO to the
employees covered by the service agree-
ment or contract.
(h) Penalties and additions to tax--(1)
In general. A CPEO that is treated as an
employer of a covered employee under
this section and that is required to meet the
reporting requirements of an employer is
subject to the same penalties and additions
to tax as an employer with respect to such
reporting requirements, including, but not
limited to, penalties and additions to tax
under sections 6651, 6656, 6672, 6721,
6722, and 6723.
(2) Failures to timely make reports
required under section 3511. CPEOs are
subject to penalty under section 6652(n)
with respect to reports required to be made
to the IRS in paragraphs (g)(1) and (3) of
this section and reports required to be
made to customers in paragraph (g)(4) of
this section.
(3) Failures to attach Schedule R. A
CPEO is subject to penalty under section
6652(n) for failure to attach Schedule R
(or successor form) to Forms 941, 940,
or 943 as required by paragraph (g)(3)
(ii) of this section. A CPEO is also subject
to penalty under section 6723 for failure
to include the EIN of each customer on
Schedule R of Form 941, 940, or 943. See
§301.6723-1 of this chapter for the appli-
cation of the section 6723 penalty in the
case of multiple failures on a single doc-
ument.
(4) Failures to file on magnetic me-
dia. With respect to the requirement in
paragraph (g)(3)(ii) of this section that a
CPEO must file Forms 940, 941, and 943,
along with all required schedules, on
magnetic media, a failure to file on mag-
netic media does not constitute a failure
to file for purposes of section 6651(a)(1)
nor does it constitute a failure to make
a report for purposes of section 6652(n).
Rather, the requirement to file Forms
940, 941, and 943 on magnetic media is a
condition of maintaining certification as
a CPEO.

June 10, 2019 1314 Bulletin No. 2019–24
(i) Applicability date. The rules in this
section apply on and after May 3, 2019.
PART 301—PROCEDURE AND AD-
MINISTRATION
Par. 3. The authority citation for part
301 is amended by removing entries for
§§301.7705-1T and 301.7705-2T and
adding entries for §§ 301.7705-1 and
301.7705-2 in numerical order to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 301.7705-1 also issued under
26 U.S.C. 7705(h).
Section 301.7705-2 also issued under
26 U.S.C. 7705(h).
* * * * *
Par. 4. Sections 301.7705-1 and
301.7705-2 are added to read as follows:
§301.7705-1 Certified professional em-
ployer organization.
(a) In general. The definitions set forth
in this section apply for purposes of this
section, §§31.3511-1 and 301.7705-2, and
sections 3302(h), 3303(a)(4), 6053(c)(8),
and 7528(b)(4).
(b) Definitions--(1) Certified profes-
sional employer organization (CPEO)
means a person that applies to be certified
as a CPEO in accordance with §301.7705-
2(a) and has been certified by the Internal
Revenue Service (IRS) as meeting the re-
quirements of §301.7705-2. For purposes
of §301.7705-2(g)(2), the term CPEO also
includes the person before it applied for
certification and while its application is
pending with the IRS. For all other pur-
poses, a person is a CPEO as of the ef-
fective date of its certification (as speci-
fied in the certification notice described in
§301.7705-2(a)(2)) and until its certifica-
tion is revoked by the IRS (as described in
§301.7705-2(n)) or, if earlier and applica-
ble, until the CPEO voluntarily terminates
its certification in the time and manner
prescribed by the Commissioner in further
guidance.
(2) CPEO applicant means a person
that has applied to be certified as a CPEO
in accordance with §301.7705-2(a) and
whose application is pending with the
IRS.
(3) CPEO contract means a service
contract between a CPEO and a customer
that is in writing and provides that, with
respect to an individual providing services
to the customer, the CPEO will--
(i) Assume responsibility for payment
of wages to the individual, without regard
to the receipt or adequacy of payment
from the customer for the services;
(ii) Assume responsibility for report-
ing, withholding, and paying any applica-
ble federal employment taxes with respect
to the individual’s wages, without regard
to the receipt or adequacy of payment
from the customer for the services;
(iii) Assume responsibility for any em-
ployee benefits that the service contract
may require the CPEO to provide to the
individual, without regard to the receipt or
adequacy of payment from the customer
for such benefits;
(iv) Assume responsibility for recruit-
ing, hiring, and firing the individual in
addition to the customer’s responsibility
for recruiting, hiring, and firing the indi-
vidual;
(v) Maintain employee records relating
to the individual; and
(vi) Agree to be treated as a CPEO for
purposes of section 3511 with respect to
the individual.
(4) Certified public accountant (CPA)
means a certified public accountant who--
(i) With respect to a CPEO applicant
or CPEO, is independent of the CPEO
applicant or CPEO (as prescribed by the
American Institute of Certified Public Ac-
countants’ Professional Standards, Code
of Professional Conduct, and its interpre-
tations and rulings);
(ii) Is not currently under suspension or
disbarment from practice before the IRS;
(iii) Is duly qualified to practice as a
CPA in any state;
(iv) Files with the IRS a written decla-
ration that he or she is currently qualified
to practice as a CPA in any state; and
(v) Meets such other requirements as
the Commissioner may prescribe in fur-
ther guidance.
(5) Covered employee means, with re-
spect to a customer, any individual (other
than a self-employed individual, as de-
fined in paragraph (b)(14) of this section)
who performs services for the customer
and who is covered by a CPEO contract
between the CPEO and the customer.
(6) Customer--(i) In general. Except
as provided in paragraph (b)(6)(ii) of this
section, a customer is any person who en-
ters into a CPEO contract with a CPEO.
(ii) Persons who are not customers. A
provider of payroll services that uses its
own EIN for filing federal employment tax
returns on behalf of its clients (or that used
its own EIN immediately prior to entering
into a service contract with the CPEO) is
not a customer, even if it has entered into
a service contract with the CPEO that
meets all of the requirements for a CPEO
contract described in paragraph (b)(3) of
this section other than being a contract be-
tween a CPEO and a customer.
(7) Federal employment taxes mean
the taxes imposed by subtitle C of the In-
ternal Revenue Code.
(8) Guidance includes guidance pub-
lished in the Federal Register or Internal
Revenue Bulletin, as well as administra-
tive guidance such as forms, instructions,
publications, or other guidance on the irs.
gov Web site.
(9) Partnership means a business enti-
ty (as described in §301.7701-2(a)) that is
classified as a partnership for federal tax
purposes under §§301.7701-1, 301.7701-
2, and 301.7701-3. Accordingly, any ref-
erences to a managing member or general
partner of a partnership mean a managing
member or general partner of an entity
that is classified as a partnership for fed-
eral tax purposes.
(10) Precursor entity--(i) In general. A
precursor entity means, with respect to a
CPEO applicant, any related entity of the
CPEO applicant that is or was a provider
of payroll services that--
(A) Has made a substantial asset trans-
fer to the CPEO applicant during the cal-
endar year in which the CPEO applicant
applies for certification or any of the three
preceding calendar years or plans to make
such a substantial asset transfer while the
application for certification is pending or
in the 12-month period following the date
of the CPEO applicant’s application for
certification; or
(B) Has ceased operations or dissolved
during the calendar year in which the
CPEO applicant applied for certification
or any of the three preceding calendar
years.
(ii) Related. For purposes of this para-
graph (b)(10), a provider of payroll ser-
vices is considered a related entity of a
CPEO applicant if it is a related entity
within the meaning of paragraph (b)(12)
of this section or if it would be or would

