This notice extends the due dates for certain 2018 information reporting requirements for insurers, self-insuring employers, and certain other providers of minimum essential coverage under section 6055 and for applicable large employers under section 6056. Specifically, this notice extends the due date for furnishing to individuals the 2018 Form 1095–B, Health Coverage, and the 2018 Form 1095–C, Employer-Provided Health Insurance Offer and Coverage, from January 31, 2019, to March 4, 2019. This notice also extends transitional good-faith relief from section 6721 and 6722 penalties to the 2018 information reporting requirements under sections 6055 and 6056.

Interest rates: underpayments and overpayments. The rates for interest determined under Section 6621 of the code for the calendar quarter beginning January 1, 2019, will be 6 percent for overpayments (5 percent in the case of a corporation), 6 percent for underpayments, and 8 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 3.5 percent.

This notice relates to amendments to sections 3401, 3402, and 3405 made by the Tax Cuts and Jobs Act (Pub. L. No. 115–97), and the decision to delay until 2020 an overhaul of the Form W–4 that had initially been proposed for 2019. This notice provides interim guidance for 2019 on income tax withholding from wages and from retirement and annuity distributions, requests comments on certain wage withholding procedures, indicates that regulations are planned to update the wage withholding regulations to reflect changes made by the TCJA, and provides for certain miscellaneous changes consistent with current procedures. This notice continues until April 30, 2019, Notice 2018–14’s temporary suspension of the requirement to furnish new Forms W–4 within 10 days for changes resulting in a reduction of allowances solely because of the TCJA.

This notice publishes the applicable dollar amounts under § 45Q(b)(1) for purposes of determining the credit for carbon oxide sequestration under § 45Q(a)(3) and (a)(4).

This notice of proposed rulemaking contains proposed regulations providing guidance on new discounting rules for unpaid losses and estimated salvage recoverable of insurance companies for Federal income tax purposes. The proposed regulations implement recent legislative changes to the Internal Revenue Code and make other technical improvements to the derivation and use of discount factors. The proposed regulation affect entities taxable as insurance companies.

This procedure modifies Rev. Proc. 2018–31, 2018–22 I.R.B. 637, to provide procedures under section 446 and the accompanying regulations to obtain automatic consent of the Commissioner of Internal Revenue to change methods of accounting to comply with section 451(b), as amended by section 13221 of the Tax Cuts and Jobs Act, relating to the timing of the recognition of income for taxable years beginning after December 31, 2017. In addition, for the first taxable year beginning after December 31, 2017, this procedure provides streamlined procedures for certain qualifying taxpayers to change a method of accounting under section 451(b).

Section 6621 of the Internal Revenue Code establishes the interest rates on overpayments and underpayments of tax. Under section 6621(a)(1), the overpayment rate is the sum of the federal short-term rate plus 3 percentage points (2 percentage points in the case of a corporation), except the rate for the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the sum of the federal short-term rate plus 0.5 of a percentage point. Under section 6621(a)(2), the underpayment rate is the sum of the federal short-term rate plus 3 percentage points.

Section 6621(c) provides that for purposes of interest payable under section 6601 on any large corporate underpayment, the underpayment rate under section 6621(a)(2) is determined by substituting “5 percentage points” for “3 percentage points.” See section 6621(c) and section 301.6621–3 of the Regulations on Procedure and Administration for the definition of a large corporate underpayment and for the rules for determining the applicable date. Section 6621(c) and section 301.6621–3 are generally effective for periods after December 31, 1990.

Section 6621(b)(1) provides that the Secretary will determine the federal short-term rate for the first month in each calendar quarter. Section 6621(b)(2)(A) provides that the federal short-term rate determined under section 6621(b)(1) for any month applies during the first calendar quarter beginning after that month. Section 6621(b)(3) provides that the federal short-term rate for any month is the federal short-term rate determined during that month by the Secretary in accordance with section 1274(d), rounded to the nearest full percent (or, if a multiple of 1/2 of 1 percent, the rate is increased to the next highest full percent).

Notice 88–59, 1988–1 C.B. 546, announced that in determining the quarterly interest rates to be used for overpayments and underpayments of tax under section 6621, the Internal Revenue Service will use the federal short-term rate based on daily compounding because that rate is most consistent with section 6621 which, pursuant to section 6622, is subject to daily compounding.

The federal short-term rate determined in accordance with section 1274(d) during October 2018 is the rate published in Revenue Ruling 2018–28, 2018–45 IRB 764, to take effect beginning November 1, 2018. The federal short-term rate, rounded to the nearest full percent, based on daily compounding determined during the month of October 2018 is 3 percent. Accordingly, an overpayment rate of 6 percent (5 percent in the case of a corporation) and an underpayment rate of 6 percent are established for the calendar quarter beginning January 1, 2019. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 for the calendar quarter beginning January 1, 2019 is 3.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning January 1, 2019, is 8 percent. These rates apply to amounts bearing interest during that calendar quarter.

Sections 6654(a)(1) and 6655(a)(1) provide that the underpayment rate established under section 6621 applies in determining the addition to tax under sections 6654 and 6655 for failure to pay estimated tax for any taxable year. Thus, the 6 percent rate also applies to estimated tax underpayments for the first calendar quarter beginning January 1, 2019. Pursuant to section 6621(b)(2)(B), in determining the addition to tax under section 6654 for any taxable year for an individual, the federal short-term rate that applies during the third month following the taxable year also applies during the first 15 days of the fourth month following the taxable year. In addition, pursuant to section 6603(d)(4), the rate of interest on section 6603 deposits is 3 percent for the first calendar quarter in 2019.

Interest factors for daily compound interest for annual rates of 3.5 percent, 5 percent, 6 percent and 8 percent are published in Tables 12, 15, 17 and 21 of Rev. Proc. 95–17, 1995–1 C.B. 566, 569, 571 and 575.

Annual interest rates to be compounded daily pursuant to section 6622 that apply for prior periods are set forth in the tables accompanying this revenue ruling.

The principal author of this revenue ruling is Casey R. Conrad of the Office of the Associate Chief Counsel (Procedure and Administration). For further information regarding this revenue ruling, contact Mr. Conrad at (202) 317-6844 (not a toll-free number).

This notice provides interim guidance for the 2019 calendar year on income tax withholding from wages and from retirement and annuity distributions. This notice provides that certain withholding rules in Notice 2018–14, 2018–7 I.R.B. 353, that applied for 2018 will remain in effect for the 2019 calendar year or, in the case of one such rule, until April 30, 2019. Also, the Internal Revenue Service (IRS) and the Department of the Treasury (Treasury Department) intend to develop regulations under sections 3401 and 3402 of the Internal Revenue Code, as amended by section 11041 of the Tax Cuts and Jobs Act, Pub. L. 115–97 (the “TCJA”). These withholding regulations will reflect changes made by the TCJA, other changes in the Code since the regulations were last amended, and certain miscellaneous changes consistent with current procedures. Comments are requested both on the interim guidance provided herein and guidance that should be provided in regulations. Comments must be received by January 25, 2019.

