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"(2) INCREASE IN PENALTY WHERE FAILURE CONTINUES AFTER

NOTIFICATION.—If any failure described in paragraph (1) continues for more than 90 days after the day on which the Secretary mails notice of such failure to the reporting corporation, such corporation shall pay a penalty (in addition to the a m o u n t required under paragraph (1)) of $1,000 for each 30-day period (or fraction thereof) during which such failure continues after the expiration of such 90-day period. The increase in any penalty under this paragraph shall not exceed $24,000. "(3) REASONABLE CAUSE.—For purposes of t h i s subsection, the

time prescribed by regulations to furnish information (and the beginning of the 90-day period after notice by the Secretary) shall be t r e a t e d as not earlier than the last day on which (as shown to the satisfaction of the Secretary) reasonable cause existed for failure to furnish the information. "(e) CROSS R E F E R E N C E. — "P^or provisions relating to criminal penalties for violation of this section, see section 7203." (b) CLERICAL AMENDMENT. — The t a b l e of sections for subpart A of

part III of subchapter A of chapter 61 is amended by inserting the following new item after the item relating to section 6038: "Sec. 6038A. Information with respect to certain foreign-owned tions."

corpora-

(c) EFFECTIVE D A T E. — The amendments m a d e by this section shall apply to taxable year s beginning after December 31, 1982.

26 USC 6038A "°*'^-

Sf:C. 340. RETURNS WITH RESPECT TO FOREIGN PERSONAL HOLDING COMPANIES.

(a) GENERAL RULE.—Section 6035 (relating to r e t u r n s of officers, directors, and s h a r e h o l d e r s of foreign personal holding companies) is amended to read as follows: "SEC. 6035. RETURNS OF OFFICERS, DIRECTORS, AND SHAREHOLDERS OF FOREIGN PERSONAL HOLDING COMPANIES.

"(a) GENERAL RULE. — E a c h United States citizen or resident who is an officer, director, or 10-percent shareholder of a corporation which was a foreign personal holding company (as defined in section 552) for any taxable year shall file a r e t u r n with respect to such taxable year setting forth— "(1) the shareholder information required by subsection (b), "(2) the income information required by subsection (c), and "(3) such other information with respect to such corporation as the Secretary shall by forms or regulations prescribe as necessary for c a r r y i n g out the purposes of this title. "(b) SHAREHOLDER INFORMATION. — The s h a r e h o l d e r

information

required by this subsection with respect to any taxable year shall be— "(1) the n a m e and address of each person who at any time during such taxable year held any s h a r e in the corporation, "(2) a description of each class of shares and the total n u m b e r of s h a r e s of such class o u t s t and i n g at the close of the taxable year, "(8) the n u m b e r of s h a r e s of each class held by each person, and "(4) any changes in the holdings of shares during the taxable year.

26 USC 6035.

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 96 STAT. 634

PUBLIC LAW 97-248—SEPT. 3, 1982 For purposes of paragraph s (1), (3), and (4), the term ' s h a r e ' includes any security convertible into a s h a r e in the corporation and any option g r a n t e d by the corporation with respect to any s h a r e in the corporation. "(c) INCOME INFORMATION. — The income information r e q u i r e d by

this subsection for any taxable year shall be the gross income, deductions, credits, taxable income, and undistributed foreign personal holding company income of the corporation for the taxable year. "(d) T I M E

AND M A N N E R

FOR F U R N I S H I N G

INFORMATION.—The

information required under subsection (a) shall be furnished a t such time and in such m a n n e r as the Secretary shall by forms and regulations prescribe. "(e) DEFINITION AND SPECIAL RULES. — "(1) 10-PERCENT SHAREHOLDER.—For purposes of t h i s section,

the term '10-percent shareholder' means any individual who owns directly or indirectly (within the m e a n i n g of section 554) 10 percent or more in value of the outstanding stock of a foreign corporation. "(2) T I M E FOR MAKING DETERMINATIONS.—

"(A) IN GENERAL.—Except as provided in subparagraph (B), the determination of w h e the r any person is a n officer, director, or 10-percent shareholder with respect to any foreign corporation shall be made as of the date on which the r e t u r n is required to be filed. "(B) SPECIAL RULE.—If after the application of s u b p a r a -

g r a p h (A) no person is required to file a r e t u r n under subsection (a) with respect to any foreign corporation for any taxable year, the determination of w h e the r any person is a n officer, director, or 10-percent shareholder with respect to such foreign corporation shall be made on the last day of such taxable year on which the r e was such a person who was a United States citizen or resident. "(3) 2 OR MORE P E R S O N S REQUIRED TO FURNISH INFORMATION WITH RESPECT TO SAME FOREIGN CORPORATION.—If, b u t for t h i s

paragraph, 2 or more persons would be required to furnish information under subsection (a) with respect to the same ibreign corporation for the same taxable year, the Secretary may by regulations provide that such information shall be required only from 1 person." (b) APPLICATION OF P E N A L T Y. —

26 USC 6679.

(1) Subsection (a) of section 6679 is amended by striking out "section 6046" and inserting in lieu thereof "section 6035 or 6046". (2) The section heading for section 6679 is amended to read as follows: "SEC. 6679. FAILURE TO FILE RETURNS OR SUPPLY INFORMATION UNDER SECTION 6035 OR 6046."

(3) The item relating to section 6679 in the table of sections for subchapter B of chapter 68 is amended to read as follows: "Sec. 6679. Failure to file returns or supply information under section (JO;}") or 6046."

26 USC 6035 ^°^^-

(c) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years of foreign corporations beginning after the date of the e n a c t m e n t of this Act.

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


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SEC. 341. AUTHORITY TO DELAY DATE FOR FILING CERTAIN RETURNS RELATING TO FOREIGN CORPORATIONS AND FOREIGN TRUSTS. (a) FOREIGN CORPORATIONS.—Subsection (d) of section 6046 (relat- 26 USC 6046. ing to t i m e for filing r e t u r n s as to organization or reorganization of foreign corporations and as to acquisitions of the i r stock) is amended by inserting before the period a t the end thereof the following: "(or on or before such l a t e r day as the Secretary may by forms or regulations prescribe)". (b) FOREIGN TRUSTS.—Subsection (a) of section 6048 (relating to 26 USC 6048. r e t u r n s a s to certain foreign t r u s t s) is amended by inserting "(or on or before such l a t e r day a s the Secretary may by regulations prescribe)" after " the 90th d a y ". (c) EFFECTIVE D A T E. — The amendments m a d e by this section shall 26 USC 6046 apply to r e t u r n s filed after the date of the e n a c t m e n t of this Act. "°^®SEC. 342. WITHHOLDING OF TAX ON NONRESIDENT ALIENS AND FOREIGN . CORPORATIONS.

26 USC 1441 '^o*^®

Not l a t e r than 2 year s after the date of the e n a c t m e n t of t h i s Act, the Secretary of the Treasury or his delegate shall prescribe regulations establishing certification procedures, refund procedures, or other procedures which e n s u r e that any benefit of any t r e a t y relating to w i t h h o l d i n g of tax under sections 1441 and 1442 of the I n t e r n a l Revenue Code of 1954 is available only to persons entitled to such benefit. SEC.

343. TECHNICAL AMENDMENT RELATING TO PENALTY UNDER SECTION 905(c).

(a) GENERAL RULE.—Subsection (c) of section 905 (relating to adjustments on payment of accrued taxes) is amended by striking out the last sentence. (b) EFFECTIVE D A T E. — The amendment m a d e by subsection (a) shall h a v e the s a m e effect as if the last s e n t e n c e of section 905(c) h a d never been enacted.

26 USC 905. 26 USC 905 note,

Subtitle G—Modification of Interest Provisions SEC. 344. INTEREST COMPOUNDED DAILY. (a) IN GENERAL. — Subchapter C of chapter 67 (relating to determination of r a t e of interest) is amended by adding a t the end thereof the following new section: "SEC. 6622. INTEREST COMPOUNDED DAILY.

26 USC 6622.

"(a) GENERAL RULE. — I n c o m p u t i n g the a m o u n t of any interest required to be paid under t h i s title or sections 1961(c)(1) or 2411 of title 28, United States Code, by the Secretary or by the tax p a y e r, or any other a m o u n t determined by reference to such a m o u n t of interest, such interest and such a m o u n t shall be compounded daily. "(b)

EXCEPTION FOR P E N A L T Y FOR F A I L U R E TO F I L E ESTIMATED

TAX.—Subsection (a) shall not apply for purposes of computing the a m o u n t of any addition to tax under section 6654 or 6655." (b) CONFORMING AMENDMENTS. —

(1) Section 6601(e) (relating to applicable rules) is amended by striking out paragraph (2) and redesignating paragraph s (3) and (4) as paragraph s (2) and (3), respectively.

26 USC 6601.

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text: The Liberty to Trade as Buttressed by National Law/Competition


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 96 STAT. 636

PUBLIC LAW 97-248—SEPT. 3, 1982 (2) The table of sections for subchapter C of chapter 67 is amended by inserting after section G621 the following new item: "Sec. 6622. Interest compounded daily."

26 USC 6622 ^°^^-

(3)(A) The heading for subchapter C of chapter 67 is amended by inserting "; Compounding of I n t e r e s t " after " R a t e ". (B) The item relating to subchapter C in the table of subchapter s for chapter 67 is amended by inserting "; compounding of i n t e r e s t " after " r a t e ". (c) EFFECTIVE D A T E. — The amendments m a d e by this section shall apply to interest accruing after December 31, 1982. SKC. Si-y. DETERMINATION OF RATE OF INTEREST TO BE MADE SEMIANNUAI.LY.

26 USC 6621.

(a) IN GENERAL.—Subsection (b) of section 6621 (relating to determination of r a t e of interest) is amended to read as follows: "(b) ADJUSTMENT OF INTEREST R A T E. — "(1) ESTABLISHMENT OF ADJUSTED RATE.—If the adjusted p r i m e

r a t e charged by b a n k s (rounded to the n e a r e s t full percent)— "(A) during the 6-month period ending on September 30 of any c a l e n d a r year, or "(B) during the 6-month period ending on March 31 of any c a l e n d a r year, differs from the interest r a t e in effect under this section on either such date, respectively, the n the Secretary shall establish, within 15 days after the close of the applicable 6-month period, an adjusted r a t e of interest equal to such adjusted prime rate. "(2) EFFECTIVE DATE OF ADJUSTMENT. — Any adjusted r a t e of

26 USC 6621 ^°^-

interest established under paragraph (1) shall become effective— "(A) on January 1 of the succeeding year in the case of an adjustment a t t r i b u t a b l e to paragraph (1)(A), and "(B) on July 1 of the s a m e year in the case of an adjustment a t t r i b u t a b l e to paragraph(l)(B)." (b) EFFECTIVE D A T E. — The amendment m a d e by this section shall apply to adjustments taking effect on January 1, 1983. SEC.

 * U6. RESTRICTIONS

PERIODS.

