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Page:United States Statutes at Large Volume 90 Part 2.djvu/222

 90 STAT. 1690

PUBLIC LAW 94-455—OCT. 4, 1976 section 6502 on the collection by levy or by a proceeding i n court in respect of any penalty described i n paragraph (1) shall be suspended for the period during which the Secretary is prohibited from collecting by levy o r a proceeding i n court. "(d)

ABATEMENT o r P E N A L T Y W H E R E TAXPAYER'S LIABILITY N O T

UNDERSTATED.—If at any time there is a final administrative determination or a final judicial decision that there was no understatement of liability i n the case of any r e t u r n o r claim for refund w i t h respect to which a penalty under subsection (a) o r (b) has been assessed, such assessment shall be abated, and if any portion of such penalty has been paid the amount so paid shall be refunded to the person who made such payment as a n overpayment of tax without r e g a r d to any period of limitations which, b u t for t h i s subsection, would a p p l y to the making of such refund. " (e) UNDERSTATEMENT OF LIABILITY D E F I N E D. — For purposes of t h i s

26 USC 1. J

section, the term 'understatement of liability' means any understatement of the n e t amount payable with respect to any tax imposed by subtitle A or any overstatement of the net amount creditable or refundable with respect to any such tax. Except as otherwise provided in subsection (d), the determination of whether or not there is a n understatement of liability shall be made without r e g a r d to any administrative or judicial action involving the taxpayer. " (f) CROSS R E F E R E N C E. —

"For definition of income tax return preparer, see section 7701 (a)(36)."

Ante, p. 1688.

(2) BURDEN OF PROOF UNDER 0694(b).—

26 USC 7428. 26 USC 7427.

Ante, p. 1689.

(A) Subchapter B of chapter 76 (relating to proceedings by taxpayers and t h i r d parties) is amended by redesignating section 7427 as section 7428 and by inserting after section 7426 the following new section: "SEC. 7427. INCOME TAX RETURN PREPARERS. " I n any proceeding involving the issue of whether or not an income tax return preparer has willfully attempted in any manner to understate the liability for tax (within the meaning of section 6 6 9 4 (b)), the burden of proof in respect to such issue shall be upon the Secretary." (B) The table of sections for such subchapter B is amended by striking out the last item and inserting in lieu thereof the following: "Sec. 7427. Income tax return preparers. "Sec. 7428. Cross references." (c) PREI'ARER M U S T FUTINISH C O P Y OF R E T U R N TO TAXPAYER AND M U S T R E T A I N COPY OR L I S T. — Subchapter B of chapter 61 ( r e l a t i n g

26 USC 6107

to information and returns) is amended by inserting after section 6106 the following new section: "SEC. 6107. INCOME TAX RETURN PREPARER MUST FURNISH COPY OF RETURN TO TAXPAYER AND MUST RETAIN A COPY OR LIST. "(a)

FuKxisiiiNG COPY TO TAXPAYER.—Any

person

who is an

income tax return p i e p a r e r with respect to any return or claim for refund shall furnish a completed copy of such r e t u r n or claim to the taxpayer not later than the time such return or claim is presented for such taxpayer's signature. "(b)

COPY OR L I S T To B E RETAINED BY I N C O M E T A X RETURN

PREPARER.—Any person w h o is an income tax r e t u r n preparer with

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Page:United States Statutes at Large Volume 90 Part 2.djvu/223

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1691

respect to a r e t u r n or claim for refund shall, for the period ending 3 years after the close of the r e t u r n period— " (1) retain a completed copy of such r e t u r n or claim, o r retain, on a list, the n a m e and tax p a y e r identification number of the tax p a y e r for whom such r e t u r n or claim was prepared, and " (2) make such copy o r list available for inspection upon request by the Secretary. " (c) EEGULATIONS.—The Secretary shall prescribe regulations under which, in cases where 2 o r more persons a r e income tax r e t u r n preparers with respect to the same return or claim for refund, compliance with the requirements of subsection (a) or (b), as the case may be, of one such person shall be deemed to be compliance with the requirements of such subsection by the other persons. ,. " (d) DEFINITIONS. — For purposes of this section, the term s ' r e t u r n ' and 'claim for refund' have the respective meanings given to such term s by section 6696(e), and the term ' r e t u r n period' has the meaning Post, p. 1693. given to such term by section 6060(c)." infra. (d)

TAXPAYER IDENTIFYING NUMBER OF PREPARER To

B E FUR-

NISHED.—Section 6109(a) (relating to supplying of identifying n u m - 26 USC 6109. bers) is amended by a d d i n g a t the end thereof the following: "(4)

F U R N I S H I N G IDENTIFYING NUMBER OF INCOME TAX RETURN

PREPARER.—Any r e t u r n o r claim for refund prepared by a n income tax r e t u r n p r e p a r e r shall b e a r such identifying number for securing p r o p e r identification of such preparer, his employer, or both, as may be prescribed. For purposes of this paragraph, the Definitions, terms ' r e t u r n ' and 'claim for refund' have the respective meanings given to such terms by section 6696(e). For purposes of this subsection, the identifying number of an individual (or his estate) shall be such individual's social security account number." (e) PREPARER M U S T F I L E A N N U A L INFORMATION R E T U R N. — Part III

of subchapter A of chapter 61 (relating to information returns) is amended by a d d i n g at the end thereof the following new subpart: "Subpart F—Information Concerning Income T a x Return Preparers "Sec. 6060. Information returns of income tax return preparers. "SEC. 6060. INFORMATION RETURNS OF INCOME TAX RETURN 26 USC 6060. PREPARERS. " (a) GENERAL RULE. — Any person w h o employs a n income tax r e t u r n p r e p a r e r to p r e p a r e any return or claim for refund other than for such person a t any time during a return period shall make a return setting forth the name, tax p a y e r identification number, and place of work of each income tax return preparer employed by him a t any time during such period. For purposes of this section, any individual who in acting as an income tax return p r e p a r e r is not the employee of another income tax return preparer shall be treated as his own employer. The return required by this section shall be filed, in such Regulations, m a n n e r as the Secretary may by regulations prescribe, on or before the first July 31 following the end of such return period. " (b) ALTERNATIVE REPORTING.—In lieu of the return required by subsection (a), the Secretary may approve an alternative reporting method if he determines that the necessary information is available to h i m from other sources. " (c) R E T U R N PERIOD D E F I N E D. — For purposes of subsection

(a),

the term 'return period' means the 12-month period beginning on

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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 90 Part 2.djvu/224

 9 0 STAT. 1692

PUBLIC LAW 94-455—OCT. 4, 1976

July 1 of each year, except that the first r e t u r n period shall be the 6-month period beginning on January 1, 1977, and ending on June 30, 1977." (f) OTHER ASSESSABLE PENALTIES W I T H RESPECT TO THE PREPARATION OF INCOME T A X R E T U R N S FOR OTHER P E R S O N S. — Subchapter B of

26 USC 6695.

chapter 68 (relating to assessable penalties) is amended by a d d i n g a t the end thereof the following new sections: "SEC. 6695. OTHER ASSESSABLE PENALTIES WITH RESPECT TO THE PREPARATION OF INCOME TAX RETURNS FOR OTHER PERSONS. "(a)

Ante, p. 1690.

Regulations.

FAILURE To F U R N I S H COPY TO TAXPAYER.—Any person who

is an income tax r e t u r n p r e p a r e r with respect to any return or claim for refund who fails to comply with section 6107(a) with respect to such return or claim shall p a y a penalty of $25 for such failure, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. " (b) FAILURE To SiGN RETURN.—Any persou who is an income tax r e t u r n preparer with respect to any return or claim for refund, w h o is required by regulations prescribed by the Secretary to sign such r e t u r n or claim, and who fails to comply with such regulations with respect to such r e t u r n or claim shall p a y a penalty of $25 for such failure, unless i t is shown that such failure is due to reasonable cause and not due to willful neglect. " (c) F A I L U R E To F U R N I S H IDENTIFYING N U M B E R. — Any person who

is a n income tax r e t u r n p r e p a r e r with respect to any r e t u r n o r claim for refund and who fails to comply with section 6109(a)(4) w i t h respect to such r e t u r n or claim shall p a y a penalty of $25 for such failure, unless i t is shown that such failure is due to reasonable cause and not due to willful neglect. "(d)

F A I L U R E To R E T A I N COPY OR L I S T. — Any person w h o is a n

income tax return p r e p a r e r with respect to any r e t u r n or claim for refund who fails to comply with section 6107(b) with respect to such r e t u r n or claim shall p a y a penalty of $50 for each such failure, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. The maximum penalty imposed under this subsection on any person with respect to any return period shall not exceed $25,000. ^

26 USC 1.

" (e) F A I L U R E To F I L E CORRECT INFORMATION R E T U R N. — Any person

required to make a r e t u r n under section 6060 who fails to comply with the requirements of such section shall pay a penalty of— " (1) $100 for each failure to file a return as required under such section, and " (2) $5 for each failure to set forth an item in the return as required under such section, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. The maximum penalty imposed under this subsection on any person with respect to any return period shall not exceed $20,000. " (f) NEGOTIATION OF C H E C K. — Any person w h o is an income tax r e t u r n p r e p a r e r w h o endorses or otherwise negotiates (directly o r through a n agent) any check made in respect of the taxes imposed by subtitle A which is issued to a tax p a y e r (other than the income tax r e t u r n p r e p a r e r) shall p a y a penalty of $500 with respect to each such check.

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text:
Page:Hockey, Canada's Royal Winter Game.djvu/72

 Experiences teaches that in a low, bent position, a man can get up speed a good deal quicker than when he keeps his body upright, and, moreover, he is less liable when skating thus, to suffer from the body check of an opponent.