Section 3402 requires an employer to withhold income tax from wages under methods and procedures prescribed by the Secretary. Section 3402 sets forth certain methods of withholding but also gives the Secretary broad regulatory authority in providing for tables or computational procedures for income tax withholding. Longstanding regulations have provided specific rules for income tax withholding. See, for example, Treas. Reg. §§ 31.3402(b) –1 and 31.3402(c)–1. Under section 3402(f)(2), an employee who receives wages subject to withholding under section 3402 is required to furnish his or her employer a Form W–4 (Employee’s Withholding Allowance Certificate). See also Treas. Reg. § 31.3402(f)(5)–1. An employee completes Form W–4 based on his or her personal tax situation and furnishes the Form W–4 to the employer.

Form W–4 is updated each year and is typically released before the beginning of the calendar year. Release of the 2018 Form W–4 was delayed until February 28, 2018, in order to reflect law changes made by the TCJA, such as changes in itemized deductions available, increases in the child tax credit, the new credit for other dependents, and the suspension of personal exemption deductions. Notice 2018–14, 2018–7 I.R.B. 353, provided relief for employers and employees affected by the delayed release of the 2018 Form W–4.

On June 6, 2018, and June 7, 2018, respectively, the IRS released for public comment a draft 2019 Form W–4 and draft instructions. Unlike the relatively minor changes made to Form W–4 in recent years, this draft form and instructions incorporated significant changes intended to improve the accuracy of income tax withholding and make the withholding system more transparent for employees. Many comments were received on the draft form and instructions. In response to comments received from stakeholders, the IRS and the Treasury Department announced on September 20, 2018, that implementation of the redesigned form would be postponed until 2020 and that the IRS and the Treasury Department would continue working closely with stakeholders as additional changes are made to the form. Accordingly, instead of using the draft 2019 Form W–4 that was released in June of 2018, the IRS intends to release a 2019 Form W–4 before the end of 2018 that makes minimal changes to the 2018 Form W–4. Like the 2018 Form W–4, the 2019 Form W–4 will implement changes made by the TCJA using computational procedures based on allowances and will be “appropriate . . . to reflect the provisions of chapter 1 applicable to” the 2019 calendar year. See section 3402(a)(1)(B).

This notice includes the following sections. Section 3 addresses the use of the term “withholding allowance” in section 3402 and its regulations. Section 4 continues until April 30, 2019, the temporary suspension of the requirement under section 3402(f)(2)(B) that employees must furnish their employers new Forms W–4 within 10 days for reductions in allowances solely resulting from changes made by the TCJA. See Notice 2018–14, 2018–7 I.R.B. 353, 355. Section 5 addresses the repeal of section 3401(e) and provides that employees who have failed to furnish a Form W–4 will be treated as single but entitled to the number of allowances provided in accordance with computational procedures set forth by the Commissioner in Publication 15 (Circular E), Employer’s Tax Guide. Section 6 requests comments on items taken into account under section 3402(m) and Treas. Reg. § 31.3402(m)–1(b) and provides that taxpayers may include an estimate of the deduction allowed under section 199A in determining the additional withholding allowance under section 3402(m) to which they are entitled and may claim on Form W–4. Section 7 explicitly allows taxpayers to use the online withholding calculator (www.irs.gov/W4App) or Publication 505, Tax Withholding and Estimated Tax, in lieu of the worksheets to Form W–4. Section 8 requests comments on alternative withholding methods under section 3402(h) and announces that the IRS and the Treasury Department intend to eliminate the combined income tax withholding and employee FICA tax withholding tables under Treas. Reg. § 31.3402(h)(4)–1(b). Section 9 modifies notification requirements for the withholding compliance program. Section 10 provides that, for 2019, the rules for default withholding for periodic payments under section 3405(a)(4), related to pensions, annuities, and certain other deferred income, will continue to parallel the rules for prior years by treating the payee as a married individual claiming three withholding allowances and applying that status to the 2019 withholding tables.

Under sections 3402(a)(1)(A) and 3402(a)(2), as modified by the TCJA, for each employee, an employer is to withhold on “the amount by which the wages exceed the taxpayer’s withholding allowance, prorated to the payroll period.” This withholding allowance is determined by the criteria set forth in section 3402(f)(1). In addition, section 3402(m) provides that, “[u]nder regulations prescribed by the Secretary, an employee shall be entitled to an additional withholding allowance or additional reductions in withholding” under section 3402(m). On the 2018 Form W–4, in accordance with section 3402, an employee reported “withholding allowances” to the employer based on the employee’s personal situation. Although the TCJA amended section 3402(f) to provide for a “withholding allowance” in the singular rather than “withholding exemptions” in the plural, section 3402(f) provides that under rules determined by the Secretary, an employee shall be entitled to a withholding allowance determined on the basis of multiple items listed in section 3402(f), and section 3402(m) provides for an additional withholding allowance. Accordingly, under the general authority to establish computational procedures pursuant to section 3402(a), the 2019 Form W–4 and the computational procedures in Publication 15 will continue to use the term “withholding allowances” and related terminology to properly incorporate the factors specified in section 3402(f) and the additional items in section 3402(m).

Pursuant to Treas. Reg. §§ 31.3402(b)–1 and 31.3402(c)–1, the 2019 Publication 15 will set the value of one withholding allowance for 2019. (The value of one withholding allowance for 2018 is $4,150.) However, the IRS and the Treasury Department intend to amend the regulations under sections 3401 and 3402 describing withholding allowances and withholding exemptions to update the terminology used in those regulations. Until further guidance is issued, any reference to a withholding exemption in the regulations and guidance under section 3402 will be applied as if it were a reference to a withholding allowance. Thus, for example, the language in Treas. Reg. § 31.3402(f)(2)–1(g)(2)(i) providing for an IRS notification process to specify a “maximum number of withholding exemptions” an employee may claim will be applied as a reference to a maximum number of withholding allowances.

In addition, as provided with respect to periods prior to 2019, for 2019, certain nonresident aliens may claim only one withholding allowance under Treas. Reg. § 31.3402(f)(6)–1 and related instructions, such as Notice 1392, Supplemental Form W–4 Instructions for Nonresident Aliens. If an employee identifies as a nonresident alien employee on the 2019 Form W–4, the employer should follow the instructions for adding a specified amount to the nonresident alien individual’s wages before application of the wage withholding tables, as provided in Publication 15, to account for nonresident aliens’ ineligibility for the standard deduction. See section 63(c)(6)(B).

Finally, section 3402(f)(2)(B) and (C) and the regulations thereunder provide that if an employee experiences a “change of status” that reduces the “withholding allowance” the employee is entitled to, the employee must furnish his or her employer a new Form W–4 within 10 days after the change if the change affects the current calendar year and by December 1 of the current calendar year if the change affects the next calendar year. See also Treas. Reg. §§ 31.3402(f)(2)–1(b) (for a change that affects the current calendar year) and 31.3402(f)(2)–1(c)(1)(i) (for a change that affects the next calendar year). However, if the change affecting the next calendar year occurs in December of the current calendar year, the employee must furnish a new Form W–4 within 10 days after the change occurs. See Treas. Reg. § 31.3402(f)(2)–1(c)(1)(i).

