Internal Revenue Bulletin 2021-39 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 2021–39
September 27, 2021
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
T.D. 9952, page 428.
These final regulations modify regulations relating to IRS
administrative proceedings to reflect limitations that are re-
quired by the enactment of the Taxpayer First Act of 2019.
These final regulations implement new rules regarding the
persons who may be provided books, papers, records, or
other data obtained pursuant to section 7602 of the Inter-
nal Revenue Code (Code) for the sole purpose of provid-
ing expert evaluation and assistance to the IRS, and adopt
further limitations on the types of non-governmental attor-
neys to whom, under the authority of section 6103(n) of the
Code, any books, papers, records, or other data obtained
pursuant to section 7602 may be provided. These final
regulations also prohibit any IRS contractors from asking
substantive questions of a summoned witness under oath
or asking a summoned person’s representative to clarify an
objection or assertion of privilege. The regulations affect
persons who are examined by the IRS and any persons who
are questioned by the IRS under oath pursuant to section
7602.
EMPLOYMENT TAX
T.D. 9953, page 430.
Temporary and proposed regulations provide guidance on
the recapture of excess employment tax credits under the
American Rescue Plan Act of 2021 (ARP). Eligible employ-
ers may claim refundable paid sick and family leave and em-
ployee retention credits up to the total allowable amounts
either on their employment tax returns or as an advance
payment that is later reconciled on their employment tax
returns. Any refund of these credits paid to a taxpayer that
exceeds the credit amount the taxpayer is allowed is an er-
roneous refund. These temporary regulations authorize the
assessment and collection of any erroneous refund of the
credits in the normal course of processing the applicable
employment tax returns. This allows the IRS to efficiently
recover any refund, while preserving administrative protec-
tions for taxpayers.
REG-109077-21, page 445.
Temporary and proposed regulations provide guidance on
the recapture of excess employment tax credits under the
American Rescue Plan Act of 2021 (ARP). Eligible employ-
ers may claim refundable paid sick and family leave and em-
ployee retention credits up to the total allowable amounts
either on their employment tax returns or as an advance
payment that is later reconciled on their employment tax
returns. Any refund of these credits paid to a taxpayer that
exceeds the credit amount the taxpayer is allowed is an er-
roneous refund. These temporary regulations authorize the
assessment and collection of any erroneous refund of the
credits in the normal course of processing the applicable
employment tax returns. This allows the IRS to efficiently
recover any refund, while preserving administrative protec-
tions for taxpayers.
EMPLOYMENT TAX,
SELF-EMPLOYMENT TAX
Notice 2021-53, page 438.
Notice 2021-53 provides guidance to employers on the
requirement to report the amount of qualified sick leave
wages and qualified family leave wages paid to employees
under the Families First Coronavirus Response Act (Families
First Act), Pub. L. No. 116-127, 134 Stat. 178 (March 18,
2020), as amended by the COVID-Related Tax Relief Act of
2020, Pub. L. No. 116-260, 134 Stat. 1182 (December
Finding Lists begin on page ii.

27, 2020), and the American Rescue Plan Act of 2021,
Pub. L. No. 117-2, 135 Stat. 4 (March 11, 2021). Employ-
ers will be required to report these amounts either on Form
W-2, Box 14, or on a separate statement. This required
reporting provides employees who are also self-employed
with information necessary for properly claiming qualified
sick leave equivalent or qualified family leave equivalent
credits under the Families First Act, as amended by the
COVID-Related Tax Relief Act of 2020, and the American
Rescue Plan Act of 2021.
INCOME TAX
Rev. Proc. 2021-41, page 443.
Revenue Procedure 2021-41 provides domestic asset/liabil-
ity percentages and domestic investment yields needed by
foreign life insurance companies and foreign property and
liability insurance companies to compute their minimum ef-
fectively connected net investment income under section
842(b) of the Internal Revenue Code for taxable years begin-
ning after December 31, 2019.
September 27, 2021 2 Bulletin No. 2021–39

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing of-
ficial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
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.
September 27, 2021 Bulletin No. 2021–39

September 27, 2021 428 Bulletin No. 2021–39
Part I
26 CFR Part 301
T.D. 9952
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 301
Certain Non-Government
Persons Not Authorized to
Participate in Examinations
of Books and Witnesses
as a Section 6103(n)
Contractor
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTIONS: Final regulations.
SUMMARY: This document contains fi-
nal regulations modifying regulations re-
lating to IRS administrative proceedings
to reflect limitations that are required by
the enactment of the Taxpayer First Act
of 2019. These final regulations imple-
ment new rules regarding the persons who
may be provided books, papers, records,
or other data obtained pursuant to section
7602 of the Internal Revenue Code (Code)
for the sole purpose of providing expert
evaluation and assistance to the IRS, and
adopt further limitations on the types of
non-governmental attorneys to whom,
under the authority of section 6103(n) of
the Code, any books, papers, records, or
other data obtained pursuant to section
7602 may be provided. These final regu-
lations also prohibit any IRS contractors
from asking substantive questions of a
summoned witness under oath or asking
a summoned person’s representative to
clarify an objection or assertion of privi-
lege. The regulations affect persons who
are examined by the IRS and any persons
who are questioned by the IRS under oath
pursuant to section 7602.
DATES: Effective date: These regulations
are effective on September 7, 2021.
Applicability date: For date of appli-
cability, see §301.7602-1(d), which pro-
vides that the regulations promulgated
by this Treasury decision are applicable
to examinations begun or administrative
summonses served by the IRS on or after
August 6, 2020.
FOR FURTHER INFORMATION CON-
TACT: Kilsy T. Barnes at (202) 317-6215
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
These final regulations amend Pro-
cedure and Administration Regulations
(26 CFR part 301) under section 7602(a)
of the Code relating to participation by
persons described in section 6103(n) of
the Code and 26 CFR §301.6103(n)-1(a)
of the Procedure and Administration
Regulations in receiving and reviewing
summoned books, papers, records, or
other data and in interviewing a sum-
moned witness under oath. These final
regulations narrow the scope of the final
regulations (TD 9778) published in the
Federal Register (81 FR 45409) on July
14, 2016 (Summons Interview Regula-
tions) by providing that certain non-gov-
ernment attorneys whom the IRS could
previously have hired are no longer au-
thorized to participate in an examination
and by interpreting the requirements of
section 7602(f), which was added to the
Code by the Taxpayer First Act of 2019.
A notice of proposed rulemaking (REG-
132434-17) proposing these changes was
published in the Federal Register (85
FR 47931) on August 7, 2020 (proposed
regulations).
Summary of Comments
No public hearing was requested or
held regarding the proposed regulations.
Two responsive comments were received,
both of which concerned only one portion
of the proposed regulations – proposed
§301.7602-1(b)(3)(C), titled “Hiring of
certain non-government attorneys.”
The first commenter recommended
modifying the proposed rules to allow
any outside contractors working for the
IRS to examine, interview, and determine
whether a taxpayer was a “tax cheat.”
The Department of the Treasury (Trea-
sury Department) and the IRS decline to
adopt this comment. While the IRS may
hire a contractor to assist the IRS in these
processes, examining a taxpayer and de-
termining whether that taxpayer is in com-
pliance with Federal tax laws are core IRS
functions that the IRS has never allowed a
contractor to perform. In addition, section
7602(f) now prohibits the IRS from allow-
ing an IRS contractor to ask substantive
questions of a witness whose testimony is
being taken under oath pursuant to section
7602.
The second commenter noted that the
non-exclusive nature of the proposed
regulations left open the possibility that
the IRS could hire as a contractor in an
IRS examination a certified public ac-
countant (CPA), enrolled agent, or anoth-
er non-attorney to provide the IRS with
assistance in the application of Federal
tax laws. This commenter asserted that
the proposed regulations should be re-
vised so as to prohibit the IRS from hir-
ing as a contractor in an examination any
person, whether or not an attorney, for
that person’s expertise with the Federal
tax laws. The Treasury Department and
the IRS decline to adopt this comment.
The limitation on hiring attorneys as con-
tactors in examinations for their expertise
in applying the Federal tax laws is a mea-
sure that goes beyond what is required
by section 7602(f). This hiring limitation
was introduced as a matter of sound tax
administration to address concerns ex-
pressed by a range of professional and
business associations over the IRS’s pri-
or use of attorneys as contractors. While
the previous commenters addressing the
Summons Interview Regulations and No-
tice 2017-38, 2017-30 I.R.B. 147, noted
the potential hazards that could arise
from the IRS hiring attorney contractors
for their expertise with Federal tax laws,
the hiring of a CPA or other accountant
by the IRS as a contractor has not been
established as a widely held concern. Ac-
cordingly, the Treasury Department and
the IRS have determined (1) that hiring
outside CPAs and accountants as contrac-

tors in an examination does not pose the
same potential risk to tax administration
that prior commenters had identified for
the IRS hiring of outside attorneys, who
are trained at developing facts and taking
testimony, and (2) that the IRS is justi-
fied in contracting for the resources and
expertise of CPAs and accountants from
outside of the IRS in certain large or
complex cases.
Explanation of the Final Regulations
The preamble to proposed regulations
explained the various provisions of the
proposed regulations in detail. Because
these final regulations adopt the proposed
regulations without any modifications,
any persons interested in understanding
the provisions of these final regulations
should consult the preamble discussion
of these provisions in the proposed regu-
lations.
Special Analyses
These regulations are not subject to
review under section 6(b) of Executive
Order 12866 pursuant to the Memoran-
dum of Agreement (April 11, 2018) be-
tween the Treasury Department and the
Office of Management and Budget re-
garding review of tax regulations. There-
fore, a regulatory impact assessment is
not required.
Pursuant to the Regulatory Flexibili-
ty Act (5 U.S.C. chapter 6), it is hereby
certified that these regulations do not
impose a significant economic impact on
a substantial number of small entities.
The final regulations mainly affect the
IRS and do not impose requirements on
small entities. Thus, no economic impact
will result from these regulations on any
small entity. Accordingly, the Secretary
of the Treasury’s delegate certifies that
the rule will not have a significant eco-
nomic impact on a substantial number of
small entities.
Pursuant to section 7805(f) of the
Code, the notice of proposed rulemaking
preceding these final regulations was sub-
mitted to the Chief Counsel for the Office
of Advocacy of the Small Business Ad-
ministration for comments on its impact
on small business. No comments were
received from the Chief Counsel for the
Office of Advocacy of the Small Business
Administration.
Drafting Information
The principal author of these final reg-
ulations is William V. Spatz of the Office
of Associate Chief Counsel (Procedure
and Administration). However, other
personnel from the Treasury Department
and the IRS participated in their devel-
opment.
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes, Ex-
cise taxes, Gift taxes, Income taxes, Pen-
alties, Reporting and recordkeeping re-
quirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 301 is
amended as follows:
PART 301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The general authority ci-
tation for part 301 continues to read in part
as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 301.7602-1 is amended:
1. In paragraph (b)(2), by adding “(Sec-
retary)” at the end of the first sentence.
2. By revising paragraphs (b)(3) and
(d).
The revisions read as follows:
§ 301.7602-1 Examination of books and
witnesses.
* * * * *
(b)* * *
(3) Participation of a person described
in section 6103(n)—(i) IRS contractor
access to books and records obtained by
the IRS administratively—(A) In general.
The Secretary may not, under the authori-
ty of section 6103(n), provide any books,
papers, records, or other data obtained
pursuant to section 7602 to any person
authorized under section 6103(n), except
when such person requires such informa-
tion for the sole purpose of providing ex-
pert evaluation and assistance to the IRS.
(B) Persons providing expert evalua-
tion and assistance. For the purposes of
paragraph (b)(3)(i)(A) of this section, per-
sons providing expert evaluation and as-
sistance may include, but are not limited
to, the following:
(1) Persons with specialized expertise
in certain substantive areas, including,
but not limited to, economists, engineers,
attorneys specializing in an area relevant
to an issue in the examination (such as
patent law, property law, environmental
law, or foreign, state, or local law (in-
cluding foreign, state, or local tax law)),
industry experts, or other subject-matter
experts;
(2) Persons providing support as ancil-
lary service contractors including, but not
limited to, court reporters, translators or
interpreters, photocopy services, provid-
ers of data processing programs or equip-
ment, litigation support services, or other
similar contractors; and
(3) Whistleblower-related contractors
described in § 301.6103(n)-2.
(C) Hiring of certain non-government
attorneys. The IRS may not hire an attor-
ney as a contractor to assist in an examina-
tion under section 7602 unless the attorney
is hired by the IRS as a specialist in foreign,
state, or local law (including foreign, state,
or local tax law), or in non-tax substantive
law that is relevant to an issue in the exam-
ination, such as patent law, property law, or
environmental law, or is hired for knowl-
edge, skills, or abilities other than provid-
ing legal services as an attorney.
(ii) IRS contractor participation in an
IRS summons interview—(A) In general.
No person other than an officer or employ-
ee of the IRS or its Office of Chief Coun-
sel may, on behalf of the Secretary, ques-
tion a witness under oath whose testimony
was obtained pursuant to section 7602.
Persons authorized by section 6103(n)
and with whom the Secretary may provide
books, papers, records, or other data ob-
tained pursuant to section 7602 may also
attend a summons interview and provide
assistance to the IRS or Office of Chief
Counsel employees in attendance, but
may not question the summoned witness
under oath or ask a summoned person’s
representative to clarify an objection or
assertion of privilege.
(B) Court reporters, translators, and
interpreters are not barred from asking
Bulletin No. 2021–39 429 September 27, 2021

