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Page:United States Statutes at Large Volume 96 Part 1.djvu/642

 96 STAT. 600

31 USC 752.

15 USC 77a.

PUBLIC LAW 97-248—SEPT. 3, 1982 (2) LONG-TERM U.S. OBLIGATIONS.—The amendment made by subsection (a) shall apply to obligations issued after the date of the enactment of this Act under the first section of the Second Liberty Bond Act. (3) EXCEPTION FOR CERTAIN WARRANTS, ETC.—The amendments made by subsection (b) shall not apply to any obligations issued after December 31, 1982, on the exercise of a warrant or the conversion of a convertible obligation if such warrant or obligation was offered or sold outside the United States without registration under the Securities Act of 1933 and was issued before August 10, 1982. A rule similar to the rule of the preceding sentence shall also apply in the case of any regulations issued under section 163(f)(2)(C) of the Internal Revenue Code of 1954 (as added by this section) except that the date on which such regulations take effect shall be substituted for "August 10, 1982". SEC. 311. RETURNS OF BROKERS. (a) GENERAL RULE.—

26 USC 6045.

(1) RETURNS.—Section 6045 (relating to returns of brokers) is amended to read as follows: "SEC. 6045. RETURNS OF BROKERS.

26 USC 6678.

"(a) GENERAL RULE.—Every person doing business as a broker shall, when required by the Secretary, make a return, in accordance with such regulations as the Secretary may prescribe, showing the name and address of each customer, with such details regarding gross proceeds and such other information as the Secretary may by forms or regulations require with respect to such business. "(b) STATEMENTS TO BE FURNISHED TO CUSTOMERS.—Every person making a return under subsection (a) shall furnish to each customer whose name is set forth in such return a written statement showing— "(1) the name and address of the person making such return, and "(2) the information shown on such return with respect to such customer. The written statement required under the preceding sentence shall be furnished to the customer on or before January 31 of the year following the calendar year for which the return under subsection (a) was made. "(c) DEFINITIONS.—For purposes of this section— "(1) BROKER.—The term 'broker' includes— "(A) a dealer, "(B) a barter exchange, and "(C) any other person who (for a consideration) regularly acts as a middleman with respect to property or services. "(2) CUSTOMER.—The term 'customer' means any person for whom the broker has transacted any business. "(3) BARTER EXCHANGE.—The term 'barter exchange' means any organization of members providing property or services who jointly contract to trade or barter such property or services." (2) PENALTY.—Paragraph (1) of section 6678 (relating to penalty for failure to furnish certain statements) is amended— (A) by inserting "6045(b)," after "6044(e),", and (B) by inserting "6045(a)," after "6044(a)(1),".

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Page:United States Statutes at Large Volume 96 Part 1.djvu/643

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 601

(b) BARTER EXCHANGE TREATED AS THIRD-PARTY RECORDKEEPER.—

Paragraph (3) of section 7609(a) (defining third-party recordkeeper) is amended by striking out "and" at the end of subparagraph (E), by striking out the period at the end of subparagraph (F) and inserting in lieu thereof "; and", and by adding at the end thereof the following new subparagraph: "(G) any barter exchange (as defined in section 6045(c)(3))."

26 USC 7609.

(c) EFFECTIVE DATES.— (1) SUBSECTION (a).—The amendments made by subsection (a)

26 USC 6045 note.

shall take effect on the date of the enactment of this Act, except that— (A) regulations relating to reporting by commodities and securities brokers shall be issued under section 6045 of the Internal Revenue Code of 1954 (as amended by this Act) within 6 months after the date of the enactment of this Act, and (B) such regulations shall not apply to transactions occurring before January 1, 1983. (2) SUBSECTION (b).—The amendments made by subsection (b) 26 USC 7609 shall apply to summonses served after December 31, 1982. "°*^SEC. 312. INFORMATION REPORTING REQUIREMENTS FOR PAYMENTS OF REMUNERATION FOR SERVICES AND DIRECT SALES.

(a) GENERAL RULE.—Subpart B of part III of subchapter A of chapter 61 (relating to information concerning transactions with other persons) is amended by inserting after section 6041 the following new section: SEC. 6041A. RETURNS REGARDING PAYMENTS OF REMUNERATION FOR SERVICES AND DIRECT SALES.

26 USC 6041A.

"(a) RETURNS REGARDING REMUNERATION FOR SERVICES.—If—

"(1) any service-recipient engaged in a trade or business pays in the course of such trade or business during any calendar year remuneration to any person for services performed by such person, and "(2) the aggregate of such remuneration paid to such person during such calendar year is $600 or more, then the service-recipient shall make a return, according to the forms or regulations prescribed by the Secretary, setting forth the aggregate amount of such payments and the name and address of the recipient of such payments. For purposes of the preceding "Servicesentence, the term 'service-recipient' means the person for whom ''^cipient. the service is performed. "(b) DIRECT SALES OF $5,000 OR MORE.— "(1) IN GENERAL.—If—

"(A) any person engaged in a trade or business in the course of such trade or business during any calendar year sells consumer products to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis which the Secretary prescribes by regulations, for resale (by the buyer or any other person) in the home or otherwise than in a permanent retail establishment, and "(B) the aggregate amount of the sales to such buyer during such calendar year is $5,000 or more,

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license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


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Page:United States Statutes at Large Volume 96 Part 1.djvu/644

 96 S T A T. 602

P U B L I C L A W 9 7 - 2 4 8 — S E P T. 3, 1982 the n such person shall m a k e a r e t u r n, according to the forms or regulations prescribed by the Secretary, setting forth the n a m e and address of the buyer to whom such sales a r e made. "(2) DEFINITIONS.—For purposes of paragraph (1)— "(A) BUY-SELL BASIS.—A t r a n s a c t i o n is on a buy-sell basis if the buyer performing the services is entitled to retain part or all of the difference between the price a t which the buyer purchases the product and the price a t which the buyer sells the product as part or all of the b u y e r ' s remuneration for the services, and "(B) DEPOSIT-COMMISSION BASIS.—A t r a n s a c t i o n

is on

a

deposit-commission basis if the buyer performing the services is entitled to r e t a i n part or all of a purchase deposit paid by the consumer in connection with the transaction a s part or all of the b u y e r ' s r e m u n e r a t i o n for the services. "(c)

CERTAIN

SERVICES

N O T INCLUDED.—No

return

shall

be

required under subsection (a) or (b) if a statement with respect to the services is required to be furnished under section 6051, 6052, or 6053. "(d) APPLICATIONS TO G O V E R N M E N T A L U N I T S. —

"(1) TREATED AS PERSONS.—The term 'person' includes any government a l unit (and any agency or i n s t r u m e n t a l i t y thereof). "(2) SPECIAL RULES.—In the case of any payment by a government a l entity or any agency or i n s t r u m e n t a l i t y thereof— "(A) subsection (a) shall be applied without regard to the trade or business requirement contained therein, and "(B) any r e t u r n under this section shall be made by the officer or employee h a v i n g control of the payment or appropriately designated for the purpose of making such r e t u r n. "(e) STATEMENTS TO B E F U R N I S H E D TO P E R S O N S W I T H RESPECT TO W H O M INFORMATION I S R E Q U I R E D TO B E F U R N I S H E D. — E v e r y person

required to m a k e a r e t u r n under subsection (a) or (b) shall furnish to each person whose n a m e is required to be set forth in such r e t u r n a written statement showing— "(1) the n a m e and address of the person required to m a k e such r e t u r n, and "(2) in the case of subsection (a), the aggregate a m o u n t of payments to the person required to be shown on such r e t u r n. The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the r e t u r n under subsection (a) was made. "(f) R E C I P I E N T TO F U R N I S H N A M E, ADDRESS, A N D IDENTIFICATION N U M B E R; INCLUSION ON R E T U R N. —

"(1) FURNISHING OF INFORMATION.—Any person with respect to whom a r e t u r n or statement is required under this section to be made by a n other person shall furnish to such other person his n a m e, address, and identification n u m b e r a t such time and in such m a n n e r as the Secretary may prescribe by regulations. "(2) INCLUSION ON RETURN.—The person to whom a n identification n u m b e r is furnished under paragraph (1) shall include such n u m b e r on any r e t u r n which such person is required to file under this section and to which such identification n u m b e r relates." 95 Stat. 344.

(b) P E N A L T Y FOR F A I L U R E TO F I L E STATEMENT.—Section 6678(1)

(relating to failure to file statement) is amended— (1) by inserting "6041A(e)," after "6041(d),", and (2) by inserting "6041A(a) or (b)," after "6041(a),".

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Page:United States Statutes at Large Volume 96 Part 1.djvu/645

 PUBLIC LAW 97-248—SEPT. 3, 1982 (c) EFFECTIVE DATE.—The amendments made by this section shall apply to payments and sales made after December 31, 1982.

96 STAT. 603 26 USC 6041A ^°^-

SEC. 313. STATE AND LOCAL INCOME TAX REFUNDS.

(a) IN GENERAL.—Subpart B of part III of subchapter A of chapter 61 (relating to information concerning transactions with other persons) is amended by adding at the end thereof the following new section: "SEC. 6050E. STATE AND LOCAL INCOME TAX REFUNDS.

26 USC 6050E.

"(a) REQUIREMENT OF REPORTING.—Every person who, with respect to any individual, during any calendar year makes payments of refunds of State or local income taxes (or allows credits or offsets with respect to such taxes) aggregating $10 or more shall make a return according to forms or regulations prescribed by the Secretary setting forth the aggregate amount of such payments, credits, or offsets, and the name and address of the individual with respect to whom such payment, credit, or offset was made. "(b) STATEMENTS TO B E FURNISHED TO INDIVIDUALS WITH RESPECT

TO WHOM INFORMATION Is FURNISHED.—Every person making a

return under subsection (a) shall furnish to each individual whose name is set forth in such return a written statement showing— "(1) the name of the State or political subdivision thereof, and "(2) the aggregate amount shown on the return of refunds, credits, and offsets to the individual. The written statement required under the preceding sentence shall be furnished to the individual during January of the calendar year following the calendar year for which the return under subsection (a) was made. "(c) PERSON DEFINED.—For purposes of this section, the term 'person' means the officer or employee having control of the payment of the refunds (or the allowance of the credits or offsets) or the person appropriately designated for purposes of this section." (b) CONFORMING AMENDMENT.—The table of sections for subpart B of part III of subchapter A of chapter 61 is amended by adding at the end thereof the following new item: "Sec. 6050E. State and local income tax refunds." EFFECTIVE DATE.—The amendments made

(c) by this section shall apply to payments of refunds, and credits and offsets made, after December 31, 1982.

26 USC 6050E note.

SEC. 314. EMPLOYER REPORTING WITH RESPECT TO TIPS.

(a) IN GENERAL.—Section 6053 (relating to reporting of tips) is 26 USC 6053. amended by adding at the end thereof the following new subsection: "(c) REPORTING REQUIREMENTS RELATING TO CERTAIN LARGE FOOD O BEVERAGE ESTABLISHMENTS.— R "(1) REPORT TO SECRETARY.—In the case of a large food or

beverage establishment, each employer shall report to the Secretary, at such time and manner as the Secretary may prescribe by regulation, the following information with respect to each calendar year: "(A) The gross receipts of such establishment from the provision of food and beverages (other than nonallocable receipts). "(B) The aggregate amount of charge receipts (other than nonallocable receipts).