For 2019, the IRS and the Treasury Department have determined that the “withholding allowance” as described in section 3402(f)(2)(B) and (C) means the number of withholding allowances claimed by the employee on Form W–4 multiplied by the value of the “withholding allowance” for 2019 as prescribed by the Commissioner in Publication 15. Thus, if an employee no longer reasonably expects to be entitled to one or more of the withholding allowances claimed on the Form W–4, the employee must generally furnish the employer a new Form W–4 within 10 days of the change. However, see section 4 of this notice for a special rule related to TCJA changes.

As noted in section 3 of this notice, section 3402(f)(2)(B) and Treas. Reg. § 31.3402(f)(2)–1(b) provide that if an employee experiences a “change of status” that reduces the withholding allowances to which the employee is entitled, that employee must generally furnish a new Form W–4 within 10 days. Under Section III of Notice 2018–14, employees who had a change of status “solely due to the changes made by the TCJA” were not required to furnish new Forms W–4 to their employers during 2018. The IRS and the Treasury Department have determined that this rule should continue in effect until April 30, 2019. Accordingly, if an employee experiences a change of status on or before April 30, 2019, that reduces the number of withholding allowances to which the employee is entitled and the change is solely due to the changes made by the TCJA, the employee is not required to furnish a new Form W–4 on or before May 9, 2019, but is generally required to furnish the employer a new Form W–4 by May 10, 2019. However, consistent with section 3 of this notice, if an employee no longer reasonably expects to be entitled to a claimed number of withholding allowances because of a change in personal circumstances not solely related to changes made by the TCJA (for example, an individual no longer qualifies as the employee’s qualifying child, as defined in section 152(c), because of a change in the individual’s principal place of abode), the employee must furnish his or her employer a new Form W–4 within 10 days after the change. Similarly, if an employee claims married filing status on Form W–4 but becomes divorced from his or her spouse, the employee must furnish the employer a new Form W–4 within 10 days after the change. See section 3402(l); Treas. Reg. § 31.3402(l)–1(b)(2). In addition, employees are encouraged to update their Forms W–4 as soon as they become aware of a change in withholding allowances they are entitled to resulting from changes made by the TCJA. The online withholding calculator (www.irs.gov/W4App) has been updated to reflect changes made by the TCJA and will be updated for 2019. Employees are encouraged to check their withholding using this online tool to prevent under-withholding and possible section 6654 estimated tax penalties.

Prior to TCJA, section 3401(e) provided that employees who failed to furnish a Form W–4 were considered to have claimed zero withholding allowances or exemptions. See also Treas. Reg. § 31.3402(f)(2)–1(a) (last sentence). Under section 3402(l) an employee is treated as single unless the employee furnishes a Form W–4 indicating that the employee is married (determined by applying the rules of section 3402(l)(3)). Thus, under prior law, employees who failed to furnish a Form W–4 were treated as single with zero allowances for purposes of determining withholding.

TCJA repealed section 3401(e) but made no substantive changes to section 3402(l). Accordingly, the IRS and the Treasury Department intend to withdraw the regulations under section 3401(e) and modify other regulations to provide that employees who have failed to furnish a Form W–4 will be treated as single but entitled to the number of withholding allowances provided in accordance with computational procedures set forth by the Commissioner in Publication 15. Until further guidance is issued, the IRS plans to provide, in the computational procedures in Publication 15 applicable for 2019, that employees who fail to furnish a Form W–4 will be treated as single with zero withholding allowances.

Section 3402(m) allows for an additional withholding allowance or additional reductions in withholding under regulations prescribed by the Secretary. Treas. Reg. § 31.3402(m)–1(b) lists items that may be taken into account in determining the withholding allowance to which an employee is entitled. The IRS and the Treasury Department request comments with respect to the list of items set forth in Treas. Reg. § 31.3402(m)–1(b). Until further guidance under section 3402(m) is issued, in addition to the items listed in Treas. Reg. § 31.3402(m)–1(b) insofar as they are applicable to the relevant tax year, a taxpayer may include the taxpayer’s estimated deduction under section 199A in determining the additional withholding allowance under section 3402(m) that the taxpayer is entitled to claim on Form W–4.

Consistent with instructions currently provided in Publication 505, Publication 15, and the instructions for Form W–4, the IRS and the Treasury Department intend to update the regulations under section 3402 to explicitly allow employees to use the withholding calculator (www.irs.gov/W4App) or Publication 505 to determine what entries to make on Form W–4 in lieu of completing certain schedules included with the Form W–4. These options are appropriate for employees who want their withholding to be as accurate as possible. For 2018, the withholding calculator provides an amount to enter on line 5 of Form W–4 for total number of allowances claimed and, if appropriate, an additional amount to enter on line 6 of Form W–4 for an additional amount to be withheld from each paycheck. The 2019 Form W–4 is expected to have the same lines. The accuracy of the calculator results depends on the accuracy of the information entered into the calculator.

As explained in the instructions for the IRS withholding calculator on the irs.gov website, taxpayers in certain situations should not use the calculator to calculate their withholding but should use Publication 505 instead. For example, for 2018, the 2018 withholding calculator should not be used by taxpayers who owe self-employment tax, alternative minimum tax, the tax on unearned income of dependents, or certain other taxes; taxpayers with long-term capital gains or qualified dividends; or taxpayers who have taxable social security benefits. It is expected that the regulations will provide that using the withholding calculator is not an acceptable procedure for an employee to follow in calculating withholding if the instructions for the IRS withholding calculator provide that it should not be used by the employee because of the employee’s individual tax situation.

The IRS and the Treasury Department request comments on alternative withholding procedures under section 3402(h). The IRS and the Treasury Department intend to eliminate one of the alternative withholding procedures, specifically, the combined income tax withholding and employee FICA tax withholding tables under Treas. Reg. § 31.3402(h)(4)–1(b), due to the unintended complexity and burden of the method. Although employers currently may withhold FICA and income tax simultaneously under these tables, they still need to report each of these amounts separately on quarterly or annual employment tax returns and Forms W–2, thus reducing any benefit from using the combined tables.

In certain cases, the IRS may issue an employer a notice prescribing a maximum number of withholding allowances an employee may claim (a lock-in letter). See Treas. Reg. § 31.3402(f)(2)–1(g)(2)(i). When the employer no longer employs the employee (within the meaning of Treas. Reg. § 31.3402(f)(2)–1(g)(2)(iii)), Treas. Reg. § 31.3402(f)(2)–1(g)(2)(iv) requires the employer to send a written response to the IRS office designated in the lock-in letter that the employee is not employed by the employer. The IRS and the Treasury Department intend to eliminate this requirement from the regulations. Pending issuance of further guidance, employers should not send a written response to the IRS as provided in Treas. Reg. § 31.3402(f)(2)–1(g)(2)(iv).

Under section 3405, the payor of certain payments for pensions, annuities, and certain other deferred income generally is required to withhold from the payments unless an individual elects not to have withholding apply to the payment. (The no-withholding election generally is unavailable with respect to eligible rollover distributions under section 3405(c) and certain payments to be made outside of the United States or its possessions under section 3405(e)(13).) An individual’s withholding election identifying the marital status and number of allowances being claimed (as well as an individual’s request for additional withholding) generally is made using Form W–4P, Withholding Certificate for Pension or Annuity Payments.