Bulletin No. 2019–24 1315 June 10, 2019
have been such a related entity based on
the ownership and responsible individuals
of the provider of payroll services at the
time of its substantial asset transfer, ceas-
ing of operations, or dissolution, as appli-
cable, and the ownership and responsible
individuals of the CPEO applicant at the
time of its application.
(11) Provider of payroll services
means a person that provides federal em-
ployment tax administration, payroll ser-
vices, or other similar federal employment
tax-related compliance services to clients,
including, but not limited to, collecting,
reporting, and paying federal employment
taxes with respect to wages or compensa-
tion paid by the person to individuals per-
forming services for the clients. A provid-
er of payroll services includes, but is not
limited to, a CPEO.
(12) Related entity means, with respect
to a CPEO applicant or CPEO, any person
that meets one or more of the following
criteria:
(i) The person is a member of a con-
trolled group of which the CPEO appli-
cant or CPEO is also a member. Addi-
tionally, CPEO applicants and CPEOs
that, but for their status as disregarded
entities would separately be members of
a controlled group, are treated as mem-
bers of a controlled group for purposes of
this paragraph (b)(12)(i). For purposes of
this paragraph (b)(12)(i), controlled group
has the meaning given to such term by
sections 414(b) and (c) and §§1.414(b)-1
and 1.414(c)-1 through 1.414(c)-6 of this
chapter, except that--
(A) With respect to a person that is not
a provider of payroll services “more than
50 percent” will be substituted for “at least
80 percent” each place it appears in sec-
tion 1563(a) (which is cross-referenced
in section 414(b) and §1.414(c)-2 of this
chapter); and
(B) With respect to a person that is a
provider of payroll services, “more than 5
percent” will be substituted for “at least 80
percent” each place it appears in section
1563(a) and §1.414(c)-2 of this chapter; or
(ii) The person is a provider of payroll
services and--
(A) A majority of the directors or a
majority of the officers (as described in
paragraph (b)(13)(ii) of this section) of the
CPEO applicant or CPEO are directors or
officers (as described in paragraph (b)(13)
(ii) of this section), respectively, of the
provider of payroll services; or
(B) An individual is a responsible in-
dividual of both the provider of payroll
services and the CPEO applicant or CPEO
by reason of paragraph (b)(13)(i) of this
section.
(13) Responsible individual means,
with respect to a CPEO applicant or
CPEO, (or, for purposes of paragraph (b)
(10)(ii) or (b)(12)(ii) of this section, a pro-
vider of payroll services), the following
individuals:
(i) Any individual who owns, directly
or indirectly, applying the constructive
ownership rules of section 1563(e) with
respect to stock ownership and substi-
tuting the term “interest” for the term
“stock” and the term “partnership” for the
term “corporation” used in that section, as
appropriate for purposes of determining
whether an interest in a partnership is in-
directly owned by any person, 33 percent
or more of--
(A) In the case of a corporation, the to-
tal combined voting power of all classes
of stock entitled to vote of such corpora-
tion or the total value of shares of all class-
es of stock of such corporation; or
(B) In the case of a partnership, the
capital interest or profits interest of such
partnership.
(ii) Any individual who is a director or
an officer. For purposes of this paragraph
(b)(13)(ii), a director is a voting member
of the governing body (that is, the board
of directors or equivalent controlling body
authorized under state law to make gov-
ernance decisions on behalf of the orga-
nization), and the officers are determined
by reference to the organizing document,
bylaws, or resolutions of the governing
body, or otherwise designated consistent
with state law. Officers may include in-
dividuals such as a president, vice-presi-
dent, secretary, and treasurer.
(iii) Any individual who, regardless of
title, has ultimate responsibility for imple-
menting the decisions of the organization’s
governing body. An individual who serves
with the title of chief executive officer, ex-
ecutive director, and/or president has this
ultimate responsibility. An individual with
this ultimate responsibility may include
an individual who is not treated as an em-
ployee of the organization. If this ultimate
responsibility resides with two or more
individuals (for example, co-presidents),
who may exercise such responsibility in
concert or individually, then each such in-
dividual is a responsible individual.
(iv) Any individual who, regardless of
title, has ultimate responsibility for super-
vising the management, administration,
or operation of the organization. An indi-
vidual who serves with the title of chief
operating officer has this ultimate respon-
sibility. An individual with this ultimate
responsibility may include an individual
who is not treated as an employee of the
organization. If this ultimate responsibil-
ity resides with two or more individuals,
who may exercise such responsibility in
concert or individually, then each such in-
dividual is a responsible individual.
(v) Any individual who, regardless of
title, has ultimate responsibility for man-
aging the organization’s finances. An in-
dividual who serves with the title of chief
financial officer or treasurer has this ul-
timate responsibility. An individual with
this ultimate responsibility may include
an individual who is not treated as an
employee of the organization. If this ul-
timate responsibility resides with two or
more individuals who may exercise the
responsibility in concert or individually,
then each such individual is a responsible
individual.
(vi) In the case of a partnership, any
individual who is a managing member or
general partner.
(vii) In the case of a sole proprietor-
ship, the sole proprietor.
(viii) In the case of a disregarded entity
owned by a corporation or partnership, the
responsible individuals of that corporation
or partnership.
(ix) In the case of a disregarded enti-
ty owned by an individual, the individual
owner.
(x) Any other individual with primary
responsibility for the organization’s feder-
al employment tax compliance.
(14) Self-employed individual means
an individual with net earnings from
self-employment (as defined in section
1402(a) without regard to the exceptions
thereunder) derived from providing ser-
vices covered by a CPEO contract, wheth-
er such net earnings from self-employ-
ment are derived from providing services
as a non-employee to a customer of the
CPEO, from the individual’s own trade

June 10, 2019 1316 Bulletin No. 2019–24
or business as a sole proprietor customer
of the CPEO, or as an individual who is a
partner in a partnership that is a customer
of the CPEO, but only with regard to such
net earnings.
(15) Substantial asset transfer means
any transfer of 35 percent or more of the
value of the operating assets of the per-
son making the transfer, whether through
one or a series of transactions and wheth-
er accomplished through sale, lease, gift,
assignment, succession, merger, consoli-
dation, corporate separation, or any other
means. For purposes of this paragraph (b)
(15), operating assets include both tangi-
ble and intangible resources related to the
conduct of the person’s trade or business,
including, but not limited to, such intangi-
ble assets as contracts, agreements, receiv-
ables, employees, and goodwill (which
includes the value of a trade or business
based on expected continued customer pa-
tronage due to its name, reputation, or any
other factors). In the case of a contract de-
scribed in section 7705(e)(2) or a service
agreement described in §31.3504-2(b)(2)
of this chapter entered into by a provider
of payroll services, even if the contract or
agreement is not sold, gifted, assigned, or
otherwise formally transferred to a CPEO
applicant, it will be considered transferred
from the provider of payroll services to
the CPEO applicant if the CPEO applicant
reports, withholds, or pays, under its em-
ployer identification number (EIN), any
applicable federal employment taxes with
respect to the wages of any individuals
covered by the contract or agreement.
(16) Work site means a physical loca-
tion at which an individual regularly per-
forms services for a customer of a CPEO
or, if there is no such location, the location
from which the customer assigns work to
the individual. A work site may not be the
individual’s residence or a telework site
unless the customer requires the individ-
ual to work at that site. For purposes of
this paragraph (b)(16), work sites that are
contiguous locations will be treated as a
single physical location and thus a single
work site, and noncontiguous locations
will be treated as separate physical loca-
tions and thus separate work sites, except
as provided in the next sentence. A CPEO
customer may treat noncontiguous loca-
tions as a single physical location and thus
a single work site if each of the locations is
separated by less than 35 miles from every
other location in the single work site and
all locations in the single work site oper-
ate in the same industry. For purposes of
the preceding sentence, the determination
of the industry of a work site is based on
the nature of the CPEO customer’s work
at that work site, irrespective of work per-
formed by other entities at the same site.
When treating noncontiguous locations as
a single physical location and thus a sin-
gle work site, one noncontiguous location
cannot be included in more than one work
site. For example, assume there are three
noncontiguous locations, A, B, and C, op-
erating in the same industry and that B is
20 miles east from A and C is 20 miles east
from B. A CPEO customer would not be
permitted to treat these three locations as
a single work site but would be permitted
to treat either A and B as a single work site
or B and C as a single work site.
(17) Work site employee--(i) In gener-
al. A work site employee means, with re-
spect to a customer, a covered employee
who performs services for such customer
at a work site where at least 85 percent of
the individuals performing services for
the customer are covered employees of
the customer.
(ii) Self-employed individuals. Solely
for purposes of determining whether the
85 percent threshold described in para-
graph (b)(17)(i) of this section is met, a
self-employed individual described in
paragraph (b)(14) of this section is treated
as a covered employee if such individual
would be a covered employee but for the
exclusion of self-employed individuals
from the definition of covered employee
in paragraph (b)(5) of this section.
(iii) Excluded employees. In deter-
mining whether the 85 percent threshold
described in paragraph (b)(17)(i) of this
section is met, an individual who is an
excluded employee described in section
414(q)(5) is not treated as either an in-
dividual providing services or a covered
employee.
(iv) Treatment for calendar quarter.
A covered employee will be considered a
work site employee for the entirety of a
calendar quarter if the employee qualifies
as a work site employee at any time during
that quarter.
(v) Separate determination for each
work site. The determination of whether a
covered employee is a work site employ-
ee is made separately with regard to each
work site at which the covered employee
regularly provides services and for each
customer for which the covered employee
is providing services. A covered employee
may be determined to be a work site em-
ployee of more than one work site during
a calendar quarter.
(vi) Good faith determination respect-
ed. A CPEO’s determination that a cov-
ered employee is a work site employee
will be respected if the CPEO has made a
good faith determination that the covered
employee meets the requirements of sec-
tion 7705(e), this paragraph (b)(17), and
any further guidance related to work site
employee determinations.
(c) Applicability date. The rules in this
section apply on and after May 3, 2019.
§301.7705-2 CPEO certification pro-
cess.
(a) Application requirement and certi-
fication--(1) Application. To be certified
as a certified professional employer orga-
nization (CPEO), a person must submit a
properly completed and executed applica-
tion for certification as a CPEO in the time
and manner prescribed by, and providing
such information as required by, this sec-
tion and any further guidance issued by the
Commissioner. In addition, the applicant’s
responsible individuals must submit such
information as is specified in this section
and further guidance.
(2) Notice. A CPEO applicant will be
notified by the Internal Revenue Service
(IRS) whether its application for certifi-
cation has been approved or denied, and,
if approved, the effective date of certifi-
cation. If the IRS denies the application,
the IRS will inform the CPEO applicant of
the reason(s) for denial. If the IRS denies
an application for certification, or if the
CPEO applicant withdraws an application
for certification, the CPEO applicant may
reapply for certification in such time and
manner, and must include such informa-
tion, as the Commissioner may prescribe
in further guidance.
(3) Public disclosure of certification.
If the IRS approves a CPEO applicant’s
application for certification, the IRS will
make available to the public the name and
address of the CPEO, as well as the effec-
tive date of its certification, in the time and
manner described in further guidance.

