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IRS Issues Regulations for New Excise Tax on Stock Repurchases

Ruth Singleton
Published Date:
Jul 2, 2024

The IRS and the Treasury Department have issued final regulations for the reporting and payment of the 1 percent excise tax on corporate stock repurchases under the 2022 Inflation Reduction Act, Accounting Today reported. The law requires certain corporations to pay the excise tax on the aggregate fair market value of repurchased stock during the taxable year, subject to adjustments. The tax applies to repurchases after Dec. 31, 2022.

The regulations require the excise tax to be reported on Form 720, “Quarterly Federal Excise Tax Return,” due for the first full calendar quarter after the end of the corporation's taxable year, along with Form 7208, Excise Tax on Repurchase of Corporate Stock. Form 7208 is used to calculate the amount of the stock repurchase excise tax that the corporation owes.

Both of these forms that are due for taxable years ending after Dec. 31, 2022, and or before June 30, 2024, need to be filed by the third quarter due date for Form 720, which is Oct. 31, 2024.

These regulations affect publicly traded domestic corporations that repurchase their stock or whose stock is acquired by certain affiliates after Dec. 31, 2022, as well as some publicly traded foreign corporations in the same situation.

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