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4182 Federal Register/Vol. 86, No. 10/Friday, January 15, 2021/Notices
ADDRESSES: Direct all written comments quality, utility, and clarity of the 601(d), the amount equal to the amount
to Kinna Brewington, Internal Revenue information to be collected; (d) ways to of funds used in violation of such
Service, room 6526, 1111 Constitution minimize the burden of the collection of subsection shall be booked as a debt of
Avenue NW, Washington, DC 20224. information on respondents, including such entity owed to the federal
FORFURTHERINFORMATIONCONTACT: through the use of automated collection government.
Requests for additional information or techniques or other forms of information The guidance published below is
copies of the form should be directed to technology; and (e) estimates of capital unchanged from the last version of the
Kerry Dennis, at (202) 317–5751 or or start-up costs and costs of operation, 1
Internal Revenue Service, Room 6526, maintenance, and purchase of services guidance dated September 2, 2020, and
1111 Constitution Avenue NW, to provide information. the frequently asked questions
2
Washington DC 20224, or through the document dated October 19, 2020, each
Approved: January 12, 2021. of which was published on Treasury’s
internet, at Kerry.Dennis@irs.gov. Chakinna B. Clemons, website, except for the following
SUPPLEMENTARYINFORMATION: Title: Supervisory Tax Analyst. changes. The introduction of the
Sales of Business Property. [FR Doc. 2021–00841 Filed 1–14–21; 8:45 am] guidance and frequently asked
OMB Number: 1545–0184. BILLING CODE 4830–01–P questions have been modified to reflect
Form Number: Form 4797. this publication in the Federal Register;
Abstract: Form 4797 is used by the guidance and frequently asked
taxpayers to report sales, exchanges, or DEPARTMENT OF THE TREASURY questions have been revised throughout
involuntary conversions of assets used to reflect that the end date of the period
in a trade or business. It is also used to Coronavirus Relief Fund for States, during which eligible expenses may be
compute ordinary income from Tribal Governments, and Certain incurred has been extended to
recapture and the recapture of prior year Eligible Local Governments December 31, 2021;3 footnote 2 of the
losses under section 1231 of the Internal AGENCY: Department of the Treasury. guidance has been revised to reflect
Revenue Code. ACTION: Coronavirus Relief Fund additional restrictions imposed by
Current Actions: There is no change section 5001(b) of Division A the
in the paperwork burden previously program guidance. CARES Act; FAQ A.59 has been
approved by OMB. The forms are being SUMMARY: The Department of the updated to correct the cross-reference to
submitted for renewal purposes only. Treasury (Treasury) is re-publishing in Treasury OIG’s FAQs; and the
Type of Review: Extension of a final form the guidance it previously application of FAQ B.6 has been
currently approved collection. made available on its website regarding clarified. Treasury is also adding to the
Affected Public: Business or other for- the Coronavirus Relief Fund for States, guidance instructions regarding the
profit organizations, individuals or tribal governments, and certain eligible return to Treasury of unused
households, and farms. local governments. Coronavirus Relief Fund payments.
Estimated Number of Respondents: FORFURTHERINFORMATIONCONTACT:
325,000. Stephen T. Milligan, Deputy Assistant Administrative Procedure Act
Estimated Time per Response: 50 General Counsel (Banking & Finance), The Administrative Procedure Act
hours, 38 minutes. 202–622–4051. (APA) provides that the notice, public
Estimated Total Annual Burden comment, and delayed effective date
Hours: 16,454,750. SUPPLEMENTARYINFORMATION: Section requirements of 5 U.S.C. 553 do not
The following paragraph applies to all 601 of the Social Security Act, as added apply ‘‘to the extent that there is
the collections of information covered by section 5001(a) of Division A of the
by this notice. Coronavirus Aid, Relief, and Economic involved . . . a matter relating to agency
An agency may not conduct or Security Act (‘‘CARES Act’’) established management or personnel or to public
sponsor, and a person is not required to the Coronavirus Relief Fund (the property, loans, grants, benefits, or
respond to, a collection of information ‘‘Fund’’) and appropriated $150 billion contracts.’’ 5 U.S.C. 553(a). The rule
unless the collection of information for payments by Treasury to States, involves a matter relating to public
displays a valid OMB control number. tribal governments, and certain local property, loans, grants, benefits, or
Books or records relating to a collection governments. contracts and is therefore exempt under
of information must be retained if their The Secretary of the Treasury has the terms of the APA.