A body check means the striking of a man with your hip or shoulder in order to cause him to stop or even fall. The most effective check of this kind is striking a man with the hip, upon his hip, because this is more or less the centre of gravity in a human being, and a good, solid weight catching a person in this spot, especially when that person is balancing on his skates or rushing up the ice, seldom fails in the desired result. The forward player who indulges in body-checking makes a fatal mistake, for although he may gain a momentary advantage, he wastes so much energy in the act, that in the long run he is a heavy loser. This is an incontrovertible fact, the testimony any forward will bear out the statement. He should avoid body-checking with even greater care than he should being checked, because the former requires a great effort, and the latter only seldom injures the man who is encountered, A defence man, however, who has but few rushes up the ice, can afford to enjoy the pleasure of "throwing" himself at an opponent, and often to great advantage. He


text:
Page:United States Statutes at Large Volume 90 Part 2.djvu/225

 PUBLIC LAW 94-455—OCT. 4, 1976

9 0 STAT. 1693

"SEC. 6696. RULES APPLICABLE WITH RESPECT TO SECTIONS 6694 AND 26 USC 6696. 6695. " (a) P E N A L T I E S TO B E ADDITIONAL TO A N Y OTHER P E N A L T I E S. — The

penalties provided by section 6694 and 6695 shall be in addition to any ^"^^' P- 1689. other penalties provided by law. J^^' P' ^"'°" "(b)

D E F I C I E N C Y PROCEDURES N O T TO A P P L Y. — Subchapter B of

^"^^' P- l^^^.

chapter 63 (relating to deficiency procedures for income, estate, gift, 26 USC 6211. and certain excise taxes) shall not apply with respect to the assessment or collection of the penalties provided by sections 6694 and 6695. "(c)

PROCEDURE FOR CLAIMING R E F U N D. — Any claim for credit or Regulations,

refund of any penalty paid under section 6694 o r 6695 shall be filed in accordance with regulations prescribed by the Secretary. " (d) PERIODS OF L I M I T A T I O N. —

" (1) ASSESSMENT.—The amount of any penalty under section 6694(a) or under section 6695 shall be assessed within 3 years after the r e t u r n o r claim for refund with respect to which the penalty is assessed w a s filed, and n o proceeding in court without assessment for the collection of such tax shall be begun after the expiration of such period. I n the case of any penalty under section 6694 (b), the penalty may be assessed, or a proceeding in court for the collection of the penalty may be begun without assessment, at any time. " (2) CLAIM FOR REFUND,—Except as provided in section 6694 (d), any claim for refund of an overpayment of any penalty assessed under section 6694 or 6695 shall be filed within 3 years from the time the penalty was paid. " (e) DEFINITIONS. — For purposes of sections 6694 and 6695— " (1) R E T U R N. — The term ' r e t u r n ' means any r e t u r n of any tax imposed by subtitle A. " (2) CLAIM FOR REFUND.—The term 'claim for refund' means a claim for refund of, o r credit against, any tax imposed by subtitle A. "

j^

,

(g) AUTHORITY TO S E E K I N J U N C T I O N A G A I N S T INCOME T A X R E T U R N

PREPARERS.—Subchapter A of chapter 76 (relating to civil actions by ^ ^,, the United States) is amended by redesignating section 7407 as section 7408 and by inserting after section 7406 the following new section: "SEC. 7407. ACTION TO ENJOIN INCOME TAX RETURN PREPARERS. 26 USC 7407. " (a) AUTHORITY TO S E E K I N J U N C T I O N. — E x c e p t as provided in sub-

section (c), a civil action in the name of the United States to enjoin any person who is an income tax r e t u r n p r e p a r e r from further engagi n g in any conduct described in subsection (b) or from further acting as a n income tax r e t u r n p r e p a r e r may be commenced a t the request of the Secretary. Any action under this section shall be b r o u g h t i n the District Court of the United States for the district in which the income tax p r e p a r e r resides or has his principal place of business or in which the tax p a y e r with respect to whose income tax return the action is brought resides. The court may exercise i t s jurisdiction over such action (as provided in section 7 4 0 2 (a)) separate and a part from any other action brought by the United States against such income tax p r e p a r e r or any taxpayer. " (b) ADJUDICATION AND DECREES.—In any action under subsection (a), if the court finds— " (1) that a n income tax r e t u r n p r e p a r e r has— " (A) engaged in any conduct subject to penalty under section 6694 or 6695, o r subject to any criminal penalty provided by this title,

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Page:United States Statutes at Large Volume 90 Part 2.djvu/226

 90 STAT. 1694

PUBLIC LAW 94-455—OCT. 4, 1976 Off, •

" (B) misrepresented his eligibility to practice before the I n t e r n a l Revenue Service, or otherwise misrepresented his experience or education as an income tax r e t u r n preparer, A-m' ^ " (C) guaranteed the payment of any tax refund or the allowance of any tax credit, or " (D) engaged in any other fraudulent or deceptive con.'. - > • •, duct which substantially interferes with the proper administration of the I n t e r n a l Revenue laws, and " (2) that injunctive relief is a p p r o p r i a t e to prevent the recurjfi.- 'i. vi.;-' rence of such conduct, the court may enjoin such person from further engaging in such conduct. I f the court finds that an income tax return preparer has continually or repeatedly engaged in any conduct described in subparagraph s (A) through (D) of this subsection and that an injunction prohibiting such conduct would not be sufficient to prevent such person's interference with the proper administration of this title, the court may enjoin such person from acting as an income tax return preparer. " (c) BOND TO STAY iNJUNCTioisr.—No action to enjoin under subsection (b)(1)(A) shall be commenced or pursued with respect to any income tax return preparer who files and maintains, with the Secretary in the internal revenue district in which is located such preparer's legal residence or principal place of business, a bond in a sum of $50,000 as surety for the payment of penalties under section Ante, p. 1689; 6694 and 6695." Post, p. 1878;

(h)

Ante, p. 1692. 26 USC 6503. 26 USC 6504. ' 26 USC 6511. ' ' >'"• ' ' '

CROSS REFERENCES.—

(1) Section 6503(h), as redesignated by this Act, is amended by adding at the end thereof the following new paragraph: "(4) Income tax return preparers, see section 6694(c)(3)." (2) Section 6504, as amended by this Act, is amended by a d d i n g at the end thereof the following new paragraph: "(11) Assessment of civil penalties under section 6694 or 6695, see section 6696(d)(1)." (3) Section 6511(g) is amended by adding at the end thereof the following new paragraph: "(7) For a period of limitations for refund of an overpayment of penalties imposed under section 6694 or 6695, see section 6696(d)(2).'' (i)

CONFORMING AMENDMENTS. —

(1) The table of subparts for part III of suchapter A of chapter 61 is amended by adding at the end thereof the following new item: "Subpart F. Information concerning income tax return preparers." (2) The table of sections for subchapter B of chapter 61 is amended by inserting immediately after the item relating to section 6106 the following new item: "Sec. 6107. Income tax return preparer must furnish copy of return to taxpayer and must retain a copy or list." (3) The table of sections for subchapter B of chapter 68 is amended by adding at the end thereof the following new items: "Sec. 6694. Understatement of taxpayer's liability by income tax return preparer. "Sec. 6695. Other assessable penalties with respect to the preparation of •i., income tax returns for other persons. "Sec. 6696. Rules applicable with respect to sections 6694 and 6695."

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Page:United States Statutes at Large Volume 90 Part 2.djvu/227

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1695

(4) 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. 7407. Action to enjoin income tax return preparers. "Sec. 7408. Cross references." (j) EFFECTIVE D A T E. — The amendments made by this section shall 26 USC 7701 apply to documents prepared after December 31, 1976. °°*^" SEC. 1204. JEOPARDY AND TERMINATION ASSESSMENTS. (a)

R E VI E W OF JEOPARDY AND TERMINATION ASSESSMENTS.—Sub-

chapter B of chapter 76 (relating to proceedings by taxpayers and t h i r d parties) is amended by inserting after section 7428 the following new section: "SEC. 7429. REVIEW OF JEOPARDY ASSESSMENT PROCEDURES. 26 USC 7429. " (a) ADMINISTRATIVE R E VI E W. —

" (1) INFORMATION TO TAXPAYER.—Within 5 days after the d a y on which an assessment is made under section 6851(a), 6861(a), or 6862, the Secretary shall provide the taxpayer with a written statement of the information upon which the Secretary relies in making such assessment. " (2) REQUEST FOR REVIEW.—Within 30 days after the day on which the taxpayer is furnished the written statement described in paragraph (1), or within 30 days after the last d a y of the period within which such statement is required to be furnished, the taxpayer may request the Secretary to review the action taken. "(3)

REDETERMINATION BY SECRETARY.—After a request

for

review is made under paragraph (2), the Secretary shall determine whether or not— " (A) the making of the assessment under section 6851, 6861, or 6862, as the case mfiy be, is reasonable under the circumstances, and " (B) the amount so assessed or demanded as a result of the action taken under section 6851, 6861, or 6862 is a p p r o p r i a t e under the circumstances. " (b) JUDICIAL R E VI E W. —

" (1) ACTIONS PERMITTED.—Within 30 days after the earlier of— " (A) the d a y the Secretary notifies the taxpayer of his determination described in subsection (a)(3), or " (B) the 16th day after the request described in subsection (a)(2) was made, the tax p a y e r may b r i n g a civil action against the United States in a district court of the United States for a determination under this subsection. " (2) DETERMINATION BY DISTRICT COURT.—Within 20 days after

an action is commenced under paragraph (1), the district court shall determine whether or not— " (A) the making of the assessment under section 6851, 6861, or 6862, as the case may be, is reasonable under the circumstances, and " (B) the amount so assessed or demanded as a result of the action taken under section 6851, 6861, or 6862, is appropriate under the circumstances. " (3) ORDER OF DISTRICT COURT.—If the court determines that

the making of such assessment is unreasonable or that the amount assessed or demanded is inappropriate, the court may order the Secretary to abate such assessment, to redetermine (in whole or

';

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Page:United States Statutes at Large Volume 90 Part 2.djvu/228

 90 STAT. 1696

PUBLIC LAW 94-455—OCT. 4, 1976 in part) the amount assessed or demanded, or to take such other action as the court finds appropriate. " (c) EXTENSION o r 2 0 - D A Y PERIOD W H E R E TAXPAYER So R E Q U E S T S. —

If the taxpayer requests an extension of the 20-day period set forth i n subsection (b)(2) and establishes reasonable grounds why such extension should be granted, the district court may g r a n t an extension of not more than 40 additional days. " (d) COMPUTATION OF D A Y S. — For purposes of this section, Saturday, Sunday, or a legal holiday in the District of Columbia shall not be counted as the last day of any period. " (e) V E N U E. — A civil action under subsection (b) shall be commenced only in the judicial district described in section 1402(a)(1) or (2) of title 28, United States Code.

. ji;;

.'.