Under the law in effect before 2018, section 3405(a)(4) provided that, in the case of a payee entitled to periodic payments with respect to which a withholding certificate has not been furnished, the amount to be withheld from each such payment “shall be determined by treating the payee as a married individual claiming 3 withholding exemptions.” See also Temp. Treas. Reg. § 35.3405–1T, Q&A A–10. The TCJA amended section 3405(a)(4) to provide that the withholding rate when no withholding certificate is furnished “shall be determined under rules prescribed by the Secretary.” See section 11041(c)(2)(G) of TCJA. Section V of Notice 2018–14 provided that, for 2018, the rules for withholding when no withholding certificate is furnished with respect to periodic payments under section 3405(a) parallel the rules for prior years and are based on treating the payee as a married individual claiming three withholding allowances. For 2019, the same rules will continue to apply to periodic payments under section 3405(a). Accordingly, for 2019, the rules for withholding when no withholding certificate is furnished with respect to periodic payments under section 3405(a) will parallel the rules for prior years and will be based on treating the payee as a married individual claiming three withholding allowances and applying that status to the 2019 withholding tables.

Interested parties are invited to submit comments on this notice by January 25, 2019. Comments should be submitted to: CC:PA:LPD:PR (Notice 2018–92), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, D.C., 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (Notice 2018–92), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington, D.C., 20224. Alternatively, taxpayers may submit comments electronically to Notice.comments@irscounsel.treas.gov. Please include “Notice 2018–92” in the subject line of any electronic submission.

The principal authors of this notice are A.G. Kelley and Mikhail Zhidkov of the Office of Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the Treasury Department and the IRS participated in its development. For further information regarding this notice, contact Mikhail Zhidkov at (202) 317-4774 (not a toll-free number).

This notice publishes the applicable dollar amounts under § 45Q(b)(1) of the Internal Revenue Code for purposes of determining the credit for carbon oxide sequestration under § 45Q(a)(3) and (a)(4).

Section 45Q was enacted by § 115 of the Energy Improvement and Extension Act of 2008, Division B of Pub. L. No. 110–343, 122 Stat. 3765, 3829 (October 3, 2008) to provide a credit for the sequestration of carbon dioxide. Section 45Q was amended by § 1131 of the American Recovery and Reinvestment Tax Act of 2009, Division B of Pub. L. 111–5, 123 Stat. 115, 325 (February 17, 2009), and more recently by section 41119 of the Bipartisan Budget Act of 2018 (BBA), Pub. L. No. 115–123 (February 9, 2018). As a result of modifications made by the BBA amendment, the credit under section 45Q now applies to the sequestration of “qualified carbon oxide,” a broader term than qualified carbon dioxide. The amount of the credit is also increased for carbon oxide captured with equipment originally placed in service on or after the date of enactment of BBA.

Section 45Q(a)(1) allows a credit of $20 per metric ton of qualified carbon oxide (i) captured by the taxpayer using carbon capture equipment which is originally placed in service at a qualified facility before the date of the enactment of BBA, (ii) disposed of by the taxpayer in secure geological storage, and (iii) not used by the taxpayer as a tertiary injectant in a qualified enhanced oil or natural gas recovery project.

Section 45Q(a)(2) allows a credit of $10 per metric ton of qualified carbon oxide (i) captured by the taxpayer using carbon capture equipment which is originally placed in service at a qualified facility before the date of the enactment of BBA and (ii) either (I) used by the taxpayer as a tertiary injectant in a qualified enhanced oil or natural gas recovery project and disposed of by the taxpayer in secure geological storage or (II) utilized by the taxpayer in a manner described in § 45Q(f)(5).

Section 45Q(a)(3) allows a credit of the applicable dollar amount (as determined under § 45Q(b)(1)) per metric ton of qualified carbon oxide (i) captured by the taxpayer using carbon capture equipment which is originally placed in service at a qualified facility on or after the date of the enactment of BBA during the 12-year period beginning on the date the equipment was originally placed in service, (ii) disposed of by the taxpayer in secure geological storage, and (iii) neither used as a tertiary injectant in a qualified enhanced oil or natural gas recovery project nor utilized in a manner described in § 45Q(f)(5).

Section 45Q(a)(4) allows credit of the applicable dollar amount (as determined under § 45Q(b)(1)) per metric ton of qualified carbon oxide (i) captured by the taxpayer using carbon capture equipment which is originally placed in service at a qualified facility on or after the date of the enactment of BBA during the 12-year period beginning on the date the equipment was originally placed in service, and (ii) either (I) used by the taxpayer as a tertiary injectant in a qualified enhanced oil or natural gas recovery project and disposed of by the taxpayer in secure geological storage or (II) utilized by the taxpayer in a manner described in § 45Q(f)(5).

Section 45Q(b)(1)(A)(i)(I) provides that, for any taxable year beginning in a calendar year after 2016 and before 2027, the applicable dollar amount for purposes of § 45Q(a)(3) is an amount equal to the dollar amount established by linear interpolation between $22.66 and $50 for each calendar year during such period.

Section 45Q(b)(1)(A(i)(II) provides that, for any taxable year beginning in a calendar year after 2016 and before 2027, the applicable dollar amount for purposes of § 45Q(a)(4) is an amount equal to the dollar amount established by linear interpolation between $12.83 and $35 for each calendar year during such period.

Section 45Q(b)(1)(A)(ii)(I) provides that, for any taxable year beginning in a calendar year after 2026, the applicable dollar amount for purposes of § 45Q(a)(3) shall be an amount equal to the product of $50 and the inflation adjustment factor for such calendar year determined under § 43(b)(3)(B) for such calendar year, determined by substituting “2025” for “1990.” Section 45Q(b)(1)(A)(ii)(II) provides that, for any taxable year beginning in a calendar year after 2026, the applicable dollar amount for purposes of § 45Q(a)(4) shall be an amount equal to the product of $35 and the inflation adjustment factor for such calendar year determined under § 43(b)(3)(B) for such calendar year, determined by substituting “2025” for “1990.”

Pursuant to § 45Q(b)(1)(B), the applicable dollar amount determined under § 45Q(b)(1)(A) is rounded to the nearest cent.

The applicable dollar amounts under § 45Q(b)(1)(A)(i)(I), established by linear

interpolation for purposes of § 45Q(a)(3), are as follows:

The applicable dollar amounts under § 45Q(b)(1)(A)(i)(II), established by linear interpolation for purposes of § 45Q(a)(4), are as follows:

The principal author of this notice is David Selig of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding this notice, contact Mr. Selig at (202) 317-6853 (not a toll-free number).

This notice extends the due date for certain 2018 information-reporting requirements for insurers, self-insuring employers, and certain other providers of minimum essential coverage under section 6055 of the Internal Revenue Code (Code) and for applicable large employers under section 6056 of the Code. Specifically, this notice extends the due date for furnishing to individuals the 2018 Form 1095–B, Health Coverage, and the 2018 Form 1095–C, Employer-Provided Health Insurance Offer and Coverage, from January 31, 2019, to March 4, 2019. This notice also extends good-faith transition relief from section 6721 and 6722 penalties to the 2018 information-reporting requirements under sections 6055 and 6056.

