Internal Revenue Bulletin 2023-16 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 2023–16
April 17, 2023
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
Announcement 2023-10, page 663.
This Announcement is issued pursuant to § 521(b) of
Pub. L. 106-170, the Ticket to Work and Work Incentives
Improvement Act of 1999, which requires the Secretary
of the Treasury to report annually to the public concerning
advance pricing agreements (APAs) and the Advance Pricing
and Mutual Agreement Program (APMA Program), formerly
known as the Advance Pricing Agreement Program (APA Pro-
gram). This twenty-fourth report describes the experience,
structure, and activities of the APMA Program during calen-
dar year 2022.
EXCISE TAX
REG-105954-22, page 713.
This notice of proposed rulemaking provides guidance
related to sections 4661, 4662, 4671, and 4672 of the
Internal Revenue Code, collectively referred to as the
Superfund chemical taxes. Section 4661(a) imposes an
excise tax on the sale or use of “taxable chemicals” by
manufacturers, producers, or importers. Section 4671(a)
imposes an excise tax on the sale or use of “taxable sub-
stances” by importers. The Superfund chemical taxes
previously expired on December 31, 1995, but were rein-
stated with certain modifications, effective July 1, 2022,
by section 80201 of the Infrastructure Investment and
Jobs Act (IIJA), Public Law 117-58, 135 Stat. 429 (Novem-
ber 15, 2021).
INCOME TAX
Notice 2023-31, page 661.
This Notice announces that when proposed regulations
under section 903 (REG-112096-22) are finalized, the Trea-
sury Department and the IRS intend to extend the transition
period for the single-country exception’s documentation
requirement from May 17, 2023 to 180 days after the
final regulations are filed with the Federal Register. The sin-
gle-country exception provides relief from the source-based
attribution requirement under section 903 for foreign with-
holding taxes on royalties paid for the use of intellectual
property within the withholding jurisdiction.
REG-120080-22, page 746.
This document contains proposed regulations regarding the
credit for clean vehicles under section 30D of the Inter-
nal Revenue Code (Code). These proposed regulations will
affect persons seeking to claim the § 30D credit and quali-
fied manufacturers of the clean vehicles.
Rev. Rul. 2023-2, page 658.
Revenue Ruling 2023-2 confirms that the basis adjustment
under section 1014 generally does not apply to the assets
of an irrevocable grantor trust not included in the deceased
grantor’s gross estate for Federal estate tax purposes.
Finding Lists begin on page ii.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
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Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial 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
substantive rulings necessary to promote a uniform appli-
cation 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
otherwise indicated. Procedures relating solely to matters
of internal management are not published; however, state-
ments 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
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
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.
April 17, 2023 Bulletin No. 2023–16

Part I
Section 671.—Trust
Income, Deductions, and
Credits Attributable to
Grantors and Others as
Substantial Owners; §
1014.—Basis of Property
Acquired from a Decedent
26 CFR 1.1014-1: Basis of Property Acquired from
a Decedent
Rev. Rul. 2023-2
ISSUE
Is there a basis adjustment under
§ 1014 of the Internal Revenue Code
(Code) to the assets of a trust on the death
of the individual who is the owner of the
trust under chapter 1 of the Code (chapter
1) if the trust assets are not includible in
the owner’s gross estate pursuant to chap-
ter 11 of the Code (chapter 11)
1
?
FACTS
In Year 1, A, an individual, established
irrevocable trust, T, and funded T with Asset
in a transfer that was a completed gift for
gift tax purposes. A retained a power over
T that causes A to be treated as the owner of
T for income tax purposes under subpart E
of part I of subchapter J of chapter 1 (sub-
part E). A did not hold a power over T that
would result in the inclusion of T’s assets
in A’s gross estate under the provisions of
chapter 11. By the time of A’s death in Year
7, the fair market value (FMV) of Asset had
appreciated. At A’s death, the liabilities of T
did not exceed the basis of the assets in T,
and neither T nor A held a note on which
the other was the obligor.
L AW
Section 671 provides that, where sub-
part E treats the grantor or another person
as the owner of any portion of a trust, the
taxable income and credits of the grantor
or the other person include those items of
income, deductions, and credits against
tax of the trust that are attributable to that
portion of the trust to the extent that these
items would be taken into account under
chapter 1 in computing taxable income
or credits against the tax of an individual.
Any remaining portion of the trust is sub-
ject to subparts A through D of part I of
subchapter J.
Section 1012(a) provides that the basis
of property is its cost, except as other-
wise provided in subchapter O of chapter
1 (subchapter O) (relating to gain or loss
on disposition of property) and subchap-
ters C (relating to corporate distributions
and adjustments), K (relating to partners
and partnerships), and P (relating to capi-
tal gains and losses) of chapter 1. One of
the provisions set forth in subchapter O is
§ 1014.
Section 1014(a)(1) generally provides
that, except as otherwise provided in
§ 1014 (including § 1014(f) requiring the
use of consistent basis), the basis of prop-
erty in the hands of a person acquiring the
property from a decedent or to whom the
property passed from a decedent, if not
sold, exchanged, or otherwise disposed of
before the decedent’s death by that person,
is the FMV of the property at the date of
the decedent’s death.
Section 1014(b) lists the seven types of
property that are considered to have been
acquired from or to have passed from the
decedent for purposes of § 1014(a). The
types of property are:
2

• Section 1014(b)(1) – Property
acquired by bequest, devise, or inher-
itance, or by the decedent’s estate
from the decedent;
• Section 1014(b)(2) – Property trans-
ferred by the decedent during life in
trust to pay the income for life to or
on the order or direction of the dece-
dent, with the right reserved to the
decedent at all times before death to
revoke the trust;
• Section 1014(b)(3) – In the case of
decedents dying after December 31,
1951, property transferred by the
decedent during life in trust to pay
the income for life or on the order
or direction of the decedent with
the right reserved to the decedent at
all times before death to make any
change in its enjoyment through the
exercise of a power to alter, amend,
or terminate the trust;
• Section 1014(b)(4) – Property
passing without full and adequate
consideration under a general power
of appointment exercised by the dece-
dent by will;
• Section 1014(b)(6) – Property which
represents the surviving spouse’s one-
half share of community property held
by the decedent and the surviving
spouse under the community property
laws of any State, or United States
territory or any foreign country, if at
least one-half of the whole of the com-
munity interest in such property was
includible in determining the value of
the decedent’s gross estate under chap-
ter 11 or § 811 of the Internal Revenue
Code of 1939 (1939 Code);
• Section 1014(b)(9) – Property
acquired from the decedent by rea-
son of death, form of ownership, or
other conditions (including property
acquired through the exercise or
non-exercise of a power of appoint-
ment), if by reason thereof the
property must be included in deter-
mining the value of the decedent’s
gross estate under chapter 11 or under
the 1939 Code. In this case, if the
property is acquired before the death
of the decedent, the basis commenc-
ing on the death of the decedent is the
amount determined under § 1014(a)
reduced by the amount allowed to the
taxpayer as deductions in computing
taxable income under subtitle A of
the Code or prior income tax laws
for exhaustion, wear and tear, obso-
lescence, amortization, and depletion
on the property before the death of
the decedent. However, § 1014(b)(9)
does not apply to:
1
Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Income Tax Regulations (26 CFR part 1).
2
Section 1014(b)(5) applies only to decedents dying before January 1, 2005. Section 1014(b)(7) and (8) were repealed by section 221(a)(74)(B) of the Tax Increase Prevention Act of 2014,
Public Law 113-295, 128 Stat. 4010, 4049 (December 19, 2014).
April 17, 2023 658 Bulletin No. 2023–16

(A) annuities described in § 72;
(B) stock or securities of a foreign
corporation that would have been
a foreign personal holding com-
pany prior to the repeal of § 552
of its next preceding taxable year
prior to the decedent’s death to
which § 1014(b)(5) would apply
if the stock or securities had been
acquired by bequest; and
(C) property described in any other
paragraph of § 1014(b); and
• Section 1014(b)(10) – Property
includible in the gross estate of the
decedent under § 2044 (relating to
certain property for which the marital
deduction was previously allowed).
In any such case, the basis is deter-
mined under § 1014(b)(9) as if such
property were described in the first
sentence of § 1014(b)(9).
Section 1.1014-1(a) generally pro-
vides that the basis of property acquired
from a decedent is equal to the value
placed upon such property for purposes
of chapter 11. Accordingly, generally the
basis of property acquired from a dece-
dent is the FMV of such property at the
date of the decedent’s death, or, if the
decedent’s executor so elects, at the alter-
nate valuation date prescribed in § 2032.
Property acquired from a decedent
includes, principally, property acquired
by bequest, devise, or inheritance, and,
in the case of decedents dying after
December 31, 1953, property required
to be included in determining the value
of the decedent’s gross estate under any
provision of the Internal Revenue Code
of 1954 or the 1939 Code.
Section 1.1014-2(a)(1) provides that
property acquired by bequest, devise, or
inheritance, or by the decedent’s estate
from the decedent, whether the property
was acquired under the decedent’s will
or under the law governing the descent
and distribution of the property of dece-
dents, is considered to have been acquired
from a decedent and the property’s basis
is determined under the general rule in §
1.1014-1.
Section 1.1014-2(b)(2) generally pro-
vides that property is considered to have
been acquired from a decedent to the
extent such property is includible in the
decedent’s gross estate if the decedent
died after December 31, 1953.
In Rev. Rul. 84-139, 1984-2 C.B. 168,
D, a citizen and resident of foreign coun-
try Z, died owning real property located in
Z. B, a United States citizen, inherited the
real property in accordance with the laws
of Z. At the time of D’s death, the prop-
erty had a basis of $100x and a FMV of
$1,000x. Because the property was located
outside the United States and D was a
nonresident alien, the value of the prop-
erty was not includible in D’s gross estate
under § 2103 for purposes of chapter 11.
B sold the property the following year for
$1050x, claiming a basis of $1,000x and
gain of $50x. The ruling concludes that,
because B inherited the property from D,
and the property is within the definition of
property acquired from a decedent under
§ 1014(b)(1), it received a basis adjust-
ment to FMV at D’s death and B had
correctly calculated B’s basis and gain. In
Rev. Rul. 84-139, which did not involve
a grantor trust, the property at issue was
acquired by a bequest.
ANALYSIS
For property to receive a basis adjust-
ment under § 1014(a), the property must
be acquired or passed from a decedent.
For property to be acquired or passed
from a decedent for purposes of § 1014(a),
it must fall within one of the seven types
of property listed in § 1014(b). Asset does
not fall within any of the seven types of
property listed in § 1014(b).
First, upon A’s death, Asset was not
”bequeathed,” “devised,” or “inherited”
within the meaning of § 1014(b)(1). A
“bequest” is the act of giving property
(usually personal property or money)
by will. Black’s Law Dictionary (11th
ed. 2019). The Supreme Court defined
“bequest” as a “gift of personal property
by will” for purposes of the predecessor
provision of § 102 that, as today, excluded
gifts, bequests, devises, or inheritance
from gross income for income tax pur-
poses. United States v. Merriam, 263 U.S.
179, 184 (1923).
A “devise” is the act of giving property,
especially real property, by will. Black’s
Law Dictionary (11th ed. 2019). Volume
97 of the Corpus Juris Secundum notes
that although “bequest” and “bequeath”
strictly refer to a gift by will of per-
sonal property, the words may be given
a broader meaning to include real prop-
erty which, under the narrower definition,
would be a devise. See 97 C.J.S. Wills §
1861 (2022).
An “inheritance” is property received
from an ancestor under the laws of intes-
tacy or property that a person receives by
bequest or devise. Black’s Law Dictionary
(11th ed. 2019).
In Bacciocco v. United States, 286
F.2d 551, 554-55 (6th Cir. 1961), the
court found that property transferred in
trust prior to the decedent’s death is not
bequeathed or inherited because it did not
pass either by will or intestacy. The court
stated, “[w]e construe those terms [bequest
and inheritance] according to their usual
and normal meaning” and noted that the
decedent’s death did not transfer the assets
to the trust. Id. at 554-56. This does not
imply that property in a trust could never
fall within the meaning of § 1014 (such as
property included in the decedent’s gross
estate or property specifically described
by §§ 1014(b)(2), (3), or (4)); however, in
the facts outlined above, the trust property
does not fall within the meaning of those
terms.
The Congressional committee report
explaining the basis of property acquired
from a decedent for purposes of § 1014(b)
(then designated § 113(a)(5) of the 1939
Code) stated that the provision “applies
basically to property in the decedent’s
probate estate and includible in his gross
estate under § 811(a) [the predecessor pro-
vision of § 2031(a)]. In addition, it applies
to property acquired by certain specifi-
cally described methods of disposition
which are treated as though the acquisition
was by bequest, devise, or inheritance.”
H.R. Rep. No 83-1337 at 4407-08 (March
9, 1954). Citing that report, the court in
Collins v. United States, 318 F. Supp. 382,
386 (C.D. Cal. 1970) stated, “[i]t seems
clear that property cannot be said to come
from a decedent by ‘bequest, devise, or
inheritance’ unless it is part of the dece-
dent’s probate estate under the laws of the
state of his domicile.”
3
The court deter-
mined that payments made to a widow by
her deceased husband’s employers, under
contracts negotiated by her husband,
did not pass from the decedent under
§ 1014 and so would not acquire a basis
determined by the contract’s FMV at the
decedent’s death but instead were income
Bulletin No. 2023–16 659 April 17, 2023

April 17, 2023 660 Bulletin No. 2023–16
with respect to a decedent that would not
receive a basis adjusted to date of death
value.
Second, Asset does not fall within any
of the remaining types of property listed
in § 1014(b). Asset is not described in
§§ 1014(b)(2), (3), or (4) because A did
not retain a power to revoke or amend T or
hold a power to appoint Asset. Asset also
is not described by § 1014(b)(6) because it
is not community property. Finally, Asset
is not described by §§ 1014(b)(9) or (10)
because it is not included in A’s gross
estate under the provisions of chapter 11.
Because at A’s death Asset does not fall
within any of the seven types of property
listed in § 1014(b), Asset does not receive
a basis adjustment under § 1014(a) at A’s
death.
HOLDING
A creates T, an irrevocable trust, retain-
ing a power which causes A to be the
owner of the entire trust for income tax
purposes under chapter 1 but does not
cause the trust assets to be included in A’s
gross estate for purposes of chapter 11.
If A funds T with Asset in a transaction
that is a completed gift for gift tax pur-
poses, the basis of Asset is not adjusted
to its fair market value on the date of A’s
death under § 1014 because Asset was
not acquired or passed from a decedent as
defined in § 1014(b). Accordingly, under
this revenue ruling’s facts, the basis of
Asset immediately after A’s death is the
same as the basis of Asset immediately
prior to A’s death.
4

DRAFTING INFORMATION
The principal authors of this revenue
ruling are Cynthia D. Morton and Dan-
iel J. Gespass of the Office of Associate
Chief Counsel (Passthroughs & Spe-
cial Industries). For further information
regarding this revenue ruling, please
contact Ms. Morton at (202) 317-5279
or Mr. Gespass at (202) 317-6859 (not a
toll-free number).
3
The court in Collins also determined that the wording of § 1014(b) indicated that the list was exclusive, marking the limits of property acquired from a decedent or passing from a decedent,
and that a transfer must therefore be within that list before it could be considered as eligible for a basis adjustment under § 1014(a). Id. at 385-86.
4
This revenue ruling does not alter the result in Rev. Rul. 84-139. Property acquired from a non-resident non-citizen decedent that is not included in his or her gross estate may receive a basis
adjustment under § 1014 if the property is acquired by bequest, devise, or inheritance within the meaning of § 1014(b)(1) or is otherwise specifically described in § 1014(b).

Bulletin No. 2023–16 661 April 17, 2023
Part III
Extension of the Transition
Period for the Single-
Country Exception Under
Section 903 of the Internal
Revenue Code
Notice 2023-31
SECTION 1. PURPOSE
This notice announces that the
Department of the Treasury (Treasury
Department) and the Internal Revenue
Service (IRS) intend to provide a longer
transition period for the documentation
requirement in proposed § 1.903-1(c)(2)
(iv)(D) (the documentation requirement)
when the exception to the source-based
attribution requirement in proposed
§ 1.903-1(c)(2)(iii)(B) (the single-country
exception) is finalized.
1
SECTION 2. BACKGROUND
Section 901 of the Internal Revenue
Code (Code) allows a credit for foreign
income, war profits, and excess profits
taxes, and section 903 provides that such
taxes include a tax in lieu of a general-
ly-imposed foreign income, war profits,
or excess profits tax. A foreign tax is a
creditable net income tax only if the deter-
mination of the foreign tax base conforms
in essential respects to the determina-
tion of taxable income under the Code.
To meet this test, a foreign tax must
satisfy the net gain requirement, which
comprises the realization requirement,
the gross receipts requirement, the cost
recovery requirement (formerly the net
income requirement), and the attribution
requirement.
The attribution requirement in § 1.901-
2(b)(5) requires that a foreign tax conform
to the concepts of taxing jurisdiction
reflected in the Code that define an income
tax in the U.S. sense. With respect to
a foreign tax imposed on nonresident
taxpayers, the attribution requirement
limits the scope of gross receipts and
costs included in the base of a foreign tax
to those that satisfy the activities-based
attribution, source-based attribution, or
property-based attribution tests. § 1.901-
2(b)(5)(i).
Under the source-based attribution
requirement in § 1.901-2(b)(5)(i)(B), a
foreign tax imposed on the nonresident’s
income on the basis of source meets the
attribution requirement only if the foreign
tax law’s sourcing rules are reasonably
similar to the sourcing rules that apply
for Federal income tax purposes. In the
case of gross income arising from royal-
ties, § 1.901-2(b)(5)(i)(B)(2) provides that
the foreign tax law must source royalties
based on the place of use of, or the right
to use, the intangible property, consis-
tent with how the Code sources royalty
income.
For foreign withholding taxes,
§ 1.903-1(c)(2)(iii) provides that the
foreign withholding tax must meet the
source-based attribution requirement
in § 1.901-2(b)(5)(i)(B) to qualify as a
‘‘covered withholding tax’’ that may be
creditable as a tax in lieu of an income tax.
Thus, a withholding tax on a royalty pay-
ment is creditable only if the foreign tax
law sources royalties based upon the place
of use of, or the right to use, the intangible
property, consistent with how the Code
sources royalty income.
On November 22, 2022, the Treasury
Department and the IRS published pro-
posed regulations (REG-112096-22) in
the Federal Register (87 FR 71271) (the
2022 FTC proposed regulations). The
2022 FTC proposed regulations provide
a limited exception to the source-based
attribution requirement for withhold-
ing taxes on certain royalty payments.
Under proposed § 1.903-1(c)(2)(iii), a
tested foreign tax satisfies the source-
based attribution requirement if the tax
meets either the source-based attribu-
tion requirement or the single-country
exception. In general, the single-coun-
try exception applies if (1) the income
subject to the tested foreign tax is char-
acterized as royalty income under the
foreign tax law,
2
and (2) the payment
giving rise to such income is made pur-
suant to a single-country license (such
license, the required agreement). Pro-
posed § 1.903-1(c)(2)(iii)(B).
Under the documentation requirement,
the required agreement pursuant to which
the royalty is paid must be executed no
later than the date on which the royalty is
paid. However, recognizing that the sin-
gle-country exception is proposed to be
applicable to periods preceding the release
of the 2022 FTC proposed regulations,
proposed § 1.903-1(c)(2)(iv)(D) provides
a special transition documentation rule
for royalties paid on or before May 17,
2023 (the transition documentation rule).
Under the transition documentation rule,
the required agreement must be executed
no later than May 17, 2023, and the agree-
ment must state (whether in the terms of
the agreement or in recitals) that royal-
ties paid on or before the execution of the
agreement are considered paid pursuant to
the terms of the agreement. According to
the preamble to the 2022 FTC proposed
regulations, taxpayers may choose to rely
on the provisions addressing the attribu-
tion requirement for royalty payments
(proposed § 1.901-2(b)(5)(i)(B)(2) and
(d)(1)(iii) and proposed § 1.903-1(c)(2)
and (d)(3), (4), and (8) through (11)) for
foreign taxes paid in taxable years begin-
ning on or after December 28, 2021, and
ending before the effective date of final
regulations adopting these rules.
The Treasury Department and the IRS
have received comments with respect
to the 2022 FTC proposed regulations,
including with respect to the documen-
tation requirement for the single-country
exception. The Treasury Department and
the IRS are considering those comments.
SECTION 3. EXTENSION OF THE
TRANSITION PERIOD FOR THE
DOCUMENTATION REQUIREMENT
To allow for an orderly implementation
of the requirements of the single-country
1
Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Income Tax Regulations (26 CFR part 1).
2
Income from the sale of a copyrighted article (as determined under rules similar to § 1.861-18) is not characterized as royalty income regardless of the characterization of the income under
the foreign tax law.

April 17, 2023 662 Bulletin No. 2023–16
exception, including for relevant periods
before the finalization of the single-coun-
try exception, the Treasury Department and
the IRS intend to modify the transition doc-
umentation rule when the single-country
exception in proposed § 1.903-1(c)(2)(iii)
(B) is finalized to provide that the required
agreement must be executed no later than
180 days after the date final regulations
adopting the single-country exception are
filed with the Federal Register.
SECTION 4. TAXPAYER RELIANCE
Consistent with the preamble to the
2022 FTC proposed regulations, taxpay-
ers may rely on Section 3 of this notice for
foreign taxes paid in taxable years begin-
ning on or after December 28, 2021, and
ending before the effective date of final
regulations adopting the single-country
exception, provided that the foreign tax is
otherwise eligible for the single-country
exception under the 2022 FTC proposed
regulations.
SECTION 5. DRAFTING
INFORMATION
The principal author of this notice is
Teisha M. Ruggiero of the Office of Asso-
ciate Chief Counsel (International). For
further information regarding this notice,
contact Ms. Ruggiero at (646) 259-8116
(not a toll-free number).

Bulletin No. 2023–16 663 April 17, 2023
Part IV
Announcement and Report Concerning Advance Pricing Agreements
March 27, 2023
Announcement 2023-10
This Announcement is issued pursuant to § 521(b) of Pub. L. 106-170, the Ticket to Work and Work Incentives Improvement Act of
1999, which requires the Secretary of the Treasury to report annually to the public concerning advance pricing agreements (APAs)
and the Advance Pricing and Mutual Agreement Program (APMA Program), formerly known as the Advance Pricing Agreement
Program (APA Program). The first report covered calendar years 1991 through 1999. Subsequent reports covered each calendar year
2000 through 2021 separately. This twenty-fourth report describes the experience, structure, and activities of the APMA Program
during calendar year 2022. It does not provide guidance regarding the application of the arm’s length standard.
Part I of this report includes information on the structure, composition, and operation of the APMA Program; Part II presents statisti-
cal data; and Part III includes general descriptions of various elements of the APAs executed in 2022, including types of transactions
covered, transfer pricing methods used, and completion time.
John M. Wall
Acting Director, APMA Program

April 17, 2023 664 Bulletin No. 2023–16
Part I. The APMA Program – Structure, Composition, and Operation
[Pub. L. 106-170 § 521(b)(2)(A)]
In February 2012, the former APA Program was moved from the Office of Chief Counsel to the Office of Transfer Pricing Operations
1

within the Large Business and International Division of the IRS and combined with the U.S. Competent Authority staff responsible
for transfer pricing cases, thereby forming the APMA Program (APMA).
As of December 31, 2022, APMA’s APA cases were handled by 59 team leaders, 26 economists, 9 managers, and 3 assistant direc-
tors.
2
Each assistant director oversees three managers who lead teams consisting of both team leaders and economists. APMA’s main
office is in Washington, DC, and it also has offices in northern California (San Francisco and San Jose), southern California (Los
Angeles and Laguna Niguel), Chicago, and New York.
On August 31, 2015, a new revenue procedure governing APA applications was published in 2015-35 I.R.B. on page 263. Revenue
Procedure (Rev. Proc.) 2015-41 provides guidance, information and instructions on APA requests and the administration of APAs.
Rev. Proc. 2015-41 updates and supersedes Rev. Proc. 2006-9, 2006-1 C.B. 278, as modified by Rev. Proc. 2008-31, 2008-1 C.B.
1133, which is also superseded.
Model APAs appear as appendices to this report. Appendix 1 is the model for APAs covered by Rev. Proc. 2006-9. Appendix 2 is the
current model APA for APAs covered by Rev. Proc. 2015-41. A list of primary APMA contacts is available at https://www.irs.gov/
businesses/corporations/apma-contacts.
1
In 2017, Transfer Pricing Operations became Treaty & Transfer Pricing Operations (“TTPO”).
2
In late 2020, TTPO’s Treaty Assistance and Interpretation Team (TAIT) joined APMA, bringing the total number of groups in APMA to four. The three legacy APMA groups have primary
responsibility for cases arising under the business profits and associated enterprises articles of U.S. tax treaties. TAIT endeavors to resolve competent authority issues arising under all other
articles of U.S. tax treaties including issues arising under U.S. tax treaties relating to estate and gift taxes. As such, TAIT is separate from APMA’s APA program, and the total numbers of
team leaders and managers handling APA cases do not include TAIT analysts and managers.

Bulletin No. 2023–16 665 April 17, 2023
Part II. APMA Program Statistical Data
[Pub. L. 106-170 § 521(b)(2)(C)(i-viii)]
Table 1: APA Applications Filed
§ 521(b)(2)(C)(i)3
Unilateral Bilateral MultilateralTotal
Filed 1991-1999
3
401
Filed 2000-20216531,845372,535
Filed in 2022221547183
Total Filed 1991-20223,119

3

Part II. APMA Program Statistical Data
[Pub. L. 106-170 § 521(b)(2)(C)(i-viii)]

Table 1: APA Applications Filed
§ 521(b)(2)(C)(i)

Unilateral Bilateral Multilateral Total
Filed 1991-1999
3
401
Filed 2000-2021 653 1,845 37 2,535
Filed in 2022 22 154 7 183
Total Filed 1991-2022

3,119

The charts above illustrate the number of complete applications filed per year and the percentage
of bilateral requests received in 2022 per foreign country. As of December 31, 2022, APMA had
also received 34 user fee filings that were not yet accompanied by a substantially complete APA
application, in addition to the 183 complete APA applications.

3
The first APA Statutory Report, which compiled APA data from 1991-1999, did not report the cumulative number
of applications for those years by submission type, so the cumulative totals cannot be reported in that manner.
0
50
100
150
200
250
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Japan
29%
India
14%
Canada
11%
Korea
10%
Italy
6%
United Kingdom
6%
Mexico
5%
Switzerland
4%
Germany
3%
Netherlands
3%
All Other Countries
9%
Bilateral APAs
Filed by Country 2022
Applications Filed
2013-2022
The charts above illustrate the number of complete applications fi led per year and the percentage of bilateral requests received in
2022 per foreign country. As of December 31, 2022, APMA had also received 34 user fee fi lings that were not yet accompanied by a
substantially complete APA application, in addition to the 183 complete APA applications.
3
The fi rst APA Statutory Report, which compiled APA data from 1991-1999, did not report the cumulative number of applications for those years by submission type, so the cumulative totals
cannot be reported in that manner.

April 17, 2023 666 Bulletin No. 2023–16
Table 2: Executed
4
and Pending APAs
§ 521(b)(2)(C)(ii-vi)
56
Unilateral Bilateral MultilateralTotal
Total Executed 1991-20216871,483212,191
Total Executed in 20221066177
Total Executed 1991-20226971,549222,268
Total Pending as of 12/31/20225448030564
Renewals Executed in 2022
5
1032042
Renewals Pending
6
as of 12/31/20223718515237

4

Table 2: Executed
4
and Pending APAs
§ 521(b)(2)(C)(ii-vi)

Unilateral Bilateral Multilateral
Total
Total Executed 1991-2021 687 1,483 21 2,191
Total Executed in 2022 10 66 1 77
Total Executed 1991-2022 697 1,549 22 2,268

Total Pending as of 12/31/2022 54 480 30 564

Renewals Executed in 2022
5
10 32 0 42
Renewals Pending
6
as of 12/31/2022 37 185 15 237

In 2022, the percentage of renewals executed decreased (55 percent of all APAs executed in

4
“Executed APAs” refers to APAs that were finalized and includes both initial and renewal APAs.
5
The number of renewals executed is included in the total number of APAs executed during the year.
6
The number of renewals still pending as of year-end is also included in the total number of pending APAs.
APAs Executed
2013-2022
0
50
100
150
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Japan
39%
Canada
14%
India
8%
Switzerland
8%
Germany
4%
Italy
4%
Korea
5%
Belgium
3%
China
3%
Finland
3%
United Kingdom
3%
All Other Countries
6%
Bilateral APAs
Executed by Country 2022
In 2022, the percentage of renewals executed decreased (55 percent of all APAs executed in 2022 versus 63 percent in 2021). The
charts above illustrate trends in the number of APAs executed per year and the countries involved in the bilateral APAs that were
executed in 2022.
4
“Executed APAs” refers to APAs that were fi nalized and includes both initial and renewal APAs.
5
The number of renewals executed is included in the total number of APAs executed during the year.
6
The number of renewals still pending as of year-end is also included in the total number of pending APAs.

Bulletin No. 2023–16 667 April 17, 2023

5

2022 versus 63 percent in 2021). The charts above illustrate trends in the number of APAs
executed per year and the countries involved in the bilateral APAs that were executed in 2022.

As the top chart illustrates, the number of pending requests increased relative to December 31,
2021. As of December 31, 2022, almost half of the pending bilateral APA requests involved
either Japan or India.

Table 3: APAs Revoked or Cancelled and Applications Withdrawn
§ 521(b)(2)(C)(vii)

Unilateral Bilateral Multilateral Total
Revoked or Cancelled 1991-2000
7
1
Revoked or Cancelled 2001-2021 8 2 0 10
Revoked or Cancelled in 2022 0 0 0 0
Total Revoked or Cancelled 1991-2022

11

Withdrawn 1991-2000
8
49
Withdrawn 2001-2021 75 152 2 229

7
The first APA Statutory Report, which compiled APA data from 1991-1999, and the second APA Statutory
Report, which compiled APA data for 2000, did not report the cumulative number of applications for those years by
submission type, so the cumulative totals cannot be reported in that manner.
8
See supra note 7.
Pending APAs
2013-2022
0
200
400
600
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Japan
24%
India
22%
Canada
11%
Korea
7%
Italy
6%
Mexico
5%
Germany
4%
United Kingdom
4%
Switzerland
3%
All Other Countries
14%
Pending Bilateral APAs
by Country
As the top chart illustrates, the number of pending requests increased relative to December 31, 2021. As of December 31, 2022,
almost half of the pending bilateral APA requests involved either Japan or India.
Table 3: APAs Revoked or Cancelled and Applications Withdrawn
§ 521(b)(2)(C)(vii)
78
Unilateral Bilateral MultilateralTotal
Revoked or Cancelled 1991-2000
7
1
Revoked or Cancelled 2001-202182010
Revoked or Cancelled in 20220000
Total Revoked or Cancelled 1991-2022
11
Withdrawn 1991-2000
8
49
Withdrawn 2001-2021751522229
Withdrawn in 20221506
Withdrawn 1991-2022
284
7
The fi rst APA Statutory Report, which compiled APA data from 1991-1999, and the second APA Statutory Report, which compiled APA data for 2000, did not report the cumulative number
of applications for those years by submission type, so the cumulative totals cannot be reported in that manner.
8
See supra note 7.

April 17, 2023 668 Bulletin No. 2023–16
Table 4: APAs Executed in 2022 by Industry
§ 521(b)(2)(C)(viii)
Industry
Wholesale/Retail Trade32
Manufacturing31
Services10
Finance, Insurance, and Real Estate3
All Other Industries1

6

Withdrawn in 2022 1 5 0 6
Withdrawn 1991-2022

284
Table 4: APAs Executed in 2022 by Industry
§ 521(b)(2)(C)(viii)
Industry

Wholesale/Retail Trade 32
Manufacturing 31
Services 10
Finance, Insurance, and Real Estate 3
All Other Industries 1

Table 4a: Manufacturing APAs Executed in 2022
Type of Manufacturing

Chemical 13
Computer and Electronic Product 9
Transportation Equipment 6
Miscellaneous
9
2
All Other Manufacturing 1

9
Industries in the Miscellaneous Manufacturing subsector (NAICS Code 339) make a wide range of products that
cannot readily be classified in specific NAICS manufacturing subsectors.
Wholesale/Retail
Trade
42%
Manufacturing
40%
Services
13%
Finance, Insurance
and Real Estate
4%
All Other Industries
1%
APAs Executed
in 2022 by Industry
Table 4a: Manufacturing APAs Executed in 2022
9
Type of Manufacturing
Chemical13
Computer and Electronic Product9
Transportation Equipment6
Miscellaneous
9
2
All Other Manufacturing1

7

Table 4b: Wholesale/Retail Trade APAs Executed in 2022

Type of Wholesale/Retail Trade

Merchant Wholesalers, Durable Goods 24
Merchant Wholesalers, Nondurable Goods
4
All Other Wholesalers
4

Types of Manufacturing APAs
Executed in 2022
Chemical
Manufacturing
42%
Transportation
Equipment
Manufacturing
19%
Miscellaneous
Manufacturing
7%
Computer and
Electronic Product
Manufacturing
29%
All Other
Manufacturing
3%
Merchant
Wholesalers, Durable
Goods
75%
Merchant
Wholesalers,
Nondurable Goods
12.5%
All Other
Wholesalers
12.5%
Types of Wholesale/Retail Trade APAs
Executed in 2022
9
Industries in the Miscellaneous Manufacturing subsector (NAICS Code 339) make a wide range of products that cannot readily be classifi ed in specifi c NAICS manufacturing subsectors.

Bulletin No. 2023–16 669 April 17, 2023
Table 4b: Wholesale/Retail Trade APAs Executed in 2022
Type of Wholesale/Retail Trade
Merchant Wholesalers, Durable Goods24
Merchant Wholesalers, Nondurable Goods
4
All Other Wholesalers
4

7

Table 4b: Wholesale/Retail Trade APAs Executed in 2022

Type of Wholesale/Retail Trade

Merchant Wholesalers, Durable Goods 24
Merchant Wholesalers, Nondurable Goods
4
All Other Wholesalers
4

Chemical
Manufacturing
42%
Transportation
Equipment
Manufacturing
19%
Miscellaneous
Manufacturing
7%
Computer and
Electronic Product
Manufacturing
29%
All Other
Manufacturing
3%
Types of Manufacturing APAs
Executed in 2022
Types of Wholesale/Retail Trade APAs
Executed in 2022
Merchant
Wholesalers, Durable
Goods
75%
Merchant
Wholesalers,
Nondurable Goods
12.5%
Wholesalers
12.5%
A
ll Other

April 17, 2023 670 Bulletin No. 2023–16
Part III. General Descriptions of APAs Executed in 2022
[Pub. L. 106-170 § 521(b)(2)(D) and (E)]
Nature of the Relationships
§ 521(b)(2)(D)(i)

8

Part III. General Descriptions of APAs Executed in 2022
[Pub. L. 106-170 § 521(b)(2)(D) and (E)]

Nature of the Relationships
§ 521(b)(2)(D)(i)

As in prior years, more than half of the APAs executed in 2022 involved transactions between
non-U.S. parents and U.S. subsidiaries.

Covered Transactions, Functions and Risks, and Tested Parties
§ 521(b)(2)(D)(ii-iii)

Non-U.S. Parent &
U.S. Subsidiary
62%
U.S. Parent &
Non-U.S. Subsidiary
31%
Sister Companies
7%
Relationships between Controlled Parties
As in prior years, more than half of the APAs executed in 2022 involved transactions between non-U.S. parents and U.S. subsidiaries.
Covered Transactions, Functions and Risks, and Tested Parties
§ 521(b)(2)(D)(ii-iii)

9

Most of the transactions
10
covered in APAs executed in 2022 involve the sale of tangible goods
or the provision of services. Twenty-two percent of the transactions involve the use of intangible
property, which can be among the most challenging transactions in APMA’s inventory.

In the majority of APAs, the covered transactions involve numerous business functions and risks.
For instance, with respect to functions, APAs involving manufactured products typically involve
a controlled group that conducts research and development (R&D), engages in product design
and engineering, manufactures the product, markets and distributes the product, and performs
support functions such as legal, finance, and human resources. Regarding risks, the controlled
group may assume a variety of risks, including market risks, R&D risks, financial risks, credit
and collection risks, product liability risks, and general business risks. In the APA evaluation
process, a significant amount of time and effort is devoted to understanding how the functions
and risks are allocated among the controlled group of companies that are party to the covered
transactions. For methods requiring the selection of a tested party, the tested party chosen
generally will be the least complex of the controlled taxpayers.

10
APAs often cover more than one type of transaction.
Sale of Tangible
Property into the U.S.
23%
Sale of Tangible
Property from the
U.S.
14%
10%
Use of Intangible
Property by a Non-
U.S. Entity
12%
Provision of Services
by a U.S. Entity
23%
Provision of Services
by a Non-U.S. Entity
16%
All Other Types of
Transactions
2%
Use o
f Intangible
Property by a U.S.
Entity
Types of Covered Transactions
U.S. Distributor
34%
U.S. Manufacturer
21%
U.S. Service Provider
7%
Non-U.S. Distributor
19%
Non-U.S. Service
Provider
18%
All Other Types of
Tested Parties
1%
Types of Tested Parties
Most of the transactions
10
covered in APAs executed in 2022 involve the sale of tangible goods or the provision of services. Twen-
ty-two percent of the transactions involve the use of intangible property, which can be among the most challenging transactions in
APMA’s inventory.
In the majority of APAs, the covered transactions involve numerous business functions and risks. For instance, with respect to func-
tions, APAs involving manufactured products typically involve a controlled group that conducts research and development (R&D),
engages in product design and engineering, manufactures the product, markets and distributes the product, and performs support
functions such as legal, fi nance, and human resources. Regarding risks, the controlled group may assume a variety of risks, including
market risks, R&D risks, fi nancial risks, credit and collection risks, product liability risks, and general business risks. In the APA eval-
uation process, a signifi cant amount of time and eff ort is devoted to understanding how the functions and risks are allocated among
the controlled group of companies that are party to the covered transactions. For methods requiring the selection of a tested party, the
tested party chosen generally will be the least complex of the controlled taxpayers.
10
APAs often cover more than one type of transaction.

Bulletin No. 2023–16 671 April 17, 2023

9

Most of the transactions
10
covered in APAs executed in 2022 involve the sale of tangible goods
or the provision of services. Twenty-two percent of the transactions involve the use of intangible
property, which can be among the most challenging transactions in APMA’s inventory.

In the majority of APAs, the covered transactions involve numerous business functions and risks.
For instance, with respect to functions, APAs involving manufactured products typically involve
a controlled group that conducts research and development (R&D), engages in product design
and engineering, manufactures the product, markets and distributes the product, and performs
support functions such as legal, finance, and human resources. Regarding risks, the controlled
group may assume a variety of risks, including market risks, R&D risks, financial risks, credit
and collection risks, product liability risks, and general business risks. In the APA evaluation
process, a significant amount of time and effort is devoted to understanding how the functions
and risks are allocated among the controlled group of companies that are party to the covered
transactions. For methods requiring the selection of a tested party, the tested party chosen
generally will be the least complex of the controlled taxpayers.

U.S. Distributor
34%
U.S. Manufacturer
21%
U.S. Service Provider
7%
Non-U.S. Distributor
19%
Non-U.S. Service
Provider
18%
All Other Types of
Tested Parties
1%
Types of Tested Parties

10
APAs often cover more than one type of transaction.
Sale of Tangible
Property into the U.S.
23%
Sale of Tangible
Property from the
U.S.
14%
Use of Intangible
Property by a U.S.
Entity
10%
Use of Intangible
Property by a Non-
U.S. Entity
12%
Provision of Services
by a U.S. Entity
23%
Provision of Services
by a Non-U.S. Entity
16%
All Other Types of
Transactions
2%
Types of Covered Transactions
Consistent with prior years, a majority of tested parties
11
in 2022 were U.S. distributors, U.S. manufacturers, or U.S. service providers.
Transfer Pricing Methods Used
§ 521(b)(2)(D)(iv)
In 2022, the most commonly used transfer pricing method (TPM) for both the sale of tangible property and the use of intangible
property continued to be the comparable profi ts method/transactional net margin method (CPM/TNMM). The CPM/TNMM was used
for 77 percent of these types of transactions.
For covered transactions involving tangible and intangible property that used the CPM/TNMM, the operating margin (OM) is still the
most common profi t level indicator (PLI) used to benchmark results. It was used 73 percent of the time. Other PLIs, such as the Berry
Ratio and return on total cost, made up the other 27 percent. As used here, “OM” is defi ned as the ratio of operating profi t to sales,
12
and “Berry Ratio” is defi ned as the ratio of gross profi t to operating expenses.
13
Most services transactions (80 percent) also used the
CPM/TNMM with the OM and operating profi t to operating expense being the most common PLIs (used 53 percent of the time).
14
Sourc es of Comparables, Comparables Selection Criteria, and Nature of Adjustments to Comparables or Tested Party Data
§ 521(b)(2)(D)(v-vii)
For t he APAs executed in 2022 that involved the CPM/TNMM with a North American tested party, the most widely used data source
for comparables was Standard and Poor’s Compustat/Capital IQ database. Diff erent sources were used in other cases (e.g., where the
tested party was not a U.S. or Canadian entity or where transaction-based methods were applied). The other most commonly used
databases are listed in the table below.
Table 5: Sources of Comparable Data
Bureau van Dijk (BvD)Prowess
Global VantageRoyaltySource
ktMINERoyaltyStat
Orbis
In making comparability adjustments, typical balance sheet adjustments, as identifi ed in Treas. Reg. §§ 1.482-1(d)(2) and 1.482-5(c)
(2)(iv), were made in most cases, including where appropriate, adjustments for payables, receivables, inventory, and fi xed assets.
In addition, where appropriate, adjustments for diff erent accounting practices were made to convert from LIFO to FIFO inventory
accounting, and a small number of cases involved the accounting reclassifi cation of expenses, e.g., from COGS to operating expenses.
11
Not all the executed APAs involve a tested party.
12
See Treas. Reg. § 1.482-5(b)(4)(ii)(A).
13
See Treas. Reg. § 1.482-5(b)(4)(ii)(B).
14
The majority of APAs that covered services transactions also included tangible/intangible transactions and are not tested under a separate PLI.

April 17, 2023 672 Bulletin No. 2023–16
Ranges, Goals, and Adjustment Mechanisms
§ 521(b)(2)(D)(viii-ix)
Most transactions covered in APAs target an interquartile range or point within the interquartile range as described in Treas. Reg.
§ 1.482-1(e)(2)(iii)(C), and other targeted arm’s length ranges. Where the transaction involves a royalty payment for the use of
intangible property, both specific royalty rates and ranges have been used. Where the covered transaction is the sale or license of
intangible property, and the payment for such transfer would be a royalty based solely on external comparable uncontrolled transac-
tions, a secondary or confirming method, e.g., a test of the post-royalty operating margin or cost-plus mark-up, has sometimes also
been used. The testing periods of the APAs executed in 2022 were either a single year, the term of the APA only, or the term of the
APA plus rollback years.
APAs executed in 2022 included several mechanisms for making adjustments to the tested party’s results when the results fall outside
the interquartile range or do not match the point required by the APA. Examples of the mechanisms used include an adjustment bring-
ing the tested party’s results for a single year to either the closer edge of the range or the median of the range, an adjustment to bring
the results over the APA term to the closer edge of the range, or an adjustment to bring the results to a specified point or royalty rate.
Critical Assumptions
§ 521(b)(2)(D)(v)
The model APAs used by the IRS (included as Appendix 1 and Appendix 2 of this report) include standard critical assumptions that
there will be no material changes to the taxpayer’s business or to its tax or financial accounting practices during the APA term. A few
bilateral cases have also included critical assumptions tied to the taxpayer’s profitability in a certain year or over the term of the APA.
Pursuant to § 7.06(3) of Rev. Proc. 2015-41, APMA will cancel an APA in the event of a failure of a critical assumption unless the
parties agree to revise the APA.
Term Lengths of APAs Executed in 2022
§ 521(b)(2)(D)(x)
Table 6: Term Lengths of APAs Executed in 2022
Term Length (years)Number of APAs
11
21
32
41
537
612
79
85
93
104
112
Average6
As described in § 3.03(1) of Rev. Proc. 2015-41, taxpayers should request an APA term that will cover at least five prospective years
and may also request that the APA be “rolled back” to cover one or more earlier taxable years, although the appropriate APA
term is decided on a case-by-case basis. Of the APAs executed in 2022, 16 percent included rollback years. A substantial number
of those APAs with terms of greater than five years were submitted as a request for a five-year term, and the additional years were
agreed to between the taxpayer and the IRS (or, in the case of a bilateral APA, between the IRS and the foreign government upon the
taxpayer’s request) to ensure a reasonable amount of prospectivity in the APA term.

Bulletin No. 2023–16 673 April 17, 2023
Amount of Time Taken to Complete New and Renewal APAs
§ 521(b)(2)(E)
Table 7: Months to Complete New and Renewal APAs Executed in 2022

Unilateral Bilateral Unilateral & Bilateral
AverageMedianAverageMedianAverageMedian
NewN/AN/A53.053.053.053.0
Renewal22.917.736.630.633.628.3
New & Renewal22.917.744.745.742.043.4
Months to Complete New and Renewal APAs Executed in 2022

12

6 12
7 9
8 5
9 3
10 4
11 2
Average 6

As described in § 3.03(1) of Rev. Proc. 2015-41, taxpayers should request an APA term that will
cover at least five prospective years and may also request that the APA
be “rolled back” to cover
one or more earlier taxable years
, although the appropriate APA term is decided on a case-by-case
basis. Of the APAs executed in 2022, 16 percent included rollback years. A substantial number
of those APAs with terms of greater than five years were submitted as a request for a five-year
term, and the additional years were agreed to between the taxpayer and the IRS (or, in the case of
a bilateral APA, between the IRS and the foreign government upon the taxpayer’s request) to
ensure a reasonable amount of prospectivity in the APA term.

Amount of Time Taken to Complete New and Renewal APAs
§ 521(b)(2)(E)

Table 7: Months to Complete New and Renewal APAs Executed in 2022

Unilateral Bilateral
Unilateral & Bilateral
Average Median Average Median
Average Median
New N/A N/A 53.0 53.0
53.0 53.0
Renewal 22.9 17.7 36.6 30.6
33.6 28.3
New & Renewal 22.9 17.7 44.7 45.7 42.0 43.4

Months to Complete New and Renewal APAs Executed in 2022

0
10
20
30
40
50
60
Average Median Average Median Average Median
Unilateral Bilateral Unilateral &
Bilateral
Months to Complete

Type of APA
New
Renewal
New &
Renewal
Median completion time continued to rise in 2022 to 43.4 months (from 35.1 months in 2021and 32.7 months in 2020).
Eff orts to Ensure Compliance with APAs
§ 521(b)(2)(F)
As described in § 7.02(1) of Rev. Proc. 2015-41, taxpayers are required to fi le annual reports to demonstrate compliance with the
terms and conditions of their APAs. The fi ling and review of these annual reports are critical parts of the APA process. Through annual
report review, the APMA Program monitors taxpayer compliance with APAs on a contemporaneous basis. Annual report review also
provides current information on the success or problems associated with the various TPMs adopted in the APA process.

April 17, 2023 674 Bulletin No. 2023–16
Nature of Documentation Required in Annual Report
§ 521(b)(2)(D)(xi)
APAs require taxpayers to file timely and complete annual reports describing their operations and demonstrating compliance with
the APA’s terms and conditions. Not every annual report will include each of the items listed in the following table; they are required
where the facts demonstrate a need for such documentation. The requirements for the information to be included in a specific APA
annual report is included in Appendix C of the executed APA.
1.
Statement regarding all material differences between Taxpayer’s business operations during APA year and description of
Taxpayer’s business operations contained in Taxpayer’s APA request. If there are no material differences, a statement to
that effect.
2.
Statement concerning all material changes in Taxpayer’s accounting methods and classifications, and methods of
estimation, from those described or used in Taxpayer’s request for the APA. If there has been no material change in
accounting methods and classifications or methods of estimation, a statement to that effect.
3.
Any change to the Taxpayer notice information.
4.
Description of any failure to meet critical assumptions. If there has been none, a statement to that effect.
5.
Statement identifying whether any material information submitted while the APA request was pending is discovered to be
false, incorrect, or incomplete.
6
The amount, reason for, and financial analysis of any compensating adjustment, for the APA year, including but not
limited to the amounts paid or received by each affected entity; the character (such as capital or ordinary expense) and
country source of the funds transferred, and the specific line item(s) of any affected U.S. tax return; and any change to any
entity classification for federal income tax purposes of any member of Taxpayer’s group that is relevant to the APA.
7.
The amounts, description, reason for, and financial analysis of any book-tax difference relevant to the TPM for the APA
year, as reflected on Schedule M-1 or Schedule M-3 of the U.S. return for the APA year.
8.
Statement regarding whether Taxpayer contemplates requesting, or has requested, to renew, modify, or cancel the APA.
9.
Financial statements and any necessary account detail to show compliance with the TPM, with a copy of the opinion from
an independent certified public accountant or other documentation required by paragraph 5(f) of the APA.
10.
Financial analysis demonstrating Taxpayer’s compliance with TPM.
11.
Organizational chart.
12.
A copy of the APA and any amendment.
13.
A penalty of perjury statement.
Approaches for Sharing of Currency or Other Risks
§ 521(b)(2)(D)(xii)
In appropriate cases, APAs may provide specific approaches for dealing with risks, including currency risk, such as adjustment mech-
anisms and/or critical assumptions.

Bulletin No. 2023–16 675 April 17, 2023
APPENDIX 1– Model APA (based on Rev. Proc. 2006-9)
ADVANCE PRICING AGREEMENT
between
[Insert Taxpayer’s Name]
and
THE INTERNAL REVENUE SERVICE
PARTIES
The Parties to this Advance Pricing Agreement (APA) are the Internal Revenue Service (IRS) and [Insert Taxpayer’s Name], EIN
________.
RECITALS
[Insert Taxpayer Name
] is the common parent of an affiliated group filing consolidated U.S. tax returns (collectively referred to as
“Taxpayer”) and is entering into this APA on behalf of itself and other members of its consolidated group.
Taxpayer’s principal place of business is [City, State]. [Insert general description of taxpayer and other relevant parties].
This APA contains the Parties’ agreement on the best method for determining arm’s-length prices of the Covered Transactions
under I.R.C. section 482, the Treasury Regulations thereunder, and any applicable tax treaties.
{If renewal, add} [Taxpayer and IRS previously entered into an APA covering taxable years ending _____ to ______, executed on
________.]
AGREEMENT
The Parties agree as follows:
1. Covered Transactions. This APA applies to the Covered Transactions, as defined in Appendix A.
2. Transfer Pricing Method. Appendix A sets forth the Transfer Pricing Method (TPM) for the Covered Transactions.
3. Term
. This APA applies to the APA Term, as defined in Appendix A.
4. Operation.
a. Revenue Procedure 2006-9 governs the interpretation, legal effect, and administration of this APA.
b. Nonfactual oral and written representations, within the meaning of sections 10.04 and 10.05 of Revenue Procedure 2006-9
(including any proposals to use particular TPMs), made in conjunction with the APA Request constitute statements made in
compromise negotiations within the meaning of Rule 408 of the Federal Rules of Evidence.
5. Compliance.
a. Taxpayer must report its taxable income in an amount that is consistent with Appendix A and all other requirements of this
APA on its timely filed U.S. Return. However, if Taxpayer’s timely filed U.S. Return for any taxable year covered by this
APA (APA Year) is filed prior to, or no later than 60 days after, the effective date of this APA, then Taxpayer must report its
taxable income for that APA Year in an amount that is consistent with Appendix A and all other requirements of this APA
either on the original U.S. Return or on an amended U.S. Return filed no later than 120 days after the effective date of this
APA, or through such other means as may be specified herein.