',

" (f) F I N A L I T Y OF DETERMINATION. — Any determination m a d e by a

district court under this section shall be final and conclusive and shall not be reviewed by any other court. " (g) BURDEN OF P R O O F. — " (1) REASONABLENESS OF TERMINATION OR JEOPARDY ASSESS-

M E N T. — I n an action under subsection (b) involving the issue of whether the making of an assessment under section 6851, 6861, or 6862 is reasonable under the circumstances, the burden of proof in respect to such issue shall be upon the Secretary. " (2) REASONABLENESS OF AMOUNT OF ASSESSMENT.—In an action

under subsection (b) involving the issue of whether a n amount assessed or demanded as a result of action taken under section 6851, 6861, or 6862 is a p p r o p r i a t e under the circumstances, the Secretary shall provide a written statement which contains any information with respect to which his determination of the amount assessed was based, but the burden of proof in respect of such issue shall be upon the taxpayer." (b) JEOPARDY ASSESSMENT OF INCOME T A X. — (1) TERMINATION ASSESSMENTS.—So much

26 USC 6851.

of

section

6851

(relating to termination of taxable year) as precedes subsection (c) is amended to read as follows: "SEC. 6851. TERMINATION ASSESSMENTS OF INCOME TAX. " (a) AUTHORITY FOR M A K I N G. —

'

" (1) IN GENERAL.—If the Secretary finds that a taxpayer designs quickly to depart from the United States or to remove his property therefrom, or to conceal liiiPself or his property therein, or to do any other act (including in the case of a corporation dist r i b u t i n g all or a part of its assets in liquidation or otherwise) tending to prejudice or to render wholly or partially ineffectual proceedings to collect the income tax for the current or the immediately preceding taxable year unless such proceeding be brought without delay, the Secretary shall immediately make a determination of tax for the current taxable year or for the pre. ceding taxable year, or both, as the case may be, and notwithstanding any other provision of law, such tax shall become immediately due and payable. The Secretary shall immediately assess the amount of the tax so determined (together with all interest, additional amounts, and additions to the tax provided by law) for the current taxable year or such preceding taxable year, or both, as the case may be, and shall cause notice of such determination and assessment to be given the taxpayer, together with a demand for immediate payment of such tax.

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Page:United States Statutes at Large Volume 90 Part 2.djvu/229

 PUBLIC LAW 94-455—OCT. 4, 1976

9 0 STAT. 1697

" (2) COMPUTATION OF T A X. — I n the case of a c u r r e n t tax a b l e

year, the Secretary shall determine the tax for the period beginn i n g on the first d a y of such current taxable year and ending on the date of the determination under paragraph (1) as though such period were a taxable year of the taxpayer, and shall take into account any p r i o r determination made under this subsection with respect to such current taxable year. "(3)

TREATMENT OF AMOUNTS COLLECTED.—Any a m o u n t s col-

lected as a result of any assessments under this subsection shall, to the extent thereof, be treated as a payment of tax for such taxable year.

•

" (4) T H I S SECTION INAPPLICABLE WHERE SECTION e s e i APPLIES.—

T h i s section shall not authorize any assessment of tax for the preceding taxable year which is made after the due date of the tax p a y e r ' s return for such taxable year (determined with regard to any extensions). " (b) NOTICE OF D E F I C I E N C Y. — I f a n assessment of tax is m a d e under

the authority of subsection (a), the Secretary shall mail a notice under section 6212(a) for the taxpayer's full taxable year (determined without regard to any action taken under subsection (a)) with respect to which such assessment was made within 60 days after the later of (i) the due date of the taxpayer's return for such taxable year (determined with regard to any extensions), or ( i i) the date such tax p a y e r files such return. Such deficiency may be in a n amount greater or less than the amount assessed under subsection (a). " (2) BONDS.—Section 6851 is amended by striking out subsection (e) (relating to bonds) and inserting in lieu thereof the following:

26 USC 6851.

" (e) SECTIONS 6861 (f) AND (g) To A P P L Y. — The provisions of sec-

tion 6861(f) (relating to collection of u n p a i d amounts) and 6861(g) (relating to abatement if jeopardy does not exist) shall a p p l y with respect to any assessment made under subsection (a). " (f) CROSS REFERENCES.—

"(1) For provisions permitting immediate levy in case of jeopardy, see section 6331(a). "(2) For provisions relating to the review of jeopardy, see section, ,^^^ 7429." Ante, p. 1695. (c) T E C H N I C A L AND CONFORMING AMENDMENTS. —

(1) Section 1346(e) of title 28, United States Code (relati n g to jurisdiction of district courts with the United States a s defendant) is amended by inserting " o r section 7429" immediately after "section 7426". (2) Section 4 4 3 (a)(3) (relating to returns for terminated 26 USC 443. period) is repealed. (3) Section 6091(b) (relating to place for filing returns) is 26 USC 6091. amended— (A) by striking out " and " a t the end of paragraph (1)(B) (iii) thereof, and by striking out paragraph (1)(B) (iv) and the m a t t e r following such paragraph and inserting i n lieu thereof the following: " ( i v) nonresi(fent alien persons, and Regulations. " (v) persons with respect to whom a n assessment was made under section 6851(a) (relating to termination assessments) with respect to the taxable year, shall be made at such place as the Secretary may by regulations designate."; and (B) by striking out " and " a t the end of paragraph (2)(B) ( i i), and by striking out paragraph (2)(B) (iii) and the

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Page:United States Statutes at Large Volume 90 Part 2.djvu/230

 90 STAT. 1698

Regulations.

26 USC 6211.

26 USC 6212. 26 USC 6213. 26 USC 6863.

Ante, p. 1695.

PUBLIC LAW 94-455—OCT. 4, 1976 matter following such paragraph and inserting in lieu thereof the following: "(iii) foreign corporations, and " (iv) corporations with respect to which an assessment was made under section 6851(a) (relating to termination assessments) with respect to the taxable year, shall be made at such place as the Secretary may by regulations designate." (4) Section 6211(b)(1) (relating to rules for determining deficiencies) is amended by striking out "and" after "31," and by inserting before the period at the end thereof the following: ", and without regard to any credits resulting from the collection of amounts assessed under section 6851 (relating to termination assessments)". (5) Section 6212(c) (relating to restrictions on further deficiency letters) is amended by inserting after "errors)," the following: "in section 6851 (relating to termination assessments),". (6) Section 6213(a) (relating to time for filing petition with the Tax Court) is amended by inserting "section 6851 or" before "section 6861". (7) Section 6863(a) (relating to bond to stay collection) is amended— (A) by striking out "6861" and inserting in lieu thereof "6851, 6861," j (B) by striking out "a jeopardy assessment" in the first sentence thereof and inserting in lieu thereof "an assessment"; and (C) by striking out "the jeopardy assessment" each place it appears therein and inserting in lieu thereof "such assessment". (8) Section 6863(b)(3)(A) (relating to stay of sale of seized property) is amended to read as follows: "(A) GENERAL RULE.—Where, notwithstanding the provi"^' sions of section 6213(a), an assessment has been made under fij,section 6851 or 6861, the property seized for collection of the tax shall not be sold— "(i) before the expiration of the periods described in subsection (c)(1)(A) and (B), "(ii) before the issuance of the notice of deficiency described in section 6851(b) or 6861 (b), and the expiration of the period provided in section 6213(a) for filing a petition with the Tax Court, and " (iii) if a petition is filed with the Tax Court (whether before or after the making of such assessment), before the expiration of the period during which the assessment of the deficiency would be prohibited if neither sections 6851(a) nor 6861(a) were applicable. Clauses (ii) and (iii) shall not apply in the case of a termination assessment under section 6851 if the taxpayer does not file a return for the taxable year by the due date (determined ^ with regard to any extensions)." (9) Section 6863 (relating to stay of collection of jeopardy assessments) is amended by adding at the end thereof the following new subsection: "(c) STAY OF SALE or SEIZED PROPERTY PENDING DISTRICT COURT DETERMINATION UNDER SECTION 7429.—

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90 STAT. 1699

" (1) GENERAL RULE.—Where a jeopardy assessment has been made under section 6 8 6 2 (a), the property seized for the collection of the tax shall not be sold— " (A) if a civil action is commenced in accordance with section 7429(b), on or before the day on which the district court Ante, p. 1695. judgment in such action becomes j&nal, or " (B) if subparagraph (A) does not apply, before the day after the expiration of the period provided in section 7429(a) for requesting an administrative review, and if such review is requested, before the day after the expiration of the period provided in section 7 4 2 9 (b), for commencing an action in the district court. " (2) EXCEPTIONS.—With respect to any property described in paragraph (1), the exceptions provided by subsection (b)(3) (B) shall a p p l y. " (10) Section 7 1 0 3 (a)(4) (relating to a cross reference) is 26 USC 7103. repealed. (11) Section 7421(a) (relating to prohibition of suits to 26 USC 7421. restrain assessment or collection of taxes) is amended by striking out " and 7426 (a) and (b)(1) " and inserting in lieu thereof "7426 (a) and (b)(1), and 7429(b)". (12) The table of sections for part I of subchapter A of chapter 70 is amended to read as follows: "Sec. 6851. Termination assessments of income tax." (13) The table of sections for subchapter B of chapter 76 is amended by inserting after the item relating to section 7428 the following: "Sec. 7429. Review of jeopardy assessment procedures." (d) EFFECTIVE D A T E. — The amendments made by this section apply 26 USC 6851 w i t h respect to action taken under section 6851, 6861, or 6862 of the note. I n t e r n a l Revenue Code of 1954 where the notice and demand takes place after December 31, 1976. SEC. 1205. ADMINISTRATIVE SUMMONS. (a) REQUIREMENT T H A T NOTICE B E SERVED ON PERSON W H O S E BOOKS, E T C., A R E B E I N G S U M M O N E D. — Subchapter A of chapter 78

(relating to examination and inspection) is amended by redesignating section 7609 as section 7611 and by inserting after section 7608 the following new sections: "SEC. 7609. SPECIAL PROCEDURES FOR THIRD-PARTY SUMMONSES. "(a)

NOTICE.— " (1) IN GENERAL.—If—

" (A) any summons described in subsection (c) is served on any person who is a t h i r d - party recordkeeper, and " (B) the summons requires the production of any portion of records made or kept of the business transactions or affairs of any person (other than the person summoned) who is identified in the description of the records contained in the summons, then notice of the summons shall be given to any person so identified within 3 days of the day on which such service is made, but no later than the 14th day before the day fixed in the summons as the day upon which such records are to be examined. Such notice shall be accompanied by a copy of the summons which has been served and shall contain directions for staying compliance with the summons under subsection (b)(2).