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Page:United States Statutes at Large Volume 96 Part 1.djvu/646

 96 STAT. 604

26 USC 6051.

PUBLIC LAW 97-248—SEPT. 3, 1982 "(C) The aggregate a m o u n t of charged tips shown on such charge receipts. "(D) The sum of— "(i) the aggregate a m o u n t reported by employees to the employer under subsection (a), plus "(ii) the a m o u n t the employer is required to report under section 6051 with respect to service charges of less than 10 percent. "(E) With respect to each employee, the a m o u n t allocated to such employee under paragraph (3). "(2)

FURNISHING

OF

STATEMENT

TO

EMPLOYEES.—Each

employer described in paragraph (1) shall furnish, in such m a n n e r as the Secretary may prescribe by regulations, to each employee of the large food or beverage establishment a written statement for each calendar year showing the following information: "(A) The n a m e and address of such employer. "(B) The n a m e of the employee. "(C) The a m o u n t allocated to the employee under paragraph (3) for all payroll periods ending within the calendar year. Any statement under this paragraph shall be furnished to the employee during January of the calendar year following the calendar year for which such statement is made. "(3) EMPLOYEE ALLOCATION OF 8 PERCENT OF GROSS RECEIPTS.—

"(A) IN GENERAL.—For purposes of paragraph s (1)(E) and (2)(C), the employer of a large food or beverage establishment shall allocate (as tips for purposes of the requirements of this subsection) among employees performing services during any payroll period who customarily receive t i p income a n a m o u n t equal to the excess of— "(i) 8 percent of the gross receipts (other than nonallocable receipts) of such establishment for the payroll period, over "(ii) the aggregate a m o u n t reported by such employees to the employer under subsection (a) for such period. "(B) METHOD OF ALLOCATION.—The employer shall allocate the a m o u n t under subparagraph (A)— "(i) on the basis of a good faith a g r e e m e n t by the employer and the employees, or "(ii) in the absence of an a g r e e m e n t under clause (i), in the m a n n e r determined under regulations prescribed by the Secretary. "(C) THE SECRETARY MAY LOWER THE PERCENTAGE REQUIRED TO BE ALLOCATED.—The Secretary may reduce (but

not below 5 percent) the percentage of gross receipts required to be allocated under subparagraph (A) where h e determines that the percentage of gross receipts constituting tips is less than 8 percent. "(4) L A R G E FOOD OR BEVERAGE ESTABLISHMENT.—For purposes

of this subsection, the term 'large food or beverage establishment ' means any trade or business (or portion thereof)— "(A) which provides food or beverages, "(B) with respect to which the tipping of employees serving food or beverages by customers is customary, and

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Page:United States Statutes at Large Volume 96 Part 1.djvu/647

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 605

"(C) which normally employed more than 10 employees on a typical business day during the preceding calendar year. For purposes of subparagraph (C), rules similar to the rules of subsections (a) and (h) of section 52 shall apply under regulations prescribed by the Secretary. "(5) EMPLOYER NOT TO BE LIABLE FOR WRONG ALLOCATIONS.—

The employer shall not be liable to any person if any amount is improperly allocated under paragraph (3)(B) if such allocation is done in accordance with the regulations prescribed under paragraph (3)(B). "(6) NoNALLOCABLE RECEIPTS DEFINED.—For purposes of this subsection, the term 'nonallocable receipts' means receipts which are allocable to— "(A) carry out sales, or "(B) services with respect to which a service charge of 10 percent or more is added. "(7) APPLICATION TO NEW BUSINESSES.—The Secretary shall prescribe regulations for the application of this subsection to new businesses." (b) PENALTY FOR FAILURE TO FURNISH STATEMENT.—Subparagraph

(D) of section 6678(3) is amended by striking out "section 6053(b)" 95 Stat. 343. and inserting in lieu thereof "subsection (b) or (c) of section 6053(c)." (c) STUDY OF TIP COMPLIANCE.—The Secretary of the Treasury or

his delegate shall submit before January 1, 1987, to the Committee on Ways and Means of the House of Representatives and to the Committee on Finance of the Senate a report with respect to tip compliance in the food and beverage service industry. Such study shall include, but not be limited to, an analysis of tipping patterns, tip-sharing arrangements, and tip compliance patterns. (d) CONFORMING AMENDMENT.—The last sentence of section 6001 (relating to notice or regulations requiring records, statements, and special returns) is amended by inserting ", records necessary to comply with section 6053(c)," after "charge receipts". (e) EFFECTIVE DATES.—

(1) IN GENERAL.—The amendments made by this section shall apply to calendar years beginning after December 31, 1982. (2) SPECIAL RULE FOR 1983.—For purposes of section 6053(c) of the Internal Revenue Code of 1954, in the case of payroll periods ending before April 1, 1983, an employer must only report with respect to such periods— (A) amounts described in subparagraphs (A), (B), (C), and (D) of section 6053(c)(1) of such Code, and (B) the name, and identification number, wages paid to, and tips reported by, each tipped employee.

Report to congressional committees. 26 USC 6053 note.

26 USC 6001.

26 USC 6053 note.

PART II—PROVISIONS TO IMPROVE REPORTING GENERALLY SEC. 315. INCREASED PENALTIES FOR FAILURE TO FILE INFORMATION RETURN OR TO FURNISH STATEMENT. (a) IN GENERAL.—Subsection (a) of section 6652 (relating to failure to file certain information returns, etc.) is amended to read as follows: "(a) RETURNS RELATING TO INFORMATION AT SOURCE, PAYMENTS OF DIVIDENDS, ETC., AND CERTAIN TRANSFERS OF STOCK.—

26 USC 6652.

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text: The Liberty to Trade as Buttressed by National Law/Indirectness of Restraint


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Page:United States Statutes at Large Volume 96 Part 1.djvu/648

 96 STAT. 606

Ante, p. 592. Ante, pp. 587, ^^^ Ante, p. 601. Ante, p. 600.

PUBLIC LAW 97-248—SEPT. 3, 1982 "(1) IN GENERAL.—In the case of each failure— "(A) to file a statement of the amount of payments to another person required by— "(i) section 6041(a) or (b) (relating to certain information at source), "(ii) section 6042(a)(1) (relating to payments of dividends), "(iii) section 6044(a)(1) (relating to payments of patronage dividends), "(iv) section 6049(a) (relating to payments of interest), "(v) section 6050A(a) (relating to reporting requirements of certain fishing boat operators), or "(vi) section 6042(e), 6044(0, 6049(e), or 6051(d) (relating to information returns with respect to income tax withheld), or "(B) to make a return required by— "(i) subsection (a) or 0)) of section 6041A (relating to returns of direct sellers). "(ii) section 6045 (relating to returns of brokers), "(iii) section 6052(a) (relating to reporting payment of wages in the form of group term life insurance), or respect to certain tips), on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall be paid (upon notice and demand by the Secretary and in the same manner as tax), by the person failing to file a statement referred to in subparagraph (A) or failing to make a return referred to in subparagraph (B), $50 for each such failure, but the total amount imposed on the delinquent person for all such failures during any calendar year shall not exceed $50,000. "(2) PENALTY IN CASE OP INTENTIONAL DISREGARD.—If 1 or
 * (iv) section 6053(c)(l) (relating to reporting with

more failures to which paragraph (1) applies are due to intentional disregard of the filing requirement, then with respect to such failures— "(A) the penalty imposed under paragraph (1) shall not be less than an amount equal to— "(i) in the case of a return not described in clauses (ii) and (iii), 10 percent of the aggregate amount of the items required to be reported, "(ii) in the case of a return required to be filed by section 6045, 5 percent of the gross proceeds required to be reported, and "(iii) in the case of a return required to be filed by section 6041A01)), $100 for each such failure, and "(B) the $50,000 limitation under paragraph (1) shall not apply." (b) INCREASE IN ADDITION TO TAX FOR FAILURE To FILE CERTAIN RETURNS OR STATEMENTS IN CONNECTION WITH PLANS OF DEFERRED

26 USC 6652.

COMPENSATION.—Subsection (0 of section 6652 (relating to information required in connection with certain plans of deferred compensation) is amended— (1) by striking out "$10" and inserting in lieu thereof "$25", and (2) by striking out "$5,000" and inserting in lieu thereof "$15,000".

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Page:United States Statutes at Large Volume 96 Part 1.djvu/649

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 607

(c) INCREASE IN CIVIL PENALTY FOR FAILURE TO FURNISH CERTAIN

STATEMENTS.—Section 6678 (relating to failure to furnish certain statements) is amended— (1) by striking out "$10" and inserting in lieu thereof "$50", and (2) by striking out "$25,000" and inserting in lieu thereof "$50,000". (d) EFFECTIVE DATE.—The amendments made by this section shall apply with respect to returns or statements the due date for the filing of which (without regard to extensions) is after December 31, 1982. SEC. 316. INCREASE IN CIVIL PENALTY ON FAILURE TO SUPPLY IDENTIFYING NUMBERS. (a) IN GENERAL.—Subsection (a) of section 6676 (relating to failure to supply identifying numbers) is amended to read as follows:

26 USC 6678.

26 USC 6652 "°*®-

26 USC 6676.

"(a) CIVIL PENALTIES.—

"(1) IN GENERAL.—If any person who is required by regulations prescribed under section 6109— "(A) to include his taxpayer identification number in any return, statement, or other document, "(B) to furnish his taxpayer identification number to another person, or "(C) to include in any return, statement, or other document made with respect to another person the taxpayer identification number of such other person, fails to comply with such requirement at the time prescribed by such regulations, such person shall, unless it is shown that such failure is due to reasonable cause and not to willful neglect, pay a penalty of $5 for each such failure described in subparagraph (A) and $50 for each such failure described in subparagraph (B) or (C), except that the total amount imposed on such person for all such failures during any calendar year shall not exceed $50,000. "(2) TAXPAYER IDENTIFICATION NUMBER DEFINED.—The term 'taxpayer identification number' means the identifying number assigned to a person under section 6109." (b) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 6676 apply with respect to returns the due date for the filing of which "°^®(without regard to extensions) is after December 31, 1982. SEC. 317. EXTENSION OF WITHHOLDING TO CERTAIN PAYMENTS WHERE IDENTIFYING NUMBER NOT FURNISHED OR INACCURATE. (a) IN GENERAL.—Section 3402 (relating to withholding at source) 26 USC 3402. is amended by adding at the end thereof the following new subsection: "(s) EXTENSION OF WITHHOLDING TO CERTAIN PAYMENTS WHERE IDENTIFYING NUMBER NOT FURNISHED OR INACCURATE.—

"(1) IN GENERAL.—If, in the case of any backup withholding payment— "(A) the payee fails to furnish his taxpayer identification number to the payor, or "(B) the Secretary notifies the payor that the number furnished by the payee is incorrect, then the payor shall deduct and withhold from such payment a tax equal to 15 percent of such payment. "(2) PERIOD FOR WHICH WITHHOLDING IS IN EFFECT.—

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Page:United States Statutes at Large Volume 96 Part 1.djvu/650

 96 S T A T. 608

P U B L I C L A W 9 7 - 2 4 8 — S E P T. 3, 1982 "(A) F A I L U R E TO FURNISH N U M B E R. — I n the case of any

failure described in subparagraph (A) of paragraph (1), paragraph (1) shall apply to any backup withholding payment made during the period during which the tax p a y e r identification n u m b e r has not been furnished. "(B) NOTIFICATION OF INCORRECT N U M B E R. — I n any

case

where the r e is a notification described in subparagraph (B) of paragraph (1), paragraph (1) shall apply to any backup withholding payment made— "(i) after the close of the 15th day after the d a y on which the payor was so notified, and "(ii) before the payee furnishes a n other tax p a y e r identification n u m b e r. "(C) 15-DAY GRACE PERIODS.— "(i) A F T E R CORRECTION.—Unless the payor other w i s e

elects, paragraph (1) shall also apply to any backup withholding payment made after the close of the period described in subparagraph (A) or (B) (as the case may be) and before the 16th day after the close of such period. "(ii) A F T E R

NOTIFICATION.—If

the

payor

so

elects,

paragraph (1) shall also apply to any b a c k u p withholding payment made during the 15-day period described in clause (i) of subparagraph (B). "(3) B A C K U P WITHHOLDING PAYMENTS.—

Ante, p. 600. Ante, p. 592.