Sections 6055 and 6056 were added to the Code by sections 1502 and 1514 of the Patient Protection and Affordable Care Act (ACA), enacted March 23, 2010, Pub. L. No. 111–148, 124 Stat. 119, 250, 256. Section 6055 requires health insurance issuers, self-insuring employers, government agencies, and other providers of minimum essential coverage to file and furnish annual information returns and statements regarding coverage provided. Section 6056 requires applicable large employers (generally those with 50 or more full-time employees, including full-time equivalent employees, in the previous year) to file and furnish annual information returns and statements relating to the health insurance, if any, that the employer offers to its full-time employees. Section 6056 was amended by sections 10106(g) and 10108(j) of the ACA and was further amended by section 1858(b)(5) of the Department of Defense and Full-Year Continuing Appropriations Act, 2011, Pub. L. No. 112–10, 125 Stat. 38, 169.

Section 36B, which was added to the Code by section 1401 of the ACA, provides a premium tax credit for eligible individuals who enroll in coverage through a Health Insurance Marketplace. Section 5000A, which was added to the Code by section 1501(b) of the ACA, generally provides that individuals must have minimum essential coverage, qualify for an exemption from the minimum essential coverage requirement, or make an individual shared responsibility payment when they file their federal income tax return. The Tax Cuts and Jobs Act, Pub. L. No. 115–97, 131 Stat. 2054, 2092, reduced the individual shared responsibility payment to zero for months beginning after December 31, 2018.

Section 6721 imposes a penalty for failing to timely file an information return or for filing an incorrect or incomplete information return. Section 6722 imposes a penalty for failing to timely furnish an information statement or for furnishing an incorrect or incomplete information statement. Section 6721 and 6722 penalties are imposed with regard to information returns and statements listed in section 6724(d), which includes those required by sections 6055 and 6056.

The regulations under section 6055 require every person that provides minimum essential coverage to an individual during a calendar year to file with the Internal Revenue Service (Service) an information return and a transmittal on or before the following February 28 (March 31 if filed electronically) and to furnish to the responsible individual identified on the return a written statement on or before January 31 following the calendar year to which the statement relates. See Treas. Reg. § 1.6055–1(f), (g)(4); see also § 6055(c)(2). The Service has designated Form 1094–B, Transmittal of Health Coverage Information Returns, and Form 1095–B, Health Coverage, to meet the requirements of the section 6055 regulations.

The regulations under section 6056 require every applicable large employer or a member of an aggregated group that is determined to be an applicable large employer (ALE member) to file with the Service an information return and a transmittal on or before February 28 (March 31 if filed electronically) of the year following the calendar year to which it relates and to furnish to full-time employees a written statement on or before January 31 following the calendar year to which the statement relates. See Treas. Reg. § 301.6056–1(e), (g); see also § 6056(c)(2). The Service has designated Form 1094–C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and Form 1095–C, Employer-Provided Health Insurance Offer and Coverage, to meet the requirements of the section 6056 regulations.

The regulations under sections 6055 and 6056 allow the Service to grant an extension of time of up to 30 days to furnish Forms 1095–B and 1095–C for good cause shown. See Treas. Reg. §§ 1.6055–1(g)(4)(i)(B)(1), 301.6056–1(g)(1)(ii)(A). In addition, filers of Forms 1095–B, 1094–C, and 1095–C may receive an automatic 30-day extension of time to file these forms with the Service by submitting Form 8809, Application for Extension of Time To File Information Returns, on or before the due date for filing those forms. See Treas. Reg. §§ 1.6081–1, 1.6081–8. Under certain conditions, filers who submit Form 8809 before the automatic 30-day extension period expires and explain in detail why the additional time is needed may also receive an additional 30-day extension of time to file Forms 1095–B, 1094–C, and 1095–C with the Service. See id.

The preambles to the section 6055 and 6056 regulations (T.D. 9660, 2014–13 I.R.B. 842; T.D. 9661, 2014–13 I.R.B. 855) provided that, for reporting of 2015 offers and coverage, the Service would not impose penalties under sections 6721 and 6722 on reporting entities that could show that they made good-faith efforts to comply with the information-reporting requirements. This relief applied only to furnishing and filing incorrect or incomplete information reported on a statement or return, and not to a failure to timely furnish or file a statement or return. Notice 2015–87, 2015–52 I.R.B. 889, reiterated that relief, and Notice 2015–68, 2015–41 I.R.B. 547, provided additional information about that relief with regard to reporting under section 6055. The preambles also noted the general rule that, under section 6724 and the related regulations, the section 6721 and 6722 penalties may be waived if a failure to timely furnish or file a statement or return is due to reasonable cause. To establish reasonable cause, the reporting entity must demonstrate that it acted in a responsible manner and that the failure was due to significant mitigating factors or events beyond the reporting entity’s control. In addition, proposed regulations under section 6055 published on August 2, 2016, proposed additional rules for reporting. 81 Fed. Reg. 50671.

Notice 2016–4, 2016–3 I.R.B. 279, extended the due dates for the 2015 information-reporting requirements under sections 6055 and 6056 (both for furnishing to individuals and for filing with the Service). In particular, the notice provided that the furnishing deadline for the 2015 Forms 1095–B and 1095–C was extended from February 1, 2016, to March 31, 2016, and that the filing deadline for the 2015 Forms 1094–B, 1095–B, 1094–C, and 1095–C was extended from February 29, 2016, to May 31, 2016, if not filing electronically, and from March 31, 2016, to June 30, 2016, if filing electronically. In addition, the notice provided that the provisions regarding an automatic and permissive 30-day extension of time for filing information returns and a permissive extension of time (of up to 30 days) for furnishing statements would not apply to the extended due dates.

Notice 2016–70, 2016–49 I.R.B. 784, extended the due dates for the 2016 information-reporting requirements under sections 6055 and 6056 for furnishing statements to individuals. In particular, the notice provided that the furnishing deadline for the 2016 Forms 1095–B and 1095–C was extended from January 31, 2017, to March 2, 2017. Notice 2016–70 did not extend the deadline for filing information returns with the Service, nor did it affect any extension that would otherwise be applicable to the deadline. The notice also extended good-faith transition relief from section 6721 and 6722 penalties to the 2016 information-reporting requirements under sections 6055 and 6056.

Notice 2018–06, 2018–2 I.R.B. 300, extended the due dates for the 2017 information-reporting requirements under sections 6055 and 6056 for furnishing statements to individuals. In particular, the notice provided that the furnishing deadline for the 2017 Forms 1095–B and 1095–C was extended from January 31, 2018, to March 2, 2018. Notice 2018–06 did not extend the deadline for filing information returns with the Service, nor did it affect any extension that would otherwise be applicable to the deadline. The notice also extended good-faith transition relief from section 6721 and 6722 penalties to the 2017 information-reporting requirements under sections 6055 and 6056.