26 USC 7609.

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 9 0 STAT. 1700

26 USC 7603.

PUBLIC LAW 94-455—OCT. 4, 1976 " (2) SurnciENCY OF NOTICE.—Such notice shall be sufficient if, on o r before such t h i r d day, such notice is served in the m a n n e r provided in section 7603 (relating to service of summons) upon the person entitled to notice, or is mailed by certified or registered mail to the last known address of such person, or, in the absence of a last known address, is left with the person summoned. I f such notice is mailed, it shall be sufficient if mailed to the last known address of the person entitled to notice or, in the case of notice to the Secretary under section 6903 of the existence of a fiduciary relationship, to the last known address of the fiduciary of such person, even if such person o r fiduciary is then deceased, under a legal disability, or no longer i n existence. " (3) THIRD-PAKTY RECORDKEEPER DEFINED.—For purposes of this

' '• •"

'

t%/

subsection, the term ' t h i r d - party recordkeeper' means— " (A) any m u t u a l savings bank, cooperative bank, domestic building and loan association, or other savings institution chartered and supervised as a savings and loan or similar •^'- •• association under Federal or State law, any bank (as defined in section 581), or any credit union (within the meaning of section 501(c) (14)(A)); " (B) any consumer reporting agency (as defined under sec•': tion 603(d) of the F a i r Credit Report i n g Act (15 U.S.C. 1681a(f))); " (C) any person extending credit through the use of credit . cards or similar devices; V " (D) any broker (as defined in section 3(a)(4) of the . Securities E x c h a n g e Act of 1934 (15 U.S.C. 78c(a)(4))); " (E) any a t to r n e y; and " (F) any accountant. " (4) EXCEPTIONS. — Paragraph (1) shall not apply to any summons— " (A) served on the person with respect to whose liability the summons is issued, or any officer or employee of such person, " (B) to determine whether or not records of the business transactions or affairs of an identified person have been made or kept, or " (C) described in subsection (f). " (5) NATURE OF SUMMONS.—Any summons to which this sub;i section applies ( and any summons in aid of collection described in subsection (c)(2)(B)) shall identify the tax p a y e r to whom the summons relates o r the other person to whom the records p e r t a i n and shall provide such other information as will enable the person summoned to locate the records required under the summons. "(b)

R I G H T TO I N T E R V E N E; R I G H T To STAY C O M P L I A N C E. —

" (1) INTERVENTION.—Notwithstanding any other law or rule of law, any person who is entitled to notice of a summons under subsection (a) shall have the r i g h t to intervene in any proceeding with respect to the enforcement of such summons under section 7604. " (2) R I G H T TO STAY COMPLIANCE.—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 stay compliance w i t h the summons if, not later than the 14th d a y after the day such notice is given in the m a n n e r provided i n subsection (a) (2)-

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90 STAT. 1701

" (A) notice in writing is given to the person summoned not to comply with the summons, and " (B) a copy of such notice not to comply with the summons is mailed by registered o r certified mail to such person and to such office as the Secretary may direct i n the notice referred to in subsection (a)(1). " (c) S U M M O N S TO W H I C H SECTION A P P L I E S. —

" (1) IN GENERAL.—Except as provided i n paragraph (2), a summons is described in this subsection if it is issued under paragraph (2) of section 7602 or under section 6420(e)(2), 6421(f) 26 USC 7602, (2), 6424(d)(2), or 6427(e)(2) and requires the production of 6420, 6421, records. ^ 2 ^ ' ^•^^• " (2) EXCEPTIONS.—A summons shall not be treated as described in this subsection if— " (A) it is solely to determine the identity of any person h a v i n g a numbered account (or similar arrangement) with a bank or other institution described in subsection (a)(3)(A), or " (B) it is i n aid of the collection of— " (i) the liability of any person against whom an assessment has been made or judgment rendered, or " (ii) the liability a t law or i n equity of any transferee or fiduciary of any person referred to in clause (i). " (3) RECORDS; CERTAIN RELATED TESTIMONY.—For purposes of

this section— " (A) the term 'records' includes books, papers, or other "Records." data, and " (B) a summons requiring the giving of testimony relating to records shall be treated as a summons requiring the production of such records. "(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 expiration of the 14-day period allowed for the notice not to comply under subsection (b)(2), or " (2) when the requirements of subsection (b)(2) have been met, except in accordance with an order issued by a court of competent jurisdiction authorizing examination of such records or with the consent of the person staying compliance. " (e) SUSPENSION o r STATUTE o r L I M I T A T I O N S. — I f any person t a k e s

any action as provided in subsection (b) and such person is the person with respect to whose liability the summons is issued (or is the agent, nominee, or other person acting under the direction or control of such p e r s o n), then the running 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 a proceeding, and appeals therein, with respect to the enforcement of such summons is pending. "(f)

ADDITIONAL REQUIREMENT I N THE CASE OF A JOHN D O E

SUMMONS.—Any summons described i n subsection (c) which does not identify the person with respect to whose liability the summons is issued may be served only after a court proceeding i n which the Secretary establishes that— " (1) the summons relates to the investigation of a particular person or ascertainable group or class of persons.

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 90 STAT. 1702

PUBLIC LAW 94-455—OCT. 4, 1976 " (2) there is a reasonable basis for believing that such person or group or class of persons may fail or may have failed to comply with any provision of any internal revenue law, and " (3) the information sought to be obtained from the examination of the records (and the identity of the person or persons with respect to whose liability the summons is issued) is not readily available from other sources. " (g)

SPECIAL EXCEPTION FOR CERTAIN S U M M O N S E S. — I n the case of

any summons described i n subsection (c), the provisions of subsections (a)(1) and (b) shall not apply if, upon petition by the Secretary, the court determines, on the basis of the facts and circumstances alleged, that there is reasonable cause to believe the giving of notice may lead to attempts to conceal, destroy, or alter records relevant to the examination, to prevent the communication of information from other persons through intimidation, bribery, or collusion, o r to flee to avoid* prosecution, testifying, or production of records.

 * v,

"(h)

,5,.,

26 USC 7610. Regulations.

JURISDICTION o r DISTRICT C O U R T. —

" (1) The United States district court for the district within which the person to be summoned resides or is found shall have
 * .:, jurisdiction to hear and determine proceedings b r o u g h t under

subsections (f) or (g). The determinations required to be made under subsections (f) and (g) shall be made ex parte and shall be made solely upon the petition and supporting affidavits. A n order denying the petition shall be deemed a final order which may be appealed. " (2) Except as to cases the court considers of greater importance, a proceeding brought for the enforcement of any summons, or a proceeding under this section, and appeals, take precedence on the docket over all cases and shall be assigned for hearing and decided a t the earliest practicable date. "SEC. 7610. FEES AND COSTS FOR WITNESSES. «^a) j j ^ GENERAL.—The Secretary shall by regulations establish the rates and conditions under which payment may be made of— " (1) fees and mileage to persons who are summoned to appear before the Secretary, and " (2) reimbursement for such costs that a r e reasonably necessary which have been directly incurred in searching for, reproducing, or t r a n s p o r t i n g books, papers, records, or other data required to be produced by summons. " (b) EXCEPTIONS.—No payment may be made under paragraph (2) of subsection (a) if— " (1) the person with respect to whose liability the summons is issued has a proprietary interest in the books, papers, records or other data required to be produced, o r " (2) the person summoned is the person with respect to whose liability the summons is issued or a n officer, employee, agent, accountant, or attorney of such person who, a t the time the summons is served, is acting as such. " (c) S U M M O N S TO W H I C H SECTION A P P L I E S. — T h i s section applies

with respect to any summons authorized under section 6 4 2 0 (e)(2), 6421(f)(2), 6424(d)(2), 6427(e)(2), o r 7602." (b) CLERICAL AMENDMENT.—The table of sections for such subchapter A is amended by striking out the item relating to section 7609 and inserting i n lieu thereof the following:

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 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1703

"Sec. 7609. Special procedures for third-party summonses. "Sec. 7610. Fees and costs for witnesses. "Sec. 7611. Cross references."

(c) EFFECTIVE D A T E. — The amendments made by this section shall 26 USC 7609 a p p l y with respect to any summons issued after December 31, 1976. note. SEC. 1206. ASSESSMENTS IN CASE OF MATHEMATICAL OR CLERICAL ERRORS. (a) IN GENERAL.—Section 6213(b) (relating to exceptions to 26 USC 6213. restrictions on assessment i n certain cases) is amended— (1) by redesignating paragraph s (2) and (3) as paragraph s (3) and (4), respectively, and (2) by striking out paragraph (1) and inserting in lieu thereof the following new paragraph s: " (1) ASSESSMENTS ARISING OUT o r MATHEMATICAL OR CLERICAL

ERRORS.—If the taxpayer is notified that, on account of a mathematical or clerical error appearing on the return, an amount of tax in excess of that shown on the r e t u r n is due, and that an assessment of the tax has been or will be made on the basis of what would have been the correct amount of tax but for the mathematical or clerical error, such notice shall not be considered as a notice of deficiency for the purposes of subsection (a) (prohibiting assessment and collection until notice of the deficiency has been m a i l e d), or of section 6212(c)(1) (restricting further deficiency letters), or of section 6512(a) (prohibiting credits or refunds after petition to the T a x C o u r t), and the taxpayer shall have no right to file a petition with the T a x Court based on such notice, nor shall such assessment o r collection be prohibited by the provisions of subsection (a) of this section. E a c h notice under this paragraph shall set forth the error alleged and an explanation thereof. " (2) ABATEMENT OF ASSESSMENT OF MATHEMATICAL OR CLERICAL ERRORS. " (A) REQUEST FOR ABATEMENT.—Notwithstanding section

6404(b), a taxpa;^er may file with the Secretary within 60 days after notice is sent under paragraph (1) a request for an abatement of any assessment specified in such notice, and upon receipt of such request, the Secretary shall abate the assessment. Any reassessment of the tax with respect to which an abatement is made under this subparagraph shall be subject to the deficiency procedures prescribed by this subchapter. " (B) S T A Y OF COLLECTION.—In the case of any assessment

referred to in paragraph (1), notwithstanding paragraph (1), no levy or proceeding in court for the collection of such assessment shall be made, begun, or prosecuted during the period in which such assessment may be abated under this paragraph." (b) DEFINITIONS RELATING TO MATHEMATICAL OR CLERICAL ERRORS.—

Section 6213 is amended by redesignating subsection (f) as subsection 26 USC 6213. (g), and by inserting immediately after subsection (e) the following new subsection: " (f) DEFINITIONS. — For purposes of this section— " (1) R E T U R N. — The term 'return' includes any return, statement, schedule, or list, and any amendment or supplement thereto, filed with respect to any tax imposed by subtitle A or B, or chap- ^6 USC 1, 2001. t e r 42 o r 43. 26 USC 4940, " (2) MATHEMATICAL OR CLERICAL ERROR.—The term ' m a the m a t i -

cal o r clerical error' means—

4971.