April 17, 2023 676 Bulletin No. 2023–16
b. {Use or edit the following when U.S. Group or Foreign Group contains more than one member.} [This APA addresses the
arm’s-length nature of prices charged or received in the aggregate between Taxpayer and Foreign Participants with respect
to the Covered Transactions. Except as explicitly provided, this APA does not address and does not bind the IRS with respect
to prices charged or received, or the relative amounts of income or loss realized, by particular legal entities that are members
of U.S. Group or that are members of Foreign Group.]
c. For each APA Year, if Taxpayer complies with the terms and conditions of this APA, then the IRS will not make or propose
any allocation or adjustment under I.R.C. section 482 to the amounts charged in the aggregate between Taxpayer and For-
eign Participant[s] with respect to the Covered Transactions.
d. If Taxpayer does not comply with the terms and conditions of this APA, then the IRS may:
i. enforce the terms and conditions of this APA and make or propose allocations or adjustments under I.R.C. section 482
consistent with this APA;
ii. cancel or revoke this APA under section 11.06 of Revenue Procedure 2006-9; or
iii. revise this APA, if the Parties agree.
e. Taxpayer must timely file an Annual Report (an original and four copies) for each APA Year in accordance with Appendix C
and section 11.01 of Revenue Procedure 2006-9. Taxpayer must file the Annual Report for all APA Years through the APA
Year ending [insert year] by [insert date]. Taxpayer must file the Annual Report for each subsequent APA Year by [insert
month and day] immediately following the close of that APA Year. (If any date falls on a weekend or holiday, the Annual
Report shall be due on the next date that is not a weekend or holiday.) The IRS may request additional information reason-
ably necessary to clarify or complete the Annual Report. Taxpayer will provide such requested information within 30 days.
Additional time may be allowed for good cause.
f. The IRS will determine whether Taxpayer has complied with this APA based on Taxpayer’s U.S. Returns, the Financial
Statements, and other APA Records, for the APA Term and any other year necessary to verify compliance. For Taxpayer
to comply with this APA, {use the following or an alternative} an independent certified public accountant must render an
opinion that Taxpayer’s Financial Statements present fairly, in all material respects, Taxpayer’s financial position under U.S.
GAAP.
g. In accordance with section 11.04 of Revenue Procedure 2006-9, Taxpayer will (1) maintain the APA Records, and (2) make
them available to the IRS in connection with an examination under section 11.03. Compliance with this subparagraph consti-
tutes compliance with the record-maintenance provisions of I.R.C. sections 6038A and 6038C for the Covered Transactions
for any taxable year during the APA Term.
h. The True Taxable Income within the meaning of Treasury Regulations sections 1.482-1(a)(1) and (i)(9) of a member of an
affiliated group filing a U.S. consolidated return will be determined under the I.R.C. section 1502 Treasury Regulations.
i. {Optional for US Parent Signatories} To the extent that Taxpayer’s compliance with this APA depends on certain acts of
Foreign Group members, Taxpayer will ensure that each Foreign Group member will perform such acts.
6. Critical Assumptions. This APA’s critical assumptions, within the meaning of Revenue Procedure 2006-9, section 4.05, appear in
Appendix B. If any critical assumption has not been met, then Revenue Procedure 2006-9, section 11.06, governs.
7. Disclosure. This APA, and any background information related to this APA or the APA Request, are: (1) considered “return infor-
mation” under I.R.C. section 6103(b)(2)(C); and (2) not subject to public inspection as a “written determination” under I.R.C.
section 6110(b)(1). Section 521(b) of Pub. L. 106-170 provides that the Secretary of the Treasury must prepare a report for public
disclosure that includes certain specifically designated information concerning all APAs, including this APA, in a form that does
not reveal taxpayers’ identities, trade secrets, and proprietary or confidential business or financial information.
8. Disputes. If a dispute arises concerning the interpretation of this APA, the Parties will seek a resolution by the Director of the
Advance Pricing and Mutual Agreement Program, to the extent reasonably practicable, before seeking alternative remedies.

Bulletin No. 2023–16 677 April 17, 2023
9. Materiality. In this APA the terms “material” and “materially” will be interpreted consistently with the definition of “material
facts” in Revenue Procedure 2006-9, section 11.06(4).
10. Section Captions. This APA’s section captions, which appear in italics, are for convenience and reference only. The captions do
not affect in any way the interpretation or application of this APA.
11. Terms and Definitions. Unless otherwise specified, terms in the plural include the singular and vice versa. Appendix D contains
definitions for capitalized terms not elsewhere defined in this APA.
12. Entire Agreement and Severability. This APA is the complete statement of the Parties’ agreement. The Parties will sever, delete,
or reform any invalid or unenforceable provision in this APA to approximate the Parties’ intent as nearly as possible.
13. Successor in Interest. This APA binds, and inures to the benefit of, any successor in interest to Taxpayer.
14. Notice. Any notices required by this APA or Revenue Procedure 2006-9 must be in writing. Taxpayer will send notices to the IRS
at the address and in the manner set forth in Revenue Procedure 2006-9, section 4.11. The IRS will send notices to:
Taxpayer Corporation
Attn: Jane Doe, Sr. Vice President (Taxes)
1000 Any Road
Any City, USA 10000
(phone: _________)
15. Effective Date and Counterparts. This APA is effective starting on the date, or later date of the dates, upon which all Parties
execute this APA. The Parties may execute this APA in counterparts, with each counterpart constituting an original.
WITNESS,
The Parties have executed this APA on the dates below.
[Taxpayer Name in all caps]
By: ___________________________ Date: ___________________, 201___
Jane Doe
Sr. Vice President (Taxes)
IRS
By: ___________________________ Date: ___________________, 201___
John M. Wall
Acting Director, Advance Pricing and Mutual
Agreement Program

April 17, 2023 678 Bulletin No. 2023–16
APPENDIX A
COVERED TRANSACTIONS AND TRANSFER PRICING METHOD (TPM)
1. Covered Transactions.
[Define the Covered Transactions.]
2. APA Term.
This APA applies to Taxpayer’s taxable years ending __________ through ________ (APA Term).
3. TPM.
{Note: If appropriate, adapt language from the following examples.}
[The Tested Party is __________.]
• CUP Method
The TPM is the comparable uncontrolled price (CUP) method. The Arm’s Length Range of the price charged for
_________ is between _______ and ___________ per unit.
• CUP Method
The TPM is the CUT Method. The Arm’s Length Range of the royalty charged for the license of ______is between
____% and ___ % of [Taxpayer’s, Foreign Participants’, or other specified party’s] Net Sales Revenue. [Insert defi-
nition of net sales revenue or other royalty base.]
• Resale Price Method (RPM)
The TPM is the resale price method (RPM). The Tested Party’s Gross Margin for any APA Year is defined as fol-
lows: the Tested Party’s gross profit divided by its sales revenue (as those terms are defined in Treasury Regulations
sections 1.482-5(d)(1) and (2)) for that APA Year. The Arm’s Length Range is between ____% and ___ %, and the
Median of the Arm’s Length Range is ___%.
• Cost Plus Method
The TPM is the cost plus method. The Tested Party’s Cost Plus Markup is defined as follows for any APA Year: the
Tested Party’s ratio of gross profit to production costs (as those terms are defined in Treasury Regulations sections
1.482-3(d)(1) and (2)) for that APA Year. The Arm’s Length Range is between ___% and ___%, and the Median of
the Arm’s Length Range is ___%.
• CPM with Berry Ratio PLI
The TPM is the comparable profits method (CPM). The profit level indicator is a Berry Ratio. The Tested Party’s
Berry Ratio is defined as follows for any APA Year: the Tested Party’s gross profit divided by its operating expenses
(as those terms are defined in Treasury Regulations sections 1.482-5(d)(2) and (3)) for that APA Year. The Arm’s
Length Range is between ____ and ___, and the Median of the Arm’s Length Range is ___.
• CPM using an Operating Margin PLI
The TPM is the comparable profits method (CPM). The profit level indicator is an operating margin. The Tested Par-
ty’s Operating Margin is defined as follows for any APA Year: the Tested Party’s operating profit divided by its sales
revenue (as those terms are defined in Treasury Regulations section 1.482-5(d)(1) and (4)) for that APA Year. The
Arm’s Length Range is between ____% and ___ %, and the Median of the Arm’s Length Range is ___%.

Bulletin No. 2023–16 679 April 17, 2023
• CPM using a Three-year Rolling Average Operating Margin PLI
The TPM is the comparable profits method (CPM). The profit level indicator is an operating margin. The Tested
Party’s Three-Year Rolling Average operating margin is defined as follows for any APA Year: the sum of the Tested
Party’s operating profit (within the meaning of Treasury Regulation section 1.482-5(d)(4) for that APA Year and the
two preceding years, divided by the sum of its sales revenue (within the meaning of Treasury Regulation section
1.482-5(d)(1)) for that APA Year and the two preceding years. The Arm’s Length Range is between ____% and
____%, and the Median of the Arm’s Length Range is ___%.
• Residual Profit Split Method
The TPM is the residual profit split method. [Insert description of routine profit level determinations and residual
profit-split mechanism].
[Insert additional provisions as needed.]
4. Application of TPM.
For any APA Year, if the results of Taxpayer’s actual transactions produce a [price per unit, royalty rate for the Covered
Transactions] [or] [Gross Margin, Cost Plus Markup, Berry Ratio, Operating Margin, Three-Year Rolling Average Operating
Margin for the Tested Party] within the Arm’s Length Range, then the amounts reported on Taxpayer’s U.S. Return must
clearly reflect such results.
For any APA year, if the results of Taxpayer’s actual transactions produce a [price per unit, royalty rate] [or] [Gross Margin,
Cost Plus Markup, Berry Ratio, Operating Margin, Three-Year Rolling Average Operating Margin for the Tested Party]
outside the Arm’s Length Range, then amounts reported on Taxpayer’s U.S. Return must clearly reflect an adjustment that
brings the [price per unit, royalty rate] [or] [Tested Party’s Gross Margin, Cost Plus Markup, Berry Ratio, Operating Margin,
Three-Year Rolling Average Operating Margin] to the Median.
For purposes of this Appendix A, the “results of Taxpayer’s actual transactions” means the results reflected in Taxpayer’s
and T ested Party’s books and records as computed under U.S. GAAP [insert another relevant accounting standard if appli-
cable], with the following adjustments:
(a) [The fair value of stock-based compensation as disclosed in the Tested Party’s audited financial statements shall be
treated as an operating expense]; and
(b) To the extent that the results in any prior APA Year are relevant (for example, to compute a multi-year average), such
results shall be adjusted to reflect the amount of any adjustment made for that prior APA Year under this Appendix A.
5. APA Revenue Procedure Treatment
If Taxpayer makes an adjustment under paragraph 4 of this Appendix A (a “primary adjustment”), Taxpayer and its related
foreign entity may elect APA Revenue Procedure Treatment in accordance with section 11.02(3) of Revenue Procedure
2006-9 and avoid the possible adverse tax consequences of a secondary adjustment that would otherwise follow the primary
adjustment.
[Insert additional provisions as needed.]

April 17, 2023 680 Bulletin No. 2023–16
APPENDIX B
CRITICAL ASSUMPTIONS
This APA’s critical assumptions are:
1. The business activities, functions performed, risks assumed, assets employed, and financial and tax accounting methods and
classifications [and methods of estimation] of Taxpayer in relation to the Covered Transactions will remain materially the same as
described or used in Taxpayer’s APA Request. A mere change in business results will not be a material change.
[Insert additional provisions as needed.]

Bulletin No. 2023–16 681 April 17, 2023
APPENDIX C
APA RECORDS AND ANNUAL REPORT
APA RECORDS
The APA Records will consist of all documents listed below for inclusion in the Annual Report, as well as all documents, notes, work
papers, records, or other writings that support the information provided in such documents.
ANNUAL REPORT
The Annual Report (and each of the four copies required by paragraph 5(e) of this APA) will include:
1. Two copies of a properly completed APA Annual Report Summary in the form of Appendix E to this APA, one copy of the form
bound with, and one copy provided separately from, the rest of the Annual Report.
2. A table of contents, organized as follows:
3. Statements that fully identify, describe, analyze, and explain:
a. All material differences between the U.S. Group’s business operations (including functions, risks assumed, markets, contrac-
tual terms, economic conditions, property, services, and assets employed) during the APA Year from the business operations
described in the APA Request. If there have been no material differences, the Annual Report will include a statement to that
effect.
b. All material differences between the U.S. Group’s accounting methods and classifications, and methods of estimation used
during the APA Year, from those described or used in the APA Request. If any change was made to conform to changes in
U.S. GAAP (or other relevant accounting standards) Taxpayer will specifically identify the change. If there has been no
material change in accounting methods and classifications or methods of estimation, the Annual Report will include a state-
ment to that effect.
c. Any change to the Taxpayer notice information in paragraph 14 of this APA.
d. Any failure to meet any critical assumption. If there has been no failure, the Annual Report will include a statement to that
effect.
e. Whether or not material information submitted while the APA Request was pending is discovered to be false, incorrect, or
incomplete.
f. Any change to any entity classification for federal income tax purposes (including any change that causes an entity to be
disregarded for federal income tax purposes) of any Worldwide Group member that is a party to the Covered Transactions
or is otherwise relevant to the TPM.
g. The amount, reason for, and financial analysis of (1) any primary adjustments made under Appendix A for the APA Year; and
(2) any (a) secondary adjustments that follow such primary adjustments or (b) accounts receivable that Taxpayer establishes,
in lieu of secondary adjustments, by electing APA Revenue Procedure Treatment pursuant to paragraph 5 of Appendix A and
Revenue Procedure 2006-9, section 11.02(3), for the APA Year, including but not limited to:
i. the amounts due or owed, and paid or received by each affected entity;
ii. the character (such as capital, ordinary, income, expense) and country source of the funds transferred, and the specific
affected line item(s) of any affected U.S. Return;

April 17, 2023 682 Bulletin No. 2023–16
iii. the date(s) and means by which the payments are or will be made; and
iv. whether or not APA Revenue Procedure Treatment was elected pursuant to paragraph 5 of Appendix A and Revenue
Procedure 2006-9, section 11.02(3).
h. The amounts, description, reason for, and financial analysis of any book-tax difference relevant to the TPM for the APA Year,
as reflected on Schedule M-1 or Schedule M-3 of the U.S. Return for the APA Year.
i. Whether Taxpayer contemplates requesting, or has requested, to renew, modify, or cancel the APA.
4. The Financial Statements, and any necessary account detail to show compliance with the TPM, including consolidating financial
statements, segmented financial data, records from the general ledger, or similar information if the assets, liabilities, income, or
expenses relevant to showing compliance with the TPM are a subset of the assets, liabilities, income, or expenses presented in
the Financial Statements.
5. {Use the following or the alternative prescribed by paragraph 5(f) of this APA:} A copy of the independent certified public
accountant’s opinion required by paragraph 5(f) of this APA.
6. A financial analysis that reflects Taxpayer’s TPM calculations for the APA Year. The calculations must reconcile with and refer-
ence the information required under item 4 above in sufficient account detail to allow the IRS to determine whether Taxpayer has
complied with the TPM.
7. An organizational chart for the Worldwide Group, revised annually to reflect all ownership or structural changes of entities that
are parties to the Covered Transactions or are otherwise relevant to the TPM.
8. A copy of the APA and any amendment.
9. A penalty of perjury statement, executed in accordance with Revenue Procedure 2006-9, section 11.01(6) and (7).

Bulletin No. 2023–16 683 April 17, 2023
APPENDIX D
DEFINITIONS
The following definitions control for all purposes of this APA. The definitions appear alphabetically below:
TermDefinition
Annual ReportA report within the meaning of Revenue Procedure 2006-9, section 11.01.
A PA
This Advance Pricing Agreement, which is an “advance pricing agreement” within the meaning of
Revenue Procedure 2006-9, section 2.04.
APA Records
The records specified in Appendix C.
APA RequestTaxpayer’s request for this APA dated _________, including any amendments or supplemental or
additional information thereto.
APA Year
This term is defined in paragraph 5(a) of this APA.
Covered Transaction(s)This term is defined in Appendix A.
Financial StatementsFinancial statements prepared in accordance with U.S. GAAP and stated in U.S. dollars.
Foreign GroupWorldwide Group members that are not U.S. persons.
Foreign Participants
[name the foreign entities involved in Covered Transactions].
I.R.C.The Internal Revenue Code of 1986, 26 U.S.C., as amended.
Pub. L. 106-170The Ticket to Work and Work Incentives Improvement Act of 1999.
Revenue Procedure 2006-9Rev. Proc. 2006-9, 2006-1 C.B. 278.
Transfer Pricing Method
(TPM)
A transfer pricing method within the meaning of Treasury Regulation section 1.482-1(b) and
Revenue Procedure 2006-9, section 2.04.
U.S. GAAPU.S. generally-accepted accounting principles.
U.S. GroupWorldwide Group members that are U.S. persons.
U.S. Return
For each taxable year, the “returns with respect to income taxes under subtitle A” that Taxpayer
must “make” in accordance with I.R.C. section 6012. {Or substitute for partnership: For each
taxable year, the “return” that Taxpayer must “make” in accordance with I.R.C. section 6031.}
Worldwide GroupTaxpayer and all organizations, trades, businesses, entities, or branches (whether or not
incorporated, organized in the United States, or affiliated) owned or controlled directly or indirectly
by the same interests.

April 17, 2023 684 Bulletin No. 2023–16
APPENDIX E
APA ANNUAL REPORT SUMMARY FORM
The APA Annual Report Summary on the next page is a required APA Record. The APA Team Leader supplies some of the infor-
mation requested on the form. Taxpayer is to supply the remaining information requested by the form and submit the form as part of
its Annual Report.

Bulletin No. 2023–16 685 April 17, 2023
APA Annual ReportDepartment of the Treasury—Internal Revenue Service
APA No. _______________
SUMMARYLarge Business and International Division
Team Leader ____________________________
Treaty and Transfer Pricing Operations
Economist _______________________________
Advance Pricing and Mutual Agreement Program
Intl Examiner _____________________________
APA Information
Taxpayer Name: ___________________________________________________
Taxpayer EIN:_________________ NAICS:___________________
APA Term: Taxable years ending ________ to ____________
Original APA [ ] Renewal APA [ ]
Annual Report due dates:
_________________, 201__ for all APA Years through APA Year ending in 200__; for each APA Year
thereafter, on _________________ [month and day] immediately following the close of the APA Year
Principal foreign country(ies) involved in covered transaction(s): _______________________________________
Type of APA: [ ] unilateral [ ] bilateral with ________________
Tested party is [ ] US [ ] foreign [ ] both
Approximate dollar volume of covered transactions (on an annual basis) involving tangible goods and services:
[ ] N/A [ ] <$50 million [ ] $50-100 million [ ] $100-250 million [ ] $250-500 million [ ] >$500 million
APA tests on (check all that apply):
[ ] annual basis [ ] multi-year basis [ ] term basis
APA provides (check all that apply) a:
[ ] range [ ] point [ ] floor only [ ] ceiling only [ ] other_____________
APA provides for adjustment (check all that apply) to:
[ ] nearest edge [ ] median [ ] other point
APA Annual Report
APA date executed: ______________, 201__
Information
This APA Annual Report Summary is for APA Year(s) ending in 200__ and was filed on _____________, 201__
(to be completedCheck here [ ] if Annual Report was filed after original due date but in accordance with extension.
by the Taxpayer)Has this APA been amended or changed? [ ] yes [ ] noEffective Date: ______________________
Has Taxpayer complied with all APA terms and conditions? [ ] yes [ ] no
Were all the critical assumptions met? [ ] yes [ ] no
Has a Primary Compensating Adjustment been made in any APA Year covered by this Annual Report?
[ ] yes [ ] no If yes, which year(s): 200___
Have any necessary Secondary Compensating Adjustments been made? [ ] yes [ ] no
Did Taxpayer elect APA Revenue Procedure treatment? [ ] yes [ ] no
Any change to the entity classification of a party to the APA? [ ] yes [ ] no
Taxpayer notice information contained in the APA remains unchanged. [ ] yes [ ] no
Taxpayer's current US principal place of business: (City, State) _____________________________________
APA Annual Report
Financial analysis reflecting TPM calculations[ ] yes [ ] no
Checklist of
Financial statements showing compliance with TPM(s)[ ] yes [ ] no
Key Contents
Schedule M-1 or M-3 book-tax differences[ ] yes [ ] no
(to be completedCurrent organizational chart of relevant portion of world-wide group[ ] yes [ ] no
by the Taxpayer)Attach copy of APA[ ] yes [ ] no
Other APA records and documents included:
Contact Information
Authorized RepresentativePhone NumberAffiliation and Address

April 17, 2023 686 Bulletin No. 2023–16
APPENDIX 2– Model APA (based on Rev. Proc. 2015-41)
TEMPLATE FOR ADVANCE PRICING AGREEMENT
UNDER REVENUE PROCEDURE 2015-41
_______________
The Advance Pricing and Mutual Agreement Program (“APMA”) of the Internal Revenue Service (“IRS”) is providing this
template for use in drafting advance pricing agreements (“APAs”) issued under IRS Revenue Procedure 2015-41, 2015-35 I.R.B.
263 (“Rev. Proc. 2015-41”). This template is designed to systematize how taxpayers propose terms for their APAs and standardize
language used in executed APAs. It will improve efficiency in the APA process and enhance consistency in the administration of the
APA program.
Rev. Proc. 2015-41 requires that taxpayers include as part of a complete APA request a draft APA and a “redline” comparison of the
proposed draft APA against the current model APA. See section 2.03, exhibit 15, of the Appendix to Rev. Proc. 2015-41. This template
serves as the model APA. A taxpayer is required to produce the “redline” comparison by following the instructions below to edit this
template with tracked changes. The draft APA and “redline” comparison are then to be included in Word format in the complete APA
request. (Before editing the template with tracked changes, a taxpayer should remove this introduction and the instructions below
from the Microsoft Word file.)
The assigned APMA team will review the APA’s terms proposed in the draft APA. If the APMA team accepts the proposed terms
in light of its review of the taxpayer’s complete APA request and other information obtained during the APA process, then the text of
the draft APA, edited as needed to fill in any information not available at the time of the APA Request, will be adopted as the text of
a finally executed APA. If the APMA team does not accept the proposed terms, it will discuss modifications to the draft APA with the
taxpayer during the APA process. For bilateral and multilateral APAs, the terms of the executed APA will of necessity be consistent
with the terms of the underlying mutual agreement between the United States and one or more treaty partners.
GENERAL INSTRUCTIONS
The template is designed to minimize editing by using an options-based format for selecting from terms presented in certain sec-
tions of the model APA. The options presented are those which APMA considers standard and which it has accepted in final APAs.
These options are not binding on APMA, however. APMA reserves the right to modify the option selections, the specific option lan-
guage used, or any other terms before executing an APA with the taxpayer.
Options are indicated by square brackets (“[]”). An “x” should be inserted between the brackets to indicate the selected option
(“[x]”). Options that are not selected should not be deleted, but instead should be left in the text of the draft APA. The options to which
APMA and the taxpayer ultimately agree for the final APA will be indicated by the presence or absence of an “x”. The term associated
with the “x” will be given operative effect in the executed APA.
Certain options are flagged with an asterisk after the square brackets (“[]*”). To facilitate the APMA team’s subsequent review of
the draft APA, the asterisks should not be deleted. Taxpayers that select flagged options are required to specifically provide justifica-
tion for the selection in the APA request. See section 1.02, Part 5, of the Appendix to Rev. Proc. 2015-41.
The template contains placeholder phrases consisting of a hashtag followed by one or more words in block capital letters
(e.g., “#COUNTRY”). Generally, the taxpayer should replace a placeholder phrase with appropriate text, subject to the following
conventions:
• If a placeholder phrase occurs within an option that the taxpayer has rejected, the taxpayer should change the hashtag to a
caret (e.g., change “#COUNTRY” to “^COUNTRY”) but otherwise leave the phrase intact.
15
The caret indicates that the
Taxpayer has rejected this option. For example, for a bilateral APA with Japan, the lines on the first page just below the title
would read:
15
As a result, almost all occurrences of the hashtag in the template will be replaced with a caret or other text in the taxpayer’s draft APA. The few remaining occurrences of the hashtag will
mark a placeholder phrase that cannot yet be replaced with appropriate text (see, for example, the placeholder phrase in paragraph 6(e) for a date that cannot be determined until the APA nears
execution). Searching the draft APA for the hashtag will locate all placeholder phrases that still need replacement.

Bulletin No. 2023–16 687 April 17, 2023
[x] Bilateral with Japan
[] Multilateral with ^COUNTRIES
[] Unilateral
• The placeholder phrase “#CURRENCY” should be replaced, for example, with “U.S. dollars,” “Euros,” or “Japanese yen.”
• The placeholder phrase “#DATE” should be replaced with a date in the format of “December 31, 2020.”
The APA Term will be expressed as dates certain, e.g., “January 1, 2017 to December 31, 2022, inclusive”, rather than as particular
tax years.
Taxpayers may need to draft custom text for situations or options not included in the template. For example, a taxpayer may
propose additional critical assumptions to address specific regulatory contingencies or conditions the taxpayer is expected to face
during the term of the APA. As another example, the provision titled “Limitation on Assistance” at the end of the Recitals might be
modified based on an understanding reached in the prefiling stage of the APA process. In some cases, a particular critical assumption
might facilitate reaching an agreement on an APA. Taxpayers that include custom text are required to specifically provide justification
for the inclusion in the APA request, just as selecting an option with an asterisk requires justification. Any custom text must also be
evident in the “redline” comparison of the proposed draft APA.
INSTRUCTIONS ON TABLES
The template contains certain tables that the taxpayer should edit. Entries in the tables will not contain hashtags, but taxpayers
nevertheless should fill in the information and add additional rows to the tables if needed. Taxpayers also should fill in the “APA
Information” in the table in Appendix D, to the extent available or proposed.
INSTRUCTIONS ON APPENDIX A
Appendix A of this template contains the description of the APA’s covered issue(s) and covered method(s). Taxpayers should note
the following points in completing Appendix A:
• The template includes just one covered issue with one corresponding covered method. If there is more than one covered
Issue proposed for the APA, the taxpayer should add additional covered issues in Appendix A, section 3, with tracked
changes.
• If there is more than one covered method, the taxpayer should first replicate the template’s entire text for Covered Method
1 in Appendix A, section 4, without tracked changes, to provide template text for each additional covered method, and then
edit the text for each covered method with tracked changes.
• Normally, each covered issue will have its own corresponding covered method. However, in some cases, a covered method
may apply at once to more than one covered issue. For example, covered issues may be proposed to be aggregated and tested
by a single covered method. In such cases, the heading for that covered method could read, for example, “Covered Method
for Covered Issues 1-3”.
• Any interaction between different covered methods should be adequately explained in the text, and in an appropriate man-
ner. For example, an explanation might be provided in an introduction at the start of section 4 of Appendix A, preceding the
description of the respective covered methods.
Appendix A uses the term “Tested Party.” When applied in the context of methods that consider, or test, data from only one party
to a transaction, this term is similar in concept to the term “tested party” as discussed in the OECD Guidelines at paragraphs 3.18
and 3.19, and as defined in the U.S. Treasury Regulations section 1.482-5(b)(2). However, some methods consider, or test, data from
both parties to a transaction, where there is no singular “tested” party. Even in applying such methods, however, it is typically the
case that one particular party’s results are formally tested for compliance with the method. For purposes of this template, in such
circumstances, the party whose results are formally tested in applying any particular method is the “Tested Party”, even if that party
is not strictly a “tested party” as discussed in the OECD Guidelines paragraphs 3.18 and 3.19, or as defined in the U.S. Treasury
Regulations section 1.482-5(b)(2).

April 17, 2023 688 Bulletin No. 2023–16
ADVANCE PRICING AGREEMENT
between
#SIGNATORY
and
THE INTERNAL REVENUE SERVICE
[] Bilateral with #COUNTRY
[] Multilateral with #COUNTRIES
[] Unilateral
Term: #DATE to #DATE, inclusive
[] This APA is commonly referred to as #APA NAME.
PARTIES
The Parties to this APA are the Internal Revenue Service (“IRS”) and #NAME OF EACH NON-IRS SIGNATORY, WITH EIN.
[] #SIGNATORY will be referred to as “U.S. Taxpayer.”
[] #SIGNATORY is the common parent of an affiliated group filing consolidated U.S. tax returns and is entering into this APA
on behalf of both itself and the following members of its consolidated group: #MEMBERS OF GROUP. All members of this
consolidated group will be referred to collectively as “U.S. Taxpayer.”
RECITALS
[] This APA is a renewal of one or more prior APAs, which are listed below in reverse chronological order:
Party(ies)Execution DateTerm
Key:
• Party(ies)
: The signatory(ies) to the prior APA, other than the IRS, with each signatory’s taxpayer identification number;
• Execution Date: The date, or the later of the dates, on which the prior APA was executed;
• Term: The term of the prior APA.
[] This is a bilateral APA within the meaning of Rev. Proc. 2015-41 and implements the terms of a mutual agreement reached
between the United States and #COUNTRY.
[] This is a multilateral APA within the meaning of Rev. Proc. 2015-41 and implements the terms of a mutual agreement reached
among the United States, #COUNTRIES.
[] This APA is a unilateral APA within the meaning of Rev. Proc. 2015-41 and is not based on any mutual agreement.
The Parties to this APA are defined in the ”Parties” section above. Regarding the Party(ies) to this APA other than the IRS:
[] No such Party has an immediate parent or owner that is not a U.S. entity.
[] One or more such Parties has an immediate parent or owner that is not a U.S. entity, as follows:

Bulletin No. 2023–16 689 April 17, 2023
PartyParent’s or Owner’s
Identifying Information
Parent’s or Owner’s
Contact Information
Key:
• Party: Name of the Party having an immediate parent or owner that is not a U.S. entity;
• Parent’s or Owner’s Identifying Information: Name of the immediate parent or owner of such Party, and the taxpayer
identification number of that parent or owner for income tax purposes in its country of residence;
• Parent’s or Owner’s Contact Information: The immediate parent’s or owner’s address and phone number.
The term “Worldwide Group” is defined below in paragraph 12 of this APA. The ultimate parent entity or owner of Worldwide
Group is:
#ENTITY NAME, ADDRESS, AND PHONE
U.S. Taxpayer’s principal place of business is #CITY, #STATE. #BRIEF DESCRIPTION OF U.S. TAXPAYER AND NON-U.S.
TAXPAYER (DEFINED IN SECTION 1 OF APPENDIX A), AND SPECIFICALLY OF EACH COVERED ENTITY (DEFINED
IN SECTION 1 OF APPENDIX A).
This APA contains the Parties’ agreement on the Covered Method(s) for resolving the Covered Issue(s) under Code section 482 and
any other Code sections that are identified in Appendix A to this APA, the U.S. Treasury Regulations thereunder, and (if applicable):
[] The income tax convention(s) between the United States and #COUNTRY(IES).
This APA shall not limit the authority of the IRS to (1) verify compliance with this APA as to the Covered Issue(s), or (2) audit
issues other than Covered Issue(s), including issues that arise under Code section 482 and any other Code sections identified in
Appendix A to this APA, and the U.S. Treasury Regulations thereunder.
LIMITATION ON ASSISTANCE
The Covered Issue(s) may relate to one or more countries which (i) have an income tax convention with the United States, but
(ii) are not a party to a mutual agreement whose terms are implemented by this APA. U.S. Taxpayer acknowledges that the IRS may
decline to provide competent authority assistance concerning taxation by such country(ies) that relates to the Covered Issue(s). See
section 2.02(4)(d) of Rev. Proc. 2015-41.

April 17, 2023 690 Bulletin No. 2023–16
AGREEMENT
The Parties agree as follows:
1. Covered Entities. This APA’s Covered Entities are defined in Appendix A.
2. Covered Issue(s). This APA applies to the Covered Issue(s), as defined in Appendix A.
3. Covered Method(s). Appendix A sets forth the Covered Method(s) for the Covered Issue(s).
4. Term. This APA applies to the APA Term, as defined in Appendix A.
5. Operation.
a. Rev. Proc. 2015-41 governs the interpretation, legal effect, and administration of this APA.
b. The APMA program provides a voluntary process whereby the IRS and taxpayers may resolve transfer pricing issues and
issues for which transfer pricing principles may be relevant in a principled and cooperative manner on a prospective basis.
As such, the APA process (as defined in Rev. Proc. 2015-41) is an alternative to dispute resolution that benefits both taxpay-
ers and the IRS and that is intended to promote and encourage open communication. Accordingly, the IRS and U.S. Taxpayer
agree that neither party will attempt to use nonfactual oral or written representations, within the meaning of sections 6.04 and
6.05 of IRS Revenue Procedure 2015-41 (including any proposals to use particular Covered Method(s)), made in conjunc-
tion with the APA Request in any judicial or administrative proceeding. The IRS and U.S. Taxpayer also agree that factual
representations made in conjunction with the APA Request may be used in judicial and administrative proceedings.
6. Compliance.
a. U.S. Taxpayer must report its taxable income in an amount that is consistent with Appendix A and all other requirements of
this APA. U.S. Taxpayer must so report its taxable income in the following manner:
i. For any APA Tax Year for which U.S. Taxpayer timely files its original U.S. return prior to, or no later than 60 days after,
the U.S. Effective Date, U.S. Taxpayer must so report its taxable income for that APA Tax Year in one of the following
ways:
A. on such original U.S. return;
B. on an amended U.S. return submitted no later than 120 days after the U.S. Effective Date;
C. through a means proposed by U.S. Taxpayer and accepted by the applicable IRS practice area no later than 120 days
after the U.S. Effective Date (or by such other deadline as is agreed between U.S. Taxpayer and the applicable IRS
practice area); or
D. if applicable:
[]* no later than 120 days after the U.S. Effective Date through the following means: #DESCRIPTION OF
MEANS.
ii. For all other APA Tax Years, U.S. Taxpayer must so report its taxable income on its timely filed original U.S. return.
iii. The provisions of paragraphs 6(a)(i) and 6(a)(ii) are modified by this paragraph 6(a)(iii). If a Covered Method includes
a term test (including the case of an annual test with a supplemental term test) or a subterm test, as described in section
4 of Appendix A, then the APA Covered Year as of which the term test or subterm test applies would change in the event
of an Early Termination. Specifically, while in the absence of an Early Termination a term test would apply as of the last
APA Covered Year, in the event of an Early Termination the term test would apply as of an earlier APA Covered Year.
Similarly, while in the absence of an Early Termination a subterm test would apply as of the last APA Covered Year in
the subterm, in the event of an Early Termination the subterm test might apply as of an earlier APA Covered Year. In
these situations, the Early Termination might not be established in time for U.S. Taxpayer to know to apply the term test

Bulletin No. 2023–16 691 April 17, 2023
or subterm test as of the earlier APA Covered Year in reporting taxable income as required under paragraphs 6(a)(i) and
6(a)(ii) for the APA Tax Year corresponding to that earlier APA Covered Year. In such cases, U.S. Taxpayer may need to
correct its reporting for that APA Tax Year. Specifically, U.S. Taxpayer will need to correct its income reporting for that
APA Tax Year if the application of the term test or subterm test in that earlier APA Covered Year changes the existence
or amount of an APA Primary Adjustment for the Covered Method for that APA Tax Year. In such cases:
A) The resulting incorrectness in the prior reporting for that APA Tax Year is excused; and
B) U.S. Taxpayer must correct such prior reporting through a means listed in paragraph 6(a)(i) within 120 days of the
Early Termination being established.
b. For each Covered Issue, if any, that involves determination of pricing and/or income allocation
16
under Code section
482 (or Code section 367(d)) as modified by any applicable income tax convention, this APA addresses the pricing and/
or income allocation between U.S. Taxpayer and Non-U.S. Taxpayer in the aggregate. Except as explicitly provided,
this APA does not address and does not bind the IRS with respect to pricing or income allocation (1) among particular
legal entities that are members of U.S. Taxpayer, or (2) among particular legal entities that are members of Non-U.S.
Taxpayer. In addition, this APA does not address pricing or income allocation between an entity that is not a Covered
Entity, and any entity.
c. For each APA Tax Year, if U.S. Taxpayer complies with the terms and conditions of this APA, then, provided that this
APA remains effective for that APA Tax Year for a particular Covered Issue, the IRS will not make or propose any allo-
cation or adjustment that is inconsistent with the application under this APA of the applicable Covered Method to that
Covered Issue.
d. If U.S. Taxpayer does not comply with the terms and conditions of this APA, then the IRS may:
i. enforce the terms and conditions of this APA and make or propose allocations or adjustments based on the applica-
tion of the Covered Method(s) to the Covered Issue(s) as provided in this APA;
ii. cancel or revoke this APA under section 7.06 of Rev. Proc. 2015-41; or
iii. revise this APA, if the Parties agree.
e. U.S. Taxpayer must timely file an Annual Report for each APA Tax Year in accordance with this paragraph 6(e),
Appendix C to this APA, and section 7.02 of Rev. Proc. 2015-41. Annual Reports for multiple APA Tax Years may be
combined, provided that all required information for each APA Tax Year is clearly presented. For each Annual Report,
U.S. Taxpayer must submit an original printed version containing a signed original “penalties of perjury” declaration,
one printed copy of the contents of the original printed version, and an electronic copy of the contents of the original
printed version. Any exhibits in the printed version must be tabbed, and the electronic copy is subject to the same
requirements, as to medium and format, that are specified for APA requests in section 2 of the Appendix to Rev. Proc.
2015-41. Upon request, U.S. Taxpayer must provide additional copies of the printed version, at addresses specified by
the IRS. U.S. Taxpayer must file the Annual Report for each APA Tax Year by the later of (i) #DATE CERTAIN, NOR-
MALLY APPROXIMATELY 90 DAYS AFTER THE U.S. EFFECTIVE DATE, and (ii) the fifteenth day of the twelfth
month following the close of the APA Tax Year. The IRS may by notice request additional information reasonably nec-
essary to clarify or complete the Annual Report. (See paragraph 16, and section 3(c) of Appendix C, regarding notices.)
U.S. Taxpayer will provide such requested information within 30 days from the date of the notice unless a later date is
specified in the notice. Additional time may be allowed for good cause in the discretion of the Director of the Advance
Pricing and Mutual Agreement Program.
f. The IRS will determine whether U.S. Taxpayer has complied with this APA based on U.S. Taxpayer’s U.S. returns, the
Financial Statements and additional statements required under this paragraph 6(f), and other APA Records, for all APA
Tax Years and any other tax year necessary to verify compliance. The Financial Statements and additional statements
required for a particular tax year are:
16
As used in this APA, "income allocation" includes allocation of loss.

April 17, 2023 692 Bulletin No. 2023–16
[] For every U.S. Covered Entity, the Financial Statements together with the additional statements specified in
paragraph 6(f)(i); and for every Non-U.S. Covered Entity, the Financial Statements together with the additional
statements specified in paragraph 6(f)(ii).
[]* For every U.S. Covered Entity, the Financial Statements together with the additional statements specified in para-
graph 6(f)(i).
[]* For every Non-U.S. Covered Entity, the Financial Statements together with the additional statements specified in
paragraph 6(f)(ii).
i. For each U.S. Covered Entity, the additional statements consist of the following statement(s):
[] An audit opinion for that U.S. Covered Entity’s Financial Statements, as defined in paragraph 6(f)(iii).
[]* One or more of the following, as indicated:
[] An accountant’s report for that U.S. Covered Entity’s Financial Statements, as defined in paragraph 6(f)(iii).
[] A self-certification for that U.S. Covered Entity’s Financial Statements, as defined in paragraph 6(f)(iii).
[] A self-certification for that U.S. Covered Entity’s Financial Statements, together with a tying certification for
that entity’s Financial Statements, as defined in paragraph 6(f)(iii).
[] #OTHER MEANS OF VERIFYING THE RELIABILITY OF THE U.S. COVERED ENTITY’S FINAN-
CIAL STATEMENTS.
ii. For each Non-U.S. Covered Entity, the additional statements consist of the following statement(s):
[] An audit opinion for that Non-U.S. Covered Entity’s Financial Statements, as defined in paragraph 6(f)(iii).
[]* One or more of the following, as indicated:
[] An accountant’s report for that Non-U.S. Covered Entity’s Financial Statements, as defined in paragraph 6(f)
(iii).
[] A self-certification for that Non-U.S. Covered Entity’s Financial Statements, as defined in paragraph 6(f)(iii).
[] A self-certification for that Non-U.S. Covered Entity’s Financial Statements, together with a tying certification
for that Covered Entity’s Financial Statements, as defined in paragraph 6(f)(iii).
[] #OTHER MEANS OF VERIFYING THE RELIABILITY OF THE NON-U.S. COVERED ENTITY’S
FINANCIAL STATEMENTS.
iii. With reference to the Financial Statements for a particular Covered Entity for a particular tax year, certain terms used
in paragraphs 6(f)(i) and 6(f)(ii) are defined as follows:
A. An audit opinion is an opinion of an independent certified public or chartered accountant who audited the Financial
Statements.
B. An accountant’s report is a report of an independent certified public or chartered accountant who is associated with
the Financial Statements.
C. A self-certification is an attestation, as defined in paragraph 6(f)(iii)(E), that the Financial Statements have been
prepared according to the Applicable Accounting Standard.

Bulletin No. 2023–16 693 April 17, 2023
D. A tying certification consists of the following:
(1) An attestation, as defined in paragraph 6(f)(iii)(E), that the Financial Statements can be reconciled to the con-
solidated Financial Statements for that entity’s direct or indirect parent according to workpapers provided with
the attestation;
(2) The workpapers referred to in paragraph 6(f)(iii)(D)(1), which must demonstrate the consolidation of the Cov-
ered Entity’s Financial Statements into the Financial Statements of the parent referred to in paragraph 6(f)(iii)
(D)(1);
(3) The Financial Statements of the parent referred to in paragraph 6(f)(iii)(D)(1); and
(4) An audit opinion (as defined in paragraph 6(f)(iii)(A)) for the Financial Statements of the parent referred to in
paragraph 6(f)(iii)(D)(1).
E. An attestation is an affirmation by an officer of the Covered Entity in the following form:
I, [Officer’s Name and Title], of [Name of Covered Entity] affirm under penalties of perjury that the facts
stated below are true. I either have adequate first-hand knowledge to make this affirmation or have gained
adequate knowledge to make this affirmation through diligent consultation(s) with one or more individuals
who have first-hand knowledge.
[Facts attested to.]
[Signature]
g. In accordance with section 7.04 of Rev. Proc. 2015-41, U.S. Taxpayer will (1) maintain the APA Records, and (2) make
them available to the IRS in connection with an examination under section 7.03 of Rev. Proc. 2015-41. Compliance with
this subparagraph constitutes compliance with the record-maintenance provisions of Code sections 6038A and 6038C for
the Covered Issue(s) for any APA Covered Year.
h. The “true taxable income” within the meaning of U.S. Treasury Regulations sections 1.482-1(a)(1) and (i)(9) of a member
of an affiliated group filing a U.S. consolidated return will be determined under the U.S. Treasury Regulations under Code
section 1502.
i. To the extent that U.S. Taxpayer’s compliance with this APA depends on certain acts of other members of Worldwide Group,
U.S. Taxpayer will ensure that such other members will perform such acts.
7. Critical Assumptions. The Critical Assumptions, which are this APA’s critical assumptions as defined in Rev. Proc. 2015-41,
appear in Appendix B. If any Critical Assumption has not been met, then Rev. Proc. 2015-41, section 7.06, governs, as modified
by Appendix B to this APA.
8. Disclosure. This APA, and any background information related to this APA or the APA Request, are: (1) considered “return
information” under Code section 6103(b)(2)(C); and (2) not subject to public inspection as a “written determination” under Code
section 6110(b)(1). Section 521(b) of Pub. L. 106-170 provides that the Secretary of the Treasury must prepare a report for public
disclosure that includes certain specifically designated information concerning all APAs, including this APA, in a form that does
not reveal taxpayers’ identities, trade secrets, and proprietary or confidential business or financial information.
9. Disputes. If a dispute arises concerning the interpretation or application of this APA, the Parties will seek a resolution by the
Director, Treaty and Transfer Pricing Operations, to the extent reasonably practicable, before seeking alternative remedies.
10. Materiality. In this APA the terms “material” and “materially” will be interpreted in a manner consistent with the description of
“material facts” in Rev. Proc. 2015-41, section 7.06(4).
11. Paragraph Captions. This APA’s paragraph captions, which appear in italic type, are for convenience and reference only. The
captions do not affect in any way the interpretation or application of this APA.

April 17, 2023 694 Bulletin No. 2023–16
12. Terms and Definitions.
a. Unless otherwise specified, terms in the plural include the singular and vice versa.
b. Appendix A contains definitions for certain terms used in this APA’s body and appendices.
c. Certain terms used in this APA’s body and appendices are defined as follows:
TermDefinition
Annual ReportA report within the meaning of Rev. Proc. 2015-41, section 7.02.
Advance Pricing
Agreement, or “APA”
An “advance pricing agreement” within the meaning of Rev. Proc. 2015-41, section 2.02. Unless context
indicates otherwise, “this APA” or “the APA” denotes the particular APA that is executed below.
APA Records(Defined in Appendix C.)
APA RequestU.S. Taxpayer’s request for this APA, which was dated #DATE, including any amendments or
supplemental or additional information thereto (including but not limited to any responses to due
diligence questions).
Critical Assumptions
(Defined in paragraph 7.)
Financial StatementsBalance sheet, income statement, statement of cash flow, and explanatory notes, prepared in accordance
with the Applicable Accounting Standard as defined in section 7 of Appendix A.
Non-U.S. GroupIn any APA Tax Year, Worldwide Group members that are not U.S. persons.
Parties
(Defined in the Recitals near the start of this APA.)
Pub. L. 106-170The Ticket to Work and Work Incentives Improvement Act of 1999.
U.S. Effective Date(Defined in paragraph 17 and in section 7 of Appendix A. Those definitions are intended to have the
same meaning. In case of conflict, the definition in paragraph 17 controls.)
U.S. GroupIn any APA Tax Year, Worldwide Group members that are U.S. persons.
Worldwide GroupIn any APA Tax Year, U.S. Taxpayer and all organizations, trades, businesses, entities, or branches
(whether or not incorporated, organized in the United States, or affiliated) owned or controlled directly
or indirectly by the same interests.
13. Deadline References. If a deadline under this APA falls on a Saturday, Sunday, or a legal holiday in the District of Columbia, the
deadline is extended to the next succeeding day that is not a Saturday, Sunday, or legal holiday in the District of Columbia.
14. Entire Agreement and Severability. This APA is the complete statement of the Parties’ agreement. The Parties will sever, delete,
or reform any invalid or unenforceable provision in this APA to approximate the Parties’ intent as nearly as possible.
15. Successor in Interest. This APA binds, and inures to the benefit of, any successor in interest to U.S. Taxpayer.
16. Notice. Any notices required by this APA or Rev. Proc. 2015-41 must be in writing. U.S. Taxpayer will send notices to the IRS
at:
Commissioner, Large Business and International Division
Internal Revenue Service
1111 Constitution Avenue, NW
SE:LB:TTPO:APMA:NCA534-01
Washington, DC 20224
(Attention: APMA)
The IRS will send notices to:
#NAME AND ADDRESS
(phone: #PHONE)

Bulletin No. 2023–16 695 April 17, 2023
The IRS also will send notices to, if applicable:
[] #REPRESENTATIVE’S NAME AND ADDRESS
(phone: #PHONE)
provided that a valid IRS Form 2848 “Power of Attorney and Declaration of Representative” for that person was included in the
most recent Annual Report (or, if no Annual Report has been filed, was included in the APA Request).
17. U.S. Effective Date and Counterparts. This APA is effective starting on the date, or later date of the dates, upon which all Parties
execute this APA (“U.S. Effective Date”). The Parties may execute this APA in counterparts, with each counterpart constituting
an original.
WITNESS,
The Parties have executed this APA on the dates below.
#SIGNATORY NAME IN BOLD FACE BLOCK CAPITAL LETTERS
By: __________________________Date: _________________, 20____
#NAME
#TITLE
INTERNAL REVENUE SERVICE
By: __________________________Date: _________________, 20____
John M. Wall
Acting Director, Advance Pricing and Mutual Agreement Program

April 17, 2023 696 Bulletin No. 2023–16
APPENDIX A
COVERED ENTITIES, TERM, COVERED ISSUE(S), COVERED METHOD(S), INCOME REPORTING,
CONFORMING ADJUSTMENTS AND REPATRITION OF FUNDS,
CERTAIN SUBSEQUENT ADJUSTMENTS,
AND DEFINITIONS
Section 1 of this Appendix lists the Covered Entities. Section 2 defines the APA Term, APA Tax Years, and APA Covered Years.
Section 3 describes the Covered Issue(s). Section 4 describes the Covered Method applicable to each Covered Issue.
Section 5 describes the application of the Covered Method(s) to income reporting and the possible need for an APA Primary
Adjustment under one or more Covered Methods. Section 6 addresses conforming adjustments and repatriation of funds following
APA Primary Adjustments.
Section 7 provides definitions that apply both to this Appendix and to the APA as a whole. The definitions table is based on a stan-
dard, inclusive model, and thus may include terms not used in this APA.
1. Covered Entities
The U.S. Covered Entity(ies) are:
#LIST OF EACH U.S. ENTITY INVOLVED IN ONE OR MORE COVERED ISSUE(S), AND ALSO (LISTED FIRST)
ANY CONSOLIDATED RETURN PARENT FOR ANY SUCH ENTITY. FOR EACH ENTITY, NAME, ADDRESS,
PHONE, AND EIN.
The term “U.S. Taxpayer” includes collectively all U.S. Covered Entities and any other entities that are in a consolidated return
group with a U.S. Covered Entity.
The Non-U.S. Covered Entity(ies) are:
# LIST OF EACH NON-U.S. ENTITY INVOLVED IN ONE OR MORE COVERED ISSUE(S), AND ALSO (LISTED
FIRST) ANY COMMON TAX REPORTING PARENT FOR ANY SUCH ENTITY. FOR EACH ENTITY, NAME,
ADDRESS, AND PHONE.
The term “Non-U.S. Taxpayer” includes collectively all Non-U.S. Covered Entities and any other entities that are in a common tax
reporting group with a Non-U.S. Covered Entity.
The term “Covered Entities” includes both the U.S. Covered Entities and the Non-U.S. Covered Entities.
2. APA Term, APA Tax Years, and APA Covered Years
The APA applies to the period from #DATE to #DATE, inclusive (the “APA Term”).
[] The APA Term does not include a Rollback.
[] The APA Term includes a Rollback, which covers from #DATE to #DATE, inclusive (the “Rollback Period”).
A tax year of U.S. Taxpayer that is wholly or partly contained in the APA Term is called an “APA Tax Year.” For a particular APA
Tax Year, the portion of such APA Tax Year that is contained in the APA Term is called an “APA Covered Year.” Such APA Tax Year
and APA Covered Year are said to “correspond” to each other or to be “corresponding.”
3. Covered Issue(s)
The Covered Issue(s) are as described below.
Covered Issue 1:
#DESCRIPTION OF COVERED ISSUE.