(a) INTEREST W I T H

26 USC 6611.

ON PAYMENT OF INTEREST

RESPECT TO D E L I N Q U E N T

FOR CERTAIN

RETURNS.—Section

6611(b) (relating to period for which interest on refunds is paid) is amended by adding a t the end thereof the following new paragraph: "(3) LATE.RETURNS.—Notwithstanding paragraph (1) or (2) in the case of a r e t u r n of tax which is filed after the last date prescribed for filing such r e t u r n (determined with regard to extensions), no interest shall be allowed or paid for any day before the date on which the r e t u r n is filed." (b) N o INTEREST IF R E T U R N N O T IN PROCESSIBLE FORM.—Section

6611 (relating to interest on overpayments) is amended by redesignating subsection (i) as subsection (j) and by adding after subsection (h) the following new subsection: "(i) N o INTEREST U N T I L RETURN IN PROCESSIBLE FOR M. —

"(1) For purposes of subsections (b)(3), (e), and (h), a r e t u r n shall not be treated as filed until it is filed in processible form. "(2) For purposes of paragraph (1), a r e t u r n is in a processible form if—

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 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 637

"(A) such r e t u r n is filed on a permitted form, and "(B) such r e t u r n contains— "(i) the tax p a y e r ' s n a m e, address, and identifying n u m b e r and the required signature, and "(ii) sufficient required information (whether on the r e t u r n or on required a t t a c h m e n t s) to permit the mathematical verification of tax liability shown on the return." (c) MODIFICATION OF INTEREST IN THE CASE OF CARRYBACKS.— (1) O V E R P A Y M E N T S. —

(A) Paragraph (1) of section 6611(f) (relating to refund of 26 USC 6611. income tax caused by carryback or adjustment for unused deductions) is amended by striking out " the close of the taxable year " and inserting in lieu thereof " the filing date for the taxable year". (B) Subparagraph (A) of section 6611(0(2) is amended by striking out " the close o f each place it appears and inserting in lieu thereof " the filing date for". (C) Subsection (1) of section 6611 is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph: "(3) SPECIAL RULES FOR PARAGRAPHS (i) AND (2).— "(A) F I L I N G DATE.—For purposes of t h i s subsection,

the

term 'filing date ' means the last date prescribed for filing the r e t u r n of tax imposed by subtitle A for the taxable year (determined without regard to extensions). "(B) COORDINATION WITH SUBSECTION (e).— "(i) IN GENERAL. — FOR PURPOSES OF SUBSECTION (e) —

"(I) any overpayment described in paragraph (1) or (2) shall be treated as an overpayment for the loss year, and "(II) such subsection shall be applied with respect to such overpayment by t r e a t i n g the r e t u r n for the loss year as not filed before claim for such overpayment is filed. "(ii) Loss YEAR.—For purposes of this subparagraph, the term 'loss year' means— "(I) in the case of a carryback of a n e t operating loss or n e t capital loss, the taxable year in which such loss arises, and "(II) in the case of a credit carryback, the taxable year in which such credit carryback arises (or, with respect to any portion of a credit carryback from a taxable year a t t r i b u t a b l e to a n e t operating loss carryback, a capital loss carryback, or other credit carryback from a subsequent taxable year, such subsequent taxable year)." (D) Subsection (g) of section 6611 is amended by striking out " the close of the taxable year " and inserting in lieu thereof " the filing date (as defined in subsection (f)(3)) for the taxable year". (2) U N D E R P A Y M E N T S. —

(A) Paragraph (1) of section 6601(d) (relating to income 26 USC 6601. tax reduced by carryback for adjustment for certain unused deductions) is amended by striking out " the last day of the taxable year " and inserting in lieu thereof " the filing date for the taxable year".

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 96 STAT. 638

PUBLIC LAW 97-248—SEPT. 3, 1982 (B) Subparagraph (A) of section 6601(d)(2) is amended by striking out "the last day of the" each place it appears and inserting in lieu thereof "the filing date for". (C) Subsection (d) of section 6601 is amended by adding at the end thereof the following new paragraph: "(4) FILING DATE.—For purposes of this subsection, the term 'filing date' has the meaning given to such term by section 6611(f)(3)(A)."

26 USC 6611

"°*®"

(d) EFFECTIVE DATES.—

(1) IN GENERAL.—The amendments made by subsections (a) and (b) shall apply to returns filed after the 30th day after the date of the enactment of this Act. (2) SUBSECTION (C).—The amendments made by subsection (c) shall apply to interest accruing after the 30th day after the date of the enactment of this Act.

Subtitle H—Taxpayer Safeguard Amendments SP]C. 347. INCREASE IN CERTAIN EXEMPTIONS FROM LEVY. (a) GENERAL RULE.— (1) FUEL, PROVISIONS, FURNITURE, AND PERSONAL EFFECTS.—

26 USC 6334.

Paragraph (2) of section 6334(a) (relating to property exempt from levy) is amended by striking out "$500" and inserting in lieu thereof "$1,500". (2) BOOKS AND TOOLS OF A TRADE, BUSINESS, OR PROFESSION.—

26 USC 6334 "°^®-

Paragraph (3) of section 6334(a) is amended by striking out "$250" and inserting in lieu thereof "$1,000". (3) WAGES, SALARY, OR OTHER INCOME.—Paragraph (1) of section 6334(d) (relating to exempt amount of wages, salary, or other income) is amended— (A) by striking out "$50" and inserting in lieu thereof "$75", and (B) by striking out "$15" and inserting in lieu thereof "$25". (b) EFFECTIVE DATE.—The amendments made by subsection (a) shall apply to levies m a d e after December 31, 1982. SEC. 348. REQUIRED RELEASE OF LIEN.

26 USC 6325.

26 USC 6325 ^°^-

(a) GENERAL RuLE.—So m u c h of subsection (a) of section 6325 (relating to release of lien) as precedes paragraph (1) thereof is amended to read as follows: "(a) RELEASE OF LIEN.—Subject to such regulations as the Secre-

tary may prescribe, the Secretary shall issue a certificate of release of any lien imposed with respect to any internal revenue tax not later than 30 days after the day on which—". (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply with respect to liens— (1) which are filed after December 31, 1982, (2) which are satisfied after December 31, 1982, or (3) with respect to which the taxpayer after December 31, 1982, requests the Secretary of the Treasury or his delegate to issue a certificate of release on the grounds that the liability was satisfied or legally unenforceable.

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96 STAT. 639

SKC. 349. REQUIREMENT OF TIMELY NOTICE OF LEVY. (a) GENERAL RULE.—Section 6331 (relating to levy and distraint) is 26 USC 633L amended by redesignating subsection (e) as subsection (f) and by striking out subsection (d) and inserting in lieu thereof the following new subsections: "(d) REQUIREMENT OF NOTICE BEFORE L E V Y. —

"(1) IN GENERAL.—Levy may be made under subsection (a) upon the salary or wages or other property of any person with respect to any unpaid tax only after the Secretary has notified such person in writing of his intention to m a k e such levy. "(2) 10-DAY REQUIREMENT.—The notice required under paragraph (1) shall be— "(A) given in person, "(B) left a t the dwelling or usual place of business of such person, or "(C) sent by certified or registered mail to such person's last known address, no less than 10 days before the day of the levy. "(3) J E O P A R D Y. — Paragraph (1) shall not apply to a levy if the Secretary has made a finding under the last sentence of subsection (a) that the collection of tax is in jeopardy. "(e) C O N T I N U I N G LEVY ON SALARY AND W A G E S. —

"(1) EFFECT OF LEVY.—The effect of a levy on salary or wages payable to or received by a tax p a y e r shall be continuous from the date such levy is first m a d e until the liability out of which such levy arose is satisfied or becomes unenforceable by reason of lapse of time. "(2) RELEASE AND NOTICE OF RELEASE.—With respect to a levy

described in paragraph (1), the Secretary shall promptly release the levy 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." (b) EFFECTIVE D A T E. — The amendment

m a d e by subsection (a)

shall apply to levies m a d e after December 31, 1982.

26 USC 6331 note.

SEC. 349A. EXTENSION OF PERIOD FOR REDEMPTION OF REAL PROPERTY.

(a) GENERAL RULE. — Paragraph (1) of section 6337(b) (relating to 26 USC 6337. period for redemption of real estate after sale) is amended by striking out "120 d a y s " and inserting in lieu thereof "180 days". (b) EFFECTIVE DATE.—The amendment m a d e by subsection (a) 26 USC 6337 shall apply with respect to property sold after the date of the "°^®e n a c t m e n t of this Act. SEC. 350. AMOUNT OF DAMAGES IN CASE OF WRONGFUL LEVY.

(a) GENERAL RULE. — Subparagraph (C) of section 7426(b)(2) (relat- 26 USC 7426. ing to a m o u n t of damages) is amended to read as follows: "(C) if such property was sold, g r a n t a j u d g m e n t for a n a m o u n t not exceeding the g r e a t e r of— "(i) the a m o u n t received by the United States from the sale of such property, or "(ii) the fair m a r k e t value of such property immediately before the levy." (b) EFFECTIVE DATE.—The amendment m a d e by subsection (a) 26 USC 7426 shall apply with respect to levies made after December 31, 1982. "°t®-

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 96 STAT. 640

PUBLIC LAW 97-248—SEPT. 3, 1982

Subtitle I—Other Provisions SEC. 351. DISALLOWANCE OF DEDUCTIONS RELATING TO NARCOTICS TRAFFICKING. (a) IN GENERAL. — Part IX of subchapter B of chapter 1 (relating to items not deductible) is amended by adding a t the end thereof the following new section: 26 USC 280E.

21 USC 812.

"SEC. 280E. EXPENDITURES IN CONNECTION WITH THE ILLEGAL SALE OF DRUGS. "No deduction or credit shall be allowed for any a m o u n t paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the m e a n i n g of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted." (b) CONFORMING AMENDMENT. — The t a b l e of sections for part IX of

subchapter B of chapter 1 of such Code is amended by adding a t the end thereof the following new item: "Sec. 280E. Expenditures in connection with the illegal sale of drugs." 26 USC 280E ^°^-

(c) EFFECTIVE D A T E. — The amendments made by this section shall apply to a m o u n t s paid or incurred after the date of the e n a c t m e n t of this Act in taxable years ending after such date. SEC. 352. SENSE OF CONGRESS WITH RESPECT TO PROVIDING OF ADDI TIONAL FUNDS TO INTERNAL REVENUE SERVICE. It is the sense of the Congress that the r e be appropriated for the use of the I n t e r n a l Revenue Service to provide additional staff— (1) for fiscal year 1983, the a m o u n t s proposed in the President's budget for fiscal year 1983, and (2) such a m o u n t s in excess of the a m o u n t requested for such purpose in the President's proposed budgets as may be necessary to provide sufficient improved enforcement to increase revenues by $1 billion in fiscal year 1984 and $2 billion in fiscal year 1985.