Bulletin No. 2019–24 1317 June 10, 2019
(4) Effective date of certification. A
CPEO’s certification will be effective as
of the effective date of certification spec-
ified in the notice described in paragraph
(a)(2) of this section and in the public
disclosure described in paragraph (a)(3)
of this section and will continue in effect
until the effective date of the revocation
of the CPEO’s certification, if any, as de-
scribed in paragraph (n) of this section
or, if earlier, the date that the CPEO vol-
untarily terminates its certification in the
time and manner prescribed by the Com-
missioner in further guidance.
(b) Requirements for certification. To
receive and maintain certification, a CPEO
applicant or CPEO must meet the require-
ments described in this section, as well as
any additional requirements the Commis-
sioner may prescribe in further guidance.
In addition, any precursor entities, related
entities, and responsible individuals of the
CPEO applicant or CPEO must meet any
requirements applicable to them described
in this section and in further guidance. The
IRS may deny an application for certifica-
tion or revoke or suspend a CPEO’s cer-
tification if a CPEO applicant or CPEO,
or one or more of its precursor entities,
related entities, or responsible individuals,
fails to meet any applicable requirement
described in this section or other appli-
cable guidance, and the IRS will do so if
the IRS determines, in its sole discretion,
that such failure presents a material risk
to the IRS’s collection of federal employ-
ment taxes. In determining whether one
or more failures to meet the requirements
described in this section presents a mate-
rial risk to the IRS’s collection of federal
employment taxes, the IRS generally will
consider all relevant facts and circum-
stances, including the size, scope, nature,
significance, recurrence, and timing of
and reason for the failure and, in the case
of a CPEO, any prior failures of the CPEO
to meet the requirements of this section.
(c) Suitability--(1) In general. The IRS
may deny an application for certification
or revoke or suspend a CPEO’s certifica-
tion for any of the following reasons:
(i) The CPEO applicant or CPEO, or
any of its precursor entities, related enti-
ties, or responsible individuals, has failed
to pay any applicable federal, state, or
local taxes or file any required federal,
state, or local tax or information returns in
a timely and accurate manner, unless the
failure is determined to be due to reason-
able cause and not due to willful neglect.
(ii) The CPEO applicant or CPEO, or
any of its precursor entities, related enti-
ties, or responsible individuals, has been
charged with or convicted of any crimi-
nal offense under the laws of the United
States or of a state or political subdivision
thereof, or is the subject of an active IRS
criminal investigation.
(iii) The CPEO applicant or CPEO, or
any of its precursor entities, related enti-
ties, or responsible individuals, has been
sanctioned, or had a license, registration,
or accreditation (including a license, reg-
istration, or accreditation relating to its
status or ability to operate as a profes-
sional employer organization) denied,
suspended, or revoked, by a court of com-
petent jurisdiction, licensing board, assur-
ance or other professional organization, or
federal or state agency, court, body, board,
or other authority for any misconduct that
involves dishonesty, fraud, or breach of
trust or that otherwise bears upon the suit-
ability of the CPEO applicant or CPEO to
perform its professional functions (includ-
ing, but not limited to, any civil or crimi-
nal penalty described in 42 U.S.C. 503(k)
(1)(D) imposed by state law).
(iv) The CPEO applicant or CPEO, or
any of its precursor entities, related enti-
ties, or responsible individuals, is listed on
any sanctions list compiled by the Office
of Foreign Assets Control (OFAC) with-
in the Department of Treasury, including,
but not limited to, the OFAC Consolidated
Sanctions List and the OFAC Specially
Designated Nationals List.
(v) The CPEO applicant or CPEO, or
any of its precursor entities, related entities,
or responsible individuals, fails to demon-
strate a history of financial responsibility,
which the IRS may assess by checks on
credit history and other similar indicators.
(vi) The CPEO applicant or CPEO and
the responsible individuals of the CPEO
applicant or CPEO fail to demonstrate
adequate collective knowledge or experi-
ence with respect to:
(A) Federal or state employment tax
reporting, depositing, and withholding re-
quirements;
(B) Handling of and accounting for
payroll, tax payments, and other funds on
behalf of others;
(C) Effective recordkeeping systems;
(D) Retention of qualified personnel
and legal advisors as needed; and
(E) General business and risk manage-
ment.
(vii) The CPEO applicant or CPEO, or
any of its responsible individuals, gives
false or misleading information (including
by intentionally omitting relevant infor-
mation), or participates in any way in the
giving of false or misleading information,
to the IRS, knowing, or having reason to
know, that the information is false or mis-
leading. For the purpose of this paragraph
(c)(1)(vii), “information” includes (but is
not limited to) facts or other matters con-
tained in testimony, federal tax returns,
and financial statements and opinions
regarding such statements; applications
for certification (and all accompanying
documentation); affidavits, declarations,
assertions, attestations, statements, and
agreements; and periodic verifications that
the requirements of this section continue
to be met; and any other information that
is required to be provided by this section,
section 3511(g), §31.3511-1 of this chap-
ter, or further guidance.
(2) Must be a business entity or sole
proprietorship--(i) In general. A CPEO
must be a business entity described in
§301.7701-2(a) or a sole proprietorship.
Accordingly, a CPEO may not be an enti-
ty classified as a trust under §301.7701-4.
(ii) Ownership by a United States per-
son. In addition, a sole proprietorship or
a business entity that is disregarded as an
entity separate from its owner for feder-
al tax purposes under §§301.7701-2 and
301.7701-3 (without regard to the special
rule in §301.7701-2(c)(2)(iv) that pro-
vides that such entities are corporations
for federal employment tax purposes)
must be wholly owned directly (including
through one or more disregarded entities
organized in the United States, in the case
of a business entity) by a United States
person (as defined in section 7701(a)(30)).
(iii) Treatment as separate member of
a controlled group. Except as provided in
paragraph (h) of this section, a CPEO ap-
plicant or CPEO that otherwise qualifies
as a member of a controlled group (with-
in the meaning of sections 414(b) and (c)
and §§1.414(b)-1 and 1.414(c)-1 through
1.414(c)-6 of this chapter) but for its sta-
tus as an entity disregarded as separate

June 10, 2019 1318 Bulletin No. 2019–24
from its owner for federal tax purposes
under §§301.7701-2 and 301.7701-3, is
treated as a separate member of a con-
trolled group for purposes of this section,
§301.7705-1, section 3511, §31.3511-1 of
this chapter, and section 7705.
(3) Authorization to investigate suit-
ability. A CPEO applicant or CPEO, and
each of its responsible individuals, must
take such actions as are necessary to au-
thorize the IRS to investigate the accuracy
of statements and submissions, includ-
ing waiving confidentiality and privilege
when necessary (i.e., in situations in which
the IRS is otherwise unable to obtain or
confirm information necessary to evalu-
ate a CPEO applicant’s or CPEO’s qual-
ification for certification), and to conduct
comprehensive background checks, in-
cluding, but not limited to, Federal Bureau
of Investigation or other similar criminal
background checks, checks on tax com-
pliance, professional experience (includ-
ing through the contact of third-party ref-
erences), credit history, and professional
sanctions. In addition, a CPEO applicant
or CPEO, and any of its responsible indi-
viduals, must provide the IRS with such
additional information as the IRS may
request to facilitate such background in-
vestigations. Each responsible individual
of a CPEO applicant or CPEO must also
submit fingerprints in the time and manner
and under the circumstances prescribed by
the Commissioner in further guidance.
(d) Business location--(1) State of or-
ganization. A CPEO applicant or CPEO
must be created or organized in the Unit-
ed States or under the law of the United
States or of any state.
(2) Business location in the United
States. A CPEO applicant or CPEO must
have one or more established, physical
business locations in the United States at
which regular operations of an activity
that constitutes a trade or business within
the United States (within the meaning of
section 864(b)) take place and at which
a significant portion of its CPEO-related
functions are carried on and administra-
tive records are kept.
(3) United States responsible individu-
als. A majority of the CPEO applicant’s or
CPEO’s responsible individuals must be
citizens or residents of the United States.
(4) Use of financial institution. A CPEO
applicant or CPEO must use only financial
institutions described in section 265(b)(5)
to hold substantially all of its cash and
cash equivalents, receive payments from
customers, and pay wages and federal em-
ployment taxes.
(e) Financial statements--(1) CPEOs.
By the last day of the sixth month after
the end of each fiscal year, and beginning
with the first fiscal year that ends after the
CPEO’s effective date of certification, a
CPEO must cause to be prepared and pro-
vided to the IRS--
(i) A copy of its annual audited finan-
cial statements for the fiscal year;
(ii) An opinion of a certified public ac-
countant (CPA) that such financial state-
ments are presented fairly and in accor-
dance with generally accepted accounting
principles (GAAP); and
(iii) A statement in the Note to the Fi-
nancial Statements covered by the CPA
opinion that the CPEO’s annual audited
financial statements reflect positive work-
ing capital or, only if the CPEO satisfies
the requirements of paragraph (e)(3) of
this section, reflect negative working cap-
ital, with such statement in either case
setting forth in detail a calculation of the
CPEO’s working capital as reflected in
the annual audited financial statements (a
working capital statement).
(2) CPEO applicants--(i) In general. A
CPEO applicant must cause to be prepared
and provided to the IRS, with its applica-
tion, a copy of its annual audited financial
statements, an opinion with respect to such
financial statements, and a working capital
statement (each as described in paragraph
(e)(1) of this section) for the most recently
completed fiscal year as of the date it ap-
plies for certification. Notwithstanding the
preceding sentence, if a CPEO applicant
applies for certification before the last
day of the sixth month following its most
recently completed fiscal year, and the
audit of the financial statements for that
fiscal year has not yet been completed at
the time of application, a CPEO applicant
must provide to the IRS, with its appli-
cation, the financial statements, opinion,
and working capital statement described
in paragraph (e)(1) of this section for the
immediately preceding fiscal year, if any,
and must subsequently provide to the IRS
the financial statements, opinion, and
working capital statement for the most
recently completed fiscal year by the last
day of the sixth month after such fiscal
year ends. In addition, for any fiscal year
that ends after the CPEO applicant applies
for certification and on or before the ef-
fective date of certification, if applicable,
the CPEO applicant must provide the au-
dited financial statements, opinion, and
working capital statement by the last day
of the sixth month after such fiscal year
ends. The obligation to provide the annual
audited financial statements described in
the preceding sentence continues to apply
even if the CPEO applicant is certified as a
CPEO prior to the date the annual audited
financial statements are provided.
(ii) Newly established CPEO appli-
cants. In addition to the requirements in
paragraph (e)(2)(i) of this section, a CPEO
applicant that was not operating as a pro-
vider of payroll services for all or part of
its most recently completed fiscal year as
of the date it applies for certification must
provide a copy of the annual audited fi-
nancial statements of any precursor entity,
if one exists, an opinion with respect to
such financial statements, and a working
capital statement (each as described in
paragraph (e)(1) of this section) for the
precursor entity’s most recently complet-
ed fiscal year as of the date of the applica-
tion for certification in such time and man-
ner as the Commissioner may prescribe in
further guidance, as well as such addition-
al information as the Commissioner may
prescribe in further guidance.
(3) Exception to positive working cap-
ital requirement. A CPEO applicant or
CPEO with annual audited financial state-
ments for a fiscal year that do not reflect
positive working capital will not fail to
meet the requirements of paragraph (e)(1)
(iii) of this section if--
(i) The CPEO applicant or CPEO has
negative working capital for no more than
two consecutive fiscal quarters of that
fiscal year, as demonstrated by the finan-
cial statements (for the final fiscal quar-
ter in the fiscal year) and the statements
described in paragraph (f)(1)(ii) of this
section (for any other fiscal quarter), as
applicable;
(ii) The CPEO applicant or CPEO, or
its CPA, provides, in such time and man-
ner as the Commissioner may prescribe
in further guidance, an explanation to the
IRS describing the reason for the failure;
and

