The US Department of the Treasury and the Internal Revenue Service (IRS) issued a release—IR-2024-179, on 28 June 2024, announcing final guidance regarding regulations on how to report and pay the 1% excise tax owed on corporate stock repurchases.

The Inflation Reduction Act imposed a new excise tax on stock repurchases equal to 1% of the aggregate fair market value of stock repurchased by certain corporations during the taxable year, subject to adjustments. The stock repurchase excise tax applies to repurchases after 31 December, 2022.

These final regulations require stock repurchase 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. Form 720 should be submitted alongside the Form 7208 for Excise Tax on Repurchase of Corporate Stock used to figure out the amount of stock repurchase excise tax owed.

Forms 720 and 7208, due for taxable years ending after 31 December, 2022, and on or before 30 June, 2024, must be filed by the third quarter due date for Form 720, which is 31 October, 2024.

If a corporation has more than one taxable year ending after 31 December, 2022, and on or before 30 June, 2024, the corporation should file a single Form 720 with two separate Forms 7208 (one for each taxable year) attached by 31 October, 2024.

The final regulations affect publicly traded domestic corporations that repurchase their stock or whose stock is acquired by certain affiliates after 31 December, 2022. The regulations also affect certain publicly traded foreign corporations that repurchase their stock or whose stock is acquired by certain affiliates after 31 December, 2022.

Earlier, the IRS released the proposed regulations on 9 April 2024, offering guidance on the new excise tax on corporate stock repurchases made after 31 December 2022.