Bulletin No. 2023–16 697 April 17, 2023
4. Covered Method(s)
Each Covered Method applies to one or more Covered Issues. A Covered Method and the Covered Issue(s) to which the Covered
Method applies are said to “correspond,” or to be “corresponding”.
The Covered Methods are summarized in the following table and are described in detail below. In case of conflict with this table,
the detailed descriptions of the Covered Methods below, and the descriptions in section 3 above of the Covered Issues, control.
Covered Method
Number
Applies to Covered
Issues Number(s)
Summary Description of
Corresponding Covered
Issues
Type of Method;
Results Tested
Point or
Range
Testing Frequency
and Periods
1
This Appendix A uses the term “Tested Party.” When applied in the context of methods that consider, or test, data from only one
party to a transaction, this term is similar in concept to the term “tested party” as discussed in the OECD Guidelines paragraphs 3.18
and 3.19, and as defined in the U.S. Treasury Regulations section 1.482-5(b)(2). However, some methods consider, or test, data from
both parties to a transaction, where there is no singular “tested” party. Even in applying such methods, however, it is typically the
case that one particular party’s results are formally tested for compliance with the method. For purposes of this template, in such
circumstances, the party whose results are formally tested in applying any particular method is the “Tested Party”, even if that party
is not strictly a “tested party” as discussed in the OECD Guidelines paragraphs 3.18 and 3.19, or as defined in the U.S. Treasury
Regulations section 1.482-5(b)(2).
Covered Method for Covered Issue 1:
a. Tested Party
The Tested Party is #TESTED PARTY.
b. Financial Results Tested (Type of Method)
[] The Covered Method is an implementation of the comparable uncontrolled price method under the OECD Guidelines and
of the comparable uncontrolled price method under the U.S. Treasury Regulations. The Tested Party’s financial results to be
tested are:
[] per unit price paid, defined as the total amount paid for #DESCRIPTION OF GOODS divided by the number of
#DESCRIPTION OF A UNIT OF GOODS purchased.
[] per unit price received, defined as the total amount received for #DESCRIPTION OF GOODS divided by the number
of #DESCRIPTION OF A UNIT OF GOODS sold.
[] The Covered Method is an implementation of the comparable uncontrolled price method under the OECD Guidelines and of
the comparable uncontrolled services price method under the U.S. Treasury Regulations. The Tested Party’s financial results
to be tested are:
[] per unit price paid, defined as the total amount paid for #DESCRIPTION OF SERVICES divided by the number of
#DESCRIPTION OF A UNIT OF SERVICES received.
[] per unit price received, defined as the total amount received for #DESCRIPTION OF SERVICES divided by the number
of #DESCRIPTION OF A UNIT OF SERVICES provided.
[] The Covered Method is an implementation of the comparable uncontrolled price method under the OECD Guidelines and
of the comparable uncontrolled transaction method under the U.S. Treasury Regulations. The Tested Party’s financial results
to be tested are the royalty paid for the license of #DESCRIPTION OF LICENSED INTANGIBLE PROPERTY divided by
the Tested Party’s:
[] sales revenue from sales of #DESCRIPTION OF GOODS/SERVICES.
[] #OTHER ROYALTY BASE.

April 17, 2023 698 Bulletin No. 2023–16
[] The Covered Method is an implementation of the comparable uncontrolled price method under the OECD Guidelines and
of the acquisition price method under the U.S. Treasury Regulations. The Tested Party’s financial results to be tested are
described in subsection (c) below.
[] The Covered Method is an implementation of the comparable uncontrolled price method under the OECD Guidelines and
of the market capitalization method under the U.S. Treasury Regulations. The Tested Party’s financial results to be tested are
described in subsection (c) below.
[] The Covered Method is an implementation of the resale price method under the OECD Guidelines and of the resale price
method under the U.S. Treasury Regulations. The Tested Party’s financial results to be tested are the gross profit margin from
the sale of #DESCRIPTION OF GOODS.
[] The Covered Method is an implementation of the resale price method under the OECD Guidelines and of the gross services
margin method under the U.S. Treasury Regulations. The Tested Party’s financial results to be tested are the gross services
margin from the provision of #DESCRIPTION OF SERVICES.
[] The Covered Method is an implementation of the cost plus method under the OECD Guidelines and of the cost plus method
under the U.S. Treasury Regulations. The Tested Party’s financial results to be tested are the gross profit markup.
[] The Covered Method is an implementation of the cost plus method under the OECD Guidelines and of the cost of services
plus method under the U.S. Treasury Regulations. The Tested Party’s financial results to be tested are the gross services
profit markup from the provision of #DESCRIPTION OF SERVICES.
[] The Covered Method is based on the principles of the low value-adding intra-group services approach under the OECD
Guidelines and of the services cost method under the U.S. Treasury Regulations. The Tested Party’s financial results to be
tested are the markup on total costs for providing #DESCRIPTION OF SERVICES.
[] The Covered Method is an implementation of the transactional net margin method under the OECD Guidelines and of the
comparable profits method under the U.S. Treasury Regulations. The Tested Party’s financial results to be tested, as reflected
in its net profit indicator (per OECD Guidelines) or profit level indicator (per U.S. Treasury Regulations), are its:
[] operating margin.
[] markup on total costs.
[] Berry ratio.
[] return on operating assets.
[] return on invested capital.
[]* #OTHER NET PROFIT INDICATOR OR PROFIT LEVEL INDICATOR, WITH DEFINITION.
[] The Covered Method is an implementation of the profit split (residual analysis) method under the OECD Guidelines and
of the residual profit split method under the U.S. Treasury Regulations. The Tested Party’s financial results to be tested are
described in subsection (c) below.
[] The Covered Method is an implementation of the profit split (contribution analysis) method under the OECD Guidelines and
of the comparable profit split method under the U.S. Treasury Regulations. The Tested Party’s financial results to be tested
are described in subsection (c) below.
[] The Covered Method is an implementation of an income based valuation technique as referenced in paragraph 6.153 of the
OECD Guidelines and of the income method under the U.S. Treasury Regulations. The Tested Party’s financial results to be
tested are described in subsection (c) below.
[] The Covered Method is an implementation of (i) a sharing of the cost of current contributions in proportion to overall
expected benefits, within a cost contribution arrangement under the OECD Guidelines, and (ii) a sharing of intangible devel-

Bulletin No. 2023–16 699 April 17, 2023
opment costs in proportion to reasonably anticipated benefits, within a cost sharing arrangement under the U.S. Treasury
Regulations. The Tested Party’s financial results to be tested are described in subsection (c) below.
[] The Covered Method is a method that is not specified under the OECD Guidelines and not specified under the U.S. Treasury
Regulations. The Tested Party’s financial results to be tested are described in subsection (c) below.
Such financial results are determined according to the Applicable Accounting Standard, with the proviso that in determining such
results, accounting principles and conventions that are generally accepted in the trade or industry must be used.
Such financial results are tested against a point or range as described below. The test is carried out with a frequency, and for cer-
tain time periods, as described below. If and when these financial results do not satisfy the test, they must be adjusted as described in
section 5 of this Appendix A.
c. Testing of Financial Results Against a Point or Range
The Tested Party’s financial results are tested as follows:
[] The financial results must equal #X.
[] The financial results must be within an Arm’s Length Range.
[] The Arm’s Length Range is from #X to #Y inclusive.
[] This Arm’s Length Range has an associated Median value of #Z.
[] This Arm’s Length Range has no associated Median value.
[] Two Arm’s Length Ranges apply. The first is from #W to #X inclusive and applies to the annual test described in sub-
section (d) below. The second is from #Y to #Z inclusive and applies to the term test described in subsection (d) below.
[] The first Arm’s Length Range has an associated Median value of #P, and the second Arm’s Length Range has an
associated Median value of #Q.
[] These Arm’s Length Ranges have no associated Median value.
[] Two Arm’s Length Ranges apply. The first is from #W to #X inclusive and applies to the subterm test described in
subsection (d) below. The second is from #Y to #Z inclusive and applies to the annual test described in subsection (d)
below.
[] The first Arm’s Length Range has an associated Median value of #P, and the second Arm’s Length Range has an
associated Median value of #Q.
[] These Arm’s Length Ranges have no associated Median value.
[] Two Arm’s Length Ranges apply. The first is from #W to #X inclusive and applies to the test for the first subterm
described in subsection (d) below. The second is from #Y to #Z inclusive and applies to the test for the second subterm
described in subsection (d) below.
[] The first Arm’s Length Range has an associated Median value of #P, and the second Arm’s Length Range has an
associated Median value of #Q.
[] These Arm’s Length Ranges have no associated Median value.
[] #OTHER DESCRIPTION, FOR EXAMPLE THE EVALUATION AND TESTING MECHANICS FOR A PROFIT SPLIT,
AN INCOME METHOD, AN UNSPECIFIED METHOD, OR A SHARING OF COSTS UNDER A COST CONTRIBU-
TION ARRANGMENT/COST SHARING ARRANGEMENT.

April 17, 2023 700 Bulletin No. 2023–16
d. Testing Frequency and Testing Periods
The Tested Party’s financial results are tested as of certain APA Covered Years, and for certain time periods, as follows:
[] The results are tested annually, meaning that they are tested as of each APA Covered Year, for a period consisting of that APA
Covered Year.
[] There is no additional term test.
[] There is an additional term test. For this test, the results are tested as of the Last Effective APA Covered Year, for the
period consisting of the Last Effective APA Covered Year and all prior APA Covered Years.
The application of the annual test and the application of the additional term test are coordinated as described in section 5 of this
Appendix A.
[]* The results are tested on a term basis, meaning that they are tested only once, as of the Last Effective APA Covered Year, for
a period consisting of the Last Effective APA Covered Year and all prior APA Covered Years.
[]* The results are tested on the basis of two subterms. For this purpose, the APA Term is divided into two subterms. The first
subterm consists of all APA Covered Years ending on or before #DATE, and the second subterm consists of all other APA
Covered Years. For each subterm, the results are tested as of the Last Effective APA Subterm Covered Year, for a period
consisting of the Last Effective APA Subterm Covered Year and all prior APA Covered Years in the subterm.
[]* The results are tested on a subterm basis for all APA Covered Years ending on or before #DATE (the “subterm”), and are
tested annually for each other APA Covered Year, as follows:
The results are tested as of the Last Effective APA Subterm Covered Year, for a period consisting of the Last Effective APA Sub-
term Covered Year and all prior APA Covered Years in the subterm.
The results are tested as of each APA Covered Year that is not in the subterm, for a period consisting of that APA Covered Year.
[]* The results are tested on a cumulative basis, meaning that (except as provided in the following sentence) they are not tested
as of the first APA Covered Year but they are tested as of each other particular APA Covered Year for a period consisting of
such particular APA Covered Year and all prior APA Covered Years. However, if the Last Effective APA Covered Year is
the first APA Covered Year, then the results are tested as of the first APA Covered Year, for a period consisting of such APA
Covered Year.
[]* The results are tested on a three-year rolling average basis, meaning that the results are tested as of each APA Covered Year,
for a period consisting of the APA Tax Year corresponding to the APA Covered Year (but excluding any portion of that APA
Tax Year that is after the APA Term), and the Tested Party’s two preceding tax years.
e. Other Provisions
The Tested Party’s financial results, to be tested as described above, are for:
[] The Tested Party as a whole.
[] Only a segment of the Tested Party’s activity. #DETAILED DESCRIPTION OF THE SEGMENT AND OF THE ALLO-
CATION AND APPORTIONMENT METHODS USED, INCLUDING ANY APPLICABLE FORMULAS AND
DEFINITIONS OF QUANTITIES USED IN THOSE FORMULAS. THIS DESCRIPTION SHOULD BE DETAILED
ENOUGH TO ENABLE A STRAIGHTFORWARD VERIFICATION OF COMPLIANCE BY THE IRS EXAMINATION
TEAM.
When the Tested Party’s financial results are tested as of a given APA Covered Year, those results shall reflect, to the extent
relevant, any APA Primary Adjustment for this Covered Method made under section 5 of this Appendix A for the APA Tax Year cor-
responding to any prior APA Covered Year.

Bulletin No. 2023–16 701 April 17, 2023
For this Covered Method, if applicable:
[]* For APA Covered Years ending on or before #DATE, it is agreed that this Covered Method, yields financial results as shown
below, and that any APA Primary Adjustments under section 5 of this Appendix A are as shown below.
#TEXT AND/OR TABLES SHOWING THE FINANCIAL RESULTS, THE TESTING OF THOSE FINANCIAL RESULTS
UNDER THE COVERED METHOD, AND ANY RESULTING APA PRIMARY ADJUSTMENTS.
For this Covered Method, if applicable:
[] This Covered Method addresses the pricing for a transfer of intangible property (which does not constitute a platform con-
tribution transaction as defined in U.S. Treasury Regulations section 1.482-7(b)(1)(ii)) within the meaning of U.S. Treasury
Regulations section 1.482-4. That pricing will not be subject to periodic adjustments by the IRS, during or after the APA
Term, under U.S. Treasury Regulations section 1.482-4(f)(2) or (6).
[] This Covered Method addresses the pricing for a platform contribution transaction (“PCT”). That PCT will not be treated
as a Trigger PCT within the meaning of U.S. Treasury Regulations section 1.482-7(i)(6)(i) for purposes of making periodic
adjustments, during or after the APA Term, under U.S. Treasury Regulations section 1.482-7(i)(6).
5. Application of Covered Method(s) to Income Reporting
For each APA Tax Year, and for each Covered Method and corresponding Covered Issue(s), the amounts reported by U.S.
Taxpayer and Non-U.S. Taxpayer for income tax purposes under the laws of the United States and #COUNTRY(IES) must
clearly reflect the Tested Party’s actual transactions, allocations, and/or recordkeeping, as applicable, that relate to such Covered
Issue(s), adjusted as necessary to conform with section 4 of this Appendix A. Accordingly, for each particular APA Tax Year and
corresponding APA Covered Year, and for each such Covered Method:
i. If the Tested Party’s financial results are tested as of such APA Covered Year and do not conform with section 4 of this
Appendix A, then the tax reporting for such APA Tax Year must clearly reflect an adjustment that brings such results into
conformance (an “APA Primary Adjustment”). If section 4 of this Appendix A specifies conformance to an Arm’s Length
Range, then the adjustment shall be to:
[] the Median.
[]* the near edge of the Arm’s Length Range.
[]* the Median for Covered Issues #SPECIFY WHICH ONES, and the near edge of the Arm’s Length Range for Covered
Issues #SPECIFY WHICH ONES.
ii. If an adjustment is not required under paragraph (i) above, then the tax reporting must clearly reflect the Tested Party’s
financial results, with no adjustment. In this case there is no APA Primary Adjustment.
iii. If both an annual test and an additional term test apply under such Covered Method, and such APA Covered Year is the Last
Effective APA Covered Year, so that as of such APA Covered Year the Tested Party’s financial results are tested under both
the annual test and the term test, then paragraphs (i) and (ii) above are modified by this paragraph (iii), which coordinates
the application of both tests. As explained in more detail below, the annual test is applied first, followed by the term test.
Specifically, the need for and amount of any APA Primary Adjustment for such APA Covered Year will be determined as
follows:
A. First apply paragraphs (i) and (ii) above under the assumption that only the annual test applies. Any required adjustment
will be referred to as the “annual adjustment” rather than an “APA Primary Adjustment.” If there is no required adjust-
ment, the annual adjustment is considered to be zero.
B. Next, apply paragraphs (i) and (ii) above to the Tested Party’s financial results as adjusted by any nonzero annual
adjustment, under the assumption that only the term test applies to those results. Any required adjustment under this
application of paragraphs (i) and (ii) will be referred to as the “term adjustment” rather than an “APA Primary Adjust-
ment.” If there is no such required adjustment, the term adjustment is considered to be zero.

April 17, 2023 702 Bulletin No. 2023–16
C. Add the annual adjustment and term adjustment, taking account of the magnitude and (if nonzero) direction of each. If
this sum is zero, there is no APA Primary Adjustment for such APA Covered Year. If this sum is nonzero, this sum gives
the magnitude and direction of the APA Primary Adjustment for such APA Covered Year. Any APA Primary Adjustment,
or the lack of an APA Primary Adjustment, must be clearly reflected in the tax reporting for such APA Tax Year (see
paragraphs (i) and (ii) above).
iv. If this APA is unilateral and such APA Covered Year is within the Rollback Period, then:
[] Paragraphs (i)-(iii) above notwithstanding, an APA Primary Adjustment will not be made if that APA Primary Adjust-
ment would decrease the income of U.S. Taxpayer for such APA Tax Year.
[]* Paragraphs (i)-(iii) above apply without modification.
If indicated, the above provisions on APA Primary Adjustments are modified as follows:
[]* Any APA Primary Adjustment that would be made under the above provisions for an APA Tax Year ending before #DATE
will instead be made for the APA Tax Year ending #THE SAME DATE (the “Telescoping Year”). For each particular Cov-
ered Method, all APA Primary Adjustments that are made for the Telescoping Year (including any APA Primary Adjustments
that are moved to the Telescoping Year as just described, as well as any APA Primary Adjustment originally made for the
Telescoping Year) are netted.
[] The foregoing provision applies without modification.
[] The foregoing provision applies with the following modification. An APA Primary Adjustment that is thus moved from
a particular APA Tax Year (the “Original Year”) to the Telescoping Year shall be increased in amount to reflect the time
value of money. That increase will consist of multiplication by a factor that is an annual rate raised to a power. The
annual rate is 1.#XY. The power is the quotient of (i) the average of the number of months by which the end of the Tele-
scoping Year is later than the end of the Original Year, and the number of months by which the start of the Telescoping
Year is later than the start of the Original Year (with any fractions of months rounded to whole months), (ii) divided by
twelve.
For U.S. tax purposes, the generally applicable Code rules will apply with respect to APA Primary Adjustments, except as other-
wise provided in Rev. Proc. 2015-41 or in this APA.
6. Conforming Adjustments and Repatriation of Funds
The provisions in this section 6 apply to “Repatriable Issues,” which are Covered Issues that concern transactions between asso-
ciated enterprises that fall under Article 9 of the OECD Model Tax Convention. Such transactions correspond to transactions that
under U.S. law are subject to application of Code section 482, as modified by any applicable treaty provision.
If the application of a Covered Method to a Repatriable Issue requires an APA Primary Adjustment under section 5 of this Appen-
dix A for a given APA Tax Year, then for U.S. tax purposes there generally must be a corresponding conforming adjustment as
specified in U.S. Treasury Regulations section 1.482-1(g)(3) as amplified by Rev. Proc. 99-32 or any successor revenue proce-
dure. However, for this purpose, all APA Primary Adjustments for such APA Tax Year arising from the application of a Covered
Method to a Repatriable Issue are first netted to yield a net APA Primary Adjustment for such APA Tax Year. Only if the net APA
Primary Adjustment is nonzero is a conforming adjustment required.
For each APA Tax Year with a nonzero net APA Primary Adjustment, for U.S. tax purposes the conforming adjustment will be
accomplished in the following steps:
i. The conforming adjustment will be accomplished between #U.S. ENTITY and #NON-U.S. ENTITY, which will be referred
to here as “U.S. Entity” and “Non-U.S. Entity”, respectively. An intercompany payable will be established between U.S.
Entity and Non-U.S. Entity in the amount and direction of the net APA Primary Adjustment, as of the last day of such APA
Tax Year. This payable will be denominated in #CURRENCY. The payable will be treated as indebtedness for all U.S. fed-
eral tax purposes; provided, however, that the payable will not be treated as indebtedness for purposes of Code section 956
if the payable is satisfied within 90 days of the close of the APA Tax Year with respect to which it is established.

Bulletin No. 2023–16 703 April 17, 2023
ii. [] The intercompany payable will bear interest at an arm’s length rate.
[] Such arm’s length rate is not specified in this APA and will be determined under applicable legal principles.
[] Such arm’s length rate is determined as follows. #DESCRIPTION OF ARM’S LENGTH RATE (FOR EXAMPLE,
FOR A U.S. DOLLAR PAYABLE, A CERTAIN APPLICABLE FEDERAL RATE UNDER U.S. TREASURY REGU-
LATIONS SECTION 1.482-2(a)(2)(iii)(C)).
[] This APA is bilateral or multilateral. As agreed between the United States and #COUNTRY(IES), the intercompany
payable will not bear interest.
iii. The intercompany payable must be satisfied, in a manner permitted under Rev. Proc. 99-32 or any successor revenue proce-
dure, within 90 days of the later of (1) the date for timely filing (with extensions) of the U.S. return for such APA Tax Year,
and (2) the APA’s U.S. Effective Date. If any amount of the intercompany payable is not otherwise so satisfied within that
90-day period, such amount, on the last day of such period, will be deemed (1) to be paid between U.S. Entity and Non-U.S.
Entity in satisfaction of the payable, and (2) to be paid (directly or indirectly, as specified below) between U.S. Entity and
Non-U.S. Entity in the opposite direction (that is, from the deemed recipient of the intercompany payable to the deemed
payor of the intercompany payable). These two deemed payments on the same day will cancel and thus yield no net cash
flow between these two entities. The second of these deemed payments will be referred to as the “reverse payment.” The
reverse payment will be deemed to be as follows:
A. If the net APA Primary Adjustment increases U.S. income:
[] The reverse payment will be deemed to be a contribution to capital from U.S. Entity to Non-U.S. Entity, either
directly, or indirectly through the corporate chain, as the case may be.
[] The reverse payment will be deemed to be a distribution from U.S. Entity to Non-U.S. Entity, either directly, or
indirectly through the corporate chain, as the case may be.
[] The reverse payment will be deemed to be a distribution from U.S. Entity to #COMMON PARENT, either directly,
or indirectly through the corporate chain, as the case may be, followed by a contribution by #COMMON PARENT
to non-U.S. Entity, either directly or indirectly through the corporate chain, as the case may be.
B. If the net APA Primary Adjustment decreases U.S. income:
[] The reverse payment will be deemed to be a contribution to capital from non-U.S. Entity to U.S. Entity, either
directly, or indirectly through the corporate chain, as the case may be.
[] The reverse payment will be deemed to be a distribution from non-U.S. Entity to U.S. Entity, either directly, or
indirectly through the corporate chain, as the case may be.
[] The reverse payment will be deemed to be a distribution from non-U.S. Entity to #COMMON PARENT, either
directly, or indirectly through the corporate chain, as the case may be, followed by a contribution by #COMMON
PARENT to U.S. Entity, either directly, or indirectly through the corporate chain, as the case may be.
This situation is generally described in paragraph 4.66 of the OECD Guidelines, and in U.S. Treasury Regulations section 1.482-
1(g) and Rev. Proc. 99-32.
In this APA, if applicable:
[]* For the APA Tax Year(s) ending on or before #DATE, it is agreed that the net APA Primary Adjustment(s), if any, from the
application of the Covered Methods are as follows: #FOR EACH SUCH APA TAX YEAR, DESCRIPTION OF WHETHER
THERE IS A NET APA PRIMARY ADJUSTMENT, AND IF SO THE AMOUNT AND DIRECTION. IF THERE IS
MORE THAN ONE COVERED METHOD FOR A REPATRIABLE ISSUE, ALSO PROVIDE A TABLE SHOWING THE
DERIVATION, FOR EACH SUCH APA TAX YEAR, OF THE NET APA PRIMARY ADJUSTMENT FROM THE APA
PRIMARY ADJUSTMENT (OR LACK OF ONE) FOR EACH SUCH COVERED METHOD. #FOR ANY SUCH NET

April 17, 2023 704 Bulletin No. 2023–16
APA PRIMARY ADJUSTMENTS, DESCRIPTION OF THE MEANS BY WHICH THE CONFORMING ADJUSTMENT
HAS BEEN OR WILL BE SATISFIED, WITH APPLICABLE DATES.
7. Definitions
The definitions in the table below apply to this APA.
The defined terms in this table include certain measures of profitability (e.g., operating profit, operating margin). Most of these
measures are ultimately defined in terms of sales revenue, operating expenses, and operating assets (defined terms), and cogs
and non-interest-bearing liabilities (undefined terms). The definitions of sales revenue, operating expenses, and operating
assets contain a limitation to the relevant business activity. Similarly, each use of the terms “cogs” and “non-interest-bearing
liabilities” is accompanied by a limitation to the relevant business activity. Therefore, the measures of profitability based on
these five terms all are defined with a limitation to the relevant business activity. (Certain other measures of profitability in
this table relate to the provision of services and are defined with reference to those services. Therefore, those measures as
well contain a limitation to the relevant business activity.)
TermDefinition
Arm’s Length Range
With respect to a particular Covered Method, a numerical range that defines the values for which
certain financial results of the Tested Party are considered to satisfy the arm’s length standard.
(This term may be referenced in section 4 of this Appendix A.)
APA Primary Adjustment
(Defined in section 5 of this Appendix A.)
APA Covered Year(Defined in section 2 of this Appendix A.)
APA Term(Defined in section 2 of this Appendix A.)
APA Tax Year(Defined in section 2 of this Appendix A.)
Applicable Accounting
Standard
The Applicable Accounting Standard is #CHOOSE FROM U.S. GAAP, IFRS, ETC. for U.S.
Taxpayer and #CHOOSE FROM U.S. GAAP, IFRS, ETC. for Non-U.S. Taxpayer.
Berry ratioThe ratio of gross profit to operating expenses.
CodeThe U.S. Internal Revenue Code of 1986, title 26 of the United States Code, as amended.
correspond, corresponding
(With regard to APA Covered Years and APA Tax Years, defined in section 2 of this Appendix A;
with regard to Covered Issues and Covered Methods, defined in section 4 of this Appendix A.)
Covered Entity(ies)(Defined in section 1 of this Appendix A.)
Covered Issue(s)(Defined in section 3 of this Appendix A.)
Covered MethodA method used to resolve one or more Covered Issues, as described in section 4 of this Appendix
A. (In some cases, this method may be a “transfer pricing method” within the meaning of
chapter II of the OECD Guidelines and U.S. Treasury Regulations section 1.482-1(b).)
Critical Assumption
fails, failure of a Critical
Assumption
A Critical assumption “fails” when the Critical Assumption has not been met. This situation is
referred to as the “failure” of the Critical Assumption.
Early TerminationA termination of this APA’s effectiveness, either in its entirely or only as applied to certain
Covered Issues before the end of the APA Term. Such a termination could result from one or
more of the following circumstances: (i) a Critical Assumption failure, (ii) a violation of the
terms and conditions of this APA, (iii) a cancellation of the APA under Rev. Proc. 2015-41, and
(iv) an amendment of the APA. If an Early Termination so terminates this APA’s effectiveness
as applied to a particular Covered Issue, the Early Termination is said to “apply” to or for that
Covered Issue.
Any such termination of effectiveness would occur as of the end of an APA Tax Year (see
Rev. Proc. 2015-41, section 7.06). Because such end of an APA Tax Year is before the end of the
APA Term, such end of an APA Tax Year is also the end of the corresponding APA Covered Year
(see the definitions of APA Tax Year and APA Covered Year in section 2 of this Appendix A).
Thus, an Early Termination always would occur as of the end of an APA Covered Year. That fact
is assumed in the definitions in this table of Last Effective APA Covered Year and Last Effective
APA Subterm Covered Year.
Gross profitSales revenue, less cost of goods sold for the relevant business activity.

Bulletin No. 2023–16 705 April 17, 2023
TermDefinition
Gross profit margingross profit, divided by sales revenue
Gross profit markupgross profit, divided by cost of goods sold for the relevant business activity
Gross services marginIn connection with a provision of services, the ratio of gross services profit to the price paid for
the services in an uncontrolled transaction. For this purpose, gross services profit equals the
amount of such price that is retained by the Tested Party.
Gross services profit markupIn connection with a provision of services, gross services profit, divided by transactional costs.
For this purpose, gross services profit equals sales revenue less transactional costs. Also, for this
purpose, transactional costs equal costs directly attributable to providing the services. Such costs
would include, for example, all compensation attributable to employees directly involved in the
performance of such services, and costs of materials and supplies consumed or made available in
rendering the services.
IFRSInternational Financial Reporting Standards.
Invested capitalOperating assets, less non-interest-bearing liabilities used in the relevant business activity.
IRSThe Internal Revenue Service, an agency of the U.S. government.
IFRSInternational Financial Reporting Standards.
Last Effective APA Covered
Year
For a particular Covered Method, the last APA Covered Year for which this APA remains
effective as to the Covered Issue(s) corresponding to that Covered Method. The Last Effective
APA Covered Year will be the last APA Covered Year unless an Early Termination applies to
such Covered Issue(s). See also the definition in this table of Early Termination.
Last Effective APA Subterm
Covered Year
For a particular Covered Method, and with reference to a particular set of APA Covered Years
that is defined as a subterm, the last APA Covered Year in the subterm for which this APA
remains effective as to the Covered Issue(s) corresponding to that Covered Method. The Last
Effective APA Subterm Covered Year will be the last APA Covered Year in the subterm unless
an Early Termination applies to such Covered Issue(s) and renders the APA ineffective as to
such Covered Issue(s) before the end of the subterm. See also the definition in this table of Early
Termination.
Markup on total costs
The ratio of operating profit to total costs.
MedianWith respect to a particular Arm’s Length Range, the median of a set of observations of market
data from which that Arm’s Length Range was determined.
Non-U.S. Taxpayer
(Defined in section 1 of this Appendix A.)
Non-U.S. Covered Entity(ies)(Defined in section 1 of this Appendix A.)
OECD Guidelines
Organisation for Economic Co-operation and Development, OECD Transfer Pricing Guidelines
for Multinational Enterprises and Tax Administrations (July 2017).
OECD PE Report
Organisation for Economic Co-operation and Development, 2010 Report on Attribution of Profit
to Permanent Establishments (July 22, 2010).
Operating assets
The value of all assets used in the relevant business activity, including fixed assets and current
assets (such as accounts receivable and inventories). The following items are excluded from
operating assets: cash, cash equivalents, short-term investments, deferred tax assets, tax refunds,
intangibles, investments in subsidiaries, portfolio investments.
Operating expensesAll expenses (including depreciation) not included in cost of goods sold except for interest
expense, domestic and foreign income taxes, amortization of intangibles, and any other expenses
not related to the operation of the relevant business activity. Operating expenses normally
include, for example, expenses associated with advertising, promotion, sales, marketing,
warehousing and distribution, administration, and a reasonable allowance for depreciation. For
U.S. Taxpayer, foreign income taxes are defined in U.S. Treasury Regulations section 1.902-1(a)
(7).
Operating margin
The ratio of operating profit to sales revenue.
Operating profitSales revenue, less cost of goods sold for the relevant business activity, less operating expenses.
Rev. Proc. 99-32A revenue procedure issued by the IRS that is cited as Rev. Proc. 99-32, 1999-2 C.B. 296.
Rev. Proc. 2015-41A revenue procedure issued by the IRS that is cited as
Rev. Proc. 2015-41, 2015-35 I.R.B 263.

April 17, 2023 706 Bulletin No. 2023–16
TermDefinition
Repatriable Issue
(Defined in section 6 of this Appendix A.)
Relevant Financial DataWith respect to a particular Covered Method, the financial results of the Tested Party that are
tested, together with any other financial data (of the Tested Party or any other party) that are
considered in determining compliance with the Covered Method.
Return on invested capital
(Defined in the same way as “return on operating assets,” but with “operating assets” replaced
by “invested capital” wherever it occurs in the definition.)
Return on operating assetsWith respect to a particular Covered Method, the Tested Party for that Covered Method, and a
testing period used in that Covered Method, the operating profit over the testing period divided
by the time-weighted average operating assets over the testing period.
For this purpose, the time-weighted average operating assets over the testing period is the
sum, over all APA Covered Years in the testing period, of the following product: (i) the simple
average of the operating asset levels at the start and end of the APA Tax Year corresponding to
such APA Covered Year, multiplied by (ii) the ratio of the number of calendar days in the APA
Covered Year, to 365.
For example, suppose that (i) the testing period consists of two consecutive APA Covered
Years, the first with 183 calendar days and the second with 366 calendar days, (ii) the total
operating profit over those two years is exactly 3.4, and (iii) the operating assets levels are
exactly 10 at the start of the APA tax year corresponding to the first APA Covered Year, 16 at the
end of the APA Tax Year corresponding to the first APA Covered Year (which is also the start
of the APA Tax Year corresponding to the second APA Covered Year), and 22 at the end of the
APA Tax Year corresponding to the second APA Covered Year. Then the time-weighted average
operating assets over the testing period is [(10+16)/2]*(183/365) + [(16+22)/2]*(366/365) =
25.5699. The return on operating assets is then 3.4/25.5699 = 13.30%.
Rollback Period(This term, if applicable, is defined in section 2 of this Appendix A.)
Sales revenueTotal receipts from sale of goods and provision of services, less returns and allowances, for the
relevant business activity.
Tax yearA standard or irregular year that is used for tax reporting purposes. For U.S. Taxpayer, a tax year
is a “taxable year,” as defined in Code section 441.
Tested Party(Defined in section 4 of this Appendix A with regard to a particular Covered Method.)
Testing periodThe time period over which financial results are tested (see section 4 of Appendix A to this
APA).
Total costsCost of goods sold for the relevant business activity, plus operating expenses.
U.S. Treasury RegulationsTax regulations issued by the U.S. Treasury Department, found at title 26 of the Code of Federal
Regulations.
U.S. Covered Entity(ies)
(Defined in section 1 of this Appendix A.)
U.S. Effective DateThe date, or later date of the dates, upon which the APA is executed by the IRS and by or on
behalf of each U.S. Covered Entity.
U.S. GAAPU.S. generally accepted accounting principles.
U.S. return
Any of the “Returns with respect to income taxes under subtitle A” required by Code section
6012, and any “return” for a partnership required by Code section 6031.
U.S. Taxpayer(Defined in section 1 of this Appendix A.)

Bulletin No. 2023–16 707 April 17, 2023
APPENDIX B
CRITICAL ASSUMPTIONS
The Critical Assumptions are:
1. The Covered Entities’ business activities, functions performed, risks assumed, assets employed, contractual terms, markets, and
economic conditions faced in relation to the Covered Issue(s) will remain materially the same as described in the APA Request.
For this purpose, a mere change in business results will not be a material change.
2. The Covered Entities’ financial accounting methods and classifications and methods of estimation in relation to the Covered
Issue(s) and Covered Method(s) will remain materially the same as described or used in the APA Request.
If indicated, the effect of a critical assumption failure may be limited as follows:
[] The failure of Critical Assumptions #XXX listed above will affect the effectiveness of this APA only as to Covered Issues
#YYY listed in Appendix A. Thus, as to the other Covered Issues, the APA will remain in force (except to the extent some
other condition affects the APA’s effectiveness as to those Covered Issues).
The Covered Entities will not cause a critical assumption to fail for the purpose of rendering the APA ineffective, unless they have
an independent business justification (unrelated to rendering the APA ineffective) for the action that causes the critical assumption
to fail. If one or more Covered Entities do cause a critical assumption to fail for the purpose of rendering the APA ineffective, and
without such independent business justification, then the Covered Entities will not withhold consent to an amendment to this APA
to the effect that this APA will continue in force without regard to such failure. In this case, if a Covered Entity refuses to sign such
an amendment, such an amendment may be executed without such signature and will then have the same force and effect as if the
amendment had such signature.

April 17, 2023 708 Bulletin No. 2023–16
APPENDIX C
APA RECORDS AND ANNUAL REPORT
APA RECORDS
The APA Records will consist of all documents listed below for inclusion in the Annual Report, as well as all documents, notes,
work papers, records, or other writings that support the information provided in such documents.
ANNUAL REPORT
An Annual Report must be submitted for each APA Tax Year in accordance with paragraph 6(e) of the APA and section 7.02 of
Rev. Proc. 2015-41.
For each APA Tax Year, the Annual Report (and each copy or version as required by paragraph 6(e) of the APA) will include:
1. Two copies of a properly completed APA Annual Report Summary in the form of Appendix D to this APA, one copy of the form
bound with, and one copy provided separately from, the rest of the Annual Report. (The electronic version of the Annual Report
need have only one copy of this item.)
2. A table of contents organized according to the additional required items listed below.
3. For such APA Tax Year and the corresponding APA Covered Year, statements that fully identify, describe, analyze, and explain:
a. All material differences between the Covered Entities’ business activities, functions performed, risks assumed, assets
employed, contractual terms, markets, and economic conditions faced in relation to the Covered Issues during such APA
Covered Year from those same items described in the APA Request. If there have been no such material differences, the
Annual Report will include a statement to that effect.
b. All material differences between Covered Entities’ financial accounting methods and classifications and methods of estima-
tion in relation to the Covered Issues and Covered Methods used during such APA Covered Year, from those described or
used in the APA Request. If any change was made to conform to changes in the Applicable Accounting Standard, U.S. Tax-
payer will specifically identify the change. If there have been no such material differences, the Annual Report will include a
statement to that effect.
c. Regarding notices under paragraph 16 of the APA:
i. A current statement of how the IRS should provide such notices to U.S. Taxpayer (and, if applicable, to U.S. Taxpayer’s
representative).
ii. A copy of any such notices that were submitted by U.S. Taxpayer to the IRS after the last Annual Report was submitted
(or, if there was no prior Annual Report, after the APA was executed). If there were no such notices, the Annual Report
will include a statement to that effect.
d. Any failure of any Critical Assumption. If there has been no such failure, the Annual Report will include a statement to that
effect.
e. Whether or not material information submitted while the APA Request was pending is discovered to be false, incorrect, or
incomplete, and if so a correction or completion of that information, as applicable.
f. Any change to any entity classification for federal income tax purposes (including any change that causes an entity to be dis-
regarded for federal income tax purposes) of any Worldwide Group member that is a Covered Entity or is otherwise relevant
to the Covered Issue(s) or Covered Method(s).
g. The following regarding any APA Primary Adjustments made for such APA Tax Year under Appendix A to this APA:
i. The amounts of any APA Primary Adjustments;

Bulletin No. 2023–16 709 April 17, 2023
ii. The circumstances that led to such APA Primary Adjustments being necessary;
iii. A calculation of the net APA Primary Adjustment as defined in Appendix A to this APA; and
iv. A complete description of the means by which the conforming adjustment (see section 6 of Appendix A to this APA) is
accomplished, including:
A. a description of any accounts payable established, including the entities involved and when the payables are
established;
B. a description of any amounts paid or deemed paid (including amounts paid or deemed paid in satisfaction of an
intercompany payable established as described in section 6 of Appendix A to this APA, and including any deemed
reverse payments as described in section 6 of Appendix A to this APA), that specifies the entities involved, when
the amounts are paid or deemed paid, and by what means any amounts are actually paid; and
C. the character (such as capital, ordinary, income, expense, dividend, contribution to capital) and country source of
any payments and deemed payments, and the specific affected line item(s) of any affected U.S. return;
h. A detailed numerical explanation of how the result of the application of the Covered Methods is reflected on the U.S. return,
with reference to particular line items on the U.S. return. This explanation shall include the amounts, description, reason for,
and financial analysis of any book-tax differences, as reflected on Schedule M-1 or Schedule M-3 of the U.S. return for such
APA Tax Year, that (i) are relevant to an APA Primary Adjustment, (ii) otherwise are relevant to the book and tax treatment
of any income or expense item that is part of the Relevant Financial Data for, or is determined by, any Covered Method for
such APA Tax Year, or (iii) otherwise are relevant to the APA. U.S. Taxpayer shall not simply attach a copy of the pertinent
schedule. Rather, U.S. Taxpayer shall specifically identify the relevant items from that schedule and shall describe in appro-
priate detail the nature of those items, how they arose, and how they are accounted for.
i. Whether or not U.S. Taxpayer contemplates requesting, or has requested, to renew, modify, or cancel the APA.
4. The Financial Statements and additional statements required under paragraph 6(f) of the APA, for such APA Tax Year and for any
other tax year whose financial data are relevant to compliance with the APA for such APA Tax Year;
5. A financial analysis that includes U.S. Taxpayer’s calculations to apply the Covered Method(s) to the Covered Issue(s) for such
APA Covered Year and supports those calculations with additional material that ties those calculations to the Financial State-
ments. The intent of this requirement is that the analysis submitted should provide a clear, complete, detailed, and self-contained
means by which the IRS can verify compliance with the Covered Method(s). This requirement is further explained as follows:
a. The additional material must support every numerical input to U.S. Taxpayer’s calculations.
b. The additional material could include, for example, consolidating financial statements, segmented financial data, and records
from the general ledger.
c. Where segmented data are used, U.S. Taxpayer must specify in detail how it accomplished the segmentation, including how
it made allocations and apportionments, including (i) the definition and calculation of any apportionment keys used, and (ii)
the calculations applying such keys. The inputs used for those various calculations must be tied to the Financial Statements.
d. The additional material must be annotated sufficiently to let the IRS easily trace U.S. Taxpayer’s entire calculations to objec-
tive, verifiable sources of data.
e. Where needed for clarity, terms must be defined.
6. The financial results pertinent to the Covered Method(s), for such APA Covered Year and all prior years, entered along with data
concerning the Covered Method(s) in an electronic results template available by contacting APMA.
7. [] An organizational chart for Worldwide Group, revised annually to reflect all ownership or structural changes of the Covered
Entities and any other entities that are relevant to the Covered Issue(s) or are otherwise relevant to the Covered Method(s).

April 17, 2023 710 Bulletin No. 2023–16
[]* An organizational chart for a part of Worldwide Group that includes all Covered Entities and includes any other entities
relevant to the Covered Issue(s) or Covered Method(s), revised annually to reflect all ownership or structural changes of
entities that are involved in the Covered Issue(s) or are otherwise relevant to the Covered Issue(s) or Covered Method(s).
8. A valid IRS Form 2848 “Power of Attorney and Declaration of Representative” for any representative to receive notices under
paragraph 16 of this APA.
9. A copy of the APA and any amendment.
10. A penalty of perjury statement, executed in accordance with Rev. Proc. 2015-41, sections 7.02(8) and (9).

Bulletin No. 2023–16 711 April 17, 2023
APPENDIX D
APA ANNUAL REPORT SUMMARY FORM
The APA Annual Report Summary on the next page is a required APA Record. APMA supplies some of the information requested
on the form. U.S. Taxpayer is to supply the remaining information requested by the form and submit the form as part of its Annual
Report.

April 17, 2023 712 Bulletin No. 2023–16
Internal Revenue ServiceAPMA Case No.
Large Business and International DivisionReviewer
Treaty & Transfer Pricing OperationsTeam Leader
Advance Pricing Mutual Agreement ProgramEconomist
Other APA Team Members
APA Information
U.S. Taxpayer’s Name
U.S. Taxpayer’s EIN
U.S. Taxpayer’s NAICS
Unilateral/Bilateral/Multilateral
Original or Renewal
APA Common Name, if any
APA Request Filing Date
Date APA Executed
APA Term (date-to-date, inclusive)
Foreign Countr(y)ies Involved
Annual Report Due Dates for years ending on or before [date]:
Annual Report Due Dates for other years: [last month of tax year] 15 following close of year
Covered Methods Summary Description
(e.g., CPM, operating margin 2%-5%)
Taxpayer’s Principal Representative
APA Annual Report Information:
Year(s) covered by this Annual Report
Issues for APMA’s special attention (or “None”)
Taxpayer Notice PersonName
Title
If necessary, include aAddress
current Form 2848 for theCity/State/Zip
Notice PersonPhone/Fax
Email
Current Representative, if anyName
Title
Include a current Form 2848Address
for the representativeCity/State/Zip
Phone/Fax
Email
Date Annual Report Filed (to be filled in by APMA):

Bulletin No. 2023–16 713 April 17, 2023
Notice of Proposed
Rulemaking
Superfund Chemical Taxes
REG-105954-22
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking.
SUMMARY: This document contains
proposed regulations relating to the excise
taxes imposed on certain chemicals and
certain imported substances, effective
July 1, 2022. Such taxes are known as the
Superfund chemical taxes. The excise tax
on taxable chemicals is imposed on the
sale or use of taxable chemicals by man-
ufacturers, producers, and importers of
such chemicals. The excise tax on taxable
substances is imposed on the sale or use
of taxable substances by importers of such
taxable substances. The proposed regula-
tions affect manufacturers, producers, and
importers that sell or use taxable chemi-
cals and importers that sell or use taxable
substances.
DATES: Written or electronic comments
and requests for a public hearing must be
received by May 30, 2023. Requests for a
public hearing must be submitted as pre-
scribed in the “Comments and Requests
for a Public Hearing” section.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic submis-
sions via the Federal eRulemaking Portal
at https://www.regulations.gov (indicate
IRS and REG-105954-22) by following
the online instructions for submitting
comments. Comments cannot be edited or
withdrawn once submitted to the Federal
eRulemaking Portal. The Department of
the Treasury (Treasury Department) and
the IRS will publish for public availability
any comment submitted electronically or
on paper to its public docket.
Send paper submissions to: CC:PA:LP-
D:PR (REG-105954-22), room 5203,
Internal Revenue Service, PO Box 7604,
Ben Franklin Station, Washington, D.C.
20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Stephanie Bland or Amanda
Dunlap at (202) 317-6855 (not a toll-
free number); concerning the submission
of comments and/or requests for a pub-
lic hearing, Vivian Hayes by phone at
(202) 317-5177 (not a toll-free number)
or by email at publichearings@irs.gov
(preferred).
SUPPLEMENTARY INFORMATION:
Background
I. Overview
This document contains proposed reg-
ulations under sections 4661, 4662, 4671,
and 4672 of the Internal Revenue Code
(Code) to amend the Environmental Tax
Regulations (26 CFR part 52). Section
4661(a) imposes an excise tax on the sale
or use of “taxable chemicals” by manu-
facturers, producers, or importers (section
4661 tax), and section 4662 provides defi-
nitions and special rules for applying the
section 4661 tax. Section 4671(a) imposes
an excise tax on the sale or use of “tax-
able substances” by importers (section
4671 tax), and section 4672 provides defi-
nitions and special rules for applying the
section 4671 tax. The section 4661 tax
and the section 4671 tax are collectively
referred to as the “Superfund chemical
taxes” because these excise taxes fund
the Hazardous Substance Response Trust
Fund established by section 221 of the
Comprehensive Environmental Response,
Compensation, and Liability Act of 1980
(CERCLA), Public Law 96-510, 94 Stat.
2767 (1980), informally referred to as
“Superfund.”
The Superfund chemical taxes pre-
viously expired on December 31, 1995,
but were reinstated with certain modifi-
cations, effective July 1, 2022, through
December 31, 2031, by section 80201 of
the Infrastructure Investment and Jobs
Act (IIJA), Public Law 117-58, 135 Stat.
429 (November 15, 2021). The proposed
regulations provide guidance on the
application of the reinstated Superfund
chemical taxes. As explained later in this
Background section, the Treasury Depart-
ment and the IRS have issued additional
guidance on topics related to the rein-
stated Superfund chemical taxes that are
not covered by the proposed regulations.
II. Section 4661 Tax on Taxable
Chemicals
A. In General
The section 4661 tax was enacted as
part of CERCLA to impose an excise tax
on the sale or use of any taxable chem-
ical by the manufacturer, producer, or
importer of the taxable chemical. While
section 4661(a) imposes tax on the sale of
any taxable chemical, section 4662(c)(1)
treats the use of a taxable chemical as a
sale of the taxable chemical.
Section 4661(b) provides a table of
42 chemicals and the per-ton tax rate for
each chemical. As reinstated by the IIJA,
the per-ton tax rate for each of the 42 tax-
able chemicals in the table under section
4661(b) is double the per-ton tax rate
previously imposed by section 4661 as in
effect at the end of 1995.
The IIJA also amends section 4661(c),
effective July 1, 2022, to provide that no
section 4661 tax will be imposed after
December 31, 2031.
B. Definition of Taxable Chemical and
Other Terms
Under section 4662(a)(1), any chem-
ical listed in the table under section
4661(b) is a “taxable chemical” if it is
manufactured or produced in the United
States or entered into the United States for
consumption, use, or warehousing. Sec-
tion 4662(a) also provides definitions of
the terms “United States,” “importer,” and
“ton,” as well as a rule that clarifies how
the per-ton section 4661 tax is imposed on
fractional parts of a ton.
C. Statutory Exceptions and Special
Rules
Section 4662(b) provides exceptions
from the definition of taxable chemical
and special rules that apply to the section
4661 tax.
The following exceptions to the section
4661 tax provided by section 4662(b)(1)

April 17, 2023 714 Bulletin No. 2023–16
through (b)(4) were first enacted as part
of CERCLA. Section 4662(b)(1) provides
that methane or butane is treated as a
taxable chemical only if it is used other-
wise than as a fuel or in the manufacture
or production of any motor fuel, diesel
fuel, aviation fuel, or jet fuel, and that the
person so using the fuel is treated as the
manufacturer. Under section 4662(b)(2),
generally no section 4661 tax is imposed
on nitric acid, sulfuric acid, ammonia, or
methane used to produce ammonia if used
as a qualified fertilizer substance. Section
4662(b)(3) provides that no section 4661
tax is imposed in the case of sulfuric acid
produced solely as a byproduct of and
on the same site as air pollution control
equipment. Finally, section 4662(b)(4)
provides that the term taxable chemical
does not include any substance to the
extent derived from coal.
In addition to modifying the exceptions
for methane and butane in section 4662(b)
(1) and qualified fertilizer substances
in section 4662(b)(2), section 1019 of
the Tax Reform Act of 1984, enacted as
Division A of the Deficit Reduction Act
of 1984, Public Law 98-369, 98 Stat.
494, 1022 (July 18, 1984), added section
4662(b)(5) (providing generally that no
section 4661 tax is imposed on several
specified taxable chemicals used as a qual-
ified fuel substance) and section 4662(b)
(6) (providing generally that no section
4661 tax is imposed on several specified
taxable chemicals by reason of the transi-
tory presence of such chemical during any
process of smelting, refining, or otherwise
extracting any substance not subject to the
section 4661 tax).
The Superfund Revenue Act of 1986
(Superfund Revenue Act), enacted as
Title V of the Superfund Amendments and
Reauthorization Act of 1986, Public Law
99-499, 100 Stat. 1613, 1760 (October 17,
1986), added the exceptions and special
rules in section 4662(b)(7) through (10).
Section 4662(b)(7) provides that except in
the case of a substance imported into the
United States or exported from the United
States, the term xylene does not include
any separated isomer of xylene. Section
4662(b)(8) generally provides that no
section 4661 tax is imposed on any chro-
mium, cobalt, or nickel that is diverted or
recovered in the United States from any
solid waste as part of a recycling process
(and not as part of the original manufac-
turing or production process), and section
4662(b)(9) provides generally that no tax
is imposed on certain taxable chemicals
used as a qualified animal feed substance.
Section 4662(b)(10) provides an excep-
tion from tax for sales of organic taxable
chemicals while those chemicals are part
of an intermediate hydrocarbon stream
and imposes a registration requirement on
both parties to the sale.
The Superfund Revenue Act also added
section 4662(c)(2) to the Code, which
provides a special rule exempting certain
inventory exchanges of taxable chemicals
from the section 4661 tax and imposes a
registration requirement on both parties to
the exchange to qualify for the exemption.
D. Credits and Refunds
Enacted as part of CERCLA, section
4662(d)(1) through (3) provides rules
authorizing the Secretary of the Treasury
or her delegate (Secretary) to provide
regulations regarding credits and refunds
of the section 4661 tax for (i) the use of
a taxable chemical in the manufacture
of another substance that is a taxable
chemical, (ii) the use of certain taxable
chemicals in the production of fertilizer,
and (iii) the use of certain taxable chem-
icals as qualified fuel. Section 4662(d)
(4), which was added by the Superfund
Revenue Act, authorizes the Secretary to
provide regulations regarding credits and
refunds of the section 4661 tax for the use
of certain taxable chemicals in the produc-
tion of animal feed.
E. Export Exemption
The Superfund Revenue Act added
section 4662(e) to the Code to provide an
exemption for the exportation of taxable
chemicals. Section 4662(e)(1)(A) allows
for the tax-free sale of taxable chemicals
for export. Section 4662(e)(1)(B) imposes
a proof of export requirement and pro-
vides that rules similar to the rules of
section 4221(b) (relating to tax-free sales
for purposes of the manufacturers excise
taxes codified in chapter 32 of the Code
(chapter 32)) are to apply.
Section 4662(e)(2)(A) provides a
mechanism for a credit or refund of the
section 4661 tax paid on a taxable chemi-
cal, or on a taxable chemical that is used in
the production of a taxable substance, that
is exported. Section 4662(e)(2)(B) estab-
lishes conditions to allowance for a credit
or refund under such circumstances.
Section 2001 of the Technical and
Miscellaneous Revenue Act of 1988
(TAMRA), Public Law 100-647, 102
Stat. 3342, 3593 (November 10, 1988),
redesignated section 4662(e)(3) as sec-
tion 4662(e)(4) and added a new section
4662(e)(3), which requires the Secretary
to provide, by regulation, the circum-
stances under which a credit or refund
may be allowed or made directly to the
party that exported a taxable chemical
or taxable substance. Section 4662(e)(4),
as redesignated by TAMRA, requires the
Secretary to issue regulations to carry out
the purposes of section 4662(e).
III. Section 4671 Tax on Taxable
Substances
A. In General
The section 4671 tax is imposed on
any taxable substance sold or used by
the importer thereof. The tax was added
to the Code by section 515 of the Super-
fund Revenue Act. The term “taxable
substance” is defined by section 4672(a),
which is described in part III.B. of this
Background section.
Section 4671(b) provides rules regard-
ing how the amount of section 4671 tax
is calculated. Section 4671(b)(1) provides
that the amount of section 4671 tax is the
amount of section 4661 tax that would
have been imposed on the taxable chem-
icals used as materials in the manufacture
or production of the taxable substance
if such taxable chemicals had been sold
in the United States for use in the man-
ufacture or production of the taxable
substance. If the importer does not furnish
to the Secretary sufficient information to
determine under section 4671(b)(1) the
amount of section 4671 tax imposed on
any taxable substance, section 4671(b)(2),
as reinstated by the IIJA, provides that the
amount of section 4671 tax imposed is 10
percent (instead of 5 percent as originally
enacted) of the appraised value of the
substance as of the time the taxable sub-
stance was entered into the United States
for consumption, use, or warehousing.