Bulletin No. 2019–24 1319 June 10, 2019
(iii) The IRS determines, in its sole dis-
cretion, that the failure does not present
a material risk to the IRS’s collection of
federal employment taxes.
(4) Completed fiscal year. For purpos-
es of this paragraph (e), a fiscal year will
be considered completed once the last day
of that fiscal year has ended, regardless of
whether the CPEO applicant or CPEO was
in operation or certified for all 12 months
of the fiscal year or the fiscal year consist-
ed of fewer than 12 months.
(f) Quarterly assertions and attesta-
tions--(1) CPEOs. By the last day of the
second month after the end of each cal-
endar quarter, and beginning with the
first calendar quarter that ends after the
CPEO’s effective date of certification, a
CPEO must provide the following to the
IRS:
(i) An assertion, signed by a responsi-
ble individual under penalties of perjury,
stating that the CPEO has withheld and
made deposits of all federal employment
taxes (other than taxes imposed by chapter
23 of the Code) as required by subtitle C
for such calendar quarter and an examina-
tion level attestation from a CPA stating
that such assertion is fairly stated in all
material respects.
(ii) A statement signed by a responsible
individual under penalties of perjury ver-
ifying that the CPEO has positive work-
ing capital (as determined in accordance
with GAAP) at the end of the most re-
cently completed fiscal quarter, as well as
such additional financial information that
the Commissioner may specify in further
guidance.
(2) Exceptions--(i) Immaterial failures.
A CPEO will not fail to meet the require-
ments of paragraph (f)(1)(i) of this section
if the CPA examination level attestation
indicates that the CPEO has failed to with-
hold or make deposits in certain immateri-
al respects, provided that--
(A) The attestation provides a summary
of the immaterial failures that were found;
(B) The attestation states that the fail-
ures were immaterial and isolated and do
not reflect a meaningful lapse in compli-
ance with federal employment tax with-
holding and deposit requirements; and
(C) The IRS determines, in its sole dis-
cretion, that the isolated and immaterial
failures identified by the CPA do not pres-
ent a material risk to the IRS’s collection
of federal employment taxes.
(ii) Negative working capital. A CPEO
with negative working capital at the end
of a fiscal quarter will not fail to meet the
requirements of paragraph (f)(1)(ii) of this
section if--
(A) The CPEO does not have negative
working capital at the end of the two fiscal
quarters immediately preceding such fis-
cal quarter, as demonstrated by the annual
audited financial statements described in
paragraph (e)(1) of this section, if avail-
able, or the statements described in para-
graph (f)(1)(ii) of this section;
(B) The CPEO provides an explanation
to the IRS describing the reason for such
negative working capital in such time and
manner as the Commissioner may pre-
scribe in further guidance; and
(C) The IRS determines, in its sole
discretion, that the negative working cap-
ital does not present a material risk to the
IRS’s collection of federal employment
taxes.
(3) CPEO applicants--(i) In general.
By the last day of the second month after
the end of each calendar quarter, begin-
ning with the most recently completed cal-
endar quarter as of the date of a CPEO ap-
plicant’s application for certification and
ending with the most recently completed
calendar quarter as of the effective date
of certification (if applicable), a CPEO
applicant must provide to the IRS the as-
sertion, examination level attestation, and
working capital statement described in
paragraph (f)(1) of this section, subject
to the exceptions described in paragraph
(f)(2) of this section (though substituting
“CPEO applicant” for “CPEO”).
(ii) Newly established CPEO appli-
cants. A CPEO applicant that was not op-
erating as a provider of payroll services
during the most recently completed calen-
dar quarter as of the date of its application
for certification or during any calendar
quarter that ends while its application for
certification is pending must provide to
the IRS the assertion, examination level
attestation, and working capital statement
described in paragraph (f)(1) of this sec-
tion with respect to any precursor entity,
if applicable, in such time and manner as
the Commissioner may prescribe in fur-
ther guidance, as well as such additional
information as the Commissioner may
prescribe in further guidance.
(g) Bond--(1) In general. A CPEO
must post a bond (or bonds, as described
in paragraph (g)(3) of this section) from a
qualified surety (as described in paragraph
(g)(6) of this section) for the payment of
federal employment taxes, issued in the
form and containing the terms prescribed
by the Commissioner in this paragraph (g)
and in further guidance and in an amount
described in paragraph (g)(2) of this sec-
tion.
(2) Bond amount--(i) In general. The
amount of the bond (or bonds, as described
in paragraph (g)(3) of this section) must
be, for each period beginning on April 1 of
any calendar year and ending on March 31
of the following calendar year (or, in the
case of a newly certified CPEO, beginning
with the effective date of certification and
ending on the subsequent March 31) (the
bond period), at least equal to the greater
of--
(A) Five percent of the CPEO’s liabil-
ity under section 3511 (or, if applicable,
the liability described in paragraph (g)(2)
(ii) of this section) during the calendar
year preceding the beginning of the bond
period, but not more than $1,000,000; or
(B) $50,000.
(ii) Amount of bond in first and sec-
ond year as a CPEO. If a CPEO does not
have any liability under section 3511 for
all or a portion of a preceding calendar
year because the CPEO was not certified
as a CPEO for all or a portion of that pre-
ceding calendar year, the liability applied
for purposes of paragraph (g)(2)(i)(A) of
this section for the entirety or portion of
the preceding calendar year during which
the CPEO was not certified will be the
federal employment tax liability of the
CPEO, and of any precursor entity of the
CPEO described in §301.7705-1(b)(10)(i)
(A), that results from one or more service
agreements described in §31.3504-2(b)(2)
of this chapter. With respect to the federal
employment tax liability of such precursor
entity during a preceding calendar year,
for purposes of paragraph (g)(2)(i)(A) of
this section, the liability will be applied
only to the extent it results from service
agreements that have been transferred or
are intended to be transferred by the pre-
cursor entity to the CPEO at the time the
bond amount is determined. For purpos-
es of this paragraph (g)(2)(ii), an entity is
considered a precursor entity of a CPEO
described in §301.7705-1(b)(10)(i)(A) if
it was determined to be its precursor en-