September 27, 2021 430 Bulletin No. 2021–39
questions. Court reporters who are hired
as contractors by the IRS to make a record
of an IRS summons interview are permit-
ted to ask typical housekeeping questions
of a summoned witness. Examples of
such questions include, but are not limited
to, asking whether the witness swears to
tell the truth, asking the witness to spell
a word or phrase, and asking whether
the witness can speak up or speak rather
than gesture an answer. Translators and
interpreters who are hired as contractors
by the IRS to assist in the interview of a
summoned witness are permitted to trans-
late any of the questions that are asked of
the witness by an IRS or Office of Chief
Counsel officer or employee and to ask
questions which may be necessary to clar-
ify the translation.
* * * * *
(d) Applicability date. This section is
applicable after September 3, 1982, ex-
cept for paragraphs (b)(1) and (2) of this
section, which are applicable on and after
April 1, 2005, and paragraph (b)(3) of this
section, which applies to examinations be-
gun or administrative summonses served
by the IRS on or after August 6, 2020.
For rules under paragraphs (b)(1) and (2)
of this section that are applicable to sum-
monses issued on or after September 10,
2002 or under paragraph (b)(3) of this sec-
tion that are applicable to summons inter-
views conducted on or after June 18, 2014
and before July 14, 2016, see 26 CFR
301.7602-1T (revised as of April 1, 2016).
For rules under paragraph (b)(3) of this
section that are applicable to administra-
tive summonses served by the IRS before
August 6, 2020, see 26 CFR 301.7602-1
(revised as of April 1, 2020).
Douglas W. O’Donnell,
Deputy Commissioner for Services
and Enforcement.
Approved: August 20, 2021
Mark J. Mazur,
Acting Assistant Secretary of the Trea-
sury (Tax Policy).
(Filed by the Office of the Federal Register on Sep-
tember 2, 2021, 4:15 p.m., and published in the issue
of the Federal Register for September 7, 2021, 86
FR 49923)
26 CFR 31.3131-1T, 26 CFR 31.3132-1T & 26 CFR
31.3134-1T: Recapture of credits under the Ameri-
can Rescue Plan Act
T.D. 9953
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 31
Recapture of Excess
Employment Tax Credits
under the American Relief
Plan Act of 2021
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Temporary regulations.
SUMMARY: This document sets forth
temporary regulations under sections 3131,
3132, and 3134 of the Internal Revenue
Code (Code), added by sections 9641 and
9651 of the American Rescue Plan Act of
2021. These temporary regulations autho-
rize the assessment of any erroneous refund
of the tax credits paid under sections 3131,
3132 (including any increases in those
credits under section 3133), and 3134 of
the Code. The text of these temporary reg-
ulations also serves as the text of the pro-
posed regulations (REG-109077-21) set
forth in the notice of proposed rulemaking
on this subject in the Proposed Rules sec-
tion of this issue of the Federal Register.
DATES: Effective date: These temporary
regulations are effective on September
10, 2021.
Applicability date: For date of applica-
bility, see §§ 31.3131-1T, 31.3132-1T, and
31.3134-1T of these temporary regulations.
FOR FURTHER INFORMATION
CONTACT: Concerning these temporary
regulations, NaLee Park at 202-317-6798.
SUPPLEMENTARY INFORMATION:
Background
The Families First Coronavirus Re-
sponse Act (Families First Act), Pub. L.
116-127, 134 Stat. 178 (March 18, 2020),
the Coronavirus Aid, Relief, and Econom-
ic Security Act (CARES Act), Pub. L.
116-136, 134 Stat. 281 (March 27, 2020),
the COVID-related Tax Relief Act of 2020
(Tax Relief Act), enacted as Subtitle B of
Title II of Division N of the Consolidated
Appropriations Act, 2021, Pub. L. 116-
260, 134 Stat.1182 (December 27, 2020),
the Taxpayer Certainty and Disaster Relief
Tax Act of 2020 (Relief Act), enacted as
Division EE of the Consolidated Appro-
priations Act, 2021, and the American
Rescue Plan Act of 2021 (the ARP), Pub.
L. 117-2, 135 Stat. 4 (March 11, 2021),
provide relief to taxpayers from economic
hardships resulting from the Coronavirus
Disease 2019 (COVID-19). As described
below, this relief includes employment tax
credits for certain wages paid by employ-
ers.
I. Paid Sick and Family Leave Credits
The Emergency Paid Sick Leave
Act (EPSLA) and the Emergency Fam-
ily and Medical Leave Expansion Act
(EFMLEA), enacted as Divisions E and
C of the Families First Act, respectively,
generally required employers with fewer
than 500 employees to provide paid leave
due to certain circumstances related to
COVID-19. Sections 7001 and 7003 of
the Families First Act generally provided
that non-governmental employers subject
to the paid leave requirements under EPS-
LA and EFMLEA were entitled to fully
refundable tax credits to cover the wages
paid for leave taken for those periods of
time during which employees are unable
to work or telework for specified reasons
related to COVID-19, plus allocable qual-
ified health plan expenses.
Although the requirement to provide
employees with paid leave under EPS-
LA and EFMLEA expired December 31,
2020, the tax credits for qualified leave
wages paid for periods of leave taken be-
ginning on April 1, 2020, and ending on
December 31, 2020, were extended by the
Tax Relief Act through March 31, 2021,
for paid leave that would have satisfied the
requirements of EPSLA and EFMLEA.
The ARP added sections 3131 through
3133 of the Code, which extend the re-
fundable tax credits for paid leave to
non-governmental employers with few-

Bulletin No. 2021–39 431 September 27, 2021
er than 500 employees, and certain gov-
ernmental entities
1
without regard to the
number of employees, that provide paid
sick and family leave for specified rea-
sons related to COVID-19 with respect
to periods of leave beginning on April 1,
2021, through September 30, 2021. The
paid sick leave credit and the paid family
leave credit (collectively, “paid sick and
family leave credits”) under sections 3131
through 3133 are available to eligible
employers that provide employees with
paid leave that would have satisfied the
requirements of EPSLA and EFMLEA,
with certain modifications made pursuant
to the ARP.
Under section 3131, a credit is avail-
able to eligible employers who pay qual-
ified sick leave wages to an employee for
up to 80 hours leave provided during the
period beginning April 1, 2021, and end-
ing September 30, 2021, if the employee
is unable to work or telework because the
employee:
(1) is subject to a Federal, State, or local
quarantine or isolation order related
to COVID-19;
(2) has been advised by a health care pro-
vider to self-quarantine due to con-
cerns related to COVID-19;
(3) is experiencing symptoms of
COVID-19 and seeking a medical
diagnosis, is seeking or awaiting the
results of a diagnostic test for, or a
medical diagnosis of, COVID-19
and the employee has been exposed
to COVID-19 or the employee’s em-
ployer has requested the test or diag-
nosis, or the employee is obtaining
immunization related to COVID-19
or recovering from any injury, dis-
ability, illness, or condition related to
the immunization;
(4) is caring for an individual who is
subject to a Federal, State, or local
quarantine or isolation order related
to COVID-19, or has been advised
by a health care provider to self-quar-
antine due to concerns related to
COVID-19;
(5) is caring for a son or daughter of such
employee if the school or place of
care of the son or daughter has been
closed, or the child care provider of
the son or daughter is unavailable,
due to COVID-19 precautions; or
(6) is experiencing any other substantial-
ly similar condition specified by the
Secretary of Health and Human Ser-
vices (HHS) in consultation with the
Secretaries of the Treasury and Labor.
The Secretary of HHS has specified,
after consultation with the Secretaries
of Treasury and Labor, that a sub-
stantially similar condition is one in
which the employee takes leave:
to accompany an individual to obtain
immunization related to COVID-19,
or
to care for an individual who is re-
covering from any injury, disability,
illness, or condition related to the im-
munization.
2

If an employee is unable to work or
telework for reasons related to COVID-19
described in (1), (2), or (3) above, quali-
fied sick leave wages are wages paid at the
employee’s regular rate of pay or, if high-
er, the Federal minimum wage or any ap-
plicable State or local minimum wage, up
to a maximum of $511 per day and $5,110
in the aggregate. If an employee is unable
to work or telework for reasons related
to COVID-19 described in (4), (5), or (6)
above, qualified sick leave wages are two-
thirds of the wages paid at the employee’s
regular rate of pay or, if higher, the Federal
minimum wage or any applicable State or
local minimum wage, up to a maximum of
$200 per day and $2,000 in the aggregate.
Under section 3132, a credit is avail-
able to eligible employers who pay qual-
ified family leave wages to an employee
for up to 12 weeks of paid family leave
provided during the period beginning
April 1, 2021, and ending September 30,
2021, if the employee is unable to work
or telework due to any of the conditions
for which eligible employers may provide
paid sick leave. Qualified family leave
wages are two-thirds of the wages paid at
the employee’s regular rate of pay, up to a
maximum of $200 per day and $12,000 in
the aggregate.
An eligible employer may not receive
the paid family leave credit for the same
wages for which it received the paid sick
leave credit. Further, an eligible employer
that receives the credits for qualified sick
leave wages under section 3131 of the
Code and qualified family leave wages
under section 3132 of the Code (collec-
tively, “qualified leave wages”) may not
receive the employee retention credit al-
lowed under section 2301 of the CARES
Act or section 3134 of the Code based on
the same wages. For the second calendar
quarter of 2021, if an eligible employer
receives the employee retention credit
under section 2301 of the CARES Act
based on wages paid that are also qual-
ified leave wages on which the employ-
er may claim the paid sick and family
leave credits, the employer must reduce
any paid sick and family leave credits by
the amount of the credit allowed under
section 2301 of the CARES Act that is
attributable to those same wages. See
sections 3131(f)(3) and 3132(f)(3). For
the third and fourth calendar quarters of
2021, any qualified leave wages eligible
employers take into account for purposes
of the paid sick and family leave credits
may not be taken into account for purpos-
es of the employee retention credit under
section 3134 of the Code. See section
3134(c)(3)(D).
The paid sick and family leave cred-
its are also reduced by the amount of the
credit allowed under section 41 (the credit
for increasing research activities) with re-
spect to wages taken into account for de-
termining both the credit under section 41
and the paid sick and family leave credits.
In addition, any wages taken into account
in determining paid sick and family leave
credits cannot be taken into account as
wages for purposes of the credits under
sections 45A, 45P, 45S, and 51. See sec-
tions 3131(f)(3) and 3132(f)(3).
1
Section 9641 of the ARP added sections 3131(f)(5) and 3132(f)(5) to the Code, which extend paid sick and family leave credits to certain governmental employers (without regard to the
number of employees). However, the credits are not allowed for the government of the United States, or any agency or instrumentality of the United States government, except for an organi-
zation described in section 501(c)(1) of the Code and exempt from tax under section 501(a) of the Code.
2
For more information on the paid sick and family leave credits, including who is an “individual” for purposes of this “substantially similar” condition, see Tax Credits for Paid Leave Under
the American Rescue Plan Act of 2021 for Leave After March 31, 2021 | Internal Revenue Service (irs.gov) at https://www.irs.gov/newsroom/tax-credits-for-paid-leave-under-the-american-
rescue-plan-act-of-2021-for-leave-after-march-31-2021.