Bulletin No. 2023–16 715 April 17, 2023
Section 4671(b)(3) provides that the Sec-
retary may prescribe an amount of section
4671 tax for each taxable substance that
will apply in lieu of the tax specified in
section 4671(b)(2), equal to the amount of
section 4671 tax that would be imposed
with respect to a taxable substance if such
substance were produced using the pre-
dominant method of production of such
substance.
Section 4671(c) provides that no sec-
tion 4671 tax is imposed on the sale or use
of any substance if tax is imposed on such
sale or use under section 4611 (imposing
an excise tax on crude oil received at a
United States refinery and on imported
petroleum products entered into the United
States for consumption, use, or warehous-
ing). Section 4671(c) further provides that
no section 4671 tax is imposed on the sale
or use of any substance if such sale or use
was subject to the section 4661 tax.
Section 4671(d) generally provides
that rules similar to certain rules in section
4662(b) and (d) relating to exemptions for
using substances as certain fuels or in the
production of fertilizer or animal feed will
apply with respect to taxable substances.
Section 4671(d)(1) provides that rules
similar to section 4662(b)(2), (5), and (9)
(relating to tax-free sales of chemicals
used as fuel or in the production of fer-
tilizer or animal feed) apply with respect
to taxable substances. Section 4671(d)
(2) provides that rules similar to section
4662(d)(2), (3), and (4) (relating to credit
or refund of tax on certain chemicals used
as fuel or in the production of fertilizer or
animal feed) apply with respect to taxable
substances.
Section 4671(e), as amended by the
IIJA effective July 1, 2022, provides that
no section 4671 tax will be imposed after
December 31, 2031.
B. List of Taxable Substances
For purposes of the section 4671 tax,
section 4672(a)(1) provides that the term
“taxable substance” means any substance
that, at the time of sale or use by the
importer, is listed as a taxable substance
by the Secretary.
Section 4672(a) provides an initial list
of taxable substances and mechanisms
for adding substances to and removing
substances from such list. There are two
ways that a substance can be listed as a
taxable substance. The first way a sub-
stance can be listed as a taxable substance,
provided by section 4672(a)(2)(A), is
if the substance is included in the initial
list of taxable substances under section
4672(a)(3), as enacted by the Superfund
Revenue Act. The second way, provided
by section 4672(a)(2)(B) as amended by
the IIJA, effective July 1, 2022, is if the
Secretary determines, in consultation with
the Administrator of the Environmental
Protection Agency (EPA) and the Com-
missioner of U.S. Customs and Border
Protection (CBP), that taxable chemicals
constitute more than 20 percent of the
weight or more than 20 percent of the
value of the materials used to produce
such substance, determined on the basis
of the predominant method of produc-
tion (more than 20-percent weight or
value test). The last sentence of section
4672(a)(2) provides that if an importer
or exporter of any substance requests that
the Secretary determine whether such
substance should be listed as a taxable
substance under section 4672(a)(1) or be
removed from such listing, the Secretary
must make such determination within 180
days after the date the request was filed.
See Rev. Proc. 2022-26 (2022-29 I.R.B.
90) for the exclusive process for making
such requests. Further, section 4672(a)
(4) provides that the Secretary must add
to the list of taxable substances under
section 4672(a)(3) those substances that
meet the more than 20-percent weight
or value test, and that the Secretary may
remove from the list only substances that
meet neither of such tests. The complete
list of taxable substances under section
4672(a) is referred to in this preamble as
the “Taxable Substances List.” The IRS
will maintain the Taxable Substances
List at https://www.irs.gov/businesses/
small-businesses-self-employed/super-
fund-chemical-excise-taxes.
Section 4672(b)(1) and (2) provides
additional definitions applicable to sec-
tions 4671 and 4672. Section 4672(b)(1)
provides that the term “importer” means
the person entering the taxable substance
for consumption, use, or warehousing.
Section 4672(b)(2) provides that the terms
“taxable chemical” and “United States”
have the respective meanings given such
terms by section 4662(a).
IV. Procedural Rules
The Superfund chemical taxes are
codified in chapter 38 of the Code (chap-
ter 38), which pertains to environmental
excise taxes.
The procedural regulations govern-
ing chapter 38 taxes are contained in
26 CFR part 40 (Excise Tax Procedural
Regulations). See 26 CFR 52.0-1 and
40.0-1(a). Chapter 38 taxes are reported
on Form 6627, Environmental Taxes,
which is required to be attached to Form
720, Quarterly Federal Excise Tax Return
(Form 720 return). See §§40.0-1(a) and
40.6011(a)-1(a)(1) of the Excise Tax Pro-
cedural Regulations.
The procedural regulations in part
40 also provide that each business unit
that has, or is required to have, a sep-
arate employer identification number
(EIN) is treated as a separate person.
See §40.0-1(d). Therefore, business units
(for example, a parent corporation and
a subsidiary corporation, a partner and
the partner’s partnership, or the various
members of a consolidated group), each
of which has, or is required to have, a
different EIN, are separate persons for
purposes of filing quarterly Form 720
returns, quarterly payments of excise
tax, semimonthly deposits of excise tax,
and registration for certain excise tax
activities.
V. Recent Published Guidance Related
to the Superfund Chemical Taxes
A. Notice 2021-66 (preliminary guidance
and request for comments)
Notice 2021-66 (2021-52 I.R.B. 901)
provided guidance related to the Super-
fund chemical taxes, including the initial
list of taxable substances as required by
section 80201(c)(3) of the IIJA, guidance
on registration requirements, and guidance
on the procedural rules that apply to the
Superfund chemical taxes. Notice 2021-
66 also requested comments on whether
any issues related to the reinstated Super-
fund chemical taxes require clarification
or additional guidance.
The comments can be accessed via
the Federal Rulemaking Portal at https://
www.regulations.gov (type IRS-2021-
0018 or Notice 2021-66 in the search field

April 17, 2023 716 Bulletin No. 2023–16
on the regulations.gov homepage to find
the comments).
B. Notice 2022-15 (deposit penalty relief)
Under §40.6302(c)-1, taxpayers must
make semimonthly deposits of the Super-
fund chemical excise taxes. Section
40.0-1(c) provides that a semimonthly
period is the first fifteen (15) days of a cal-
endar month or the portion of a calendar
month following the 15th day of the month.
One commenter to Notice 2021-66
(commenter) requested deposit penalty
relief. After considering the comment, the
Treasury Department and the IRS issued
Notice 2022-15 (2022-18 I.R.B. 1043) to
provide transitional relief for the third and
fourth calendar quarters of 2022, and the
first calendar quarter of 2023, regarding
the failure to deposit penalty imposed by
section 6656 of the Code for failures to
deposit Superfund chemical taxes through
March 31, 2023, provided certain require-
ments are met.
C. Revenue Procedure 2022-26
(exclusive process for requesting
modifications to the Taxable Substances
List)
Notice 89-61 (1989-1 C.B. 717), as
modified by Notice 95-39 (1995-1 C.B.
312), provided the previous process by
which importers and exporters could
request to add a substance to or remove
a substance from the Taxable Substances
List. Several commenters requested that
the Treasury Department and the IRS
provide an updated procedure by which
importers and exporters may petition
to add a substance to or remove a sub-
stance from the Taxable Substances List.
Those commenters also requested that any
new guidance provide notice of requests
for modifications to the Taxable Sub-
stances List and an opportunity for public
comment.
Rev. Proc. 2022-26 sets forth the
exclusive process by which importers,
exporters, and interested persons may
petition to add a substance to or remove
a substance from the Taxable Substances
List. The process set forth in Rev Proc.
2022-26 provides for public notice of any
petition and the opportunity for public
comment.
Explanation of Provisions
I. General Rules Regarding the Section
4661 Tax
Proposed §52.4661-1 sets forth gen-
eral rules regarding the section 4661 tax,
including rules regarding the imposition
of tax, the attachment of tax, the persons
liable for tax, the amount of tax, and the
calculation of the amount of tax.
A. Attachment of Tax
1. General rule; foreign manufacturers
Proposed §52.4661-1(c)(1) clarifies that
the section 4661 tax attaches to the first
sale or use of a taxable chemical by the
manufacturer, producer, or importer. This
is consistent with Congressional intent that
the tax apply only once to a given quan-
tity of a taxable chemical. See S. Rep. No.
96-848, 96th Cong., 2d Sess. 21 (1980) (“A
number of provisions are included in the
fee system to assure an equitable fee which
avoids unintended economic impacts,
including: a provision which allows only
one fee collection on any given quantity.”).
Proposed §52.4661-1(c)(2) clarifies
that in situations involving a foreign man-
ufacturer, the section 4661 tax does not
attach to the foreign manufacturer’s sale
of a substance listed in the table under
section 4661(b) to the importer because
the substance is not a taxable chemical at
the time of such sale; rather, tax attaches
to the importer’s first sale or use of the
taxable chemical. This rule is consistent
with section 4661(a) and the definition
of the term “taxable chemical” in section
4662(a)(1). It is also consistent with the
overall statutory scheme of excise taxes
and relevant case law. See, e.g., Indian
Motorcycle Co. v. United States, 283 U.S.
570 (1931) (excise tax is not imposed on
the importation of a taxable motorcycle,
but rather on the first sale by the importer).
2. Dilution of chemical mixtures
Proposed §52.4661-1(c)(1) clarifies that
in the case of chemical mixtures containing
one or more chemicals with respect to which
tax was paid (tax-paid chemicals), no section
4661 tax attaches when the chemical mix-
ture is diluted with a solvent to change the
concentration of the chemical mixture, pro-
vided the solvent is not a taxable chemical.
The proposed regulations take this approach
because the section 4661 tax has already
been paid on the taxable chemicals in the
chemical mixture, and the taxable chemicals
in the chemical mixture do not lose their
identity during the dilution process.
3. Chemical mixtures and chemical
compounds
A chemical mixture is generally any
substance composed of two or more phys-
ically-combined components that are not
chemically bonded. Chemical mixtures
include solutions, suspensions, and alloys.
If a taxable chemical is a component of
a chemical mixture, the taxable chemical
remains a taxable chemical while it is part
of the chemical mixture.
In contrast, a chemical compound is
generally any substance composed of
identical molecules, each of which con-
sists of two or more atoms of the same or
different elements held together by chem-
ical bonds. A taxable chemical used to
produce a chemical compound does not
retain its individual properties.
With regard to domestically-produced
chemical mixtures, the manufacture or pro-
duction of a chemical mixture is a “use” of
the taxable chemicals in the chemical mix-
ture under proposed §52.4662-1(c)(15), and
the section 4661 tax attaches at the time of
such use. However, the “use” definition does
not capture any taxable chemicals found in
imported chemical mixtures. Therefore,
the taxable chemicals found in an imported
chemical mixture could completely escape
the section 4661 tax unless the importer
engages in a manufacturing process of sep-
arating the taxable chemicals in the mixture
(such a process would make the importer
the manufacturer of the taxable chemicals
in the mixture) and then sells or uses those
taxable chemicals. This would give for-
eign manufacturers of chemical mixtures a
competitive advantage over domestic man-
ufacturers of the same chemical mixtures.
To address this disparity, proposed
§52.4661-1(c)(3) provides that when a
taxable chemical is part of an imported
chemical mixture that is not a taxable sub-
stance (as defined in section 4672(a)(1) and
proposed §52.4672-1(b)(8)), tax attaches
to the first sale or use of the chemical mix-

Bulletin No. 2023–16 717 April 17, 2023
ture by the importer. Further, proposed
§52.4661-1(f)(2) includes a rule regarding
the calculation of the amount of tax with
regard to chemical mixtures. More spe-
cifically, under proposed §52.4661-1(f)
(2)(ii), when a taxable chemical is part of
an imported chemical mixture that is not
a taxable substance, as defined in section
4672(a)(1) and proposed §52.4672-1(b)
(8), tax is imposed on the actual weight
of any taxable chemicals in the chemical
mixture at the time the importer first sells
or uses the chemical mixture. These rules
ensure that foreign and domestic manufac-
turers of chemical mixtures are treated the
same for purposes of the section 4661 tax.
The approach is supported by the fact that
a taxable chemical in a chemical mixture
is assumed to retain its chemical identity
while part of the chemical mixture. There
is also support for this position in case
law. See Murphy Oil USA, Inc. v. United
States, 81 F. Supp. 2d 942 (W.D. Ark.
1999) (section 4661 tax is imposed on the
taxable chemicals in a chemical mixture).
As with chemical mixtures, the domes-
tic manufacture or production of a chemical
compound with one or more taxable chemi-
cals is a taxable use of the taxable chemicals.
Therefore, the domestic manufacturer or
producer of the chemical compound is liable
for the section 4661 tax. However, because
a taxable chemical used to produce a chem-
ical compound does not retain its chemical
identity, the Treasury Department and the
IRS lack the authority under sections 4661
and 4662 to tax the taxable chemicals used
in the production of imported chemical
compounds. This creates an advantage for
foreign manufacturers of chemical com-
pounds that are produced with taxable
chemicals but that are not taxable sub-
stances, as defined in section 4672(a) and
proposed §52.4672-1(b)(8). The Treasury
Department and the IRS request comments
on possible ways to mitigate the disadvan-
tage to domestic manufacturers within the
constraints of the statutory scheme.
4. Ores and metals
Several taxable chemicals, including
nickel, cobalt, chromium, and phospho-
rus, are produced from ores. In addition,
one taxable chemical, chromite, is an ore.
The production of a taxable chemical
from ore requires mining the ore to extract
the ore from the earth, and an extraction,
smelting, or other process to remove or
refine the taxable chemical from the ore.
Proposed §52.4661-1(c)(4)(i) pro-
vides, generally, that in the case of ores,
the section 4661 tax attaches to the first
sale or use of the taxable chemical by the
manufacturer, producer, or importer after
extraction of the taxable chemical from
the ore, and the person that extracts the
taxable chemical from the ore is the manu-
facturer of the taxable chemical. Proposed
§52.4661-1(c)(4)(i) further provides that
the term “extraction of a taxable chemical
from the ore” means the first process in
the United States that a person uses to sep-
arate the taxable chemical from the ore.
As noted earlier, chromite is both a
taxable chemical and an ore; therefore, it
is treated differently from taxable chemi-
cals that are produced from ores. Proposed
§52.4661-1(c)(4)(ii) provides that in the
case of chromite, the section 4661 tax
attaches to the first sale or use of chromite
by the manufacturer, producer, or importer
after the chromite is mined. Under the
proposed regulations, the tax treatment of
taxable chemicals that are metals under
section 4661 is generally addressed by the
rule regarding ores. The Treasury Depart-
ment and the IRS request comments on
whether an additional or alternative rule for
metals would be appropriate or warranted.
B. Procedural Rules; Definition of Person
Proposed §52.4661-1(d) notes that the
procedural rules in 26 CFR part 40 apply to
the section 4661 tax. Proposed §52.4661-
1(d) further notes that each business unit
that has, or is required to have, a separate
EIN is treated as a separate person for pur-
poses of filing excise tax returns, making
semimonthly deposits of excise tax, mak-
ing payments of excise tax, and applying
for the registration required under section
4662(b)(10)(C) and (c)(2)(B). See §40.0-
1(d). Proposed §52.4671-1(d) is a similar
provision related to the section 4671 tax.
C. Calculation of the Amount of Tax
1. Measurement and documentation
regarding tonnage
Proposed §52.4661-1(f) provides rules
regarding how to calculate the amount of
section 4661 tax. As noted earlier, the sec-
tion 4661 tax applies at a specified rate per
ton.
One commenter requested flexibility
in how to measure and document ton-
nage, but did not elaborate on what type
of information is generally available in the
industry that could potentially be used as a
metric for measuring tonnage, on whether
different sectors of the industry might
require different options for measuring
tonnage, or on the degree of specificity
that could be attained by using a metric
other than the actual weight. The Treasury
Department and the IRS lack sufficient
information about possible ways to mea-
sure tonnage, other than by using the
actual weight of the taxable chemical. The
Treasury Department and the IRS are also
concerned that a broad rule, such as one
that would allow any reasonable method
of measurement, could artificially reduce
the tax base. For these reasons, proposed
§52.4661-1(f)(2)(i) provides that for pur-
poses of calculating the amount of section
4661 tax, the weight of a taxable chemi-
cal, measured in tons, is the actual weight
of the taxable chemical at the time of sale
or use by the manufacturer, producer, or
importer.
The Treasury Department and the IRS
request comments on any other appro-
priate methods that could be used to
measure tonnage, with specificity and
without artificially reducing the tax base.
The Treasury Department and the IRS
also request comments on the types of
documentation available in the industry
that could be used as records to support a
weight measurement.
2. Conversion required for volumetric
measurements
A taxable chemical may be measured in
volumetric units. Because the section 4661
tax is imposed at a rate per ton, any volu-
metric units must be converted to weight
units in order to calculate the amount of
section 4661 tax. Proposed §52.4661-
1(f)(2)(iii) requires that any volumetric
measurement of a taxable chemical be
converted to a weight measurement and
provides a formula for volume-to-weight
conversions.

April 17, 2023 718 Bulletin No. 2023–16
II. Definitions Relating to Sections 4661
and 4662
As noted earlier, sections 4661 and
4662(c)(1) impose a tax on the sale or use
of a taxable chemical by the manufacturer,
producer, or importer. Several commenters
requested that the Treasury Department
and the IRS provide definitions of the
terms “manufacturer,” “importer,” “sale,”
and “use.” The definitions in proposed
§52.4662-1 include those definitions
requested by commenters, as well as oth-
ers that are necessary to provide clarity
with regard to the application of sections
4661 and 4662.
A. Taxable Chemical
As discussed in section II of the
Background section, section 4662(a)(1)
generally defines the term “taxable chemi-
cal” as any substance (A) that is listed in the
table under section 4661(b), and (B) that is
manufactured or produced in the United
States or entered into the United States for
consumption, use, or warehousing. The
table under section 4661(b) includes only
the name of each taxable chemical. The
taxable chemicals listed in the table under
section 4661(b) include metals, metalloids,
minerals, and an ore (chromite).
The proposed regulations clarify that
a substance is a taxable chemical only if
it satisfies both prongs of the definition
of “taxable chemical” in section 4662(a)
(1). In addition, the proposed regulations
provide that, except as provided in sec-
tion 4662(b), a substance is listed in the
table under section 4661(b) if it has the
same name and molecular formula as a
substance listed in the table under section
4661(b). The proposed regulations fur-
ther provide that all isomeric forms of a
substance listed in the table under section
4661(b) are treated as having the same
name and molecular formula of the sub-
stance. Therefore, except as provided in
section 4662(b)(7) with respect to xylene,
an isomer of a substance listed in the table
under section 4661(b) is a substance listed
in the table under section 4661(b).
B. Importer
Section 4662(a)(3) defines the term
“importer” as the person entering the tax-
able chemical for consumption, use, or
warehousing. The proposed regulations
clarify that if the person entering the tax-
able chemical for consumption, use, or
warehousing is merely acting as an agent
or a customs broker for another person,
then the agent or customs broker is not the
importer, and the importer is the first per-
son in the United States to sell or use the
taxable chemical after entry of the taxable
chemical for consumption, use, or ware-
housing. The proposed regulations also
address how to identify the importer with
regard to sales that involve drop shipping
a taxable chemical when the party ship-
ping the taxable chemical is outside the
United States.
C. Manufacturer
Neither section 4661 nor section 4662
defines the term “manufacturer.” Pro-
posed §52.4662-1(c)(6)(i) defines the
term “manufacturer” as any person that
produces a taxable chemical from new
or raw material, feedstocks, or other sub-
stances, or from scrap, salvage, waste,
or recycled substances. Further, under
the proposed regulations, a manufacturer
includes any person that produces a tax-
able chemical from the mining process, or
extracts, isolates, separates, or otherwise
removes a taxable chemical from an ore or
from another substance. A manufacturer
also includes any person that produces a
taxable chemical by processing or manip-
ulating a substance, such as through the
oxidation process. The term manufacturer
does not include a person that dilutes a
chemical mixture comprised of one or
more tax-paid chemicals with a solvent
that is not a taxable chemical.
One commenter requested that recy-
clers be excluded from the definition of
the term “manufacturer.” Section 4662(b)
(8)(A) provides that no section 4661 tax
is imposed on any chromium, cobalt, or
nickel which is diverted or recovered in
the United States from any solid waste
as part of a recycling process (and not as
part of the original manufacturing or pro-
duction process). The explicit reference
to recycling activities in section 4662(b)
(8)(A), combined with the absence of a
general exception for recycling activities
in sections 4661 and 4662, suggest that
Congress did not intend to exclude per-
sons engaged in recycling activities from
the definition of the term “manufacturer.”
Accordingly, the proposed regulations do
not adopt this suggestion.
Proposed §52.4662-1(c)(6)(ii) add resses
contract manufacturing. More speci fically,
proposed §52.4662-1(c)(6)(ii) provides that
if a person manufactures or produces a tax-
able chemical for a second person, pursuant
to a contract, order, or agreement and in
accordance with the second person’s spec-
ifications, or if a person manufactures or
produces a taxable chemical for a second
person from materials owned by the second
person, the second person (and not the first
person) is treated as the manufacturer of the
taxable chemical manufactured or produced
by the first person.
D. Sale
Neither section 4661 nor section
4662 defines the term “sale.” Proposed
§52.4662-1(c)(8) defines the term “sale” as
the transfer of title or substantial incidents
of ownership (whether or not delivery to, or
payment by, the purchaser has been made)
in a taxable chemical for a consideration,
which may include, but is not limited to,
money, services, or property.
One commenter requested an exclu-
sion from the definition of the term “sale”
for sales of intermediate hydrocarbon
streams and inventory exchanges if both
parties to the sale or exchange are taxable
chemical registrants. Section 4662(b)(10)
and (c)(2) provide exceptions to the sec-
tion 4661 tax in the scenarios described
by the commenter when both parties are
registered; therefore, there is no need for
a carve out from the definition of the term
“sale.”
E. Ton
Section 4662(a)(4) defines the term
“ton” to mean 2,000 pounds, which is a
short ton. Proposed §52.4662-1(c)(13)
follows the statutory definition.
F. Use
Neither section 4661 nor section
4662 defines the term “use.” Proposed
§52.4662-1(c)(15) defines the term “use”
broadly. More specifically, proposed
§52.4662-1(c)(15) provides that a taxable

Bulletin No. 2023–16 719 April 17, 2023
chemical is used when it is consumed,
when it functions as a catalyst, when its
chemical composition changes, when it
is used in the manufacture or production
of a chemical mixture or other substance
(including by mixing or combining the
taxable chemical with other substances),
or when it is put into service in a trade or
business for the production of income. The
loss or destruction of a taxable chemical
through spillage, fire, natural degradation,
or other casualty is not a use. The mere
manufacture or production of a taxable
chemical is not a use of that chemical.
The legislative history of CERCLA
notes that in determining how industrial
fees should be levied, Congress “moved
away from imposing fees on wastes and
hazardous end-products, and instead
approved a system which imposes fees on
the relatively few basic building blocks
used to make all hazardous products and
wastes.” S. Rep. No. 96-848, 96th Cong.,
2d Sess. 19 (1980) (quoted language from
the Committee Report by the Senate Envi-
ronment and Public Works Committee
on an early draft of S.1480). The legisla-
tive history further notes that tax is to be
imposed “at an early step in the industrial
chain of production, distribution, consump-
tion, and disposal.” Id. at 20. The definition
of “use” in the proposed regulations is con-
sistent with the legislative history.
III. Special Rules and Exceptions
Relating to the Section 4661 Tax
Section 4662(b) provides a num-
ber of exceptions and special rules that
apply to the section 4661 tax. Some of
the provisions in section 4662(b) provide
exceptions to the definition of “taxable
chemical”; other provisions provide gen-
eral exceptions to the section 4661 tax.
A. Methane or Butane Used as Fuel
Methane and butane are included in
the list of taxable chemicals in section
4661(b). Section 4662(b)(1) provides that
methane or butane is treated as a taxable
chemical only if it is used otherwise than
as a fuel or otherwise than in the manu-
facture or production of any motor fuel,
diesel fuel, aviation fuel, or jet fuel. In such
cases, the person so using the methane or
butane is treated as the manufacturer.
The section 4662(b)(1) rule impacts
the timing of the imposition of the section
4661 tax. Unlike other chemicals included
in the list of taxable chemicals in section
4661(b) that are taxable chemicals at the
time of manufacture, production, or impor-
tation, the status of methane or butane as
a taxable chemical cannot be determined
until the time of use. As a result, it is pos-
sible that methane or butane will never
become a taxable chemical and no section
4661 tax will attach. It is also possible that
there will be intervening sales of methane
or butane before the section 4661 tax is
imposed.
Proposed §52.4662-2(a)(2) provides
that methane or butane is used otherwise
than as a fuel when it is used other than
in the production of energy. Proposed
§52.4662-2(a)(2) further provides that
methane or butane is used as a fuel when
it is used in the production of energy. It
also provides examples of when methane
or butane is used as a fuel. The rule in the
proposed regulations regarding use as a
fuel is consistent with existing guidance
in other areas of excise tax. See section
2(f) of Notice 2006-92 (2006-43 I.R.B.
774) (providing guidance on use as a fuel
relating to excise tax on alternative fuel
mixtures).
B. Qualified Fertilizer, Fuel, and Animal
Feed Substances
Section 4662(b)(2), (5), and (9) pro-
vide exceptions to the section 4661 tax
for certain taxable chemicals that are
qualified fertilizer, fuel, or animal feed
substances. Proposed §52.4662-2(b) pro-
vides rules regarding the exception for
qualified fertilizer substances. Proposed
§52.4662-2(e) provides rules regarding
the exception for qualified fuel substances.
Proposed §52.4662-2(f) provides rules
regarding the exception for qualified ani-
mal feed substances.
One commenter highlighted the need
for guidance on tax-free sales under the
fertilizer exception and requested clar-
ification on whether tax-free sales are
limited to one intervening sale. That com-
menter also requested guidance on how
to make claims for credit and refund.
Another commenter requested that the
Treasury Department and the IRS pro-
vide model certificates for tax-free sales.
The proposed regulations address those
issues. Proposed §52.4662-2(h) provides
rules regarding tax-free sales under sec-
tion 4662(b)(2), (5), and (9) and clarifies
that the exception is available for multi-
ple intervening sales. The provisions in
proposed §52.4662-2(h) are similar to
tax-free sale rules in other areas of excise
tax and include a model exemption certif-
icate. To lessen the burden on taxpayers,
proposed §52.4662-2(h) allows for a
“blanket” exemption certificate that may
be used for a period of up to one (1) year.
C. Sulfuric Acid Produced as a Byproduct
of Air Pollution Control Equipment
Section 4662(b)(3) provides that no
section 4661 tax is imposed on sulfuric
acid produced solely as a byproduct of
and on the same site as air pollution con-
trol equipment. The statute does not define
the term “air pollution control equipment”
for purposes of this exception. Further,
the statute is silent with regard to whether
the exception applies to sulfuric acid pro-
duced solely as a byproduct of and on the
same site as air pollution control equip-
ment located outside the United States.
Proposed §52.4662-2(c) defines the
term “air pollution control equipment” as
any equipment used to comply with the
Clean Air Act, including any amendments
thereto, as codified in 42 U.S.C. chapter
85, or any similar provision under state
law. This definition effectively limits the
exception to domestically-produced sul-
furic acid. The Treasury Department and
the IRS request comments on the defini-
tion of “air pollution control equipment”
in proposed §52.4662-2(c). To the extent
commenters believe the definition should
be modified, the Treasury Department
and the IRS request comments on the
type of documentation that is available to
demonstrate to the IRS that sulfuric acid
produced outside the United States was,
in fact, produced solely as a byproduct of
and on the same site as air pollution con-
trol equipment.
D. Taxable Chemicals Produced from
Coal
Section 4662(b)(4) provides that the
term “taxable chemical” does not include
any substance derived from coal. Pro-

April 17, 2023 720 Bulletin No. 2023–16
posed §52.4662-2(d) defines the term
“coal” as bituminous coal, subbituminous
coal, anthracite, and lignite.
E. Intermediate Hydrocarbon Streams
Section 4662(b)(10)(A) provides that
no section 4661 tax is imposed on any
organic taxable chemical while such chem-
ical is part of an intermediate hydrocarbon
stream containing one or more organic
taxable chemicals. Section 4662(b)(10)
(B) provides that if any organic taxable
chemical on which no section 4661 tax
was previously imposed by reason of sec-
tion 4662(b)(10)(A) is isolated, extracted,
or otherwise removed from, or ceases
to be part of (collectively, isolation), an
intermediate hydrocarbon stream, such
isolation is treated as a use by the person
causing the isolation, and such person is
treated as the manufacturer of the organic
taxable chemical so isolated.
1. Definition of “organic taxable
chemical”
Section 4662(b)(10)(D) defines
“organic taxable chemical” as any taxable
chemical that is an organic substance. At
the most basic level, an organic substance
is a substance that contains carbon and
hydrogen atoms.
The organic substances that are listed
in the table under section 4661(b) are
acetylene, benzene, butane, butylene, buta-
diene, ethylene, methane, naphthalene,
propylene, toluene, and xylene. See H.R.
Rep. No. 99-962, 99th Cong., 2d Sess., at
328 n. 6 (1986). However, neither the stat-
ute nor the legislative history addresses
the interplay between section 4662(b)
(1) and (10) with regard to methane and
butane. Although methane and butane are
organic substances that are listed in the
table in section 4661(b), they are treated
as taxable chemicals only when used oth-
erwise than as a fuel or otherwise than in
the production of any motor fuel, diesel
fuel, aviation fuel, or jet fuel. See section
4662(b)(1) and proposed §52.4662-2(a).
Therefore, methane and butane are not
organic taxable chemicals at the time of
isolation from an intermediate hydrocar-
bon stream. See section 4662(b)(1) and
proposed §52.4662-2(a) and (g). Proposed
§52.4662-2(g)(2)(i) clarifies that no sec-
tion 4661 tax is imposed on methane or
butane at the time the methane or butane
is isolated from an intermediate hydrocar-
bon stream and includes an example to
illustrate this rule.
2. Multi-step isolation process
The rule in section 4661(b)(10) is clear
with regard to organic taxable chemicals
isolated from an intermediate hydrocarbon
stream as part of a single-step isolation
process. However, neither the statute nor
the legislative history addresses what
happens when isolation is a multi-step
process.
In Murphy Oil USA, Inc. v. United
States, 81 F. Supp. 2d 942 (W.D. Ark.
1999), the court considered the applicabil-
ity of section 4662(b)(10) to a multi-step
process of isolating propylene from a C3/
C4 hydrocarbon stream. The court held
that the splitting process designed to iso-
late and extract the propylene content
from the C3/C4 stream as refinery-grade
propylene was the point of isolation,
even though the resulting refinery-grade
propylene was a mixture of propylene
and propane that could have been further
processed into a purer grade of propyl-
ene. The court further held that because
the weight of the propylene in the refin-
ery-grade propylene could be determined
with specificity, the section 4661 tax was
imposed only on the weight of the propyl-
ene in the refinery-grade propylene.
Proposed §52.4662-2(g)(3)(ii) fol-
lows the holding in the Murphy Oil case
and clarifies that when the isolation of an
organic taxable chemical from an interme-
diate hydrocarbon stream is a multi-step
process, the first process that a person uses
to isolate, extract, or otherwise remove
the organic taxable chemical from the
intermediate hydrocarbon stream (even
if the organic taxable chemical is, at that
time, still mixed with other substances
and further processing is possible, but not
required) is treated as a use by the person
causing the isolation, and such person is
treated as the manufacturer of the organic
taxable chemical so isolated. Proposed
§52.4662-2(g)(3)(ii) further clarifies that
if the organic taxable chemical is part of
a chemical mixture at the time of isola-
tion, the section 4661 tax is imposed on
the weight of the entire chemical mixture,
unless the person causing the isolation can
establish, with specificity, the weight of
the organic taxable chemical or chemicals
contained in the chemical mixture.
IV. Credits and Refunds of the Section
4661 Tax
Section 4662(d) provides a mechanism
for a credit or refund of the section 4661
tax with regard to certain specified uses of
taxable chemicals. Multiple commenters
requested that the Treasury Department
and the IRS provide guidance on claims
for credit and refund. One commenter
requested specific guidance on the use
of invoices to support credit and refund
claims.
Proposed §52.4662-4 provides rules
regarding claims for credit and refund
under section 4662(d). The provisions in
proposed §52.4662-4 explain the general
rules, conditions to allowance, and sup-
porting information required for claims for
credit and refund. Proposed §52.4662-4
also includes a model certificate to support
a claim for credit or refund. The approach
taken in the proposed regulations is con-
sistent with other areas of excise tax law.
V. Exports
Section 4662(e)(1)(A) provides that no
section 4661 tax is imposed on the sale
by the manufacturer or producer of any
taxable chemical for export or for resale
by the purchaser to a second purchaser
for export. Section 4662(e)(1)(B) pro-
vides that rules similar to section 4221(b)
(relating to exports exempt from manufac-
turers excise taxes codified in chapter 32)
apply. Proposed §52.4662-5(b) provides
rules regarding how to effectuate tax-free
sales for export under section 4662(e)(1).
The rules in proposed §52.4662-5(b) are
based on the rules in §48.4221-3 of the
Manufacturers and Retailers Excise Tax
Regulations, and include a model exemp-
tion certificate and a model statement of
export.
Section 4662(e)(2) provides the gen-
eral rule for claims for credit or refund of
the section 4661 tax in the case of taxable
chemicals that are exported, and taxable
chemicals used as materials in the manu-
facture or production of a substance that is
a taxable substance (that is, it is listed on

Bulletin No. 2023–16 721 April 17, 2023
the Taxable Substances List) at the time of
export. Proposed §52.4662-5(c) provides
rules regarding claims for credit or refund
under section 4662(e)(2).
Several commenters expressed con-
cern about not being able to make credit
or refund claims for taxable chemicals
used in the manufacture of substances that
meet the more than 20-percent weight or
value test but have not yet been added to
the Taxable Substances List. The require-
ment that a substance be on the Taxable
Substance List at the time of export in
order to make a claim for credit or refund
is statutory. See section 4662(e)(2). The
Treasury Department and the IRS request
comments on possible ways to mitigate
the impact of the express statutory lan-
guage in section 4662(e)(2).
Section 4662(e)(3) provides a mecha-
nism for an exporter to make claims for
credit or refund. Proposed §52.4662-5(d)
provides rules regarding claims for credit
or refund under section 4662(e)(3).
VI. General Rules Regarding the
Section 4671 Tax
General rules regarding the sec-
tion 4671 tax are set forth in proposed
§52.4671-1, including rules regarding
the imposition of tax, the persons liable
for tax, the attachment of tax, the amount
of tax, and the calculation of the amount
of tax. Proposed §52.4671-2 provides
rules regarding tax-free sales under sec-
tion 4671(d)(1) and claims for credit and
refund under section 4671(d)(2).
VII. Definitions Relating to
Sections 4671 and 4672
Proposed §52.4672-1 provides defi-
nitions applicable to sections 4671 and
4672. To the extent there is overlap, the
definitions in proposed §52.4672-1 with
respect to the section 4671 tax track the
definitions in section §52.4662-1 with
respect to the section 4661 tax.
VIII. Predominant Method of
Production
Sections 4671(b)(3) and 4672(a)(2) use
the term “predominant method of produc-
tion.” However, the term is undefined by
statute. The legislative history is limited
and provides only that with regard to the
determination of substances on the Tax-
able Substances List, the determination is
to be made “on the basis of the predomi-
nant method of production (with respect
to imported derivatives) using stoichio-
metric material consumption assuming a
100-percent yield.” Conf. Rep. 962, 99th
Cong., 2d Sess. (1987), 1987-1 C.B. 383,
386-7.
Proposed §52.4672-1(b)(4) defines the
term “predominant method of production”
to mean the method used to produce the
greatest number of tons of a particular
substance worldwide, relative to the total
number of tons of the substance produced
worldwide. The definition uses world-
wide production as the metric because the
term “predominant method of production”
applies only in the context of the section
4671 tax, which is imposed on imported
substances.
The Treasury Department and the IRS
request comments on the predominant
method of production, or any other rele-
vant information (such as the weight or
value of the taxable chemicals used in the
manufacture or production of the taxable
substance), for the following taxable sub-
stances that are included in the statutory
list in section 4672(a)(3): ferronickel;
formaldehyde; hydrogen peroxide; meth-
anol; nickel powders; nickel waste and
scrap; polystyrene resins and copoly-
mers; styrene-butadiene, snpf; synthetic
rubber, not containing fillers; unwrought
nickel; vinyl resins; vinyl resins, nspf; and
wrought nickel rods and wires.
IX. Tax-free Sales under Section
4671(d)(1)
Section 4671(d)(1) provides that rules
similar to those in section 4662(b)(2), (5),
and (9) apply with respect to taxable sub-
stances used or sold for use as described
in such rules. Proposed §52.4671-2(b)
provides rules regarding how to effectuate
tax-free sales under section 4671(d)(1);
the rules are similar to those in proposed
§52.4662-2(h).
X. Credits and Refunds under Section
4671(d)(2)
Section 4671(d)(2) provides that rules
similar to section 4662(d)(2), (3), and (4)
apply with respect to taxable substances
used or sold for use as described in such
rules. Proposed §52.4671-2(c) provides
rules regarding claims for credit or refund
under section 4671(d)(2); the rules are
similar to those in proposed §52.4662-4.
XI. Types of Substances Eligible for
Addition to the Taxable Substances List
When the Superfund chemical taxes
were previously in effect, Notice 89-61
provided a determination process by
which importers and exporters of sub-
stances could request modifications to
the Taxable Substances List pursuant to
the flush language of section 4672(a)(2).
Notice 89-61 provided that textile fibers,
yarns, and staple, and fabricated prod-
ucts that are molded, formed, woven, or
otherwise finished into end-use products
were ineligible for addition to the Taxable
Substances List. Notice 95-39 modified
Notice 89-61 to allow polymers extruded
in fiber form to be added to the Taxable
Substances List.
Proposed §52.4672-1(b) incorporates
the rules from Notice 89-61 and Notice
95-39 regarding the types of substances
that may be added to the Taxable Sub-
stances List if they otherwise meet the
more than 20-percent weight or value test.
These rules were also incorporated into
the definition of the term “substance” in
section 3.10 of Rev. Proc. 2022-26.
XII. Other Issues
A. Sales Between Certain Registrants
Two commenters requested that the
Treasury Department and the IRS adopt
a practice with respect to sales of taxable
chemicals that is similar to what is in place
for “S” registrants for fuel transactions.
One commenter suggested an expansion
of “G” registration and an allowance of
tax-free sales among all “G” registrants.
In the fuel excise tax area, section 4081
of the Code establishes the bulk transfer
system and the ability for “S” registrants
to make tax-free sales of taxable fuel.
More specifically, section 4081(a)(1)(B)
(i) expressly exempts certain removals
and entries of taxable fuel within the bulk
transfer system and imposes registration
requirements. There is no such statutory

April 17, 2023 722 Bulletin No. 2023–16
directive with regard to the Superfund
chemical taxes, and such an approach
would be inconsistent with the statutory
text and legislative history of the section
4661 tax. Therefore, the proposed regula-
tions do not adopt this suggestion.
B. Modifications to the Taxable
Substances List
Several commenters requested the
addition of substances to or the removal
of substances from the Taxable Sub-
stances List. Such comments are not
considered requests to add to or remove
from the Taxable Substances List and
will not be processed. All requests to add
substances to or remove substances from
the Taxable Substances List must be sub-
mitted in accordance with the procedures
set forth in Rev. Proc. 2022-26, which
provides the exclusive process by which
importers, exporters, and other interested
persons may petition to add a substance to
or remove a substance from the Taxable
Substances List.
C. Delayed Implementation of Superfund
Chemical Taxes
Multiple commenters requested that
the Treasury Department and the IRS
delay implementation of the Superfund
chemical taxes until January 1, 2023. The
IIJA reinstates the Superfund chemical
taxes as of July 1, 2022. The Treasury
Department and the IRS do not have the
authority to modify the effective date of
the Superfund chemical taxes, which is
statutory. Accordingly, the Superfund
chemical taxes are effective July 1, 2022,
as required by law.
D. Harmonized Tariff Schedule (HTS)
and Chemical Abstract Service (CAS)
Numbers
Several commenters requested that
the Treasury Department and the IRS
provide HTS and CAS numbers for all
taxable chemicals and taxable substances
to ensure uniform identification by stake-
holders and the IRS.
The U.S. International Trade Com-
mission maintains and publishes HTS
numbers. The Chemical Abstract Service
maintains CAS numbers. CAS is a divi-
sion of the American Chemical Society, a
non-profit organization that holds a con-
gressional charter under title 36, United
States Code. The Treasury Department
and the IRS are considering the request to
provide HTS and CAS numbers and how
those numbers can be verified with the
appropriate experts. The Treasury Depart-
ment and the IRS request comments on
the degree of specificity that would be
required for HTS and CAS numbers. Spe-
cifically, the Treasury Department and the
IRS request comments on the appropriate
number of decimal places for the HTS
and CAS numbers that would be used to
identify taxable chemicals and taxable
substances.
Effect on Other Documents
The following notices of determina-
tion that were issued pursuant to Notice
89-61 are revoked: 55 FR 24023-01
(June 13, 1990); 55 FR 24023-02 (June
13, 1990); 55 FR 25768-02 (June 22,
1990); 55 FR 25770-01 (June 22, 1990);
56 FR 47985-01 (Sept. 23, 1991); 56 FR
47986-01 (Sept. 23, 1991); 56 FR 47986-
02 (Sept. 23, 1991); 56 FR 47987-01
(Sept. 23, 1991); 57 FR 10947-03 (Mar.
31, 1992); 58 FR 66068-01, (Dec. 17,
1993); 58 FR 66069-01 (Dec. 17, 1993);
58 FR 66069-02 (Dec. 17, 1993); 58 FR
66071-01 (Dec. 17, 1993); 58 FR 67439-
01 (Dec. 21, 1993); 59 FR 11827-01
(Mar. 14, 1994; 59 FR 11828-01 (Mar.
14, 1994); 59 FR 11831-01 (Mar. 14,
1994); 59 FR 13036-02 (Mar. 18, 1994);
59 FR 13037-01 (Mar. 18, 1994); 59
FR 13038-01 (Mar. 18, 1994); 59 FR
13039-01 (Mar. 18, 1994); 59 FR 14446-
01 (Mar. 28, 1994); 59 FR 14447-01,
(Mar. 28, 1994); 59 FR 27652-02 (May
27, 1994); 59 FR 27653-01 (May 27,
1994);, 59 FR 27653-02 (May 27, 1994);
59 FR 31297-03 (June 17, 1994); 59 FR
31298-01 (June 17, 1994); 59 FR 31299-
01 (June 17, 1994); 59 FR 35170-02
(July 8, 1994); 59 FR 35171-01 (July 8,
1994); 59 FR 35171-02 (July 8, 1994);
59 FR 37131-01 (July 20, 1994); 59 FR
45322-01 (Sept. 1, 1994); 59 FR 51663-
03, (Oct. 12, 1994); 59 FR 52028-01
(Oct. 13, 1994); 60 FR 10142-03 (Feb.
23, 1995); 60 FR 19112-02 (Apr. 14,
1995); 60 FR 19113-01 (Apr. 14, 1995);
60 FR 26478-02 (May 17, 1995); 60 FR
27594-01 (May 24, 1995); 60 FR 36458-
01 (July 17, 1995); 60 FR 36459-01 (July
17, 1995); 60 FR 54100-01 (Oct. 19,
1995); 60 FR 54101-01 (Oct. 19, 1995);
61 FR 13919-03 (Mar. 28, 1996); 62 FR
10310-01 (Mar. 6, 1997); 65 FR 46046-
01 (July 26, 2000); 72 F.R. 62730-01
(Nov. 6, 2007).
Special Analyses
I. Regulatory Planning and Review—
Economic Analysis
Executive Orders 13563 and 12866
direct agencies to assess costs and ben-
efits of available regulatory alternatives
and, if regulation is necessary, to select
regulatory approaches that maximize net
benefits, including potential economic,
environmental, public health and safety
effects, distributive impacts, and equity.
Executive Order 13563 emphasizes the
importance of quantifying both costs and
benefits, reducing costs, harmonizing
rules, and promoting flexibility.
The proposed regulations have been
designated by the Office of Information
and Regulatory Affairs (OIRA) as subject
to review under Executive Order 12866
pursuant to the Memorandum of Agree-
ment (MOA, April 11, 2018) between the
Treasury Department and the Office of
Management and Budget (OMB) regard-
ing review of tax regulations. OIRA has
determined that the proposed rulemaking
is significant and subject to review under
Executive Order 12866 and section 1(b) of
the Memorandum of Agreement. Accord-
ingly, the proposed regulations have been
reviewed by OMB.
A. Background
As noted earlier, CERCLA, known
colloquially as “Superfund,” was enacted,
in part, to create a hazardous substance
cleanup program. Section 221 of CERCLA
established the “Hazardous Substance
Response Trust Fund,” which was funded,
in part, by the Superfund chemical taxes.
The Superfund chemical taxes expired on
December 31, 1995.
Effective July 1, 2022, section 80201 of
the IIJA reinstates the Superfund chemical
taxes with certain modifications. Pursuant
to section 80201(c)(3) of the IIJA, Notice

Bulletin No. 2023–16 723 April 17, 2023
2021-66 provided initial guidance related
to the Superfund chemical taxes.
B. Need for Proposed Regulations
The proposed regulations generally
provide structure and clarity for the imple-
mentation of the Superfund chemical taxes
as reinstated by IIJA. However, the Trea-
sury Department and the IRS determined
that there remained outstanding issues
requiring clarification that should be sub-
ject to notice and comment. In addition to
clarifying statutory rules in sections 4661
and 4671 regarding the Superfund chem-
ical tax procedural rules and computation
of tax, these proposed regulations provide
definitions that track the statutory lan-
guage and otherwise borrow from existing
excise tax rules, including regulations
relating to ozone-depleting chemicals and
manufacturers excise taxes. The proposed
regulations provide procedural guidance
regarding tax-free sales of certain tax-
able chemicals and taxable substances.
Finally, the proposed regulations provide
procedures for taxpayers to claim credits
and refunds of Superfund chemical taxes
paid with respect to taxable chemicals or
taxable substances sold for use or used for
certain purposes.
C. Baseline
The Treasury Department and the
IRS have assessed the benefits and costs
of the proposed regulation relative to a
no-action baseline reflecting anticipated
Federal income tax-related behavior in the
absence of this regulation.
D. Affected Entities
The Superfund chemical taxes are
excise taxes imposed on any manufac-
turer, producer, or importer that sells or
uses taxable chemicals or taxable sub-
stances. The taxes are reported on excise
tax forms, separate from corporate or indi-
vidual income tax forms. The Superfund
chemical taxes are expected to be paid
by industrial chemical companies, which
include various manufacturing, refining,
and wholesaler firms. The extent to which
the cost of the Superfund chemical taxes
will be passed down to the eventual con-
sumers of products containing the taxable
chemicals or taxable substances is vari-
able across a wide array of products.
After the expiration of the Superfund
chemical taxes on December 31, 1995, the
number of quarterly excise tax filers fell
by approximately 5,500 taxpayers. This
number is a reasonable estimate of the
number of Superfund chemical tax filers
in 1995, as the Superfund chemical taxes
were the only excise taxes to have expired
at that time and the Superfund petroleum
tax filers would still be paying the Oil Spill
Liability excise taxes, and therefore had
not stopped filing quarterly excise forms.
However, the make-up of the chemical
and manufacturing industries is expected
to have changed since the previous impo-
sition of the Superfund chemical taxes.
In addition, section 80201(c)(1) of the
IIJA modifies the method under section
4672(a)(2)(B) of the Code for determining
whether a substance is a taxable substance
by lowering the required percentage of
taxable chemicals used to produce the
substance from 50 percent to 20 percent
of the weight (or the value) of the mate-
rials used to produce such substance.
Given the changes in the application of the
Superfund chemical taxes, the Treasury
Department and the IRS do not have read-
ily available data to quantify the impact of
the excise taxes. The Treasury Department
and the IRS invite comments, especially
data sets or analyses, on the number of
affected taxpayers.
E. Economic Analysis of the Proposed
Regulations
The proposed regulations provide cer-
tainty and consistency in the application
of Superfund chemical taxes by providing
definitions and clarifications regarding
the statutes’ terms and rules. In addition,
the proposed regulations provide model
certificates and examples for the taxpayer
to follow. An economically efficient tax
system generally aims to treat income and
expense derived from similar economic
decisions consistently across taxpayers
and activities in order to reduce incentives
for individuals and businesses to make
choices based on tax rather than market
incentives. In the absence of the guidance
provided in these proposed regulations,
taxpayers would bear the burden of inter-
preting the statute and the chances that
different taxpayers might interpret the stat-
ute differently would be exacerbated. For
example, two similarly-situated taxpayers
might interpret the statutory provisions
pertaining to the calculation of tax dif-
ferently or reach different conclusions
regarding eligibility for exemptions from
the Superfund chemical taxes. Thus, lack
of certainty may lead to very different tax
liabilities for taxpayers undertaking sim-
ilar activities. The Treasury Department
and the IRS invite comments, especially
data sets or analyses, of the impact of the
proposed regulations.
II. Paperwork Reduction Act
The Paperwork Reduction Act of
1995 (44 U.S.C. 3501-3520) (“Paper-
work Reduction Act”) requires that a
federal agency obtain the approval of the
OMB before collecting information from
the public, whether such collection of
information is mandatory, voluntary, or
required to obtain or retain a benefit.
Overview
The collections of information in these
proposed regulations are in: Proposed
§§52.4662-2(g)(5) (notification certifi-
cate for intermediate hydrocarbon streams
under section 4662(b)(10)); 52.4662-2(h)
(2) (exemption certificate for tax-free
sales for fertilizer, motor fuel, and animal
feed substances under section 4662(b));
52.4662-3(c) (notification certificate
for inventory exchanges under section
4662(c)); 52.4662-4(a)(4) (supporting
information required for claims for credit
and refund under section 4662(d)(1));
52.4662-4(b)(3) (supporting information
required for claims for credit and refund
under section 4662(d)(2)); 52.4662-4(c)
(3) (supporting information required for
claims for credit and refund under section
4662(d)(3)); 52.4662-4(d)(3) (supporting
information required for claims for credit
and refund under section 4662(d)(4));
52.4662-4(e)(2) (certificate to support
claims for credit and refund under section
4662(d)); 52.4662-5(b)(5) (exemption
certificate for tax-free sales for export
under section 4662(e)(1)); 52.4662-5(c)
(3) (supporting information required for
claims for credit and refund under section
4662(e)(2)); 52.4662-5(d)(3) (supporting