26 USC 6011

26 USC 501.

SEC. 353. REPORT ON FORMS. Not later than June 30, 1983, the Secretary of the Treasury or his delegate shall study and report to the Congress methods of modifying the design of the forms used by the I n t e r n a l Revenue Service to achieve g r e a t e r accuracy in the reporting of income and the matching of information reports and r e t u r n s with the r e t u r n s of tax imposed by chapter 1 of the I n t e r n a l Revenue Code of 1954. SEC. 354. EXEMPTION OF VETERANS' ORGANIZATIONS. (a) IN GENERAL. — Paragraph (19) of section 501(c) (relating to exemption of veterans ' organizations) is amended— (1) by striking out " w a r veterans " the first place it a p p e a r s and inserting in lieu thereof "past or present m e m b e r s of the A r m e d Forces of the United States ", and (2) by amending subparagraph (B) to read as follows: "(B) a t least 75 percent of the m e m b e r s of which a r e past or present m e m b e r s of the Armed Forces of the United States and substantially all of the other m e m b e r s of which a r e individuals who a r e cadets or a r e spouses, widows, or

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 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 641

widowers of past or present m e m b e r s of the Armed Forces of the United States or of cadets, and ". (b) ASSOCIATIONS ORGANIZED BEFORE 1880.—Subsection (c) of sec-

tion 501 (relating to exempt organizations) is amended by adding a t 26 USC 501. the end thereof the following new paragraph: "(23) any association organized before 1880 more than 25 percent of the m e m b e r s of which a r e present or past m e m b e r s of the Armed Forces and a principal purpose of which is to provide insurance and other benefits to veterans or their dependents." (c) EFFECTIVE D A T E. — The amendments m a d e by subsections (a) 26 USC 501 note. and (b) shall apply to taxable years beginning after the date of the e n a c t m e n t of this Act. SEC. 355. A M E N I) M P: N T TO COMMl NIC A T I O N S ACT OF 1934.

Title III of the Communications Act of 1934 is amended by inserting immediately after section 330 therein the following new section: "VERY HIGH FREQUENCY STATIONS

" SEC. 331. It shall be the policy of the Federal Communications Commission to allocate c h a n n e l s for very high frequency commercial television broadcasting in a m a n n e r which ensures that not less than one such channel shall be allocated to each State, if technically feasible. In any case in which licensee of a very high frequency commercial television broadcast station notifies the Commission to the effect that such licensee will agree to the reallocation of its channel to a community within a State in which the r e is allocated no very high frequency commercial television broadcast channel a t the t i m e such notification, the Commission shall, notwithstanding any other provision of law, order such reallocation and issue a license to such licensee for that purpose pursuant to such notification for a term of not to exceed 5 years as provided in section 307(d) of the Communications Act of 1934."

47 USC 331.

47 USC 307.

SEC. 356. CONFIDENTIALITY AND DISCLOSURE OF RETURNS AND RETURN INFORMATION.

(a) IN GENERAL.— Subsection (i) of section 6103 (relating to disclosure to Federal officers or employees for administration of Federal laws not relating to tax administration) is amended by redesignating paragraph (6) as paragraph (7) and by striking out paragraph s (1), (2), (3), (4), and (5) and inserting in lieu thereof the following: "(1) DISCLOSURE OF RETURNS AND RETURN INFORMATION FOR USE IN CRIMINAL INVESTIGATIONS.—

"(A) IN GENERAL.—Except as provided in paragraph (6), any r e t u r n or r e t u r n information with respect to any specified taxable period or periods shall, pursuant to and upon the g r a n t of an ex part e order by a Federal district court judge or m a g i s t r a t e under subparagraph (B), be open (but only to the extent necessary as provided in such order) to inspection by, or disclosure to, officers and employees of any Federal agency who a r e personally and directly engaged in— "(i) preparation for any judicial or administrative proceeding pertaining to the enforcement of a specifically designated Federal criminal statute (not involving tax administration) to which the United States or such agency is or may be a party.

26 USC 6103.

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 96 STAT. 642

PUBLIC LAW 97-248—SEPT. 3, 1982 "(ii) any investigation which may result in such a proceeding, or "(iii) any Federal grand jury proceeding pertaining to enforcement of such a criminal statute to which the United States or such agency is or may be a party, solely for the use of such officers and employees in such preparation, investigation, or grand jury proceeding. "(B) APPLICATION FOR ORDER.—The Attorney General, the

Deputy Attorney General, the Associate Attorney General, any Assistant Attorney General, any United States attorney, any special prosecutor appointed under section 593 of title 28, United States Code, or any attorney in charge of a criminal division organized crime strike force established pursuant to section 510 of title 28, United States Code, may authorize an application to a Federal district court judge or magistrate for the order referred to in subparagraph (A). Upon such application, such judge or magistrate may grant such order if he determines on the basis of the facts submitted by the applicant that— "(i) there is reasonable cause to believe, based upon information believed to be reliable, that a specific criminal act has been committed, "(ii) there is reasonable cause to believe that the return or return information is or may be relevant to a matter relating to the commission of such act, and "(iii) the return or return information is sought exclusively for use in a Federal criminal investigation or proceeding concerning such act, and the information sought to be disclosed cannot reasonably be obtained, under the circumstances, from another source. "(2) DISCLOSURE OF RETURN INFORMATION OTHER THAN TAX-

PAYER RETURN INFORMATION FOR USE IN CRIMINAL INVESTIGATIONS.—

"(A) IN GENERAL.—Except as provided in paragraph (6), upon receipt by the Secretary of a request which meets the requirements of subparagraph (B) from the head of any Federal agency or the Inspector General thereof, or, in the case of the Department of Justice, the Attorney General, the Deputy Attorney General, the Associate Attorney General, any Assistant Attorney General, the Director of the Federal Bureau of Investigation, the Administrator of the Drug Enforcement Administration, any United States attorney, any special prosecutor appointed under section 593 of title 28, United States Code, or any attorney in charge of a criminal division organized crime strike force established pursuant to section 510 of title 28, United States Code, the Secretary shall disclose return information (other than taxpayer return information) to officers and employees of such agency who are personally and directly engaged in— "(i) preparation for any judicial or administrative proceeding described in paragraph (l)(A)(i), "(ii) any investigation which may result in such a proceeding, or "(iii) any grand jury proceeding described in paragraph (l)(A)(iii),

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Page:United States Statutes at Large Volume 96 Part 1.djvu/685

 PUBLIC LAW 97-248—SEPT. 3, 1982 solely for the use of such officers and employees in such preparation, investigation, or g r and j u r y proceeding. "(B) REQUIREMENTS.—A request meets the requirements of this subparagraph if the request is in writing and sets forth— "(i) the n a m e and address of the tax p a y e r with respect to whom the requested r e t u r n information relates; "(ii) the taxable period or periods to which such r e t u r n information relates; "(iii) the s t a t u to r y authority under which the proceeding or investigation described in subparagraph (A) is being conducted; and "(iv) the specific reason or reasons w h y such disclosure is, or may be, relevant to such proceeding or investigation. "(C) TAXPAYER IDENTITY.—For purposes of t h i s paragraph,

a tax p a y e r ' s identity shall not be t r e a t e d as tax p a y e r r e t u r n information. "(3) D I S C L O S U R E OF R E T U R N INFORMATION TO A P P R I S E A P P R O P R I ATE OFFICIALS OF CRIMINAL ACTIVITIES OR EMERGENCY CIRCUMSTANCES. — "(A) POSSIBLE VIOLATIONS OF FEDERAL CRIMINAL L A W. —

"(i) IN GENERAL.—Except as provided in paragraph (6), the Secretary may disclose in writing r e t u r n information (other than tax p a y e r r e t u r n information) which may constitute evidence of a violation of any Federal criminal law (not involving tax administration) to the e x t e n t necessary to apprise the head of the a p p r o p r i a t e Federal agency charged with the responsibility of enforcing such law. The head of such agency may disclose such r e t u r n information to officers and employees of such agency to the e x t e n t necessary to enforce such law. "(ii) TAXPAYER IDENTITY.—If the r e is r e t u r n informa-

tion (other than tax p a y e r r e t u r n information) which may constitute evidence of a violation by any tax p a y e r of any Federal criminal law (not involving tax administration), such tax p a y e r ' s identity may also be disclosed under clause (i). "(B) EMERGENCY CIRCUMSTANCES.— "(i) D A N G E R OF DEATH OR PHYSICAL I N J U R Y. — Under

circumstances involving an i m m i n e n t danger of death or physical injury to any individual, the Secretary may disclose r e t u r n information to the extent necessary to apprise a p p r o p r i a t e officers or employees of any Federal or State law enforcement agency of such circumstances. "(ii) F L I G H T FROM FEDERAL PROSECUTION.—Under cir-

cumstances involving the i m m i n e n t flight of any individual from Federal prosecution, the Secretary may disclose r e t u r n information to the extent necessary to apprise a p p r o p r i a t e officers or employees of any Federal law enforcement agency of such circumstances. "(4) U S E OF CERTAIN DISCLOSED RETURNS AND RETURN INFORMATION IN JUDICIAL OR ADMINISTRATIVE PROCEEDINGS.—

96 STAT. 643

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Page:United States Statutes at Large Volume 96 Part 1.djvu/686

 96 STAT. 644

PUBLIC LAW 97-248—SEPT. 3, 1982 "(A) RETURNS AND TAXPAYER RETURN INFORMATION.—

18 USC app.

Except as provided in subparagraph (C), any return or taxpayer return information obtained under paragraph (1) may be disclosed in any judicial or administrative proceeding pertaining to enforcement of a specifically designated Federal criminal statute or related civil forfeiture (not involving tax administration) to which the United States or a Federal agency is a party— "(i) if the court finds that such return or taxpayer return information is probative of a matter in issue relevant in establishing the commission of a crime or the guilt or liability of a party, or "(ii) to the extent required by order of the court pursuant to section 3500 of title 18, United States Code, or rule 16 of the Federal Rules of Criminal Procedure. "(B) RETURN INFORMATION (OTHER THAN TAXPAYER RETURN

INFORMATION).—Except as provided in subparagraph (C), any return information (other than taxpayer return information) obtained under paragraph (1), (2), or (3)(A) may be disclosed in any judicial or administrative proceeding pertaining to enforcement of a specifically designated Federal criminal statute or related civil forfeiture (not involving tax administration) to which the United States or a Federal agency is a party. "(C) CONFIDENTIAL INFORMANT; IMPAIRMENT OF INVESTIGA-

TIONS.—No return or return information shall be admitted into evidence under subparagraph (A)(i) or (B) if the Secretary determines and notifies the Attorney General or his delegate or the head of the Federal agency that such admission would identify a confidential informant or seriously impair a civil or criminal tax investigation. "(D)

CONSIDERATION

OF CONFIDENTIALITY

POLICY.—In

ruling upon the admissibility of returns or return information, and in the issuance of an order under subparagraph (A)(ii), the court shall give due consideration to congressional policy favoring the confidentiality of returns and return information as set forth in this title. "(E) REVERSIBLE ERROR.—The admission into evidence of any return or return information contrary to the provisions of this paragraph shall not, as such, constitute reversible error upon appeal of a judgment in the proceeding. "(5) DISCLOSURE TO LOCATE FUGITIVES FROM JUSTICE.—