September 27, 2021 432 Bulletin No. 2021–39
Sections 3131(f)(2) and 3132(f)(2)
provide that, for purposes of sections 3131
and 3132, respectively, the term “wages”
means wages as defined in section 3121(a),
determined without regard to paragraphs
(1) through (22) of section 3121(b),
and compensation as defined in section
3231(e), determined without regard to the
sentence in section 3231(e)(1) that begins
“Such term does not include remunera-
tion”. Eligible employers are entitled to
receive a credit equal to the amount of
qualified leave wages paid under sections
3131 and 3132. Under sections 3131(d)
and 3132(d), the credit is increased by
the eligible employer’s cost of maintain-
ing health insurance coverage allocable
to the qualified leave wages (“allocable
qualified health plan expenses”). Under
sections 3131(e) and 3132(e), the credit
is also increased by certain amounts paid
under collectively bargained agreements
by the eligible employer that are proper-
ly allocable to the qualified leave wages
(“certain collectively bargained contri-
butions”), subject to the daily and aggre-
gate credit limitations. The credits for the
qualified leave wages and the collectively
bargained contributions combined cannot
exceed the $511 daily and $5110 aggre-
gate limitation or $200 daily and $2000
aggregate limitation for paid sick leave
and the $200 daily and $12,000 aggregate
limitation for paid family leave. However,
the credit for the allocable qualified health
expenses is in addition to the credit for the
qualified leave wages and not subject to
the daily and aggregate credit limitations.
Under sections 3131 and 3132, qual-
ified leave wages are subject to the tax-
es imposed on employers by sections
3111(a) (employer’s share of social secu-
rity tax), 3111(b), and 3221(a), but section
3133(a) provides that the paid sick and
family leave credits under sections 3131
and 3132 are increased by the amount of
the taxes imposed by sections 3111(a),
3111(b), and 3221(a) on qualified leave
wages.
The paid sick and family leave credits
under sections 3131 and 3132 are allowed
against the taxes imposed on employers
under section 3111(b) (the Hospital Insur-
ance tax (Medicare tax)), and against so
much of the taxes imposed under section
3221(a) (the Railroad Retirement Tax Act
Tier 1 tax) as are attributable to the rate
in effect under section 3111(b), as appli-
cable, on all wages and compensation paid
to all employees, and any credit amounts
in excess of these taxes are treated as an
overpayment to be refunded under sec-
tions 6402(a) and 6413(b) of the Code.
See sections 3131(b)(4)(A), 3131(f)(1),
3132(b)(3)(A), and 3132(f)(1).
II. Employee Retention Credit
Section 2301 of the CARES Act, as
originally enacted, provides for an em-
ployee retention credit for eligible em-
ployers, including tax-exempt organiza-
tions, that pay qualified wages, including
certain health plan expenses, to some or
all employees after March 12, 2020, and
before January 1, 2021. Section 206 of
the Relief Act adopted amendments and
technical changes to section 2301 of the
CARES Act for qualified wages paid af-
ter March 12, 2020, and before January
1, 2021, primarily expanding eligibility
for certain employers to claim the credit.
Section 206 of the Relief Act is effective
retroactive to the effective date of section
2301 of the CARES Act. Section 207 of
the Relief Act, which is effective for cal-
endar quarters beginning after December
31, 2020, further amends section 2301 of
the CARES Act to extend the application
of the employee retention credit to quali-
fied wages paid after December 31, 2020,
and before July 1, 2021, and to modify the
calculation of the credit amount for qual-
ified wages paid during that time. Section
9651 of the ARP enacted section 3134 of
the Code, effective for calendar quarters
beginning after June 30, 2021, to provide
an employee retention credit for qualified
wages paid after June 30, 2021, and be-
fore January 1, 2022. The Department of
the Treasury (Treasury Department) and
the Internal Revenue Service (IRS) will
continue to monitor potential legislation
related to the employee retention credit
that may impact certain rules described in
this preamble.
The employee retention credit is avail-
able to any employer carrying on a trade
or business during a calendar quarter that
meets the requirements to be an eligible
employer under section 3134, which in-
clude experiencing a full or partial sus-
pension of business operations due to
orders from an appropriate governmen-
tal authority limiting commerce, travel,
or group meetings (for commercial, so-
cial, religious, or other purposes) due to
COVID-19, experiencing a decline in
gross receipts, or qualifying as a recovery
startup business.
For eligible employers that averaged
more than 500 full-time employees (with-
in the meaning of section 4980H) during
2019 (large eligible employers), qualified
wages are wages and compensation (in-
cluding allocable qualified health plan ex-
penses), up to $10,000 per employee per
calendar quarter, paid to employees for the
time during which they are not providing
services due to a full or partial suspen-
sion of business operations or a decline
in gross receipts. For eligible employ-
ers that averaged 500 full-time employ-
ees or fewer during 2019 (small eligible
employers), and for severely financially
distressed employers as defined in sec-
tion 3134(c)(3)(C)(ii) that are also large
eligible employers, qualified wages are
the wages and compensation (including
allocable qualified health plan expenses),
up to $10,000 per employee per calendar
quarter, paid with respect to an employ-
ee (regardless of whether the employee is
performing services) during any period in
the calendar quarter in which the business
operations are fully or partially suspended
due to a governmental order or during any
calendar quarter in which the employer is
experiencing a decline in gross receipts. If
an employer was not in existence in 2019,
an employer may use the average num-
ber of full-time employees in 2020 rather
than 2019. If an employer is an eligible
employer due to being a recovery startup
business, the maximum aggregate em-
ployee retention credit the employer may
claim in a calendar quarter is $50,000. In
the third and fourth calendar quarters of
2021, a recovery startup business that is a
small eligible employer may treat all wag-
es paid with respect to an employee during
the quarter as qualified wages. See Notice
2021-49.
The same wages or compensation can-
not be counted for both the paid sick and
family leave credits under sections 3131
and 3132 and the employee retention cred-
it under section 3134. Qualified wages for
the employee retention credit also do not
include any wages taken into account un-
der sections 41, 45A, 45P, 45S, 51, and

Bulletin No. 2021–39 433 September 27, 2021
1396 of the Code. See section 3134(c)(3)
(D). Additionally, qualified wages do not
include amounts taken into account as
payroll costs for Paycheck Protection Pro-
gram loan forgiveness and certain grants.
See section 3134(h).
Section 3134(c)(4)(A) provides that,
for purposes of section 3134, the term
“wages” means wages as defined in sec-
tion 3121(a)
3
and compensation as defined
in section 3231(e).
The employee retention credit under
section 3134 is equal to 70 percent of
qualified wages paid. The credit is al-
lowed against the taxes imposed on em-
ployers under section 3111(b), first re-
duced by any tax credits allowed under
sections 3131 and 3132, and against so
much of the taxes imposed under section
3221(a) as are attributable to the rate in ef-
fect under section 3111(b), as applicable,
first reduced by any credits allowed under
sections 3131 and 3132, on all wages and
compensation paid to all employees. Any
credit amounts in excess of these taxes
are treated as an overpayment that shall
be refunded under sections 6402(a) and
6413(b) of the Code.
III. Refundability of Credits
Sections 3131(b)(4)(A), 3132(b)(3)
(A), and 3134(b)(3) provide that if the
amount of the paid sick and family leave
credits (which would include any increas-
es in the credits under section 3133(a))
and employee retention credit exceeds
the taxes imposed under section 3111(b)
and so much of the taxes imposed under
section 3221(a) as are attributable to the
rate in effect under section 3111(b), as
applicable, for any calendar quarter, after
application of the other credits previously
applied, such excess shall be treated as an
overpayment that shall be refunded under
sections 6402(a) and 6413(b).
Section 6402(a) generally provides
that, within the applicable period of lim-
itations, overpayments may be credited
against any liability in respect of an inter-
nal revenue tax on the part of the person
who made the overpayment and any re-
maining balance refunded to such person.
Section 6413(b) provides that if more than
the correct amount of employment tax im-
posed by sections 3101, 3111, 3201, 3221,
or 3402 is paid or deducted and the over-
payment cannot be adjusted under section
6413(a)
4
, the amount of the overpayment
shall be refunded (subject to the applica-
ble statute of limitations) as the Secretary
may prescribe in regulations.
The IRS revised Form 941, Employer’s
Quarterly Federal Tax Return, Form 943,
Employer’s Annual Federal Tax Return
for Agricultural Employees, Form 944,
Employer’s Annual Federal Tax Return,
and Form CT-1, Employer’s Annual Rail-
road Retirement Tax Return, so that em-
ployers may use these returns to claim
the paid sick and family leave credits un-
der sections 3131 through 3133 and the
employee retention credit under section
3134. The revised employment tax returns
allow for any of these credits in excess of
the taxes imposed under section 3111(b)
and so much of the taxes imposed under
section 3221(a) as are attributable to the
rate in effect under section 3111(b), as ap-
plicable, to be credited against other em-
ployment taxes and then for any remain-
ing balance to be credited or refunded to
the employer in accordance with section
6402(a) or section 6413(b).
IV. Advance Payment of Credits and
Erroneous Refunds
Sections 3131(b)(4)(B) and 3132(b)
(3)(B) provide that, in anticipation of the
paid sick and family leave credits under
these sections (which would include any
increases in the credits under section
3133(a)), including any refundable por-
tions, these credits are to be advanced,
according to forms and instructions pro-
vided by the Secretary, up to the total
allowable amount of the credits and sub-
ject to applicable limits for the calendar
quarter. Section 3134(j)(2) provides that
eligible employers for which the average
number of full-time employees (within the
meaning of section 4980H) employed by
the eligible employer during 2019 was not
greater than 500 may elect for any calen-
dar quarter to receive an advance payment
of the employee retention credit for the
quarter in an amount not to exceed 70 per-
cent of the average quarterly wages paid
in calendar year 2019.
To implement the advance payment
provisions, employers that are eligible to
receive an advance of the tax credits may
use IRS Form 7200, Advance Payment of
Employer Credits Due To COVID-19, to
request an advance of the paid sick and
family leave credits and the employee re-
tention credit. Employers are required to
reconcile any advance payments claimed
on Form 7200 with total credits claimed
and total taxes due on their employment
tax returns.
A refund or credit of any portion of
these tax credits, regardless of whether
they are advanced, to a taxpayer in excess
of the amount to which the taxpayer is en-
titled is an erroneous refund that the em-
ployer must repay.
V. Assessment Authority
Section 6201 authorizes the Secretary
to determine and assess tax liabilities in-
cluding interest, additional amounts, addi-
tions to the tax, and assessable penalties.
However, the general authority to assess
tax liabilities under section 6201(a) does
not provide for the assessment of any
non-rebate
5
portion of an erroneous re-
fund of a refundable tax credit, which may
include a portion of the credits available
under sections 3131, 3132, and 3134, if
the refund exceeds the amounts to which
an employer is properly entitled. While
these types of erroneous refunds are gen-
erally recovered or recaptured through
agreed upon voluntary repayments, setoff,
or through litigation, the Code in some
instances, such as in sections 3131, 3132,
and 3134, provides for the administrative
3
For purposes of certain governmental organizations or entities as described in section 3134(f)(2) of the Code, wages as defined in section 3121(a) are determined without regard to paragraphs
(5), (6), (7), (10), and (13) of section 3121(b) (except with respect to services performed in a penal institution by an inmate thereof).
4
Section 6413(a) addresses interest-free adjustments of overpayments. The section provides that if more than the correct amount of employment tax imposed by section 3101, 3111, 3201,
3221, or 3402 is paid with respect to any payment of remuneration, proper adjustments with respect to both the tax and the amount to be deducted, shall be made, without interest, in such
manner and at such times as the Secretary may by regulations prescribe.
5
As a general matter, ”non-rebate” refers to the portion of any refund of a tax credit that exceeds the IRS’s determination of the recipient’s tax liability (i.e., the remaining portion of the refund
that is paid to the recipient after the refund has been applied to the recipient’s tax liability).

