Treasury Proposed Stock Buyback Tax Rules in Final Review Stages

The Treasury Department and IRS plan to drop a long-awaited proposed guidance package for the 1% stock repurchase excise tax in the coming weeks, after pushing back the release for months.

Department of the Treasury Tax Legislative Counsel Krishna Vallabhaneni said the rules likely won’t come out this week, but they are in the final stages of review.

“These regs on the excise tax are likely to come out in a matter of weeks, not months,” Vallabhaneni said Monday at the Tax Executives Institute 2024 Midyear Conference.

The buyback tax imposes a 1% excise tax on corporations’ stock repurchases. It was established in the 2022 Inflation Reduction Act. Treasury officials last year had said they planned to release guidance on the tax by the end of 2023, but have had to repeatedly push that back.

• The Biden administration proposed quadrupling the rate of the buyback tax to 4% from the current 1% in its recent Greenbook budget proposal, as it previously proposed last year.
• Treasury and IRS are also working on proposed guidance for the Corporate Alternative Minimum Tax, and Vallabhaneni said that could still take months. CAMT requires companies to pay tax at a rate of at least 15% of their financial-statement income if they aren’t already doing so.