June 10, 2019 1320 Bulletin No. 2019–24
tity under that section at the time it was a
CPEO applicant.
(iii) One continuous obligation. The
bond, any riders thereto, and any strength-
ening bonds posted to satisfy the require-
ments of this section are considered one
continuous obligation of the surety for un-
paid tax liabilities accrued by the CPEO
under subtitle C from the effective date of
the bond until the bond is superseded or
cancelled.
(3) Increase in bond amount--(i) In
general. A CPEO must determine if an
increase in the bond amount is necessary
for each new bond period. If a CPEO’s
liability under section 3511 (or, if appli-
cable, the liability described in paragraph
(g)(2)(ii) of this section) for the preced-
ing calendar year results in a minimum
required bond amount specified in para-
graph (g)(2) of this section that exceeds
the current amount of the bond, the
CPEO must increase the amount of its
bond with respect to the new bond period
in order to meet the minimum required
bond amount specified in paragraph (g)
(2) of this section. To increase the bond
amount, a CPEO may amend an existing
bond through the use of a rider, or post a
strengthening, superseding, or new bond,
where applicable, and in such time and
manner as the Commissioner may pre-
scribe in further guidance.
(ii) To reflect adjustment or assessment.
Subject to the limit in paragraph (g)(2)(i)
(A) of this section, if, during the bond
period, the CPEO or the IRS determines
that the applicable federal employment
tax liability for the preceding calendar
year was higher than the amount reported
and paid and on which the bond amount
for the bond period was based (and the
applicable party makes an adjustment or
assessment reflecting such determination),
a CPEO must increase the amount of its
bond to meet the minimum required bond
amount specified in paragraph (g)(2) of
this section through the use of a rider, or
by posting a strengthening, superseding,
or new bond in such time and manner as
the Commissioner may prescribe in fur-
ther guidance.
(4) Cancellation--(i) Notice. A bond
required under this paragraph (g) must
provide that it may be cancelled by the
surety only after the surety gives written
notice of such cancellation to the IRS and
the CPEO in such time and manner as the
Commissioner may prescribe in further
guidance.
(ii) New or superseding bond required.
If a CPEO either receives notice of cancel-
lation from the surety provider of its bond,
or gives notice to the IRS of the CPEO’s
intent to cancel the bond, the CPEO must
post a new or superseding bond for the
minimum required bond amount specified
in paragraph (g)(2) of this section in such
time and manner as the Commissioner
may prescribe in further guidance.
(iii) Ongoing liability. A bond required
under this paragraph (g) must provide that,
if a surety cancels the bond without issuing
a superseding bond to the CPEO, the sure-
ty will, notwithstanding the cancellation,
remain liable for all federal employment
tax liability accrued by the CPEO during
the period beginning with the effective
date of the first bond issued by the surety
to the CPEO in any consecutive series of
bonds issued by that surety prior to can-
cellation and ending with the cancellation
of the bond (the total bond period), up to
the penal amount of the bond at the time of
the cancellation. A cancelling surety will
remain liable as described in this para-
graph (g)(4)(iii) for federal employment
tax liability accrued during the total bond
period up to the penal amount of the bond
for as long as the Commissioner may as-
sess and collect taxes for such period un-
der sections 6501 and 6502.
(5) No posting of collateral--(i) In gen-
eral. Except as provided in paragraph (g)
(5)(iii) of this section, a CPEO must meet
the bond requirements of this paragraph
(g) without posting collateral.
(ii) Surety’s retention of the right to seek
collateral by itself not a violation of para-
graph (g)(5)(i) of this section. A surety’s
retention of the right to seek collateral, as
long as no collateral is actually required
by the surety or posted by the CPEO, does
not violate the rule in paragraph (g)(5)(i).
(iii) Exceptions to no collateral re-
quirement. The Commissioner may pro-
vide exceptions to the rule in paragraph
(g)(5)(i) of this section in further guidance
published in the Internal Revenue Bulle-
tin.
(6) Requirements for surety. Any surety
that issues a bond required by this para-
graph (g) to a CPEO must be a surety
company that holds a certificate of author-
ity from the Secretary as an acceptable
surety on federal bonds and meets such
other requirements as the Commissioner
may prescribe in further guidance.
(7) Bond definitions--(i) Rider. A rider
is an amendment to an existing bond that
increases the bond amount. The rider must
apply to liabilities that arise on or after the
effective date of the bond that the rider
amends. The surety remains liable under
the existing bond, as amended by the rider,
for the assessment and collection periods
applicable to the CPEO under sections
6501 and 6502, respectively, with respect
to any taxable period that occurs during
the term of the bond unless and until the
bond is superseded.
(ii) Strengthening bond. A strengthen-
ing bond is an additional bond posted in
the incremental amount of the increase so
that the strengthening bond together with
the existing bond equal the total minimum
required bond amount specified in para-
graph (g)(2) of this section. The strength-
ening bond must apply to liabilities that
arise on or after the effective date of the
bond it strengthens. Both the strengthen-
ing bond and the bond it strengthens must
remain in effect, and the surety remains
liable under both bonds for the assess-
ment and collection periods applicable to
the CPEO under sections 6501 and 6502,
respectively, with respect to any taxable
period that occurs during the term of the
bonds, unless and until the bonds are su-
perseded.
(iii) New bond. A new bond is a bond
posted for the total required bond amount,
and a new bond may only be posted upon
the CPEO’s initial certification or imme-
diately following cancellation of an ex-
isting bond. In the case of a cancellation
of an existing bond, the effective date of
the new bond must be no later than the ef-
fective date of the cancellation of the ex-
isting bond, and the surety providing the
existing (now cancelled) bond remains li-
able for liabilities that accrued during the
term of the cancelled bond for the assess-
ment and collection periods applicable to
the CPEO under sections 6501 and 6502,
respectively, with respect to any taxable
period that occurred during the term of
that bond.

Bulletin No. 2019–24 1321 June 10, 2019
(iv) Superseding bond. A superseding
bond is a bond posted for the total min-
imum required bond amount specified
in paragraph (g)(2) of this section, not
just for an incremental increase. Upon
execution of the superseding bond, the
superseded bond is no longer in effect,
and the surety that provided the super-
seded bond is no longer liable under the
superseded bond. The superseding bond
must apply to liabilities that arise on or
after the effective date of the superseded
bond.
(h) Controlled group. All CPEO appli-
cants and CPEOs that are members of a
controlled group within the meaning of
sections 414(b) and (c), and §§1.414(b)-1
and 1.414(c)-1 through 1.414(c)-6 of this
chapter, will be treated as a single CPEO
applicant or CPEO for purposes of para-
graphs (e) (other than (e)(1)(iii)), (f) (oth-
er than (f)(1)(ii)), and (g) of this section.
(i) Consents to disclose. To receive and
maintain certification, a CPEO applicant
or CPEO must provide such consents for
the IRS to disclose confidential tax infor-
mation to its customers, and to other per-
sons as necessary to carry out the purposes
of these regulations, that relates to its cer-
tification and obligations to report, depos-
it, and pay federal employment taxes as
the Commissioner may require in further
guidance.
(j) Periodic verification. A CPEO must
periodically verify that it continues to
meet the requirements of this section in
the time and manner prescribed by the
Commissioner in further guidance.
(k) Notification of material changes. A
CPEO applicant or CPEO must notify the
IRS, in the time and manner prescribed
by the Commissioner in further guidance,
of any change that materially affects the
continuing accuracy of any agreement or
information that was previously made or
provided to the IRS.
(l) Accrual method of accounting. A
CPEO must compute its taxable income
using an accrual method of accounting
or, if applicable, another method that the
Commissioner provides for in further
guidance.
(m) Compliance with reporting obli-
gations--(1) In general. A CPEO must
agree to make reports to the IRS and to
its clients as provided in section 3511(g)
and §31.3511-1 of this chapter, including
filing all federal employment tax returns
and information returns as required.
(2) Filing on magnetic media. A CPEO
must file all returns, schedules, reports,
and other forms and documents on mag-
netic media when required by section
3511(g) and §31.3511-1 of this chapter,
other Treasury regulations, or other guid-
ance.
(n) Suspension and revocation--(1) In
general. The IRS may suspend or revoke
the certification of any CPEO, in the time
and manner and under the circumstances
prescribed by the Commissioner in this
section and in further guidance, as a re-
sult of one or more failures to meet any of
the requirements for CPEOs described in
this section, section 3511(g), §31.3511-1
of this chapter, and any further guidance
and will suspend or revoke certification if
the IRS determines, in its sole discretion,
that such failure(s) present a material risk
to the IRS’s collection of federal employ-
ment taxes. See paragraph (b) of this sec-
tion for the factors the IRS will consider in
determining whether one or more failures
to meet any of the requirements described
in this section presents a material risk to
the IRS’s collection of federal employ-
ment taxes.
(2) Suspension. Section 3511 will not
apply to any contract described in section
7705(e)(2) into which the CPEO enters
while its certification is suspended.
(3) Revocation. If an organization’s
certification as a CPEO is revoked, the or-
ganization will not be considered a CPEO
for purposes of section 3511 unless and
until it again applies to be certified as a
CPEO in accordance with paragraph (a) of
this section and is again certified by the
IRS as meeting the requirements of this
section. An organization whose certifica-
tion as a CPEO has been revoked may not
reapply to be certified as a CPEO until one
year has passed after the effective date of
its revocation.
(4) Disclosure of suspension and re-
vocation--(i) Notification by the CPEO.
An organization whose certification as
a CPEO has been suspended or revoked
must notify its customers of such suspen-
sion or revocation in the time and manner
prescribed by the Commissioner in further
guidance.
(ii) Disclosure by the IRS. If the IRS
suspends or revokes an organization’s cer-
tification as a CPEO, the IRS will make
available to the public the fact of such
suspension or revocation in the time and
manner described in further guidance. The
IRS may also separately notify the organi-
zation’s customers of such suspension or
revocation.
(o) Applicability date. The rules in this
section apply on and after May 3, 2019.
§301.7705-1T [Removed]
Par. 5. Section 301.7705-1T is removed.
§301.7705-2T [Removed]
Par. 6. Section 301.7705-2T is re-
moved.
PART 602 – OMB CONTROL NUM-
BERS UNDER THE PAPERWORK RE-
DUCTION ACT
Par. 7. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805
Par. 8. In §602.101, paragraph (b) is
amended by adding entries in numerical
order for “31.3511-1,” “301.7705-1,” and
“301.7705-2” and removing the entries
for “301.7705-1T” and “301.7705-2T” to
read as follows:
§ 602.101 OMB Control numbers.
* * * * *
(b) * * *
CFR part or section
where identified and
described
Current OMB
control No.
* * * * * * *
31.3511-11545-2266
* * * * * * *
301.7705-11545-2266
301.7705-21545-2266
* * * * * * *
* * * * *
Kirsten Wielobob,
Deputy Commissioner for Services
and Enforcement.
Approved: May 7, 2019
David J. Kautter,
Assistant Secretary of the Treasury
(Tax Policy).
(Filed by the Office of the Federal Register on May
23, 2018, 11:15 a.m., and published in the issue of the
Federal Register for May 28, 2018, 84 F.R. 24367)