April 17, 2023 724 Bulletin No. 2023–16
information required for claims for credit
and refund by the exporter under section
4662(e)(3)); 52.4671-2(b)(3) (exemption
certificate for tax-free sales for fertilizer,
motor fuel, and animal feed substances
under section 4672(d)(1)); 52.4671-2(c)
(3) (supporting information required for
claims for credit or refund under section
4671(d)(2)); and 52.4672-2(c)(4) (certifi-
cate to support claims for credit or refund
under section 4671(d)(2)).
Estimated burden
The IRS Taxpayer Burden Model can-
not be used to calculate reporting burden
not associated with economic activity, as
is the case with the required reporting in
these proposed regulations. Therefore, the
IRS is providing off-model estimates of
the burden associated with these proposed
regulations. The estimated time to com-
plete a notification certificate is 15 to 30
minutes. It is estimated that 100 to 1,000
taxpayers will complete a notification cer-
tificate. The estimated minimum burden
imposed by the notification certificate is 25
hours (100 taxpayers x .25 hours), and the
estimated maximum burden imposed is
250 hours (1,000 taxpayers x .25 hours).
Using a monetization rate of $98.50 (2020
dollars), the total monetized burden for
the notification certificate requirement is
estimated to be between $2,462.50 (25
hours x $98.50) and $24,625 (250 hours
x $98.50).
The time to complete a single exemp-
tion certificate to support a tax-free sale,
a certificate to support a claim for credit
or refund of tax, or a statement of export
is estimated to be 30 to 60 minutes, and
the IRS expects that between 6,000 and
30,000 taxpayers will submit one of
these documents. The estimated mini-
mum burden imposed by these reporting
requirements is 3,000 hours (6,000 tax-
payers x .5 hour) and the estimated
maximum burden imposed is 30,000
hours (30,000 taxpayers x 1 hour). Using
a monetization rate of $98.50 (2020 dol-
lars), total monetized burden is estimated
to be between $295,500 (3,000 hours x
$98.50) and $2,955,000 (30,000 hours x
$98.50).
The total estimated burden for these
proposed regulations is between 3,025
hours (25 hours + 3,000 hours) and 30,250
hours (250 hours + 30,000 hours). The total
monetized burden under these proposed
regulations is estimated to be between
$297,962.50 ($2,462.50 + $295,500) and
$2,979,625 ($24,625 + $2,955,000).
The collections of information
contained in this notice of proposed
rulemaking have been submitted to OMB
for review in accordance with the Paper-
work Reduction Act of 1995 (PRA, 44
U.S.C. 3507(d)) under control number
1545-2304. Written comments and recom-
mendations for the proposed information
collection can be submitted by visiting
https://www.reginfo.gov/public/do/PRA-
Main. Information collection requests may
be found by selecting “Currently Under
Review—Open for Public Comments” or
by using the search function. Comments
on the information collections may also be
sent to the Internal Revenue Service, Attn:
IRS Reports Clearance Officer, SE:W:-
CAR:MP:T:T:SP, Washington, DC 20224.
Comments on the collections of informa-
tion should be received by May 30, 2023.
Comments are specifically requested
concerning:
Whether the proposed collections of
information are necessary for the proper
performance of the functions of the IRS,
including whether the information will
have practical utility;
The accuracy of the estimated burden
associated with the proposed collections
of information;
How the quality, utility, and clarity of
the information to be collected may be
enhanced;
How the burden of complying with
the proposed collections of information
may be minimized, including through
the application of automated collection
techniques or other forms of information
technology; and
Estimates of capital or start-up costs
and costs of operation, maintenance,
and purchase of services to provide
information.
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
OMB.
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
tax return information are confidential, as
required by section 6103 of the Code.
III. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), it is hereby cer-
tified that these proposed regulations will
not have a significant economic impact
on a substantial number of small entities
within the meaning of section 601(6) of
the Regulatory Flexibility Act.
The proposed regulations provide
clarity for manufacturers, producers, and
importers that sell or use taxable chem-
icals and for importers that sell or use
taxable substances. The proposed regula-
tions provide general rules related to the
Superfund chemical taxes, including the
attachment of tax, how to calculate the
tax, the taxation of chemical mixtures,
and supporting information required for
credit or refund claims. The proposed
regulations provide rules and model cer-
tificates for the statutory exceptions and
special rules related to the section 4661
tax, such as for methane or butane used
otherwise than as a fuel, qualified fertil-
izer, fuel, and animal feed substances,
and tax-free sales for organic taxable
chemicals are part of an intermediate
hydrocarbon stream. The proposed reg-
ulations also provide rules and model
certificates for the statutory exceptions
to the section 4671 tax for qualified fer-
tilizer, fuel, and animal feed substances.
Accordingly, the Treasury Department
and the IRS intend that the proposed
rules provide clarity for manufactures,
producers, and importers and consistent
application of the Superfund chemical
taxes.
The Treasury Department and the IRS
do not have readily available data to assess
how many entities may be affected by the
proposed regulations. Even if a substan-
tial number of small entities are affected,
the economic impact of these regulations
on small entities is not likely to be signif-
icant. The proposed regulations provide
taxpayers with definitional and computa-
tional guidance regarding the Superfund
chemical taxes as well as rules and model
certificates for statutory exceptions to the
Superfund chemical taxes. As explained
in the PRA section, the record keeping

Bulletin No. 2023–16 725 April 17, 2023
obligations imposed by these proposed
regulations are certificates for the statu-
tory exceptions to Superfund chemical
taxes and credit and refund claims. It is
estimated that between 6,000 and 30,000
taxpayers will prepare one of such certif-
icates annually and it will take no more
than one hour to complete.
Accordingly, the Secretary certifies
that these proposed regulations will not
have a significant economic impact on a
substantial number of small entities. The
Treasury Department and the IRS specif-
ically invite comments from any party,
particularly affected small entities, on the
accuracy of this certification.
Pursuant to section 7805(f), this notice
of proposed rulemaking has been submit-
ted to the Chief Counsel for the Office of
Advocacy of the Small Business Adminis-
tration for comment on its impact on small
business.
Proposed Applicability Dates
These proposed regulations are pro-
posed to apply to sales or uses in calendar
quarters beginning on or after the date the
Treasury Decision adopting these rules as
final regulations is published in the Fed-
eral Register. Taxpayers and their related
parties, within the meaning of sections
267(b) and 707(b)(1) of the Code, may
rely on the provisions of these proposed
regulations prior to that date provided
that they follow the proposed regulations
in their entirety (as applicable) and in a
consistent manner until the date the Trea-
sury Decision adopting these rules as final
regulations is published in the Federal
Register.
Comments and Requests for a Public
Hearing
Before these proposed amendments
to the regulations are adopted as final
regulations, consideration will be given
to comments that are submitted timely
to the IRS as prescribed in the preamble
under the ADDRESSES section. The
Treasury Department and the IRS request
comments on all aspects of the proposed
regulations. All commenters are strongly
encouraged to submit comments electron-
ically. The Treasury Department and the
IRS will publish for public availability
any comment submitted electronically or
on paper to its public docket on https://
www.regulations.gov.
A public hearing will be scheduled if
requested in writing by any person who
timely submits electronic or written com-
ments. Requests for a public hearing are
encouraged to be made electronically. If
a public hearing is scheduled, a notice of
the date and time for the public hearing
will be published in the Federal Register.
Announcement 2020-4 (2020-17 I.R.B.
1) provides that until further notice, pub-
lic hearings conducted by the IRS will be
held telephonically. Any telephonic hear-
ing will be made accessible to people with
disabilities.
Drafting Information
The principal author of these pro-
posed regulations is Stephanie Bland of
the Office of the Associate Chief Coun-
sel (Passthroughs and Special Industries).
However, other personnel from the Trea-
sury Department and the IRS participated
in their development.
List of Subjects in 26 CFR Part 52
Chemicals, Environmental protection,
Excise taxes, Hazardous waste, Reporting
and recordkeeping requirements.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 52 is pro-
posed to be amended as follows:
PART 52 – ENVIRONMENTAL
TAXES.
Paragraph 1. The authority citation for
part 52 is amended by adding entries for
§§52.4661-1, 52.4662-1 through 52.4662-
5, 52.4671-1, 52.4671-2, 52.4672-1, and
52.4672-2 in numerical order and revising
the entry for §52.4682-3 to read in part as
follows:
Authority: 26 U.S.C. 7805.
Section 52.4661-1 also issued under 26
U.S.C. 4661.
Section 52.4662-1 also issued under 26
U.S.C. 4662.
Section 52.4662-2 also issued under 26
U.S.C. 4662.
Section 52.4662-3 also issued under 26
U.S.C. 4662.
Section 52.4662-4 also issued under 26
U.S.C. 4662.
Section 52.4662-5 also issued under 26
U.S.C. 4662.
Section 52.4671-1 also issued under 26
U.S.C. 4671.
Section 52.4671-2 also issued under 26
U.S.C. 4671.
Section 52.4672-1 also issued under 26
U.S.C. 4672.
Section 52.4672-2 also issued under 26
U.S.C. 4672.
Section 52.4682-3 also issued under 26
U.S.C. 4682(c)(2).
* * * * *

Par. 2. Section 52.4661-1 is added to
read as follows:
§52.4661-1 Imposition of tax.
(a) In general. Section 4661(a) of the
Internal Revenue Code (Code) imposes an
excise tax on any taxable chemical sold
or used by the manufacturer, producer,
or importer of the taxable chemical. See
sections 4661(a)(1) and 4662(c)(1) of the
Code.
(b) Person liable for tax. The manufac-
turer, producer, or importer of a taxable
chemical is liable for the section 4661 tax.
(c) Attachment of tax—(1) In general.
The section 4661 tax attaches when the
manufacturer, producer, or importer of
a taxable chemical first sells or uses the
taxable chemical. No section 4661 tax
attaches when the manufacturer, pro-
ducer, or importer of a chemical mixture
(as defined in §52.4662-1(c)(1)) con-
taining one or more tax-paid chemicals
(as defined in §52.4662-1(c)(12)), or a
subsequent purchaser of such chemical
mixture, dilutes the chemical mixture with
a solvent to change the concentration of
the tax-paid chemical or chemicals in the
chemical mixture, provided the solvent is
not a taxable chemical.
(2) Foreign manufacturers. No section
4661 tax attaches to a foreign manufac-
turer’s sale of a substance listed in the
table under section 4661(b) to an importer
because the substance is not a taxable
chemical at the time of sale. See section
4662(a)(1). Instead, the section 4661 tax

April 17, 2023 726 Bulletin No. 2023–16
attaches to the importer’s first sale or use
of the taxable chemical.
(3) Taxable chemical that is part of an
imported chemical mixture. In the case
of a taxable chemical that is part of an
imported chemical mixture that is not a
taxable substance (as defined in section
4672(a) and §52.4672-1(b)(8)), the sec-
tion 4661 tax attaches to the importer’s
first sale or use of the chemical mixture.
(4) Ores—(i) In general. In the case
of a taxable chemical that is derived from
an ore, neither the mining of the ore nor
the extraction of the taxable chemical
from the ore is a taxable event. Instead,
the section 4661 tax attaches to the first
sale or use of the taxable chemical by
the manufacturer, producer, or importer
after extraction of the taxable chemical
from the ore, and the person that extracts
the taxable chemical from the ore is the
manufacturer of the taxable chemical.
For purposes of this paragraph (c)(4)(i),
the term extraction of a taxable chemi-
cal from the ore
means the first process
that a person uses in the United States
to separate the taxable chemical from
the ore. See paragraph (c)(4)(ii) of this
section for the special rule regarding
chromite.
(ii) Chromite. The mining of chromite,
which is an ore, is not a taxable event.
Instead, tax attaches to the first sale or
use of chromite by the manufacturer, pro-
ducer, or importer after the chromite is
mined. For domestically-mined chromite,
the person that mines the chromite is the
manufacturer.
(d) Procedural rules. Part 40 of this
chapter provides rules related to filing
excise tax returns, making semimonthly
deposits of excise tax, making payments
of excise tax, and other procedural rules.
See §§52.0-1 and 40.0-1(a) of this chapter.
Each business unit that has, or is required
to have, a separate employer identification
number is treated as a separate person for
purposes of filing excise tax returns, mak-
ing semimonthly deposits of excise tax,
making payments of excise tax, and the
registration requirements under section
4662(b)(10)(C) and (c)(2)(B). See §40.0-
1(d) of this chapter.
(e) Amount of tax. The section 4661
tax is imposed as a rate per ton of taxable
chemical sold or used by the manufac-
turer, producer, or importer. See section
4661(b) for the rate of tax per ton of each
taxable chemical.
(f) Calculation of tax—(1) Overview.
The section 4661 tax is calculated by mul-
tiplying the number of tons of the taxable
chemical sold or used by the manufac-
turer, producer, or importer by the tax rate
applicable to the taxable chemical under
section 4661(b). In the case of a fraction
of a ton, the tax is calculated by adding
the number of whole tons (if any) and the
number of fractional tons of the taxable
chemical, and then multiplying the sum of
those numbers by the tax rate applicable to
the taxable chemical. See section 4662(a)
(5).
(2) Determination of weight—(i) In
general. The weight of a taxable chem-
ical is the actual weight of the taxable
chemical at the time of sale or use by the
manufacturer, producer, or importer, mea-
sured in tons.
(ii) Imported chemical mixtures. In the
case of a taxable chemical that is part of
an imported chemical mixture that is not
a taxable substance, the section 4661 tax
is imposed on the actual weight of each
taxable chemical in the chemical mixture
at the time of sale or use of the chemical
mixture by the importer. If there are mul-
tiple taxable chemicals in the chemical
mixture, the amount of tax is calculated
separately for each taxable chemical in the
chemical mixture.
(iii) Conversion required for volu-
metric measurements. Any volumetric
measurement of a taxable chemical must
be converted to a weight measurement.
To calculate the weight (in pounds) of
a taxable chemical from a volumetric
measurement (in cubic feet), the volume
of the taxable chemical (in cubic feet) is
multiplied by the density of the taxable
chemical (in pounds per cubic foot). To
convert a volumetric measurement to a
weight measurement for purposes of the
section 4661 tax, the pressure and tem-
perature used to determine density must
be the same as the pressure and tempera-
ture used to determine volume.
(g) Examples. The following examples
illustrate the rules of this section.
(1) Example 1. X, a foreign manufacturer of
potassium hydroxide, sells 10 tons of potassium
hydroxide to Y, a domestic corporation. Y enters
the 10 tons of potassium hydroxide into the United
States for consumption, use, or warehousing, and
then sells it to Z, a domestic corporation. Under
these facts, Y is the importer of the potassium
hydroxide. The section 4661 tax attaches when Y
sells the potassium hydroxide to Z. Y is liable for
the section 4661 tax. The section 4661 tax is cal-
culated by multiplying 10 tons (the weight of the
potassium hydroxide) by $0.44 (the rate of tax per
ton of potassium hydroxide). The amount of section
4661 tax is $4.40.
(2) Example 2
. X, a foreign corporation, sells
nickel ore to Y, a domestic corporation. Y enters the
nickel ore into the United States for consumption,
use, or warehousing, and then extracts nickel from
the ore. Y sells 10 tons of the nickel to Z, a domestic
corporation. Z further processes the nickel to remove
impurities and then uses the nickel to create an
alloy. Under these facts, Y is the manufacturer of the
nickel. The section 4661 tax attaches when Y sells
the nickel to Z. Y is liable for the section 4661 tax.
The section 4661 tax is calculated by multiplying 10
tons (the weight of the nickel) by $8.90 (the rate of
tax per ton of nickel). The amount of section 4661
tax is $89.00.
(3) Example 3. X, a domestic producer of chro-
mite, sells 3,500 pounds of chromite to Y, a domestic
corporation. The section 4661 tax attaches when X
sells the chromite to Y. X is liable for the section
4661 tax. The section 4661 tax is calculated by
adding the number of whole and fractional tons of
chromite (1 ton + .75 ton = 1.75 tons), and then mul-
tiplying 1.75 tons by $3.04 (the rate of tax per ton of
chromite). The amount of section 4661 tax is $5.32.
(4) Example 4. X, an importer, enters 1.2 tons of
a chemical mixture comprised of 98.3 percent sulfu-
ric acid and 1.7 percent water for consumption, use,
or warehousing. X sells the chemical mixture to Y, a
domestic corporation. The section 4661 tax attaches
when X sells the chemical mixture to Y. X is liable
for the section 4661 tax. The section 4661 tax is cal-
culated based on the weight of the sulfuric acid in
the chemical mixture (98.3% x 1.2 tons = 1.18 tons),
and then multiplying 1.18 tons by $0.52 (the rate of
tax per ton of sulfuric acid). The amount of section
4661 tax is $0.61.
(5) Example 5. X, an importer, enters 1.2 tons of
a chemical mixture comprised of 98.3 percent sulfu-
ric acid and 1.7 percent water for consumption, use,
or warehousing. X sells the chemical mixture to Y, a
domestic corporation. Y adds water to the chemical
mixture, resulting in a chemical mixture of 93 per-
cent sulfuric acid and 7 percent water, and sells the
chemical mixture to Z, a domestic corporation. The
section 4661 tax attaches when X sells the chemical
mixture to Y. X is liable for the section 4661 tax. The
section 4661 tax is calculated based on the weight of
the sulfuric acid in the chemical mixture (98.3% x
1.2 tons = 1.18 tons), and then multiplying 1.18 tons
by $0.52 (the rate of tax per ton of sulfuric acid).
The amount of section 4661 tax is $0.61. No addi-
tional section 4661 tax is imposed when Y dilutes the
chemical mixture by adding water or when Y sells
the diluted chemical mixture to Z.
(h) Cross references—(1) Definitions.
For definitions that relate to sections
4661 and 4662, see section 4662(a) and
§52.4662-1.
(2) Exceptions and special rules. For
exceptions and special rules applicable to

Bulletin No. 2023–16 727 April 17, 2023
the section 4661 tax, see section 4662(b)
and §52.4662-2.
(3) Inventory exchanges. For special
rules related to inventory exchanges, see
section 4662(c)(2) and §52.4662-3.
(4) Credit or refund of tax. For rules
related to credits and refunds of the sec-
tion 4661 tax, see section 4662(d) and
§52.4662-4.
(5) Exports. For rules related to exports,
see section 4662(e) and §52.4662-5.
(i) Applicability date. This sec-
tion applies to sales or uses in calendar
quarters beginning on or after [date of
publication of final regulations in the Fed-
eral Register].
Par. 3. Section 52.4662-1 is added to
read as follows:
§52.4662-1 Taxable chemical; other
definitions.
(a) Overview. This section provides
definitions for purposes of sections 4661
and 4662 of the Internal Revenue Code
(Code), §52.4661-1, this section, and
§§52.4662-2 through 52.4662-5.
(b) Taxable chemical—(1) In general.
(i) Except as provided in section 4662(b),
the term taxable chemical means any sub-
stance that is:
(A) Listed in the table under section
4661(b); and
(B) Manufactured or produced in the
United States, or entered into the United
States for consumption, use, or warehous-
ing. See section 4662(a)(1).
(ii) A substance is a taxable chemical
only if it satisfies both paragraphs (b)(1)
(i) and (ii) of this section. For rules regard-
ing paragraph (b)(1)(i) of this section, see
paragraph (b)(2) of this section. For the
definition of entered into the United States
for consumption, use, or warehousing as it
relates to the second prong of the defini-
tion, see paragraph (c)(2) of this section.
(2) Substances listed in the table under
section 4661(b). A substance is listed in
the table under section 4661(b), and there-
fore satisfies paragraph (b)(1)(i) of this
section, if it has the same name and molec-
ular formula as a substance listed in the
table under section 4661(b). All isomeric
forms of a substance listed in the table
under section 4661(b) are treated as hav-
ing the same name and molecular formula
of the substance. Therefore, except as pro-
vided in section 4662(b)(7) with respect to
xylene, an isomer of a substance listed in
the table under section 4661(b) is a sub-
stance listed in the table under section
4661(b). The physical state of a substance
(that is, solid, liquid, or gas) is immaterial.
See paragraph (b)(3) of this section for the
name and the molecular formula, or chem-
ical symbol, of each substance listed in the
table under section 4661(b).
(3) Molecular formulas and chemical
symbols. The following table provides the
name and molecular formula or chemical
symbol for each substance listed in the
table under section 4661(b):
Table 1 to Paragraph (b)(3)
NameMolecular formula or chemical symbol
AcetyleneC
2
H
2
BenzeneC
6
H
6
ButaneC
4
H
10
ButyleneC
4
H
8
ButadieneC
4
H
6
EthyleneC
2
H
4
MethaneCH
4
NaphthaleneC
10
H
8
PropyleneC
3
H
6
TolueneC
7
H
8
XyleneC
8
H
10
AmmoniaNH
3
AntimonySb
Antimony trioxideSbO
3
ArsenicAs
Arsenic trioxideAsO
3
Barium sulfideBaS
BromineBr
CadmiumCd
ChlorineCl
ChromiumCr
ChromiteFeCr
2
O
4
and MgCr
2
O
4

April 17, 2023 728 Bulletin No. 2023–16
NameMolecular formula or chemical symbol
Potassium dichromateK
2
Cr
2
O
7
Sodium dichromateNaCr
2
O
7
CobaltCo
Cupric sulfateCuSO
4
Cupric oxideCuO
Cuprous oxideCu
2
O
Hydrochloric acidHCl
Hydrogen fluoride HF
Lead oxidePbO
MercuryHg
NickelNi
PhosphorusP
Stannous chlorideSnCl
2
Stannic chlorideSnCl
4
Zinc chlorideZnCl
2
Zinc sulfateZnSO
4
Potassium hydroxideKOH
Sodium hydroxideNaOH
Sulfuric acidH
2
SO
4
Nitric acidHNO
3
(4) Special rule for ores. Except for
chromite, an ore is not a taxable chemical.
(5) Special rule for methane and
butane. For rules regarding the treat-
ment of methane and butane as taxable
chemicals, see section 4662(b)(1) and
§52.4662-2(a).
(6) Special rule for substances derived
from coal. For rules regarding the exclu-
sion from the definition of taxable
chemical for substances derived from coal,
see section 4662(b)(4) and §52.4662-2(d).
(7) Special rule for xylene. For a spe-
cial rule regarding separated isomers of
xylene, see section 4662(b)(7).
(8) Example. X, a domestic corpora-
tion, produces isobutylene in the United
States. Isobutylene is an isomer of buty-
lene and has the molecular formula C
4
H
8
.

The isobutylene is a taxable chemical
because it is a substance listed in the table
under section 4661(b) as required by sec-
tion 4662(a)(1)(A), and it is produced in
the United States as required by section
4662(a)(1)(B).
(c) Other definitions—(1) Chemi-
cal mixture. The term chemical mixture
means a substance composed of two or
more physically-combined components
that are not chemically bonded. Chemical
mixtures include alloys, solutions, suspen-
sions, and colloids.
(2) Entry for consumption, use, or
warehousing—(i) In general. Except as
otherwise provided in this paragraph (c)
(2), the term entry for consumption, use,
or warehousing, when used with respect
to any goods, means:
(A) Brought into the customs territory
of the United States (customs territory) if
applicable customs law requires that the
goods be entered into the customs territory
for consumption, use, or warehousing;
(B) Admitted into a foreign trade zone
for any purpose if like goods brought into
the customs territory would be entered
into the customs territory for consump-
tion, use, or warehousing; or
(C) Imported into any other part of the
United States for any purpose if like goods
brought into the customs territory would
be entered into the customs territory for
consumption, use, or warehousing.
(ii) Entry for transportation and expor-
tation. Goods entered into a customs
territory for transportation and expor-
tation are not goods entered into the
customs territory for consumption, use, or
warehousing.
(iii) Multiple entries. In the case of
multiple entries described in paragraph (c)
(2)(i) of this section, only the first entry is
taken into account.
(3) Exportation. The term exportation
means the severance of a taxable chemical
from the mass of things belonging within
the United States with the intention of
uniting it with the mass of things belong-
ing within a foreign country.
(4) Exporter. The term exporter means
the person named as shipper or consignor
in the export bill of lading.
(5) Importer—(i) In general. The term
importer means the person entering the
taxable chemical for consumption, use,
or warehousing. See section 4662(a)
(3). If the person entering the taxable
chemical for consumption, use, or ware-
housing is merely acting as an agent or a
customs broker for another person, then
the agent or customs broker is not the
importer and the importer is the first per-
son in the United States to sell or use the
taxable chemical after entry of the tax-

Bulletin No. 2023–16 729 April 17, 2023
able chemical for consumption, use, or
warehousing.
(ii) Drop ship businesses. If a drop
ship business in the United States pur-
chases or otherwise arranges for a person
outside the United States to ship a chem-
ical listed in the table under section
4661(b) directly to a purchaser in the
United States, the drop ship business is
the importer of the chemical. If a drop
ship business outside the United States
purchases or otherwise arranges for a
person outside the United States to ship
a chemical listed in the table under sec-
tion 4661(b) directly to a purchaser in
the United States, the purchaser in the
United States is the importer of the chem-
ical. For purposes of this paragraph (c)(5)
(ii), the term drop ship business means a
person that sells the chemical or arranges
for purchasers to purchase the chemical,
and uses a third party to fill the order by
shipping the chemical directly to the pur-
chaser. The determination of whether a
person is a drop ship business is made on
a sale-by-sale basis.
(6) Manufacturer—(i) In general. The
term manufacturer includes a producer.
A manufacturer is any person that pro-
duces a taxable chemical from new or
raw material, feedstocks, or other sub-
stances, or from scrap, salvage, waste,
or recycled substances. A manufacturer
includes any person that produces a tax-
able chemical from the mining process, or
extracts, isolates, separates, or otherwise
removes a taxable chemical from an ore or
from another substance. A manufacturer
also includes any person that produces a
taxable chemical by processing or manip-
ulating a substance, such as through the
oxidation process. The term manufacturer
does not include a person that dilutes a
chemical mixture comprised of one or
more tax-paid chemicals with a solvent
that is not a taxable chemical.
(ii) Contract manufacturing. If a per-
son manufactures or produces a taxable
chemical for a second person, pursuant
to a contract, order, or agreement and in
accordance with the second person’s spec-
ifications, or if a person manufactures or
produces a taxable chemical for a second
person from materials owned by the sec-
ond person, the second person is treated as
the manufacturer of the taxable chemical
manufactured by the first person.
(7) Molecular formula. The term
molecular formula means a chemical for-
mula that shows the number and kinds of
atoms in the substance.
(8) Sale. The term sale means the
transfer of title or substantial incidents of
ownership (whether or not delivery to, or
payment by, the purchaser has been made)
in a taxable chemical for a consideration,
which may include, but is not limited to,
money, services, or property.
(9) Section 4661 tax. The term section
4661 tax means the excise tax imposed
by section 4661(a) of the Code on any
taxable chemical sold or used by the man-
ufacturer, producer, or importer of the
taxable chemical.
(10) Taxable substance. The term tax-
able substance has the meaning given to
such term by section 4671(a) of the Code
and §52.4672-1(b)(8).
(11) Taxable chemical registrant. The
term taxable chemical registrant means
a person that is registered by the Internal
Revenue Service (IRS) under Activity
Letter “G.” A person may apply for “G”
registration by completing Form 637,
Application for Registration for Certain
Excise Tax Activities, and submitting the
completed form to the IRS.
(12) Tax-paid chemical. The term tax-
paid chemical means a taxable chemical
on which the section 4661 tax has been
paid.
(13) To n. The term ton means 2,000
pounds. In the case of any taxable chem-
ical measured by volume, the term ton
means the amount of such taxable chemi-
cal, in cubic feet, that is the equivalent of
2,000 pounds on a molecular weight basis.
See section 4662(a)(4) and §52.4661-1(f)
(2)(iii).
(14) United States. The term United
States has the meaning given to such term
by section 4612(a)(4) of the Code. See
section 4662(a)(2).
(15) Use. Except as otherwise provided
in section 4662 and §52.4662-2, a taxable
chemical is used when it is consumed,
when it functions as a catalyst, when its
chemical composition changes, when it
is used in the manufacture or production
of a chemical mixture or other substance
(including by mixing or combining the
taxable chemical with other substances),
or when it is put into service in a trade or
business for the production of income. The
loss or destruction of a taxable chemical
through spillage, fire, natural degradation,
or other casualty is not a use of the chem-
ical. The mere manufacture or production
of a taxable chemical is not a use of that
chemical.
(d) Applicability date. This sec-
tion applies to sales or uses in calendar
quarters beginning on or after [date of
publication of final regulations in the Fed-
eral Register].
Par. 4. Section 52.4662-2 is added to
read as follows:
§52.4662–2 Exceptions and special
rules.
(a) Methane or butane used as a fuel—
(1) In general. Methane or butane is treated
as a taxable chemical only if it is used oth-
erwise than as a fuel, or otherwise than
in the manufacture or production of any
motor fuel, diesel fuel, aviation fuel, or jet
fuel. Any person using methane or butane
otherwise than as a fuel, or otherwise than
in the manufacture or production of any
motor fuel, diesel fuel, aviation fuel, or jet
fuel, is treated as the manufacturer of the
methane or butane and the tax imposed
by section 4661(a) of the Code attaches
at the time such person so uses the meth-
ane or butane. See section 4662(b)(1) of
the Code. See section 4662(b)(10) and
paragraph (g) of this section regarding
the exception for hydrocarbon streams
containing mixtures of organic taxable
chemicals.
(2) Use otherwise than as a fuel. Meth-
ane or butane is used otherwise than as a
fuel when it is used other than in the pro-
duction of energy. For example, methane
or butane is used otherwise than as a fuel
when it is used as a coolant. Conversely,
methane or butane is used as a fuel when
it is consumed in the production of energy.
For example, methane or butane is used
as a fuel when it is consumed in an inter-
nal combustion engine to power a vehicle,
when it is consumed in an engine to power
an aircraft, or when it is consumed in a
furnace, cooking appliance, or lighter to
produce heat.
(3) Examples. The following examples
illustrate the rules in paragraph (a)(2) of
this section.
(i) Example 1. X, a domestic corporation, pro-
duces methane in the United States and uses it to

April 17, 2023 730 Bulletin No. 2023–16
fire the furnaces at X’s refinery. The methane is not
treated as a taxable chemical because it is used as a
fuel by X.
(ii) Example 2. X, a domestic corporation, pro-
duces methane in the United States and sells it to Y,
a domestic corporation. Y uses the methane in the
production of antifreeze. The methane is not treated
as a taxable chemical until Y uses the methane in the
production of antifreeze. Y is treated as the manufac-
turer of the methane and the section 4661 tax attaches
at the time Y uses the methane in the production of
antifreeze. Y is liable for the section 4661 tax.
(b) Substances used in the production
of fertilizer—(1) In general. No section
4661 tax is imposed in the case of nitric
acid, sulfuric acid, ammonia, or methane
used to produce ammonia (collectively,
fertilizer chemicals, or individually, fertil-
izer chemical) that is a qualified fertilizer
substance. See section 4662(b)(2)(A).
Although taxable chemicals other than
fertilizer chemicals may be qualified fer-
tilizer substances, the section 4662(b)(2)
exception does not apply to such other
taxable chemicals. For example, zinc
sulfate used by the manufacturer to pro-
duce a qualified fertilizer substance does
not qualify for the exception in section
4662(b)(2).
(2) Definitions—(i) Qualified fertil-
izer substance. Under section 4662(b)(2)
(B), the term qualified fertilizer substance
means:
(A) Any substance used by the man-
ufacturer, producer, or importer in a
qualified fertilizer use;
(B) Any substance sold for use by any
purchaser in a qualified fertilizer use; or
(C) Any substance sold for resale by
any purchaser for use, or resale for ulti-
mate use, in a qualified fertilizer use.
(ii) Qualified fertilizer use. The term
qualified fertilizer use means any use in
the manufacture or production of fertilizer
or for direct application as a fertilizer. See
section 4662(b)(2)(C). The term qualified
fertilizer use includes the act of putting
fertilizer on crops or croplands.
(iii) Fertilizer. The term fertilizer
means a substance used to improve the
growth of plants. The term fertilizer does
not include pesticides, insecticides, herbi-
cides or fungicides.
(3) Taxation of nonqualified sale or
use. If no section 4661 tax was imposed
on the sale or use of fertilizer chemicals by
reason of the exception in section 4662(b)
(2), the first person that sells or uses any
such chemical other than as a qualified
fertilizer substance is treated as the man-
ufacturer of such chemical. See section
4662(b)(2)(D). When a fertilizer chemical
is sold or used to produce both a quali-
fied fertilizer substance and a substance
that is not a qualified fertilizer substance
(derivative substance), the section 4661
tax is imposed on the fertilizer chemical
used to produce the derivative substance
at the time the manufacturer, producer, or
importer sells or uses the fertilizer chem-
ical. The amount of the section 4661 tax
is calculated based on the weight of the
fertilizer chemical sold or used to produce
the derivative substance.
(4) Tax-free sales. See paragraph (h)
of this section for rules related to tax-free
sales.
(5) Credit or refund of tax. See section
4662(d)(2) and §52.4662-4(b) for rules
related to credits and refunds of the sec-
tion 4661 tax.
(c) Sulfuric acid produced as a byprod-
uct of air pollution control. No section
4661 tax is imposed on sulfuric acid pro-
duced solely as a byproduct of and on the
same site as air pollution control equip-
ment. See section 4662(b)(3). As used in
section 4662(b)(3), the term air pollution
control equipment means any equipment
used to comply with the Clean Air Act,
including any amendments thereto, as
codified in 42 U.S.C. chapter 85, or any
similar provision under state law.
(d) Substances derived from coal—(1)
In general. Under section 4662(b)(4), the
term taxable chemical does not include
any substance to the extent derived from
coal. As used in section 4662(b)(4), the
term coal means bituminous coal, subbi-
tuminous coal, anthracite, and lignite. A
substance is not derived from coal merely
because coal served as a source of energy
in the production of the substance.
(2) Example. X, a domestic corporation,
uses a high-temperature carbonization
process to convert coal to coke and coal
tar. X then cracks the coal tar to produce
naphthalene. The naphthalene is derived
from coal and the exception in section
4662(b)(4) applies. Therefore, the naph-
thalene is not a taxable chemical.
(e) Substances used in the production
of motor fuel—(1) In general. No sec-
tion 4661 tax is imposed in the case of
acetylene, benzene, butylene, butadiene,
ethylene, naphthalene, propylene, toluene,
or xylene (collectively, fuel chemicals, or
individually, a fuel chemical) that is a qual-
ified fuel substance. See section 4662(b)
(5)(A). Although taxable chemicals other
than fuel chemicals may be qualified fuel
substances, the section 4662(b)(5) excep-
tion does not apply to such other taxable
chemicals.
(2) Definitions—(i) Qualified fuel sub-
stance. Under section 4662(b)(5)(B), the
term qualified fuel substance means:
(A) Any substance used by the manu-
facturer, producer, or importer thereof in a
qualified fuel use;
(B) Any substance sold for use by any
purchaser in a qualified fuel use; or
(C) Any substance sold for resale by
any purchaser for use, or resale for ulti-
mate use, in a qualified fuel use.
(ii) Qualified fuel use. A qualified fuel
use means any use in the manufacture or
production of any motor fuel, diesel fuel,
aviation fuel, or jet fuel, or any use of a
fuel chemical as such a fuel. See section
4662(b)(5)(C).
(3) Taxation of nonqualified sale or
use. If no section 4661 tax was imposed
on the sale or use of a fuel chemical by
reason of the exception in section 4662(b)
(5), the first person that sells or uses such
fuel chemical other than as a qualified fuel
substance is treated as the manufacturer of
such fuel chemical. See section 4662(b)(5)
(E). When a fuel chemical is sold or used
to produce both a qualified fuel substance
and a substance that is not a qualified
fuel substance (derivative substance), the
section 4661 tax is imposed on the fuel
chemical sold or used as the derivative
substance at the time the manufacturer,
producer, or importer sells or uses the fuel
chemical. The amount of the section 4661
tax is calculated based on the weight of
the fuel chemical sold or used to produce
the derivative substance.
(4) Tax-free sales. See paragraph (h)
of this section for rules related to tax-free
sales.
(5) Credit or refund of tax. See section
4662(d)(3) and §52.4662-4(c) for rules
related to credits and refunds of the sec-
tion 4661 tax.
(f) Substances used in the production
of animal feed—(1) In general. No section
4661 tax is imposed in the case of nitric
acid, sulfuric acid, ammonia, or meth-
ane used to produce ammonia (each, an

Bulletin No. 2023–16 731 April 17, 2023
animal feed chemical, and collectively,
animal feed chemicals) that is a quali-
fied animal feed substance. See section
4662(b)(9). Although taxable chemicals
other than animal feed chemicals may be
qualified animal feed substances, the sec-
tion 4662(b)(9) exception does not apply
to such other taxable chemicals.
(2) Definitions—(i) Qualified animal
feed substance. Under section 4662(b)(9)
(B), the term qualified animal feed sub-
stance means:
(A) Any substance used by the man-
ufacturer, producer, or importer in a
qualified animal feed use;
(B) Any substance sold for use by any
purchaser in a qualified animal feed use;
or
(C) Any substance sold for resale by
any purchaser for use, or resale for ulti-
mate use, in a qualified animal feed use.
(ii) Qualified animal feed use. The term
qualified animal feed use means any use in
the manufacture or production of animal
feed, animal feed supplements, or ingre-
dients used in animal feed or animal feed
supplements. See section 4662(b)(9)(C).
(3) Taxation of nonqualified sale or use.
If no section 4661 tax was imposed on the
sale or use of animal feed chemicals by rea-
son of the exception in section 4662(b)(9),
the first person that sells or uses any such
chemical other than as a qualified animal
feed substance is treated as the manufac-
turer of the chemical. See section 4662(b)
(9)(D). When an animal feed chemical is
sold or used to produce both a qualified
animal feed substance and a substance that
is not a qualified animal feed substance
(derivative substance), the section 4661
tax is imposed on the animal feed chemi-
cal sold or used to produce the derivative
substance at the time the manufacturer, pro-
ducer, or importer sells or uses the animal
feed chemical. The amount of the section
4661 tax is calculated based on the weight
of the animal feed chemical sold or used to
produce the derivative substance.
(4) Tax-free sales. See paragraph (h)
of this section for rules related to tax-free
sales.
(5) Credit or refund of tax. See section
4662(d)(4) and §52.4662-4(d) for rules
related to credits and refunds of the sec-
tion 4661 tax.
(g) Hydrocarbon streams containing
mixtures of organic taxable chemicals—
(1) In general. No section 4661 tax is
imposed on any organic taxable chemical
while such chemical is part of an interme-
diate hydrocarbon stream containing one
or more organic taxable chemicals, if the
requirements in paragraph (g)(4) of this
section are satisfied. See section 4662(b)
(10)(A). For purposes of section 4662(b)
(10), the term intermediate hydrocarbon
stream means a mixture of organic chem-
icals that requires further distillation or
processing to manufacture or produce a
taxable chemical.
(2) Organic taxable chemical—(i) In
general. For purposes of section 4662(b)
(10), the term organic taxable chemical
means any taxable chemical that is an
organic substance. See section 4662(b)
(10)(D). The organic substances that are
listed in the table in section 4661(b) are
acetylene, benzene, butane, butylene,
butadiene, ethylene, methane, naphtha-
lene, propylene, toluene, and xylene.
However, only acetylene, benzene, buty-
lene, butadiene, ethylene, naphthalene,
propylene, toluene, and xylene are organic
taxable chemicals (provided they also sat-
isfy the requirements of section 4662(a)
(1)(B)). Although methane and butane are
organic substances that are listed in the
table in section 4661(b), they are treated
as organic taxable chemicals only when
used otherwise than as a fuel or otherwise
than in the manufacture or production of
any motor fuel, diesel fuel, aviation fuel,
or jet fuel (provided they also satisfy the
requirements of section 4662(a)(1)(B)).
See section 4662(b)(1) and paragraph (a)
of this section. Therefore, methane and
butane are not organic taxable chemicals at
the time of isolation from an intermediate
hydrocarbon stream. See section 4662(b)
(1) and paragraph (a) of this section. As a
result, no section 4661 tax is imposed on
methane or butane at the time of isolation
from an intermediate hydrocarbon stream.
(ii) Example. X, a domestic corpora-
tion, is a refiner of petroleum products.
X uses a fluid catalytic cracking process
to crack gas oil and the fluid catalyst
into other chemicals, including liquefied
petroleum gas (LPG). X next uses a frac-
tioning process to separate a stream of
C3/C4 (which contains propane, propyl-
ene, butane, and other chemicals) from
the other chemical components of LPG.
After fractionation, X uses a splitting pro-
cess to separate the butane from the other
chemicals contained in the C3/C4 stream.
X sells the butane to Y, a domestic cor-
poration, which blends the butane into
gasoline. In this scenario, no section 4661
tax is imposed when X isolates the butane
through the splitting process, because the
butane is not an organic taxable chemical
at the time the splitting process occurs.
Further, no section 4661 tax is imposed
on X’s sale of the butane to Y because the
butane is not a taxable chemical at the time
of the sale. Additionally, no section 4661
tax is imposed on Y’s use of the butane
because Y does not use the butane other-
wise than as a fuel or otherwise than in the
manufacture or production of any motor
fuel, diesel fuel, aviation fuel or jet fuel.
(3) Isolation of organic taxable chem-
ical from intermediate hydrocarbon
stream—(i) One-step isolation process. If
any organic taxable chemical on which no
section 4661 tax was previously imposed
by reason of section 4662(b)(10)(A) is
isolated, extracted, or otherwise removed
from, or ceases to be part of (collectively,
isolation), an intermediate hydrocarbon
stream, such isolation is treated as a use by
the person causing the isolation, and such
person is treated as the manufacturer of
the organic taxable chemical so isolated.
See 4662(b)(10)(B).
(ii) Multi-step isolation process. When
the isolation of an organic taxable chem-
ical from an intermediate hydrocarbon
stream is a multi-step process, the first pro-
cess that a person uses to isolate, extract,
or otherwise remove the organic taxable
chemical from the intermediate hydrocar-
bon stream (even if the organic taxable
chemical is, at that time, still mixed with
other substances and further processing is
possible, but not required) is treated as a
use by the person causing the isolation,
and such person is treated as the manu-
facturer of the organic taxable chemical
so isolated. If the taxable chemical is part
of a chemical mixture at the time of iso-
lation, the section 4661 tax is imposed on
the weight of the entire chemical mixture,
unless the person causing the isolation
can establish, with specificity, the weight
of the taxable chemical contained in the
chemical mixture.
(iii) Example. X, a domestic corpora-
tion, is a refiner of petroleum products.
X uses a fluid catalytic cracking process

April 17, 2023 732 Bulletin No. 2023–16
to crack gas oil and the fluid catalyst
into lighter chemicals, including lique-
fied petroleum gas (LPG). X next uses a
fractioning process to separate a stream
of C3/C4 (which contains propane, pro-
pylene, butane, and other chemicals) from
the other chemical components of LPG.
After fractionation, X uses a splitting
process to separate the propylene from
the other chemicals contained in the C3/
C4 stream, resulting in a propane and
propylene mixture commonly referred to
as refinery grade propylene. X sells the
refinery grade propylene to Y, a domes-
tic corporation, which further refines the
refinery grade propylene to remove most
of the propane and other contaminants. In
this scenario, X’s splitting process is a use
of the propylene by X, and X is treated
as the manufacturer of the propylene.
Therefore, X is liable for the section 4661
tax. If X can establish, with specificity,
the weight of the propylene in the mix-
ture, the amount of the section 4661 tax
is calculated based only on the weight of
the propylene in the mixture. If X cannot
establish, with specificity, the weight of
the propylene in the mixture, the amount
of the section 4661 tax is calculated based
on the weight of the mixture.
(4) Requirements. The exception in
section 4662(b)(10) applies only if, at the
time of the sale of any intermediate hydro-
carbon stream containing one or more or
organic taxable chemicals, all of the fol-
lowing requirements are satisfied:
(i) Both parties are taxable chemical
registrants;
(ii) The seller has an unexpired notifi-
cation certificate from the purchaser; and
(iii) The seller has no reason to believe
that any information in the notification
certificate is false.
(5) Notification certificate—(i) Over-
view. The certificate to be provided by the
purchaser of an intermediate hydrocarbon
stream to the seller consists of a statement
that is signed under penalties of perjury
by a person with authority to bind the pur-
chaser, is in substantially the same form as
the model certificate in paragraph (g)(5)
(ii) of this section, and contains all of the
information necessary to complete such
model certificate. A new certificate must
be given if any information in the certifi-
cate changes or the purchaser informs the
seller that the certificate is no longer accu-
rate. The certificate expires on the earlier
of the date the purchaser provides a new
certificate or the date the purchaser is noti-
fied by the Internal Revenue Service (IRS)
that the purchaser’s registration has been
revoked or suspended.
(ii) Model certificate.
NOTIFICATION CERTIFICATE OF TAXABLE CHEMICAL REGISTRANT
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
Name, address, and employer identification number of person receiving certificate
The undersigned taxable chemical registrant (Registrant) hereby certifies under penalties of perjury that Registrant is registered by
the Internal Revenue Service (IRS) under activity letter “G” with registration number ________________, and that Registrant’s reg-
istration has not been revoked or suspended by the IRS.
Registrant understands that the fraudulent use of this certificate may subject Registrant and all parties making such fraudulent use of
this certificate to a fine or imprisonment, or both, together with the costs of prosecution.
__________________________________________
Signature and date signed
__________________________________________
Printed or typed name of person signing
__________________________________________
Title of person signing
__________________________________________
Name of Registrant
__________________________________________
Employer identification number
__________________________________________
Address of Registrant

Bulletin No. 2023–16 733 April 17, 2023
(iii) Use of letter of registration as
notification certificate prohibited. A copy
of the letter of registration issued to a
taxable chemical registrant by the IRS is
not a notification certificate described in
paragraph (g)(5) of this section and cannot
be used as a substitute for a notification
certificate.
(h) Tax-free sales of taxable chemi-
cals—(1) In general. To make a tax-free
sale pursuant to section 4662(b)(2), (5),
or (9), the manufacturer, producer, or
importer (or, in the case of resales, the
reseller) of the taxable chemical must
obtain an unexpired exemption certificate
from the purchaser, in the form prescribed
in paragraph (h)(2) of this section, prior
to or at the time of sale, and the manu-
facturer, producer, importer, or reseller
must have no reason to believe that any
information in the certificate regarding
the use of the taxable chemical is false.
If the manufacturer, producer, importer,
or reseller does not obtain an unexpired
exemption certificate by the time of the
sale, or if the manufacturer, producer,
importer, or reseller has reason to believe
that any information in the certificate
regarding the use of the taxable chemi-
cal is false, the manufacturer, producer,
importer, or reseller is liable for the sec-
tion 4661 tax. However, if the purchaser
subsequently uses the taxable chemical in
the manner described in section 4662(b)
(2), (5), or (9), the purchaser may file a
claim for credit or refund pursuant to sec-
tion 4662(d) and §52.4662-4.
(2) Exemption certificate—(i) Over-
view. The exemption certificate consists of
a statement that is signed under penalties of
perjury by a person with authority to bind
the purchaser, is in substantially the same
form as the model certificate in paragraph
(h)(2)(ii) of this section, and contains all
of the information necessary to complete
such model certificate. A new certificate
must be given if any information in the
certificate changes. The certificate expires
no later than one year from the effective
date specified in the certificate. The cer-
tificate may be included as part of any
business records normally used to docu-
ment a sale. The IRS may withdraw the
right of a purchaser of taxable chemicals
to provide a certificate under this section
if the purchaser uses the taxable chemicals
to which a certificate relates other than as
stated in the certificate.
(ii) Model certificate.
EXEMPTION CERTIFICATE
(To support tax-free sales of taxable chemicals under section 4662(b) of the Internal Revenue Code (Code).)
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
Name, address, and employer identification number of seller
____________________________(Purchaser) certifies the following under penalties of perjury:
Name of purchaser
The sale(s) to which this certificate applies are for (mark below):
_______ Sold for use by Purchaser as described in section 4662(b)(2) (qualified fertilizer use), section 4662(b)(5) (qualified fuel use),
or section 4662(b)(9) (qualified animal feed use) of the Code
_______ Sold for resale by Purchaser for use, or resale for ultimate use, in a qualified use
The taxable chemical to which this certificate applies will be used (mark below):
_______ Qualified fertilizer use
_______ Qualified fuel use
_______ Qualified animal feed use
_________________________________________________________________________________________________________
Name of taxable chemical(s) to be purchased by Purchaser
This certificate applies to:
1. Percentage of purchaser’s purchases _______ between _____________ (effective date) and _____________ (expiration
date) (period not to exceed one year after the effective date) under account or order number(s) ________________________;
or
2. A single purchase invoice or delivery ticket number _____________________________.
If Purchaser sells or uses the taxable chemical to which this certificate relates for a nonqualified sale or use, Purchaser will be treated
as the manufacturer of the taxable chemical and will be liable for the tax imposed by section 4661(a) of the Code.

April 17, 2023 734 Bulletin No. 2023–16
Purchaser will provide a new certificate to the seller if any information in this certificate changes.
Purchaser understands that Purchaser may be liable for the penalty under section 6701 of the Code (relating to aiding and abetting an
understatement of tax liability) if this is an erroneous certification.
Purchaser understands that the fraudulent use of this certificate may subject Purchaser and all parties making any fraudulent use of
this certificate to a fine or imprisonment, or both, together with the costs of prosecution.
__________________________________________
Printed or typed name of person signing
__________________________________________
Title of person signing
__________________________________________
Employer identification number
__________________________________________
Address of Purchaser
__________________________________________
Signature and date signed
(i) Applicability date. This sec-
tion applies to sales or uses in calendar
quarters beginning on or after [date of
publication of final regulations in the Fed-
eral Register].
Par. 5. Section 52.4662-3 is added to
read as follows:
§52.4662-3 Inventory exchanges.
(a) In general. Except as otherwise pro-
vided in section 4662(c)(2) of the Internal
Revenue Code (Code), in any case in which
a manufacturer, producer, or importer of a
taxable chemical exchanges such chemi-
cal as part of an inventory exchange with
another person, the exchange is not treated
as a sale, and the other person is treated as
the manufacturer, producer, or importer of
the chemical, if the requirements in para-
graph (b) of this section are satisfied. See
section 4662(c)(2). For purposes of sec-
tion 4662(c), the term inventory exchange
means any exchange in which two persons
exchange property that is, in the hands of
each person, property described in sec-
tion 1221(a)(1) of the Code. See section
4662(c)(2)(C).
(b) Requirements. The section 4662(c)
exception applies only if, at the time of
the exchange, all of the following require-
ments are satisfied:
(1) Both parties are taxable chemical
registrants;
(2) The manufacturer, producer, or
importer has an unexpired notification
certificate from the person receiving the
taxable chemical; and
(3) The manufacturer, producer, or
importer has no reason to believe that any
information in the notification certificate
is false.
(c) Notification certificate—(1) Over-
view. The certificate to be provided by
the person receiving the taxable chemical
consists of a statement that is signed under
penalties of perjury by someone with
authority to bind the person receiving the
taxable chemical, is in substantially the
same form as the model certificate pro-
vided in paragraph (c)(2) of this section,
and contains all of the information neces-
sary to complete such model certificate.
A new certificate must be given if any
information in the certificate changes or
if the person receiving the taxable chem-
ical informs the manufacturer, producer,
or importer that the certificate is no lon-
ger accurate. The certificate expires on the
earlier of the date the person provides a
new certificate or the date the person is
notified by the Internal Revenue Service
(IRS) that the person’s registration has
been revoked or suspended.
(2) Model certificate.