"(A) IN GENERAL.—Except as provided in paragraph (6), the return of an individual or return information with respect to such individual shall, pursuant to and upon the grant of an ex parte order by a Federal district court judge or magistrate under subparagraph (B), be open (but only to the extent necessary as provided in such order) to inspection by, or disclosure to, officers and employees of any Federal agency exclusively for use in locating such individual. "(B) APPLICATION FOR ORDER.—Any person described in

paragraph (1)(B) may authorize an application to a Federal district court judge or magistrate for an order referred to in subparagraph (A). Upon such application, such judge or magistrate may grant such order if he determines on the basis of the facts submitted by the applicant that—

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 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 645

"(i) a Federal arrest warrant relating to the commission of a Federal felony offense has been issued for an individual who is a fugitive from justice, "(ii) the return of such individual or return information with respect to such individual is sought exclusively for use in locating such individual, and "(iii) there is reasonable cause to believe that such return or return information may be relevant in determining the location of such individual. "(6)

CONFIDENTIAL INFORMANTS; IMPAIRMENT OF INVESTIGA-

TIONS.—The Secretary shall not disclose any return or return information under paragraph (1), (2), (3)(A), (5), or (7) if the Secretary determines (and, in the case of a request for disclosure pursuant to a court order described in paragraph (1)(B) or (5)(B), certifies to the court) that such disclosure would identify a confidential informant or seriously impair a civil or criminal tax investigation.". (b) CONFORMING AMENDMENTS.—

(1) Subsection (p) of section 6103 (relating to procedure and 26 USC 6103. recordkeeping) is amended— (A) by striking out "(6)(A)(ii)" in paragraph (3)(A) and inserting in lieu thereof "(7)(A)(ii)", (B) by striking out "(d)" in paragraph (3)(C)(i) and inserting in lieu thereof "(d), (i)(3)(B)(i),", (C) by striking out "such requests" in paragraph (3)(C)(i)(II) and inserting in lieu thereof "such requests or otherwise", (D) by striking out "(i)(l), (2), or (5)" each place it appears in paragraph (4) and inserting in lieu thereof "(i)(l), (2), (3), or (5)", (E) by striking out "(d)" each place it appears in paragraph (4) and inserting in lieu thereof "(d), (i)(3)(B)(i),", and (F) by striking out "subsection (i)(6)(A)(ii)" in paragraph (6)(B)(i) and inserting in lieu thereof "subsection (i)(7)(A)(ii)". (2) Paragraph (2) of section 7213(a) (relating to unauthorized 26 USC 7213. disclosure of information) is amended by striking out "(d)" and inserting in lieu thereof "(d), (i)(3)(B)(i),". (c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 6103 take effect on the day after the date of the enactment of this Act. "°^SEC. 357. CIVIL DAMAGES AGAINST UNITED STATES FOR UNAUTHORIZED DISCLOSURES BY AN EMPLOYEE.

(a) IN GENERAL.—Subchapter B of chapter 76 (relating to proceedings by taxpayers and third parties) is amended by redesignating section 7431 as section 7432 and inserting after section 7430 the following new section: "SEC. 7431. CIVIL DAMAGES FOR UNAUTHORIZED DISCLOSURE OF RETURNS AND RETURN INFORMATION. "(a) IN GENERAL.— "(1) DISCLOSURE BY EMPLOYEE OF UNITED STATES.—If any offi-

cer or employee of the United States knowingly, or by reason of negligence, discloses any return or return information with respect to a taxpayer in violation of any provision of section 6103, such taxpayer may bring a civil action for damages

26 USC 7432. 26 USC 7431

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Page:United States Statutes at Large Volume 96 Part 1.djvu/688

 96 STAT. 646

PUBLIC LAW 97-248—SEPT. 3, 1982 against the United States in a district court of the United States. "(2) DISCLOSURE BY A PERSON WHO IS NOT AN EMPLOYEE OF UNITED STATES.—If any person who is not an officer or employee

of the United States knowingly, or by reason of negligence, discloses any return or return information with respect to a taxpayer in violation of any provision of section 6103, such taxpayer may bring a civil action for damages against such person in a district court of the United States. "(b) No LIABILITY FOR GOOD FAITH BUT ERRONEOUS INTERPRETA-

TION.—No liability shall arise under this section with respect to any disclosure which results from a good faith, but erroneous, interpretation of section 6103. "(c) DAMAGES.—In any action brought under subsection (a), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the sum of— "(1) the greater of— "(A) $1,000 for each act of unauthorized disclosure of a return or return information with respect to which such defendant is found liable, or "(B) the sum of— "(i) the actual damages sustained by the plaintiff as a result of such unauthorized disclosure, plus "(ii) in the case of a willful disclosure or a disclosure which is the result of gross negligence, punitive damages, plus "(2) the costs of the action. "(d) PERIOD FOR BRINGING ACTION.—Notwithstanding any other provision of law, an action to enforce any liability created under this section may be brought, without regard to the amount in controversy, at any time within 2 years after the date of discovery by the plaintiff of the unauthorized disclosure. "(e) RETURN; RETURN INFORMATION.—For purposes of this section, the terms 'return' and 'return information' have the respective meanings given such terms in section 6103(b)." (b) CONFORMING AMENDMENTS.—

Repeal. 26 USC 7217.

26 USC 7431 "°*'®-

Ante, p. 641.

(1) Section 7217 (relating to civil damages for unauthorized disclosure of returns and return information) is hereby repealed. (2) The table of sections for part I of subchapter A of chapter 75 is amended by striking out the item relating to section 7217. (3) The table of sections for subchapter B of chapter 76 is amended by striking out the item relating to section 7431 and inserting in lieu thereof the following: "Sec. 7431. Civil damages for unauthorized disclosure of returns and return information. "Sec. 7432. Cross references." (c) EFFECTIVE DATE.—The amendments made by this section shall

apply with respect to disclosures made after the date of enactment of this Act. SEC. 358. DISCLOSURE FOR USE IN CERTAIN AUDITS BY GENERAL ACCOUNTING OFFICE. (a) IN GENERAL.—Paragraph (7) of section 6103(i) (relating to disclosure to Comptroller General), as redesignated by section 396(a), is amended by redesignating subparagraph (B) as subparagraph (C)

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Page:United States Statutes at Large Volume 96 Part 1.djvu/689

 PUBLIC LAW 97-248—SEPT. 3, 1982 and by inserting after subparagraph (A) the following new subparagraph: "(B) A U D I T S OF OTHER AGENCIES.—

"(i) IN GENERAL.—Nothing in this section shall prohibit any r e t u r n or r e t u r n information obtained under this title by any Federal agency (other than a n agency referred to in subparagraph (A)) for use in any program or activity from being open to inspection by, or disclosure to, officers and employees of the General Accounting Office if such inspection or disclosure is— "(I) for purposes of, and to the e x t e n t necessary in, making a n audit authorized by law of such program or activity, and "(II) pursuant to a w r i t t e n request by the Comptroller General of the United States to the head of such Federal agency, "(ii) INFORMATION FROM SECRETARY.—If the Comptrol-

ler General of the United States determine s that the r e t u r n s or r e t u r n information available under clause (i) a r e not sufficient for purposes of making a n audit of any program or activity of a Federal agency (other than an agency referred to in subparagraph (A)), upon written request by the Comptroller General to the Secretary, r e t u r n s and r e t u r n information (of the type authorized by subsection (1) or (m) to be made available to the Federal agency for use in such program or activity) shall be open to inspection by, or disclosure to, officers and employees of the General Accounting Office for the purpose of, and to the extent necessary in, making such audit. "(iii) REQUIREMENT OF NOTIFICATION UPON COMPLE-

TION OF AUDIT.—Within 90 days after the completion of an audit with respect to which r e t u r n s or r e t u r n information were opened to inspection or disclosed under clause (i) or (ii), the Comptroller General of the United States shall notify in writing the Joint Committee on Taxation of such completion. Such notice shall include— "(I) a description of the use of the r e t u r n s and r e t u r n information by the Federal agency involved, "(II) such recommendations with respect to the use of r e t u r n s and r e t u r n information by such Federal agency as the Comptroller General deems appropriate, and "(III) a statement on the impact of any such recommendations on confidentiality of r e t u r n s and r e t u r n information and the administration of this title. "(iv) CERTAIN RESTRICTIONS MADE APPLICABLE.—The

restrictions contained in subparagraph (A) on the disclosure of any r e t u r n s or r e t u r n information open to inspection or disclosed under such subparagraph shall also apply to r e t u r n s and r e t u r n information open to inspection or disclosed under this subparagraph. "

96 STAT. 647

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Page:United States Statutes at Large Volume 96 Part 1.djvu/690

 96 STAT. 648

PUBLIC LAW 97-248—SEPT. 3, 1982 (b) CONFORMING AMENDMENTS.—

26 USC 6103.

26 USC 6103 note. Tax Treatment of Partnership Items Act of 1982. 26 USC 1 note.

(1) Subparagraph (A) of section 6103(i)(7) of such Code (as redesignated by this Act) is amended by striking out "subparagraph (B)" and inserting in lieu thereof "subparagraph (C)". (2) Subparagraph (C) of section 6103(i)(7) of such Code (as redesignated by this Act) is amended by striking out "subparagraph (A)" and inserting in lieu thereof "subparagraph (A) or (B)'^. (c) EFFECTIVE DATE.—The amendments made by this section shall take effect on the day after the date of the enactment of this Act.

TITLE IV—TAX TREATMENT OF PARTNERSHIP ITEMS SEC. 401. SHORT TITLE.

This title may be cited as the 'Tax Treatment of Partnership Items Act of 1982". SEC. 402. TAX TREATMENT OF PARTNERSHIP ITEMS.

(a) GENERAL RULE.—Chapter 63 (relating to assessment) is amended by adding at the end thereof the following new subchapter:

"Subchapter C—Tax Treatment of Partnership Items "Sec. 6221. Tax treatment determined at partnership level. "Sec. 6222. Partner's return must be consistent with partnership return or Secretary notified of inconsistency. "Sec. 6228. Notice to partners of proceedings. "Sec. 6224. Participation in administrative proceedings; waivers; agreements. "Sec. 6225. Assessments made only after partnership level proceedings are completed. "Sec. 6226. Judicial review of final partnership administrative adjustments. "Sec. 6227. Administrative adjustment requests. "Sec. 6228. Judicial review where administrative adjustment request is not allowed in full. "Sec. 6229. Period of limitations for making assessments. "Sec. 6280. Additional administrative provisions. "Sec. 62.S1. Definitions and special rules. "Sec. 6282. Extension of subchapter to windfall profit tax. 26 USC 6221.

"SEC. 6221. TAX TREATMENT DETERMINED AT PARTNERSHIP LEVEL.

"Except as otherwise provided in this subchapter, the tax treatment of any partnership item shall be determined at the partnership level. 26 USC 6222.

"SEC. 6222. PARTNER'S RETl'RN MUST BE CONSISTENT WITH PARTNERSHIP RETURN OR SECRETARY NOTIFIED OF INCONSISTENCY.

