SECTION 2. BACKGROUND

.01 Empowerment Zones . An empowerment zone is an area of high poverty and unemployment located in an urban or rural area that is designated under section 1391(a), as appropriate, by the Secretary of Housing and Urban Development or the Secretary of Agriculture, each Secretary an “appropriate Secretary” under section 1393(a)(1) of the Code. See section 1391(a); see generally section 1393. Qualifying taxpayers and businesses located within the boundaries of empowerment zones are eligible for Federal income tax incentives to promote economic development in those designated areas. See section 1396 of the Code (regarding empowerment zone employment credits); section 1397A of the Code (providing an increase in expensing under section 179 of the Code); section 1397B of the Code (providing nonrecognition of gain on rollover of empowerment zone investments).

.02 Duration of Empowerment Zone Designation and Extensions .

(1) Initial duration of designation . As originally enacted in 1993, section 1391(d)(1) provided that the designation of an empowerment zone remained in effect during the period beginning on the date of the designation and ending on the earliest of (i) the close of the 10th calendar year beginning on or after such date of designation (statutory termination date), (ii) the termination date designated by a State or local government in its nomination (that is, the designated termination date), or (iii) the date the appropriate Secretary revokes the designation. See section 13301(a) of the Omnibus Budget Reconciliation Act of 1993 (OBRA of 1993), Public Law 103-66, 107 Stat. 312 (August 10, 1993) (adding section 1391(d)(1) to the Code).

(2) First extension of empowerment zone designations . Section 112 of the Community Renewal Tax Relief Act of 2000 (CRTA of 2000), enacted as part of the Consolidated Appropriations Act, 2001, Appendix G, Public Law 106-554, 114 Stat. 2763A-587 (December 21, 2000), amended section 1391(d)(1)(A) (i) to extend the designation of empowerment zones through December 31, 2009, regardless of the designated termination date provided by a State or local government in its nomination. See also part II of Notice 2013-38, 2013-25 I.R.B. 1251. Therefore, following the enactment of the CRTA of 2000, the respective nominations for all empowerment zones were treated at that time as having a designated termination date of December 31, 2009. See id .

(3) Subsequent extensions of statutory termination date. The statutory termination date has been extended several additional times, most recently in 2019 to extend that date to December 31, 2020. See section 118(a) of the Taxpayer Certainty and Disaster Tax Relief Act of 2019 (TCDTRA of 2019), enacted as part of the Further Consolidated Appropriations Act, 2020, Division Q, Public Law 11694, 133 Stat. 2534 (December 20, 2019). See also section 40311(a)(1) of the Bipartisan Budget Act of 2018 (BBA of 2018), Public Law 115-123, 132 Stat. 64 (February 9, 2018); section 171(a)(1) of the Protecting Americans from Tax Hikes Act of 2015 (PATH ACT of 2015), enacted as part of the Consolidated Appropriations Act, 2016, Division Q, Public Law 114

June 29, 2020 10 Bulletin No. 2020–27

Section 118(b) of the TCDTRA of 2019 provides that, if a nomination for an empowerment zone includes a designated termination date of December 31, 2017, section 1391(d)(1)(B) does not apply to the designation if, after the date of enactment of the TCDTRA of 2019, the State or local government that made such nomination extends the termination date to December 31, 2020 (that is, the statutory designation date), in such manner as may be provided by the Secretary of the Treasury (or the Secretary’s designee). Accordingly, to provide procedures to extend a designated termination date to December 31, 2020, section 3.01 of this revenue procedure sets forth an automatic extension procedure and section 3.02 of this revenue procedure sets forth a written declination procedure consistent with the notices described above.