Bulletin No. 2023–16 735 April 17, 2023
NOTIFICATION CERTIFICATE OF TAXABLE CHEMICAL REGISTRANT
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
Name, address, and employer identification number of person receiving certificate
The undersigned taxable chemical registrant (Registrant) hereby certifies under penalties of perjury that Registrant is registered by
the Internal Revenue Service (IRS) under activity letter “G” with registration number ________________, and that Registrant’s reg-
istration has not been revoked or suspended by the IRS.
Registrant understands that the fraudulent use of this certificate may subject Registrant and all parties making such fraudulent use of
this certificate to a fine or imprisonment, or both, together with the costs of prosecution.
__________________________________________
Signature and date signed
__________________________________________
Printed or typed name of person signing
__________________________________________
Title of person signing
__________________________________________
Name of Registrant
__________________________________________
Employer identification number
__________________________________________
Address of Registrant
(3) Use of letter of registration as noti-
fication certificate prohibited. A copy of
the letter of registration issued to a tax-
able chemical registrant by the IRS is
not a notification certificate described in
paragraph (c) of this section and cannot
be used as a substitute for a notification
certificate.
(d) Applicability date. This sec-
tion applies to sales or uses in calendar
quarters beginning on or after [date of
publication of final regulations in the Fed-
eral Register].
Par. 6. Section 52.4662-4 is added to
read as follows:
§52.4662-4 Credit or refund of tax
under section 4662(d).
(a) Tax-paid chemicals used to make
taxable chemicals—(1) In general.
Any section 4661 tax paid by the man-
ufacturer, producer, or importer (initial
manufacturer) with respect to a tax-paid
chemical that is subsequently used by any
person (subsequent manufacturer) in the
manufacture or production of any other
substance that is a taxable chemical (sub-
sequent taxable chemical) will be allowed
as a credit or refund to the subsequent
manufacturer in the same manner as if it
were an overpayment of the section 4661
tax. See section 4662(d)(1) of the Code.
The subsequent manufacturer may file a
claim for credit or refund (without inter-
est) for the amount of the overpayment,
provided the conditions to allowance set
forth in paragraph (a)(3) of this section
are satisfied. See paragraph (a)(4) of this
section for the supporting information that
a subsequent manufacturer must include
with a claim for credit or refund. The sub-
sequent manufacturer’s claim for credit or
refund of the overpayment cannot exceed
the amount of section 4661 tax imposed
on the subsequent taxable chemical, or
that would have been imposed but for the
application of section 4662(b) or (e) of the
Code. See section 4662(d)(1).
(2) Allocation required in certain sit-
uations. If a subsequent manufacturer
uses a tax-paid chemical to manufacture
or produce multiple subsequent taxable
chemicals, a subsequent taxable chemi-
cal and another substance, or one or more
subsequent taxable chemicals and one or
more other substances, the subsequent
manufacturer must allocate the overpay-
ment of the section 4661 tax paid on the
tax-paid chemical (first tax) among all
subsequent taxable chemicals and other
substances manufactured or produced
with the tax-paid chemical and apply
the allocation to the claim for credit or
refund. The subsequent manufacturer
must calculate the amount of the first tax
to be allocated to each subsequent taxable
chemical and other substance by multiply-
ing the amount of the first tax by a fraction,

April 17, 2023 736 Bulletin No. 2023–16
the numerator of which is the weight (in
tons) of the portion of the tax-paid chem-
ical the subsequent manufacturer used to
manufacture or produce the subsequent
taxable chemical or other substance, and
the denominator of which is the total
weight (in tons) of the tax-paid chemical
for which the subsequent manufacturer
has a certificate described in paragraph
(e) of this section. The subsequent manu-
facturer’s claim for credit or refund of an
overpayment cannot exceed the amount
of section 4661 tax imposed on the subse-
quent taxable chemical to which the claim
relates, or that would have been imposed
but for the application of section 4662(b)
or (e) of the Code. See paragraph (a)(4) of
this section for the supporting information
regarding the allocation that a subsequent
manufacturer must include with a claim
for credit or refund. See paragraph (a)(5)
of this section for examples that illustrate
the allocation rule.
(3) Conditions to allowance of a claim
for credit or refund. A claim for credit
or refund of section 4661 tax is allowed
under section 4662(d)(1) and this para-
graph (a) only if:
(i) The first tax was paid to the Internal
Revenue Service (IRS) and not credited or
refunded;
(ii) After payment of the first tax, the
subsequent manufacturer used the tax-
paid chemical to manufacture or produce
a subsequent taxable chemical, mul-
tiple subsequent taxable chemicals, a
subsequent taxable chemical and another
substance, or one or more subsequent
taxable chemicals and one or more other
substances;
(iii) The subsequent manufacturer sold
or used the subsequent taxable chemical
for which a credit or refund is sought and
section 4661 tax was imposed (or would
have been imposed but for section 4662(b)
or (e)) on such sale or use;
(iv) The subsequent manufacturer has
filed a timely claim for credit or refund
that contains the supporting information
required under paragraph (a)(4) of this
section; and
(v) The subsequent manufacturer has a
certificate, in the form prescribed in para-
graph (e) of this section, from the initial
manufacturer.
(4) Supporting information required. A
subsequent manufacturer’s claim for credit
or refund with respect to the subsequent
manufacturer’s use of a tax-paid chemical
to manufacture or produce a subsequent
taxable chemical, multiple subsequent
taxable chemicals, a subsequent taxable
chemical and another substance, or one
or more subsequent taxable chemicals
and one or more other substances, must
include the following information:
(i) The name of the tax-paid chemical,
the total number of tons of the tax-paid
chemical purchased from the initial man-
ufacturer, producer, or importer, and the
total number of tons of the tax-paid chem-
ical used to manufacture or produce each
subsequent taxable chemical or other sub-
stance during the period covered by the
claim;
(ii) The name of each subsequent tax-
able chemical or other substance and the
total number of tons of each subsequent
taxable chemical or other substance so
manufactured or produced during the
period covered by the claim;
(iii) The amount of section 4661 tax
paid with respect to the tax-paid chem-
ical and the amount of section 4661
tax imposed (or that would have been
imposed but for section 4662(b) or (e)) on
the sale or use of each subsequent taxable
chemical manufactured or produced with
the tax-paid chemical;
(iv) If allocation is required, the
amount of the first tax allocated to each
subsequent taxable chemical to which the
claim relates, and the allocation calcula-
tion; and
(v) The certificate described in para-
graph (e) of this section, or a copy of such
certificate.
(5) Examples. The following examples
illustrate the allocation rule in paragraph
(a)(2) of this section.
(i) Example 1—(A) Facts. X, a domestic man-
ufacturer, sells 5 tons of Taxable Chemical 1 to Y, a
domestic corporation. Section 4661 tax is imposed
on X’s sale of Taxable Chemical 1 at a rate of $8.90
per ton. X pays the section 4661 tax in the amount
of $44.50. Y uses 3 tons of Taxable Chemical 1 to
produce 4 tons of Taxable Chemical 2. Y uses 2
tons of Taxable Chemical 1 to produce 3 tons of
Taxable Chemical 3. Y then sells the 4 tons of Tax-
able Chemical 2 and 3 tons of Taxable Chemical 3,
to Z, a domestic corporation. Section 4661 tax is
imposed on Y’s sale of Taxable Chemical 2 at a rate
of $9.74 per ton, for a tax of $38.96. Section 4661
tax is imposed on Y’s sale of Taxable Chemical 3
at a rate of $5.40 per ton, for a tax of $16.20. The
total amount of section 4661 tax imposed on Y’s
sales of Taxable Chemical 2 and Taxable Chemical
3 is $55.16. Y files a claim for refund of the section
4661 tax X paid with respect to Taxable Chemical 1
(first tax).
(B) Analysis. Y must allocate the first tax
between Taxable Chemical 2 and Taxable Chemical
3 as follows: 3/5 ($26.70) to Taxable Chemical 2,
and 2/5 ($17.80) to Taxable Chemical 3. The section
4661 tax imposed on Y’s sale of Taxable Chemical
2 to Z ($38.96), exceeds the amount of the first tax
allocated to Taxable Chemical 2 ($26.70). Therefore,
Y’s claim for refund with respect to Taxable Chemi-
cal 2 is limited to $26.70, the amount of the first tax
allocated to Taxable Chemical 2. The section 4661
tax imposed on Y’s sale of Taxable Chemical 3 to Z
($16.20), is less than the amount of the first tax allo-
cated to Taxable Chemical 3 ($17.80). Therefore, Y’s
claim for refund with respect to Taxable Chemical 3
is limited to $16.20, the amount of section 4661 tax
imposed on Taxable Chemical 3. Y’s total claim for
refund is limited to $42.90 ($26.70 + $16.20) due to
the required allocation.
(ii) Example 2—(A) Facts. X, a domestic man-
ufacturer, sells 3 tons of Taxable Chemical 1 to Y, a
domestic corporation. Section 4661 tax is imposed
on X’s sale of Taxable Chemical 1 at a rate of $9.74
per ton. X pays the tax in the amount of $29.22.
Y uses 2 tons of Taxable Chemical 1 to produce 3
tons of Taxable Chemical 2. Y uses 1 ton of Taxable
Chemical 1 to produce 2 tons of another substance.
Y then sells 3 tons of Taxable Chemical 2 to Z, a
domestic corporation. Tax is imposed on Y’s sale of
Taxable Chemical 2 at a rate of $5.40 per ton, for a
tax of $16.20. Y files a claim for refund of the first
tax paid with respect to Taxable Chemical 1 (first
tax).
(B) Analysis. Y must allocate the first tax
between Taxable Chemical 2 and the other substance
as follows: 2/3 ($19.48) to Taxable Chemical 2, and
1/3 ($9.74) to the other substance. Y may claim a
refund of the first tax in the amount of $16.20 (the
full amount of tax imposed on Y’s sale of Taxable
Chemical 2 to Z), because the tax imposed on Tax-
able Chemical 2 does not exceed the amount of the
first tax that was allocated to Taxable Chemical 2.
(b) Use as a fertilizer—(1) In general.
Any section 4661 tax paid that exceeds the
amount of section 4661 tax determined
with regard to section 4662(b)(2) with
respect to nitric acid, sulfuric acid, ammo-
nia, or methane used to produce ammonia
(each, a fertilizer chemical) that any per-
son uses as a qualified fertilizer substance
will be allowed as a credit or refund
(without interest) to the person using the
fertilizer chemical as a qualified fertilizer
substance in the same manner as if it were
an overpayment of section 4661 tax. See
section 4662(d)(2). Such person may file a
claim for credit or refund of the amount of
the overpayment, provided the conditions
to allowance set forth in paragraph (b)(2)
of this section are satisfied. See paragraph
(b)(3) of this section for the supporting
information that must be included with a

Bulletin No. 2023–16 737 April 17, 2023
claim for credit or refund pursuant to sec-
tion 4662(d)(2).
(2) Conditions to allowance of a claim
for credit or refund. A claim for credit or
refund of section 4661 tax with respect
to a tax-paid fertilizer chemical that is
used as a qualified fertilizer substance is
allowed under section 4662(d)(2) and this
section only if:
(i) A section 4661 tax with respect to
the fertilizer chemical was paid to the IRS
and not credited or refunded;
(ii) After payment of the section 4661
tax, a person used the fertilizer chemical
as a qualified fertilizer substance;
(iii) The person using the fertilizer
chemical as a qualified fertilizer substance
has filed a timely claim for credit or refund
that includes the information required
under paragraph (b)(3) of this section; and
(iv) The person using the fertilizer
chemical as a qualified fertilizer substance
has a certificate, in the form prescribed in
paragraph (e) of this section, from the per-
son that paid the section 4661 tax.
(3) Supporting information required.
Each claim for credit or refund with
respect to a tax-paid fertilizer chemical
used as a qualified fertilizer substance
must include the following information:
(i) The name of the tax-paid fertilizer
chemical to which the claim relates and
the total number of tons of the tax-paid
fertilizer chemical used as a qualified fer-
tilizer substance during the period covered
by the claim;
(ii) The manner in which the claimant
used the qualified fertilizer substance;
(iii) The amount of section 4661 tax
paid with respect to the tax-paid fertilizer
chemical; and
(iv) The certificate described in para-
graph (e) of this section, or a copy of
such certificate, that relates to the tax-paid
fertilizer chemical for which the claim is
being made.
(c) Use as qualified fuel—(1) In general.
Any section 4661 tax paid that exceeds the
amount of section 4661 tax determined
with regard to section 4662(b)(5) with
respect to acetylene, benzene, butylene,
butadiene, ethylene, naphthalene, propyl-
ene, toluene, or xylene (collectively, fuel
chemicals, or individually, a fuel chem-
ical) that any person uses as a qualified
fuel substance will be allowed as a credit
or refund (without interest) to the person
using the fuel chemical as a qualified fuel
substance in the same manner as if it were
an overpayment of section 4661 tax. See
section 4662(d)(3). Such person may file a
claim for credit or refund of the amount of
the overpayment, provided the conditions
to allowance set forth in paragraph (c)(2)
of this section are satisfied. See paragraph
(c)(3) of this section for the supporting
information that must be included in a
claim for credit or refund pursuant to sec-
tion 4662(d)(3).
(2) Conditions to allowance of a claim
for credit or refund. A claim for credit or
refund of section 4661 tax with respect to
a tax-paid fuel chemical that is used as a
qualified fuel substance is allowed under
section 4662(d)(3) and this section only if:
(i) A section 4661 tax with respect to
the fuel chemical was paid to the IRS and
not credited or refunded;
(ii) After payment of the section 4661
tax, a person used the fuel chemical as a
qualified fuel substance;
(iii) The person using the fuel chem-
ical as a qualified fuel substance has
filed a timely claim for credit or refund
that includes the supporting information
required under paragraph (c)(3) of this
section; and
(iv) The person using the fuel chemical
as a qualified fuel substance has a certifi-
cate, in the form prescribed in paragraph
(e) of this section, from the person that
paid the section 4661 tax.
(3) Supporting information required.
Each claim for credit or refund with
respect to a tax-paid fuel chemical used as
a qualified fuel substance must include the
following information:
(i) The name of the fuel chemical to
which the claim relates and the total num-
ber of tons of the tax-paid fuel chemical
used as a qualified fuel substance during
the period covered by the claim;
(ii) The manner in which the claimant
used the qualified fuel substance;
(iii) The amount of section 4661 tax
paid with respect to the fuel chemical; and
(iv) The certificate described in para-
graph (e) of this section, or a copy of such
certificate, that relates to the tax-paid fuel
chemical for which the claim is being
made.
(d) Use in the production of animal
feed—(1) In general. Any section 4661
tax paid that exceeds the amount of tax
determined with regard to section 4662(b)
(9) with respect to nitric acid, sulfuric acid,
ammonia, or methane used to produce
ammonia (each, an animal feed chemical)
that any person uses as a qualified animal
feed substance will be allowed as a credit
or refund (without interest) to the person
using the animal feed chemical as a qual-
ified animal feed substance in the same
manner as if it were an overpayment of
section 4661 tax. See section 4662(d)(4).
Such person may file a claim for credit or
refund of the amount of the overpayment,
provided the conditions to allowance set
forth in paragraph (d)(2) of this section
are satisfied. See paragraph (d)(3) of this
section for the supporting information that
must be included in a claim for credit or
refund pursuant to section 4662(d)(4).
(2) Conditions to allowance of a claim
for credit or refund. A claim for credit or
refund of section 4661 tax with respect
to a tax-paid animal feed chemical that is
used as a qualified animal feed substance
is allowed under section 4662(d)(4) and
this section only if:
(i) A section 4661 tax with respect to
the animal feed chemical was paid to the
IRS and not credited or refunded;
(ii) After payment of the section 4661
tax, a person used the animal feed chem-
ical as a qualified animal feed substance;
(iii) The person using the animal feed
chemical as a qualified animal feed sub-
stance has filed a timely claim for credit or
refund that includes the supporting infor-
mation required under paragraph (d)(3) of
this section; and
(iv) The person using the animal
feed chemical as a qualified animal feed
substance has a certificate, in the form
prescribed in paragraph (e) of this section,
from the person that paid the section 4661
tax.
(3) Supporting information required.
Each claim for credit or refund with
respect to a tax-paid animal feed chemical
used as a qualified animal feed substance
must include the following information:
(i) The name of the animal feed chemi-
cal to which the claim relates and the total
number of tons of the tax-paid animal feed
chemical used as a qualified animal feed
substance during the period covered by
the claim;
(ii) The manner in which the claimant
used the qualified animal feed substance;

April 17, 2023 738 Bulletin No. 2023–16
CERTIFICATE TO SUPPORT A CLAIM FOR CREDIT OR REFUND
(To support claims for credit or refund under section 4662(d) of the Internal Revenue Code (Code).)
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
Name, address, and employer identification number of person that paid the tax imposed by section 4661 of the Code (section 4661
tax)
The undersigned taxpayer hereby certifies the following under penalties of perjury:
The undersigned taxpayer reported and paid the section 4661 tax on the following taxable chemicals (include lot numbers (if appli-
cable), quantities (in tons), and dates of sale or use):
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
Amount of section 4661 tax the undersigned taxpayer paid with respect to the taxable chemicals listed above: __________________
_______________________________________________
Tax quarter(s) during which tax payment(s) was made: _____________________________________________________________
_______________
The undersigned taxpayer has not received a credit or a refund, and will not claim a credit or a refund, with regard to the tax paid on
the taxable chemical(s) to which this certificate relates.
The undersigned taxpayer understands that it may be liable for the penalty under section 6701 of the Code (relating to aiding and
abetting an understatement of tax liability) if this is an erroneous certification.
The undersigned taxpayer understands that the fraudulent use of this certificate may subject the undersigned taxpayer and all parties
making any fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.
__________________________________________
Signature and date signed
__________________________________________
Printed or typed name of person signing
__________________________________________
Title of person signing
(iii) The amount of section 4661 tax
paid with respect to the animal feed chem-
ical; and
(iv) A certificate described in para-
graph (e) of this section, or a copy of such
certificate, that relates to the tax-paid ani-
mal feed chemical for which the claim is
being made.
(e) Certificate—(1) Overview. The
certificate to be provided with any claim
for credit or refund under paragraphs (a)
through (d) of this section consists of a
statement that is signed under penalties of
perjury by a person with authority to bind
the person that paid the section 4661 tax,
is in substantially the same form as the
model certificate provided in paragraph
(e)(2) of this section, and contains all of
the information necessary to complete the
model certificate.
(2) Model certificate.

Bulletin No. 2023–16 739 April 17, 2023
(f) Applicability date. This section
applies to sales or uses in calendar quar-
ters beginning on or after the [date of
publication of final regulations in the Fed-
eral Register].
Par. 7. Section 52.4662-5 is added to
read as follows:
§52.4662-5 Exports.
(a) Overview. Section 4662(e) of the
Internal Revenue Code (Code) provides
rules regarding taxable chemicals that are
exported. Paragraph (b) of this section
provides the circumstances under which
a manufacturer or producer may make a
tax-free sale for export. Paragraph (c) of
this section provides the circumstances
under which a credit or refund (without
interest) of the section 4661 tax is allowed
to the person that paid the section 4661
tax. Paragraph (d) of this section provides
the circumstances under which a credit
or refund (without interest) of the section
4661 tax is allowed to the exporter.
(b) Tax-free sales for export—(1) In
general. A manufacturer or producer of
a taxable chemical may sell a taxable
chemical tax free under section 4662(e)
(1) only if the person that purchases the
taxable chemical from the manufacturer
or producer (first purchaser) intends to
export the taxable chemical or resell it to
a second purchaser that intends to export
the taxable chemical. A manufacturer or
producer may not sell a taxable chemical
tax free to a first purchaser for resale to a
second purchaser if the second purchaser
does not intend to export the taxable
chemical itself but instead plans to sell
it to a third purchaser that will resell the
taxable chemical or export it. See para-
graph (b)(5)(i) of this section for the proof
required when the manufacturer or pro-
ducer is the exporter. See paragraph (b)(5)
(ii) of this section for the proof required
when the manufacturer or producer is not
the exporter.
(2) Exported taxable chemical returned
to the United States. If a taxable chemi-
cal is sold tax free by the manufacturer or
producer pursuant to section 4662(e)(1)
and paragraph (b) of this section and the
taxable chemical is subsequently returned
to the United States, the importer of the
taxable chemical is liable for the section
4661 tax when the importer sells or uses
the taxable chemical.
(3) Sale or resale to a purchaser located
outside the United States. To make a tax-
free sale of a taxable chemical for export
to a first purchaser that is located outside
the United States, the manufacturer or pro-
ducer must obtain from the first purchaser,
at the earlier of the time title to the taxable
chemical passes to the first purchaser or
the time of shipment, either:
(i) A written order or contract of sale
that states the manufacturer or producer
will ship the taxable chemical to a location
outside the United States; or
(ii) Where shipment is to be made to a
location within the United States, a state-
ment from the first purchaser showing:
(A) That the first purchaser is purchas-
ing the taxable chemical to fill existing or
future orders for shipment to a location
outside the United States, or for resale to
a second purchaser that is engaged in the
business of exporting and that will export
the taxable chemical; and
(B) That such taxable chemical will be
shipped to a location outside the United
States prior to any resale except for export.
(4) Cessation of exemption. The exemp-
tion provided in section 4662(e)(1) and
paragraph (b) of this section will cease to
apply on the first day following the close
of the 6-month period that begins on the
date the manufacturer or producer sold
the taxable chemical to the first purchaser,
or the date the manufacturer or producer
shipped the taxable chemical to the first
purchaser, whichever is earlier, unless the
manufacturer or producer receives proof
of export, in the form prescribed by para-
graph (b)(5) of this section, within such
6-month period. If, on the first day follow-
ing the close of such 6-month period, the
manufacturer or producer has not received
proof of export, in the form prescribed by
paragraph (b)(5) of this section, the man-
ufacturer or producer is liable for the tax
and tax attaches at that time.
(5) Proof of export—(i) Proof required
when the manufacturer or producer is the
exporter. The following constitutes proof
of export when the manufacturer or pro-
ducer is the exporter:
(A) A copy of the export bill of lading
issued by the delivering carrier;
(B) A certificate by the agent or rep-
resentative of the export carrier showing
actual exportation of the taxable chemical;
(C) A certificate of landing signed by a
customs officer of the foreign country to
which the taxable chemical is exported;
(D) Where the foreign country has no
customs administration, a statement of the
foreign consignee showing receipt of the
taxable chemical; or
(E) Where a department or agency of
the United States government is unable to
furnish any one of the foregoing types of
proof of exportation, a statement or certifi-
cation on department or agency letterhead,
executed by an authorized person, that the
taxable chemicals have been exported.
(ii) Statement of export required when
manufacturer or producer is not the
exporter—(A) In general. If the manu-
facturer or producer of a taxable chemical
is not the exporter of the taxable chemi-
cal, the manufacturer or producer must
have in its possession a statement from
the first purchaser stating that the tax-
able chemical was, in fact, exported by
the first purchaser, or was resold to a sec-
ond purchaser that exported the taxable
chemical. The manufacturer or producer
must receive such statement of export no
later than the close of the 6-month period
that begins on the earlier of the date the
manufacturer or producer sold the taxable
chemical to the first purchaser, or the date
the manufacturer or producer shipped the
taxable chemical to the first purchaser. The
statement of export consists of a statement
that is signed under penalties of perjury
by a person with authority to bind the first
purchaser, is in substantially the same
form as the model statement of export in
paragraph (b)(5)(ii)(B) of this section, and
contains all the information necessary to
complete the model statement. The state-
ment of export must be included as part of
the manufacturer or producer’s business
records.
(B) Model statement of export.

April 17, 2023 740 Bulletin No. 2023–16
for credit or refund. A claim for credit or
refund of section 4661 tax with respect to
a tax-paid chemical that is exported (or
with respect to a tax-paid chemical that
is used as material in the manufacture or
production of a substance that is a taxable
STATEMENT OF EXPORT
(To support tax-free sales of taxable chemicals under section 4662(e)(1)(B) of the Internal Revenue Code (Code).)
_________________________(Purchaser) certifies the following under penalties of perjury:
Name of Purchaser
Name of taxable chemical(s) purchased by Purchaser: ______________________________________________________________
_________________________________________________________________________________________________________
Purchaser purchased the taxable chemical(s) specified above tax free on _________________ (purchase date). The taxable chemicals
were thereafter exported.
Purchaser has in its possession proof of export with respect to the taxable chemicals identified in this statement. The proof of export
is: _______________________________________________________________________________________________________
_________________________________________________________________________________________________________
Purchaser will retain the business records needed to document the export of the taxable chemical(s) to which this statement applies
and will make such records available to the Internal Revenue Service.
Purchaser has not previously executed a statement with respect to the taxable chemical(s) identified in this certificate.
Purchaser understands that Purchaser may be liable for the penalty under section 6701 of the Code (relating to aiding and abetting an
understatement of tax liability) if this is an erroneous certification.
Purchaser understands that the fraudulent use of this statement may subject Purchaser and all parties making any fraudulent use of
this certificate to a fine or imprisonment, or both, together with the costs of prosecution.
__________________________________________
Printed or typed name of person signing
__________________________________________
Title of person signing
__________________________________________
Employer identification number
__________________________________________
Address of Purchaser
__________________________________________
Signature and date signed
(c) Credit or refund—(1) In general.
The person that paid the section 4661
tax with respect to a taxable chemical is
allowed a credit or refund (without inter-
est) if:
(i) Such chemical was exported by any
person; or
(ii) Such chemical was used as mate-
rial in the manufacture or production of a
substance that was exported by any person
and, at the time of export, was a taxable
substance (as defined in section 4672(a) of
the Code and §52.4672-1(b)(8)). See sec-
tion 4662(e)(2)(A).
(2) Conditions to allowance of claim

Bulletin No. 2023–16 741 April 17, 2023
substance at the time of export) is allowed
under section 4662(e)(2) and paragraph
(c) of this section only if the person that
paid the section 4661 tax establishes that:
(i) The person has repaid or agreed to
repay the amount of the section 4661 tax
to the person that exported the tax-paid
chemical (or the taxable substance man-
ufactured or produced with the tax-paid
chemical); or
(ii) The person has obtained the written
consent of the exporter to the allowance of
the credit or the making of the refund; and
(iii) The person provides the support-
ing information described in paragraph (c)
(3) of this section.
(3) Supporting information required.
Each claim for credit or refund with respect
to a tax-paid chemical that is exported (or
with respect to a tax-paid chemical that
is used as material in the manufacture or
production of a substance that is a tax-
able substance at the time of export) must
include the following information:
(i) The name of the tax-paid chemical
to which the claim relates and the total
number of tons of the tax-paid chemical
exported during the period covered by the
claim (in the case of a tax-paid chemical
used to manufacture or produce a taxable
substance, the claim must also include the
name of each taxable substance and the
number of tons of each taxable substance
exported during the period covered by the
claim);
(ii) The amount of section 4661 tax
paid with respect to the tax-paid chem-
ical (in the case of a taxable substance,
the amount of section 4661 tax paid with
respect to each tax-paid chemical used in
the manufacture or production of the sub-
stance); and
(iii) Proof of export of the taxable
chemical (or the taxable substance) in the
form prescribed by paragraph (b)(5) of
this section.
(d) Credit or refund directly to
exporter—(1) In general. The exporter is
allowed a credit or refund (without inter-
est), provided the conditions to allowance
in paragraph (d)(2) of this section are sat-
isfied. See section 4662(e)(3).
(2) Conditions to allowance. Any sec-
tion 4661 tax paid on a taxable chemical
(or on any taxable chemical used as mate-
rial in the manufacture or production of
a taxable substance) may be credited or
refunded (without interest) to the exporter
pursuant to section 4662(e)(3) and para-
graph (d) of this section only if:
(i) The person that paid the section
4661 tax waives the right to claim a credit
or refund of the section 4661 tax; and
(ii) The exporter provides the support-
ing information described in paragraph (d)
(3) of this section.
(3) Supporting information required.
Each claim for credit or refund by the
exporter must include the following
information:
(i) The name of the tax-paid chemical
to which the claim relates and the total
number of tons of the tax-paid chemical
exported during the period covered by
the claim (or in the case of a taxable sub-
stance, the name of the taxable substance
to which the claim relates, the name of
each tax-paid chemical used as material
in the manufacture or production of the
taxable substance, and the total number
of tons of each tax-paid chemical used as
material in the manufacture or production
of the taxable substance that was exported
during the period covered by the claim);
(ii) Proof of export of the tax-paid
chemical (or the taxable substance) in the
form prescribed by paragraph (b)(5) of
this section; and
(iii) A statement, signed under penal-
ties of perjury by the person that paid the
section 4661 tax, providing:
(A) That the person that paid the tax
waives the right to claim a credit or refund
of the section 4661 tax;
(B) The amount of section 4661 tax
the person paid on the sale of the taxable
chemical (or on the sale or use of each
taxable chemical used to manufacture or
produce the taxable substance); and
(C) The date the person paid the sec-
tion 4661 tax.
(e) Applicability date. This sec-
tion applies to sales or uses in calendar
quarters beginning on or after [date of
publication of final regulations in the Fed-
eral Register].
Par. 8. Section 52.4671-1 is added to
read as follows:
§52.4671-1 Imposition of tax.
(a) In general. Section 4671(a) of the
Internal Revenue Code (Code) imposes
an excise tax on any taxable substance
sold or used by the importer of the taxable
substance.
(b) Person liable for tax. The importer
of a taxable substance is the person liable
for the section 4671 tax.
(c) Attachment of tax. The section 4671
tax attaches at the time the importer first
sells or uses the taxable substance.
(d) Procedural rules. Part 40 of this
chapter provides rules related to filing
excise tax returns, making semimonthly
deposits of excise tax, making payments
of excise tax, and other procedural rules.
See §§52.0-1 and 40.0-1(a) of this chapter.
Each business unit that has, or is required
to have, a separate employer identification
number is treated as a separate person for
purposes of filing excise tax returns, mak-
ing semimonthly deposits of excise tax,
and making payments of excise tax. See
§40.0-1(d) of this chapter.
(e) Amount of tax—(1) In general.
Except as provided in paragraph (e)(2) of
this section, the amount of section 4671
tax with respect to any taxable substance is
the amount of section 4661 tax that would
have been imposed on the taxable chemi-
cals used as materials in the manufacture
or production of the taxable substance if
the taxable chemicals had been sold in the
United States for use in the manufacture
or production of the taxable substance.
See section 4671(b)(1).
(2) Special rules. If the importer does
not furnish sufficient information to the
Secretary of the Treasury or her delegate
(Secretary) to determine the amount of
section 4671 tax imposed on any taxable
substance, the amount of section 4671
tax is 10 percent of the appraised value
of the taxable substance at the time the
substance was entered into the United
States for consumption, use, or warehous-
ing. See section 4671(b)(2). Alternatively,
the Secretary may prescribe a tax rate
for any taxable substance in lieu of the
amount prescribed in section 4671(b)(2).
The tax rate prescribed by the Secretary
equals the amount of section 4671 tax that
would have been imposed if the taxable
substance were produced using the pre-
dominant method of production of such
substance using a stoichiometric mate-
rial consumption equation that assumes a
100-percent yield. See section 4671(b)(3).
Importers of taxable substances are not
required to use the rate or rates prescribed

April 17, 2023 742 Bulletin No. 2023–16
by the Secretary and may instead calculate
the amount of section 4671 tax pursuant to
section 4671(b)(1) and §52.4671-1(e)(1).
(3) Example. An importer sells a sub-
stance that is a taxable substance listed
in section 4672(a)(3). The taxable chem-
ical, acetylene, constitutes, by weight, 19
percent of the materials used to produce
the taxable substance. Section 4671 tax
attaches at the time of the importer’s sale
of the taxable substance. The Secretary
has prescribed a tax rate for the taxable
substance pursuant to section 4671(b)(3).
The importer may calculate the amount
of section 4671 tax pursuant to section
4671(b)(1), or use the rate prescribed by
the Secretary to calculate the amount of
section 4671 tax imposed on the import-
er’s sale of the taxable substance.
(f) Exemption for substances taxed
under sections 4611 and 4661. No section
4671 tax is imposed on the importer’s sale
or use of any taxable substance if tax is
imposed on such sale or use under section
4611 or 4661 of the Code. See section
4671(c).
(g) Applicability date. This section
applies to calendar quarters beginning on
or after [date of publication of final regu-
lations in the Federal Register].
Par. 9. Section 52.4671-2 is added to
read as follows:
§52.4671-2 Certain fertilizer, fuel, and
animal feed uses.
(a) In general. Section 4671(d) of the
Internal Revenue Code (Code) provides
that rules similar to section 4662(b)(2) of
the Code (pertaining to fertilizer), section
4662(b)(5) (pertaining to motor fuel), and
section 4662(b)(9) (pertaining to animal
feed) apply with respect to taxable sub-
stances used or sold for use as described
in section 4662(b)(2), (5), and (9).
(b) Tax-free sales—(1) In general. No
section 4671 tax is imposed on a taxable
substance used or sold for use as described
in section 4662(b)(2), (5), or (9), if all tax-
able chemicals used as materials in the
manufacture or production of such sub-
stance would have been exempt under
section 4662(b)(2), (5), or (9) if such
taxable chemicals had been sold in the
United States for use in the manufacture
or production of the taxable substance.
To make a tax-free sale of a taxable sub-
stance pursuant to section 4671(d)(1), the
importer (or, in the case of resales, the
reseller) of the taxable substance must
obtain an unexpired exemption certificate
from the purchaser, in the form prescribed
in paragraph (b)(3) of this section, prior
to or at the time of sale, and the importer
or reseller must have no reason to believe
that any information in the certificate
regarding the use of the taxable substance
is false. If the importer or reseller does not
obtain an unexpired exemption certificate
by the time of the sale, or if the importer
or reseller has reason to believe that any
information in the certificate regarding the
use of the substance is false, the importer
or reseller is liable for the full amount
of the section 4671 tax. However, if the
purchaser subsequently uses the taxable
substance as described in section 4662(b)
(2), (5), or (9), the purchaser may file a
claim for credit or refund pursuant to sec-
tion 4671(d)(2) and paragraph (c) of this
section.
(2) Tax-free sales not available in
certain situations. The provisions of para-
graph (b)(1) of this section apply only if
all taxable chemicals used as materials in
the manufacture or production of a taxable
substance would have been exempt under
section 4662(b)(2), (5), or (9) if such
taxable chemicals had been sold in the
United States for use in the manufacture
or production of the taxable substance.
Section 4671 tax is imposed on a taxable
substance used or sold for use if the tax-
able chemicals used as materials in the
manufacture or production of such taxable
substance consist of one or more taxable
chemicals that would have been exempt
under section 4662(b)(2), (5), or (9), and
one or more taxable chemicals that would
not have been exempt under section
4662(b)(2), (5), or (9). If the purchaser
subsequently uses the taxable substance
as described in section 4662(b)(2), (5),
or (9), the purchaser may file a claim for
credit or refund of the section 4671 tax
paid on the taxable chemicals that would
have been exempt under section 4662(b)
(2), (5), or (9) pursuant to section 4671(d)
(2) and paragraph (c) of this section and
were used as materials in the manufacture
or production of the taxable substance.
(3) Exemption certificate—(i) Over-
view. The exemption certificate consists
of a statement that is signed under penal-
ties of perjury by a person with authority
to bind the purchaser, is in substantially
the same form as the model certificate in
paragraph (b)(3)(ii) of this section, and
contains all of the information neces-
sary to complete such model certificate.
A new certificate must be given if any
information in the certificate changes. The
certificate expires no later than one year
from the effective date specified in the
certificate. The certificate may be included
as part of any business records normally
used to document a sale. The Internal
Revenue Service (IRS) may withdraw the
right of a purchaser of a taxable substance
to provide a certificate under this section
if the purchaser uses the taxable substance
to which a certificate relates other than as
stated in the certificate.
(ii) Model certificate.

Bulletin No. 2023–16 743 April 17, 2023
EXEMPTION CERTIFICATE
(To support tax-free sales of taxable substances under section 4671(d)(1) of the Internal Revenue Code (Code).)
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
Name, address, and employer identification number of seller
____________________________(Purchaser) certifies the following under penalties of perjury:
Name of Purchaser
The sale(s) to which this certificate applies are for (mark below):
_______ Sold for use by Purchaser as described in section 4662(b)(2) (qualified fertilizer use), section 4662(b)(5) (qualified fuel use),
or section 4662(b)(9) (qualified animal feed use) of the Code
_______ Sold for resale by Purchaser for use, or resale for ultimate use, in a qualified use
The taxable substance(s) to which this certificate applies will be used (mark below):
________ Qualified fertilizer use
________ Qualified fuel use
________ Qualified animal feed use
_________________________________________________________________________________________________________
Name of taxable substance(s) to be purchased by Purchaser
This certificate applies to:
1. Percentage of Purchaser’s purchases _________________ between _______________ (effective date) and
____________ (expiration date) (period not to exceed one year after the effective date) under account or order number(s)
____________________________; or
2. A single purchase invoice or delivery ticket number _________________________.
If Purchaser sells or uses the taxable substance to which this certificate relates for a nonqualified sale or use, Purchaser will be treated
as the importer of the taxable substance and will be liable for the tax imposed by section 4671.
Purchaser will provide a new certificate to the seller if any information in this certificate changes.
Purchaser understands that Purchaser may be liable for the penalty under section 6701 of the Code (relating to aiding and abetting an
understatement of tax liability) if this is an erroneous certification.
Purchaser understands that the fraudulent use of this certificate may subject Purchaser and all parties making any fraudulent use of
this certificate to a fine or imprisonment, or both, together with the costs of prosecution.
__________________________________________
Printed or typed name of person signing
__________________________________________
Title of person signing
__________________________________________
Employer identification number
__________________________________________
Address of Purchaser
__________________________________________
Signature and date signed

April 17, 2023 744 Bulletin No. 2023–16
(c) Credits and refunds—(1) In gen-
eral. If any section 4671 tax was paid with
respect to a taxable substance used or sold
for use as described in section 4662(b)(2),
(5), or (9), the portion of the tax attrib-
utable to any taxable chemical used as
material in the manufacture or production
of such substance that would have been
exempt under section 4662(b)(2), (5), or
(9) if the taxable chemical had been sold
in the United States will be allowed as a
credit or refund (without interest) to the
person using the substance in the same
manner as if it were an overpayment of
section 4671 tax. See sections 4671(d)(2)
and 4662(d). Such person may file a claim
for credit or refund of the amount of the
overpayment, provided the conditions to
allowance set forth in paragraph (c)(2) of
this section are satisfied. See paragraph (c)
(3) of this section for the supporting infor-
mation that must be included in a claim
for credit or refund pursuant to section
4671(d)(2).
(2) Conditions to allowance of a claim
for credit or refund. A claim for credit
or refund of section 4671 tax is allowed
under section 4671(d)(2) and this section
only if:
(i) A section 4671 tax was paid to the
Internal Revenue Service and not credited
or refunded;
(ii) After the imposition of section
4671 tax, a person used the taxable sub-
stance as described in section 4662(b)(2),
(5), or (9);
(iii) The person using the taxable sub-
stance has filed a timely claim for credit
or refund that includes the information
required under paragraph (c)(3) of this
section; and
(iv) The person using the taxable
substance has a certificate, in the form
prescribed in paragraph (c)(4) of this sec-
tion, from the person that paid the section
4671 tax. The claimant must have a sepa-
rate certificate for each taxable substance
to which the claim relates.
(3) Supporting information required.
Each claim for credit or refund must
include the following information:
(i) The name of the taxable substance
to which the claim relates and the total
number of tons of the taxable substance
used as described in section 4662(b)(2),
(5), or (9) during the period covered by
the claim;
(ii) The name of any taxable chemi-
cals used as material in the manufacture
or production of the taxable substance
that would have been exempt under sec-
tion 4662(b)(2), (5), or (9) if the taxable
chemicals had been sold in the United
States;
(iii) The type of qualified use (fertil-
izer, fuel, or animal feed);
(iv) The total amount of section 4671
tax paid on the taxable substance under
section 4671(a);
(v) If the amount of section 4671
tax was calculated pursuant to section
4671(b)(1) and §52.4671-1(e)(1), the
rate of tax and conversion factors for any
taxable chemicals used as material in the
manufacture or production of the taxable
substance that would have been exempt
under section 4662(b)(2), (5), or (9) if the
taxable chemicals had been sold in the
United States; and
(vi) A certificate described in paragraph
(c)(4) of this section, or a copy of such
certificate, that relates to the taxable sub-
stance for which the claim is being made.
(4) Certificate—(i) Overview. The
certificate to be provided with regard to
claims for credit or refund under this sec-
tion consists of a statement that is signed
under penalties of perjury by a person
with authority to bind the person that paid
the section 4671 tax, is in substantially
the same form as the model certificate
provided in paragraph (c)(4)(ii) of this
section, and contains all of the informa-
tion necessary to complete the model
certificate.
(ii) Model certificate.
CERTIFICATE TO SUPPORT A CLAIM FOR CREDIT OR REFUND
(To support claims for credit or refund under section 4671(d)(2) of the Internal Revenue Code (Code).)
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
Name, address, and employer identification number of person that paid the tax imposed by section 4671 of the Code (section 4671
tax)
The undersigned taxpayer hereby certifies the following under penalties of perjury:
The undersigned taxpayer reported and paid the section 4671 tax on the following taxable substance (include lot numbers (if appli-
cable) and the date(s) of sale or use): ___________________________________________________________________________
Number of tons of the taxable substance on which tax was paid:________________________
Name of any taxable chemicals used as material in the manufacture or production of the taxable substance:
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________

Bulletin No. 2023–16 745 April 17, 2023
Total amount of section 4671 tax the undersigned taxpayer paid with respect to the taxable substance listed above: ______________
______________________________________________________________
Rate of tax for the taxable substance listed above (complete only if the amount of tax was calculated pursuant to section 4671(b)(1)):
____________________________________________________________________________
Conversion factor for each taxable chemical listed above (complete only if the amount of tax was calculated pursuant to section
4671(b)(1)): ____________________________________________________________________________
Tax quarter(s) during which tax payment was made: _______________________________________________________________
_____________
The undersigned taxpayer has not received a credit or a refund, and will not claim a credit or a refund, with regard to the tax paid on
the taxable substance to which this certificate relates.
The undersigned taxpayer understands that it may be liable for the penalty under section 6701 of the Code (relating to aiding and
abetting an understatement of tax liability) if this is an erroneous certification.
The undersigned taxpayer understands that the fraudulent use of this certificate may subject the undersigned taxpayer and all parties
making any fraudulent use of this certificate to a fine or imprisonment, or both, together with the costs of prosecution.
__________________________________________
Signature and date signed
__________________________________________
Printed or typed name of person signing
__________________________________________
Title of person signing
(d) Applicability date. This section
applies to calendar quarters beginning on
or after [date of publication of final regu-
lations in the Federal Register].
Par. 10. Section 52.4672-1 is added to
read as follows:
§52.4672-1 Definitions.
(a) Overview. This section provides
definitions for purposes of sections 4671
and 4672 of the Internal Revenue Code
(Code), §§52.4671-1 and 52.4671-2, this
section, and §52.4672-2.
(b) Definitions—(1) Conversion fac-
tor. The term conversion factor means the
ratio of the weight of an individual taxable
chemical used in the production of a sub-
stance to the total weight of the substance.
(2) Entry for consumption, use, or
warehousing. The term entry for consump-
tion, use, or warehousing has the meaning
given such term by §52.4662-1(c)(2).
(3) Importer—(i) In general. The term
importer means the person entering the
taxable substance for consumption, use,
or warehousing. See section 4662(a)(3). If
the person entering the taxable substance
for consumption, use, or warehousing is
merely acting as an agent or a customs
broker for another person, then the agent
or customs broker is not the importer
and the importer is the first person in the
United States to sell or use the taxable sub-
stance after entry of the taxable substance
for consumption, use, or warehousing.
(ii) Drop ship businesses. If a drop ship
business in the United States purchases
or otherwise arranges for a person out-
side the United States to ship a taxable
substance directly to a purchaser in the
United States, the drop ship business is
the importer of the taxable substance. If
a drop ship business outside the United
States purchases or otherwise arranges
for a person outside the United States to
ship a taxable substance directly to a pur-
chaser in the United States, the purchaser
in the United States is the importer of the
taxable substance. With regard to any sale
of a taxable substance, the term drop ship
business means a person that sells the tax-
able substance or arranges for purchasers
to purchase the taxable substance, and
uses a third party to fill orders by shipping
the taxable substance directly to the pur-
chaser. The determination of whether a
person is a drop ship business is made on
a sale-by-sale basis.
(4) Predominant method of production.
The term predominant method of produc-
tion means the method used to produce
the greatest number of tons of a particular
substance worldwide, relative to the total
number of tons of the substance produced
worldwide.
(5) Sale. The term sale means the
transfer of title or substantial incidents of
ownership (whether or not delivery to, or

April 17, 2023 746 Bulletin No. 2023–16
payment by, the purchaser has been made)
in a taxable substance for a consideration,
which may include, but is not limited to,
money, services, or property.
(6) Section 4671 tax. The term section
4671 tax means the excise tax imposed by
section 4671(a) of the Code on any taxable
substance sold or used by the importer of
the taxable substance.
(7) Taxable chemical. The term taxable
chemical has the meaning given such term
by section 4662(a)(1) of the Code and sec-
tion §52.4662-1(b).
(8) Taxable substance. The term tax-
able substance means any substance,
which at the time of sale or use by the
importer, is listed in section 4672(a)(3)
or has been added to the list of taxable
substances pursuant to section 4672(a)
(2) or (4). The term does not include any
substance that the Secretary of the Trea-
sury or her delegate has removed from
the list of taxable substances through
the process described in section 4672(a)
(2) or (4). A substance that satisfies the
weight or value test, but that is not listed
in section 4672(a)(3) and has not been
added to the list of taxable substances
pursuant to section 4672(a)(2) or (4), is
not a taxable substance.
(9) Use. A taxable substance is used
when it is consumed, when it functions as
a catalyst, when its chemical composition
changes, when it is used in the manufac-
ture or production of another substance
(including by mixing or combining the
taxable substance with other substances),
or when it is put into service in a trade or
business for the production of income.
The loss or destruction of a taxable sub-
stance through spillage, fire, natural
degradation, or other casualty is not a use.
The mere manufacture or production of a
taxable substance is not a use of that tax-
able substance.
(10) United States. The term United
States has the meaning given such term by
section 4612(a)(4) of the Code. See sec-
tions 4672(b)(2) and 4662(a)(2).
(11) Weight or value test. The term
weight or value test means the test under
section 4672(a)(2)(B) for determining
whether taxable chemicals constitute more
than 20 percent of the weight or more than
20 percent of the value of the materials
used to produce a substance, based on the
predominant method of production.
(c) Applicability date. This section
applies to calendar quarters beginning on
or after [date of publication of final regu-
lations in the Federal Register].
Par. 11. Section 52.4672-2 is added to
read as follows:
§52.4672-2 List of taxable substances.
(a) Overview. Section 4672(a)(3)
of the Internal Revenue Code (Code)
provides the initial list of taxable sub-
stances. Section 4672(a)(2) and (4)
provides mechanisms by which sub-
stances may be added to or removed
from the list. Therefore, the list of tax-
able substances is subject to change.
The Internal Revenue Service (IRS)
will maintain the current list of taxable
substances at https://www.irs.gov/busi-
nesses/small-businesses-self-employed/
superfund-chemical-excise-taxes.
(b) Requests to modify the list of tax-
able substances—(1) In general. An
importer or exporter of any substance,
or a person other than an importer or
exporter (interested person), may peti-
tion to add a substance to or remove a
substance from the list of taxable sub-
stances. See section 4672(a)(2). The
procedures governing the exclusive pro-
cess by which importers, exporters, and
interested persons may request modifi-
cations to the list of taxable substances
are provided in guidance published
in the Internal Revenue Bulletin. See
§601.601(d) of this chapter.
(2) Synthetic organic substances. A
synthetic organic substance is eligible for
addition to the list of taxable substances
through the process described in para-
graph (b)(1) of this section unless such
substance is a textile fiber (other than a
polymer in extruded fiber form), yarn,
or staple, or a fabricated product that is
molded, formed, woven, or otherwise fin-
ished into an end-use product. However,
such substance may be added to the list
of taxable substances only if it meets the
weight or value test.
(3) Inorganic substances. An inorganic
substance is eligible for addition to the list
of taxable substances through the process
described in paragraph (b)(1) of this sec-
tion unless it is a fabricated product that
is molded, formed, or otherwise finished
into an end-use product. However, such
substance may be added to the list of tax-
able substances only if it meets the weight
or value test.
(c) Applicability date. This section
applies to calendar quarters beginning on
or after [date of publication of final regu-
lations in the Federal Register].
Douglas W. O’Donnell,
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register March
27, 2023, 11:15a.m., and published in the issue of the
Federal Register for March 29, 2023, 88 FR 18446)
Notice of Proposed
Rulemaking
Section 30D New Clean
Vehicle Credit
REG-120080-22
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking.
SUMMARY: This document contains
proposed regulations regarding the Fed-
eral income tax credit under the Inflation
Reduction Act of 2022 for the purchase of
qualifying new clean vehicles, including
new plug-in electric vehicles powered by
an electric battery meeting certain require-
ments and new qualified fuel cell vehicles.
These proposed regulations would affect
eligible taxpayers who purchase new
vehicles that qualify for the credit.
DATES: Comments and Requests for
a Public Hearing: Written or electronic
comments and requests for a public hear-
ing must be received by June 16, 2023.
Requests for a public hearing must be
submitted as prescribed in the “Com-
ments and Requests for a Public Hearing”
section.
Applicability Date of New Criti-
cal Mineral and Battery Component
Requirements: See section III.D of the
“Background” section for a discussion
of the applicability date of the new crit-

Bulletin No. 2023–16 747 April 17, 2023
ical mineral and battery component
requirements.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic submis-
sions via the Federal eRulemaking Portal
at https://www.regulations.gov (indicate
IRS and REG-120080-22) by following
the online instructions for submitting
comments. Once submitted to the Federal
eRulemaking Portal, comments cannot be
edited or withdrawn. The Department of
the Treasury (Treasury Department) and
the IRS will publish for public availabil-
ity any comments submitted, whether
electronically or on paper, to the IRS’s
public docket. Send paper submissions
to: CC:PA:LPD:PR (REG-120080-22),
Room 5203, Internal Revenue Service,
P.O. Box 7604, Ben Franklin Station,
Washington, DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, the Office of Associate Chief
Counsel (Passthroughs & Special Indus-
tries) at (202) 317-6853 (not a toll-free
number); concerning submissions of com-
ments and requests for a public hearing,
Vivian Hayes at (202) 317-5306 (not a
toll-free number) or by email to publi-
chearings@irs.gov (preferred).
SUPPLEMENTARY INFORMATION:
Background
I. Overview
Section 30D(a) of the Internal Revenue
Code (Code) provides a credit (section
30D credit) against the tax imposed by
chapter 1 of the Code (chapter 1) with
respect to each new clean vehicle that a
taxpayer purchases and places in service.
The credit is determined and allowable
with respect to the taxable year in which
the taxpayer places the new clean vehi-
cle in service. This document contains
proposed amendments to the Income Tax
Regulations (26 CFR part 1) under section
30D of the Code (proposed regulations).
To date, no regulations have been pro-
posed pursuant to section 30D.
Section 30D was originally enacted by
section 205(a) of the Energy Improvement
and Extension Act of 2008, Division B of
Public Law 110-343, 122 Stat. 3765, 3835
(October 3, 2008), to provide a credit for
the purchase and placing in service of
new qualified plug-in electric drive motor
vehicles. Section 30D has been amended
several times since its enactment, most
recently by section 13401 of Public Law
117-169, 136 Stat. 1818 (August 16,
2022), commonly known as the Inflation
Reduction Act of 2022 (IRA).
The amount of the section 30D credit
is treated as a personal credit or a general
business credit depending on the character
of the vehicle. In general, the section 30D
credit is treated as a personal credit allow-
able under subpart A of the Code. Section
30D(c)(2). However, the amount of the
section 30D credit that is attributable to
property that is of a character subject to an
allowance for depreciation is treated as a
current year business credit under section
38(b) instead of being allowed under sec-
tion 30D(a). Section 30D(c)(1). Section
38(b)(30) lists as a current year business
credit the portion of the section 30D credit
to which section 30D(c)(1) applies. The
IRA did not amend section 30D(c)(1) or
(2).
II. IRA Amendments to Section 30D
The IRA made a number of amend-
ments to section 30D. In general, the
purpose of these amendments is to pro-
mote the purchase and use of new clean
vehicles by lower and middle-income
Americans, to promote resilient supply
chains and domestic manufacturing, to
strengthen supply chains with trusted trad-
ing partners, to protect against improper
credit claims, and to achieve signifi-
cant carbon emissions reductions. These
amendments are specifically described in
the following subsections.
A. Credit amount and critical mineral
and battery component requirements
The IRA amends the rules for determin-
ing the amount of the section 30D credit.
Prior to the amendments to section 30D
made by section 13401(a) and (e) of the IRA
becoming applicable, the amount of the sec-
tion 30D credit is calculated based on the
vehicle’s battery capacity. The base amount
is $2,500, plus $417 for a battery with a
capacity of at least 5 kilowatt hours, and an
additional $417 for each kilowatt hour of
capacity in excess of 5 kilowatt hours, up
to a maximum credit of $7,500 per vehi-
cle. Section 13401(a) of the IRA amends
section 30D(b) of the Code to provide a
maximum credit of $7,500 per vehicle,
consisting of $3,750 in the case of a vehicle
that meets certain requirements relating to
critical minerals and $3,750 in the case of
a vehicle that meets certain requirements
relating to battery components. The amend-
ments made by section 13401(a) of the IRA
apply to vehicles placed in service after the
date on which the Secretary of the Treasury
or her delegate (Secretary) issues proposed
guidance described in new section 30D(e)
(3)(B) of the Code relating to the new crit-
ical minerals requirements described in
new section 30D(e)(1)(A) (Critical Min-
erals Requirement) and the new battery
components requirements described in new
section 30D(e)(2)(A) (Battery Components
Requirement). See section 13401(k)(3) of
the IRA.
New section 30D(e)(1)(A) provides
that the Critical Minerals Requirement
with respect to the battery from which
the electric motor of a vehicle draws elec-
tricity is satisfied if the percentage of the
value of the applicable critical minerals (as
defined in section 45X(c)(6)) contained
in such battery that were (i) extracted or
processed in the United States, or in any
country with which the United States has
a free trade agreement in effect, or (ii)
recycled in North America, is equal to or
greater than the applicable percentage (as
certified by the qualified manufacturer, in
such form or manner as prescribed by the
Secretary). The applicable percentage for
the Critical Minerals Requirement is set
forth in section 30D(e)(1)(B)(i) through
(v) of the Code and varies based on when
the vehicle is placed in service. In the case
of a vehicle placed in service after the
date of issuance of the proposed guidance
described in new section 30D(e)(3)(B) of
the Code and before January 1, 2024, the
applicable percentage is 40 percent. In the
case of a vehicle placed in service during
calendar year 2024, 2025, and 2026, the
applicable percentage is 50 percent, 60
percent, and 70 percent, respectively. In
the case of a vehicle placed in service
after December 31, 2026, the applicable
percentage is 80 percent.