September 27, 2021 434 Bulletin No. 2021–39
recapture of these non-rebate refunds ei-
ther by directly authorizing assessment of
the erroneous non-rebate refunds or by au-
thorizing the promulgation of regulations
or other guidance to do so.
Specifically, with regard to the paid
sick and family leave credits, sections
3131(g) and 3132(g) provide, in relevant
part, that the Secretary will provide such
regulations or other guidance as may be
necessary to carry out the purposes of
the credits, including regulations or oth-
er guidance to prevent the avoidance of
the purposes of the limitations under this
provision and to recapture the benefit of
the credit in cases where there is a subse-
quent adjustment to the credit. See sec-
tions 3131(g)(1), 3131(g)(4), 3132(g)(1),
and 3132(g)(4). With regard to the em-
ployee retention credit, section 3134(j)
(3)(B) allows for the direct assessment
of certain erroneous refunds of advanced
portions of the credit by providing that
if a small eligible employer specified in
section 3134(j)(2) receives excess ad-
vance payments of the credit, then the
taxes imposed under section 3111(b) or
so much of the taxes imposed under sec-
tion 3221(a) as are attributable to the rate
in effect under section 3111(b), as ap-
plicable, for the calendar quarter are in-
creased by the amount of the excess. Sec-
tion 3134(m)(3) further provides that the
Secretary will issue such forms, instruc-
tions, regulations, and other guidance as
are necessary to prevent the avoidance
of the purposes of the limitations under
section 3134.
On July 29, 2020, temporary regula-
tions (TD 9904) amending the Employ-
ment Tax Regulations under sections 3111
and 3221 to provide for the recapture of er-
roneous refunds of the paid sick and fam-
ily leave credits under the Families First
Act and erroneous refunds of the employ-
ee retention credit under the CARES Act,
pursuant to the authority granted under
these acts to prescribe those regulations,
were published in the Federal Register (85
FR 45514). A notice of proposed rulemak-
ing (REG-111879-20) cross-referencing
the temporary regulations was published
in the Federal Register on the same day
(85 FR 45551). Because the ARP did not
amend the Families First Act or CARES
Act to extend the paid leave credits and
employee retention credit provided there-
under, but rather enacted new Code sec-
tions that provide for similar credits, the
temporary regulations in TD 9904 do not
apply to the credits under the ARP. There-
fore, separate regulations are required to
provide for the recapture of the erroneous
refund of these credits pursuant to the au-
thority granted under sections 3131, 3132,
and 3134.
Accordingly, this document amends the
Employment Tax Regulations (26 CFR
part 31) by adding temporary regulations
under new sections 3131, 3132, and 3134
of the Code. Concurrent with the publica-
tion of this Treasury decision, the Treasury
Department and the IRS are publishing in
the Proposed Rules section of this issue of
the Federal Register a notice of proposed
rulemaking (REG-109077-21) on this
subject that cross-references the text of
these temporary regulations. See section
7805(e)(1). Interested persons are directed
to the ADDRESSES and Comments and
Requests for a Public Hearing sections
of the preamble to REG-109077-21 for in-
formation on submitting public comments
or requesting a public hearing on the pro-
posed regulations.
Explanation of Provisions
Sections 3131(b)(3), 3131(b)(4)(A),
3131(f)(1), 3132(b)(2), 3132(b)(3)(A),
3132(f)(1), 3134(b)(2), 3134(b)(3), and
3134(c)(1) provide that the credits de-
scribed in these sections are taken against
the taxes imposed under section 3111(b)
and so much of the taxes imposed under
section 3221(a) as are attributable to the
rate in effect under section 3111(b), as
applicable, (although for the employee
retention credit, the taxes are first re-
duced by any paid sick and family leave
credits). Additionally, if the amount of
the credits exceeds these taxes for any
calendar quarter, then the excess shall be
treated as an overpayment to be refunded
or credited under sections 6402(a) and
6413(b). Any credits claimed that ex-
ceed the amount to which the employer
is entitled and that are actually credited
or refunded by the IRS are considered
to be erroneous refunds of these credits.
Section 3134(j)(3)(B) provides that if a
small eligible employer specified in sec-
tion 3134(j)(2) receives excess advance
payments of the credit, then the taxes
imposed under section 3111(b) or so
much of the taxes imposed under section
3221(a) as are attributable to the rate in
effect under section 3111(b), as applica-
ble, for the calendar quarter are increased
by the amount of the excess.
These temporary regulations provide
that erroneous refunds of these credits are
treated as underpayments of the taxes im-
posed under section 3111(b) and so much
of the taxes imposed under section 3221(a)
as are attributable to the rate in effect un-
der section 3111(b), as applicable. These
temporary regulations authorize the IRS
to assess any credits erroneously credited,
paid, or refunded in excess of the amount
allowed as if those amounts were taxes
imposed under section 3111(b) and so
much of the taxes imposed under section
3221(a) as are attributable to the rate in ef-
fect under section 3111(b), as applicable,
subject to assessment and administrative
collection procedures. This allows the IRS
to prevent the avoidance of the purposes
of the limitations under the credit provi-
sions and to recover the erroneous refund
amounts efficiently, while also preserving
administrative protections afforded to tax-
payers with respect to contesting their tax
liabilities under the Code and avoiding
unnecessary costs and burdens associat-
ed with litigation. These assessment and
administrative collection procedures may
apply in the normal course in processing
employment tax returns that include ad-
vances in excess of claimed credits and
in examining returns for excess claimed
credits. These assessment and administra-
tive collection procedures do not replace
the existing recapture methods, but rather
represent an alternative method available
to the IRS.
Specifically, these temporary regu-
lations provide that any amount of the
credits for qualified leave wages and cer-
tain collectively bargained contributions
under sections 3131 and 3132, plus any
amount of credits for qualified health
plan expenses under sections 3131(d) and
3132(d), and including any increases in
these credits under section 3133, and any
amount of the employee retention credit
for qualified wages under section 3134 of
the Code that are erroneously refunded or
credited to an employer shall be treated
as underpayments of the taxes imposed
under section 3111(b) and so much of the

Bulletin No. 2021–39 435 September 27, 2021
taxes imposed under section 3221(a) as
are attributable to the rate in effect un-
der section 3111(b), as applicable, by the
employer and may be administratively
assessed and collected in the same man-
ner as the taxes. These temporary regu-
lations provide that the determination of
any amount of credits erroneously re-
funded must take into account any credit
amounts advanced to an employer under
the process established by the IRS in ac-
cordance with sections 3131(b)(4)(B),
3132(b)(3)(B) and 3134(j)(2).
In certain situations, third-party payors
claim tax credits on behalf of their com-
mon law employer clients. These tempo-
rary regulations address this situation by
providing that employers against which
an erroneous refund of credits may be
assessed as an underpayment include per-
sons treated as the employer under sec-
tions 3401(d), 3504, and 3511, consistent
with their liability for the employment
taxes against which the credits applied.
Sections 3131(h) and 3132(h) provide
that the paid sick and family leave credits
apply to wages paid with respect to a pe-
riod of leave taken beginning on April 1,
2021 and ending on September 30, 2021.
Section 3134(n) provides that the employ-
ee retention tax credit applies to wages
paid after June 30, 2021, and before Jan-
uary 1, 2022.
Pursuant to section 7805(b)(2) of the
Code, these temporary regulations are
permitted to apply before the dates pro-
vided under section 7805(b)(1), includ-
ing the date on which these temporary
regulations are filed with the Federal
Register, because these temporary regu-
lations are being issued within 18 months
of the date of the enactment of the rel-
evant statutory provisions. Accordingly,
these temporary regulations apply to all
credits under sections 3131 and 3132, in-
cluding any increases to the credits under
section 3133, credited or refunded on or
after April 1, 2021, including advanced
refunds, as well as all credits under sec-
tion 3134 that are credited or refunded on
or after July 1, 2021, including advanced
refunds. These applicability dates corre-
spond to the effective dates of the statuto-
ry sections that provide for these credits
and that authorize guidance to allow for
the administrative recapture of erroneous
refunds of these credits.
Special Analyses
The Office of Management and Bud-
get’s Office of Information and Regulato-
ry Analysis has determined that these tem-
porary regulations are not significant and
not subject to review under section 6(b) of
Executive Order 12866.
Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), the Secretary
certifies that these temporary regulations
will not have a significant economic im-
pact on a substantial number of small en-
tities because these temporary regulations
impose no compliance burden on any
business entities, including small entities.
Although these temporary regulations
will apply to all employers eligible for
the tax credits under sections 3131, 3132,
and 3134, including small businesses and
tax-exempt organizations with fewer than
500 employees, and will therefore be like-
ly to affect a substantial number of small
entities, the economic impact will not be
significant. These temporary regulations
do not affect the employer’s employment
tax reporting or the necessary information
to substantiate entitlement to the cred-
its. Rather, these temporary regulations
merely implement the statutory authority
granted under sections 3131(g), 3132(g),
and 3134(m) that authorize the IRS to as-
sess, reconcile, and recapture any portion
of the credits erroneously credited, paid,
or refunded in excess of the actual amount
allowed as if the amounts were taxes
imposed under section 3111(b) and so
much of the taxes imposed under section
3221(a) as are attributable to the rate in ef-
fect under section 3111(b), as applicable,
subject to assessment and administrative
collection procedures. Notwithstanding
this certification, the Treasury Department
and the IRS invite comments on any im-
pact these temporary regulations would
have on small entities.
Pursuant to section 7805(f), these tem-
porary regulations have been submitted to
the Chief Counsel of the Office of Advo-
cacy of the Small Business Administration
for comment on its impact on small busi-
ness.
The Treasury Department and the IRS
have determined that there is good cause
to issue these regulations as temporary
regulations. Employers were required to
file Form 941, Employer’s Quarterly Fed-
eral Tax Return, for the second quarter
of calendar year 2021 by July 31, 2021,
as required by section 6071 of the Code
and Treas. Reg. § 31.6071(a)-1. Employ-
ers use Form 941 to claim paid sick and
family leave credits and the employee
retention credit, as well as to report any
advance of these credits they received
during the calendar quarter. In filing their
second quarter 2021 Form 941, some em-
ployers may have already received, as an
advance, refund amounts in excess of the
credits to which they are entitled. In addi-
tion to the statutory authority provided by
section 3134(j)(3) with regard to errone-
ous advance refunds of the employee re-
tention credit, these temporary regulations
authorize the assessment of any errone-
ous refunds of the credits. Without these
temporary regulations, in some instances
the IRS may not be able to avoid bringing
costly and burdensome litigation to recov-
er the erroneous refunds. Further, com-
ments are being solicited in the cross-ref-
erenced notice of proposed rulemaking
that is in this issue of the Federal Register,
and any comments will be considered be-
fore final regulations are issued.
Statement of Availability of IRS
Documents
IRS notices and other guidance cited
in this preamble are published in the In-
ternal Revenue Bulletin (or Cumulative
Bulletin) and are available from the Su-
perintendent of Documents, U.S. Govern-
ment Publishing Office, Washington, DC
20402, or by visiting the IRS website at
http://www.irs.gov.
Drafting Information
The principal author of these tempo-
rary regulations is NaLee Park, Office of
the Associate Chief Counsel (Employee
Benefits, Exempt Organizations, and Em-
ployment Taxes). However, other person-
nel from the Treasury Department and the
IRS participated in the development of
these temporary regulations.
List of Subjects in 26 CFR Part 31
Employment taxes, Income taxes, Pen-
alties, Pensions, Railroad retirement, Re-
porting and recordkeeping requirements,