"(A) IN GENERAL.—For purposes of this subsection, the term 'backup withholding payment ' means any payment of a kind, and to a payee, required to be shown on a r e t u r n required under— "(i) section 6041(a) or (b) (relating to certain information at source), "(ii) section 6041A(a) (relating to r e t u r n s regarding payments to nonemployees), "(iii) section 6042(a) (relating to payments of dividends), "(iv) section 6044 (relating to r e t u r n s regarding patronage dividends) b u t only to the extent of payments of money. "(v) section 6045 (relating to r e t u r n s of brokers), "(vi) section 6049(a) (relating to payments of interest), or "(vii) section 6050A (relating to reporting requirements of certain fishing boat operators), b u t only to the extent of payments of the proceeds of the catch. "(B) SPECIAL RULE.—For purposes of this subsection, the determination of w h e the r any payment is of a kind required to be shown on a r e t u r n described in subparagraph (A) shall be made without regard to any minimum a m o u n t which must be paid before a r e t u r n is required. "(4) P A Y M E N T S MUST AGGREGATE $ 6 0 0 BEFORE WITHHOLDING REQUIRED FROM PAYMENTS DESCRIBED IN SECTION 6041(a) OR

Ante, p. 601.

6041 A.—In the case of any payment which is of a kind required to be shown on a r e t u r n required under section 6041(a) or 6041A(a) and which is made during any calendar year, no a m o u n t shall be deducted and withheld with respect to such payment unless—

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Page:United States Statutes at Large Volume 96 Part 1.djvu/651

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 609

"(A) the aggregate a m o u n t of such payment and all previous such payments to the payee involved during such calendar year equals or exceeds $600, "(B) the payor was required under section 6041(a) or 6041A(a) to file a r e t u r n for the preceding calendar year with respect to payments to the payee involved, or "(C) during the preceding calendar year the payor made backup withholding payments to the payee with respect to which a m o u n t s were required to be deducted and withheld under paragraph (1). "(5) DEFINITIONS A N D SPECIAL RULES.—For purposes of t h i s

subsection— "(A) OBVIOUSLY INCORRECT N U M B E R. — A payee shall

be

t r e a t e d as failing to furnish his tax p a y e r identification n u m b e r if the n u m b e r furnished does not contain the proper n u m b e r of digits. "(B)

PAYEE

FURNISHES

2 INCORRECT

NUMBERS.—If

the

payee furnishes a payor 2 incorrect n u m b e r s, the payor shall, after receiving notice of the second incorrect n u m b e r, t r e a t the payee as not h a v i n g furnished a n other tax p a y e r identification n u m b e r under paragraph (2)(B)(ii) until the day on which the payor receives notification from the Secretary that a correct tax p a y e r identification n u m b e r has been furnished. "(C) EXCEPTION FOR PAYMENTS TO CERTAIN P A Y E E S. — P a r a -

g r a p h (1) shall not apply to any payment made to— "(i) the United States (as defined in section 3455(a)(3)), "(ii) any State (as defined in section 3455(a)(2)), "(iii) a n organization which is exempt from taxation under section 501(a), "(iv) any foreign government (as defined in section 3455(a)(4)) or international organization (as defined in section 3455(a)(5)), or "(v) any other person specified in regulations. "(D) TAXPAYER IDENTIFICATION N U M B E R. — The term 'tax-

payer identification n u m b e r ' means the identifying n u m b e r assigned to a person under section 6109. "(E)

AMOUNTS

FOR WHICH

WITHHOLDING

OTHERWISE

REQUIRED.—No tax shall be deducted or withheld under this subsection with respect to any a m o u n t for which withhold ing is otherwise required by this title. "(F) E X E M P T I O N WHILE WAITING FOR N U M B E R. — The Secre-

t a r y shall prescribe regulations for exemptions from the tax imposed by paragraph (1) during periods during which a person is waiting for receipt of a taxpayer identification number. "(G) N O M I N E E S. — I n the case of a backup withholding payment described in clause (i) or (v) of paragraph (3)(A) to a nominee, in the m a n n e r provided in regulations, both the nominee and the u l t i m a t e payee shall be treated as the payee. "(H) REQUIREMENT OF NOTICE TO P A Y E E. — W h e n e v e r the

Secretary notifies a payor under paragraph (1)(B) that the taxpayer identification n u m b e r furnished by any payee is incorrect, the Secretary shall a t the s a m e time furnish a

Ante, p. 583.

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Page:United States Statutes at Large Volume 96 Part 1.djvu/652

 96 STAT. 610

PUBLIC LAW 97-248—SEPT. 3, 1982 copy of such notice to the payor, and the payor shall promptly furnish such copy to the payee. "(I) REQUIREMENT OF NOTICE TO SECRETARY.—If the Secre-

tary notifies a payor under paragraph (1)(B) that the taxpayer identification number furnished by any payee is incorrect and such payee subsequently furnishes another taxpayer identification number to the payor, the payor shall promptly notify the Secretary of the other taxpayer identification number so furnished. "(J) COORDINATION WITH OTHER SECTIONS.—For purposes

26 USC 3402 ^°^-

of section 31, this chapter (other than subsection (n) of this section), and so much of subtitle F (other than section 7205) as relates to this chapter, payments which are subject to withholding under this subsection shall be treated as if they were wages paid by an employer to an employee." (b) EFFECTIVE DATE.—The amendments made by subsection (a) shall apply to payments made after December 31, 1983. SEC. 318. MINIMUM PENALTY FOR EXTENDED FAILURE TO FILE.

26 USC 6651.

26 USC 6651 note.

26 USC 6011.

(a) IN GENERAL.—Subsection (a) of section 6651 (relating to failure to file tax return or to pay tax) is amended by adding at the end thereof the following new sentence: "In the case of a failure to file a return of tax imposed by chapter 1 within 60 days of the date prescribed for filing of such return (determined with regard to any extensions of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, the addition to tax under paragraph (1) shall not be less than the lesser of $100 or 100 percent of the amount required to be shown as tax on such return." (b) CONFORMING AMENDMENTS.—Section 6651(c)(1) (relating to additions under more than one paragraph) is amended— (1) by adding at the end of subparagraph (A) the following new sentence: "In any case described in the last sentence of subsection (a), the amount of the addition under paragraph (1) of subsection (a) shall not be reduced under the preceding sentence below the amount provided in such last sentence.", and (2) by inserting "(determined without regard to the last sentence of such subsection)" after "paragraph (1) of subsection (a)" in subparagraph (B). (c) EFFECTIVE DATE.—The amendments made by this section shall apply to returns the due date for filing of which (including extensions) is after December 31, 1982. SEC. 319. INFORMATION RETURNS. Section 6011 (relating to general requirement of return, statement, or list) is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: "(e) REGULATIONS REQUIRING RETURNS ON MAGNETIC TAPE, ETC.—

The Secretary shall prescribe regulations providing standards for determining which returns must be filed on magnetic media or in other machine-readable form. The Secretary may not require returns of any tax imposed by subtitle A on individuals, estates, and trusts to be other than on paper forms supplied by the Secretary. In prescribing such regulations, the Secretary shall take into account

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 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 611

(among other relevant factors) the ability of the taxpayer to comply at a reasonable cost with such a filing requirement."

Subtitle C—Abusive Tax Shelters, Etc.; Substantial Underpayments; False Documents; Frivolous Returns PART I—ABUSIVE TAX SHELTERS, ETC. SEC. 320. PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS, ETC. (a) GENERAL RULE.—Subchapter B of chapter 68 (relating to

assessable penalties) is amended by adding at the end thereof the following new section: "SEC. 6700. PROMOTING ABUSIVE TAX SHELTERS, ETC.

"(a) IMPOSITION OF PENALTY.—Any person who— "(I)(A) organizes (or assists in the organization of)— "(i) a partnership or other entity, "(ii) any investment plan or arrangement, or "(iii) any other plan or arrangement, or "(B) participates in the sale of any interest in an entity or plan or arrangement referred to in subparagraph (A), and "(2) makes or furnishes (in connection with such organization or sale)— "(A) a statement with respect to the allowability of any deduction or credit, the excludability of any income, or the securing of any other tax benefit by reason of holding an interest in the entity or participating in the plan or arrangement which the person knows or has reason to know is false or fraudulent as to any material matter, or "(B) a gross valuation overstatement as to any material matter, shall pay a penalty equal to the greater of $1,000 or 10 percent of the gross income derived or to be derived by such person from such activity. "(b) RULES RELATING TO PENALTY FOR GROSS VALUATION OVERSTATEMENTS.— "(1) GROSS VALUATION OVERSTATEMENT DEFINED.—For pur-

poses of this section, the term 'gross valuation overstatement' means any statement as to the value of any property or services if— "(A) the value so stated exceeds 200 percent of the amount determined to be the correct valuation, and "(B) the value of such property or services is directly related to the amount of any deduction or credit allowable under chapter 1 to any participant. "(2) AUTHORITY TO WAIVE.—The Secretary may waive all or any part of the penalty provided by subsection (a) with respect to any gross valuation overstatement on a showing that there was a reasonable basis for the valuation and that such valuation was made in good faith. "(c) PENALTY IN ADDITION TO OTHER PENALTIES.—The penalty imposed by this section shall be in addition to any other penalty provided by law."

26 USC 6700.

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Page:United States Statutes at Large Volume 96 Part 1.djvu/654

 96 STAT. 612

PUBLIC LAW 97-248—SEPT. 3, 1982 (b) CLERICAL AMENDMENT.—The table of sections for subchapter B of chapter 68 is amended by adding at the end thereof the following new item: "Sec. 700. Promoting abusive tax shelters, etc."

26 USC 6700 ^°^-

26 USC 7409. 26 USC 7408.

(c) EFFECTIVE DATE.—The amendments made by this section shall take effect on the day after the date of the enactment of this Act. SEC. 321. ACTION TO ENJOIN PROMOTERS OF ABUSIVE TAX SHELTERS, ETC. (a) GENERAL RULE.—Subchapter A of chapter 76 (relating to civil actions by the United States) is amended by redesignating section 7408 as section 7409 and by inserting after section 7407 the following new section: "SEC. 7408. ACTION TO ENJOIN PROMOTERS OF ABUSIVE TAX SHELTERS. ETC. "(a) AUTHORITY TO SEEK INJUNCTION.—A civil action in the name of the United States to enjoin any person from further engaging in conduct subject to penalty under section 6700 (relating to penalty for promoting abusive tax shelters, etc.) may be commenced at the request of the Secretary, Any action under this section shall be brought in the district court of the United States for the district in which such person resides, has his principal place of business, or has engaged in conduct subject to penalty under section 6700. The court may exercise its jurisdiction over such action (as provided in section 7402(a)) separate and apart from any other action brought by the United States against such person. "(b) ADJUDICATION AND DECREE.—In any action under subsection (a), if the court finds— "(1) that the person has engaged in any conduct subject to penalty under section 6700 (relating to penalty for promoting abusive tax shelters, etc.), and "(2) that injunctive relief is appropriate to prevent recurrence of such conduct, the court may enjoin such person from engaging in such conduct or in any other activity subject to penalty under section 6700. "(c) CITIZENS AND RESIDENTS OUTSIDE THE UNITED STATES.—If any

citizen or resident of the United States does not reside in, and does not have his principal place of business in, any United States judicial district, such citizen or resident shall be treated for purposes of this section as residing in the District of Columbia." (b) CLERICAL AMENDMENT.—The table of sections for subchapter A of chapter 76 is amended by striking out the last item and inserting in lieu thereof the following: "Sec. 7408. Action to enjoin promoters of abusive tax shelters, etc. "Sec. 7409. Cross references."