June 10, 2019 1322 Bulletin No. 2019–24
Part III.
Current Refundings
for Certain Targeted
State, Local, and Indian
Tribal Government Bond
Programs
Notice 2019-39
SECTION 1. PURPOSE
This notice provides guidance regard-
ing the issuance of tax-exempt State and
local bonds under § 103 of the Internal
Revenue Code
1
and tax-exempt Indian
tribal government bonds under § 7871
in current refunding issues (as defined in
§ 1.150-1(d)(3)) to refund (directly or in-
directly in a series of current refunding is-
sues) original bonds issued in eligible tar-
geted bond programs, as more particularly
specified in section 3 of this notice.
SECTION 2. BACKGROUND
Congress from time to time enacts stat-
utory program provisions under the Code
or special legislation to authorize various
targeted bond programs that permit the
issuance of State, local, or Indian tribal
government bonds the interest on which
is excluded from the gross income of the
holders (“tax-exempt bonds”) to facilitate
lower borrowing costs, subject to bond
volume caps or issuance time deadlines,
or both (“targeted bond programs”). Tar-
geted bond programs often involve in-
centives to provide disaster relief or to
promote economic development or rede-
velopment in underserved areas in target-
ed circumstances.
Examples of targeted bond programs
include the following: (1) certain tax-ex-
empt exempt facility bonds and qualified
mortgage bonds known as “GO Zone
Bonds” issued under former § 1400(N) for
a defined portion of the Hurricane Katrina
disaster area known as the “Gulf Oppor-
tunity Zone,” subject to a bond volume
cap (population-based formula) and an
issuance time deadline (before January 1,
2012); (2) tax-exempt bonds issued under
§§ 702(d)(1) and 704(a) of the Heartland
Disaster Tax Relief Act of 2008, Pub. L.
No. 110-343, 122 Stat. 3912, 3913, 3919
(2008), to provide relief in the Midwestern
and Hurricane Ike Disaster Areas, subject
to bond volume caps (population-based
formulas) and an issuance time dead-
line (before January 1, 2013); (3) certain
tax-exempt exempt facility bonds known
as “Recovery Zone Facility Bonds” issued
under former § 1400U-3 for projects in
certain defined “Recovery Zones,” sub-
ject to a bond volume cap ($15 billion
nationally) and an issuance time deadline
(before January 1, 2011); and (4) Tribal
Economic Development Bonds issued by
Indian tribal governments under § 7871(f)
to finance eligible projects on Indian res-
ervations under program qualification pa-
rameters comparable to those that apply to
State and local governments under § 103,
subject to a bond volume cap ($2 billion).
In the case of the general ongoing pro-
gram for tax-exempt qualified private ac-
tivity bonds under § 141(e) that are sub-
ject to volume caps, § 146(i) generally
authorizes current refunding issues with-
out additional volume cap if the amount
of the refunding bonds does not exceed
the outstanding amount of the refunded
bonds. However, the statutory provisions
authorizing targeted bond programs often
do not address the permissibility of issuing
bonds in current refunding issues
2
to re-
fund or refinance bonds originally issued
pursuant to these programs. As a result,
questions have arisen regarding whether
original bonds issued under these targeted
bond programs may be refinanced in cur-
rent refunding issues without additional
volume cap and whether such current re-
funding issues may be issued after an issu-
ance time deadline for the original bonds.
Current refunding issues within appro-
priate size limits that do not increase the
outstanding amount of tax-exempt bonds
generally are favored transactions for eco-
nomic and policy purposes because these
transactions are done primarily to reduce
borrowing costs and these transactions
also reduce the Federal costs of the as-
sociated tax benefit. Previous published
guidance permits current refunding is-
sues for several targeted bond programs.
See, e.g., Notice 2012-3, 2012-3 I.R.B.
289 (GO Zone, Midwest, and Hurricane
Ike Disaster Area Bonds); Notice 2014-9,
2014-5 I.R.B. 455 (Recovery Zone Facili-
ty Bonds); see also Notice 2003-40, 2003-
2 C.B. 10 (treatment of current refunding
issues and other tax issues regarding New
York Liberty Bonds).
The purpose of this notice is to re-
duce or eliminate the need for separate
program-by-program guidance on this
favored type of refinancing for each such
program, subject to applicable statutory
restrictions.
SECTION 3. SCOPE AND
APPLICATION
The guidance in section 4 of this notice
applies to tax-exempt bonds issued in cur-
rent refunding issues to refund (directly or
indirectly in a series of current refunding
issues) original bonds in existing and fu-
ture tax-exempt targeted bond programs
that impose bond volume caps, issuance
time deadlines, or both, on the issuance of
the original bonds and that operate under
statutory parameters that do not address
the permissibility of current refunding
bonds. Bonds issued in these tax-exempt
targeted bond programs are referred to in
this notice as “Qualified Bonds.”
In addition, the references in this notice
to “original bonds” or “original Qualified
Bonds” include Tribal Economic Develop-
ment Bonds issued as tax- advantaged build
America bonds under former § 54AA.
SECTION 4. GUIDANCE
Any current refunding issue the proceeds
of which are used (directly or indirectly in a
series of current refunding issues) to refund
original Qualified Bonds qualifies for issu-
ance as an issue of tax-exempt Qualified
Bonds without regard to any bond volume
1
Unless otherwise provided, section references are to the Internal Revenue Code or the Income Tax Regulations.
2
Under § 1.150-1(d)(3), a current refunding issue generally consists of an issue of bonds that is issued to refund or refinance bonds of a prior issue not more than 90 days before the last
expenditure of any proceeds of the refunding issue to pay principal or interest on the prior issue.

Bulletin No. 2019–24 1323 June 10, 2019
cap or issuance time deadline for the orig-
inal Qualified Bonds if all of the following
requirements are met:
(1) The original Qualified Bonds were is-
sued with any required bond volume
cap allocation and before any applica-
ble time deadline for issuance of the
original Qualified Bonds;
(2) Except as provided herein, the issue
price (as defined in § 1.148-1(f)) of the
current refunding issue is no greater
than the outstanding stated principal
amount of the refunded bonds of the
prior issue (as defined in § 1.150-1(d)
(5)) of Qualified Bonds (the refunded
bonds). For refunded bonds originally
issued with more than a de minimis
amount of original issue discount or
premium (as defined in § 1.148-1(b)),
the present value of the refunded
bonds (as determined under § 1.148-
4(e)) must be used in lieu of the out-
standing stated principal amount to
determine the maximum issue price
of the current refunding issue that
may qualify as tax-exempt Qualified
Bonds pursuant to this notice; and
(3) The current refunding issue meets
all applicable requirements for the
issuance of Qualified Bonds (exclud-
ing any bond volume cap or original
issuance time deadline), including,
without limitation, the requirements
under § 149(g) that the original Qual-
ified Bonds met the requirements
applicable to hedge bonds, and, in
the case of private activity bonds to
which § 147(b) applies, the require-
ment under § 147(b) that the average
bond maturity be no longer than 120
percent of the average reasonably ex-
pected economic life of the facilities
financed or refinanced with the net
proceeds of such issue.
SECTION 5. EFFECT ON OTHER
DOCUMENTS
This notice supersedes Notice 2012-3
and Notice 2014-9.
SECTION 6. EFFECTIVE DATES
This notice applies to current refund-
ing issues that are issued on or after May
22, 2019. Issuers may apply this notice to
current refunding issues that are issued
before May 22, 2019.
SECTION 7. DRAFTING
INFORMATION
The principal authors of this notice are
Johanna Som de Cerff and David White
of the Office of Associate Chief Counsel
(Financial Institutions & Products). For
further information regarding this notice
contact David White on (202) 317-6980
(not a toll-free number).
26 CFR 601.105:

Examination of returns and claims
for refund, credit, or abatement; determination of
correct tax liability.