September 27, 2021 436 Bulletin No. 2021–39
Social security, Unemployment compen-
sation.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 31 is amend-
ed as follows:
PART 31—EMPLOYMENT TAXES
AND COLLECTION OF INCOME
TAX AT SOURCE
Paragraph 1. The authority citation for
part 31 is amended by adding entries for
§§31.3131-1T, 31.3132-1T, and 31.3134-
1T in numerical order to read in part as
follows:
Authority: 26 U.S.C. 7805.
* * * * *
Section 31.3131-1T also issued under
26 U.S.C. 3131(g).
Section 31.3132-1T also issued under
26 U.S.C. 3132(g).
Section 31.3134-1T also issued under
26 U.S.C. 3134(m)(3).
* * * * *
Par. 2. Section 31.3131-1T is added to
read as follows:
§31.3131-1T Recapture of credits.
(a) Recapture of erroneously refund-
ed credits. Any amount of credits for
qualified sick leave wages under sec-
tion 3131(a), including any increase to
the amount of the credits under sections
3131(d), 3131(e), and 3133, that are
treated as overpayments and refunded
or credited to an employer under section
6402(a) or section 6413(b) and to which
the employer is not entitled, resulting in
an erroneous refund to the employer, shall
be treated as an underpayment of the tax-
es imposed under section 3111(b) and so
much of the taxes imposed under section
3221(a) as are attributable to the rate in ef-
fect under section 3111(b), as applicable,
and may be assessed and collected by the
Secretary in the same manner as the taxes.
(b) Advance credit amounts errone-
ously refunded. The determination of any
amount of credits erroneously refunded
as described in paragraph (a) of this sec-
tion must take into account any amount of
credits advanced to an employer under the
process established by the Internal Reve-
nue Service in accordance with sections
3131(b)(4)(B) and 3131(g)(6).
(c) Third party payors. For purposes
of this section, employers against whom
an erroneous refund of the credits under
section 3131 (including any increases in
those credits under section 3133), can be
assessed as an underpayment of the tax-
es imposed under section 3111(b) and so
much of the taxes imposed under section
3221(a) as are attributable to the rate in
effect under section 3111(b), as applica-
ble, include persons treated as the em-
ployer under sections 3401(d), 3504, and
3511, consistent with their liability for the
section 3111(b) or 3121(a) taxes against
which the credit applied.
(d) Applicability date. This section ap-
plies to all credit refunds under section
3131 (including any increases in those
credits under section 3133), advanced or
paid on or after April 1, 2021.
Par. 3. Section 31.3132-1T is added to
read as follows:
§31.3132-1T Recapture of credits.
(a) Recapture of erroneously refund-
ed credits. Any amount of credits for
qualified family leave wages under sec-
tions 3132, including any increase to
the amount of the credits under sections
3132(d), 3132(e), and 3133, that are
treated as overpayments and refunded
or credited to an employer under section
6402(a) or section 6413(b) and to which
the employer is not entitled, resulting in
an erroneous refund to the employer, shall
be treated as an underpayment of the tax-
es imposed under section 3111(b) and so
much of the taxes imposed under section
3221(a) as are attributable to the rate in ef-
fect under section 3111(b), as applicable,
and may be assessed and collected by the
Secretary in the same manner as the taxes.
(b) Advance credit amounts errone-
ously refunded. The determination of any
amount of credits erroneously refunded
as described in paragraph (a) of this sec-
tion must take into account any amount of
credits advanced to an employer under the
process established by the Internal Reve-
nue Service in accordance with sections
3132(b)(3)(B) and 3132(g)(6).
(c) Third party payors. For purposes
of this section, employers against whom
an erroneous refund of the credits under
section 3132 (including any increases in
those credits under section 3133), can be
assessed as an underpayment of the tax-
es imposed under section 3111(b) and so
much of the taxes imposed under section
3121(a) as are attributable to the rate in
effect under section 3111(b), as applica-
ble, include persons treated as the em-
ployer under sections 3401(d), 3504, and
3511, consistent with their liability for the
section 3111(b) or 3121(a) taxes against
which the credit applied.
(d) Applicability date. This section ap-
plies to all credit refunds under section
3132 (including any increases in those
credits under section 3133) advanced or
paid on or after April 1, 2021.
Par. 4. Section 31.3134-1T is added to
read as follows:
§31.3134-1T Recapture of credits.
(a) Recapture of erroneously refunded
credits. Any amount of credits for quali-
fied wages under section 3134 of the Code
that is treated as an overpayment and re-
funded or credited to an employer under
section 6402(a) or section 6413(b) of the
Code and to which the employer is not
entitled, resulting in an erroneous refund
to the employer, shall be treated as an un-
derpayment of the taxes imposed under
section 3111(b) and so much of the taxes
imposed under section 3221(a) as are at-
tributable to the rate in effect under sec-
tion 3111(b), as applicable, and may be
assessed and collected by the Secretary in
the same manner as the taxes.
(b) Advance credit amounts errone-
ously refunded. The determination of any
amount of credits erroneously refunded
as described in paragraph (a) of this sec-
tion must take into account any amount of
credits advanced to an employer under the
process established by the Internal Reve-
nue Service in accordance with sections
3134(j) and 3134(m).
(c) Third party payors. For purposes of
this section, employers against whom an
erroneous refund of the credits under sec-
tion 3134 can be assessed as an underpay-
ment of the taxes imposed under section
3111(b) and so much of the taxes imposed
under section 3121(a) as are attributable to
the rate in effect under section 3111(b), as
applicable, include persons treated as the
employer under sections 3401(d), 3504,

Bulletin No. 2021–39 437 September 27, 2021
and 3511, consistent with their liability
for the section 3111(b) or 3121(a) taxes
against which the credit applied.
(d) Applicability date. This section ap-
plies to all credit refunds under section
3134 advanced or paid on or after July 1,
2021.
Douglas W. O’Donnell,
Deputy Commissioner for Services
and Enforcement.
Approved: August 18, 2021.
Mark J. Mazur,
Acting Assistant Secretary of the Trea-
sury (Tax Policy).
(Filed by the Office of the Federal Register on Sep-
tember 7, 2021, 8:45 a.m., and published in the issue
of the Federal Register for September 8, 2021, 86
FR 50295)

September 27, 2021 438 Bulletin No. 2021–39
Part III
Guidance on Reporting
Qualified Sick Leave Wages
and Qualified Family Leave
Wages Paid For Leave
Provided in 2021
Notice 2021-53
I. PURPOSE
This notice provides guidance to em-
ployers on the requirement to report the
following qualified sick leave wages and
qualified family leave wages (qualified
leave wages)
1
paid to employees for leave
provided in 2021:
2
• Qualified leave wages under the Fam-
ilies First Coronavirus Response Act
(Families First Act), Pub. L. No. 116-
127, 134 Stat. 178 (March 18, 2020),
as amended by the COVID-related
Tax Relief Act of 2020 (Tax Relief
Act), enacted as Subtitle B of Title
II of Division N of the Consolidated
Appropriations Act, 2021, Pub. L.
No. 116-260, 134 Stat. 1182 (Decem-
ber 27, 2020), paid for leave provided
to employees beginning January 1,
2021, through March 31, 2021.
3
• Qualified leave wages under sections
3131, 3132, and 3133 of the Inter-
nal Revenue Code (Code), added by
section 9641 of the American Rescue
Plan Act of 2021 (ARP), Pub. L. No.
117-2, 135 Stat. 4 (March 11, 2021),
paid for leave provided to employ-
ees beginning April 1, 2021, through
September 30, 2021.
Employers are required to report qual-
ified leave wages either on a 2021 Form
W-2, Box 14, or on a separate statement.
This reporting provides employees who
are also self-employed with information
necessary for properly claiming qualified
sick leave equivalent or qualified family
leave equivalent credits for the 2021 tax-
able year under the Families First Act or
the ARP.
II. BACKGROUND
In general
The Families First Act and sections
3131 and 3132 of the Code provide refund-
able tax credits to employers with fewer
than 500 employees (eligible employers)
to reimburse them for the cost of providing
qualified leave wages. Sections 3131 and
3132 also permit certain governmental em-
ployers to claim these tax credits, without
regard to the number of their employees.
4

Accordingly, when this notice addresses
the credits provided under these Code sec-
tions, the term “eligible employer” also in-
cludes these governmental employers.
Division E of the Families First Act,
the Emergency Paid Sick Leave Act (EPS-
LA), and Division C of the Families First
Act, the Emergency Family and Medical
Leave Expansion Act (EFMLEA), gen-
erally required eligible employers to pro-
vide paid sick leave and expanded family
and medical leave, respectively, begin-
ning April 1, 2020, through December 31,
2020, up to specified limits, to employees
unable to work or telework due to certain
circumstances related to COVID-19. The
EPSLA entitled workers to up to 80 hours
of paid sick time and the EFMLEA en-
titled workers to up to 10 weeks of paid
family and medical leave if they were
unable to work for certain reasons relat-
ed to COVID-19. The Families First Act
also provided eligible employers with ful-
ly refundable tax credits to cover the cost
of the leave required to be paid under the
EPSLA and EFMLEA. The requirement
that eligible employers provide leave un-
der the EPSLA and EFMLEA does not
apply after December 31, 2020. However,
the Tax Relief Act extended the availabil-
ity of the tax credits under the Families
First Act through March 31, 2021, for paid
leave that would have satisfied the EPSLA
or EFMLEA requirements.
Specifically, sections 7001 and 7003
of the Families First Act provide refund-
able tax credits against the tax imposed
by section 3111(a) of the Code (referring
to the eligible employer’s share of the so-
cial security portion of the Federal Insur-
ance Contributions Act (FICA) tax), and
so much of the Railroad Retirement Tax
Act (RRTA) Tier 1 tax as is attributable
to the rate in effect under section 3111(a),
on all wages or compensation paid to all
employees for each calendar quarter in an
amount equal to the qualified leave wages
paid by the eligible employer, plus allo-
cable qualified health plan expenses, with
respect to leave provided to employees
beginning April 1, 2020, through March
31, 2021. The credits under sections 7001
and 7003 of the Families First Act are in-
creased by the amount of the tax imposed
by section 3111(b) of the Code (referring
to the eligible employer’s share of Medi-
care tax) and so much of the RRTA Tier 1
tax imposed as is attributable to the rate in
effect under section 3111(b) on qualified
leave wages. See section 7005(b)(1) of the
Families First Act.
Section 9641 of the ARP added sec-
tions 3131 through 3133 to the Code,
which extend the availability of the cred-
its for paid leave through September 30,
2021. Section 3131 provides the credit for
paid sick leave, section 3132 provides the
credit for paid family leave, and section
3133 provides that the credits allowed un-
der sections 3131 and 3132 are increased
by the eligible employer’s share of both
the social security and Medicare portions
of FICA tax (and the eligible employer’s
share of the RRTA Tier 1 tax) imposed on
1
For the definition of “qualified sick leave wages,” see sections 7001(c) of the Families First Act and 3131(c) of the Code. For the definition of “qualified family leave wages,” see sections
7003(c) of the Families First Act and 3132(c) of the Code.
2
Separate reporting requirements apply for calendar year 2020. Notice 2020-54, 2020-31 I.R.B. 226, provides guidance to employers on the requirement to report the amount of qualified sick
leave wages and qualified family leave wages for leave provided to employees beginning April 1, 2020, through December 31, 2020.
3
The amendments made by section 288 of the Tax Relief Act apply as if included in the provisions of the Families First Act to which they relate. Therefore, references to the Families First
Act throughout this notice should be read as the Families First Act, as amended by the Tax Relief Act.
4
For purposes of the Families First Act, these credits do not apply to the government of the United States, the government of any State or political subdivision thereof, or any agency or
instrumentality of any of the foregoing. See sections 7001(e)(4) and 7003(e)(4) of the Families First Act. For purposes of the ARP, these credits do not apply to the government of the United
States or any agency or instrumentality thereof that is not an organization described in section 501(c)(1) of the Code. See sections 3131(f)(5) and 3132(f)(5).