The principal author of this notice is Danielle Pierce of the Office of the Associate Chief Counsel (Procedure and Administration). For further information regarding this notice contact Danielle Pierce at (202) 317-6845 (not a toll-free number).

Section 13221 of the Tax Cuts and Jobs Act, Pub. L. No. 115–97 (December 22, 2017) (TCJA) amended § 451 of the Internal Revenue Code (Code) relating to the timing of the recognition of income for federal income tax purposes for taxable years beginning after December 31, 2017. This revenue procedure modifies Rev. Proc. 2018–31, 2018–22 I.R.B. 637, to provide procedures under § 446 and § 1.446–1(e) of the Income Tax Regulations to obtain automatic consent of the Commissioner of Internal Revenue (Commissioner) to change methods of accounting to comply with § 451(b), as amended by TCJA. In addition, for the first taxable year that begins after December 31, 2017, certain taxpayers are permitted to make a method change to comply with § 451(b) without filing a Form 3115, Application for Change in Accounting Method.

.01 Section 13221 of TCJA made several changes to the timing of income for accrual method taxpayers by redesignating § 451(b) through (i) as (d) through (k), and adding new §§ 451(b) and (c). New §§ 451(b) and (c) are generally effective for tax years beginning after December 31, 2017. Section 451(b), as amended by TCJA, generally provides that for an accrual method taxpayer, the all events test with respect to any item of gross income (or portion thereof) shall not be treated as met any later than when such item (or portion thereof) is taken into account as revenue in the taxpayer’s applicable financial statement, or such other financial statement as the Secretary may specify.

.02 Section 13221(d) of TCJA provides rules relating to the coordination with § 481(a) for a qualified change in method of accounting for the taxpayer’s first taxable year beginning after December 31, 2017. Section 13221(d)(2) of TCJA provides that a qualified change in method of accounting is a change that: is required by the amendments made by section 13221 of TCJA, or was prohibited under the Code of 1986 prior to such amendments and that is permitted under the Code after such amendments. These method changes are treated as initiated by the taxpayer and as made with the consent of the Secretary. This provision of TCJA does not set forth the administrative procedures to make a change in method of accounting to comply with § 451(b), and does not specify whether a taxpayer is entitled to a section 481(a) spread period, audit protection, or ruling protection.

.03 Section 13221(e) of TCJA provides that in the case of income from a debt instrument having original issue discount (OID), the rules of § 451(b) apply to taxable years beginning after December 31, 2018, and the § 481(a) adjustment period for any adjustment under § 481(a) for a qualified change in method of accounting is six taxable years.

.04 On May 28, 2014, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) jointly announced new financial accounting standards for revenue recognition, titled “Revenue from Contracts with Customers (Topic 606)” (New Standards). See FASB Update No. 2014–09 and IASB International Financial Reporting Standard (IFRS) 15. Publicly-traded entities, certain not-for-profit entities, and certain employee benefit plans are required to adopt the New Standards for annual reporting periods beginning after December 15, 2017. Other entities are required to adopt the New Standards for annual reporting periods beginning after December 15, 2018. However, early adoption was allowed for reporting periods beginning after December 15, 2016. See FASB Update No. 2015–14, “Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date.”

.05 Rev. Proc. 2018–29, 2018–22 I.R.B. 634, as modified by Rev. Proc. 2018–49, 2018–41 I.R.B. 548, added a new automatic method change to Rev. Proc. 2018–31 for taxpayers that want to change their method of accounting for the recognition of income to a method that uses the New Standards (i) to identify performance obligations, (ii) to allocate transaction price to performance obligations, and/or (iii) to consider performance obligations satisfied. Rev. Proc. 2018–29, as modified by Rev. Proc. 2018–49, is effective on May 10, 2018, and applies to taxable years ending on or before May 10, 2021.

.06 Section 1.446–1(e)(3)(ii) provides that the Commissioner may prescribe the administrative procedures under which a taxpayer will be permitted to change a method of accounting. Except as otherwise provided in § 1.446–1(e)(3)(ii), a taxpayer must file a Form 3115 in order to secure the Commissioner’s consent to change a method of accounting. Rev. Proc. 2015–13, 2015–5 I.R.B. 419, as clarified and modified by Rev. Proc. 2015–33, 2015–24 I.R.B. 1067, and as modified by Rev. Proc. 2016–1, 2016–1 I.R.B. 1, and Rev. Proc. 2017–59, 2017–48 I.R.B. 543, provides the general procedures by which a taxpayer may obtain automatic consent of the Commissioner to change a method of accounting described in the List of Automatic Changes. Rev. Proc. 2018–31 contains the current List of Automatic Changes.

.07 Section 3 of this revenue procedure modifies Rev. Proc. 2018–31 to provide new automatic method changes under § 451, and modifications to an existing automatic change for a taxpayer to change its method of accounting to comply with §§ 451(b)(1)(A) and 451(b)(4). A taxpayer that files a Form 3115 in accordance with this revenue procedure to make a change in method of accounting to comply with § 451(b) may receive audit protection, as provided in section 8.01 of Rev. Proc. 2015–13.

.08 To further ease the administrative burden faced by taxpayers to comply with TCJA amendments to § 451 for the first taxable year beginning after December 31, 2017, this revenue procedure permits certain taxpayers to make changes in method of accounting to comply with § 451(b) using streamlined method change procedures if the change results in a zero § 481(a) adjustment, or if the taxpayer requesting the change is a small business taxpayer as provided in this revenue procedure. Some taxpayers that qualify to use the streamlined method change procedures provided in this revenue procedure may choose to file a Form 3115 in order to retain a clear record of a change in method of accounting, make permissible concurrent changes on the same Form 3115, or make a change in method of accounting with audit protection. However, other qualifying taxpayers may prefer the administrative convenience of being able to comply with § 451(b) solely by the filing of their federal income tax return. This revenue procedure provides rules for accrual method taxpayers that qualify and prefer to use the streamlined method change procedures.

.01 Section 16 of Rev. Proc. 2018–31 is modified to add new section 16.12 to read as follows:

.12 Changes in the timing of income recognition under § 451(b) for a taxpayer with an applicable financial statement (AFS).

(1) Description of change. This change applies to taxable years beginning after December 31, 2017. However, in the case of income from a debt instrument having original issue discount (OID), this change applies to taxable years beginning after December 31, 2018. This change applies to an accrual method taxpayer with an AFS that wants to change its method of accounting for the recognition of income to a method of accounting that complies with § 451(b)(1)(A). This change also applies to an accrual method taxpayer with an AFS that wants to change its method of accounting to a method under § 451(b)(4).

(2) Applicability. This change applies to a taxpayer that:

(a) wants to change to a method of accounting that treats an item of gross income, or portion thereof, as meeting the all events test no later than when such item, or portion thereof, is taken into account as revenue in its AFS under § 451(b)(1)(A), and/or

(b) is not adopting the New Standards (as defined in section 16.11(1) of this revenue procedure) for the year of change, and wants to allocate the transaction price to performance obligations under § 451(b)(4).