"(a) IN GENERAL.—A partner shall, on the partner's return, treat a partnership item in a manner which is consistent with the treatment of such partnership item on the partnership return. "(b) NOTIFICATION OF INCONSISTENT TREATMENT.—

"(1) IN GENERAL.—In the case of any partnership item, if— "(A)(i) the partnership has filed a return but the partner's treatment on his return is (or may be) inconsistent with the treatment of the item on the partnership return, or "(ii) the partnership has not filed a return, and

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Page:United States Statutes at Large Volume 96 Part 1.djvu/691

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 649

"(B) the part n e r files with the Secretary a statement identifying the inconsistency, subsection (a) shall not apply to such item. "(2) P A R T N E R RECEIVING INCORRECT INFORMATION.—A part n e r

shall be treated as having complied with subparagraph (B) of paragraph (1) with respect to a partnership item if the partner— "(A) d e m o n s t r a t e s to the satisfaction of the Secretary that the t r e a t m e n t of the partnership item on the part n e r ' s r e t u r n is consistent with the t r e a t m e n t of the item on the schedule furnished to the part n e r by the partnership, and "(B) elects to have this paragraph apply with respect to that item. "(c) E F F E C T OF F A I L U R E TO N O T I F Y. — I n any case—

"(1) described in paragraph (l)(A)(i) of subsection (b), and "(2) in which the part n e r does not comply with paragraph (1)(B) of subsection (b), section 6225 shall not apply to any part of a deficiency a t t r i b u t a b l e to any computational adjustment required to m a k e the t r e a t m e n t of the items by such part n e r consistent with the t r e a t m e n t of the items on the partnership r e t u r n. "(d) ADDITION TO T A X FOR F A I L U R E TO COMPLY W I T H S E C T I O N. — "F'or addition to tax in the case of a partner's intentional or negligent disregard of requirements of this section, see section 6653(a). "SEC. 6223. NOTICE TO PARTNERS OF PROCEEDINGS. "(a) SECRETARY M U S T G IV E P A R T N E R S N O T I C E OF B E G I N N I N G A N D COMPLETION OF ADMINISTRATIVE P R O C E E D I N G S. — The Secretary shall

mail to each part n e r whose n a m e and address is furnished to the Secretary notice of— "(1) the beginning of a n administrative proceeding a t the partnership level with respect to a partnership item, and "(2) the final partnership administrative adjustment resulting from any such proceeding. A part n e r shall not be entitled to any notice under this subsection unless the Secretary has received (at least 30 days before it is mailed to the tax m a t t e r s part n e r) sufficient information to enable the Secretary to determine that such part n e r is entitled to such notice and to provide such notice to such part n e r. "(b) SPECIAL RULES FOR PARTNERSHIP W I T H M O R E T H A N 100 PARTNERS.— "(1) P A R T N E R WITH LESS THAN i PERCENT INTEREST.—Except as

provided in paragraph (2), subsection (a) shall not apply to a part n e r if— "(A) the partnership has more than 100 part n e r s, and "(B) the part n e r has a less than 1 percent interest in the profits of the partnership. "(2) SECRETARY MUST GIVE NOTICE TO NOTICE GROUP.—If a

group of part n e r s in the aggregate having a 5 percent or more interest in the profits of a partnership so request and designate one of their m e m b e r s to receive the notice, the member so designated shall be treated as a part n e r to whom subsection (a) applies. "(c) INFORMATION BASE FOR SECRETARY'S NOTICES, E T C. — For pur-

poses of this subchapter—

26 USC 6228.

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Page:United States Statutes at Large Volume 96 Part 1.djvu/692

 96 STAT. 650

PUBLIC LAW 97-248—SEPT. 3, 1982 "(1) INFORMATION ON PARTNERSHIP RETURN.—Except as provided in paragraphs (2) and (3), the Secretary shall use the names, addresses, and profits interests shown on the partnership return. "(2) USE OF ADDITIONAL INFORMATION.—The Secretary shall use additional information furnished to him by the tax matters partner or any other person in accordance with regulations prescribed by the Secretary. "(3) SPECIAL RULE WITH RESPECT TO INDIRECT PARTNERS.—If

any information furnished to the Secretary under paragraph (1) or (2)— "(A) shows that a person has a profits interest in the partnership by reason of ownership of an interest through 1 or more pass-thru partners, and "(B) contains the name, address, and profits interest of such person, then the Secretary shall use the name, address, and profits interest of such person with respect to such partnership interest (in lieu of the names, addresses, and profits interests of the passthru partners). "(d) PERIOD FOR MAILING NOTICE.— "(1) NOTICE OF BEGINNING OF PROCEEDINGS.—The Secretary

shall mail the notice specified in paragraph (1) of subsection (a) to each partner entitled to such notice not later than the 120th day before the day on which the notice specified in paragraph (2) of subsection (a) is mailed to the tax matters partner. "(2) NOTICE OF FINAL PARTNERSHIP ADMINISTRATIVE ADJUST-

MENT.—The Secretary shall mail the notice specified in paragraph (2) of subsection (a) to each partner entitled to such notice not later than the 60th day after the day on which the notice specified in such paragraph (2) was mailed to the tax matters partner. "(e) EFFECT OF SECRETARY'S FAILURE TO PROVIDE NOTICE.— "(1) APPLICATION OF SUBSECTION.—

"(A) IN GENERAL.—This subsection applies where the Secretary has failed to mail any notice specified in subsection (a) to a partner entitled to such notice within the period specified in subsection (d). "(B) SPECIAL RULES FOR PARTNERSHIPS WITH MORE THAN

100 PARTNERS.—For purposes of subparagraph (A), any partner described in paragraph (1) of subsection (b) shall be treated as entitled to notice specified in subsection (a). The Secretary may provide such notice— "(i) except as provided in clause (ii), by mailing notice to the tax matters partner, or "(ii) in the case of a member of a notice group which qualifies under paragraph (2) of subsection (b), by mailing notice to the partner designated for such purpose by the group. "(2) PROCEEDINGS FINISHED.—In any case to which this subsection applies, if at the time the Secretary mails the partner notice of the proceeding— "(A) the period within which a petition for review of a final partnership administrative adjustment under section 6226 may be filed has expired and no such petition has been filed, or

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text: The Liberty to Trade as Buttressed by National Law/Restraints through Invading Liberty


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Page:United States Statutes at Large Volume 96 Part 1.djvu/693

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 651

"(B) the decision of a court in an action begun by such a petition has become final, the partner may elect to have such adjustment, such decision, or a settlement agreement described in paragraph (2) of section 6224(c) with respect to the partnership taxable year to which the adjustment relates apply to such partner. If the partner does not make an election under the preceding sentence, the partnership items of the partner for the partnership taxable year to which the proceeding relates shall be treated as nonpartnership items. "(3) PROCEEDINGS STILL GOING ON.—In any case to which this subsection applies, if paragraph (2) does not apply, the partner shall be a party to the proceeding unless such partner elects— "(A) to have a settlement agreement described in paragraph (2) of section 6224(c) with respect to the partnership taxable year to which the proceeding relates apply to the partner, or "(B) to have the partnership items of the partner for the partnership taxable year to which the proceeding relates treated as nonpartnership items. "(f)

ONLY ONE NOTICE OF FINAL PARTNERSHIP ADMINISTRATIVE

ADJUSTMENT.—If the Secretary mails a notice of final partnership administrative adjustment for a partnership taxable year with respect to a partner, the Secretary may not mail another such notice to such partner with respect to the same taxable year of the same partnership in the absence of a showing of fraud, malfeasance, or misrepresentation of a material fact. "(g) TAX MATTERS PARTNER MUST KEEP PARTNERS INFORMED OF

PROCEEDINGS.—To the extent and in the manner provided by regulations, the tax matters partner of a partnership shall keep each partner informed of all administrative and judicial proceedings for the adjustment at the partnership level of partnership items. "(h) PASS-THRU PARTNER REQUIRED TO FORWARD NOTICE.—

"(1) IN GENERAL.—If a pass-thru partner receives a notice with respect to a partnership proceeding from the Secretary, the tax matters partner, or another pass-thru partner, the passthru partner shall, within 30 days of receiving that notice, forward a copy of that notice to the person or persons holding an interest (through the pass-thru partner) in the profits or losses of the partnership for the partnership taxable year to which the notice relates. "(2) PARTNERSHIP AS PASS-THRU PARTNER.—In the case of a pass-thru partner which is a partnership, the tax matters partner of such partnership shall be responsible for forwarding copies of the notice to the partners of such partnership. "SEC. 6224. PARTICIPATION IN ADMINISTRATIVE PROCEEDINGS; WAIVERS; AGREEMENTS.

"(a) PARTICIPATION IN ADMINISTRATIVE PROCEEDINGS.—Any partner has the right to participate in any administrative proceeding relating to the determination of partnership items at the partnership level. "(b) PARTNER MAY WAIVE RIGHTS.—

"(1) IN GENERAL.—A partner may at any time waive— "(A) any right such partner has under this subchapter, and

26 USC 6224.

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Page:United States Statutes at Large Volume 96 Part 1.djvu/694

 96 STAT. 652

PUBLIC LAW 97-248—SEPT. 3, 1982 "(B) any restriction under this subchapter on action by the Secretary. "(2) FORM.—Any waiver under paragraph (1) shall be made by a signed notice in writing filed with the Secretary, "(c) SETTLEMENT AGREEMENT.—In the absence of a showing of

fraud, malfeasance, or misrepresentation of fact— "(1) BINDS ALL PARTIES.—A settlement agreement between the

Secretary and 1 or more partners in a partnership with respect to the determination of partnership items for any partnership taxable year shall (except as otherwise provided in such agreement) be binding on all parties to such agreement with respect to the determination of partnership items for such partnership taxable year. An indirect partner is bound by any such agreement entered into by the pass-thru partner unless the indirect partner has been identified as provided in section 6223(c)(3). "(2) OTHER PARTNERS HAVE RIGHT TO ENTER INTO CONSISTENT

AGREEMENTS.—If the Secretary enters into a settlement agreement with any partner with respect to partnership items for any partnership taxable year, the Secretary shall offer to any other partner who so requests settlement terms for the partnership taxable year which are consistent with those contained in such settlement agreement. Except in the case of an election under paragraph (2) or (3) of section 6223(e) to have a settlement agreement described in this paragraph apply, this paragraph shall apply with respect to a settlement agreement entered into with a partner before notice of a final partnership administrative adjustment is mailed to the tax matters partner only if such other partner makes the request before the expiration of 150 days after the day on which such notice is mailed to the tax matters partner. "(3) TAX MATTERS PARTNERS.—

PARTNER

MAY BIND

CERTAIN

OTHER

"(A) IN GENERAL.—A partner who is not a notice partner (and not a member of a notice group described in subsection (b)(2) of section 6223) shall be bound by any settlement agreement— "(i) which is entered into by the tax matters partner, and "(ii) in which the tax matters partner expressly states that such agreement shall bind the other partners. "(B) EXCEPTION.—Subparagraph (A) shall not apply to any partner who (within the time prescribed by the Secretary) files a statement with the Secretary providing that the tax matters partner shall not have the authority to enter into a settlement agreement on behalf of such partner. 26 USC 6225.