26 USC 7408 "°^-

(c) EFFECTIVE DATE.—The amendments made by this section shall take effect on the day after the date of the enactment of this Act. SEC. 322. PROCEDURAL RULES APPLICABLE TO PENALTIES UNDER SECTIONS 6700. 6701, AND 6702. (a) GENERAL RULE.—Subchapter B of chapter 68 (relating to assessable penalties) is amended by adding at the end thereof the following new section:

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 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 613

"SEC. 6703. RULES APPLICABLE TO PENALTIES UNDER SECTIONS 6700, 6701, AND 6702.

26 USC 6703.

"(a) BURDEN OF PROOF.—In any proceeding involving the issue of whether or not any person is liable for a penalty under section 6700, 6701, or 6702, the burden of proof with respect to such issue shall be on the Secretary. "(b) DEFICIENCY PROCEDURES NOT TO APPLY.—Subchapter B of

chapter 63 (relating to deficiency procedures) shall not apply with respect to the assessment or collection of the penalties provided by sections 6700, 6701, and 6702. "(c) EXTENSION OF PERIOD OF COLLECTION WHERE PERSON PAYS 15 PERCENT OF PENALTY.—

"(1) IN GENERAL.—If, within 30 days after the day on which notice and demand of any penalty under section 6700, 6701, or 6702 is made against any person, such person pays an amount which is not less than 15 percent of the amount of such penalty and files a claim for refund of the amount so paid, no levy or proceeding in court for the collection of the remainder of such penalty shall be made, begun, or prosecuted until the final resolution of a proceeding begun as provided in paragraph (2). Notwithstanding the provisions of section 7421(a), the beginning of such proceeding or levy during the time such prohibition is in force may be enjoined by a proceeding in the proper court. "(2) PERSON MUST BRING SUIT IN DISTRICT COURT TO DETERMINE HIS LIABILITY FOR PENALTY.—If, within 30 days after the day on

which his claim for refund of any partial payment of any penalty under section 6700, 6701, or 6702 is denied (or, if earlier, within 30 days after the expiration of 6 months after the day on which he filed the claim for refund), the person fails to begin a proceeding in the appropriate United States district court for the determination of his liability for such penalty, paragraph (1) shall cease to apply with respect to such penalty, effective on the day following the close of the applicable 30-day period referred to in this paragraph. "(3) SUSPENSION OF RUNNING OF PERIOD OF LIMITATIONS ON

COLLECTION.—The running of the period of limitations provided in section 6502 on the collection by levy or by a proceeding in court in respect of any penalty described in paragraph (1) shall be suspended for the period during which the Secretary is prohibited from collecting by levy or a proceeding in court." (b) CLERICAL AMENDMENT.—The table of sections for subchapter B of chapter 68 is amended by adding at the end thereof the following new section: "Sec. 6703. Rules applicable to penalties under sections 6700, 6701, and 6702."

(c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 6703 take effect on the day after the date of the enactment of this Act. ^°^^PART II—SUBSTANTIAL UNDERPAYMENT; FALSE DOCUMENTS; FRIVOLOUS RETURNS; ETC. SEC. 323. PENALTY FOR SUBSTANTIAL UNDERSTATEMENT.

(a) IN GENERAL.—Subchapter A of chapter 68 (relating to additions to tax and additional amounts) is amended by redesignating section 6661 as section 6662 and by inserting after section 6660 the 26 USC 6662. following new section:

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Page:United States Statutes at Large Volume 96 Part 1.djvu/656

 96 STAT. 614 26 USC 6661.

PUBLIC LAW 97-248—SEPT. 3, 1982 "SEC. 6661. SUBSTANTIAL UNDERSTATEMENT OF LIABILITY. "(a) ADDITION TO T A X. — I f the r e is a s u b s t a n t i a l under statement of

income tax for any taxable year, the r e shall be added to the tax a n a m o u n t equal to 10 percent of the a m o u n t of any under payment a t t r i b u t a b l e to such under statement. "(b) DEFINITION AND SPECIAL RULE. — "(1) SUBSTANTIAL UNDERSTATEMENT.—

"(A) IN GENERAL.—For purposes of this section, the r e is a substantial under statement of income tax for any taxable year if the a m o u n t of the under statement for the taxable year exceeds the g r e a t e r of— "(i) 10 percent of the tax required to be shown on the r e t u r n for the taxable year, or "(ii) $5,000. "(B) SPECIAL RULE FOR CORPORATIONS.—In the case of a

corporation other than a n electing small business corporation (as defined in section 1371(b)) or a personal holding company (as defined in section 542), paragraph (1) shall be applied by substituting '$10,000' for '$5,000'. "(2) U N D E R STATEMENT. —

"(A) IN GENERAL.—For purposes of paragraph (1), the term ' under statement ' means the excess of— "(i) the a m o u n t of the tax required to be shown on the r e t u r n for the taxable year, over "(ii) the a m o u n t of the tax imposed which is shown on the r e t u r n. "(B) REDUCTION FOR UNDERSTATEMENT DUE TO POSITION OF

TAXPAYER OR DISCLOSED ITEM.—The a m o u n t of the understatement under subparagraph (A) shall be reduced by that portion of the under statement which is a t t r i b u t a b l e to— "(i) the tax t r e a t m e n t of any item by the tax p a y e r if the r e is or was substantial authority for such treatment, or "(ii) any item with respect to which the relevant facts affecting the item's tax t r e a t m e n t a r e adequately disclosed in the r e t u r n or in a statement attached to the return. "(C) SPECIAL RULES IN CASES INVOLVING TAX SHELTERS.—

"(i) IN GENERAL.—In the case of any item a t t r i b u t a b l e to a tax shelter— "(I) subparagraph (B)(ii) shall not apply, and "(II) subparagraph (B)(i) shall not apply unless (in addition to meeting the requirements of such subparagraph) the tax p a y e r reasonably believed that the tax t r e a t m e n t of such item by the taxpayer was more likely than not the proper treatment. "(ii) TAX SHELTER.—For purposes of clause (i), the term 'tax shelter' means— "(I) a partnership or other entity, "(II) any investment plan or a r r a n g e m e n t, or "(III) any other plan or a r r a n g e m e n t, if the principal purpose of such partnership, entity, plan, or a r r a n g e m e n t is the avoidance or evasion of Federal income tax.

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Page:United States Statutes at Large Volume 96 Part 1.djvu/657

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 615

"(3) COORDINATION WITH PENALTY IMPOSED BY SECTION 6659.— For purposes of determining the amount of the addition to tax assessed under subsection (a), there shall not be taken into account that portion of the substantial understatement on which a penalty is imposed under section 6659 (relating to 95 Stat. 341. addition to tax in the case of valuation overstatements). "(c) AUTHORITY TO WAIVE.—The Secretary may waive all or any part of the addition to tax provided by this section on a showing by the taxpayer that there was reasonable cause for the understatement (or part thereof) and that the taxpayer acted in good faith." (b) CONFORMING AMENDMENT.—The table of sections for subchapter A of chapter 68 is amended by striking out the last item and inserting in lieu thereof the following: "Sec. 6661. Substantial understatement of liability. "Sec. 6662. Applicable rules."

(c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 6661 apply to returns the due date (determined without regard to exten- "°^®sion) for filing of which is after December 31, 1982. SEC. 324. PENALTIES FOR DOCUMENTS UNDERSTATING TAX LIABILITY. (a) GENERAL RULE.—Subchapter B of chapter 68 (relating to assessable penalties) is amended by inserting after section 6700 the following new section: "SEC. 6701. PENALTIES FOR AIDING AND ABETTING UNDERSTATEMENT OF 26 USC 6701. TAX LIABILITY. "(a) IMPOSITION OF PENALTY.—Any person—

"(1) who aids or assists in, procures, or advises with respect to, the preparation or presentation of any portion of a return, affidavit, claim, or other document in connection with any matter arising under the internal revenue laws, "(2) who knows that such portion will be used in connection with any material matter arising under the internal revenue laws, and "(3) who knows that such portion (if so used) will result in an understatement of the liability for tax of another person, shall pay a penalty with respect to each such document in the amount determined under subsection (b). "(b) AMOUNT OF PENALTY.—

"(1) IN GENERAL.—Except as provided in paragraph (2), the amount of the penalty imposed by subsection (a) shall be $1,000. "(2) CORPORATIONS.—If the return, affidavit, claim, or other document relates to the tax liability of a corporation, the amount of the penalty imposed by subsection (a) shall be $10,000. "(3) ONLY i PENALTY PER PERSON PER PERIOD.—If any person is subject to a penalty under subsection (a) with respect to any document relating to any taxpayer for any taxable period (or where there is no taxable period, any taxable event), such person shall not be subject to a penalty under subsection (a) with respect to any other document relating to such taxpayer for such taxable period (or event). "(c) ACTIVITIES OF SUBORDINATES.—

"(1) IN GENERAL.—For purposes of subsection (a), the term 'procures' includes— "(A) ordering (or otherwise causing) a subordinate to do an act, and

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Page:United States Statutes at Large Volume 96 Part 1.djvu/658

 96 STAT. 616

PUBLIC LAW 97-248—SEPT. 3, 1982 "(B) knowing of, and not attempting to prevent, participation by a subordinate in an act. "(2) SUBORDINATE.—For purposes of paragraph (1), the term 'subordinate' means any other person (whether or not a director, officer, employee, or agent of the taxpayer involved) over whose activities the person has direction, supervision, or control. "(d) TAXPAYER NOT REQUIRED TO HAVE KNOWLEDGE.—Subsection

(a) shall apply whether or not the understatement is with the knowledge or consent of the persons authorized or required to present the return, affidavit, claim, or other document. "(e) CERTAIN ACTIONS NOT TREATED AS AID OR ASSISTANCE.—For

purposes of subsection (a)(1), a person furnishing typing, reproducing, or other mechanical assistance with respect to a document shall not be treated as having aided or assisted in the preparation of such document by reason of such assistance. "(f) PENALTY IN ADDITION TO OTHER PENALTIES.—

"(1) IN GENERAL.—Except as provided by paragraph (2), the penalty imposed by this section shall be in addition to any other penalty provided by law. "(2) COORDINATION WITH RETURN PREPARER PENALTIES.—No

penalty shall be assessed under subsection (a) or (b) of section 6694 on any person with respect to any document for which a penalty is assessed on such person under subsection (a)." (b) CLERICAL AMENDMENT.—The table of sections for subchapter B of chapter 68 is amended by inserting after the item relating to section 6700 the following new item: "Sec. 6701. Penalties for aiding and abetting understatement of tax liability."

26 USC 6701 ^°^^-

(c) EFFECTIVE DATE.—The amendments made by this section shall take effect on the day after the date of the enactment of this Act. (d) CROSS REFERENCE.— For provisions relating to burden of proof and prepayment forum, see section 6703 of the Internal Revenue Code of 1954, as added by section 333 of this Act. SEC. 325. FRAUD PENALTY.

26 USC 6653.

(a) GENERAL RULE.—Subsection (b) of section 6653 (relating to fraud penalty) is amended to read as follows: "(b) FRAUD.—

"(1) IN GENERAL.—If any part of any underpayment (as defined in subsection (c)) of tax required to be shown on a return is due to fraud, there shall be added to the tax an amount equal to 50 percent of the underpayment. "(2)

ADDITIONAL

AMOUNT

FOR PORTION

ATTRIBUTABLE TO

FRAUD.—There shall be added to the tax (in addition to the amount determined under paragraph (1)) an amount equal to 50 percent of the interest payable under section 6601— "(A) with respect to the portion of the underpayment described in paragraph (1) which is attributable to fraud, and "(B) for the period beginning on the last day prescribed by law for payment of such underpayment (determined without regard to any extension) and ending on the date of the assessment of the tax (or, if earlier, the date of the payment of the tax).

