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Thanks for the Break! Stock Repurchase Excise Tax on a Payment and Reporting Pause

August 15, 2023 (3 min read)

IRS recently issued guidance concerning the stock repurchase excise tax, or "buyback tax," introduced under the Inflation Reduction Act (Pub. L. No. 117-169) and set forth under Section 4501 of the Internal Revenue Code. The guidance, appearing in Announcement 2023-18, confirms that no taxpayer is required to report the new excise tax on repurchases of corporate stock during a covered corporation's taxable year on any returns filed with the IRS or to make any payments of such tax, before the time specified in forthcoming regulations. The stock repurchase excise tax applies to repurchases made after December 31, 2022. It’s expected that the proposed regulations will require any liability for the buyback tax for a taxable year ending after December 31, 2022, but prior to publication of the proposed regulations, to be reported on the quarterly federal excise tax return — IRS Form 720 — that is due for the first full quarter after the date proposed regulations are published. Payment of any tax due is expected at the same time.

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