"SEC. 6225. ASSESSMENTS MADE ONLY AFTER PARTNERSHIP LEVEL PROCEEDINGS ARE COMPLETED. "(a) RESTRICTION ON ASSESSMENT AND COLLECTION.—Except as

otherwise provided in this subchapter, no assessment of a deficiency attributable to any partnership item may be made (and no levy or proceeding in any court for the collection of any such deficiency may be made, begun, or prosecuted) before—

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Page:United States Statutes at Large Volume 96 Part 1.djvu/695

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 653

"(1) the close of the 150th day after the d a y on which a notice of a final partnership administrative adjustment was mailed to the tax matters partner, and "(2) if a proceeding is begun in the T a x Court under section 6226 during such 150-day period, the decision of the court in such proceeding has become final. "(b) P R E M A T U R E

ACTION

MAY B E ENJOINED.—Notwithstanding

section 7421(a), any action which violates subsection (a) may be enjoined in the proper court. "(c) L I M I T W H E R E N O PROCEEDING B E G U N. — I f no proceeding under

section 6226 is begun with respect to any final partnership administrative adjustment during the 150-day period described in subsection (a), the deficiency assessed against any part n e r with respect to the partnership items to which such adjustment relates shall not exceed the a m o u n t determined in accordance with such adjustment. "SP]C. 6226. JUDICIAL REVIEW OP^ FINAL PARTNERSHIP ADMINISTRATIVE ADJUSTMENTS. "(a) PETITION BY T A X MATTERS P A R T N E R. — W i t h i n 90 days

after

the d a y on which a notice of a final partnership administrative adjustment is mailed to the tax m a t t e r s part n e r, the tax m a t t e r s part n e r may file a petition for a readjustment of the partnership items for such taxable year with— "(1) the Tax Court, "(2) the district court of the United States for the district in which the partnership ' s principal place of business is located, or "(3) the Claims Court. "(b) P E T I T I O N BY P A R T N E R OTHER T H A N T A X MATTERS P A R T N E R. —

"(1) IN GENERAL.—If the tax m a t t e r s part n e r does not file a readjustment petition under subsection (a) with respect to any final partnership administrative adjustment, any notice a r t n e r (and any 5-percent group) may, within 60 days after the close of the 90-day period set forth in subsection (a), file a petition for a readjustment of the partnership items for the taxable year involved with any of the courts described in subsection (a). "(2) PRIORITY OF THE TAX COURT ACTION.—If more than

1

action is brought under paragraph (1) with respect to any partnership for any partnership taxable year, the first such action brought in the Tax Court shall go forward. "(3) PRIORITY OUTSIDE THE TAX COURT.—If more than 1 action

is brought under paragraph (1) with respect to any partnership for any taxable year b u t no such action is brought in the Tax Court, the first such action brought shall go forward. "(4) DISMISSAL OF OTHER ACTIONS.—If an action

is b r o u g h t

under paragraph (1) in addition to the action which goes forward under paragraph (2) or (3), such action shall be dismissed. "(5) T A X MATTERS PARTNER MAY I N T E R V E N E. — The tax m a t t e r s

part n e r may intervene subsection.

in any action

brought

under

this

"(c) PARTNERS TREATED AS PARTIES.—If an action is brought under

subsection (a) or (b) with respect to a partnership for any partnership taxable year— "(1) each person who was a part n e r in such partnership at any time during such year shall be treated as a party to such action, and "(2) the court having jurisdiction of such action shall allow each such person to participate in the action.

26 USC 6226.

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text:
Page:United States Statutes at Large Volume 96 Part 1.djvu/696

 96 STAT. 654

PUBLIC LAW 97-248—SEPT. 3, 1982 "(d) PARTNER MUST HAVE INTEREST IN OUTCOME.— "(1) I N ORDER TO BE PARTY TO ACTION.—Subsection (c) shall not

apply to a partner after the day on which— "(A) the partnership items of such partner for the partnership taxable year became nonpartnership items by reason of 1 or more of the events described in subsection (b) of section 6231, or "(B) the period within which any tax attributable to such partnership items may be assessed against that partner expired. "(2) To FILE PETITION.—No partner may file a readjustment petition under subsection (b) unless such partner would (after the application of paragraph (1) of this subsection) be treated as a party to the proceeding. "(e) JURISDICTIONAL REQUIREMENT FOR BRINGING ACTION IN DISTRICT COURT OR CLAIMS COURT.—

"(1) IN GENERAL.—A readjustment petition under this section may be filed in a district court of the United States or the Claims Court only if the partner filing the petition deposits with the Secretary, on or before the day the petition is filed, the amount by which the tax liability of the partner would be increased if the treatment of partnership items on the partner's return were made consistent with the treatment of partnership items on the partnership return, as adjusted by the final partnership administrative adjustment. In the case of a petition filed by a 5-percent group, the requirement of the preceding sentence shall apply to each member of the group. The court may by order provide that the jurisdictional requirements of this paragraph are satisfied where there has been a good faith attempt to satisfy such requirements and any shortfall in the amount required to be deposited is timely corrected. "(2) REFUND ON REQUEST.—If an action brought in a district

26 USC 6601 et
 * 9-

court of the United States or in the Claims Court is dismissed by reason of the priority of a Tax Court action under paragraph (2) of subsection (b), the Secretary shall, at the request of the partner who made the deposit, refund the amount deposited under paragraph (1). "(3) INTEREST PAYABLE.—Any amount deposited under paragraph (1), while deposited, shall not be treated as a payment of tax for purposes of this title (other than chapter 67). "(f) SCOPE OF JUDICIAL REVIEW.—A court with which a petition is filed in accordance with this section shall have jurisdiction to determine all partnership items of the partnership for the partnership taxable year to which the notice of final partnership administrative adjustment relates and the proper allocation of such items among the partners. "(g) DETERMINATION OF COURT REVIEWABLE.—Any determination

by a court under this section shall have the force and effect of a decision of the Tax Court or a final judgment or decree of the district court or the Claims Court, as the case may be, and shall be reviewable as such. Only the tax matters partner, a notice partner, or a 5-percent group may seek review of a determination by a court under this section. "(h) EFFECT OF DECISION DISMISSING ACTION.—If an action brought under this section is dismissed (other than under paragraph (4) of subsection (b)), the decision of the court dismissing the action shall be considered as its decision that the notice of final partnership

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text:
Page:United States Statutes at Large Volume 96 Part 1.djvu/697

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 655

administrative adjustment is correct, and an appropriate order shall be entered in the records of the court. "SFX:. 6227. ADMINISTRATIVE ADJUSTMENT REQUESTS.

26 USC 6227.

"(a) GENERAL RULE.—A partner may file a request for an administrative adjustment of partnership items for any partnership taxable year at any time which is— "(1) within 3 years after the later of— "(A) the date on which the partnership return for such year is filed, or "(B) the last day for filing the partnership return for such year (determined without regard to extensions), and "(2) before the mailing to the tax matters partner of a notice of final partnership administrative adjustment with respect to such taxable year. "(b) REQUESTS BY TAX MATTERS PARTNER ON BEHALF OF PARTNERSHIP.— "(1) SUBSTITUTED RETURN.—If the tax matters partner—

"(A) files a request for an administrative adjustment, and "(B) asks that the treatment shown on the request be substituted for the treatment of partnership items on the partnership return to which the request relates, the Secretary may treat the changes shown on such request as corrections of mathematical or clerical errors appearing on the partnership return. "(2) REQUESTS NOT TREATED AS SUBSTITUTED RETURNS.—

"(A) IN GENERAL.—If the tax matters partner files an administrative adjustment request on behalf of the partnership which is not treated as a substituted return under paragraph (1), the Secretary may, with respect to all or any part of the requested adjustments— "(i) without conducting any proceeding, allow or make to all partners the credits or refunds arising from the requested adjustments, "(ii) conduct a partnership proceeding under this subchapter, or "(iii) take no action on the request. "(B) EXCEPTIONS.—Clause (i) of subparagraph (A) shall not apply with respect to a partner after the day on which the partnership items become nonpartnership items by reason of 1 or more of the events described in subsection (b) of section 6231. Post,p.ms. "(3) REQUEST MUST SHOV^T EFFECT ON DISTRIBUTIVE SHARES.—

The tax matters partner shall furnish with any administrative adjustment request on behalf of the partnership revised schedules showing the effect of such request on the distributive shares of the partners and such other information as may be required under regulations. "(c) OTHER REQUESTS.—If any partner files a request for an administrative adjustment (other than a request described in subsection (b)), the Secretary may— "(1) process the request in the same manner as a claim for credit or refund with respect to items which are not partnership items, "(2) assess any additional tax that would result from the requested adjustments,

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text:
Page:United States Statutes at Large Volume 96 Part 1.djvu/698

 96 STAT. 656

PUBLIC LAW 97-248—SEPT. 3, 1982 "(3) mail to the part n e r, under subparagraph (A) of section 6231(b)(1) (relating to items becoming n o n partnership items), a notice that all partnership items of the part n e r for the partnership taxable year to which such request relates shall be t r e a t e d as n o n partnership items, or "(4) conduct a partnership proceeding.

26 USC 6228.

"SEC. 6228. JUDICIAL REVIEW WHERE ADMINISTRATIVE ADJUSTMENT REQUEST IS NOT ALLOWED IN FULL. "(a) R E Q U E S T ON B E H A L F OF PARTNERSHIP. —

"(1) IN GENERAL.—If any part of an administrative adjustment request filed by the tax m a t t e r s part n e r under subsection (b) of section 6227 is not allowed by the Secretary, the tax m a t t e r s part n e r may file a petition for an adjustment with respect to the partnership items to which such part of the request relates with— "(A) the Tax Court, "(B) the district court of the United States for the district in which the principal place of business of the partnership is located, or "(C) the Claims Court. "(2) PERIOD FOR FILING P E T I T I O N. —

"(A) IN GENERAL.—A petition may be filed under paragraph (1) with respect to partnership items for a partnership taxable year only— "(i) after the expiration of 6 months from the date of filing of the request under section 6227, and "(ii) before the date which is 2 years after the date of such request. "(B) N o PETITION AFTER NOTICE OF B E G I N N I N G OF ADMINIS-

TRATIVE PROCEEDING.—No petition may be filed under paragraph (1) after the day the Secretary mails to the partnership a notice of the beginning of an administrative proceeding with respect to the partnership taxable year to which such request relates. "(C)

F A I L U R E BY SECRETARY TO ISSUE TIMELY NOTICE OF

ADJUSTMENT.—If the Secretary— "(i) mails the notice referred to in subparagraph (B) before the expiration of the 2-year period referred to in clause (ii) of subparagraph (A), and "(ii) fails to mail a notice of final partnership administrative adjustment with respect to the partnership taxable year to which the request relates before the expiration of the period described in section 6229(a) (including any extension by agreement), subparagraph (B) shall cease to apply with respect to such request, and the 2-year period referred to in clause (ii) of subparagraph (A) shall not expire before the date 6 months after the expiration of the period described in section 6229(a) (including any extension by agreement). "(D) EXTENSION OF TIME.—The 2-year period described in subparagraph (A)(ii) shall be extended for such period as may be agreed upon in writing between the tax m a t t e r s part n e r and the Secretary. "(3) COORDINATION WITH ADMINISTRATIVE ADJUSTMENT. — "(A) ADMINISTRATIVE ADJUSTMENT BEFORE FILING OF PETI-