April 17, 2023 748 Bulletin No. 2023–16
New section 30D(e)(2)(A) provides
that the Battery Components Requirement
with respect to the battery from which the
electric motor of a vehicle draws electric-
ity is satisfied if the percentage of the value
of the components contained in such bat-
tery that were manufactured or assembled
in North America is equal to or greater
than the applicable percentage (as certi-
fied by the qualified manufacturer, in such
form or manner as prescribed by the Sec-
retary). The applicable percentage for the
Battery Components Requirement is set
forth in section 30D(e)(2)(B)(i) through
(vi) of the Code and varies based on when
the vehicle is placed in service. In the case
of a vehicle placed in service after the
date of issuance of the proposed guidance
described in new section 30D(e)(3)(B) of
the Code and before January 1, 2024, the
applicable percentage is 50 percent. In the
case of a vehicle placed in service during
calendar year 2024 or 2025, the applicable
percentage is 60 percent. In the case of a
vehicle placed in service during calendar
year 2026, 2027, and 2028, the applicable
percentage is 70 percent, 80 percent, and
90 percent, respectively. In the case of a
vehicle placed in service after December
31, 2028, the applicable percentage is 100
percent.
B. New clean vehicle definition
The IRA amends the definition of the
vehicles that may qualify for the section
30D credit. Section 13401(c) of the IRA
amends section 30D(d) of the Code by
making the credit applicable to “new
clean vehicles,” instead of “new qualified
plug-in electric drive motor vehicles,”
applicable to vehicles placed in service
after December 31, 2022. As amended by
section 13401(c) and (g)(2) of the IRA,
section 30D(d)(1) of the Code defines a
“new clean vehicle” as a motor vehicle
that satisfies the eight requirements set
forth in section 30D(d)(1)(A) through
(H) of the Code: the original use of the
motor vehicle must commence with the
taxpayer; the motor vehicle must be
acquired for use or lease by the taxpayer
and not for resale; the motor vehicle must
be made by a qualified manufacturer; the
motor vehicle must be treated as a motor
vehicle for purposes of title II of the Clean
Air Act; the motor vehicle must have a
gross vehicle weight rating of less than
14,000 pounds; the motor vehicle must
be propelled to a significant extent by an
electric motor which draws electricity
from a battery that has a capacity of not
less than 7 kilowatt hours, and is capa-
ble of being recharged from an external
source of electricity; the final assembly
of the motor vehicle must occur within
North America; and the person who sells
any vehicle to the taxpayer must furnish
a report to the taxpayer and to the Secre-
tary, at such time and in such manner as
the Secretary provides, containing specif-
ically enumerated items.
With respect to the requirement that the
motor vehicle must be made by a quali-
fied manufacturer, the IRA creates new
requirements for manufacturers of vehi-
cles eligible for the section 30D credit
applicable to vehicles placed in service
after December 31, 2022. As amended by
section 13401(c) the IRA, section 30D(d)
(3) of the Code defines a “qualified man-
ufacturer” as any manufacturer (within
the meaning of the regulations prescribed
by the Administrator of the Environmen-
tal Protection Agency for purposes of the
administration of title II of the Clean Air
Act (42 U.S.C. 7521 et seq.)) that enters
into a written agreement with the Secretary
under which such manufacturer agrees to
make periodic written reports to the Sec-
retary (at such times and in such manner
as the Secretary may provide) providing
vehicle identification numbers and such
other information related to each vehicle
manufactured by such manufacturer as the
Secretary may require.
The IRA provides that certain fuel cell
vehicles may qualify for the section 30D
credit. Section 13401(c) of the IRA adds
new section 30D(d)(6) to the Code, which
includes in the definition of the term
“new clean vehicle” applicable to vehi-
cles placed in service after December 31,
2022, any “new qualified fuel cell motor
vehicle” (as defined in section 30B(b)(3))
that meets the requirements under section
30D(d)(1)(G) and (H) (North Ameri-
can final assembly and seller reporting
requirements).
The IRA disqualifies certain vehicles
from the section 30D credit if the battery
of the vehicle contains critical minerals
or battery components from a foreign
entity of concern. As amended by section
13401(e) of the IRA, section 30D(d)(7)
of the Code excludes, after certain speci-
fied dates, vehicles placed in service with
batteries containing certain critical miner-
als or battery components from a foreign
entity of concern from the definition of
the term “new clean vehicle.” In particu-
lar, amended section 30D(d)(7) provides
that the term “new clean vehicle” does not
include (A) any vehicle placed in service
after December 31, 2024, with respect to
which any of the applicable critical miner-
als contained in the battery of such vehicle
(as described in section 30D(e)(1)(A))
were extracted, processed, or recycled
by a foreign entity of concern (as defined
in section 40207(a)(5) of the Infrastruc-
ture Investment and Jobs Act (42 U.S.C.
18741(a)(5))), or (B) any vehicle placed
in service after December 31, 2023, with
respect to which any of the components
contained in the battery of such vehicle (as
described in section 30D(e)(2)(A)) were
manufactured or assembled by a foreign
entity of concern (as so defined). These
rules will be addressed in future guidance.
C. Final assembly requirement
As described in section II.B of the
Background section of this preamble,
the IRA requires new clean vehicles to
undergo final assembly in North America
to be eligible for the section 30D credit.
This requirement is applicable to vehicles
sold after August 16, 2022. See section
13401(k)(2) of the IRA. New section
30D(d)(5) defines “final assembly” as the
process by which a manufacturer produces
a new clean vehicle at, or through the use
of, a plant, factory, or other place from
which the vehicle is delivered to a dealer
or importer with all component parts nec-
essary for the mechanical operation of the
vehicle included with the vehicle, whether
or not the component parts are perma-
nently installed in or on the vehicle.
D. Elimination of phaseout
The IRA eliminates the phaseout of
the section 30D credit for vehicles made
by manufacturers that have sold at least
200,000 vehicles eligible for the credit for
use in the United States after December
31, 2009. Pursuant to section 13401(d)
of the IRA this limitation does not apply

Bulletin No. 2023–16 749 April 17, 2023
to vehicles sold after December 31, 2022.
See section 13401(k)(5) of the IRA.
E. Special rules
The IRA adds four new special rules
under section 30D(f) applicable to vehi-
cles placed in service after December 31,
2022. First, section 30D(f)(8) permits
only one section 30D credit to be claimed
for each vehicle identification number
(VIN). Second, section 30D(f)(9) requires
taxpayers to include on the taxpayer’s
return for the taxable year the VIN of the
vehicle for which the section 30D credit is
claimed. Third, section 30D(f)(10) denies
the section 30D credit to certain high-in-
come taxpayers. More specifically, section
30D(f)(10)(A) provides that no credit
is allowed for any taxable year if (i) the
lesser of (I) the modified adjusted gross
income of the taxpayer for such taxable
year, or (II) the modified adjusted gross
income of the taxpayer for the preceding
taxable year, exceeds (ii) the threshold
amount (Modified AGI Limitation). New
section 30D(f)(10)(B) provides that the
threshold amount is (i) in the case of a joint
return or a surviving spouse (as defined
in section 2(a) of the Code), $300,000,
(ii) in the case of a head of household
(as defined in section 2(b) of the Code),
$225,000, and (iii) in the case of any other
taxpayer, $150,000. New section 30D(f)
(10)(C) defines “modified adjusted gross
income” as adjusted gross income (AGI)
increased by any amount excluded from
gross income under sections 911, 931, or
933.
Fourth, section 30D(f)(11) excludes
from the section 30D credit vehicles that
exceed certain manufacturer’s suggested
retail price thresholds. New section
30D(f)(11)(A) provides that no credit is
allowed for a vehicle with a manufactur-
er’s suggested retail price in excess of the
applicable limitation. New section 30D(f)
(11)(B) provides that the applicable lim-
itation for each vehicle classification is as
follows: in the case of a van, $80,000; in
the case of a sport utility vehicle, $80,000;
in the case of a pickup truck, $80,000; and
in the case of any other vehicle, $55,000.
New section 30D(f)(11)(C) authorizes
the Secretary to prescribe such regula-
tions or other guidance as the Secretary
determines necessary to determine vehi-
cle classifications using criteria similar
to that employed by the Environmental
Protection Agency and the Department of
the Energy to determine size and class of
vehicles.
Section 13401(i)(4) of the IRA
amended section 6213(g)(2) to provide
the IRS with math error authority for the
omission of a correct VIN included on the
return as required under section 30D(f)(9).
Amended section 30D(g) provides
rules for transfer of the credit from the
taxpayer to certain registered dealers
applicable to vehicles placed in service
after December 31, 2023. Those rules will
be addressed in future guidance.
Amended section 30D(h) provides that
no credit is allowed with respect to any
vehicle placed in service after December
31, 2032.
F. IRA applicability dates
Section 13401(k) of the IRA specifies
various applicability dates for its amend-
ments to section 30D. As noted previously,
except as provided in section 13401(k)(2)
through (5) of the IRA, the amendments
made by section 13401 of the IRA apply
to vehicles placed in service after Decem-
ber 31, 2022. Section 13401(k)(2) of the
IRA provides that the amendments made
by section 13401(b) of the IRA relating to
final assembly apply to vehicles sold after
the date of enactment of the IRA (August
16, 2022). Section 13401(k)(3) of the
IRA provides that the amendments made
by section 13401(a) and (e) of the IRA
relating to the per vehicle credit amount
dollar limitation and Critical Minerals and
Battery Components Requirements apply
to vehicles placed in service after the date
on which the proposed guidance described
in new section 30D(e)(3)(B) is issued by
the Secretary. Section 13401(k)(4) of the
IRA provides that the amendments made
by section 13401(g) of the IRA relating to
transfers of the section 30D credit apply
to vehicles placed in service after Decem-
ber 31, 2023. Section 13401(k)(5) of the
IRA provides that the amendment made
by section 13401(d) of the IRA eliminat-
ing the manufacturer limitation applies to
vehicles sold after December 31, 2022.
Section 13401(l) of the IRA provides
a transition rule for a taxpayer who pur-
chased or entered into a written binding
contract to purchase a new qualified
plug-in electric drive motor vehicle (as
defined in section 30D(d)(1) of the Code,
as in effect on the day before the date of
enactment of the IRA (August 15, 2022))
after December 31, 2021, and before the
date of enactment of the IRA (August 16,
2022), and placed such vehicle in ser-
vice on or after the date of enactment of
the IRA. The transition rule provides that
such a taxpayer may elect (at such time,
and in such form and manner as the Secre-
tary may prescribe) to treat such vehicle as
having been placed in service on the day
before the date of enactment of the IRA.
III. Prior Guidance, Request for
Comments, and Other Documents
Relating to the New Clean Vehicle
Credit
A. Notice 2022-46
On October 5, 2022, the Treasury
Department and the IRS published Notice
2022-46, 2022-43 I.R.B. 302. The notice
requested general comments on issues
arising under section 30D, as well as
specific comments concerning: (1) defi-
nitions; (2) critical minerals; (3) battery
components; (4) applicable values; (5) for-
eign entities of concern; (6) recordkeeping
and reporting; (7) tax-exempt entities; (8)
registered dealers and eligible entities;
(9) the final assembly requirement; (10)
vehicle classifications; (11) elections to
transfer and advance payments; and (12)
recapture. The Treasury Department and
the IRS received 884 comments from
industry participants, environmental
groups, individual consumers, and other
stakeholders. The Treasury Department
and the IRS appreciate the commenters’
interest and engagement on these issues.
These comments have been carefully con-
sidered in the preparation of the proposed
regulations.
B. Revenue Procedure 2022-42
On December 12, 2022, the Treasury
Department and the IRS published Rev-
enue Procedure 2022-42, 2022-52 I.R.B.
565, providing guidance for qualified man-
ufacturers to enter into written agreements
with the IRS, as required in sections 30D,
25E, and 45W of the Code, and to report

April 17, 2023 750 Bulletin No. 2023–16
certain information regarding vehicles
produced by such manufacturers that may
be eligible for these credits. Information
required to be reported includes certifi-
cations regarding the Critical Minerals
and Battery Components Requirements,
as required in sections 30D(e)(1)(A) and
(e)(2)(A), once those requirements are
applicable. In addition, Revenue Proce-
dure 2022-42 provides the procedures for
sellers of new clean vehicles or previous-
ly-owned clean vehicles to report certain
information to the IRS and the purchasers
of such clean vehicles.
C. Notices 2023-1 and 2023-16 and 30D
White Paper
On December 29, 2022, the Trea-
sury Department and the IRS published
Notice 2023-1, 2023-3 I.R.B. 373, which
describes definitions for certain terms in
section 30D that the Treasury Depart-
ment and the IRS intended to include
in proposed regulations. The Treasury
Department also released a white paper on
the anticipated direction, as of December
29, 2022, of the proposed guidance on the
Critical Minerals and Battery Components
Requirements and the process for deter-
mining whether vehicles qualify under
these requirements (30D White Paper).
See “Anticipated Direction of Forthcom-
ing Proposed Guidance on Critical Mineral
and Battery Component Value Calcula-
tions for the New Clean Vehicle Credit,”
Dec. 29, 2022, https://home.treasury.gov/
system/files/136/30DWhite-Paper.pdf
(last accessed March 28, 2023).
On February 3, 2023, the Treasury
Department and the IRS published Notice
2023-16, 2023-8 I.R.B. 479, which modi-
fies Notice 2023-1 by revising the vehicle
classification standard that the Treasury
Department and the IRS intend to provide
in proposed regulations.
D. Proposed guidance described in
section 30D(e)(3)(B)
The publication of these proposed
regulations in the Federal Register is
the issuance of the proposed guidance
described in section 30D(e)(3)(B) (as
added by section 13401(e) of the IRA).
Pursuant to section 13401(a), (e), and (k)
(3) of the IRA, the critical minerals and

battery components requirements of sec-
tion 13401(a) and (e) of the IRA amend
section 30D with respect to vehicles
placed in service after the date on which
these proposed regulations are published
in the Federal Register. Accordingly, the
Critical Minerals and Battery Components
Requirements apply to vehicles placed in
service after April 17, 2023, the date of
publication in the Federal Register.
Explanation of Provisions
I. General Rules
Section 30D(a) and proposed §1.30D-
1(a) provide that there is allowed as a
credit against the tax imposed by chapter
1 for the taxable year an amount equal to
the sum of the credit amounts determined
under section 30D(b) with respect to each
new clean vehicle placed in service by the
taxpayer during the taxable year.
Section 30D(c) and proposed §1.30D-
1(b) provide that the section 30D credit
may be allowed as a general business
credit or a personal credit depending on
whether the property is of a character
subject to an allowance for depreciation
(depreciable vehicle).
Section 30D(c)(1) and proposed
§1.30D-1(b)(1) provide that so much
of the credit that would be allowed to a
taxpayer under section 30D(a) for any
taxable year with respect to all new clean
vehicles placed in service by the taxpayer
during the taxable year (determined with-
out regard to section 30D(c) and proposed
§1.30D-1(b)(1)) that is attributable to
one or more depreciable vehicles will be
treated as a current year general business
credit under section 38 of the Code that
is listed in section 38(b)(30) for such tax-
able year (and not allowed under section
30D(a)). Depreciable vehicles may also
be eligible for the credit for qualified com-
mercial clean vehicles under section 45W.
However, under section 45W(d)(3), no
credit is allowed under section 45W for a
vehicle for which a section 30D credit was
allowed to any taxpayer for any taxable
year. In addition, proposed §1.30D-1(b)
(2) would require the apportionment of
any section 30D credit with respect to a
depreciable vehicle the business use of
which is less than 50 percent of a taxpay-
er’s total use of the vehicle for the taxable
year in which the vehicle is placed in ser-
vice. The portion of the section 30D credit
corresponding to the percentage of the
taxpayer’s business use of the depreciable
vehicle would be treated as a general busi-
ness credit under section 30D(c)(1) and
proposed §1.30D-1(b)(1), and the portion
of the section 30D credit corresponding to
the percentage of the taxpayer’s personal
use of such vehicle would be treated as a
section 30D credit allowed under section
30D(a) pursuant to section 30D(c)(2) and
proposed §1.30D-1(b)(3).
Section 30D(c)(2) and proposed
§1.30D-1(b)(3) provide that the section
30D credit allowed for any taxable year
(determined after application of section
30D(c)(1) and proposed §1.30D-1(b)(1))
is treated as a nonrefundable personal
credit allowable under subpart A of part
IV of subchapter A of chapter 1 (subpart
A) for such taxable year. Section 26 of
the Code limits the aggregate amount of
credits allowed to a taxpayer by subpart
A based on the taxpayer’s tax liability.
Under section 26(a), the aggregate amount
of credits allowed to a taxpayer by sub-
part A cannot exceed the sum of (i) the
taxpayer’s regular tax liability (as defined
in section 26(b)) for the taxable year
reduced by the foreign tax credit allow-
able under section 27 of the Code, and (ii)
the alternative minimum tax imposed by
section 55(a) for the taxable year.
II. Definitions
Proposed §1.30D-2 clarifies the defi-
nitions of certain terms related to the
statutory requirements of the section
30D credit. The definitions contained in
proposed §1.30D-2 were substantially
described in Notice 2023-1, as modified
by Notice 2023-16.
A. Final assembly
Under section 30D(d)(1)(G) and sec-
tion 13401(k)(2) of the IRA, any vehicle
sold after August 16, 2022, must undergo
its final assembly in North America to be
eligible for the section 30D credit. Section
30D(d)(5) defines “final assembly” as the
process by which a manufacturer produces
a new clean vehicle at, or through the use
of, a plant, factory, or other place from
which the vehicle is delivered to a dealer

Bulletin No. 2023–16 751 April 17, 2023
or importer with all component parts nec-
essary for the mechanical operation of the
vehicle included with the vehicle, whether
or not the component parts are perma-
nently installed in or on the vehicle.
Proposed §1.30D-2(b) would provide
that, for purposes of section 30D(d)(5) of
the Code, “final assembly” means the pro-
cess by which a manufacturer produces a
new clean vehicle at, or through the use
of, a plant, factory, or other place from
which the vehicle is delivered to a dealer
or importer with all component parts nec-
essary for the mechanical operation of the
vehicle included with the vehicle, whether
or not the component parts are perma-
nently installed in or on the vehicle. To
establish where final assembly of a new
clean vehicle occurred, the taxpayer could
rely on the following information: (1) the
vehicle’s plant of manufacture as reported
in the vehicle identification number (VIN)
pursuant to 49 CFR 565; or (2) the final
assembly point reported on the label
affixed to the vehicle as described in 49
CFR 583.5(a)(3).
The vehicle’s plant of manufacture as
reported in the VIN means the plant where
the manufacturer affixes the VIN. See 49
CFR 565.12. The plant of manufacture is
reported in the VIN pursuant to 49 CFR
565.15(d)(2). The Department of Energy,
Alternative Fuels Data Center (AFDC),
and the Department of Transportation,
National Highway Traffic Safety Admin-
istration (NHSTA), each provide a VIN
decoder to the public, which can be used
to identify a vehicle’s plant of manufac-
ture. AFDC, VIN Decoder, https://afdc.
energy.gov/laws/electric-vehicles-for-tax-
credit (last accessed March 28, 2023);
NHTSA, VIN Decoder, https://www.
nhtsa.gov/vin-decoder (last accessed
March 28, 2023).
Labeling requirements in 49 CFR 583.5
require the final assembly point to be
reported on the label affixed to a passen-
ger motor vehicle. Final assembly point
means the plant, factory, or other place,
which is a building or series of buildings
in close proximity, where a new passenger
motor vehicle is produced or assembled
from passenger motor vehicle equipment
and from which such vehicle is delivered
to a dealer or importer in such a condition
that all component parts necessary to the
mechanical operation of such automobile
are included with such vehicle whether or
not such component parts are permanently
installed in or on such vehicle. For multi-
stage vehicles, the final assembly point is
the location where the first stage vehicle is
assembled. 49 CFR 583.4(b)(5).
B. North America
Proposed §1.30D-2(d) would provide
that for purposes of section 30D(d)(1)
(G), “North America” means the territory
of the United States, Canada, and Mexico
as defined in 19 CFR part 182, Appendix
A, § 1(1). The territory described in 19
CFR part 182, Appendix A, §1(1), which
provides rules of origin regulations for
the United States-Mexico-Canada Agree-
ment, is defined as (a) for Canada, the
following zones or waters as determined
by its domestic law and consistent with
international law: (i) The land territory, air
space, internal waters, and territorial sea of
Canada, (ii) the exclusive economic zone
of Canada, and (iii) the continental shelf
of Canada; (b) for Mexico, (i) the land
territory, including the states of the Fed-
eration and Mexico City, (ii) the air space,
and (iii) the internal waters, territorial sea,
and any areas beyond the territorial seas of
Mexico within which Mexico may exer-
cise sovereign rights and jurisdiction, as
determined by its domestic law, consis-
tent with the United Nations Convention
on the Law of the Sea, done at Montego
Bay on December 10, 1982; and (c) for
the United States, (i) the customs territory
of the United States, which includes the
50 states, the District of Columbia, and
Puerto Rico, (ii) the foreign trade zones
located in the United States and Puerto
Rico, and (iii) the territorial sea and air
space of the United States and any area
beyond the territorial sea within which, in
accordance with customary international
law as reflected in the United Nations
Convention on the Law of the Sea, the
United States may exercise sovereign
rights or jurisdiction.
C. Manufacturer’s suggested retail price
(MSRP)
Section 30D(f)(11)(A) provides that no
section 30D credit is allowed for a vehicle
with an MSRP in excess of the applicable
limitation. Section 30D(f)(11)(B) pro-
vides that the “applicable limitation” for
each vehicle classification is as follows: in
the case of a van, $80,000; in the case of
a sport utility vehicle, $80,000; in the case
of a pickup truck, $80,000; and in the case
of any other vehicle, $55,000.
Proposed §1.30D-2(c) would provide
that for purposes of section 30D(f)(11)(A),
“manufacturer’s suggested retail price”
means the sum of: (A) the retail price of
the automobile suggested by the manufac-
turer as described in 15 U.S.C. 1232(f)(1);
and (B) the retail delivered price suggested
by the manufacturer for each accessory or
item of optional equipment, physically
attached to such automobile at the time
of its delivery to the dealer, which is not
included within the price of such automo-
bile as stated pursuant to 15 U.S.C. 1232(f)
(1), as described in 15 U.S.C. 1232(f)(2).
This price information is reported on the
label that is affixed to the windshield or
side window of the vehicle, as described
in 15 U.S.C. 1232.
D. Vehicle classifications
For purposes of applying the MSRP
limitation under section 30D(f)(11)(A),
section 30D(f)(11)(C) authorizes the
Secretary to prescribe such regulations
or other guidance as the Secretary deter-
mines necessary to determine vehicle
classifications using criteria similar to that
employed by the Environmental Protec-
tion Agency (EPA) and the Department
of Energy to determine size and class of
vehicles.
The Treasury Department and the
IRS originally announced an intent to
propose use of the vehicle classification
standards in 40 CFR 600.002 in Notice
2023-1; however, in Notice 2023-16, the
Treasury Department and the IRS modi-
fied the expected vehicle classification
standard set forth in Notice 2023-1 to
instead provide that a vehicle’s vehicle
classification is expected to be determined
consistent with the fuel economy labeling
regime described in 40 CFR 600.315-08.
Although the EPA vehicle classification
standards in both regimes are similar, the
fuel economy labeling regime provides for
EPA discretion to assign so-called “cross-
over” vehicles to a class on a case-by-case
basis, taking into account consumer
perspective and the marketing segment

April 17, 2023 752 Bulletin No. 2023–16
targeted by the manufacturer. EPA, “Fuel
Economy Labeling of Motor Vehicles:
Revisions to Improve Calculation of Fuel
Economy Estimates,” 71 Fed. Reg. 77872,
77913 (Dec. 27, 2006). In addition, the
proposed adoption of the fuel economy
labeling regime would align the vehicle
classification standards for purposes of
the section 30D credit with the classifica-
tion displayed on the vehicle label and on
the consumer-facing website FuelEcon-
omy.gov, making it easier for consumers
to know which vehicles qualify under the
applicable MSRP limitation.
Proposed §1.30D-2(g) would provide
that for purposes of section 30D(f)(11)(B),
a vehicle’s vehicle classification is to be
determined consistent with the rules and
definitions provided in 40 CFR 600.315-
08 for vans, sport utility vehicles, pickup
trucks, and other vehicles. Specifically,
“van” means a vehicle classified as a van
or minivan under 40 CFR 600.315-08(a)
(2)(iii) and (iv), or otherwise so classified
by the Administrator of the EPA pursuant
to 40 CFR 600.315-08(a)(3)(ii); “sport
utility vehicle” means a vehicle classified
as a small sport utility vehicle or stan-
dard sport utility vehicle under 40 CFR
600.315-08(a)(2)(v) and (vi), or otherwise
so classified by the Administrator of the
EPA pursuant to 40 CFR 600.315-08(a)(3)
(ii); “pickup truck” means a vehicle clas-
sified as a small pickup truck or standard
pickup truck under 40 CFR 600.315-08(a)
(2)(i) and (ii), or otherwise so classified by
the Administrator of the EPA pursuant to
40 CFR 600.315-08(a)(3)(ii); and “other
vehicle” means any vehicle classified in
one of the classes of passenger automo-
biles listed in 40 CFR 600.315-08(a)(1),
or otherwise so classified by the Admin-
istrator of the EPA pursuant to 40 CFR
600.315-08(a)(3)(ii).
E. Placed in service
Proposed §1.30D-2(e) would pro-
vide that for purposes of the section 30D
credit, a new clean vehicle is considered
to be placed in service on the date the
taxpayer takes possession of the vehicle.
This proposed definition is consistent with
the meaning of “placed in service” for
purposes of other provisions of the Code
under which property is considered to be
“placed in service” when the property is

“placed in a condition or state of readiness
and availability for a specifically assigned
function” and as “the date on which the
owner of the vehicle took actual posses-
sion of the vehicle.” See §§1.46-3(d)(1)(ii)
and (4)(i), 1.179-4(e) and 145.4051-1(c)
(2); see also §1.1250-4(b)(2); Consumers
Power Co. v. Commissioner, 89 T.C. 710
(1987); Noell v. Commissioner, 66 T.C.
718, 728-729 (1976).
III. The Critical Minerals and Battery
Components Requirements
Section 30D(e) of the Code provides
requirements for critical minerals and
battery components with respect to the
battery from which the electric motor of
a new clean vehicle draws electricity. The
Critical Mineral and Battery Component
Requirements apply to applicable critical
minerals and battery components, respec-
tively, contained in a battery as defined in
proposed § 1.30D-3(c)(3).
A. Critical Minerals Requirement
Proposed §1.30D-3(a) would provide
the rules for determining compliance with
the Critical Minerals Requirement. In gen-
eral, proposed §1.30D-3(a) is consistent
with the framework for the Critical Miner-
als Requirement that was described in the
30D White Paper. Proposed §1.30D-3(a)
would provide a three-step process for
determining the percentage of the value of
the applicable critical minerals in a battery
that contribute toward meeting the Critical
Minerals Requirement.
i. Step 1: Determine procurement
chains
In the first step for determining
compliance with the Critical Minerals
Requirement, the manufacturer would
need to determine the procurement chain
or chains for each applicable critical min-
eral. Proposed §1.30D-3(c)(14) would
define a “procurement chain” as a com-
mon sequence of extraction, processing, or
recycling activities that occur in a common
set of locations, concluding in the produc-
tion of constituent materials. Proposed
§1.30D-3(c)(14) would further clarify
that sources of a single applicable critical
mineral may have multiple procurement
chains if, for example, one source of the
applicable critical mineral undergoes the
same extraction, processing, or recycling
process in different locations. Each appli-
cable critical mineral procurement chain
would need to be evaluated separately
pursuant to proposed §1.30D-3(a)(3)(ii).
ii. Step 2: Identify qualifying critical
minerals
In the second step for determining
compliance with the Critical Minerals
Requirement, each applicable critical min-
eral procurement chain in the battery would
need to be evaluated to determine whether
critical minerals procured from the chain
have been (1) extracted or processed in
the United States, or in any country with
which the United States has a free trade
agreement in effect, or (2) recycled in
North America. Applicable critical min-
erals that satisfy this requirement are
considered qualifying critical minerals.
Proposed §1.30D-3(c)(17) would define
“qualifying critical mineral” as an appli-
cable critical mineral that is extracted or
processed in the United States, or in any
country with which the United States has a
free trade agreement in effect, or recycled
in North America. Proposed §1.30D-3(c)
(17) would use a “50% of value added
test” to determine whether this definition
is satisfied. Thus, an applicable critical
mineral would be treated as extracted or
processed in the United States, or in any
country with which the United States has
a free trade agreement in effect, if: (1) 50
percent or more of the value added to the
applicable critical mineral by extraction is
derived from extraction that occurred in
the United States or in any country with
which the United States has a free trade
agreement in effect; or (2) 50 percent
or more of the value added to the appli-
cable critical mineral by processing is
derived from processing that occurred in
the United States or in any country with
which the United States has a free trade
agreement in effect. An applicable criti-
cal mineral would be treated as recycled
in North America if 50 percent or more of
the value added to the applicable critical
mineral by recycling is derived from recy-
cling that occurred in North America.

The 30D White Paper explained the
likely need for transition rules that would

Bulletin No. 2023–16 753 April 17, 2023
provide manufacturers time to develop the
necessary capability to certify compliance
with the Critical Minerals Requirement
throughout their supply chains—espe-
cially given the complexity of battery
supply chains and the detailed tracking
that would be required—while moving
towards more secure and resilient criti-
cal mineral supply chains. The proposed
50% of value added test would serve that
purpose for vehicles placed in service
in 2023 and 2024. For later years, how-
ever, the Treasury Department and the
IRS anticipate moving to a more stringent
test for determining if an applicable criti-
cal mineral was extracted or processed in
the United States or in any country with
which the United States has a free trade
agreement in effect, or whether an applica-
ble critical mineral was recycled in North
America. This more stringent test would
reflect the potential for more detailed
tracking throughout manufacturers’ sup-
ply chains, which may be necessary to
certify compliance with the foreign entity
of concern requirements described in
section 30D(d)(7)(A) (applicable for vehi-
cles placed in service after December 31,
2024).
The Treasury Department and the IRS
specifically request comment on the 50%
of value added test, and the best approach
for adopting a more stringent test for vehi-
cles placed in service in 2025 and later
years. For example, under one approach,
the standard of 50 percent or more of
the value added to the applicable criti-
cal mineral for extraction, processing, or
recycling in the definition of qualifying
critical mineral, could increase incremen-
tally over time (similar to the incremental
increase in the applicable critical minerals
percentages in section 30D(e)(1)(B) and
proposed § 1.30D-3(a)(2)).
Notably, the 50% of value added test
would need to be applied separately for
each procurement chain of an applica-
ble critical mineral pursuant to proposed
§1.30D-3(a)(3)(ii). For example, lithium
that undergoes initial processing activities
in a plant in Country A and then is trans-
ferred to a plant in Country B to undergo
final processing activities, culminating
in the lithium being incorporated into a
constituent material, would be analyzed
under this step together with other lithium
moving through the same procurement
chain. However, if some of the lithium in
the prior example instead undergoes final
processing activities in a plant in Country
C instead of Country B, then there would
be two procurement chains for lithium: (1)
Country A to Country B and (2) Country A
to Country C.
Proposed §1.30D-3(c)(8) would define
“extraction” as the activities performed
to extract or harvest minerals or natural
resources from the ground or a body of
water, including, but not limited to, by
operating equipment to extract miner-
als or natural resources from mines and
wells, or to extract or harvest minerals or
natural resources from the waste or resi-
due of prior extraction. Extraction would
conclude when activities are performed
to convert raw mined or harvested prod-
ucts or raw well effluent to substances that
can be readily transported or stored for
direct use in applicable critical mineral
processing. Extraction would include the
beneficiation or other physical processes
that allow the extracted materials, includ-
ing ores, clays, and brines, to become
transportable. Extraction would include
the physical processes involved in refin-
ing. Extraction would not include the
chemical and thermal processes involved
in refining.
Proposed §1.30D-3(c)(13) would
define “processing” as the non-physical
processes involved in refining of non-re-
cycled substances or materials, including
the treating, baking, and coating pro-
cesses used to convert such substances
and materials into constituent materials.
Processing would begin when chemical
or thermal processes, or the combination
of them, are used on extracted minerals
or natural resources or manmade minerals
or resources to create a new product that,
through subsequent steps in the applica-
ble critical minerals supply chain, will be
processed into a final constituent material.
Processing would include the chemical or
thermal processes involved in refining.
Processing would not include the physical
processes involved in refining.
Proposed §1.30D-3(c)(6) would define
“constituent materials” as materials that
contain applicable critical minerals and
are employed directly in the manufactur-
ing of battery components. Constituent
materials could include, but would not
be limited to, powders of cathode active
materials, powders of anode active mate-
rials, foils, metals for solid electrodes,
binders, electrolyte salts, and electrolyte
additives, as required for a battery cell.
The definition of constituent materials
describes the materials that distinguish
the steps of extraction, processing, and
recycling of critical minerals from the
subsequent steps of manufacturing and
assembly of battery components. Constit-
uent materials would be the final products
relevant for calculating the value of the
applicable critical minerals in the battery.
Constituent materials would mark the
end of processing as the point at which
no further chemical, physical, or ther-
mal processes are needed to create the
final product that is then used in battery
component manufacturing. Constituent
materials would similarly mark the end of
recycling as the point at which no further
transformations are needed to create the
final product that is then used in battery
component manufacturing. All constituent
materials contain applicable critical min-
erals. Once the final constituent material
is created, it then is used as an input to a
battery component. Some battery com-
ponents could be made entirely of inputs
that do not contain constituent materials.
Inputs used to manufacture battery com-
ponents that do not contain any applicable
critical minerals (for example, solvents,
conductive additives, etc.) would not be
considered to be constituent materials.
Proposed §1.30D-3(c)(19) would
define “recycling” as the series of activ-
ities during which recyclable materials
containing applicable critical minerals
are transformed into specification-grade
commodities and consumed in lieu of
virgin materials to create new constit-
uent materials; such activities result in
new constituent materials contained in
the battery from which the electric motor
of a new clean vehicle draws electric-
ity. All physical, chemical, and thermal
treatments or modifications that convert
recycled feedstocks to specification grade
constituent materials would be included in
recycling. This definition would align with
the current methods of direct, hydromet-
allurgical, or pyrometallurgical recycling
that are utilized commercially for reuse of
materials for battery applications.
Proposed §1.30D-3(c)(24) would
define “value,” with respect to property,

April 17, 2023 754 Bulletin No. 2023–16
as the arm’s-length price that was paid or
would be paid for the property by an unre-
lated purchaser determined in accordance
with the principles of section 482 of the
Code and regulations thereunder.
Proposed §1.30D-3(c)(25) would
define “value added,” with respect to
recycling, extraction, or processing of an
applicable critical mineral as the increase
in the value of the applicable critical min-
eral attributable to the relevant activity.
Proposed §1.30D-3(c)(11) would
define “North America” as the territory of
the United States, Canada, and Mexico as
defined in 19 CFR. part 182, Appendix A,
§ 1(1).
Proposed §1.30D-3(c)(7) would define
the term “country with which the United
States has a free trade agreement in effect”
and list the countries with which the
United States has a “free trade agreement
in effect.” The term free trade agreement
is not defined in the IRA or in the Code.
The proposed definition takes into account
the term’s meaning, use and context in the
statute. The IRA’s amendments to section
30D expand the incentives for taxpayers
to purchase new clean vehicles and for
vehicle manufacturers to increase their
reliance on supply chains in the United
States and in countries with which the
United States has reliable and trusted
economic relationships. The Treasury
Department and the IRS recognize that
more secure and resilient supply chains
are essential for our national security, our
economic security, and our technological
leadership. The Treasury Department and
the IRS propose to identify the countries
with which the United States has free
trade agreements in effect for purposes of
section 30D consistent with the statute’s
purposes of promoting reliance on such
supply chains and of providing eligible
consumers with access to tax credits for
the purchase of new clean vehicles.
Based on these considerations, the
Treasury Department and the IRS propose
criteria the Secretary would consider in
identifying these countries. As set forth
in proposed §1.30D-3(c)(7)(i), those cri-
teria would include whether an agreement
between the United States and another
country, as to the critical minerals con-
tained in electric vehicle batteries or more
generally, and in the context of the over-
all commercial and economic relationship
between that country and the United
States: (A) reduces or eliminates trade bar-
riers on a preferential basis, (B) commits
the parties to refrain from imposing new
trade barriers, (C) establishes high-stan-
dard disciplines in key areas affecting
trade (such as core labor and environ-
mental protections), and/or (D) reduces or
eliminates restrictions on exports or com-
mits the parties to refrain from imposing
such restrictions on exports.
Applying those factors, the proposed
regulations include countries with which
the United States has comprehensive free
trade agreements (that is, agreements cov-
ering substantially all trade in goods and
services between the parties, including
trade in critical minerals). These are Aus-
tralia, Bahrain, Canada, Chile, Colombia,
Costa Rica, Dominican Republic, El
Salvador, Guatemala, Honduras, Israel,
Jordan, Korea, Mexico, Morocco, Nicara-
gua, Oman, Panama, Peru, and Singapore.
In addition, the Treasury Department and
the IRS also propose to include additional
countries that the Secretary identifies after
considering the factors listed in proposed
§1.30D-3(c)(7)(i). One example of such a
country is Japan, with which the United
States recently concluded a Critical Miner-
als Agreement (CMA)
1
containing robust
obligations to help ensure free trade in crit-
ical minerals, including a commitment to
refrain from imposing duties on exports of
critical minerals that are currently essen-
tial to the electric vehicle battery supply
chain, a commitment for the United States
and Japan to confer on investments in this
sector that may affect national security,
and detailed undertakings related to the
enforcement of labor and environmen-
tal laws related to trade in those critical
minerals. The CMA was concluded in the
context of an earlier trade agreement the
United States concluded with Japan in
2019,
2
a related 2019 agreement on digital
trade,
3
and the U.S.-Japan Partnership on
Trade announced in November 2021.
4
The
Treasury Department and the IRS have
consulted with the U.S. Trade Representa-
tive in applying the proposed factors here.
Based on an evaluation of the criteria
in proposed §1.30D-3(c)(7)(i), the Trea-
sury Department and the IRS would make
any necessary amendments to the list in
proposed §1.30D-3(c)(7)(ii), including
adding any additional countries as any
new qualifying international agreements
enter into force and the Secretary deter-
mines that the factors have been met. The
Treasury Department and the IRS would
similarly make any necessary amendments
based on the modification, termination, or
expiration of any previously identified free
trade agreements. Proposed § 1.30D-3(c)
(7)(iii) would provide that the list of coun-
tries in proposed § 1.30D-3(c)(7)(ii) may
be revised and updated through appropri-
ate publication in the Federal Register
or in the Internal Revenue Bulletin. The
treatment of any given country under this
overall approach is independent from the
inclusion or exclusion of any other.
5
The Treasury Department and the IRS
seek comment on the proposed criteria
for identifying countries with which the
United States has free trade agreements
in effect, other potential approaches for
identifying those countries, and the list of
countries set forth in proposed §1.30D-
3(c)(7)(ii).
iii. Step 3: Calculate qualifying critical
mineral content
The third step for determining com-
pliance with the Critical Minerals
Requirement would involve the calcu-
lation of the percentage of the value of
qualifying critical minerals contained in
1
Agreement Between the Government of the United States of America and the Government of Japan on Strengthening Critical Minerals Supply Chains, concluded March 28, 2023, https://
ustr.gov/sites/default/files/2023-03/US%20Japan%20Critical%20Minerals%20Agreement%202023%2003%2028.pdf.
2
Trade Agreement Between the United States of America and Japan, concluded October 7, 2019, https://ustr.gov/sites/default/files/files/agreements/japan/Trade_Agreement_between_the_
United_States_and_Japan.pdf.
3
Agreement Between the United States of America and Japan Concerning Digital Trade, concluded October 7, 2019, https://ustr.gov/sites/default/files/files/agreements/japan/Agreement_
between_the_United_States_and_Japan_concerning_Digital_Trade.pdf.
4
Office of United States Trade Representative, United States and Japan Announce the Formation of the U.S.-Japan Partnership on Trade, Nov. 17, 2021, https://ustr.gov/about-us/policy-offices/
press-office/press-releases/2021/november/united-states-and-japan-announce-formation-us-japan-partnership-trade-0.
5
This independent treatment is consistent with proposed §1.30D-3(c)(e).

Bulletin No. 2023–16 755 April 17, 2023
a battery. The proposed regulations refer
to this percentage as the “qualifying crit-
ical mineral content” and define that term
under proposed §1.30D-3(c)(18) as the
percentage of the value of the applicable
critical minerals contained in the battery
from which the electric motor of a new
clean vehicle draws electricity that were
extracted or processed in the United
States, or in any country with which the
United States has a free trade agreement
in effect, or were recycled in North Amer-
ica. Under proposed §1.30D-3(a)(3)(i),
qualifying critical mineral content would
be calculated as the percentage that results
from dividing the total value of qualifying
critical minerals by the total value of crit-
ical minerals. Proposed §1.30D-3(c)(23)
would define “total value of qualifying
critical minerals” as the sum of the values
of all the qualifying critical minerals con-
tained in a battery described in proposed
§1.30D-3(a)(1). Proposed §1.30D-3(c)
(22) would define “total value of critical
minerals” as the sum of the values of all
applicable critical minerals contained in a
battery described in proposed §1.30D-3(a)
(1).
Proposed §1.30D-3(a)(3)(iii) would
require qualified manufacturers to select
a date for determining the values asso-
ciated with the total value of qualifying
critical minerals (determined separately
for each procurement chain) and the
total value of critical minerals. Such date
would need to be after the final process-
ing or recycling step for the applicable
critical minerals relevant to the certifi-
cation described in section 30D(e)(1)(A)
of the Code. This date would need to be
uniformly applied for all applicable crit-
ical minerals contained in the battery.
Proposed §1.30D-3(a)(15) would define
a qualified manufacturer as a manufac-
turer described in section 30D(d)(3) of
the Code.
Proposed §1.30D-3(a)(3)(iv) would
provide that a qualified manufacturer may
determine qualifying critical mineral con-
tent based on the value of the applicable
critical minerals actually contained in the
battery of a specific vehicle. Alternatively,
for purposes of calculating the qualifying
critical mineral content for batteries in a
group of vehicles, a qualified manufac-
turer could average the qualifying critical
mineral content calculation over a lim-
ited period of time (for example, a year,
quarter, or month) with respect to vehicles
from the same model line, plant, class, or
some combination of thereof, with final
assembly (as defined in section 30D(d)
(5) of the Code and proposed §1.30D-
2(b)) within North America. The Treasury
Department and the IRS seek comment
on whether to include any more specific
conditions or limitations on this ability to
average these calculations
The percentage of qualifying critical
minerals content that is calculated in Step
3 would ultimately be compared with the
relevant applicable critical minerals per-
centage provided in proposed §1.30D-3(a)
(2) to determine whether a vehicle satis-
fies the Critical Minerals Requirement
described in section 30D(e)(1)(A) of the
Code.
B. Battery Components Requirement
Proposed §1.30D-3(b) would provide
the rules for determining compliance
with the Battery Components Require-
ment. In general, proposed §1.30D-3(b)
is consistent with the framework for the
Battery Components Requirement that
was described in the 30D White Paper.
Proposed §1.30D-3(b) would provide
a four-step process for determining the
percentage of the value of the battery
components in a battery that contribute
toward meeting the Battery Components
Requirement.
i. Step 1: Identify components that are
manufactured or assembled in
North America
In the first step for determining com-
pliance with the Battery Components
Requirement, qualified manufacturers
would need to determine whether each
battery component in a battery was man-
ufactured or assembled in North America.
Such components are referred to in the
proposed regulations as “North Ameri-
can battery components” and are defined
in proposed §1.30D-3(c)(12) as a battery
component substantially all of the man-
ufacturing or assembly of which occurs
in North America, without regard to the
location of the manufacturing or assembly
activities of the components that make up
the particular battery component.
Proposed §1.30D-3(c)(3) would define
“battery,” for purposes of a new clean
vehicle, as a collection of one or more
battery modules, each of which has two
or more electrically configured battery
cells in series or parallel, to create voltage
or current. The term “battery” would not
include items such as thermal manage-
ment systems or other parts of a battery
cell or module that do not directly con-
tribute to the electrochemical storage of
energy within the battery, such as battery
cell cases, cans, or pouches. This defi-
nition of battery is consistent with the
statute because battery modules and cells
are the sources “from which the electric
motor of such vehicle draws electricity.”
Sections 30D(e)(1)(A) and (2)(A). The
battery module is the end point for the
purpose of calculating the value of battery
components.
Proposed §1.30D-3(c)(4) would define
“battery cell” as a combination of battery
components (other than battery cells)
capable of electrochemically storing
energy from which the electric motor of
a new clean vehicle draws electricity. This
definition of battery cell would encom-
pass the smallest combination of battery
components necessary for the function of
energy storage.
Proposed §1.30D-3(c)(5) would define
“battery component” as a component that
forms part of a battery and which is man-
ufactured or assembled from one or more
components or constituent materials that
are combined through industrial, chemi-
cal, and physical assembly steps. Battery
components would include, but not be
limited to, a cathode electrode, anode
electrode, solid metal electrode, separator,
liquid electrolyte, solid state electrolyte,
battery cell, and battery module. Constit-
uent materials would not be considered a
type of battery component, although con-
stituent materials could be manufactured
or assembled into battery components.
Some battery components could be made
entirely of inputs that do not contain con-
stituent materials. Battery components
would include any piece of the assembled
battery cell that contribute to electrochem-
ical energy storage.
Proposed §1.30D-3(c)(10) would
define “manufacturing,” with respect to a
battery component, as the industrial and
chemical steps taken to produce a battery

April 17, 2023 756 Bulletin No. 2023–16
component. Manufacturing would use
industrial and chemical steps starting with
constituent materials and other battery
components that do not contain constit-
uent materials to create a new battery
component.
Proposed §1.30D-3(c)(2) would define
“assembly,” with respect to battery com-
ponents, as the process of combining
battery components into battery cells and
battery modules.
ii. Step 2: Determine the incremental
value of each battery component and
North American battery components
In the second step for determining
compliance with the Battery Components
Requirement, qualified manufacturers
would need to determine the incremental
value for each battery component. The
resulting incremental value for a battery
component would be attributable to North
America if the battery component is a
“North American battery component” as
defined in proposed §1.30D-3(c)(12).
Proposed §1.30D-3(c)(9) would define
“incremental value,” with respect to a bat-
tery component, as the value (as defined in
proposed §1.30D-3(c)(24)) determined by
subtracting from the value of that battery
component the value of the manufac-
tured or assembled battery components,
if any, that are contained in that battery
component.
Proposed §1.30D-3(c)(20) would
define “total incremental value of North
American battery components” as the sum
of the incremental values of each North
American battery component contained in
a battery described in proposed §1.30D-
3(b)(1).
iii. Step 3: Determine the total
incremental value of battery
components
In the third step for determining com-
pliance with the Battery Components
Requirement, qualified manufacturers
would need to total the incremental value
of battery components. Proposed §1.30D-
3(c)(21) would define “total incremental
value of battery components” as the sum
of the incremental values of each bat-
tery component contained in a battery
described in proposed §1.30D-3(b)(1).