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Page:United States Statutes at Large Volume 96 Part 1.djvu/659

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 617

"(3) N o NEGLIGENCE ADDITION WHEN THERE IS ADDITION FOR FRAUD.—The addition to tax under this subsection shall be in lieu of any a m o u n t determined under subsection (a). "(4) SPECIAL RULE FOR JOINT R E T U R N S. — I n the case of a joint

r e t u r n under section 6013, this subsection shall not apply with respect to the tax of the spouse unless some part of the underp a y m e n t is due to the fraud of such spouse." (b) EFFECTIVE D A T E. — The amendment m a d e by subsection (a) 26 USC 6653 shall apply with respect to taxes the last day prescribed by law for "° ^' payment of which (determined without regard to any extension) is after the date of e n a c t m e n t of this Act. SEC. 326. PENALTY FOR FRIVOLOUS RETURNS. (a) GENERAL

RULE.—Subchapter

B of chapter

68 ( r e l a t i n g

to

assessable penalties) is amended by inserting after section 6701 the following new section: "SEC. 6702. FRIVOLOUS INCOME TAX RETURN.

26 USC 6702.

"(a) C IV I L PENALTY.—If—

"(1) any individual files w h a t p u r p o r t s to be a r e t u r n of the tax imposed by subtitle A b u t which— "(A) does not contain information on which the substantial correctness of the self-assessment may be judged, or "(B) contains information that on its face indicates that the self-assessment is substantially incorrect; and "(2) the conduct referred to in paragraph (1) is d u e to— "(A) a position which is frivolous, or "(B) a desire (which a p p e a r s on the purported r e t u r n) to delay or impede the administration of Federal income tax laws, the n such individual shall pay a penalty of $500. "(b) PENALTY

IN ADDITION TO OTHER P E N A L T I E S. — The

penalty

imposed by subsection (a) shall be in addition to any other penalty provided by law." (b) CLERICAL AMENDMENT. — The t a b l e of sections for subchapter B

of chapter 68 is amended by inserting after the item relating to section 6701 the following new item: "Sec. 702. Frivolous income tax return."

(c) EFFECTIVE D A T E. — The amendments m a d e by this section shall apply with respect to documents filed after the date of the enactm e n t of this Act.

26 USC 6702 "°*'^"

(d) CROSS R E F E R E N C E. — For provisions relating to burden of proof and prepayment forum,.see section 67.'J of the Internal Revenue Code of 19.^4, as added by section 33.3 of this Act. SEC. 327. R E L I E F FROM CRIMINAL PENALTY FOR F A I L U R E TO F I L E ESTI.MATED TAX W H E R E T A X P A Y E R F A L L S WITHIN STATUTORY EXCEPTIONS.

Section 7203 (relating to willful failure to file r e t u r n, supply information, or pay tax) is amended by adding a t the end thereof the following new sentence: "In the case of any person with respect to whom the r e is a failure to pay any estimated tax, this section shall not apply to such person with respect to such failure if the r e is no addition to tax under section 6654 or 6655 with respect to such failure."

26 USC 7203.

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Page:United States Statutes at Large Volume 96 Part 1.djvu/660

 96 STAT. 618

PUBLIC LAW 97-248—SEPT. 3, 1982 SEC. 328. ADJUSTMENTS TO ESTIMATED TAX PROVISIONS. (a) W A IV E R OF P E N A L T Y W H E R E INDIVIDUAL D I D N O T H A V E T A X LIABILITIES FOR PRECEDING TAXABLE Y E A R. —

95 Stat. 346.

(1) Section 6654 (relating to failure by individual to pay estimated tax) is amended by redesignating subsection (h) a s subsection (i) and by inserting after subsection (g) the following new subsection: "(h) EXCEPTION W H E R E N O T A X LIABILITY FOR PRECEDING TAXABLE

Y E A R. — N o addition to tax shall be imposed under subsection (a) for any taxable year if— "(1) the individual did not h a v e any liability for tax for the preceding taxable year, "(2) the preceding taxable year w a s a taxable year of 12 months, and "(3) the individual w a s a citizen or resident of the United States throughout the preceding taxable year." (2) Subsection (g) of section 6654 is amended by striking out "and (f)" and inserting in lieu thereof "(f), and (h)". (b) E L I M I N A T I O N OF REQUIREMENTS TO F I L E DECLARATIONS OF ESTIMATED TAX.—

95 Stat. 345.

26 USC 6073.

26 USC 6153.

(1) Section 6015 (relating to declaration of estimated income tax by individuals) is amended by adding a t the end thereof the following new subsection: "(k) TERMINATION.—No declaration shall be required under this section for any taxable year beginning after December 31, 1982." (2) Section 6073 (relating to time for filing declarations of estimated income tax by individuals) is amended by adding at the end thereof the following new subsection: "(f) TERMINATION.—This section shall not apply to any taxable year beginning after December 31, 1982." (3) Section 6153 (relating to installment payments of estimated income tax by individuals) is amended by striking out subsection (g) and inserting in lieu thereof the following: "(g) SPECIAL RULES FOR TAXABLE Y E A R S B E G I N N I N G A F T E R 1982.—

26 USC 6015 ^°^^-

In the case of taxable years beginning after 1982— "(1) this section shall be applied as if the requirements of sections 6015 and 6073 r e m a i n e d in effect, and "(2) the a m o u n t of the estimated tax t a k e n into account under this section shall be determined under rules similar to the rules of subsections (b) and (d) of section 6654." (c) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 1982. SEC. 329. INCREASES IN CERTAIN CRIMINAL FINES.

26 USC 7201.

(a) A T T E M P T TO EVADE OR DEFEAT TAX.—Section 7201 (relating to

a t t e m p t to evade or defeat tax) is amended by striking out "$10,000" and inserting in lieu thereof "$100,000 ($500,000 in the case of a corporation)". (b) W I L L F U L FAILURE TO F I L E R E T U R N, SUPPLY INFORMATION, OR

26 USC 7203.

26 USC 7206.

P A Y TAX.—Section 7203 (relating to willful failure to file r e t u r n, supply information, or pay tax) is amended by striking out "$10,000" and inserting in lieu thereof "$25,000 ($100,000 in the case of a corporation)". (c) FRAUD AND FALSE STATEMENTS.—Section 7206 (relating to fraud and false statements) is amended by striking out "$5,000" and inserting in lieu thereof "$100,000 ($500,000 in the case of a corporation)".

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 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 619

(d) FRAUDULENT RETURNS, STATEMENTS, OR OTHER DOCUMENTS.—

Section 7207 (relating to fraudulent returns, statements, or other 26 USC 7207. documents) is amended by striking out "$1,000" each place it appears and inserting in lieu thereof "$10,000 ($50,000 in the case of a corporation)". (e) EFFECTIVE DATE.—The amendments made by this section shall ^^^^^^ ^^^^ apply to offenses committed after the date of the enactment of this note. Act. SEC. 330. SPECIAL RULES WITH RESPECT TO CERTAIN CASH.

(a) IN GENERAL.—Subchapter A of chapter 70 (relating to jeopardy) is amended by adding at the end thereof the following new part: "PART III—SPECIAL RULES WITH RESPECT TO CERTAIN CASH "Sec. 6867. Presumptions where owner of large amount of cash is not identified. "SEC. 6867. PRESUMPTIONS WHERE OWNER OF LARGE AMOUNT OF CASH IS NOT IDENTIFIED.

"(a) GENERAL RULE.—If the individual who is in physical possession of cash in excess of $10,000 does not claim such cash— "(1) as his, or "(2) as belonging to another person whose identity the Secretary can readily ascertain and who acknowledges ownership of such cash, then, for purposes of sections 6851 and 6861, it shall be presumed that such cash represents gross income of a single individual for the taxable year in which the possession occurs, and that the collection of tax will be jeopardized by delay. "(b) RULES FOR ASSESSING.—In the case of any assessment resulting from the application of subsection (a)— "(1) the entire amount of the cash shall be treated as taxable income for the taxable year in which the possession occurs, "(2) such income shall be treated as taxable at a 50-percent rate, and "(3) except as provided in subsection (c), the possessor of the cash shall be treated (solely with respect to such cash) as the taxpayer for purposes of chapters 63 and 64 and section 7429(a)(1). "(c) EFFECT OF LATER SUBSTITUTION OF TRUE OWNER.—If, after an assessment resulting from the application of subsection (a), such assessment is abated and replaced by an assessment against the owner of the cash, such later assessment shall be treated for purposes of all laws relating to lien, levy and collection as relating back to the date of the original assessment. "(d) DEFINITIONS.—For purposes of this section— "(1) CASH.—The term 'cash' includes any cash equivalent. "(2) CASH EQUIVALENT.—The term 'cash equivalent' means— "(A) foreign currency, "(B) any bearer obligation, and "(C) any medium of exchange which— "(i) is of a type which has been frequently used in illegal activities, and

26 USC 6867.

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text: The Liberty to Trade as Buttressed by National Law/Indirectness in Relation to Cases of Non-Assent


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Page:United States Statutes at Large Volume 96 Part 1.djvu/662

 96 STAT. 620

PUBLIC LAW 97-248—SEPT. 3, 1982 "(ii) is specified as a cash equivalent for purposes of this part in regulations prescribed by the Secretary. "(3) VALUE OF CASH EQUIVALENT.—Any cash equivalent shall be taken into account— "(A) in the case of a bearer obligation, at its face amount, and "(B) in the case of any other cash equivalent, at its fair market value." (b) CLERICAL AMENDMENT.—The table of parts for such subchapter A is amended by adding at the end thereof the following new item: "Part III. Special rules with respect to certain cash."

26 USC 6867 "°**-

(c) EFFECTIVE DATE.—The amendments made by subsections (a) and (b) shall take effect on the day after the date of the enactment of this Act.

Subtitle D—Administrative Summons 26 USC 7609.