(Also Part I, §§ 280F; 1.280F-7.)
Rev. Proc. 2019-26
SECTION 1. PURPOSE
This revenue procedure provides: (1)
tables of limitations on depreciation de-
ductions for owners of passenger automo-
biles first placed in service by the taxpayer
during calendar year 2019; and (2) a ta-
ble of amounts that must be included in
income by lessees of passenger automo-
biles first leased by the taxpayer during
calendar year 2019. The tables detailing
these depreciation limitations and lessee
inclusion amounts reflect the automobile
price inflation adjustments required by
§ 280F(d)(7). For purposes of this revenue
procedure, the term “passenger automo-
biles” includes trucks and vans.
SECTION 2. BACKGROUND
.01 For owners of passenger automo-
biles, § 280F(a) imposes dollar limitations
on the depreciation deduction for the year
the taxpayer places the passenger auto-
mobile in service and for each succeeding
year. For passenger automobiles placed in
service after 2018, § 280F(d)(7) requires
the Internal Revenue Service to increase
the amounts allowable as depreciation de-
ductions by a price inflation adjustment
amount that is determined using the au-
tomobile component of the Chained Con-
sumer Price Index for all Urban Consum-
ers published by the Department of Labor.
.02 Section 168(k)(1) provides that, in
the case of qualified property, the depre-
ciation deduction allowed under § 167(a)
for the taxable year in which the property
is placed in service includes an allowance
equal to the applicable percentage of the
property’s adjusted basis (hereinafter, re-
ferred to as Ҥ 168(k) additional first year
depreciation deduction”). Pursuant to §
168(k)(6)(A), the applicable percentage
is 100 percent for qualified property ac-
quired and placed in service after Septem-
ber 27, 2017, and placed in service before
January 1, 2023, and is phased down 20
percent each year for property placed in
service through December 31, 2026. Pur-
suant to § 168(k)(8)(B)(i), the applicable
percentage is 30 percent for qualified
property acquired before September 28,
2017, and placed in service in 2019. For
qualified property acquired and placed in
service after September 27, 2017, § 168(k)
(2)(F)(i) increases the first year deprecia-
tion allowed under § 280F(a)(1)(A)(i) by
$8,000. For qualified property acquired by
the taxpayer before September 28, 2017,
and placed in service by the taxpayer
during 2019, § 168(k)(2)(F)(iii) increases
the first year depreciation allowed under §
280F(a)(1)(A)(i) by $4,800.
.03 Tables 1 through 3 of this revenue
procedure provide depreciation limita-
tions for passenger automobiles placed in
service during calendar year 2019. Table
1 provides depreciation limitations for
passenger automobiles acquired by the
taxpayer before September 28, 2017, and
placed in service by the taxpayer during
calendar year 2019, for which the § 168(k)
additional first year depreciation deduc-
tion applies. Table 2 provides depreciation
limitations for passenger automobiles ac-
quired by the taxpayer after September 27,
2017, and placed in service by the taxpay-
er during calendar year 2019, for which
the § 168(k) additional first year depreci-
ation deduction applies. Table 3 provides
depreciation limitations for passenger
automobiles placed in service during cal-
endar year 2019 for which no § 168(k) ad-
ditional first year depreciation deduction
applies. The § 168(k) additional first year
depreciation deduction does not apply for
2019 if the taxpayer: (1) did not use the
passenger automobile during 2019 more
than 50 percent for business purposes; (2)
elected out of the § 168(k) additional first

June 10, 2019 1324 Bulletin No. 2019–24
year depreciation deduction pursuant to
§ 168(k)(7) for the class of property that
includes passenger automobiles; or (3)
acquired the passenger automobile used
and the acquisition of such property did
not meet the acquisition requirements in
§ 168(k)(2)(E)(ii).
.04 Section 280F(c)(2) requires a re-
duction to the amount of deduction al-
lowed to the lessee of a leased passenger
automobile. Pursuant to § 280F(c)(3), the
reduction must be substantially equivalent
to the limitations on the depreciation de-
ductions imposed on owners of passenger
automobiles. Under § 1.280F-7(a) of the
Income Tax Regulations, this reduction
requires a lessee to include in gross in-
come an amount determined by applying
a formula to the amount obtained from a
table. Table 4 applies to lessees of passen-
ger automobiles. This table shows income
inclusion amounts for a range of fair mar-
ket values for each taxable year after the
passenger automobile is first leased.
SECTION 3. SCOPE
.01 The limitations on depreciation de-
ductions in section 4.01(2) of this revenue
procedure apply to passenger automobiles,
other than leased passenger automobiles,
that are placed in service by the taxpayer
in calendar year 2019, and continue to ap-
ply for each taxable year that the passen-
ger automobile remains in service.
.02 The table in section 4.02 of this rev-
enue procedure applies to leased passen-
ger automobiles for which the lease term
begins during calendar year 2019. Les-
sees of these passenger automobiles must
use these tables to determine the inclu-
sion amount for each taxable year during
which the passenger automobile is leased.
See Rev. Proc. 2014-21, 2014-11 I.R.B.
641, as amplified and modified by sec-
tion 4.03 of Rev. Proc. 2015-19, 2015-8
I.R.B. 656, for passenger automobiles first
leased during calendar year 2014; Rev.
Proc. 2015-19, as amplified and modified
by section 4.03 of Rev. Proc. 2016-23,
2016-16 I.R.B. 581, for passenger auto-
mobiles first leased during calendar year
2015, Rev. Proc. 2016-23 for passenger
automobiles first leased during calendar
year 2016, Rev. Proc. 2017-29, 2017-14
I.R.B. 1065, for passenger automobiles
first leased during calendar year 2017, and
Rev. Proc. 2018-03, 2018-2 I.R.B. 285, for
passenger automobiles first leased during
calendar year 2018.
SECTION 4. APPLICATION
.01 Limitations on Depreciation De-
ductions for Certain Automobiles.
(1) Amount of the inflation adjustment.
Under § 280F(d)(7)(B)(i), the automobile
price inflation adjustment for any calendar
year is the percentage (if any) by which the
C-CPI-U automobile component for Octo-
ber of the preceding calendar year exceeds
the automobile component of the CPI (as
defined in § 1(f)(4)) for October of 2017,
multiplied by the amount determined un-
der § 1(f)(3)(B). The amount determined
under § 1(f)(3)(B) is the amount obtained
by dividing the new vehicle component of
the C-CPI-U for calendar year 2016 by the
new vehicle component of the CPI for cal-
endar year 2016, where the C-CPI-U and
the CPI for calendar year 2016 means the
average of such amounts as of the close
of the 12-month period ending on August
31, 2016. Section 280F(d)(7)(B)(ii) de-
fines the term “C-CPI-U automobile com-
ponent” as the automobile component of
the Chained Consumer Price Index for All
Urban Consumers as described in § 1(f)
(6). The product of the October 2017 CPI
new vehicle component (144.868) and
the amount determined under § 1(f)(3)(B)
(0.694370319) is 100.592. The new vehi-
cle component of the C-CPI-U released in
November 2018 was 101.318 for October
2018. The October 2018 C-CPI-U new ve-
hicle component exceeded the product of
the October 2017 CPI new vehicle com-
ponent and the amount determined under
§ 1(f)(3)(B) by 0.726 (101.318 - 100.592).
The percentage by which the C-CPI-U
new vehicle component for October 2018
exceeds the product of the new vehicle
component of the CPI for October of 2017
and the amount determined under § 1(f)
(3)(B) is 0.722 percent (0.726/100.592 x
100%), the automobile price inflation ad-
justment for 2019 for passenger automo-
biles. The dollar limitations in § 280F(a)
are therefore multiplied by a factor of
0.00722, and the resulting increases, after
rounding to the nearest $100, are added to
the 2018 limitations to give the depreci-
ation limitations applicable to passenger
automobiles for calendar year 2019. This
adjustment applies to all passenger auto-
mobiles that are first placed in service in
calendar year 2019.
(2) Amount of the limitation. Tables 1
through 3 contain the dollar amount of the
depreciation limitation for each taxable
year for passenger automobiles a taxpay-
er places in service during calendar year
2019. Use Table 1 for a passenger automo-
bile to which the § 168(k) additional first
year depreciation deduction applies that
is acquired before September 28, 2017,
and placed in service during calendar
year 2019; Table 2 for a passenger auto-
mobile to which the § 168(k) additional
first year depreciation deduction applies
that is acquired after September 27, 2017,
and placed in service during calendar year
2019; and Table 3 for a passenger automo-
bile for which no § 168(k) additional first
year depreciation deduction applies.
REV. PROC. 2019-26 TABLE 1
DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES
ACQUIRED BEFORE SEPTEMBER 28, 2017, AND PLACED IN SERVICE DURING CALENDAR YEAR 2019 FOR
WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES
Tax YearAmount
1st Tax Year$ 14,900
2nd Tax Year$ 16,100
3rd Tax Year$ 9,700
Each Succeeding Year$ 5,760