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 90 STAT. 1704

^''-'

26 USC 1, 2001, 4940, 4971.

PUBLIC LAW 94-455—OCT. 4, 1976 " (A) an error in addition, subtraction, multiplication, or division shown on any return, " (B) a n incorrect use of any table provided by the I n t e r n a l Revenue Service with respect to any return if such incorrect use is a p p a r e n t from the existence of other information on the return, " (C) an entry on a return of an item which is inconsistent with another entry of the same or another item on such return, " (D) an omission of information which is required to be supplied on the return to substantiate an entry on the return, and " (E) an entry on a r e t u r n of a deduction or credit i n a n amount which exceeds a statutory limit imposed by subtitle A or B, or chapter 42 or 43, if such limit is expressed— " (i) as a specified monetary amount, or " ( i i) as a percentage, ratio, or fraction, and if the items entering into the application of such limit appear on such return." (c) T E C H N I C A L AND CONFORMING AMENDMENTS. —

26 USC 6213.

26 USC 6201.

26 USC 6212.

26 USC 6213 note.

> U

(1) Section 6213(b)(3) (relating to assessments arising out of tentative carryback adjustments), as redesignated by subsection (a), is amended— (A) by striking out "he may assess" and inserting in lieu thereof " h e may assess without regard to the provisions of paragraph (2)", and (B) by striking out "mathematical e r r o r " and inserting in lieu thereof "mathematical or clerical error". (2) Section 6 2 0 1 (a)(3) (relating to assessments r e g a r d i n g erroneous income tax prepayment credits) and section 6201(a) (4) (relating to assessments regarding erroneous credit under section 39 or 43) a r e each amended— (A) by striking out "mathematical e r r o r " and inserting in lieu thereof "mathematical or clerical error", and (B) by inserting immediately before the period a t the end thereof the following: ", except that the provisions of section 6213(b)(2) (relating to abatement of mathematical or clerical error assessments) shall not apply with regard to any assessment under this paragraph ". (3) Section 6212(c)(1) (relating to deficiency letters) i s amended by striking out " ( r e l a t i n g to mathematical e r r o r s) " and inserting i n lieu thereof " ( r e l a t i n g to mathematical or clerical errors)". (d) EFFECTIVE D A T E. — The amendments made by this section shall a p p l y with respect to returns (within the meaning of section 6213 (f)(1) of the I n t e r n a l Revenue Code of 1954) filed after December 31, 1976. SEC. 1207. WITHHOLDING. (a) W I T H H O L D I N G STATE AND DISTRICT I N C O M E T A X E S F R O M C O M PENSATION OF MEMBERS OF A R M E D FORCES W H O A R E RESIDENTS OF THE STATE OR DISTRICT OF COLUMBIA.— (1) W I T H H O L D I N G OF STATE INCOME TAXES.—The last sentence

of section 5517(a) of title 5, United States Code, is amended to read as follows: " I n the case of p a y for service as a member of the armed forces, the preceding sentence shall be applied by substituting 'who are residents of the State with which the agree-

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 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1705

ment is made' for 'whose regular place of Federal employment is within the State with which the agreement is made'." (2)

W I T H H O L D I N G OF DISTRICT INCOME TAXES.—Subsection

(a)

of section 5516 of title 5, United States Code, is amended— (A) by striking out in the t h i r d sentence " p a y for service as a member of the armed forces, or to "; and (B) by a d d i n g after the t h i r d sentence the following new sentence: " I n the case of p a y for service as a member of the armed forces, the second sentence of this subsection shall be applied by substituting 'who are residents of the District of Columbia for 'whose regular place of employment is within the District of Columbia'." (b) W I T H H O L D I N G STATE AND C I T Y I N C O M E T A X E S F R O M THE C O M PENSATION or MEMBERS OF THE NATIONAL GUARD OR THE READY R E -

SERVE.—Section 5517 of title 5, United States Code, is amended by a d d i n g at the end thereof the following new subsection: " (d) For the purpose of this section and sections 5516 and 5520, the terms 'serve as a member of the armed forces' and 'service as a member of the A r m e d Forces' do not include— " (1) participation in exercises or the performance of d u t y under section 502 of title 32, United States Code, by a member of the National G u a r d; and " (2) participation in scheduled drills or t r a i n i n g periods, or service on active duty for t r a i n i n g, under section 270(a) of title 10, United States Code, by a member of the Ready Reserve."

Definitions, 5 USC 5516, 5520.

(c) VOLUNTARY W I T H H O L D I N G OF STATE I N C O M E TAXES F R O M THE COMPENSATION OF FEDERAL E M P L O Y E E S. — Paragraph s (1) and (2) of

section 5517(a) of title 5, United States Code, are amended to read as follows: " (1) provides for the collection of a tax either by imposing on employers generally the duty of withholding sums from the p a y of employees and making returns of the sums to the State, or by r a n t i n g to employers generally the authority to withhold sums rom the p a y of employees if any employee voluntarily elects to have such sums withheld; and " (2) imposes the d u t y or g r a n t s the authority to withhold generally with respect to the p a y of employees who are residents of the State; ".

f

(d) W I T H H O L D I N G T A X ON CERTAIN GAMBLING W I N N I N G S. — S e c t i o n

3402 (relating to income tax collected a t source) is amended by a d d i n g a t the end thereof the following new subsection: " (q) EXTENSION or NINGS.—

W I T H H O L D I N G TO CERTAIN GAMBLING

WIN-

" (1) GENERAL RULE.—Every person, including the Government of the United States, a State, or a political subdivision thereof, or any instrumentalities of the foregoing, making any payment of winnings which are subject to withholding shall deduct and withhold from such payment a tax in an amount equal to 20 percent of such payment. "(2)

E X E M P T I O N WHERE TAX OTHERWISE W I T H H E L D. — I n

the

case of any payment of winnings which are subject to withholding made to a nonresident alien individual or a foreign corporation, the tax imposed under paragraph (1) shall not apply to any such payment subject to tax under section 1441(a) (relating to withholding on nonresident aliens) or tax under section 1442(a) (relating to withholding on foreign corporations).

26 USC 3402.

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90 STAT. 1706 Definition.

"(3)

W I N N I N G S W H I C H ARE SUBJECT TO W I T H H O L D I N G. — For

purposes of this subsection, the term 'winnings which are subject to withholding' means proceeds from a wager determined in accordance with the following: " (A) IN GENERAL.—Except as provided i n subparagraph s (B) and (C), proceeds of more than $1,000 from a wagering transaction, if the amount of such proceeds is a t least 300 times as large as the amount wagered. " (B) STATE-CONDUCTED LOTTERIES.—Proceeds of more than

$5,000 from a wager placed in a lottery conducted by a n agency of a State acting under authority of State law, b u t only if such wager is placed with the State agency conducting such lottery, or with its authorized employees or agents. "(C)

SWEEPSTAKES, WAGERING POOLS, AND OTHER LOTTER-

IES.—Proceeds of more than $1,000 from a wager placed in a sweepstakes, wagering pool, or lottery (other than a wager described in subparagraph (B)). "(4)

RULES FOR DETERMINING PROCEEDS FROM A WAGER.—For

purposes of this subsection— " (A) proceeds from a wager shall be determined by reducing the amount received by the amount of the wager, and " (B) proceeds which are not money shall be taken into account a t their fair market value. "(5)

E X E M P T I O N FOR BINGO, KENO, AND SLOT M A C H I N E S. — The

tax imposed under paragraph (1) shall not apply to winnings from a slot machine, keno, and bingo. " (6) STATEMENT BY RECIPIENT.—Every person who is to receive

a payment of winnings which are subject to withholding shall furnish the person making such payment a statement, made under the penalties of perjury, containing the name, address, and taxpayer identification number of the person receiving the payment and of each person entitled to any portion of such payment. "(7)

26 USC 3403, 3404. 26 USC 6001, 7205.

COORDINATION W I T H OTHER SECTIONS.—For purposes of

sections 3403 and 3404 and for purposes of so much of subtitle F (except section 7205) as relates to this chapter, payments to any person of winnings which a r e subject to withholding shall be treated as if they were wages paid by an employer to a n employee." (e) W I T H H O L D I N G OF FEDERAL TAXES ON CERTAIN ENGAGED I N F I S H I N G. — (1) IN GENERAL.—

26 USC 3121.

INDIVIDUALS

(A) Section 3121(b) (defining employment) is amended by striking out " o r " at the end of paragraph (18), by striking out the period a t the end of paragraph (19) and inserting in lieu thereof "; or", and by adding after paragraph (19) the following new paragraph: "(20) service performed by an individual on a boat engaged in catching fish o r other forms of aquatic animal life under an arrangement with the owner or operator of such boat pursuant to which— " (A) such individual does not receive any cash remuneration (other than as provided in subparagraph (B)), " (B) such individual receives a share of the boat's ( o r the boats' in the case of a fishing operation involving more than one boat) catch of fish or other forms of aquatic animal

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 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1707

life or a share of the proceeds from the sale of such catch, and "(C) the amount of such individual's share depends on the amount of the boat's (or the boats' in the case of a fishing operation involving more than one boat) catch of fish or other forms of aquatic animal life, but only if the operating crew of such boat (or each boat from which the individual receives a share in the case of a fishing operation involving more than one boat) is normally made up of fewer than 10 individuals." (B) Section 1402(c)(2) (defining trade or business) is 26 USC 1402. amended by striking out "and" at the end of subparagraph (D), by striking out the semicolon at the end of subparagraph (E) and inserting in lieu thereof ", and", and by adding after subparagraph (E) the following new subparagraph: " (F) service described in section 3121(b) (20);". Ante, p. 1706. (C) Section 3401(a) (defining wages for purposes of 26 USC 3401. withholding) is amended by striking out the period at the end of paragraph (16) and inserting in lieu thereof "; or", and by adding after paragraph (16) the following new paragraph: " (17) for service described in section 3121(b) (20)." (2) CONFORMING AMENDMENTS.—

(A) Section 210(a) of the Social Security Act is amended 42 USC 410. by striking out "or" at the end of paragraph (18), by striking out the period at the end of paragraph (19) and inserting in lieu thereof "; or," and by adding after paragraph (19) the following new paragraph: "(20) Service performed by an individual on a boat engaged in catching fish or other forms of aquatic animal life under an arrangement with the owner or operator of such boat pursuant to which— "(A) such individual does not receive any cash remuneration (other than as provided in subparagraph (B)), "(B) such individual receives a share of the boat's (or the boats' in the case of a fishing operation involving more than one boat) catch of fish or other forms of aquatic animal life or a share of the proceeds from the sale of such catch, and "(C) the amount of such individual's share depends on the amount of the boat's (or boats' in the case of a fishing operation involving more than one boat) catch of fish or other forms of aquatic animal life, but only if the operating crew of such boat (or each boat from which the individual receives a share in the case of a fishing operation involving more than one boat) is normally made up of fewer than 10 individuals." (B) Section 211(c)(2) of such Act is amended by striking 42 USC 411. out "and" at the end of subparagraph (D), by striking out the semicolon at the end of subparagraph (E), and inserting in lieu thereof ", and" and by adding after subparagraph (E) the following new paragraph: " (F) service described in section 210(a) (20);". (3) R E P O R T I N G REQUIREMENT.—

(A) Subpart B of part III of subchapter A of chapter 61 (relating to information concerning transactions with other

,,

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 90 STAT. 1708

26 USC 6050A.

Ante, p. 1706. r,.,f i,

26 USC 6652. Supra.

PUBLIC LAW 94-455—OCT. 4, 1976 persons) is amended by adding a t the end thereof the following new section: "SEC. 6050A. REPORTING REQUIREMENTS OF CERTAIN FISHING BOAT OPERATORS. " (a) REPORTS.—The operator of a boat on which one o r more individuals, during a calendar year, perform services described in section f^l21(b) (20) shall submit to the Secretary ( a t such time, and in such manner and form, as the Secretary shall by regulations prescribe) information respecting— " (1) the identity of each individual performing such services; " (2) the percentage of each such individual's share of the catches of fish or other forms of aquatic animal life, and the percentage of the operator's share of such catches; " (3) if such individual receives his share in kind, the type and weight of such share, together with such other information as the Secretary may prescribe by regulations reasonably necessary to determine the value of such share; and " (4) if such individual receives a share of the proceeds of such catches, the amount so received. " (b) W R I T T E N STATEMENT.—Every pereon making a return under subsection (a) shall furnish to each person whose name is set forth in such return a written statement showing the information relating to such person contained in such return. 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 return under subsection (a) was made." (B) Section 6652(b) (relating to failure to file certain information returns) is amended by inserting after "withh e l d), " the following: " i n the case of each failure to make a return required by section 6050A(a) (relating to reporting requirements of certain fishing boat operators),". (C) Section 6652(b) is further amended by inserting after " t i p s), " the following: " o r section 6050A(b) (relating to statements furnished by certain fishing boat operators),", (f) EFFECTIVE D A T E S. —

5 USC 5516 note. 5 USC 5517

note, 26 USC 3402 note. 26 USC 3121

note.