TION.—No petition may be filed under this subsection after

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text:
Page:United States Statutes at Large Volume 96 Part 1.djvu/699

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 657

the Secretary mails to the tax m a t t e r s part n e r a notice of final partnership administrative adjustment for the partnership taxable year to which the request under subsection (b) of section 6227 relates. "(B)

ADMINISTRATIVE

ADJUSTMENT

AFTER

FILING BUT

BEFORE HEARING OF PETITION.—If the Secretary mails to the tax m a t t e r s part n e r a notice of final partnership administrative adjustment for the partnership taxable year to which the request under section 6227 relates after the filing of a petition under this subsection b u t before the h e a r i n g of such petition, such petition shall be treated as an action brought under section 6226 with respect to that administrative adjustment, except that subsection (e) of section 6226 shall not apply. "(C) N O T I C E MUST BE BEFORE EXPIRATION OF STATUTE OF

LIMITATIONS.—A notice of final partnership administrative adjustment for the partnership taxable year shall be t a k e n into account under subparagraph s (A) and (B) only if such notice is mailed before the expiration of the period prescribed by section 6229 for making assessments of tax a t t r i b u t a b l e to partnership items for such taxable year. "(4) P A R T N E R S TREATED AS PARTY TO ACTION.—

"(A) IN GENERAL.—If a n action is brought by the tax m a t t e r s part n e r under paragraph (1) with respect to any request for a n adjustment of a partnership item for any taxable year— "(i) each person who w a s a part n e r in such partnership a t any time during the partnership taxable year involved shall be t r e a t e d as a party to such action, and "(ii) the court having jurisdiction of such action shall allow each such person to participate in the action. "(B) P A R T N E R S MUST HAVE INTEREST IN OUTCOME.—For

purposes of subparagraph (A), rules similar to the rules of paragraph (1) of section 6226(d) shall apply. "(5) SCOPE OF JUDICIAL R E VI E W. — E x c e p t in the case described

in subparagraph (B) of paragraph (3), a court with which a petition is filed in accordance with this subsection shall have jurisdiction to determine only those partnership items to which the part of the request under section 6227 not allowed by the Secretary relates and those items with respect to which the Secretary asserts adjustments as offsets to the adjustments requested by the tax m a t t e r s part n e r. "(6) DETERMINATION OF COURT REVIEWABLE.—Any d e term i n a -

tion by a court under this subsection shall have the force and effect of a decision of the Tax Court or a final j u d g m e n t or decree of the district court or the Claims Court, as the case may be, and shall be reviewable as such. Only the tax m a t t e r s part n e r, a notice a r t n e r, or a 5-percent group may seek review of a determination by a court under this subsection. '(b) OTHER REQUESTS.— "(1) NOTICE PROVIDING THAT ITEMS BECOME NONPARTNERSHIP

ITEMS.—If the Secretary mails to a part n e r, under subparagraph (A) of section 6231(b)(1) (relating to items ceasing to be partnership items), a notice that all partnership items of the part n e r for the partnership taxable year to which a timely request for administrative adjustment under subsection (c) of section 6227 relates shall be treated as n o n partnership items—

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text:
Page:United States Statutes at Large Volume 96 Part 1.djvu/700

 96 STAT. 658

PUBLIC LAW 97-248—SEPT. 3, 1982 "(A) such request shall be t r e a t e d a s a claim for credit or refund of a n overpayment a t t r i b u t a b l e to n o n partnership items, and "(B) the part n e r may bring a n action under section 7422 with respect to such claim a t any time within 2 year s of the mailing of such notice. "(2) OTHER CASES.—

"(A) IN GENERAL.—If the Secretary fails to allow any part of a n administrative adjustment request filed under subsection (c) of section 6227 by a part n e r and paragraph (1) does not apply— "(i) such part n e r may, pursuant to section 7422, begin a civil action for refund of any a m o u n t due by reason of the adjustments described in such part of the request, and "(ii) on the beginning of such civil action, the partnership items of such part n e r for the partnership taxable year to which such part of such request relates shall be t r e a t e d as n o n partnership items for purposes of this subchapter. "(B) P E R I O D FOR FILING PETITION.—

"(i) IN GENERAL.—An action may be begun under subparagraph (A) with respect to a n administrative adjustment request for a partnership taxable year only— "(I) after the expiration of 6 months from the date of filing of the request under section 6227, and "(II) before the date which is 2 years after the date of filing of such request. "(ii)

EXTENSION

OF

TIME.—The

2-year

period

described in subclause (II) of clause (i) shall be extended for such period as may be agreed upon in writing between the part n e r and the Secretary. "(C) ACTION BARRED AFTER PARTNERSHIP PROCEEDING HAS

BEGUN.—No petition may be filed under subparagraph (A) with respect to a n administrative adjustment request for a partnership taxable year after the Secretary mails to the partnership a notice of the beginning of a partnership proceeding with respect to such year. "(D) F A I L U R E BY SECRETARY TO ISSUE TIMELY NOTICE OF ADJUSTMENT.—If the Secretary —

"(i) mails the notice referred to in subparagraph (C) before the expiration of the 2-year period referred to in clause (i) (II) of subparagraph (B), and "(ii) fails to mail a notice of final partnership administrative adjustment with respect to the partnership taxable year to which the request relates before the expiration of the period described in section 6229(a) (including any extension by agreement), subparagraph (C) shall cease to apply with respect to such request, and the 2-year period referred to in clause (i) (II) of subparagraph (B) shall not expire before the date 6 months after the expiration of the period described in section 6229(a) (including any extension by agreement).

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text:
Page:United States Statutes at Large Volume 96 Part 1.djvu/701

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 659

"SEC. 6229. PERIOD OF LIMITATIONS FOR MAKING ASSESSMENTS.

"(a) GENERAL RULE.—Except as otherwise provided in this section, the period for assessing any tax imposed by subtitle A with respect to any person which is attributable to any partnership item (or affected item) for a partnership taxable year shall not expire before the date which is 3 years after the later of— "(1) the date on which the partnership return for such taxable year was filed, or "(2) the last day for filing such return for such year (determined without regard to extensions). "(b) EXTENSION BY AGREEMENT.—

"(1) IN GENERAL.—The period described in subsection (a) (including an extension period under this subsection) may be extended— "(A) with respect to any partner, by an agreement entered into by the Secretary and such partner, and "(B) with respect to all partners, by an agreement entered into by the Secretary and the tax matters partner (or any other person authorized by the partnership in writing to enter into such an agreement), before the expiration of such period. "(2) COORDINATION WITH SECTION 6501 (c)(4).—Any agreement

under section 6501(c)(4) shall apply with respect to the period described in subsection (a) only if the agreement expressly provides that such agreement applies to tax attributable to partnership items. "(c) SPECIAL RULE IN CASE OF FRAUD, ETC.— "(1) FALSE RETURN.—If any partner has, with the intent to

evade tax, signed or participated directly or indirectly in the preparation of a partnership return which includes a false or fraudulent item— "(A) in the case of partners so signing or participating in the preparation of the return, any tax imposed by subtitle A which is attributable to any partnership item (or affected item) for the partnership taxable year to which the return relates may be assessed at any time, and "(B) in the case of all other partners, subsection (a) shall be applied with respect to such return by substituting '6 years' for '3 years'. "(2) SUBSTANTIAL OMISSION OF INCOME.—If any partnership omits from gross income an amount properly includible therein which is in excess of 25 percent of the amount of gross income stated in its return, subsection (a) shall be applied by substituting '6 years' for '3 years'. "(3) No RETURN.—In the case of a failure by a partnership to file a return for any taxable year, any tax attributable to a partnership item (or affected item) arising in such year may be assessed at any time. "(4) RETURN FILED BY SECRETARY.—For purposes of this section, a return executed by the Secretary under subsection (b) of section 6020 on behalf of the partnership shall not be treated as a return of the partnership. "(d)

SUSPENSION

WHEN

SECRETARY

MAKES

ADMINISTRATIVE

ADJUSTMENT.—If notice of a final partnership administrative adjustment with respect to any taxable year is mailed to the tax matters

26 USC 6229.

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text:
Page:United States Statutes at Large Volume 96 Part 1.djvu/702

 96 STAT. 660

PUBLIC LAW 97-248—SEPT. 3, 1982

partner, the running of the period specified in subsection (a) (as modified by other provisions of this section) shall be suspended— "(1) for the period during which an action may be brought under section 6226 (and, if an action with respect to such administrative adjustment is brought during such period, until the decision of the court in such action becomes final), and "(2) for 1 year thereafter. "(e) UNIDENTIFIED PARTNER.—If—

"(1) the name, address, and taxpayer identification number of a partner are not furnished on the partnership return for a partnership taxable year, and "(2)(A) the Secretary, before the expiration of the period otherwise provided under this section with respect to such partner, mails to the tax matters partner the notice specified in paragraph (2) of section 6223(a) with respect to such taxable year, or "(B) the partner has failed to comply with subsection (b) of section 6222 (relating to notification of inconsistent treatment) with respect to any partnership item for such taxable year, the period for assessing any tax imposed by subtitle A which is attributable to any partnership item (or affected item) for such taxable year shall not expire with respect to such partner before the date which is 1 year after the date on which the name, address, and taxpayer identification number of such partner are furnished to the Secretary. "(f) ITEMS BECOMING NONPARTNERSHIP ITEMS.—If, before the expiration of the period otherwise provided in this section for assessing any tax imposed by subtitle A with respect to the partnership items of a partner for the partnership taxable year, such items become nonpartnership items by reason of 1 or more of the events described in subsection (b) of section 6231, the period for assessing any tax imposed by subtitle A which is attributable to such items (or any item affected by such items) shall not expire before the date which is 1 year after the date on which the items become nonpartnership items. 26 USC 6230.