contents may become material in the adopted this guidance for recipients of
administration of any internal revenue payments from the Fund pursuant to his 1As noted previously on Treasury’s website, on
law. Generally, tax returns and tax authority under the Social Security Act June 30, 2020, the guidance provided under ‘‘Costs
return information are confidential, as to adopt rules and regulations as may be incurred during the period that begins on March 1,
required by 26 U.S.C. 6103. necessary to the efficient administration 2020, and ends on December 30, 2020’’ was
updated. On September 2, 2020, the ‘‘Supplemental
Request for Comments: Comments of the functions with which he is Guidance on Use of Funds to Cover Payroll and
submitted in response to this notice will charged under the Social Security Act. Benefits of Public Employees’’ and ‘‘Supplemental
be summarized and/or included in the 42 U.S.C. 1302(a). This guidance Guidance on Use of Funds to Cover Administrative
request for OMB approval. All primarily concerns the use of payments Costs’’ sections were added.
2As noted previously on Treasury’s website, on
comments will become a matter of from the Fund set forth in section 601(d) August 10, 2020, the frequently asked questions
public record. Comments are invited on: of the Social Security Act. Treasury’s were revised to add Questions A.49–52. On
(a) Whether the collection of Office of Inspector General (OIG) will September 2, 2020, Questions A.53–56 were added
information is necessary for the proper use this guidance in its audits of and Questions A.34 and A.38 were revised. On
performance of the functions of the recipients’ use of funds. Section October 19, 2020, Questions A.57–59 and B.13 were
added and Questions A.42, 49, and 53 were revised.
agency, including whether the 601(f)(2) of the Social Security Act 3Section 1001 of Division N of the Consolidated
information shall have practical utility; provides that if the Treasury OIG Appropriations Act, 2021 amended section
(b) the accuracy of the agency’s estimate determines that a recipient of payments 601(d)(3) of the Social Security Act by extending
of the burden of the collection of from the Fund has failed to comply with the end of the covered period for Coronavirus Relief
Fund expenditures from December 30, 2020 to
information; (c) ways to enhance the the use of funds provisions of section December 31, 2021.
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Federal Register/Vol. 86, No. 10/Friday, January 15, 2021/Notices 4183
Regulatory Flexibility Analysis These may include expenditures 601(d) may be summarized as providing
The Regulatory Flexibility Act does incurred to allow the State, territorial, that a State, local, or tribal government
not apply to a rulemaking when a local, or Tribal government to respond may use payments from the Fund only
general notice of proposed rulemaking directly to the emergency, such as by to cover previously unbudgeted costs of
is not required. addressing medical or public health necessary expenditures incurred due to
needs, as well as expenditures incurred the COVID–19 public health emergency
Paperwork Reduction Act to respond to second-order effects of the during the covered period.