(1) SUBSECTION (a).—The amendments made by subsection (a) shall apply to wages withheld after the 120-day period following any request for a n agreement after the date of the enactment of this Act. (2) SUBSECTIONS (b) AND (C).—The

amendments m a d e by sub-

sections (b) and (c) shall apply to wages withheld after the 120day period following the date of the enactment of this Act. (3) SUBSECTION (d).—The amendments made by subsection (d) shall apply to payments of winnings made after the 90th day after the date of the enactment of this Act. (4) SUBSECTION (e). —

(A) The amendments made by paragraph s (1)(A) and (2)(A) of subsection (e) shall apply to services performed after December 31, 1971. The amendments made by paragraph s (1)(B), (1)(C), and (2 U B) of such subsection shall apply to taxable years ending after December 31, 1971. The amendments made by paragraph (3) of such subsection shall apply to calendar years beginning after the date of the enactment of this Act. (B) Notwithstanding subparagraph (A), if the owner or operator of any boat treated a share of the boat's catch of fish

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 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1709

or other aquatic animal life (or a share of the proceeds therefrom) received by an individual after December 31, 1971, and before the date of the enactment of this Act for services performed by such individual after December 31, 1971, on such boat as being subject to the tax under chapter 21 of the I n t e r n a l Revenue Code of 1954, then the amendments made 26 USC 3101. by paragraph s (1)(A) and (B) and (2) of subsection (e) shall not apply with respect to such services performed by such individual ( and the share of the catch, o r proceeds therefrom, received by him for such services). SEC. 1208. STATE-CONDUCTED LOTTERIES. (a)

E X E M P T I O N F R O M WAGERING T A X. — Paragraph (3)

of section

4402 (relating to State-conducted sweepstakes) is amended to read as 26 USC 4402. follows: " (3) STAI^-CONDUCTED LOTTERIES, ETC.—On any wager placed

in a sweepstakes, wagering pool, or lottery which is conducted by an agency of a State acting under authority of State law, b u t only if such wager is placed with the State agency conducting such sweepstakes, wagering pool, or lottery, or with its authorized employees or agents." (b)

EXEMPTION

FROM

OCCUPATIONAL T A X ON COIN-OPERATED

DEVICES.—Section 4462(b) (relating to exclusions from definition of 26 USC 4462. coin-operated g a m i n g devices) is amended— (1) by striking out " o r " a t the end of paragraph (1), (2) by striking out the period at the end of paragraph (2) and inserting in lieu thereof "; or", and (3) by a d d i n g a t the end thereof the following new paragraph: " (3) a vending machine which— " (A) dispenses tickets on a sweepstakes, wagering pool, or lottery which is conducted by an agency of a State acting under authority of State law, and " (B) is maintained by the State agency conducting such sweepstakes, wagering pool, or lottery, or by its authorized employees or agents." (c) EFFECTIVE D A T E S. —

(1) The amendment made by subsection (a) shall apply with respect to wagers placed after March 10, 1964. (2) The amendments made by subsection (b) shall a p p l y w i t h respect to periods after March 10, 1964. SEC. 1209. MINIMUM EXEMPTION FROM LEVY FOR WAGES, SALARY, AND OTHER INCOME. (a) GENERAL RULE.—Subsection (a) of section 6334 (relating to property exempt from levy) is amended by a d d i n g at the end thereof the following new paragraph: "(9)

MINIMUM

EXEMPTION

FOR WAGES, SALARY, AND OTHER

INCOME —Any amount payable to or received by an individual as wages or salary for personal services, o r as income derived from other sources, during any period, to the extent that the total of such amounts payable to or received by h i m during such period does not exceed the applicable exempt amount determined under subsection (d). " (b) DETERMINATION o r E X E M P T AMOUNT.—Section 6334 is amended

by a d d i n g at the end thereof the following new subsection: "(d)

E X E M P T A M O U N T OF W A G E S, SALARY, OR OTHER I N C O M E. —

" (1) INDIVIDUALS ON WEEKLY BASIS.—In the case of a n individ-

ual who is paid o r receives all of his wages, salary, and other in-

89-194 O—78—pt. 2

16

26 USC 4402 note. 26 USC 4462 note-

26 USC 6334.

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 90 STAT. 1710

•'

Regulations.

PUBLIC LAW 94-455—OCT. 4, 1976 come on a weekly basis, the amount of the wages, salary, and other income payable to or received by h i m during any week which is exempt from levy under subsection (a)(9) shall be— " (A) $50, plus " (B) $15 for each individual who is specified in a written statement which is submitted to the person on whom notice of levy is served and which is verified in such manner as the Secretary shall prescribe by regulations and— " (i) over half of whose support for the payroll period was received from the taxpayer, " (ii) who is the spouse of the taxpayer, or who bears a relationship to the tax p a y e r specified in paragraph s (1) through (9) of section 152(a) (relating to definition of dependents), and " ( i i i) who is not a minor child of the taxpayer with respect to whom amounts are exempt from levy under subsection (a)(8) for the payroll period. For purposes of subparagraph (B) (ii) of the preceding sentence, 'payroll period' shall be substituted for 'taxable year' each place it appears in paragraph (9) of section 152(a). " (2) iNDrVIDUALS ON BASIS OTHER THAN WEEKLY.—In the Case of

any individual not described in paratrraph (1), the ainoinit o^" ' h e wages, salary, and other income payable to or received by him during any applicable p a y period or other fiscal period (as determined under regulations prescribed by the Secretary) which is exempt from levy under subsection (a)(9) shall be an amount (determined under such regulations) which as nearly as possible will result in the same total exemption from levy for such individual over a period of time as he would have under paragraph (1) if ( during such period of time) he were paid or received such wages, salary, and other income on a regular weekly basis." (c) CONFORMING AMENDMENT. — The paragraph heading for p a r a -

g r a p h (8) of section 6334(a) is amended to read as follows: " (8) J U D G M E N T S FOR SUPPORT OF MINOR CHILDREN.—". (d) LEVY ON WAGES, E T C., To B E C O N T I N U I N G. —

26 USC 6331.

(1) Subsection (d) of section 6331 (relating to levy on salaries and wages) is amended by a d d i n g a t the end thereof the following new paragraph: "(3)

 * t(,v5 '•:

C O N T I N U I N G LEVY ON SALARY AND WAGES.— " (A) E F F E C T OF LEVY.—The effect of a levy on salary or

wages payable to or received by a taxpayer shall be continuous from the date such levy is first made until the liability out of which such levy arose is satisfied or becomes unenforceable by reason of lapse of time. "(B)

26 USC 6332.

REI^EASE AND NOTICE o r REUIASE.—With respect to a

levy described in subparagraph (A), the Secretary shall promptly release the lev^y when the liability out of which such levy arose is satisfied or becomes unenforceable by reason of lapse of time, and shall promptly notify the person upon whom such levy was made that such levy has been released." (2) The second sentence of section 6331(b) (relating to seizure and sale of property) is amended by striking out " A levy" and inserting in lieu thereof "Except as otherwise provided in subsection (d)(3), a levy". (3) The first sentence of section 6332(c)(1) (relating to enforcement of levy) is amended by striking out "from the date of such levy" and inserting in lieu thereof "from the date of such levy

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 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1711

(or, in the case of a levy described in section 6331(d)(3), from the date such person would otherwise have been obligated to pay over such amounts to the tax p a y e r) ". (4) Paragraph (1) of section 6331(d) (relating to levy on salaries and wages) is amended by striking out the last sentence, (e) EFFECTIVE D A T E. — The amendments made by this section shall apply only with respect to levies made after December 31, 1976. SEC. 1210. JOINT COMMITTEE REFUND CASES. (a) IN GENERAL.—Section 6405(a) (relating to reports of refunds and credits) is amended to read as follows:

Ante, p. 1710. 26 USC 6331. 26 USC 6334 note. 26 USC 6405.

" (a) BY TREASURY TO JOINT COMMITTEE.—No refund or credit of

any income, w a r profits, excess profits, estate, or gift tax, or any tax imposed with respect to private foundations and pension plans under chapters 42 and 43, in excess of $200,000 shall be made until after the 26 USC 4940, expiration of 30 days from the date upon which a report giving the 4971. name of the person to whom the refund or credit is to be made, the amount of such refund or credit, and a summary of the facts and the decision of the Secretary, is submitted to the Joint Committee on Taxation." (b) TENTATIVE REFUNDS.—Section 6405(c) is amended by striking out "$100,000" and inserting in lieu thereof "$200,000". (c) AUDIT.—Section 8023(a) (relating to powers to obtain 26 USC 8023. information from the I n t e r n a l Revenue Service) is amended by a d d i n g at the end thereof the following new sentence: " I n the investigation by the Joint Committee on Taxation of the administration of the internal revenue taxes by the I n t e r n a l Revenue Service, the Chief of Staflf of the Joint Committee on T a x a t i o n is authorized to secure directly from the I n t e r n a l Revenue Service such tax returns, or copies of tax returns, and other relevant information, as the Chief of Staff deems necessary for such investigation, and the I n t e r n a l Revenue Service is authorized and directed to furnish such tax returns and information to the Chief of Staff together with a brief report, with respect to each return, as to any action taken or proposed to be taken by the Service as a result of any audit of the return." (d) EFFECTIVE D A T E S. —

