SECTION 6. REQUEST FOR

COMMENTS

.01 Comments requested .

The Treasury Department and the IRS request written comments on issues relating to §§ 41(h) and 3111(f) and the interim guidance provided in this notice. In particular, the Treasury Department and the IRS request comments that address the following:

(1) Section 41(h)(6)(A) grants the Secretary authority to provide rules to prevent the avoidance of the purposes of the limitations and aggregation rules under § 41(h) through the use of successor companies or other means. Because there may be scenarios in which a business could make a payroll tax credit election that is inconsistent with the intent of § 41(h) through the use of a successor company or otherwise, the Treasury Department and the IRS are considering whether rules are necessary to treat successor companies as the same person for purposes of § 41(h) and, if so, how the term “successor company” should be defined for purposes of § 41(h). In addition, the Treasury Department and the IRS are exploring whether businesses could otherwise avoid the purposes of the limitations and aggregation rules through means other than successor companies and, if so, whether rules are necessary to prevent such a result. The Treasury Department and the IRS invite comments regarding rules to address successor companies and other means of avoiding the purposes of the rules under § 41(h).

(2) Section 41(h)(6)(C) grants the Secretary authority to provide rules for recapturing the benefit of payroll tax credits in cases where there is a subsequent adjustment to the payroll tax credit portion of the research credit, including requiring amended income tax returns in cases where there is such an adjustment. The Treasury Department and the IRS invite comments on how the IRS should recapture excessive payroll tax credits if there is a subsequent adjustment to the payroll tax credit portion of the research credit. For example, the Treasury Department and the IRS request comments on how the IRS should recapture excessive payroll tax credits if: (A) the payroll tax credit portion of the research credit is reduced because the IRS subsequently adjusts a business’s research credit, or, in the case of a business other than a partnership and S corporation, the amount of the business credit carryforward under § 39 carried from the taxable year (determined before the application of § 41(h)); (B) a business makes an invalid election because, for example, the business is not a qualified small business; or (C) an error in determining or claiming the payroll tax credit is made on

Bulletin No. 2017–16 1103 April 17, 2017

the employment tax return. The Treasury Department and the IRS also request specific comments on how the IRS should recapture excessive payroll tax credits if the situation is described in either (A), (B), or (C) of the preceding sentence, and either (i) the period of limitations on assessment of tax under § 6501 has expired for the income tax return, but has not expired for the employment tax return, or (ii) the period of limitations on assessment of tax has expired for the employment tax return, but has not expired for the income tax return.

(3) The Treasury Department and the IRS invite comments regarding whether guidance is necessary to address how the § 41(h) election rules apply to members of a consolidated group.

(4) Section 41(h)(4)(B)(ii) provides that a person may not make a payroll tax credit election if such person (or any other person treated as a single taxpayer under § 41(h) (5)(A) with such person) has made a payroll tax credit election for 5 or more preceding taxable years. The Treasury Department and the IRS invite comments regarding whether controlled group relationships that existed in previous taxable years that do not exist in the current taxable year are relevant for purposes of the 5–year-limitation period under § 41(h)(4)(B)(ii).

.02 Date for comments .

Comments in response to this notice are requested by July 17, 2017.

.03 Address to send comments .

(1) Comments responding to this notice should be sent to:

Internal Revenue Service CC:PA:LPD:PR (Notice 2017–23) Room 5203 P.O. Box 7604 Ben Franklin Station Washington, DC 20044 Please include “Notice 2017–23” on the cover page.

(2) Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to:

Internal Revenue Service Courier’s Desk 1111 Constitution Ave., N.W. Washington, DC 20224 Attn: CC:PA:LPD:PR (Notice 2017–23)

(3) Submissions may also be sent electronically to the following e-mail address: Notice.Comments@irscounsel.treas.gov . Please include “Notice 2017–23” in the subject line.

All comments will be available for public inspection and copying.