The total incremental value of battery
components could also be calculated by
totaling the value of each battery module
in the battery.
iv. Step 4: Calculate the qualifying
battery component content
In the fourth step for determining com-
pliance with the Battery Components
Requirement, qualified manufacturers
would need to determine the qualifying
battery component content. Proposed
§1.30D-3(c)(16) would define “qualify-
ing battery component content” as the
percentage of the value of the battery
components contained in the battery
from which the electric motor of a new
clean vehicle draws electricity that were
manufactured or assembled in North
America. Proposed §1.30D-3(b)(3)(i)
would provide that the qualifying battery
component content is the percentage that
results from dividing the total incremental
value of North American battery compo-
nents (determined in step 2) by the total
incremental value of battery components
(determined in step 3).
Proposed §1.30D-3(b)(3)(ii) would
require qualified manufacturers to select
a date for determining the values associ-
ated with the total incremental value of
North American battery components and
the total incremental value of battery com-
ponents. Such date would need to be after
the last manufacturing or assembly step
for the battery components relevant to the
certification described in section 30D(e)
(2)(A) of the Code. This date must be uni-
formly applied for all battery components
contained in the battery.
Proposed §1.30D-3(b)(3)(iii) would
provide that a qualified manufacturer may
determine qualifying battery component
content based on the incremental values of
the battery components actually contained
in the battery of a specific vehicle. Alter-
natively, for purposes of calculating the
qualifying battery component content for
batteries in a group of vehicles, a qualified
manufacturer could average the qualify-
ing battery component content calculation
over a limited period of time (for example,
a year, quarter, or month) with respect to
vehicles from the same model line, plant,
class, or some combination of thereof,
with final assembly (as defined in sec-
tion 30D(d)(5) of the Code and proposed
§1.30D-2(a)) within North America. The
Treasury Department and the IRS seek
comment on whether to include any more
specific conditions or limitations on this
ability to average these calculations.
The percentage of qualifying battery
component content that would be cal-
culated in Step 4 would ultimately be
compared with the relevant applicable
battery components percentage provided
in proposed §1.30D-3(b)(2) to determine
whether a vehicle satisfies the Battery
Components Requirement described in
section 30D(e)(2)(A) of the Code.
The Treasury Department and the IRS
request comments on the Critical Mineral
and Battery Component Requirements as
they would be implemented in proposed
§1.30D-3, including the distinction between
processing of applicable critical minerals
and manufacturing and assembly of battery
components, and related definitions.
C. Excluded entities
Section 30D(d)(7) of the Code excludes
from the definition of “new clean vehicle”
any vehicle placed in service after Decem-
ber 31, 2024, with respect to which any of
the applicable critical minerals contained
in the battery of such vehicle (as described
in section 30D(e)(1)(A)) were extracted,
processed, or recycled by a foreign entity
of concern (as defined in section 40207(a)
(5) of the Infrastructure Investment and
Jobs Act (42 U.S.C. 18741(a)(5))), or any
vehicle placed in service after December
31, 2023, with respect to which any of
the components contained in the battery
of such vehicle (as described in section
30D(e)(2)(A)) were manufactured or
assembled by a foreign entity of concern
(as so defined). The Treasury Department
and the IRS intend to issue guidance with
respect to section 30D(d)(7) at a later date.
IV. Special Rules
Proposed §1.30D-4 would provide spe-
cial rules with respect to the section 30D
credit.
A. No Double Benefit
Section 30D(f)(2) and proposed
§1.30D-4(a)(1) would provide that the

Bulletin No. 2023–16 757 April 17, 2023
amount of any deduction or other credit
allowable under chapter 1 for a vehicle
for which a section 30D credit is allow-
able must be reduced by the amount of the
section 30D credit allowed under section
30D(a) for such vehicle determined with-
out regard to section 30D(c), which may
treat all or a portion of the aggregate credit
allowed under section 30D(a) as a current
year general business credit under section
38(b).
Proposed §1.30D-4(a)(2) would pro-
vide that a section 30D credit that has
been allowed with respect to a vehi-
cle in a taxable year before the taxable
year in which a credit under section 25E
is allowable for that vehicle does not
reduce the amount of the allowable sec-
tion 25E credit. Accordingly, a taxpayer
who otherwise satisfies the requirements
of section 25E would be eligible to claim
the section 25E credit for a vehicle for
which another taxpayer previously
claimed the section 30D credit.
Proposed §1.30D-4(a)(3) would pro-
vide that no credit is allowed under
section 45W with respect to any vehicle
for which a credit was allowed under sec-
tion 30D. This rule, which is based on
section 45W(d)(3), precludes both the sec-
tion 30D credit and the section 45W credit
from being allowed for the same vehicle,
whether in the same or different taxable
years.
B. Limitation based on modified
adjusted gross income
Section 30D(f)(10) and proposed
§1.30D-4(b) would provide that no sec-
tion 30D(a) credit is allowed for any
taxable year if (i) the lesser of (I) the
modified AGI of the taxpayer for such
taxable year or (II) the modified AGI of
the taxpayer for the preceding taxable
year exceeds (ii) the threshold amount
(Modified AGI Limitation). The threshold
amount is $300,000 in the case of a joint
return or a surviving spouse (as defined
in section 2(a) of the Code), $225,000 in
the case of a head of household (as defined
in section 2(b) of the Code), and $150,000
for all other taxpayers. “Modified adjusted
gross income” is defined in section 30D(f)
(10)(C) as the taxpayer’s AGI increased
by any amount excluded from gross
income under sections 911, 931, or 933

of the Code. Proposed §1.30D-4(b)(4)
provides that if the taxpayer’s filing status
changes (for example, from single to head
of household) in this two-year period, the
taxpayer satisfies the Modified AGI Lim-
itation if the taxpayer’s modified AGI
does not exceed the threshold amount in
either taxable year based on the applicable
filing status for that taxable year.
Proposed §1.30D-4(b)(5)(i) would pro-
vide that, except as provided in proposed
§1.30D-4(b)(5)(ii), in the case of a new
clean vehicle that is placed in service by
a corporation or other taxpayer that is not
an individual for whom AGI is computed
under section 62, the Modified AGI Lim-
itation does not apply. Corporations and
such other taxpayers do not have AGI
computed under section 62, so the special
rule in section 30D(f)(10) establishing a
Modified AGI Limitation does not apply
to these taxpayers.
Proposed §1.30D-4(b)(5)(ii) would
provide that in the event that the new clean
vehicle is placed in service by a partner-
ship or an S corporation, and the section
30D credit is claimed by individuals
who are direct or indirect partners of that
partnership or shareholders of that S cor-
poration, the Modified AGI Limitation
will apply to those partners or sharehold-
ers. The Treasury Department and the IRS
request comments on whether a similar
rule should be provided for trusts or other
types of entities that place in service a new
clean vehicle.
C. Multiple owners and passthrough
entity ownership of a single vehicle
In certain instances, multiple taxpay-
ers may purchase, place in service, and
be titled as owners of a single vehicle.
For example, a married couple that files
separate tax returns may jointly purchase
and take possession of a new clean vehi-
cle that qualifies for the section 30D credit
and both spouses may be titled as owners
of the vehicle. However, the structure of
section 30D provides for one taxpayer to
claim the section 30D credit per vehicle
placed in service. See generally section
30D(a), (b), (f)(8), (f)(9) and section
6213(g)(2)(T) of the Code. Section 30D
does not contain rules for allocation or
proration of the section 30D credit with
respect to a single vehicle to multiple
taxpayers placing that vehicle in service,
and such an allocation or proration would
present challenges from a tax administra-
tion perspective.
Proposed §1.30D-4(c)(1) would pro-
vide that, except as provided in proposed
§1.30D-4(c)(2), the amount of the section
30D credit attributable to a new clean
vehicle may be claimed on only one tax
return. In the event multiple owners place
in service a new clean vehicle, no allo-
cation or proration of the credit would
be available. Proposed §1.30D-4(c)(3)(i)
would provide that the name and taxpayer
identification number of the owner claim-
ing the credit under section 30D(a) should
be listed on the seller’s report pursuant to
section 30D(d)(1)(H). Accordingly, multi-
ple owners of a new clean vehicle would
inform the seller which owner will claim
the section 30D credit so that the seller
can identify that taxpayer on the seller’s
report. The credit would be allowed only
on the tax return of the owner listed in the
seller’s report.
Proposed §1.30D-4(c)(2) would pro-
vide that in the case of a new clean vehicle
placed in service by a partnership or S
corporation, while the partnership or
S corporation is the vehicle owner, the
section 30D credit is allocated among the
partners of the partnership under §1.704-
1(b)(4)(ii) or among the shareholders of
the S corporation under sections 1366(a)
and 1377(a) of the Code and claimed on
the tax returns of the partners or share-
holder(s). Proposed §1.30D-4(c)(3)(i)
would provide that in the case of a new
clean vehicle placed in service by a part-
nership or S corporation, the name and tax
identification number of the partnership or
S corporation that placed the new clean
vehicle in service should be listed on the
seller’s report pursuant to section 30D(d)
(1)(H).
V. Severability
If any provision in this proposed
rulemaking is held to be invalid or unen-
forceable facially, or as applied to any
person or circumstance, it shall be sever-
able from the remainder of this rulemaking,
and shall not affect the remainder thereof,
or the application of the provision to other
persons not similarly situated or to other
dissimilar circumstances.

April 17, 2023 758 Bulletin No. 2023–16
Effect on Other Documents
This proposed rulemaking hereby
makes IRS Notices 2023-1, 2023-3 I.R.B.
373 and 2023-16, 2023-8 I.R.B. 479
obsolete.
Proposed Applicability Dates
Proposed §1.30D-1 is proposed to
apply to new clean vehicles placed in ser-
vice after the date of publication of the
Treasury Decision adopting these rules as
final rules in the Federal Register.
Proposed § 1.30D-2 is proposed to apply
to new clean vehicles placed in service on
or after January 1, 2023, for taxable years
ending after April 17, 2023. The amend-
ments made to section 30D by the IRA
generally apply to vehicles placed in ser-
vice after December 31, 2022, with certain
exceptions. The definitions in proposed
§ 1.30D-2 were substantially described
in Notice 2023-1, which was released on
December 29, 2022.
6
The definitions in
proposed § 1.30D-2 generally relate to stat-
utory rules applicable to vehicles placed in
service on or after January 1, 2023. These
proposed regulations are proposed to apply
to vehicles placed in service on or after
January 1, 2023, for taxable years ending
after the date these proposed regulations
are published in the Federal Register to
improve certainty for taxpayers and to pro-
vide clear rules for tax administration.
Proposed §1.30D-3 is proposed to
apply to new clean vehicles placed in
service after April 17, 2023 for taxable
years ending after April 17, 2023. Pur-
suant to section 13401(a), (e), and (k)(3)
of the IRA, the critical minerals and bat-
tery components requirements of section
13401(a) and (e) of the IRA amend sec-
tion 30D with respect to vehicles placed
in service after the date on which these
proposed regulations are published in the
Federal Register. Accordingly, the Crit-
ical Minerals and Battery Components
Requirements in proposed § 1.30D-3 are
proposed to apply to vehicles placed in
service after the date of publication of
these proposed regulations for taxable
years ending after the date of publication
of these proposed regulations.
Proposed § 1.30D-4 is proposed to
apply to new clean vehicles placed in ser-
vice after the date of publication of the
Treasury Decision adopting these rules as
final rules in the Federal Register.
Taxpayers may rely on these proposed
regulations for vehicles placed in service
prior to the date final regulations are pub-
lished in the Federal Register, provided
the taxpayer follows the proposed regula-
tions in their entirety, and in a consistent
manner.
Statement of Availability for IRS
Documents
For copies of recently issued Revenue
Procedures, Revenue Rulings, Notices,
and other guidance published in the Inter-
nal Revenue Bulletin, please visit the IRS
website at https://www.irs.gov.
Special Analyses
I. Regulatory Planning and Review –
Economic Analysis
Executive Orders 13563 and 12866
direct agencies to assess costs and ben-
efits of available regulatory alternatives
and, if regulation is necessary, to select
regulatory approaches that maximize net
benefits (including potential economic,
environmental, public health and safety
effects, distributive impacts, and equity).
Executive Order 13563 emphasizes the
importance of quantifying both costs and
benefits, of reducing costs, of harmoniz-
ing rules, and of promoting flexibility.
These proposed regulations have been
designated by the Office of Management
and Budget’s Office of Information and
Regulatory Affairs (OIRA) as subject to
review under Executive Order 12866 pur-
suant to the Memorandum of Agreement
(April 11, 2018) between the Treasury
Department and the Office of Management
and Budget (OMB) regarding review of tax
regulations. OIRA has determined that the
proposed rulemaking is significant and sub-
ject to review under Executive Order 12866
and section 1(b) of the Memorandum of
Agreement. Accordingly, the proposed reg-
ulations have been reviewed by OMB.
II. Paperwork Reduction Act
Any collection burden associated with
rules described in these proposed regula-
tions is previously accounted for in OMB
Control Number 1545-2137. These pro-
posed regulations do not alter previously
accounted for information collection
requirements and do not create new collec-
tion requirements. OMB Control Number
1545-2137 covers Form 8936 and Form
8936-A regarding electric vehicle credits,
including the new requirement in section
30D(f)(9) to include on the taxpayer’s
return for the taxable year the VIN of the
vehicle for which the section 30D credit
is claimed. Revenue Procedure 2022-42
describes the procedural requirements for
qualified manufacturers to make periodic
written reports to the Secretary to pro-
vide information related to each vehicle
manufactured by such manufacturer that
is eligible for the section 30D credit as
required in section 30D(d)(3), including
the critical mineral and battery compo-
nent certification requirements in sections
30D(e)(1)(A) and (e)(2)(A). In addition,
Revenue Procedure 2022-42 also provides
the procedures for sellers of new clean
vehicles to report information required
by section 30D(d)(1)(H) for vehicles to
be eligible for the section 30D credit. The
collections of information contained in
Revenue Procedure 2022-42 are described
in that document and were submitted to
the Office of Management and Budget in
accordance with the Paperwork Reduction
Act under control number 1545-2137.
The requirement to determine the final
assembly location in proposed §1.30D-
2(b) by relying on (1) the vehicle’s plant
of manufacture as reported in the vehi-
cle identification number (VIN) pursuant
to 49 CFR 565 or (2) the final assembly
point reported on the label affixed to the
vehicle as described in 49 CFR 583.5(a)
(3) is accounted for by the Department of
Transportation in OMB Control Numbers
2127-0510 and 2127-0573.
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.
6
Notice 2023-16, released February 3, 2023, modified Notice 2023-1, regarding the vehicle classification standard set forth in Notice 2023-1 in a manner that allowed additional new clean
vehicles to be eligible for the section 30D credit. Notice 2023-16 provided that taxpayers could rely on these modified expected definitions for new clean vehicles placed in service on or
after January 1, 2023.

Bulletin No. 2023–16 759 April 17, 2023
III. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), the Secretary
hereby certifies that these proposed regula-
tions will not have a significant economic
impact on a substantial number of small
entities within the meaning of section
601(6) of the Regulatory Flexibility Act.
Pursuant to section 7805(f), this notice
of proposed rulemaking has been submit-
ted to the Chief Counsel for the Office of
Advocacy of the Small Business Admin-
istration for comment on their impact on
small business.
The proposed regulations affect two
types of business entities: (1) qualified
manufacturers that must trace and report
on their critical minerals and battery com-
ponents in order to certify that their new
clean vehicles qualify for the section 30D
credit, and (2) businesses that may earn
the section 30D credit when purchasing
and placing in service a new clean vehicle.
While the tracking and reporting of
critical minerals and battery components
is likely to involve significant administra-
tive costs, according to public filings, all
qualified manufacturers had total reve-
nues above $1B in 2022. There are a total
of 21 qualified manufacturers that have
indicated that they manufacture vehicles
currently eligible for the section 30D
credit.
7
Pursuant to Revenue Procedure
2022-42 and following the publication
of these proposed regulations, qualified
manufacturers will also have to certify
that their vehicles qualify under the Crit-
ical Minerals and Battery Components
Requirements. The proposed regulations
provide definitions and general rules for
the section 30D credit, including rules for
qualified manufacturers to comply with
the Critical Mineral and Battery Com-
ponent Requirements. Accordingly, the
Treasury Department and the IRS intend
that the proposed rules provide clarity
for qualified manufacturers for consistent
application of critical minerals and battery
components calculations and for taxpayers
purchasing new clean vehicles that qualify
for the section 30D credit. The Treasury
Department and the IRS have determined
that qualified manufacturers do not meet
the applicable definition of small entity.
Business purchasers of clean vehicles
who take the section 30D credit must
satisfy reporting requirements that are
largely the same as those faced by indi-
viduals accessing the section 30D credit
to purchase clean vehicles. Taxpayers
will continue to file Form 8936, Quali-
fied Plug-In Electric Drive Motor Vehicle
Credit, to claim the section 30D credit. As
was the case for the section 30D credit prior
to amendments made by the IRA, taxpay-
ers can rely on qualified manufacturers to
determine if the vehicle being purchased
qualifies for the section 30D credit and the
credit amount. The estimated burden for
individual and business taxpayers filing
this form is approved under OMB control
number 1545-0074 and 1545-0123. To
make it easier for a taxpayer to determine
the potential section 30D credit available
for a specific vehicle, the proposed regula-
tions provide business entities with tools
and definitions to ascertain whether any
vehicles purchased would be eligible for
the credit. The VIN reporting required
by section 30D(f)(9) and described in
the proposed regulations was included in
prior section 30D reporting.
Accordingly, the Secretary certifies
that these proposed regulations will not
have a significant economic impact on a
substantial number of small entities. The
Treasury Department and the IRS request
comments that provide data, other evi-
dence, or models that provide insight on
this issue.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 requires that agencies
assess anticipated costs and benefits and
take certain other actions before issuing a
final rule that includes any Federal man-
date that may result in expenditures in
any one year by a State, local, or Tribal
government, in the aggregate, or by the
private sector, of $100 million in 1995
dollars, updated annually for inflation.
In 2023, that threshold is approximately
$198 million. This rule does not include
any Federal mandate that may result in
expenditures by State, local, or Tribal
governments, or by the private sector in
excess of that threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (Federal-
ism) prohibits an agency (to the extent
practicable and permitted by law) from
promulgating any regulation that has fed-
eralism implications, unless the agency
meets the consultation and funding
requirements of section 6 of the Executive
order, if the rule either imposes substan-
tial, direct compliance costs on State and
local governments, and is not required
by statute, or preempts State law. This
proposed rule does not have federalism
implications and does not impose substan-
tial direct compliance costs on State and
local governments or preempt State law
within the meaning of the Executive order.
Comments and Requests for a Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any comments that are
submitted timely to the IRS as prescribed
in this preamble under the ADDRESSES
heading. The Treasury Department and
the IRS request comments on all aspects
of the proposed regulations, including
their economic impact and any alterna-
tive approaches that should be considered
during the rulemaking process. In addi-
tion, the Treasury Department and the IRS
request comments on the specific issues
noted in the previous sections of this
preamble.
Any comments submitted, whether
electronically or on paper, will be made
available at https://www.regulations.gov or
upon request. A public hearing will be sched-
uled if requested in writing by any person
who timely submits electronic or written
comments as prescribed in this preamble
under the “DATES” heading. Requests for
a public hearing are also encouraged to be
made electronically. If a public hearing is
scheduled, notice of the date and time for
the public hearing will be published in the
Federal Register. Announcement 2020-4,
2020-17 IRB 1, provides that until further
notice, public hearings conducted by the
IRS will be held telephonically. Any tele-
phonic hearing will be made accessible to
people with disabilities.
7
The list of manufacturers is available at the following IRS website: https://www.irs.gov/credits-deductions/manufacturers-and-models-for-new-qualified-clean-vehicles-pur-
chased-in-2023-or-after#:~:text=If%20you%20bought%20and%20placed,Internal%20Revenue%20Code%20Section%2030D.

April 17, 2023 760 Bulletin No. 2023–16
Drafting Information
The principal author of the proposed
regulations is the Office of Associate
Chief Counsel (Passthroughs & Special
Industries). However, other personnel
from the Treasury Department and the
IRS participated in the development of the
proposed regulations.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is pro-
posed to be amended as follows:
PART 1 INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by adding entries in
numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.30D-1 also issued under 26
U.S.C. 30D.
Section 1.30D-2 also issued under 26
U.S.C. 30D.
Section 1.30D-3 also issued under 26
U.S.C. 30D.
Section 1.30D-4 also issued under 26
U.S.C. 30D and 26 U.S.C. 45W(d)(3).
Par 2. Sections 1.30D-0, 1.30D-1,
1.30D-2, 1.30D-3, and 1.30D-4 are added
to read as follows:
Sec.
* * * * *
1.30D-0 Table of contents.
1.30D-1 Credit for new clean vehicles.
1.30D-2 Definitions for purposes of sec-
tion 30D.
1.30D-3 Critical mineral and battery com-
ponent requirements.
1.30D-4 Special rules.
* * * * *
§1.30D-0 Table of contents.
This section lists the captions contained
in §§1.30D-1 through 1.30D-4.
§1.30D-1 Credit for new clean vehicles.
(a) In general.
(b) Treatment of credit.
(1) Business credit treated as part of gen-
eral business credit.
(2) Apportionment of section 30D credit.
(3) Personal credit limited based on tax
liability.
(c) Severability.
(d) Applicability date.
§1.30D-2 Definitions for purposes of sec-
tion 30D.
(a) In general.
(b) Final assembly.
(c) Manufacturer’s suggested retail price.
(d) North America.
(e) Placed in service.
(f) Section 30D regulations.
(g) Vehicle classifications.
(i) Van.
(ii) Sport utility vehicle.
(iii) Pickup truck.
(iv) Other vehicle.
(h) Severability.
(i) Applicability date.
§1.30D-3 Critical mineral and battery
component requirements.
(a) Critical minerals requirement.
(1) In general.
(2) Applicable critical minerals percentage.
(3) Determining qualifying critical min-
eral content.
(i) In general.
(ii) Separate determinations required for
each procurement chain.
(iii) Time for determining value.
(iv) Application of qualifying critical min-
eral content to vehicles.
(b) Battery components requirement.
(1) In general.
(2) Applicable battery components
percentage.
(3) Determining qualifying battery com-
ponent content.
(i) In general.
(ii) Time for determining value.
(iii) Application of qualifying battery
component content to vehicles.
(c) Definitions.
(1) Applicable critical mineral.
(2) Assembly.
(3) Battery.
(4) Battery cell.
(5) Battery component.
(6) Constituent materials.
(7) Country with which the United States
has a free trade agreement in effect.
(8) Extraction.
(9) Incremental value.
(10) Manufacturing.
(11) North America.
(12) North American battery component.
(13) Processing
(14) Procurement chain.
(15) Qualified manufacturer.
(16) Qualifying battery component content.
(17) Qualifying critical mineral.
(18) Qualifying critical mineral content.
(19) Recycling.
(20) Total incremental value of North
American battery components.
(21) Total incremental value of battery
components.
(22) Total value of critical minerals.
(23) Total value of qualifying critical
minerals.
(24) Value.
(25) Value added.
(d) Excluded entities.
(e) Severability.
(f) Applicability date.
§1.30D-4 Special rules
(a) No double benefit.
(1) In general.
(2) Application to credit for previous-
ly-owned clean vehicles under section
25E.
(3) Application to credit for qualified
clean vehicles under section 45W.
(b) Limitation based on modified adjusted
gross income.
(1) In general.
(2) Threshold amount.
(3) Modified adjusted gross income.
(4) Special rule for change in filing status.
(5) Application to taxpayers other than
individuals.
(i) In general.
(ii) Application to passthrough entities.
(c) Multiple owners and passthrough
entity ownership of a single vehicle.
(1) In general.
(2) Passthrough entities.
(3) Seller Reporting.
(i) In general.
(ii) Passthrough entities.
(4) Example.
(d) Severability.
(e) Applicability date.
§1.30D-1 Credit for new clean vehicles.
(a) In general. Section 30D(a) of the
Internal Revenue Code (Code) allows

Bulletin No. 2023–16 761 April 17, 2023
as a credit against the tax imposed by
chapter 1 of the Code (chapter 1) for the
taxable year of a taxpayer an amount
equal to the sum of the credit amounts
determined under section 30D(b) with
respect to each new clean vehicle pur-
chased by the taxpayer that the taxpayer
places in service during the taxable year.
For purposes of the section 30D regu-
lations (as defined in §1.30D-2(f)), the
term section 30D credit means the credit
allowable to a taxpayer for a taxable year
under section 30D(a) and the section
30D regulations with respect to all vehi-
cles placed in service by the taxpayer
during the taxable year. Section 1.30D-2
provides definitions that apply for pur-
poses of section 30D and the section 30D
regulations. Section 1.30D-3 provides
rules regarding the critical mineral and
battery component requirements of sec-
tion 30D(e). Section 1.30D-4 provides
guidance regarding the limitations and
special rules in section 30D(f).
(b) Application with other credits—(1)
Business credit treated as part of general
business credit—(i) In general. Section
30D(c)(1) requires that so much of the
section 30D credit that would be allowed
under section 30D(a) for any taxable year
(determined without regard to section
30D(c) and this paragraph (b)) that is
attributable to a depreciable vehicle must
be treated as a general business credit
under section 38 of the Code that is listed
in section 38(b)(30) for such taxable year
(and not allowed under section 30D(a)). In
the case of a depreciable vehicle the use of
which is 50 percent or more business use
in the taxable year such vehicle is placed in
service, the section 30D credit that would
be allowed under section 30D(a) for that
taxable year (determined without regard
to section 30D(c) and this paragraph (b))
that is attributable to such depreciable
vehicle must be treated as a general busi-
ness credit under section 38 of the Code
that is listed in section 38(b)(30) for such
taxable year (and not allowed under sec-
tion 30D(a)). See paragraph (b)(2) of this
section for rules applicable in the case of
a depreciable vehicle the use of which is
less than 50 percent business use in the
taxable year such vehicle is placed in ser-
vice. See paragraph (b)(3) of this section
for rules applicable to a section 30D credit
allowed under section 30D(a) pursuant to

section 30D(c)(2) or paragraphs (b)(2)(ii)
or (b)(3) of this section.
(ii) Depreciable vehicle. For purposes
of this paragraph (b), a depreciable vehi-
cle is a vehicle of a character subject to an
allowance for depreciation.
(2) Apportionment of section 30D
credit. In the case of a depreciable vehi-
cle the business use of which is less than
50 percent of a taxpayer’s total use of the
vehicle for the taxable year in which the
vehicle is placed in service, the taxpayer’s
section 30D credit for that taxable year
with respect to that vehicle must be appor-
tioned as follows:
(i) The portion of the section 30D credit
corresponding to the percentage of the
taxpayer’s business use of the vehicle is
treated as a general business credit under
section 30D(c)(1) and paragraph (b)(1) of
this section (and not allowed under section
30D(a) or paragraph (b)(3) of this section).
(ii) The portion of the section 30D
credit corresponding to the percentage of
the taxpayer’s personal use of the vehicle
is treated as a section 30D credit allowed
under section 30D(a) pursuant to section
30D(c)(2) and paragraph (b)(3) of this
section.
(3) Personal credit limited based on
tax liability. Section 26 of the Code limits
the aggregate amount of credits allowed to
a taxpayer by subpart A of part IV of sub-
chapter A of chapter 1 (subpart A) based
on the taxpayer’s tax liability. Under sec-
tion 26(a), the aggregate amount of credits
allowed to a taxpayer by subpart A cannot
exceed the sum of the taxpayer’s regular
tax liability (as defined in section 26(b))
for the taxable year reduced by the foreign
tax credit allowable under section 27 of
the Code, and the alternative minimum tax
imposed by section 55(a) for the taxable
year. Section 30D(c)(2) provides that the
section 30D credit allowed under section
30D(a) for any taxable year (determined
after application of section 30D(c)(1)
and paragraphs (b)(1) and (2) of this sec-
tion) is treated as a credit allowable under
subpart A for such taxable year, and the
section 30D credit allowed under section
30D(a) is therefore subject to the limita-
tion imposed by section 26.
(c) Severability. The provisions of this
section are separate and severable from
one another. If any provision of this sec-
tion is stayed or determined to be invalid,
it is the agencies’ intention that the remain-
ing provisions shall continue in effect.
(d) Applicability date. This section
applies to new clean vehicles placed in
service after [DATE OF PUBLICATION
OF FINAL RULE].
§1.30D-2 Definitions for purposes of
section 30D.
(a) In general. The definitions in para-
graphs (b) through (g) of this section
apply for purposes of section 30D of the
Internal Revenue Code (Code) and the
section 30D regulations.
(b) Final assembly means the process
by which a manufacturer produces a new
clean vehicle at, or through the use of, a
plant, factory, or other place from which
the vehicle is delivered to a dealer or
importer with all component parts neces-
sary for the mechanical operation of the
vehicle included with the vehicle, whether
or not the component parts are perma-
nently installed in or on the vehicle. To
establish where final assembly of a new
clean vehicle occurred for purposes of
the requirement in section 30D(d)(1)(G)
that final assembly of a new clean vehicle
occur within North America, the taxpayer
may rely on the following information:
(1) The vehicle’s plant of manufacture
as reported in the vehicle identification
number pursuant to 49 CFR 565; or
(2) The final assembly point reported
on the label affixed to the vehicle as
described in 49 CFR 583.5(a)(3).
(c) Manufacturer’s suggested retail
price means the sum of the prices
described in paragraphs (c)(1) and (2) of
this section as reported on the label that is
affixed to the windshield or side window
of the vehicle, as described in 15 U.S.C.
1232.
(1) The retail price of the automo-
bile suggested by the manufacturer as
described in 15 U.S.C. 1232(f)(1).
(2) The retail delivered price suggested
by the manufacturer for each accessory
or item of optional equipment, physically
attached to such automobile at the time
of its delivery to the dealer, which is not
included within the price of such automo-
bile as stated pursuant to 15 U.S.C. 1232(f)
(1), as described in 15 U.S.C. 1232(f)(2).
(d) North America means the territory
of the United States, Canada, and Mexico

April 17, 2023 762 Bulletin No. 2023–16
as defined in 19 CFR part 182, appendix
A, section 1(1).
(e) Placed in service. A new clean vehi-
cle is considered to be placed in service on
the date the taxpayer takes possession of
the vehicle.
(f) Section 30D regulations means
§1.30D-1, this section, and §§1.30D-3 and
1.30D-4.
(g) Vehicle classifications—(1) In gen-
eral. The vehicle classification of a new
clean vehicle is to be determined consis-
tent with the rules and definitions provided
in 40 CFR 600.315-08 and this paragraph
(g) for vans, sport utility vehicles, and
pickup trucks, and other vehicles.
(2) Van means a vehicle classified as
a van or minivan under 40 CFR 600.315-
08(a)(2)(iii) and (iv), or otherwise so
classified by the Administrator of the EPA
pursuant to 40 CFR 600.315-08(a)(3)(ii).
(3) Sport utility vehicle means a vehicle
classified as a small sport utility vehicle
or standard sport utility vehicle under 40
CFR 600.315-08(a)(2)(v) and (vi), or oth-
erwise so classified by the Administrator
of the EPA pursuant to 40 CFR 600.315-
08(a)(3)(ii).
(4) Pickup truck means a vehicle clas-
sified as a small pickup truck or standard
pickup truck under 40 CFR 600.315-08(a)
(2)(i) and (ii), or otherwise so classified by
the Administrator of the EPA pursuant to
40 CFR 600.315-08(a)(3)(ii).
(5) Other vehicle means any vehicle
classified in one of the classes of passenger
automobiles listed in 40 CFR 600.315-
08(a)(1), or otherwise so classified by the
Administrator of the EPA pursuant to 40
CFR 600.315-08(a)(3)(ii).
(h) Severability. The provisions of this
section are separate and severable from
one another. If any provision of this sec-
tion is stayed or determined to be invalid,
it is the agencies’ intention that the remain-
ing provisions shall continue in effect.
(i) Applicability date. This section
applies to new clean vehicles placed in
service on or after January 1, 2023, for
taxable years ending after April 17, 2023.
§1.30D-3 Critical mineral and battery
component requirements.
(a) Critical minerals requirement—(1)
In general. The critical minerals require-
ment described in section 30D(e)(1)(A) of
the Internal Revenue Code (Code), with
respect to the battery from which the elec-
tric motor of a new clean vehicle draws
electricity, is met if the qualifying critical
mineral content of such battery is equal to
or greater than the applicable critical min-
erals percentage (as defined in paragraph
(a)(2) of this section), as certified by the
qualified manufacturer, in such form or
manner as prescribed by the Secretary of
the Treasury or her delegate (Secretary).
(2) Applicable critical minerals per-
centage. For purposes of paragraph (a)
(1) of this section, section 30D(e)(1)(B)
provides the applicable critical minerals
percentage, which is based on the year in
which a vehicle is placed in service by the
taxpayer and set forth in paragraphs (a)(2)
(i) through (v) of this section.
(i) In the case of a vehicle placed in
service after April 17, 2023, and before
January 1, 2024, the applicable critical
minerals percentage is 40 percent.
(ii) In the case of a vehicle placed in
service during calendar year 2024, the
applicable critical minerals percentage is
50 percent.
(iii) In the case of a vehicle placed in
service during calendar year 2025, the
applicable critical minerals percentage is
60 percent.
(iv) In the case of a vehicle placed in
service during calendar year 2026, the
applicable critical minerals percentage is
70 percent.
(v) In the case of a vehicle placed in
service after December 31, 2026, the
applicable critical minerals percentage is
80 percent.
(3) Determining qualifying critical
mineral content—(i) In general. Qualify-
ing critical mineral content with respect to
a battery described in paragraph (a)(1) of
this section is calculated as the percentage
that results from dividing:
(A) The total value of qualifying criti-
cal minerals, by
(B) The total value of critical minerals.
(ii) Separate determinations required
for each procurement chain. The portion
of an applicable critical mineral that is a
qualifying critical mineral must be deter-
mined separately for each procurement
chain.
(iii) Time for determining value. A
qualified manufacturer must select a date
for determining the values described in
paragraphs (a)(3)(i)(A) and (B) of this
section. Such date must be after the final
processing or recycling step for the appli-
cable critical minerals relevant to the
certification described in section 30D(e)
(1)(A).
(iv) Application of qualifying critical
mineral content to vehicles. A qualified
manufacturer may determine qualifying
critical mineral content based on the value
of the applicable critical minerals actu-
ally contained in the battery of a specific
vehicle. Alternatively, for purposes of
calculating the qualifying critical mineral
content for batteries in a group of vehicles,
a qualified manufacturer may average the
qualifying critical mineral content calcu-
lation over a period of time (for example,
a year, quarter, or month) with respect to
vehicles from the same model line, plant,
class, or some combination of thereof,
with final assembly (as defined in section
30D(d)(5) of the Code and §1.30D-2(b))
within North America.
(b) Battery components requirement—
(1) In general. The battery components
requirement described in section 30D(e)
(2)(A) of the Code, with respect to the
battery from which the electric motor of a
new clean vehicle draws electricity, is met
if the qualifying battery component con-
tent of such battery is equal to or greater
than the applicable battery components
percentage (as defined in paragraph (b)(2)
of this section), as certified by the quali-
fied manufacturer, in such form or manner
as prescribed by the Secretary.
(2) Applicable battery components per-
centage. For purposes of paragraph (b)(1)
of this section, section 30D(e)(2)(B) pro-
vides the applicable battery components
percentage, which is based on the year in
which a vehicle is placed in service by the
taxpayer as set forth in paragraphs (b)(2)
(i) through (vi) of this section.
(i) In the case of a vehicle placed in
service after April 17, 2023, and before
January 1, 2024, the applicable battery
components percentage is 50 percent.
(ii) In the case of a vehicle placed in
service during calendar year 2024 or
2025, the applicable battery components
percentage is 60 percent.
(iii) In the case of a vehicle placed in
service during calendar year 2026, the
applicable battery components percentage
is 70 percent.

Bulletin No. 2023–16 763 April 17, 2023
(iv) In the case of a vehicle placed in
service during calendar year 2027, the
applicable battery components percentage
is 80 percent.
(v) In the case of a vehicle placed in
service during calendar year 2028, the
applicable battery components percentage
is 90 percent.
(vi) In the case of a vehicle placed
in service after December 31, 2028, the
applicable battery components percentage
is 100 percent.
(3) Determining qualifying battery
component content—(i) In general. Qual-
ifying battery component content with
respect to a battery described in paragraph
(b)(1) of this section is calculated as the
percentage that results from dividing—
(A) The total incremental value of
North American battery components, by
(B) The total incremental value of bat-
tery components.
(ii) Time for determining value. A
qualified manufacturer must select a date
for determining the incremental values
described in paragraphs (b)(3)(i)(A) and
(B) of this section. Such date must be after
the last manufacturing or assembly step
for the battery components relevant to the
certification described in section 30D(e)
(2)(A) of the Code.
(iii) Application of qualifying bat-
tery component content to vehicles. A
qualified manufacturer may determine
qualifying battery component content
based on the incremental values of the
battery components actually contained
in the battery of a specific vehicle. Alter-
natively, for purposes of calculating the
qualifying battery component content
for batteries in a group of vehicles, a
qualified manufacturer may average the
qualifying battery component content
calculation over a period of time (for
example, a year, quarter, or month) with
respect to vehicles from the same model
line, plant, class, or some combination of
thereof, with final assembly (as defined
in section 30D(d)(5) of the Code and
§1.30D-2(b)) within North America.
(c) Definitions. The following defini-
tions apply for purposes of this section:
(1) Applicable critical mineral means
an applicable critical mineral as defined in
section 45X(c)(6) of the Code.
(2) Assembly, with respect to battery
components, means the process of com-
bining battery components into battery
cells and battery modules.
(3) Battery, for purposes of a new clean
vehicle, means a collection of one or more
battery modules, each of which has two or
more electrically configured battery cells
in series or parallel, to create voltage or
current. The term battery does not include
items such as thermal management sys-
tems or other parts of a battery cell or
module that do not directly contribute
to the electrochemical storage of energy
within the battery, such as battery cell
cases, cans, or pouches.
(4) Battery cell means a combination
of battery components (other than battery
cells) capable of electrochemically storing
energy from which the electric motor of a
new clean vehicle draws electricity.
(5) Battery component means a compo-
nent that forms part of a battery and which
is manufactured or assembled from one or
more components or constituent materi-
als that are combined through industrial,
chemical, and physical assembly steps.
Battery components may include, but are
not limited to, a cathode electrode, anode
electrode, solid metal electrode, separator,
liquid electrolyte, solid state electrolyte,
battery cell, and battery module. Constit-
uent materials are not considered a type
of battery component, although constit-
uent materials may be manufactured or
assembled into battery components. Some
battery components may be made entirely
of inputs that do not contain constituent
materials.
(6) Constituent materials means
materials that contain applicable critical
minerals and are employed directly in the
manufacturing of battery components.
Constituent materials may include, but are
not limited to, powders of cathode active
materials, powders of anode active mate-
rials, foils, metals for solid electrodes,
binders, electrolyte salts, and electrolyte
additives, as required for a battery cell.
(7) Country with which the United
States has a free trade agreement in
effect—(i) In general. The term “country
with which the United States has a free
trade agreement in effect” means any of
those countries identified in paragraph (c)
(7)(ii) of this section or that the Secretary
may identify in the future. The criteria
the Secretary will consider in determin-
ing whether to identify a country under
this paragraph (c)(7) include whether an
agreement between the United States and
that country, as to the critical minerals
contained in electric vehicle batteries or
more generally, and in the context of the
overall commercial and economic rela-
tionship between that country and the
United States:
(A) Reduces or eliminates trade barri-
ers on a preferential basis;
(B) Commits the parties to refrain from
imposing new trade barriers;
(C) Establishes high-standard disci-
plines in key areas affecting trade (such
as core labor and environmental protec-
tions); and/or
(D) Reduces or eliminates restric-
tions on exports or commits the parties to
refrain from imposing such restrictions.
(ii) Free trade agreements in effect.
The countries with which the United
States currently has a free trade agreement
in effect are: Australia, Bahrain, Canada,
Chile, Colombia, Costa Rica, Dominican
Republic, El Salvador, Guatemala, Hon-
duras, Israel, Japan, Jordan, South Korea,
Mexico, Morocco, Nicaragua, Oman,
Panama, Peru, and Singapore.
(iii) Updates. The list of countries
in paragraph (c)(7)(ii) may be revised
and updated through appropriate guid-
ance published in the Federal Register
or in the Internal Revenue Bulletin (see
§601.601(d) of this chapter).
(8) Extraction means the activities
performed to extract or harvest minerals
or natural resources from the ground or a
body of water, including, but not limited
to, by operating equipment to extract or
harvest minerals or natural resources from
mines and wells, or to extract minerals or
natural resources from the waste or residue
of prior extraction. Extraction concludes
when activities are performed to convert
raw mined or harvested products or raw
well effluent to substances that can be
readily transported or stored for direct use
in critical mineral processing. Extraction
includes the physical processes involved
in refining. Extraction does not include the
chemical and thermal processes involved
in refining.
(9) Incremental value, with respect
to a battery component, means the value
determined by subtracting from the value
of that battery component the value of the
manufactured or assembled battery com-

April 17, 2023 764 Bulletin No. 2023–16
ponents, if any, that are contained in that
battery component.
(10) Manufacturing, with respect to a
battery component, means the industrial
and chemical steps taken to produce a bat-
tery component.
(11) North America means the territory
of the United States, Canada, and Mexico
as defined in 19 CFR part 182, appendix
A, section 1(1).
(12) North American battery com-
ponent means a battery component
substantially all of the manufacturing or
assembly of which occurs in North Amer-
ica, without regard to the location of the
manufacturing or assembly activities of
any components that make up the partic-
ular battery component.
(13) Processing means the non-physi-
cal processes involved in the refining of
non-recycled substances or materials,
including the treating, baking, and coating
processes used to convert such substances
and materials into constituent materi-
als. Processing includes the chemical or
thermal processes involved in refining.
Processing does not include the physical
processes involved in refining.
(14) Procurement chain means a com-
mon sequence of extraction, processing,
or recycling activities that occur in a
common set of locations with respect
to an applicable critical mineral, con-
cluding in the production of constituent
materials. Sources of a single applica-
ble critical mineral may have multiple
procurement chains if, for example, one
source of the applicable critical mineral
undergoes the same extraction, process-
ing, or recycling process in different
locations.
(15) Qualified manufacturer means a
manufacturer described in section 30D(d)
(3) of the Code.
(16) Qualifying battery component
content means the percentage of the value
of the battery components contained in the
battery from which the electric motor of
a new clean vehicle draws electricity that
were manufactured or assembled in North
America.
(17) Qualifying critical mineral
means an applicable critical mineral that
is extracted or processed in the United
States, or in any country with which the
United States has a free trade agreement in
effect, or recycled in North America.
(i) An applicable critical mineral is
extracted or processed in the United
States, or in any country with which the
United States has a free trade agreement
in effect, if:
(A) Fifty (50) percent or more of the
value added to the applicable critical
mineral by extraction is derived from
extraction that occurred in the United
States or in any country with which the
United States has a free trade agreement
in effect; or
(B) Fifty (50) percent or more of the
value added to the applicable critical
mineral by processing is derived from pro-
cessing that occurred in the United States
or in any country with which the United
States has a free trade agreement in effect.
(ii) An applicable critical mineral is
recycled in North America if 50 percent
or more of the value added to the applica-
ble critical mineral by recycling is derived
from recycling that occurred in North
America.
(18) Qualifying critical mineral con-
tent means the percentage of the value of
the applicable critical minerals contained
in the battery from which the electric
motor of a new clean vehicle draws elec-
tricity that were extracted or processed in
the United States, or in any country with
which the United States has a free trade
agreement in effect, or recycled in North
America.
(19) Recycling means the series of
activities during which recyclable mate-
rials containing critical minerals are
transformed into specification-grade
commodities and consumed in lieu of
virgin materials to create new constituent
materials; such activities result in new
constituent materials contained in the bat-
tery from which the electric motor of a
new clean vehicle draws electricity.
(20) Total incremental value of North
American battery components means the
sum of the incremental values of each
North American battery component con-
tained in a battery described in paragraph
(b)(1) of this section.
(21) Total incremental value of battery
components means the sum of the incre-
mental values of each battery component
contained in a battery described in para-
graph (b)(1) of this section.
(22) Total value of critical minerals
means the sum of the values of all appli-
cable critical minerals contained in a
battery described in paragraph (a)(1) of
this section.
(23) Total value of qualifying critical
minerals means the sum of the values of
all the qualifying critical minerals con-
tained in a battery described in paragraph
(a)(1) of this section.
(24) Value, with respect to property,
means the arm’s-length price that was paid
or would be paid for the property by an
unrelated purchaser determined in accor-
dance with the principles of section 482 of
the Code and regulations thereunder.
(25) Value added, with respect to
recycling, extraction, or processing of
an applicable critical mineral, means the
increase in the value of the applicable crit-
ical mineral attributable to the relevant
activity.
(d) Excluded entities. [IRS will address
excluded entities in the final rule.]
(e) Severability. The provisions of this
section are separate and severable from
one another. If any provision of this sec-
tion is stayed or determined to be invalid,
it is the agencies’ intention that the remain-
ing provisions shall continue in effect.
(f) Applicability date. This section
applies to new clean vehicles placed in
service after April 17, 2023, for taxable
years ending after April 17, 2023.
§1.30D-4 Special rules.
(a) No double benefit—(1) In general.
Under section 30D(f)(2) of the Internal
Revenue Code (Code), the amount of any
deduction or other credit allowable under
chapter 1 of the Code for a vehicle for
which a credit is allowable under section
30D(a) must be reduced by the amount of
the section 30D credit allowed for such
vehicle (determined without regard to sec-
tion 30D(c)).
(2) Application to credit for previous-
ly-owned clean vehicles under section
25E. A section 30D credit that has been
allowed with respect to a vehicle in a tax-
able year before the year in which a credit
under section 25E of the Code is allow-
able for that vehicle does not reduce the
amount allowable under section 25E.
(3) Application to credit for qualified
clean vehicles under section 45W. Pursu-
ant to section 45W(d)(3) of the Code, no
credit is allowed under section 45W with

Bulletin No. 2023–16 765 April 17, 2023
respect to any vehicle for which a credit
was allowed under section 30D.
(b) Limitation based on modified
adjusted gross income—(1) In general.
No credit is allowed under section 30D(a)
for any taxable year if—
(i) The lesser of —
(A) The modified adjusted gross
income of the taxpayer for such taxable
year, or
(B) The modified adjusted gross
income of the taxpayer for the preceding
taxable year, exceeds
(ii) The threshold amount.
(2) Threshold amount. For purposes of
paragraph (b)(1) of this section, the thresh-
old amount applies to individual taxpayers
based on the return filing status for the
taxable year, as set forth in paragraphs (b)
(2)(i) through (iii) of this section.
(i) In the case of a joint return or a sur-
viving spouse (as defined in section 2(a)
of the Code), the threshold amount is
$300,000,
(ii) In the case of a head of household
(as defined in section 2(b) of the Code),
the threshold amount is $225,000.
(iii) In the case of a taxpayer not
described in paragraph (b)(2)(i) or (ii)
of this section, the threshold amount is
$150,000.
(3) Modified adjusted gross income.
For purposes of section 30D(f)(10) and
this paragraph (b), the term modified
adjusted gross income means adjusted
gross income (as defined in section 62
of the Code) increased by any amount
excluded from gross income under section
911, 931, or 933 of the Code.
(4) Special rule for change in filing
status. If the taxpayer’s filing status for
the taxable year differs from the taxpay-
er’s filing status in the preceding taxable
year, the taxpayer satisfies the limitation
described in paragraph (b)(1) of this sec-
tion if the taxpayer’s modified AGI does
not exceed the threshold amount in either
year based on the applicable filing status
for that taxable year.
(5) Application to taxpayers other
than individuals—(i) In general. Except
as provided in paragraph (b)(4)(ii) of
this section, the modified adjusted gross
income limitation of this paragraph (b)
does not apply in the case of a new clean
vehicle placed in service by a corporation
or other taxpayer that is not an individual
for whom adjusted gross income is com-
puted under section 62.
(ii) Application to passthrough enti-
ties. In the case of a new clean vehicle
placed in service by a partnership or S
corporation, where the section 30D credit
is claimed by individuals who are direct
or indirect partners of that partnership or
shareholders of that S corporation, the
modified adjusted gross income limitation
of this paragraph (b) will apply to those
partners or shareholders.
(c) Multiple owners and passthrough
entity ownership of a single vehicle—(1)
In general. Except as provided in para-
graph (c)(2) of this section, the amount
of the section 30D credit attributable to a
new clean vehicle may be claimed on only
one tax return. In the event a new clean
vehicle is placed in service by multiple
owners, no allocation or proration of the
section 30D credit is available.
(2) Passthrough entities. In the case
of a new clean vehicle placed in service
by a partnership or S corporation, while
the partnership or S corporation is the
vehicle owner, the section 30D credit is
allocated among the partners of the part-
nership under §1.704-1(b)(4)(ii) or among
the shareholders of the S corporation
under sections 1366(a) and 1377(a) of the
Code and claimed on the tax returns of the
ultimate partners’ or of the S corporation
shareholder(s).
(3) Seller reporting—(i) In general.
The name and taxpayer identification
number of the vehicle owner claiming the
section 30D credit must be listed on the
seller’s report pursuant to section 30D(d)
(1)(H). The credit will be allowed only on
the tax return of the owner listed in the
seller’s report.
(ii) Passthrough entities. In the case of
a new clean vehicle placed in service by
a partnership or S corporation, the name
and tax identification number of the part-
nership or S corporation that placed the
new clean vehicle in service must be listed
on the seller’s report pursuant to section
30D(d)(1)(H).
(4) Example. A married couple jointly
purchases and places in service a new
clean vehicle that qualifies for the section
30D credit and puts both of their names
on the title. When the couple prepares to
file their Federal income tax return, they
choose to file using the married filing
separately filing status. The section 30D
credit may only be claimed by one of the
spouses on that spouse’s tax return, and the
other spouse may not claim any amount of
the section 30D credit with respect to that
new clean vehicle. The spouse that claims
the section 30D credit must be the same
spouse listed on the seller report received
pursuant to section 30D(d)(1)(H).
(d) Severability. The provisions of this
section are separate and severable from
one another. If any provision of this sec-
tion is stayed or determined to be invalid,
it is the agencies’ intention that the remain-
ing provisions shall continue in effect.
(e) Applicability date. This section
applies to new clean vehicles placed in
service after [DATE OF PUBLICATION
OF FINAL RULE].
Douglas W. O’Donnell,
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register March
31, 2023, 8:45 a.m., and published in the issue of
the Federal Register for April 17, 2023, TBD FR
TBD)

Bulletin No. 2023–16 i April 17, 2023
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.

April 17, 2023 ii Bulletin No. 2023–16
Numerical Finding List
1
Bulletin 2023–16
Announcements:
2023-2, 2023-2 I.R.B. 344
2023-1, 2023-3 I.R.B. 422
2023-3, 2023-5 I.R.B. 447
2023-4, 2023-7 I.R.B. 470
2023-5, 2023-9 I.R.B. 499
2023-6, 2023-9 I.R.B. 501
2023-8, 2023-14 I.R.B. 632
2023-9, 2023-15 I.R.B. 639
2023-10, 2023-16 I.R.B. 663
AOD:
2023-1, 2023-10 I.R.B. 502
2023-2, 2023-11 I.R.B. 529
Notices:
2023-4, 2023-2 I.R.B. 321
2023-5, 2023-2 I.R.B. 324
2023-6, 2023-2 I.R.B. 328
2023-8, 2023-2 I.R.B. 341
2023-1, 2023-3 I.R.B. 373
2023-2, 2023-3 I.R.B. 374
2023-3, 2023-3 I.R.B. 388
2023-7, 2023-3 I.R.B. 390
2023-9, 2023-3 I.R.B. 402
2023-10, 2023-3 I.R.B. 403
2023-11, 2023-3 I.R.B. 404
2023-12, 2023-6 I.R.B. 450
2023-13, 2023-6 I.R.B. 454
2023-16, 2023-8 I.R.B. 479
2023-17, 2023-10 I.R.B. 505
2023-18, 2023-10 I.R.B. 508
2023-20, 2023-10 I.R.B. 523
2023-19, 2023-11 I.R.B. 560
2023-21, 2023-11 I.R.B. 563
2023-22, 2023-12 I.R.B. 569
2023-23, 2023-13 I.R.B. 571
2023-24, 2023-13 I.R.B. 571
2023-26, 2023-13 I.R.B. 577
2023-25, 2023-14 I.R.B. 629
2023-27, 2023-15 I.R.B. 634
2023-28, 2023-15 I.R.B. 635
2023-31, 2023-16 I.R.B. 661
Proposed Regulations:
REG-100442-22, 2023-3 I.R.B. 423
REG-146537-06, 2023-3 I.R.B. 436
REG-114666-22, 2023-4 I.R.B. 437
REG 122286-18, 2023-11 I.R.B. 565
REG-120653-22, 2023-15 I.R.B. 640
REG-105954-22, 2023-16 I.R.B. 713
REG-120080-22, 2023-16 I.R.B. 746
Revenue Procedures:
2023-1, 2023-1 I.R.B. 1
2023-2, 2023-1 I.R.B. 120
2023-3, 2023-1 I.R.B. 144
2023-4, 2023-1 I.R.B. 162
2023-5, 2023-1 I.R.B. 265
2023-7, 2023-1 I.R.B. 305
2023-8, 2023-3 I.R.B. 407
2023-10, 2023-3 I.R.B. 411
2023-11, 2023-3 I.R.B. 417
2023-14, 2023-6 I.R.B. 466
2023-9, 2023-7 I.R.B. 471
2023-13, 2023-13 I.R.B. 581
2023-17, 2023-13 I.R.B. 604
2023-18, 2023-13 I.R.B. 605
2023-19, 2023-13 I.R.B. 626
2023-20, 2023-15 I.R.B. 636
Revenue Rulings:
2023-1, 2023-2 I.R.B. 309
2023-3, 2023-6 I.R.B. 448
2023-4, 2023-9 I.R.B. 480
2023-5, 2023-10 I.R.B. 503
2023-6, 2023-14 I.R.B. 627
2023-7, 2023-15 I.R.B. 633
2023-2, 2023-16 I.R.B. 658
Treasury Decisions:
9970, 2023-2 I.R.B. 311
9771, 2023-3 I.R.B. 346
9772, 2023-11 I.R.B. 530
9773, 2023-11 I.R.B. 557
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2022–27 through 2022–52 is in Internal Revenue Bulletin
2022–52, dated December 27, 2022.

Bulletin No. 2023–16 iii April 17, 2023
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2023–16
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2022–27 through 2022–52 is in Internal Revenue Bulletin
2022–52, dated December 27, 2022.

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