The final rule contains no emergency, such as by providing Initial guidance released on April 22,
requirements subject to the Paperwork economic support to those suffering 2020, provided that the cost of an
Reduction Act. from employment or business expenditure is incurred when the
interruptions due to COVID–19-related recipient has expended funds to cover
Authority and Issuance business closures. Funds may not be the cost. Upon further consideration and
42 U.S.C. 1302(a). used to fill shortfalls in government informed by an understanding of State,
revenue to cover expenditures that local, and tribal government practices,
Coronavirus Relief Fund Guidance for would not otherwise qualify under the Treasury is clarifying that for a cost to
State, Territorial, Local, and Tribal statute. Although a broad range of uses be considered to have been incurred,
Governments is allowed, revenue replacement is not performance or delivery must occur
The purpose of this document is to a permissible use of Fund payments. during the covered period but payment
provide guidance to recipients of the The statute also specifies that of funds need not be made during that
funding available under section 601(a) expenditures using Fund payments time (though it is generally expected
of the Social Security Act, as added by must be ‘‘necessary.’’ The Department of that this will take place within 90 days
section 5001 of the Coronavirus Aid, the Treasury understands this term of a cost being incurred). For instance,
Relief, and Economic Security Act broadly to mean that the expenditure is in the case of a lease of equipment or
(‘‘CARES Act’’). The CARES Act reasonably necessary for its intended other property, irrespective of when
established the Coronavirus Relief Fund use in the reasonable judgment of the payment occurs, the cost of a lease
(the ‘‘Fund’’) and appropriated $150 government officials responsible for payment shall be considered to have
billion to the Fund. Under the CARES spending Fund payments. been incurred for the period of the lease
Act, the Fund is to be used to make Costs Not Accounted for in the Budget that is within the covered period but not
payments for specified uses to States Most Recently Approved as of March 27, otherwise. Furthermore, in all cases it
and certain local governments; the 2020 must be necessary that performance or
District of Columbia and U.S. Territories delivery take place during the covered
(consisting of the Commonwealth of The CARES Act also requires that period. Thus the cost of a good or
Puerto Rico, the United States Virgin payments be used only to cover costs service received during the covered
Islands, Guam, American Samoa, and that were not accounted for in the period will not be considered eligible
the Commonwealth of the Northern budget most recently approved as of under section 601(d) if there is no need
Mariana Islands); and Tribal March 27, 2020. A cost meets this for receipt until after the covered period
governments. requirement if either (a) the cost cannot has expired.
The CARES Act provides that lawfully be funded using a line item, Goods delivered in the covered period
payments from the Fund may only be allotment, or allocation within that need not be used during the covered
used to cover costs that— budget or (b) the cost is for a period in all cases. For example, the
1. are necessary expenditures substantially different use from any cost of a good that must be delivered in
incurred due to the public health expected use of funds in such a line December in order to be available for
emergency with respect to the item, allotment, or allocation. use in January could be covered using
Coronavirus Disease 2019 (COVID–19); The ‘‘most recently approved’’ budget payments from the Fund. Additionally,
2. were not accounted for in the refers to the enacted budget for the the cost of goods purchased in bulk and
budget most recently approved as of relevant fiscal period for the particular delivered during the covered period
March 27, 2020 (the date of enactment government, without taking into may be covered using payments from
of the CARES Act) for the State or account subsequent supplemental the Fund if a portion of the goods is
government; and appropriations enacted or other ordered for use in the covered period,
3. were incurred during the period budgetary adjustments made by that the bulk purchase is consistent with the
that begins on March 1, 2020, and ends government in response to the COVID– recipient’s usual procurement policies
1 19 public health emergency. A cost is and practices, and it is impractical to
on December 31, 2021. not considered to have been accounted track and record when the items were
The guidance that follows sets forth for in a budget merely because it could used. A recipient may use payments
the Department of the Treasury’s be met using a budgetary stabilization from the Fund to purchase a durable
interpretation of these limitations on the fund, rainy day fund, or similar reserve good that is to be used during the
permissible use of Fund payments. account. current period and in subsequent
Necessary Expenditures Incurred Due to Costs Incurred During the Period That periods if the acquisition in the covered
the Public Health Emergency Begins on March 1, 2020, and Ends on period was necessary due to the public
The requirement that expenditures be December 31, 2021 health emergency.
incurred ‘‘due to’’ the public health Given that it is not always possible to
emergency means that expenditures Finally, the CARES Act provides that estimate with precision when a good or
must be used for actions taken to payments from the Fund may only be service will be needed, the touchstone
respond to the public health emergency. used to cover costs that were incurred in assessing the determination of need
during the period that begins on March for a good or service during the covered
1, 2020, and ends on December 31, 2021 period will be reasonableness at the
1See Section 601(d) of the Social Security Act, as (the ‘‘covered period’’). Putting this time delivery or performance was
added by section 5001 of the CARES Act and as requirement together with the other sought, e.g., the time of entry into a
amended by section 1001 of Division N of the
Consolidated Appropriations Act, 2021. provisions discussed above, section procurement contract specifying a time
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4184 Federal Register/Vol. 86, No. 10/Friday, January 15, 2021/Notices
for delivery. Similarly, in recognition of with the COVID–19 public health 6. Any other COVID–19-related
the likelihood of supply chain emergency. expenses reasonably necessary to the
disruptions and increased demand for • Expenses for disinfection of public function of government that satisfy the
certain goods and services during the areas and other facilities, e.g., nursing Fund’s eligibility criteria.