SEC. 331. SPECIAL PROCEDURES FOR THIRD-PARTY SUMMONSES. (a) PROCEEDING To QuASH.—Paragraph (2) of section 7609(b) (relating to right to intervene; right to stay compliance) is amended to read as follows: "(2) PROCEEDING TO QUASH.—

"(A) IN GENERAL.—Notwithstanding any other law or rule of law, any person who is entitled to notice of a summons under subsection (a) shall have the right to begin a proceeding to quash such summons not later than the 20th day after the day such notice is given in the manner provided in subsection (a)(2). In any such proceeding, the Secretary may seek to compel compliance with the summons. "(B) REQUIREMENT OF NOTICE TO PERSON SUMMONED AND

TO SECRETARY.—If any person begins a proceeding under subparagraph (A) with respect to any summons, not later than the close of the 20-day period referred to in subparagraph (A) such person shall mail by registered or certified mail a copy of the petition to the person summoned and to such office as the Secretary may direct in the notice referred to in subsection (a)(1). "(C) INTERVENTION; ETC.—Notwithstanding any other law or rule of law, the person summoned shall have the right to intervene in any proceeding under subparagraph (A). Such person shall be bound by the decision in such proceeding (whether or not the person intervenes in such proceeding).' (b) RESTRICTION ON EXAMINATION.—Subsection (d) of section 7609 (relating to restriction on examination of records) is amended to read as follows: "(d) RESTRICTION ON EXAMINATION OF RECORDS.—No examination

of any records required to be produced under a summons as to which notice is required under subsection (a) may be made— "(1) before the close of the 23rd day after the day notice with respect to the summons is given in the manner provided in subsection (a)(2), or "(2) where a proceeding under subsection (b)(2)(A) was begun within the 20-day period referred to in such subsection and the requirements of subsection (b)(2)(B) have been met, except in accordance with an order of the court having jurisdiction of

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 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 621

such proceeding or with the consent of the person beginning the proceeding to q u a s h. " (c) JURISDICTION.—Subsection (h) of section 7609 (relating to jurisdiction of district court) is amended to read as follows:

26 USC 7609.

"(h) JURISDICTION OF DISTRICT COURT; E T C. —

"(1) JURISDICTION.—The United States district court for the district within which the person to be s u m m o n e d resides or is found shall have jurisdiction to h e a r and determine any proceeding brought under subsection (b)(2), (f), or (g). An order denying the petition shall be deemed a final order which may be appealed. "(2)

SPECIAL RULE FOR PROCEEDINGS UNDER SUBSECTIONS

(f)

AND (g).—The determination s required to be made under subsections (f) and (g) shall be m a d e ex part e and shall be made solely on the petition and supporting affidavits. "(3) PRIORITY.—Except as to cases the court considers of g r e a t e r importance, a proceeding brought for the enforcement of any summons, or a proceeding under this section, and appeals, t a k e s precedence on the docket over all other cases and shall be assigned for h e a r i n g and decided at the earliest practicable date. " (d) CONFORMING AMENDMENTS. —

(1) Paragraph (1) of section 7609(a) is amended— (A) by striking out "14th d a y " and inserting in lieu thereof "23rd day", and (B) by striking out the last sentence and inserting in lieu thereof the following: "Such notice shall be accompanied by a copy of the s u m m o n s which has been served and shall contain an explanation of the right under subsection (b)(2) to bring a proceeding to quash the s u m m o n s. " (2) The subsection heading for subsection (b) of section 7609 is amended to read as follows: "(b)

R I G H T TO I N T E R V E N E; R I G H T TO PROCEEDING TO Q U A S H. — ".

(e) EFFECTIVE D A T E. — The amendments m a d e by this section shall apply to summonses served after December 31, 1982.

26 USC 7609 note.

SEC. 332. DUTY OF THIRD-PARTY RECORDKEEPER. (a) GENERAL RULE.—Section 7609 (relating to special procedures for third-party summonses) is amended by adding at the end thereof the following new subsection:

Supra.

"(i) DUTY OF T H I R D - P A R T Y RECORDKEEPER.— "(1) RECORDKEEPER MUST ASSEMBLE RECORDS AND BE PREPARED

TO PRODUCE RECORDS.—On receipt of a s u m m o n s described in subsection (c), the third-party recordkeeper shall proceed to assemble the records requested, or such portion thereof as the Secretary may prescribe, and shall be prepared to produce the records pursuant to the s u m m o n s on the day on which the records are to be examined. "(2)

SECRETARY MAY GIVE RECORDKEEPER

CERTIFICATE.—The

Secretary may issue a certificate to the third-party recordkeeper that the period prescribed for beginning a proceeding to quash a s u m m o n s has expired and that no such proceeding began within such period, or that the tax p a y e r consents to the examination. "(3)

PROTECTION

FOR

RECORDKEEPER

WHO

DISCLOSES.—Any

third-party recordkeeper, or agent or employee thereof, making a disclosure of records pursuant to this section in good-faith

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Page:United States Statutes at Large Volume 96 Part 1.djvu/664

 96 STAT. 622

26 USC 7609 ^°^-

PUBLIC LAW 97-248—SEPT. 3, 1982 reliance on the certificate of the Secretary or an order of a court requiring production of records shall not be liable to any customer or other person for such disclosure." (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to summonses served after December 31, 1982. SP:C. 33.3. LIMITATION ON USE OF ADMINISTRATIVE SI MMONS.

26 USC 7602.

(a) IN GENERAL.—Section 7602 (relating to examination of books and witnesses) is amended by striking out " For the purpose" and inserting in lieu the r e o f "(a) AUTHORITY To S U M M O N, E T C. — For the

purpose" and by adding a t the end thereof the following new subsections: "(b) P U R P O S E M A Y INCLUDE INQUIRY I N TO OF F E N S E. — The purposes

for which the Secretary may t a k e any action described in paragraph (1), (2), or (3) of subsection (a) include the purpose of inquiring into any offense connected with the administration or enforcement of the internal revenue laws. "(c) N o ADMINISTRATIVE S U M M O N S W H E N THE R E I S J U S T I C E DEPARTMENT REFERRAL.— "(1) LIMITATION OF AUTHORITY.—No s u m m o n s may be issued

under this title, and the Secretary may not begin any action under section 7604 to enforce any s u m m o n s, with respect to any person if a Justice Department referral is in effect with respect to such person. "(2) J U S T I C E DEPARTMENT REFERRAL IN EFFECT.—For purposes

of this subsection— "(A) IN GENERAL.—A Justice Department referral is in effect with respect to any person if— "(i) the Secretary has recommended to the Attorney General a grand j u r y investigation of, or the criminal prosecution of, such person for any offense connected with the administration or enforcement of the internal revenue laws, or "(ii) any request is made under section 6103(h)(3)(B) for the disclosure of any r e t u r n or r e t u r n information (within the m e a n i n g of section 6103(b)) relating to such person. "(B) TERMINATION.—A Justice Department referral shall cease to be in effect with respect to a person when— "(i) the Attorney General notifies the Secretary, in writing, that— "(I) he will not prosecute such person for any offense connected with the administration or enforcement of the internal revenue laws, "(II) he will not authorize a grand j u r y investigation of such person with respect to such an offense, or "(III) he will discontinue such a grand j u r y investigation, "(ii) a final disposition has been made of any criminal proceeding pertaining to the enforcement of the internal revenue laws which was instituted by the Attorney General against such person, or "(iii) the Attorney General notifies the Secretary, in writing, that he will not prosecute such person for any offense connected with the administration or enforce-

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Page:United States Statutes at Large Volume 96 Part 1.djvu/665

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 623

ment of the internal revenue laws relating to the request described in subparagraph (A)(ii). "(3) TAXABLE YEARS, ETC., TREATED SEPARATELY.—For purposes

of this subsection, each taxable period (or, if there is no taxable period, each taxable event) and each tax imposed by a separate chapter of this title shall be treated separately." (b) EFFECTIVE DATE.—The amendments made by subsection (a) ^6 USC 7602 shall take effect on the day after the date of the enactment of this note. Act.

Subtitle E—Withholding on Pensions and Other Retirement Income SEC. 334. WITHHOLDING ON PENSIONS. ANNUITIES, AND CERTAIN OTHER DEFERRED INCOME.

(a) IN GENERAL.—Chapter 24 (relating to collection of income tax at source on wages) is amended by adding at the end thereof the following new section: "SEC. 3405. SPECIAL RULES FOR PENSIONS, ANNUITIES. AND CERTAIN OTHER DEFERRED INCOME. "(a) PENSIONS, ANNUITIES, ETC.— "(1) WITHHOLDING AS IF PAYMENT WERE WAGES.—The

payor of any periodic payment (as defined in subsection (d)(2)) shall withhold from such payment the amount which would be required to be withheld from such payment if such payment were a payment of wages by an employer to an employee for the appropriate payroll period. "(2) ELECTION OF NO WITHHOLDING.—An individual may elect to have paragraph (1) not apply with respect to periodic payments made to such individual. Such an election shall remain in effect until revoked by such individual. "(3) WHEN ELECTION TAKES EFFECT.—Any election under this subsection (and any revocation of such an election) shall take effect as provided by subsection (f)(3) of section 3402 for withholding exemption certificates. "(4) AMOUNT WITHHELD WHERE NO WITHHOLDING EXEMPTION CERTIFICATE IN EFFECT.—In the case of any payment with

respect to which a withholding exemption certificate is not in effect, the amount withheld under paragraph (1) shall be determined by treating the payee as a married individual claiming 3 withholding exemptions. "(b) NONPERIODIC DISTRIBUTION.—

"(1) WITHHOLDING.—The payor of any nonperiodic distribution (as defined in subsection (d)(3)) shall withhold from such distribution the amount determined under paragraph (2). "(2) AMOUNT OF WITHHOLDING.— "(A) DISTRIBUTIONS WHICH ARE NOT QUALIFIED TOTAL DIS-

TRIBUTIONS.—In the case of any nonperiodic distribution which is not a qualified total distribution, the amount withheld under paragraph (1) shall be the amount determined by multiplying such distribution by 10 percent. "(B) QUALIFIED TOTAL DISTRIBUTIONS.—In the case of any nonperiodic distribution which is a qualified total distribution, the amount withheld under paragraph (1) shall be

26 USC 3405.

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Page:United States Statutes at Large Volume 96 Part 1.djvu/666

 96 STAT. 624

PUBLIC LAW 97-248—SEPT. 3, 1982 determined under tables (or other computational procedures) prescribed by the Secretary which a r e based on the a m o u n t of tax which would be imposed on such distribution under section 402(e) if the recipient elected to t r e a t such distribution as a lump-sum distribution (within the meaning of section 402(e)(4)(A)). "(C)

SPECIAL RULE

FOR DISTRIBUTIONS BY REASONS OF

DEATH.—In the case of any distribution described in subparagraph (B) from or under any plan or contract described in section 401(a), 403(a), or 403(b) which is made by reason of a participant's death, the Secretary, in prescribing tables or procedures under paragraph (1), shall t a k e into account the exclusion from gross income provided by section 101(b) (whether or not allowable). "(3) ELECTION OF NO W I T H H O L D I N G. —

"(A) IN GENERAL.—An individual may elect not to have paragraph (1) apply with respect to any nonperiodic distribution. "(B) SCOPE

OF ELECTION.—An

election

under

subpara-

g r a p h (A)— "(i) except as provided in clause (ii), shall be on a distribution-by-distribution basis, or "(ii) to the extent provided in regulations, may apply to subsequent nonperiodic distributions made by the payor to the payee under the same a r r a n g e m e n t. "(c) LIABILITY FOR W I T H H O L D I N G. —

"(1) IN GENERAL.—Except as provided in paragraph (2), the payor of a designated distribution (as defined in subsection (d)(1)) shall withhold, and be liable for, payment of the tax required to be withheld under this section. "(2) P L A N ADMINISTRATOR LIABLE IN CERTAIN CASES.—

"(A) IN GENERAL.—In the case of any plan to which this paragraph applies, paragraph (1) shall not apply and the plan a d m i n i s t r a to r shall withhold, and be liable for, payment of the tax unless the plan administrator— "(i) directs the payor to withhold such tax, and "(ii) provides the payor with such information as the Secretary may require by regulations. "(B) P L A N S TO WHICH

PARAGRAPH APPLIES.—This

para-

graph applies to any plan described in, or which at any time has been determined to be described in— "(i) section 401(a), "(ii) section 403(a), or "(iii) section 301(d) of the Tax Reduction Act of 1975.