Bulletin No. 2021–39 439 September 27, 2021
the qualified leave wages. Sections 3131
and 3132 of the Code provide that eligible
employers are entitled to claim refundable
tax credits with respect to leave provided
voluntarily to employees beginning April
1, 2021, through September 30, 2021, if
the leave would have satisfied the EPSLA
or EFMLEA requirements.
5
Specifically,
sections 3131 and 3132 of the Code pro-
vide refundable tax credits against the tax
imposed by section 3111(b) (referring to
an eligible employer’s share of Medicare
tax), and so much of the RRTA Tier 1 tax
as is attributable to the rate in effect un-
der section 3111(b), on all wages or com-
pensation paid to all employees for each
calendar quarter in an amount equal to the
qualified leave wages paid by the eligible
employer plus (i) the allocable qualified
health plan expenses and (ii) certain col-
lectively bargained contributions alloca-
ble to qualified leave wages. See sections
3131(d), 3131(e), 3132(d), and 3132(e).
Sections 7001(c) and 7003(c) of the
Families First Act and sections 3131(f)
(2) and 3132(f)(2) of the Code define the
terms wages and compensation to mean
“wages” as defined in section 3121(a),
but without regard to section 3121(b)
(1) through (22), and “compensation” as
defined in section 3231(e), but without
regard to the exclusions under section
3231(e)(1).
6
A self-employed individual carrying
on a trade or business in 2021 within the
meaning of section 1402 who would have
received qualified leave wages if the in-
dividual were treated as an employee of
an employer (other than himself or her-
self) may claim refundable tax credits if
the individual is unable to work or tele-
work (eligible self-employed individual).
Specifically, sections 7002 and 7004 of
the Families First Act permit an eligible
self-employed individual to claim refund-
able tax credits for qualified sick leave
equivalent amounts and qualified family
leave equivalent amounts (qualified leave
equivalent amounts) if the individual is un-
able to work or telework during the period
beginning April 1, 2020, through March
31, 2021, due to certain circumstanc-
es related to COVID-19. Sections 9642
and 9643 of the ARP permit an eligible
self-employed individual to claim refund-
able tax credits for qualified leave equiva-
lent amounts if the individual is unable to
work or telework during the period begin-
ning April 1, 2021, through September 30,
2021, due to certain circumstances related
to COVID-19. An eligible self-employed
individual may have to reduce qualified
leave equivalent amounts by some or all
of the qualified leave wages the individual
received from an employer. See sections
7002 and 7004 of the Families First Act
and sections 9642 and 9643 of the ARP.
Sections 7002(g) and 7004(e) of the
Families First Act provide that the Sec-
retary of the Treasury will prescribe such
regulations or other guidance as may be
necessary to carry out the purposes of
sections 7002 and 7004 of the Families
First Act, respectively. Section 9642(h)
and section 9643(h) of the ARP provide
that the Secretary of the Treasury will
prescribe such regulations or other guid-
ance as may be necessary to carry out the
purposes of sections 9642 and 9643 of the
ARP, respectively.
Qualified leave wages paid for leave
beginning January 1, 2021, through
March 31, 2021
With respect to paid leave provided
under the Families First Act to employ-
ees beginning January 1, 2021, through
March 31, 2021, qualified sick leave wag-
es are wages and compensation, as defined
under section 7001(c), paid for leave that
would have satisfied the requirements of
the EPSLA. In general, eligible employ-
ers are permitted to claim refundable tax
credits if they provide employees with up
to 80 hours of paid sick leave due to the
employee being unable to work or tele-
work because the employee—
(1) is subject to a Federal, State, or local
quarantine or isolation order related
to COVID- 19;
(2) has been advised by a health care pro-
vider to self-quarantine due to con-
cerns related to COVID-19;
(3) is experiencing symptoms of
COVID-19 and seeking a medical di-
agnosis;
(4) is caring for an individual who is sub-
ject to a Federal, State, or local quar-
antine or isolation order related to
COVID-19, or has been advised by a
health care provider to self-quarantine
due to concerns related to COVID-19;
(5) is caring for a son or daughter of such
employee if the school or place of
care of the son or daughter has been
closed, or the child care provider of
such son or daughter is unavailable,
due to COVID-19 precautions; or
(6) is experiencing any other substantial-
ly similar condition specified by the
Secretary of Health and Human Ser-
vices in consultation with the Secre-
taries of the Treasury and Labor.
7
An employee who receives paid sick
leave due to the inability to work or tele-
work for reasons related to COVID-19
described in (1), (2), or (3) above must be
paid sick leave wages at the employee’s
regular rate of pay or, if higher, the Federal
minimum wage or any applicable State or
local minimum wage, up to $511 per day
and $5,110 in the aggregate, for the eligi-
ble employer to claim the credit for leave
provided to that employee during the peri-
od beginning April 1, 2020, through March
31, 2021. An employee who receives paid
sick leave due to the inability to work or
telework for reasons related to COVID-19
described in (4), (5), or (6) above must be
paid sick leave wages at two-thirds the em-
ployee’s regular rate of pay or, if higher,
the Federal minimum wage or any appli-
cable State or local minimum wage, up to
$200 per day and $2,000 in the aggregate.
Because the sick leave wage cap is not in-
creased for the period beginning January
1, 2021, and ending March 31, 2021, no
more than $5,110 (or $2,000 for absences
described in (4), (5), and (6) above) in the
aggregate may be claimed by an employer
with respect to leave provided to an em-
ployee during the period beginning April 1,
2020, through March 31, 2021.
With respect to paid leave provided to
employees during the period beginning
5
When this notice addresses the credits provided under the ARP, references to EPSLA should be read as EPSLA, with certain modifications pursuant to the ARP. Similarly, references to
EFMLEA should be read as EFMLEA, with certain modifications pursuant to the ARP.
6
Qualified leave wages under the Families First Act are also determined without regard to section 7005(a) of the Families First Act.
7
The U.S. Department of Health and Human Services has not specified any other conditions for credits available under the Families First Act, but see the discussion regarding the additional
conditions specified that apply for credits available under the ARP.

September 27, 2021 440 Bulletin No. 2021–39
January 1, 2021, through March 31, 2021,
qualified family leave wages are wages
and compensation, as defined under sec-
tion 7003(c) of the Families First Act, paid
for leave that would have satisfied the re-
quirements of the EFMLEA. In general,
eligible employers are permitted to claim
refundable tax credits if they provide em-
ployees with up to 10 weeks of paid family
leave due to the employee being unable to
work or telework because the employee is
caring for a son or daughter whose school
or place of care is closed or whose child
care provider is unavailable for reasons
related to COVID-19. To receive the cred-
it, the eligible employer must pay the em-
ployee family leave wages at two-thirds
the employee’s regular rate of pay, up to
$200 per day and $10,000 in the aggre-
gate. Because the family leave wage cap
is not increased for the period beginning
January 1, 2021, and ending March 31,
2021, no more than $10,000 in the aggre-
gate may be claimed by an employer with
respect to leave provided to an employee
during the period beginning April 1, 2020,
through March 31, 2021.
Reduction to qualified leave equivalent
amounts for qualified leave wages paid
beginning January 1, 2021, through
March 31, 2021
If a self-employed individual is enti-
tled to a refundable tax credit for a qual-
ified sick leave equivalent amount under
section 7002(a) of the Families First Act
and also receives qualified sick leave
wages as an employee, section 7002(d)
(3) of the Families First Act reduces the
qualified sick leave equivalent amount for
which the eligible self-employed individ-
ual may claim a credit to the extent that
the sum of the qualified sick leave equiv-
alent amount described in section 7002(c)
of the Families First Act and any qualified
sick leave wages under section 7001(b)(1)
of the Families First Act exceeds $2,000
(or $5,110 in the case of any day any por-
tion of which is paid sick time described
in paragraphs (1), (2), or (3) of section
5102(a) of the EPSLA). Similarly, if a
self-employed individual is entitled to a
refundable tax credit for a qualified fam-
ily leave equivalent amount under section
7004(a) of the Families First Act and also
receives qualified family leave wages as
an employee, section 7004(d)(3) of the
Families First Act reduces the qualified
family leave equivalent amount for which
the self-employed individual may claim
a credit to the extent that the sum of the
qualified family leave equivalent amount
described in section 7004(c) of the Fam-
ilies First Act and the qualified family
leave wages under section 7003(b)(1) of
the Families First Act exceeds $10,000.
Under the Families First Act, the re-
quirement to reduce qualified leave equiv-
alent amounts is not applied separately for
2020 and 2021. Instead, the reduction to
the qualified leave equivalent amounts in
each case is figured using the sum of the
qualified leave equivalent amounts and
the qualified leave wages for the entire
period beginning April 1, 2020, through
March 31, 2021. As a result, if an eligi-
ble self-employed individual reduced a
qualified sick leave equivalent amount for
2020 because the sum of the qualified sick
leave equivalent amount and the qualified
sick leave wages exceeded $5,110, then
no credit under section 7002 of the Fam-
ilies First Act will be available for 2021.
Likewise, if an eligible self-employed in-
dividual reduced a qualified family leave
equivalent amount for 2020 because the
sum of the qualified family leave equiva-
lent amount and the qualified family leave
wages exceeded $10,000, then no credit
under section 7004 of the Families First
Act will be available for 2021.
Qualified leave wages paid for leave
beginning April 1, 2021, through
September 30, 2021
With respect to leave provided under
sections 3131 and 3132 of the Code to em-
ployees beginning April 1, 2021, through
September 30, 2021, qualified sick leave
wages are wages and compensation, as de-
fined under section 3131(f)(2), paid with
respect to leave that would have satisfied
the requirements of the EPSLA. In gen-
eral, eligible employers are permitted to
claim refundable tax credits under section
3131 if they provide employees with up to
80 hours of paid sick leave due to the em-
ployee being unable to work or telework
because the employee—
(1) is subject to a Federal, State, or local
quarantine or isolation order related
to COVID-19;
(2) has been advised by a health care pro-
vider to self-quarantine due to con-
cerns related to COVID-19;
(3) is experiencing symptoms of
COVID-19 and is seeking a medical
diagnosis; or is seeking or awaiting
the results of a diagnostic test for, or
a medical diagnosis of, COVID-19
and has been exposed to COVID-19,
or the employer has requested such
test or diagnosis, or is obtaining im-
munization related to COVID-19 or is
recovering from any injury, disability,
illness, or condition related to such
immunization;
8
(4) is caring for an individual who is
subject to a Federal, State, or local
quarantine or isolation order related
to COVID-19 or has been advised by
a health care provider to self-quar-
antine due to concerns related to
COVID-19;
(5) is caring for a son or daughter of such
employee if the school or place of
care of the son or daughter has been
closed, or the child care provider of
such son or daughter is unavailable,
due to COVID-19 precautions; or
(6) is experiencing any other substantially
similar condition specified by the Sec-
retary of Health and Human Services
in consultation with the Secretaries
of the Treasury and Labor, including
if the employee is accompanying an
individual to obtain immunization re-
lated to COVID-19, or is caring for an
individual who is recovering from any
injury, disability, illness, or condition
related to the immunization.
9
8
For purposes of the ARP, paragraph (3) of section 5102(a) of the EPSLA was modified to include certain absences related to receiving or recovering from vaccinations (see section 3131(c)
(2) of the Code).
9
As of the date of this notice, the IRS has posted FAQs titled “Tax Credits for Paid Leave Under the American Rescue Plan Act of 2021 for Leave After March 31, 2021,” on IRS.gov,
which reflect the substantially similar conditions designated by the Secretary of Health and Human Services in consultation with the Secretaries of Labor and the Treasury. The FAQs will
be periodically updated with new information as necessary. See https://www.irs.gov/newsroom/tax-credits-for-paid-leave-under-the-american-rescue-plan-act-of-2021-specific-provisions-
related-to-self-employed-individuals.

Bulletin No. 2021–39 441 September 27, 2021
An employee who receives paid sick
leave due to the inability to work or tele-
work for reasons related to COVID-19 de-
scribed in paragraphs (1), (2), or (3) above
after March 31, 2021, and before October
1, 2021, must be paid sick leave wages at
the employee’s regular rate of pay or, if
higher, the Federal minimum wage or any
applicable State or local minimum wage,
up to $511 per day and $5,110 in the ag-
gregate for the eligible employer to claim
the credit for leave provided to that em-
ployee beginning April 1, 2021, through
September 30, 2021. An employee who
receives paid sick leave due to the inabili-
ty to work or telework for reasons related
to COVID-19 described in paragraphs (4),
(5), or (6) above after March 31, 2021, and
before October 1, 2021, must be paid sick
leave wages at two-thirds of the employ-
ee’s regular rate of pay or, if higher, the
Federal minimum wage or any applicable
State or local minimum wage, up to $200
per day and $2,000 in the aggregate for
the eligible employer to claim the credit
for leave provided to that employee begin-
ning April 1, 2021, through September 30,
2021.
With respect to leave provided to em-
ployees during the period beginning April
1, 2021, through September 30, 2021,
qualified family leave wages are wages
and compensation, as defined under sec-
tion 3132(f)(2) of the Code, paid with re-
spect to leave that would have satisfied the
requirements of the EFMLEA. In general,
eligible employers are permitted to claim
refundable tax credits under section 3132
if they provide employees with up to 12
weeks of paid family leave due to the em-
ployee being unable to work or telework
for any of the same reasons for which an
employee can take paid sick leave. To
receive the credit, the eligible employer
must pay the employee family leave wag-
es at two-thirds of the employee’s regular
rate of pay, up to $200 per day and $12,000
in the aggregate, with respect to leave pro-
vided to that employee during the period
beginning April 1, 2021, through Septem-
ber 30, 2021.
Reduction to qualified leave equivalent
amounts for qualified leave wages
paid beginning April 1, 2021, through
September 30, 2021
If a self-employed individual is entitled
to a refundable tax credit for a qualified
sick leave equivalent amount under sec-
tion 9642(a) of the ARP and also receives
qualified sick leave wages as an employ-
ee, section 9642(e)(2) of the ARP reduces
the qualified sick leave equivalent amount
for which the eligible self-employed in-
dividual may claim a credit to the extent
that the sum of the qualified sick leave
equivalent amount described in section
9642(c) of the ARP and any qualified sick
leave wages under section 3131(b)(1) of
the Code exceeds $2,000 (or $5,110 in the
case of any day any portion of which is
paid sick time described in paragraph (1),
(2), or (3) of section 5102(a) of the EPS-
LA). Similarly, if a self-employed indi-
vidual is entitled to a refundable tax cred-
it for a qualified family leave equivalent
amount under section 9643(a) of the ARP,
and also receives qualified family leave
wages that meet the requirements of the
EFMLEA, section 9643(e)(2) of the ARP
reduces the qualified family leave equiva-
lent amount for which the self-employed
individual may claim a credit to the extent
that the sum of the qualified family leave
equivalent amount described in section
9643(c) of the ARP and the qualified fam-
ily leave wages under section 3132(b)(1)
of the Code exceeds $12,000.
III. REPORTING REQUIREMENTS
In order to provide eligible self-em-
ployed individuals who also receive wag-
es or compensation as employees with the
information they need to properly claim
any qualified sick leave equivalent or
qualified family leave equivalent credits
for the 2021 taxable year, this notice re-
quires eligible employers to report to em-
ployees the amount of qualified sick leave
wages and qualified family leave wages
paid to the employees under (i) sections
7001 or 7003 of the Families First Act
for leave provided during the period be-
ginning January 1, 2021, through March
31, 2021, and (ii) sections 3131 and 3132
of the Code for leave provided during the
period beginning April 1, 2021, through
September 30, 2021. Furthermore, since
qualified leave wages are defined under
both the Families First Act and sections
3131 and 3132 of the Code as wages de-
fined in section 3121(a) without regard to
the exclusions from employment under
section 3121(b)(1) through (22) and com-
pensation defined in section 3231(e) with-
out regard to the exclusions from compen-
sation under section 3231(e)(1), eligible
employers must determine the amount of
qualified leave wages to report without re-
gard to the exclusions from employment
under section 3121(b)(1) through (22)
and without regard to the exclusions from
compensation under section 3231(e)(1).
10
Only eligible employers who claim
credits under the Families First Act or
sections 3131 and 3132 of the Code are
required to separately report qualified sick
leave wages and qualified family leave
wages to their employees. Eligible em-
ployers who forego claiming refundable
tax credits under the Families First Act or
sections 3131 and 3132 of the Code for
qualified leave wages are not required to
separately report qualified sick leave wag-
es or qualified family leave wages paid to
employees to the extent those wages are
not claimed as a credit. Furthermore, gov-
ernmental employers that are prohibited
from claiming credits for qualified leave
wages are not required to separately report
any qualified sick leave wages or qualified
family leave wages paid to employees.
Eligible employers have separate re-
porting requirements for (i) leave provided
to employees during the period beginning
January 1, 2021, through March 31, 2021,
under the Families First Act; and (ii) leave
provided to employees during the period
beginning April 1, 2021, through Sep-
tember 30, 2021, under sections 3131 and
3132 of the Code. With respect to leave
provided to employees during the period
10
For purposes of determining qualified leave wages under the Families First Act, employers must also disregard section 7005(a). For more information about the definition of wages for
purposes of sections 3131 and 3132 of the Code, see Tax Credits for Paid Leave Under the American Rescue Plan Act of 2021 for Leave After March 31, 2021: Special Issues for Employ-
ers—Other Issues, FAQ 93 for examples, which may be found at https://www.irs.gov/newsroom/tax-credits-for-paid-leave-under-the-american-rescue-plan-act-of-2021-special-issues-for-
employers-other-issues.