COVID–19 public health emergency, if a homes, in response to the COVID–19 Nonexclusive Examples of Ineligible
recipient enters into a contract requiring public health emergency. Expenditures2
the delivery of goods or performance of • Expenses for technical assistance to
services by December 31, 2021, the local authorities or other entities on The following is a list of examples of
failure of a vendor to complete delivery mitigation of COVID–19-related threats costs that would not be eligible
or services by December 31, 2021, will to public health and safety. expenditures of payments from the
not affect the ability of the recipient to • Expenses for public safety measures Fund.
use payments from the Fund to cover undertaken in response to COVID–19. 1. Expenses for the State share of
• Expenses for quarantining 3
the cost of such goods or services if the individuals. Medicaid.
delay is due to circumstances beyond 3. Payroll expenses for public safety, 2. Damages covered by insurance.
the recipient’s control. public health, health care, human 3. Payroll or benefits expenses for
This guidance applies in a like services, and similar employees whose employees whose work duties are not
manner to costs of subrecipients. Thus, services are substantially dedicated to substantially dedicated to mitigating or
a grant or loan, for example, provided mitigating or responding to the COVID– responding to the COVID–19 public
by a recipient using payments from the 19 public health emergency. health emergency.
Fund must be used by the subrecipient 4. Expenses of actions to facilitate
only to purchase (or reimburse a compliance with COVID–19-related 2In addition, pursuant to section 5001(b) of
purchase of) goods or services for which public health measures, such as: Division A of the CARES Act, payments from the
receipt both is needed within the • Expenses for food delivery to Fund are subject to the requirements contained in
covered period and occurs within the the Further Appropriations Act of 2020 (Pub. L.
residents, including, for example, senior 116–94) for funds for programs authorized under
covered period. The direct recipient of citizens and other vulnerable section 330 through 340 of the Public Health
payments from the Fund is ultimately populations, to enable compliance with Service Act (42 U.S.C. 254 through 256). Section
responsible for compliance with this COVID–19 public health precautions. 5001(b) thereby applies to payments from the Fund
limitation on use of payments from the the general restrictions on the Department of Health
• Expenses to facilitate distance and Human Services’ appropriations. Of particular
Fund. learning, including technological relevance for the Fund, payments may not be
improvements, in connection with expended for an abortion, for health benefits
Nonexclusive Examples of Eligible school closings to enable compliance coverage—meaning a package of services covered
Expenditures by a managed health care provider or organization
with COVID–19 precautions. pursuant to a contract or other arrangement—that
Eligible expenditures include, but are • Expenses to improve telework includes coverage of abortion, for the creation of a
not limited to, payment for: capabilities for public employees to human embryo or embryos for research purposes,
1. Medical expenses such as: enable compliance with COVID–19 or for research in which a human embryo is
• COVID–19-related expenses of public health precautions. destroyed, discarded, or knowingly subjected to risk
of injury or death greater than that allowed for
public hospitals, clinics, and similar • Expenses of providing paid sick and research on fetuses in utero under 45 CFR 46.204(b)
facilities. paid family and medical leave to public and 42 U.S.C. 289g(b)). The prohibition on payment
• Expenses of establishing temporary employees to enable compliance with for abortions and health benefits coverage that
public medical facilities and other COVID–19 public health precautions. includes coverage of abortion does not apply to an
• COVID–19-related expenses of abortion if the pregnancy is the result of an act of
measures to increase COVID–19 rape or incest; or in the case where a woman suffers
treatment capacity, including related maintaining state prisons and county from a physical disorder, physical injury, or
construction costs. jails, including as relates to sanitation physical illness, including a life-endangering
• Costs of providing COVID–19 and improvement of social distancing physical condition caused by or arising from the
measures, to enable compliance with pregnancy itself, that would, as certified by a
testing, including serological testing. physician, place the woman in danger of death
• Emergency medical response COVID–19 public health precautions. unless an abortion is performed. These provisions
expenses, including emergency medical • Expenses for care for homeless do not prohibit the expenditure by a State, locality,