(1) The amendments made by subsections (a) and (b) shall take effect on the date of the enactment of this Act, except that such amendments shall not apply with respect to any refund or credit with respect to which a report has been made before the date of the enactment of this Act under subsection (a) or (c) of section 6405 of the I n t e r n a l Revenue Code of 1954, (2) The amendment made by subsection (c) shall take effect on January 1, 1977. SEC. 1211. SOCIAL SECURITY ACCOUNT NUMBERS. (a) Section 208(g) of the Social Security Act is amended, in the m a t t e r preceding clause (1) thereof, by striking out "entitled—" and inserting in lieu thereof "entitled, or for any other purpose—". (b) Section 205(c)(2) of such Act is amended by a d d i n g at the end thereof the following new subparagraph s: " (C)(i) I t is the policy of the United States that any State (or political subdivision thereof) may, in the administration of any tax, general public assistance, driver's license, or motor vehicle registration law within its jurisdiction, utilize the social security account numbers issued by the Secretary for the purpose of establishing the identification of individuals affected by such law, and may require any individ-

26 USC 6405 note.

26 USC 8023 note. 42 USC 408. 42 USC 405.

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 90 STAT. 1712

42 USC 601, 651. "State." 26 USC 6109. Regulations. 42 USC 405. 42 USC 408.

26 USC 6404.

PUBLIC LAW 94-455—OCT. 4, 1976 ual who is or appears to be so affected to furnish to such State (or political subdivision thereof) or any agency thereof h a v i n g administrative responsibility for the law involved, the social security account number (or numbers, if he has more than one such number) issued to him by the Secretary. " ( i i) I f and to the extent that any provision of Federal law heretofore enacted is inconsistent with the policy set forth in clause (i) of this subparagraph, such provision shall, on and after the date of the enactment of this subparagraph, be null, void, and of no effect. " ( i i i) For purposes of clause (i) of this subparagraph, an agency of a State ( o r political subdivision thereof) charged with the administration of any general public assistance, driver's license, o r motor vehicle registration law which did not use the social security account number for identification under a law or regulation adopted before January 1, 1975, may require an individual to disclose his or her social security number to such agency solely for the purpose of administering the laws referred to in clause (i) above and for the purpose of responding to requests for information from an agency operating pursuant to the provisions of part A or D of title IV of the Social Security Act. " ( i v) For purposes of this subparagraph, the term 'State' includes the District of Columbia, the Commonwealth of P u e r to Rico, the V i r g i n Islands, Guam, the Commonwealth of the Northern Marianas, and the T r u s t Territory of the Pacific Islands." (c) Section 6109 (relating to identifying numbers) is amended by adding at the end thereof the following new subsection: " (d) UsE OF SociAL SECURITY AccouNT NuMBER.—The social security account number issued to a n individual for purposes of section 205(c)(2)(A) of the Social Security Act shall, except as shall otherwise be specified under regulations of the Secretary, be used as the identifying number for such individual for purposes of this title." (d)(1) Section 208 of the Social Security Act is amended by inserting after subsection (g) the following new subsection: " (h) discloses, uses, or compels the disclosure of the social security number of any person in violation of the laws of the United States; " (2) section 208(g)(2) of such Act is amended by a d d i n g "or" a t the end thereof. SEC. 1212. ABATEMENT OF INTEREST WHEN RETURN IS PREPARED FOR TAXPAYER BY THE INTERNAL REVENUE SERVICE. (a) IN GENERAL.—Section 6404 (relating to abatements) is amended by adding at the end thereof the following new subsection: " (d) ASSESSMENTS ATTRIBUTABLE TO CERTAIN MATHEMATICAL ERRORS BY INTERNAL REVENUE SEI^VICE.—In the case of an assessment of any

>

26 USC 6404 "lote.

tax imposed by chapter 1 attributable in whole or in part to a mathematical error described in section 6213(f)(2)(A), if the return was prepared by an officer or employee of the I n t e r n a l Revenue Service acting in his official capacity to provide assistance to taxpayers in the preparation of income tax returns, the Secretary is authorized to abate the assessment of all or any part of any interest on such deficiency for any period ending on or before the 30th day following the date of notice and demand by the Secretary for payment of the deficiency." (b) EEFECTIVE D A T E. — The amendment made by subsection (a) shall apply with respect to returns filed for taxable years ending after the date of the enactment of this Act.

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 is in a good position to catch his adversary "on the hip," especially when the latter is "on the wing," as it were, and can thus often put a short-stop to a dangerous run. The effect of a body-check is not so "striking" when the object of it steadies himself in as low a position as possible, while the man who is using the play attains his end better by catching his opponent, as stated above, in the centre of his weight, or higher, when the latter is not steadily placed. This practice of body-checking is permissible, and, to a certain degree, scientific, but it is questionable whether it be not a less noble way of overcoming a dangerous opponent, than by expert stick handling, or by some gentler means. It cannot be said to be directly in accordance with the strictest, the highest sense of polished, fair, scientific play. It certainly is a feat, difficult of accomplishment, to stop a man who is rushing towards you with the speed of an express train, and upset him without the slightest injury to yourself, but is this the fairest way of defending your flags? It savors too much of roughness, and can be the cause of a serious accident, because a fall on the ice, at any time is usually painful and dangerous enough, without any additional impetus from without. If it is allowable, it is most unfair to "body" a man into the side of the rink.


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 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1713

TITLE XIII—TAX EXEMPT ORGANIZATIONS SEC. 1301. DISPOSITION OF PRIVATE FOUNDATION PROPERTY UNDER TRANSITION RULES OF TAX REFORM ACT OF 1969. (a) IN GENERAL.—Paragraph (2) of section 101(1) of the Tax Reform Act of 1969 (relating to private foundations savings provisions) is amended— (1) by striking out "and" at the end of subparagraph (D); (2) by striking out the period at the end of subparagraph (E) and inserting in lieu thereof "; and"; and (3) by adding at the end thereof the following new subparagraph: " (F) the sale, exchange, or other disposition (other than by lease) of property which is owned by a private foundation to a disqualified person if— "(i) such foundation is leasing substantially all of such property under a lease to which subparagraph (C) applies. " (ii) the disposition to such disqualified person occurs before January 1, 1978, and "(iii) such foundation receives in return for the disposition to such disqualified person an amount which equals or exceeds the fair market value of such property at the time of the disposition or at the time (after June 30, 1976) a contract for the disposition was previously executed in a transaction which would not constitute a prohibited transaction (within the meaning of section 503(b) or any corresponding provision of prior law).". (b) EFFECTIVE DATE.—The amendments made by subsection (a) shall apply to dispositions after the date of the enactment of this Act in taxable years ending after such date. SEC. 1302. NEW PRIVATE FOUNDATION SET-ASIDES. (a) IN GENERAL.—Section 4942(g)(2) (relating to definition of qualifying distributions) is amended to read as follows: "(2)

26 USC 4940 "°*®"

26 USC 4940 °°*^26 USC 4942.

CERTAIN SET-ASIDES.—

"(A) IN GENERAL.—For all taxable years beginning ou or Effective date, after January 1, 1975, subject to such terms and conditions as may be prescribed by the Secretary, an amount set aside for a specific project which comes within one or more purposes described in section 170(c)(2)(B) may be treated as a qualifying distribution if it meets the requirements of subparagraph (B). "(B) REQUIREMENTS.—An amount set aside for a specific project shall meet the requirements of this subparagraph if at the time of the set-aside the foundation establishes to the satisfaction of the Secretary that the amount will be paid for the specific project within 5 years, and either— "(i) at the time of the set-aside the private foundation establishes to the satisfaction of the Secretary that the project is one which can better be accomplished by such set-aside than by immediate payment of funds, or " ( i i)(I) the project will not be completed before the end of the taxable year of the foundation in which the set-aside is made,

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 90 STAT. 1714

PUBLIC LAW 94-455—OCT. 4, 1976 " ( II) the private foundation in each taxable year beginning after December 31, 1975 ( o r after the end of the fourth taxable year following the year of its creation, whichever is l a t e r), distributes amounts, in cash or its equivalent, equal to not less than the distributable amount determined under subsection (d) (without regard to subsection (i)) for purposes described in section 170(c)(2)(B) ( i n c l u d i n g b u t not limited to payments with respect to set-asides which were treated as qualifying distributions in one or more prior year s), and " ( III) the private foundation has distributed (including but not limited to payments with respect to set-asides which were treated as qualifying distributions in one or more prior years) during the four taxable years immediately preceding its first taxable year beginning after December 31, 1975, o r the fifth taxable year following the year of its creation, whichever is later, a n aggregate amount, in cash or its equivalent, of not less than the sum of the following: 80 percent of the first preceding taxable year's distributable a m o u n t; 60 percent of the second preceding taxable year's distributable a m o u n t; 40 percent of the t h i r d preceding taxable year's distributable a m o u n t; and 20 percent of the fourth preceding taxable year's distributable amount. "(C)

CERTAIN FAILURES TO DISTRIBUTE.—If, for any

taxable

year to which clause (ii) ( II) of subparagraph (B) applies, the private foundation fails to distribute in cash or its equivalent amounts not less than those required by such clause and— " (i) the failure to distribute such amounts was not willful and was due to reasonable cause, and " ( i i) the foundation distributes an amount in cash or its equivalent which is not less than the difference between the amounts required to be distributed under clause (ii) ( II) of subparagraph (B) and the amounts actually distributed in cash or its equivalent during that taxable year within the initial correction period provided i n subsection (j)(2), such distribution in cash or its equivalent shall be treated for the purposes of this subparagraph as made during such year. " (D) REDUCTION IN DISTRIBUTION AMOUNT.—If, during the

taxable years in the adjustment period for which the organization is a private foundation, the foundation distributes amounts i n cash or its equivalent which exceed the amount required to be distributed under clause (ii) ( II) of subparagraph (B) (including b u t not limited to payments with respect to set-asides which were treated as qualifying distributions in prior year s), then for purposes of this subsection the distribution required under clause (ii) ( II) of subparagraph (B) for the taxable year shall be reduced by an amount equal to such excess. " (E) ADJUSTMENT PERIOD.—For purposes of subparagraph

(D), with respect to any taxable year of a private foundation, the taxable years i n the adjustment period are the taxable years ( not exceeding 5) beginning after December 31, 1975, and immediately preceding the taxable year. I n the case of a set-aside which satisfies the requirements of clause (i) of subparagraph (B), for good cause shown, the period for p a y i n g the amount set aside may be extended by the Secretary." 26 USC 6501.