September 27, 2021 442 Bulletin No. 2021–39
beginning January 1, 2021, through March
31, 2021, eligible employers claiming a
credit under sections 7001 or 7003 of the
Families First Act must separately state
the total amount of qualified sick leave
wages paid under the provisions of para-
graphs (1), (2), or (3) of section 5102(a)
of the EPSLA, qualified sick leave wages
paid under the provisions of paragraphs
(4), (5), or (6) of section 5102(a) of the
EPSLA, and qualified family leave wag-
es paid under the provisions of section
3102(b) of the EFMLEA. With respect to
leave provided to employees during the
period beginning April 1, 2021, through
September 30, 2021, eligible employers
claiming a credit under sections 3131 or
3132 of the Code must separately state the
total amount of qualified sick leave wages
paid under the provisions of paragraphs
(1), (2), or (3) of section 5102(a) of the
EPSLA, qualified sick leave wages paid
under the provisions of paragraphs (4),
(5), or (6) of section 5102(a) of the EPS-
LA, and qualified family leave wages paid
under the EFMLEA.
Employers must separately state each
of these wage amounts either on the 2021
Form W-2, Box 14, or on a separate state-
ment included with each employee’s Form
W-2, Wage and Tax Statement. Self-em-
ployed individuals claiming a credit for a
qualified sick leave equivalent amount or
qualified family leave equivalent amount
must report these qualified sick leave
wages and qualified family leave wages
on Form 7202, Credits for Sick Leave and
Family Leave for Certain Self-Employed
Individuals, included with their 2021 in-
come tax returns, and may have to reduce
(but not below zero) any qualified sick
leave or qualified family leave equivalent
amounts by these qualified leave wages.
Specific Reporting Instructions
Qualified leave wages paid in 2021
under the Families First Act and sections
3131 and 3132 of the Code are to be re-
ported in Box 1 of Form W-2. To the ex-
tent that qualified leave wages are social
security wages or Medicare wages, they
must also be included in Box 3 (up to the
social security wage base) and Box 5, re-
spectively. To the extent qualified leave
wages are compensation subject to the
RRTA, they must also be included in Box
14 under the appropriate RRTA reporting
label(s).
11
In addition to the regular reporting
requirements, employers must report to
the employee the following types and
amounts of the wages that were paid, with
each amount separately reported either
in Box 14 of Form W-2 or on a separate
statement:
12
• The total amount of qualified sick
leave wages paid for reasons de-
scribed in paragraphs (1), (2), or (3)
of section 5102(a) of the EPSLA with
respect to leave provided to employ-
ees during the period beginning on
January 1, 2021, through March 31,
2021. In labeling this amount, em-
ployers must use the following, or
similar language: “sick leave wages
subject to the $511 per day limit paid
for leave taken after December 31,
2020, and before April 1, 2021.”
• The total amount of qualified sick
leave wages paid for reasons de-
scribed in paragraphs (4), (5), or (6)
of section 5102(a) of the EPSLA with
respect to leave provided to employ-
ees during the period beginning on
January 1, 2021, through March 31,
2021. In labeling this amount, em-
ployers must use the following, or
similar language: “sick leave wages
subject to the $200 per day limit paid
for leave taken after December 31,
2020, and before April 1, 2021.”
• The total amount of qualified fami-
ly leave wages paid to the employee
under the EFMLEA with respect to
leave provided to employees during
the period beginning on January
1, 2021, through March 31, 2021.
In labeling this amount, employers
must use the following, or similar
language: “emergency family leave
wages paid for leave taken after De-
cember 31, 2020, and before April 1,
2021.”
• The total amount of qualified sick
leave wages paid for reasons de-
scribed in paragraphs (1), (2), or (3)
of section 5102(a) of the EPSLA with
respect to leave provided to employ-
ees during the period beginning on
April 1, 2021, through September
30, 2021. In labeling this amount,
employers must use the following, or
similar language: “sick leave wages
subject to the $511 per day limit paid
for leave taken after March 31, 2021,
and before October 1, 2021.”
• The total amount of qualified sick
leave wages paid for reasons de-
scribed in paragraphs (4), (5), or (6)
of section 5102(a) of the EPSLA with
respect to leave provided to employ-
ees during the period beginning on
April 1, 2021, through September
30, 2021. In labeling this amount,
employers must use the following, or
similar language: “sick leave wages
subject to the $200 per day limit paid
for leave taken after March 31, 2021,
and before October 1, 2021.”
• The total amount of qualified fami-
ly leave wages paid to the employee
under the EFMLEA with respect to
leave provided to employees during
the period beginning on April 1, 2021,
through September 30, 2021. In label-
ing this amount, employers must use
the following, or similar language:
“emergency family leave wages paid
for leave taken after March 31, 2021,
and before October 1, 2021.”
If a separate statement is provided and
the employee receives a paper Form W-2,
then the statement must be included with
the Form W-2 sent to the employee, and if
the employee receives an electronic Form
W-2, then the statement must be provided
in the same manner and at the same time
as the Form W-2.
If an employer that does not claim
credits under these provisions or an em-
ployer that is prohibited from claiming
those credits erroneously reports sick
leave wages or family leave wages to an
employee on Form W-2, Box 14, or on
a separate statement, the employer must
11
Railroad employers are directed by the instructions to Form W-2 to report certain specified amounts in Box 14. Other employers are directed to use Box 14 “for any other information that
you want to give to your employee. Label each item.” This notice directs all employers to use Box 14 to report qualified sick leave wages and qualified family leave wages, unless a separate
statement is used instead.
12
Qualified leave wages for leave provided to employees beginning April 1, 2020, through December 31, 2020, should be separately reported on a 2020 Form W-2 or separate statement as
described in Notice 2020-54.

Bulletin No. 2021–39 443 September 27, 2021
either furnish a Form W-2c, Corrected
Wage and Tax Statement, or provide a
corrected statement to the employee cor-
recting the erroneous reporting. The Form
W-2c or corrected statement should be
sent only to the employee. The employer
should not file Form W-2c with the Social
Security Administration solely to correct
the amount in Box 14.
Model language for employee
instructions
As part of the Instructions for Employ-
ee, under the instructions for Box 14, for
the Forms W-2, or in a separate statement
sent to the employee, the employer may
provide additional information about
qualified sick leave wages and qualified
family leave wages and explain that these
wages may limit the amount of the qual-
ified sick leave equivalent or qualified
family leave equivalent credits to which
the employee may be entitled with respect
to any self-employment income. The fol-
lowing model language (modified as nec-
essary) may be used. Please note that this
language has been modified from that sug-
gested in Notice 2020-54.
“Included in Box 14, if applicable,
are amounts paid to you as qualified sick
leave wages or qualified family leave
wages under the Families First Corona-
virus Response Act and/or sections 3131
and 3132 of the Internal Revenue Code.
Specifically, up to six types of paid qual-
ified sick leave wages or qualified family
leave wages may be reported in Box 14:
• Sick leave wages subject to the $511
per day limit paid for leave taken after
December 31, 2020, and before April
1, 2021, because of care you required.
• Sick leave wages subject to the $200
per day limit paid for leave taken after
December 31, 2020, and before April
1, 2021, because of care you provided
to another.
• Emergency family leave wages paid
for leave taken after December 31,
2020, and before April 1, 2021.
• Sick leave wages subject to the $511
per day limit paid for leave taken after
March 31, 2021, and before October
1, 2021, because of care you required.
• Sick leave wages subject to the $200
per day limit paid for leave taken af-
ter March 31, 2021, and before Oc-
tober 1, 2021, because of care you
provided to another.
• Emergency family leave wages paid
for leave taken after March 31, 2021,
and before October 1, 2021.
If you have self-employment income in
addition to wages paid by your employer,
and you intend to claim any qualified sick
leave or qualified family leave equivalent
credits, you must report the qualified sick
leave or qualified family leave wages on
Form 7202, Credits for Sick Leave and
Family Leave for Certain Self-Employed
Individuals, included with your income
tax return, and may have to reduce (but
not below zero) any qualified sick leave
or qualified family leave equivalent cred-
its by the amount of these qualified leave
wages. If you have self-employment in-
come, you should refer to the instructions
for your individual income tax return for
more information.”
IV. PAPERWORK REDUCTION ACT
Any collection of information associ-
ated with this notice has been submitted
to the Office of Management and Budget
for review under OMB control number
1545-0008 in accordance with the Paper-
work Reduction Act of 1995 (44 U.S.C.
3507(d)). An agency may not conduct or
sponsor and a person is not required to re-
spond to a collection of information unless
it displays a valid OMB control number.
V. DRAFTING INFORMATION
The principal authors of this notice are
Michael Gitlin and Jason Healey. For fur-
ther information on the provisions of this
notice, please contact Mr. Gitlin or Mr.
Healey at 202-317-6798 (not a toll-free
number).
26 CFR 601.105: Examination of returns and
claims for refund, credit or abatement; determina-
tion of tax liability
(Also: 842(b))
Rev. Proc. 2021-41
SECTION 1. PURPOSE
This revenue procedure provides the
domestic asset/liability percentages and
domestic investment yields needed by for-
eign life insurance companies and foreign
property and liability insurance compa-
nies to compute their minimum effective-
ly connected net investment income under
section 842(b) of the Internal Revenue
Code for taxable years beginning after De-
cember 31, 2019. Instructions are provid-
ed for computing foreign insurance com-
panies’ liabilities for the estimated tax and
installment payments of estimated tax for
taxable years beginning after December
31, 2019. For more specific guidance re-
garding the computation of the amount of
net investment income to be included by a
foreign insurance company on its U.S. in-
come tax return, see Notice 89-96, 1989-2
C.B. 417. For the domestic asset/liability
percentage and domestic investment yield,
as well as instructions for computing for-
eign insurance companies’ liabilities for
estimated tax and installment payments of
estimated tax for taxable years beginning
after December 31, 2018, see Rev. Proc.
2020-41, 2020-40 I.R.B. 793.
SECTION 2. PERCENTAGES AND
YIELDS
.01 DOMESTIC ASSET/LIABILITY
PERCENTAGES FOR 2020. The Secre-
tary determines the domestic asset/liabili-
ty percentage separately for life insurance
companies and property and liability in-
surance companies. For the first taxable
year beginning after December 31, 2019,
the relevant domestic asset/liability per-
centages are:
130.9 percent for foreign life insurance
companies, and
217.3 percent for foreign property and
liability insurance companies.
.02 DOMESTIC INVESTMENT
YIELDS FOR 2020. The Secretary pre-
scribes separate domestic investment
yields for foreign life insurance compa-
nies and for foreign property and liability
insurance companies. For the first taxable
year beginning after December 31, 2019,
the relevant domestic investment yields
are:
3.3 percent for foreign life insurance
companies, and
2.6 percent for foreign property and li-
ability insurance companies.
.03 SOURCE OF DATA FOR 2020.
The section 842(b) percentages to be used