26 USC 46 note. "(d)

DEFINITIONS

AND SPECIAL

RULES.—For

purposes

of

this

section— "(1) DESIGNATED DISTRIBUTION.—

"(A) IN GENERAL.—Except as provided in subparagraph (B), the term 'designated distribution' means any distribution or payment from or under— "(i) a n employer deferred compensation plan, "(ii) an individual retirement plan (as defined in section 7701(a)(37)), or "(iii) a commercial a n n u i t y. "(B) EXCEPTIONS.—The term 'designated distribution' shall not include—

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text:
Author:Henri Simon Hymans

Works

 * Rubens: sa vie et son œuvre

Contributions to EB1911

 * (in part)
 * (in part)
 * (in part)

title: Author:Henri Simon Hymans


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Page:United States Statutes at Large Volume 96 Part 1.djvu/667

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 625

"(i) any a m o u n t which is wages without regard to this section, and "(ii) the portion of a distribution or payment which it is reasonable to beheve is not mcludible in gross income. "(2) PERIODIC PAYMENT.—The term 'periodic payment ' means a designated distribution which is a n a n n u i t y or similar periodic payment. "(3) NoNPERiODic DISTRIBUTION.—The term 'nonperiodic distribution' means any designated distribution which is not a periodic payment. "(4) Q U A L I F I E D TOTAL DISTRIBUTION.—

"(A) IN GENERAL.—The term 'qualified total distribution' means any distribution which— "(i) is a designated distribution, "(ii) it is reasonable to believe is made within 1 taxable year of the recipient, "(iii) is m a d e under a plan described in section 401(a), or 403(a), and "(iv) consists of the balance to the credit of the employee under such plan. "(B)

SPECIAL

RULE

FOR

ACCUMULATED

DEDUCTIBLE

EMPLOYEE CONTRIBUTIONS.—For purposes of subparagraph (A), a c c u m u l a t e d deductible employee contributions (within the m e a n i n g of section 72(o)(5)(B)) shall be t r e a t e d separately in determining if the r e has been a qualified total distribution. "(5)

EMPLOYER

DEFERRED COMPENSATION P L A N. — The

term

'employer deferred compensation plan' means any pension, a n n u i t y, profit-sharing, or stock bonus plan or other plan deferring the receipt of compensation. "(6) COMMERCIAL A N N U I T Y. — The term ' c o m m e r c i a l a n n u i t y '

means a n a n n u i t y, endowment, or life insurance contract issued by a n insurance company licensed to do business under the laws of any State. "(7) P L A N ADMINISTRATOR.—The term ' p l a n a d m i n i s t r a to r ' has

the m e a n i n g given such term by section 414(g). "(8) MAXIMUM AMOUNT W I T H H E L D. — The maximum a m o u n t to

be withheld under this section on any designated distribution shall not exceed the s u m of the a m o u n t of money and the fair m a r k e t value of other property (other than employer securities of the employer corporation (within the m e a n i n g of section 402(a)(3))) received in the distribution. "(9) SEPARATE ARRANGEMENTS TO BE TREATED SEPARATELY.—If

the payor has more than 1 a r r a n g e m e n t under which designated distributions may be made to any individual, each such a r r a n g e m e n t shall be t r e a t e d separately. "(10) T I M E AND M A N N E R OF ELECTION.—

"(A) IN GENERAL.—Any election and any revocation under this section shall be made a t such time and in such m a n n e r as the Secretary shall prescribe. "(B) PAYOR REQUIRED TO NOTIFY PAYEE OF RIGHTS TO ELECT.— "(i) PERIODIC P A Y M E N T S. — The p a y o r of any periodic

payment— "(I) shall t r a n s m i t to the payee notice of the right to m a k e a n election under subsection (a) not

95 Stat. 278.

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Page:United States Statutes at Large Volume 96 Part 1.djvu/668

 96 STAT. 626

PUBLIC LAW 97-248—SEPT. 3, 1982 earlier than 6 months before the first of such payments and not later than when making the first of such payments, "(II) if such a notice is not t r a n s m i t t e d under subclause (I) when making such first payment, shall t r a n s m i t such a notice when making such first payment, and "(III) shall t r a n s m i t to payees, not less frequently than once each calendar year, notice of their rights to m a k e elections under subsection (a) and to revoke such elections, "(ii) NoNPERiODic DISTRIBUTIONS.—The payor of any nonperiodic distribution shall t r a n s m i t to the payee notice of the right to m a k e any election provided in subsection (b) a t the t i m e of the distribution (or a t such earlier time a s may be provided in regulations). "(iii) NOTICE.—Any notice t r a n s m i t t e d pursuant to this subparagraph shall be in such form and contain such information as the Secretary shall prescribe. "(11) W I T H H O L D I N G INCLUDES DEDUCTION.—The term s

'with-

holding', 'withhold', and 'withheld' include 'deducting', 'deduct', and 'deducted'. "(e) W I T H H O L D I N G TO B E T R E A T E D AS W A G E W I T H H O L D I N G U N D E R SECTION 3402 FOR OTHER P U R P O S E S. — For purposes of t h i s chapter

26 USC 6047.

(and so much of subtitle F as relates to this chapter)— "(1) any designated distribution (whether or not a n election under this section applies to such distribution) shall be treated as if it were wages paid by a n employer to a n employee with respect to which the r e has been withholding under section 3402, and "(2) in the case of any designated distribution not subject to withholding under this section by reason of a n election under this section, the a m o u n t withheld shall be t r e a t e d as zero." (b) FiLiNG OF REPORTS.—Section 6047 (relating to information concerning certain t r u s t s and a n n u i t y and bond purchase plans) is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: "(e) REPORTS BY EMPLOYERS, P L A N ADMINISTRATORS, E T C. —

"(1) IN GENERAL.—The Secretary shall by forms or regulations require that— "(A) the employer m a i n t a i n i n g, or the plan a d m i n i s t r a to r (within the m e a n i n g of section 414(g)) of, a plan from which designated distributions (as defined in section 3405(d)(1)) may be made, and "(B) any person issuing any contract under which designated distributions (as so defined) may be made, m a k e r e t u r n s and reports regarding such plan (or contract) to the Secretary, to the participants and beneficiaries of such plan (or contract), and to such other persons as the Secretary may by regulations prescribe. "(2) FOR M, ETC., OF REPORTS.—Such report s shall be in such

form, made a t such time, and contain such information as the Secretary may prescribe by forms or regulations." (c) P E N A L T Y FOR F A I L U R E TO K E E P RECORDS NECESSARY TO COMPLY W I T H R E P O R T I N G REQUIREMENTS OF SECTION 6047(e).—

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Page:United States Statutes at Large Volume 96 Part 1.djvu/669

 P U B L I C L A W 9 7 - 2 4 8 — S E P T. 3, 1982

96 S T A T. 627

(1) IN GENERAL.—Subchapter B of chapter 68 (relating to assessable penalties) is amended by adding a t the e n d thereof the following new section: "SEC. 6704. FAILURE TO KEEP RECORDS NECESSARY TO MEET REPORTING REQUIREMENTS UNDER SECTION 6047(e).

26 USC 6704.

"(a) LIABILITY FOR PENALTY.—Any person who— "(1) has a duty to report or may have a duty to report any information under section 6047(e), and "(2) fails to keep such records as may be required by regulations prescribed under section 6047(e) for the purpose of providing the necessary d a t a base for e i the r c u r r e n t reporting or future reporting, shall pay a penalty for each c a l e n d a r year for which the r e is any failure to keep such records. "(b) A M O U N T OF P E N A L T Y. —

"(1) IN GENERAL.—The p e n a l t y of any person for any calendar year shall be $50, multiplied by the n u m b e r of individuals with respect to whom such failure occurs in such year. "(2) MAXIMUM AMOUNT.—The penalty under this section of any person for any c a l e n d a r year shall not exceed $50,000. "(c) EXCEPTIONS. —

"(1) REASONABLE CAUSE.—No p e n a l t y shall be imposed by this section on any person for any failure which is shown to be d u e to reasonable cause and not to willful neglect. "(2) INABILITY

TO CORRECT PREVIOUS

FAILURE.—No

penalty

shall be imposed by t h i s section on any failure by a person if such failure is a t t r i b u t a b l e to a prior failure which has been penalized under this section and with respect to which the person has m a d e all reasonable efforts to correct the failure. "(3) P R E - 1983 FAILURES.—No penalty shall be imposed by this section on any person for any failure which is a t t r i b u t a b l e to a failure occurring before January 1, 1983, if the person has m a d e all reasonable efforts to correct such pre-1983 failure." (2) CLERICAL AMENDMENT.—The table of sections for subchapter B of chapter 68 is amended by adding a t the end thereof the following new section: "Sec. 6704. Failure to keep records necessary to meet reporting requirements under section 6047(e)." (d) COORDINATION

WITH

PAYMENTS OTHER T H A N

VOLUNTARY

WITHHOLDING

ON CERTAIN

WAGES.—Subsection (o) of section 3402

26 USC 3402.

(relating to extension of withholding to certain payments other than wages) is amended by adding at the e n d thereof the following new paragraph: "(6) COORDINATION WITH WITHHOLDING ON DESIGNATED DISTRI-

BUTIONS UNDER SECTION 3405.—This subsection shall not apply to any a m o u n t which is a designated distribution (within the m e a n i n g of section 3405(d)(1))." (e) EFFECTIVE D A T E S. — (1) AMENDMENT MADE BY SUBSECTIONS (a) AND (dt.—Except as

provided in paragraph (4), the amendment made by subsections (a) and (d) shall apply to payments or other distributions made after December 31, 1982. (2) AMENDMENTS MADE BY SUBSECTION

(b).—Except as pro-

vided in paragraph (4), the amendments m a d e by subsection (b) shall t a k e effect on January 1, 1983.

26 USC 3405 ^°^^-

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Page:United States Statutes at Large Volume 96 Part 1.djvu/670

 96 STAT. 628

PUBLIC LAW 97-248—SEPT. 3, 1982 (3) AMENDMENTS MADE BY SUBSECTION (C). — The amendments

m a d e by subsection (c) shall t a k e effect on January 1, 1985. (4) PERIODIC PAYMENTS BEGINNING BEFORE JANUARY i, 1983.—

Regulations.

For purposes of section 3405(a) of the I n t e r n a l Revenue Code of 1954, in the case of periodic payments beginning before January 1, 1983, the first periodic payment after December 31, 1982, shall be t r e a t e d as the first such periodic payment. (5) DELAY IN APPLICATION.—The Secretary of the Treasury shall prescribe such regulations which delay (but not beyond June 30, 1983) the application of some or all of the amendments made by this section with respect to any payor until such t i m e as such payor is able to comply without undue h a r d s h i p with the requirements of such provisions. (6) WAIVER OF PENALTY.—No penalty shall be assessed under section 6672 with respect to any failure to withhold as required by the amendments made by this section if such failure was before July 1, 1983, and if the person m a d e a good faith effort to comply with such withholding requirements. SEC. 33.5. PARTIAL ROLLOVERS OF IRA DISTRIBUTIONS PERMITTED. (a) GENERAL RULE. —

26 USC 408.

(1) Paragraph (3) of section 408(d) is amended by adding a t the end thereof the following new subparagraph: "(C) PARTIAL ROLLOVERS PERMITTED.—

"(i) IN GENERAL.—If any a m o u n t paid or distributed out of a n individual retirement account or individual retirement a n n u i t y would meet the requirements of subparagraph (A) b u t for the fact that the e n t i r e a m o u n t was not paid into a n eligible plan as required by clause (i), (ii), or (iii) of subparagraph (A), such a m o u n t shall be t r e a t e d as meeting the requirements of subparagraph (A) to the extent it is paid into a n eligible plan referred to in such clause not l a t e r than the 60th day referred to in such clause. "(ii) ELIGIBLE P L A N. — For purposes of clause (i), the

26 USC 409.

term 'eligible plan' means any account, a n n u i t y, bond, contract, or plan referred to in subparagraph (A)." (2) Paragraph (3) of section 409(b) is amended by adding a t the end thereof the following new subparagraph: "(D) P A R T I A L ROLLOVERS PERMITTED.—Rules s i m i l a r to the

rules of section 408(d)(3)(C) shall apply for purposes of subparagraph (C)." 26 USC 408 note. (b) EFFECTIVE DATE.—The amendments m a d e by subsection (a) shall apply to distributions made after December 31, 1982, in taxable years ending after such date.