Bulletin No. 2019–24 1325 June 10, 2019
REV. PROC. 2019-26 TABLE 2
DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES ACQUIRED AFTER SEPTEMBER 27, 2017, AND
PLACED IN SERVICE DURING CALENDAR YEAR 2019, FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR
DEPRECIATION DEDUCTION APPLIES
Tax YearAmount
1st Tax Year$ 18,100
2nd Tax Year$ 16,100
3rd Tax Year$ 9,700
Each Succeeding Year$ 5,760
REV. PROC. 2019-26 TABLE 3
DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES
PLACED IN SERVICE DURING CALENDAR YEAR 2019 FOR WHICH NO § 168(k) ADDITIONAL FIRST YEAR
DEPRECIATION DEDUCTION APPLIES
Tax YearAmount
1st Tax Year$ 10,100
2nd Tax Year$ 16,100
3rd Tax Year$ 9,700
Each Succeeding Year$ 5,760
.02 Inclusions in Income of Lessees of
Passenger Automobiles.
A taxpayer must follow the proce-
dures in § 1.280F-7(a) for determining
the income inclusion amounts for pas-
senger automobiles first leased in calen-
dar year 2019. In applying these proce-
dures, lessees of passenger automobiles
should use Table 4 of this revenue pro-
cedure.
REV. PROC. 2019-26 TABLE 4
DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES
WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2019
Fair Market Value of Passenger
AutomobileTax Year During Lease
OverNot Over1st2nd3rd4th5th & later
$50,000$51,00001133
51,00052,000411152023
52,00053,000920303643
53,00054,0001330445363
54,00055,0001740587083
55,00056,00022497288102
56,00057,000265986105122
57,00058,0003168101122142
58,00059,0003578115139161
59,00060,0003988129156181
60,00062,00046102151181211
62,00064,00055121179216250
64,00066,00063140208251289
66,00068,00072160236284329
68,00070,00081179265318369
70,00072,00090198293353408

June 10, 2019 1326 Bulletin No. 2019–24
REV. PROC. 2019-26 TABLE 4
DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES
WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2019
Fair Market Value of Passenger
AutomobileTax Year During Lease
OverNot Over1st2nd3rd4th5th & later
72,00074,00098217322387448
74,00076,000107236351421487
76,00078,000116255379456526
78,00080,000125275407489567
80,00085,000140308458549635
85,00090,000162356529635734
90,00095,000184404600720833
95,000100,000206452671806931
100,000110,0002385257789341,079
110,000120,0002826219201,1051,277
120,000130,0003267171,0631,2761,474
130,000140,0003708121,2061,4471,672
140,000150,0004139091,3481,6181,869
150,000160,0004571,0051,4911,7882,067
160,000170,0005011,1011,6331,9602,264
170,000180,0005451,1971,7762,1302,461
180,000190,0005881,2931,9192,3012,659
190,000200,0006321,3892,0612,4732,856
200,000210,0006761,4852,2042,6433,053
210,000220,0007201,5812,3462,8153,250
220,000230,0007631,6772,4892,9863,448
230,000240,0008071,7732,6323,1563,645
240,000and over8511,8692,7743,3283,842
SECTION 5. EFFECTIVE DATE
This revenue procedure applies to pas-
senger automobiles that a taxpayer first
places in service or first leases during cal-
endar year 2019.
SECTION 6. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Bernard P. Harvey of the Of-
fice of Associate Chief Counsel (Income
Tax & Accounting). For further informa-
tion regarding this revenue procedure,
contact Mr. Harvey at (202) 317-7005 (not
a toll-free number).

Bulletin No. 2019–24 1327 June 10, 2019
Part IV.
Announcement 2019-06
Notice 2019-32, 2019-21 I.R.B. 1187
(May 20, 2019), contains a typographical
error in the first sentence of section 4.01
on page 1189. The sentence states that
comments may be submitted in writing
on or before Thursday, June 4, 2019. The
correct date is July 4, 2019. The sentence
is amended to delete “June 4,” and replace
it with “July 4.”

Bulletin No. 2019–24 i June 10, 2019
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion. It
is not used where a position in a prior rul-
ing is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previous-
ly published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cas-
es in litigation, or the outcome of a Ser-
vice study.
Abbreviations
The following abbreviations in current use
and formerly used will appear in material
published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

June 10, 2019 ii Bulletin No. 2019–24
Numerical Finding List
1
Bulletin 2019–24
Action on Decision:
2019-1, 2019-08 I.R.B. 569
Announcements:
2019-1, 2019-06 I.R.B. 566
2019-2, 2019-12 I.R.B. 910
2019-3, 2019-15 I.R.B. 965
2019-4, 2019-21 I.R.B. 1192
2019-5, 2019-22 I.R.B. 1262
2019-6, 2019-24 I.R.B. 1327
Notices:
2019-01, 2019-02 I.R.B. 275
2019-02, 2019-02 I.R.B. 281
2019-03, 2019-03 I.R.B. 350
2019-04, 2019-02 I.R.B. 282
2019-05, 2019-02 I.R.B. 283
2019-06, 2019-03 I.R.B. 353
2019-07, 2019-09 I.R.B. 740
2019-08, 2019-03 I.R.B. 354
2019-09, 2019-04 I.R.B. 403
2019-10, 2019-13 I.R.B. 913
2019-11, 2019-05 I.R.B. 430
2019-13, 2019-08 I.R.B. 580
2019-16, 2019-10 I.R.B. 763
2019-17, 2019-12 I.R.B. 907
2019-18, 2019-13 I.R.B. 915
2019-19, 2019-12 I.R.B. 907
2019-20, 2019-14 I.R.B. 927
2019-21, 2019-14 I.R.B. 927
2019-22, 2019-14 I.R.B. 931
2019-23, 2019-15 I.R.B. 941
2019-24, 2019-14 I.R.B. 932
2019-25, 2019-15 I.R.B. 942
2019-26, 2019-15 I.R.B. 943
2019-28, 2019-18 I.R.B. 1077
2019-30, 2019-20 I.R.B. 1180
2019-31, 2019-20 I.R.B. 1181
2019-32, 2019-21 I.R.B. 1187
2019-33, 2019-22 I.R.B. 1255
2019-34, 2019-22 I.R.B. 1257
2019-39, 2019-24 I.R.B. 1322
Proposed Regulations:
REG-104259-18, 2019-02 I.R.B. 300
REG-104352-18, 2019-03 I.R.B. 357
REG-106089-18, 2019-05 I.R.B. 431
REG-134652-18, 2019-09 I.R.B. 747
REG-141739-08, 2019-09 I.R.B. 757
REG-121694-16, 2019-16 I.R.B. 1032
REG-135671-17, 2019-16 I.R.B. 1035
REG-103083-18, 2019-17 I.R.B. 1046
Proposed Regulations—Continued
REG-113943-17, 2019-17 I.R.B. 1067
REG-143686-07, 2019-17 I.R.B. 1072
REG-124627-11, 2019-17 I.R.B. 1073
REG-120186-18, 2019-21 I.R.B. 1193
REG-113604-18, 2019-22 I.R.B. 1265
Revenue Procedures:
2019-1, 2019-01 I.R.B. 1
2019-2, 2019-01 I.R.B. 106
2019-3, 2019-01 I.R.B. 130
2019-4, 2019-01 I.R.B. 146
2019-5, 2019-01 I.R.B. 230
2019-6, 2019-02 I.R.B. 284
2019-7, 2019-01 I.R.B. 268
2019-8, 2019-03 I.R.B. 347
2019-9, 2019-02 I.R.B. 293
2019-10, 2019-02 I.R.B. 296
2019-11, 2019-09 I.R.B. 742
2019-12, 2019-04 I.R.B. 401
2019-13, 2019-09 I.R.B. 744
2019-14, 2019-15 I.R.B. 948
2019-15, 2019-14 I.R.B. 939
2019-17, 2019-17 I.R.B. 1045
2019-18, 2019-18 I.R.B. 1077
2019-20, 2019-20 I.R.B. 1182
2019-21, 2019-21 I.R.B. 1190
2019-22, 2019-22 I.R.B. 1260
2019-25, 2019-22 I.R.B. 1261
2019-26, 2019-24 I.R.B. 1323
Revenue Rulings:
2019-03, 2019-02 I.R.B. 272
2019-04, 2019-07 I.R.B. 567
2019-05, 2019-11 I.R.B. 766
2019-06, 2019-14 I.R.B. 919
2019-07, 2019-10 I.R.B. 761
2019-08, 2019-14 I.R.B. 923
2019-09, 2019-14 I.R.B. 925
2019-10, 2019-16 I.R.B. 1010
2019-11, 2019-17 I.R.B. 1041
2019-13, 2019-20 I.R.B. 1179
Treasury Decisions:
9844, 2019-11 I.R.B. 781
9845, 2019-08 I.R.B. 570
9846, 2019-09 I.R.B. 583
9847, 2019-09 I.R.B. 670
9848, 2019-11 I.R.B. 897
9850, 2019-12 I.R.B. 904
9852, 2019-16 I.R.B. 1010
9853, 2019-16 I.R.B. 1026
9855, 2019-17 I.R.B. 1042
9854, 2019-18 I.R.B. 1075
9857, 2019-22 I.R.B. 1239
9858, 2019-22 I.R.B. 1251
Treasury Decisions—Continued
9859, 2019-24 I.R.B. 1293
9860, 2019-24 I.R.B. 1297
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2018–27 through 2018–52 is in Internal Revenue Bulletin
2018–52, dated December 27, 2018.

Bulletin No. 2019–24 iii June 10, 2019
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2019–24
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2018–27 through 2018–52 is in Internal Revenue Bulletin
2018–52, dated December 27, 2018.

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www.irs.gov) or write to the Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave.
NW, IR-6230 Washington, DC 20224.