"SEC. 6230. ADDITIONAL ADMINISTRATIVE PROVISIONS. "(a) NORMAL DEFICIENCY PROCEEDINGS DO NOT APPLY TO COMPUTATIONAL ADJUSTMENTS.—Subchapter B of this chapter shall not

apply to the assessment or collection of any adjustment.

computational

"(b) MATHEMATICAL AND CLERICAL ERRORS APPEARING ON PARTNERSHIP RETURN.—

"(1) IN GENERAL.—Section 6225 shall not apply to any adjustment necessary to correct a mathematical or clerical error (as defined in section 6213(g)(2)) appearing on the partnership return. "(2) EXCEPTION.—Paragraph (1) shall not apply to a partner if, within 60 days after the day on which notice of the correction of the error is mailed to the partner, such partner files with the Secretary a request that the correction not be made. "(c) CLAIMS ARISING OUT OF ERRONEOUS COMPUTATIONS, ETC.—

"(1) IN GENERAL.—A partner may file a claim for refund on the grounds that— "(A) the Secretary erroneously computed any computational adjustment necessary—

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text:
Page:United States Statutes at Large Volume 96 Part 1.djvu/703

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 661

"(i) to make the partnership items on the partner's return consistent with the treatment of the partnership items on the partnership return, or "(ii) to apply to the partner a settlement, a final partnership administrative adjustment, or the decision of a court in an action brought under section 6226 or section 6228(a), or "(B) the Secretary failed to allow a credit or to make a refund to the partner in the amount of the overpayment attributable to the application to the partner of a settlement, a final partnership administrative adjustment, or the decision of a court in an action brought under section 6226 or section 6228(a) (or erroneously computed the amount of any such credit or refund). "(2) TIME FOR FILING CLAIM.— "(A) UNDER PARAGRAPH (i)

(A).—Any claim under paragraph (1)(A) shall be filed within 6 months after the day on which the Secretary mails the notice of computational adjustment to the partner. "(B) UNDER PARAGRAPH (i)(B).—Any claim under paragraph (1)(B) shall be filed within 2 years after whichever of the following days is appropriate: "(i) the day on which the settlement is entered into, "(ii) the day on which the period during which an action may be brought under section 6226 with respect to the final partnership administrative adjustment expires, or "(iii) the day on which the decision of the court becomes final.

"(3) SUIT IF CLAIM NOT ALLOWED.—If any portion of a claim

under paragraph (1) is not allowed, the partner may bring suit with respect to such portion within the period specified in subsection (a) of section 6532 (relating to periods of limitations on refund suits). "(4) No REVIEW OF SUBSTANTIVE ISSUES.—For purposes of any

claim or suit under this subsection, the treatment of partnership items on the partnership return, under the settlement, under the final partnership administrative adjustment, or under the decision of the court (whichever is appropriate) shall be conclusive. "(d) SPECIAL RULES WITH RESPECT TO CREDITS OR REFUNDS ATTRIBUTABLE TO PARTNERSHIP ITEMS.—

"(1) IN GENERAL.—Except as otherwise provided in this subsection, no credit or refund of an overpayment attributable to a partnership item (or an affected item) for a partnership taxable year shall be allowed or made to any partner after the expiration of the period of limitation prescribed in section 6229 with respect to such partner for assessment of any tax attributable to such item. "(2) ADMINISTRATIVE ADJUSTMENT REQUEST.—If a request for

an administrative adjustment under section 6227 with respect to a partnership item is timely filed, credit or refund of any overpayment attributable to such partnership item (or an affected item) may be allowed or made at any time before the expiration of the period prescribed in section 6228 for bringing suit with respect to such request.

�


text:
Page:United States Statutes at Large Volume 96 Part 1.djvu/704

 96 STAT. 662

PUBLIC LAW 97-248—SEPT. 3, 1982 "(3) CLAIM UNDER SUBSECTION (C).—If a timely claim is filed under subsection (c) for a credit or refund of an overpayment attributable to a partnership item (or affected item), credit or refund of such overpayment may be allowed or made at any time before the expiration of the period specified in section 6532 (relating to periods of limitations on suits) for bringing suit with respect to such claim. "(4) TIMELY SUIT.—Paragraph (1) shall not apply to any credit or refund of any overpayment attributable to a partnership item (or an item affected by such partnership item) if a partner brings a timely suit with respect to a timely administrative adjustment request under section 6228 or a timely claim under subsection (c) relating to such overpayment. "(5) OVERPAYMENTS REFUNDED WITHOUT REQUIREMENT THAT

PARTNER FILE CLAIM.—In the case of any overpayment by a partner which is attributable to a partnership item (or an affected item) and which may be refunded under this subchapter, to the extent practicable credit or refund of such overpayment shall be allowed or made without any requirement that the partner file a claim therefor. "(6) SUBCHAPTER B OF CHAPTER 66 NOT APPLICABLE.—Sub-

26 USC 6511.

chapter B of chapter 66 (relating to limitations on credit or refund) shall not apply to any credit or refund of an overpayment attributable to a partnership item (or an affected item). "(e) TAX MATTERS PARTNER REQUIRED TO FURNISH NAMES OF PARTNERS TO SECRETARY.—If the Secretary mails to any partnership

the notice specified in paragraph (1) of section 6223(a) with respect to any partnership taxable year, the tax matters partner shall furnish to the Secretary the name, address, profits interest, and taxpayer identification number of each person who was a partner in such partnership at any time during such taxable year. If the tax matters partner later discovers that the information furnished to the Secretary was incorrect or incomplete, the tax matters partner shall furnish such revised or additional information as may be necessary. "(f) FAILURE OF TAX MATTERS PARTNER, ETC., TO FULFILL RESPONSIBILITY DOES NOT AFFECT APPLICABILITY OF PROCEEDING.—The

failure of the tax matters partner, a pass-thru partner, the representative of a notice group, or any other representative of a partner to provide any notice or perform any act required under this subchapter or under regulations prescribed under this subchapter on behalf of such partner does not affect the applicability of any proceeding or adjustment under this subchapter to such partner. "(g) DATE DECISION OF COURT BECOMES FINAL.—For purposes of

Ante, p. 622.

section 6229(d)(1) and section 6230(c)(2)(B), the principles of section 7481(a) shall be applied in determining the date on which a decision of a district court or the Claims Court becomes final. "(h) EXAMINATION AUTHORITY NOT LIMITED.—Nothing in this subchapter shall be construed as limiting the authority granted to the Secretary under section 7602. "(i) TIME AND MANNER OF FILING STATEMENTS, MAKING ELECTIONS, ETC.—Except as otherwise provided in this subchapter,

each— "(1) statement, "(2) election, "(3) request, and "(4) furnishing of information.

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text:
Page:United States Statutes at Large Volume 96 Part 1.djvu/705

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 66^

shall be filed or made at such time, in such manner, and at such place as may be prescribed in regulations. "(j) PARTNERSHIPS HAVING PRINCIPAL PLACE OF BUSINESS OUTSIDE THE UNITED STATES.—For purposes of sections 6226 and 6228, a

principal place of business located outside the United States shall be treated as located in the District of Columbia. "(k) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subchapter. Any reference in this subchapter to regulations is a reference to regulations prescribed by the Secretary. "(1) COURT RULES.—Any action brought under any provision of this subchapter shall be conducted in accordance with such rules of practice and procedure as may be prescribed by the Court in which the action is brought. "SEC. 6231. DEFINITIONS AND SPECIAL RULES.

"(a) DEFINITIONS.—For purposes of this subchapter— "(1) PARTNERSHIP.—

"(A) IN GENERAL.—Except as provided in subparagraph (B), the term 'partnership' means any partnership required to file a return under section 6031(a). "(B) EXCEPTION FOR SMALL PARTNERSHIPS.—

"(i) IN GENERAL.—The term 'partnership' shall not include any partnership if— "(I) such partnership has 10 or fewer partners each of whom is a natural person (other than a nonresident alien) or an estate, and "(II) each partner's share of each partnership item is the same as his share of every other item. For purposes of the preceding sentence, a husband and wife (and their estates) shall be treated as 1 partner, "(ii) ELECTION TO HAVE SUBCHAPTER APPLY.—A partnership (within the meaning of subparagraph (A)) may for any taxable year elect to have clause (i) not apply. Such election shall apply for such taxable year and all subsequent taxable years unless revoked with the consent of the Secretary. "(2) PARTNER.—The term 'partner' means— "(A) a partner in the partnership, and "(B) any other person whose income tax liability under subtitle A is determined in whole or in part by taking into account directly or indirectly partnership items of the partnership. "(3) PARTNERSHIP ITEM.—The term 'partnership item' means, with respect to a partnership, any item required to be taken into account for the partnership's taxable year under any provision of subtitle A to the extent regulations prescribed by the Secretary provide that, for purposes of this subtitle, such item is more appropriately determined at the partnership level than at the partner level. "(4) NONPARTNERSHIP ITEM.—The term 'nonpartnership item' means an item which is (or is treated as) not a partnership item. "(5) AFFECTED ITEM.—The term 'affected item' means any item to the extent such item is affected by a partnership item. "(6) COMPUTATIONAL ADJUSTMENT.—The term 'computational adjustment' means the change in the tax liability of a partner which properly reflects the treatment under this subchapter of

97-200 O-84-pt. 1

23: QL3

26 USC 6231.

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text: The Liberty to Trade as Buttressed by National Law/Damages


text:
Page:United States Statutes at Large Volume 96 Part 1.djvu/706

 96 STAT. 664

PUBLIC LAW 97-248—SEPT. 3, 1982 a partnership item. All adjustments required to apply the results of a proceeding with respect to a partnership under this subchapter to an indirect partner shall be treated as computational adjustments. "(7) TAX MATTERS PARTNER.—The tax matters partner of any

partnership is— "(A) the general partner designated as the tax matters partner as provided in regulations, or "(B) if there is no general partner who has been so designated, the general partner having the largest profits interest in the partnership at the close of the taxable year involved (or, where there is more than 1 such partner, the 1 of such partners whose name would appear first in an alphabetical listing). If there is no general partner designated under subparagraph (A) and the Secretary determines that it is impracticable to apply subparagraph (B), the partner selected by the Secretary shall be treated as the tax matters partner. "(8) NOTICE PARTNER.—The term 'notice partner' means a partner who, at the time in question, would be entitled to notice under subsection (a) of section 6223 (determined without regard to subsections (b)(2) and (e)(1)(B) thereof). "(9) PASS-THRU PARTNER.—The term 'pass-thru partner' means a partnership, estate, trust, electing small business corporation, nominee, or other similar person through whom other persons hold an interest in the partnership with respect to which proceedings under this subchapter are conducted. "(10) INDIRECT PARTNER.—The term 'indirect partner' means a person holding an interest in a partnership through 1 or more pass-thru partners. "(11) 5-PERCENT GROUP.—A 5-percent group is a group of partners who for the partnership taxable year involved had profits interests which aggregated 5 percent or more. "(12) HUSBAND AND WIFE.—Except to the extent otherwise provided in regulations, a husband and wife who have a joint interest in a partnership shall be treated as 1 person. "(b) ITEMS CEASE TO BE PARTNERSHIP ITEMS IN CERTAIN CASES.—

"(1) IN GENERAL.—For purposes of this subchapter, the partnership items of a partner for a partnership taxable year shall become nonpartnership items as of the date— "(A) the Secretary mails to such partner a notice that such items shall be treated as nonpartnership items, "(B) the partner files suit under section 6228(b) after the Secretary fails to allow an administrative adjustment request with respect to any of such items, "(C) the Secretary enters into a settlement agreement with the partner with respect to such items, or "(D) such change occurs under subsection (e) of section 6223 (relating to effect of Secretary's failure to provide notice) or under subsection (c) of this section. "(2) CIRCUMSTANCES IN WHICH NOTICE IS PERMITTED.—The Secretary may mail the notice referred to in subparagraph (A) of paragraph (1) to a partner with respect to partnership items for a partnership taxable year only if— "(A) such partner—

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