Subtitle F—Transactions Outside the United States or Involving Foreign Persons SEC. 336. JURISDICTION OF COURT AND ENFORCEMENT OF SUMMONS IN CASE OF PERSONS RESIDING OUTSIDE THE UNITED STATES. 26 USC 7701.

(a) GENERAL RULE. — S u b s e c t i o n (a) of section

7701 ( r e l a t i n g

to

definitions) is amended by adding at the end thereof the following new paragraph:

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Page:United States Statutes at Large Volume 96 Part 1.djvu/671

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 629

"(38) PERSONS RESIDING OUTSIDE UNITED STATES.—If any citizen

or resident of the United States does not reside in (and is not found in) any United States judicial district, such citizen or resident shall be t r e a t e d as residing in the District of Columbia for purposes of any provision of this title r e l a t i n g to— "(A) jurisdiction of courts, or "(B) enforcement of s u m m o n s. " (b) EFFECTIVE D A T E. — The amendment

m a d e by subsection (a)

shall t a k e effect on the day after the date of the e n a c t m e n t of this Act. SEC.

337. ADMISSIBILITY COUNTRIES.

OF EVIDENCP]

MAINTAINED

IN

26 USC 7701

note.

FOREIGN

(a) GENERAL RULE. — Part III of subchapter N of chapter 1 (relating to income from sources without the United States) is amended by adding a t the end thereof the following new subpart: " Subpart I—Admissibility of D o c u m e n t a t i o n M a i n t a i n e d in Foreign Countries "Sec. 982. Admissibility of documentation maintained in foreign countries. "SEC. 982. ADMISSIBILITY OF DOCUMENTATION MAINTAINED IN FOREIGN COUNTRIES.

"(a) GENERAL RULE.—If the tax p a y e r fails to substantially comply with any formal document request arising out of the examination of the tax t r e a t m e n t of any item (hereinafter in this section referred to as the 'examined item') before the 90th day after the date of the mailing of such request on motion by the Secretary, any court having jurisdiction of a civil proceeding in which the tax t r e a t m e n t of the examined item is a n issue shall prohibit the introduction by the tax p a y e r of any foreign-based documentation covered by such request. "(b) REASONABLE CAUSE EXCEPTION. —

"(1) IN GENERAL.—Subsection (a) shall not apply with respect to any documentation if the tax p a y e r establishes that the failure to provide the documentation as requested by the Secretary is d u e to reasonable cause. "(2) FOREIGN NONDISCLOSURE LAW NOT REASONABLE CAUSE.—

For purposes of paragraph (1), the fact that a foreign jurisdiction would impose a civil or criminal penalty on the taxpayer (or any other person) for disclosing the requested documentation is not reasonable cause. "(c) FORMAL D O C U M E N T R E Q U E S T. — For purposes of this section— "(1) FORMAL DOCUMENT REQUEST.—The term 'formal docu-

m e n t request' means any request (made after the normal request procedures have failed to produce the requested documentation) for the production of foreign-based documentation which is mailed by registered or certified mail to the tax p a y e r at his last known address and which sets forth— "(A) the time and place for the production of the documentation, "(B) a statement of the reason the documentation previously produced (if any) is not sufficient, "(C) a description of the documentation being sought, and "(D) the consequences to the tax p a y e r of the failure to produce the documentation described in subparagraph (C).

26 USC 982.

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Page:United States Statutes at Large Volume 96 Part 1.djvu/672

 96 STAT. 630

PUBLIC LAW 97-248—SEPT. 3, 1982 "(2) PROCEEDING TO Q U A S H. —

"(A) IN GENERAL.—Notwithstanding any other law or rule of law, any person to whom a formal document request is mailed shall have the right to begin a proceeding to quash such request not later than the 90th day after the day such request was mailed. In any such proceeding, the Secretary may seek to compel compliance with such request. "(B) JURISDICTION.—The United States district court for the district in which the person (to whom the formal docum e n t request is mailed) resides or is found shall have jurisdiction to h e a r any proceeding brought under subparagraph (A). An order denying the petition shall be deemed a final order which may be appealed. "(C) SUSPENSION OF 90-DAY PERIOD.—The r u n n i n g of the

90-day period referred to in subsection (a) shall be suspended during any period during which a jproceeding brought under subparagraph (A) is pending. "(d)

DEFINITIONS

A N D SPECIAL

RULES.—For

purposes

of

this

section— "(1)

FOREIGN-BASED

DOCUMENTATION.—The

term

'foreign-

based d o c u m e n t a t i o n ' means any documentation which is outside the United States and which may be relevant or m a t e r i a l to the tax t r e a t m e n t of the examined item. "(2) DOCUMENTATION.—The term 'documentation' includes books and records. "(3) FOREIGN-CONNECTED.—An item shall be treated as foreign-connected if— "(A) such item is directly or indirectly from a source outside the United States, or "(B) such item (in whole or in part)— "(i) purports to arise outside the United States, or "(ii) is otherwise dependent on t r a n s a c t i o n s occurring outside the United States. "(4) AUTHORITY TO EXTEND 90-DAY PERIOD.—The Secretary, and

any court having jurisdiction over a proceeding under subsection (c)(2), may extend the 90-day period referred to in subsection (a). "(e) SUSPENSION OF STATUTE OF LIMITATIONS.—If any person t a k e s

any action as provided in subsection (c)(2), the r u n n i n g of any period of limitations under section 6501 (relating to the assessment and collection of tax) or under section 6531 (relating to criminal prosecutions) with respect to such person shall be suspended for the period during which the proceeding under such subsection, and appeals therein, a r e pending." (b) CLERICAL AMENDMENT. — The t a b l e of subpart s for part III of

subchapter N of chapter 1 is amended by adding a t the end thereof the following new item: "Subpart

26 USC 982 note.

L Admissibility countries."

of

documentation

maintained

in

foreign

(c) EFFECTIVE D A T E. — The amendments made by this section shall apply with respect to formal document requests (as defined in section 982(c)(1) of the I n t e r n a l Revenue Code of 1954, as added by this section) mailed after the date of the e n a c t m e n t of this Act.

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Page:United States Statutes at Large Volume 96 Part 1.djvu/673

 PUBLIC LAW 97-248—SEPT. 3, 1982 SEC.

96 STAT. 631

338. PENALTY FOR FAILURE TO FURNISH INFORMATION WITH RESPECT TO CERTAIN P OREIGN CORPORATIONS.

(a) IN GENERAL.—Section 6038 (relating to information with respect to certain foreign corporations) is amended by redesignating subsections (b), (c), and (d) as subsections (c), (d), and (e), respectively, and by inserting after subsection (a) the following new subsection:

26 USC 6038.

"(b) DOLLAR PENALTY FOR F A I L U R E TO F U R N I S H INFORMATION. —

"(1) IN GENERAL.—If any person fails to furnish, within the time prescribed under paragraph (2) of subsection (a), any information with respect to any foreign corporation required under paragraph (1) of subsection (a), such person shall pay a penalty of $1,000 for each annual accounting period with respect to which such failure exists. "(2) INCREASE I N PENALTY WHERE FAILURE CONTINUES AFTER

NOTIFICATION.—If any failure described in paragraph (1) continues for more than 90 days after the day on which the Secretary mails notice of such failure to the United States person, such person shall pay a penalty (in addition to the a m o u n t required under paragraph (1)) of $1,000 for each 30-day period (or fraction thereof) during which such failure continues with respect to any annual accounting period after the expiration of such 90-day period. The increase in any penalty under this paragraph shall not exceed $24,000." (b) COORDINATION

WITH

EXISTING

REDUCTION

IN FOREIGN T A X

CREDIT.—Subsection (c) of section 6038 (as redesignated by subsection (a)) is amended— (1) by inserting " and sub.section (b)" after "subsection" in paragraph (3)(B), and (2) by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph: "(3) COORDINATION WITH SUBSECTION (b).—The a m o u n t of the

reduction which (but for this paragraph) would be made under paragraph (1) with respect to any annual accounting period shall be reduced by the a m o u n t of the penalty imposed by subsection (b) with respect to such period." (c) T E C H N I C A L AMENDMENTS. —

(1) The subsection heading of subsection (c) of section 6038 (as redesignated by subsection (a)) is amended to read as follows: "(c) P E N A L T Y OF R E D U C I N G FOREIGN T A X C R E D I T. — ".

(2) Paragraph (1) of section 6038(a) is amended by striking out "within the m e a n i n g of subsection (d)(1)" and inserting in lieu thereof "within the m e a n i n g of subsection (e)(1)". (3) The last sentence of paragraph (1) of section 6038(c) (as redesignated by subsection (a)) is amended by inserting "of such failure" after "notice". (d) EFFECTIVE DATE.—The amendments made by this section shall apply with respect to information for annual accounting periods ending after the date of the e n a c t m e n t of this Act. SEC. 339. INFORMATION REQUIREMENTS WITH RESPECT TO CERTAIN FOR EIGN-OWNED CORPORATIONS.

(a) GENERAL RULE. — Subpart A of part III of subchapter A of chapter 61 is amended by inserting after section 6038 the following new section:

97-200 O—84—pt. 1

22: QL3

26 USC 6038 "°*'^-

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Page:United States Statutes at Large Volume 96 Part 1.djvu/674

 96 STAT. 632 26 USC 6038A.

PUBLIC LAW 97-248—SEPT. 3, 1982 "SEC. 6038A. INFORMATION WITH RESPECT TO CERTAIN FOREIGN-OWNED CORPORATIONS.

"(a) REQUIREMENT.—If, at any time during a taxable year, a corporation (hereinafter in this section referred to as the 'reporting corporation')— "(1) is a domestic corporation or is a foreign corporation engaged in trade or business within the United States, and "(2) is controlled by a foreign person, such corporation shall furnish, at such time and in such manner as the Secretary shall by regulations prescribe, the information described in subsection (b). "(b) REQUIRED INFORMATION.—For purposes of subsection (a), the information described in this subsection is such information as the Secretary may prescribe by regulations relating to— "(1) the name, principal place of business, nature of business, and country or countries in which organized or resident, of each corporation which— "(A) is a member of the same controlled group as the reporting corporation, and "(B) had any transaction with the reporting corporation during its taxable year, "(2) the manner in which the reporting corporation is related to each corporation referred to in paragraph (1), and "(3) transactions between the reporting corporation and each foreign corporation which is a member of the same controlled group as the reporting corporation. "(c) DEFINITIONS.—For purposes of this section— "(1) CONTROL.—The term 'control' has the meaning given to such term by section 6038(d)(1); except that 'at least 50 percent' shall be substituted for 'more than 50 percent' each place it appears in such section. "(2) CONTROLLED GROUP.—The term 'controlled group' means any controlled group of corporations within the meaning of section 1563(a); except that— "(A) 'at least 50 percent' shall be substituted— "(i) for 'at least 80 percent' each place it appears in section 1563(a)(1), and "(ii) for 'more than 50 percent' each place it appears in section 1563(a)(2)(B), and "(B) the determination shall be made without regard to subsections (a)(4) and (e)(3)(C) of section 1563. "(3) FOREIGN PERSON.—The term 'foreign person' means any person who is not a United States person. For purposes of the preceding sentence, the term 'United States person' has the meaning given to such term by section 7701(a)(30); except that any individual who is a citizen of any possession of the United States (but not otherwise a citizen of the United States) and who is not a resident of the United States shall not be treated as a United States person. "(d) PENALTY FOR FAILURE TO FURNISH INFORMATION.—

"(1) IN GENERAL.—If a reporting corporation fails to furnish (within the time prescribed by regulations) any information described in subsection (b), such corporation shall pay a penalty of $1,000 for each taxable year with respect to which such failure occurs.

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