(3) Inapplicability. This change does not apply to a taxpayer that:

(a) wants to make a change for federal income tax purposes to a method that adopts the New Standards, as provided in section 16.11 of this revenue procedure. See, however, section 16.11 of this revenue procedure for a change to adopt the New Standards;

(b) wants to make a change in method of accounting to a method described in § 451(b)(2); or

(c) does not have an AFS, as defined in § 451(b)(1)(A)(i) or (ii).

(4) Manner of making change.

(a) Short Form 3115. A taxpayer making a change under this section 16.12 is required to complete only the following information on Form 3115 (Rev. December 2015):

(i) The identification section of page 1 (above Part I);

(ii) The signature section at the bottom of page 1;

(iii) Part I;

(iv) Part II, all lines except lines 13, 16c, and 19; and

(v) Part IV, all lines. For a taxpayer making a change under this section 16.12, the statement required for Line 26 of Form 3115 should list the § 481(a) adjustment(s), and a description of where the § 481(a) adjustment is reflected on the federal income tax return (line number or schedule).

In addition, the requirement to file the duplicate copy, under section 6.03(1)(a) of Rev. Proc. 2015–13, is waived.

(b) Section 481(a) adjustment period for changes relating to items of income involving OID. In the case of income from a debt instrument having OID, the § 481(a) adjustment period for any qualified change in method of accounting described in this section 16.12(4)(b) is six taxable years (year of change and next five taxable years). For purposes of the preceding sentence, a qualified change in method of accounting is a change in method of accounting for income from a debt instrument having OID to a method that is required by § 451(b), as added by section 13221 of the Tax Cuts and Jobs Act (TCJA) Public Law 115–97, 131 Stat. 2054 (Dec. 22, 2017), for such income, but only for the taxpayer’s first taxable year beginning after December 31, 2018.

(c) Streamlined method change procedures for certain taxpayers.

(i) Applicability. The procedures described in this section 16.12(4)(c) may be used by a taxpayer to make a change in method of accounting described in section 16.12(2) of this revenue procedure in the taxpayer’s first taxable year beginning after December 31, 2017. A taxpayer is permitted to use the streamlined method change procedures if the taxpayer meets one of the following requirements:

(A) the taxpayer, other than a tax shelter (as defined in § 448(d)(3)), meets the § 448(c) gross receipts test (a “small business taxpayer”). The taxpayer meets the § 448(c) gross receipts test if the taxpayer has average annual gross receipts for the three prior taxable years of $25,000,000 or less; or

(B) the taxpayer is making one or more changes to comply with § 451(b)(1)(A) and/or § 451(b)(4), and the § 481(a) adjustment required by each of the changes is zero. A taxpayer making more than one change in method of accounting under section 16.12(2) of this revenue procedure is not permitted to net the § 481(a) adjustments to determine if the taxpayer meets the requirements to use the streamlined method change procedures. See section 16.12(8)(a) of this revenue procedure for more information on making a permitted concurrent change.

(ii) Inapplicability. In addition to the inapplicability rules provided in section 16.12(3) of this revenue procedure, a taxpayer may not use these streamlined method change procedures if the taxpayer wants to make a concurrent automatic change described in section 16.12(8)(b) of this revenue procedure.

(iii) No Form 3115 required. In accordance with § 1.446–1(e)(3)(ii), the requirement of § 1.446–1(e)(3)(i) to file a Form 3115 is waived for a taxpayer making a change in method of accounting under this section 16.12 using the streamlined method change procedures. Thus, a taxpayer using the streamlined method change procedures is not required to file a Form 3115 and is not required to attach a separate statement when making a change under this section 16.12.

(5) Certain eligibility rule inapplicable.

(a) In general. Except as otherwise provided in this section 16.12(5), the eligibility rule in section 5.01(1)(f) of Rev. Proc. 2015–13 does not apply to a change under this section 16.12 for a taxpayer’s first, second, or third taxable year beginning after December 31, 2017.

(b) Changes related to debt instruments having OID. For a change related to income from a debt instrument having OID, the eligibility rule in section 5.01(1)(f) of Rev. Proc. 2015–13 does not apply to this change for a taxpayer’s first, second, or third taxable year beginning after December 31, 2018.

(c) Changes made under the streamlined method change procedures. For a change made using the streamlined procedures of section 16.12(4)(c) of this revenue procedure, the eligibility rule in section 5.01(1)(f) of Rev. Proc. 2015–13 does not apply to this change for a taxpayer’s first taxable year beginning after December 31, 2017.

(6) No audit protection. A taxpayer making a change in method of accounting using the streamlined method change procedures provided in section 16.12(4)(c) of this revenue procedure does not receive audit protection under section 8.01 of Rev. Proc. 2015–13.

(7) No ruling on method used. The consent granted under section 9 of Rev. Proc. 2015–13 for a change made under section 16.12 of this revenue procedure is not a determination by the Commissioner that the new method of accounting is a permissible method of accounting under § 451 and does not create a presumption that the allocation method used under § 451(b)(4) is a permissible method of accounting. The Director may ascertain whether the new method of accounting is a permissible method of accounting under § 451 and whether the allocation method is permissible under § 451(b)(4).

(8) Concurrent automatic changes.

(a) In general. A taxpayer that wants to make one or more concurrent changes in method of accounting under this section 16.12 may file a single Form 3115 that includes all of the changes, must separately state the § 481(a) adjustment for each change, if applicable, and may not net the § 481(a) adjustment for a change with § 481(a) adjustments from other changes. A taxpayer that makes a change under both section 16.12(2)(a) and (2)(b) of this revenue procedure is required to implement the change under section 16.12(2)(b) before making the change under section 16.12(2)(a). See section 6.03(1)(b) of Rev. Proc. 2015–13 for information on making concurrent changes.

(b) Concurrent change in the timing of recognition of income due to the New Standards. Except as provided in section 16.12(4)(c)(i) of this section, a taxpayer that wants to make a change under section 16.12(2)(a) of this revenue procedure and a change under section 16.11 of this revenue procedure for the same year of change may file a single Form 3115 for both changes and enter the designated automatic accounting method change number for both changes on the appropriate line of Form 3115. A taxpayer that makes both changes is required to make the change under section 16.11 of this revenue procedure before making the change under this section 16.12(2)(a).

(9) Designated automatic accounting method change number. The designated automatic accounting method change number for a change under this section 16.12 is “239.”

(10) Contact information. For further information regarding a change under this section, contact Peter E. Ford at (202) 317-7003 (not a toll-free call). For further information regarding a change under this section for OID, contact Charles W. Culmer at (202) 317-4528 (not a toll-free call).

.02 Section 15.01 of Rev. Proc. 2018–31, as modified by Rev. Proc. 2018–44, 2018–37 I.R.B. 416, is modified as follows:

(1) Section 15.01(1)(a) of Rev. Proc. 2018–31 is modified to add a new paragraph at the end thereof to read as follows:

Lastly, a taxpayer with an applicable financial statement (AFS) qualifies to use this section 15.01 for a taxable year beginning after December 31, 2017, to comply with § 451(b)(1)(A), and, if applicable, § 451(b)(4). However, a taxpayer that wants to make a change for the recognition of income for federal income tax purposes to a method under the New Standards, as defined in section 16.11(1) of this revenue procedure, for allocating transaction price to performance obligations for the same year of change must use section 16.11 of this revenue procedure to make the change for purposes of complying with § 451(b)(4).