September 27, 2021 444 Bulletin No. 2021–39
for the 2020 taxable year are based on tax
return data from the 2018 taxable year.
SECTION 3. ESTIMATED TAXES
To compute estimated tax and the in-
stallment payments of estimated tax due
for taxable years beginning after Decem-
ber 31, 2019, a foreign insurance compa-
ny must compute its estimated tax pay-
ments by adding to its income other than
net investment income the greater of (i)
its net investment income as determined
under section 842(b)(5) that is actually
effectively connected with the conduct
of a trade or business within the United
States for the relevant period, or (ii) the
minimum effectively connected net in-
vestment income under section 842(b)
that would result from using the most
recently available domestic asset/liabil-
ity percentage and domestic investment
yield. Thus, for installment payments
due after the publication of this revenue
procedure, the domestic asset/liability
percentages and the domestic investment
yields provided in this revenue procedure
must be used to compute the minimum
effectively connected net investment
income. However, if the due date of an
installment is less than 20 days after the
date this revenue procedure is published
in the Internal Revenue Bulletin, the
asset/liability percentages and domes-
tic investment yields provided in Rev.
Proc. 2020-41 may be used to compute
the minimum effectively connected net
investment income for such installment.
For further guidance in computing esti-
mated tax, see Notice 89-96.
SECTION 4. EFFECTIVE DATE
This revenue procedure is effective for
taxable years beginning after December
31, 2019.
SECTION 5. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Sheila Ramaswamy of the
Office of Associate Chief Counsel (Inter-
national). For further information regard-
ing this revenue procedure contact Shei-
la Ramaswamy at (202) 317-6938 (not a
toll-free number).

Bulletin No. 2021–39 445 September 27, 2021
Part IV
Notice of Proposed
Rulemaking
Recapture of Excess
Employment Tax Credits
under the American Relief
Plan Act of 2021
REG-109077-21
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of Proposed Rulemak-
ing by cross-reference to temporary reg-
ulations.
SUMMARY: In the Rules and Regula-
tions section of this issue of the Federal
Register, the IRS is issuing temporary
regulations pursuant to the regulatory
authority granted under sections 3131,
3132, and 3134 of the Internal Reve-
nue Code, added by sections 9641 and
9651 of the American Rescue Plan Act
of 2021, to prescribe regulations as may
be necessary for recapturing the benefit
of the employment tax credits provided
under these sections when necessary and
to prevent the avoidance of the purposes
of the limitations under these sections.
These proposed regulations affect busi-
nesses and tax-exempt organizations, as
well as certain governmental entities,
that claim the paid sick leave credit and
the paid family leave credit under sec-
tions 3131 and 3132, respectively, and
that claim the employee retention cred-
it under section 3134. The text of those
temporary regulations serves as the text
of these proposed regulations.
DATES: Written or electronic comments
and requests for a public hearing must
be received by November 09, 2021. Re-
quests for a public hearing must be sub-
mitted as prescribed 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 www.regulations.gov (indicate IRS and
REG-109077-21) by following the online
instructions for submitting comments.
Once submitted to the Federal eRulemak-
ing Portal, comments cannot be edited or
withdrawn. The IRS expects to have lim-
ited personnel available to process public
comments that are submitted on paper
through the mail. Until further notice,
any comments submitted on paper will
be considered to the extent practicable.
The Department of the Treasury (Trea-
sury Department) and the IRS will pub-
lish for public availability any comment
submitted electronically, and to the extent
practicable on paper, to its public docket.
Send paper submissions to: CC:PA:LP-
D:PR (REG-109077-21), room 5203,
Internal Revenue Service, PO Box 7604,
Ben Franklin Station, Washington, D.C.
20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, NaLee Park at (202) 317-
6879; concerning submissions of com-
ments and/or requests for a public hearing,
Regina Johnson at (202) 317-5177 (not
toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background and Explanation of
Provisions
Temporary regulations in the Rules
and Regulations section of this issue of
the Federal Register amend the Employ-
ment Taxes and Collection of Income at
the Source Regulations (26 CFR part 31)
under sections 3131, 3132, and 3134 of
the Internal Revenue Code (Code) pur-
suant to the regulatory authority granted
under these sections to prescribe regula-
tions as may be necessary for recapturing
the benefit of the employment tax credits
provided under these sections when nec-
essary and to prevent the avoidance of the
purposes of the limitations under these
sections. Consistent with this authority,
these proposed regulations authorize the
assessment of erroneous refunds of the
credits paid under sections 3131, 3132
(including any increases in those credits
under section 3133), and 3134. The text of
those temporary regulations also serves as
the text of these proposed regulations. The
preamble to the temporary regulations ex-
plains the amendments.
Special Analyses
The Office of Management and Bud-
get’s Office of Information and Regulato-
ry Analysis has determined that these reg-
ulations are not significant and not subject
to review under section 6(b) of Executive
Order 12866.
Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), the Secretary cer-
tifies that these proposed regulations will
not have a significant economic impact on
a substantial number of small entities be-
cause these proposed regulations impose
no compliance burden on any business en-
tities, including small entities. Although
these proposed regulations will apply to
all employers eligible for the credits under
sections 3131, 3132, and 3134, including
small businesses and tax-exempt organi-
zations with fewer than 500 employees as
well as certain governmental employers,
and therefore are likely to affect a substan-
tial number of small entities, the economic
impact will not be significant. These pro-
posed regulations do not affect the em-
ployer’s employment tax reporting or the
necessary information to substantiate en-
titlement to the credits. Rather, these pro-
posed regulations merely implement the
statutory authority granted under sections
3131(g), 3132 (g), 3134(j), and 3134(m)
that authorize the Service to assess, rec-
oncile, and recapture any portion of the
credits erroneously paid or refunded in
excess of the actual amount allowed as if
those amounts were taxes imposed under
section 3111(b) (the Hospital Insurance
tax (Medicare tax)), and so much of the
taxes imposed under section 3221(a) (the
Railroad Retirement Tax Act Tier 1 tax) as
are attributable to the rate in effect under
section 3111(b), as applicable, subject to
assessment and administrative collection
procedures. Notwithstanding this certifi-
cation, the Treasury Department and the

September 27, 2021 446 Bulletin No. 2021–39
IRS invite comments on any impact these
regulations would have on small entities.
Pursuant to section 7805(f), this notice
of proposed rulemaking has been submit-
ted to the Chief Counsel of the Office of
Advocacy of the Small Business Adminis-
tration for comment on its impact on small
business.
Comments and Requests for Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any comments that are
timely submitted to the IRS as prescribed
in the preamble under the “ADDRESS-
ES” section. The Treasury Department
and the IRS request comments on all as-
pects of these proposed regulations. Any
electronic comments submitted, and to the
extent practicable any paper comments
submitted, will be made available at www.
regulations.gov or upon request.
A public hearing will be scheduled if
requested in writing by any person who
timely submits electronic or written com-
ments. Requests for a hearing are strongly
encouraged to be submitted electronically.
If a public hearing is scheduled, notice of
the date and time for the public hearing
will be published in the Federal Regis-
ter. Announcement 2020-4, 2020-17 IRB
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.
Statement of Availability of IRS
Documents
IRS notices and other guidance cited
in this preamble are published in the In-
ternal Revenue Bulletin (or Cumulative
Bulletin) and are available from the Su-
perintendent of Documents, U.S. Govern-
ment Publishing Office, Washington, DC
20402, or by visiting the IRS website at
http://www.irs.gov.
Drafting Information
The principal author of these regula-
tions is NaLee Park, Office of the Asso-
ciate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the Treasury Department and the IRS par-
ticipated in the development of these reg-
ulations.
List of Subjects in 26 CFR 31
Employment taxes, Income taxes, Pen-
alties, Pensions, Railroad retirement, Re-
porting and recordkeeping requirements,
Social security, Unemployment compen-
sation.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 31 is pro-
posed to be amended as follows:
PART 31—EMPLOYMENT TAXES
AND COLLECTION OF INCOME
TAX AT SOURCE
Paragraph 1. The authority citation for
part 31 is amended by adding entries for
§§31.3131-1, 31.3132-1, and 31.3134-1 in
numerical order to read in part as follows:
Authority: 26 U.S.C. 7805.
* * * * *
Section 31.3131-1 also issued under 26
U.S.C. 3131(g).
Section 31.3132-1 also issued under 26
U.S.C. 3132(g).
Section 31.3134-1 also issued under 26
U.S.C. 3134(m)(3).
* * * * *
Par. 2. Section 31.3131-1 is added to
read as follows:
§31.3131-1 Recapture of credits.
[The text of proposed §31.3131-1 is the
same as the text of §31.3131-1T published
elsewhere in this issue of the Federal
Register].
Par. 3. Section 31.3132-1 is added to
read as follows:
§31.3132-1 Recapture of credits.
[The text of proposed §31.3132-1 is the
same as the text of §31.3132-1T published
elsewhere in this issue of the Federal
Register].
Par. 4. Section 31.3134-1 is added to
read as follows:
§31.3134-1 Recapture of credits.
[The text of proposed §31.3134-1 is the
same as the text of §31.3134-1T published
elsewhere in this issue of the Federal
Register].
Douglas W. O’Donnell,
Deputy Commissioner for Services
and Enforcement.
(Filed by the Office of the Federal Register on Sep-
tember 7, 2021, 8:45 a.m., and published in the issue
of the Federal Register for September 8, 2021, 86
FR 50295)

Bulletin No. 2021–39 i September 27, 2021
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.

September 27, 2021 ii Bulletin No. 2021–39
Numerical Finding List
1
Bulletin 2021–39
Announcements:
2021-12, 2021-31 I.R.B. 267
2021-13, 2021-33 I.R.B. 314
2021-14, 2021-33 I.R.B. 315
Notices:
2021-39, 2021-27 I.R.B. 3
2021-40, 2021-28 I.R.B. 15
2021-41, 2021-29 I.R.B. 17
2021-42, 2021-29 I.R.B. 19
2021-38, 2021-30 I.R.B. 155
2021-44, 2021-31 I.R.B. 166
2021-45, 2021-31 I.R.B. 170
2021-47, 2021-32 I.R.B. 269
2021-46, 2021-33 I.R.B. 303
2021-48, 2021-33 I.R.B. 305
2021-49, 2021-34 I.R.B. 316
2021-43, 2021-35 I.R.B. 332
2021-50, 2021-35 I.R.B. 333
2021-51, 2021-36 I.R.B. 361
2021-52, 2021-38 I.R.B. 381
2021-53, 2021-39 I.R.B. 438
Proposed Regulations:
REG-107705-21, 2021-30 I.R.B. 162
REG-102951-16, 2021-32 I.R.B. 272
REG-109077-21, 2021-39 I.R.B. 445
Revenue Procedures:
2021-28, 2021-27 I.R.B. 5
2021-29, 2021-27 I.R.B. 12
2021-24, 2021-29 I.R.B. 19
2021-14, 2021-30 I.R.B. 158
2021-30, 2021-31 I.R.B. 172
2021-31, 2021-33 I.R.B. 324
2021-33, 2021-34 I.R.B. 327
2021-34, 2021-35 I.R.B. 337
2021-35, 2021-35 I.R.B. 355
2021-36, 2021-35 I.R.B. 357
2021-37, 2021-38 I.R.B. 385
2021-38, 2021-38 I.R.B. 425
2021-39, 2021-38 I.R.B. 426
2021-40, 2021-38 I.R.B. 426
2021-41, 2021-39 I.R.B. 443
Revenue Rulings:
2021-12, 2021-27 I.R.B. 1
2021-13, 2021-30 I.R.B. 152
2021-14, 2021-31 I.R.B. 164
2021-15, 2021-35 I.R.B. 331
2021-16, 2021-36 I.R.B. 359
2021-17, 2021-37 I.R.B. 362
Treasury Decisions:
9951, 2021-30 I.R.B. 25
9952, 2021-39 I.R.B. 428
9953, 2021-39 I.R.B. 430
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin
2021–52, dated December 27, 2021.

Bulletin No. 2021–39 iii September 27, 2021
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2021–39
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin
2021–52, dated December 27, 2021.

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