(b) STATUTE o r LIMITATIONS.—Subsection (n) of "section 6501 (re-

l a t i n g to limitations on assessments and collections) is amended by adding a t the end thereof the following new paragraph:

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 PUBLIC LAW 94^55—OCT. 4, 1976

90 STAT. 1715

" (3) CERTAIN SET-AsroEs DESCRIBED I N SECTION 4942(g)(2). — I n

the case of a deficiency attributable to the failure of an amount set aside by a private foundation for a specific project to be treated as a qualifying distribution under the provisions of section 4942(g)(2)(B)(i) ( II), such deficiency may be assessed at any time before the expiration of 2 years after the expiration of the period within which a deficiency may be assessed for the taxable year to which the amount set aside relates." (c) EFFECTIVE D A T E. — The amendments made by this section shall 26 USC 4942 ^PPly to taxable years beginning after December 31, 1974. note. SEC. 1303. MINIMUM DISTRIBUTION AMOUNT FOR PRIVATE FOUNDATIONS. (a) IN GENERAL.—Subsection (e) of section 4942 (relating to mini- 26 USC 4942. mum investment r e t u r n) is amended to read as follows: " (e) MINIMUM INVESTMENT R E T U R N. —

" (1) IN GENERAL.—For purposes of subsection (d), the minimum investment r e t u r n for any p r i v a t e foundation for any taxable year is 5 percent of the excess of— " (A) the aggregate fair market value of all assets of the foundation other than those which a r e used (or held for use) directly in carrying out the foundation's exempt purpose, over " (B) the acquisition indebtedness with respect to such assets (determined under section 614(c)(1) without regard to the taxable year in which the indebtedness was i n c u r r e d).

..,.-;;

"(2) VALUATION.—

" (A) IN GENERAL.—For purposes of paragraph (1)(A), the fair market value of securities for which market quotations are readily available shall be determined on a monthly basis. For all other assets, the fair market value shall be deter- Regulations, mined at such times and in such manner as the Secretary shall by regulations prescribe. "(B)

REDUCTIONS I N VALUE FOR BLOCKAGE OR SIMILAR FAC-

TORS.—In determining the value of any securities under this paragraph, the fair market value of such securities (determined without regard to any reduction in value) shall not be reduced unless, and only to the extent that, the private foundation establishes that as a result of— " (i) the size of the block of such securities, " ( i i) the fact that the securities held are securities in a closely held corporation, or " ( i i i) the fact that the sale of such securities would result in a forced or distress sale, the securities could not be liquidated within a reasonable period of time except at a price less than such fair market value. Any reduction in value allowable under this subparagraph shall not exceed 10 percent of such fair market value." (b) EFFECTIVE D A T E. — The amendment made by this section applies 26 USC 4942 to taxable years beginning after December 31, 1975. "o*^SEC. 1304. EXTENSION OF TIME TO AMEND CHARITABLE REMAINDER TRUST GOVERNING INSTRUMENT. (a) EXTENSION OF TIME.—Section 2055(e)(3) ( r e l a t i n g to the allow- 26 USC 2055. ance of deductions in certain cases) is amended— (1) by striking out "Sentember 21, 1974," and inserting in lieu thereof "December 31, 1977,", and (2) by striking: out "December 31, 1975" each place it appears and inserting in lieu thereof "December 31.1977".

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 90 STAT. 1716 26 USC 2055

'^°*®Post, p. 1846. 26 USC 2055.

26 USC 2055 "ot®-

26 USC 513.

PUBLIC LAW 94-455—OCT. 4, 1976 (b) E X T E N S I O N OF PERIOD FOR F I L I N G C L A I M FOR R E F U N D OF ESTATE

T A X P A I D. — A claim for refund or credit of a n overpayment of the tax imposed by section 2001 of the I n t e r n a l Revenue Code of 1954 allowable under section 2055(e)(3) of such Code (as amended.by subsection (a)) shall not be denied because of the expiration of the time for filing such a claim under section 6511(a) if such claim is filed not later than June 30, 1978. (c) ErrECTiVE D A T E. — The amendments made by this section shall apply in the case of decedents dying after December 31, 1969. SEC. 1305. UNRELATED TRADE OR BUSINESS INCOME OF TRADE SHOWS, STATE FAIRS, ETC. (a) IN GENERAL.—Section 513 (relating to unrelated trade or business) is amended by adding a t the end thereof the following new subsection: "(d)

Definitions.

CERTAIN ACTIVITIES OF TRADE S H O W S, STATE F A I R S, E T C. —

" (1) GENERAL RULE.—The term 'unrelated trade or business' does not include qualified public entertainment activities of an organization described in paragraph (2)(C), or qualified convention and trade show activities of a n organization described in paragraph (3)(C). " (2) QUALIFIED PUBLIC ENTERTAINMENT ACTIVITIES.—For p u r -

poses of this subsection— " (A) P U B L I C ENTERTAINMENT ACTIVITY.—The term 'public

entertainment activity' means any entertainment or recreational activity of a kind traditionally conducted a t fairs or expositions promoting agricultural and educational purposes, including, b u t not limited to, any activity one of the purposes of which is to attract the public to fairs or expositions or to promote the breeding of animals or the development of products or equipment. "(B)

QUALIFIED PUBLIC ENTERTAINMENT ACTIVITY.—The

term 'qualified public entertainment activity' means a public entertainment activity which is conducted by a qualifying organization described in subparagraph (C) in— " (i) conjunction with an international, national. State, regional, or local fair or exposition, " ( i i) accordance with the provisions of State law which permit the activity to be operated or conducted solely by such an organization, or by an agency, instrumentality, or political subdivision of such State, or " ( i i i) accordance with the provisions of State law which permit such an organization to be granted a license to conduct not more than 20 days of such activity on payment to the State of a lower percentage of the revenue from such licensed activity than the State requires from organizations not described in section 501(c)(3), (4), or (5). "(C)

Q U A L I F Y I N G ORGANIZATION.—For purposes of

this

paragraph, the term 'qualifying organization' means an organization which is described in section 501(c)(3), (4), or (5) which regularly conducts, as one of its substantial exempt purposes, a n agricultural and educational fair or exposition. " (3) QUALIFIED CONVENTION AND TRADE SHOW ACTIVITIES.— " (A) CONVENTION AND TRADE SHOW ACTIVITY.—The term

'convention and trade show activity' means any activity of a kind traditionally conducted at conventions, annual meetings, or trade shows, including, but not limited to, any activity one

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 PUBLIC LAW 94-455—OCT. 4, 1976 - •' •

90 STAT. 1717

of the purposes of which is to attract persons in an industry generally (without regard to membership in the sponsoring organization) as well as members of the public to the show for the purpose of displaying industry products or to stimulate interest in, and demand for, industry products o r services, or to educate persons engaged in the industry in the development of new products and services or new rules and regulations affecting the industry. "(B)

Q l T A L i r i E D CONVENTION AND TRADE SHOW ACTIVITY.—

The term 'qualified convention and trade show activity' means a convention and trade show activity carried out by a qualifying organization described in subparagraph (C) in conjunction with an international, national. State, regional, or local convention, annual meeting, or show conducted by an organization described in subparagraph (C) if one of the purposes of such organization in sponsoring the activity is the promotion and stimulation of interest in, and demand for, the products and services of that industry in general, and the show is designed to achieve such purpose through the character of the exhibits and the extent of the industry products displayed. "(C)

QUALIFYING ORGANIZATION.—For purposes of

this

paragraph, the term 'qualifying organization' means an organization described in section 5 0 1 (c)(5) or (6) which regularly conducts as one of its substantial exempt purposes a show which stimulates interest in, and demand for, the products of a particular industry or segment of such industry. " (4) S U C H ACTIVITIES NOT TO AFEECT EXEMPT STATUS.—An Organization described in section 501(c)(3), (4), or (5) shall not be considered as not entitled to the exemption allowed under section 501(a) solely because of qualified public entertainment activities conducted by it." (b) EFFECTIVE DATES.—The amendments made by subsection (a) 26 USC 513 ripply to qualified public entertainment activities in taxable years ""*^beginning after December 31, 1962, and to qualified convention and trade show activities in taxable years beginning after the date of enactment of this Act. SEC. 1306. DECLARATORY JUDGMENTS WITH RESPECT TO SECTION 501(c)(3) STATUS AND CLASSIFICATION. (a) GENERAL RULE.—Subchapter B of chapter 76 (relating to proceedings by taxpayers and t h i r d parties) is amended by redesignating section 7428 as 7430, and by inserting after section 7427 the following new section: "SEC. 7428. DECLARATORY JUDGMENTS RELATING TO STATUS AND 26 USC 7428. CLASSIFICATION OF ORGANIZATIONS UNDER SECTTION 501(c)(3), ETC. " (a) CREATION OF R E M E D Y. — I n a case of actual controversy involving— " (1) a determination by the Secretary— " (A) with respect to the initial qualification or continuing qualification of an organization as an organization described in section 501(c)(3) which is exempt from tax under section 501(a) or as an organization described in section 170(c)(2), " (B) with respect to the initial classification or continuing classification of an organization as a private foundation (as defined in section 509(a)), or

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 90 STAT. 1718

26 USC 4942.

PUBLIC LAW 94-455—OCT. 4, 1976 " (C) with respect to the initial classification or continuing classification of an organization as a private operating foundation (as defined in section 4942(j)(3)), or " (2) a failure by the Secretary to make a determination with respect to an issue referred to in paragraph (1), upon the filing of a n a p p r o p r i a t e pleading, the United States T a x Court, the United States Court of Claims, o r the district court of the United States for the District of Columbia may make a declaration with respect to such initial qualification or continuing qualification or with respect to such initial classification o r continuing classification. Any such declaration shall have the force and efi^ect of a decision of the T a x Court or a final judgment or decree of the district court or the Court of Claims, as the case may be, and shall be reviewable as such. " (b) LIMITATIONS.—

" (1) PETITIONER.—A pleading may be filed under this section only by the organization the qualification or classification of which is a t issue. " (2) E X H A U S T I O N OF ADMINISTRATIVE R E M E D I E S. — A declaratory

judgment or decree under this section shall not be issued in any proceeding unless the T a x Court, the Court of Claims, or the district court of the United States for the District of Columbia determines that the organization involved has exhausted administrative remedies available to it within the I n t e r n a l Revenue Service. A n organization requesting the determination of a n issue referred to in subsection (a)(1) shall be deemed to have exhausted its administrative remedies with respect to a failure by the Secretary to make a determination with respect to such issue a t the expiration of 270 days after the date on which the request for such determination was made if the organization has taken, i n a timely manner, all reasonable steps to secure such determination. " (3) T I M E FOR BRINGING ACTION.—If the Secretary sends by cer-

tified or registered mail notice of his determination with respect to a n issue referred to in subsection (a)(1) to the organization referred to i n paragraph (1), n o proceeding may be initiated under this section by such organization unless the pleading is filed before the 91st day after the date of such mailing. " (c) VALIDATION OF CERTAIN CONTRIBUTIONS MADE D U R I N G P E N D ENCY o r PROCEEDINGS.— " (1) IN GENERAL.—If—

"'-

" (A) the issue referred to i n subsection (a)(1) involves the revocation of a determination that the organization is described in section 170(c)(2), " (B) a proceeding under this section is initiated within the time provided by subsection (b)(3), and " (C) either— " (i) a decision of the T a x Court has become final (within the meaning of section 7481), or " ( i i) a judgment of the district court of the United States for the District of Columbia has been entered, or " ( i i i) a judgment of the Court of Claims has been entered,", and such decision or judgment, as the case may be, determines that the organization was not described i n section 170(c)(2),

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