(2) Section 15.01(1)(b) of Rev. Proc. 2018–31 is modified to add new division (ix) to read as follows:

(ix) a taxpayer with an AFS that wants to make a change for the recognition of income for federal income tax purposes to a method under the New Standards, as defined in section 16.11(1) of this revenue procedure, for allocating transaction price to performance obligations for the same year of change that it wants to change to an accrual method.

(3) Section 15.01(2)(b) of Rev. Proc. 2018–31 is modified to read as follows:

(b) Accrual method of accounting is a method identified by § 446(c)(2) and §§ 1.446–1(c)(1)(ii), 1.451–1(a), and 1.461–1(a)(2). For a taxable year beginning after December 31, 2017, a taxpayer with an AFS treats the all events test with respect to an item of income, or portion of an item of income, as met no later than when the item, or portion of that item, is taken into account as revenue in its AFS.

(4) Section 15.01(3)(b) of Rev. Proc. 2018–31 is modified to read as follows:

(b) Certain eligibility rule inapplicable.

(i) Prior change eligibility rule inapplicable. Any prior change to the overall cash method that the taxpayer implemented using the provisions of Rev. Proc. 2001–10, as modified by Rev. Proc. 2011–14, or Rev. Proc. 2002–28, as modified by Rev. Proc. 2011–14, is disregarded for purposes of section 5.01(1)(e) of Rev. Proc. 2015–13.

(ii) Certain eligibility rule temporarily inapplicable. For a taxpayer with an AFS that changes to an overall accrual method that complies with § 451(b)(1)(A), and, if applicable, § 451(b)(4) under this section, the eligibility rule in section 5.01(1)(e) of Rev. Proc. 2015–13 does not apply to this change for the taxpayer’s first, second, or third taxable year ending beginning after December 31, 2017.

(5) Section 15.01(3) of Rev. Proc. 2018–31 is modified to add new subparagraphs (f) and (g) to read as follows:

(f) Concurrent automatic changes for a taxpayer with an AFS that complies with § 451(b). A taxpayer with an AFS that changes to an overall accrual method that complies with § 451(b)(1)(A) under this section 15.01 that also wants to make a change under this section 15.01 to comply with § 451(b)(4) must file a single Form 3115. The taxpayer must separately state the § 481(a) adjustment for each change and may not net these § 481(a) adjustments. A taxpayer must make the change for § 451(b)(4) before making the change for § 451(b)(1)(A). See section 6.03(1)(b) of Rev. Proc. 2015–13 for information on making concurrent changes.

(g) Concurrent change in the timing of recognition of income due to the New Standards. A taxpayer that wants to make a change under this section 15.01 and a change under section 16.11 of this revenue procedure for the same year of change must file a single Form 3115 for both changes and enter the designated automatic accounting method change number for both changes on the appropriate line of Form 3115. A taxpayer that makes both changes is required to make the change under section 16.11 of this revenue procedure before making the change under this section 15.01.

(6) Section 15.01(4)(b) of Rev. Proc. 2018–31 is modified to read as follows:

(b) Certain eligibility rule inapplicable.

(i) Prior change eligibility rule inapplicable. For a taxpayer making a change from the cash method in the first § 448 year, any prior change to the overall cash method is disregarded for purposes of section 5.01(1)(e) of Rev. Proc. 2015–13.

(ii) Certain eligibility rule temporarily inapplicable. For a taxpayer with an AFS that changes to an overall accrual method that complies with § 451(b)(1)(A), and, if applicable, § 451(b)(4) under this section, the eligibility rule in section 5.01(1)(e) of Rev. Proc. 2015–13 does not apply to this change for the taxpayer’s first, second, or third taxable year beginning after December 31, 2017.

(7) Section 15.01 of Rev. Proc. 2018–31 is modified to renumber existing paragraphs 15.01(5) and (6) as paragraphs 15.01(6) and (7), respectively, and add new paragraph 15.01(5) to read as follows:

(5) No ruling on method used. The consent granted under section 9 of Rev. Proc. 2015–13 for a change made under section 15.01 of this revenue procedure is not a determination by the Commissioner that the new method of accounting is a permissible method of accounting under § 451 and does not create a presumption that the allocation method used under § 451(b)(4) is a permissible method of accounting. The Director may ascertain whether the new method of accounting is a permissible method of accounting under § 451 and whether the allocation method is permissible under § 451(b)(4).

.01 In general. This revenue procedure is effective on November 29, 2018, for a taxable year beginning after December 31, 2017.

.02 Return of Form 3115 filed under the non-automatic change procedures. The National Office will return any Form 3115 requesting a change in method of accounting that was filed with the National Office on or before November 29, 2018, under the non-automatic procedures of Rev. Proc. 2015–13 for a taxable year beginning after December 31, 2017, that is pending with the National Office on November 29, 2018, and that is described in section 3 of this revenue procedure. The National Office will send a letter to the taxpayer acknowledging the return of the Form 3115, and will return the user fee submitted with the Form 3115. For purposes of the rules of Rev. Proc. 2015–13, the timely resubmitted Form 3115 will be considered filed as of the date the taxpayer originally filed the Form 3115 under the non-automatic change procedures in Rev. Proc. 2015–13. This paragraph does not extend the date the taxpayer must file the original (returned) Form 3115 under section 6.03(1)(a)(i)(A) of Rev. Proc. 2015–13.

This revenue procedure modifies Rev. Proc. 2018–31.

The principal author of this revenue procedure is Peter E. Ford of the Office of the Associate Chief Counsel (Income Tax & Accounting). For further information regarding this revenue procedure, contact Mr. Ford on (202) 317-7003 (not a toll free number).

Internal Revenue Service (IRS), Treasury.

Notice of proposed rulemaking; notice of public hearing.

This document contains proposed regulations providing guidance on new discounting rules for unpaid losses and estimated salvage recoverable of insurance companies for Federal income tax purposes. The proposed regulations implement recent legislative changes to the Internal Revenue Code (Code) and make other technical improvements to the derivation and use of discount factors. The proposed regulations affect entities taxable as insurance companies. This document invites comments and provides notice of a public hearing on these proposed regulations.

Written or electronic comments must be received by December 7, 2018. Requests to speak and outlines of topics to be discussed at the public hearing scheduled for December 20, 2018, at 10 a.m., must be received by December 7, 2018.

Comments: Send submissions to: CC:PA:LPD:PR (REG–103163–18), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG–103163–18), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC 20224, or sent electronically via the Federal eRulemaking Portal at http://www.regulations.gov (REG–103163–18).

Public hearing: The public hearing will be held in the IRS Auditorium, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC 20224.

Concerning the proposed regulations, Kathryn M. Sneade, (202) 317-6995; concerning submissions of comments and requests to speak at the public hearing, Regina L. Johnson, (202) 317-6901 (not toll-free numbers).

The principal author of these regulations is Kathryn M. Sneade, Office of Associate Chief Counsel (Financial Institutions and Products), IRS. However, other personnel from the Treasury Department and the IRS participated in their development.