populations provided to mitigate entity, or private person of State, local, or private
transportation, related to COVID–19. COVID–19 effects and enable funds (other than a State’s or locality’s contribution
• Expenses for establishing and compliance with COVID–19 public of Medicaid matching funds). These provisions do
operating public telemedicine not restrict the ability of a managed care provider
capabilities for COVID–19-related health precautions. from offering abortion coverage or the ability of a
5. Expenses associated with the State or locality to contract separately with such a
treatment. provision of economic support in provider for such coverage with State funds (other
2. Public health expenses such as: connection with the COVID–19 public than a State’s or locality’s contribution of Medicaid
• Expenses for communication and matching funds). Furthermore, no government
enforcement by State, territorial, local, health emergency, such as: which receives payments from the Fund may
• Expenditures related to the discriminate against a health care entity on the
and Tribal governments of public health provision of grants to small businesses basis that the entity does not provide, pay for,
orders related to COVID–19. to reimburse the costs of business provide coverage of, or refer for abortions. Except
• Expenses for acquisition and interruption caused by required with respect to certain law enforcement and
distribution of medical and protective adjudication activities, no funds may be used to
closures. maintain or establish a computer network unless
supplies, including sanitizing products • Expenditures related to a State, such network blocks the viewing, downloading, and
and personal protective equipment, for territorial, local, or Tribal government exchanging of pornography. No payments from the
medical personnel, police officers, payroll support program. Fund may be provided to the Association of
social workers, child protection • Unemployment insurance costs Community Organizations for Reform Now
(ACORN) or any of its affiliates, subsidiaries, allied
services, and child welfare officers, related to the COVID–19 public health organizations, or successors. For the full text of
direct service providers for older adults emergency if such costs will not be these requirements, see Title V of Pubic Law 116–
and individuals with disabilities in reimbursed by the federal government 94 (133 Stat. 2605 et seq.), available at https://
community settings, and other public pursuant to the CARES Act or www.congress.gov/116/plaws/publ94/PLAW-
116publ94.pdf.
health or safety workers in connection otherwise. 3See 42 CFR 433.51 and 45 CFR 75.306.
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Federal Register/Vol. 86, No. 10/Friday, January 15, 2021/Notices 4185
4. Expenses that have been or will be include, for example, the costs of that public safety employees would
reimbursed under any federal program, redeploying educational support staff or include police officers (including state
such as the reimbursement by the faculty to develop online learning police officers), sheriffs and deputy
federal government pursuant to the capabilities, such as through providing sheriffs, firefighters, emergency medical
CARES Act of contributions by States to information technology support that is responders, correctional and detention
State unemployment funds. not part of the staff or faculty’s ordinary officers, and those who directly support
5. Reimbursement to donors for responsibilities. such employees such as dispatchers and
donated items or services. Substantially Dedicated supervisory personnel. Public health
6. Workforce bonuses other than employees would include employees
hazard pay or overtime. Within this category of substantially involved in providing medical and other
7. Severance pay. different uses, as stated in the Guidance health services to patients and
8. Legal settlements. above, Treasury has included payroll supervisory personnel, including
Supplemental Guidance on Use of and benefits expenses for public safety, medical staff assigned to schools,
Funds To Cover Payroll and Benefits of public health, health care, human prisons, and other such institutions, and
Public Employees services, and similar employees whose other support services essential for
As discussed in the Guidance above, services are substantially dedicated to patient care (e.g., laboratory technicians)
the CARES Act provides that payments mitigating or responding to the COVID– as well as employees of public health
19 public health emergency. The full departments directly engaged in matters
from the Fund must be used only to amount of payroll and benefits expenses related to public health and related
cover costs that were not accounted for of substantially dedicated employees supervisory personnel.
in the budget most recently approved as may be covered using payments from
of March 27, 2020. As reflected in the the Fund. Treasury has not developed a Not Substantially Dedicated
Guidance and FAQs, Treasury has not precise definition of what ‘‘substantially As provided in FAQ A.47, a State,
interpreted this provision to limit dedicated’’ means given that there is not local, or tribal government may also
eligible costs to those that are a precise way to define this term across track time spent by employees related to
incremental increases above amounts different employment types. The COVID–19 and apply Fund payments on
previously budgeted. Rather, Treasury relevant unit of government should that basis but would need to do so
has interpreted this provision to exclude maintain documentation of the consistently within the relevant agency
items that were already covered for their ‘‘substantially dedicated’’ conclusion or department. This means, for example,
original use (or a substantially similar with respect to its employees. that a government could cover payroll
use). This guidance reflects the intent If an employee is not substantially expenses allocated on an hourly basis to
behind the Fund, which was not to dedicated to mitigating or responding to employees’ time dedicated to mitigating
provide general fiscal assistance to state the COVID–19 public health emergency, or responding to the COVID–19 public
governments but rather to assist them his or her payroll and benefits expenses health emergency. This result provides
with COVID–19-related necessary may not be covered in full with equitable treatment to governments that,
expenditures. With respect to personnel payments from the Fund. A portion of for example, instead of having a few
expenses, though the Fund was not such expenses may be able to be employees who are substantially
intended to be used to cover covered, however, as discussed below. dedicated to the public health
government payroll expenses generally, Public Health and Public Safety emergency, have many employees who
the Fund was intended to provide In recognition of the particular have a minority of their time dedicated
assistance to address increased importance of public health and public to the public health emergency.
expenses, such as the expense of hiring safety workers to State, local, and tribal Covered Benefits
new personnel as needed to assist with government responses to the public Payroll and benefits of a substantially
the government’s response to the public health emergency, Treasury has dedicated employee may be covered
health emergency and to allow provided, as an administrative using payments from the Fund to the
recipients facing budget pressures not to accommodation, that a State, local, or extent incurred between March 1 and
have to lay off or furlough employees tribal government may presume that December 31, 2021.
who would be needed to assist with that public health and public safety Payroll includes certain hazard pay
purpose. employees meet the substantially and overtime, but not workforce
Substantially Different Use dedicated test, unless the chief bonuses. As discussed in FAQ A.29,
As stated in the Guidance above, executive (or equivalent) of the relevant hazard pay may be covered using
Treasury considers the requirement that government determines that specific payments from the Fund if it is
payments from the Fund be used only circumstances indicate otherwise. This provided for performing hazardous duty
to cover costs that were not accounted means that, if this presumption applies, or work involving physical hardship
for in the budget most recently work performed by such employees is that in each case is related to COVID–
approved as of March 27, 2020, to be considered to be a substantially 19. This means that, whereas payroll
met if either (a) the cost cannot lawfully different use than accounted for in the and benefits of an employee who is
be funded using a line item, allotment, most recently approved budget as of substantially dedicated to mitigating or
or allocation within that budget or (b) March 27, 2020. All costs of such responding to the COVID–19 public
the cost is for a substantially different employees may be covered using health emergency may generally be
use from any expected use of funds in payments from the Fund for services covered in full using payments from the
such a line item, allotment, or provided during the period that begins Fund, hazard pay specifically may only
allocation. on March 1, 2020, and ends on be covered to the extent it is related to
Treasury has provided examples as to December 31, 2021. COVID–19. For example, a recipient
what would constitute a substantially In response to questions regarding may use payments from the Fund to
different use. Treasury provided (in which employees are within the scope cover hazard pay for a police officer
FAQ A.3) that costs incurred for a of this accommodation, Treasury is coming in close contact with members
substantially different use would supplementing this guidance to clarify of the public to enforce public health or
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